AMENDED STOCK PURCHASE AND SALE AGREEMENT
AMENDED STOCK PURCHASE AND SALE AGREEMENT, dated April 8, 1997, by and
among, PROFLIGHT MEDICAL RESPONSE, INC., a Colorado corporation with its
principal office at 00000 Xxxx Xxxxxxx Xxxxx Xxxx, Xxxxxxxxx, Xxxxxxxx 00000
(the "Purchaser"), XXXXX X. XXXXXX, XX. who resides at 00000 Xxxxxxxx Xxxxx,
Xxxxxxxxxx, Xxxxxxx 00000 (the "Shareholder"), and AIR RESPONSE SOUTH, INC., a
Florida corporation with its principal office at Orlando Executive Airport, 000X
Xxxxxxx Xxxxxx, Xxxxxx 72, Xxxxxxx, Xxxxxxx 00000 (the "Company").
W I T N E S E T H:
WHEREAS, the Purchaser desires to acquire and the Shareholder wishes to
transfer, on the terms and subject to the conditions and in the manner reflected
below, all of the outstanding shares of capital stock of the Company; and
WHEREAS, the Purchaser is not prepared or willing to proceed with the
contemplated transaction without the support, agreements and representations of
the Company and Shareholder contained in this Agreement and is proceeding in
reliance upon such support, agreements and representations; and
WHEREAS, the Shareholder and the Company are not prepared or willing to
proceed with the contemplated transaction without the support, agreements and
representations of the Purchaser contained in this Agreement and are proceeding
in reliance upon such support, agreements and representations;
NOW, THEREFORE, the parties to this AMENDED STOCK PURCHASE AND SALE
AGREEMENT do hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 GENERAL CONSTRUCTION: For purposes hereof, except as otherwise
expressly provided:
1.1.1 Defined terms include the plural as well as the singular;
1.1.2 All accounting terms not otherwise defined have the meanings
assigned under generally accepted accounting principles;
1.1.3 All references to schedules and exhibits are to all the
schedules and exhibits attached to this Agreement; and
1.1.4 Pronouns of either gender or neuter shall include, as
appropriate, the other pronoun forms.
1.2 Definitions: As used in this Agreement, the following terms shall
have the following definitions.
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1.2.1 Affiliate: When used with respect to a person, an "affiliate"
of that person is a person controlling, controlled by, or under common
control with that person.
1.2.2 Agreement: This Amended Stock Purchase and Sale Agreement,
including all of its schedules and exhibits and all other documents
specifically referred to in this Agreement that have been or are to be
delivered by a party to this Agreement to another such party in
connection with the Transaction and this Agreement and including all
duly adopted amendments, modifications, and supplements to or for this
Agreement, schedules, exhibits and other documents. Except as otherwise
provided, all schedules, exhibits and other documents required to be
delivered by a party to this Agreement shall be completed or delivered
10 days prior to the Closing.
1.2.3 Audited Financial Statements: With respect to the Company, for
the twelve month periods ended May 31, 1996 and 1995.
1.2.4 Closing: As defined in Section 9.1.
1.2.5 Closing Date: As defined in Section 9.1.
1.2.6 Company Balance Sheet: Balance Sheet as of May 31, 1996
included in the Audited Financial Statements.
1.2.7 Consulting and Non-Competition Agreement: As defined in
Section 2.3.
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1.2.8 EEO: Equal Employment Opportunity Act of 1972.
1.2.9 Entity: A corporation, partnership, sole proprietorship, joint
venture, or other form of organization formed for the conduct of a
business, whether active or passive.
1.2.10 ERISA: The Employee Retirement Income Security Act of 1974,
as amended and in effect at the time of execution of this Agreement.
1.2.11 GAAP: Generally accepted accounting principles, as in effect
on the date of any statement, report or determination that purports to
be, or is required to be, prepared or made in accordance with GAAP. All
references herein to financial statements prepared in accordance with
GAAP shall mean in accordance with GAAP consistently applied throughout
the periods to which reference is made.
1.2.12 Inventories: The stock of goods held by the Company from time
to time in the ordinary course of the business of the Company, in the
form in which such inventories then are held or after incorporating with
other goods or items, or the like.
1.2.13 IPO: The Purchaser's filing of an initial public offering on
Form SB-2 or other similar form with the Securities and Exchange
Commission.
1.2.14 Liabilities: At any point in time (the "Determination Time"),
the obligations of a person or Entity, whether known or unknown,
contingent or absolute, recorded on its
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books or not, arising or resulting in any way from facts, events,
agreements, obligations or occurrences that existed or transpired at a
prior point in time, or resulted from the passage of time to the
Determination Time, but not including obligations accruing or payable
after the Determination Time to the extent (but only to the extent) that
such obligations (l) arise under previously existing agreements for
services, benefits, or other considerations, and (2) accrue or become
payable with respect to services benefits, or other considerations
received by the person or Entity after the Determination Time.
1.2.15 Loan: The November 1996 loan by the Purchaser to Air
Response, Inc. for the aggregate sum of Two Hundred Thousand ($200,000)
Dollars with interest at the rate of ten (10%) percent per annum.
1.2.16 OSHA: The Occupational Safety and Health Act of 1970.
1.2.17 Permits: Any permits, licenses, orders, approvals,
franchises, registrations, authorizations or other approvals from any
federal, state, local and foreign governmental or regulatory body or
authority (public or self-regulatory).
1.2.18 Subsidiary: A corporation with respect to which another
Entity owns, directly or indirectly, shares entitling it to elect a
majority of the Board of Directors or in which it has a majority of the
equity interest.
1.2.19 Transaction: The acquisition of all the outstanding shares of
capital stock of the Company by the
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Purchaser from the Shareholder, as provided in Article II of this
Agreement.
1.2.20 Unaudited Financial Statements: With respect to the Company
for the six months ended November 30, 1996 and 1995 and for the three
months ended February 28, 1997 and 1996.
ARTICLE II
THE TRANSACTION
2.1 The Transaction: 2.1.1 Subject to the terms, conditions, provisions
and limitations contained in this Agreement, the Purchaser, in reliance upon the
representations and warranties of the Shareholder and the Company made herein
and in the schedules and exhibits annexed hereto, will at the Closing, acquire
from the Shareholder and the Shareholder, in reliance upon the representations
and warranties of the Purchaser made herein and in the schedules and exhibits
annexed hereto, will at the Closing transfer, convey and assign to the
Purchaser, free and clear of any and all liens, charges or other encumbrance,
51,000 shares of common stock, par value $.01, of the Company, comprising all of
the issued and outstanding shares of capital stock of the Company and
representing his entire ownership of equity securities of the Company, for Two
Million Dollars ($2,000,000) and for
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the number of shares of common stock, par value $.001, of the Purchaser equal to
an amount of $1,000,000. In calculating the number of shares of common stock to
which shareholder shall be entitled, the value of each share of common stock
shall be the per share price to the public at which the common stock is sold in
the IPO. The Shareholder's shares will not be registered under the Securities
Act of 1933 and will be legended to that effect. The Shareholder's shares shall
be issued thirteen months from the closing of the IPO.
2.1.2 Anything to the contrary herein notwithstanding, if the
Purchaser completes a second public offering, the Shareholder has the
option to put such number of shares of common stock, at the then current
market value, equal to 20% of the net proceeds of such offering to the
Purchaser, not to exceed $1,000,000. In the event a second public
offering occurs prior to the expiration of thirteen months from the
closing of the IPO, the shareholder shall have the right to be paid cash
without the actual issuance of the applicable shares.
2.2 Manner of Payment: The cash portion of the purchase price set forth
in Section 2.1.1 shall be payable as follows:
2.2.1 $1,000,000 shall be due and payable on the earlier of six
months from the date hereof or upon closing of the Purchaser's IPO.
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2.2.2 $1,000,000 shall be due and payable two years from the closing
date of the Purchaser's IPO.
2.2.3 Cash payments shall be made by wire transfer of federal funds
to such account or accounts of the Shareholder as shall be communicated
to the Purchaser in writing or by certified funds on the dates set forth
above.
2.3 Consulting and Non-Competition Agreement Prior to the Closing Date,
the Purchaser will enter into a consulting and non-competition agreement with
the Shareholder (the "Consulting and Non-Competition Agreement") in the form
annexed hereto as EXHIBIT 2.3 which agreement will take effect as of the Closing
Date.
