<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 16, 1998.
REGISTRATION NO. 333-64513
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
AIRCRAFT SERVICE INTERNATIONAL, INC.
FLORIDA AVIATION FUELING COMPANY, INC.
DISPATCH SERVICES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 4581 65-0822351
DELAWARE 4581 38-1844890
FLORIDA 4581 59-0785228
FLORIDA 4581 59-0578335
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION NUMBER) IDENTIFICATION NO.)
</TABLE>
8240 N.W. 52ND TERRACE, #200
MIAMI, FLORIDA 33166-7766
TELEPHONE: (305) 599-1600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
STEPHEN D. TOWNES
8240 N.W. 52ND TERRACE, #200
MIAMI, FLORIDA 33166-7766
TELEPHONE: (305) 599-1600
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPY TO:
WILLIAM S. KIRSCH, P.C.
KIRKLAND & ELLIS
200 EAST RANDOLPH DRIVE
CHICAGO, ILLINOIS 60601
TELEPHONE: (312) 861-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
If any securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 16, 1998
PRELIMINARY PROSPECTUS
, 1998
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
OFFER TO EXCHANGE ITS SERIES B 11% SENIOR NOTES DUE 2005 FOR ANY AND ALL OF ITS
OUTSTANDING 11%
SENIOR NOTES DUE 2005.
------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
, 1998, UNLESS EXTENDED.
Aircraft Service International Group, Inc. (the "Company"), hereby offers
(the "Exchange Offer"), upon the terms and conditions set forth in this
Prospectus (the "Prospectus") and the accompanying Letter of Transmittal (the
"Letter of Transmittal"), to exchange $1,000 principal amount of its Series B
11% Senior Notes due 2005 (the "Exchange Notes"), registered under the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to a
Registration Statement of which this Prospectus is a part, for each $1,000
principal amount of its outstanding 11% Senior Notes due 2005 (the "Old Notes"),
of which $80,000,000 principal amount is outstanding. The form and terms of the
Exchange Notes are the same as the form and term of the Old Notes except that
(i) the Exchange Notes will have been registered under the Securities Act and,
therefore, will not bear legends restricting the transfer thereof and (ii)
holders of the Exchange Notes will not be entitled to certain rights of holders
of Old Notes under the Exchange Offer Registration Rights Agreement (as
defined). The Old Notes and the Exchange Notes are sometimes referred to herein
collectively as the "Notes". The Exchange Notes will evidence the same debt as
the Old Notes (which they replace) and will be issued under and be entitled to
the benefits of the Indenture dated as of August 18, 1998 (the "Indenture") by
and among the Company and State Street Bank and Trust Company, as trustee,
governing the Notes. See "The Exchange Offer" and "Description of the Notes."
The proceeds of the Initial Offering (as defined) were used to repay
certain indebtedness of the Company incurred in connection with the Acquisition.
See "The Acquisition" and "Use of Proceeds."
The Company will accept for exchange any and all Old Notes validly tendered
and not withdrawn prior to 5:00 p.m., New York City time on
, 1998, unless extended by the Company in its sole
discretion (the "Expiration Date"). Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m. on the Expiration Date. The Exchange Offer is subject to
certain customary conditions. See "The Exchange Offer."
Interest on the Notes will accrue from their date of original issuance and
will be payable semiannually in arrears on February 15 and August 15 of each
year, commencing February 15, 1999, at the rate of 11% per annum. The Notes will
mature on August 15, 2005. The Notes are redeemable, in whole or in part, at the
option of the Company on or after August 15, 2003, at the redemption prices set
forth herein, plus accrued and unpaid interest, if any, to the date of
redemption. In addition, the Company, at its option, may redeem in the aggregate
up to 33 1/3% of the original principal amount of the Notes at any time on or
prior to August 15, 2001 at a redemption price equal to 111% of the principal
amount thereof, together with accrued and unpaid interest thereon to the
redemption date, with the Net Proceeds of one or more Public Offerings; provided
that at least $53.3 million aggregate principal amount of the Notes remains
outstanding after any such redemption and that any such redemption occurs within
90 days following the closing of such Public Offering. See "Description of the
Notes--Optional Redemption."
(Cover page continued on following page)
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 13 FOR A DESCRIPTION OF CERTAIN RISKS
TO BE CONSIDERED BY HOLDERS WHO TENDER THEIR OLD NOTES IN THE EXCHANGE OFFER AND
INVESTORS IN THE NOTES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE> 3
(Cover page continued)
The Notes will be general senior unsecured obligations of the Company,
jointly and severally and fully and unconditionally guaranteed, on a senior
unsecured basis (the "Guarantee"), by the Company's Domestic Restricted
Subsidiaries (the "Guarantors"). The Notes will rank pari passu with all
existing and future senior indebtedness of the Company and senior to all
existing and future subordinated indebtedness of the Company. The Notes will be
(i) effectively subordinated to the senior Credit Facility and any other secured
obligations of the Company and the Guarantors to the extent of the value of the
assets securing such obligations and (ii) structurally subordinated to all
obligations of the Company's non-Domestic Restricted Subsidiaries and
Unrestricted Subsidiaries.
As of September 30, 1998, on a pro forma basis after giving effect to the
Offering, the Company and the Guarantors would have had no indebtedness to which
holders of the Notes would have been effectively subordinated and the Company's
non-Domestic Restricted Subsidiaries and Unrestricted Subsidiaries would have
had no indebtedness to which holders of the Notes would have been structurally
subordinated. In addition, the Company would have had $8.7 million of additional
borrowing availability under the Senior Credit Facility. See "Capitalization,"
"Description of Senior Credit Facility" and "Description of the Notes."
The Old Notes were sold by the Company on August 18, 1998 to CIBC
Oppenheimer Corp. (the "Initial Purchaser") in a transaction not registered
under the Securities Act in reliance upon an exemption under the Securities Act
(the "Initial Offering"). The Initial Purchaser subsequently placed the Old
Notes with (i) qualified institutional buyers in reliance upon Rule 144A under
the Securities Act and (ii) qualified buyers outside the United States in
reliance upon Regulation S under the Securities Act. Accordingly, the Old Notes
may not be reoffered, resold or otherwise transferred in the United States
unless registered under the Securities Act or unless an applicable exemption
from the registration requirements of the Securities Act is available. The
Exchange Notes are being offered hereunder in order to satisfy the obligations
of the Company under the Exchange Offer Registration Rights Agreement entered
into by the Company and the Initial Purchasers in connection with the Initial
Offering (the "Exchange Offer Registration Rights Agreement"). See "The Exchange
Offer."
Based upon an interpretation by the staff of the Securities and Exchange
Commission (the "Commission") set forth in certain no-action letters issued to
third parties, the Company believes that the Exchange Notes issued pursuant to
the Exchange Offer in exchange for Old Notes may be offered for resale, resold
and otherwise transferred by any holder thereof (other than any such holder that
is an "affiliate" of the Company within the meaning of Rule 405 under the
Securities Act) without compliance with the registration and prospectus delivery
requirements of the Securities Act, provided that such Exchange Notes are
acquired in the ordinary course of such holder's business and such holder has no
arrangement or understanding with any person to participate in the distribution
of such Exchange Notes. See "The Exchange Offer--Resale of the Exchange Notes."
Holders of Old Notes wishing to accept the Exchange Offer must represent to the
Company, as required by the Exchange Offer Registration Rights Agreement, that
such conditions have been met. Each broker-dealer (a "Participating
Broker-Dealer") that receives Exchange Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Notes. The Letter of Transmittal states that by
so acknowledging and by delivering a prospectus, a participating Broker-Dealer
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act. This Prospectus, as it may be amended or supplemented from
time to time, may be used by a Participating Broker-Dealer in connection with
resales of Exchange Notes received in exchange for Old Notes where such Old
Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities. The Company has agreed
that, for a period of 180 days after the Expiration Date, it will make this
Prospectus available to any Participating Broker-Dealer for use in connection
with any such resale (provided that the Company receives notice from such
Participating Broker-Dealer of its status as a Participating Broker-Dealer
within 30 days after the consummation of the Exchange Offer). See "Plan of
Distribution."
The Company will not receive any proceeds from the Exchange Offer. The
Company has agreed to bear the expenses of the Exchange Offer. No underwriter is
being used in connection with the Exchange Offer.
There has not previously been any public market for the Old Notes or the
Exchange Notes. The Company does not intend to list the Exchange Notes on any
securities exchange or to seek approval for
<PAGE> 4
(Cover page continued)
quotation through any automated quotation system. There can be no assurance that
an active market for the Exchange Notes will develop. See "Risk Factors--Absence
of a Public Market Could Adversely Affect the Value of Exchange Notes."
Moreover, to the extent that Old Notes are tendered and accepted in the Exchange
Offer, the trading market for untendered and tendered but unaccepted Old Notes
could be adversely affected.
Market data used throughout this Prospectus was obtained from internal
Company surveys and estimates and industry publications. Industry publications
generally state that the information contained therein has been obtained from
sources believed to be reliable but that the accuracy and completeness of such
information is not guaranteed. The Company has not independently verified any
such market data. Similarly, internal Company surveys and estimates, while
believed by the Company to be reliable, have not been verified by any
independent sources.
The Exchange Notes will be available initially only in book-entry form.
Except as described under "Book-Entry; Delivery and Form," the Company expects
that the Exchange Notes issued pursuant to the Exchange Offer will be
represented by a Global Note (as defined), which will be deposited with, or on
behalf of, the Depository Trust Company ("DTC") and registered in its name or in
the name of Euroclear System and Cedel, Societe Anonyme, its nominees.
Beneficial interests in the Global Notes representing the Exchange Notes will be
shown on, and transfers thereof will be effected through, records maintained by
DTC and its participants. After the initial issuance of the Global Notes, notes
in certificated form will be issued in exchange for the Global Notes only under
limited circumstances as set forth in the indenture. See "Description of the
Notes--Book-Entry; Delivery and Form."
Until , 1999 (90 days after the commencement of the Exchange
Offer), all dealers effecting transactions in the Exchange Notes may be required
to deliver a Prospectus. This in addition to the dealers' obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
<PAGE> 5
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on Form
S-4 (the "Exchange Offer Registration Statement," which term shall encompass all
amendments, exhibits, annexes and schedules thereto) pursuant to the Securities
Act, and the rules and regulations promulgated thereunder, covering the Exchange
Offer contemplated hereby. This Prospectus does not contain all the information
set forth in the Exchange Offer Registration Statement. For further information
with respect to the Company and the Exchange Offer, reference is made to the
Exchange Offer Registration Statement. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Exchange Offer Registration Statement,
reference is made to the exhibit for a more complete description of the document
or matter involved, and each such statement shall be deemed qualified in its
entirety by such reference.
The Company is not currently subject to the periodic reporting and other
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Upon the effectiveness of the Exchange Offer Registration
Statement the Company will become subject to the periodic reporting and other
informational requirements of the Exchange Act, and in accordance therewith will
be required to file periodic reports and other information with the Commission.
The Company has agreed that, whether or not it is required to do so by the rules
and regulations of the Commission, for so long as any Notes remain outstanding,
it will furnish to the holders of the Notes and, to the extent permitted by
applicable law or regulation, file with the Commission (i) all quarterly and
annual financial information that would be required to be contained in a filing
with the Commission on Forms 10-Q and 10-K if the Company was required to file
such Forms, including for each a "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and, with respect to the annual
information only, a report thereof by the Company's independent certified public
accountants and (ii) all reports that would be required to be filed on Form 8-K
if it were required to file such reports. In addition, for so long as any of the
Notes remain outstanding, the Company has agreed to make available to any
prospective purchaser of the Notes or beneficial owner of the Notes, in
connection with any sale thereof, the information required by Rule 144A(d)(4)
under the Securities Act.
The Company, a corporation organized under the laws of the state of
Delaware, has its principal executive office located at 8240 N.W. 52nd Terrace,
#200, Miami, Florida 33166-1600; its telephone number is (305) 599-1600.
i
<PAGE> 6
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and the notes thereto which appear
elsewhere in this Prospectus. Unless the context otherwise indicates, the term
the "Company" refers to (i) Aircraft Service International Group, Inc., its
wholly-owned subsidiaries and Omni Aircraft Service GmbH ("Omni Aircraft"), a
joint venture between the Company and a subsidiary of Preussag AG, when used in
reference to periods subsequent to April 1, 1998 and (ii) the Company's
subsidiaries which prior to their acquisition by the Company were operated under
the divisional name of Aircraft Services International Group (the "ASIG
business" or the "Predecessor") by Viad Corp ("Viad"), when used in reference to
periods as of and prior to March 31, 1998. All references to fiscal years in
this Prospectus refer to years ended December 31. Aircraft Service International
Group, Inc. has adopted a fiscal year end of March 31.
THE COMPANY
The Company is one of the largest independent providers of aviation fueling
and aircraft ground services in the United States. The Company has provided
quality service to its customers for 51 years and has a well-established
presence in 31 airports in the United States, Europe and the Bahamas with an
average tenure in excess of 20 years at its current locations. In 1997, the
Company provided service to over 1.8 million commercial flights for over 200
customers, including most of the major domestic and international airlines such
as American Airlines, Inc. ("American"), British Airways plc ("BA"), Continental
Airlines, Inc. ("Continental"), Delta Air Lines, Inc. ("Delta"), Northwest
Airlines Corporation ("Northwest"), United Airlines, Inc. ("United") and US
Airways, Inc. ("US Airways"), as well as regional air carriers, airport
authorities and oil companies such as Esso U.K. ("Esso"). The Company also
operates fuel storage and delivery systems for airline consortia and airport
authorities, including Los Angeles International Airport's LAXFUEL, which the
Company believes is the largest airport fuel consortium in the world. The
Company intends to solidify its position as a leading independent provider of
aviation fueling and aircraft ground services in the United States and Europe by
leveraging its well-established operating history and relationships with major
customers to generate new business, continuing to take advantage of outsourcing
opportunities, pursuing selected acquisitions in its fragmented industry and
capitalizing on international growth opportunities. The Company has achieved
8.9% revenue and 8.5% EBITDA (as defined herein) compound annual growth rates
between 1993 and 1997. For the year ended December 31, 1997 and the six months
ended September 30, 1998, the Company generated revenues of $119.3 million and
$61.2 million, respectively, and net income (loss) of $6.0 million and $(3.5)
million, respectively. For the year ended March 31, 1998 and the six months
ended September 30, 1998, the Company had a pro forma net loss of $0.8 million
and $1.2 million, respectively, and pro forma EBITDA of $17.2 million and $8.1
million, respectively.
The Company's business includes aviation fueling services (57% of 1997
revenues), aircraft ground services (39%) and other aviation services (4%).
Aviation fueling services are comprised primarily of into-plane fueling,
maintenance and operation of fuel storage and delivery systems and the retail
sale of fuel products. Generally, the Company has custody over, but not
ownership of, the fuel it manages and delivers. Aircraft ground services consist
primarily of ground handling, aircraft interior grooming, cargo handling,
passenger and traffic services and fixed base operations ("FBOs"). FBOs
generally include the provision of terminal services, pilot facilities,
maintenance, weather service, flight planning and hangar space to private,
executive and corporate aircraft. Within each business line, the services
provided by the Company are complementary and, by expanding the number of
flights served at each location, the Company has the opportunity to leverage its
existing infrastructure to realize higher margins on incremental revenues. The
Company provides its services to customers pursuant to contractual agreements
and currently has approximately 740 contracts, which have been in place,
including extensions, for an average of 5.0 years each. The Company believes it
has established a reputation for providing quality service and that its
incumbency position at its current locations provides a significant competitive
advantage, as evidenced by an average contract renewal rate over the past three
years of approximately 96%. In addition, the Company has been successful in
winning new business, having won approximately 38%, 45%, 52% and 72% of the new
contracts on which it placed competitive bids in 1995, 1996, 1997 and the nine
months ended September 30, 1998, respectively.
1
<PAGE> 7
The Company believes it has a significant market share of into-plane
fueling services (based on gallons pumped) at many of its locations, handling an
estimated 50% or more of the outsourced commercial fueling requirements at 24 of
the 29 locations where it provides such services. In addition, the Company's
strategic position at certain of its locations is enhanced because the Company
owns or operates the only fuel storage and delivery system at the airport. The
Company believes that because it has generally made significant capital
investments and has management infrastructure in place, it has a competitive
advantage in winning new business relative to a competitor with a small or no
presence at such locations.
INDUSTRY OVERVIEW
Independent aviation services include the aviation fueling and aircraft
ground services provided by the Company as well as other aviation services,
including food service, aircraft maintenance and avionics supplies. The demand
for independent aviation services depends on both the amount of airline traffic
and the extent to which airlines outsource the provision of these services.
Based on airport traffic figures, its own market experience and estimates of
revenue received for services rendered per plane, the Company believes that
approximately 90% of the total commercial aviation fueling market and
approximately 30% of the total commercial ground services market are outsourced
by airlines to independent providers such as the Company and that, as a result,
the aggregate independent markets for fueling services and ground services at
the top 100 North American airports are approximately $300 million and $1.9
billion, respectively.
According to the Air Transport Association of America, an independent
airline industry association, domestic commercial airline traffic increased at a
2.8% compound annual growth rate from 771.6 billion available seat miles ("ASM")
in 1993 to 860.6 billion ASM in 1997. Similarly, according to the Boeing 1998
Current Market Outlook, global commercial airline traffic increased at a 8.8%
compound annual growth rate from approximately 3.0 trillion available seat
kilometers ("ASK") in 1993 to approximately 4.2 trillion ASK in 1997. The Boeing
1998 Current Market Outlook projects that global commercial airline traffic will
continue to grow at a 5.0% annual rate over the next ten years, with North
American traffic growing at a 3.5% annual rate. The Boeing 1998 Current Market
Outlook also projects that additional flights and new routes are expected to
account for 82% of this growth, increased average flight lengths for 16% of this
growth and larger airplanes for only 2% of this growth.
Airline deregulation, which occurred in the United States during the late
1970s and early 1980s, not only generated new entrants in the airline market,
but also stimulated demand for aviation services. The increased competition
resulting from deregulation led airlines to outsource many non-core services
that could be provided on a more cost-effective basis by an independent service
provider. Airline deregulation also changed the pattern of air traffic,
resulting in the creation of airport hubs. The creation of airport hubs further
contributed to the increase in outsourcing, as service providers could realize
greater economies of scale and provide more cost-effective service to large
numbers of flights arriving at and departing from an airline's major hub. The
trend towards outsourcing continued in the late 1980s and early 1990s, when as a
result of large financial losses and a series of restructurings, airlines
undertook cost-cutting efforts, which included the continued outsourcing of
non-core aspects of the business. These cost-cutting efforts and outsourcing
measures, along with a growing economy, allowed the airline industry to return
to profitability in the mid-1990s.
The independent aviation services industry is highly fragmented in both the
United States and Europe and is characterized by many operators that provide
services at a single or small number of locations. Small operators are likely to
face significant competitive pressures as large airlines increasingly deal with
fewer and larger suppliers providing a broader range of services at multiple
locations. This trend should encourage the consolidation of the industry and
enable suppliers to capitalize on economies of scale. For these reasons, the
Company believes that industry consolidation will provide opportunities for
growth in addition to the growth resulting from increases in airline traffic and
outsourcing.
2
<PAGE> 8
BUSINESS STRATEGY
The Company's objective is to solidify its position as a leading
independent provider of aviation fueling and aircraft ground services in the
United States and Europe. The Company intends to pursue its objective through
the following business strategies:
LEVERAGE WELL-ESTABLISHED OPERATING HISTORY AND MARKET POSITIONS. In its
51-year operating history, the Company has built a reputation for providing
quality service and has established a long-term presence in its current
airport locations, with an average tenure in its current 31 locations in
excess of 20 years. The Company believes that it can continue to leverage
its operating history and established presence at its current locations to
acquire additional business thereby enhancing economies of scale and cost
savings in such operations. The Company's incumbency position at its
current locations often provides a significant competitive advantage in
winning new business when new contracts can be priced without incorporating
additional fixed costs. The Company also seeks to increase the number of
locations at which it maintains and operates fuel storage and delivery
systems, not only for the steady returns on such contracts, but also
because providing these services creates an opportunity for the Company to
increase its into-plane fueling at that location by building relationships
with the airlines' local managers, who often have influence in determining
their airlines' provider of into-plane fueling services.
LEVERAGE LONG-TERM RELATIONSHIPS WITH MAJOR CUSTOMERS. The Company
maintains relationships with most of the major domestic and international
airlines, including American, BA, Continental, Delta, Northwest, United and
US Airways. The Company believes that these long-term customer
relationships, some of which have existed since the Company's inception,
continue to provide the Company with opportunities to obtain additional
business from these major airline customers both at the locations where the
Company currently provides services to such customers, as well as at other
locations. In addition, the Company expects to benefit from the trend among
large airlines to deal with fewer and larger suppliers that can provide a
broader range of services at multiple locations.
MAINTAIN AND ENHANCE REPUTATION FOR CUSTOMER SERVICE AND QUALITY. The
Company believes that it has one of the best service reputations in the
industry, and as a result, has built a loyal customer base, which is
evidenced by its average contract renewal rate of approximately 96% over
the past three years. The Company provides a high level of customer service
not only by providing a highly trained, efficient and professional work
force, but also by maintaining regular communication with its customers.
Maintaining communication enables the Company to respond to customer
concerns, fosters a strong partnership with the airlines and provides the
Company with information regarding potential business opportunities. As one
of the leading independent providers of aviation fueling and aircraft
ground services in the United States, the Company is invited to participate
in many competitive bidding opportunities for new business and has
generally been successful, having won approximately 38%, 45%, 52% and 72%
of the new contracts on which it placed competitive bids in 1995, 1996,
1997 and the nine months ended September 30, 1998, respectively. The
Company believes that by providing high levels of customer service with an
emphasis on quality, it can continue to retain a large percentage of its
contracts and can be more successful in competitive bids made for new
contracts. In addition, the Company has recently begun to capitalize on
what it perceives as a trend among airlines towards seeking higher quality
outside suppliers, as opposed to simply the lowest priced supplier, by
offering enhanced levels of service in exchange for a premium price. For
example, the Company is reinforcing its reputation for quality through the
implementation of ISO-9002 initiatives at a major airport and expects to
implement ISO-9002 initiatives at other airports. The Company's ISO-9002
initiatives include enhanced employee training and qualifications,
utilizing equipment meeting certain safety, cleanliness and speed criteria
and maintaining complete documentation of all systems and procedures.
PURSUE SELECTIVE CONSOLIDATING ACQUISITIONS. The Company believes that the
independent aviation service industry is highly fragmented in both the
United States and Europe, which affords significant opportunities for
consolidation. The industry includes many small, local or regional
independent aviation service providers that may lack the financial
resources and infrastructure necessary to achieve the efficiencies and
economies of scale to compete effectively for new customers and to make
capital commitments to grow. The Company believes that, through its
established operating history, it is
3
<PAGE> 9
well-positioned to capitalize on this consolidation opportunity and that by
acquiring select competitors and complementary companies it can achieve
further economies of scale and cost savings. In addition, acquisitions are
expected to expand the geographic coverage and range of services provided
by the Company, further solidifying the Company's position as a leading
independent provider of aviation fueling and aircraft ground services.
CAPITALIZE ON INTERNATIONAL GROWTH OPPORTUNITIES. The Company believes it
is well-positioned to capitalize on the liberalization taking place in the
international markets for aviation services, particularly in Europe. The
Company believes it became the first independent aviation fueling service
provider to operate at the London-Heathrow airport when it began providing
into-plane fueling services to BA there in 1990. In addition, the Company
believes that in 1997 it became the first independent aviation fueling
services provider to operate at each of the Munich airport and the
London-Gatwick airport when Omni Aircraft began providing into-plane
fueling services and operating the fuel delivery system at Munich and the
Company entered into an agreement with Esso pursuant to which it began
providing into-plane fueling for BA and other airlines at London-Gatwick.
Alliances with large oil companies such as Esso offer the potential to
accelerate the Company's penetration of the European market by leveraging
the oil companies' existing airport services infrastructure, contracts and
contacts. The Company believes that its quality reputation and current
European operations, particularly its relationship with BA, has positioned
the Company to be a preferred supplier among many potential European
customers. The Company also believes it is well-positioned in the gateway
cities of Miami, Los Angeles, San Francisco, Atlanta and Seattle to take
advantage of growth and market developments in Latin America, Europe and
the Asia-Pacific regions.
INCREASE OPERATING EFFICIENCY. Management has identified several areas
where it believes the Company can achieve immediate cost savings, including
the implementation of a new pension plan and insurance policy and the
reduction of overhead. In addition, the Company believes that it can
improve its operating efficiency through the economies of scale created by
leveraging its existing infrastructure to realize higher margins on
incremental revenue. The Company is also undertaking programs to reduce
costs through the redesign of systems, procedures and measurements to
improve worker efficiency, safety and satisfaction. In addition, the
Company has developed a comprehensive plan to upgrade the quality and
efficiency of its equipment, which is expected to reduce operating costs.
THE ACQUISITION
The Initial Offering was made in conjunction with the Company's $95 million
acquisition of the ASIG business from Viad that was consummated as of April 1,
1998 (the "Acquisition").
An investor group (the "Investor Group") organized by Tioga Capital
Corporation ("Tioga") and including John Hancock Mutual Life Insurance Company
("Hancock") and an affiliate of Canadian Imperial Bank of Commerce ("CIBC," an
affiliate of the Initial Purchaser), capitalized Ranger Aerospace Corporation
("Ranger") with an aggregate investment of $24.1 million. Ranger subsequently
contributed this $24.1 million as equity to the Company (the "Equity
Investment") in return for all of its outstanding common stock. In connection
with the Acquisition, the Company and Viad agreed that they will jointly elect
under the Internal Revenue Code (the "338(h)(10) election") to treat the
Acquisition as a purchase of assets for federal income tax purposes, which will
result in the Company's tax basis in its assets being increased to their fair
market value at the time of the Acquisition. The net proceeds from the Equity
Investment and the Company's issuance of $75 million of senior increasing rate
notes (the "Senior Increasing Rate Notes") under a note purchase agreement among
the Company, Ranger and the Initial Purchaser (the "Note Purchase Agreement")
were used to consummate the Acquisition. Concurrent with the Acquisition, the
Company entered into a senior credit facility consisting of a $10 million
working capital facility (the "Senior Credit Facility"), which was provided by
Key Corporate Capital Inc., an affiliate of Key Bank, as lender and agent. The
net proceeds of the Initial Offering were used to repay the Senior Increasing
Rate Notes.
Ranger owns all of the Company's outstanding common stock. The assets of
the Company consist principally of the stock of its subsidiaries, through which
it conducts substantially all of its operations. The Company's ability to make
payments of principal and interest on the Notes is dependent upon dividends or
4
<PAGE> 10
other distributions of funds from its subsidiaries. The following chart shows
the structure of the Company following the Acquisition:
LOGO
The Company's principal executive offices are located at 8240 N.W. 52nd
Terrace, Suite 200, Miami, Florida 33166-7766, and its telephone number is (305)
599-1600.
RECENT DEVELOPMENTS
The Company was recently informed by BA that BA is not renewing its
contract with the Company for the provision of aircraft grooming services at
London-Heathrow airport following the expiration of such contract in January
1999. This contract generated approximately 8.8% of the Company's revenues in
1997 and the anticipated reduction in revenues and EBITDA as a result of the
loss of this contract for the fiscal year ending March 31, 1999 is $2.1 million
and $0.2 million, respectively.
THE INITIAL OFFERING
Old Notes.................. The Old Notes were sold by the Company on August
18, 1998 to CIBC Oppenheimer Corp. (the "Initial
Purchaser") pursuant to a Purchase Agreement dated
August 13, 1998 (the "Purchase Agreement"). The
Initial Purchaser subsequently resold the Old Notes
to (i) qualified institutional buyers pursuant to
Rule 144A under the Securities Act and (ii)
qualified buyers outside the United States in
reliance upon Regulation S under the Securities
Act.
Exchange Offer Registration
Rights Agreement......... Pursuant to the Purchase Agreement, the Company and
the Initial Purchaser entered into an exchange
offer registration rights agreement dated as of
August 18, 1998 (the "Exchange Offer Registration
Rights Agreement"), which grants the holders of the
Old Notes certain exchange and registration rights.
The Exchange Offer is intended to satisfy such
exchange rights which terminate upon the
consummation of the Exchange Offer.
5
<PAGE> 11
THE EXCHANGE OFFER
Securities Offered......... $80,000,000 aggregate principal amount of Series B
11% Senior Notes due 2005.
The Exchange Offer......... $1,000 principal amount of Exchange Notes in
exchange for each $1,000 principal amount of Old
Notes. As of the date hereof, $80,000,000 aggregate
principal amount of Old Notes are outstanding. The
Company will issue the Exchange Notes to holders on
or promptly after the Expiration Date.
Based on an interpretation by the staff of the
Commission set forth in no-action letters issued to
third parties, the Company believes that Exchange
Notes issued pursuant to the Exchange Offer in
exchange for Old Notes may be offered for resale,
resold and otherwise transferred by any holder
thereof (other than any such holder which is an
"affiliate" of the Company within the meaning of
Rule 405 under the Securities Act) without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that such Exchange Notes are acquired in the
ordinary course of such holder's business and that
such holder does not intend to participate and has
no arrangement or understanding with any person to
participate in the distribution of such Exchange
Notes.
Any Participating Broker-Dealer that acquired Old
Notes for its own account as a result of
market-making activities or other trading
activities may be a statutory underwriter. Each
Participating Broker-Dealer that receives Exchange
Notes for its own account pursuant to the Exchange
Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such
Exchange Notes. The Letter of Transmittal states
that by so acknowledging and by delivering a
prospectus, a Participating Broker-Dealer will not
be deemed to admit that it is an "underwriter"
within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented
from time to time, may be used by a Participating
Broker-Dealer in connection with resales of
Exchange Notes received in exchange for Old Notes
where such Old Notes were acquired by such
Participating Broker-Dealer as a result of market-
making activities or other trading activities. The
Company has agreed that, for a period of 180 days
after the Expiration Date, it will make this
Prospectus available to any Participating
Broker-Dealer for use in connection with any such
resale (provided that the Company receives notice
from such Participating Broker-Dealer of its status
as a Participating Broker-Dealer within 30 days
after the consummation of the Exchange Offer). See
"Plan of Distribution."
Any holder who tenders in the Exchange Offer with
the intention to participate, or for the purpose of
participating, in a distribution of the Exchange
Notes could not rely on the position of the staff
of the Commission enunciated in no-action letters
and, in the absence of an exemption therefrom, must
comply with the registration and prospectus
delivery requirements of the Securities Act in
connection with any resale transaction. Failure to
comply with such requirements in such instance may
result in such holder incurring liability under the
Securities Act for which the holder is not
indemnified by the Company.
6
<PAGE> 12
Expiration Date............ 5:00 p.m., New York City time, on ,
1998 unless the Exchange Offer is extended, in
which case the term "Expiration Date" means the
latest date and time to which the Exchange Offer is
extended. The Company will keep the Exchange Offer
open for not less than 30 days (or longer if
required by applicable law) after the date on which
notice of the Exchange Offer is mailed to holders
of the Old Notes. As a result of the requirements
set forth in the Exchange Offer Registration
Statement, the Company believes that it is unlikely
that it would extend the Exchange Offer beyond 45
days after such notice is mailed to the holders of
the Old Notes.
Accrued Interest on the
Exchange Notes and the
Old Notes................ Each Exchange Note will bear interest from its
issuance date. Holders of Old Notes that are
accepted for exchange will receive, in cash,
accrued interest thereon to, but not including, the
issuance date of the Exchange Notes. Such interest
will be paid with the first interest payment on the
Exchange Notes on February 15, 1999.
Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain customary
conditions, which may be waived by the Company. See
"The Exchange Offer--Conditions."
Procedures for Tendering
Old Notes.................. Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
accompanying Letter of Transmittal, or a facsimile
thereof, in accordance with the instructions
contained herein and therein, and mail or otherwise
deliver such Letter of Transmittal, or such
facsimile, together with the Old Notes and any
other required documentation to the Exchange Agent
(as defined) at the address set forth herein. By
executing the Letter of Transmittal, each holder
will represent to the Company that, among other
things, the Exchange Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary
course of business of the person receiving such
Exchange Notes, whether or not such person is the
holder, that neither the holder nor any such other
person has any arrangement or understanding with
any person to participate in the distribution of
such Exchange Notes and that neither the holder nor
any such other person is an "affiliate," as defined
under Rule 405 of the Securities Act, of the
Company. See "The Exchange Offer--Purpose and
Effect of the Exchange Offer" and "--Procedures for
Tendering."
Untendered Old Notes....... Following the consummation of the Exchange Offer,
holders of Old Notes eligible to participate but
who do not tender their Old Notes will not have any
further exchange rights and such Old Notes will
continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market
for such Old Notes could be adversely affected.
Consequences of Failure to
Exchange................. The Old Notes that are not exchanged pursuant to
the Exchange Offer will remain restricted
securities. Accordingly, such Old Notes may be
resold only (i) to the Company, (ii) pursuant to
Rule 144A or Rule 144 under the Securities Act or
pursuant to some other exemption under the
Securities Act, (iii) outside the United States to
a foreign person
7
<PAGE> 13
pursuant to the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective
registration statement under the Securities Act.
See "The Exchange Offer--Consequences of Failure to
Exchange."
Shelf Registration
Statement.................. If any holder of the Old Notes (other than any such
holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities
Act) is not eligible under applicable securities
laws to participate in the Exchange Offer, and such
holder has satisfied certain conditions relating to
the provision of information to the Company for use
therein, the Company has agreed to register the Old
Notes on a shelf registration statement (the "Shelf
Registration Statement") and use its best efforts
to cause it to be declared effective by the
Commission as promptly as practical on or after the
consummation of the Exchange Offer. The Company has
agreed to maintain the effectiveness of the Shelf
Registration Statement for, under certain
circumstances, a maximum of two years, to cover
resales of the Old Notes held by any such holders.
Special Procedures for
Beneficial Owners.......... Any beneficial owner whose Old Notes are registered
in the name of a broker, dealer, commercial bank,
trust company or other nominee and who wishes to
tender should contact such registered holder
promptly and instruct such registered holder to
tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on such owner's
own behalf, such owner must, prior to completing
and executing the Letter of Transmittal and
delivering its Old Notes, either make appropriate
arrangements to register ownership of the Old Notes
in such owner's name or obtain a properly completed
bond power from the registered holder. The transfer
of registered ownership may take considerable time.
Guaranteed Delivery
Procedures............... Holders of Old Notes who wish to tender their Old
Notes and whose Old Notes are not immediately
available or who cannot deliver their Old Notes,
the Letter of Transmittal or any other documents
required by the Letter of Transmittal to the
Exchange Agent (or comply with the procedures for
book-entry transfer) prior to the Expiration Date
must tender their Old Notes according to the
guaranteed delivery procedures set forth in "The
Exchange Offer--Guaranteed Delivery Procedures."
Withdrawal Rights.......... Tenders may be withdrawn at any time prior to 5:00
p.m., New York City time, on the Expiration Date.
Acceptance of Old Notes and
Delivery of Exchange
Notes.................... The Company will accept for exchange any and all
Old Notes which are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Notes
issued pursuant to the Exchange Offer will be
delivered promptly following the Expiration Date.
See "The Exchange Offer--Terms of the Exchange
Offer."
Use of Proceeds............ There will be no cash proceeds to the Company from
the exchange pursuant to the Exchange Offer.
Exchange Agent............. State Street Bank and Trust Company is serving as
Exchange Agent in connection with the exchange
offer of Exchange Notes for Old Notes. State Street
Bank and Trust Company is referred to herein as the
"Exchange Agent."
8
<PAGE> 14
THE EXCHANGE NOTES
Maturity Date.............. August 15, 2005
General.................... The form and terms of the Exchange Notes are the
same as the form and terms of the Old Notes (which
they replace) except that (i) the Exchange Notes
have been registered under the Securities Act and,
therefore, will not bear legends restricting the
transfer thereof, and (ii) the holders of Exchange
Notes will not be entitled to certain rights of
holders of Old Notes under the Exchange Offer
Registration Rights Agreement, including the
provisions providing for an increase in the
interest rate on the Old Notes in certain
circumstances relating to the timing of the
Exchange Offer, which rights will terminate when
the Exchange Offer is consummated. See "The
Exchange Offer--Purpose and Effect of the Exchange
Offer." The Exchange Notes will evidence the same
debt as the Old Notes and will be entitled to the
benefits of the Indenture. See "Description of the
Notes."
Interest Payment Dates..... Interest will accrue on the Exchange Notes from the
date of issuance and is payable in cash
semiannually on each February 15 and August 15,
commencing February 15, 1999.
Ranking; Guarantees........ The Exchange Notes will be, as the Old Notes (which
they replace) are, general senior unsecured
obligations of the Company, jointly and severally
and fully and unconditionally guaranteed, on a
senior unsecured basis (the "Guarantee"), by the
Company's Domestic Restricted Subsidiaries (the
"Guarantors"). The Exchange Notes will rank pari
passu with all existing and future senior
indebtedness of the Company and senior to all
existing and future subordinated indebtedness of
the Company. The Exchange Notes will be, as the Old
Notes (which they replace) are, (i) effectively
subordinated to the Senior Credit Facility and any
other secured obligations of the Company and the
Guarantors to the extent of the value of the assets
securing such obligations and (ii) structurally
subordinated to all obligations of the Company's
non-Domestic Restricted Subsidiaries and
Unrestricted Subsidiaries. As of September 30,
1998, the Company and the Guarantors would have had
no indebtedness to which holders of the Exchange
Notes would have been effectively subordinated and
the Company's non-Domestic Restricted Subsidiaries
and Unrestricted Subsidiaries would have had no
indebtedness to which holders of the Exchange Notes
would have been structurally subordinated. In
addition, the Company would have had $8.7 million
of additional borrowing availability under the
Senior Credit Facility. See "Capitalization,"
"Description of Senior Credit Facility" and
"Description of the Notes." Separate financial
statements for the Guarantors have not been
presented herein because management believes the
condensed consolidating financial statements
presented in the footnotes to the financial
statements are more meaningful in understanding the
financial position and results of operations of the
Guarantors.
Optional Redemption........ The Exchange Notes will be, as the Old Notes (which
they replace) are, redeemable at the option of the
Company, in whole or in part, at any time on or
after August 15, 2003, at the redemption prices set
forth herein, together with accrued and unpaid
interest thereon to the redemption date. In
addition, the Company, at its option, may redeem in
the aggregate up to 33 1/3% of the original
principal amount of the Notes at
9
<PAGE> 15
any time on or prior to August 15, 2001 at a
redemption price equal to 111.000% of the principal
amount thereof, together with accrued and unpaid
interest thereon to the redemption date, with the
Net Proceeds of one or more Public Offerings;
provided that at least $53.3 million aggregate
principal amount of the Notes remains outstanding
after any such redemption and that any such
redemption occurs within 90 days following the
closing of such Public Offering. See "Description
of the Notes--Optional Redemption."
Change of Control.......... Upon the occurrence of a Change of Control, each
holder of the Notes will be entitled to require the
Company to purchase such holder's Notes at a
purchase price equal to 101% of the principal
amount thereof, together with accrued and unpaid
interest thereon to the purchase date. See
"Description of the Notes--Change of Control
Offer." There can be no assurance that the Company
will have the financial resources necessary to
purchase the Notes upon a Change of Control.
Asset Sale Proceeds........ The Company will be obligated in certain instances
to make an offer to repurchase the Notes at a
purchase price equal to 100% of the principal
amount thereof, together with accrued and unpaid
interest thereon to the repurchase date, with the
net cash proceeds of certain asset sales. See
"Description of the Notes--Certain
Covenants--Limitation on Certain Asset Sales."
Certain Covenants.......... The indenture pursuant to which the Exchange Notes
will be issued (the "Indenture") contains covenants
for the benefit of the holders of the Notes that,
among other things, restrict the ability of the
Company and any of its Restricted Group Members (as
defined herein) to: (i) incur additional
Indebtedness (as defined herein); (ii) issue common
and preferred stock of subsidiaries; (iii) pay
dividends and make other Restricted Payments (as
defined herein); (iv) transfer and sell assets; (v)
enter into transactions with affiliates; (vi)
create liens; (vii) make certain investments;
(viii) enter into sale and leaseback transactions;
(ix) enter into agreements restricting the ability
of Restricted Group Members to declare dividends
and make distributions; and (x) merge or
consolidate the Company or any Guarantors. These
covenants are subject to a number of important
exceptions. See "Description of the Notes--Certain
Covenants."
RISK FACTORS
See "Risk Factors" for a discussion of certain factors relating to the
Company, its business, and an investment in the Exchange Notes to be considered
by holders of Old Notes prior to tendering any Old Notes in exchange for
Exchange Notes and by new investors in the Notes.
10
<PAGE> 16
SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL AND OTHER DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table presents summary historical financial data for each of
the three years in the period ended December 31, 1997 which has been derived
from the audited financial statements of the Company and the notes thereto which
appear elsewhere in this Prospectus. The summary historical financial data for
the three months ended March 31, 1997 and March 31, 1998, and the six months
ended September 30, 1997 and September 30, 1998 have been derived from unaudited
financial statements of the Company, which in the opinion of management, include
all adjustments, consisting only of normal recurring adjustments, necessary for
a fair presentation of the results for the unaudited interim periods. Results
for the six months ended September 30, 1998 are not necessarily indicative of
results that may be expected for the entire year.
The following unaudited summary pro forma statement of income data for the
six month period ended September 30, 1998 gives effect to, among other things,
the Initial Offering as if it had occurred at the beginning of the period
presented. Certain management assumptions and adjustments relating to the
Acquisition and the Initial Offering are described in the Notes to Unaudited Pro
Forma Financial Data and should be read in conjunction therewith. The unaudited
summary pro forma financial data do not purport to be indicative of the actual
results of operation of the Company that would have actually been attained had
the Acquisition and the Initial Offering in fact occurred on the date specified,
nor are they necessarily indicative of the results of operations that may be
achieved in the future. See "Unaudited Pro Forma Financial Data," "Selected
Historical Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements of the Company
and notes thereto which appear elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
---------------------------------------------------------------------- -------------
YEARS ENDED DECEMBER 31, THREE MONTHS ENDED, SIX MONTHS ENDED,
------------------------------ --------------------- -----------------------------
MARCH 31, MARCH 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1997 1997 1998 1997 1998
-------- -------- -------- --------- --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues................................... $111,658 $121,574 $119,325 $29,816 $31,035 $58,954 $ 61,243
Costs and expenses:
Operating expenses........................ 93,540 102,935 98,190 23,973 26,320 47,651 49,471
Selling, general and administrative....... 6,467 7,259 6,507 2,064 1,754 3,610 4,035
Depreciation and amortization............. 4,340 4,420 4,604 1,172 1,154 2,295 4,259
-------- -------- -------- ------- ------- ------- --------
Total costs and expenses................ 104,347 114,614 109,301 27,209 29,228 53,556 57,765
-------- -------- -------- ------- ------- ------- --------
Operating income........................... 7,311 6,960 10,024 2,607 1,807 5,398 3,478
Other income (expense), net................ 47 (45) (71) 35 (57) 82 (128)
Interest income............................ 842 343 350 37 77 188 140
Interest and other financial expense....... (620) (606) (669) (165) (170) (330) (6,496)
-------- -------- -------- ------- ------- ------- --------
Income (loss) before income taxes.......... 7,580 6,652 9,634 2,514 1,657 5,338 (3,006)
Income taxes............................... 2,563 2,433 3,602 934 615 2,014 323
-------- -------- -------- ------- ------- ------- --------
Net income (loss) before extraordinary
item...................................... 5,017 4,219 6,032 1,580 1,042 3,324 (3,329)
Extraordinary loss on early extinguishment
of debt................................... -- -- -- -- -- -- (213)
Net income (loss).......................... $ 5,017 $ 4,219 $ 6,032 $ 1,580 $ 1,042 $ 3,324 $ (3,542)
======== ======== ======== ======= ======= ======= ========
Net income (loss) per share -- basic and
diluted:..................................
Before extraordinary item.................. $(33,290)
========
Extraordinary loss......................... $ (2,130)
========
Net income (loss).......................... $(35,420)
========
Weighted average common shares outstanding
-- basic and diluted...................... 100
========
OTHER DATA:
EBITDA(a).................................. $ 11,651 $ 11,380 $ 14,628 $ 3,779 $ 2,961 $ 7,693 $ 7,737
Capital expenditures....................... 4,402 9,061 3,947 963 2,702 1,904 6,337
Ratio of net debt to EBITDA(b).............
Ratio of EBITDA to cash interest
expense(c)................................
Net cash provided by operating
activities................................ 5,060 7,161 17,139 5,927 5,321 8,516 3,018
Net cash (used in) investing activities.... (4,402) (9,061) (4,300) (963) (2,702) (2,295) (94,805)
Net cash provided by (used in) financing
activities................................ (806) 2,091 (13,030) (4,380) (2,619) (8,011) 96,538
BALANCE SHEET DATA (AT END OF PERIOD):
Cash....................................... $ 4,752
Total assets............................... 124,807
Total debt................................. 80,000
Total stockholder's equity................. 20,706
<CAPTION>
SUCCESSOR
-------------
PRO FORMA
SEPTEMBER 30,
1998
-------------
<S> <C>
STATEMENT OF INCOME DATA:
Revenues................................... $ 61,243
Costs and expenses:
Operating expenses........................ 49,341
Selling, general and administrative....... 3,839
Depreciation and amortization............. 4,259
--------
Total costs and expenses................ 57,439
--------
Operating income........................... 3,804
Other income (expense), net................ (128)
Interest income............................ 140
Interest and other financial expense....... (4,726)
--------
Income (loss) before income taxes.......... (910)
Income taxes............................... 323
--------
Net income (loss) before extraordinary
item...................................... $ (1,233)
Extraordinary loss on early extinguishment
of debt................................... --
Net income (loss).......................... $ (1,233)
========
Net income (loss) per share -- basic and
diluted:..................................
Before extraordinary item.................. $(12,330)
========
Extraordinary loss......................... --
========
Net income (loss).......................... $(12,330)
========
Weighted average common shares outstanding
-- basic and diluted...................... 100
========
OTHER DATA:
EBITDA(a).................................. $ 8,063
Capital expenditures.......................
Ratio of net debt to EBITDA(b).............
Ratio of EBITDA to cash interest
expense(c)................................
Net cash provided by operating
activities................................
Net cash (used in) investing activities....
Net cash provided by (used in) financing
activities................................
BALANCE SHEET DATA (AT END OF PERIOD):
Cash.......................................
Total assets...............................
Total debt.................................
Total stockholder's equity.................
</TABLE>
(See footnotes on following page.)
11
<PAGE> 17
NOTES TO SUMMARY HISTORICAL AND UNAUDITED PRO FORMA FINANCIAL AND OTHER DATA
(a) EBITDA is defined herein as net income (loss) before interest, income taxes,
depreciation, amortization and other income (expense). Although EBITDA is
not a measure of performance calculated in accordance with generally
accepted accounting principles, the Company has included information
concerning EBITDA in this Prospectus because it is commonly used by certain
investors and analysts as a measure of a company's ability to service its
debt obligations. The Company's calculation of EBITDA may not be comparable
to similarly titled measures reported by other companies and should not be
viewed as a accurate comparative measure since all companies do not
calculate this non-GAAP measure in the same manner. The Company's EBITDA
calculation is not intended to represent cash used in operating activities,
since it does not include interest and taxes and changes in operating assets
and liabilities, nor is it intended to represent the net increase or
decrease in cash, since it does not include cash provided by (used in)
investing and financing activities.
(b) Net debt equals total debt less cash.
(c) Cash interest expense equals interest expense less amortization of deferred
financing costs.
12
<PAGE> 18
RISK FACTORS
This Prospectus contains forward-looking statements. Such forward-looking
statements are based on the beliefs of the Company's management as well as on
assumptions made by and information currently available to the Company at the
time such statements were made. When used in this Prospectus, the words
"anticipate," "believe," "estimate," "expect," "intends" and similar
expressions, as they relate to the Company, are intended to identify
forward-looking statements. Prior to tendering their Old Notes for Exchange
Notes in the Exchange Offer, holders of Old Notes should carefully consider the
following risk factors in addition to other information contained in this
Prospectus. Such holders of Old Notes should also be aware that actual results
could differ materially from those projected by such forward-looking statements
as a result of the risk factors set forth below or other factors. The Company
cautions the reader, however, that this list of factors may not be exhaustive
and that these or other factors could have an adverse effect on the Company's
ability to service its indebtedness, including principal and interest payments
on the Exchange Notes.
POTENTIAL ADVERSE EFFECTS OF THE COMPANY'S SUBSTANTIAL LEVERAGE
The Company incurred significant indebtedness in connection with the
Acquisition. As of September 30, 1998, the Company had outstanding indebtedness
of $80.0 million, which represents a ratio of indebtedness to total
capitalization of 0.79. For the six months ended September 30, 1998, on a pro
forma basis, the Company would have incurred a net loss of $1.2 million and the
Company's earnings would have been inadequate to cover fixed charges by $2.5
million. The Company also has additional borrowing capacity under the Senior
Credit Facility. The lender under the Senior Credit Facility has an exclusive
security interest in the Company's accounts receivable and inventory.
The Company's leveraged financial position poses substantial consequences
to holders of the Notes, including the risks that: (i) a substantial portion of
the Company's cash flow from operations will be dedicated to the payment of
principal and interest on the Notes and the payment of principal and interest
under the Senior Credit Facility and other indebtedness; (ii) the Company's
leveraged position may impede its ability to obtain financing in the future for
working capital, capital expenditures and general corporate purposes; and (iii)
the Company's highly leveraged financial position may make it more vulnerable to
a downturn in the aviation services industry, which may limit its ability to
withstand competitive pressures. The Company believes it will have sufficient
capital to carry on its business and will be able to meet its scheduled debt
service requirements and other obligations. However, there can be no assurance
that the future cash flow of the Company will be sufficient to meet all of the
Company's scheduled debt service requirements and other obligations. See "Use of
Proceeds," "Capitalization" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital Resources."
RISK THAT THE COMPANY WILL BE UNABLE TO SATISFY ITS DEBT OBLIGATIONS
The Company's ability to pay interest on the Notes and to satisfy its other
debt obligations will depend on its financial and operating performance, which
is subject to prevailing economic and competitive conditions and to certain
financial, business and other factors beyond its control, including airline
passenger traffic, airline fuel prices, availability and skills of the
workforce, availability and cost of liability insurance and extreme weather
conditions. If the Company is unable to generate sufficient cash flow from
operations in the future to service its indebtedness and to meet its other
obligations, the Company will be required to adopt one or more alternatives,
such as refinancing or restructuring its indebtedness, selling material assets
or operations or seeking to raise additional debt or equity capital. There can
be no assurance that any of these actions could be effected on a timely basis or
on satisfactory terms or that these actions would enable the Company to continue
to satisfy its capital requirements. In addition, the terms of existing or
future indebtedness, including the Indenture and the Senior Credit Facility, may
prohibit the Company from adopting any of these alternatives. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources," "Description of Senior Credit
Facility" and "Description of the Notes."
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OPERATING AND FINANCIAL RESTRICTIONS IMPOSED BY THE SENIOR CREDIT FACILITY AND
THE INDENTURE
The agreements governing the outstanding indebtedness of the Company impose
certain operating and financial restrictions on the Company. The Senior Credit
Facility requires the Company to comply with financial covenants with respect to
(i) a minimum debt service ratio and (ii) a maximum leverage ratio. In addition,
the Senior Credit Facility restricts, among other things, the Company's ability
to: (i) declare dividends or redeem or repurchase capital stock; (ii) incur
liens; (iii) make loans and investments; (iv) incur additional indebtedness; (v)
engage in mergers, acquisitions and asset sales; and (vi) enter into
transactions with its affiliates. A failure to comply with the restrictions
contained in the Senior Credit Facility could lead to an event of default
thereunder which could result in an acceleration of such indebtedness. Such an
acceleration would also constitute an event of default under the Indenture
relating to the Notes. The Company currently does not have any borrowings
outstanding under the Senior Credit Facility and is currently in compliance with
the covenants and financial tests in the Senior Credit Facility. See
"Description of Senior Credit Facility."
The Indenture contains a number of covenants which restrict, among other
things, the Company's ability to: (i) incur additional Indebtedness; (ii) issue
common and preferred stock of subsidiaries; (iii) pay dividends and make other
Restricted Payments; (iv) transfer and sell assets; (v) enter into transactions
with affiliates; (vi) create liens; (vii) make certain investments; (viii) enter
into sale and leaseback transactions; (ix) enter into agreements restricting the
ability of Restricted Group Members to declare dividends and make distributions;
and (x) merge or consolidate the Company or any Guarantors. A failure to comply
with the restrictions in the Indenture could result in an event of default under
the Indenture. See "Description of the Notes." The Company is currently in
compliance with the covenants contained in the Indenture.
SENSITIVITY OF THE COMPANY'S OPERATIONS TO GENERAL ECONOMIC CONDITIONS
The air transportation industry is highly sensitive to general economic
conditions. The Company's operations may be adversely affected by a sustained
economic recession either in the United States or globally. A substantial
reduction in air traffic, or financial problems incurred by the Company's
customers, could have a material adverse effect on the Company's business,
operating results and financial condition. Furthermore, the Company's business
with foreign customers, and domestic customers that conduct business
internationally, could be adversely affected by political or military disputes
involving the United States and/or certain foreign countries. There can be no
assurance that these factors will not have a material adverse effect on the
Company's business, operating results and financial condition.
EFFECT OF AVIATION FUEL AVAILABILITY AND PRICE INCREASES ON THE COMPANY'S
CUSTOMERS
A material rise in the price or a material decrease in the availability of
aviation fuel would adversely impact the Company's customers. The Company's
customers would likely pass such increased costs on to the ultimate consumers of
air travel, who, as the cost of air travel increases, are likely to use less air
travel, thereby decreasing demand for air travel and hence for the Company's
services. An increase in the price or decrease in the availability of aviation
fuel, and the resulting decrease in air travel, could have a material adverse
effect on the Company's business, operating results and financial condition.
In addition, to the extent that the Company's customers were not able to
immediately adjust their business operations to reflect increased operating
costs, they could take relatively longer to pay the Company's accounts
receivable, thereby increasing the Company's working capital demands. In some
cases, the impact of a fuel price increase could materially impair the financial
stability of an airline customer such that it would be unable to pay amounts
owed to the Company and could result in such airline customer becoming
insolvent. In that event, the Company could incur significant losses related to
the uncollectability of the receivable and could be materially impacted by the
loss of the business associated with such insolvent airline.
RISKS RELATED TO THE CREDIT QUALITY OF THE COMPANY'S ACCOUNTS RECEIVABLE
The majority of the Company's accounts receivable are due from its airline
customers. Historically, airlines have been highly sensitive to general economic
conditions and a number of airlines have failed in the
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past. The Company's airline customers include large, well-established airlines
as well as smaller, less well-established or less well-capitalized customers,
including certain regional, commuter, start-up and foreign airlines, which may
be less creditworthy than larger, well-established and well-capitalized airlines
or more vulnerable to adverse changes in market conditions and to catastrophic
accidents. The Company has incurred in the past, and is likely to continue to
incur, losses as the result of the business failure of one or more customers.
The Company's total losses (not all of which are due to the failure of a
customer) due to uncollectible accounts have been less than one half of one
percent of its revenues in each of the last three years. The failure of a
relatively large customer or a number of smaller customers could have a material
adverse effect on the Company's business, operating results and financial
condition.
RISKS RELATED TO DOING BUSINESS WITH FOREIGN CUSTOMERS
Approximately 27% of the Company's revenue for fiscal 1997 was generated
from foreign-based customers headquartered in Europe, the Caribbean, Latin
America and Asia. The Company frequently grants foreign customers extended
credit terms, which may result in proportionately larger receivable balances.
Although invoices are usually denominated in United States dollars, foreign
customers may have difficulty in paying such invoices in the event of the
devaluation of their national currency or as a result of risks related to
exchange rates generally. In addition, if a foreign customer fails to abide by
its contractual commitments, the Company's legal remedies may not be as
effective as they would be in collecting from domestic customers.
RISKS RELATED TO THE COMPANY'S DEPENDENCE ON SIGNIFICANT CUSTOMERS
The Company derived approximately 17.5% and 14.1% of its revenue from Delta
and BA in fiscal 1997, respectively, and the Company's top ten customers
accounted for approximately 57.4% of revenue in fiscal 1997. There can be no
assurance that the Company will maintain or improve its relationships with its
significant customers or that the Company will continue to service such
customers at current levels. The loss of all of either Delta's or BA's business
could have a material adverse effect on the Company's business, operating
results and financial condition. In addition, Delta and BA provide a significant
portion of their own ground services. If Delta and/or BA increase the level of
ground services provided by their own employees, the market for the Company's
services would be reduced, which could have a material adverse effect on the
Company's business, operating results and financial condition.
The Company was recently informed by BA that BA is not renewing its
contract with the Company for the provision of aircraft grooming services at
London-Heathrow airport following the expiration of such contract in January
1999. This contract generated approximately 8.8% of the Company's revenues in
1997. There can be no assurance that the Company will be able to win new
contracts to replace this lost business. See "Prospectus Summary--Recent
Developments."
THE COMPANY OPERATES IN HIGHLY COMPETITIVE MARKETS
Each of the markets in which the Company operates is highly competitive.
The Company is in direct competition with major airlines, other aircraft support
companies and oil companies in providing into-plane fuel services and with major
airlines and other aircraft support companies in providing ground handling
services. The Company competes with major airlines, specialized freight
transporters and other cargo service firms in providing cargo services. In
airports where the Company has FBOs, the Company competes against other FBOs and
other entities providing similar services. Competition for customers between the
Company and its competitors is principally on the basis of price and quality of
service, and substantially all of the Company's services are subject to
competitive bidding. Many of the Company's competitors have greater financial,
technical and marketing resources than the Company, and there can be no
assurance that the Company will be able to compete successfully with existing or
new competitors. See "Business--Competition."
RISK THAT THE COMPANY MAY LOSE BUSINESS DUE TO IN-SOURCING
The Company has lost customer business to in-sourcing and may continue to
lose customer business to in-sourcing. In 1996, Delta through Delta Staffing
Services ("DSS"), a wholly-owned subsidiary, began
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providing certain ground services which had previously been outsourced to third
party providers such as the Company. As a result, the Company has lost contracts
with Delta at approximately 12 of the 14 locations where the Company had
provided Delta such services in 1996 and believes that it may lose the remainder
of its ground services contracts with Delta. The Company's remaining ground
services contracts with Delta accounted for approximately 1.2% of its revenue in
1997. If Delta increases the amount of such ground services to be provided by
DSS or DSS begins providing other aviation services, it could have a material
adverse effect on the Company's business, operating results and financial
condition. Moreover, there can be no assurance that customers will not take
similar action in the future.
NATURE OF THE COMPANY'S CONTRACTS WITH ITS CUSTOMERS
Almost all of the Company's business depends on short-term contracts and
other contracts terminable by either party upon limited notice. Many contracts
with customers are based on invoice terms. While the Company believes such terms
are typical in its industry, there can be no assurance that such contracts,
agreements or arrangements will not be terminated. The termination of a large
portion of its contracts could have a material adverse effect on the Company's
business, operating results and financial condition.
NATURE OF THE COMPANY'S RIGHTS TO OPERATE AT AIRPORTS
In order to be able to provide its services at an airport, the Company
generally must receive permits, licenses or consents to operate at the airport
from the local airport authority. Because airport authorities are local in
nature, and not governed by a uniform set of rules and regulations, the approval
process can be subject to influences outside the Company's control, including
the local political climate. In addition, many of such permits, licenses or
consents to operate may be terminated by the local airport authority at will and
without cause. The loss of one or more of the Company's permits, licenses or
consents to operate could have a material adverse effect on the Company's
business, operating results and financial condition.
PARTICIPATION BY THE COMPANY IN A REGULATED INDUSTRY
The Company is subject to regulations promulgated by states, counties,
municipalities and airport authorities where it does business. The Company also
is affected by the regulation of its customers, including federal regulation by
the Federal Aviation Administration ("FAA") and the United States Department of
Defense ("DOD"). These and other federal agencies and departments have
considerable discretion in promulgating regulations and policies that can and do
affect the Company's customers. The Company's customers have and may continue to
come under the close scrutiny of such agencies and departments, and such
regulation may have a material adverse effect on the Company's customers, which
in turn could have a material adverse effect on the Company's business,
operating results and financial condition. Moreover, there can be no assurance
that the FAA, DOD or other federal agency or department, or a state or local
regulatory body, will not impose rules and regulations that directly regulate
the Company. Such regulation could have a material adverse effect on the
Company's business, operating results and financial condition.
RISKS RELATED TO THE COMPANY'S ABILITY TO RETAIN ITS EMPLOYEES AND ITS UNION
RELATIONS
The Company experiences a high degree of turnover among its employees, with
an average annual turnover rate from 1993 to 1997 of approximately 93% and a
turnover rate in 1997 of approximately 90%, which management believes is
approximately equal to the average turnover rate in its industry. As a result,
the Company expends a significant amount of time and resources on identifying
and training its workforce. There can be no assurance that the Company will be
able to hire or retain a sufficient number of qualified employees to meet its
growth and cost control objectives. An inability to attract or retain qualified
employees could have a material adverse effect on the Company's business,
operating results and financial condition.
In addition, approximately two-thirds of the Company's employees are
represented by labor unions. There are currently approximately 30 collective
bargaining contracts in place, almost all of which have terms of three years.
Contract expirations are staggered with approximately one-third coming up for
renewal each year. Although the Company believes that it has had good relations
with the unions representing its
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employees, adverse changes in those relationships could result in a work
stoppage or an increase in costs which could have a material adverse effect on
the Company's business, operating results and financial condition. See
"Business--Employees."
THE COMPANY'S DEPENDENCE UPON ITS KEY PERSONNEL
The Company's success depends in large part on the services of its senior
management team. The loss of any of its key executives could have a material
adverse effect on the Company. The Company does not maintain key-man life
insurance on any members of its senior management team. The Company's ability to
manage its anticipated growth will depend on its ability to identify, hire and
retain additional qualified management personnel. Competition for such personnel
is intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel and such failure could have a material
adverse effect on the Company's business, operating results and financial
condition. See "Management."
ABILITY TO COMPLETE ACQUISITIONS
An important component of the Company's business strategy is to expand its
operations through selected acquisitions of aviation service businesses which
may be integrated into or complement the Company's existing businesses. Failure
to accomplish future acquisitions could limit the Company's revenue and earnings
growth potential. Although the Company regularly reviews possible acquisition
candidates, there can be no assurance that suitable acquisition candidates will
be identified or that acquisitions can be consummated on acceptable terms.
Future acquisitions may be funded through the issuance of additional debt,
borrowings under the Senior Credit Facility, borrowings under new credit
facilities or through additional equity financing, or some combination of the
foregoing. There can be no assurance that such financing will be available on
terms acceptable to the Company, or at all. In addition, the Company's ability
to pursue acquisitions may be limited by its significant indebtedness,
particularly, acquisitions may be prohibited by the terms of the Indenture and
the Senior Credit Facility and the Senior Credit Facility may require the lender
to grant consent for an acquisition. In addition, acquisitions involve a number
of risks that could adversely affect the Company's business, operating results
and financial condition, including the diversion of management's attention, the
assimilation of the operations and personnel of the acquired companies, the
potential loss of key employees and the assumption of an acquired company's
indebtedness and other liabilities. There can be no assurance that any
acquisition by the Company will not have a material adverse effect on the
Company's business, operating results and financial condition or that any such
acquisition will enhance the Company's business, operating results or financial
condition.
RISKS RELATED TO ENVIRONMENTAL ISSUES WITH RESPECT TO THE COMPANY'S OPERATIONS
The Company is subject to compliance obligations and liabilities imposed
pursuant to federal, state, local and foreign environmental and workplace health
and safety requirements, including the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA"). In particular, the Company's
aircraft fuel handling operations are subject to liabilities and obligations
relating to the above ground and underground storage of, and the release and
cleanup of, petroleum products. Although the Company believes it is in material
compliance with environmental, health and safety requirements, the possibility
exists that noncompliance could occur or be identified in the future, and the
penalties or costs of corrective action associated therewith could have a
material adverse effect on the Company's business, operating results and
financial condition. In addition, requirements are complex, change frequently
and have tended to become more stringent over time, and there can be no
assurance that these requirements will not change in the future in a manner that
could materially and adversely affect the Company.
The Company is currently conducting or funding, or expects to conduct or
fund, environmental investigations, monitoring and cleanups at certain of its
previously or currently operated facilities, including facilities located at the
Memphis, Miami, New Orleans, Portland, Sarasota and Seattle airports, and has
received claims or demands to pay a portion of airport-wide cleanup costs with
respect to its Philadelphia, San Diego and San Francisco airport facilities.
Also, from time to time, the Company receives notices of potential liability for
cleanup costs associated with offsite waste recycling or disposal facilities at
which wastes
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associated with its operations allegedly have come to be located. In addition,
airport authorities are coming under increasing pressure to clean up previous
contamination at their facilities, and are seeking financial contribution from
airport tenants and companies which operate at their airports. Although the
Company believes that legal arrangements (including operating agreements,
contractual indemnities, insurance policies, allocation agreements and state
funding mechanisms) are in place which significantly mitigate the foregoing
liabilities, should such arrangements fail, the Company could bear direct
liability for the foregoing matters and such liability could have a material
adverse effect on the Company's business, operating results and financial
condition. In addition, there can be no assurance that a change in environmental
laws, regulations, or interpretations thereof or a change in the nature of the
Company's operations will not require the Company to incur additional cleanup
costs. Further, there can be no assurance that future environmental
investigations by the Company will not identify other environmental conditions
requiring material expenditures of funds. See "Business--Environmental."
THE COMPANY'S DEPENDENCE ON ITS SUBSIDIARIES
The assets of the Company consist principally of the stock of its
subsidiaries, through which it conducts substantially all of its operations. The
Company's ability to pay interest on the Notes and to satisfy its other
obligations will depend upon dividends or other distributions of funds from its
subsidiaries. The future operating performance of the Company's subsidiaries,
including the Guarantors, will be affected by economic conditions, and
financial, business and other factors, many of which are beyond the Company's
control. The Notes will be (i) effectively subordinated to the Senior Credit
Facility and any other secured obligations of the Company and the Guarantors to
the extent of the value of the assets securing such obligations and (ii)
structurally subordinated to all obligations of the Company's non-Domestic
Restricted Subsidiaries and Unrestricted Subsidiaries. As of September 30, 1998,
on a pro forma basis after giving effect to the Initial Offering, the Company
and the Guarantors would have had no indebtedness to which holders of the Notes
would have been effectively subordinated and the Company's non-Domestic
Restricted Subsidiaries and Unrestricted Subsidiaries would have had no
indebtedness to which holders of the Notes would have been structurally
subordinated. The Senior Credit Facility and all obligations thereunder will be
secured by a first priority lien on the Company's accounts receivable and
inventory. There can be no assurance that the operating cash flow of the
Company's subsidiaries will be sufficient to meet the Company's operating
expenses and debt service obligations or to pay principal and interest on the
Notes. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."
POTENTIAL CONFLICTS BETWEEN THE INTERESTS OF HOLDERS OF THE NOTES AND THE
STOCKHOLDERS THAT CONTROL THE COMPANY
Following the Acquisition, Hancock and its affiliates and affiliates of
CIBC collectively hold approximately 49% of the voting common stock of Ranger
and all of the nonvoting common stock of Ranger. In addition, Hancock and its
affiliates, affiliates of CIBC and substantially all of the Company's other
stockholders have entered into a Securityholders Agreement regarding, among
other things, the voting of such stock. By virtue of such stock ownership and
the Securityholders Agreement, Hancock and its affiliates and affiliates of CIBC
will have the power to control all matters submitted to stockholders of the
Company, to elect a majority of the directors of the Company and to exercise
control over the business, policies and affairs of the Company. The interests of
Hancock and its affiliates and such affiliates of CIBC as equity holders may
differ from the interests of holders of the Notes. See "Certain
Transactions--Securityholders Agreement."
RISK THAT THE COMPANY MAY NOT HAVE THE FINANCIAL RESOURCES TO REPURCHASE THE
NOTES UPON A CHANGE OF CONTROL OF THE COMPANY
In the event of a Change of Control, the Company will be required to make
an offer for cash to repurchase the Notes at 101% of the principal amount
thereof, plus accrued and unpaid interest and Additional Interest, if any,
thereon to the repurchase date. Certain events involving a Change of Control may
result in an event of default under the Senior Credit Facility or other
indebtedness of the Company that may be incurred in the future. Moreover, the
exercise by the holders of the Notes of their right to require the
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Company to repurchase the Notes may cause an event of default under the Senior
Credit Facility or such other indebtedness, even if the Change of Control does
not. The Company' obligations under this provision of the Indenture could delay,
deter or prevent a sale of the Company which might otherwise be advantageous to
holders of Notes. Finally, there can be no assurance that the Company will have
the financial resources necessary to repurchase the Notes upon a Change of
Control. See "Description of the Notes--Change of Control Offer."
RISKS RELATED TO THE YEAR 2000 ISSUE
Currently, many computer systems and software products are coded to accept
only two digit entries in the date code field. These date code fields will need
to accept four digit entries to distinguish 21st century dates from 20th century
dates. As a result, many companies' software and computer systems may need to be
upgraded or replaced in order to comply with such "Year 2000" requirements. The
Company and third parties with which the Company does business rely on numerous
computer programs in their day to day operations. The Company has evaluated and
believes it has addressed the Year 2000 issue as it relates to its internal
computer systems and is also surveying its customers for Year 2000 compliance.
Although based on its investigation to date, the Company does not believe it
will experience any material adverse effects as a result of the Year 2000 issue,
there can be no assurance in this regard, and the Year 2000 issue could have a
material adverse impact on the Company's business, operating results and
financial condition.
CONSEQUENCES TO HOLDERS OF OLD NOTES WHO FAIL TO EXCHANGE THEIR OLD NOTES
Holders of Old Notes who do not exchange their Old Notes for Exchange Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes, as set forth in the legend thereon, as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. The Company does not currently anticipate
that it will register the Old Notes under the Securities Act. Based on
interpretations by the staff of the Commission set forth in no-action letters
issued to third parties, including Exxon Capital Holdings Corporation, SEC
No-Action letter (available April 13, 1988)(the "Exxon Capital Letter"), Morgan
Stanley & Co. Incorporated, SEC No-Action Letter (available June 5, 1991)(the
"Morgan Stanley Letter"), and similar letters, the Company believes that the
Exchange Notes issued pursuant to the Exchange Offer may be offered for resale,
resold or otherwise transferred by any holder thereof (other than any such
holder which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act provided that such Exchange
Notes are acquired in the ordinary course of such holder's business and such
Holder has no arrangement with any person to participate in the distribution of
such Exchange Notes. Notwithstanding the foregoing, each broker-dealer that
receives Exchange Notes for its own account pursuant to the Exchange Offer must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. The Letter of Transmittal states that by so acknowledging
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with any resale of Exchange Notes received in
exchange for Old Notes where such Old Notes were acquired by such broker-dealer
as a result of market-making activities or other trading activities (other than
Old Notes acquired directly from the Company). The Company has agreed that, for
a period of 180 days from the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution." Any holder who tenders in the Exchange Offer for the
purpose of participating in a distribution of the Exchange Notes cannot rely on
the Morgan Stanley Letter or similar letters and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction. To the extent that Old Notes are
tendered and accepted in the Exchange Offer, the trading market, if any, for the
Old Notes not so tendered could be adversely affected. See "The Exchange Offer."
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FAILURE TO FOLLOW EXCHANGE OFFER PROCEDURES COULD ADVERSELY AFFECT HOLDERS
Issuance of the Exchange Notes in exchange for the Old Notes pursuant to
the Exchange Offer will be made only after a timely receipt by the Company of
such Old Notes, a properly completed and duly executed Letter of Transmittal and
all other required documents. Therefore, holders of the Old Notes desiring to
tender such Old Notes in exchange for Exchange Notes should allow sufficient
time to ensure timely delivery. The Company is under no duty to give
notification of defects or irregularities with respect to the tenders of Old
Notes for exchange. Old Notes that are not tendered or are tendered but not
accepted will, following the consummation of the Exchange Offer, continue to be
subject to the existing restrictions upon transfer thereof, and, upon
consummation of the Exchange Offer certain registration rights under the
Exchange Offer Registration Rights Agreement will terminate. In addition, any
holder of Old Notes who tenders in the Exchange Offer for the purpose of
participating in a distribution of the Exchange Notes may be deemed to have
received restricted securities, and if so, will be required to comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction. Each broker-dealer that receives
Exchange Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. See "Plan of
Distribution." To the extent that Old Notes are tendered and accepted in the
Exchange Offer, the trading market for untendered and tendered but unaccepted
Old Notes could be adversely affected. See "The Exchange Offer."
ABSENCE OF A PUBLIC MARKET COULD ADVERSELY AFFECT THE VALUE OF EXCHANGE NOTES
The Old Notes were issued to, and the Company believes are currently owned
by, a relatively small number of beneficial owners. Prior to the Exchange Offer,
there has not been any public market for the Old Notes. The Old Notes have not
been registered under the Securities Act and will be subject to restrictions on
transferability to the extent that they are not exchanged for Exchange Notes by
holders who are entitled to participate in this Exchange Offer. The holders of
Old Notes (other than any such holder that is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act) who are not eligible to
participate in the Exchange Offer are entitled to certain registration rights
and the Company is required to file a Shelf Registration Statement with respect
to such Old Notes. The Exchange Notes will constitute new issues of securities
with no established trading market. The Company does not intend to list the
Exchange Notes on any national securities exchange or seek the admission thereof
to trading in the National Association of Securities Dealers Automated Quotation
System. The Initial Purchaser has advised the Company that it currently intends
to make a market in the Exchange Notes, but it is not obligated to do so and may
discontinue such market making at any time. In addition, such market making
activity will be subject to the limits imposed by the Securities Act and the
Exchange Act and may be limited during the Exchange Offer and the pendency of
the Shelf Registration Statement. Accordingly, no assurance can be given that an
active public or other market will develop for the Exchange Notes or as to the
liquidity of the trading market for the Exchange Notes. If a trading market does
not develop or is not maintained, holders of the Exchange Notes may experience
difficulty in reselling the Exchange Notes or may be unable to sell them at all.
If a market for the Exchange Notes develops, any such market may be discontinued
at any time.
If a public trading market develops for the Exchange Notes, future trading
prices of such securities will depend on many factors including, among other
things, prevailing interest rates, the Company's results of operations and
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the Exchange Notes may trade at a discount from their
principal amount.
RISK OF FRAUDULENT TRANSFER
Under applicable provisions of the United States Bankruptcy Code or
comparable provisions of state fraudulent transfer or conveyance laws, if the
Company or any Guarantor, at the time it issued the Senior Increasing Rate Notes
or issues the Notes, or, as the case may be, its Guarantee: (i) incurred such
indebtedness with intent to hinder, delay or defraud creditors or (ii) received
less than reasonably equivalent
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value or fair consideration for incurring such indebtedness and (a) was
insolvent at the time of such incurrence, (b) was rendered insolvent by reason
of such incurrence (and the application of the proceeds thereof), (c) was
engaged or was about to engage in a business or transaction for which the assets
remaining with the Company or any Guarantor constituted unreasonably small
capital to carry on its businesses or (d) intended to incur, or believed that it
would incur, debts beyond its ability to pay such debts as they mature, then, in
each case, a court of competent jurisdiction could void, in whole or in part,
the Notes or the Guarantees, or, in the alternative, subordinate the Notes or
the Guarantees to existing and future indebtedness of the Company or any
Guarantor, as the case may be. The measure of insolvency for purposes of the
foregoing will vary depending upon the law applied in such case. Generally,
however, the Company or any Guarantor would be considered insolvent if the sum
of its debts, including contingent liabilities, was greater than all of its
assets at fair valuation or if the present fair saleable value of its assets was
less than the amount that would be required to pay the probable liability on its
existing debts, including contingent liabilities, as they become absolute and
matured. If any Guarantee is avoided, the holders could lose the benefit of the
Guarantee, and the holders could also be required to return to the Guarantor or
its estate the amount of any payment or other property received in respect of
the Notes.
Management believes that the Notes are being issued without the intent to
hinder, delay or defraud creditors and for proper purposes and in good faith and
that the Company, after the issuance of the Notes and the application of the
proceeds thereof, will be solvent, will have sufficient capital for carrying on
its business and will be able to pay its debts as they mature. There can be no
assurance, however, that a court passing on such questions would agree with
management's view.
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THE ACQUISITION
The Initial Offering was made in conjunction with the Company's $95 million
acquisition of the ASIG business from Viad that was consummated as of April 1,
1998.
The Investor Group capitalized Ranger with an aggregate investment of $24.1
million. Ranger subsequently contributed this $24.1 million as equity to the
Company in return for all of its outstanding common stock. In connection with
the Acquisition, the Company and Viad agreed that they will jointly make the
338(h)(10) election, which will result in the Company's tax basis in its assets
being increased to their fair market value at the time of the Acquisition. The
net proceeds from the Equity Investment and the Company's issuance of $75
million of Senior Increasing Rate Notes under the Note Purchase Agreement were
used to consummate the Acquisition. Concurrent with the Acquisition, the Company
entered into the Senior Credit Facility, which was provided by Key Corporate
Capital Inc., an affiliate of Key Bank, as lender and agent. The net proceeds of
the Initial Offering were used to repay the Senior Increasing Rate Notes.
The following table sets forth the Company's sources and uses of funds in
the Acquisition (dollars in thousands):
<TABLE>
<S> <C>
SOURCES OF FUNDS:
Senior Increasing Rate Notes.............................. $ 75,000
New equity invested....................................... 24,100
Cash (a).................................................. 6,513
--------
Total sources........................................ $105,613
========
USES OF FUNDS:
ASIG cash purchase price (b).............................. $ 95,000
General corporate purposes................................ 5,929
Transaction costs and fees (c)............................ 4,684
--------
Total uses........................................... $105,613
========
</TABLE>
- - ---------------
(a) Reflects cash in the ASIG business on the Acquisition date.
(b) Without giving effect to any post-closing adjustments. See "Certain
Transactions--Share Purchase Agreement."
(c) Unamortized fees related to the issuance of the Senior Increasing Rate Notes
were written off upon the consummation of the Initial Offering.
22
<PAGE> 28
USE OF PROCEEDS
The net proceeds of the Initial Offering, were approximately $76.8 million
(after payment of fees and expenses) and were used to repay the Senior
Increasing Rate Notes incurred in connection with the Acquisition. The Senior
Increasing Rate Notes were held by an affiliate of the Initial Purchaser.
This Exchange Offer is intended to satisfy certain of the Company's
obligations under the Purchase Agreement and the Exchange Offer Registration
Rights Agreement. The Company will not receive any cash proceeds from the
issuance of the Exchange Notes offered hereby. In consideration for issuing the
Exchange Notes contemplated in this Prospectus, the Company will receive Old
Notes in like principal amount, the form and terms of which are the same as the
form and terms of the Exchange Notes (which replace the Old Notes), except as
otherwise described herein. The Old Notes surrendered in exchange for Exchange
Notes will be retired and canceled and cannot be reissued. Accordingly, issuance
of the Exchange Notes will not result in any increase or decrease in the
indebtedness of the Company. As such, no effect has been given to the Exchange
Offer in the pro forma statements or capitalization table.
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of September 30, 1998. The Old Notes surrendered in exchange for the
Exchange Notes will be retired and canceled and cannot be reissued. Accordingly,
issuance of the Exchange Notes will not result in any increase on decrease in
the indebtedness of the Company. As such, no effect has been given to the
Exchange Offer in this Capitalization table. The information in this table
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the unaudited interim
financial statements of the Company as of and for the six months ended September
30, 1998 and the notes thereto which appear elsewhere in this Prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
----------------------
(DOLLARS IN THOUSANDS,
EXCEPT SHARE DATA)
<S> <C>
Cash........................................................ $ 4,752
========
Total debt:
Senior Credit Facility (a)................................ $ --
Old Notes................................................. 80,000
--------
Total debt............................................. 80,000
Stockholder's equity:
Common stock, $0.01 par value, 1,000 shares authorized,
100 shares issued and outstanding...................... --
Paid-in capital........................................... 24,100
Cumulative translation adjustment......................... 148
Retained deficit.......................................... (3,542)
--------
Total stockholder's equity.................................. 20,706
--------
Total capitalization................................... $100,706
========
</TABLE>
- - ---------------
(a) The Senior Credit Facility consists of a $10 million revolving credit
facility. As of September 30, 1998, the Company had no amounts outstanding
under the Senior Credit Facility.
23
<PAGE> 29
UNAUDITED PRO FORMA FINANCIAL DATA
The following unaudited pro forma financial data are derived from the
Company's financial statements which appear elsewhere in this Prospectus, as
adjusted to give effect to the Acquisition and the Initial Offering. The
unaudited pro forma statement of income for the fiscal year ended March 31, 1998
gives effect to, among other things, the Acquisition and the Initial Offering as
if they had occurred at the beginning of the period, and the unaudited pro forma
statement of income for the six months ended September 30, 1998 gives effect to,
among other things, the Initial Offering as if it had occurred at the beginning
of the period. The pro forma adjustments are based upon available data and
certain assumptions that the Company believes are reasonable. The unaudited pro
forma financial data do not purport to be indicative of the actual financial
position or results of operations of the Company that would have actually been
attained had the Acquisition and the Initial Offering in fact occurred on the
date specified, nor are they necessarily indicative of the results of operations
that may be achieved in the future. The unaudited pro forma financial data
should be read in conjunction with the financial statements of the Company
including the notes thereto, and the information contained in "The Acquisition,"
"Use of Proceeds," and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" which appear elsewhere in this Prospectus.
24
<PAGE> 30
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE FISCAL YEAR ENDED MARCH 31, 1998(1)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Revenues............................................ $ 119,325 $119,325
Costs and expenses:
Operating expenses................................ 98,190 $(2,219)(a)(b) 95,971
Selling, general and administrative............... 6,507 (355)(b) 6,152
Depreciation and amortization..................... 4,604 4,118(c) 8,722
---------- ------- --------
Total costs and expenses....................... 109,301 1,544 110,845
---------- ------- --------
Operating income.................................... 10,024 (1,544) 8,480
Other income (expense), net......................... (71) (71)
Interest income..................................... 350 (247)(d) 103
Interest and other financial expense................ (669) (8,676)(e) (9,345)
---------- ------- --------
Income (loss) before income taxes................... 9,634 (10,467) (833)
Income taxes........................................ 3,602 (3,602)(f) --
---------- ------- --------
Net income (loss)................................. $ 6,032 $(6,865) $ (833)
========== ======= ========
Net loss per share -- basic and diluted........... $ (8,330)
========
Weighted average common shares outstanding........ 100
========
EBITDA(g)......................................... $ 14,628 $ 2,574 $ 17,202
========== ======= ========
Ratio of earnings to fixed charges(h)............. 7.4x --
</TABLE>
- - ---------------
(1) The Company's fiscal year end is March 31. The Pro Forma Statement of Income
for the fiscal year ended March 31, 1998 represents the combination of the
results of the Company for the period from March 24, 1998 (inception) to
March 31, 1998 (the Company had no operations during this period) and the
results of the ASIG business for the year ended December 31, 1997.
