PURCHASE AGREEMENT Dated as of June 12, 2007 By and Among MAC ACQUISITIONS LLC, as Acquiror, SAN JOSE JET CENTER, INC. and ACM AVIATION INC., as Seller and CERTAIN BENEFICIAL OWNERS OF SELLER
Dated
as of June 12, 2007
By
and Among
MAC
ACQUISITIONS LLC,
as
Acquiror,
SAN
XXXX JET CENTER, INC.
and
ACM
AVIATION INC.,
as
Seller
and
CERTAIN
BENEFICIAL OWNERS OF SELLER
TABLE
OF CONTENTS
Page | |||||||
ARTICLE
I PURCHASE AND SALE OF MEMBERSHIP INTERESTS
|
2
|
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1.1
|
PURCHASE
AND SALE.
|
2
|
|||||
1.2
|
PURCHASE
PRICE.
|
2
|
|||||
1.3
|
CLOSING.
|
4
|
|||||
1.4
|
PHYSICAL
INVENTORY
|
4
|
|||||
1.5
|
CLOSING
PRORATIONS AND CLOSING
COSTS.
|
5
|
|||||
1.6
|
PRE-CLOSING
WORKING CAPITAL
ADJUSTMENT.
|
6
|
|||||
1.7
|
POST-CLOSING
WORKING CAPITAL
ADJUSTMENT.
|
6
|
|||||
1.8
|
GAAP
ACCOUNTING.
|
7
|
|||||
1.9
|
ACQUIROR
CONSENTS.
|
8
|
|||||
1.10
|
SELLER
REPRESENTATIVE.
|
8
|
|||||
ARTICLE
II REPRESENTATIONS & WARRANTIES OF SELLER AND THE BENEFICIAL
OWNERS
|
9
|
||||||
2.1
|
ORGANIZATION
AND EXISTENCE.
|
9
|
|||||
2.2
|
EXECUTION
AND EFFECT OF AGREEMENT.
|
9
|
|||||
2.3
|
FINANCIAL
STATEMENTS; LIABILITIES.
|
10
|
|||||
2.4
|
CAPITALIZATION.
|
10
|
|||||
2.5
|
INVENTORY.
|
11
|
|||||
2.6
|
PERSONAL
PROPERTY.
|
11
|
|||||
2.7
|
TAX
MATTERS.
|
12
|
|||||
2.8
|
PRODUCTS
AND SERVICES.
|
13
|
|||||
2.9
|
INTELLECTUAL
PROPERTY.
|
14
|
|||||
2.10
|
PERMITS;
COMPLIANCE WITH LAWS.
|
15
|
|||||
2.11
|
REAL
PROPERTY; LEASES OF REAL PROPERTY.
|
15
|
|||||
2.12
|
INSURANCE.
|
17
|
|||||
2.13
|
CONTRACTS.
|
17
|
|||||
2.14
|
NO
VIOLATION.
|
19
|
|||||
2.15
|
LITIGATION;
ORDERS.
|
19
|
|||||
2.16
|
THIRD
PARTY AND GOVERNMENTAL CONSENTS.
|
20
|
|||||
2.17
|
ENVIRONMENTAL
MATTERS.
|
20
|
|||||
2.18
|
EMPLOYEES;
CONSULTANTS; LABOR MATTERS.
|
21
|
|||||
2.19
|
BUSINESS
CONDUCT.
|
22
|
|||||
2.20
|
TRANSACTIONS
WITH AFFILIATES.
|
23
|
|||||
2.21
|
NO
BROKERS.
|
24
|
|||||
2.22
|
CUSTOMERS
AND VENDORS.
|
24
|
|||||
2.23
|
EMPLOYEE
BENEFIT PLANS; ERISA.
|
24
|
|||||
2.24
|
CAPITAL
EXPENDITURES.
|
25
|
|||||
2.25
|
CERTAIN
PAYMENTS.
|
25
|
|||||
2.26
|
BUSINESS
ACTIVITY RESTRICTIONS.
|
26
|
|||||
2.27
|
ACCOUNTS
RECEIVABLE.
|
26
|
|||||
2.28
|
OPERATIONS
OF JET CENTER ENTITIES.
|
26
|
|||||
2.29
|
NO
SIGNIFICANT ITEMS EXCLUDED.
|
26
|
|||||
ARTICLE
III REPRESENTATIONS AND WARRANTIES OF THE
ACQUIROR
|
27
|
||||||
3.1
|
ORGANIZATION
AND EXISTENCE.
|
27
|
|||||
3.2
|
EXECUTION
AND EFFECT OF AGREEMENT.
|
27
|
|||||
3.3
|
NO
VIOLATION.
|
27
|
|||||
3.4
|
LITIGATION.
|
27
|
|||||
3.5
|
CONSENTS.
|
28
|
|||||
3.6
|
NO
BROKERS.
|
28
|
i
ARTICLE
IV COVENANTS
|
28 | ||||||
4.1
|
FILINGS
AND OTHER ACTIONS.
|
28
|
|||||
4.2
|
HSR
ACT.
|
29
|
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4.3
|
CONDUCT
OF BUSINESS PENDING CLOSING.
|
29
|
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4.4
|
NO
SHOP.
|
31
|
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4.5
|
NOTIFICATION
OF CERTAIN MATTERS.
|
32
|
|||||
4.6
|
TRANSFER/ASSIGNMENT
OF MEMBERSHIP INTERESTS.
|
33
|
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4.7
|
NONCOMPETE.
|
33
|
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4.8
|
FURTHER
ASSURANCES.
|
34
|
|||||
4.9
|
POST-CLOSING
COVENANTS.
|
35
|
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4.10
|
EMPLOYEE
MATTERS.
|
35
|
|||||
4.11
|
HANGAR
F CONSTRUCTION.
|
36
|
|||||
4.12
|
DUE
DILIGENCE.
|
36
|
|||||
4.13
|
AIRCRAFT
MANAGEMENT, AIR CHARTER AND MAINTENANCE.
|
36
|
|||||
4.14
|
ACM
AVIATION NAME.
|
36
|
|||||
4.15
|
NOTIFICATION
REGARDING CERTAIN EVENTS.
|
37
|
|||||
ARTICLE
V CONDITIONS TO THE CLOSING
|
37
|
||||||
5.1
|
CONDITIONS
TO OBLIGATIONS OF EACH PARTY TO EFFECT THE CLOSING.
|
37
|
|||||
5.2
|
ADDITIONAL
CONDITIONS TO OBLIGATIONS OF THE SELLER TO EFFECT THE
CLOSING.
|
38
|
|||||
5.3
|
ADDITIONAL
CONDITIONS TO THE OBLIGATIONS OF THE ACQUIROR TO EFFECT THE
CLOSING.
|
38
|
|||||
5.4
|
EFFECT
OF CLOSING; WAIVER.
|
40
|
|||||
ARTICLE
VI
|
41 | ||||||
INDEMNIFICATION;
REMEDIES
|
41 | ||||||
6.1
|
OBLIGATIONS
OF THE SELLER AND THE BENEFICIAL OWNERS.
|
41
|
|||||
6.2
|
OBLIGATIONS
OF THE ACQUIROR.
|
42
|
|||||
6.3
|
PROCEDURE
FOR CLAIMS.
|
42
|
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6.4
|
SURVIVAL.
|
43
|
|||||
6.5
|
INDEMNITY
PAYMENTS.
|
44
|
|||||
6.6
|
LIMITATIONS
ON INDEMNIFICATION OBLIGATIONS UNDER ARTICLE VI.
|
45
|
|||||
6.7
|
REMEDIES.
|
45
|
|||||
6.8
|
TREATMENT
OF INDEMNIFICATION PAYMENTS.
|
46
|
|||||
ARTICLE
VII TERMINATION
|
46 | ||||||
7.1
|
TERMINATION.
|
46
|
|||||
7.2
|
CONSEQUENCES
OF TERMINATION.
|
47
|
|||||
ARTICLE
VIII GENERAL PROVISIONS
|
48
|
||||||
8.1
|
COOPERATION.
|
48
|
|||||
8.2
|
PRESS
RELEASES; CONFIDENTIALITY.
|
48
|
|||||
8.3
|
EXPENSES.
|
49
|
|||||
8.4
|
AMENDMENTS
AND WAIVERS.
|
49
|
|||||
8.5
|
SUCCESSORS
AND ASSIGNS.
|
50
|
|||||
8.6
|
THIRD
PARTY BENEFICIARIES.
|
51
|
|||||
8.7
|
CHOICE
OF LAW.
|
51
|
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8.8
|
JURISDICTION;
SERVICE OF PROCESS.
|
51
|
|||||
8.9
|
NOTICES.
|
51
|
|||||
8.10
|
SEVERABILITY.
|
53
|
|||||
8.11
|
ENTIRE
AGREEMENT.
|
53
|
|||||
8.12
|
CONSTRUCTION.
|
53
|
|||||
8.13
|
TITLES
AND SUBTITLES.
|
53
|
|||||
8.14
|
COUNTERPARTS.
|
53
|
|||||
8.15
|
RELEASE
BY SELLER, JET CENTER ENTITIES AND BENEFICIAL OWNERS.
|
54
|
ii
SCHEDULES
Schedule
2.1
|
--
|
Organization
and Existence
|
Schedule
2.2
|
--
|
Execution
and Effect of Agreement
|
Schedule
2.3
|
--
|
Financial
Statements; Liabilities
|
Schedule
2.4
|
--
|
Capitalization
|
Schedule
2.5
|
--
|
Inventory
|
Schedule
2.6
|
--
|
Personal
Property
|
Schedule
2.7
|
--
|
Tax
Matters
|
Schedule
2.8
|
--
|
Products
and Services
|
Schedule
2.9
|
--
|
Intellectual
Property
|
Schedule
2.10
|
--
|
Permits;
Compliance with Laws
|
Schedule
2.11
|
--
|
Real
Property; Leases of Real Property
|
Schedule
2.12
|
--
|
Insurance
|
Schedule
2.13
|
--
|
Contracts
|
Schedule
2.14
|
--
|
No
Violation
|
Schedule
2.15
|
--
|
Litigation;
Orders
|
Schedule
2.16
|
--
|
Third
Party and Governmental Consents
|
Schedule
2.17
|
--
|
Environmental
Matters
|
Schedule
2.18
|
--
|
Employees;
Consultants; Labor Matters
|
Schedule
2.19
|
--
|
Business
Conduct
|
Schedule
2.20
|
--
|
Transactions
with Affiliates
|
Schedule
2.21
|
--
|
No
Brokers
|
Schedule
2.22
|
--
|
Customers
and Vendors
|
Schedule
2.23
|
--
|
Employee
Benefit Plans; ERISA
|
Schedule
2.24
|
--
|
Capital
Expenditures
|
Schedule
2.25
|
--
|
Certain
Payments
|
Schedule
2.26
|
--
|
Business
Activity Restrictions
|
Schedule
2.27
|
--
|
Accounts
Receivable
|
Schedule
2.28
|
--
|
Operations
of Jet Center Entities
|
Schedule
2.29
|
--
|
No
Significant Items Excluded
|
Schedule
3.6
|
--
|
No
Brokers
|
Schedule
4.7
|
--
|
Noncompete
|
Schedule
4.9(b)
|
--
|
Nonsolicitation
|
EXHIBITS
Exhibit
A
|
Form
of Escrow Agreement
|
Exhibit
B
|
Form
of Cancellation of Intercompany Transactions
Agreement
|
Exhibit
C
|
Form
of Legal Opinion
|
Exhibit
D
|
Form
of General Release
|
Exhibit
E
|
Form
of Assignment and Assumption of San Xxxx Purchase
Agreement
|
Exhibit
F
|
Form
of Macquarie Guaranty Agreement
|
Exhibit
G
|
Allocation
Methodology
|
iii
THIS
PURCHASE AGREEMENT
(this
“Agreement”)
dated
as of the 12th day of June, 2007 is by and among MAC
Acquisitions LLC, a Delaware limited liability company (the
“Acquiror”),
San
Xxxx Jet Center, Inc., a California corporation (“Jet
Center Inc.”),
and
ACM Aviation Inc., a California corporation (“ACM
Inc.”),
certain beneficial
owners of Jet Center Inc. and ACM Inc. whose names appear as signatories on
the
signature pages hereto (collectively, the “Beneficial
Owners”),
SJJC
Aviation Services, LLC, a Delaware limited liability company (“SJJC”),
and
SJJC FBO Services, LLC, a Delaware limited liability company, SJJC Airline
Services, LLC, a Delaware limited liability company, Jet Center Property
Services, LLC, a Delaware limited liability company, ACM Property Services,
LLC,
a Delaware limited liability company, and ACM Aviation, LLC, a Delaware limited
liability company (collectively the “SJJC
Subsidiaries”
and
collectively with SJJC, the “Jet
Center Entities”).
Jet
Center Inc. and ACM Inc. are sometimes individually referred to hereafter as
a
“Member”
and
sometimes jointly referred to hereafter as the “Members”
or
the
“Seller.”
The
Seller, the Acquiror, the Beneficial Owners and the Jet Center Entities may
be
referred to hereinafter collectively as the “Parties”
or
individually as a “Party.”
R
E C I T A L S
WHEREAS,
the
Members jointly own 100% of the membership interests (the “Membership
Interests”)
of
SJJC, and SJJC is the sole member of each of the SJJC Subsidiaries;
WHEREAS,
the Jet
Center Entities are engaged in the business of (i) conducting fixed base
operations (“FBOs”)
for
aircraft, including ground servicing, fueling, parking, tie-down, de-icing,
de-fueling, storage, repair and maintenance at certain premises located in
San
Jose, California at the Mineta San Xxxx International Airport, (ii) performing
certain aircraft management services pursuant to short-term leases, (iii)
operating an air charter business, and (iv) office space rental (collectively,
the “FBO
Business”);
WHEREAS,
the
Seller desires to sell, convey, transfer, assign and deliver to the Acquiror,
and the Acquiror desires to purchase and acquire from the Seller, all of the
Seller’s right, title and interest in and to the Membership Interests free and
clear of all Liens (the “Acquisition”),
and
Seller desires that the aforesaid transaction be consummated;
WHEREAS,
in
consideration of the direct and
indirect benefits accruing to the Beneficial Owners as the direct or indirect
owners of capital stock of ACM
Inc.
and Jet Center Inc.,
the
Beneficial Owners have agreed to be Parties to this Agreement and to make the
representations and warranties herein along with Seller in order to induce
the
Acquiror to enter into this Agreement, without which inducement the Acquiror
would not have entered into this Agreement; and
WHEREAS,
in
furtherance of the consummation of the Acquisition, the Parties desire to enter
into this Agreement.
NOW,
THEREFORE,
in
consideration of the premises and for other good and valuable consideration,
the
receipt and sufficiency of which are hereby expressly acknowledged, the Parties,
intending to be legally bound hereby, agree as follows:
ARTICLE
I
PURCHASE
AND SALE OF MEMBERSHIP INTERESTS
1.1
Purchase
and Sale.
(a) Subject
to the terms and conditions of this Agreement and in reliance upon the
representations, warranties, covenants and agreements of the Seller and the
Beneficial Owners contained herein, the Seller hereby agrees to sell, convey,
transfer, assign and deliver to the Acquiror, and the Acquiror hereby agrees
to
purchase and acquire from the Seller, free and clear of any lien,
security interest, mortgage, pledge, hypothecation, charge, preemptive right,
voting trust, imposition, covenant, condition, right of first refusal, easement
or conditional sale or other title retention agreement or other
restrictions
(collectively, “Liens”),
all
of the Seller’s right, title and interest in and to the Membership
Interests.
(b) Effective
upon the Closing, the Members hereby waive, and Jet Center Inc., in its capacity
as Manager of SJJC hereby waives, any and all of their respective rights under
the Amended and Restated Limited Liability Company Agreement of SJJC dated
as of
January 1, 2005 (the “Operating
Agreement”)
and
agree that upon the Closing, the Acquiror shall be deemed and admitted as a
substitute member of SJJC in accordance with the terms of the Operating
Agreement and the Limited Liability Company Act of the State of Delaware, as
amended.
1.2
Purchase
Price.
(a) The
aggregate consideration for the Membership Interests (collectively, the
“Purchase
Price”)
shall
be $120,000,000, as follows, subject to adjustment, if at all, as set forth
in
Section 1.5, Section 1.6 and Section 1.7.
(b) The
Purchase Price shall be paid as follows:
(i) $10,000,000
(the “Escrowed
Funds”)
shall
be paid via wire transfer of immediately available funds from the Acquiror
to
Regions Bank, 000 Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000, Attn: Xxx
X.
Xxxxxxx (the “Escrow
Agent”)
on the
Closing Date, which deposit shall be released from escrow in accordance with
the
terms of an escrow agreement dated as of the date hereof among the Acquiror,
the
Seller and the Escrow Agent in substantially the form attached hereto as
Exhibit
A
(the
“Escrow
Agreement”);
(ii) an
amount
shall be paid by the Acquiror on the Closing Date, via wire transfer of
immediately available funds to one or more accounts specified by the Seller,
equal to $120,000,000 adjusted as follows:
-
2 -
(A) minus
the
amount of the Escrowed Funds;
(B) minus
the
amount of any debt of the Jet Center Entities not paid in full by the Seller
at
or prior to the Closing (including the fees, costs, expenses and/or penalties
incurred in connection with the prepayment or satisfaction after the Closing
of
any such debt, including all accrued but unpaid interest as of the applicable
payoff date), but excluding:
(1) any
debt
for borrowed money of the Jet Center Entities outstanding as of the Closing
Date
related solely to Hangar E construction costs, not
to
exceed $4,197,083 (the “Hangar
E Debt”);
(2) any
debt
for borrowed money of the Jet Center Entities outstanding as of the Closing
Date
related solely to new fuel farm construction, not to exceed $1,400,000 (the
“Fuel
Farm Debt”);
(3) any
debt
for borrowed money of the Jet Center Entities outstanding as of the Closing
Date
related solely to design
and construction costs of
Hangar
F (the “Hangar
F Debt”),
provided that such Hanger F Debt shall not exceed $18,000,000 plus the costs
of
any change orders, additions or modifications to the Hanger F project following
the Effective Date that are approved in advance by Acquiror (collectively,
the
“Hanger
F Cap”);
(4) the
outstanding principal amount of indebtedness of SJJC and/or the SJJC
Subsidiaries to Avfuel Corporation (“Avfuel”)
(as
successor in interest to Texaco Aviation Products LLC by assignment dated
October 9, 2001) pursuant to a Promissory Term Note dated October 19, 2000
in
original principal amount of $1,000,000, the principal balance outstanding
under
which on the Closing Date shall not exceed $782,900 (the “AvFuel
Debt”);
and
(5) any
debt
which is included in the calculation of the Working Capital under Section
1.6;
(C) plus
the
amount of any costs incurred, other than amounts satisfied by debt financing
outstanding as of the Closing pursuant to Section 1.2(b)(ii)(B)(3)
above,
attributable to the design and construction costs of Hangar F (the “Hangar
F Cap-Ex Costs Incurred”),
provided that the Hangar F Cap-Ex Costs Incurred and the Hanger F Debt shall
collectively not exceed the Hanger F Cap;
(D) plus
or minus
the
amount of the prorations and closing costs described in Section 1.5 that are
able to be determined as of the Closing Date; and
(E) plus
or minus
the
pre-Closing Purchase Price adjustment, if any, determined as described in
Section 1.6.
(iii) The
prorations and closing costs described in Section 1.5 that are not able to
be
determined as of the Closing Date shall be paid by the Seller or the Acquiror,
as the case may be, in accordance with Section 1.5; and
-
3 -
(iv) The
post-Closing Purchase Price adjustment, if any, determined as described in
Section 1.7, shall be paid by the Seller or the Acquiror in accordance with
Section 1.7.
(c) The
Parties agree that for tax purposes the Seller shall be characterized as selling
partnership interests and the Acquiror shall be treated as buying assets as
generally described in Revenue Ruling 99-6. The
Acquiror and the Seller have
agreed upon a methodology for the allocation of the Purchase Price among the
assets of the FBO Business being acquired, as set forth on Exhibit
G
attached
hereto (the “Allocation
Methodology”).
