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Exhibit 2.1
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ASSET PURCHASE AGREEMENT
AMONG
XXXXXXXXX INDUSTRIES, INC.,
AVIATION SALES COMPANY
AND
AVIATION SALES DISTRIBUTION SERVICES COMPANY
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SEPTEMBER 20, 2000
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INDEX
Page
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RECITALS..........................................................................................1
ARTICLE I DEFINITIONS.............................................................................1
1.1 Defined Terms.........................................................................1
1.2 Other Definitional Provisions........................................................10
ARTICLE II PURCHASE AND SALE OF ASSETS...........................................................11
2.1 Purchased Assets.....................................................................11
2.2 Excluded Assets......................................................................13
2.3 Assignment of Contracts and Rights...................................................13
2.4 Purchase Price.......................................................................14
2.5 Payment of Estimated Cash Purchase Price.............................................14
2.6 Cash Purchase Price Adjustment.......................................................14
2.7 Purchase Price Allocation and Tax Returns............................................15
2.8 Assumed Liabilities..................................................................16
2.9 Excluded Liabilities.................................................................16
2.10 The Closing..........................................................................17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX..........................................17
3.1 Corporate Status.....................................................................17
3.2 Corporate Power and Authority........................................................17
3.3 Enforceability.......................................................................18
3.4 No Violation.........................................................................18
3.5 No Commissions.......................................................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND AVS................................18
4.1 Corporate Status.....................................................................18
4.2 Power and Authority..................................................................19
4.3 Enforceability.......................................................................19
4.4 Corporate Information................................................................19
4.5 Shareholders.........................................................................19
4.6 No Violation.........................................................................19
4.7 Subsidiaries.........................................................................20
4.8 Financial Statements.................................................................20
4.9 Changes Since the Current Balance Sheet Date.........................................20
4.10 Liabilities of the Company...........................................................21
4.11 Litigation...........................................................................21
4.12 Environmental Matters................................................................21
4.13 Real Estate..........................................................................24
4.14 Good Title to and Condition of Assets................................................25
4.15 Compliance with Laws.................................................................25
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4.16 Labor and Employment Matters.........................................................26
4.17 Employee Benefit Plans...............................................................26
4.18 Tax Matters..........................................................................29
4.19 Insurance............................................................................29
4.20 Receivables..........................................................................30
4.21 Licenses, Permits and Approvals......................................................30
4.22 Assumed Contracts; Affiliated Transactions...........................................30
4.23 Intellectual Property................................................................30
4.24 Contracts............................................................................30
4.25 Accuracy of Information Furnished by the Company or AVS..............................31
4.26 Product Warranties and Rebates.......................................................32
4.27 No Commissions.......................................................................32
ARTICLE V CONDUCT OF BUSINESS PENDING THE CLOSING................................................33
5.1 Conduct of Business by the Company Pending the Closing...............................33
ARTICLE VI ADDITIONAL AGREEMENTS.................................................................35
6.1 Further Assurances...................................................................35
6.2 Compliance with Covenants............................................................35
6.3 Cooperation..........................................................................35
6.4 HSR Act and Other Actions............................................................35
6.5 Confidentiality; Publicity...........................................................36
6.6 Access to Information................................................................36
6.7 Notification of Certain Matters......................................................36
6.8 Additional Covenants.................................................................37
6.9 No Other Discussions.................................................................37
6.10 Employment Matters...................................................................38
6.11 Delivery of Property Received by the Company After Closing...........................39
6.12 Xxxxxxxxx Appointed Attorney for the Company.........................................39
6.13 Execution of Further Documents.......................................................40
6.14 Post Closing Retention of Records....................................................40
6.15 Payoff and Estoppel Letters..........................................................40
6.16 Execution of Transaction Documents...................................................41
6.17 Real Property Purchases/Leases.......................................................41
6.18 Accounts Receivable..................................................................41
6.19 Post Closing Matters.................................................................43
6.20 Web Site Link; E-mail................................................................43
6.21 Standstill...........................................................................43
6.22 Audited Financial Statements.........................................................44
6.23 License of Trademarks................................................................44
6.24 Consigned Inventory Investments......................................................44
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF XXXXXXXXX...........................................45
7.1 Accuracy of Representations and Warranties and Compliance with Obligations...........45
7.2 No Material Adverse Change or Destruction of Property................................45
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7.3 Corporate Certificate................................................................45
7.4 Opinion of Counsel...................................................................46
7.5 Consents.............................................................................46
7.6 No Adverse Litigation................................................................46
7.7 HSR Act Waiting Period...............................................................46
7.8 Delivery of Purchased Assets.........................................................46
7.9 Delivery of Payoff and Estoppel Letters..............................................46
7.10 Execution and Delivery of Certain Transaction Documents..............................46
7.11 Real Estate Transaction Documents....................................................46
7.12 Inventory Purchase Agreement.........................................................47
7.13 Purchase Price Allocation Certificate................................................47
7.14 Xxxxxxxxx Financing..................................................................47
7.15 Amendment to Xxxxxxxxx Credit Facility...............................................47
7.17 SPC Senior Subordinated Note.........................................................47
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AND AVS................................47
8.1 Accuracy of Representations and Warranties and Compliance with Obligations...........47
8.2 Corporate Certificate................................................................48
8.3 Purchase Price.......................................................................48
8.4 No Adverse Litigation................................................................48
8.5 HSR Act Waiting Period...............................................................48
8.6 Execution and Delivery of Certain Transaction Documents..............................48
8.7 Inventory Purchase Agreement.........................................................48
8.8 Real Estate Transaction Documents....................................................48
8.9 Consents.............................................................................48
7.13 Purchase Price Allocation Certificate................................................49
ARTICLE IX INDEMNIFICATION.......................................................................49
9.1 Agreement by the Company and AVS to Indemnify........................................49
9.2 Agreement by Xxxxxxxxx to Indemnify..................................................50
9.3 Survival of Representations and Warranties...........................................51
9.4 Third Party Actions..................................................................52
9.5 Remedies Cumulative..................................................................53
ARTICLE X TERMINATION............................................................................53
10.1 Termination..........................................................................53
10.2 Effect of Termination................................................................54
ARTICLE XI GENERAL PROVISIONS....................................................................55
11.1 Notices..............................................................................55
11.2 Entire Agreement.....................................................................56
11.3 Expenses.............................................................................56
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11.4 Amendment; Waiver....................................................................56
11.5 Binding Effect; Assignment...........................................................57
11.6 Counterparts.........................................................................57
11.7 Interpretation.......................................................................57
11.8 Severability.........................................................................57
11.9 Governing Law; Jurisdiction..........................................................58
11.10 Arm's Length Negotiations............................................................58
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered into as of
September 20, 2000 among Xxxxxxxxx Industries, Inc., a Delaware corporation
("Xxxxxxxxx"), Aviation Sales Company, a Delaware corporation ("AVS"), and
Aviation Sales Distribution Services Company, a Delaware corporation (the
"Company").
RECITALS
The Company is engaged in the redistribution of aircraft engines,
aircraft parts and aircraft engine parts through sale, lease and exchange
transactions (the "Business"). Contemporaneous with the execution of this
Agreement, KAV Inventory, LLC, a Delaware limited liability company owned
jointly by Xxxxxxxxx and AVS ("KAV"), is entering into an inventory purchase
agreement with the Company pursuant to which KAV will purchase the Company's
inventory of aircraft engines, aircraft parts and aircraft engine parts. In
connection therewith, Xxxxxxxxx desires to purchase, and the Company desires to
sell, substantially all of the balance of the business, operations, properties
and assets of the Company on the terms and subject to the conditions contained
in this Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Accounts Payable" means payables of the Company, including,
without limitation, all trade payables, notes payable and
other payables of the Company, which are classified as
accounts payable on the regularly prepared balance sheet of
the Company.
"Adjusted Closing Date Balance Sheet" means the balance sheet
reflecting the Purchased Assets (as hereinafter defined) and
the Assumed Liabilities (as hereinafter defined) as of the
Closing Date, which is created by taking the balance sheet of
the Company as of the Closing Date prepared in accordance with
GAAP consistent with past practice (other than the omission of
footnotes thereto which are required to be included therein in
accordance with GAAP) and
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adjusting such balance sheet using the same methodologies,
policies and procedures as were used in the preparation of the
Base Balance Sheet.
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations promulgated under
the Exchange Act (as hereinafter defined), as in effect on the
date hereof.
"Affiliated Transactions" means any transaction between the
Company and (a) any officer, director or Affiliate of the
Company; (b) any officer or director of AVS or any Affiliate
of AVS; (c) any Familial Affiliate (as hereinafter defined) of
any person covered by subsection (a) or (b); or (d) any entity
in which any person covered by subsections (a), (b) or (c) of
this definition owns or has any beneficial interest.
"Assumed Payables" means the following Accounts Payable,
Purchase Order Accruals and Repair Order Accruals of the
Company which arise on or prior to, and remain unpaid as of,
the Closing Date:
(a) any Accounts Payable, Purchase Order
Accruals and Repair Order Accruals owed by
the Company to each member of a Group if
Receivables owed to the Company by any
member of such Group are included in clauses
(a), (b) or (c) of the definition of the
term Purchased Receivables;
(b) any Accounts Payable owed by the Company to
each member of a Group if (i) the Company is
not owed any Receivables from any member of
such Group, and (ii) such Accounts Payable
appear on the Company's regularly prepared
accounts payable aging report as of the
Closing Date (which shall be prepared
consistent with past practice); and
(c) any Accounts Payable designated as Assumed
Payables in writing by Xxxxxxxxx and the
Company on or prior to the Closing Date;
PROVIDED, HOWEVER, that the Assumed Payables shall in no event
include (i) any Accounts Payable owed by the Company to any
member of a Group where there is a debit balance in the
aggregate Accounts Payable owed by the Company to the members
of such
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Group, when taken together, and (ii) any Accounts Payable owed
by the Company to AVS or any Affiliate of AVS.
"AVS Accountants" means Xxxxxx Xxxxxxxx LLP.
"Base Balance Sheet" means the balance sheet reflecting the
Purchased Assets and the Assumed Liabilities as of June 30,
2000 in the form attached hereto as EXHIBIT A.
"Business Day" means any day other than a Saturday or Sunday
or a day on which commercial banks are required or authorized
to close in Miami, Florida.
"Code" means the Internal Revenue Code of 1986 as amended, or
any successor thereto, and any rules and regulations
promulgated thereunder.
"Confidential Information" means any confidential, proprietary
or non-public information included in the Purchased Assets,
whether written or oral, tangible or intangible, including,
without limitation, any trade secrets, know-how, computer
programs in both source code and object code form and any
rights relating thereto, information relating to any actual or
proposed product, development, technology, technique, process
or methodology and any improvement, advancement or
modification thereto, any sales, promotional or marketing
plans, programs, techniques, practices or strategies, any
expansion plans (including existing and entry into new
geographic and/or product markets), any operational and
management guidelines, any corporate policies, any cost,
pricing or other financial data and projections, the identity
and background of any customer, prospect or supplier and any
other information which is to be treated as confidential
because of any obligation owed by the Company to a third
party.
"Consigned Inventory Investment" means amounts invested by the
Company in inventory consigned to the Company by parties other
than AVS or any of its Affiliates which are subject to
consignment agreements which are assigned by the Company to,
and which are assumed by, Xxxxxxxxx, a list of which is set
forth on SCHEDULE 1.1(a).
"Consignment Agreement" means that certain Consignment
Agreement between KAV and Xxxxxxxxx in the form of EXHIBIT B
attached hereto.
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"Contract" means any agreement, contract, lease, note,
mortgage, indenture, loan agreement, franchise agreement,
covenant, employment agreement, lease agreement, exchange
agreement, license agreement, instrument, purchase or sales
order, commitment, undertaking or obligation, in each case,
whether written or oral, express or implied.
"Cooperation Agreement" means that certain Cooperation
Agreement between Xxxxxxxxx, AVS and the Company in the form
of EXHIBIT C attached hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor thereto, and any rules and
regulations promulgated thereunder.
"Excluded Payables" means any Accounts Payable other than
Assumed Payables.
"Excluded Receivables" means any Receivables of the Company
other than Purchased Receivables.
"Familial Affiliate" with respect to any person means any
person who is a member of the immediate family of such person
or any entity in which any such person has any beneficial
interest.
"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.
"Group" in the case of any Person means such Person and any
Person known by either of the parties to be an Affiliate of
such Person.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, or any successor thereto, and any
rules and regulations promulgated thereunder.
"Identified Customer" means (a) any customer which has
committed in writing to purchase specified inventory from the
Company within
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ten (10) days after such inventory is made available for
purchase by the Company, or (b) any customer which has
committed in writing to purchase maintenance and repair
services from the Company for which work will begin within ten
(10) days from the date of such commitment and will end within
the thirty (30) day period thereafter.
"Indebtedness" means any indebtedness for borrowed money
(including, but not limited to, accrued but unpaid interest),
whether owed to a bank or any other Person, remaining payments
on capitalized leases and remaining payments on covenants not
to compete.
"Independent Accountants" means (a) Deloitte & Touche L.L.P.
or (b) if Deloitte & Touche L.L.P. is unable or unwilling to
serve or ceases to be an Independent Firm (as hereinafter
defined), any other firm of independent certified public
accountants of national reputation which has not performed
services for Xxxxxxxxx or AVS or any of their respective
Affiliates during the preceding three (3) year period (an
"Independent Firm"), which is selected by Xxxxxxxxx and AVS
(or if they cannot agree, by the Xxxxxxxxx Accountants and the
AVS Accountants).
"Inventory Purchase Agreement" means that certain Inventory
Purchase Agreement among KAV, the Company and AVS in the form
of EXHIBIT D attached hereto.
"IRS" means the United States Internal Revenue Service or any
successor agency, and to the extent relevant, the United
States Department of the Treasury.
"KAV Senior Subordinated Note - A" means that certain Senior
Subordinated Note - A issued by KAV in favor of the Company
pursuant to the Inventory Purchase Agreement in the form of
EXHIBIT E.
"KAV Senior Subordinated Note - B" means that certain Senior
Subordinated Note - B issued by KAV in favor of the Company
pursuant to the Inventory Purchase Agreement in the form of
EXHIBIT F.
"KAV Subordinated Note" means that certain Subordinated Note
issued by KAV in favor of the Company pursuant to the
Inventory Purchase Agreement.
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"Xxxxxxxxx Accountants" means KPMG LLP.
"Xxxxxxxxx Credit Facility" means that certain Amended and
Restated Credit Agreement dated December 14, 1998, among
Xxxxxxxxx, Bank of America, N.A. (as successor to NationsBank,
N.A.), individually and as agent, and the other banks a party
thereto, as amended.
"Knowledge" with respect to any Person means the knowledge of
any officer of such Person who has responsibility for the
day-to-day oversight of the area of operations covered by the
Section of this Agreement in which the term "Knowledge" is
used, in each case, after due and diligent inquiry.
"Legal Requirement" means any federal, state, local,
municipal, foreign, international, multinational, or other
administrative order, decree, constitution, law, ordinance,
principle of common law, rule, regulation, statute or treaty.
"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 of any jurisdiction in
connection with such mortgage, pledge, security interest,
encumbrance, lien or charge).
"Material Adverse Change (or Effect)," with respect to any
Person, means a change (or effect) in condition (financial or
otherwise), properties, assets, liabilities, rights,
obligations, operations or business of such Person which
change (or effect), individually or in the aggregate, is
materially adverse to such condition (financial or otherwise),
properties, assets, liabilities, rights, obligations,
operations or business.
"Miramar Facility" means the Company's headquarters located at
0000 Xxxxxxxx Xxxx in Miramar, Florida.
"Miramar Sale - Leaseback Transaction" means the transaction
involving (a) the sale of the Miramar Facility by AVS upon the
terms set forth on the term sheet attached hereto as EXHIBIT G
and such other terms and conditions as shall be reasonably
acceptable to AVS, and (b) the lease of the Miramar Facility
by Xxxxxxxxx upon the terms set
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forth in the term sheet attached hereto as EXHIBIT H and such
other terms and conditions as shall be reasonably acceptable
to Kellstrom.
"Miramar Sublease Agreement" means a sublease agreement
between AVS and Xxxxxxxxx pursuant to which Kellstrom shall
sublease the Miramar Facility from AVS on the following terms:
(a) a term of at least seven (7) years, (b) a rental rate
equal to AVS' direct out-of-pocket expenses relating to the
lease of the Miramar Facility, (c) the right of Xxxxxxxxx or
AVS to terminate such sublease upon consummation of the
Miramar Sale-Leaseback Transaction or another transaction in
which the Miramar Facility is sold and leased to Xxxxxxxxx on
terms acceptable to Xxxxxxxxx, (d) the consent of and a
non-disturbance agreement from the owner of the Miramar
Facility, and (e) containing such other terms as may be
acceptable to Xxxxxxxxx.
"Non-Competition Agreement" means that certain Non-Competition
Agreement among Xxxxxxxxx, KAV, the Company and AVS in the
form of EXHIBIT I attached hereto.
"Ordinary Course of Business" with respect to any Person means
actions taken by such Person consistent with the past
practices of such Person in the ordinary course of the normal
day-to-day business of such Person.
"Pearland Facility" means the Company's facility located at
0000 Xxxxx Xxxx in Pearland, Texas.
"Pearland Real Estate Purchase Agreement" means that certain
Purchase and Sale Agreement between the Company and Xxxxxxxxx
with respect to the purchase of the Pearland Facility, in the
form of EXHIBIT J attached hereto.
"Permitted Liens" means Liens arising by operation of law,
including, without limitation, materialmen's, mechanic's,
workmen's and repairmen's Liens, in each case, securing
Assumed Liabilities.
"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.
