1
EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is made and entered into as of the 1st
day of April, 1999, by and among COMPLETE CONTROLS, INC., an Arizona corporation
("Seller"), MICAH CHAPMAN, GLEN HISCOX and FRANK ZAMBO (collectively referred to
as "Shareholders") and AMERICAN AIRCARRIERS SUPPORT ACQUISITION IV CORP. (the
"Purchaser"), a Arizona subsidiary of AMERICAN AIRCARRIERS SUPPORT,
INCORPORATED, a Delaware corporation ("AASI").
W I T N E S S E T H:
WHEREAS, the Seller is engaged in the business of maintaining,
overhauling, supplying and redistributing aircraft flight controls and
associated parts to commercial and cargo airlines.
WHEREAS, the Shareholders own one hundred percent (100%) of the
outstanding shares of Seller.
WHEREAS, the Seller desires to sell and the Purchaser desires to
purchase substantially all the operating assets and properties used in the
business operations of Seller under the terms set forth herein.
NOW, THEREFORE, the parties hereto agree that the purpose of this
Agreement is to set forth the terms and conditions upon which the Seller has
agreed to sell to the Purchaser certain of its business and assets; and the
Purchaser has agreed to purchase and pay for such business and assets; and
furthermore, the Seller and the Purchaser in consideration of the premises and
the mutual agreements contained herein, do hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Assets to be Purchased and Sold.
(a) Description of Assets. At the Closing (as defined in Section 1.2),
the Seller shall sell and convey to the Purchaser, and the Purchaser shall
purchase and acquire from the Seller, substantially all the business and assets
of the Seller existing and owned by the Seller or used by the Seller in Seller's
2
business on the Closing Date (as defined in Section 1.2) relating to Seller's
business, other than the Excluded Assets (as defined in Section 1.1(b)). The
assets of the Seller to be purchased hereunder (which shall not include the
Excluded Assets) are referred to herein as the "Subject Assets," and shall
include without limitation:
(i) all the Seller's inventory described on Exhibit 1.1(a)(i);
(ii) all the Seller's rights to prepaid license fees,
deposits, prepaid lease expenses and other rights acquired under any
leases, other than Excluded Assets (the "Prepaid Expenses"). The Seller
shall prepare a detailed listing of such Prepaid Expenses as of the
Closing Date which shall be included as Exhibit 1.1(a)(ii) hereto;
(iii) all furniture, fixtures, furnishings, tools, equipment,
supplies, parts, accessories, inventories, machinery, shelving,
computer equipment, signage, and other tangible personal property of
the Seller other than Excluded Assets (the "Tangible Property"),
including without limitation the items of Equipment and other Tangible
Property described on Exhibit 1.1(a)(iii) hereto and any additions or
accessions thereto or substitutions therefor or proceeds thereof;
(iv) to the extent Purchaser desires to acquire the same, all
rights of the Seller under all contracts, service agreements,
advertising agreements, sales contracts, customer orders, leases,
licenses, and agreements other than Excluded Assets (the "Contracts"),
including without limitation the Seller's rights existing on the
Closing Date under the Contracts described or referred to in Exhibit
1.1(a)(iv) hereto;
(v) (A) all rights of the Seller in the name "Complete
Controls, Inc." and any trademarks, tradenames or service marks, and
all registrations thereof and pending applications therefor, in
connection therewith (the "Name"), and (B) all other tradenames,
trademarks, service marks, copyrights, licenses, proprietary rights and
technology,
2
3
patents and registrations thereof or applications therefor, and trade
secrets, secret processes (whether or not patentable), supplies and
vendor lists, customer lists, software, inventions (whether or not
patentable), formulae and other property belonging to, used in or
appertaining to the Seller's Subject Assets, all as described on
Exhibit 1.1(a)(v) hereto (collectively, with the Name, the
"Intellectual Property");
(vi) books, records, ledgers, files, documents,
correspondence, lists, prints, plans, drawings, and specifications,
creative materials, advertising and promotional materials, studies,
reports, and other printed or written materials directly related to
Seller's business other than Excluded Records (as defined in subsection
1.1(b)(ii) (the "Records");
(vii) all the Seller's federal, state and local governmental
permits, licenses, and approvals required for the conduct of its
business (or held with respect to the assets and operations of the
business of the Seller) to the extent assignment thereof to the
Purchaser is permitted by applicable law (the "Licenses"), all as
described on Exhibit 1.1(a)(vii) hereto; and
(viii) all the Seller's work-in-process as described on
Exhibit 1.1(a)(viii); and
(ix) all accounts receivables owned by Seller at Closing and
listed on Exhibit 1.1(a)(ix).
(b) Excluded Assets. The assets to be purchased and sold hereunder, and
the term "Subject Assets" as used herein, shall not include the following assets
of the Seller existing on the Closing Date (the "Excluded Assets"):
(i) The Seller's cash balances as of Closing and any passive
investments of Seller as identified on Exhibit 1.1(b)(i).
(ii) The Seller's corporate minute books, stock records and
income tax records, and other records of the Seller
3
4
relating exclusively to Excluded Assets (the "Excluded Records"),
however with regard to tax return and financial statement information,
Purchaser shall have access to such information, including all
accounting work papers, for the last three (3) years to the extent the
same are related to the Seller's business being acquired hereunder as
may be periodically requested;
(iii) The Seller's tax prepayments.
(iv) The personal property listed on Exhibit 1.1(b)(iv).
Section 1.2 Closing Date. The closing date (the "Closing Date") shall
be April 1, 1999, or such other date as may be mutually agreed to by the
parties. The closing of this transaction (the "Closing") shall be held at the
offices of David M. Furr, Gray, Layton, Kersh, Solomon, Sigmon, Furr & Smith,
P.A., Gastonia, North Carolina, or such other place as the parties may mutually
agree. At the Closing, subject to the fulfillment or waiver of the conditions
set forth in Article V, the Seller shall convey the Subject Assets to the
Purchaser by appropriate instruments of transfer and the Purchaser shall pay to
the Seller the Purchase Price as provided in Sections 1.3 and 1.4.
Section 1.3 Purchase Price. The final purchase price, subject to any
working capital adjustments, to be paid to the Seller for the Subject Assets
(the "Purchase Price") shall be an amount equal to Six Hundred Thousand Dollars
($600,000.00). The Purchase Price shall be subject to a minimum working capital
adjustment based on the financials of the Seller dated December 31, 1998.
Accounts receivable, inventory, accounts payable and accrued liabilities, credit
card payables, shareholder loans payables, accrued benefits and payroll, sales
tax liability and work-in-process are to be included in this calculation of a
working capital adjustment.
Section 1.4 Payment of Purchase Price. The Purchase Price
shall be payable by the Purchaser over two (2) years in the
amounts set forth on Exhibit 1.4. At Closing, Purchaser shall
give to Seller a down payment of One Hundred Fifty Thousand
4
5
Dollars ($150,000.00) and a Promissory Note in the amount and form set forth on
Exhibit 1.4.
Section 1.5 No Liabilities Assumed; Liabilities of the Purchaser After
Closing. The Purchaser is not assuming any of the Seller's liabilities or
obligations, whether known or unknown, contingent or realized, except as
provided on Exhibit 1.5; provided, however, all liabilities incurred after the
Closing in connection with the Purchaser's operations after the Closing shall be
liabilities of the Purchaser.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND SHAREHOLDERS
To induce the Purchaser and AASI to enter into this Agreement and to
purchase the Subject Assets, the Seller and Shareholders (excluding Glen Hiscox)
jointly and severally, represent and warrant that the statements contained in
this Article II are correct and complete as of the Closing Date, except as set
forth in the disclosure schedule accompanying this Agreement and initialed by
the Parties (the "Disclosure Schedule").
