EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
AMONG
ROWAN COMPANIES, INC.,
ERA AVIATION, INC.
AND
SEACOR HOLDINGS INC.
DATED AS OF OCTOBER 14, 2004
TABLE OF CONTENTS
PAGE
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ARTICLE I PURCHASE AND SALE OF SHARES.............................................................................1
SECTION 1.01 Purchase and Sale of Shares.......................................................................1
SECTION 1.02 Purchase Price....................................................................................1
SECTION 1.03 Closing...........................................................................................1
SECTION 1.04 Deliveries by Seller..............................................................................2
SECTION 1.05 Deliveries by Purchaser...........................................................................2
SECTION 1.06 Books and Records.................................................................................2
SECTION 1.07 Transition Services...............................................................................2
SECTION 1.08 Intercompany Accounts.............................................................................2
SECTION 1.09 Working Capital Adjustment........................................................................3
SECTION 1.10 Inventory Verification............................................................................5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY...............................................6
SECTION 2.01 Organization and Qualification....................................................................6
SECTION 2.02 Articles of Incorporation and By-Laws.............................................................6
SECTION 2.03 Capitalization and Ownership......................................................................7
SECTION 2.04 Authority Relative to the Transaction Documents...................................................7
SECTION 2.05 No Conflict; Required Filings and Consents........................................................8
SECTION 2.06 Company Permits; Compliance With Laws.............................................................9
SECTION 2.07 Financial Statements; Liabilities; Contracts......................................................9
SECTION 2.08 Material Contracts...............................................................................10
SECTION 2.09 Absence of Certain Developments..................................................................12
SECTION 2.10 Absence of Litigation............................................................................13
SECTION 2.11 Employee Benefit Plans; Labor Matters............................................................13
SECTION 2.12 Taxes............................................................................................16
SECTION 2.13 Environmental Matters............................................................................18
SECTION 2.14 Real Property....................................................................................20
SECTION 2.15 Tangible Personal Property.......................................................................22
SECTION 2.16 Intellectual Property............................................................................22
SECTION 2.17 Aircraft; Adequacy of Rights.....................................................................25
SECTION 2.18 Aircraft Crew Members............................................................................26
SECTION 2.19 Accounts Receivable..............................................................................27
SECTION 2.20 Insurance........................................................................................27
SECTION 2.21 Related Party Transactions.......................................................................27
SECTION 2.22 Customers and Suppliers..........................................................................28
SECTION 2.23 Banks............................................................................................28
SECTION 2.24 Brokers..........................................................................................28
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER..........................................................28
SECTION 3.01 Organization and Qualification...................................................................28
SECTION 3.02 Authority Relative to the Transaction Documents..................................................28
SECTION 3.03 No Conflict; Required Filings and Consents.......................................................29
SECTION 3.04 Acquisition of Shares for Investment.............................................................29
SECTION 3.05 Availability of Funds............................................................................29
SECTION 3.06 Litigation.......................................................................................29
SECTION 3.07 Brokers..........................................................................................30
ARTICLE IV ADDITIONAL AGREEMENTS.................................................................................30
SECTION 4.01 Conduct of Business by the Company Pending the Closing...........................................30
SECTION 4.02 Access to Information; Confidentiality...........................................................33
SECTION 4.03 Interim Financial Statements.....................................................................34
SECTION 4.04 Notice of Litigation.............................................................................34
SECTION 4.05 Approvals and Consents; Cooperation..............................................................34
SECTION 4.06 No Solicitation of Transactions..................................................................34
SECTION 4.07 Employees; Employee Benefits.....................................................................35
SECTION 4.08 Tax Matters......................................................................................38
SECTION 4.09 Purchaser's Use of Name..........................................................................43
SECTION 4.10 Director and Non-Employee Officer Resignations...................................................43
SECTION 4.11 Transfer of Certain Assets.......................................................................43
SECTION 4.12 Commercially Reasonable Efforts..................................................................43
SECTION 4.13 Public Announcements.............................................................................43
SECTION 4.14 Notification of Certain Matters..................................................................44
SECTION 4.15 Additional Agreements............................................................................44
SECTION 4.16 Merrill Field Leasehold Interest.................................................................45
SECTION 4.17 Noncompetition...................................................................................45
SECTION 4.18 Indemnification For Certain Matters in Disclosure Letter.........................................46
ARTICLE V CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE.......................................................46
SECTION 5.01 Conditions to Each Party's Obligation to Effect the Transaction..................................46
SECTION 5.02 Further Conditions to Seller's Obligations.......................................................47
SECTION 5.03 Further Conditions to Purchaser's Obligations....................................................47
ARTICLE VI TERMINATION, AMENDMENT AND WAIVER.....................................................................48
SECTION 6.01 Termination......................................................................................48
SECTION 6.02 Effect of Termination............................................................................49
SECTION 6.03 Amendment........................................................................................49
SECTION 6.04 Waiver...........................................................................................49
SECTION 6.05 Fees and Expenses................................................................................49
SECTION 6.06 Risk of Loss.....................................................................................50
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ARTICLE VII SURVIVAL AND INDEMNIFICATION.........................................................................51
SECTION 7.01 Survival Periods.................................................................................51
SECTION 7.02 Seller's Agreement to Indemnify..................................................................52
SECTION 7.03 Purchaser's Agreement to Indemnify...............................................................54
SECTION 7.04 Indemnification Procedures For Third Party Claims................................................55
SECTION 7.05 No Setoff........................................................................................57
SECTION 7.06 No Duplication...................................................................................57
SECTION 7.07 Qualifications for Materiality...................................................................57
SECTION 7.08 Sole Remedy......................................................................................57
SECTION 7.09 No Special Damages...............................................................................58
ARTICLE VIII GENERAL PROVISIONS..................................................................................58
SECTION 8.01 Notices..........................................................................................58
SECTION 8.02 Severability.....................................................................................59
SECTION 8.03 Assignment.......................................................................................59
SECTION 8.04 Interpretation...................................................................................60
SECTION 8.05 Specific Performance.............................................................................60
SECTION 8.06 Governing Law....................................................................................60
SECTION 8.07 Parties in Interest..............................................................................60
SECTION 8.08 Counterparts.....................................................................................60
SECTION 8.09 Entire Agreement.................................................................................60
SECTION 8.10 Certain Definitions..............................................................................61
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TABLE OF DEFINED TERMS
(NOT A PART OF THE AGREEMENT)
TERM PAGE TERM PAGE
- ---- ---- ---- ----
Acquisition Proposal...............................35 Environmental Permit...............................19
Affiliate..........................................61 ERISA..............................................61
Affiliated Group...................................61 Expenses...........................................50
Agreed Rate.........................................4 FAA.................................................8
Agreement...........................................1 FAR.................................................9
Aircraft...........................................25 Final Inventory.....................................5
Aircraft Documents.................................25 Fixed Wing Business................................61
Auditors............................................4 Fixed Wing Claim...................................61
Blue Sky Laws.......................................8 Forms..............................................42
Business............................................1 GAAP................................................3
Business Day.......................................61 Government Actions.................................26
CERCLA.............................................19 Government Contract................................11
Claim..............................................55 Governmental Entity................................61
Closing.............................................1 HSR Act.............................................8
Closing Condition Consents.........................47 Intellectual Property..............................22
Closing Date........................................2 Intellectual Property Licenses.....................61
Closing Date Working Capital Schedule...............3 Inventory..........................................61
Closing Statement...................................3 Inventory Verification Period.......................5
COBRA..............................................15 IRS................................................14
Code...............................................61 Knowledge..........................................62
Company.............................................1 Law................................................62
Company Common Stock................................1 Lien...............................................62
Company Employees..................................35 Litigation.........................................62
Company Financial Statements........................9 Material Contracts.................................10
Company Material Adverse Effect.....................6 Merrill Field Leashold Interest....................45
Company Permits.....................................9 Multiemployer Plan.................................14
Company Plans......................................14 Multiple Employer Plan.............................14
Company Properties.................................21 Order..............................................62
Company Property...................................21 Owned Properties...................................21
Confidentiality Agreement..........................33 Owned Property.....................................21
Contract...........................................61 PBGC...............................................15
Crew Member........................................26 PCBs...............................................19
Deductible Amount..................................52 Permitted Liens....................................62
Deed Reservations..................................62 Person.............................................62
Disclosure Letter...................................6 Personal Property Leases...........................22
DOT.................................................8 Preliminary Inventory...............................5
employee benefit plans.............................13 Purchase Price......................................1
Environmental Action...............................18 Purchaser...........................................1
Environmental Clean-up Site........................19 Purchaser Damages..................................52
Environmental Costs and Liabilities................19 Purchaser Disclosure Letter........................28
Environmental Laws.................................19 Purchaser Employee Benefit Plans...................36
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Purchaser Indemnitees..............................52 Survival Period....................................51
Purchaser Medical Plan.............................37 Target Working Capital..............................3
RCRA...............................................19 Tax Proceeding.....................................41
Real Property Lease................................21 Tax Returns........................................63
Real Property Leases...............................21 Taxes..............................................63
Related Equipment..................................62 Terminating Purchaser Breach.......................49
Release............................................19 Terminating Seller Breach..........................49
Representatives....................................33 Termination Date...................................48
Rowan Marine.......................................44 Title IV Plan......................................15
Section 338(h)(10) Election........................42 Transaction Documents...............................2
Securities Act.....................................29 Transition Date....................................36
Seller..............................................1 Transition Services Agreement.......................2
Seller Affiliated Group............................63 U of A.............................................45
Seller Damages.....................................54 U of A Letter Agreement............................45
Seller Indemnitees.................................54 Uncollected Accounts Receivable.....................3
Shares..............................................1 USERRA.............................................36
Stock Purchase......................................1 WARN...............................................63
Straddle Period....................................39 Working Capital.....................................3
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STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of October
14, 2004, is entered into by and among ROWAN COMPANIES, INC., a Delaware
corporation ("Seller"), ERA AVIATION, INC., a Washington corporation (the
"Company"), and SEACOR HOLDINGS INC., a Delaware corporation ("Purchaser").
R E C I T A L S:
- - - - - - - -
WHEREAS, Seller owns 2,000 shares (the "Shares") of common stock, no
par value per share ("Company Common Stock"), of the Company, which represent
all of the outstanding shares of capital stock of the Company;
WHEREAS, the Company is engaged in the business of (i) providing
contract and charter helicopter and fixed-wing aviation services and (ii)
operating a scheduled regional airline service in Alaska (such business referred
to herein as the "Business"); and
WHEREAS, Seller desires to sell and Purchaser desires to purchase the
Shares upon the terms and subject to the conditions set forth herein;
NOW THEREFORE, in consideration of the representations, warranties,
covenants and agreements set forth herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
SECTION 1.01 Purchase and Sale of Shares. On the terms and subject to
the conditions set forth in this Agreement, at the Closing (as defined below)
Seller shall sell, assign, transfer, convey and deliver to Purchaser, and
Purchaser shall purchase and accept from Seller, all of the Shares for the
aggregate consideration set forth in SECTION 1.02 below. The transactions
contemplated by this SECTION 1.01 are sometimes referred to herein as the "Stock
Purchase."
SECTION 1.02 Purchase Price.
(a) In consideration for the Shares, Purchaser shall pay to Seller an
aggregate cash purchase price of $118,125,000 (the "Purchase Price"),
subject to adjustment as provided in SECTION 1.09, SECTION 1.10 and SECTION
6.06.
(b) Purchaser shall pay the Purchase Price at the Closing by wire
transfer of immediately available funds to an account or accounts
designated by Seller, such designation to be made not less than two (2)
Business Days prior to the Closing.
SECTION 1.03 Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Andrews Kurth
LLP, 600 Travis, Suite 4200, Houston, Texas 77002, on the first Business Day
immediately following the day on which the last of the conditions to each
party's obligations under this Agreement (other than those that by their nature
are intended to be satisfied at Closing) set forth in ARTICLE V shall have been
satisfied or waived, or at such other time, date or place as the parties may
agree. The date on which the Closing occurs is referred to herein as the
"Closing Date."
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SECTION 1.04 Deliveries by Seller. Subject to the terms and
conditions of this Agreement, at the Closing, Seller shall deliver (or cause to
be delivered) the following to Purchaser:
(a) One or more certificates representing the Shares, accompanied by
stock powers duly endorsed in blank or accompanied by duly executed
instruments of transfer; and
(b) All other documents, instruments and writings required to be
delivered by Seller (or as reasonably requested by Purchaser in order to
facilitate the Stock Purchase) at or (to the extent not previously
delivered) prior to the Closing Date under this Agreement.
SECTION 1.05 Deliveries by Purchaser. Subject to the terms and
conditions of this Agreement, at the Closing, Purchaser will deliver (or cause
to be delivered) the following to Seller:
(a) The Purchase Price as set forth in SECTION 1.02 of this Agreement;
and
(b) All other documents, instruments and writings required to be
delivered by Purchaser at or (to the extent not previously delivered) prior
to the Closing Date under this Agreement.
SECTION 1.06 Books and Records. Seller agrees to deliver to Purchaser
at the Closing all books and records of the Company (including correspondence,
memoranda, books of account, personnel and payroll records and the like).
SECTION 1.07 Transition Services. On the Closing Date, Seller and
Purchaser shall enter into a transition services agreement (the "Transition
Services Agreement," and, together with this Agreement, and each other
agreement, document or instrument or certificate to be executed in connection
with the consummation of the transactions contemplated by this Agreement, the
"Transaction Documents"), in substantially the form attached hereto as Exhibit
1.07. Except as provided in the Transition Services Agreement, at the Closing,
all data processing, accounting, insurance, banking, personnel, legal,
communications and other products and services provided to the Company by Seller
or any of Seller's Affiliates, including any agreements or understandings
(written or oral) with respect thereto, will terminate.
SECTION 1.08 Intercompany Accounts. SECTION 1.08 of the Disclosure
Letter sets forth all intercompany accounts (including cash) and all
intercompany leases and other agreements between the Company, on the one hand,
and Seller and or any of Seller's Affiliates (other than the Company), on the
other hand, and specifies whether they shall be paid or otherwise settled as of
the Closing.
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SECTION 1.09 Working Capital Adjustment.
(a) SECTION 1.09 of the Disclosure Letter sets forth the components of
Working Capital (as defined below) as of June 30, 2004, in the amount of
$12,700,000 ("Target Working Capital").
(b) Within seventy-five (75) Business Days following the Closing:
(i) Purchaser shall prepare and deliver, or cause to be prepared
and delivered, to Seller a schedule of components of Working Capital
as of the Closing Date prepared in a manner consistent with SECTION
1.09 of the Disclosure Letter (the "Closing Date Working Capital
Schedule") and a statement (the "Closing Statement") reflecting the
calculation of any adjustment to the Purchase Price under this SECTION
1.09(b), accompanied by a certificate of the chief financial officer
or principal accounting officer of Purchaser, in such person's
capacity as an officer of Purchaser and not in any personal capacity,
to the effect that such Closing Statement has, to his or her
knowledge, been prepared in accordance with the terms of this
Agreement.
(ii) The Closing Date Working Capital Schedule shall reflect
Working Capital consistent with financial reporting policies and
procedures used by the Business prior to the Closing, which policies
and procedures are set forth in SECTION 1.09 of the Disclosure Letter.
As used in this Agreement, "Working Capital" means the amount of
current assets of the Business (excluding (A) Inventory, (B) income
taxes, (C) intercompany accounts, (D) accounts receivable as of the
Closing Date that are not collected on or prior to the date the
Closing Statement is delivered to Seller ("Uncollected Accounts
Receivable") and (E) proceeds from sales of non-current assets) minus
the amount of current liabilities of the Business (excluding income
taxes and intercompany accounts) and minus any new indebtedness
incurred prior to the Closing, each as determined as of the relevant
date and recorded in accordance with generally accepted accounting
principles in the United States ("GAAP") and calculated in a manner
consistent with SECTION 1.09 of the Disclosure Letter. From and after
the date the Closing Statement is delivered to Seller, Purchaser shall
use commercially reasonable efforts, consistent with the Company's
past practice, to collect any Uncollected Accounts Receivable and
shall promptly remit to Seller any proceeds thereof.
(iii) Seller shall have a period of twenty (20) Business Days
after delivery of the Closing Date Working Capital Schedule and the
Closing Statement to review (and cause Seller's auditors to review)
such documents and make any objections it may have in writing to
Purchaser. Purchaser will make the work papers and back-up materials
used in preparing the Closing Date Working Capital Schedule and the
Closing Statement available to Seller and Seller's auditors at
reasonable times and upon reasonable notice during such twenty (20)
Business Day period in order to facilitate the resolution by the
parties of any objections to the Closing Date Working Capital Schedule
and the Closing Statement. If written objections are delivered to
Purchaser by Seller within such twenty (20) Business Day period, then
3
Purchaser and Seller shall attempt to resolve the matter or matters in
dispute. If no written objections are made by Seller within such
twenty (20) Business Day period, then the Closing Date Working Capital
Schedule and the Closing Statement shall be final and binding on the
parties. If disputes with respect to the Closing Date Working Capital
Schedule or the Closing Statement cannot be resolved by Purchaser and
Seller within five (5) Business Days after timely delivery of any
objections thereto, then, at the request of Purchaser or Seller, the
specific matters in dispute shall be submitted to KPMG International
or such other independent accounting firm as may be approved by Seller
and Purchaser (KPMG International or such other independent accounting
firm, as applicable, the "Auditors"), which firm shall, not later than
twenty (20) Business Days after such submission, render its opinion as
to such specific matters. If no such submission is made within five
(5) Business Days after the delivery of the objections, then any
unresolved objections shall be disregarded, and the Closing Date
Working Capital Schedule and the Closing Statement shall be final and
binding on the parties. Based on such opinion, the Auditors will then
send to Seller and Purchaser their determination of the specified
matters in dispute, which determination shall be final and binding on
the parties hereto. Each of the parties shall bear all costs and
expenses incurred by it in connection with such arbitration, and the
fees and expenses of the Auditors shall be borne one-half by Seller
and one-half by Purchaser.
(iv) If the Working Capital reflected on the Closing Date Working
Capital Schedule as finally determined under SECTION 1.09(b)(iii) of
this Agreement is less than the Target Working Capital, then within
five (5) Business Days following the final determination thereof,
Seller shall pay to Purchaser, by wire transfer of immediately
available funds to the account or accounts designated by Purchaser,
the amount of such deficiency with interest thereon at a rate per
annum equal to the rate of interest published by the Wall Street
Journal from time to time as the "prime rate" at the large U.S. money
center banks (the "Agreed Rate") during the period from the Closing
Date to the date of payment. If the Working Capital reflected on the
Closing Date Working Capital Schedule as finally determined under
SECTION 1.09(b)(iii) is greater than the Target Working Capital, then
within five (5) Business Days following the final determination
thereof, Purchaser shall pay to Seller, by wire transfer of
immediately available funds to the account or accounts designated by
Seller, the amount of such excess with interest thereon at the Agreed
Rate during the period from the Closing Date to the date of payment.
(c) Purchaser and Seller shall, and shall cause their respective
representatives to, cooperate and assist in the preparation of the Closing
Date Working Capital Schedule and Closing Statement and the calculation of
Working Capital and in the conduct of the review described in this SECTION
1.09, including, without limitation, the making available to the extent
necessary of books, records, work papers and personnel.
4
SECTION 1.10 Inventory Verification.
(a) SECTION 1.10(a) of the Disclosure Letter contains a preliminary
list of all of the items comprising the Inventory on hand as of June 30,
2004 (the "Preliminary Inventory"), which list includes the quantities of
such items on hand as of such date, as well as the book values of such
items.
(b) Promptly following the date hereof, in the presence of
representatives of both Seller and Purchaser, the Company shall commence a
physical count and reconciliation of the Inventory in accordance with the
Company's normal inventory procedures, as described in the Summary of
Inventory Accounting Policies, a copy of which is set forth in SECTION
1.10(b) of the Disclosure Letter, as of November 1, 2004 and shall prepare
an updated version of the list contained in SECTION 1.10(a) of the
Disclosure Letter reflecting the results of such physical count and
reconciliation (the "Final Inventory"). Such physical count and
reconciliation shall be completed as expeditiously as possible but in any
event within thirty (30) Business Days after the date hereof (or, if
necessary, such later time as the parties may mutually agree, but in no
event later than seventy-five (75) Business Days after the Closing) (the
"Inventory Verification Period"). If, upon completion of such physical
count, the parties agree on the Final Inventory, each of them shall execute
a certificate in writing certifying as to their agreement regarding the
Final Inventory and attach thereto a copy of the list of the Final
Inventory so agreed to. Any items of Inventory that cannot be used or
returned to a usable state in accordance with the Company's past practices
due to improper or missing documentation related to such items required
under applicable Company Permits or Law shall not be included in the
determination of the Final Inventory.