2.4 Right of First Refusal: In the event that this Agreement is not
consummated, for any reason and until the Loan is repaid, the Purchaser shall
have a right of first refusal, for a period of ninety days, after receipt of
written notice, to meet the terms of any other offer for the common stock and/or
business of the Company. In the event the Purchaser, in its discretion decides
not to meet such terms and the terms of the offer are subsequently changed, the
Purchaser shall be given an additional thirty days to meet the revised terms of
any said agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SHAREHOLDER AND THE COMPANY
The Shareholder and the Company make the following representations and
warranties to the Purchaser, each of which shall be deemed material:
3.1 Valid Corporate Existence; Qualification: The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida. The Company has the corporate power and authority to
carry on its business as now being conducted. The Company is duly qualified as a
foreign corporation to do business, and is in good standing in each jurisdiction
where the character of the properties owned or leased by it, or the nature of
its activities is such that the qualification as a foreign corporation in that
jurisdiction is required by law. SCHEDULE 3.1 hereto lists all jurisdictions in
which the Company is qualified to do business. Except as indicated on SCHEDULE
3.1, there is no jurisdiction in which failure to qualify would have a material
adverse effect on the Company or its assets, properties or business. A copy of
the Company's Certificate of Incorporation (certified by the appropriate
official of the State of Florida) and By-Laws and minute books (certified by the
Company's Secretary), as amended to date, which will be delivered to the
Purchaser at or prior to the Closing, are true and complete copies of those
documents as
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now in effect. The minute books of the Company contain accurate records of all
meetings of its Board of Directors, and stockholders since its incorporation,
and accurately reflect all transactions referred to therein.
3.2 CAPITALIZATION: The authorized capital stock of Company consists of
100,000 shares of common stock, Series A, $.01 par value per share, of which no
shares are issued and outstanding and 100,000 shares of common stock, Series B,
$.01 par value per share. There is no other capital stock authorized for
issuance. As of the date hereof, there are 51,000 outstanding shares of Series
B, $.01 par value per share common stock validly issued and outstanding, fully
paid and non-assessable and no shares are reserved for issuance nor are there
outstanding any options, warrants, convertible instruments or other rights,
agreements or commitments to acquire common stock of the Company.
3.3 CORPORATE AUTHORITY; BINDING NATURE OF AGREEMENT: The Company has
the power to enter into this Agreement and to carry out its obligation
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of the Company and no other corporate proceedings on the part of the
Company are necessary to authorize the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby. This Agreement
constitutes the valid and binding obligation of the Company and is enforceable
in
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accordance with its terms.
3.4 CONSENTS: Except as set forth in SCHEDULE 3.4, there are no consents
of governmental and other regulatory agencies, foreign or domestic, and of other
third parties required to be received by or on the part of the Shareholder or
the Company, to enable it to enter into and carry out this Agreement in all
material respects.
3.5 FINANCIAL STATEMENTS: The Company, prior to the Closing Date, will
deliver to the Purchaser, the Audited Financial Statements of the Company and
the Unaudited Financial Statements of the Company. All of the historical
financial statements contained in such documents will have been prepared from
the books and records of the Company. The Audited Financial Statements will be
prepared in accordance with GAAP, and fairly and accurately reflect the
financial position and condition of the Company as at the dates and for the
periods indicated. Without limiting the foregoing, at the date of the Company
Balance Sheet, the Company will have owned each of the assets included in
preparation of the Company Balance Sheet, and the valuation of such assets in
the Company Balance Sheet will not be for more than their fair saleable value
(on an item by item basis) at that date; and the Company will have no
Liabilities other than those included in the Company Balance Sheet, nor any
Liabilities in amounts in excess of the amounts included for them in the Company
Balance Sheet. The Unaudited Financial Statements to be included in the
documents described above in this Section
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will be prepared in a manner consistent with the basis of presentation used in
the Audited Financial Statements, and fairly present the financial position and
condition of the Company as, at and for the periods indicated, subject to normal
year end adjustments, none of which will be material. From the date hereof,
through the Closing Date, the Company will continue to prepare financial
statements on the same basis that it has done so in the past, will promptly
deliver the same to the Purchaser, and agrees that from and after such delivery,
the foregoing representations will be applicable to each financial statement so
prepared and delivered. The Audited Financial Statements for the year ended May
31, 1996 will be prepared by Staff, Michaels & Ciampino, independent certified
public accountants, whose report thereon is included therein. The Audited
Financial Statements for the year ended May 31, 1995 were prepared by Xxxxxxx,
Xxxxxx & Co., independent certified public accountants, whose report therein is
included therein.
3.6 NO UNDISCLOSED LIABILITIES: Except as set forth in the Company
Balance sheet included in the Audited Financial Statements or as set forth in
SCHEDULE 3.6, the Company has no material debts, liabilities or obligations,
known or unknown, contingent or absolute, except those arising in the ordinary
course of business of the Company and consistent with past practice.
3.7 ACTIONS SINCE THE COMPANY BALANCE SHEET: Except as set forth and
reflected in this Agreement or in SCHEDULE 3.7,
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since the date of the Company Balance Sheet, the Company has not:
3.7.1 incurred any material obligation or liability, known or
unknown, absolute or contingent, except those arising in the ordinary
and usual course of its business and those incurred in connection with
the transactions contemplated by this Agreement;
3.7.2 issued or sold, or agreed to issue or sell any capital stock
of the Company or any securities convertible into or rights to acquire
any such capital stock or any dividend or distribution declared, set
aside or paid on any such capital stock;
3.7.3 discharged or satisfied any lien or encumbrance, except in the
ordinary and usual course of business, or paid or satisfied any
liability, absolute or contingent, other than as at the Company Balance
Sheet in the ordinary and usual course of business and those incurred in
connection with the transactions contemplated by this Agreement;
3.7.4 made any wage or salary increases or granted any bonuses other
than wage and salary increases and bonuses granted in accordance with
its normal salary increase and bonus policies;
3.7.5 mortgaged, pledged or subjected to any lien, pledge, charge or
other encumbrance any of its properties or assets, or permitted any of
its property or assets to be subjected to any lien or other
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encumbrance, except in the ordinary and usual course of business;
3.7.6 sold, assigned or transferred any of its properties or assets,
except in the ordinary and usual course of business;
3.7.7 entered into any transaction or course of conduct not in the
in the ordinary and usual course of business;
3.7.8 waived any rights of substantial value, or cancelled, modified
or waived any indebtedness for borrowed money held by it, except in the
ordinary and usual course of business;
3.7.9 made any loans or advances to any person or assumed,
guaranteed, endorsed or otherwise became responsible for the obligations
of any person; or
3.7.10 incurred any indebtedness for borrowed money (except for
endorsement, for collection or deposit of negotiable instruments
received in the ordinary and usual course of business).
3.8 No Adverse Developments: Except as set forth in SCHEDULE 3.8, since
the date of the Company Balance Sheet, there has not been:
3.8.1 any material adverse changes in the assets, properties,
operations, financial condition or prospects of the Company;
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3.8.2 any damage, destruction or loss, whether covered by insurance
or not, having a material adverse effect on the business, operations,
financial condition or prospects of the Company;
3.8.3 any entry into or termination of any material commitment,
contract, agreement or transaction affecting the Company, including,
without limitation, any material borrowing or capital expenditure or
sale or other disposition of any material asset or assets, other than
this Agreement and agreements executed in the ordinary and usual course
of business;
3.8.4 any transfer of or right granted under any material lease,
license, agreement, patent, trademark, trade name or copyright;
3.8.5 default or breach by the Company in any material respect under
any contract or Permit; or
3.8.6 any event other than in the ordinary and usual course of
business which could be reasonably expected to have a material adverse
effect upon the business of the Company, and after reasonable inquiry by
the Shareholder and the Company, they know of no development or
threatened development of a nature that is, or which could be reasonably
expected to have a materially adverse effect upon the business of the
Company or upon any of its assets, properties, operations or financial
condition.
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3.9 TAXES: All tax returns of the Company which are due have been duly
filed and are correct and all taxes, assessments and other governmental charges
upon the Company which are shown to be due and payable thereon have been paid.
All tax returns of the Company which become due prior to the Closing shall be
timely filed by the Company. The Company does not know of any ongoing tax audit,
proposed tax deficiency, assessment, charge or levy against it, the payment of
which is not adequately provided for on the books of the Company. The Company
will provide to the Purchaser prior to the Closing a true and correct copy of
its tax returns for the prior three years and any returns filed subsequent to
the date hereof.