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"Purchase Order Accruals" means accruals recorded by the
Company on account of parts received and included in the
inventory of the Company as reflected in the Company's general
ledger account number 3140 and which appear on the regularly
prepared balance sheet of the Company.
"Purchased Receivables" means the following Receivables of the
Company which arose on or prior to, and remain uncollected as
of, the Closing Date and which appear on the Company's
regularly prepared accounts receivable aging report as of the
Closing Date (which shall be prepared consistent with past
practice):
(a) any Receivables owed to the Company by each
member of a Group if all or any portion of
such Receivables of such Group will
constitute "Eligible Receivables" (as such
term is defined in the Xxxxxxxxx Credit
Facility);
(b) any Receivables owed to the Company by each
member of a Group if there is a credit
balance in the aggregate of the Receivables
owed to the Company by the members of such
Group, when taken together; and
(c) any Receivables designated as Purchased
Receivables in writing by Xxxxxxxxx and the
Company on or prior to the Closing Date;
PROVIDED, HOWEVER, that the Purchased Receivables shall not,
in any event, include (i) any Receivables owed to the Company
by any member of a Group if Accounts Payable from any member
of such Group fall within the proviso contained in the
definition of the term Assumed Payables and (ii) any
Receivables owed to the Company by AVS or any Affiliate of
AVS.
"Real Estate Transaction Documents" means the Pearland Real
Estate Purchase Agreement, the Van Nuys Lease Assignment
Agreement and the Miramar Sublease Agreement or the documents
required to consummate the Miramar Sale-Leaseback Transaction,
as applicable.
"Receivables" means receivables of the Company, including
without limitation, those accounts receivable that are trade
accounts receivable, notes receivable and receivables from
manufacturers, insurance companies, service contract providers
and any other
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vendors or suppliers of the Company, which are classified as
accounts receivable on the Base Balance Sheet.
"Receivables Credit Amount" means the amount equal to (a) Two
Million Dollars ($2,000,000) minus (b) fifty percent (50%) of
the aggregate purchase price of services purchased by
Xxxxxxxxx and its Affiliates from AVS and its Affiliates
(other than with respect to inventory of KAV) during the
period commencing on the Closing Date and ending on the first
anniversary of the Closing Date (including, without
limitation, amounts paid, invoiced or to be invoiced on
account thereof), but in no event shall the Receivables Credit
Amount be less than zero (0).
"Repair Order Accruals" means accruals recorded by the Company
relating to repairs of inventory as reflected in the Company's
general ledger account number 3160 and which appear on the
regularly prepared balance sheet of the Company.
"SEC" means the United States Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended,
or any successor thereto, and any rules and regulations
promulgated thereunder.
"Subsidiary of AVS" means any Person in which AVS or any
Subsidiary of AVS (i) directly or indirectly owns
(beneficially or of record) or has the power to vote fifty
percent (50%) or more of the outstanding voting stock or other
equity interests, or (ii) otherwise controls the management or
operation.
"Tax Return" means any return (including any information
return), report, statement, schedule, notice, form or other
document or information filed with or submitted to or required
to be filed with or submitted to any Governmental Authority in
connection with or with respect to the determination,
assessment, collection or payment of any Taxes or in
connection with the administration, implementation or
enforcement of or compliance with any Legal Requirements
relating to any Tax.
"Taxes" means all taxes, including, but not limited to,
income, value added, excise, property, sales, franchise,
intangible, withholding, gift, escheat, payroll, social
security and unemployment taxes, levies, assessments, tariffs,
duties (including customs duties), deficiencies or
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other fees, imposed, assessed or collected by or under the
authority of any Governmental Authority, or payable pursuant
to any tax sharing agreement or other contract relating to the
sharing or payment of any such tax, levy, assessment, tariff,
duty (including customs duties), deficiency or other fee, and
any related charge or amount, including, but not limited to,
any fine, penalty, interest or additional tax.
"Threatened" means any demand or statement that has been made
in writing or any notice that has been given in writing in
connection with a claim, charge, proceeding, dispute, action
or other matter.
"Transaction Documents" means the Transition Services
Agreement, the Consignment Agreement, the Non-Competition
Agreement, the Cooperation Agreement, the Inventory Purchase
Agreement, the License Agreement, the Real Estate Transaction
Documents and any other agreements, documents or instruments
entered into by any of AVS, the Company, Xxxxxxxxx or KAV
pursuant to or in connection herewith or therewith.
"Transition Services Agreement" means that certain Transition
Services Agreement among AVS, the Company and Xxxxxxxxx in the
form attached hereto as EXHIBIT K
"Van Nuys Facility" means the Company's facility located at
00000 Xxxxxx Xxxxxxxxx, Xxxxxx 000 and 240 in Van Nuys,
California.
"Van Nuys Lease Assignment Agreement" means that certain
Assignment and Assumption Agreement entered into between the
Company and Xxxxxxxxx with respect to the assignment and
assumption of that certain Lease Agreement entered into
between the Company and Massachusetts Mutual Life Insurance
Company for the Van Nuys Facility in the form attached hereto
as EXHIBIT L.
1.2 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) All terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
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(c) All matters of an accounting nature in connection with
this Agreement and the transactions contemplated hereby shall, except as
expressly set forth herein, be determined in accordance with GAAP applied on a
basis consistent with prior periods.
(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.
(e) Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
(f) Whenever this Agreement provides for a payment to be made
by any party, such payment shall be made by wire transfer of immediately
available United States funds.
(g) 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.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASED ASSETS. Subject to the terms and conditions of this
Agreement, the Company agrees to and will at the Closing (as hereinafter
defined) sell, convey, transfer, assign and deliver to Xxxxxxxxx, and Xxxxxxxxx
shall purchase, the Purchased Assets (as hereinafter defined), free and clear of
any Liens (other than Permitted Liens) for the consideration set forth in
SECTION 2.4 below. For purposes of this Agreement, "Purchased Assets" shall mean
all of the Company's business, operations, properties and assets of every kind
and description, tangible or intangible, wherever located as shall exist on the
Closing Date (as hereinafter defined), whether or not appearing on the Base
Balance Sheet (as hereinafter defined), in each case, other than Excluded Assets
(as hereinafter defined). Without limiting the generality of the foregoing, the
Purchased Assets shall include all of the following assets of the Company (in
each case excluding Excluded Assets):
(a) tangible personal property, including, without limitation,
all machinery, equipment, leasehold improvements, vehicles, supplies, furniture
and fixtures (whether located at or on the Leased Premises (as defined below) or
elsewhere);
(b) permits, licenses, certificates of authority, franchises,
accreditations, registrations and other authorizations;
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(c) cash, cash equivalents, marketable securities, documents,
instruments, deposits, rights of offset under Contracts, security deposits,
escrows, prepaid real estate and personal property taxes or other advance
payments and work in process;
(d) all Purchased Receivables;
(e) leases and licenses covering real property, machinery,
equipment, tools, inventory, furniture, fixtures and other tangible assets;
(f) subject to SECTION 2.3, rights in, to or under any
agreements or Contracts made or entered into by the Company or by which it or
its properties or assets are bound, whether written or oral, express or implied,
including, without limitation, all consignment agreements or similar
arrangements;
(g) choses in action, causes of action, claims and other
rights of every kind and nature of the Company against any third party;
(h) operating data and records of the Company, including
without limitation, all employee records and payroll data for the present and
previous employees of, and independent contractors retained by, the Company,
customer and client lists and records of past, present and prospective customers
and clients, financial, accounting and credit records, training materials,
operating manuals, human resource manuals and materials, marketing brochures and
materials, sales materials, computer data, computer software, correspondence,
budgets and other similar documents and records;
(i) patents, patent applications, trade secrets, technology,
know-how, formulae, designs and drawings, computer software, copyrights,
processes, operating rights, licenses and permits and other intellectual
property and intangible property and rights of the Company, including without
limitation, all accounting systems, inventory systems, bar coding systems and
imaging systems (collectively, the "Intellectual Property");
(j) insurance proceeds arising in connection with damage to
Purchased Assets occurring after the date hereof and prior to the Closing Date,
to the extent not expended on the repair or restoration of the Purchased Assets;
(k) (i) telephone and facsimile numbers used by the Company,
any employees of the Company employed in the Business; (ii) telephone and
facsimile numbers reserved by the Company and AVS containing the same prefix
numbers as any of the telephone and facsimile numbers covered by subsection (i)
above; and (iii) the telephone number "0-000-XXX-XXXX";
(l) Inventory Locator System identifier codes, listings and
positions and SITA codes and lines of AVS and the Company and any rights
relating thereto; and
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(m) the KAV Senior Subordinated Note - A.
2.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary set forth
in SECTION 2.1, the Purchased Assets shall not include the following assets of
the Company: (a) the Purchase Price (as defined below) and other rights of the
Company under this Agreement; (b) the shares of capital stock of the Company
which are owned and held by the Company as treasury shares; (c) the corporate
minute books and stock records of the Company, (d) the Purchased Inventory (as
such term is defined in the Inventory Purchase Agreement) being purchased by KAV
under the Inventory Purchase Agreement; (e) the shares of capital stock of
Aviation Sales Bearings Company, a Delaware corporation d/b/a Dixie Bearings
("Dixie Bearings"), owned by the Company; (f) any assets of Dixie Bearings; (g)
any of the Company's trademarks, trademark applications, trade names, slogans,
service marks, fictitious names or corporate names; (h) that certain Promissory
Note dated December 2, 1994 in the original principal amount of $2,500,000 made
by Aviation Properties in favor of ASC Acquisition Partners, L.P., predecessor
in interest to the Company; (i) the Company's web site and domain names (which
are more particularly described on SCHEDULE 2.2); (j) the KAV Senior
Subordinated Note - B, the KAV Subordinated Note and the KAV Senior Subordinated
Adjustment Note (as defined in the Inventory Purchase Agreement), if any, issued
to the Company under the Inventory Purchase Agreement; (k) the Excluded
Receivables; (l) the Consigned Inventory Investment; and (m) those assets
expressly identified on SCHEDULE 2.2 hereto (collectively, the "Excluded
Assets").
2.3 ASSIGNMENT OF CONTRACTS AND RIGHTS. At Closing, the Company and AVS
shall assign or cause to be assigned to Xxxxxxxxx (and/or Xxxxxxxxx'x designee,
at Xxxxxxxxx'x discretion) those Contracts set forth on SCHEDULE 2.3 (the
"Assumed Contracts"). Notwithstanding anything to the contrary set forth in this
Agreement, this Agreement shall not constitute an assignment of any Contract,
claim, license, franchise, lease, commitment, sales order, sales contract,
supply contract, service agreement, purchase order, purchase commitment or other
right or benefit if an attempted assignment thereof, without the consent of a
third party thereto, would constitute a breach thereof or in any way adversely
affect the rights of Xxxxxxxxx thereunder following the Closing. If such consent
is not obtained, or if any attempt at an assignment thereof would be ineffective
or would adversely affect the rights of Xxxxxxxxx thereunder following the
Closing so that Xxxxxxxxx would not in fact receive all such rights, the Company
shall (i) cooperate with Xxxxxxxxx to the extent necessary to obtain for
Xxxxxxxxx the benefits under such claim, contract, license, franchise, lease,
commitment, sales order, sales contract, supply contract, service agreement,
purchase order, purchase commitment or other right or benefit, including
enforcement for the benefit of Xxxxxxxxx of any and all rights of the Company
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise; PROVIDED, HOWEVER, Xxxxxxxxx shall reimburse the
Company for all reasonable out-of-pocket costs and expenses incurred by the
Company in connection with providing such cooperation to Xxxxxxxxx as required
under this SECTION 2.3(i), (ii) use reasonable commercial efforts to secure the
consents of the applicable third parties to the assignment of the foregoing
rights and benefits, and (iii) assign to Xxxxxxxxx any such rights or benefits
immediately upon receipt of the appropriate consents.
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2.4 PURCHASE PRICE. In full consideration for the performance by AVS
and the Company of their obligations under this Agreement (including, without
limitation, the covenants contained in SECTION 6.8 below) and the covenants
contained in the Non-Competition Agreement and the transfer and delivery to
Xxxxxxxxx of the Purchased Assets, Xxxxxxxxx agrees, subject to the terms,
conditions and limitations set forth in this Agreement, to pay the cash
consideration (the "Cash Purchase Price") set forth below, and to assume the
Assumed Liabilities. The Purchase Price shall be the aggregate of the Cash
Purchase Price plus the Assumed Liabilities. The Cash Purchase Price shall be an
amount equal to the Adjusted Net Worth of the Business (as hereinafter defined)
as of the Closing Date. For purposes hereof, the "Adjusted Net Worth of the
Business" shall mean the net worth of the Business, as reflected on the Adjusted
Closing Date Balance Sheet.
2.5 PAYMENT OF ESTIMATED CASH PURCHASE PRICE. At least two days prior
to the Closing Date, Xxxxxxxxx and the Company shall estimate by mutual
agreement the amount of the Cash Purchase Price (the "Estimated Cash Purchase
Price"). At the Closing, Xxxxxxxxx shall pay the Estimated Cash Purchase Price
by wire transfer of immediately available funds.
2.6 CASH PURCHASE PRICE ADJUSTMENT.
(a) Within ninety (90) days following the Closing Date,
Xxxxxxxxx shall prepare and deliver to AVS and the Company a certificate
verified as to accuracy by its Chief Financial Officer (the "Actual Cash
Purchase Price Certificate") (a) attaching a copy of the Adjusted Closing Date
Balance Sheet, and (b) setting forth the Adjusted Net Worth of the Business as
of the Closing Date (the "Actual Cash Purchase Price"). Each of AVS and the
Company shall cooperate fully with Xxxxxxxxx in the preparation of the Adjusted
Closing Date Balance Sheet.
(b) Within sixty (60) days after the Actual Cash Purchase
Price Certificate is delivered to AVS and the Company, AVS and the Company shall
give written notice to Xxxxxxxxx setting forth in detail any objection to the
Actual Cash Purchase Price reflected in the Actual Cash Purchase Price
Certificate. If AVS and the Company shall fail to provide such notice to
Xxxxxxxxx of its objection to the Actual Cash Purchase Price reflected in the
Actual Cash Purchase Price Certificate, then the determination of the Actual
Cash Purchase Price by Xxxxxxxxx as reflected in the Actual Cash Purchase Price
Certificate shall be final and binding on the parties hereto.
(c) If within such sixty (60) day period following delivery of
the Actual Cash Purchase Price Certificate, AVS and the Company shall give
written notice of its objection to Kellstrom, Kellstrom, on the one hand, and
AVS and the Company, on the other hand, shall use reasonable and good-faith
efforts to resolve any such objection within the thirty (30) day period
following the receipt of the notice of objection (the "Resolution Period"). If
the parties shall reach agreement on the objections of AVS and the Company, then
the Actual Cash Purchase Price as agreed to by the parties shall become the
Actual Cash Purchase Price for purposes of this Agreement. If the parties are
unable to reach agreement on the objections of AVS and the Company within the
Resolution Period, then the matter shall be submitted as soon as practicable to
the Independent Accountants for determination of the Actual Cash Purchase Price.
To the extent that it is agreed by
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the parties that the Actual Cash Purchase Price exceeds the Estimated Cash
Purchase Price, then Xxxxxxxxx shall pay to the Company the undisputed portion
of the amount by which the Actual Cash Purchase Price exceeds the Estimated Cash
Purchase Price. To the extent that it is agreed by the parties that the
Estimated Cash Purchase Price exceeds the Actual Cash Purchase Price, then the
Company shall pay to Xxxxxxxxx the undisputed portion of the amount by which the
Estimated Cash Purchase Price exceeds the Actual Cash Purchase Price. If the
parties shall submit the determination of the Actual Cash Purchase Price to the
Independent Accountants, then the determination of the Independent Accountants
shall be final and binding on the parties and such amount shall become the
Actual Cash Purchase Price for purposes of the remainder of this Agreement. The
parties (and their professional advisors) shall cooperate with one another in
furtherance of determining the Actual Cash Purchase Price, and the parties shall
make reasonably available their books and records (including, without
limitation, any technically available relevant computerized reports) and
personnel, in furtherance of making such determination. In connection with the
resolution of any dispute, each party shall pay its own fees and expenses,
including, without limitation, legal, accounting and consultant fees and
expenses. The cost and expense of the Independent Accountants shall be shared
equally between Xxxxxxxxx, on the one hand, and AVS and the Company on the other
hand.
(d) If the Estimated Cash Purchase Price is greater than the
Actual Cash Purchase Price, then the Company shall repay to Xxxxxxxxx within
five (5) Business Days following receipt of the Actual Cash Purchase Price
Certificate or, if disputed, within five (5) Business Days following the earlier
of the date on which the parties resolve the dispute or the date of
determination of the Actual Cash Purchase Price by the Independent Accountants,
the difference between the Estimated Cash Purchase Price and the Actual Cash
Purchase Price (net of any portion of such amounts previously paid). If the
Company shall fail to pay such amount when due, then Xxxxxxxxx shall have the
right (but not the obligation), in addition to any other remedies which it may
have, to deem such amount to be Xxxxxxxxx Indemnifiable Damages in accordance
with ARTICLE IX (PROVIDED, HOWEVER, that neither the Xxxxxxxxx Indemnification
Threshold nor the Xxxxxxxxx Indemnification Cap shall be applicable to such
amount). If the Actual Cash Purchase Price is greater than the Estimated Cash
Purchase Price, then Xxxxxxxxx shall pay to the Company within five (5) Business
Days following receipt of the Actual Cash Purchase Price Certificate or, if
disputed, within five (5) Business Days following the earlier of the date on
which the parties resolve the dispute or the date of determination of the Actual
Cash Purchase Price by the Independent Accountants, the difference between the
Actual Cash Purchase Price and the Estimated Cash Purchase Price (net of any
portion of such amounts previously paid). If Xxxxxxxxx shall fail to pay such
amount when due, the Company shall have the right (but not the obligation), in
addition to any other remedies which it may have, to deem such amount to be
Company Indemnifiable Damages in accordance with ARTICLE IX (PROVIDED, HOWEVER,
that neither the Company Indemnifiable Threshold nor the Company Indemnification
Cap shall be applicable to such amount).
