SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) DECEMBER 31, 1997
AVIATION SALES COMPANY
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
DELAWARE 1-11775 65-0665658
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(STATE OR OTHER JURISDICTION (COMMISSION (IRS EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
6905 NW 25TH STREET, MIAMI, FL 33122
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (305) 592-4055
N/A
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(FORMER NAME OR FORMER ADDRESS; IF CHANGED SINCE LAST REPORT)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On December 31, 1997, Aviation Sales Company, Inc., a Delaware
corporation (the "Company") purchased, through a wholly-owned subsidiary,
substantially all of the assets and liabilities of Apex Manufacturing, Inc., an
Arizona Corporation ("Apex") pursuant to a stock for asset purchase agreement
(the "Agreement"). Apex, located in Phoenix, Arizona, manufactures precision
aerospace parts and specializes in the machining of metal parts, including
precision shafts, fuel shrouds, housings and couplings for aerospace acuting
systems, fuel controls and engines.
In connection with the consummation of the Agreement, which was
accounted for under the pooling of interest business combination method of
accounting, the Company issued 238,572 unregistered shares of its Common Stock
in exchange for all of the assets, properties and business of Apex. The Company
agreed to file after the Agreement a registration statement covering the Company
common stock issued in connection with the Agreement. The transaction is valued
at approximately $8.35 million dollars. In addition, the Company agreed to
assume substantially all of the liabilities of Apex including approximately
$2,000,000 in indebtedness. The aggregate purchase price was determined in
arms-length negotiations between the Company and shareholders of Apex.
In addition, Mr. James John Berens, Jr. signed a three-year employment
agreement and R.W. Reitz entered into a one-year employment agreement to serve
as Vice President and General Manager, and Vice President, respectively, of the
Company's subsidiary that acquired the assets and liabilities of Apex.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Not applicable.
(b PRO FORMA FINANCIAL INFORMATION.
Not applicable since Apex is not considered to be a
"significant subsidiary" of the Company as that term is
defined in Section 210.1-02(w) of Regulation S-X.
(c) Exhibits.
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EXHIBIT NO. DESCRIPTION
2.1 Stock for Asset Purchase Agreement by and between
Aviation Sales Company, AVS/AMI Merger Corp., Apex
Manufacturing, Inc., and the shareholders of Apex
Manufacturing, dated as of December 31, 1997.
99.1 Press Release dated January 6, 1998 announcing the
consummation of the Agreement.
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SIGNATURE
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 hereunto duly authorized.
January 13, 1998 AVIATION SALES COMPANY
By: /s/ JOSEPH E. CIVILETTO
-------------------------------------
Joseph E. Civiletto
Vice President and
Chief Financial Officer
(Authorized officer)
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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2.1 Stock for Asset Purchase Agreement by and between
Aviation Sales Company, AVS/AMI Merger Corp., Apex
Manufacturing, Inc., and the shareholders of Apex
Manufacturing, dated as of December 31, 1997.
99.1 Press Release dated January 6, 1998 announcing the
consummation of the Agreement.
EXHIBIT 2.1
STOCK FOR ASSET PURCHASE AGREEMENT
This STOCK FOR ASSET PURCHASE AGREEMENT (this "Agreement") is entered
into as of December 31, 1997 by and among AVIATION SALES COMPANY, a Delaware
corporation ("AVS"); and AVS/AMI MERGER CORP., an Arizona corporation and
wholly-owned direct subsidiary of AVS (the "AVS Acquisition Sub," and together
with AVS, the "AVS Companies"); APEX MANUFACTURING, INC., an Arizona corporation
(the "Company"); and the shareholders of the Company listed on the signature
pages hereto, who constitute all of the shareholders of the Company
(collectively, the Shareholders"). Certain other capitalized terms used herein
are defined in ARTICLE XIII and throughout this Agreement.
RECITALS
The Company owns and operates an aerospace manufacturing business
located in Phoenix, Arizona (the "Business"). AVS desires to purchase and the
Company and the Shareholders desire to sell all of the assets, properties and
business of the Company on the terms and subject to the conditions set forth in
this Agreement.
TERMS OF AGREEMENT
In consideration of the mutual representations, warranties, covenants
and agreements contained herein, the parties hereto agree as follows:
ARTICLE
I
PURCHASE AND SALE OF ASSETS
1.1 PURCHASED ASSETS. The Company agrees to and will at the Closing (as
defined in Section 3.1), sell, convey, transfer, assign and deliver to AVS
Acquisition Sub at the Closing, on the terms and subject to the conditions set
forth in this Agreement, all of its assets, properties and business of every
kind and description, whether real, personal or mixed, tangible or intangible,
wherever located (except those assets of the Company which are specifically
excluded as provided in Section 1.2 hereof) as shall exist on the Closing Date
(as defined in Section 3.1), whether or not appearing on the Current Balance
Sheet (as defined in Section 5.9) (collectively, the "Purchased Assets").
Without limiting the generality of the foregoing, the Purchased Assets shall
include, but not be limited to, the following:
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(a) TANGIBLE PERSONAL PROPERTY. All machinery, equipment,
tools, supplies, leasehold improvements, construction in progress,
furniture and fixtures, trucks, automobiles, vehicles, containers,
computer equipment, computer software and any other fixed assets owned
by the Company, as more particularly described on SCHEDULE 1.1(A)
attached hereto;
(b) CUSTOMER ACCOUNTS. All of the Company's commercial and
industrial contract and non-contract customer accounts, customer
contracts (the "Customer Contracts") and other rights to provide
products to the customers of the Company, as more particularly
described on SCHEDULE 1.1(B) attached hereto;
(c) CASH AND CASH EQUIVALENTS. All cash and cash equivalents
and investments, whether short-term or long-term, of the Company,
including without limitation, bank accounts, certificates of deposit,
treasury bills and securities;
(d) PREPAYMENTS. All prepaid and deferred items of the
Company, including without limitation, prepaid rentals, insurance,
taxes and unbilled charges and deposits relating to the operations of
the Company;
(e) RECEIVABLES. All receivables of the Company, including
without limitation all trade accounts receivables, notes receivable,
receivables arising as a result of contracts in transit and receivables
from manufacturers, insurance companies, service contract providers and
any other vendors or suppliers of the Company, as more particularly
described on SCHEDULE 1.1(E);
(f) LEASEHOLD INTERESTS. All of the interest of and the rights
and benefits accruing to the Company as lessee under any leases of
machinery, vehicles, containers, equipment, tools, furniture and
fixtures and other fixed assets;
(g) PROPRIETARY RIGHTS. All of the proprietary rights of the
Company, including without limitation all trademarks, trade names,
corporate names, patents, patent applications, licenses thereof, trade
secrets, technology, know-how, formulae, designs and drawings, computer
software, slogans, copyrights, processes, operating rights, other
licenses and permits and other similar intangible property and rights
relating to the business of the Company, and all goodwill developed
through the use of such property and rights (collectively,
"Intellectual Property"), as more particularly described on SCHEDULE
1.1(G) attached hereto;
(h) LICENSES AND PERMITS. To the extent assignable, all
permits, licenses, certificates of authority, franchises,
accreditations, registrations and other authorizations issued or used
in connection with the Business; and
(i) BOOKS, RECORDS AND OTHER ASSETS. All operating data and
records of the Company, including without limitation, customer lists
and records, financial, accounting and
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credit records, correspondence, budgets and other similar documents and
records, and all of the Company's telephone and telecopier numbers, and
post office boxes.
1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary set forth
in Section 1.1, the Purchased Assets shall exclude the following assets of the
Company: (i) the Purchase Price (as defined in Section 2.1) and other rights of
the Company under this Agreement; (ii) the shares of Preferred Stock of the
Company which are owned and held by the Company as treasury shares; (iii) the
corporate minute books and stock records of the Company; and (iv) all interest,
rights and benefits accruing to the Company from and after the Closing Date
under any and all Contracts between the Company and the Shareholders, any
Affiliate or other related party of the Company.
1.3 ASSIGNMENT OF CONTRACTS. Notwithstanding anything in this Agreement
to the contrary, this Agreement shall not constitute an assignment of any claim,
contract, license, franchise, lease, commitment, sales order, sales contract,
supply contract, service agreement, purchase order or purchase commitment if an
attempted assignment thereof, without the consent of a third party thereto,
would constitute a breach thereof or in any way adversely affect the rights of
AVS Acquisition Sub thereunder. If such consent is not obtained, or if any
attempt at an assignment thereof would be ineffective or would affect the rights
of the Company thereunder so that AVS Acquisition Sub would not in fact receive
all such rights, the Company and the Shareholders shall cooperate with the AVS
Companies to the extent necessary to provide for AVS Acquisition Sub the
benefits under such claim, contract, license, franchise, lease, commitment,
sales order, sales contract, supply contract, service agreement, purchase order
or purchase commitment, including enforcement for the benefit of AVS Acquisition
Sub of any and all rights of the Company against a third party thereto arising
out of the breach or cancellation by such third party or otherwise.
ARTICLE II
PURCHASE PRICE; ASSUMED LIABILITIES
2.1 PURCHASE PRICE. As consideration for the Purchased Assets, AVS
agrees, on the terms and subject to the conditions and limitations set forth
herein, to issue to the Company an aggregate number of shares (rounded to the
nearest whole share) of common stock, par value $.001 per share, of AVS ("AVS
Common Stock") determined by dividing (a) $8,350,000 (the "Purchase Price")
MINUS the amount of the Net Equity Shortfall (as defined below) of the Company
on the Closing Date ("Purchase Price Adjustment"); by (b) the average closing
price of a share of AVS Common Stock on The New York Stock Exchange (the "NYSE")
for the ten (10) consecutive trading day period ending December 22, 1997, as
reported (absent manifest error in the printing thereof) by the Wall Street
Journal (Eastern Edition) (the "Average Closing Price"); PROVIDED, HOWEVER,
that if the Average Closing Price is less than $35.00, the Average Closing
Price shall be deemed to be $35.00, and if the Average Closing Price is
greater than $40.00, the Average Closing Price shall be deemed to be $40.00; and
then (c) dividing the quotient determined under (a) and (b)
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above by the aggregate number of shares of Company Common Stock issued and
outstanding at the Closing Date.
For purposes of this Agreement, (i) "Net Equity Shortfall" shall mean the
amount, if any, by which the actual net equity balance of the Company, as
determined in accordance with GAAP, at the Closing Date is less than the Minimum
Net Equity; (ii) "Minimum Net Equity" shall mean $2,437,000, including the
Company's issued and outstanding Preferred Stock.
2.2 ASSUMED LIABILITIES. Except as set forth in Section 2.3, the AVS
Acquisition Sub agrees to and will at the Closing assume and agree to pay,
discharge and perform when lawfully required (i) all of the obligations, duties
and liabilities of the Company set forth on the Current Balance Sheet (as
defined in Section 5.9) and not paid or discharged on or prior to the Closing
Date, (ii) all of the obligations, duties and liabilities of the Company
incurred since the date of the Current Balance Sheet in the ordinary course of
business consistent with past practice, including the items referred to in
SCHEDULE 5.10, (iii) Indebtedness (as defined below) of the Company in an amount
not to exceed $2,000,000 in the aggregate ("Assumed Indebtedness") (or, in the
alternative, the AVS Companies may cause the payment at the Closing of the
amount of the Assumed Indebtedness), and (iv) all of the obligations,
liabilities and duties of the Company incurred in the ordinary course of
business prior to the date of the Current Balance Sheet which, in accordance
with GAAP consistently applied, were not required to be recorded on the Current
Balance Sheet (and which in the aggregate are not material) (the liabilities and
obligations referenced in this Section 2.2 are hereinafter referred to as the
"Assumed Liabilities").
Any amounts any of the AVS Companies pays in excess of the Assumed
Indebtedness in order to satisfy any indebtedness, obligations, duties and
liabilities of the Company as of the Closing Date shall be deemed Indemnifiable
Damages (as defined in Section 11.1), and AVS Companies may set off against the
Held Back Shares (as defined in Section 3.2) or take any other action or
exercise any other remedy available to it by appropriate legal proceedings to
recover such amount.
2.3 RETAINED LIABILITIES. The parties expressly agree that the Company
shall retain and the AVS Acquisition Sub shall not assume or otherwise become
liable for the following obligations or liabilities of the Company (the
"Retained Liabilities"):
(a) any liability or obligation of the Company or the
Shareholders against which AVS Acquisition Sub is indemnified pursuant
to ARTICLE XI hereof or arising or incurred in connection with the
negotiation, preparation or execution of this Agreement and the
transactions contemplated hereby, except attorneys' fees to be paid by
AVS pursuant to Section 15.3;
(b) any liability or obligation of the Company or the
Shareholders with respect to or arising out of any employee benefit
plan or any other plans or arrangements for the benefit of any
employees of the Company, any affiliated companies or the Shareholders;
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(c) any and all expenses, costs, damages, liabilities, or
obligations (including, without limitation, fees and expenses of
counsel) incurred by, under or pursuant to any Environmental Laws or
related to the Discharge, Handling, presence or clean up of Hazardous
Substances arising as a result of events occurring or facts or
circumstances arising or existing on or prior to the Closing Date
(whether or not in the ordinary course of business and whether or not
set forth on SCHEDULE 5.13);
2.4 TIMING OF PURCHASE PRICE ADJUSTMENT At least two days prior to the
Closing Date, the Company and AVS shall estimate by mutual agreement the amount
of the Purchase Price Adjustment, if any, as of the Closing Date for purposes of
determining the number of AVS Shares to be delivered by AVS to the Company at
Closing (which estimated amount is referred to herein as the "Estimated Value").
Within 45 days after the Closing Date, the Shareholders shall prepare and
deliver to AVS (in accordance with Section 14.1) a final balance sheet of the
Company as of the Closing Date along with a determination (the "Determination")
of the actual amount of the Purchase Price Adjustment as of the Closing Date
(which actual value is referred to herein as the "Actual Value"), which shall be
prepared on a basis consistent with the determination of the Estimated Value.
If, within 30 days after the date on which a Determination is delivered to AVS,
AVS shall not have given written notice to the Shareholders setting forth in
detail any objection of AVS to such Determination, then such Determination shall
be final and binding on the parties hereto. In the event AVS gives written
notice of any objection to such Determination within the 30-day period, AVS and
the Shareholders shall use all reasonable efforts to resolve the dispute within
the 30-day period following the delivery of the written notice. If the parties
are unable to reach an agreement within such 30-day period, the matter shall be
submitted to a firm of independent certified public accountants (which company
shall constitute one of the "Big Six" accounting firms), for determination of
the Actual Value which shall be final and binding upon AVS and the Shareholders.
AVS and the Shareholders shall contribute equally to costs (including fees and
expenses charged by the accounting firm) in connection with the resolution of
any such dispute. If the Actual Value is greater than the Estimated Value, AVS
shall be entitled to set off against the Held Back Shares (as defined in Section
3.2) the difference between the Actual Value and the Estimated Value (assuming a
value per share for purposes of such calculation equal to the Average Closing
Sale Price), which set off shall be deemed to be Indemnifiable Damages under
ARTICLE XI hereof.