3.10 OWNERSHIP OF ASSETS: Except as set forth on SCHEDULE 3.10(i), the
Company owns outright, and has good, marketable and insurable title to all of
its assets and properties reflected in the Company Balance Sheet except as the
same may have been disposed of in the ordinary course of business since the
Company Balance Sheet date, free and clear of all liens, mortgages, pledges,
conditional sales agreements, restrictions on transfer or other encumbrances or
charges whatsoever. The Company does not own any patents, copyrights,
trademarks, trade names or other similar intangible assets except as set forth
in SCHEDULE 3.10(ii). No other person has any ownership or similar right in, or
contractual or other right to acquire any such right in, any of the Company's
assets. The Shareholder and the Company do not know of any potential action
16
by any party, governmental or other and no proceedings with respect thereto have
been instituted of which the Company has notice that would materially effect the
Company's ability to use and to utilize each of such assets in its business.
SCHEDULE 3.10(iii) sets forth a listing of all aircraft owned by the Company,
including a description thereof. Each such aircraft has been maintained in
accordance with Part 135 of the regulations of the Federal Aviation
Administration, and the Company has completely and accurately maintained all
records required by Part 135 of the regulations of the Federal Aviation
Administration for such aircraft. SCHEDULE 3.10(iv) sets forth a listing of all
records required to be maintained. The Company will provide to the Purchaser
prior to the Closing a true and correct copy of all records listed in SCHEDULE
3.10(iv). Except as set forth on SCHEDULE 3.10(v), all properties and other
assets owned by the Company or used by the Company in the conduct of its
business are in good operating condition and repair (ordinary wear and tear
excepted), are suitable for the conduct of its business as presently conducted,
have been properly maintained, and do not require any maintenance or repairs
except for routine maintenance and repairs that are not material in nature or in
cost.
3.11 INSURANCE: Polices of fire, liability, workers compensation and
other forms of insurance maintained by the Company, which are usual and
customary in the business of the Company as to amount and scope, and are
adequate to protect the Company against any reasonably foreseeable risk of loss,
17
including business interruption, are listed on SCHEDULE 3.11 and identifies for
each policy, the carrier, amount of coverage, annual premium, risks covered,
placing broker or agent, and other relevant information as to each. All policies
listed on SCHEDULE 3.11 have been provided to the Purchaser prior to the
Closing. All premiums have been currently paid on such policies, and all
policies will be maintained and, if necessary, renewed through the Closing Date.
Neither the Shareholder nor the Company have failed to give any notice or
present any claim under any such policy and there are no claims outstanding
under any such policy as to which any insurance company is denying liability or
defending under a reservation of rights clause or otherwise. Anything to the
contrary herein notwithstanding in the event any liability insurance policy is a
"claims made" policy, prior to Closing, the Company shall purchase an extension
to the policy commonly referred to as a "tail", which shall cover all liability
claims made against the Company for a period of five (5) years after Closing, to
the extent that the Company can get this long an extension.
3.12 LITIGATION, COMPLIANCE WITH LAW: Except as set forth in SCHEDULE
3.12, there are no pending or threatened actions, suits, proceedings or
governmental investigations or reviews relating to the Company or any of its
properties, assets or business or, to the knowledge of the Shareholder or the
Company, any order, injunction, award or decree outstanding, against the Company
or against or relating to any of its properties, assets
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or business; and the Shareholder and the Company, after reasonable inquiry,
knows of no basis for any such action, suits or proceedings or any such
governmental investigations, reviews, orders, injunctions or decrees. To the
knowledge of the Shareholder and the Company, the Company is not in violation of
any material law, regulation, ordinance, order, injunction, decree, award, or
other requirement of any governmental body, court or arbitrator relating to its
properties, assets or business.
3.13 COMPLIANCE WITH INSTRUMENTS; ETC.: The Company is not:
3.13.1 in default under any indenture, agreement or instrument
to which it is a party or by which it is bound; or
3.13.2 in violation of its Certificate of Incorporation, By-Laws
or of any applicable law.
3.14 INVENTORIES: All Inventories of the Company, whether or not
reflected in the Company Balance Sheet are of a quality and quantity usable and
salable in the ordinary course of business, except for obsolete items and items
of below standard quality, all of which in the aggregate are immaterial in
amount. Items included in such Inventories are carried on the books of the
Company, and are valued on the Company Balance Sheet, at the lower of cost or
market and, in any event, at not greater than their net realizable value, on an
item-by-item basis, after appropriate deductions for cost of completion,
marketing costs, transportation expense and allocation of overhead. To the best
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knowledge of the Company, the Inventory is unadulterated and does not contain
any ingredient or substances prohibited by pertinent laws, rules or regulations
and all labels for and printed materials relating to the Inventory correctly
represent the ingredients thereto and comply with all laws, rules or regulations
pertaining to the labeling of the products comprising the Inventory. SCHEDULE
3.14 hereto includes a full and complete listing of all of the Company's
inventory, if any, for items having a value of $1,000 or more.
3.15 PERMITS AND LICENSES: The Company has all material Permits of all
federal, state, local and foreign governmental or regulatory bodies required of
it to carry on its business as presently conducted; all such Permits are in full
force and effect, and to the knowledge of the Shareholder and the Company, after
reasonable inquiry, no suspension or cancellation of any of such Permits is
threatened and the Company is in compliance with all material requirements,
standards and procedures of the federal, state, local and foreign governmental
bodies which have issued such Permits. SCHEDULE 3.15(i) hereto lists all Permits
held by the Company in connection with its business. All Permits listed on
SCHEDULE 3.15(i) have been provided to the Purchaser prior to the Closing. As to
any such Permit that has expired or is about to expire, the Company has promptly
applied for a renewal of the same and expects the same to be renewed in the
usual course. Except as disclosed on SCHEDULE 3.15(ii) hereto, no consent of,
approval of, or notification to the authority issuing
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any Permit is necessary due to the execution of this Agreement or the
consummation of the Transaction. Upon consummation of the Transaction, the
Company will continue to be entitled to all authority and benefits conferred by
any such Permits and shall be lawfully entitled to use such Permits in
connection with the operations of its business, provided the Purchaser has
received, when applicable, approval for the transfer of such permits.
3.16 TRADE NAMES: SCHEDULE 3.16 identifies each trade name, fictitious
business name, or similar name under which the Company has conducted any part of
its business since inception.
3.17 REAL PROPERTY: The Company owns no real property and
leases the real property listed in SCHEDULE 3.17.
3.18 INTEREST IN COMPETITOR. SUPPLIERS OR CUSTOMERS:
Except as set forth in Schedule 3.18, none of the officers, directors or
shareholders of the Company or, to the best of their knowledge, members of their
immediate families owns an interest in any person or firm which is a competitor,
supplier or customer of or to the Company or, has an existing contractual
relationship with the Company.
3.19 ACCOUNTS PAYABLE: The accounts payable reflected on the Company
Balance Sheet do, and those reflected in the most recent balance sheet included
in the Unaudited Financial Statements do, and those reflected on the books of
the Company at the time of the Closing will, reflect all amounts owed by the
Company in respect
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of trade accounts due and other Payables of the Company, and the actual
Liability of the Company in respect of such obligations was not and will not be,
on any of such dates, in excess of the amounts, so reflected on the balance
sheets or the books of the Company, as the case may be.
3.20 ACCOUNTS RECEIVABLE: All Accounts receivable of the Company,
whether or not reflected in the Company Balance Sheet, represent transactions in
the ordinary course of business, and are current and collectible net of any
reserves shown on such Balance Sheet (which reserves are adequate and were
calculated consistent with past practice). SCHEDULE 3.20 specifically identifies
the aging of Receivables, as of December 16, 1996.
3.21 Employees: To their best knowledge, the Company has complied with
all laws, regulations and orders relating to the employees of its business,
including but not limited to OSHA, EEO, ERISA, and wages and hours. None of the
Company's employees is represented by any labor union or collective bargaining
agent. The Company does not maintain or make any employer contributions under
any bonus, profit sharing compensation, or other plans, agreements, trusts,
funds, or arrangements for the benefit of directors, officers or employees of,
or whose principal responsibilities relate to, the Company, and there are no
employment, consulting, severance, or indemnification arrangements, agreements,
or understandings between the Company and any current or former directors,
officers or other employees (or Affiliates thereof) of, or whose principal
responsibilities relate to, the Company. SCHEDULE 3.21 identifies all present
employees of the Company and their respective salaries. The
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Company is not, and following the Closing will not be, bound by any express or
implied contract or agreement to employ, directly or as a consultant or
otherwise, any person for any specific period of time, except as set forth
pursuant to the provisions hereof.
