SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark one)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended December 31, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to ____________
Commission file number 0-28428
AIRNET SYSTEMS, INC.
______________________________________________________________
(Exact name of registrant as specified in its charter)
Ohio 31-1458309
_______________________________ __________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3939 International Gateway, Columbus, Ohio 43219
______________________________________________________________
(Address of principal executive offices) (Zip Code)
(614) 237-9777
______________________________________________________________
(Registrant's telephone number, including area code)
Not Applicable
______________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes __X__ No _____
Common Shares, $.01 Par Value,
Outstanding as of February 10, 1997 - 12,621,083
Index to Exhibits at page 13
Page 1 of 44 pages.
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AIRNET SYSTEMS, INC.
FORM 10-Q FOR FISCAL QUARTER ENDED DECEMBER 31, 1996
PART I: FINANCIAL INFORMATION
Item 1 Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of December 31, 1996 and
September 30, 1996 ...................................................... 3
Condensed Consolidated Statements of Operations for the three months
ended December 31, 1996 and 1995 ........................................ 4
Condensed Consolidated Statements of Cash Flows for the three months
ended December 31, 1996 and 1995 ........................................ 5
Notes to Condensed Consolidated Financial Statements .................... 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations ....................................... 8
PART II: OTHER INFORMATION
Items 1 through 6 ......................................................... 11
Signatures ................................................................ 12
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
AIRNET SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, September 30,
1996 1996
-------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 9,541,003 $ 11,405,672
Accounts receivable:
Trade, less allowances 5,969,424 6,849,606
Shareholder, affiliates, and employees 207,571 260,220
Spare parts and supplies 5,012,284 5,195,917
Deposits and prepaids 3,682,624 2,979,580
------------ ------------
Total current assets 24,412,906 26,690,995
Net property and equipment 45,573,622 40,721,952
Other assets:
Intangibles, net of accumulated amortization 1,673,861 1,741,091
Other 3,014,900 51,860
Deferred tax asset 4,115,057 5,803,057
------------ ------------
Total assets $ 78,790,346 $ 75,008,955
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,675,586 $ 3,686,733
Salaries and related liabilities 1,647,296 1,223,820
Accrued expenses 443,453 553,359
Deferred taxes 208,995 208,995
------------ ------------
Total current liabilities 4,975,330 5,672,907
Deferred tax liability 3,397,062 3,397,062
Shareholders' equity:
Preferred stock, $.01 par value; 10,000,000 shares
authorized; and no shares issued and outstanding -- --
Common stock, $.01 par value; 40,000,000 shares
authorized; and 12,475,128 and 12,317,835 shares
issued and outstanding at December 31, 1996
and September 30, 1996, respectively 124,751 123,178
Additional paid-in-capital 77,874,855 75,929,927
Retained earnings (7,581,652) (10,114,119)
------------ ------------
Total shareholders' equity 70,417,954 65,938,986
------------ ------------
Total liabilities and shareholders' equity $ 78,790,346 $ 75,008,955
============ ============
See notes to condensed consolidated financial statements
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AIRNET SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three months ended
December 31,
-----------------------------
1996 1995
<S> <C> <C>
Revenues
Air transportation $19,392,498 $17,090,062
Fixed base operations 366,432 251,169
----------- -----------
Total revenues 19,758,930 17,341,231
Costs and expenses
Air transportation 13,657,494 12,051,022
Fixed base operations 309,352 209,315
Selling, general and administrative 1,571,617 2,891,452
----------- -----------
Total costs and expenses 15,538,463 15,151,789
----------- -----------
Income from operations 4,220,467 2,189,442
Interest expense -- 372,326
----------- -----------
Income before income taxes 4,220,467 1,817,116
Provision for income taxes (note 4) 1,688,000 --
----------- -----------
Net income $ 2,532,467 $ 1,817,116
=========== ===========
Net income per common share (note 5) $ 0.20 --
===========
Weighted average common shares outstanding 12,435,805 --
Pro forma information (note 5):
Historical income before income taxes $ 1,817,116
Pro forma adjustments other than income taxes 1,487,140
-----------
Pro forma income before income taxes 3,304,256
Pro forma tax provision on pro forma income (note 4) 1,321,702
-----------
Pro forma net income $ 1,982,554
===========
Pro forma net income per common share $ 0.23
===========
Weighted average common shares outstanding 8,631,359
See notes to condensed consolidated financial statements
</TABLE>
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AIRNET SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three months ended
December 31,
------------------------------
1996 1995
-------- --------
<S> <C> <C>
Operating activities
Net income $ 2,532,467 $ 1,817,116
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,276,041 2,142,519
Amortization of intangibles 67,230 108,975
Deferred taxes 1,688,000 --
Provision for losses (gains) on accounts receivable 9,000 (9,000)
Deferred compensation -- 42,008
Loss (gain) on disposition of assets (187,675) 2,635
Change in operating assets and liabilities:
Accounts receivable 924,131 (457,016)
Spare parts and supplies 183,633 (250,496)
Prepaid expenses (703,044) (408,530)
Accounts payable (1,215,467) 1,909,080
Accrued expenses (109,906) 759,380
Salaries and related liabilities 423,476 (524,806)
Other, net (93,000) --
------------ ------------
Net cash provided by operating activities 5,794,886 5,131,865
Investing activities
Acquisition of Float Control, Inc., net
of cash acquired (Note 3) (719,519) --
Purchase of property and equipment (9,170,036) (3,455,779)
Proceeds from the sale of property and equipment 2,230,000 --
------------ ------------
Net cash used in investing activities (7,659,555) (3,455,779)
Financing activities
Proceeds from shareholder notes receivable -- 40,588
Repayment of borrowings under the revolving
credit facility -- (1,150,000)
Repayment of long-term debt -- (2,126,569)
Proceeds from the issuance of long-term debt -- 1,748,000
Distributions to shareholders -- (423,571)
------------ ------------
Net cash used in financing activities -- (1,911,552)
------------ ------------
Net decrease in cash (1,864,669) (235,466)
Cash at beginning of period 11,405,672 238,394
------------ ------------
Cash at end of period $ 9,541,003 $ 2,928
============ ============
See notes to condensed consolidated financial statements
</TABLE>
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AIRNET SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
AirNet Systems, Inc. (the "Company") operates a fully integrated national air
transportation network which provides delivery service for time-critical
shipments for customers in the U.S. banking industry and other industries. The
Company also offers retail aviation fuel sales and related ground services for
customers in Columbus, Ohio.
The accompanying condensed consolidated financial statements (unaudited) include
the accounts of AirNet Systems, Inc. and its subsidiaries. These financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions of Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all
information and footnotes required by generally accepted accounting principles
for complete financial statements. These financial statements should be read in
conjunction with the fiscal year ended September 30, 1996 consolidated financial
statements of AirNet Systems, Inc. contained in the Annual Report on Form 10-K
(File No. 0-28428) for additional disclosures including a summary of the
Company's accounting policies, which have not significantly changed.
The financial information included herein reflects all adjustments (consisting
of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the results of interim periods. Operating
results for the three months ended December 31, 1996 are not necessarily
indicative of the results to be expected for the year ending September 30, 1997.
The preparation of the condensed consolidated financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes thereto. Actual results could differ from
those estimates.
2. Initial Public Offering
On May 31, 1996, the Company completed its initial public offering (the
"Offering") which raised approximately $82.7 million, net of expenses. Proceeds
were used to repay outstanding debt, repurchase an outstanding warrant and make
distributions to former shareholders and to provide working capital to finance
future acquisitions and internal growth.
3. Acquisitions
Effective October 24, 1997, the Company acquired Float Control, Inc. ("Float
Control") through the merger of a wholly-owned subsidiary of the Company into
Float Control. Float Control was owned by certain executive officers of the
Company and two other individuals and holds a 19% equity interest in The Check
Exchange System Co. (the "CHEXS Partnership"). The CHEXS Partnership operates a
national net settlement switch utilized by members of the National Clearinghouse
Association pursuant to which such member banks are able to settle transactions
with other members rather than maintaining individual accounts with each member.
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Pursuant to the Plan and Agreement of Reorganization and Plan and Agreement of
Merger, each effective as of September 30, 1996, the Company issued 157,293
Common Shares and paid approximately $725,000. The acquisition was accounted for
under the purchase method of accounting.
Subsequent to December 31, 1996, the Company closed the acquisition of Express
Convenience Center, Inc. d/b/a ECC Worldwide Services in exchange for 145,955
Common Shares.
4. Income Taxes and Pro forma Income Taxes
Prior to the Offering, the Company's income was taxed under the provisions of
Subchapter S of the Internal Revenue Code of 1986, which provides that in lieu
of corporate income taxes, the shareholders of the S Corporation are taxed on
their proportionate share of the Company's taxable income. Therefore, no
provision for federal and certain state income taxes has been included in net
income for the three months ended December 31, 1995. However, the pro forma
section of the statement of operations does include an estimate of taxes as if
the Company were a C Corporation during the three months ended December 31,
1995.
Upon completion of the Offering, the Company ceased to qualify as an S
Corporation and was subject to corporate income taxes. The Company has recorded
tax expense of $1,688,000 related to its operations for the three months ended
December 31, 1996. Differences arising between the provision for income taxes
and the amount computed by applying the statutory federal income tax rate to
income before income taxes for the three months ended December 31, 1996 relate
primarily to the differences between using the accrual basis for financial
reporting purposes and the cash basis for income tax reporting purposes and the
use of accelerated depreciation rates on property and equipment for tax
purposes.