(c) If the parties are unable to agree upon the Final Inventory on or
before the expiration of the Inventory Verification Period, Seller on the
one hand and Purchaser on the other shall each prepare a written statement
specifying therein in detail the basis and reason for all disputes between
the parties regarding the determination of the Final Inventory and the
amounts in dispute. Within five (5) Business Days after the expiration of
the Inventory Verification Period, they shall each submit such written
statements to the Auditors, who shall act as an arbitrator, for resolution
of all disputes set forth in such written statements. The Auditors shall be
instructed to use commercially reasonable efforts to resolve all disputes
as soon as practicable and in any event within twenty (20) Business Days
after the submission to it of the parties' written statements. Each of the
parties shall bear all costs and expenses incurred by it in connection with
such arbitration, and the fees of the Auditors shall be shared equally by
Purchaser and Seller. This provision for arbitration shall be specifically
enforceable by the parties, and the decision of the Auditors shall be final
and binding and there shall be no right of appeal therefrom.
(d) Within five (5) Business Days after the date on which the Final
Inventory is finally determined in accordance with this SECTION 1.10
(whether by agreement of the parties or by decision of the Auditors), (i)
if the Final Inventory exceeds the aggregate book value of the Preliminary
Inventory set forth in SECTION 1.10(a) of the Disclosure Letter by more
than $200,000, then Purchaser shall pay Seller the amount of such excess in
immediately available funds, or (ii) if the aggregate book value of the
Preliminary Inventory set forth in SECTION 1.10(a) of the Disclosure Letter
exceeds the aggregate book value of the Final Inventory by more than
$100,000, then Seller shall pay Purchaser the amount of such excess in
immediately available funds.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY
Except as set forth in a Disclosure Letter delivered by Seller and
the Company concurrently with the execution of this Agreement (the "Disclosure
Letter"), Seller and the Company hereby jointly and severally represent and
warrant to Purchaser as follows:
SECTION 2.01 Organization and Qualification. Each of Seller and the
Company is a corporation duly incorporated, validly existing and in good
standing under the Laws of the jurisdiction of its incorporation and has the
requisite power and authority to own, lease and operate its properties and to
carry on its business as it is now being conducted. Each of Seller and the
Company is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by Seller or the Company, as applicable, or
the nature of their respective businesses makes such qualification or licensing
necessary, except for such failures to be so qualified or licensed and in good
standing as would not, individually or in the aggregate, have a Company Material
Adverse Effect. As used in this Agreement, the term "Company Material Adverse
Effect" means (a) a material impairment or delay of the ability of Seller to
consummate the transactions contemplated by this Agreement or (b) a material
adverse change in, or effect on, the business, assets and liabilities (taken
together), properties, condition (financial or otherwise) or results of
operations of the Company; provided, however, that (i) any adverse change or
effect directly and substantially attributable to the announcement, pendency or
consummation of the transactions contemplated by this Agreement (including any
decrease in customer demand, any reduction in revenues, any disruption in
supplier, partner or similar relationships or any loss of employees), (ii)
general business or economic conditions affecting the economy as a whole, (iii)
conditions generally affecting the helicopter or aviation industries as a whole
and (iv) changes or developments in financial or securities markets or the
economy in general, any outbreak or escalation of hostilities or the declaration
by the United States of a national emergency or war, any acts of terrorism, any
other international or domestic calamity or crisis or geopolitical event, or
effects of weather or meteorological events shall each be excluded from such
determination.
SECTION 2.02 Articles of Incorporation and By-Laws.
(a) Seller has made available to Purchaser complete and correct copies
of its certificate of incorporation and by-laws and the articles of
incorporation and by-laws of the Company, in each case as amended to the
date of this Agreement. Seller is not in violation of any of the provisions
of its certificate of incorporation or by-laws, and the Company is not in
violation of any of the provisions of its articles of incorporation or
by-laws.
6
(b) The minute books of the Company previously made available to
Purchaser contain true, correct and complete records of all meetings and
accurately reflect all other corporate action of the stockholders and board
of directors of the Company. The stock certificate books and stock transfer
ledgers of the Company previously made available to Purchaser are true,
correct and complete. All stock transfer taxes levied or payable with
respect to all transfers of shares of the Company prior to the date hereof
have been paid and appropriate transfer tax stamps affixed.
SECTION 2.03 Capitalization and Ownership.
(a) The authorized capital stock of the Company consists of 3,000
shares of Company Common Stock. Two thousand shares of Company Common Stock
are outstanding, all of which are validly issued, fully paid and
nonassessable. Except for the Shares, there are no shares of capital stock
or other equity interests in the Company issued or outstanding, and except
for this Agreement, there are no options, warrants or other rights,
agreements, arrangements or commitments obligating the Company to issue or
sell any shares of capital stock of, or other equity interests in, the
Company.
(b) All of the Shares are owned of record and beneficially by Seller,
and the consummation of the Stock Purchase will convey to Purchaser good
title to the Shares, free and clear of all Liens (as hereinafter defined),
except for those created by Purchaser or arising out of ownership of the
Shares by Purchaser. Seller has the corporate power and authority to sell,
transfer, assign and deliver the Shares as provided in this Agreement, and
such delivery will convey to Purchaser good and marketable title to the
Shares, free and clear of all Liens.
(c) Except as set forth on SECTION 2.03(c) of the Disclosure Letter,
there is no existing option, warrant, call, right or contract of any
character to which Seller or the Company is a party requiring, and there
are no securities of the Company outstanding which upon conversion or
exchange would require, the issuance, sale or transfer of any additional
shares of capital stock or other equity securities of the Company or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase shares of capital stock or other equity
securities of the Company. Neither Seller nor the Company is a party to any
voting trust or other Contract (other than this Agreement) with respect to
the voting, redemption, sale, transfer or other disposition of the capital
stock of the Company.
SECTION 2.04 Authority Relative to the Transaction Documents. Each of
Seller and the Company has all necessary corporate power and authority to
execute and deliver the Transaction Documents, to perform its obligations
thereunder and to consummate the transactions contemplated thereby. The
execution and delivery of the Transaction Documents by Seller and the Company
and the consummation by Seller and the Company of the transactions contemplated
thereby have been duly and validly authorized by all necessary corporate action,
and no other corporate proceedings on the part of Seller or the Company are
necessary to authorize the Transaction Documents or to consummate the
transactions contemplated thereby. The Transaction Documents have been duly and
validly executed and delivered by Seller and the Company and, assuming the due
authorization, execution and delivery by Purchaser, constitute the legal, valid
and binding obligation of Seller and the Company, enforceable against Seller and
the Company in accordance with their terms (except insofar as enforceability may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or principles governing the availability of equitable remedies).
7
SECTION 2.05 No Conflict; Required Filings and Consents.
(a) The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby by Seller and the
Company will not, (i) conflict with or violate the certificate of
incorporation or by-laws of Seller or the articles of incorporation or
by-laws of the Company or (ii) except as set forth in SECTION 2.05(a) of
the Disclosure Letter and assuming that all consents, approvals,
authorizations and other actions described in SECTION 2.05(b) have been
obtained and all filings and obligations described in SECTION 2.05(b) have
been made, conflict with or result in any violation of or default (with or
without notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a
benefit under, or give rise to any obligation of the Company to make any
payment under, or to the increased, additional, accelerated or guaranteed
rights or entitlements of any Person under, or result in the creation of
any Liens upon any of the properties or assets of the Company under, any
provision of (A) any contract, or permit to which the Company is a party or
by which any of the properties or assets of the Company are bound; (B) any
Order of any Governmental Entity applicable to the Company or any of the
properties or assets of the Company as of the date hereof; or (C) any
applicable Law, except, with respect to clause (ii), for any such
conflicts, violations, breaches, defaults, or other occurrences as would
not, individually or in the aggregate, have a Company Material Adverse
Effect.
(b) Except as set forth in SECTION 2.05(b) of the Disclosure Letter,
the execution and delivery of the Transaction Documents by Seller do not,
and the performance of them by Seller will not, require any consent,
approval, authorization or permit of, or filing with or notification to,
any Governmental Entity, except (i) for applicable requirements, if any, of
state securities or "blue sky" Laws ("Blue Sky Laws") and the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder ("HSR
Act"), (ii) notices to, filings with or approvals of the U.S. Federal
Aviation Administration ("FAA") required under applicable Law, if any,
(iii) notices to, filings with or approvals of the U.S. Department of
Transportation ("DOT") required under applicable Law, if any and (iv) where
failure to obtain such consents, approvals, authorizations or permits, or
to make such filings or notifications, would not prevent or delay
consummation of the transactions contemplated by the Transaction Documents,
or otherwise prevent Seller from performing its obligations under the
Transaction Documents, and would not, individually or in the aggregate,
have a Company Material Adverse Effect.
8
SECTION 2.06 Company Permits; Compliance With Laws.
(a) The Company is in possession of, and (assuming that all consents,
approvals, authorizations and other actions described in SECTION 2.05(b)
have been obtained and all filings and obligations described in SECTION
2.05(b) have been made) immediately following the Closing will continue to
possess, all franchises, grants, authorizations, licenses, permits,
easements, variances, exceptions, consents, certificates, approvals and
orders of any Governmental Entity necessary for the Company to own, lease
and operate its properties and to carry on the Business in all material
respects as it is now being conducted (the "Company Permits"), and, as of
the date hereof, no suspension or cancellation of any material Company
Permit is pending or, to the Knowledge of Seller, threatened. The Company
has delivered copies or otherwise made available to Purchaser for
inspection all Company Permits. The Company is up-to-date and current in
all material respects with regard to record keeping and reporting that is
necessary under any Company Permit, and no material Company Permit has been
revoked, suspended, or limited in any material respect within the last five
(5) years. All manuals, ratings, systems, and programs required to be in
force, offered, promulgated, compiled, or assembled by the Company under
any material Company Permit or other applicable Law, Federal Aviation
Regulation ("FAR") or Department of Transportation regulation are complete,
current, up-to-date, in full force and effect, and comply in all material
respects with the Company Permit applicable thereto.
(b) The Company is not in conflict with, or in default or violation
of, and there has been no event that with the giving of notice or the lapse
of time or both would become a default or violation of, in any material
respect (i) any Law applicable to the Company or by which any property or
asset of the Company is bound or affected, nor has it received notice of or
been charged with such, nor, to the Knowledge of the Company or Seller, is
the Company under investigation for any such violation, (ii) any note,
bond, mortgage, indenture, contract, agreement, lease, license, franchise
or other instrument or obligation to which the Company is a party or by
which the Company or any property or asset of the Company is bound or
affected or (iii) any Company Permits.
SECTION 2.07 Financial Statements; Liabilities; Contracts.
(a) SECTION 2.07(a) of the Disclosure Letter contains a balance sheet
and income statement of the Company as of and for the period ending June
30, 2004 (the "Company Financial Statements"). Except as disclosed therein,
such Company Financial Statements were prepared from the books of account
and other financial records of the Company, are complete and correct in all
material respects and present fairly the financial position and results of
operation of the Company as at the dates and for the periods indicated
therein, and, except as set forth in SECTION 2.07(a) of the Disclosure
Letter, each of the items reflected in such Company Financial Statements
was recorded in accordance with GAAP.
(b) The Company makes and keeps books, records and accounts which, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of its assets.
9
(c) Except (i) for liabilities and obligations incurred in the
ordinary course of business and consistent with past practice since the
date of the Company Financial Statements, (ii) as otherwise disclosed
herein or in SECTION 2.07(c) of the Disclosure Letter or (iii) for
executory obligations existing as of the date of the Company Financial
Statements that arose in the ordinary course of business consistent with
past practice under contracts and agreements and that are disclosed in
SECTION 2.08 of the Disclosure Letter (or to contracts or agreements that
are not otherwise required to be disclosed in the Disclosure Letter by the
terms of SECTION 2.08 of this Agreement), all liabilities and obligations
of the Company (whether direct, indirect, accrued, contingent or otherwise)
that would be required to be reflected or reserved against in the balance
sheet of the Company included in the Company Financial Statements are so
reflected or reserved against in such balance sheet of the Company.
SECTION 2.08 Material Contracts.
(a) SECTION 2.08 of the Disclosure Letter sets forth all of the
following Contracts (as defined in SECTION 8.10) to which the Company is a
party or by which it is bound (collectively, the "Material Contracts"):
(i) Contracts with Seller or any current or former officer,
director, stockholder or Affiliate of Seller;
(ii) Contracts with any labor union or association representing
any employee of the Company;
(iii) Contracts pursuant to which any party is required to
purchase or sell a stated portion of its requirements or output from
or to another party;
(iv) Contracts for the sale of any of the assets of the Company
other than in the ordinary course of business or for the grant to any
person of any preferential rights to purchase any of its assets;
(v) Contracts for joint ventures, strategic alliances or
partnerships;
(vi) charter Contracts and master services agreements;
(vii) Contracts containing covenants of the Company not to
compete in any line of business or with any Person in any geographical
area or covenants of any other Person not to compete with the Company
in any line of business or in any geographical area;
(viii) Contracts relating to the acquisition by the Company of
any operating business or the capital stock of any other Person;
(ix) Contracts relating to the incurrence, assumption or
guarantee of any Indebtedness or imposing a Lien other than a
Permitted Lien on any of its assets;
10
(x) Contracts under which the Company has made advances or loans
to any other Person in excess of $100,000;
(xi) Contracts providing for severance, retention, change in
control or other similar payments;
(xii) Contracts for the employment of any individual on a
full-time, part-time or consulting or other basis providing for annual
compensation in excess of $100,000;
(xiii) Contracts for the provision of goods or services involving
consideration in excess of $100,000 over the term of the Contract;
(xiv) outstanding agreements of guaranty, surety or
indemnification, direct or indirect, by the Company;
(xv) Contracts (or group of related contracts) which involve the
expenditure of more than $100,000 and require performance by any party
more than one year from the date hereof; and
(xvi) Contracts with any Governmental Entity (each a "Government
Contract")
(xvii) Contracts that are otherwise material to the Company.
(b) Each Material Contract is in full force and effect and is the
legal, valid and binding obligation of the Company, enforceable against it
in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding at
law or in equity). The Company is not in default under any Material
Contract, nor, to the Knowledge of Seller or the Company, is any other
party to any Material Contract in default thereunder, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a default by the Company or, to the Knowledge of Seller or the
Company, any other party thereunder. No party to any of the Material
Contracts has exercised any termination rights with respect thereto. Except
as indicated in SECTION 2.08 of the Disclosure Letter, Seller has delivered
or otherwise made available to Purchaser true, correct and complete copies
of all of the Material Contracts, together with all amendments,
modifications or supplements thereto.
(c) None of the Government Contracts requires the Company to have a
U.S. Government approved accounting system, and the Company is in
substantial compliance with all material obligations imposed by Law upon
the Company as a result of any Government Contract, including all material
reporting or filing requirements (such as, by example but not by way of
limitation, EEO-1 and VETS-100 forms) with all applicable Governmental
Entities.
11
SECTION 2.09 Absence of Certain Developments. Except as expressly
contemplated by this Agreement or as set forth in SECTION 2.09 of the Disclosure
Letter, since the date of the Company Financial Statements the Company has
conducted the Business only in the ordinary course of business, and there has
not been any event, change, occurrence or circumstance that has had or would
reasonably be expected to have a Company Material Adverse Effect. Without
limiting the generality of the foregoing, except as expressly contemplated by
this Agreement or as set forth in the Disclosure Letter, since the date of the
Company Financial Statements:
(a) as of the date hereof, there has not been any damage, destruction
or loss, whether or not covered by insurance, with respect to (i) any
Aircraft or Company Property or (ii) any other property or asset of the
Company having a replacement cost of more than $200,000 for all such
losses;
(b) there has not been any declaration, setting aside or payment of
any dividend or other distribution in respect of any shares of capital
stock of the Company or any repurchase, redemption or other acquisition by
the Company of any outstanding shares of capital stock or other securities
of, or other ownership interest in, the Company;
(c) the Company has not awarded or paid any bonuses to employees of
the Company with respect to the fiscal year ending December 31, 2004,
except to the extent accrued on the Company Financial Statements or entered
into any employment, deferred compensation, severance or similar agreement
(nor amended any such agreement) or agreed to increase the compensation
payable or to become payable by it to any of the Company's directors,
officers, employees, agents or representatives or agreed to increase the
coverage or benefits available under any severance pay, termination pay,
vacation pay, company awards, salary continuation for disability, sick
leave, deferred compensation, bonus or other incentive compensation,
insurance, pension or other employee benefit plan, payment or arrangement
made to, for or with such directors, officers, employees, agents or
representatives;
(d) there has not been any change by the Company in accounting or Tax
reporting principles, methods or policies;
(e) the Company has not made or rescinded any election relating to
Taxes, or settled or compromised any material claim relating to Taxes;
(f) the Company has not failed to promptly pay and discharge current
liabilities except where disputed in good faith by appropriate proceedings;
(g) the Company has not made any loans, advances or capital
contributions to, or investments in, any Person or paid any fees or
expenses to any director, officer or partner of the Company, Seller or any
Affiliate of Seller;
(h) the Company has not mortgaged, pledged or subjected to any Lien,
other than Permitted Liens, any of its assets, or acquired any assets or
sold, assigned, transferred, conveyed, leased or otherwise disposed of any
assets of the Company, except for assets acquired or sold, assigned,
transferred, conveyed, leased or otherwise disposed of in the ordinary
course of business;
12
(i) the Company has not discharged or satisfied any Lien, or paid any
obligation or liability (fixed or contingent), except in the ordinary
course of business and not otherwise material to the Company;
(j) the Company has not canceled or compromised any debt or claim or
amended, canceled, terminated, relinquished, waived or released any
Contract or right except in the ordinary course of business and which, in
the aggregate, would not be material to the Company;
(k) the Company has not made or committed to make any capital
expenditures or capital additions or betterments in excess of $1,000,000
individually or $5,000,000 in the aggregate;
(l) other than pursuant to the intercompany relationships described in
SECTION 1.08 of the Disclosure Letter, the Company has not issued, created,
incurred, assumed or guaranteed any indebtedness;
(m) the Company has not granted any license or sublicense of any
rights under or with respect to any Intellectual Property;
(n) the Company has not instituted or settled any material Litigation;
and
(o) the Company has not agreed, committed, arranged or entered into
any understanding to do anything set forth in this SECTION 2.09.
SECTION 2.10 Absence of Litigation.
(a) Except as set forth in SECTION 2.10(a) of the Disclosure Letter or
in any notice provided pursuant to SECTION 4.14 hereof, there is no
Litigation pending or, to the Knowledge of Seller or the Company,
threatened against the Company, or any property or asset of the Company.
(b) Except as set forth in SECTION 2.10(b) of the Disclosure Letter,
neither the Company nor any property or asset of the Company is subject to
any continuing order of, consent decree, settlement agreement or other
similar written agreement with, or, to the Knowledge of Seller or the
Company, continuing investigation by, any Governmental Entity, or any
Order, determination or award of any Governmental Entity or arbitrator.
Except as set forth in SECTION 2.10(b) of the Disclosure Letter, the
Company is not engaged in any legal action to recover monies due it or for
damages sustained by it.
SECTION 2.11 Employee Benefit Plans; Labor Matters.
(a) SECTION 2.11(a) of the Disclosure Letter contains a true and
complete list of all "employee benefit plans" (within the meaning of
Section 3(3) of ERISA and all other employee benefit plans, programs,
agreements, policies, arrangements or payroll practices, including bonus or
other incentive compensation, collective bargaining agreements, employment,
consulting or other compensation, incentive, equity or equity-based
compensation, deferred compensation, retention, change in control,
severance, sick leave, vacation pay, salary continuation, health, life
insurance and educational assistance plans, policies agreements or
arrangements as to which the Company has any obligations, contingent or
otherwise (collectively, the "Company Plans").
13
(b) Correct and complete copies of the following documents, with
respect to each of the Company Plans have been delivered or otherwise made
available to Purchaser by Seller, to the extent applicable: (i) plan
documents, summary plan descriptions, related trust documents, insurance
contracts or other funding arrangements, and in each case, all amendments
thereto; (ii) the most recently filed Internal Revenue Service ("IRS") Form
5500 and all schedules thereto, (iii) the most recent IRS determination
letter and (iv) the most recently prepared actuarial report and financial
statement.
(c) The Company has no express or implied legally binding arrangement
that would constitute a commitment to create any additional Company Plan or
to modify any existing Company Plan (other than with respect to a
modification, change or termination required by ERISA or the Code).
(d) Except as set forth in SECTION 2.11(d) of the Disclosure Letter,
neither the execution and delivery of this Agreement nor the consummation
of the Stock Purchase will (i) result in any payment becoming due to any
Employee, (ii) increase any benefits otherwise payable under any Company
Plan or (iii) result in the acceleration of the time of payment or vesting
of any such benefits under any such Company Plan.