Section 2.1 Organization of the Seller. The Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of Arizona.
Section 2.2 Subsidiaries and Foreign Qualification.
(a) Subsidiary. The Seller has no subsidiaries and no other equity
investments in any other corporation, partnership, joint ventures or other
business entity.
(b) Foreign Qualification. The Seller has qualified to transact
business as a foreign corporation in the following jurisdictions as indicated on
Exhibit 2.2, and the nature and location of the Seller's business and assets is
such that no further qualification is required.
Section 2.3 Authorization of Transaction. The Seller has full power
and authority (including full corporate power and
5
6
authority) to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Seller and Shareholders, enforceable in accordance with its terms and
conditions.
Section 2.4 Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any statute, regulation, rule, judgment, order, decree,
stipulation, injunction, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or any provision of
the charter or bylaws of the Seller or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify, or cancel, require any notice
under any contract, lease, sublease, license, sublicense, franchise, permit,
indenture, agreement or mortgage for borrowed money, instrument of indebtedness,
security interest, or other arrangements to which the Seller is a party or by
which it is bound or to which any of its assets is subject, except with respect
to the required third party consents identified on Section 2.4 of the Disclosure
Schedule. Seller does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any governmental or
governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement, except notice required to be given to the
Federal Aviation Administration.
Section 2.5 Financial Statements; Books and Records. Seller has
delivered to Purchaser and AASI financial statements of Seller for the year
ended December 31, 1997 and December 31, 1998 (together the "Financial
Statements") attached herein as Exhibit 2.5(a). The Financial Statements present
fairly the financial position of Seller as at such dates and the results of
operations for the periods then ended, except that the Financial Statements are
subject to normal year-end adjustments. The Financial Statements are correct and
complete and are consistent with the books and records of the Seller.
Except for Exhibit 2.5(b), none of the records, systems, data or
information of the Seller is recorded, stored, maintained, operated or
otherwise, wholly or partly, dependent on
6
7
or held or accessible by any means (including, but not limited to, an
electronic, mechanical or photographic process, computerized or not) which are
not under the exclusive ownership and direct control of the Seller.
The books of account, minute books and other material business records
of the Seller are complete and correct and have been maintained in accordance
with sound business practices. The Seller has:
(a) made and kept its books, records and accounts, which, in reasonable
detail, accurately and fairly reflect the transactions and dispositions of its
assets, and
(b) devised and maintained a system of internal accounting control
sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management's
general or specific authorization;
(ii) transactions are recorded as necessary (A) to permit
preparation of financial statements in conformity with GAAP or any
other criteria applicable to such statements, and (B) to maintain
accountability for assets;
(iii) access to assets is permitted only in accordance with
management's general or specific authorization;
(iv) the recorded accountability for assets as compared with
the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences; and
(v) the accounts/trade payables set forth on Exhibit 2.5(b)(v)
were incurred in the ordinary course of business and no disputes exist
thereto.
Section 2.6 Absence of Certain Changes or Events. Since December 31,
1998, there has not been any adverse change in the assets, liabilities,
business, financial condition, operations, results of operations, or future
prospects of the Seller's
7
8
business. Without limiting the generality of the foregoing, since that date:
(a) the Seller has not sold, leased, transferred, or assigned any of
its assets, tangible or intangible, used in the business other than for a fair
consideration in the ordinary course of business;
(b) with respect to Seller's business, the Seller has not entered into
any contract, lease, sublease, license, or sublicense (or series of related
contracts, leases, subleases, licenses, and sublicenses) either involving more
than $5,000 or outside the ordinary course of business;
(c) with respect to Seller's business, no party (including the Seller)
has accelerated, terminated, modified, or canceled any contract, lease,
sublease, license, or sublicense (or series of related contracts, leases,
subleases, licenses, and sublicenses) involving more than $5,000 to which the
Seller is a party or by which it is bound;
(d) the Seller has not imposed any security interest upon any of its
assets, tangible or intangible;
(e) with respect to Seller's business, the Seller has not made any
capital expenditure (or series of related capital expenditures) either involving
more than $5,000 or outside the ordinary course of business;
(f) with respect to Seller's business, the Seller has not made any
capital investment in, any loan to, or any acquisition of the securities or
assets of any other person (or series of related capital investments, loans, and
acquisitions) either involving more than $5,000 or outside the ordinary course
of business;
(g) with respect to Seller's business, the Seller has not created,
incurred, assumed, or guaranteed any indebtedness (including capitalized lease
obligations) either involving more than $5,000 or outside the ordinary course of
business;
8
9
(h) with respect to Seller's business, the Seller has not delayed or
postponed (beyond its normal practice) the payment of accounts payable and other
Liabilities, except as noted in Exhibit 1.5 (item 3);
(i) with respect to Seller's business, the Seller has not canceled,
compromised, waived, or released any right or claim (or series or related rights
and claims) either involving more than $5,000 or outside the ordinary course of
business;
(j) with respect to Seller's business, the Seller has not granted any
license or sublicense of any rights under or with respect to any Intellectual
Property;
(k) there has been no change made or authorized in the charter or
bylaws of the Seller other than those contemplated herein;
(l) with respect to Seller's business, the Seller has not experienced
any damage, destruction, or loss (whether or not covered by insurance) to its
property;
(m) with respect to Seller's business, the Seller has not made any loan
to, or entered into any other transaction with, any of its directors, officers,
and employees outside the ordinary course of business giving rise to any claim
or right on its part against the person or on the part of the person against it;
(n) with respect to Seller's business, the Seller has not entered into
any employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(o) with respect to Seller's business, the Seller has not granted any
increase outside the ordinary course of business in the base compensation of any
of its directors, officers, and employees;
(p) with respect to Seller's business, the Seller has not adopted any
(i) bonus, (ii) profit-sharing, (iii) incentive compensation, (iv) pension, (v)
retirement, (vi) medical, hospitalization, life, or other insurance, (vii)
severance, or
9
10
(viii) other plan, contract, or commitment for any of its directors, officers,
and employees, or modified or terminated any existing such plan, contract, or
commitment;
(q) with respect to Seller's business, the Seller has not made or
pledged to make any charitable or other capital contribution outside the
ordinary course of business;
(r) with respect to Seller's business, the Seller has not delayed
payment of any amount to any third party with respect to any Liability or
obligation (including any costs and expenses the Seller has incurred or may
incur in connection with this Agreement or any of the transitions contemplated
hereby); and
(s) with respect to Seller's business, there has not been any other
occurrence, event, incident, action, failure to act, or transaction outside the
ordinary course of business involving the Seller.
(t) With respect to Seller's business, there has not been any inquiry,
notice or other communication from the Federal Aviation Administration ("FAA")
relating to any event, incident, action, failure to act or other transaction
involving the Seller.
Section 2.7 Undisclosed Liabilities. With respect to the Seller's
business, the Seller has no Liability (and there is no basis for any present or
future charge, complaint, action, suit, proceeding, hearing, investigation,
claim or demand against any of them giving rise to any Liability), except for
(i) Liabilities set forth on the face of the December 31, 1998 Balance Sheet and
(ii) Liabilities which have arisen after December 31, 1998 in the ordinary
course of business (none of which relates to any breach of contract, breach of
warranty, tort, infringement, or violation of law or arose out any charge,
complaint, action, suit, proceeding, hearing, investigation, claim, or demand).