5. Pro Forma Information
The pro forma statement of operations for the three months ended December 31,
1995 presents the pro forma effects on the historical financial information
reflecting certain Offering related transactions as if they had occurred on
October 1, 1995. The following is a summary of such pro forma adjustments:
Three months
ended
December 31,
1995
---------------
The elimination of interest expense related to the debt $ 372,327
repaid
The elimination of payments under the Wright Agreement 320,108
The elimination of amortization expense related to the
covenant not to compete asset write-off 63,430
The elimination of deferred compensation expense for 56,059
certain key employees
A reduction of compensation expense for executive
officers based on new employment arrangements 36,688
The elimination of employee stock purchase agreement
expense for certain key employees 638,528
--------------
Total pro forma adjustments other than income taxes $1,487,140
==============
Pro forma earnings per share for the three months ended December 31, 1995 is
based on the weighted average number of Common Shares outstanding during the
period, including the effect of the 2,650,764 Common Shares subject to certain
warrants which were outstanding during the three months ended December 31, 1995.
One of the warrants was subsequently purchased by the Company and a second
warrant was exercised in conjunction with the Offering.
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AIRNET SYSTEMS, INC
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Statement
Certain matters discussed in this Quarterly Report on Form 10-Q, including, but
not limited to, information regarding future economic performance and plans and
objectives of the Company's management are forward looking statements which
involve risks and uncertainties. The following risks and uncertainties, in
addition to the other risks previously disclosed in the Company's filings with
the Securities and Exchange Commission and press releases, could cause actual
results to differ materially from those contemplated in any such forward looking
statement: potential regulatory changes by the Federal Aviation Administration
or the Federal Reserve which could increase the level of regulation of the
Company's business; adverse weather conditions; technological advances and
increases in the use of electronic funds transfers, and other economic,
competitive and governmental factors affecting the Company's markets, prices and
other facets of its operations.
Results of Operations
THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1995
Revenues were $19.8 million for the three months ended December 31, 1996, an
increase of $2.4 million, or 13.9%, over the same period of fiscal 1996.
Revenues from check delivery increased $1.9 million, or 12.9%. Of the increase,
$0.6 million is attributable to price increases effective January 1, 1996 and
$0.7 million can be attributed to the Midway Aviation acquisition. The balance
is due to increased business activity and increases in total weight shipped.
Small package delivery revenues increased $0.4 million, or 17.3%, due primarily
to increased activity from both new and existing customers.
Total costs and expenses were $15.5 million for the three months ended December
31, 1996, an increase of $0.4 million, or 2.6%, over the same period in fiscal
1996, resulting in income from operations of $4.2 million for the three months
ended December 31, 1996 compared to $2.2 million for the same period of fiscal
1996. Air transportation expenses were up $1.6 million, or 13.3%, while selling,
general and administrative expenses decreased $1.3 million, or 45.6%, for the
three month period.
Air transportation costs increased due, in part, to the addition of air and
ground personnel required to service a larger fleet of aircraft and the
increased volume of activity. In addition, depreciation expense increased $0.2
million, or 9.8%, due to the increased size of the Company's fleet, which grew
from 67 owned aircraft at December 31, 1995 to 88 owned aircraft at December 31,
1996. A rise in fuel prices coupled with increased flight hours contributed to a
$0.4 million, or 20.7%, increase in aircraft fuel expense. The Company has begun
to pass on the rise in fuel prices to its customers through its fuel rebate/
surcharge program. The increased fleet size and flight hours also resulted in a
$0.2 million, or 13.5%, increase in maintenance expense. The fleet growth and
additional vehicles required to support the increased volumes resulted in
increased insurance costs of $0.1 million, or 22.6%.
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Selling, general and administrative expenses decreased primarily due to the
termination of stock purchase agreements (which resulted in a $0.7 million
decrease) and the termination of a covenant not to compete (which resulted in a
$0.4 million decrease). All were effective in conjunction with the Company's
initial public offering (the "Offering") in May 1996. The stock purchase
agreements were with certain executive officers and had been tied to
appreciation in the book value of the Common Shares of the Company. The covenant
not to compete required payments based on the Company's cash flow and debt to
equity ratio.
Interest costs decreased $0.4 million as a result of the repayment of all
outstanding debt in June 1996 with proceeds from the Offering.
The Company operated as an S Corporation under the Internal Revenue Code from
1988 until it elected to terminate its S Corporation status in conjunction with
the Offering. Under its Subchapter S election, shareholders of the Company were
taxed directly on the Company's income and, consequently, the Company was not
subject to federal and certain state income taxes at the corporate level for the
three months ended December 31, 1995. The Company recorded net deferred tax
expense of $1.7 million for the three months ended December 31, 1996 related to
the income tax expense on income for the period.
Pro forma information reflects the effects of certain Offering related
transactions on the statement of operations for the three months ended December
31, 1995 as if they occurred on October 1, 1995. See Note 5 to the Condensed
Consolidated Financial Statements included herein.
Adjusted pro forma net income per share was $0.16 for the three months ended
December 31, 1995 with the assumption that the Common Shares issued in the
Offering were outstanding for the entire period.
Liquidity and Capital Resources
CASH FLOW FROM OPERATING ACTIVITIES. Net cash flow from operating activities was
$5.8 million for the three months ended December 31, 1996, compared to $5.1
million for the same period in fiscal 1996. The increase in fiscal 1997 cash
flow is primarily the result of cash generated through operations. Net revenues
increased 13.9% over first quarter fiscal 1996 levels, while operating expenses
increased only 2.6%. To support its expanding aircraft fleet, the Company
acquired spare parts inventory and a spare jet engine from a former Learjet
service center for approximately $0.7 million.
CURRENT CREDIT ARRANGEMENTS. The Company maintains a credit agreement with a
bank that provides a $50.0 million, five year, unsecured revolving credit
facility. The credit agreement limits the availability of funds to certain
specified percentages of accounts receivable, inventory and the wholesale value
of aircraft and equipment. In addition, the agreement requires the maintenance
of certain minimum net worth and cash flow levels, imposes certain limitations
on payments of dividends, restricts the amount of additional debt and requires
prior bank approval for certain acquisitions. There were no borrowings under the
credit agreement at December 31, 1996.
INVESTING ACTIVITIES. Capital expenditures totaled $9.2 million for the three
months ended December 31, 1996, compared to $3.5 million for the same period in
fiscal 1996. Approximately $6.2 million was incurred in connection with the
purchase of six (6) new aircraft and the remainder was incurred primarily for
flight equipment and delivery vehicles. The Company anticipates it will have
approximately $20.0 million in total capital expenditures in fiscal 1997,
excluding any acquisitions of new businesses. The Company anticipates it will
continue to acquire aircraft and flight equipment as necessary to maintain
growth and continue offering quality service to its customers. The Company is
also currently considering an expansion of its facilities. However, no
definitive arrangements or agreements have been reached.
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On October 24, 1996, the Company acquired all of the outstanding shares of Float
Control Inc. as a result of the merger of a wholly-owned subsidiary of the
Company into Float Control. In connection with the acquisition, the Company
issued 157,293 Common Shares of the Company and paid approximately $0.7 million
in cash. As a result of this acquisition, the Company holds a 19% interest in
The Check Exchange System Co. (CHEXS Partnership). The CHEXS Partnership
operates a national net settlement switch utilized by members of the National
Clearinghouse Association pursuant to which such member banks are able to settle
transactions with other members rather than maintaining individual accounts with
each member.
Subsequent to December 31, 1996, the Company closed the acquisition of Express
Convenience Center, Inc. d/b/a ECC Worldwide Services, a small package air
freight forwarder, in exchange for 145,955 Common Shares. The acquisition is
expected to add up to 1,800 new small package customers to the Company's air
transportation system.
The Company anticipates that operating cash and capital expenditure requirements
will continue to be funded by cash flow from operations, cash on hand and bank
borrowings.
Seasonality and Variability in Quarterly Results
The Company's operations historically have been somewhat seasonal and somewhat
dependent on the number of banking holidays falling during the week. Because
financial institutions are currently the Company's principal customers, the
Company's air system is scheduled around the needs of financial institution
customers. When financial institutions are closed, there is no need for the
Company to operate a full system. The Company's first fiscal quarter is often
the most impacted by bank holidays (including Thanksgiving and Christmas)
recognized by its primary customers. When these holidays fall on Monday through
Thursday, the Company's revenue and net income are adversely affected. For
example, the quarter ended December 31, 1996 contained only 47 days of full
operation for the Company, while the quarter ended December 31, 1995 contained
49 days. The Company's annual results fluctuate as well.
Operating results are also affected by the weather. The Company generally
experiences higher maintenance costs during its second quarter. Winter weather
requires additional costs for de-icing, hangar rental and other aircraft
services. The Company's cash flows are also influenced by the budget cycles of
its primary customers. Many financial institutions have calendar year budget
cycles and desire to pay for December services prior to year end. This results
in increased cash flows for the Company's first fiscal quarter but decreased
cash flows in January and February.
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AIRNET SYSTEMS, INC.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. Not Applicable
Item 2. Changes in Securities.
On October 24, 1996, the Company acquired Float Control, Inc. through a
merger of Float Control, Inc. into a wholly-owned subsidiary of the
Company. In connection with this transaction, the Company issued
157,293 Common Shares to former shareholders of Float Control, Inc. The
Common Shares issued were valued at $12.375 per share, or $1,946,501 in
the aggregate. The Common Shares issued to former Float Control, Inc.
shareholders were not registered under the Securities Act of 1933 in
reliance upon the exemption from registration provided by Section 4(6)
for sales to accredited investors.