Following the Closing, the Acquiror and the Seller and their respective
Affiliates shall finalize an allocation of the Purchase Price consistent with
the Allocation Methodology, and shall file all necessary Tax Returns and other
forms (including Internal Revenue Service Form 8594) to report the transactions
contemplated herein for U.S. federal, state, local and non-United States income
Tax purposes in accordance with such allocation, and shall not take any position
inconsistent with such allocation. The Parties agree that such allocation will
be in accordance with Treasury Regulation Section 1.1060-1 and any
appraisals of the assets of the FBO Business being acquired conducted on behalf
of the Acquiror following the Closing. Any adjustment to the Purchase Price
shall be allocated among such assets as provided in Treasury Regulation
Section 1.1060-1 and, in the event of such adjustment, the Acquiror and the
Seller agree to revise and amend Form 8594 within 30 days of such
adjustment.
1.3
Closing.
Unless
otherwise mutually agreed upon by the Parties in writing, the closing of the
Acquisition (the “Closing”)
shall
take place within five business days following final approval to the extent
required from the San Xxxx City Council to the assignment of the FBO leases
regarding the FBO Business and any other approvals required to be obtained
from
the San Xxxx City Council related thereto, at a time and place mutually agreed
upon by the Acquiror and the Seller Representative (as defined in Section
1.10(a)); provided, however, that all of the conditions precedent to the Closing
set forth in Article
V
shall
have been satisfied or waived. Time is of the essence. Notwithstanding, the
Parties may mutually agree to extend the Closing to the end of the month
following receipt of any approvals required to be obtained from the San Xxxx
City Council in order to simplify any accounting required under this Agreement.
The date of the Closing is hereinafter called the “Closing
Date.”
The
Parties agree to deliver at the Closing such documents, certificates and other
instruments as are specified in Article V hereof and as may be reasonably
required by the Acquiror or the Seller to effect the transfer by the Seller
of
the Membership Interests pursuant to and as contemplated by this Agreement
and
to consummate the Acquisition. All events which shall occur at the Closing
shall
be deemed to occur simultaneously.
1.4
Physical
Inventory
On
the
Closing Date or at such other time prior to or after the Closing as agreed
upon
between the Acquiror and the Seller,
representatives of the Acquiror and the Seller
shall
take the appropriate actions and shall use appropriate accounting methods,
consistent with GAAP, the Jet Center Entities’ past practices, perpetual
inventory records and inventory valuation methodologies consistent with past
practices, to mutually determine the Inventory Assets (defined below) owned
by
the Jet Center Entities on the Closing Date. Each Party shall bear its own
expense in connection therewith. “Inventory
Assets”
means
all consumable inventory, including, without limitation, all pilot supplies,
avgas and Jet A fuel, oil and all other materials and supplies to be used,
sold
or consumed by the Jet Center Entities in the ordinary course of the FBO
Business.
-
4 -
1.5
Closing
Prorations and Closing Costs.
The
following items and costs shall be prorated (on the Closing Date or as soon
thereafter as is practicable) between the Seller and the Acquiror in the manner
indicated:
(a) All
sales
and use taxes associated with the Acquisition shall be split equally between
the
Acquiror and the Seller, unless prohibited by applicable Laws;
(b) All
Taxes
with respect to the FBO Business which are due and payable and/or levied due
and
payable and/or accrued prior to the Closing Date;
(c) All
possessory use Taxes shall be prorated as set forth below based on the most
recently ascertainable property Tax xxxx; and
(d) All
Taxes
of SJJC, including, without limitation, Taxes with respect to the FBO Business,
that relate to any Tax period (or portion thereof) ending on or prior to the
Closing Date.
For
purposes of calculating prorations for non-income Taxes, the Seller shall be
deemed to be in title to the Membership Interests and the FBO Business for
the
entire day immediately prior to the Closing Date and the Acquiror shall be
deemed in title for the entire day of the Closing Date. All such prorations
shall be made on the basis of the actual number of days of the year and month
which shall have elapsed as of the Closing Date. To the extent not ascertainable
on the Closing Date, the amount of such prorations shall be adjusted in cash
after the Closing Date as and when complete and accurate information becomes
available. The Seller and the Acquiror agree to cooperate and use their diligent
and good faith efforts to make such adjustments no later than 60 days after
the
Closing Date. In the event that amounts are not included in the Closing Working
Capital Calculation (for example, because the relevant Tax Return is not yet
due
and filed or because an amount is subsequently changed by a taxing authority),
then the amounts due from the Seller to the Acquiror hereunder shall be treated
in the same manner as a breach or inaccuracy of a representation and warranty
under Section 2.7 (Taxes) and shall be subject to the relevant provisions of
Article VI. Items of income and expense for the period prior to the Closing
Date
will be for the account of the Seller and items of income and expense for the
period on or after the Closing Date will be for the account of the Acquiror,
all
as determined by the accrual method of accounting.
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1.6
Pre-Closing
Working Capital Adjustment.
(a) “Working
Capital”
means
current assets of
the
Jet Center Entities (including
the Inventory Assets) minus current liabilities of the Jet Center Entities
(excluding any current portion of the Hanger E Debt, the Fuel Farm Debt, the
Hangar F Debt and the AvFuel Debt).
(b) At
least
five business days prior to the Closing, the Seller Representative shall deliver
its best estimate of the consolidated balance sheet of SJJC Aviation Services,
LLC as of the Closing (the “Estimated
Closing Balance Sheet”)
and a
calculation from the Estimated Closing Balance Sheet (the “Estimated
Working Capital Calculation”)
of the
estimated Working Capital (the “Estimated
Working Capital”),
in
each case reasonably acceptable to the Acquiror.
(c) For
purposes of this Agreement, “Target
Working Capital”
means
Zero
Dollars ($0.00).
(d) If
the
Estimated Working Capital is equal to the Target Working Capital, then there
shall be no adjustment to the Purchase Price under this Section 1.6. If the
Estimated Working Capital exceeds the Target Working Capital, then the Purchase
Price shall be increased by the amount of such excess pursuant to Section 1.2.
If the Target Working Capital exceeds the Estimated Working Capital, then the
Purchase Price shall be decreased by the amount of such excess pursuant to
Section 1.2.
1.7
Post-Closing
Working Capital Adjustment.
Following
the Closing Date, the Purchase Price shall be adjusted, if at all, as set forth
below:
(a) As
soon
as practicable (and in any event within 60 days following the Closing), the
Acquiror shall prepare and deliver to the Seller Representative and its counsel
a consolidated
balance sheet of SJJC Aviation Services, LLC as of the Closing Date prepared
by
the Acquiror in accordance with GAAP as applied by the Jet Center Entities
consistent with past practices (the “Closing
Balance Sheet”),
a
calculation of the Working Capital as of the Closing Date based on such Closing
Balance Sheet (the “Closing
Working Capital Calculation”)
and
all work papers and back-up materials relating thereto.
(b) On
or
prior to the 30th day following the Acquiror’s delivery of the Closing Balance
Sheet and the Closing Working Capital Calculation, the Seller Representative
may
give the Acquiror a written notice stating in reasonable detail the Seller
Representative’s objections (an “Objection
Notice”)
to the
Closing Balance Sheet or the Closing Working Capital Calculation. Any Objection
Notice shall specify in reasonable detail the dollar amount of any objection
and
the basis therefor. Any determination set forth on the Closing Balance Sheet
or
the Closing Working Capital Calculation which is not specifically objected
to in
the Objection Notice shall be deemed acceptable and shall be final and binding
upon the Parties upon delivery of the Objection Notice. If the Seller
Representative does not give the Acquiror an Objection Notice within such 30-day
period, then the Closing Balance Sheet and the Closing Working Capital
Calculation shall be conclusive and binding upon the Parties and the Working
Capital set forth in the Closing Working Capital Calculation will constitute
the
Working Capital for purposes of this Section 1.7. During such 30-day period,
the
Acquiror shall provide the Seller Representative with access to the books and
records of the Seller and its personnel and accountants as may be reasonably
necessary for the Seller Representative to review the Closing Balance Sheet
and
the Closing Working Capital Calculation.
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(c) Following
the Acquiror’s receipt of any Objection Notice, the Seller Representative and
the Acquiror shall attempt to negotiate in good faith to resolve such dispute.
In the event that the Seller Representative and the Acquiror fail to agree
on
any of the Seller Representative’s proposed adjustments set forth in the
Objection Notice within 30 days after the Acquiror receives the Objection
Notice, the Seller Representative and the Acquiror agree that a mutually
acceptable accounting firm of nationally recognized standing (the “Independent
Accounting Firm”)
shall,
within the 45-day period immediately following such 30-day period, make the
final determination of Working Capital as of the Closing Date in accordance
with
the terms of this Agreement. The Acquiror and the Seller Representative each
shall provide the Independent Accounting Firm with their respective
determinations of the Working Capital as of the Closing Date. The Independent
Accounting Firm shall make an independent determination of the Working Capital
as of the Closing Date that, assuming compliance with the previous clause,
shall
be final and binding on the Seller and the Acquiror. Notwithstanding the above,
the Independent Accounting Firm shall serve as an arbitrator of the dispute
rather than an auditor. The fees, costs and expenses of the Independent
Accounting Firm shall be paid by the Party whose calculation of Working Capital
was different by the greater amount from that of the Independent Accounting
Firm.
(d) If
the
Estimated Working Capital equals the Working Capital as of the Closing Date
as
finally determined pursuant to this Section 1.7, then there shall be no
adjustment to the consideration paid at Closing pursuant to Section 1.2. If
the
Estimated Working Capital exceeds the Working Capital as of the Closing Date
as
finally determined pursuant to this Section 1.7, then the Seller Representative,
on behalf of the Seller, shall be required to pay to the Acquiror, by wire
transfer of immediately available funds to the account designated in writing
by
the Acquiror, an amount equal to such excess together
with interest at the rate of 8% per annum, which interest shall begin accruing
on the Closing Date and end on the date that the payment is made.
If the
Working Capital as of the Closing Date as finally determined pursuant to this
Section 1.7 exceeds the Estimated Working Capital, then the Acquiror shall
pay
an amount equal to such excess, together
with interest at the rate of 8% per annum, which interest shall begin accruing
on the Closing Date and end on the date that the payment is made,
by wire
transfer of immediately available funds to the accounts designated in writing
by
the Seller Representative. Within
10
days after the calculation of Working
Capital
as of
the Closing Date becomes binding and conclusive on the Parties, the Seller
Representative or the Acquiror, as the case may be, shall make the wire transfer
payment provided for in this Section 1.7.
1.8
GAAP
Accounting.
Unless
otherwise noted, working capital and all other financial measures used in this
Agreement will be determined in accordance with generally accepted accounting
principles applied by the Jet Center Entities on a consistent basis in effect
on
the date hereof as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession of the United
States (“GAAP”).
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1.9
Acquiror
Consents.
Unless
otherwise noted, whenever the consent of the Acquiror is required to be obtained
pursuant to this Agreement, such consent requirement shall be satisfied only
if
the consent is obtained from an elected officer of the Acquiror.
1.10
Seller
Representative.
(a) Xxxxx
Xxxxxxx is hereby appointed by each of the Members (and their successors and
assigns) as agent and attorney-in-fact (the “Seller
Representative”)
for
and on behalf of each of such legal entities, (i) to enter into and perform
the
Escrow Agreement, to authorize the distribution of cash from the Escrowed Funds
in satisfaction of claims pursuant to this Agreement, to object to such
distributions, to agree to, negotiate, enter into settlements and compromises
of, and demand arbitration and comply with orders of courts and awards of
arbitrators with respect to such claims, and to take all actions necessary
or
appropriate in the reasonable judgment of the Seller Representative for the
accomplishment of the foregoing, (ii) to take any other action expressly
delegated to the Seller Representative under the other terms of this Agreement
and (iii) to execute any amendment, waiver or consent of this Agreement or
the
Escrow Agreement.
Any
notice to the Seller required or permitted under this Agreement may be satisfied
by notice to the Seller Representative.
(b) The
Seller Representative may be changed by the Beneficial Owners from time to
time
upon not less than thirty (30) days prior written notice to the Acquiror;
provided,
however,
that
the Seller Representative may not be removed unless Beneficial Owners indirectly
holding at least two-thirds interest in the Escrowed Funds agree to such removal
and to the identity of the substituted seller representative. Any vacancy in
the
position of Seller Representative due to the death, disability, or resignation
upon 30 days notice, of the Seller Representative will be filled by approval
of
the Beneficial Owners indirectly holding a majority in interest of the Escrowed
Funds. No bond shall be required of the Seller Representative. The Seller
Representative will have the right to recover from the Escrowed
Fund,
subsequent to the satisfaction of any pending claim against the Escrowed
Fund
but
prior to any distribution of the Escrowed
Fund
to the
Seller, reasonable fees and expenses incurred in connection with his duties
as
Seller Representative in relation to the resolution of any dispute. In the
event
the Escrowed Funds are insufficient to satisfy the reasonable
fees and expenses incurred
by the Seller Representative in connection with his duties as such, the Seller
and the Beneficial Owners shall jointly and severally indemnify the Seller
Representative for such reasonable fees and expenses.
(c) The
Seller Representative shall not be liable for any act done or omitted hereunder
as the Seller Representative. The Seller shall severally indemnify the Seller
Representative and hold the Seller Representative harmless against any loss,
liability or expense incurred without bad faith or willful misconduct on the
part of the Seller Representative, acting in such capacity, and arising out
of
or in connection with the acceptance or administration of the Seller
Representative’s duties hereunder, including the reasonable fees and expenses of
any legal counsel retained by the Seller Representative. Any Party dealing
with
the Seller Representative is entitled to rely on the actions taken by, and
consents and approvals given by, the Seller Representative.
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ARTICLE
II
REPRESENTATIONS
& WARRANTIES OF
SELLER
AND THE BENEFICIAL OWNERS
As
an
inducement to the Acquiror to enter into this Agreement and to consummate the
Acquisition, each of the Seller and
the
Beneficial Owners hereby jointly and severally represents and warrants to the
Acquiror that, except as otherwise set forth in the disclosure schedules
referred to in this Agreement and attached hereto (the “Disclosure
Schedules”),
the
following representations and warranties are, as of the date hereof, true and
correct. For
purposes of this Agreement, the term “Knowledge”
means
the actual knowledge of
a
particular fact or other matter being possessed as of the pertinent date
by
Xxxxx
Xxxxxxx and Xxx Xxxx, after due inquiry or,
if
due inquiry has not been made, knowledge that a prudent individual could be
expected to discover or otherwise become aware of after due inquiry of all
vice
presidents, the Director of Human Resources, the Director of Maintenance, and
the Director of Operations
of
the
Jet
Center Entities.
2.1 Organization
and Existence.
Each
of
the Jet Center Entities is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware, and
is
duly authorized and qualified to do business under all applicable laws,
treaties, rules, regulations, ordinances and orders of any Governmental
Authority (as defined below) (“Legal
Requirements”
or
“Laws”) to carry on its business in the places and in the manner as now
conducted, to own or hold under lease the properties and assets it now owns
or
holds under lease and to perform all of its obligations under this Agreement,
except where the failure to be so authorized, qualified or in good standing
would not be reasonably likely to result in a
material
adverse effect on the business, operations, assets, prospects or financial
condition of the FBO Business (a
“Material
Adverse Effect”).
The
minute books and records of each of the Jet Center Entities, as previously
delivered to the Acquiror, are true, correct and complete. True and complete
copies of the Certificate of Formation, as amended to date, and Limited
Liability Company Agreement, as amended to date, have been provided to the
Acquiror for each of the Jet Center Entities. For purposes of this Agreement,
“Governmental
Authority”
means
any governmental, regulatory or administrative body, agency, subdivision or
authority, any court or judicial authority, or any public, private or industry
regulatory authority, whether national, federal, state, local, foreign or
otherwise.
2.2 Execution
and Effect of Agreement.
The
Seller has full power and authority to execute and deliver this Agreement and
each of the other agreements, certificates, schedules and instruments to be
executed and delivered in connection with the consummation of the Acquisition
(the “Transaction
Documents”)
to
which it is a party, to perform its obligations hereunder and thereunder, and
to
consummate the Acquisition. The execution, delivery and performance by each
of
the Jet Center Entities of this Agreement and the other Transaction Documents
to
which it is a party and the consummation by each such legal entity of the
Acquisition have been duly and validly authorized and approved by each such
legal entity and, except as set forth on Schedule
2.2,
no
other proceeding on the part of any such legal entity is necessary to authorize
the execution, delivery and performance by such legal entity of this Agreement
or the other Transaction Documents to which the Acquiror is a party or the
consummation of the Acquisition. This Agreement and the other Transaction
Documents to which each of the Jet Center Entities is a party have been duly
and
validly executed and delivered by each such legal entity and (assuming the
valid
execution and delivery thereof by the Acquiror and any other parties thereto)
constitute the legal, valid and binding obligations of each such legal entity,
enforceable against each such legal entity in accordance with their respective
terms, except as limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors’
rights and remedies generally, and subject as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) (collectively, the “Bankruptcy
and Equity Exceptions”).
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2.3 Financial
Statements; Liabilities.
(a) Copies
of
each of the audited, consolidated balance sheets, statements of profit and
loss
and statements of cash flows of SJJC Aviation Services, LLC for the fiscal
years
ended December 31, 2006, December 31 2005 and December 31, 2004 have been
provided to the Acquiror (collectively, the “Annual
Financial Statements”).
Copies of each of the consolidated balance sheets and statements of profit
and
loss of SJJC Aviation Services, LLC for the three months ended March 31, 2007
(the “Interim
Financial Statements,”
and
together with the Annual Financial Statements, the “Financial
Statements”)
have
been provided to the Acquiror. Except as set forth on Schedule
2.3(a),
each of
the Financial Statements (including the footnotes thereto, if any) is in
accordance with the books and records of SJJC Aviation Services, LLC, presents
fairly and accurately the consolidated financial position, assets and
liabilities and results of operations and cash flows of SJJC Aviation Services,
LLC and the FBO Business at the dates and for the periods indicated and has
been
prepared in accordance with GAAP, subject (only with respect to the Interim
Financial Statements) to normal and immaterial year-end adjustments and footnote
disclosures. The Financial Statements contain appropriate allowances and
reserves for accounts receivable and other accruals.
(b) As
of
December 31, 2006 (the “Balance
Sheet Date”),
none of
the Jet Center Entities had any indebtedness or other liability (whether
known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due)
which
was not disclosed in the Financial Statements (including the footnotes thereto).
Except as set forth on Schedule
2.3(b),
none of
the Jet Center Entities has incurred from and after the Balance Sheet Date
any
indebtedness or other liability (whether
known or unknown, whether absolute or contingent, whether liquidated or
unliquidated and whether due or to become due),
other
than current
liabilities for trade or business obligations incurred after
the
Balance Sheet Date in
connection with the purchase of goods or performance of services in the ordinary
course of business and consistent with past practice (other than in connection
with any material default under, or breach of, any Material Contract or Real
Property Lease by any of the Jet Center Entities).
2.4 Capitalization.
(a) The
issued and outstanding limited liability company interests of each of the Jet
Center Entities are set forth on Schedule
2.4(a)
and
are held
of record and beneficially as set forth on Schedule
2.4(a).
Except
as
set forth on Schedule
2.4(a),
each
owner of limited
liability company interests of
each
of
the Jet Center Entities:
(i)
holds such interests free and clear of any and all Liens; (ii)
is
not a party to any voting trust, proxy or other agreement or understanding
with
respect to such interests; and (iii) owns no other, and has no other right
to
purchase any, limited
liability company
interests in any of the Jet Center Entities.
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(b) All
of
the issued and outstanding limited
liability company interests of
each
of
the Jet Center Entities
have
been duly authorized, are validly issued, fully paid, and
nonassessable and
were
issued in conformity with all applicable Legal Requirements. Except
as
set forth on Schedule
2.4(b),
there
are no (i) outstanding options, rights (preemptive or otherwise), warrants,
calls, convertible equity interests, stock
appreciation, phantom interests, profit participation or similar
rights
or
commitments, (ii) other arrangements to which any of the Jet Center Entities
is
a party requiring or restricting the issuance, sale or transfer of any limited
liability company interests of such legal entities, (iii) equity interests
convertible directly or indirectly into equity interests of such legal entities,
evidencing the right to subscribe for any equity interests of such legal
entities, or giving any Person
(defined
below) any
rights with respect to the equity interests of any such legal entities. Except
as set forth on Schedule
2.4(b),
there
are no voting agreements, voting trusts, other agreements (including cumulative
voting rights), commitments or understandings with respect to the limited
liability company interests of any of the Jet Center Entities. “Person”
means
an individual, corporation, partnership, limited liability company, joint
venture, association, trust, unincorporated organization or other entity,
including a government or political subdivision or an agency or instrumentality
thereof.