Section 2.8 Tax Matters.
(a) The Seller has filed or will file all tax returns that it was
required to file. All taxes owed by the Seller (whether or not shown on any tax
return) have been paid or will be paid. The Seller currently is not the
beneficiary of any extension of
10
11
time within which to file any tax return. No claim has ever been made by an
authority in a jurisdiction where the Seller does not file tax returns that it
is or may be subject to taxation by that jurisdiction. There are no security
interests on any of the assets of any of the Seller that arose in connection
with any failure (or alleged failure) to pay any tax. All tax returns disclosed
herein have been accurately prepared and reflect all known tax liabilities of
the Seller.
(b) Except as is disclosed in Section 2.8(b) and Exhibit 1.5 (item iii)
of the Disclosure Schedule, the Seller has withheld and paid all taxes required
to have been withheld and paid in connection with amounts paid or owing to any
employee, creditor, independent contractor, or other third party.
(c) No officer (or employee responsible for tax matters) of the Seller
expects any authority to assess any additional taxes for any period for which
tax returns have been filed. There is no dispute or claim concerning any tax
liability of the Seller either (i) claimed or raised by any authority in writing
or (ii) as to which any of officers (and employees responsible for tax matters)
of the Seller has knowledge based upon personal contact with any agent of such
authority.
(d) All ad valorem property taxes for 1998 and all years prior to 1998
imposed on the Seller with respect to, or which may become a lien on, the
Subject Assets have been paid in full.
Section 2.9 Furniture, Equipment, Etc. The Seller has good and
marketable title to the Tangible Property, free and clear of all liens, charges,
security interests, easements, reservations, restrictions, encumbrances and
other defects in title (collectively, "Encumbrances"), has the right to convey
such Tangible Property to the Purchaser, at the Closing shall have conveyed to
the Purchaser good and marketable title to such Tangible Property free and clear
of all Encumbrances, and will warrant and defend the title to such Tangible
Property in the Purchaser against the lawful claims of all persons whomsoever.
Except as set forth in Section 2.9 of the Disclosure Schedule, none of
the Tangible Property is leased by the Seller from any other party. There is no
default under the leases
11
12
described on Section 2.9 of the Disclosure Schedule and such leases are valid
and enforceable in accordance with their terms.
All Tangible Property is in good operating condition and repair,
ordinary wear and tear excepted.
Section 2.10 Inventory. The Seller has good and marketable title to the
Inventory described on the December 31, 1998 Balance Sheet and listed on Exhibit
1.1(a)(i), free and clear of all Encumbrances, has the right to convey such
Inventory to the Purchaser, at the Closing shall have conveyed to the Purchaser
good and marketable title to such Inventory free and clear of all Encumbrances
and will warrant and defend the title to such Inventory in Purchaser against the
lawful claims of all persons whomsoever.
The level of Inventory at Closing will not vary materially from that
shown on December 31, 1998 Balance Sheet and will not exceed normal inventory
levels necessary to conduct the Seller's business in the ordinary course of the
Seller's business.
Section 2.11 Intellectual Property. The Seller has exclusive rights to
use the Intellectual Property described on Exhibit 1.1(a)(v) in connection with
its business as and where now conducted and the use of the Intellectual Property
by the Seller in its business as and where now conducted does not violate or
infringe the rights of any other person, nor is the Seller a party to any
agreement with any other person or entity with respect to the use of the
Intellectual Property.
Section 2.12 Contracts. With respect to Seller's business, Exhibit
1.1(a)(iv) lists all contracts, including the following contracts, agreements,
and other written arrangements to which the Seller is a party:
(a) any written arrangement for the lease of personal property from or
to third parties providing for lease payments;
(b) any written on-going arrangement for the purchase or sale of raw
materials, commodities, supplies, products, or other personal property or for
the furnishing or receipt of services
12
13
(including any agent or representation agreements with third parties);
(c) any written arrangement concerning a partnership or joint venture;
(d) any written arrangement under which it has created, incurred,
assumed, or guaranteed (or may create, incur, assume, or guarantee) indebtedness
(including capitalized lease obligations) or under which it has imposed (or may
impose) a security interest on any of its assets, tangible or intangible;
(e) any written arrangement concerning confidentiality or competition;
(f) any written arrangement involving any of the Seller's stockholders
and its affiliates;
(g) any written arrangement with any of its directors, officers, and
employees in the nature of a collective bargaining agreement, employment
agreement, or severance agreement;
(h) any written arrangement under which the consequences of a default
or termination could have an adverse effect on the assets, liabilities,
business, financial condition, operations, results of operations, or future
prospects of Seller's business; or
(i) any other written arrangement either involving more than $5,000 or
not entered into in the ordinary course of business.
The Seller has delivered to the Purchaser and AASI a correct and
complete copy of each written arrangement listed in Exhibit 1.1(a)(iv). With
respect to each Contract: (i) the written arrangement is legal, valid, binding,
enforceable, and in full force and effect; (ii) the written arrangement will
continue to be legal, valid, binding, and enforceable and in full force and
effect on identical terms following the Closing; (iii) no party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or default or permit termination, modification, or
acceleration, under the
13
14
written arrangement; and (iv) no party has repudiated any provision of the
written arrangement. The Seller is not a party to any verbal contract,
agreement, or other arrangement, which, if reduced to written form, would be
required to be listed in Exhibit 1.1(a)(iv) under terms of this Section 2.12.
The contracts and arrangements on Exhibit 1.1(a)(iv) constitute all of the
agreements, contracts, arrangements and rights necessary to conduct the Seller's
business as it is presently conducted and presently proposed to be conducted.
To Seller's knowledge, no filled customer order or commitment of the
Seller's business obligating the Seller to process, manufacture, or deliver
products or perform services will result in a loss to the Seller upon completion
of performance. No purchase order or commitment of the Seller with respect to
Seller's business is in excess of normal requirements, nor are prices provided
therein in excess of current market prices for the products or services to be
provided thereunder. To Seller's knowledge, no supplier of the Seller has
indicated within the past year that, with respect to Seller's business, it will
stop, or decrease the rate of, supplying materials, products, or services to
them and no customer of the Seller has indicated within the past year that it
will stop, or decrease the rate of, buying materials, products, or services from
it.
Section 2.13 Software and Information Systems.
(a) Section 2.13 of the Disclosure Schedule sets forth an accurate and
complete list and summary description of all the software used in and related to
Seller's business ("Software"). The Software identified on Section 2.13 of the
Disclosure Schedule is all the software necessary for the operation of Seller's
business as it is presently conducted and as presently proposed to be conducted.
Section 2.13 of the Disclosure Schedule identifies or describes (i) Software
which is owned by the Seller and (ii) Software which is licensed to the Seller
by third parties. Each person who participated in the development of Software
owned by Seller has either so participated as an employee of Seller or entered
into a written agreement assigning the copyright in such Software (including the
related documentation) to Seller. In each instance in which Seller is using or
has used Software, or a copy thereof, that it purchased
14
15
or licensed from a third party (other than word processing, accounting,
communications and similar business software that is commercially available to
any third party at a cumulative cost not in excess of $5,000): (i) Seller has
the perpetual, irrevocable, transferable, worldwide right to use, copy, modify,
prepare, derivatives of, sublicense, distribute and modify, prepare derivatives
of, sublicense, distribute and otherwise market each Software; and (ii) Seller
has possession of and the right to use the most current, fully documented source
code version of such Software.