See accompanying Notes to Unaudited Pro Forma Statements of Income.
25
<PAGE> 31
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
UNAUDITED PRO FORMA STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
---------- ----------- ---------
<S> <C> <C> <C>
Revenues............................................ $ 61,243 $ 61,243
Costs and expenses:
Operating expenses................................ 49,471 $ (130)(b) 49,341
Selling, general and administrative............... 4,035 (196)(b) 3,839
Depreciation and amortization..................... 4,259 4,259
-------- ------ --------
Total costs and expenses....................... 57,765 (326) 57,439
Operating income.................................... 3,478 326 3,804
Other income (expense), net......................... (128) (128)
Interest income..................................... 140 140
Interest and other financial expense................ (6,496) 1,770(e) (4,726)
-------- ------ --------
Loss before income taxes............................ (3,006) 2,096 (910)
Income taxes........................................ 323 323
-------- ------ --------
Net loss before extraordinary item................ (3,329) 2,096 (1,233)
Extraordinary loss on early extinguishment of
Debt........................................... (213) 213 --
Net loss.......................................... $ (3,420) $2,309 $ (1,233)
Net loss per share--basic and diluted............. $(35,420) -- $(12,330)
======== ========
Weighted average common shares outstanding--basic
and diluted.................................... 100 100
======== ========
EBITDA(g)......................................... $ 7,737 $ 326 $ 8,063
======== ====== ========
Ratio of earnings to fixed charges(h)............. -- --
</TABLE>
See accompanying Notes to Unaudited Pro Forma Statements of Income.
26
<PAGE> 32
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
MARCH 31, SEPTEMBER 30,
1998(1) 1998
----------------- ----------------
<S> <C> <C>
(a) In connection with the Acquisition, the Company was
obligated to obtain new insurance policies separate
from previously existing policies maintained by the
Predecessor and by Viad on behalf of the Predecessor
and to establish a new benefit plan to replace the
Predecessor's defined benefit pension plan and 401(k)
plan.
Decrease in operating expenses:
New insurance policies, net........................ $1,112
Replacement benefit plan, net...................... 493
------
$1,605
======
(b) In connection with the Acquisition, several executive
positions were either eliminated or replaced with new
individuals and the Company underwent a general
reorganization which resulted in the elimination of
certain positions and changes to other positions both
at its operating stations and at its corporate office.
In addition, certain intercompany charges from Viad
for corporate overhead, including legal, audit,
treasury and risk assessment, were eliminated and
replaced with charges appropriate for the new Company
on a stand-alone basis.
Decrease in operating expenses:
General reorganization............................. $ 614 $ 130
====== =======
Decrease in selling, general and administrative
expenses:
Executive positions, net........................... $ (154) $ 130
General reorganization............................. 255 66
Corporate overhead, net............................ 254 --
------ -------
$ 355 $ 196
====== =======
(c) Reflects the following:
Increase in depreciation expense resulting from the
write-up of property, plant and equipment to fair
market value. Such write-up in assets will be
depreciated over the remaining life of the assets.... $1,852
Increase in amortization expense due to additional
goodwill created as a result of the Acquisition which
is amortized over 20 years........................... 2,368
Partial offset to increase in amortization expense
resulting from the reversal of amortization relating
to historical goodwill eliminated in connection with
the Acquisition...................................... (102)
------
$4,118
======
(d) Reflects the reversal of historical interest income
previously allocated from Viad and eliminated upon
consummation of the Acquisition....................... $ 247
======
</TABLE>
27
<PAGE> 33
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF INCOME -- (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
MARCH 31, SEPTEMBER 30,
1998(1) 1998
----------------- ----------------
<S> <C> <C>
(e) Reflects the following effects on interest expense
resulting from the Initial Offering:
Interest expense:
Old Notes.......................................... $8,800 $ 4,400
Unused Senior Credit Facility fee.................. 50 24
------ -------
Pro forma cash interest expense...................... 8,850 4,424
Amortization of Initial Offering costs and other
fees............................................... 495 302
------ -------
Total pro forma interest expense..................... 9,345 4,726
Less: historical interest and other financial
expense............................................ (669) (6,496)
------ -------
Total interest expense adjustment.................... $8,676 $(1,770)
====== =======
- - ---------------
(1) The Company's fiscal year end is March 31. The Pro Forma Statement of Income for the fiscal
year ended March 31, 1998 represents the combination of the results of the Company for the
period from March 24, 1998 (inception) to March 31, 1998 (the Company had no operations during
this period) and the results of the ASIG business for the year ended December 31, 1997.
(f) Represents the reversal of historical income tax expense.
(g) EBITDA is defined herein as net income (loss) before interest, income taxes, depreciation,
amortization and other income (expense). Although EBITDA is not a measure of performance
calculated in accordance with generally accepted accounting principles, the Company has
included information concerning EBITDA in this Prospectus because it is commonly used by
certain investors and analysts as a measure of a company's ability to service its debt
obligations. The Company's calculation of EBITDA may not be comparable to similarly titled
measures reported by other companies and should not be viewed as an accurate comparative
measure since all companies do not calculate this non-GAAP measure in the same manner. The
Company's EBITDA calculation is not intended to represent cash used in operating activities,
since it does not include interest and taxes and changes in operating assets and liabilities,
nor is it intended to represent the net increase or decrease in cash, since it does not include
cash provided by (used in) investing and financing activities.
(h) Calculated by dividing earnings by total fixed charges. Earnings consist of net income (loss)
plus income taxes and fixed charges excluding capitalized interest. Fixed charges consist of
interest expense, whether expensed or capitalized, amortization of deferred financing costs and
a portion of rental expense representing the interest factor. Earnings were inadequate to cover
fixed charges by $833 for the pro forma year ended March 31, 1998 and $1,727 and $2,516 for the
six months ended September 30, 1998 and the pro forma six months ended September 30, 1998,
respectively.
</TABLE>
28
<PAGE> 34
SELECTED HISTORICAL FINANCIAL DATA
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
The following table presents selected historical financial data for each of
the five years in the period ended December 31, 1997 and for each of the three
month periods ended March 31, 1997 and March 31, 1998 and six month periods
ended September 30, 1997 and September 30, 1998. The selected historical
statement of income data for each of the years ended December 31, 1995, 1996 and
1997 and balance sheet data as of December 31, 1996 and 1997 have been derived
from the audited financial statements of the Company and the notes thereto which
appear elsewhere in this Prospectus. The selected historical statement of income
data for each of the years ended December 31, 1993 and 1994 and balance sheet
data as of December 31, 1993, 1994 and 1995 have been derived from the
consolidated financial statements of Viad, which are not included in this
Prospectus. The selected historical statement of income and balance sheet data
as of and for each of the three month periods ended March 31, 1997 and March 31,
1998 and six month periods ended September 30, 1997 and September 30, 1998 have
been derived from unaudited financial statements, which, in the opinion of
management, include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair presentation of the results for the unaudited
interim periods. Results for the six months ended September 30, 1998 are not
necessarily indicative of results that may be expected for the entire year.
<TABLE>
<CAPTION>
PREDECESSOR
--------------------------------------------------------------------------
SIX MONTHS
THREE MONTHS ENDED ENDED,
YEARS ENDED DECEMBER 31, --------------------- -------------
-------------------------------------------------- MARCH 31, MARCH 31, SEPTEMBER 30,
1993 1994 1995 1996 1997 1997 1998 1997
------- ------- -------- -------- -------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Revenues.................. $84,704 $94,308 $111,658 $121,574 $119,325 $29,816 $31,035 $58,954
Costs and expenses:
Operating expenses...... 68,945 76,793 93,540 102,935 98,190 23,973 26,320 47,651
Selling, general and
administrative........ 5,193 5,458 6,467 7,259 6,507 2,064 1,754 3,610
Depreciation and
amortization.......... 4,260 4,165 4,340 4,420 4,604 1,172 1,154 2,295
------- ------- -------- -------- -------- ------- ------- -------
Total costs and
expenses............ 78,398 86,416 104,347 114,614 109,301 27,209 29,228 53,556
------- ------- -------- -------- -------- ------- ------- -------
Operating income.......... 6,306 7,892 7,311 6,960 10,024 2,607 1,807 5,398
Other income (expense),
net..................... (123) (60) 47 (45) (71) 35 (57) 82
Interest income........... 270 483 842 343 350 37 77 188
Interest and other
financial expense....... (151) (158) (620) (606) (669) (165) (170) (330)
------- ------- -------- -------- -------- ------- ------- -------
Income (loss) before
income taxes............ 6,302 8,157 7,580 6,652 9,634 2,514 1,657 5,338
Income taxes.............. 1,872 2,596 2,563 2,433 3,602 934 615 2,014
------- ------- -------- -------- -------- ------- ------- -------
Net income (loss) before
extraordinary item...... 4,430 5,561 5,017 4,219 6,032 1,580 1,042 3,324
Extraordinary loss on
early extinguishment of
debt.................... -- -- -- -- -- -- -- --
------- ------- -------- -------- -------- ------- ------- -------
Net income (loss)......... $ 4,430 $ 5,561 $ 5,017 $ 4,219 $ 6,032 $ 1,580 $ 1,042 $ 3,324
======= ======= ======== ======== ======== ======= ======= =======
Net loss per share--basic
and diluted:
Before extraordinary
item....................
Extraordinary loss........
Net income (loss).........
Weighted average common
shares
outstanding--basic and
diluted................. -- -- -- -- -- -- -- --
OTHER DATA:
EBITDA(a)................. $10,566 $12,057 $ 11,651 $ 11,380 $ 14,628 $ 3,779 $ 2,961 $ 7,693
Capital expenditures...... 2,561 4,722 4,402 9,061 3,947 963 2,702 1,904
Ratio of earnings to fixed
charges(b).............. 6.5x 8.3x 6.1x 5.6x 7.4x 7.0x 4.9x 4.4x
Net cash provided by
operating activities.... N/A N/A 5,060 7,161 17,139 5,927 5,321 8,516
Net cash (used in)
investing activities.... N/A N/A (4,402) (9,061) (4,300) (963) (2,702) (2,295)
Net cash provided by
(used in) financing
activities.............. N/A N/A (806) 2,091 (13,030) (4,380) (2,619) (8,011)
BALANCE SHEET DATA (AT END
OF PERIOD):
Cash...................... $ 1,027 $ 148 $ -- $ 191 $ -- $ 775 $ -- $ 400
Total assets.............. 43,063 47,699 43,160 38,602 41,930 37,974 45,597 34,166
Total debt................ 315 315 247 173 91 173 91 91
Total
combined/stockholder's
equity.................. 17,477 19,697 17,692 15,433 14,557 15,472 15,589 15,948
<CAPTION>
SUCCESSOR
-------------
SEPTEMBER 30,
1998
-------------
<S> <C>
STATEMENT OF INCOME DATA:
Revenues.................. $ 61,243
Costs and expenses:
Operating expenses...... 49,471
Selling, general and
administrative........ 4,035
Depreciation and
amortization.......... 4,259
--------
Total costs and
expenses............ 57,765
--------
Operating income.......... 3,478
Other income (expense),
net..................... (128)
Interest income........... 140
Interest and other
financial expense....... (6,496)
--------
Income (loss) before
income taxes............ (3,006)
Income taxes.............. 323
--------
Net income (loss) before
extraordinary item...... (3,329)
Extraordinary loss on
early extinguishment of
debt.................... (213)
--------
Net income (loss)......... $ (3,542)
========
Net loss per share--basic
and diluted:
Before extraordinary
item.................... $(33,290)
========
Extraordinary loss........ $ (2,130)
========
Net income (loss)......... $(35,420)
========
Weighted average common
shares
outstanding--basic and
diluted................. 100
========
OTHER DATA:
EBITDA(a)................. $ 7,737
Capital expenditures...... 6,337
Ratio of earnings to fixed
charges(b).............. --
Net cash provided by
operating activities.... 3,018
Net cash (used in)
investing activities.... (94,805)
Net cash provided by
(used in) financing
activities.............. 96,538
BALANCE SHEET DATA (AT END
OF PERIOD):
Cash...................... $ 4,752
Total assets.............. 124,807
Total debt................ 80,000
Total
combined/stockholder's
equity.................. 20,706
</TABLE>
- - ---------------
29
<PAGE> 35
(a) EBITDA is defined herein as net income (loss) before interest, income taxes,
depreciation, amortization and other income (expense). Although EBITDA is
not a measure of performance calculated in accordance with generally
accepted accounting principles, the Company has included information
concerning EBITDA in this Prospectus because it is commonly used by certain
investors and analysts as a measure of a company's ability to service its
debt obligations. The Company's calculation of EBITDA may not be comparable
to similarly titled measures reported by other companies since all companies
do not calculate this non-GAAP measure in the same manner. The Company's
EBITDA calculation is not intended to represent cash used in operating
activities, since it does not include interest and taxes and changes in
operating assets and liabilities, nor is it intended to represent the net
increase or decrease in cash, since it does not include cash provided by
(used in) investing and financing activities.
(b) Calculated by dividing earnings by total fixed charges. Earnings consist of
net income (loss) plus income taxes and fixed charges excluding capitalized
interest. Fixed charges consist of interest expense, whether expensed or
capitalized, amortization of deferred financing costs and a portion of
rental expense representing the interest factor. Earnings were inadequate to
cover fixed charges by $1,727 for the six months ended September 30, 1998.
30
<PAGE> 36
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion of the Company's consolidated historical results
of operations and financial condition should be read in conjunction with the
combined financial statements and the notes thereto which appear elsewhere in
this Prospectus.
OVERVIEW
The Company's business includes aviation fueling services (57% of 1997
revenues), aircraft ground services (39%) and other aviation services (4%).
Aviation fueling services are comprised primarily of into-plane fueling,
maintenance and operation of fuel storage and delivery systems and the retail
sale of fuel products. Generally, the Company has custody over, but not
ownership of, the fuel it manages and delivers. Aircraft ground services consist
primarily of ground handling, aircraft interior grooming, cargo handling,
passenger and traffic services and FBOs.
The Investor Group capitalized Ranger with an aggregate investment of $24.1
million, all of which was contributed as equity to the Company in return for all
of its outstanding common stock. The net proceeds from the Equity Investment and
the Company's issuance of $75 million of Senior Increasing Rate Notes under the
Note Purchase Agreement were used to consummate the Acquisition of the ASIG
business from Viad for $95 million. Concurrent with the Acquisition, the Company
entered into the Senior Credit Facility.
ASIG has adopted a fiscal year end of March 31.
Revenues
Into-plane fueling service consists of providing airplanes with specified
amounts of fuel from fuel storage facilities located at or near the airport. The
Company generally records revenue from its into-plane fueling contracts based on
a fee per gallon of fuel delivered. Fuel system maintenance and operation
consists of the maintenance and operation of the fuel storage and delivery
systems at an airport. These systems are typically composed of storage tanks,
pumps, pipes and filter/separators. The Company generally records revenue from
its maintenance and operation contracts based on reimbursement of costs, plus an
additional monthly fee. In addition, the Company sells aviation fuel to private
aircraft at retail prices at locations where it has FBOs.
Ground handling services consist of the provision of ground handling crews
and all necessary ground support equipment to process airline flights through
the full range of on-the-ground services. Aircraft interior grooming consists of
the cleaning of aircraft cabins between flights and cargo handling consists of
the loading, warehousing and documentation of cargo. Passenger and traffic
services include passenger ticketing, check-in and boarding, security clearance,
special assistance and skycap services. FBOs generally include the provision of
terminal services, pilot facilities, maintenance, weather service, flight
planning and hangar space to private, executive and corporate aircraft. For each
of these aircraft ground services, other than FBOs, the Company is generally
compensated by a fixed fee for each aircraft serviced, based on the size of the
aircraft. For FBOs, the Company is generally compensated by a fixed fee for
specific services rendered.
The Company provides its services to its customers pursuant to contractual
agreements and currently has approximately 740 contracts, which have been in
place, including extensions, for an average of 5.0 years each. In 1997, the
Company's largest contract accounted for 8.8% of revenue, and no other contract
accounted for more than 4.3% of revenue. The majority of the Company's contracts
have an industry standard initial length of one year, although the Company's
larger contracts generally run for initial terms of three to five years.
Costs and Expenses
The Company's principal operating expenses are labor costs and direct
supervision at its stations along with related benefits and payroll taxes, cost
of fuel sold, workers' compensation, property and liability insurance, rent
expense, repairs and maintenance expenses and miscellaneous other direct
station-related expenses. Certain of these expenses are relatively fixed,
regardless of the extent of operations at a particular station, including the
cost of the facility, station management and related administrative expenses.
31
<PAGE> 37
Selling, general and administrative expenses include the costs of marketing
the Company's services, general supervision provided to the stations, and
accounting, finance and personnel related expenses. These costs are generally
comprised of labor costs and related benefits and payroll taxes, legal and other
professional fees and miscellaneous expenses.
RESULTS OF OPERATIONS
The following table summarizes the Company's historical results of
operations for the periods indicated (dollars in millions):
<TABLE>
<CAPTION>
PREDECESSOR
------------------------------------------------------------------------------------------------
SIX MONTHS
THREE MONTHS ENDED ENDED
YEARS ENDED DECEMBER 31, ----------------------------- -------------
------------------------------------------------ MARCH 31, MARCH 31, SEPTEMBER 30,
1995 1996 1997 1997 1998 1997
-------------- -------------- -------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $111.7 100.0% $121.6 100.0% $119.3 100.0% $29.8 100.0% $31.0 100.0% $59.0 100.0%
Costs and expenses:
Operating expenses..... 93.6 83.8 102.9 84.7 98.2 82.3 24.0 80.4 26.3 84.8 47.7 80.8
Selling, general and
administrative....... 6.5 5.8 7.3 6.0 6.5 5.5 2.1 6.9 1.8 5.7 3.6 6.1
Depreciation and
amortization......... 4.3 3.9 4.4 3.6 4.6 3.8 1.1 3.9 1.1 3.7 2.3 3.9
------ ----- ------ ----- ------ ----- ----- ----- ----- ----- ----- -----
Operating income........ $ 7.3 6.5% $ 7.0 5.7% $ 10.0 8.4% $ 2.6 8.7% $ 1.8 5.8% $ 5.4 9.2%
====== ===== ====== ===== ====== ===== ===== ===== ===== ===== ===== =====
EBITDA.................. $ 11.7 10.4% $ 11.4 9.4% $ 14.6 12.3% $ 3.7 12.6% $ 3.0 9.5% $ 7.7 13.0%
====== ===== ====== ===== ====== ===== ===== ===== ===== ===== ===== =====
<CAPTION>
SUCCESSOR
-------------
SEPTEMBER 30,
1998
-------------
<S> <C> <C>
Revenues................ $61.2 100.0%
Costs and expenses:
Operating expenses..... 49.5 80.8
Selling, general and
administrative....... 4.0 6.6
Depreciation and
amortization......... 4.2 6.9
----- -----
Operating income........ $ 3.5 5.7%
===== =====
EBITDA.................. $ 7.7 12.6%
===== =====
</TABLE>
Six Months Ended September 30, 1998 Compared to Six Months Ended September 30,
1997
Revenues increased $2.3 million, or 3.9%, from $59.0 million for the six
months ended September 30, 1997, to $61.2 million for the six months ended
September 30, 1998. This increase was attributable to, among other things, new
business principally for into-plane fueling and revenue enhancements on existing
contracts and was partially offset by lost business primarily related to lost
Delta ground handling business in certain locations of $1.8 million. The lost
Delta business was primarily due to a strategic decision by the Company either
to increase margins on selected low margin ground services contracts or to
terminate those contracts and Delta's decision to in-source certain ground
services which had previously been outsourced to the Company.
Operating expenses increased $1.8 million, or 3.8%, from $47.7 million for
the six months ended September 30, 1997 to $49.5 million for the six months
ended September 30, 1998. This increase was primarily attributable to increased
labor costs of $2.0 million and higher repair and maintenance expenses of $0.4
million primarily as a result of the increased revenues. These increases were
partially offset by reduced pension and insurance expenses of $.06 million due
to revised benefit plans. Operating expenses as a percentage of revenues were
80.8% in the six months ended September 30, 1997 and 80.9% in the six months
ended September 30, 1998.
Selling, general and administrative expenses increased $0.4 million, or
11.8%, from $3.6 million for the six months ended September 30, 1997 to $4.0
million for the six months ended September 30, 1998, principally due to
temporarily higher corporate office payroll during the transition period
following the Acquisition. As a result, selling, general and administrative
expenses as a percentage of revenues increased from 6.1% in the six months ended
September 30, 1997 to 6.5% in the six months ended September 30, 1998.
Depreciation and amortization expenses increased $1.9 million, or 85.6%,
from $2.3 million for the six months ended September 30, 1997 to $4.2 million
for the six months ended September 30, 1998. This increase reflects the increase
in depreciation expense related to the allocation of the Acquisition purchase
price to the assets acquired based on the underlying fair values of these
assets, which resulted in an increase in fixed assets of $24.3 million. The
increase also reflects $1.2 million of amortization of intangibles resulting
from the Acquisition, which are generally being amortized over 20 years.
As a result of the above factors, operating income decreased $1.9 million,
or 35.6%, from $5.4 million for the six months ended September 30, 1997 to $3.5
million for the six months ended September 30, 1998.
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Operating income margins decreased from 9.2% in the six months ended September
30, 1997 to 5.7% in the six months ended September 30, 1998.
Interest and other financial expense increased $6.2 million from $0.3
million for the six months ended September 30, 1997 to $6.5 million for the six
months ended September 30, 1998. This increase relates primarily to the interest
accrued on the Senior Increasing Rate Notes of $4.0 million which were incurred
in connection with the Acquisition and related amortization of deferred
financing costs of $2.5 million related to the incurrence of this debt.
As a result of the above factors, income taxes decreased $1.7 million from
$2.0 million for the six months ended September 30, 1997, to $0.3 million for
the six months ended September 30, 1998.
Accordingly, net income decreased $6.8 million from net income of $3.3
million for the six months ended September 30, 1997 to a net loss of $3.5
million for the six months ended September 30, 1998.
The foregoing factors resulting in a consistent level of EBITDA of $7.7
million for each of the six months ended September 30, 1997 and 1998. EBITDA
margins decreased from 13.0% to 12.6% for the respective periods.
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31,
1997
Revenues increased $1.2 million, or 4.1%, from $29.8 million for the three
months ended March 31, 1997, to $31.0 million for the three months ended March
31, 1998. This increase was attributable to, among other things new business
principally for into-plane fueling and revenue enhancements on existing
contracts partially offset by lost business primarily related to lost Delta
ground handling business in certain locations of $1.7 million as described
above.
Operating expenses increased $2.3 million, or 9.8%, from $24.0 million for
the three months ended March 31, 1997 to $26.3 million for the three months
ended March 31, 1998. This increase was primarily attributable to increased
labor and related benefits expenses of $1.6 million, workers' compensation
expenses of $0.2 million, damage claims of $.01 million and repairs and
maintenance expenses of $.4 million. As a result, operating expenses as a
percentage of revenues increased from 80.4% in the three months ended March 31,
1997 to 84.8% in the three months ended March 31, 1998.
Selling, general and administrative expenses decreased $0.3 million or
15.0% from $2.1 million for the three months ended March 31, 1997 to $1.8
million for the three months ended March 31, 1998. This decrease was the result
of reduced payroll related to management changes as part of a concerted effort
to reduce overhead expenses.
Depreciation and amortization expenses were $1.1 million for each of the
three months ended March 31, 1997 and 1998. Although the level of expenses was
consistent between periods, depreciation and amortization expenses as a
percentage of revenues decreased from 3.9% in the three months ended March 31,
1997 to 3.7% in the three months ended March 31, 1998 as a result of the
increased revenues.
As a result of the above factors, operating income decreased $0.8 million,
or 30.7%, from $2.6 million for the three months ended March 31, 1997 to $1.8
million for the three months ended March 31, 1998. Operating income margins
decreased from 8.7% in the three months ended March 31, 1997 to 5.8% in the
three months ended March 31, 1998.
As a result of the above factors, income taxes decreased $0.3 million from
$0.9 million for the three months ended March 31, 1997, to $0.6 million for the
three months ended March 31, 1998. The effective tax rates were consistent
between the two periods.
Accordingly, net income decreased $0.5 million from $1.6 million for the
three months ended March 31, 1997, to $1.0 million for the three months ended
March 31, 1998. Net income margins decreased from 5.3% to 3.4% for the
respective periods.
The foregoing factors resulted in a decrease in EBITDA of $0.8 million, or
21.7%, from $3.7 million for the three months ended March 31, 1997 to $3.0
million for the three months ended March 31, 1998. EBITDA margins decreased from
12.6% to 9.5% for the respective periods.
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Year Ended December 31, 1997 Compared to Year Ended December 31, 1996
Revenues decreased $2.3 million, or 1.8%, from $121.6 million in 1996 to
$119.3 million in 1997. This decrease was primarily attributable to, among other
things, lost business principally related to ground handling contracts with
Delta lost or terminated of $4.5 million as described above. Partially
offsetting this decrease were new business and other activity, principally
related to into-plane fueling and fuel system maintenance and operation
contracts, and revenue enhancements on existing contracts.
Operating expenses decreased $4.7 million, or 4.6%, from $102.9 million
during 1996 to $98.2 million during 1997. This decrease was primarily
attributable to a decrease in payroll and related benefits of $4.2 million,
which were directly related to the decrease in Delta revenues and a reduction in
damage claims of $0.5 million. Offsetting these decreases were increased
workers' compensation expenses and medical insurance costs of $0.3 million.
Operating expenses as a percentage of revenues decreased from 84.7% in 1996 to
82.3% in 1997.
Selling, general and administrative expenses decreased $0.8 million, or
10.4%, from $7.3 million in 1996 to $6.5 million in 1997. This decrease was the
result of reduced payroll related to management changes along with a concerted
effort on the part of management to reduce overhead expenses. Selling, general
and administrative expenses as a percentage of revenues decreased from 6.0% in
1996 to 5.5% in 1997.
Depreciation and amortization expenses increased $0.2 million, or 4.2%,
from $4.4 million in 1996 to $4.6 million in 1997. This increase was primarily
attributable to the additional depreciation resulting from increased capital
investments in 1996 and 1997 related to the Company's ongoing fleet improvement
program and purchases of equipment to service new contracts signed during 1996
and 1997. Depreciation and amortization expenses as a percentage of revenues
increased from 3.6% in 1996 to 3.9% in 1997, primarily as a result of these
increased expenses despite reduced revenues.
As a result of the above factors, operating income increased $3.0 million,
or 44.0%, from $7.0 million in 1996 to $10.0 million in 1997. The low margin
Delta contracts that were lost or terminated by the Company, together with
improved profit margins on existing and new business and management's concerted
efforts to reduce expenses resulted in the increase of operating income margins
from 5.7% in 1996 to 8.4% in 1997.
As a result of the above factors, income taxes increased $1.2 million from
$2.4 million for the year ended December 31, 1996, to $3.6 million for the year
ended December 31, 1997. The effective tax rates were consistent between the two
periods.
Accordingly, net income increased $1.8 million from $4.2 million for the
year ended December 31, 1996, to $6.0 million for the year ended December 31,
1997. Net income margins increased from 3.5% to 5.1%.
The foregoing factors resulted in an increase in EBITDA of $3.2 million, or
28.5%, from $11.4 million in 1996 to $14.6 million in 1997. EBITDA margin
increased from 9.4% to 12.3% for the respective periods.
Year Ended December 31, 1996 Compared to Year Ended December 31, 1995
Revenues increased $9.9 million, or 8.9%, from $111.7 million in 1995 to
$121.6 million in 1996. This increase was attributable to, among other things,
new business and revenue enhancements on existing contracts, and was partially
offset by lost business. The new business consisted of increased revenues
generated by 14 Delta ground handling contracts won in 1995 of $4.5 million
along with a number of other smaller contracts throughout the Company's
operation. The lost business primarily represents revenues of $0.8 million lost
in Orlando when the international airlines began flying principally to a new
international airport opened in Orlando at which the Company did not provide
services.
Operating expenses increased $9.4 million, or 10.0%, from $93.5 million in
1995 to $102.9 million in 1996. The increase was primarily attributable to
increases in (i) labor and related benefits expenses of $5.6 million, rent
expense of $0.3 million and training costs of $0.3 million resulting primarily
from 14 Delta ground handling and other new contracts won in 1995; (ii) workers'
compensation expenses of $1.6 million; and (iii) property and liability
insurance expenses of $0.5 million. Operating expenses as a percentage of
revenues increased from 83.8% in 1995 to 84.7% in 1996.
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<PAGE> 40
Selling, general and administrative expenses increased $0.8 million, or
12.2%, from $6.5 million in 1995 to $7.3 million in 1996. This increase was
primarily the result of increases in labor and related benefits related to
additional personnel added because of the new Delta contracts. Selling, general
and administrative expenses as a percentage of revenues increased from 5.8% in
1995 to 6.0% in 1996.
Depreciation and amortization expenses increased $0.1 million, or 1.8%,
from $4.3 million in 1995 to $4.4 million in 1996. This increase was primarily
attributable to the additional depreciation resulting from increased capital
investments in 1995 and 1996 related to ongoing fleet improvement purchases and
purchases of equipment to service new contracts signed during 1995 and 1996.
Depreciation and amortization expenses as a percentage of revenues decreased
from 3.9% in 1995 to 3.6% in 1996 primarily as a result of the increase in
revenue.
As a result of the above factors, operating income decreased $0.3 million,
or 4.8%, from $7.3 million in 1995 to $7.0 million in 1996, and operating income
margin decreased from 6.5% in 1995 to 5.7% in 1996. The low margin Delta
contracts resulted in greater revenues but did not marginally improve operating
income and, combined with the increased selling, general and administrative
expenses incurred to better manage the added business, primarily accounted for
the decrease.
Interest income decreased $0.5 million from $0.8 million for the year ended
December 31, 1995, to $0.3 million for the year ended December 31, 1996, as a
result of higher cash balances being retained in the company during 1995 and
being used in 1996 to fund increased capital expenditures and reduced
profitability.
As a result of the above factors, income taxes decreased $0.1 million from
$2.6 million for the year ended December 31, 1995, to $2.4 million for the year
ended December 31, 1996.
Accordingly, net income decreased $0.8 million from $5.0 million for the
year ended December 31, 1995, to $4.2 million for the year ended December 31,
1996. Net income margins decreased from 4.5% to 3.5% for the respective periods.
The foregoing factors resulted in a decrease in EBITDA of $0.3 million, or
2.3%, from $11.7 million in 1995 to $11.4 million in 1996. EBITDA margin
decreased from 10.4% to 9.4% for the respective periods.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities was $8.5 million for the six
months ended September 30, 1997, as compared to $3.0 million for the six months
ended September 30, 1998. The net cash provided by operating activities
decreased primarily due to a decrease in net income, an increase in prepaid
expenses and a decrease in accounts payable partially offset by increased
depreciation and amortization related to the Acquisition. Net cash provided by
operating activities was $5.9 million for the three months ended March 31, 1997,
as compared to $5.3 million for the three months ended March 31, 1998. Net cash
provided by operating activities decreased primarily due to a decrease in net
income of $0.6 million. Net cash provided by operating activities was $5.1
million, $7.2 million and $17.1 million in 1995, 1996 and 1997, respectively.
Net cash provided by operating activities increased primarily due to increases
in net income, accounts payable and accrued liabilities and decreases in
accounts receivable.
Net cash used in investing activities was $2.3 million for the six months
ended September 30, 1997, as compared to $94.8 million for the six months ended
September 30, 1998. The increase was primarily attributable to the Acquisition.
Net cash used in investing activities was $1.0 million for the three months
ended March 31, 1997, as compared to $2.7 million for the three months ended
March 31, 1998. Net cash used in investing activities increased primarily due to
increased capital expenditures. Net cash used in investing activities was $4.4
million, $9.1 million and $4.3 million in 1995, 1996 and 1997, respectively. Net
cash used in investing activities fluctuated primarily due to the Company's
capital expenditure needs for maintaining and upgrading its existing vehicle and
equipment fleet, which generally represent a majority of the Company's capital
expenditures. In addition, the Company frequently makes capital investments
necessary to support new contracts won by the Company. Through March 31, 1999,
the Company plans to invest an additional $2.6 million primarily related to the
ongoing maintenance of its fleet and $8.9 million for additional equipment to
support new contracts it has already won and continued upgrading of its fleet.
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Net cash provided by (used in) financing activities was $(8.0) million for
the six months ended September 30, 1997 and $96.5 million for the six months
ended September 30, 1998. This increase is due primarily to the issuance of
common stock of the Company and borrowing under the Senior Increasing Rate
Notes. Net cash provided by (used in) financing activities was $(4.4) million
for the three months ended March 31, 1997, as compared to $(2.6) million for the
three months ended March 31, 1998. Net cash provided by (used in) financing
activities decreased primarily due to a decrease in dividends to Viad. Net cash
provided by (used in) financing activities was $(0.8) million, $2.1 million and
$(13.0) million in 1995, 1996 and 1997, respectively. Fluctuations in net cash
provided by (used in) financing activities are due primarily to changes in the
due to/from Parent accounts.
As of September 30, 1998, the Company had long-term indebtedness of $80.0
million in the form of the Notes, cash of approximately $4.8 million and
approximately $8.7 million of availability and no borrowings outstanding under
the Senior Credit Facility. See "Description of Senior Credit Facility."
Concurrent with the consummation of the Initial Offering, the Company expensed
approximately $213,000 million to write off the remaining unamortized deferred
financing costs previously incurred in connection with the Senior Increasing
Rate Notes that were repaid with the net proceeds of the Initial Offering. The
expenses related to the deferred financing costs were accounted for as an
extraordinary loss on the early extinguishment of debt.
Following the Initial Offering, the Company's primary sources of liquidity
will be from cash flow provided by operations and borrowings under its Senior
Credit Facility. Based upon the successful implementation of management's
business and operating strategy, the Company believes that these funds will
provide it with sufficient liquidity and capital resources to meet current and
future financial obligations, including the payment of principal and interest on
the Notes, as well as to provide funds for the Company's working capital,
capital investments and other needs for the next twelve months. The Company's
future operating performance and ability to service or refinance the Notes and
to repay, extend or refinance the Senior Credit Facility will be subject to
future economic conditions and to financial, business and other factors, many of
which are beyond the Company's control. There can be no assurance that such
sources of funds will be adequate and that the Company will not require
additional capital from borrowings or securities offerings to satisfy such
requirements. In addition, there can be no assurance that the Company will have
sufficient available capital resources to realize its acquisition strategy. Such
future acquisitions, depending on their size and the form of consideration, may
require the Company to seek additional debt or equity financing. See "Risk
Factors--Ability to Complete Acquisitions."
RECENT DEVELOPMENTS
The Company was recently informed by BA that BA is not renewing its
contract with the Company for the provision of aircraft grooming services at
London-Heathrow airport following the expiration of such contract in January
1999. This contract generated approximately 8.8% of the Company's revenues in
1997 and the anticipated reduction in revenues and EBITDA as a result of the
loss of this contract for the fiscal year ended March 31, 1999 is $2.1 million
and $0.2 million, respectively.
ENVIRONMENTAL MATTERS
The Company is subject to compliance obligations and liabilities imposed
pursuant to federal, state, local and foreign environmental and workplace health
and safety requirements, including CERCLA. In particular, the Company's aviation
fueling services are subject to liabilities and obligations relating to the
above ground and underground storage of, and the release and cleanup of,
petroleum products. Although the Company believes it is in material compliance
with environmental, health and safety requirements, the possibility exists that
noncompliance could occur or be identified in the future, and the penalties or
costs of corrective action associated therewith could have a material adverse
effect on the Company's business, operating results and financial condition. In
addition, requirements are complex, change frequently and have tended to become
more stringent over time, and there can be no assurance that these requirements
will not change in the future in a manner that could materially and adversely
affect the Company.
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The Company is currently conducting or funding, or expects to conduct or
fund, environmental investigations, monitoring and cleanups at certain of its
previously or currently operated facilities. Also, from time to time, the
Company receives notices of potential liability for cleanup costs associated
with offsite waste recycling or disposal facilities at which wastes associated
with its operations allegedly have come to be located. In addition, airport
authorities are coming under increasing pressure to clean up previous
contamination at their facilities and are seeking financial contribution from
airport tenants and companies which operate at their airports. Although the
Company has taken steps to mitigate or remove the foregoing liabilities, the
Company could bear direct liability for the foregoing matters and such liability
could have a material adverse effect on the Company's business, operating
results and financial condition. See "Risk Factors--Environmental Matters."
YEAR 2000 ISSUE
Readiness
The Company has evaluated and believes it has addressed the Year 2000 issue
as it relates to its internal information technology systems. The Company's
internal efforts included the upgrading of critical hardware and software
systems to become Year 2000 compliant. The Company is in the process of
surveying its customers with whom it has material relationships for Year 2000
compliance.
Costs
The costs of achieving Year 2000 compliance have not been material to date
and additional costs are not expected to be material.
Risks
Based on its investigation to date, the Company does not believe it will
experience any material adverse effects as a result of the Year 2000 issue.
However, there can be no assurance in this regard, and the Year 2000 issue could
have a material adverse effect on the Company. While the Company has undertaken
its own evaluation and testing of its information technology systems, it is
dependent to some extent on the assurance and guidance provided by suppliers of
hardware, software and programming services as to its Year 2000 readiness.
The Company's Year 2000 evaluation includes an analysis of the possible
effects on, and the state of Year 2000 compliance by, its customers with whom it
has material relationships. However, the Company has limited ability to
independently verify the possible effect of Year 2000 issues on such customers
as this process is limited to such persons' public statements, responses to the
Company's inquiries and information available to the Company from other third
party sources, if any. Therefore, the Company's beliefs about the effects of its
customers' Year 2000 compliance may be inaccurate.
In addition, there can be no assurance that despite the Company's Year 2000
efforts and its belief that its internal systems are Year 2000 compliant. The
most reasonably likely worst case scenario with respect to Year 2000 issues is
that the Company's remediation of its information technology systems proves to
be ineffective and critical systems fail or malfunction as a result of Year 2000
problems and disrupt its operations. The Company is currently unable to quantify
the effect of such a malfunction, however, such an event could have a material
adverse effect on the Company.
Contingency Plans
The Company does not currently have any contingency plans with respect to
Year 2000 issues. If in the future the Company identifies a material problem
with a critical system, the Company will develop an appropriate contingency plan
at that time. However, circumstances may occur for which there are no
satisfactory contingency plans.
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EURO CONVERSION ISSUE
On January 1, 1999, 11 of the 15 member countries of the European Union are
scheduled to establish fixed conversion rates between their existing currencies
and the euro and to adopt the euro as their common legal currency. The Company
has begun consideration of the effects of the euro conversion on its operations,
but it is currently unsure of the potential impact that the euro conversion will
have on its business, financial condition and results of operations,
particularly as the euro conversion relates to the Company's European
operations.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, ("SFAS 131") "Disclosures about Segments
of an Enterprise and Related Information." SFAS 131 establishes standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires those enterprises to report
selected information about operating segments in interim financial reports
issued to shareholders. The provisions of SFAS 131 are effective for fiscal
years beginning after December 15, 1997. The Company does not anticipate the
requirements of SFAS 131 will have a significant impact on reporting its
financial statements.
IMPACT OF INFLATION
Although the Company cannot accurately determine the precise effect of
inflation on its operations, it does not believe that inflation has had a
material effect on its revenue or results of operations for the periods
presented herein. However, substantial increases in the Company's costs,
particularly labor or employee benefits costs, would be likely to adversely
affect the Company's revenues and operating results. In addition, because
inflation would likely materially and adversely affect the airline industry as a
whole, and the Company's business depends to a large extent on the economic
health of the airline industry, an increase in inflation would likely have a
material adverse effect on the Company's revenue and operating results.
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BUSINESS
The Company is one of the largest independent providers of aviation fueling
and aircraft ground services in the United States. The Company has provided
quality service to its customers for 51 years and has a well-established
presence in 31 airports in the United States, Europe and the Bahamas with an
average tenure in excess of 20 years at its current locations. In 1997, the
Company provided service to over 1.8 million commercial flights for over 200
customers, including most of the major domestic and international airlines such
as American, BA, Continental, Delta, Northwest, United and US Airways, as well
as regional air carriers, airport authorities and oil companies such as Esso.
The Company also operates fuel storage and delivery systems for airline
consortia and airport authorities, including Los Angeles International Airport's
LAXFUEL, which the Company believes is the largest airport fuel consortium in
the world. The Company intends to solidify its position as a leading independent
provider of aviation fueling and aircraft ground services in the United States
and Europe by leveraging its well-established operating history and
relationships with major customers to generate new business, continuing to take
advantage of outsourcing opportunities, pursuing selected acquisitions in its
fragmented industry and capitalizing on international growth opportunities. The
Company has achieved 8.9% revenue and 8.5% EBITDA compound annual growth rates
between 1993 and 1997. For the year ended December 31, 1997 and the six months
ended September 30, 1998, the Company generated revenues of $119.3 million and
$61.2 million, respectively, and net income (loss) of $6.0 million and $(3.5)
million, respectively. For the year ended March 31, 1998 and the six months
ended September 30, 1998, the Company had a pro forma net loss of $0.8 million
and $1.2 million, respectively, and pro forma EBITDA of $17.2 million and $8.1
million, respectively.
The Company's business includes aviation fueling services (57% of 1997
revenues), aircraft ground services (39%) and other aviation services (4%).
Aviation fueling services are comprised primarily of into-plane fueling,
maintenance and operation of fuel storage and delivery systems and the retail
sale of fuel products. Generally, the Company has custody over, but not
ownership of, the fuel it manages and delivers. Aircraft ground services consist
primarily of ground handling, aircraft interior grooming, cargo handling,
passenger and traffic services and FBOs. FBOs generally include the provision of
terminal services, pilot facilities, maintenance, weather service, flight
planning and hangar space to private, executive and corporate aircraft. Within
each business line, the services provided by the Company are complementary and,
by expanding the number of flights served at each location, the Company has the
opportunity to leverage its existing infrastructure to realize higher margins on
incremental revenues. The Company provides its services to customers pursuant to
contractual agreements and currently has approximately 740 contracts, which have
been in place, including extensions, for an average of 5.0 years each. The
Company believes it has established a reputation for providing quality service
and that its incumbency position at its current locations provides a significant
competitive advantage, as evidenced by an average contract renewal rate over the
past three years of approximately 96%. In addition, the Company has been
successful in winning new business, having won approximately 38%, 45%, 52% and
72% of the new contracts on which it placed competitive bids in 1995, 1996, 1997
and the nine months ended September 30, 1998, respectively.
The Company believes it has a significant market share of into-plane
fueling services (based on gallons pumped) at many of its locations, handling an
estimated 50% or more of the outsourced commercial fueling requirements at 24 of
the 29 locations where it provides such services. In addition, the Company's
strategic position at certain of its locations is enhanced because the Company
owns or operates the only fuel storage and delivery system at the airport. The
Company believes that because it has generally made significant capital
investments and has management infrastructure in place, it has a competitive
advantage in winning new business relative to a competitor with a small or no
presence at such locations.
INDUSTRY
Independent aviation services include the aviation fueling and aircraft
ground services provided by the Company as well as other aviation services,
including food service, aircraft maintenance and avionics supplies. The demand
for independent aviation services depends on both the amount of airline traffic
and the extent to which airlines outsource the provision of these services.
Based on airport traffic figures, its own market experience and estimates of
revenue received for services rendered per plane, the Company believes that
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approximately 90% of the total commercial aviation fueling market and
approximately 30% of the total commercial ground services market are outsourced
by airlines to independent providers such as the Company and that, as a result,
the aggregate independent markets for fueling services and ground services at
the top 100 North American airports are approximately $300 million and $1.9
billion, respectively.
According to the Air Transport Association of America, an independent
airline industry association, domestic commercial airline traffic increased at a
2.8% compound annual growth rate from 771.6 billion ASM in 1993 to 860.6 billion
ASM in 1997. Similarly, according to the Boeing 1998 Current Market Outlook,
global commercial airline traffic increased at a 8.8% compound annual growth
rate from approximately 3.0 trillion ASK in 1993 to approximately 4.2 trillion
ASK in 1997. The Boeing 1998 Current Market Outlook projects that global
commercial airline traffic will continue to grow at a 5.0% annual rate over the
next ten years, with North American traffic growing at a 3.5% annual rate. The
Boeing Current Market Outlook also projects that additional flights and new
routes are expected to account for 82% of this growth, increased average flight
lengths for 16% of this growth and larger airplanes for only 2% of this growth.
Airline deregulation, which occurred in the United States during the late
1970s and early 1980s, not only generated new entrants in the airline market,
but also stimulated demand for aviation services. The increased competition
resulting from deregulation led airlines to outsource many non-core services
that could be provided on a more cost-effective basis by an independent service
provider. Airline deregulation also changed the pattern of air traffic,
resulting in the creation of airport hubs. The creation of airport hubs further
contributed to the increase in outsourcing, as service providers could realize
greater economies of scale and provide more cost-effective service to large
numbers of flights arriving at and departing from an airline's major hub. The
trend towards outsourcing continued in the late 1980s and early 1990s, when as a
result of large financial losses and a series of restructurings, airlines
undertook cost-cutting efforts, which included the continued outsourcing of
non-core aspects of the business. These cost-cutting efforts and outsourcing
measures, along with a growing economy, allowed the airline industry to return
to profitability in the mid-1990s.
The independent aviation services industry is highly fragmented in both the
United States and Europe and is characterized by many operators that provide
services at a single or small number of locations. Small operators are likely to
face significant competitive pressures as large airlines increasingly deal with
fewer and larger suppliers providing a broader range of services at multiple
locations. This trend should encourage the consolidation of the industry and
enable suppliers to capitalize on economies of scale. For these reasons, the
Company believes that industry consolidation will provide opportunities for
growth in addition to the growth resulting from increases in airline traffic and
outsourcing.
Aviation Fueling Services
Aviation fueling services are comprised primarily of into-plane fueling,
maintenance and operation of fuel storage and delivery systems and the retail
sale of fuel products.
Into-plane fueling service consists of providing airplanes with specified
amounts of fuel from fuel storage facilities located at or near the airport.
Depending on the fuel storage system at a particular airport, the service
provider either (i) delivers the fuel to the plane from the fuel storage tanks
using a refueling tanker vehicle or (ii) if the airport is equipped with a
system that delivers fuel from the fuel storage tanks directly to the airline
gates via underground pipes (a "hydrant system"), connects its equipment to the
hydrant at the airline gate to deliver fuel into the aircraft. Generally,
into-plane fueling contracts provide for a fee based upon the volume of fuel
delivered.
Fuel system maintenance and operation consists of the maintenance and
operation of the fuel storage and delivery systems at an airport. These systems
are typically comprised of storage tanks, pumps, pipes and filter/separators. In
the United States, airport fuel storage and delivery systems are generally owned
by the local airport authority and leased collectively by certain of the
airlines operating at such airport (an "airline consortium") and generally
supply fuel to most of the airlines operating at that airport. Independent
service providers that maintain and operate fuel storage and delivery systems
are responsible for managing the fuel inventory by overseeing the receipt and
disbursement of fuel, as well as the physical and administrative
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<PAGE> 46
maintenance of these systems. Generally, contracts for the maintenance and
operation of fuel storage and delivery systems provide for the reimbursement of
costs, plus an additional monthly fee. There are a limited number of vendors
that provide fuel system maintenance and operation services and, due to the
technical nature of this service, competition is primarily driven by reputation
for quality and reliability, technical competence, safety record and price.
The retail sale of fuel products generally takes place at locations where a
service provider has established FBOs to provide terminal, flight planning and
other aviation services to private, executive and corporate aircraft.
The North American market for fueling services is relatively mature with a
large percentage of fueling contracts having already been outsourced to
independent providers. However, the Company believes that the industry, because
it is characterized by many service providers operating at a single or small
number of locations, offers the potential for growth through consolidation.
Currently, in Europe, the fueling services infrastructure is generally
owned and operated by major oil companies, rather than by airport authorities or
airlines as in the United States, although liberalization is taking place in the
European market. The Company expects that the liberalization of the European
aviation fuel services market will follow the same general trends as in the
United States, when oil companies divested their fuel services operations to, or
entered into joint ventures with, independent providers. However, due to the
technical nature of fueling services and the often large capital investments
involved, the Company expects the growth of independent competition to be
limited to a relatively small number of well-capitalized, experienced companies.
Aircraft Ground Services
Aircraft ground services consist primarily of ground handling, aircraft
interior grooming, cargo handling, passenger and traffic services and FBOs.
Ground handling services consist of the provision of ground handling crews
and all necessary ground support equipment to process airline flights through
the full range of on-the-ground services. Such equipment and services include
loaders to load and unload baggage and cargo, air conditioning units used to
cool aircraft while waiting at a gate, ground power units used to provide
auxiliary power to aircraft and tow vehicles used to move aircraft. Ground
handling service providers are generally compensated through a fixed fee for
each aircraft serviced, based on the size of the aircraft.
Aircraft interior grooming consists of the cleaning of aircraft cabins
between flights and cargo handling consists of the loading, warehousing and
documentation of cargo. Passenger and traffic services include passenger
ticketing, check-in and boarding, security clearance, special assistance and
skycap services. FBOs generally include the provision of terminal services,
pilot facilities, maintenance, weather service, flight planning and hangar space
to private, executive and corporate aircraft. For each of these aircraft ground
services, other than FBOs, the Company is generally compensated by a fixed fee
for each aircraft serviced, based on the size of the aircraft. For FBOs, the
Company is generally compensated by a fixed fee for specific services rendered.
In the North American ground services sector, a majority of airline
operators provide their own ground services. Nonetheless, there are several
large independent ground service providers operating on a national basis as well
as numerous smaller regional or single location operators. Over the past five
years, major trends impacting the growth of the independent ground services
industry in North America include the continuing trend towards greater
consolidation among major airline companies and increased service requirements
at lower costs. Airline operators continue to seek value-added service
solutions, such as the use of a single service provider to supply a broad range
of services at a large number of locations at costs lower than can be
accomplished in-house.
European competition in the airline industry has intensified significantly
in connection with the liberalization of this market. The Company believes that
such liberalization will require European airlines to compete based on price and
quality of service provided. Ground services constitute not only an important
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component of airlines' operating costs, but also a vitally important element in
the airlines' image as perceived by its customers. As such, airlines have sought
freedom to choose among several suppliers of different ground handling services
or have sought to supply those services themselves.
Unlike the situation in the United States, the European market is still
comprised mainly of local ground services monopolies operated by national
airlines or national airport companies. An active campaign by several major
European airlines, including formal complaints lodged with the European
Commission, led the European Transport Ministers in December 1995 to agree to
phase out these local ground services monopolies by January 1, 2003. Until
recently, few ground services providers operated outside their respective home
markets and only a few of the independent United States domestic ground service
providers, such as ASIG, have established European operations.
COMPANY HISTORY
The Company was formed in March 1998 to facilitate the acquisition of the
ASIG business from Viad. The ASIG business has a long history of providing
quality service in the independent aviation services market with its two main
predecessor companies, Dispatch Services, Inc. ("DSI") and Aircraft Service
International, Inc. ("ASII") operating since 1947 and 1952, respectively. Most
of the companies comprising the ASIG business were acquired by the Greyhound
Corporation (Viad's predecessor) in the late 1960s.
Both DSI and ASII began as ground services operations and expanded into
fueling services when the large oil companies in the United States began to
divest these operations in the 1960s and 1970s. During this period, ASII also
began to expand its operations beyond its traditional home in the Southeast and
followed the expansion of Delta and other large customers to the western region
of the United States. Aircraft Service, Ltd. the Company's first European
operation, was established in the United Kingdom in 1990 to provide fueling and
ground services at the London-Heathrow airport. In 1997, the Company began
providing into-plane fueling services and operating the fuel delivery system at
the Munich airport through Omni Aircraft and also entered into an agreement with
Esso pursuant to which it began providing into-plane fueling for BA and other
airlines at the London-Gatwick airport. Through this expansion into Europe, the
Company believes it became the first independent aviation fueling service
provider to operate at each of the London-Heathrow airport, the Munich airport
and the London-Gatwick airport.
The Company's 51-year operating history has allowed the Company to
establish a reputation for providing consistent, high quality customer service
and long-standing relationships with many of the world's major airlines at some
of the world's busiest airports. The following chart lists the 31 airports in
the United States, Europe and the Bahamas where the Company currently provides
services:
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<TABLE>
<CAPTION>
OPERATING OPERATING
LOCATION SINCE LOCATION SINCE
- - -------- --------- -------- ---------
<S> <C> <C> <C>
Miami, FL........................... 1947 Albuquerque, NM..................... 1987
Tampa, FL........................... 1957 Burbank, CA......................... 1987
Ft. Lauderdale, FL.................. 1958 Portland, OR........................ 1987
Los Angeles, CA..................... 1961 Rochester, NY....................... 1987
Orlando, FL......................... 1961 Seattle, WA......................... 1987
San Francisco, CA................... 1961 San Diego, CA....................... 1988
West Palm Beach, FL................. 1962 London, England-Heathrow............ 1990
Melbourne, FL....................... 1963 Santa Ana, CA....................... 1991
Memphis, TN......................... 1963 Cleveland, OH....................... 1992
Freeport, Bahamas................... 1969 Denver, CO.......................... 1993
Cincinnati, OH...................... 1969 Philadelphia, PA.................... 1993
Nashville, TN....................... 1969 Atlanta, GA......................... 1994
New Orleans, LA..................... 1971 Colorado Springs, CO................ 1995
Sarasota, FL........................ 1973 London, England-Gatwick............. 1997
Pittsburgh, PA...................... 1983 Munich, Germany..................... 1997
Fairbanks, AK....................... 1985
</TABLE>
BUSINESS STRATEGY
The Company's objective is to solidify its position as a leading
independent provider of aviation fueling and aircraft ground services in the
United States and Europe. The Company intends to pursue its objective through
the following business strategies:
LEVERAGE WELL-ESTABLISHED OPERATING HISTORY AND MARKET POSITIONS. In its
51-year operating history, the Company has built a reputation for providing
quality service and has established a long-term presence in its current
airport locations, with an average tenure in its current 31 locations in
excess of 20 years. The Company believes that it can continue to leverage
its operating history and established presence at its current locations to
acquire additional business thereby enhancing economies of scale and cost
savings in such operations. The Company's incumbency position at its
current locations often provides a significant competitive advantage in
winning new business when new contracts can be priced without incorporating
additional fixed costs. The Company also seeks to increase the number of
locations at which it maintains and operates fuel storage and delivery
systems, not only for the steady returns on such contracts, but also
because providing these services creates an opportunity for the Company to
increase its into-plane fueling at that location by building relationships
with the airlines' local managers, who often have influence in determining
their airlines' provider of into-plane fueling services.
LEVERAGE LONG-TERM RELATIONSHIPS WITH MAJOR CUSTOMERS. The Company
maintains relationships with most of the major domestic and international
airlines, including American, BA, Continental, Delta, Northwest, United and
US Airways. The Company believes that these long-term customer
relationships, some of which have existed since the Company's inception,
continue to provide the Company with opportunities to obtain additional
business from these major airline customers both at the locations where the
Company currently provides services to such customers, as well as at other
locations. In addition, the Company expects to benefit from the trend among
large airlines to deal with fewer and larger suppliers that can provide a
broader range of services at multiple locations.
MAINTAIN AND ENHANCE REPUTATION FOR CUSTOMER SERVICE AND QUALITY. The
Company believes that it has one of the best service reputations in the
industry, and as a result, has built a loyal customer base, which is
evidenced by its average contract renewal rate of approximately 96% over
the past three years. The Company provides a high level of customer service
not only by providing a highly trained, efficient and professional work
force, but also by maintaining regular communication with its customers.
Maintaining communication enables the Company to respond to customer
concerns, fosters a strong partnership with
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the airlines and provides the Company with information regarding potential
business opportunities. As one of the leading independent providers of
aviation fueling and aircraft ground services in the United States, the
Company is invited to participate in many competitive bidding opportunities
for new business and has generally been successful, having won
approximately 38%, 45%, 52% and 72% of the new contracts on which it placed
competitive bids in 1995, 1996, 1997 and the nine months ended September
30, 1998, respectively. The Company believes that by providing high levels
of customer service with an emphasis on quality, it can continue to retain
a large percentage of its contracts and can be more successful in
competitive bids made for new contracts. In addition, the Company has
recently begun to capitalize on what it perceives as a trend among airlines
towards seeking higher quality outside suppliers, as opposed to simply the
lowest priced supplier, by offering enhanced levels of service in exchange
for a premium price. For example, the Company is reinforcing its reputation
for quality through the implementation of ISO-9002 initiatives at a major
airport and expects to implement ISO-9002 initiatives at other airports.
The Company's ISO-9002 initiatives include enhanced employee training and
qualifications, utilizing equipment meeting certain safety, cleanliness and
speed criteria and maintaining complete documentation of all systems and
procedures.
PURSUE SELECTIVE CONSOLIDATING ACQUISITIONS. The Company believes that the
independent aviation service industry is highly fragmented in both the
United States and Europe, which affords significant opportunities for
consolidation. The industry includes many small, local or regional
independent aviation service providers that may lack the financial
resources and infrastructure necessary to achieve the efficiencies and
economies of scale to compete effectively for new customers and to make
capital commitments to grow. The Company believes that, through its
established operating history, it is well-positioned to capitalize on this
consolidation opportunity and that by acquiring select competitors and
complementary companies it can achieve further economies of scale and cost
savings. In addition, acquisitions are expected to expand the geographic
coverage and range of services provided by the Company, further solidifying
the Company's position as a leading independent provider of aviation
fueling and aircraft ground services.
CAPITALIZE ON INTERNATIONAL GROWTH OPPORTUNITIES. The Company believes it
is well-positioned to capitalize on the liberalization taking place in the
international markets for aviation services, particularly in Europe. The
Company believes it became the first independent aviation fueling service
provider to operate at the London-Heathrow airport when it began providing
into-plane fueling services to BA there in 1990. In addition, the Company
believes that in 1997 it became the first independent aviation fueling
services provider to operate at each of the Munich airport and the
London-Gatwick airport when Omni Aircraft began providing into-plane
fueling services and operating the fuel delivery system at Munich and the
Company entered into an agreement with Esso pursuant to which it began
providing into-plane fueling for BA and other airlines at London-Gatwick.
Alliances with large oil companies such as Esso offer the potential to
accelerate the Company's penetration of the European market by leveraging
the oil companies' existing airport services infrastructure, contracts and
contacts. The Company believes that its quality reputation and current
European operations, particularly its relationship with BA, has positioned
the Company to be a preferred supplier among many potential European
customers. The Company also believes it is well-positioned in the gateway
cities of Miami, Los Angeles, San Francisco, Atlanta and Seattle to take
advantage of growth and market developments in Latin America, Europe and
the Asia-Pacific regions.
INCREASE OPERATING EFFICIENCY. Management has identified several areas
where it believes the Company can achieve immediate cost savings, including
the implementation of a new pension plan and insurance policy and the
reduction of overhead. In addition, the Company believes that it can
improve its operating efficiency through the economies of scale created by
leveraging its existing infrastructure to realize higher margins on
incremental revenue. The Company is also undertaking programs to reduce
costs through the redesign of systems, procedures and measurements to
improve worker efficiency, safety and satisfaction. In addition, the
Company has developed a comprehensive plan to upgrade the quality and
efficiency of its equipment, which is expected to reduce operating costs.
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OPERATIONS
Aviation Fueling Services
The Company provides fueling services at 16 of the top 50 North American
airports (as ranked by Airports Council International in terms of total aircraft
movements), including Atlanta, Los Angeles, Miami, Denver, Philadelphia,
Pittsburgh and San Francisco. Generally, the Company has custody over, but not
ownership of, the fuel it manages and delivers, and thus has limited direct
exposure to fluctuations in fuel prices. In 1997, the Company's aviation fueling
services accounted for 57% of its revenue.
Into-Plane Fueling Services. Into-plane fueling services provided $53.4
million, $50.8 million and $46.7 million of the Company's revenue in 1997, 1996
and 1995, respectively. The Company provides into-plane fueling at 29 locations,
including both major hub airports as well as smaller sites, and in 1997
delivered fuel to more than 1.7 million flights.
Major hub airports where the Company operates include Atlanta, Cincinnati,
London (Heathrow and Gatwick), Los Angeles, Memphis, Miami, Munich, Orlando,
Philadelphia, Pittsburgh, San Francisco and Seattle. At Atlanta Hartsfield
International Airport, the Company operates what it believes is the single
largest into-plane fueling contract in the world which involves servicing
approximately 630 Delta flights daily. At Pittsburgh International Airport, the
Company provides into-plane fueling for approximately 480 US Airways flights
daily. In 1990, the Company won the into-plane fueling contract for BA at the
London-Heathrow airport through a competitive bid process and currently supplies
fuel to more than 250 BA flights daily. In May 1997, Omni Aircraft won the
contract to maintain and operate the Munich airport owned fuel systems as well
as one of two into-plane fuel service licenses. In June 1997, pursuant to an
agreement with Esso, the Company began providing into-plane fueling to BA and
other airlines at the London-Gatwick airport.
The Company and its customers measure its into-plane fueling performance
based on timing, accuracy, staff professionalism, safety and quality of service.
The Company must meet strict criteria in all of these areas. For airlines
operating on tight flight schedules, timely refueling of aircraft is vitally
important to operating performance. The Company utilizes its extensive
scheduling experience and a workforce of cross-trained employees to ensure that
its commitments are met. Company employees are cross-trained in a variety of
functions which better enables the Company to fulfill peak demand requirements
using a flexible number of personnel.
Into-plane fueling requires delivery of exact amounts of fuel and the
maintenance of timely and accurate records. The Company delivers large
quantities of fuel (approximately 4.2 billion gallons in 1997), and at any time
can provide customers with accurate records of the contracted fuel deliveries.
The Company has developed proprietary software and MIS systems to generate these
records for customers.
Safety is of paramount importance to the Company and to its customers. The
critical nature of fuel quality demands that extensive safety protocols be
followed and enforced. All Company personnel undergo a safety training course
upon initial employment followed by refresher courses every year and are
rigorously monitored for adherence to safety procedures.
Fuel System Maintenance and Operations. Fuel system maintenance and
operations generated revenue of $8.0 million, $6.1 million and $6.0 million in
1997, 1996 and 1995, respectively. The combined fuel storage capacity of the
fuel systems that the Company owns and operates or contracts to maintain and
operate exceeds 90 million gallons.
The most prominent example of the Company's fuel system maintenance and
operations is its management of LAXFUEL, which the Company believes is the
largest airport fuel consortium in the world. Currently comprised of 56 domestic
and international airlines, LAXFUEL is operated on a 24-hour basis, receiving
fuel from more than 17 suppliers and processing approximately 1,000 fuel
accounting transactions each day. In 1997, the Company managed monthly volume at
LAXFUEL of approximately 132 million gallons. The Company first won this
contract in 1986 and recently managed a $85 million upgrade of the fuel system.
Since the original contract award, the Company has won two follow-on contracts
from LAXFUEL.
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<PAGE> 51
The Company also maintains and operates fuel storage and delivery systems for
either airline consortia, oil company consortia, a single airline or the local
airport authority in 15 other locations, including Cincinnati, Denver, Ft.
Lauderdale, Memphis, Miami and Pittsburgh. In addition, the Company owns and
operates six fuel storage and delivery systems in Albuquerque, Melbourne, New
Orleans, Orlando, Sarasota and West Palm Beach.
As a result of its long operating history, the Company has developed
significant expertise in providing efficient systems and processes necessary for
the successful maintenance and operation of fuel storage and delivery systems.
One notable internally developed software program is the Airport Fuel Inventory
Control System ("AFICS"). Developed in 1995, AFICS increases the reporting
efficiency for the large consortium fuel inventories that the Company manages
and has been an instrumental factor in the Company's ability to secure
additional contracts to maintain and operate fuel facilities.
Other Aviation Services. In addition to the other services discussed, at
locations where the Company operates FBOs, namely Albuquerque, Freeport, Bahamas
and Orlando, the Company sells aviation fuel to retail customers.
Aircraft Ground Services
In 1997, the Company's aircraft ground services accounted for 39% of
revenue.
Ground Handling. Ground handling services generated revenue of $23.3
million, $30.9 million and $27.4 million in 1997, 1996 and 1995, respectively.
The Company provides ground handling services to over 100 domestic and
international airlines at 12 locations and is capable of servicing any size
aircraft, from commuter planes to wide-body Boeing 747s. The Company's largest
ground handling operation is at Miami International Airport where the Company
and its predecessors have been providing ground handling services since 1947.
The Company has over 600 employees servicing 54 airlines and approximately 2,400
flights per month at Miami International Airport. The Company also operates and
maintains the computerized baggage system for the entire "B" and "F" concourses
and handles the Federal Inspection Service baggage distribution for all
international carriers at the airport.
The Company measures its ground handling operating performance based on
timing, staff professionalism, safety and quality. Airline customers closely
track the Company's ability to operate within strict timing parameters and
efficiently process such functions as baggage handling, which impact airline
customer satisfaction. Ground handling typically requires a large number of
employees and vehicles to service an aircraft and thus airlines seek suppliers
that are large enough to cost-effectively provide such employees and services.
By providing an outsourced alternative for the ground handling needs of many
airlines, the Company is able to take advantage of economies of scale and offer
customers access to quality and timely ground handling service at a substantial
discount to the cost of in-sourcing such services.
Aircraft Interior Grooming. Aircraft interior grooming generated revenue
of $15.9 million, $16.6 million and $15.3 million in 1997, 1996 and 1995,
respectively. The Company provides aircraft interior grooming services at 13
locations and has the capability to expand these services throughout the
Company's entire network. The Company's largest interior grooming contract is
currently with BA at the London-Heathrow airport, where the Company provides
interior grooming services for BA's fleet of Boeing 747 wide-body aircraft.
However, BA has informed the Company that it intends not to renew this contract
following its expiration in January 1999. The Company is developing a strategy
for responding to BA in regard to this contract. See "Prospectus Summary--Recent
Developments." Timing and quality are key components of this service as the
Company must consistently adhere to tight time schedules and achieve high
performance benchmarks on cleaning quality, an attribute with significant
influence on airline customer satisfaction.
Cargo Handling. The Company provides cargo handling services primarily in
conjunction with its ground handling operations. The Company handles both
domestic and international cargo as well as specialized cargo and hazardous
shipments.
Other Ground Services. The Company regularly provides certain airline
customers at its Ft. Lauderdale, Miami, Orlando and Tampa locations with
passenger handling services, and from time to time provides such
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services to charter airline customers in Albuquerque and Pittsburgh. The Company
often fulfills its customers' particular needs by providing specialized staff
who may be multilingual or trained for specific tasks.
In addition, the Company provides certain airline customers in Miami and
Orlando with flight operations and load control, including communications,
flight dispatch, weight and balance information, flight planning, weather
service and diplomatic clearances. The Company operates limited FBOs in
Albuquerque, Freeport, Bahamas and Orlando, where it provides terminal services,
pilot facilities, line maintenance, worldwide weather service, flight planning
and hanger space for private, executive and corporate aircraft. The Company also
operates United's VIP lounge at the London-Heathrow airport.
CUSTOMERS
The Company's customer base is comprised of airlines, airport authorities
and oil companies. The Company believes that the Company has established strong
customer relationships with most of the major domestic and international
airlines, including American, BA, Continental, Delta, Northwest, United and US
Airways, as well as many regional and smaller carriers. The Company has also
built strong relationships with many leading airport authorities and oil
companies.
In 1997, the Company's two largest customers, Delta and BA, accounted for
approximately 17.5% and 14.1% of revenue, respectively, and the Company's top
ten customers accounted for approximately 57.4% of revenue. See "Risk
Factors--Risks Related to the Company's Dependence on Significant Customers."
SALES AND MARKETING
The Company's sales and marketing staff is comprised of seven professionals
who average over 17 years of experience with the Company. All sales personnel
are compensated through salary plus an incentive bonus based on the Company's
overall performance.
The Company formally markets its services through a combination of customer
visits, membership in trade organizations, participation in International Air
Transportation Association and National Air Transportation Association trade
shows and seminars, and sponsorship of events at annual meetings of consortia
that own major fuel storage and delivery systems. Informational marketing also
takes place on a daily basis through interaction with the Company's customers at
all levels of their respective organizations.
These marketing activities lead to bidding opportunities that the Company
receives in the following ways: (i) airlines call and formally request a
proposal from a selected group of service providers; (ii) existing customers
request proposals for add-on services; (iii) non-solicited calls are made to
selected airlines offering services, and (iv) airlines request proposals through
a general solicitation to any interested service provider.
The Company wins the majority of its new business through the competitive
bid process and has established a strong track record in this regard, having won
approximately 38%, 45%, 52% and 72% of the new contracts on which it placed
competitive bids in 1995, 1996, 1997 and the nine months ended September 30,
1998, respectively. The Company currently has approximately 740 contracts, which
have been in place, including extensions, for an average of 5.0 years each, and
over the past three years, the Company's average contract renewal rate has been
approximately 96%. In 1997, the Company's largest contract accounted for 8.8% of
revenue, and no other contract accounted for more than 4.3% of revenue. The
majority of the Company's contracts have an industry standard initial length of
one year, although the Company's larger contracts generally run for initial
terms of three to five years.
COMPETITION
The aircraft services industry is highly fragmented, consisting of a
limited number of well-capitalized companies which offer a broad range of
services, a large number of smaller, specialized companies and subsidiaries
established by major airlines to provide certain services. The Company's major
competitors include Airport Group International Inc., AMR Services Corporation
(a subsidiary of American), DSS, DynAir, Hudson General Corporation, Mercury Air
Group, Inc., Odgen Aviation Services Inc. and Signature Flight Support Corp. The
Company believes that the principal competitive factors in the aviation
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services industry are quality, safety, turnaround time, overall customer
service, technical capabilities of personnel and price. The Company believes
that it competes favorably on the basis of all of the foregoing factors.
FACILITIES AND EQUIPMENT
The Company's headquarters are currently located in Miami, Florida near
Miami International Airport and occupy approximately 22,000 square feet pursuant
to a lease which expires in November 1998. As part of a general reorganization
in connection with the Acquisition, the Company's headquarters will be relocated
from its existing facilities to smaller, less expensive facilities in the Miami
area. The Company maintains numerous facilities such as tank farms, hangers,
warehouses and equipment depots, among others, at airports across the United
States, Europe and the Bahamas as part of its service operations.
The Company owns a large fleet of equipment, major components of which
include refueling tankers, hydrant dispensers, jumbo aircraft loaders, aircraft
air conditioner trucks and generators. The Company manages the fleet centrally
and follows standardization guidelines to facilitate worker training, to
strengthen purchasing power and to maintain industry standards.
Through its heavy maintenance support facility in Tampa, Florida, the
Company refurbishes its fleet of vehicles and equipment on an ongoing basis.
Vehicles such as refueling tankers can undergo complete overhauls involving the
replacement of all pumping systems, electrical systems, major operating
components and chassis. The actual fuel tanks themselves do not usually require
refurbishment and their economic lives range between 30 and 40 years.
ENVIRONMENTAL MATTERS
The Company is subject to compliance obligations and liabilities imposed
pursuant to federal, state, local and foreign environmental and workplace health
and safety requirements, including CERCLA. In particular, the Company's aircraft
fuel handling operations are subject to liabilities and obligations relating to
the aboveground and underground storage of, and the release and cleanup of,
petroleum products. The Company rigorously monitors its environmental
responsibilities and believes it was one of the first service providers in the
industry to develop extensive in-house oversight expertise from years of
operating experience. Despite such efforts, the possibility exists that
noncompliance could occur or be identified in the future, the penalties or
corrective action costs associated with which could be material. In addition,
requirements are complex, change frequently, and have tended to become more
stringent over time, and there can be no assurance that these requirements will
not change in the future in a manner that could materially and adversely affect
the Company.
The Company is currently conducting or funding, or expects to conduct or
fund, environmental investigations, monitoring and cleanups at certain of its
previously or currently operated facilities, including facilities located at the
Memphis, Miami, New Orleans, Portland, Sarasota and Seattle airports, and has
received claims or demands to pay a portion of airport-wide costs, including in
some cases under CERCLA or analogous state laws with respect to its
Philadelphia, San Diego and San Francisco airport facilities. At certain
facilities at which the Company provides into-plane fueling services or
maintains and operates a fuel storage and delivery system, environmental
remedial costs have been borne by the owners of airport fueling systems rather
than the Company. In addition, the Company has in place other legal arrangements
(e.g., contractual indemnities, insurance policies, allocation agreements and
state funding mechanisms for cleanup of pollution from storage tanks) which it
believes significantly mitigate the foregoing liabilities. However, the Company
cannot guarantee that the state programs will continue to have funds available
for the cleanup of tank sites. In the event that these or other legal
arrangements fail, the Company could bear direct liability for the foregoing or
any future matters and such liability could be material. In addition, there can
be no assurance that future environmental investigations by the Company will not
identify other environmental conditions requiring material expenditures of
funds.
From time to time, the Company receives notices of potential liability,
pursuant to CERCLA or analogous state laws, for cleanup costs associated with
offsite waste recycling or disposal facilities at which
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wastes associated with its operations have allegedly come to be located.
Liability under CERCLA is strict, retroactive, and joint and several, although
such liability is often allocated among multiple responsible parties. In the
past several years, such notices have been received for the Peak Oil site in
Tampa, Florida; the South Eighth Street Landfill site in West Memphis, Arkansas;
the Wingate Road site in Ft. Lauderdale, Florida; and the Petroleum Products
Corporation site in Pembroke Pines, Florida. With respect to all such sites, the
Company either has settled its liability (Peak Oil), expects its liability to be
de minimis and fully indemnified by Viad (South Eighth Street), or has denied
liability altogether (Wingate Road and Petroleum Products). The possibility
exists that the Company will receive additional notices of CERCLA-type liability
in the future. In light of the relatively small volume of waste typically
contributed by the Company, the applicability of the CERCLA "petroleum
exemption" to certain of its wastes, the large numbers of parties typically
involved in such sites, and the availability of contractual indemnifications,
although there can be no assurance in this regard, the Company currently expects
that its future liabilities for cleanup of offsite disposal facilities will not
be material.
Subject to certain time and dollar limitations, Viad has agreed to
indemnify the Company with respect to certain pre-Acquisition environmental
liabilities, including all known and unknown onsite and offsite contamination
matters. Based upon its environmental due diligence investigation, the Company
believes that such indemnification, coupled with the legal arrangements set
forth above, provide sufficient protection with respect to environmental
liabilities. In the event that Viad fails to honor this indemnification, the
Company could bear direct liability for such matters and such liability could be
material. See "Risk Factors--Risks Related to Environmental Issues with Respect
to the Company's Operations."
EMPLOYEES
As of September 30, 1998, the Company employed 3,300 people. Of this total,
approximately two-thirds were represented by unions, with the other third
generally employed at airports operating without union representation. The
Company has no nationwide labor contracts and its contract terms differ from
station to station. There are currently approximately 30 collective bargaining
contracts in place, almost all of which have terms of three years. Collective
bargaining contract expirations are staggered with approximately one-third
coming up for renewal each year. Most of the Company's union contracts provide
"ramp agent" as a single rank classification, thereby giving the Company
flexibility to utilize its staff according to ad hoc requirements in fueling,
ground handling, cabin cleaning and baggage handling. The Company believes it
has very good relationships with its employees and various unions. There has
never been a strike or work stoppage at any facility operated by the Company.
LEGAL
The Company and certain of its subsidiaries and affiliates are plaintiffs
or defendants in various actions, proceedings and claims, including
environmental claims. Some of the foregoing involve or may involve compensatory
or other damages. Litigation is subject to many uncertainties and although
liability, if any, is not ascertainable, the Company believes that any resulting
liability will not materially affect the Company's financial position or the
results of its operations.
Subject to certain limitations, Viad has agreed to indemnify the Company
for: (i) liability for medical claims and worker's compensation claims; (ii)
liability for unknown and undisclosed claims existing on or prior to the closing
date of the Acquisition and not reflected in the balance sheet of the ASIG
business or otherwise disclosed in the schedules to the Share Purchase Agreement
(as defined herein); (iii) liability for obligations relating to employee
benefits and employee benefit plans existing on or prior to the closing date of
the Acquisition; and (iv) liability for any claim or matter relating to or
arising with respect to the ASIG business or its assets on or prior to the
closing date of the Acquisition. Based upon its due diligence investigation, the
Company believes that such indemnification provides ample protection with
respect to such pre-Acquisition liabilities, although there can be no assurance
in this regard. In the event that Viad fails to honor this indemnification, the
Company could bear direct liability for such matters and such liability could be
material.
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<PAGE> 55
INSURANCE
The Company's business activities subject it to risk of significant
potential liability under federal and state statutes, common law and contractual
indemnification agreements. The Company reviews the adequacy of its insurance on
an ongoing basis. The Company believes it follows generally accepted standards
for its lines of business with respect to the purchase of business insurance and
risk management practices. The Company accordingly maintains insurance in
amounts it deems appropriate for its business.
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<PAGE> 56
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information (ages as of September
30, 1998) with respect to the persons who are members of the Board of Directors
(the "Board") or executive officers of the Company. Hancock and CIBC Ventures
together have the ability to appoint a majority of the members of the Board of
both Ranger and the Company pursuant to the Securityholders Agreement. See
"Certain Transactions--Securityholders Agreement."
<TABLE>
<CAPTION>
NAME AGE POSITION AND OFFICES
---- --- --------------------
<S> <C> <C>
Stephen D. Townes...................... 46 President, Chief Executive Officer and Director
George B. Schwartz..................... 45 Chairman of the Board, Director and Assistant
Secretary
F. Andrew Mitchell..................... 45 Executive Vice President and Chief Financial
Officer
George W. Watts........................ 46 Executive Vice President and Secretary
John W. Gassett........................ 51 Senior Vice President--ASIG North America
Paul Jefferson......................... 43 Senior Vice President and Managing Director--ASIG
Europe
William McLendon....................... 38 Vice President--Eastern Operations
Ronald F. Pattie....................... 50 Vice President--Technical Services
D. Dana Donovan........................ 42 Director
Jay R. Levine.......................... 42 Director
Edward Levy............................ 34 Director
S. Mark Ray............................ 46 Director
</TABLE>
Stephen D. Townes founded Ranger and the Company and became President,
Chief Executive Officer and Director upon the consummation of the Acquisition.
Prior to joining Ranger and the Company, Mr. Townes had been the Vice Chairman
and a Director of Sabreliner Corporation's commercial aircraft services division
since November 1995. From July 1994 to November 1995 Mr. Townes was President
and Partner of Intertrade Ltd., and prior to joining Intertrade, Mr. Townes was
the Executive Vice President & Technical Operations Officer of Stevens Aviation.
Prior to joining Stevens Aviation in March 1990, Mr. Townes held management
positions with the Dee Howard Company and LTV Aerospace & Defense (now Vought
Aircraft). Mr. Townes received an engineering degree from West Point, an MBA
from Long Island University and completed the PMD Program at Harvard Business
School.
George B. Schwartz co-founded Ranger and the Company and became Chairman of
the Board upon the consummation of the Acquisition. Mr. Schwartz is currently
the President of Tioga Capital Corporation, a position he has held since 1991.
From 1987 to 1990, Mr. Schwartz was a Partner of The Airlie Group, L.P., an
investment fund, the general partner of which was an affiliate of Bass Brothers
Enterprises. Prior to joining Airlie, Mr. Schwartz was employed as a Senior Vice
President of Drexel Burnham Lambert, Inc. Mr. Schwartz also serves as a director
of Worldwide Games Corporation and Thompson Hospitality Corporation and as
Chairman of the Board of Engineered Fibres, Inc. Mr. Schwartz received his MBA
from the Amos Tuck School at Dartmouth College and a bachelors degree from
Vanderbilt University.
F. Andrew Mitchell joined Ranger and the Company as Executive Vice
President and Chief Financial Officer upon the consummation of the Acquisition.
Prior to joining Ranger and the Company, Mr. Mitchell had been the Chief
Financial Officer and a Director of Moovies, Inc. since 1995. From 1991 to 1995
Mr. Mitchell was the Managing Partner of the Greenville, South Carolina office
of KPMG Peat Marwick, LLP and held various positions with KPMG Peat Marwick, LLP
since 1975. Mr. Mitchell is a director of Video Update, Inc. and First Savers
Bank. Mr. Mitchell received a bachelors degree in accounting from the University
of Cincinnati and is a Certified Public Accountant.
Dr. George W. Watts joined Ranger and the Company as Executive Vice
President and Secretary upon the consummation of the Acquisition. Prior to
joining Ranger and the Company, Dr. Watts had been the President of Executive
Vision, a management consulting firm specializing in executive and
organizational
51
<PAGE> 57
development from 1985 to 1994 and 1997 to 1998. From 1994 to 1996, Dr. Watts was
the Executive Vice President of PM Realty Group. Dr. Watts has authored several
books regarding corporate change management and executive development and has
consulted with numerous venture capital companies and major corporations in the
areas of executive assessment, management training, business process
re-engineering, corporate restructuring, marketing program development,
post-merger integration and accelerated growth management. Dr. Watts received a
bachelors, master's and Ph.D. degrees in psychology and education from The
College of William and Mary.
John W. Gassett joined the Company in 1967 and until 1980, served as
Station Manager of the West Palm Beach, Miami and Fort Lauderdale facilities. In
1980, Mr. Gassett was appointed a Director of Sales, in 1988 was named Vice
President--Marketing and Sales and, effective July 1998, was promoted to his
current position. Mr. Gassett attended the University of North Florida and
Pensacola Jr. College.
Paul Jefferson joined the Company in 1996 as Vice President--Europe and,
effective July 1998, was promoted to his current position. Mr. Jefferson is
responsible for all aspects of the Company's business in the United Kingdom and
continental Europe. Mr. Jefferson is also a director of Omni Aircraft Service
GmbH, the Company's joint venture in Germany. From 1992 to 1996, Mr. Jefferson
held the position of Retail Services Manager in France with Eurotunnel and prior
to that Mr. Jefferson was employed with Esso U.K. for 14 years. Mr. Jefferson
received a BSc degree (with Honours) in Business Studies from Queens
University--Belfast.
