ASSET PURCHASE AGREEMENT
DATED
MARCH 23, 2000
AMONG
AIR METHODS CORPORATION
MERCY AIR SERVICE, INC.
AND
AREA RESCUE CONSORTIUM OF HOSPITALS
TABLE OF CONTENTS
PAGE
----
ARTICLE I SALE AND PURCHASE OF CERTAIN ASSETS 1
1.1 Purchase and Sale 1
1.2 Excluded Assets 1
1.3 Excluded Liabilities 2
1.4 Purchase Price 3
1.5 Allocation of Purchase Price 4
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER 4
2.1 Due Organization 4
2.2 Subsidiaries 4
2.3 Due Authorization 4
2.4 Absence of Changes or Events 5
2.5 Personal Property 5
2.6 Compliance with Licenses, Permits, Laws and Other Instruments 6
(a) Licenses and Permits. 6
(b) Conflicts 6
(c) Government Consent 6
2.7 Contracts and Agreements 6
2.8 Claims and Proceedings 7
2.9 Taxes 7
2.10 Real Properties; Leases 7
2.11 Insurance 8
2.12 Books and Records 8
2.13 Financial Statements 8
2.14 Environmental Matters. 9
2.15 Brokers 10
2.16 Information Furnished 10
2.17 Federally Funded Programs 10
ARTICLE III BUYER'S AND AIR METHODS' REPRESENTATIONS
AND WARRANTIES 11
3.1 Due Organization 11
3.2 Due Authorization 11
3.3 Brokers 11
3.4 Federally Funded Programs 11
ARTICLE IV SURVIVAL OF REPRESENTATIONS AND WARRANTIES 12
i
TABLE OF CONTENTS
(continued)
PAGE
ARTICLE V COLLECTION OF SELLER'S ACCOUNTS RECEIVABLE 12
5.1 Buyer's Agreement to Collect Accounts 12
5.2 Estimated Collectible Receivables 12
5.3 Remittance of Collected Receivables 12
5.4 Additional Payment on Uncollected Accounts 13
ARTICLE VI COVENANTS OF SELLER 13
6.1 Conduct of Business Pending Closing 13
6.2 Consents of Others 15
6.3 Further Assurances 15
6.4 Access to Records Before Closing 15
6.5 Access to Records After Closing 15
6.6 Employee Benefit Plan Not Assumed 15
6.7 Covenant Not to Compete 15
6.8 Accrued Vacation 16
6.9 Preferred Provider Contacts 16
6.10 Facilities 16
6.11 Buyer's Use of Name 16
ARTICLE VII CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE
CLOSING 16
7.1 Conditions to Buyer's Obligations 16
(a) Covenants, Representations and Warranties 17
(b) Consents 17
(c) Material Adverse Change 17
(d) Release of Third Party Interests in the Purchased Assets 17
(e) Preferred Provider Contracts. 17
(f) Litigation 17
(g) Consents. 18
(h) Hart-Scott-Rodino. 18
(i) Certificate of Officer 18
7.2 Conditions to Seller's Obligations 18
(a) Covenants, Representations and Warranties 18
(b) Consents 18
(c) Litigation 18
(d) Certificate of Officers 18
ARTICLE VIII CLOSING 19
8.1 Closing 19
8.2 Documents to be Delivered by Seller 19
ii
TABLE OF CONTENTS
(continued)
PAGE
(a) Conveyance Documents 19
(b) Special Warranty Deed 19
(c) Opinion 19
(d) Certificate 19
(e) Lien Releases 19
(f) Transfer of Records 19
8.3 Documents to be Delivered by Buyer 19
(a) Purchase Price 19
(b) Note 19
(c) Sublease 20
(d) Bill of Sale, Assignment and Assumption Agreement 20
(e) Certificate 20
(f) Opinion 20
ARTICLE IX TAXES, UTILITIES, ASSESSMENTS AND
OTHER ADJUSTMENTS 20
9.1 Payment of All Taxes Resulting from Sale of Assets by Seller 20
9.2 Payment in Lieu of Covenant Not to Compete 20
9.3 Payment for Telephone System 20
9.4 Payment for Equipment 20
ARTICLE X INDEMNIFICATION 20
10.1 Indemnification by Seller 20
10.2 Limitations on Indemnification Obligations of Seller 21
(a) Deductible 21
(b) General Liability Ceiling 21
(c) 22
(d) 22
(e) Time Limitations. 22
(f) Environmental/Remedial Action 22
10.3 Cooperation 23
(a) Notice 23
(b) Claims for Money Damages 23
10.4 Arbitration Provisions 23
10.5 Exclusive Remedy 24
10.6 Survival of Representations and Indemnification of Buyer
and Air Methods 24
ARTICLE XI TERMINATION 25
11.1 Termination of Agreement 25
11.2 Procedure Upon Termination 26
iii
TABLE OF CONTENTS
(continued)
PAGE
11.3 Liquidated Damages Upon Termination 27
ARTICLE XII CONFIDENTIALITY 27
12.1 Confidentiality Covenants 27
12.2 Disclosure Pursuant to Legal Process 28
12.3 Termination of Confidentiality Obligations 29
ARTICLE XIII MISCELLANEOUS 29
13.1 Modifications; Waiver 29
13.2 Notices 29
13.3 Counterparts 30
13.4 Expenses 30
13.5 Binding Effect; Assignment 30
13.6 No Strict Construction 30
13.7 Entire and Sole Agreement 30
13.8 Governing Law 30
13.9 Invalid Provisions. 30
13.10 Headings 31
iv
LIST OF EXHIBITS
EXHIBITS
- --------
Exhibit A Bill of Sale, Assignment and Assumption Agreement
Exhibit B Form of Opinion of Buyer's Counsel
Exhibit C Form of Opinion of Seller's Counsel
Exhibit D Certificate of Seller
Exhibit E Certificate of Buyer
Exhibit F Form 8594
Exhibit G Form of Non-Compete Agreement
Exhibit H Form of Lease
v
LIST OF SCHEDULES
SCHEDULES
- ---------
Schedule 1.1 (a) Purchased Assets
Schedule 1.1 (b) Assumed Liabilities
Schedule 1.1 (c) Contracts Purchased
Schedule 1.2 (b) Real Property at 18500 Edison Avenue
Schedule 1.2 (c) Current Assets
Schedule 1.2 (f) Prepaid Expenses
Schedule 1.2 (g) Insurance Policies
Schedule 1.2 (h) Contracts
Schedule 1.2 (m) Personal Property Retained
Schedule 1.4 (c) Fixed Wing Aircraft
Schedule 1.4 (c)(i) King Air Parts
Schedule 1.5 Allocation of Purchase Price
Schedule 2.2 Related Parties
Schedule 2.3 Authorizations
Schedule 2.4 Absence of Certain Charges
Schedule 2.5 (a) Title to Personal Property
Schedule 2.5 (c) Air Worthiness
Schedule 2.6 (a) Licenses and Permits
Schedule 2.6 (c) Government Consents
Schedule 2.7 (a) Contracts
Schedule 2.7 (b) Assumed Contracts
Schedule 2.8 Claims and Proceedings
Schedule 2.9 Taxes
Schedule 2.10 (a) Real Property
Schedule 2.10 (b) Leased property Insurance
Schedule 2.14 Underground/Above-Ground Storage Tanks
Schedule 2.15 Letter Agreement with Stifel, Nicolaus & Company,
Incorporated, dated as of February 1, 1999
Schedule 4.1 Employees
Schedule 5.1 Conduct of Business
Schedule 6.1 (g) Individuals to Execute Non-Compete
Schedule 6.1 (h) Compensation of Certain Employees
Schedule 6.7 Members
vi
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of March
23, 2000, among AIR METHODS CORPORATION, a Delaware corporation ("Air Methods"),
MERCY AIR SERVICE, INC., a California corporation ("Buyer"), a wholly owned
subsidiary of Air Methods, and AREA RESCUE CONSORTIUM OF HOSPITALS, a Missouri
non-profit corporation ("Seller").
RECITALS
A. Seller is engaged in the business of providing emergency air medical
transportation services in Missouri and adjoining states (the "Business"), and
owns and leases certain assets and properties which are used by or useful to
Seller in the conduct of its Business.
B. Buyer and Air Methods are engaged in the business of providing
emergency air medical transportation services in other regions of the United
States.
C. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, certain of Seller's assets used in, or useful to and related to the
operation of the Business on the terms and conditions set forth in this
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
representations, warranties, covenants, agreements, terms and conditions set
forth below, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF CERTAIN ASSETS
1.1 PURCHASE AND SALE. On the terms and subject to the conditions and
------------------
exceptions contained in this Agreement, Seller agrees to sell to Buyer and Buyer
agrees to purchase from Seller at the Closing (as defined herein), free and
clear of all liens, claims, and encumbrances, all of Seller's right, title, and
interest in and to the tangible and intangible assets identified on Schedule
--------
1.1(a), and to assume the liabilities listed in Schedule 1.1(b) and the
- ------ ----------------
contracts listed on Schedule 1.1(c), which, together with certain of the
----------------
Excluded Assets as defined in Section 1.2, comprise the emergency, air medical,
critical care, helicopter business as operated by Seller prior to the Closing,
including the good will related to such business (the "Purchased Assets").
Buyer may assign its rights hereunder, but not its obligations, to a subsidiary
corporation and may assign its rights to purchase certain of the Purchased
Assets to a financial entity that will finance Buyer's purchase with a leasing
transaction.
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
----------------
contained in Section 1.1 hereof, the parties expressly agree that Seller shall
retain and continue to own, and Buyer will not acquire, the following assets of
the Business (the "Excluded Assets") and shall remain the property of Seller
after the Closing:
(a) Seller's interest in SkyLife Aviation, L.L.C., a Missouri
limited liability company ("Skylife");
(b) Seller's interest in the building (consisting of an office
facility and aircraft hangar), fixtures and leasehold interest located at 18500
Edison Avenue, Chesterfield, Missouri (Spirit of St. Louis Airport), as more
fully described in Schedule 1.2(b);
----------------
(c) Seller's current assets, including all cash on hand and in any
bank account of Seller as of the Closing Date, billed and unbilled accounts
receivable, and amounts due from related Organizations of Seller, all as listed
and described in Schedule 1.2(c);
----------------
(d) the books and records, medical records for flights prior to
Closing, minute books, stock records and corporate seal of Seller;
(e) the rights of membership in Seller;
(f) those rights relating to deposits and prepaid expenses of
Seller and claims for refunds and rights to offset in respect thereof listed in
Schedule 1.2(f);
- ----------------
(g) all of Seller's insurance policies and rights thereunder,
except to the extent specified in Schedule 1.2(g);
----------------
(h) Seller's Contracts listed in Schedule 1.2(h);
-----------------
(i) all personnel records and other records that Seller is
required by law to retain in its possession;
(j) all claims for refund of taxes and other governmental charges
of whatever nature;
(k) all rights in connection with and assets of the Employee Plans
of Seller;
(l) all rights of Seller under this Agreement, the Bill of Sale,
the Assignment and Assumption Agreement and the Escrow Agreement;
(m) personal property and assets expressly designated in Schedule
--------
1.2(m).