Item 3. Defaults Upon Senior Securities. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders. Not Applicable
Item 5. Other Information. Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits:
EXHIBIT NO. DESCRIPTION
___________ _____________
Exhibit 2(a) Plan and Agreement of Reorganization, dated September
30, 1996, between AirNet Systems, Inc. and Float
Control, Inc. See pages 14-34
Exhibit 2(b) Plan and Agreement of Merger, dated September 30,
1996, among AirNet Systems, Inc., AirNet Merger
Corporation and Float Control, Inc. See pages 35-43
Exhibit 27 Financial Data Schedule. See page 44
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three months ended
December 31, 1996.
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AIRNET SYSTEMS, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 13, 1997 By: /s/ Eric P. Roy
___________________________________
Eric P. Roy,
Executive Vice President
(Duly Authorized Officer)
(Principal Financial Officer)
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AIRNET SYSTEMS, INC.
INDEX TO EXHIBITS
Exhibit No. Description Page
___________ ___________ ____
2(a) Plan and Agreement of Reorganization, dated 14-34
September 30, 1996, between AirNet Systems,
Inc. and Float Control, Inc.
2(b) Plan and Agreement of Merger, dated September 35-43
30, 1996, among AirNet Systems, Inc., AirNet
Merger Corporation and Float Control, Inc.
27 Financial Data Schedule 44
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Exhibit 2(a)
Plan and Agreement of Reorganization,
dated September 30, 1996,
between AirNet Systems, Inc.
and Float Control, Inc.
________________________
PLAN AND AGREEMENT OF REORGANIZATION
THIS PLAN AND AGREEMENT OF REORGANIZATION (the "Plan"), entered into as of
September 30, 1996, by and between AirNet Systems, Inc., an Ohio corporation
("AirNet"), and Float Control, Inc., a Michigan corporation ("Float Control).
In consideration of the premises and the respective representations,
warranties, covenants, agreements and conditions hereinafter set forth, AirNet
and Float Control, intending to be legally bound hereby, agree as follows:
ARTICLE I
AGREEMENTS WITH RESPECT TO THE MERGER
1.1 MERGER. (a) Subject to the terms and conditions of this Plan and
subject to and in accordance with the Plan and Agreement of Merger among Float
Control, AirNet and AirNet Merger Corporation ("Merger Corp."), a subsidiary of
AirNet to be formed in connection with the transactions contemplated hereby, a
copy of the form of which Plan and Agreement of Merger is attached hereto as
Exhibit A (the "Merger Agreement"), at the Effective Time (as defined in Section
2.2 hereof), Merger Corp. shall be merged with and into Float Control in
accordance with applicable Michigan and Ohio laws and Float Control shall be the
surviving corporation (the "Surviving Corporation"). Each common share, without
par value, of Merger Corp. which is issued and outstanding immediately prior to
the Effective Time shall, by operation of law, become an issued and outstanding
common share, $1.00 par value per share, of the Surviving Corporation.
(b) The Merger Agreement provides for the terms and conditions of the
Merger, the mode of carrying the same into effect, and the manner of converting
the outstanding common shares, $1.00 par value per share (the "Float Control
Shares"), of Float Control into common shares, $0.01 par value per share (the
"AirNet Common Shares"), of AirNet. As more specifically provided by the Merger
Agreement, each of the Float Control Shares which is outstanding immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of the holder thereof, be cancelled and converted into the
right to receive 76.7677 AirNet Common Shares, for an aggregate of 230,299
AirNet Common Shares to be issued in the Merger. No fractional AirNet Common
Shares shall be issued in the Merger to holders of Float Control Shares. Each
holder of Float Control Shares who would otherwise have been entitled to a
fraction of an AirNet Common Share shall receive, in lieu thereof, an amount of
cash (without interest) determined by multiplying the fractional share interest
to which such holder would be entitled by $12.375. The number of AirNet Common
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Shares to be issued pursuant to the Merger has been determined by dividing $2.85
million by the closing price for the AirNet Common Shares, as reported on The
Nasdaq Stock Market on the day before the intention of AirNet to acquire Float
Control was publicly announced.
1.2 FUTURE ACTION. Each of AirNet, Merger Corp. and Float Control shall
take all such actions and execute all such documents, agreements and instruments
which may be necessary or appropriate to satisfy all legal requirements of the
States of Ohio and Michigan, so that the Merger Agreement and the Merger will
become effective on the terms and conditions set forth in this Plan and in the
Merger Agreement.
ARTICLE II
CLOSING
2.1 CLOSING DATE AND PLACE. The closing of the transactions contemplated by
this Plan and the Merger Agreement (the "Closing") shall take place at the
offices of Vorys, Sater, Seymour and Pease, 52 East Gay Street, Columbus, Ohio
43215, on October 18, 1996, commencing at 10:00 a.m., local time, or at such
other place and time and on such other date as AirNet and Float Control may
agree.
2.2 EFFECTIVE TIME. The Merger shall become effective on the date and at
the time of filing of a Certificate of Merger with the Ohio Secretary of State
in accordance with Section 1701.81 of the Ohio Revised Code (or such later date
and time as may be specified in the Certificate of Merger so filed). The filing
of such Certificate of Merger with the Ohio Secretary of State shall be preceded
by the filing of a Certificate of Merger with the Michigan Department of
Commerce in the form required by Section 450.1707 of the Michigan Business
Corporation Act. The term "Effective Time" shall mean the date and time when the
Merger becomes effective.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FLOAT CONTROL
3.1 In order to induce AirNet to enter into this Plan and to perform its
obligations hereunder, Float Control hereby warrants and represents to AirNet
that:
(a) CORPORATE STATUS. Float Control is a corporation duly organized,
validly existing and in good standing under the laws of the State of Michigan,
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and is in good standing as a foreign corporation in each jurisdiction where the
properties owned, leased or operated, or the business conducted, by it require
such qualification. SCHEDULE 3.1(A)(1) lists each jurisdiction in which Float
Control is qualified as a foreign corporation. Float Control has the full
corporate power and authority to own its property, to carry on its business as
presently conducted and, subject to approval of this Plan and the Merger
Agreement by the shareholders of Float Control, to enter into and perform the
transactions contemplated in this Plan and the Merger Agreement. SCHEDULE
3.1(A)(2) sets forth true and complete copies of the Restated Articles of
Incorporation and Amended and Restated Bylaws of Float Control, in each case as
amended to date. The minute books of Float Control contain complete and accurate
records of all meetings and other corporate actions of Float Control's
shareholders, Board of Directors and committees of directors.
(b) CAPITALIZATION. The authorized capital stock of Float Control consists
solely of 50,000 common shares, $1.00 par value per share, of which 3,000 common
shares are issued and outstanding (the "Float Control Shares"). The record and
beneficial owners of the Float Control Shares and the number of Float Control
Shares held by each such owner are as follows:
Gerald G. Mercer 1,500 Float Control Shares
Donald W. Wright 891 Float Control Shares
Glenn M. Miller 186 Float Control Shares
Charles A. Renusch 129 Float Control Shares
Eric P. Roy 78 Float Control Shares
Jeffrey Wright 60 Float Control Shares
Guy S. King 45 Float Control Shares
Lincoln L. Rutter 45 Float Control Shares
Kendall W. Wright 45 Float Control Shares
William R. Sumser 21 Float Control Shares
To the best knowledge of Float Control, Gerald G. Mercer, Glenn M. Miller,
Charles A. Renusch, Eric P. Roy, Guy S. King, Lincoln L. Rutter, Kendall W.
Wright and William R. Sumser are residents of the State of Ohio; and Donald W.
Wright and Jeffrey Wright are residents of either the State of Florida or the
State of Ohio.
All of the Float Control Shares are validly issued, fully paid and
non-assessable and have been sold in compliance with all applicable federal and
state securities laws, and none of the Float Control Shares have been issued in
violation of the preemptive rights of any person. Float Control has no
commitment or obligation to issue, deliver or sell, under any warrant,
subscription, option, stock purchase plan, stock incentive plan, conversion
right or otherwise, or to purchase, redeem or otherwise acquire, any of its
capital stock. Other than the Shareholders' Agreement, made as of
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______________, 1992, among the Shareholders and Float Control (the "1992
Shareholders' Agreement"), to the best of Float Control's knowledge, no Float
Control Shareholder is a party to any option agreement, voting trust agreement,
proxy arrangement, shareholders' agreement or other agreement, commitment or
understanding of any character relating to any issued or unissued shares of the
capital stock of Float Control. There are no outstanding or authorized stock
appreciation rights, phantom stock, profit participation or similar rights with
respect to Float Control.
(c) CORPORATE AUTHORITY. All proceedings by the Board of Directors of Float
Control necessary to authorize the execution, delivery and performance of this
Plan and the Merger Agreement by Float Control and the consummation of the
transactions contemplated hereby and thereby have been duly and validly taken.
Except for the approval of this Plan and the Merger Agreement by the
shareholders of Float Control, no other corporate proceedings on the part of
Float Control are necessary to consummate the transactions so contemplated. This
Plan has been validly executed by a duly authorized officer of Float Control and
constitutes a valid and binding agreement of Float Control enforceable against
it in accordance with its terms. Upon delivery of the Merger Agreement by Float
Control to AirNet, the Merger Agreement will have been validly executed by duly
authorized officers of Float Control and will constitute a valid and binding
agreement of Float Control enforceable against it in accordance with its terms.
(d) TAXES. Within the times and in the manner prescribed by law, Float
Control has filed all tax returns and reports required by applicable federal,
state and local laws to be filed by it. All such returns and reports are true,
complete and correct in all material respects. True copies of all such returns
and reports have been made available to AirNet. All taxes, interest, penalties
and assessments shown by such reports and returns to be due or claimed to be due
have been paid. No taxing authority has proposed any additional taxes, licenses,
assessments, fees, interest or penalties in respect of Float Control. Float
Control has not been audited by any taxing authority. There is no issue relating
to any such tax and information returns and reports that, if determined
adversely to Float Control, could result in the assertion of any deficiency for
any tax, fee, interest or penalty in connection therewith, and Float Control
knows of no facts or circumstances which could give rise to any such issue.
