EXHIBIT 2.1
EXECUTION COPY
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PURCHASE AND SALE AGREEMENT
BY AND AMONG
TRAJEN HOLDINGS, INC.
THE STOCKHOLDERS THEREOF
AND
MACQUARIE FBO HOLDINGS LLC
APRIL 18, 2006
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS........................................................ 1
1.2 CONSTRUCTION....................................................... 1
ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE OF SHARES........................................ 2
2.2 PURCHASE PRICE..................................................... 2
2.3 CLOSING............................................................ 3
2.4 DELIVERIES AT CLOSING.............................................. 3
2.5 POST-CLOSING PURCHASE PRICE PAYMENTS............................... 7
2.6 NET WORKING CAPITAL DETERMINATION.................................. 8
ARTICLE III
ESCROW
3.1 ESCROW DEPOSIT..................................................... 10
3.2 DISBURSEMENTS...................................................... 11
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH SELLER
4.1 OWNERSHIP OF SHARES, WARRANTS AND OPTIONS.......................... 12
4.2 ORGANIZATION; EXISTENCE AND GOOD STANDING.......................... 12
4.3 AUTHORITY; ENFORCEABILITY.......................................... 12
4.4 NO VIOLATIONS...................................................... 13
4.5 LEGAL PROCEEDINGS.................................................. 13
4.6 BROKER............................................................. 13
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
5.1 ORGANIZATION; EXISTENCE AND GOOD STANDING.......................... 14
5.2 AUTHORITY; ENFORCEABILITY.......................................... 14
5.3 CAPITALIZATION OF THE COMPANY...................................... 14
5.4 SUBSIDIARIES....................................................... 15
5.5 NO VIOLATIONS...................................................... 15
5.6 LEGAL REQUIREMENTS AND PERMITS..................................... 16
5.7 LEGAL PROCEEDINGS.................................................. 16
5.8 ENVIRONMENTAL...................................................... 16
TRAJEN HOLDINGS, INC.
PURCHASE AND SALE AGREEMENT
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5.9 TAX MATTERS........................................................ 17
5.10 FINANCIAL MATTERS.................................................. 20
5.11 ABSENCE OF CERTAIN CHANGES......................................... 21
5.12 EMPLOYEE BENEFIT PLANS............................................. 23
5.13 EMPLOYEES; EMPLOYMENT MATTERS...................................... 24
5.14 AGREEMENTS, CONTRACTS AND COMMITMENTS.............................. 25
5.15 REAL PROPERTY...................................................... 27
5.16 PERSONAL PROPERTY.................................................. 29
5.17 INTELLECTUAL PROPERTY.............................................. 29
5.18 INSURANCE.......................................................... 29
5.19 BANK ACCOUNTS; POWERS OF ATTORNEY.................................. 30
5.20 RELATED PARTY TRANSACTIONS......................................... 30
5.21 BROKER............................................................. 30
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
6.1 ORGANIZATION; EXISTENCE AND GOOD STANDING.......................... 30
6.2 AUTHORITY; ENFORCEABILITY.......................................... 30
6.3 NO VIOLATIONS...................................................... 31
6.4 LEGAL PROCEEDINGS.................................................. 31
6.5 ACQUISITION AS INVESTMENT.......................................... 31
6.6 FINANCING.......................................................... 31
6.7 BROKER............................................................. 32
ARTICLE VII
COVENANTS AND OTHER AGREEMENTS
7.1 COVENANTS REGARDING CONDUCT OF BUSINESS............................ 32
7.2 ESTOPPELS; CONSENTS; HSR ACT....................................... 34
7.3 ACCESS AND ASSISTANCE.............................................. 36
7.4 EMPLOYEE MATTERS................................................... 38
7.5 DISTRIBUTION OF NON-FBO ASSETS..................................... 39
7.6 REMEDIATION........................................................ 39
7.7 PUBLIC ANNOUNCEMENTS............................................... 39
7.8 COMMERCIALLY REASONABLE EFFORTS.................................... 40
7.9 RESTRICTIVE COVENANTS.............................................. 40
7.10 NON-SOLICITATION................................................... 41
7.11 INDEMNIFICATION OF OFFICERS AND DIRECTORS.......................... 41
7.12 RELEASE............................................................ 42
7.13 NO SHOP............................................................ 42
7.14 FCC LICENSES....................................................... 42
7.15 USE OF TRAJEN NAME................................................. 43
TRAJEN HOLDINGS, INC.
PURCHASE AND SALE AGREEMENT
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ARTICLE VIII
CONDITIONS TO CLOSING
8.1 PURCHASER'S CLOSING CONDITIONS..................................... 43
8.2 SELLERS' CLOSING CONDITIONS........................................ 45
ARTICLE IX
TERMINATION RIGHTS
9.1 TERMINATION RIGHTS................................................. 45
9.2 EFFECT OF TERMINATION.............................................. 46
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY PURCHASER....................................... 47
10.2 INDEMNIFICATION BY SECURITYHOLDERS................................. 47
10.3 LIMITATIONS AND OTHER INDEMNITY CLAIM MATTERS...................... 48
10.4 CALCULATION OF LOSSES.............................................. 50
10.5 CLAIM PROCEDURES................................................... 50
10.6 NO RELIANCE........................................................ 51
10.7 DISPUTE RESOLUTION................................................. 52
ARTICLE XI
[RESERVED.]
ARTICLE XII
GENERAL
12.1 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS........................... 53
12.2 SPECIFIC PERFORMANCE............................................... 54
12.3 AMENDMENTS......................................................... 54
12.4 NOTICES............................................................ 54
12.5 GOVERNING LAW...................................................... 56
12.6 DISCLOSURE SCHEDULES............................................... 56
12.7 SEVERABILITY....................................................... 56
12.8 SELLER REPRESENTATIVE.............................................. 56
12.9 TRANSACTION COSTS AND EXPENSES..................................... 57
12.10 WAIVER............................................................. 57
12.11 COUNTERPARTS....................................................... 58
TRAJEN HOLDINGS, INC.
PURCHASE AND SALE AGREEMENT
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EXHIBITS
Exhibit A Definitions
Exhibit B Form of Option Termination Agreement
Exhibit C Form of Warrant Termination Agreement
Exhibit D Form of Escrow Agreement
Exhibit E Form of Opinion of the Company's Counsel
Exhibit F Form of Opinion of Purchaser's Counsel
Exhibit G Form of Airport Authority Estoppel Letter
Exhibit H Additional Acquisition Letters
SCHEDULES
Schedule 1 Sellers/Securityholders, Ownership and Related Information
Schedule 2.4(a) Borrowed Money Debt
Schedule 2.6 Working Capital Statement
Schedule 5.1 Organization; Existence and Good Standing
Schedule 5.3(c) Voting Agreements, etc.
Schedule 5.4 Subsidiaries
Schedule 5.5 No Violations - Company
Schedule 5.6 Aircraft
Schedule 5.7 Legal Proceedings
Schedule 5.8(a) Environmental
Schedule 5.8(c) Environmental Permits
Schedule 5.9 Tax Matters
Schedule 5.10(a) Financial Statements
Schedule 5.10(b) GAAP Exceptions
Schedule 5.10(c) Borrowed Money Debt
Schedule 5.10(e) Non-FBO Assets
Schedule 5.11 Absence of Certain Changes
Schedule 5.12(a) Benefit Plans
Schedule 5.12(k) Nonqualified Deferred Compensation Plans
Schedule 5.13(a) Employees
Schedule 5.13(b) Terms of Employment; Leave
Schedule 5.14(a) Scheduled Contracts
Schedule 5.14(c) Certain Relationships
Schedule 5.14(d) Indemnification Obligations
Schedule 5.15(b)(i) Leased Real Property
Schedule 5.15(d)(vi) Capital Expenditures
Schedule 5.15(e) Landlord Property Leases
Schedule 5.16 Personal Property; Titles and Registrations
Schedule 5.17(a) Intellectual Property
Schedule 5.18 Insurance
TRAJEN HOLDINGS, INC.
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Schedule 5.19 Bank Accounts; Powers of Attorney
Schedule 5.20 Related Party Transactions
Schedule 6.3 No Violations - Purchaser
Schedule 7.1(g) Benefit Matters
Schedule 7.1(m) Material Contracts
Schedule 7.2(a) Airport Authority Estoppel Letters
Schedule 7.5 Distribution of Non-FBO Assets
Schedule 7.9 Non-Compete Airports
Schedule 10.2(b)(iv) Indemnity Matters
Schedule A-1 Approved Capital Expenditures
Schedule A-2 DOD & IT Employees
Schedule A-3 Non-FBO Assets
TRAJEN HOLDINGS, INC.
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GLOSSARY OF DEFINED TERMS
The location of the definition of each capitalized term used in this
Agreement is set forth in this Glossary:
401(k) Plan .............................................................. 23
AAA ...................................................................... 52
Accounting Firm .......................................................... 9
Acquisition Transaction Fees ............................................. A-1
Additional Acquisition Letters ........................................... A-1
Additional Acquisition Purchase Agreement ................................ A-1
Additional Acquisitions .................................................. A-1
Additional Acquisitions Incremental Amount ............................... A-1
Additional Acquisitions Purchase Price ................................... A-1
Adjustment Amount ........................................................ A-1
Affiliate ................................................................ A-1
Agreement ................................................................ 1
Airport Estoppel ......................................................... 34
Approved Capital Expenditure Amount ...................................... A-2
Audited 2005 Financial Statements ........................................ 37
Audited EBITDA ........................................................... A-2
Automatic Elimination .................................................... 34
Base New Working Capital ................................................. 8
Benefit Plans ............................................................ A-2
Borrowed Money Debt ...................................................... A-2
Business ................................................................. A-2
Business Day ............................................................. A-2
Charter Documents ........................................................ A-2
Claim .................................................................... 50
Claim Notice ............................................................. 50
Closing .................................................................. 3
Closing Date ............................................................. 3
Closing Statement ........................................................ 8
COBRA .................................................................... A-2
Code ..................................................................... A-2
Common Share Equivalent Consideration .................................... A-2
Common Share Equivalents ................................................. A-2
Common Shares ............................................................ 1
Company .................................................................. 1
Company Group ............................................................ 17
Company Plans ............................................................ 23
Confidential Information ................................................. A-2
Confidentiality Agreement ................................................ A-3
Contract ................................................................. A-3
Covered Persons .......................................................... 41
De Minimis Claim ......................................................... 48
Debt Payoff Amount ....................................................... 4
Dispute .................................................................. 52
Disputed Items ........................................................... 9
DOD & IT Employees ....................................................... A-3
El Paso Earn-Out ......................................................... A-3
Employee Pension Benefit Plan ............................................ A-3
Employee Welfare Benefit Plan ............................................ A-3
Environmental Laws ....................................................... A-3
Environmental Permits .................................................... 17
ERISA .................................................................... A-3
ERISA Affiliate .......................................................... A-3
Escrow Agent ............................................................. A-3
Escrow Agreement ......................................................... 4
Escrow Funds ............................................................. 5
Estimated Closing Date Net Working Capital Statement ..................... 8
Estimated Net Working Capital ............................................ 8
Excluded Claims .......................................................... 42
Execution Date ........................................................... 1
Facilities ............................................................... A-4
Facility Completion Costs ................................................ A-4
FBO ...................................................................... A-4
FBO Businesses ........................................................... A-4
FBO Lease ................................................................ A-4
Financial Statements ..................................................... 20
GAAP ..................................................................... A-4
Governmental Entity ...................................................... A-4
Hazardous Materials ...................................................... A-4
HSR Act .................................................................. A-4
Indemnitees .............................................................. 47
Indemnitor ............................................................... 50
Initial Acquisition Purchase Agreements .................................. A-4
Initial Acquisitions ..................................................... A-4
Initial Closing Statement ................................................ 2
Insurance Policies ....................................................... 29
Intellectual Property .................................................... 29
Investors Agreement ...................................................... A-4
Knowledge ................................................................ A-4
Landlord Property Leases ................................................. 29
Latest Balance Sheet Date ................................................ 20
Legal Proceeding ......................................................... A-5
Legal Requirement ........................................................ A-5
Lien ..................................................................... A-5
Losses ................................................................... 47
Management Promissory Notes .............................................. A-5
Material Adverse Effect .................................................. A-5
MIC ...................................................................... A-5
Net Working Capital ...................................................... 8
Non-FBO Asset Distribution ............................................... 39
Non-FBO Assets ........................................................... A-5
Notices .................................................................. 55
Option ................................................................... A-5
Optionholder ............................................................. A-5
Parties .................................................................. 1
Party .................................................................... 1
Payoff Letters ........................................................... 4
Permits .................................................................. A-5
TRAJEN HOLDINGS, INC.
PURCHASE AND SALE AGREEMENT
GLOSSARY OF DEFINED TERMS
Permitted Liens .......................................................... A-6
Person ................................................................... A-6
Post-Closing Additional Acquisition Incremental Amount ................... A-6
Preferred Shares ......................................................... 1
Prohibited Transaction ................................................... A-6
Project A Acquisition .................................................... A-6
Project A Purchase Agreement ............................................. A-6
Project B Acquisition .................................................... A-6
Project B Purchase Agreement ............................................. A-6
Project C Acquisition .................................................... A-7
Project C Acquisition Purchase Price ..................................... A-7
Project C Purchase Agreement ............................................. A-7
Projected Adjusted EBITDA ................................................ A-7
Purchase Price ........................................................... 2
Purchaser ................................................................ 1
Purchaser Indemnitees .................................................... 47
Purchaser Related Party .................................................. A-7
Real Property Leases ..................................................... 27
Reimbursement Fund ....................................................... 5
Rejected Opportunity ..................................................... A-7
Release .................................................................. A-7
Released Claims .......................................................... 42
Released Parties ......................................................... 42
Remaining Disputed Items ................................................. 9
Required Authority ....................................................... 34
Responsible Officer ...................................................... A-7
Scheduled Contracts ...................................................... 25
Securities Act ........................................................... A-7
Securityholders .......................................................... A-7
Seller ................................................................... 1
Seller Indemnitees ....................................................... 47
Seller Representative .................................................... 56
Seller Transaction Expenses .............................................. A-7
Sellers .................................................................. 1
Series A Certificate of Designations ..................................... A-8
Series A Preferred Shareholder ........................................... A-8
Series A Preferred Shares ................................................ 1
Series B Preferred Shares ................................................ 1
Series C Preferred Shares ................................................ 1
Shares ................................................................... 1
Site EBITDA .............................................................. A-8
Subsidiary ............................................................... A-8
Subsidiary Equity ........................................................ 15
Tax ...................................................................... A-8
Tax Benefit .............................................................. A-8
Tax Return ............................................................... A-9
Taxing Authority ......................................................... A-9
Termination Date ......................................................... A-9
Trademarks ............................................................... 29
Transaction Documents .................................................... A-9
Warrant .................................................................. A-9
Warrantholder ............................................................ X-0
Xxxx-Xxxx Costs .......................................................... A-9
TRAJEN HOLDINGS, INC.
PURCHASE AND SALE AGREEMENT
GLOSSARY OF DEFINED TERMS
PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (including the exhibits and schedules
hereto, each as amended or restated from time to time, this "AGREEMENT"), dated
as of April 18, 2006 (the "EXECUTION DATE"), is by and among Macquarie FBO
Holdings LLC, a Delaware limited liability company ("PURCHASER"), Trajen
Holdings, Inc., a Delaware corporation (the "COMPANY"), and all of the
stockholders of the Company, whose names are listed on the signature pages
hereto under the caption "Sellers" (individually, a "SELLER" and collectively,
"SELLERS"). Purchaser, the Company and Sellers are individually referred to
herein as a "PARTY" and collectively as the "PARTIES."
RECITALS
WHEREAS, on the date hereof Sellers collectively own all of the issued and
outstanding capital stock of the Company, being 15,000 shares of Series A
Preferred Stock, $0.0001 par value per share (the "SERIES A PREFERRED SHARES"),
58,210 shares of Series B Preferred Stock, $0.0001 par value per share (the
"SERIES B PREFERRED SHARES"), 25,000 shares of Series C Preferred Stock, $0.0001
par value per share (the "SERIES C PREFERRED SHARES" and together with the
Series A Preferred Shares and the Series B Preferred Shares, the "PREFERRED
SHARES"), and 36,300 shares of common stock, $0.0001 par value per share (the
"COMMON SHARES" and together with the Preferred Shares, the "SHARES");
WHEREAS, Sellers desire to sell the Shares to Purchaser, and Purchaser
desires to purchase the Shares from Sellers, in each case, subject to the terms
and conditions set forth in this Agreement; and
WHEREAS, Macquarie Infrastructure Company LLC, as a material beneficiary of
the transactions contemplated by this Agreement, and as a material inducement to
the Company's and each Seller's willingness to enter into this Agreement, is
entering in a guaranty agreement on even date herewith to guaranty Purchaser's
obligations hereunder;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Parties hereto agree as follows:
AGREEMENTS
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. In addition to the terms defined in the body of this
Agreement, capitalized terms used herein will have the meanings given to them in
Exhibit A. The Glossary, which follows the Table of Contents, sets forth the
location in this Agreement of the definition for each capitalized term used
herein.
1.2 CONSTRUCTION. All article, section, subsection, schedule and exhibit
references used in this Agreement are to this Agreement unless otherwise
specified. All schedules and exhibits attached to this Agreement constitute a
part of this Agreement and are incorporated
herein. Unless the context of this Agreement clearly requires otherwise: (a) the
singular includes the plural and the plural includes the singular wherever and
as often as may be appropriate, (b) the words "includes" or "including" means
"including without limitation," and (c) the words "hereof," "herein,"
"hereunder" and similar terms in this Agreement refer to this Agreement as a
whole and not any particular section or article in which such words appear. All
references to Dollars or "$" are to United States dollars. All references to
"days" are to calendar days.
ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE OF SHARES. Subject to the terms and conditions of
this Agreement, at the Closing, each Seller shall sell, assign, convey, transfer
and deliver to Purchaser, and Purchaser shall purchase and accept from each
Seller the Shares set forth opposite such Seller's name on Schedule 1.
2.2 PURCHASE PRICE.
(a) Subject to the terms and conditions of this Agreement, in exchange
for all of the Shares, Purchaser shall pay, in accordance with Sections 2.4(b)
and 2.5, the following amount in immediately available funds (as adjusted
pursuant to this Section 2.2, the "PURCHASE PRICE"):
(i) the sum of $331,050,000; plus
(ii) the Project C Acquisition Purchase Price if consummated
prior to the Closing; plus
(iii) the Additional Acquisitions Purchase Price; plus
(iv) the Additional Acquisitions Incremental Amount; plus
(v) the Acquisition Transaction Fees; plus
(vi) the Approved Capital Expenditure Amount; plus
(vii) the Adjustment Amount; minus
(viii) the Seller Transaction Expenses; minus
(ix) the Facility Completion Costs.
(b) Not less than two Business Days before the Closing, the Company
shall prepare and submit to Purchaser its good faith calculation of the Purchase
Price including separate line items for each component of the Purchase Price
listed in Sections 2.2(a)(ii) through (ix)) (the "INITIAL CLOSING STATEMENT").
The Initial Closing Statement will be the basis on which Purchaser delivers the
Purchase Price at Closing; provided that during the 30-day period
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following the Closing, Purchaser and the Seller Representative shall cooperate
in good faith to reconcile any component of the Purchase Price (other than the
Adjustment Amount which will be determined finally pursuant to Section 2.6) that
is disputed by the Parties in good faith or could not be computed with certainty
before the Closing. Any disagreement remaining after such 30-day period may be
resolved by Purchaser and the Seller Representative or submitted to be resolved
pursuant to the dispute resolution procedures set forth in Section 10.7. Once
Purchaser and the Seller Representative finally resolve all disagreements
regarding the Initial Closing Statement, or when the dispute resolution
procedures with respect to such matter have been finally resolved, Purchaser and
the Seller Representative shall make such payments to one another to put the
Parties in the same position they would have been in had the final resolution of
the Purchase Price components been known at the Closing. Any adjustment to the
Purchase Price pursuant to this Section 2.2 shall be deemed to be adjustments to
the Purchase Price for all tax purposes.
2.3 CLOSING. Subject to the terms and conditions of this Agreement, the
closing of the purchase and sale of the Shares (the "CLOSING") will take place
at 10:00 a.m., New York time at the offices of Xxxxxx & Xxxxxx L.L.P., 000 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, on the fifth Business Day
following the satisfaction or waiver of the last condition in Article VIII to be
satisfied or waived, unless such date is within the fourteen-day period
preceding the end of any calendar quarter, in which case the Closing will take
place on the first Business Day immediately after the end of such calendar
quarter, or at such other time and place as Purchaser and Seller Representative
agree (the "CLOSING DATE"). The Closing will be effective as of 12:01 a.m., New
York time on the Closing Date.
2.4 DELIVERIES AT CLOSING.
(A) BY THE COMPANY. Subject to the terms and conditions of this
Agreement, at the Closing, the Company shall execute and deliver, or cause to be
executed and delivered, to Purchaser each of the following documents (where the
execution or delivery of the documents is contemplated), deliver, or cause to be
delivered, to Purchaser each of the following items (where the delivery of the
items is contemplated), and will take or cause to be taken, the following
actions, where the taking of action is contemplated:
(i) the stock certificates representing ownership of the
Shares duly endorsed in blank by the record holder of each such
certificate or accompanied by duly executed stock power(s) endorsed in
blank by the record holder of each such certificate or, in lieu of any
of such certificates and stock powers, customary lost certificate
affidavits in form reasonably acceptable to Purchaser and the original
minute books for the Company and each Subsidiary;
(ii) an Option Termination Agreement, substantially in the
form of Exhibit B, from each Optionholder;
(iii) a Warrant Termination Agreement, substantially in the
form of Exhibit C, from each Warrantholder;
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(iv) for the Company and the Subsidiaries, a certificate of
the Secretary of State (or other applicable Governmental Entity) of
the state of organization of such entity, and each state where such
entity is qualified to do business as a foreign entity, dated not more
than 15 days prior to the Closing Date, as to the existence or
qualification (as the case may be) and, where applicable, good
standing of such entity;
(v) a certificate, dated as of the Closing Date, signed by
the Secretary of the Company certifying (A) that attached to such
certificate are true and complete copies of (1) the Charter Documents
of the Company and each Subsidiary, and (2) all resolutions of the
Board of Directors of the Company relating to this Agreement and the
transactions contemplated hereby, and (B) as to the incumbency and
specimen signature of each Responsible Officer of the Company
executing this Agreement and each other Transaction Document or any
certificate or instrument furnished pursuant thereto;
(vi) for each Seller that is corporation, partnership,
limited liability company or other entity, a certificate, dated as of
the Closing Date, signed by an appropriate officer, partner or manager
of such Seller, certifying as to the incumbency and specimen signature
of the representative of the Seller executing this Agreement and each
other Transaction Document or any certificate or instrument furnished
by such Seller pursuant thereto, and that this Agreement and each
other Transaction Document executed by such Seller is duly and validly
authorized and constitutes a binding obligation of the Seller;
(vii) a certificate, dated as of the Closing Date, signed by
a Responsible Officer of the Company and each Seller certifying that
the conditions set forth in Sections 8.1(a) and 8.1(b) with respect to
the Company or each Seller, as applicable, have been satisfied;
(viii) customary payoff letters (the "PAYOFF LETTERS") from
each financial institution or other lender to which the Company or any
Subsidiary is obligated with respect to the repayment of Borrowed
Money Debt (other than the Borrowed Money Debt described in Schedule
2.4(a)) confirming the total payment required to be made as of the
Closing Date to repay in full all Borrowed Money Debt (other than the
Borrowed Money Debt described in Schedule 2.4(a)) including all
principal, interest, fees, prepayment premiums and penalties, if any,
together with pay-off instructions for making such repayment on the
Closing Date (the aggregate of all such amounts being referred to as
the "DEBT PAYOFF AMOUNT");
(ix) the written resignations, effective as of the Closing
Date, of the directors and officers of the Company and the
Subsidiaries;
(x) the Escrow Agreement substantially in the form of
Exhibit D (the "ESCROW AGREEMENT") duly executed by the Seller
Representative;
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(xi) a tax certificate from each Seller complying with
Treas. Reg. 1.1445-2(b)(2) stating that such Seller is not a "foreign
person" within the meaning of Section 1445 of the Code; and
(xii) an opinion of the Company's counsel, dated as of the
Closing Date and addressed to Purchaser, substantially in the form of
Exhibit E.