(b) Seller does not sell, license, sublicense or otherwise market
Software to third parties and has not entered into any Contract that grants any
third party a license or sublicense in Software. Seller has not entered into any
Contract, other than those Contracts listed on Section 2.13(b) of the Disclosure
Schedule, that restricts Seller's use of Software or that obligates Seller to
maintain, enhance, protect or otherwise take any action with respect to
Software.
(c) Except as is set forth in Section 2.13(c) of the Disclosure
Schedule, all Software that Seller uses includes four digit format for the
indication of the relevant year and, at no additional costs to Purchaser, and
without human intervention, will correctly recognize and correctly process data
and formulas relating to the year 2000 and beyond and provide all such
date-related data and formulas used by other applications in a format that will
permit the correct recognition and processing of data by the other applications.
Seller, except as disclosed in this Section 2.13 is not aware of any year 2000
(Y2K) issues with any major customers and suppliers.
(d) To Seller's knowledge, except as set forth in Section 2.13(d) of
the Disclosure Schedule, there are no defects or errors in the Software, which
defects or errors could materially and adversely affect Purchaser's or any
licensee's use of the Software or the functioning of the Software in accordance
with the specifications for the Software.
Section 2.14 Real Property Leases. With respect to Seller's business,
Section 2.14 of the Disclosure Schedule lists and describes briefly all real
property leased or subleased to
15
16
the Seller. The Seller has delivered to the Purchaser correct and complete
copies of the leases and subleases listed in Section 2.14 of the Disclosure
Schedule. With respect to each lease and sublease listed in Section 2.14 of the
Disclosure Schedule:
(a) the lease or sublease is legal, valid, binding, enforceable, and in
full force and effect;
(b) the lease or sublease will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
Closing.
(c) no party to the lease or sublease is in breach or default, and no
event has occurred which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or acceleration
thereunder;
(d) no party to the lease or sublease has repudiated any provision
thereof;
(e) there are no disputes, oral agreements, or forbearance programs in
effect as to the lease or sublease;
(f) with respect to each sublease, the representations and warranties
set forth in subsections (a) through (e) above are true and correct with respect
to the underlying lease;
(g) the Seller has not assigned, transferred, conveyed, mortgaged,
deeded in trust, or encumbered any interest in the leasehold or subleasehold;
(h) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits) required
in connection with the operation thereof and have been operated and maintained
in accordance with applicable laws, rules, and regulations; and
(i) all facilities leased or subleased thereunder have received all
approvals of governmental authorities (including licenses and permits) required
in connection with the operation thereof and have been operated and maintained
in accordance with applicable laws, rules, and regulations.
16
17
Section 2.15 Accounts Receivable. All accounts receivable of the Seller
with respect to Seller's business are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims, are
presently current and collectible, and will be collected in accordance with
their terms at their recorded amounts, subject only to the reserve for bad debts
set forth on the face of the December 31, 1998 Balance Sheet as adjusted for the
passage of time in accordance with the past custom and practice of the Seller.
Section 2.16 Licenses. The rights of the Seller under the Licenses
described or referred to in Exhibit 1.1(a)(viii) are valid and enforceable by
the Seller in accordance with their respective terms. Neither the Seller nor the
other parties thereto are in default in any material respects (nor does any
circumstance exist which, with notice or the passage of time or both, would
result in such a default) under the Licenses. The parties further acknowledge
that subsequent to the closing of the instant agreement, Purchaser will be
required, pursuant to 14 C.F.R. Section 145.15 to apply for an amended
certificate pursuant to 14 C.F.R. Section 145.11. Prior to the grant of the
amended certificate, Seller and Purchaser shall act under the Seller's old
certificate as may be legally permissible to continue without interruption the
operation of the Seller.
17
18
Section 2.17 Litigation. Section 2.17 of the Disclosure Schedule sets
forth each instance in which the Seller or the Shareholders (i) are subject to
any unsatisfied judgment, order, decree, stipulation, injunction, or charge or
(ii) are a party to the knowledge of any officers (and employees with
responsibility for litigation matters) of the Seller or is threatened to be made
a party to any charge, complaint, action, suit, proceeding, hearing, or
investigation of or in any court or quasi-judicial or administrative agency of
any federal, state, local, or foreign jurisdiction or before any arbitrator.
None of the charges, complaints, actions, suits, proceedings, hearings, and
investigations set forth in Section 2.17 of the Disclosure Schedule could result
in any adverse change in the assets, liabilities, business, financial condition,
operations, results of operations, or future prospects of Seller's business.
None of the officers or shareholders (and employees with responsibility for
litigation matters) of the Seller have any reason to believe that any such
charge, complaint, action, suit, proceeding, hearing, or investigation may be
brought or threatened against the Seller.
Section 2.18 Employees.
(a) Employee Census. Seller has furnished an accurate employee census,
detailing the Employee's date of hire, salary, benefits and other pertinent
information in Section 2.18 of the Disclosure Schedule. There shall have been no
material increase in any compensation paid or payable to the employees of Seller
unless otherwise disclosed and agreed to by Purchaser.
(b) No Contracts or Future Contracts. Seller has no employment
contracts that cannot be terminated without liability and further, Seller will
not contact any employees to work for Seller after closing without first
obtaining Purchaser's written permission.
(c) Restrictions on Employees. No officer or employee of the Seller is
subject to any agreement with any other person or entity which requires such
officer or employee to assign any interest in inventions or other intellectual
property or keep confidential any trade secrets, proprietary data, customer
lists or other business information or which restricts such officer or
18
19
employee from engaging in competitive activities or solicitation of customers.
(d) Retention of Employees. Seller has no employment contracts, written
or oral, with any employee of Seller that is not terminable at Seller's
discretion and with no commitment or obligation of severance pay or benefits
except as described in Section 2.18 of the Disclosure Schedule. Seller shall be
responsible for any severance or wrongful termination claims each of these
employees may have and agree to indemnify Purchaser from the same occurring
prior to the Closing. Seller shall terminate all employees effective as of the
date of Closing. Purchaser will hire the employees on the same terms and
conditions as currently exist, including that there will be no lapse in benefits
and credit will be given for years of actual service.
(e) Employee Benefits. Section 2.18 of the Disclosure Schedule lists
all employee benefit plans that the Seller maintains or to which the Seller
contributes for the benefit of any current or former employee of the Seller
("Employee Benefit Plan").
(f) ERISA Matters.
(i) Except as set forth on Section 2.18 of the Disclosure
Schedule, the Seller (or any person or entity under "common control"
with it ("ERISA Affiliates"), as "common control" is defined under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
does not maintain or contribute to, or has not maintained or
contributed to, any bonus, pension, profit sharing, deferred
compensation, retirement, hospitalization, medical or dental
reimbursement, severance pay, vacation pay, disability, death benefit,
insurance, and other similar plans, programs, or arrangements providing
benefits to the employees of the Seller (including but not limited to
"employee pension benefit plans" and "employee welfare benefit plans"
within the meaning of Section 3(1) and 3(2) of ERISA ("Pension Benefit
Plans") and Welfare Benefit Plans" respectively)). The Seller has
delivered to Purchaser true copies of all plans set forth in Section
2.18 of the Disclosure Schedule.
