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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
AMONG
XXXXXXXXX INDUSTRIES, INC.,
AEROCAR AVIATION CORP.,
AEROCAR PARTS, INC.,
XXXX XXXXXXX
AND
XXXXXX XXXXXXX
MAY 6, 1998
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this "Agreement") is entered into as of
May 6, 1998 among XXXXXXXXX INDUSTRIES, INC., a Delaware corporation
("Xxxxxxxxx"); AEROCAR AVIATION CORP., a Florida corporation ("Aerocar
Aviation"); AEROCAR PARTS, INC., a Florida corporation ("Aerocar Parts" and,
together with Aerocar Aviation, the "Companies"); XXXX XXXXXXX, a resident of
the State of Florida ("Xxxx"), and XXXXXX XXXXXXX, a resident of the State of
Florida ("Carmel") (Xxxx and Carmel are hereinafter each sometimes referred to
as a "Shareholder" and collectively as the "Shareholders").
RECITALS
The parties have determined that it is in their respective best
interests for Xxxxxxxxx to acquire all of the issued and outstanding shares of
capital stock of the Companies. The Shareholders have therefore agreed to sell,
and Xxxxxxxxx has agreed to purchase, all such shares on the terms, and subject
to the conditions, contained in this Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINED TERMS. As used herein, the following terms shall have
the following meanings:
"Aerocar Aviation Common Stock" shall mean the shares of
Common Stock, $1.00 par value per share, of Aerocar Aviation.
"Aerocar Parts Common Stock" shall mean the shares of Common
Stock, $1.00 par value per share, of Aerocar Parts.
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations promulgated under the
Exchange Act, as in effect on the date hereof.
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"Asset Sale After Tax Amount (Aviation)" means an amount equal
to the remainder of (i) the sum of the total consideration to be paid
to the Shareholders by Xxxxxxxxx pursuant to Section 2.1(a) hereof,
plus the Purchase Price Adjustment Amount (Aviation), minus (ii) the
total amount of federal income taxes to be incurred by the Shareholders
as a result of the transactions contemplated hereby in respect of the
sale of Aerocar Aviation Common Stock, and assuming that an election is
made under Section 338(h)(10) of the Code under Section 6.13 of this
Agreement with respect to such sale.
"Asset Sale After Tax Amount (Parts)" means an amount equal to
the remainder of (i) the sum of the total consideration to be paid to
the Shareholders by Xxxxxxxxx pursuant to Section 2.1(b) hereof, plus
the Purchase Price Adjustment Amount (Parts), minus (ii) the total
amount of federal income taxes to be incurred by the Shareholders as a
result of the transactions contemplated hereby in respect of the sale
of Aerocar Parts Common Stock, and assuming that an election is made
under Section 338(h)(10) of the Code under Section 6.13 of this
Agreement with respect to such sale.
"Confidentiality Agreement" means the Confidentiality
Agreement dated as of April 30, 1998 between the Companies and
Xxxxxxxxx.
"Contract" means any agreement, contract, lease, note,
mortgage, indenture, loan agreement, franchise agreement, covenant,
employment agreement, license, instrument, purchase and sales order,
commitment, undertaking, obligation, whether written or oral, express
or implied.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Familial Affiliate" shall mean any person related by blood or
marriage to any officer, director or shareholder of either of the
Companies and any entity in which any officer, director or shareholder
or such person owns any beneficial interest.
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Indebtedness" means the aggregate amount of indebtedness for
borrowed money (including accrued but unpaid interest), whether owed to
a bank or any other Person,
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remaining payments on capitalized equipment leases and remaining
payments on covenants not to compete.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited to,
any conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable law
of any jurisdiction in connection with such mortgage, pledge, security
interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or
effect) in financial condition, properties, assets, liabilities,
rights, obligations, operations or prospects which change (or effect)
individually or in the aggregate, is materially adverse to such
condition, properties, assets, liabilities, rights, obligations,
operations, business or prospects.
"Person" means an individual, partnership, corporation,
business trust, joint stock company, estate, trust, unincorporated
association, joint venture, Governmental Authority or other entity, of
whatever nature.
"Purchase Price Adjustment Amount (Aviation)" means an amount
that will cause the remainder of the Stock Sale After Tax Amount
(Aviation) minus the Asset Sale After Tax Amount (Aviation) to be equal
to zero; provided, however, that the Purchase Price Adjustment Amount
(Aviation) shall in no event be more than Four Hundred Thousand Dollars
($400,000) (notwithstanding the contents of Schedule 2.1(a)(ii)
hereof). The Purchase Price Adjustment Amount (Aviation) shall be
relevant only if the parties have made an election under Section
338(h)(10) of the Code pursuant to Section 6.13 hereof with respect to
the Aerocar Aviation Acquisition.
"Purchase Price Adjustment Amount (Parts)" means an amount
that will cause the remainder of the Stock Sale After Tax Amount
(Parts) minus the Asset Sale After Tax Amount (Parts) to be equal to
zero; provided, however, that the Purchase Price Adjustment Amount
(Parts) shall in no event be more than One Thousand Dollars ($1,000)
(notwithstanding the contents of Schedule 2.1(b)(ii) hereof). The
Purchase Price Adjustment Amount (Parts) shall be relevant only if the
parties have made an election under Section 338(h)(10) of the Code
pursuant to Section 6.13 hereof with respect to the Aerocar Parts
Acquisition.
"Register", "registered" and "registration" refer to a
registration of the offering and sale of securities effected by
preparing and filing a registration statement in compliance with the
Securities Act and the declaration or ordering of the effectiveness of
such registration statement.
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"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shares" means all of the issued and outstanding shares of
Aerocar Aviation Common Stock and Aerocar Parts Common Stock.
"Stock Sale After Tax Amount (Aviation)" shall mean an amount
equal to the remainder of the total consideration to be paid to the
Shareholders by Xxxxxxxxx pursuant to Section 2.1(a) hereof (exclusive
of the Purchase Price Adjustment Amount (Aviation)), minus the total
amount of federal income taxes to be incurred by the Shareholders as a
result of the transactions contemplated hereby in respect of the sale
of Aerocar Aviation Common Stock, and assuming that no election is made
under Section 338(h)(10) of the Code under Section 6.13 of this
Agreement with respect to such sale.
"Stock Sale After Tax Amount (Parts)" shall mean an amount
equal to the remainder of the total consideration to be paid to the
Shareholders by Xxxxxxxxx pursuant to Section 2.1(b) hereof (exclusive
of the Purchase Price Adjustment Amount (Parts)), minus the total
amount of federal income taxes to be incurred by the Shareholders as a
result of the transactions contemplated hereby in respect of the sale
of Aerocar Parts Common Stock, and assuming that no election is made
under Section 338(h)(10) of the Code under Section 6.13 of this
Agreement with respect to such sale.
"Tax Return" means any return (including any information
return), report, statement, schedule, notice, form or other document or
information filed with or submitted to or required to be filed or
submitted to any Governmental Authority in connection with or with
respect to the determination, assessment, collection or payment of any
Taxes.
"Taxes" means all taxes, including, but not limited to,
income, excise, property, sales, franchise, intangible, withholding,
social security and unemployment taxes, levy, assessment, tariff, duty
(including customs duties), deficiency or other fee, imposed, assessed
or collected by or under the authority of any Governmental Authority,
or payable pursuant to any tax sharing agreement or other contract
relating to the sharing or payment of any such tax, levy, assessment,
tariff, duty (including customs duties), deficiency or other fee, and
any related charge or amount, including, but not limited to, any fine,
penalty, interest or additional tax.
"Underwriter" means any one or more underwriters selected by
Xxxxxxxxx for the Offering (as defined in Section 7.11 hereof).
"Warrant Exercise Price" means the price to the public of a
share of Xxxxxxxxx Common Stock issued in the Offering (as defined in
Section 7.11 hereof) or, if the Closing shall occur prior to the
Offering, the average closing price of a share of Xxxxxxxxx Common
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Stock as reported on the Nasdaq Stock Market for the five (5)
consecutive trading days preceding the trading day immediately prior to
the Closing Date, as reported (absent manifest error in the printing
thereof) by The Wall Street Journal (Eastern Edition).
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with
this Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
(e) Whenever the words "include," "includes" or "including"
are used in this Agreement, they shall be deemed to be followed by the words
"without limitation."
ARTICLE II
PURCHASE AND SALE OF SHARES
2.1 THE ACQUISITION.
(a) THE AEROCAR AVIATION ACQUISITION. Upon the terms and
subject to the conditions of this Agreement, at the Closing (as defined below),
the Shareholders shall sell, assign, transfer, convey and deliver to Xxxxxxxxx,
and Xxxxxxxxx shall purchase, acquire and accept from the Shareholders, the
Aerocar Aviation Common Stock, free and clear of any Liens (the "Aerocar
Aviation Acquisition").
(i) AEROCAR AVIATION CONSIDERATION. Subject to the terms
and conditions of this Agreement, Xxxxxxxxx shall pay to the
Shareholders the aggregate sum of Forty Eight Million Seven Hundred
Fifty Thousand Dollars ($48,750,000) for the Aerocar Aviation Common
Stock (the "Aerocar Aviation Purchase Price"). The Aerocar Aviation
Purchase Price shall be paid as follows:
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(a) on the Closing Date, Xxxxxxxxx shall:
(i) pay to the Shareholders the aggregate sum of
Forty Three Million Seven Hundred Fifty
Thousand Dollars ($43,750,000) by wire transfer
of immediately available funds to an account
designated by the Shareholders in writing to
Xxxxxxxxx prior to Closing; and
(ii) execute and deliver to the Shareholders a
Warrant (the "Warrant") substantially in the
form attached hereto as Exhibit A for the
purchase of an aggregate of 250,000 shares of
common stock, par value $.001, of Xxxxxxxxx
(the "Xxxxxxxxx Common Stock") at a per share
exercise price equal to the Warrant Exercise
Price.
The foregoing payments are hereinafter
sometimes collectively referred to herein as
the "Closing Date Aerocar Aviation Payments."
(b) on the first anniversary of the Closing Date,
Xxxxxxxxx shall, at its election, either (i) pay to
the Shareholders the aggregate sum of Two Million
Five Hundred Thousand Dollars ($2,500,000) by wire
transfer of immediately available funds to the
account designated by the Shareholders pursuant to
Section 2.1(a)(i)(a)(i) above (or to such other
account as may be designated by the Shareholders in
writing to Xxxxxxxxx prior to the first anniversary
of the Closing Date), or (ii) deliver to the
Shareholders that aggregate number of shares of
Xxxxxxxxx Common Stock determined by dividing (x) Two
Million Five Hundred Thousand Dollars ($2,500,000) by
(y) the average closing price of a share of Xxxxxxxxx
Common Stock as reported on the Nasdaq Stock Market
("Nasdaq") for the thirty (30) consecutive trading
days preceding the second trading day immediately
prior to the first anniversary of the Closing Date,
as reported (absent manifest error in the printing
thereof) by The Wall Street Journal (Eastern
Edition); and
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(c) subject to Section 10.5, on the second anniversary of
the Closing Date, Xxxxxxxxx shall, at its election,
either (i) pay to the Shareholders the aggregate sum
of Two Million Five Hundred Thousand Dollars
($2,500,000) by wire transfer of immediately
available funds to the account designated by the
Shareholders pursuant to Section 2.1(a)(i)(a)(i)
above (or to such other account as may be designated
by the Shareholders in writing to Xxxxxxxxx prior to
the second anniversary of the Closing Date), or (ii)
deliver to the Shareholders that aggregate number of
shares of Xxxxxxxxx Common Stock determined by
dividing (x) Two Million Five Hundred Thousand
Dollars ($2,500,000) by (y) the average closing price
of a share of Xxxxxxxxx Common Stock as reported on
Nasdaq for the thirty (30) consecutive trading days
preceding the second trading day immediately prior to
the second anniversary of the Closing Date, as
reported (absent manifest error in the printing
thereof) by The Wall Street Journal (Eastern Edition)
(the Xxxxxxxxx Common Stock to be delivered pursuant
to Section 2.1(a)(i)(b) and Section 2.1(a)(i)(c) is
sometimes collectively referred to herein as the
"Stock Consideration," and the payments to be made
pursuant to such Sections are sometimes hereinafter
collectively referred to as the "Deferred Payments").
(ii) ALLOCATION OF AEROCAR AVIATION PURCHASE PRICE; PURCHASE
PRICE ADJUSTMENT. Assuming that an election under Section 338(h)(10) of
the Code is made pursuant to Section 6.13 of this Agreement, the
parties have agreed upon the tentative allocation of the modified
aggregate deemed sale price of the Aerocar Aviation Common Stock under
Treasury Regulation Section 1.338(h)(10)-1 and related provisions, and
the tentative Purchase Price Adjustment Amount (Aviation) and its
calculation, as set forth on Schedule 2.1(a)(ii), which shall be
finalized by the parties on or prior to Closing. If a Code Section
338(h)(10) election is made with respect to the Aerocar Aviation
Acquisition, the amount to be paid to the Shareholders pursuant to
Section 2.1(a)(i)(a)(i) of this Agreement shall be increased by the
Purchase Price Adjustment Amount (Aviation). The Shareholders and
Xxxxxxxxx shall file all required information and Tax Returns (and any
amendments thereto) in a manner consistent with the foregoing
allocations. If, contrary to the intent of the parties hereto as
expressed in this Section 2.1(a)(ii), any taxing authority makes or
proposes an allocation of the consideration paid hereunder different
from that set forth in and agreed upon pursuant to this Section 2.1,
the Shareholders and Xxxxxxxxx shall cooperate with each other in good
faith to contest such taxing authority's allocation (or proposed
allocation), provided, however, that, after
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consultation with the party adversely affected by such allocation (or
proposed allocation), any party hereto may file such protective claims
or returns as may reasonably be required to protect its interests.
(b) THE AEROCAR PARTS ACQUISITION. Upon the terms and subject
to the conditions of this Agreement, at the Closing (as defined below), the
Shareholders shall sell, assign, transfer, convey and deliver to Xxxxxxxxx, and
Xxxxxxxxx shall purchase, acquire and accept from the Shareholders, the Aerocar
Parts Common Stock, free and clear of any Liens (the "Aerocar Parts
Acquisition", and together with the Aerocar Aviation Acquisition, the
"Acquisition").
(i) AEROCAR PARTS CONSIDERATION. Subject to the terms and
conditions of this Agreement, Xxxxxxxxx shall pay to the Shareholders
the aggregate sum of Two Hundred Fifty Thousand Dollars ($250,000) for
the Aerocar Parts Common Stock (the "Aerocar Parts Purchase Price").
The Aerocar Parts Purchase Price shall be paid by Xxxxxxxxx to the
Shareholders on the Closing Date by wire transfer of immediately
available funds to an account designated by the Shareholders in writing
to Xxxxxxxxx prior to Closing. The foregoing payment is hereinafter
sometimes referred to herein as the "Closing Date Aerocar Parts
Payment" and the Closing Date Aerocar Aviation Payments and the Closing
Date Aerocar Parts Payment are sometimes hereinafter collectively
referred to as the "Closing Date Payments."
(ii) ALLOCATION OF AEROCAR PARTS PURCHASE PRICE; PURCHASE
PRICE ADJUSTMENT. Assuming that an election under Section 338(h)(10) of
the Code is made pursuant to Section 6.13 of this Agreement, the
parties have agreed upon the tentative allocation of the modified
aggregate deemed sale price of the Aerocar Parts Common Stock under
Treasury Regulation Section 1.338(h)(10)-1 and related provisions, and
the tentative Purchase Price Adjustment Amount (Parts) and its
calculation, as set forth on Schedule 2.1(b)(ii). If a Code Section
338(h)(10) election is made with respect to the Aerocar Parts
Acquisition, the amount to be paid to the Shareholders pursuant to
Section 2.1(b)(i) of this Agreement shall be increased by the Purchase
Price Adjustment Amount (Parts). The Shareholders and Xxxxxxxxx shall
file all required information and Tax Returns (and any amendments
thereto) in a manner consistent with the foregoing allocations. If,
contrary to the intent of the parties hereto as expressed in this
Section 2.1(b)(ii), any taxing authority makes or proposes an
allocation of the consideration paid hereunder different from that set
forth in and agreed upon pursuant to this Section 2.1, the Shareholders
and Xxxxxxxxx shall cooperate with each other in good faith to contest
such taxing authority's allocation (or proposed allocation), provided,
however, that, after consultation with the party adversely affected by
such allocation (or proposed allocation), any party hereto may file
such protective claims or returns as may reasonably be required to
protect its interests.
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2.2 PURCHASE PRICE PAYABLE TO SHAREHOLDERS. The Aerocar Aviation
Purchase Price (including, without limitation, the Warrant and any Stock
Consideration) and the Aerocar Parts Purchase Price, as each may be adjusted
pursuant to Section 2.1(a)(ii) and Section 2.1(b)(ii), shall be paid to the
Shareholders in proportion to the relative number of shares owned by each
Shareholder in Aerocar Aviation and Aerocar Parts, respectively.