2.5 NO EXPANSION OF THIRD PARTY RIGHTS. The assumption by AVS
Acquisition Sub of the Assumed Liabilities, and the transfer thereof by the
Company, shall in no way expand the rights or remedies of any third party
against the AVS Companies or the Company as compared to the rights and remedies
which such third party would have had against the Company had the AVS
Acquisition Sub not assumed such liabilities. Without limiting the generality of
the preceding sentence, the assumption by AVS Acquisition Sub of the Assumed
Liabilities shall not create any third party beneficiary rights.
2.6 LIQUIDATION OF THE COMPANY. The parties hereto acknowledge and
agree that immediately after the consummation of acquisition of the Purchased
Assets, the Company will be
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liquidated and all of the Company's assets, which will then consist of the
Purchase Price, shall be distributed by the Company to the Shareholders.
2.7 ACCOUNTING AND TAX TREATMENT. The parties hereto acknowledge and
agree that the transactions contemplated by this Agreement are intended to be
treated as a pooling of interest business combination by AVS for accounting
purposes and as a tax-free reorganization under Section 368 of the Code for tax
purposes.
ARTICLE III
CLOSING
3.1 TIME AND PLACE. Subject to and after fulfillment or waiver of the
conditions set forth in ARTICLE VIII and ARTICLE IX of this Agreement, the
Closing of the purchase and sale of the Purchased Assets (the "Closing") shall
take place on a date selected by AVS within five (5) days following the
fulfillment or waiver of such conditions (the "Closing Date"), through the
mutual exchange of documents by overnight mail and telecopy, or such other
manner as the parties may otherwise agree.
3.2 PROCEDURE AT THE CLOSING. At the Closing, the parties agree that
the following shall occur:
(a) The Company and the Shareholders shall have satisfied each
of the conditions set forth in ARTICLE VIII and shall deliver to the
AVS Companies the documents, certificates, opinions, consents and
letters required by ARTICLE VIII.
(b) The Company and the Shareholders shall deliver to AVS
Acquisition Sub a Bill of Sale and Assignment in the form attached
hereto as EXHIBIT A, and such other deeds, bills of sale, endorsements,
assignments, releases and other instruments, in such form as is
satisfactory to AVS and as shall be sufficient to vest in AVS
Acquisition Sub good and marketable title to the Purchased Assets and
shall deliver to AVS Acquisition Sub immediate possession of the
Purchased Assets.
(c) AVS shall issue to the Company the shares of AVS Common
Stock issuable pursuant to Section 2.1 and shall deliver such shares in
the following manner: (i) AVS shall set aside and hold in accordance
with Section 11.3 stock certificates representing shares of AVS Common
Stock having a value equal to ten percent (10%) of the Purchase Price
(the "Held Back Shares"), and (ii) AVS shall deliver one or more stock
certificates representing the balance of the shares of AVS Common Stock
issuable in accordance with Section 2.1 to the Company. The shares of
AVS Common Stock issuable pursuant to Section 2.1, including the Held
Back Shares, are referred to herein as the "AVS Shares."
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(d) The Company shall execute and deliver a receipt
acknowledging receipt of the Purchase Price.
(e) Upon liquidation of the Company and subject to compliance
with the pooling and Held Back Shares and Article XI requirement
contained herein, the Company shall execute a medallion signature
guarantee stock power in favor of the Shareholders and deliver such
stock power along with the certificate(s) for the AVS Shares
representing the Purchase Price for issuance in the names of the
Shareholders. The Shareholders (excluding the Company Plan) agree to
take all action necessary to substitute, as AVS may request, a
sufficient number of AVS Shares to be received by them upon liquidation
of the Company as Held Back Shares in place of the Held Back Shares,
and any additional AVS Shares given as security, previously provided by
the Company at Closing. In addition, each of the Shareholders shall
execute and provide such documents, including medallion signature
guarantee stock powers, as the Company may request in connection with
such Held Back Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE AVS COMPANIES
As a material inducement to the Company and each of the Shareholders to
enter into this Agreement and to consummate the transactions contemplated
hereby, each of the AVS Companies makes the following representations and
warranties to the Company and the Shareholders:
4.1 CORPORATE STATUS. AVS is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. AVS is
duly qualified and in good standing as a foreign corporation in all
jurisdictions where such qualification is required under applicable law, except
where the failure to be so qualified would not have a Material Adverse Effect on
AVS. The AVS Acquisition Sub is a corporation duly organized, validly existing
and in good standing under the laws of the State of Arizona and the AVS
Acquisition Sub is a wholly owned subsidiary of AVS.
4.2 CORPORATE POWER AND AUTHORITY. Each of the AVS Companies has the
corporate power and authority to execute and deliver this Agreement, to perform
its respective obligations hereunder and to consummate the transactions
contemplated hereby. Each of the AVS Companies has taken all action necessary to
authorize its execution and delivery of this Agreement, the performance of its
obligations hereunder and the consummation of the transactions contemplated
hereby.
4.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by each of the AVS Companies and constitutes a legal, valid and binding
obligation of each of the AVS Companies, enforceable against each of the AVS
Companies in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting
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the enforcement of creditors' rights generally and general equitable principles
regardless of whether such enforceability is considered in a proceeding at law
or in equity.
4.4 AVS COMMON STOCK. Upon consummation of the transactions
contemplated by this Agreement and the issuance and delivery of certificates
representing the AVS Shares to the Company, the AVS Shares will be validly
issued, fully paid and non-assessable shares of AVS Common Stock.
4.5 SEC FILINGS. Since July 1996, except where the failure to have done
so did not and would not have a Material Adverse Effect on AVS, AVS has filed
all reports and registration statements, together with any amendments thereto,
that it was required to file with the SEC, including, but not limited to Forms
10-K, Forms 10-Q, Forms 8-K and proxy statements (collectively, the "AVS
Reports"). As of their respective dates (but taking into account any amendments
filed prior to the date of this Agreement), the AVS Reports, including the
financial statements therein, complied in all material respects with all rules
and regulations promulgated by the SEC and 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 statements therein, in light of the circumstances
under which they were made, not misleading. Since the date of the last AVS
Report, except where the failure to have done so would not have a Material
Adverse Effect on AVS, no material change has occurred that would require AVS to
file any amendment to such AVS Reports.
4.6 ABILITY TO GRANT REGISTRATION RIGHTS. AVS has all necessary
corporate power and authority to grant the registration rights under Section
10.1 hereof granted hereunder and to undertake to file the Registration
Statement (as defined in Section 10.1) with respect to the AVS Shares to be
issued hereunder. As of the date hereof, AVS knows of no reason that the
Registration Statement would fail to be permitted to go effective by the SEC.
4.7 NO COMMISSIONS. None of the AVS Companies has incurred any
obligation for any finder's or broker's or agent's fees or commissions or
similar compensation in connection with the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY AND THE SHAREHOLDERS
As a material inducement to the AVS Companies to enter into this
Agreement and to consummate the transactions contemplated hereby, the Company
and the Shareholders, jointly and severally, make the following representations
and warranties to AVS:
5.1 CORPORATE STATUS. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation and has the requisite power and authority to own or lease its
properties and to carry on its business as now being conducted. The
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Company is not legally qualified to transact business as a foreign corporation
in any jurisdiction, and the nature of its properties and the conduct of its
business does not require such qualification. The Company has fully complied
with all of the requirements of any statute governing the use and registration
of fictitious names, and has the legal right to use the names under which it
operates its business in Arizona. There is no pending or threatened proceeding
for the dissolution, liquidation, insolvency or rehabilitation of the Company.
5.2 POWER AND AUTHORITY. The Company has the corporate power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The Company
has taken all action necessary to authorize the execution and delivery of this
Agreement, the performance of its obligations hereunder and the consummation of
the transactions contemplated hereby. Each Shareholder, other than the Company's
401(k) plan, (the "Company Plan"), represents that he is an individual residing
in the State of Arizona, and each Shareholder, or in the case of the Company
Plan, the sole trustee thereof, has the requisite competence and authority to
execute and deliver this Agreement, to perform his or its respective obligations
hereunder and to consummate the transactions contemplated hereby.
5.3 ENFORCEABILITY. This Agreement has been duly executed and delivered
by the Company and the Shareholders, and constitutes the legal, valid and
binding obligation of each of them, enforceable against them in accordance with
its terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and general equitable principles regardless of
whether such enforceability is considered in a proceeding at law or in equity.
5.4 CAPITALIZATION. As of the date hereof, the Company has (a)
1,000,000 authorized shares of Company Common Stock and 1,000,000 authorized
shares of preferred stock, $ 1.00 per share par value (the "Preferred Stock")
and no other shares of any class of capital stock, (b) 300,000 shares of Company
Common Stock and 562,000 shares of Preferred Stock issued and outstanding, and
(c) no shares of Company Common Stock and no shares of Preferred Stock held in
treasury. All of the issued and outstanding shares of capital stock of the
Company (i) have been duly authorized and validly issued and are fully paid and
non-assessable, (ii) were issued in compliance with all applicable state and
federal securities laws, and (iii) were not issued in violation of any
preemptive rights, rights of first refusal or similar rights. Except as set
forth in SCHEDULE 5.4, no preemptive rights, rights of first refusal or similar
rights exist with respect to the shares of capital stock of the Company and no
such rights arise by virtue of or in connection with the transactions
contemplated hereby. There are no outstanding or authorized rights, options,
warrants, convertible securities, subscription rights, conversion rights,
exchange rights or other agreements or commitments of any kind that could
require the Company to issue or sell any shares of its capital stock (or
securities convertible into or exchangeable for shares of its capital stock).
There are no outstanding stock appreciation, phantom stock, profit participation
or other similar rights with respect to the Company. There are no proxies,
voting rights or other agreements or understandings with respect to the voting
or transfer of the capital stock of the Company. Other than as set forth in
Section 7.16, the Company is not obligated to redeem or otherwise acquire any of
its outstanding shares of capital stock.
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5.5 SHAREHOLDERS OF THE COMPANY. SCHEDULE 5.5 sets forth, with respect
to the Company, the name, address and federal taxpayer identification number of,
and the number of outstanding shares of each class of its capital stock owned of
record and/or beneficially by, each shareholder of the Company as of the close
of business on the date of this Agreement. As of the date hereof, the
Shareholders constitute all of the holders of all issued and outstanding shares
of capital stock of the Company, and each of the Shareholders owns such shares
free and clear of all Liens, restrictions and claims of any kind. From December
31, 1996 up to and including the Current Balance Sheet Date, the Company has not
made any distributions to the Shareholders other than ordinary and customary
salaries, expense reimbursements and scheduled payments on the Preferred Stock
owed to Robert W. Reitz and James John Berens, Jr. and accrued bonuses paid
December 19, 1997 to Robert W. Reitz and James John Berens, Jr. The Company has
paid in full all accumulated dividends on its capital stock that were payable as
of the date hereof.
5.6 NO VIOLATION. The execution and delivery of this Agreement by the
Company and the Shareholders, the performance by them of their respective
obligations hereunder and the consummation by them of the transactions
contemplated by this Agreement will not (i) contravene any provision of the
articles of incorporation or bylaws of the Company, (ii) violate or conflict
with any law, statute, ordinance, rule, regulation, decree, writ, injunction,
judgment or order of any Governmental Authority or of any arbitration award
which is either applicable to, binding upon or enforceable against the Company,
any of the Shareholders or the Purchased Assets, (iii) conflict with, result in
any breach of, or constitute a default (or an event which would, with the
passage of time or the giving of notice or both, constitute a default) under, or
give rise to a right to terminate, amend, modify, abandon or accelerate, any
Contract which is applicable to, binding upon or enforceable against the
Company, any of the Shareholders or the Purchased Assets, (iv) result in or
require the creation or imposition of any Lien upon or with respect to any of
the property or assets of the Company, or (v) require the consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Authority, any court or tribunal or any other Person, except any SEC and other
filings required to be made by AVS.
5.7 RECORDS OF THE COMPANY. The copies of the articles of incorporation
and bylaws of the Company which were provided to AVS are true, accurate and
complete and reflect all amendments made through the date of this Agreement. The
minute books for the Company made available to AVS for review were correct and
complete in all material respects as of the date of such review, no further
entries have been made through the date of this Agreement, such minute books
contain the true signatures of the persons purporting to have signed them, and
such minute books contain an accurate record of all material corporate actions
of the shareholders and directors (and any committees thereof) of the Company
taken by written consent or at a meeting since incorporation. All material
corporate actions taken by the Company have been duly authorized or ratified.
All accounts, books, ledgers and official and other records of the Company have
been fully, properly and accurately kept and completed in all material respects,
and there are no material inaccuracies or discrepancies of any kind contained
therein. The stock ledgers of the Company, as previously made available to AVS,
contain accurate and complete records of all issuances, transfers and
cancellations of shares of the capital stock of the Company.
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5.8 SUBSIDIARIES. The Company does not own, directly or indirectly, any
outstanding voting securities of or other interests in, or controls, any other
corporation, partnership, joint venture or other business entity.
5.9 FINANCIAL STATEMENTS. The Company and the Shareholders have
delivered to AVS the financial statements of the Company, including the notes
thereto, for (i) the year ended December 31, 1995 and December 31, 1996, audited
by Miller, Wagner and Company, Ltd. ("Miller Wagner"), and (ii) the period ended
November 30, 1997, internally prepared by the Company, copies of which are
attached to SCHEDULE 5.9 hereto (the "Financial Statements"). The balance sheet
of the Company dated as of November 30, 1997, included in the Financial
Statements is referred to herein as the "Current Balance Sheet." The Financial
Statements fairly present in all material respects the financial position of the
Company at each of the balance sheet dates and the results of operations for the
periods covered thereby, and have been prepared in accordance with GAAP
consistently applied throughout the periods indicated except, in the case of
interim financial statements, for normal year-end audit adjustments and the
absence of footnotes. The books and records of the Company fully and fairly
reflect in all material respects all of its transactions, properties, assets and
liabilities. There are no extraordinary or material non-recurring items of
income or expense (subject to fluctuations in the ordinary course of business)
during the periods covered by the Financial Statements and the balance sheets
included in the Financial Statements do not reflect any write-up or revaluation
increasing the book value of any assets, except as specifically disclosed in the
notes thereto. The Financial Statements reflect all adjustments necessary for a
fair presentation of the financial information contained therein.