William McLendon joined the Company in July 1998 as Vice President--Eastern
Operations. Mr. McLendon is responsible for all aspects of the Company's
business in the eastern U.S. Prior to joining the Company, Mr. McLendon was a
General Manager with Stevens Aviation from 1994 to 1996, and from 1991 to 1994,
was employed by ATS Aerospace, Inc., most recently as Vice President,
Operations. From 1981 to 1991 Mr. McLendon served in the United States Air
Force. Mr. McLendon received an engineering degree from the United States Air
Force Academy and bachelors and master's degrees from Oxford University where he
was a Rhodes Scholar.
Ronald F. Pattie joined the Company in 1969 as a field operations officer,
has since served as Director of Maintenance, was appointed as Director of
Technical Services and Quality Assurance in 1983 and, effective July 1998, was
promoted to his current position. Mr. Pattie received a bachelors degree in
Business Administration and Accounting from the University of South Florida.
D. Dana Donovan became a Director of Ranger and the Company upon the
consummation of the Acquisition. Mr. Donovan has been a Senior Investment
Officer at John Hancock Mutual Life Insurance Company since 1990. From 1988 to
1990, Mr. Donovan was a principal with Berwick Capital. From 1985 to 1988, Mr.
Donovan was with Signal Capital's Merchant Banking Group. Mr. Donovan is a
director of Learning Curve International L.L.C. and Mobile Information Systems,
Inc. Mr. Donovan received his MBA from the Amos Tuck School at Dartmouth College
and a bachelors degree from Duke University.
Jay R. Levine became a Director of Ranger and the Company upon the
consummation of the Acquisition. Since 1997, Mr. Levine has served as a Managing
Director of CIBC Oppenheimer Corp. and manages the CIBC Oppenheimer High Yield
Merchant Banking Funds. From 1996 to 1997, Mr. Levine was President of PPMJ,
Inc., a private consulting firm that advised its clients on private equity
investments. From 1990 to 1996, Mr. Levine was a senior executive in the
Morningside and Springfield Group, a private investment company. Mr. Levine is a
director of Consolidated Advisors Limited, L.L.C., Global Crossing, Ltd.,
Heating Oil Partners, L.P. and Evercom, Inc. Mr. Levine received a bachelors
degree from Syracuse University, a JD degree from Tulane University and an LLM
in taxation from New York University.
Edward Levy became a Director of Ranger and the Company upon the
consummation of the Acquisition. Mr. Levy has been a Managing Director of CIBC
Oppenheimer Corp. since 1995. Between 1991 and 1995, Mr. Levy held various
positions at The Argosy Group, L.P., culminating in the position of Managing
Director. Mr. Levy has also held positions in the Mergers and Acquisitions Group
of Drexel Burnham Lambert Incorporated and the Corporate Finance Department of
Kidder, Peabody & Co., Incorporated. Mr. Levy is also a director of Heating Oil
Partners, L.P., Norcross Safety Products, L.L.C., DSMax International, Inc. and
High Voltage Engineering Corporation. Mr. Levy is a graduate of Connecticut
College.
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<PAGE> 58
S. Mark Ray became a Director of Ranger and the Company upon the
consummation of the Acquisition. Mr. Ray has been a Senior Investment Officer at
John Hancock Mutual Life Insurance Company since 1991, where he manages a $2.0
billion transportation portfolio for the Bond and Corporate Finance Group.
Before joining John Hancock Mutual Life Insurance Company in 1978, Mr. Ray was a
United States Air Force pilot candidate, as well as a civilian aviator. Leaving
active duty in 1977, but continuing service with the Air Force Reserves, he
worked on the marketing and operations staff of the Kansas City Southern Railway
Company for a year in Dallas. As an inactive ready-reservist, Mr. Ray achieved
the rank of Captain and in 1987, after completing his service commitment, he
received his Honorable Discharge. Mr. Ray received a bachelors degree from Texas
Tech University in 1975.
COMPENSATION OF DIRECTORS
Generally, the Directors of Ranger and the Company will not be paid for
their services on the Board. Directors are reimbursed for out-of-pocket expenses
incurred in connection with attending Board meetings. The Company has entered
into an agreement with Tioga pursuant to which Tioga will receive a fee during
the period which Mr. Schwartz serves as Chairman of the Board. Mr. Schwartz is
the President of Tioga. See "Certain Transactions--Chairman Agreement."
COMPENSATION OF EXECUTIVE OFFICERS
The compensation of executive officers of the Company will be determined by
the Board of Directors. The following Summary Compensation Table includes
individual compensation information for the former Executive Vice President and
General Manager and each of the four other most highly compensated executive
officers of the Company in fiscal 1997 (collectively, the "Named Executive
Officers") for services rendered in all capacities to the Company during fiscal
1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
---------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION SALARY($) BONUS($) COMPENSATION(A) COMPENSATION($)
--------------------------- --------- -------- --------------- ---------------
<S> <C> <C> <C> <C>
Robert B. Tarman (b)....................... $148,833 $18,200 $ -- $21,336(c)
Former Executive Vice President and General
Manager
Lloyd M. Stauffer, Jr...................... 119,477(d) 18,200 -- 43,831(e)
Senior Vice President--Customer Service
Maurice W. Blauch II (f)................... 112,167 76,900 -- 429(g)
Former Chief Financial Officer
John W. Gassett............................ 106,875 11,500 -- 6,643(h)
Senior Vice President--ASIG North America
David R. Pettit, Jr........................ 93,671(i) 10,700 -- 7,169(j)
Vice President--Human Resources
</TABLE>
- - ---------------
(a) Excludes perquisites and other personal benefits, securities or property
which aggregate the lesser of $50,000 or 10% of the total annual salary and
bonus.
(b) Following consummation of the Acquisition, Mr. Tarman retired.
(c) Includes payments made on behalf of Mr. Tarman of $2,899 for group term life
insurance, $13,479 for moving expenses and $14,734 for financial planning
services.
(d) Does not include $68,815 received by Mr. Stauffer upon the purchase and sale
of 7,528 shares of common stock of Viad pursuant to options to acquire such
stock granted to Mr. Stauffer by Viad.
(e) Includes payments made on behalf of Mr. Stauffer of $3,492 for group term
life insurance and $12,887 for financial planning services and reflects a
contribution of $27,002 made to Viad's Senior Employee Retirement Plan by
Viad on behalf of Mr. Stauffer.
(f) Mr. Blauch resigned as Chief Financial Officer effective April 1997.
(g) Represents payments made on behalf of Mr. Blauch for group term life
insurance.
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<PAGE> 59
(h) Includes payments made on behalf of Mr. Gassett of $1,251 for group term
life insurance and a contribution of $5,392 made to Viad's Senior Employee
Retirement Plan by Viad on behalf of Mr. Gassett.
(i) Does not include $112,347 received by Mr. Pettit upon the purchase and sale
of 13,739 shares of common stock of Viad pursuant to options to acquire
such stock granted to Mr. Pettit by Viad.
(j) Includes payments made on behalf of Mr. Pettit of $1,658 for group term life
insurance and a contribution of $5,512 made to Viad's Senior Employee
Retirement Plan by Viad on behalf of Mr. Pettit.
EMPLOYMENT AGREEMENTS
Messrs. Townes, Mitchell and Watts have each entered into an employment
agreement (each, an "Employment Agreement") with Ranger and the Company. The
Employment Agreements provide for the employment, until March 31, 2001, unless
terminated earlier as provided in the respective Employment Agreement, of (i)
Mr. Townes as the President and Chief Executive Officer; (ii) Mr. Mitchell as
Executive Vice President and Chief Financial Officer and (iii) Mr. Watts as
Executive Vice President. The Employment Agreement of Mr. Townes provides for an
annual base salary of $275,000 and each of the Employment Agreements of Messrs.
Mitchell and Watts provide for an annual base salary of $212,000. In addition,
each Employment Agreement provides: (i) for the base salary to increase based on
the Consumer Price Index; (ii) an annual bonus to be determined by the Board of
Directors of the Company; and (iii) health benefits, life and disability
insurance, participation in the Company's retirement plan(s) and customary
fringe benefits and vacation periods.
Each Employment Agreement may be terminated by the Company at any time with
or without Cause. Each Employment Agreement defines "Cause" to mean any of the
following acts: (i) the commission of a felony or a crime involving moral
turpitude or the commission of any other act or omission involving dishonesty,
disloyalty or fraud with respect to the Company or any of its subsidiaries or
any of their customers or suppliers; (ii) conduct tending to bring the Company
or any of its subsidiaries into substantial public disgrace or disrepute; (iii)
failure to perform duties as reasonably directed by the Board of Directors of
the Company or the Company's president; (iv) gross negligence or willful
misconduct with respect to the Company or any of its subsidiaries; or (v) any
other material breach of the Employment Agreement which is not cured within 15
days after written notice thereof. Messrs. Townes, Mitchell and Watts may also
choose to terminate employment with the Company by reason of a Constructive
Termination. "Constructive Termination" means (i) a reduction of base salary or
(ii) the assigning of any duties inconsistent with duties first described in the
respective Employment Agreement. If the employment of Mr. Townes is terminated
for any reason other than (i) a termination by the Company for Cause or (ii) a
termination by Mr. Townes that is not a Constructive Termination, Mr. Townes
will receive severance compensation equal to 18 months base salary and current
health benefit coverage. If the employment of Messrs. Mitchell or Watts,
respectively, is terminated for any reason other than (i) a termination by the
Company for Cause or (ii) a termination by Mr. Mitchell or Mr. Watts,
respectively, that is not a Constructive Termination, Mr. Mitchell or Mr. Watts,
respectively, will receive 12 months salary if such termination occurs before
December 31, 1998 and will receive 18 months salary if such termination occurs
thereafter, unless such termination is in connection with the refusal by Mr.
Mitchell or Mr. Watts to relocate to the Company's headquarters, in which case
Mr. Mitchell or Mr. Watts will receive nine months salary.
Messrs. Townes and Schwartz have also entered into agreements with Ranger
pursuant to which they, acting directly or indirectly, have purchased Class A
Voting Common Stock of Ranger. See "Certain Transactions--Executive Stock
Agreement" and "--Investor Stock Agreements."
401(K) AND PROFIT SHARING PLAN
The Company has a 401(k) plan (the "401(k) plan") for the benefit of
substantially all of its non-union employees, which is qualified for tax exempt
status by the Internal Revenue Service. Employees can make contributions to the
plan up to the maximum amount allowed by federal tax code regulations.
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<PAGE> 60
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 1,000 shares of
common stock, par value $0.01 per share, of which 100 shares are issued and
outstanding and held of record by Ranger.
The authorized capital stock of Ranger consists of: (i) 2,000,000 shares of
common stock, par value $0.01 per share, of which 1,000,000 shares are
designated Class A Voting Common Stock (the "Class A Common") (35,997.8 shares
are issued and outstanding) and 1,000,000 shares are designated Class B
Non-Voting Common Stock (the "Class B Common") (69,030 shares are issued and
outstanding); and (ii) 200,000 shares of 10.5% Payment-in-Kind Redeemable
Preferred Stock, par value $0.01 per share (the "Preferred Stock" and,
collectively with the Class A Common and the Class B Common, the "Securities")
(6,000 shares are issued and outstanding). The holders of Class A Common have
the right to vote on all matters to be voted on by the stockholders of Ranger.
Each holder of Class A Common is entitled to one vote per share. Except as
otherwise required by law a holder of Class B Common or Preferred Stock does not
have any voting rights with respect thereto. Each share of Class A Common is
convertible at any time into one share of Class B Common and each share of Class
B Common is convertible at any time into one share of Class A Common, in each
case at the option of the holder of such share. Except as described above with
respect to voting rights, the Class A Common is identical to the Class B Common.
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<PAGE> 61
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
All of the equity of the Company is owned by Ranger. The following table
sets forth certain information regarding the beneficial ownership of the equity
securities of Ranger by: (i) each of the Directors and executive officers of
Ranger; (ii) all Directors and executive officers of Ranger as a group; and
(iii) each owner of more than 5% of any class of equity securities of Ranger
("5% Owners"). Ranger currently has 39,997.8 shares of Class A Common, 69,030
shares of Class B Common and 6,000 shares of Preferred Stock issued and
outstanding. Unless otherwise noted, the address for each Director and executive
officer of Ranger is c/o Ranger Aerospace Corporation, 1 Caledon Court,
Greenville, South Carolina 29615-3170.
<TABLE>
<CAPTION>
CLASS A COMMON CLASS B COMMON PREFERRED STOCK
------------------ ---------------- ----------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENT NUMBER PERCENT NUMBER PERCENT
------------------------------------ -------- ------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
DIRECTORS AND EXECUTIVE OFFICERS:
George B. Schwartz (a)...................... 5,964.8 15.91% -- -- -- --
Stephen D. Townes (b)....................... 2,663 7.10 -- -- -- --
Edward Levy (c)............................. 18,370 49.00 12,630 18.30% 4,650 77.50%
D. Dana Donovan (d)......................... -- -- 56,400 81.70 -- --
S. Mark Ray (d)............................. -- -- 56,400 81.70 -- --
Jay R. Levine (c)........................... 18,370 49.00 12,630 18.30 4,650 77.50
All Directors and Officers as a group (6
persons).................................. 26,997.8 72.01 69,030 100.0 4,650 77.50
5% OWNERS:
John Hancock Mutual Life Insurance Company
(e)....................................... -- -- 56,400 81.70 -- --
Canadian Imperial Bank of Commerce (f)...... 18,370 49.00 12,630 18.30 4,650 77.50
Randolph Street Partners II (g)............. 5,000 13.34 -- -- 750 12.50
Gregg L. Engles (h)......................... 4,000 10.67 -- -- 600 10.00
Danielle Schwartz Trust, UAD 10/1/93 (i).... 5,694.8 15.91 -- -- -- --
</TABLE>
- - ---------------
(a) Includes 5,964.8 shares of Class A Common owned by the Danielle Schwartz
Trust, UAD 10/1/93. Mr. Schwartz disclaims beneficial ownership of all such
shares.
(b) Includes 2,663 shares of Class A Common currently being transferred from Mr.
Townes to the Townes Family Trust. Mr. Townes does not have beneficial
ownership in, or control over, the Townes Family Trust.
(c) Includes 18,370 shares of Class A Common, 12,630 shares of Class B Common
and 4,650 shares of Preferred Stock beneficially owned by CIBC. Such person
disclaims beneficial ownership of all such shares. Such person's address is
c/o CIBC Oppenheimer Corp., 425 Lexington Avenue, New York, New York 10017.
(d) Includes 56,400 shares of Class B Common beneficially owned by John Hancock
Mutual Life Insurance Company. Such person disclaims beneficial ownership of
all such shares. Such person's address is c/o John Hancock Mutual Life
Insurance Company, John Hancock Place, Box 111, Boston, Massachusetts 02117.
(e) Such person's address is John Hancock Place, Box 111, Boston, Massachusetts
02117.
(f) Such person's address is 161 Bay Street, 8th Floor, BCE Place; PP Box 500
MSJ 258, Toronto, Canada. Each of Messrs. Jay Bloom, Andrew Heyer and Dean
Kehler (each of whom are Managing Directors of CIBC Oppenheimer Corp.) may
be viewed as sharing beneficial ownership of such shares.
(g) Such person's address is 200 East Randolph Drive, Suite 5400, Chicago,
Illinois 60601.
(h) Such person's address is 3811 Turtle Creek Road, Dallas, Texas 75219
(i) Such person's address is c/o Ranger Aerospace Corporation, 1 Caledon Court,
Greenville, South Carolina 29615-3170.
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<PAGE> 62
CERTAIN TRANSACTIONS
TRANSITION SERVICES AGREEMENT
In connection with the Acquisition, the Company entered into a Transition
Services Agreement (the "Transition Services Agreement") with Viad pursuant to
which (i) Viad agreed to provide certain administrative support and other
services to the Company and (ii) the Company agreed to provide certain
environmental consulting services to Viad. Amounts owed under the Transition
Services Agreement are to be paid monthly in arrears and are determined based
upon the amount of services actually provided thereunder. The Transition
Services Agreement shall terminate December 31, 1998 (or such longer or shorter
period with respect to particular services provided thereunder), unless the
Company or Viad terminate the Transition Services Agreement as of an earlier
date with respect to specific transition services. The Company believes that the
terms of the Transition Services Agreement are at least as favorable to the
Company as those which could be obtained from an unrelated third party.
SECURITYHOLDERS AGREEMENT
Ranger, Hancock and its affiliates, affiliates of CIBC, the Danielle
Schwartz Trust, Mr. Townes, Randolph Street Partners II and Gregg L. Engles have
entered into a Securityholders Agreement (the "Securityholders Agreement"). The
Securityholders Agreement requires that each of the parties thereto vote all of
his or its Ranger voting securities and take all other necessary or desirable
actions to cause the size of the Board of Ranger to be established at six
members and to cause the election to the Board of Ranger of two representatives
designated by Hancock and its affiliates (the "Hancock Designees"), two
representatives designated by such affiliates of CIBC (the "CIBC Designees") and
two executive officers jointly designated by such affiliates of CIBC and Hancock
and its affiliates (the "Executive Directors"). Mr. Schwartz and Mr. Townes will
each serve as an Executive Director, so long as such person is an officer of the
Company and Ranger. Any representative on the Board of Ranger may be removed
from the Board of Ranger only at the request of the party that designated such
representative. The Board of the Company is established by the Board of Ranger,
provided that Mr. Schwartz and Mr. Townes will serve as Directors of the
Company. Mr. Schwartz will serve as Chairman of the Board of Ranger and the
Company. The right of Hancock and its affiliates and such affiliates of CIBC to
designate representatives to the Board of Ranger will terminate at such time as
such party owns less than 50% of the common stock, Preferred Stock and/or PIK
Notes held by such party as of the Acquisition closing date. The right of Mr.
Townes to be elected as a member of the Board of Ranger will terminate at such
time as he owns less than 50% of the shares of common stock purchased under the
Executive Stock Agreement (as defined herein), or earlier in the event he ceases
to be an officer of the Company and Ranger. The right of Mr. Schwartz to be
elected as a member of the Board of Ranger will terminate at such time as the
Danielle Schwartz Trust owns less than 50% of the shares of common stock it
purchased under the Investor Stock Agreement (as defined herein), or earlier in
the event Mr. Schwartz ceases to be Chairman of the Company and Ranger pursuant
to the Chairman Agreement (as defined herein). The provisions of the
Securityholders Agreement relating to the composition of the Board of Ranger
will terminate on the earlier to occur of (i) the tenth anniversary of the
Acquisition unless extended by holders of 75% of the voting securities subject
to the Securityholders Agreement or (ii) upon a Qualified Public Offering (as
defined herein).
In addition to the foregoing, the Securityholders Agreement (i) requires
the holders of securities of Ranger to obtain the prior written consent of
Ranger in some circumstances prior to transferring any securities of Ranger;
(ii) grants in connection with the sale of securities of Ranger certain
preemptive rights with respect to such sale, first to other holders of
securities of Ranger, then to Ranger; (iii) grants the holders of securities of
Ranger certain participation rights in connection with certain transfers made by
other holders of securities of Ranger; and (iv) requires all holders of Ranger
securities who are parties to the Securityholders Agreement to consent to and
participate in a sale of the business of Ranger to an independent third party
(whether by way of a sale of stock, sale of assets, merger, recapitalization or
otherwise) if such sale is approved by such affiliates of CIBC and Hancock and
its affiliates (provided that such affiliates of CIBC and Hancock and its
affiliates each hold not less than 50% of the Ranger securities held by such
party as of the Acquisition closing date) and
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<PAGE> 63
the Board of Ranger. The agreements set forth in (i) to (iii) above terminate
with respect to each security of Ranger upon the earlier of the date on which
such security has been transferred in a public sale or the consummation of a
public offering of $35 million or more of Ranger's equity securities in which
the per share price of the common stock of Ranger is no less than four times its
price as of the date of the Acquisition (a "Qualified Public Offering"). The
agreement set forth in (iv) above terminates with respect to each interest in
Ranger upon the consummation of a Qualified Public Offering.
The Securityholders Agreement also provides that the Preferred Stock and
PIK Notes (as defined herein) issued under the Securities Purchase Agreement
will rank pari passu in the event of any liquidation, dissolution or winding-up
of Ranger, and that holders of PIK Notes will use their reasonable efforts to
provide the holders of Preferred Stock representation on any creditors'
committee established for the benefit of the holders of PIK Notes. A similar
provision is contained in the Share Purchase Agreement (as defined herein).
In addition, without the consent of both the CIBC Designees and the Hancock
Designees, Ranger may not: (i) issue or authorize the issuance of any equity
securities or any securities convertible into equity securities in excess of
2,500 shares of Ranger common stock; (ii) consolidate or merge with, or sell all
of substantially all of its assets to, any other person; (iii) permit any of its
subsidiaries to issue any equity securities to any person other than Ranger or
one of Ranger's direct or indirect wholly-owned subsidiaries; (iv) acquire any
interest in any business for an aggregate consideration in excess of $1.0
million; or (v) amend any provision of Ranger's certificate of incorporation.
RIGHTS AGREEMENT
Ranger, Hancock and its affiliates, affiliates of CIBC, Randolph Street
Partners II, Gregg L. Engles and the Danielle Schwartz Trust have entered into a
Rights Agreement (the "Rights Agreement"). Under the Rights Agreement, the
holders of shares of Ranger common stock originally issued to Hancock and to
affiliates of CIBC have the right at any time, subject to certain conditions, to
require Ranger to register any or all of their common stock in Ranger under the
Securities Act on Form S-1 or Form S-2 (a "Long-Form Registration") on two
occasions and on Form S-3 (a "Short-Form Registration") on unlimited occasions,
and all holders of registrable securities of Ranger have the right to request
that such securities be included in any such Long-Form or Short-Form
Registration, subject to pro rata reductions if required by the managing
underwriter. In addition, all holders of registrable securities of Ranger are
entitled to request the inclusion of such securities in any registration
statement at Ranger's expense whenever Ranger proposes to register any of its
securities under the Securities Act (a "Piggyback Registration"). Ranger shall
pay all registration expenses in connection with each Long-Form, Short-Form and
Piggyback Registration. Holders of registrable securities of Ranger are
prohibited from effecting a public sale of such securities seven days prior to
and 90 days after the effective date of any Long-Form, Short-Form or
underwritten Piggyback Registration. Ranger is prohibited from effecting a
public sale of its equity securities on its own behalf during the seven days
prior to and 120 days after the effective date of any Long-Form, Short-Form or
underwritten Piggyback Registration. In connection with such registrations,
Ranger has agreed to indemnify all holders of registrable securities against
certain liabilities, including liabilities under the Securities Act.
EXECUTIVE STOCK AGREEMENT
Mr. Townes has entered into an Executive Stock Agreement (the "Executive
Stock Agreement") with Ranger pursuant to which Mr. Townes purchased 2,663
shares of Class A Common at a price of $100 per share and such stock was paid
for with a promissory note. This promissory note is secured by a pledge of all
of shares of Class A Common purchased by Mr. Townes under the Executive Stock
Agreement and is recourse to Mr. Townes for 25% of the original principal amount
of and accrued interest under the promissory note. All of the stock purchased by
Mr. Townes is subject to vesting and becomes fully vested on April 3, 2001,
which vesting accelerates upon: (i) a sale of Ranger; (ii) a Qualified Public
Offering; (iii) the "constructive termination" of Mr. Townes' employment; or
(iv) the termination of Mr. Townes' employment without "Cause." In the event of
a termination of Mr. Townes' employment for any reason, the stock in Ranger held
by Mr. Townes or his successors and assigns shall be subject to repurchase by
Ranger. In the event of the termination of Mr. Townes' employment for a reason
other than: (i) death or disability;
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(ii) a termination by the Company for "Cause"; or (iii) a termination by Mr.
Townes that is not a "constructive termination," Mr. Townes may require Ranger
to repurchase the interests Mr. Townes holds therein. In addition, Mr. Townes
may not transfer the interests he holds in Ranger without the consent of the
Board of Ranger or pursuant to the Securityholders Agreement. See
"--Securityholders Agreement."
INVESTOR STOCK AGREEMENT
The Danielle Schwartz Trust has entered into an Investor Stock Agreement
(the "Investor Stock Agreement") with Ranger pursuant to which it purchased
Class A Common at a price of $100 per share and such stock was paid for with a
promissory note. This promissory note is secured by a pledge of all of the
shares of Class A Common purchased under the Investor Stock Agreement and is
recourse to the Danielle Schwartz Trust for 25% of the original principal amount
of and accrued interest under the promissory note. Under the Investor Stock
Agreement, in the event that Mr. Schwartz is terminated for "Cause" as Chairman
(as such terms are defined in the Chairman Agreement), Ranger shall have the
option to repurchase all of the interests in Ranger held by the Danielle
Schwartz Trust. In addition, the Danielle Schwartz Trust may not transfer the
interests it holds in Ranger without the consent of the Board of Ranger or
pursuant to the Securityholders Agreement. See "--Securityholders Agreement."
CHAIRMAN AGREEMENT
Tioga, Ranger, the Company and Mr. Schwartz have entered into a Chairman
Agreement (the "Chairman Agreement") pursuant to which Mr. Schwartz will serve
as the Chairman of Ranger and the Company until April 2, 2001 (such period will
be automatically extended for additional terms of one year unless the Board of
Ranger takes action to terminate such extension), unless terminated earlier as
provided in the Chairman Agreement. The Chairman Agreement provides that Tioga
will receive a $150,000 annual base fee (subject to annual increases based on
the consumer price index) and that Mr. Schwartz will receive health benefits and
life and disability insurance. In addition, Tioga will receive a bonus of
$1,350,000 if the Company satisfies certain market value and liquidity
requirements in connection with a sale of the business of Ranger or the Company
or a public offering of equity securities of Ranger. The Company believes that
the terms of the Chairman Agreement are at least as favorable to the Company as
those which could be obtained from an unrelated party.
Noncompetition provisions of the Chairman Agreement prevent Mr. Schwartz
from engaging in any business in competition with the Company for a period of 18
months after any termination or for 12 months after termination as director
without Cause in countries where the Company conducts business as of the date of
such termination.
Mr. Schwartz may be terminated as the Chairman at any time with or without
Cause. The Chairman Agreement defines "Cause" to mean any of the following acts:
(i) the commission of a felony or a crime involving moral turpitude (as
determined by the Board of the Company in its good faith judgment) or any
indictment for a felony or crime involving moral turpitude; (ii) the commission
of any other act or omission involving dishonesty, disloyalty or fraud with
respect to Ranger or any of its subsidiaries or any of their customers or
suppliers; (iii) conduct tending to bring Ranger or any of its subsidiaries into
substantial public disgrace or disrepute; (iv) failure to perform duties as
reasonably directed by the Board of Ranger which failure is not cured within 15
days after written notice thereof; (v) gross negligence or willful misconduct
with respect to Ranger or any of its subsidiaries; or (vi) any other material
breach of the Chairman Agreement which is not cured within 15 days after written
notice thereof. If Mr. Schwartz is terminated as the Chairman for any reason
other than for Cause, Tioga will receive the base fee for one year thereafter.
FEE LETTER
In connection with the Acquisition, the Company paid Tioga the sum of
$850,000 pursuant to a certain fee letter in consideration for services rendered
by Tioga to the Company and Ranger. Mr. Schwartz is the president of Tioga. In
consideration for such payment, the Company and Ranger on one hand, and Tioga
and Mr. Schwartz on the other, along with certain other parties, agreed to
release each other from any claims,
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liabilities or obligations not arising from gross negligence or willful
misconduct with respect to the consummation of the Acquisition.
SHARE PURCHASE AGREEMENT
Pursuant to a Share Purchase Agreement (the "Share Purchase Agreement"),
Viad and Viad Service Companies, Limited, a United Kingdom limited liability
company (together with Viad, the "Sellers") agreed to sell all of the issued and
outstanding shares of capital stock or other equity interests of the entities
which comprised the ASIG business to Ranger. The purchase price for such equity
interests was $95 million, subject to a post-closing purchase price adjustment
in favor of the Company for any shortfall in the net asset value, net working
capital or required cash (as such terms are defined in the Share Purchase
Agreement) of the ASIG business from the levels represented at the closing of
the Acquisition. The purchase price is also subject to adjustment in favor of
Viad in an amount equal to the amount of cash in the ASIG business at the
closing of the Acquisition in excess of the Required Cash.
The Share Purchase Agreement contained customary representations and
warranties, covenants, agreements and acknowledgments made by the parties
thereto, including a covenant to make the 338(h)(10) election. The Sellers also
agreed to indemnify Ranger with respect to the breach of certain representations
and warranties and covenants. Such indemnification was limited to not more than
a gross aggregate amount of $10.0 million. The indemnification obligations with
respect to breaches of representations and warranties will survive until the
second anniversary of the closing of the Acquisition and may be extended to the
extent that Ranger provides notice to the Sellers of an indemnifiable claim
prior to such time. Under the terms of the Share Purchase Agreement, the
obligations of the Sellers with respect to such indemnification terminate if
Ranger fails to give notice of an indemnifiable claim to the Seller prior to the
fifth anniversary of the closing of the Share Purchase Agreement.
Prior to the closing of the Acquisition, the Share Purchase Agreement was
amended by the Sellers and Ranger (the "Amendment"). In addition to certain
other matters addressed in the Amendment, Ranger assigned all of its rights and
obligations under the Share Purchase Agreement to the Company, with the
exception of its rights to acquire Aircraft Service, Ltd., a United Kingdom
limited liability company, which it assigned to ASIG Europe Ltd., a United
Kingdom limited liability company.
NONCOMPETITION AGREEMENT
The Sellers, Greyhound Dobbs Incorporated, a Delaware corporation
("Dobbs"), Ranger and the Company entered a noncompetition agreement (the
"Noncompetition Agreement"). Under the Noncompetition Agreement, each of the
Sellers and Dobbs covenanted and agreed that it would not, in any geographical
location anywhere in the world, engage directly or indirectly, in any activity
which is competitive with the Company's business as of the date of the
Acquisition. In addition, each of Ranger and the Company covenanted and agreed
that it would not, in any geographical location anywhere in the world, engage
directly or indirectly, in the business of preparing and providing food and
beverage services for airline passengers, airline crews, support personnel and
airport personnel. The noncompetition restrictions above terminate upon the
earlier of: (i) the date three years following the date of the Acquisition and
(ii) for restrictions that apply to Dobbs, Ranger and the Company, upon (a) the
Sellers' sale of any of the capital shares of Dobbs resulting in a divestiture
of control, (b) the sale of Ranger, (c) the sale by Ranger of any of the capital
shares of the entities comprising the ASIG business resulting in a divestiture
of control, or (d) the sale by Ranger or Dobbs of capital shares or
substantially all of the assets of any subsidiary, in which event such
restrictions shall terminate only with respect to the subsidiary being sold.
SECURITIES PURCHASE AGREEMENT
Pursuant to the Securities Purchase Agreement, Ranger authorized the
issuance and sale of the following securities: (i) $8,460,000 in aggregate
principal amount of 10.5% payment-in-kind notes (the "PIK Notes"); (ii) 6,000
shares of Preferred Stock; (iii) 29,862 shares of Class A Common; and (iv)
66,718 shares of Class B Common. Subject to the terms of the Securities Purchase
Agreement, Ranger agreed to sell, and Hancock,
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affiliates of CIBC, Randolph Street Partners II and Gregg L. Engles
(collectively, the "Purchasers") agreed to purchase, the Securities.
The Securities Purchase Agreement contained customary provisions for such
agreements, including representations and warranties and affirmative covenants.
The Securities Purchase Agreement also granted the Purchasers the right to
purchase their pro rata share of any future issuances of Ranger common equity or
convertible securities other than in connection with certain public offerings.
The Securities Purchase Agreement also provided that the PIK Notes would have a
scheduled repayment date of March 31, 2010, and that Ranger may optionally repay
the PIK Notes before this date provided that Ranger also redeems the Preferred
Stock.
RELATIONSHIP WITH VIAD
In fiscal 1996 and 1997, the Company transferred approximately $10.2
million and $12.8 million, respectively, of accounts receivable to Viad and was
charged a financing charge by Viad of approximately $0.5 million in 1996 and
$0.6 million in 1997 for the transferred receivables. In addition, prior to the
Acquisition, Viad allocated certain income and expenses to the Company. For a
description of such allocations see Note 3 to the Company's audited financial
statements which appear elsewhere in this Prospectus.
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DESCRIPTION OF SENIOR CREDIT FACILITY
The Company has entered into a Senior Credit Facility (the "Senior Credit
Facility") with Key Corporate Capital, Inc. (the "Lender"), which provides for
Revolving Loans (as defined in the Senior Credit Facility) and Letters of Credit
(as defined in the Senior Credit Facility) in the aggregate amount of up to the
lesser of $10.0 million or the Borrowing Base (the "Revolving Credit
Commitment"). The Borrowing Base is equal to eighty-five percent (85%) of the
amount due and owing on Eligible Accounts Receivable (as defined in the Senior
Credit Facility). The Revolving Loans under the Senior Credit Facility will
mature on August 31, 2002 or sooner as provided in the Senior Credit Facility.
Indebtedness of the Company under the Senior Credit Facility will be
guaranteed by each of the Company's domestic subsidiaries and will generally be
secured by: (i) all of the Company's cash equivalents, accounts receivable,
contract rights, general intangibles, instruments and chattel paper relating
thereto; (ii) all of the Company's inventory; (iii) amounts (if any) held in a
commercial deposit account with the Lender; and (iv) all proceeds from (i) to
(iii) inclusive.
The Company's borrowings under the Revolving Loans will bear interest at a
floating rate and may be maintained as Prime Rate Loans or LIBOR Loans (each as
defined in the Senior Credit Facility). Borrowings made pursuant to the Prime
Rate Loans bear interest rates equal to the prime rate plus the Applicable
Margin (as defined in the Senior Credit Facility) and borrowings made pursuant
to the LIBOR Loans bear interest rates equal to the LIBOR rate plus the
Applicable Margin. The Applicable Margin for Prime Rate loans will be 0% through
June 1999 and thereafter will range from 0% to 0.50% based on the Company's
Leverage Ratio (as defined in the Senior Credit Agreement). The Applicable
Margin for LIBOR Loans will be 1.75% through June 1999 and thereafter will range
from 1.25% to 2.25% based on the Company's Leverage Ratio.
The Lender will issue Letters of Credit as the Company may from time to
time request; provided that the Lender will not be obligated to issue a Letter
of Credit if, after giving effect thereto, the aggregate undrawn face amount of
all issued and outstanding Letters of Credit (i) would exceed $2 million or (ii)
when added to the aggregate outstanding principal amount of Revolving Loans,
would exceed the Revolving Credit Commitment. For each Letter of Credit, the
Company will agree to pay the Lender a non-refundable commission equal to the
face amount of the Letter of Credit multiplied by the Applicable Margin for
LIBOR Loans, payable quarterly in arrears.
Amounts borrowed under the Senior Credit Facility may be prepaid and
reborrowed. Prepayments of Prime Rate Loans shall be without premium or penalty.
Prepayments of LIBOR Loans shall be without premium or penalty if prepaid at the
end of the applicable Interest Period (as defined in the Senior Credit
Facility). Prepayment of LIBOR Loans prior to the end of the applicable Interest
Period obligates the Company to pay a prepayment fee determined as set forth in
the Senior Credit Facility.
The Company is obligated to pay the Lender a commitment fee for providing
the Senior Credit Facility equal to one-half percent (0.50%) per annum
multiplied by $10.0 million less (i) the average daily outstanding principal
amount of the Revolving Loans less (ii) the average daily amount of all issued
and outstanding Letters of Credit, payable monthly in arrears on May 1, 1998 and
on the first day of each month thereafter. In addition, the Company is obligated
to pay the Lender an account administration fee equal to $10,000 per year.
The Senior Credit Facility requires the Company to meet certain financial
tests, including, without limitation, minimum interest coverage and maximum
leverage ratios. The Senior Credit Facility also contains certain covenants,
which among other things, will limit the incurrence of additional indebtedness,
the making of loans or investments, the declaration of dividends, transactions
with affiliates, asset sales, acquisitions, mergers and consolidations, the
incurrence of liens and encumbrances and other matters customarily restricted in
such agreements.
The Senior Credit Facility contains customary events of default, including
without limitation, payment defaults, breaches of representations and
warranties, covenant defaults, cross-defaults to certain other indebtedness,
certain events of bankruptcy and insolvency, judgment defaults, failure of any
guaranty or security document supporting the Senior Credit Facility to be in
full force and effect and a change of control of the Company.
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THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were originally sold by the Company on August 18, 1998 to the
Initial Purchaser pursuant to the Purchase Agreement. The Initial Purchaser
subsequently resold the Old Notes to qualified institutional buyers in reliance
on Rule 144A under the Securities Act and to qualified buyers outside the United
States in Reliance upon Regulation S under the Securities Act. As a condition of
the Purchase Agreement, the Company entered into an Exchange Offer Registration
Rights Agreement with the Initial Purchaser pursuant to which the Company has
agreed, for the benefit of the holders of the Old Notes, at the Company's cost,
to use its reasonable best efforts to (i) file the Exchange Offer Registration
Statement within 60 days after the date of the original issuance of the Old
Notes with the Commission with respect to the Exchange Offer for the Exchange
Notes; (ii) use its best efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act within 150 days
after the date of the original issuance of the Old Notes and (iii) use its best
efforts to consummate the Exchange Offer within 180 days after the date of the
original issuance of the Old Notes. Upon the Exchange Offer Registration
Statement being declared effective, the Company will offer the Exchange Notes in
exchange for surrender of the Old Notes. The Company will keep the Exchange
Offer open for not less than 30 days (or longer if required by applicable law)
after the date on which notice of the Exchange Offer is mailed to the holders of
the Old Notes. For each Old Note surrendered to the Company pursuant to the
Exchange Offer, the holder of such Old Note will receive an Exchange Note having
a principal amount equal to that of the surrendered Old Note. Interest on each
Old Note will accrue from the last interest payment date on which interest was
paid on the Old Note surrendered in exchange therefor or, if no interest has
been paid on such Old Note, from the date of its original issue. Interest on
each Exchange Note will accrue from the date of its original issue.
Under existing interpretations of the staff of the Commission contained in
several no-action letters to third parties, the Exchange Notes will in general
be freely tradeable after the Exchange Offer without further registration under
the Securities Act. However, any purchaser of Old Notes who is an "affiliate" of
the Company or who intends to participate in the Exchange Offer for the purpose
of distributing the Exchange Notes (i) will not be able to rely on the
interpretation of the staff of the Commission, (ii) will not be able to tender
its Old Notes in the Exchange Offer and (iii) must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with
any sale or transfer of the Old Notes, unless such sale or transfer is made
pursuant to an exemption from such requirements.
As contemplated by these no-action letters and the Exchange Offer
Registration Rights Agreement, each holder accepting the Exchange Offer is
required to represent to the Company in the Letter of Transmittal that (i) the
Exchange Notes are to be acquired by the holder or the person receiving such
Exchange Notes, whether or not such person is the holder, in the ordinary course
of business, (ii) the holder or any such other person (other than a
broker-dealer referred to in the next sentence) is not engaging and does not
intend to engage, in distribution of the Exchange Notes, (iii) the holder or any
such other person has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iv) neither the holder
nor any such other person is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act, and (v) the holder or any such other person
acknowledges that if such holder or any other person participates in the
Exchange Offer for the purpose of distributing the Exchange Notes it must comply
with the registration and prospectus delivery requirements of the Securities Act
in connection with any resale of the Exchange Notes and cannot rely on those
no-action letters. As indicated above, each Participating Broker-Dealer that
receives an Exchange Note for its own account in exchange for Old Notes must
acknowledge that it (i) acquired the Old Notes for its own account as a result
of market-making activities or other trading activities, (ii) has not entered
into any arrangement or understanding with the Company or any "affiliate" of the
Company (within the meaning of Rule 405 under the Securities Act) to distribute
the Exchange Notes to be received in the Exchange Offer and (iii) will deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes. For a description of the procedures for resales
by Participant Broker-Dealers, see "Plan of Distribution."
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In the event that changes in the law or the applicable interpretations of
the staff of the Commission do not permit the Company to effect such an Exchange
Offer, or if for any other reason the Exchange Offer is not consummated within
180 days of the date of the original issuance of the Old Notes, the Company will
(i) file the Shelf Registration Statement covering resales of the Old Notes;
(ii) use its reasonable best efforts to cause the Shelf Registration Statement
to be declared effective under the Securities Act and (iii) use its reasonable
best efforts to keep effective the Shelf Registration Statement until the
earlier of two years after its effective date and such time as all of the
applicable Notes have been sold thereunder. The Company will, in the event of
the filing of the Shelf Registration Statement, provide to each applicable
holder of the Old Notes copies of the prospectus which is a part of the Shelf
Registration Statement, notify each such holder when the Shelf Registration
Statement has become effective and take certain other actions as are required to
permit unrestricted resale of the Old Notes. A holder of the Old Notes that
sells such Old Notes pursuant to the Shelf Registration Statement generally will
be required to be named as a selling security holder in the related prospectus
and to deliver a prospectus to purchasers, will be subject to certain of the
civil liability provisions under the Securities Act in connection with such
sales and will be bound by the provisions of the Exchange Offer Registration
Rights Agreement which are applicable to such a holder (including certain
indemnification obligations). In addition, each holder of the Old Notes will be
required to deliver information to be used in connection with the Shelf
Registration Statement and to provide comments on the Shelf Registration
Statement within the time periods set forth in the Exchange Offer Registration
Rights Agreement in order to have their Old Notes included in the Shelf
Registration Statement and to benefit from the provisions set forth in the
following paragraph.
Although the Company intends to file one of the registration statements
described above, there can be no assurance that such registration statement will
be filed or, if filed, that it will become effective. If the Company fails to
comply with the above provisions or if such registration statement fails to
become effective, then, as liquidated damages, additional interest shall become
payable in respect of the Notes as follows:
If (i) the Exchange Offer Registration Statement or Shelf Registration
Statement is not filed within 60 days after the Issue Date;
(ii) an Exchange Offer Registration Statement or Shelf Registration
Statement is not declared effective within 150 days after the Issue Date;
and
(iii) either (A) the Company has not exchanged the Exchange Notes for
all Old Notes validly tendered in accordance with the terms of the Exchange
Offer on or prior to 180 days after the Issue Date or (B) the Exchange
Offer Registration Statement ceases to be effective at any time prior to
the time that the Exchange Offer is consummated or (C) if applicable, the
Shelf Registration Statement has been declared effective and such Shelf
Registration Statement ceases to be effective at any time prior to the
second anniversary of its effective date;
(each of such events referred to in clauses (i) through (iii) above is a
"Registration Default"), the sole remedy available to holders of the Old Notes
will be the immediate assessment of additional interest ("Additional Interest")
as follows: the per annum interest rate on the Old Notes will increase by 0.5%
during the first 90-day period following the occurrence of a Registration
Default and the per annum interest rate will increase by an additional 0.25% for
each subsequent 90-day period during which the Registration Default remains
uncured, up to a maximum additional interest rate of 2.0% per annum in excess of
the interest rate on the cover of this Prospectus. All Additional Interest will
be payable to holders of the Old Notes in cash on the same original interest
payment dates as the Old Notes, commencing with the first such date occurring
after any such Additional Interest commences to accrue, until such Registration
Default is cured. After the date on which such Registration Default is cured,
the interest rate on the Old Notes will revert to the interest rate originally
borne by the Old Notes (as shown on the cover of this Prospectus).
If the Exchange Offer is made and the Initial Purchaser continues to hold
Old Notes, the Initial Purchaser may exchange Old Notes for other notes
identical to the Exchange Notes except for transfer restrictions ("Private
Exchange Notes"). If it receives Private Exchange Notes, the Initial Purchaser
thereafter will have the right for a period after consummation of the Exchange
Offer to request the Company to file a shelf registration statement covering the
Private Exchange Notes. If such requested shelf registration
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is not filed or does not become effective by the times provided in the Exchange
Offer Registration Rights Agreement, the interest rate on the Private Exchange
Notes will increase as provided above until such time as it does become
effective.
The summary herein of the Exchange Offer Registration Rights Agreement only
summarizes the material terms thereof and is qualified in its entirety by
reference to all the provisions of the Exchange Offer Registration Rights
Agreement, a copy of which will be available upon request to the Company.
Following the consummation of the Exchange Offer, holders of the Old Notes
who were eligible to participate in the Exchange Offer but who did not tender
their Old Notes will not have any further registration rights and such Old Notes
will continue to be subject to certain restrictions on transfer. Accordingly,
the liquidity of the market for such Old Notes could be adversely affected.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of Exchange
Notes in exchange for each $1,000 principal amount of outstanding Old Notes
accepted in the Exchange Offer. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the Exchange Notes are the same as the form and terms
of the Old Notes except that (i) the Exchange Notes bear a different CUSIP
Number from the Old Notes, (ii) the Exchange Notes have been registered under
the Securities Act and hence will not bear legends restricting the transfer
thereof and (iii) the holders of the Exchange Notes will not be entitled to
certain rights under the Exchange Offer Registration Rights Agreement, including
the provisions providing for an increase in the interest rate on the Old Notes
in certain circumstances relating to the timing of the Exchange Offer, all of
which rights will terminate when the Exchange Offer is consummated. The Exchange
Notes will evidence the same debt as the Old Notes and will be entitled to the
benefits of the Indenture.
As of the date of this Prospectus, $80,000,000 aggregate principal amount
of Old Notes were outstanding. The Company has fixed the close of business on
, 1998 as the record date for the Exchange Offer for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially.
Holders of Old Notes do not have any appraisal or dissenters' rights under
the General Corporation Law of Delaware, or the Indenture in connection with the
Exchange Offer. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the Exchange Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, the certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than transfer taxes in certain circumstances, in connection with the
Exchange Offer. See "--Fees and Expenses."
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EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. The Company will keep the
Exchange Offer open for not less than 30 days (or longer if required by
applicable law) after the date on which notice of the Exchange Offer is mailed
to holders of the Old Notes. As a result of the requirements set forth in the
Exchange Offer Registration Statement, the Company believes that it is unlikely
that it would extend the Exchange Offer beyond 45 days after such notice is
mailed to the holders of the Old Notes.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will mail to the registered
holders an announcement thereof, each prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled expiration date.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, to extend the Exchange Offer or to terminate the
Exchange Offer if any of the conditions set forth below under "--Conditions"
shall not have been satisfied, by giving oral or written notice of such delay,
extension or termination to the Exchange Agent or (ii) to amend the terms of the
Exchange Offer in any manner. Any such delay in acceptance, extension,
termination or amendment will be followed as promptly as practicable by oral or
written notice thereof to the registered holders.
INTEREST ON THE EXCHANGE NOTES
The Exchange Notes will bear interest from their date of issuance. Holders
of Old Notes that are accepted for exchange will receive, in cash, accrued
interest thereon to, but not including, the date of issuance of the Exchange
Notes. Such interest will be paid with the first interest payment on the
Exchange Notes on February 15, 1999. Interest on the Old Notes accepted for
exchange will cease to accrue upon issuance of the Exchange Notes.
Interest on the Exchange Notes is payable semi-annually on each February 15
and August 15 commencing on February 15, 1999.
PROCEDURES FOR TENDERING
Only a holder of Old Notes may tender such Old Notes in the Exchange Offer.
To tender in the Exchange Offer, a holder must complete, sign and date the
Letter of Transmittal, or a facsimile thereof, have the signatures thereon
guaranteed if required by the Letter of Transmittal or submit an Agent's Message
in connection with a book-entry transfer, and mail or otherwise deliver such
Letter of Transmittal or such facsimile, together with the Old Notes and any
other required documents, to the Exchange Agent prior to 5:00 p.m., New York
City time, on the Expiration Date. To be tendered effectively, the Old Notes,
Letter of Transmittal or Agent's Message and other required documents must be
completed and received by the Exchange Agent at the address set forth below
under "Exchange Agent" prior to 5:00 p.m., New York City time, on the Expiration
Date. Delivery of the Old Notes may be made by book-entry transfer in accordance
with the procedures described below. Confirmation of such book-entry transfer
must be received by the Exchange Agent prior to the Expiration Date.
The term "Agent's Message" means a message, transmitted by a book-entry
transfer facility to, and received by, the Exchange Agent forming a part of a
confirmation of a book-entry, which states that such book-entry transfer
facility has received an express acknowledgment from the participant in such
book-entry transfer facility tendering the Old Notes that such participant has
received and agrees: (i) to participate in the Automated Tender Option Program
("ATOP"); (ii) to be bound by the terms of the Letter of Transmittal; and (iii)
that the Company may enforce such agreement against such participant.
By executing the Letter of Transmittal or Agent's Message, each holder will
make to the Company the representations set forth above in the third paragraph
under the heading "--Purpose and Effect of the Exchange Offer."
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The tender by a holder and the acceptance thereof by the Company will
constitute agreement between such holder and the Company in accordance with the
terms and subject to the conditions set forth herein and in the Letter of
Transmittal or Agent's Message.
THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND SOLE RISK
OF THE HOLDER. AS AN ALTERNATIVE TO DELIVERY BY MAIL, HOLDERS MAY WISH TO
CONSIDER OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME
SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION
DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY.
HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS, TRUST
COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender should contact the registered holder promptly and instruct such
registered holder to tender on such beneficial owner's behalf. See "Instructions
to Registered Holder and/or Book-Entry Transfer Facility Participant from
Beneficial Owner" included with the Letter of Transmittal.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration
Instructions" or "Special Delivery Instructions" on the Letter of Transmittal or
(ii) for the account of an Eligible Institution. In the event that signatures on
a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantee must be by a member firm of the
Medallion System (an "Eligible Institution").
If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by such
registered holder as such registered holder's name appears on such Old Notes
with the signature thereon guaranteed by an Eligible Institution.
If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, offices of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal.
The Company understands that the Exchange Agent will make a request
promptly after the date of this Prospectus to establish accounts with respect to
the Old Notes at the book-entry transfer facility, The Depository Trust Company
(the "Book-Entry Transfer Facility"), for the purpose of facilitating the
Exchange Offer, and subject to the establishment thereof, any financial
institution that is a participant in the Book-Entry Transfer Facility's system
may make book-entry delivery of Old Notes by causing such Book-Entry Transfer
Facility to transfer such Old Notes into the Exchange Agent's account with
respect to the Old Notes in accordance with the Book-Entry Transfer Facility's
procedures for such transfer. Although delivery of the Old Notes may be effected
through book-entry transfer into the Exchange Agent's account at the Book-Entry
Transfer Facility unless an Agent's Message is received by the Exchange Agent in
compliance with ATOP, an appropriate Letter of Transmittal properly completed
and duly executed with any required signature guarantee and all other required
documents must in each case be transmitted to and received or confirmed by the
Exchange Agent at its address set forth below on or prior to the Expiration
Date, or, if the guaranteed delivery procedures described below are complied
with, within the time period provided under such procedures. Delivery of
documents to the Book-Entry Transfer Facility does not constitute delivery to
the Exchange Agent.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which
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<PAGE> 73
determination will be final and binding. The Company reserves the absolute right
to reject any and all Old Notes not properly tendered or any Old Notes the
Company's acceptance of which would, in the opinion of counsel for the Company,
be unlawful. The Company also reserves the right in their sole discretion to
waive any defects, irregularities or conditions of tender as to particular Old
Notes. The Company's interpretation of the terms and conditions of the Exchange
Offer (including the instructions in the Letter of Transmittal) will be final
and binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as the
Company shall determine. Although the Company intends to notify holders of
defects or irregularities with respect to tenders of Old Notes, neither the
Company, the Exchange Agent nor any other person shall incur any liability for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Old Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering holders, unless otherwise
provided in the Letter of Transmittal, as soon as practicable following the
Expiration Date.
GUARANTEED DELIVERY PROCEDURES
Holders who wish to tender their Old Notes and (i) whose Old Notes are not
immediately available, (ii) who cannot deliver their Old Notes, the Letter of
Transmittal or any other required documents to the Exchange Agent or (iii) who
cannot complete the procedures for book-entry transfer, prior to the Expiration
Date, may effect a tender if:
(a) the tender is made through an Eligible Institution;
(b) prior to the Expiration Date, the Exchange Agent receives from
such Eligible Institution a properly completed and duly executed Notice of
Guaranteed Delivery (by facsimile transmission, mail or hand delivery)
setting forth the name and address of the holder, the certificate number(s)
of such Old Notes and the principal amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that, within three
New York Stock Exchange trading days after the Expiration Date, the Letter
of Transmittal (or facsimile thereof) (or, in the case of a book-entry
transfer, an Agent's Message) together with the certificate(s) representing
the Old Notes (or a confirmation of book-entry transfer of such Notes into
the Exchange Agent's account at the Book-Entry Transfer Facility), and any
other documents required by the Letter of Transmittal will be deposited by
the Eligible Institution with the Exchange Agent; and
(c) such properly completed and executed Letter of Transmittal (of
facsimile thereof), as well as the certificate(s) representing all tendered
Old Notes in proper form for transfer (or a confirmation of book-entry
transfer of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility), together with a Letter of Transmittal (or
facsimile thereof), properly completed and duly executed, with any required
signature guarantees (or, in the case of a book-entry transfer, an Agent's
Message) and all other documents required by the Letter of Transmittal are
received by the Exchange Agent upon three New York Stock Exchange trading
days after the Expiration Date.
WITHDRAWAL OF TENDERS
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a telegram, telex,
letter or facsimile transmission notice of withdrawal must be received by the
Exchange Agent at its address set forth herein prior to 5:00 p.m., New York City
time, on the Expiration Date. Any such notice of withdrawal must (i) specify the
name of the person having deposited the Old Notes to be withdrawn (the
"Depositor"), (ii) identify the Old Notes to be withdrawn (including the
certificate number(s) and principal amount of such Old Notes, or, in the case of
Old Notes transferred by book-entry transfer, the name and number of the account
at the Book-Entry Transfer Facility to be credited), (iii) be signed by the
holder in the same manner as the original signature on the Letter of Transmittal
by which such Old Notes were tendered (including any required
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<PAGE> 74
signature guarantees) or be accompanied by documents of transfer sufficient to
have the Trustee with respect to the Old Notes register the transfer of such Old
Notes into the name of the person withdrawing the tender and (iv) specify the
name in which any such Old Notes are to be registered, if different from that of
the Depositor. All questions as to the validity, form and eligibility (including
time of receipt) of such notices will be determined by the Company, whose
determination shall be final and binding on all parties. Any Old Notes so
withdrawn will be deemed not to have been validly tendered for purposes of the
Exchange Offer and no Exchange Notes will be issued with respect thereto unless
the Old Notes so withdrawn are validly retendered. Any Old Notes which have been
tendered but which are not accepted for exchange will be returned to the holder
thereof without cost to such holder as soon as practicable after withdrawal,
rejection of tender or termination of the Exchange Offer. Properly withdrawn Old
Notes may be retendered by following one of the procedures described above under
"--Procedures for Tendering" at any time prior to the Expiration Date.
CONDITIONS
Notwithstanding any other term of the Exchange Offer, the Company shall not
be required to accept for exchange, or exchange Exchange Notes for, any Old
Notes, and may terminate or amend the Exchange Offer as provided herein before
the acceptance of such Old Notes, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in the sole judgment of the Company, might materially impair the
ability of the Company to proceed with the Exchange Offer or any material
adverse development has occurred in any existing action or proceeding with
respect to the Company or any of its subsidiaries; or
(b) any law, statute, rule, regulation or interpretation by the staff
of the Commission is proposed, adopted or enacted, which, in the sole
judgment of the Company, might materially impair the ability of the Company
to proceed with the Exchange Offer or materially impair the contemplated
benefits of the Exchange Offer to the Company; or
(c) any governmental approval has not been obtained, which approval
the Company shall, in its sole discretion, deem necessary for the
consummation of the Exchange Offer as contemplated hereby.
If the Company determines in its sole discretion that any of the conditions
are not satisfied, the Company may (i) refuse to accept any Old Notes and return
all tendered Old Notes to the tendering holders, (ii) extend the Exchange Offer
and retain all Old Notes tendered prior to the expiration of the Exchange Offer,
subject, however, to the rights of holders to withdraw such Old Notes (see
"--Withdrawal of Tenders") or (iii) waive such unsatisfied conditions with
respect to the Exchange Offer and accept all properly tendered Old Notes which
have not been withdrawn.
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EXCHANGE AGENT
State Street Bank and Trust Company has been appointed as Exchange Agent
for the exchange of Exchange Notes for Old Notes pursuant to the Exchange Offer.
Questions and requests for assistance, requests for additional copies of this
Prospectus or of the Letter of Transmittal and requests for Notice of Guaranteed
Delivery should be directed to the Exchange Agent addressed as follows:
<TABLE>
<S> <C>
By Mail: Overnight Courier:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box 778 Two International Place
Boston, Massachusetts 02110 Boston, Massachusetts 02110
Attention: Attention:
By Hand in New York (as Drop Agent): By Hand in Boston:
State Street Bank and Trust Company, N.A. State Street Bank and Trust Company
61 Broadway Two International Place
Concourse Level, Corporate Trust Window Fourth Floor, Corporate Trust Department
New York, New York 10006 Boston, Massachusetts 02110
Facsimile Transmission: Confirm by Telephone:
(For Eligible Institutions Only) (617) 664-5314
(617) 664-5290
</TABLE>
DELIVERY TO AN ADDRESS OTHER THAN SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
FEES AND EXPENSES
The expenses of soliciting tenders will be borne by the Company. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telegraph, telecopy, telephone or in person by officers and
regular employees of the Company and its affiliates.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by the Company. Such expenses include fees and expenses of the Exchange
Agent and Trustee, accounting and legal fees and printing costs, among others.
ACCOUNTING TREATMENT
The Exchange Notes will be recorded at the same carrying value as the Old
Notes, which is face value, as reflected in the Company's accounting records on
the date of exchange. Accordingly, no gain or loss for accounting purposes will
be recognized by the Company. The expenses of the Exchange Offer will be
expensed over the term of the Exchange Notes.
CONSEQUENCES OF FAILURE TO EXCHANGE
The Old Notes that are not exchanged for Exchange Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Old Notes
may be resold only (i) to the Company (upon redemption thereof or otherwise),
(ii) so long as the Old Notes are eligible for resale pursuant to Rule 144A, to
a person inside the United States whom the seller reasonably believes is a
qualified institutional buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, in
accordance with Rule 144 under the Securities Act, or pursuant to another
exemption from the registration
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requirements of the Securities Act (and based upon an opinion of counsel
reasonably acceptable to the Company), (iii) outside the United States to a
foreign person in a transaction meeting the requirements of Rule 904 under the
Securities Act, or (iv) pursuant to an effective registration statement under
the Securities Act, in each case in accordance with any applicable securities
laws of any state of the United States.
RESALE OF THE EXCHANGE NOTES
With respect to resales of Exchange Notes, based on interpretations by the
staff of the Commission set forth in no-action letters issued to third parties,
the Company believes that a holder or other person who receives Exchange Notes,
whether or not such person is the holder (other than a person that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act) who receives Exchange Notes in exchange for Old Notes in the ordinary
course of business and who is not participating, does not intend to participate,
and has no arrangement or understanding with any person to participate, in the
distribution of the Exchange Notes, will be allowed to resell the Exchange Notes
to the public without further registration under the Securities Act and without
delivering to the purchasers of the Exchange Notes a prospectus that satisfies
the requirements of Section 10 of the Securities Act. However, if any holder
acquires Exchange Notes in the Exchange Offer for the purpose of distributing or
participating in a distribution of the Exchange Notes, such holder cannot rely
on the position of the staff of the Commission enunciated in such no-action
letters or any similar interpretive letters, and must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale transaction, unless an exemption from registration is
otherwise available. Further, each Participating Broker-Dealer that receives
Exchange Notes for its own account in exchange for Old Notes, where such Old
Notes were acquired by such Participating Broker-Dealer as a result of
market-making activities or other trading activities, must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange Notes.
As contemplated by these no-action letters and the Exchange Offer
Registration Rights Agreement, each holder accepting the Exchange Offer is
required to represent to the Company in the Letter of Transmittal that (i) the
Exchange Notes are to be acquired by the holder or the person receiving such
Exchange Notes, whether or not such person is the holder, in the ordinary course
of business, (ii) the holder or any such other person (other than a
broker-dealer referred to in the next sentence) is not engaging and does not
intend to engage, in the distribution of the Exchange Notes, (iii) the holder or
any such other person has no arrangement or understanding with any person to
participate in the distribution of the Exchange Notes, (iv) neither the holder
nor any such other person is an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act, and (v) the holder or any such other person
acknowledges that if such holder or other person participates in the Exchange
Offer for the purpose of distributing the Exchange Notes it must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with any resale of the Exchange Notes and cannot rely on those
no-action letters. As indicated above, each Participating Broker-Dealer that
receives Exchange Notes for its own account in exchange for Old Notes must
acknowledge that it will deliver a prospectus in connection with any resale of
such Exchange Notes. For a description of the procedures for such resales by
Participating Broker-Dealers, see "Plan of Distribution."
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DESCRIPTION OF THE NOTES
The Exchange Notes will be issued under an Indenture, dated as of August
18, 1998 (the "Indenture") by and among the Company, the Guarantors and State
Street Bank and Trust Company, as trustee (the "Trustee"). The terms of the
Exchange Notes include those stated in the Indenture and those made part of the
Indenture by reference to the Trust Indenture Act of 1939, as amended (the
"TIA") as in effect on the date of the Indenture. The Exchange Notes are subject
to all such terms, and holders of the Notes are referred to the Indenture and
the TIA for a statement of them. The following is a summary of the material
terms and provisions of the Exchange Notes. This summary does not purport to be
a complete description of the Exchange Notes and is subject to the detailed
provisions of, and qualified in its entirety by reference to, the Exchange Notes
and the Indenture (including the definitions contained therein). The form and
terms of the Exchange Notes are the same as the form and terms of the Old Notes
(which they replace) except that (i) the Exchange Notes have been registered
under the Securities Act and, therefore, will not bear legends restricting the
transfer thereof and (ii) the holders of Exchange Notes will not be entitled to
certain rights under the Exchange Offer Registration Rights Agreement, including
the provisions providing for an increase in the interest rate on the Old Notes
in certain circumstances relating to the timing of the Exchange Offer, which
rights will terminate when the Exchange Offer is consummated. A copy of the form
of Indenture is filed as an exhibit to the Exchange Offer Registration Statement
of which this Prospectus forms a part. Definitions relating to certain
capitalized terms are set forth under "--Certain Definitions" and throughout
this description. Capitalized terms that are used but not otherwise defined
herein have the meanings ascribed to them in the Indenture. The Old Notes and
the Exchange Notes are sometimes referred to herein collectively as the "Notes."
For purposes of this "Description of the Notes," the term "Company" means
Aircraft Service International Group, Inc.
GENERAL
The Notes are limited in aggregate principal amount to $80,000,000. The
Notes are general unsecured obligations of the Company, pari passu in right of
payment to senior obligations of the Company and senior in right of payment to
any current or future subordinated obligations of the Company.
The Notes are fully and unconditionally guaranteed, on a senior unsecured
basis, as to payment of principal, premium, if any, and interest, jointly and
severally, by the Guarantors (together with each other Domestic Restricted
Subsidiary of the Company which guarantees payment of the Notes pursuant to the
covenant described under "--Certain Covenants--Limitation on Creation of Certain
Subsidiaries").
MATURITY, INTEREST AND PRINCIPAL
The Notes mature on August 15, 2005. The Notes will bear interest at a rate
of 11% per annum from the Issue Date until maturity. Interest is payable
semi-annually in arrears on each February 15 and August 15 commencing February
15, 1999, to holders of record of the Notes at the close of business on the
immediately preceding February 1 and August 1, respectively. The interest rate
on the Notes is subject to increase, and such Additional Interest will be
payable on the payment dates set forth above, in certain circumstances, if the
Notes (or other securities substantially similar to the Notes) are not
registered with the Commission within the prescribed time periods.
OPTIONAL REDEMPTION
The Notes will be redeemable at the option of the Company, in whole at any
time or in part from time to time on or after August 15, 2003 at the following
redemption prices (expressed as percentages of the principal amount thereof),
together, in each case, with accrued and unpaid interest, if any, to the
redemption date, if redeemed during the twelve-month period beginning on August
15 of each year listed below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003........................................................ 105.500%
2004 and thereafter......................................... 100.000%
</TABLE>
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Notwithstanding the foregoing, the Company, at its option, may redeem in
the aggregate up to 33 1/3% of the original principal amount of Notes at any
time and from time to time prior to August 15, 2001 at a redemption price equal
to 111.000% of the aggregate principal amount so redeemed, together with accrued
and unpaid interest, if any, to the redemption date out of the Net Proceeds of
one or more Public Offerings; provided that at least $53.3 million of the
principal amount of Notes originally issued remain outstanding immediately after
the occurrence of any such redemption and that any such redemption occurs within
90 days following the closing of such Public Offering and provided, further,
that with respect to any Public Offering by Ranger, the net proceeds thereof are
contributed to the Company as common equity.
In the event of a redemption of fewer than all of the Notes, the Trustee
will select the Notes to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which such Notes are listed,
or if such Notes are not then listed on a national securities exchange, on a pro
rata basis, by lot or in such other manner as the Trustee will deem fair and
equitable. The Notes will be redeemable in whole or in part upon not less than
30 nor more than 60 days' prior written notice, mailed by first class mail to a
holder's last address as it will appear on the register maintained by the
Registrar of the Notes. On and after any redemption date, interest will cease to
accrue on the Notes or portions thereof called for redemption unless the Company
fails to redeem any such Note.
CERTAIN COVENANTS
The Indenture contains, among others, the following covenants:
Limitation on Additional Indebtedness
The Company will not, and will not permit any Restricted Group Member of
the Company to, directly or indirectly, incur any Indebtedness (including
Acquired Indebtedness and including Disqualified Capital Stock); provided that
the Company may incur Indebtedness (including Acquired Indebtedness or
Disqualified Capital Stock), including Indebtedness that ranks pari passu with
the Notes or is subordinated to the Notes, if (a) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the Company's Consolidated Fixed Charge Coverage Ratio is at least 2.0
to 1 if the Indebtedness is incurred prior to December 31, 1999 and 2.25 to 1 if
the Indebtedness is incurred thereafter and (b) no Default or Event of Default
will have occurred and be continuing at the time or as a consequence of the
incurrence of such Indebtedness.
Notwithstanding the foregoing, (a) the Company and its Restricted Group
Members may incur Permitted Indebtedness; (b) nothing in this covenant will
prohibit or restrict the ability of Ranger to incur Indebtedness directly except
to the extent such Indebtedness is guaranteed by the Company or any Restricted
Group Member; and (c) the issuance of Indebtedness representing only PIK
Interest will not constitute an incurrence of Indebtedness for purposes of this
covenant.
The Company will not, and will not permit any of its Restricted Group
Members to, incur any Indebtedness which by its terms (or by the terms of any
agreement governing such Indebtedness) is subordinated in right of payment to
any other Indebtedness of the Company or such Restricted Group Member unless
such Indebtedness is also by its terms (or by the terms of any agreement
governing such Indebtedness) made expressly subordinate in right of payment to
the Notes pursuant to subordination provisions that are substantively identical
to the subordination provisions of such Indebtedness (or such agreement) that
are most favorable to the holders of any other Indebtedness of the Company or
such Restricted Group Member, as the case may be.
Any Indebtedness of an Unrestricted Subsidiary or Permitted Joint Venture
that is not incurred by such Unrestricted Subsidiary or Permitted Joint Venture
on a basis that is entirely non-recourse to the Company and its Restricted Group
Members will, for purposes of this covenant and all determinations, hereunder
with respect to both the original incurrence of such Indebtedness and any
subsequent determinations, hereunder relating to any other Indebtedness, be
deemed Indebtedness of a Restricted Group Member to the extent of such recourse.
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Limitation on Preferred Stock of Restricted Group Members
The Company will not permit (a) any Restricted Subsidiary to issue any
Preferred Stock (other than to the Company or one or more of its Domestic
Wholly-Owned Subsidiaries) or permit any Person (other than the Company or one
or more of its Domestic Wholly-Owned Subsidiaries) to hold any such Preferred
Stock or (b) any Restricted Joint Venture to issue any Preferred Stock (other
than to the partners, owners or other equity holders in such Restricted Joint
Venture) or permit any Person (other than the partners, owners or other equity
holders in such Restricted Joint Venture) to hold any such Preferred Stock.
Limitation on Capital Stock of Restricted Group Members
The Company will not (i) sell, pledge, hypothecate or otherwise convey or
dispose of any of its Capital Stock of a Restricted Group Member (other than
under the Senior Credit Facility or one or more of the credit facilities
permitted to be secured pursuant to clause (xi) of the definition of "Permitted
Liens") or (ii) permit any of its Restricted Group Members to issue any Capital
Stock, other than to the Company or a Wholly-Owned Subsidiary of the Company or,
in the case of a Restricted Joint Venture, to its partners, owners or other
equity holders. The foregoing restrictions will not apply to (a) an Asset Sale
made in compliance with the "Limitation on Certain Asset Sales" covenant, (b)
the issuance to or ownership by directors of directors' qualifying shares or the
ownership by foreign nationals of Capital Stock of any Restricted Group Member
to the extent mandated by applicable law, (c) the issuance of Capital Stock of a
Subsidiary that becomes a Restricted Joint Venture or Permitted Joint Venture as
a result thereof, (d) the issuance of Preferred Stock in accordance with the
"Limitation on Preferred Stock of Restricted Group Members" covenant or (e) the
issuance of Capital Stock by a Restricted Joint Venture so long as the proceeds
thereof are either distributed proportionately to the other partners, owners or
other equity holders in such Restricted Joint Venture, used to repurchase the
entire equity interests of one or more other partners, owners or other equity
holders or applied in the manner described in clause (iii)(B) of the first
paragraph under the "Limitation on Certain Asset Sales" covenant.
Limitation on Restricted Payments
The Company will not make, and will not permit any of its Restricted Group
Members to, directly or indirectly, make, any Restricted Payment, unless:
(a) no Default or Event of Default will have occurred and be continuing
at the time of or immediately after giving effect to such Restricted Payment;
(b) immediately after giving pro forma effect to such Restricted
Payment, the Company could incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the "Limitation on Additional Indebtedness"
covenant; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date does
not exceed the sum of (1) 50% of the cumulative Consolidated Net Income of the
Company subsequent to the Issue Date (or minus 100% of any cumulative deficit in
Consolidated Net Income during such period) plus (2) 100% of the aggregate Net
Proceeds and the fair market value of securities or other property received by
the Company from the issue or sale, after the Issue Date, of Capital Stock
(other than Disqualified Capital Stock or Capital Stock of the Company issued to
any Subsidiary of the Company or a Restricted Joint Venture) of the Company or
any Indebtedness or other securities of the Company convertible into or
exercisable or exchangeable for Capital Stock (other than Disqualified Capital
Stock) of the Company which has been so converted or exercised or exchanged, as
the case may be, plus (3) without duplication of any amounts included in clauses
(1) and (2) above, 100% of the aggregate net proceeds of any equity contribution
received by the Company from a holder of the Company's Capital Stock, excluding,
in the case of clauses (2) and (3) above, any Net Proceeds from a Public
Offering to the extent used to redeem the Notes plus (4) $2,500,000. For
purposes of determining under this clause (c) the amount expended for Restricted
Payments, cash distributed will be valued at the face amount thereof and
property other than cash will be valued at its fair market value determined, in
good faith, by the Board of Directors of the Company.
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<PAGE> 80
The provisions of this covenant will not prohibit: (i) the payment of any
distribution within 60 days after the date of declaration thereof, if at such
date of declaration such payment would comply with the provisions of this
Agreement; (ii) the repurchase redemption or other acquisition or retirement of
any shares of Capital Stock of the Company or Indebtedness of the Company
subordinated to the Notes, by conversion into, or by or in exchange for, shares
of Capital Stock (other than Disqualified Capital Stock), or out of, the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of the
Company or a Restricted Joint Venture) of other shares of Capital Stock of the
Company (other than Disqualified Capital Stock); (iii) the redemption or
retirement of Indebtedness of the Company subordinated to the Notes in exchange
for, by conversion into, or out of the Net Proceeds of, a substantially
concurrent sale or incurrence of Indebtedness (other than any Indebtedness owed
to a Subsidiary or a Restricted Joint Venture) of the Company that (A) is
contractually subordinated in right of payment to the Notes to at least the same
extent as the subordinated Indebtedness being redeemed or retired, (B) is
scheduled to mature either (I) no earlier than the Indebtedness being redeemed
or retired, or (II) after the maturity date of the Notes, (C) the portion, if
any, of which Indebtedness that is scheduled to mature on or prior to the
maturity date of the Notes has a weighted average life to maturity at the time
such Indebtedness is incurred that is equal to or greater than the weighted
average life to maturity of the portion of the Indebtedness being redeemed or
retired that is scheduled to mature on or prior to the maturity date of the
Notes, and (D) is in an aggregate principal amount that is equal to or less than
the sum of (x) the aggregate principal then outstanding under the Indebtedness
being redeemed or retired, (y) the amount of accrued and unpaid interest, if
any, and premiums owed, if any, not in excess of preexisting prepayment
provisions on such Indebtedness being redeemed or retired and (z) the amount of
customary fees, expenses and costs related to the incurrence of such
Indebtedness; (iv) the retirement of any shares of Disqualified Capital Stock of
the Company by conversion into, or by exchange for, shares of Disqualified
Capital Stock of the Company, or out of the Net Proceeds of the substantially
concurrent sale (other than to a Subsidiary of the Company or a Restricted Joint
Venture) of other shares of Disqualified Capital Stock of the Company that (A)
is subordinated to the Notes to at least the same extent as the Disqualified
Capital Stock being retired, (B) is scheduled to be mandatorily redeemed, if at
all, either (I) no earlier than the Disqualified Capital Stock being retired, or
(II) after the maturity date of the Notes, (C) the portion, if any, of which
Disqualified Capital Stock that is scheduled to be mandatorily redeemed on or
prior to the maturity date of the Notes has a weighted average life to mandatory
redemption at the time such Disqualified Capital Stock is issued that is equal
to or greater than the weighted average life to mandatory redemption of the
portion of the Disqualified Capital Stock being retired that is scheduled to be
mandatorily redeemed on or prior to the maturity date of the Notes, and has an
aggregate liquidation preference that is equal to or less than the sum of (a)
the aggregate liquidation preference then outstanding of the Disqualified
Capital Stock being retired, (b) the amount of accrued and unpaid dividends, if
any, and premiums owed, if any, not in excess of preexisting redemption
provisions on such Disqualified Capital Stock being retired and (c) the amount
of customary fees, expenses and costs related to the issuance of such
Disqualified Capital Stock; (v) payments to the Initial Purchaser, Tioga or
their respective Affiliates representing customary investment banking fees for
services rendered; (vi) payments to Hancock representing insurance premiums not
in excess of prevailing market rates; (vii) payments to Tioga of a chairman's
fee pursuant to the investment agreement in effect on the Issue Date; (viii) the
payment of distributions to Ranger solely for the purpose of enabling Ranger to
pay its reasonable, ordinary course operating and administrative expenses and
taxes, the amount of which in any fiscal year will not exceed $200,000; and (ix)
so long as no Default or Event of Default will have occurred and be continuing
at the time of or immediately after giving effect to such payment, the payment
of distributions to Ranger for the sole purpose of purchasing, redeeming or
otherwise acquiring for value shares of Capital Stock of Ranger (other than
Disqualified Capital Stock) or options on such shares held by Ranger's, the
Company's or its Subsidiaries' officers or employees or former officers or
employees (or their estates or beneficiaries under their estates) upon the
death, disability, retirement or termination of employment of such current or
former officers or employees pursuant to the terms of an employee benefit plan
or any other agreement pursuant to which such shares of Capital Stock or options
were issued or pursuant to a severance, buy-sell or right of first refusal
agreement with such current or former officer or employee; provided that the
aggregate cash consideration paid, or distributions or payments made, pursuant
to this clause (ix) will not exceed $250,000 in any fiscal year; provided,
further, that the Company may carry over and make for one fiscal year, in
addition to the
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amounts permitted for such fiscal year, the amount of such distributions
permitted to have been made, but not made, in the immediately preceding fiscal
year; provided, further, that such distributions in any fiscal year of the
Company will be deemed made first from the aforementioned permitted amount for
such fiscal year and then from any amount carried over into such fiscal year in
accordance with this proviso. Notwithstanding the foregoing, the amount of any
payments made in reliance on clauses (i) and (ix) above will reduce the amount
otherwise available for Restricted Payments pursuant to subparagraphs (a)-(c)
above.
Not later than the date of making any Restricted Payment, the Company will
deliver to the Purchaser on behalf of the Holders an Officers' Certificate
stating that such Restricted Payment is permitted and setting forth the basis
upon which the calculations required by this covenant were computed, which
calculations may be based upon the Company's latest available financial
statements, and, to the extent that the absence of a Default or an Event of
Default is a condition to the making of such Restricted Payment, that no Default
or Event of Default exists and is continuing and no Default or Event of Default
will occur immediately after giving effect to any Restricted Payments.
Limitation on Certain Asset Sales
The Company will not, and will not permit any of its Restricted Group
Members to, consummate an Asset Sale unless (i) the Company or such Restricted
Group Member, as the case may be, receives consideration at the time of such
sale or other disposition at least equal to the fair market value thereof (as
determined in good faith by the Board of Directors of the Company, and evidenced
by a board resolution); (ii) not less than 75% of the consideration received by
the Company or its Subsidiaries, as the case may be, is in the form of cash or
Temporary Cash Investments; and (iii) the Asset Sale Proceeds received by the
Company or such Restricted Group Member are applied (A) first, to the extent the
assets that are the subject of such Asset Sale constitute collateral securing
only the Senior Credit Facility or Purchase Money Indebtedness and the Company
is required to prepay, repay or purchase debt or to reduce an unused commitment
to lend under the Senior Credit Facility or such Purchase Money Indebtedness, as
the case may be, within 180 days following the receipt of the Asset Sale
Proceeds from any Asset Sale, but only to the extent that any such repayment
will result in a permanent reduction of the commitments thereunder in an amount
equal to the principal amount so repaid; (B) second, to the extent the Company
elects, to an investment in assets used or useful in businesses similar or
ancillary to the business of the Company or such Restricted Group Member as
conducted at the time of such Asset Sale, provided that such investment occurs
on or prior to the 365th day following receipt of such Asset Sale Proceeds (the
"Reinvestment Date"); and (C) third, if, on the Reinvestment Date with respect
to any Asset Sale, the Available Asset Sale Proceeds exceed $5,000,000, the
Company will apply an amount equal to such Available Asset Sale Proceeds to an
offer to repurchase the Notes, at a purchase price in cash equal to 100% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of repurchase (an "Excess Proceeds Offer").
If the Company is required to make an Excess Proceeds Offer, the Company
will mail, within 30 days following the Reinvestment Date, a notice to the
Holders stating, among other things: (1) that such Holders have the right to
require the Company to apply the Available Asset Sale Proceeds to repurchase
such Notes at a purchase price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase; (2)
the purchase date (the "Purchase Date"), which will be no earlier than 30 days
and not later than 60 days from the date such notice is mailed; (3) the
instructions, determined by the Company, that each Holder must follow in order
to have such Notes repurchased; and (4) the calculations used in determining the
amount of Available Asset Sale Proceeds to be applied to the repurchase of such
Notes. The Excess Proceeds Offer will remain open for a period of 20 business
days following its commencement (the "Offer Period"). The notice, which will
govern the terms of the Excess Proceeds Offer, will state:
(1) that the Excess Proceeds Offer is being made pursuant to this
covenant and the length of time the Excess Proceeds Offer will remain open;
(2) the purchase price and the Purchase Date;
(3) that any Note not tendered or accepted for payment will continue to
accrue interest;
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(4) that any Note accepted for payment pursuant to the Excess Proceeds
Offer will cease to accrue interest on and after the Purchase Date and the
payment of the purchase price to the Holder thereof;
(5) that Holders electing to have a Note purchased pursuant to any
Excess Proceeds Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, to the Company, a depositary, if appointed by the Company, or a
paying agent at the address specified in the notice prior to the close of
business on the business day preceding the Purchase Date;
(6) that Holders will be entitled to withdraw their election if the
Company, depositary or paying agent, as the case may be, receives, not later
than the expiration of the Offer Period, a facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Note the
Holder delivered for purchase and a statement that such Holder is withdrawing
its election to have the Note purchased;
(7) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Available Asset Sale Proceeds the Company will select the
Notes to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Notes in denominations of $1,000,
or integral multiples thereof, will be purchased); and
(8) that Holders whose Notes were purchased only in part will be issued
new Notes equal in principal amount to the unpurchased portion of the Notes
surrendered.
On or before the Purchase Date, the Company will, to the extent lawful,
accept for payment, on a pro rata basis to the extent necessary, Notes or
portions thereof tendered pursuant to the Excess Proceeds Offer, and will
promptly (but in any case not later than five days after the Purchase Date) mail
or deliver to each tendering Holder an amount equal to the purchase price of the
Note tendered by such Holder and accepted by the Company for purchase, and the
Company will promptly issue a new Note and the Guarantors will endorse the
guarantee thereon and the Company will mail or make available for delivery such
new Note to such Holder equal in principal amount to any unpurchased portion of
the Note surrendered. Any Note not so accepted will be promptly mailed or
delivered by the Company to the Holder thereof. The Company will publicly
announce the results of the Excess Proceeds Offer on the Purchase Date by
sending a press release to the Dow Jones News Service or similar business news
service in the United States. If an Excess Proceeds Offer is not fully
subscribed, the Company may retain that portion of the Available Asset Sale
Proceeds not required to repurchase Notes and use such portion for general
corporate purposes, and such retained portion will not be considered in the
calculation of "Available Asset Sale Proceeds" with respect to any subsequent
offer to purchase Notes.
In the event of the transfer of substantially all of the property and
assets of the Company and its Restricted Group Members as an entirety to a
Person in a transaction permitted by the provisions described under "Limitation
on Consolidation, Merger and Sale of Assets," the successor Person will be
deemed to have sold the properties and assets of the Company and its Restricted
Group Members not so transferred for purposes of this covenant and will comply
with the provision of this covenant with respect to such deemed sale as if it
were an Asset Sale.