2.5 Inventory.
Each
of
the Jet Center Entities has good and marketable title to all of the Inventory
Assets. The Inventory Assets do not include items that are obsolete, damaged
or
slow moving. The Inventory Assets are in good and merchantable condition, are
suitable and usable for the purposes for which they are intended and are in
a
condition such that they can be sold in the ordinary course of business
consistent with past practice. The Inventory Assets are valued on the books
and
records of the Jet Center Entities at the lower of cost or market value.
2.6 Personal
Property.
(a) Except
as
set forth on Schedule
2.6(a),
the
Jet
Center Entities have
good
and marketable title to, or valid leasehold interests in, all tangible personal
property used in the FBO
Business.
All
such tangible personal property is free and clear of all Liens, other than
Permitted Liens (as defined below), including, without limitation, any claim
that the acquisition of such property by the Jet Center Entities constituted
a
fraudulent conveyance. “Permitted
Liens”
means:
(i) any Lien with respect to Taxes (as defined below) (A) that are not yet
due
and payable or (B) that are being contested in good faith and by appropriate
proceedings and are identified on Schedule
2.6(a)(i);
(ii)
Liens of landlords, carriers, warehousemen, mechanics and materialmen and the
like (X) that are incurred in the ordinary course of business for amounts not
yet due and payable or (Y) that are being diligently contested in good faith
by
appropriate proceedings and are identified on Schedule
2.6(a)(ii);
and
(iii) easements, rights-of-way, reservations, zoning and other restrictions
and
similar encumbrances that do not interfere in any respect with the ordinary
course of the FBO Business.
(b) Schedule
2.6(b)
sets
forth a complete and accurate list of: (a) all personal property that is used
in
the FBO Business regardless of whether owned or leased by the Jet Center
Entities; (b) all other personal property owned by the Jet Center Entities
(i)
as of the Balance Sheet Date and (ii) acquired since the Balance Sheet Date;
and
(c) all leases and agreements in respect of personal property regardless of
whether owned or leased by the Jet Center Entities, and, in the case of this
clause (c), true, complete and correct copies of all such leases have been
provided to the Acquiror. All personal property used by the Jet Center Entities
is either owned by the Jet Center Entities or leased by the Jet Center Entities,
or will be owned or leased by the Jet Center Entities, pursuant to lease
agreements set forth on Schedule 2.6(b),
prior to
the Closing Date. All of the personal property listed on Schedule 2.6(b)
is in
good working order and condition, ordinary wear and tear excepted.
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(c) All
leases and agreements included on Schedule 2.6(b)
are in
full force and effect and constitute, or will constitute prior to the Closing
Date, valid and binding agreements of the Jet Center Entities and, to the
Seller’s Knowledge, of the other parties thereto in accordance with their
respective terms, except as limited by the Bankruptcy and Equity Exceptions.
2.7 Tax
Matters.
(a) The
following terms shall have the meanings assigned to them below:
(i) “Tax”
(including, with correlative meaning, the terms “Taxes”
and
“Taxable”)
means
(A) any net income, gross income, gross receipts, sales, use, ad valorem,
transfer, transfer gains, franchise, profits, license, withholding, payroll,
employment, social security (or similar), unemployment, disability, excise,
severance, stamp, rent, recording, registration, occupation, premium, real
or
personal property, escheat, intangibles, environmental (including taxes under
Code § 59A) or windfall profits tax, alternative or add-on minimum
tax, capital stock, customs duty or other tax, fee, duty, levy, impost,
assessment or charge of any kind whatsoever (including but not limited to taxes
assessed to real property and water and sewer rents relating thereto), together
with any interest and any fine, penalty, addition to tax or additional amount
or
deductions imposed by any Governmental Authority (domestic or foreign) (a
“Tax
Authority”)
responsible for the imposition of any such tax, whether disputed or not,
including any liability arising under any tax sharing agreement, with respect
to
the Seller, the Jet Center Entities, or the FBO Business; (B) any liability
for the payment of any amount of the type described in the immediately preceding
clause (A) as a result of the Seller
or any
of the Jet Center Entities
being a
member of an affiliated or combined group with any other corporation at any
time
on or prior to the Closing Date; and (C) any liability of the Seller
or the
Jet Center Entities
for the
payment of any amounts of the type described in the immediately preceding
clause (A) as a result of a contractual obligation to indemnify any other
Person.
(ii) “Tax
Return”
means
any return or report (including elections, declarations, disclosures, schedules,
attachments, estimates and information returns) relating to Taxes required
to be
supplied to any Tax Authority, and including any amendment thereof.
(b) Except
as
set forth on Schedule
2.7(b):
(i) Each
of
the Jet Center Entities has timely filed or timely requested extensions to
file
those Tax Returns which are required to be filed on or before the date hereof
or
will timely file or timely request extensions to file all Tax Returns required
to be filed after the date hereof for all taxable periods ending on or before
the date hereof and all such Tax Returns are, or will be when filed, true,
correct and complete in all material respects;
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(ii) Each
of
the Jet Center Entities has paid, to the appropriate Tax Authority, or, if
payment is not yet due, will pay, to the appropriate Tax Authority, all Taxes
due and payable for all Taxable periods beginning on or before the date
hereof;
(iii) Except
in
the case of a Lien for ad valorem property taxes not yet due and payable, there
is no unpaid Tax: (A) which constitutes a Lien upon any of the assets of the
Jet
Center Entities; or (B) except as contemplated by the terms of this Agreement
for which the Acquiror would be liable under applicable Law by reason of having
acquired the assets of the Jet Center Entities by virtue of its purchase of
the
Membership Interests;
(iv) There
are
no Tax Liens on or pending against any of the assets of the Jet Center Entities
that arose in connection with any failure to pay any Tax or
otherwise;
(v) Each
of
the Jet Center Entities has complied with all applicable Laws relating to the
withholding and payment of Taxes and has timely withheld and paid to the proper
Tax Authorities all amounts required to have been withheld and paid in
connection with amounts paid or owing to any employee or independent contractor
of the FBO Business; and
(vi) None
of
the Jet Center Entities is a party to any Tax allocation or Tax sharing
agreement.
(c) Each
of
the Jet Center Entities has collected and remitted to the appropriate Tax
Authority all sales and use or similar Taxes required to have been collected,
including any interest and any penalty, addition to tax or additional amount
unpaid, and has been furnished properly completed exemption certificates for
all
exempt transactions. Each of the Jet Center Entities has collected and/or
remitted to the appropriate Tax Authority all property taxes, customs duties,
fees, and assessments or charge of any kind whatsoever which are other than
in
the nature of income taxes (including but not limited to Taxes assessed to
real
property and water and sewer rents relating thereto).
2.8 Products
and Services.
Except
as
described on Schedule
2.8:
(a) each
product sold, leased or delivered, or service provided, by the Jet
Center Entities
has been
in material conformity with all applicable contractual commitments and all
express and implied warranties; and (b) the Jet
Center Entities
do not
have any liability (and there is no pending or, to the Seller’s Knowledge,
threatened claim against the Jet
Center Entities
that
could reasonably be expected to give rise to any liability) for replacement
or
repair thereof or other damages in connection therewith. Schedule
2.8
includes
copies of the standard terms and conditions of sale or lease for the
Jet
Center Entities’
products
and services (containing applicable guaranty, warranty, and indemnity
provisions). No product sold, leased or delivered, or service provided, by
the
Jet
Center Entities
is
subject to any guaranty, warranty or other indemnity beyond the applicable
standard terms, conditions of sale or lease set forth on Schedule
2.8
or as
may be imposed by law.
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2.9 Intellectual
Property.
(a) Set
forth
on Schedule
2.9
is a
true and complete list of all patents, patent applications, trademarks, service
marks, trademark and service xxxx applications, trade names, registered
copyrights and licenses presently owned or held by the Jet
Center Entities,
or used
in or necessary for the conduct of the FBO Business, as conducted and as
proposed to be conducted, as well as any agreement under which the Jet
Center Entities
have
access to any third-party trade secret, confidential or proprietary information
used by the Jet
Center Entities
(the
“Intellectual
Property Rights”).
The
Jet
Center Entities
own or
possess sufficient legal rights to all the Intellectual Property Rights, and
in
each case such rights are all of the legal rights necessary to conduct its
business as now conducted without any conflict with or infringement or
misappropriation of the rights of others. There are no outstanding options,
licenses, or agreements of any kind relating to the foregoing, nor are any
of
the Jet
Center Entities
bound by
or a party to any options, licenses or agreements of any kind with respect
to
the Intellectual Property Rights or any intellectual or proprietary rights
of
any other person or entity, except for
licenses arising from the purchase of widely-available “off the shelf” or other
standard products licensed by any of the Jet Center Entities in the ordinary
course of its business or as otherwise
set
forth on Schedule
2.9.
(b) To
the
Seller’s Knowledge, no allegations have been made that the Jet
Center Entities
have
violated or, by conducting the FBO Business as conducted and as proposed to
be
conducted, would violate any patent, trademark, service xxxx, trade name,
copyright, trade secret or other proprietary rights of any other person or
entity.
(c) To
the
Seller’s Knowledge, none of the employees of the Jet
Center Entities
is
obligated under any contract (including licenses, covenants or commitments
of
any nature) or other agreement, or subject to any judgment, decree or order
of
any court or administrative agency, that would interfere with such employee’s
duties to the Jet
Center Entities
or that
would conflict with the FBO Business as conducted and as proposed to be
conducted. Neither the execution nor delivery of this Agreement or any related
agreements, nor the carrying on of the FBO Business by its employees, nor the
conduct of the FBO Business as conducted and as proposed to be conducted, will
conflict with or result in a breach of the terms, conditions or provisions
of,
or constitute a default under, any contract, covenant or instrument under which
any employee of the FBO Business is now obligated. To the Seller’s Knowledge, it
is not or will not be necessary to utilize any inventions, trade secrets or
proprietary information of any of the employees working in the FBO Business
made
prior to their employment with the
Jet
Center Entities,
except
for inventions, trade secrets or proprietary information that have been assigned
to the
Jet
Center Entities.
(d) To
the
Seller’s Knowledge, no claims have been asserted by any other person or entity
contesting the validity, enforceability, use or ownership of any of the
Intellectual Property Rights. To the Seller’s Knowledge, there has been no
infringement or misappropriation by any other person or entity with respect
to
any of the Intellectual Property Rights.
(e) Notwithstanding
the foregoing, to the Seller’s Knowledge, Trade Secrets (as defined below) used
in or necessary for the FBO Business are, or will be prior to the Closing Date,
the unencumbered property of the
Jet
Center Entities.
No
claim has been asserted by any entity or person with respect to, or challenging
or questioning, the ownership, validity of or right to use the Trade Secrets,
nor, to the Seller’s Knowledge, is there a valid basis for any such claim.
“Trade
Secrets”
means
trade secrets (as such are determined under applicable law), know-how and other
confidential business information, including technical information, marketing
plans, research, designs, plans, methods, techniques, and processes, any and
all
technology, supplier lists, computer software programs or applications, in
both
source and object code form, technical documentation of such software programs,
statistical models, supplier lists, e-mail lists, inventions, sui generis
database rights, databases and data, whether in tangible or intangible form
and
whether or not stored, compiled or memorialized physically, electronically,
graphically, photographically or in writing.
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14 -
2.10 Permits;
Compliance with Laws.
(a) A
true,
correct and complete list of all licenses, franchises, permits and other
governmental authorizations relating to the ownership and operation of the
FBO
Business are set forth on Schedule
2.10(a).
Except
as set forth on Schedule
2.10(a),
the
licenses, franchises, permits and other governmental authorizations listed
on
Schedule
2.10(a)
are
valid and in effect, and neither the Seller nor any of the Jet Center Entities
has received any notice in writing or has any Knowledge that: (i) any
Governmental Authority intends to cancel, terminate or not renew any such
license, franchise, permit or other governmental authorization; or (ii) any
Jet
Center Entity is conducting its business and carrying out any activities in
breach or violation of any such license, franchise, permit or other governmental
authorization. The licenses, franchises, permits and other governmental
authorizations listed on Schedule
2.10(a)
are the
only licenses, franchises, permits and other governmental authorizations
required
for the conduct of the FBO Business as it is now being conducted or carried
out
by the
Jet
Center Entities.
The
FBO
Business has been conducted in compliance with the requirements, standards,
criteria and conditions set forth in the licenses, franchises, permits and
other
governmental authorizations listed on Schedule
2.10(a).
The
transactions contemplated by this Agreement will not result in a default under
or a breach or violation of, or adversely affect the rights and benefits
afforded to the Jet Center Entities by, any licenses, franchises, permits or
other governmental authorizations listed on Schedule
2.10(a).
(b) The
Jet
Center Entities are in material compliance with all applicable national, state,
local and foreign laws, rules and regulations. Except
as
set forth on Schedule
2.10(b),
no Jet
Center Entity has received from any Governmental Authority within the past
three
years any written notification with respect to possible conflicts, defaults
or
violations of any national,
state, local and foreign laws, rules and regulations.
2.11 Real
Property; Leases of Real Property.
(a) None
of
the Jet Center Entities
owns or
has ever owned fee simple title to any real property.
(b) There
are
no leases of real property or rights therein under which any of the
Jet
Center Entities,
with
respect to the FBO
Business,
is a
lessee or sublessee other than real property leases described on Schedule
2.11(b)
(including all renewals, extensions, modifications and supplements thereto,
the
“Real
Property Leases”).
A
complete and correct copy of each Real Property Lease has been furnished to
the
Acquiror. Except as disclosed on Schedule 2.11(b),
no
consent is required of any landlord or other third party to any Real Property
Lease to consummate the Acquisition. None of the Jet Center Entities are in
default in any respect beyond any applicable notice or grace period and neither
Seller nor any of the Jet Center Entities has received written notice of any
such default still outstanding on the date hereof under any Real Property Lease,
and on the date hereof, to the Seller’s Knowledge, there exists no uncured
default thereunder by any other party. All Real Property Leases are, or will
be
prior to the Closing Date, legal, valid, binding, in full force and effect
and
are enforceable against the Jet Center Entities, and to the Seller’s Knowledge,
the other parties thereto, in accordance with their terms except as limited
by
the Bankruptcy and Equity Exceptions. The real property demised under the Real
Property Leases constitutes all of the real property necessary for the operation
of the FBO Business as presently conducted. There
is
no brokerage commission or finder’s fee due from the Seller or the Jet
Center Entities
and
unpaid with regard to the
Real
Property Leases, or which will become due at any time in the future with regard
to any
Real
Property Lease. No proceeding is pending or, to the Seller’s Knowledge,
threatened for the taking or condemnation of all or any portion of the property
demised under the Real Property Leases.
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15 -
(c) To
the
Seller’s Knowledge, except
as
set forth on Schedule
2.11(c),
there
are no unrecorded covenants, deed restrictions, easements, leases, subleases
or
rights of occupancy or Liens that encumber any of the Real Property Leases
or
any of the properties demised under the Real Property Leases.
(d) To
the
Seller’s Knowledge, except
as
set forth on Schedule
2.11(d),
there
are no easements, rights of way or licenses that are not in full force and
effect necessary for the operation of the premises demised under the Real
Property Leases and all such easements, rights of way and licenses set forth
on
Schedule
2.11(d)
are in
full force and effect.
(e) Except
as
set forth on Schedule
2.11(e),
the
premises demised under the Real Property Leases, including the walls, ceilings
and other structural elements of any improvements erected on the properties
demised under the Real Property Leases and the building systems such as heating,
plumbing, ventilation, air conditioning, mechanical and electric, are: (i)
adequate and sufficient for the current operations of the FBO Business; and
(ii)
in good working order, repair and operating condition as of the date hereof,
ordinary wear and tear excepted and without any structural defects other than
minimal structural defects which do not affect the value or use of such
properties and have been maintained in accordance with generally accepted
industry practices.
(f) The
Jet
Center Entities
have the
right of ingress and egress, through a public road, street, easement or license,
to and from each of the properties demised under the Real Property Leases.
(g) Except
as
set forth on Schedule
2.11(g),
the Jet
Center Entities have not provided any letters of credit or other security in
favor of any unrelated party for any Contracts entered into by the Jet Center
Entities including, without limitation, the Real Property Leases.
(h) The
Jet
Center Entities’ interests in the Real Property Leases is free and clear of
all
liens, except for Permitted Liens.
(i) Other
than in the ordinary course of business (e.g., hangar leases), there are no
parties other than the Jet Center Entities in possession of any of the real
property leased by the Jet Center Entities or any portion thereof, and, other
than in the ordinary course of business (e.g., hangar leases), there are no
contracts, agreements or arrangements granting to any party or parties the
right
of use or occupancy of any of such leased real property or any portion
thereof.
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16 -
(j) To
the
Knowledge of the Seller, (1) legal descriptions for the real property contained
in the Real Property Leases adequately describe the property subject thereto
and
(2) all
facilities, buildings, improvements and other structures used in the FBO
Business are located on the real property leased by the Jet Center
Entities.
2.12 Insurance.
Schedule
2.12
contains
a complete and correct list of all policies of insurance of any kind or nature
covering the FBO Business including, without limitation, policies of life,
fire,
theft, professional services, employee fidelity, directors’ and officers’ and
other casualty and liability insurance, and such policies are in full force
and
effect. Complete and correct copies of each such policy have been provided
to
the Acquiror. Schedule
2.12
also
sets forth: (a) with respect to each such insurance policy, the applicable
deductible amounts and any limitations to coverage; and (b) a true and complete
list of claims made in respect of such insurance policies from and after January
1, 2004. No notice of cancellation has been received with respect to any
insurance policies relating to the FBO Business, and except for workers’
compensation policies, no such policies are subject to any retroactive rate
or
audit adjustments or coinsurance arrangements. There is no claim by the Seller
or the Jet
Center Entities
pending
under any of such insurance policies as to which coverage has been questioned,
denied or disputed by the underwriters of such insurance policies or requirement
by any insurer to perform work which has not been satisfied. Neither the Seller
nor any of the Jet
Center Entities
has
incurred any liability covered by the insurance policies for which it has not
properly asserted a claim under such policies. All premiums due under all
insurance policies have been paid. The insurance policies set forth on
Schedule
2.12
cover
risks and liabilities to an extent and in a manner customary in the FBO industry
and the aircraft maintenance and avionics business.
2.13 Contracts.
(a) Schedule
2.13(a)
lists
the following agreements to which any of the Jet Center Entities is a party
(or
provides a cross-reference to another schedule in the Disclosure Schedules
where
such agreements are listed) (each a “Material
Contract”):
(i) all
documents relating to indebtedness for money borrowed or collateral therefor,
including guarantees;
(ii) all
collective bargaining, labor, employment, consulting, termination, compensation,
bonus, profit sharing, severance, stock option, stock purchase, retirement,
pension, health, accident, group insurance, liability, death benefit and other
agreements or plans relating to compensation of or benefits for current or
former officers or employees;
(iii) any
lease, contract, commitment, or agreement (or group of related agreements)
for
the purchase or sale of raw materials, commodities, supplies, products or other
personal property, or for the furnishing or receipt of services, the performance
of which will: (A) extend over a period of more than one year; (B) result in
a
loss; or (C) involve consideration paid or received in excess of
$50,000;
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17 -
(iv) any
contract, agreement, or instrument not entered into in the ordinary course
of
business;
(v) any
contract containing restrictions on the operations of the FBO Business to
compete in any geographic region or in any line of business;
(vi) any
lease
of real property and all personal property leases;
(vii) any
agreement concerning a partnership or joint venture;
(viii) any
agreement between the Seller (or any of the Jet Center Entities) and any of
their respective Affiliates; an “Affiliate”
of
any
Person means any other Person directly or indirectly through one or more
intermediary persons, Controlling, Controlled by or under common Control (as
defined below) with such Person and shall include in each case all of such
Persons’ officers, directors, agents, employees, and subsidiaries; “Control”
with
respect to any Person, means the power to direct the management and policies
of
such Person, directly or indirectly, by or through stock ownership, agency
or
otherwise, or pursuant to or in connection with an agreement, arrangement or
understanding (written or oral) with one or more other Persons by or through
stock ownership, agency or otherwise; and the terms “Controlling”
and
“Controlled”
have
meanings correlative to the foregoing;
(ix) any
agreement under which any of the Jet Center Entities has advanced or loaned
any
amount to any of its directors, officers, stockholders or employees outside
the
ordinary course of business;
(x) any
contract relating to fuel purchases, fuel sales, into-plane services, ground
support services, aircraft management, aircraft hangar rental, aircraft tie-down
services, de-icing, de-fueling and aircraft maintenance and
avionics;
(xi) each
and
every other contract that is material to the financial condition, earnings
or
operation of the FBO Business; and
(xii) any
other
agreement (or group of related agreements), the performance of which involves
annual consideration in excess of $50,000.