Float Control is not a party to any tax sharing, tax indemnity or tax allocation
agreement. Float Control has not executed an extension or waiver of any statute
of limitations on the assessment or collection of any tax due that is currently
in effect. For purposes of this Subsection 3.1(d), the terms "taxes" shall refer
to all federal, state, local and foreign taxes, assessments, penalties,
deficiencies, fees and other governmental charges and impositions (including
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without limitation all income tax, unemployment compensation, social security,
payroll, sales and use, excise, property franchise, ad valorem and any other tax
or similar governmental charge of imposition).
(e) PROPERTY AND TITLE. Float Control has no material property other than
the 19% interest which Float Control holds as a general partner of The Check
Exchange System Co., an Ohio general partnership ("Check Exchange"), the 19%
interest which Float Control holds in National Returns Clearinghouse, Ltd.
("Returns"), the interest of Float Control in the contracts identified on
SCHEDULE 3.1(M), the intellectual property identified on SCHEDULE 3.1(O) and a
bank account with The Huntington National Bank, Columbus, Ohio. Float Control is
in rightful possession of, and has good title to, all of its property and
assets, free and clear of all security interests, liens, pledges, options,
hypothecations, charges or interests of any persons whatsoever. All of the
property of Float Control is adequate to continue to conduct Float Control's
business as it is presently being conducted. Float Control does not own, and
since its incorporation has not owned, any personal property or any real
property or conducted any business other than in its capacity as a general
partner of Check Exchange and as a result of its interest in Returns. The
shareholders of Float Control hold no ownership interest in any of the assets
used by Float Control in its business.
(f) LEGAL PROCEEDINGS. There are no actions, suits, proceedings, claims or
investigations threatened or pending in any court, before any governmental
agency or instrumentality or in any arbitration proceeding (i) against, by or
affecting Float Control or its business, prospects, condition (financial or
otherwise) or any of its assets; or (ii) against, by or affecting Float Control
which would prevent the consummation of this Plan or of any of the transactions
contemplated hereby or declare the same to be unlawful or cause the rescission
thereof. Float Control is not a party to any judgment, order, writ, injunction
or decree of any court or governmental entity.
(g) NO CONFLICT. Neither the execution and delivery of this Plan and the
Merger Agreement by Float Control nor the consummation of the transactions
contemplated by this Plan or the Merger Agreement will (i) violate any provision
of or result in the breach of or default (or with notice or lapse of time would
result in a default) under: (a) any provision of any federal, state or local
law, regulation, ordinance, order, rule or administrative ruling of any
governmental authority or instrumentality applicable to Float Control or any of
its properties; (b) the Restated Articles of Incorporation or the Amended and
Restated Bylaws of Float Control; (c) any agreement, instrument, arrangement or
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understanding to which Float Control is a party or by which it may be bound; or
(d) any order, judgment, writ, injunction or decree of any court, arbitration
panel, or any governmental agency or instrumentality applicable to Float
Control; (ii) result in the creation or acceleration of any security interest,
claim, lien, charge or encumbrance of any kind whatsoever upon any of the assets
of Float Control; or (iii) in any way affect or violate the terms or conditions
of, or result in the cancellation, modification, revocation or suspension of,
any license, approval, certificate, permit or authorization held by Float
Control.
(h) SUBSIDIARIES. Other than the 19% interest which Float Control holds as
a general partner of Check Exchange and the 19% interest which Float Control
holds in Returns, Float Control does not own, directly or indirectly, any shares
of any corporation or any interest or investment in any partnership, business
trust or other unincorporated entity.
(i) BROKERS, FINDERS, AND OTHERS. There are no fees or commissions of any
sort whatsoever claimed by, or payable by Float Control to, any broker, finder,
intermediary or any other.
(j) EMPLOYEES. Float Control has no employees.
(k) INSURANCE. Float Control maintains no policies of insurance.
(l) CONSENTS. No consent, approval, authorization of or filing with any
governmental authority or any third party (other than the shareholders of Float
Control) is required on the part of Float Control in connection with the
execution or delivery of this Plan or the Merger Agreement or the consummation
of the transactions contemplated hereby or thereby, which has not been obtained.
(m) CONTRACTS.
(i) SCHEDULE 3.1(M) sets forth a list, identifying by dates and parties, of
all material contracts, agreements, obligations and commitments (the
"Contracts") to which Float Control is a party or by which it is bound. True
copies of all of the Contracts have been made available to AirNet. Float Control
has substantially performed all obligations required to be performed by it to
date under all of the Contracts and is not in default under any of the
Contracts, and neither Float Control nor, to the best of Float Control's
knowledge, any other party is in default under any of the Contracts.
(ii) RESTRICTIONS ON CONDUCT OF BUSINESS. Float Control is not restricted
by commitment (including, without limitation, any non-competition agreement or
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covenant) from carrying on its business as carried on at the date hereof.
(n) TITLE TO THE SHARES. The Float Control Shareholders are the record
owners of, and, to the best of Float Control's knowledge, have good and
marketable title to, the Float Control Shares, free and clear of any and all
covenants, conditions, restrictions, security agreements, equities, voting trust
arrangements, liens, charges, encumbrances, options and adverse claims or rights
("Encumbrances") other than the restrictions set forth in the 1992 Shareholders'
Agreement. Upon consummation of the Merger, AirNet will acquire good and
marketable title to the all of the issued and outstanding shares of capital
stock of Float Control, of any class, free and clear of any and all
Encumbrances.
(o) INTELLECTUAL PROPERTY. SCHEDULE 3.1(O) sets forth a list of any and all
interests in any United States or foreign patent, patent application, invention
disclosure, trade secret, trademark, trademark registration, trade name,
copyright, copyright registration or application for any of the foregoing owned
or held by Float Control. To the best of Float Control's knowledge, the conduct
of business by Float Control does not conflict with or infringe upon any
patents, trademarks, trade secrets, copyrights or trade names of others. Float
Control is not aware that the conduct of any third party conflicts with or
infringes upon any patents, trademarks, trade secrets, copyrights or trade names
of Float Control.
(p) COMPLIANCE WITH LAW. No licenses, franchises, permits and
authorizations are necessary for the lawful conduct of Float Control's business.
The business of Float Control is being conducted in all material respects in
compliance with all applicable statutes, laws, ordinances, rules and regulations
of any federal, state, local or foreign governmental bodies, agencies and
subdivisions having, asserting or claiming jurisdiction over it or over any part
of its operations, and Float Control has not received any notice within three
(3) years of the date hereof asserting or alleging noncompliance with or
violation of any such statutes, laws, ordinances, rules and regulations.
(q) DISCLOSURE. No representation or warranty by Float Control contained in
this Plan, and no statement contained in any certificate or other document
(including any Schedule) furnished by Float Control to AirNet pursuant hereto
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein and herein not
misleading, in the light of the circumstances under which made.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF AIRNET
4.1 In order to induce Float Control to enter into this Plan and to perform
its obligations hereunder, AirNet hereby warrants and represents to Float
Control that:
(a) CORPORATE STATUS. AirNet is a corporation duly organized, validly
existing and in good standing under the laws of the State of Ohio, and is in
good standing as a foreign corporation in each jurisdiction where the properties
owned, leased or operated, or the business conducted, by it require such
qualification. AirNet has the full corporate power and authority to own its
property, to carry on its business as presently conducted and to enter into and
perform the transactions contemplated in this Plan and the Merger Agreement.
(b) CORPORATE PROCEEDINGS. All corporate proceedings of AirNet necessary to
authorize the execution, delivery and performance of this Plan and the Merger
Agreement by AirNet and the consummation of the transactions contemplated hereby
and thereby, including the issuance of the AirNet Common Shares to the
shareholders of Float Control, have been duly and validly taken. This Plan has
been validly executed by a duly authorized officer of AirNet and constitutes a
valid and binding agreement of AirNet enforceable against it in accordance with
its terms. Upon delivery of the Merger Agreement by AirNet to Float Control, the
Merger Agreement will have been validly executed by duly authorized officers of
AirNet and Merger Corp. and will constitute a valid and binding agreement of
AirNet and of Merger Corp. enforceable against each of them in accordance with
its terms.
(c) LEGAL PROCEEDINGS. There are no actions, suits, proceedings, claims or
investigations threatened or pending in any court, before any governmental
agency or instrumentality or in any arbitration proceeding against, by or
affecting AirNet which would prevent the consummation of this Plan or of any of
the transactions contemplated hereby or declare the same to be unlawful or cause
the rescission thereof.
(d) NO CONFLICT. Neither the execution and delivery of this Plan and the
Merger Agreement by AirNet nor the consummation of the transactions contemplated
by this Plan or the Merger Agreement will (i) violate any provision of or result
in the breach of or default (or with notice or lapse of time would result in a
default) under: (a) any provision of any federal, state or local law,
regulation, ordinance, order, rule or administrative ruling of any governmental
authority or instrumentality applicable to AirNet or any of its properties; (b)
the Amended Articles or the Regulations of AirNet; (c) any agreement,
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instrument, arrangement or understanding to which AirNet is a party or by which
it may be bound; or (d) any order, judgment, writ, injunction or decree of any
court, arbitration panel, or any governmental agency or instrumentality
applicable to AirNet; (ii) result in the creation or acceleration of any
security interest, claim, lien, charge or encumbrance of any kind whatsoever
upon any of the assets of AirNet; or (iii) in any way affect or violate the
terms or conditions of, or result in the cancellation, modification, revocation
or suspension of, any license, approval, certificate, permit or authorization
held by AirNet.