2.3 THE CLOSING. Subject to the terms and conditions of this
Agreement, the consummation of the Acquisition (the "Closing") shall take place
as promptly as practicable (and in any event within five (5) business days)
after satisfaction or waiver of the conditions set forth in Articles VII and
VIII, at the offices of Xxxxxxxxx'x counsel, Akerman, Senterfitt & Xxxxxx, P.A.,
Miami, Florida, or such other time and place as the parties may otherwise agree
(the "Closing Date").
2.4 PROCEDURE AT THE CLOSING. At the Closing, the Shareholders
shall deliver to Xxxxxxxxx certificates representing the Shares duly endorsed
for transfer, and Xxxxxxxxx shall make the Closing Date Payments. In addition,
at the Closing the Companies and the Shareholders shall deliver to Xxxxxxxxx the
documents, certificates, opinions, consents and letters required by Article VII,
and Xxxxxxxxx shall deliver to the Shareholders the documents, opinions and
certificates required by Article VIII.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF XXXXXXXXX
As a material inducement to the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby, Xxxxxxxxx
makes the following representations and warranties to the Shareholders:
3.1 CORPORATE STATUS. Xxxxxxxxx is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite power and authority to own or lease its properties and to
carry on its business as now being conducted. There is no pending or threatened
proceeding for the dissolution, liquidation, insolvency or rehabilitation of
Xxxxxxxxx.
3.2 CORPORATE POWER AND AUTHORITY. Xxxxxxxxx has the corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Subject to approval by the Board of Directors of Xxxxxxxxx, Xxxxxxxxx has taken
all action necessary to authorize the execution and delivery of this Agreement,
the performance of its obligations hereunder and the consummation of the
transactions contemplated hereby.
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3.3 ENFORCEABILITY. Subject to approval by the Board of Directors
of Xxxxxxxxx, this Agreement has been duly executed and delivered by Xxxxxxxxx
and constitutes a legal, valid and binding obligation of Xxxxxxxxx, enforceable
against Xxxxxxxxx in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and
general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
3.4 NO VIOLATION. Except as set forth in Schedule 3.4, the
execution and delivery of this Agreement by Xxxxxxxxx, the performance by
Xxxxxxxxx of its obligations hereunder and the consummation by Xxxxxxxxx of the
transactions contemplated by this Agreement will not (i) contravene any
provision of the Certificate of Incorporation or Bylaws of Xxxxxxxxx, (ii)
violate or conflict with any law, statute, ordinance, rule, regulation, decree,
writ, injunction, judgment or order of any Governmental Authority or of any
arbitration award which is either applicable to, binding upon or enforceable
against Xxxxxxxxx, (iii) conflict with, result in any breach of, or constitute a
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right to
terminate, amend, modify, abandon or accelerate, any material Contract which is
applicable to, binding upon or enforceable against Xxxxxxxxx, (iv) result in or
require the creation or imposition of any Lien upon or with respect to any of
the property or assets of Xxxxxxxxx, or (v) require the consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person, except any SEC and other
filings required to be made by Xxxxxxxxx and any filings required to be made by
the parties under the HSR Act, if any.
3.5 XXXXXXXXX COMMON STOCK. Subject to approval by the Board of
Directors of Xxxxxxxxx, upon consummation of the Acquisition and the issuance
and delivery of certificates representing the Stock Consideration to the
Shareholders, the Stock Consideration will be validly issued, fully paid and
non-assessable shares of Xxxxxxxxx Common Stock.
3.6 ISSUANCE OF WARRANT. Subject to approval by the Board of
Directors of Xxxxxxxxx, upon consummation of the Acquisition, (i) Xxxxxxxxx will
have the full right, power and authority to issue, execute and deliver the
Warrant and the Warrant will be duly authorized, and at the Closing shall be
duly executed and delivered by Xxxxxxxxx and (ii) the Xxxxxxxxx Common Stock
issuable upon exercise of the Warrant will be duly and validly authorized and
reserved for issuance and, upon issuance thereof upon exercise of the Warrant
accompanied by payment therefor, will be duly and validly issued, fully paid and
non-assessable.
3.7 REPORTS OF XXXXXXXXX. Xxxxxxxxx has delivered to the
Shareholders copies of the following filings made by it with the SEC: (i)
Xxxxxxxxx'x Annual Report on Form 10-K for the fiscal year ended December 31,
1997, (ii) Xxxxxxxxx'x Current Reports on Form 8-K filed with the SEC on
February 27, 1998 and April 14, 1998 and (iii) Xxxxxxxxx'x Definitive Proxy
Statement for the Annual Meeting to be held on May 29, 1998 (collectively, the
"SEC Reports"). As of their respective dates, the SEC Reports and Xxxxxxxxx'x
other reports made pursuant to the Exchange Act
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complied in all material respects with the requirements of the Exchange Act and
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein.
3.8 NO MATERIAL ADVERSE EFFECT. Since the filing of Xxxxxxxxx'x
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, there
has been no Material Adverse Change in Xxxxxxxxx.
3.9 NO COMMISSIONS. Xxxxxxxxx has not incurred any obligation for
any finder's or broker's or agent's fees or commissions or similar compensation
in connection with the transactions contemplated hereby, other than fees which
will be paid by, and are the sole obligation of, Xxxxxxxxx.
3.10 LITIGATION. Except as set forth in Xxxxxxxxx'x SEC Reports,
there is no action, suit or other legal or administrative proceeding or
governmental investigation, pending or to the knowledge of Xxxxxxxxx threatened,
against Xxxxxxxxx or affecting Xxxxxxxxx or its properties or assets which in
the aggregate would have a Material Adverse Effect on Xxxxxxxxx or which
questions the validity or enforceability of this Agreement or the transactions
contemplated hereby.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
THE SHAREHOLDERS AND THE COMPANIES
As a material inducement to Xxxxxxxxx to enter into this Agreement and
to consummate the transactions contemplated hereby, the Shareholders and the
Companies, jointly and severally, make the following representations and
warranties to Xxxxxxxxx:
4.1 CORPORATE STATUS. Each of the Companies is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida and has the requisite corporate power and authority to own or lease its
properties and to carry on its business as now being conducted. Neither of the
Companies is legally qualified to transact business as a foreign corporation in
any jurisdiction, and the nature of its properties and the conduct of its
business does not require such qualification. Each of the Companies has fully
complied with all of the requirements of any statute governing the use and
registration of fictitious names, and has the legal right to use the names under
which it operates its business. There is no pending or threatened proceeding for
the dissolution, liquidation, insolvency or rehabilitation of any of the
Companies.
4.2 POWER AND AUTHORITY. Each of the Companies has the corporate
power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
Each of the Companies has taken all action necessary to authorize the execution
and delivery of this Agreement, the performance of its obligations hereunder and
the consummation of the transactions contemplated hereby. The Shareholders are
individual United
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States citizens or permanent residents of the United States residing in the
State of Florida, and have the requisite competence and authority to execute and
deliver this Agreement, to perform their obligations hereunder and to consummate
the transactions contemplated hereby.
4.3 ENFORCEABILITY. This Agreement has been duly executed and
delivered by each of the Companies and the Shareholders, and constitutes the
legal, valid and binding obligation of each of them, enforceable against them in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
4.4 CAPITALIZATION - AEROCAR AVIATION. As of the date hereof,
Aerocar Aviation has (a) 500 shares of Aerocar Aviation Common Stock authorized
and no other shares of any class of capital stock authorized, (b) 200 shares of
Aerocar Aviation Common Stock issued and outstanding, and (c) no shares of
Aerocar Aviation Common Stock held in treasury. All of the issued and
outstanding shares of capital stock of Aerocar Aviation (i) have been duly
authorized and validly issued and are fully paid and non-assessable, (ii) were
issued in compliance with all applicable state and federal securities laws, and
(iii) were not issued in violation of any preemptive rights or rights of first
refusal. Except as set forth on Schedule 4.4, no preemptive rights or rights of
first refusal exist with respect to the shares of capital stock of Aerocar
Aviation and no such rights arise by virtue of or in connection with the
transactions contemplated hereby. There are no outstanding or authorized rights,
options, warrants, convertible securities, subscription rights, conversion
rights, exchange rights or other agreements or commitments of any kind that
could require Aerocar Aviation to issue or sell any shares of its capital stock
(or securities convertible into or exchangeable for shares of its capital
stock). There are no outstanding stock appreciation, phantom stock, profit
participation or other similar rights with respect to Aerocar Aviation. Except
as set forth on Schedule 4.4, there are no proxies, voting rights or other
agreements or understandings with respect to the voting or transfer of the
capital stock of Aerocar Aviation. Aerocar Aviation is not obligated to redeem
or otherwise acquire any of its outstanding shares of capital stock.
4.5 CAPITALIZATION - AEROCAR PARTS. As of the date hereof, Aerocar
Parts has (a) 500 shares of Aerocar Parts Common Stock authorized and no other
shares of any class of capital stock authorized, (b) 200 shares of Aerocar Parts
Common Stock issued and outstanding, and (c) no shares of Aerocar Parts Common
Stock held in treasury. All of the issued and outstanding shares of capital
stock of Aerocar Parts (i) have been duly authorized and validly issued and are
fully paid and non-assessable, (ii) were issued in compliance with all
applicable state and federal securities laws, and (iii) were not issued in
violation of any preemptive rights or rights of first refusal. Except as set
forth on Schedule 4.5, no preemptive rights or rights of first refusal exist
with respect to the shares of capital stock of Aerocar Parts and no such rights
arise by virtue of or in connection with the transactions contemplated hereby.
There are no outstanding or authorized rights, options, warrants, convertible
securities, subscription rights, conversion rights, exchange rights or other
agreements or commitments of any kind that could require Aerocar Parts to issue
or sell any shares of its capital
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stock (or securities convertible into or exchangeable for shares of its capital
stock). There are no outstanding stock appreciation, phantom stock, profit
participation or other similar rights with respect to Aerocar Parts. Except as
set forth on Schedule 4.5, there are no proxies, voting rights or other
agreements or understandings with respect to the voting or transfer of the
capital stock of Aerocar Parts. Aerocar Parts is not obligated to redeem or
otherwise acquire any of its outstanding shares of capital stock.
4.6 SHAREHOLDERS. Schedule 4.6 sets forth, with respect to each of
the Companies, the name, address and federal taxpayer identification number of,
and the number of outstanding shares of each class of its capital stock owned of
record and/or beneficially by, the shareholder(s) of each of the Companies as of
the close of business on the date of this Agreement. As of the date hereof, the
Shareholders constitute the holders of all issued and outstanding shares of
capital stock of the Companies, and the Shareholders own such shares free and
clear of all Liens, restrictions and claims of any kind.
4.7 NO VIOLATION. Except as set forth in Schedule 4.7, the
execution and delivery of this Agreement by each of the Companies and the
Shareholders, the performance by them of their respective obligations hereunder
and the consummation by them of the transactions contemplated by this Agreement
will not (i) contravene any provision of the Articles of Incorporation or Bylaws
of either of the Companies, (ii) violate or conflict with any law, statute,
ordinance, rule, regulation, decree, writ, injunction, judgment or order of any
Governmental Authority or of any arbitration award which is either applicable
to, binding upon or enforceable against any of the Companies or either of the
Shareholders, (iii) conflict with, result in any breach of, or constitute a
default (or an event which would, with the passage of time or the giving of
notice or both, constitute a default) under, or give rise to a right to
terminate, amend, modify, abandon or accelerate, any material Contract which is
applicable to, binding upon or enforceable against any of the Companies or
either of the Shareholders, (iv) result in or require the creation or imposition
of any Lien upon or with respect to any of the property or assets of any of the
Companies, or (v) require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, any court or
tribunal or any other Person, except any SEC and other filings required to be
made by Xxxxxxxxx and any filings required to be made by the parties under the
HSR Act, if any.
4.8 RECORDS OF THE COMPANIES. The copies of the Articles of
Incorporation and Bylaws of the Companies which were provided to Xxxxxxxxx are
true, accurate and complete and reflect all amendments made through the date of
this Agreement. The minute books for the Companies made available to Xxxxxxxxx
for review were correct and complete in all material respects as of the date of
such review, no further entries have been made through the date of this
Agreement, such minute books contain the true signatures of the persons
purporting to have signed them, and such minute books contain an accurate record
of all material corporate actions of the shareholders and directors (and any
committees thereof) of each of the Companies taken by written consent or at a
meeting since incorporation. All material corporate actions taken by each of the
Companies have been duly authorized or ratified. All accounts, books, ledgers
and official and other records of each of the
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Companies have been fully, properly and accurately kept and completed in all
material respects, and there are no material inaccuracies or discrepancies of
any kind contained therein. The stock ledgers of each of the Companies, as
previously made available to Xxxxxxxxx, contain accurate and complete records of
all issuances, transfers and cancellations of shares of the capital stock of
each of the Companies.
4.9 SUBSIDIARIES. Neither of the Companies owns, directly or
indirectly, any outstanding voting securities of or other interests in, or
controls, any other corporation, partnership, joint venture or other business
entity.
4.10 FINANCIAL STATEMENTS. Attached hereto as Schedule 4.10 are the
financial statements of each of the Companies (including, with respect to
Aerocar Aviation, the notes thereto) for the years ended December 31, 1993,
December 31, 1994, December 31, 1995, December 31, 1996 and December 31, 1997,
prepared and, with respect to those in respect of Aerocar Aviation, audited, by
Xxxxx Xxxxxxxxx & Co. (the "Accountants") (the "Financial Statements"). The
balance sheet of each of the Companies dated as of December 31, 1997 included in
the Financial Statements is hereinafter sometimes referred to as the "Current
Balance Sheet." The Financial Statements fairly present the financial position
of each of the Companies at each of the balance sheet dates and the results of
operations for the periods covered thereby, and have been prepared in accordance
with GAAP consistently applied throughout the periods indicated. The books and
records of each of the Companies fully and fairly reflect in all material
respects all of its transactions, properties, assets and liabilities. Except as
reflected on the Financial Statements, there are no material extraordinary or
non-recurring items of income or expense during the periods covered by the
Financial Statements and the balance sheets included in the Financial Statements
do not reflect any writeup or revaluation increasing the book value of any
assets, except as specifically disclosed in the notes thereto. The Financial
Statements reflect all adjustments necessary for a fair presentation of the
financial information contained therein.
4.11 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as set
forth on Schedule 4.11, since the date of the Current Balance Sheet, neither of
the Companies has (i) issued any capital stock or other securities; (ii) made
any distribution of or with respect to its capital stock or other securities or
purchased or redeemed any of its securities; (iii) paid any bonus to or
increased the rate of compensation of any of its officers or salaried employees
or amended any other terms of employment of such persons; (iv) sold, leased or
transferred any of its properties or assets other than in the ordinary course of
business consistent with past practice; (v) made or obligated itself to make
capital expenditures out of the ordinary course of business consistent with past
practice; (vi) made any payment in respect of its liabilities other than in the
ordinary course of business consistent with past practice; (vii) incurred any
obligations or liabilities (including any indebtedness) or entered into any
transaction or series of transactions involving in excess of $50,000 in the
aggregate out of the ordinary course of business, except for the Contract to
acquire the Engines on Order (hereinafter defined), this Agreement and the
transactions contemplated hereby; (viii) suffered any theft, damage, destruction
or casualty loss, not covered by insurance and for which a timely claim was
filed, in
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excess of $50,000 in the aggregate; (ix) suffered any extraordinary losses
(whether or not covered by insurance); (x) waived, canceled, compromised or
released any rights having a value in excess of $50,000 in the aggregate; (xi)
made or adopted any change in its accounting practice or policies; (xii) made
any adjustment to its books and records other than in respect of the conduct of
its business activities in the ordinary course consistent with past practice;
(xiii) entered into any transaction with any Affiliate or Familial Affiliate
other than intercompany transactions between the Companies in the ordinary
course of business consistent with past practice; (xiv) entered into any
employment agreement; (xv) terminated, amended or modified any agreement
involving an amount in excess of $50,000; (xvi) imposed any security interest or
other Lien on any of its assets other than in the ordinary course of business
consistent with past practice; (xvii) delayed paying any accounts payable which
are due and payable except to the extent being contested in good faith; (xviii)
made or pledged any charitable contribution in excess of $5,000; (xix) entered
into any other transaction or been subject to any event which has or may have a
Material Adverse Effect on either of the Companies; or (xx) agreed to do or
authorized any of the foregoing.
4.12 LIABILITIES OF THE COMPANIES. Except as disclosed on Schedule
4.12 hereto, neither of the Companies has any liabilities or obligations,
whether accrued, absolute, contingent or otherwise, except (a) to the extent
reflected on the Current Balance Sheet and not heretofore paid or discharged,
(b) liabilities incurred in the ordinary course of business consistent with past
practice since the date of the Current Balance Sheet (none of which relates to
breach of contract, breach of warranty, tort, infringement or violation of law,
or which arose out of any action, suit, claim, governmental investigation or
arbitration proceeding), and (c) liabilities incurred in the ordinary course of
business prior to the date of the Current Balance Sheet which, in accordance
with GAAP consistently applied, were not required to be recorded thereon.