(b) BY PURCHASER. Subject to the terms and conditions of this
Agreement, at the Closing, Purchaser shall execute and deliver, or cause to be
executed and delivered, to Sellers each of the following documents (where the
execution or delivery of the documents is contemplated), deliver, or cause to be
delivered, to Sellers each of the following items (where the delivery of other
items is contemplated) and take, or cause to be taken, the following actions
(where the taking of action is contemplated) and pursuant to a funds flow memo
the specifics of which the Seller Representative furnishes to Purchaser prior to
the Closing:
(i) payment of the Purchase Price (which solely for purposes
of this Section 2.4(b)(i) shall be determined using the Estimated Net
Working Capital and the estimated Adjustment Amount resulting
therefrom) in immediately available funds by wire transfer to accounts
specified to Purchaser by the Seller Representative and otherwise in
the following manner:
(A) Purchaser shall pay the Debt Payoff Amount to the
Company's lenders pursuant to the delivery instructions given in the
Payoff Letters.
(B) Of the balance of the Purchase Price after the payment
described in Section 2.4(b)(i)(A), Purchaser shall deposit $10,000,000
of the Purchase Price (the "ESCROW FUNDS") in the Escrow Account to be
held, safeguarded and released pursuant to the terms of the Escrow
Agreement.
(C) Of the balance of the Purchase Price after the payments
described in Sections 2.4(b)(i)(A) and (B), Purchaser shall pay the
Wind-Down Costs to the Seller Representative.
(D) Of the balance of the Purchase Price after the payments
described in Section 2.4(b)(i)(A), (B) and (C), an amount equal to
$150,000 to the Seller Representative (the "REIMBURSEMENT FUND") to
provide funds to reimburse the Seller Representative for expenses
incurred by it on behalf of the Sellers as further contemplated in
Section 12.8.
(E) Of the balance of the Purchase Price after making the
payments described in Sections 2.4(b)(i)(A), (B), (C) and (D),
Purchaser shall pay to each Series A Preferred Shareholder, an amount
equal to the Liquidation Value of each Series A Preferred Share (as
such term is defined in and computed in the manner required by the
Series A Certificate of Designations, which computation shall be
certified to Purchaser by the Company at the Closing) multiplied by
the number
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of Series A Preferred Shares owned by such holder, which number is
specified for such holder opposite its name on Schedule 1.
(F) Of the balance of the Purchase Price after making the
payments described in Sections 2.4(b)(i)(A), (B), (C), (D) and (E), an
amount equal to the estimated Adjustment Amount, if positive, to the
Seller Representative to be distributed to the Securityholders in
accordance with Section 2.6(e).
(G) Of the balance of the Purchase Price after making the
payments described in Sections 2.4(b)(i)(A), (B), (C), (D), (E) and
(F), Purchaser shall pay to each Optionholder the amount owing to such
Optionholder pursuant to the terms of the Option Termination Agreement
executed and delivered by such Optionholder. At the Closing, the
Company shall provide Purchaser with the amount payable to each
Optionholder pursuant to this Section 2.4(b)(i)(G). The Company agrees
that each Option Termination Agreement will provide for a payment,
with respect to the termination of each Option, equal to (1) the
Common Share Equivalent Consideration, less the exercise price set
forth in such Option, multiplied by (2) the number of Common Shares
issuable upon exercise of such Option in full, whether or not such
Option has fully vested.
(H) Of the balance of the Purchase Price after making the
payments described in Sections 2.4(b)(i)(A), (B), (C), (D), (E), (F)
and (G), Purchaser shall pay to each Warrantholder the amount owing to
such Warrantholder pursuant to the terms of the Warrant Termination
Agreement executed and delivered by such Warrantholder. At the
Closing, the Company shall provide Purchaser with the amount payable
to each Warrantholder pursuant to this Section 2.4(b)(i)(H). The
Company agrees that each Warrant Termination Agreement will provide,
with respect to the termination of each Warrant, for a payment equal
to (1) the Common Share Equivalent Consideration, less the exercise
price set forth in such Warrant, multiplied by (2) the number of
Common Shares issuable upon exercise of such Warrant in full.
(I) Purchaser shall pay the balance of the Purchase Price,
after making the payments described in Sections 2.4(b)(i)(A), (B),
(C), (D), (E), (F), (G) and (H), to holders of the Series B Preferred
Shares, the Series C Preferred Shares and the Common Shares listed on
Schedule 1, in proportion to the number of Series B Preferred Shares,
Series C Preferred Shares and Common Shares held thereby, treating all
such classes of stock as a single, combined class for these purposes.
The Company agrees that each such holder will receive the Common Share
Equivalent Consideration with respect to each such Series B Preferred
Share, Series C Preferred Share and Common Share; provided that the
amount payable to each obligor under a Management Promissory Note
shall be reduced by an amount necessary to satisfy in full the
obligations outstanding under such Management Promissory Note.
6
(ii) for Purchaser, a certificate of the Secretary of State
of the state of organization of such entity, dated not more than 15
days prior to the Closing Date, as to the existence and, where
applicable, good standing of such entity;
(iii) a certificate, dated as of the Closing Date, signed by
the Secretary of Purchaser certifying (A) that attached to such
certificate are true and complete copies of the Charter Documents of
Purchaser and (B) as to the incumbency and specimen signature of each
Responsible Officer of Purchaser executing this Agreement and each
other Transaction Document or any certificate or instrument furnished
pursuant hereto;
(iv) a certificate, dated as of the Closing Date, signed by
a Responsible Officer of Purchaser certifying that the conditions set
forth in Section 8.2(a) and 8.2(b) have been satisfied;
(v) Purchaser shall deliver the Escrow Agreement duly
executed by Purchaser; and
(vi) an opinion of Purchaser's counsel, dated as of the
Closing Date and addressed to Sellers, substantially in the form of
Exhibit F.
2.5 POST-CLOSING PURCHASE PRICE PAYMENTS.
(a) After the Closing, Purchaser shall cause the Company to use its
commercially reasonable efforts to consummate as soon as practicable each
Additional Acquisition that has not been consummated on or before the Closing
Date. At the closing of each Additional Acquisition at which the FBO operations
related thereto are acquired after the Closing Date by Purchaser, Purchaser's
subsidiaries or any Purchaser Related Party, Purchaser shall pay the Seller
Representative in immediately available funds by wire transfer pursuant to
instructions given to Purchaser by the Seller Representative an amount equal to
the Post-Closing Additional Acquisition Incremental Amount related to such
acquisition.
(b) The Seller Representative shall promptly disburse all funds
received pursuant to this Section 2.5 to the Securityholders in proportion to
each such Securityholder's percentage interest in the Escrow Funds, which
percentage interest is set forth for each Securityholder on Schedule 1 of the
Escrow Agreement. All payments made pursuant to this Section 2.5 shall be deemed
to be additional purchase price for tax purposes.
(c) With respect to any payment to be made by Purchaser under Article
II, Purchaser shall be entitled to deduct and withhold from such payment such
amount that is required to be deducted and withheld under the Code, or any
provision of state, local, provincial or foreign Tax Law. To the extent that
amounts are so withheld by Purchaser, Purchaser shall remit such amount in the
manner required by applicable Legal Requirements, and such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
party in respect of whom such deduction and withholding was made.
7
2.6 NET WORKING CAPITAL DETERMINATION.
(a) As used herein, the term "NET WORKING CAPITAL" shall mean the
result of (i) the sum of the following current assets (A) cash and cash
equivalents, (B) accounts receivable, net of doubtful accounts, (C) inventory,
(D) current deferred tax asset, (E) prepaid insurance and (F) prepaids and other
current assets, minus (ii) the sum of the following current liabilities (A)
accounts payable, (B) accrued expenses and (C) accrued payroll and payroll
related costs. Net Working Capital shall be determined as of the Closing Date in
accordance with GAAP (consistent with the Company's past applications of GAAP)
and shall be adjusted to give effect to transactions occurring prior to or in
connection with the Closing.
(b) As used herein, the term "BASE NET WORKING CAPITAL" shall mean
$4,063,527.
(c) At least three (3) Business Days prior to Closing, the Company
shall deliver to Purchaser a statement (the "ESTIMATED CLOSING DATE NET WORKING
CAPITAL STATEMENT") of the Company's good faith estimate of Net Working Capital
as of the Closing Date (the "ESTIMATED NET WORKING CAPITAL"). The Estimated
Closing Date Net Working Capital Statement shall be prepared using the same
format and otherwise in accordance with Schedule 2.6 and shall contain
reasonable detail and supporting documentation to support the estimate of Net
Working Capital set forth therein.
(d) Within sixty (60) days after the Closing, Purchaser shall deliver
to the Seller Representative its determination of the Net Working Capital as of
the Closing Date, including its calculation of the components thereof in
accordance with Schedule 2.6 (the "CLOSING STATEMENT"). The Closing Statement
shall be prepared in accordance with GAAP and using the same format and
otherwise in accordance with the methodologies used by the Company in preparing
the Estimated Closing Date Net Working Capital Statement and shall contain
reasonable detail and supporting documentation to support the Net Working
Capital as of the Closing Date set forth therein. After delivery of the Closing
Statement, Purchaser shall provide the Seller Representative and its
representatives full access to the financial books and records pertaining to the
Company and its Subsidiaries to confirm or audit the Net Working Capital as of
the Closing Date, including the components thereof. The Seller Representative
and its representatives may make inquiries of Purchaser and its Affiliates and
their respective accountants regarding questions concerning, or disagreements
with, the Net Working Capital as of the Closing (including the components
thereof ) arising in the course of their review thereof. Purchaser shall use
its, and shall cause its Affiliates to use their, commercially reasonable
efforts to cause any such accountants to cooperate with the Seller
Representative and its representatives and to respond to such inquiries. Without
limiting the foregoing, Purchaser shall cause its accountants to provide the
Seller Representative and its representatives with access to such accountants'
work papers. Should the Seller Representative disagree with Purchaser's
determination of the Net Working Capital as of the Closing Date, the Seller
Representative shall notify Purchaser within thirty (30) days after Purchaser's
delivery of the Closing Statement of its disagreement with any items set forth
in the Closing Statement. Within five (5) days after Purchaser receives notice
of the Seller Representative's disagreement, Purchaser and the Seller
8
Representative shall meet to attempt to resolve any differences related to their
respective calculation of each item in dispute (the "DISPUTED ITEMS"). The
Purchaser and the Seller Representative shall negotiate in good faith to resolve
any Disputed Items. If Purchaser and the Seller Representative are unable to
agree upon the same dollar value of any Disputed Item (the unresolved items
being the "REMAINING DISPUTED ITEMS") within fifteen (15) days after the Seller
Representative's delivery of notice of disagreement regarding the Closing
Statement, such disagreement shall be resolved in accordance with the procedure
set forth in Section 2.6(e), which shall be the sole and exclusive remedy for
resolving disputes relative to the determination of the Net Working Capital as
of the Closing Date.
(e) In the event that the Seller Representative and the Purchaser are
not able to agree on the Net Working Capital as of the Closing Date within
thirty (30) days after the Seller Representative's delivery of notice of
disagreement, the Seller Representative and the Purchaser shall each have the
right to require that the Remaining Disputed Items be submitted to Deloitte &
Touche LLP, or if Deloitte & Touche LLP is not available for any reason or does
not maintain its independent status, such other independent certified public
accounting firm as the Seller Representative and the Purchaser may then mutually
agree upon in writing (the "ACCOUNTING FIRM") for computation or verification in
accordance with the provisions of this Agreement. Purchaser and the Seller
Representative shall each present in writing to the Accounting Firm (i) its
proposed resolution of each of the Remaining Disputed Items (on an item by item
basis) and (ii) any materials it wishes to present to justify the resolution it
so presents. The Accounting Firm shall review each of the proposed resolutions
submitted by Purchaser and the Seller Representative concerning each of the
Remaining Disputed Items together with the supporting materials submitted in
favor thereof. Purchaser and the Seller Representative shall instruct the
Accounting Firm to adopt the resolution of each Remaining Disputed Item (on an
item by item basis) proposed by either Party in their respective supporting
materials (and the Accounting Firm shall have no power whatsoever to reach any
other result) and the Accounting Firm shall adopt the resolution of each item
that in its judgment is the most fair, equitable and in conformity with this
Agreement. The Accounting Firm may adopt Purchaser's resolution of some items
and the Seller Representative's resolution of other items. Purchaser and the
Seller Representative shall instruct the Accounting Firm to reach its final
decision within thirty (30) days after the Parties' presentation of the
Remaining Disputed Items to the Accounting Firm. The submission of the Remaining
Disputed Items to the Accounting Firm shall be the exclusive remedy for
resolving disputes relative to the determination of Net Working Capital. The
Accounting Firm's determination shall be binding upon the Seller Representative,
the Securityholders and the Purchaser. If at any time the Parties resolve their
dispute, then, notwithstanding the preceding provisions of this Section 2.6(e),
the arbitration procedures promptly shall be discontinued and the calculation of
the affected item shall be revised, if necessary, to reflect such resolution and
thereupon shall be final and binding on the Parties. The Accounting Firm's fees
and expenses shall be borne equally by the Securityholders and the Purchaser.
The portion of such fees and expenses borne by the Securityholders shall be
satisfied from the Escrow Funds. Purchaser and the Seller Representative shall
jointly instruct the Escrow Agent to disburse to the Accounting Firm an amount
equal to one-half of the fees and expenses of such Accounting Firm. Each
Securityholder shall be deemed to bear its pro rata share of such
9
fees and expenses based on its percentage interest of the Escrow Funds, which
percentage interest is set forth on Schedule 1 to the Escrow Agreement.
(f) Promptly following the first to occur of (i) the last day of the
period during which the Seller Representative may dispute the Closing Statement
(unless the Seller Representative has disputed same), (ii) the resolution of any
disputed Closing Statement items pursuant to agreement of the Seller
Representative and Purchaser or (iii) the end of the dispute resolution process
described in Section 2.6(e), the Seller Representative or Purchaser or, if any
of the disputed Closing Statement items are resolved by the Accounting Firm, the
Accounting Firm, shall restate the Closing Statement taking into account any
changes that have been agreed to by the Seller Representative and Purchaser or
that have been finally determined by the Accounting Firm. The Closing Statement,
as so restated or, in the case of clause (i), the unadjusted Closing Statement,
is referred to as the "FINAL WORKING CAPITAL STATEMENT." The difference between
(A) the sum of the asset line items in the Final Working Capital Statement and
(B) the sum of the liability line items in the Final Working Capital Statement
is referred to as the "FINAL WORKING CAPITAL AMOUNT." If the Final Working
Capital Amount differs from the Estimated Net Working Capital, the Seller
Representative and Purchaser shall promptly (within two Business Days after the
Final Working Capital Amount is determined) make a true-up payment so that,
following such payment, the parties are in the same position they would have
been in had the Final Working Capital Amount been known at the Closing and used
in lieu of the Estimated Net Working Capital in determining the amount of the
payment under Section 2.4(b). Any payment received by the Seller Representative
pursuant to Section 2.4(b)(i)(F) shall be held by the Seller Representative
until the Final Working Capital Amount is determined pursuant to this Section
2.6. Any payment required of Purchaser shall be paid in cash by Purchaser to the
Seller Representative, and any payment required of the Securityholders shall be
satisfied first from the amount, if any, paid to the Seller Representative
pursuant to Section 2.4(b)(i)(F), and if any amounts remain owing to Purchaser
following payment of such funds, from the Escrow Funds. The Seller
Representative shall promptly disburse all funds retained as a result of any
payment pursuant to Section 2.4(b)(i)(F) or received pursuant to this Section
2.6(f) in respect of the Final Working Capital Amount to the Securityholders in
proportion to each such Securityholder's percentage interest in the Escrow
Funds, which percentage interest is set forth for each Securityholder on
Schedule 1 to the Escrow Agreement. In the event any payment is required of the
Securityholders from the Escrow Funds, Purchaser and the Seller Representative
shall jointly instruct the Escrow Agent to disburse to Purchaser the amount
owing to Purchaser. Each Securityholder shall be deemed to bear its pro rata
share of the expenses described in the preceding sentence based on its
percentage interest of the Escrow Funds.
ARTICLE III
ESCROW
3.1 ESCROW DEPOSIT. Subject to the terms and conditions of this Agreement,
at the Closing, Purchaser shall deposit the Escrow Funds with the Escrow Agent
to be held, invested, safeguarded and released pursuant to the terms of the
Escrow Agreement.
10
3.2 DISBURSEMENTS.
(a) The Escrow Agreement will provide that disbursements of the Escrow
Funds shall only be made in accordance with written instructions jointly signed
by Purchaser and the Seller Representative or pursuant to a judgment or court
order issued by a court of competent jurisdiction or a final arbitration award
pursuant to this Agreement.
(b) In the event that the Securityholders become obligated finally to
Purchaser or any of the other Purchaser Indemnitees under this Agreement (as
determined by final, non-appealable judgment), at Purchaser's request, the
Seller Representative shall promptly execute a joint instruction letter with
Purchaser directing the Escrow Agent to disburse Escrow Funds to satisfy such
obligations.
(c) In the event the Company (i) becomes obligated to pay and actually
pays any portion of the El Paso Earn-Out or (ii) the Company fails to satisfy
the conditions precedent for the El Paso Earn-Out, at Purchaser's request and,
in the case of clause (i), upon receipt of evidence reasonably satisfactory to
the Seller Representative of such payment, the Seller Representative shall
promptly execute a joint instruction with Purchaser directing the Escrow Agent
to disburse Escrow Funds to Purchaser in an amount equal to the lesser of
$2,000,000 and the remaining Escrow Funds.
(d) In addition to any disbursements of the Escrow Funds pursuant to
above provisions of this Section 3.2, Purchaser and the Seller Representative
for the benefit of the Securityholders shall issue joint instructions to the
Escrow Agent to effect the following disbursements:
(i) On the 270th day following the Closing Date, Purchaser
and the Seller Representative shall jointly instruct the Escrow Agent
to disburse to the Seller Representative for the benefit of the
Securityholders an amount equal to 50% of Escrow Funds less (A) the
amount, if any, of Escrow Funds which the Escrow Agent has (1)
disbursed pursuant to the Escrow Agreement prior to such date or (2)
been instructed to disburse in accordance with the Escrow Agreement
but not actually disbursed as of such date and (B) a reasonable
reserve amount (to be determined by Purchaser and the Seller
Representative in good faith, or, to the extent Purchaser and Seller
Representative are unable to agree, pursuant to the dispute resolution
provisions contained in Section 10.7 of this Agreement) in respect of
(x) any claims submitted by any Purchaser Indemnitee in accordance
with Article X that remain pending at such time and (y) the El Paso
Earn-Out (but only if such payment is then reasonably likely to become
payable by the Company).
(ii) On the first business day on or after the 540th day
following the Closing Date, Purchaser and the Seller Representative
shall jointly instruct the Escrow Agent to disburse to the Seller
Representative for the benefit of the Securityholders an amount equal
to the remaining Escrow Funds as of such date, if any, less (A) the
amount, if any, of Escrow Funds which the Escrow Agent has
11
been instructed to disburse in accordance with the Escrow Agreement
but not actually disbursed as of such date and (B) a reasonable
reserve amount (to be determined by Purchaser and the Seller
Representative in good faith, or, to the extent Purchaser and the
Seller Representative are unable to agree, pursuant to the dispute
resolution provisions contained in Section 10.7 of this Agreement) in
respect of any claims submitted by any Purchaser Indemnitee in
accordance with Article X that remain pending at such time.
(e) Following resolution from time to time of any claim for which a
reserve of a portion of the Escrow Funds was established, Purchaser and the
Seller Representative will jointly instruct the Escrow Agent to release such
reserve amount from the Escrow Funds to the Seller Representative for the
benefit of the Securityholders, to a Purchaser Indemnitee or to both, as
appropriate for the resolution of such claim.
(f) The Seller Representative shall promptly disburse all funds
received pursuant to this Section 3.2 to the Securityholders in proportion to
each such Securityholder's percentage interest in the Escrow Funds, which
percentage interest is set forth for each Securityholder on Schedule 1 of the
Escrow Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each Seller hereby severally and not jointly, and only with respect to
itself, represents and warrants to Purchaser as follows:
4.1 OWNERSHIP OF SHARES, WARRANTS AND OPTIONS. Such Seller is the sole
record and beneficial owner of the Shares listed opposite such Seller's name on
Schedule 1. The Shares of such Seller are free and clear of all Liens (other
than any transfer restrictions imposed by federal and state securities laws and
Liens arising under the terms of the Investors Agreement). Schedule 1 identifies
for such Seller the date any Warrant or Option was granted or issued to such
Seller, the class and number of shares of capital stock of the Company issuable
upon exercise in full of such Warrants and Options, and the exercise price
payable with respect to each Common Share issuable upon exercise of such
Warrants and Options. Except for such Shares, Warrants and Options, such Seller
does not own of record or beneficially, or have any interest in, or right to
acquire, any shares of capital stock of the Company or any Subsidiary.
4.2 ORGANIZATION; EXISTENCE AND GOOD STANDING. Each Seller that is a
corporation, limited partnership or limited liability company, as the case may
be, is duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is incorporated or organized. Such Seller has all
requisite power and authority to own the Shares, Options or Warrants held
thereby. Such Seller is not required to be qualified to do business as a foreign
corporation, limited partnership or limited liability company, as the case may
be, in any jurisdiction in order to own or sell its Shares or perform its
obligations hereunder.