Limitation on Transactions with Affiliates
The Company will not, and will not permit any of its Restricted Group
Members to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate or holder of 10% or more of the Company's Common Stock (an "Affiliate
Transaction") or extend, renew, waive or otherwise modify the terms of any
Affiliate Transaction entered into prior to the date of the Indenture if such
extension, renewal, waiver or other modification is more disadvantageous to the
Holders in any material respect than the original agreement as in effect on the
date of the Indenture unless (i) such Affiliate Transaction is between or among
the Company and/or its Wholly-Owned Subsidiaries; or (ii) the terms of such
Affiliate Transaction are at least as favorable as the terms which could be
obtained by the Company or such Restricted Group Member, as the case may be, in
a comparable transaction made on an arm's-length basis between unaffiliated
parties. In any Affiliate Transaction involving an amount or having a value in
excess of $1,000,000 which is not permitted
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under clause (i) above, the Company must obtain a resolution of the Board of
Directors certifying that such Affiliate Transaction complies with clause (ii)
above. In any Affiliate Transaction with a value in excess of $5,000,000 which
is not permitted under clause (i) above the Company must obtain a written
opinion as to the fairness of such a transaction from an independent investment
banking firm.
The limitations set forth in this covenant will not apply to (i) any
Restricted Payment that is not prohibited by the "Limitation on Restricted
Payments" covenant, (ii) any transaction pursuant to an agreement, arrangement
or understanding existing on the date of the Indenture, (iii) any transaction,
approved by the Board of Directors of the Company, with an officer or director
of the Company or of any Subsidiary in his or her capacity as officer or
director entered into in the ordinary course of business or (iv) transactions
permitted by the provisions described under "Limitation on Consolidation, Merger
and Sale of Assets."
Limitations on Liens
The Company will not, and will not permit any of its Restricted Group
Members to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any property
or asset of the Company or any Restricted Group Member or any shares of stock or
debt of any Restricted Group Member which owns property or assets, now owned or
hereafter acquired, unless (i) if such Lien secures Indebtedness which is pari
passu with the Notes, then the Notes are secured on an equal and ratable basis
with the obligations so secured until such time as such obligation is no longer
secured by a Lien or (ii) if such Lien secures Indebtedness which is
subordinated to the Notes, any such Lien will be subordinated to the Lien
granted to the Holders of the Notes to the same extent as such subordinated
Indebtedness is subordinated to the Notes.
Limitations on Investments
The Company will not, and will not permit any of its Restricted Group
Members to, make any Investment other than (i) a Permitted Investment or (ii) an
Investment that is made as a Restricted Payment in compliance with the
"Limitation on Restricted Payments" covenant, after the Issue Date.
Limitation on Creation of Certain Subsidiaries
The Company will not create or acquire, nor permit any of its Restricted
Group Members to create or acquire, any Domestic Restricted Subsidiary unless
such Domestic Restricted Subsidiary has executed a guarantee in the form set
forth in the Indenture, pursuant to which such Domestic Restricted Subsidiary
will become a Guarantor. As of the Issue Date, the Company will have no Domestic
Restricted Subsidiaries, other than the Guarantors.
Limitation on Sale and Lease-Back Transactions
The Company will not, and will not permit any Restricted Group Member to,
enter into any Sale and Lease-Back Transaction unless (i) the consideration
received in such Sale and Lease-Back Transaction is at least equal to the fair
market value of the property sold, as determined, in good faith, by the Board of
Directors of the Company and evidenced by a board resolution, (ii) the Company
could incur the Attributable Indebtedness in respect of such Sale and Lease-Back
Transaction in compliance with the "Limitation on Additional Indebtedness"
covenant and (iii) such Sale and Lease-Back Transaction is permitted by, and the
proceeds thereof are applied in compliance with, the "Limitation on Certain
Asset Sales" covenant.
Payments for Consent
Neither the Company nor any of its Restricted Group Members will, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or the Notes unless such consideration is offered to be paid or agreed
to be paid to all Holders of the Notes which
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so consent, waive or agree to amend in the time frame set forth in solicitation
documents relating to such consent, waiver or agreement.
Conduct of Business
The Company and its Restricted Group Members will not engage in any
business other than the business of providing aviation services or aerospace
support.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Group Members
The Company will not, and will not permit any of its Restricted Group
Members to, directly or indirectly, create or otherwise cause or suffer to exist
or become effective any encumbrance or restriction on the ability of any
Restricted Group Member to (a)(i) pay dividends or make any other distributions
to the Company or any Restricted Group Member (A) on its Capital Stock or (B)
with respect to any other interest or participation in, or measured by, its
profits or (ii) repay any Indebtedness or any other obligation owed to the
Company or any Restricted Group Member, (b) make loans or advances or capital
contributions to the Company or any of its Restricted Group Members or (c)
transfer any of its properties or assets to the Company or any of its Restricted
Group Members, except for such encumbrances or restrictions existing under or by
reason of (i) encumbrances or restrictions existing on the date of the Indenture
to the extent and in the manner such encumbrances and restrictions are in effect
on the date hereof (including without limitation pursuant to the Senior Credit
Facility), (ii) the Indenture, the Notes and the Guarantees, (iii) applicable
law, (iv) any instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person
(including any Subsidiary of the Person), so acquired, (v) customary
non-assignment provisions in leases or other agreements entered in the ordinary
course of business and consistent with past practices, (vi) Refinancing
Indebtedness; provided that such payment restrictions are no more restrictive
than those contained in the agreements governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded, (vii) customary
restrictions in security agreements or mortgages securing Indebtedness of the
Company or a Restricted Group Member to the extent such restrictions restrict
the transfer of the property subject to such security agreements and mortgages
or (viii) customary restrictions with respect to a Restricted Group Member
pursuant to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such Restricted
Group Member.
CHANGE OF CONTROL OFFER
Upon the occurrence of a Change of Control, the Company will be obligated
to make an offer to purchase (the "Change of Control Offer") each holder's
outstanding Notes at a purchase price (the "Change of Control Purchase Price")
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the Change of Control Payment Date (as defined below) in accordance
with the procedures set forth below. There can be no assurance that the Company
will have the financial resources necessary to purchase the Notes upon a Change
of Control.
Within 30 days of the occurrence of a Change of Control, the Company will
(i) cause a notice of the Change of Control Offer to be sent at least once to
the Dow Jones News Service or similar business news service in the United States
and (ii) send by first-class mail, postage prepaid, to the Trustee and to each
holder of the Notes, at the address appearing in the register maintained by the
registrar of the Notes, a notice stating:
(1) that a Change of Control Offer is being made and that all Notes
validly tendered prior to the expiration date stated in such notice will be
accepted for payment;
(2) the purchase date, which shall be no earlier than 20 business
days from the date such notice is mailed (the "Change of Control Payment
Date"), and the purchase price, which shall be 101% of outstanding
principal together with accrued interest to the Change of Control Payment
Date;
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(3) that any Note not timely tendered in accordance with such notice
will remain outstanding and will continue to accrue interest;
(4) that any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of Control
Payment Date unless the Company shall default in the payment of the
repurchase price of the Notes;
(5) that if the Holders elect to have a Note purchased pursuant to
the Change of Control Offer they will be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, to the Company prior to 5:00 p.m. New York time on
the Change of Control Payment Date;
(6) that the Holders will be entitled to withdraw their election if
the Company receives, not later than 5:00 p.m. New York time on the
business day preceding the Change of Control Payment Date, a telegram,
telex, facsimile transmission or letter setting forth the principal amount
of Notes such Holders delivered for purchase, and a statement that such
Holders are withdrawing their election to have such Note purchased; and
(7) that if Notes are purchased only in part a new Note of the same
type will be issued in principal amount equal to the unpurchased portion of
the Notes surrendered.
On or before the Change of Control Payment Date, the Company will (x)
accept for payment Notes or portions thereof which are to be purchased in
accordance with the above, and (y) deposit at the payment office
established by the Company cash in U.S. dollars sufficient to pay the
purchase price of all Notes to be purchased.
The Indenture provides that (A) if the Company or any Restricted
Group Member thereof has issued any outstanding (1) Indebtedness that is
subordinated in right of payment to the Notes or (2) Preferred Stock, and
the Company or such Restricted Group Member is required to make a change of
control offer or to make a distribution with respect to such subordinated
Indebtedness or Preferred Stock in the event of a change of control, the
Company will not consummate any such offer or distribution with respect to
such subordinated indebtedness or Preferred Stock until such time as the
Company has paid the Change of Control Purchase Price in full to the
holders of Notes that have accepted the Company's Change of Control Offer
and shall otherwise have consummated the Change of Control Offer made to
Holders of the Notes and (B) the Company will not issue Indebtedness that
is subordinated in right of payment to the Notes or Preferred Stock with
change of control provisions requiring the payment of such indebtedness or
Preferred Stock prior to the payment of the Notes in the event of a Change
of Control.
The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
purchase of Notes pursuant to an offer hereunder. To the extent the
provisions of any securities laws or regulations conflict with the
provisions under this Section, the Company will comply with the applicable
securities laws and regulations and shall not be deemed to have breached
their obligations under this Section by virtue thereof.
LIMITATION ON CONSOLIDATION, MERGER AND SALE OF ASSETS
The Company will not, nor will it permit any Guarantor to, consolidate
with, merge with or into, or transfer all or substantially all of its assets (as
an entirety or substantially as an entirety in one transaction or a series of
related transactions) to, any Person unless: (i) the Company or such Guarantor,
as the case may be, will be the continuing Person, or the Person (if other than
the Company or such Guarantor) formed by such consolidation or into which the
Company or such Guarantor, as the case may be, is merged or to which the
properties and assets of the Company or such Guarantor, as the case may be, are
transferred will be a corporation (or in the case of such Guarantor, a
corporation, partnership, limited partnership or limited liability company)
organized and existing under the laws of the United States or any State thereof
or the District of Columbia and will expressly assume in writing all of the
obligations of the Company or such Guarantor, as the
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case may be, under the Notes and the Indenture, and the obligations under the
Indenture will remain in full force and effect; (ii) immediately before and
immediately after giving effect to such transaction, no Default or Event of
Default will have occurred and be continuing; (iii) immediately after giving
effect to such transaction or series of transactions on a pro forma basis the
Consolidated Net Worth of the Company or the surviving entity as the case may be
is at least equal to the Consolidated Net Worth of the Company immediately
before such transaction or series of transactions; and (iv) immediately after
giving effect to such transaction on a pro forma basis the Company or such
Person could incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) pursuant to the "Limitation on Additional Indebtedness"
covenant.
In connection with any consolidation, merger or transfer of assets
contemplated by this covenant, the Company will deliver, or cause to be
delivered, to the Holders, in form and substance reasonably satisfactory to the
Trustee, an Officers' Certificate and an opinion of counsel, each stating that
such consolidation, merger or transfer and the supplemental indenture in respect
thereto comply with this covenant and that all conditions precedent herein
provided for relating to such transaction or transactions have been complied
with.
GUARANTEES
The Notes are jointly and severally and fully and unconditionally
guaranteed on a senior unsecured basis by the Guarantors.
The obligations of each Guarantor are limited to the maximum amount as
will, after giving effect to all other contingent and fixed liabilities of such
Guarantor and after giving effect to any collections from or payments made by or
on behalf of any other Guarantor in respect of the obligations of such other
Guarantor under its Guarantee or pursuant to its contribution obligations under
the Indenture, result in the obligations of such Guarantor under the Guarantee
not constituting a fraudulent conveyance or fraudulent transfer under federal or
state law. Each Guarantor that makes a payment or distribution under a Guarantee
will be entitled to a contribution from each other Guarantor in a pro rata
amount based on the Adjusted Net Assets of each Guarantor.
A Guarantor will be released from all of its obligations under its
Guarantee if all of its assets or Capital Stock is sold, in each case in a
transaction in compliance with the "Limitation on Certain Asset Sales" covenant,
or the Guarantor merges with or into or consolidates with, or transfers all or
substantially all of its assets in compliance with the "Merger, Consolidation or
Sale of Assets" covenant, and such Guarantor has delivered to the Trustee an
Officers' Certificate and an opinion of counsel, each stating that all
conditions precedent herein provided for relating to such transaction have been
complied with.
EVENTS OF DEFAULT
The following events are defined in the Indenture as "Events of Default:"
(1) there is a default in the payment of any principal of, or
premium, if any, on the Notes when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise;
(2) there is a default in the payment of any interest on any Note
when the same becomes due and payable and the Default continues for a
period of 30 days;
(3) there is a default in the observance or performance of the
covenants set forth in the "Change of Control Offer" covenant, the
"Limitation on Additional Indebtedness" covenant, the "Limitation on
Restricted Payments" covenant or the "Limitation on Certain Asset Sales"
covenant;
(4) the Company or any Guarantor defaults in the observance or
performance of any other covenant in the Notes or the Indenture for 60 days
after written notice from the Holders of not less than 25% in the aggregate
principal amount of the Notes then outstanding;
(5) there is a default in the payment at final maturity of principal
in an aggregate amount of $5,000,000 or more with respect to any
Indebtedness of either the Company or any Restricted Group Member, or there
is an acceleration of any such Indebtedness in the aggregate amount of
$5,000,000 or more which default shall not be cured, waived or postponed
pursuant to an agreement with the holders of
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such Indebtedness within 30 days after written notice by any Holder, or
which acceleration shall not be rescinded or annulled within 10 days after
written notice to the Company of such Default by any Holder;
(6) the entry of a final judgment or judgments which can no longer be
appealed for the payment of money in excess of $5,000,000 against either
the Company or any Restricted Group Member and such judgment remains
undischarged, for a period of 60 consecutive days during which a stay of
enforcement of such judgment shall not be in effect;
(7) certain events of bankruptcy affecting the Company or any of its
Restricted Group Members;
or
(8) any of the Guarantees ceases to be in full force and effect or
any of the Guarantees is declared to be null and void and unenforceable or
any of the Guarantees is found to be invalid or any of the Guarantors
denies in writing its liability under its Guarantee (other than by reason
of release of a Guarantor in accordance with the terms of the Indenture).
The Indenture provides that the Trustee may withhold notice to the holders
of the Notes of any default (except in payment of principal or premium, if any,
or interest on the Notes) if the Trustee considers it to be in the best interest
of the holders of the Notes to do so.
The Indenture provides that if an Event of Default (other than an Event of
Default resulting from certain events of bankruptcy, insolvency or
reorganization) will have occurred and be continuing, then the Trustee or the
holders of not less than 25% in aggregate principal amount of the Notes then
outstanding may declare to be immediately due and payable the entire principal
amount of all the Notes then outstanding plus accrued interest to the date of
acceleration and the same will become immediately due and payable (plus, in the
event of any such declaration following a Default resulting from a willful
action of the Company with the intent to avoid the payment of any premium on the
Notes, which declaration occurs (a) before the fifth anniversary of the Issue
Date, a premium (expressed as a percentage of principal amount) equal to the
interest rate per annum then being paid on the Notes, or (b) on or after the
fifth anniversary of the Issue Date, a premium (expressed as a percentage of
principal amount) equal to the then applicable redemption premium); provided,
however, that after such acceleration but before a judgment or decree based on
acceleration is obtained by the Trustee, the holders of a majority in aggregate
principal amount of outstanding Notes may rescind and annul such acceleration if
(i) all Events of Default, other than nonpayment of principal, premium, if any,
or interest that has become due solely because of the acceleration, have been
cured or waived as provided in the Indenture, (ii) to the extent the payment of
such interest is lawful, interest on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iii) if the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (iv) in the event of the cure or waiver of an
Event of Default of the type described in clause (7) of the above Events of
Default, the Trustee will have received an officers' certificate and an opinion
of counsel that such Event of Default has been cured or waived. No such
rescission will affect any subsequent Default or impair any right consequent
thereto. In case an Event of Default resulting from certain events of
bankruptcy, insolvency or reorganization will occur, the principal, premium and
interest amount with respect to all of the Notes will be due and payable
immediately without any declaration or other act on the part of the Trustee or
the holders of the Notes.
The holders of a majority in principal amount of the Notes then outstanding
will have the right to waive any existing default or compliance with any
provision of the Indenture or the Notes and to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee, subject to
certain limitations provided for in the Indenture and under the TIA.
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder will
have previously given to the Trustee written notice of a continuing Event of
Default and unless the holders of at least 25% in aggregate principal amount of
the outstanding Notes will have made written request and offered reasonable
indemnity to the Trustee to institute such proceeding as Trustee, and unless the
Trustee will not have received from the holders of a majority in aggregate
principal amount of the outstanding Notes a direction inconsistent with such
request and will have
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failed to institute such proceeding within 60 days. Notwithstanding the
foregoing, such limitations do not apply to a suit instituted on such Note on or
after the respective due dates expressed in such Note.
DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may elect either (a) to defease and
be discharged from any and all of its and any Guarantor's obligations with
respect to the Notes (except for the obligations to register the transfer or
exchange of such Notes, to replace temporary or mutilated, destroyed, lost or
stolen Notes, to maintain an office or agency in respect of the Notes and to
hold monies for payment in trust) ("defeasance") or (b) to be released from its
obligations with respect to the Notes under certain covenants contained in the
Indenture ("covenant defeasance") upon the deposit with the Trustee (or other
qualifying trustee), in trust for such purpose, of money and/or non-callable
U.S. government obligations which through the payment of principal and interest
in accordance with their terms will provide money, in an amount sufficient to
pay the principal of, premium, if any, and interest on the Notes, on the
scheduled due dates therefor or on a selected date of redemption in accordance
with the terms of the Indenture. Such a trust may only be established if, among
other things, (i) the Company has delivered to the Trustee an opinion of counsel
(as specified in the Indenture) (A) to the effect that neither the trust nor the
Trustee will be required to register as an investment company under the
Investment Company Act of 1940, as amended, and (B) describing either a private
ruling concerning the Notes or a published ruling of the Internal Revenue
Service, to the effect that holders of the Notes or persons in their positions
will not recognize income, gain or loss for federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to federal
income tax on the same amount and in the same manner and at the same times, as
would have been the case if such deposit, defeasance and discharge had not
occurred, (ii) no Default or Event of Default will have occurred and be
continuing on the date of such deposit or insofar as Events of Default from
bankruptcy, insolvency or reorganization events are concerned, at any time in
the period ending on the 91st day after the date of deposit; (iii) such
defeasance or covenant defeasance will not result in a breach or violation of,
or constitute a default under the Indenture or any other material agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any or its Subsidiaries is bound; (iv) the Company will
have delivered to the Trustee an Officers' Certificate stating that the deposit
was not made by the Company with the intent of preferring the holders of the
Notes over any other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the Company or others;
(v) the Company will have delivered to the Trustee an Officers' Certificate and
an opinion of counsel, each stating that all conditions precedent provided for
or relating to the defeasance or the covenant defeasance have been complied
with; (vi) the Company will have delivered to the Trustee an opinion of counsel
to the effect that (A) the trust funds will not be subject to any rights of
holders of Senior Indebtedness, including, without limitation, those arising
under the Indenture and (B) after the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally; and (vii) certain other customary conditions precedent are satisfied.
MODIFICATION OF INDENTURE
From time to time, the Company, the Guarantors and the Trustee may, without
the consent of holders of the Notes, amend or supplement the Indenture for
certain specified purposes, including providing for uncertificated Notes in
addition to certificated Notes, and curing any ambiguity, defect or
inconsistency, or making any other change that does not, in the opinion of the
Trustee, materially and adversely affect the rights of any holder. The Indenture
contains provisions permitting the Company, the Guarantors and the Trustee, with
the consent of holders of at least a majority in principal amount of the
outstanding Notes, to modify or supplement the Indenture, except that no such
modification will, without the consent of each holder affected thereby, (i)
reduce the amount of Notes whose holders must consent to an amendment,
supplement, or waiver to the Indenture, (ii) reduce the rate of or change the
time for payment of interest, including defaulted interest, on any Note, (iii)
reduce the principal of or premium on or change the stated maturity of any Note
or change the date on which any Notes may be subject to redemption or repurchase
or reduce the redemption or repurchase price therefor, (iv) make any Note
payable in money other than that stated in the Note or change the place of
payment from New York, New York, (v) waive a default on the payment of the
principal of,
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interest on, or redemption payment with respect to any Note, (vi) make any
change in provisions of the Indenture protecting the right of each holder of
Notes to receive payment of principal of and interest on such Note on or after
the due date thereof or to bring suit to enforce such payment, or permitting
holders of a majority in principal amount of Notes to waive Defaults or Events
of Default; (vii) amend, change or modify in any material respect the obligation
of the Company to make and consummate a Change of Control Offer in the event of
a Change of Control or make and consummate an Asset Sale Offer with respect to
any Asset Sale that has been consummated or modify any of the provisions or
definitions with respect thereto; (viii) modify or change any provision of the
Indenture or the related definitions affecting the ranking of the Notes or any
Guarantee in a manner which adversely affects the holders of Notes; or (ix)
release any Guarantor from any of its obligations under its Guarantee or the
Indenture otherwise than in accordance with the terms of the Indenture.
REPORTS TO HOLDERS
So long as the Company is subject to the periodic reporting requirements of
the Exchange Act, it will continue to furnish the information required thereby
to the Commission and to the holders of the Notes. The Indenture provides that
even if the Company is entitled under the Exchange Act not to furnish such
information to the Commission or to the holders of the Notes, it will
nonetheless continue to furnish such information to the Commission and holders
of the Notes.
COMPLIANCE CERTIFICATE
The Company will deliver to the Trustee on or before 90 days after the end
of the Company's fiscal year and on or before 45 days after the end of each the
first, second and third fiscal quarters in each year an Officers' Certificate
stating whether or not the signers know of any Default or Event of Default that
has occurred. If they do, the certificate will describe the Default or Event of
Default, its status and the intended method of cure, if any.
THE TRUSTEE
The Trustee under the Indenture will be the Registrar and Paying Agent with
regard to the Notes. The holders of a majority in principal amount of the then
outstanding Notes have the right to direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee,
subject to certain limitations provided for in the Indenture and under the TIA.
During the existence of an Event of Default, the Trustee will exercise such
rights and powers vested in it under the Indenture and use the same degree of
care and skill in its exercise as a prudent person would exercise under the
circumstances in the conduct of such person's own affairs. The Trustee is under
no obligation to exercise any of its rights or powers under the Indenture at the
request of any holder of Notes, unless such holder has offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense.
TRANSFER AND EXCHANGE
Holders of the Notes may transfer or exchange Notes in accordance with the
Indenture. The Registrar under such Indenture may require a holder, among other
things, to furnish appropriate endorsements and transfer documents, and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
is not required to transfer or exchange any Note selected for redemption and,
further, is not required to transfer or exchange any Note for a period of 15
days before selection of the Notes to be redeemed.
The Notes will be issued in a transaction exempt from registration under
the Act and will be subject to the restrictions on transfer described in "Notice
to Investors."
The registered holder of a Note may be treated as the owner of it for all
purposes.
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CERTAIN DEFINITIONS
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms as well as any other capitalized terms used herein for which no
definition is provided.
"Acquired Indebtedness" means Indebtedness of a Person (including an
Unrestricted Subsidiary or Permitted Joint Venture) existing at the time such
Person becomes a Restricted Group Member or assumed in connection with the
acquisition of assets from such Person.
"Acquisition" means the transactions described in the Acquisition
Agreement.
"Acquisition Agreement" means the Share Purchase Agreement between Viad
Corp. and Viad Service Companies Limited, as sellers, and Ranger, as buyer,
dated as of March 14, 1998, and the schedules thereto, as amended by Amendment
No. 1 thereto, dated as of April 2, 1998 between Viad Corp. and Viad Service
Companies Limited, as sellers, and Ranger, as buyer, and the Company and ASIG
Europe Limited, as assignees.
"Adjusted Net Assets" of a Guarantor at any date will mean the lesser of
the amount by which (x) the fair value of the property of such Guarantor exceeds
the total amount of liabilities, including, without limitation, contingent
liabilities (after giving effect to all other fixed and contingent liabilities),
but excluding liabilities under the Guarantee, of such Guarantor at such date
and (y) the present fair salable value of the assets of such Guarantor at such
date exceeds the amount that will be required to pay the probable liability of
such Guarantor on its debts (after giving effect to all other fixed and
contingent liabilities and after giving effect to any collection from any
Subsidiary of such Guarantor in respect of the obligations of such Guarantor
under the Guarantee), excluding Indebtedness in respect of the Guarantee, as
they become absolute and matured.
"Affiliate" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. For the purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
"ASIG entities" means the "ASIG entities" as defined in the Acquisition
Agreement.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Group Member in any other Person pursuant to which such Person will
become a Restricted Group Member, or will be merged with or into the Company or
any Restricted Group Member or (b) the acquisition by the Company or any
Restricted Group Member of the assets of any Person (other than a Restricted
Group Member) which constitute all or substantially all of the assets of such
Person or comprise any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means the sale, transfer or other disposition (including any
Sale and Lease-Back Transaction), other than to the Company or any of its
Wholly-Owned Subsidiaries, in any single transaction or series of related
transactions having a fair market value in excess of $200,000 of (a) any Capital
Stock of or other equity interest in any Restricted Group Member, or (b) any
other property or assets of the Company or of any Restricted Group Member
thereof (other than sales of inventory in the ordinary course of business);
provided that Asset Sales will not include (i) sales, leases, conveyances,
transfers or other dispositions to the Company or to a Wholly-Owned Subsidiary
or to any other Person if after giving effect to such sale, lease, conveyance,
transfer or other disposition such other Person becomes a Wholly-Owned
Subsidiary; (ii) the contribution or other transfer of any assets or property to
a joint venture, partnership or other Person (which may be a Subsidiary) in
which the Company has a direct or indirect interest to the extent such
contribution or other transfer constitutes a Permitted Investment (other than by
operation of clause (iv) of the definition thereof); or (iii) the sale, transfer
or other disposition of all or substantially all of the assets of the Company or
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any Guarantor as permitted under the provisions described under "Limitation on
Consolidation, Merger and Sale of Assets."
"Asset Sale Proceeds" means, with respect to any Asset Sale, (i) cash
received by the Company or any Restricted Group Member from such Asset Sale
(including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income, transfer, value added or other taxes measured by or
resulting from such Asset Sale, (b) payment of all brokerage commissions,
underwriting and other fees and expenses related to such Asset Sale, (c)
provision for minority interest holders in any majority-owned Restricted Group
Member as a result of such Asset Sale and (d) deduction of appropriate amounts
to be provided by the Company or a Restricted Group Member as a reserve, in
accordance with GAAP, against any liabilities associated with the assets sold or
disposed of in such Asset Sale and retained by the Company or a Restricted Group
Member after such Asset Sale, including, without limitation, severance, health
care, pension and other post-employment benefit liabilities and liabilities
related to environmental matters or against any indemnification obligations
associated with the assets sold or disposed of in such Asset Sale, and (ii)
promissory notes and other non-cash consideration received by the Company or any
Restricted Group Member from such Asset Sale or other disposition upon the
liquidation or conversion of such notes or non-cash consideration into cash.
"Attributable Indebtedness" in respect of a Sale and Lease-Back Transaction
means, as at the time of determination, the greater of (i) the fair value of the
property subject to such arrangement (as determined by the Board of Directors)
and (ii) the present value of the total obligations (discounted at a rate of
10%, compounded annually) of the lessee for rental payments during the remaining
term of the lease included in such Sale and Lease-Back Transaction (including
any period for which such lease has been extended).
"Available Asset Sale Proceeds" means, with respect to any Asset Sale, the
aggregate Asset Sale Proceeds from such Asset Sale that have not been applied in
accordance with clause (iii)(A) or (iii)(B) of the first paragraph under the
"Limitation on Certain Asset Sales" covenant and that have not been the basis
for an Excess Proceeds Offer in accordance with clause (iii)(C) of the first
paragraph under the "Limitation on Certain Asset Sales" covenant.
"Board of Directors" means (i) in the case of a Person that is a
corporation, the board of directors of such Person or any committee authorized
to act therefor, (ii) in the case of a Person that is a limited partnership, the
board of directors of its corporate general partner or any committee authorized
to act therefor (or, if the general partner is itself a limited partnership, the
board of directors of such general partner's corporate general partner or any
committee authorized to act therefor) and (iii) in the case of any other Person,
the board of directors, management committee or similar governing body or any
authorized committee thereof responsible for the management of the business and
affairs of such Person.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated and whether or not voting) of capital
stock, partnership interests or any other participation, right or other interest
in the nature of an equity interest in such Person or any option, warrant or
other security convertible into or exercisable for any of the foregoing.
"Capitalized Lease Obligations" means Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
will be the capitalized amount of such obligations determined in accordance with
GAAP.
"Change of Control" means, at any time after the Issue Date, the occurrence
of one or more of the following events: (i) any Person (including a Person's
Affiliates and associates), other than a Permitted Holder, becomes the
beneficial owner (as defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of 50% or more of the total
voting or economic power of the Common Stock of the Company or Ranger, (ii) any
Person (including a Person's Affiliates and associates), other than a Permitted
Holder, becomes the beneficial owner of more than 33 1/3% of the total voting
power of the Common Stock of the Company or Ranger, and the Permitted Holders
beneficially own, in the aggregate, a lesser percentage of the total voting
power of the Common Stock of the Company or Ranger, as the case may be, than
such other Person and do not have the right or ability by voting power, contract
or otherwise to
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elect or designate for election a majority of the Board of Directors of the
Company, (iii) there will be consummated any consolidation or merger of the
Company in which the Company is not the continuing or surviving corporation or
pursuant to which the Common Stock of the Company would be converted into cash,
securities or other property, other than a merger or consolidation of the
Company in which the holders of the Common Stock of the Company outstanding
immediately prior to the consolidation or merger hold, directly or indirectly,
at least a majority of the Common Stock of the surviving corporation immediately
after such consolidation or merger, or (iv) during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors of the Company or Ranger (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Company or Ranger, as the case may be, has been approved by
a majority of the directors then still in office who either were directors at
the beginning of such period or whose election or recommendation for election
was previously so approved) cease to constitute a majority of the Board of
Directors of the Company or Ranger, as the case may be. For purposes of this
definition, "voting power" will be deemed to include the potential for voting
power upon conversion of outstanding non-voting securities into voting
securities.
"CIBC Ventures" means CIBC Wood Gundy Ventures, Inc.
"Commodity Hedge Agreement" will mean any option, hedge or other similar
agreement or arrangement designed to protect against fluctuations in commodity
or materials prices.
"Common Stock" of any Person means all Capital Stock of such Person that is
generally entitled to (i) vote in the election of directors of such Person or
(ii) if such Person is not a corporation, vote or otherwise participate in the
selection of the governing body, partners, managers or others that will control
the management and policies of such Person.
"Consolidated Fixed Charge Coverage Ratio" means, with respect to any
Person, the ratio of EBITDA of such Person during the four full fiscal quarters
(the "Four Quarter Period") ending on or prior to the date of the transaction
giving rise to the need to calculate the Consolidated Fixed Charge Coverage
Ratio (the "Transaction Date") to Consolidated Fixed Charges of such Person for
the Four Quarter Period. In addition to and without limitation of the foregoing,
for purposes of this definition, "EBITDA" and "Consolidated Fixed Charges" will
be calculated after giving effect on a pro forma basis for the period of such
calculation to (i) the incurrence or repayment of any Indebtedness of such
Person or any of its Restricted Group Members (and the application of the
proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant to working
capital facilities, occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such incurrence or repayment, as the case may be (and
the application of the proceeds thereof), occurred on the first day of the Four
Quarter Period, (ii) any Asset Sales or Asset Acquisitions (including, without
limitation, any Asset Acquisition giving rise to the need to make such
calculation as a result of such Person or one of its Restricted Group Members
(including any Person who becomes a Restricted Group Member as a result of the
Asset Acquisition) incurring, assuming or otherwise being liable for Acquired
Indebtedness and also including any EBITDA (provided that such EBITDA will be
included only to the extent includable pursuant to the definition of
"Consolidated Net Income") attributable to the assets which are the subject of
the Asset Acquisition during the Four Quarter Period) occurring during the Four
Quarter Period or at any time subsequent to the last day of the Four Quarter
Period and on or prior to the Transaction Date, as if such Asset Sale or Asset
Acquisition (including the incurrence, assumption or liability for any such
Acquired Indebtedness) occurred on the first day of the Four Quarter Period and
(iii) net cost savings calculated on a basis consistent with Regulation S-X
under the Securities Act (provided that both (A) such cost savings were
identified and quantified in an Officers' Certificate delivered to the Trustee
at the time of the consummation of the Asset Sale or Asset Acquisition and (B)
with respect to each Asset Sale or Asset Acquisition completed prior to the 90th
day preceding such Transaction Date, actions were commenced or initiated by the
Company within 90 days of such Asset Sale or Asset Acquisition to effect such
cost savings identified in such Officers' Certificate). If such Person or any of
its Restricted Group Members directly or indirectly guarantees Indebtedness of a
third Person, the preceding sentence will give effect to the incurrence of such
guaranteed Indebtedness as if such
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Person or any Restricted Group Member of such Person had directly incurred or
otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter will be
deemed to have accrued at a fixed rate per annum equal to the rate of interest
on such Indebtedness in effect on the Transaction Date; and (2) notwithstanding
clause (1) above, interest on Indebtedness determined on a fluctuating basis, to
the extent such interest is covered by one or more Interest Rate Agreements,
will be deemed to accrue at the rate per annum resulting after giving effect to
the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any Person, for any
period, the sum of (i) Consolidated Interest Expense, plus (ii) without
duplication, the product of (x) the amount of all dividend payments on any
series of Preferred Stock of such Person or any Restricted Group Member,
determined on a consolidated basis (other than dividends paid in Capital Stock
(other than Disqualified Capital Stock) of such Person or any of its
Wholly-Owned Subsidiaries) paid, accrued or scheduled to be paid or accrued
during such period times (y) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective consolidated
federal, state and local tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any Person, for any
period, the aggregate amount of interest which, in conformity with GAAP (without
taking into account interest incurred by Unrestricted Subsidiaries or Permitted
Joint Ventures), would be set forth opposite the caption "interest expense" or
any like caption on an income statement for such Person and its Restricted Group
Members on a consolidated basis (including, but not limited to, (i) imputed
interest included in Capitalized Lease Obligations, (ii) all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing, (iii) the net costs associated with hedging
obligations, (iv) amortization of deferred financing costs, (v) the interest
portion of any deferred payment obligation, (vi) amortization of discount or
premium, if any, and (vii) all other non-cash interest expense (including PIK
Interest) (other than interest amortized to cost of sales)) plus, without
duplication, all net capitalized interest for such period and all interest paid
under any guarantee of Indebtedness (including a guarantee of principal,
interest or any combination thereof) of any Person, plus the amount of all
dividends or distributions paid on Disqualified Capital Stock (other than
dividends paid or payable in shares of Capital Stock of the Company), less the
amortization of deferred financing costs, and excluding, however, any amount of
such interest of any Restricted Group Member if the net income of such
Restricted Group Member is excluded in the calculation of Consolidated Net
Income pursuant to clause (a) or (f) of the definition thereof (but only in the
same proportion as the net income of such Restricted Group Member is excluded
from the calculation of Consolidated Net Income pursuant to clause (a) or (f) of
the definition thereof).
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Restricted Group
Members for such period, on a consolidated basis, determined in accordance with
GAAP; provided, however, that (a) the Net Income of (i) any Person (the "other
Person") in which the Person in question or any of its Restricted Group Members
has less than a 100% interest (which interest does not cause the Net Income of
such other Person to be consolidated into the net income of the Person in
question in accordance with GAAP), (ii) any Unrestricted Subsidiary or (iii) any
Permitted Joint Venture will be included only to the extent of the amount of
dividends or distributions paid to the Person in question or the Restricted
Group Member, (b) the Net Income of any Restricted Group Member of the Person in
question that is subject to any restriction or limitation (including without
limitation as a result of the failure of such dividend or distribution to be
irrevocably authorized by other members of a Restricted Joint Venture, where
such other members' authorization is necessary for such dividend or distribution
or such other members otherwise have the ability to restrict or limit such
dividend or distribution) on the payment of dividends or the making of other
distributions (other than pursuant to the Notes, the Indenture or the Senior
Credit Facility) will be excluded to the extent of such restriction or
limitation, (c) (i) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition and
(ii) any net gain or loss resulting from an Asset Sale by the Person in question
or any of its Restricted Group Members other than in the ordinary course of
business will be excluded,
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(d) extraordinary gains and losses will be excluded, (e) without duplication,
the write-off of fees and expenses arising from the Acquisition will be
excluded, (f) income or loss attributable to discontinued operations (including
without limitation operations disposed of during such period whether or not such
operations were classified as discontinued) will be excluded in an amount not to
exceed $2,000,000 for any four quarter period, (g) to the extent not otherwise
excluded in accordance with GAAP, the Net Income of any Restricted Group Member
in an amount that corresponds to the percentage ownership interest in the income
of such Restricted Group Member not owned on the last day of such period,
directly or indirectly, by such Person will be excluded, (h) dividends or
distributions from Permitted Joint Ventures or Restricted Joint Ventures will in
any event be excluded to the extent used to increase the amount available for
Investment under clause (xii) of the definition of "Permitted Investments" in
accordance with the terms thereof and (i) dividends, distributions and any other
payments constituting return on capital from Investments will in any event be
excluded to the extent used to increase the amount available for Investment
under clause (xiii) of the definition of "Permitted Investments" in accordance
with the terms thereof.
"Consolidated Net Worth" means, with respect to any Person at any date, the
consolidated stockholder's equity of such Person less the amount of such
stockholder's equity attributable to Disqualified Capital Stock of such Person
and its Subsidiaries, as determined in accordance with GAAP.
"Default" means any condition or event that is, or with the passing of time
or giving of any notice expressly required under the Indenture (or both) would
be, an Event of Default.
"Disqualified Capital Stock" means any Capital Stock of a Person which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to the maturity date of the Notes, for cash or
securities constituting Indebtedness. Without limitation of the foregoing,
Disqualified Capital Stock will be deemed to include any Preferred Stock of the
Company, with respect to which, under the terms of such Preferred Stock, by
agreement or otherwise, the Company is obligated to pay current dividends or
distributions in cash during the period prior to the maturity date of the Notes;
provided, however, that Preferred Stock of the Company that is issued with the
benefit of provisions requiring a change of control offer to be made for such
Preferred Stock in the event of a change of control of the Company, which
provisions have substantially the same effect as the provisions described under
"Change of Control Offer," will not be deemed to be Disqualified Capital Stock
solely by virtue of such provisions.
"Domestic" with respect to any Person means a Person whose jurisdiction of
incorporation or formation is the United States, any state thereof or the
District of Columbia.
"EBITDA" means, for any Person, for any period, an amount equal to (a) the
sum of (i) Consolidated Net Income for such period, plus (ii) the provision for
taxes for such period based on income or profits to the extent such income or
profits were included in computing Consolidated Net Income and any provision for
taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period (but only including Redeemable
Dividends in the calculation of such Consolidated Interest Expense to the extent
that such Redeemable Dividends have not been excluded in the calculation of
Consolidated Net Income), plus (iv) depreciation for such period on a
consolidated basis, plus (v) amortization of intangibles for such period on a
consolidated basis, plus (vi) any other non-cash items (excluding any such
non-cash item to the extent that it represents an accrual of or reserve for a
cash expense in any future period or amortization of a prepaid cash expense that
was paid in a prior period) reducing Consolidated Net Income for such period,
minus (b) all such non-cash items increasing Consolidated Net Income for such
period, all for such Person and its Subsidiaries determined in accordance with
GAAP, except that with respect to the Company each of the foregoing items will
be determined on a consolidated basis with respect to the Company and its
Restricted Group Members only; provided, however, that, for purposes of
calculating EBITDA during any fiscal quarter, cash income from a particular
Investment (other than in a Subsidiary which under GAAP is consolidated or a
Restricted Joint Venture) of such Person will be included only (x) to the extent
cash income has been received by such Person with respect to such Investment, or
(y) if the cash income derived from such Investment is attributable to Temporary
Cash Investments.
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"Eligible Receivables" means "Eligible Account Receivable" as that term is
defined in the Senior Credit Facility.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"fair market value" means, with respect to any asset or property, the price
which could be negotiated in an arm's length, free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of whom is under
undue pressure or compulsion to complete the transaction.
"GAAP" means generally accepted accounting principles consistently applied
as in effect in the United States from time to time.
"Guarantee" means, as the context may require, individually, a guarantee,
or collectively, any and all guarantees, of the Obligations of the Company with
respect to the Notes by each Guarantor, if any, pursuant to the terms of the
Indenture.
"Guarantor" means each Domestic Restricted Subsidiary of the Company on the
date of the Indenture or that thereafter becomes a Guarantor pursuant to the
Indenture, and "Guarantors" means such entities, collectively.
"Hancock" means John Hancock Mutual Life Insurance Company.
"incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
guarantee or otherwise become liable in respect of such Indebtedness or other
obligation or the recording, as required pursuant to GAAP or otherwise, of any
such Indebtedness or other obligation on the balance sheet of such Person (and
"incurrence," "incurred," "incurrable" and "incurring" will have meanings
correlative to the foregoing); provided that a change in GAAP that results in an
obligation of such Person that exists at such time becoming Indebtedness will
not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person, any
indebtedness at any time outstanding, secured or unsecured, contingent or
otherwise, which is for borrowed money (whether or not the recourse of the
lender is to the whole of the assets of such Person or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
representing the balance deferred and unpaid of the purchase price of any
property (excluding, without limitation, any balances that constitute accounts
payable or trade payables in the ordinary course of business, any obligations to
other members of a "consortium" or similar group of aircraft service providers
arising from the fact that such Person holds cash and manages aircraft fuel
inventories on behalf of such other consortium members in the ordinary course of
business, and other accrued liabilities arising in the ordinary course of
business) if and to the extent any of the foregoing indebtedness would appear as
a liability upon a balance sheet of such Person prepared in accordance with
GAAP, and will also include, to the extent not otherwise included (i) any
Capitalized Lease Obligations, (ii) obligations secured by a Lien to which the
property or assets owned or held by such Person is subject, whether or not the
obligation or obligations secured thereby will have been assumed (provided,
however, that if such obligation or obligations will not have been assumed, the
amount of such Indebtedness will be deemed to be the lesser of the principal
amount of the obligation or the fair market value of the pledged property or
assets), (iii) guarantees of items of other Persons which would be included
within this definition for such other Persons (whether or not such items would
appear upon the balance sheet of the guarantor), (iv) all obligations for the
reimbursement of any obligor on any letter of credit, banker's acceptance or
similar credit transaction (provided that in the case of any such letters of
credit, the items for which such letters of credit provide credit support are
those of other Persons which would be included within this definition for such
other Persons), (v) Disqualified Capital Stock of such Person or any Restricted
Group Member thereof, and (vi) obligations of any such Person under any Interest
Rate Agreement applicable to any of the foregoing (if and to the extent such
Interest Rate Agreement obligations would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP). The amount of
Indebtedness of any Person at any date will be the outstanding balance at such
date of all unconditional obligations as described above and, with respect to
contingent obligations, the maximum liability upon the occurrence of the
contingency giving rise to the obligation, provided (i) that the amount
outstanding at any time of any Indebtedness issued with original issue
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discount is the principal amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP and (ii) that Indebtedness will not
include any liability for United States or foreign, federal, state, local or
other taxes. Notwithstanding any other provision of the foregoing definition,
any trade payable arising from the purchase of goods or materials or for
services obtained in the ordinary course of business will not be deemed to be
"Indebtedness" of the Company or any Restricted Group Member for purposes of
this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount will not also be included.
"Individual Investors" means the Danielle Schwartz Trust, Randolph Street
Partners II, Gregg L. Engles and Stephen D. Townes.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"Interest Rate Agreement" will mean any interest or foreign currency rate
swap, cap, collar, option, hedge, forward rate or other similar agreement or
arrangement designed to protect against fluctuations in interest rates or
currency exchange rates.
"Inventory" means "Inventory" as that term is defined in the Senior Credit
Facility.
"Investments" means, directly or indirectly, any advance, account
receivable (other than an account receivable arising in the ordinary course of
business or acquired as part of the assets acquired by the Company or any
Restricted Group Member in connection with an acquisition of assets which is
otherwise permitted by the terms of the Indenture), loan or capital contribution
to (by means of transfers of property to others, payments for property or
services for the account or use of others or otherwise), the purchase of any
stock, bonds, notes, debentures, partnership or joint venture interests or other
securities of, the acquisition, by purchase or otherwise, of all or
substantially all of the business or assets or stock or other evidence of
beneficial ownership of, any Person or the making of any investment in any
Person. Investments will exclude (i) extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices and (ii) the
repurchase of securities of any Person by such Person. For the purposes of the
"Limitation on Restricted Payments" covenant, "Investment" will include the fair
market value of the net assets of any Restricted Group Member (in the case of
any Restricted Joint Venture, to the extent of the Company's or its Restricted
Subsidiary's direct or indirect ownership interest in such net assets) at the
time that such Restricted Group Member is designated an Unrestricted Subsidiary
or Permitted Joint Venture and will exclude the fair market value of the net
assets of any Unrestricted Subsidiary or Permitted Joint Venture at the time
that such Unrestricted Subsidiary or Permitted Joint Venture is designated a
Restricted Group Member. If the Company or any Restricted Group Member of the
Company sells or otherwise disposes of any Common Stock of any direct or
indirect Restricted Subsidiary of the Company such that, after giving effect to
any such sale or disposition, the Company no longer owns, directly or
indirectly, greater than 50% of the outstanding Common Stock of such Restricted
Subsidiary, the Company will be deemed to have made an Investment on the date of
any such sale or disposition equal to the fair market value of the Common Stock
of such Restricted Subsidiary not sold or disposed of.
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement, security interest, lien, charge, easement, encumbrance, preference,
priority, or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any Capitalized Lease Obligation, conditional sales, or
other title retention agreement having substantially the same economic effect as
any of the foregoing).
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by or
equity contribution to any Person, the aggregate net proceeds received by such
Person, after payment of expenses, commissions and the
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like incurred in connection therewith, whether such proceeds are in cash or in
property (valued at the fair market value thereof, as determined in good faith
by the Board of Directors of such Person, at the time of receipt) and (b) in the
case of any exchange, exercise, conversion or surrender of outstanding
securities of any kind for or into shares of Capital Stock of such Person which
is not Disqualified Capital Stock, the net book value of such outstanding
securities on the date of such exchange, exercise, conversion or surrender (plus
any additional amount required to be paid by the holder to such Person upon such
exchange, exercise, conversion or surrender, less any and all payments made to
the holders, e.g., on account of fractional shares and less all expenses
incurred by such Person in connection therewith).
"Obligations" means, with respect to any Indebtedness, any principal,
premium, interest, penalties, fees, indemnifications, reimbursements, damages
and other expenses payable under the documentation governing such Indebtedness.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chief Executive Officer, the President or any Vice President and
the Chief Financial Officer or any Treasurer of such Person that will comply
with applicable provisions of the Indenture.
"Permitted Holders" means, collectively, (i) the Company and Ranger, (ii)
Hancock, Tioga, CIBC Ventures, and any Affiliate of the foregoing (other than
any of their portfolio companies) and (iii) the Individual Investors, each of
the spouses, children (adoptive or biological) or other lineal descendants of
the Individual Investors, the probate estate of any such individual and any
trust, so long as one or more of the foregoing individuals retain substantially
all of the controlling or beneficial interest thereunder.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Guarantor arising under or
in connection with the Senior Credit Facility in an amount not to exceed
the greater of (A) $15,000,000 less the aggregate amount of all mandatory
prepayments actually made thereunder to the extent that the corresponding
commitments have been permanently reduced and all scheduled payments
actually made thereunder, or (B) the aggregate of 85% of Eligible
Receivables and 60% of eligible Inventory;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness of non-Domestic Wholly-Owned Subsidiaries and
Restricted Joint Ventures outstanding under one or more working capital
facilities not to exceed the aggregate of 85% of eligible accounts
receivable and 60% of eligible inventory of each such non-Domestic
Wholly-Owned Subsidiary or Restricted Joint Venture;
(iv) Indebtedness not covered by any other clause of this definition
which is outstanding on the date of the Indenture;
(v) Indebtedness of the Company to any Wholly-Owned Subsidiary of
the Company and Indebtedness of any Wholly-Owned Subsidiary of the Company
to the Company or another Wholly-Owned Subsidiary of the Company; provided
that (A) if the Company or any Guarantor is the obligor on such
Indebtedness, such Indebtedness is unsecured and expressly subordinated to
the payment in full in cash to all obligations in respect of the Notes and
the Guarantee of such Guarantor and (B)(I) any subsequent issuance or
transfer of equity interests that results in any such Indebtedness being
held by a Person other than the Company or a Wholly-Owned Subsidiary of the
Company and (II) any sale or transfer of any such Indebtedness to a Person
other than the Company or a Wholly-Owned Subsidiary of the Company will be
deemed to constitute an incurrence of Indebtedness by the Company or such
Restricted Group Member not permitted by this clause (v);
(vi) Interest Rate Agreements;
(vii) Refinancing Indebtedness;
(viii) Indebtedness under Commodity Hedge Agreements entered into in
the ordinary course of business consistent with reasonable business
requirements and not for speculation;
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(ix) Indebtedness consisting of guarantees made in the ordinary
course of business by the Company or its Subsidiaries of obligations of the
Company or any of its Wholly-Owned Subsidiaries, which obligations are
otherwise permitted under the Indenture;
(x) contingent obligations of the Company or its Subsidiaries in
respect of customary indemnification and purchase price adjustment
obligations incurred in connection with an Asset Sale; provided that the
maximum assumable liability in respect of all such obligations will at no
time exceed the gross proceeds actually received by the Company and its
Subsidiaries in connection with such Asset Sale;
(xi) Purchase Money Indebtedness and Capitalized Lease Obligations of
the Company and its Subsidiaries incurred to acquire property in the
ordinary course of business and any refinancings, renewals or replacements
of any such Purchase Money Indebtedness or Capitalized Lease Obligation
(subject to the limitations on the principal amount thereof set forth in
this clause (xi)), the principal amount of which Purchase Money
Indebtedness and Capitalized Lease Obligations will not in the aggregate at
any one time outstanding exceed $2,500,000; and
(xii) additional Indebtedness of the Company or any Guarantor (other
than Indebtedness specified in clauses (i) through (xi) above) not to
exceed $5,000,000 in the aggregate at any one time outstanding.
"Permitted Investments" means, for any Person, Investments made on or after
the date of the Indenture consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
(iii) Investments by the Company, or by a Restricted Subsidiary
thereof, in a Person, if as a result of such Investment (a) such Person
becomes a Restricted Subsidiary of the Company, (b) such Person is merged,
consolidated or amalgamated with or into, or transfers or conveys
substantially all of its assets to, or is liquidated into, the Company or a
Restricted Subsidiary thereof or (c) such business or assets are owned by
the Company or a Restricted Subsidiary;
(iv) an Investment that is made by the Company or a Restricted
Subsidiary thereof in the form of any stock, bonds, notes, debentures,
partnership or joint venture interests or other securities that are issued
by a third party to either or both of the Company or a Restricted
Subsidiary solely as partial consideration for the consummation of an Asset
Sale that is otherwise permitted by the "Limitation on Certain Asset Sales"
covenant;
(v) Investments consisting of (a) purchases and acquisitions of
inventory, supplies, materials and equipment, or (b) licenses or leases of
intellectual property and other assets in each case in the ordinary course
of business;
(vi) Investments consisting of (a) loans and advances to employees
for reasonable travel, relocation and business expenses in the ordinary
course of business and loans to directors or employees of Ranger, the
Company or its Subsidiaries for the sole purpose of purchasing equity of
Ranger, the principal amount of which loans and advances permitted by this
clause (vi)(a) will not exceed $1,500,000 in the aggregate at any one time
outstanding (excluding any such loans or advances outstanding on the date
of the Indenture), (b) extensions of trade credit in the ordinary course of
business, and (c) prepaid expenses incurred in the ordinary course of
business;
(vii) without duplication, Investments consisting of Indebtedness
permitted pursuant to clause (v) of the definition of "Permitted
Indebtedness;"
(viii) Investments existing on the date of the Indenture;
(ix) Investments of the Company under Interest Rate Agreements;
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(x) Investments under Commodity Hedge Agreements entered into in the
ordinary course of business consistent with reasonable business
requirements and not for speculation;
(xi) Investments consisting of endorsements for collection or deposit
in the ordinary course of business;
(xii) Investments in Permitted Joint Ventures and Restricted Joint
Ventures, or in a Person which as a result of such Investment becomes a
Permitted Joint Venture or Restricted Joint Venture; provided that (A) at
the time such Investment is made, no Default or Event of Default will have
occurred and be continuing (or would result therefrom); and (B) after
giving effect to such Investment, the aggregate Investment made by the
Company and its Restricted Group Members in Permitted Joint Ventures and
Restricted Joint Ventures does not exceed 5% of the Company's consolidated
assets (other than goodwill and other intangibles); provided, further, that
the amount available for Investments to be made pursuant to this clause
(xii) will be increased from time to time to the extent any return on
capital is received by the Company or a Wholly-Owned Subsidiary on an
Investment made in reliance on this clause (xii), in each case, up to, but
not exceeding, the amount of the original Investment but only to the extent
such return on capital is excluded from Consolidated Net Income;
(xiii)Investments consisting of stock, obligations or securities
received as part of or in connection with the bankruptcy, winding up,
liquidation or reorganization of a Person that is or was a customer of the
Company or any of its Subsidiaries, unless such stock, obligations or
securities are received in consideration for an Investment made in such
Person in connection with or anticipation of such bankruptcy, winding up or
liquidation;
(xiv)Investments, to the extent that the consideration provided by
the Company or any Restricted Group Member consists solely of Capital Stock
(other than Disqualified Capital Stock) of the Company; and
(xv) Investments (other than Investments specified in clauses (i)
through (xiv) above) in an aggregate amount, as valued at the time each
such Investment is made, not exceeding $1,000,000 for all such Investments
from and after the date of the Indenture; provided that the amount
available for Investments to be made pursuant to this clause (xv) will be
increased from time to time to the extent any return on capital is received
by the Company or a Wholly-Owned Subsidiary on an Investment made in
reliance on this clause (xv), in each case, up to, but not exceeding, the
amount of the original Investment but only to the extent such return on
capital is excluded from Consolidated Net Income.
"Permitted Joint Venture" means any joint venture arrangement (which may be
structured as a corporation, partnership, trust, limited liability company or
any other Person) if (a) no Affiliate (other than a Restricted Subsidiary of the
Company) of the Company or a Restricted Subsidiary has an Investment in such
Person, (b) such Person is engaged in the business of providing aviation
services or aerospace support, (c) the Company, directly or through its
Restricted Subsidiaries, at all times owns at least 25% of the total outstanding
shares of Capital Stock of such Person entitled to participate in distributions
in respect of the earnings, sale or liquidation of such Person, (d) the Company,
directly or through its Restricted Subsidiaries, is entitled to (A) in the case
of an Investment in Capital Stock, receive dividends or other distributions on
its Investment at the same time as or prior to, and on a basis at least pro rata
with, any other holder or holders of Capital Stock of such Person and (B) in the
case of an Investment other than in Capital Stock, receive interest thereon at a
rate per annum not less than the rate on the Notes and, on the liquidation or
dissolution of such Person, receive repayment of the principal thereof prior to
the payment of any dividends or distributions on Capital Stock of such Person,
(e) the Company, directly or through its Restricted Subsidiaries, either (x)
controls, under an operating and management agreement or otherwise, the
day-to-day management and operation of such Person and any facility of the
Person in which the Investment is made or (y) has significant influence over the
management and operation of such Person and any facility of such Person in all
material respects (significant influence to include the right to control or veto
any material act or decision) in connection with such management or operation,
and (f) no default with respect to any Indebtedness of such Person or any
Subsidiary of such Person (including any right which the holders thereof may
have to take enforcement action against such Person) would permit (upon notice,
lapse of time or both) any holder of any
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material Indebtedness of the Company or its Restricted Subsidiaries to declare a
default on such Indebtedness or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity. If, at any time, a Permitted
Joint Venture fails to comply with clauses (a) through (f) above, such Permitted
Joint Venture will constitute an Investment and must comply with the "Limitation
on Restricted Payments" covenant (but only with respect to the Company's then
net Investment in such Permitted Joint Venture).
"Permitted Liens" means (i) Liens on property or assets of, or any shares
of stock of or secured debt of, any corporation existing at the time such
corporation becomes a Restricted Subsidiary of the Company or at the time such
corporation is merged into the Company or any of its Restricted Subsidiaries;
provided that such Liens are not incurred in connection with, or in
contemplation of, such corporation becoming a Restricted Subsidiary of the
Company or merging into the Company or any of its Restricted Subsidiaries, (ii)
Liens securing Refinancing Indebtedness; provided that any such Lien does not
extend to or cover any Property, shares or debt other than the Property, shares
or debt securing the Indebtedness so refunded, refinanced or extended, (iii)
Liens in favor of the Company or any of its Restricted Group Members, (iv) Liens
securing industrial revenue bonds, (v) Liens to secure Purchase Money
Indebtedness and Capitalized Lease Obligations that are permitted under the
definition of "Permitted Indebtedness" in an aggregate amount at any one time
outstanding not to exceed 5% of the Company's consolidated assets (other than
goodwill and other intangibles); provided that (a) with respect to any Purchase
Money Indebtedness, any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the cost
(including sales and excise taxes, installation and delivery charges and other
direct costs of, and other direct expenses paid or charged in connection with,
such purchase or construction) of such Property, (b) with respect to any
Purchase Money Indebtedness, the principal amount of the Indebtedness secured by
such Lien does not exceed 100% of such costs, and (c) such Lien does not extend
to or cover any Property other than the item of Property that is the subject of
such Purchase Money Indebtedness or Capitalized Lease Obligation, as the case
may be, and any improvements on such item, (vi) statutory liens or landlords',
carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which do not secure
any Indebtedness and with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as will be required in conformity with GAAP will
have been made therefor, (vii) Liens for taxes, assessments or governmental
charges that are being contested in good faith by appropriate proceedings,
(viii) Liens on Collateral (as defined in the Senior Credit Facility as in
effect on the Issue Date) securing Permitted Indebtedness under the Senior
Credit Facility, (ix) Liens on accounts receivable and inventory of non-Domestic
Wholly-Owned Subsidiaries or Restricted Joint Ventures securing Permitted
Indebtedness under the working capital facilities described in clause (iii) of
the definition of "Permitted Indebtedness," (x) Liens securing Indebtedness of
the Company or any Guarantor incurred in reliance upon clause (xii) of the
definition of "Permitted Indebtedness"; (xi) Liens (other than Liens specified
in clauses (viii) through (x) above) securing Indebtedness of the company or any
Guarantor in an aggregate amount not to exceed $15,000,000 at any one time
outstanding incurred pursuant to a credit facility otherwise permitted by the
terms of the Indenture; (xii) Liens existing on the date of the Indenture,
(xiii) any extensions, substitutions, replacements or renewals of the foregoing,
(xiv) Liens incurred in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other forms of government
insurance or benefits, or to secure the performance of letters of credit, bids,
tenders, statutory obligations, surety and appeal bonds, leases, government
contracts and other similar obligations (other than obligations for borrowed
money) entered into in the ordinary course of business, (xv) any attachment or
judgment Lien not constituting an Event of Default under the Indenture that is
being contested in good faith by appropriate proceedings and for which adequate
reserves have been established in accordance with GAAP (if so required), (xvi)
Liens arising from the filing, for notice purposes only, of financing statements
in respect of operating leases, (xvii) Liens arising by operation of law in
favor of depositary banks and collecting banks, incurred in the ordinary course
of business, (xviii) Liens consisting of restrictions on the transfer of
securities pursuant to applicable federal and state securities laws, (xix)
interests of lessors and licensors under leases and licenses to which the
Company or any of its Restricted Group Members is a party, (xx) with respect to
any real property occupied by the Company or any of its Restricted Group
Members, all easements, rights of way, licenses and similar encumbrances on or
defects of title that do not materially impair the use of such property for its
intended
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purposes, and (xxi) Liens securing Indebtedness or other obligations in an
aggregate amount not to exceed $250,000 at any one time outstanding.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization or government (including any agency or political subdivision
thereof).
"PIK Interest" means, with respect to any Indebtedness, any interest
thereon paid or payable in the form of additional Indebtedness.
"Preferred Stock" means any Capital Stock of a Person, however designated,
which entitles the holder thereof to a preference with respect to dividends,
distributions or liquidation proceeds of such Person over the holders of other
Capital Stock issued by such Person.
"Property" of any Person means all types of real, personal, tangible,
intangible or mixed property owned by such Person whether or not included in the
most recent consolidated balance sheet of such Person and its Subsidiaries under
GAAP.
"Public Offering" means an underwritten public offering and sale by the
Company or Ranger of shares of its common stock (however designated and whether
voting or non-voting) and any and all rights, warrants or options to acquire
such common stock pursuant to a registration statement registered pursuant to
the Securities Act.
"Purchase Money Indebtedness" means any Indebtedness incurred by a Person
to finance (within 90 days from incurrence) the cost (including the cost of
construction) of an item of Property acquired in the ordinary course of
business, the principal amount of which Indebtedness does not exceed the sum of
(i) 100% of such cost and (ii) reasonable fees and expenses of such Person
incurred in connection therewith.
"Redeemable Dividend" means, for any dividend or distribution with regard
to Disqualified Capital Stock, the quotient of the dividend or distribution
divided by the difference between one and the maximum statutory federal income
tax rate (expressed as a decimal number between 1 and 0) then applicable to the
Company of such Disqualified Capital Stock.
"Refinancing Indebtedness" means Indebtedness that refunds, refinances or
extends any Indebtedness of the Company outstanding on the Issue Date or other
Indebtedness permitted to be incurred by the Company or its Restricted Group
Members pursuant to the terms of the Indenture, but only to the extent that (i)
the Refinancing Indebtedness is subordinated to the Notes to at least the same
extent as the Indebtedness being refunded, refinanced or extended, if at all,
(ii) the Refinancing Indebtedness is scheduled to mature either (a) no earlier
than the Indebtedness being refunded, refinanced or extended, or (b) after the
maturity date of the Notes, (iii) the portion, if any, of the Refinancing
Indebtedness that is scheduled to mature on or prior to the maturity date of the
Notes has a weighted average life to maturity at the time such Refinancing
Indebtedness is incurred that is equal to or greater than the weighted average
life to maturity of the portion of the Indebtedness being refunded, refinanced
or extended that is scheduled to mature on or prior to the maturity date of the
Notes, (iv) such Refinancing Indebtedness is in an aggregate principal amount
that is equal to or less than the sum of (a) the aggregate principal amount then
outstanding under the Indebtedness being refunded, refinanced or extended, (b)
the amount of accrued and unpaid interest, if any, and premiums owed, if any,
not in excess of preexisting prepayment provisions on such Indebtedness being
refunded, refinanced or extended and (c) the amount of customary fees, expenses
and costs related to the incurrence of such Refinancing Indebtedness, and (v)
such Refinancing Indebtedness is incurred by the same Person that initially
incurred the Indebtedness being refunded, refinanced or extended.
"Restricted Group Members" means, collectively, each Restricted Subsidiary
of the Company, each Restricted Joint Venture and each Restricted Subsidiary of
a Restricted Joint Venture.
"Restricted Joint Venture" means a Permitted Joint Venture that has been
designated by the Board of Directors of the Company as a Restricted Joint
Venture based on its good faith determination, evidenced by a board resolution,
that the Company has, directly or indirectly, the requisite control over such
Permitted Joint Venture to prevent it from incurring Indebtedness, or taking any
other action at any time, in contravention of
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any of the provisions of the Indenture that are applicable to Restricted Joint
Ventures; provided that, immediately after giving effect to such designation,
(i) the Indebtedness and Liens of such Permitted Joint Venture outstanding
immediately after such designation would, if incurred at such time, have been
permitted to be incurred for all purposes of the Indenture; and (ii) no Default
or Event of Default will have occurred and be continuing. The Company will
deliver an Officers' Certificate to the Holders upon designating any Permitted
Joint Venture as a Restricted Joint Venture. As of the Issue Date, Omni Aircraft
will not be a Restricted Joint Venture.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution or payment on Capital Stock of
the Company or any Restricted Group Member or any payment made to the direct or
indirect holders (in their capacities as such) of Capital Stock of the Company
or any Restricted Group Member (other than (x) dividends or distributions
payable solely in Capital Stock (other than Disqualified Capital Stock) or in
options, warrants or other rights to purchase Capital Stock (other than
Disqualified Capital Stock), and (y) in the case of Restricted Group Members,
dividends or distributions payable to the Company or to a Wholly-Owned
Subsidiary of the Company), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company or any of its
Restricted Group Members (other than Capital Stock owned by the Company or a
Wholly-Owned Subsidiary of the Company, excluding Disqualified Capital Stock) or
any option, warrants or other rights to purchase such Capital Stock, (iii) the
making of any principal payment on, or the purchase, defeasance, repurchase,
redemption or other acquisition or retirement for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment, of any
Indebtedness which is subordinated in right of payment to the Notes other than
subordinated Indebtedness acquired in anticipation of satisfying a scheduled
sinking fund obligation, principal installment or final maturity (in each case
within one year of the date of acquisition), (iv) the making of any Investment
or guarantee of any Investment in any Person other than a Permitted Investment,
(v) any designation of a Restricted Group Member as an Unrestricted Subsidiary
or a Permitted Joint Venture on the basis of the Investment by the Company
therein and (vi) forgiveness of any Indebtedness of an Affiliate of the Company
(other than a Restricted Group Member) to the Company or a Restricted Group
Member (other than the cancellation of loans to directors or employees of
Ranger, the Company or its Subsidiaries made in accordance with clause (vi) of
the definition of "Permitted Investments" in connection with the return to
Ranger of the equity of Ranger originally purchased by such director as employee
with the proceeds of such loan). For purposes of determining the amount expended
for Restricted Payments, cash distributed or invested will be valued at the face
amount thereof and property other than cash will be valued at its fair market
value determined in good faith by the Company's Board of Directors.
"Restricted Subsidiary" means a Subsidiary of the Company other than an
Unrestricted Subsidiary and includes all of the Subsidiaries of the Company
existing in the date of the Indenture. The Board of Directors of the Company may
designate any Unrestricted Subsidiary or any Person that is to become a
Subsidiary as a Restricted Subsidiary if immediately after giving effect to such
action (and treating any Acquired Indebtedness as having been incurred at the
time of such action), (i) the Company could have incurred at least $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to the
"Limitation on Additional Indebtedness" covenant and (ii) no Default or Event of
Default will have occurred and be continuing. The Company will deliver an
Officers' Certificate to the Holders upon designating any Unrestricted
Subsidiary as a Restricted Subsidiary.
"Sale and Lease-Back Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Restricted Group Member of any
real or tangible personal Property, which Property has been or is to be sold or
transferred by the Company or such Restricted Group Member to such Person in
contemplation of such leasing.
"S&P" means Standard & Poor's Corporation and its successors.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Credit and Security Agreement dated as
of April 2, 1998 between the Company and Key Corporate Capital Inc., together
with the documents related thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
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amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Subsidiaries
as additional borrowers or guarantors thereunder (provided that such increase in
borrowings or adding Subsidiaries of the Company as additional borrowers or
guarantors is permitted by the "Limitation on Additional Indebtedness"
covenant)) all or any portion of the Indebtedness under such agreement or any
successor or replacement agreement and whether by the same or any other agent,
lender or group of lenders.
"Subsidiary" of any specified Person means any corporation, partnership,
limited liability company, joint venture, association or other business entity,
whether now existing or hereafter organized or acquired, (i) in the case of a
corporation, of which more than 50% of the total voting power of the Capital
Stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, officers or trustees thereof is held by such
first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, limited liability company, joint venture, association or other
business entity, with respect to which such first-named Person or any of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise or if in accordance with
GAAP such entity is consolidated with the first-named Person for financial
statement purposes.
"Temporary Cash Investments" means (i) Investments in marketable direct
obligations issued or guaranteed by the United States of America, or of any
governmental agency or political subdivision thereof, maturing within 365 days
of the date of purchase; (ii) Investments in certificates of deposit and
eurodollar time deposits issued by a bank organized under the laws of the United
States of America, any state thereof (or the District of Columbia) or any
foreign country recognized by the United States, in each case having capital,
surplus and undivided profits at the time of investment totaling more than
$500,000,000 (or the foreign currency equivalent thereof) and rated at the time
of investment at least A by S&P and A-2 by Moody's (or similar equivalent
foreign ratings), maturing within 365 days of purchase; (iii) Investments not
exceeding 365 days in duration in money market funds that invest substantially
all of such funds' assets in the Investments described in the preceding clauses
(i) and (ii); (iv) Investments in commercial paper with a maturity of 180 days
or less issued by a corporation (except an Affiliate of the Company) organized
under the laws of any state of the United States (or the District of Columbia)
or any foreign country recognized by the United States and at the time of
investment rated at least A-1 by S&P or at least P-1 by Moody's (or similar
equivalent foreign ratings) and (v) Investments in repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clause (i) above entered into with a bank meeting the qualifications
described in clause (ii) above.
"Tioga" means Tioga Capital Corporation.
"Tioga Letter" means the letter from Tioga to the Company regarding payment
of advisory fees, dated April 2, 1998.
"Unrestricted Subsidiary" means (a) any Subsidiary of an Unrestricted
Subsidiary and (b) any Subsidiary of the Company which is classified after the
Issue Date as an Unrestricted Subsidiary by a resolution adopted by the Board of
Directors of the Company; provided that a Subsidiary organized or acquired after
the Issue Date may be so classified as an Unrestricted Subsidiary only if such
classification is in compliance with the "Limitation on Restricted Payments"
covenant. The Purchaser will be given prompt notice by the Company of each
resolution adopted by the Board of Directors of the Company under this
provision, together with a copy of each such resolution adopted.
"U.S. Government Obligations" means (a) securities that are direct
obligations of the United States of America for the payment of which its full
faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and will also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt;
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provided that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or a specific payment of principal or interest on any such
U.S. Government Obligation held by such custodian for the account of the holder
of such depository receipt.
"Wholly-Owned Subsidiary" of a specified Person means any Subsidiary (or,
if such specified Person is the Company, a Restricted Subsidiary), all of the
outstanding voting securities (other than, in respect of non-Domestic
Subsidiaries, directors' qualifying shares or immaterial amounts of shares held
by foreign nationals to the extent mandated by or advantageous under applicable
law) of which are owned, directly or indirectly, by such Person.
BOOK ENTRY; DELIVERY AND FORM
The New Notes will be represented by one or more permanent global notes in
definitive, fully registered form without interest coupons (the "Global Notes"),
and will be deposited with the Trustee as custodian for, and registered in the
name of a nominee of, DTC.
Ownership of beneficial interests in a Global Note will be limited to
persons who have accounts with DTC ("participants") or persons who hold interest
through participants. Ownership of beneficial interests in a Global Note will be
shown on, and the transfer of that ownership will be effected only through,
records maintained by DTC or its nominee (with respect to interests of
participants) and the records of participants (with respect to interests of
persons other than participants), qualified institutional buyers may hold their
interests in a Global Note directly through DTC if they are participants in such
system, or indirectly through organizations which are participants in such
system.
So long as DTC, or its nominee, is the registered owner or holder of a
Global Note, DTC or such nominee, as the case may be, will be considered the
sole owner or holder of the New Notes represented by such Global Notes for all
purposes under the Indenture and the New Notes. No beneficial owner of an
interest in a Global Note will be able to transfer that interest except in
accordance with DTC's applicable procedures, in addition to those provided for
under the Indenture.
Payments of the principal of, and interest on, a Global Note will be made
to DTC or its nominee, as the case may be, as the registered owner thereof.
Neither the Company, the Trustee nor any Paying Agent will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in a Global Note or
for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The Company expects that DTC or its nominee, upon receipt of any payment of
principal interest in respect of a Global Note, will credit participants'
accounts with payments in amounts proportionate to their respective beneficial
interests in the principal amount of such Global Note as shown on the records of
DTC or its nominee. The Company also expects that payments by participants to
owners of beneficial interests in such Global Note held through such
participants will be governed by standing instructions and customary practices,
as is now the case with securities held for the accounts of customers registered
in the names of nominees for such customers. Such payments will be the
responsibility of such participants.
Transfers between the participants in DTC will be effected in the ordinary
way in accordance with DTC rules and will be settled in same-day funds.
The Company expects that DTC will take any action permitted to be taken by
a holder of New Notes only at the direction of one or more participants to whose
account the DTC interests in a Global Note is credited and only in respect of
such portion of the aggregate principal amount of New Notes as to which such
participant or participants has or have given such direction. However, if there
is an Event of Default under the New Notes, DTC will exchange the applicable
Global Note for certificated notes, which it will distribute to its
participants.
The Company understands that: DTC is a limited purpose trust company
organized under the laws of the State of New York, a "banking organization"
within the meaning of New York Banking Law, a member of
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the Federal Reserve System, a "clearing corporation" within the meaning of the
Uniform Commercial Code and a "Clearing Agency" registered pursuant to the
provisions of Section 17A of the Exchange Act. DTC was created to hold
securities for its participants and facilitate the clearance and settlement of
securities transactions between participants through electronic book-entry
changes in accounts of its participants, thereby eliminating the need for
physical movement of certificates and certain other organizations. Indirect
access to the DTC system is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a participant, either directly or indirectly ("indirect participants").
Although DTC is expected to follow the foregoing procedures in order to
facilitate transfers of interests in a Global Note among participants of DTC, it
is under no obligation to perform or continue to perform such procedures, and
such procedures may be discounted at any time. Neither the Company nor the
Trustee will have any responsibility for the performance by DTC or its
participants or indirect participants of its obligations under the rules and
procedures governing its operations.
If DTC is at any time unwilling or unable to continue as a depositary for
the Global Notes and a successor depositary is not appointed by the Company
within 90 days, the Company will issue certificated notes, pursuant to the
Indenture.
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MATERIAL FEDERAL INCOME TAX CONSIDERATIONS
The following is a general discussion of the material U.S. federal income
tax aspects of the acquisition, ownership and disposition of the Notes. This
discussion is a summary for general information purposes only and does not
consider all aspects of U.S. federal income taxation that may be relevant to the
acquisition, ownership and disposition of the Notes by a prospective investor in
light of such investor's personal circumstances. This discussion also does not
address the U.S. federal income tax consequences of the acquisition, ownership
and disposition of Notes not held as capital assets within the meaning of
Section 1221 of the U.S. Internal Revenue Code of 1986, as amended (the "Code"),
or the U.S. federal income tax consequences to investors subject to special
treatment under the U.S. federal income tax laws, such as dealers in securities
or foreign currency, tax-exempt entities, financial institutions, insurance
companies, persons that hold the Notes as part of a "straddle," "hedge,"
"conversion transaction" or other integrated investment, persons that have a
"functional currency" other than the U.S. dollar, and investors in pass-through
entities. In addition, this discussion does not describe any U.S. federal
alternative minimum tax consequences, and does not describe any tax consequences
arising under U.S. federal gift and estate or other federal tax laws (except to
the limited extent set forth below under "Non-U.S. Holders") or under the tax
laws of any state, local or foreign jurisdiction.
This discussion is based upon the Code, existing regulations thereunder
(the "Treasury Regulations"), and current administrative rulings and court
decisions. All of the foregoing is subject to change, possibly on a retroactive
basis, and any such change could affect the continuing validity of this
discussion.
The exchange of Old Notes for Exchange Notes pursuant to the Exchange Offer
will not be treated as an "exchange" for federal income tax purposes because the
Exchange Notes will not be considered to differ materially in kind or extent
from the Old Notes. Rather, the Exchange Notes received by a holder will be
treated as a continuation of the Old Notes in the hands of such holder. As a
result, there will be no federal income tax consequences to holders exchanging
Old Notes for Exchange Notes pursuant to the Exchange Offer.
PERSONS CONSIDERING THE EXCHANGE OF OLD NOTES SHOULD CONSULT THEIR OWN TAX
ADVISORS CONCERNING THE APPLICATION OF U.S. FEDERAL INCOME, ESTATE AND OTHER TAX
LAWS, AS WELL AS THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING JURISDICTION, TO
THEIR PARTICULAR SITUATIONS.
U.S. HOLDERS
The following discussion is limited to the U.S. federal income tax
consequences relevant to a holder of a Note that is (i) a citizen or resident
(as defined in Section 7701(b)(1) of the Code) of the United States, (ii) a
corporation organized under the laws of the United States or any political
subdivision thereof or therein, (iii) an estate, the income of which is subject
to U.S. federal income tax regardless of the source, or (iv) a trust, if a court
within the United States is able to exercise primary supervision over the
trust's administration and one or more United States persons have the authority
to control all its substantial decisions (a "U.S. Holder"). Certain U.S. federal
income tax consequences relevant to a holder other than a U.S. Holder are
discussed separately below.
STATED INTEREST
Interest on a Note will generally be taxable to a U.S. Holder as ordinary
interest income at the time it is received or accrued in accordance with such
Holder's method of accounting for U.S. federal income tax purposes.
In the event of a Change of Control, each holder of a Note will have the
right to require the Company to purchase such Note at a price equal to 101% of
the principal amount thereof. The Treasury Regulations provide that such right
will not affect the yield or maturity date of the Note unless, based on all the
facts and circumstances as of the issue date, it is more likely than not that a
Change of Control giving rise to the redemption right will occur. The Company
has no present intention of treating the redemption provisions of the Notes as
affecting the computation of the yield to maturity of the Notes.
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The Company may redeem the Notes at any time on or after August 15, 2003,
and in certain circumstances, may redeem a portion of the Notes at any time
prior to August 15, 2001. Under the Treasury Regulations, the Company is deemed
to exercise any option to redeem if the exercise of such option would lower the
yield of the debt instrument. The Company will not be treated as having
exercised an option to redeem under these rules.
MARKET DISCOUNT
If a U.S. Holder acquires a Note at a "market discount," some or all of any
gain recognized upon a sale or other disposition of such Note, or upon receipt
of principal payments at or prior to maturity, may be treated as ordinary
income, as described below. For this purpose, "market discount" is the excess
(if any) of the "stated redemption price at maturity" over the purchase price,
subject to a statutory de minimis exception, and the "stated redemption price at
maturity" is the aggregate of all payments due to the U.S. Holder under such
Note at or before its maturity date, other than "qualified stated interest."
"Qualified stated interest" is generally interest that is actually and
unconditionally payable in cash or property (other than debt instruments of the
issuer) at fixed intervals of one year or less during the entire term of the
Note at certain specified rates. Unless a U.S. Holder has elected to include the
market discount in income as it accrues, any gain recognized on any subsequent
disposition of such Note (other than in connection with certain nonrecognition
transactions), or on receipt of any principal payments with respect to such Note
at or prior to maturity will be treated as ordinary income to the extent of the
market discount that is treated as having accrued during the period such U.S.
Holder held such Note.
The amount of market discount treated as having accrued will be determined
either (i) on a straight-line basis by multiplying the market discount times a
fraction, the numerator of which is the number of days the Note was held by the
U.S. Holder and the denominator of which is the total number of days after the
date such U.S. Holder acquired such Note up to and including the date of its
maturity or (ii) if the U.S. Holder so elects, on a constant interest rate
method. A U.S. Holder may make that election with respect to any Note, but, once
made, such election is irrevocable.
In lieu of recharacterizing gain upon disposition as ordinary income to the
extent of accrued market discount at the time of disposition, a U.S. Holder of a
Note acquired at a market discount may elect to include market discount in
income currently, through the use of either the straight-line method or the
elective constant interest method. Once made, the election to include market
discount in income currently will apply to all Notes and other obligations held
by the U.S. Holder that are purchased at a market discount during the taxable
year for which the election is made, and all subsequent taxable years of the
U.S. Holder, unless the Internal Revenue Service (the "IRS") consents to a
revocation of the election. If an election is made to include market discount in
income currently, the basis of the Note in the hands of the U.S. Holder will be
increased by the market discount thereon as it is included in income.
Unless a U.S. Holder who acquires a Note at a market discount elects to
include market discount in income currently, such U.S. Holder may be required to
defer deductions for any interest paid on indebtedness allocable to such Notes
in an amount not exceeding the deferred market discount income until such income
is recognized.
BOND PREMIUM
If a U.S. Holder purchases a Note and immediately after the purchase the
adjusted basis of such Note exceeds the sum of all amounts payable on the
instrument after the purchase date (other than qualified stated interest), the
Note has "bond premium." A U.S. Holder may elect to amortize such bond premium
over the remaining term of such Note (or if it results in a smaller amount of
amortizable bond premium, until an earlier call date).
If bond premium is amortized, the amount of interest that must be included
in the U.S. Holder's income for each period ending on an interest payment date
or at the stated maturity, as the case may be, will be reduced by the portion of
premium allocable to such period based on the Note's yield to maturity. If such
an election to amortize bond premium is not made, a U.S. Holder must include the
full amount of each interest
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payment in income in accordance with its regular method of accounting and will
receive a tax benefit from the premium only in computing such U.S. Holder's gain
or loss upon the sale or other disposition or payment of the principal amount of
the Note.
An election to amortize premium will apply to amortizable bond premium on
all Notes and other bonds, the interest on which is includible in the U.S.
Holder's gross income, held at the beginning of the U.S. Holder's first taxable
year to which the election applies or that are thereafter acquired, and such
election may be revoked only with the consent of the IRS.
SALE, EXCHANGE OR REDEMPTION OF THE NOTES
Upon the disposition of a Note by sale, exchange, redemption or otherwise,
a U.S. Holder will generally recognize gain or loss equal to the difference
between (i) the amount realized on the disposition (other than amounts
attributable to accrued and unpaid interest, which will be taxable as ordinary
income) and (ii) the U.S. Holder's adjusted tax basis in the Note. A U.S.
Holder's adjusted tax basis in a Note generally will equal the cost of the Note
to the U.S. Holder increased by amounts includible in income as market discount
(if the U.S. Holder elects to include market discount on a current basis) and
reduced by any bond premium amortized by the U.S. Holder.
Provided the Note is held as a capital asset, such gain or loss (except to
the extent that the market discount rules otherwise provide) will generally
constitute capital gain or loss and, in the case of individuals, will be
long-term capital gain (subject to a maximum rate of 20%) or loss if the U.S.
Holder has held such Note for more than 18 months and will be mid-term capital
gain (subject to a maximum rate of 28%) or loss if the U.S. Holder has held such
Note for more than one year but not more than 18 months. The deductibility of
capital losses by U.S. Holders is subject to limitation.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under the Code, a U.S. Holder may be subject, under certain circumstances,
to information reporting and or backup withholding at a 31% rate with respect to
cash payments in respect of interest on, or the gross proceeds from disposition
of, a Note. This withholding applies only if a U.S. Holder (i) fails to furnish
its taxpayer identification number ("TIN") within a reasonable time after a
request therefor, (ii) furnishes an incorrect TIN, (iii) fails to report
interest or dividends properly, or (iv) fails, under certain circumstances, to
provide a certified statement, signed under penalty of perjury, that the TIN
provided is its correct number and that it is not subject to backup withholding.