(e) None of the Company Plans is a multiemployer plan, within the
meaning of Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan")
nor will the Company have any obligation to make any contribution to any
Multiemployer Plan. None of the Company Plans is a single employer pension
plan, within the meaning of Section 4001(a)(15) of ERISA, for which the
Company could incur liability under Section 4063 or 4064 of ERISA (a
"Multiple Employer Plan"). With respect to each Company Plan, neither the
Company nor any trade or business, whether or not incorporated, that
together with the Company would be deemed a "single employer" within the
meaning of Section 4001(b) of ERISA has made or suffered a "complete
withdrawal" or a "partial withdrawal" as such terms are respectively
defined in Sections 4203 and 4205 of ERISA (or any liability resulting
therefrom has been satisfied in full).
(f) Except as set forth in SECTION 2.11(f) of the Disclosure Letter,
none of the Company Plans (i) provides for the payment of separation,
severance, termination or similar-type benefits to any Person or (ii)
obligates the Company to pay separation, severance, termination or other
benefits as a result of the transactions contemplated by this Agreement.
(g) To the Company's or Seller's Knowledge, there has been no
non-exempt prohibited transaction (within the meaning of Section 406 of
ERISA or Section 4975 of the Code) with respect to any Company Plan, which
could reasonably be expected to give rise to liability of the Company equal
to or greater than $500,000 in the aggregate. The Company is not currently
liable and has not previously incurred any liability for any tax or penalty
arising under Section 4971, 4972, 4979, 4980 or 4980B of the Code or
Section 502(c) of ERISA which could reasonably be expected to give rise to
liability of the Company equal to or greater than $500,000 in the
aggregate, and to the Company or Seller's Knowledge, no fact or event
exists which could reasonably be expected to give rise to any such
liability.
14
(h) Except as set forth in SECTION 2.11(h) of the Disclosure Letter,
there are no pending actions, claims or lawsuits which have been asserted
or instituted relating to the Company Plans, the assets of any of the
trusts under such plans or the sponsor, administrator or fiduciary of any
of the Company Plans, with respect to the operation of such plans (other
than routine benefit claims which could not reasonably be expected to
result in a Company Material Adverse Effect), nor does the Company have any
Knowledge of facts that could form the basis for any such claim or lawsuit.
(i) Except as set forth in SECTION 2.11(i) of the Disclosure Letter,
none of the Company Plans provide for post-employment life or health
insurance, benefits or coverage for any participant or any beneficiary of a
participant, except as may be required under the Consolidate Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA").
(j) The Company has not incurred any liability under, arising out of
or by operation of Title IV of ERISA that has not been satisfied in full
(other than liability for premiums to the Pension Benefit Guaranty
Corporation ("PBGC") arising in the ordinary course), including, without
limitation, any liability in connection with the termination or
reorganization of any employee pension benefit plan subject to Title IV of
ERISA maintained by the Company or any ERISA Affiliate (as defined at the
end of this paragraph) or to which the Company or any ERISA Affiliate
contributed or has ever been obligated to contribute thereunder (a "Title
IV Plan"). With respect to the Title IV Plans, (i) no complete or partial
termination has occurred within the five (5) years preceding the date of
this Agreement with respect to any Title IV Plan, (ii) no reportable event
(within the meaning of Section 4043 of ERISA) for which the 30-day notice
requirement to the PBGC has not been waived has occurred or is expected to
occur with respect to any Title IV Plans, (iii) no asset of the Company is
the subject of any lien arising under Section 302(f) of ERISA or Section
412(n) of the Code, (iv) the Company has not been required to post any
security under Section 307 of ERISA or Section 401(a)(29) of the Code and
(v) no fact or event exists which would give rise to any such lien or
requirement to post any such security, which could, in each of (i)-(v)
listed above, reasonably be expected to give rise to liability of the
Company equal to or greater than $500,000 in the aggregate. An "ERISA
Affiliate" shall mean any Affiliate of the Company and any trade or
business (whether or not incorporated) which is or has ever been under
common control, or which is or has ever been treated as a single employer,
with any of them under Section 414(b), (c), (m) or (o) of the Code.
(k) The Company Plans have been maintained, in all material respects,
in accordance with their terms and with the requirements of all applicable
Laws, including, without limitation, ERISA and the Code, except for such
Law violations as could not reasonably be expected to give rise to
liability of the Company equal to or greater than $500,000 in the
aggregate. To the Knowledge of Seller or the Company, nothing has occurred
with respect to the operation of the Company Plans that would reasonably be
expected to cause the imposition to the Company of any liabilities,
penalties or taxes under ERISA or the Code which, in the aggregate, could
reasonably be expected to result in a Company Material Adverse Effect.
15
(l) The Company has not incurred any liability under, and has complied
in all respects with all applicable Laws relating to the employment of
labor, including all such applicable Laws relating to wages, hours, WARN,
collective bargaining, discrimination, civil rights, safety and health,
workers' compensation and the collection and payment of withholding and/or
social security taxes and any similar tax, except for immaterial
non-compliance. The Company does not reasonably expect to incur any such
liability as a result of actions taken or not taken prior to the Closing.
SECTION 2.11(l) of the Disclosure Letter lists all notices given by the
Company in connection with WARN.
(m) (i) The Company is not a party to any collective bargaining
agreement or other labor union contract applicable to Persons employed by
the Company, nor, to the Knowledge of Seller and the Company, are there any
activities or proceedings of any labor union to organize any such
employees; (ii) the Company has not breached or otherwise failed to comply
with any provision of any such agreement or contract, and there are no
grievances outstanding against the Company under any such agreement or
contract; (iii) there are no unfair labor practice complaints pending
against the Company before the National Labor Relations Board or any
current union representation questions involving employees of the Company;
and (iv) there is no strike, slowdown, work stoppage or lockout, or, to the
Knowledge of Seller and the Company, threat thereof, by or with respect to
any employees of the Company.
SECTION 2.12 Taxes.
(a) All income and other material Tax Returns required to be filed by
or with respect to the Company (or any Affiliated Group of which the
Company is or was a member) prior to the date of this Agreement (taking
into account extensions) have been filed, and all such Tax Returns are
true, correct and complete in all material respects. All Taxes shown due on
such returns and all other material amounts of Taxes (whether or not
required to be shown on a Tax Return) payable by or with respect to the
Company (or any Affiliated Group of which the Company is or was a member)
have been timely paid or accrued on the Company Financial Statements.
(b) SECTION 2.12(b) of the Disclosure Letter lists all income and
other material Tax Returns filed with respect to the Company since December
31, 2000. Seller has made available to Purchaser complete copies of the
relevant portions of all income and other material Tax Returns of,
examination reports relating to, and statements of deficiencies assessed
against or agreed to by, the Company during such period.
(c) Except as set forth in SECTION 2.12(c) of the Disclosure Letter,
neither the Company nor any Person on its behalf has waived any statute of
limitations in respect of Taxes or agreed to, or become a party to, any
extension of time with respect to a Tax assessment or deficiency or the
period for filing any Tax Return, which waiver of statute of limitations or
extension of time has not since expired.
16
(d) Except as set forth in SECTION 2.12(d) of the Disclosure Letter,
the Company is not a party to any pending action or proceeding, and,
neither Seller nor the Company has received any written notice that there
is any action or proceeding threatened by any Governmental Entity against
the Company for assessment or collection of Taxes. All deficiencies
asserted or assessments made as a result of any examinations by any
Governmental Entity of the Tax Returns of or with respect to the Company
have been fully paid.
(e) The Company has not been a member of any Affiliated Group other
than the Affiliated Group of which Seller is the common parent, and the
Company does not have any liability for Taxes of any Person under Treasury
Regulation Section 1.1502-6 or any comparable provision of state, local or
foreign Law (other than as a member of such group).
(f) The Company has withheld or collected and timely paid over to the
appropriate Governmental Entity (or is properly holding for such payment)
all Taxes required by applicable Law to be withheld or collected.
(g) Neither Seller nor the Company has received any written notice
that a claim with regard to Taxes has been made by a Governmental Entity in
a jurisdiction in which no Tax Return is filed by or with respect to the
Company such that the Company may be subject to taxation by that
jurisdiction.
(h) Other than any Lien for current taxes and assessments not yet past
due, there are no Liens for Taxes upon the assets of the Company.
(i) The Company is not subject to private letter rulings of the IRS or
comparable rulings from any other Governmental Entity.
(j) Neither the Company nor any Person on its behalf has (i) agreed,
is required or has any application pending, to make any adjustment pursuant
to Section 481(a) of the Code or any similar provision of applicable Law or
has received notice that any Governmental Entity has proposed any such
adjustment, (ii) executed or entered into a closing agreement pursuant to
Section 7121 of the Code or any similar provision of applicable Law or
(iii) granted to any Person any power of attorney that is currently in
force with respect to any Tax matter.
(k) None of the property owned by the Company is (i) property required
to be treated as being owned by another Person pursuant to the provisions
of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and
in effect immediately prior to the enactment of the Tax Reform Act of 1986,
(ii) "tax-exempt use property" within the meaning of Section 168(h)(1) of
the Code, (iii) "tax-exempt bond financed property" within the meaning of
Section 168(g) of the Code, (iv) "limited use property" within the meaning
of Rev. Proc. 2001-28, (v) subject to Section 168(g)(1)(A) of the Code, or
(vi) subject to any provision of state, local or foreign Law comparable to
any of the provisions listed above.
17
(l) The Company is not a party to or bound by any tax sharing,
allocation, indemnity or similar agreement or arrangement (whether or not
written) pursuant to which Purchaser or any of its Affiliates (including
the Company) will have any obligation to make any payments after the
Closing.
(m) The Company has not constituted either a "distributing
corporation" or a "controlled corporation" (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (i) in the two (2) years
prior to the date of this Agreement or (ii) in a distribution which could
otherwise constitute part of a "plan" or "series of related transactions"
(within the meaning of Section 355(e) of the Code) in conjunction with the
transactions contemplated by this Agreement.
(n) There is no taxable income of the Company that will be required
under applicable Law to be reported by Purchaser or any of its Affiliates
(including the Company) for a taxable period (or portion thereof) beginning
after the Closing Date which taxable income was realized (and reflects
economic income) arising prior to the Closing Date.
(o) Except as set forth in SECTION 2.12(o) of the Disclosure Letter,
the Company is not and within the last five (5) years has not been, or
treated as having been, engaged in a trade or business or a permanent
establishment in any jurisdiction other than the United States, and the
Company has not within the last five (5) years been and is not subject to
taxation (including any withholding tax) in any jurisdiction other than the
(i) United States or (ii) a jurisdiction in the United States.
(p) Except as set forth in SECTION 2.12(p) of the Disclosure Letter,
the Company has not made any payments, is not obligated to make any
payments, and is not a party to any agreement that under certain
circumstances would obligate the Company to make any payments that will not
be deductible under Section 280G of the Code or subject to Section 4999 of
the Code.
(q) The Company does not, directly or indirectly, own any capital
stock or other equity interest in any other Person.
(r) The Company is a member of a "selling consolidated group" within
the meaning of Treasury Regulation Section 1.338(h)(10)-1(b)(2), and Seller
is eligible to make the Section 338(h)(10) Election with respect to the
Company.
SECTION 2.13 Environmental Matters.
(a) For purposes of this Agreement, the following terms shall have the
following meanings: (i) "Environmental Action" means any claim, proceeding
or other Action brought or threatened under any Environmental Law or
otherwise asserting that the Company has incurred or is responsible for
Environmental Costs and Liabilities, including, but not limited to,
18
assessments, judgments, damages, penalties, fines, or remedial obligations;
(ii) "Environmental Clean-up Site" means any location which is listed on
the National Priorities List, the Comprehensive Environmental Response,
Compensation and Liability Information System, or on any similar local,
state or foreign list of sites requiring investigation or cleanup, or which
is the subject of any pending or threatened Action related to or arising
from any alleged violation of any Environmental Law, or at which there has
been an actual or threatened Release of a Hazardous Substance; (iii)
"Environmental Costs and Liabilities" means Liabilities arising out of the
ownership or operation of the business of the Company or the ownership,
operation or condition of the Real Property or any other real property
currently or formerly owned, occupied, operated or leased by the Company,
in each case to the extent based upon or arising out of (A) Environmental
Law, (B) a failure to obtain, maintain or comply with any Environmental
Permit, (C) a Release of any Hazardous Substance, or (D) the use,
generation, storage, transportation, treatment, manufacture, distribution,
sale, or off-site disposal of Hazardous Substances; (iv) "Environmental
Laws" means any and all applicable Laws issued, promulgated or entered into
by any Governmental Entity relating to the environment, worker health and
safety, preservation or reclamation of natural resources, or to the
management, handling, use, generation, treatment, storage, transportation,
disposal, manufacture, distribution, formulation, packaging, labeling,
Release or threatened Release of or exposure to Hazardous Substances,
whether now existing or subsequently enacted including, but not limited to,
the Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. Section 9601 et seq. ("CERCLA"); the Federal Water Pollution
Control Act, 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section
2601 et seq.; the Occupational Safety and Health Act, 29 U.S.C. Section 651
et seq. the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 et seq.; the Safe Drinking Water Act, 42 U.S.C.
Section 300(f) et seq.; the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq.; the Federal Insecticide, Fungicide and
Rodenticide Act 7 U.S.C. Section 136 et seq.; the Resource Conservation and
Recovery Act of 1976 ("RCRA"), 42 U.S.C. Section 6901 et seq.; the Oil
Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; and any similar or
implementing state or local Law, any all amendments or regulations
promulgated thereunder; and any common law doctrine, including but not
limited to, negligence, nuisance, trespass, personal injury, or property
damage related to or arising out of the presence, Release, or exposure to
Hazardous Substances; (v) "Environmental Permit" means any Authorization
under Environmental Law, and includes any and all Orders issued or entered
into by a Governmental Entity under Environmental Law; (vi) "Hazardous
Substances" means all explosive or regulated radioactive materials or
substances, hazardous or toxic materials, wastes or chemicals, petroleum
and petroleum products (including crude oil or any fraction thereof),
asbestos or asbestos containing materials, polychlorinated biphenyls
("PCBs") and all other materials, chemicals or substances which are
regulated by, form the basis of liability or are defined as pollutants,
contaminants, wastes, hazardous, extremely hazardous, toxic or words of
similar import, under any Environmental Law, including materials listed in
49 C.F.R. Section 172.101 and materials defined as hazardous pursuant to
Section 101(14) of CERCLA (vii) "Release" means any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, dumping, exposure to or disposing of Hazardous Substances into or
in the Environment.
19
(b) Except as set forth in SECTION 2.13(b) of the Disclosure Letter or
as would not be reasonably expected to result in Environmental Costs and
Liabilities of $100,000 individually or $500,000 in the aggregate: (i) the
Company has secured, and is in compliance with, all Environmental Permits
required in connection with its operations and the Company Properties, all
such Environmental Permits are valid and in full force and effect, and none
of such Environmental Permits will be terminated or impaired or become
terminable as a result of this transaction; (ii) the Company has not
violated and is not in violation of any Environmental Laws, the Company has
not received notice alleging that it is not in compliance with
Environmental Laws, and the Company is not aware of facts or circumstances
that are likely to result in the failure of the Company to comply with or
constitute a violation of any Environmental Laws or Environmental Permits;
(iii) none of the properties owned or leased by the Company (including
soils and surface and ground waters) are contaminated with any Hazardous
Substance, there has been no treatment, storage, disposal or Release of any
Hazardous Substance at, from, into, on or under any Company Property or any
other property currently or formerly owned, occupied, operated or leased by
the Company; (iv) the Company is not actually or potentially or, to the
Knowledge of Seller or the Company, allegedly liable for any off-site
contamination, the Company has not received a CERCLA 104(e) information
request nor has the Company been named a potentially responsible party for
any National Priorities List site under CERCLA or any site under analogous
state Law, and the Company has not transported or arranged for the
treatment, storage, handling, disposal, or transportation of any Hazardous
Substances to any off-site location that is an Environmental Clean-up Site;
(v) there are no past, pending or, to Seller's or the Company's Knowledge,
threatened Environmental Actions against or affecting the Company, the
Company is not aware of any facts or circumstances which could be expected
to form the basis for any Environmental Action against the Company, and the
Company is not subject to any Order relating to compliance with any
Environmental Law or to investigation or cleanup of a Hazardous Substance,
and there are no past Environmental Actions under which the Company has any
unfulfilled remedial obligations or ongoing monitoring or reporting
obligations; (vi) any aboveground or underground tanks previously situated
on the Company Properties or any other property currently or formerly
owned, occupied, operated or leased by the Company have been removed in
accordance with all Environmental Laws, there are no articles, containers
or equipment containing PCBs in, at, on, under or within the Company
Properties in excess of applicable standards, and there is no
asbestos-containing material in, at, on, under or within the Company
Properties in excess of applicable standards; and (vii) the Company has
made available to Purchaser all material written environmental and worker
health and safety investigations, assessments, studies, audits, tests and
reports that have been prepared by or on behalf of the Company.
SECTION 2.14 Real Property.
(a) SECTION 2.14(a) of the Disclosure Letter sets forth a complete
list of (i) all real property and interests in real property owned in fee
by the Company (individually, an "Owned Property" and collectively, the
"Owned Properties"), and (ii) all real property and interests in real
property leased by the Company (individually, a "Real Property Lease" and
20
collectively, the "Real Property Leases" and, together with the Owned
Properties, being referred to herein individually as a "Company Property"
and collectively as the "Company Properties") as lessee or lessor. The
Company has good and marketable fee title to all Owned Property, free and
clear of all Liens of any nature whatsoever except (A) Liens set forth in
SECTION 2.14(a) of the Disclosure Letter and (B) Permitted Liens. The
Company Properties constitute all interests in real property currently used
or currently held for use in connection with the business of the Company
and which are necessary for the continued operation of the business of the
Company as the business is currently conducted. The Company has not used,
nor allowed any other Person to use, any Company Property for any purpose
other than helicopter or fixed-wing aviation operations and such other uses
as are normally incident thereto. Except as indicated in SECTION 2.14(a) of
the Disclosure Letter, the Company has delivered or otherwise made
available to Purchaser true, correct and complete copies of (i) all deeds,
title reports and surveys for the Owned Properties and (ii) the Real
Property Leases, together with all amendments, modifications or
supplements, if any, thereto.
(b) The Company has a valid and enforceable leasehold interest under
each of the Real Property Leases, subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability,
to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity). Each of the Real Property
Leases is in full force and effect, and the Company has neither received
nor given any notice of any default or event that with notice or lapse of
time, or both, would constitute a default by the Company under any of the
Real Property Leases and, to the Knowledge of Seller or the Company, no
other party is in default thereof, and no party of the Real Property Leases
has exercised any termination rights with respect thereto.
(c) The Company has all certificates of occupancy and Company Permits
of any Governmental Body necessary in all material respects for the current
use and operation of each Company Property.
(d) There does not exist any actual or, to the Knowledge of Seller or
the Company, threatened condemnation or eminent domain proceedings that
affect any Company Property or any part thereof, and neither Seller nor the
Company has received any notice, oral or written, of the intention of any
Governmental Body or other Person to take or use all or any part thereof.
(e) None of the Seller nor the Company has received any notice from
any insurance company that has issued a policy with respect to any Company
Property requiring performance of any structural or other repairs or
alterations to such Company Property.
(f) Except as set forth in SECTION 2.14(f) of the Disclosure Letter,
the Company does not own or hold, and is not obligated under or a party to,
any option, right of first refusal or other contractual right to purchase,
acquire, sell, assign or dispose of any real estate or any portion thereof
or interest therein.
21
SECTION 2.15 Tangible Personal Property.
(a) The Company has good title to all of the items of tangible
personal property reflected on the Company Financial Statements (except as
sold or disposed of subsequent to the date thereof in the ordinary course
of business), including the Aircraft (as defined in SECTION 2.17(a)) and
Related Equipment (as defined in SECTION 8.10(s)), free and clear of any
and all Liens, other than (i) Liens set forth in SECTION 2.15(a) of the
Disclosure Letter and (ii) Permitted Liens.
(b) SECTION 2.15(b) of the Disclosure Letter sets forth all leases of
personal property involving annual payments in excess of $25,000 relating
to personal property used in the business of the Company or to which the
Company is a party or by which the properties or assets of the Company is
bound ("Personal Property Leases"). The Company has delivered or otherwise
made available to Purchaser true, correct and complete copies of the
Personal Property Leases, together with all amendments, modifications or
supplements thereto.
(c) The Company has a valid and enforceable leasehold interest under
each of the Personal Property Leases under which it is a lessee, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Each of the
Personal Property Leases is in full force and effect. There is no default
under any Personal Property Lease by the Company or, to the Knowledge of
Seller or the Company, by any other party thereto, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder by the Company or, to the Knowledge of
Seller or the Company, by any other party thereto. No party to any of the
Personal Property Leases has exercised any termination rights with respect
thereto.
SECTION 2.16 Intellectual Property.