4.3 AUTHORITY; ENFORCEABILITY. Such Seller has the full corporate,
partnership or limited liability company power (if an entity) or legal capacity
(if an individual) and authority to
12
execute this Agreement and the other Transaction Documents to which such Seller
is a party, and to perform its obligations under this Agreement and the other
Transaction Documents to which such Seller is, or will be as of the Closing, a
party. The execution, delivery and performance of this Agreement has been, and
the execution, delivery and performance of the other Transaction Documents to
which such Seller will be a party as of the Closing will have been, duly and
validly authorized by such Seller. This Agreement constitutes, and each of the
other Transaction Documents to which such Seller will be a party as of the
Closing will constitute, the valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other Legal Requirements relating to or affecting creditors'
rights generally or by equitable principles.
4.4 NO VIOLATIONS. The execution and delivery of this Agreement and the
other Transaction Documents to which such Seller is a party by such Seller does
not and will not, and the performance and compliance with the terms and
conditions hereof and thereof by such Seller and the consummation of the
transactions contemplated hereby and thereby by such Seller will not:
(a) violate, conflict with, result in a breach or constitute a default
under any of the provisions of such Seller's Charter Documents, if applicable;
or
(b) violate, conflict with, result in a breach or constitute a default
under any provision of, or require any notice, filing, consent, authorization or
approval under any Legal Requirement (other than the HSR Act) binding upon such
Seller or any Contract to which such Seller is a party or which it or its assets
are otherwise bound or subject to.
4.5 LEGAL PROCEEDINGS. There are no Legal Proceedings pending or, to the
knowledge of such Seller, threatened that (a) challenge the validity or
enforceability of such Seller's obligations under this Agreement or other
Transaction Documents to which such Seller is or will be a party or (b) seek to
prevent, delay or otherwise would reasonably be expected to adversely affect the
consummation by such Seller of the transactions contemplated herein or therein.
4.6 BROKER. Such Seller is not liable for any investment banking fee,
finder's fee, brokerage payment or other like payment in connection with the
origination, negotiation or consummation of the transactions contemplated herein
that will be the obligation of the Company, any Subsidiary or Purchaser. Such
Seller is not a party to any agreement, and has not committed any act which
might give rise to any valid claim against Purchaser, the Company or any
Subsidiary, for any such fee commission or similar payment.
ARTICLE V
REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY
The Company hereby represents and warrants to Purchaser as follows:
13
5.1 ORGANIZATION; EXISTENCE AND GOOD STANDING. The Company and each
Subsidiary is a corporation, limited partnership or limited liability company,
as the case may be, duly organized, validly existing and in good standing under
the laws of the jurisdiction in which it is incorporated or organized. The
Company and each Subsidiary has all requisite power and authority to own, lease
and operate the properties and assets it currently owns, leases and operates and
to carry on its business as such business is currently conducted. The Company
and each Subsidiary is qualified to do business as a foreign corporation,
limited partnership or limited liability company, as the case may be, in each
jurisdiction shown in Schedule 5.1, which are all jurisdictions where the nature
of its properties or business requires such qualification.
5.2 AUTHORITY; ENFORCEABILITY. The Company has the full corporate power and
authority to execute this Agreement and other Transaction Documents to which it
is a party, and to perform its obligations under this Agreement and the other
Transaction Documents to which it is, or will be as of the Closing, a party. The
execution, delivery and performance of this Agreement has been, and the
execution, delivery and performance of the other Transaction Documents to which
the Company will be a party as of the Closing will have been, duly and validly
authorized by the Company. This Agreement constitutes, and each of the other
Transaction Documents to which the Company will be a party as of the Closing
will constitute, the valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or other Legal
Requirements relating to or affecting creditors' rights generally or by
equitable principles. The Option Termination Agreements and the Warrant
Termination Agreements will as of the Closing constitute the valid and binding
obligations of the parties thereto, enforceable against such parties in
accordance with their terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other Legal Requirements
relating to or affecting creditors' rights generally or by equitable principles.
5.3 CAPITALIZATION OF THE COMPANY.
(a) The Shares constitute all of the issued and outstanding shares of
capital stock of the Company. The Shares have been duly authorized and validly
issued and are fully paid and non-assessable and were issued in conformity with
all applicable Legal Requirements and were not issued in violation of, and are
not subject to, any purchase option, call option, right of first refusal,
preemptive right, subscription right or any similar right under any provision of
the Delaware General Corporation Law, the Company's Charter Documents or any
Contract to which the Company is or was a party or by which it is or was
otherwise bound. The Shares are held of record by the Sellers as described in
Schedule 1.
(b) Except for the Options and the Warrants and except for the
preemptive rights granted under the Investors Agreement, there are no Contracts
(including, without limitation, options, warrants, calls and preemptive rights)
obligating the Company (i) to issue, sell, pledge, dispose of or encumber any
shares of any class of its capital stock or any securities convertible,
exercisable or exchangeable into any class of its capital stock, (ii) to redeem,
purchase or acquire in any manner any class of its capital stock or any
securities that are
14
convertible, exercisable or exchangeable into any shares of any class of its
capital stock, or (iii) to make any dividend or distribution of any kind with
respect to its capital stock.
(c) Except for the Options and the Warrants, there are no outstanding
or authorized stock appreciation rights, phantom stock rights, stock-based
performance units, profit participation, or similar rights affecting the capital
stock of the Company. Except for the Investors Agreement, the Company's Charter
Documents and the agreements listed on Schedule 5.3(c), the Company is not a
party to any voting trusts, proxies, or other shareholder or similar agreements
or understandings with respect to the voting, repurchase, or transfer of the
capital stock of the Company.
(d) The Company has delivered to Purchaser true and complete copies of
the Company's Charter Documents, as amended to date. The Company has delivered
to Purchaser true and complete copies of all minute books and stock ledgers of
the Company and the Subsidiaries.
5.4 SUBSIDIARIES. Set forth in Schedule 5.4 is a true and complete list of
each of the Subsidiaries, its jurisdiction of organization, the amount and type
of each Subsidiary's authorized capital stock or other equity interest and the
amount, type and owner of each Subsidiary's issued and outstanding shares of
capital stock or other securities of any Subsidiary (the "SUBSIDIARY EQUITY").
All of the Subsidiary Equity is owned beneficially and of record, directly or
indirectly, by the Company. The Company has delivered to Purchaser true and
complete copies of each Subsidiary's Charter Documents, as amended to date. The
Subsidiary Equity has been duly authorized and validly issued and is fully paid
and non-assessable. There are no voting trusts, proxies or other shareholder or
similar agreements or undertakings with respect to the voting, repurchase or
transfer of the Subsidiary Equity or other than as set forth in the Investors
Agreement. All of the Subsidiary Equity has been pledged to secure the Borrowed
Money Debt. Except for the security interests in the Subsidiary Equity held by
the Borrowed Money Debt lenders, no Person has any claim to, or any right to
acquire any Subsidiary Equity or ownership interests in any Subsidiary. Except
as set forth on Schedule 5.4, neither the Company nor any Subsidiary owns, of
record or beneficially, or controls, directly or indirectly, any capital stock
or any other equity interest in any corporation, association or other business
entity.
5.5 NO VIOLATIONS. Except as set forth on Schedule 5.5, the execution and
delivery of this Agreement and the other Transaction Documents to which the
Company is a party by the Company does not and will not, and the performance and
compliance with the terms and conditions hereof and thereof by the Company and
the consummation of the transactions contemplated hereby and thereby will not:
(a) violate or conflict with any of the provisions of the Company's or
any Subsidiary's Charter Documents, if applicable;
(b) except for approval under the HSR Act, violate or conflict with,
in any material respect, any provision of or require any filing, consent,
authorization or approval under any Legal Requirement binding upon the Company
or any Subsidiary; or
15
(c) violate or conflict with, in any material respect, require the
consent of the counterparty to, or constitute a material default (or any event
which, with or without due notice or lapse of time, or both, would constitute a
material default), or give rise to any material payment obligation, right of
amendment (with respect to any material term), termination or cancellation under
any Scheduled Contract.
5.6 LEGAL REQUIREMENTS AND PERMITS. The Company and the Subsidiaries are in
compliance in all material respects with all applicable Legal Requirements. The
Company and each Subsidiary holds all material Permits, licenses, certificates,
approvals, registrations, franchises, rights, qualifications and other
authorizations of federal, state and local governments, agencies and regulatory
authorities required or advisable for the conduct of the Business as operated on
the date hereof. Except as set forth in Schedule 5.6, neither the Company nor
any Subsidiary (a) holds any Permit to operate aircraft issued by the Federal
Aviation Administration or by the U.S. Department of Transportation or (b) owns
or leases aircraft or (c) operates aircraft for a third party under a management
agreement or other similar arrangement. Neither the Company nor any Subsidiary
has received any notice of any (i) order, rule or directive, or any proposed
order, rule or directive, issued by any Governmental Entity against the Company
or any Subsidiary or (ii) threatened legal or regulatory proceeding which could
adversely affect in any material respect the Business or assets of the Company
or any Subsidiary or any Permit required to be obtained and maintained by the
Company or any Subsidiary. Notwithstanding the foregoing, this Section 5.6 shall
not apply to any matters relating to compliance with Environmental Laws or tax
matters as it is the Parties' intent that Sections 5.8 and 5.9, as applicable,
shall cover such matters.
5.7 LEGAL PROCEEDINGS. Except as set forth in Schedule 5.7, as of the
Execution Date, there are no Legal Proceedings pending or, to the Knowledge of
the Company, threatened against the Company or any Subsidiary. Except as set
forth on Schedule 5.7, as of the Execution Date, none of the Company or any
Subsidiary is subject to or in violation of any judgment, order, award,
injunction or decree of any Governmental Entity. As of the Closing Date, there
shall not be any Legal Proceedings pending, or to the Knowledge of the Company,
threatened against the Company or any Subsidiary that, if determined adversely,
would have a Material Adverse Effect. As of the Closing Date, none of the
Company or any Subsidiary shall be subject to or in violation of any judgment,
order, award, injunction or decree of any Governmental Entity which would result
in or have a Material Adverse Effect.
5.8 ENVIRONMENTAL.
(a) Except as set forth in Schedule 5.8(a):
(i) To the Knowledge of the Company, the Company and the
Subsidiaries and their respective properties and operations are in
compliance in all material respects with Environmental Laws.
(ii) The Company and the Subsidiaries and their respective
properties and operations are not subject to any pending or, to the
Knowledge of the
16
Company, threatened proceedings or investigations by or before any
Governmental Entity pursuant to Environmental Laws.
(iii) Neither the Company nor any Subsidiary has received any
written notice, notification, demand, request for information,
citation, summons, complaint or order pursuant to Environmental Laws
relating to the Company and asserting that the Company or any
Subsidiary has failed to comply in any material respect with any
applicable Environmental Law. Neither the Company nor any Subsidiary
has received any written notice from or after March 1, 2003 that it is
a potentially responsible party under CERCLA or any similar state or
local law with respect to any on-site or off-site location.
(iv) There has been no Release of Hazardous Materials by the
Company or any Subsidiary or former Subsidiary (while such Subsidiary
was owned by the Company) on any real property now or previously
leased by the Company or any of the Subsidiaries or former
Subsidiaries (while such Subsidiaries were owned by the Company) in
respect of which a Governmental Entity has required or under
Environmental Law may require any material remedial action.
(b) The Company has delivered to Purchaser or its representatives all
Phase I environmental assessment reports and related documents in the Company's
possession relating to its current facilities or the real property currently
leased by it except such reports or related documents that were prepared at
Purchaser's request. Except for such reports and related documents, there has
been no environmental investigation, study or other third party analyses or
audit report prepared by, for, or provided to the Company in relation to the
Business since March 1, 2003.
(c) Schedule 5.8(c) sets forth a true and complete list of all
material Permits required under any Environmental Law ("ENVIRONMENTAL PERMITS")
in connection with the ownership and operation of the Business as of the
Execution Date. The Company has obtained all material Environmental Permits
required for operation of the Business, enabling the Business to operate as of
the Closing Date in the ordinary course of business consistent with past
practices.
(d) This Section 5.8 and the first sentence of Section 5.7 contain the
sole and exclusive representations and warranties of the Company with respect to
environmental matters relating to the Company or any Subsidiary, including any
matters arising under Environmental Laws.
5.9 TAX MATTERS. Except as set forth on Schedule 5.9:
(a) All Tax Returns required to be filed by or with respect to any of
the Company, the Subsidiaries and each affiliated, combined, consolidated or
unitary group of which the Company or any Subsidiary is or has been a member (a
"COMPANY GROUP") on or before the Closing Date have been or will be duly and
timely filed in the manner prescribed by applicable
17
laws. All Taxes required to be paid by or with respect to any of the Company and
the Subsidiaries (whether or not shown or required to be shown on any Tax
Return) have been timely paid.
(b) All Tax withholding and deposit requirements imposed on or with
respect to any of the Company and the Subsidiaries have been satisfied in full
and the Company and the Subsidiaries have complied with all information
reporting and backup withholding requirements, including the maintenance of
required records with respect thereto, in connection with amounts paid or owing
to any employee, creditor, independent contractor or other third party. There
are no Liens on any of the assets, rights or properties of the Company or any
Subsidiary with respect to Taxes, other than Liens for Taxes not yet due and
payable.
(c) Neither the Company nor any Subsidiary has requested any extension
of time within which to file any Tax Return which Tax Return has not yet been
filed. None of the Company or any Subsidiary has in force any waiver of any
statute of limitations in respect of Taxes or any extension of time with respect
to a Tax assessment or deficiency.
(d) There are no pending Tax audits and none have been threatened in
writing by any Tax Authority. There are no proposed deficiencies or other claims
for unpaid Taxes that have been asserted by a Tax Authority in writing against
the Company, any Subsidiary or any Company Group. No issue has been raised by
any examination conducted by any Taxing authority that, by application of the
same principles, would reasonably be expected to result in a proposed deficiency
for any other period not so examined. Each deficiency resulting from any audit
or examination relating to Taxes of the Company or any Subsidiary by any Taxing
authority has been paid or is being contested in good faith and in accordance
with law and is fully reserved for on the Latest Balance Sheet in accordance
with GAAP. No claim has ever been made by an authority in a jurisdiction where
the Company or any of the Subsidiaries does not file Tax Returns that the
Company or any Subsidiary, as the case may be, is or may be subject to Tax in
that jurisdiction. Neither the Company nor any Subsidiary is subject to any
private letter ruling of the Internal Revenue Service or comparable rulings of
other Tax authorities that will be binding on the Company or any Subsidiary with
respect to any period following the Closing Date. Neither the Company nor any of
the Subsidiaries has granted any power of attorney that is currently in force
with respect to any Taxes or Tax Returns.
(e) Except for the existing affiliated group of which the Company is
the common parent corporation, none of the Company or any Subsidiary has ever
been a member of any affiliated, combined, consolidated or unitary group,
including any affiliated group of corporations, within the meaning of Section
1504 of the Code. None of the Company or any Subsidiary has any liability for,
or any indemnification or reimbursement obligation with respect to, Taxes of any
person (i) under Treasury Regulation Section 1.1502-6 (or any similar provision
under foreign, state or local law), (ii) as transferee or successor, (iii) by
contract, or (iv) otherwise. Neither the Company nor any Subsidiary is a party
to any Tax sharing agreement, Tax indemnity obligation or similar agreement,
arrangement or practice with respect to Taxes (including any advance pricing
agreement, closing agreement or other agreement relating to Taxes with any
Taxing authority).
18
(f) Neither the Company nor any Subsidiary has been a party to or
participated in any way in a transaction that could be described as a "listed
transaction" within the meaning of Treasury Regulation Section 1.6011-4(b) or
any confidential corporate Tax shelter within the meaning of Treasury Regulation
Section 1.6111-2, nor has any Tax item or any Tax strategy that has been derived
from or related to any such transaction been reflected in any Tax Return of the
Company or any Subsidiary.
(g) Neither the Company nor any Subsidiary is a party to any
agreement, contract, or arrangement (including this Agreement and the
arrangements contemplated hereby) that, individually or collectively, (i) has
resulted or could result in a "parachute payment" within the meaning of Section
280G of the Code (or any corresponding or similar provision of state, local or
foreign Tax law); (ii) has resulted or could result in the payment of any amount
(whether in cash or property, including shares of capital stock) that would not
be deductible pursuant to the terms of Sections 162(a)(1), 162(m), 162(n) or
280G of the Code; or (iii) is or will be subject to the excise Tax under Section
4999 of the Code.
(h) Neither the Company nor any Subsidiary has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock that purported or
intended to qualify in whole or in part under Section 355 of the Code.
(i) The statutes of limitations for the federal income Tax Returns of
the Company and the Subsidiaries (including any Tax Returns of any Company
Group) have expired or otherwise have been closed for all Taxable periods ending
on or before December 31, 2001.
(j) Neither the Company nor any Subsidiary has agreed to or is
required to make any adjustment under Code Section 481(a) or Section 482 (or an
analogous provision of state, local or foreign law) by reason of a change in
accounting method or otherwise. Neither the Company nor any Subsidiary will be
required to include in income, or exclude any item of deduction from, Taxable
income for any Taxable period (or portion thereof) ending after the Closing Date
as a result of any (i) "closing agreement" as described in Code section 7121 (or
any corresponding or similar provision of state, local or foreign income Tax
law); (ii) intercompany transactions occurring at or prior to the Closing or any
excess loss account in existence at Closing described in Treasury Regulations
under Code section 1502 (or any corresponding or similar provision of state,
local or foreign income Tax law); or (iii) installment disposition made on or
prior to the Closing Date.
(k) Neither the Company nor any Subsidiary is or has been a United
States real property holding corporation (as defined in Section 897(c)(2) of the
Code).
(l) Neither the Company nor any Subsidiary has had or maintained a
permanent establishment other than in its country of incorporation.
(m) Neither Company nor any Subsidiary has elected a classification
under Treas. Reg. Section 301.7701-3, other than its default classification for
federal Tax purposes.
19
(n) The tax basis of the Company and its Subsidiaries in their
property, plant and equipment (other than the Non-FBO Assets) is equal to or
greater than $100,000,000.
(o) Other than as a result of the purchase and sale of Shares pursuant
to this Agreement, neither the Company nor any Subsidiary is subject to any
limitation on the use of its Tax attributes under Section 382 of the Code or
Treasury Regulation Section 1.1502-15 or -21 (regarding separate return
limitation years) or any comparable provisions of state law.
(p) This Section 5.9 contains the sole and exclusive representations
and warranties of the Company with respect to tax matters relating to the
Company or any Subsidiary.
5.10 FINANCIAL MATTERS.
(a) Set forth on Schedule 5.10(a) are actual and complete copies of
the following financial statements (collectively, the "FINANCIAL STATEMENTS"):
(i) the audited balance sheets of the Company and its
consolidated subsidiaries as of December 31, 2003 and 2004, and the
related audited statements of income, stockholders' equity and cash
flows of the Company for the periods then ended;
(ii) the unaudited balance sheet of the Company and its
consolidated subsidiaries as of December 31, 2005, and the related
unaudited statements of income, stockholders' equity and cash flows of
the Company for the period then ended (the "UNAUDITED 2005 FINANCIAL
STATEMENTS"); and
(iii) the unaudited balance sheet of the Company and its
consolidated subsidiaries as of February 28, 2006 (the "LATEST BALANCE
SHEET DATE"), and the related unaudited statements of income,
stockholders' equity and cash flows of the Company for the period then
ended.
(b) Except as disclosed in Schedule 5.10(b), the Financial Statements
have been prepared based upon the books and records of the Company and its
Subsidiaries and in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, subject, in the case of the unaudited
financial statements, to normal, recurring year end adjustments, and the absence
of explanatory footnote disclosures required by GAAP, and fairly present in all
material respects the financial condition and results of operation of the
Company and its consolidated Subsidiaries at the respective dates described
above (and the results of operations of the Company and its consolidated
Subsidiaries for the respective periods). The Financial Statements do not
contain any adjustment for the sale of the Company's airplane or the Non-FBO
Asset Distribution.
(c) The only Borrowed Money Debt of the Company and the Subsidiaries
arises under the credit agreements and other promissory notes and agreements
described on Schedule 5.10(c).
20
(d) Since the Latest Balance Sheet Date, neither the Company nor any
Subsidiary has incurred any obligation or liability (whether accrued, absolute,
contingent or otherwise) of the type required to be reflected on a consolidated
balance sheet of the Company and the Subsidiaries prepared in accordance with
GAAP applied on a basis consistent with the Latest Balance Sheet except
liabilities and obligations incurred in the ordinary course of business or in
connection with the sale of the Company and the Subsidiaries.
(e) Since March 1, 2003, except for the Business, the Non-FBO Assets
or as set forth on Schedule 5.10(e), the Company has not owned or operated any
businesses other than FBO Businesses.
5.11 ABSENCE OF CERTAIN CHANGES. As of the Execution Date and except as set
forth on Schedule 5.11 or except as otherwise contemplated by this Agreement
(including the Non-FBO Asset Distribution, the Initial Acquisitions, the Project
C Acquisition and the other Transaction Documents) and disregarding the
activities of the companies acquired in the Initial Acquisitions prior to their
acquisition by the Company or one of its Subsidiaries, since December 31, 2005:
(a) the Company and the Subsidiaries have not amended their Charter
Documents;
(b) the Company and the Subsidiaries have conducted their business
only in, and have not engaged in any material transaction outside of, the
ordinary course of business;
(c) there has not been any damage, destruction or other casualty loss
with respect to any asset or property owned or leased by the Company or any
Subsidiary that has resulted, or is reasonably likely to result, in losses in
excess of $500,000 individually or $1,000,000 in the aggregate;
(d) neither the Company nor any Subsidiary has mortgaged, pledged or
subjected to any Lien (other than a Permitted Lien or a Lien securing any
Borrowed Money Debt), any of the assets or properties of the Company or any
Subsidiary;
(e) the Company has not made any change in its accounting principles,
practices or methodologies;
(f) the Company and the Subsidiaries have not entered into any
employment, consulting, severance, termination, Benefit Plan or other benefit
agreement or other agreement with any of the employees or former employees of
the Company and the Subsidiaries relating to compensation;
(g) neither the Company nor any Subsidiary has (i) increased the
compensation payable to any of its officers or employees, other than normal and
customary increases consistent with past practice or increases that otherwise
were required by the Company's or a Subsidiary's obligations pursuant to
applicable Legal Requirements or contracts in effect as of December 31, 2005,
(ii) increased severance obligations payable to any of its
21
officers or employees, (iii) made or committed to make any bonus payment to any
of its employees or agents other than payments or arrangements in the ordinary
course of business consistent with past practices or (iv) loaned money to any
officer or employee of the Company or any Subsidiary;
(h) other than in the ordinary course of business, neither the Company
nor any Subsidiary has waived or released any material right or claim of or in
favor of the Company or any Subsidiary or cancelled or waived any debts or
claims against any officer, manager or employee of the Company or any
Subsidiary;
(i) neither the Company nor any Subsidiary has sold, assigned or
transferred, other than in the ordinary course of business and consistent with
past practices, any material assets;
(j) neither the Company nor any Subsidiary has acquired by merger,
consolidation or otherwise any material assets or business of, any corporation,
partnership, association or other business organization or division thereof;
(k) neither the Company nor any Subsidiary or, to Knowledge of the
Company, any other party, has terminated, amended or modified, or threatened to
terminate, amend or modify, any material Scheduled Contract or material Permit;
(l) there has not been any strike, walkout, or other significant labor
event or threat thereof, which in any case has materially adversely affected the
Business, or any other new or continued event, development or condition
involving labor matters which has or could materially adversely affect the
Business;
(m) there has not been any actual or, to the Knowledge of the Company,
threatened change, in the Company's relations with, or any loss or, to the
Knowledge of the Company, threatened loss of, any relationship of the Company
with its landlords, suppliers or customers which, individually or in the
aggregate, has had or would reasonably be expected to have a Materially Adverse
Effect on the Company;
(n) the Company has not written off as uncollectible any notes owed to
the Company or accounts receivable of the Company or written down the value of
any asset or inventory of the Company other than in immaterial amounts or in the
ordinary course of business consistent with past practice;
(o) the Company has not created, incurred, assumed or guaranteed any
material obligations or liabilities (whether absolute, accrued, contingent or
otherwise and whether due or to become due), except in the ordinary course of
business or with respect to Borrowed Money Debt that will be included in the
Debt Payoff Amount;
(p) neither the Company nor any Subsidiary has altered in any material
respect the manner in which it collects accounts receivable or pays accounts
payable; or
22
(q) the Company and the Subsidiaries have not agreed to do any of the
foregoing.