2.7 PURCHASE PRICE ALLOCATION AND TAX RETURNS. The purchase price as
determined for tax purposes only (which includes the amount of cash and other
property paid to the Company plus liabilities assumed pursuant to this
Agreement) shall be allocated among the Purchased Assets of
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the Company and the covenants set forth in SECTION 6.8 below and in the
Non-Competition Agreement by mutual agreement of the parties and shall be
reflected in a certificate signed by the parties on the Closing Date (the
"Purchase Price Allocation Certificate") (which allocation shall be subject to
adjustment by the parties upon the determination of the Actual Cash Purchase
Price which is made pursuant to SECTION 2.6). The parties agree that all Tax
Returns, including, without limitation, IRS Form 8594, shall be consistent with
the allocation set forth on the Purchase Price Allocation Certificate (as
adjusted) and none of Xxxxxxxxx, AVS and the Company shall take any position
which is inconsistent therewith.
2.8 ASSUMED LIABILITIES. Xxxxxxxxx shall at the Closing assume and
agree to pay, discharge and perform when lawfully required (a) all of the
obligations, duties and liabilities of the Company which are Assumed Payables;
(b) all Assumed Contracts (other than any obligations thereunder which relate to
breach of contract, breach of warranty, tort, infringement or violation of law,
or which arise out of any action, suit, claim, charge, governmental
investigation or arbitration proceeding relating to facts and circumstances
arising on or prior to the Closing Date); (c) all accrued but unpaid vacation
and sick time of the Company's employees as of the Closing Date; (d) any
liabilities other than those set forth in (a), (b) and (c) above that are
expressly set forth on the Adjusted Closing Date Balance Sheet; and (e) all
other liabilities expressly set forth on SCHEDULE 2.8 (collectively the "Assumed
Liabilities"); PROVIDED, HOWEVER, that any obligations, duties or liabilities
set forth in subsections (b) through (h), inclusive, of SECTION 2.9 shall not
constitute Assumed Liabilities hereunder whether or not such obligations, duties
or liabilities fall within this SECTION 2.8.
2.9 EXCLUDED LIABILITIES. The parties expressly agree that Xxxxxxxxx
shall not assume, agree to pay or otherwise become liable for any obligation or
liability of the Company or other Person other than the Assumed Liabilities
(with any liabilities or obligations other than the Assumed Liabilities being
referred to herein as the "Excluded Liabilities"). The Excluded Liabilities
shall include, without limitation, the following:
(a) any liability or obligation of AVS or the Company against
which Xxxxxxxxx is indemnified pursuant to ARTICLE IX of this Agreement;
(b) any liability or obligation of AVS or the Company arising
under this Agreement;
(c) any liability or obligation of AVS, the Company or any
other Affiliate of AVS relating to Taxes, including any interest or penalties
thereon;
(d) any liability or obligation of the Company to AVS or any
of its Affiliates, whether by contract, tort, pursuant to law or otherwise
("Affiliate Obligations");
(e) any liability or obligation of the AVS Group (as
hereinafter defined) with respect to or arising out of any Employee Benefit Plan
(as defined below) or any other plans or
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arrangements for the benefit of any current or former employees, officers or
directors of the AVS Group, which are maintained by AVS, the Company, any
Affiliate of AVS or the Company or any third party and any employment agreements
or other arrangements for the benefit of any employee of the AVS Group or any
payment required to be made thereunder, except to the extent that such liability
is within a line item expressly designated as being assumed by Xxxxxxxxx on the
Base Balance Sheet and in an amount expressly included therefore in the Adjusted
Closing Date Balance Sheet;
(f) any liability or obligation of the Company with respect to
the Excluded Assets;
(g) any Excluded Payables; and
(h) any liability or obligation with respect to the matters
identified on SCHEDULE 2.9 hereto.
2.10 THE CLOSING. Subject to the terms and conditions of this
Agreement, the closing of the purchase and sale of the Purchased Assets (the
"Closing") shall take place as promptly as practicable (and in any event within
seven (7) Business Days) after satisfaction or waiver of the conditions set
forth in ARTICLES VII and VIII, at the offices of Akerman, Senterfitt & Xxxxxx,
P.A., Ft. Lauderdale, Florida, or such other time and place as the parties may
otherwise agree (the "Closing Date").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX
As a material inducement to the Company and AVS to enter into this
Agreement and to consummate the transactions contemplated hereby, Xxxxxxxxx
makes the following representations and warranties to the Company and AVS:
3.1 CORPORATE STATUS. Xxxxxxxxx is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite corporate power and authority to own or lease its
properties and to carry on its business as now being conducted.
3.2 CORPORATE POWER AND AUTHORITY. Xxxxxxxxx has the corporate power
and authority to execute and deliver this Agreement and the Transaction
Documents to which it is a party, to perform its obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby.
Xxxxxxxxx has taken all corporate actions necessary to authorize the execution
and delivery of this Agreement and the Transaction Documents to which it is a
party, the performance of its obligations hereunder and thereunder and the
consummation of the transactions contemplated hereby and thereby.
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3.3 ENFORCEABILITY. This Agreement and the Transaction Documents to
which it is a party have been duly executed and delivered by Xxxxxxxxx and
constitute legal, valid and binding obligations of Xxxxxxxxx, enforceable
against Xxxxxxxxx in accordance with their 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 NO VIOLATION. Except as set forth in SCHEDULE 3.4, none of the
execution or delivery of this Agreement by Xxxxxxxxx and each of the Transaction
Documents to which Xxxxxxxxx is a party, the performance by Xxxxxxxxx of its
obligations hereunder or thereunder or the consummation by it of the
transactions contemplated hereby or thereby will (i) contravene any provision of
the Restated Certificate of Incorporation or By-Laws of Xxxxxxxxx, each as
amended to date, (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 Xxxxxxxxx, except to the extent that
such violation or conflict would not have a Material Adverse Effect on
Xxxxxxxxx, (iii) 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 Xxxxxxxxx, (iv) result in or require the creation or
imposition of any Lien upon or with respect to any of the property or assets of
Xxxxxxxxx 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 Xxxxxxxxx and any filings required to be made by the parties under the
HSR Act, if any.
3.5 NO COMMISSIONS. Xxxxxxxxx has not 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, other than fees which will
be paid by, and are the sole obligation of, Xxxxxxxxx.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND AVS
As a material inducement to Xxxxxxxxx to enter into this Agreement and
to consummate the transactions contemplated hereby and to invest in KAV, the
Company and AVS, jointly and severally, make the following representations and
warranties to Xxxxxxxxx:
4.1 CORPORATE STATUS. Each of the Company and AVS is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite power and authority to own or lease its
properties and to carry on its business as now being
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conducted. Each of the Company and AVS is legally qualified to transact business
as a foreign corporation, and is in good standing as such, in those
jurisdictions set forth on SCHEDULE 4.1. There is no pending or Threatened
proceeding for the dissolution, liquidation, insolvency or rehabilitation of the
Company or AVS.
4.2 POWER AND AUTHORITY. Each of the Company and AVS has the corporate
power and authority to execute and deliver this Agreement and each of the
Transaction Documents to which the Company and/or AVS is a party, to perform its
respective obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each of the Company and AVS has
taken all corporate action necessary to authorize the execution and delivery of
this Agreement and each of the Transaction Documents to which the Company and/or
AVS is a party, the performance of its obligations hereunder and thereunder and
the consummation of the transactions contemplated hereby and thereby.
4.3 ENFORCEABILITY. This Agreement and each of the Transaction
Documents to which the Company and/or AVS is a party have been duly executed and
delivered by each of the Company and AVS, and constitutes the legal, valid and
binding obligation of each of them, enforceable against each of them in
accordance with their 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.
4.4 CORPORATE INFORMATION. SCHEDULE 4.4 contains a list of (a) any name
(including, without limitation, any assumed or fictitious name) used by the
Company since the date of its organization, (b) any merger or business
acquisition undertaken by the Company since the date of its organization, (c)
any principal place of business or chief executive office maintained by the
Company since the date of its organization, (d) all other offices and places of
business maintained by the Company since the date of its organization, and (e)
all other locations where the equipment, inventory, chattel paper and books and
records of the Company and all Consigned Inventory (as hereinafter defined) are
located.
4.5 SHAREHOLDERS. AVS owns beneficially and of record all of the issued
and outstanding shares of capital stock of the Company, free and clear of any
Liens, claims or restrictions of any kind except as set forth on SCHEDULE 4.5
hereto.
4.6 NO VIOLATION. Except as set forth on SCHEDULE 4.6, none of the
execution or delivery of this Agreement by the Company or AVS and each of the
Transaction Documents to which the Company and/or AVS is a party, the
performance by the Company or AVS of their respective obligations hereunder and
thereunder or the consummation by the Company or AVS of the transactions
contemplated hereby or thereby will (i) contravene any provision of the
Certificate of Incorporation or Bylaws (or other organizational documents), as
amended to date, of the Company or AVS, (ii) violate or conflict with any Legal
Requirement or any decree, writ, injunction, judgment or order of any
Governmental Authority or of any arbitration award which is either applicable
to,
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binding upon or enforceable against the Company or AVS, except to the extent
such violation or conflict would not have a Material Adverse Effect on the
Company, the Business or the Purchased Assets, (iii) 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
Assumed Contract, (iv) result in or require the creation or imposition of any
Lien upon or with respect to any of the property or assets of either the Company
or AVS, 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 filings required to be made by the
parties and any filings required to be made by the parties under the HSR Act, if
any.
4.7 SUBSIDIARIES. Except as set forth on SCHEDULE 4.7, the Company does
not own, directly or indirectly, any outstanding voting securities of or other
interests in, or control, any corporation, partnership, joint venture or other
business entity.
4.8 FINANCIAL STATEMENTS. The Company and AVS have delivered to
Xxxxxxxxx (i) the unaudited balance sheets of the Company at December 31, 1998
and 1999 and the related unaudited statements of income of the Company for the
fiscal years ended December 31, 1998 and 1999 (the "Annual Financial
Statements"), (ii) the unaudited balance sheet of the Company at June 30, 2000
and the related unaudited statement of income for the six months ended June 30,
2000 (the "Interim Financial Statements", and together with the Annual Financial
Statements, the "Financial Statements" (copies of which are attached to SCHEDULE
4.8 hereto)) and (iii) the Base Balance Sheet. The balance sheet of the Company
dated as of June 30, 2000 included in the Interim Financial Statements is
referred to herein as the "Current Balance Sheet." The Financial Statements
fairly present 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 (other than the omission of footnotes thereto which are
required to be included therein in accordance with GAAP).
4.9 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Since the date of the
Current Balance Sheet, the Company has operated in the Ordinary Course of
Business, there has not been a Material Adverse Change in the Company or the
Business and, except as set forth on SCHEDULE 4.9, the Company has not (i) paid
any bonus to or increased the rate of compensation of any of its officers or
salaried employees other than in the Ordinary Course of Business; (ii) sold,
leased or transferred any of its properties or assets other than (x) the sale of
inventory in the Ordinary Course of Business and (y) the sale of assets other
than inventory in an aggregate amount not exceeding Two Hundred Fifty Thousand
Dollars ($250,000); (iii) made or obligated itself to make capital expenditures
in excess of One Hundred Thousand Dollars ($100,000) in the aggregate not shown
on the Current Balance Sheet; (iv) incurred any obligations or liabilities
(including any Indebtedness) or entered into any transaction or series of
transactions outside the Ordinary Course of Business involving in excess of One
Hundred Thousand Dollars ($100,000) in the aggregate; (v) suffered any theft,
damage, destruction, casualty loss or extraordinary loss, whether or not covered
by insurance and whether or not a timely claim was filed with respect thereto,
in excess of Fifty Thousand Dollars
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($50,000) in the aggregate; (vi) waived, canceled, compromised or released any
rights having a value in excess of Fifty Thousand Dollars ($50,000) in the
aggregate other than in the Ordinary Course of Business; (vii) made or adopted
any change in its accounting practice or policies; (viii) made any adjustment to
its books or records other than in the Ordinary Course of Business; (ix) entered
into any transaction with any Affiliate other than in the Ordinary Course of
Business; (x) entered into any employment or consulting agreement; (xi) imposed
any security interest or other Lien on any of the Purchased Assets; (xii) made
or pledged any charitable contributions in excess of Ten Thousand Dollars
($10,000) in the aggregate; (xiii) entered into any other transaction or, to the
Knowledge of the Company or AVS, been subject to any event which has or may have
a Material Adverse Effect on the Company, the Business or the Purchased Assets;
or (xiv) agreed to do or authorized any of the foregoing.
4.10 LIABILITIES OF THE COMPANY. The Company does not have any
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except (a) to the extent reflected on the Current Balance Sheet and not
heretofore paid or discharged, (b) liabilities incurred in the Ordinary Course
of Business since June 30, 2000 (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, charge, governmental investigation or arbitration
proceeding), and (c) liabilities which have arisen after June 30, 2000 outside
the Ordinary Course of Business which are expressly set forth on SCHEDULE 4.10.
4.11 LITIGATION. Except as disclosed on SCHEDULE 4.11 hereto, there is
no action, suit, or other legal or administrative proceeding or governmental
investigation pending or Threatened by or against the Company or any of the
Company's properties or assets or the Business or which relates to or questions
the validity or enforceability of this Agreement and the Transaction Documents
or the transactions contemplated hereby and thereby. There are no outstanding
orders, decrees or stipulations issued by any Governmental Authority in any
proceeding to which the Company is or was a party which have not been complied
with in full by the Company or which continue to impose any material obligations
on the Company or which may have a Material Adverse Effect on the Company, the
Business or the Purchased Assets.
4.12 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 4.12:
(a) The Company (as defined in clause (g) below) is and has at
all times been in compliance 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, judgments,
injunctions, governmental
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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 pending or Threatened against or involving the Company, or its
business, operations, properties, or assets, issued by any Governmental
Authority or third party with respect to any Environmental Laws or Licenses
issued to the Company thereunder in connection with, related to or arising out
of the ownership by the Company of its properties or assets or the operations of
its business, which have not been resolved to the satisfaction of the issuing
Governmental Authority or third party in a manner that would not impose any
continuing obligation on Xxxxxxxxx or the Company.
(c) The Company has not 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 operated by the Company; or (iii) any site which, pursuant
to any Environmental Laws, (x) to the Knowledge of the Company, any location
that has been placed on the National Priorities List or its state equivalent, or
(y) the United States Environmental Protection Agency or the relevant state
agency or other Governmental Authority has notified the Company 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 operated by the Company 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 4.12 identifies the operations and activities,
and locations thereof, which have been conducted or are being conducted by the
Company (not including any Affiliates of the Company) on any real property
currently or previously owned or operated by the Company (not including any
Affiliates of the Company) which have involved the Handling or Discharge of
Hazardous Substances.
(e) Except set forth on SCHEDULE 4.12, the Company does not
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 operated by the Company that are
required to be registered under applicable Environmental Laws.
(f) SCHEDULE 4.12 identifies (i) all environmental audits,
assessments or occupational health studies undertaken by the Company or its
agents or, to the Knowledge of the Company, undertaken by any Governmental
Authority, or any third party, relating to or affecting the Company (not
including any Affiliates of the Company) or any real property currently or
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previously owned or operated by the Company (not including any Affiliates of the
Company); (ii) the results of any ground, water, soil, air or asbestos
monitoring undertaken by the Company or its agents or, to the Knowledge of the
Company, undertaken by any Governmental Authority or any third party, relating
to or affecting the Company (not including any Affiliates of the Company) or any
real property currently or previously owned or operated by the Company (not
including any Affiliates of the Company) 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 the Company and any
Governmental Authority arising under or related to Environmental Laws; and (iv)
all outstanding citations issued under OSHA (as defined in clause (g) below), or
similar state or local statutes, laws, ordinances, codes, rules, regulations,
orders, rulings, or decrees, relating to or affecting either the Company (not
including any Affiliates of the Company) or any real property currently or
previously owned or operated by the Company (not including any Affiliates of the
Company).
(g) For purposes of this Agreement (except as otherwise set
forth below), 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 (as defined in
clause (g) below), or any applicable state or local statute, law,
ordinance, code, rule, regulation, order ruling, or decree governing
Aboveground Storage Tanks.
"Company" means the Company and each of its Subsidiaries for
purposes of this SECTION 4.12.
"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 the Company 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. 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,
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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 amended, 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.
"Hazardous Substances" shall be construed broadly to include
any toxic or hazardous substance, material, or waste, and any other
contaminant, pollutant or constituent thereof, including without
limitation, chemicals, compounds, by-products, 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.
"Licenses" means all licenses, certificates, permits,
approvals and registrations.
"Subsidiary" of any Person means any corporation or other
entity in which the Person directly or indirectly owns any outstanding
voting stock or equity interests.
"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.
4.13 REAL ESTATE.
(a) All real property and all interests in real property owned
by the Company are set forth in SCHEDULE 4.13.