(e) FILING OF REPORTS. Since May 29, 1996, the date on which the common
shares, $0.01 par value, of AirNet became registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), AirNet has filed with the
Securities and Exchange Commission (the "SEC") all documents and reports
(including all amendments, exhibits and schedules thereto and documents
incorporated by reference therein) required to be filed by AirNet under the
Exchange Act and the Securities Act of 1933, as amended (the "1933 Act"), and
the rules and regulations promulgated by the SEC thereunder ("AirNet Reports").
The AirNet Reports, as of their respective dates (as amended through the date
hereof), did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in view of the circumstances under which they were made, not
misleading.
(f) AIRNET COMMON SHARES. The AirNet Common Shares, upon their issuance by
AirNet to the shareholders of Float Control upon consummation of the Merger,
will be duly authorized, validly issued, fully paid and non-assessable, free and
clear of any encumbrances other than the securities law restrictions described
in Section 5.4.
(g) BROKERS, FINDERS, AND OTHERS. There are no fees or commissions of any
sort whatsoever claimed by, or payable by AirNet to, any broker, finder,
intermediary or any other.
(h) CONSENTS. No consent, approval, authorization of or filing with any
governmental authority or any third party is required on the part of AirNet in
connection with the execution or delivery of this Plan or the Merger Agreement
or the consummation of the transactions contemplated hereby or thereby, which
has not been obtained.
(i) COMPLIANCE WITH LAW. The business of AirNet is being conducted in all
material respects in compliance with all applicable statutes, laws, ordinances,
rules and regulations of any federal, state, local or foreign governmental
bodies, agencies and subdivisions having, asserting or claiming jurisdiction
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over it or any part of its operations, and AirNet has not received any notice
within three (3) years of the date hereof asserting or alleging noncompliance
with or violation of any such statutes, laws, ordinances, rules and regulations.
(j) DISCLOSURE. No representation or warranty by AirNet contained in this
Plan, and no statement contained in any certificate or other document (including
any Schedule) furnished by AirNet to Float Control pursuant hereto contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained therein and herein not misleading, in light of
the circumstances under which made.
ARTICLE V
COVENANTS OF THE PARTIES
5.1 CONDUCT OF BUSINESS OF FLOAT CONTROL. Float Control covenants with
AirNet that throughout the period from the date of this Plan to and including
the Closing:
(a) CONDUCT OF BUSINESS. Float Control's business will be conducted only in
the ordinary and usual course and in the same manner as it has previously been
conducted.
(b) CHANGES IN BUSINESS AND CAPITAL STRUCTURE. Except with the prior
express written consent of AirNet, Float Control will not: (i) sell, transfer,
mortgage, pledge or subject to any lien or otherwise encumber any of its assets;
(ii) become bound by, enter into or perform any contract, commitment or
transaction which is other than in the ordinary course of its business or which
would cause or result in its being unable to perform its obligations under this
Plan or the Merger Agreement; (iii) declare or pay any dividends or make any
distributions on its issued and outstanding capital stock; (iv) purchase,
redeem, retire or otherwise acquire any of its capital stock; (v) issue or grant
any capital stock or any option or right to acquire any of its capital stock;
(vi) amend its Restated Articles of Incorporation or Amended and Restated
Bylaws; (vii) merge or consolidate with any other corporation or otherwise
reorganize; (viii) incur any material obligation or liability other than current
liabilities and obligations incurred in the ordinary course of business; (ix)
waive or cancel any right of material value or material debts; (x) take any
action that would result in any of its representations or warranties contained
in this Plan not being true and correct; or (xi) enter into any agreement to do
any of the foregoing.
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(c) PERFORMANCE OF OBLIGATIONS. Float Control will perform all of its
obligations under any and all agreements relating to or affecting its
properties, rights and business.
(d) MAINTENANCE OF BUSINESS ORGANIZATION. Float Control will maintain and
preserve its business organization intact and maintain the respective
relationships of persons having business relationships with it.
(e) ACCESS TO INFORMATION. Float Control will take all action necessary to
afford the officers and designated representatives of AirNet full access during
normal business hours to: (i) all of Float Control's properties, books, records,
tax returns and reports, financial statements, contracts and commitments, and
any work papers relating to any of the foregoing; (ii) all such documents,
copies of documents and information concerning its affairs as AirNet may
reasonably request; and (iii) Float Control's officers and directors in order
that AirNet may have full opportunity to make such investigation as it shall
desire to make of the business and affairs of Float Control. No action taken or
investigation made by or on behalf of AirNet contemplated by this Subsection
5.1(e) shall affect the representations and warranties of Float Control set
forth in this Plan.
(f) NO SHOPPING. Neither Float Control nor any of the officers,
representatives or agents of Float Control shall, directly or indirectly,
encourage or solicit or hold discussions or negotiations with, or provide any
information to, any person, entity or group (other than AirNet and its
representatives) concerning any merger, consolidation, sale of substantial
assets not in the ordinary course of business, sale of shares of capital stock
or similar transactions involving Float Control (an "Acquisition Transaction").
Float Control will promptly communicate to AirNet the terms of any proposal
which Float Control may receive in respect of any Acquisition Transaction, and
the nature and terms of any inquiry in respect of any Acquisition Transaction by
any third party of which Float Control obtains knowledge.
5.2 APPROVAL OF FLOAT CONTROL SHAREHOLDERS. Float Control will take all
steps necessary to duly call, give notice of, convene and hold a meeting of its
shareholders as soon as reasonably practicable for the purpose of securing the
approval of shareholders of this Plan and the Merger Agreement.
5.3 EXECUTION OF MERGER AGREEMENT. Float Control will enter into and use
its best efforts to consummate the Merger Agreement. AirNet will cause the
organization of Merger Corp. AirNet will enter into, and cause Merger Corp. to
enter into and execute, the Merger Agreement.
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5.4 SECURITIES LAW MATTERS.
(a) AirNet and Float Control will cooperate with each other and use their
best efforts to prepare all necessary documentation, to effect all necessary
filings and to take all action required to be taken under any applicable
securities laws in connection with the issuance of the AirNet Common Shares
pursuant to Section 1.1 hereof and the Merger Agreement. AirNet shall also take
any action required to be taken in order that the AirNet Common Shares to be
issued pursuant to Section 1.1 hereof and the Merger Agreement shall, as of the
Effective Time, be listed on The Nasdaq Stock Market.
(b) Float Control understands that the AirNet Common Shares to be issued to
the shareholders of Float Control pursuant to the Merger will be issued without
registration under the 1933 Act or the securities laws of any state in reliance
upon specific exemptions therefrom. To the best knowledge of Float Control, each
shareholder of Float Control is an "accredited investor" as that term is defined
in Regulation D promulgated under the 1933 Act. Float Control understands, and
shall cause each shareholder of Float Control to be notified that, the AirNet
Common Shares to be issued pursuant to the Merger may not be sold or transferred
unless they are registered under the 1933 Act and any applicable state or other
securities laws, or unless exemptions from registration under such laws are
available. Float Control understands that AirNet shall have no obligation to
register the AirNet Common Shares under any securities laws or to maintain in
effect any registration of such AirNet Common Shares which may be made at any
time.
(c) Float Control hereby acknowledges, and shall notify each shareholder of
Float Control, that the share certificates evidencing the AirNet Common Shares
to be issued pursuant to the Merger, shall be imprinted with a legend in
substantially the following form:
THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED OR ASSIGNED EXCEPT (i) PURSUANT TO
REGISTRATIONS UNDER APPLICABLE SECURITIES LAWS OR (ii) IF, IN THE
OPINION OF COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY, THE
PROPOSED TRANSFER MAY BE EFFECTED IN COMPLIANCE WITH APPLICABLE
SECURITIES LAWS WITHOUT REGISTRATION.
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Upon the request of any shareholder of Float Control, accompanied by an
opinion of counsel selected by such shareholder, which opinion and counsel are
reasonably satisfactory to AirNet, to the effect that no transfer by such
shareholder will violate the 1933 Act or applicable state or other securities
laws, AirNet shall remove the legend from the share certificate(s) evidencing
the AirNet Common Shares held by the Float Control shareholder or shall issue to
such Float Control shareholder a new certificate for the AirNet Common Shares
without the restrictive legend.
ARTICLE VI
FURTHER OBLIGATIONS OF THE PARTIES
6.1 (a) BEST EFFORTS. Each of AirNet and Float Control shall use best
efforts to satisfy all of the conditions to the completion of the Merger and to
cause the consummation of the transactions described in this Plan, including
making all governmental applications, notices and filings and taking all steps
to secure promptly all governmental and third party consents, rulings and
approvals which are necessary or desirable for the performance by each party of
each of its obligations under this Plan and the Merger Agreement.
(b) CONFIDENTIALITY. AirNet and Float Control agree for themselves, and
their representatives, successors and assigns, that any and all nonpublic
information that each obtains from the other will be kept strictly confidential
and not be disclosed by them or their representatives, agents, successors and
assigns to any other person or group, except among their attorneys, accountants
and other representatives; except for any disclosure of such information to
which the other consents in writing or which in the opinion of counsel for the
disclosing party is required to be made under the securities laws or other
applicable laws and except for information already in the public domain not as a
result of the actions of the disclosing person or the disclosing person's
representatives.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PARTIES
7.1 CONDITIONS TO OBLIGATIONS OF AIRNET. The obligations of AirNet under
this Plan and the Merger Agreement shall be subject to the satisfaction of each
of the following conditions precedent:
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(a) This Plan and the Merger Agreement shall have been validly approved by
the affirmative vote of the holders of at least that number of outstanding Float
Control Shares required under law and Float Control's Restated Articles of
Incorporation and Amended and Restated Bylaws to approve such Agreements.