Complete
and correct copies of each of the agreements listed on Schedule
2.13(a)
have
been provided to the Acquiror.
(b) Each
of
the Seller and the Jet Center Entities has performed all of its obligations
required to be performed by it to date and is not in material default in any
respect under any agreement set forth on Schedule
2.13(a).
To the
Seller’s Knowledge, no party with whom the Seller or any of the Jet Center
Entities has such an agreement is in default thereunder. All of the agreements
set forth on Schedule
2.13(a)
are, or
will be prior to the Closing Date, in full force and effect and enforceable
against the Seller or the relevant Jet Center Entity, as applicable, and to
the
Seller’s Knowledge, the other parties thereto in accordance with their terms,
except as limited by the Bankruptcy and Equity Exceptions. Except as set forth
on Schedule
2.13(b),
neither
the Seller nor any of the Jet Center Entities has been notified in writing,
and
the Seller has no Knowledge, that any party to any agreement set forth on
Schedule
2.13(a)
intends
to cancel, terminate, not renew or exercise an option, or materially increase
the rent or other fees required to be paid or materially decrease the goods
purchased or sold or services provided by or to such party under any such
agreement, whether in connection with the Acquisition or otherwise. Neither
the
Seller nor any of the Jet Center Entities has been the subject of any warranty
claim, indemnification claim or any other claim whatsoever arising out of or
relating to any agreement set forth on Schedule
2.13(a)
and, to
the Seller’s Knowledge, no such claims have been or are presently threatened.
Except as set forth on Schedule
2.13(b),
none of
the agreements with any third party set forth on Schedule
2.13(a)
requires
or provides for the payment of any rebate, allowance, stocking fee or other
similar payment to any such third party in an amount in excess of $10,000 on
an
annual basis.
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18 -
2.14 No
Violation.
Except
as
set forth on Schedule
2.14,
neither
the execution or delivery by any of the Jet Center Entities of this Agreement
or
any Transaction Document to which any of the Jet Center Entities is a party,
nor
the consummation by any of the Jet Center Entities of the Acquisition, will
violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge or restriction of any Governmental Authority, or court to which
a
Jet Center Entity is a party or to which it is bound or subject, conflict with
or result in a breach of, or give rise to a right of termination of, or
accelerate the performance required by, any terms of any agreement or contract
listed on Schedule
2.13(a),
or
constitute a default in any respect thereunder, or result in the creation of
any
Lien upon any of the assets used in the FBO Business, nor will it violate any
of
the provisions of the Certificate of Formation or Limited Liability Company
Agreement of any Jet Center Entity or violate any judgment or decree by which
any Jet Center Entity is bound.
2.15 Litigation;
Orders.
Except
as
set forth on Schedule
2.15,
there
is no pending action, arbitration, audit, hearing, litigation, suit or, to
the
Seller’s Knowledge, investigation (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted, heard by or before,
or
otherwise involving, any court, Governmental Authority, arbitrator or other
third party, whether at law or in equity (a “Proceeding”)
(whether
or not the defense thereof or liabilities in respect thereof are covered by
insurance),
that:
(a) has been commenced by or against the Seller or any of the Jet Center
Entities; or (b) challenges or may have the effect of preventing, delaying,
making illegal, or otherwise interfering with the Acquisition. To the Seller’s
Knowledge, no Proceeding has been threatened by or against the Seller or any
of
the Jet Center Entities and no event has occurred or circumstances exist that
may give rise to or serve as a basis for commencement of any Proceeding by
or
against the Seller or any of the Jet Center Entities. Copies of all pleadings,
correspondence and other documents relating to each Proceeding listed on
Schedule
2.15
have
been delivered or made available to the Acquiror. All
notices required to have been given to any insurance company listed as insuring
against any Proceeding listed on Schedule
2.15
have
been timely and duly given and, except as set forth on Schedule
2.15,
no
insurance company has asserted that such Proceeding is not covered by the
applicable policy relating to such Proceeding.
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19 -
2.16 Third
Party and Governmental Consents.
Except
for the consents set forth on Schedule
2.16,
no
consent, waiver, approval, permit, authorization of, declaration to or filing
with any third party or Governmental Authority on the part of the Seller or
the
Jet Center Entities is required in connection with the execution and delivery
of
this Agreement or any Transaction Document to which the Seller or any of the
Jet
Center Entities is a party or the consummation of the Acquisition, except
for the approvals required under the HSR Act.
2.17 Environmental
Matters.
(a) For
purposes of this Agreement, “Environmental
Laws”
means
any federal, state or local law (including common law), ordinance, regulation,
order, or permit, license or approval pertaining to the environment, natural
resources, Hazardous Materials, or human health or safety as presently in effect
or as amended as of the Closing Date.
(b) For
purposes of this Agreement, “Hazardous
Materials”
means
hazardous wastes as presently defined by the Resource Conservation and Recovery
Act of 1976, 42 U.S.C. § 6901 et. seq., as amended, and regulations
promulgated thereunder and hazardous substances as presently defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42
U.S.C. § 9601 et seq., as amended (“CERCLA”
or
“Superfund”)
and
regulations promulgated thereunder, and shall also include any pollutant,
contaminant, substance, material or waste (regardless of physical form or
concentration) that is regulated, listed or identified under any Environmental
Law.
(c) Except
as
disclosed on Schedule
2.17(c):
(i) the operations of the Jet Center Entities are now and have at all times
during the period of ownership and operation of the FBO Business by the Jet
Center Entities been in compliance with applicable Environmental Laws;
(ii) neither the Seller nor any of the Jet Center Entities is subject to
any pending or, to the Seller’s Knowledge, threatened judicial, administrative
or civil proceeding alleging the violation of any Environmental Law or alleging
responsibility for environmental conditions at any real property; (iii)
neither the Seller nor any of the Jet Center Entities has received any written
notice that it is potentially responsible under any Environmental Law for
environmental conditions at the premises demised under the Real Property Leases
or potentially liable for any claims relating to the FBO Business and arising
under Environmental Laws; (iv) neither the Seller nor any of the Jet Center
Entities has received a written request for information under CERCLA or any
state or local counterpart; (v) neither the Seller nor any of the Jet Center
Entities has disposed of or released Hazardous Materials, except in accordance
with applicable Environmental Laws, on, in, at or under any real property
currently or formerly owned, operated, leased or occupied by the Seller or
the
Jet Center Entities; (vi) there are no underground storage tanks or
piping, septic tanks, drains, sumps, pits, ponds, impoundments, lagoons,
landfills, waste piles, friable
asbestos
containing materials, peeling or damaged lead paint or regulated polychlorinated
biphenyls present on, in, at or under any real property currently owned,
operated, leased or occupied by the Seller or the Jet Center Entities;
(vii) neither the Seller nor any of the Jet Center Entities has, during the
period of ownership and operation of the FBO Business by the Jet Center
Entities, generated for transport, transported, disposed of or released any
Hazardous Materials to, in or at any other real property in violation of
applicable Environmental Laws; (viii) the Jet Center Entities have, or will
have prior to the Closing Date, all permits, licenses and approvals required
by
Environmental Laws to conduct the FBO Business and neither the Seller nor any
of
the Jet Center Entities has received any notice that any Governmental Authority
intends to cancel, terminate or not renew any such permit, license or approval;
(ix) neither the Seller nor any of the Jet Center Entities has agreed to
indemnify any predecessor or other party, including a buyer, seller, landlord
or
tenant, with respect to any environmental liability nor has the Seller or any
of
the Jet Center Entities agreed to assume the environmental liability of any
person by contract, agreement, or operation of law; (x) the transactions
contemplated by this Agreement are not subject to any state environmental
transfer laws and no governmental approval, clearance or consent is required
under any Environmental Law for the consummation of the Acquisition or for
the
continuation of the FBO Business as presently conducted after the Closing;
(xi) to the Seller’s Knowledge, no other Person has released Hazardous
Materials at any property currently or formerly owned, operated, leased or
occupied by the Jet Center Entities or in a location that would threaten or
contaminate such properties; and (xii) the Seller has delivered to the
Acquiror copies of all environmental reports, permits, suits, information
requests, orders, notices of violation, closure letters, site status letters
and
similar documentation that are in its possession or control, each of which
is
listed on Schedule
2.17(c),
and has
disclosed its waste practices and its use of Hazardous Materials, if any, on
Schedule
2.17(c).
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20 -
2.18 Employees;
Consultants;
Labor Matters.
(a) The
Seller has provided the Acquiror with a true and correct list, by categorization
of job position rather that by name, of all Persons presently employed in the
FBO Business, all Persons who presently perform work for the FBO Business
pursuant to any agreements between the Jet
Center Entities
and any
employment agency, and all currently-engaged independent contractors and
consultants (collectively, the “Independent
Contractors”)
of the
Jet
Center Entities,
and the
total compensation, including base salary or wages, bonus, commissions, and
all
other available forms of compensation, paid or to become payable to each such
individual for the 2006 calendar year.
(b) Schedule
2.18(b)
lists
all employment agreements, independent contractor agreements, consulting
agreements or severance agreements to which any Jet Center Entity is a party.
This Agreement and the Acquisition do not and will not violate any such
employment, independent contractor or consulting agreements. Each Jet Center
Entity is in material compliance with all federal, state, and local laws and
regulations respecting employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety and health and
employment practices, and no Jet Center Entity has engaged in any unfair labor
practice. Except as set forth on Schedule
2.18(b),
no Jet
Center Entity has received any written notice of noncompliance of any currently
applicable federal, state, and local laws and regulations respecting employment,
discrimination in employment, terms and conditions of employment, wages, hours
and occupational safety and health and employment practices.
(c) The
Jet
Center Entities have withheld all amounts required by law or by agreement to
be
withheld from the wages, salaries, and other payments to employees and are
not
liable for any arrears of wages or any Taxes or any penalty for failure to
comply with any of the foregoing. The Jet Center Entities are not liable for
any
payment to any trust or other fund or to any governmental or administrative
authority, with respect to unemployment compensation benefits, social security
or other benefits or obligations for employees. Except as set forth on
Schedule
2.18(c),
there
are no pending claims against any of the Jet
Center Entities
under
any workers’ compensation plan or policy or for long term disability. There are
no claims or controversies pending or, to the Seller’s Knowledge, threatened,
between any of the Jet Center Entities and any of their employees or Independent
Contractors.
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21 -
(d) To
the
Seller’s Knowledge, no employees working in the FBO Business or Independent
Contractors are in violation of any term of any employment contract, patent
disclosure agreement, enforceable non-competition agreement, or any enforceable
restrictive covenant to a former employer or customer relating to the right
of
any such employee or Independent Contractor to be employed by the Jet
Center Entities
because
of the nature of the business conducted or presently proposed to be conducted
by
the Jet
Center Entities
after
the Closing Date or to the use of trade secrets or proprietary information
of
others.
(e) No
employees or Independent Contractors of the Jet
Center Entities
have
given notice and, to the Seller’s Knowledge, no such employee or Independent
Contractor intends to terminate his or her employment, independent contractor
or
consulting relationship with the
Jet
Center Entities.
(f) Except
as
set forth on Schedule
2.18(f):
(i) no
Jet
Center Entity is a
party
to any Contract with any labor organization or other representative of its
employees; (ii) there is no unfair labor practice charge or complaint pending
or, to the Seller’s Knowledge, threatened against any of the
Jet
Center Entities;
(iii)
no Jet
Center Entity has experienced
any labor strike, slowdown, work stoppage or similar labor controversy within
the past three years; (iv) no representation question has been raised respecting
the Jet
Center Entities’
employees working within the past three years, nor are there any campaigns
being
conducted to solicit authorization from the Jet
Center Entities’
employees to be represented by any labor organization; (v) no claim before
any
Governmental Authority brought by or on behalf of any employee, prospective
employee, former employee, retiree, labor organization or other representative
of the Jet
Center Entities’
employees, is pending or, to the Seller’s Knowledge, threatened against any of
the Jet
Center Entities;
(vi) no
Jet
Center Entity is a
party
to, or otherwise bound by, any order,
judgment, preliminary or permanent injunction, temporary restraining order,
award, citation, decree, consent decree or writ relating
to its employees or employment practices; and (vii) the Jet
Center Entities
have
paid or accrued in full to all of their employees all wages, salaries,
commissions, bonuses, benefits and other compensation due and payable to such
employees.
2.19 Business
Conduct.
Except
as
set forth on Schedule
2.19
or as
contemplated by this Agreement, from and after the Balance Sheet Date, the
FBO
Business has been conducted only in the ordinary course consistent with past
custom and practice and there has not been any:
(a) Material
Adverse Effect;
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22 -
(b) loan
or
advance by the Jet Center Entities to any Person other than sales to customers
on credit in the ordinary course of business consistent with past custom and
practices;
(c) declaration,
setting aside, or payment of any dividend or other distribution in respect
of
any equity interest in the Jet Center Entities, or any direct or indirect
redemption, purchase, or other acquisition of such equity interest;
(d) incurrence
of any debts, liabilities or obligations except current liabilities incurred
in
connection with or for services rendered or goods supplied in the ordinary
course of business consistent with past custom and practices, liabilities on
account of Taxes and governmental charges but not penalties, interest or fines
in respect thereof;
(e) issuance
by the Jet Center Entities of any notes, bonds, or other debt securities or
any
stock options, warrants or other equity securities or securities convertible
into or exchangeable for any equity securities;
(f) cancellation,
waiver or release by the Jet Center Entities of any debts, rights or claims,
except in each case in the ordinary course of business consistent with past
custom and practices;
(g) change
in
accounting principles, methods or practices (including, without limitation,
any
change in depreciation or amortization policies or rates) utilized by the Jet
Center Entities, unless required by GAAP;
(h) negotiation,
sale, lease, transfer or conveyance by the Jet Center Entities of any assets
other than in the ordinary course of business;
(i) capital
expenditures or commitments therefor by the Jet Center Entities, other than
with
respect to the capital expenditures or commitments set forth on Schedule
2.24;
(j) creation
of any Lien on any asset of the Jet Center Entities, except for Permitted
Liens;
(k) adoption,
amendment or termination of any employee benefit plan;
(l) increase
in the benefits provided under any employee benefit plan; or
(m) occurrence
or event not included in clauses
(a)
through
(l)
that is
reasonably likely to have a Material Adverse Effect.
2.20 Transactions
with Affiliates.
Except
as
set forth on Schedule
2.20,
none of
the Jet Center Entities is a party to any contract, agreement or other
arrangement (other than those relating to employment and listed on Schedule
2.18(b)
or in an
aggregate amount not in excess of $1,000) with: (a) any current or former
officer, director, employee or stockholder; (b) any parent, spouse, child,
brother, sister or other family relation of any such officer, director, employee
or stockholder; (c) any corporation, partnership or other entity of which any
such officer, director, employee or stockholder or any such family relation
is
an officer, director, employee, partner or greater than 10% owner (based on
percentage ownership of voting interest); or (d) any trust with respect to
which
any such entity is a trustee or beneficiary.
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23 -
2.21 No
Brokers.
Except
as
set forth on Schedule
2.21,
neither
the Seller nor any of the Jet Center Entities nor any Person acting on behalf
of
the Seller or any of the Jet Center Entities has agreed to pay a commission,
finder’s or investment banking fee, or similar payment in connection with this
Agreement or any matter related hereto to any Person, nor has any such Person
taken any action on which a claim for any such payment could be
based.
2.22 Customers
and Vendors.
Schedule 2.22
contains
a complete and accurate list of the 10 largest customers (based on revenues)
and
10 largest vendors (based on expenses) for the FBO
Business
for the fiscal years ended December 31, 2006, December 31, 2005 and December
31,
2004. Except
as
set forth on Schedule
2.22,
the
business activity between the Jet
Center Entities
and the
10 largest customer and 10 largest vendors during calendar year 2006 as set
forth on Schedule
2.22
has not
changed in any material respect. Except
as
set forth on Schedule 2.22,
neither
the Seller nor any of the Jet Center Entities has received written notice that,
and the Seller has no Knowledge that, any such customer or any such vendor
does
not plan to continue to do business with the Jet Center Entities after the
Closing, or plans to reduce its supplies to or volume of orders from the Jet
Center Entities after the Closing or will not do business on substantially
the
same terms and conditions with the Jet Center Entities after the Closing as
such
vendor or customer did with the Jet Center Entities before the Closing. Except
as described on Schedule
2.22,
all of
the relationships of the Jet Center Entities with its customers: (a) are
described in written agreements, copies of which have been provided to the
Acquiror; (b) have not been orally modified; and (c) require no performance
by
the Jet Center Entities beyond the written terms thereof. Schedule
2.22
identifies all vendors from whom the Jet Center Entities are entitled to any
price discounts and all customers for whom the Jet Center Entities have granted
any price discounts, and the oral or written agreements evidencing such
discounts.
2.23 Employee
Benefit Plans; ERISA.
(a) Schedule
2.23(a)
contains
a true and complete list of each “employee benefit plan” as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”),
that
is sponsored, maintained or contributed to or required to be contributed to
by
any of the Jet
Center Entities or
any
trade or business, whether or not incorporated (an “ERISA
Affiliate”),
that
together with any of the Jet
Center Entities
would be
deemed a “single
employer”
within
the meaning of Section 414(b) or (c) of the Internal Revenue Code of 1986,
as
amended (the “Code”),
or to
which any of the Jet
Center Entities
or an
ERISA Affiliate is a party or has or may have any liability (individually,
a
“Jet
Center Plan,”
and
collectively, the “Jet
Center Plans”).
(b) Neither
the Jet
Center Entities
nor any
ERISA Affiliate has ever sponsored, maintained, contributed to or had any
obligation to contribute to a plan, whether or not within the definition of
a
Jet Center Plan, that is or was: (i) subject to Title IV of ERISA; (ii) a
multiemployer plan within the meaning of Section 3(37) of ERISA; (iii)
maintained in connection with any trust described in Section 501(c)(9) of the
Code or that provided retiree health, life or other welfare benefits (other
than
benefits required by Legal Requirements); or (iv) subject to the minimum funding
standards of ERISA Section 302 or Code Section 412. Further, neither the Jet
Center Entities nor any ERISA Affiliate has ever contributed to or been
obligated to contribute to a multiemployer plan within the meaning of Section
4001(a)(3) of ERISA.
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24 -
(c) Except
as
set forth on Schedule
2.23(c),
none
of
the Jet Center Entities has announced or otherwise made a commitment to create
any bonus or severance plan or program or any other employee benefit plan for
employees in the FBO Business.
(d) Each
Jet
Center Plan has been maintained in material compliance with its terms and all
applicable Legal Requirements.
(e) Except
as
set forth on Schedule
2.23(e),
the Jet
Center Entities do not sponsor, maintain, contribute to or have any other
liability with respect to any arrangement that (i) provides deferred
compensation that is subject to Code Section 409A or (ii) may result in the
payment of excess parachute payments as described in Code Section 280G(b)
(without regard to the exception contained in Code Section
280G(b)(5)(B).
(f) The
only
Jet Center Plan that is intended to qualify under Section 401(a) of the Code
is
the San Xxxx Jet Center, LLC and ACM Aviation, LLC 401(k) Plan, and it so
qualifies.
2.24 Capital
Expenditures.
Schedule
2.24
sets
forth the capital expenditures incurred by the Jet
Center Entities
during
calendar year 2006 and lists all budgeted capital expenditures or legally
binding capital expenditure commitments by the Jet
Center Entities
from and
after December 31, 2006. For any legally binding capital expenditure commitments
exceeding $25,000, Schedule
2.24
also
contains a reference to the contracts or agreements with the applicable third
parties evidencing such capital expenditure commitments.
2.25 Certain
Payments.
None
of
the Jet
Center Entities
nor or
any of their directors, officers, employees or agents has directly or
indirectly: (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment in violation of any federal,
state, local, municipal, foreign or other constitution, ordinance, regulation,
statute, treaty, or other law to any person or entity, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable
treatment for business secured, or (iii) to obtain special concessions or
for special concessions already obtained, for or in respect of the Jet
Center Entities
or any
affiliate of the
Jet
Center Entities;
or
(b) established or maintained any fund or asset that has not been recorded
in the books and records of the
Jet
Center Entities.
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25 -
2.26 Business
Activity Restrictions.