(a) SECTION 2.16(a) of the Disclosure Letter sets forth an accurate
and complete list of all patents, registered marks, pending applications
for registrations of any marks and unregistered marks, registered
copyrights, and pending applications for registration of copyrights, owned
or filed by the Company (collectively, the "Intellectual Property").
SECTION 2.16(a) of the Disclosure Letter lists the jurisdictions in which
each such item of Intellectual Property has been issued or registered or in
which any such application for such issuance and registration has been
filed.
(b) Except as disclosed in SECTION 2.16(b) of the Disclosure Letter,
the Company is the sole and exclusive owner of all right, title and
interest in and to (i) all of the patents, the marks, each of the
registered copyrights and pending applications filed by the Company
therefor, and (ii) each of the other material copyrights in any works of
authorship prepared by or for the Company that resulted from or arose out
of any work performed by or on behalf of the Company or by any employee,
22
officer, consultant or contractor of any of them. To the Knowledge of
Seller or the Company, the Company is the sole and exclusive owner of, or
has valid and continuing rights to use, sell and license, as the case may
be, all other material Intellectual Property used, sold or licensed by the
Company in its businesses as presently conducted and as currently proposed
to be conducted, free and clear of all Liens or obligations to others
(except for those specified licenses included in SECTION 2.16(e) of the
Disclosure Letter).
(c) The material Intellectual Property owned, used, practiced or
otherwise commercially exploited by the Company, the manufacturing,
licensing, marketing, importation, offer for sale, sale or use of the
Company's products or technology in connection with the business as
presently and as currently proposed to be conducted, and the Company's
present and currently proposed business practices and methods do not
constitute an unauthorized use or misappropriation of any patent,
copyright, trade secret or other similar right, of any Person, and, to the
Knowledge of the Company or the Seller, do not infringe, constitute an
unauthorized use of, or violate any other right of any Person (including,
without limitation, pursuant to any non-disclosure agreements or
obligations to which the Company or any of their present or former
employees is a party). The material Intellectual Property owned by or
licensed to the Company includes all of the intellectual property rights
necessary to enable the Company to conduct its businesses in the manner in
which such business is currently being conducted and, to the Knowledge of
the Company or the Seller, as currently proposed to be conducted.
(d) Except with respect to licenses of commercial off-the-shelf
Software, and except pursuant to the Intellectual Property Licenses listed
in SECTION 2.16(d) of the Disclosure Letter, the Company is not required,
obligated, or under any liability whatsoever, to make any payments by way
of royalties, fees or otherwise to any owner, licensor of, or other
claimant to any material Intellectual Property, or other third party, with
respect to the use thereof in connection with the conduct of the businesses
of the Company as currently conducted or proposed to be conducted.
(e) SECTION 2.16(e) of the Disclosure Letter sets forth a complete and
accurate list of all contracts to which the Company is a party (i) granting
any Intellectual Property Licenses, (ii) containing a covenant not to
compete or otherwise limiting its ability to (A) exploit fully any of the
Intellectual Property or (B) conduct the business in any market or
geographical area or with any Person or (iii) containing an agreement to
indemnify any other person against any claim of infringement of
Intellectual Property.
(f) Each of the Intellectual Property Licenses is in full force and
effect and is the legal, valid and binding obligation of the Company,
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). The Company is
not in default under any Intellectual Property License, nor, to the
Knowledge of the Company or the Seller, is any other party to any
Intellectual Property License in default thereunder, and no event has
occurred that with the lapse of time or the giving of notice or both would
constitute a default thereunder. No party to any of the Intellectual
Property Licenses has exercised any termination rights with respect
thereto.
23
(g) The Company has not authorized any disclosure of any of the
Company's trade secrets or other non-public, proprietary information
material to its Business as presently conducted, and to the Knowledge of
Seller or the Company, no such trade secrets or such other information have
been actually disclosed by the Company to any third party other than
pursuant to a non-disclosure agreement restricting the disclosure and use
of the Intellectual Property, except for immaterial disclosures. The
Company has taken adequate security measures to protect the secrecy,
confidentiality and value of all the trade secrets of the Company and any
other of its non-public, proprietary information material to its Business
as presently conducted, including invention disclosures, not covered by any
patents owned or patent applications filed by the Company, which measures
are reasonable in the industry in which the Company operates.
(h) As of the date hereof, the Company is not the subject of any
pending or, to the Knowledge of Seller or the Company, threatened
Litigation which involve a claim of infringement, unauthorized use, or
violation by any Person against the Company or challenging the ownership,
use, validity or enforceability of, any material Intellectual Property. The
Company has not received notice of any such threatened claim and, to the
Knowledge of Seller or the Company, there are no facts or circumstances
that reasonably would form the basis for any claim of infringement,
unauthorized use, or violation by any Person against the Company, or
challenging the ownership, use, validity or enforceability of any material
Intellectual Property. All of the Company's rights in and to material
Intellectual Property are valid and enforceable.
(i) To the Knowledge of Seller or the Company, no Person is
infringing, violating, misusing or misappropriating any material
Intellectual Property of the Company, and no such claims have been made
against any Person by the Company.
(j) There are no Orders to which the Company is a party or by which
the Company is bound which restrict, in any material respect, the rights to
use any of the Intellectual Property.
(k) The consummation of the transactions contemplated hereby will not
result in the loss or impairment of Purchaser's right to own or use any of
the Intellectual Property.
(l) No present or former employee has any right, title, or interest,
directly or indirectly, in whole or in part, in any material Intellectual
Property owned or used by the Company. To the Knowledge of Seller or the
Company, no employee, consultant or independent contractor of the Company
is, as a result of or in the course of such employee's, consultant's or
independent contractor's engagement by the Company, in default or breach of
any material term of any employment agreement, non-disclosure agreement,
assignment of invention agreement or similar agreement.
24
(m) SECTION 2.16(m) of the Disclosure Letter sets forth a complete and
accurate list of (i) all Software that is owned exclusively by the Company
and is material to the operation of the Business and (ii) all Software that
is material to the Company's operation of the Business that is not
exclusively owned by the Company, excluding Software available on
reasonable terms through commercial distributors or in consumer retail
stores for a license fee of no more than $10,000.
SECTION 2.17 Aircraft; Adequacy of Rights.
(a) SECTION 2.17(a) of the Disclosure Letter is a complete, accurate,
and updated list of all aircraft owned by the Company and/or used by the
Company in its Business as currently conducted (the "Aircraft"), including
the insured values thereof. All Aircraft owned by the Company on the date
hereof are duly registered in the name of the Company as the registered
owner thereof. All Aircraft covered by conditional purchase agreements or
leases to the Company are duly registered to such vendors or lessors as
owner. There are no Liens against the Aircraft, except as set forth in
SECTION 2.17(a) of the Disclosure Letter.
(b) Each of the Aircraft has a Certificate of Airworthiness.
(c) Except as noted in the applicable records and logs of the Aircraft
and their respective Related Equipment, copies of which have been provided
to or otherwise made available to Purchaser for inspection, no Aircraft or
any of its Related Equipment have or have had any material damage or
accident history, no FAA Form 337's or 8110-3's have been filed with regard
to any Aircraft, and no Aircraft have been involved in any major incidents
or accidents. All NTSB Form 6120's which the Company has filed in the last
five (5) years are set forth in SECTION 2.17(c) of the Disclosure Letter.
(d) While operated by the Company, all Aircraft have been flown, and
all Aircraft and their respective Related Equipment have been operated,
inspected, and maintained (including but not limited to any necessary
preventive maintenance), in all material respects, in accordance with all
applicable FAA regulations and requirements as well as all manufacturer
guidelines, aircraft flight manuals, and other requirements or authorized
alternative method of compliance.
(e) While operated by the Company, all Aircraft and their respective
Related Equipment have at all times been, as applicable, maintained,
inspected, flown, operated, and repaired by duly qualified and certificated
pilots, crew members, flight attendants, and mechanics, in all material
respects, in accordance with all applicable Company Permits and Law
requirements as well as any insurance requirements applicable to the
Aircraft and their respective Related Equipment.
(f) All Aircraft Documents (as defined below) are in all material
respects complete, accurate, and up-to-date including, but not limited to,
matching and consistent component cards for all components or accessories
installed in any Aircraft. All material maintenance discrepancies have been
duly and completely noted in the Aircraft Documents for each Aircraft.
"Aircraft Documents" shall mean any and all log books, maintenance records,
engine log books, and all other maintenance, modification, alteration,
25
manufacturer origin, overhaul, repair, and inspection records and all other
current and historical records and documentation pertaining to each
Aircraft or its Related Equipment including, without limitation, all such
documents and records required to be maintained under applicable Law, the
applicable Company Permits, and in accordance with the requirements of all
applicable FAR's and DOT regulations. Such records shall also include all
documentation initially and subsequently furnished by the manufacturers of
each Aircraft or its Related Equipment.
(g) All necessary FAA or DOT forms relative to maintenance,
inspection, repair, and overhaul of each Aircraft or its Related Equipment
have been duly and timely filed with the FAA or DOT, as applicable, and
noted in the Aircraft Documents, including, but not limited to all FAA Form
337's, 8110-3's, and ICA's while such Aircraft and its Related Equipment
have been operated by the Company.
(h) The Company is a duly certified air carrier, and there are in full
force and effect a DOT Certificate of Public Convenience and Necessity, an
Air Carrier Certificate authorizing operations under FAR Parts 121, 133,
135 and 137 and Repair Station Certificates under FAR Part 145 that are
adequate for the conduct of the Business as presently conducted by the
Company.
SECTION 2.18 Aircraft Crew Members. As used herein, the term "Crew
Member" means a pilot, mechanic, flight attendant FAR 121 dispatcher or other
aircraft crew member, as applicable, whether currently employed by the Company
or not.
(a) All Aircraft Crew Members have current and valid medical
certificates to the extent they are required to have them under the
applicable Company Permits and applicable FAA requirements;
(b) All Aircraft Crew Members have been trained and are current in
their applicable training requirements, all in accordance with the
applicable Company Permits, applicable Law, and any other particular FAA
and/or insurance requirements applicable to the business of the Company as
it is now conducted;
(c) All Aircraft Crew Members are current and up-to-date with regard
to any drug testing or drug use detection training as required under the
applicable Company Permits; and
(d) With regard to the Company or any Aircraft Crew Member, SECTION
2.18(d) of the Disclosure Letter sets forth all inquiries, proposed
certificate actions, warning notices, letters of correction, administrative
actions, enforcement actions, emergency actions, consent orders, orders of
compliance, cease and desist orders, orders of denial, requests for
re-examination, civil penalties, and/or criminal actions (all of which are
collectively referred to as the "Government Actions") which have been
initiated or proposed by the FAA as against the Company or, to the
Knowledge of Seller or the Company, any Aircraft Crew Member within the
last five (5) years, true and complete copies of which have been provided
or otherwise made available to Purchaser. No other Government Actions are
pending against the Company or, to the Knowledge of Seller or the Company,
26
any Aircraft Crew Member, and, to the Knowledge of Seller or the Company,
no other Government Actions are threatened or imminent as against the
Company or any Aircraft Crew Member. Neither the Company nor, to the
Knowledge of Seller or the Company, any Aircraft Crew Member has had any
material license, certificate, validation, or authorization suspended,
revoked, or limited in any manner during the last five (5) years, nor is
the Company or, to the Knowledge of Seller or the Company, any Aircraft
Crew Member currently subject to any restriction, limitation, suspension,
FAA order or request for remedial training of any kind or character.
SECTION 2.19 Accounts Receivable. Solely with respect to accounts
receivable of the Business that are not paid or settled in accordance with
SECTION 1.08 of this Agreement, all such accounts receivable of the Company with
respect to the Business are reflected properly on the books and records of the
Company, are valid, have arisen from bona fide transactions in the ordinary
course of business and are subject to no setoff or counterclaim. The accounts
receivable reserves on the face of the balance sheet included in the Company
Financial Statements have been established based on the past practices of the
Business and, in light of the collections experience of the Business, are, to
Seller's and the Company's Knowledge, adequate to cover accounts receivable in
existence as of the date of such balance sheet that are not collectible in
accordance with their terms and were recorded in accordance with GAAP
consistently applied.
SECTION 2.20 Insurance. The Company has insurance policies in full
force and effect for such amounts as are sufficient in all material respects for
all requirements of applicable Law and all agreements to which the Company is a
party or by which it is bound. Set forth in SECTION 2.20 of the Disclosure
Letter is a list of all insurance policies and all fidelity bonds held by or
applicable to the Company setting forth, in respect of each such policy, the
policy name, policy number, carrier, term, type and amount of coverage and
annual premium as of the date hereof, and Seller or the Company has provided or
otherwise made available to Purchaser true and complete copies of all such
insurance policies and fidelity bonds. Excluding insurance policies that have
expired and been replaced in the ordinary course of business, no insurance
policy has been cancelled within the last two (2) years and, to the Knowledge of
the Company or the Seller, no threat has been made to cancel any insurance
policy of the Company during such period. No underwriter of any insurance policy
applicable to the Company or any of its properties or assets has denied coverage
of any pending or open claims made with respect to the Company or any of its
properties or assets.
SECTION 2.21 Related Party Transactions. Except as set forth in
SECTION 2.21 of the Disclosure Letter, none of Seller or any of its directors,
officers, partners, stockholders or Affiliates or any director, officer,
partner, stockholder or Affiliate of the Company (i) owns any direct or indirect
interest of any kind in, or controls or is a director, officer, employee or
partner of, or consultant to, or lender to or borrower from or has the right to
participate in the profits of, any Person which is (A) a competitor, supplier,
customer, landlord, tenant, creditor or debtor of the Company, (B) engaged in a
business related to the business of the Company or (C) a participant in any
transaction to which the Company is a party or (ii) is a party to any Contract
with the Company.
27
SECTION 2.22 Customers and Suppliers. SECTION 2.22 of the Disclosure
Letter sets forth a list of the ten (10) largest customers and the ten (10)
largest suppliers of the Company, as measured by the dollar amount of purchases
therefrom or thereby, during the fiscal year ended December 31, 2003 and the six
(6) months ended June 30, 2004, showing the approximate total sales by the
Company to each such customer and the approximate total purchases by the Company
from each such supplier, during such period.
SECTION 2.23 Banks. SECTION 2.23 of the Disclosure Letter contains a
complete and correct list of the names and locations of all banks in which the
Company has accounts or safe deposit boxes and the names of all persons
authorized to draw thereon or to have access thereto. Except as set forth on
SECTION 2.23 of the Disclosure Letter, no person holds a power of attorney to
act on behalf of the Company with respect to such accounts or safe deposit
boxes.
SECTION 2.24 Brokers. Except for Simmons & Company International,
whose fees will be paid by Seller, no broker, finder or investment banker is
entitled to a brokerage, finder's or other fee or commission in connection with
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of Seller or the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Except as set forth in the Disclosure Letter delivered by Purchaser
concurrently with the execution of this Agreement (the "Purchaser Disclosure
Letter"), Purchaser hereby represents and warrants to Seller and the Company
that:
SECTION 3.01 Organization and Qualification. Purchaser is a
corporation duly incorporated, validly existing and in good standing under the
Laws of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted.
SECTION 3.02 Authority Relative to the Transaction Documents.
Purchaser has all necessary corporate power and authority to execute and deliver
the Transaction Documents, to perform its obligations thereunder and to
consummate the transactions contemplated thereby. The execution and delivery of
the Transaction Documents by Purchaser and the consummation by Purchaser of the
transactions contemplated thereby have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
Purchaser are necessary to authorize the Transaction Documents or to consummate
the transactions contemplated thereby. The Transaction Documents have been duly
and validly executed and delivered by Purchaser and, assuming the due
authorization, execution and delivery by Seller, constitutes the legal, valid
and binding obligation of Purchaser, enforceable against Purchaser in accordance
with their terms (except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
similar laws affecting creditors' rights generally, or principles governing the
availability of equitable remedies).
28
SECTION 3.03 No Conflict; Required Filings and Consents.
(a) The execution and delivery of the Transaction Documents and the
consummation of the transactions contemplated thereby by Purchaser will
not, (i) conflict with or violate the certificate of incorporation or
by-laws of Purchaser, (ii) except as set forth in SECTION 3.03(a) of the
Purchaser Disclosure Letter and assuming that all consents, approvals,
authorizations and other actions described in SECTION 3.03(b) have been
obtained and all filings and obligations described in SECTION 3.03(b) have
been made, conflict with or violate any Law applicable to Purchaser or by
which any property or asset of Purchaser is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which, with
notice or lapse of time or both, would become a default) under, or give to
others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any
property or asset of Purchaser pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation, except, with respect to clauses (ii) and (iii),
for any such conflicts, violations, breaches, defaults or other occurrences
as would not, individually or in the aggregate, have a material adverse
effect on the ability of Purchaser to consummate the Stock Purchase.
(b) The execution and delivery of the Transaction Documents by
Purchaser do not, and the performance of them by Purchaser will not
require, any consent, approval, authorization or permit of, or filing with
or notification to, any Governmental Entity, except (i) for applicable
requirements, if any, of Blue Sky Laws and the pre-merger notification
requirements of the HSR Act, (ii) notices to, filings with or approvals of
the FAA required under applicable Law, if any, (iii) notices to, filings
with or approvals of the DOT required under applicable Law, if any and (iv)
where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or
delay consummation of the transactions contemplated thereby, or otherwise
prevent Purchaser from performing its obligations under the Transaction
Documents, and would not, individually or in the aggregate, have a material
adverse effect on the ability of Purchaser to consummate the Stock
Purchase.
SECTION 3.04 Acquisition of Shares for Investment. Purchaser is
acquiring the Shares for investment and not with a view to, or for sale in
connection with, any distribution thereof, nor with any present intention of
distributing or selling the Shares. Purchaser agrees that the Shares may not be
sold, transferred, offered for sale, pledged, hypothecated or otherwise disposed
of without registration under the Securities Act of 1933, as amended (the
"Securities Act"), and any applicable Blue Sky Laws, except under an exemption
from such registration under the Securities Act and such Blue Sky Laws.
SECTION 3.05 Availability of Funds. At the Closing Purchaser will
have sufficient immediately available funds, in cash, to pay the Purchase Price
and any other amounts payable under this Agreement as and when due hereunder and
to effect the transactions contemplated by this Agreement, all without any
further third-party consent or approval required.
SECTION 3.06 Litigation. Except as set forth in SECTION 3.06 of the
Purchaser Disclosure Letter, there is no Litigation pending or, to the knowledge
of Purchaser, threatened against Purchaser or any of its Affiliates before any
court, arbitrator or Governmental Entity, which would, individually or in the
aggregate, have a material adverse effect on the ability of Purchaser to
consummate the Stock Purchase.
29
SECTION 3.07 Brokers. No broker, finder or investment banker is
entitled to a brokerage, finder's or other fee or commission in connection with
the transactions contemplated hereby based upon arrangements made by or on
behalf of Purchaser.
ARTICLE IV
ADDITIONAL AGREEMENTS
SECTION 4.01 Conduct of Business by the Company Pending the Closing.