5.12 EMPLOYEE BENEFIT PLANS.
(a) Set forth on Schedule 5.12(a) is a list of all Benefit Plans
maintained, administered or contributed to, directly or indirectly, by the
Company or any ERISA Affiliate of the Company ("COMPANY PLANS"). The only
Company Plan which is an Employee Pension Benefit Plan is the Trajen, Inc.
401(k) Plan (the "401(K) PLAN").
(b) There has been delivered to Purchaser, with respect to each
Company Plan, the following: (i) a copy of the annual report (if required under
ERISA) with respect to each such plan for the last three (3) years (including
all schedules and attachments); (ii) a copy of the summary plan description,
together with each summary of material modification required under ERISA with
respect to such plan; (iii) a true and complete copy of each such written plan,
and with respect to the 401(k) Plan, the original plan document and all
amendments thereto which have been adopted since the inception of such plan;
(iv) all trust agreements, insurance contracts, and similar instruments with
respect to each such funded or insured plan; (v) copies of all nondiscrimination
and top-heavy testing reports for the last three (3) plan years with respect to
each such plan that is subject to nondiscrimination and/or top-heavy testing;
and (vi) any investment management agreements, administrative services contracts
or similar agreements relating to the ongoing administration and investment of
each such plan
(c) Each Company Plan (i) is in compliance in all material respects
with all applicable laws, including ERISA and the Code and (ii) has been
administered in all material respects in accordance with its governing
instruments.
(d) All contributions, premiums and other payments required to be made
by the Company and the Subsidiaries to the Company Plans have been made timely,
excluding any such failures that individually or in the aggregate are not
material, and there are no material benefit obligations that have not been
properly accounted for in the Company's financial statements or disclosed in the
footnotes thereto in accordance with GAAP.
(e) To the Knowledge of the Company, (i) there have been no Prohibited
Transactions with respect to any Company Plan which could reasonably be expect
to result in any liability to the Company, its ERISA Affiliates, or any of their
respective employees and (ii) there has been no breach of fiduciary duty
(including violations under Part 4 of Title I of ERISA) with respect to any
Company Plan.
(f) (i) Neither the Company nor any ERISA Affiliate has ever
sponsored, maintained, contributed to, had any obligation to contribute to, or
had any other liability under or with respect to any Employee Pension Benefit
Plan covered by Title IV of ERISA, Section 302 of ERISA or Section 412 of the
Code; and (ii) neither the Company nor any ERISA Affiliate has ever had any
liability under or with respect to any "multiemployer plan" as defined in ERISA
Section 3(37) or any "multiple employer welfare arrangement" as defined in
Section 3(40)(A) of ERISA.
23
(g) Neither the Company nor any ERISA Affiliate has ever sponsored,
maintained, administered, contributed to, had any obligation to contribute to,
or had any other liability under or with respect to any Employee Welfare Benefit
Plan which provides health, life or other coverage for former directors,
officers or employees (or any spouse or former spouse or other dependent
thereof), other than benefits required by COBRA.
(h) Neither the Company nor any ERISA Affiliate has ever maintained a
"voluntary employees beneficiary association" within the meaning of Section
501(c)(9) of the Code or any other "welfare benefit fund" as defined in Section
419(e) of the Code.
(i) The Subsidiaries and the entities included in the Non-FBO Assets
are the only ERISA Affiliates of the Company.
(j) There are no withdrawal charges, redemption fees, contingent
deferred sales charges or similar expenses triggered by termination of the
401(k) Plan or cessation of participation or withdrawal of employees thereunder.
(k) Neither the Company nor any ERISA Affiliate sponsors, maintains,
or contributes to a nonqualified deferred compensation plan within the meaning
of Code Section 409A, except to the extent that such arrangement will (i) be
terminated by the Closing Date and (ii) not give rise to Tax described in
Section 409A(a)(1)(B).
5.13 EMPLOYEES; EMPLOYMENT MATTERS.
(a) Schedule 5.13(a) identifies for each of the Company and the
Subsidiaries the following:
(i) (A) the name, job title, original hire date, service date,
bonus, if any, paid for fiscal period ending December 31, 2005,
accrued and unused vacation as of the Execution Date, and current
annual salary (or rate of pay) of each of such entity's employees,
other than the DOD & IT Employees, and (B) other compensation
(including, without limitation, normal bonus, profit-sharing, pension
benefits and other compensation) now payable to each of such entity's
employees, other than the DOD & IT Employees;
(ii) any increase to become effective after the date of this
Agreement in the total compensation or rate of total compensation
(including, without limitation, normal bonus, profit-sharing, pension
benefits and other compensation) payable to each such person; and
(iii) all presently outstanding loans and advances (other than
routine travel advances to be repaid or formally accounted for within
60 days) made by the Company or any Subsidiary to, or made to the
Company or any Subsidiary by, any director, officer or employee of the
Company or any Subsidiary.
24
(b) Except as set forth on Schedule 5.13(b), (i) the terms of
employment of all employees of the Company and the Subsidiaries are such that
their employment may be terminated at will with notice given at any time and
(ii) there are no severance payments which are payable by the Company to any
such person under the terms of any Contract. Schedule 5.13(b) lists all of the
employees who are currently on leave relating to work-related injuries and/or
receiving disability benefits under any Benefit Plan.
(c) The Company is not a party to any collective bargaining agreement
or labor union contract. As of the Execution Date, with respect to the Company,
there is no pending or, to the Knowledge of the Company, threatened (i) union
organizational activity or (ii) application for certification of a collective
bargaining agent.
(d) All persons classified by the Company as independent contractors
satisfy the requirements of applicable Legal Requirements to be so classified,
and the Company has fully and accurately reported its compensation on IRS Forms
1099 when required to do so. No individual who has performed services for or on
behalf of the Company and who has been treated by the Company as an independent
contractor is classifiable as a "leased employee" within the meaning of Section
414(n)(2) of the Code with respect to the Company.
5.14 AGREEMENTS, CONTRACTS AND COMMITMENTS.
(a) Schedule 5.14(a) contains a true and complete list as of the
Execution Date, and the Company has delivered to Purchaser complete and correct
copies, of the Contracts described below to which the Company or any Subsidiary
is a party (collectively, the "SCHEDULED CONTRACTS"):
(i) each Contract pursuant to which the Company or any Subsidiary
currently leases real property used in the operation of the Business,
including the FBO Leases;
(ii) each Contract for the purchase of fuel after the date hereof
by the Company or any Subsidiary;
(iii) each Contract reasonably expected to involve the future
delivery by the Company or any Subsidiary of 500,000 or more gallons
of fuel per year to any single customer and any requirements Contracts
for fuel;
(iv) each Contract that has a remaining term in excess of one
year, cannot be terminated on less than 90 days' notice (without a
monetary penalty) and involves future payments, performance or
services or delivery of goods or materials to or by the Company or any
Subsidiary of any amount or value reasonably expected to exceed
$50,000 in any future 12-month period;
(v) each license agreement of the Company or any Subsidiary with
respect to patents, trademarks, copyrights or other intellectual
property rights currently used or to be used by the Company or any
Subsidiary (other than those
25
relating to commercial-off-the-shelf software entered into in the
ordinary course of business, the annual fees for which do not exceed
$5,000 individually, or $50,000 in the aggregate);
(vi) each joint venture, partnership and other similar Contract
involving the sharing of profits of the Company or any Subsidiary with
any third-party;
(vii) each Contract that limits the freedom of the Company or any
Subsidiary to compete in any line of business, to compete within any
geographic area or with any Person or otherwise materially restricts
the Company's or any Subsidiary's ability to solicit or hire any
Person or solicit business from any Person;
(viii) each Contract with current or former stockholders,
officers, directors or employees of the Company or any Subsidiary, in
each case, that provides for any unsatisfied severance obligation;
(ix) each collective bargaining agreement or other Contract to or
with any labor unions involving the Company's or any Subsidiary's
employees;
(x) any and all broker, distributor or dealer agreements that
involve future payments of amounts reasonably expected to exceed
$50,000 in any future 12-month period;
(xi) any and all agreements requiring the incurrence of debt for
borrowed money by the Company or any Subsidiary;
(xii) each Contract relating to the disposition or acquisition of
any FBO facility or related business, in each case, since March 1,
2003, including the Initial Acquisition Purchase Agreements, the
Project C Acquisition Agreement, the Additional Acquisition Purchase
Agreements, if any, and the Additional Acquisition Letters, if any;
and
(xiii) each amendment in respect of any of the foregoing.
(b) The Scheduled Contracts are in full force and effect. To the
Knowledge of the Company, except for the consent requirements listed on Schedule
5.5, no event has occurred that, with notice, the passage of time or both, would
constitute a default by the Company or any other party under, or failure of the
Company or any other party to comply with a material provision of, any of the
Scheduled Contracts, or otherwise give any party a right of termination or
material modification thereof. None of the Company, the Subsidiaries or, to the
Knowledge of the Company, the other party or parties to such Scheduled Contracts
(i) is in default under the terms of any such Scheduled Contract, (ii) has
received a notice that it is in default under, or not in material compliance
with, any provision of any Scheduled Contracts or (iii) has delivered any notice
to another party alleging any default under, or failure to comply with any
material provision of any Scheduled Contract. Each such Scheduled Contract is
the valid and binding
26
obligation of the Company or the Subsidiaries, as applicable, and to the
Knowledge of the Company, the other party or parties thereto, enforceable by the
Company or the Subsidiaries in accordance with the terms of such Scheduled
Contracts except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other Legal Requirements relating to
or affecting creditors' rights generally or by equitable principles.
(c) Except as disclosed on Schedule 5.14(c), as of the Execution Date,
to the Knowledge of the Company, no material supplier to or landlord of the
Company or any Subsidiary, or any Governmental Entity, has taken, and neither
the Company nor any Subsidiary has received any notice that, any material
supplier to or landlord of the Company or any Subsidiary, or any Governmental
Entity, contemplates taking, any steps to terminate or materially and adversely
alter the business relationship of Company with such supplier, landlord or
Governmental Entity.
(d) All of the Company's obligations and the Subsidiaries' obligations
to indemnify (including any obligations to advance funds for expenses) any
Person for acts or omissions by such Person occurring prior to the Closing Date,
whether pursuant to Charter Documents of the Company or any Subsidiary,
individual indemnity agreements, board resolutions or otherwise, are listed and
described on Schedule 5.14(d).
5.15 REAL PROPERTY.
(a) Neither the Company nor any Subsidiary owns any fee interest in
real property.
(b) Schedule 5.15(b)(i) lists all real property leased or subleased,
as of the Execution Date, by the Company or any Subsidiary and each Contract
pursuant to which the Company or any Subsidiary leases from any other party any
real property, including renewals, extensions, modifications or supplements to
any of the foregoing. The Company has delivered to Purchaser correct and
complete copies of the Contracts listed in Schedule 5.15(b)(i) (the "REAL
PROPERTY LEASES"). The Real Property Leases are in full force and effect and
have not been modified, amended or, to the Knowledge of the Company, assigned by
the Company, any Subsidiary or landlord. Each Real Property Lease is the valid
and binding obligation of the Company or any Subsidiary party thereto, except as
the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other Legal Requirements relating to or affecting
creditors' rights generally or by equitable principles. Neither the Company nor
any Subsidiary has (i) received any notice that the Company or any Subsidiary is
in default under, or not in material compliance with any Real Property Lease, or
that there may be any material changes in property tax or land use law affecting
any Real Property Lease and that would materially impair the use of such
property by the Company or any Subsidiary, as currently used, or (ii) delivered
any notice to another party alleging any default under, or failure to comply
with any material provision of, any Real Property Lease. To the Knowledge of the
Company, no event has occurred that, with notice, the passage of time or both,
would constitute a material default by the Company or any Subsidiary under, or
failure of the Company or any Subsidiary to comply materially with any provision
of, any Real Property Lease, or otherwise give any party a right of termination
or modification thereof.
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(c) The property covered by the Real Property Leases constitutes all
of the real property (other than the Non-FBO Assets) currently used in the
conduct of the Business, other than the Xxxxxxxxxx Airport Fixed Base Operation
Lease Agreement, effective October 1, 2003 between The Texas A&M University and
Trajen, Inc., and the Company's leasehold interests in such leased real property
are free and clear of Liens, except for Permitted Liens.
(d) (i) Neither the Company nor any Subsidiary has received written
notice of any threatened condemnation proceedings, lawsuits or administrative
actions relating to any of the real property used in the Business, and there are
no pending or, to the Knowledge of the Company, threatened, condemnation
proceedings, lawsuits or administrative actions relating to any of the real
property used in the Business that, in either case, would materially and
adversely affect the Business.
(ii) All facilities, buildings, improvements and other structures
used in the Business are located on the real property leased by the
Company and the Subsidiaries.
(iii) To the Knowledge of the Company, none of the real property
leased by the Company or the Subsidiaries or any of the structures
thereon used in the Business are dependent upon or benefit from any
"non-conforming use" or similar zoning classification.
(iv) Other than in the ordinary course of business (e.g., hangar
leases), there are no parties other than the Company or any Subsidiary
in possession of any of the real property leased by the Company and
the Subsidiaries or any portion thereof, and, other than in the
ordinary course of business (e.g., hangar leases), there are no
Contracts granting to any party or parties the right of use or
occupancy of any of such leased real property or any portion thereof.
(v) To the Knowledge of the Company, legal descriptions for the
real property contained in the Real Property Leases adequately
describe the leased real property subject thereto. To the Knowledge of
the Company, all structures on the real property leased by the Company
and the Subsidiaries are located within the boundary lines of the
leased real property and no structures, facilities or other
improvements on any parcel adjacent to any of the leased real property
encroach in any material respect onto any of the real property leased
by the Company or the Subsidiaries. To the Knowledge of the Company,
all structural, mechanical and other physical systems related to the
real property leased by the Company or any Subsidiary are in a
condition sufficient, in all material respects, to operate the
Business in accordance with past practices.
(vi) Except as set forth on Schedule 5.15(d)(vi), the Company is
not obligated to any third party to make any capital expenditures that
exceed $100,000 individually, or $500,000 in the aggregate, for real
property fixtures or improvements thereon.
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(e) Schedule 5.15(e) contains a list, as of the Execution Date, of all
hangar space, office space and real property subleased by the Company or any
Subsidiary to any other party, other than leases that may be terminated on less
upon less than 60 days' notice or that require rental payments of less than
$10,000 per month. All subleases identified on Schedule 5.15(e) (the "LANDLORD
PROPERTY LEASES") are in full force and effect, have not been modified, amended
or, to the Knowledge of the Company, assigned. Each Landlord Property Lease is
the valid and binding obligation of the Company or any Subsidiary party thereto,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other Legal Requirements relating to or affecting
creditors' rights generally or by equitable principles. The Company has
delivered to Purchaser complete and accurate copies of each Landlord Property
Lease.
5.16 PERSONAL PROPERTY. Except as described in Schedule 5.16, the Company
or a Subsidiary has good title to (or a valid leasehold interest in) all of the
tangible personal property (other than the Non-FBO Assets) currently used in the
conduct of the Business, and such title or leasehold interests are free and
clear of Liens, except for Permitted Liens. The Company has valid titles and
registrations for each motor vehicle owned by the Company and the Subsidiaries,
all of which owned as of the Execution Date are listed on Schedule 5.16 and
copies of which have been delivered to Purchaser.
5.17 INTELLECTUAL PROPERTY.
(a) Schedule 5.17(a) identifies all of the following intellectual
property (the "INTELLECTUAL PROPERTY") which is, as of the date of this
Agreement, used by the Company or any Subsidiary: (i) all registered trademarks
and service marks (collectively, "TRADEMARKS"), (ii) all patents and pending
applications to patent any technology or design which are material to the
Business, (iii) all registrations of and applications to register copyrights
which are material to the Business, and (iv) all material licenses to which the
Company is the licensee relating to technology, know-how, or software used by
the Business, whether proprietary to the Company or licensed or otherwise
authorized to use by others.
(b) The Company and the Subsidiaries have good title (free of Liens
other than Permitted Liens) to, or are duly licensed to use (or permitted by
similar agreement to use) each item of Intellectual Property. The use by the
Company or any Subsidiary of the Intellectual Property does not infringe any
rights of any third party and, to the Knowledge of the Company, no activity of
any third party infringes upon the rights of the Company or any Subsidiary with
respect to any of the Intellectual Property. Neither the Company nor any
Subsidiary has received notice of any claims asserted by any Person with respect
to challenging the ownership, validity, enforceability or use of the
Intellectual Property, nor to Knowledge of the Company, are there any valid
grounds for any such bona fide claims. To the extent the Company or any
Subsidiary uses any Intellectual Property owned by a third party, the Company or
any Subsidiary has a license with such third party for the use of such
Intellectual Property and is not in default under any such license.
5.18 INSURANCE. Schedule 5.18 lists all insurance policies insuring the
Business and the Company's or any Subsidiary's assets (the "INSURANCE POLICIES")
maintained by or on behalf
29
of the Company and the Subsidiaries and includes a description of any material
self-insurance arrangements currently in effect with respect to the Company and
the Subsidiaries. Each such Insurance Policy is in full force and effect. All
insurance premiums currently due with respect to such Insurance Policies have
been paid. Neither the Company nor any Subsidiary has received notice of
cancellation or non-renewal of any such Insurance Policy. Except as set forth on
Schedule 5.18, there are no claims related to or arising out of the operation of
the Business pending under any Insurance Policies.
5.19 BANK ACCOUNTS; POWERS OF ATTORNEY. Schedule 5.19 lists each bank,
trust company, savings institution, brokerage firm, mutual fund or other
financial institution with which the Company or any Subsidiary has an account or
safe deposit or lock box and the names and identification of all persons
authorized to draw on it or to have access to it.
5.20 RELATED PARTY TRANSACTIONS. Except as set forth in Schedule 5.20, no
stockholder, officer or director of the Company or any Subsidiary or immediate
family member thereof (a) is presently a party to any material agreement with
the Company or any Subsidiary or (b) owns any interest in any assets of the
Company or any Subsidiary. Any and all contracts between the Company on the one
hand and any Affiliate of the Company on the other hand (other than the
Company's Charter Documents) are listed on Schedule 5.20, and the Company has
delivered to Purchaser complete and correct copies of each such contract.
5.21 BROKER. The Company is not liable for any investment banking fee,
finder's fee, brokerage payment or other like payment in connection with the
origination, negotiation or consummation of the transactions contemplated herein
that will be the obligation of the Company, any Subsidiary or Purchaser. The
Company is not a party to any agreement, and has not committed any act which
might give rise to any valid claim against the Company, any Subsidiary or
Purchaser for any such fee, commission or similar payment.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to the Company and the
Securityholders as follows:
6.1 ORGANIZATION; EXISTENCE AND GOOD STANDING. Purchaser is a limited
liability company, validly existing and in good standing under the laws of the
State of Delaware. Purchaser has all requisite power and authority to own, lease
and operate the properties and assets it currently owns, leases and operates and
to carry on its business as such business is currently conducted. Purchaser is
qualified to do business as a foreign corporation, limited partnership or
limited liability company, as the case may be, in all jurisdictions where the
nature of its properties or business requires such qualification.
6.2 AUTHORITY; ENFORCEABILITY. Purchaser has the full power, legal capacity
and authority to execute this Agreement and to perform its obligations under
this Agreement and the other Transaction Documents to which it is a party, and
to perform its obligations under this Agreement and the other Transaction
Documents to which Purchaser is a party. The execution,
30
delivery and performance of this Agreement has been, and the execution, delivery
and performance of the other Transaction Documents to which Purchaser will be a
party as of the Closing will have been, duly and validly authorized by
Purchaser. This Agreement constitutes, and each of the other Transaction
Documents to which Purchaser will be a party as of the Closing will constitute,
the valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other Legal Requirements
relating to or affecting creditors' rights generally or by equitable principles.
Except for the approvals required under the HSR Act, Purchaser has, in
accordance with all Legal Requirements, the Charter Documents of Purchaser, and
any Contracts to which Purchaser is a party, obtained all approvals and taken
all actions necessary for the authorization, execution, delivery and performance
by Purchaser, of this Agreement and the other Transaction Documents.
6.3 NO VIOLATIONS. The execution and delivery of this Agreement and the
other Transaction Documents by Purchaser does not and will not, and the
performance and compliance with the terms and conditions hereof and thereof by
Purchaser and the consummation of the transactions contemplated hereby and
thereby by Purchaser will not:
(a) violate, conflict with, result in a breach or constitute a default
under any of the provisions of Purchaser's Charter Documents; or
(b) except for approval under the HSR Act or as set forth on Schedule
6.3, violate, conflict with, result in a breach or constitute a default under
any provision of or require any notice, filing, consent, authorization or
approval under any Legal Requirement binding upon Purchaser or any Contract to
which Purchaser is a party or which it or its assets are otherwise bound or
subject to.
6.4 LEGAL PROCEEDINGS. There are no Legal Proceedings pending or, to the
knowledge of Purchaser, threatened against Purchaser that (a) challenge the
validity or enforceability of any of Purchaser's obligations under this
Agreement or the other Transaction Documents to which Purchaser is or will be a
party or (b) seek to prevent, delay or otherwise would reasonably be expected to
adversely affect the consummation by Purchaser of the transactions contemplated
herein or therein.
6.5 ACQUISITION AS INVESTMENT. Purchaser is acquiring the Shares for its
own account, not as a nominee or agent, as an investment without the present
intent or conduct to sell, transfer or otherwise distribute the Shares to any
other Person. Purchaser acknowledges and understands that the Shares are not
registered under the Securities Act of 1933, as amended.
6.6 FINANCING. Purchaser has the financial capacity to perform all of its
obligations under this Agreement, and Purchaser has currently available all
funds, resources and capabilities necessary to pay the Purchase Price and any
other amounts contemplated by this Agreement and to perform its obligations
under this Agreement. Without limiting the foregoing, Purchaser's ability to
consummate the transactions contemplated hereby is not contingent on Purchaser's
ability to complete any public offering or private placement of equity or debt
securities, for which Purchaser does not already have commitments, on or prior
to the Closing Date.