5.10 CHANGES SINCE THE CURRENT BALANCE SHEET DATE. Except as set forth
on SCHEDULE 5.10, since the date of the Current Balance Sheet, the Company has
not (i) issued any capital stock or other securities; (ii) made any distribution
of or with respect to its capital stock or other securities or purchased or
redeemed any of its securities; (iii) paid any bonus to or increased the rate of
compensation of any of its officers or salaried employees or amended any other
terms of employment of such persons; (iv) sold, leased or transferred any of its
properties or assets other than in the ordinary course of business consistent
with past practice; (v) made or obligated itself to make capital expenditures
out of the ordinary course of business consistent with past practice; (vi) made
any payment in respect of its liabilities other than in the ordinary course of
business consistent with past practice; (vii) incurred any obligations or
liabilities (including any indebtedness) or entered into any transaction or
series of transactions involving in excess of $10,000 in the aggregate out of
the ordinary course of business, except for this Agreement and the transactions
contemplated hereby; (viii) suffered any theft, damage, destruction or casualty
loss, not covered by insurance and for which a timely claim was filed, in excess
of $10,000 in the aggregate; (ix) suffered any extraordinary losses (whether or
not covered by insurance); (x) waived, canceled, compromised or released any
rights having a value in excess of $10,000 in the aggregate; (xi) made or
adopted any change in its accounting practice or policies; (xii) made any
adjustment to its books and records other than in respect of the conduct of its
business activities in the ordinary course consistent with past practice; (xiii)
entered into any transaction with any Affiliate other than intercompany
transactions in the ordinary course of business consistent with past practice;
(xiv) entered into any employment
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agreement; (xv) terminated, amended or modified in any material respect any
agreement involving an amount in excess of $10,000; (xvi) imposed any security
interest or other Lien on any of its assets other than in the ordinary course of
business consistent with past practice; (xvii) delayed paying any accounts
payable which are due and payable except to the extent being contested in good
faith; (xviii) made or pledged any charitable contribution in excess of $5,000;
(xix) entered into any other transaction or, been subject to any event which has
or may have a Material Adverse Effect on the Business; or (xx) agreed to do or
authorized any of the foregoing.
5.11 LIABILITIES OF THE COMPANY. The Company does not have any
liabilities or obligations, whether accrued, absolute, contingent or otherwise,
except (a) to the extent reflected or taken into account in the Current Balance
Sheet and not heretofore paid or discharged, (b) liabilities incurred in the
ordinary course of business consistent with past practice since the date of the
Current Balance Sheet (none of which relates to breach of contract, breach of
warranty, tort, infringement or violation of law, or which arose out of any
action, suit, claim, governmental investigation or arbitration proceeding), (c)
normal accruals, reclassifications, and audit adjustments which would be
reflected on an audited financial statement and which would not be material in
the aggregate, and (d) liabilities incurred in the ordinary course of business
prior to the date of the Current Balance Sheet which, in accordance with GAAP
consistently applied, were not recorded thereon. As of the Closing Date, the
aggregate amount of Indebtedness of the Company shall not exceed $2,000,000. For
purposes of this Agreement, "Indebtedness" shall mean the aggregate amount of
indebtedness for borrowed money (including accrued but unpaid interest), whether
owed to a bank or any other person, remaining payments on capitalized equipment
leases and remaining payments on Preferred Stock.
5.12 LITIGATION. There is no action, suit, or other legal or
administrative proceeding or governmental investigation pending, or to the
knowledge of the Shareholders, threatened, anticipated or contemplated against,
by or affecting the Company, or the Purchased Assets, or the Shareholders, or
which questions the validity or enforceability of this Agreement or the
transactions contemplated hereby, and there is no basis for any of the
foregoing. There are no outstanding orders, decrees or stipulations issued by
any Governmental Authority in any proceeding to which the Company or any of the
Shareholders is or was a party which have not been complied with in full or
which continue to impose any material obligations on the Company, any of the
Shareholders or which may have a Material Adverse Effect on the Company, any of
the Shareholders or the Purchased Assets.
5.13 ENVIRONMENTAL MATTERS.
(a) The Company (as defined in clause (g) below) is and has at
all times been in compliance in all material respects with all Environmental
Laws (as defined in clause (g) below) governing its business, operations,
properties and assets, including, without limitation: (i) all requirements
relating to the Discharge (as defined in clause (g) below) and Handling (as
defined in clause (g) below) of Hazardous Substances (as defined in clause (g)
below); (ii) all requirements relating to notice, record keeping and reporting;
(iii) all requirements relating to obtaining and maintaining Licenses (as
defined in clause (g) below) for the ownership of its properties and assets
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and the operation of its business as presently conducted, including Licenses
relating to the Handling and Discharge of Hazardous Substances; and (iv) all
applicable writs, orders, judgements, injunctions, governmental communications,
decrees, informational requests or demands issued pursuant to, or arising under,
any Environmental Laws.
(b) There are no (and there is no basis for any)
non-compliance orders, warning letters, notices of violation (collectively
"Notices"), claims, suits, actions, judgments, penalties, fines, or
administrative or judicial investigations or proceedings (collectively
"Proceedings") pending or threatened against or involving the Company, or its
business, operations, properties or assets, issued by any Governmental Authority
or third party with respect to any Environmental Laws or Licenses issued to the
Company thereunder in connection with, related to or arising out of the
ownership by the Company of its properties or assets or the operation of its
business, which have not been resolved to the satisfaction of the issuing
Governmental Authority or third party in a manner that would not impose any
material obligation, burden or continuing material liability on any of the AVS
Companies, the Purchased Assets, or the Company in the event that the
transactions contemplated by this Agreement are consummated, or which could have
a Material Adverse Effect on the Company, the Purchased Assets, or any of the
AVS Companies, including, without limitation: (i) Notices or Proceedings related
to the Company being a potentially responsible party for a federal or state
environmental cleanup site or for corrective action under any applicable
Environmental Laws; (ii) Notices or Proceedings relating to the Company being
responsible to undertake any response or remedial actions or clean-up actions of
any kind; or (iii) Notices or Proceedings related to the Company being liable
under any Environmental Laws for personal injury, property damage, natural
resource damage, or clean up obligations.
(c) The Company has not Handled or Discharged, nor has it
allowed or arranged for any third party to Handle or Discharge, Hazardous
Substances to, at or upon: (i) any location other than a site lawfully permitted
to receive such Hazardous Substances; (ii) any real property currently or
previously owned or leased by the Company (other than in the ordinary course of
business in compliance in all material respects with applicable Environmental
Laws); or (iii) any site which, pursuant to any Environmental Laws, (x) has been
placed on the National Priorities List or its state equivalent, or (y) the
Environmental Protection Agency or the relevant state agency or other
Governmental Authority has notified the Company that such Governmental Authority
has proposed or is proposing to place on the National Priorities List or its
state equivalent. There has not occurred, nor is there presently occurring, a
Discharge, or threatened Discharge, of any Hazardous Substance on, into or
beneath the surface of, or adjacent to, any real property currently or
previously owned or leased by the Company in an amount requiring a notice or
report to be made to a Governmental Authority or in violation of any applicable
Environmental Laws.
(d) SCHEDULE 5.13 identifies the operations and activities,
and locations thereof, which have been conducted or are being conducted by the
Company on any real property currently or previously owned or leased by the
Company which have involved the Handling or Discharge of Hazardous Substances.
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(e) The Company does not use, nor has it used, any Aboveground
Storage Tanks (as defined in clause (g) below) or Underground Storage Tanks (as
defined in clause (g) below), and there are not now nor have there ever been any
Underground Storage Tanks beneath any real property currently or previously
owned or leased by the Company that are required to be registered under
applicable Environmental Laws.
(f) SCHEDULE 5.13 identifies (i) all environmental audits,
assessments or occupational health studies undertaken by the Company or its
agents or undertaken by any Governmental Authority, or any third party, relating
to or affecting the Company or any real property currently or previously owned
or leased by the Company; (ii) the results of any ground, water, soil, air or
asbestos monitoring undertaken by the Company or its agents or undertaken by any
Governmental Authority or any third party, relating to or affecting the Company
or any real property currently or previously owned or leased by the Company
which indicate the presence of Hazardous Substances at levels requiring a notice
or report to be made to a Governmental Authority or in violation of any
applicable Environmental Laws; (iii) all material written communications between
the Company and any Governmental Authority arising under or related to
Environmental Laws; and (iv) all outstanding citations issued under OSHA, or
similar state or local statutes, laws, ordinances, codes, rules, regulations,
orders, rulings, or decrees, relating to or affecting either the Company or any
real property currently or previously owned or leased by the Company.
(g) For purposes of this Section 5.13, the following terms
shall have the meanings ascribed to them below:
"Aboveground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 ET SEQ., as amended, of RCRA, or any applicable state
or local statute, law, ordinance, code, rule, regulation, order ruling, or
decree governing Aboveground Storage Tanks.
"Company" means the Company and any Affiliates.
"Discharge" means any manner of spilling, leaking, dumping,
discharging, releasing or emitting, as any of such terms may further be defined
in any Environmental Law, into any medium including, without limitation, ground
water, surface water, soil or air.
"Environmental Laws" means all federal, state, regional or
local statutes, laws, rules, regulations, codes, orders, plans, injunctions,
decrees, rulings, and changes or ordinances or judicial or administrative
interpretations thereof, or similar laws of foreign jurisdictions where the
Company conducts business, whether currently in existence or hereafter enacted
or promulgated, any of which govern (or purport to govern) or relate to
pollution, protection of the environment, public health and safety, air
emissions, water discharges, hazardous or toxic substances, solid or hazardous
waste or occupational health and safety, as any of these terms are or may be
defined in such statutes, laws, rules, regulations, codes, orders, plans,
injunctions, decrees, rulings and changes or ordinances, or judicial or
administrative interpretations thereof, including, without limitation: the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund
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Amendment and Reauthorization Act of 1986, 42 U.S.C. ss.9601, ET SEQ.
(collectively "CERCLA"); the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 and subsequent Hazardous and
Solid Waste Amendments of 1984, 42 U.S.C. ss.6901 ET SEQ. (collectively "RCRA");
the Hazardous Materials Transportation Act, as amended, 49 U.S.C. ss.1801, ET
SEQ.; the Clean Water Act, as emended, 33 U.S.C. ss.1311, ET SEQ.; the Clean Air
Act, as amended (42 U.S.C. ss.7401-7642); the Toxic Substances Control Act, as
amended, 15 U.S.C. ss.2601 ET SEQ.; the Federal Insecticide, Fungicide, and
Rodenticide Act as amended, 7 U.S.C. ss.136-136Y ("FIFRA"); the Emergency
Planning and Community Right-to-Know Act of 1986 as amended, 42 U.S.C. ss.11001,
ET SEQ. (Title III of SARA) ("EPCRA"); and the Occupational Safety and Health
Act of 1970, as amended, 29 U.S.C. ss.651, ET SEQ. ("OSHA").
"Handle" means any manner of generating, accumulating,
storing, treating, disposing of, transporting, transferring, labeling, handling,
manufacturing or using, as any of such terms may further be defined in any
Environmental Law, of any Hazardous Substances or Waste.
"Hazardous Substances" shall be construed broadly to include
any toxic or hazardous substance, material, or waste, and any other contaminant,
pollutant or constituent thereof, whether liquid, solid, semi-solid, sludge
and/or gaseous, including without limitation, chemicals, compounds, by-products,
pesticides, asbestos containing materials, petroleum or petroleum products, and
polychlorinated biphenyls, the presence of which requires investigation or
remediation under any Environmental Laws or which are or become regulated,
listed or controlled by, under or pursuant to any Environmental Laws, including,
without limitation, RCRA, CERCLA, the Hazardous Materials Transportation Act,
the Toxic Substances Control Act, the Clean Air Act, the Clean Water Act, FIFRA,
EPCRA and OSHA, or any similar state statute, or any future amendments to, or
regulations implementing such statutes, laws, ordinances, codes, rules,
regulations, orders, rulings, or decrees, or which has been or shall be
determined or interpreted at any time by any Governmental Authority to be a
hazardous or toxic substance regulated under any other statute, law, regulation,
code, rule, order, or decree.
"Licenses" means all licenses, certificates, permits,
approvals and registrations.
"Underground Storage Tank" shall have the meaning ascribed to
such term in Section 6901 ET SEQ., as amended, of RCRA, or any applicable state
or local statute, law, ordinance, code, rule, regulation, order ruling, or
decree governing Underground Storage Tanks.
5.14 REAL ESTATE
(a) The Company does not own any real estate.
(b) SCHEDULE 5.14(B) sets forth a list of all leases, licenses
or similar agreements ("Leases") to which the Company is a party (copies of
which have previously been furnished to AVS), in each case setting forth (A) the
lessor and lessee thereof and the date and term of each of the Leases, (B) the
street address, of each property covered thereby, and (C) a brief description
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(including size and function) of the principal improvements and buildings
thereon (the "Leased Premises"), all of which are within the property set-back
and building lines of the respective property. The Leases are in full force and
effect and have not been amended, and no party thereto is in default or breach
under any such Lease. No event has occurred which, with the passage of time or
the giving of notice or both, would cause a material breach of or default under
any of such Leases. There is no breach or anticipated breach by any other party
to such Leases. With respect to each such Leased Premises:
(i) The Company has valid leasehold interests in the Leased
Premises, which leasehold interests are free and clear of any Liens,
covenants and easements or title defects of any nature whatsoever,
except for landlord Liens that arise by operation of law (none of such
Liens presently exist);
(ii) Except for the Leased Premises that is presently in the
process of a build out, the improvements or portions thereof located on
the Leased Premises that are used in the business of the Company are
each in good repair and condition, normal wear and tear excepted, and
are in the aggregate sufficient to satisfy the Company's current and
reasonably anticipated normal business activities as conducted threat;
(iii) Each of the Leased Premises (a) has direct access to
public roads or access to public roads by means of a perpetual access
easement, such access being sufficient to satisfy the current and
reasonably anticipated normal transportation requirements of the
Company's business as presently conducted at such parcel; and (b) is
served by all utilities in such quantity and quality as are sufficient
to satisfy the current normal business activities as conducted at such
parcel; and
(iv) The Company has not received notice of (a) any
condemnation proceeding with respect to any portion of the Leased
Premises or any access thereto, and, to the knowledge of the
Shareholders no such proceeding is contemplated by any Governmental
Authority; or (b) any special assessment which may affect any of the
Leased Premises, and no such special assessment is, to the knowledge of
the Shareholders, contemplated by any Governmental Authority.
5.15 GOOD TITLE TO AND CONDITION OF ASSETS.
(a) Except as set forth on SCHEDULE 5.15, the Company has good
and marketable title to all of the Purchased Assets with full power to sell,
transfer and assign the same, free and clear of any Liens or restrictions on use
and by delivery of the Bill of Sale and Assignment as contemplated by Section
3.2 the Company will deliver to AVS Acquisition Sub title to the Purchased
Assets free and clear of any Lien except for such Liens set forth on EXHIBIT
5.15. Each of the Shareholders covenants and agrees that it will warrant and
defend the property hereby sold to AVS Acquisition Sub, its successors and
assigns, against the lawful claims, demands, charges of all Persons whomsoever.
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(b) The Purchased Assets currently in use or necessary for the
business and operations of the Company are in reasonably good operating
condition, normal wear and tear excepted, and have been maintained substantially
in accordance with all applicable manufacturer's specifications and warranties.
5.16 COMPLIANCE WITH LAWS.
(a) The Company is and has been in compliance in all material
respects with all laws, regulations and orders applicable to it, its business
and operations (as conducted by it now and in the past), the Purchased Assets,
the Leased Premises and any other properties and assets (in each case owned or
used by it now or in the past). The Company has not been cited, fined or
otherwise notified of any asserted past or present failure to comply in any
material respect with any laws, regulations or orders and no proceeding with
respect to any such violation is pending or, to the knowledge of the
Shareholders, threatened.
(b) Neither the Company, nor any of its employees or agents,
has made any payment of funds in connection with the business of the Company
which is prohibited by law, and no funds have been set aside to be used in
connection with the business of the Company for any payment prohibited by law.