- ------
1.3 EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
---------------------
contained in this Agreement, Buyer will not assume or be liable for and Seller
will retain and remain solely responsible for all of Seller's debts, liabilities
and obligations of any nature whatsoever whether accrued, absolute or
contingent, whether known or unknown, whether due or to become due and whether
related to the Purchased Assets, the Business, or otherwise, and regardless of
when asserted, except Seller's obligation to perform, after the Closing Date,
the duties and responsibilities of Seller under the agreements specifically
identified on Schedule 1.1(b) entitled "Assigned Contracts."
----------------
2
1.4 PURCHASE PRICE. On or prior to March 20, 2000, Seller shall notify
--------------
Buyer in writing whether Seller elects to receive payment for the Purchased
Assets as set forth in Section 1.4(a) or Section 1.4(b) (the "Purchase Price
Notice"). If the Purchase Price Notice is not received by Buyer on or before
March 20, 2000, then the Buyer shall be deemed to have elected to receive
payment for the Purchased Assets as set forth in Section 1.4(b).
(a) The purchase price (the "Cash Purchase Price") for the
Purchased Assets shall be $12,000,000. The Cash Purchase Price shall be paid by
Buyer by the delivery at the Closing of cash or immediately available funds
pursuant to wire transfer instructions provided to Buyer by Seller prior to
Closing.
(b) The purchase price (the "Alternate Purchase Price") for the
Purchased Assets shall be $11,500,000 (the "Cash Portion") plus the Earnout
Payments (defined below), if any, as follows:
(i) At Closing, Buyer shall pay the Cash Portion to Seller in
cash or immediately available funds pursuant to wire transfer instructions
provided to Buyer by Seller prior to Closing.
(ii) In addition to the Cash Portion, Buyer shall make
additional payments (each an "Earnout Payment") to Seller (if any) equal to 50%
of Buyer's collections for future services which are six months old or older
over 50% of its standard charges, calculated as set forth in Section
1.4(b)(iii), beginning October 1, 2000 and at the end of each calendar quarter
thereafter; provided, however, that at such time as $1,500,000 has been paid
pursuant to this Section 1.4(b), Buyer shall have no further obligation to make
any additional Earnout Payments.
(iii) Following each calendar quarter beginning January 1,
2001, Buyer shall determine (i) the total revenue collected by it since the
Closing ("Revenues") for Charges (defined below) for services performed after
the Closing and more than six months prior to the end of the quarter (the
"Calculation Period") and (it) the total of the Charges during the Calculation
Period. Buyer shall pay to Seller, within ten ( 10) business days of the end
of such calendar quarter, 50% of all Revenues in excess of 50% of the Charges
for such period less the total of all Earnout Payments previously paid to Seller
during all prior periods.
(iv) As used in this Section 1.4(b), "Charges" means the
total standard charges for services performed during the Calculation Period
computed in the manner currently calculated by Mercy in its other operations.
3
(c) Buyer agrees to purchase two fixed wing airplanes from
Skylife, more fully described in Schedule 1.4(c), all the spare parts relating
---------------
to said aircraft owned by SkyLife and the equipment owned by Seller enumerated
in Schedule 1.2(m) relating to the aforesaid airplanes and owned by ARCH. The
----------------
price for both airplanes shall be $1,650,000.00. The price for the parts shown
in Schedule 1.4(c)(i) shall be at book value exclusive of depreciation on or
-------------------
about the Closing Date, and the price for the equipment shall be $11,175.00.
This agreement will be expressed more fully in an aircraft purchase agreement
between Air Methods and SkyLife. The Cash Purchase Price provided for in
Section 1.4(a) shall be reduced by $500,000, and Air Methods shall deliver to
Seller at the Closing a promissory note (the "Note"), bearing interest at nine
and one quarter percent (9 %) per annum with principal payable in level monthly
installments of $13,888.89 over three years from the Closing Date.
(d) The term "Cash Purchase Price," as used in this Agreement
shall mean the purchase price provided for in Section 1.4(a) or 1.4(b) whichever
is selected by Seller, less the Note provided for in Section 1.4(c) and any
other adjustments provided for herein.
1.5 ALLOCATION OF PURCHASE PRICE. Buyer and Seller acknowledge that,
-------------------------------
under Section 1060 of the Internal Revenue Code of 1986, as amended ("Section
1060"), Buyer and Seller must report information regarding the allocation of the
purchase price to the United States Secretary of Treasury by attaching
Department of Treasury, Internal Revenue Service, Form 8594 to their federal
income tax returns for the tax period which includes the date of Closing. At or
prior to Closing, Buyer shall inform Seller of Buyer's proposed allocation of
the Purchase Price, which shall be reasonable under the circumstances, and Buyer
and Seller will attach to their federal income tax returns for the tax period
that includes the date of Closing, Form 8594 as completed consistent with
Buyer's allocation. Within forty-five (45) days after Closing, Buyer shall
prepare Form 8594 and deliver it to Seller for its review and approval in
accordance with the provisions of this section.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
2.1 DUE ORGANIZATION. Seller is a non-profit public benefit
-----------------
corporation duly organized, validly existing, and in good standing under the
laws of the State of Missouri and has all requisite corporate power and
authority to carry on the critical care, air ambulance business as now conducted
and to own, lease and/or operate the Purchased Assets to be conveyed to Buyer
pursuant to Section 1.1 herein.
2.2 SUBSIDIARIES. Except as described in Schedule 2.2, Seller has no
------------ ------------
subsidiaries and does not conduct any operations, business, or activities other
than the Business and the operation of the Purchase Assets.
2.3 DUE AUTHORIZATION. Seller has all requisite power and authority to
-----------------
execute, deliver, and perform this Agreement and to perform the transactions
contemplated hereby. The execution, delivery, and performance by Seller of this
Agreement and the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action. This Agreement has been duly and
validly executed and delivered by Seller and constitutes the valid and binding
obligations of Seller enforceable against Seller in accordance with its terms.
Except as set forth on Schedule 2.3, the execution, delivery, and performance of
------------
4
this Agreement (as well as all other instruments, agreements, certificates, or
other documents contemplated hereby) by Seller does not (a) violate any federal,
state, county, or local law, rule, or regulation or any decree or judgment of
any court or governmental authority applicable to Seller, (b) violate or
conflict with, or permit the cancellation of, or constitute a default under, any
agreement to which Seller is a party, or by which Seller is bound, (c) permit
the acceleration of the maturity of any indebtedness of Seller secured by the
Purchased Assets, or the acceleration of any obligation affecting the Purchased
Assets, or (d) violate or conflict with any provision of the Articles of
Incorporation or Bylaws, or equivalent constitutive documents, of Seller.
2.4 ABSENCE OF CHANGES OR EVENTS. Except as set forth in Schedule 2.4,
---------------------------- ------------
since December 31, 1999 (i) Seller has conducted the Business in a manner
consistent with the requirements of Section 6.1 below; (ii) neither Seller nor
the Purchased Assets have suffered any change, event, or condition which has had
or may have a Material Adverse Effect, as defined in this Section below, on the
Purchased Assets; (iii) Seller has not acquired or disposed of any of the
Purchased Assets other than in the ordinary course of business or as expressly
contemplated by the terms of this Agreement; and (iv) Seller has maintained its
inventory of parts at levels consistent with commercially reasonable practices.
As used in this Agreement, "Material Adverse Effect" means any material
adverse change in or effect on the Business or on the physical or operating
condition of any of the Purchased Assets, whether attributable to a single
circumstance or event or an aggregation of circumstances or events.
2.5 PERSONAL PROPERTY.
------------------
(a) Seller has good title to (or valid leasehold or contractual
interests in) all personal property comprising the Purchased Assets, free and
clear of all liens, claims, charges, setoffs, encumbrances or restrictions of
every kind ("Lien") except as disclosed in Schedule 2.5(a). The documents of
---------------
transfer to be executed and delivered by Seller at the Closing will be
sufficient to convey good and marketable title to the Purchased Assets to Buyer,
free and clear of all liens, claims, charges, set-offs, encumbrances, or
restrictions of every kind, other than those expressly assumed by Buyer pursuant
to Article I hereof or as may be imposed by Buyer.
(b) All machinery, equipment and tangible assets of Seller being
used in the operation of the Purchased Assets are usable by or useful to Seller
in the ordinary course of its business, and are in adequate operating condition
and repair to the extent necessary for the operation of the Business as
conducted as of the date hereof and as of the Closing Date.
(c) Except as set forth on Schedule 2.5(c), all helicopters and
---------------
one spare engine (LTS 101 engine) have been maintained in an air-worthy
condition in accordance with the maintenance requirements of (i) the Federal
Aviation Administration (the "FAA") and (ii) the manufacturers of such
helicopters or such components or equipment (as the case may be). All aircraft
will be purchased "as is, where is" without warranty of merchantability, except
as provided herein.
5
2.6 COMPLIANCE WITH LICENSES, PERMITS, LAWS AND OTHER INSTRUMENTS.
------------------------------------------------------------------
(a) Licenses and Permits. Attached hereto as Schedule 2.6(a) is a
-------------------- ---------------
list of all federal, state, county, and local governmental licenses,
certificates, and permits held or applied for by Seller which relate to the
conduct of the Business and which have a material effect on the Purchased
Assets, including, but not limited to, all FAA licenses and permits
("Authorizations"). Seller has complied in all respects with the terms and
conditions of all such Authorizations, and no violation of any such
Authorizations or the laws or rules governing the issuance or continued validity
thereof has occurred. No additional Authorizations are required from any
federal, state, county, or local government agency or body thereof in connection
with the operation of the Purchased Assets, the failure to obtain which could
reasonably be expected to have a Material Adverse Effect on the Purchased
Assets. Except as disclosed on Schedule 2.6(a), in the conduct of the Business
---------------
and operation of the Purchased Assets, Seller has not been issued any citations,
notices or orders of non-compliance under any law, rule, regulation, ordinance,
order, judgment, or decree (with respect to the Purchased Assets) within two
years of the Closing Date.
(b) Conflicts. Neither the ownership nor use of the Purchased
---------
Assets conflicts with the rights of any other person, firm, or corporation,
violates or, with or without the giving of notice or the passage of time, or
both, will violate, conflict with or result in a default, right to accelerate or
loss of rights under, any terms or provisions of the Articles of Incorporation
or Bylaws, or equivalent constitutive documents, as presently in effect, of
Seller, or any lien, encumbrance, mortgage deed of trust, lease, license,
agreement, understanding, law, ordinance, rule or regulation, or any order,
judgment or decree to which Seller is a party or by which Seller may be bound or
affected.