Any amount withheld from a payment to a U.S. Holder under the backup withholding
rules is allowable as a credit (and may entitle such holder to a refund) against
such holder's U.S. federal income tax liability, provided that the required
information is furnished to the IRS. Certain persons are exempt from backup
withholding, including corporations and financial institutions. Holders of Notes
should consult their tax advisors as to their qualification for exemption from
withholding and the procedure for obtaining such exemption.
NON-U.S. HOLDERS
The following discussion is limited to the U.S. federal income and estate
tax consequences relevant to a holder of a Note that is not a U.S. Holder (a
"Non-U.S. Holder").
For purposes of the following discussion, interest and gain on the sale,
exchange or other disposition of a Note will be considered "U.S. trade or
business income" if such income or gain is (i) effectively connected with the
conduct of a trade or business within the U.S. and (ii) in the case of an
applicable income tax treaty between the U.S. and the country of which the
Non-U.S. Holder is a qualified resident, attributable to a permanent
establishment (or to a fixed base) in the United States.
STATED INTEREST
Generally, any interest paid to a Non-U.S. Holder of a Note that is not
U.S. trade or business income will not be subject to U.S. federal income tax if
the interest qualities as "portfolio interest." Interest on the Notes
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will qualify as portfolio interest if: (i) the Non-U.S. Holder does not actually
or constructively own 10% or more of the total voting power of all classes of
stock of the Company and is not a "controlled foreign corporation" with respect
to which the Company is a "related person" within the meaning of Section
864(d)(4) of the Code; (ii) the Non-U.S. Holder is not a bank for purposes of
Section 881(c)(3)(A) of the Code that is being paid such interest pursuant to an
extension of credit made pursuant to a loan agreement entered into in the
ordinary course of its trade or business; and (iii) the Non-U.S. Holder
satisfies the requirements of Sections 871(h) or 881(c) of the Code, as set
forth below under "Owner Statement Requirement."
The gross amount of payments to a Non-U.S. Holder of interest that do not
qualify for the portfolio interest exception and that are not U.S. trade or
business income will be subject to U.S. withholding tax at the rate of 30%,
unless a U.S. income tax treaty applies to reduce or eliminate withholding. U.S.
trade or business income will be taxed at regular U.S. federal income tax rates
rather than the 30% gross withholding rate and, if the Non-U.S. Holder is a
foreign corporation, may be subject to a branch profits tax equal to 30% of its
effectively connected earnings and profits, as adjusted for certain items,
unless it qualifies for a lower rate under an applicable treaty. To claim the
benefit of a tax treaty or to claim exemption from withholding because the
income is U.S. trade or business income, the Non-U.S. Holder must provide a
properly executed Form 1001 or 4224 (or such successor forms as the IRS
designates), as applicable, prior to payment of interest. These forms must be
periodically updated. Under regulations effective as of January 1, 2000, Forms
1001 and 4224 will be replaced by Form W-8. Also under regulations effective as
of January 1, 2000, a Non-U.S. Holder who is claiming the benefits of a tax
treaty may be required to obtain a U.S. taxpayer identification number and to
provide certain documentary evidence issued by foreign governmental authorities
to prove residence in the foreign country. Certain special procedures are
provided in the proposed regulations for payments through qualified
intermediaries.
SALE, EXCHANGE OR REDEMPTION OF NOTES
Except as described below and subject to the discussion concerning backup
withholding, any gain realized by a Non-U.S. Holder on the sale, exchange or
redemption of a Note generally will not be subject to U.S. federal income tax,
unless (i) such gain is U.S. trade or business income or (ii) subject to certain
exceptions, the Non-U.S. Holder is an individual who holds the Note as a capital
asset and is present in the United States for 183 days or more during the
taxable year of the disposition.
FEDERAL ESTATE TAX
Notes held (or treated as held) by an individual who is a Non-U.S. Holder
at the time of his or her death will not be subject to U.S. federal estate tax,
provided that any interest on the Notes would have qualified as portfolio
interest if received by such individual at the time of his or her death.
OWNER STATEMENT REQUIREMENT
Sections 871(h) and 881(c) of the Code require that either the beneficial
owner of a Note or a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution") and that holds a Note on behalf of such
owner files a statement with the Company or its agent to the effect that the
beneficial owner is not a U.S. Holder in order to avoid withholding of U.S.
federal income tax. Under current regulations, this requirement will be
satisfied if the Company or its agent receives (i) a statement (an "Owner
Statement") from the beneficial owner of a Note in which such owner certifies,
under penalties of perjury, that such owner is not a United States person and
provides such owner's name and address, or (ii) a statement from the Financial
Institution holding the Note on behalf of the beneficial owner in which the
Financial Institution certifies, under penalties of perjury, that it has
received the Owner Statement together with a copy of the Owner Statement. The
beneficial owner must inform the Company or its agent (or, in the case of a
statement described in clause (ii) of the immediately preceding sentence, the
Financial Institution) within 30 days of any change in information on the Owner
Statement. The Internal Revenue Service has amended the transition period
relating to recently issued Treasury Regulations governing backup withholding
and information reporting requirements. Withholding
104
<PAGE> 110
certificates or statements that are valid on December 31, 1999, may be treated
as valid until the earlier of its expiration or December 31, 2000. All existing
certificates or statements will cease to be effective after December 31, 2000.
INFORMATION REPORTING AND BACKUP WITHHOLDING
The Company must report annually to the IRS and to each Non-U.S. Holder any
interest paid on the Notes. Copies of these information returns may also be made
available under the provisions of a specific treaty or agreement to the tax
authorities of the country in which the Non-U.S. Holder resides.
The regulations provide that backup withholding and information reporting
will not apply to payments of principal on the Notes by the Company to a
Non-U.S. Holder if the holder certifies as to its non-U.S. status under
penalties of perjury or otherwise establishes an exemption (provided that
neither the Company nor its paying agent has actual knowledge that the holder is
a U.S. Holder or that the conditions of any other exemption are not, in fact,
satisfied).
The payment of the proceeds from the disposition of Notes by or through the
United States office of any broker, U.S. or foreign, will be subject to
information reporting and possible backup withholding unless the owner certifies
as to its non-U.S. status under penalties of perjury or otherwise establishes an
exemption, provided that the broker does not have actual knowledge that the
holder is a U.S. Holder or that the conditions of any other exemption are not,
in fact, satisfied. The payment of the proceeds from the disposition of a Note
by or through a non-U.S. office of a U.S. broker that is not a "U.S. related
person" will not be subject to information reporting or backup withholding. (For
this purpose, a "U.S. related person" is (i) a "controlled foreign corporation"
for U.S. federal income tax purposes or (ii) a foreign person 50% or more of
whose gross income from all sources for the three-year period ending with the
close of its taxable year preceding the payment (or for such part of the period
that the broker has been in existence) is derived from activities that are
effectively connected with the conduct of a U.S. trade or business).
In the case of the payment of proceeds from the disposition of Notes by or
through a non-U.S. office of a broker that is either a U.S. person or a U.S.
related person, the regulations require information reporting on the payment
unless the broker has documentary evidence in its files that the owner is a
Non-U.S. Holder and the broker has no knowledge to the contrary. Backup
withholding will not apply to payments made through foreign offices of a broker
that is a U.S. person or a U.S. related person (absent actual knowledge that the
payee is a U.S. Holder).
Regulations effective as of January 1, 2000 provide similar rules but, in
the case of payment of proceeds inside the United States, may require an
additional certification that the beneficial owner has not and does not expect
to be present in the United States for a period of 183 days or more during the
year. Each Non-U.S. Holder should consult such holder's own tax advisor to
determine the applicability of these regulations to its particular situation.
Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be allowed as a refund or a credit against such Non-U.S.
Holder's U.S. federal income tax liability, provided that the requisite
procedures are followed.
105
<PAGE> 111
PLAN OF DISTRIBUTION
Each Participating Broker-Dealer that receives Exchange Notes for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Notes. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a Participating Broker-Dealer in connection with resales of Exchange Notes
received in exchange for Old Notes where such Old Notes were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that for a period of 180 days after the Expiration Date, it will make
this Prospectus, as amended or supplemented, available to any Participating
Broker-Dealer for use in connection with any such resale (provided that the
Company receives notice from any Participating Broker-Dealer of its status as a
Participating Broker-Dealer within 30 days after the consummation of the
Exchange Offer). In addition, until , 1999 (90 days after the
commencement of the Exchange Offer), all dealers effecting transactions in the
Exchange Notes may be required to deliver a prospectus.
The Company will not receive any proceeds from any sales of the Exchange
Notes by Participating Broker Dealers. Exchange Notes received by Participating
Broker-Dealers for their own account pursuant to the Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market, in
negotiated transactions, through the writing of options on the Exchange Notes or
a combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Participating Broker-Dealer and/or the purchasers of
any such Exchange Notes. Any Participating Broker-Dealer that resells the
Exchange Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such Exchange Notes may be deemed to be an "underwriter" within the meaning of
the Securities Act and any profit on any such resale of Exchange Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a Participating Broker-Dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any Participating Broker-Dealer that has
provided the Company with notice of its status as a Participating Broker-Dealer
within 30 days after the consummation of the Exchange Offer.
106
<PAGE> 112
LEGAL MATTERS
Certain legal matters in connection with the issuance of the Exchange Notes
will be passed upon for the Company by Kirkland & Ellis, Chicago, Illinois (a
partnership which includes professional corporations). Certain partners of
Kirkland & Ellis are also partners of Randolph Street Partners II, a partnership
that invested $1.25 million in the Equity Investment to acquire 750 shares of
Preferred Stock and 5,000 shares of Class A Voting Common Stock in the
Acquisition.
EXPERTS
The combined financial statements of Aircraft Service International Group
as of December 31, 1996 and 1997 and for the three years in the period ended
December 31, 1997 appearing in this Prospectus and Registration Statement have
been audited by Ernst & Young LLP, independent certified public accountants, as
set forth in their report appearing herein, which is based in part on the report
of Deloitte & Touche, independent auditors. The balance sheet of Aircraft
Service International Group, Inc. as of March 31, 1998 appearing in this
Prospectus and Registration Statement has been audited by Ernst & Young LLP,
independent auditors, as set forth in their report appearing herein. The
financial statements referred to above are included herein in reliance upon such
reports given upon the authority of such firms as experts in accounting and
auditing.
107
<PAGE> 113
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
Unaudited Financial Statements
Consolidated Interim Balance Sheet........................ F-2
Interim Statements of Operations.......................... F-3
Interim Statements of Cash Flows.......................... F-4
Notes to Interim Financial Statements..................... F-5
AIRCRAFT SERVICE INTERNATIONAL GROUP (PREDECESSOR)
Report of Independent Certified Public Accountants........ F-14
Report of Independent Auditors............................ F-15
Audited Financial Statements
Combined Balance Sheets................................... F-16
Combined Statements of Income............................. F-17
Combined Statements of Changes in Combined Equity......... F-18
Combined Statements of Cash Flows......................... F-19
Notes to Combined Financial Statements.................... F-20
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
Audited Financial Statements
Report of Independent Auditors............................ F-42
Balance Sheet............................................. F-43
Note to Balance Sheet..................................... F-44
</TABLE>
F-1
<PAGE> 114
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
CONSOLIDATED INTERIM BALANCE SHEET
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
-------------
(SUCCESSOR)
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 4,752
Accounts receivable, net of allowance of $535............. 19,011
Prepaid expenses.......................................... 1,063
Spare parts and supplies.................................. 2,203
--------
Total current assets.............................. 27,029
Property, plant and equipment, net.......................... 46,554
Intangibles, net of accumulated amortization of $1,218...... 47,688
Investments in and advances to joint venture................ 92
Deferred financing costs, net of accumulated amortization of
$25....................................................... 2,996
Other assets................................................ 448
--------
Total assets...................................... $124,807
========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable.......................................... $ 3,538
Accrued expenses.......................................... 17,255
Customer deposits......................................... 3,308
--------
Total current liabilities......................... 24,101
Long-term debt.............................................. 80,000
Commitments
Stockholder's equity:
Common stock; $0.01 par value; 1,000 shares authorized;
100 shares issued and outstanding...................... --
Paid-in capital........................................... 24,100
Cumulative translation adjustment......................... 148
Retained deficit.......................................... (3,542)
--------
Total stockholder's equity........................ 20,706
--------
Total liabilities and stockholder's equity........ $124,807
========
</TABLE>
See accompanying notes.
F-2
<PAGE> 115
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
INTERIM STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
-------------------------------
1997 1998
---- ----
(COMBINED) (CONSOLIDATED)
(PREDECESSOR) (SUCCESSOR)
<S> <C> <C>
Revenues.................................................... $58,954 $ 61,243
Costs and expenses:
Operating expenses........................................ 47,651 49,471
Selling, general and administrative....................... 3,610 4,035
Depreciation and amortization............................. 2,295 4,259
------- --------
Total costs and expenses.......................... 53,556 57,765
------- --------
Operating income............................................ 5,398 3,478
------- --------
Other income (expense), net................................. 82 (128)
Interest income............................................. 188 140
Interest and other financial expense........................ (330) (6,496)
------- --------
Income (loss) before income taxes........................... 5,338 (3,006)
Income taxes................................................ 2,014 323
------- --------
Net income (loss) before extraordinary item................. 3,324 (3,329)
Extraordinary loss on early extinguishment of debt.......... -- (213)
Net income (loss)........................................... $ 3,324 $ (3,542)
======= ========
Basic and diluted loss per share:
Before extraordinary item................................... $(33,290)
========
Extraordinary loss.......................................... $ (2,130)
========
Net loss.................................................... $(35,420)
========
Weighted average common shares outstanding -- basic and
diluted................................................... 100
========
</TABLE>
See accompanying notes.
F-3
<PAGE> 116
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
INTERIM STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
-------------------------------
1997 1998
------- --------
(COMBINED) (CONSOLIDATED)
(PREDECESSOR) (SUCCESSOR)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $ 3,324 $ (3,542)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization.......................... 2,295 4,259
Amortization of deferred financing costs............... -- 2,338
Extraordinary loss..................................... -- 213
Deferred income taxes.................................. (426) 14
Provision for bad debts................................ (63) --
Loss on sale of property, plant and equipment.......... -- 17
Equity loss in joint venture........................... -- 40
Changes in operating assets and liabilities:
Accounts receivable.................................. 1,038 (1,800)
Prepaid expenses..................................... (650) (945)
Spare parts and supplies............................. (87) (385)
Other assets......................................... 42 357
Accounts payable..................................... (1,144) (904)
Accrued expenses..................................... 4,440 2,481
Customer deposits.................................... (253) 875
------- --------
Net cash provided by operating activities................... 8,516 3,018
INVESTING ACTIVITIES
Purchases of property, plant and equipment.................. (1,904) (6,337)
Purchase of ASIG business, less cash acquired of $6,513..... -- (88,487)
Advances to joint venture, net.............................. (391) 19
------- --------
Net cash used in investing activities....................... (2,295) (94,805)
FINANCING ACTIVITIES
Issuance of common stock.................................... -- 24,100
Borrowings, net............................................. -- 75,900
Deferred financing costs.................................... -- (3,462)
Payments on notes payable................................... (91) --
Advances to Parent, net..................................... (4,630) --
Dividends................................................... (3,290) --
------- --------
Net cash provided by (used in) financing activities......... (8,011) 96,538
------- --------
Net increase in cash........................................ (1,790) 4,751
Cash at beginning of period................................. 2,190 1
------- --------
Cash at end of period....................................... $ 400 $ 4,752
======= ========
</TABLE>
See accompanying notes.
F-4
<PAGE> 117
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
1. BASIS OF PRESENTATION
Aircraft Service International Group, Inc. (the "Company") was organized in
March 1998 for the purpose of acquiring beneficial ownership and control of all
the outstanding capital stock or other equity interests in Aircraft Services
International, Inc., Dispatch Services, Inc., Florida Aviation Fueling Co.,
Bahamas Airport Service, Inc., Freeport Flight Services, Inc., Aircraft Service,
Ltd., ASII Holding GmbH, and ASII Aircraft Service Canada Ltd. (collectively the
"ASIG business" or "Predecessor") from Viad Corp ("Viad") and Viad Service
Companies, Limited as of April 1, 1998 pursuant to a share purchase agreement
(the "Acquisition"). Prior to the Acquisition by the Company, the ASIG business
was operated under the divisional name of Aircraft Services International Group.
The operations of the ASIG business are included in the accompanying
consolidated interim financial statements beginning on April 1, 1998. The
Company is 100% owned by Ranger Aerospace Corporation. Prior to April 1, 1998,
the Company had no operations.
The purchase price of the Acquisition was $95 million in cash, plus fees
and expenses of $4.1 million. The purchase price is subject to a purchase price
adjustment in favor of the Company for any shortfall in the net asset value, net
working capital or required cash (as such terms are defined in the "Share
Purchase Agreement") of the ASIG business from the levels represented at the
closing of the Acquisition. The purchase price is also subject to adjustment in
favor of Viad in an amount equal to the amount of cash in the ASIG business at
the closing of the Acquisition in excess of the required cash.
The Acquisition was accounted for as a purchase and, accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed
based on appraisals and other estimates of their underlying fair values. The
allocation of the purchase price is preliminary pending finalization of
appraisals and other estimates. The excess of the purchase price over the fair
value of net assets acquired of approximately $49.0 million is classified as
goodwill and other intangibles and is generally being amortized over 20 years.
The following is a summary of the purchase price allocation:
<TABLE>
<S> <C>
Net working capital, including cash of $6,513............... $ 3,879
Property, plant and equipment............................... 43,259
Other assets................................................ 3,056
Intangibles................................................. 48,906
-------
$99,100
=======
</TABLE>
The purchase price was funded as follows:
<TABLE>
<S> <C>
Sale of 100 shares of common stock, $0.01 par value, to
Ranger Aerospace Corporation.............................. $24,100
Borrowings under Senior Increasing Rate Notes (see Note
6)........................................................ 75,000
-------
$99,100
=======
</TABLE>
BUSINESS
The Company and its subsidiaries provide aviation fueling services,
aircraft ground services and other aviation services at various airports in the
United States, Europe and the Bahamas.
F-5
<PAGE> 118
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the Company
and its subsidiaries. Prior to the Acquisition, the accounts of the ASIG
business were not presented on a combined basis as those of a separate reporting
entity. Accordingly, the accounts included in the accompanying financial
statement of operations and cash flows for the six months ended September 30,
1997 were carved out of Viad's historical accounting records. All significant
intercompany balances and transactions were eliminated.
SPARE PARTS AND SUPPLIES
Spare parts and supplies are valued at the lower of cost or market. Cost is
computed using the first-in first-out cost method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is recorded
using the straight-line method over the estimated useful lives of the assets,
which ranges from 4 to 20 years for operating equipment, 20 to 30 years for
buildings, and 3 to 10 years for office furniture and equipment. Leasehold
improvements are amortized over the life of the lease or the related asset,
whichever is shorter. Maintenance and repairs are charged to expense when
incurred. Significant expenditures, which extend the useful lives of assets, are
capitalized.
FOREIGN CURRENCY TRANSLATION
For the Company's operations where the functional currency is other than
the U.S. Dollar, balance sheet amounts are translated using the exchange rate in
effect at the balance sheet date. Income statement amounts are translated at the
average exchange rates during the year. Translation adjustments resulting from
the changes in exchange rates from year to year are recorded as a separate
component of stockholders' equity.
INVESTMENTS IN AND ADVANCES TO JOINT VENTURE
The Company accounts for its investment in a 50% owned joint venture under
the equity method of accounting. The joint venture, Omni Aircraft Service GmbH,
located in Munich, Germany, provides aviation fueling and aircraft ground
services at Munich International Airport.
Intangible assets consist of the excess of net assets acquired over
liabilities assumed, which is being amortized on the straight-line basis over 20
years, and other identifiable intangible assets, including covenants not to
compete, which are being amortized on the straight-line basis over their
respective lives.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for the impairment of long-lived assets under
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of
(SFAS No. 121). SFAS No. 121 requires impairment losses to be recorded on
long-lived assets when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. The Company believes no impairment indicators exist at
September 30, 1998.
F-6
<PAGE> 119
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
NET LOSS PER COMMON SHARE
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" (SFAS No. 128). SFAS No. 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Basic earnings per share will typically be higher
than primary earnings per share due to the exclusion of any dilutive effects of
options, warrants and convertible securities from the calculation. Diluted
earnings per share is similar to the previously reported fully diluted earnings
per share. The adoption of SFAS No. 128 had no impact on the Company.
CONCENTRATION OF CREDIT RISK
The Company provides services to domestic and foreign airlines and
continually monitors its exposure for credit losses. The Company limits its
exposure by requiring prepayments or deposits from certain customers.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
INTERIM FINANCIAL DATA
In the opinion of the management of the Company, the accompanying unaudited
interim financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the consolidated financial
position of the Company as of September 30, 1998, the consolidated results of
operations for the six months ended September 30, 1998, and the combined results
of operations of the ASIG business for the six months ended September 30, 1997.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash, accounts receivable, accounts payable, and
accrued expenses in the accompanying financial statements approximate their fair
value because of their short maturity.
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
-------------
<S> <C>
Operating equipment......................................... $37,303
Buildings and leasehold improvements........................ 6,777
Office furniture and equipment.............................. 1,516
Construction in progress.................................... 3,940
-------
49,536
Accumulated depreciation and amortization................... (2,982)
-------
$46,554
=======
</TABLE>
F-7
<PAGE> 120
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
4. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1998
-------------
<S> <C>
Salaries and wages.......................................... $ 4,799
Damage claims............................................... 1,198
Accrued interest............................................ 1,061
Other....................................................... 10,197
-------
$17,255
=======
</TABLE>
5. NOTES PAYABLE
On April 2, 1998, the Company entered into a revolving credit facility with
a bank (the "Senior Credit Facility"). The Senior Credit Facility allows for
borrowings in the aggregate of up to the lesser of $10 million or a borrowing
base, equal to 85% of eligible accounts receivable, as defined. The revolving
loans under the Senior Credit Facility mature on August 31, 2002 or sooner as
provided in the Senior Credit Facility.
Indebtedness of the Company under the Senior Credit Facility will be
guaranteed by each of the Company's domestic subsidiaries and will generally be
secured by: (i) all of the Company's cash equivalents, accounts receivable,
contract rights, general intangibles, instruments and chattel paper relating
thereto; (ii) all of the Company's inventory; (iii) amounts (if any) held in a
commercial deposit account with the lending bank, and (iv) all proceeds from (i)
to (iii) inclusive.
The Company's borrowings under the Senior Credit Facility will bear
interest at a floating rate and may be maintained as Prime Rate Loans or LIBOR
loans. Borrowings made pursuant to the Prime Rate Loans bear interest rates
equal to the prime rate plus the Applicable Margin (as defined in the Senior
Credit Facility) and borrowings made pursuant to the LIBOR Loans bear interest
rates equal to the LIBOR rate plus the Applicable Margin. The Applicable Margin
for Prime Rate Loans will be 0% through June 1999 and thereafter will range from
0% to 0.50% based on the Company's Leverage Ratio (as defined in the Senior
Credit Agreement). The Applicable Margin for LIBOR Loans will be 1.75% through
June 1999 and thereafter will range from 1.25% to 2.25% based on the Company's
Leverage Ratio.
The Senior Credit Facility requires the Company to meet certain financial
tests, including, without limitation, minimum interest coverage and maximum
leverage ratios. The Senior Credit Facility also contains certain covenants,
which among other things, will limit the incurrence of additional indebtedness,
the making of loans or investments, the declaration of dividends, transactions
with affiliates, asset sales, acquisitions, mergers and consolidations, the
incurrence of liens and encumbrances and other matters customarily restricted in
such agreements. There were no amounts outstanding under the facility as of
September 30, 1998.
6. LONG-TERM DEBT
On April 2, 1998, the Company issued $75 million of notes (the "Senior
Increasing Rate Notes"). The proceeds from the Senior Increasing Rate Notes were
used to consummate the Acquisition. On August 18, 1998, the Company issued $80
million of notes (the "Senior Notes"). The proceeds from the Senior Notes were
used to repay the Senior Increasing Rate Notes. The Senior Notes mature in
August, 2005, and bear interest at 11%, payable semiannually on each February 15
and August 15, commencing February 15, 1999. The Senior Notes are redeemable at
the option of the Company, at any time on or after August 15, 2003, at a premium
of 105.5% in 2003 and at 100.0% of the principal amount in 2004 and thereafter.
In addition, the
F-8
<PAGE> 121
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
6. LONG-TERM DEBT -- (CONTINUED)
Company may redeem at its option up to 33 1/3% of the original principal amount
of the Senior Notes at any time on or prior to August 15, 2001, at a redemption
price equal to 111.0% of the principal amount being redeemed, with the net
proceeds of one or more public offerings, provided that at least $53.3 million
aggregate principal amount of the Senior Notes remain outstanding after any such
redemption and that any such redemption occurs within 90 days following the
closing of such public offering. Upon the occurrence of a Change in Control (as
defined in the Indenture covering the Senior Notes), each holder of the Senior
Notes is entitled to require the Company to repurchase such Senior Notes at a
premium of 101%. The Senior Notes are fully and unconditionally guaranteed, on
an unsecured basis, by the Company's domestic subsidiaries (see Note 8).
The Senior Notes contain certain covenants, which among other things limit
the ability of the Company to incur additional indebtedness, issue common and
preferred stock of its subsidiaries, pay dividends, transfer and sell assets and
enter into transactions with affiliates.
7. LITIGATION
The Company is engaged in litigation arising in the normal course of
business. Management believes that the outcome of such litigation will not have
a material adverse effect on the Company's financial position or its results of
operations.
F-9
<PAGE> 122
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
8. SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING/COMBINING FINANCIAL STATEMENTS
The Notes are guaranteed on a senior unsecured basis, jointly and
severally, by each of the Company's domestic operating subsidiaries (the
"Guarantors"). The Guarantors include Aircraft Services International, Inc.,
Dispatch Services, Inc., and Florida Aviation Fueling Co. The condensed
consolidating/combining financial statements of the Guarantors should be read in
connection with the consolidated financial statements of the Company. Separate
financial statements of the Guarantors are not presented because the Guarantors
are jointly, severally and unconditionally liable under the guarantees, and the
Company believes the condensed consolidating/combining financial statements
presented are more meaningful in understanding the financial position and
results of operations of the Guarantors.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
----------------------------------------------------------------
GUARANTOR NON-GUARANTOR ELIMINATION CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash..................................... $ 2,620 $2,132 $ $ 4,752
Accounts receivable, net................. 18,271 740 19,011
Prepaid expenses......................... 982 81 1,063
Spare parts and supplies................. 2,163 40 2,203
-------- ------ ------- --------
Total current assets............. 24,036 2,993 27,029
Property, plant and equipment, net......... 43,628 2,926 46,554
Due from (to) affiliates................... 509 2,587 (3,096)
Intangibles, net........................... 47,688 -- 47,688
Deferred income taxes...................... -- 92 92
Investment in consolidated subsidiaries.... 2,079 -- (2,079) --
Investments in and advances to joint
venture.................................. --
Deferred financing costs................... 2,996 -- -- 2,996
Other assets............................... 444 4 448
-------- ------ ------- --------
$121,380 $8,602 $(5,175) $124,807
======== ====== ======= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable......................... $ 2,889 $ 649 $ -- $ 3,538
Due from (to) affiliates................. 2,587 509 (3,096) --
Accrued expenses......................... 12,916 4,339 17,255
Customer deposits........................ 3,227 81 3,308
-------- ------ ------- --------
Total current liabilities........ 21,619 5,578 (3,096) 24,101
Long-term debt............................. 80,000 -- 80,000
Stockholder's equity:
Common stock............................. -- 935 (935) --
Paid-in capital.......................... 24,100 1,144 (1,144) 24,100
Cumulative translation adjustment........ -- 148 148
Retained earnings (deficit).............. (4,339) 797 (3,542)
-------- ------ ------- --------
Total stockholder's equity....... 19,761 3,024 (2,079) 20,706
-------- ------ ------- --------
Total liabilities and
stockholder's equity........... $121,380 $8,602 $(5,175) $124,807
======== ====== ======= ========
</TABLE>
F-10
<PAGE> 123
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
8. SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING/COMBINING FINANCIAL STATEMENTS
- - -- (CONTINUED)
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30, 1998
---------------------------------------------
GUARANTOR NON-GUARANTOR CONSOLIDATED
SUBSIDIARIES SUBSIDIARIES TOTAL
------------ ------------- ------------
<S> <C> <C> <C>
Revenues................................................. $49,858 $11,385 $ 61,243
Costs and expenses:
Operating expenses..................................... 40,211 9,260 49,471
Selling, general and administrative.................... 3,461 574 4,035
Depreciation and amortization.......................... 3,953 306 4,259
------- ------- --------
Total costs and expenses....................... 47,625 10,140 57,765
------- ------- --------
Operating income......................................... 2,233 1,245 3,478
------- ------- --------
Other income (expense), net.............................. 24 (152) (128)
Interest income.......................................... 113 27 140
Interest and other financial expense..................... (6,709) -- (6,709)
------- ------- --------
Income (loss) before income taxes........................ (4,339) 1,120 (3,219)
Income taxes............................................. -- 323 323
------- ------- --------
Net income (loss)........................................ $(4,339) $ 797 $ (3,542)
======= ======= ========
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30, 1997
-----------------------------------------
GUARANTOR NON-GUARANTOR COMBINED
SUBSIDIARIES SUBSIDIARIES TOTAL
------------ ------------- --------
<S> <C> <C> <C>
Revenues................................................... $49,361 $9,593 $58,954
Costs and expenses:
Operating expenses....................................... 39,898 7,753 47,651
Selling, general and administrative...................... 3,099 511 3,610
Depreciation and amortization............................ 2,030 265 2,295
------- ------ -------
Total costs and expenses......................... 45,027 8,529 53,556
------- ------ -------
Operating income........................................... 4,334 1,064 5,398
------- ------ -------
Other income (expense), net................................ 14 68 82
Interest income............................................ 127 61 188
Interest and other financial expense....................... (330) -- (330)
------- ------ -------
Income before income taxes................................. 4,145 1,193 5,338
Income taxes............................................... 1,745 269 2,014
------- ------ -------
Net income................................................. $ 2,400 $ 924 $ 3,324
======= ====== =======
</TABLE>
F-11
<PAGE> 124
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
8. SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING/COMBINING FINANCIAL STATEMENTS
- - -- (CONTINUED)
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30, 1998
------------------------------------------------------------------
GUARANTOR NON-GUARANTOR ELIMINATION
SUBSIDIARIES SUBSIDIARIES ENTRIES CONSOLIDATED TOTAL
------------ ------------- ----------- ------------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)......................... $ (4,339) $ 797 $ $ (3,542)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciation and amortization........ 3,953 306 4,259
Amortization of deferred financing
costs.............................. 2,338 -- 2,338
Extraordinary loss................... 213 -- 213
Gain on sale of fixed assets......... 17 -- 17
Deferred income taxes................ -- 14 14
Equity loss in joint venture......... -- 40 40
Changes in operating assets and
liabilities:
Accounts receivable................ 2,068 268 (1,800)
Investment in consolidated
subsidiaries.................... (27) -- 27 --
Due from (to) affiliates........... 541 (541) --
Prepaid expenses................... (887) (58) (945)
Spare parts and supplies........... (386) 1 (385)
Other assets....................... 384 (6) (21) 357
Accounts payable................... (1,168) 264 (904)
Accrued expenses................... 1,379 1,108 (6) 2,481
Customer deposits.................. 851 24 875
-------- ------ --- --------
Net cash provided by operating
activities.............................. 801 2,217 3,018
INVESTING ACTIVITIES
Purchases of property, plant and
equipment............................... (6,233) (104) (6,337)
Purchase of ASIG business................. (88,487) -- (88,487)
Advances to joint venture, net............ -- 19 19
-------- ------ --- --------
Net cash used in investing activities..... (94,720) (85) (94,805)
FINANCING ACTIVITIES
Issuance of common stock.................. 24,100 -- 24,100
Borrowings, net........................... 75,900 -- 75,900
Deferred financing costs.................. (3,462) -- (3,462)
-------- ------ --- --------
Net cash provided by financing
activities.............................. 96,538 -- 96,538
-------- ------ --- --------
Net increase in cash...................... 2,619 2,132 4,751
Cash at beginning of period............... 1 -- 1
-------- ------ --- --------
Cash at end of period..................... $ 2,620 $2,132 $ $ 4,752
======== ====== === ========
</TABLE>
F-12
<PAGE> 125
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
8. SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING/COMBINING FINANCIAL STATEMENTS
- - -- (CONTINUED)
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30, 1997
------------------------------------------------------------
COMBINATION
GUARANTOR NON-GUARANTOR AND ELIMINATION COMBINED
SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------ ------------- --------------- --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................... $ 2,400 $ 924 $ $ 3,324
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization........... 2,030 265 2,295
Deferred income taxes................... (509) 83 (426)
Equity income........................... -- (63) (63)
Changes in operating assets and
liabilities:
Accounts receivable................... 3,567 (2,529) 1,038
Due from (to) affiliates.............. (92) 92 --
Prepaid expenses...................... (581) (69) (650)
Spare parts and supplies.............. (90) 3 (87)
Other assets.......................... 43 (1) 42
Accounts payable...................... (1,596) 452 (1,144)
Accrued expenses...................... 3,413 1,027 4,440
Customer deposits..................... (181) (72) (253)
------- ------ ------- -------
Net cash provided by operating activities.... 8,404 112 8,516
INVESTING ACTIVITIES
Purchases of property, plant and equipment... (907) (997) (1,904)
Advances to joint venture.................... -- (391) (391)
------- ------ ------- -------
Net cash used in investing activities........ (907) (1,388) (2,295)
FINANCING ACTIVITIES
Payments on notes payable.................... (91) -- (91)
Advances from (to) Parent, net............... (4,614) (16) (4,630)
Dividends.................................... (2,792) (498) (3,290)
------- ------ ------- -------
Net cash provided by (used in) financing
activities................................. (7,497) (514) (8,011)
------- ------ ------- -------
Net increase (decrease) in cash.............. -- (1,790) (1,790)
Cash at beginning of period.................. -- 2,190 2,190
------- ------ ------- -------
Cash at end of period........................ $ -- $ 400 $ $ 400
======= ====== ======= =======
</TABLE>
F-13
<PAGE> 126
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Stockholders
Aircraft Service International Group
We have audited the accompanying combined balance sheets of Aircraft
Service International Group, a combined group of companies affiliated by common
ownership, as of December 31, 1996 and 1997, and the related combined statements
of income, changes in combined equity and cash flows for each of the three years
in the period ended December 31, 1997. Our audits also included the financial
statement schedule listed in the index at Item 21(b) of this Registration
Statement. These financial statements and schedule are the responsibility of the
Group's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits. We did not audit the
financial statements of Aircraft Service, Ltd. ("ASL"), a company affiliated by
common ownership and included in the accompanying combined financial statements.
ASL's financial statements reflect total assets of $3,852,000 and $5,339,000 as
of December 31, 1996 and 1997, respectively, and total revenues of $14,894,000,
$15,897,000 and $16,792,000 for the years ended December 31, 1995, 1996 and
1997, respectively. Those statements were audited by other auditors whose report
has been furnished to us, and our opinion, insofar as it relates to data
included for ASL, is based solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits and the report of other auditors provide a reasonable
basis for our opinion.
In our opinion, based on our audits and the report of other auditors, the
combined financial statements referred to above present fairly, in all material
respects, the combined financial position of Aircraft Service International
Group at December 31, 1996 and 1997, and the combined results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, in conformity with generally accepted accounting principles.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
ERNST & YOUNG LLP
Miami, Florida
May 1, 1998
F-14
<PAGE> 127
REPORT OF INDEPENDENT AUDITORS
TO THE DIRECTORS AND SHAREHOLDERS OF AIRCRAFT SERVICE LIMITED
We have audited the balance sheets of Aircraft Service Limited as of 31 December
1997 and 1996 and the profit and loss accounts, reconciliation of movements in
shareholders' funds and cash flow statements for each of the three years in the
period ended 31 December 1997 (not presented separately herein), all expressed
in pounds sterling. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United Kingdom, which are similar to those generally accepted in the
United States of America. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free from material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Aircraft Service Limited as at 31 December
1997 and 1996 and the results of the operations and their cash flows for each of
the three years in the period ended 31 December 1997, in conformity with
accounting principles generally accepted in the United Kingdom, which differ in
certain significant respects from generally accepted accounting principles in
the United States of America.
Deloitte & Touche
Chartered Accountants and Registered Auditors
Hill House
1 Little New Street
London EC4A 3TR
7 July 1998
F-15
<PAGE> 128
AIRCRAFT SERVICE INTERNATIONAL GROUP
COMBINED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, 1998
------------------ -----------
1996 1997
---- ---- (UNAUDITED)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash...................................................... $ 191 $ -- $ --
Accounts receivable, net of allowance of $1,276, $622 and
$546 in 1996, 1997 and 1998, respectively.............. 9,235 7,141 17,309
Due from Parent........................................... 1,453 7,520 -
Prepaid expenses.......................................... 606 445 285
Spare parts and supplies.................................. 2,079 2,150 2,168
Deferred income taxes..................................... 871 1,108 1,126
------- ------- -------
Total current assets.............................. 14,435 18,364 20,888
Property, plant and equipment, net.......................... 18,894 18,313 19,892
Goodwill, net of accumulated amortization of $1,915, $1,991
and $2,022 in 1996, 1997 and 1998, respectively........... 2,243 2,166 2,135
Deferred income taxes....................................... 2,367 2,267 2,118
Investments in and advances to joint venture................ 15 235 151
Other assets................................................ 648 585 413
------- ------- -------
Total assets...................................... $38,602 $41,930 $45,597
======= ======= =======
LIABILITIES AND COMBINED EQUITY
Current liabilities:
Accounts payable.......................................... $ 2,707 $ 4,094 $ 4,566
Accrued expenses.......................................... 17,378 19,816 20,244
Customer deposits......................................... 2,911 3,372 2,433
Due to Parent............................................. -- -- 2,674
Current portion of notes payable.......................... 82 91 91
------- ------- -------
Total current liabilities......................... 23,078 27,373 30,008
Notes payable............................................... 91 -- --
Commitments
Combined equity:
Common stock.............................................. 907 907 907
Paid-in capital........................................... 1,585 1,585 1,585
Cumulative translation adjustment......................... 22 (5) (2)
Retained earnings......................................... 12,919 12,070 13,099
------- ------- -------
Total combined equity............................. 15,433 14,557 15,589
------- ------- -------
Total liabilities and combined equity............. $38,602 $41,930 $45,597
======= ======= =======
</TABLE>
See accompanying notes.
F-16
<PAGE> 129
AIRCRAFT SERVICE INTERNATIONAL GROUP
COMBINED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- ------------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues.................................... $111,658 $121,574 $119,325 $29,816 $31,035
Cost and expenses:
Operating expenses........................ 93,540 102,935 98,190 23,973 26,320
Selling, general and administrative....... 6,467 7,259 6,507 2,064 1,754
Depreciation and amortization............. 4,340 4,420 4,604 1,172 1,154
-------- -------- -------- ------- -------
Total cost and expenses........... 104,347 114,614 109,301 27,209 29,228
-------- -------- -------- ------- -------
Operating income............................ 7,311 6,960 10,024 2,607 1,807
Other income (expense), net................. 47 (45) (71) 35 (57)
Interest income............................. 842 343 350 37 77
Interest and other financial expense........ (620) (606) (669) (165) (170)
-------- -------- -------- ------- -------
Income before income taxes.................. 7,580 6,652 9,634 2,514 1,657
Income taxes................................ 2,563 2,433 3,602 934 615
-------- -------- -------- ------- -------
Net income.................................. $ 5,017 $ 4,219 $ 6,032 $ 1,580 $ 1,042
======== ======== ======== ======= =======
</TABLE>
See accompanying notes.
F-17
<PAGE> 130
AIRCRAFT SERVICE INTERNATIONAL GROUP
COMBINED STATEMENTS OF CHANGES IN COMBINED EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
CUMULATIVE TOTAL
COMMON PAID-IN TRANSLATION RETAINED COMBINED
STOCK CAPITAL ADJUSTMENT EARNINGS EQUITY
------ ------- ----------- -------- --------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1995..................... $907 $1,585 $(131) $17,336 $19,697
Net income................................... -- -- -- 5,017 5,017
Dividends.................................... -- -- -- (6,997) (6,997)
Translation loss............................. -- -- (25) -- (25)
---- ------ ----- ------- -------
Balance at December 31, 1995 907 1,585 (156) 15,356 17,692
Net income................................... -- -- -- 4,219 4,219
Dividends.................................... -- -- -- (6,656) (6,656)
Translation gain............................. -- -- 178 -- 178
---- ------ ----- ------- -------
Balance at December 31, 1996 907 1,585 22 12,919 15,433
Net income................................... -- -- -- 6,032 6,032
Dividends.................................... -- -- -- (6,881) (6,881)
Translation loss............................. -- -- (27) --..... (27)
---- ------ ----- ------- -------
Balance at December 31, 1997................... 907 1,585 (5) 12,070 14,557
Net income (unaudited)....................... -- -- -- 1,042 1,042
Dividends (unaudited)........................ -- -- -- (13) (13)
Translation gain (unaudited)................. -- -- 3 -- 3
---- ------ ----- ------- -------
Balance at March 31, 1998 (unaudited).......... $907 $1,585 $ (2) $13,099 $15,589
==== ====== ===== ======= =======
</TABLE>
See accompanying notes.
F-18
<PAGE> 131
AIRCRAFT SERVICE INTERNATIONAL GROUP
COMBINED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------------- ------------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income.................................. $ 5,017 $ 4,219 $ 6,032 $ 1,580 $ 1,042
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization.......... 4,340 4,420 4,604 1,172 1,154
Deferred income taxes.................. 1,048 (104) (136) 182 131
Provision for bad debts................ 240 289 245 60 --
Equity loss in joint venture........... -- 3 133 -- 84
Changes in operating assets and
liabilities:
Accounts receivable.................. (2,554) 1,291 1,822 3,170 2,635
Prepaid expenses..................... (61) (337) 161 211 160
Spare parts and supplies............. (385) (304) (71) 48 (18)
Other assets......................... (118) (91) 63 171 172
Accounts payable..................... (2,410) (866) 1,387 (286) 472
Accrued expenses..................... (330) (762) 2,438 (458) 428
Customer deposits.................... 273 (597) 461 77 (939)
-------- ------- --------- ------- -------
Net cash provided by operating activities... 5,060 7,161 17,139 5,927 5,321
INVESTING ACTIVITIES
Purchases of property, plant and
equipment................................. (4,402) (9,061) (3,947) (963) (2,702)
Advances to joint venture................... -- -- (353) -- --
-------- ------- --------- ------- -------
Net cash used in investing activities....... (4,402) (9,061) (4,300) (963) (2,702)
FINANCING ACTIVITIES
Payments on notes payable................... (67) (74) (82) -- --
Advances from (to) Parent, net.............. 6,258 8,821 (6,067) (2,682) (2,606)
Dividends................................... (6,997) (6,656) (6,881) (1,698) (13)
-------- ------- --------- ------- -------
Net cash provided by (used in) financing
activities................................ (806) 2,091 (13,030) (4,380) (2,619)
-------- ------- --------- ------- -------
Net increase (decrease) in cash............. (148) 191 (191) 584 --
Cash at beginning of period................. 148 -- 191 191 --
-------- ------- --------- ------- -------
Cash at end of period....................... $ -- $ 191 $ -- $ 775 $ --
======== ======= ========= ======= =======
</TABLE>
See accompanying notes.
F-19
<PAGE> 132
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
1. BUSINESS AND BASIS OF PRESENTATION
NATURE OF BUSINESS
The Company provides aviation fueling and aircraft ground services at
various airports in the United States, Europe and the Bahamas.
BASIS OF PRESENTATION
Aircraft Service International Group (the "Company" or the "Combined
Affiliates") is a combined group of companies affiliated through common
ownership by Viad Corp ("Viad"). These businesses were sold as of April 1, 1998
(see Note 12). The accompanying combined financial statements include the
following entities: Aircraft Services International, Inc., Dispatch Services,
Inc., Florida Aviation Fueling Co., Bahamas Airport Service, Inc., Freeport
Flight Services, Ltd., Aircraft Service, Ltd., ASII Holding GmbH and ASII
Aircraft Service Canada Ltd.
For the years ended December 31, 1995, 1996 and 1997, respectively, the
accounts of the above entities were not presented on a combined basis as those
of a separate reporting entity. Accordingly, the accounts included in the
accompanying financial statements were carved out of Viad's historical
accounting records. For all years presented, the financial statements of the
Company include the accounts of these entities. The accompanying financial
statements include costs allocated by Viad to the Company for certain legal,
audit, risk assessment, treasury and financial services. The financial statement
captions which include allocated amounts, along with a description of the
functions or services and the amounts allocated are summarized in Note 3.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The accompanying combined financial statements include the accounts of the
entities affiliated by common ownership and control outlined in Note 1. All
significant intercompany balances and transactions have been eliminated in
combination.
SPARE PARTS AND SUPPLIES
Spare parts and supplies are valued at the lower of cost or market. Cost is
computed using the first-in first-out cost method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is recorded
using the straight-line method over the estimated useful lives of the assets,
which ranges from 4 to 20 years for operating equipment, 20 to 30 years for
buildings, and 3 to 10 years for office furniture and equipment. Leasehold
improvements are amortized over the life of the lease or the related asset,
whichever is shorter. Maintenance and repairs are charged to expense when
incurred. Significant expenditures, which extend the useful lives of assets, are
capitalized.
FOREIGN CURRENCY TRANSLATION
For the Company's operations where the functional currency is other than
the U.S. Dollar, balance sheet amounts are translated using the exchange rate in
effect at the balance sheet date. Income statement amounts
F-20
<PAGE> 133
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
are translated at the average exchange rates during the year. Translation
adjustments resulting from the changes in exchange rates from year to year are
recorded as a separate component of combined equity.
INVESTMENTS IN AND ADVANCES TO JOINT VENTURE
The Company accounts for its investment in a 50% owned joint venture under
the equity method of accounting. The joint venture, Omni Aircraft Service GmbH,
located in Munich, Germany, provides aviation fueling and aircraft ground
services at Munich International Airport.
GOODWILL
Goodwill is amortized on a straight-line basis over 40 years.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company accounts for the impairment of long-lived assets under
Statement of Financial Accounting Standards No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of
(SFAS No. 121). SFAS No. 121 requires impairment losses to be recorded on
long-lived assets when indicators of impairment are present and the undiscounted
cash flows estimated to be generated by those assets are less than the assets'
carrying amount. The Company believes no impairment indicators existed at
December 31, 1997.
CONCENTRATION OF CREDIT RISK
The Company provides services to domestic and foreign airlines and
continually monitors its exposure for credit losses. The Company limits its
exposure by requiring prepayments or deposits from certain customers.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
INTERIM FINANCIAL DATA
In the opinion of the management of the Company, the accompanying unaudited
combined financial statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the combined financial
position of the Company as of March 31, 1998, and the combined results of
operations for the three months ended March 31, 1997 and 1998.
ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying value of cash, accounts receivable, accounts payable and
accrued expenses in the accompanying combined financial statements approximate
their fair value because of their short term maturity.
3. RELATED-PARTY TRANSACTIONS
The Parent provided certain corporate general and administrative services
to the Company, including legal, audit, risk assessment, treasury and finance
services. Related allocated expenses, included in selling, general and
administrative in the accompanying combined statements of income, were
approximately $883,
F-21
<PAGE> 134
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
$896 and $854 in 1995, 1996 and 1997, respectively, and $212 and $173 for the
three months ended March 31, 1997 and 1998, respectively.
The Company transferred ownership of certain accounts receivable to the
Parent. Total amounts transferred through the due from (to) parent account were
$10,200 and $12,800 at December 31, 1996 and 1997, respectively. No receivables
were transferred at March 31, 1998. The Company was charged a discount from the
Parent for these transferred receivables based on the amount of receivables
actually sold by the Parent. Allocated charges totaled $375, $483 and $555 for
the years ended December 31, 1995, 1996 and 1997, respectively, and $143 and
$148 for the three months ended March 31, 1997 and 1998, respectively, and are
included in interest and other financial expense in the accompanying combined
statements of income.
The Parent managed the cash and financing requirements of the Company. The
Company's available cash was swept into the Parent's accounts and the Company's
cash requirements were paid from the Parent's accounts. Interest was credited to
the Company on net balances due from Parent based on the prime lending rate less
1.5%. Interest income credited to the Company totaled approximately $613, $246
and $247 in 1995, 1996 and 1997, respectively, and $21 and $55 for the three
months ended March 31, 1997 and 1998, respectively.
Due from (to) Parent represents the net amount due to or from the Parent
for expenses allocated in conjunction with services provided by the Parent, cash
and receivables transferred to the Parent, dividends paid, and other charges
between the Company and the Parent.
All allocations and estimates were based on assumptions the Parent believed
were reasonable in these circumstances. The allocated amounts are not
necessarily indicative of the costs that the Company would have incurred as a
stand-alone entity.
4. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------- MARCH 31,
1996 1997 1998
---- ---- ---------
(UNAUDITED)
<S> <C> <C> <C>
Operating equipment............................... $ 56,544 $ 58,216 $ 58,955
Buildings and leasehold improvements.............. 4,948 5,796 5,944
Office furniture and equipment.................... 4,315 4,758 4,543
Construction in progress.......................... 3,180 2,966 4,942
-------- -------- --------
68,987 71,736 74,384
Accumulated depreciation and amortization......... (50,093) (53,423) (54,492)
-------- -------- --------
$ 18,894 $ 18,313 $ 19,892
======== ======== ========
</TABLE>
F-22
<PAGE> 135
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
5. ACCRUED EXPENSES
Accrued expenses consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- MARCH 31,
1996 1997 1998
---- ---- ---------
(UNAUDITED)
<S> <C> <C> <C>
Salaries and wages.................................. $ 6,674 $ 6,273 $ 5,889
Pension............................................. 1,218 1,393 1,610
Damage claims....................................... 1,294 1,102 1,226
Workmen's compensation.............................. 2,241 2,595 2,799
Deferred condemnation award......................... -- 1,832 1,830
Other............................................... 5,951 6,621 6,890
------- ------- -------
$17,378 $19,816 $20,244
======= ======= =======
</TABLE>
In 1997, the Company was granted a cash condemnation award of approximately
$1.8 million related to the condemnation of its facilities in Burbank,
California. The entire amount, which included awards for the estimated value of
the leasehold estate, improvements to the Company's realty, and loss of business
goodwill, was deferred and is included in accrued expenses in the accompanying
December 31, 1997 balance sheet, pending the final outcome of court hearings
concerning the condemnation award. At December 31, 1997, the Company had assets
at its Burbank Facility with a net book value of $30, included in property,
plant and equipment.
6. INCOME TAXES
The Company files a consolidated federal and various state income tax
returns with the Parent and other eligible subsidiaries of the Parent. A verbal
intercompany tax agreement requires the Company to pay the Parent an amount
which approximates the income tax it would pay if it were filing separate
consolidated income tax returns. In addition, the Parent credits the Company for
an allocated portion of the state tax savings which the Parent and its
subsidiaries realize upon filing combined or consolidated income tax returns in
certain states. In accordance with Statement of Financial Accounting Standards
No. 109, Accounting for Income Taxes, the Company has accounted for federal and
state income taxes as if the Company was filing unconsolidated federal and state
income tax returns.
The income before provision for income taxes consisted of the following:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ ------------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
United States.......................... $4,893 $4,954 $7,910 $2,055 $1,239
Non-U.S................................ 2,687 1,698 1,724 459 418
------ ------ ------ ------ ------
$7,580 $6,652 $9,634 $2,514 $1,657
====== ====== ====== ====== ======
</TABLE>
F-23
<PAGE> 136
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
The provision (benefit) for income taxes is summarized as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------ ------------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Current:
U.S. Federal......................... $ 638 $1,699 $2,737 $ 471 $ 276
State................................ 69 224 478 94 56
Non-U.S.............................. 808 614 523 187 152
------ ------ ------ ------ ------
1,515 2,537 3,738 752 484
------ ------ ------ ------ ------
Deferred:
U.S. Federal......................... 1,022 (89) (120) 216 138
State................................ 109 (11) (14) 26 12
Non-U.S.............................. (83) (4) (2) (60) (19)
------ ------ ------ ------ ------
1,048 (104) (136) 182 131
------ ------ ------ ------ ------
$2,563 $2,433 $3,602 $ 934 $ 615
====== ====== ====== ====== ======
</TABLE>
Significant components of the Company's deferred income taxes are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------
MARCH 31,
1996 1997 1998
------ ------ ------------
(UNAUDITED)
<S> <C> <C> <C>
Allowance for doubtful accounts............................. $ 421 $ 197 $ 238
Interest on deferred compensation........................... 269 290 294
Worker's compensation insurance............................. 784 908 873
Accrued post-retirement benefits............................ 176 253 219
Accrued medical and life insurance.......................... 302 271 223
Damage claims and other insurance liabilities............... 530 458 492
Deferred condemnation award................................. - 641 641
Other....................................................... 756 357 264
------ ------ ------
Deferred income tax asset................................... $3,238 $3,375 $3,244
====== ====== ======
</TABLE>
A reconciliation of income taxes to the U.S. statutory rate of 34% is as
follows:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
-------------------------- ------------
1995 1996 1997 1997 1998
------ ------ ------ ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Income taxes at U.S. statutory rate.................... $2,577 $2,262 $3,276 $855 $563
State income taxes..................................... 131 141 306 79 38
Permanent items........................................ 89 57 43 10 12
Effect of non-U.S. operations.......................... (234) (27) (23) (10) 2
------ ------ ------ ---- ----
$2,563 $2,433 $3,602 $934 $615
====== ====== ====== ==== ====
</TABLE>
F-24
<PAGE> 137
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
7. COMMITMENTS
The Company leases operating facilities and office space pursuant to
various operating leases. The aggregate minimal rental payments under all
operating leases with initial terms of one year or more at December 31, 1997 are
as follows:
<TABLE>
<S> <C>
1998........................................................ $ 776
1999........................................................ 315
2000........................................................ 275
2001........................................................ 268
2002........................................................ 212
Thereafter.................................................. 830
------
$2,676
======
</TABLE>
Total rent expense for all operating leases amounted to $2,591, $2,516 and
$2,491 for the years ended December 31, 1995, 1996 and 1997, respectively, and
$752 and $754 for the three months ended March 31, 1997 and 1998, respectively.
8. LITIGATION
The Company is engaged in litigation arising in the normal course of
business. Management believes that the outcome of such litigation will not have
a material adverse effect on the Company's financial position or its results of
operations.
9. EMPLOYEE BENEFIT PLANS
The Company sponsors three non-contributory defined benefit pension plans.
Two of the plans cover management, supervisory, administrative and non-union
hourly employees. The third plan covers union employees at the Company's Miami
International Airport operations. These plans cover approximately 40% of the
Company's employees. With the exception of the third plan, no other union
employees are covered under a pension program. These plans provide benefits
based on the employees' tenure and qualifying average compensation. The plans
were funded by the Parent. The Parent's funding policies provide that payments
to defined benefit pension trusts be at least equal to the minimum funding
required by applicable regulations.
The assumptions used in the calculation of the actuarial present value of
the projected benefit obligation and expected long-term return on plan assets
consisted of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Weighted average discount rate.............................. 8.0% 8.0% 7.5%
Rate of increase in compensation levels..................... 5.0 5.0 4.5
Expected long-term return on plan assets.................... 9.5 9.5 9.5
</TABLE>
F-25
<PAGE> 138
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
The following table sets forth the funded status and pension liability
recognized in the combined balance sheets:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1996 1997
---- ----
<S> <C> <C>
OVERFUNDED PLANS
Actuarial present value of accumulated benefit obligations:
Vested benefit obligations.................................. $5,541 $ 8,269
====== =======
Accumulated benefit obligations............................. $7,757 $ 9,275
====== =======
Projected benefit obligations............................... $9,959 $11,542
Plan assets allocated by Parent at fair value............... 7,869 10,142
------ -------
Projected benefit obligations in excess of plan assets...... 2,090 1,400
Unrecognized transition assets.............................. 20 15
Unrecognized prior service costs............................ (367) (333)
Unrecognized net losses..................................... (844) (174)
------ -------
Accrued pension costs....................................... $ 899 $ 908
====== =======
UNDERFUNDED AND UNFUNDED PLANS
Actuarial present value of accumulated benefit obligations:
Vested benefit obligations.................................. $ 253 $ 336
====== =======
Accumulated benefit obligations............................. $ 268 $ 362
====== =======
Projected benefit obligations............................... $ 485 $ 486
Unrecognized prior service costs............................ (409) (209)
Unrecognized net gains...................................... -- 19
Additional minimum liability................................ 192 67
------ -------
Accrued pension costs....................................... $ 268 $ 363
====== =======
</TABLE>
The Company also participates in a foreign multi-employer defined benefit
pension plan which covers seven of the Company's managers in Europe.
The following table sets forth the Company's net periodic pension cost:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Service cost benefits earned during the period.......... $ 551 $ 718 $ 715
Interest cost on projected benefit obligation........... 609 731 815
Return on plan assets................................... (1,141) (780) (1,765)
Net amortization and deferral........................... 636 270 1,119
------- ----- -------
Net pension expense..................................... $ 655 $ 939 $ 884
======= ===== =======
</TABLE>
The Company also sponsors a defined contribution plan pursuant to Section
401(k) of the Internal Revenue Code. Subject to certain dollar limits, employees
may contribute a percentage of their salaries to the plan and the Company will
match a portion of each employee's contribution. This plan is in effect for U.S.
based non-union employees only. The expense pertaining to this plan was
approximately $137, $300 and $331 for the years ended December 31, 1995, 1996
and 1997, respectively.
F-26
<PAGE> 139
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
The Company provides contributory health care benefits to the retirees and
their dependents of two of its entities. The Company has recorded a liability
equal to the unfunded accumulated benefit obligation for these benefits as
required by the provisions of Financial Accounting Standards No. 106, Employers'
Accounting for Postretirement Benefits Other than Pensions (SFAS No. 106). SFAS
No. 106 requires that the cost of these benefits, which are primarily for health
care and life insurance, be recognized in the financial statements throughout
the employees' active working careers.
The following table sets forth the financial status of the plan reconciled
to amounts recorded in the accompanying combined financial statements:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------
1996 1997
---- ----
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees.................................................. $ 59 $ 72
Fully eligible participants............................... 132 159
Other active plan participants............................ 220 265
---- ----
Accumulated postretirement benefit obligation............... 411 496
Unrecognized net gain (loss)................................ 23 (76)
---- ----
Accrued cost................................................ $434 $420
==== ====
</TABLE>
The weighted average discount rate used in determining the accumulated
benefit obligation was 8.0% and 7.5% at December 31, 1996 and 1997,
respectively. The assumed health care cost trend rate used in measuring the 1996
and 1997 accumulated postretirement benefit obligation was 11% and 10%,
respectively, gradually declining to 5% by the year 2002 and remaining at that
level thereafter for retirees below age 65, and 8.0% and 7.5%, respectively,
gradually declining to 5% by the year 2002 and remaining at that level
thereafter for retirees above age 65.
Because the benefits are capped, a one-percentage point increase in the
assumed health care cost trend rate would not increase the accumulated
postretirement benefit obligation as of December 31, 1997, or related annual
expense.
The components of net periodic postretirement benefit cost consisted of the
following:
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
--------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Service cost benefits earned during the period.............. $20 $28 $30
Interest cost on accumulated benefit obligation............. 24 29 33
Net amortization and deferral............................... -- (5) (3)
--- --- ---
Net postretirement expense.................................. $44 $52 $60
=== === ===
</TABLE>
10. SIGNIFICANT CUSTOMERS
One of the Company's customers accounted for 17.6%, 20.2% and 17.5% of the
Company's revenues for the years ended December 31, 1995, 1996 and 1997,
respectively, and 18.8% and 15.2% for the three months ended March 31, 1997 and
1998, respectively. Another customer accounted for 14.3%, 14.1% and 14.1% of the
Company's revenues for the years ended December 31, 1995, 1996 and 1997,
respectively, and 12.9% and 13.3% for the three months ended March 31, 1997 and
1998, respectively.
F-27
<PAGE> 140
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
11. GEOGRAPHIC AREA INFORMATION
The following table includes selected financial information pertaining to
the Company's geographic operations:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------
1995 1996 1997
---- ---- ----
<S> <C> <C> <C>
Revenues:
United States....................................... $ 93,730 $102,995 $ 98,853
United Kingdom...................................... 14,894 15,897 16,792
Freeport, Bahamas................................... 3,034 2,682 3,680
-------- -------- --------
$111,658 $121,574 $119,325
======== ======== ========
Operating income:
United States....................................... $ 4,936 $ 5,399 $ 8,307
United Kingdom...................................... 2,043 1,623 1,572
Germany............................................. (23) (2) (45)
Freeport, Bahamas................................... 355 (60) 190
-------- -------- --------
$ 7,311 $ 6,960 $ 10,024
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31,
------------------
1996 1997
---- ----
<S> <C> <C>
Identifiable assets:
United States............................................. $34,452 $36,423
United Kingdom............................................ 3,852 5,339
Germany................................................... 73 250
Freeport, Bahamas......................................... 1,368 1,207
Eliminations.............................................. (1,143) (1,289)
------- -------
$38,602 $41,930
======= =======
</TABLE>
12. SUBSEQUENT EVENT
On April 1, 1998, the Parent sold the Company for approximately $95
million, subject to adjustment, to Aircraft Service International Group, Inc.
("ASIG"), pursuant to a share purchase agreement (the "Share Purchase
Agreement"). In accordance with the Share Purchase Agreement, certain assets and
liabilities of the Company were retained by the Parent.
F-28
<PAGE> 141
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS
In connection with the acquisition of the Company as discussed in Note 12,
ASIG is planning to offer $80 million in aggregate principal amount of Senior
Notes due 2005 (the "Notes"). The Notes would be guaranteed on a senior
unsecured basis, jointly and severally, by each of ASIG's domestic subsidiaries
(the "Guarantors"). The Guarantors would include Aircraft Services
International, Inc., Dispatch Services, Inc., and Florida Aviation Fueling Co.
The condensed combined financial statements of the Guarantors should be read in
connection with the combined financial statements of the Company. Separate
financial statements of the Guarantors are not presented because the Guarantors
are to be jointly, severally and unconditionally liable under the guarantees,
and the Company believes the condensed combining financial statements presented
are more meaningful in understanding the financial position and results of
operations of the Guarantors.
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1997
------------------------------------------------------------
COMBINATION
GUARANTOR NON-GUARANTOR AND ELIMINATION COMBINED
SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------ ------------- --------------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash....................................... $ -- $ 550 $ (550) $ --
Accounts receivable, net................... 5,858 1,283 7,141
Due from Parent............................ 5,691 1,829 7,520
Prepaid expenses........................... 390 55 445
Spare parts and supplies................... 2,116 34 2,150
Deferred income taxes...................... 1,108 -- 1,108
------- ------ ------- -------
Total current assets............... 15,163 3,751 (550) 18,364
Property, plant and equipment, net........... 15,735 2,578 18,313
Due from (to) affiliates..................... 713 -- (713) --
Goodwill, net................................ 1,968 198 2,166
Deferred income taxes........................ 2,242 25 2,267
Investments in and advances to joint
venture.................................... -- 235 235
Other assets................................. 602 9 (26) 585
------- ------ ------- -------
Total assets....................... $36,423 $6,796 $(1,289) $41,930
======= ====== ======= =======
LIABILITIES AND COMBINED EQUITY
Current liabilities:
Accounts payable........................... $ 3,916 $ 728 $ (550) $ 4,094
Due from (to) affiliates................... -- 713 (713) --
Accrued expenses........................... 16,275 3,541 19,816
Customer deposits.......................... 2,762 610 3,372
Current portion of notes payable........... 91 -- 91
------- ------ ------- -------
Total current liabilities.......... 23,044 5,592 (1,263) 27,373
Combined equity:
Common stock............................... 5 928 (26) 907
Paid-in capital............................ 441 1,144 1,585
Cumulative translation adjustment.......... -- (5) (5)
Retained earnings (deficit)................ 12,933 (863) 12,070
------- ------ ------- -------
Total combined equity.............. 13,379 1,204 (26) 14,557
------- ------ ------- -------
Total liabilities and combined
equity........................... $36,423 $6,796 $(1,289) $41,930
======= ====== ======= =======
</TABLE>
F-29
<PAGE> 142
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
DECEMBER 31, 1996
------------------------------------------------------------
COMBINATION
GUARANTOR NON-GUARANTOR AND ELIMINATION COMBINED
SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------ ------------- --------------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash....................................... $ -- $1,174 $ (983) $ 191
Accounts receivable, net................... 8,021 1,214 9,235
Due from Parent............................ 1,002 451 1,453
Prepaid expenses........................... 581 25 606
Spare parts and supplies................... 2,047 32 2,079
Deferred income taxes...................... 871 871
------- ------ ------- -------
Total current assets............... 12,522 2,896 (983) 14,435
Property, plant and equipment, net........... 16,808 2,086 18,894
Due from (to) affiliates..................... 98 29 (127) --
Goodwill, net................................ 2,024 219 2,243
Deferred income taxes........................ 2,343 24 2,367
Investments in and advances to joint
venture.................................... -- 15 15
Other assets................................. 657 24 (33) 648
------- ------ ------- -------
Total assets....................... $34,452 $5,293 $(1,143) $38,602
======= ====== ======= =======
LIABILITIES AND COMBINED EQUITY
Current liabilities:
Accounts payable........................... $ 3,221 $ 469 $ (983) $ 2,707
Due from (to) affiliates................... 29 98 (127) --
Accrued expenses........................... 14,503 2,875 17,378
Customer deposits.......................... 2,803 108 2,911
Current portion of notes payable........... 82 -- 82
------- ------ ------- -------
Total current liabilities.......... 20,638 3,550 (1,110) 23,078
Notes payable................................ 91 -- 91
Combined equity:
Common stock............................... 5 935 (33) 907
Paid-in capital............................ 441 1,144 1,585
Cumulative translation adjustment.......... -- 22 22
Retained earnings (deficit)................ 13,277 (358) 12,919
------- ------ ------- -------
Total combined equity.............. 13,723 1,743 (33) 15,433
------- ------ ------- -------
Total liabilities and combined
equity........................... $34,452 $5,293 $(1,143) $38,602
======= ====== ======= =======
</TABLE>
F-30
<PAGE> 143
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-----------------------------------------
GUARANTOR NON-GUARANTOR COMBINED
SUBSIDIARIES SUBSIDIARIES TOTAL
------------ ------------- --------
<S> <C> <C> <C>
Revenues............................................... $98,853 $20,472 $119,325
Cost and expenses:
Operating expenses................................... 81,058 17,132 98,190
Selling, general and administrative.................. 5,464 1,043 6,507
Depreciation and amortization........................ 4,024 580 4,604
------- ------- --------
Total cost and expenses...................... 90,546 18,755 109,301
------- ------- --------
Operating income....................................... 8,307 1,717 10,024
------- ------- --------
Other income (expense), net............................ 56 (127) (71)
Interest income........................................ 216 134 350
Interest and other financial expense................... (669) -- (669)
------- ------- --------
Income before income taxes............................. 7,910 1,724 9,634
Income taxes........................................... 3,081 521 3,602
------- ------- --------
Net income............................................. $ 4,829 $ 1,203 $ 6,032
======= ======= ========
</TABLE>
F-31
<PAGE> 144
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
-----------------------------------------
GUARANTOR NON-GUARANTOR COMBINED
SUBSIDIARIES SUBSIDIARIES TOTAL
------------ ------------- --------
<S> <C> <C> <C>
Revenues............................................... $102,995 $18,579 $121,574
Cost and expenses:
Operating expenses................................... 87,274 15,661 102,935
Selling, general and administrative.................. 6,371 888 7,259
Depreciation and amortization........................ 3,951 469 4,420
-------- ------- --------
Total cost and expenses...................... 97,596 17,018 114,614
-------- ------- --------
Operating income....................................... 5,399 1,561 6,960
-------- ------- --------
Other income (expense), net............................ (41) (4) (45)
Interest income........................................ 202 141 343
Interest and other financial expense................... (606) -- (606)
-------- ------- --------
Income before income taxes............................. 4,954 1,698 6,652
Income taxes........................................... 1,823 610 2,433
-------- ------- --------
Net income............................................. $ 3,131 $ 1,088 $ 4,219
======== ======= ========
</TABLE>
F-32
<PAGE> 145
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-----------------------------------------
GUARANTOR NON-GUARANTOR COMBINED
SUBSIDIARIES SUBSIDIARIES TOTAL
------------ ------------- --------
<S> <C> <C> <C>
Revenues............................................... $93,730 $17,928 $111,658
Cost and expenses:
Operating expenses................................... 79,272 14,268 93,540
Selling, general and administrative.................. 5,698 769 6,467
Depreciation and amortization........................ 3,824 516 4,340
------- ------- --------
Total cost and expenses...................... 88,794 15,553 104,347
------- ------- --------
Operating income....................................... 4,936 2,375 7,311
------- ------- --------
Other income (expense), net............................ 50 (3) 47
Interest income........................................ 527 315 842
Interest and other financial expense................... (620) -- (620)
------- ------- --------
Income before income taxes............................. 4,893 2,687 7,580
Income taxes........................................... 1,838 725 2,563
------- ------- --------
Net income............................................. $ 3,055 $ 1,962 $ 5,017
======= ======= ========
</TABLE>
F-33
<PAGE> 146
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
------------------------------------------------------------------
COMBINATION
GUARANTOR NON-GUARANTOR AND ELIMINATION
SUBSIDIARIES SUBSIDIARIES ENTRIES COMBINED TOTAL
------------ ------------- --------------- --------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income............................... $ 4,829 $ 1,203 $ 6,032
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation and amortization....... 4,005 599 4,604
Deferred income taxes............... (135) (1) (136)
Equity loss in joint venture........ - 133 133
Changes in operating assets and
liabilities:
Accounts receivable............ 2,163 (96) 2,067
Due from (to) affiliates....... (644) 644 --
Prepaid expenses............... 191 (30) 161
Spare parts and supplies....... (69) (2) (71)
Other assets................... 55 8 63
Accounts payable............... 695 259 $ 433 1,387
Accrued expenses............... 1,772 666 2,438
Customer deposits.............. (41) 502 461
------- ------- ----- --------
Net cash provided by operating
activities............................. 12,821 3,885 433 17,139
INVESTING ACTIVITIES
Purchases of property, plant and
equipment.............................. (2,877) (1,070) (3,947)
Advances to joint venture................ -- (353) (353)
------- ------- ----- --------
Net cash used in investing activities.... (2,877) (1,423) (4,300)
FINANCING ACTIVITIES
Payments on notes payable................ (82) -- (82)
Advances from (to) Parent, net........... (4,689) (1,378) (6,067)
Dividends................................ (5,173) (1,708) (6,881)
------- ------- ----- --------
Net cash used in financing activities.... (9,944) (3,086) (13,030)
------- ------- ----- --------
Net increase (decrease) in cash.......... -- (624) 433 (191)
Cash at beginning of year................ -- 1,174 (983) 191
------- ------- ----- --------
Cash at end of year...................... $ -- $ 550 $(550) $ --
======= ======= ===== ========
</TABLE>
F-34
<PAGE> 147
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1996
------------------------------------------------------------
COMBINATION
GUARANTOR NON-GUARANTOR AND ELIMINATION COMBINED
SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------ ------------- --------------- --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................... $ 3,131 $ 1,088 $ 4,219
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization........... 3,951 469 4,420
Deferred income taxes................... (102) (2) (104)
Equity loss in joint venture............ -- 3 3
Changes in operating assets and
liabilities:
Accounts receivable................... 1,598 (18) 1,580
Due from (to) affiliates.............. 399 (399) --
Prepaid expenses...................... (328) (9) (337)
Spare parts and supplies.............. (293) (11) (304)
Other assets.......................... (80) (11) (91)
Accounts payable...................... (673) 111 $(304) (866)
Accrued expenses...................... (664) (98) (762)
Customer deposits..................... (593) (4) (597)
------- ------- ----- -------
Net cash provided by operating activities.... 6,346 1,119 (304) 7,161
INVESTING ACTIVITIES
Purchases of property, plant and equipment... (8,500) (561) (9,061)
Net cash used in investing activities........ (8,500) (561) (9,061)
FINANCING ACTIVITIES
Payments on notes payable.................... (74) -- (74)
Advances from (to) Parent, net............... 7,130 1,691 8,821
Dividends.................................... (4,902) (1,754) (6,656)
------- ------- ----- -------
Net cash provided by (used in) financing
activities................................. 2,154 (63) 2,091
------- ------- ----- -------
Net increase (decrease) in cash.............. -- 495 (304) 191
Cash at beginning of year.................... -- 679 (679) --
------- ------- ----- -------
Cash at end of year.......................... $ -- $ 1,174 $(983) $ 191
======= ======= ===== =======
</TABLE>
F-35
<PAGE> 148
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------------------------------------------
COMBINATION
GUARANTOR NON-GUARANTOR AND ELIMINATION COMBINED
SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------ ------------- --------------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................ $ 3,055 $ 1,962 $ 5,017
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization........... 4,034 306 4,340
Deferred income taxes................... 1,134 (86) 1,048
Equity loss in joint venture............ -- -- --
Changes in operating assets and
liabilities:
Accounts receivable.................. (1,573) (741) (2,314)
Due from (to) affiliates............. 1,463 (1,463) --
Prepaid expenses..................... 36 (97) (61)
Spare parts and supplies............. (392) 7 (385)
Other assets......................... (127) 9 (118)
Accounts payable..................... (1,472) (259) $(679) (2,410)
Accrued expenses..................... (852) 522 (330)
Customer deposits.................... 244 29 273
-------- -------- ----- -------
Net cash provided by operating
activities.............................. 5,550 189 (679) 5,060
INVESTING ACTIVITIES
Purchases of property, plant and
equipment............................... (4,101) (301) (4,402)
-------- -------- ----- -------
Net cash used in investing activities..... (4,101) (301) (4,402)
FINANCING ACTIVITIES
Payments on notes payable................. (67) -- (67)
Advances from (to) Parent, net............ 4,024 2,234 6,258
Dividends................................. (4,881) (2,116) (6,997)
-------- -------- ----- -------
Net cash provided by (used in) financing
activities.............................. (924) 118 (806)
-------- -------- ----- -------
Net increase (decrease) in cash........... 525 6 (679) (148)
Cash at beginning of year................. (525) 673 -- 148
-------- -------- ----- -------
Cash at end of year....................... $ -- $ 679 $(679) $ --
======== ======== ===== =======
</TABLE>
F-36
<PAGE> 149
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31, 1998
---------------------------------------------------------
COMBINATION
GUARANTOR NON-GUARANTOR AND ELIMINATION COMBINED
SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------ ------------- --------------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash....................................... $ -- $ 293 $ (293) $ --
Accounts receivable, net................... 16,436 873 17,309
Due from Parent............................ -- 1,565 (1,565) --
Prepaid expenses........................... 262 23 285
Spare parts and supplies................... 2,127 41 2,168
Deferred income taxes...................... 1,126 -- 1,126
------- ------ ------- -------
Total current assets............... 19,951 2,795 (1,858) 20,888
Property, plant and equipment, net........... 17,071 2,821 19,892
Due from (to) affiliates..................... 410 -- (410) --
Goodwill, net................................ 1,942 193 2,135
Deferred income taxes........................ 2,074 44 2,118
Investments in and advances to joint
venture.................................... -- 151 151
Other assets................................. 430 4 (21) 413
------- ------ ------- -------
Total assets....................... $41,878 $6,008 $(2,289) $45,597
======= ====== ======= =======
LIABILITIES AND COMBINED EQUITY
Current liabilities:
Accounts payable........................... $ 4,180 $ 679 $ (293) $ 4,566
Due from (to) affiliates................... -- 410 (410) --
Accrued expenses........................... 17,013 3,231 20,244
Customer deposits.......................... 2,376 57 2,433
Due to Parent.............................. 4,239 -- (1,565) 2,674
Current portion of notes payable........... 91 -- 91
------- ------ ------- -------
Total current liabilities.......... 27,899 4,377 (2,268) 30,008
Combined equity:
Common stock............................... -- 928 (21) 907
Paid-in capital............................ 441 1,144 1,585
Cumulative translation adjustment.......... -- (2) (2)
Retained earnings (deficit)................ 13,538 (439) 13,099
------- ------ ------- -------
Total combined equity.............. 13,979 1,631 (21) 15,589
------- ------ ------- -------
Total liabilities and combined
equity........................... $41,878 $6,008 $(2,289) $45,597
======= ====== ======= =======
</TABLE>
F-37
<PAGE> 150
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
-----------------------------------------
GUARANTOR NON-GUARANTOR COMBINED
SUBSIDIARIES SUBSIDIARIES TOTAL
------------ ------------- --------
<S> <C> <C> <C>
Revenues................................................... $25,846 $5,189 $31,035
Cost and expenses:
Operating expenses....................................... 22,134 4,186 26,320
Selling, general and administrative...................... 1,397 357 1,754
Depreciation and amortization............................ 954 200 1,154
------- ------ -------
Total cost and expenses.......................... 24,485 4,743 29,228
------- ------ -------
Operating income........................................... 1,361 446 1,807
Other income (expense), net................................ (4) (53) (57)
Interest income............................................ 51 26 77
Interest and other financial expense....................... (170) -- (170)
------- ------ -------
Income before income taxes................................. 1,238 419 1,657
Income taxes............................................... 482 133 615
------- ------ -------
Net income................................................. $ 756 $ 286 $ 1,042
======= ====== =======
</TABLE>
F-38
<PAGE> 151
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED STATEMENT OF INCOME
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
-----------------------------------------
GUARANTOR NON-GUARANTOR COMBINED
SUBSIDIARIES SUBSIDIARIES TOTAL
------------ ------------- --------
<S> <C> <C> <C>
Revenues................................................... $25,366 $4,450 $29,816
Cost and expenses:
Operating expenses....................................... 20,339 3,634 23,973
Selling, general and administrative...................... 1,767 297 2,064
Depreciation and amortization............................ 1,055 117 1,172
------- ------ -------
Total cost and expenses.......................... 23,161 4,048 27,209
------- ------ -------
Operating income........................................... 2,205 402 2,607
Other income (expense), net................................ 31 4 35
Interest income............................................ 22 15 37
Interest and other financial expense....................... (165) -- (165)
------- ------ -------
Income before income taxes................................. 2,093 421 2,514
Income taxes............................................... 807 127 934
------- ------ -------
Net income................................................. $ 1,286 $ 294 $ 1,580
======= ====== =======
</TABLE>
F-39
<PAGE> 152
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998
------------------------------------------------------------
COMBINATION
GUARANTOR NON-GUARANTOR AND ELIMINATION COMBINED
SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------ ------------- --------------- --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................... $ 756 $ 286 $ 1,042
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization........... 954 200 1,154
Deferred income taxes................... 150 (19) 131
Equity loss in joint venture............ -- 84 84
Changes in operating assets and
liabilities:
Accounts receivable................... 2,226 409 2,635
Due from (to) affiliates.............. 303 (303) --
Prepaid expenses...................... 128 32 160
Spare parts and supplies.............. (11) (7) (18)
Other assets.......................... 167 5 172
Accounts payable...................... 264 (49) $ 257 472
Accrued expenses...................... 596 (168) 428
Customer deposits..................... (386) (553) (939)
------- ----- ----- -------
Net cash provided by (used in) by operating
activities................................. 5,147 (83) 257 5,321
INVESTING ACTIVITIES
Purchases of property, plant and equipment... (2,264) (438) (2,702)
------- ----- ----- -------
Net cash used in investing activities........ (2,264) (438) (2,702)
FINANCING ACTIVITIES
Advances from (to) Parent, net............... (2,870) 264 (2,606)
Dividends.................................... (13) -- (13)
------- ----- ----- -------
Net cash provided by (used in) financing
activities................................. (2,883) 264 (2,619)
------- ----- ----- -------
Net increase (decrease) in cash.............. -- (257) 257 --
Cash at beginning of period.................. -- 550 (550) --
------- ----- ----- -------
Cash at end of period........................ $ -- $ 293 $(293) $ --
======= ===== ===== =======
</TABLE>
F-40
<PAGE> 153
AIRCRAFT SERVICE INTERNATIONAL GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
(ALL DOLLAR AMOUNTS ARE IN THOUSANDS; INFORMATION PERTAINING TO THE THREE MONTHS
ENDED MARCH 31, 1997 AND 1998 IS UNAUDITED)
13. SUPPLEMENTAL GUARANTOR CONDENSED COMBINING FINANCIAL STATEMENTS --
(CONTINUED)
COMBINED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1997
------------------------------------------------------------
COMBINATION
GUARANTOR NON-GUARANTOR AND ELIMINATION COMBINED
SUBSIDIARIES SUBSIDIARIES ENTRIES TOTAL
------------ ------------- --------------- --------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net income................................... $ 1,286 $ 294 $ 1,580
Adjustments to reconcile net income to net
cash provided by (used in) operating
activities:
Depreciation and amortization........... 1,055 117 1,172
Deferred income taxes................... 241 (59) 182
Changes in operating assets and
liabilities:
Accounts receivable................... 2,555 675 3,230
Due from (to) affiliates.............. (175) 175 --
Prepaid expenses...................... 194 17 211
Spare parts and supplies.............. 43 5 48
Other assets.......................... 171 -- 171
Accounts payable...................... (288) 51 $(49) (286)
Accrued expenses...................... (3) (455) (458)
Customer deposits..................... 77 -- 77
-------- ----- ---- -------
Net cash provided by (used in) by operating
activities................................. 5,156 820 (49) 5,927
INVESTING ACTIVITIES
Purchases of property, plant and equipment... (1,031) 68 (963)
-------- ----- -------
Net cash provided by (used in), investing
activities................................. (1,031) 68 (963)
FINANCING ACTIVITIES
Advances from (to) Parent, net............... (2,711) 29 (2,682)
Dividends.................................... (1,414) (284) (1,698)
-------- ----- ---- -------
Net cash provided by (used in) financing
activities................................. (4,125) (255) (4,380)
-------- ----- ---- -------
Net increase (decrease) in cash.............. -- 633 (49) 584
Cash at beginning of period.................. -- 191 -- 191
-------- ----- ---- -------
Cash at end of period........................ $ -- $ 824 $(49) $ 775
======== ===== ==== =======
</TABLE>
F-41
<PAGE> 154
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Aircraft Service International Group, Inc.