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6.7 BROKER. Purchaser is not liable for any investment banking fee,
finder's fee, brokerage payment or other like payment in connection with the
origination, negotiation or consummation of the transactions contemplated herein
that will be the obligation of the Company or any Seller. Purchaser is not a
party to any agreement, and has not committed any act which might give rise to
any valid claim against any Seller, the Company or any Subsidiary for any such
fee, commission or similar payment.
ARTICLE VII
COVENANTS AND OTHER AGREEMENTS
7.1 COVENANTS REGARDING CONDUCT OF BUSINESS. From the date hereof through
Closing, except as permitted or required by the other terms of this Agreement or
consented to or approved in writing by Purchaser, which consent or approval will
not be unreasonably withheld or delayed, the Company shall conduct and cause the
Subsidiaries to conduct the business operations, activities and practices of the
Company and the Subsidiaries in all material respects consistent with their past
practices (including with respect to managing working capital, collection of
accounts receivable and payment of accounts payable). Without limiting the
foregoing, without the consent or approval of Purchaser, which consent or
approval will not be unreasonably withheld, neither the Company nor any
Subsidiary shall, except as otherwise permitted or required by the other terms
of this Agreement:
(a) amend its Charter Documents;
(b) change the number of its shares of authorized or issued capital
stock (or other authorized capital) or issue, grant or sell any equity interests
(or options or warrants) or any other securities or obligations convertible into
or exchangeable for shares of its capital stock, in each case, except for
issuances of Common Stock upon the exercise of any of the Options or Warrants;
(c) except for the Non-FBO Asset Distribution, declare or pay
dividends or make any other distributions in respect of its capital stock, or
purchase, redeem or otherwise acquire or retire for value any shares of its
capital stock;
(d) incur any Borrowed Money Debt other than Borrowed Money Debt to be
included in the Debt Payoff Amount;
(e) mortgage, pledge or subject to any Lien (other than a Permitted
Lien or a Lien securing any Borrowed Money Debt), any of the assets or
properties of the Company or any Subsidiary;
(f) settle any litigation, action or claim other than (i) claims
involving less than $200,000 in the aggregate or (ii) settlements settled
through insurance proceeds;
(g) other than in the ordinary course of business or except as
required by applicable Legal Requirements or Benefit Plans or as set forth on
Schedule 7.1(g), (i) increase the annual level of compensation of any executive
officer or other employee of the Company or
32
the Subsidiaries, (i) grant any bonus, benefit or other direct or indirect
compensation to any executive officer or other employee, (iii) materially
increase the coverage or benefits available under any (or create any new)
severance pay, termination pay, vacation pay, company awards, salary
continuation for disability, sick leave, deferred compensation, bonus or other
incentive compensation, insurance, pension or other employee benefit plan or
arrangement made to, for, or with any of the executive officers or other
employee of the Company or any of its Subsidiaries or otherwise modify or amend
or terminate any such plan or arrangement or (iv) enter into any employment,
deferred compensation, severance, consulting, non-competition or similar
agreement (or amend any such agreement) involving any executive officer or other
employee;
(h) make, change or revoke any election in respect of Taxes, change an
annual accounting period, make any agreement or settlement with any Taxing
Authority, file any amended Tax Return, surrender any right to claim a refund of
Taxes, or consent to any extension or waiver of the limitation period applicable
to any Tax claim or assessment;
(i) except as may be required as a result of applicable Legal
Requirements or under GAAP, change in any material respect any accounting
method;
(j) sell, assign, lease or otherwise dispose of any of its assets or
properties, except in the ordinary course of business or pursuant to the Non-FBO
Asset Distribution;
(k) terminate, amend or fail to renew any material Permit other than
in the ordinary course of business and consistent with past practice;
(l) terminate, amend or fail to renew any Insurance Policies other
than in the ordinary course of business and consistent with past practice;
(m) commit a breach of or fail to perform material obligations under,
or except as set forth on Schedule 7.1(m), amend, modify or terminate any
material Contract without Purchaser's prior written consent, provided, that, the
foregoing shall not preclude the Company or any Subsidiary from amending or
modifying a material Contract without Purchaser's prior written consent if such
amendment or modification (i) is in the ordinary course of business, (ii) is not
adverse to the Company or any Subsidiary and (iii) the Company provides
Purchaser with prompt written notice after such amendment or modification;
(n) waive any material right or material condition under the Project B
Acquisition Agreement and Project C Acquisition Agreement;
(o) other than in the ordinary course of business, waive or release
any material right or claim in favor of the Company or any Subsidiary or cancel
or waive any debts or claims against any officer, manager or employee of the
Company or any Subsidiary;
(p) enter into any Contract that would constitute a Scheduled Contract
and that would involve future payments, performance of services or delivery of
goods or materials to or by the Company or any Subsidiary of any amount or value
reasonably expected to exceed $100,000 in any future 12-month period; provided,
notwithstanding the foregoing, this clause (p)
33
shall not prohibit the Company from entering into any Contract that solely
involves obligations that the Company is not prohibited from incurring under the
other clauses of this Section 7.1.; or
(q) take or agree to take any of the actions described above.
7.2 ESTOPPELS; CONSENTS; HSR ACT.
(a) The Company and the Purchaser shall use commercially reasonable
efforts to obtain, prior to Closing, any third party consents required in
connection with the transactions contemplated by this Agreement. The Company and
Purchaser shall use commercially reasonable efforts to obtain, as promptly as
practicable, estoppel letters (each an "AIRPORT ESTOPPEL") substantially in the
form of Exhibit G, with such modifications as are reasonably agreed to by the
Company and Purchaser to address particular circumstances of a particular
airport authority, from the airport authorities listed on Schedule 7.2(a).
(b) In furtherance of the foregoing, the Parties covenant and agree to
prepare and submit the Airport Estoppels to the airport authorities listed on
Schedule 7.2(a) within five days following the Execution Date; provided, that,
in no event shall any Airport Estoppel be submitted before MIC has, in
accordance with applicable Legal Requirements, issued a press release announcing
the transactions contemplated hereby, which shall be released within four
Business Days following the Execution Date. Purchaser will be available on
36-hour notice from the Company to meet with representatives from the airport
authorities. All contact with the airport authorities regarding the Airport
Estoppels will be coordinated through the Company. Purchaser will furnish the
airport authorities with such evidence and assurances as the airport authorities
reasonably request regarding the Purchaser's structure, organization,
creditworthiness, insurance coverage and operating experience.
(c) In the event that any airport authority to which an Airport
Estoppel is delivered pursuant to Section 7.2(b) does not respond to the
estoppel request within 60 days following the Execution Date, each such airport
authority that is designated as a "Required Authority" on Schedule 7.2(a) (each,
unless and until removed from Section 7.2(a) in accordance with this Section
7.2(c), a "REQUIRED AUTHORITY") shall be automatically removed as a Required
Authority from Schedule 7.2(a). In the event that an airport authority has not
responded to an estoppel request within 35 days following the Execution Date,
the Company shall use commercially reasonable efforts to provide Purchaser and
its representatives with access to such airport authority to permit Purchaser an
opportunity to obtain a response to the estoppel request within the prescribed
60-day period. In the event that any airport authority to which an Airport
Estoppel is delivered pursuant to Section 7.2(b) advises the Company or the
Purchaser within 60 days following the Execution Date that it does not, as a
matter of policy or otherwise, respond to requests for estoppel or furnish
estoppel letters, each such airport authority that is a Required Authority shall
be automatically removed as a Required Authority from Schedule 7.2(a). The
removal of any Required Authority from Schedule 7.2(a) pursuant to this Section
7.2(c) is referred to as an "AUTOMATIC ELIMINATION."
(d) In the event that an Airport Estoppel is not received from any
Required Authority within 90 days following the Execution Date and such airport
authority has not been
34
subject to an Automatic Elimination pursuant to Section 7.2(c), Purchaser may on
or before the fifth day following such 90th day elect to remove such airport
authority from the list of Required Authorities on Schedule 7.2(a). In the event
that Purchaser elects not to remove any such airport authority from the list of
Required Authorities on Schedule 7.2(a), the Seller Representative may on or
before the tenth day following such 90th day after the Execution Date terminate
this Agreement or extend the estoppel period with respect to such airport
authority for an additional 30-day period. In the event such Airport Estoppel
has not been obtained during such additional 30-day period, the Seller
Representative may elect to extend such estoppel period for an additional 30
days or terminate this Agreement. In the event such Airport Estoppel has not
been obtained during such additional 30-day period, the Seller Representative
may elect to extend such estoppel period for up to an additional 30 days or
terminate this Agreement. If any Airport Estoppel has not been obtained from any
Required Authority (excluding any Required Authority subject to an Automatic
Elimination) within 180 days following the Execution Date, Purchaser or the
Seller Representative may terminate this Agreement.
(e) In the event that any Required Authority responds to the estoppel
request within 60 days following the Execution Date and indicates that consent
is required of such Required Authority (notwithstanding the absence of any
consent requirement in the FBO Lease between such airport authority and the
Company) in connection with the transactions contemplated by this Agreement, the
Company and Purchaser shall use commercially reasonable efforts to obtain, as
promptly as practicable, consent from such Required Authority. These efforts
would include submitting a consent request in the form requested by the Required
Authority or, if the Required Authority does not request a particular form, in a
form reasonably acceptable to Purchaser and the Seller Representative. If a
Required Authority conditions its consent on making modifications to the
applicable FBO Lease, Purchaser will agree to such modifications as long as the
modifications do not materially impact the Company's Business or consolidated
financial results, including as a result of material obligations to finance
capital expenditures imposed by a Required Authority. If any consent requested
of a Required Authority is not obtained from such Required Authority within 90
days following the Execution Date, Purchaser may on or before the fifth day
following such 90th day elect to remove such airport authority from the list of
Required Authorities on Schedule 7.2(a). In the event that Purchaser elects not
to remove any such airport authority from the list of Required Authorities on
Schedule 7.2(a), the Seller Representative may on or before the tenth day
following such 90th day after the Execution Date terminate this Agreement or
extend the consent period with respect to such airport authority for an
additional 30-day period. In the event such consent has not been obtained during
such additional 30-day period, the Seller Representative may elect to extend
such consent period for an additional 30 days or terminate this Agreement. In
the event such consent has not been obtained during such additional 30-day
period, the Seller Representative may elect to extend such consent period for up
to an additional 30 days or terminate this Agreement. If a requested consent has
not been obtained from any Required Authority within 180 days following the
Execution Date, Purchaser or the Seller Representative may terminate this
Agreement.
(f) No later than 10 Business Days following the Execution Date,
Purchaser and the Company shall make such filings as may be required by the HSR
Act with respect to the
35
transactions contemplated by this Agreement and the other Transaction Documents.
Thereafter, Purchaser and the Company shall file as promptly as practicable all
reports or other documents required or requested by the U.S. Federal Trade
Commission or the U.S. Department of Justice pursuant to the HSR Act or
otherwise including requests for additional information concerning such
transactions, so that the waiting period specified in the HSR Act will expire as
soon as reasonably possible after the Execution Date. Without limiting the
foregoing, Purchaser and the Company shall use commercially reasonable efforts
to cooperate and oppose any preliminary injunction sought by any Governmental
Entity under the HSR Act preventing the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents; provided,
neither the Company nor Purchaser will be required to divest any of its assets
in connection with these efforts. Purchaser shall pay the statutory filing fee
associated with filings under the HSR Act.
(g) Purchaser and the Company shall cause their respective counsel to
furnish the other party such necessary information and reasonable assistance as
the other may reasonably request in connection with its preparation of necessary
filings or submissions under the provisions of the HSR Act. Purchaser and the
Company shall cause their respective counsel to supply to the other party copies
of all correspondence, filings or written communications by such Party or its
Affiliates with any Governmental Entity or staff members thereof, with respect
to the transactions contemplated by this Agreement and the other Transaction
Documents, except for documents filed pursuant to Item 4(c) of the HSR
Notification and Report Form or communications regarding the same, documents or
information submitted in response to any request for additional information or
documents pursuant to the HSR Act which reveal any Party's negotiating
objectives, strategies or purchase price expectations.
7.3 ACCESS AND ASSISTANCE.
(a) Upon receipt of reasonable advance notice, the Company will afford
to Purchaser and its authorized representatives reasonable access from the
Execution Date through the Closing Date, during normal business hours, solely in
furtherance of Purchaser's investigation of the Company, the Subsidiaries and
the transactions contemplated hereby, to the Company's (including the Company's
and each Subsidiary's) offices, properties, and books and records, and to the
Company's (including the Company's and each Subsidiary's) officers and
management team, and will furnish to Purchaser such additional information
regarding the business of the Company and the Subsidiaries as Purchaser may
reasonably request, to the extent that such access and disclosure would not
violate the terms of any agreement to which the Company or any Subsidiary is
bound, any applicable Legal Requirement, result in any loss of attorney-client
or other privilege or significantly disrupt the Company's operations. All
information obtained pursuant to this Section shall be "Confidential
Information" as defined in the Confidentiality Agreement and shall be subject to
the terms thereof. Notwithstanding anything to the contrary contained herein,
prior to Closing, without prior written consent of the Company, which may be
withheld for any reason, Purchaser shall not contact any suppliers to, or
customers of, the Company or any Subsidiary with respect to the transactions
contemplated hereby.
36
(b) The Company will furnish to Purchaser, promptly after the
completion thereof by KPMG (but in any event no later than May 31, 2006), the
audited balance sheet of the Company and its consolidated subsidiaries as of
December 31, 2005, and the related audited statements of income, stockholders'
equity and cash flows of the Company for the year then ended, prepared in
accordance with GAAP applied on a consistent basis in a form that complies with
Regulation S-X under the Securities Act (the "AUDITED 2005 FINANCIAL
STATEMENTS"). On or before the 45th day following the end of each fiscal quarter
ending on or before the Closing (to the extent such 45th day falls on a date
prior to the Closing Date), the Company will furnish to Purchaser an unaudited
quarterly balance sheet of the Company and its consolidated subsidiaries as of
the end of such fiscal quarter, and the related unaudited statements of income,
stockholders' equity and cash flows of the Company for the quarter then ended,
in a form that complies with Regulation S-X under the Securities Act and such
other information reasonably requested by the managing underwriter in connection
with any registered offering. On or before the 30th day following the end of
each month ending on or before the Closing (to the extent such 30th day falls on
a date prior to the Closing Date), the Company will furnish to Purchaser an
unaudited monthly balance sheet of the Company and its consolidated subsidiaries
as of the end of such month, and the related unaudited statements of income,
stockholders' equity and cash flows of the Company for the month then ended, in
a form consistent with monthly financial statements historically prepared by the
Company. The Company shall use commercially reasonable efforts, at Purchaser's
sole cost and expense, to obtain comfort letters from the Company's accountants
regarding information about the Company and the Subsidiaries as reasonably
requested by the managing underwriter in connection with any registered offering
or otherwise, and the consent of such accountants to the inclusion of that
information in appropriate filings with the Securities and Exchange Commission.
The Parties acknowledge and agree that a material inducement to the Company and
Sellers entering into this Agreement is the absence of a condition to closing
predicated upon Purchaser's ability to obtain financing to consummate the
transactions contemplated by this Agreement. Accordingly, the closing of the
transactions contemplated by this Agreement shall not be conditioned upon the
receipt of any such financing, and Purchaser hereby agrees that absent willful
or intentional breach of this Section 7.3(b) by the Company the condition set
forth in Section 8.1(a) shall be deemed satisfied.
(c) From and after the Execution Date, the Seller Representative shall
cooperate fully (and prior to the Closing shall cause the Company and the
Subsidiaries to cooperate fully), as and to the extent reasonably requested by
the Purchaser, in connection with the filing of Tax Returns. From and after the
Closing Date, the Seller Representative shall cooperate fully, as and to the
extent reasonably requested by the Purchaser, in connection with the filing of
Tax Returns and any audit, litigation or other proceeding with respect to Taxes.
In each case, such cooperation shall include the retention and (upon the
Purchaser's request) the provision of records and information which are
reasonably relevant to any such Tax Return filing, audit, litigation or other
proceeding and making employees available on a mutually convenient basis to
provide additional information and explanation of any material provided
hereunder. Purchaser shall reimburse the Seller Representative for reasonable
out-of-pocket expenses incurred by the Seller Representative in connection with
its compliance with this Section 7.3(c).
37
7.4 EMPLOYEE MATTERS.
(a) On or prior to Closing, the Company and the Subsidiaries shall
discharge and pay all bonuses accrued through the Closing Date.
(b) Effective on the Closing Date, the Company and the Subsidiaries
shall cause the employment of (i) Xxxxxx Xxxxxx and the DOD & IT Employees to be
transferred to Trajen, Inc. or Trajen Systems LP and (ii) all other employees of
Trajen, Inc. (or its successor) or Trajen Systems LP to be transferred to Trajen
Flight Support, L.P.
(c) For purposes of eligibility, vesting and benefits under any
vacation and severance programs, Purchaser shall cause the employee benefit
plans and programs maintained by Purchaser and its Affiliates to credit the
individuals employed by the Company and the Subsidiaries on the Closing Date,
after taking into account the transfers required by Section 7.4(b) ("CONTINUING
EMPLOYEES") with their service with the Company and its Affiliates (and any
predecessors) to the extent such service was recognized under a similar plan of
the Company or a Subsidiary as of the Closing.
(d) Purchaser shall either cause the Company to continue its employee
benefit plans in effect on the Closing or provide the Continuing Employees with
employee benefit plans on the same basis as such plans are provided to
comparable employees of Purchaser and its Affiliates.
(e) Following the Closing, Purchaser shall ensure that each general
manager at each of the Company's and the Subsidiaries' FBO locations is given
the opportunity to continue employment for the 12-month period beginning on the
Closing Date, and that such employment shall be on substantially the same salary
and benefit terms as are in effect on the Closing Date or better; provided, the
foregoing shall not prevent Purchaser from terminating any person's employment
based on Purchaser's customary performance standards.
(f) The Company and the Subsidiaries shall cause Trajen Flight
Support, L.P. to cease to be a participating employer in the 401(k) Plan as of
the Closing Date and shall cause Trajen, Inc. (or its successor) and Trajen
Systems LP to cease all participation in any other Company Benefit Plans.
(g) On or immediately prior to the Closing, the Company shall cause
the spinoff from its cafeteria plan of the accounts of the DOD & IT Employees
under such plans to a new cafeteria plan established by Trajen, Inc. (or its
successor) or Trajen Systems LP Following the Closing the Company and Purchaser
shall take all reasonable actions with respect to the cafeteria plan to help
effectuate such spinoff.
(h) To the extent any of the employees transferred in connection with
the Non-FBO Asset Distribution are entitled to continuation coverage under a
Company group health plan following the Closing pursuant to Section 4980B of the
Code, the entities included in the Non-FBO Assets shall be responsible for
providing notices and any required coverage.
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(i) The Company shall cause the accounts of all Continuing Employees
in the 401(k) Plan to become 100% vested as of the Closing Date.
(j) The Company will use commercially reasonable efforts to obtain
stockholder approval in a manner that satisfies the requirements of Section
280G(b)(5) of the Code with respect to the matters listed on Schedule 5.9(g).
(k) The Company and the Subsidiaries shall cause all Company Benefit
Plans, other than the 401(k) Plan, to be amended to the extent required to
ensure that employees of post-Closing affiliates of the Purchaser, other than
the entities acquired pursuant to this Agreement, shall not be eligible to
participate in any Company Benefit Plan.
7.5 DISTRIBUTION OF NON-FBO ASSETS. On or prior to the Closing, the Company
and the Subsidiaries shall distribute or dispose of the equity interests of the
entities listed in the definition of "Non-FBO Assets" on the terms described in
Schedule 7.5 (such transactions referred to herein as the "NON-FBO ASSET
DISTRIBUTION"). In the event that applicable Tax laws are revised or new Tax
laws are adopted prior to Closing that adversely affect the tax treatment of the
Non-FBO Asset Distribution, Purchaser and the Seller Representative will
negotiate in good faith to revise Schedule 7.5 that permits for a tax efficient
distribution of the Non-FBO Assets in a manner reasonably acceptable to
Purchaser and the Seller Representative. In connection with the Non-FBO Asset
Distribution, the entity or entities subject to such distribution will retain
all liabilities and obligations associated with the ownership, operation and
distribution of the Non-FBO Assets and will indemnify the Purchaser Indemnitees
with respect to such liabilities and obligations as more specifically described
on Schedule 7.5. The entity or entities subject to such Non-FBO Asset
Distribution shall not make any distribution or otherwise take any action the
purpose of which is to evade or circumvent the foregoing indemnity prior to the
eighteen-month anniversary of the Closing Date. In the event that such entities
do not for any reason satisfy such indemnification obligations, Purchaser and
the Seller Representative will execute a joint instruction letter directing the
Escrow Agent to disburse Escrow Funds (to the extent such funds remain
available) to Purchaser to satisfy such required indemnification obligations.
7.6 REMEDIATION. With respect to the two small spills of jet fuel at the
Casper, Wyoming FBO described in the most recent Phase I related to such FBO
included in Schedule 5.8 and Aspen, Colorado FBO described in the most recent
Phase I related to such FBO included in Schedule 5.8, the Company shall use
commercially reasonable efforts to (a) obtain a determination from the
appropriate Governmental Entity that no remedial action is required or (b)
remediate any contamination resulting from the spills to the extent required by
the appropriate Governmental Entity, in each case prior to the Closing Date.
7.7 PUBLIC ANNOUNCEMENTS. The Parties agree that, except to the extent
necessary to comply with the requirements of (a) applicable Legal Requirements,
(b) any listing agreements with securities exchanges or (c) the rules,
regulations or orders of any other Governmental Entity, no press release or
similar public announcement or communication shall ever, whether prior to or
subsequent to the Closing, be made or caused to be made concerning the specific
terms of this Agreement unless approved in advance by Purchaser and Seller
Representative;
39
provided, with respect to any press release or similar public announcement or
communication permitted hereby, the Parties agree that each shall give
reasonable notice and consult with each other prior to issuing any such press
release or otherwise making a public announcement or communication.
Notwithstanding the foregoing, the Sellers and the Company hereby consent to
Purchaser and its Affiliates disclosing information regarding the Company,
Subsidiaries and Business, to the extent contemplated by Section 7.3(b) and
provided such disclosure is made in accordance with and pursuant to Legal
Requirements (including applicable federal securities laws and stock exchange
listing rules).
7.8 COMMERCIALLY REASONABLE EFFORTS. Subject to the terms and conditions of
this Agreement, each of Purchaser and the Company shall use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary or desirable to consummate the
transactions contemplated by this Agreement and the other Transaction Documents
and to ensure the satisfaction of its conditions to Closing set forth herein.