(c) Government Consent. Seller is not aware of any proposed law,
-------------------
governmental taking, condemnation or other proceeding which would be applicable
to the Business or Purchased Assets and which might have a Material Adverse
Effect on the Business or the Purchased Assets either before or after the
Closing except as disclosed in Schedule 2.6(c). Except as set forth on Schedule
---------------- --------
2.6(c), no consent, qualification, order, approval, or authorization of, or
- ------
filing with, any governmental authority, including, without limitation, any
filings or notices required by applicable bulk sales law, if any, is required in
connection with Seller's execution, delivery and performance of this Agreement
and the consummation of any transaction contemplated hereby.
2.7 CONTRACTS AND AGREEMENTS.
--------------------------
(a) Attached hereto as Schedule 2.7(a) is a list and brief
----------------
description of all written or oral contracts, commitments, leases, and other
agreements (including, without limitation, promissory notes, loan agreements,
and other evidences of indebtedness, guarantees, agreements with distributors,
suppliers, dealers, franchisors and customers, and service agreements) with
respect to the Purchased Assets to which Seller is a party or by which the
Purchased Assets are bound and pursuant to which the obligations thereunder of
either party thereto are, or are contemplated as being, $50,000.00 per annum or
more (collectively, the "Contracts"). The Contracts are valid and enforceable
and in full force and effect. Except as set forth on Schedule 2.7(a), Seller is
---------------
6
not, and, to the best knowledge of Seller, no other party thereto is, in default
(and no event has occurred which, with the passage of time or the giving of
notice, or both, would constitute a default) under any of the Contracts, and has
not waived any right under any of the Contracts. Except as set forth on
Schedule 2.7(a), no consent, qualification order, approval or authorization of,
- ----------------
or filing with, any person or governmental entity is required in connection with
Seller's execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
(b) Attached hereto as Schedule 2.7(b) is a list and brief
----------------
description of all written or oral contracts, commitments, leases and other
agreements with respect to the Purchased Assets to which Seller is a party or is
bound, and which Buyer has agreed to assume the duties and responsibilities of
Seller thereunder pursuant to Section 1.3.
2.8 CLAIMS AND PROCEEDINGS. Except as set forth in Schedule 2.8,
------------------------ ------------
there are no claims, actions, suits, legal or administrative proceedings or
investigations ("Claims or Proceedings") pending or threatened, against or
relating to the Purchased Assets or the transactions contemplated by this
Agreement, and Seller neither knows of, nor has any reason to be aware of, any
basis for the same. In particular, and without limiting the generality of the
preceding sentence, there are no Claims or Proceedings, and no basis for any
Claim or Proceeding, arising out of the business of Seller prior to the Closing
with respect to patients for whom services were provided by Seller prior to
Closing, which Claims or Proceedings are or will be based upon any alleged
impropriety in charging, billing or receiving payment for the services rendered
by the Seller, except as disclosed in Schedule 2.8.
-------------
2.9 TAXES. Except as disclosed on Schedule 2.9, all federal, state,
----- ------------
local and foreign tax returns and reports of any of the entities comprising
Seller required by law to be filed on or before the Closing and which would
affect the Purchased Assets have been duly filed or duly extended to a date in
the future, and all federal, state, local, foreign and any other taxes
(including interest and penalties), assessments, fees and other governmental
charges with respect to the Purchased Assets and due on or prior to the Closing
have been paid.
2.10 REAL PROPERTIES; LEASES.
-------------------------
(a) Schedule 2.10(a) sets forth a list containing a description of
----------------
all interests in Real Property owned, leased or otherwise used or occupied by
Seller and which are part of the Purchased Assets (the "Real Property"). With
respect to all Real Property owned by Seller and which are part of the Purchased
Assets, (i) each parcel of such owned Real Property is owned in fee simple with
good and marketable title free and clear of all Liens, except as described in
Schedule 2.10(a) and those that do not materially adversely interfere with the
- ----------------
use of such Real Property as currently used, (ii) there are no leases,
subleases, licenses, concessions or other agreements (written or oral) granting
to any person the right to use or occupy such owned Real Property or any portion
thereof, and (iii) there are no outstanding options, rights of first offer or
rights of first refusal or any other agreements pursuant to which Seller would
be required to sell the owned Real Property or any portion thereof or interest
therein, or purchase any other real property. Seller has made available to
Buyer complete and accurate copies of all material documents and information of
Seller concerning such owned Real Property.
7
(b) Attached hereto as Schedule 2.10(b) is a list setting forth
----------------
all leases under which Seller possesses or uses real property which is a part of
the Purchased Assets (the "Real Property Leases") and all leases under which
Seller possesses or uses items of tangible personal property that are material
to the conduct of Seller's business (the "Personal Property Leases"). True,
correct and complete copies of the Real Property Leases and Personal Property
Leases (collectively, the "Leases") have been delivered to Buyer, together with
the names and addresses of the lessors thereunder. The Leases are in full force
and effect and Seller is not in default. To the knowledge of Seller, (i) the
other parties to the Leases are not in default thereunder and (ii) no facts or
circumstances have occurred which, with the passage of time or the giving of
notice, or both, would constitute a default by Seller or the other parties,
under any of the Real Property Leases or the Personal Property Leases.
(c) To the knowledge of the officers of Seller: (i) all structures
and facilities on the real properties listed on Schedule 2.10(a) and Schedule
---------------- --------
2.10(b) are free of structural defects and are equipped in substantial
- ------
conformity with laws and governmental regulations applicable to Seller; (ii) the
zoning of each parcel of real property permits the presently existing
improvements and continuation of the business presently conducted thereon by
Seller; and (iii) no zoning changes, and no condemnation or similar proceedings,
are pending or threatened against any of the real properties listed on Schedule
--------
2.10(a)or Schedule 2.10(b).
- ------- -----------------
2.11 INSURANCE. Schedule 2.11 contains a listing of all policies of
--------- --------------
fire, general liability, worker's compensation, errors and omissions,
malpractice and other types of insurance maintained by or on behalf of Seller,
to provide insurance protection for the assets and business of Seller. Except
as set forth in Schedule 2.11 hereto, all of such policies are now in full force
-------------
and effect and those policies or other policies covering the same risks and in
substantially the same amounts have been in full force and effect continuously
for the past three (3) years, and provide coverage for the properties, assets,
and operations of Seller in the amounts and against the risks required (i) to
comply with all applicable laws and regulations and (ii) to conform to the
standard levels of insurance maintained in the industry in which Seller
operates. Seller has not received any notice of cancellation or material
amendment of any such policies, and, to the knowledge of Seller, all material
claims thereunder have been filed in a timely fashion. The activities and
operations of Seller have been conducted in a manner so as to conform in all
material respects to all applicable provisions of such insurance policies.
Seller shall maintain all such insurance policies in effect from the date hereof
until the Closing.
2.12 BOOKS AND RECORDS. The books of account of Seller as they relate
------------------
to the Purchased Assets are complete and correct in all respects, and there have
been no transactions involving the Purchased Assets which properly should have
been set forth therein and which have not been accurately so set forth in all
respects.
2.13 FINANCIAL STATEMENTS. Seller has delivered to Buyer balance
---------------------
sheets as of December 31, 1997 and 1998 and statements of operations and
statements of cash flows for the fiscal years then ended, audited, and a balance
sheet, statement of income and statement of cash flows for the nine months ended
September 30, 1999, all unaudited. Seller will deliver to Buyer, at least two
business days prior to the Closing, an audited balance sheet as of December 31,
1999, and statements of operations and cash flows for the fiscal year ended
December 31, 1999, which will reflect no material adverse change in Seller's
operations since September 30, 1999. All of such financial statements have been
prepared from the books and records of Seller in accordance with generally
accepted accounting principles ("GAAP") consistently applied, and maintained
throughout the periods indicated, and fairly present the financial condition of
Seller and results of operations as of their respective dates and for the
periods indicated.
8
2.14 ENVIRONMENTAL MATTERS. As of the date of this Agreement, except
----------------------
as set forth in Schedule 2.14 and except as to matters described in this Section
-------------
2.14 which individually and in the aggregate would not have a Material Adverse
Effect:
(a) Seller has obtained all permits, licenses and other
authorizations which are required under the Environmental Laws and all other
applicable laws for the ownership, use and operation of each location owned,
operated or leased by Seller and acquired by Buyer hereunder (the "Property"),
all such permits, licenses and authorizations are in effect, no appeal nor any
other action is pending to revoke or modify in a manner adverse to Seller any
such permit, license or authorization, and Seller has complied and is in
compliance with all terms and conditions of all such permits, licenses and
authorizations.
(b) Seller and the Property have complied and are in compliance
with all Environmental Laws including, without limitation, all restrictions,
conditions, standards, limitations, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental Laws or contained in any
regulation, code, plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder.
(c) There is no civil, criminal or administrative action, suit,
demand, claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter which would reasonably be expected to result in liability that
is existing or pending, or to the knowledge of Seller threatened, relating to
the Property .
(d) Neither Seller nor any other person has released, placed,
stored, buried or dumped or arranged for disposal of any Hazardous Substances or
any other substances produced by, or resulting from, any business, commercial or
industrial activities, operations or processes, on or beneath the Property
except for inventories of such substances to be used, and wastes generated
therefrom, in the ordinary course of business of Seller provided that such
excepted inventories and wastes, if any, were and are stored, handled and
disposed of in accordance with applicable laws and regulations and in a manner
such that there has been no release of any such substances into the environment
in violation of the Environmental Laws or in a manner that would give rise to
costs or liability under any Environmental Law.
(e) No releases have occurred at the Property which could result
in the assertion or creation of a Lien on the Property by any governmental body
or agency with respect thereto, nor has any such assertion of a Lien been made
by any governmental body or agency with respect thereto.
9
(f) None of the following exists at the Property:
asbestos-containing material in any form or condition, materials or equipment
containing polychlorinated biphenyls, landfills, surface impoundments or
disposal areas.
(g) Any underground and above-ground storage tanks currently or
formerly owned or operated by Seller or located on or beneath the Property are
described on Schedule 2.14 and have been properly registered, constructed (or
--------------
upgraded), operated and (if now out of service) closed and removed in compliance
with all applicable laws and requirements.
(h) "Hazardous Substance" means any toxic or hazardous materials,
wastes or substances, defined as, or included in the definition of, "hazardous
substances," "hazardous wastes," hazardous materials" or "toxic substances"
under any Environmental Law, including, but not limited to, asbestos, buried
contaminants, regulated chemicals, flammable or explosive materials, radioactive
materials, polychlorinated biphenyls, petroleum and petroleum products.
(i) "Environmental Laws" means any statute, law, ordinance,
regulation, rule, judgment, decree or order of any governmental entity relating
to any matter of pollution, protection of the environment, environmental
regulation or control regarding Hazardous Substances.