Seller and the Company covenant and agree that, during the period from the date
of this Agreement to and including the Closing Date, except as set forth in
SECTION 4.01 of the Disclosure Letter or as specifically contemplated by any
other provision of this Agreement or consented to by Purchaser in writing, the
Company shall, and Seller shall cause the Company to:
(a) carry on its business in the usual, regular and ordinary course in
all material respects, in substantially the same manner as heretofore
conducted, and shall use commercially reasonable efforts to preserve intact
its present lines of business, maintain its rights and franchises and
preserve its relationships with employees, customers, suppliers and others
having business dealings with it to the end that its ongoing business shall
not be impaired in any material respect at the Closing; provided, however,
that no action by Seller or the Company specifically permitted by any other
provision of this Agreement shall be deemed a breach of this SECTION
4.01(a);
(b) maintain (i) all of the assets and properties of the Company in
their current condition, ordinary wear and tear excepted, in accordance
with the Company's past practices and (ii) insurance upon all of the
properties and assets of the Company insured as of the date of this
Agreement in such amounts and of such kinds comparable to that in effect on
the date of this Agreement;
(c) (i) maintain the books, accounts and records of the Company in the
ordinary course of business, (ii) continue to collect accounts receivable
and pay accounts payable utilizing normal procedures and without
discounting or accelerating payment of such accounts other than in
accordance with the Company's past practices and (iii) comply with all
material contractual and other obligations applicable to the operation of
the Company;
(d) comply in all material respects with all applicable Laws and
Company Permits;
(e) not amend or otherwise change the Company's articles of
incorporation or by-laws;
30
(f) not transfer, issue, sell, pledge, dispose of, grant or encumber,
or authorize the issuance, sale, pledge, disposition, grant or encumbrance
of, (i) any shares of capital stock of the Company 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
(including any phantom interest), of the Company, (ii) any Aircraft or
(iii) any other asset of the Company except (A) in the ordinary course of
business and in a manner consistent with past practice and (B) for
consideration less than $100,000;
(g) not reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of the Company's capital
stock;
(h) not (i) acquire or dispose of (including, without limitation, by
merger, consolidation, acquisition or disposition of stock or assets, or by
liquidation or dissolution) any interest in any corporation, partnership,
other business organization or any division thereof or any assets, other
than the acquisition or disposition of assets (other than the Aircraft and
the Company Properties) in the ordinary course of business consistent with
past practice, provided that the Company shall not acquire Inventory in
excess of $2,000,000 in the aggregate; (ii) other than pursuant to the
intercompany relationships described in SECTION 1.08 of the Disclosure
Letter, 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) enter into, amend in any material respect
or terminate any contract or agreement material to the business, results of
operations or financial condition of the Company taken as a whole other
than in the ordinary course of business, consistent with past practice;
(iv) authorize any capital expenditure, other than capital expenditures for
the Company in an aggregate amount not exceeding the sum of (A) the amounts
(by category) provided in the capital expenditure budget for the fiscal
year ending December 31, 2004 previously provided to Purchaser and (B)
$3,000,000; (v) enter into any commitment for capital expenditures of the
Company in excess of $500,000 for any individual commitment and $2,000,000
for all commitments in the aggregate; (vi) enter into any Contract that is
not cancelable by the Company upon thirty (30) days notice without penalty;
or (vii) enter into or amend any contract, agreement, commitment or
arrangement that, if fully performed, would not be permitted under this
SECTION 4.01(h);
(i) subject to any Lien (other than Permitted Liens) or otherwise
encumber or, except for Permitted Liens, permit, allow or suffer to be
encumbered, any of the properties or assets (whether tangible or
intangible) of the Company;
(j) not (i) increase the compensation payable or to become payable to
its employees, except for increases in accordance with past practices in
salaries or wages of employees of the Company, (ii) grant any severance or
termination pay to any employee of the Company, (iii) enter into or amend
any employment or severance agreement with any director, officer or other
employee of the Company or (iv) establish, adopt, enter into, extend, amend
or terminate any collective bargaining, bonus, profit, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other agreement, trust,
fund, policy or arrangement for the benefit of any director, officer or
employee;
31
(k) except as set forth in SECTION 4.01(k) of the Disclosure Letter,
not make any tax election or settle or compromise any income tax liability;
(l) not take any action that would prevent or impede any party to this
Agreement from obtaining any consent or approval the receipt of which is a
condition to the consummation of the transactions contemplated hereby;
(m) not enter into any agreement or arrangement that would limit or
otherwise restrict the Company or any successor thereto or, after the
Closing, Purchaser or any subsidiary thereof or any successor thereto, from
engaging or competing in any line of business or in any geographic area;
(n) not pay, discharge or satisfy any claim, liability or obligation
(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 liabilities reflected or
reserved against in the balance sheet of the Company (including the notes
thereto) included in the Company Financial Statements or subsequently
incurred in the ordinary course of business and consistent with past
practice;
(o) fly, operate, inspect, and maintain (including but not limited to
any necessary preventive maintenance) all Aircraft in accordance with all
applicable FAA regulations and requirements as well as all applicable
manufacturer guidelines, aircraft flight manuals, insurance requirements
and Company Permits;
(p) not defer, keep open or carry forward any maintenance items or
discrepancies if doing so would result in the grounding of an Aircraft due
to airworthiness or safety of flight issues, nor request any extension for
any maintenance, repair or overhaul past the applicable limits as set forth
in the Aircraft's manual(s), other than by methods already approved via the
Company's FAA Operations Specifications;
(q) comply in full, or via authorized alternative method of
compliance, with all manufacturer service bulletins, alert service
bulletins and FAA airworthiness directives within the time periods for
compliance specified in such service bulletins and airworthiness
directives;
(r) maintain, inspect, fly, operate, and repair by duly qualified and
certificated pilots, crew members, flight attendants and mechanics all
Aircraft in accordance with all applicable Company Permits and FAA
regulations and requirements as well as any insurance requirements
applicable to the Aircraft;
(s) not introduce any material change with respect to the operation of
the Company, including any material change in the types, nature,
composition or quality of its products or services, or, other than in the
ordinary course of business, make any change in product specifications or
prices or terms of distribution of such products;
(t) not make a change in its accounting or Tax reporting principles,
methods or policies;
32
(u) not terminate, amend, restate, supplement or waive any material
rights under any Material Contract, Real Property Lease, Personal Property
Lease, Intellectual Property or Company Permits; and
(v) not take any action that would render, or which reasonably may be
expected to render, (i) any of the representations or warranties of Seller
set forth in this Agreement untrue at the Closing or (ii) except as
otherwise permitted by SECTION 6.05, any of the conditions set forth in
ARTICLE V not being satisfied.
Seller further covenants and aggress that Seller shall not authorize
or enter into, or permit the Company to enter into, an agreement to do anything
prohibited by the foregoing SECTION 4.01(b) through SECTION 4.01(v).
SECTION 4.02 Access to Information; Confidentiality.
(a) To the fullest extent possible and consistent with applicable Law,
Seller and the Company shall afford to Purchaser and its officers,
employees, accountants, counsel, financial advisors and other
representatives ("Representatives") reasonable access during normal
business hours during the period prior to the Closing to all of the
officers, employees, agents, properties, books, contracts, commitments and
records of the Company, and during such period, the Company shall furnish
promptly to Purchaser and its Representatives all information concerning
the businesses, properties and personnel of the Company as Purchaser may
reasonably request and allow Purchaser to make extracts and copies of such
books and records. Without limiting the immediately preceding sentence,
Seller and the Company shall, to the fullest extent possible and consistent
with applicable Law, afford to Purchaser and its Representatives reasonable
access to the Aircraft, their respective Related Equipment and the Aircraft
Documents for inspection and evaluation at such times as may be reasonably
requested by Purchaser during the period prior to the Closing. No
investigation by Purchaser prior to or after the date of this Agreement
shall diminish or obviate any of the representations, warranties, covenants
or agreements of Seller and the Company contained in this Agreement. In
order that Purchaser may have full opportunity to make such physical,
business, accounting and legal review, examination or investigation as it
may reasonably request of the affairs of the Company, the Company shall,
and Seller shall cause the officers, employees, consultants, agents,
accountants, attorneys and other representatives of the Company to,
cooperate fully with such representatives in connection with such review
and examination.
(b) Until the Closing, Purchaser, Seller and the Company will be bound
by, and will hold any information received pursuant to this Agreement in
confidence in accordance with the terms of, the confidentiality agreement
between Seller and Purchaser dated April 22, 2004 (the "Confidentiality
Agreement"), except to the extent reasonably necessary in connection with
the exploration and pursuit of a potential sale of the Fixed Wing Business.
Other than as specifically contemplated by SECTION 4.08, none of Seller or
any of its Affiliates will have any obligation to make available or provide
to Purchaser or its Representatives a copy of any consolidated, combined or
unitary Tax Return filed by Seller or any of its Affiliates, or any related
material.
33
SECTION 4.03 Interim Financial Statements. Seller and the Company
shall provide to Purchaser, within thirty (30) days after the end of each
calendar month, monthly interim updates to the Company Financial Statements,
which shall be prepared on the same basis as the Company Financial Statements.
SECTION 4.04 Notice of Litigation. Seller and the Company shall each
notify Purchaser orally and in writing promptly (but in no event later than two
(2) Business Days and in any event prior to the Closing) upon such party having
Knowledge of any pending or threatened Litigation against the Company not
already disclosed in SECTION 2.10(a) of the Disclosure Letter.
SECTION 4.05 Approvals and Consents; Cooperation.
(a) Upon the terms and subject to the conditions set forth in this
Agreement, each of the parties (i) shall make promptly its filings, and
thereafter make any other required submissions, under the HSR Act with
respect to the transactions contemplated hereby and, if so determined by
Purchaser, join with Purchaser in requesting early termination of the
waiting period under the HSR Act in order that the Closing may proceed,
(ii) shall make promptly any required filings with the FAA and the DOT so
that the Company shall be able to operate the Business substantially as it
is currently conducted, and (iii) shall use commercially reasonable efforts
to obtain as promptly as practicable (A) all approvals of the FAA required
under applicable Law, if any, (B) all approvals of the DOT required under
applicable Law, if any, (C) all necessary actions or nonactions, waivers,
consents and approvals from Governmental Entities, including opposing any
attempt by any Governmental Entity to obtain a preliminary or permanent
injunction, or to affirm on appeal any such injunction, from the Federal
Trade Commission or a federal or state court to enjoin the consummation of
the transactions contemplated hereby under any antitrust Law, and provided
that Purchaser shall consider in good faith but shall not be required to
agree to any proposal to make any material modification to the business
transaction contemplated by this Agreement in order to obtain the agreement
of any Governmental Entity to permit the transactions contemplated hereby
to be consummated and (D) all necessary consents, approvals or waivers from
third parties and (iii) shall execute and deliver any additional
instruments necessary to consummate the transactions contemplated by, and
to fully carry out the purposes of, this Agreement.
(b) Seller and Purchaser each agrees that it will consult with the
other party with respect to obtaining all permits, consents, approvals and
authorizations of all third parties and Governmental Entities necessary or
advisable to consummate the transactions contemplated by this Agreement,
and each party will keep the other party apprised of the status of matters
relating to completion of the transactions contemplated by this Agreement.
SECTION 4.06 No Solicitation of Transactions.
(a) Seller and the Company agree that they and their respective
Representatives shall not, directly or indirectly, discuss, negotiate,
undertake, authorize, recommend, propose or enter into, either as the
proposed surviving, merged, acquiring or acquired corporation, any
transaction involving a merger, consolidation, business combination,
34
purchase or disposition of any amount of the assets of the Company or any
capital stock of the Company other than the transactions contemplated by
this Agreement (an "Acquisition Proposal"), (ii) facilitate, encourage,
solicit or initiate discussions, negotiations or submissions of proposals
or offers in respect of an Acquisition Proposal, (iii) furnish or cause to
be furnished, to any Person, any information concerning the business,
operations, properties or assets of the Company in connection with an
Acquisition Proposal, or (iv) otherwise cooperate in any way with, or
assist or participate in, facilitate or encourage, any effort or attempt by
any other Person to do or seek any of the foregoing.
(b) Seller and the Company shall notify Purchaser orally and in
writing promptly (but in no event later than two (2) Business Days) after
receipt of any proposal or offer from any Person other than Purchaser to
effect an Acquisition Proposal or any request for non-public information
relating to the Company or for access to the properties, books or records
of the Company by any Person other than Purchaser. Such notice shall
indicate the identity of the Person making the proposal or offer, or
intending to make a proposal or offer or requesting non-public information
or access to the books and records of the Company, the material terms of
any such proposal or offer, or modification or amendment to such proposal
or offer and copies of any written proposals or offers or amendments or
supplements thereto. Seller and the Company shall keep Purchaser informed,
on a current basis, of any material changes in the status and any material
changes or modifications in the material terms of any such proposal, offer,
indication or request.
(c) Seller and the Company shall (and shall cause their
Representatives to) immediately cease and cause to be terminated any
existing discussions or negotiations with any Persons (other than
Purchaser) conducted heretofore with respect to any of the foregoing.
Seller and the Company agree not to release any third party from the
confidentiality and standstill provisions of any agreement to which the
Company is a party.
(d) Notwithstanding any other provision of this Agreement to the
contrary, the provisions of this SECTION 4.06 and all rights and
obligations of the parties under or with respect to this SECTION 4.06 shall
terminate and be of no further force or effect as of and upon the
occurrence of the Closing.
SECTION 4.07 Employees; Employee Benefits.
(a) SECTION 4.07(a) of the Disclosure Letter sets forth a true,
correct and complete list of all individuals who are employed by the
Company on a full-time, permanent or part time basis principally at or with
respect to the Business of the Company as of the date of this Agreement
(such individuals, together with any individuals who may be added to such
list prior to the Closing Date in accordance with this SECTION 4.07(a) are
collectively referred to herein as the "Company Employees"). Any employee
35
of the Company who is not actively at work on the Closing Date due to a
short-term absence, whether paid or unpaid (e.g., vacation, holiday, jury
duty, FMLA, pregnancy, parental and bereavement leave, military leave,
scheduled time off, or illness or injury leave) in compliance with the
applicable policies of the Company (or a long-term absence covered under a
long-term disability Company Plan) or any employee of the Company who is
not actively at work on the Closing Date and is receiving worker's
compensation payments from the Company as required by applicable Law will
be deemed a "Company Employee." SECTION 4.07(a) of the Disclosure Letter
will set forth each Company Employee's name, position, hourly wage rate or
salary, total compensation (including incentive and similar compensation),
and the vacation time to which each Company Employee is entitled (for
purposes of SECTION 4.07(b)). Such list also identifies: (i) all Company
Employees covered by a severance plan, policy or arrangement and the amount
such Company Employee may be entitled to under such severance plan, policy
or arrangement; and (ii) any Company Employee who is currently on military
leave from the Company and whether any such Company Employee is entitled to
re-employment rights under the Uniformed Services Employment and
Reemployment Rights Act of 1994, as amended ("USERRA") or other applicable
Laws. Not later than three (3) Business Days prior to the Closing Date,
such list shall be updated to reflect any additional individuals who become
Company Employees in the ordinary course of the conduct of the Company's
business after the date of this Agreement and prior to the Closing Date.
(b) Seller and the Company shall take all necessary action to effect
the cessation of active participation by the Company Employees in the
Company Plans effectively as of the Closing Date, or such other date as
Seller and Purchaser may agree in the Transition Services Agreement. In
connection therewith, Seller shall timely provide all Company Employees
with any notices required under Code Section 4980F and shall, or shall
cause the Company to, give notice to all affected Company Employees that
their active participation in the Company Plans shall terminate on the
Closing Date, or such other date as may be set forth in a Transition
Services Agreement (the "Transition Date"). Subject to the provisions of a
Transition Services Agreement, beginning immediately after the Closing
Date, any (i) retirement plan, (ii) employee welfare benefit plan, (iii)
material fringe benefit including vacation pay or paid sick leave or (iv)
other retirement, bonus, severance or incentive plan or program that
Purchaser maintains, contributes to or participates in (collectively,
"Purchaser Employee Benefit Plans") shall be made available to each Company
Employee when, and on the same terms and conditions, such Purchaser
Employee Benefit Plan would be made available to an employee of Purchaser
or Purchaser's Affiliates who is similarly situated to the Company
Employee. Purchaser and Purchaser Employee Benefit Plans shall recognize
(A) each Company Employee's years of service prior to the Closing Date with
Seller and the Company (including service with any other employer that was
recognized by Seller or the Companies) for purposes of eligibility and
vesting, (B) the amount of annual vacation time for each Company Employee
under Purchaser's vacation policy to which a similarly situated employee of
Purchaser or Purchaser's Affiliates would be entitled and (C) such service
of each Company Employee for all other purposes for which such service is
either taken into account or recognized; provided, however, that such
service shall not be credited for purposes of benefit accrual or level of
benefits or to the extent it would result in a duplication of benefits.
Purchaser and Purchaser Employee Benefit Plans shall also recognize and
comply with all reemployment rights and service crediting provisions of
USERRA and other applicable Laws for purposes of this SECTION 4.07(b).
36
(c) Effective as of the Closing, the Company and Purchaser shall
assume and perform all of the obligations and liabilities of Seller under
the severance benefit plans and retention bonus award agreements of Seller
or the Company attached to SECTION 4.07(c) of the Disclosure Letter in
accordance with the terms and conditions of such plans and agreements.
Purchaser shall be responsible for and assume all liability for all notices
or payments due to any Company Employees, and all notices, payments, fines
or assessments due to any Governmental Entity, under any applicable Law
with respect to the employment, discharge or layoff of employees by the
Company or Purchaser after the Closing Date, including WARN and any rules
or regulations as have been issued in connection with the foregoing.
(d) Seller agrees to cooperate with Purchaser in connection with any
and all notifications, benefits and liabilities to any Company Employee and
Governmental Entities under WARN or any other applicable Law relating to
plant closings, mass layoffs, or employee separations or severance pay that
are first required to be provided or discharged prior to, on or after the
Closing Date.
(e) Purchaser agrees that upon the Transition Date, each Company
Employee shall be immediately eligible to participate, without any waiting
time, in a group health plan, as defined in Section 5000(b)(1) of the Code
of Purchaser or Purchaser's Affiliates ("Purchaser Medical Plan").
Purchaser agrees that the Purchaser Medical Plan shall (i) credit each
Company Employee towards the deductibles, coinsurance and maximum
out-of-pocket provisions imposed under such group health plan, for the plan
year during which the Closing Date occurs, with any applicable expenses
already incurred during the portion of the year preceding the Closing Date
under the applicable group health plans of Seller and (ii) waive any
preexisting condition restriction which was waived under the terms of any
analogous Company Plan. Seller shall be exclusively responsible for
complying with COBRA with respect to employees of the Company and their
eligible dependents by reason of such employee's termination of employment
or other qualifying event on or prior to the Closing Date, and Purchaser
shall be exclusively responsible for complying with COBRA with respect to
any such termination of employment or other qualifying event after the
Closing Date.
(f) Except as may be otherwise provided in this Agreement or in a
Transition Services Agreement, Seller shall retain all responsibility for
the Company Plans, and Seller and the Company Plans, as applicable, shall
be responsible and liable for benefits incurred or accrued under the
Company Plans in accordance with their terms and provisions by the Company
Employees prior to the Closing.
(g) Seller agrees to indemnify Purchaser and its affiliates,
directors, officers and employees with respect to any loss, liability,
damage, fine, expense, penalty, assessment (including but not limited to
funding deficiency assessments and Pension Benefit Guaranty Corporation
liability assessments), judgments, benefit claims, breach of fiduciary duty
damages or prohibited transaction penalties (including any and all costs
and fees relating to any legal proceedings in connection therewith and
including attorneys' fees, costs and expenses of enforcing this indemnity
against Seller) with respect to any Company Plan which is subject to Title
37
IV of ERISA and with respect to any other employee benefit plan, as such
term is described in Section 3(3) of ERISA which is subject to Title IV of
ERISA and which is not a Company Plan but which was sponsored, maintained
or contributed to by any of Seller or any corporation, trade, business or
entity under common control with Seller within the meaning of Section
414(b), (c) or (m) of the Code; provided, however, that nothing in this
SECTION 4.07(g) shall be construed or interpreted to relieve Purchaser of
any employee benefit liability or obligation specifically and expressly
assumed or agreed to by Purchaser pursuant to the terms of this Agreement.
The provisions set forth in this SECTION 4.07(g): (i) shall survive the
Closing hereunder until sixty (60) days after the expiration of the
applicable statute of limitations (including any valid extensions thereof,
whether automatic or permissive); (ii) shall not be subject to any of the
limitations on indemnification set forth in SECTION 7.02 of this Agreement;
and (iii) the indemnification provided for in this SECTION 4.07(g) shall be
the sole remedy for any claim in respect of the matters described in this
SECTION 4.07(g), and in the event of a conflict between the provisions of
this SECTION 4.07(g), on the one hand, and the provisions of ARTICLE VII
hereof, on the other, the provisions of this SECTION 4.07(g) shall control.
For the avoidance of doubt, any claim arising out of or relating to a
breach of a representation or warranty contained in SECTION 2.11 that is
not otherwise covered in this SECTION 4.07(g) shall be governed exclusively
by the provisions of ARTICLE VII, and not by this SECTION 4.07(g).
(h) Seller and any Affiliates (other than the Company) shall be solely
responsible for claims for workers' compensation that are incurred on or
prior to the Closing Date and Purchaser shall be solely responsible (or
cause the Company, if applicable, to assume and become solely responsible)
for claims for workers' compensation that are incurred with respect to any
Company Employee after the Closing Date.
(i) Seller agrees to furnish Purchaser with such information
concerning employees, employee payroll and employee benefit plans, subject
to confidentiality and privacy considerations, and to take all such other
action, as is necessary and appropriate to effectuate the transactions
contemplated hereby.
(j) Nothing herein expressed or implied shall confer upon any of the
employees of Seller, Purchaser, the Company, or any of their Affiliates,
any rights or remedies, including any right to benefits or employment, or
continued benefits or employment, for any specified period, of any nature
or kind whatsoever under or by reason of this Agreement.
SECTION 4.08 Tax Matters.