3.22 AGREEMENTS AND OBLIGATIONS; PERFORMANCE: SCHEDULE 3.22 sets forth a
list of material agreements to which the Company is a party or is otherwise
bound. Other than these material agreements, the Company is not party to or
bound by any:
3.22.1 written or oral agreement or other contractual commitment,
understanding or obligation which involves aggregate payments or
receipts in excess of $25,000 that cannot be canceled on 30 days or less
any continuing notice without penalty or premium or obligation or
liability;
3.22.2 contractual obligation or contractual liability of any kind
to the Shareholder which will not be canceled on or prior to the Closing
except as otherwise provided by this Agreement;
3.22.3 contract, arrangement, commitment or understanding with its
customers or any officer, employee, stockholder, director,
representative or agent thereof for the repurchase of products, sharing
of fees, the rebating of charges to such customers, bribes, kickbacks
from such customers or other similar arrangements;
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3.22.4 contract for the purchase or sale of any materials, products
or supplies or for any services, which commits or will commit it for a
fixed term;
3.22.5 contract of employment with any employee not terminable at
will without penalty or ANY continuing obligation or liability,
otherwise provided by this Agreement;
3.22.6 deferred compensation, bonus or incentive plan or agreement
not cancelable at will without penalty or premium or any continuing
obligation or liability which will not be canceled on or prior to the
Closing;
3.22.7 management or consulting agreement not terminable at will
without penalty or premium or any continuing obligation or liability
which the Company and each such individual agree to cancel on the
Closing Date;
3.22.8 lease for real or personal property (including borrowings
thereon) license or royalty agreements;
3.22.9 union or other collective bargaining agreement;
3.22.10 agreement, commitment or understanding relating to
indebtedness for borrowed money;
3.22.11 contract which, by its terms, requires the consent of any
party thereto, to the consummation
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of the transactions contemplated hereby;
3.22.12 contract containing covenants limiting the freedom of the
Company to engage or compete in any line or business or with any person
in any geographical area:
3.22.13 contract or option relating to the acquisition or sale of
any business;
3.22.14 voting trust agreement or similar agreement;
3.22.15 option for the tangible or intangible; or
3.22.16 other contract, agreement, commitment or understanding which
materially affects any of its properties, assets or business, whether
directly or indirectly, or which was entered into other than in the
ordinary course of business.
A truly and correct copy of each of the material agreements of the Company
listed in SCHEDULE 3.22 has been delivered to the Purchaser prior to the
Closing. The Company has in all material respects performed all material
obligations required to be performed by it to date under all agreement to which
it is a party and is not in default in any material respect under any of its
agreements and has received no notice of any default or alleged default which
has not heretofore been cured or which notice has not heretofore been
withdrawn.
25
3.23 COOPERATION WITH PROFLIGHT IN FILING IPO: The Shareholder and the
Company shall cause its officers, directors, employees, accountants and
attorneys to cooperate fully with the Purchaser in connection with the filing of
a registration statement with the Securities and Exchange Commission.
3.24 No Subsidiaries: The Company does not have any subsidiaries and
does not own directly or indirectly any equity interest in any other business or
Entity.
3.25 No Breach: Neither the execution and delivery of this Agreement nor
compliance by the Shareholder and the Company with any of the provisions hereof
nor the consummation of the transactions contemplated hereby, will:
3.25.1 violate or, alone or with notice or the passage of time,
result in the material breach or termination of, or otherwise give any
contracting party the riqht to terminate, or declare a default under,
the agreement or other material oral or written to which the terms of
any material document or undertaking, Company is a party or by which its
properties or assets may be bound;
3.25.2 result in the imposition of any lien, mortgage, security
interest, pledge, encumbrance, easement, claim or other restriction or
charge on any of the assets of the Company, and will not alter or impair
any of the assets of the Company nor the Purchaser's ability to utilize
in the same manner in
26
which they are currently utilized by the Company in connection with its
business;
3.25.3 violate any judgment, order, decree or award against, or
binding upon, or upon its properties or assets; or
3.25.4 violate any law or regulation of any jurisdiction relating to
the Company, its assets or properties.
3.26 Brokers: All negotiations relative to this Agreement and the
Transaction contemplated hereby have been carried on directly with the Purchaser
without the intervention of any broker, finder, investment banker or other third
party. The Shareholder and the Company have not engaged, consented to, or
authorized any broker, finder, investment banker or other third party to act on
its behalf, directly or indirectly, as a broker or finder in connection with
this Agreement and the Transaction, and the Shareholder and the Company agree to
indemnify the Purchaser against, and to hold the Purchaser harmless from any
claim for brokerage or similar commission or other compensation which may be
made against the Purchaser by any third party in connection with any of the
transactions contemplated hereby which claim is based upon any action by the
Shareholder or the Company.
3.27 Untrue or Omitted Facts: No representation, warranty, document,
certificates or other writings furnished by the Shareholder or the Company in
this Agreement contains any untrue statement of a material fact, or omits to
state a fact
27
necessary in order to make such representations, warranties or statements not
materially misleading.
3.28 CUSTOMERS: During the last twelve months, (i) no customer which
accounted for more than 5% of the sales in any one of the last three fiscal
years, (ii) no customers which in the aggregate accounted for more than 10% of
the sales of the Company in any one of the last three fiscal years, and/or (iii)
no other customer of material importance to the Company, has (a) canceled,
terminated or delivered written or, to the knowledge of the Shareholder, oral
notice to the Company threatening to cancel or terminate its relationship with
the Company or (b) materially decreased or delivered written or, to the
knowledge of the Shareholder, oral notice to the Company threatening to decrease
its usage of the Company's services.
3.29 SHAREHOLDER'S NON-INTERFERENCE: The Shareholder agrees that from
the date hereof until five (5) years from the Closing Date, he shall not induce
or attempt to induce, or assist others in inducing or attempting to induce, any
person who was employed by the Company prior to the Closing Date and who
continues to be employed by the Company on or after the Closing Date to
terminate his or its relationship with the Company or in any other manner to
interfere with the relationship between the Company any such person.
28
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser makes the following representations and warranties to the
Shareholder each of which shall be deemed material:
4.1 Valid Corporate Existence; Qualification: The Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Colorado. The Purchaser has the corporate power and authority to
carry on its business as now being conducted. The Purchaser is duly qualified as
a foreign corporation to do business, and is in good standing in each
jurisdiction where the character of the properties owned or leased by it, or the
nature of its activities is such that the qualification as a foreign corporation
in that jurisdiction is required by law. SCHEDULE 4.1 hereto lists all
jurisdiction in which the Purchaser is qualified to do business. Except as
indicated on SCHEDULE 4.1. there is no jurisdiction in which failure to qualify
would have a material adverse effect on the Purchaser or its assets, properties
or business. A copy of the Purchaser's Certificate of Incorporation (certified
by the appropriate official of the State of Colorado) and By-Laws and minute
books (certified by the Purchaser's Secretary), as amended to date, which will
be delivered to the Shareholder at or prior to the Closing, are true and
complete copies of those documents as now in effect. The minute books of the
Purchaser contain accurate records of all meetings of its Board of Directors,
and
29
stockholders since its incorporation, and accurately reflect all transactions
referred to therein.
4.2 CORPORATE AUTHORITY: BINDING NATURE OF AGREEMENT: The Purchaser has
the power to enter into this Agreement and to carry out its obligation
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the Board of
Directors of the Purchaser and no other corporate proceedings on the part of the
Purchaser are necessary to authorize the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby. This
Agreement constitutes the valid and binding obligation of the Purchaser and is
enforceable in accordance with its terms.
4.3 CONSENTS: There are no consents of governmental and other regulatory
agencies, foreign or domestic, and of other third parties required to be
received by or on the part of the Purchaser, to enable it to enter into and
carry out this Agreement in all material respects.
4.4 BROKERS: All negotiations relative to this Agreement and the
Transaction contemplated hereby have been carried on directly with the
Shareholder and the Company without the intervention of any broker, finder,
investment banker or other third party. The Purchaser has not engaged, consented
to, or authorized any broker, finder, investment banker or other third party to
act on its behalf, directly or indirectly, as a broker or finder in connection
with this Agreement and the Transaction,
30
and the Purchaser agrees to indemnify the Shareholder and the Company against,
and to hold the Shareholder and the Company harmless from any claim for
brokerage or similar commission or other compensation which may be made against
the Shareholder or the Company by any third party in connection with any of the
transactions contemplated hereby which claim is based upon action by the
Purchaser.