2.15 BROKERS. Except as described on Schedule 2.15, Seller has not
------- -------------
engaged, or caused to be incurred, any liability for any brokerage or finders'
fees or agents' commissions or like payments to, any finder, broker, or sales
agent in connection with the origin, negotiation, execution, delivery, or
performance of this Agreement or the transactions contemplated hereby, and all
compensation of any kind payable to any such party shall be the sole
responsibility of Seller or the Members, and Buyer shall have no responsibility
therefor.
2.16 INFORMATION FURNISHED. No representation or warranty made by
----------------------
Seller in this Agreement, no written statement or document furnished by Seller
in connection with the negotiation of the transactions contemplated by this
Agreement, and no exhibit, certificate, schedule, document, list or instrument
prepared, made, or delivered, or to be prepared, made, or delivered, by or on
behalf of Seller pursuant hereto contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained herein and therein not misleading.
2.17 FEDERALLY FUNDED PROGRAMS. Seller represents and warrants that it
-------------------------
is not, and at no time has been, excluded from participation in any federally
funded health care program, including Medicare or Medicaid. Seller agrees to
immediately notify Buyer of any threatened, proposed, or actual exclusion from
any federally funded health care program.
Seller represents and warrants that it has reviewed all applicable
statutes, regulations and rules pertaining to Medicaid and Medicare, including,
but not limited to, the Anti-Kickback Statutes (42 U.S.C. Section 1320 a - 7(b)
and the Federal False Claims Act (31 U.S.C. Section 3729) and represent that its
billing practices are in compliance with Medicaid/Medicare rules and
regulations. Seller also acknowledges that no part of its compensation is
related to the referral, purchasing, leasing, ordering or arranging for services
for which payment may be made in whole or in part under Medicare/Medicaid.
10
ARTICLE III
BUYER'S AND AIR METHODS' REPRESENTATIONS AND WARRANTIES
Buyer and Air Methods represent and warrant to Seller as follows:
3.1 DUE ORGANIZATION. Air Methods is a corporation duly organized,
-----------------
validly existing and in good standing in the State of Delaware, and Buyer is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California. Each has all requisite corporate power and
authority to enter into and perform this Agreement and the related agreements
referred to herein and, following the Closing, to operate and own or lease, as
the case may be, the Purchased Assets.
3.2 DUE AUTHORIZATION. The execution, delivery and performance of this
-----------------
Agreement has been duly authorized by all requisite corporate action of Buyer,
and this Agreement has been duly and validly executed and delivered by Buyer and
constitutes the valid and binding obligation of Buyer, enforceable against Buyer
in accordance with its terms. The execution, delivery, and performance of this
Agreement (as well as all other instruments, agreements, certificates or other
documents contemplated hereby) by Buyer, will not (a) violate any federal,
state, county, or local law, rule, or regulation or any decree or judgment of
any court or governmental authority applicable to Buyer or its property; (b)
violate or conflict with, or permit the cancellation of, or constitute a default
under any agreement to which Buyer is a party or by which it or its property is
bound, (c) permit the acceleration of the maturity of any indebtedness of, or
any indebtedness secured by the property of, Buyer; or (d) violate or conflict
with any provision of the Articles of Incorporation or Bylaws of Buyer.
3.3 BROKERS. Neither Buyer nor Air Methods has engaged, or caused to
-------
be incurred, any liability for any brokerage or finders' fees or agents'
commissions or like payments to any finder, broker or sales agent in connection
with the origin, negotiation, execution, delivery, or performance of this
Agreement or the transactions contemplated hereby and Seller shall have no
responsibility therefore.
3.4 FEDERALLY FUNDED PROGRAMS. Buyer and Air Methods represent and
---------------------------
warrant that either of them has not, and at no time has been, excluded from
participation in any federally funded health care program, including Medicare or
Medicaid. Buyer and Air Methods agree to immediately notify Seller of any
threatened, proposed, or actual exclusion from any federally funded health care
program.
Buyer and Air Methods represent and warrant that both of them have reviewed
all applicable statutes, regulations and rules pertaining to Medicaid and
Medicare, including, but not limited to, the Anti-Kickback Statutes (42 U.S.C.
Section 1320 a - 7(b) and the Federal False Claims Act (31 U.S.C. Section 3729))
and represent that its billing practices are in compliance with
Medicaid/Medicare rules and regulations. Each also acknowledges that no part of
its compensation is related to the referral, purchasing, leasing, ordering or
arranging for services for which payment may be made in whole or in part under
Medicare/Medicaid.
11
ARTICLE IV
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Seller set forth in this
Agreement or in the Disclosure Schedules or Closing Certificates delivered
pursuant hereto shall terminate on the first (1st) anniversary of the Closing
Date, except as follows: (i) the representations and warranties of the Seller
contained in Sections 2.10 and 2.14 shall survive the Closing for the statutory
limitations period under Missouri law that is applicable to written contracts
and (ii) the representations and warranties of the Seller contained in Section
2.9 survive the Closing for the statutory limitations period applicable, to the
filing of Tax Returns and payment of Income Taxes under the Internal Revenue
Code of 1986, as amended and in effect on the date of this Agreement. The
representations and warranties of the Buyer in Section 3 hereof shall survive
the Closing for the statutory limitations period under Missouri law that is
applicable to written contracts.
ARTICLE V
COLLECTION OF SELLER'S ACCOUNTS RECEIVABLE
5.1 BUYER'S AGREEMENT TO COLLECT ACCOUNTS. Buyer agrees to use
-----------------------------------------
commercially reasonable efforts to collect or cause to be collected, on behalf
of Seller, all of Seller's accounts receivable outstanding and unpaid at the
date of Closing that arose from the operation of its air medical transport
services prior to the Closing.
5.2 ESTIMATED COLLECTIBLE RECEIVABLES. With respect to the remaining
-----------------------------------
accounts receivable to be collected by Buyer pursuant to this Article V (the
"Accounts"), Buyer and Seller will agree upon the collectible percentage of the
Accounts based upon the historical collection percentage of gross charges that
are at least six months old. Such percentage shall be applied to the gross
charges less the amounts collected prior to Closing to determine the "Estimated
Collectible Receivables."
5.3 REMITTANCE OF COLLECTED RECEIVABLES. On a monthly basis beginning
------------------------------------
at the end of the month immediately following the Closing, Buyer shall remit,
within ten (10) business days after the end of each such month, all amounts
received by Buyer as payment for amounts due on the Accounts until the total
remitted to Seller equals the Estimated Collectible Receivables. Thereafter,
Buyer shall remit on a monthly basis within ten (10) business days after the end
of each such month, 50% of all amounts received as payment for amounts due on
the Accounts.
12
5.4 ADDITIONAL PAYMENT ON UNCOLLECTED ACCOUNTS. In addition to the
----------------------------------------------
foregoing, until the earlier to occur of (a) the total remitted to Seller equals
the Estimated Collectible Receivables or (b) 24 months after the Closing, Buyer
shall pay to Seller, with each monthly payment, an amount equal to interest on
the unremitted balance of the Estimated Collectible Receivables at the rate of
10% per annum. Except that accounts receivable from Barnes-Jewish Hospital, St.
John's Mercy Medical Center and St. Louis Children's Hospital shall be excluded
from the Estimated Collectible Receivables for the purpose of calculating the
interest on the unremitted balance.
ARTICLE VI
COVENANTS OF SELLER
6.1 CONDUCT OF BUSINESS PENDING CLOSING. From the date hereof to the
-------------------------------------
Closing Date, Seller shall use its best efforts to, preserve substantially
intact its business organization and present relationships with its customers,
suppliers and employees. Seller will not take any action that could reasonably
be expected to have an adverse effect on Seller, or the transactions
contemplated by this Agreement, without the prior written consent of Buyer,
which consent shall not be unreasonably withheld, will not engage in any
practice, take any action, or enter into any transaction outside the ordinary
course of business as conducted prior to the date of this Agreement. Without
limiting the generality of the foregoing, without such consent,
(a) Seller shall not sell, lease, transfer, or assign any assets,
tangible or intangible, which comprise the Purchased Assets other than for a
fair consideration in the ordinary course of business.
(b) Seller will not enter into any agreement, contract, lease, (or
license or series of related agreements, contracts, leases and licenses) with
respect to the Purchased Assets outside the ordinary course of business,
(c) Seller will not accelerate, terminate or cancel any agreement,
contract, lease, or license (or series of related agreements, contracts, leases
and licenses) involving more than $5,000 with respect to the Purchased Assets to
which Seller is a party or by which it is bound.
(d) Seller will not impose any Lien upon any of the Purchased
Assets, tangible or intangible.
(e) [Intentionally left blank].
(f) [Intentionally left blank].
(g) Seller will not sell or consent to the sale of any of the
Purchased Assets outside the ordinary course of business.
(h) Seller will not increase the compensation or benefits payable
to employees listed in Schedule 6.1(h) without the consent of Buyer.
----------------
13
(i) [Intentionally left blank].
(j) Seller will maintain insurance on the Purchased Assets
consistent with past practices and, unless comparable insurance is substituted
therefor or is not generally available to businesses of the type conducted by
Seller, not take any action to terminate or modify, or permit the lapse or
termination of. the present insurance policies and coverages of Seller as set
forth in Schedule 2.11.
--------------
(k) Seller will promptly notify Buyer of any lawsuit or other
legal proceeding that is commenced, or that is threatened, in writing, against
Seller and that (i) relates to or arises out of the Purchased Assets and, if
adversely determined against Seller, would be expected to have a Material
Adverse Effect on Seller, or (ii) relates to any of the Purchased Assets.
(l) [Intentionally left blank].
(m) Seller will maintain in good working order and condition,
ordinary wear and tear excepted, all of the Purchased Assets.
(n) Seller will maintain its inventories of parts, supplies and
other assets at substantially the same level as existed in December 1999.
(o) Seller will use its best reasonable efforts to obtain and
maintain all consents, assignments or approvals of, and licenses, permits and
franchises and rights to operate granted by, governmental authorities, the
absence or loss of which is expected to have a Material Adverse Effect on
Buyer's ability to operate the Business after Closing.
(p) Seller will not take any action which would be expected to
result in a violation of or in the noncompliance with any laws or regulations
applicable to Seller that would be expected to have a Material Adverse Effect on
the Closing.
(q) Seller will cooperate with Buyer and render to Buyer such
assistance as Buyer may reasonably request, at Buyer's sole expense, in
obtaining such governmental approvals as Buyer considers necessary or
appropriate.
(r) Seller will pay, when due, and prior to the imposition or
assessment of any interest, penalties or liens by reason of the nonpayment of,
taxes due or assessed against it with respect to the Purchased Assets, except
for any taxes being contested in good faith and for which reserves have been
established by the Seller.
(s) Seller shall give prompt notice to Buyer of any notice of
material default received by Seller subsequent to the date of this Agreement
under any material instrument, contract or agreement, or any material adverse
change in the Purchased Assets occurring prior to the Closing.