4.13 LITIGATION. Except as disclosed on Schedule 4.13 hereto, there
is no action, suit, or other legal or administrative proceeding or governmental
investigation pending, threatened, anticipated or contemplated against, by or
affecting either of the Companies, or any of their respective properties or
assets, or either of the Shareholders, or which questions the validity or
enforceability of this Agreement or the transactions contemplated hereby, and
there is no basis for any of the foregoing. There are no outstanding orders,
decrees or stipulations issued by any Governmental Authority in any proceeding
to which either of the Companies is or was a party which have not been complied
with in full or which continue to impose any obligations on any of the
Companies.
4.14 ENVIRONMENTAL MATTERS.
(a) Each of the Companies (as defined in clause (g) below) is
and has at all times been in full compliance with all Environmental Laws (as
defined in clause (g) below) governing its respective business, operations,
properties and assets, including, without limitation: (i) all requirements
relating to the Discharge (as defined in clause (g) below) and Handling (as
defined in clause (g) below) of Hazardous Substances (as defined in clause (g)
below); (ii) all requirements
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relating to notice, record keeping and reporting; (iii) all requirements
relating to obtaining and maintaining Licenses (as defined in clause (g) below)
for the ownership and/or use of its properties and assets and the operation of
its business as presently conducted, including Licenses relating to Hazardous
Substances; and (iv) all applicable writs, orders, judgements, injunctions,
written governmental communications, decrees or demands issued pursuant to, or
arising under, any Environmental Laws, except where non-compliance would not
have a Material Adverse Effect on either of the Companies.
(b) There are no (and there is no basis for any)
non-compliance orders, warning letters, notices of violation (collectively
"Notices"), claims, suits, actions, judgments, penalties, fines, or
administrative or judicial investigations or proceedings (collectively
"Proceedings") pending or threatened against or involving either of the
Companies, or their respective businesses, operations, properties, or assets,
issued by any Governmental Authority or third party, for which either of the
Companies could be liable, with respect to any Environmental Laws or Licenses
issued to either of the Companies thereunder in connection with, related to or
arising out of the ownership by either of the Companies of their respective
properties or assets or the operation of their respective businesses, which have
not been resolved to the satisfaction of the issuing Governmental Authority or
third party in a manner that would not impose any obligation, burden or
continuing liability on Xxxxxxxxx or any of the Companies in the event that the
transactions contemplated by this Agreement are consummated, or which could have
a Material Adverse Effect on any of the Companies, including, without
limitation: (i) Notices or Proceedings related to either of the Companies being
a potentially responsible party for a federal or state environmental cleanup
site or for corrective action under any applicable Environmental Laws; (ii)
Notices or Proceedings relating to either of the Companies being responsible to
undertake any response or remedial actions or clean-up actions under any
applicable Environmental Law; or (iii) Notices or Proceedings related to either
of the Companies being liable under any Environmental Laws for personal injury,
property damage, natural resource damage, or clean up obligations.
(c) Neither of the Companies has Handled or Discharged, nor
has it allowed or arranged for any third party to Handle or Discharge, Hazardous
Substances in violation of Environmental Laws to, at or upon: (i) any location
other than a site lawfully permitted to receive such Hazardous Substances in
violation of Environmental Laws; (ii) any real property currently or previously
owned or leased by either of the Companies; or (iii) any site which, pursuant to
any Environmental Laws, (x) has been placed on the National Priorities List or
its state equivalent, or (y) the Environmental Protection Agency or the relevant
state agency or other Governmental Authority has notified either of the
Companies that such Governmental Authority has proposed or is proposing to place
on the National Priorities List or its state equivalent. There has not occurred,
nor is there presently occurring, a Discharge, or threatened Discharge, of any
Hazardous Substance on, into or beneath the surface of, or adjacent to, any real
property currently or previously owned or leased by either of the Companies in
an amount requiring a notice or report to be made to a Governmental Authority or
in violation of any applicable Environmental Laws.
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(d) Schedule 4.14 identifies the operations and activities,
and locations thereof, which have been conducted or are being conducted by
either of the Companies on any real property currently or previously owned or
leased by either of the Companies which have involved the Handling or Discharge
of Hazardous Substances.
(e) Neither of the Companies use, nor has used, any
Aboveground Storage Tanks (as defined in clause (g) below) or Underground
Storage Tanks (as defined in clause (g) below), and there are not now nor have
there ever been any Underground Storage Tanks beneath any real property
currently or previously owned or leased by either of the Companies that are
required to be registered under applicable Environmental Laws.
(f) Schedule 4.14 identifies (i) all environmental audits,
assessments or occupational health studies undertaken by either of the Companies
or its agents or undertaken by any Governmental Authority, or any third party
(as to such third party, known to either of the Companies or either of the
Shareholders), relating to or affecting either of the Companies or any real
property currently or previously owned or leased by either of the Companies;
(ii) the results of any ground, water, soil, air or asbestos monitoring
undertaken by either of the Companies or its agents or known by either of the
Companies or either of the Shareholders to have been undertaken by any
Governmental Authority or any third party, relating to or affecting either of
the Companies or any real property currently or previously owned or leased by
either of the Companies which indicate the presence of Hazardous Substances at
levels requiring a notice or report to be made to a Governmental Authority or in
violation of any applicable Environmental Laws; (iii) all material written
communications between either of the Companies and any Governmental Authority
arising under or related to Environmental Laws; and (iv) all outstanding
citations known by either of the Companies or either of the Shareholders to have
been issued under OSHA, or similar state or local statutes, laws, ordinances,
codes, rules, regulations, orders, rulings, or decrees, relating to or affecting
either of the Companies or any real property currently or previously owned or
leased by either of the Companies.
(g) For purposes of this Section 4.14, the following terms
shall have the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Aboveground Storage
Tanks.
"Companies" means Aerocar Aviation and any Affiliates of
Aerocar Aviation and Aerocar Parts and any Affiliates of Aerocar Parts.
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"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further be
defined in any Environmental Law, into any medium including, without
limitation, ground water, surface water, soil or air.
"Environmental Laws" means all federal, state, regional or
local statutes, laws, rules, regulations, codes, orders, injunctions,
decrees, rulings, and ordinances or judicial or administrative
interpretations thereof, or similar laws of foreign jurisdictions where
either of the Companies conduct business, currently in existence,
enacted or promulgated, any of which govern or relate to pollution,
protection of the environment, public health and safety, air emissions,
water discharges, hazardous or toxic substances, solid or hazardous
waste or occupational health and safety, as any of these terms are or
may be defined in such statutes, laws, rules, regulations, codes,
orders, injunctions, decrees, rulings and ordinances, or judicial or
administrative interpretations thereof, including, without limitation:
the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Superfund Amendment and Reauthorization
Act of 1986, 42 U.S.C. ss.9601, et seq. (collectively "CERCLA"); the
Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and subsequent Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. ss.6901 et seq. (collectively "RCRA");
the Hazardous Materials Transportation Act, as amended, 49 U.S.C.
ss.1801, et seq.; the Clean Water Act, as amended, 33 U.S.C. ss.1311,
et seq.; the Clean Air Act, as amended (42 U.S.C. ss.7401- 7642); the
Toxic Substances Control Act, as amended, 15 U.S.C. ss.2601 et seq.;
the Federal Insecticide, Fungicide, and Rodenticide Act as amended, 7
U.S.C. ss.136-136y ("FIFRA"); the Emergency Planning and Community
Right-to-Know Act of 1986 as amended, 42 U.S.C. ss.11001, et seq.
(Title III of XXXX) ("EPCRA"); and the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. ss.651, et seq. ("OSHA").
"Handle" means any manner of generating, accumulating,
storing, treating, disposing of, transporting, transferring, labeling,
handling, manufacturing or using, as any of such terms may be defined
in any Environmental Law, of any Hazardous Substances or Waste.
"Hazardous Substances" shall be construed broadly to include
any toxic or hazardous substance, material, or waste, and any other
contaminant or pollutant, whether liquid, solid, semi-solid, sludge
and/or gaseous, including without limitation, chemicals, compounds,
by-products, pesticides, asbestos containing materials, petroleum or
petroleum products, and polychlorinated biphenyls, the presence of
which, as of the date hereof and/or the Closing Date, requires
investigation or remediation under any Environmental Laws or which are,
as of the date hereof and/or the Closing Date, or become regulated,
listed or controlled by, under or pursuant to any Environmental Laws,
including, without limitation, RCRA, CERCLA, the Hazardous Materials
Transportation Act, the Toxic Substances Control Act, the Clean Air
Act, the Clean Water Act, FIFRA, EPCRA and OSHA, or any similar state
statute, or regulations implementing such statutes, laws, ordinances,
codes, rules, regulations, orders, rulings, or decrees, or which has
been determined or interpreted by any Governmental
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Authority to be a hazardous or toxic substance regulated under any
other statute, law, regulation, order, code, rule, order, or decree.
"Licenses" means all licenses, certificates, permits,
approvals and registrations.
"Underground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 et seq., as amended, of RCRA, or any
applicable state or local statute, law, ordinance, code, rule,
regulation, order ruling, or decree governing Underground Storage
Tanks.
4.15 REAL ESTATE.
(a) The Companies do not own any real property or any
interest therein.
(b) Schedule 4.15(b) sets forth a list of all leases, licenses
or similar agreements which are for the use or occupancy of real property
("Leases") to which any of the Companies is a party (copies of which have
previously been furnished to Xxxxxxxxx), in each case setting forth (A) the
lessor and lessee thereof and the date and term of each of the Leases, (B) the
street address of each property covered thereby, and (C) a brief description
(including size and function) of the principal improvements and buildings
thereon (the "Leased Premises"), all of which are within the property setback
and building lines of the respective property. The Leases are in full force and
effect and have not been amended, and, to the best of each of the Companies and
each Shareholder's knowledge, the other party is not in material default or
breach under any such Lease. No event has occurred which, with the passage of
time or the giving of notice or both, would cause a material breach of or
default under any of such Leases. With respect to each such Leased Premises,
each of the Companies has valid leasehold interests in the Leased Premises, free
and clear of any Liens which have not been adequately bonded or are being
contested in good faith.
4.16 GOOD TITLE TO AND CONDITION OF ASSETS.
(a) Except as set forth on Schedule 4.16, each of the
Companies has good and marketable title to all of its Assets (as hereinafter
defined), free and clear of any Liens or restrictions on use. For purposes of
this Agreement, the term "Assets" means all of the properties and assets of each
of the Companies, other than the Leased Premises, whether personal or mixed,
tangible or intangible, wherever located including, without limitation, the
aircraft, aircraft engines (including engines held for lease) and the spare
parts set forth on Schedule 4.16(a) hereto (the engines identified therein are
hereinafter collectively referred to as the "Designated Engines"). Aerocar
Aviation is in the process of acquiring the two (2) aircraft engines identified
on Schedule 4.16(a) as "Engines on Order" (the "Engines on Order") which, when
Aerocar Aviation acquires the same shall become Designated Engines hereunder.
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AT CLOSING, XXXXXXXXX SHALL BE DEEMED TO ACKNOWLEDGE THAT
NEITHER THE COMPANIES NOR THE SHAREHOLDERS HAVE MADE NOR SHALL BE DEEMED TO HAVE
MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE
MERCHANTABILITY, FITNESS FOR PARTICULAR USE OR PURPOSE, DESIGN OR CONDITION OF,
OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP IN, THE DESIGNATED ENGINES
OR THE AIRCRAFT/ENGINE SPARE PARTS INCLUDED IN THE ASSETS (WHICH ARE BEING
ACQUIRED AS AN ASSET OF THE COMPANIES ON AN "AS IS" "WHERE IS" BASIS,) AND THE
COMPANIES AND THE SHAREHOLDERS DISCLAIM AND XXXXXXXXX HEREBY WAIVES ALL SUCH
WARRANTIES, ARISING BY LAW OR OTHERWISE, AS TO THE PHYSICAL CONDITION OF THE
DESIGNATED ENGINES AND THE AIRCRAFT/ENGINE SPARE PARTS, INCLUDING, BUT NOT
LIMITED TO, ANY AND ALL DEFECTS, WHETHER OBVIOUS, LATENT OR UNDISCOVERABLE.
EXCEPT AS OTHERWISE SET FORTH HEREIN, XXXXXXXXX AT CLOSING SHALL BE DEEMED TO
ACKNOWLEDGE THAT IT HAS NOT SOUGHT FROM THE COMPANIES, OR LOOKED TO OR RELIED
UPON THE COMPANIES, FOR ANY ANALYSIS, EVALUATION OR ADVICE WITH RESPECT TO ANY
AIRCRAFT ENGINE LEASE OR LESSEE.
(b) The Fixed Assets (as hereinafter defined) currently in use
or necessary for the business and operations of each of the Companies are in
good operating condition, normal wear and tear excepted. For purposes of this
Agreement, the term "Fixed Assets" means all vehicles, machinery, equipment,
tools, supplies, leasehold improvements, furniture and fixtures (other than
Designated Engines and aircraft/engine spare parts) used by or located on the
premises of each of the Companies or set forth on the Current Balance Sheet or
acquired by each of the Companies since the date of the Current Balance Sheet.
Schedule 4.16(b) lists the vehicles owned, leased or used by each of the
Companies, setting forth the make, model, vehicle identification number, and
year of manufacture, and for each vehicle, whether it is owned or leased, and if
owned, the name of any lienholder and the amount of the lien, and if leased, the
name of the lessor and, whether owned or leased.
4.17 COMPLIANCE WITH LAWS.
(a) Each of the Companies is and has been in compliance with
all laws, regulations and orders applicable to it, its business and operations
(as conducted by it now and in the past), the Assets and the Leased Premises and
any other properties and assets (in each case owned or used by it now or in the
past), except where the failure to so comply would not have a Material Adverse
Effect on either of the Companies. Neither of the Companies has been cited,
fined or otherwise notified of any asserted past or present failure to comply
with any laws, regulations or orders and no proceeding with respect to any such
violation is pending or threatened.
(b) Neither of the Companies is subject to any Contract,
decree or injunction in which either of the Companies is a party which restricts
the continued operation of any business of
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either of the Companies or the expansion thereof to other geographical areas,
customers and suppliers or lines of business.
4.18 LABOR AND EMPLOYMENT MATTERS. The Companies and the
Shareholders have delivered to Xxxxxxxxx on the date hereof a list setting forth
the name, address, social security number and current rate of compensation of
the employees of each of the Companies. Neither of the Companies is a party to
or bound by any collective bargaining agreement or any other agreement with a
labor union, and there has been no effort by any labor union during the 24
months prior to the date hereof to organize any employees of either of the
Companies into one or more collective bargaining units. Each of the Companies
has complied with applicable laws, rules and regulations relating to employment,
civil rights and equal employment opportunities, including but not limited to,
the Civil Rights Act of 1964, the Fair Labor Standards Act, the Americans with
Disabilities Act, as amended, and the Immigration Reform and Control Act of
1986, as amended, except where the failure to so comply would not have a
Material Adverse Effect on either of the Companies.
4.19 EMPLOYEE BENEFIT PLANS.
(a) Employee Benefit Plans. Schedule 4.19 contains a list
setting forth each employee benefit plan or arrangement of each of the
Companies, including but not limited to employee pension benefit plans, as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), multiemployer plans, as defined in Section 3(37) of ERISA,
employee welfare benefit plans, as defined in Section 3(1) of ERISA, deferred
compensation plans, stock option plans, bonus plans, stock purchase plans,
hospitalization, disability and other insurance plans, severance or termination
pay plans and policies, whether or not described in Section 3(3) of ERISA, in
which employees, their spouses or dependents, of each of the Companies
participate ("Employee Benefit Plans") (true and accurate copies of which,
together with the most recent annual reports on Form 5500 and summary plan
descriptions with respect thereto, were furnished to Xxxxxxxxx).
(b) Compliance with Law. With respect to each Employee Benefit
Plan, (i) each has been administered in all material respects in compliance with
its terms and with all applicable laws, including, but not limited to, ERISA and
the Internal Revenue Code of 1986, as amended (the "Code"); (ii) no actions,
suits, claims or disputes are pending, or threatened; (iii) no audits,
inquiries, reviews, proceedings, claims, or demands are pending with any
governmental or regulatory agency; (iv) there are no facts which could give rise
to any liability in the event of any such investigation, claim, action, suit,
audit, review, or other proceeding; (v) all material reports, returns, and
similar documents required to be filed with any governmental agency or
distributed to any plan participant have been duly or timely filed or
distributed; and (vi) no "prohibited transaction" has occurred within the
meaning of the applicable provisions of ERISA or the Code.