(c) The Company is and at all times has been in compliance in
all material respects with the terms and provisions of the Immigration Reform
and Control Act of 1986, as amended (the "Immigration Act"). With respect to
each Employee (as defined in 8 C.F.R. 274a.1(f)) of the Company for whom
compliance with the Immigration Act is required, the Company has on file a true,
accurate and complete copy of (i) each Employee's Form I-9 (Employment
Eligibility Verification Form) and (ii) all other records, documents or other
papers prepared, procured and/or retained by the Company pursuant to the
Immigration Act. The Company has not been cited, fined, served with a Notice of
Intent to Fine or with a Cease and Desist Order, nor has any action or
administrative proceeding been initiated or threatened against the Company, by
the Immigration and Naturalization Service by reason of any actual or alleged
failure to comply with the Immigration Act.
(d) The Company is not subject to any Contract, decree or
injunction in which the Company is a party which restricts the continued
operation of any business of the Company or the expansion thereof to other
geographical areas, customers and suppliers or lines of business.
5.17 LABOR AND EMPLOYMENT MATTERS. SCHEDULE 5.17 sets forth the name,
address, social security number and current rate of compensation of the
employees of the Company ("Employees"). The Company is not a party to or bound
by any collective bargaining agreement or any other agreement with a labor
union, and there has been no effort by any labor union during the 24 months
prior to the date hereof to organize any employees of the Company into one or
more collective bargaining units. There is no pending or, to the knowledge of
the Shareholders, threatened labor dispute, strike or work stoppage which
affects or which may affect the business of the Company or which may interfere
with its continued operations. Neither the Company nor any agent,
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representative or employee thereof has within the last 24 months committed any
unfair labor practice as defined in the National Labor Relations Act, as
amended, and there is no pending or, to the knowledge of the Shareholders,
threatened charge or complaint against the Company by or with the National Labor
Relations Board or any representative thereof. There has been no strike, walkout
or work stoppage or threat of union activity involving any of the employees of
the Company during the 24 months prior to the date hereof. None of the
Shareholders is aware that any executive or key employee or group of employees
has any plans to terminate his, her or their employment with the Company as a
result of the transactions contemplated hereby or otherwise. The Company has
complied in all material respects with applicable laws, rules and regulations
relating to employment, civil rights and equal employment opportunities,
including but not limited to, the Civil Rights Act of 1964, the Fair Labor
Standards Act, and the Americans with Disabilities Act, as amended.
5.18 EMPLOYEE BENEFIT PLANS.
(a) EMPLOYEE BENEFIT PLANS. SCHEDULE 5.18 contains a list
setting forth each employee benefit plan or arrangement of the Company,
including but not limited to, employee pension benefit plans, as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), multi-employer plans, as defined in Section 3(37) of ERISA, employee
welfare benefit plans, as defined in Section 3(1) of ERISA, deferred
compensation plans, stock option plans, bonus plans, stock purchase plans,
hospitalization, disability and other insurance plans, severance or termination
pay plans and policies, whether or not described in Section 3(3) of ERISA, in
which employees, their spouses or dependents, of the Company participate
("Employee Benefit Plans") (true and accurate copies of which, together with the
most recent annual reports on Form 5500 and summary plan descriptions with
respect thereto, were furnished to AVS).
(b) COMPLIANCE WITH LAW. With respect to each Employee Benefit
Plan (i) each has been administered in all material respects in compliance with
its terms and with all applicable laws, including, but not limited to, ERISA and
the Internal Revenue Code of 1986, as amended (the "Code"); (ii) no actions,
suits, claims or disputes are pending, or, to the knowledge of the Shareholders,
threatened; (iii) no audits, inquiries, reviews, proceedings, claims, or demands
are pending with any governmental or regulatory agency; (iv) there are no facts
which could give rise to any material liability in the event of any such
investigation, claim, action, suit, audit, review, or other proceeding; and (v)
all material reports, returns, and similar documents required to be filed with
any governmental agency or distributed to any plan participant have been duly or
timely filed or distributed.
(c) QUALIFIED PLANS. With respect to each Employee Benefit
Plan intended to qualify under Code Section 401(a) or 403(a) (i) the Internal
Revenue Service has issued a favorable determination letter, true and correct
copies of which have been furnished to AVS, that such plans are qualified and
exempt from federal income taxes; (ii) no such determination letter has been
revoked nor has revocation been, to the knowledge of the Shareholders,
threatened, nor has any amendment or other action or omission occurred with
respect to any such plan since the date of its most recent determination letter
or application therefor in any respect which would adversely affect its
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qualification or materially increase its costs; (iii) no such plan has been
amended in a manner that would require security to be provided in accordance
with Section 401(a)(29) of the Code; (iv) no reportable event (within the
meaning of Section 4043 of ERISA) has occurred, other than one for which the
30-day notice requirement has been waived; (v) as of the Closing Date, the
present value of all liabilities that would be "benefit liabilities" under
Section 4001(a)(16) of ERISA if benefits described in Code Section 411(d)(6)(B)
were included will not exceed the then current fair market value of the assets
of such plan (determined using the actuarial assumptions used for the most
recent actuarial valuation for such plan); (vi) all contributions to, and
payments from and with respect to such plans, which may have been required to be
made in accordance with such plans and, when applicable, Section 302 of ERISA or
Section 412 of the Code, have been timely made; and (vii) all such contributions
to the plans, and all payments under the plans (except those to be made from a
trust qualified under Section 401(a) of the Code) and all payments with respect
to the plans (including, without limitation, PBGC (as defined below) and
insurance premiums) for any period ending before the Closing Date that are not
yet, but will be, required to be made are properly accrued and reflected on the
Current Balance Sheet (other than routine claims for benefits under the terms of
such plans).
(d) MULTIEMPLOYER PLANS. The Company does not participate and
is not otherwise involved in any multiemployer plan, as described in Section
4001(a)(3) of ERISA.
(e) WELFARE PLANS. (i) Except as set forth on SCHEDULE 5.18,
the Company is not obligated under any employee welfare benefit plan as
described in Section 3(1) of ERISA ("Welfare Plan") to provide medical or death
benefits (other than routine claims for benefits under the terms of its health
insurance plan) with respect to any employee or former employee of the Company
or its predecessors after termination of employment except as required by COBRA;
(ii) the Company has complied, in all material respects, with the notice and
continuation coverage requirements of Section 4980B of the Code and the
regulations thereunder with respect to each Welfare Plan that is, or was during
any taxable year for which the statute of limitations on the assessment of
federal income taxes remains, open, by consent or otherwise, a group health plan
within the meaning of Section 5000(b)(1) of the Code; and (iii) there are no
reserves, assets, surplus or prepaid premiums under any Welfare Plan which is an
Employee Benefit Plan. The consummation of the transactions contemplated by this
Agreement will not entitle any individual to severance pay, and, will not
accelerate the time of payment or vesting, or increase the amount of
compensation, due to any individual.
(f) CONTROLLED GROUP LIABILITY. The Company is not part of a
"control group" under Code Section 414(b), (c), (m) or (o): and has not (i) been
terminated or withdrawn from any employee benefit plan under circumstances
resulting (or expected to result) in liability to the Pension Benefit Guaranty
Corporation ("PBGC"), the fund by which the employee benefit plan is funded, or
any employee or beneficiary for whose benefit the plan is or was maintained
(other than routine claims for benefits); (ii) had any assets subject to (or
expected to be subject to) a lien for unpaid contributions to any employee
benefit plan; (iii) failed to pay premiums to the PBGC when due; (iv) been
subject to (or expected to be subject to) an excise tax under Code Section 4971;
(v) engaged
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in any transaction which would give rise to liability under Section 4069 or
Section 4212(c) of ERISA; or (vi) violated Code Section 4980B or Section 601
through 608 of ERISA.
(g) OTHER LIABILITIES. (i) None of the Employee Benefit Plans
obligates the Company to pay separation, severance, termination or similar
benefits solely as a result of any transaction contemplated by this Agreement or
solely as a result of a "change of control" (as such term is defined in Section
280G of the Code); (ii) all required or discretionary (in accordance with
historical practices) payments, premiums, contributions, reimbursements, or
accruals for all periods ending prior to or as of the Closing Date shall have
been made or properly accrued on the Current Balance Sheet or will be properly
accrued on the books and records of the Company as of the Closing Date; and
(iii) none of the Employee Benefit Plans has any unfunded liabilities which are
not reflected on the Current Balance Sheet or the books and records of the
Company other than for routine claims under the terms of such plans.
5.19 TAX MATTERS. All Tax Returns required to be filed prior to the
date hereof with respect to the Company or any of its income, properties,
franchises or operations have been timely filed, each such Tax Return has been
prepared in compliance in all material respects with all applicable laws and
regulations, and all such Tax Returns are true and accurate in all material
respects. All Taxes due and payable by or with respect to the Company have been
paid or are accrued on the Current Balance Sheet or will be accrued on its books
and records as of the Closing subject to customary year end adjustments and
accruals for current year Taxes. Except as set forth in SCHEDULE 5.19 hereto:
(i) with respect to each taxable period of the Company, either such taxable
period has been audited by the relevant taxing authority or the time for
assessing or collecting Taxes with respect to each such taxable period has
closed and such taxable period is not subject to review by any relevant taxing
authority; (ii) no deficiency or proposed adjustment which has not been settled
or otherwise resolved for any amount of Taxes has been asserted or assessed by
any taxing authority against the Company; (iii) the Company has not consented to
extend the time in which any Taxes may be assessed or collected by any taxing
authority; (iv) the Company has not requested or been granted an extension of
the time for filing any Tax Return to a date later than the Closing Date; (v)
there is no action, suit, taxing authority proceeding, or audit or claim for
refund now in progress, pending or, to the knowledge of the Shareholders,
threatened against or with respect to the Company regarding Taxes; (vi) the
Company has not made an election or filed a consent under Section 341(f) of the
Code (or any corresponding provision of state, local or foreign law) on or prior
to the Closing Date; (vii) there are no Liens for Taxes (other than for current
Taxes not yet due and payable and delinquent) upon the assets of the Company;
(viii) the Company will not be required (A) as result of a change in method of
accounting for a taxable period ending on or prior to the Closing Date, to
include any adjustment under Section 481(c) of the Code (or any corresponding
provision of state, local or foreign law) in taxable income for any taxable
period (or portion thereof) beginning after the Closing Date or (B) as a result
of any "closing agreement,"as described in Section 7121 of the Code (or any
corresponding provision of state, local or foreign law), to include any item of
income or exclude any item of deduction from any taxable period (or portion
thereof) beginning after the Closing Date; (ix) the Company has not been a
member of an affiliated group (as defined in Section 1504 of the Code) or filed
or been included in a combined, consolidated or unitary income Tax Return; (x)
the Company
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is not a party to or bound by any tax allocation or tax sharing agreement or has
any current or potential contractual obligation to indemnify any other Person
with respect to Taxes; (xi) there are no material additional Taxes owed by the
Company for any period for which Tax Returns have been filed in excess of the
amounts shown as due and payable thereon; (xii) the Company has not made any
payments, and will not become obligated (under any contract entered into on or
before the Closing Date) to make any payments, that will be non-deductible under
Section 280G of the Code (or any corresponding provision of state, local or
foreign law); (xiii) none of the Shareholders is a "foreign person" within the
meaning of Section 1445 of the Code; (xiv) no claim has ever been made by a
taxing authority in a jurisdiction where the Company does not file Tax Returns
that the Company is or may be subject to Taxes assessed by such jurisdiction;
(xv) the Company does not have any permanent establishment in any foreign
country, as defined in the relevant tax treaty between the United States of
America and such foreign country; (xvi) true, correct and complete copies of all
income and sales Tax Returns filed by or with respect to the Company for the
past three years have been furnished or made available to AVS; (xvii) the
Company will not be subject to any Taxes for the period ending at the Closing
Date for any period for which a Tax Return has not been filed imposed pursuant
to Section 1374 or Section 1375 of the Code (or any corresponding provision of
state, local or foreign law); and (xviii) no Arizona sales or use tax, Arizona
non-recurring intangibles tax, Arizona documentary stamp tax or other Arizona
excise tax (or comparable tax imposed by the State of Arizona) will be payable
by any of the AVS Companies merely by virtue of the transactions contemplated in
this Agreement.
5.20 INSURANCE. The Company is covered by valid, outstanding and
enforceable policies of insurance issued to it by reputable insurers covering
its properties, assets and businesses against risks of the nature normally
insured against by corporations in the same or similar lines of business and in
coverage amounts typically and reasonably carried by such corporations (the
"Insurance Policies"). Such Insurance Policies are in full force and effect, and
all premiums due thereon have been paid. As of the Closing Date, each of the
Insurance Policies will be in full force and effect. None of the Insurance
Policies will lapse or terminate as a result of the transactions contemplated by
this Agreement. The Company has complied in all material respects with the
provisions of such Insurance Policies. SCHEDULE 5.20 contains (i) a complete and
correct list of all Insurance Policies and all amendments and riders thereto
(copies of which have been provided to AVS) and (ii) a detailed description of
each pending claim under any of the Insurance Policies for an amount in excess
of $10,000 that relates to loss or damage to the properties, assets or
businesses of the Company. The Company has not failed to give, in a timely
manner, any notice required under any of the Insurance Policies to preserve its
rights thereunder.
5.21 RECEIVABLES. All of the Receivables (as hereinafter defined) are
valid and legally binding, represent bona fide transactions and arose in the
ordinary course of business of the Company. Subject to an allowance for doubtful
accounts as provided under GAAP and a further allowance of $25,000 in the
aggregate, all of the Receivables are good and collectible receivables, and will
be collected in full in accordance with the terms of such receivables (and in
any event within six months following the Closing), without setoff or
counterclaims. For purposes of this Agreement, the term
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"Receivables" means all receivables of the Company, including all trade account
receivables arising from the provision of services, sale of inventory, notes
receivable, and insurance proceeds receivable.
5.22 LICENSES AND PERMITS. The Company possesses all material licenses
and required governmental or official approvals, permits or authorizations
(collectively, the "Permits") for its businesses and operations, including with
respect to the operation of each of the Leased Premises, and SCHEDULE 5.22
contains a true and complete list of all such Permits. All such Permits are
valid and in full force and effect, and the Company is in compliance in all
material respects with the respective requirements thereof and no proceeding is
pending or threatened to revoke or amend any of them. Subject to obtaining any
required governmental consents, none of such Permits is or will be impaired or
in any way affected in any material respect by the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
5.23 ADEQUACY OF THE ASSETS; RELATIONSHIPS WITH CUSTOMERS AND
SUPPLIERS; AFFILIATED TRANSACTIONS. The Purchased Assets and Leased Premises
constitute, in the aggregate, all of the assets and properties necessary for the
conduct of the Business of the Company in the manner in which and to the extent
to which such business is currently being conducted. No current supplier to the
Company of items essential to the conduct of its business has threatened to
terminate its business relationship with it for any reason. The Company does not
have any direct or indirect interest in any customer, supplier or competitor of
the Company, or in any person from whom or to whom the Company leases real or
personal property. No officer, director or shareholder of the Company, nor any
person related by blood or marriage to any such person, nor any entity in which
any such person owns any beneficial interest, is a party to any Contract or
transaction with the Company or has any interest in any property used by the
Company.