(b) SCHEDULE 4.13 sets forth a list of all leases, licenses or
similar agreements of or relating to real property (collectively, "Leases") to
which the Company is a party (copies of which have previously been furnished to
Xxxxxxxxx), in each case setting forth the lessor and lessee thereof and the
date and term of each of the Leases, and the street address of each property
covered thereby (the "Leased Premises"). The Leases are in full force and effect
and have not been amended. Except as set forth in SCHEDULE 4.13, (i) the Company
is not in default or breach under any Lease; (ii) the portions of the buildings
located on the Leased Premises that are used in the business of the
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Company are each in good repair and condition, normal wear and tear excepted,
and are in the aggregate sufficient to satisfy the Company's current business
activities as conducted thereat; (iii) each of the Leased Premises (a) has
direct access to public roads or access to public roads by means of a perpetual
access easement, such access being sufficient to satisfy the current
transportation requirements of the Company's 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) the Company has not received written 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 Company and AVS, no such
proceeding is contemplated by any Governmental Authority or (b) any special
assessment which to the Knowledge of the Company may affect any of the Leased
Premises for which the Company may be responsible, and no such special
assessment is, to the Knowledge of the Company and AVS, contemplated by any
Governmental Authority.
4.14 GOOD TITLE TO AND CONDITION OF ASSETS.
(a) Except as set forth on SCHEDULE 4.14(a), the Company has
good and marketable title to all of the Purchased Assets. The Company will as of
the Closing Date own the Purchased Assets free and clear of any Liens (other
than Permitted Liens), with full power to sell, transfer and assign the same to
Xxxxxxxxx free and clear of any Liens. The tangible Purchased Assets taken as a
whole are in good operating condition, normal wear and tear excepted.
(b) SCHEDULE 4.14(b) contains a list as of the date of this
Agreement of all agreements pursuant to which inventory owned by third parties
is held by the Company on a consignment basis (the "Consigned Inventory"),
setting forth for each such agreement, a description of the Consigned Inventory
and the name, address and telephone number of the owner thereof. The Company is
in possession of all Consigned Inventory. All Consigned Inventory is located at
the Company's facilities, other than that Consigned Inventory designated on
SCHEDULE 4.14(c) that is located at the repair facilities set forth on such
Schedule.
(c) SCHEDULE 4.14(d) lists the vehicles owned, leased or used
by the Company, setting forth the make, model, vehicle identification number,
and year of manufacture, and for each vehicle, whether it is owned or leased,
and if owned, the name of any lienholder and the amount of the lien, and if
leased, the name of the lessor and the general terms of the lease.
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4.15 COMPLIANCE WITH LAWS.
(a) The Company is and has been in compliance with all laws,
regulations and orders applicable to it, its properties and assets (in each
case, owned or used by it now or in the past), and its business and operations
(as conducted by it now and in the past). The Company has not been cited, fined
or otherwise notified in writing of any asserted past or present failure to
comply with any laws, regulations or orders and no proceeding with respect to
any such violation is pending or Threatened.
(b) To the Knowledge of the Company and AVS, neither the
Company nor any of its employees or agents has made any payment of funds in
connection with the business of the Company which is prohibited by law, and no
funds have been set aside to be used in connection with the business of the
Company for any payment prohibited by law.
(c) The Company is not subject to any contract or decree, or
any injunction specifically applicable to it and not generally to similarly
situated companies, which restricts the continued operation of the Company or
the expansion thereof to other geographical areas, customers and suppliers or
lines of business.
4.16 LABOR AND EMPLOYMENT MATTERS. All Persons who are employees of AVS
and its Affiliates that are employed in connection with the Business are
employees of the Company. SCHEDULE 4.16 sets forth the name, address, social
security number and current rate of compensation of each of the employees of the
Company as of the date of this Agreement. Neither AVS nor the Company is a party
to or bound by any collective bargaining agreement or any other agreement with a
labor union, and there have been no Threatened efforts by any labor union to
organize any employees of the Company 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 the Company or that may
interfere with its continued operations. AVS and the Company have complied with
applicable laws relating to employment, civil rights and equal employment
opportunities.
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4.17 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE BENEFIT PLANS. SCHEDULE 4.17 contains a true and
complete list of each employee benefit plan as defined in Section 3(2) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), employee
welfare benefits plan as defined in Section 3(1) of ERISA, and each deferred
compensation, stock option, stock purchase, bonus, medical, welfare, disability,
severance or termination pay, insurance or incentive plan, and each other
employee benefit plan, program, agreement or arrangement, (whether funded or
unfunded, written or oral, qualified or nonqualified), sponsored, maintained or
contributed to or required to be contributed to by the Company, AVS, any
Affiliate of AVS or by any trade or business, whether or not incorporated, that
together with the Company, AVS or any Affiliate of AVS would be deemed a "single
employer" within the meaning of Section 4001 of ERISA (a "Company ERISA
Affiliate")(the Company, AVS, any Affiliate of AVS and any Company ERISA
Affiliate are collectively referred to as the "AVS Group"), for the benefit of
any employee, terminated employee, leased employee or former leased employee,
director, officer, shareholder or independent contractor of the AVS Group (the
"Employee Benefit Plans"). SCHEDULE 4.17 identifies each plan that is an
"employee benefit plan," within the meaning of Section 3(3) of ERISA. The AVS
Group has no liability with respect to any plan, arrangement or practice of the
type described in this SECTION 4.17 other than the Employee Benefit Plans set
forth on SCHEDULE 4.17.
(b) COMPLIANCE WITH LAW. With respect to each Employee Benefit
Plan, (i) each has been administered in compliance with its terms and with all
applicable laws, including, but not limited to, ERISA and the Code, except to
the extent that there would be no Material Adverse Effect on the Company, the
Business or the Purchased Assets; (ii) no actions, suits, claims or disputes are
pending or Threatened, except for claims for benefits in the normal course of
the Plan; (iii) no audits, inquiries, reviews, proceedings, claims, or demands
are pending with any governmental or regulatory agency; (iv) 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 (v) no "prohibited transaction" has occurred
within the meaning of the applicable provisions of ERISA or the Code that would
subject the Company or AVS to any liability.
(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 Xxxxxxxxx, 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, except for
plan changes required by the Small Business Job Protection Act of 1996 and the
Tax Reform Act of 1997; (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 thirty (30) day notice requirement
has been waived; (v) as of the Closing Date, the present value of all
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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 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 Closing Date that are not yet, but will be,
required to be made are properly accrued and reflected on the Current Balance
Sheet.
(d) MULTIEMPLOYER PLANS. None of the Employee Benefit Plans is
a multiemployer plan, as described in Section 4001(a)(3) of ERISA.
(e) WELFARE PLANS. (i) The AVS Group is not obligated under
any employee welfare benefit plan as described in Section 3(1) of ERISA
("Welfare Plan") to provide medical or death benefits with respect to any
employee or former employee of the Company or its predecessors after termination
of employment, except as required by applicable law; (ii) the AVS Group has
complied with the notice and continuation coverage requirements of Section 4980B
of the Code and the regulations thereunder and Part 6 of Title I of ERISA
("COBRA") and has complied with the Health Insurance Portability and
Accountability Act of 1996 ("HIPAA") 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; (iii)
AVS and the Company will be responsible for the continued compliance of COBRA
and HIPAA with respect to any Employee Benefit Plan and all current, future and
former employees of the AVS Group covered thereby; and (iv) there are no
reserves, assets, surplus or prepaid premiums under any Welfare Plan which is an
Employee Benefit Plan. Except as set forth on SCHEDULE 4.17, 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 under any Employee
Benefit Plan.
(f) CONTROLLED GROUP LIABILITY. Neither the AVS Group 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
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Section 4069 or Section 4212(c) of ERISA; or (vi) has violated Code Section
4980B or Section 601 through 608 of ERISA.
(g) OTHER LIABILITIES. (i) None of the Employee Benefit Plans
obligates the Company or AVS 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" of the Company (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 Closing
Date shall have been made or properly accrued on the Current Balance Sheet or
will be properly accrued on the books and records of the Company or AVS as of
the Closing 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 the Company or AVS.
(h) Nothing expressed or implied in this Agreement shall
obligate Xxxxxxxxx to continue to employ any of the Company's employees
following the Closing or interfere with the right of Xxxxxxxxx to modify the
position or terms of employment of any employee that is employed by Xxxxxxxxx
following the Closing.
(i) There are no leased employees or independent contractors
within the meaning of Section 414(n) of the Code who perform services for AVS or
the Company.
(j) Xxxxxxxxx will not suffer any loss, cost or liability as a
result of any claim that the AVS Group or any entity that would be aggregated
with the AVS Group under Code Section 414(b), (c), (m) or (o), has not complied
with the provisions of this SECTION 4.17 with respect to each Employee Benefit
Plan maintained by any such entity.
4.18 TAX MATTERS. All Tax Returns required to be filed on or prior to
the date hereof with respect to the Company or any of its income, properties,
franchises or operations, have been timely filed where required to be filed
(including applicable extension periods), each such Tax Return has been prepared
in compliance with all applicable laws and regulations, and all such Tax Returns
are true and accurate. All Taxes due and payable by or with respect to the
Company have been fully and timely paid or are accrued on the Current Balance
Sheet and adequate reserves or accruals for Taxes have been provided in its
books and records with respect to any period for which Tax Returns have not yet
been filed or for which Taxes are not yet due and payable. Except as set forth
on SCHEDULE 4.18: (i) 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 the Company; (ii) the Company has not
consented to extend the time in which any Taxes may be assessed or collected by
any taxing authority; (iii) the Company has not requested or been granted an
extension of the time for filing any Tax Return to a date later than the Closing
Date; (iv) there is no action, suit, taxing authority proceeding, or audit or
claim for refund now in progress, pending or Threatened against or with respect
to the Company regarding Taxes; (v) there are no Liens for Taxes (other than for
current Taxes not yet due and payable) upon the assets of the Company; (vi) the
Company is not
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a party to or bound by any tax allocation or tax sharing agreement and does not
have any current or potential contractual obligation to indemnify any other
Person with respect to Taxes; (vii) there are no Taxes due or owing or which may
become due or owing by the Company for or on account of any period for which Tax
Returns have been filed, except as reflected on the Current Balance Sheet;
(viii) no claim has ever been made by a taxing authority in a jurisdiction where
the Company does not file Tax Returns that it is or may be subject to Taxes
assessed by such jurisdiction; and (ix) the Company has withheld and paid to the
appropriate Governmental Authorities all Taxes required to be withheld and paid
in connection with payments made to other parties on a timely basis and in
accordance with all applicable laws.
4.19 INSURANCE. The Company is covered by valid, outstanding and
enforceable policies of insurance 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 and in
coverage amounts typically and reasonably carried by such corporations (the
"Insurance Policies"). Such Insurance Policies are in full force and effect, and
all premiums due thereon have been paid. Through the Closing Date, 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. The Company has complied with the provisions of such Insurance
Policies, except where such failure does not have a Material Adverse Effect on
the Company, the Business or the Purchased Assets. SCHEDULE 4.19 contains (i) a
complete and correct list of all Insurance Policies and all amendments and
riders thereto (copies of which have been provided to Xxxxxxxxx) and (ii) a
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 any Company. The Company has not failed to give, in a
timely manner, any notice required under any of the Insurance Policies to
preserve its rights thereunder.
4.20 RECEIVABLES. All of the Purchased Receivables are valid and
legally binding, represent bona fide transactions and arose in the Ordinary
Course of Business of the Company.
4.21 LICENSES, PERMITS AND APPROVALS. The Company possesses all
licenses and required governmental or official approvals, permits or
authorizations (collectively, the "Permits") for its businesses and operations
except to the extent that it would not have a Material Adverse Effect on the
Company, the Business or the Purchased Assets, and SCHEDULE 4.21 contains a true
and complete list of all such Permits. All such Permits are valid and in full
force and effect, and the Company is in full compliance with the respective
requirements thereof, and no proceeding is pending or Threatened to revoke or
amend any of them. Except as set forth on SCHEDULE 4.21, none of such Permits is
or will be impaired or in any way affected by the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
4.22 ASSUMED CONTRACTS; AFFILIATED TRANSACTIONS. No Person who is a
party to an Assumed Contract has Threatened to terminate, amend or modify any
such Assumed Contract. SCHEDULE 4.22 sets forth a list of all Affiliated
Transactions (other than in the Ordinary Course of Business) which have taken
place or on account of which payment has been made since June 30,
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1999, in each case setting forth the parties thereto, the date thereof and the
principal terms of such transaction (including, without limitation, any amounts
paid or payable on account thereof).
4.23 INTELLECTUAL PROPERTY. SCHEDULE 4.23 contains a list of all
Intellectual Property (including licenses for the use of computer software
programs) used by the Company in the conduct of its business. Except as set
forth on SCHEDULE 4.23, the Company has the exclusive unencumbered right, title
and interest in and to all Intellectual Property. The conduct of the business of
the Company as presently conducted, and the current use and exploitation of the
Company's Intellectual Property, does not infringe or misappropriate any rights
held or asserted by any Person, and to the Knowledge of the Company and AVS, no
Person is infringing on the Intellectual Property. Except for payments made in
the Ordinary Course of Business or as set forth on SCHEDULE 4.23, no payments
are required for the continued use of the Company's current Intellectual
Property. None of the Company's current Intellectual Property is the subject of
any pending or Threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like claim,
action or proceeding.
4.24 CONTRACTS. SCHEDULE 4.24 sets forth a list of each Contract
(including any amendments and modifications thereto) to which the Company is a
party or by which the Purchased Assets are bound and which is material to the
Company, the Business or the Purchased Assets (the "Material Contracts"). True,
correct and complete copies of each written Material Contract have been made
available to Xxxxxxxxx. Each Material Contract constitutes a legal, valid and
binding obligation of the parties thereto, and (i) the Company is not in
violation of any of the terms or conditions of any Material Contract, (ii) to
the Knowledge of the Company and AVS, all of the covenants to be performed by
any other party thereto have been performed, and (iii) to the Knowledge of the
Company and AVS, there are no claims for breach or indemnification or notice of
default or termination under any Material Contract. To the Knowledge of the
Company and AVS, no event has occurred which constitutes, or after notice or the
passage of time, or both, would constitute, a breach or a default by the Company
under any Material Contract, and to the Knowledge of the Company and AVS, no
such event has occurred which constitutes or would constitute a default by any
other party. Except as set forth on SCHEDULE 4.24, no Material Contract requires
consent to the assignment to and assumption by Xxxxxxxxx and any such assignment
and assumption will not result in any penalty, premium or variation of the
rights, remedies, benefits or obligations of any party thereunder. SCHEDULE 4.24
accurately identifies all parties to the Material Contracts, and where
applicable, specifies the relationship of each such party to the Company, AVS
and their Affiliates. As used in this SECTION 4.24, Material 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(s), or letters of intent or commitment letters
with respect to same; (b) contracts obligating the Company to provide or
purchase products or services calling for payment to or by the Company exceeding
Ten Thousand Dollars ($10,000) or not cancelable without cost or penalty on
notice of thirty (30) days or less; (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
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exceeding Ten Thousand Dollars ($10,000); (d) distribution, consignment, sales
agency or franchise or similar agreements, or agreements providing for an
independent contractor's services, or letters of intent with respect to same
calling for payment to or by the Company exceeding Five Thousand Dollars
($5,000) or not cancelable without cost or penalty on notice of thirty (30) days
or less; (e) employment agreements, management service agreements, consulting
agreements, confidentiality agreements, non-competition agreements and any other
agreements relating to any employee, officer or director of the Company; (f) any
Contract relating to pending capital expenditures by the Company; (g) any
non-competition agreements restricting the Company in any manner; and (h) other
Contracts or understandings, irrespective of subject matter not otherwise
disclosed on the Schedules, calling for payments by the Company exceeding Fifty
Thousand Dollars ($50,000) or not cancelable without cost or penalty on notice
of thirty (30) days or less.
4.25 ACCURACY OF INFORMATION FURNISHED BY THE COMPANY OR AVS. No
written representation made or written information included in this Agreement,
including without limitation, those contained in the various Schedules and
Exhibits attached hereto, contains any untrue statement of a material fact or
omits any material fact necessary to make the information contained herein and
therein not misleading. Neither the Company nor AVS has omitted to disclose any
material fact or information about the Company or the Business that has or could
have a Material Adverse Effect on the Business. Each of the representations and
warranties of the Company and AVS contained in the Inventory Purchase Agreement
are true, correct and complete and are incorporated in their entirety herein by
reference. The Company and AVS acknowledge that such representations and
warranties which are incorporated herein by reference are a material inducement
to Xxxxxxxxx entering into this Agreement.
4.26 PRODUCT WARRANTIES AND REBATES. Except as set forth on SCHEDULE
4.26, no product sold, leased or delivered by the Company is subject to any
guaranty, warranty or other indemnity beyond the guaranty, warranty or other
indemnity provided by the manufacturer or repair vendor thereof. SCHEDULE 4.26
contains a true and complete list and description of any and all customer
rebates, discounts or reimbursement programs or special terms or conditions
(including, without limitation, products supplied to customers on a
demonstration basis) which have been or will be offered by the Company in
connection with the Business at any time prior to the Closing and pursuant to
which any obligations and liabilities of the Company, of any nature whatsoever
and whether matured or unmatured, remain outstanding.
4.27 NO COMMISSIONS. None of AVS, the Company or any other Affiliate of
AVS 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, other than fees which will be paid by, and are the sole
obligation of, AVS, the Company or any other Affiliate of AVS.