6.2 CONSENTS OF OTHERS. Prior to the Closing, Seller shall use its
--------------------
best efforts to obtain all authorizations, consents and permits required of the
Purchased Assets and Seller to permit consummation of the transactions
contemplated by this Agreement.
14
6.3 FURTHER ASSURANCES. In case at any time after Closing any further
-------------------
action is necessary to complete the transfer of the Purchased Assets to Buyer,
or otherwise to carry out the purposes of this Agreement, the proper officers of
Seller shall take all such reasonable action without any further consideration
therefor.
6.4 ACCESS TO RECORDS BEFORE CLOSING. Prior to the Closing, Seller
------------------------------------
shall give, or cause to be given, to Buyer and its representatives full and
unrestricted access, upon reasonable notice, to Seller's assets, properties,
titles, operations, contracts, corporate minute and other books, records, files
and documents of Seller with respect to the Purchased Assets and to make copies
of all such materials allowed by law. Seller will provide Buyer opportunities
to meet with key employees of the Business, to visit facilities of the Business
and to otherwise conduct due diligence in respect of the Purchased Assets. All
materials copied by Buyer shall be returned to Seller if the Closing of the
transactions contemplated hereunder fails to occur, and shall be maintained in
confidence by Buyer prior to the Closing.
6.5 ACCESS TO RECORDS AFTER CLOSING. After the Closing Date, Buyer on
--------------------------------
the one hand and Seller on the other agree that they will give, or cause to be
given, to the other party, its successors and its representatives, during normal
business hours and at the requesting party's expense, such reasonable access to
the properties, titles, contracts, books, records, files and documents of Buyer
(to the extent Buyer's records are the records, materials and data transferred
to Buyer from Seller pursuant to this Agreement) or Seller, as the case may be,
as is reasonably necessary to allow the requesting party to obtain information
in the other party's possession with respect to any claims, demands, audits,
suits or matters of a similar nature made by or against the requesting party as
the previous or new owner and operator of the Purchased Assets, as the case may
be, and to make copies of such information to the extent reasonably necessary.
6.6 EMPLOYEE BENEFIT PLAN NOT ASSUMED. Seller agrees that Buyer shall
----------------------------------
not assume sponsorship of Seller's group health plan or any other benefit plan
that Seller maintains or sponsors. Buyer shall not, therefore, be a successor
employer of any former or current employee of Seller, whether or not such
employee is offered employment with Buyer, for purposes of compliance with the
Family and Medical Leave Act, the group health plan coverage rules of the
Consolidated Omnibus Reconciliation Act of 1985, as amended, or any similar
applicable state laws. Seller agrees that Buyer shall not assume any other
benefits plan that Seller may sponsor. Buyer will assume the group health
insurance contract that Seller has with United Healthcare.
6.7 COVENANT NOT TO COMPETE. For a period of ten (10) years from the
-------------------------
Closing or any of the Preferred Provider Contracts required by Section 6.9
herein are cancelled for cause, whichever occurs sooner, Seller agrees, and each
of the entities listed on Schedule 6.7, being the Members of ARCH (the
-------------
"Members") shall, at the Closing, agree that it and its controlled affiliates
will not, directly or indirectly, engage in the business of providing airborne
medical transportation services within 75 miles of any facility in the St. Louis
metropolitan area currently served by Seller or within 75 miles of any facility
in the St. Louis metropolitan area served by Buyer following the Closing.
15
6.8 ACCRUED VACATION. With respect to any employees of Seller who
-----------------
become employees of Buyer after the Closing, Seller agrees that it will pay to
each employee an amount equal to the value of accrued vacation at the date of
Closing, or, at the employee's request, reduce the Purchase Price to Buyer by
such amount upon Buyer's agreement to honor the employee's accrued vacation time
after the Closing.
6.9 PREFERRED PROVIDER CONTRACTS. Seller shall use reasonable
------------------------------
commercial efforts to assist Buyer in obtaining preferred provider contracts
substantially in the form of Exhibits I and J with each of Barnes-Jewish
Hospital, St. Louis Children's Hospital and St. John's Mercy Medical Center.
6.10 FACILITIES.
----------
(a) Seller shall permit Buyer to use the office facilities of
Seller located at Spirit of St. Louis Airport ("Spirit Facility") for a rental
fee of $14.00 per square foot per year for office and maintenance space, if any,
plus all utility costs, $1,000/month for each fixed wing airplane and $750/month
for each helicopter stored in the hangar, for a period of time following the
Closing not beyond two days before the closing on the sale of the Spirit
Facility. Seller has informed Buyer that Seller has contracted to sell the
Spirit Facility, and Seller's Closing on the sale of the Spirit Facility which
shall take place on or about April 14, 2000. Seller shall obtain the permission
of the purchaser of the Spirit Facility for Buyer to use hangar space and to the
assignment to Buyer of Seller's rights with respect to the space for the
Communications Center for up to six months after Closing, it being understood
that Buyer requires use of such facilities only for so long as is necessary to
allow Buyer to move its operations to 2207 Scott Avenue.
(b) Seller acknowledges that Buyer is incurring costs in
refurbishing, renovating, altering or constructing at the building at 2207 Scott
Avenue, St. Louis, Missouri 63103, and agrees to reimburse Buyer for such costs
in the event of termination of this Agreement.
6.11 BUYER'S USE OF NAME. Seller agrees that Buyer may use the words
---------------------
"ARCH Air Medical Services" in the name of the entity that Buyer forms to
operate the Business after Closing or in any trade name that it may adopt to
identify the Business.
ARTICLE VII
CONDITIONS TO OBLIGATION OF PARTIES TO CONSUMMATE CLOSING
7.1 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of Buyer to
------------------------------------
consummate the transactions contemplated by this Agreement is subject to
satisfaction on or prior to the Closing of the following conditions (any of
which may be waived by Buyer in writing):
(a) Covenants, Representations and Warranties. Seller shall have
------------------------------------------
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants contained in this Agreement to be
performed and complied with by each of them prior to or at the Closing. The
representations and warranties of Seller set forth in Article II hereof shall be
accurate in all material respects at and as of the Closing with the same force
and effect as though made on and as of the Closing.
16
(b) Consents. All statutory requirements for the valid
--------
consummation by Seller of the transactions contemplated by this Agreement shall
have been fulfilled and all authorizations, consents, waivers and approvals,
including, but not limited to, the giving of notice pursuant to Section 355.656
of the Missouri Revised Statutes to the Missouri Attorney General and the
passage of twenty (20) days as specified in such section without adverse action
thereon, and including those of all federal, state, local and foreign
governmental agencies and regulatory authorities required to be obtained (as
reasonably determined by Buyer) in order to permit Buyer to acquire the
Purchased Assets shall have been obtained in form and substance reasonably
satisfactory to Buyer. Seller shall have obtained any authorizations, consents,
waivers, approvals or other actions required in connection with the execution,
delivery and performance of this Agreement to prevent a material breach or
default by Seller under any contract to which such entity is a party or for the
continuation of any material agreement to which such entity is a party and which
relates to the Purchased Assets. All approvals of the Board of Directors of
Seller and its Members necessary for the consummation of this Agreement and the
transactions contemplated hereby shall have been obtained.
(c) Material Adverse Change. There has been no Material Adverse
-------------------------
Effect to the condition of the Purchased Assets since December 31, 1999.
(d) Release of Third Party Interests in the Purchased Assets. Any
--------------------------------------------------------
and all liens, encumbrances and/or security interests evidenced by financing
statements currently of record to perfect a security interest in the Purchased
Assets in accordance with the Uniform Commercial Code ("UCC") or duly recorded
on title certificates of aircraft pursuant to regulations of the Federal
Aviation Administration ("FAA") shall be released unless otherwise consented to
in writing by Buyer. if any such encumbrances shall be consented to by Buyer,
amendments to such security agreements and/or financing statements shall be
filed in the appropriate filing location for the purpose of eliminating any and
all references to blanket liens covering the Purchased Assets.
(e) Preferred Provider Contracts. Each of Barnes-Jewish Hospital,
----------------------------
St. Louis Children's Hospital and St. Johns Mercy Medical Center shall have
entered into ten (10) year service contracts with Buyer on terms reasonably
acceptable to Buyer.
(f) Litigation. No action, suit or proceeding shall have been
----------
instituted before, or by, any governmental body, to restrain, modify or prevent
the consummation of the transaction contemplated hereby, or to seek damages on a
discovery order in connection with such transaction, or that has or may be
expected to have, a Material Adverse Effect on the Purchased Assets or Buyer's
right to own, operate, or control the Purchased Assets.
(g) Consents. All consents required to be given by St. John's
--------
Regional Medical Center (Joplin, Missouri), Cardinal Glennon Children's
Hospital, Barnes-Jewish Hospital and St. Louis Children's Hospital to the
assignment or execution of their respective contracts with Seller to Buyer with
such amendments to such contracts as Buyer shall reasonably request, shall have
been obtained.
17
(h) Hart-Scott-Rodino. All filings and notices required pursuant
-----------------
to the Hart-Scott-Rodino Act, if applicable, shall have been made or obtained.
(i) Certificate of Officer. A fully executed certificate in
------------------------
substantially the form set forth in Exhibit D attached hereto.
7.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of Seller to
-------------------------------------
consummate the transactions contemplated hereby is subject to satisfaction on or
prior to the Closing of the following conditions (any of which may be waived by
Seller in writing):
(a) Covenants, Representations and Warranties. Buyer shall have
-------------------------------------------
performed in all material respects all obligations and agreements and complied
in all material respects with all covenants contained in this Agreement to be
performed and complied with by Buyer prior to or at the Closing, The
representations and warranties of Buyer set forth in Article III hereof shall be
accurate in all material respects, at and as of the Closing, with the same force
and effect as though made on and as of the Closing.
(b) Consents. All statutory requirements for the valid
--------
consummation by Buyer of the transactions contemplated by this Agreement shall
have been fulfilled, and all authorizations, consents and approvals, or passage
of the statutory period of time with adverse action by the Missouri Attorney
General, including those of all federal, state, local and foreign governmental
agencies and regulatory authorities required to be obtained in order to permit
the consummation by Buyer of the transactions contemplated hereby shall have
been obtained.
(c) Litigation. No action, suit or proceeding shall have been
----------
instituted before, or by, any governmental body, to restrain, modify or prevent
the consummation of the transaction contemplated hereby, or to seek damages on a
discovery order in connection with such transaction.
(d) Certificate of Officers. A fully executed certificate in
-------------------------
substantially the form set forth in Exhibit E attached hereto.