5.24 INTELLECTUAL PROPERTY. The Company has full legal right, title and
interest in and to all trademarks, service marks, trade names, copyrights,
know-how, patents, trade secrets, proprietary computer software, data bases and
compilations, licenses (including licenses for the use of computer software
programs and technical specifications), and other intellectual property used in
the conduct of its business (the "Intellectual Property"). The business of the
Company as presently conducted, and the unrestricted conduct and the
unrestricted use and exploitation of the Intellectual Property, does not
infringe or misappropriate any rights held or asserted by any Person, and no
Person is infringing on the Intellectual Property. No payments are required for
the continued use of the Intellectual Property. None of the Intellectual
Property has ever been declared invalid or unenforceable, or is the subject of
any pending or threatened action for opposition, cancellation, declaration,
infringement, or invalidity, unenforceability or misappropriation or like claim,
action or proceeding.
5.25 CONTRACTS. SCHEDULE 5.25 sets forth a list of each Contract to
which the Company is a party or by which it or its properties and assets are
bound and which is material to its business, assets, properties or prospects
(the "Designated Contracts"), true and correct copies of which have been
provided to AVS. The copy of each Designated Contract furnished to AVS is a true
and complete copy of the document it purports to represent and reflects all
amendments thereto made through the date of this Agreement. To the knowledge of
the Shareholders, except as set forth on
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SCHEDULE 5.25, the Company has not violated any of the terms or conditions of
any Designated Contract, or any term or condition which would permit termination
or material modification of any Designated Contract, and all of the covenants to
be performed by any other party thereto have been performed in all material
respects and there are no claims for breach or indemnification or notice of
default or termination under any Designated Contract, and no event has occurred
which constitutes, or after notice or the passage of time, or both, would
constitute, a material default by the Company under any Designated Contract, and
no such event has occurred which constitutes or would constitute a material
default by any other party. The Company is not subject to any material liability
or payment resulting from renegotiation of amounts paid it under any Designated
Contract. As used in this Section, Designated Contracts shall include, without
limitation, (a) loan agreements, indentures, mortgages, pledges, hypothecations,
deeds of trust, conditional sale or title retention agreements, security
agreements, equipment financing obligations or guaranties, or other sources of
contingent liability in respect of any indebtedness or obligations to any other
Person, or letters of intent or commitment letters with respect to same; (b)
contracts obligating the Company to provide products or services for a period of
one year or more, excluding standard maintenance contracts entered into in the
ordinary course of business without material modification from the preprinted
forms used by the Company in the ordinary course of its business; (c) leases of
real property, and leases of personal property not cancelable without penalty on
notice of sixty (60) days or less or calling for payment of an annual gross
rental exceeding $10,000; (d) distribution, sales agency or franchise or similar
agreements, or agreements providing for an independent contractor's services, or
letters of intent with respect to same; (e) employment agreements, management
service agreements, consulting agreements, confidentiality agreements,
non-competition agreements, any other agreements relating to any employee,
officer or director of the Company, and all employee handbooks, policy
statements and similar plans; (f) licenses, assignments or transfers of
trademarks, trade names, service marks, patents, copyrights, trade secrets or
know how, or other agreements regarding proprietary rights or intellectual
property; (g) any Contract relating to pending capital expenditures by the
Company; and (h) other material Contracts or understandings, irrespective of
subject matter and whether or not in writing, not entered into in the ordinary
course of business by the Company and not otherwise disclosed on the Schedules.
5.26 ACCURACY OF INFORMATION FURNISHED BY THE COMPANY AND THE
SHAREHOLDERS. No representation, statement or information made or furnished by
the Company and the Shareholders to AVS or any of AVS' representatives contained
in this Agreement and the various Schedules attached hereto contains any untrue
statement of a material fact or omits any material fact necessary to make the
information contained herein not misleading. The Company and the Shareholders
have provided AVS with true, accurate and complete copies of all documents
listed or described in the various Schedules attached hereto. Notwithstanding
the foregoing, the representation contained in this Section 5.26 does not
supersede or modify the specific representations contained in other sections
herein.
5.27 INVESTMENT INTENT; ACCREDITED INVESTOR STATUS: SECURITIES
DOCUMENTS. Prior to its liquidation, the Company, and following such
liquidation, each of the Shareholders will be acquiring the AVS Shares hereunder
for his or its own account for investment and not with a view
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to, or for the sale in connection with, any distribution of any of the AVS
Shares, except in compliance with applicable state and federal securities laws.
The Company and each of the Shareholders has had the opportunity to discuss the
transactions contemplated hereby with AVS and has had the opportunity to obtain
such information pertaining to the AVS Companies as has been requested,
including but not limited to filings made by AVS with the SEC under the Exchange
Act, including the most recent filing by AVS on Form 10-K, and any filings on
Schedule 14A and Forms 10-Q or 8-K since the end of AVS' last fiscal year end.
The Company and each of the Shareholders is an "accredited investor" within the
meaning of Regulation D promulgated under the Securities Act, and has such
knowledge and experience in business or financial matters that he is capable of
evaluating the merits and risks of an investment in the AVS Shares.
5.28 BANK ACCOUNTS; BUSINESS LOCATIONS. SCHEDULE 5.28 sets forth all
accounts of the Company with any bank, broker or other depository institution,
and the names of all persons authorized to withdraw funds from each such
account. As of the date hereof, the Company has no office or place of business
other than as identified on SCHEDULE 5.14(B) and the Company's principal places
of business and chief executive offices are indicated on SCHEDULE 5.14(B), and,
except for equipment leased to customers in the ordinary course of business, all
locations where the equipment, inventory, chattel paper and books and records of
the Company is located as of the date hereof are fully identified on SCHEDULES
5.14(B).
5.29 NAMES; PRIOR ACQUISITIONS. All names under which the Company does
business as of the date hereof are specified on SCHEDULE 5.29. Except as set
forth on SCHEDULE 5.29, the Company has not changed its name or used any assumed
or fictitious name, or been the surviving entity in a merger, acquired any
business or changed its principal place of business or chief executive office,
within the past three years.
5.30 NO COMMISSIONS. Neither the Company nor any of the Shareholders
has incurred any obligation for any finder's or brokers or agent's fees or
commissions or similar compensation in connection with the transactions
contemplated hereby.
5.31 CERTAIN ACCOUNTING MATTERS. Neither the Company nor any of the
Shareholders, nor any of their Affiliates have taken or agreed to take any
action that (excluding any action taken or agreed to be taken as contemplated by
this Agreement or by AVS or any of its Affiliates or with the consent of AVS)
would prevent AVS from accounting for the transactions contemplated hereby as a
pooling of interest business combination.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE CLOSING
6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING THE CLOSING. The Company
covenants and agrees that, between the date of this Agreement and the Closing
Date, the business of
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the Company shall be conducted only in, and the Company shall not take any
action except in, the ordinary course of business, consistent in all material
respects with past practice. The Company shall use its best efforts to preserve
intact its business organizations, to keep available the services of their
current officers, employees and consultants, and to preserve their present
relationships with customers, suppliers and other persons with which they have
significant business relations. By way of amplification and not limitation, the
Company shall not, except as set forth on SCHEDULE 6.1, between the date of this
Agreement and the Closing Date, directly or indirectly, do or propose or agree
to do any of the following without the prior written consent of AVS:
(a) amend or otherwise change its articles of incorporation
or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, encumber, or, authorize
the issuance, sale, pledge, disposition, grant or encumbrance of (i) any shares
of its capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of such capital
stock, or any other ownership interest, of it or (ii) any of its assets,
tangible or intangible, except in the ordinary course of business consistent in
all material respects with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect to any
of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase
or otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, for cash or
shares of stock, by merger, consolidation, or acquisition of stock or assets)
any interest in any corporation, partnership or other business organization or
division thereof or any assets, or make any investment either by purchase of
stock or securities, contributions of capital or property transfer, or, except
in the ordinary course of business, consistent with past practice, purchase any
property or assets of any other Person, (ii) except in the ordinary course of
business, incur any indebtedness for borrowed money or issue any debt securities
(excluding Preferred Stock) or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any Person, except
endorsement of checks payable to the Company in the ordinary course of business,
or make any loans or advances, or (iii) enter into any Contract other than in
the ordinary course of business, consistent with past practice;
(f) increase the compensation payable or to become payable to
its officers or employees, or, except as presently bound to do, grant any
severance or termination pay to, or enter into any employment or severance
agreement with, any of its directors, officers or other employees, or establish,
adopt, enter into or amend or take any action to accelerate any rights or
benefits which any collective bargaining, bonus, profit sharing, trust,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any directors, officers or
employees;
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(g) take any action other than in the ordinary course of
business and in a manner consistent in all material respects with past practice
with respect to accounting policies or procedures;
(h) make any capital investments in excess of an aggregate of
$10,000;
(i) make any distributions to Shareholders, other than
ordinary and customary salaries, expense reimbursements and scheduled payments
on the Preferred Stock, owing to Robert W. Reitz and/or James John Berens, Jr.,
as referred to in Section 5.5 hereof;
(j) pay, discharge or satisfy any existing claims, liabilities
or obligations (absolute, accrued, asserted or unassorted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business and consistent in all material respects with past practice of
due and payable liabilities reflected or reserved against in its financial
statements, as appropriate, or liabilities incurred after the date hereof in the
ordinary course of business and consistent in all material respects with past
practice;
(k) increase or decrease in any material respect prices
charged to its customers, except for previously announced price changes, or take
any other action which might reasonably result in any material increase in the
loss of customers through non-renewal or termination of service contracts or
other causes; or
(l) agree, in writing or otherwise, to take or authorize any
of the foregoing actions or any action which would make any representation or
warranty in ARTICLE V untrue or incorrect.
ARTICLE VII
CERTAIN AGREEMENTS AND COVENANTS OF THE PARTIES
7.1 FURTHER ASSURANCES. Each party shall execute and deliver such
additional customary instruments and other documents and shall take such further
actions as may be reasonably necessary or appropriate to effectuate, carry out
and comply with all of the terms of this Agreement and the transactions
contemplated hereby.
7.2 COMPLIANCE WITH COVENANTS. The Shareholders shall cause the Company
to comply with all of the respective covenants of the Company under this
Agreement.
7.3 COOPERATION. Each of the parties agrees to cooperate with the other
in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, rule or regulation or the rules of the New York Stock Exchange ("NYSE") (or
any exchange on which the AVS Common Stock may be listed) in connection with the
transactions contemplated by this Agreement and to use their respective
commercially reasonably best
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efforts to agree jointly on a method to overcome any objections by any
Governmental Authority to any such transactions.
7.4 OTHER ACTIONS. Each of the parties hereto shall use its
commercially reasonable best efforts to take, or cause to be taken, all
appropriate actions, and to do, or cause to be done, all things reasonably
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated herein, including,
without limitation, using its commercially reasonable best efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of any Governmental Authority and parties to Contracts with the Company
as are necessary for the consummation of the transactions contemplated hereby.
Each of parties shall make on a prompt and timely basis all governmental or
regulatory notifications and filings required to be made by it for the
consummation of the transactions contemplated hereby. The parties also agree to
use commercially reasonable best efforts to defend all lawsuits or other legal
proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby and to lift or rescind any injunction or restraining order
or other order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby.
7.5 ACCESS TO INFORMATION. From the date hereof to the Closing Date,
the Company shall (and shall cause its directors, officers, employees, auditors,
counsel and agents) to afford AVS and AVS' officers, employees, auditors,
counsel and agents reasonable access at all reasonable times to its properties,
offices, and other facilities, to its officers and employees and to all books
and records, and shall furnish such persons with all financial, operating and
other data and information as may be reasonably requested and all such
information will be subject to the terms and conditions of that certain
confidentiality agreement between AVS and the Company. No information provided
to or obtained by AVS shall affect any representation or warranty in this
Agreement.
7.6 NOTIFICATION OF CERTAIN MATTERS. Until the Closing Date, the
Shareholders shall give prompt notice to AVS of the occurrence or non-occurrence
of any event which would likely cause any representation or warranty contained
herein to be untrue or inaccurate, or any covenant, condition, or agreement
contained herein not to be complied with or satisfied. Subject to the
limitations imposed by law, and/or the rules of the NYSE, until the Closing
Date, AVS shall give prompt notice to the Company and the Shareholders of the
occurrence or non-occurrence of any event which would likely cause any
representation or warranty contained herein to be untrue or inaccurate, or any
covenant, condition, or agreement contained herein not to be complied with or
satisfied.
7.7 CONFIDENTIALITY; PUBLICITY. Except as may be required by law or as
otherwise permitted or expressly contemplated herein, no party hereto or their
respective Affiliates, employees, agents and representatives shall disclose to
any third party this Agreement or the subject matter or terms hereof without the
prior consent of the other parties hereto. No press release or other public
announcement related to this Agreement or the transactions contemplated hereby
shall be issued by any party hereto without the prior approval of the other
parties, except that AVS may make such public disclosure which it believes in
good faith to be required by law or by the terms of any listing
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agreement with or requirements of a securities exchange (in which case AVS will
consult with an officer of the Company prior to making such disclosure).
7.8 NO OTHER DISCUSSIONS. Until this Agreement is terminated in
accordance with its provisions, the Company, the Shareholders, and their
respective Affiliates, employees, agents and representatives will not (i)
initiate, encourage the initiation by others of discussions or negotiations with
third parties or respond to solicitations by third persons relating to any
merger, sale or other disposition of any substantial part of the assets,
business or properties of the Company (whether by merger, consolidation, sale of
stock or otherwise) or (ii) enter into any agreement or commitment (whether or
not binding) with respect to any of the foregoing transactions. Until this
Agreement is terminated in accordance with its provisions, the Company and the
Shareholders will immediately notify AVS if any third party attempts to initiate
any solicitation, discussion or negotiation with respect to any of the foregoing
transactions.
7.9 RESTRICTIVE COVENANTS. In order to assure that AVS will realize the
benefits of the transactions contemplated hereby, each of the Company and the
Shareholders jointly and severally agrees with AVS that he, she or it, as the
case may be, will not:
(a) for a period of the later of five years from the Closing
Date or three years following the termination of the Shareholders' employment
with AVS and its affiliates, directly or indirectly, alone or as a partner,
joint venturer, officer, director, member, employee, consultant, agent,
independent contractor or shareholder of, or lender to, any company or business,
engage in any business in the aerospace industry in direct competition with the
business of AVS, as such business now exists or as it may exist at the time of
termination, anywhere in the United States; provided, however, that, the
beneficial ownership of less than five percent (5%) of the shares of stock of
any other corporation having a class of equity securities actively traded on a
national securities exchange or over-the-counter market shall not be deemed, in
and of itself, to violate the prohibitions of this Section;
(b) for a period of the later of five years from the Closing
Date or three years following the termination of the Shareholders' employment
with AVS and its affiliates, directly or indirectly (i) induce any Person which
is a customer of the Company, AVS or any Affiliate of the Company or AVS to
patronize any business in the aerospace industry directly or indirectly in
competition with business conducted by the Company, AVS or any Affiliate of the
Company or AVS; (ii) canvass, solicit or accept from any Person which is a
customer of the Company, AVS or any Affiliate of the Company or AVS, any such
competitive business; or (iii) request or advise any Person which is a customer
or supplier of the Company, AVS or any Affiliate of the Company or AVS, to
withdraw, curtail or cancel any such customer's or supplier's business with the
Company, AVS or any Affiliate of the Company or AVS, or its or their successors;
(c) for a period of the later of five years from the Closing
Date or three years following the termination of the Shareholders' employment
with AVS and its affiliates, directly or indirectly employ, or knowingly permit
any company or business directly or indirectly controlled by
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him, to employ, any person who was employed by the Company, AVS or any Affiliate
of the Company or AVS at or within the prior six months, or in any manner seek
to induce any such person to leave his or her employment;
(d) at any time following the Closing Date, directly or
indirectly, in any way outside of his employment with, or consulting services
for, the Company or AVS or any Affiliate of the Company or AVS utilize,
disclose, copy, reproduce or retain in his possession any of the Company's
proprietary rights or records, including, but not limited to, any of its
customer lists.