19
20
(ii) Neither the Seller nor its ERISA Affiliates have or have
ever had an obligation to contribute to a "multiemployer plan" within
the meaning of Section 4001(a)(3) of ERISA.
(iii) Each Welfare Benefit Plan has been funded and will
continue to be funded in accordance with its terms through the Closing
Date, including the payment of applicable premiums, for coverage
through Closing Date, on any insurance contract funding a Welfare
Benefit Plan.
(iv) Each Welfare Benefit Plan which is a "group health plan,"
as defined in Section 607(1) of ERISA has been operated in material
compliance with the provisions of Part 6 of Title I of ERISA and
Section 4980B of the Code at all times. Section 2.18 of the Disclosure
Schedule has a complete and accurate list of all present and former
employees of the Seller and their respective beneficiaries who, as of
the date hereof, are receiving or who are eligible to elect to receive
benefits pursuant to such group health plans and the provisions of
ERISA and the Code as well as the current hourly pay or yearly salary.
Section 2.19 Environmental Matters.
(a) Except as set forth in Section 2.19(a) of the Disclosure Schedule,
the Seller and the property owned or used in its business are, and at all times
have been, in compliance with all applicable Federal, state and local statutes,
laws, ordinances, regulations and codes related in any way to Hazardous
Materials (as hereinafter defined) and underground storage tanks. As used
herein, Hazardous Materials shall mean solid waste (as that term is defined in
the Resource Conservation and Recovery Act, 42 U.S.C.A. Section 6901, et seq,
and the regulations adopted pursuant thereto), hazardous substances (as that
term is defined in the Comprehensive Environmental Response Compensation and
Liability Act, 42 U.S.C.A. Section 9601, et seq, and the regulations adopted
pursuant thereto), and other pollutants, including, without limitation, any
solid, liquid, gaseous or thermal irritant or contaminant, such as smoke, vapor,
soot, fumes, acids, alkaloids or chemicals.
20
21
(b) Except as set forth in Section 2.19(b) of the Disclosure Schedule,
during Seller's occupancy of the property used in its business, no Hazardous
Materials have been generated, treated, stored or disposed of at, or transported
to or form, the Seller or the property owned or used in the Seller's business at
any time.
(c) Except as set forth in Section 2.19(c) of the Disclosure Schedule,
to Seller's knowledge no asbestos or materials containing asbestos have been
installed, used, treated, stored or disposed of by the Seller in or on property
owned or used by the Seller at any time.
(d) To Seller's knowledge, except as set forth in Section 2.19(d) of
the Disclosure Schedule, during Seller's occupancy of the property used in its
business, no polychlorinated biphenyls are located on or in the facilities of
the Seller or any property owned or used by the Seller at any time.
(e) Except as set forth in Section 2.19(e) of the Disclosure Schedule,
the Seller holds all necessary permits or licenses to enable it to comply with
all statutes, laws, ordinances, regulations and codes related in any way to
Hazardous Materials or underground storage tanks.
(f) Except as set forth in Section 2.19(f) of the Disclosure Schedule,
no notice has been served on the Seller or any of its directors, officers or
shareholders from any entity, governmental body or individual claiming violation
of any statute, law, ordinance, regulation or code related in any way to
Hazardous Materials or underground storage tanks, requiring compliance with any
statute, law, ordinance, regulation or code related in any way to Hazardous
Materials or underground storage tanks, or demanding payment of or contributions
for damage regarding the Seller or property owned or used by the Seller related
in any way to Hazardous Materials or underground storage tanks, including
without limitation, damages to the environment or natural resources.
21
22
Section 2.20 Legal Compliance.
(a) With respect to Seller's business, the Seller has complied with all
laws (including rules and regulations thereunder) of federal, state, local, and
foreign governments (and all agencies thereof), and no charge, complaint,
action, suit, proceeding, hearing, investigation, claim, demand, or notice has
been filed or commenced against the Seller alleging any failure to comply with
any such law or regulation, except as disclosed on Exhibit 1.5 (item iii).
(b) With respect to Seller's business, the Seller has complied with all
applicable laws (including rules and regulations thereunder) relating to the
employment of labor, employee civil rights, and equal employment opportunities.
(c) With respect to Seller's business, the Seller has not violated in
any respect or received a notice or charge asserting any violation of the
Sherman Act, the Clayton Act, The Robinson-Patman Act, or the Federal Trade
Commission Act, each as amended.
(d) With respect to Seller's business, the Seller has not:
(i) made or agreed to make any contribution, payment, or gift
of funds or property to any governmental official, employee, or agent
where either the contribution, payment, or gift or the purpose thereof
was illegal under the laws of any federal, state, local, or foreign
jurisdiction;
(ii) established or maintained any unrecorded operating asset
for any purpose; or
(iii) made or agreed to make any contribution, or reimbursed
any political gift or contribution made by any other person, to any
candidate for federal, state, local, or foreign public office.
(e) With respect to Seller's business, the Seller has filed in a timely
manner all reports, documents, and other materials it was required to file (and
the information contained therein was correct and complete in all respects)
under all applicable laws (including rules and regulations thereunder).
22
23
(f) With respect to Seller's business, the Seller has possession of all
records and documents it was required to retain under all applicable laws
(including rules and regulations thereunder).
Section 2.21 Product Warranty. With respect to Seller's business, each
service provided, overhauled parts and other parts and products manufactured,
sold, leased, or delivered by the Seller has been in conformity with all
applicable contractual commitments and all express and implied warranties, and,
with respect to Seller's business, the Seller has no liability (and to Seller's
knowledge there is no present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim, or demand against any service,
overhauled parts or other parts and products giving rise to any liability) for
replacement or repair thereof or other damages in connection therewith, except
as is disclosed in Section 2.21 of the Disclosure Schedule. With respect to
Seller's business, no service, overhauled parts or other parts and products
manufactured, sold, leased, or delivered by the Seller is subject to any
guaranty, warranty, or other indemnity beyond the applicable standard terms and
conditions of sale or lease. With respect to Seller's business, Section 2.21 of
the Disclosure Schedule includes copies of the standard invoices (containing
terms and conditions of services provided, terms and conditions of sale or
lease, applicable guaranty, warranty, and indemnity provisions).
Section 2.22 Product Liability; Product Safety. Except as set forth on
Section 2.22 of the Disclosure Schedule, the Seller has no liability (and to
Seller's knowledge there is no present of future charge, complaint, action,
suit, proceeding, hearing, investigation, claim, or demand against Seller giving
rise to any liability) arising out of any injury to persons or property as a
result of a service performed by Seller or as a result of the ownership,
possession, or use of any overhauled part or other parts and products
manufactured, sold, leased, or delivered by the Seller.
Except as set forth on Section 2.22 of the Disclosure Schedule, the
Seller has not been required to file any notification or other report with or to
provide information to any product safety agency, commission, board or other
23
24
governmental authority of any jurisdiction concerning actual or potential
hazards with respect to any service Seller has provided or with respect to any
flight controls, overhauled parts or other parts and products manufactured or
sold by Seller. Each service performed by Seller, overhauled part and other
parts and products manufactured, distributed or sold by Seller complies in all
material respects of all product safety standards or each applicable product
safety agency, commission, board or other governmental authority. The Seller has
not made any misrepresentation or furnished any information containing any
material omission to any products safety testing laboratory or a similar
organization. The Seller has not failed to obtain approval of any product,
component or process which is used, manufactured or licensed by the Seller in
the conduct of its business which is legally required to be approved by any
independent or government-sponsored testing laboratory, industry, trade
association or similar body agency or association.