(c) Qualified Plans. With respect to each Employee Benefit
Plan intended to qualify under Code Section 401(a) or 403(a), (i) the Internal
Revenue Service has issued a favorable
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determination letter, true and correct copies of which have been furnished to
Xxxxxxxxx, that such plans are qualified and exempt from federal income taxes;
(ii) no such determination letter has been revoked nor has revocation been
threatened, nor has any amendment or other action or omission occurred with
respect to any such plan since the date of its most recent determination letter
or application therefor in any respect which would adversely affect its
qualification or materially increase its costs; (iii) no such plan has been
amended in a manner that would require security to be provided in accordance
with Section 401(a)(29) of the Code; (iv) no reportable event (within the
meaning of Section 4043 of ERISA) has occurred, other than one for which the
30-day notice requirement has been waived; (v) as of the Closing Date, the
present value of all liabilities that would be "benefit liabilities" under
Section 4001(a)(16) of ERISA if benefits described in Code Section 411(d)(6)(B)
were included will not exceed the then current fair market value of the assets
of such plan (determined using the actuarial assumptions used for the most
recent actuarial valuation for such plan); (vi) all contributions to, and
payments from and with respect to such plans, which may have been required to be
made in accordance with such plans and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made; and (vii) all such contributions
to the plans, and all payments under the plans (except those to be made from a
trust qualified under Section 401(a) of the Code) and all payments with respect
to the plans (including, without limitation, PBGC (as defined below) and
insurance premiums) for any period ending before the Closing Date that are not
yet, but will be, required to be made are properly accrued and reflected on the
Current Balance Sheet.
(d) Multiemployer Plans. With respect to any multiemployer
plan, as described in Section 4001(a)(3) of ERISA ("MPPA Plan"), (i) all
contributions required to be made with respect to employees of each of the
Companies have been timely paid; (ii) neither of the Companies has incurred or
is expected to incur, directly or indirectly, any withdrawal liability under
ERISA with respect to any such plan (whether by reason of the transactions
contemplated by this Agreement or otherwise); (iii) Schedule 4.19 sets forth (A)
the withdrawal liability under ERISA to each MPPA Plan, (B) the date as of which
such amount was calculated, and (C) the method for determining the withdrawal
liability; and (iv) no such plan is (or is expected to be) insolvent or in
reorganization and no accumulated funding deficiency (as defined in Section 302
of ERISA and Section 412 of the Code), whether or not waived, exists or is
expected to exist with respect to any such plan.
(e) Welfare Plans. (i) Neither of the Companies is obligated
under any employee welfare benefit plan as described in Section 3(1) of ERISA
("Welfare Plan") to provide medical or death benefits with respect to any
employee or former employee of either of the Companies or their respective
predecessors after termination of employment; (ii) each of the Companies has
complied with the notice and continuation coverage requirements of Section 4980B
of the Code and the regulations thereunder with respect to each Welfare Plan
that is, or was during any taxable year for which the statute of limitations on
the assessment of federal income taxes remains, open, by consent or otherwise, a
group health plan within the meaning of Section 5000(b)(1) of the Code; and
(iii) there are no reserves, assets, surplus or prepaid premiums under any
Welfare Plan which is an Employee Benefit Plan. The consummation of the
transactions contemplated by this Agreement will
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not entitle any individual to severance pay, and will not accelerate the time of
payment or vesting, or increase the amount of compensation, due to any
individual.
(f) Controlled Group Liability. Neither of the Companies, nor
any entity that would be aggregated with it under Code Section 414(b), (c), (m)
or (o), (i) has ever terminated or withdrawn from any employee benefit plan
under circumstances resulting (or expected to result) in liability to the
Pension Benefit Guaranty Corporation ("PBGC"), the fund by which the employee
benefit plan is funded, or any employee or beneficiary for whose benefit the
plan is or was maintained (other than routine claims for benefits); (ii) has any
assets subject to (or expected to be subject to) a lien for unpaid contributions
to any employee benefit plan; (iii) has failed to pay premiums to the PBGC when
due; (iv) is subject to (or expected to be subject to) an excise tax under Code
Section 4971; (v) has engaged in any transaction which would give rise to
liability under Section 4069 or Section 4212(c) of ERISA; or (vi) has violated
Code Section 4980B or Section 601 through 608 of ERISA.
(g) Other Liabilities. (i) None of the Employee Benefit Plans
obligates either of the Companies to pay separation, severance, termination or
similar benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a "change of control" (as such term is
defined in Section 280G of the Code); (ii) all required or discretionary (in
accordance with historical practices) payments, premiums, contributions,
reimbursements, or accruals for all periods ending prior to or as of the Closing
Date shall have been made or properly accrued on the Current Balance Sheet or
will be properly accrued on the books and records of each of the Companies as of
the Closing Date; and (iii) none of the Employee Benefit Plans has any unfunded
liabilities which are not reflected on the Current Balance Sheet or the books
and records of each of the Companies.
4.20 TAX MATTERS. Except as set forth on Schedule 4.20, all Tax
Returns required to be filed prior to the date hereof with respect to the
Companies or any of their respective income, properties, franchises or
operations have been timely filed where required to be filed, each such Tax
Return has been prepared in compliance with all applicable laws and regulations,
and all such Tax Returns are true and accurate in all respects. Except as set
forth on Schedule 4.20, all Taxes due and payable by or with respect to each of
the Companies have been paid or are accrued on the Current Balance Sheet. Except
as set forth on Schedule 4.20 hereto: (i) with respect to each taxable period of
each of the Companies (for 1993, 1994 and 1995 for federal tax purposes), either
such taxable period has been audited by the relevant taxing authority or the
time for assessing or collecting Taxes with respect to each such taxable period
has closed and such taxable period is not subject to review by any relevant
taxing authority; (ii) no deficiency or proposed adjustment which has not been
settled or otherwise resolved for any amount of Taxes has been asserted or
assessed by any taxing authority against either of the Companies; (iii) neither
of the Companies has consented to extend the time in which any Taxes may be
assessed or collected by any taxing authority; (iv) neither of the Companies has
requested or been granted an extension of the time for filing any Tax Return to
a date later than the Closing Date; (v) there is no action, suit, taxing
authority proceeding, or audit or claim for refund now in progress, pending or
threatened against or with respect to either
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of the Companies regarding Taxes; (vi) neither of the Companies has made an
election or filed a consent under Section 341(f) of the Code (or any
corresponding provision of state, local or foreign law) on or prior to the
Closing Date; (vii) there are no Liens for Taxes (other than for current Taxes
not yet due and payable) upon the assets of either of the Companies; (viii)
neither of the Companies will be required (A) as a result of a change in method
of accounting for a taxable period ending on or prior to the Closing Date, to
include any adjustment under Section 481(c) of the Code (or any corresponding
provision of state, local or foreign law) in taxable income for any taxable
period (or portion thereof) beginning after the Closing Date or (B) as a result
of any "closing agreement," as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign law), to include any item of
income or exclude any item of deduction from any taxable period (or portion
thereof) beginning after the Closing Date; (ix) neither of the Companies has
been a member of an affiliated group (as defined in Section 1504 of the Code) or
filed or been included in a combined, consolidated or unitary income Tax Return;
(x) neither of the Companies is a party to or bound by any tax allocation or tax
sharing agreement or has any current or potential contractual obligation to
indemnify any other Person with respect to Taxes; (xi) neither of the Companies
has made any payments, and will not become obligated (under any contract entered
into on or before the Closing Date) to make any payments, that will be
non-deductible under Section 280G of the Code (or any corresponding provision of
state, local or foreign law); (xii) neither of the Companies has been a United
States real property holding corporation within the meaning of Section 897(c)(2)
of the Code (or any corresponding provision of state, local or foreign law)
during the applicable period specified in Section 897(c)(1)(a)(ii) of the Code
(or any corresponding provision of state, local or foreign law); (xiii) no claim
has ever been made by a taxing authority in a jurisdiction where either of the
Companies does not file Tax Returns that such company is or may be subject to
Taxes assessed by such jurisdiction; (xiv) neither of the Companies has any
permanent establishment in any foreign country, as defined in the relevant tax
treaty between the United States of America and such foreign country; (xv) true,
correct and complete copies of all income and sales Tax Returns filed by or with
respect to each of the Companies for the past three years have been furnished or
made available to Xxxxxxxxx; (xvi) neither of the Companies will be subject to
any Taxes for the period ending at the Closing Date or any period for which a
Tax Return has not been filed imposed pursuant to Section 1374 or Section 1375
of the Code (or any corresponding provision of state, local or foreign law); and
(xvii) a valid election under Section 1362(a) of the Code has been in effect for
each of the Companies for each of their respective taxable years, as to Aerocar
Aviation since March 1, 1988 and as to Aerocar Parts since its date of
incorporation, and such election has not been revoked or terminated and none of
the Companies or any existing or previous shareholders of any of the Companies
has taken any action (nor are they aware of any such action by any other Person)
which would cause (other than the transactions contemplated hereby) or have
caused a termination of such "S" election, and none of the Companies has ever
failed to be a small business corporation as defined in Section 1361(b) of the
Code and the Treasury Regulations thereunder.
4.21 INSURANCE. Schedule 4.21 contains (i) a complete and correct
list of all policies of insurance covering each of the Companies' respective
properties, assets and business (together with all amendments and riders
thereto, the "Insurance Policies") (copies of which have been provided
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to Xxxxxxxxx) and (ii) a detailed description of each pending claim under any of
the Insurance Policies for an amount in excess of $10,000 that relates to loss
or damage to the properties, assets or businesses of each of the Companies.
Neither of the Companies has failed to give, in a timely manner, any notice
required under any of the Insurance Policies necessary to preserve its rights
thereunder with respect to any outstanding claims and the Companies and the
Shareholders have no knowledge of any uninsured claims or losses. Each of the
Companies has complied with the material provisions of such Insurance Policies
as in effect from time to time.
4.22 RECEIVABLES. All of the Receivables (as hereinafter defined)
outstanding on May 4, 1998 are identified on Schedule 4.22 hereto and are valid
and legally binding, represent bona fide transactions and arose in the ordinary
course of business of each of the Companies. All of the Receivables are good and
collectible receivables, and will be collected in full in accordance with the
terms of such receivables (and in any event within six months following the
Closing), without set off or counterclaims, subject to the allowance for
doubtful accounts, if any, set forth on the Current Balance Sheet as reasonably
adjusted since the date of the Current Balance Sheet in the ordinary course of
business consistent with past practice. For purposes of this Agreement, the term
"Receivables" means all receivables of the Companies, including all trade
account receivables arising from the provision of services, sale of inventory,
notes receivable, and insurance proceeds receivable. At the written request of
Xxxxxxxxx, the Shareholders shall purchase from Xxxxxxxxx, and Xxxxxxxxx shall
sell to the Shareholders, all Receivables which arose prior to the Closing Date
and remain uncollected on the six month anniversary of the Closing at a purchase
price equal to the face amount thereof and, upon such purchase, the Shareholders
may retain the proceeds of such Receivables as and when collected by them (and
to the extent thereafter collected by Xxxxxxxxx, Xxxxxxxxx shall promptly remit
the same to the Shareholders) and Xxxxxxxxx shall take such actions in
connection with the collection thereof as the Shareholders shall reasonably
request at the Shareholders' sole cost and expense. Xxxxxxxxx shall utilize
commercially reasonable efforts to collect all Receivables after Closing.
Xxxxxxxxx shall not take any action to compromise such Receivables, which in the
aggregate, exceed $50,000, without Carmel's prior written consent which consent
will not be unreasonably withheld. Notwithstanding anything in this Agreement to
the contrary, the Shareholders shall not be obligated to purchase any Receivable
whose collectability has been materially impaired by Xxxxxxxxx'x failure to
perform its obligations in the transaction giving rise to such Receivable or any
other act or omission of Xxxxxxxxx, including any material violation by
Xxxxxxxxx of the terms of this and the immediately preceding two (2) sentences.
4.23 LICENSES AND PERMITS. Attached as Schedule 4.23 is a list of
all aviation-related licenses and required governmental or official approvals,
permits or authorizations held by the Companies, including but not limited to
those required to be issued by the Federal Aviation Administration or pursuant
to Part 145 of the Federal Aviation Regulations (collectively, the "Aviation
Permits") and all other required governmental or official licenses, approvals,
permits or authorizations (collectively, with the Aviation Permits, the
"Permits") material to its businesses and operations, including with respect to
the operation of each of the Leased Premises. All such Permits are valid and in
full force and effect, and each of the Companies is in compliance in all
material
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respects with the respective requirements thereof and no proceeding is pending
or threatened to revoke or amend any of them.
4.24 RELATIONSHIPS WITH CUSTOMERS AND SUPPLIERS; AFFILIATED
TRANSACTIONS. To the best of the Companies' and the Shareholders' knowledge, no
current supplier to either of the Companies of items essential to the conduct of
its business has threatened to terminate its business relationship with it for
any reason. Except as set forth on Schedule 4.24, no officer, director or
shareholder of either of the Companies, nor any person related by blood or
marriage to either of the Shareholders, nor any entity in which any such person
owns any beneficial interest, is a party to any Contract or transaction with
either of the Companies or has any interest in any property used by either of
the Companies.
4.25 INTELLECTUAL PROPERTY. Each of the Companies has full legal
right, title and interest in or the right to use pursuant to license and to all
trademarks, service marks, trade names, copyrights, know-how, patents, trade
secrets, proprietary computer software, data bases and compilations, licenses
(including licenses for the use of computer software programs), and other
intellectual property used in the conduct of its business (the "Intellectual
Property"). The business of each of the Companies as presently conducted and use
of the Intellectual Property in accordance with the terms of the applicable
license agreements, does not infringe or misappropriate any rights held or
asserted by any Person, and no Person is infringing on the Intellectual
Property. No payments are required for the continued use of the Intellectual
Property. Neither the Companies nor any Shareholder has notice that the
Intellectual Property has been declared invalid or unenforceable, or is the
subject of any pending or threatened action for opposition, cancellation,
declaration, infringement, or invalidity, unenforceability or misappropriation
or like claim, action or proceeding to which either of the Companies is a party.
4.26 CONTRACTS. Schedule 4.26 sets forth a list of each Contract to
which each of the Companies is a party or by which it or its properties and
assets are bound (other than any Contract which provides for aggregate payments
of less than $10,000) (the "Designated Contracts"). True and correct copies of
each written Designated Contract have been provided to Xxxxxxxxx and true and
correct summaries of each oral Designated Contract are set forth on Schedule
4.26. The copy of each written Designated Contract or summary of each oral
Designated Contract furnished to Xxxxxxxxx is a true and complete copy or
summary, as the case may be, of the document it purports to represent and
reflects all amendments thereto made through the date of this Agreement.
Schedule 4.26 identifies Designated Contracts identified therein that require
the consents of third parties to the transactions contemplated hereby. Neither
of the Companies has violated any of the material terms or conditions of any
Designated Contract or any term or condition which would permit termination or
material modification of any Designated Contract, and to the best of the
Companies' and the Shareholders' knowledge, (i) all of the covenants to be
performed by any other party thereto have been fully performed (other than with
respect to engine lease covenants relating to the maintenance or condition of
engines or maintenance logs) and (ii) there are no claims for breach or
indemnification or notice of default or termination under any Designated
Contract. No event has
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occurred which constitutes, or after notice or the passage of time, or both,
would constitute, a default by either of the Companies under any Designated
Contract, and, to the best of the Companies' and the Shareholders' knowledge, no
such event has occurred which constitutes or would constitute a default by any
other party. As used in this Section, Designated Contracts shall include,
without limitation, formal or informal, written or oral, (a) loan agreements,
indentures, mortgages, pledges, hypothecations, deeds of trust, conditional sale
or title retention agreements, security agreements, equipment financing
obligations or guaranties, or other sources of contingent liability in respect
of any indebtedness or obligations to any other Person, or letters of intent or
commitment letters with respect to the same; (b) contracts obligating either of
the Companies to provide products or services for a period of one year or more,
excluding standard maintenance contracts entered into in the ordinary course of
business without material modification from the preprinted forms used by the
Companies in the ordinary course of their businesses; (c) leases of real
property, (d) leases of personal property (including, without limitation,
aircraft and engine leases); (e) distribution, sales agency or franchise or
similar agreements, or agreements providing for an independent contractor's
services, or letters of intent with respect to the same; (f) employment
agreements, management service agreements, consulting agreements,
confidentiality agreements, non-competition agreements, any other agreements
relating to either of the Companies or any employee, officer or director of
either of the Companies, and all employee handbooks, policy statements and
similar plans; (g) licenses, assignments or transfers of trademarks, trade
names, service marks, patents, copyrights, trade secrets or know how, or other
agreements regarding proprietary rights or intellectual property; (h) any
Contract relating to pending capital expenditures by either of the Companies;
(i) contracts obligating either of the Companies to purchase vehicles, parts,
accessories, supplies, equipment, oil, advertising, media and media related
services of any kind; and (j) all other Contracts or understandings which are
material to either of the Companies or its business, assets or properties,
irrespective of subject matter and whether or not in writing, and not otherwise
disclosed on the Schedules.