We have audited the accompanying balance sheet of Aircraft Service
International Group, Inc. as of March 31, 1998. This balance sheet is the
responsibility of the Company's management. Our responsibility is to express an
opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the balance sheet is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheet. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall balance sheet presentation. We
believe that our audit of the balance sheet provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of Aircraft Service International
Group, Inc. at March 31, 1998, in conformity with generally accepted accounting
principles.
ERNST & YOUNG LLP
Greenville, South Carolina
September 16, 1998
F-42
<PAGE> 155
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
BALANCE SHEET
MARCH 31, 1998
<TABLE>
<S> <C>
ASSETS
Cash........................................................ $100
====
STOCKHOLDER'S EQUITY
Common stock, $0.01 par value -- authorized 1,000 shares,
issued and outstanding 100 shares......................... $ 1
Additional paid-in capital.................................. 99
----
Total stockholder's equity.................................. $100
====
</TABLE>
See accompanying note.
F-43
<PAGE> 156
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
NOTE TO BALANCE SHEET
MARCH 31, 1998
1. BASIS OF PRESENTATION
Aircraft Service International Group, Inc. (the "Company") was incorporated
on March 24, 1998 for the purpose of acquiring beneficial ownership and control
of all the outstanding capital stock or other equity interests in Aircraft
Service International, Inc., Dispatch Services, Inc., Florida Aviation Fueling
Co., Bahamas Airport Service, Inc., Freeport Flight Services, Inc., Aircraft
Service, Ltd., ASII Holding GmbH, and ASII Aircraft Service Canada Ltd.
(collectively the "ASIG business" or "Predecessor") from Viad Corp ("Viad") and
Viad Service Companies, Limited as of April 1, 1998 pursuant to a share purchase
agreement (the "Acquisition"). Prior to the Acquisition by the Company, the ASIG
business was operated under the divisional name of Aircraft Services
International Group. The Company is 100% owned by Ranger Aerospace Corporation.
Prior to April 1, 1998, the Company had no operations.
The purchase price of the Acquisition was $95 million in cash, plus fees
and expenses of approximately $4.1 million. The purchase price is subject to a
purchase price adjustment in favor of the Company for any shortfall in the net
asset value, net working capital or required cash (as such terms are defined in
the "Share Purchase Agreement") of the ASIG business from the levels represented
at the closing of the Acquisition. The purchase price is also subject to
adjustment in favor of Viad in an amount equal to the amount of cash in the ASIG
business at the closing of the Acquisition in excess of the required cash.
The Acquisition was accounted for as a purchase and, accordingly, the
purchase price was allocated to the assets acquired and liabilities assumed
based on appraisals and other estimates of their underlying fair values. The
allocation of the purchase price is preliminary pending finalization of
appraisals and other estimates. The excess of the purchase price over the fair
value of net assets acquired of approximately $48.0 million is classified as
goodwill and other intangibles and is generally being amortized over 20 years.
The following is a summary of the purchase price allocation:
<TABLE>
<S> <C>
Net working capital, including cash of $6,513,000........... $ 3,879,000
Property, plant and equipment............................... 44,208,000
Other assets................................................ 3,056,000
Intangibles................................................. 47,957,000
-----------
$99,100,000
===========
</TABLE>
The purchase price was funded as follows:
<TABLE>
<S> <C>
Sale of 100 shares of common stock, $0.01 per value, to
Ranger Aerospace Corporation.............................. $24,100,000
Borrowings under Senior Increasing Rate Notes............... 75,000,000
-----------
$99,100,000
===========
</TABLE>
BUSINESS
The Company and it subsidiaries provide aviation fueling services, aircraft
ground services and other aviation services at various airports in the United
States, Europe and the Bahamas.
F-44
<PAGE> 157
- - ------------------------------------------------------
- - ------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THE OFFER
CONTAINED HEREIN OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE INITIAL PURCHASER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
----------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................. i
Prospectus Summary..................... 1
Risk Factors........................... 13
The Acquisition........................ 22
Use of Proceeds........................ 23
Capitalization......................... 23
Unaudited Pro Forma Financial Data..... 24
Selected Historical Financial Data..... 29
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 31
Business............................... 39
Management............................. 51
Description of Capital Stock........... 55
Security Ownership of Certain
Beneficial Owners and Management..... 56
Certain Transactions................... 57
Description of Senior Credit
Facility............................. 62
The Exchange Offer..................... 63
Description of the Notes............... 72
Material Federal Income Tax
Considerations....................... 101
Plan of Distribution................... 106
Legal Matters.......................... 107
Experts................................ 107
Index to Financial Statements.......... F-1
</TABLE>
- - ------------------------------------------------------
- - ------------------------------------------------------
- - ------------------------------------------------------
- - ------------------------------------------------------
$80,000,000
AIRCRAFT SERVICE
INTERNATIONAL GROUP, INC.
OFFER TO EXCHANGE ITS SERIES B
11% SENIOR NOTES DUE 2005
FOR ANY AND ALL OF ITS OUTSTANDING
11% SENIOR NOTES DUE 2005
-----------------
PROSPECTUS
-----------------
, 1998
- - ------------------------------------------------------
- - ------------------------------------------------------
<PAGE> 158
PART II: INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is incorporated under the laws of the State of Delaware.
Section 145 of the General Corporation Law of the State of Delaware ("Section
145") provides that a Delaware corporation may indemnify any persons who are, or
are threatened to be made, parties to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person is or was an officer, director, employee or
agent of such corporation, or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, provided such
person acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests and, with respect to any
criminal action or proceeding, had no reasonable cause to believe that his
conduct was illegal. A Delaware corporation may indemnify any persons who are,
or are threatened to be made, a party to any threatened, pending or completed
action or suit by or in the right of the corporation by reason of the fact that
such person was a director, officer, employee or agent of such corporation, or
is or was serving at the request of such corporation as a director, officer,
employee or agent of another corporation or enterprise. The indemnity may
include expenses (including attorneys' fees) actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit,
actually or reasonably incurred by such person acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's best
interests except that no indemnification is permitted without judicial approval
if the officer or director is adjudged to be liable to the corporation. Where an
officer or director is successful on the merits or otherwise in the defense of
any action referred to above, the corporation must indemnify him against the
expenses which such officer or director has actually and reasonably incurred.
Article Nine of the Certificate of Incorporation of the Company provides
that to the fullest extent permitted by the General Corporation Law of the State
of Delaware as the same exists of may hereafter be amended, a director of the
Company shall not be liable to the Company or its stockholders for monetary
damages for a breach of fiduciary duty as a director.
Section 145 further authorizes a corporation to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation or enterprise,
against any liability asserted against him and incurred by him in any such
capacity, arising out of his status as such, whether or not the corporation
would otherwise have the power to indemnify him under Section 145.
All of the directors and officers of the Company are covered by insurance
policies maintained and held in effect by such corporation against certain
liabilities for actions taken in such capacities, including liabilities under
the Securities Act of 1933.
ITEM 21. EXHIBITS.
<TABLE>
<S> <C>
(a) Exhibits.
3.1 Certificate of Incorporation of the Company
3.2 Bylaws of the Company
3.3 Certificate of Incorporation of Aircraft Service
International, Inc.
3.4 Bylaws of Aircraft Service International, Inc.
3.5 Certificate of Incorporation of Florida Aviation Fueling
Company, Inc.
3.6 Bylaws of Florida Aviation Fueling Company, Inc.
3.7 Certificate of Incorporation of Dispatch Services, Inc.
3.8 Bylaws of Dispatch Services, Inc.
</TABLE>
II-1
<PAGE> 159
<TABLE>
<S> <C>
4.1 Securities Purchase Agreement dated as of August 13, 1998,
by and among the Company, the Guarantors and CIBC
Oppenheimer Corp.
4.2 Indenture dated as of August 18, 1998, among the Company and
State Street Bank and Trust Company, as Trustee with respect
to the 11% Senior Notes due 2005 (including the form of
Series B 11% Senior Notes and Guarantees)
4.3 Registration Rights Agreement dated as of August 18, 1998,
among the Company, the Guarantors and CIBC Oppenheimer Corp.
and State Street Bank and Trust with respect to the 11%
Senior Notes due 2005
5.1 Opinion of Kirkland & Ellis*
10.1 Share Purchase Agreement dated as of March 14, 1998, between
Viad Corp. and Viad Service Companies Limited and Ranger, as
amended on March 31, 1998+*
10.2 Securities Purchase Agreement dated as of April 1, 1998, by
and among Ranger, John Hancock Mutual Life Insurance
Company, CIBC Wood Gundy Ventures, Randolph Street Partners
and Gregg L. Engles
10.3 Securityholders Agreement, dated April 1, 1998 by and among
Ranger, John Hancock Mutual Life Insurance Company, CIBC
Wood Gundy Ventures, Randolph Street Partners II and Gregg
L. Engles
10.4 Registrations Rights Agreement, dated April 1, 1998 by and
among Ranger, CIBC Wood Gundy Ventures, Randolph Street
Partners II and Gregg L. Engles
10.5 Executive Stock Agreement, dated April 2, 1998 between
Ranger and Stephen D. Townes
10.6 Investor Stock Agreement, dated April 2, 1998 between Ranger
and The Danielle Schwartz Trust
10.7 Employment Agreement, dated April 2, 1998, between Ranger,
the Company and Stephen D. Townes
10.8 Employment Agreement, dated April 2, 1998, between Ranger,
the Company and F. Andrew Mitchell
10.9 Employment Agreement, dated April 2, 1998, between Ranger,
the Company and George W. Watts
10.10 Chairman Agreement, dated April 2, 1998, between Ranger, the
Company, Tioga Capital Corporation and George B. Schwartz
12.1 Statement Regarding Computation of Ratios of Earnings to
Fixed Charges*
21.1 Subsidiaries of the Company
23.1 Consent of Ernst & Young LLP
23.2 Consent of Deloitte & Touche
23.3 Consent of Kirkland & Ellis (included in Exhibit 5.1)*
24.1 Power of Attorney (included in Part II of the Registration
Statement)**
25.1 Statement of Eligibility of Trustee on Form T-1*
27.1 Financial Data Schedule*
99.1 Form of Letter of Transmittal
</TABLE>
II-2
<PAGE> 160
<TABLE>
<S> <C>
99.2 Form of Notice of Guaranteed Delivery
99.3 Form of Tender Instructions
</TABLE>
- - ---------------
* To be filed by amendment
** Previously filed
+ The Company agrees to furnish supplementally to the Commission a copy of any
omitted schedule or exhibit to such agreement upon request by the Commission.
(b) Financial Statement Schedules.
Schedule II -- Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission are not
required under the related instructions, are inapplicable or not material, or
the information called for thereby is otherwise included in the financial
statements and therefore has been omitted.
ITEM 22. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at the time shall be deemed to
be the initial bona fide offering thereof,
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, such registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 161
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Aircraft
Service International Group, Inc. duly caused this Amendment No. 1 to
Registration Statement on Form S-4 to be signed on its behalf by the
undersigned, thereunto duly authorized, in City of Miami, State of Florida, on
the 16th day of November, 1998.
AIRCRAFT SERVICE INTERNATIONAL
GROUP, INC.
By: /s/ STEPHEN D. TOWNES
------------------------------------
Stephen D. Townes
President and Chief Executive
Officer
* * *
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 16th day of November, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ STEPHEN D. TOWNES President and Chief Executive Officer and
- - ----------------------------------------------------- Director (Principal Executive Officer)
Stephen D. Townes
/s/ F. ANDREW MITCHELL Executive Vice President and Chief Financial
- - ----------------------------------------------------- Officer (Principal Accounting and Financial
F. Andrew Mitchell Officer)
* Chairman of the Board, Director and
- - ----------------------------------------------------- Assistant Secretary
George B. Schwartz
* Director
- - -----------------------------------------------------
D. Dana Donovan
* Director
- - -----------------------------------------------------
Jay R. Levine
* Director
- - -----------------------------------------------------
Edward Levy
* Director
- - -----------------------------------------------------
S. Mark Ray
</TABLE>
* The undersigned, by signing his name hereto, does sign and execute this
Amendment No. 1 to Registration Statement on Form S-4 on behalf of the above
named officers and directors of Aircraft Service International Group, Inc.
pursuant to the Power of Attorney executed by such officers and directors
and filed with the Securities and Exchange Commission.
<TABLE>
<C> <S>
/s/ F. ANDREW MITCHELL Attorney-in-Fact
- - -----------------------------------------------------
F. Andrew Mitchell
</TABLE>
II-4
<PAGE> 162
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Aircraft
Service International, Inc. duly caused this Amendment No. 1 to Registration
Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto
duly authorized, in City of Miami, State of Florida, on the 16th day of
November, 1998.
AIRCRAFT SERVICE INTERNATIONAL, INC.
By: /s/ STEPHEN D. TOWNES
------------------------------------
Stephen D. Townes
President and Chief Executive
Officer
* * *
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 16th day of November, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ STEPHEN D. TOWNES President and Chief Executive Officer and
- - ----------------------------------------------------- Director (Principal Executive Officer)
Stephen D. Townes
/s/ F. ANDREW MITCHELL Executive Vice President
- - ----------------------------------------------------- (Principal Accounting and Financial Officer)
F. Andrew Mitchell
</TABLE>
II-5
<PAGE> 163
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Dispatch
Services, Inc. duly caused this Amendment No. 1 to Registration Statement on
Form S-4 to be signed on its behalf by the undersigned, thereunto duly
authorized, in City of Miami, State of Florida, on the 16th day of November,
1998.
DISPATCH SERVICES, INC.
By: /s/ STEPHEN D. TOWNES
------------------------------------
Stephen D. Townes
President and Chief Executive
Officer
* * *
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 16th day of November, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ STEPHEN D. TOWNES President and Chief Executive Officer and
- - ----------------------------------------------------- Director (Principal Executive Officer)
Stephen D. Townes
/s/ F. ANDREW MITCHELL Executive Vice President
- - ----------------------------------------------------- (Principal Accounting and Financial Officer)
F. Andrew Mitchell
</TABLE>
II-6
<PAGE> 164
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Florida
Aviation Fueling Company, Inc. duly caused this Amendment No. 1 to Registration
Statement on Form S-4 to be signed on its behalf by the undersigned, thereunto
duly authorized, in City of Miami, State of Florida, on the 16th day of
November, 1998.
FLORIDA AVIATION FUELING COMPANY, INC.
By: /s/ STEPHEN D. TOWNES
-------------------------------------
Stephen D. Townes
President and Chief Executive Officer
* * *
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities indicated on the 16th day of November, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<C> <S>
/s/ STEPHEN D. TOWNES President and Chief Executive Officer and
- - ----------------------------------------------------- Director (Principal Executive Officer)
Stephen D. Townes
/s/ F. ANDREW MITCHELL Executive Vice President
- - ----------------------------------------------------- (Principal Accounting and Financial Officer)
F. Andrew Mitchell
</TABLE>
II-7
<PAGE> 165
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
AIRCRAFT SERVICE INTERNATIONAL GROUP
DECEMBER 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT CHARGED TO BALANCE
BEGINNING COSTS AND AT END OF
DESCRIPTION OF YEAR EXPENSES DEDUCTIONS YEAR
----------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
Year Ended December 31, 1995
Deducted from asset accounts:
Allowance for doubtful accounts............ $1,276 $240 $ 825(1) $ 691
====== ==== ===== ======
Year Ended December 31, 1996
Deducted from asset accounts:
Allowance for doubtful accounts............ $ 691 $289 $(296)(1)(2) $1,276
====== ==== ===== ======
Year Ended December 31, 1997
Deducted from asset accounts:
Allowance for doubtful accounts............ $1,276 $245 $ 899(1) $ 622
====== ==== ===== ======
</TABLE>
- - ---------------
(1) Uncollectible accounts written off, net of recoveries.
(2) Represents offset of customer deposits against allowance.
S-1
<PAGE> 1
EXHIBIT 3.1
CERTIFICATE OF INCORPORATION
OF
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
ARTICLE ONE
The name of the corporation is Aircraft Service International Group, Inc.
ARTICLE TWO
The address of the corporation's registered office in the
State of Delaware is The Corporation Trust Center, 1209 Orange Street, in the
City of Wilmington, County of New Castle. The name of its registered agent at
such address is The Corporation Trust Company.
ARTICLE THREE
The nature of the business or purposes to be conducted or
promoted is to engage in any lawful act or activity for which corporations may
be organized under the General Corporation Law of the State of Delaware.
ARTICLE FOUR
The total number of shares of capital stock which the
corporation has authority to issue is 1,000 shares of Common Stock, par value
$.01 per share.
ARTICLE FIVE
The name and mailing address of the sole incorporator are as
follows:
NAME MAILING ADDRESS
---- ---------------
Adam Pick 200 East Randolph Drive
Suite 5600
Chicago, Illinois 60601
ARTICLE SIX
The corporation is to have perpetual existence.
<PAGE> 2
ARTICLE SEVEN
In furtherance and not in limitation of the powers conferred
by statute, the board of directors of the corporation is expressly authorized to
make, alter or repeal the by-laws of the corporation.
ARTICLE EIGHT
Meetings of stockholders may be held within or without the
State of Delaware, as the by-laws of the corporation may provide. The books of
the corporation may be kept outside the State of Delaware at such place or
places as may be designated from time to time by the board of directors or in
the by-laws of the corporation. Election of directors need not be by written
ballot unless the by-laws of the corporation so provide.
ARTICLE NINE
To the fullest extent permitted by the General Corporation Law
of the State of Delaware as the same exists or may hereafter be amended, a
director of this corporation shall not be liable to the corporation or its
stockholders for monetary damages for a breach of fiduciary duty as a director.
Any repeal or modification of this ARTICLE NINE shall not adversely affect any
right or protection of a director of the corporation existing at the time of
such repeal or modification.
ARTICLE TEN
The corporation expressly elects not to be governed by Section
203 of the General Corporation Law of the State of Delaware.
ARTICLE ELEVEN
The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed herein and by the laws of the State of
Delaware, and all rights conferred upon stockholders herein are granted subject
to this reservation.
* * * * *
2
<PAGE> 3
<PAGE> 1
EXHIBIT 3.2
BY-LAWS
OF
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the
corporation in the State of Delaware shall be located at The Corporation Trust
Center, 1209 Orange Street, in the City of Wilmington, County of New Castle. The
name of the corporation's registered agent at such address shall be The
Corporation Trust Company. The registered office and/or registered agent of the
corporation may be changed from time to time by action of the board of
directors.
Section 2. Other Offices. The corporation may also have
offices at such other places, both within and without the State of Delaware, as
the board of directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of
the stockholders shall be held each year within one hundred twenty (120) days
after the close of the immediately preceding fiscal year of the corporation for
the purpose of electing directors and conducting such other proper business as
may come before the meeting. The date, time and place of the annual meeting
shall be determined by the president of the corporation; provided, that if the
president does not act, the board of directors shall determine the date, time
and place of such meeting.
Section 2. Special Meetings. Special meetings of stockholders
may be called for any purpose and may be held at such time and place, within or
without the State of Delaware, as shall be stated in a notice of meeting or in a
duly executed waiver of notice thereof.
Section 3. Place of Meetings. The board of directors may
designate any place, either within or without the State of Delaware, as the
place of meeting for any annual meeting or for any special meeting called by the
board of directors. If no designation is made, or if a special meeting be
otherwise called, the place of meeting shall be the principal executive office
of the corporation.
Section 4. Notice. Whenever stockholders are required or
permitted to take action at a meeting, written or printed notice stating the
place, date, time, and, in the case of special meetings, the purpose or
purposes, of such meeting, shall be given to each stockholder entitled to vote
at such meeting.
<PAGE> 2
Section 5. Stockholders List. The officer having charge of the
stock ledger of the corporation shall make, at least 10 days before every
meeting of the stockholders, a complete list of the stockholders entitled to
vote at such meeting arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
10 days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 6. Quorum. The holders of a majority of the
outstanding shares of capital stock, present in person or represented by proxy,
shall constitute a quorum at all meetings of the stockholders, except as
otherwise provided by statute or by the certificate of incorporation. If a
quorum is not present, the holders of a majority of the shares present in person
or represented by proxy at the meeting, and entitled to vote at the meeting, may
adjourn the meeting to another time and/or place.
Section 7. Adjourned Meetings. When a meeting is adjourned to
another time and place, notice need not be given of the adjourned meeting if the
time and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business which
might have been transacted at the original meeting. If the adjournment is for
more than thirty days, or if after the adjournment a new record date is fixed
for the adjourned meeting, a notice of the adjourned meeting shall be given to
each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the
affirmative vote of the majority of shares present in person or represented by
proxy at the meeting and entitled to vote on the subject matter shall be the act
of the stockholders, unless the question is one upon which by express provisions
of an applicable law or of the certificate of incorporation a different vote is
required, in which case such express provision shall govern and control the
decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the
General Corporation Law of the State of Delaware or by the certificate of
incorporation of the corporation or any amendments thereto and subject to
Section 3 of Article VI hereof, every stockholder shall at every meeting of the
stockholders be entitled to one vote in person or by proxy for each share of
common stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a
meeting of stockholders or to express consent or dissent to corporate action in
writing without a meeting may authorize another person or persons to act for him
or her by proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer period.
Section 11. Action by Written Consent. Unless otherwise
provided in the certificate of incorporation, any action required to be taken at
any annual or special meeting of stockholders of
2
<PAGE> 3
the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent or consents in writing, setting forth
the action so taken and bearing the dates of signature of the stockholders who
signed the consent or consents, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares entitled to
vote thereon were present and voted and shall be delivered to the corporation
by delivery to its registered office in the state of Delaware, or the
corporation's principal place of business, or an officer or agent of the
corporation having custody of the book or books in which proceedings of
meetings of the stockholders are recorded. Delivery made to the corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested. All consents properly delivered in accordance with this
section shall be deemed to be recorded when so delivered. No written consent
shall be effective to take the corporate action referred to therein unless,
within sixty days of the earliest dated consent delivered to the corporation as
required by this section, written consents signed by the holders of a
sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have
not consented in writing. Any action taken pursuant to such written consent or
consents of the stockholders shall have the same force and effect as if taken
by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the
corporation shall be managed by or under the direction of the board of
directors.
Section 2. Number, Election and Term of Office. The number of
directors which shall constitute the first board shall be two (2). Thereafter,
the number of directors shall be estab lished from time to time by resolution of
the board. The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. The directors shall be elected in this manner
at the annual meeting of the stockholders, except as provided in Section 4 of
this Article III. Each director elected shall hold office until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire
board of directors may be removed at any time, with or without cause, by the
holders of a majority of the shares then entitled to vote at an election of
directors. Whenever the holders of any class or series are entitled to elect one
or more directors by the provisions of the corporation's certificate of
incorporation, the provisions of this section shall apply, in respect to the
removal without cause of a director or directors so elected, to the vote of the
holders of the outstanding shares of that class or series and not to the vote of
the outstanding shares as a whole. Any director may resign at any time upon
written notice to the corporation.
3
<PAGE> 4
Section 4. Vacancies. Vacancies and newly created
directorships resulting from any increase in the authorized number of directors
may be filled by a majority of the directors then in office, though less than a
quorum, or by a sole remaining director. Each director so chosen shall hold
office until a successor is duly elected and qualified or until his or her
earlier death, resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly
elected board of directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other
than the annual meeting, of the board of directors may be held without notice at
such time and at such place as shall from time to time be determined by
resolution of the board. Special meetings of the board of directors may be
called by or at the request of the president on at least 24 hours notice to each
director, either personally, by telephone, by mail, or by telegraph.
Section 7. Quorum, Required Vote and Adjournment. A majority
of the total number of directors shall constitute a quorum for the transaction
of business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the board of directors. If a quorum shall
not be present at any meeting of the board of directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by
resolution passed by a majority of the whole board, designate one or more
committees, each committee to consist of one or more of the directors of the
corporation, which to the extent provided in such resolution or these by-laws
shall have and may exercise the powers of the board of directors in the
management and affairs of the corporation except as otherwise limited by law.
The board of directors may designate one or more directors as alternate members
of any committee, who may replace any absent or disqualified member at any
meeting of the committee. Such committee or committees shall have such name or
names as may be determined from time to time by resolution adopted by the board
of directors. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
Section 9. Committee Rules. Each committee of the board of
directors may fix its own rules of procedure and shall hold its meetings as
provided by such rules, except as may otherwise be provided by a resolution of
the board of directors designating such committee. In the event that a member
and that member's alternate, if alternates are designated by the board of
directors as provided in Section 8 of this Article III, of such committee is or
are absent or disquali fied, the member or members thereof present at any
meeting and not disqualified from voting, whether or not such member or members
constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in place of any such absent or disqualified
member.
Section 10. Communications Equipment. Members of the board of
directors or any committee thereof may participate in and act at any meeting of
such board or committee through the use of a conference telephone or other
communications equipment by means of which all persons
4
<PAGE> 5
participating in the meeting can hear each other, and participation in the
meeting pursuant to this section shall constitute presence in person at the
meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any
member of the board of directors or any committee thereof who is present at a
meeting shall be conclusively presumed to have waived notice of such meeting
except when such member attends for the express purpose of objecting at the
beginning of the meeting to the transaction of any business because the meeting
is not lawfully called or convened. Such member shall be conclusively presumed
to have assented to any action taken unless his or her dissent shall be entered
in the minutes of the meeting or unless his or her written dissent to such
action shall be filed with the person acting as the secretary of the meeting
before the adjournment thereof or shall be forwarded by registered mail to the
secretary of the corporation immediately after the adjournment of the meeting.
Such right to dissent shall not apply to any member who voted in favor of such
action.
Section 12. Action by Written Consent. Unless otherwise
restricted by the certificate of incorporation, any action required or permitted
to be taken at any meeting of the board of directors, or of any committee
thereof, may be taken without a meeting if all members of the board or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be
elected by the board of directors and may consist of a president, any number of
vice presidents, a secretary, a chief financial officer, any number of assistant
secretaries and such other officers and assistant officers as may be deemed
necessary or desirable by the board of directors. Any number of offices may be
held by the same person. In its discretion, the board of directors may choose
not to fill any office for any period as it may deem advisable, except that the
offices of president and secretary shall be filled as expeditiously as
possible.
Section 2. Election and Term of Office. The officers of the
corporation shall be elected annually by the board of directors at its first
meeting held after each annual meeting of stockholders or as soon thereafter as
conveniently may be. Vacancies may be filled or new offices created and filled
at any meeting of the board of directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board
of directors may be removed by the board of directors whenever in its judgment
the best interests of the corporation would be served thereby, but such removal
shall be without prejudice to the contract rights, if any, of the person so
removed.
5
<PAGE> 6
Section 4. Vacancies. Any vacancy occurring in any office
because of death, resignation, removal, disqualification or otherwise, may be
filled by the board of directors for the unexpired portion of the term by the
board of directors then in office.
Section 5. Compensation. Compensation of all officers shall be
fixed by the board of directors, and no officer shall be prevented from
receiving such compensation by virtue of his or her also being a director of the
corporation.
Section 6. President. The president, subject to the powers of
the board of directors, shall have general charge of the business, affairs and
property of the corporation, and control over its officers, agents and
employees; and shall see that all orders and resolutions of the board of
directors are carried into effect. The president shall execute bonds, mortgages
and other contracts requiring a seal, under the seal of the corporation, except
where required or permitted by law to be otherwise signed and executed and
except where the signing and execution thereof shall be expressly delegated by
the board of directors to some other officer or agent of the corporation. The
president shall have such other powers and perform such other duties as may be
prescribed by the board of directors or as may be provided in these by-laws.
Section 7. Vice-presidents. The vice-president, or if there
shall be more than one, the vice-presidents in the order determined by the board
of directors shall, in the absence or disability of the president, act with all
of the powers and be subject to all the restrictions of the president. The
vice-presidents shall also perform such other duties and have such other powers
as the board of directors, the president or these by-laws may, from time to
time, prescribe.
Section 8. The Secretary and Assistant Secretaries. The
secretary shall attend all meetings of the board of directors, all meetings of
the committees thereof and all meetings of the stockholders and record all the
proceedings of the meetings in a book or books to be kept for that purpose.
Under the president's supervision, the secretary shall give, or cause to be
given, all notices required to be given by these by-laws or by law; shall have
such powers and perform such duties as the board of directors, the president or
these by-laws may, from time to time, prescribe; and shall have custody of the
corporate seal of the corporation. The secretary, or an assistant secretary,
shall have authority to affix the corporate seal to any instrument requiring it
and when so affixed, it may be attested by his or her signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors or
president may, from time to time, prescribe.
Section 9. The Chief Financial Officer and Assistant
Treasurer. The chief financial officer shall have the custody of the corporate
funds and securities; shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation; shall deposit all monies
and other valuable effects in the name and to the credit of the corporation as
may be ordered by the board of directors; shall cause the funds of the
corporation to be disbursed when such disbursements have been duly authorized,
taking proper vouchers for such disbursements; and shall render to the
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president and the board of directors, at its regular meeting or when the board
of directors so requires, an account of the corporation; shall have such powers
and perform such duties as the board of directors, the president or these
by-laws may, from time to time, prescribe. If required by the board of
directors, the chief financial officer shall give the corporation a bond (which
shall be rendered every six years) in such sums and with such surety or sureties
as shall be satisfac tory to the board of directors for the faithful performance
of the duties of the office of chief financial officer and for the restoration
to the corporation, in case of death, resignation, retirement, or removal from
office, of all books, papers, vouchers, money, and other property of whatever
kind in the possession or under the control of the chief financial officer
belonging to the corporation. The assistant treasurer, or if there shall be more
than one, the assistant treasurers in the order determined by the board of
directors, shall in the absence or disability of the chief financial officer,
perform the duties and exercise the powers of the chief financial officer. The
assistant treasurers shall perform such other duties and have such other powers
as the board of directors or the president may, from time to time, prescribe.
Section 10. Other Officers, Assistant Officers and Agents.
Officers, assistant officers and agents, if any, other than those whose duties
are provided for in these by-laws, shall have such authority and perform such
duties as may from time to time be prescribed by resolution of the board of
directors.
Section 11. Absence or Disability of Officers. In the case of
the absence or disability of any officer of the corporation and of any person
hereby authorized to act in such officer's place during such officer's absence
or disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
INDEMNIFICATION OF OFFICERS, DIRECTORS AND OTHERS
Section 1. Nature of Indemnity. Each person who was or is
made a party or is threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, crimi nal, administrative or
investigative (hereinafter a "proceeding"), by reason of the fact that he or
she, is or was a director or officer, of the corporation or is or was serving
at the request of the corporation as a director, officer, employee, fiduciary,
or agent of another corporation or of a partnership, joint venture, trust or
other enterprise including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an official capacity
as a director, officer, employee, fiduciary or agent or in any other capacity
while serving as a director, officer, employee, fiduciary or agent, shall be
indemnified and held harmless by the corporation to the fullest extent which it
is empowered to do so by the General Corporation Law of the State of Delaware,
as the same exists or may hereafter be amended against all expense, liability
and loss (including attorneys' fees actually and reasonably incurred by such
person in connection with such proceeding) and such indemnification shall inure
to the benefit of his or her heirs, executors and administrators; provided,
however, that, except as provided in Section 2 hereof, the corporation shall
indemnify any such person seeking indemnification in connection with a
proceeding initiated by such person only if such proceeding was
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authorized by the board of directors of the corporation. The right to
indemnification conferred in this Article V shall be a contract right and,
subject to Sections 2 and 5 hereof, shall include the right to be paid by the
corporation the expenses incurred in defending any such proceeding in advance
of its final disposition. The corporation may, by action of its board of
directors, provide indemnification to employees and agents of the corporation
with the same scope and effect as the foregoing indemnification of directors
and officers.
Section 2. Procedure for Indemnification of Directors and
Officers. Any indemnification of a director, officer, employee, fiduciary or
agent of the corporation under Section 1 of this Article V or advance of
expenses under Section 5 of this Article V shall be made promptly, and in any
event within 30 days, upon the written request of the director, officer,
employee, fiduciary or agent. If a determination (as defined in the General
Corporation Law of the State of Delaware) by the corporation that the director,
officer, employee, fiduciary or agent is entitled to indemnification pursuant to
this Article V is required, and the corporation fails to respond within sixty
days to a written request for indemnity, the corporation shall be deemed to have
approved the request. If the corporation denies a written request for
indemnification or advancing of expenses, in whole or in part, or if payment in
full pursuant to such request is not made within 30 days, the right to
indemnification or advances as granted by this Article V shall be enforceable by
the director, officer, employee, fiduciary or agent in any court of competent
jurisdiction. Such person's costs and expenses incurred in connection with
successfully establishing his or her right to indemnification, in whole or in
part, in any such action shall also be indemnified by the corporation. It shall
be a defense to any such action (other than an action brought to enforce a claim
for expenses incurred in defending any proceeding in advance of its final
disposition where the required undertaking, if any, has been tendered to the
corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware for
the corporation to indemnify the claimant for the amount claimed, but the burden
of such defense shall be on the corporation. Neither the failure of the
corporation (including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he or she has met the applicable standard of conduct set forth in the
General Corporation Law of the State of Delaware, nor an actual determination by
the corporation (including its board of directors, independent legal counsel, or
its stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 3. Article Not Exclusive. The rights to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Article V shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the certificate of incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 4. Insurance. The corporation may purchase and
maintain insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the corporation or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or
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<PAGE> 9
not the corporation would have the power to indemnify such person against such
liability under this Article V.
Section 5. Expenses. Expenses incurred by any person described
in Section 1 of this Article V in defending a proceeding shall be paid by the
corporation in advance of such proceeding's final disposition upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he or she is not entitled to be
indemnified by the corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the board of
directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered
by the foregoing provisions of this Article V and who are or were employees or
agents of the corporation, or who are or were serving at the request of the
corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the board of directors.
Section 7. Contract Rights. The provisions of this Article V
shall be deemed to be a contract right between the corporation and each director
or officer who serves in any such capacity at any time while this Article V and
the relevant provisions of the General Corporation Law of the State of Delaware
or other applicable law are in effect, and any repeal or modification of this
Article V or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this
Article V, references to "the corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee, fiduciary or agent of another corporation, partnership, joint
venture, trust or other enterprise, shall stand in the same position under this
Article V with respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its separate
existence had continued.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation
shall be entitled to have a certificate, signed by, or in the name of the
corporation by the president, or a vice-president and the secretary or any
assistant secretary of the corporation, certifying the number of shares owned by
such holder in the corporation. If such a certificate is countersigned (1) by a
transfer agent or an assistant transfer agent other than the corporation or its
employee or (2) by a registrar, other than the corporation or its employee, the
signature of the president, any vice-president, secretary, or any assistant
secretary may be facsimiles. In case any officer or officers who have signed, or
whose
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facsimile signature or signatures have been used on, any such certificate or
certificates shall cease to be such officer or officers of the corporation
whether because of death, resignation or otherwise before such certificate or
certificates have been delivered by the corporation, such certificate or
certificates may nevertheless be issued and delivered as though the person or
persons who signed such certificate or certificates or whose facsimile signature
or signatures have been used thereon had not ceased to be such officer or
officers of the corporation. All certificates for shares shall be consecutively
numbered or otherwise identified. The name of the person to whom the shares
represented thereby are issued, with the number of shares and date of issue,
shall be entered on the books of the corporation. Shares of stock of the
corporation shall only be transferred on the books of the corporation by the
holder of record thereof or by such holder's attorney duly authorized in
writing, upon surrender to the corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons, with such
evidence of the authenticity of such endorsement, transfer, authorization, and
other matters as the corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
Section 2. Lost Certificates. The board of directors may
direct a new certificate or certificates to be issued in place of any
certificate or certificates previously issued by the corporation alleged to have
been lost, stolen, or destroyed, upon the making of an affidavit of that fact by
the person claiming the certificate of stock to be lost, stolen, or destroyed.
When authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In
order that the corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, the board
of directors may fix a record date, which record date shall not precede the date
upon which the resolution fixing the record date is adopted by the board of
directors, and which record date shall not be more than sixty nor less than ten
days before the date of such meeting. If no record date is fixed by the board of
directors, the record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be the close of business on the next
day preceding the day on which notice is given, or if notice is waived, at the
close of business on the day next preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the board of directors may fix
a record date, which record date shall not precede the date
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upon which the resolution fixing the record date is adopted by the board of
directors, and which date shall not be more than ten days after the date upon
which the resolution fixing the record date is adopted by the board of
directors. If no record date has been fixed by the board of directors, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by statute, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation by delivery to its registered office in the State of Delaware, its
principal place of business, or an officer or agent of the corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporation's registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the board of directors and prior action by the board of
directors is required by statute, the record date for determining stockholders
entitled to consent to corporate action in writing without a meeting shall be at
the close of business on the day on which the board of directors adopts the
resolution taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order
that the corporation may determine the stockholders entitled to receive payment
of any dividend or other distribution or allotment or any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purposes of any other lawful action,
the board of directors may fix a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted,
and which record date shall be not more than sixty days prior to such action. If
no record date is fixed, the record date for determining stockholders for any
such purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to
the corporation of the certificate or certificates for a share or shares of
stock with a request to record the transfer of such share or shares, the
corporation may treat the registered owner as the person entitled to receive
dividends, to vote, to receive notifications, and otherwise to exercise all the
rights and powers of an owner.
Section 7. Subscriptions for Stock. Unless otherwise provided
for in the subscription agreement, subscriptions for shares shall be paid in
full at such time, or in such installments and at such times, as shall be
determined by the board of directors. Any call made by the board of directors
for payment on subscriptions shall be uniform as to all shares of the same class
or as to all shares of the same series. In case of default in the payment of any
installment or call when such payment is due, the corporation may proceed to
collect the amount due in the same manner as any debt due the corporation.
ARTICLE VII
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the
corporation, subject to the provisions of the certificate of incorporation, if
any, may be declared by the board of directors
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at any regular or special meeting, pursuant to law. Dividends may be paid in
cash, in property, or in shares of the capital stock, subject to the provisions
of the certificate of incorporation. Before payment of any dividend, there may
be set aside out of any funds of the corporation available for dividends such
sum or sums as the directors from time to time, in their absolute discretion,
think proper as a reserve or reserves to meet contingencies, or for equalizing
dividends, or for repairing or maintaining any property of the corporation, or
any other purpose and the directors may modify or abolish any such reserve in
the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or
other orders for the payment of money by or to the corporation and all notes and
other evidences of indebtedness issued in the name of the corporation shall be
signed by such officer or officers, agent or agents of the corporation, and in
such manner, as shall be determined by resolution of the board of directors or a
duly authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any
officer or officers, or any agent or agents, of the corporation to enter into
any contract or to execute and deliver any instrument in the name of and on
behalf of the corporation, and such authority may be general or confined to
specific instances.
Section 4. Loans. The corporation may lend money to, or
guarantee any obligation of, or otherwise assist any officer or other employee
of the corporation or of its subsidiary, including any officer or employee who
is a director of the corporation or its subsidiary, whenever, in the judgment of
the directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation
shall be fixed by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors may provide
a corporate seal which shall be in the form of a circle and shall have inscribed
thereon the name of the corporation and the words "Corporate Seal, Delaware".
The seal may be used by causing it or a facsimile thereof to be impressed or
affixed or reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting
securities in any other corporation held by the corporation shall be voted by
the president, unless the board of directors specifically confers authority to
vote with respect thereto, which authority may be general or confined to
specific instances, upon some other person or officer. Any person authorized to
vote securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of
record, in person or by attorney or other agent, shall, upon written demand
under oath stating the purpose thereof, have the right during the usual hours
for business to inspect for any proper purpose the corporation's stock
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ledger, a list of its stockholders, and its other books and records, and to make
copies or extracts therefrom. A proper purpose shall mean any purpose reasonably
related to such person's interest as a stockholder. In every instance where an
attorney or other agent shall be the person who seeks the right to inspection,
the demand under oath shall be accompanied by a power of attorney or such other
writing which authorizes the attorney or other agent to so act on behalf of the
stockholder. The demand under oath shall be directed to the corporation at its
registered office in the State of Delaware or at its principal place of
business.
Section 9. Section Headings. Section headings in these by-laws
are for convenience of reference only and shall not be given any substantive
effect in limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any
provision of these by-laws is or becomes inconsistent with any provision of the
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, the provision of these by-laws shall not
be given any effect to the extent of such inconsistency but shall otherwise be
given full force and effect.
ARTICLE VIII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new
by-laws adopted at any meeting of the board of directors by a majority vote. The
fact that the power to adopt, amend, alter, or repeal the by-laws has been
conferred upon the board of directors shall not divest the stockholders of the
same powers.
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EXHBIT 3.3
CERTIFICATE OF INCORPORATION
OF
AIRCRAFT SERVICE INTERNATIONAL, INC.
FIRST. The name of the corporation is AIRCRAFT SERVICE INTERNATIONAL, INC.
SECOND. The principal office of the corporation in the State of
Delaware is located at 100 West Tenth Street, in the city of
Wilmington, County of New Castle. The name and address of its
resident agent is The corporation Trust company, 100 West
Tenth Street, Wilmington, Delaware.
THIRD. The purposes of the corporation are to engage in any lawful
act or activity for which corporations may be organized under
the General Corporation Law of Delaware, and without limiting
the foregoing, to engage in aircraft service operations and
services of all kinds, and produce, manufacture, develop,
construct, transport, buy, hold, sell, and generally deal in
products, materials and property, both tangible and
intangible.
FOURTH. The total number of share of capital stock which this
corporation shall have authority to issue is one thousand
(1,000) shares of common stock all of which shares shall be
without par value.
FIFTH. The minimum of capital with which this corporation will commence
business in One Thousand dollars ($1,000.00).
SIXTH. The names and places of residence of the incorporators are as follows:
Raymond H. Warns, 111 North Kaspar Avenue, Arlington Heights, Ill.
<PAGE> 2
Herbert R. Nelson, 729 South Bennett, Palatine, Illinois
McGee Parramore, 601 South Stuart Lane, Palatine, Illinois
SEVENTH. The corporation is to have perpetual existence.
EIGHTH. The private property of the shareholders shall not be subject to the
payment of corporate debts to any extent whatever.
NINTH. In furtherance and not in limitation of the powers conferred by the
laws of the State of Delaware, the Board of Directors is expressly
authorized:
(a) To make, alter or repeal the by-laws of the corporation.
(b) To authorize and cause to be executed mortgages and liens upon
the real and personal property of the corporation.
(c) To set apart out of any of the funds of the corporation
available for dividends a reserve or reserves for any proper
purpose and to abolish any such reserve in the manner in which
it was created.
(d) By resolution passed by a majority of the whole board, to
designate one or more committees, each committee to consist of
two or more of the directors of the corporation, which, to the
extent provided in the resolution or in the by-laws of the
corporation, shall have and may exercise the powers of the
Board of Directors in the management of the business and
affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it.
(e) To sell, assign, convey and otherwise dispose of a part of
the property, assets and effects of this Corporation less than
the whole thereof, or less than substantially the whole
thereof, on such terms and conditions as they shall deem
advisable, without
<PAGE> 3
the assent of the stockholders in writing or otherwise; and
also to sell, assign, transfer, convey, lease, exchange and
otherwise dispose of the whole or substantially the whole of
the property, assets, effects, franchises and good will of
this Corporation, on such terms and conditions as they shall
deem expedient, and for the best interests of the corporation,
when and as authorized by the affirmative vote of the holders
of not less than a majority of the stock then issued and
outstanding having voting power, at a stockholders' meeting
duly called for the purpose, but in any event not less than
the amount required by law.
All of the powers of this Corporation, insofar as the same lawfully may
be vested by this Certificate in the Board of Directors, are hereby conferred
upon the Board of Directors of this Corporation.
TENTH. In the absence of fraud, no contract or transaction between
this Corporation ad any other person, association or
corporation shall be affected by the fact that any of the
directors or officers of this Corporation are interested in,
or with, such person, association or corporation, or are
directors or officers of such other association or corporation
and any director or officer of the Corporation individually
may be a party to, or may be interested in, any such contract
or transaction of this Corporation; and no such contract or
transaction of this Corporation with any person or persons,
firm association, or corporation, shall be rendered illegal,
or in any way be affected, by the fact that any director or
officer of this Corporation is a party to, or interested in,
such contract or transaction, or in any way connected with
such person or persons, firm, association or corporation;
<PAGE> 4
and each and every person who may become a director or officer
of this Corporation is hereby relieved from any liability that
might otherwise exist from thus contracting with this
Corporation, for the benefit of himself or any person, firm,
association or corporation in which he may be anywise
interested.
ELEVENTH. If the by-laws so provide, the stockholders and directors
shall have power to hold their meetings, to have an officer
or officers and to keep the books of this corporation
(subject to the provisions of the statute) outside of the
State of Delaware at such places as may from time to time be
designated by the by-;laws or by resolutions of the directors.
TWELFTH. This corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
law, and all rights conferred on officers, directors and
stockholder herein are granted subject to this reservation.
<PAGE> 1
EXHIBIT 3.4
BYLAWS OF
AIRCRAFT SERVICE INTERNATIONAL, INC.
ARTICLE I
OFFICES
Section 1. The principal office of the corporation shall be located at
Chicago, Illinois. The Board of Directors is hereby granted full power and
authority to change said principal office from one location to another.
Section 2. The corporation may also have other offices at such other places
as the Board of Directors may from time to time determine or the business of the
corporation may require.
ARTICLE II
MEETING OF STOCKHOLDERS
Section 1. All meeting of the stockholders for any purpose may be held at
such time and place as shall be stated in the notice of the meeting or in a duly
executed waiver of notice thereof.
Section 2. The annual meeting of stockholders of the corporation
shall be held on the third Friday in March in each year, if not a legal holiday;
and if a legal holiday, then on the next secular day following, at which time
they shall elect by a plurality, a Board of Directors and transact such other
business as may properly be brought before the meeting.
Section 3. At each stockholder's meeting the books of record of stockholders
shall be open to inspection by any stockholder at the time and place of the
meeting.
Section 4. Special meetings of stockholders, for any purpose or purposes,
unless otherwise prescribed by statute or by the Certificate of Incorporation
may be called by the President or by the Board of Directors and shall be called
by the president at the request in writing of
<PAGE> 2
stockholders owning one-third or more of the capital stock of the corporation
issued and outstanding and entitled to vote. Such request shall state the
purpose or purposes of the proposed meeting.
Section 5. Written or printednotice of each annual or special meeting of
stockholders stating the time, place and object thereof, shall be given to each
stockholder entitled to vote at such meeting by leaving such notice with him or
at his residence or usual place of business, or by mailing a copy thereof to him
at his last known post office address at least ten (10) days and not more than
fifty (50) days before the date on which the meeting is to be held. No
publication of any notice of a meeting of stockholders shall be required. If any
stockholder shall sign a written waiver of notice of any meeting, either before
or after the meeting, such waiver shall be deemed equivalent to notice. Notice
of any adjourned meeting of stockholders except as otherwise expressly provided
by statute shall not be required to be given, unless the adjournment is for more
than thirty (30) days, in which case notice of the adjourned meeting shall be
given to each shareholder.
Section 6. At all meetings of stockholders, the holders of a majority of the
stock issued and outstanding and entitled to vote, present in person or
represented by proxy, shall constitute a quorum for the transaction of business,
except as otherwise provided by statute or by the Certificate of Incorporation.
If, however, such quorum shall not be present or represented at any meeting of
the stockholders, the stockholders entitled to vote thereat, present in person
or represented by proxy, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present or represented. At such
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adjourned meeting at which a quorum shall be present or represented any business
may be transacted which might have been transacted at the meeting as originally
notified.
Section 7. When a quorum is present at any meeting, the vote of the
holders of a majority of the stock having voting power present in person or
represented by proxy at the meeting shall decide any question brought before
such meeting, unless the question is one upon which by express provision of the
statutes or of the Certificate of Incorporation, a different vote is required in
which such case express provision shall govern and control the decision of such
question.
Section 8. At every meeting of the stockholders the President, or in
his absence a Vice President, in order of his designation, or, in the absence of
both President and Vice President, a Chairman chosen by a majority in interest
of the stockholders of the corporation present in person or by proxy and
entitled to vote, shall act as Chairman. The Secretary of the corporation shall
act as secretary at all meetings of the stockholders. In the absence of the
Secretary from any such meeting, the chairman may appoint any person to act as
secretary of the meeting.
Section 9. At each meeting of stockholders every holder of record of stock
entitled to vote thereat shall be entitled to one vote for each share of stock
of the corporation held by him and registered in his name on the books of the
corporation at the time of such meeting. Shares of its own capital stock
belonging to the corporation shall not be voted upon directly or indirectly. The
vote on stock of the corporation may be given by the stockholder entitled
thereto in person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto authorized, and
delivered to the secretary of the meeting. No proxy shall be valid after the
expiration of three years from the date of its execution, unless said proxy
expressly provides for a longer period.
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Section 10. Any action required to be taken at a meeting of the stockholders,
or any other action which may be taken at a meeting of the stockholders, may
be taken without a meeting, if (1) all of the stockholders who would have been
entitled to vote upon the action if such meeting were held, shall consent in
writing to such corporate action being taken; or (2) at least 51% of the
stockholders who would have been entitled to vote upon the action, if such
meeting were held, shall consent in writing to such corporate action being
taken, provided that in no case shall the written consent be by the holders of
stock having less than the minimum percentage of the total vote required by
statute for the proposed corporate action, and further provided that prompt
notice must be given to all stockholder of the taking of corporation action
without a meeting and by less than the unanimous written consent.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole
Board shall be not less than three (3) nor more than nine (9). Within the limits
above specified, the number of directors shall be determined by resolution of
the Board of Directors or by the stockholders at the annual meeting. The
directors shall be elected by the stockholders in the manner hereinabove
prescribed and shall hold office until their successors shall have been elected
and qualified or until their prior decease, resignation or removal. The
directors need not be stockholders of the corporation.
Section 2. Vacancies resulting from any cause and newly created
directorships resulting from any increase in the number of directors may be
filled either by a majority of the directors then in office, though less than a
quorum, or by the stockholders, and the directors so chosen shall hold
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office until the next annual election and until their successors are duly
elected and shall qualify, unless sooner displaced.
Section 3. The business of the corporation shall be managed by its Board of
Directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
Section 4. The Board of Directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware, as the
Board of Directors from time to time may determine.
Section 5. The first meeting of each newly elected Board of Directors may be
held at such time and place as shall be fixed by the vote of the stockholders at
the annual meeting and no notice of such meeting shall be necessary to the newly
elected directors in order legally to constitute the meeting, provided a quorum
shall be present. In the event of the failure of the stockholders to fix the
time or place of such first meeting of the newly elected Board of Directors, or
in the event such meeting is not held at the time and place so fixed by the
stockholders, the meeting may be held at the time and place as shall be
specified in a notice given as hereinafter provided for special meetings of the
Board of Directors, or as shall be specified in a written waiver signed by all
of the directors.
Section 6. Regular meetings of the Board of Directors may be held without
notice at such times and such place as shall from time to time be determined by
the Board.
Section 7. Special meetings of the Board may be called by the President or
in his absence, by a Vice President or by a majority of the directors, at such
time and place as shall be specified in a
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notice thereof or in a consent and waiver of notice thereof signed by all of the
directors. Notices of each special meeting shall be delivered to each director
either personally or by mail or by telegraph or telephone not later than three
(3) days before the day on which the meeting is to be held. Notice of any
meeting need not be given to any director, however, if waived by him in writing
or by telegraph. Any meeting of the Board of Directors shall be a legal meeting
without any notice thereof having been given, if all directors shall be present
thereat.
Section 8. At all meetings of the Board of Directors, a majority of the
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present thereat, the directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the Certificate of Incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the Board of Directors or of any committee thereof may be taken without a
meeting, if prior to such action a written consent thereto is signed by all
members of the Board or of such committee as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or committee.
Section 10. Any director may be removed either with or without cause, at any
time, by the affirmative vote of a majority in interest of the stockholders of
record of the corporation entitled to vote, at a special meeting of the
stockholders called for the purpose; and the vacancy in the Board caused by such
removal may be filled by the stockholders at such meeting. Any director may
resign at any time by giving written notice of such resignation to the President
or the
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Secretary of the corporation and such resignation shall take effect at the time
specified in such notice.
Section 11. The directors as such shall not receive any stated salaries for
their services, but by resolution of the Board of Directors, a fixed sum and
expenses of attendance, if any, may be allowed for attendance at each regular or
special meeting of the Board; provided that nothing herein contained shall be
construed to preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of special or standing
committees may be allowed like compensation for attending committee meetings.
Each director and officer, whether or not then in office, shall be
indemnified by the corporation against all claims and liabilities and all
expenses reasonably incurred or imposed upon him in connection with or arising
out of any action, suit or proceeding in which he may be involved by reason of
any act or acts or alleged act or acts, either of omission or commission,
performed by him while acting as such officer or director in good faith. The
corporation shall not, however, indemnify any director or officer with respect
to matters as to which he shall be finally adjudged in any such action, suit or
proceeding to have been derelict in the performance of his duty as such director
or officer. The foregoing right of indemnification shall not be exclusive of
other rights to which any director or officer may be entitled as a matter of
law. Each such officer and director shall likewise be indemnified against any
judgment, decree or fine which may be imposed upon him in any such action, suit
or proceedings.
Section 12. The Board of Directors may, by resolution passed by
a majority of the whole Board, designate two or more of their number to
constitute an Executive Committee, which, to the extent provided in the
resolution, shall have any may exercise the powers of the Board of
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Directors in the management of the business and affairs of the corporation and
may authorize the seal of the corporation to be affixed to all papers which may
require it. Such committee shall keep regular minutes of its meetings and report
the same to the Board of Directors.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholder shall be in writing and
delivered personally or mailed to the directors or stockholders at their
addresses appearing on the books of the corporation. Notice by mail shall be
deemed to be given at the time when the same shall be mailed. Notices to
directors may also be given by telegram and shall be deemed to be given at the
time of delivery to the telegraph company for transmission. Section 2. Whenever
any notice is required to be given under the provisions of the statute or of the
Certificate of Incorporation or of these by-laws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the Board of
Directors and shall be a Chairman of the Board, a President, who shall be a
director, one or more Vice Presidents, a Secretary and a Treasurer. The Board of
directors may also choose one or more Assistant Secretaries and Assistant
Treasurers. Section 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose a Chairman of the Board, a
President, one or more Vice Presidents, a
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Secretary and a Treasurer, and each officer so chosen shall hold office until
his successor shall have been duly chosen and qualified or until he shall resign
or have been removed in the manner hereinafter provided.
Section 3. The board of Directors may appoint such other officers and agents
as it shall deem necessary, each of whom shall hold their offices for such terms
and shall exercise such powers and perform such duties as the Board of Directors
may from time to time determine.
Section 4. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
Section 5. Any officer elected or appointed by the Board of Directors may be
removed either with or without cause at any time by the affirmative vote of a
majority of the Board of Directors. Any officer may resign at any time by giving
notice to the Board of Directors or to the President or to the Secretary and
such resignation shall take effect at the time specified in such notice.
Section 6. A vacancy in any office because of death, resignation, removal,
or disqualification or any other cause shall be filled for the unexpired portion
of the term in the manner prescribed in these by-laws for regular appointments
or elections to such offices.
CHAIRMAN OF THE BOARD OF DIRECTORS
Section 7. The Chairman of the Board of Directors, subject to the direction
of the Board of Directors, shall preside at all meetings of the Board of
Directors and shall have such other duties and powers as may be assigned to him
from time to time by the Board of Directors.
THE PRESIDENT
Section 8. The President shall be the Chief Executive Officer of the
corporation. He shall preside at all meetings of the stockholders and shall have
general supervision over the business of
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the corporation and over its several officers, subject, however, to the control
of the Board of Directors. He may sign, with the Secretary or the Treasurer,
certificates of stock of the corporation; he may sign and execute, in the name
of the corporation, deeds, mortgages, bonds, contracts or other instruments,
subject to the provisions of these by-laws, except in cases where the signing
and execution thereof shall be expressly delegated by the Board of Directors or
by these by-laws to some other officer or agent of the corporation; and in
general, he shall perform all duties incident to the office of President, and
such other duties as from time to time may be assigned to him by the Board of
Directors.
He shall, unless otherwise directed by the Board of Directors, attend
in person or by substitute appointed by him, and act and vote on behalf of the
corporation at all meetings of the stockholders of any corporation in which the
corporation holds stock.
He shall, whenever it may in his opinion be necessary, prescribe the
duties for officers and employees of the corporation whose duties are not
otherwise defined.
THE VICE PRESIDENTS
Section 9. At the request of the President, or in his absence, or
disability, or in case of a vacancy in the office of President, a Vice President
in the order of his designation shall perform all the duties of the President,
and when so acting, shall have all the powers of, and be subject to all the
restrictions upon the President, and shall perform such other duties as from
time to time may be assigned to him by the Board of Directors or the President.
Each other Vice President shall have such powers, and shall perform such duties
as may be assigned to him by the Board of Directors.
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THE SECRETARY
Section 10. The Secretary may sign, with the President or Vice President,
certificates of stock of the corporation and shall:
(a) Keep the minutes of the meetings of stockholders and of the
Board of Directors in books provided for the purpose.
(b) See that all notices are duly given in accordance with the
provisions of these by-laws or as required by law.
(c) Be custodian of the records and of the seal of the corporation
and see that it is affixed to all stock certificates prior to
their issuance and to all documents, the execution of which on
behalf of the corporation under its seal is duly authorized in
accordance with the provisions of these by-laws.
(d) Have charge of the stock books of the corporation and keep or
cause to be kept the stock and transfer books in such manner
as to show at any time the amount of the stock of the
corporation issued and outstanding, the manner in which and
the time when such stock was paid for, the names,
alphabetically arranged, and the addresses of the holders of
record thereof, the number of shares held by each and the time
when each became such holder of record; exhibit at all
reasonable times to any director, upon application, the
original or duplicate stock ledger.
(e) See that the books, reports, statements, certificates and all
other documents and records required by law are properly kept
and filed.
(f) In general, perform all duties incident to the office of
Secretary, and such other duties as from time to time may be
assigned to him by the Board of Directors.
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THE TREASURER
Section 11. The Treasurer, if required so to do by the Board of Directors,
shall give a bond for the faithful discharge of his duties in such sum, and with
such sureties, as the Board of Directors shall require. The Treasurer may sign,
with the President or a Vice President, certificates of stock of the
corporation, and shall:
(a) Have charge and custody of, and be responsible for
all funds and securities of the corporation, and
deposit all such funds in the name of the corporation
in such banks, trust companies or other depositories
as shall be selected in accordance with the
provisions of these by-laws.
(b) Exhibit at all reasonable times his books of account
and records to any of the directors of the
corporation upon application during business hours at
the office of the corporation where such books and
records are kept.
(c) Render a statement of the condition of the finances
of the corporation at all regular meetings of the
Board of Directors, and a full financial report at
the annual meeting of the stockholders; if called
upon so to do.
(d) Receive, and give receipt for, money due and payable
to the corporation from any source whatsoever.
(e) In general, perform all the duties incident to the
office of Treasurer, and such other duties as from
time to time may be assigned to him by the Board of
Directors.
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ARTICLE VI
CONTRACTS, CHECKS, EXPENDITURES, BANKS ACCOUNTS, ETC.
Section 1. The President or such officer or officers to whom he shall
delegate the power, may make or authorize to be made capital expenditures,
investments or advances, execute contracts or leases, establish or increase
salaries, and make or authorize retirements and sales of capital items,
write-offs of accounts and settlements of claims, in such manner and subject to
such limitations as shall be determined from time to time by resolution of the
Board of Directors.
Section 2. All funds of the corporation shall be deposited from time to time
to the credit of the corporation with such banks, bankers, trust companies, or
other depositories as the Board of Directors may select or as may be selected by
any officer or officers, agent or agents of the corporation to whom such power
may be delegated from time to time by the Board of Directors.
Section 3. All checks, drafts or other orders for the payment of money,
notes, acceptances, or other evidences of indebtedness shall be issued in the
name of the corporation and in such manner as shall be determined from time to
time by resolution of the Board of Directors.
ARTICLE VII SHARES AND THEIR
TRANSFER
Section 1. Certificates for shares of the stock of the corporation of
any class, shall be in such form, respectively, as shall be approved by the
Board of Directors. They shall be signed by the President or a Vice President
and by the Treasurer, Assistant Treasurer, Secretary or Assistant Secretary, and
the seal of the corporation shall be affixed thereto. They shall be numbered and
entered in the books of the corporation as they are issued and shall exhibit the
holder's name and number of shares.
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Section 2. Transfers of shares of the stock of the corporation shall be made
on the books of the corporation by the holder thereof, or by his attorney
thereunto duly authorized, and on surrender of the certificate or certificate
for such shares. A person in whose name shares of stock stand on the books of
the corporation shall be deemed the owner thereof as regards the corporation;
provided that whenever any transfer of shares shall be made for collateral
security, and not absolutely, and written notice thereof shall be given to the
Secretary of the corporation, such fact shall be stated in the entry of the
transfer.
Section 3. The holder of any certificate of stock of the corporation
shall immediately notify the corporation of any loss or destruction of such
certificate, and the corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it alleged to have been lost or
destroyed. The Board of Directors may, in its discretion, require the owner of
the lost or destroyed certificate or his legal representatives to give the
corporation a bond in such sum, not exceeding double the value of the stock, and
with such surety or sureties, as it may direct, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss or
destruction of any such certificate; a new certificate may be so issued without
requiring any bond when, in the judgment of the Board of Directors, it is proper
so to do.
Section 4. The Board of Directors may make such rules and regulations
as it may deem expedient concerning the issuance, transfer and registration of
certificates for shares of the capital stock of the corporation. It may appoint
a transfer agent or a registrar of transfers or both, and may require all
certificates of stock to bear the signature of either or both.
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ARTICLE VIII
SEAL
Section 1. The Board of Directors shall provide a corporate seal, which
shall be in the form of a circle and shall bear the full name of the corporation
and the work "Delaware" and the year of its incorporation.
ARTICLE IX
FISCAL YEAR
Section 1. The fiscal year of the corporation shall end on the 31st day of
December in each year.
ARTICLE X
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed, or new bylaws
may be adopted by the stockholders at any regular meeting or by the stockholders
at any special meeting, provided notice of proposed alteration or repeal of the
proposed bylaws be included in the notice of such special meeting.
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EXHIBIT 3.5
CERTIFICATE OF INCORPORATION
of
FLORIDA AVIATION FUELING COMPANY, INC.
--------------------------------------
* * * * *
WE, THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the Corporation Law,
State of Florida, being Chapter 12 of the Florida Statutes, 1941, do hereby
certify as follows:
FIRST: The name of this corporation is
FLORIDA AVIATION FUELING COMPANY, INC
SECOND: The general nature of the business or businesses to be carried
on and conducted by the said corporation shall be:
(a) To engage in, carry on, conduct, manage and transact any and
every kind of business, as agent or a principal, having to do with, but not
limited to, the purchasing, selling, distributing, supplying, furnishing,
storing, receiving for storage, exchanging, transporting and testing petroleum
products of every kind and character or any other substance or substances,
materials or products of every kind and description whether or not consisting
wholly of petroleum, or consisting partly of petroleum, or having a petroleum
base, or consisting of substances, materials or products containing petroleum in
any form or having a petroleum base, which are now used, known or hereafter
known, invented or developed for use in or in connection with serial and other
forms of transportation, propulsion, movement or navigation of all kinds.
<PAGE> 2
(b) To design, promote, finance, build, construct, equip,
purchase, lease or otherwise acquire, own, maintain, improve, extend, operate,
manage, mortgage, lease, sublease or dispose of and also to obtain and grant all
rights, power, licenses, privileges, franchises and concessions with respect to
or in connection with
(i) airports, airport terminals, airport
administration buildings, stations, depots, railroad sidings,
ramps, hangars, warehouses, storehouses, offices and office
buildings, shops, stores, salesrooms, garages, parking areas, tank
cars, tank trucks, waterways, channels or other bodies of water,
pits;
(ii) aircraft landing fields, flying fields,
aircrafts, seadromes, waterbases for the landing and take-off of
aircraft, runways, aprons, aircraft service facilities, docks,
mooring facilities, wharves, buildings, pipe lines, barges, barge
unloading and piping facilities, pumps, meters, hose, hose reels,
water separators, air releases, pipe miniloading loading racks;
and
(iii) any and all other structures, buildings,
facilities of every kind and character, machinery, equipment and
appurtenances of any and every kind and character now necessary
for or used, known or hereafter known, invented or developed for
use for or in connection with the use of petroleum products of
every kind and description or other substances, materials or
products, in aerial or other transportation propulsion, movement
or navigation.
(c) To design, make, build, construct, manufacture, purchase,
lease or otherwise acquire, hold, own, improve, repair, service, manage,
operate, mortgage, sell, lease, sublease or otherwise dispose of and also to
obtain and grant rights, powers licenses, privileges,
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franchises and concessions with respect to or in connection with any and every
kind of substances, materials, products, equipment, device or facility now or
hereafter necessary for or used or useful for or in connection with the use of
petroleum products of every kind and description, or any other substances,
materials, or products in aerial or other transportation, propulsion, movement
and navigation.
(d) To engage in, carry on, conduct, manage and transact, any and
every kind of business having to do with transportation, loading, unloading,
storage, and transfer services of any and every kind and character used or
useful for or in connection with or in aid of the use or petroleum products of
every kind and description or other substances, materials or products, in aerial
or other transformation, propulsion or movement or navigation, including without
limitations, the business of carrying, transporting, delivering, loading,
unloading, steering or transferring, either as common carrier, contract carrier
or otherwise, persons and property, by any vehicle or means of transportation or
conveyance whether now known or hereafter invented or developed.
(e) To buy, hold, own, mortgage, exchange, lease, rent, sell,
convey and otherwise acquire, dispose of and deal in, operate, manage, improve
and develop real property, improved and unimproved, and any interest therein,
and buildings, fixtures and other structures therein, and personal property
appurtenant thereto or connected therewith; to erect, construct and operate
buildings, structures and works of every kind and description; and to
reconstruct, renovate, alter, rehabilitate and improve buildings and structures
and their appurtenances.
(f) To make, manufacture, produce, purchase and otherwise acquire,
hold, own, store, sell and otherwise dispose of, mortgage, pledge, export,
import, receive on
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consignment or otherwise, all on behalf of itself or of others, and in any way
deal in goods, wares, merchandise, commodities, and personal property of every
kind, nature an description, and to act as manufacturers, importers, exporters,
wholesalers, retailers, agents, sales agents, factors, brokers, commission
merchants and concession brokers with respect thereto.
(g) To purchase or otherwise acquire all or any part of the
property, assets, rights, business and good will, and to undertake and assume
all or any part of the duties, liabilities and obligations, of any person ,
firm, partnership, association, corporation or other legal entity and to pay for
the same in cash, bonds, notes or other securities or obligations of the
corporation or otherwise; to hold, utilize or in any manner dispose of all or
any part of the property, assets, rights and business as acquired, and to
exercise all powers necessary or convenient in and about the conduct, management
and carrying on of all or any part of any such property, assets, rights and
business.
(h) To obtain or otherwise acquire from any person, firm,
partnership, association, corporation or other legal entity, public or private,
domestic or foreign, or from the government of any country, territory, state,
municipality or of any political or administrative subdivision or department
thereof, and to hold, own, use, exercise, exploit, dispose of and realize upon
any and all powers, rights, privileges, immunities, franchises, guaranties,
grants and concessions which the corporation may deem desirable; and to
undertake and prosecute any business dependent thereon.
(i) To apply for, obtain, register, purchase, lease or otherwise
acquire, hold, own, exploit, operate, exercise, develop, manufacture under,
introduce, sell, assign, lease, grant licenses in respect of or otherwise
dispose of, pledge or otherwise give liens upon or against,
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invest, trade and deal in and with or otherwise turn to account and otherwise
contract with reference to, letters patent, copyrights, trademarks and trade
names, licenses with respect thereto, and any and all inventions, improvements,
apparatus; appliances, procedures, formulae, certain or rights used in
connection with or secured under patent or otherwise, whether of the United
States of America or of any other government or country and to engage in, carry
on conduct, manage and transact any business which may be deemed, directly or
indirectly, to aid, effectuate or develop the name or any of them.
(j) To make, enter into and perform contracts and arrangement of
every kind and description for any lawful purpose with any person, firm,
partnership, association, corporation or other legal entity, public or private,
domestic or foreign, and with the government of any country, territory, state,
municipality or of any political or administrative subdivision or department
thereof.
(k) To borrow and raise money for its corporate purposes and,
without limit as to amount, to draw, make, accept, indorse, execute, issue and
deliver promissory notes, drafts, bills of exchange, warrants, bonds, debentures
and other negotiable or non-negotiable instruments, obligations and evidences or
indebtedness of any nature, and to secure the payment thereof and the interest
thereon by mortgage upon or pledge, deed, conveyance or assignment in trust of
the whole or any part of the property of the corporation, whether at the time
owned or hereafter acquired, and to sell, pledge or otherwise dispose of such
bonds, debentures, notes or other obligations or evidences of indebtedness.
(l) To subscribe for, purchase, borrow or otherwise acquire,
own, hold, sell, lend, exchange, pledge, hypothecate or otherwise dispose of,
inventory trade and deal in and with
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or otherwise realize upon, alone or in syndicates or otherwise in conjunction
with others, stocks, bonds, debentures, notes, acceptances, bills of exchange,
warrants or other securities made, created or issued by any person, firm,
partnership, association, corporation, or other legal entity, public or private,
domestic or foreign, or by the government of any country, territory, state,
municipality or any political or administrative subdivision or department
thereof, and any and all trust, participation or other certificates of or for,
or receipts evidencing interest in, any such securities, in whole or in part,
its own shares of stock, bonds, debentures, notes, evidences of indebtedness or
other securities or to make payment therefor by any other lawful means; and ,
while the owner or holder of any such securities or of any interest therein, to
possess and exercise all the rights, powers and privileges of ownership,
including the right to vote thereon for any and all purposes.
(m) To aid by loan, subsidy, guaranty or in any other lawful
manner any person, firm, partnership, association, corporation or other legal
entity, public or private, domestic or foreign; to guarantee the payment of
dividends on any stock or the payment of the principal of, or interest on, any
obligations issued or incurred by any such person, firm, partnership,
association, corporation or other legal entity; to do any and all other acts and
things for the enhancement, protection and preservation of any securities which
are in any manner, directly or indirectly, owned, held or guaranteed by the
corporation, and to do any and all acts and things designed to accomplish any
such purpose; and to lend money on time or call loans, with or without
collateral security therefor.
(n) To guarantee or underwrite securities or obligations,
contractual or otherwise, of any other person, firm partnership, association,
corporation or other legal entity,
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public or private, domestic or foreign, and to indemnify or hold harmless such
other person, firm, partnership, association, corporation or other legal entity,
with or without consideration therefor and whether or not this corporation may
be a creditor of or have an interest in any such person, firm, partnership,
association, corporation or other legal entity, by reason of stock ownership or
otherwise.
(o) To purchase, hold, sell, transfer, reissue or cancel the
shares of its own stock or any of its securities or other obligations or any
rights therein; provided that it shall not use its funds or property for the
purchase of shares of its own capital stock when such use would cause an
impairment of its capital, except as otherwise permitted by law; and provided
further, that shares of its own capital stock belonging to it shall not be voted
upon directly or indirectly.
(p) To act as manager of any person, firm, partnership,
corporation or other legal entity, or as a representative or agent thereof in
any capacity (whether managing, operating, financial, insurance, purchasing,
selling, advertising or otherwise), and, or any such manager, representative or
agent, to develop, exploit, promote, conduct, manage, operate, improve, extend
or liquidate nay of the business or property thereof, and to aid, conduct,
manage, or operate any lawful enterprise in connection therewith; and, generally
to act as agent, commission merchant or broker in and with respect to any and
all kinds of service and property.
(q) To make, enter into and perform any lawful contracts or
arrangements for sharing of profits, union of interests, reciprocal concessions
or cooperation with any person, firm, partnership, association, corporation or
other legal entity, public or private, foreign or domestic, carrying on or
proposing to carry on any business or transaction which this corporation is
authorized to carry on expressly or by implication, or with the government of
any country,
7
<PAGE> 8
territory, state, municipality or political or administrative subdivision or
department thereof carrying on or proposing to carry on any such business or
transaction.
(r) To have and maintain one or more officers and to conduct and
carry on any or all of its operations anywhere in the world.
(s) To organize or cause to be organized under the laws of any
country, territory, state or political or administrative subdivision or
department thereof, any corporation or corporations for the purpose of
accomplishing any or all of the objects for which this corporation is organized,
and to dissolve, wind up, liquidate, merge or consolidate any such corporation
or corporations or to cause the same to be dissolved, wound up, liquidated,
merged or consolidated.
(t) To do any and all things herein set forth, to the same extent
as a natural person might or could do as principal, factor, agent, contractor or
otherwise, either alone or through or in conjunction with any other person,
firm, partnership, association, corporation or other legal entity, and in any
part of the world outside of the State of Florida, and, so far as permitted by
law, within the said state; and, in general, to do all and everything necessary,
suitable or proper for the accomplishment of any of the purposes or the
attainment of any one or more of the objects herein enumerated; and to engage in
any and all lawful business whatever, necessary or convenient in connection
with, or incidental to, the exercise or attainment of any of the powers or
purposes hereinbefore specified, excepting such as are forbidden by law.
(u) The foregoing clauses shall be construed both as objects
and powers, and the matters expressed in each clause shall, except as otherwise
expressly provided, be in no way limited by reference to or inference from the
terms of any other clause, but shall be regarded as independent objects and
powers and the enumeration herein of any specific powers shall not be
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<PAGE> 9
construed to limit or restrict in any manner the exercise by the corporation of
the general powers now or hereafter conferred upon corporations by the laws of
the State of Florida, nor shall expression of one thing be deemed to exclude
another of like nature but not expressed.
THIRD: The maximum number of shares which may be issued by the
corporation is one hundred (100), of the par value of One Hundred Dollars ($100)
each.
FOURTH: The corporation will begin business with not less than
Five Hundred Dollars ($500).
FIFTH: The corporation is to have perpetual existence.
SIXTH: The principal place of business of said corporation shall
be the City of Miami, in the County of Dade.
SEVENTH: The number of the directors shall be not less than three
(3) nor more than eight (8).
EIGHTH: The names and post office addresses of the first Board of
Directors, who shall hold office for one year or until their successors are
elected and have qualified, are as follows:
Names Post Office Addresses
----- ---------------------
FOY D. JORDAN P.O. Box 155, Miami International Airport Branch,
Miami, Florida.
THOMAS R. GREEN P.O. Box 155, Miami International Airport Branch,
Miami, Florida.
HENRY O. FRAAD 350 Fifth Avenue, New York 1, New York
DANIEL FRAAD, JR. 350 Fifth Avenue, New York 1, New York
9
<PAGE> 10
NINTH: The names and post office addresses of the subscribers to
the capital stock and the number of shares subscribed for by each are as
follows:
No. of
Names Post Office Addresses Shares
----- --------------------- ------
EVE SHEPPARD 37 Wall Street, New York, N.Y. One (1)
LOUIS A. WEINTRAUB 37 Wall Street, New York, N.Y. One (1)
MILTON WINE 37 Wall Street, New York, N.Y. One (1)
TENTH: The directors and stockholders shall have power to hold
their meetings and to have one or more offices and to keep the books of the
corporation (except the original or a duplicate stock ledger) outside of the
State of Florida, at such place or places as from time to time may be designated
by the By-Laws or by resolution of the Board.
The directors shall also have power, without the assent or vote of
the stockholders, to make and alter By-Laws of the corporation; to fix the times
for the declaration and payment of dividends; to fix and vary the amount to be
reserved as working capital; and to determine the use and disposition of any
surplus or net profits over and above the capital stock paid in.
No director shall be disqualified from voting or acting on behalf
of the corporation in contracting with any other corporation or in which he may
be a director or a stockholder, nor shall nay director of the corporation be
disqualified from voting or acting in its behalf by reason of any personal
interest.
10
<PAGE> 11
IN WITNESS WHEREOF, we, the undersigned, being each of the
original subscribers to capital stock hereinbefore named, have hereunto set our
hands and seals, the 11th day of October, 1951.
/s/ Eve Sheppard (L.S.)
---------------------------
/s/ Milton Wine
---------------------------(L.S.)
/s/ Louis A. Weintraub
---------------------------(L.S.)
IN PRESENCE OF:
- - -----------------------------
11
<PAGE> 1
EXHIBIT 3.6
BYLAWS OF
FLORIDA AVIATION FUELING COMPANY, INC.
ARTICLE I
OFFICES
Section 1. The principal office of the corporation shall be
located at Miami, Florida. The Board of Directors is hereby granted full power
and authority to change said principal office from one location to another.
Section 2. The corporation may also have other offices at such
other places as the Board of Directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for any purpose may be
held at such time and place as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
Section 2. The annual meeting of stockholders of the corporation
shall be held on the first Monday in March in each year, if not a legal holiday;
and if a legal holiday, then on the next secular day following, at which time
they shall elect by a plurality, a Board of Directors and transact such other
business may properly be brought before the meeting.
Section 3. At each stockholders' meeting the books of record
stockholders shall be open to inspection by any stockholder at the time and
place of the meeting.
<PAGE> 2
Section 4. Special meetings of stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation may be called by the President or by the Board of Directors and
shall be called by the President at the request in writing of stockholders
owning one-third or more of the capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
Section 5. Written or printed notice of each annual or special
meeting of stockholders stating the time, place and object thereof, shall be
given to each stockholder entitled to vote at such meeting by leaving such
notice with him or at his residence or usual place of business, or by mailing a
copy thereof to him at his last known post office address at least ten (10) days
and not more than sixty (60) days before the date on which the meeting is to be
held. No publication of any notice of a meeting of stockholders shall be
required. If any stockholder shall, in person or by attorney thereunto
authorized, in writing or by telegraph waive notice of any meeting, notice
thereof need not be given to him. Notice of any adjourned meeting of
stockholders except as otherwise expressly provided by statute shall not be
required to be given.
Section 6. At all meetings of stockholders, the holders of a
majority of the stock issued and outstanding and entitled to vote, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business, except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such
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adjourned meeting at which a quorum shall be present or represented any business
may be transacted which might have transacted at the meeting as originally
notified.
Section 7. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power present in person or
represented by proxy at the meeting shall decide any question brought before
such meeting, unless the question is one upon which by express provision of the
statutes or of the Certificate of Incorporation, a different vote is required in
which case such express provision shall govern and control the decision of such
question.
Section 8. At every meeting of the stockholders the President, or
in his absence a Vice President, in order of his designation, or, in the absence
of both President and Vice President, a Chairman chosen by a majority in
interest of the stockholders of the corporation present in person or by proxy
and entitled to vote, shall act as Chairman. The Secretary of the corporation
shall act as secretary at all meetings of the stockholders. In the absence of
the Secretary from any such meeting, the Chairman may appoint any person to act
as secretary of the meeting.
Section 9. At each meeting of stockholders every holder of record
of stock entitled to vote thereat shall be entitled to one vote for each share
of stock of the corporation held by him and registered in his name on the books
of the corporation at the time of such meeting. Shares of its own capital stock
belonging to the corporation shall not be voted upon directly or indirectly. The
vote on stock of the corporation may be given by the stockholder entitled
thereto in person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto authorized, and
delivered to the secretary of the meeting. No proxy shall be
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valid after the expiration of three years from the date of its execution, unless
said proxy expressly provides for a longer period.
Section 10. Any action required to be taken at a meeting of the
stockholders, or any other action which may be taken at a meeting of the
stockholders, or any other action which may be taken at a meeting of the
stockholders, may be taken without a meeting, if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE III
DIRECTORS
Section 1.
RESOLVED, that the first sentence of Section 1. of Article III of the
Bylaws of this Company be, and it hereby is, deleted, and the following
substituted therefor:
"The number of directors which shall constitute the whole Board shall
be not less than two (2) nor more than fifteen (15). Within the limits
above specified, the number of directors shall be determined by
resolution of the Board or by the stockholders at the annual meeting."
elected and qualified or until their prior decease, resignation or removal. The
directors need not be stockholders of the corporation.
Section 2. Vacancies resulting from any cause and newly created
directorships resulting from any increase in the number of directors may be
filled either by a majority of the directors then in office, though less than a
quorum, or by the stockholders, and the directors so chosen shall hold office
until the next annual election and until their successors are duly elected and
shall qualify, unless sooner displaced.
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Section 3. The business of the corporation shall be managed by
its Board of Directors which may exercise all such powers of the corporation and
do all such lawful acts and things as are not by statute or by the Certificate
of Incorporation or by these by-laws directed or required to be exercised or
done by the stockholders.
Section 4. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Florida, as the Board of Directors from time to time may determine.
Section 5. The first meeting of each newly elected Board of
Directors may be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at the time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the Board of Directors may be
held without notice at such time and at such place as shall from time to time be
determined by the Board.
Section 7. Special meetings of the Board may be called by the
President or in his absence, by a Vice President or by a majority of the
directors, at such time and place as shall be specified in a notice thereof or
in a consent and waiver of notice thereof signed by all of the directors.
Notices of each special meetings shall be delivered to each director either
personally or
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by mail or by telegraph or telephone not later than three (3) days before the
day on which the meeting is to be held. Notice of any meeting need not be given
to any director, however, if waived by him in writing or by telegraph. Any
meeting of the Board of Directors shall be a legal meeting without any notice
thereof having been given, if all directors shall be present thereat.
Section 8. At all meetings of the Board of Directors, a majority
of the directors shall constitute a quorum for the transaction of business and
the act of a majority of the directors present at any meeting at which there is
a quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present thereat, the directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the Certificate of
Incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if prior to such action a written consent thereto is signed
by all members of the Board or such committee as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee.
Section 10. Any director may be removed either with or without
cause, at any time, by the affirmative vote of a majority in interest of the
stockholders of record of the corporation entitled to vote, at a special meeting
of the stockholders called for the purpose; and the vacancy in the Board caused
by such removal may be filled by the stockholders at such meeting. Any director
may resign at any time by giving written notice of such resignation to the
President or the Secretary of the corporation and such resignation shall take
effect at the time specified in such notice.