7.9 RESTRICTIVE COVENANTS.
(a) From and after the Closing Date and until the third anniversary
thereof, each Seller (other than any Seller who continues to be employed by the
Company or any Subsidiary on a full-time basis after the Closing) agrees, solely
with respect to itself, not to directly or through a direct or indirect
subsidiary thereof (i) purchase, invest in or fund any FBO at any of the
airports listed in Schedule 7.9, (ii) open for business, invest in, fund or
otherwise assist the establishment of a new FBO at any of the airports listed in
Schedule 7.9, or (iii) solicit or hire any employee of Purchaser or any of its
Affiliates (but, with respect to the employees of the Company or the
Subsidiaries, only those employees of the Company and the Subsidiaries that
accept offers of permanent employment with Purchaser or any of its Affiliates
from and after the Closing); provided, such limitation shall not preclude
Sellers or any of their Affiliates from employing any Person who is no longer
employed by Purchaser or any of its Affiliates at the time such Person contacts
such Seller or Affiliate on his or her own initiative without any direct or
indirect solicitation by or encouragement from Seller or its Affiliates.
(b) Notwithstanding the foregoing, any Seller may (i) own, solely as
an investment, up to 1.0 % of any class of securities of any Person if such
securities are listed on any national or regional securities exchange so long as
such Seller is not a director, officer, employee or analogously employed or
engaged, (ii) be employed by an entity that has operations that would otherwise
violate Section 7.9(a) if such Seller's position and job function with such
entity does not involve such operations and (iii) be employed by Purchaser or
any of its Affiliates.
(c) Each Seller specifically acknowledges and agrees that the breach
by such Seller of its covenants contained in this Section 7.9 would cause
Purchaser irreparable harm not compensable solely in damages. Each Seller
acknowledges and agrees that it is essential to the effective enforcement of
this provision that Purchaser be entitled to the remedy of an injunction and it
agrees to the granting of such an injunction, without any showing of damages or
posting of any bond, in the event of a breach by such Seller of the terms of
this provision; provided,
40
however, that Purchaser shall also be entitled to pursue against such Seller
breaching this Section 7.9 any other remedies (at law or in equity) available to
Purchaser under this Agreement.
(d) A breach of this Section 7.9 by any particular Seller shall not be
imputed to the other Sellers.
7.10 NON-SOLICITATION. Purchaser agrees that it shall not, and shall cause
its Affiliates not to, from the date hereof through February 16, 2008, solicit
or hire any employee of the Company or any Subsidiary; provided that such
limitation shall not preclude Purchaser or any of its Affiliates from employing
any Person who is no longer employed by the Company or the Subsidiaries at the
time such Person contacts Purchaser on his or her own initiative without any
direct or indirect solicitation by or encouragement from Purchaser or its
Affiliates. This Section 7.10 shall terminate and have no further force or
effect in the event the Closing occurs.
7.11 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) Purchaser agrees that all rights to indemnification for acts or
omissions occurring prior to the Closing Date now existing in favor of the
current or former directors and officers of the Company and the Subsidiaries
currently indemnified by the Company and the Subsidiaries (collectively, the
"COVERED PERSONS") as provided as of the date hereof in their respective Charter
Documents, individual indemnity agreements, board resolutions or otherwise, to
the extent described on Schedule 5.14(d), shall survive the transactions
contemplated herein and shall continue in full force and effect in accordance
with their terms, but solely with respect to claims by Persons other than the
parties to this Agreement, for a period of not less than six years from the
Closing Date. Purchaser and the Company shall not amend, repeal or otherwise
modify such arrangements in any manner that would adversely affect the rights of
the Covered Persons thereunder with respect to indemnification for claims by
Persons other than the parties to this Agreement.
(b) Purchaser shall cause the Company and the Subsidiaries to honor,
to the fullest extent permitted by applicable Legal Requirements, all of the
Company's obligations and the Subsidiaries' obligations to indemnify (including
any obligations to advance funds for expenses) the Covered Persons for acts or
omissions by such Covered Persons occurring prior to the Closing Date to the
extent that such obligations of the Company exist on the date of this Agreement,
whether pursuant to Charter Documents of the Company or any Subsidiary,
individual indemnity agreements, board resolutions or otherwise, to the extent
described on Schedule 5.14(d), but solely with respect to claims by Persons
other than the parties to this Agreement, and such obligations shall survive the
Closing and shall continue in full force and effect in accordance with the terms
of such arrangements until the expiration of the applicable statute of
limitations with respect to any claims by Persons other than the parties to this
Agreement against such Covered Persons arising out of such acts or omissions;
provided, however, that such indemnification rights shall not apply to any
Covered Person with respect to any liability that such Covered Person is
obligated to indemnify Purchaser or any Purchaser Indemnitee under Section 10.2
of this Agreement.
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7.12 RELEASE. As of the Closing, each Seller hereby fully and irrevocably
releases, acquits and forever discharges the Company and the Subsidiaries, and
each of their respective past, present and future officers, directors, partners,
general partners, limited partners, managing directors, members, stockholders,
trustees, representatives, employees, principals, agents, Affiliates, parents,
subsidiaries (direct and indirect), joint ventures, predecessors, successors,
assigns, beneficiaries, heirs, executors, personal or legal representatives,
insurers and attorneys of any of them (collectively, the "RELEASED PARTIES")
from any and all actions, claims, counterclaims, suits, causes of action,
judgments, damages, demands and liabilities, of every kind and nature
whatsoever, including taxes (including taxes under Sections 409A and 4999 of the
Code), past, present or future, at law or in equity, whether known or unknown,
contingent or otherwise, relating to or arising out of the ownership or
acquisition of Shares of or the business and affairs of the Company and the
Subsidiaries, in each case, which any such Seller had, have or may have had at
any time in the past until and including the Closing Date, including any claims
regarding the allocation and distribution of the Purchase Price pursuant to
Section 2.4(b) (collectively, "RELEASED CLAIMS"). Notwithstanding the foregoing,
the Released Claims shall not include (i) exculpation and indemnification rights
set forth in the Company's Charter Documents or any written indemnification
agreement, to the extent described on Schedule 5.14(d), (ii) rights under
directors and officers insurance policies and Section 7.11 hereof, (iii) any
amounts due such Seller for compensation or expense reimbursement, (iv) any
vested and accrued interest of such Seller in, or benefit to such Seller under,
any Benefit Plan, (v) rights arising under this Agreement or any other
Transaction Document, other than any claims regarding the allocation and
distribution of the Purchase Price pursuant to Section 2.4(b) or (vi) rights of
Madison Capital Funding LLC and its Affiliates solely in their capacity as
lenders to the Company (collectively, the "EXCLUDED CLAIMS"). The releases,
acquittals and discharges in this Section 7.12 are conditioned on the
consummation of the Closing.
7.13 NO SHOP. From the Execution Date through the Closing or earlier
termination of this Agreement, each Seller agrees not to sell or otherwise
transfer any of its Shares to any other Person, and each Seller and the Company
agree not to, directly or indirectly, solicit, initiate or participate in any
way in discussions or negotiations with, or provide any information or
assistance to, any Person or group of Persons (other than Purchaser and its
Affiliates) concerning any acquisition of an equity interest in, or in a merger,
consolidation, liquidation, dissolution, disposition of assets (other than in
the ordinary course of business and as specifically permitted pursuant to this
Agreement) of the Company, any Subsidiary or any of their assets, or any
disposition of any of such Seller's Shares (other than pursuant to the
transactions contemplated by this Agreement), or assist or participate in,
facilitate or encourage any effort or attempt by any other Person to do or seek
to do any of the foregoing.
7.14 FCC LICENSES. The Company will use commercially reasonable efforts to
assist Purchaser with obtaining replacement licenses and associated permits, and
any associated required consents or approvals, in each case, from the Federal
Communications Commission as of or following the Closing to enable the Company
and the Subsidiaries to continue to operate the FBO Business immediately
following Closing insofar as matters related to the Federal Communications
Commission is concerned in a manner consistent in all material respects with its
operation prior to Closing, which efforts shall include providing Purchaser with
information
42
about the Company and its Subsidiaries as may be required for such licenses,
permits, consents or approvals.
7.15 USE OF TRAJEN NAME. During the period beginning on the Closing Date
and ending on the first anniversary thereof, Purchaser, the Company and the
Subsidiaries hereby grant to the entities owned by the Securityholders (and
which retain the Non-FBO Assets following the Non-FBO Asset Distribution) and
any Affiliates of such entities the exclusive right to use the names "Trajen
Systems LP," "Trajen, Inc." and the name of any successor entity of Trajen, Inc.
that includes the term "Trajen" (so long as the name of such successor entity is
not one then used by the Purchaser, the Company and the Subsidiaries).
Immediately following the first anniversary of the Closing Date, the entities
owned by the Securityholders (and which retain the Non-FBO Assets following the
Non-FBO Asset Distribution) and their Affiliates shall cease using the name
"Trajen."
ARTICLE VIII
CONDITIONS TO CLOSING
8.1 PURCHASER'S CLOSING CONDITIONS. Purchaser's obligation to consummate
the transactions contemplated under this Agreement is subject to the
satisfaction (or to the extent permitted by applicable Legal Requirements,
waiver by Purchaser), on or prior to the Closing Date, of each of the following
conditions:
(a) Each Seller and the Company shall have performed and complied in
all material respects with all covenants (except as otherwise contemplated by
Section 7.3(b)) required by this Agreement to be performed or complied with by
such Seller or the Company, as the case may be, on or prior to the Closing Date.
(b) The representations and warranties of each Seller in this
Agreement shall be true and correct in all material respects as of the Execution
Date (except to the extent such representations speak to an earlier date, in
which case as of such earlier date) and as of the Closing Date (except to the
extent such representations speak to an earlier date, in which case as of such
earlier date). The representations and warranties of the Company in this
Agreement shall be true and correct in all material respects as of the Execution
Date (except to the extent such representations speak to an earlier date, in
which case as of such earlier date). The representations and warranties of the
Company in this Agreement shall be true and correct as of the Closing Date
(except to the extent such representations speak to an earlier date, in which
case as of such earlier date) except to the extent the failure of such
representations and warranties to be true and correct as of the Closing Date (i)
relates to events or circumstances first occurring after the Execution Date,
(ii) is not attributable to a breach of the Company's covenants in Section 7.1
and (iii) has not had, and is not reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect (provided that for purposes of
determining whether the condition set forth in this sentence has been satisfied,
all "Material Adverse Effect" and other materiality qualifiers contained in the
Company's representations and warranties shall be disregarded). For purposes of
determining whether the condition in this Section 8.1(b) has been satisfied, any
breach of representation or warranty arising from any Seller's or the Company's
and the Subsidiaries' compliance with the express terms of this Agreement shall
be disregarded.
43
(c) Purchaser shall have received from Sellers and the Company the
documents required to be delivered at Closing pursuant to Section 2.4(a).
(d) The Company shall have closed the Project A Acquisition and the
Project B Acquisition, in each case on the terms and conditions set forth in the
Project A Purchase Agreement and the Project B Purchase Agreement, respectively,
and the Company shall not have waived any material right or any material
condition set forth in the Project A Purchase Agreement or the Project B
Purchase Agreement without the prior written consent of Purchaser.
(e) The Company shall have completed the Non-FBO Asset Distribution in
accordance with Section 7.5.
(f) The Company shall have received the required consent of the lessor
party to the Company's ground lease at its Hayward, California FBO in connection
with the Non-FBO Asset Distribution.
(g) The Company shall have received executed Airport Estoppels from
each of the airport authorities designated as a "Required Authority" on Schedule
7.2(a) except for those Airport Estoppels that are removed from the list of
"Required Authorities" in accordance with Section 7.2.
(h) The waiting period applicable to the consummation of the purchase
and sale of the Shares under the HSR Act shall have expired or have been
terminated.
(i) No restraining order, injunction or other order issued by any
court of competent jurisdiction preventing the consummation of the purchase and
sale of the Shares or the other transactions contemplated by this Agreement and
the other Transaction Documents (brought by a third party not affiliated with
the Parties) shall be in effect.
(j) (i) There shall not have been any damage, destruction or other
casualty loss with respect to any asset or property owned or leased by the
Company or any Subsidiary, (ii) neither the Company nor any Subsidiary or, to
Knowledge of the Company, any other party, shall have terminated, amended or
modified, or, to the Knowledge of the Company, threatened to terminate, amend or
modify, any material Scheduled Contract or material Permit, (iii) there shall
not have been any strike, walkout, or other significant labor event or threat
thereof and (iv) there shall not have been any actual or, to the Knowledge of
the Company, threatened change, in the business relationship with, or any loss
or, to the Knowledge of the Company, threatened loss of, any business
relationship of the Company with its landlords, suppliers, customers or
Governmental Entities which, in the case of clauses (i) through (iv), has had or
would reasonably be expected to have a Material Adverse Effect.
(k) At least 14 days prior to the Closing, the Company shall have
delivered to Purchaser: (i) copies of all correspondence and agreements between
the Company and/or any of its Subsidiaries, on the one hand, and any
Securityholder or Securityholders, on the other hand, with respect to any
payments that could result in or constitute a "parachute payment" (as defined in
Section 280G(b)(2) of the Code); and (ii) a schedule setting forth the name of
any
44
Securityholder who is expected to receive a parachute payment and the expected
amount of the "excess parachute payment" (as defined in Section 280G(b)(1) of
the Code); provided, that, in no event shall the total amount of any such excess
parachute payments exceed $500,000.
8.2 SELLERS' CLOSING CONDITIONS. Sellers' obligations to consummate the
transactions contemplated under this Agreement are subject to the satisfaction
(or to the extent permitted by applicable Legal Requirements, waiver by the
Seller Representative on behalf of Sellers), on or prior to the Closing Date, of
each of the following conditions:
(a) Purchaser shall have performed and complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date.
(b) The representations and warranties of Purchaser contained in this
Agreement shall be true and correct in all material respects as if made on and
as of the Closing Date (except to the extent such representations speak to an
earlier date, in which case as of such earlier date).
(c) The waiting period applicable to the consummation of the purchase
and sale of the Shares under the HSR Act shall have expired or have been
terminated.
(d) Sellers shall have received from Purchaser the documents required
to be delivered at Closing pursuant to Section 2.4(b).
(e) No restraining order, injunction or other order issued by any
court of competent jurisdiction preventing the consummation of the purchase and
sale of the Shares or the other transactions contemplated by this Agreement and
the other Transaction Documents (brought by a third party not affiliated with
the Parties) shall be in effect.
ARTICLE IX
TERMINATION RIGHTS
9.1 TERMINATION RIGHTS. This Agreement may be terminated at any time prior
to the Closing as follows:
(a) By mutual written consent of the Seller Representative and
Purchaser;
(b) By the Seller Representative or Purchaser in the event that the
Closing has not occurred on or prior to the Termination Date; provided, however,
that the right to terminate this Agreement under this Section 9.1(b) shall not
be available to any Party whose breach of its representations and warranties in
this Agreement or whose failure to perform any of its covenants and agreements
under this Agreement shall have been a material contributing cause of, or
resulted in, the failure of the Closing to occur on or before the Termination
Date;
45
(c) By the Seller Representative or Purchaser if any permanent
injunction, decree or judgment by any Governmental Entity preventing the
consummation of the transactions contemplated hereby shall have become final and
non-appealable;
(d) By the Seller Representative, on behalf of all of the Sellers, in
the event (i) Sellers are not in breach of this Agreement and none of their
representations and warranties shall have become and continue to be untrue in a
manner that would cause the condition set forth in Section 8.1(b) not to be
satisfied or a failure by Sellers to perform their covenants in such a manner as
would cause the condition set forth in Section 8.1(a) not to be satisfied, and
(ii) there shall have been a breach of Purchaser's representations and
warranties in this Agreement or a failure by Purchaser to perform its covenants
in this Agreement in such a manner that the conditions to the Closing set forth
in Sections 8.2(a) or 8.2(b) are not reasonably likely to be satisfied prior to
the later of (A) the Termination Date or (B) if capable of cure, within ten (10)
days after written notice thereof to such other Party prior to the Termination
Date;
(e) By Purchaser in the event (i) Purchaser is not in breach of this
Agreement and none of its representations and warranties shall have become and
continue to be untrue in a manner that would cause the conditions set forth in
Section 8.2(b) or a failure by Purchaser to perform its covenants in such a
manner as would cause the condition set forth in Section 8.2(a) not to be
satisfied, and (ii) there shall have been a breach of any Seller's or the
Company's representations and warranties in this Agreement or a failure by the
Company to perform its covenants in this Agreement in such a manner that the
conditions to the Closing set forth in Section 8.1(a) or 8.1(b) are not
reasonably likely to be satisfied prior to the later of (A) the Termination Date
or (B) if capable of cure, within ten (10) days after written notice thereof to
such other Party prior to the Termination Date;
(f) By Purchaser within five Business Days of the Company's delivery
to Purchaser of the Audited 2005 Financial Statements in the event the Audited
EBITDA reflected in the Audited 2005 Financial Statements is less than
$16,141,895; or
(g) By Purchaser or the Seller Representative in accordance with
Section 7.2(d) or (e).
9.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement pursuant to Section 9.1, all obligations of the Parties hereto shall
terminate, except for the provisions of this Section 9.2, and Sections 7.7,
7.10, 10.7, 12.1, 12.2, 12.3, 12.4, 12.5 and 12.9; provided, further, that in
the event this Agreement is terminated pursuant to Section 9.1(b), 9.1(d) or
9.1(e), nothing herein shall prejudice the ability of the non-breaching party
from seeking damages from any other Party for any willful and intentional breach
of this Agreement, including attorneys' fees and the right to pursue any remedy
at law or in equity, and otherwise the Parties shall have no liability to each
other under or relating to this Agreement.
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ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY PURCHASER. Subject to the other terms of this
Article X, from and after the Closing, Purchaser, the Company and the
Subsidiaries shall indemnify, defend and hold harmless each Seller and its
Affiliates and their respective partners, members, directors, officers,
shareholders, employees, successors and assigns (collectively, the "SELLER
INDEMNITEES") from and against any and all damages, claims, liabilities, losses,
costs and expenses (including reasonable fees and expenses of counsel and court
costs) (collectively, "LOSSES") arising out of or resulting from (a) the failure
of any of the representations or warranties made by Purchaser in Article VI to
be true and correct or (b) the failure of Purchaser to perform any of its
covenants or obligations under this Agreement.
10.2 INDEMNIFICATION BY SECURITYHOLDERS.
(a) Subject to the other terms of this Article X, from and after the
Closing, each Securityholder shall indemnify, defend and hold harmless Purchaser
and its Affiliates (which shall include the Company and the Subsidiaries after
the Closing) and their respective partners, members, directors, officers,
shareholders, employees, successors and assigns (collectively, the "PURCHASER
INDEMNITEES" and, together with the Seller Indemnitees, the "INDEMNITEES") from
and against any and all Losses arising out of or resulting from (i) the failure
of any of the representations or warranties made by such Securityholder in
Article IV or in the Option Termination Agreement or Warrant Termination
Agreement to be true and correct or (ii) the failure of such Securityholder to
perform any of its obligations, as applicable, under Section 7.9.
(b) Subject to the other terms of this Article X, from and after the
Closing, the Securityholders shall indemnify, defend and hold harmless the
Purchaser Indemnitees from and against any and all Losses arising out of or
resulting from (i) the failure of the representations and warranties made by the
Company in Article V to be true and correct (provided that each Seller's and the
Company's compliance with the covenants contained in this Agreement on or prior
to the Closing Date shall not result in the failure of such representations and
warranties to be true and correct), (ii) the failure of the Company or any of
the Sellers to perform any of their respective obligations to be performed by
the Company or any Seller under this Agreement (other than the obligations under
Section 7.9), (iii) the ownership or operation of the Non-FBO Assets, (iv) the
matters identified on Schedule 10.2(b)(iv) or (v) any lawsuit first filed
against the Company or any of its Subsidiaries after the Execution Date and
before the Closing Date so long as (A) such lawsuit is brought by, and on behalf
of, a Person that is not a Purchaser Indemnitee and is initiated, maintained and
prosecuted completely independent of any Purchaser Indemnitee and (B) is based
on facts or circumstances unrelated to the matters described on Schedule 5.7.
(c) Subject to the other terms of this Article X, from and after the
Closing, the Securityholders shall indemnify, defend and hold harmless the
Purchaser Indemnitees from and against any and all fees, Taxes and expenses
arising out of or resulting from the Non-FBO Asset Distribution and, to the
extent the Non-FBO Asset Distribution gives rise to any income Taxes payable by
the Company for the Tax year that includes the Closing Date, effect shall be
given to
47
all available credits and deductions, including in respect of existing and
future net operating losses and deductions arising from the termination of the
Options for purposes of determining the amount of the Securityholders'
indemnification obligation under this Section 10.2(c). The Parties acknowledge
and agree that no indemnification obligation shall arise under this Section
10.2(c) as a result of any reduction in Tax attributes existing on the Closing
Date that occurs as a result of the Non-FBO Asset Distribution and that makes
such attributes unavailable after the Closing Date.
10.3 LIMITATIONS AND OTHER INDEMNITY CLAIM MATTERS. Notwithstanding
anything to the contrary in this Agreement, the following terms shall apply to
any claim for monetary damages arising out of this Agreement or related to the
transactions contemplated hereby:
(a) De Minimis. No Securityholder will have any liability under
Section 10.2(a)(i) (other than with respect to any Claim arising from a breach
by such Securityholder of its representations and warranties under Section 4.1
related to such Seller's title to its Shares), and the Securityholders will not
have any liability under Section 10.2(b)(i) or (v), in respect of any individual
Claim involving Losses to the Purchaser Indemnitees of less than $25,000 (each,
a "DE MINIMIS CLAIM").
(b) Deductible. No Securityholder will have any liability under
Section 10.2(a)(i) (other than with respect to any Claim under Section 4.1
related to such Securityholder's title to its Shares), and no Securityholder
will have any liability under Section 10.2(b)(i) or (v), in respect of Losses to
the Purchaser Indemnitees until the Purchaser Indemnitees have suffered Losses
in excess of $1,000,000 in the aggregate arising from Claims under Section
10.2(a)(i) and Section 10.2(b)(i) or (v) that are not De Minimis Claims, and
then the Securityholders shall have liability only for such Losses in excess of
$1,000,000.
(c) Cap. No Securityholder shall have liability under Section
10.2(a)(i) in excess of its percentage interest of the Escrow Funds, which
percentage interest is set forth on Schedule 1 to the Escrow Agreement, except
with respect to any Claim arising from a breach by such Securityholder of its
representations and warranties under Section 4.1 related to such
Securityholder's title to its Shares, which liability shall be limited to the
portion of the Purchase Price actually received by such Securityholder pursuant
to this Agreement. No Securityholder shall have liability under Sections
10.2(b)(i), (ii), (iii), (iv) or (v) or Section 10.2(c) in excess of its
percentage interest of the Escrow Funds, which percentage interest is set forth
on Schedule 1 to the Escrow Agreement.
(d) Claims Period. In no event shall any Indemnitee be entitled to
assert any Claim under Section 10.1(a), Section 10.2(a)(i) or Sections
10.2(b)(i), (ii), (iii), (iv) or (v) or Section 10.2(c) unless such Claim is
first made on or prior to the eighteen-month anniversary of the Closing Date;
provided, however, that such eighteen-month survival period shall not apply to
any Claim against a particular Securityholder that arises from a breach by such
Securityholder of its representation in Section 4.1 relating to its title to its
Shares, which Claims may be asserted until the expiration of the statute of
limitations applicable thereto.