Except
as
set forth on Schedule
2.26:
(a)
there is no non-competition or other similar agreement, commitment or order
to
which the Jet
Center Entities
or any
of their Affiliates is a party or subject to that has or could reasonably be
expected to have the effect of prohibiting or impairing the conduct of the
FBO
Business by the
Jet
Center Entities;
(b)
none of the Jet
Center Entities
has
entered into any agreement under which it is restricted from selling products
to, or providing services to, customers or potential customers in any geographic
area, during any period of time or in any segment of the market or line of
business; and (c) no Affiliate of the Jet
Center Entities
is a
party to any agreement, which, by virtue of such person’s relationship with
the
Jet
Center Entities,
restricts it from, directly or indirectly, engaging in the FBO
Business.
2.27 Accounts
Receivable.
Except
to
the extent of the amount of the reserve for doubtful accounts reflected in
the
Interim Financial Statements or as set forth on Schedule
2.27,
all
accounts receivable of the Jet
Center Entities
reflected therein and all accounts receivable that have arisen since March
31,
2007 (except accounts receivable that have been collected since such date)
are
valid and enforceable claims, and constitute bona fide accounts receivable
resulting from the sale of goods and performance of services in the ordinary
course of the FBO Business. The accounts receivable are subject to no valid
defense, offsets, returns, allowances or credits of any kind, and are fully
collectible within 60 days from their due date, except to the extent of the
amount of the reserve for doubtful accounts reflected in the Interim Financial
Statements. Except for the accounts receivable, the Jet
Center Entities
have not
made any loan or advance to any Person.
2.28 Operations
of Jet Center Entities.
None
of
the Jet Center Entities is engaged in any businesses other than the ownership
and operation of the FBO Business and certain aircraft management services
occasionally in other locations pursuant to short-term leases. Except
as
described on Schedule
2.28,
the
Jet
Center Entities are the only legal entities that own or operate the assets
used
or useable in connection with the FBO Business. Except
as
described on Schedule
2.28,
none
of
the Jet Center Entities currently operates any aircraft management services,
air
charter business, aircraft maintenance, repair or overhaul activities, or any
other activities, that are covered by 14 CFR Part 145.
2.29 No
Significant Items Excluded.
The
assets held by the Jet Center Entities include all assets, properties,
contracts, permits or other items that are necessary to the ongoing operation
of
the FBO Business in substantially the same manner in which the FBO Business
has
been conducted prior to the date hereof.
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26 -
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF THE ACQUIROR
The
Acquiror hereby represents and warrants to the Seller that, except
as
otherwise set forth in the Disclosure Schedules, the
following representations and warranties are, as of the date hereof, and will
be
(unless made as of a specified date), as of the Closing Date (subject
to the disclosures on any updated Disclosure Schedules pursuant to Section
4.5(d)),
true
and correct.
3.1 Organization
and Existence.
The
Acquiror is a limited liability company duly formed, validly existing and in
good standing under the laws of the State of Delaware. The Acquiror has full
power and authority to own its properties and carry on its business as it is
now
being conducted.
3.2 Execution
and Effect of Agreement.
The
Acquiror has full power and authority to execute and deliver this Agreement
and
each other Transaction Document to which it is a party, to perform its
obligations hereunder and thereunder, and to consummate the Acquisition. The
execution, delivery and performance by the Acquiror of this Agreement and the
other Transaction Documents to which it is a party and the consummation by
the
Acquiror of the Acquisition have been duly and validly authorized and approved
by the Acquiror and no other proceeding on the part of the Acquiror is necessary
to authorize the execution, delivery and performance by the Acquiror of this
Agreement or the other Transaction Documents to which the Acquiror is a party
or
the consummation of the Acquisition. This Agreement and the other Transaction
Documents to which the Acquiror is a party have been duly and validly executed
and delivered by the Acquiror and (assuming the valid execution and delivery
thereof by the Seller and any other parties thereto) constitute the legal,
valid
and binding obligations of the Acquiror, enforceable against the Acquiror in
accordance with their respective terms, except as limited by the Bankruptcy
and
Equity Exceptions.
3.3 No
Violation.
Neither
the execution or delivery by the Acquiror of this Agreement or any Transaction
Document to which the Acquiror is a party nor the consummation by the Acquiror
of the Acquisition will violate any statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge or restriction of any Governmental
Authority, or court to which the Acquiror is a party or to which it is bound
or
subject, nor will it violate any of the provisions of the Acquiror’s charter or
bylaws.
3.4 Litigation.
There
is
no Proceeding (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance),
that:
(a) has been commenced by or against the Acquiror that would
have a
material adverse effect on the Acquisition; or (b) challenges or may have the
effect of preventing, delaying, making illegal, or otherwise interfering with
the Acquisition. No Proceeding has been threatened by or against the Acquiror
and no event has occurred or circumstances exist that may give rise to or serve
as a basis for commencement of any Proceeding by or against the Acquiror that
would
have a
material adverse effect on the Acquisition.
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27 -
3.5 Consents.
Except
for the consents set forth on Schedule
3.5,
no
consent, waiver, approval, permit, authorization of, declaration to or filing
with any third party or Governmental Authority on the part of the Acquiror
is
required in connection with the execution and delivery of this Agreement or
any
Transaction Document to which the Acquiror is a party or the consummation of
the
Acquisition, except for the approvals required under the HSR Act and filings
pursuant to applicable securities laws or
listing agreements with securities exchanges.
3.6 No
Brokers.
Except
for the arrangements set forth on Schedule
3.6
(which
are the sole obligation of the Acquiror), neither
the Acquiror nor any Person acting on behalf of the Acquiror has agreed to
pay a
commission, finder’s or investment banking fee, or similar payment in connection
with this Agreement or any matter related hereto to any Person, nor has any
such
Person taken any action on which a claim for any such payment could be
based.
ARTICLE
IV
COVENANTS
4.1 Filings
and Other Actions.
(a) Upon
the
terms and subject to the conditions contained herein, each of the Parties hereto
hereby agrees: (i) to cooperate with one another in determining whether any
filings are required to be made with, or consents or permits are required to
be
obtained from, any Governmental Authority in any jurisdiction or any airport
authority, lender, lessor or other third party in connection with the
consummation of the Acquisition and cooperate in making any such filings
promptly and in seeking timely to obtain any such consents and permits; (ii)
to
use commercially reasonable efforts to defend all actions challenging this
Agreement or the consummation of the Acquisition and use its commercially
reasonable efforts to lift or rescind any injunction or restraining order or
other court order adversely affecting the ability of the Parties to consummate
the Acquisition; and (iii) to use commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all other
things necessary, proper or advisable to consummate and make effective,
in
the
most expeditious manner practicable,
the
Acquisition,
including using commercially reasonable efforts to (A) cause the conditions
precedent set forth in Article V
to be
satisfied, (B) obtain all necessary actions or nonactions, waivers, consents,
approvals, rulings, exemptions, orders and authorizations from Governmental
Authorities and the making of all necessary registrations, declarations and
filings (including registrations, declarations and filings with Governmental
Authorities, if any) and the taking of all commercially reasonable steps as
may
be necessary to avoid any suit, claim, action, investigation or proceeding
by
any Governmental Authority, (C) assist the
Acquiror
with
obtaining replacement licenses and associated permits, and any associated
required consents or approvals, in each case, from the Federal Communications
Commission as of or following the Closing to enable the Jet Center Entities
to
continue to operate the FBO Business immediately following Closing insofar
as
matters related to the Federal Communications Commission is concerned in a
manner consistent in all material respects with its operation prior to Closing,
which efforts shall include providing the Acquiror with information about Jet
Center Entities as may be required for such licenses, permits, consents or
approvals; and (D) execute or deliver any additional instruments reasonably
necessary to consummate the Acquisition, and to fully carry out the purposes
of,
this Agreement. As soon as practicable following the date hereof, the Seller
and
the Acquiror will jointly use their commercially reasonable efforts to obtain
any required consents, waivers and approvals in connection with the consummation
of the Acquisition.
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28 -
(b) All
licenses, franchises, permits and other governmental authorizations required
for the conduct of the FBO Business as it is now being conducted or carried
out
by the Jet Center Entities are or will prior to the Closing be issued to or
for
the benefit of the Jet Center Entities.
4.2 HSR
Act.
In
connection with the transactions contemplated by this Agreement, the Parties
shall comply promptly after the date hereof with the notification and reporting
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended, and the regulations promulgated thereunder (“HSR
Act”)
and
use all commercially reasonable efforts to obtain early termination of the
waiting period under the HSR Act. The Parties shall comply
with any additional request for information, including requests for production
of documents and production of witnesses for interviews or depositions, by
any
antitrust authority. Without
limiting the foregoing, the Acquiror and the Seller shall use commercially
reasonable efforts to cooperate and oppose any preliminary injunction sought
by
any Governmental Authority under the HSR Act preventing the consummation
of
the
transactions contemplated by this Agreement;
provided, that, neither the Acquiror nor the Seller will be required to divest
any of its assets in connection with these efforts. The Acquiror and the Seller
shall split equally the fees associated with filings under the HSR
Act.
4.3 Conduct
of Business Pending Closing.
Except
as
otherwise provided in this Agreement or with the prior written consent of the
Acquiror, between the date of this Agreement and the Closing Date or the earlier
termination of this Agreement pursuant to Section
7.1,
each of
the Jet Center Entities shall:
(a) carry
on
the FBO Business in the ordinary course consistent with past
practice;
(b) use
its
best efforts to: (i) preserve the FBO Business intact; (ii) preserve existing
relationships with Persons related to the FBO Business;
(iii)
retain the services of the present employees of the FBO Business; and (iv)
preserve the goodwill of the customers and vendors of the FBO
Business;
(c) except
as
permitted by this Agreement, not use, disseminate or disclose, directly or
indirectly, any of the Trade Secrets to any party;
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29 -
(d) not
amend
or terminate any agreements or contracts that require annual payments or
receipts of funds by any of the Jet Center Entities in excess of
$50,000;
(e) inform
the Acquiror of the occurrence of any event that may result in a Material
Adverse Effect;
(f) not
take
or cause to be taken any of the actions described in Section
2.19
of this
Agreement;
(g) not
intentionally cause any Material Adverse Effect;
(h) not
hire
any additional employees who have total annual compensation in excess of
$90,000;
(i) not
purchase Inventory Assets other than in the ordinary course of business
consistent with past practice and shall not materially change the nature, level
and condition of the Inventory Assets;
(j) not
write-down or write-up (or fail to write down or write up in accordance with
GAAP) the value of any Inventory Assets other than in the ordinary course of
business consistent with past practice and in accordance with GAAP;
(k) not
make,
revoke or change any Tax elections, or settle any matter relating to Taxes,
without the prior written consent of the Acquiror;
(l) not
intentionally take any action that would give rise to a breach of any of the
representations and warranties set forth in Article
II
hereof;
(m) not
increase the compensation or benefits payable to, or to become payable to,
any
employees of the Jet Center Entities, pay any benefit to any such employees
not
required by any existing Company Employee Benefit Plan as in effect on the
date
of this Agreement, or modify any Company Employee Benefit Plan except to the
extent required by applicable Law;
(n) not
enter
into any contract or agreement requiring any of the Jet Center Entities to
incur
obligations exceeding $50,000, except in the ordinary course of
business;
(o) not
enter
into any transactions set forth in Section
2.20;
and
(p) not
take
or
agree to take any actions inconsistent with the above.
Notwithstanding
anything to the contrary, the Jet Center Entities may distribute to their
respective members, including the Seller, such funds as may be available for
distribution as they may deem appropriate; provided, however, that no
distribution may be made to the Seller to the extent it would cause the Working
Capital to become negative as of the Closing.
Neither
Seller nor the Jet Center Entities will enter into any financing arrangements
for the design or construction costs of Hangar F without the Acquiror's prior
approval, which approval will not be unreasonably withheld, conditioned or
delayed.
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30 -
4.4 No
Shop.
(a) In
consideration of the substantial expenditure of time, effort and expense
undertaken by the Acquiror in connection with its due diligence efforts and
the
preparation, negotiation and execution of this Agreement, each of the Members
and
the
Beneficial Owners agree that neither they, the Jet Center Entities, nor their
Representatives shall, after the execution of this Agreement until the Closing
Date or the earlier termination of this Agreement pursuant to Section
7.1
(the
“No-Shop
Period”),
directly or indirectly: (i) solicit, initiate, encourage, enter into, conduct
or
continue any negotiation of terms or enter into any agreement or understanding,
with any other person or entity (other
than any officer, director, controlled affiliate or employee of the Seller,
the
Jet Center Entities, or any of their respective affiliates or any investment
banker, attorney or other advisor or representative of the Seller, the Jet
Center Entities or any of its affiliates) regarding
the transfer, directly or indirectly, of any interest in the Jet Center Entities
or any material portion of the assets of the FBO Business (including by way
of
license); or (ii) disclose any nonpublic information relating to the
FBO
Business or
afford
access to the books or records of Seller or any of the Jet
Center Entities to
any
other person or entity that Seller is informed is considering acquiring an
interest in the Jet Center Entities. If,
during the No-Shop Period, the Seller or its Representatives receives any
written request for information or written indication of interest from any
Person that may be interested in acquiring an interest in the Seller or the
Jet
Center Entities,
the
Seller shall promptly refuse any such communication and cease any discussion
related thereto and promptly disclose to the Acquiror the receipt of such
request or indication of interest, and the material terms of any such indication
of interest, and shall provide to the Acquiror copies of any correspondence
or
other written materials received in connection therewith. The Seller and the
Beneficial Owners hereby confirm to the Acquiror that, as of the date hereof,
all discussions, negotiations and other activities with any other person by
or
on behalf of the Seller and the Jet
Center Entities
have
been terminated and that neither the Seller nor any of the Jet
Center Entities
has any
obligation to sell to or discuss with any other person the sale of any assets
comprising the FBO Business or the stock or assets of either the Seller or
any
of the Jet
Center Entities.
(b) The
Seller hereby represents and warrants to the Acquiror that by entering into
this
Agreement and performing the actions contemplated hereby, the Seller is not
violating or breaching any other contract or agreement to which the Seller
is a
party with any other Person with respect to any sale of the assets comprising
the FBO Business or limited liability company interests of the Jet Center
Entities.
(c) In
the
event that
the
Seller or its Representatives breaches its obligations in Section
4.4(a)
and in
addition to any other legal remedy available to the Acquiror related thereto,
the Seller hereby agrees that it shall pay all costs and expenses of the
Acquiror incurred in connection with enforcing its rights hereunder, including
all reasonable attorneys’ fees and expenses. In the event of any breach or
inaccuracy of the representation and warranty set forth in Section
4.4(b)
and in
addition to any other legal remedy available to the Acquiror related thereto,
the Seller hereby agrees to pay to the Acquiror reasonable damages and other
losses, if any, of any kind or nature whatsoever incurred by the Acquiror
arising from or relating to such breach or inaccuracy, including without
limitation: (i) any damages or losses resulting from claims by third parties;
and (ii) the Acquiror's reasonable attorneys' fees.
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31 -
4.5 Notification
of Certain Matters.
(a) Between
the date of this Agreement and the Closing Date or the earlier termination
of
this Agreement, the Seller Representative shall give prompt notice to the
Acquiror of: (i) any fact, condition, information or discovery that any
representation or warranty of the Seller or
the
Beneficial Owners made on the date hereof was untrue or inaccurate in any
respect; and (ii) any failure of the Seller or the Beneficial Owners to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by such Person hereunder. The delivery of any notice pursuant to
this
Section 4.5(a)
shall
not be deemed to: (a) modify the representations or warranties as made on the
date hereof by the Seller or the Beneficial Owners; (b) modify the conditions
set forth in Article
V
or (c)
limit or otherwise affect the remedies available hereunder to the
Acquiror.
(b) Between
the date of this Agreement and the Closing Date or the earlier termination
of
this Agreement, the Seller Representative shall give prompt notice to the
Acquiror of the occurrence or nonoccurrence of any event which would cause
any
representation or warranty of the Seller or the Beneficial Owners made on the
date hereof to be untrue or inaccurate in any material respect at the Closing
when such representations and warranties are required to be made again.
It
is
understood and agreed that the Seller has a continuing obligation until the
Closing Date to amend or supplement promptly the Disclosure Schedules with
respect to any matter hereafter arising or discovered which, if existing or
known as of the date of this Agreement, would have been required to be set
forth
or described in such Disclosure Schedules or that is necessary to complete
or
correct any information in any representation or warranty of the Seller and
the
Beneficial Owners contained in this Agreement. The disclosure provided by the
Seller and the Beneficial Owners in any such amended, supplemented or revised
Disclosure Schedule (collectively, “Supplemental
Disclosures”)
shall
in no way affect or be deemed to limit the Acquiror’s right and option,
exercisable at any time prior to the Closing, to provide written notice to
the
Seller Representative that the Acquiror has elected to terminate this Agreement
if, in the exercise of the Acquiror’s commercially reasonable good faith
judgment, items identified in the Supplemental Disclosures, that were not
included in the Disclosure Schedules in the form attached to this Agreement
at
the time of execution, disclose that matters exist which may reasonably have
a
Material Adverse Effect; provided,
that,
Acquiror may only terminate this Agreement pursuant to foregoing clause after
Macquarie FBO Holdings LLC or any of its Affiliates includes financial
information about the Jet Center Entities in a public filing if the items
identified in the Supplemental Disclosures, that were not included in the
Disclosure Schedules, in the form attached to this Agreement at the time of
execution, disclose matters that existed at the time of execution and such
matters have or have had a Material Adverse Effect. If the Acquiror does not
elect to terminate this Agreement as provided above, this Agreement shall remain
in full force and effect subject to the express provisions hereof and such
changes or additional items shall (i) not constitute or be deemed to constitute
a breach of the representations and warranties made by the Seller and the
Beneficial Owners, and (ii) such Supplemental Disclosures shall upon the Closing
be deemed to amend the Disclosure Schedules as of the date of this Agreement
and
thereby cure any breach which would have resulted from Seller and Beneficial
Owners failure to disclose the matters set forth in the Supplemental
Disclosures.
(c) Between
the date of this Agreement and the Closing Date or the earlier termination
of
this Agreement, the Acquiror shall give prompt notice to the Seller
Representative of: (a) any fact, condition, information or discovery that any
representation or warranty of the Acquiror made on the date hereof was untrue
or
inaccurate in any respect; and (b) any failure of the Acquiror to comply with
or
satisfy any covenant, condition or agreement to be complied with or satisfied
by
such Person hereunder. The delivery of any notice pursuant to this Section 4.5(c)
shall
not be deemed to: (i) modify the representations or warranties as made on the
date hereof by the Acquiror; (ii) modify the conditions set forth in
Article
V;
or
(iii) limit or otherwise affect the remedies available hereunder to the
Seller.
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(d) Between
the date of this Agreement and the Closing Date or the earlier termination
of
this Agreement, the Acquiror shall give prompt notice to the Seller
Representative of the occurrence or nonoccurrence of any event which would
cause
any representation or warranty of the Acquiror made on the date hereof to be
untrue or inaccurate in any respect at the Closing when such representations
and
warranties are required to be made again. The Acquiror shall prepare updated
Disclosure Schedules for delivery to the Seller Representative on or before
the
Closing Date. If the events disclosed on the updated Disclosure Schedules
occurred after the date hereof, such additional items shall not constitute
or be
deemed to constitute a breach of the representations and warranties made by
the
Acquiror on the date hereof.
4.6 Transfer/Assignment
of Membership Interests.
On
or
prior to the Closing, the Seller shall take all actions necessary, and shall
cause all of its Affiliates to take all actions necessary, to convey, transfer,
assign and deliver to the Acquiror, all of their right, title and interest
in
and to the Membership Interests free and clear of all Liens without any
consideration other than the consideration set forth in this
Agreement.
4.7 Noncompete.
(a) Except
as
set forth on Schedule
4.7,
for a
period beginning on the Closing Date and ending on the second anniversary of
the
Closing Date (the “Restricted
Period”),
each
of the Sellers and the Beneficial Owners (collectively, the “Restricted
Parties”)
agrees
not to, within a 50-mile radius of the Mineta San Xxxx International Airport
facilities (the “Geographic
Area”):
(i)
engage in the FBO business, (ii) perform
aircraft management services and (iii) operate
an air charter business, directly
or indirectly, as a stockholder, partner, member, owner, joint venturer,
investor, lender or in any other capacity whatsoever (other than as a holder
of
not more than two percent of the total outstanding stock of a publicly held
company).