ARTICLE V
COVENANTS OF THE SHAREHOLDER AND THE COMPANY
5.1 COVENANTS OF THE SHAREHOLDER AND THE COMPANY: The Shareholder and
the Company hereby each covenant to, from and after the date hereof and until
the Closing or earlier termination of this Agreement, without the prior written
consent of the Purchaser:
5.1.1 BEST EFFORTS: To take every action reasonably required of
it and use its best efforts to satisfy the conditions to closing set
forth in this Agreement and otherwise to ensure the prompt and expedient
consummation of the Transaction substantially as contemplated by this
Agreement, and will exert all reasonable efforts to cause the
Transaction to be consummated, provided in all instances that the
representations and warranties of the Purchaser in this Agreement are
and remain true and accurate and that the
31
covenants and agreements of the Purchaser in this Agreement are
satisfied or appear capable of being satisfied and subject, at all
times, to the right and ability of the directors of the Company to
satisfy their fiduciary obligations.
5.1.2 ACCESS AND INFORMATION: To afford the officers, attorneys,
accountants and other authorized representatives of the Purchaser
(collectively, the "Representatives"), free and full access, during
regular business hours and upon reasonable notice, to all of its books,
records, contracts, commitments and properties (including, without
limitation, tax returns) at the Purchaser's own expense, to review,
examine and investigate the books, records and properties of the Company
to determine the accuracy of the representations and warranties made by
the Shareholder and the Company. The Shareholder and the Company shall
cause its employees, accountants and attorneys to cooperate fully with
said review, examination and investigation. The Company shall promptly
furnish to the Purchaser (i) all communications to its directors or to
its shareholders, generally, (ii) internal monthly financial statements
when and as available, and (iii) all other information concerning its
business properties and personnel as the Purchaser may reasonably
request.
5.1.3 INSURANCE: To maintain in full force and effect insurance
coverage of a type and amount customary in
32
its business, but not less than presently in effect.
5.1.4 DISCHARGE TAXES AND INDEBTEDNESS: To pay and discharge, as
they become due, all taxes, assessments, debts, claims and other
governmental or non-governmental charges lawfully imposed upon or
incurred by it or the properties and assets of the Company, except
taxes, assessments, debts, claims and charges contested in good faith in
appropriate proceedings for which the Company shall have set aside
adequate reserves for the payment of such tax, assessment, debt, claim
or charge. The Company shall provide the Purchaser, upon the evidence of
payment of such taxes, claims and charges satisfactory to the Purchaser.
The Company also covenants to file all tax returns as they become due
prior to the Closing.
5.1.5 COMPLIANCE WITH AGREEMENTS: COMPLIANCE WITH LAWS: To
comply with the terms and conditions of all material agreements,
commitments or instruments to which the Shareholder or the Company is a
party or by which he or it may be bound. The Shareholder and the Company
shall duly comply in all material respect with any material laws,
ordinances, rules and regulations of any foreign, federal, state or
local government or any agency thereof, or any writ, order or decree,
and conform to all valid requirements of governmental authorities
relating to the conduct of its business, properties and assets.
33
5.1.6 NO INDEBTEDNESS: Not to incur any obligation or liability,
absolute or contingent, except for those incurred in the ordinary and
usual course of its business or in connection with the transactions
contemplated by this Agreement.
5.1.7 NO DIVIDEND. RETIREMENT OR PURCHASE OF STOCK: Not to
declare or pay any dividend or distribution, in cash or otherwise, on
any shares of stock of the Company or redeem, return, purchase or
otherwise acquire directly or indirectly any shares of stock.
5.1.8 CONDUCT OF BUSINESS PRIOR TO CLOSING:
(i) to conduct its business only in the ordinary and usual
course and make no material change in any of its business practices
and policies;
(ii) to use its best efforts to preserve its business
organization intact, to keep available the services of its present
employees and consultants and to preserve its good will;
(iii) to maintain good relationships with suppliers, lenders,
creditors, employees, customers and others having business or
financial relationships with them:
(iv) it shall not (a) amend its Certificate of Incorporation
or By-Laws or (b) split, combine, or reclassify any of its
outstanding securities;
34
(v) it shall not (a) adopt, enter into, or amend any bonus,
profit sharing, compensation, stock option, warrant, pension,
retirement, deferred compensation, employment, severance,
termination, or other employee benefit plan, agreement, trust fund,
or arrangement for the benefit or welfare of any officer, director
or employee of the Company or (b) agree to any material (in relation
to historical compensation) increase in compensation payable or to
become payable to, or any increase in the contractual term of
employment of, any such employee, except in the ordinary course of
business in accordance with past practice;
(vi) it shall not sell, lease, mortgage, encumber, or
otherwise dispose of or grant any interest in any of its assets or
properties except for sales, encumbrances and other dispositions or
grants in the ordinary course of business and consistent with past
practice and except for liens for taxes not yet due or liens or
encumbrances that are not material in amount or effect and do not
impair the use of the property, or as specifically provided for or
permitted in this Agreement;
(vii) it shall not enter into, or terminate, any material
contract, agreement, commitment, or understanding;
35
(viii) it will not hold any meetings of its board of
directors, or any committee thereof, or of its shareholders, without
giving a representative selected by the Purchaser the option to
attend the same (although the Company may request that such
representative absent himself during that portion of any such
meeting that pertains to issues arising under this Agreement); and
(ix) it shall immediately notify the Purchaser of any event or
occurrence or emergency material to, and not in the ordinary and
usual course of business.
5.1.9 No Breach: Not to voluntarily take any action or do anything
which will cause a breach of or default respecting its covenants,
representations or warranties set forth herein and promptly to notify
the Purchaser of any event or fact which represents or is likely to
cause such a breach or default.
5.1.10 No Solicitation: From the date hereof through the Closing
Date, the Shareholder and the Company shall not, directly or indirectly,
through any officer, employee, agents, advisors, representatives or
others (i) solicit, encourage or initiate any discussions with, or
negotiate or otherwise deal with, or provide any information to any
person or Entity, other than the Purchaser and its officers, employees,
agents, advisors or representatives,
36
concerning the Company or relating to any merger, acquisition or
purchase of all or any portion of the assets of, or any equity interest
in the Company and (ii) except with the prior written consent of the
Purchaser, disclose, directly or indirectly, to any person any
information concerning the business and properties of the Company or
afford to any person access to the properties, books or records of the
Company. The Shareholder shall immediately cease and cause to be
terminated any existing discussions or negotiations with any parties
other than the Purchaser conducted heretofore with respect to the
Transaction. The Company will notify the Purchaser immediately upon
receipt of any inquiry, offer or proposal relating to any of the
foregoing. None of the foregoing shall prohibit providing information to
others in a manner in keeping with the ordinary course of business of
the Company or providing information to government authorities.
5.1.11 Publicity: Prior to the Closing, any written news releases by the
Company pertaining to this Agreement or the Transaction shall be
submitted to the Purchaser for review and approval prior to release by
the Company, and shall be released only in a form approved by the
Purchaser, provided, however, that such approval shall not be
unreasonably withheld, and (b) such review and approval shall not be
required, if prior review and approval would prevent the timely and
accurate dissemination of such
37
press release as required to comply, in the judgment of counsel, with
any applicable law, rule or policy.
5.1.12 UPDATING OF SCHEDULES AND EXHIBITS: The Company and
Shareholder shall notify the Purchaser of any changes, additions or
events which may cause any change in or addition to any Schedules and
Exhibits delivered by it under this Agreement, promptly after the
occurrence of the same and at the Closing by the delivery of updates of
all Schedules and Exhibits. No notification pursuant to this. Section
shall be deemed to cure any breach of any representation or warranty
made in this Agreement unless the Purchaser specifically agrees thereto
in writing nor shall any such notification be considered to constitute
or give rise to a waiver by the Purchaser of any condition set forth in
this Agreement.