(a) Seller shall be responsible for, and shall defend, reimburse,
indemnify, and hold harmless the Purchaser Indemnitees against and in
respect of all Purchaser Damages that may be incurred by or imposed on any
Purchaser Indemnitee as a result of or arising out of: (A) all Taxes of the
Company for any taxable period ending on or prior to the Closing Date, (B)
if applicable law does not permit the Company to close its taxable year on
38
the Closing Date or in any case in which a Tax is assessed with respect to
a taxable period which includes the Closing Date (but does not begin or end
on that day) (a "Straddle Period"), all Taxes of the Company allocable to
the portion of such period ending on the Closing Date, as determined in
accordance with SECTION 4.08(d), (C) all Taxes imposed on any member of an
Affiliated Group of which the Company is or was a member on or prior to the
Closing Date by reason of the liability of the Company pursuant to Treasury
Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or
any analogous or similar provision under state, local or foreign Law), (D)
any Taxes directly resulting from the Section 338(h)(10) Election, (E)
Seller's failure to perform any covenant with respect to Taxes contained in
this Agreement or any other Transaction Documents and (F) a breach of any
representation or warranty contained in SECTION 2.12(r), other than, in the
case of each of subsections (A) through (E) above, the amount of Tax
actually taken into account as, and increasing, current liabilities in
calculating the Working Capital adjustment (excluding any provisions for
deferred Taxes established to reflect differences between the treatment of
items for accounting and income tax purposes).
(b) Purchaser shall be responsible for, and shall defend, reimburse,
indemnify, and hold harmless Seller Indemnitees against and in respect of,
all Seller Damages that may be incurred by or imposed on any Seller
Indemnitee as a result of or arising out of (except to the extent resulting
from a breach of any representation or warranty contained in Section 2.12):
(A) all Taxes of the Company for any taxable period beginning after the
Closing Date, (B) with respect to any Straddle Period, all Taxes of the
Company allocable to the post-Closing Date portion of such period, as
determined in accordance with SECTION 4.08(d), (C) the Purchaser's failure
to perform any covenant with respect to Taxes contained in this Agreement
or any other Transaction Documents and (D) all Taxes taken into account as
current liabilities in calculating the Working Capital adjustment
(excluding any provisions for deferred Taxes established to reflect
differences between the treatment of items for accounting and tax
purposes).
(c) Any Tax Return to be prepared pursuant to the provisions of this
SECTION 4.08(c) shall be prepared in a manner consistent with practices
followed in prior years with respect to similar Tax Returns, except for
changes required by changes in applicable Law or fact or as required to
make or reflect the Section 338(h)(10) Election. Purchaser shall not file
an amended Tax Return for the Company for any period ending on or before
the Closing Date without the consent of Seller, which consent may not be
unreasonably withheld. The following provisions shall govern the allocation
of responsibility as between Purchaser and Seller for certain Tax matters:
(i) Seller shall prepare or cause to be prepared and timely file
or cause to be timely filed (A) all Tax Returns for the Company
required to be filed (taking into account extensions) on or prior to
the Closing Date and (B) all Tax Returns of the Company that are filed
on a consolidated, combined or unitary basis with Seller or any
Affiliate of Seller for all periods ending on or before the Closing
Date regardless of when they are to be filed, including the
consolidated federal income Tax Return of the Seller Affiliated Group
for the taxable period which includes the Closing Date which return
shall include the Company for its taxable period ending on the Closing
Date. Seller will permit Purchaser to review and comment on the
portions of such Tax Returns (and underlying work papers) described in
the preceding sentence to the extent they relate to the Company prior
to filing. Seller shall pay the Taxes attributable to the Company with
respect to such periods.
39
(ii) Purchaser shall prepare or cause to be prepared and timely
file or cause to be timely filed all other Tax Returns of the Company
for Tax periods which begin before the Closing Date and end after the
Closing Date. Purchaser will permit Seller to review and comment on
each such Tax Return described in the preceding sentence prior to
filing, and Seller shall not be required to pay Purchaser or indemnify
any Purchaser Indemnitee for Taxes to the extent they result from
Purchaser's failure to make revisions to such Tax Returns that are
reasonably requested by Seller. Seller and Purchaser shall attempt in
good faith to resolve any disagreements regarding such Tax Returns
prior to the due date for filing. The determination whether the
request for such revisions was reasonable shall be determined by an
independent accounting firm chosen and retained by mutual agreement of
Seller and Purchaser, the fees and expenses of which shall be paid
one-half by Seller and one-half by Purchaser. Seller shall pay to
Purchaser within fifteen (15) days of filing any Tax Return required
to be filed by Purchaser pursuant to this SECTION 4.08(c)(ii), an
amount equal to the Taxes which relates to the portion of the Tax
period covered by such return that ends on the Closing Date and are
not reflected on the Closing Statement.
(d) To the extent permitted by applicable Law or administrative
practice, the taxable year of the Company shall end on and include the
Closing Date. If applicable Law or administrative practice does not permit
the Company to close its taxable year on the Closing Date, then with
respect to any Straddle Period, the determination of the Taxes for the
portion of the year or period ending on, and the portion of the year or
period beginning after, the Closing Date shall (i) in the case of any Taxes
based upon or related to income or gross receipts, be determined by
assuming that the taxable year or period ended on and included the Closing
Date and (ii) in the case of any Taxes other than Taxes based upon or
related to income or gross receipts, be deemed to be the amount of such
Taxes for the entire Straddle Period multiplied by a fraction the numerator
of which is the number of days in the portion of the Straddle Period ending
on the Closing Date or beginning after the Closing Date, as applicable, and
the denominator of which is the number of days in the entire Straddle
Period, except that exemptions, allowances or deductions that are
calculated on an annual basis and annual property Taxes shall be prorated
on the basis of the number of days in the annual period elapsed through the
Closing Date as compared to the number of days in the annual period
elapsing after the Closing Date.
(e) After the Closing Date, Seller shall grant to Purchaser (or its
designees) access at all reasonable times to all of the information, books,
and records relating to the Company within the possession of Seller
(including work papers and correspondence with taxing authorities), and
shall afford Purchaser (or its designees) the right (at Purchaser's
expense) to take extracts therefrom and to make copies thereof, to the
extent reasonably necessary to permit Purchaser (or its designees) to
40
prepare Tax Returns and to conduct negotiations with taxing authorities.
After the Closing Date, Purchaser shall grant or cause the Company to grant
to Seller (or its designees) access at all reasonable times to all of the
information, books and records relating to the Company within the
possession of Purchaser or the Company (including work papers and
correspondence with taxing authorities), and shall afford Seller (or its
designees) the right (at Seller's expense) to take extracts therefrom and
to make copies thereof, to the extent reasonably necessary to permit Seller
(or its designees) to prepare Tax Returns and to conduct negotiations with
taxing authorities.
(f) Seller shall be responsible for the payment of all excise, sales,
use, transfer (including real property transfer or gains), stamp,
documentary, filing, recordation and other similar Taxes, together with any
interest, additions or penalties with respect thereto and any interest in
respect of such additions or penalties, resulting directly from the
transactions contemplated by this Agreement.
(g) On or before the Closing Date, Seller shall ensure that no Tax
indemnity agreement, Tax allocation agreement or Tax sharing agreement with
respect to the Company is in force or effect as to the Company and that
there shall be no liability of the Company after the Closing Date under any
such agreement.
(h) Refunds of Taxes paid or payable with respect to Taxes
attributable to the Company shall be promptly paid as follows (or to the
extent payable but not paid due to offset against other Taxes shall be
promptly paid by the party receiving the benefit of the offset as follows):
(i) to Seller if attributable to Taxes with respect to any Tax year or
portion thereof ending on or before the Closing Date (or for any Tax year
beginning before and ending after the Closing Date to the extent allocable
(determined in a manner consistent with SECTION 4.08(d)) to the portion of
such period beginning before and ending on the Closing Date (other than if
attributable to the amount of Tax refunds or credits actually taken into
account as, and increasing, current assets in calculating the Working
Capital adjustment); and (ii) to Purchaser if attributable to Taxes with
respect to any Tax year or portion thereof beginning after the Closing Date
(or for any Tax year beginning before and ending after the Closing Date to
the extent allocable (determined in a manner consistent with SECTION
4.08(d)) to the portion of such period ending after the Closing Date).
(i) After the Closing Date, in the case of any audit, examination, or
other proceeding with respect to Taxes ("Tax Proceeding") for periods
ending on or before the Closing Date, Purchaser shall inform Seller within
ten (10) days of the receipt of any notice of such Tax Proceeding, and
shall afford Seller, at Seller's expense, the opportunity to control the
conduct of such Tax Proceeding. Purchaser shall execute or cause to be
executed powers of attorney or other documents necessary to enable Seller
to take all reasonable actions desired by Seller with respect to such Tax
Proceeding. Seller shall have the right to control any such Tax Proceeding
41
and to initiate any claim for refund, file any amended return or take any
other action which it deems appropriate with respect to such Taxes. After
the Closing Date, in the case of any Tax Proceeding for periods beginning
after the Closing Date, Seller shall inform Purchaser within ten (10) days
of the receipt of any notice of such Tax Proceeding, and shall afford
Purchaser, at Purchaser's expense, the opportunity to control the conduct
of such Tax Proceeding. Seller shall execute or cause to be executed powers
of attorney or other documents necessary to enable Purchaser to take all
reasonable actions desired by Purchaser with respect to such Tax
Proceeding. Purchaser shall have the right to control any such Tax
Proceeding and to initiate any claim for refund, file any amended return or
take any other action which it deems appropriate with respect to such
Taxes. Seller and Purchaser shall jointly control any Tax Proceeding for
periods beginning on or before the Closing Date and ending after the
Closing Date. The failure of any party to give the other party notice as
provided in this SECTION 4.08(i) shall not relieve such other party of its
obligations under this SECTION 4.08 except to the extent that such other
party is materially prejudiced by such failure to give notice.
(j) Seller shall join Purchaser in making a timely, irrevocable and
effective election under section 338(h)(10) of the Code (and any comparable
elections under state, local or foreign Tax law) (collectively, the
"Section 338(h)(10) Election") with respect to the acquisition of the
Shares by Purchaser pursuant to this Agreement. Prior to the due date for
filing IRS Form 8023 and any similar forms under applicable income Tax Law
(the "Forms"), Purchaser and Seller shall cause the Forms to be duly
executed by an authorized Person for Purchaser and Seller, respectively.
Purchaser shall duly and timely file the Forms as prescribed by Treasury
Regulation Section 1.338(h)(10)-1 or the corresponding provisions of
applicable income Tax Law. Purchaser and Seller agree that the Purchase
Price and the liabilities of the Company (plus other relevant items) shall
be allocated among the assets of the Company for Tax purposes in the manner
required under section 338 of the Code and the Treasury Regulations
promulgated thereunder. Purchaser and Seller shall endeavor in good faith
to reach timely agreement on such allocation; provided, however, that if
Purchaser and Seller have not reached agreement on such allocation by the
seventy-fifth (75th) Business Day after the Closing Date, then such
allocation shall be made in accordance with the appraisal of a recognized
appraisal firm chosen and retained by mutual agreement of Seller and
Purchaser, the fees and expenses of which shall be paid one-half by Seller
and one-half by Purchaser. Purchaser, Seller and the Company shall duly and
timely file the Forms and all Tax Returns (including IRS Form 8883) in a
manner consistent with the two preceding sentences and shall not take a
position before any Governmental Entity or otherwise inconsistent
therewith. Purchaser and Seller shall cooperate with each other in the
making of the Section 338(h)(10) Election.
(k) The provisions set forth in this SECTION 4.08: (A) shall survive
the Closing hereunder until sixty (60) days after the expiration of the
applicable statute of limitations (including any valid extensions thereof,
whether automatic or permissive); (B) shall not be subject to any of the
limitations on indemnification set forth in SECTION 7.02 of this Agreement;
and (C) the indemnification provided for in SECTION 4.08(a) and SECTION
4.08(b) shall be the sole remedy for any claim in respect of any Taxes
described in SECTION 4.08(a) or SECTION 4.08(b), as applicable, and in the
event of a conflict between the provisions of this SECTION 4.08, on the one
hand, and the provisions of ARTICLE VII hereof, on the other, the
provisions of this SECTION 4.08 shall control. For the avoidance of doubt,
any claim arising out of or relating to a breach of a representation or
warranty contained in SECTION 2.12 that is not otherwise covered in this
SECTION 4.08 shall be governed exclusively by the provisions of ARTICLE
VII, and not by this SECTION 4.08.
42
SECTION 4.09 Purchaser's Use of Name. Purchaser agrees that promptly
following the Closing Date, it will not use and will cause the Company to cease
using any reference to the names of Seller or any of Seller's Affiliates (other
than the Company) or any derivatives of such names. Purchaser further agrees
that promptly following the Closing Date, it will cause the Company to
terminate, in accordance with applicable Laws, any assumed name or similar
certificates or documents of the Company on file with any Governmental Entities
that would be inconsistent with the immediately preceding sentence.
SECTION 4.10 Director and Non-Employee Officer Resignations. At or
prior to the Closing, Seller and the Company shall have used their commercially
reasonable best efforts to cause the directors and non-employee officers of the
Company designated by Purchaser in writing to deliver written resignations from
their positions as directors or officers of the Company effective as of the
Closing.
SECTION 4.11 Transfer of Certain Assets.
(a) At any time, and from time to time, prior to the Closing, the
Company may transfer, and Seller may cause the Company to transfer, to
Seller or an Affiliate or Affiliates of Seller designated by Seller all or
any portion of the Company's cash.
(b) At or prior to the Closing, Seller will transfer or cause to be
transferred to the Company the assets identified in SECTION 4.11(b)of the
Disclosure Letter, which relate to the Business and are held by Affiliates
of Seller other than the Company.
(c) At or prior to the Closing, Seller may transfer or cause to be
transferred from the Company to Seller or an Affiliate or Affiliates of
Seller designated by Seller the assets identified in SECTION 4.11(c) of the
Disclosure Letter, which are held by the Company but which do not relate to
the Business.
SECTION 4.12 Commercially Reasonable Efforts. Each of Seller, the
Company and Purchaser shall cooperate, and use their respective commercially
reasonable efforts to take, or cause to be taken, all action, and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws to consummate the transactions contemplated by this Agreement.
SECTION 4.13 Public Announcements. Unless otherwise required by
applicable Law or stock exchange requirements, Seller and Purchaser shall
consult with each other before issuing any press release or otherwise making any
public statements with respect to this Agreement or any transaction contemplated
hereby, and neither Seller nor Purchaser shall issue any such press release or
make any such public statement without the other's prior express consent.
43
SECTION 4.14 Notification of Certain Matters. In the event that, at
any time prior to the Closing, any party hereto acquires Knowledge of any event,
condition, fact or circumstance that, if existing or known to such party or any
other party hereto as of the date hereof, would have been required to be set
forth or described in the Disclosure Letter or the Purchaser Disclosure Letter
or would otherwise have rendered any representation or warranty of any party
contained in ARTICLE II or ARTICLE III of this Agreement untrue, such party
shall promptly (but in any event prior to the Closing) provide written notice of
such event, condition, fact or circumstance to each other party, which notice
shall also state whether such party believes such event, condition, fact or
circumstance is, or if not cured within thirty (30) days after written notice of
same from the appropriate party, would become, a Terminating Seller Breach or a
Terminating Purchaser Breach. However, no such written notice shall be deemed to
cure any breach of any such representation or warranty, whether for purposes of
determining whether or not the conditions set forth in ARTICLE V have been
satisfied or otherwise, unless otherwise agreed in writing by all of the parties
hereto.
SECTION 4.15 Additional Agreements.
(a) At or before the Closing, Seller and the Company shall enter into
a master services agreement for the provision of flight services to Seller
by the Company, which master services agreement shall (i) have a term of
three (3) years commencing on the Closing Date, (ii) require Seller to use
the Company for its third party flight service needs during the term,
provided that the Company has suitable aircraft timely available and the
Company's prices for such services are competitive with prices available
from other third party flight service providers, (iii) cancelable by Seller
upon thirty (30) days written notice in the event of material
non-performance by the Company and (iv) otherwise be in form and substance
mutually agreeable to Seller and Purchaser. For the avoidance of doubt,
neither the failure by the Company to have suitable aircraft timely
available nor the failure of the Company's prices for such services to be
competitive with prices available from other third party flight service
providers shall be deemed to be "material non-performance by the Company"
for purposes of terminating the master services agreement; provided,
however, that in such events, Seller will have no obligation under the
master services agreement to obtain flight services from the Company so
long as such conditions exist.
(b) At or before the Closing, Seller shall cause Rowan Marine
Services, Inc., a wholly-owned subsidiary of Seller ("Rowan Marine"), to
enter into a sublease agreement with the Company pursuant to which the
Company will lease from Rowan Marine a portion of the leased premises held
by Rowan Marine in Fourchon, Louisiana pursuant to that certain Contract of
Lease dated November 28, 1988 (as amended and assigned to Rowan Marine),
including a hangar building and surrounding apron space, for a term of
three (3) years at a rental rate equal to $2,500 per month, which sublease
shall be in form and substance mutually agreeable to Seller and Purchaser.
(c) Purchaser and Seller agree to negotiate in good faith to attempt
to reach an agreement pursuant to which Purchaser or Purchaser's designee
may purchase from Seller, and Seller may sell to Purchaser or Purchaser's
designee, the 1981 Hatteras Sportfisherman boat designated as the "M/V
Salsa" and the 1998 Artigiana Battelli inflatable skiff located thereon
owned by Seller, on an as-is where-is basis, for a price and on other terms
and conditions as may be mutually agreed upon by Seller and Purchaser;
provided, however, that Purchaser shall have no obligation to purchase, and
Seller shall have no obligation to sell, such vessels by reason of this
SECTION 4.15(c) or any other provision of this Agreement.
44
SECTION 4.16 Merrill Field Leasehold Interest.
(a) In the event that prior to the Closing, the Company and the
University of Alaska ("U of A") shall not have completed the sale of
certain leasehold interests and improvements thereon held by the Company
and located at Merrill Field in Anchorage, Alaska (the "Merrill Field
Leasehold Interest"), contemplated by that certain letter agreement dated
April 1, 2004, by and between the Company and U of A (the "U of A Letter
Agreement"), Purchaser shall cause the Company to use commercially
reasonably efforts to complete such transaction in accordance with the
terms and conditions of such agreement as soon as reasonably practicable,
and promptly upon the completion of such transaction, Purchaser shall cause
the Company to pay to Seller all of the proceeds from such transaction,
less any applicable Taxes payable by the Company and any out-of-pocket
third party expenses incurred by the Company in respect of such
transaction. Additionally, if such transaction is consummated, Seller shall
indemnify and hold the Company and Purchaser harmless from and against all
indemnification obligations incurred by the Company under the U of A Letter
Agreement for environmental contamination of the leased premises existing
as of the date such transaction is consummated. Such indemnification shall
not be subject to the limitations set forth in SECTION 7.02(b)(ii), (iii),
(iv) or (v), nor shall any indemnification made pursuant to this SECTION
4.16(a) be considered or included in determining whether the Deductible
Amount has been reached or exceeded for purposes of any indemnification
under SECTION 7.02(a).
(b) In the event that the sale transaction contemplated by the U of A
Letter Agreement is not consummated within six (6) months after the
Closing, the Company shall, and Purchaser shall, at the Company's option,
cause the Company to either (i) pay to Seller an amount equal to the
appraised fair value of the Merrill Field Leasehold Interest, as determined
by an appraiser mutually acceptable to Seller on the one hand and the
Company and Purchaser on the other or (ii) convey the Merrill Field
Leasehold Interest to Seller at no cost to Seller, in either case except
for any out-of-pocket third party expenses or Taxes incurred by the Company
in respect of such transaction, which shall be reimbursed by Seller.
SECTION 4.17 Noncompetition. In consideration of a portion of the
Purchase Price to be paid to Seller hereunder, Seller shall not, for a period of
two (2) years after the Closing Date, in any manner, directly or indirectly
through one or more subsidiaries, engage or become engaged in, or assist any
other Person in engaging or becoming engaged in any business located or doing
business anywhere the Company is conducting or planning to conduct business as
of the Closing Date that is competitive with the businesses of the Company, as
conducted and planned to be conducted as of the Closing Date; provided, however,
that nothing in this SECTION 4.17 shall prohibit Seller or any of Seller's
45
Affiliates from being a stockholder in a mutual fund or a diversified investment
company or a passive owner of less than five percent (5%) of the outstanding
stock of any class of a corporation that is publicly traded and that competes
with the business of the Company, so long as Seller or such Affiliate has no
active participation in the business of such corporation. The parties hereto
specifically acknowledge and agree that the remedy at law for any breach of the
foregoing will be inadequate and that Purchaser, in addition to any other relief
available to it, shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage or posting any bond whatsoever.
The parties hereto agree that if any court of competent jurisdiction in a final
nonappealable judgment determines that the time period, geographical area,
business limitation or any other relevant feature of this SECTION 4.17 is
unreasonable, arbitrary or against public policy, then a lesser period of time,
geographical area, business limitation or other relevant feature which is
determined to be reasonable, not arbitrary and not against public policy may be
enforced against Seller.