(b) Each
of
the
Restricted Parties acknowledges that: (i) an essential part of the Acquisition
is the purchase by the Acquiror of goodwill and that to protect and preserve
such goodwill, the covenants set forth in this Section
4.7
are not
only reasonable and necessary but required as a condition to the Acquiror’s
consummation of the Acquisition; (ii) the provisions of this Section
4.7
are the
product of arm’s-length negotiation and are reasonable and necessary to protect
and preserve the Acquiror’s interests in and right to the ownership, use and
operation of the FBO Business from and after the Closing Date; and (iii) the
Acquiror would be damaged if any of the Restricted Parties breached the
covenants set forth in this Section
4.7.
(c) The
Parties recognize that damages in the event of a breach by any of the Restricted
Parties of any provision of this Section
4.7
would be
difficult, if not impossible, to ascertain, and it is therefore agreed that
the
Acquiror, in addition to and without limiting any other remedy or right it
may
have, shall have the right to an injunction or other equitable relief in any
court of competent jurisdiction, enjoining any such breach. The existence of
this right shall not preclude any other rights or remedies at law or in equity
which the Acquiror may have relating to a breach of this Section
4.7.
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(d) Whenever
possible, each provision and term of this Section
4.7
shall be
interpreted in a manner to be effective and valid, but if any provision or
term
of this Section
4.7
is held
to be prohibited or invalid, then such provision or term shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating
or
affecting in any manner whatsoever the remainder of such provision or term
or
the remaining provisions or terms of this Section
4.7.
If any
of the covenants set forth in this Section
4.7
are held
to be unreasonable, arbitrary or against public policy, such covenants shall
be
considered divisible with respect to duration, geographic area and scope, and
in
such lesser duration, geographic area and scope, shall be effective, binding
and
enforceable against the Seller and the Restricted Parties to the greatest extent
permissible.
4.8 Further
Assurances.
The
Parties hereto hereby agree to execute and deliver, or cause to be executed
and
delivered, such further instruments or documents or take such other action
as
may be reasonably necessary or convenient to carry out the Acquisition. The
Parties hereto hereby agree to seek diligently to cause the conditions to
Closing which reasonably are within their control to be satisfied on or before
the Closing Date. The
Jet
Center Entities and the Seller will cooperate, and will cause the Jet Center
Entities’ accountants and other representatives to cooperate, with the Acquiror,
Macquarie FBO Holdings LLC and its affiliates (each being referred to as a
“Macquarie
Entity”
and
collectively as the “Macquarie
Entities”),
and
each of their respective accountants and other representatives, at the
Acquiror’s or Macquarie Entity’s (as the case may be) sole cost and expense, to
provide information
(including certifications and responses to inquiries from the Acquiror's,
Macquarie Entities’ or Jet Center Entities’ auditors regarding the business
and/or management of the Jet Center Entities) and
access to employees of the Jet Center Entities to assist the Acquiror, Macquarie
Entities and each of their respective accountants and other representatives
with
the preparation of financial statements for and other disclosure about the
Jet
Center Entities in connection with the Acquisition and/or capital raising
activities that are compliant with Regulation S-X of the Securities Act
Securities Act of 1933, as amended (the “Securities
Act”)
or
otherwise in accordance with applicable Legal Requirements or listing agreements
with securities exchanges; provided, however, so long as the Jet Center Entities
and Seller comply with the foregoing covenants, the Parties acknowledge and
agree that: (i) the preparation of financial statements for and other disclosure
about the Jet Center Entities that are compliant with Regulation S-X of the
Securities Act or otherwise in accordance with applicable Legal Requirements
or
listing agreements with securities exchanges is not a condition to Closing;
and
(ii) the failure to have financial statements prepared for and other disclosure
about the Jet Center Entities that are compliant with Regulation S-X of the
Securities Act or otherwise in accordance with applicable Legal Requirements
or
listing agreements with securities exchanges shall not be a breach of the
covenant set forth above.
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4.9 Post-Closing
Covenants.
(a) Confidentiality.
After
the date hereof, the Seller and the Jet Center Entities shall hold in strict
confidence, and shall use their best efforts to cause all of the Seller’s
Representatives to hold in strict confidence, all confidential information
concerning the FBO Business.
(b) Nonsolicitation.
Except
as
set forth on Schedule
4.9(b),
none of
the Seller, the Beneficial Owners or their Affiliates shall recruit, solicit
or
induce, or attempt to induce, any of the employees of the FBO Business or any
employee or consultant of the Acquiror or its Affiliates to terminate their
employment with, or otherwise cease their relationship with, the Acquiror or
its
Affiliates before or within two years after the Closing Date without the prior
written consent of the Acquiror.
(c) Further
Assurances.
The
Seller and the Jet Center Entities hereby agree, without further consideration,
to execute and deliver following the Closing Date such other instruments of
transfer and take such other actions as the Acquiror may reasonably request
in
order to put the Acquiror in possession of, and to vest in the Acquiror, good,
valid, and unencumbered title to the Membership Interests in accordance with
this Agreement and to consummate the Acquisition. The Acquiror hereby agrees,
without further consideration, to take such other action following the date
hereof and execute and deliver such other documents as the Seller may reasonably
request in order to consummate the Acquisition in accordance with this
Agreement.
4.10 Employee
Matters.
The
Acquiror or one of its Affiliates shall employ each of Xxx Xxxx and Xxx Xxxxxx
for 18 months after the Closing at a base salary no less than the current salary
being paid to each of Xxx Xxxx and Xxx Xxxxxx. The Acquiror or one of its
Affiliates will provide each of Xxx Xxxx and Xxx Xxxxxx with bonus compensation
opportunities and benefits similar to other similarly situated employees
employed by the Acquiror in the FBO Business during the term of their employment
with the Acquiror or one of its Affiliates. Nothing in this Section 4.10 shall
prohibit the Acquiror or one of its Affiliates from terminating the employment
of Xxx Xxxx and/or Xxx Xxxxxx at any time after the Closing (a) for
Cause (as defined
herein) or (b) for any other reason; provided, however, that (in the case of
a
termination other than for Cause) the Acquiror or one of its Affiliates
continues to provide such terminated employee’s then current base salary
for the remainder of his 18 month employment term or pays the terminated
employee a lump sum equal to such amount, subject to applicable withholdings
and
delivery by the terminated employee of a general release in favor of the
Acquiror and its affiliates (including the stockholder of the Acquiror and
its
stockholders as of the date hereof and the Jet Center Entities). For purposes
of
this Section “Cause”
means:
(i) there is a neglect of duty by the employee or employee exhibits
persistent deficiencies in performance or incompetence, and employee fails
to
remedy such neglect, deficiency or incompetence within 30 days following notice
from his employer; (ii) employee is convicted of, or pleads guilty or “no
contest” to, a felony; (iii) employee dies; (iv)
employee is involved in
fraud,
misappropriation of trade secrets or embezzlement; or (v) employee commits
a
material act of dishonesty or misconduct that is incompatible with service
to
any of the Jet Center Entities or which causes discredit or would reasonably
tend to cause discredit to fall upon any of the Jet Center
Entities.
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4.11 Hangar
F Construction.
During
the No-Shop Period, (a) the Acquiror shall be entitled to provide its input,
subject to acceptance by the Seller, regarding the construction and design
of
Hangar F and shall be entitled to review documentation regarding the Hangar
F
Cap-Ex Costs Incurred and (b) the budget for the construction and design of
Hangar F shall not exceed $18,000,000.
4.12 Due
Diligence.
(a) Except
as
provided below, from the date hereof until the earliest to occur of the
termination of this Agreement, the Closing Date or such date as mutually agreed
in writing between the Acquiror and the Seller Representative (the “Due
Diligence Period”),
the
Acquiror shall undertake and be afforded an opportunity to conduct, at its
own
expense, such financial, legal and operating due diligence reviews of the Seller
with respect to the ownership and operation of the FBO Business as the Acquiror
deems necessary.
(b) The
Acquiror and the Seller shall treat all information obtained in connection
with
the negotiation and performance of this Agreement or the due diligence
investigations conducted as confidential subject to the provisions of
Section 8.2
hereof.
4.13 Aircraft
Management, Air Charter and Maintenance.
Prior
to
the Closing Date, except to the extent compliance with this Section would
conflict with another provision of this Agreement, would be reasonably
likely to have a Material Adverse Effect, or would be likely to result in
out-of-pocket costs to the Jet Center Entities in excess of $10,000 in the
aggregate, the
Seller and the Jet Center Entities hereby agree, without further consideration,
upon Acquiror’s request and subject to Acquiror’s approval, to execute and
deliver such instruments of transfer and take such other actions as are
reasonably necessary in order to: (a) put ACM Aviation, LLC in possession of,
and to vest in ACM Aviation, LLC, good, valid and unencumbered title to all
of
the assets used in, and caused ACM Aviation, LLC to have assumed all liabilities
and obligations arising out of, the operation of the aircraft management, air
charter and aircraft maintenance, repair and overhaul businesses currently
operated by the Seller and the Jet Center Entities; and (b) transfer or
otherwise distribute from ACM Aviation, LLC to another Jet Center Entity, the
ownership or operation of any assets, and any liabilities related thereto,
regarding any businesses of the Seller and the Jet Center Entities other than
the aircraft management, air charter and aircraft maintenance, repair and
overhaul businesses.
Notwithstanding anything in this Agreement to the contrary, in the event any
of
the Jet Center Entities’ compliance with this Section results, or will result,
in the accrual or assessment of a tax payable by any of the Jet Center Entities
that would not have otherwise been incurred or assessed absent this Section,
such tax, if paid prior to the Closing, shall be credited to Seller in the
Closing Working Capital Calculation, and, if not paid prior to the Closing,
shall not be treated as a liability in the Closing Working Capital Calculation
and shall be paid by such Jet Center Entity in the normal course of
business.
4.14 ACM
Aviation Name.
In
the
event that Acquiror, any of Acquiror’s successors or assigns, any person to whom
all or substantially all of the assets of SJJC are sold, or any person who
may
hereafter otherwise acquire all right, title and interest in and to the name
“ACM Aviation” (whether by merger, consolidation or other business combination
or otherwise), as applicable, decides to terminate use of the name “ACM
Aviation” at the fixed base operations at the Xxxxxx X. Mineta San Xxxx
International Airport, ACM Inc. shall be promptly notified of such decision
by
the person making the decision and such person shall, promptly after its receipt
of a written request from ACM Inc. in response to such notice, assign all of
its
right, title and interest in and to the name “ACM Aviation” to ACM Inc. at no
cost to ACM Inc. other than applicable filing fees.
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4.15 Notification
Regarding Certain Events.
Acquiror
shall promptly notify the Seller Representative of the occurrence and date
of
the following: (a) Macquarie
FBO Holdings LLC
or any
of its Affiliates includes financial information about the Jet Center Entities
in a public filing, and (b) the earlier of either of (i) the transactions
contemplated under the Stock Purchase Agreement dated April 16, 2007, as
amended, among Mercury Air Centers, Inc., Macquarie FBO Holdings LLC, Allied
Capital Corporation, Directional Aviation Group, LLC, Xxxxxxx X. Xxxxx, Xxxxx
Xxxxx and Allied Capital Corporation, as representative for the selling group
(the “MAC/Macquarie
SPA”)
are
consummated; or (ii) the MAC/Macquarie SPA is terminated.
ARTICLE
V
CONDITIONS
TO THE CLOSING
5.1 Conditions
to Obligations of Each Party to Effect the Closing.
The
respective obligations of each Party to this Agreement to consummate the
Acquisition shall be subject to the satisfaction or waiver of each of the
following conditions:
(a) Escrow
Agreement.
The
Acquiror, the Seller Representative and the Escrow Agent shall have entered
into
the Escrow Agreement.
(b) Consents.
All
necessary consents of and filings required to be obtained or made by the
Acquiror or the Seller with any Governmental Authority or agency relating to
the
consummation of the transactions contemplated by this Agreement shall have
been
obtained and made.
(c) No
Pending Injunctions or Pending Orders.
No
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint or prohibition preventing the consummation of the Acquisition shall
be
in effect, nor shall any proceeding seeking any of the foregoing be pending.
No
action shall have been taken, or any statute, rule, regulation or order enacted,
entered, enforced or deemed applicable to the Acquisition, that makes the
consummation thereof illegal. In the event an injunction or other order shall
have been issued, or a proceeding for such an injunction or order be pending,
each Party agrees to use its reasonable best efforts to have such injunction
or
other order lifted or such proceeding terminated.
(d) HSR
Waiting Period.
The
waiting period applicable to the consummation of the Acquisition under the
HSR
Act shall have expired or shall have been terminated.
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5.2 Additional
Conditions to Obligations of the
Seller to Effect the Closing.
The
obligations of the Seller to consummate the Acquisition shall be subject to
the
satisfaction or waiver of each of the following conditions:
(a) Representations
and Warranties.
All of
the representations and warranties of the Acquiror contained in this Agreement
shall be true and correct in all material respects (other than representations
and warranties subject to “materiality” qualifiers, which shall be true and
correct as stated) both when made, and on and as of the Closing Date (subject
to
the disclosures on any updated Disclosure Schedules pursuant to Section
4.5(d)),
with
the same force and effect as though made at and as of the Closing Date, except
to the extent that any specific representation or warranty is made as of a
specified date, in which case such representation or warranty shall be true
and
correct in all material respects as of such date. The Acquiror
shall have delivered to the Seller a certificate dated the Closing Date and
signed by it to such effect or otherwise explicitly setting forth any exceptions
thereto.
(b) Performance
of Obligations.
All of
the terms, covenants and conditions of this Agreement to be complied with or
performed by the Acquiror on or before the Closing Date shall have been duly
complied with and performed in all material respects on or before the Closing
Date. The Acquiror shall have delivered to the Seller a certificate dated the
Closing Date and signed by it to such effect.
(c) Officer’s
Certificate; Corporate Documents.
The
Seller shall have received a certificate or certificates, dated the Closing
Date, and signed by an authorized representative of the Acquiror certifying
the
truth and correctness of attached copies of the Acquiror’s Certificate of
Formation (including all amendments thereto), limited liability company
agreement (including all amendments thereto), and resolutions of the board
of
directors or managers of the Acquiror approving the Acquiror’s execution of this
Agreement and the other Transaction Documents to which the Acquiror is a party
and the consummation of the Acquisition.
The
Acquiror shall have delivered to the Seller a certificate or other written
evidence, dated as of a date no earlier than 10 days prior to the Closing Date,
duly issued by the applicable Governmental Authority, showing that the Acquiror
is in good standing and authorized to do business in its state of
formation.
(d) Consents.
All
consents and approvals listed on Schedule
3.5
shall
have been obtained.
(e) Escrowed
Funds.
The
Escrow Agent shall have received the Escrowed Funds in accordance with
Section
1.2(b).
(f) Additional
Documents.
The
Seller shall have received such other documents and instruments as may be
reasonably required to consummate the Acquisition.
5.3 Additional
Conditions to the Obligations of the Acquiror
to
Effect the Closing.
The
obligations of the Acquiror to consummate the Acquisition shall be subject
to
the satisfaction or waiver of each of the following conditions; provided,
that,
the
condition precedent set forth in Section 5.3(a) shall be deemed satisfied
without regard to whether the representation and warranty set forth in
Section
2.19(a)
is true
and correct as of the Closing Date, and the conditions precedent set forth
in
Sections 5.3(e) and (g) shall be deemed satisfied, if Macquarie FBO Holdings
LLC
or any
of its Affiliates includes financial information about the Jet Center Entities
in a public filing:
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38 -
(a) Representations
and Warranties.
All of
the representations and warranties of the Seller and the Beneficial Owners
contained in this Agreement shall be true and correct in all material respects
(other than representations and warranties subject to “materiality” qualifiers,
which shall be true and correct as stated) both when made, and on and as of
the
Closing Date (subject to the disclosures on any updated Disclosure Schedules
pursuant to Section
4.5(b)),
with
the same force and effect as though made at and as of the Closing Date, except
to the extent that any specific representation or warranty is made as of a
specified date, in which case such representation or warranty shall be true
and
correct in all material respects as of such date. Each of the Jet Center
Entities and the Beneficial Owners shall have delivered to the Acquiror a
certificate dated the Closing Date and
signed by it to such effect or otherwise explicitly setting forth any exceptions
thereto.
(b) Performance
of Obligations.
All of
the terms, covenants and conditions of this Agreement
to be complied with or performed by the Seller and the Beneficial Owners on
or
before the Closing Date shall have been duly complied with and performed in
all
material respects on or before the Closing Date. Seller and the Beneficial
Owners shall have delivered to the Acquiror a certificate dated the Closing
Date
and signed by it to such effect.
(c) Officer’s
Certificate; Corporate Documents.
The Acquiror
shall have received a certificate or certificates, dated the Closing Date and
signed by an officer of each of the Jet Center Entities, certifying the truth
and correctness of attached copies of the Certificate of Formation (including
all amendments thereto), Limited Liability Company Agreement (including all
amendments thereto) or other organizational documents, as applicable. The
Acquiror shall have received resolutions of the board of directors or managers
of each of the Jet Center Entities approving such entity’s execution of this
Agreement and the other Transaction Documents to which it is a party and the
consummation of the Acquisition. Each of the Jet Center Entities shall have
delivered to the Acquiror a certificate or other written evidence, dated as
of a
date no earlier than 10 days prior to the Closing
Date, duly issued by the applicable Governmental Authority in each of the states
of Delaware and California showing that such entity is in good standing and
authorized to do business in such jurisdiction.
(d) Consents.
All
consents and approvals listed on Schedule
2.16
and
marked with an asterisk (*) shall have been obtained on terms reasonably
satisfactory to the Acquiror.
(e) No
Material Adverse Effect.
As of
the Closing Date, no Proceeding against any of the Jet Center Entities or the
Beneficial Owners shall be pending or threatened, and no event or circumstance
shall have occurred, either of which would have a Material
Adverse Effect. None of the Jet Center Entities shall have suffered any material
loss or damages to any of its properties or assets whether or not covered by
insurance, which change, loss or damage materially affects or impairs the
ability to conduct the FBO Business as it is presently conducted. None of the
Jet Center Entities nor the FBO Business shall have been adversely affected
in
any material way by any act of God, fire, flood or other natural disaster,
shortage of power, labor disturbance, sabotage, war, terrorism or
insurrection.
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(f) Intercompany
Transactions.
All
accounts receivable, notes receivable or any other receivables or advances
and
all accounts payable, notes payable or any other payables or advances between
any of the Jet Center Entities and its Affiliates shall be collected, paid
off
or otherwise cancelled as of the Closing Date pursuant to the terms of a
cancellation of intercompany transactions agreement, substantially in the form
attached hereto as Exhibit
B.
(g) Loss
of Customers or Vendors.
No more
than 10% of each of the customers or vendors set forth on Schedule
2.22
shall
have provided notice to any of the Jet Center Entities or the Acquiror that
it
intends to terminate its contractual relationship with any such entity and
none
of the customer and vendor contracts with such customers and vendors shall
have
been terminated for any reason.
(h) Additional
Documents.
The
Acquiror shall have received such other documents and instruments as may be
reasonably required to consummate the Acquisition, including
payoff
letters from all lenders to the Jet Center Entities with respect to any debt
for
borrowed money, including the Hangar E Debt, the Fuel Farm Debt and the Hangar
F
Debt, but expressly excluding the AvFuel Debt, which letters shall include
a
provision for termination of all applicable liens and the right of the Jet
Center Entities to file termination statements with respect thereto.
(i) FIRPTA.
Each of
the Members shall have executed a certificate under penalties of perjury in
the
form prescribed by Treasury Regulation Section 1.1445-2(b)(2)(iii).
(j) Opinion
of Counsel.
A
signed opinion from Xxxxxxx & Xxxxxx, legal counsel to the Jet Center
Entities and Seller, dated as of the Closing Date and addressed to the Acquiror,
shall have been delivered to the Acquiror, substantially in the form attached
hereto as Exhibit
C.
(k) Release.
A
general release from each of the Members, the Beneficial Owners and any other
direct or indirect beneficial owners of the
issued and outstanding capital stock of the
Members relating
to any claims against (i) the Jet Center Entities or the FBO Business for
matters occurring as of or prior to Closing or (ii) the Acquiror or any of
its
Affiliates arising out of, in connection with or as a result of the arrangements
described in Schedule
3.6
shall
have been delivered to the Acquiror, substantially in the form attached hereto
as Exhibit
D.