(b) The representations and warranties of Float Control set forth in
Article III of this Plan and the information set forth in each schedule and
other document furnished to AirNet pursuant to this Plan shall be true and
complete in all respects at the Closing Date as though such representations and
warranties and information were also made as of the Closing Date.
(c) Float Control shall have performed and complied with each and every
covenant, obligation and condition required by this Plan and the Merger
Agreement to be performed or complied with by it at or prior to the Closing.
(d) During the period from the date hereof to the Closing Date, there shall
not have been any material adverse change in or to the business of Float
Control.
(e) As of the Closing, no suit, action, investigation, inquiry or other
proceeding by or before any court or governmental body or other regulatory or
administrative agency or commission requesting or looking toward an order,
judgment or decree shall be threatened, instituted or pending which questions
the validity or legality of this Plan or the Merger Agreement or the
transactions contemplated hereby or thereby.
(f) As of the Closing, there shall not be any effective injunction, writ,
preliminary restraining order or any other order issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
not be consummated as so provided or imposing any condition on the consummation
of any of the transactions contemplated hereby.
(g) AirNet shall have provided the required notification to The Nasdaq
Stock Market of the proposed issuance of the AirNet Common Shares to be issued
pursuant to the Merger.
(h) At the Closing, Float Control shall have delivered to AirNet a
certificate of Float Control, dated as of the Closing Date, and certifying that
(i) the representations and warranties of Float Control set forth in this Plan
are true and complete in all material respects as of the Closing Date; and (ii)
Float Control has performed all of the covenants, obligations and conditions
required to be performed by it under the Plan and the Merger Agreement on or
before the Closing Date.
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(i) At the Closing, Float Control shall have delivered to AirNet copies of
all resolutions adopted by the directors and the shareholders of Float Control
adopting and approving this Plan and the Merger Agreement and authorizing the
consummation of the transactions described herein and therein, which resolutions
shall be accompanied by a certificate of the secretary of Float Control, dated
as of the Closing Date, and certifying (i) the date and manner of the adoption
of each such resolution; and (ii) that each such resolution is in full force and
effect, without amendment, as of the Closing Date.
(j) At the Closing, Float Control shall have delivered to AirNet the
original, complete minute books of Float Control containing at least the
Restated Articles of Incorporation, the Amended and Restated Bylaws and all of
the minutes and actions of the shareholders, directors and committees of
directors and share transfer and registration records of Float Control.
7.2 CONDITIONS TO OBLIGATIONS OF FLOAT CONTROL. The obligations of Float
Control under this Plan and the Merger Agreement shall be subject to
satisfaction of each of the following conditions precedent:
(a) The representations and warranties of AirNet set forth in Article IV of
this Plan and the information set forth in each schedule and other document
furnished by AirNet to Float Control shall be true and complete in all respects
at the Closing Date as though such representations and warranties and
information were also made as of the Closing Date.
(b) AirNet shall have performed and complied with each and every covenant,
obligation and condition required by this Plan and the Merger Agreement to be
performed or complied with by it at or prior to the Closing Date.
(c) During the period from the date hereof to the Closing Date, there shall
not have been any material adverse change in or to the business of AirNet.
(d) As of the Closing, no suit, action, investigation, inquiry or other
proceeding by or before any court or governmental body or other regulatory or
administrative agency or commission requesting or looking toward an order,
judgment or decree shall be threatened, instituted or pending which questions
the validity or legality of this Plan or the Merger Agreement or the
transactions contemplated hereby or thereby.
(e) As of the Closing, there shall not be any effective injunction, writ,
preliminary restraining order or any other order issued by a court of competent
jurisdiction directing that the transactions provided for herein or any of them
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not be consummated as so provided or imposing any condition on the consummation
of any of the transactions contemplated hereby.
(f) At the Closing, AirNet shall have delivered to Float Control, a
certificate of the president and chief executive officer or the executive vice
president of AirNet, dated as of the Closing Date, and certifying that (i) the
representations and warranties of AirNet set forth in this Plan are true and
complete in all material respects as of the Closing Date; and (ii) AirNet has
performed all of the covenants, obligations and conditions to be performed by it
under the Plan and the Merger Agreement on or before the Closing Date.
(g) At the Closing, AirNet shall have delivered to Float Control copies of
all resolutions adopted by the directors of AirNet and the directors and sole
shareholder of Merger Corp., respectively, adopting and approving this Plan
and/or the Merger Agreement, as the case may be, and authorizing the
consummation of the transactions described herein and therein, which resolutions
shall be accompanied by a certificate of the secretary of the respective
corporations, dated as of the Closing Date, and certifying (i) the date and
manner of the adoption of each such resolution; and (ii) that each such
resolution is in full force and effect, without amendment, as of the Closing
Date.
7.3 CONDITIONS TO OBLIGATIONS OF ALL PARTIES. The obligations of Float
Control and AirNet under this Plan shall be subject to the receipt by the
parties of all governmental and third-party approvals, consents and rulings that
are necessary in order to consummate the transactions provided for in this Plan
and (i) such approvals, consents and rulings shall not be the subject of any
unresolved proceeding contesting such approval, consent or ruling maintained by
federal or state governmental authority or third party, and (ii) such approvals,
consents and rulings shall not contain any term or condition which would have a
material adverse effect on the business, operations, assets or financial
condition of AirNet or Float Control upon completion of the Merger or otherwise
materially impair the value of Float Control to AirNet.
ARTICLE VIII
SURVIVABILITY OF REPRESENTATIONS AND WARRANTIES
8.1 No representations, warranties or agreements in this Plan, or in any
document delivered pursuant to the terms hereof or in connection with the
transactions contemplated hereby, shall survive the Merger.
-16-
<PAGE>
ARTICLE IX
TERMINATION
9.1 TERMINATION. (a) This Plan may be terminated by the mutual consent of
the parties hereto.
(b) If the Closing does not occur on or before December 31, 1996, through
no fault of the party seeking to terminate, or if a preliminary or final
injunction or temporary restraining order is issued which enjoins the
transactions contemplated herein for more than 20 days, either AirNet or Float
Control may terminate this Plan without incurring any penalty, liability or
obligation.
(c) In the event that Subsection 9.1(a) or Subsection 9.1(b) hereof is not
applicable and a party hereto shall fail or refuse to consummate the
transactions contemplated herein (other than by reason of a condition precedent
to such party's obligations failing to be satisfied) or shall take any other
action contrary to the terms of this Plan, or in the event that a party hereto
shall fail or refuse to take any action contemplated in this Plan necessary to
consummate the transactions contemplated hereby, the nondefaulting party shall
be entitled to pursue any remedy provided by law or in equity, specifically
including the remedy of specific performance, or, if such failure constitutes a
material breach of this Plan, and is not reasonably cured after notice, may
terminate this Plan and sue for damages, costs and expenses.
ARTICLE X
MISCELLANEOUS
10.1 All notices, requests, demands and other communications required or
permitted to be given under this Plan shall be given in writing and shall be
deemed to have been given if delivered by hand, by express service or sent by
certified mail, postage prepaid, to the following addresses:
IF TO FLOAT CONTROL, TO:
Gerald G. Mercer
President
Float Control, Inc.
3939 International Gateway
Columbus, OH 43219
-17-
<PAGE>
IF TO AIRNET, TO:
Gerald G. Mercer
President and Chief Executive Officer
AirNet Systems, Inc.
3939 International Gateway
Columbus, OH 43219
Either party to this Plan may, by notice given in accordance with this Section
10.1, designate a new address for notices, requests, demands and other
communications to such party.
10.2 This Plan may be executed in one or more counterparts, each of which
shall be deemed to be a duplicate original, but all of which taken together
shall be deemed to constitute a single instrument.
10.3 This Plan (including each Exhibit and Schedule provided pursuant
hereto) constitutes the entire agreement between the parties hereto in respect
of the subject matter of this Plan (including each Exhibit and Schedule) and
supersedes all prior and contemporaneous agreements between the parties hereto
in connection with the subject matter of this Plan. This Plan shall not be
amended except in a writing signed by Float Control and AirNet.
10.4 This Plan shall inure to the benefit of and be binding upon the
respective successors and assigns (including successive, as well as immediate,
successors and assigns) of the parties hereto. This Plan may not be assigned by
either party hereto without the prior written consent of the other party hereto.
10.5 The captions contained in this Plan are included only for convenience
of reference and do not define, limit, explain or modify this Plan or its
interpretation, construction or meaning and are in no way to be construed as
part of this Plan. When used in this Agreement, the number and gender of each
pronoun shall be construed to be such number and gender as the context,
circumstances or its antecedent may require.
10.6 This Plan shall be governed by and construed in accordance with the
laws of the State of Ohio, without giving effect to principles of conflicts or
choice of laws.
10.7 Except as otherwise agreed in writing, each party hereto shall pay all
costs and expenses, including legal and accounting fees, and all expenses
relating to its performance of, and compliance with, such party's undertakings
in this Plan.
10.8 Nothing herein expressed or implied is intended or shall be construed
to confer upon or give to any person or entity other than the parties hereto and
-18-
<PAGE>
their successors or permitted assigns, any rights or remedies under or by reason
of this Plan.
IN WITNESS WHEREOF, this Plan and Agreement of Reorganization has been
executed on behalf of Float Control and AirNet to be effective as of the date
set forth in the first paragraph above.
FLOAT CONTROL: AIRNET:
FLOAT CONTROL, INC. AIRNET SYSTEMS, INC.