NOTWITHSTANDING ANYTHING CONTAINED IN THIS ARTICLE OR ANY OTHER
PROVISION HEREOF, IT IS THE EXPLICIT INTENT OF EACH PARTY HERETO THAT THE
COMPANY AND AVS ARE NOT MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED,
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BEYOND THOSE EXPRESSLY GIVEN IN THIS ARTICLE IV OR IN ANY TRANSACTION DOCUMENTS,
INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OR REPRESENTATION AS TO
CONDITION, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS
TO ANY OF THE PURCHASED ASSETS AND, EXCEPT AS EXPRESSLY SET FORTH HEREIN AND IN
THE TRANSACTION DOCUMENTS, IT IS UNDERSTOOD THAT XXXXXXXXX IS PURCHASING ALL OF
THE PURCHASED ASSETS ON AN "AS-IS" AND "WHERE-IS" BASIS. It is understood that
any cost estimates, projections or other predictions contained or referred to in
the schedules attached hereto and any cost estimates, projections or predictions
or any other information contained or referred to in other materials that have
been or shall hereafter be provided to Xxxxxxxxx or any of its Affiliates,
agents or representatives are not and shall not be deemed to be representations
or warranties of AVS or the Company.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE CLOSING
5.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING. AVS and the
Company covenant and agree that, between the date of this Agreement and the
Closing Date, the business of the Company shall be conducted only in, and the
Company shall not take any action except in, the Ordinary Course of Business.
The Company and AVS shall during such period use commercially reasonable efforts
to preserve intact the Company's business organization, to keep available the
services of its current officers, employees and consultants, and to preserve its
present relationships with customers, suppliers and other Persons with which it
has significant business relations. By way of amplification and not limitation,
the Company shall not (and AVS shall not permit the Company to), between the
date of this Agreement and the Closing Date, except as set forth in SCHEDULE
5.1(a), directly or indirectly, do or propose or agree to do any of the
following without the prior written consent of Xxxxxxxxx:
(a) amend or otherwise change its Certificate of Incorporation
or Bylaws or equivalent organizational documents;
(b) sell, pledge, dispose of, encumber, exchange or lease, or
authorize the sale, pledge, disposition, exchange or lease of, or grant of an
encumbrance on, any of its assets (including, without limitation, the Purchased
Assets), tangible or intangible, except sales of inventory in the Ordinary
Course of Business;
(c) 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 make any investment either by purchase of stock or
securities, contributions of capital or property transfer, or purchase any
property or assets of any other Person;
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(d) incur any indebtedness other than trade payables and
accrued expenses in the Ordinary Course of Business or issue any debt securities
or assume, guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any Person, or make any loans or advances
other than advances to employees not exceeding Twenty Thousand Dollars ($20,000)
in the aggregate;
(e) to the extent not prohibited by any other provision of
this SECTION 5.1, enter into any Contract other than in the Ordinary Course of
Business providing for a term of not more than six months and payments not
exceeding Fifty Thousand Dollars ($50,000) in the aggregate over the term of
such Contract;
(f) make capital expenditures exceeding One Hundred Thousand
Dollars ($100,000) in excess of those reflected on the Base Balance Sheet;
(g) purchase any inventory having a purchase price in excess
of Twenty Thousand Dollars ($20,000) per item and One Hundred Thousand Dollars
($100,000) in the aggregate, other than for purchases of inventory for sale to
an Identified Customer;
(h) engage in any Affiliated Transactions in excess of Five
Thousand Dollars ($5,000) per transaction and Ten Thousand Dollars ($10,000) in
the aggregate, other than purchases of inventory for sale to an Identified
Customer, transactions that will not result in any change in or affect the
Purchased Assets and/or Assumed Liabilities and transfers of cash among AVS and
any of its Affiliates;
(i) enter into any Contract providing for the lease or
exchange of any assets, including, without limitation, any inventory, other than
in the Ordinary Course of Business;
(j) increase the compensation payable or to become payable to
its officers or employees except in the Ordinary Course of Business;
(k) 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;
(l) 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, 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;
(m) in any way modify or amend any accounting policies or
procedures used in the preparation of the Base Balance Sheet;
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(n) pay, discharge or satisfy any existing claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the Ordinary
Course of Business 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;
(o) materially increase or decrease prices charged to its
customers, or take any other action which might reasonably be expected to result
in any material increase in the loss of customers through non-renewal or
termination of contracts or other causes; or
(p) agree, in writing or otherwise, to take or authorize any
of the foregoing actions.
In the event that the Company shall desire to take any action covered by
subparagraph (g) above, the Company shall request the consent of Xxxxxxxxx on
any Business Day by speaking with Zivi Nedivi, Xxxx Xxx Xxxxx and Xxxxx Xxxxxx
(or any one of them that the Company can reach) in person or by telephone at the
telephone numbers set forth in SCHEDULE 5.1(b) and simultaneously confirming
such request by e-mail to each such person at the e-mail addresses set forth on
SCHEDULE 5.1(b). In the event that none of the foregoing representatives of
Xxxxxxxxx respond to a request made pursuant to such procedures by 11:59 p.m. of
the next Business Day, Xxxxxxxxx shall be deemed to have granted its consent to
such request. In the event that Xxxxxxxxx shall respond to any such request
(either approving or disapproving of a proposed transaction), it shall confirm
its response by return e-mail to the sender of the e-mail request and if such
response shall be a disapproval, it shall include a reason therefor.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the Transaction Documents and the
transactions contemplated hereby and thereby.
6.2 COMPLIANCE WITH COVENANTS. At the Closing, the Company and AVS
covenant and agree to deliver to Xxxxxxxxx the certificates, opinions and other
documents required to be delivered to Xxxxxxxxx pursuant to ARTICLE VII, and
Xxxxxxxxx covenants and agrees to deliver to the Company the certificates and
other documents required to be delivered to the Company pursuant to ARTICLE
VIII.
6.3 COOPERATION. Each of the parties agrees to use its best efforts to
cooperate with the others in the preparation and filing of all forms,
notifications, reports and information, if any,
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required or deemed advisable pursuant to any law, rule or regulation (including,
without limitation, any rules or regulations of any securities exchange upon
which the securities of Xxxxxxxxx or AVS may be listed or traded) in connection
with the transactions contemplated by this Agreement and the Transaction
Documents, and to use its best efforts to agree jointly on a method to overcome
any objections by any Governmental Authority to any such transactions. AVS and
the Company shall, and shall cause the AVS Accountants to cooperate with the
Xxxxxxxxx Accountants from time to time in connection with any audit of the
assets, properties and business of Xxxxxxxxx and/or the Business, including,
without limitation, the execution and delivery by AVS and the Company of
customary audit representation letters.
6.4 HSR ACT AND OTHER ACTIONS. Each of the parties hereto shall (i)
make promptly (and in no event later than five (5) Business Days following the
execution of this Agreement) its respective filings, if any, and thereafter make
any other required submissions, under the HSR Act, with respect to the
transactions contemplated hereby, and shall seek early termination of the
applicable waiting period under the HSR Act, (ii) take all appropriate
reasonable actions, and do, or cause to be done, all things necessary, proper or
advisable under any applicable laws, rules and regulations and Contracts to
consummate and make effective the transactions contemplated herein, including,
without limitation, obtaining all licenses, permits, consents, approvals,
authorizations, qualifications and orders of any Governmental Authority and
parties to Contracts with the Company as are necessary for it to consummate the
transactions contemplated hereby, (iii) make on a prompt and timely basis all
governmental or regulatory notifications and filings required to be made by it
to consummate and make effective the transactions contemplated hereby, (iv)
defend all lawsuits or other legal proceedings brought against it which
challenge this Agreement or the consummation of the transactions contemplated
hereby, and (v) take all actions necessary or advisable to lift or rescind any
injunction or restraining order or other order adversely affecting its ability
to consummate the transactions contemplated hereby. The filing fees associated
with the required filings under the HSR Act shall be split between AVS and the
Company, on the one hand, and Xxxxxxxxx on the other hand.
6.5 CONFIDENTIALITY; PUBLICITY. No party hereto or their respective
Affiliates, employees, agents or representatives shall disclose to any third
party the existence of this Agreement or the subject matter or terms hereof and
no party hereto shall issue any press release or other public announcement
related to this Agreement or the transactions contemplated hereby, in each such
case, except (a) with the prior approval of the other parties, (b) if such party
believes in good faith such disclosure to be required by law or by the terms of
any listing agreement with or requirements of a securities exchange upon which
its securities may be listed or traded or (c) if such disclosure relates to any
legal proceeding involving Xxxxxxxxx, KAV, the Company or AVS; PROVIDED,
HOWEVER, that each party shall use commercially reasonable efforts to coordinate
with the other parties in making any public disclosure pursuant to clause (b) of
this sentence.
6.6 ACCESS TO INFORMATION. From the date hereof to the Closing Date,
the Company and AVS shall (and shall cause their directors, officers, employees,
auditors, counsel and agents to) afford Xxxxxxxxx and Xxxxxxxxx'x officers,
employees, auditors, counsel and agents access during normal business hours to
their properties, offices and other facilities, to their officers and employees
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and to all books and records, and shall furnish such persons with all financial,
operating and other data and information as may be reasonably requested;
PROVIDED, HOWEVER, that any such access shall be arranged, so as not to
interfere unnecessarily with the operation of the Business.
6.7 NOTIFICATION OF CERTAIN MATTERS. The Company and AVS shall give
prompt written notice to Xxxxxxxxx of any information, fact or circumstance
which could cause any representation or warranty contained herein made by the
Company or AVS to be untrue or inaccurate, or any covenant, condition or
agreement contained herein applicable to the Company or AVS not to be complied
with or satisfied. Xxxxxxxxx shall give prompt written notice to AVS and the
Company of any information, fact or circumstance which could cause any
representation or warranty contained herein made by Xxxxxxxxx to be untrue or
inaccurate, or any covenant, condition or agreement contained herein applicable
to Xxxxxxxxx not to be complied with or satisfied.
6.8 ADDITIONAL COVENANTS. In order to assure that Xxxxxxxxx will
realize the benefits of the transactions contemplated hereby, each of AVS and
the Company, jointly and severally, agree that it will not, and will cause each
of its Subsidiaries not to:
(a) until the earlier of (i) the fifth anniversary of the
Closing Date, or (ii) the later of (a) the date that neither AVS nor any of its
Subsidiaries own beneficially or of record any interest in KAV, or (b) the third
anniversary of the Closing Date (the "Restriction Period"), without the prior
written consent of Xxxxxxxxx (which consent will not be unreasonably withheld or
delayed), directly or indirectly employ, or knowingly permit any company or
business, directly or indirectly, controlled by them to employ, any person who
was employed by Xxxxxxxxx or any of its Affiliates, successors or assigns
(collectively, the "Xxxxxxxxx Companies") at or within the then prior six months
or in any manner seek to induce any such person to leave his or her employment;
or
(b) at any time following the Closing Date, directly or
indirectly, in any way utilize, disclose, copy, reproduce or retain any
confidential or proprietary information or records of the Xxxxxxxxx Companies in
their possession or any Confidential Information, other than as permitted by the
terms of the Transaction Documents.
The Company and AVS agree and acknowledge that the restrictions contained in
this SECTION 6.8 are reasonable in scope, duration and area, and are necessary
to protect the Xxxxxxxxx Companies after the Closing Date. The parties agree and
acknowledge that the breach of this SECTION 6.8 will cause irreparable damage to
the Xxxxxxxxx Companies for which monetary damages will not be adequate, and
upon breach (or threatened breach) of any provision of this SECTION 6.8, the
Xxxxxxxxx Companies shall be entitled to injunctive relief, specific performance
or other equitable relief without the need to post a bond or other security or
prove special damages; PROVIDED, HOWEVER, that this shall in no way limit any
other remedies which the Xxxxxxxxx Companies may have (including, without
limitation, the right to seek monetary damages). If any provision of this
SECTION 6.8, 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 the remainder of this
Agreement. If any such provision, or any part thereof, is held to be
unenforceable
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because of the duration of such provision, the scope of activity or the area
covered thereby, the parties agree that the court making such determination
shall have the power to reduce the duration, scope 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. AVS and the
Company hereby agree that Xxxxxxxxx may assign, without limitation, the
foregoing restrictive covenants to any successor to or Affiliate of Xxxxxxxxx.
6.9 NO OTHER DISCUSSIONS. From the date hereof until the Closing Date,
neither the Company or AVS nor any of their respective Affiliates, employees,
agents representatives shall (a) solicit, encourage, consider or accept any
offer from any Person to acquire all or any portion of the assets (other than in
the case of inventory, in the Ordinary Course of Business) of or any interest in
the Company, (b) participate in any negotiations or discussions with any other
Person concerning the sale of all or any portion of the assets (other than in
the case of inventory, in the Ordinary Course of Business) of or any interest in
the Company, (c) provide any non-public information about the Company (other
than to the Company's lenders or advisors or Xxxxxxxxx and its agents and
consultants as provided herein), (d) enter into any agreement or commitment
(whether or not binding) with respect to any of the foregoing, or (e) otherwise
cooperate in any way with, or assist, facilitate or encourage any effort by any
other person seeking to acquire all or any portion of the assets (other than in
the case of inventory, in the Ordinary Course of Business) of or any interest in
the Company. The Company and AVS shall immediately notify Xxxxxxxxx in writing
of any such inquiry or proposal which any of the Company or AVS may receive with
respect to the foregoing transactions, including the terms and identity of the
inquirer or offeror.
6.10 EMPLOYMENT MATTERS.
(a) OFFERS OF EMPLOYMENT. At Closing, the Company shall terminate the
employment of all employees set forth on SCHEDULE 6.10 ("Schedule 6.10
Employees"), which constitute all of the employees of the Company employed in
the Business (except for those employees being retained pursuant to the
Transition Services Agreement). Xxxxxxxxx shall offer employment, commencing on
the Closing Date, to all Schedule 6.10 Employees on such terms and conditions as
may be determined by Xxxxxxxxx. At Closing, AVS shall release all Schedule 6.10
Employees that accept employment with Xxxxxxxxx from any and all agreements or
arrangements which may restrict such Persons from accepting the offer of
employment with Xxxxxxxxx or from working for Xxxxxxxxx. Xxxxxxxxx shall be
responsible for (a) complying with the provisions of the Worker Adjustment and
Retraining Notification Act ("Warn Act") with respect to the termination of the
employment of all Schedule 6.10 Employees, including without limitation, the
payment of any amounts required to be paid to such employees thereunder, and (b)
shall bear the cost and expense of the termination of the employment of any
Schedule 6.10 Employees who accept employment with Xxxxxxxxx whose employment is
thereafter terminated by Xxxxxxxxx. All employees hired by Xxxxxxxxx hereunder
shall be eligible to participate in the health plans of Xxxxxxxxx effective on
the Closing Date. All of such employees' periods of service with the Company
shall be counted in determining their entitlement to benefits with Xxxxxxxxx
other than for purposes of vesting in company contributions under Xxxxxxxxx'x
401(k) plan.
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(b) SPIN OFF AND TERMINATION OF THE NEW 401(K) PLAN. Prior to the
Closing Date, AVS intends to create a new 401(k) plan (the "New 401(k) Plan")
and transfer all accounts held in the existing AVS 401(k) plan on behalf of all
Schedule 6.10 Employees to the New 401(k) Plan. Thereafter, all Schedule 6.10
Employees will become ineligible to participate in the AVS 401(k) plan. Prior to
the Closing Date, AVS intends to terminate the New 401(k) Plan and fully vest
all Schedule 6.10 Employees. As soon as possible after the termination of the
New 401(k) Plan, AVS will file an application with the IRS that requests
issuance of a favorable determination letter that the termination of the New
401(k) Plan does not adversely affect the tax-qualified status of the New 401(k)
Plan (the "IRS Determination"). Upon receipt of such a favorable determination
letter, AVS will cause the New 401(k) Plan to distribute all plan assets to the
Plan participants, and Xxxxxxxxx, to the extent it maintains a defined
contribution retirement plan (the "Xxxxxxxxx Plan") that accepts rollovers, will
allow any such participant that it employs at that time, provided he or she is
an eligible participant in the Xxxxxxxxx Plan, to rollover or to direct the
trustee of the New 401(k) Plan to rollover their distributions from the New
401(k) Plan to the Xxxxxxxxx Plan. Nothing in this SECTION 6.10, however, shall
entitle AVS to consolidate the New 401(k) Plan with, or to initiate a trustee to
trustee transfer of plan assets to, the Xxxxxxxxx Plan other than as directed by
a plan participant to complete a participant directed rollover as provided
above.
(c) ROLLOVER OF PROMISSORY NOTES FROM AVS 401(K) PLAN. Upon the
consummation of the transactions contemplated by this Agreement, AVS shall
permit Schedule 6.10 Employees to elect distributions of their account balances,
including promissory notes for any outstanding loans, from the New 401(k) Plan
and to rollover or direct rollover by the plan trustee of such account balances
to the Xxxxxxxxx plan, to the extent the Xxxxxxxxx Plan accepts rollovers and
that the IRS Determination has been received, without treating the distribution
of the promissory notes as a taxable event to the extent allowed by law. To the
extent necessary, AVS shall amend the New 401(k) Plan or its loan policy, as
appropriate, to permit the rollover of promissory notes pursuant to this SECTION
6.10(C).
6.11 DELIVERY OF PROPERTY RECEIVED BY THE COMPANY AFTER CLOSING. From
and after the Closing, Xxxxxxxxx shall have the right and authority to collect,
for the account of Xxxxxxxxx, all Receivables and other items which shall be
transferred or are intended to be transferred to Xxxxxxxxx as part of the
Purchased Assets as provided in this Agreement, and to endorse with the name of
the Company any checks or drafts received on account of any such Receivables or
other items of the Purchased Assets. Each of the Company and AVS agree that they
will transfer or deliver to Xxxxxxxxx, promptly after the receipt thereof, any
cash or other property which the Company or AVS receives after the Closing Date
in respect of any Purchased Assets, including, without limitation, any claims,
contracts, licenses, leases, commitments, sales orders, purchase orders,
receivables of any character or any other items transferred or intended to be
transferred to Xxxxxxxxx as part of the Purchased Assets under this Agreement.