(l) Closing
or Termination of Other Purchase Agreement.
Three
Business Days after the first to occur of the following: (i) the date on which
the transactions contemplated under the MAC/Macquarie SPA are consummated;
(ii)
the date on which the MAC/Macquarie SPA is terminated; or (iii) November 1,
2007.
5.4 Effect
of Closing; Waiver.
Notwithstanding
anything in this Agreement to the contrary, the
decision of a Party to consummate the Closing absent full satisfaction of one
or
more of the conditions set forth in Section 5.1
through
Section 5.3,
inclusive, shall constitute a waiver by such Party of any of its other rights
or
remedies, at law or in equity, with respect to any such unsatisfied conditions,
except that the waiver by a Party of the condition set forth in Section
5.2(a)
or
Section
5.3(a),
respectively,
shall
only be effective to the extent of the matters explicitly disclosed in the
bring-down certificates delivered by the other Parties pursuant to Section
5.2(a)
and
Section
5.3(a),
respectively.
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ARTICLE
VI
INDEMNIFICATION;
REMEDIES
6.1 Obligations
of the Seller and the Beneficial Owners.
In
partial consideration of the commitment of the Acquiror hereunder and subject
to
the limitations set forth in this Article
VI,
the
Seller and the Beneficial Owners agree to jointly and severally indemnify,
reimburse and hold harmless the Acquiror and any of its affiliates, directors,
officers, agents and employees and each other Person, if any, controlling the
Acquiror (each, an “Acquiror
Indemnified Person”)
from
and against any liability, obligation, loss or expense (or actions or claims
in
respect thereof) to which such Acquiror Indemnified Person may become subject
as
a result of, or based upon or arising out of, directly or
indirectly:
(a) any
inaccuracy in, or breach of, any of the representations and warranties in
Article
II,
the
Transaction Documents to which the Seller or the Beneficial Owners is a party
or
in any certificate or document furnished pursuant hereto by the Seller or the
Beneficial Owners on the date hereof and on the Closing Date;
(b) any
payment required to be made by the Seller Representative to the Acquiror
pursuant to Section
1.7;
(c) any
breach or nonfulfillment of any covenant or agreement made by the Seller or
the
Beneficial Owners in or pursuant to this Agreement or in any Transaction
Document;
or
(d) the
occurrence of any of the following: (i) a violation of an Environmental Law
in
effect as of or prior to the Closing Date caused by any act or omission of
the
Seller, its predecessors, officers, agents, contractors, employees or invitees,
involving the premises
demised under the Real Property Leases;
(ii) an
environmental contamination or environmental condition affecting the premises
demised under the Real Property Leases (including but not limited to
contamination by Hazardous Materials and contamination as a result of migration
of contaminants from adjacent properties), existing as of or prior to the
Closing Date; (iii) any release or threatened release of Hazardous Materials
relating to the operation of the FBO Business by the Seller or its predecessors
in excess of acceptable levels under applicable Environmental Laws or otherwise
requiring remediation under applicable Environmental Laws or as necessary to
protect human health and the environment; (iv) any Liability arising under
Environmental Law in effect as of or prior to the Closing Date relating to
the
operation of the FBO Business by the Seller or its predecessors; or (v) any
Liability for any off-site disposal by the Seller or its
predecessors.
The
foregoing indemnification shall include, in
each
case, and subject
to the limitations set forth in this Article
VI,
an
obligation by Seller and the Beneficial Owners to jointly and severally
reimburse any Acquiror Indemnified Person for all reasonable expenses (including
the reasonable fees and expenses of counsel) as they are incurred by such
Acquiror Indemnified Person in connection with investigating, preparing or
defending any action or claim pending or threatened, whether or not such
Acquiror Indemnified Person is a Party hereto.
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6.2 Obligations
of the Acquiror.
In
partial consideration of the commitment of the Seller and
the
Beneficial Owners hereunder, the Acquiror agrees to indemnify, reimburse and
hold harmless the Seller, the Beneficial Owners and each of their affiliates,
agents and employees and each other Person, if any, controlling any of
its affiliates
(each a “Seller
Indemnified Person”)
from
and against any liability, obligation, loss or expense (or actions or claims
in
respect thereof) to which such Seller Indemnified Person may become subject
as a
result of, or based upon or arising out of, directly or indirectly:
(a) any
inaccuracy in, or breach of any of the representations and warranties made
by
the Acquiror in Article
III,
the
Transaction Documents to which the Acquiror is a party or in any certificate
or
document furnished pursuant hereto by the Acquiror on the date hereof and on
the
Closing Date;
(b) any
payment required to be made by the Acquiror to the Seller Representative
pursuant to Section
1.7;
(c) the
Acquiror’s
failure
to satisfy any of its obligations relating to the FBO Business for which
obligations the Acquiror is not otherwise entitled to seek indemnification
from
the Seller and the Beneficial Owners; or
(d) any
breach or nonfulfillment of any covenant or agreement made by the Acquiror
in or
pursuant to this Agreement or in any Transaction Document to which the Seller
is
a party.
The
foregoing indemnification shall include, in each case, an obligation by the
Acquiror to reimburse any Seller Indemnified Person for all reasonable expenses
(including the reasonable fees and expenses of counsel) as they are incurred
by
such Seller Indemnified Person in connection with investigating, preparing
or
defending any action or claim pending or threatened, whether or not such Seller
Indemnified Person is a Party hereto.
6.3 Procedure
for Claims.
(a) Any
Acquiror Indemnified Person and any Seller Indemnified Person shall each be
referred to herein as an “Indemnified
Person.”
Any
Indemnified Person seeking indemnification with respect to any losses, claims,
damages, liabilities or expenses shall give notice describing the claim for
indemnification in reasonable detail to the Person from whom indemnification
is
sought (each, an “Indemnifying
Person”)
prior
to the expiration of the time period set forth in Section
6.4.
(b) If
any
claim, demand, liability or obligation is asserted by any third party against
any Indemnified Person, the Indemnifying Person shall have the right, unless
otherwise precluded by applicable Law, to conduct and control the defense,
compromise or settlement of any action or threatened action brought against
the
Indemnified Person in respect of matters addressed by the indemnity set forth
in
this Article
VI
(an
“Action”).
The
Indemnified Person shall have the right to employ counsel separate from counsel
employed by the Indemnifying Person in connection with any Action or threatened
Action and to participate in the defense thereof. The fees and expenses of
counsel employed by the Indemnified Person shall be at the sole expense of
the
Indemnified Person unless: (i) the Indemnifying Person shall have elected not,
or, after reasonable written notice of any Action or threatened Action, shall
have failed, to assume or participate in the defense thereof; (ii) the
employment thereof has been specifically authorized by the Indemnifying Person
in writing; or (iii) the parties to any Action or threatened Action (including
any impleaded parties) include both the Indemnifying Person and the Indemnified
Person and the Indemnifying Person shall have been advised in writing by counsel
for the Indemnified Person that there may be one or more defenses available
to
the Indemnified Person that are not available to the Indemnifying Person or
legal conflicts of interest pursuant to applicable rules of professional conduct
between the Indemnifying Person and the Indemnified Person. If any of the events
referred to in clauses (i), (ii) and (iii) above is applicable, the fees and
expenses of one separate counsel employed by the Indemnified Person shall be
at
the expense of the Indemnifying Person.
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(c) The
Indemnifying Person shall not, without the written consent of the Indemnified
Person, settle or compromise any Action or threatened Action or consent to
the
entry of any judgment that does not include as an unconditional term thereof
the
giving by the claimant or the plaintiff to the Indemnified Person a release
from
all liability in respect of such Action or threatened Action. Unless the
Indemnifying Person shall have elected not, or shall have after reasonable
written notice of any Action or threatened Action failed, to assume or
participate in the defense thereof, the Indemnified Person may not settle or
compromise such Action or threatened Action without the written consent of
the
Indemnifying Person. If, after reasonable written notice of any Action or
threatened Action, the Indemnifying Person neglects to defend the Indemnified
Person, a recovery against the latter for damages suffered by it in good faith,
is conclusive in its favor against the Indemnifying Person; provided that no
such conclusive presumption shall be made if the Indemnifying Person has not
received reasonable written notice of such Action against the Indemnified
Person.
(d) Notwithstanding
anything contained in this Agreement to the contrary, prior to seeking
indemnification from any Indemnifying Person pursuant to Section
6.1(a),
in
connection with the representations made under Section
2.17,
or
pursuant to Section
6.1(d),
the
Indemnified Person shall tender to the City of San Xxxx any such claims for
which the City of San Xxxx is responsible pursuant to the FBO
Leases.
6.4 Survival.
The
representations, warranties, covenants and agreements made by the Parties in
this Agreement, including the indemnification obligations of the Seller,
the
Beneficial Owners and the Acquiror set forth in Article
VI,
shall
survive the Closing and shall continue in full force and effect after the
Closing except as provided below:
(a) any
claim
by the Acquiror under Section
6.1(a)
shall
expire if notice of such claim has not been provided by the Acquiror to the
Seller Representative on or before the second anniversary of the Closing Date,
except as provided in Section
6.4(b);
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(b) any
claim
by the Acquiror relating to any inaccuracy in, or breach of, any of the
representations and warranties made by the Seller and the Beneficial Owners
under: (i) Section
2.1
(Organization), Section
2.2
(Execution and Effect of Agreement), Section
2.4
(Capitalization), Section
2.6(a)
(Title
to Assets), Section
2.14
(No
Violation), and Section
2.21
(No
Brokers) (collectively, the “Fundamental
Matters”)
shall
survive until
30
days after the expiration of the applicable statute of limitations;
(ii)
Section
2.7
(Taxes)
and Section
2.17
(Environmental) (together, the “Special
Matters”)
shall
survive until the third anniversary of the Closing Date; and (iii) any
inaccuracy in, or breach of, any of the representations and warranties involving
fraud shall survive until the fifth anniversary of the Closing
Date;
(c) any
claim
by the Seller under Section
6.2(a)
shall
expire if notice of such claim has not been provided by the Seller
Representative to the Acquiror on or before the second anniversary of the
Closing Date, except as provided in Section
6.4(d);
(d) any
claim
by the Seller relating to any inaccuracy in, or breach of, any of the
representations and warranties made by the Acquiror under Section
3.2
(Execution and Effect of Agreement) or Section
3.6
(No
Brokers) shall survive until 30 days after the expiration of the applicable
statute of limitations;
(e) any
claim
by the Acquiror under Section
6.1(c)
shall
expire if notice of such claim has not been provided by the Acquiror to the
Seller Representative on or before the second anniversary of the Closing Date;
and
(f) any
claim
by the Acquiror under Section
6.1(d)
shall
expire if notice of such claim has not been provided by the Acquiror to the
Seller Representative on or before the third anniversary of the Closing
Date.
6.5 Indemnity
Payments.
(a) If
the
Acquiror agrees, or is determined by a court of competent jurisdiction or by
means of alternative dispute resolution mutually agreed to by the relevant
parties, to have an obligation to reimburse any Seller
Indemnified
Person
under this Article
VI,
then
the Acquiror shall promptly pay such amount to the applicable Seller
Indemnified
Person
by wire transfer of immediately available funds to the bank and account
specified by the Seller Indemnified
Person in writing.
(b) If
the
Seller Representative agrees, or the Seller and the Beneficial
Owners are
determined by a court of competent jurisdiction or by means of alternative
dispute resolution mutually agreed to by the relevant parties, to have an
obligation to reimburse any Acquiror Indemnified Person under this Article
VI,
then
such amount shall be disbursed to the Acquiror Indemnified Person from the
Escrowed Funds pursuant to the terms of the Escrow
Agreement,
until
the Escrowed Funds have been exhausted; provided
that in
the event the Escrowed Funds are exhausted, then any of such amount not able
to
be funded from the Escrowed Funds,
subject
to the limitations set forth in Section
6.6,
shall be
promptly paid to
the
Acquiror Indemnified Person by the Seller Representative, from and on behalf
of
the Seller and the Beneficial Owners,
by wire
transfer of immediately available funds to the bank and account specified by
the
Acquiror Indemnified Person in writing.
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44 -
6.6 Limitations
on Indemnification Obligations Under Article VI.
(a) Except
as
provided below, the Acquiror may not make any claims against the Seller
or
the
Beneficial Owners under Section
6.1(a)
unless
and until the aggregate amount of all such claims under Section
6.1(a)
exceeds
$250,000 (the “Basket
Amount”);
thereafter, the Seller and the Beneficial Owners shall be responsible for
payment of any claims in excess of the Basket Amount, subject to the limitation
set forth in Section
6.6(b).
The
foregoing restriction shall not apply to any claims by the Acquiror relating
to the Fundamental Matters, the Special Matters or any
inaccuracy in, or breach of, any of the representations and warranties of the
Seller and the Beneficial Owners involving fraud.
(b) Except
as
provided below, the Seller
and the
Beneficial Owners shall
not
have any liability for indemnifiable claims under Section
6.1(a)
or
Section
6.1(c)
to the
extent the aggregate amount of all claims suffered or incurred by the Acquiror
exceeds the Escrowed Funds. The aggregate liability of the Seller and the
Beneficial
Owners
for
indemnifiable claims (i) under Section
6.1(a)
relating
to the Fundamental Matters, the Special Matters or any
inaccuracy in, or breach of, any of the representations and warranties of the
Seller and the Beneficial Owners involving fraud, or (ii) under Section
6.1(d),
shall be
limited to the Purchase Price.
(c) Notwithstanding
the above, any claim of the Acquiror in excess of the Escrowed Funds shall
be
proportionately reduced by that portion of the total beneficial holdings of
SJJC
that is beneficially held by The RNN Foundation (i.e., 10.2%), which holds
such
interest for the benefit of Santa Xxxxx University for the purpose of funding
tuition scholarships for underprivileged students.
6.7 Remedies.
(a) Exclusive
Remedy. Subject to Section 6.7(b), (i) the
indemnities provided in this Article VI are intended to be and shall be the
sole
and exclusive remedies of the Acquiror after the Closing regarding any matter
touching upon
or
relating to the negotiation, entry of, consummation and closing of this
Agreement and the performance of the FBO Business; (ii) the purpose of this
exclusive and sole remedy provision is that the total amount recoverable from
the Seller and Beneficial Owners represents the total amount recoverable from
them for any and all causes of action against them after the Closing whether
under this Agreement or otherwise; and (iii) each Party is relying upon the
other’s agreement and representation that the remedies provided for in this
Article VI shall be the sole and exclusive remedies of the Acquiror against
the
Seller and Beneficial Owners after the Closing.
(b) Specific
Performance.
Each
Party hereto acknowledges that because
of
the difficulty of measuring economic losses attributable to the breach of a
Party’s obligations under
Section
8.2
or
failure to
consummate
the Acquisition in accordance with the terms of this Agreement, and
because of the immediate and irreparable damage that would be caused for which
there would be no other adequate remedy, the Parties hereto hereby agree that
the applicable provisions of this Agreement may be enforced
against the breaching Party by a decree of specific performance issued by any
court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. Each Party hereto hereby agrees
to waive the defense that a remedy at law would be adequate in any action for
specific performance under this Section
6.7(b).
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6.8 Treatment
of Indemnification Payments.
The
Parties hereto hereby agree that any indemnification payments made pursuant
to
this Agreement shall be treated for tax purposes as adjustments to the Purchase
Price unless otherwise required by applicable Law.
ARTICLE
VII
TERMINATION
7.1 Termination.
This
Agreement may be terminated at any time prior to the Closing Date
solely:
(a) by
mutual
written consent of the Seller Representative and the Acquiror;
(b) by
the
Seller Representative or the Acquiror if the transactions contemplated by this
Agreement shall not have been consummated by November 15, 2007,
provided that the failure of such transactions to be consummated is not due
to
the willful failure of the Party seeking to terminate this Agreement to perform
any of its obligations under this Agreement to the extent required to be
performed by it on or prior to the Closing Date.
(c) by
the
Seller Representative, if: (i) there has been a material misrepresentation
or
breach by the Acquiror of a representation or warranty contained herein and
such
material misrepresentation or breach, if curable, is not cured within 10 days
after written notice thereof from the Seller Representative; (ii) the Acquiror
has committed a material breach of any covenant imposed upon it hereunder and,
if curable, fails to cure such breach within 10 days after written notice
thereof from the Seller Representative; or (iii) any condition to the
Seller’s
obligations to effect the Closing under Section
5.2
becomes
incapable of fulfillment through no fault of the Seller and
is
not waived by the Seller Representative;
(d) by
the
Acquiror, if: (i) there has been a material misrepresentation or breach by
the
Seller or a Beneficial Owner of a representation or warranty contained herein
and such material misrepresentation or breach, if curable, is not cured within
10 days after written notice thereof from the Acquiror; (ii) the Seller or
a
Beneficial Owner has committed a material breach of any covenant imposed upon
it
hereunder and, if curable, fails to cure such breach within 10 days after
written notice thereof from the Acquiror; or (iii) any condition to the
Acquiror’s obligations to effect the Closing under Section
5.3
becomes
incapable of fulfillment through no fault of the Acquiror and is not waived
by
the Acquiror; or
(e) by
the
Seller
Representative or
the
Acquiror if there shall be any law that makes consummation of the Acquisition
illegal or otherwise prohibited, or if any order enjoining any of the Jet Center
Entities, on the one hand, or the Acquiror, on the other, from consummating
the
Acquisition is entered and such order shall have become final and nonappealable,
provided that the Party seeking to terminate this Agreement pursuant to this
provision shall have used all reasonable efforts to remove or vacate such
order.
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7.2 Consequences
of Termination.
(a) In
the
event that this Agreement shall be terminated pursuant to this Article
VII,
each
Party will redeliver all documents, work papers and other material of any other
Party relating to the Acquisition, whether so obtained before or after the
execution hereof, to the Party furnishing the same.
(b) If
this
Agreement shall be terminated pursuant to clause (a), (b), (e) or (f) of
Section
7.1,
all
further obligations of the Parties hereto shall terminate without further
liability of any Party, provided that the
rights and obligations of the Parties under Sections
6.7, 7.2, 8.2, 8.3, 8.7, 8.8 and 8.15
shall
survive the termination of this Agreement.
(c) If
this
Agreement shall be terminated pursuant to clause (c) or clause (d) of
Section
7.1:
(i)
each of the Seller and the Acquiror will remain liable to the other for any
misrepresentation, breach of warranty or nonfulfillment of, or failure to
perform, any covenant or agreement of such Party existing at the time of such
termination; (ii) each of the Seller and the Acquiror shall be entitled to
pursue any and all remedies available at law or in equity
including, but not limited to, the availability of specific performance or
other
injunctive relief and reimbursement of all
costs
and expenses incurred by such Party in connection with the Acquisition
including, without limitation, all reasonable attorney’s fees and
expenses;
and
(iii) the rights and obligations of the Parties under Sections
6.7, 7.2, 8.2, 8.3, 8.7, 8.8 and 8.15
shall
survive the termination of this Agreement.
(d) If
Macquarie
FBO Holdings LLC or any of its Affiliates includes financial information about
the Jet Center Entities in a public filing prior to the Closing, and the
Acquiror fails to consummate the Closing for any reason other than: (i)
the
failure of the Seller to have obtained the consents and approvals listed on
Schedule
2.16
and
marked with an asterisk (*); (ii) a breach by the Seller or any of the Jet
Center Entities of any material term or condition of this Agreement, which
breach is not cured within 10 business days following receipt by the breaching
Party of notice of such breach; or (iii) the failure of any condition to
Acquiror’s obligation to consummate the Acquisition to have been satisfied due
to any action or inaction by Seller or any of the Jet Center Entities, then
Macquarie FBO Holdings LLC shall pay to Seller $10,000,000 (by cashier’s check
or by wire transfer of immediately available funds to a bank account designed
by
Seller) within 10 days of the termination of this Agreement. This payment shall
not constitute Seller or the Jet Center Entities’ exclusive remedy, nor shall
Seller, the Jet Center Entities, or any of them, be deemed to waive any other
rights or remedies such Seller or the Jet Center Entities may have, whether
in
law or equity, for a breach of this Agreement by Acquiror, or its successors
or
assigns; provided, however, the $10,000,000 payment shall be credited toward
any
monetary damages suffered by Seller or the Jet Center Entities and shall
therefore reduce by such amount any additional recovery by Seller or the Jet
Center Entities.