4.27 ACCURACY OF INFORMATION FURNISHED BY THE COMPANIES OR THE
SHAREHOLDERS. No representation, statement or information made or furnished by
the Companies or the Shareholders to Xxxxxxxxx or any of Xxxxxxxxx'x
representatives, including those contained in this Agreement and the various
Schedules attached hereto and the other information and statements referred to
herein and previously furnished by either of the Companies and the Shareholders
in connection with the evaluation, negotiation and consummation of the
transactions contemplated hereby, contains or shall contain any untrue statement
of a material fact or omits or shall omit any material fact necessary to make
the information contained therein not misleading. The Companies and the
Shareholders have provided Xxxxxxxxx with true, accurate and complete copies of
all documents listed or described in the various Schedules attached hereto.
4.28 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS; SECURITIES
DOCUMENTS. Each of the Shareholders is or will be acquiring the Xxxxxxxxx Common
Stock hereunder for his or her own account for investment and not with a view
to, or for the sale in connection with, any distribution of any of the Xxxxxxxxx
Common Stock, except in compliance with applicable state and federal
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securities laws. The Shareholders have had the opportunity to discuss the
transactions contemplated hereby with Xxxxxxxxx and have had the opportunity to
obtain such information pertaining to Xxxxxxxxx as has been requested, including
but not limited to filings made by Xxxxxxxxx with the SEC under the Exchange
Act, including the most recent filing by Xxxxxxxxx on Form 10-K, and any filings
on Schedule 14A and Forms 10-Q or 8-K since the end of Xxxxxxxxx'x last fiscal
year end, which filings are also available on the Internet at xxx.xxx.xxx. Each
Shareholder is an "accredited investor" within the meaning of Regulation D
promulgated under the Securities Act, and has such knowledge and experience in
business or financial matters that he is capable of evaluating the merits and
risks of an investment in the Xxxxxxxxx Common Stock. As a condition to the
delivery of the Stock Consideration to the Shareholders, if any, the
Shareholders shall deliver to Xxxxxxxxx a representation substantially identical
to the provisions of this Section 4.28.
4.29 BANK ACCOUNTS; BUSINESS LOCATIONS. Schedule 4.29 sets forth
all accounts of each of the Companies with any bank, broker or other depository
institution, and the names of all persons authorized to withdraw funds from each
such account. As of the date hereof, neither of the Companies has any office or
place of business other than as identified on Schedule 4.15(b) and the
Companies' principal places of business and chief executive offices are
indicated on Schedule 4.15(b), and, except for equipment leased to customers in
the ordinary course of business, all locations where the equipment, inventory,
chattel paper and books and records of the Companies are located as of the date
hereof are fully identified on Schedule 4.15(b).
4.30 NAMES; PRIOR ACQUISITIONS. All names under which the Companies
do business as of the date hereof are specified on Schedule 4.30. Except as set
forth on Schedule 4.30, neither of the Companies has changed its name or used
any assumed or fictitious name, or been the surviving entity in a merger,
acquired any business or changed its principal place of business or chief
executive office, within the past three years.
4.31 NO COMMISSIONS. Neither of the Companies nor any Shareholder
has incurred any obligation for any finder's or broker's or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE ACQUISITION
5.1 CONDUCT OF BUSINESS BY THE COMPANIES PENDING THE ACQUISITION.
Each of the Companies covenants and agrees that, between the date of this
Agreement and the Closing Date, the business of each of the Companies shall be
conducted only in, and each of the Companies shall not take any action except
in, the ordinary course of business, consistent with past practice. Each of the
Companies shall use its reasonable best efforts to preserve intact its business
organization, to keep available the services of its current officers, employees
and consultants, and to preserve its present
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relationships with customers, suppliers and other persons with which it has
significant business relations. By way of amplification and not limitation,
neither of the Companies shall, between the date of this Agreement and the
Closing Date, directly or indirectly, do or propose or agree to do any of the
following without the prior written consent of Xxxxxxxxx:
(a) amend or otherwise change its Articles of Incorporation or
Bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or, authorize
the issuance, sale, pledge, disposition, lease, grant of an encumbrance on, (i)
any shares of its capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any shares of such
capital stock, or any other ownership interest, of it, (ii) subject to (iii)
below, any of its assets, tangible or intangible, except in the ordinary course
of business consistent with past practice and in transactions not exceeding
$100,000 in the aggregate, or (iii) any aircraft or Designated Engines;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, for cash or
shares of stock, by merger, consolidation, or acquisition of stock or assets)
any interest in any corporation, partnership or other business organization or
division thereof, or make any investment either by purchase of stock or
securities, contributions of capital or property transfer, or, except in the
ordinary course of business, consistent with past practice and in transactions
not exceeding $100,000 in the aggregate, purchase any property or assets of any
other Person, (ii) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any Person, or make any loans or
advances, (iii) to the extent not prohibited by any other provision of this
Section 5.1, enter into any Contract other than in the ordinary course of
business, consistent with past practice and providing for payments not exceeding
$100,000 in the aggregate over the term of such Contract, (iv) make capital
expenditures exceeding $100,000 or purchases of inventories exceeding $50,000,
in each case in the aggregate, or (v) engage in any transaction with an
Affiliate or Familial Affiliate of either of the Companies; provided, however,
that Aerocar Aviation may pay for and take delivery of the Engines on Order as
long as the source of the payment by Aerocar Aviation of the cost therefor shall
be the proceeds of a capital contribution of either Shareholder to Aerocar
Aviation which, as a matter of clarification, shall not have the effect of
increasing the Purchase Price;
(f) except as set forth on Schedule 5.1(f) hereto, increase
the compensation payable or to become payable to its officers or employees, or,
except as presently bound to do, grant any severance or termination pay to, or
enter into any employment or severance agreement with, any
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of its directors, officers or other employees, or establish, adopt, enter into
or amend or take any action to accelerate any rights or benefits which any
collective bargaining, bonus, profit sharing, trust, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or employees; provided,
however, that Carmel shall be entitled only to be paid the base salary and
benefits set forth on Schedule 5.1(f) hereto notwithstanding any past practices,
anything to the contrary contained herein or in any agreement or arrangement
that he has with either of the Companies;
(g) take any action other than in the ordinary course of
business and in a manner consistent with past practice with respect to
accounting policies or procedures;
(h) pay, discharge or satisfy any existing claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent with past practice of due and payable
liabilities reflected or reserved against in its financial statements, as
appropriate, or liabilities incurred after the date hereof in the ordinary
course of business and consistent with past practice;
(i) increase or decrease prices charged to its customers,
except for previously announced price changes, or take any other action which
might reasonably be expected to result in any material increase in the loss of
customers through non-renewal or termination of service contracts or other
causes; or
(j) agree, in writing or otherwise, to take or authorize any
of the foregoing actions or any action which would make any representation or
warranty in Article IV untrue or incorrect.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
6.2 COMPLIANCE WITH COVENANTS. The Shareholders shall cause each
of the Companies to comply in all material respects with all of the respective
covenants of each of the Companies under this Agreement.
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6.3 COOPERATION- GENERAL. Each of the parties agrees to use
reasonable best efforts to cooperate with the other in the preparation and
filing of all forms, notifications, reports and information, if any, required or
reasonably deemed advisable pursuant to any law, rule or regulation, the rules
of Nasdaq (or any exchange on which the Xxxxxxxxx Common Stock may be listed) or
the National Association of Securities Dealers, Inc. in connection with the
transactions contemplated by this Agreement, and to use their respective best
efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.
6.4 COOPERATION- THE OFFERING. The Companies and the Shareholders
agree to use their reasonable best efforts to cooperate with Xxxxxxxxx in
connection with Xxxxxxxxx'x preparation of one or more registration statements
to be filed in connection with the Offering. In connection with such
cooperation, none of the Shareholders or Companies shall be required to certify
as to the accuracy of information regarding the Companies or the Shareholders
contained in any registration statement. The Companies and the Shareholders
hereby confirm that, to the best of their knowledge, the Accountants have
consented to the filing of the Companies' financial statements for the last
three (3) fiscal years as part of such registration statements, and the
Companies and the Shareholders shall, promptly upon request by Xxxxxxxxx, use
their best efforts to secure from the Accountants such written consents as may
be required to be filed as part of such registration statements.
6.5 HSR ACT AND OTHER ACTIONS. Each of the parties hereto shall
(i) make promptly (and in no event later than ten (10) business days following
the execution of this Agreement) its respective filings, if any, and thereafter
make any other required submissions, under the HSR Act, with respect to the
transactions contemplated hereby, and shall, if requested by Xxxxxxxxx, seek
early termination of the applicable waiting period under the HSR Act, and (ii)
use reasonable efforts to take all appropriate actions, and do, or cause to be
done, all things necessary, proper or advisable under any applicable laws,
regulations and Contracts to consummate and make effective the transactions
contemplated herein, including, without limitation, obtaining all licenses,
permits, consents, approvals, authorizations, qualifications and orders of any
Governmental Authority and parties to Contracts with each of the Companies as
are necessary for the consummation of the transactions contemplated hereby. Each
of parties shall make on a prompt and timely basis all governmental or
regulatory notifications and filings required to be made by it for the
consummation of the transactions contemplated hereby. The parties also agree to
use reasonable best efforts to defend all lawsuits or other legal proceedings
challenging this Agreement or the consummation of the transactions contemplated
hereby and to lift or rescind any injunction or restraining order or other order
adversely affecting the ability of the parties to consummate the transactions
contemplated hereby.
6.6 ACCESS TO INFORMATION. From the date hereof to the Closing
Date, each of the Companies shall (and shall cause its directors, officers,
employees, and use its best efforts to cause its auditors, counsel and agents
to) afford Xxxxxxxxx, the Underwriter and their respective officers, employees,
auditors, counsel and agents reasonable access at all reasonable times to its
properties, offices and other facilities, to its officers and employees and to
all books and records, and shall
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furnish such persons with all financial, operating and other data and
information regarding the Companies or the Shareholders as may be requested.
Neither the due diligence investigation made by Xxxxxxxxx in connection with the
Acquisition nor information provided to or obtained by Xxxxxxxxx shall affect
any representation or warranty contained in this Agreement. Except to the extent
expressly disclosed in this Agreement, or a schedule hereto, the Companies and
the Shareholders do not make any representation or warranty regarding any
information obtained by Xxxxxxxxx regarding the Companies or the Shareholders.
6.7 NOTIFICATION OF CERTAIN MATTERS. The Companies and the
Shareholders shall give prompt notice to Xxxxxxxxx of the occurrence or
non-occurrence of any event of which either of the Companies or any Shareholder
has knowledge which would likely cause any representation or warranty contained
herein made by any of them to be untrue or inaccurate, or any covenant,
condition, or agreement contained herein applicable to any of them not to be
complied with or satisfied in any material respect. Xxxxxxxxx shall give prompt
notice to the Shareholders of the occurrence or non-occurrence of any event of
which Xxxxxxxxx has knowledge which would likely cause any representation or
warranty contained herein made by Xxxxxxxxx to be untrue or inaccurate, or any
covenant, condition, or agreement contained herein applicable to it not to be
complied with or satisfied in any material respect.
6.8 RESTRICTIVE COVENANTS. In order to assure that Xxxxxxxxx will
realize the benefits of the Acquisition, the Shareholders agree with Xxxxxxxxx
that they individually or collectively will not:
(i) for the period commencing on the Closing Date
and ending on the fifth anniversary of the Closing Date,
directly or indirectly, alone or as a partner, joint venturer,
officer, director, employee, consultant, agent, independent
contractor, lender or security holder of any company or
business, engage in purchasing, selling or leasing of (a)
aircraft, (b) jet, turbo prop or other aircraft engines, (c)
jet, turbo prop or other aircraft engine parts, or (d) any
other aircraft part, anywhere in the world; provided, however,
that, the beneficial ownership of less than five percent (5%)
of the shares of stock of any corporation having a class of
equity securities actively traded on a national securities
exchange or over-the-counter market shall not be deemed, in
and of itself, to violate the prohibitions of this Section;
(ii) for the period commencing on the Closing Date
and ending on the fifth anniversary of the Closing Date,
without the prior written consent of Xxxxxxxxx, directly or
indirectly, alone or as a partner, joint venturer, officer,
director, employee, consultant, agent, independent contractor,
lender or security holder of any company or business, engage
in overhauling, refurbishing,
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manufacturing, marketing or distribution of (a) aircraft, (b) jet,
turbo prop or other aircraft engines, (c) jet, turbo prop or other
aircraft engine parts, or (d) any other aircraft part, anywhere in the
world; provided, however, that, the beneficial ownership of less than
five percent (5%) of the shares of stock of any corporation having a
class of equity securities actively traded on a national securities
exchange or over-the-counter market shall not be deemed, in and of
itself, to violate the prohibitions of this Section;
(iii) for the period commencing on the Closing Date
and ending on the fifth anniversary of the Closing Date, directly or
indirectly, employ, or knowingly permit any company or business
directly or indirectly controlled by either of them, to employ, any
person who was employed by Xxxxxxxxx or the Companies, or any of their
respective Affiliates, subsidiaries, successors or assigns
(collectively, the "Xxxxxxxxx Companies") at or within the then prior
six (6) months, or in any manner seek to induce any such person to
leave his or her employment; and
(iv) at any time following the Closing Date, directly
or indirectly, in any way utilize, disclose, copy, reproduce or retain
in his possession either of the Companies' or the Xxxxxxxxx Companies'
proprietary rights or records, including, but not limited to, any of
their respective customer lists.
The Shareholders agree and acknowledge that the restrictions contained in this
Section are reasonable in scope and duration and are necessary to protect the
Xxxxxxxxx Companies after the Closing Date. If any provision of this Section 6.8
as applied to any party or to any circumstance is adjudged by a court to be
invalid or unenforceable, the same will in no way affect any other circumstance
or the validity or enforceability of this Agreement. If any such provision, or
any part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, the parties agree that the court making
such determination shall have the power to reduce the duration and/or area of
such provision, and/or to delete specific words or phrases, and in its reduced
form, such provision shall then be enforceable and shall be enforced. The
parties agree and acknowledge that the breach of this Section will cause
irreparable damage to the Xxxxxxxxx Companies and upon breach of any provision
of this Section, the Xxxxxxxxx Companies shall be entitled to injunctive relief,
specific performance or other equitable relief; provided, however, that, this
shall in no way limit any other remedies which the Xxxxxxxxx Companies may have
(including, without limitation, the right to seek monetary damages). Xxxxxxxxx
and the Shareholders hereby agree that Xxxxxxxxx may assign, without limitation,
the foregoing restrictive covenants to any successor to or Affiliates of
Xxxxxxxxx.
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6.9 CONFIDENTIALITY; PUBLICITY. No press release or other public
announcement related to this Agreement or the transactions contemplated hereby
shall be issued by any party hereto without the prior approval of the other
parties, except that Xxxxxxxxx may make such public disclosure which it believes
in good faith to be required by law or by the terms of any listing agreement
with or requirements of a securities exchange upon which its securities may be
listed or traded. Notwithstanding the foregoing or anything contained in the
Confidentiality Agreement, Xxxxxxxxx shall have the right to disclose in any
registration statements prepared in connection with the Offering information,
including without limitation the Financial Statements and other financial
information, concerning the Companies and the Shareholders that it in good faith
believes is required to be disclosed pursuant to the Securities Act and the
rules promulgated thereunder, the rules of Nasdaq and applicable state
securities laws or is advised by the Underwriter is necessary or advisable. The
parties confirm that the reference to "Recipient's Representatives" in the
Confidentiality Agreement shall include the Underwriter.
6.10 NO OTHER DISCUSSIONS. Each of the Companies, the Shareholders,
and their respective Affiliates, employees, agents and representatives will not
(i) initiate, encourage the initiation by others of discussions or negotiations
with third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
business or properties of each of the Companies (whether by merger,
consolidation, sale of stock or otherwise) or (ii) enter into any agreement or
commitment (whether or not binding) with respect to any of the foregoing
transactions. The Companies and the Shareholders will immediately notify
Xxxxxxxxx if any third party attempts to initiate any solicitation, discussion
or negotiation with respect to any of the foregoing transactions.
6.11 DUE DILIGENCE REVIEW AND ENVIRONMENTAL ASSESSMENT. Xxxxxxxxx
shall be entitled to have conducted prior to Closing a due diligence review of
the assets, properties, books and records of each of the Companies and an
environmental assessment of the Leased Premises (hereinafter referred to as
"Environmental Assessment"). The Environmental Assessment may include, but not
be limited to, a physical examination of the Leased Premises, and any
structures, facilities, or equipment located thereon, soil samples, ground and
surface water samples, storage tank testing, review of pertinent records,
documents, and Licenses of each of the Companies. The Companies and the
Shareholders shall provide Xxxxxxxxx or its designated agents or consultants
with the access to such properties controlled or used by either of the Companies
or any Shareholder which Xxxxxxxxx, its agents or consultants require to conduct
the Environmental Assessment. If the Environmental Assessment identifies
environmental conditions which require remediation or further evaluation under
the Environmental Laws or if the results of the Environmental Assessment or due
diligence review are otherwise not satisfactory to Xxxxxxxxx in its sole
discretion, then Xxxxxxxxx may, on or prior to June 30, 1998, elect not to close
the transactions contemplated by, and terminate, this Agreement, in addition to
any other remedies that may be available to it, notwithstanding anything to the
contrary contained herein. Xxxxxxxxx'x failure or decision not to conduct any
such Environmental Assessment or due diligence review shall not affect any
representation or warranty of the Shareholders under this Agreement.