Section 2.23 Insurance. Seller maintains in full force and effect
insurance coverage on its assets, properties, premises, operations and personnel
in such amounts and against such risks and losses as are adequate and customary
for the business engaged in by Seller. Section 2.23 of the Disclosure Schedule
lists all policies of insurance owned by the Seller and now in effect insuring
all its business, assets and personnel, and sets forth for such policy the name
of the insurer, the type of coverage, the amount of coverage, the term thereof
and the annual premium.
Section 2.24 Disclosure. None of the representations or warranties of
Seller contained herein, none of the information contained in the Disclosure
Schedule referred to in this Article II and none of the other information or
documents furnished to the Purchaser pursuant to the terms of this Agreement is
or will be false or misleading in any material respect, or omits or will omit to
state a fact herein or therein necessary to make the statements herein or
therein not misleading in any material respect. To Seller's knowledge, there is
no fact which adversely affects or in the future is likely to affect adversely
the Subject Assets or the Seller's business in any material respect which has
not been set forth or referred to in this Agreement, Exhibits or the Schedules
hereto.
24
25
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER AND AASI
To induce the Seller to enter into this Agreement and to sell the
Subject Assets, the Purchaser and AASI hereby represent and warrant that the
statements contained in this Article III are correct and complete as of the
Closing Date, except as set forth in the Disclosure Schedule.
Section 3.1 Corporate Organization and Authority. The Purchaser and
AASI are corporations duly organized and validly existing and in good standing
under the laws of the jurisdiction of their incorporation, with full corporate
power and authority to conduct its business as now conducted and to enter into
and perform its obligations under this Agreement. The Purchaser's and AASI's
execution, delivery and performance of this Agreement and its acquisition of and
payment for the Subject Assets have been duly authorized by all requisite
corporate action on the part of the Purchaser and AASI, and this Agreement
constitutes, and all agreements and other instruments and documents to be
executed and delivered by the Purchaser and AASI hereunder will constitute, the
Purchaser's and AASI's legal, valid and binding obligations, enforceable against
the Purchaser and AASI in accordance with their terms.
Section 3.2 Absence of Conflicts and Consent Requirements. The
Purchaser's and AASI's execution and delivery of this Agreement and performance
of its obligations hereunder, including the purchase of and payment for the
Subject Assets hereunder, do not and will not conflict with, violate or result
in any default under the Purchaser's or AASI's Articles of Incorporation or
Bylaws or any mortgage, indenture, agreement, instrument or other contract to
which the Purchaser or AASI is a party or by any judgment, order, decree, law,
statute, regulation or other judicial or governmental restriction to which the
Purchaser and AASI are subject. The Purchaser's and AASI's execution and
delivery of this Agreement and performance of its obligations hereunder,
including the purchase of and payment for the Subject Assets, do not and will
not require the consent of, or any prior
25
26
filing with or notice to, any governmental authority or other third party.
Section 3.3 No Material Misstatements or Omissions. The representations
and warranties of the Purchaser and AASI in this Agreement do not contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made therein not misleading.
ARTICLE IV
CERTAIN COVENANTS AND AGREEMENTS
Section 4.1 Change of the Seller's Name. Promptly after the Closing,
the Seller will take all action necessary to discontinue use of the Name and to
enable the Purchaser exclusively to use the Name, and at the Closing shall
deliver to the Purchaser all documents necessary to accomplish the foregoing.
Shareholders shall not operate under any corporate entity in any type of
aviation or aviation parts business.
Section 4.2 Maintenance of Records. Inasmuch as certain of the Seller's
books, records and documents are to be included as Subject Assets and sold to
the Purchaser hereunder, and certain other of the Seller's books, records and
documents are Excluded Assets to be retained by the Seller hereunder, and the
Purchaser or the Seller may have need to have access to the books, records and
documents held by the other after the Closing, the Purchaser and the Seller
agree that they shall each maintain for at least three years after the Closing
Date (or for such longer period as may be required by applicable law) the
respective books, records and documents sold or retained hereunder. During such
period, representatives of the Purchaser shall be permitted to inspect and make
copies of such books, records, accounting work papers and other documents
retained by the Seller during normal business hours and upon reasonable notice
for purposes related to the continuation by the Purchaser of the Seller's
business; and representatives of the Seller shall be permitted to inspect and
make copies of the books, records and documents sold to the Purchaser during
normal
26
27
business hours and upon reasonable notice for purposes related to winding up its
affairs.
Section 4.3 Further Assurances. The Seller, the Shareholders and the
Purchaser each hereby covenants and agrees with the other that at any time and
from time to time each will promptly execute and deliver to the other such
further assurances, instruments and documents and take such further action as
the other may reasonably request in order to carry out the full intent and
purpose of this Agreement.
Section 4.4 Fees and Expenses. The Seller, the Shareholders and the
Purchaser shall each bear their own expenses in connection with the negotiation
and preparation of this Agreement and their consummation of the transactions
contemplated hereby, including without limitation the fees and expenses of their
respective counsel, accountants and consultants.
Section 4.5 No Brokers. The Seller and the Purchaser each represent and
warrant to the other that no broker or finder has been involved or engaged by it
in connection with the transactions contemplated hereby, and each hereby agrees
to indemnify and save harmless the other from and against any and all broker's
or finder's fees, commissions or similar charges incurred or alleged to have
been incurred by the indemnifying party in connection with the transactions
contemplated hereby and any and all loss, liability, cost or expense (including
reasonable attorneys' fees) arising out of any claim that the indemnifying party
incurred any such fees, commissions or charges.
Section 4.6 Bulk Transfer Compliance. Inasmuch as the Seller has agreed
to duly pay, perform and discharge the Excluded Liabilities and Obligations, the
Purchaser and the Seller hereby mutually agree to waive compliance with the
provisions of the Arizona Bulk Sales laws and of the corresponding laws of any
other jurisdiction, to the extent applicable to the transactions contemplated
hereby. The Seller covenants and agrees to indemnify and save harmless the
Purchaser from and against any and all loss, liability, cost and expense
(including reasonable attorneys' fees) arising out of noncompliance with said
Bulk Transfers.
27
28
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to the Purchaser's Obligations. The obligations
of the Purchaser and AASI to complete the Closing are contingent upon the
fulfillment of each of the following conditions on or before the Closing Date,
except to the extent that the Purchaser may, in its absolute discretion, waive
any one or more thereof in whole or in part:
(a) Instruments of Transfer. The Seller shall have delivered to the
Purchaser such assignments, bills of sale, deeds, certificates of title and
other instruments of transfer, all in form reasonably satisfactory to the
Purchaser, as are necessary to fully and effectively convey to the Purchaser all
of the Subject Assets in accordance with the terms hereof and shall have
executed the Consignment Agreement.
(b) Consents. The consents, if any, described in the Exhibits hereto,
and all other consents, if any, required for the Seller to perform its
obligations hereunder, shall have been obtained in form reasonably satisfactory
to the Purchaser.
(c) No Material Adverse Change. On the date of Closing, there shall not
have occurred any event or condition materially and adversely affecting the
financial condition, results of operations or business prospects of the Seller
except for matters resulting from adverse changes in economic conditions
affecting businesses generally.