The Company and the Shareholders agree and acknowledge that the restrictions
contained in this Section 7.9 are reasonable in scope and duration and are
necessary to protect AVS after the Closing Date. If any provision of this
Section 7.9 as applied to any party or to any circumstance is adjudged by a
court to be invalid or unenforceable, the same will in no way affect any other
circumstance or the validity or enforceability of this Agreement. If any such
provision, or any part thereof, is held to be unenforceable because of the
duration of such provision or the area covered thereby, the parties agree that
the court making such determination shall have the power to reduce the duration
and/or area of such provision, and/or to delete specific words or phrases, and
in its reduced form, such provision shall then be enforceable and shall be
enforced. The parties agree and acknowledge that the breach of this Section 7.9
will cause irreparable damage to the AVS Companies and upon breach of any
provision of this Section 7.9, the AVS Companies shall be entitled to injunctive
relief, specific performance or other equitable relief; provided, however, that,
this shall in no way limit any other remedies which the AVS Companies may have
(including, without limitation, the right to seek monetary damages).
7.10 DUE DILIGENCE REVIEW AND ENVIRONMENTAL ASSESSMENT. AVS, at its
sole cost and expense, shall be entitled to have conducted prior to Closing a
due diligence review of the assets, properties, books and records of the Company
(hereinafter referred to as "Environmental Assessment"), and such other
properties used, owned or occupied by the Company or any of its predecessors or
former Affiliates, as AVS, in its sole discretion, may deem necessary ("Other
Premises"). The Environmental Assessment may include, but not be limited to, a
physical examination of the Leased Premises and Other Premises, and any
structures, facilities, or equipment located thereon, soil samples, ground and
surface water samples, storage tank testing, review of pertinent records,
documents, and Licenses of the Company. The Company and the Shareholders shall
provide AVS or its designated agents or consultants with the access to such
property which AVS, its agents or consultants require to conduct the
Environmental Assessment. If the Environmental Assessment identifies
environmental conditions which require remediation or further evaluation under
the Environmental Laws or if the results of the Environmental Assessment or due
diligence review are otherwise not satisfactory to AVS in its sole discretion,
then AVS may, prior to the Closing Date, elect to terminate this Agreement and
not to close the transactions contemplated by this Agreement as its sole and
exclusive remedy. AVS' failure or decision not to conduct any such Environmental
Assessment shall not affect any representation or warranty of the Shareholders
under this Agreement. Except as otherwise required by law, AVS shall not
disclose any environmental report it obtained to any third party (excluding its
employees, agents, advisors and bankers.)
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7.11 TRADING IN AVS COMMON STOCK. Except as otherwise expressly
consented to by AVS, from the date of this Agreement until the Closing Date,
neither the Company nor the Shareholders (nor any Affiliates thereof) will
directly or indirectly purchase or sell (including short sales) any shares of
AVS Common Stock in any transactions effected on the NYSE or otherwise, or sell,
transfer, pledge, dispose of or otherwise part with any interest in or with
respect to or in any other manner reduce their investment risk with respect to
any shares of AVS Common Stock to be received pursuant to this Agreement.
7.12 ACCOUNTING TREATMENT. The Shareholders acknowledge that it is AVS'
intention that the transactions contemplated by this Agreement be accounted for
as a pooling of interests business combination and that each of the Shareholders
may be deemed to be an "affiliate" of the Company within the meaning of Rule 145
promulgated under the Securities Act. Accordingly, each of the Shareholders
covenants and agrees that he will not without AVS' consent (i) take any action
after the date hereof to cause the transactions contemplated hereby not to be
accountable under the pooling of interests method of accounting, or (ii) sell,
transfer, pledge, dispose of or otherwise part with any interest in or with
respect to, or in any other manner reduce his investment risk with respect to,
(A) any shares of capital stock of the Company at any time prior to the Closing
Date, and (B) any shares of AVS Common Stock received by such Shareholder in
connection with the transactions contemplated hereby or otherwise until such
time as AVS publishes financial results covering at least 30 days of combined
operations of AVS and the Company. Each of the Shareholders further understands
and agrees that AVS will instruct its stock transfer agent not to effect any
transfer of the shares of Common Stock received by the Shareholders pursuant to
this Agreement unless such transfer is made in compliance with the foregoing
restrictions. Each of the Shareholders hereby acknowledges and agrees that any
breach of this Agreement may result in special damage and injury to AVS not
readily recoverable as money damages and, therefore, each of the Shareholders
consents to, and covenants that he will not oppose, any application by AVS, for
equitable relief from any such breach by way of injunction or decree of specific
performance on the basis that AVS has an adequate remedy at law. Any monetary
damages arising hereunder shall be subject to the limitation on the maximum
amount of Indemnifiable Damages set forth in Section 11.1 hereof. AVS agrees to
use good faith efforts to publish such financial results not later than the last
filing date permitted under the rules of the Exchange Act for a timely filing of
its Quarterly Report on Form 10-Q covering the first fiscal quarter 1998 of AVS.
7.13 SHAREHOLDER VOTE. Each of the Shareholders, in executing this
Agreement, consents as a shareholder of the Company to the transactions
contemplated hereby and the transactions contemplated hereby, and waives notice
of any meeting in connection therewith, and hereby releases and waives all
rights with respect to the transactions contemplated hereby under the articles
of incorporation of the Company and any agreements among the Shareholders and
the Company relating to the sale, purchase or voting of any capital stock of the
Company. At Closing, the Shareholders agree that any and all agreements relating
to the sale, purchase or voting of capital stock of the Company shall be
terminated.
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7.14 STOCK POWERS. At the Closing, each of the Company and the
Shareholders covenants and agrees to deliver to AVS: ten (10) stock powers
executed in blank, with medallion signature guarantees, for use in connection
with the Held Back Shares.
7.15 PAYOFF AMOUNTS; RELEASE OF GUARANTIES. Prior to Closing, the
Company shall request and deliver to AVS payoff and estoppel letters from such
holders of the Company's outstanding Indebtedness as designated by AVS, which
letters shall contain payoff amounts, per diem interest, wire transfer
instructions and an agreement to deliver, upon payment in full, UCC-3
termination statements, satisfactions of mortgage and any original promissory
notes or other evidences of indebtedness marked canceled. AVS shall obtain, at
its sole cost and expense, the releases of the guaranties of the Company's
Indebtedness made by the Shareholders that are listed on SCHEDULE 7.15.
7.16 REDEMPTION OF PREFERRED STOCK. On or prior to Closing the Company
shall redeem in full all outstanding shares of Preferred Stock, in accordance
with the provisions in the Company's articles of incorporation, as amended,
governing the Preferred Stock.
7.17 TERMINATION OF PARTICIPATION. Except as otherwise provided in
Section 7.18 below, the active participation of all Employees in the Company
Plan shall cease as of the Closing Date and no additional benefits shall be
accrued thereunder for the Employees.
7.18 COMPANY PLAN. Effective as of the Closing Date, the Company shall
take or cause to be taken all action necessary to fully vest Employees in their
accrued benefits, if any, under the Company Plan and to provide for allocation
of contributions accrued prior to the Closing Date with respect to Employees who
are participants in the Company's Plan as of the Closing Date. As of the Closing
Date, Company shall make all contributions on behalf of all Employees to the
Company Plan attributable to service and compensation for such Employees through
the Closing Date and terminate the Company Plan. The Company shall cause the
amounts in the Company Plan to be distributed to the Company Plan participants
and the AVS Companies shall not be required to cause a transfer of any amounts
from the Company Plan to any employee benefit plan of any of the AVS Companies.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF AVS COMPANIES
The obligations of the AVS Companies to effect the transactions
contemplated hereby shall be subject to the fulfillment at or prior to the
Closing Date of the following conditions, any or all of which may be waived in
whole or in part by the AVS Companies:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the Company and the
Shareholders contained in this Agreement shall be true and correct in all
material respects at and as of the Closing Date with the same force and
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effect as though made at and as of that time except (i) for changes specifically
permitted by or disclosed on any schedule to this Agreement, and (ii) that those
representations and warranties which address matters only as of a particular
date shall remain true and correct in all material respects as of such date. The
Company and the Shareholders shall have performed and complied in all material
respects, with all of their respective obligations required by this Agreement to
be performed or complied with at or prior to the Closing Date. The Company and
the Shareholders shall have delivered to the AVS Companies a certificate, dated
as of the Closing Date, duly signed by each of the Shareholders and the Company
(in the case of the Company, by its President), certifying that such
representations and warranties are true and correct and that all such
obligations have been complied with and performed.
8.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change to the Company, the Purchased Assets or the Business, (ii) there shall
have been no adverse federal, state or local legislative or regulatory change
affecting in any material respect the services, products or business of any of
the Company, the Purchased Assets or the Business, and (iii) none of the
Purchased Assets of the Company shall have been damaged by fire, flood,
casualty, act of God or the public enemy or other cause (regardless of insurance
coverage for such damage) which damages may have a Material Adverse Effect
thereon, and there shall have been delivered to the AVS Companies a certificate
to that effect, dated the Closing Date and signed by or on behalf of the Company
and the Shareholders. This condition to closing shall be waived if the parties
execute this Agreement and close the transactions contemplated by it on the same
date.
8.3 CORPORATE CERTIFICATE. The Company shall have delivered to the AVS
Companies (i) copies of the articles of incorporation and bylaws of the Company
as in effect immediately prior to the Closing Date, (ii) copies of resolutions
adopted by the Board of Directors and Shareholders of the Company authorizing
the transactions contemplated by this Agreement, and (iii) a certificate of good
standing of the Company issued by the Corporation Commission of the State of
Arizona as of a date not more than ten days prior to the Closing Date, certified
in the case of subsections (i) and (ii) of this Section as of the Closing Date
by the Secretary of the Company as being true, correct and complete.
8.4 DELIVERY OF PURCHASED ASSETS. At the Closing, the Company shall
duly execute and deliver to AVS Acquisition Sub a Bill of Sale and Assignment in
the form attached hereto as EXHIBIT A and such other instruments of transfer of
title as are necessary to transfer to AVS Acquisition Sub good and marketable
title to the Purchased Assets, subject to the Lien provided in SCHEDULE 5.15 and
shall deliver to AVS Acquisition Sub immediate possession of the Purchased
Assets.
8.5 OPINION OF COUNSEL. The AVS Companies shall have received an
opinion dated as of the Effective Date from counsel for the Company and the
Shareholders, in form attached hereto, to the effect that:
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(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Arizona and has the
corporate power to carry on the business now conducted by it and to own or lease
the properties now owned or leased by it;
(b) The Company is duly qualified to do business and is in
good standing in each jurisdiction where the character of its properties owned
or held under lease or held under lease or the nature of its activities make
such qualification necessary;
(c) The Company has obtained all necessary authorizations and
consents of its Boards of Directors and the Shareholders to effect the
transactions contemplated hereby;
(d) To the knowledge of counsel, all issued and outstanding
shares of capital stock of the Company are owned as set forth on SCHEDULE 5.5
hereto;
(e) Such counsel does not know of any litigation, proceeding
or investigation then pending or threatened which could reasonably be expected
to result in any Material Adverse Effect on the Company, the Purchased Assets or
the Business, or which questions the validity of this Agreement;
(f) Such counsel does not know or have reason to believe that
any event has occurred or state of facts exists which would constitute a breach
of any of the representations and warranties made by the Company or the
Shareholders pursuant to ARTICLE V of this Agreement;
(g) To the knowledge of such counsel, the execution and
delivery of this Agreement by the Company and the Shareholders, the performance
by the Company and the Shareholders of their obligations hereunder and the
consummation by them of the transactions contemplated by this Agreement will not
(a) contravene any provision of the Articles of Incorporation or Bylaws of the
Company, (b) violate or conflict with any law, statute, ordinance, rule,
regulation, decree, writ, injunction, judgment or order of any Governmental
Authority or of any arbitration award which is either applicable to, binding
upon or enforceable against the Company or the Shareholders, (c) conflict with,
result in any breach of, or constitute a default (or an event which would, with
the passage of time or the giving of notice or both, constitute a default)
under, or give rise to a right of payment or right to terminate, amend, modify,
abandon or accelerate, any Contract which is applicable to, binding upon or
enforceable against the Company or the Shareholders, (d) result in or require
the creation or imposition of any Lien upon or with respect to any of the
Purchase Assets of the Company, (e) give to any individual or entity a right or
claim against the Company or the Shareholders or (f) require the consent,
approval, authorization or permit of, or filing with or notification to, any
Governmental Authority, any court or tribunal or any other Person, except any
SEC and other filings required to be made by AVS;
(h) This Agreement is a valid and binding obligation of the
Company and the Shareholders, and enforceable against each of them in accordance
with their terms, except as
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enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws affecting the enforcement of creditors' rights generally or
general equitable principles.
8.6 CONSENTS. The Company shall have received consents to the
transactions contemplated hereby and waivers of rights to terminate or modify
any material rights or obligations of the Company from any Person from whom such
consent or waiver is required under any Contract or instrument on or prior to
the Closing Date, or who, as a result of the transactions contemplated hereby,
would have such rights to terminate or modify such Contracts or instruments,
either by the terms thereof or as a matter of law.
8.7 SECURITIES LAWS. AVS shall have received all necessary consents and
otherwise complied with any state or federal securities laws applicable to the
issuance of the AVS Shares, in connection with the transactions contemplated
hereby.
8.8 NO ADVERSE LITIGATION. There shall not be pending or threatened any
action or proceeding by or before any court or other governmental body for which
the Company has received service which shall seek to restrain, prohibit,
invalidate or collect damages arising out of any of the transactions
contemplated hereby, and which, in the reasonable judgment of AVS, makes it
inadvisable to proceed with the transactions contemplated hereby and other
transactions contemplated hereby.
8.9 BOARD APPROVAL. The Board of Directors of AVS shall have authorized
and approved this Agreement and the transactions contemplated hereby.
8.10 DUE DILIGENCE REVIEW. AVS shall be satisfied with the results of
its due diligence review and Environmental Assessment pursuant to Section 7.10.