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<PAGE> 7
Section 11. The directors as such shall not receive any stated
salaries for their services, but by resolution of the Board of Directors, a
fixed sum and expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of the Board; provided that nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Each director and officer, whether or not then in office,
shall be indemnified by the corporation against all claims and liabilities and
all expenses reasonably incurred or imposed upon him in connection with or
arising out of any action, suit or proceeding in which he may be involved by
reason of any act or acts or alleged act or acts, either of omission or
commission, performed by him while acting as such officer or director in good
faith. The corporation shall not, however, indemnify any director or officer
with respect to matters as to which he shall be finally adjudged in any such
action, suit or proceeding to have been derelict in the performance of his duty
as such director or officer. The foregoing right of indemnification shall not be
exclusive of other rights to which any director or officer may be entitled as a
matter of law. Each such officer and director shall likewise be indemnified
against any judgment, decree or fine which may be imposed upon him in any such
action, suit or proceedings.
Section 12. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate two or more their number to constitute an
Executive Committee, which, to the extent provided in the resolution, shall have
and may exercise the powers of the Board of Directors in the management of the
business and affairs of the corporation and may authorize the
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<PAGE> 8
seal of the corporation to be affixed to all papers which may require it. Such
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors.
ARTICLE IV
NOTICES
Section 1. Notices to directors and stockholders shall be in
writing and delivered personally or mailed to the directors or stockholders at
their addresses appearing on the books of the corporation. Notice by mail shall
be deemed to be given at the time when the same shall be mailed. Notices to
directors may also be given by telegram and shall be deemed to given at the time
of delivery to the telegraph company for transmission.
Section 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by
the Board of Directors and shall be a Chairman of the Board, a President, who
shall be a director, one or more Vice Presidents, a Secretary and a Treasurer.
The Board of Directors may also choose one or more Assistant Secretaries and
Assistant Treasurers.
Section 2. The Board of Directors at its first meeting after
each annual meeting of stockholders shall choose a Chairman of the Board, a
President, one or more Vice Presidents, a Secretary and a Treasurer, and each
officer so chosen shall hold office until his successor shall
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have been duly chosen and qualified or until he shall resign or have been
removed in the manner hereinafter provided.
Section 3. The Board of Directors may appoint such other
officers and agents as it shall deem necessary, each of whom shall hold their
offices for such terms and shall exercise such powers and perform such duties as
the Board of Directors may from time to time determine.
Section 4. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
Section 5. Any officer elected or appointed by the Board of
Directors may be removed either with or without cause at any time by the
affirmative vote of a majority of the Board of Directors. Any officer may resign
at any time by giving notice to the Board or to the President or the Secretary
and such resignation shall take effect at the time specified in such notice.
Section 6. A vacancy in any office because of death,
resignation, removal, or disqualification or any other cause shall be filled for
the unexpired portion of the term in the manner prescribed in these by-laws for
regular appointments or elections to such offices.
CHAIRMAN OF THE BOARD OF DIRECTORS
Section 7. The Chairman of the Board of Directors, subject to
the direction of the Board of Directors, shall preside at all meetings of the
Board of Directors and shall have such other duties and powers as may be
assigned to him from time to time by the Board of Directors.
THE PRESIDENT
Section 8. The President shall be the Chief Executive Officer of
the corporation. He shall preside at all meetings of the stockholders and shall
have general supervision over the
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business of the corporation and over its several officers, subject, however, to
the control of the Board of Directors. He may sign, with the Secretary or the
Treasurer, certificates of stock of the corporation; he may sign and execute, in
the name of the corporation, deeds, mortgages, bonds, contracts or other
instruments, subject to the provisions of these by-laws, except in cases where
the signing and execution thereof shall be expressly delegated by the Board of
Directors or by these by-laws to some other officer or agent of the corporation;
and in general, he shall perform all duties incident to the office of President,
and such other duties as from time to time may be assigned to him by the Board
of Directors.
He shall, unless otherwise directed by the Board of Directors,
attend in person or by substitute appointed by him, and act and vote on behalf
of the corporation at all meetings of the stockholders of any corporation in
which the corporation holds stock.
He shall, whenever it may in his opinion be necessary,
prescribe the duties for officers and employees of the corporation whose duties
are not otherwise defined.
THE VICE PRESIDENTS
Section 9. At the request of the President, or in his absence,
or disability, or in case of a vacancy in the office of President, a Vice
President in the order of his designation shall perform all the duties of the
President, and, when so acting, shall have all the powers of, and be subject to
all the restrictions upon the President, and shall perform such other duties as
from time to time may be assigned to him by the Board of Directors or the
President. Each other Vice President shall have such powers, and shall perform
such duties as may be assigned to him by the Board of Directors.
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<PAGE> 11
THE SECRETARY
Section 10. The Secretary may sign, with the President or Vice
President, certificates of stock of the corporation and shall:
(a) Keep the minutes of the meetings of stockholders and
of the Board of Directors in books provided for the
purpose.
(b) See that all notices are duly given in accordance
with the provisions of these by-laws or as required
by law.
(c) Be custodian of the records and of the seal of the
corporation and see that it is affixed to all stock
certificates prior to their issuance and to all
documents, the execution of which on behalf of the
corporation under its seal is duly authorized in
accordance with the provisions of these by-laws.
(d) Have charge of the stock books of the corporation and
keep or cause to be kept the stock and transfer books
in such manner as to show at any time the amount of
the stock of the corporation issued and outstanding,
the manner in which and the time when such stock was
paid for, the names, alphabetically arranged, and the
addresses of the holders of record thereof, the
number of shares held by each and the time when each
became such holder of record; exhibit at all
reasonable times to any director, upon application,
the original or duplicate stock ledger.
(e) See that the books, reports, statements, certificates
and all other documents and records required by law
are properly kept and filed.
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(f) In general, perform all duties incident to the office
of Secretary, such other duties as from time to time
may be assigned to him by the Board of Directors.
THE TREASURER
Section 11. The Treasurer, if required so to do by the Board of
Directors, shall give a bond for the faithful discharge of his duties in such
sum, and with such sureties, as the Board of Directors shall require. The
Treasurer may sign, with the President or a Vice President, certificates of
stock of the corporation, and shall:
(a) Have charge and custody of, and be responsible for
all funds and securities of the corporation, and
deposit all such funds in the name of the corporation
in such banks, trust companies or other depositories
as shall be selected in accordance with the
provisions of these by-laws.
(b) Exhibit at all reasonable times his books of account
and records to any of the directors of the
corporation upon application during business hours at
the office of the corporation where such books and
records are kept.
(c) Render a statement of the condition of the finances
of the corporation at all regular meetings of the
Board of Directors, and a full financial report at
the annual meeting of the stockholders, if called
upon so to do.
(d) Receive, and give receipt for, money due and payable
to the corporation from any source whatsoever.
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(e) In general, perform all the duties incident to the
officer of Treasurer, and such other duties as from
time to time may be assigned to him by the Board of
Directors.
ARTICLE VI
CONTRACTS, CHECKS, EXPENDITURES, BANK ACCOUNTS, ETC.
Section 1. The President or such officer or officers to whom he
shall delegate the power, may make or authorize to be made capital expenditures,
investments or advances, execute contracts or leases, establish or increase
salaries, and make or authorize retirements and sales of capital items,
write-offs of accounts and settlements of claims, in such manner and subject to
such limitations as shall be determined from time to time by resolution of the
Board of Directors.
Section 2. All Funds of the corporation shall be deposited from
time to time to the credit of the corporation with such banks, bankers, trust
companies, or other depositories as the Board of Directors may select or as may
be selected by any officer or officers, agent or agents of the corporation to
whom such power may be delegated from time to time by the Board of Directors.
Section 3. All checks, drafts or other orders for the payment of
money, notes, acceptances, or other evidences of indebtedness shall be issued in
the name of the corporation and in such manner as shall be determined from time
to time by resolution of the Board of Directors.
ARTICLE VII
SHARES AND THEIR TRANSFER
Section 1. Certificates for shares of the stock of the
corporation of any class, shall be in such form, respectively, as shall be
approved by the Board of Directors. They shall be signed
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by the President or a Vice President and by the Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary, and the seal of the corporation shall be
affixed thereto. They shall be numbered and entered in the books of the
corporation as they are issued and shall exhibit the holder's name and number of
shares.
Section 2. Transfers of shares of the stock of the corporation
shall be made on the books of the corporation by the holder thereof, or by his
attorney thereunto duly authorized, and on surrender of the certificate or
certificate for such shares. A person in whose name shares of stock stand on the
books of the corporation shall be deemed the owner thereof as regards the
corporation; provided that whenever any transfer of shares shall be made for
collateral security, and not absolutely, and written notice thereof shall be
given to the Secretary of the corporation, such fact shall be stated in the
entry of the transfer.
Section 3. The holder of any certificate of stock of the
corporation shall immediately notify the corporation of any loss or destruction
of such certificate, and the corporation may issue a new certificate of stock in
the place of any certificate theretofore issued by it alleged to have been lost
or destroyed. The Board of Directors may, in its discretion, require the owner
of the lost or destroyed certificate or his legal representatives to give the
corporation a bond in such sum, not exceeding double the value of the stock, and
with such surety or sureties, as it may direct, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss or
destruction of any such certificate; a new certificate may be so issued without
requiring any bond when, in the judgment of the Board of Directors, it is proper
so to do.
Section 4. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issuance, transfer and
registration of a certificates for shares of the
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capital stock of the corporation. It may appoint a transfer agent or a registrar
of transfers or both, and may require all certificates of stock to bear the
signature of either or both.
ARTICLE VIII
SEAL
Section 1. The Board of Directors shall provide a corporate
seal, which shall be in the form of a circle and shall bear the full name of the
corporation and the word "Florida" and the year of its incorporation.
ARTICLE IX
FISCAL YEAR
Section 1. The fiscal year of the corporation shall end on the
31st day of December in each year.
ARTICLE X
AMENDMENTS
Section 1. These bylaws may be altered, amended or repealed, or
new bylaws may be adopted at any meeting of the Board of Directors, provided
such alteration, amendment, repeal or adoption not be inconsistent with any
bylaws that may have been adopted by the stockholders, and provided notice of
the above-mentioned proposed change be included in the notice of any meeting at
which the bylaws are to be so changed.
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<PAGE> 1
EXHIBIT 3.7
The undersigned, all of lawful age and citizens of the United States,
hereby associate ourselves together for the purpose of becoming a corporation
under the laws of Florida.
I.
The name of said Corporation shall be:
DISPATCH SERVICES, INC.
II.
The general nature of the business to be transacted shall be:
To manufacture, buy, sell, hire, assemble, repair, and store motor
vehicles and aircraft of all kinds, and all kinds of motor vehicle and aircraft
instruments, radio, engines, parts, equipment, and supplies; to supply the
necessary personnel and equipment in connection with the loading and unloading
or passengers and cargo, refueling of aircraft, cleaning of aircraft, and
maintenance of aircraft equipment; and to provide commissary supplies; to act as
agents for any person, firm or corporation engaged in air transportation, in the
sale of tickets, processing of passengers, baggage, and cargo, including the
preparation of necessary clearance and governmental forces encountered in
domestic and international air transportation; to perform and render generally
services connected with the dispatching and operation of aircraft whether
engaged in scheduled or non-scheduled air transportation; the assembling and
forwarding of weather data, and other information as required or needed in the
operation of aircraft.
To carry on the business of exporters and importers as principal,
factor, agent, or commission merchant in respect to buying, selling, trading, or
dealing in any kind of goods or merchandise; and to do a general brokerage,
commission, import, forwarding, and export business.
<PAGE> 2
To acquire, own, establish, maintain and operate hotels and apartment
houses in Dade County, Florida; to buy, own, hold, control, improve, mortgage,
rent, lease, sell, convey, and otherwise acquire, deal in and dispose of real,
personal, or mixed property, or any right, interest or estate therein, as owner,
broker, agent, factor, or otherwise.
To purchase, acquire, hold, sell, exchange, and otherwise dispose of
stocks, bonds, notes, mortgages and all other evidences of indebtedness of any
corporation, domestic or foreign, or of any individual, firm or association, and
to issue in exchange therefor its stocks, bonds, mortgages, notes or other
obligations or evidences of indebtedness, and while owner of any such stocks,
bonds, mortgages or other obligations, to possess and exercise in respect
thereto all the rights, powers and privileges of individual owners or holders
thereof, including the right to exercise any and all voting power thereon.
The building, construction, alteration, maintaining, repairing,
operating and leasing of houses, buildings or other improvements on property
owned or controlled by the company or by other firms, persons or corporations,
or any interest or estate therein.
To borrow money and to secure the payment thereof by the execution and
delivery of notes, bonds, mortgages, trust deeds or other commercial paper or
forms of security of the company, with full right to pledge and to encumber any
and all property of the company by mortgage, trust deed or otherwise.
To have, exercise and enjoy in other states and foreign countries all
the powers, objects and privileges herein enumerated or authorized by the laws
of the State of Florida; provided, however, such powers, objects and privileges
shall not be in contravention of the laws of such other state or foreign
country.
2
<PAGE> 3
To act as agent or broker for the sale of real and personal property
for others on commission or other compensation, and to perform any other acts
incidental or necessary to any of the businesses herein designated, the
designation thereof to be construed both as objects and powers and any specific
mention thereof shall not be deemed to be exclusive.
And in general, to have and to exercise all the powers conferred by the
laws of Florida upon corporations formed under the corporation law, State of
Florida, 1925, approved June 1st, 1925 and effective July 15th, 1925.
III.
The maximum number of shares of stock shall be five hundred (500) of
the par value of Ten Dollars ($10.00) each.
IV.
The amount of capital with which the corporation will begin business
shall not be less than Five Hundred Dollars ($500.00).
V.
The corporation shall have perpetual existence unless discontinued by
law.
VI.
The principal office of the corporation shall be in the City of Miami,
Dade County, Florida.
VII.
The corporation shall have not less than three directors. The number
may be increased, and if increased, thereafter decreased to a number of not less
than three, from time to time, by a vote of the stockholders, as hereinafter
provided.
3
<PAGE> 4
VIII.
The names and post office addresses of the first Board of Directors,
who shall hold office until their successors are elected and shall have
qualified, are as follows:
Morten S. Beyer 5674 S.W. Fifth Street, Miami, Florida
Thomas R. Green 3888 N.W. First Street, Miami, Florida
Nilda L. Green 3888 N.W. First Street, Miami, Florida
IX.
The name and post office address of each subscriber of the certificate
of incorporation, and the number of shares which each agrees to take, are as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Morten S. Beyer 5674 S.W. Fifth Street, Miami, Florida 26 shares
Thomas R. Green 3888 N.W. First Street, Miami, Florida 13 shares
Nilda L. Green 3888 N.W. First Street, Miami, Florida 52 shares
TOTAL 52 shares
</TABLE>
X.
In furtherance of, and not in the limitation of the powers conferred by
statute, the following regulations are adopted for the conduct of the business
and affairs of the corporation:
The affairs of the corporation shall be conducted by its Board of
Directors, a President, a Vice-President, Secretary and Treasurer, and such
other officers or agents as provided by law and the By-laws of the company; the
number of the Board of Directors may be increased from time to time by a vote of
the stockholders at any regular or special meeting called for the purpose; any
two offices may be held by the same person, except the President shall not be
Vice-President, Secretary, or Assistant Secretary.
4
<PAGE> 5
WITNESS the hands and seals of said incorporators, this 8th day of
September, A.D. 1947.
/s/ Morten S. Beyer
-------------------
/s/ Thomas R. Green
-------------------
/s/ Nilda L. Green
------------------
5
<PAGE> 1
EXHIBIT 3.8
BYLAWS OF
DISPATCH SERVICES, INC.
ARTICLE I
OFFICES
SECTION 1. The principal office of the corporation shall be
located at Miami, Florida. The Board of Directors is hereby granted full power
and authority to change said principal office from one location to another.
SECTION 2. The corporation may also have other offices at such
other places as the Board of Directors may from time to time determine or the
business of the corporation may require. ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. All meetings of the stockholders for any purpose may be
held at such time and place as shall be stated in the notice of the meeting or
in a duly executed waiver of notice thereof.
SECTION 2. The annual meeting of stockholders of the corporation
shall be held on the first Monday in March in each year, if not a legal holiday;
and if a legal holiday, then on the next secular day following, at which time
they shall elect by a plurality, a Board of Directors and transact such other
business may properly be brought before the meeting.
SECTION 3. At each stockholders' meeting the books of record
stockholders shall be open to inspection by any stockholder at the time and
place of the meeting.
<PAGE> 2
SECTION 4. Special meetings of stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the Certificate of
Incorporation may be called by the President or by the Board of Directors and
shall be called by the President at the request in writing of stockholders
owning one-third or more of the capital stock of the corporation issued and
outstanding and entitled to vote. Such request shall state the purpose or
purposes of the proposed meeting.
SECTION 5. Written or printed notice of each annual or special
meeting of stockholders stating the time, place and object thereof, shall be
given to each stockholder entitled to vote at such meeting by leaving such
notice with him or at his residence or usual place of business, or by mailing a
copy thereof to him at his last known post office address at least ten (10) days
and not more than sixty (60) days before the date on which the meeting is to be
held. No publication of any notice of a meeting of stockholders shall be
required. If any stockholder shall, in person or by attorney thereunto
authorized, in writing or by telegraph waive notice of any meeting, notice
thereof need not be given to him. Notice of any adjourned meeting of
stockholders except as otherwise expressly provided by statute shall not be
required to be given.
SECTION 6. At all meetings of stockholders, the holders of a
majority of the stock issued and outstanding and entitled to vote, present in
person or represented by proxy, shall constitute a quorum for the transaction of
business, except as otherwise provided by statute or by the Certificate of
Incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such
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<PAGE> 3
adjourned meeting at which a quorum shall be present or represented any business
may be transacted which might have transacted at the meeting as originally
notified.
SECTION 7. When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power present in person or
represented by proxy at the meeting shall decide any question brought before
such meeting, unless the question is one upon which by express provision of the
statutes or of the Certificate of Incorporation, a different vote is required in
which case such express provision shall govern and control the decision of such
question.
SECTION 8. At every meeting of the stockholders the President, or
in his absence a Vice President, in order of his designation, or, in the absence
of both President and Vice President, a Chairman chosen by a majority in
interest of the stockholders of the corporation present in person or by proxy
and entitled to vote, shall act as Chairman. The Secretary of the corporation
shall act as secretary at all meetings of the stockholders. In the absence of
the Secretary from any such meeting, the Chairman may appoint any person to act
as secretary of the meeting.
SECTION 9. At each meeting of stockholders every holder of record
of stock entitled to vote thereat shall be entitled to one vote for each share
of stock of the corporation held by him and registered in his name on the books
of the corporation at the time of such meeting. Shares of its own capital stock
belonging to the corporation shall not be voted upon directly or indirectly. The
vote on stock of the corporation may be given by the stockholder entitled
thereto in person or by his proxy appointed by an instrument in writing,
subscribed by such stockholder or by his attorney thereunto authorized, and
delivered to the secretary of the meeting. No proxy shall be
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<PAGE> 4
valid after the expiration of three years from the date of its execution, unless
said proxy expressly provides for a longer period.
SECTION 10. Any action required to be taken at a meeting of the
stockholders, or any other action which may be taken at a meeting of the
stockholders, or any other action which may be taken at a meeting of the
stockholders, may be taken without a meeting, if a consent in writing, setting
forth the action so taken, shall be signed by all of the shareholders entitled
to vote with respect to the subject matter thereof.
ARTICLE III
DIRECTORS
SECTION 1.
RESOLVED, that the first sentence of Section 1. of Article III of the
Bylaws of this Company be, and it hereby is, deleted, and the following
substituted therefor:
The number of directors which shall constitute the whole Board shall be
not less than two (2) nor more than fifteen (15). Within the limits
above specified, the number of directors shall be determined by
resolution of the Board or by the stockholders at the annual meeting.
elected and qualified or until their prior decease, resignation or removal. The
directors need not be stockholders of the corporation.
SECTION 2. Vacancies resulting from any cause and newly created
directorships resulting from any increase in the number of directors may be
filled either by a majority of the directors then in office, though less than a
quorum, or by the stockholders, and the directors so chosen shall hold office
until the next annual election and until their successors are duly elected and
shall qualify, unless sooner displaced.
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<PAGE> 5
SECTION 3. The business of the corporation shall be managed by its
Board of Directors which may exercise all such powers of the corporation and do
all such lawful acts and things as are not by statute or by the Certificate of
Incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
SECTION 4. The Board of Directors of the corporation may hold
meetings, both regular and special, either within or without the State of
Florida, as the Board of Directors from time to time may determine.
SECTION 5. The first meeting of each newly elected Board of
Directors may be held at such time and place as shall be fixed by the vote of
the stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present. In the event of the failure of the
stockholders to fix the time or place of such first meeting of the newly elected
Board of Directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at the time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the Board of Directors, or as shall be specified in a
written waiver signed by all of the directors.
SECTION 6. Regular meetings of the Board of Directors may be held
without notice at such time and at such place as shall from time to time be
determined by the Board.
SECTION 7. Special meetings of the Board may be called by the
President or in his absence, by a Vice President or by a majority of the
directors, at such time and place as shall be specified in a notice thereof or
in a consent and waiver of notice thereof signed by all of the directors.
Notices of each special meetings shall be delivered to each director either
personally or
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<PAGE> 6
by mail or by telegraph or telephone not later than three (3) days before the
day on which the meeting is to be held. Notice of any meeting need not be given
to any director, however, if waived by him in writing or by telegraph. Any
meeting of the Board of Directors shall be a legal meeting without any notice
thereof having been given, if all directors shall be present thereat.
SECTION 8. At all meetings of the Board of Directors, a majority
of the directors shall constitute a quorum for the transaction of business and
the act of a majority of the directors present at any meeting at which there is
a quorum shall be the act of the Board of Directors, except as may be otherwise
specifically provided by statute or by the Certificate of Incorporation. If a
quorum shall not be present thereat, the directors present may adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present.
SECTION 9. Unless otherwise restricted by the Certificate of
Incorporation or these by-laws, any action required or permitted to be taken at
any meeting of the Board of Directors or of any committee thereof may be taken
without a meeting, if prior to such action a written consent thereto is signed
by all members of the Board or such committee as the case may be, and such
written consent is filed with the minutes of proceedings of the Board or
committee.
SECTION 10. Any director may be removed either with or without
cause, at any time, by the affirmative vote of a majority in interest of the
stockholders of record of the corporation entitled to vote, at a special meeting
of the stockholders called for the purpose; and the vacancy in the Board caused
by such removal may be filled by the stockholders at such meeting. Any director
may resign at any time by giving written notice of such resignation to the
President or the Secretary of the corporation and such resignation shall take
effect at the time specified in such notice.
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<PAGE> 7
SECTION 11. The directors as such shall not receive any stated
salaries for their services, but by resolution of the Board of Directors, a
fixed sum and expenses of attendance, if any, may be allowed for attendance at
each regular or special meeting of the Board; provided that nothing herein
contained shall be construed to preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
Each director and officer, whether or not then in office, shall
be indemnified by the corporation against all claims and liabilities and all
expenses reasonably incurred or imposed upon him in connection with or arising
out of any action, suit or proceeding in which he may be involved by reason of
any act or acts or alleged act or acts, either of omission or commission,
performed by him while acting as such officer or director in good faith. The
corporation shall not, however, indemnify any director or officer with respect
to matters as to which he shall be finally adjudged in any such action, suit or
proceeding to have been derelict in the performance of his duty as such director
or officer. The foregoing right of indemnification shall not be exclusive of
other rights to which any director or officer may be entitled as a matter of
law. Each such officer and director shall likewise be indemnified against any
judgment, decree or fine which may be imposed upon him in any such action, suit
or proceedings.
SECTION 12. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate two or more their number to constitute an
Executive Committee, which, to the extent provided in the resolution, shall have
and may exercise the powers of the Board of Directors in the management of the
business and affairs of the corporation and may authorize the
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<PAGE> 8
seal of the corporation to be affixed to all papers which may require it. Such
committee shall keep regular minutes of its meetings and report the same to the
Board of Directors.
ARTICLE IV
NOTICES
SECTION 1. Notices to directors and stockholders shall be in
writing and delivered personally or mailed to the directors or stockholders at
their addresses appearing on the books of the corporation. Notice by mail shall
be deemed to be given at the time when the same shall be mailed. Notices to
directors may also be given by telegram and shall be deemed to given at the time
of delivery to the telegraph company for transmission.
SECTION 2. Whenever any notice is required to be given under the
provisions of the statutes or of the Certificate of Incorporation or of these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
SECTION 1. The officers of the corporation shall be chosen by the
Board of Directors and shall be a Chairman of the Board, a President, who shall
be a director, one or more Vice Presidents, a Secretary and a Treasurer. The
Board of Directors may also choose one or more Assistant Secretaries and
Assistant Treasurers.
SECTION 2. The Board of Directors at its first meeting after each
annual meeting of stockholders shall choose a Chairman of the Board, a
President, one or more Vice Presidents, a Secretary and a Treasurer, and each
officer so chosen shall hold office until his successor shall
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<PAGE> 9
have been duly chosen and qualified or until he shall resign or have been
removed in the manner hereinafter provided.
SECTION 3. The Board of Directors may appoint such other officers
and agents as it shall deem necessary, each of whom shall hold their offices for
such terms and shall exercise such powers and perform such duties as the Board
of Directors may from time to time determine.
SECTION 4. The salaries of all officers and agents of the
corporation shall be fixed by the Board of Directors.
SECTION 5. Any officer elected or appointed by the Board of
Directors may be removed either with or without cause at any time by the
affirmative vote of a majority of the Board of Directors or to the President or
the Secretary and such resignation shall take effect at the time specified in
such notice.
SECTION 6. A vacancy in any office because of death, resignation,
removal, or disqualification or any other cause shall be filled for the
unexpired portion of the term in the manner prescribed in these by-laws for
regular appointments or elections to such offices.
CHAIRMAN OF THE BOARD OF DIRECTORS
SECTION 7. The Chairman of the Board of Directors, subject to the
direction of the Board of Directors, shall preside at all meetings of the Board
of Directors and shall have such other duties and powers as may be assigned to
him from time to time by the Board of Directors.
THE PRESIDENT
SECTION 8. The President shall be the Chief Executive Officer of
the corporation. He shall preside at all meetings of the stockholders and shall
have general supervision over the business of the corporation and over its
several officers, subject, however, to the control of the
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<PAGE> 10
Board of Directors. He may sign, with the Secretary or the Treasurer,
certificates of stock of the corporation; he may sign and execute, in the name
of the corporation, deeds, mortgages, bonds, contracts or other instruments,
subject to the provisions of these by-laws, except in cases where the signing
and execution thereof shall be expressly delegated by the Board of Directors or
by these by-laws to some other officer or agent of the corporation; and in
general, he shall perform all duties incident to the office of President, and
such other duties as from time to time may be assigned to him by the Board of
Directors.
He shall, unless otherwise directed by the Board of Directors,
attend in person or by substitute appointed by him, and act and vote on behalf
of the corporation at all meetings of the stockholders of any corporation in
which the corporation holds stock.
He shall, whenever it may in his opinion be necessary,
prescribe the duties for officers and employees of the corporation whose duties
are not otherwise defined.
THE VICE PRESIDENTS
SECTION 9. At the request of the President, or in his absence, or
disability, or in case of a vacancy in the office of President, a Vice President
in the order of his designation shall perform all the duties of the President,
and, when so acting, shall have all the powers of, and be subject to all the
restrictions upon the President, and shall perform such other duties as from
time to time may be assigned to him by the Board of Directors or the President.
Each other Vice President shall have such powers, and shall perform such duties
as may be assigned to him by the Board of Directors.
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<PAGE> 11
THE SECRETARY
SECTION 10. The Secretary may sign, with the President or Vice
President, certificates of stock of the corporation and shall:
(a) Keep the minutes of the meetings of stockholders and
of the Board of Directors in books provided for the
purpose.
(b) See that all notices are duly given in accordance
with the provisions of these by-laws or as required
by law.
(c) Be custodian of the records and of the seal of the
corporation and see that it is affixed to all stock
certificates prior to their issuance and to all
documents, the execution of which on behalf of the
corporation under its seal is duly authorized in
accordance with the provisions of these by-laws.
(d) Have charge of the stock books of the corporation and
keep or cause to be kept the stock and transfer books
in such manner as to show at any time the amount of
the stock of the corporation issued and outstanding,
the manner in which and the time when such stock was
paid for, the names, alphabetically arranged, and the
addresses of the holders of record thereof, the
number of shares held by each and the time when each
became such holder of record; exhibit at all
reasonable times to any director, upon application,
the original or duplicate stock ledger.
(e) See that the books, reports, statements, certificates
and all other documents and records required by law
are properly kept and filed.
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<PAGE> 12
(f) In general, perform all duties incident to the office
of Secretary, such other duties as from time to time
may be assigned to him by the Board of Directors.
THE TREASURER
SECTION 11. The Treasurer, if required so to do by the Board of
Directors, shall give a bond for the faithful discharge of his duties in such
sum, and with such sureties, as the Board of Directors shall require. The
Treasurer may sign, with the President or a Vice President, certificates of
stock of the corporation, and shall:
(a) Have charge and custody of, and be responsible for
all funds and securities of the corporation, and
deposit all such funds in the name of the corporation
in such banks, trust companies or other depositories
as shall be selected in accordance with the
provisions of these by-laws.
(b) Exhibit at all reasonable times his books of account
and records to any of the directors of the
corporation upon application during business hours at
the office of the corporation where such books and
records are kept.
(c) Render a statement of the condition of the finances
of the corporation at all regular meetings of the
Board of Directors, and a full financial report at
the annual meeting of the stockholders, if called
upon so to do.
(d) Receive, and give receipt for, money due and payable
to the corporation from any source whatsoever.
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<PAGE> 13
(e) In general, perform all the duties incident to the
officer of Treasurer, and such other duties as from
time to time may be assigned to him by the Board of
Directors.
ARTICLE VI
CONTRACTS, CHECKS, EXPENDITURES, BANK ACCOUNTS, ETC.
SECTION 1. The President or such officer or officers to whom he
shall delegate the power, may make or authorize to be made capital expenditures,
investments or advances, execute contracts or leases, establish or increase
salaries, and make or authorize retirements and sales of capital items,
write-offs of accounts and settlements of claims, in such manner and subject to
such limitations as shall be determined from time to time by resolution of the
Board of Directors.
SECTION 2. All Funds of the corporation shall be deposited from
time to time to the credit of the corporation with such banks, bankers, trust
companies, or other depositories as the Board of Directors may select or as may
be selected by any officer or officers, agent or agents of the corporation to
whom such power may be delegated from time to time by the Board of Directors.
SECTION 3. All checks, drafts or other orders for the payment of
money, notes, acceptances, or other evidences of indebtedness shall be issued in
the name of the corporation and in such manner as shall be determined from time
to time by resolution of the Board of Directors.
ARTICLE VII
SHARES AND THEIR TRANSFER
SECTION 1. Certificates for shares of the stock of the corporation
of any class, shall be in such form, respectively, as shall be approved by the
Board of Directors. They shall be signed
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<PAGE> 14
by the President or a Vice President and by the Treasurer, Assistant Treasurer,
Secretary or Assistant Secretary, and the seal of the corporation shall be
affixed thereto. They shall be numbered and entered in the books of the
corporation as they are issued and shall exhibit the holder's name and number of
shares.
SECTION 2. Transfers of shares of the stock of the corporation
shall be made on the books of the corporation by the holder thereof, or by his
attorney thereunto duly authorized, and on surrender of the certificate or
certificate for such shares. A person in whose name shares of stock stand on the
books of the corporation shall be deemed the owner thereof as regards the
corporation; provided that whenever any transfer of shares shall be made for
collateral security, and not absolutely, and written notice thereof shall be
given to the Secretary of the corporation, such fact shall be stated in the
entry of the transfer.
SECTION 3. The holder of any certificate of stock of the
corporation shall immediately notify the corporation of any loss or destruction
of such certificate, and the corporation may issue a new certificate of stock in
the place of any certificate theretofore issued by it alleged to have been lost
or destroyed. The Board of Directors may, in its discretion, require the owner
of the lost or destroyed certificate or his legal representatives to give the
corporation a bond in such sum, not exceeding double the value of the stock, and
with such surety or sureties, as it may direct, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss or
destruction of any such certificate; a new certificate may be so issued without
requiring any bond when, in the judgment of the Board of Directors, it is proper
so to do.
SECTION 4. The Board of Directors may make such rules and
regulations as it may deem expedient concerning the issuance, transfer and
registration of a certificates for shares of the
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capital stock of the corporation. It may appoint a transfer agent or a registrar
of transfers or both, and may require all certificates of stock to bear the
signature of either or both.
ARTICLE VIII
SEAL
SECTION 1. The Board of Directors shall provide a corporate seal,
which shall be in the form of a circle and shall bear the full name of the
corporation and the word "Florida" and the year of its incorporation.
ARTICLE IX
FISCAL YEAR
SECTION 1. The fiscal year of the corporation shall end on the
31st day of December in each year.
ARTICLE X
AMENDMENTS
SECTION 1. These bylaws may be altered, amended or repealed, or
new bylaws may be adopted at any meeting of the Board of Directors, provided
such alteration, amendment, repeal or adoption not be inconsistent with any
bylaws that may have been adopted by the stockholders, and provided notice of
the above-mentioned proposed change be included in the notice of any meeting at
which the bylaws are to be so changed.
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<PAGE> 1
EXHIBIT 4.1
- - --------------------------------------------------------------------------------
SECURITIES PURCHASE AGREEMENT
by and among
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.,
the GUARANTORS named herein
and
CIBC OPPENHEIMER CORP.
--------------------------------
Dated as of August 13, 1998
- - --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE I
DEFINITIONS Page
----------- ----
<S> <C> <C>
Section 1.1. Definitions............................... 1
Section 1.2. Accounting Terms; Financial Statements.... 5
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE OF
NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASER
Section 2.1. Issue of Notes............................ 5
Section 2.2. Purchase, Sale and Delivery of Notes...... 6
Section 2.3. Registration Rights of Holders of Notes... 6
Section 2.4. Offering by the Initial Purchaser......... 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties............ 7
Section 3.2. Resale of Notes........................... 22
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations
of the Initial Purchaser................. 23
Section 4.2. Conditions Precedent to Obligations
of the Company........................... 25
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company and the
Guarantors............................... 25
</TABLE>
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<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE VI
FEES Page
---- ----
<S> <C> <C>
Section 6.1. Costs, Expenses and Taxes....................... 28
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity....................................... 29
Section 7.2. Contribution.................................... 32
Section 7.3. Registration Rights Agreement................... 33
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions.......................... 33
Section 8.2. Termination..................................... 33
Section 8.3. No Waiver; Modifications in Writing............. 35
Section 8.4. Information Supplied by the Initial Purchaser... 35
Section 8.5. Communications.................................. 35
Section 8.6. Execution in Counterparts....................... 36
Section 8.7. Successors...................................... 36
Section 8.8. Governing Law................................... 36
Section 8.9. Severability of Provisions...................... 37
Section 8.10. Headings........................................ 37
SIGNATURE PAGE................................................ 37
Exhibit A - Form of Opinion of Kirkland & Ellis
</TABLE>
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<PAGE> 4
SECURITIES PURCHASE AGREEMENT, dated as of August 13, 1998 (the
"Agreement"), by and among AIRCRAFT SERVICE INTERNATIONAL GROUP, INC., a
Delaware corporation (the "Company"), AIRCRAFT SERVICE INTERNATIONAL, INC.,
FLORIDA AVIATION FUELING COMPANY, INC. and DISPATCH SERVICES, INC. (the
"Guarantors") and CIBC OPPENHEIMER CORP. ("CIBC" or the "Initial Purchaser").
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder.
"Affiliate" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person. For purposes of this
definition, "control" (including, with correlative meanings, the terms
"controlling", "controlled by" and "under common control with"), as used with
respect to any Person, means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise.
"Agreement" means this Agreement, as the same may be amended, supplemented
or modified in accordance with the terms hereof and in effect.
"Basic Documents" means, collectively, the Indenture, the Notes, the
Guarantees, the Registration Rights Agreement and this Agreement.
"Capital Stock" means, with respect to any Person, any and all shares or
other equivalents (however designated) of
<PAGE> 5
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capital stock, partnership interests or any other participation, right or other
interest in the nature of an equity interest in such Person or any option,
warrant or other security convertible into or exercisable for any of the
foregoing.
"Closing" has the meaning provided therefor in Section 2.2 of this
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Act.
"Commonly Controlled Entity" has the meaning provided therefor in Section
3.1(cc) of this Agreement.
"Company" has the meaning set forth in the introductory paragraph to this
Agreement.
"Default" means any event, act or condition which, with notice or lapse of
time or both, would constitute an Event of Default.
"Employee Benefit Plan" has the meaning provided therefor in Section
3.1(cc) of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
pursuant thereto, as amended from time to time.
"Event of Default" means any event defined as an Event of Default in the
Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Exchange Notes" shall have the meaning provided therefor in the
Registration Rights Agreement.
"Facilities" means any and all real property (including without
limitation, all buildings, fixtures or other improvements located thereon) now,
hereafter or heretofore owned, leased, operated or used by the Company or its
subsidiaries or any of their respective predecessors in interest.
<PAGE> 6
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"Final Memorandum" has the meaning provided therefor in Section 2.1 of
this Agreement.
"Guarantees" has the meaning provided therefor in Section 2.1 of this
Agreement.
"Guarantor" has the meaning set forth in the introductory paragraph to
this Agreement.
"Indemnified Party" has the meaning provided therefor in Section 7.1(c) of
this Agreement.
"Indemnifying Party" has the meaning provided therefor in Section 7.1(c)
of this Agreement.
"Indenture" means the indenture among the Company, the Guarantors and
State Street Bank and Trust Company, as Trustee, under which the Notes will be
issued.
"Initial Purchaser" has the meaning set forth in the introductory
paragraph to this Agreement.
"Intellectual Property Rights" has the meaning provided therefor in
Section 3.1(s) of this Agreement.
"Laws" means any applicable federal, state, local or foreign statutes,
laws, codes, common law rules, ordinances, rules, regulations, permits,
licensing or other requirements or any judicial or administrative decision of
any governmental authority.
"Lien" means, with respect to any property or assets of any Person, any
mortgage or deed of trust, pledge, hypothecation, assignment, deposit
arrangement (other than advance payments or customer deposits for goods and
services sold by the Company in the ordinary course of business), security
interest, lien, charge, easement, encumbrance, preference, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever
on or with respect to such property or assets (including without limitation,
any Capitalized Lease Obligations (as defined in the Indenture)), conditional
sales, or other title retention agreement having substantially the same
economic effect as any of the foregoing.
"Material Adverse Effect" means (i) a material adverse effect on the
business, assets, condition (financial or otherwise), results of operations or
properties of the Company and its subsidiaries, taken as a whole or (ii) a
material ad-
<PAGE> 7
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verse effect on the legality, validity, binding effect or enforceability of
this Agreement or the Basic Documents.
"Memorandum" has the meaning provided therefor in Section 2.1 of this
Agreement.
"Notes" means the 11% Senior Notes due 2005 of the Company.
"Offering" has the meaning assigned thereto in the Memorandum.
"Offering Materials" has the meaning provided therefor in Section 7.1 of
this Agreement.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, joint-stock company, trust, unincorporated organization
or association or government (including any agency or political subdivision
thereof).
"PORTAL" means the Private Offerings, Resales and Trading through
Automated Linkages Market.
"Preliminary Memorandum" has the meaning provided therefor in Section 2.1
of this Agreement.
"Private Exchange Notes" has the meaning provided therefor in the
Registration Rights Agreement.
"Proceeding" has the meaning provided therefor in Section 7.1(c) of this
Agreement.
"QIB" has the meaning provided therefor in Section 3.2 of this Agreement.
"Ranger" means Ranger Aerospace Corporation, which owns all of the
outstanding common stock of the Company.
"Registration Rights Agreement" means the registration rights agreement
among the Company, the Guarantors and the Initial Purchaser relating to the
Notes.
"Regulation S" means Regulation S under the Act.
"State" means each of the states of the United States, the District of
Columbia and the Commonwealth of Puerto Rico.
<PAGE> 8
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"State Commission" means any agency of any State having jurisdiction to
enforce such State's securities laws.
"Time of Purchase" has the meaning provided therefor in Section 2.2 of
this Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended,
and the rules and regulations of the Commission thereunder.
Section 1.2. Accounting Terms; Financial Statements. All accounting
terms used herein not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with sound accounting practice.
The term "sound accounting practice" shall mean such accounting practice as,
in the opinion of the independent accountants regularly retained by the
Company, conforms at the time to generally accepted accounting principles in
the United States applied on a consistent basis except for changes with which
such accountants concur. All determinations to which accounting principles
apply shall be made in accordance with sound accounting practice.
ARTICLE II
ISSUE OF NOTES; PURCHASE AND SALE
OF NOTES; RIGHTS OF HOLDERS OF NOTES;
OFFERING BY INITIAL PURCHASER
Section 2.1. Issue of Notes. The Company has authorized the issuance of
$80,000,000 aggregate principal amount of the Notes which are to be issued
pursuant to the Indenture. Each Note will be substantially in the form of the
Note set forth as Exhibit A to the Indenture.
The obligations of the Company under the Indenture and the Notes will be
unconditionally guaranteed (the "Guarantees"), on a joint and several basis, by
each Guarantor. Each Guarantee will be substantially in the form of the
Guarantee set forth as Exhibit G to the Indenture.
The Notes will be offered and sold to the Initial Purchaser without being
registered under the Act, in reliance on exemptions therefrom.
In connection with the sale of the Notes, the Company has prepared a
preliminary offering memorandum dated July 28,
<PAGE> 9
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1998 (the "Preliminary Memorandum") and prepared a final offering memorandum
dated August 13, 1998 (the "Final Memorandum" and, together with the
Preliminary Memorandum, the "Memorandum") setting forth or including a
description of the terms of the Notes, the terms of the offering, a description
of the Company and its subsidiaries and any material developments relating to
the Company and its subsidiaries occurring after the date of the most recent
financial statements included therein.
Section 2.2. Purchase, Sale and Delivery of Notes. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company agrees that
it will sell to the Initial Purchaser, and the Initial Purchaser agrees that it
will purchase from the Company at the Time of Purchase, $80,000,000 of the
Company's Notes at a price equal to $970.00 per $1,000 principal amount
thereof.
The purchase, sale and delivery of the Notes will take place at a closing
(the "Closing") at the offices of Cahill Gordon & Reindel, 80 Pine Street, New
York, New York 10005, at 9:00 A.M., New York time, on August 18, 1998, or such
later date and time, if any, as the Initial Purchaser and the Company shall
agree. The time at which such Closing is concluded is herein called the "Time
of Purchase."
One or more certificates in definitive form for the Notes that the Initial
Purchaser has agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchaser
requests upon notice to the Company at least 24 hours prior to the Closing,
shall be delivered by or on behalf of the Company to the Initial Purchaser,
against payment by or on behalf of the Initial Purchaser of the purchase price
therefor by wire transfer of immediately available funds wired in accordance
with the written instructions of the Company. The Company will make such
certificate or certificates for the Notes available for checking and packaging
by the Initial Purchaser at the offices of the Initial Purchaser, or such other
place as the Initial Purchaser may designate, at least 24 hours prior to the
Closing.
Section 2.3. Registration Rights of Holders of Notes. The Initial
Purchaser and its direct and indirect transferees of the Notes will have such
rights with respect to the registration thereof under the Act and qualification
of the Indenture under the Trust Indenture Act as are set forth in the
Registration Rights Agreement.
<PAGE> 10
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Section 2.4. Offering by the Initial Purchaser. The Initial Purchaser
proposes to make an offering of the Notes at the price and upon the terms set
forth in the Final Memorandum, as soon as practicable after this Agreement is
entered into and as in the judgment of the Initial Purchaser is advisable.
ARTICLE III
REPRESENTATIONS AND WARRANTIES; RESALE OF NOTES
Section 3.1. Representations and Warranties. The Company and the
Guarantors jointly and severally represent and warrant to and agree with the
Initial Purchaser as follows:
(a) Final Memorandum. The Final Memorandum as of its date does not,
and at the Time of Purchase will not, contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
set forth in this Section 3.1(a) do not apply to statements or omissions
made in reliance upon and in conformity with information relating to the
Initial Purchaser furnished to the Company in writing by the Initial
Purchaser expressly for use in the Final Memorandum or any amendment or
supplement thereto as set forth in Section 8.4 hereof. The statistical
and market-related data included in the Final Memorandum (i) are based on
or derived from sources that the Company believes to be reliable and
accurate, (ii) represent the Company's good faith estimates that are made
on the basis of data derived from sources that the Company believes to be
reliable or (iii) represent the Company's good faith estimates that are
based on internal Company surveys that the Company believes have a
reasonable basis. The Notes, the Indenture and the Registration Rights
Agreement conform in all material respects to the description thereof in
the Final Memorandum.
(b) Financial Statements. The audited financial statements of the
Company and its predecessor set forth in the Final Memorandum are in
accordance with the books and records of the Company, fairly present in
all material respects the financial position, results of operations, and
cash flows of the Company or the predecessor, as the case may be, at the
dates and for the periods to which they re-
<PAGE> 11
-8-
late and have been prepared in accordance with generally accepted
accounting principles consistently applied (except as otherwise stated
therein); the unaudited financial statements of the Company and its
predecessor set forth in the Final Memorandum were prepared in a manner
consistent with the Company's or the predecessor's, as the case may be,
historical practices and in the reasonable judgment of management of the
Company fairly present in all material respects the financial position and
results of operations of the Company or the predecessor, as the case may
be, at the date and for the period to which they relate, subject only to
year end adjustments and the absence of footnote disclosures (except as
otherwise stated therein); and the summary and selected financial data in
the Final Memorandum present fairly the financial information shown
therein and have been prepared and compiled on a basis consistent with
audited and unaudited financial statements included therein. Ernst &
Young LLP, which has reported upon the audited financial statements
included in the Memorandum, is an independent public accounting firm as
required by the Act and the rules and regulations thereunder.
(c) Pro Forma Statements. The pro forma financial statements and
other pro forma financial information (including the notes thereto)
included in the Final Memorandum (A) have been prepared in accordance with
applicable requirements of Regulation S-X promulgated under the Exchange
Act (it being understood that the rules under Regulation S-X relative to
pro forma adjustments require the application of judgment regarding
whether such adjustments are directly attributable to the transaction,
have a continuing impact and are factually supportable and that the staff
of the Commission could disagree that certain of the adjustments meet
these requirements) and (B) have been properly computed on the bases
described therein; and the assumptions used in the preparation of the pro
forma financial statements and other pro forma financial information
included in the Final Memorandum are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or
circumstances referred to therein.
(d) Organization. The Company and each of its subsidiaries is duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and has the corporate power and
authority to carry on its business as now being conducted and to own and
operate the properties and assets now owned and being
<PAGE> 12
-9-
operated by it. The Company and each Guarantor have delivered to the
Initial Purchaser complete and correct copies of its Certificate of
Incorporation and By-Laws as in effect on the date hereof. The Company
and each of its subsidiaries is duly qualified or licensed to do business
and is in good standing in each jurisdiction in which such qualification
is necessary under the applicable law as a result of the conduct of its
business or the ownership of its properties other than those jurisdictions
where the failure to be so qualified or licensed would not have a Material
Adverse Effect.
(e) Capitalization, Equity Ownership. As of the Time of Purchase
(after giving effect to the Offering), the Company will have the
capitalization as set forth in the Final Memorandum; the authorized
capital stock of the Company will consist of 1,000 shares of common stock,
par value $0.01 per share, of which 100 shares will be issued and
outstanding and held of record by Ranger; the authorized capital stock of
Ranger will consist of: (i) 2,000,000 shares of common stock, par value
$0.01 per share, of which 1,000,000 shares are designated Class A Voting
Common Stock (3,5997.8 shares are issued and outstanding) and 1,000,000
shares are designated Class B Non-Voting Common Stock (69,030 shares are
issued and outstanding); and (ii) 200,000 shares of 10.5% Payment-In-Kind
Redeemable Preferred Stock, par value $0.01 per share (6,000 shares are
issued and outstanding); all of the issued and outstanding securities of
the Company and Ranger have been duly authorized and validly issued and
are fully paid and non-assessable and none of them have been issued in
violation of any preemptive or other right; all of the outstanding shares
of capital stock of the subsidiaries are owned, directly or indirectly, by
the Company; and, except as contemplated in this Agreement or the other
agreements, instruments or documents delivered in connection with the
transactions contemplated hereby, neither the Company nor Ranger is a
party to or bound by any contract, agreement or arrangement to issue, sell
or otherwise dispose of or redeem, purchase or otherwise acquire any
Capital Stock or any other security of the Company or Ranger or any other
security exercisable or exchangeable for or convertible into any Capital
Stock or any other security of the Company or Ranger, except for
contracts, agreements or arrangements that have been discussed previously
between Ranger and either Kraig Danielson, George W. Watts or F. Andrew
Mitchell.
<PAGE> 13
-10-
(f) Authority. The Company and each Guarantor has the power to
enter into the Basic Documents (to the extent a party thereto) and all
other agreements, instruments and documents executed and delivered by the
Company and each Guarantor pursuant thereto (collectively, the "Delivered
Documents") and to carry out its obligations thereunder, including without
limitation issuing the Notes in the manner and for the purpose
contemplated by this Agreement. The execution, delivery and performance
of the Delivered Documents and the consummation of the transactions
contemplated thereby have been duly authorized by the Company and each
Guarantor (to the extent a party thereto), and no other proceeding or
approval on the part of the Company and each Guarantor is necessary to
authorize the execution and delivery of the Delivered Documents or the
performance of any of the transactions contemplated thereby.
(g) Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and the Guarantors and (assuming the
due authorization, execution and delivery thereof by the Initial
Purchaser) is a valid and legally binding agreement of the Company and the
Guarantors, enforceable against each of them in accordance with its terms
except (i) that the enforcement hereof may be subject to bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and to general principles of equity and the discretion of the
court before which any proceeding therefor may be brought and (ii) as any
rights to indemnity or contribution hereunder may be limited by federal
and state securities laws and public policy considerations.
(h) Guarantees. The Guarantees have been duly authorized by each of
the Guarantors and, when executed by the Guarantors in accordance with the
provisions of the Indenture and, when the Notes are executed by the
Company and authenticated by the Trustee in accordance with the provisions
of the Indenture and delivered to and paid for by the Initial Purchaser in
accordance with the terms of this Agreement, will constitute a valid and
legally binding obligations of the Guarantors enforceable against each of
them in accordance with their terms except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles
<PAGE> 14
-11-
of equity and the discretion of the court before which any proceeding
therefor may be brought.
(i) Indenture. The Indenture has been duly authorized by the
Company and the Guarantors and, when executed and delivered by the Company
and the Guarantors (assuming the due authorization, execution and delivery
thereof by the Trustee), will constitute a valid and legally binding
agreement of the Company and the Guarantors, enforceable against each of
them in accordance with its terms except that the enforcement thereof may
be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding
therefor may be brought.
(j) Registration Rights Agreement. The Registration Rights
Agreement has been duly authorized by the Company and the Guarantors and,
when executed and delivered by the Company and the Guarantors (assuming
the due authorization, execution and delivery thereof by the Initial
Purchaser), will constitute a valid and legally binding agreement of the
Company and the Guarantors, enforceable against each of them in accordance
with its terms except (i) that the enforcement thereof may be subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally, and to general principles of equity and the discretion
of the court before which any proceeding therefor may be brought and (ii)
as any rights to indemnity or contribution thereunder may be limited by
federal and state securities laws and public policy considerations.
(k) Notes. The Notes, the Exchange Notes and the Private Exchange
Notes have each been duly authorized by the Company and, when executed by
the Company and authenticated by the Trustee in accordance with the
provisions of the Indenture and, in the case of the Notes, delivered to
and paid for by the Initial Purchaser in accordance with the terms of this
Agreement, will be entitled to the benefits of the Indenture and will
constitute valid and legally binding obligations of the Company
enforceable in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other
<PAGE> 15
-12-
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
(l) Other Documents. Each other Delivered Document executed and
delivered by the Company and the Guarantors has been duly and validly
authorized, executed and delivered by the Company and the Guarantors and
constitutes or will constitute a valid and legally binding obligation of
the Company and the Guarantors, enforceable against them in accordance
with its terms, except (i) that the enforcement thereof may be subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally, and to general principles of equity and the discretion
of the court before which any proceeding therefor may be brought and (ii)
as any rights to indemnity and contribution hereunder and thereunder may
be limited by applicable law.
(m) Solvency. Immediately after the consummation of the
transactions contemplated by this Agreement (including the use of proceeds
from the sale of Notes at the Time of Purchase), the fair value and
present fair saleable value of the assets of the Company on a consolidated
basis will exceed the sum of its stated liabilities and identified
contingent liabilities; the Company or any of its subsidiaries will not
be, after giving effect to the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby
(including the use of proceeds from the sale of Notes at the Time of
Purchase), (i) left with unreasonably small capital with which to carry on
its business as it is proposed to be conducted, (ii) unable to pay its
debts (contingent or otherwise) as they mature or (iii) otherwise
insolvent.
(n) Absence of Certain Changes. Subsequent to the date as of which
information is given in the Final Memorandum, except as described in the
Final Memorandum, there has not been (i) any event or condition that has
or could reasonably be expected to have a Material Adverse Effect, (ii)
any transaction entered into by the Company or any of its subsidiaries,
other than in the ordinary course of business, that has or could
reasonably be expected to have a Material Adverse Effect or (iii) any
dividend or distribution of any kind declared, paid or made by the Company
on its capital stock.
<PAGE> 16
-13-
(o) No Violation. Neither the execution, delivery or performance of
any of the Delivered Documents nor the consummation of any of the
transactions contemplated thereby (i) will violate or conflict with the
Company's or any of the Guarantors' Certificate of Incorporation or
By-Laws, (ii) will, as of the Time of Purchase, result in any breach of or
default under any provision of any material contract or agreement to which
the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any property or assets of
the Company or any of its subsidiaries is subject, (iii) violates, is
prohibited by or requires the Company or any of its subsidiaries to obtain
or make any consent, authorization, approval, registration or filing under
any statute, law, ordinance, regulation (including without limitation
Regulation T, U or X of the Board of Governors of the Federal Reserve
System), rule, judgment, decree or order of any court or governmental
agency, board, bureau, body, department or authority, or of any other
person, presently in effect or in effect at the Time of Purchase, (iv)
will cause any acceleration of maturity of any note, instrument or other
indebtedness to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or with respect
to which the Company or any of its subsidiaries is an obligor or
guarantor, or (v) except as contemplated by this Agreement and the other
Basic Documents, will result in the creation or imposition of any Lien
upon or give to any other person any interest or right (including any
right of termination or cancellation) in or with respect to the equity or
any of the properties, assets, business, agreements or contracts of the
Company or any of its subsidiaries, other than any violation, conflict,
breach, default, acceleration or Lien which individually or in the
aggregate does not have a Material Adverse Effect.
(p) Title and Condition of Properties and Assets. As of the date
hereof, each of the Company and its subsidiaries has good and valid title
to all of its owned assets and properties which are material to its
business, taken as a whole. As of the Time of Purchase, each of the
Company and its subsidiaries will have good and valid title to all of its
assets and properties which are material to its business, taken as a whole
(except as sold or otherwise disposed of in the ordinary course of
business), subject to no Liens other than Permitted Liens (as defined in
the Indenture).
<PAGE> 17
-14-
(q) Leased Property. Each lease of real property or personal
property that is material to the business of the Company and its
subsidiaries, taken as a whole, is in full force and effect and is valid
and enforceable in accordance with its terms. There is not under any such
lease any default by the Company or any of its subsidiaries, or any event
that with notice or lapse of time or both would constitute such a default
by the Company or any of its subsidiaries and with respect to which the
Company or any of its subsidiaries has not taken adequate steps to prevent
such default from occurring, except for any such default that would not
have a Material Adverse Effect; all of such events, if any, and the
aforesaid steps taken by the Company or any of its subsidiaries are set
forth in the Final Memorandum. There is not under any such lease any
default by any other party thereto or any event that with notice or lapse
of time or both would constitute such a default thereunder by such party,
which default would have a Material Adverse Effect. Neither the Company
nor any of its subsidiaries owns any real property.
(r) Litigation. There are no actions, suits, proceedings or
investigations, either at law or in equity, or before any commission or
other administrative authority in any United States jurisdiction, of any
kind now pending or, to the best of the knowledge of the Company or any
subsidiary, threatened involving the Company or any of its subsidiaries
that (i) seek to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance of the Guarantees by the Guarantors or
the issuance and sale of the Notes by the Company or any of the other
material transactions contemplated hereby, (ii) question the legality or
validity of any such transactions or seek to recover damages or obtain
other relief in connection with any such transactions or (iii) which would
have, individually or in the aggregate, a Material Adverse Effect.
(s) Patents, Copyrights and Trademarks. Whether registered or at
common law, there are no material copyrights, patents, trade names,
trademarks and service marks, or any applications therefor that are
pending or in the process of preparation (collectively, the "Intellectual
Property Rights"), that are directly or indirectly owned, licensed, used,
required for use or controlled in whole or in part by the Company or its
subsidiaries and no licenses and other agreements allowing the Company or
its subsidiaries to use Intellectual Property Rights of third parties in
the United States that are not accurately de-
<PAGE> 18
-15-
scribed in the Final Memorandum. Except as otherwise described in the
Final Memorandum, each of the Company or its subsidiaries is the sole and
exclusive owner of the Intellectual Property Rights described therein,
free and clear of any Lien (other than Permitted Liens), and such
Intellectual Property Rights have not been and are not being challenged in
any way or involved in any pending or threatened unfair competition
proceeding. There has been and is no claim challenging the scope,
validity or enforceability of any of the Intellectual Property Rights.
Neither the Company nor any of its subsidiaries has infringed, or is
infringing or is subject to any unfair competition claim with respect to,
any service mark or trade name registration or application therefor,
trademark, trademark registration or application therefor, copyright,
copyright registration or application therefor, patent, patent
registration or application therefor, or any other proprietary or
intellectual property right of any person or entity and neither the
Company nor any of its subsidiaries has received or has any knowledge,
after due inquiry, of any such claim or other notice of any such violation
or infringement.
(t) Compliance with Laws, Etc. The Company and its subsidiaries are
in compliance with, and the execution and delivery of this Agreement and
the other Delivered Documents and the consummation by the Company and its
subsidiaries of the transactions contemplated hereby and thereby
(including, without limitation, the issuance of the Notes and the
Guarantees in the manner and for the purpose contemplated by this
Agreement) will comply with, all federal, state and local statutes, laws,
ordinances, regulations, rules, permits, judgments, orders or decrees
applicable to the Company or its subsidiaries and there does not exist any
basis for any claim of default under or violation of any such statute,
law, ordinance, regulation, rule, judgment, order or decree except such
noncompliance, defaults or violations, if any, that in the aggregate do
not have a Material Adverse Effect. The Company and its subsidiaries are
in compliance with (i) all applicable requirements of the Occupational
Safety and Health Act of 1970 within the United States and rules,
regulations and orders thereunder and (ii) all applicable laws and related
rules and regulations of all United States jurisdictions affecting labor
union activities, civil rights or employment, including, without
limitation, in the United States, the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Equal
<PAGE> 19
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Employment Opportunity Act of 1972, the Employee Retirement Income
Security Act of 1974, the Equal Pay Act and the National Labor Relations
Act, in each case, other than any such noncompliance which in the
aggregate would have a Material Adverse Effect. None of the Company or
its subsidiaries is currently or, after giving effect to the consummation
of the transactions contemplated by this Agreement and the Basic
Documents, will be (i) in violation of its respective organizational
documents, or (ii) in default (nor will an event occur which with notice
or passage of time or both would constitute such a default) under or in
violation of any indenture or loan or credit agreement or any other
material agreement or instrument to which it is a party or by which it or
any of its properties or assets may be bound or affected (except as set
forth in the Final Memorandum), which default or violation (individually
or in the aggregate) (x) materially and adversely affects the legality,
validity or enforceability of this Agreement or any of the Basic Documents
or (y) has a Material Adverse Effect.
(u) Compliance with Environmental Laws. Except as disclosed in the
Final Memorandum (or, if the Final Memorandum is not in existence, the
most recent Preliminary Memorandum) and except as does not, individually
or in the aggregate, have a Material Adverse Effect, (A) each of the
Company and its subsidiaries is in compliance with and not subject to
liability under all applicable Environmental Laws, (B) each of the Company
and its subsidiaries has made all filings and provided all notices
required under any applicable Environmental Law, and has all permits,
authorizations and approvals required under any applicable Environmental
Laws and is in compliance with their requirements, (C) there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter or request
for information pending or, to the best knowledge of the Company or any of
its subsidiaries, threatened against the Company or any of its
subsidiaries under any Environmental Law, (D) no lien, charge, encumbrance
or restriction has been recorded under any Environmental Law with respect
to any assets, facility or property owned, operated, leased or controlled
by the Company or any of its subsidiaries, (E) neither the Company nor any
of its subsidiaries has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA") or
any comparable state
<PAGE> 20
-17-
law, (F) no property or facility now or formerly owned, leased or operated
by the Company or any of its subsidiaries is (i) listed or proposed for
listing on the National Priorities List under CERCLA or (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability Information
System List promulgated pursuant to CERCLA, or on any comparable list
maintained by any state or local governmental authority; (G) there are no
events, activities, conditions, or occurrences which could reasonably be
expected to prevent the Company or any of its subsidiaries from complying
with, or to result in liability under, Applicable Environmental Laws.
For purposes of this Agreement, the following terms shall have the
following meanings: "Environmental Law" means any federal, state, local
or municipal statute, law, rule, regulation, ordinance, code, policy or
rule of common law and any judicial or administrative interpretation
thereof, including any judicial or administrative order, consent decree or
judgment binding on any of the Company or the Subsidiaries, relating to
pollution or protection of the environment (including, without limitation,
ambient air, indoor air, surface water, groundwater, land surface or
subsurface strata), natural resources, or health or safety or any
pollutant, contaminant, waste, constituent, chemical, material or
substance, that is subject to regulation thereunder.
(v) Governmental Authorizations and Regulations. Except as set
forth in the Final Memorandum, no authorization, consent, approval,
license, qualification or formal exemption from, nor any filing,
declaration or registration with, any court, governmental agency,
securities exchange or any regulatory authority is required in connection
with the execution, delivery or performance by the Company or its
subsidiaries of this Agreement or any of the other Basic Documents or any
of the transactions contemplated thereby, except that (i) may be required
under state securities or "blue sky" laws or the laws of any foreign
jurisdiction in connection with the offer and sale of the Notes, (ii)
would not (individually or in the aggregate) have a Material Adverse
Effect. All such authorizations, consents, approvals, licenses,
qualifications, exemptions, filings, declarations and registrations set
forth in the Final Memorandum (other than as disclosed therein) which are
required to have been obtained by the date hereof have been obtained or
made, as the case may be, and are in full force and effect and not the
subject
<PAGE> 21
-18-
of any pending or, to the knowledge of the Company, threatened attack by
appeal or direct proceeding or otherwise.
(w) Labor Matters.
(i) Collective Bargaining Representative. There are 29 collective
bargaining agreements covering certain employees of the Company or its
subsidiaries;
(ii) Labor Disputes. There is and for the past three years has been
no labor strike, work stoppage, lockout or other work action, and no such
dispute is actually pending or, to the Company's knowledge, threatened
against or affecting the Company or any of its subsidiaries;
(iii) Representative Questions. To the Company's knowledge, no union
organization or decertification campaign is in progress or threatened with
respect to the Company or any of its subsidiaries; and no question
concerning representation exists respecting such employees;
(iv) Unfair Labor Practices. There is no unfair labor practice
charge or complaint pending or, to the Company's knowledge, threatened
before the National Labor Relations Board or any similar state, local or
foreign governmental authority having jurisdiction, including any foreign
labor Law, against the Company or any of its subsidiaries;
(v) Grievances. There is no pending or, to the Company's knowledge,
threatened labor grievance against the Company or any of its subsidiaries
which, if decided adversely to the Company, would have a Material Adverse
Effect;
(vi) Employment Matters. No actions or investigations with respect
to any Law relating to the employment of labor are under way or, to the
Company's knowledge, threatened against the Company or any of its
subsidiaries which, if decided adversely to the Company, would have a
Material Adverse Effect; and to the Company's knowledge no facts or
circumstances exist that could give rise to such liability; and
(vii) Collective Bargaining Obligations. All collective bargaining
obligations required by any Law or contract have been, or prior to the
Closing Date will be,
<PAGE> 22
-19-
satisfied by the Company or any of its subsidiaries. No plant closing or
mass layoffs as those terms are defined in the WARN Act or any similar
state or local Law have been implemented in the past five years, and no
layoffs that could implicate such Laws will be implemented before the Time
of Purchase.
(x) Relationships. Except as described in the Final Memorandum,
neither the Company nor any of the Guarantors has received any notice or
has any knowledge that any customer who accounted for more than 5% of the
consolidated revenues of the Company or its predecessor during the past 24
months intends to terminate or materially reduce its business with the
Company or any of the Guarantors in the future, and except as described in
the Final Memorandum, no such customer has terminated or materially
reduced its business with the Company or any of the Guarantors during the
past twelve months.
(y) Employees. Except as described in the Final Memorandum, there
has been no resignation or termination of employment of any officer or key
employee of the Company or any of its subsidiaries and neither the Company
nor its subsidiaries has any knowledge of any impending or threatened
resignation or termination of employment in any case that would have a
Material Adverse Effect. Except as set forth in the Final Memorandum,
neither the Company nor its subsidiaries has entered into any severance or
similar arrangement in respect of any present or former employees required
to be disclosed therein.
(z) Brokers. Except as described in the Final Memorandum, there are
no claims for commissions or fees from any investment banker, broker,
finder, consultant or intermediary hired by or on behalf of the Company in
connection with the transactions contemplated by this Agreement based on
any arrangement or agreement binding upon the Company or any of its
subsidiaries.
(aa) Tax Matters. The Company and its subsidiaries have duly filed
all tax reports and returns required to be filed by them, including all
federal, state, local and foreign tax returns and reports, and the Company
and its subsidiaries have paid in full all taxes required to be paid by
the Company and its subsidiaries before such payment became delinquent
other than taxes being contested in good faith and for which adequate
reserves have been established in accordance with GAAP, except where the
fail-
<PAGE> 23
-20-
ure to file such return or pay such tax would not have a Material Adverse
Effect.
(bb) Investment Company. Neither the Company nor any of the
Guarantors is and immediately after the Time of Purchase none of them will
be an "investment company" or, to the Company's knowledge, a company
"controlled" by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(cc) ERISA. The execution and delivery of this Agreement and the
other Basic Documents and the sale of the Notes to the Initial Purchaser
will not involve any non-exempt prohibited transaction within the meaning
of Section 406 of ERISA or Section 4975 of the Code on the part of the
Company or the Guarantors. The preceding representation is made in
reliance on and subject to the accuracy of the Initial Purchaser's
representations and warranties in Section 3.2 hereof. No Reportable Event
(as defined in Section 4043 of ERISA) for which the 30-day notice
requirement has not been waived has occurred during the five-year period
prior to the date on which this representation is made or deemed made with
respect to any Employee Benefit Plan, and the Company and its subsidiaries
and Commonly Controlled Entities have complied in all material respects
with the applicable provisions of ERISA and the Code in connection with
the Employee Benefit Plans. The present value of all accrued benefits
under each Employee Benefit Plan subject to Title IV of ERISA (based on
the current liability, interest rate and other assumptions used in
preparation of the plan's Form 5500 Annual Report) did not, as of the last
annual valuation date prior to the date on which this representation is
made or deemed made, exceed the value of the assets of such plan allocable
to such accrued benefits by more than $2.0 million. Neither of the
Company or any of its subsidiaries, nor any Commonly Controlled Entity (as
defined below) has had a complete or partial withdrawal from any
Multiemployer Plan (as defined in Section 4001(a)(3) of ERISA) for which
any withdrawal liability is still outstanding. No such Multiemployer Plan
is in reorganization or insolvent. There are no material liabilities of
the Company or any of its subsidiaries or any Commonly Controlled Entity
for post-retirement benefits to be provided to their current and former
employees under Plans which are welfare benefit plans (as described in
Section 3(1) of ERISA) which are not described in the financial statements
contained in the Final Memorandum. With respect to each
<PAGE> 24
-21-
Employee Benefit Plan, no event has occurred and there exists no
conditions or set of circumstances in connection with which the Company or
any of its subsidiaries may be reasonably likely to, directly or
indirectly (through a Commonly Controlled Entity or otherwise) be subject
to material liability under the Code, ERISA or any other applicable law,
except for liability for benefit claims and funding obligations payable in
the ordinary course. "Commonly Controlled Entity" means any person or
entity that, together with the Company or any of its subsidiaries, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the
Code. "Employee Benefit Plan" means an employee benefit plan, as defined
in Section 3(2) of ERISA, which is maintained or contributed to by the
Company or its subsidiaries, or any Commonly Controlled Entity or to which
the Company or its subsidiaries or any Commonly Controlled Entity may have
liability.
(dd) The Offering. No form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) was
used by the Company or their representatives in connection with the offer
and sale of the Notes. Neither the Company, the Guarantors nor any Person
authorized to act for any of them has, either directly or indirectly, sold
or offered for sale any of the Notes or any other similar security of the
Company or the Guarantors to, or solicited any offers to buy any thereof
from, or has otherwise approached or negotiated in respect thereof with,
any Person or Persons other than with or through the Initial Purchaser;
and the Company and the Guarantors agree that neither they nor any Person
acting on their behalf will sell or offer for sale any Notes to, or
solicit any offers to buy any Notes from, or otherwise approach or
negotiate in respect thereof with, any Person or Persons so as thereby to
bring the issuance or sale of any of the Notes within the provisions of
Section 5 of the Act. Assuming the accuracy of the Initial Purchaser's
representations and warranties set forth in Section 3.2 hereof, and the
due performance by the Initial Purchaser of the covenants and agreements
set forth in Section 3.2 hereof, the offer and sale of the Notes to the
Initial Purchaser in the manner contemplated by this Agreement and the
Memorandum does not require registration under the Act and the Indenture
does not require qualification under the Trust Indenture Act. No
securities of the Company nor the Guarantors are of the same class (within
the meaning of Rule 144A under the Act) as the Notes and listed on a
national securities exchange registered under Section 6 of
<PAGE> 25
-22-
the Exchange Act, or quoted in a U.S. automated interdealer quotation
system. Neither the Company nor the Guarantors has taken, nor will either
of them take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Notes. Neither the Company, the
Guarantors nor any of their respective Affiliates or any person acting on
its or their behalf (other than the Initial Purchaser) has engaged in any
directed selling efforts (as that term is defined in Regulation S with
respect to the Notes and the Company, the Guarantors and their respective
Affiliates and any person acting on its or their behalf (other than the
Initial Purchaser) have acted in accordance with the offering restrictions
requirements of Regulation S.
(ee) Insurance. The Company and its subsidiaries carry insurance in
such amounts and covering such risks as in their reasonable determination
is adequate for the conduct of their business and the value of their
properties.
Section 3.2. Resale of Notes. The Initial Purchaser represents and
warrants that it is a "qualified institutional buyer" as defined in Rule 144A
of the Act ("QIB"). The Initial Purchaser agrees with the Company and the
Guarantors (as to itself only) that (a) it has not and will not solicit offers
for, or offer or sell, the Notes by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Act; and (b) it has and will solicit offers for the Notes only from, and will
offer the Notes only to (A) in the case of offers inside the United States, (i)
Persons whom the Initial Purchaser reasonably believes to be QIBs or, if any
such Person is buying for one or more institutional accounts for which such
Person is acting as fiduciary or agent, only when such Person has represented
to the Initial Purchaser that each such account is a QIB, to whom notice has
been given that such sale or delivery is being made in reliance on Rule 144A,
and, in each case, in transactions under Rule 144A and (B) in the case of
offers outside the United States, to Persons other than U.S. Persons ("foreign
purchasers," which term shall include dealers or other professional fiduciaries
in the United States acting on a discretionary basis for foreign beneficial
owners (other than an estate or trust)); provided, however, that, in the case
of this clause (B), in purchasing such Notes such Persons are deemed to have
represented and agreed as provided under the caption "Notice to Investors"
contained in the Final Memorandum. The Initial Pur-
<PAGE> 26
-23-
chaser represents and warrants that the funds of the Initial Purchaser being
used for the initial purchase of the Notes in no case represent assets of any
employee benefit plan subject to ERISA or 4975 of the Code.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
Section 4.1. Conditions Precedent to Obligations of the Initial
Purchaser. The obligation of the Initial Purchaser to purchase the Notes to be
purchased at the Closing is subject, at the Time of Purchase, to the
satisfaction of the following conditions:
(a) At the Time of Purchase, the Initial Purchaser shall have
received the opinion, dated as of the Time of Purchase and addressed to
the Initial Purchaser, of Kirkland & Ellis, counsel for the Company, in
form and substance reasonably satisfactory to counsel for the Initial
Purchaser, to the effect as set forth on Exhibit A hereto.
(b) The Initial Purchaser shall have received an opinion, addressed
to the Initial Purchaser in form and substance satisfactory to the Initial
Purchaser and dated the Time of Purchase, of Cahill Gordon & Reindel,
counsel to the Initial Purchaser.
(c) The Initial Purchaser shall have received from Ernst & Young LLP
a comfort letter or letters dated the date hereof and the date of the
Closing in form and substance reasonably satisfactory to counsel to the
Initial Purchaser.
(d) The representations and warranties made by the Company and the
Guarantors herein shall be true and correct in all material respects
(except for changes expressly provided for in this Agreement) on and as of
the Time of Purchase with the same effect as though such representations
and warranties had been made on and as of the Time of Purchase, the
Company and the Guarantors shall have complied in all material respects
with all agreements as set forth in or contemplated hereunder and in the
Basic Documents required to be performed by it at or prior to the Time of
Purchase and the Company shall have furnished
<PAGE> 27
-24-
to the Initial Purchaser a certificate, dated the Time of Purchase, to
such effect.
(e) Subsequent to the date of the Final Memorandum, (i) there shall
not have been any change that has or could reasonably be expected to have
a Material Adverse Effect and (ii) the Company and its subsidiaries shall
not have taken any voluntary, affirmative action to conduct their
respective businesses other than in the ordinary course.
(f) At the Time of Purchase and after giving effect to the
consummation of the transactions contemplated by this Agreement and the
Basic Documents, there shall exist no Default or Event of Default.
(g) The purchase of and payment for the Notes by the Initial
Purchaser hereunder shall not be prohibited or enjoined (temporarily or
permanently) by any applicable law or governmental regulation (including,
without limitation, Regulation T, U or X of the Board of Governors of the
Federal Reserve System).
(h) At the Time of Purchase, the Initial Purchaser shall have
received a certificate, dated the Time of Purchase, from the Company
stating that the conditions specified in Sections 4.1(e), (f), (g) and (h)
have been satisfied or duly waived at the Time of Purchase.
(i) Each of the Basic Documents shall have been executed and
delivered by all the respective parties thereto and shall be in full force
and effect.
(j) All proceedings required in order to issue the Notes and
consummate the transactions contemplated by this Agreement and all
documents and papers relating thereto shall be reasonably satisfactory to
the Initial Purchaser and counsel to the Initial Purchaser. The Initial
Purchaser and counsel to the Initial Purchaser shall have received copies
of such papers and documents of the Company and the Guarantors as they may
reasonably request in connection therewith, all in form and substance
reasonably satisfactory to them.
(k) The sale of the Notes hereunder shall not have been enjoined
(temporarily or permanently) at the Time of Purchase.
<PAGE> 28
-25-
On or before the Closing, the Initial Purchaser and counsel to the Initial
Purchaser shall have received such further documents, opinions, certificates
and schedules or other instruments relating to the business, corporate, legal
and financial affairs of the Company and its subsidiaries as they may
reasonably request.
Section 4.2. Conditions Precedent to Obligations of the Company. The
obligations of the Company to deliver the Notes shall be subject to the
accuracy as of the date hereof and at the Time of Purchase (as if made on and
as of the time of Purchase) of the representations and warranties of the
Initial Purchaser herein (delivery of the purchase price by the Initial
Purchaser for the Notes being an affirmation by the Initial Purchaser of the
accuracy of its representations and warranties).
ARTICLE V
COVENANTS
Section 5.1. Covenants of the Company and the Guarantors. The Company
and the Guarantors covenant and agree with the Initial Purchaser that:
(a) The Company will not amend or supplement the Final Memorandum or
any amendment or supplement thereto of which the Initial Purchaser shall
not previously have been advised and furnished a copy for a reasonable
period of time prior to the proposed amendment or supplement and as to
which the Initial Purchaser shall not have given its consent, which
consent shall not be unreasonably withheld. The Company will promptly,
upon the reasonable request of the Initial Purchaser or counsel to the
Initial Purchaser, make any amendments or supplements to the Preliminary
Memorandum or the Final Memorandum that may be necessary or advisable in
connection with the resale of the Notes by the Initial Purchaser.
(b) The Company and the Guarantors will cooperate with the Initial
Purchaser in arranging for the qualification of the Notes and the
Guarantees for offering and sale under the securities or "blue sky" laws
of such jurisdictions as the Initial Purchaser may designate and will
continue such qualifications in effect for as long as may be reasonably
necessary to complete the resale of the Notes;
<PAGE> 29
-26-
provided, however, that in connection therewith, the Company and the
Guarantors shall not be required to qualify as a foreign corporation, to
take any acts which would require it to qualify to do business or to
execute a general consent to service of process in any jurisdiction or
subject itself to taxation in excess of a nominal dollar amount in any
such jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by
the Initial Purchaser of the Notes, the Exchange Notes or the Private
Exchange Notes, any event occurs or information becomes known as a result
of which the Final Memorandum as then amended or supplemented would
include any untrue statement of a material fact, or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, or if for
any other reason it is necessary at any time to amend or supplement the
Final Memorandum to comply with applicable law, the Company will promptly
notify the Initial Purchaser thereof (who thereafter will not use such
Final Memorandum until appropriately amended or supplemented) and will
prepare, at the expense of the Company, an amendment or supplement to the
Final Memorandum that corrects such statement or omission or effects such
compliance.
(d) The Company will, without charge, provide to the Initial
Purchaser and to counsel to the Initial Purchaser as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or
supplement thereto as the Initial Purchaser may reasonably request.
(e) The Company will apply the net proceeds from the sale of the
Notes as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For and during the period ending on the date no Notes are
outstanding, the Company will furnish to the Initial Purchaser copies of
all reports and other communications (financial or otherwise) furnished by
the Company to the Trustee or the holders of the Notes and, promptly after
available, copies of any reports or financial statements furnished to or
filed by the Company with the Commission or any national securities
exchange on which any class of securities of the Company may be listed.
<PAGE> 30
-27-
(g) Prior to the Time of Purchase, the Company will furnish to the
Initial Purchaser, as soon as they have been prepared in final form, a
copy of any unaudited interim financial statements of the Company and
Subsidiaries for any period subsequent to the period covered by the most
recent financial statements appearing in the Final Memorandum.
(h) The Company nor any of its Affiliates will sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale
of the Notes in a manner which would require the registration under the
Act of the Notes.
(i) The Company will not solicit any offer to buy or offer to sell
the Notes by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) or in
any manner involving a public offering within the meaning of Section 4(2)
of the Act.
(j) For so long as any of the Notes remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the Act
and not saleable in full under Rule 144 under the Act (or any successor
provision), the Company will make available, upon request, to any seller
of such Notes the information specified in Rule 144A(d)(4) under the Act,
unless the Company is then subject to Section 13 or 15(d) of the Exchange
Act.
(k) The Company will use its best efforts to (i) permit the Notes to
be included for quotation on PORTAL and (ii) permit the Notes to be
eligible for clearance and settlement through The Depository Trust
Company.
(l) The Company and the Guarantors (to the extent a party thereto)
will do and perform all things required to be done and performed by them
under this Agreement and the other Basic Documents prior to or after the
Closing, subject to the qualifications and limitations in the writing that
expresses such obligations, and to satisfy all conditions precedent on
their part to the obligations of the Initial Purchaser under this
Agreement to purchase and accept delivery of the Notes.
(m) In connection with Notes offered and sold in an offshore
transaction (as defined in Regulation S), the
<PAGE> 31
-28-
Company will not register any transfer of such Notes not made in
accordance with the provisions of Regulation S and will not, except in
accordance with the provisions of Regulation S, if applicable, issue any
such Notes in the form of definitive securities.
ARTICLE VI
FEES
Section 6.1. Costs, Expenses and Taxes. Notwithstanding any termination
of this Agreement (pursuant to Section 8.2 or otherwise), the Company and the
Guarantors jointly and severally agree to pay the following costs and expenses
and all other costs and expenses incident to the performance by the Company of
its obligations hereunder: (i) the costs of printing and reproducing the
Preliminary Memorandum, the Final Memorandum and each amendment or supplement
to any of them; (ii) the delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of each Preliminary
Memorandum, the Final Memorandum and all amendments or supplements to any of
them as may be reasonably requested for use in connection with the offering and
sale of the Notes; (iii) the authentication, issuance and delivery of
certificates for the Notes and the related Guarantees, including any stamp
taxes in connection with the original issuance and sale of the Notes and
trustees' fees; (iv) the fees and expenses of the Company's accountants and the
fees and expenses of counsel (including local and special counsel) for the
Company; (v) fees and expenses of the Trustee including fees and expenses of
its counsel; (vi) all expenses and listing fees incurred in connection with the
application for quotation of the Notes on the PORTAL Market; and (vii) any fees
charged by investment rating agencies for the rating of the Notes. In
addition, the transportation and other expenses incurred by or on behalf of
representatives of the Company and the Initial Purchaser in connection with
presentations to prospective purchasers of the Notes shall be allocated as
follows: costs relating to the chartered airplane shall be shared equally by
the Company and the Initial Purchaser; costs relating to (i) the provision of
local transportation services, (ii) the meeting space for such presentations
and (iii) any catering expenses that were either (A) incurred in connection
with such meetings or (B) incurred in connection with travel on the chartered
plane and billed separately from other flight related charges, shall be paid by
the Initial Purchaser; costs relating to flights on commercial
<PAGE> 32
-29-
airlines and hotels shall be paid by the party that incurred such costs; and
costs relating to the production, printing and distribution of all marketing
materials shall be paid by the Company. For the avoidance of doubt, it is
understood that the Company shall have no obligation to pay any fees, expenses
or disbursements of Cahill Gordon & Reindel, counsel for the Initial Purchaser.
ARTICLE VII
INDEMNITY
Section 7.1. Indemnity.