(d) No Adverse Proceedings. No action, suit or proceeding before any
court or any governmental or regulatory authority shall have been commenced, no
investigation by any governmental or regulatory authority shall have been
commenced, and no action, suit or proceeding by any governmental or regulatory
authority shall have been threatened against any of the parties to this
Agreement, or any of the principals, officers or directors of any of them, or
any of the Subject Assets seeking to restrain, prevent or change the
transactions contemplated hereby or questioning the validity or legality of any
of such transactions or seeking damages in connection with any of such
transactions.
28
29
(e) Other Assurances. The Seller shall have delivered to the Purchaser
such other and further certificates, assurances and documents as the Purchaser
or AASI may reasonably request in order to evidence the accuracy of the Seller's
representations and warranties, the performance of its covenants and agreements
to be performed at or prior to the Closing, and the fulfillment of the
conditions to the Purchaser's obligations.
(f) Lease of Facilities. Purchaser and Seller shall enter into leases
for the facilities in which Seller's business is presently located (the
"Leases").
(g) Director and Shareholder Approval. All necessary director and
shareholder approval shall be given by Seller. A legal opinion shall be given by
counsel to the Seller as to this provision.
(h) Employee Payroll Matters. Purchaser and Seller shall have resolved,
to Purchaser's and Seller's mutual satisfaction, the employee-related payroll
matters. Fulfillment of this obligation shall include, but not be limited to,
the filing of all outstanding returns for Arizona withholding liability and
federal employer/employee liability, FUTA and Medicare liability and payment of
all outstanding principal amounts due thereunder.
(i) Opinion of Seller's Counsel. The Purchaser shall have received from
counsel for the Seller an opinion dated as of the date of Closing in form and
substance satisfactory to the Purchaser and its counsel, to the effect that:
(i) Seller is a corporation duly organized, validly existing
and in good standing under the laws of Arizona.
(ii) All corporate or other proceedings required by law, the
Articles of Incorporation and the bylaws of the Seller in connection
with the authorization, execution and delivery of this Agreement and
the consummation of the transaction contemplated have been duly and
validly taken.
(iii) The Seller has the legal power and authority to
consummate this transaction.
29
30
(iii) Except as disclosed in this Agreement, the Disclosure
Schedule or the Exhibits hereto, such counsel is not aware of any
pending or threatened action, suit, proceeding or investigation before
any court or any public, regulatory, or governmental agency, authority
or body, involving Seller or any of its existing officers or directors
and such counsel do not know of any legal matter or government
proceedings regarding Seller.
In rendering such an opinion, counsel for Seller may rely (i) as to
matters of fact, to the extent they deem proper, on certificates of responsible
officers of Seller; and (ii) to the extent they deem proper, upon written
statements or certificates of officers of departments of various jurisdictions
having custody of documents respecting the corporate existence or good standing
of Seller, provided that copies of any such statements or certificates shall be
delivered to counsel for the Purchaser.
(j) Articles of Incorporation, Bylaws, and Minutes. The Seller shall
have delivered to the Purchaser the Articles of Incorporation, the Bylaws, and
the corporate minutes of the Seller, along with a certificate, dated as of the
Closing Date, certifying as to the accuracy and completeness of such corporate
documents.
(k) Corporate Documents. The Seller shall deliver to the Purchaser at
the Closing the following:
(i) a good standing certificate issued by the Secretary of the
State of Arizona with respect to the Seller;
(ii) certified copies of resolutions of the shareholders and
board of directors of the Seller authorizing the execution, delivery
and performance by the Seller of this Agreement, the conveyance of the
Subject Assets and the transactions contemplated hereby; and
(iii) a certificate of the Seller certifying that each of the
obligations of the Seller to be performed on or before the Closing
pursuant to this Agreement shall have been duly performed as of the
Closing.
30
31
Section 5.2 Conditions to the Seller's Obligations. The obligations of
the Seller to complete the Closing are contingent upon the fulfillment of each
of the following conditions on or before the Closing Date, except to the extent
that the Seller may, in its absolute discretion, waive any one or more thereof
in whole or in part:
(a) Payment of Purchase Price. The Purchaser shall have paid to the
Seller the Purchase Price or delivered promissory notes to the Seller.
(b) Employment Agreement. Purchaser shall enter into employment
agreements with Micah Chapman and Frank Zambo substantially in the form of
Exhibit 5.2(b) hereto.
(c) No Adverse Proceedings. No action, suit or proceeding before any
court or any governmental or regulatory authority shall have been commenced, no
investigation by any governmental or regulatory authority shall have been
commenced, and no action, suit or proceeding by any governmental or regulatory
authority shall have been threatened, against any of the parties to this
Agreement, or any of the principals, officers or directors of any of them, or
any of the Subject Assets, seeking to restrain, prevent or change the
transactions contemplated hereunder or questioning the validity or legality of
any of such transactions or seeking damages in connection with any of such
transactions.
(d) Other Assurances. The Purchaser shall have delivered to the Seller
such other and further certificates, assurances and documents as the Seller may
reasonably request in order to evidence the accuracy of the Purchaser's
representations and warranties, the performance of its covenants and agreements
to be performed at or prior to the Closing, and the fulfillment of the
conditions to the Seller's obligations.
(e) Opinion of the Purchaser's Counsel. The Purchaser shall have
furnished the Seller with an opinion, dated the date of Closing, of Gray,
Layton, Kersh, Solomon, Sigmon, Furr & Smith, P.A., counsel for the Purchaser
and AASI, in form and substance satisfactory to the Seller and its counsel, to
the effect that: (i) the Purchaser and AASI are corporations duly organized,
validly existing and in good standing under the laws of Arizona and
31
32
Delaware respectively and has all requisite power and authority to execute and
deliver this Agreement and to perform their obligations under this Agreement;
(ii) all corporate or other proceedings required by law, the Articles of
Incorporation and By-laws of Purchaser and AASI or by the provisions of this
Agreement to be taken by the Purchaser and AASI on or before the date of
Closing, in connection with the authorization, execution and delivery of this
Agreement and the consummation of the transaction contemplated by this
Agreement, have been duly and validly taken; and (iii) the Purchaser and AASI
have the legal power and authority to consummate this transaction.
ARTICLE VI
INDEMNIFICATION
Section 6.1 Indemnification by the Seller and Shareholders. Subject to
the procedures and limitations set forth in this Article VI, the Seller and
Shareholders (except for Glen Hiscox), jointly and severally, hereby agree to
indemnify and save harmless the Purchaser from and against any and all
liabilities, losses, claims, judgments, damages, expenses and costs (including,
without limitation reasonable counsel fees and costs and expenses incurred in
connection therewith) (a "Loss") incurred by the Purchaser arising after the
Closing out of any of the following:
(a) Breach of Warranty. The falsity or incorrectness of any
representation or warranty made by the Seller or Shareholders in this Agreement
or in any instrument or document delivered by the Seller or Shareholders to the
Purchaser pursuant to this Agreement;
(b) Breach of Covenants. The Seller's failure to duly perform any
covenant or agreement to be performed by it under this Agreement or under any
instrument or document delivered by the Seller to the Purchaser pursuant to this
Agreement;
(c) Claims Against Subject Assets. Any levy or other claim by any third
party against or with respect to the Subject Assets, or
32
33
any other claim by any third party against the Purchaser, arising out of any act
or omission or alleged act or omission of the Seller or Shareholders prior to
the Closing.