18
ARTICLE VIII
CLOSING
8.1 CLOSING. If all conditions to the obligations of Buyer and Seller
--------
to consummate the purchase and sale of the assets as set forth in Articles VI
and VII have been satisfied, the closing of the transactions contemplated hereby
(the "Closing") shall occur at the offices of Lashly & Baer, P.C., 714 Locust
Street, St. Louis, Missouri 63101 (or such other place as the parties may agree)
on March 31, 2000, or at such other date as the parties mutually agree (the
"Closing Date"), provided that Buyer may extend the Closing Date for up to 30
days if reasonably necessary to complete its arrangements for financing the
Purchase Price. Any move necessitated before Closing due to the provisions of
Section 6.10 and the inability of Buyer to Close on or before April 12, 2000,
shall be the sole cost of the Buyer. The parties agree to enter into a
Management and Operating Agreement, in form satisfactory to both parties, which
will facilitate Buyer's duty to obtain licenses and permits to operate the
helicopter business after Closing.
8.2 DOCUMENTS TO BE DELIVERED BY SELLER. The following documents shall
-----------------------------------
be delivered to Buyer at the Closing by Seller, as applicable:
(a) Conveyance Documents. Such deeds, bills of sales, assignments
--------------------
or other instruments of sale, transfer, assignment, conveyance and delivery in
form and substance reasonably satisfactory to counsel for Buyer, as are required
in order to transfer to Buyer good and marketable title to the Purchased Assets,
free and clear of all liens, charges, security interests and other encumbrances
except as provided herein, duly executed by Seller;
(b) Special Warranty Deed. A special warranty deed for all real
-----------------------
estate;
(c) Opinion. Opinion of Lashly & Baer, P.C., counsel to Seller,
-------
dated the Closing Date, substantially in the form attached hereto as Exhibit C;
(d) Certificate. A certificate substantially in the form
-----------
attached hereto as Exhibit D, dated as of the Closing Date and duly executed by
an executive officer of Seller;
(e) Lien Releases. UCC and FAA termination statements and other
--------------
applicable documentation necessary to release any encumbrances, liens, security
interests or any interest of any third party in the Purchased Assets to the
extent not relating to or arising from an Assumed Liability, duly executed by
the appropriate parties;
(f) Transfer of Records. All contracts, files, documents, data,
---------------------
records and information of Seller relating to the Purchased Assets.
8.3 DOCUMENTS TO BE DELIVERED BY BUYER. The following shall be
---------------------------------------
delivered to Seller at the Closing by Buyer:
(a) Purchase Price. The Cash Purchase Price or the Cash Portion
---------------
of the Alternate Purchase Price, as provided for in Section 1.4(a) or I .4(b),
as applicable, subject to adjustment as provided for in Sections 1.4(c) or
1.4(c), if applicable, paid in cash or by wire transfer of funds as provided in
Section 1.4;
- ------------
19
(b) Note. The Note, if applicable, pursuant to Section 1.4(c);
---- --------------
(c) Sublease. An appropriate sublease agreement if applicable
--------
pursuant to Section 1.4(e);
(d) Bill of Sale, Assignment and Assumption Agreement. An
-------------------------------------------------------
Assumption Agreement in substantially the form attached hereto as Exhibit A,
dated as of the Closing Date and duly executed by Buyer;
(e) Certificate. A certificate executed by an executive officer of
-----------
Buyer, dated the Closing Date, in substantially the form attached as Exhibit E
hereto; and
(f) Opinion. An opinion of Davis, Graham & Stubbs LLP, counsel to
-------
Buyer, dated the Closing Date, in substantially the form attached hereto as
Exhibit D.
ARTICLE IX
TAXES, UTILITIES, ASSESSMENTS
AND OTHER ADJUSTMENTS
9.1 PAYMENT OF ALL TAXES RESULTING FROM SALE OF ASSETS BY BUYER. Buyer
-----------------------------------------------------------
shall pay in a timely manner all Taxes, if any, resulting from or payable in
connection with the sale of the Purchased Assets pursuant to this Agreement,
regardless of the person on whom imposed.
9.2 PAYMENT IN LIEU OF COVENANT NOT TO COMPETE. Seller shall pay Buyer
------------------------------------------
$101,000.00 as consideration for its inability to deliver a covenant not to
compete with respect to Cyril C. Woodrome.
9.3 PAYMENT FOR TELEPHONE SYSTEM. Seller shall pay Buyer $44,834.29 to
----------------------------
reimburse Buyer for the Lucent telephone system being purchased for the 2207
Scott Avenue facility.
9.4 PAYMENT FOR EQUIPMENT. Buyer shall pay Seller $11,175.00 for
----------------------
equipment relating to the two aircraft (King Air B100) being purchased from
SkyLife and $12,872.05 for equipment shown on Schedule 9.3.
--------------
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY SELLER. Seller agrees that, notwithstanding
---------------------------
the Closing and regardless of any investigation made at any time by or on behalf
of Buyer or of any information Buyer may have in respect thereof, Seller will
indemnify and hold harmless Buyer and each officer, director and affiliate of
Buyer (collectively, the "Indemnified Parties") from and against any and all
damages, losses, claims, liabilities, demands, charges, suits, penalties, costs
20
and expenses (including court costs and reasonable attorneys' fees and expenses
incurred in investigating and preparing for any litigation or proceeding)
(collectively, the "Indemnifiable Costs"), which any of the Indemnified Parties
may sustain, or to which any of the Indemnified Parties may be subjected,
arising out of (A) any misrepresentation, breach or default by Seller or any
Member of or under any of the representations and warranties, covenants,
agreements or other provisions of this Agreement or any agreement or document
executed in connection herewith; (B) any failure by Seller to perform or observe
any term, provision, covenant, agreement or condition in this Agreement on the
part of Seller to be performed or observed; (C) any noncompliance with the
provisions of any applicable bulk sales law or regulation; or (D) any liability
or obligation of the Seller not expressly assumed by Buyer hereunder, whether or
not disclosed herein and including, but not limited to, any claim or claims made
against Buyer arising out of liabilities or asserted liabilities of Seller or
its affiliates which may be asserted against Buyer as purchaser of the Purchased
Assets.
10.2 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS OF SELLER. The
---------------------------------------------------------
liability of the Seller to Buyer under Section 10.1 shall be subject to the
following limitations:
(a) Deductible. Seller shall not be liable for indemnity under
----------
Section 10.1 unless the aggregate amount of Indemnifiable Costs incurred by the
Indemnified Parties exceeds the sum of one hundred thousand dollars ($100,000)
(the "Deductible") prior to the expiration of the Applicable Limitations Period,
hereinafter defined. This Section shall not apply to Indemnifiable Costs
arising as a result of a breach of representations in Sections 2.9, 2.14 and
2.15.
(b) General Liability Ceiling. If the aggregate Indemnifiable
---------------------------
Costs incurred by the Indemnified Parties exceed the Deductible before
expiration of the Applicable Limitations, Seller shall indemnify the Indemnified
Parties for the amount of such excess up to but not in excess of the amount of
the Purchase Price less all debt on the Purchased Assets. Seller agrees, for a
period of one (1) year after the Closing Date, to make no distributions to the
Members of any portion of the Purchase Price (including any payment of any
liability of a Member or a liability of Seller guaranteed by a Member) up to
$3,000,000.00. For the period after one (1) year after the Closing Date until
two (2) years after the Closing Date, Seller shall maintain:
(i) a "tail" or similar insurance policy on the underground
storage tank insurance presently maintained by Seller, Policy 020568, with the
Missouri Petroleum Storage Tank Insurance Fund, plus an amount equal to the
deductible amount of said policy;
(ii) an amount sufficient to satisfy in full the requirements
of the letter agreement with Stifel, Nicolaus & Company, Incorporated, set forth
in Schedule 2.15;
--------------
(iii) an amount sufficient to pay principal and interest on
all indebtedness of ARCH, including any accounts payable and the line of credit
and building loan with Mercantile Bank of St. Louis, National Association, it
successors and assigns;
21
(iv) an amount sufficient to pay all tax liabilities for the
years 1998, 1999 and 2000;
(v) an amount sufficient to satisfy all obligations to ARCH's
employees on the Closing Date for accrued vacation time, contractual
obligations, and all employee benefit plans of ARCH and SkyLife;
(vi) an amount sufficient to pay all premiums on the tail for
the professional policy listed in Schedule 1.2(g);
----------------
(vii) an amount sufficient to prosecute any litigation
pending, threatened or outstanding against ARCH as of the date one year after
the Closing Date; and
(viii) Two Hundred Fifty Thousand Dollars ($250,000.00).
(c) [Intentionally left blank].
(d) [Intentionally left blank].
(e) Time Limitations. Except as provided hereafter, the
-----------------
"Applicable Limitation Period" within which any claim for indemnification may be
brought by Buyer under Section 10.1 shall be the one (1) year, ending on the
first anniversary date of the Closing Date. Notwithstanding the preceding
sentence, the "Applicable Limitation Period" for claims for indemnification
arising from a material breach of a representation contained in Sections 2.9,
2.10 and 2.14 shall be a period of time equal to the statutory limitations
period that would apply to the facts or circumstances that gave rise to such
material breach and no claim for indemnification of Indemnifiable costs arising
out of any such material breach may be asserted against the Seller after the
expiration of the "Applicable Limitation Period" that would, under the
applicable statute, apply to such breach, except that in no event shall such
period extend beyond the second anniversary of the Closing Date.
(f) Environmental/Remedial Action. Seller shall be entitled to
------------------------------
control any remedial action and any proceeding relating to an environmental
matter arising under the provisions of Section 2.14 for which Seller is
obligated or agrees to indemnify Buyer. "Remedial action" shall include all
actions, including any capital expenditures, required or voluntarily undertaken
to: (a) clean up, remove, treat, or in any other way address any Hazardous
Substance or other substance; (b) prevent the release or threat of release, or
minimize the further release of any Hazardous Substance or other substance so it
does not migrate or endanger or threaten to endanger public health or welfare or
the environment; (c) perform pre-remedial studies and investigations or
post-remedial monitoring and care; or (d) bring all facilities and operations
conducted thereon into compliance with all environmental laws and environmental
governmental authorizations. Seller shall meet and consult with the designated
representatives of Buyer in so acting, and all actions by Seller shall be
reasonable under the circumstances.
22
To be effective, any claim for indemnification by any Indemnified Party
must be made by a written notice (a "Notice of Claim") to the Seller, given in
accordance with the provisions of Section 10.2 hereof, accompanied by
documentation supporting the claim, by no later than the expiration of the
Applicable Limitation Period set forth above in this Section 10.2(e). If the
Indemnified Party asserting any such claim for indemnification hereunder has
made such a claim prior to the expiration of the Applicable Limitations Period,
then, subject to the Deductible and the applicable Liability Ceiling in this
Section 10.2, such Indemnified Party shall be entitled to recover the full
amount of the Indemnified Costs incurred by it even if that amount is not
finally determined until after such expiration.
10.3 COOPERATION.
-----------
(a) NOTICE. Buyer will give prompt written notice to Seller of
------
any assertion, claim or demand which Seller discovers or of which notice is
received after the Closing and which might give rise to a claim by Buyer against
Seller under Section 10.1 hereof, stating in reasonable detail the nature, basis
and amount thereof.