The Company shall at Closing transfer to Xxxxxxxxx all of its rights and
interests in and to the Consigned Inventory, and shall deliver to Xxxxxxxxx
possession of all Consigned Inventory other than the Consigned Inventory set
forth on SCHEDULE 4.14 (C).
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6.12 XXXXXXXXX APPOINTED ATTORNEY FOR THE COMPANY. Effective at the
Closing Date, the Company hereby constitutes and appoints Xxxxxxxxx and its
successors and assigns, its true and lawful attorney, in the name of the Company
but for the benefit and at the expense of Xxxxxxxxx (a) to endorse checks or
other negotiable instruments representing the payment of any Purchased
Receivables; and (b) to take any and all actions which Xxxxxxxxx may xxxx
necessary in order to provide for Xxxxxxxxx the benefits of any of the Purchased
Assets if (i) the Company shall be party to any merger transaction in which it
is not the surviving corporation; (ii) the Company shall be liquidated or
dissolved; (iii) any court of competent jurisdiction shall enter an order,
judgment or decree appointing a custodian, receiver, trustee, liquidator or
conservator of the Company or the whole or any substantial part of the
properties of the Company or approve a petition filed against the Company
seeking liquidation, reorganization or arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the United
States or any state, or if there is commenced against the Company any proceeding
or petition seeking reorganization, arrangement or similar relief under the
federal bankruptcy laws or any other applicable law or statute of the United
States or any state, or (iv) it shall be required to comply with any Legal
Requirement; PROVIDED, HOWEVER, Xxxxxxxxx shall not exercise any such
power-of-attorney under subsection (b) unless it shall have first requested that
the Company or any successor thereto take such actions and five (5) Business
Days shall have passed without such actions having been taken. The Company
acknowledges that the foregoing powers are coupled with an interest and shall be
irrevocable. Xxxxxxxxx shall be entitled to retain for its own account any
amounts collected pursuant to the foregoing powers, including any amounts
payable as interest and penalties in respect thereof.
6.13 EXECUTION OF FURTHER DOCUMENTS. The Company and AVS shall from and
after the Closing execute, acknowledge and deliver all such further deeds, bills
of sale, assignments, transfers, conveyances, powers of attorney and assurances
as may be requested by Xxxxxxxxx to convey and transfer to and vest in Xxxxxxxxx
and protect its right, title and interest in all of the Purchased Assets and to
carry out the transactions contemplated by this Agreement and the other
Transaction Documents.
6.14 POST CLOSING RETENTION OF RECORDS. For a period of not less than
six (6) years after the Closing Date, Xxxxxxxxx shall preserve and retain all
corporate, accounting, legal, audit and other books and records pertaining to
the Purchased Assets; PROVIDED, HOWEVER, such six (6) year period shall be
extended in the event that any proceeding has been commenced or is pending or
Threatened at the expiration of such six (6) year period and such extension
shall continue until any such proceeding has been settled or resolved with
finality or is no longer pending or Threatened. Notwithstanding the foregoing,
Xxxxxxxxx may at any time after three (3) years from the Closing Date discard or
destroy any of such books and records prior to the end of such six (6) year
period or period of extension if it has given AVS and the Company at least sixty
(60) days prior written notice of Xxxxxxxxx'x intent to discard or destroy such
books and records and has given AVS and the Company the opportunity to take
possession of any or all of such books and records within said sixty (60) day
period. Xxxxxxxxx shall afford each of AVS and their representatives reasonable
access during normal business hours to, and the right to make copies of, all
such books and records, for any legitimate purpose (including, without
limitation, in connection with the preparation, documentation
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and/or handling of any financial statements, tax returns, tax audits, reports to
governmental or regulatory agencies, litigation, disputes, claims or
controversies); PROVIDED, HOWEVER, that any such access shall be arranged so as
not to interfere unreasonably with the business and operations of Xxxxxxxxx and
its Affiliates.
6.15 PAYOFF AND ESTOPPEL LETTERS. Prior to Closing, the Company shall
request payoff and estoppel letters with respect to any Indebtedness included in
the Assumed Liabilities, in each case, setting forth the payoff amount, per
diem, wire transfer instructions and an agreement to deliver to Xxxxxxxxx upon
full payment, UCC-3 termination statements, satisfactions of mortgage or other
appropriate releases and any original promissory notes or other evidences of
indebtedness marked canceled.
6.16 EXECUTION OF TRANSACTION DOCUMENTS. Prior to or at Closing,
Xxxxxxxxx, the Company and AVS shall enter into each of the Transaction
Documents to which it is a party.
6.17 REAL PROPERTY PURCHASES/LEASES.
(a) PEARLAND FACILITY. The Company shall at Closing sell, and Xxxxxxxxx
shall at Closing purchase, the Pearland Facility pursuant to the Pearland Real
Estate Purchase Agreement.
(b) VAN NUYS FACILITY. Subject to SECTION 2.3, the Company shall at
Closing assign to Xxxxxxxxx, and Xxxxxxxxx shall at Closing assume, the lease of
the Company's Van Nuys Facility pursuant to the Van Nuys Lease Assignment
Agreement. The Company shall use best efforts to obtain the consent of
Massachusetts Mutual Life Insurance Company to such assignment and to cause it
to enter into a landlord's waiver in form acceptable to Bank of America, N.A.,
pursuant to the Xxxxxxxxx Credit Facility.
(c) MIRAMAR FACILITY. The Company shall cause the owner trustee of the
trust owning the Miramar Facility to sell such facility pursuant to the Miramar
Sale - Leaseback Transaction and, if it cannot do so by the Closing Date, it
shall enter into the Miramar Sublease Agreement. Xxxxxxxxx shall either (a)
sublease the Miramar Facility from AVS pursuant to the Miramar Sublease
Agreement, or (b) lease the Miramar Facility pursuant to the Miramar Sale -
Leaseback Transaction. The Company shall use its best efforts to cause the
landlord of the Miramar Facility to enter into a landlord's waiver in form
acceptable to Bank of America, N.A., pursuant to the Xxxxxxxxx Credit Facility.
6.18 ACCOUNTS RECEIVABLE.
(a) Xxxxxxxxx shall, following the Closing Date, use efforts consistent
with the efforts generally used by it to collect its own receivables to collect
Purchased Receivables. The Company shall designate one representative (the
"Company Collection Representative") in writing to Xxxxxxxxx with whom Xxxxxxxxx
shall coordinate the collection of Purchased Receivables during the first year
following the Closing Date. The Company Collection Representative shall not be
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entitled to, and shall not, contact any account debtors with respect to the
collection of any Purchased Receivables; PROVIDED, HOWEVER, the Company
Collection Representative shall have the right upon request to participate with
Xxxxxxxxx in conference calls and/or meetings with account debtors to discuss
the collection of Purchased Receivables. Xxxxxxxxx shall make available to the
Company Collection Representative upon request such information relating to the
Purchased Receivables as the Company Collection Representative may reasonably
request. The Company Collection Representative shall have the authority to act
on behalf of the Company in approving any actions to be taken that are not
consistent with the actions customarily taken by Xxxxxxxxx in connection with
the collection of its own receivables, in settling any disputes with respect to
the Purchased Receivables and in approving any discounts or offsets to the
Purchased Receivables. If Xxxxxxxxx shall at any time propose to accept any
goods in settlement of any Purchased Receivables, it shall obtain the consent of
the Company Collection Representative (which shall not be unreasonably withheld
or delayed), and the value of such goods shall be as mutually agreed upon by the
parties. The Company shall have the right at its sole cost and expense twice
during the first year following the Closing Date upon prior written notice to
Xxxxxxxxx to audit and inspect the books and records of Xxxxxxxxx relating to
the Purchased Receivables during normal business hours.
(b) Any payments received by Xxxxxxxxx from a customer following the
Closing Date on account of Purchased Receivables shall be applied first to the
payment of unpaid invoices referenced by the customer on or in connection with
the payment of such invoices or if no such reference is made by the customer on
or in connection with the payment of such invoices, then to the payment of
invoices issued to such customer in the order in which such invoices were
issued; PROVIDED, HOWEVER, that, if Xxxxxxxxx shall have received notice from a
customer disputing all or any portion of an unpaid invoice, then any payment
received from such customer shall not be applied to the disputed portion of such
invoice, but shall be applied to the balance of such invoice, and then to the
next invoice issued to such customer (in each case, until the dispute with such
customer shall be resolved). Xxxxxxxxx shall not encourage any of its customers
to give priority to the payment of receivables owed to Xxxxxxxxx over the
payment of the Purchased Receivables.
(c) At any time following the Closing Date, upon the written request of
the Company, Xxxxxxxxx shall sell to the Company and/or AVS any Purchased
Receivables which remain unpaid or unsatisfied. Upon the written request of
Xxxxxxxxx delivered at any time within thirty (30) days following the first
anniversary of the Closing Date, the Company and/or AVS shall purchase from
Xxxxxxxxx any Purchased Receivables which remain unpaid or unsatisfied as of the
one year anniversary of the Closing Date. The purchase price of any Purchased
Receivables purchased by the Company and/or AVS hereunder shall be equal to the
face amount thereof (the "Receivables Purchase Amount"), and upon any such
purchase, the Company may retain the proceeds of such Purchased Receivables as
and when collected (and to the extent thereafter collected by or paid to
Xxxxxxxxx, Xxxxxxxxx shall promptly remit the same to the Company). If AVS
and/or the Company elects to purchase the Purchased Receivables pursuant to the
first sentence of this SECTION 6.18(c), AVS shall deliver to Xxxxxxxxx a
certificate signed by its Chief Financial Officer setting forth the Purchased
Receivables which it desires to purchase, and Xxxxxxxxx shall transfer such
Purchased Receivables to AVS and/or the Company and AVS and/or the Company shall
pay
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for the Purchased Receivables in cash by wire transfer of immediately available
funds as follows: (i) for purchases of Purchased Receivables that are "Eligible
Receivables" (as such term is defined in the Xxxxxxxxx Credit Facility), on the
date such transfer is made to AVS and/or the Company and (ii) for purchases of
Purchased Receivables that are not Eligible Receivables, on the earlier to occur
of the one hundred eightieth (180th) day after the date of such sale or the
first anniversary of the Closing Date. If Xxxxxxxxx elects to sell Purchased
Receivables to the Company and/or AVS pursuant to the second sentence of this
SECTION 6.18(c), Xxxxxxxxx shall deliver to the Company and/or AVS a certificate
signed by its Chief Financial Officer setting forth the aggregate of such
Purchased Receivables which remain unpaid or unsatisfied as of such date,
together with all related and supporting documentation, and the Company and/or
AVS shall purchase such Purchased Receivables from Xxxxxxxxx within thirty (30)
days following receipt thereof as follows: (a) AVS shall provide to Xxxxxxxxx a
credit toward the purchase of services from AVS and its Affiliates equal to the
lesser of (x) the Receivables Credit Amount or (y) fifty percent (50%) of the
Receivables Purchase Amount and (b) the balance in cash by wire transfer of
immediately available funds. The purchase price and terms for services to which
the credit shall be applied from time to time shall be no less favorable than
those offered to unaffiliated third parties with similar purchase volume. If the
Company or AVS shall fail to provide Xxxxxxxxx with the appropriate Receivables
Credit Amount from time to time, to pay the cash amount within the applicable
period set forth above, then Xxxxxxxxx shall have the right (but not the
obligation), in addition to any other remedies which it may have, to either (a)
deem such amount to be Xxxxxxxxx Indemnifiable Damages in accordance with
ARTICLE IX (PROVIDED, HOWEVER, that the Xxxxxxxxx Indemnification Threshold and
the Xxxxxxxxx Indemnification Cap shall not be applicable to such amount) or (b)
setoff such amount against any amount owed by Xxxxxxxxx or any of its Affiliates
to AVS, the Company or any Affiliate of AVS or the Company (whether under this
Agreement or otherwise). Xxxxxxxxx shall advise the Company at least sixty (60)
days prior to the first anniversary of the Closing Date of any uncollected
Purchased Receivables and any unpaid Assumed Payables owed to any member of a
Group from which there is an uncollected Purchased Receivable, provided that
failure to deliver said notice within the applicable time period shall not in
any way affect Xxxxxxxxx'x rights or the Company's or AVS' obligations
hereunder.
6.19 POST CLOSING MATTERS. Immediately prior to the Closing, AVS shall
remove from the properties to be purchased or leased by Xxxxxxxxx pursuant to
SECTION 6.17 any assets other than the Purchased Assets and assets consigned to
Xxxxxxxxx by AVS or any of its Affiliates or by any third party and cause any
Persons who are not hired by Xxxxxxxxx following the Closing to vacate such
premises.
6.20 WEB SITE LINK; E-MAIL. For the period beginning on the Closing
Date and ending on the later of the third anniversary of the Closing Date or the
date on which the Consignment Agreement shall terminate, AVS shall for no
additional consideration include above the fold on its home page and each page
of its web site that offers parts or inventory for sale a direct link to one or
more web sites maintained by Xxxxxxxxx and its Affiliates, such link to contain
such information as may be mutually acceptable to the parties. For the period
beginning on the Closing Date and ending on the first anniversary of the Closing
Date, AVS and the Company shall, for no additional
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consideration, forward to one or more e-mail addresses designated by Xxxxxxxxx
any and all e-mails directed to the e-mail addresses assigned to any employees
of the Company and any employees of AVS employed in the Business prior to the
Closing Date, and shall take such reasonable actions as may be necessary to
prevent e-mails from being transmitted from any such e-mail address.
6.21 STANDSTILL. Each of Xxxxxxxxx and AVS agrees that it will not and
will not permit its Subsidiaries to, unless it shall have been specifically
invited in writing by the other, in any manner, whether publicly or otherwise,
directly or indirectly, or in any way assist, finance, influence or encourage
any other person or entity, whether publicly or otherwise, directly or
indirectly to, initiate, make, effect, cause or seek, offer or propose to
initiate, make, effect, cause or seek, or participate in or take a position with
respect to (i) any acquisition of any securities or assets of the other (other
than in the case of assets, transactions in the Ordinary Course of Business) or
beneficial ownership (as defined in Rule 13d-3 under the Exchange Act) thereof;
(ii) any tender or exchange offer, merger, or other business combination
involving the other; (iii) any sale of assets, recapitalization, restructuring,
liquidation, dissolution or other extraordinary transaction with respect to the
other; (iv) any submission to or proposal for a vote of stockholders of the
other, including, without limitation, a proposal within the meaning of Rule
14a-1(1) under the Exchange Act, or any action that would, but for Rule 14a-2(b)
under the Exchange Act, be deemed a "solicitation" of "proxies" with respect to
any securities of the other, or with respect to any issue that is the subject of
such a proxy solicitation; (vi) any comment or proposal with respect to any
nomination or election of directors or other matter or transaction involving the
other or any grant of any proxy with respect to securities of the other to any
person not designated by the other; (vii) any formation of a "group", within the
meaning of Section 13(d)(3) or Section 14(d)(2) of, or Rule 13d-5 under, the
Exchange Act, with respect to securities of the other; (viii) any action which
would at any time require the other to make a public announcement regarding any
of the foregoing; (ix) any disclosure of any intention, plan or arrangement
inconsistent with any of the foregoing; or (x) any discussions, arrangements,
understandings, agreements or proposals with any person or entity with respect
to any of the foregoing. Each of Xxxxxxxxx and AVS also agree not to and agree
not to permit its Affiliates to request the other (or its directors, officers,
employees or agents) directly or indirectly, to amend or waive any provision of
this Section (including this sentence).
6.22 AUDITED FINANCIAL STATEMENTS. The Company and AVS shall obtain an
audit of the financial statements of the Company for the fiscal years ended
December 31, 1998 and 1999 and for the nine months ended September 30, 2000, and
make available their books, records and personnel in connection therewith.
6.23 LICENSE OF TRADEMARKS. AVS, KAV and Xxxxxxxxx shall enter into the
Trademark License Agreement in the form of EXHIBIT M attached hereto (the
"License Agreement").
6.24 CONSIGNED INVENTORY INVESTMENTS. Xxxxxxxxx shall pay to the
Company any documented Consigned Inventory Investment relating to any inventory
consigned to the Company by parties other than AVS or any of its Affiliates
which are subject to consignment agreements which are assigned by the Company
to, and which are assumed by, Xxxxxxxxx, in each case, at the
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same time that payment is made by Xxxxxxxxx to the consignor on account of the
sale of the consigned inventory under the related consignment agreement. If
Xxxxxxxxx shall for any reason return to a consignor any Consigned Inventory in
which the Company has a Consigned Inventory Investment, (a) Xxxxxxxxx shall
provide written notice thereof to the Company (and shall to the extent not in
violation of the respective consignment agreements provide fifteen (15) days
prior written notice to the Company), and (b) Xxxxxxxxx shall not be responsible
for the payment to, or reimbursement of, the Company for any Consigned Inventory
Investment relating thereto and the Company shall thereafter have the right to
seek reimbursement of such Consigned Inventory Investment from the consignor of
such inventory. Xxxxxxxxx shall, not later than the 20th day of each calendar
month, provide to the Company a monthly report containing a list of sales made
during the immediately preceding calendar month of any Consigned Inventory in
which there is a Consigned Inventory Investment and a list of any Consigned
Inventory in which there is Consigned Inventory Investment which remains unsold
as of the end of the immediately preceding calendar month (until all Consigned
Inventory in which there is a Consigned Inventory Investment has been sold).