8.11 EMPLOYMENT AGREEMENTS. At the Closing Date, James John Berens, Jr.
shall have entered into a three (3) year employment agreement and R.W. Reitz
shall have entered into a one (1) year employment agreement with the surviving
corporation each in substantially the form attached hereto as SCHEDULE 8.11(A)
and (B), respectively.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF
THE COMPANY AND THE SHAREHOLDERS
The obligations of the Company and the Shareholders to effect the
transactions contemplated hereby shall be subject to the fulfillment at or prior
to the Closing Date of the following conditions, any or all of which may be
waived in whole or in part in writing by the Company and the Shareholders:
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9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE WITH
OBLIGATIONS. The representations and warranties of the AVS Companies contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing Date with the same force and effect as though made at and as of
that time except (i) for changes specifically permitted by or disclosed pursuant
to this Agreement, and (ii) that those representations and warranties which
address matters only as of a particular date shall remain true and correct as of
such date. Each of the AVS Companies shall have performed and complied with all
of its obligations required by this Agreement to be performed or complied with
at or prior to the Closing Date. Each of the AVS Companies shall have delivered
to the Company and the Shareholders a certificate, dated as of the Effective
Date, and signed by an executive officer, certifying that such representations
and warranties are true and correct in all material respects and that all such
obligations have been complied with and performed.
9.2 NO MATERIAL ADVERSE CHANGE OR DESTRUCTION OF PROPERTY. Between the
date hereof and the Closing Date, (i) there shall have been no Material Adverse
Change to the AVS Companies, (ii) there shall have been no adverse federal,
state or local legislative or regulatory change affecting in any material
respect the services, products or business of any of the AVS Companies, and
(iii) none of the properties and assets of any of the AVS Companies shall have
been damaged by fire, flood, casualty, act of God or the public enemy or other
cause (regardless of insurance coverage for such damage) which damages may have
a Material Adverse Effect thereon, and there shall have been delivered to the
Company a certificate to that effect, dated the Effective Date and signed by or
on behalf of each of the AVS Companies. This condition to closing shall be
waived if the parties execute this Agreement and close the transactions
contemplated by it on the same date.
9.3 OPINION OF COUNSEL. The Company shall have received an opinion
dated as of the Closing Date from counsel for AVS, in form attached hereto, to
the effect that:
(a) AVS is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware;
(b) AVS has obtained all necessary authorizations and consents
of its Board of Directors to effect the transactions contemplated hereby;
(c) The AVS Shares, when issued in connection with the
transactions contemplated by this Agreement will be duly authorized, validly
issued, fully paid and nonassessable.
(d) This Agreement is a valid and binding obligation of AVS,
enforceable against AVS in accordance with its terms, except as enforcement may
be subject to or limited by (a) bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights
generally or (b) general equitable principles.
9.4 SECURITIES LAWS. AVS shall have received all necessary consents and
otherwise complied with any state or federal securities laws applicable to the
issuance of the AVS Shares, in connection with the transactions contemplated
hereby.
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9.5 EMPLOYMENT AGREEMENTS. At the Closing Date, James John Berens, Jr.
shall have entered into with the Company a three (3) year employment agreement
and Robert W. Reitz shall have entered into a one (1) year employment agreement
with the surviving corporation each in substantially the form attached hereto as
SCHEDULE 8.11(A) and (B), respectively.
9.6 AVS SHARES. At the Closing, AVS shall have issued all of the AVS
Shares and shall have delivered to the Company (i) certificates representing the
AVS Shares issued to it hereunder, other than the Held Back Shares, and (ii)
copies of stock certificates representing the Held Back Shares issued to them.
9.7 NO ORDER OR INJUNCTION. No court of competent jurisdiction or other
governmental body shall have issued or entered any order or injunction
restraining or prohibiting the transactions contemplated hereby, which remains
in effect at the time of Closing and no litigation, claim or proceeding shall be
pending or threatened which seeks to restrain, prohibit or invalidate the
transaction contemplated hereby.
ARTICLE X
REGISTRATION RIGHTS
The Shareholders shall have the following registration rights with
respect to the AVS Shares issued to them following liquidation of the Company:
10.1 REGISTRATION RIGHTS FOR AVS SHARES; FILING OF REGISTRATION
STATEMENT. AVS will utilize reasonable efforts to cause, within ninety (90) days
following the Closing Date, a registration statement to be filed under the
Securities Act or an existing registration statement to be amended for the
purpose of registering the AVS Shares for resale by a Holder thereof (the
"Registration Statement"). For purposes of this Article, a person is deemed to
be a "Holder" of AVS Shares whenever such person is the record owner of AVS
Shares. AVS will use reasonable efforts to have the Registration Statement
become effective and cause the AVS Shares to be registered under the Securities
Act, and registered, qualified or exempted under the state securities laws of
such jurisdictions as any Holder reasonably requests, and will file an
application to list such shares on the NYSE, as soon as is reasonably
practicable.
10.2 PIGGY-BACK REGISTRATION. If, at anytime prior to the date on which
AVS files the Registration Statement required under Section 10.1 hereof, AVS
proposes to file a Registration Statement for a public offering and sale of AVS
Common Stock (other than one on Form S-8 or S-4), AVS will, prior to such
filing, give written notice to the Holders of the AVS Shares its intention to do
so. Upon the written request of any Holder of the AVS Shares given within 20
days after AVS provides such notice (which request shall state the intended
method of disposition of such AVS Shares), AVS shall use reasonable efforts to
cause all AVS Shares which AVS has been requested by the Holder to register to
be registered in such Registration Statement under the Securities Act to
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the extent necessary to permit their sale or other disposition in accordance
with the intended methods of distribution specified in the Holders' request;
PROVIDED, HOWEVER, that AVS shall have the right to postpone or withdraw any
registration effected pursuant to this Section 10.2 without any obligation to
the Shareholders whatsoever. In connection with any registration under this
Section 10.2, involving an underwritten offering, AVS shall not be required to
include any AVS Shares in such registration unless the Holder(s) accept the
terms of the underwriting as agreed upon between AVS and the underwriters
selected by it. If, in the opinion of the managing underwriter, it is
appropriate because of marketing factors to limit the number of AVS Shares to be
included in the offering, then AVS shall be required to include in the
registration only that number of AVS Shares, if any, which the managing
underwriter believes should be included therein, and AVS shall be entitled to
include before such AVS Shares such number of shares of AVS Common Stock to be
issued by AVS in the offering. If the number of AVS Shares to be included in the
offering in accordance with the foregoing is less than the total number of AVS
Shares which the Holder(s) have requested to be included, then the Holder(s) and
the other holders of securities entitled to be included in such registration
shall participate in the registration pro rata based upon their total ownership
of shares of unregistered AVS Common Stock.
10.3 EXPENSES OF REGISTRATION. AVS shall pay all expenses incurred by
AVS in connection with the registration, qualification and/or exemption of the
AVS Shares, including any SEC and state securities law registration and filing
fees, printing expenses, fees and disbursements of AVS's counsel and
accountants, transfer agents' and registrars' fees, fees and disbursements of
experts used by AVS in connection with such registration, qualification and/or
exemption, and expenses incidental to any amendment or supplement to the
Registration Statement or prospectuses contained therein. AVS shall not,
however, be liable for any sales, broker's or underwriting commissions or other
selling expenses incurred upon sale by any Holder of any of the AVS Shares.
10.4 FURNISHING OF DOCUMENTS. AVS shall furnish to the Holders such
reasonable number of copies of the Registration Statement, such prospectuses as
are contained in the Registration Statement and such other documents as the
Holders may reasonably request in order to facilitate the offering of the AVS
Shares.
10.5 AMENDMENTS AND SUPPLEMENTS. AVS shall prepare and promptly file
with the SEC and promptly notify the Holders of the filing of such amendments or
supplements to the Registration Statement or prospectuses contained therein as
may be necessary to correct any statements or omissions if, at the time when a
prospectus relating to the AVS Shares is required to be delivered under the
Securities Act, any event shall have occurred as a result of which any such
prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading. AVS shall also advise the Holders promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the SEC suspending the effectiveness of the Registration Statement or
the initiation or threatening of any proceeding for that purpose and promptly
use its reasonable best efforts to prevent the issuance of any stop order or to
obtain its withdrawal if such stop order should be issued. If, after a
Registration Statement
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becomes effective, AVS advises the Holders that AVS considers it appropriate
that the Registration Statement be amended, the Holders shall suspend any
further sales of the AVS Shares until AVS advises the Holders that the
Registration Statement has been amended, in which case AVS shall cause such
amendment to be filed as soon as reasonably practical.
10.6 DURATION. AVS shall maintain the effectiveness of the Registration
Statement until such time as AVS reasonably determines, based on an opinion of
counsel, that the Holders will be eligible to sell all of the Shares then owned
by the Holders without the need for continued registration of the shares, in the
three month period immediately following the termination of the effectiveness of
the Registration Statement. AVS's obligations contained in this ARTICLE X shall
terminate on the first anniversary of the Closing Date.
10.7 FURTHER INFORMATION. If AVS Shares owned by a Holder are included
in any registration, such Holder shall furnish AVS such information regarding
itself as AVS may reasonably request and as shall be required in connection with
any registration, qualification or compliance referred to in this Agreement.
ARTICLE XI
INDEMNIFICATION
11.1 AGREEMENT TO INDEMNIFY.
(a) INDEMNITY BY THE COMPANY AND THE SHAREHOLDERS. Each of the
Company and the Shareholders (excluding the Company Plan) agrees to jointly and
severally indemnify and hold the AVS Companies harmless from and against the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including, without limitation, related reasonable counsel and paralegal fees
and expenses) incurred or suffered by any of the AVS Companies arising out of or
resulting from (i) any breach of a representation or warranty made by the
Company or the Shareholders in this Agreement, (ii) any breach of the covenants
or agreements made by the Company or any Shareholder in this Agreement, (iii)
any inaccuracy in any certificate delivered by the Company or any Shareholder
pursuant to this Agreement, (iv) any tax liability relating to any period
occurring on or prior to the Closing Date, (v) any regulating and licensing
obligations arising on or prior to the Closing Date, or (vi) Company's failure
to comply with the Arizona Bulk Sales Act (collectively, "Indemnifiable
Damages"). Without limiting the generality of the foregoing, with respect to the
measurement of Indemnifiable Damages, subject to the provisions set forth
herein, the AVS Companies shall have the right to be put in the same after tax
consolidated financial position as it would have been in had each of the
representations and warranties of the Shareholders hereunder been true and
correct and had the covenants and agreements of the Company and the Shareholders
hereunder been performed in full. Notwithstanding anything to the contrary
contained herein, the maximum amount of Indemnifiable Damages for any third
party claims that may be obtained hereunder shall not exceed the amount of the
Purchase Price. In addition, notwithstanding anything
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to the contrary contained herein, AVS shall not be entitled to any Indemnifiable
Damages arising out of claims of third parties arising from or relating to any
facts, circumstances or events occurring on or prior to the date of Closing
unless the aggregate of all such Indemnifiable Damages exceeds $25,000 (the
"Indemnification Threshold"), in which case the AVS Companies shall be entitled
to all such Indemnifiable Damages, including the Indemnification Threshold;
provided, however, the Indemnification Threshold and the limitations on the
maximum amount of Indemnifiable Damages set forth herein shall not apply in the
case of fraud or an intentional misrepresentation or intentional breach of
warranty, covenant or agreement.
(b) INSURANCE RECOVERY. The amount of any Indemnifiable
Damages hereunder shall be reduced by the amount, if any, of the recovery
actually received by AVS with respect to the Indemnifiable Damages (net of any
out-of-pocket collection costs) under applicable insurance policies.
11.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Company, the Shareholders or AVS in
this Agreement or pursuant hereto shall survive for a period of one year after
the Closing Date. No claim for the recovery of Indemnifiable Damages arising out
of a breach of any representation or warranty may be asserted by the AVS
Companies against the Company or Shareholders or by the Shareholders or the
Company against AVS after such representations and warranties shall thus expire;
PROVIDED, HOWEVER, that claims for Indemnifiable Damages first asserted within
the applicable period shall not thereafter be barred. Notwithstanding any
knowledge of facts determined or determinable by any party by investigation,
each party shall have the right to fully rely on the representations,
warranties, covenants and agreements of the other parties contained in this
Agreement or in any certificate delivered at the Closing pursuant to this
Agreement. Each representation, warranty, covenant and agreement of the parties
contained in this Agreement is independent of each other representation,
warranty, covenant and agreement.
11.3 SECURITY FOR THE SHAREHOLDERS' INDEMNIFICATION OBLIGATION. As
security for the indemnification obligations contained in this ARTICLE XI, at
the Closing, AVS shall set aside and hold, and the Shareholders hereby grant a
security interest in the shares represented by, the certificates representing
the Held Back Shares issued pursuant to this Agreement. AVS may set off against
the Held Back Shares any loss, damage, cost or expense for which the
Shareholders may be responsible pursuant to this Agreement (including without
limitation, any Indemnifiable Damages for which the Shareholders may be
responsible pursuant to this Agreement) whether or not indemnified pursuant to
this ARTICLE XI, subject, however, to the following terms and conditions:
(a) AVS shall give written notice to the Shareholders of any
claim for Indemnifiable Damages or any other damages hereunder, which notice
shall set forth (i) the amount of Indemnifiable Damages or other loss, damage,
cost or expense which AVS claims to have sustained by reason thereof, and (ii)
the basis of such claim;
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(b) Such set off shall be effected on the later to occur on
the expiration of 10 days from the date of such notice or, if such claim is
contested, the date the dispute regarding the amount of the set off is resolved,
and such set off shall be charged proportionally against the shares set aside;
(c) For purposes of any set off against the Held Back Shares
pursuant to this Article, the shares of AVS Common Stock shall be valued at the
Average Closing Sale Price;
(d) Any claim disputing the amount of a setoff as provided in
(b) above, may be submitted to arbitration in accordance with the rules of the
American Arbitration Association.
11.4 VOTING OF AND DIVIDENDS ON THE HELD BACK SHARES; CASH PROCEEDS.
Except with respect to shares transferred pursuant to the foregoing right of
setoff (and in the case of such shares, until the same are transferred), all
Held Back Shares shall be deemed to be owned by the Shareholders and the
Shareholders shall be entitled to vote the same; PROVIDED, HOWEVER, that, there
shall also be deposited with AVS subject to the terms of this Article, all
shares of AVS Common Stock issued to the Shareholders as a result of any stock
dividend or stock split and all cash issuable to the Shareholders as a result of
any cash dividend, with respect to the Held Back Shares. All stock and cash
issued or paid upon Held Back Shares shall be distributed to the person or
entity entitled to receive such Held Back Shares together with such Held Back
Shares. Provided that all cash proceeds of the sale are substituted for the Held
Back Shares and delivered to AVS, the Held Back Shares may be sold by the owner
thereof subject to any other restrictions contained herein. AVS agrees to hold
such proceeds in a segregated interest bearing account.
11.5 DELIVERY OF HELD BACK SHARES. AVS agrees to deliver to the
Shareholders no later than the first anniversary of the Closing Date any Held
Back Shares then held by it unless there then remains unresolved any claim for
Indemnifiable Damages or other damages hereunder as to which notice has been
given, in which event any Held Back Shares remaining on deposit after such claim
shall have been satisfied shall be returned to the Shareholders promptly after
the time of satisfaction.
11.6 ADJUSTMENT TO PURCHASE PRICE CONSIDERATION. All payments for
Indemnifiable Damages made pursuant to this Article shall be treated as
adjustments to the consideration granted under Section 2.1 hereof.