ARTICLE VI
COVENANTS OF THE PURCHASER
6.1. COVENANTS OF THE PURCHASER: The Purchaser hereby covenants to, from
and after the date hereof and until the Closing or earlier termination of this
Agreement:
6.1.1 Best Efforts: To take every action reasonably required of in
and use its best efforts to satisfy the conditions to closing set forth
in this Agreement and otherwise to ensure the prompt and expedient
38
consummation of the Transaction substantially as contemplated by this
Agreement, and will exert all reasonable efforts to cause the
Transaction to be consummated provided in all instances that the
representations and warranties of the Shareholder and the Company in
this Agreement are and remain true and accurate and that the covenants
and agreements of the Shareholder and the Company in this Agreement are
satisfied or appear capable of being satisfied and subject, at all
times, to the right and ability of the directors of the Purchaser to
satisfy their fiduciary obligations.
6.1.2 Election to Board: Upon Closing, the Purchaser shall take such
action as may be necessary to cause the Board of Directors of the
Purchaser to nominate and recommend to the shareholders of the
Purchaser, as members of the Board for so long as the shareholder owns
or has rights to own, directly or indirectly, at least 220,000 shares of
common stock, at any annual or special meeting of stockholders of the
Purchaser called for the purpose of voting on the election of directors,
or by consensual action of shareholders of the Purchaser with respect to
the election of directors, two of the Shareholder's designees.
6.1.3 REGISTRATION OF SHAREHOLDER'S SHARES: If the Purchaser, at any
time after the IPO, proposes to register any of its securities under the
Securities Act of 1933, as amended (other than in connection with
capital raising for a merger or
39
acquisition or pursuant to Form S-4 or Form S-8 or other comparable
form), the Purchaser shall request that the managing underwriter or sole
underwriter of such underwritten public offering include the shares of
common stock of the Shareholder (the "Registrable Securities") in such
registration. If such managing underwriter agrees to include any of the
Registrable Securities in the underwritten offering, the Purchaser
shall, at such time, give prompt written notice to the Shareholder of
its intention to effect such registration and of such Shareholders'
rights under such proposed registration, and upon the request of the
Shareholder delivered to the Purchaser, within twenty (20) days after
giving of such notice (which request shall specify the Registrable
Securities intended to be disposed of by such Shareholder and the
intended method of disposition thereof), the Purchaser shall include
such Registrable Securities held by such Shareholder in such
registration; provided, however, that:
(i) If, at any time after giving such written notice of the
Purchaser's intention to register any of the Shareholder's
Registrable Securities and prior to the effective date of the
registration statement filed in connection with such registration,
the Purchaser shall determine for any reason not to register or to
delay the registration of such Registrable Securities, at its sole
election, the Purchaser may give written notice of such
determination to the Shareholder and thereupon shall be relieved of
its obligation to register any
40
Registrable Securities issued or issuable in connection with such
registration (but not from its obligation to pay registration
expenses in connection therewith or to register the Registrable
Securities in a subsequent registration); and, in the case of a
determination to delay a registration, shall thereupon be permitted
to delay registering any Registrable Securities for the same period
as the delay in respect of securities being registered for the
Purchaser.
(ii) If the managing underwriter in such underwritten offering
shall advise the Purchaser that it declines to include a portion or
all of the Registrable Securities requested by the Shareholder to be
included in the registration statement, then, distribution of all or
a specified portion of the Registrable Securities shall be excluded
from such registration statement (in case of an exclusion as to a
portion of such Registrable Securities, such portion to be allocated
among the shareholders in proportion to the respective numbers of
Registrable Securities requested to be registered by each such
selling shareholder). In such event the Purchaser shall give the
Shareholder prompt notice of the number of Registrable Securities
excluded.
41
ARTICLE VII
CONDITIONS PERCENT TO THE OBLIGATION
OF THE SHAREHOLDER AND THE COMPANY TO CLOSE
The obligation of the Shareholder and the Company to enter into and
complete the Closing is subject to the fulfillment, prior to the Closing Date,
of each of the following conditions, any one or more of which may be waived by
the Shareholder or the Company:
7.1 CONSENTS, LICENSES AND PERMITS: The Purchaser shall have obtained
all consents, licenses, permits approvals and authorizations and waivers of
third parties necessary for the performance by it of all of its obligations
under this Agreement.
7.2 REPRESENTATIONS AND WARRANTIES: All representations and warranties
of the Purchaser set forth in this Agreement and in any written statement or
other document delivered pursuant hereto or in connection with the Transaction
contemplated hereby shall be true in all material respects as at the Closing
Date, as if made at the Closing and as of the Closing Date.
7.3 COVENANTS: The Purchaser shall have performed and complied in all
material respects with all covenants and each of its agreements and obligations
required by this Agreement to be performed or complied with prior to or at the
Closing.
7.4 NO ACTIONS: No action, suit, proceeding or investigation shall have
been instituted against the Purchaser, and be continue in a before a court or
by a governmental body or agency, or shall have been threatened and be
unresolved, to
42
restrain or to prevent or to obtain damages in respect of, the carrying out of
the transactions contemplated hereby, or which might materially affect the right
of the Company and the Shareholder in the Transaction after the Closing Date, or
which might have a materially adverse effect thereon.
7.5 CERTIFICATE: The Shareholder and the Company shall have received a
certificate dated the Closing Date, signed by the President and Secretary of the
Purchaser as to the satisfaction of the conditions contained in Sections 7.2 and
7.3.
7.6 ADDITIONAL DOCUMENTS: The Purchaser shall have delivered all such
certified resolutions, certificates and documents as the Shareholder or the
Company or its counsel may have reasonably requested, including but not limited
to a Certificate of Good Standing and Certificate of Incorporation from the
Secretary of State of Colorado, dated no fifteen (15) days prior to the Closing
Date.
7.7 APPROVAL OF COUNSEL: All actions, instruments and documents required
to carry out this Agreement or proceedings, and all other related legal matters,
shall as to form and substance by counsel to the incidental thereto, have been
approved Shareholder and the Company, which opinion shall be substantially in
the form of EXHIBIT 7.7.
43
ARTICLE VIII
CONDITIONS PRECEDENT TO THE
OBLIGATION OF THE PURCHASER TO CLOSE
The obligation of the Purchaser to enter into and complete the Closing
is subject to the fulfillment, prior to the Closing Date, of each of the
following conditions, any one or more of which may be waived by the Shareholder
and the Purchaser:
8.1 CONSENTS. LICENSES AND PERMITS: The Shareholder and the Company
shall have obtained all consents, licenses, permits approvals and authorizations
and waivers of third parties necessary for the performance by them of all of
their obligations under this Agreement.
8.2 REPRESENTATIONS AND WARRANTIES: All representations and warranties
of the Shareholder and the Company set forth in this Agreement and in any
written statement or other document delivered pursuant hereto or in connection
with the Transaction contemplated hereby shall be true in all material respects
as at the Closing Date, as if made at the Closing and as of the Closing Date.
8.3 COVENANTS: The Shareholder and the Company. shall have performed and
complied in all material respects with all covenants and each of its agreements
and obligations required by this Agreement to be performed or complied with
prior to or at the Closing.
8.4 NO ACTIONS: No action, suit, proceeding or investigation shall have
been instituted, and be continuing
44
before a court or by a governmental body or agency, or shall have been
threatened and be unresolved, to restrain or to prevent or the carrying out of
the or which might materially to obtain damages in respect of, transactions
contemplated hereby, affect the right of the Purchaser to own or to operate or
control the assets, properties and business of the Company and/or the
Shareholder after the Closing Date, or which might have a materially adverse
effect thereon.
8.5 CERTIFICATE: The Purchaser shall have received a certificate dated
the Closing Date, signed by the President and Secretary of the Company as to the
satisfaction of the conditions contained in Sections 8.2 and 8.3.
8.6 ADDITIONAL DOCUMENTS: The Shareholder and the Company shall have
delivered all such certified resolutions, certificates and documents as the
Purchaser or its counsel may have reasonably requested, including but not
limited to a Certificate of Good Standing and certified Certificate of
Incorporation from the Secretary of State of Florida, dated no earlier than
fifteen (15) days prior to the Closing Date.
8.7 Approval of Counsel and Accountants: All proceedings, instruments
and documents required to carry out this Agreement or incidental thereto, and
all other related legal matters, shall have been approved as to form and
substance by counsel to the Purchaser, which opinion shall be substantially ln
the form of EXHIBIT 8.7.
45
8.8. CONSULTING AND NON-COMPETITION AGREEMENT: The Shareholder and the
Company shall have delivered the Consulting and Non-Competition Agreement to the
Purchaser and said agreement shall take effect on the Closing Date.