(b) CLAIMS FOR MONEY DAMAGES. In case of any claim for money
---------------------------
damages by a third party, any suit for money damages, any claim for money
damages by any governmental body, or any legal, administrative or arbitration
proceeding with respect to which Seller may have liability for money damages
under the indemnity agreements contained in Section 10.1, Seller shall be
entitled to participate therein, and to the extent desired, to assume the
defense thereof, and after notice from Seller of its election so to assume the
defense thereof, the Seller will not be liable to the Indemnified Party for any
legal or other expenses subsequently incurred by the Indemnified Party in
connection with the defense thereof, other than reasonable costs of
investigation, unless the Seller does not actually assume the defense thereof
following notice of such election. Buyer or Seller shall make available to the
other and its attorneys and accountants, at all reasonable times, all books and
records relating to such suit, claim or proceeding, and Buyer and Seller will
render to each other such assistance as may reasonably be required of each other
in order to insure proper and adequate defense of any such suit, claim or
proceeding. Buyer will not make any settlement of any claim which might give
rise to liability of Seller hereunder for money damages under the indemnity
agreement contained in Section 10. I hereof without the consent of the Seller,
which consent shall not be unreasonably withheld. If the Seller shall desire
and be able to effect a monetary compromise or settlement of any such claim
which settlement or monetary compromise shall fully and finally relieve Seller
of any liability in connection with such cause of action and claim and the
Indemnified Party shall refuse to consent to such compromise or settlement (to
the extent it relates to money damages), then the liability of Seller to the
Indemnified Party with respect to settlement of such claim shall be limited to
the amount so offered in compromise or settlement.
10.4 ARBITRATION PROVISIONS. If the parties have been unable to
-----------------------
resolve any dispute or controversy arising with respect to a claim of
indemnification hereunder, then such dispute or controversy shall be settled by
arbitration by a panel of one arbitrator (selected from a panel of independent
and disinterested persons, with at least ten years experience in significant
corporate, business or accounting matters, familiar with the purchase and sale
of business concerns) in accordance with the rules of the American Arbitration
Association. The expenses of the party that prevails in the arbitration,
including attorneys' fees and arbitration expenses, shall be paid by the losing
party. If each party prevails in part, the arbitrator will determine the
appropriate allocation of expenses among the parties. Judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The parties may pursue all other remedies with respect to any claim
not subject to arbitration.
23
10.5 EXCLUSIVE REMEDY. Buyer hereby agrees that (i) the rights and
-----------------
remedies of Buyer and the Indemnified Parties contained in this Article X shall
be the sole and exclusive rights and remedies that they shall have against the
Seller or the Members for any breach of or inaccuracy in any of the
representations or warranties of Seller contained in this Agreement, in the
Seller's Disclosure Schedules and in the Seller's Closing Certificates, (ii)
Buyer, for itself and the Indemnified Parties, including its and their
respective successors and assigns, hereby waives and agrees that it or they will
not assert or seek to enforce any other rights or remedies, whether available
under statute or at common law, that Buyer would otherwise have against the
Seller by reason of or in respect of any such breach or inaccuracy in any of
such representations or warranties of the Seller (collectively, "Other
Remedies"), and (iii) except as provided in the next sentence, Buyer shall hold
harmless and indemnify the Seller and the Members and their respective heirs,
representatives, successors and assigns from and against any claims, demands,
actions, suits or other proceedings brought against any of them, and any
liabilities, damages, costs and expenses, including, without limitation,
reasonable attorneys' fees, incurred by the Seller or the Members or any of
their respective heirs, representatives, successors or assigns, arising out of
any attempt or any efforts (successful or unsuccessful) by any Indemnified Party
to assert or exercise any of the Other Remedies, Notwithstanding the foregoing,
the provisions of this Section 10 with respect to the exclusive rights and
remedies of the Buyer and the Indemnified Parties shall not apply to any breach
of representation or warranty of Seller contained in this Agreement (as the same
has been modified by the Disclosure Schedules attached hereto), if a court or
arbitrator having jurisdiction has found that Seller committed common law fraud
or that Seller committed a violation of the antifraud provisions of the Federal
Securities Laws in making such representation or warranty and such finding has
become final and is no longer appealable, provided, however, that limitations on
-----------------
and the exclusions from the amount of Seller's liability to Buyer, and the
Indemnified Parties contained in this Article X and the provisions establishing
an Applicable Limitations Period on the rights of the Buyer to assert
indemnification claims shall nevertheless continue to apply notwithstanding any
such finding or findings.
10.6 SURVIVAL OF REPRESENTATIONS AND INDEMNIFICATION OF BUYER AND AIR
------------------------------------------------------------------
METHODS. All representations, warranties, covenants and obligations in this
- ------
Agreement, and any certificate delivered by Buyer and Air Methods pursuant to
this Agreement shall survive the Closing and the consummation of the
transactions contemplated herein for two years from the date of Closing. The
right of indemnification, reimbursement or other remedy based upon such
representations, warranties, covenants and obligations shall not be affected by
any investigation conducted with respect to, or knowledge (either actual
awareness or where a prudent person could be expected to discover or otherwise
become aware of such fact or other matter in the course of conducting a
reasonably comprehensive investigation regarding the accuracy of any
representations or warranties contained in this Agreement) acquired about the
accuracy or inaccuracy of or compliance with any such representation.
24
Buyer and Air Methods will indemnify and hold harmless Seller, its
officers, directors, Members and affiliate from and against any and all damages,
loses, claims, liability, expense (including costs of investigation and defense
and reasonable attorneys' fees) and expenses, whether or not involving a third
party claim arising from or in connection with:
(a) any breach of any representation or warranty made by Buyer in
this Agreement pursuant to this Agreement;
(b) any brokerage or finder's fees or commissions or similar
payments based upon any agreement or understanding made, or alleged to have been
made, by any person acting on its behalf in connection with any of the
transactions contemplated herein;
(c) any assumed liabilities; and
(d) any environmental liabilities arising as a result of Buyer's
use of the Purchased Assets after the Closing Date.
Buyer and Air Methods will have no liability (for indemnification or
otherwise) with respect to claims arising under this Section 10.6 until the
total damages with respect to such matters exceeds $10,000.00 and then only for
the amounts by which such damage exceeds $10,000.00. However this section will
not apply to claims under Section 10.6(b), (c) and (d).
ARTICLE XI
TERMINATION
11.1 TERMINATION OF AGREEMENT. This Agreement may, by written notice
--------------------------
given at or prior to Closing in the manner hereinafter provided, be terminated
or abandoned:
(a) By mutual consent of Buyer and Seller;
(b) By Seller if the Closing has not occurred on or before the
Closing Date due to a failure of any of the conditions specified in Section 7.2
or Buyer's material failure to make the deliveries required in Section 8.3 at
the Closing;
(c) By Seller if there has been a material default or breach by
Buyer with respect to the performance of any of Buyer's material covenants and
agreements contained herein, or with respect to the correctness of or due
compliance with any of Buyer's material representations and warranties contained
herein;
(d) By Buyer if the Closing has not occurred on or before the
Closing Date due to a failure of any of the conditions specified in Section 7.1,
(which shall include adverse action by the Missouri Attorney General); or
Seller's material failure to make the deliveries requested by Section 8.2 at the
Closing; or
(e) By Buyer if there has been a material default or breach by
Seller with respect to the performance of any of Seller's material covenants and
agreements contained herein, or with respect to the correctness of or due
compliance with any of Seller's material representations and warranties
contained herein.
25
Notwithstanding the foregoing, if Buyer or Seller is in breach of any of
its respective material obligations under this Agreement, the Buyer or Seller
(as the case may be) shall not be entitled to exercise its termination right
under Section 11.1 (b), (c), (d) or (e) above during the continuance of such
breach.
11.2 PROCEDURE UPON TERMINATION. In the event of termination of this
----------------------------
Agreement by Buyer or Seller or by both Buyer and Seller pursuant to Section
11.1 hereof, written notice thereof shall forthwith be given to the other party
or parties hereto and the transactions contemplated herein shall be abandoned
without further action by Buyer, the Company or the Seller. In addition, if
this Agreement is terminated as provided herein:
(a) Each party will redeliver all documents, workpapers and other
material of any other party relating to the transactions contemplated hereby,
whether so obtained before or after the execution hereof, to the party
furnishing the same.
(b) All information of a confidential nature received by any party
hereto with respect to the business of any other party (other than information
which is a matter of public knowledge or which has heretofore been or is
hereafter published in any publication for public distribution or filed as
public information with any governmental authority) shall continue to be subject
to the provisions of Section 12.1 of this Agreement, which provisions shall
survive any such termination.
(c) Upon any termination of this Agreement pursuant to this
Section 11, the respective obligations of the parties hereto under this
Agreement (other than under Paragraphs 11,2(a) and (b) above) shall terminate
and no party shall have any liability whatsoever to any other party hereto by
reason of such termination, irrespective of the cause of such termination,
provided, however, that a termination of this Agreement by Buyer pursuant to
- ------------------
Paragraph 11.1 (d) due to a Material Seller Default, or by Seller pursuant to
Paragraph 11.1(c) due to a Material Buyer Default, shall not relieve Seller or
the Buyer (as the case may be) of its liability hereunder to the nondefaulting
party, and provided, further, that if, notwithstanding a Material Seller Default
-----------------
or a Material Buyer Default, the Buyer (in the case of a Material Seller
Default) closes, or Seller (in the case of a Material Buyer Default) close the
transactions contemplated hereby, such action by the non-defaulting party or
parties shall constitute a waiver of such Material Seller Default or Material
Buyer Default, as the case may be, and (ii) notwithstanding anything to the
contrary contained herein, in no event shall Seller be liable to Buyer by reason
of a material breach of this Agreement by Seller, and in no event shall Buyer be
liable to any or all of the Seller by reason of a material breach of this
Agreement by Buyer, for any consequential damages, special damages or lost
profits or lost business opportunities arising from such breach.
11.3 LIQUIDATED DAMAGES UPON TERMINATION.
--------------------------------------
(a) If the Seller terminates this Agreement pursuant to Section
11.1(b) or (c), then Seller shall be entitled to liquidated damages equal to
$360,000 (the "Seller Breakup Fee").
26
(b) If the Buyer terminates this Agreement pursuant to Section
11.1(d) (except that adverse action by the Missouri Attorney General shall not
give rise to such entitlement to the Buyer Breakup Fee) or Section 11.1(e), then
Buyer shall be entitled to liquidated damages equal to $360,000 (the "Buyer
Breakup Fee").
(c) The Seller Breakup Fee or the Buyer Breakup Fee, as
applicable, shall be payable by the applicable party in cash by wire transfer of
immediately available funds within 20 business days following termination of the
Agreement in the manner described in Sections 11.2(a) and 11.2(b).