By: Gerald G. Mercer By: Gerald G. Mercer
______________________________ ______________________________
Gerald G. Mercer, its Gerald G. Mercer, its
President President and Chief
Executive Officer
-19-
<PAGE>
LIST OF EXHIBITS
EXHIBIT SECTION OF
LETTER EXHIBIT DESCRIPTION AGREEMENT
- ------- ------------------- ----------
A Plan and Agreement of Merger 1.1
LIST OF SCHEDULES
SCHEDULE NO./SECTION NO. DESCRIPTION OF SCHEDULE
- ------------------------ -----------------------
3.1(a)(1) Jurisdictions in Which Float Control
Is Qualified to Transact Business
3.1(a)(2) Restated Articles of Incorporation
and Amended and Restated Bylaws of
Float Control
3.1(m) Contracts
3.1(o) Intellectual Property
-20-
Exhibit 2(b)
Plan and Agreement of Merger,
dated September 30, 1996,
among AirNet Systems, Inc.,
AirNet Merger Corporation
and Float Control, Inc.
________________________
PLAN AND AGREEMENT OF MERGER
This PLAN AND AGREEMENT OF MERGER (sometimes hereinafter called the "MERGER
AGREEMENT"), made to be effective as of September 30, 1996, by and among FLOAT
CONTROL, INC., a Michigan corporation (sometimes hereinafter called "FLOAT
CONTROL"); AIRNET MERGER CORPORATION, an Ohio corporation (sometimes hereinafter
called "MERGER CORP.") (MERGER CORP. and FLOAT CONTROL sometimes hereinafter
collectively referred to as the "CONSTITUENT CORPORATIONS"); and AIRNET SYSTEMS,
INC., an Ohio corporation (sometimes hereinafter called "AIRNET");
W I T N E S S E T H :
WHEREAS, the authorized shares of FLOAT CONTROL consist of 50,000 common
shares, $1.00 par value per share (the "FLOAT CONTROL SHARES"), which are voting
shares. There are 3,000 FLOAT CONTROL SHARES issued and outstanding; and
WHEREAS, the authorized shares of MERGER CORP. consist of 850 common
shares, without par value (the "MERGER CORP. SHARES"), which are voting shares.
There are 500 MERGER CORP. SHARES issued and outstanding; and
WHEREAS, the Board of Directors of each of the CONSTITUENT CORPORATIONS and
of AIRNET deem it advisable and in the best interests of their respective
corporations and their shareholders that the CONSTITUENT CORPORATIONS be merged
in a transaction through which FLOAT CONTROL would become a wholly-owned
subsidiary of AIRNET, MERGER CORP. would cease to have a separate corporate
existence, and persons presently holding FLOAT CONTROL SHARES would receive
AIRNET common shares in exchange therefor; and
WHEREAS, the Boards of Directors of the CONSTITUENT CORPORATIONS and of
AIRNET have, by resolutions duly adopted by them, approved this MERGER AGREEMENT
and directed that it be executed by the undersigned officers and submitted to a
vote of the shareholders of FLOAT CONTROL and the sole shareholder of MERGER
CORP.;
NOW, THEREFORE, in consideration of the premises and of their mutual
covenants and agreements, it is hereby agreed by and among the CONSTITUENT
CORPORATIONS and AIRNET that the terms of the merger contemplated by this MERGER
AGREEMENT (sometimes hereinafter called the "MERGER") and the mode of carrying
the MERGER into effect shall be as follows:
-1-
<PAGE>
ARTICLE ONE
THE SURVIVING CORPORATION
SECTION 1.01. At the date and time when the MERGER shall become effective
(sometimes hereinafter called the "MERGER TIME"), MERGER CORP. will merge into
FLOAT CONTROL and FLOAT CONTROL will be the continuing and surviving corporation
in the MERGER, will continue to exist under the laws of the State of Michigan,
and will be the only one of the CONSTITUENT CORPORATIONS to continue its
separate corporate existence after the MERGER TIME. As used in this MERGER
AGREEMENT, the term "SURVIVING CORPORATION" refers to FLOAT CONTROL as the
surviving corporation at and after the MERGER TIME.
SECTION 1.02. The name of the SURVIVING CORPORATION shall be FLOAT CONTROL,
INC.
SECTION 1.03. The Restated Articles of Incorporation of FLOAT CONTROL, as
in effect immediately prior to the MERGER TIME, shall be the articles of
incorporation of the SURVIVING CORPORATION until amended in accordance with law.
SECTION 1.04. The Amended and Restated Bylaws of FLOAT CONTROL, as in
effect immediately prior to the MERGER TIME, shall be the bylaws of the
SURVIVING CORPORATION until amended in accordance with law.
SECTION 1.05. At and after the MERGER TIME, the number of directors of the
SURVIVING CORPORATION shall be three (3) until changed in accordance with the
bylaws of the SURVIVING CORPORATION. The individuals listed below shall serve as
the directors of the SURVIVING CORPORATION until the next annual meeting of the
SURVIVING CORPORATION, or until their earlier resignation, removal from office
or death:
Gerald G. Mercer
Glenn M. Miller
Charles A. Renusch
SECTION 1.06. At and after the MERGER TIME and until changed in accordance
with law, the officers of the SURVIVING CORPORATION shall be as follows:
Gerald G. Mercer -- President
Charles A. Renusch -- Secretary
Glenn M. Miller -- Treasurer
SECTION 1.07. The office of the SURVIVING CORPORATION shall be located at
3939 International Gateway, Columbus, Ohio 43219. The registered office of the
SURVIVING CORPORATION in the state of Michigan shall be located at 30600
Telegraph Road, Birmingham Farms, Michigan 48025 and the registered agent of the
-2-
<PAGE>
SURVIVING CORPORATION in the State of Michigan shall be The Corporation Company.
SECTION 1.08. The SURVIVING CORPORATION hereby consents to be sued and
served with process in the State of Ohio in any proceeding in the State of Ohio
to enforce against the SURVIVING CORPORATION any obligation of either of the
CONSTITUENT CORPORATIONS or to enforce the rights of a dissenting shareholder of
either of the CONSTITUENT CORPORATIONS, and the SURVIVING CORPORATION hereby
irrevocably appoints the Ohio Secretary of State as its agent to accept service
of process in any such proceeding in the State of Ohio.
SECTION 1.09. It is desired that the SURVIVING CORPORATION transact
business in the State of Ohio as a foreign corporation. The SURVIVING
CORPORATION hereby constitutes and appoints as the statutory agent of the
SURVIVING CORPORATION upon whom process against the SURVIVING CORPORATION may be
served within the State of Ohio, Statutory Agent Corporation, which has the
following business address:
Attn: Librarian
52 East Gay Street
County of Franklin
Columbus, OH 43215
The SURVIVING CORPORATION hereby consents irrevocably to service of process
on Statutory Agent Corporation and its successors so long as the authority of
such agent shall continue as provided by Chapter 1703 of the Ohio Revised Code
and to service of process from any court in the State of Ohio or from any public
authorities upon the Ohio Secretary of State if Statutory Agent Corporation
cannot be found, if the license of the SURVIVING CORPORATION to do business in
the State of Ohio has expired or has been cancelled, or in any of the other
events whereby such service upon the Ohio Secretary of State is authorized by
Chapter 1703 of the Ohio Revised Code.
ARTICLE TWO
DISTRIBUTIONS TO SHAREHOLDERS
SECTION 2.01. The manner and basis of making distributions to shareholders
of the CONSTITUENT CORPORATIONS in extinguishment of and in substitution for
their shares of the CONSTITUENT CORPORATIONS shall be as set forth in this
ARTICLE TWO.
SECTION 2.02. At the MERGER TIME and as a result of the MERGER, each of the
3,000 issued and outstanding FLOAT CONTROL SHARES shall, automatically and
-3-
<PAGE>
without further act of either of the CONSTITUENT CORPORATIONS, of AIRNET or of
the holder thereof, be extinguished. In substitution therefor, the holders of
the 3,000 FLOAT CONTROL SHARES so extinguished shall be entitled to receive from
AIRNET an aggregate of 230,299 common shares, $0.01 par value per share, of
AIRNET (the "AIRNET COMMON SHARES"). The holder of each of the 3,000 issued and
outstanding FLOAT CONTROL SHARES so extinguished shall be entitled to receive
from AIRNET in substitution therefor 76.7677 AIRNET COMMON SHARES.
SECTION 2.03. At the MERGER TIME and as a result of the MERGER, each of the
500 issued and outstanding MERGER CORP. SHARES shall, automatically and without
further act of the CONSTITUENT CORPORATIONS, of AIRNET or the holder thereof, be
extinguished. In substitution for the full number of MERGER CORP. SHARES
formerly held by it, AIRNET shall be entitled to receive from the SURVIVING
CORPORATION 500 common shares, $1.00 par value per share; and AIRNET shall
forthwith be entered on the books of the SURVIVING CORPORATION as the holder of
said 500 common shares of the SURVIVING CORPORATION. Promptly after the MERGER
TIME, the SURVIVING CORPORATION shall deliver to AIRNET one or more certificates
evidencing 500 of the outstanding common shares of the SURVIVING CORPORATION.
After the MERGER TIME and until such certificates have been received by AIRNET
from the SURVIVING CORPORATION, each certificate theretofore representing one or
more of the MERGER CORP. SHARES shall, in the aggregate, be deemed for all
corporate purposes to evidence ownership of 500 of the issued and outstanding
common shares, $1.00 par value per share, of the SURVIVING CORPORATION.