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ARTICLE
VIII
GENERAL
PROVISIONS
8.1 Cooperation.
The
Seller Representative shall deliver or cause to be delivered to the Acquiror
on
the Closing Date, and at such other times and places as shall be reasonably
agreed to, such additional instruments as the Acquiror may reasonably request
for the purpose of carrying out the Acquisition. The Acquiror shall deliver
or
cause to be delivered to the Seller Representative on the Closing Date, and
at
such other times and places as shall be reasonably agreed to, such additional
instruments as the Seller Representative may reasonably request for the purpose
of carrying out the Acquisition.
8.2 Press
Releases; Confidentiality.
(a) Except
as
provided below, neither the Acquiror nor its directors, officers, employees,
advisors, lenders, attorneys or agents shall make any press release or public
announcement in connection with the Acquisition prior to the Closing without
the
prior written consent of the Seller Representative. Except as provided below,
none of the Jet Center Entities, the Seller, or the
Beneficial Owners or their directors, officers, employees, stockholders,
advisors, lenders, attorneys or agents shall make any press release or public
announcement in connection with the Acquisition without the prior written
consent of the Acquiror. Notwithstanding the foregoing, each Party hereto and
the Macquarie Entities will be permitted to (i) communicate to its respective
directors, officers, employees, stockholders, advisors, lenders, attorneys
or
agents the confidentiality obligation contained in this Section
8.2,
and
(ii) make such press releases, public announcements and/or filings with the
Securities and Exchange Commission in connection with the Acquisition and/or
capital raising activities without obtaining any prior written consent if
required by applicable Law or stock exchange regulation to do so, but prior
to
making such disclosure, the disclosing Party shall provide the other Party
with
a draft of such press release, announcement or filing for review and comment;
provided, further, that no such press release, announcement or filing shall
contain any financial information about the Jet Center Entities other than
audited
financials for the period ended December 31, 2006 and unaudited condensed
financials for the interim periods since December 31, 2006, and such other
information as required by applicable Securities and Exchange Commission
regulations; provided, further, that that
no
such press release, announcement or filing shall include any financial
information about the Jet Center Entities until the
waiting period applicable to the consummation of the Acquisition under the
HSR
Act shall have expired, or shall have been terminated, without receipt of a
Second Request by any of the Parties, or if any Party receives a Second Request,
the resolution of all impediments under the HSR
Act,
otherwise preventing the consummation of
the
transactions contemplated by this Agreement.
(b) Each
of
the Jet Center Entities, the Acquiror and the Beneficial Owners recognizes
that
the Acquiror will receive additional confidential information regarding the
Seller and the Beneficial Owners from and after the date hereof. Accordingly,
each Party agrees to use its best efforts, consistent with past practices,
to
prevent the unauthorized disclosure of any confidential information concerning
each other Party that has been or is disclosed to it or its agents previously
or
from and after the date hereof. Notwithstanding the foregoing, each Party may
make confidential information available to its Affiliates and their respective
officers, directors, employees, agents, counsel, existing lenders, accountants,
prospective senior banks, and financial advisors and to such other parties
who
sign a written agreement to be bound by the same confidentiality obligations
as
are set forth herein; provided that the receiving party shall be liable for
any
unauthorized disclosure by such persons. The obligations set forth in this
Section
8.2(b)
do not
apply to information that: (i) at the time of an alleged breach hereof is part
of the public domain (other than as a result of a breach of confidentiality
obligations by the party who is the recipient of the relevant confidential
information); (ii) has been disclosed, at the time of an alleged breach hereof,
by the disclosing party to third parties without restrictions on disclosure;
(iii) has, at the time of an alleged breach hereof, been received by the
receiving party from a third party without breach of a nondisclosure obligation
of the third party; or (iv) was developed independently by the receiving party
without reference to the information provided by the disclosing party. If the
Acquisition is not consummated for any reason whatsoever, each Party shall
deliver to the other Parties all documents, work papers and other material
obtained from the other.
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(c) Prior
to
any disclosure required by Law, regulation or judicial order relating to the
Acquisition or non-public information regarding the Jet Center Entities, the
Beneficial Owners or the Acquiror, the Party required to make such disclosure
shall advise each other Party of such requirement so that the applicable Party
may seek a protective order.
(d) The
trading in the securities of Allied Capital Corporation (NYSE: ALD), an
affiliate of the Acquiror, or Macquarie
Infrastructure Company Trust (NYSE: MIC),
an
affiliate of the legal entity that has agreed to acquire substantially all
of
the issued and outstanding capital stock of the Acquiror’s sole stockholder
pursuant to the MAC/Macquarie SPA, based on confidential information may result
in liability. As a result, none of the Sellers, the Beneficial Owners, the
Jet
Center Entities nor any of their Affiliates shall trade in the securities of
ALD
or MIC until the closing of the Acquisition or the termination of this
Agreement. Each of the Sellers, the Beneficial Owners and the Jet Center
Entities shall notify its directors, officers, employees, agents, or
stockholders who receive confidential information that trading in the securities
of ALD or MIC based on such confidential information could result in
liability.
(e) Unless
otherwise indicated, the obligations of the Parties under this Section shall
survive the Closing and any termination of this Agreement.
8.3 Expenses.
Whether
or not the Acquisition is consummated: (a) the Acquiror shall pay all of
its legal, accounting, due diligence and other out-of-pocket expenses incident
to the Acquisition; and (b) the Seller shall
pay
all of its legal, accounting, investment banking and other out-of-pocket
expenses incident to the Acquisition. The fees associated
with filings under the HSR Act shall be paid by the Parties as set forth in
Section
4.2.
Any
fees
and expenses of the Independent Accounting Firm shall be paid by the Parties
in
accordance with Section
1.7.
The
Seller and the Beneficial Owners shall jointly and severally pay all costs
and
expenses incurred by the Acquiror to enforce its rights under this Agreement
including, without limitation, all reasonable attorneys’ fees and expenses.
8.4 Amendments
and Waivers.
Any
term
of this Agreement may be amended, supplemented or modified, only with the
written consent of the Acquiror and the Seller Representative, and the
observance of any term of this Agreement may be waived (either generally or
in a
particular instance and either retroactively or prospectively), only with the
written consent of the Party against whom the waiver is sought to be enforced.
No waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar),
nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
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8.5 Successors
and Assigns.
This
Agreement shall be binding upon and shall inure to the benefit of the Parties
hereto and their respective successors and permitted assigns. Except
as
provided below, this Agreement and all rights and obligations of the Parties
hereunder may not be assigned or transferred without the prior written consent
of the other Parties hereto. The
Acquiror may: (a) (at any time prior to the Closing) at its sole discretion,
in
whole or in part assign its rights pursuant to this Agreement, including the
right to purchase the Membership Interests, to one or more of its Affiliates;
and (b) designate one or more of its Affiliates to perform its obligations
hereunder (in any or all of which cases, except as provided below, the Acquiror
nonetheless shall remain responsible for the performance of all of its
obligations hereunder). The Parties acknowledge and agree that: (x) a change
in
control of the issued and outstanding capital stock of the Acquiror’s sole
stockholder will occur upon the consummation of the transactions contemplated
by
the MAC/Macquarie SPA; and (y) all rights and obligations of the Acquiror under
this Agreement will be assigned and delegated to Macquarie FBO Holdings LLC
automatically upon the termination, if any, of the MAC/Macquarie SPA, which
assignment and delegation shall be in accordance with the Assignment and
Assumption of San Xxxx Purchase Agreement, in the form attached hereto as
Exhibit
E
(the
“San
Xxxx Assignment Agreement”),
which
agreement Acquiror shall cause to be executed by the Acquiror and Macquarie
FBO
Holdings LLC and delivered to Seller within 10 days following the execution
of
this Agreement. Each of the Seller and the Beneficial Owners consent to: (i)
the
anticipated change in control described in clause (x) above; and (ii) the
assignment and delegation of all of the Acquiror’s rights and obligations under
this Agreement pursuant to the terms and conditions set forth in the San Xxxx
Assignment Agreement, which assignment shall only become effective, as described
in the San Xxxx Assignment Agreement. Effective, upon a change in control as
described in clause (x) above, (A) Macquarie FBO Holdings LLC will guarantee
all
of the obligations of the Acquiror under this Agreement pursuant to the Guaranty
Agreement, the form of which is attached hereto as Exhibit
F
(the
“Macquarie
Guaranty Agreement”),
which
agreement Acquiror shall cause to be executed by Macquarie FBO Holdings LLC
and
delivered to Seller as of the date hereof, but shall only be effective upon
a
change in control as described in clause (x) above; and (B) the Seller and
the
Beneficial Owners shall permit the Acquiror to assign all of its rights and
obligations under this Agreement to one or more of its Affiliates, in which
case
the assignor shall have no further responsibility for the performance of its
obligations hereunder but the assignee’s performance of its obligations
hereunder shall continue to be guaranteed by Macquarie FBO Holdings LLC pursuant
to the Macquarie Guaranty Agreement. Except as provided in this Section 8.5,
nothing
in
this Agreement, express or implied, is intended to confer upon any Person other
than the Parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement.
-
50 -
8.6 Third
Party Beneficiaries.
The
rights created by this Agreement are only for the benefit of the Parties, and
no
Person (other than Parties to this Agreement, the Macquarie Entities, or their
respective successors or permitted assigns) shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained; provided,
however, that the provisions of Article
VI
above
concerning indemnification are intended for the benefit of the parties specified
therein, and their respective legal representatives, successors and
assigns.
8.7 Choice
of Law.
This
Agreement shall be governed by and construed under, and the rights of the
Parties determined in accordance with, the laws of the State of California
(without reference to the choice of law provisions of the State of California)
except with respect to matters of law concerning the internal corporate affairs
of any corporate entity which is a Party to or the subject of this Agreement,
and as to those matters the law of the jurisdiction under which the respective
entity derives its powers shall govern.
8.8 Jurisdiction;
Service of Process.
Any
action or proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the Parties in
the
California Superior Court in Santa Xxxxx County, California, or, if it has
or
can acquire jurisdiction, in the United States District Court located in Santa
Xxxxx County, California, and each of the Parties consents to the jurisdiction
of such courts (and of the appropriate appellate courts) in any such action
or
proceeding and waives any objection to venue laid therein. Process in any action
or proceeding referred to in the preceding sentence may be served on any Party
anywhere in the world.
8.9 Notices.
Unless
otherwise provided, any notice required or permitted under this Agreement shall
be given in writing and shall be deemed effectively given upon the earlier
of:
(a) personal delivery to the Party to be notified; (b) receipt after deposit
with the United States Post Office, by registered or certified mail, postage
prepaid return receipt requested; (c) the next business day after dispatch
via
nationally recognized overnight courier; or (d) confirmation of transmission
by
facsimile or electronic mail (provided such transmission is also
contemporaneously sent via one of the methods specified in clauses (a), (b)
or
(c)), all addressed to the Party to be notified at the address indicated for
such Party below, or at such other address as such Party may designate by five
days’ advance written notice to the other Parties. Notices should be provided in
accordance with this Section at the following addresses:
-
51 -
If to the Acquiror, to: |
With
a copy to (which shall not constitute notice):
|
MAC
Acquisitions LLC
000
Xxxxxxxx Xxxx
Xxxxxxxx
Xxxxxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxxxx X. Xxxxx
|
DLA
Xxxxx US LLP
0000
Xxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx,
XX 00000-0000
Fax:
(000) 000-0000
Attn:
Xxxxxxx X. Xxxxxxx, Esq.
|
Allied
Capital Corporation
0000
Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx,
XX 00000-0000
Fax:
(000) 000-0000
Attn:
Xxxx X. Xxxxxxxx
|
Macquarie
FBO Holdings LLC
000
Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxx Xxxxxx
|
Pillsbury
Xxxxxxxx Xxxx Xxxxxxx LLP
0000
Xxxxxx Xxxx.
Xxxxx
0000
XxXxxx,
XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxx X. Xxxxxx, Esq.
Xxxxx
X. Xxxxxxx, Esq.
|
If to the Seller, to: | With a copy to (which shall not constitute notice): |
Xxxxx
Xxxxxxx,
Seller
Representative
00000
Xxxxx Xxxx
Xxxxxxxx,
XX 00000
Fax:
(000) 000 0000
|
Xxxxxxx
& Xxxxxx, A Law Corporation
The
Xxxxxxx Building
00
X. Xxxxx Xxxxxx
Xxx
Xxxx, XX 00000-0000
Fax:
(000) 000-0000
Attn:
Xxxxxxxx X. Xxxxxxx Xx., Esq.
|
Groom
& Cave, LLP
0000
Xxx Xxxxxxx, Xxxxx 000
Xxx
Xxxx, XX 00000
Fax:
(000)
000-0000
Attn:
Xxxxxxx X. Xxxxx, Esq.
|
-
52 -
If to the Beneficial Owners, to: | With a copy to (which shall not constitute notice): |
ACM
Aviation, Inc.
c/o
The Yellowstone Jetcenter
000
Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx,
Xxxxxxx 00000
Fax:
(000) 000-0000
Attn:
X.X. Xxxxxxxx, Xx.
|
Xxxxxxx
& Xxxxxx, A Law Corporation
The
Xxxxxxx Building
00
X. Xxxxx Xxxxxx
Xxx
Xxxx, XX 00000-0000
Fax:
(000) 000-0000
Attn:
Xxxxxxxx X. Xxxxxxx Xx., Esq.
|
San
Xxxx Jet Center, Inc.
0000
Xxxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
Fax:
(000) 000-0000
Attn:
Xxxxx Xxxxxxx
|
Groom
& Cave, LLP
0000
Xxx Xxxxxxx, Xxxxx 000
Xxx
Xxxx, XX 00000
Fax:
(000)
000-0000
Attn:
Xxxxxxx X. Xxxxx, Esq.
|
8.10 Severability.
If
one or
more provisions of this Agreement shall be held invalid, illegal or
unenforceable, such provision shall, to the extent possible, be modified in
such
manner as to be valid, legal and enforceable but so as to most nearly retain
the
intent of the Parties, and if such modification is not possible, such provision
shall be severed from this Agreement. In either case, the balance of this
Agreement shall be interpreted as if such provision were so modified or
excluded, as the case may be, and shall be enforceable in accordance with its
terms.
8.11 Entire
Agreement.
This
Agreement, together with the exhibits and schedules hereto, constitutes the
entire agreement among the Parties with respect to the subject matter hereof
and
supersedes all prior understandings and agreements, whether written or oral,
and
no Party shall be liable or bound to any other Party in any manner by any
warranties, representations or covenants except as specifically set forth
herein.
8.12 Construction.
The
Parties have participated jointly in the negotiation and drafting of this
Agreement. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the Parties
and no presumption or burden of proof shall arise favoring or disfavoring any
Party by virtue of authorship of any provision of this Agreement.
8.13 Titles
and Subtitles.
The
titles and subtitles used in this Agreement are for convenience only and are
not
to be considered in construing or interpreting this Agreement.
8.14 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
-
53 -
8.15 Release
by Seller, Jet Center Entities and Beneficial Owners.
Upon
the
effective date, if any, of the transactions contemplated by the San Xxxx
Assignment Agreement (and
described in Section 4 thereof),
each of
the Seller, the Jet Center Entities and the Beneficial Owners, on behalf of
itself or himself and all of its or his affiliates, subsidiaries, directors,
officers, employees, successors and assigns (collectively, the “Releasing
Parties”),
hereby absolutely and forever releases, waives, acquits, satisfies and
discharges MAC Acquisitions LLC, a Delaware limited liability company, and
each
and any of its affiliates, subsidiaries, stockholders, directors, officers,
employees, heirs, devisees, legatees, executors, administrators, personal and
legal representatives, assigns and successors in interest (collectively, the
“Released
Parties”)
of and
from any and all past, present or future claims, demands, rights, causes of
action, judgments, executions, damages, liabilities, costs and expenses
(including attorney’s fees and court costs), of every kind and nature
whatsoever, now known or unknown, suspected or unsuspected, in law or in equity
(collectively, “Claims”),
which
the Releasing Parties own or hold, or at any time heretofore has ever had,
owned
or held, or may hereafter have, own or hold, based upon, related to or arising
out of, directly or indirectly, the transactions contemplated by this Agreement
or the ability to consummate the transactions contemplated by this Agreement.
The Releasing Parties further covenant and agree that none of the Releasing
Parties shall ever institute or voluntarily participate in any suit or action,
at law or in equity, against the Released Parties or any of them, by reason
of,
or based upon, any Claim released pursuant to this Section
8.15.
Each of
the Releasing Parties acknowledges that, upon the effective date, if any, of
the
transactions contemplated by the San Xxxx Assignment Agreement (and described
in
Section 4 thereof), its or his sole recourse for any Claims under this Agreement
or the transactions related hereto shall be to Macquarie FBO Holdings LLC and
its permitted successors or assigns. Each Releasing Party hereby agrees to
severally, but not jointly, indemnify and hold harmless the Released Parties
from any suit or action, at law or in equity, against the Released Parties
or
any of them, by reason of, or based upon, any Claim released by such Releasing
Party pursuant to this Section
8.15.
[Signatures
appear on next page]
-
54 -
IN
WITNESS WHEREOF, the Parties hereto have
caused this Agreement to be executed and delivered as of the date first written
above.
WITNESS: |
MAC
Acquisitions LLC
|
|||
By:
Mercury Air Centers, Inc., Sole Stockholder
|
||||
|
By:
|
/s/
Xxxx Xxxxxxxx
|
||
Name: |
Xxxx
Xxxxxxxx
|
|||
Title: |
Director
|
ACM
AVIATION, INC.
|
||||
|
||||
|
By:
|
[ILLEGIBLE]
|
||
Name: |
|
|||
Title: |
|
SAN
XXXX JET CENTER, INC.
|
||||
|
||||
|
By:
|
/s/
Xxxxxx X. Xxxx
|
||
Name: |
Xxxxxx
X. Xxxx
|
|||
Title: |
Director
|
SJJC
AVIATION SERVICES, LLC, a
Delaware
limited liability company
|
||||
|
||||
|
By:
|
|
|
||||
/s/
Xxx Xxxx
|
By:
|
/s/
Xxxxx [ILLEGIBLE]
|
||
Chairman
of the
Board,
|
||||
Authorized
Representative
|
SJJC
AVIATION SERVICES, LLC, a
Delaware
limited liability company
|
||||
|
||||
/s/
Xxxxxx Xxxx
|
By:
|
/s/
Xxx Xxxx
|
||
Xxx
Xxxx
|
||||
Manager
|
JET
CENTER PROPERTY SERVICES, LLC, a
Delaware
limited liability company
|
||||
|
||||
/s/
Xxxxxx Xxxx
|
By:
|
/s/
Xxx Xxxx
|
||
Xxx
Xxxx
|
||||
Manager
|
ACM
AVIATION, LLC, a
Delaware
limited liability company
|
||||
|
||||
/s/
Xxxxxx Xxxx
|
By:
|
/s/
Xxx Xxxx
|
||
Xxx
Xxxx
|
||||
Manager
|
ACM
PROPERTY SERVICES, LLC, a
Delaware
limited liability company
|
||||
|
||||
/s/
Xxxxxx Xxxx
|
By:
|
/s/
Xxx Xxxx
|
||
Xxx
Xxxx
|
||||
Manager
|
SJJC
FBO SERVICES, LLC, a
Delaware
limited liability company
|
||||
|
||||
/s/
Xxxxxx Xxxx
|
By:
|
/s/
Xxx Xxxx
|
||
Xxx
Xxxx
|
||||
Manager
|
WITNESS: | BENEFICIAL OWNERS: | |||
|
||||
/s/
Xxxxx Xxxxxxxxx
|
/s/
Xxxxx Xxxxx
|
|||
Xxxxx Xxxxxxxxx | Xxxxx Xxxxx |
[ILLEGIBLE
|
/s/
Xxxx Xxxxxxx
|
|||
Xxxx Xxxxxxx |
|
/s/
Xxxxx Xxxxxxx
|
|||
Xxxxx Xxxxxxx |
/s/
Xxxx Trevine
|
/s/
Xxx Xxxxxxxx
|
|||
C. Xxxx Trevine | Xxx Xxxxxxxx |
|
/s/
Xxxxx Xxxxxx
|
|||
Xxxxx Xxxxxx |
|
/s/
Xxxx Xxxxxxxx
|
|||
Xxxx Xxxxxxxx |
/s/
Xxx Xxxx
|
/s/
Xxxxx Xxxx
|
|||
Xxxxx Xxxx |
|
/s/
Xxxxx X. Xxxxxx
|
|||
Xxxxx X. Xxxxxx |
|
/s/
Xxxxx Xxxx
|
|||
Xxxxx Xxxx |