ARTICLE XII
CONFIDENTIALITY
12.1 CONFIDENTIALITY COVENANTS. Buyer and Seller each acknowledge that
-------------------------
they have previously each entered into confidentiality agreements which remain
valid and enforceable documents, and that they may have received access to
Confidential Information (as hereinafter defined) of the other in the course of
investigations and negotiations prior to Closing, and Members acknowledge that
they may have Confidential Information of Seller. Each party who receives any
Confidential Information (a "Receiving Party") from any other party hereto (the
"Disclosing Party"), may disclose any such Confidential Information to such
party's employees, attorneys, accountants, financial advisors or agents or
representatives that have a need to know such Information to facilitate or
assist with the consummation of the transactions contemplated hereby
(collectively, "Representatives"). Subject to the foregoing exception, and the
exception hereinafter set forth in Subsection 12.2 below (i) a Receiving Party
shall keep, and shall cause its Representatives to keep, all Confidential
Information received from a Disclosing Party hereunder strictly confidential and
shall not disclose, and shall cause its Representatives not to disclose, any
such Confidential Information to any third party, and (ii) any Receiving Party
and its Representatives shall not make any uses of Confidential Information
received from a Disclosing Party except to facilitate or assist with the
consummation of the transactions contemplated hereby. Confidential information
shall include any business, financial, technical or other information,
including, but not limited to, business plans, forecasts, marketing plans or
initiatives, customer, client and vendor lists, training materials developed by
the Disclosing Party, information regarding the identities, qualifications and
compensation being paid to key employees, information received from customers,
vendors or clients with the expectation, whether explicit or implicit, that such
information would be protected from disclosure or dissemination to third
parties, and other information the value of which to the Disclosing Party is
dependent on the non-disclosure of such information. Confidential Information
shall not include information that, although disclosed or made available by a
Disclosing Party or any of its Representatives to a Receiving Party or any of
its Representatives, (i) can be obtained by persons not subject to
confidentiality or use restrictions from public sources, including periodicals,
government and industry publications and other media that is readily accessible
to the public or competitors of the Disclosing Party, (ii) has been disclosed by
the Disclosing Party or any of its Representatives to any unaffiliated third
parties without the imposition of any restrictions or prohibitions on disclosure
or use thereof and has been, as a result, disclosed by that third party to other
third parties, or (iii) information that the Receiving Party can demonstrate
convincingly was in its possession prior to its disclosure to the Receiving
Party by the Disclosing Party or any of its Representatives, provided that the
--------
Receiving Party had not obtained possession of such Confidential information
from any one that the Receiving Party knew or should have known was subject to
restrictions on its right to disclose such information to the Receiving Party,
either pursuant to an agreement or by reason of his position or relationship
with the Disclosing Party.
27
12.2 DISCLOSURE PURSUANT TO LEGAL PROCESS. If a Receiving Party is
----------------------------------------
required by subpoena or other legal process, or by laws applicable to it, to
disclose or produce any Confidential Information belonging to a Disclosing
Party, then, the Receiving Party shall (i) provide the Disclosing Party prompt
notice thereof and copies, if possible, and, if not, a description, of the
Confidential Information requested or required to be produced so that Disclosing
Party may seek an order to quash such subpoena or other legal process or an
appropriate protective order or may elect to waive compliance with the
provisions of this Section 12 as to any portion or all of such Confidential
Information (ii) consult with the Disclosing Party as to the advisability of
taking legally available steps to quash or narrow such request, and (iii)
provide such reasonable cooperation as the Disclosing Party may request in
connection with efforts by the Disclosing Party to quash the subpoena or other
legal process or to obtain a protective order with respect to the Confidential
Information being sought. If, in the absence of a protective order or the
receipt of a waiver hereunder, a Receiving Party is nonetheless, in the opinion
of his legal counsel, compelled to disclose or produce any such Confidential
Information of the Disclosing Party to any tribunal legally authorized to
request and entitled to receive such Confidential Information or to any
government agency with which the Receiving Party is required by law to file any
such Information or otherwise stand liable for contempt or suffer other censure
or penalty or liability, the Disclosing Party may disclose or produce such
Confidential Information to such tribunal or government agency, notwithstanding
the fact that such information may, as a result become available to the public,
without incurring liability hereunder to the Disclosing Party; provided,
---------
however, that the Receiving Party shall give the Disclosing Party written notice
- -------
of the Confidential Information to be so disclosed or produced as far in advance
of its disclosure or production as is practicable and shall use his best efforts
to obtain, to the greatest extent practicable, an order or other reliable
assurance that confidential treatment will be accorded to such Confidential
Information so required to be disclosed or produced. Notwithstanding the
foregoing, the parties agree that the Buyer may file a report on Form 8-K with
the Securities and Exchange Commission regarding the transactions contemplated
by this Agreement and file as exhibits thereto, this Agreement, and all
schedules and exhibits thereto without requesting confidential treatment for
such documents and that the Seller may file with the Missouri Attorney General
this Agreement and such other information as the Missouri Attorney General shall
reasonably request to comply with the provisions of Section 355.656 RSMo.
without requesting confidential treatment of such documents
12.3 TERMINATION OF CONFIDENTIAL OBLIGATIONS. The obligations of Buyer
---------------------------------------
under this Article XII shall terminate on the Closing of the transactions
contemplated hereby, but the obligations of Seller, shall survive the Closing
for a period of two (2) years thereafter with respect to Confidential
Information of Seller or Buyer. In the event of a termination of this
Agreement, the respective obligations of Seller with respect to Confidential
Information of Buyer and the obligations of Buyer with respect to Confidential
Information of Seller and the Seller shall survive for a period of five (5)
years from the date of such termination.
28
ARTICLE XIII
MISCELLANEOUS
13.1 MODIFICATIONS; WAIVER. Any amendment, change or modification of
----------------------
this Agreement shall be void unless in writing and signed by all parties hereto.
No failure or delay by any party hereto in exercising any right, power or
privilege hereunder, and no course of dealing between or among any of the
parties, shall operate as a waiver of any such right, power or privilege. No
waiver of any default on any one occasion shall constitute a waiver of any
subsequent or other default. No single or partial exercise of any such right,
power or privilege shall preclude the further or full exercise thereof.
13.2 NOTICES. All notices and other communications hereunder shall be
-------
in writing and shall be deemed to have been duly given when personally
delivered, mailed by certified mail, return receipt requested, or via Federal
Express or similar overnight courier service, or by facsimile. Such notices or
other communications shall be sent to the following addresses, unless other
addresses are subsequently specified in writing:
Buyer: Mercy Air Service, Inc.
-----
1670 Miro Way
Rialto, CA 929376
Attention: President
Fax No.: (909)357-1009
Tel. No. (909)437-7009
with copies to: Air Methods Corporation
7301 S. Peoria
Englewood, CO 80112
Attention: President and CEO
Fax No.: (303)792-4780
Tel. No.: (303)792-7412
and to
Davis, Graham & Stubbs LLP
370 Seventeenth Street
Suite 4700
Denver, CO 80202
Attention: Lester R. Woodward, Esq.
Fax No. (303)893-1379
Tel. No.: (303)892-9400
Seller: Area Rescue Consortium of Hospitals
------
18500 Edison Avenue
Chesterfield, MO 63005
Attention: Robert F. Stumpf
Fax No.: (636)681-8049
Tel. No.: (636)681-8000
29
with a copy to: Lashly & Baer, P.C.
714 Locust Street
St. Louis, MO 63101
Attention: Charles E. Valier
Fax No.: (314)621-6844
Tel. No.: (314)621-2939
13.3 COUNTERPARTS. This Agreement may be executed in multiple
------------
counterparts, each of which shall be deemed an original but all of which
counterparts collectively shall constitute one instrument. Signatures may be
exchanged by facsimile, with original signatures to follow. Each party hereto
agrees that it will be bound by its own signature and that it accepts the
facsimile signatures of the other parties hereto.
13.4 EXPENSES. Each of the parties hereto will bear all costs, charges
--------
and expenses incurred by such party in connection with this Agreement and the
consummation of the transactions contemplated herein.
13.5 BINDING EFFECT, ASSIGNMENT. This Agreement shall be binding upon
---------------------------
and inure to the benefit of Buyer, Air Methods and Seller, their respective
representatives, successors, and permitted assigns; provided, however, that no
party may assign his, her, or its rights or obligations under this Agreement
without the prior written consent of the other parties. Buyer may assign
certain rights with respect to the Purchased Assets to Buyer's lenders to
securitize certain assets being financed.
13.6 NO STRICT CONSTRUCTION. The language used in this Agreement shall
----------------------
be deemed to be the language chosen by the parties to express their mutual
intent, and no rule of strict construction shall be applied against any party
hereto.
13.7 ENTIRE AND SOLE AGREEMENT. This Agreement and the other schedules
-------------------------
and Agreements referred to herein, constitute the entire agreement between the
parties hereto and supersede all prior agreements, negotiations,
representations, warranties, statements, promises, information, arrangements and
understandings, whether oral or written, express or implied, with respect to the
subject matter hereof.
13.8 GOVERNING LAW. This Agreement and its validity, construction,
--------------
enforcement, and interpretation shall be governed by the substantive laws of the
State of Missouri.
13.9 INVALID PROVISIONS. If any provision of this Agreement is deemed
-------------------
or held to be illegal, invalid or unenforceable, this Agreement shall be
considered divisible and inoperative as to such provision to the extent it is
deemed to be illegal, invalid or unenforceable, and in all other respects this
Agreement shall remain in full force and effect, provided, however, that if any
provision of this Agreement is deemed or held to be illegal, invalid or
unenforceable there shall be added hereto with the mutual consent of the parties
a provision as similar as possible to such illegal, invalid or unenforceable
provision and be legal, valid and enforceable. Further, should any provision
contained in this Agreement ever be reformed or rewritten by any judicial body
of competent jurisdiction, such provision as so reformed or rewritten shall be
binding upon all parties hereto.
30
13.10 HEADINGS. The descriptive section headings are for convenience
--------
of reference only and shall not control or affect the meaning or construction of
any provision of this Agreement.
* * * * *
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
31
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed as of the date and year first above written.
BUYER:
AIR METHODS CORPORATION
By: /s/ George W. Belsey
-----------------------
President
MERCY AIR SERVICE, INC.
By: /s/ David L. Dolstein
------------------------
President
SELLER:
AREA RESCUE CONSORTIUM OF HOSPITALS
By: /s/ James R. Kimmey, M.D.
-----------------------------
Chairman
32
EXHIBIT A
Bill of Sale, Assignment and Assumption Agreement
EXHIBIT B
Form of Opinion of Buyer's Counsel
EXHIBIT C
Form of Opinion of Seller's Counsel
EXHIBIT D
Certificate of Seller
EXHIBIT E
Certificate of Buyer
EXHIBIT F
Form 8594
EXHIBIT G
Form of Non-Compete Agreement
SCHEDULE 1.2(G) - Insurance Policies (cont'd)
EXHIBIT H
Form of Lease