SECTION 2.04. (a) As soon as practicable after the MERGER TIME, AIRNET
shall mail to each holder of record of FLOAT CONTROL SHARES a mutually agreed
upon form letter of transmittal and instructions for use in effecting the
surrender of the certificate or certificates which, immediately prior to the
MERGER TIME, represented outstanding FLOAT CONTROL SHARES (each, a "FLOAT
CONTROL CERTIFICATE"). The form letter of transmittal shall provide instructions
for use in effecting the surrender of the FLOAT CONTROL CERTIFICATES in exchange
for certificates representing AIRNET COMMON SHARES ("AIRNET CERTIFICATES") as
provided in Section 2.02 hereof. Upon surrender of a FLOAT CONTROL CERTIFICATE
for cancellation, together with such letter of transmittal duly executed, the
holder of such FLOAT CONTROL CERTIFICATE shall receive in exchange therefor a
certificate evidencing the applicable number of AIRNET COMMON SHARES to which
such holder is entitled in accordance with Section 2.02 of this MERGER AGREEMENT
and the FLOAT CONTROL CERTIFICATE so surrendered shall thereafter be cancelled.
(b) The registered holder of any FLOAT CONTROL CERTIFICATE outstanding
immediately prior to the MERGER TIME, as such holder appears in the books and
records of FLOAT CONTROL or its transfer agent immediately prior to the MERGER
-4-
<PAGE>
TIME, shall, until such FLOAT CONTROL CERTIFICATE is surrendered in exchange for
an AIRNET CERTIFICATE as contemplated by Section 2.04(a), have and be entitled
to exercise any voting and other rights with respect to, and to receive any
dividends or other distributions on, the AIRNET COMMON SHARES into which the
FLOAT CONTROL SHARES represented by any FLOAT CONTROL CERTIFICATE have been
converted pursuant to Section 2.02 of this MERGER AGREEMENT.
(c) In the event that any holder of FLOAT CONTROL SHARES is unable to
deliver the FLOAT CONTROL CERTIFICATE which represents FLOAT CONTROL SHARES of
the holder, AIRNET, in the absence of actual knowledge that any FLOAT CONTROL
SHARES theretofore represented by any such FLOAT CONTROL CERTIFICATE have been
acquired by a bona fide purchaser, shall deliver to such holder the
consideration to which such holder is entitled in accordance with the provisions
of this MERGER AGREEMENT upon the presentation of all of the following:
(i) An affidavit or other evidence to the reasonable satisfaction of
AIRNET that any such FLOAT CONTROL CERTIFICATE has been lost,
wrongfully taken or destroyed;
(ii) Such security or indemnity as may be reasonably requested by
AIRNET to indemnify and hold AIRNET harmless; and
(iii) Evidence to the satisfaction of AIRNET that such person is the
owner of the FLOAT CONTROL SHARES theretofore represented by each
FLOAT CONTROL CERTIFICATE claimed by him to be lost, wrongfully
taken or destroyed and that he is the person who would be
entitled to present each such FLOAT CONTROL CERTIFICATE for
exchange pursuant to this MERGER AGREEMENT.
SECTION 2.05. Notwithstanding any other provision of this MERGER AGREEMENT,
no fractional AIRNET COMMON SHARES shall be issued in the MERGER to holders of
FLOAT CONTROL SHARES. Each holder of FLOAT CONTROL SHARES who otherwise would
have been entitled to a fraction of an AIRNET COMMON SHARE shall receive in lieu
thereof, at the time of surrender of the FLOAT CONTROL CERTIFICATE(s) evidencing
such holder's FLOAT CONTROL SHARES, an amount of cash (without interest)
determined by multiplying the fractional share interest to which such holder
would otherwise be entitled by $12.375.
-5-
<PAGE>
ARTICLE THREE
APPROVAL; TERMINATION AND ABANDONMENT; AMENDMENT
SECTION 3.01. This MERGER AGREEMENT shall be submitted for approval by the
shareholders of FLOAT CONTROL and by the sole shareholder of MERGER CORP.
SECTION 3.02. The MERGER shall be terminated and abandoned at any time
prior to the MERGER TIME without notice of such action to the CONSTITUENT
CORPORATIONS or to AIRNET if the Plan and Agreement of Reorganization, dated
September 30, 1996 (the "PLAN") between AIRNET and FLOAT CONTROL is terminated.
SECTION 3.03. From time to time and at any time prior to the MERGER TIME,
this MERGER AGREEMENT may be amended only by an agreement in writing executed in
the same manner as this MERGER AGREEMENT, after authorization of such action by
the Board of Directors of the CONSTITUENT CORPORATIONS and of AIRNET; except
that after the approval contemplated by Section 3.01 hereof, there shall be no
amendments that would (a) alter or change the amount or kind of shares,
evidences of indebtedness other securities, cash, rights or any other property
to be received by the holders of any class or series of shares of either of the
CONSTITUENT CORPORATIONS in the MERGER, (b) alter or change any terms of the
articles of incorporation or bylaws of the SURVIVING CORPORATION, or (c) alter
or change any of the terms and conditions of this MERGER AGREEMENT if any of the
alterations or changes, alone or in the aggregate, would adversely affect the
holders of any class or series of shares of the CONSTITUENT CORPORATIONS.
ARTICLE FOUR
EFFECTIVE DATE OF MERGER
SECTION 4.01. (a) Upon the approval of this MERGER AGREEMENT by the
shareholders of each of the CONSTITUENT CORPORATIONS, each of the CONSTITUENT
CORPORATIONS shall cause a Certificate of Merger (in the form required by
Section 450.1707 of the Michigan Business Corporation Act) to be executed and
filed with the Michigan Department of Commerce (the "Michigan Department").
(b) After the filing of the Certificate of Merger described in Section
4.01(a) with the Michigan Department, each of the CONSTITUENT CORPORATIONS shall
cause a Certificate of Merger (in the form required by Section 1701.81 of the
Ohio Revised Code) to be executed and filed with the Secretary of State of the
State of Ohio (the "Ohio Secretary").
(c) The MERGER shall become effective on the date and at the time of filing
of the Certificate of Merger described in Section 4.01(b) with the Ohio
-6-
<PAGE>
Secretary in accordance with Section 1701.81 of the Ohio Revised Code (or such
later date and time as may be specified in the Certificates of Merger described
in Sections 4.01(a) and 4.01(b)).
ARTICLE FIVE
ADDITIONAL PROVISIONS
SECTION 5.01. All assets of the CONSTITUENT CORPORATIONS as they exist at
the MERGER TIME, shall pass to and vest in the SURVIVING CORPORATION without any
conveyance or other transfer. The SURVIVING CORPORATION shall be responsible for
all of the liabilities of every kind and description of each of the CONSTITUENT
CORPORATIONS existing as of the MERGER TIME.
ARTICLE SIX
MISCELLANEOUS
SECTION 6.01. This MERGER AGREEMENT may be executed in one or more
counterparts, each of which shall be deemed to be a duplicate original but all
of which taken together shall be deemed to constitute a single instrument.
SECTION 6.02. The captions contained in this MERGER AGREEMENT are included
only for convenience of reference and do not define, limit, explain or modify
this MERGER AGREEMENT or its interpretation, construction or meaning and are in
no way to be construed as part of this MERGER AGREEMENT.
SECTION 6.03. This MERGER AGREEMENT shall inure to the benefit of and be
binding upon the respective successors and assigns (including successive, as
well as immediate, successors and assigns) of the parties hereto.
SECTION 6.04. The number and gender of each pronoun used in this MERGER
AGREEMENT shall be construed to mean such number and gender as the context,
circumstances or its antecedent may require.
SECTION 6.05. This MERGER AGREEMENT shall be governed by and construed in
accordance with the laws of the State of Ohio and of the State of Michigan.
-7-
<PAGE>
IN WITNESS WHEREOF, this MERGER AGREEMENT has been executed on behalf of
the CONSTITUENT CORPORATIONS and of AIRNET by their officers duly authorized in
the premises.
ATTEST: AIRNET:
AIRNET SYSTEMS, INC.
By: William R. Sumser By: Gerald G. Mercer
____________________________ ____________________________
William R. Sumser, its Gerald G. Mercer, its President
Secretary and Chief Executive Officer
ATTEST: MERGER CORP.:
AIRNET MERGER CORPORATION
By: William R. Sumser By: Gerald G. Mercer
____________________________ ____________________________
William R. Sumser, its Gerald G. Mercer, its
Secretary President
ATTEST: FLOAT CONTROL:
FLOAT CONTROL, INC.
By: Charles A. Renusch By: Gerald G. Mercer
____________________________ ____________________________
Charles A. Renusch, its Gerald G. Mercer, its
Secretary President
-8-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from AirNet
Systems, Inc.'s Quarterly Report on Form 10-Q for the three months ended
December 31, 1996 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 9,541,003
<SECURITIES> 0
<RECEIVABLES> 6,200,145
<ALLOWANCES> 23,150
<INVENTORY> 5,012,284
<CURRENT-ASSETS> 24,412,906
<PP&E> 88,523,667
<DEPRECIATION> 42,950,045
<TOTAL-ASSETS> 78,790,346
<CURRENT-LIABILITIES> 4,975,330
<BONDS> 0
0
0
<COMMON> 124,751
<OTHER-SE> 70,293,203
<TOTAL-LIABILITY-AND-EQUITY> 78,790,346
<SALES> 366,432
<TOTAL-REVENUES> 19,758,930
<CGS> 309,352
<TOTAL-COSTS> 13,966,846
<OTHER-EXPENSES> 1,571,617
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,220,467
<INCOME-TAX> 1,688,000
<INCOME-CONTINUING> 2,532,467
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,532,467
<EPS-PRIMARY> .20
<EPS-DILUTED> 0
</TABLE>