48
(e) Net Working Capital. Notwithstanding anything to the contrary in
this Agreement, the Purchaser Indemnitees shall be deemed not to have suffered
any Losses under Section 10.2 arising from claims based on specific types of
assets and liabilities included in determining the Company's "Net Working
Capital" as of the Closing. It is the Parties' intent that the procedures,
including the dispute resolution procedures, set forth in Section 2.6, shall
provide the sole and exclusive remedies for such claims and that Purchaser shall
not have recourse pursuant to Section 10.2 for breaches of representation and
warranties contained in this Agreement the subject matter of which were settled
pursuant to Section 2.6. By way of illustration, the Parties confirm that the
Company's accounts receivable will be a type of current asset that will be
included in determining the Company's "Net Working Capital" as of the Closing
and, therefore, Purchaser shall not be entitled to seek indemnification from the
Securityholders pursuant to Section 10.2 for a breach of the representations and
warranties in Article V with respect to accounts receivable.
(f) Exclusive Remedy; Sole Recourse to Escrow Funds.
(i) Notwithstanding anything to the contrary in this Agreement,
except (A) as otherwise contemplated by Section 10.3(f)(ii) and (B)
each Seller's several liability for any breach of Section 4.1 with
respect to such Seller's title to its Shares, each Securityholder's
sole and exclusive liability for monetary damages under this
Agreement, and Purchaser's sole and exclusive recourse for monetary
damages against any Securityholder, shall be limited to such
Securityholder's percentage interest of the Escrow Funds, which
percentage interest is set forth on Schedule 1 to the Escrow
Agreement, while such funds remain in the Escrow Account. If the
Closing occurs, the monetary remedies set forth in this Article X and
the specific performance remedy referenced in Section 12.2 shall
provide the sole and exclusive remedies arising from this Agreement
and the transactions contemplated hereby. In the event this Agreement
is terminated without the occurrence of the Closing, the sole and
exclusive remedies of the Parties shall be as set forth in Section
9.2. The Parties acknowledge and agree that the remedies available in
this Section 10.3(f) supersede any other remedies available at law or
in equity including rights of rescission and claims arising under
applicable statutes, including pursuant to Section 27.01 of the Texas
Business and Commerce Code. The Parties covenant not to xxx, assert
any arbitration claim or otherwise threaten any Claim other than those
described in this Section 10.3(f) as being available under the
particular circumstances described in this Section 10.3(f).
(ii) Nothing in this Agreement (including Section 10.3(f)(i)) is
intended by the Parties or shall be deemed or otherwise construed to
limit Purchaser's ability to bring or recover monetary damages for a
fraud claim under the U. S. Federal securities laws against a
particular Seller based on that Seller's Knowledge of a misstatement
of a material fact made by the Company through its representations and
warranties contained in Article V, as qualified by the Company's
disclosure schedules. The non-reliance provisions of Section 10.6
49
shall not be affected by this Section 10.3(f)(ii). Accordingly, the
basis of any such fraud claim shall be limited to the specific
statements covered by the Company's representations and warranties
contained in Article V. Purchaser's sole and exclusive remedy in
respect of any such fraud claim under the U.S. Federal securities laws
against any particular Seller shall be for monetary damages and, with
respect to such Seller, shall be capped at the portion of the Purchase
Price actually received by such Seller.
10.4 CALCULATION OF LOSSES. The amount of any Losses for which
indemnification is provided under this Article X shall be calculated (a) net of
any duplicative amounts recovered by any Indemnitee under insurance policies or
from third Persons with respect to such Losses; (b) net of any Tax Benefit
incurring to any Indemnitee on account of such Loss. If an Indemnitee receives
an amount under insurance coverage or from a third party with respect to Losses
that have been satisfied by a release of any of the Escrow Funds, then such
Indemnitee shall promptly deposit such amount (up to the amount of the Escrow
Funds released for such purpose) into the Escrow Account and such amount shall
be part of the Escrow Funds thereafter; provided, however, than an Indemnitee
shall not be required to deposit into the Escrow Account any released Escrow
Funds to the extent such funds are released to cover the uninsured portion of
any Losses otherwise indemnifiable under this Article X. The amount of any
Losses for which indemnification is provided under this Article X initially
shall be determined without regard to any Tax Benefit. However, to the extent
that the Indemnitee recognizes a Tax Benefit with respect to any payment for
Losses made hereunder, such Indemnitee shall pay to the Indemnitor the amount of
such Tax Benefit (but not in excess of the indemnification payment or payments
actually received from the Indemnitor with respect to such Losses) at such time
or times as and to the extent that the Indemnitee actually realizes such Tax
Benefit through an actual reduction in Tax paid, calculated by computing the
amount of Taxes before and after inclusion of any Tax items attributable to such
Losses for which indemnification was made and treating such Tax items as the
last items claimed for any taxable period; provided that, if any subsequent Tax
adjustments are made relating to the Indemnitee for any taxable period as a
result of or in settlement of any audit or other administrative proceeding that
results in any change in the amount of any Tax Benefit to the Indemnitee,
appropriate payments will be made between the Indemnitor and the Indemnitee to
properly reflect such adjustment amount.
10.5 CLAIM PROCEDURES.
(a) Each Indemnitee agrees that promptly after it becomes aware of facts
giving rise to a claim by it for indemnification pursuant to this Article X,
such Indemnitee must assert its claim for indemnification under this Article X
(each, a "CLAIM") by providing a written notice (a "CLAIM NOTICE") to the Person
allegedly required to provide indemnification protection under this Article X
(each, an "INDEMNITOR") specifying, in reasonable detail, the nature and basis
for such Claim (e.g., the underlying representation, warranty or covenant
alleged to have been breached). Notwithstanding the foregoing, an Indemnitee's
failure to send or delay in sending a third party Claim Notice will not relieve
the Indemnitor from liability hereunder with respect to such Claim except to the
extent the Indemnitor is prejudiced by such failure or delay.
50
(b) In the event of the assertion of any third party Claim for which, by
the terms hereof, an Indemnitor is obligated to indemnify an Indemnitee, the
Indemnitor will have the right, at such Indemnitor's expense, to assume the
defense of same including the appointment and selection of counsel on behalf of
the Indemnitee so long as such counsel is reasonably acceptable to the
Indemnitee. If the Indemnitor elects to assume the defense of any such third
party Claim, it shall within 30 days notify the Indemnitee in writing of its
intent to do so. Subject to Section 10.5(c), the Indemnitor will have the right
to settle or compromise or take any corrective or remediation action with
respect to any such Claim by all appropriate proceedings, which proceedings will
be diligently prosecuted by the Indemnitor to a final conclusion or settled at
the discretion of the Indemnitor. The Indemnitee will be entitled, at its own
cost, to participate with the Indemnitor in the defense of any such Claim. If
the Indemnitor assumes the defense of any such third-party Claim but fails to
diligently prosecute such Claim, or if the Indemnitor does not assume the
defense of any such Claim, the Indemnitee may assume control of such defense and
in the event it is finally determined by a court of competent jurisdiction that
the Claim was a matter for which the Indemnitor is required to provide
indemnification under the terms of this Article X, the Indemnitor will bear the
reasonable costs and expenses of such defense (including fees and expenses of
counsel).
(c) Notwithstanding anything to the contrary in this Agreement, the
Indemnitor will not be permitted to settle, compromise, take any corrective or
remedial action or enter into an agreed judgment or consent decree, in each
case, that subjects the Indemnitee to any criminal liability, requires an
admission of guilt or wrongdoing on the part of the Indemnitee or imposes any
continuing obligation on or requires any payment from the Indemnitee without the
Indemnitee's prior written consent.
10.6 NO RELIANCE.
(a) Limited Representations and Warranties. THE REPRESENTATIONS AND
WARRANTIES OF EACH SELLER CONTAINED IN ARTICLE IV AND THE COMPANY CONTAINED IN
ARTICLE V CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF
SELLERS AND THE COMPANY, AS APPLICABLE, TO PURCHASER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY. THE REPRESENTATIONS AND WARRANTIES OF
PURCHASER CONTAINED IN ARTICLE VI CONSTITUTE THE SOLE AND EXCLUSIVE
REPRESENTATIONS AND WARRANTIES OF PURCHASER TO THE COMPANY AND THE
SECURITYHOLDERS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY. EXCEPT
FOR SUCH REPRESENTATIONS AND WARRANTIES (IN EACH CASE, AS MODIFIED BY THE
SCHEDULES HERETO), NONE OF SELLERS, THE COMPANY, PURCHASER OR ANY OTHER PERSON
MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO
SUCH PARTIES OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND EACH PARTY
DISCLAIMS ANY OTHER REPRESENTATIONS OR WARRANTIES, WHETHER MADE BY SUCH PARTIES
OR ANY OF THEIR AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR
REPRESENTATIVES (INCLUDING WITH RESPECT TO THE DISTRIBUTION TO, OR ANY SUCH
PERSON'S RELIANCE
51
ON, ANY INFORMATION, DOCUMENTS OR OTHER MATERIAL MADE AVAILABLE TO PURCHASER IN
ANY DATA ROOM, MANAGEMENT PRESENTATION OR IN ANY OTHER FORM IN EXPECTATION OF,
OR IN CONNECTION WITH, THE TRANSACTIONS CONTEMPLATED HEREBY). EXCEPT FOR SUCH
REPRESENTATIONS AND WARRANTIES (IN EACH CASE, AS MODIFIED BY THE SCHEDULES
HERETO), EACH PARTY HEREBY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY
REPRESENTATION, WARRANTY, PROJECTION, FORECAST, STATEMENT, OR INFORMATION MADE,
COMMUNICATED, OR FURNISHED (ORALLY OR IN WRITING) TO ANY OTHER PARTY OR ITS
AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES (INCLUDING
OPINION, INFORMATION, PROJECTION, OR ADVICE THAT MAY HAVE BEEN OR MAY BE
PROVIDED TO ANY PARTY OR ANY DIRECTOR, OFFICER, EMPLOYEE, AGENT, CONSULTANT, OR
REPRESENTATIVE OF SUCH PARTY OR ANY OF ITS AFFILIATES). PURCHASER ACKNOWLEDGES
AND AGREES THAT IT HAS NOT RELIED, INCLUDING FOR PURPOSES OF SECTION 27.01 OF
THE TEXAS BUSINESS AND COMMERCE CODE, ON ANY REPRESENTATIONS AND WARRANTIES
OTHER THAN THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS
AGREEMENT IN MAKING ITS INVESTMENT DECISION WITH RESPECT TO THE SHARES.
(b) Covenant Not to Xxx. Neither Purchaser nor any of its Affiliates
(including any Purchaser Indemnitee) shall assert or threaten, and Purchaser
hereby waives and shall cause such Affiliates to waive, any claim or other
method of recovery, in contract, in tort or under applicable Legal Requirements,
including Section 27.01 of the Texas Business and Commerce Code, against any
Person that is not a party hereto (or a successor to a party hereto) relating to
the transactions contemplated by this Agreement or the distribution of the
Purchase Price or the Escrow Funds.
(c) Waiver of Consequential Damages, Etc. In no event shall any Party
be liable for (and the term "Losses" shall exclude) any consequential (including
lost profits), punitive or exemplary damages alleged to have resulted from a
breach by any Party of any provision of this Agreement or the other Transaction
Documents or related hereto or thereto, and in no event shall an arbitrator be
able to award such damages unless, and solely to the extent that, a Party hereto
becomes obligated to pay such damages to a third party.
10.7 DISPUTE RESOLUTION. Any controversy, dispute or claim arising out of
or relating to this Agreement or the Transaction Documents, including but not
limited to a claim based on or arising from an alleged tort or the performance,
enforcement, breach, termination, statute of limitations applicable, scope or
validity thereof ("DISPUTE") for which application for immediate injunctive
relief shall be available, shall be submitted first to mediation to be conducted
in New York, New York and administered by the American Arbitration Association
("AAA") under its Commercial Mediation Rules before resorting to arbitration.
(a) If the Dispute is not resolved within 30 days after the request
for mediation, any unresolved Dispute shall be settled by binding arbitration.
The arbitration shall
52
be conducted in New York, New York before a single arbitrator being a retired
judge of the state or federal courts located in the State of New York. If the
Parties are unable to agree on selection of an arbitrator, shall be selected
under the expedited rules of the AAA. The rules of the AAA shall apply to the
extent not inconsistent with the rules herein specified. Either Seller
Representative on behalf of Sellers or Purchaser may initiate arbitration by
written notice to the other party and the arbitration will be conducted
according to the following: (i) not later than seven (7) days prior to the
hearing date set by the arbitrator, each party shall submit a brief with a
single proposal for settlement, (ii) the hearing will be conducted on a
confidential basis without continuance or adjournment, (iii) the arbitrator will
be limited to selecting only one of the two proposals submitted by the parties,
and (iv) evidence concerning the financial position or organizational makeup of
the parties, any offer made or the details of any negotiation prior to
arbitration shall not be permissible. Judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof. The award
shall be in writing, shall be signed by the arbitrator and shall include
findings of fact and a statement of the reasons for the award with a breakdown
as to specific claims. If at any time the Parties resolve their Dispute, then,
notwithstanding the provisions of this Section 10.7, the arbitration procedures
will promptly be discontinued. Such resolution will be final and binding on the
Parties.
(b) Any party may, without waiving any remedy of arbitration, seek
from a court or agency having jurisdiction, any interim, equitable or
provisional relief to protect the property or rights of that party pending the
arbitrator's determination of the merits of the Dispute, but without award of
attorneys' fees, costs and expenses as set forth in Section 10.7(d).
(c) The arbitration award shall be made within three months of the
filing of the notice of intention to arbitrate, and the arbitrator shall agree
to comply with this schedule before accepting appointment.
(d) The costs and expenses of the arbitrator shall be borne
proportionately by the Parties based on the resolution of the Dispute by the
arbitrator. Such proportionate sharing of expenses will be determined based on
the arbitrator's final resolution of the Dispute.
(e) Except as may be required by law, neither the Parties nor the
arbitrator shall disclose the existence, content or results of any arbitration
without the prior written consent of the other Parties.
ARTICLE XI
[RESERVED.]
ARTICLE XII
GENERAL
12.1 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS.
(a) Except for documents and agreements executed pursuant hereto, and
except for the provisions of the Confidentiality Agreement, this Agreement
supersedes all prior oral discussions and written agreements among the Parties
with respect to the subject matter of
53
this Agreement (including the Memorandum of Understanding dated February 16,
2006 and any other term sheet or similar agreement or document relating to the
transactions contemplated hereby). Except for the Confidentiality Agreement,
this Agreement, including the exhibits and schedules hereto and other documents
delivered in connection herewith, contains the sole and entire agreement between
the Parties hereto with respect to the subject matter hereof. The
Confidentiality Agreement shall terminate and be of no further force or effect
in the event that the Closing occurs.
(b) All of the terms, covenants, representations, warranties and
conditions of this Agreement will be binding upon, and inure to the benefit of,
and be enforceable by, the Parties and their respective successors and permitted
assigns (and in the case of indemnities to the benefit of all persons
indemnified). Nothing herein expressed or implied is intended or will be
construed to confer upon or to give any Person not a Party any rights or
remedies under or by reason of this Agreement, except for the indemnified
parties expressly identified in this Agreement.
(c) Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assignable by (i) the Company or any Seller
without the prior written consent of Purchaser or (ii) Purchaser without the
prior written consent of the Seller Representative; provided, however, that
Purchaser may, upon written notice to the Seller Representative, assign in whole
its right, title and interest under this Agreement to North America Capital
Holding Company, but such assignment shall not release Purchaser from its
obligations hereunder.
12.2 SPECIFIC PERFORMANCE. Each Party acknowledges that the remedies at law
of the Parties for a breach or threatened breach of this Agreement would be
inadequate and, in recognition of this fact, any Party, without posting any
bond, and in addition to all other remedies that may be available, shall be
entitled to obtain equitable relief in the form of specific performance, a
temporary restraining order, a temporary or permanent injunction or any other
equitable remedy that may then be available.
12.3 AMENDMENTS. This Agreement may be amended, modified or superseded, and
any of the terms, covenants, representations, warranties or conditions hereof
may be waived, only by a written instrument executed by Purchaser and Seller
Representative or, in the case of a waiver, by or on behalf of Purchaser (if
Purchaser is waiving compliance) or Seller Representative (if any Seller is
waiving compliance). The failure of any Party at any time or times to require
performance of any provisions hereof will in no manner affect the right at a
later time to enforce the same. No waiver by any Party of any condition, or of
any breach of any term, covenant, representation or warranty contained in this
Agreement, in any one or more instances, will be deemed to be or construed as a
further or continuing waiver of any such condition or breach or a waiver of any
other condition or of any breach of any other term, covenant, representation or
warranty.
12.4 NOTICES. Unless otherwise provided herein, all notices, requests,
consents, approvals, demands and other communications to be given hereunder
(collectively, "NOTICES") will be in writing and will be deemed given upon (a)
confirmation of receipt of a facsimile transmission, (b) confirmed delivery by a
standard overnight carrier or when delivered by hand,
54
(c) actual receipt or (d) the expiration of four Business Days after the day
when mailed by registered or certified mail (postage prepaid, return receipt
requested), addressed to the respective Parties listed below at the following
addresses (or such other address for a Party hereto as will be specified by like
notice):
If to Purchaser, to:
Macquarie FBO Holdings LLC
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Pillsbury Xxxxxxxx Xxxx Xxxxxxx LLP
0000 Xxxxxx Xxxx.
Xxxxx 0000
XxXxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to any Securityholder at any time, or the Company prior to the Closing,
c/o Seller Representative, to:
The CapStreet Group, LLC
000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
55
with a copy to:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile: (000) 000-0000
Any notice given or received by the Seller Representative hereunder shall be
promptly transmitted to the Sellers.
12.5 GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WHICH CHOICE HAS
BEEN SELECTED TAKING INTO ACCOUNT THE NEXUS REQUIREMENTS OF NEW YORK CONFLICT OF
LAW PRINCIPLES).
12.6 DISCLOSURE SCHEDULES. The inclusion of any information (including
dollar amounts) in any section of the Company's disclosure schedules shall not
be deemed to be an admission or acknowledgment by the Company that such
information is required to be listed on such section of the Company's disclosure
schedules or is material to or outside the ordinary course of the business of
the Company or the Subsidiaries, as applicable. The information contained in
this Agreement, the Exhibits hereto and the Company's disclosure schedules is
disclosed solely for purposes of this Agreement, and no information contained
herein or therein shall be deemed to be an admission by any Party hereto to any
third party of any matter whatsoever (including, any violation of a Legal
Requirement or breach of contract). The Company shall notify Purchaser of any
changes, additions, or events which cause any material change in or addition to
the Company's disclosure schedules promptly after the Company becomes aware of
the same by delivery of appropriate updates to all such schedules to Purchaser.
No notification of a change or addition to a disclosure schedule made pursuant
to this Section 12.6 shall be deemed to cure any breach of any representation or
warranty resulting from such change or addition for purposes of the conditions
set forth in Section 8.1(b) or for purposes of the Purchaser Indemnitees'
indemnification rights under Article X.
12.7 SEVERABILITY. In the event any of the provisions hereof are held to be
invalid or unenforceable under applicable Legal Requirements, the remaining
provisions hereof will not be affected thereby. In such event, the Parties
hereto agree and consent that such provisions and this Agreement will be
modified and reformed so as to effect the original intent of the Parties as
closely as possible with respect to those provisions which were held to be
invalid or unenforceable.
12.8 SELLER REPRESENTATIVE.
(a) The CapStreet Group, LLC is hereby appointed by each Seller (and
their successors and assigns) as agent and attorney-in-fact (the "SELLER
REPRESENTATIVE") for each Seller, for and on behalf of such Sellers, (i) to
enter into and perform the Escrow Agreement, to
56
authorize delivery to the Purchaser Indemnitees of cash from the Escrow Funds in
satisfaction of claims by the Purchaser Indemnitees, to object to such
deliveries, to agree to, negotiate, enter into settlements and compromises of,
and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, and to take all actions necessary or
appropriate in the reasonable judgment of the Seller Representative for the
accomplishment of the foregoing, (ii) to take any other action expressly
delegated to the Seller Representative under the other terms of this Agreement
and (iii) with the consent of Sellers who owned greater than 86% of the Shares,
to execute any amendment, waiver or consent of this Agreement, the Escrow
Agreement or the parent guaranty. Sellers hereby agree that the Reimbursement
Fund shall be set aside and paid to the Seller Representative to cover
administrative and other expenses of the Seller Representative associated with
the performance of its obligations under this Section 12.8.
(b) The Seller Representative shall not be liable for any act done or
omitted hereunder as the Seller Representative while acting in good faith and in
the exercise of reasonable judgment. Sellers shall severally indemnify the
Seller Representative and hold the Seller Representative harmless against any
loss, liability or expense incurred without negligence, bad faith or willful
misconduct on the part of the Seller Representative and arising out of or in
connection with the acceptance or administration of the Seller Representative's
duties hereunder, including the reasonable fees and expenses of any legal
counsel retained by the Seller Representative. Any party dealing with the Seller
Representative is entitled to rely on the actions taken by, and consents and
approvals given by, the Seller Representative without the need to investigate
whether the Seller Representative has obtained the requisite consent described
in Section 12.8(a)(iii). A Party shall be entitled to rely on the Seller
Representative's actions, consents and approvals notwithstanding any knowledge
of the relying Person. No Person shall have any liability for relying on the
Seller Representative in the foregoing manner.
(c) Concurrent with the execution hereof, each Seller has delivered to
the Seller Representative certificates representing such Seller's Shares along
with stock powers executed in blank authorizing the Seller Representative to
transfer such Shares to Purchaser at the Closing solely as all of Sellers'
conditions to Closing are satisfied. Each Seller hereby authorizes the Seller
Representative to deliver such certificates to Purchaser in connection with the
Closing of the transactions contemplated by this Agreement in exchange for the
contemporaneous payment of the portion of the Purchase Price to which such
Seller is entitled pursuant to the terms hereof.
12.9 TRANSACTION COSTS AND EXPENSES. Sellers, on the one hand, and
Purchaser, on the other hand, will bear all of their own costs, fees and
expenses, if any, incurred by or on its behalf in connection with this
Agreement, the other Transaction Documents and the purchase and sale of the
Shares. Sellers will ensure that none of the costs, fees and expenses for which
they are responsible will be charged to the Company except the Seller
Transaction Expenses.
12.10 WAIVER. Solely for the purposes of the transactions contemplated
hereby, the Company and each Seller hereby waives any right of first offer,
right of first refusal, tag-along, drag-along, preemptive right, buy-sell right
or similar right that would interfere with the
57
consummation of the transactions described herein, including all such rights
arising under the Investors Agreement.
12.11 COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which will be deemed an original, but all of which
will constitute on agreement.
[SIGNATURE PAGES FOLLOW]
58
IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the
date first written above.