11.7 NO BAR; WAIVER. If the Held Back Shares are insufficient to set
off any claim for Indemnifiable Damages made hereunder (or have been delivered
to the Shareholders prior to the making or resolution of such claim), then AVS
may take any action or exercise any remedy available to it by appropriate legal
proceedings to collect the Indemnifiable Damages. The Shareholders hereby waive
any rights to contribution or any similar rights they may have against the
Company as of a result of their agreement to indemnify AVS under this ARTICLE
XI.
11.8 REMEDIES CUMULATIVE. The remedies provided herein shall be
cumulative and shall not preclude AVS from asserting any other right, or seeking
any other remedies against the Shareholders or the Company.
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ARTICLE XII
SECURITIES LAW MATTERS
The parties agree as follows with respect to the sale or other
disposition after the Closing Date of the AVS Shares:
12.1 DISPOSITION OF SHARES. The Company and the Shareholders represent
and warrant that the shares of AVS Common Stock being acquired by them hereunder
are being acquired and will be acquired for their own respective accounts and
will not be sold or otherwise disposed of, except pursuant to (a) an exemption
from the registration requirements under the Securities Act, which does not
require the filing by AVS with the SEC of any registration statement, offering
circular or other document, in which case, the Company and the Shareholders
shall first supply to AVS an opinion of counsel (which counsel and opinions
shall be satisfactory to AVS) that such exception is available, or (b)an
effective registration statement filed by AVS with the SEC under the Securities
Act.
12.2 LEGEND. The certificates representing the AVS Shares shall bear
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT FILED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND IN COMPLIANCE WITH
APPLICABLE SECURITIES LAWS OF ANY STATE WITH RESPECT THERETO,
OR IN ACCORDANCE WITH AN OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER THAT AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE, AND ALSO MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF BY THE HOLDER WITHOUT
COMPLIANCE WITH THE SECURITIES AND EXCHANGE COMMISSION'S
ACCOUNTING SERIES RELEASES 130 AND 135.
AVS may, unless a registration statement is in effect covering such shares or it
has received an opinion of counsel reasonably acceptable to it that registration
is not required due to an exemption therefrom, place stop transfer orders with
its transfer agents with respect to such certificates in accordance with federal
securities laws.
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ARTICLE XIII
DEFINITIONS
13.1 DEFINED TERMS. As used herein, the following terms shall have the
following meanings:
"Affiliate" shall have the meaning ascribed to it in Rule
12b-2 of the General Rules and Regulations under the Exchange Act, as
in effect on the date hereof.
"Code" means the Internal Revenue Code of 1986, as amended and
treasury regulations promulgated thereunder.
"Big Six" means Arthur Andersen, L.L.P., KPMG Peat Marwick,
L.L.P., Price Waterhouse, L.L.P., Ernst & Young, L.L.P., Deloitte &
Touche, L.L.P., and Coopers & Lybrand, L.L.P.
"Contract" means any agreement, contract, lease, note,
mortgage, indenture, loan agreement, franchise agreement, covenant,
employment agreement, license, instrument, purchase and sales order,
undertaking, commitment, obligation whether written or oral, express or
implied.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means generally accepted accounting principles in
effect in the United States of America from time to time.
"Governmental Authority" means any nation or government, any
state, regional, local or other political subdivision thereof, and any
entity or official exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including, but not limited to,
any conditional sale or other title retention agreement, any lease in
the nature thereof, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code or comparable law
or any jurisdiction in connection with such mortgage, pledge, security
interest, encumbrance, lien or charge).
"Material Adverse Change (or Effect)" means a change (or
effect), in the condition (financial or otherwise), properties, assets,
liabilities, rights, obligations, operations, business or prospects
which change (or effect) individually or in the aggregate, is
materially adverse to such condition, properties, assets, liabilities,
rights, obligations, operations, business or prospects.
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"Person" means an individual, partnership, corporation,
business trust, joint stock company, estate, trust, unincorporated
association, joint venture, Governmental Authority or other entity, of
whatever nature.
"SEC" or "Commission" means the Securities and Exchange
Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Tax Return" means any tax return, filing or information
statement required to be filed in connection with or with respect to
any Taxes; and
"Taxes" means all taxes, fees or other assessments, including,
but not limited to, income, excise, property, sales, franchise,
intangible, withholding, social security and unemployment taxes imposed
by any federal, state, local or foreign governmental agency, and any
interest or penalties related thereto.
13.2 OTHER DEFINITIONAL PROVISIONS.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context otherwise requires.
(b) Terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) All matters of an accounting nature in connection with
this Agreement and the transactions contemplated hereby shall be determined in
accordance with GAAP applied on a basis consistent with prior periods, where
applicable.
(d) As used herein, the neuter gender shall also denote the
masculine and feminine, and the masculine gender shall also denote the neuter
and feminine, where the context so permits.
ARTICLE XIV
TERMINATION
14.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing Date:
(a) by mutual written consent of all of the parties hereto at
any time prior to the Closing; or
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(b) by AVS in the event of a material breach by the Company or
the Shareholder, of any provision of this Agreement;
(c) by the Company or a majority of the Shareholders in the
event of a material breach by AVS of any provision of this Agreement; or
(d) by AVS or the Company or a majority of the Shareholders if
the Closing shall not have occurred by January 31, 1998.
14.2 EFFECT OF TERMINATION. Except for the provisions of ARTICLE XI
hereof, which shall survive any termination of this Agreement, in the event of
termination of this Agreement pursuant to Section 14.1, this Agreement shall
forthwith become void and of no further force and effect, and the parties hereto
shall be released from any and all obligations hereunder; provided, however,
that nothing herein shall relieve any party from liability for the willful
breach of any of its representations, warranties, covenants or agreements set
forth in this Agreement. The provisions of any Confidentiality Agreement
executed by AVS for the benefit of the Company shall survive any termination of
this Agreement.
ARTICLE XV
GENERAL PROVISIONS
15.1 NOTICES. All notices, requests, demands, claims, and other
communications hereunder shall be in writing and shall be delivered by certified
or registered mail (first class postage pre-paid), guaranteed overnight
delivery, or facsimile transmission if such transmission is confirmed by
delivery by certified or registered mail (first class postage pre-paid) or
guaranteed overnight delivery, to the following addresses and telecopy numbers
(or to such other addresses or telecopy numbers which such party shall designate
in writing to the other party):
(a) IF TO ANY OF THE AVS COMPANIES TO:
Aviation Sales Company
6905 N.W. 25th Street
Miami, FL 33122
Attn: Dale S. Baker, Chairman of the Board, President
and Chief Executive Officer
Telecopy: (305) 599-6775
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WITH A COPY TO:
Akerman, Senterfitt & Eidson, P.A.
One Southeast Third Avenue, 28th Floor
Miami, Florida 33131
Attention: Philip B. Schwartz, Esq.
Telecopy: (305) 374-5095
(b) IF TO THE COMPANY AND/OR THE SHAREHOLDERS TO:
Apex Manufacturing, Inc.
4300 E. Magnolia
Phoenix, Arizona 85034
Attn: James John Berens, Jr.
Telecopy: (602) 437-4239
WITH A COPY TO:
Sacks Tierney, P.A.
2929 North Central Avenue, 14th Floor
Phoenix, Arizona 85012
Attn: Sharri Poulson Speaker, Esq.
Telecopy: (602) 279-2027
Notice shall be deemed given on the date sent if sent by facsimile
transmission and on the date delivered (or the date of refusal of delivery) if
sent by overnight delivery or by certified or registered mail.
15.2 ENTIRE AGREEMENT. This Agreement (including the Exhibits and
Schedules attached hereto) and other documents delivered at the Closing pursuant
hereto, contains the entire understanding of the parties in respect of its
subject matter and supersedes all prior agreements and understandings (oral or
written) between or among the parties with respect to such subject matter. The
Exhibits and Schedules constitute a part hereof as though set forth in full
above.
15.3 EXPENSES. Except as otherwise provided herein, the parties shall
pay their own fees and expenses, including their own counsel fees, incurred in
connection with this Agreement or any transaction contemplated hereby. AVS
agrees that upon the occurrence of the Closing, it shall reimburse up to an
aggregate of $25,000 in documented legal expenses incurred by the Shareholders
(as a group) in connection with the negotiation and preparation of this
Agreement.
15.4 AMENDMENT; WAIVER. This Agreement may not be modified, amended,
supplemented or waived, except by written instrument executed by all parties. No
failure to exercise, and no delay in exercising, any right, power or privilege
under this Agreement shall operate as a waiver, nor shall
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any single or partial exercise of any right, power or privilege hereunder
preclude the exercise of any other right, power or privilege. No waiver of any
breach of any provision shall be deemed to be a waiver of any preceding or
succeeding breach of the same or any other provision, nor shall any waiver be
implied from any course of dealing between the parties. No extension of time for
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts. The rights and remedies of the parties
under this Agreement are in addition to all other rights and remedies, at law or
equity, that they may have against each other.
15.5 BINDING EFFECT; ASSIGNMENT. The rights and obligations of this
Agreement shall bind and inure to the benefit of the parties and their
respective successors and assigns. Nothing expressed or implied herein shall be
construed to give any other person any legal or equitable rights hereunder.
Except for any transfer, after the Closing Date, of Company Common Stock by AVS
to any Affiliate of AVS, which is hereby expressly permitted, the rights and
obligations of this Agreement may not be assigned by the Company, or any
Shareholders without the prior written consent of AVS.
15.6 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original but all of which together shall
constitute one and the same instrument.
15.7 INTERPRETATION. When a reference is made in this Agreement to an
article, section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. The headings
contained herein and on the schedules are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement or the
schedules. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation." Time shall be of the essence in this Agreement.
15.8 GOVERNING LAW; SEVERABILITY. This Agreement shall be construed in
accordance with and governed for all purposes by the laws of the State of
Florida applicable to contracts executed and to be wholly performed within such
State. If any word, phrase, sentence, clause, section, subsection or provision
of this Agreement as applied to any party or to any circumstance is adjudged by
a court to be invalid or unenforceable, the same will in no way affect any other
circumstance or the validity or enforceability of any other word, phrase,
sentence, clause, section, subsection or provision of this Agreement. If any
provision of this Agreement, or any part thereof, is held to be unenforceable
because of the duration of such provision or the area covered thereby or
otherwise, the parties agree that the court making such determination shall have
the power to reduce the duration and/or area of such provision, and/or to delete
specific words or phrases, and in its reduced form, such provision shall then be
enforceable and shall be enforced.
15.9 ARM'S LENGTH NEGOTIATIONS. Each party herein expressly represents
and warrants to all other parties hereto that (a) before executing this
Agreement, said party has fully informed itself of the terms, contents,
conditions and effects of this Agreement; (b) said party has relied solely and
completely upon its own judgment in executing this Agreement; (c) said party has
had the opportunity
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to seek and has obtained the advice of counsel before executing this Agreement;
(d) said party has acted voluntarily and of its own free will in executing this
Agreement; (e) said party is not acting under duress, whether economic or
physical, in executing this Agreement; and (f) this Agreement is the result of
arm's length negotiations conducted by and among the parties and their
respective counsel.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
AVIATION SALES COMPANY, a Delaware
corporation
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
AVS/AMI MERGER CORP., an Arizona
corporation
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
APEX MANUFACTURING, INC., an Arizona
corporation
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
--------------------------------------------------
JAMES JOHN BERENS, JR., individually
--------------------------------------------------
JANICE D. BERENS, individually
--------------------------------------------------
R.W. REITZ, individually
--------------------------------------------------
SHIRLEY J. REITZ, individually
48
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APEX MANUFACTURING, INC.
EMPLOYEES 401(K) PLAN
By:
-----------------------------------------------
Name: JAMES JOHN BERENS, JR.
--------------------------------------------
Title: SOLE TRUSTEE
-------------------------------------------
By:
----------------------------------------------
Name: JAMES JOHN BERENS, JR.
-------------------------------------------
Title: BENEFICIARY
-------------------------------------------
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LIST OF EXHIBITS AND SCHEDULES
EXHIBIT A Bill of Sale and Assignment
Schedule 1.1(a) Tangible Personal Property
Schedule 1.1(b) Customer Accounts and Contracts
Schedule 1.1(g) Intellectual Property
Schedule 2.2(b) Assumed Indebtedness
Schedule 5.4 Capitalization
Schedule 5.5 Shareholders
Schedule 5.9 Financial Statements
Schedule 5.10 Changes Since Current Balance Sheet Date
Schedule 5.13 Environmental Matters
Schedule 5.14(b) Real Estate
Schedule 5.15 Title to and Condition of Assets
Schedule 5.17 Employee Benefit Plans
Schedule 5.18 Tax Matters
Schedule 5.20 Insurance
Schedule 5.22 Permits
Schedule 5.25 Material Contracts
Schedule 5.28 Bank Accounts
Schedule 5.29 Names
Schedule 6.1 Conduct of Business Pending Closing
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Schedule 7.17 Releases of Guaranties
Schedule 8.11(a) Berens Employment Agreement
Schedule 8.11(b) Reitz Employment Agreement
51
EXHIBIT 99.1
AVIATION SALES COMPANY COMPLETES ACQUISITION OF APEX
MANUFACTURING INC.
MIAMI--(BUSINESS WIRE)-- Jan. 6, 1998--Aviation Sales Company (NYSE:AVS-news)
announced today that it acquired Apex Manufacturing Inc., a precision aerospace
parts manufacturer.
Aviation Sales issued 238,572 shares of common stock in exchange for
substantially all of the assets and liabilities of Apex. The transaction is
valued at approximately $8.35 million and will be accounted for as a
pooling-of-interests.
Apex, a privately held company headquartered in Phoenix, Arizona manufactures
precision aerospace parts and specializes in the machining of metal parts
including precision shafts, fuel shrouds, housings and couplings for aerospace
actuating systems, fuel controls and engines. As part of the transaction, key
members of Apex's management group signed long-term employment agreements with
Aviation Sales and will assume ongoing management of the company.
Dale Baker, Chairman and CEO commented: "The acquisition of Apex further expands
Aviation Sales manufacturing capabilities in the precision aerospace machined
parts business and compliments the earlier acquisition of Kratz-Wilde. The
acquisition creates the opportunity for Aviation Sales to provide a broader
range of manufacturing services to key customers such as Allied Signal, GE and
Boeing. We expect the acquisition to be slightly accretive to 1998 earnings."
Avaition Sales is a recognized worldwide leader in the aircraft spare parts
market, manufacturing, selling and repairing parts for Boeing, McDonnell
Douglas, Lockheed and Airbus aircraft, and Pratt & Whitney, General Electric and
Rolls Royce jet engines. Offering inventory management services, including
purchasing services, repair and repair management, warehouse management,
aircraft disassembly services and consignment and leasing of aircraft spare
parts, Aviation Sales is a leader in Total Inventory Solutions designed to meet
the diverse needs of its customers.
This press release contains forward-looking statements, which involve risks and
uncertainties. Aviation Sales' actual results could differ materially from the
results anticipated herein. For further information, please see Aviation Sales'
Annual Report on Form 10-K, as amended, for the 1996 fiscal year.
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