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6.12 TRADING IN XXXXXXXXX COMMON STOCK. Except as otherwise
expressly consented to by Xxxxxxxxx, from the date of this Agreement until the
Closing Date, neither of the Companies nor any Shareholder (nor any Affiliates
thereof) will directly or indirectly purchase or sell (including short sales)
any shares of Xxxxxxxxx Common Stock or derivative securities in any
transactions effected on the Nasdaq or otherwise.
6.13 CERTAIN TAX MATTERS; 338(H)(10) ELECTION. The Shareholders
shall duly prepare, or cause to be prepared, and file, or cause to be filed, on
a timely basis, all Tax Returns for each of the Companies for any period ending
on or before the Closing Date. The Shareholders shall provide such Tax Returns
to Xxxxxxxxx for review at least 60 days prior to their due date (including
extensions where applicable). The Shareholders shall not file any amended Tax
Returns with respect to either of the Companies without the prior written
consent of Xxxxxxxxx which consent shall not be unreasonably withheld. At the
option of Xxxxxxxxx, and if Xxxxxxxxx so requests, the parties shall jointly
make a timely election under Section 338(h)(10) of the Code with respect to
either or both of the Aerocar Aviation Acquisition or the Aerocar Parts
Acquisition and execute and deliver such documents as may be necessary to make
such election on a timely basis.
6.14 SHAREHOLDER VOTE. The Shareholders, in executing this
Agreement, consent as the sole shareholders of each of the Companies to the
Acquisition and the transactions contemplated hereby, and waive notice of any
meeting in connection therewith, and hereby release and waive all rights with
respect to the transactions contemplated hereby under the Articles of
Incorporation or Bylaws of each of the Companies, applicable state law, and any
agreements relating to the sale, purchase or voting of any capital stock of each
of the Companies. At Closing, the Shareholders and each of the Companies agree
that any and all agreements relating to the sale, purchase or voting of capital
stock of either of the Companies, including any agreements described on Schedule
4.4, shall be, and hereby are, terminated.
6.15 COMPANIES COMMON STOCK; STOCK POWERS; RELEASES. At the
Closing, the Companies and the Shareholders shall deliver to Xxxxxxxxx: (i) all
certificates evidencing shares of capital stock of each of the Companies held by
them, duly endorsed for transfer to Xxxxxxxxx; and (ii) a release from the
Shareholders and such of his and the Companies' Affiliates as may be designated
by Xxxxxxxxx, in such form as is reasonably satisfactory to Xxxxxxxxx, releasing
all claims of any nature against each of the Companies, if any, and any claims
arising out of the Acquisition and the transactions contemplated by this
Agreement, provided that such releases shall not cover any rights of the
Shareholders against Xxxxxxxxx under this Agreement.
6.16 RESIGNATION. The Shareholders shall, at Closing, deliver to
Xxxxxxxxx the resignations of all persons in their capacities as officers or
directors of each of the Companies effective on the Closing Date, and the
Shareholders shall also resign as employees of the Companies effective on the
Closing Date.
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6.17 PAYOFF AMOUNTS. Prior to Closing, each of the Companies shall
request and deliver to Xxxxxxxxx payoff and estoppel letters from such holders
of each of the Companies' outstanding Indebtedness as designated by Xxxxxxxxx,
which letters shall contain payoff amounts, per diem interest, wire transfer
instructions and an agreement to deliver, upon payment in full, UCC-3
termination statements, FAA lien releases, satisfactions of mortgage and any
original promissory notes or other evidences of indebtedness marked canceled.
6.18 INDEBTEDNESS. On and prior to the Closing Date, the Companies
shall not incur or permit to exist Indebtedness in excess of $5,000,000.
6.19 RELEASE OF PERSONAL GUARANTEES. Xxxxxxxxx shall exercise its
reasonable best efforts to cause the release on the Closing Date of all
guarantees issued by the Shareholders in respect of the Companies' indebtedness
for borrowed money to First Union National Bank identified on Schedule 4.26
hereto, such release to be in writing and in a form reasonably satisfactory to
the affected Shareholder. If Xxxxxxxxx is unable to obtain any such release,
Xxxxxxxxx shall on the Closing Date repay such indebtedness in full with
immediately available funds.
6.20 INSURANCE. For the period commencing on the Closing Date and
ending on the third anniversary of the Closing Date, Xxxxxxxxx shall cause the
Shareholders to be added as additional insureds to its aviation comprehensive
general liability insurance in effect from time to time which shall have limits
of not less than US$150,000,000 combined single limit, and shall cause a
certificate evidencing such insurance (and the fact that it may not be cancelled
except upon thirty (30) days' prior written notice to the shareholders) to be
delivered to the Shareholders at Closing and thereafter upon the request of
either Shareholder.
6.21 CERTAIN VEHICLES. On or prior to the Closing Date, the
Shareholders shall use their best efforts to cause the leases of the automobiles
driven by the Shareholders, which leases and automobiles are described in
Schedule 6.21 hereto (the "Vehicle Leases"), to be assigned from the Aerocar
Parts or Aerocar Aviation, as applicable, to any Shareholder individually and to
cause the lessor thereof to release the Companies from any further obligation
thereunder. In the event that such assignment and release shall not have been
accomplished on or prior to the Closing Date, (i) the Shareholders shall and
hereby do indemnify the Companies and Xxxxxxxxx and hold each of them harmless
for any obligations under or pursuant to such leases or arising from any use or
operation of such vehicles, (ii) the Shareholders shall secure and pay for
automobile insurance with limits of liability reasonably acceptable to Xxxxxxxxx
but not less than $250,000 per occurrence and $500,000 in the aggregate and
(iii) shall cause Xxxxxxxxx and the Companies to be named as additional insureds
thereunder and cause a certificate evidencing such insurance (and the fact that
it may not be cancelled except upon thirty (30) days' prior written notice to
Xxxxxxxxx and the Companies) to be delivered to Xxxxxxxxx at Closing and
thereafter upon the request of Xxxxxxxxx.
6.22 MARCH 31, 1998 BALANCE SHEET. On or prior to May 13, 1998, the
Shareholders and the Companies shall deliver to Xxxxxxxxx the balance sheet of
each of the Companies dated as of
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March 31, 1998 which, upon delivery thereof, shall be deemed included in the
Financial Statements; provided, however, notwithstanding delivery of such
balance sheet, the Current Balance Sheet shall continue to be the December 31,
1997 balance sheet of each of the Companies.
6.23 AIRPLANE HANGAR. On or prior to the Closing Date, Carmel shall
have caused the lease of the aircraft hangar located at the North Perry Airport,
Florida, presently being leased by one of the Companies to be assigned by the
tenant to, and assumed by, Carmel individually, and shall cause the landlord
thereof to consent thereto and release the Companies from any further obligation
thereunder.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF XXXXXXXXX
The obligations of Xxxxxxxxx to effect the Acquisition shall be subject
to the fulfillment at or prior to the Closing Date of the following conditions,
any or all of which may be waived in whole or in part in writing by Xxxxxxxxx:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Shareholders contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed on any
schedule to this Agreement, and (ii) that those representations and warranties
which address matters only as of a particular date shall remain true and correct
as of such date. Each of the Companies and the Shareholders shall have performed
and complied in all material respects with all of their respective obligations
required by this Agreement to be performed or complied with at or prior to the
Closing Date. Each of the Companies and the Shareholders shall have delivered to
Xxxxxxxxx a certificate, dated as of the Closing Date, duly signed (in the case
of each of the Companies, by its President), certifying that such
representations and warranties are true and correct in all material respects and
that all such obligations have been complied with and performed.
7.2 NO MATERIAL ADVERSE CHANGE. Between the date hereof and the
Closing Date, there shall have been no Material Adverse Change to either of the
Companies.
7.3 CORPORATE CERTIFICATE. The Shareholders shall have delivered
to Xxxxxxxxx (i) copies of the Articles of Incorporation and Bylaws of each of
the Companies as in effect immediately prior to the Closing Date, (ii) copies of
resolutions adopted by the Board of Directors and Shareholders of each of the
Companies authorizing the transactions contemplated by this Agreement, and (iii)
a certificate of good standing of each of the Companies issued by the Secretary
of State of the State of Florida as of a date not more than ten days prior to
the Closing Date, certified in the case of subsections (i) and (ii) of this
Section as of the Closing Date by the Secretary of each of the Companies as
being true, correct and complete.
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7.4 OPINION OF COUNSEL. Xxxxxxxxx shall have received an opinion
dated as of the Closing Date from counsel for each of the Companies and the
Shareholders, in form and substance acceptable to Xxxxxxxxx, and containing
standard exceptions and assumptions promulgated by the Florida Bar or the
American Bar Association for opinions of this type, to the effect that:
(a) Each of the Companies is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida and
is authorized to carry on the business now conducted by it and to own or lease
the properties now owned or leased by it;
(b) Each of the Companies has obtained all necessary
authorizations and consents of its Board of Directors and the Shareholders to
effect the Acquisition;
(c) The execution and delivery of this Agreement by each of
the Companies and the Shareholders, the performance by each of the Companies and
the Shareholders of their respective obligations hereunder and the consummation
by each of them of the transactions contemplated by this Agreement will not (a)
contravene any provision of the Articles of Incorporation or Bylaws of each of
the Companies, (b) violate or conflict with any applicable law, statute,
ordinance, rule or regulation which is either applicable to, binding upon or
enforceable against either of the Companies or any Shareholder, or (c) require
the consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority, except any SEC and other filings
required to be made by Xxxxxxxxx or any filings required to be made by the
parties under the HSR Act, if any;
(d) This Agreement is a valid and binding obligation of each
of the Companies, and the Shareholders, and enforceable against the Companies
and the Shareholders in accordance with its terms, except as enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
affecting the enforcement of creditors' rights generally or general equitable
principles.
7.5 CONSENTS. Each of the Companies and the Shareholders shall
have received consents to the transactions contemplated hereby and waivers of
rights to terminate or modify any material rights or obligations of each of the
Companies or any Shareholder from any Person from whom such consent or waiver is
required, including without limitation, under any Contract or instrument or
under the HSR Act or other law or regulation, or who, as a result of the
transactions contemplated hereby, would have such rights to terminate or modify
such Contracts or instruments, either by the terms thereof or as a matter of
law.
7.6 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other governmental
body which shall seek to restrain, prohibit, invalidate or collect damages
arising out of the Acquisition or any other transaction contemplated hereby, and
which, in the judgment of Xxxxxxxxx, makes it inadvisable to proceed with the
Acquisition and other transactions contemplated hereby.
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7.7 BOARD APPROVAL. The Board of Directors of Xxxxxxxxx shall have
authorized and approved this Agreement, the Acquisition and the transactions
contemplated hereby.
7.8 DUE DILIGENCE REVIEW. Xxxxxxxxx'x right to terminate this
Agreement or refuse to close pursuant to Section 6.11 shall have expired.
7.9 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting period
shall have expired or been terminated.
7.10 INDEBTEDNESS; UCC FILINGS. At the Closing Date, the aggregate
amount of Indebtedness of the Companies shall not exceed $5,000,000.
Additionally, a search of the UCC filings with respect to the Companies and
searches of the FAA Registry with respect to the Designated Engines shall not
disclose any active filings other than filings with respect to the Liens
identified on Schedule 4.16 hereto or the Designated Contracts.
7.11 CONSUMMATION OF UNDERWRITTEN PUBLIC OFFERING. Xxxxxxxxx shall
have received net proceeds of not less than $100 million through an underwritten
public offering of its debt or equity securities (the "Offering").
7.12 DESIGNATED ENGINES. The Assets on the Closing Date shall
consist of, without limitation, the Designated Engines and the Engines on Order
(which shall have become Designated Engines); provided however, in the event
that payment by Aerocar Aviation for the Engines on Order has not been made by
the Closing Date, the Closing Date Payment shall be reduced by the cost to be
paid therefor.
7.13 LEASE AMENDMENT. The Companies and the landlord of the Leased
Premises located at 0000 Xxxxx Xxxx Xxxxx, Xxxxxx, Xxxxxxx shall have amended
and restated the leases in respect thereof on terms reasonably satisfactory to
Xxxxxxxxx to, among other things, permit termination by the tenant(s) thereunder
without penalty after December 31, 1998 upon thirty (30) days prior written
notice to the landlord, provided that the earliest that such termination may be
effective shall be January 1, 1999.
7.14 RELEASES AND RESIGNATIONS. The Companies and the Shareholders
shall have delivered the releases and resignations referred to in Sections 6.15
and 6.16 hereof.
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ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF
THE SHAREHOLDERS
The obligation of the Shareholders to effect the Acquisition shall be
subject to the fulfillment at or prior to the Closing Date of the following
conditions, any or all of which may be waived in whole or in part in writing by
the Shareholders:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of Xxxxxxxxx contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing Date with the same force and effect as though made at and as of that
time except (i) for changes specifically permitted by or disclosed pursuant to
this Agreement, and (ii) that those representations and warranties which address
matters only as of a particular date shall remain true and correct as of such
date. Xxxxxxxxx shall have performed and complied in all material respects with
all of its obligations required by this Agreement to be performed or complied
with at or prior to the Closing Date. Xxxxxxxxx shall have delivered to the
Shareholders a certificate, dated as of the Closing Date, and signed by an
executive officer, certifying that such representations and warranties are true
and correct and that all such obligations have been complied with and performed.
8.2 NO MATERIAL ADVERSE CHANGE. Between the date hereof and the
Closing Date, there shall have been no Material Adverse Change to Xxxxxxxxx.
8.3 CORPORATE CERTIFICATE. Xxxxxxxxx shall have delivered to the
Shareholders (i) copies of the Certificate of Incorporation and Bylaws of
Xxxxxxxxx as in effect on the Closing Date, (ii) copies of resolutions adopted
by the Board of Directors of Xxxxxxxxx authorizing the transactions contemplated
by this Agreement, and (iii) a certificate of good standing of Xxxxxxxxx issued
by the Secretary of State of the State of Delaware as of a date not more than
ten days prior to the Closing Date, certified in the case of subsections (i) and
(ii) of this Section as of the Closing Date by the Secretary of each of the
Companies as being true, correct and complete.
8.4 OPINION OF COUNSEL. The Shareholders shall have received an
opinion dated as of the Closing Date from counsel for Xxxxxxxxx, in form and
substance acceptable to the Shareholders, and containing standard exceptions and
assumptions promulgated by the Florida Bar or the American Bar Association for
opinions of this type, to the effect that:
(a) Xxxxxxxxx is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
authorized to carry on the business now conducted by it and to own or lease the
properties now owned or leased by it;
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(b) Xxxxxxxxx has obtained all necessary authorizations and
consents of its Board of Directors to effect the Acquisition;
(c) The execution and delivery of this Agreement by Xxxxxxxxx,
the performance by Xxxxxxxxx of its obligations hereunder and the consummation
by it of the transactions contemplated by this Agreement will not (a) contravene
any provision of the Certificate of Incorporation or Bylaws of Xxxxxxxxx, (b)
violate or conflict with any applicable law, statute, ordinance, rule or
regulation which is either applicable to, binding upon or enforceable against
Xxxxxxxxx, or (c) require the consent, approval, authorization or permit of, or
filing with or notification to, any Governmental Authority, except any SEC and
other filings required to be made by Xxxxxxxxx or any filings required to be
made by the parties under the HSR Act, if any;
(d) This Agreement is a valid and binding obligation of
Xxxxxxxxx and enforceable against Xxxxxxxxx in accordance with its terms, except
as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights
generally or general equitable principles.
(e) The execution and delivery of the Warrant has been duly
authorized by Xxxxxxxxx and the Warrant has been duly executed and delivered.
The Xxxxxxxxx Common Stock issuable upon exercise of the Warrant has been
reserved for issuance and, upon issuance thereof upon exercise thereof
accompanied by payment of the exercise price therefor, will be duly and validly
issued, fully paid and non-assessable.
8.5 PURCHASE PRICE. Xxxxxxxxx shall have made the Closing Date
Payments in respect of the Purchase Price, together with payment of the Purchase
Price Adjustment Amount (if applicable).
8.6 WARRANT. Xxxxxxxxx shall have executed and delivered the
Warrant.