The Purchaser shall have the right to be put in the same financial
position as it would have been in had each of the representations and warranties
of the Seller and Shareholders been true and correct or had the Seller or
Shareholders not breached any representations, warranties, covenants or
agreements, whether by payment by Seller or shareholders or by offset against
any future monies owed to the same.
Section 6.2 Survival of the Seller's and Shareholders' Warranties. The
representations and warranties of the Seller and Shareholders made in this
Agreement or in any instrument or document delivered by the Seller or
Shareholders to the Purchaser pursuant to this Agreement shall survive the
Closing.
Section 6.3 Indemnification by the Purchaser. After the Closing, the
Purchaser agrees that it will indemnify and save harmless the Seller from and
against any and all loss, liability, damages, cost or expense (including
reasonable attorneys' fees) incurred by the Seller (net of any benefits to the
Seller) arising out of the Purchaser's breach of any of its representations,
warranties, covenants and agreements in this Agreement or in any document
delivered by the Purchaser to the Seller hereunder.
Section 6.4 Matters Involving Third Parties. If any third party shall
notify any Party (the "Indemnified Party") with respect to any matter which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Article, then the Indemnified Party shall
notify each Indemnifying Party thereof promptly; provided, however, that no
delay on the part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any liability or obligation hereunder
unless (and then solely to the extent) the Indemnifying Party thereby is
damaged. Within 15 days after the Indemnified Party has given notice of the
matter the Indemnifying Party may notify the Indemnified Party that the
Indemnifying Party is going to cure the matter and release the Indemnified Party
from any and all liability with respect thereto. In the event any Indemnifying
Party notifies the Indemnified Party within 15 days
33
34
after the Indemnified Party has given notice of the matter that the Indemnifying
Party is assuming the defense thereof, (A) the Indemnifying Party will defend
the Indemnified Party against the matter with counsel of its choice reasonably
satisfactory to the Indemnified Party, (B) the Indemnified Party may retain
separate co-counsel (at its cost), (C) the Indemnified Party will not consent to
the entry of any judgment or enter into any settlement with respect to the
matter without the written consent of the Indemnifying Party (not to be withheld
unreasonably), and (D) the Indemnifying Party will not consent to the entry of
any judgment with respect to the matter, or enter into any settlement which does
not include a provision whereby the plaintiff or claimant in the matter releases
the Indemnified Party from all Liability with respect thereto, without the
written consent of the Indemnified Party (not to be withheld unreasonably). In
the event no Indemnifying Party notifies the Indemnified Party with 15 days
after the Indemnified Party has given notice of the matter, the Indemnified
Party may defend against, or enter into any settlement with respect to, the
matter in any manner it reasonably may deem appropriate.
ARTICLE VII
MISCELLANEOUS
Section 7.1 Merger Clause. This Agreement contains the final, complete
and exclusive statement of the agreement between the parties with respect to the
transactions contemplated herein and all prior or contemporaneous written or
oral agreements with respect to the subject matter hereof are merged herein.
Section 7.2 Amendments. No change, amendment, qualification or
cancellation hereof shall be effective unless in writing and executed by each of
the parties hereto by their duly authorized officers.
Section 7.3 Press Releases and Announcements. No party shall issue any
press release or announcement relating to the subject matter of this Agreement
prior to the Closing without the prior written approval of the other party;
provided, however, that any party may make any public disclosure it believes in
good faith is
34
35
required by law or regulation (in which case the disclosing party will advise
the other party prior to making the disclosure).
Section 7.4 Benefits and Binding Effect. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors, transferees and assigns.
Section 7.5 Notices. All notices, requests and demands and other
communications hereunder must be in writing and shall be deemed to have been
duly given when (i) personally delivered, (ii) when forwarded by Federal
Express, Airborne or another private carrier which maintains records showing
delivery information, (iii) when sent via facsimile transmission but only if a
written or facsimile acknowledge of receipt is received by the sending party, or
(iv) when placed in the United States Mails and forwarded by Registered or
Certified Mail, return receipt requested, postage prepaid, addressed to the
party to whom such notice is being given at the following addresses:
AS TO THE SELLER: Complete Controls, Inc.
850 E. Teton Rd, Suite 8
Tucson, AZ 85706
WITH COPY TO: Mark J. Valentine
Monroe & Associates
6280 E. Pima, Suite 106
Tucson, AZ 85712
AS TO THE PURCHASER: American Aircarriers Support,
Incorporated
Attn: Joseph E. Civiletto
P. O. Box 7566
Charlotte, NC 28241
WITH COPY TO: David M. Furr
Gray, Layton, Kersh, Solomon,
Sigmon, Furr & Smith, P.A.
P. O. Box 2636
Gastonia, NC 28053-2636
35
36
Any party may change the address(es) to which notices to it are to be sent by
giving notice of such change to the other parties in accordance with this
Section.
Section 7.6 Captions. The captions are for convenience of reference
only and shall not be construed as a part of this Agreement.
Section 7.7 Governing Law. This Agreement shall be construed,
interpreted, enforced and governed by and under the laws of the State of South
Carolina.
Section 7.8 Submission to Jurisdiction. Each of the parties submits to
the jurisdiction of any state or federal court sitting in South Carolina in any
action or proceeding arising out of or relating to this Agreement, agrees that
all claims in respect of the action or proceeding may be heard and determined in
any such court, and agrees not to bring any action or proceeding arising out of
or relating to this Agreement in any other court. Each of the parties waives any
defense of inconvenient forum to the maintenance of any action or proceeding so
brought and waives any bond, surety, or other security that might be required of
any other party with respect thereto by suit on the judgment or in any other
manner provided by law.
Section 7.9 No Third-Party Beneficiaries. This Agreement is not
intended to be for the benefit of and shall not be enforceable by any person who
or which is not a party hereto (or a permitted assign or successor to such
party).
Section 7.10 Exhibits. All of the Exhibits hereto referred to in this
Agreement are hereby incorporated herein by reference and shall be deemed and
construed to be a part of this Agreement for all purposes.
Section 7.11 Severability. The invalidity or unenforceability of any
one or more phrases, sentences, clauses or provisions of this Agreement shall
not affect the validity or enforceability of the remaining portions of this
Agreement or any part thereof.
36
37
Section 7.12 Counterparts. This Agreement may be executed in
any number of counterparts, all of which shall constitute one and
the same instrument.
IN WITNESS WHEREOF, the Seller and the Purchaser have each caused this
Agreement to be executed by their respective duly authorized officers under
seal, all as of the day and year first above written.
SELLER:
ATTEST: COMPLETE CONTROLS, INC.
/s/ Frank Zambo /s/ Micah Chapman
- -------------------------------- ------------------------------------ (SEAL)
Secretary President
/s/ Micah Chapman
------------------------------------ (SEAL)
Micah Chapman
/s/ Glen Hiscox
------------------------------------ (SEAL)
Glen Hiscox
/s/ Frank Zambo
------------------------------------ (SEAL)
Frank Zambo
PURCHASER:
AMERICAN AIRCARRIERS SUPPORT
ATTEST: ACQUISITION IV CORP.
/s/ Elaine T. Rudisill By /s/ Joseph E. Civiletto
- -------------------------------- ------------------------------------
Asst. Secretary President
AMERICAN AIRCARRIERS SUPPORT,
ATTEST: INCORPORATED
/s/ Elaine T. Rudisill By /s/ Joseph E. Civiletto
- -------------------------------- ------------------------------------
Asst. Secretary President
37