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF XXXXXXXXX
The obligations of Xxxxxxxxx to effect the transactions contemplated
hereby shall be subject to the fulfillment at or prior to the Closing Date of
the following conditions, any or all of which may be waived in whole or in part
in writing by Xxxxxxxxx:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company and AVS contained
in this Agreement and in each of the Transaction Documents to which the Company
and/or AVS are parties shall be true and correct at and as of the Closing Date
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 or any such Transaction Document, 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. The Company and AVS shall have performed and
complied with all of their respective obligations required by this Agreement and
in each of the Transaction Documents to which the Company and/or AVS are parties
to be performed or complied with at or prior to the Closing Date. The Company
and AVS shall have delivered to Xxxxxxxxx a certificate, dated as of the Closing
Date, duly signed by their respective President and Chief Financial Officer,
certifying that such representations and warranties are true and correct and
that all such obligations have been performed and complied with.
7.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change to the Company or AVS or to the Business, and (ii) none of the Purchased
Assets 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 damage may have a Material Adverse Effect on the Purchased Assets taken
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as a whole, and there shall have been delivered to Xxxxxxxxx a certificate to
that effect, dated the Closing Date and duly signed by their respective
President and Chief Financial Officer to that effect.
7.3 CORPORATE CERTIFICATE. The Company and AVS shall have delivered to
Xxxxxxxxx (i) copies of the Certificate of Incorporation and Bylaws of each of
the Company and AVS as in effect immediately prior to the Closing Date, (ii)
copies of resolutions adopted by the Board of Directors and the shareholders of
the Company, and by the Board of Directors of AVS, authorizing the transactions
contemplated by this Agreement, and (iii) a certificate of good standing for the
Company and AVS issued by the Secretary of State of the State of Delaware as of
a date not more than ten (10) Business Days prior to the Closing Date, certified
in the case of subsections (i) and (ii) of this Section as of the Closing Date
by their respective Secretary, as applicable, as being true, correct and
complete.
7.4 OPINION OF COUNSEL. Xxxxxxxxx shall have received an opinion, dated
as of the Closing Date, from counsel for the Company and AVS addressed to
Xxxxxxxxx and its lenders in the form attached hereto as EXHIBIT N.
7.5 CONSENTS. The Company, AVS and Xxxxxxxxx shall each have received
consents to the transactions contemplated hereby and waivers of rights to
terminate or modify any of their respective rights or obligations from any
Person from whom such consent or waiver is required, under any Assumed Contract
that is also a Material Contract in the case of AVS and the Company and any
material Contract (which the parties acknowledge includes those Contracts set
forth on SCHEDULE 3.4) in the case of Xxxxxxxxx, the HSR Act or any other Legal
Requirement, or who, as a result of the transactions contemplated hereby, would
have the right to terminate, accelerate or modify such Material Contracts in the
case of AVS and the Company and any material Contract in the case of Xxxxxxxxx,
either by the terms thereof or as a matter of law.
7.6 NO ADVERSE LITIGATION. There shall not be pending 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
transactions contemplated hereby.
7.7 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting period shall
have expired or been terminated.
7.8 DELIVERY OF PURCHASED ASSETS. The Company shall have duly executed
and delivered to Xxxxxxxxx a Xxxx of Sale and Assignment and such other
instruments of transfer of title as are reasonably necessary in the opinion of
Xxxxxxxxx to transfer to Xxxxxxxxx good and marketable title to the Purchased
Assets, in each case, in form and substance satisfactory to Xxxxxxxxx, and shall
deliver to Xxxxxxxxx immediate possession of the Purchased Assets free and clear
of any Liens (other than Permitted Liens).
7.9 DELIVERY OF PAYOFF AND ESTOPPEL LETTERS. The Company and AVS shall
have delivered to Xxxxxxxxx the payoff and estoppel letters referred to in
SECTION 6.15 hereof.
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7.10 EXECUTION AND DELIVERY OF CERTAIN TRANSACTION DOCUMENTS. Each of
the parties (other than Xxxxxxxxx) to the Transaction Documents shall have
executed and delivered the Transaction Documents to which it is a party.
7.11 REAL ESTATE TRANSACTION DOCUMENTS. The transactions contemplated
by the Real Estate Transaction Documents shall have been consummated
contemporaneously with the transactions contemplated hereby. The landlords of
the Miramar Facility and the Van Nuys Facility shall have entered into a
landlord's waiver in form acceptable to Bank of America, N.A., pursuant to the
Xxxxxxxxx Credit Facility.
7.12 INVENTORY PURCHASE AGREEMENT. The transactions contemplated by the
Inventory Purchase Agreement shall have been consummated contemporaneously with
the transactions contemplated hereby.
7.13 PURCHASE PRICE ALLOCATION CERTIFICATE. The Company shall have
executed and delivered to Xxxxxxxxx a Purchase Price Allocation Certificate
which complies with SECTION 2.7 and is reasonably acceptable to Xxxxxxxxx.
7.14 XXXXXXXXX FINANCING. Xxxxxxxxx shall have received at least
Fifteen Million Dollars ($15,000,000) in the form of mezzanine debt financing
upon the terms set forth in the term sheet attached hereto as EXHIBIT O and such
other terms and conditions as shall be reasonably acceptable to Xxxxxxxxx.
7.15 AMENDMENT TO XXXXXXXXX CREDIT FACILITY. Xxxxxxxxx shall have
entered into an amendment to the Xxxxxxxxx Credit Facility upon terms acceptable
to Xxxxxxxxx.
7.16 KAV SENIOR SUBORDINATED NOTE - A. The Company shall have assigned
to Xxxxxxxxx the KAV Senior Subordinated Note - A and KAV shall have issued to
Xxxxxxxxx a replacement KAV Senior Subordinated Note - A representing the
indebtedness thereby assigned to Xxxxxxxxx having identical provisions to the
KAV Senior Subordinated Note - A.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND AVS
The obligations of the Company and AVS to effect the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions, any or all of which may be waived in
whole or in part in writing by the Company or AVS:
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8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Xxxxxxxxx contained in this
Agreement and each of the Transaction Documents to which it is a party shall be
true and correct at and as of the Closing Date 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 in each of the Transaction
Documents to which it is a party, 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. Xxxxxxxxx shall have performed and complied with
all of its obligations required by this Agreement and in each of the Transaction
Documents to which it is a party to be performed or complied with by it at or
prior to the Closing Date. Xxxxxxxxx shall have delivered to the Company a
certificate, dated as of the Closing Date, and signed by its President and Chief
Financial Officer, certifying that such representations and warranties are true
and correct and that all such obligations have been complied with and performed.
8.2 CORPORATE CERTIFICATE. Xxxxxxxxx shall have delivered to the
Company and AVS (i) copies of resolutions adopted by the Board of Directors of
Xxxxxxxxx authorizing the transactions contemplated by this Agreement, and (ii)
a certificate of good standing for Xxxxxxxxx issued by the Secretary of State of
the State of Delaware as of a date not more than ten (10) Business Days prior to
the Closing Date, certified in the case of subsection (i) of this Section as of
the Closing Date by the Secretary of Xxxxxxxxx as being true, correct and
complete.
8.3 PURCHASE PRICE. Xxxxxxxxx shall have paid to the Company the
Estimated Cash Purchase Price.
8.4 NO ADVERSE LITIGATION. There shall not be pending any action or
proceeding by or before any court or other governmental body, other than those
set forth on SCHEDULE 8.4, which shall seek to restrain, prohibit, invalidate or
collect damages arising out of the transactions contemplated hereby.
8.5 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting period shall
have expired or been terminated.
8.6 EXECUTION AND DELIVERY OF CERTAIN TRANSACTION DOCUMENTS. Each of
the parties (other than AVS and the Company) to the Transaction Documents shall
have executed and delivered the Transaction Documents to which it is a party.
8.7 INVENTORY PURCHASE AGREEMENT. The transactions contemplated by the
Inventory Purchase Agreement shall have been consummated contemporaneously with
the transactions contemplated hereby.
8.8 REAL ESTATE TRANSACTION DOCUMENTS. The transactions contemplated by
the Real Estate Transaction Documents shall have been consummated
contemporaneously with the transactions contemplated hereby.
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8.9 CONSENTS. The Company and AVS shall have received consents to the
transactions contemplated hereby from any Person from whom such consent is
required under the HSR Act or pursuant to any other Legal Requirement.
8.10 CONSENT OF AVS SENIOR LENDERS. AVS shall have received any consent
required to be obtained from its lenders under (a) that certain Fourth Amended
and Restated Credit Agreement dated May 31, 2000, as amended, between AVS and
Citicorp USA, Inc., as Agent, and (b) that certain Participation Agreement dated
as of December 17, 1998, as amended, by and among AVS, as construction agent,
AVS, as lessee, First Security Bank, National Association, not individually,
except as expressly stated therein, but solely as Owner trustee under the
Aviation Sales Trust 1998-1, the various banks and other lending institutions
which parties thereto from time to time, as the holders, and the various banks
and other lending institutions which are parties thereto from time to time, as
the lenders, and NationsBank, National Association, as Administrative Agent for
the lenders, as amended.
8.11 PURCHASE PRICE ALLOCATION CERTIFICATE. Xxxxxxxxx shall have
executed and delivered to the Company a Purchase Price Allocation Certificate
which complies with SECTION 2.7 and is reasonably acceptable to the Company.
ARTICLE IX
INDEMNIFICATION
9.1 AGREEMENT BY THE COMPANY AND AVS TO INDEMNIFY. The Company and AVS,
jointly and severally, agree to indemnify and hold Xxxxxxxxx and any Affiliate
of Xxxxxxxxx purchasing Purchased Assets hereunder and each of their respective
officers, directors, shareholders, employees, attorneys and Affiliates (each a
"Xxxxxxxxx Indemnified Party" and collectively the "Xxxxxxxxx Indemnified
Parties") harmless from and against the aggregate of all expenses, losses,
costs, deficiencies, liabilities and damages (including, without limitation,
counsel and paralegal fees and expenses) incurred or suffered by any of the
Xxxxxxxxx Indemnified Parties arising out of or resulting from (i) any breach of
a representation or warranty made by the Company and AVS (or either of them) in
or pursuant to this Agreement or any of the Transaction Documents to which the
Company or AVS is a party (including the schedules hereto and thereto and any
certificates executed and delivered by the Company or AVS (or either of them)
pursuant hereto or thereto or in connection herewith or therewith), (ii) any
breach of a covenant or agreement made by the Company and AVS (or either of
them) in or pursuant to this Agreement or any of the Transaction Documents to
which the Company or AVS is a party, (iii) any inaccuracy in any statement made
by the Company or AVS in any certificate, instrument or other document delivered
by the Company or AVS pursuant to or in connection with this Agreement or any of
the Transaction Documents to which the Company or AVS is a party, (iv) any
Excluded Liabilities, (v) any liability of the Company or AVS for any Taxes
(whether or not disclosed in this Agreement or any of the Transaction Documents
to which the
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Company or AVS is a party or disclosed, referenced or incorporated by reference
in any of the schedules hereto or thereto), and (vi) any Affiliate Obligations
and any other amounts required to be paid on account of Affiliated Transactions
(collectively, "Xxxxxxxxx Indemnifiable Damages"). Notwithstanding the foregoing
provisions of this Section 9.1, if Xxxxxxxxx has the right to cause AVS and/or
the Company to repurchase Purchased Receivables under Section 6.18, Xxxxxxxxx
shall be precluded from making a claim against AVS or the Company under this
Section 9.1 for a breach of the representations made in Section 4.20, unless AVS
and the Company shall fail to comply with any of the covenants set forth in
Section 6.18. Notwithstanding anything to the contrary contained herein,
Xxxxxxxxx shall not be entitled to collect Xxxxxxxxx Indemnifiable Damages under
subsection (i) of the first sentence of this SECTION 9.1 (other than on account
of a breach of any representation or warranty contained in SECTION 4.18, SECTION
4.20 or SECTION 4.23) or on account of a breach of any covenant contained in
Article V if the Company or AVS can establish that Xxxxxxxxx had actual
knowledge at the time of Closing that the representation or warranty on which
such claim is based was false or that the covenant contained in Article V had
been breached. Notwithstanding the foregoing provisions or anything contained
herein to the contrary, no claim for Xxxxxxxxx Indemnifiable Damages shall be
asserted by the Xxxxxxxxx Indemnified Parties until the aggregate of all
Xxxxxxxxx Indemnifiable Damages exceeds Four Hundred Thousand Dollars ($400,000)
(the "Xxxxxxxxx Indemnification Threshold"), at which time the Xxxxxxxxx
Indemnified Parties shall only be entitled to the aggregate amount by which the
Xxxxxxxxx Indemnifiable Damages exceeds Two Hundred Thousand Dollars ($200,000).
Notwithstanding anything to the contrary set forth herein, the total Xxxxxxxxx
Indemnifiable Damages for which the Company and AVS, in the aggregate, shall be
liable hereunder shall not exceed the sum equal to the Purchase Price (the
"Xxxxxxxxx Indemnification Cap"). Notwithstanding anything to the contrary set
forth herein, the Xxxxxxxxx Indemnification Threshold and the Xxxxxxxxx
Indemnification Cap shall not apply and there shall be no limitation or
restriction whatsoever on the liability of the Company or AVS under this Article
IX for Xxxxxxxxx Indemnifiable Damages with respect to any claim relating to or
arising from any one or more of the following: (i) any Xxxxxxxxx Indemnifiable
Damages arising under subsections (ii), (iv), (v) or (vi) of this SECTION 9.1
above, (ii) a breach of any covenant or agreement of the Company or AVS, (iii) a
breach of any one or more of the representations or warranties set forth in the
first or last sentence of SECTION 4.1, or in SECTION 4.2, SECTION 4.3, SECTION
4.12, SECTION 4.14(A), SECTION 4.18 or SECTION 4.20, or (iv) any act of fraud in
connection with the execution, delivery or performance of this Agreement or any
Transaction Document to which the Company or AVS is a party, including, without
limitation, any fraudulent representation or warranty made in or pursuant to
this Agreement or any Transaction Document to which the Company or AVS is a
party.
9.2 AGREEMENT BY XXXXXXXXX TO INDEMNIFY. Xxxxxxxxx agrees to indemnify
and hold the Company and AVS and their respective officers, directors,
shareholders, employees, attorneys and Affiliates (each a "Company Indemnified
Party" and together the "Company Indemnified Parties") harmless from and against
the aggregate of all expenses, losses, costs, deficiencies, liabilities and
damages (including, without limitation, reasonable counsel and paralegal fees
and expenses) incurred or suffered by any of the Company Indemnified Parties
arising out of or resulting from (i) any breach of a representation or warranty
made by Xxxxxxxxx in or pursuant to this Agreement or any other Transaction
Document to which Xxxxxxxxx is a party (including the
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schedules hereto or thereto and any certificates executed and delivered by
Xxxxxxxxx pursuant to or in connection herewith or therewith), (ii) any breach
of a covenant or agreement made by Xxxxxxxxx in or pursuant to this Agreement or
any Transaction Document to which the Xxxxxxxxx is a party, (iii) any inaccuracy
in any statement made by Xxxxxxxxx in any certificate, instrument or other
document executed and delivered by Xxxxxxxxx pursuant to or in connection with
this Agreement or any Transaction Document to which the Xxxxxxxxx is a party,
(iv) any liability relating to the operation by Xxxxxxxxx of the Business after
the Closing Date, and (v) any Assumed Liabilities (collectively, "Company
Indemnifiable Damages"). Notwithstanding anything to the contrary contained
herein, neither the Company nor AVS shall be entitled to collect Company
Indemnifiable Damages under subsection (i) of the immediately preceding sentence
if Xxxxxxxxx can establish that the Company or AVS had actual knowledge at the
time of Closing that the representation or warranty on which such claim is based
was false. Notwithstanding the foregoing provisions or anything contained herein
to the contrary, (a) no claim for Company Indemnifiable Damages shall be
asserted by the Company Indemnified Parties until the aggregate of all Company
Indemnifiable Damages exceeds Four Hundred Thousand Dollars ($400,000) (the
"Company Indemnification Threshold"), at which time the Company Indemnified
Parties shall only be entitled to the aggregate amount by which the Company
Indemnifiable Damages exceeds Two Hundred Thousand Dollars ($200,000).
Notwithstanding anything to the contrary set forth herein, the total Company
Indemnifiable Damages for which Xxxxxxxxx shall be liable hereunder shall not
exceed the sum equal to the Purchase Price (the "Company Indemnification Cap").
Notwithstanding anything to the contrary set forth herein, the Company
Indemnification Threshold and the Company Indemnification Cap shall not apply
and there shall be no limitation or restriction whatsoever on the liability of
Xxxxxxxxx under this Article IX for Company Indemnifiable Damages with respect
to any claim relating to or arising from any one or more of the following: (i)
any Company Indemnifiable Damages arising under subsection (iv) of this SECTION
9.2 above, (ii) a breach of any covenant or agreement by Xxxxxxxxx contained in
this Agreement or any other Transaction Document to which Xxxxxxxxx is a party,
(iii) a breach of any one or more of the representations or warranties set forth
in SECTION 3.1, SECTION 3.2 or SECTION 3.3, or (iv) any act of fraud in
connection with the execution, delivery or performance of this Agreement or any
other Transaction Document to which Xxxxxxxxx is a party including, without
limitation, any fraudulent representation or warranty made in or pursuant to
this Agreement or any other Transaction Document to which Xxxxxxxxx is a party.