8.7 NO ADVERSE LITIGATION. There shall not be pending or
threatened any action or proceeding by or before any court or other governmental
body which shall seek to restrain, prohibit, invalidate or collect damages
arising out of the Acquisition or any other transaction contemplated hereby, and
which, in the judgment of the Shareholders, makes it inadvisable to proceed with
the Acquisition and other transactions contemplated hereby.
8.8 HSR ACT WAITING PERIOD. Any applicable HSR Act waiting period
shall have expired or been terminated.
8.9 CONSENTS. Xxxxxxxxx shall have received consents to the
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of Xxxxxxxxx from any Person from whom such
consent or waiver is required, including without limitation, under any Contract
or instrument or under the HSR Act or other law or regulation, or who, as a
result of
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the transactions contemplated hereby, would have such rights to terminate or
modify such Contracts or instruments, either by the terms thereof or as a matter
of law.
ARTICLE IX
REGISTRATION RIGHTS
The Shareholders shall have the following registration rights with
respect to the Xxxxxxxxx Common Stock issued to them as part of the Stock
Consideration hereunder, if any:
9.1 REGISTRATION RIGHTS FOR STOCK CONSIDERATION. Xxxxxxxxx will
utilize reasonable efforts to cause, within 30 days following the issuance to
the Shareholders of the Stock Consideration, a registration statement to be
filed under the Securities Act or an existing registration statement to be
amended for the purpose of registering the outstanding Stock Consideration for
resale on a delayed or continuous basis by a Holder thereof (the "Registration
Statement"). Xxxxxxxxx shall use reasonable best efforts to cause the
registration statement to be declared effective and cause all Stock
Consideration to be listed on the principal national securities exchange on
which Xxxxxxxxx'x securities of the same class are then listed. For purposes of
this Article, a person is deemed to be a "Holder" of Stock Consideration
whenever such person is the record owner of Stock Consideration. Xxxxxxxxx will
use reasonable efforts to have the Registration Statement become effective and
cause the Stock Consideration to be registered under the Securities Act, and
registered, qualified or exempted under the state securities laws of such
jurisdictions as any Holder reasonably requests, as soon as is reasonably
practicable. Notwithstanding the foregoing, Xxxxxxxxx may delay filing a
Registration Statement, and may withhold efforts to cause the Registration
Statement to become effective, if Xxxxxxxxx determines in good faith that such
registration might interfere with or affect the negotiation or completion of any
transaction that is being contemplated by Xxxxxxxxx (whether or not a final
decision has been made to undertake such transaction) at the time the right to
delay is exercised.
9.2 EXPENSES OF REGISTRATION. Xxxxxxxxx shall pay all expenses
incurred by Xxxxxxxxx in connection with the registration, qualification and/or
exemption of the Stock Consideration, including any SEC and state securities law
registration and filing fees, printing expenses, fees and disbursements of
Xxxxxxxxx'x counsel and accountants, transfer agents' and registrars' fees, fees
and disbursements of experts used by Xxxxxxxxx in connection with such
registration, qualification and/or exemption, and expenses incidental to any
amendment or supplement to the Registration Statement or prospectuses contained
therein. Xxxxxxxxx shall not, however, be liable for any sales, broker's or
underwriting commissions or other selling expenses incurred upon sale by any
Holder of any of the Stock Consideration.
9.3 FURNISHING OF DOCUMENTS. Xxxxxxxxx shall furnish to the
Holders such reasonable number of copies of the Registration Statement, such
prospectuses as are contained in the
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Registration Statement and such other documents as the Holders may reasonably
request in order to facilitate the offering of the Stock Consideration.
9.4 AMENDMENTS AND SUPPLEMENTS. Xxxxxxxxx shall prepare and
promptly file with the SEC and promptly notify the Holders of the filing of such
amendments or supplements to the Registration Statement or prospectuses
contained therein as may be necessary to correct any statements or omissions if,
at the time when a prospectus relating to the Stock Consideration is required to
be delivered under the Securities Act, any event shall have occurred as a result
of which any such prospectus or any other prospectus as then in effect would
include an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Xxxxxxxxx shall also advise the
Holders promptly after it shall receive notice or obtain knowledge thereof, of
the issuance of any stop order by the SEC suspending the effectiveness of the
Registration Statement or the initiation or threatening of any proceeding for
that purpose and promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued. If, after a Registration Statement becomes effective, Xxxxxxxxx
advises the Holders that Xxxxxxxxx considers it appropriate that the
Registration Statement be amended, the Holders shall suspend any further sales
of the Stock Consideration until Xxxxxxxxx advises the Holders that the
Registration Statement has been amended.
9.5 DURATION. Xxxxxxxxx shall maintain the effectiveness of the
Registration Statement until such time as Xxxxxxxxx reasonably determines, based
on an opinion of counsel, that the Holders will be eligible to sell all of the
Shares then owned by the Holders without the need for continued registration of
the shares, in the three month period immediately following the termination of
the effectiveness of the Registration Statement.
9.6 FURTHER INFORMATION. If Stock Consideration owned by a Holder
is included in any registration, such Holder shall furnish Xxxxxxxxx such
information regarding itself as Xxxxxxxxx may reasonably request and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
9.7 INDEMNIFICATION. The provisions of Sections 5(h), 5(i), 5(j)
and 5(k) of the Warrant shall apply in connection with the registration
contemplated by this Article IX, as if the "Holder(s)", the "Warrant Shares",
and the "Company" were the Shareholder(s), the Stock Consideration and
Xxxxxxxxx, respectively.
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ARTICLE X
INDEMNIFICATION
10.1 AGREEMENT TO INDEMNIFY. The Shareholders jointly and severally
agree to indemnify and hold Xxxxxxxxx, the Xxxxxxxxx Companies and each of their
respective officers, directors, employees, attorneys and Affiliates (each a
"Xxxxxxxxx Indemnified Party" and together the "Xxxxxxxxx Indemnified Parties")
harmless from and against the aggregate of all expenses, losses, costs,
deficiencies, liabilities and damages (including, without limitation, related
counsel and paralegal fees and expenses) incurred or suffered by any of the
Xxxxxxxxx Indemnified Parties arising out of or resulting from (i) any breach of
a representation or warranty made by either of the Companies or any Shareholder
in or pursuant to this Agreement, (ii) any breach of a covenant or agreement
made by either of the Companies or any Shareholder in or pursuant to this
Agreement, (iii) any inaccuracy in any certificate, instrument or other document
delivered by either of the Companies or any Shareholder pursuant to or in
connection with this Agreement, (iv) any tax liability of either of the
Companies or any Shareholder arising from or relating to any period occurring on
or prior to the Closing Date (including, without limitation, any claim made by
the Florida Department of Revenue on account of sales taxes owed by the
Companies), (v) any regulating and licensing obligations of the Companies
arising on or prior to the Closing Date, (vi) the Companies' ownership of the
Assets and operation of their respective business prior to Closing, or (vii) any
claims of any third parties arising from or relating to any facts, circumstances
or events occurring on or prior to the Closing Date with respect to either of
the Companies, their respective businesses or any of the foregoing, whether or
not disclosed to Xxxxxxxxx, herein or in any schedule hereto (collectively,
"Xxxxxxxxx Indemnifiable Damages"). Notwithstanding the foregoing provisions, no
claim for Xxxxxxxxx Indemnifiable Damages shall be asserted by the Xxxxxxxxx
Indemnified Parties until the aggregate of all Xxxxxxxxx Indemnifiable Damages
exceeds $100,000 (the "Xxxxxxxxx Indemnification Threshold"), at which time the
Xxxxxxxxx Indemnified Parties may assert claims for the full amount of Xxxxxxxxx
Indemnified Damages. Notwithstanding anything to the contrary set forth herein,
the total Xxxxxxxxx Indemnifiable Damages for which the Shareholders shall be
collectively liable hereunder shall not exceed (i) $25,000,000 for claims for
Xxxxxxxxx Indemnifiable Damages made within 180 days after the Closing Date and
(ii) $10,000,000 for claims for Xxxxxxxxx Indemnifiable Damages made between 181
and 365 days (inclusive) after the Closing Date (each, a "Xxxxxxxxx
Indemnification Cap"). Notwithstanding anything to the contrary set forth
herein, the Xxxxxxxxx Indemnification Cap shall not apply to and there shall be
no limitation or restriction whatsoever on the liability of the Shareholders
under this Article X for Xxxxxxxxx Indemnifiable Damages with respect to or
arising from any one or more of the following and no Xxxxxxxxx Indemnifiable
Damages arising from any of the following shall be included in determining
whether the Xxxxxxxxx Indemnification Cap or the Xxxxxxxxx Indemnification
Threshold has been met: (a) a breach of any one or more of the representations
and warranties set forth in the first or last sentence of Section 4.1, or in
Section 4.2, Section 4.3, Section 4.4, Section 4.5, Section 4.6, Section 4.14,
the first sentence of Section 4.16 and Section 4.20, (b) any Xxxxxxxxx
Indemnifiable Damages arising under subsection (iv) of Section 10.1 above, (c)
any wilful or intentional breach of any
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representation, warranty, covenant or agreement made in or pursuant to this
Agreement (including, without limitation, in the Schedules and Exhibits attached
hereto) or in any certificate, instrument or other document delivered by any of
the Companies or any Shareholder pursuant to this Agreement, and (d) any act of
common law fraud in connection with the execution, delivery and performance of
this Agreement, including without limitation, any fraudulent representation or
warranty made in or pursuant to this Agreement (including, without limitation,
in the Schedules and Exhibits attached hereto) or in any certificate, instrument
or other document delivered by any of the Companies or any Shareholder pursuant
to or in connection with this Agreement.
10.2 AGREEMENT BY XXXXXXXXX TO INDEMNIFY. Xxxxxxxxx agrees to
indemnify and hold the Shareholders and their respective heirs and personal
representatives (each a "Shareholder Indemnified Party" and together the
"Shareholder Indemnified Parties") harmless from and against the aggregate of
all expenses, losses, costs, deficiencies, liabilities and damages (including,
without limitation, related counsel and paralegal fees and expenses) incurred or
suffered by any of the Shareholder Indemnified Parties arising out of or
resulting from (i) any breach of a representation or warranty made by Xxxxxxxxx
in or pursuant to this Agreement, (ii) any breach of a covenant or agreement
made by Xxxxxxxxx in or pursuant to this Agreement, (iii) any inaccuracy in any
certificate, instrument or other document delivered by Xxxxxxxxx pursuant to or
in connection with this Agreement, (iv) any tax liability of either of the
Companies arising from or relating to any period occurring after the Closing
Date, (v) any regulating and licensing obligations of the Companies arising
after the Closing Date, (vi) Xxxxxxxxx'x ownership of the Companies and
operation of their respective business following the Closing, and (vii) any
claims of any third parties arising from or relating to any facts, circumstances
or events occurring after the Closing Date with respect to either of the
Companies, their respective businesses or any of the foregoing (collectively,
"Shareholder Indemnifiable Damages"). Notwithstanding the foregoing provisions,
no claim for Shareholder Indemnifiable Damages shall be asserted by the
foregoing Shareholder Indemnified Parties until the aggregate of all Shareholder
Indemnifiable Damages exceeds One Hundred Thousand Dollars ($100,000) (the
"Shareholder Indemnification Threshold"), at which time the foregoing
Shareholder Indemnified Parties may assert claims for the full amount of the
Shareholder Indemnifiable Damages. Notwithstanding anything to the contrary set
forth herein, the total Shareholder Indemnifiable Damages for which Xxxxxxxxx
shall be liable hereunder shall not exceed (i) $25,000,000 for claims for
Shareholder Indemnifiable Damages made within 180 days after the Closing Date
and (ii) $10,000,000 for claims for Shareholder Indemnifiable Damages made
during the period hereafter made between 181 and 365 days (inclusive) after the
Closing Date (each, a "Shareholder Indemnification Cap"). Notwithstanding
anything else to the contrary set forth herein, the Shareholder Indemnification
Cap shall not apply to and there shall be no limitation or restriction
whatsoever on the liability of Xxxxxxxxx under this Article X for Shareholder
Indemnifiable Damages with respect to any claim relating to or arising from any
one or more of the following and no Shareholder Indemnifiable Damages arising
from any of the following shall be included in determining whether the
Shareholder Indemnification Cap or the Shareholder Indemnification Threshold has
been met: (a) a breach of any one or more of the representations and warranties
set forth in Section 3.1, Section 3.2 and Section 3.3; (b) any wilful or
intentional breach of any
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representation, warranty, covenant or agreement made in or pursuant to this
Agreement (including, without limitation, in the Schedules attached hereto) or
in any certificate, instrument or other document delivered by Xxxxxxxxx pursuant
to this Agreement; and (c) any act of common law fraud in connection with the
execution, delivery and performance of this Agreement, including without
limitation, any fraudulent representation or warranty made in or pursuant to
this Agreement (including, without limitation, in the Schedules and Exhibits
attached hereto) or in any certificate, instrument or other document delivered
by Xxxxxxxxx pursuant to or in connection with this Agreement.
10.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Companies, the Shareholders and
Xxxxxxxxx in this Agreement or pursuant hereto shall survive the closing of the
transactions contemplated hereby for a period of one (1) year following the
Closing Date; provided, however, that (i) the representations and warranties set
forth in Section 3.1, Section 3.2, Section 3.3, the first or last sentence of
Section 4.1, or in Section 4.2, Section 4.3, Section 4.4, Section 4.5, Section
4.6, and the first sentence of Section 4.16 shall survive indefinitely, and (ii)
the representations and warranties set forth in Section 4.14, Section 4.17,
Section 4.19 and Section 4.20 shall expire at the time the latest applicable
statute of limitations expires for the enforcement by an applicable Governmental
Authority or any other Person of any remedy with respect to a violation of or
the subject matter covered by such representations and warranties. No claim for
the recovery of any Xxxxxxxxx Indemnifiable Damages or Shareholder Indemnifiable
Damages with respect to the representations and warranties in this Agreement may
be asserted by any of the parties after such representations and warranties
shall expire in accordance with the terms of this Agreement; provided, however,
that claims for Xxxxxxxxx Indemnifiable Damages or Shareholder Indemnifiable
Damages first asserted within the applicable period shall not thereafter be
barred. Notwithstanding any knowledge of facts determined or determinable by any
party by investigation, each party shall have the right to fully rely on the
representations, warranties, covenants and agreements of the other parties
contained in this Agreement or in any other documents or papers delivered in
connection herewith. Each representation, warranty, covenant and agreement of
the parties contained in this Agreement is independent of each other
representation, warranty, covenant and agreement.
10.4 THIRD PARTY ACTIONS.
(a) For the purpose of this Section 10.4, the term
"Indemnifiable Damages" means the Xxxxxxxxx Indemnifiable Damages or the
Shareholder Indemnifiable Damages, as the context requires, the term
"Indemnified Party" means the Xxxxxxxxx Indemnified Parties or the Shareholder
Indemnified Parties, as the context requires, and the term "Indemnifying Party"
means the party (Xxxxxxxxx or the Shareholders) against whom a claim for
Indemnifiable Damages is to be made.
(b) With respect to any action commenced by a third party
which could give rise to Indemnifiable Damages, the Indemnifying Party shall
have the right to participate in, and, to the
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extent that it may wish, jointly or individually, to assume the defense thereof
with counsel reasonably satisfactory to the Indemnified Party; provided, that
prior to the assumption of such defense the Indemnifying Party must acknowledge
in writing to the Indemnified Party that the Indemnifying Party shall be fully
responsible (with no reservation of rights) for all Indemnifiable Damages
relating to such claim; provided, further, if the defendants in any action
include both the Indemnified Party and the Indemnifying Party and there is a
conflict of interest as reasonably determined by counsel for the Indemnifying
Party which would prevent such counsel from also representing the Indemnified
Party, then the Indemnified Party shall have the right to select separate
counsel to participate in the defense of such action on behalf of the
Indemnified Party. After notice from the Indemnifying Party to the Indemnified
Party of its election to so assume the defense thereof, the Indemnifying Party
will not be liable to the Indemnified Party pursuant to the provisions of
Section 10.1 for the related counsel and paralegal fees and expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation, unless (i) the Indemnified
Party shall have employed counsel in accordance with the provisions of the
preceding sentence; (ii) the Indemnifying Party shall not have employed counsel
satisfactory to the Indemnified Party to represent the Indemnified Party within
a reasonable time after notice of the commencement of the action, or (iii) the
Indemnifying Party has authorized the employment of counsel for the Indemnified
Party at the expense of the Indemnifying Party. Notwithstanding anything to the
contrary in this Section 10.4(c), the Indemnifying Party shall have no right to
settle or compromise any action for which they have assumed the defense to the
extent the settlement or compromise provides for any injunctive or other
equitable relief against the Indemnified Party or otherwise provides for any
continuing obligations of any nature against the Indemnified Party or loss of
rights of the Indemnified Party, and nothing stated in this Section 10.4(b)
shall otherwise affect the Indemnifying Party's obligation to pay the
Indemnified Party all Indemnifiable Damages (other than such related counsel and
paralegal fees and expenses) pursuant to Section 10.1. With respect to any such
third party action assumed by the Indemnifying Party, the parties agree to
provide each other with all material information that they request relating to
the handling of such matter.