SECTION 4.18 Indemnification For Certain Matters in Disclosure
Letter. Seller shall indemnify and hold the Company and Purchaser harmless from
and against all Purchaser Damages not covered by insurance arising out of or
resulting from (i) any of the matters identified in SECTION 2.10(a) of the
Disclosure Letter and (ii) any of the matters identified in Items 5 (Deadhorse),
6 (Yakutat), 7 (Anchorage) and 10 (Fairbanks) of SECTION 2.13(b) of the
Disclosure Letter. The provisions of this SECTION 4.18 shall survive the Closing
until sixty (60) days after the expiration of the applicable statute of
limitations related to such matters (including any valid extensions thereof,
whether automatic or permissive). The indemnification provided for in this
SECTION 4.18 shall not be subject to the limitations on indemnification set
forth in SECTION 7.02(b)(ii), (iii), (iv) or (v) of this Agreement, nor shall
any indemnification made pursuant to this SECTION 4.18 be considered or included
in determining whether the Deductible Amount has been reached or exceeded for
purposes of any indemnification under SECTION 7.02(a). The indemnification
provided for in this SECTION 4.18 shall be the sole remedy for any claim in
respect of the matters described in this SECTION 4.18, and in the event of a
conflict between the provisions of this SECTION 4.18, on the one hand, and the
provisions of ARTICLE VII hereof, on the other, the provisions of this SECTION
4.18 shall control.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE
SECTION 5.01 Conditions to Each Party's Obligation to Effect the
Transaction. The obligations of the parties hereto to consummate the
transactions contemplated hereby are subject to the satisfaction at or prior to
the Closing of the following conditions:
(a) any waiting period (and any extension thereof) applicable to the
consummation of the transactions contemplated hereby under the HSR Act
shall have expired or been terminated;
(b) no Governmental Entity or court of competent jurisdiction located
or having jurisdiction in the United States shall have enacted, issued,
promulgated, enforced or entered any applicable Law which is then in effect
and has the effect of restraining or making the transactions contemplated
hereby illegal or otherwise prohibiting consummation of such transactions;
and
46
(c) all permits, consents, approvals, authorizations, qualifications
and orders described in SECTION 2.05 and all consents and authorizations of
third parties required under any Material Contract in order to consummate
the transactions contemplated hereby (the "Closing Condition Consents")
shall have been obtained, and none of such Closing Condition Consents shall
have a Company Material Adverse Effect.
SECTION 5.02 Further Conditions to Seller's Obligations. The
obligation of Seller to consummate the transactions contemplated by this
Agreement is further subject to satisfaction or waiver at or prior to the
Closing Date of the following conditions:
(a) The representations and warranties of Purchaser contained in
ARTICLE III of this Agreement that are qualified as to materiality shall be
true and correct and those that are not so qualified shall be true and
correct in all material respects, as of the date of this Agreement and as
of the Closing Date as though such representations and warranties were made
at and as of such date, except for representations and warranties which
expressly relate to an earlier date (in which case such representations
that are qualified as to materiality shall be true and correct and those
that are not so qualified shall be true and correct in all material
respects as of such earlier date), and Seller shall have received a
certificate of Purchaser, executed on Purchaser's behalf by an authorized
executive officer of Purchaser, dated the Closing Date, certifying to such
effect;
(b) Purchaser shall have performed and complied in all material
respects with all agreements and obligations required by this Agreement to
be performed or complied with by it on or prior to the Closing, and Seller
shall have received a certificate of Purchaser, executed on Purchaser's
behalf by an authorized executive officer of Purchaser, dated the Closing
Date, certifying to such effect; and
(c) Purchaser shall have executed and delivered to Seller the
Transition Services Agreement, and such agreement shall be in full force
and effect.
SECTION 5.03 Further Conditions to Purchaser's Obligations. The
obligation of Purchaser to consummate the transactions contemplated by this
Agreement is further subject to the satisfaction or waiver at or prior to the
Closing Date of the following conditions:
(a) The representations and warranties of Seller contained in ARTICLE
II of this Agreement that are qualified as to materiality shall be true and
correct and those that are not so qualified shall be true and correct in
all material respects, as of the date of this Agreement and as of the
Closing Date as though such representations and warranties were made at and
as of such date, except for representations and warranties which expressly
relate to an earlier date (in which case such representations that are
qualified as to materiality shall be true and correct and those that are
not so qualified shall be true and correct in all material respects as of
such earlier date), and Purchaser shall have received a certificate of
Seller, executed on Seller's behalf by an authorized executive officer of
Seller, dated the Closing Date, certifying to such effect;
47
(b) Seller shall have performed and complied in all material respects
with all agreements and obligations required by this Agreement to be
performed or complied with by it on or prior to the Closing, and Purchaser
shall have received a certificate of Seller, executed on its behalf by an
authorized executive officer of Seller, dated the Closing Date, certifying
to such effect;
(c) From the date of the Company Financial Statements to the Closing
Date, there shall not have occurred any event that would reasonably be
expected to result in a Company Material Adverse Effect;
(d) Seller shall have executed and delivered to Purchaser the
Transition Services Agreement, and such agreement shall be in full force
and effect;
(e) Purchaser shall have received the written resignation of each of
the directors and non-employee officers of the Company;
(f) Seller shall have delivered to Purchaser an affidavit of
non-foreign status that complies with Section 1445 of the Code; and
(g) In connection with the notification by Purchaser and the Company
to the FAA and the DOT of the transactions contemplated by this Agreement,
Purchaser or the Company shall not have been advised by the FAA or the DOT
of any issues that could reasonably be expected to materially and adversely
affect the ability of the Company to operate the Business substantially as
it is currently conducted.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
SECTION 6.01 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing, notwithstanding any requisite approval and adoption of this Agreement
and the transactions contemplated hereby, as follows:
(a) by mutual written consent of Seller and Purchaser;
(b) by either Seller or Purchaser, if the Closing shall not have
occurred on or before December 31, 2004 (the "Termination Date"); provided,
however, that the right to terminate this Agreement under this SECTION
6.01(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before the Termination Date;
(c) by either Seller or Purchaser, if any court of competent
jurisdiction in the United States or any other Governmental Entity, based
otherwise than on any applicable antitrust Law, (i) shall have issued an
Order or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and
such Order or other action shall have become final and nonappealable or
(ii) shall have failed to issue an Order or to take any other action
necessary to fulfill the conditions to the Closing, and such denial of a
request to issue such Order or take such other action shall have become
final and nonappealable;
48
(d) by Purchaser by written notice to Seller upon a material breach of
any representation, warranty, covenant or agreement on the part of Seller
set forth in this Agreement, which would give rise to a failure of a
condition set forth in SECTION 5.01 or SECTION 5.03 and is incapable of
being cured or, if capable of being cured, shall not have been cured within
thirty (30) days after written notice of such breach is given to Seller by
Purchaser (a "Terminating Seller Breach");
(e) by Seller by written notice to Purchaser upon a material breach of
any representation, warranty, covenant or agreement on the part of
Purchaser set forth in this Agreement which would give rise to a failure of
a condition set forth in SECTION 5.01 or SECTION 5.02 and is incapable of
being cured or, if capable of being cured, shall not have been cured within
thirty (30) days after written notice of such breach is given to Purchaser
by Seller (a "Terminating Purchaser Breach"); and
(f) by Purchaser pursuant to SECTION 6.06(c).
SECTION 6.02 Effect of Termination. In the event of termination of
this Agreement pursuant to SECTION 6.01, this Agreement shall forthwith become
void and, except as provided in SECTION 6.05, there shall be no liability under
this Agreement on the part of Seller or Purchaser, or any of their respective
officers or directors, and all rights and obligations of each party hereto shall
cease, except for those set forth in this SECTION 6.02 and in SECTION 6.05,
SECTION 8.05, and SECTION 8.06; provided, however, that nothing herein shall
relieve any party from liability for any breach of this Agreement; and provided
further, that if this Agreement is terminated by Purchaser pursuant to SECTION
6.01(d), Seller, in addition to any other liabilities arising hereunder, shall
be liable for and shall pay within five (5) Business Days after receipt by
Seller of a written invoice therefor the cost of all filing and other fees paid
by Purchaser in respect of the transactions contemplated by this Agreement up to
a maximum aggregate amount of $500,000.
SECTION 6.03 Amendment. This Agreement may be amended by the parties
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Closing. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
SECTION 6.04 Waiver. At any time prior to the Closing, any party
hereto may (a) extend the time for the performance of any obligation or other
act of any other party hereto, (b) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto and
(c) waive compliance with any agreement or condition contained herein. Any such
extension or waiver shall be valid if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
SECTION 6.05 Fees and Expenses. Except as set forth in this SECTION
6.05, all expenses incurred in connection with this Agreement shall be paid by
the party incurring such expenses, whether or not the transactions contemplated
hereby are consummated, except that Purchaser shall pay all filing fees incurred
in connection with the premerger notification requirements of the HSR Act.
49
"Expenses" as used in this Agreement shall include all reasonable out-of-pocket
expenses (including all fees and expenses of counsel, accountants, investment
bankers, experts and consultants to a party hereto and its Affiliates) incurred
by a party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution or performance of this Agreement.
SECTION 6.06 Risk of Loss.
(a) In the event of the total destruction of any Aircraft prior to
Closing, the Company shall promptly notify Purchaser of such destruction,
and the Purchase Price shall be reduced by an amount equal to the insured
value of such Aircraft as set forth in SECTION 2.17(a) of the Disclosure
Letter. In such event, Seller shall be entitled to receive and retain all
insurance proceeds, if any, received by Seller or the Company in respect of
the destruction of such Aircraft, and at Closing the Company shall assign
to Seller any rights the Company has to receive any insurance proceeds or
payments with respect to such destruction. Except as provided in SECTION
6.06(c), the Closing shall occur pursuant to SECTION 1.03 hereof without
delay.
(b) In the event of the damage of any Aircraft or Related Equipment
prior to Closing that does not constitute a total destruction or loss of
the Aircraft in accordance SECTION 6.06(a) or the damage or destruction of
any other asset or property of the Company prior to Closing, the Company
shall promptly notify Purchaser of such damage or destruction, and Seller
shall, at Seller's option, either (i) repair such Aircraft or Related
Equipment or other asset or property and restore it to the condition it was
in immediately prior to such damage or destruction at Seller's sole cost
and expense or (ii) reduce the Purchase Price by an amount equal to the net
insurance proceeds, if any, received by Seller or the Company on or prior
to the Closing in respect of such damage or destruction, plus the amount of
any deductible or self retention amount applicable to such damage or
destruction and at the Closing assign to the Company any rights Seller has
to receive any additional insurance proceeds or payments with respect to
such damage or destruction. In the event that Seller elects to repair such
damage or destruction, Seller shall be entitled to receive and retain all
insurance proceeds, if any, received by Seller or the Company in respect of
such damage or destruction, and at the Closing the Company shall assign to
Seller any rights the Company has to receive any additional insurance
proceeds or payments with respect to such damage or destruction. Except as
provided in SECTION 6.06(c), the Closing shall, subject to the conditions
set forth in ARTICLE V hereof, occur pursuant to SECTION 1.03 hereof
without delay.
(c) Notwithstanding the provisions of SECTION 6.06(a) or SECTION
6.06(b), Seller and Purchaser agree that if the damage or destruction
covered by those provisions is such that Seller or Purchaser in good faith
reasonably expects the amount thereof to be in excess of $40,000,000, then
Purchaser may terminate this Agreement. Unless terminated as hereinbefore
provided in this SECTION 6.06(c), the Stock Purchase shall otherwise be
consummated, subject to the conditions set forth in ARTICLE V hereof, as
though such destruction or damage had not occurred.
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(d) If, prior to the Closing Date, all or any significant portion (as
defined in this SECTION 6.06(d)) of the Company Properties is taken by
eminent domain (or is the subject of a pending taking which has not yet
been consummated), Seller shall notify Purchaser of such fact promptly
after obtaining Knowledge thereof, and Purchaser shall have the right to
terminate this Agreement by giving notice to Seller not later than ten (10)
days after the giving of Seller's notice. For the purposes hereof, a
"significant portion" of the Company Properties shall mean such a portion
of the Company Properties as shall be necessary, as reasonably determined
by Purchaser, for the operation of the Business in the ordinary course,
without causing a Company Material Adverse Effect. If Purchaser does not
elect to terminate this Agreement as aforesaid, or if an "insignificant
portion" (i.e., anything other than a significant portion) of the Company
Properties is taken by eminent domain (or becomes the subject of a pending
taking), there shall be no abatement of the Purchase Price, and Seller
shall assign to the Company (without recourse) at the Closing the rights of
Seller to the awards, if any, for the taking, and the Company shall be
entitled to receive and keep all awards for the taking of the Company
Properties or such portion thereof.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
SECTION 7.01 Survival Periods. Subject to the immediately following
sentence, all representations and warranties of Purchaser and Seller contained
in this Agreement shall survive the Closing until the date that is twelve (12)
months after the Closing Date and all representations and warranties of Seller
contained in this Agreement, to the extent applicable or related to the Fixed
Wing Business (as defined in SECTION 8.10(g)), shall survive the Closing until
the date that is twenty-four (24) months after the Closing Date, except that (i)
the representations and warranties of Seller contained in SECTION 2.01, SECTION
2.04, SECTION 2.11, SECTION 2.12, and SECTION 2.13 and the representations and
warranties of Purchaser contained in SECTION 3.01 and SECTION 3.02 shall each
survive the Closing until ninety (90) days following the expiration of the
applicable statute of limitations and (ii) the representations and warranties of
Seller contained in SECTION 2.03 and SECTION 2.24 and the representations and
warranties of Purchaser contained in SECTION 3.07 shall survive indefinitely,
with respect to the particular matter that is the subject matter of each thereof
(each of the foregoing periods as to the representations and warranties to which
they apply, the "Survival Period"); provided, however, that any obligations to
indemnify and hold harmless shall not terminate with respect to any Purchaser
Damages or Seller Damages, as the case may be, as to which the Person to be
indemnified shall have given notice (stating in reasonable detail the basis of
the claim for indemnification) to the indemnifying party in accordance with
SECTION 7.02, SECTION 7.03 or SECTION 7.04 of this Agreement before the
termination of the applicable Survival Period. The representations and
warranties of the Company shall terminate as of the Closing, and Seller and the
Company each hereby releases the other from all claims arising out of the
transactions contemplated by this Agreement based on indemnification.
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SECTION 7.02 Seller's Agreement to Indemnify.
(a) Subject to the terms and conditions set forth in this Agreement,
from and after the Closing, Seller shall indemnify and hold harmless
Purchaser and its directors, officers, employees, Affiliates, controlling
persons, agents and representatives and their successors and assigns
(collectively, the "Purchaser Indemnitees") from and against all liability,
demands, claims, actions or causes of action, assessments, losses, damages,
costs and expenses (including reasonable attorneys' fees and expenses)
(collectively, "Purchaser Damages") asserted against or incurred by any
Purchaser Indemnitee as a result of or arising out of (i) a breach of any
representation or warranty contained in ARTICLE II of this Agreement (other
than a representation or warranty contained in SECTION 2.12(r) the
indemnification for which shall be solely and exclusively governed by
SECTION 4.08) (each of which, for purposes of this SECTION 7.02(a), shall
be deemed to have been made as of the date hereof and as of the Closing
Date, except for those which expressly relate to an earlier date, each of
which shall be deemed to have been made as of such earlier date) or (ii)
any breach of any of the covenants and agreements of Seller or the Company
contained in this Agreement, including any agreement of Seller to indemnify
Purchaser with respect to specific matters contained elsewhere in this
Agreement (other than a covenant or agreement relating to Taxes and set
forth in SECTION 4.08 the indemnification for which shall be solely and
exclusively governed by SECTION 4.08).
(b) Seller's obligation to indemnify the Purchaser Indemnitees for
Purchaser Damages under SECTION 7.02(a) of this Agreement is subject to the
following limitations:
(i) Seller shall have no obligation under SECTION 7.02(a) to
indemnify any Purchaser Indemnitee for any Purchaser Damages resulting
from or arising out of any Terminating Seller Breach occurring after
the date hereof but prior to the Closing of which any party hereto has
provided written notice to the other parties in accordance with
SECTION 4.14 prior to the Closing.
(ii) No indemnification shall be made by Seller under SECTION
7.02(a) unless the aggregate amount of all Purchaser Damages exceeds
$1,000,000 (the "Deductible Amount") and, in such event,
indemnification shall be made by Seller only to the extent that the
aggregate amount of Purchaser Damages exceeds the Deductible Amount;
provided, however, that, the limitations of this SECTION 7.02(b)(ii)
shall not apply with respect to any Purchaser Damages arising out of
or resulting from breaches of any representation or warranty contained
in SECTION 2.03, SECTION 2.12, SECTION 2.15(a) or SECTION 2.24, and,
subject to SECTION 7.02(b)(iii), SECTION 7.02(b)(iv) and SECTION
7.02(b)(v), indemnification shall be made by Seller for all Purchaser
Damages arising out of or resulting from the breach of any such
representation or warranty;
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(iii) Subject to SECTION 7.02(b)(iv) and SECTION 7.02(b)(v), in
no event shall Seller's aggregate obligation to indemnify the
Purchaser Indemnitees for Fixed Wing Claims (as defined in SECTION
8.10(h)) of which Seller first receives notice from the applicable
Purchaser Indemnitees after the first anniversary of the Closing Date
but on or before the second anniversary of the Closing Date exceed
$11,000,000, or in the case of Fixed Wing Claims arising out of or
resulting from breaches of any representation or warranty contained in
SECTION 2.03, SECTION 2.11, SECTION 2.12, SECTION 2.13, SECTION
2.15(a) or SECTION 2.24 or any of the covenants or agreements of
Seller or the Company contained in SECTION 4.07, the Purchase Price,
except in the event that such obligation to indemnify arises from the
fraudulent act or omission of Seller;
(iv) In no event shall Seller's aggregate obligation to indemnify
the Purchaser Indemnitees for Purchaser Damages under SECTION 7.02(a)
exceed $40,000,000, or in the case of Purchaser Damages arising out of
or resulting from breaches of any representation or warranty contained
in SECTION 2.03, SECTION 2.11, SECTION 2.12, SECTION 2.13, SECTION
2.15(a) or SECTION 2.24 or any of the covenants or agreements of
Seller or the Company contained in SECTION 4.07, the Purchase Price,
except in the event that such obligation to indemnify arises from the
fraudulent act or omission of Seller;
(v) In no event shall Seller's aggregate obligation to indemnify
the Purchaser Indemnitees under SECTION 7.02(a) exceed the Purchase
Price, except in the event that such obligation to indemnify arises
from the fraudulent act or omission of Seller;
(vi) The amount of any Purchaser Damages shall be reduced by any
amount actually received by a Purchaser Indemnitee with respect to
such Purchaser Damages under any insurance coverage or from any other
party alleged to be responsible for such Purchaser Damages. If a
Purchaser Indemnitee receives an amount under insurance coverage or
from any such other party with respect to Purchaser Damages at any
time subsequent to any indemnification provided by Seller under this
SECTION 7.02, then such Purchaser Indemnitee shall promptly (but in no
event more than ten (10) Business Days after receipt of such amount)
reimburse Seller for amounts paid by Seller to the Purchaser
Indemnitee in connection with providing such indemnification up to
such amount received by the Purchaser Indemnitee; and
(vii) Seller shall be obligated to indemnify the Purchaser
Indemnitees under SECTION 7.02(a) only for those claims giving rise to
Purchaser Damages with respect to which the Purchaser Indemnitees have
given Seller written notice prior to the end of the applicable
Survival Period. Any written notice delivered by a Purchaser
Indemnitee to Seller with respect to Purchaser Damages shall set forth
with as much specificity as is reasonably practicable the basis of the
claim for Purchaser Damages, whether the Purchaser Indemnitee believes
the claim to be a Fixed-Wing Claim and, to the extent reasonably
practicable, a reasonable estimate of the amount of such claim.
Subject to the procedures with respect to Claims under SECTION 7.04
hereof, if such written notice (or an amended notice) states the
53
amount of Purchaser Damages claimed and Seller notifies the Purchaser
Indemnitee that Seller does not dispute the claim described in such
notice or fails to notify the Purchaser Indemnitee within twenty (20)
Business Days after delivery of such notice by the Purchaser
Indemnitee whether Seller disputes the claim described in such notice,
Purchaser Damages in the amount specified in such notice will be
deemed admitted by Seller, and Seller will pay the amount of such
Purchaser Damages to the Purchaser Indemnitee. If a written notice
does not state the amount of Purchaser Damages claimed, such omission
will not preclude the Purchaser Indemnitee from recovering from Seller
the amount of Purchaser Damages with respect to the claim described in
such notice upon final determination thereof.
(c) Seller will pay the amount of any Purchaser Damages to the
applicable Purchaser Indemnitee within five (5) Business Days following the
determination of Seller's liability for and the amount of Purchaser Damages
(whether such determination is made pursuant to the procedures set forth in
this ARTICLE VII, by agreement between the Purchaser Indemnitee and Seller
or by final adjudication in accordance with the terms of this Agreement).