9.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the parties in this Agreement or any of
the Transaction Documents or pursuant hereto or thereto shall survive the
closing of the transactions contemplated hereby as follows: (i) the
representations and warranties made by Xxxxxxxxx in SECTION 3.1, SECTION 3.2 and
SECTION 3.3 shall survive indefinitely, (ii) the representations and warranties
made by AVS and the Company in the first and last sentence of SECTION 4.1, and
in SECTION 4.2, SECTION 4.3, the first two (2) sentences of SECTION 4.14(a) and
in SECTION 4.18 shall survive indefinitely, and (iii) all other representations
and warranties shall expire on the last day of the twenty-first (21st) full
calendar month following the Closing Date; PROVIDED, HOWEVER, that, in the case
of SECTION 9.3(iii), if any Person shall acquire all of the issued and
outstanding shares of capital stock of AVS or AVS shall merge with any Person
other than an Affiliate of AVS in a transaction in which AVS is not the
surviving entity on or prior
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to the last day of the eighteenth (18th) full calendar month following the
Closing Date, the representations and warranties covered by SECTION 9.3(iii)
shall expire on the later of (i) the last day of the eighteenth (18th) full
calendar month following the Closing Date, or (ii) the thirty-first (31st) day
following written notice of the consummation of such a transaction is provided
to Xxxxxxxxx by AVS. 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 and each of the Transaction Documents
or in any other documents or papers delivered in connection herewith or
therewith. Each representation, warranty, covenant and agreement of the parties
contained in this Agreement and each of the Transaction Documents is independent
of each other representation, warranty, covenant and agreement. No claim for the
recovery of any Xxxxxxxxx Indemnifiable Damages or Company Indemnifiable Damages
with respect to the representations and warranties in this Agreement and each of
the Transaction Documents may be asserted by any of the parties after such
representations and warranties shall expire in accordance with the terms of this
Agreement and each of the Transaction Documents; PROVIDED, HOWEVER, that claims
for Xxxxxxxxx Indemnifiable Damages or Company Indemnifiable Damages first
asserted with reasonable specificity in writing within the applicable period
shall not thereafter be barred.
9.4 THIRD PARTY ACTIONS.
(a) For the purpose of this SECTION 9.4, the term
"Indemnifiable Damages" means Xxxxxxxxx Indemnifiable Damages or Company
Indemnifiable Damages, as the context requires, the term "Indemnified Party"
means the Xxxxxxxxx Indemnified Parties or the Company Indemnified Parties, as
the context requires, and the term "Indemnifying Party" means the party
(Xxxxxxxxx or the Company or AVS) against whom a claim for Indemnifiable Damages
is to be made.
(b) If any claim or action shall be commenced or asserted
against an Indemnified Party which, if successful, could give rise to
Indemnifiable Damages, the Indemnified Party shall give the Indemnifying Party
prompt written notice of such claim or action (provided that the failure to give
such notice shall not relieve the Indemnifying Party of its indemnification
obligations except where, and solely to the extent that, the failure to provide
such notice actually and materially prejudices the rights of the Indemnifying
Party). Upon receipt of written notice of any such claim or action, the
Indemnifying Party shall have the option to assume the defense thereof by
providing written notice of such election to the Indemnified Party within ten
(10) Business Days after receipt of written notice of any such claim or action
(an "Indemnification Notice"). If the Indemnifying Party shall elect to assume
the defense of any claim or action by the delivery of an Indemnification Notice
within such ten (10) Business Day period, then, subject to the terms set forth
below, (i) the Indemnifying Party shall have the right to assume and control the
defense of the claim or action, (ii) the Indemnified Party may at its own cost
and expense participate in (but not control) the defense thereof, and (iii) the
Indemnifying Party shall be fully responsible (with no reservation of rights)
for all Indemnifiable Damages relating to the claim or action. If the
Indemnifying Party states in an Indemnification Notice that it will not assume
the defense of the claim or action, or if the Indemnifying Party fails to
provide the Indemnified Party with an Indemnification Notice within
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such ten (10) Business Day period, then (i) the Indemnified Party shall have the
right to assume and control the defense of the claim or action, (ii) the
Indemnifying Party may at its own cost and expense participate in (but not
control) the defense thereof, and (iii) the Indemnifying Party shall be
responsible for any Indemnifiable Damages (including, without limitation, the
costs incurred by the Indemnified Party in the defense thereof) relating to the
claim or action subject to and in accordance with the terms and conditions set
forth in this Agreement. If the Indemnifying Party provides, within such ten
(10) Business Day period, an Indemnification Notice stating that it shall assume
the defense of the claim or action, then the Indemnifying Party shall, at its
own cost and expense, diligently defend such claim or action, and the
Indemnifying Party will not be liable to the Indemnified Party pursuant to the
provisions of SECTIONS 9.1 or 9.2 for any related counsel and paralegal fees and
expenses subsequently incurred by the Indemnified Party in connection with the
defense thereof other than reasonable costs of investigation, unless (i) the
defendants in any action include both the Indemnified Party and the Indemnifying
Party and there is a conflict of interest as reasonably determined by counsel
for the Indemnifying Party which would prevent such counsel from also
representing the Indemnified Party, (ii) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within a reasonable time after notice of the commencement
of the action, or shall have failed to diligently defend such action, or (iii)
the Indemnifying Party has authorized the employment of counsel for the
Indemnified Party at the expense of the Indemnifying Party. Notwithstanding
anything to the contrary in this SECTION 9.4, the Indemnifying Party shall have
no right to settle or compromise any action for which it has assumed the defense
to the extent the settlement or compromise provides for any injunctive or other
equitable relief against the Indemnified Party or otherwise provides for any
continuing obligations of any nature against the Indemnified Party or loss of
rights of the Indemnified Party, and nothing stated in this SECTION 9.4 shall
otherwise affect the Indemnifying Party's obligation to pay the Indemnified
Party all Indemnifiable Damages (other than such related counsel and paralegal
fees and expenses) pursuant to SECTION 9.1 or SECTION 9.2. With respect to any
such third party action, the parties agree to provide each other with all
material information that they request relating to the handling of such matter.
The parties shall reasonably cooperate with one another in furtherance of
resolving any claims for which indemnification is sought hereunder. No
Indemnified Party shall settle, compromise, pay or discharge, any Indemnifiable
Claim without the prior written consent of the Indemnifying Party, so long as
the Indemnifying Party is diligently defending same in accordance with this
SECTION 9.4. An Indemnified Party shall not unreasonably withhold its consent to
a settlement of a matter.
9.5 REMEDIES CUMULATIVE. The remedies provided herein shall be
cumulative and shall not preclude any indemnified party from asserting any other
right, or seeking any other remedies against any indemnifying party.
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ARTICLE X
TERMINATION
10.1 TERMINATION. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by mutual written consent of all of the parties; or
(b) by Xxxxxxxxx in the event of a material breach by the
Company or AVS of any provision of this Agreement or any Transaction Document to
which it is a party which material breach is not cured within thirty (30) days
of the delivery to the Company and AVS of written notice thereof from Xxxxxxxxx
or which breach by its nature cannot be cured prior to Closing; or
(c) by the Company and AVS in the event of a material breach
by Xxxxxxxxx of any provision of this Agreement or any Transaction Document to
which it is a party which material breach is not cured within thirty (30) days
of the delivery to Xxxxxxxxx of written notice thereof from the Company and AVS
or which breach by its nature cannot be cured prior to Closing; or
(d) by any party in the event that the Closing shall not have
occurred on or prior to the sixtieth (60th) day following the date of this
Agreement; PROVIDED, HOWEVER, that the failure of the Closing to occur by such
date shall not have been the result of the failure of the party seeking to
terminate this Agreement to perform or fulfill any of its obligations hereunder;
and PROVIDED FURTHER that any party shall have the right to extend such date for
up to an additional thirty (30) days upon written notice to the other parties in
the event that the only then-unsatisfied condition to Closing is the receipt of
one or more consents required to be delivered pursuant to SECTION 7.5 or the
expiration or termination of any applicable HSR Act waiting period as required
pursuant to SECTIONS 7.7 and 8.5.
This Agreement shall automatically terminate without action by either party if
the Inventory Purchase Agreement shall terminate or be terminated for any
reason.
10.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to SECTION 10.1, except as set forth in SECTION 10.3, this
Agreement shall forthwith become void and of no further force and effect and the
parties shall be released from any and all obligations and liabilities
hereunder; PROVIDED, however, that (a) nothing herein shall relieve any party
from liability for fraud or any act in the nature of fraud committed in
connection with any of its representations, warranties, covenants or agreements
set forth in this Agreement, and (b) nothing herein shall relieve any party from
any liability for any breach or violation hereof.
10.3 XXXXXXXXX DAMAGES. Notwithstanding anything to the contrary contained
herein, in the event that the transactions contemplated by this Agreement are
not consummated because AVS shall not have received either or both of the
consents required to be obtained by it pursuant to Section 8.10 hereof and AVS
or the Company shall within one (1) year following the date on which this
Agreement is terminated enter into any agreement to sell all or substantially
all of the assets of the Company or AVS or any interest in the Company or AVS
entitling the holder thereof the right to vote fifty percent (50%) or more of
the voting interests of the Company or AVS, then AVS and
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the Company, jointly and severally, shall pay to Xxxxxxxxx its reasonable
out-of-pocket costs (not to exceed $1,000,000 in the aggregate) incurred in
connection with this Agreement and the Inventory Purchase Agreement and its
evaluation, negotiation, execution and efforts to consummate, the transactions
contemplated by this Agreement and the Inventory Purchase Agreement (including,
without limitation, reasonable attorneys' fees and costs), and AVS and the
Company, jointly and severally, shall pay to Xxxxxxxxx an additional amount of
Five Million Dollars ($5,000,000), evidencing all additional costs borne by
Xxxxxxxxx in connection with the transactions contemplated hereby and by the
Inventory Purchase Agreement, including opportunity costs, costs relating to the
allocation of human resources in contemplation of the transactions contemplated
hereby, and damages to Xxxxxxxxx'x reputation in the industry and in general due
to the inability to consummate the transactions contemplated hereby. The parties
hereto hereby agree that the costs borne by Xxxxxxxxx in connection with the
transactions contemplated hereby and by the Inventory Purchase Agreement, apart
from its out of pocket expenses, are incapable of being accurately measured and
that said Five Million Dollars ($5,000,000) additional fee represents the
parties' estimate of said costs and said fee is not meant nor shall it be deemed
a penalty, but rather an attempt to quantify the amount of damages sustained by
Xxxxxxxxx if the transactions contemplated hereby and by the Inventory Purchase
Agreement are not consummated.
ARTICLE XI
GENERAL PROVISIONS
11.1 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), 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 XXXXXXXXX TO:
Xxxxxxxxx Industries, Inc.
0000 Xxxxxxxxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Zivi X. Xxxxxx, President
Telecopy: (000) 000-0000
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WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
000 Xxxx Xxx Xxxx Xxxxxxxxx, Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxx X. March, Esq.
Telecopy: (000) 000-0000
(b) IF TO THE COMPANY AND/OR AVS TO:
Aviation Sales Company
0000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxx, Chairman
Telecopy: (000) 000-0000
WITH A COPY TO:
Xxxxx & Xxxxxx
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: J. Xxxxxxx Xxxxx, Esq.
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 certified or registered mail.
11.2 ENTIRE AGREEMENT. This Agreement and the Transaction Documents
(including the exhibits and schedules attached hereto and thereto) and the other
documents delivered pursuant hereto and thereto and in connection herewith and
therewith 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 of the document to which they are
attached as though set forth in full thereon. Notwithstanding anything to the
contrary in this Agreement, any matter, fact, event or other information
expressly and specifically set forth in any Schedule attached to this Agreement
shall be deemed disclosed in all Schedules to this Agreement.
11.3 EXPENSES. Except as otherwise provided herein, AVS shall pay the
fees and expenses incurred by it and the Company, including accounting and
counsel fees, incurred in connection with this Agreement and the Transaction
Documents and the transactions contemplated hereby and thereby, and Xxxxxxxxx
shall pay its own fees and expenses, including accounting and
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counsel fees, incurred in connection with this Agreement and the Transaction
Documents and the transactions contemplated hereby and thereby.
11.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented, canceled or discharged, 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. Except as otherwise provided herein, the rights and remedies
of the parties under this Agreement and the Transaction Documents are in
addition to all other rights and remedies, at law or equity, which they may have
against each other.
11.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective heirs, executors, personal representatives, trustees, guardians,
attorneys-in-fact, successors and assigns. Nothing expressed or implied herein
shall be construed to give any other person any legal or equitable rights
hereunder. Except as expressly provided herein, no party may assign any of its
rights or delegate any of its obligations under this Agreement without the prior
written consent of the non-assigning or non-delegating parties; PROVIDED,
HOWEVER, that notwithstanding anything to the contrary contained in this
Agreement, (1) Xxxxxxxxx may assign any or all of its rights and privileges
under this Agreement to its lenders from time to time, without the consent of
the Company or AVS, provided that any such assignees shall take such assignment
subject to all of the terms, conditions and limitations set forth in the
Agreement, and (2) Xxxxxxxxx may assign its rights and delegate its obligations
under this Agreement to any direct or indirect wholly-owned subsidiary of
Xxxxxxxxx, and upon such assignment, such subsidiary shall have full rights and
obligations under this Agreement as if it were a party hereto. Such subsidiary
shall be a third-party beneficiary with respect to all rights and remedies
provided hereunder or otherwise provided at law or in equity. In the case of any
assignment by Xxxxxxxxx, Xxxxxxxxx shall remain fully responsible and liable for
all of its obligations hereunder.
11.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which taken together
shall constitute one and the same instrument.
11.7 INTERPRETATION. Any reference made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit shall be deemed to be
to the referenced article, section, paragraph, clause, schedule or exhibit of
this Agreement unless otherwise indicated. The headings contained in this
Agreement and on the exhibits and schedules hereto are for reference purposes
only
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and shall in no way affect in any way the meaning or interpretation of this
Agreement or the exhibits or schedules hereto. Time shall be of the essence in
this Agreement.
11.8 SEVERABILITY. If any word, phrase, sentence, clause, section,
subsection or provision of this Agreement 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 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.
11.9 GOVERNING LAW; JURISDICTION. 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. Any suit, action or proceeding against Xxxxxxxxx, the Company or AVS
arising out of, or with respect to, this Agreement or any judgment entered by
any court in respect thereof shall be brought in the courts of Broward County,
Florida or in the U.S. District Court for the Southern District of Florida and
each party hereby irrevocably (a) accepts and consents to the exclusive personal
jurisdiction of such courts for the purpose of any suit, action or proceeding,
(b) waives, to the fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any judgment entered by any
court in respect thereof brought in such courts, (c) waives any claim that any
suit, action or proceedings brought in such courts has been brought in an
inconvenient forum, and (d) agrees that service of process, summons, notice or
document by U.S. registered mail in accordance with this Agreement shall be
effective service of process for any action, suit or proceeding brought against
a party in any such court.
11.10 ARM'S LENGTH NEGOTIATIONS. Each party hereto expressly agrees
that (a) before executing this Agreement, it has fully informed itself of the
terms, contents, conditions and effects of this Agreement; (b) it has relied
solely and completely upon its own judgment in executing this Agreement; (c) it
has had the opportunity to seek and has obtained the advice of counsel before
executing this Agreement; (d) it has acted voluntarily and of its own free will
in executing this Agreement; (e) it 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.
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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.
XXXXXXXXX INDUSTRIES, INC., a Delaware
corporation
By: /s/ Zivi X. Xxxxxx
------------------------------------------
Zivi X. Xxxxxx
President and Chief Executive Officer
AVIATION SALES COMPANY, a Delaware
corporation
By: /s/ Xxxx X. Xxxxx
------------------------------------------
Xxxx X. Xxxxx
Chairman and Chief Executive Officer
AVIATION SALES DISTRIBUTION
SERVICES COMPANY, a Delaware corporation
By: /s/ Xxxxxx Xxxxxxx
------------------------------------------
Xxxxxx Xxxxxxx
President
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Base Balance Sheet
Exhibit B Form of Consignment Agreement
Exhibit C Form of Cooperation Agreement
Exhibit D Inventory Purchase Agreement (without exhibits)
Exhibit E Form of KAV Senior Subordinated Note - A
Exhibit F Form of KAV Senior Subordinated Note - B
Exhibit G Miramar Sale Term Sheet
Exhibit H Miramar Lease Term Sheet
Exhibit I Form of Non-Competition Agreement
Exhibit J Form of Pearland Real Estate Purchase Agreement
Exhibit K Form of Transition Services Agreement
Exhibit L Form of Van Nuys Lease Assignment Agreement
Exhibit M Form of License Agreement
Exhibit N Form of Opinion of Seller's Counsel
Exhibit O Mezzanine Debt Term Sheet
Schedule 1.1(a) Consigned Inventory Investments
Schedule 2.2 Excluded Assets
Schedule 2.3 Assumed Contracts
Schedule 2.8 Assumed Liabilities
Schedule 2.9 Excluded Liabilities
Schedule 3.4 Xxxxxxxxx Violations
Schedule 4.1 Foreign Qualifications
Schedule 4.4 Corporate Information
Schedule 4.5 Liens on Capital Stock
Schedule 4.6 Violations
Schedule 4.7 Subsidiaries
Schedule 4.8 Financial Statements
Schedule 4.9 Changes Since the Current Balance Sheet Date
Schedule 4.10 Certain Liabilities
Schedule 4.11 Litigation
Schedule 4.12 Environmental Matters
Schedule 4.13 Real Estate
Schedule 4.14(a) Title and Condition of Assets
Schedule 4.14(b) Consigned Inventory
Schedule 4.14(c) Consigned Inventory Locations
Schedule 4.14(d) Vehicles
Schedule 4.16 Employees
Schedule 4.17 Employee Benefit Plans
Schedule 4.18 Tax Matters
Schedule 4.19 Insurance Policies
Schedule 4.21 Permits and Approvals
Schedule 4.22 Affiliated Transactions
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Schedule 4.23 Intellectual Property
Schedule 4.24 Contracts
Schedule 4.26 Product Warranties and Rebates
Schedule 5.1(a) Conduct of Business Pending the Acquisition
Schedule 5.1(b) Contact Telephone Numbers and E-Mail Addresses
Schedule 6.10 Employee Matters
Schedule 8.4 Adverse Litigation
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