8.9 FINANCIALS: The Shareholder and the Company shall have delivered the
Audited Financial Statements and the Unaudited Financial Statements to the
Purchaser which statements shall be reasonably satisfactory to the Purchaser.
ARTICLE IX
CLOSING
9.1 Location and Time: The Closing provided for herein shall take place
at the offices of Xxxxxxx Xxxxxxxxxx Xxxxxx Xxxxx & Xxxxx, 000 Xxxx 00xx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, at 9:30 a.m. the earlier of September 1, 1997 or
within 7 days of the closing date of the IPO or at such other time and place as
may be mutually agreed to by the parties hereto. The date of the Closing is
referred to in this Agreement as the "Closing Date" or the "Closing."
9.2 ITEMS TO BE DELIVERED BY THE SHAREHOLDER OR THE COMPANY: At the
Closing, the Shareholder and/or the Company will deliver or cause to be
delivered to the Purchaser:
9.2.1 Stock certificate and stock power for 51,000 shares of
common stock of the company;
9.2.2 The Consulting and Non Competition Agreement;
9.2.3 The certificates required by Section 8.5;
46
9.2.4 Such other certified resolutions, documents and
certificates as required to be delivered by the Shareholder or the
Company pursuant to the provisions of the Agreement; and
9.2.5 Bills of Sale and Assignments of the listed Agreements, as
set forth in SCHEDULE 9.2.5.
9.3 ITEMS TO BE DELIVERED TO THE PURCHASER: At the Closing, the
Purchaser will deliver or cause to be delivered to the Shareholder:
9.3.1 $1,000,000 by official bank or certified check payable to
the Shareholder.
9.3.2 A promissory note in the original principal amount of
$1,000,000 payable to the order of the Shareholder in the form and
substance as set forth in EXHIBIT 9.3.2.
9.3.3 The certificates required by Section 7.5; and
9.3.4 Such other certified resolutions, documents and
certificates as are required to be delivered by the Purchaser pursuant
to the provisions of the Agreement.
ARTICLE X
SURVIVAL OF REPRESENTATIONS: INDEMNIFICATION
10.1 Survival: Except as set forth in SCHEDULE 10.1, the parties hereto
agree that their respective representations and warranties shall survive the
execution and delivery of this Agreement and the consummation of the
transactions provided for herein, for a period of six (6) years from the Closing
Date, with the exception of those regarding taxes set forth in Section 3.8
47
which shall survive until the expiration of the respective periods within which
such taxes may be assessed, notwithstanding any investigations made by any party
hereto and any knowledge which any party may have regarding a breach of a
representation or warranty by another party.
10.2 INDEMNIFICATION BY SHAREHOLDER AND THE COMPANY: The Shareholder and
the Company shall indemnify, save and keep the Purchaser, its successors and
assigns, forever harmless against and from all liabilities, demands, claims,
actions or causes of action, assessments, losses, penalties costs, damages or
expenses, including reasonable attorneys' fees and expenses, of every kind,
nature and description, fixed or contingent, sustained or incurred by Purchaser,
its successors or assigns arising out of, resulting from, based upon or in
connection with:
10.2.1 any representation or warranty made by the Shareholder
and the Company to the Purchaser herein or any violation of agreements
or covenants or any instrument or document delivered to Purchaser in
connection herewith being incorrect in any material respect provided a
claim is asserted by the Purchaser within six (6) years of the Closing
Date.
10.2.2 the failure of the Shareholder or the Company to comply
with, or the breach by Shareholder or the Company of any of the
covenants and agreements in this Agreement to be performed by
Shareholder or the Company.
48
The Company and the Shareholder shall be obligated to indemnify and
hold harmless Purchaser pursuant to this Section 10.2 only to the
extent that the aggregate of all indemnifiable losses exceeds $75,000.
10.3 Indemnification by the Purchaser: The Purchaser shall indemnify,
save and keep the Shareholder and the Company, their successors and assigns,
forever harmless against and from all liabilities, demands, claims, actions or
causes of action, assessments, losses, penalties, costs, damages including
reasonable attorneys' fees and expenses, or expenses, of every kind, nature and
description, fixed or contingent, sustained or incurred by Shareholder and the
Company, its successors or assigns arising out of, resulting from, based upon or
in connection with:
10.3.1 any representation or warranty made by Purchaser to
Shareholder or the Company herein or any violation of agreements or
covenants or any instrument or document delivered to Shareholder and the
Company in connection herewith being incorrect in any material respect
provided a claim is asserted by Shareholder or the Company within six
(6) years of the Closing Date.
10.3.2 the failure of the Purchaser to comply with, or the
breach by the Purchaser of any of the covenants and agreements in this
Agreement to be performed by the Purchaser:
49
10.4 DEFENSE OF CLAIMS: A party entitled to indemnification hereunder
(an "Indemnified Party") agrees to notify each party required to indemnity
hereunder (an "Indemnifying Party") with reasonable promptness of any claim
asserted against it in respect of which any Indemnifying Party may be liable
under this Agreement, which notification shall be accompanied by a written
statement setting forth the basis of such claim and the manner of calculation
thereof. An Indemnifying Party shall have the right to defend any such claim at
its or his own expense and with counsel of its or his choice; provided, however,
that such counsel shall have been approved by the Indemnified Party prior to
engagement, which approval shall not be unreasonably withheld or delayed; and
provided further, that the Indemnified Party may participate in such defense, if
it so chooses, with its own counsel and at its own expense.
10.5 RIGHTS WITHOUT PREJUDICE: The rights of the parties under this
Article X are without prejudice to any other rights or remedies that it may have
by reason of this Agreement or as otherwise provided by law.
ARTICLE XI
TERMINATION AND WAIVER
11.1 TERMINATION: This Agreement and the Transaction may be terminated
at any time prior to the Closing:
50
11.1.1 By mutual consent of the Company and the Purchaser;
11.1.2 By the Company if any of the conditions set forth in
Article VII, and by the Purchaser if any of the conditions set forth in
Article VIII hereof, shall not have been fulfilled on or prior to the
Closing date, or shall become incapable of fulfillment, and shall not
have been waived.
In the event this agreement is terminated as described above, this Agreement
shall be void and of no force and effect.
11.2 REPAYMENT OF LOAN: In the event this Agreement is terminated for
any reason, the parties recognize that the terms of the Loan shall remain in
effect.
11.3 REMEDIES:
11.3.1 If the Shareholder and/or the Company defaults under the
Agreement, prior to Closing, the Shareholder and the Company recognize
that the Purchaser will suffer irreparable damage and that it will be
difficult if not impossible, to compute the Purchaser's actual damages.
The parties, therefore agree, that the Shareholder and the Company's
obligations hereunder shall be subject to a decree for specific
performance by any court of competent jurisdiction. The rights set forth
in this Section 11.3.1 shall be in addition to, and not in lieu of, any
other rights and remedies available to the Purchaser at law or in
equity.
51
11.3.2. If the Purchaser defaults under the Agreement, prior to
Closing, the parties recognize that the terms of the Loan shall remain
in effect.
ll.4 WAIVER: Any condition to the performance of the Company,
Shareholder and the Purchaser which legally may be waived on or prior to the
Closing Date may be waived at any time by the party entitled to the benefit
thereof by action taken or authorized by an instrument in writing executed by
the relevant party or parties. The failure of any party at any time or times to
require performance of any provision hereof shall in no manner affect the right
of such party as a later time to enforce the same. No waiver by any party of the
breach of any term, covenant, representation or warranty contained in this
Agreement as a condition to such party's obligations hereunder shall release or
affect any liability resulting from such breach, and no waiver of any nature,
whether by conduct or otherwise, in any one or more instances, shall be deemed
to be or construed as further or continuing waiver of any such condition or of
any breach of any other term, covenant, representation or warranty of this
Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 EXPENSES: Each of the parties hereto shall bear his or its own
expenses in connection herewith, including any expenses if the proposed
transaction is abandoned at any time prior to the
52
consummation thereof.