SECTION 7.03 Purchaser's Agreement to Indemnify.
(a) Subject to the terms and conditions set forth in this Agreement,
from and after the Closing, Purchaser shall indemnify and hold harmless
Seller and Seller's directors, officers, employees, Affiliates, controlling
persons, agents and representatives and their successors and assigns
(collectively, the "Seller Indemnitees") from and against all liability,
demands, claims, actions or causes of action, assessments, losses, damages,
costs and expenses (including reasonable attorneys' fees and expenses)
(collectively, "Seller Damages") asserted against or incurred by any Seller
Indemnitee as a result of or arising out of (i) a breach of any
representation or warranty contained in ARTICLE III of this Agreement (each
of which, for purposes of this SECTION 7.03(a), shall be deemed to have
been made as of the date hereof and as of the Closing Date, except for
those which expressly relate to an earlier date, each of which shall be
deemed to have been made as of such earlier date) or (ii) any breach of any
of the covenants or agreements of Purchaser contained in this Agreement,
including any agreement of Purchaser to indemnify Seller with respect to
specific matters contained elsewhere in this Agreement (other than a
covenant or agreement relating to Taxes and set forth in SECTION 4.08 the
indemnification for which shall be solely and exclusively governed by
SECTION 4.08)).
(b) Purchaser's obligation to indemnify the Seller Indemnitees under
SECTION 7.03(a) of this Agreement is subject to the following limitations:
(i) Purchaser shall have no obligation under SECTION 7.03(a) to
indemnify any Seller Indemnitee for any Seller Damages resulting from
or arising out of any Terminating Purchaser Breach occurring after the
date hereof but prior to the Closing of which any party hereto has
provided written notice to the other parties in accordance with
SECTION 4.14 prior to the Closing.
54
(ii) The amount of any Seller Damages shall be reduced by any
amount actually received by a Seller Indemnitee with respect to such
Seller Damages under any insurance coverage or from any other party
alleged to be responsible for such Seller Damages. If a Seller
Indemnitee receives any amount under insurance coverage or from any
such other party with respect to Seller Damages at any time subsequent
to any indemnification provided by Purchaser under this SECTION 7.03,
then such Seller Indemnitee shall promptly (but in no event more than
ten (10) Business Days after receipt of such amount) reimburse
Purchaser for amounts paid by Purchaser to the Seller Indemnitee in
connection with providing such indemnification up to such amount
received by the Seller Indemnitee; and
(iii) Purchaser shall be obligated to indemnify the Seller
Indemnitees under SECTION 7.03(a) only for those claims giving rise to
Seller Damages with respect to which the Seller Indemnitees have given
Purchaser written notice prior to the end of the Survival Period (to
the extent the Survival Period is applicable to such claim). Any
written notice delivered by a Seller Indemnitee to Purchaser with
respect to Seller Damages shall set forth with as much specificity as
is reasonably practicable the basis of the claim for Seller Damages
and, to the extent reasonably practicable, a reasonable estimate of
the amount of such claim. Subject to the procedures with respect to
Claims under SECTION 7.04 hereof, if such written notice (or an
amended notice) states the amount of Seller Damages claimed and
Purchaser notifies the Seller Indemnitee that Purchaser does not
dispute the claim described in such notice or fails to notify the
Seller Indemnitee within twenty (20) Business Days after delivery of
such notice by the Seller Indemnitee whether Purchaser disputes the
claim described in such notice, Seller Damages in the amount specified
in such notice will be deemed admitted by Purchaser, and Purchaser
will pay the amount of such Seller Damages to the Seller Indemnitee.
If a written notice does not state the amount of Seller Damages
claimed, such omission will not preclude the Seller Indemnitee from
recovering from Purchaser the amount of Seller Damages with respect to
the claim described in such notice upon final determination thereof.
(c) Purchaser will pay the amount of any Seller Damages to the
applicable Seller Indemnitee within five (5) Business Days following the
determination of Purchaser's liability for and the amount of Seller Damages
(whether such determination is made pursuant to the procedures set forth in
this ARTICLE VII, by agreement between Purchaser and the Seller Indemnitee
or by final adjudication in accordance with the terms of this Agreement).
SECTION 7.04 Indemnification Procedures For Third Party Claims. The
obligations of Seller to indemnify the Purchaser Indemnitees under SECTION 7.02
of this Agreement with respect to Purchaser Damages and the obligations of
Purchaser to indemnify the Seller Indemnitees under SECTION 7.03 of this
Agreement with respect to Seller Damages, in either case resulting from the
assertion of liability by third parties (each, as the case may be, a "Claim"),
will be subject to the following terms and conditions:
55
(a) Any party against whom any Claim is asserted will give the
indemnifying party written notice of any such Claim promptly after learning
of such Claim, and the indemnifying party may, at its option, undertake the
defense of such Claim by representatives of its own choosing. Failure to
give prompt notice of a Claim under this Agreement shall not affect the
indemnifying party's obligations under this ARTICLE VII, except to the
extent the indemnifying party is materially prejudiced by such failure to
give prompt notice. If the indemnifying party, within thirty (30) days
after notice of any such Claim, or such shorter period as is reasonably
required, fails to assume or diligently pursue the defense of such Claim,
the Purchaser Indemnitee or the Seller Indemnitee, as the case may be,
against whom such Claim has been made will (upon further notice to the
indemnifying party) have the right to undertake the defense, compromise or
settlement of such Claim on behalf of and for the account and risk, and at
the expense, of the indemnifying party, subject to the right of the
indemnifying party to assume the defense of such Claim at any time prior to
settlement, compromise or final determination of such Claim. If the
indemnifying party assumes such defense, the Purchaser Indemnitee or the
Seller Indemnitee, as the case may be, shall have the right to participate
in the defense thereof and to employ counsel, at its own expense (which
expense shall not constitute a Purchaser Damage or Seller Damage, as
applicable, unless the Purchaser Indemnitee or the Seller Indemnitee, as
the case may be, reasonably determines that the indemnifying party is not
adequately representing or, because of a conflict of interest, may not
adequately represent, any interests of the Purchaser Indemnitee or the
Seller Indemnitee, as the case may be, and only to the extent that such
expenses are reasonable), separate from the counsel employed by the
Purchaser Indemnitee or the Seller Indemnitee, as the case may be, it being
understood, however, that the indemnifying party shall control such
defense. The indemnifying party shall be liable for the fees and expenses
of counsel employed by the Purchaser Indemnitee or the Seller Indemnitee,
as the case may be, for any period during which the indemnifying party has
not assumed the defense thereof; provided, however, that the indemnifying
party shall not be required to pay for more than one such counsel for all
indemnified parties in connection with any Claim.
(b) Anything in this SECTION 7.04 to the contrary notwithstanding, the
indemnifying party shall not enter into any settlement or compromise of any
action, suit or proceeding or consent to the entry of any judgment (i) that
does not include as an unconditional term thereof the delivery by the
claimant or plaintiff to the Seller Indemnitee or the Purchaser Indemnitee,
as the case may be, of a written release from all liability in respect of
such action, suit or proceeding or (ii) for other than monetary damages to
be borne by the indemnifying party, without the prior written consent of
the Seller Indemnitee or the Purchaser Indemnitee, as the case may be,
which consent shall not be unreasonably withheld.
(c) The indemnifying party and the Seller Indemnitee or Purchaser
Indemnitee, as applicable, shall provide each other such cooperation as may
be reasonably requested and at the expense of the indemnifying party in all
aspects of any investigation, defense, pretrial activities, trial,
compromise, settlement or discharge of any claim in respect of which
indemnity is sought under this ARTICLE VII, including, but not limited to,
by providing the indemnifying party with reasonable access to employees and
officers (including as witnesses) and other information.
56
SECTION 7.05 No Setoff. Neither Purchaser nor Seller shall have any
right to setoff any Purchaser Damages or Seller Damages, respectively, against
any payments to be made by either of them under this Agreement.
SECTION 7.06 No Duplication. Any liability for indemnification under
this Agreement shall be determined without duplication of recovery by reason of
the state of facts (i) giving rise to such liability constituting a breach of
more than one representation, warranty, covenant or agreement or (ii) taken into
account in determining any adjustment to the Purchase Price under SECTION
1.09(b).
SECTION 7.07 Qualifications for Materiality. Notwithstanding any
provision in this Agreement to the contrary, the indemnification obligations of
Seller and Purchaser under this ARTICLE VII in connection with a breach of any
representation, warranty, covenant or other agreement contained in this
Agreement shall be determined taking into account any qualifications, provisions
or exceptions for "material", "materiality," "in all material respects" (or
correlative meanings) or "Company Material Adverse Effect" set forth in such
representation, warranty, covenant or other agreement, but for purposes of
determining any Seller Damages or Purchaser Damages, as the case may be, to be
indemnified, such representations, warranties, covenants or other agreements
shall be deemed to have been made or given for the purposes of this ARTICLE VII
as though there were no such qualification, provision or exception. The parties
acknowledge that the failure to disclose a matter in the Disclosure Letter or
Purchaser Disclosure Letter due to the materiality thresholds set forth in any
such representation, warranty, covenant or other agreement shall not give rise
to Purchaser Damages or Seller Damages, as the case may be.
SECTION 7.08 Sole Remedy.
(a) After the Closing, the parties agree that the sole and exclusive
remedy of any party to this Agreement or their respective Affiliates with
respect to this Agreement, the events giving rise to this Agreement and the
transactions provided for in this Agreement, shall be limited to the
adjustment and indemnification provisions set forth in this ARTICLE VII and
elsewhere in this Agreement, and in furtherance of the foregoing, each of
the parties, on behalf of itself and its Affiliates, waives and releases
the other party to this Agreement (and such other party's Affiliates) from,
to the fullest extent permitted under applicable Law, any and all rights,
claims and causes of action it or its Affiliates may have against the other
party to this Agreement, except as provided by this Agreement.
Notwithstanding the foregoing, nothing in this Agreement will prevent any
party from bringing an action based upon allegations of fraud by the other
party in connection with this Agreement. In the event such action is
brought, the prevailing party's attorneys' fees and costs will be paid by
the non-prevailing party.
(b) The parties intend that, even though indemnification and other
obligations appear in various sections and articles of this Agreement, the
indemnification procedures and, to the extent applicable, the limitations
contained in this ARTICLE VII shall apply to all indemnity and other
obligations of the parties under this Agreement, except to the extent
expressly excluded in this ARTICLE VII and except with respect to any
indemnity or other obligation contained in SECTION 4.07(g), SECTION 4.08 or
SECTION 4.18.
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SECTION 7.09 No Special Damages. IN NO EVENT SHALL ANY PARTY BE
LIABLE UNDER THIS ARTICLE VII, SECTION 4.07(g), SECTION 4.08, SECTION 4.18 OR
OTHERWISE IN RESPECT OF THIS AGREEMENT FOR EXEMPLARY, SPECIAL, PUNITIVE,
INDIRECT, REMOTE, SPECULATIVE, INCIDENTAL OR CONSEQUENTIAL DAMAGES, EXCEPT TO
THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES TO AN UNAFFILIATED THIRD PARTY IN
CONNECTION WITH A THIRD PARTY CLAIM, IN WHICH EVENT SUCH DAMAGES SHALL BE
RECOVERABLE.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.01 Notices.
(a) All notices and other communications given or made pursuant to
this Agreement shall be in writing and shall be sent by an overnight
courier service that provides proof of receipt, mailed by registered or
certified mail (postage prepaid, return receipt requested) or telecopied to
the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
if to the Purchaser:
SEACOR Holdings Inc.
460 Park Avenue
12th Floor
New York, NY 10022
Attention: President
Fax No.: (212) 582-8522
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153-0119
Attention: Dennis Barsky and David Zeltner
Fax No.: (212) 833-3038
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if to Seller or the Company:
Rowan Companies, Inc.
2800 Post Oak Boulevard
Suite 5450
Houston, Texas 77056-6127
Attention: R.G. Croyle
Fax No.: (713) 960-7509
with a copy to:
Andrews Kurth LLP
600 Travis, Suite 4200
Houston, Texas 77002
Attention: Robert V. Jewell
Fax No.: (713) 220-4285
(b) If this Agreement provides for a designated period after a notice
within which to perform an act, such period shall commence on the date of
receipt or refusal of the notice.
(c) If this Agreement requires the exercise of a right by notice on or
before a certain date or within a designated period, such right shall be
deemed exercised on the date of delivery to the courier service,
telecopying or mailing of the notice pursuant to which such right is
exercised.
(d) Notices of changes of address shall be effective only upon
receipt.
SECTION 8.02 Severability. The provisions of this Agreement shall be
severable, and if any provision of this Agreement is determined by a court of
competent jurisdiction to be invalid, illegal or incapable of being enforced
under applicable Law or public policy, such provision shall be deemed severed
from this Agreement, and all other provisions of this Agreement shall
nevertheless remain in full force and effect. Upon such determination that any
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the fullest extent possible.
SECTION 8.03 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
(whether by operation of applicable Law or otherwise) without the prior written
consent of the other party. Notwithstanding the foregoing, the parties agree
that Purchaser may assign all of its rights and obligations in, to and under
this Agreement to a wholly-owned direct or indirect subsidiary of Purchaser;
provided, however, that in the event of such assignment by Purchaser, Purchaser
shall remain responsible and liable for all of the obligations and liabilities
of Purchaser under this Agreement.
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SECTION 8.04 Interpretation.
(a) When a reference is made in this Agreement to Sections, Exhibits
or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The table of
contents, glossary of defined terms and headings contained in this
Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation." The phrases
"the date of this Agreement" and "the date hereof" shall be deemed to refer
to the date in the first paragraph of this Agreement.
(b) The parties hereto acknowledge that certain matters set forth in
the applicable Disclosure Letter are included for informational purposes
only, notwithstanding the fact that, because they do not rise above
applicable materiality thresholds or otherwise, they would not be required
to be set forth therein by the terms of this Agreement and that disclosure
of such matters shall not be taken as an admission by Seller or Purchaser
that such disclosure is required to be made under the terms or any
provision of this Agreement, and in no event shall the disclosure of such
matters be deemed or interpreted to broaden or otherwise amplify the
representations and warranties contained in this Agreement.
SECTION 8.05 Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at Law or in equity.
SECTION 8.06 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware applicable to
contracts executed in and to be performed in that State.
SECTION 8.07 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
Person any right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement, other than to the Purchaser Indemnitees and Seller
Indemnitees as provided in SECTION 7.02(a) and SECTION 7.03(a), respectively.
SECTION 8.08 Counterparts. This Agreement may be executed in two or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of a signature page to this Agreement by telecopier shall
be effective as delivery of a manually executed counterpart of this Agreement.
SECTION 8.09 Entire Agreement. This Agreement (including the
Exhibits, the Disclosure Letter and the Purchaser Disclosure Letter) constitutes
the entire agreement among the parties with respect to the subject matter hereof
and, except for the Confidentiality Agreement, supersedes all prior agreements
and undertakings, both written and oral, among the parties, with respect to the
subject matter hereof.
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SECTION 8.10 Certain Definitions.
For purposes of this Agreement:
(a) "Affiliate" of a specified Person means a Person who directly or
indirectly through one or more intermediaries controls, is controlled by or
is under common control with, such specified Person;
(b) "Affiliated Group" means any affiliated group within the meaning
of Section 1504(a) of the Code or any similar group defined under a similar
provision of applicable Law;
(c) "Business Day" means any day that is not a Saturday, Sunday or
other day on which banking institutions in Houston, Texas are authorized or
required by applicable Law or executive order to close;
(d) "Code" means the Internal Revenue Code of 1986, as amended;
(e) "Contract" means any contract, agreement, indenture, note, bond,
loan, instrument, lease, commitment or other arrangement or agreement,
whether written or oral;
(f) "ERISA" means the Employment Retirement Income Security Act of
1974, as amended;
(g) "Fixed Wing Business" means the Company's Alaskan airline business
as operated by the Company on the date hereof and on the Closing Date,
including all assets and liabilities related thereto.
(h) "Fixed Wing Claim" means any claim for Purchaser Damages to the
extent resulting from or arising out of the Fixed Wing Business.
(i) "Governmental Entity" means any United States (federal, state or
local) or foreign government or governmental, regulatory or administrative
authority, agency, commission or court;
(j) "Intellectual Property Licenses" means (i) any grant to a third
Person of any right to use any of the Intellectual Property, and (ii) any
grant to the Company of a right to use a third Person's intellectual
property rights which is necessary for the use of any Intellectual
Property;
(k) "Inventory" means the Company's inventories of goods or products
used or useable in the conduct of the Business in the ordinary course of
business, in existence as of the relevant date of determination;
61
(l) "Knowledge" or "Known" means, with respect to Seller or the
Company, the knowledge of any of the individuals listed on Exhibit 8.10(l)
attached hereto, and, with respect to Purchaser, the knowledge of any of
the executive officers of Purchaser;
(m) "Law" means any United States (federal, state or local) or foreign
law, statute, ordinance, rule, regulation or Order;
(n) "Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, proxy, voting trust or agreement, transfer restriction under any
shareholder or similar agreement, encumbrance or any other restriction or
limitation whatsoever;
(o) "Litigation" means any litigation, suits, claim, action,
proceeding or investigation;
(p) "Order" means any decree, judgment, injunction, ruling, writ or
other order (whether temporary, preliminary or permanent);
(q) "Permitted Liens" means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance which have been made available to Purchaser; (ii) statutory liens
for current Taxes, assessments or other governmental charges not yet
delinquent or the amount or validity of which is being contested in good
faith by appropriate proceedings, provided an appropriate reserve is
established therefor; (iii) mechanics', carriers', workers', repairers' and
similar Liens arising or incurred in the ordinary course of business that
are not resulting from a breach, default or violation by the Company of any
Contract or applicable Law; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Entity, provided that such
regulations have not been violated; and (v) all matters of record, Liens
and other imperfections of title, charges, easements, restrictions and
encumbrances (including (l) reservations specified in instruments of
conveyance such as deeds and indentures, reserving in favor of the grantor
under such instrument ("Deed Reservations") an interest in mineral rights,
including petroleum, petroleum products, phosphate minerals, oil and gas,
(2) any zoning, utility easement, covenant or restriction pursuant to any
deed or recorded plat affecting the Company Properties and (3) any other
Deed Reservation) which would not materially detract from the value of or
materially interfere with the present use of any Company Property subject
thereto or affected thereby;
(r) "Person" means an individual, corporation, partnership, limited
liability company, limited partnership, syndicate, person (including a
"person" defined in Section 13(d)(3) of the Exchange Act), trust,
association or entity or government, political subdivision, agency or
instrumentality of a government;
(s) "Related Equipment" means, with respect to an Aircraft, such
Aircraft's engines and all material appliances, parts, instruments,
avionics, components, appurtenances, accessories, furnishings and other
equipment or property incorporated in, installed in or affixed to such
Aircraft or its engines.
62
(t) "Seller Affiliated Group" means the Affiliated Group of which
Seller is the common parent;
(u) "Taxes" means any federal, state, local or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental, customs duties,
capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property,
sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated tax or other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not, and any
liability in respect of any of the foregoing items payable by reason of
contract, assumption, transferee liability, operation of law, Treasury
Regulation Section 1.1502-6(a) (or any predecessor or successor thereof or
any analogous or similar provision under applicable Law) or otherwise;
(v) "Tax Returns" means all returns, declarations, reports, statements
and other documents required or permitted to be filed in respect of Taxes,
and any claims for refunds of Taxes, including any amendments or
supplements thereto; and
(w) "WARN" means the Worker Adjustment and Retraining Notification Act
of 1988, as amended, and any similar state or local "mass layoff" or "plant
closing" law.
(SIGNATURE PAGE FOLLOWS)
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
ROWAN COMPANIES, INC.
By: /s/ R.G. Croyle
-----------------------------------
Name: R.G. Croyle
Title: Vice Chairman
ERA AVIATION, INC.
By: /s/ R.G. Croyle
-----------------------------------
Name: R.G. Croyle
Title: Vice Chairman
SEACOR HOLDINGS INC.
By: /s/ Dick Fagerstal
-----------------------------------
Name: Dick Fagerstal
Title: Senior Vice President
64
EXHIBIT 1.07
------------
FORM OF TRANSITION SERVICES AGREEMENT
EXHIBIT 8.10(L)
"KNOWLEDGE" INDIVIDUALS FOR SELLER AND THE COMPANY
Lynda Aycock
Terry Bennett
K. Bryan Blixhavn
John L. Buvens
R. G. Croyle
Marcia Davis
Mark Hay
William Hedrick
C. W. Johnson
Mark Jones
Paul Landis
Richard Larew
D. F. McNease
Wilbur O'Brien
Jim Shugart
E. E. Thiele
William H. Wells
Glyn Wheeler