10.5 SET OFF AGAINST DEFERRED PAYMENTS. Without limiting any other
rights or remedies available to the Xxxxxxxxx Indemnified Parties, Xxxxxxxxx
shall have the right to set off any claim for Xxxxxxxxx Indemnifiable Damages
(subject to the Xxxxxxxxx Indemnification Threshold and Xxxxxxxxx
Indemnification Cap, if applicable) against the Deferred Payment otherwise
payable pursuant to Section 2.1(a)(i)(c) of this Agreement, but only to the
extent of $2,000,000 (the "Maximum Committed Setoff Amount"), subject, however,
to the following terms and conditions:
(i) Xxxxxxxxx shall give written notice to the
Shareholders of any claim for Xxxxxxxxx Indemnifiable Damages or any
other damages hereunder, which notice shall set forth (i) the amount of
Xxxxxxxxx Indemnifiable Damages or other loss, damage, cost or expense
which Xxxxxxxxx Indemnified Parties claims to have sustained by reason
thereof, and (ii) the basis of such claim;
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(ii) Such set off and recoupment shall be effected on
the later to occur on the expiration of thirty (30) days from the date
of such notice (the "Notice of Contest Period") or, if such claim is
contested, the date the dispute is resolved;
(iii) If, prior to the expiration of the Notice of
Contest Period, the Shareholders shall notify Xxxxxxxxx in writing of
an intention to dispute the claim, then Xxxxxxxxx and the Shareholders
shall use all reasonable efforts to resolve the dispute within thirty
(30) business days following the receipt by Xxxxxxxxx of the written
notice from the Shareholders. If the parties are unable to reach
agreement within such thirty (30) day period then Xxxxxxxxx shall have
the right to retain the amount proposed to be setoff against such
Deferred Payments and each party may take any action or excise any
remedy available to it by appropriate legal proceedings to resolve the
dispute;
(iv) If the Maximum Permitted Setoff Amount is
insufficient to satisfy any claim for Xxxxxxxxx Indemnifiable Damages
(subject to any applicable Xxxxxxxxx Indemnification Threshold and
Xxxxxxxxx Indemnification Cap), then Xxxxxxxxx may take any action or
exercise any remedy available to it by appropriate legal proceedings to
collect the Xxxxxxxxx Indemnifiable Damages.
10.6 ADJUSTMENT TO PURCHASE PRICE. All set offs, recoupments and
payments for Xxxxxxxxx Indemnifiable Damages or Shareholder Indemnifiable
Damages, as applicable, made pursuant to this Article shall be treated as
adjustments to the Purchase Price.
10.7 REMEDIES; WAIVER. The remedies provided herein shall be the
sole remedies for Indemnifiable Damages, but shall not preclude Xxxxxxxxx or the
Shareholders from asserting any other right, or seeking any other remedies
against each other for common law fraud and injunctive relief notwithstanding
any expiration identified in Section 10.3 hereof. The Shareholders hereby waive
any rights to contribution or any similar rights they may have against the
Companies as a result of their agreement to indemnify Xxxxxxxxx under this
Article X.
10.8 INSURANCE COVERAGE. To the extent that Xxxxxxxxx shall receive
payment under any insurance policies on account of damages which constitute
Xxxxxxxxx Indemnifiable Damages for which a Shareholder shall have paid
Xxxxxxxxx under this Article X, then Xxxxxxxxx shall repay to such Shareholder
the amount of such payment up to the amount actually received by Xxxxxxxxx under
such insurance policies (net of any costs incurred by Xxxxxxxxx in collecting
under such Insurance Policies). To the extent that a Shareholder shall receive
payment under any insurance policies on account of damages which constitute
Shareholder Indemnifiable Damages for which Xxxxxxxxx shall
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have paid such Shareholder under this Article X, then such Shareholder shall
repay to Xxxxxxxxx the amount of such payment up to the amount actually received
by such Shareholder under such insurance policies (net of any costs incurred by
such Shareholder in collecting under such insurance policies).
10.9 REDUCTION FOR TAX BENEFIT. To the extent that Xxxxxxxxx shall
receive any tax benefit as a result of any Xxxxxxxxx Indemnifiable Damages, the
amount payable by the Shareholders on account of such Xxxxxxxxx Indemnifiable
Damages shall be reduced by the amount of the tax benefit actually received by
Xxxxxxxxx (assuming the application of the highest marginal tax rate applicable
to Xxxxxxxxx in the year in which such tax benefit is received). To the extent
that the Shareholders shall receive any tax benefit as a result of any
Shareholder Indemnifiable Damages, the amount payable by Xxxxxxxxx on account of
such Shareholder Indemnifiable Damages shall be reduced by the amount of the tax
benefit actually received by the Shareholders (assuming the application of the
highest marginal tax rate applicable to the Shareholders in the year in which
such tax benefit is received).
ARTICLE XI
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the Closing Date of the Xxxxxxxxx Common Stock issued as Stock
Consideration and upon exercise of the Warrant:
11.1 DISPOSITION OF SHARES. The Shareholders represent and warrant
that the shares of Xxxxxxxxx Common Stock being acquired by them hereunder will
be acquired for their own account and will not be sold or otherwise disposed of,
except pursuant to (a) an exemption from the registration requirements under the
Securities Act, which does not require the filing by Xxxxxxxxx with the SEC of
any registration statement, offering circular or other document, in which case,
the Shareholders shall first supply to Xxxxxxxxx an opinion of counsel (which
counsel and opinions shall be satisfactory to Xxxxxxxxx) that such exception is
available, or (b) an effective registration statement filed by Xxxxxxxxx with
the SEC under the Securities Act.
11.2 LEGEND. The certificates representing the Xxxxxxxxx Common
Stock issued pursuant to payment of Stock Consideration or upon exercise of the
Warrant shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FILED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND IN COMPLIANCE WITH APPLICABLE SECURITIES LAWS OF ANY STATE
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WITH RESPECT THERETO, OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE.
Xxxxxxxxx may, unless a registration statement is in effect covering such
shares, place stop transfer orders with its transfer agents with respect to such
certificates in accordance with federal securities laws.
ARTICLE XII
TERMINATION
12.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by mutual written consent of all of the parties hereto at
any time prior to the Closing; or
(b) by Xxxxxxxxx in the event of a material breach by either
of the Companies or the Shareholders of any provision of this Agreement which is
not cured within three (3) days of the Shareholders' receipt of written notice
thereof from Xxxxxxxxx; or
(c) by the Shareholders in the event of a material breach by
Xxxxxxxxx of any provision of this Agreement which is not cured within three (3)
days of Xxxxxxxxx'x receipt of written notice thereof from the Shareholders; or
(d) if the Closing shall not have occurred by July 30, 1998;
provided, however, that Xxxxxxxxx shall have the right to extend such date for
up to an additional thirty (30) days upon written notice to the Shareholders
accompanied by a letter from a nationally recognized financial institution
stating that it is highly confident that it could secure financing through a
public offering or private placement of Xxxxxxxxx'x debt or equity securities or
other transaction that will result in net proceeds to Xxxxxxxxx of an amount at
least equal to $100,000,000; or
(e) by the Companies and the Shareholders in the event that
the Board of Directors of Xxxxxxxxx shall not have authorized and approved of
this Agreement and the transactions contemplated hereby on or before May 31,
1998.
12.2 EFFECT OF TERMINATION. Subject to Section 12.3 hereof, except
for the provisions of Article X and Section 6.9 hereof, which shall survive any
termination of this Agreement, in the event of termination of this Agreement
pursuant to Section 12.1 (or pursuant to any other provision hereof
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expressly permitting termination), this Agreement shall forthwith become void
and of no further force and effect and the parties shall be released from any
and all obligations and liabilities hereunder; provided, however, that nothing
herein shall relieve any party from liability for common law fraud committed in
connection with any of its representations, warranties, covenants or agreements
set forth in this Agreement.
12.3 XXXXXXXXX DAMAGES. Notwithstanding anything to the contrary
contained herein:
(a) In the event that this Agreement is terminated under the
terms of Section 12.1(b) above, then the Shareholders and the Companies, jointly
and severally, shall pay Xxxxxxxxx its reasonable out of pocket costs incurred
in connection with this Agreement and its evaluation, negotiation, execution and
efforts to consummate, the transactions contemplated by this Agreement
(including, without limitation, reasonable attorneys' fees and costs), and the
Shareholders and the Companies, jointly and severally, shall pay Xxxxxxxxx an
additional amount of $5,000,000, evidencing all additional costs borne by
Xxxxxxxxx in connection with the transactions contemplated hereby, including
opportunity costs, costs relating to the allocation of human resources in
contemplation of the transactions contemplated hereby, and damages to
Xxxxxxxxx'x reputation in the industry and in general due to the inability to
consummate the transactions contemplated hereby.
(b) The parties hereto hereby agree that the costs borne by
Xxxxxxxxx, apart from its out of pocket expenses, are incapable of being
accurately measured and that said $5,000,000 additional fee represents the
parties' estimate of said costs and said fee is not meant nor shall it be deemed
a penalty, but rather an attempt to quantify the amount of damages sustained by
Xxxxxxxxx if the transactions contemplated hereby are not consummated.
ARTICLE XIII
GENERAL PROVISIONS
13.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall designate
in writing to the other party):
(a) IF TO XXXXXXXXX TO:
Xxxxxxxxx Industries, Inc.
00000 X.X. 0xx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
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Attn: Zivi X. Xxxxxx, President
Telecopy: (000) 000-0000
WITH A COPY TO:
Akerman, Senterfitt & Xxxxxx, P.A.
Xxx Xxxxxxxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx X. March, Esq.
Telecopy: (000) 000-0000
(b) IF TO THE COMPANIES (PRIOR TO CLOSING) AND/OR THE
SHAREHOLDERS TO:
Xx. Xxxxxx Xxxxxxx
Xx. Xxxx Xxxxxxx
0000 Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx 00000
WITH A COPY TO:
Xxxxx, Xxxxx, Xxxxxxx and Xxxxx
Republic Tower, 15th Floor
Ft. Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx XxXxxxxxxx, Esq.
Telecopy: 000-000-0000
Notice shall be deemed given on the date sent if sent by facsimile
transmission and on the date delivered (or the date of refusal of delivery) if
sent by overnight delivery, or certified or registered mail.
13.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto), the other documents signed by the parties which are
delivered contemporaneously herewith, and other documents delivered at the
Closing pursuant hereto, contain the entire understanding of the parties in
respect of its subject matter and supersedes all prior agreements and
understandings (oral or written) between or among the parties with respect to
such subject matter. The Exhibits and Schedules constitute a part hereof as
though set forth in full above.
13.3 EXPENSES. Except as otherwise provided herein, the
Shareholders shall pay their own and the Companies' fees and other expenses,
including accounting and counsel fees, incurred in connection with this
Agreement or any transaction contemplated hereby except that fees and expenses
of the Companies incurred in the ordinary course of the Companies' business
consistent with past practice shall be paid by the Companies. Xxxxxxxxx shall
pay its own fees and expenses
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and HSR fees, the HSR fees of the Shareholders and the Companies and all
documentary stamp and intangible taxes imposed on the parties hereto in
connection with the transactions contemplated hereby.
13.4 AMENDMENT; WAIVER. This Agreement may not be modified,
amended, supplemented, canceled or discharged, except by written instrument
executed by all parties. No failure to exercise, and no delay in exercising, any
right, power or privilege under this Agreement shall operate as a waiver, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor shall any waiver be
implied from any course of dealing between the parties. No extension of time for
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts. The rights and remedies of the parties
under this Agreement are in addition to all other rights and remedies, at law or
equity, that they may have against each other.
13.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective heirs, executors, personal representatives, trustees, guardians,
attorneys-in-fact, successors and assigns. Nothing expressed or implied herein
shall be construed to give any other person any legal or equitable rights
hereunder. Except as expressly provided herein, the rights and obligations of
this Agreement may not be assigned by any of the parties hereto without the
prior written consent of the non-assigning parties.
13.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
13.7 INTERPRETATION. When a reference is made in this Agreement to
an article, section, paragraph, clause, schedule or exhibit, such reference
shall be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Time shall be of the essence in this Agreement.
13.8 GOVERNING LAW; SEVERABILITY. This Agreement shall be construed
in accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State. If any word, phrase, sentence, clause, section, subsection or provision
of this Agreement as applied to any party or to any circumstance is adjudged by
a court to be invalid or unenforceable, the same will in no way affect any other
circumstance or the validity or enforceability of any other word, phrase,
sentence, clause, section, subsection or provision of this Agreement. If any
provision of this Agreement, or any part thereof, is held to be unenforceable
because of the duration of such provision or the area covered thereby or
otherwise, the parties agree that the court making such determination shall have
the power to reduce
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the duration and/or area of such provision, and/or to delete specific words or
phrases, and in its reduced form, such provision shall then be enforceable and
shall be enforced.
13.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly agrees
that (a) before executing this Agreement, said party has fully informed itself
of the terms, contents, conditions and effects of this Agreement; (b) said party
has relied solely and completely upon its own judgment in executing this
Agreement; (c) said party has had the opportunity to seek and has obtained the
advice of counsel before executing this Agreement; (d) said party has acted
voluntarily and of its own free will in executing this Agreement; (e) said party
is not acting under duress, whether economic or physical, in executing this
Agreement; and (f) this Agreement is the result of arm's length negotiations
conducted by and among the parties and their respective counsel.
13.10 JURISDICTION. Any suit, action or proceeding against any
Company or Shareholder arising out of, or with respect to, this Agreement or any
judgment entered by any court in respect thereof may be brought in the courts of
Broward County, Florida or in the U.S. District Court for the Southern District
of Florida and each party hereby irrevocably accepts and consents to the
nonexclusive personal jurisdiction of those courts for the purpose of any suit,
action or proceeding. In addition, each party hereby irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement or any judgment entered by any court in respect
thereof brought in Broward County, Florida or the U.S. District Court for the
Southern District of Florida and hereby further irrevocably waives any claim
that any suit, action or proceedings brought in Broward County, Florida or in
such District Court has been brought in an inconvenient forum.
13.11 CONSEQUENTIAL DAMAGES. Notwithstanding anything in this
Agreement to the contrary, no party to this Agreement shall have any liability
to any other party under this Agreement for any consequential, incidental or
special damages, regardless of the cause therefor, whether in tort or contract.
[SIGNATURES ON NEXT PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
XXXXXXXXX INDUSTRIES, INC., a Delaware
corporation
By: /s/ Zivi X. Xxxxxx
------------------------------------------
Zivi X. Xxxxxx
President
AEROCAR AVIATION CORP., a Florida
corporation
By: /s/ Xxxxxx Xxxxxxx
------------------------------------------
Xxxxxx Xxxxxxx
President
AEROCAR PARTS, INC., a Florida corporation
By: /s/ Xxxxxx Xxxxxxx
------------------------------------------
Xxxxxx Xxxxxxx
President
/s/ Xxxxxx Xxxxxxx
---------------------------------------------
XXXXXX XXXXXXX, individually
/s/ Xxxx Xxxxxxx
---------------------------------------------
XXXX XXXXXXX, individually
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LIST OF EXHIBITS AND SCHEDULES
Exhibit A Form of Warrant Agreement
Schedule 2.1(a)(ii) Allocation of Purchase Price (Aviation); Tentative Purchase Price
Adjustment
Schedule 2.1(b)(ii) Allocation of Purchase Price (Parts); Tentative Purchase Price Adjustment
Schedule 3.4 Xxxxxxxxx Consents
Schedule 4.4 Capitalization/Rights - Aerocar Aviation
Schedule 4.5 Capitalization/Rights - Aerocar Parts
Schedule 4.6 Shareholders
Schedule 4.7 Violations
Schedule 4.10 Financial Statements/Current Balance Sheets
Schedule 4.11 Changes Since the Current Balance Sheet Date
Schedule 4.12 Certain Liabilities
Schedule 4.13 Litigation
Schedule 4.14 Environmental Matters
Schedule 4.15(b) Leased Premises
Schedule 4.16 Assets - Exceptions; Liens
Schedule 4.16(a) Aircraft; Engines; Parts; Engines on Order
Schedule 4.16(b) Vehicles
Schedule 4.19 Employee Benefit Plans
Schedule 4.20 Tax Matters
Schedule 4.21 Insurance Matters
Schedule 4.22 Receivables
Schedule 4.23 Permits
Schedule 4.24 Affiliated Transactions
Schedule 4.26 Designated Contracts/Consents
Schedule 4.29 Bank Accounts
Schedule 4.30 Names
Schedule 5.1(f) Shareholder Compensation Pending Closing/Scheduled Increases to Other
Employees
Schedule 6.21 Leases of Automobiles Driven by the Shareholders
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