12.2 CONFIDENTIAL INFORMATION: Each party agrees that such party and its
representatives will hold in strict confidence all information and documents
received from the other parties and, if the transactions herein contemplated
shall not be consummated, each party will continue to hold such information and
documents in strict confidence and will return to such other parties all such
documents (including the exhibits attached to this Agreement) then in such
receiving party's possession without retaining copies thereof; provided,
however, that each party's obligations under this Section 12.2 to maintain such
confidentiality shall not apply to any information or documents that are in the
public domain at the time furnished by the others or that become in the public
domain thereafter through any means other than as a result of any act of the
receiving party or of its agents, officers, directors or stockholders which
constitutes a breach of this Agreement, or that are required by applicable law
to be disclosed or which the Purchaser furnishes to its attorneys, accountants,
underwriters or other persons it deems necessary or advisable in connection with
the preparation of its IPO. The parties agree that the remedy at law for any
breach of this Section 12.2 will be inadequate and a non-breaching party will be
entitled to injunctive relief to compel the breaching party to perform or
refrain from action required or prohibited hereunder.
53
12.3 MODIFICATION, TERMINATION OR WAIVER: This Agreement may be amended,
modified, superseded or terminated, and any of the terms, covenants,
representations, warranties or conditions hereof may be waived, but only by a
written instrument executed by the party waiving compliance. The failure of any
party at any time or times to require performance of any provisions hereof shall
in no manner affect the right of such party at a later time to enforce the same.
12.4 NOTICES: All notices, requests, demands and communications under or
in respect hereof shall be deemed to have been duly given and made if in writing
(including fax) if delivered by hand or left at a posted pre-paid registered or
certified mail (airmail is dispatched to a foreign country) to the party
concerned at its address appearing below or sent by fax to the number and with a
copy as below indicated. Service shall be deemed to be effective: so far as
delivery by hand is concerned when handed to the recipient or left at the
recipient's address; by post two days after posting (seven days if sent to a
foreign country; by fax on the same day as dispatch and receipt is confirmed.
The said addresses and fax numbers are as follows:
If to Shareholder and Company:
Xxxxx X. Xxxxxx, Xx.
00000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Tel.: 000-000-0000
Fax: 000-000-0000
54
with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, Xxx Xxxx 00000
Tel.: 000-000-0000
Fax: 000-000-0000
If to Purchaser:
Xxxxx X. Xxxxxxxxx
Proflight Medical Response, Inc.
00000 Xxxx Xxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Tel.: 000-000-0000
Fax: 000-000-0000
with a copy to:
Xxxxxx X. Xxxxx, Esq.
Xxxxxxx Xxxxxxxxxx Xxxxxx Xxxxx & Xxxxx
Two Grand Central Tower
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Tel.: 000-000-0000
Fax: 000-000-0000
The parties may change the persons, addresses and fax numbers to which the
notices or other communications are to be sent by giving written notice of any
such change in the manner provided herein for giving notice.
12.5 BINDING EFFECT AND ASSIGNMENT: This Agreement shall be binding upon
and inure to the benefit of the successors and assigns of the parties hereto;
provided, however, that no assignment of any rights or delegation of any
obligations provided for herein may be made by any party without the express
written consent of the other parties.
55
12.6 ENTIRE AGREEMENT: This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof.
12.7 SCHEDULES AND EXHIBITS: All schedules and exhibits annexed hereto
and the documents and instruments referred to herein or required to be delivered
simultaneously herewith or at the Closing are expressly made a part of this
Agreement as fully as though completely set forth herein, and all references to
this Agreement herein or in any of such schedules, exhibits, documents, or
instruments shall be deemed to refer to and include all such schedules,
exhibits, documents and instruments.
12.8 GOVERNING LAW: This Agreement shall be governed by, and construed
in accordance with the laws of the State of Colorado applicable to agreements
made and to be performed entirely within that State, excluding the choice of law
rules thereof.
12.9 COUNTERPARTS: This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but which together shall constitute
one and the same instrument.
12.10 SECTION HEADINGS: The section headings contained in this
Agreement are inserted for conveniences of reference only and shall
not affect the meaning or interpretation of this Agreement.
56
IN WITNESS WHEREOF, each of the parties hereto has duly executed this
agreement as of the day and year first above written.
AIR RESPONSE SOUTH, INC.
By: /s/ Xxxxx X. Xxxxxx, Xx.
-------------------------------
Xxxxx X. Xxxxxx, Xx.,
President
/s/ Xxxxx X. Xxxxxx, Xx.
-------------------------------
Xxxxx X. Xxxxxx, Xx.
PROFLIGHT MEDICAL RESPONSE,INC.
By: /s/ Xxxxx X. Xxxxxxxxx
-------------------------------
Xxxxx X. Xxxxxxxxx, President
57
SCHEDULE 3.1
Valid Corporate Existence; Qualification
Florida
SCHEDULE 3.4
Consents
None except see Schedule 3.15(ii).
SCHEDULE 3.6
No Undisclosed Liabilities
None
SCHEDULE 3.7
Actions Since the Company Balance Sheet
3.7.9 The Company has made loans to Shareholder, some or all of which may have
been made subsequent to the date of the Company Balance Sheet.
SCHEDULE 3.8
No Adverse Developments
None, except the Company may have become a guarantor on certain agreements for
Air Response, Inc. Any such guarantees will be identified for Purchaser prior to
the Closing.
SCHEDULE 3.9
Taxes
The time for filing the Florida and Federal Rax Returns for the fiscal year
ended May 31, 1996 has been extended to February 15, 1996. It is expected that
the amount due, if any, will be minimal.
SCHEDULE 3.10
Ownership of Assets
See Section 3.17
SCHEDULE 3.12
Litigation
None
SCHEDULE 3.14
Inventory
To be supplied before the Closing.
SCHEDULE 3.15(i)
List of Permits
State of Florida, Department of Revenue, Certificate of Registration
#58-12-144039-27 for Air Response South authorizing and empowering the
collection of sales and use taxes for the State of Florida, opening date 1/1/95.
State of Florida, Department of Health and Rehabilitative Services, Emergency
Medical Services, Air Ambulance Service License, dated June 30, 1994, expires
________________ .
Orange County Emergency Medical Services, Certificate of Public Convenience and
Necessity for Air AILS-Transport (Interfacility Only) service. Issued May 23,
1995, expires May 23, 1997. New York State Department of Health Certificate of
Ambulance Operating Authority to Response Medical Transport Service, Inc. for
Xxxxxxxxxx, Schoharie and Herkimer Countries, including a fixed wing variance.
Approval to transfer this permit is required.
SCHEDULE 3.15(ii)
Permits, Consent, etc.
Upon Closing, Company will not be entitled to all authority and benefits
conferred by State of Florida, Department of Health and Rehabilitative Services,
Emergency Medical Services, Air Ambulance Service License, dated
___________________, expires _____________________and Orange County Emergency
Medical Services Certificate of Public Convenience and Necessity for Air
ALA-Transport service. It will be necessary for Purchaser to apply for an Air
Ambulance Service License and an Orange County Certificate of Public Convenience
and Necessity.
Orange County Emergency Medical Services, Certificate of Public Convenience and
Necessity for Air AILS-Transport (Interfacility Only) service. Issued May 23,
1995, expires May 23, 1997. New York State Department of Health Certificate of
Ambulance Operating Authority to Response Medical Transport Service, Inc. for
Xxxxxxxxxx, Schoharie and Herkimer Counties, including a fixed wing variance.
Approval to transfer this permit is required.
SCHEDULE 3.16
Trade Names
None
SCHEDULE 3.17
Real Property
None.
Commercial Hanger sublease agreement entered into the 1st day of November, 1994
by and between Xxxxxxxxx Flying Service, Inc. and Air Response/Orlando Jets
covering the period November 1, 1994 through November 30, 1995 and thereafter on
a month to month basis for hangar space and offices. The premises are located
at the Orlando Executive Airport and are designated as Hangar #72 and 73 at 000X
Xxxxxxx Xxxxxx.
There is an unwritten, month to month, lease for hangar space at Paducah,
Kentucky.
SCHEDULE 3.18
Interest in Competitor, Suppliers or Customers
From time to time, the Company receives services from Response Aviation, Inc.,
Response Medical Transport Services, Inc. and Air Response, Inc., all of which
are solely owned by Shareholder. In addition, from time to time, the Company
provides services to Response Aviation, Inc.
SCHEDULE 3.20
Accounts Receivable Aging
To be provided before Closing.
SCHEDULE 3.21
Employees
To be provided prior to Closing.
SCHEDULE 3.22
Agreements and Obligations; Performance
None
SCHEDULE 4.1
Colorado
SCHEDULE 6.1.4
Guarantees
The Company may have guaranteed obligations of Air Response, Inc. The Company
will identify to Purchaser any such guarantees within 30 days.