THE COMPANY:
TRAJEN HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxx
------------------------------------
Name: Xxxxxx Xxxxxx
Title: Authorized Signatory
SIGNATURE PAGE
SELLERS:
CAPSTREET II, L.P.
By: CapStreet XX XX, L.P.
its general partner
By: The CapStreet Group, LLC
its general partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
CAPSTREET PARALLEL, L.P.
By: The CapStreet Group, LLC,
its general partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
CAPSTREET CO-INVESTMENT II, L.P.
By: The CapStreet Group, LLC,
its general partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxxxxx X. Xxxxxxxxx
Title: Chief Financial Officer
SIGNATURE PAGE
MADISON CAPITAL FUNDING LLC
By: /s/ Xxxxx X. Xxxx
------------------------------------
Name: Xxxxx X. Xxxx
Title: Authorized Signatory
SIGNATURE PAGE
NEW YORK LIFE CAPITAL PARTNERS II, L.P.
By: NYLCAP Manager, LLC,
its investment manager
By: /s/ Xxxxx X. Xxxxxx, V
------------------------------------
Name: Xxxxx X. Xxxxxx, V
Title: Executive Vice president
SIGNATURE PAGE
GULFSTAR MERCHANT BANKING, LTD.
By: GulfStar Group GP, LLC,
its general partner
By: /s/ X. Xxxx Kahge
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Name: X. Xxxx Kahge
Title: Executive Vice President
SIGNATURE PAGE
FITZSEA, LLC
By: /s/ XX Xxxxxxxxxx
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Name: XX Xxxxxxxxxx
Title: General Partner
/s/ Xxxxxx X. Xxxxxx
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XXXXXX X. XXXXXX
/s/ Xxxxxx Xxxxxx
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XXXXXX XXXXXX
/s/ Xxxxxx Xxxxxx
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XXXXXX XXXXXX
/s/ Xxxxx Xxxxxx
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XXXXX XXXXXX
/s/ Xxxxxx Xxxxxxxx
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XXXXXX XXXXXXXX
/s/ Xxx Xxxxxxxx
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XXX XXXXXXXX
/s/ Xxxxx Xxxxxx
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XXXXX XXXXXX
/s/ Xxx Xxxx
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XXX XXXX
/s/ Xxxx Xxxxxxx
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XXXX XXXXXXX
/s/ Xxxxxx Xxxxxxxx
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XXXXXX XXXXXXXX
SIGNATURE PAGE
PURCHASER:
MACQUARIE FBO HOLDINGS LLC
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Chief Executive Officer
SIGNATURE PAGE
EXHIBIT A
DEFINITIONS
"ACQUISITION TRANSACTION FEES" means all third-party fees and expenses
incurred and paid by the Company or any Subsidiary prior to the Closing in
connection with the investigation, negotiation and documentation of any
Additional Acquisition; provided, (a) such Acquisition Transaction Fees shall be
capped at $250,000 per transaction and (b) such Acquisition Transaction Fees
shall not include any payments made to or on behalf of the owners of the FBOs
that are the target of any such acquisition.
"ADDITIONAL ACQUISITION LETTERS" means the letters of intent attached
hereto as Exhibit H.
"ADDITIONAL ACQUISITION PURCHASE AGREEMENT" refers to each definitive
agreement pursuant to which the Company or one of the Subsidiaries has the right
to consummate an Additional Acquisition.
"ADDITIONAL ACQUISITIONS" means any acquisition (other than the Initial
Acquisitions and the Project C Acquisition) by the Company, by any Subsidiary or
by any Purchaser Related Party, in each case, which acquisition (a) is described
by one of the Additional Acquisition Letters and (b) is consummated by any
Purchaser Related Entity on or before the second anniversary of the Closing
Date.
"ADDITIONAL ACQUISITIONS INCREMENTAL AMOUNT" means, with respect to each
Additional Acquisition consummated by the Company or any Subsidiary prior to the
Closing Date, the excess of (a) 8.0 multiplied by the Projected Adjusted EBITDA
for such Additional Acquisition over (b) (i) the aggregate purchase price paid
by the Company, any Subsidiary or any Purchaser Related Party to consummate such
Additional Acquisition (including any deferred purchase price, earn-out payments
and payments pursuant to seller financing arrangements), plus (ii) the amount of
any debt assumed and additional required capital investments.
"ADDITIONAL ACQUISITIONS PURCHASE PRICE" means the aggregate purchase price
paid by the Company or any Subsidiary at or prior to the Closing Date to
consummate the Additional Acquisitions or any of them.
"ADJUSTMENT AMOUNT" means an amount equal to the difference between the
Final Working Capital Amount and the Base Net Working Capital, which may be a
positive or negative number.
"AFFILIATE" means with respect to an entity, any other entity controlling,
controlled by or under common control with such entity. As used in this
definition, the term "control," including the correlative terms "controlling,"
"controlled by" and "under common control with," means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of an entity, whether through ownership of voting securities, by
contract or otherwise.
EXHIBIT A
"APPROVED CAPITAL EXPENDITURE AMOUNT" means the capital expenditures listed
on Schedule A-1 and all other capital expenditures incurred and paid by the
Company or any Subsidiary after the date hereof for projects approved of by
Purchaser in writing other than capital expenditures required (a) for routine
maintenance or repairs of damages sustained between the date hereof and the
Closing or (b) to complete the Facilities.
"AUDITED EBITDA" means operating income plus depreciation expense.
"BENEFIT PLANS" means any "employee benefit plan", within the meaning of
Section 3(3) of ERISA, and any bonus, deferred compensation, incentive
compensation, stock and stock-based plan, program or arrangement.
"BORROWED MONEY DEBT" means all indebtedness for borrowed money and any
guaranties of indebtedness for borrowed money. For purposes of clarification,
the El Paso Earn-Out does not constitute Borrowed Money Debt.
"BUSINESS" means the business of the Company and the Subsidiaries conducted
over the 12 months prior to the Execution Date and as of the date hereof;
provided, the term "Business" shall not include the business relating to the
Non-FBO Assets.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which banks in Texas or New York City are authorized or required by law to be
closed.
"CHARTER DOCUMENTS" means, with respect to any Person, the certificate of
incorporation, articles of incorporation or association and by-laws, the limited
liability company agreement, or limited partnership agreement or other agreement
or agreements that establish the legal personality of such Person, in each case
as amended to date.
"COBRA" means Section 4980B of the Code, Part 6 of Title I of ERISA,
similar provisions of state law and applicable regulations relating to any of
the foregoing.
"CODE" means the Internal Revenue Code of 1986, as amended, or any amending
or superseding tax laws of the United States of America.
"COMMON SHARE EQUIVALENT CONSIDERATION" means an amount equal to the
quotient (rounded to the second decimal place) of (a) the sum of (i) the portion
of the Purchase Price remaining after making the payments described in Sections
2.4(b)(i)(A), (B), (C), (D), (E) and (F), plus (ii) the aggregate exercise price
of all Options and Warrants and the aggregate amount outstanding as of the
Closing Date under the Management Promissory Notes divided by (b) the number of
Common Share Equivalents outstanding immediately prior to the Closing.
"COMMON SHARE EQUIVALENTS" means all of the Common Shares, all Common
Shares issuable upon conversion of the Series B Preferred Shares and the Series
C Preferred Shares and all Common Shares issuable upon exercise of the Options
and the Warrants.
"CONFIDENTIAL INFORMATION" means any information relating to the Business;
provided, "Confidential Information" shall not include any information that (a)
was, at the time of
EXHIBIT A
disclosure, in the public domain, (b) is published or otherwise becomes part of
the public domain through no fault of the disclosing Person, its employees or
its representatives, (c) was already known by, or in the possession of, a Person
at the time of disclosure, provided that such Person received the information in
a lawful manner, (d) was received from a third party who had a lawful right to
disclose such information or (e) was independently developed by a Person without
reference to Confidential Information.
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality Agreement,
dated December 16, 2005, between the Company. and Macquarie Securities (USA)
Inc. as amended from time to time.
"CONTRACT" means any contract, commitment, lease, license, mortgage, bond,
note or other instrument evidencing indebtedness, or other legally binding
agreement, and all amendments thereof, but excluding any Permits.
"DOD & IT EMPLOYEES" means the employees of the Company or the Subsidiaries
listed on Schedule A-2.
"EL PASO EARN-OUT" means the contract renewal payments, if any, due under
Section 2.2 of that certain Asset Purchase Agreement between Trajen Flight
Support, LP, Superior Aviation Fuel Enterprises, LLC and Superior Aviation-SLT,
LLC, dated February 24, 2005.
"EMPLOYEE PENSION BENEFIT PLAN" has the meaning set forth in Section 3(2)
of ERISA.
"EMPLOYEE WELFARE BENEFIT PLAN" has the meaning set forth in Section 3(1)
of ERISA.
"ENVIRONMENTAL LAWS" means all applicable U.S. federal, state, local and
other Legal Requirements (and administrative or judicial interpretations by any
Governmental Entity having the force and effect of Legal Requirements) relating
to pollution or the protection of human health and safety from the effects of
pollution or the environment (which includes its ambient air, surface water,
ground water, land surface and subsurface strata), including but not limited to
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C. Sections 9601 et. seq. ("CERCLA"), Legal Requirements relating to
emissions, discharges, releases or threatened releases of Hazardous Substances,
or otherwise relating to the manufacture, processing, distribution, use,
existence, treatment, storage, disposal, arrangement for transport, arrangement
for disposal, transport, reporting or handling of Hazardous Substances, but not
including zoning and land use laws.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA AFFILIATE" " means each Person that is or was required to be treated
as a single employer with the Company under Section 414 of the Code or Section
4001(b)(1) of ERISA.
"ESCROW AGENT" means XX Xxxxxx Xxxxx Bank.
EXHIBIT A
"FACILITY COMPLETION COSTS" means the costs and expenses required as of the
Closing Date to complete the Facilities.
"FACILITIES" means the Company's currently planned new hangar facilities to
be located at its FBOs in Austin, Texas, El Paso, Texas (inclusive of the new
terminal facility) and Oklahoma City, Oklahoma and a 40,000 gallon fuel farm at
its FBO in El Paso, Texas.
"FBO" means fixed base operations.
"FBO BUSINESSES" means FBO businesses and fueling, line service,
maintenance and charter businesses.
"FBO LEASE" means each Contract that involves the lease or sublease by the
Company or any Subsidiary of real property to conduct fixed base operations and
ancillary activities.
"GAAP" means generally accepted accounting principles in the United States
as promulgated by the Financial Accounting Standards Board, or its predecessors
or successors, as of the date of the statement to which such term refers.
"GOVERNMENTAL ENTITY" means any court, governmental department, commission,
council, board, agency, bureau or other instrumentality of the United States of
America, any foreign jurisdiction, or any state, provincial, county,
municipality or local governmental unit thereof, including any Taxing Authority.
"HAZARDOUS MATERIALS" means any substance, pollutant, contaminant, or
waste, or any constituent of any such substance, pollutant, contaminant or
waste, the use, handling, presence, release or disposal of which is in any way
regulated by or pursuant to any applicable Environmental Law.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended.
"INITIAL ACQUISITION PURCHASE AGREEMENTS" refers to the Project A Purchase
Agreement and the Project B Purchase Agreement.
"INITIAL ACQUISITIONS" means the Project A Acquisition, the Project B
Acquisition.
"INVESTORS AGREEMENT" means that certain Investors Agreement among the
Company and Sellers, dated as of February 23, 2005, as amended to date.
"KNOWLEDGE" means (a) as it applies to the representations and warranties
made by the Company in Article V, the actual knowledge, after due inquiry, of
Xxxxxx Xxxxxx and Xxxxx Xxxxxx and (b) as it applies to any particular Seller
for purposes of Article X, the actual knowledge of such Seller without any duty
to investigate or conduct independent inquiry provided that the Knowledge of any
particular Seller shall not be imputed to another Seller.
EXHIBIT A
"LEGAL PROCEEDING" means any judicial, administrative or arbitral actions,
suits, hearings, inquiries, investigations or other proceedings (public or
private) before any Governmental Entity.
"LEGAL REQUIREMENT" means all applicable laws (including Environmental
Laws), statutes, rules, regulations, codes, ordinances, Permits, bylaws,
variances, policies, judgments, injunctions, orders, guidelines, conditions and
licenses of a Governmental Entity having jurisdiction over the assets or the
properties of any Party and the operations thereof.
"LIEN" means any lien, claim, restriction, charge, mortgage, pledge,
condemnation award, expropriation award, encumbrance, hypothecation, lease,
sublease, preferential purchase right, option, conditional sales contract,
security interest or encumbrance of any nature whatsoever.
"MANAGEMENT PROMISSORY NOTES" means the promissory notes listed on Schedule
1 issued by the management Sellers to the Company in connection with such
management Sellers purchase of Series C Preferred Shares.
"MATERIAL ADVERSE EFFECT" means any circumstance involving a change in or
effect on the Business (a) that is, or is reasonably likely in the future to be,
individually or in the aggregate, materially adverse to the business operations,
earnings, results of operations, assets or liabilities or the financial
condition of the Company and the Subsidiaries, taken as a whole, other than
changes or effects that are generally applicable in the United States economy or
the United States securities markets (provided that such events, effects or
changes do not effect the Business in a disproportionate manner), or (b) that is
reasonably likely to prevent or materially delay or impair the ability of the
applicable Party to consummate the transactions contemplated by this Agreement.
"MIC" means Macquarie Infrastructure Company, LLC, an Affiliate of
Purchaser.
"NON-FBO ASSETS" means the capital stock, membership interests, partnership
interests or other equity interests in each of Trajen Fuels LLC, Trajen
Acquisition, Inc., Trajen Systems LP, Trajen, Inc. (following the distribution
of certain FBO assets as contemplated by Section 7.5), the non-FBO contracts,
assets and operations described on Schedule A-3 and the Rejected Opportunities.
"OPTION" means each option to acquire Common Shares granted to employees or
directors of the Company, which options are listed on Schedule 1; provided, the
Warrants do not constitute Options.
"OPTIONHOLDER" means any Person to whom the Company has issued Options,
which Persons are listed on Schedule 1 under the caption "Optionholders."
"PERMITS" means all of the permits, licenses, variances, exemptions,
orders, franchises, certificates and approvals of all Governmental Entities
necessary to conduct the Business in compliance with all Legal Requirements.
EXHIBIT A
"PERMITTED LIENS" means (i) statutory Liens for current Taxes or
assessments, or other similar governmental charges, not yet delinquent or the
amount or validity of which is being contested in good faith by appropriate
proceedings and for which adequate reserves have been established in accordance
with GAAP, (ii) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other similar Liens arising or incurred in the ordinary course of
business not yet delinquent or the amount or validity of which is being
contested in good faith by appropriate proceedings, (iii) zoning, entitlement
and other land use or environmental regulations by any Governmental Entity that
have not been materially violated; (iv) Liens that represent purchase money
security interests for personal property purchased in the ordinary course of
business; (v) Liens created by or arising out of the express terms of any Real
Property Lease, (vi) Liens securing the Borrowed Money Debt to be repaid at
Closing and (vii) such other Liens that would not, individually or in the
aggregate, reasonably be expected materially and adversely to affect the value,
marketability or continued use (consistent with the historical use thereof) of
the assets subject thereto.
"PERSON" means any natural person, corporation, company, partnership
(general or limited), limited liability company, trust or other entity.
"POST-CLOSING ADDITIONAL ACQUISITION INCREMENTAL AMOUNT" means, with
respect to each Additional Acquisition consummated after the Closing Date by the
Company or any other Purchaser Related Party the excess of (a) 8.0 multiplied by
the Projected Adjusted EBITDA for such Additional Acquisition over (b) (i) the
aggregate purchase price paid by the Company or any other Purchaser Related
Party to consummate such acquisition (including any deferred purchase price,
earn-out payments and payments pursuant to seller financing arrangements) plus
(ii) the amount of any debt assumed and/or additional required capital
investments.
"PROHIBITED TRANSACTION" has the meaning set forth in Section 406 of ERISA
and Section 4975 of the Code.
"PROJECT A ACQUISITION" means the acquisition by the Company or any
Subsidiary of the FBO business at the Chicago/Palwaukee Airport in Wheeling,
Illinois.
"PROJECT A PURCHASE AGREEMENT" means the Purchase and Sale Agreement
between Trajen Flight Support, LP, North American Jet Holdings L.L.C., North
American Jet, LLC, North American Jet Charter Group, LLC, North American Jet
Maintenance L.L.C. and the other signatories thereto, dated March 22, 2006,
relating to the Project A Acquisition.
"PROJECT B ACQUISITION" means the acquisition by the Company or any
Subsidiary of the FBO business identified as "Project B" on substantially the
same terms as those described to Purchaser by the Company in the "Project B"
correspondence between the Company and Purchaser prior to the date hereof.
"PROJECT B PURCHASE AGREEMENT" means the definitive purchase agreement
relating to the Project B Acquisition.
EXHIBIT A
"PROJECT C ACQUISITION" means the acquisition by the Company or any
Subsidiary of the FBO business identified as "Project C" on substantially the
same terms as those described to Purchaser by the Company in the "Project C"
correspondence between the Company and Purchaser prior to the date hereof.
"PROJECT C ACQUISITION PURCHASE PRICE" means the aggregate purchase price
paid by the Company or any Subsidiary prior to the Closing to consummate the
Project C Acquisition.
"PROJECT C PURCHASE AGREEMENT" means the definitive purchase agreement
relating to the Project C Acquisition.
"PROJECTED ADJUSTED EBITDA" means, with respect to any Additional
Acquisition, the Site EBITDA reasonably expected to be generated from the FBO
operations that are the subject of such Acquisition over the twelve month period
following the Company's, any Subsidiary's or any Purchaser Related Party's
acquisition thereof taking into account (i) the Site EBITDA attributable to such
FBO operations for the twelve month period immediately preceding the Company's,
any Subsidiary's or any Purchaser Related Party's acquisition thereof, (ii) the
increased revenues reasonably likely to be realized by the increased fuel prices
Purchaser is reasonably likely to be able to charge customers at such FBO during
the twelve month period following the Company's, any Subsidiary's or any
Purchaser Related Party's acquisition thereof and (iii) the reduced expenses
reasonably likely to be realized by sourcing fuel at Purchaser's (or its
Affiliate's) cost and (iv) the elimination of personnel consistent with the
Company's past practices.
"PURCHASER RELATED PARTY" means Purchaser, any Affiliate of Purchaser and
any other Person in which Purchaser or any Affiliate thereof has a direct or
indirect financial interest.
"REJECTED OPPORTUNITY" means any acquisition that would be an Additional
Acquisition if Purchaser is required to approve the terms thereof but which is
not approved by Purchaser at or before the Closing.
"RELEASE" means, with respect to any Hazardous Material, any spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping or disposing into any surface or ground water, drinking water
supply, soil, surface or subsurface strata or medium, or the ambient air.
"RESPONSIBLE OFFICER" means with respect to any Person, any vice-president
or more senior officer of such Person.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"SECURITYHOLDERS" means the holders of the Shares, Options and Warrants.
"SELLER TRANSACTION EXPENSES" means all unpaid fees and expenses incurred
by or charged to the Company or any of its Subsidiaries for services provided
through the Closing Date in connection with the purchase and sale of the Shares
pursuant to this Agreement,
EXHIBIT A
including legal fees and related expenses, investment banking fees and related
expenses, if any, and accounting fees and related expenses.
"SERIES A CERTIFICATE OF DESIGNATIONS" means the Certificate of
Designations, Rights and Preferences of the Company governing certain terms
affecting the Series A Preferred Shares.
"SERIES A PREFERRED SHAREHOLDER" means each record holder of Series A
Preferred Shares, which holders are listed on Schedule 1 under the caption
"Series A Preferred Shareholders.
"SITE EBITDA" means, with respect to any FBO operation, (a) the revenues of
such operation minus (b) the site specific operating expenses arising from such
operation, in each case, determined in accordance with GAAP, but, in each case,
excluding any (i) interest expense (including amortization of debt issuance
costs) and interest revenue for such period, (ii) taxes based on income or
profit for such period, (iii) depreciation, amortization (including amortization
of goodwill and other intangibles) and other non-cash write-offs or write-downs
of depreciable or amortizable items for such period, and (iv) non-recurring
costs or expenses associated with acquisitions or operations.
"SUBSIDIARY" means any corporation, partnership, limited liability company
or other legal entity of which the Company (either alone or together with any
other Subsidiary) owns, directly or indirectly, 50% or more of the stock or
other equity or partnership interests the holders of which are generally
entitled to vote for the election of the board of directors or other governing
body of such corporation or other legal entity or of which the Company controls
the management; provided, "SUBSIDIARY" shall include Ascend Development HWD,
LLC, Ascend Development HWD II, LLC, but exclude any Person that is a Non-FBO
Asset.
"TAX" or "TAXES" means (i) any taxes and similar assessments imposed by any
Taxing Authority, including income, profits, gross receipts, net proceeds,
alternative or add-on minimum, ad valorem, value added, sales, use, real
property, personal property (tangible and intangible), environmental, stamp,
leasing, lease, user, excise, duty, franchise, capital stock, transfer,
registration, withholding, social security (or similar), unemployment,
disability, payroll, employment, fuel, excess profits, occupational, premium,
windfall profit, severance, actual or estimated, or other similar charge,
including any interest, penalty, or addition thereto, whether disputed or not,
(ii) all liability for the payment of any amounts of the type described in
clause (i) as the result of being (or ceasing to be) a member of an affiliated,
consolidated, combined or unitary group (or being included (or required to be
included) in any Tax Return related thereto); and (iii) all liability for the
payment of any amounts as a result of an express or implied obligation to
indemnify or otherwise assume or succeed to the liability of any other person
with respect to the payment of any amounts of the type described in clause (i)
or clause (ii).
"TAX BENEFIT" means the reduction in the amount of Taxes that otherwise
would have been paid by any Indemnitee as result of incurring any Losses.
EXHIBIT A
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TAXING AUTHORITY" means, with respect to any Tax, the Governmental Entity
or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision,
including any governmental or quasi-governmental entity or agency that imposes,
or is charged with collecting, social security or similar charges or premiums.
"TERMINATION DATE" means September 1, 2006, unless the Company extends on
one or more occasions the estoppel period contemplated by Section 7.2, in which
case such termination date will be extended to the first day following the end
of the last such extension period.
"TRANSACTION DOCUMENTS" means, collectively, this Agreement, the Escrow
Agreement and all of the certificates, instruments and agreements required to be
delivered by the Parties at the Closing.
"WARRANT" means each warrant to acquire Common Shares, which warrants are
listed on Schedule 1.
"WARRANTHOLDER" means any Person to whom the Company has issued Warrants,
which persons are listed on Schedule 1 under the caption "WARRANTHOLDERS."
"WIND-DOWN COSTS" means an amount to be determined prior to the Closing by
the Seller Representative to include $600,000 of retention payments and to
otherwise cover change-of-control costs and any costs, fees and expenses
determined by the Seller Representative to be necessary or prudent to manage and
wind-down the Non-FBO Assets.
EXHIBIT A