(a) Indemnification by the Company and the Guarantors. The Company and
the Guarantors, jointly and severally, agree and covenant to hold harmless and
indemnify the Initial Purchaser and any Affiliates thereof (including any
director, officer, employee, agent or controlling Person of any of the
foregoing) from and against any losses, claims, damages, liabilities and
expenses (including expenses of investigation) to which the Initial Purchaser
and its Affiliates may become subject arising out of or based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Memorandum and any amendments or supplements thereto, the Basic Documents or
any application or other documents filed with the Commission or any State
Commission (collectively, the "Offering Materials") or arising out of or based
upon the omission or alleged omission to state in any of the Offering Materials
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that the Company and the
Guarantors shall not be liable under this paragraph (a) to the extent that such
losses, claims, damages or liabilities arose out of or are based upon an untrue
statement or omission made in any of the documents referred to in this
paragraph (a) in reliance upon and in conformity with the information relating
to the Initial Purchaser furnished in writing by the Initial Purchaser for
inclusion therein; provided, further, that the Company and the Guarantors shall
not be liable under this paragraph (a) to the extent that such losses, claims,
damages or liabilities arose out of or are based upon an untrue statement or
omission made in any Memorandum that is corrected in the Final Memorandum (or
any amendment or supplement thereto) if the person asserting such loss, claim,
damage or liability purchased Notes from the Initial Purchaser in reliance on
such Memorandum but was not given the
<PAGE> 33
-30-
Final Memorandum (or any amendment or supplement thereto) on or prior to the
confirmation of the sale of such Notes. The Company and the Guarantors, on a
joint and several basis, further agree to reimburse the Initial Purchaser for
any reasonable legal and other expenses as they are incurred by it in
connection with investigating, preparing to defend or defending any lawsuits,
claims or other proceedings or investigations arising in any manner out of or
in connection with such Person being the Initial Purchaser; provided that if
the Company and the Guarantors reimburse the Initial Purchaser hereunder for
any expenses incurred in connection with a lawsuit, claim or other proceeding
for which indemnification is sought, the Initial Purchaser hereby agrees to
refund such reimbursement of expenses to the extent that the losses, claims,
damages or liabilities are not entitled to indemnification hereunder. The
Company and the Guarantors further agree that the indemnification, contribution
and reimbursement commitments set forth in this Article VII shall apply whether
or not the Initial Purchaser is a formal party to any such lawsuits, claims or
other proceedings. The indemnity, contribution and expense reimbursement
obligations of the Company and the Guarantors under this Article VII shall be
in addition to any liability the Company and the Guarantors may otherwise have.
(b) Indemnification by the Initial Purchaser. The Initial Purchaser
agrees and covenants to hold harmless and indemnify the Company, the Guarantors
and any Affiliates thereof (including any director, officer, employee, agent or
controlling Person of any of the foregoing) from and against any losses,
claims, damages, liabilities and expenses insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon any untrue
statement of any material fact contained in the Offering Materials, or upon the
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or omission was made
in reliance upon and in conformity with the information relating to the Initial
Purchaser furnished in writing by the Initial Purchaser for inclusion therein.
The indemnity, contribution and expense reimbursement obligations of the
Initial Purchaser under this Article VII shall be in addition to any liability
the Initial Purchaser may otherwise have.
(c) Procedure. If any Person shall be entitled to indemnity hereunder
(each an "Indemnified Party"), such Indemnified Party shall give prompt written
notice to the party or parties from which such indemnity is sought (each an
"Indemni-
<PAGE> 34
-31-
fying Party") of the commencement of any action, suit, investigation or
proceeding, governmental or otherwise (a "Proceeding"), with respect to which
such Indemnified Party seeks indemnification or contribution pursuant hereto;
provided, however, that the failure so to notify the Indemnifying Parties shall
not relieve the Indemnifying Parties from any obligation or liability except to
the extent that the Indemnifying Parties have been prejudiced materially by
such failure. The Indemnifying Parties shall have the right, exercisable by
giving written notice to an Indemnified Party promptly after the receipt of
written notice from such Indemnified Party of such Proceeding, to assume, at
the Indemnifying Parties' expense, the defense of any such Proceeding, with
counsel reasonably satisfactory to such Indemnified Party; provided, however,
that an Indemnified Party or parties (if more than one such Indemnified Party
is named in any Proceeding) shall have the right to employ separate counsel in
any such Proceeding and to participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Indemnified Party or
parties unless: (1) the Indemnifying Parties agree to pay such fees and
expenses; or (2) the Indemnifying Parties fail promptly to assume the defense
of such Proceeding or fail to employ counsel reasonably satisfactory to such
Indemnified Party or parties; or (3) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party or
parties and the Indemnifying Party or an Affiliate of the Indemnifying Party
and such Indemnified Parties, and the Indemnified Parties shall have been
advised in writing by counsel that there may be one or more legal defenses
available to such Indemnified Party or parties that are different from or
additional to those available to the Indemnifying Parties, in which case, if
such Indemnified Party or parties notifies the Indemnifying Parties in writing
that it elects to employ separate counsel at the expense of the Indemnifying
Parties, the Indemnifying Parties shall not have the right to assume the
defense thereof and such counsel shall be at the expense of the Indemnifying
Parties, it being understood, however, that, unless there exists a conflict
among Indemnified Parties, the Indemnifying Parties shall not, in connection
with any one such Proceeding or separate but substantially similar or related
Proceedings in the same jurisdiction, arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys (together with appropriate local
counsel) at any time for such Indemnified Party or Parties, or for fees and
expenses that are not reasonable. No Indemnified Party or Parties will settle
any Proceeding without the consent of the Indemnifying Party or Parties (but
such consent shall not be un-
<PAGE> 35
-32-
reasonably withheld). No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement of any pending or
threatened Proceeding in respect of which any Indemnified Party is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of
such Indemnified Party from all liability or claims that are the subject of
such Proceeding.
Section 7.2. Contribution. If for any reason the indemnification
provided for in Section 7.1 of this Agreement is unavailable to an Indemnified
Party, or insufficient to hold it harmless, in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each applicable
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect not only the relative benefits received by the
Indemnifying Party on the one hand and the Indemnified Party on the other, but
also the relative fault of the Indemnifying and Indemnified Parties in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Indemnifying and
Indemnified Parties shall be deemed to be in the same proportion as the total
proceeds from the offering of the Notes (net of the Initial Purchaser's
discounts and commissions but before deducting expenses) received by the
Company bear to the total discounts and commissions received by the Initial
Purchaser. The relative fault of the Indemnifying and Indemnified Parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Indemnifying or
Indemnified Parties and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses, claims,
damages and liabilities referred to above shall be deemed to include any legal
or other fees or expenses incurred by such party in connection with
investigating or defending any such claim.
The Company and the Initial Purchaser agree that it would not be just and
equitable if contribution pursuant to the immediately preceding paragraph were
determined pro rata or per capita or by any other method of allocation which
does not take into account the equitable considerations referred to in such
<PAGE> 36
-33-
paragraph. Notwithstanding any other provision of this Section 7.2, the
Initial Purchaser shall not be obligated to make contributions hereunder that
in the aggregate exceed the total discounts, commissions and other compensation
received by the Initial Purchaser under this Agreement, less the aggregate
amount of any damages that the Initial Purchaser has otherwise been required to
pay by reason of the untrue or alleged untrue statements or the omissions or
alleged omissions to state a material fact. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation.
Section 7.3. Registration Rights Agreement. Notwithstanding anything to
the contrary in this Article VII, the indemnification and contribution
provisions of the Registration Rights Agreement shall govern any claim with
respect thereto.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Survival of Provisions. The representations, warranties and
covenants of the Company, the Guarantors and the Initial Purchaser made herein,
the indemnity and contribution agreements contained herein and each of the
provisions of Articles VI, VII and VIII shall remain operative and in full
force and effect regardless of (a) any investigation made by or on behalf of
the Company, the Guarantors or the Initial Purchaser, (b) acceptance of any of
the Notes and payment therefor, (c) any termination of this Agreement other
than pursuant to Section 8.2 or (d) disposition of the Notes by the Initial
Purchaser whether by redemption, exchange, sale or otherwise. With respect to
any termination of this Agreement pursuant to Section 8.2, this Agreement and
the obligations contemplated hereby shall terminate without liability to any
party, and no party shall have any continuing obligation hereunder or liability
to any other party hereto, except that each of the provisions of Articles VI,
VII and VIII shall remain operative and in full force and effect regardless of
any termination pursuant thereto.
Section 8.2. Termination. (a) This Agreement may be terminated in the
sole discretion of the Initial Purchaser by notice to the Company given prior
to the Time of Purchase in the event that the Company and the Guarantors shall
have
<PAGE> 37
-34-
failed, refused or been unable to perform all obligations and satisfy all
conditions on their part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing:
(i) the Company or the Guarantors shall have sustained any loss or
interference with respect to their businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any strike, labor dispute, slow down or work stoppage
or any legal or governmental proceeding, which loss or interference, in
the sole judgment of the Initial Purchaser, has a Material Adverse Effect,
or there shall have been, in the sole judgment of the Initial Purchaser,
any event or development that, individually or in the aggregate, has a
Material Adverse Effect (including without limitation a Change of Control
(as defined in the Indenture)), except in each case as described in the
Final Memorandum (exclusive of any amendment or supplement thereto);
(ii) trading in securities of the Company or in securities generally
on the New York Stock Exchange, American Stock Exchange or the Nasdaq
National Market shall have been suspended or minimum or maximum prices
shall have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial markets
of the United States which, in the case of (A), (B) or (C) above and in
the sole judgment of the Initial Purchaser, makes it impracticable or
inadvisable to proceed with the offering or the delivery of the Notes as
contemplated by the Final Memorandum; or
(v) any securities of the Company or Ranger shall have been
downgraded or placed on any "watch list" for possible downgrading by any
nationally recognized statistical rating organization.
<PAGE> 38
-35
(b) Termination of this Agreement pursuant to this Section 8.2 shall be
without liability of any party to any other party except as provided in Section
8.1 hereof.
Section 8.3. No Waiver; Modifications in Writing. No failure or delay on
the part of the Company or the Guarantors or the Initial Purchaser in
exercising any right, power or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Company or
the Guarantors or the Initial Purchaser at law or in equity or otherwise. No
waiver of or consent to any departure by the Company or the Guarantors from any
provision of this Agreement shall be effective unless signed in writing by the
party hereto entitled to the benefit thereof, provided that notice of any such
waiver shall be given to each party hereto as set forth below. Except as
otherwise provided herein, no amendment, modification or termination of any
provision of this Agreement shall be effective unless signed in writing by or
on behalf of the Company, the Guarantors and the Initial Purchaser. Any
amendment, supplement or modification of or to any provision of this Agreement,
any waiver of any provision of this Agreement, and any consent to any departure
by the Company or the Guarantors from the terms of any provision of this
Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on the Company or the
Guarantors in any case shall entitle the Company or the Guarantors to any other
or further notice or demand in similar or other circumstances.
Section 8.4. Information Supplied by the Initial Purchaser. The
statements set forth in the first paragraph on page i and in the third and
fourth sentences of the fifth paragraph and the seventh paragraph under the
heading "Plan of Distribution" in the Final Memorandum (to the extent such
statements relate to the Initial Purchaser) constitute the only information
furnished by the Initial Purchaser to the Company for the purposes of Sections
3.1(a) and 7.1(a) and (b) hereof.
Section 8.5. Communications. All notices, demands and other
communications provided for hereunder shall be in writing, and, (a) if to the
Initial Purchaser, shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service or personal
deliv-
<PAGE> 39
-36-
ery, addressed to CIBC Oppenheimer Corp., 425 Lexington Avenue, 3rd floor, New
York, New York 10017, Attention: Edward Levy with a copy to Cahill Gordon &
Reindel, 80 Pine Street, New York, New York, 10005, Attention: Geoffrey E.
Liebmann, Esq., and (b) if to the Company or the Guarantors, shall be given by
similar means to Aircraft Service International Group, Inc., 8240 N.W. 52nd
Terrace, Suite 200, Miami, Florida 33166-7766, Attn: Chief Financial Officer,
with copies to Kirkland & Ellis, 200 East Randolph Drive, Chicago, IL 60601,
Attn: William S. Kirsch, P.C. and Richard W. Porter. In each case notices,
demands and other communications shall be deemed given when received.
Section 8.6. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same Agreement.
Section 8.7. Successors. This Agreement shall inure to the benefit of
and be binding upon the Initial Purchaser, the Company or the Guarantors and
their respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
Person any legal or equitable right, remedy or claim under or in respect of
this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such Persons and for the benefit of no other Person
except that (i) the indemnities of the Company and the Guarantors contained in
Section 7.1(a) of this Agreement shall also be for the benefit of the
directors, officers, employees and agents of the Initial Purchaser and any
Person or Persons who control the Initial Purchaser within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act and (ii) the
indemnities of the Initial Purchaser contained in Section 7.1(b) of this
Agreement shall also be for the benefit of the directors of the Company, their
directors, officers, employees and agents and any Person or Persons who control
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act. No purchaser of Notes from the Initial Purchaser will be deemed
a successor because of such purchase.
Section 8.8. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE
<PAGE> 40
-37-
WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
Section 8.9. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 8.10. Headings. The Article and Section headings and Table of
Contents used or contained in this Agreement are for convenience of reference
only and shall not affect the construction of this Agreement.
[Signature page follows]
<PAGE> 41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
By: /s/ Stephen D. Townes
---------------------------------------
Name: Stephen D. Townes
Title: President & CEO
AIRCRAFT SERVICE INTERNATIONAL, INC.
By: /s/ Stephen D. Townes
---------------------------------------
Name: Stephen D. Townes
Title: President & CEO
FLORIDA AVIATION FUELING COMPANY, INC.
By: /s/ Stephen D. Townes
---------------------------------------
Name: Stephen D. Townes
Title: President & CEO
DISPATCH SERVICES, INC.
By: /s/ Stephen D. Townes
---------------------------------------
Name: Stephen D. Townes
Title: President & CEO
The foregoing Agreement is
confirmed and accepted as of
the date first above written.
CIBC OPPENHEIMER CORP.
By: /s/ Edward Levy
- - -------------------------------------
Name: Edward Levy
Title: Managing Director
<PAGE> 42
Exhibit A
Form of Opinion of Kirkland & Ellis
(i) The Company has been duly organized and is validly existing as a
corporation in good standing under the General Corporation Law of the
State of Delaware, with corporate power and authority to own, and hold
under lease, its properties and conduct its business as described in the
Memorandum. Each of the Guarantors has been duly organized and is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation with corporate power and authority to
own, and hold under lease, its properties and conduct its business as
described in the Memorandum.
(ii) The Company has the corporate power to enter into and perform
its obligation under the Basic Documents including without limitation the
power to issue, sell and deliver the Notes as contemplated by this
Agreement. The Board of Directors of the Company, or a duly authorized
committee thereof, has adopted by requisite vote the resolutions necessary
to authorize the Company's execution, delivery and performance of the
Basic Documents and has approved by requisite vote the price and interest
rate set forth therein.
(iii) Each of the Guarantors has the corporate power to enter into
and perform its obligation under the Basic Documents including without
limitation the power to issue, sell and deliver the Guarantees as
contemplated by this Agreement. The Board of Directors of each of the
Guarantors, or a duly authorized committee thereof, has adopted by
requisite vote the resolutions necessary to authorize the Guarantors'
execution, delivery and performance of the Basic Documents.
(iv) The outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and non-assessable.
All of the shares of capital stock of the Company are owned by Ranger
Aerospace Corporation and all shares of each subsidiary (other than, in
respect of non-domestic subsidiaries, directors' qualifying shares or
immaterial amounts of shares held by foreign nationals to the extent
mandated by or advantageous under applicable law) are owned by the
Company, in each case, free and clear of all liens, encumbrances and
security interests and to the actual knowledge of such counsel no options,
warrants or other rights to purchase, agree-
A-1
<PAGE> 43
ments or other obligations to issue, or other rights to convert any
obligations into, shares of capital stock of or ownership interests in the
Company or any of its subsidiaries are outstanding.
(v) The Company and the Guarantors have duly executed and delivered
this Agreement, the Indenture and the Registration Rights Agreement.
(vi) Each of the Basic Documents is a valid and binding obligation of
each of the Company and the Guarantors and (assuming the due
authorization, execution and delivery thereof by the other parties
thereto) is enforceable against each of them in accordance with its terms.
(vii) The Notes have been duly executed and delivered by the Company
and, when paid for by the Initial Purchaser in accordance with the terms
of this Agreement (assuming the due authorization, execution and delivery
of the Indenture by the Trustee and due authentication and delivery of the
Notes by the Trustee in accordance the Indenture), will constitute the
valid and binding obligations of the Company, enforceable against it in
accordance with their terms and entitled to the benefits of the Indenture.
(viii) When the Exchange Notes and the Private Exchange Notes have
been duly executed and delivered by the Company in accordance with the
terms of the Registration Rights Agreement, the Exchange Offer (as defined
in the Registration Rights Agreement) and the Indenture (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and
due authentication and delivery of the Exchange Notes and the Private
Exchange Notes by the Trustee in accordance with the Indenture), the
Exchange Notes and the Private Exchange Notes will constitute the valid
and binding obligations of the Company, enforceable against it in
accordance with their terms and entitled to the benefits of the Indenture.
(ix) The Guarantees endorsed on the Notes and the guarantees to be
endorsed on the Exchange Notes and the Private Exchange Notes have each
been duly executed and delivered by each of the Guarantors and, when the
Notes are executed by the Company and paid for by the Initial Purchaser in
accordance with the terms of this Agreement (assuming the due
authorization, execution and delivery of the Indenture by the Trustee and
due authentication and delivery of the Notes by the Trustee in accordance
the Indenture), will constitute the valid and binding obligations of the
Guarantors, enforceable against the Guaran-
A-2
<PAGE> 44
tors in accordance with their terms and entitled to the benefits of the
Indenture.
(x) The statements in the Memorandum under the headings "Description
of the Notes," "Exchange Offer; Registration Rights," and "Description of
Senior Credit Facility", insofar as such statements purport to summarize
certain provisions of the Indenture, the Notes, the Registration Rights
Agreement and the Senior Credit Facility, and subject to the limitations
contained in such statements, provide a fair and accurate summary in all
material respects of such provisions of such agreements.
(xi) The execution and delivery of this Agreement, the Registration
Rights Agreement and the Indenture, and the consummation of the
transactions contemplated thereby (including, without limitation, the
issuance and sale of the Notes and the issuance of the Guarantees to the
Initial Purchaser) do not and will not conflict with or constitute or
result in a breach or default under (or an event which with notice or the
passage of time or both would constitute a default under) or violation of
(i) the certificate of incorporation or bylaws of the Company or any of
the Guarantors, (ii) any statute or governmental rule or regulation which,
in our experience, is normally applicable either to general business
corporations that are not engaged in regulated business activities or to
transactions of the type contemplated by the Memorandum (but without such
counsel's having made any special investigation as to other laws and
provided that such counsel need express no opinion in this paragraph with
respect to (a) any laws, rules or regulations to which the Company may be
subject as a result of the Initial Purchaser's legal or regulatory status
or the involvement of the Initial Purchaser in such transactions, (b) any
laws, rules or regulations relating to disclosure, misrepresentations or
fraud or (c) the Act, the Exchange Act or the Trust Indenture Act) or
(iii) the terms or provisions of any contract to which the Company or such
Guarantor is a party except (in the of clauses (ii) and (iii) above) for
any such conflict, breach, violation, default or event which would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(xii) To the actual knowledge of such counsel, no consent, waiver,
approval, authorization or order of any court or governmental authority is
required for the issuance and sale by the Company of the Notes to the
Initial Purchaser, the issuance of the Guarantees or the consummation by
the Company and the Guarantors of the other transactions contemplated by
the Basic Documents, except such
A-3
<PAGE> 45
as may be required under the Act, the Exchange Act, the Trust Indenture
Act and the securities or Blue Sky laws of the various states (and the
rules and regulations thereunder), as to which such counsel need express
no opinion in this paragraph.
(xiii) To the actual knowledge of such counsel, no legal or
governmental proceedings are pending to which the Company and the
Guarantors are a party or to which the property or assets of the Company
and the Guarantors are subject which seek to restrain, enjoin or prevent
the consummation of or otherwise challenge the issuance or sale of the
Notes to be sold to the Initial Purchaser, the issuance of the Guarantees
or the consummation of the other transactions contemplated by the Basic
Documents.
(xiv) No registration under the Act of the Notes or the Guarantees is
required in connection with the sale of the Notes and the Guarantees to
the Initial Purchaser in the manner contemplated by this Agreement and the
Memorandum or in connection with the initial resale of the Notes by the
Initial Purchaser in accordance with Section 3.2 of this Agreement, and
prior to the commencement of the Exchange Offer or the effectiveness of
the Shelf Registration Statement (as defined in the Registration Rights
Agreement), the Indenture is not required to be qualified under the Trust
Indenture Act, in each case assuming (i) that the purchasers who buy such
Notes in the initial resale thereof are qualified institutional buyers as
defined in Rule 144A promulgated under the Act and (ii) the accuracy and
completeness of the Initial Purchaser's representations in Section 3.2 and
those of the Company and the Guarantors contained in this Agreement
regarding the absence of a general solicitation in connection with the
sale of such Notes to the Initial Purchaser and the initial resale
thereof.
(xv) As of the date hereof, neither the Notes nor the Guarantees are
of the same class (within the meaning of Rule 144A under the Act) as
securities of the Company or the Guarantors that are listed on a national
securities exchange registered under Section 6 of the Exchange Act or that
are quoted in a United States automated inter-dealer quotation system.
(xvi) Neither the Company nor any of the Guarantors are, or
immediately after the sale of the Notes to the Initial Purchaser and
application of the net proceeds therefrom as described in the Offering
Memorandum under the caption "Use of Proceeds" will be, an "investment
com-
A-4
<PAGE> 46
pany" as such term is defined in the Investment Company Act of 1940, as
amended.
(xvii) Neither the sale, issuance, execution or delivery of the Notes
or the Guarantees nor the application of the net proceeds therefrom as
described in the Offering Memorandum under the caption "Use of Proceeds"
will contravene Regulation T (12 C.F.R. Part 220), Regulation U (12 C.F.R.
Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of Governors
of the Federal Reserve System.
A-5
<PAGE> 1
EXHIBIT 4.2
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.,
the GUARANTORS named herein,
and any future GUARANTORS that become parties hereto
and
STATE STREET BANK AND TRUST COMPANY
as Trustee
INDENTURE
Dated as of August 18, 1998
$80,000,000
11% Senior Notes due 2005
<PAGE> 2
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- - ------- -------
310(a)(1).............................................. 7.10
(a)(2).............................................. 7.10
(a)(3).............................................. N.A.
(a)(4).............................................. N.A.
(b)................................................. 7.08; 7.10; 11.02
(b)(1).............................................. 7.10
(b)(9).............................................. 7.10
(c)................................................. N.A.
311(a)................................................. 7.11
(b)................................................. 7.11
(c)................................................. N.A.
312(a)................................................. 2.06
(b)................................................. 11.03
(c)................................................. 11.03
313(a)................................................. 7.06
(b)(1).............................................. 7.06
(b)(2).............................................. 7.06
(c)................................................. 11.02
(d)................................................. 7.06
314(a)................................................. 4.02; 4.04; 11.02
(b)................................................. N.A.
(c)(1).............................................. 11.04; 11.05
(c)(2).............................................. 11.04; 11.05
(c)(3).............................................. N.A.
(d)................................................. N.A.
(e)................................................. 11.05
(f)................................................. N.A.
315(a)................................................. 7.01; 7.02
(b)................................................. 7.05; 11.02
(c)................................................. 7.01
(d)................................................. 6.05; 7.01; 7.02
(e)................................................. 6.11
316(a)(last sentence).................................. 2.10
(a)(1)(A)........................................... 6.05
(a)(1)(B)........................................... 6.04
(a)(2).............................................. 8.02
(b)................................................. 6.07
(c)................................................. 8.04
317(a)(1).............................................. 6.08
(a)(2).............................................. 6.09
(b)................................................. 7.12
318(a)................................................. 11.01
____________
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture
<PAGE> 3
TABLE OF CONTENTS
Page
----
ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions................................................... 1
Section 1.02. Other Definitions............................................. 31
Section 1.03. Incorporation by Reference of Trust Indenture Act............. 31
Section 1.04. Rules of Construction......................................... 32
ARTICLE 2 THE NOTES
Section 2.01. Amount of Notes............................................... 33
Section 2.02. Form and Dating............................................... 33
Section 2.03. Execution and Authentication.................................. 34
Section 2.04. Registrar and Paying Agent.................................... 35
Section 2.05. Paying Agent to Hold Money in Trust........................... 36
Section 2.06. Noteholder Lists.............................................. 36
Section 2.07. Transfer and Exchange......................................... 36
Section 2.08. Replacement Notes............................................. 37
Section 2.09. Outstanding Notes............................................. 38
Section 2.10. Treasury Notes................................................ 38
Section 2.11. Temporary Notes............................................... 39
Section 2.12. Cancellation.................................................. 39
Section 2.13. Defaulted Interest............................................ 39
Section 2.14. CUSIP Number.................................................. 40
Section 2.15. Deposit of Moneys............................................. 40
Section 2.16. Book-Entry Provisions for Global Notes........................ 40
Section 2.17. Special Transfer Provisions................................... 43
Section 2.18. Computation of Interest....................................... 46
ARTICLE 3 REDEMPTION
Section 3.01. Notices to Trustee............................................ 46
Section 3.02. Selection by Trustee of Notes to Be Redeemed.................. 46
Section 3.03. Notice of Redemption.......................................... 47
Section 3.04. Effect of Notice of Redemption................................ 48
Section 3.05. Deposit of Redemption Price................................... 48
Section 3.06. Notes Redeemed in Part........................................ 49
ARTICLE 4 COVENANTS
Section 4.01. Payment of Notes.............................................. 49
-i-
<PAGE> 4
Page
----
Section 4.02. SEC Reports................................................... 49
Section 4.03. Waiver of Stay, Extension or Usury Laws....................... 51
Section 4.04. Compliance Certificate........................................ 51
Section 4.05. Taxes........................................................ 52
Section 4.06. Limitation on Additional Indebtedness......................... 52
Section 4.07. Limitation on Preferred Stock of Restricted Group Members..... 53
Section 4.08. Limitation on Capital Stock of Restricted Group Members....... 54
Section 4.09. Limitation on Restricted Payments............................. 54
Section 4.10. Limitation on Certain Asset Sales............................. 58
Section 4.11. Limitation on Transactions with Affiliates.................... 60
Section 4.12. Limitations on Liens.......................................... 61
Section 4.13. Limitations on Investments.................................... 62
Section 4.14. Limitation on Creation of Certain Subsidiaries................ 62
Section 4.15. Limitation on Sale and Lease-Back Transactions................ 62
Section 4.16. Payments for Consent.......................................... 62
Section 4.17. Legal Existence.............................................. 63
Section 4.18. Change of Control............................................. 63
Section 4.19. Maintenance of Office or Agency............................... 65
Section 4.20. Maintenance of Properties; Insurance; Books and Records;
Compliance with Law........................................... 66
Section 4.21. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Group Members............................ 66
Section 4.22. Further Assurance to the Trustee.............................. 67
Section 4.23. Limitation on Conduct of Business............................. 67
ARTICLE 5 SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets........ 68
Section 5.02. Successor Person Substituted.................................. 69
ARTICLE 6 DEFAULTS AND REMEDIES
Section 6.01. Events of Default............................................. 69
Section 6.02. Acceleration.................................................. 71
Section 6.03. Other Remedies................................................ 72
Section 6.04. Waiver of Past Defaults and Events of Default................. 73
Section 6.05. Control by Majority........................................... 73
Section 6.06. Limitation on Suits........................................... 73
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Section 6.07. Rights of Holders to Receive Payment.......................... 74
Section 6.08. Collection Suit by Trustee.................................... 74
Section 6.09. Trustee May File Proofs of Claim.............................. 74
Section 6.10. Priorities.................................................... 75
Section 6.11. Undertaking for Costs......................................... 76
Section 6.12. Restoration of Rights and Remedies............................ 76
ARTICLE 7 TRUSTEE
Section 7.01. Duties of Trustee............................................. 76
Section 7.02. Rights of Trustee............................................. 78
Section 7.03. Individual Rights of Trustee.................................. 79
Section 7.04. Trustee's Disclaimer.......................................... 79
Section 7.05. Notice of Defaults............................................ 79
Section 7.06. Reports by Trustee to Holders................................. 79
Section 7.07. Compensation and Indemnity.................................... 80
Section 7.08. Replacement of Trustee........................................ 81
Section 7.09. Successor Trustee by Consolidation, Merger, Etc............... 82
Section 7.10. Eligibility; Disqualification................................. 83
Section 7.11. Preferential Collection of Claims Against Company............. 83
Section 7.12. Paying Agents................................................. 83
ARTICLE 8 AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.................................... 84
Section 8.02. With Consent of Holders....................................... 84
Section 8.03. Compliance with Trust Indenture Act........................... 86
Section 8.04. Revocation and Effect of Consents............................. 86
Section 8.05. Notation on or Exchange of Notes.............................. 87
Section 8.06. Trustee to Sign Amendments, etc............................... 87
ARTICLE 9 DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture........................................ 88
Section 9.02. Legal Defeasance.............................................. 88
Section 9.03. Covenant Defeasance........................................... 89
Section 9.04. Conditions to Defeasance or Covenant Defeasance............... 89
Section 9.05. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions......................... 92
Section 9.06. Reinstatement................................................. 92
Section 9.07. Moneys Held by Paying Agent................................... 93
Section 9.08. Moneys Held by Trustee........................................ 93
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ARTICLE 10 GUARANTEE OF NOTES
Section 10.01. Guarantee.................................................... 94
Section 10.02. Execution and Delivery of Guarantees......................... 95
Section 10.03. Limitation of Guarantee...................................... 95
Section 10.04. Release of Guarantor......................................... 96
ARTICLE 11 MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls................................. 96
Section 11.02. Notices...................................................... 96
Section 11.03. Communications by Holders with Other Holders................. 98
Section 11.04. Certificate and Opinion as to Conditions Precedent........... 98
Section 11.05. Statements Required in Certificate and Opinion............... 99
Section 11.06. Rules by Trustee and Agents.................................. 99
Section 11.07. Business Days; Legal Holidays................................ 99
Section 11.08. Governing Law................................................ 100
Section 11.09. No Adverse Interpretation of Other Agreements................ 100
Section 11.10. No Recourse Against Others................................... 100
Section 11.11. Successors................................................... 101
Section 11.12. Multiple Counterparts........................................ 101
Section 11.13. Table of Contents, Headings, etc............................. 101
Section 11.14. Separability................................................. 101
EXHIBITS
Exhibit A Form of Note..................................................... A-1
Exhibit B Form of Legend and Assignment for 144A Note...................... B-1
Exhibit C Form of Legend and Assignment for Regulation S Note.............. C-1
Exhibit D Form of Legend for Global Note................................... D-1
Exhibit E Form of Certificate to Be Delivered in Connection with
Transfers to Non-QIB Accredited Investors........................ E-1
Exhibit F Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S............................... F-1
Exhibit G Form of Guarantee............................................... G-1
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<PAGE> 7
INDENTURE, dated as of August 18, 1998, among AIRCRAFT SERVICE
INTERNATIONAL GROUP, INC., a Delaware corporation (the "Company"), AIRCRAFT
SERVICE INTERNATIONAL, INC., a Delaware corporation, FLORIDA AVIATION FUELING
COMPANY INC., a Florida corporation, DISPATCH SERVICES, INC., a Florida
corporation, and any future GUARANTORS that become parties hereto (the
"Guarantors") and STATE STREET BANK AND TRUST COMPANY, a Massachusetts chartered
trust company, as trustee (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
11% Senior Notes due 2005 (the "Notes"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01. Definitions.
"Acquired Indebtedness" means Indebtedness of a Person
(including an Unrestricted Subsidiary or Permitted Joint Venture) existing at
the time such Person becomes a Restricted Group Member or assumed in connection
with the acquisition of assets from such Person.
"Acquisition" means the transactions described in the
Acquisition Agreement.
"Acquisition Agreement" means the Share Purchase Agreement
between Viad Corp and Viad Service Companies Limited, as sellers, and Ranger, as
buyer, dated as of March 14, 1998, and the schedules thereto, as amended by
Amendment No. 1 thereto, dated as of April 2, 1998 between Viad Corp and Viad
Service Companies Limited, as sellers, and Ranger, as buyer, and the Company and
ASIG Europe Limited, as assignees.
"Additional Interest" means additional interest on the Notes
which the Company and the Guarantors, jointly and severally, agree to pay to the
Holders pursuant to Section 4 of the Registration Rights Agreement.
"Adjusted Net Assets" of a Guarantor at any date shall mean
the lesser of the amount by which (x) the fair value of the property of such
Guarantor exceeds the total amount of
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liabilities, including, without limitation, contingent liabilities (after giving
effect to all other fixed and contingent liabilities), but excluding liabilities
under the Guarantee, of such Guarantor at such date and (y) the present fair
salable value of the assets of such Guarantor at such date exceeds the amount
that shall be required to pay the probable liability of such Guarantor on its
debts (after giving effect to all other fixed and contingent liabilities and
after giving effect to any collection from any Subsidiary of such Guarantor in
respect of the obligations of such Guarantor under the Guarantee), excluding
Indebtedness in respect of the Guarantee, as they become absolute and matured.
"Affiliate" of any specified Person means any other Person
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person. For the
purposes of this definition, "control" (including, with correlative meanings,
the terms "controlling," "controlled by" and "under common control with"), as
used with respect to any Person, means the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of
such Person, whether through the ownership of voting securities, by agreement or
otherwise.
"Agent" means the Registrar, any Paying Agent, or agent for
service of notices and demands.
"ASIG entities" means the "ASIG entities" as defined in the
Acquisition Agreement.
"Asset Acquisition" means (a) an Investment by the Company or
any Restricted Group Member in any other Person pursuant to which such Person
shall become a Restricted Group Member, or shall be merged with or into the
Company or any Restricted Group Member or (b) the acquisition by the Company or
any Restricted Group Member of the assets of any Person (other than a Restricted
Group Member) which constitute all or substantially all of the assets of such
Person or comprise any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means the sale, transfer or other disposition
(including any Sale and Lease-Back Transaction), other than to the Company or
any of its Wholly-Owned Subsidiaries, in any single transaction or series of
related transactions having a fair market value in excess of $200,000 of (a) any
Capital
<PAGE> 9
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Stock of or other equity interest in any Restricted Group Member, or (b) any
other property or assets of the Company or of any Restricted Group Member
thereof (other than sales of inventory in the ordinary course of business);
provided that Asset Sales shall not include (i) sales, leases, conveyances,
transfers or other dispositions to the Company or to a Wholly-Owned Subsidiary
or to any other Person if after giving effect to such sale, lease, conveyance,
transfer or other disposition such other Person becomes a Wholly-Owned
Subsidiary; (ii) the contribution or other transfer of any assets or property to
a joint venture, partnership or other Person (which may be a Subsidiary) in
which the Company has a direct or indirect interest to the extent such
contribution or other transfer constitutes a Permitted Investment (other than by
operation of clause (iv) of the definition thereof); or (iii) the sale, transfer
or other disposition of all or substantially all of the assets of the Company or
any Guarantor as permitted under the provisions of Section 5.01.
"Asset Sale Proceeds" means, with respect to any Asset Sale,
(i) cash received by the Company or any Restricted Group Member from such Asset
Sale (including cash received as consideration for the assumption of liabilities
incurred in connection with or in anticipation of such Asset Sale), after (a)
provision for all income, transfer, value added or other taxes measured by or
resulting from such Asset Sale, (b) payment of all brokerage commissions,
underwriting and other fees and expenses related to such Asset Sale, (c)
provision for minority interest holders in any majority-owned Restricted Group
Member as a result of such Asset Sale and (d) deduction of appropriate amounts
to be provided by the Company or a Restricted Group Member as a reserve, in
accordance with GAAP, against any liabilities associated with the assets sold or
disposed of in such Asset Sale and retained by the Company or a Restricted Group
Member after such Asset Sale, including, without limitation, severance, health
care, pension and other post-employment benefit liabilities and liabilities
related to environmental matters or against any indemnification obligations
associated with the assets sold or disposed of in such Asset Sale, and (ii)
promissory notes and other non-cash consideration received by the Company or any
Restricted Group Member from such Asset Sale or other disposition upon the
liquidation or conversion of such notes or non-cash consideration into cash.
"Attributable Indebtedness" in respect of a Sale and
Lease-Back Transaction means, as at the time of determination, the greater of
(i) the fair value of the property subject to such arrangement (as determined by
the Board of Directors) and
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(ii) the present value of the total obligations (discounted at a rate of 10%,
compounded annually) of the lessee for rental payments during the remaining term
of the lease included in such Sale and Lease-Back Transaction (including any
period for which such lease has been extended).
"Available Asset Sale Proceeds" means, with respect to any
Asset Sale, the aggregate Asset Sale Proceeds from such Asset Sale that have not
been applied in accordance with Section 4.10(a)(iii)(A) or (iii)(B) and that
have not been the basis for an Excess Proceeds Offer in accordance with Section
4.10(a)(iii)(C) of the first paragraph in Section 4.10.
"Board of Directors" means (i) in the case of a Person that is
a corporation, the board of directors of such Person or any committee authorized
to act therefor, (ii) in the case of a Person that is a limited partnership, the
board of directors of its corporate general partner or any committee authorized
to act therefor (or, if the general partner is itself a limited partnership, the
board of directors of such general partner's corporate general partner or any
committee authorized to act therefor) and (iii) in the case of any other Person,
the board of directors, management committee or similar governing body or any
authorized committee thereof responsible for the management of the business and
affairs of such Person.
"Board Resolution" means a copy of a resolution certified
pursuant to an Officers' Certificate to have been duly adopted by the Board of
Directors of the Company or a Guarantor, as appropriate, and to be in full force
and effect, and delivered to the Trustee.
"Capital Stock" means, with respect to any Person, any and all
shares or other equivalents (however designated and whether or not voting) of
capital stock, partnership interests or any other participation, right or other
interest in the nature of an equity interest in such Person or any option,
warrant or other security convertible into or exercisable for any of the
foregoing.
"Capitalized Lease Obligations" means Indebtedness represented
by obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Indebtedness
shall be the capitalized amount of such obligations determined in accordance
with GAAP.
<PAGE> 11
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"Change of Control" means, at any time after the Issue Date,
the occurrence of one or more of the following events: (i) any Person (including
a Person's Affiliates and associates), other than a Permitted Holder, becomes
the beneficial owner (as defined under Rule 13d-3 or any successor rule or
regulation promulgated under the Exchange Act) of 50% or more of the total
voting or economic power of the Common Stock of the Company or Ranger, (ii) any
Person (including a Person's Affiliates and associates), other than a Permitted
Holder, becomes the beneficial owner of more than 33 1/3% of the total voting
power of the Common Stock of the Company or Ranger, and the Permitted Holders
beneficially own, in the aggregate, a lesser percentage of the total voting
power of the Common Stock of the Company or Ranger, as the case may be, than
such other Person and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the Board of
Directors of the Company, (iii) there shall be consummated any consolidation or
merger of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which the Common Stock of the Company would be
converted into cash, securities or other property, other than a merger or
consolidation of the Company in which the holders of the Common Stock of the
Company outstanding immediately prior to the consolidation or merger hold,
directly or indirectly, at least a majority of the Common Stock of the surviving
corporation immediately after such consolidation or merger, or (iv) during any
period of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company or Ranger (together with any
new directors whose election by such Board of Directors or whose nomination for
election by the shareholders of the Company or Ranger, as the case may be, has
been approved by a majority of the directors then still in office who either
were directors at the beginning of such period or whose election or
recommendation for election was previously so approved) cease to constitute a
majority of the Board of Directors of the Company or Ranger, as the case may be.
For purposes of this definition, "voting power" shall be deemed to include the
potential for voting power upon conversion of outstanding non-voting securities
into voting securities.
"CIBC Ventures" means CIBC Wood Gundy Ventures, Inc.
"Commodity Hedge Agreement" shall mean any option, hedge or
other similar agreement or arrangement designed to protect against fluctuations
in commodity or materials prices.
<PAGE> 12
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"Common Stock" of any Person means all Capital Stock of such
Person that is generally entitled to (i) vote in the election of directors of
such Person or (ii) if such Person is not a corporation, vote or otherwise
participate in the selection of the governing body, partners, managers or others
that shall control the management and policies of such Person.
"Company" means the party named as such in the first paragraph
of this Indenture until a successor replaces such party pursuant to Article 5 of
this Indenture and thereafter means the successor.
"Company Request" means any written request signed in the name
of the Company by the Chief Executive Officer, the President, any Vice
President, the Chief Financial Officer or the Treasurer of the Company and
attested to by the Secretary or any Assistant Secretary of the Company.
"Consolidated Fixed Charge Coverage Ratio" means, with respect
to any Person, the ratio of EBITDA of such Person during the four full fiscal
quarters (the "Four Quarter Period") ending on or prior to the date of the
transaction giving rise to the need to calculate the Consolidated Fixed Charge
Coverage Ratio (the "Transaction Date") to Consolidated Fixed Charges of such
Person for the Four Quarter Period. In addition to and without limitation of the
foregoing, for purposes of this definition, "EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect on a pro forma basis for the
period of such calculation to (i) the incurrence or repayment of any
Indebtedness of such Person or any of its Restricted Group Members (and the
application of the proceeds thereof) giving rise to the need to make such
calculation and any incurrence or repayment of other Indebtedness (and the
application of the proceeds thereof), other than the incurrence or repayment of
Indebtedness in the ordinary course of business for working capital purposes
pursuant to working capital facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period, (ii) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need to
make such calculation as a result of such Person or one of its Restricted Group
Members (including any Person who becomes a Restricted Group Member as a result
of the Asset Acquisition) incurring, assuming or otherwise being liable for
Acquired Indebtedness and also including any EBITDA (provided
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that such EBITDA shall be included only to the extent includable pursuant to the
definition of "Consolidated Net Income") attributable to the assets which are
the subject of the Asset Acquisition during the Four Quarter Period) occurring
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such Asset
Sale or Asset Acquisition (including the incurrence, assumption or liability for
any such Acquired Indebtedness) occurred on the first day of the Four Quarter
Period and (iii) net cost savings calculated on a basis consistent with
Regulation S-X under the Securities Act (provided that both (A) such cost
savings were identified and quantified in an Officers' Certificate delivered to
the Trustee at the time of the consummation of the Asset Sale or Asset
Acquisition and (B) with respect to each Asset Sale or Asset Acquisition
completed prior to the 90th day preceding such Transaction Date, actions were
commenced or initiated by the Company within 90 days of such Asset Sale or Asset
Acquisition to effect such cost savings identified in such Officers'
Certificate). If such Person or any of its Restricted Group Members directly or
indirectly guarantees Indebtedness of a third Person, the preceding sentence
shall give effect to the incurrence of such guaranteed Indebtedness as if such
Person or any Restricted Group Member of such Person had directly incurred or
otherwise assumed such guaranteed Indebtedness. Furthermore, in calculating
"Consolidated Fixed Charges" for purposes of determining the denominator (but
not the numerator) of this "Consolidated Fixed Charge Coverage Ratio," (1)
interest on outstanding Indebtedness determined on a fluctuating basis as of the
Transaction Date and which shall continue to be so determined thereafter shall
be deemed to have accrued at a fixed rate per annum equal to the rate of
interest on such Indebtedness in effect on the Transaction Date; and (2)
notwithstanding clause (1) above, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by one or more
Interest Rate Agreements, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Consolidated Fixed Charges" means, with respect to any
Person, for any period, the sum of (i) Consolidated Interest Expense, plus (ii)
without duplication, the product of (x) the amount of all dividend payments on
any series of Preferred Stock of such Person or any Restricted Group Member,
determined on a consolidated basis (other than dividends paid in Capital Stock
(other than Disqualified Capital Stock) of such Person or any of its
Wholly-Owned Subsidiaries) paid, accrued or scheduled to be paid or accrued
during such period times (y) a fraction,
<PAGE> 14
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the numerator of which is one and the denominator of which is one minus the then
current effective consolidated federal, state and local tax rate of such Person,
expressed as a decimal.
"Consolidated Interest Expense" means, with respect to any
Person, for any period, the aggregate amount of interest which, in conformity
with GAAP (without taking into account interest incurred by Unrestricted
Subsidiaries or Permitted Joint Ventures), would be set forth opposite the
caption "interest expense" or any like caption on an income statement for such
Person and its Restricted Group Members on a consolidated basis (including, but
not limited to, (i) imputed interest included in Capitalized Lease Obligations,
(ii) all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing, (iii) the net costs
associated with hedging obligations, (iv) amortization of deferred financing
costs, (v) the interest portion of any deferred payment obligation, (vi)
amortization of discount or premium, if any, and (vii) all other non-cash
interest expense (including PIK Interest) (other than interest amortized to cost
of sales)) plus, without duplication, all net capitalized interest for such
period and all interest paid under any guarantee of Indebtedness (including a
guarantee of principal, interest or any combination thereof) of any Person, plus
the amount of all dividends or distributions paid on Disqualified Capital Stock
(other than dividends paid or payable in shares of Capital Stock of the
Company), less the amortization of deferred financing costs, and excluding,
however, any amount of such interest of any Restricted Group Member if the net
income of such Restricted Group Member is excluded in the calculation of
Consolidated Net Income pursuant to clause (a) or (f) of the definition thereof
(but only in the same proportion as the net income of such Restricted Group
Member is excluded from the calculation of Consolidated Net Income pursuant to
clause (a) or (f) of the definition thereof).
"Consolidated Net Income" means, with respect to any Person,
for any period, the aggregate of the Net Income of such Person and its
Restricted Group Members for such period, on a consolidated basis, determined in
accordance with GAAP; provided, however, that (a) the Net Income of (i) any
Person (the "other Person") in which the Person in question or any of its
Restricted Group Members has less than a 100% interest (which interest does not
cause the Net Income of such other Person to be consolidated into the net income
of the Person in question in accordance with GAAP), (ii) any Unrestricted
Subsidiary or (iii) any Permitted Joint Venture shall be included only to the
<PAGE> 15
-9-
extent of the amount of dividends or distributions paid to the Person in
question or the Restricted Group Member, (b) the Net Income of any Restricted
Group Member of the Person in question that is subject to any restriction or
limitation (including without limitation as a result of the failure of such
dividend or distribution to be irrevocably authorized by other members of a
Restricted Joint Venture, where such other members' authorization is necessary
for such dividend or distribution or such other members otherwise have the
ability to restrict or limit such dividend or distribution) on the payment of
dividends or the making of other distributions (other than pursuant to the
Notes, this Indenture or the Senior Credit Facility) shall be excluded to the
extent of such restriction or limitation, (c) (i) the Net Income of any Person
acquired in a pooling of interests transaction for any period prior to the date
of such acquisition and (ii) any net gain or loss resulting from an Asset Sale
by the Person in question or any of its Restricted Group Members other than in
the ordinary course of business shall be excluded, (d) extraordinary gains and
losses shall be excluded, (e) without duplication, the write-off of fees and
expenses arising from the Acquisition shall be excluded, (f) income or loss
attributable to discontinued operations (including without limitation operations
disposed of during such period whether or not such operations were classified as
discontinued) shall be excluded in an amount not to exceed $2,000,000 for any
four quarter period, (g) to the extent not otherwise excluded in accordance with
GAAP, the Net Income of any Restricted Group Member in an amount that
corresponds to the percentage ownership interest in the income of such
Restricted Group Member not owned on the last day of such period, directly or
indirectly, by such Person shall be excluded, (h) dividends or distributions
from Permitted Joint Ventures or Restricted Joint Ventures shall in any event be
excluded to the extent used to increase the amount available for Investment
under clause (xii) of the definition of "Permitted Investments" in accordance
with the terms thereof and (i) dividends, distributions and any other payments
constituting return on capital from Investments shall in any event be excluded
to the extent used to increase the amount available for Investment under clause
(xiii) of the definition of "Permitted Investments" in accordance with the terms
thereof.
"Consolidated Net Worth" means, with respect to any Person at
any date, the consolidated stockholder's equity of such Person less the amount
of such stockholder's equity attributable to Disqualified Capital Stock of such
Person and its Subsidiaries, as determined in accordance with GAAP.
<PAGE> 16
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"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at 61 Broadway, New York, New York 10006, Attn: Corporate Trust Division.
"Default" means any condition or event that is, or with the
passing of time or giving of any notice expressly required under this Indenture
(or both) would be, an Event of Default.
"Depository" means, with respect to the Notes issued in the
form of one or more Global Notes, The Depository Trust Company or another Person
designated as Depository by the Company, which Person must be a clearing agency
registered under the Exchange Act.
"Disqualified Capital Stock" means any Capital Stock of a
Person which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable at the option of the holder), or
upon the happening of any event, matures or is mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to the maturity date of the
Notes, for cash or securities constituting Indebtedness. Without limitation of
the foregoing, Disqualified Capital Stock shall be deemed to include any
Preferred Stock of the Company, with respect to which, under the terms of such
Preferred Stock, by agreement or otherwise, the Company is obligated to pay
current dividends or distributions in cash during the period prior to the
maturity date of the Notes; provided, however, that Preferred Stock of the
Company that is issued with the benefit of provisions requiring a change of
control offer to be made for such Preferred Stock in the event of a change of
control of the Company, which provisions have substantially the same effect as
Section 4.18 shall not be deemed to be Disqualified Capital Stock solely by
virtue of such provisions.
"Domestic" with respect to any Person means a Person whose
jurisdiction of incorporation or formation is the United States, any state
thereof or the District of Columbia.
"EBITDA" means, for any Person, for any period, an amount
equal to (a) the sum of (i) Consolidated Net Income for such period, plus (ii)
the provision for taxes for such period based on income or profits to the extent
such income or profits were included in computing Consolidated Net Income and
any provision
<PAGE> 17
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for taxes utilized in computing net loss under clause (i) hereof, plus (iii)
Consolidated Interest Expense for such period (but only including Redeemable
Dividends in the calculation of such Consolidated Interest Expense to the extent
that such Redeemable Dividends have not been excluded in the calculation of
Consolidated Net Income), plus (iv) depreciation for such period on a
consolidated basis, plus (v) amortization of intangibles for such period on a
consolidated basis, plus (vi) any other non-cash items (excluding any such
non-cash item to the extent that it represents an accrual of or reserve for a
cash expense in any future period or amortization of a prepaid cash expense that
was paid in a prior period) reducing Consolidated Net Income for such period,
minus (b) all such non-cash items increasing Consolidated Net Income for such
period, all for such Person and its Subsidiaries determined in accordance with
GAAP, except that with respect to the Company each of the foregoing items shall
be determined on a consolidated basis with respect to the Company and its
Restricted Group Members only; provided, however, that, for purposes of
calculating EBITDA during any fiscal quarter, cash income from a particular
Investment (other than in a Subsidiary which under GAAP is consolidated or a
Restricted Joint Venture) of such Person shall be included only (x) to the
extent cash income has been received by such Person with respect to such
Investment, or (y) if the cash income derived from such Investment is
attributable to Temporary Cash Investments.
"Eligible Receivables" means "Eligible Account Receivable" as
that term is defined in the Senior Credit Facility.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Notes" shall have the meaning assigned thereto in
the Registration Rights Agreement.
"fair market value" means, with respect to any asset or
property, the price which could be negotiated in an arm's length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction.
"GAAP" means generally accepted accounting principles
consistently applied as in effect in the United States from time to time.
<PAGE> 18
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"Guarantee" means, as the context may require, individually, a
guarantee, or collectively, any and all guarantees, of the Obligations of the
Company with respect to the Notes by each Guarantor, if any, pursuant to the
terms of this Indenture.
"Guarantor" means Aircraft Service International, Inc.,
Florida Aviation Fueling Company, Inc., Dispatch Services, Inc., and each
Domestic Restricted Subsidiary of the Company that hereafter becomes a Guarantor
pursuant to this Indenture, and "Guarantors" means such entities, collectively.
"Hancock" means John Hancock Mutual Life Insurance Company.
"Holder" or "Noteholder" means the Person in whose name a Note
is registered on the Registrar's books.
"incur" means, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to GAAP
or otherwise, of any such Indebtedness or other obligation on the balance sheet
of such Person (and "incurrence," "incurred," "incurrable" and "incurring" shall
have meanings correlative to the foregoing); provided that a change in GAAP that
results in an obligation of such Person that exists at such time becoming
Indebtedness shall not be deemed an incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to
any Person, any indebtedness at any time outstanding, secured or unsecured,
contingent or otherwise, which is for borrowed money (whether or not the
recourse of the lender is to the whole of the assets of such Person or only to a
portion thereof), or evidenced by bonds, notes, debentures or similar
instruments or representing the balance deferred and unpaid of the purchase
price of any property (excluding, without limitation, any balances that
constitute accounts payable or trade payables in the ordinary course of
business, any obligations to other members of a "consortium" or similar group of
aircraft service providers arising from the fact that such Person holds cash and
manages aircraft fuel inventories on behalf of such other consortium members in
the ordinary course of business, and other accrued liabilities arising in the
ordinary course of business) if and to the extent any of the foregoing
indebtedness would appear as a liability upon a balance sheet of such
<PAGE> 19
-13-
Person prepared in accordance with GAAP, and shall also include, to the extent
not otherwise included (i) any Capitalized Lease Obligations, (ii) obligations
secured by a Lien to which the property or assets owned or held by such Person
is subject, whether or not the obligation or obligations secured thereby shall
have been assumed (provided, however, that if such obligation or obligations
shall not have been assumed, the amount of such Indebtedness shall be deemed to
be the lesser of the principal amount of the obligation or the fair market value
of the pledged property or assets), (iii) guarantees of items of other Persons
which would be included within this definition for such other Persons (whether
or not such items would appear upon the balance sheet of the guarantor), (iv)
all obligations for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction (provided that in the case of
any such letters of credit, the items for which such letters of credit provide
credit support are those of other Persons which would be included within this
definition for such other Persons), (v) Disqualified Capital Stock of such
Person or any Restricted Group Member thereof, and (vi) obligations of any such
Person under any Interest Rate Agreement applicable to any of the foregoing (if
and to the extent such Interest Rate Agreement obligations would appear as a
liability upon a balance sheet of such Person prepared in accordance with GAAP).
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and,
with respect to contingent obligations, the maximum liability upon the
occurrence of the contingency giving rise to the obligation, provided (i) that
the amount outstanding at any time of any Indebtedness issued with original
issue discount is the principal amount of such Indebtedness less the remaining
unamortized portion of the original issue discount of such Indebtedness at such
time as determined in conformity with GAAP and (ii) that Indebtedness shall not
include any liability for United States or foreign, federal, state, local or
other taxes. Notwithstanding any other provision of the foregoing definition,
any trade payable arising from the purchase of goods or materials or for
services obtained in the ordinary course of business shall not be deemed to be
"Indebtedness" of the Company or any Restricted Group Member for purposes of
this definition. Furthermore, guarantees of (or obligations with respect to
letters of credit supporting) Indebtedness otherwise included in the
determination of such amount shall not also be included.
"Indenture" means this Indenture as amended, restated or
supplemented from time to time.
<PAGE> 20
-14-
"Individual Investors" means the Danielle Schwartz Trust,
Randolph Street Partners II, Gregg L. Engles and Stephen D. Townes.
"Institutional Accredited Investor" means an institution that
is an "accredited investor" as that term is defined in Rule 501 (a)(1), (2), (3)
or (7) promulgated under the Securities Act.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Rate Agreement" shall mean any interest or foreign
currency rate swap, cap, collar, option, hedge, forward rate or other similar
agreement or arrangement designed to protect against fluctuations in interest
rates or currency exchange rates.
"Inventory" means "Inventory" as that term is defined in the
Senior Credit Facility.
"Investments" means, directly or indirectly, any advance,
account receivable (other than an account receivable arising in the ordinary
course of business or acquired as part of the assets acquired by the Company or
any Restricted Group Member in connection with an acquisition of assets which is
otherwise permitted by the terms of this Indenture), loan or capital
contribution to (by means of transfers of property to others, payments for
property or services for the account or use of others or otherwise), the
purchase of any stock, bonds, notes, debentures, partnership or joint venture
interests or other securities of, the acquisition, by purchase or otherwise, of
all or substantially all of the business or assets or stock or other evidence of
beneficial ownership of, any Person or the making of any investment in any
Person. Investments shall exclude (i) extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices and (ii) the
repurchase of securities of any Person by such Person. For the purposes of
Section 4.09, "Investment" shall include the fair market value of the net assets
of any Restricted Group Member (in the case of any Restricted Joint Venture, to
the extent of the Company's or its Restricted Subsidiary's direct or indirect
ownership interest in such net assets) at the time that such Restricted Group
Member is designated an Unrestricted Subsidiary or Permitted Joint Venture and
shall exclude the fair market value of the net assets of any Unrestricted
Subsidiary or Permitted Joint Venture at the time that such Unrestricted
Subsidiary or Permitted Joint Venture is designated a Restricted
<PAGE> 21
-15-
Group Member. If the Company or any Restricted Group Member of the Company
sells or otherwise disposes of any Common Stock of any direct or indirect
Restricted Subsidiary of the Company such that, after giving effect to any such
sale or disposition, the Company no longer owns, directly or indirectly, greater
than 50% of the outstanding Common Stock of such Restricted Subsidiary, the
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Common Stock of such
Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date the Notes are first issued by the
Company and authenticated by the Trustee under this Indenture.
"Lien" means, with respect to any property or assets of any
Person, any mortgage or deed of trust, pledge, hypothecation, assignment,
deposit arrangement, security interest, lien, charge, easement, encumbrance,
preference, priority, or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including, without limitation, any Capitalized Lease Obligation, conditional
sales, or other title retention agreement having substantially the same economic
effect as any of the foregoing).
"Maturity Date" means August 15, 2005.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Income" means, with respect to any Person for any period,
the net income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital
Stock by or equity contribution to any Person, the aggregate net proceeds
received by such Person, after payment of expenses, commissions and the like
incurred in connection therewith, whether such proceeds are in cash or in
property (valued at the fair market value thereof, as determined in good faith
by the Board of Directors of such Person, at the time of receipt) and (b) in the
case of any exchange, exercise, conversion or surrender of outstanding
securities of any kind for or into shares of Capital Stock of such Person which
is not Disqualified Capital Stock, the net book value of such outstanding
securities on the date of such exchange, exercise, conversion or surrender (plus
any additional amount required to be paid by
<PAGE> 22
-16-
the holder to such Person upon such exchange, exercise, conversion or surrender,
less any and all payments made to the holders, e.g., on account of fractional
shares and less all expenses incurred by such Person in connection therewith).
"Non-U.S. Person" means a person who is not a U.S. person, as
defined in Regulation S.
"Notes" means the securities that are issued under this
Indenture, as amended or supplemented from time to time pursuant to this
Indenture.
"Obligations" means, with respect to any Indebtedness, any
principal, premium, interest, penalties, fees, indemnifications, reimbursements,
damages and other expenses payable under the documentation governing such
Indebtedness.
"Offering" means the offering of the Notes as described in the
Offering Memorandum.
"Offering Memorandum" means the Offering Memorandum dated
August 13, 1998 pursuant to which the Notes were offered.
"Officer," with respect to any Person (other than the
Trustee), means the Chief Executive Officer, the President, any Vice President
and the Chief Financial Officer, the Treasurer or the Secretary of such Person,
or any other officer designated by the Board of Directors of such Person, as the
case may be.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by an Officer of such Person that shall comply with
applicable provisions of this Indenture.
"Opinion of Counsel" means a written opinion reasonably
satisfactory in form and substance to the Trustee from legal counsel which
counsel is reasonably acceptable to the Trustee (it being agreed that Kirkland &
Ellis is acceptable) stating the matters required by Section 11.05 and delivered
to the Trustee.
"Permitted Holders" means, collectively, (i) the Company and
Ranger, (ii) Hancock, Tioga, CIBC Ventures, and any Affiliate of the foregoing
(other than any of their portfolio companies) and (iii) the Individual
Investors, each of the spouses, children (adoptive or biological) or other
lineal descendants of the Individual Investors, the probate estate of any such
individual and any trust, so long as one or more of
<PAGE> 23
-17-
the foregoing individuals retain substantially all of the controlling or
beneficial interest thereunder.
"Permitted Indebtedness" means:
(i) Indebtedness of the Company or any Guarantor arising
under or in connection with the Senior Credit Facility in an amount not
to exceed the greater of (A) $15,000,000 less the aggregate amount of
all mandatory prepayments actually made thereunder to the extent that
the corresponding commitments have been permanently reduced and all
scheduled payments actually made thereunder, or (B) the aggregate of
85% of Eligible Receivables and 60% of eligible Inventory;
(ii) Indebtedness under the Notes and the Guarantees;
(iii) Indebtedness of non-Domestic Wholly-Owned Subsidiaries
and Restricted Joint Ventures outstanding under one or more working
capital facilities not to exceed the aggregate of 85% of eligible
accounts receivable and 60% of eligible inventory of each such
non-Domestic Wholly-Owned Subsidiary or Restricted Joint Venture;
(iv) Indebtedness not covered by any other clause of this
definition which is outstanding on the date of this Indenture;
(v) Indebtedness of the Company to any Wholly-Owned
Subsidiary of the Company and Indebtedness of any Wholly-Owned
Subsidiary of the Company to the Company or another Wholly-Owned
Subsidiary of the Company; provided that (A) if the Company or any
Guarantor is the obligor on such Indebtedness, such Indebtedness is
unsecured and expressly subordinated to the payment in full in cash to
all obligations in respect of the Notes and the Guarantee of such
Guarantor and (B)(I) any subsequent issuance or transfer of equity
interests that results in any such Indebtedness being held by a Person
other than the Company or a Wholly-Owned Subsidiary of the Company and
(II) any sale or transfer of any such Indebtedness to a Person other
than the Company or a Wholly-Owned Subsidiary of the Company shall be
deemed to constitute an incurrence of Indebtedness by the Company or
such Restricted Group Member not permitted by this clause (v);
(vi) Interest Rate Agreements;
<PAGE> 24
-18-
(vii) Refinancing Indebtedness;
(viii) Indebtedness under Commodity Hedge Agreements entered
into in the ordinary course of business consistent with reasonable
business requirements and not for speculation;
(ix) Indebtedness consisting of guarantees made in the
ordinary course of business by the Company or its Subsidiaries of
obligations of the Company or any of its Wholly-Owned Subsidiaries,
which obligations are otherwise permitted under this Indenture;
(x) contingent obligations of the Company or its
Subsidiaries in respect of customary indemnification and purchase price
adjustment obligations incurred in connection with an Asset Sale;
provided that the maximum assumable liability in respect of all such
obligations shall at no time exceed the gross proceeds actually
received by the Company and its Subsidiaries in connection with such
Asset Sale;
(xi) Purchase Money Indebtedness and Capitalized Lease
Obligations of the Company and its Subsidiaries incurred to acquire
property in the ordinary course of business and any refinancings,
renewals or replacements of any such Purchase Money Indebtedness or
Capitalized Lease Obligation (subject to the limitations on the
principal amount thereof set forth in this clause (xi)), the principal
amount of which Purchase Money Indebtedness and Capitalized Lease
Obligations shall not in the aggregate at any one time outstanding
exceed $2,500,000; and
(xii) additional Indebtedness of the Company or any Guarantor
(other than Indebtedness specified in clauses (i) through (xi) above)
not to exceed $5,000,000 in the aggregate at any one time outstanding.
"Permitted Investments" means, for any Person, Investments
made on or after the date of this Indenture consisting of:
(i) Investments by the Company, or by a Restricted Subsidiary
thereof, in the Company or a Restricted Subsidiary;
(ii) Temporary Cash Investments;
<PAGE> 25
-19-
(iii) Investments by the Company, or by a Restricted
Subsidiary thereof, in a Person, if as a result of such Investment (a)
such Person becomes a Restricted Subsidiary of the Company, (b) such
Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Restricted Subsidiary thereof or (c)
such business or assets are owned by the Company or a Restricted
Subsidiary;
(iv) an Investment that is made by the Company or a
Restricted Subsidiary thereof in the form of any stock, bonds, notes,
debentures, partnership or joint venture interests or other securities
that are issued by a third party to either or both of the Company or a
Restricted Subsidiary solely as partial consideration for the
consummation of an Asset Sale that is otherwise permitted by Section
4.10;
(v) Investments consisting of (a) purchases and acquisitions
of inventory, supplies, materials and equipment, or (b) licenses or
leases of intellectual property and other assets in each case in the
ordinary course of business;
(vi) Investments consisting of (a) loans and advances to
employees for reasonable travel, relocation and business expenses in
the ordinary course of business and loans to directors or employees of
Ranger, the Company or its Subsidiaries for the sole purpose of
purchasing equity of Ranger, the principal amount of which loans and
advances permitted by this clause (vi)(a) shall not exceed $1,500,000
in the aggregate at any one time outstanding (excluding any such loans
or advances outstanding on the date of this Indenture), (b) extensions
of trade credit in the ordinary course of business, and (c) prepaid
expenses incurred in the ordinary course of business;
(vii) without duplication, Investments consisting of
Indebtedness permitted pursuant to clause (v) of the definition of
"Permitted Indebtedness;"
(viii) Investments existing on the date of this Indenture;
(ix) Investments of the Company under Interest Rate
Agreements;
<PAGE> 26
-20-
(x) Investments under Commodity Hedge Agreements entered
into in the ordinary course of business consistent with reasonable
business requirements and not for speculation;
(xi) Investments consisting of endorsements for collection or
deposit in the ordinary course of business;
(xii) Investments in Permitted Joint Ventures and Restricted
Joint Ventures, or in a Person which as a result of such Investment
becomes a Permitted Joint Venture or Restricted Joint Venture; provided
that (A) at the time such Investment is made, no Default or Event of
Default shall have occurred and be continuing (or would result
therefrom); and (B) after giving effect to such Investment, the
aggregate Investment made by the Company and its Restricted Group
Members in Permitted Joint Ventures and Restricted Joint Ventures does
not exceed 5% of the Company's consolidated assets (other than goodwill
and other intangibles); provided, further, that the amount available
for Investments to be made pursuant to this clause (xii) shall be
increased from time to time to the extent any return on capital is
received by the Company or a Wholly-Owned Subsidiary on an Investment
made in reliance on this clause (xii), in each case, up to, but not
exceeding, the amount of the original Investment but only to the extent
such return on capital is excluded from Consolidated Net Income;
(xiii) Investments consisting of stock, obligations or
securities received as part of or in connection with the bankruptcy,
winding up, liquidation or reorganization of a Person that is or was a
customer of the Company or any of its Subsidiaries, unless such stock,
obligations or securities are received in consideration for an
Investment made in such Person in connection with or anticipation of
such bankruptcy, winding up or liquidation;
(xiv) Investments, to the extent that the consideration
provided by the Company or any Restricted Group Member consists solely
of Capital Stock (other than Disqualified Capital Stock) of the
Company; and
(xv) Investments (other than Investments specified in clauses
(i) through (xiv) above) in an aggregate amount, as valued at the time
each such Investment is made, not exceeding $1,000,000 for all such
Investments from and after the date of this Indenture; provided that
the amount
<PAGE> 27
-21-
available for Investments to be made pursuant to this clause (xv) shall
be increased from time to time to the extent any return on capital is
received by the Company or a Wholly-Owned Subsidiary on an Investment
made in reliance on this clause (xv), in each case, up to, but not
exceeding, the amount of the original Investment but only to the extent
such return on capital is excluded from Consolidated Net Income.
"Permitted Joint Venture" means any joint venture arrangement
(which may be structured as a corporation, partnership, trust, limited liability
company or any other Person) if (a) no Affiliate (other than a Restricted
Subsidiary of the Company) of the Company or a Restricted Subsidiary has an
Investment in such Person, (b) such Person is engaged in the business of
providing aviation services or aerospace support, (c) the Company, directly or
through its Restricted Subsidiaries, at all times owns at least 25% of the total
outstanding shares of Capital Stock of such Person entitled to participate in
distributions in respect of the earnings, sale or liquidation of such Person,
(d) the Company, directly or through its Restricted Subsidiaries, is entitled to
(A) in the case of an Investment in Capital Stock, receive dividends or other
distributions on its Investment at the same time as or prior to, and on a basis
at least pro rata with, any other holder or holders of Capital Stock of such
Person and (B) in the case of an Investment other than in Capital Stock, receive
interest thereon at a rate per annum not less than the rate on the Notes and, on
the liquidation or dissolution of such Person, receive repayment of the
principal thereof prior to the payment of any dividends or distributions on
Capital Stock of such Person, (e) the Company, directly or through its
Restricted Subsidiaries, either (x) controls, under an operating and management
agreement or otherwise, the day-to-day management and operation of such Person
and any facility of the Person in which the Investment is made or (y) has
significant influence over the management and operation of such Person and any
facility of such Person in all material respects (significant influence to
include the right to control or veto any material act or decision) in connection
with such management or operation, and (f) no default with respect to any
Indebtedness of such Person or any Subsidiary of such Person (including any
right which the holders thereof may have to take enforcement action against such
Person) would permit (upon notice, lapse of time or both) any holder of any
material Indebtedness of the Company or its Restricted Subsidiaries to declare a
default on such Indebtedness or cause the payment thereof to be accelerated or
payable prior to its final scheduled maturity. If, at any time, a Permitted
<PAGE> 28
-22-
Joint Venture fails to comply with clauses (a) through (f) above, such Permitted
Joint Venture shall constitute an Investment and must comply with Section 4.09
(but only with respect to the Company's then net Investment in such Permitted
Joint Venture).
"Permitted Liens" means (i) Liens on property or assets of, or
any shares of stock of or secured debt of, any corporation existing at the time
such corporation becomes a Restricted Subsidiary of the Company or at the time
such corporation is merged into the Company or any of its Restricted
Subsidiaries; provided that such Liens are not incurred in connection with, or
in contemplation of, such corporation becoming a Restricted Subsidiary of the
Company or merging into the Company or any of its Restricted Subsidiaries, (ii)
Liens securing Refinancing Indebtedness; provided that any such Lien does not
extend to or cover any Property, shares or debt other than the Property, shares
or debt securing the Indebtedness so refunded, refinanced or extended, (iii)
Liens in favor of the Company or any of its Restricted Group Members, (iv) Liens
securing industrial revenue bonds, (v) Liens to secure Purchase Money
Indebtedness and Capitalized Lease Obligations that are permitted under the
definition of "Permitted Indebtedness" in an aggregate amount at any one time
outstanding not to exceed 5% of the Company's consolidated assets (other than
goodwill and other intangibles); provided that (a) with respect to any Purchase
Money Indebtedness, any such Lien is created solely for the purpose of securing
Indebtedness representing, or incurred to finance, refinance or refund, the cost
(including sales and excise taxes, installation and delivery charges and other
direct costs of, and other direct expenses paid or charged in connection with,
such purchase or construction) of such Property, (b) with respect to any
Purchase Money Indebtedness, the principal amount of the Indebtedness secured by
such Lien does not exceed 100% of such costs, and (c) such Lien does not extend
to or cover any Property other than the item of Property that is the subject of
such Purchase Money Indebtedness or Capitalized Lease Obligation, as the case
may be, and any improvements on such item, (vi) statutory liens or landlords',
carriers', warehousemen's, mechanics', suppliers', materialmen's, repairmen's or
other like Liens arising in the ordinary course of business which do not secure
any Indebtedness and with respect to amounts not yet delinquent or being
contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with GAAP
shall have been made therefor, (vii) Liens for taxes, assessments or
governmental charges that are being contested in good faith by appropriate
proceedings, (viii) Liens on Collateral
<PAGE> 29
-23-
(as defined in the Senior Credit Facility as in effect on the Issue Date)
securing Permitted Indebtedness under the Senior Credit Facility, (ix) Liens on
accounts receivable and inventory of non-Domestic Wholly-Owned Subsidiaries or
Restricted Joint Ventures securing Permitted Indebtedness under the working
capital facilities described in clause (iii) of the definition of "Permitted
Indebtedness," (x) Liens securing Indebtedness of the Company or any Guarantor
incurred in reliance upon clause (xii) of the definition of "Permitted
Indebtedness"; (xi) Liens (other than Liens specified in clauses (viii) through
(x) above) securing Indebtedness of the Company or any Guarantor in an aggregate
amount not to exceed $15,000,000 at any one time outstanding incurred pursuant
to a credit facility otherwise permitted by the terms of this Indenture; (xii)
Liens existing on the date of this Indenture, (xiii) any extensions,
substitutions, replacements or renewals of the foregoing, (xiv) Liens incurred
in the ordinary course of business in connection with worker's compensation,
unemployment insurance or other forms of government insurance or benefits, or to
secure the performance of letters of credit, bids, tenders, statutory
obligations, surety and appeal bonds, leases, government contracts and other
similar obligations (other than obligations for borrowed money) entered into in
the ordinary course of business, (xv) any attachment or judgment Lien not
constituting an Event of Default under this Indenture that is being contested in
good faith by appropriate proceedings and for which adequate reserves have been
established in accordance with GAAP (if so required), (xvi) Liens arising from
the filing, for notice purposes only, of financing statements in respect of
operating leases, (xvii) Liens arising by operation of law in favor of
depositary banks and collecting banks, incurred in the ordinary course of
business, (xviii) Liens consisting of restrictions on the transfer of securities
pursuant to applicable federal and state securities laws, (xix) interests of
lessors and licensors under leases and licenses to which the Company or any of
its Restricted Group Members is a party, (xx) with respect to any real property
occupied by the Company or any of its Restricted Group Members, all easements,
rights of way, licenses and similar encumbrances on or defects of title that do
not materially impair the use of such property for its intended purposes, and
(xxi) Liens securing Indebtedness or other obligations in an aggregate amount
not to exceed $250,000 at any one time outstanding.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization or gov-
<PAGE> 30
-24-
ernment including any agency or political subdivision thereof).
"Physical Notes" means certificated Notes in registered form
in substantially the form set forth in Exhibit A.
"PIK Interest" means, with respect to any Indebtedness, any
interest thereon paid or payable in the form of additional Indebtedness.
"Preferred Stock" means any Capital Stock of a Person, however
designated, which entitles the holder thereof to a preference with respect to
dividends, distributions or liquidation proceeds of such Person over the holders
of other Capital Stock issued by such Person.
"Private Exchange Notes" shall have the meaning assigned
thereto in the Registration Rights Agreement.
"Private Placement Legend" means the legend initially set
forth on the Rule 144A Notes and on any Physical Notes (other than Regulation S
Notes) delivered prior to the issuance of the Exchange Notes in the form set
forth in Exhibit B.
"Property" of any Person means all types of real, personal,
tangible, intangible or mixed property owned by such Person whether or not
included in the most recent consolidated balance sheet of such Person and its
Subsidiaries under GAAP.
"Public Offering" means an underwritten public offering and
sale by the Company or Ranger of shares of its common stock (however designated
and whether voting or non-voting) and any and all rights, warrants or options to
acquire such common stock pursuant to a registration statement registered
pursuant to the Securities Act.
"Purchase Money Indebtedness" means any Indebtedness incurred
by a Person to finance (within 90 days from incurrence) the cost (including the
cost of construction) of an item of Property acquired in the ordinary course of
business, the principal amount of which Indebtedness does not exceed the sum of
(i) 100% of such cost and (ii) reasonable fees and expenses of such Person
incurred in connection therewith.
"Qualified Institutional Buyer" or "QIB" shall have the
meaning specified in Rule 144A promulgated under the Securities Act.
<PAGE> 31
-25-
"Ranger" means Ranger Aerospace Corporation, a Delaware
corporation.
"Redeemable Dividend" means, for any dividend or distribution
with regard to Disqualified Capital Stock, the quotient of the dividend or
distribution divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the Company of such Disqualified Capital Stock.
"Redemption Date" when used with respect to any Note to be
redeemed means the date fixed for such redemption pursuant to the terms of the
Notes.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances or extends any Indebtedness of the Company outstanding on the Issue
Date or other Indebtedness permitted to be incurred by the Company or its
Restricted Group Members pursuant to the terms of this Indenture, but only to
the extent that (i) the Refinancing Indebtedness is subordinated to the Notes to
at least the same extent as the Indebtedness being refunded, refinanced or
extended, if at all, (ii) the Refinancing Indebtedness is scheduled to mature
either (a) no earlier than the Indebtedness being refunded, refinanced or
extended, or (b) after the maturity date of the Notes, (iii) the portion, if
any, of the Refinancing Indebtedness that is scheduled to mature on or prior to
the maturity date of the Notes has a weighted average life to maturity at the
time such Refinancing Indebtedness is incurred that is equal to or greater than
the weighted average life to maturity of the portion of the Indebtedness being
refunded, refinanced or extended that is scheduled to mature on or prior to the
maturity date of the Notes, (iv) such Refinancing Indebtedness is in an
aggregate principal amount that is equal to or less than the sum of (a) the
aggregate principal amount then outstanding under the Indebtedness being
refunded, refinanced or extended, (b) the amount of accrued and unpaid interest,
if any, and premiums owed, if any, not in excess of preexisting prepayment
provisions on such Indebtedness being refunded, refinanced or extended and (c)
the amount of customary fees, expenses and costs related to the incurrence of
such Refinancing Indebtedness, and (v) such Refinancing Indebtedness is incurred
by the same Person that initially incurred the Indebtedness being refunded,
refinanced or extended.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of August 18, 1998 among the
<PAGE> 32
-26-
Company, the Guarantors and CIBC Oppenheimer Corp., as Initial Purchaser.
"Regulation S" means Regulation S promulgated under the
Securities Act.
"Responsible Officer," when used with respect to the Trustee,
means an officer or assistant officer assigned to the corporate trust department
of the Trustee (or any successor group of the Trustee) including any vice
president, assistant vice president, assistant secretary, treasurer or assistant
treasurer or any other officer of the Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer to
whom such matter is referred because of his knowledge of and familiarity with
the particular subject.
"Restricted Group Members" means, collectively, each
Restricted Subsidiary of the Company, each Restricted Joint Venture and each
Restricted Subsidiary of a Restricted Joint Venture.
"Restricted Joint Venture" means a Permitted Joint Venture
that has been designated by the Board of Directors of the Company as a
Restricted Joint Venture based on its good faith determination, evidenced by a
board resolution, that the Company has, directly or indirectly, the requisite
control over such Permitted Joint Venture to prevent it from incurring
Indebtedness, or taking any other action at any time, in contravention of any of
the provisions of this Indenture that are applicable to Restricted Joint
Ventures; provided that, immediately after giving effect to such designation,
(i) the Indebtedness and Liens of such Permitted Joint Venture outstanding
immediately after such designation would, if incurred at such time, have been
permitted to be incurred for all purposes of this Indenture; and (ii) no Default
or Event of Default shall have occurred and be continuing. The Company shall
deliver an Officers' Certificate to the Holders upon designating any Permitted
Joint Venture as a Restricted Joint Venture. As of the Issue Date, Omni Aircraft
will not be a Restricted Joint Venture.
"Restricted Payment" means any of the following: (i) the
declaration or payment of any dividend or any other distribution or payment on
Capital Stock of the Company or any Restricted Group Member or any payment made
to the direct or indirect holders (in their capacities as such) of Capital Stock
<PAGE> 33
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of the Company or any Restricted Group Member (other than (x) dividends or
distributions payable solely in Capital Stock (other than Disqualified Capital
Stock) or in options, warrants or other rights to purchase Capital Stock (other
than Disqualified Capital Stock), and (y) in the case of Restricted Group
Members, dividends or distributions payable to the Company or to a Wholly-Owned
Subsidiary of the Company), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company or any of its
Restricted Group Members (other than Capital Stock owned by the Company or a
Wholly-Owned Subsidiary of the Company, excluding Disqualified Capital Stock) or
any option, warrants or other rights to purchase such Capital Stock, (iii) the
making of any principal payment on, or the purchase, defeasance, repurchase,
redemption or other acquisition or retirement for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment, of any
Indebtedness which is subordinated in right of payment to the Notes other than
subordinated Indebtedness acquired in anticipation of satisfying a scheduled
sinking fund obligation, principal installment or final maturity (in each case
within one year of the date of acquisition), (iv) the making of any Investment
or guarantee of any Investment in any Person other than a Permitted Investment,
(v) any designation of a Restricted Group Member as an Unrestricted Subsidiary
or a Permitted Joint Venture on the basis of the Investment by the Company
therein and (vi) forgiveness of any Indebtedness of an Affiliate of the Company
(other than a Restricted Group Member) to the Company or a Restricted Group
Member (other than the cancellation of loans to directors or employees of
Ranger, the Company or its Subsidiaries made in accordance with clause (vi) of
the definition of "Permitted Investments" in connection with the return to
Ranger of the equity of Ranger originally purchased by such director as employee
with the proceeds of such loan). For purposes of determining the amount expended
for Restricted Payments, cash distributed or invested shall be valued at the
face amount thereof and property other than cash shall be valued at its fair
market value determined in good faith by the Company's Board of Directors.
"Restricted Subsidiary" means a Subsidiary of the Company
other than an Unrestricted Subsidiary and includes all of the Subsidiaries of
the Company existing at the date of this Indenture. The Board of Directors of
the Company may designate any Unrestricted Subsidiary or any Person that is to
become a Subsidiary as a Restricted Subsidiary if immediately after giving
effect to such action (and treating any Acquired Indebtedness as having been
incurred at the time of such action), (i) the Company could have incurred at
least $1.00 of addi-
<PAGE> 34
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tional Indebtedness (other than Permitted Indebtedness) pursuant to Section 4.06
and (ii) no Default or Event of Default shall have occurred and be continuing.
The Company shall deliver an Officers' Certificate to the Holders upon
designating any Unrestricted Subsidiary as a Restricted Subsidiary.
"Rule 144A" means Rule 144A promulgated under the Securities
Act.
"Sale and Lease-Back Transaction" means any arrangement with
any Person providing for the leasing by the Company or any Restricted Group
Member of any real or tangible personal Property, which Property has been or is
to be sold or transferred by the Company or such Restricted Group Member to such
Person in contemplation of such leasing.
"S&P" means Standard & Poor's Corporation and its successors.
"SEC" means the United States Securities and Exchange
Commission as constituted from time to time or any successor performing
substantially the same functions.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Credit Facility" means the Credit and Security
Agreement dated as of April 2, 1998 between the Company and Key Corporate
Capital Inc., together with the documents related thereto (including, without
limitation, any guarantee agreements and security documents), in each case as
such agreements may be amended (including any amendment and restatement
thereof), supplemented or otherwise modified from time to time, including any
agreement extending the maturity of, refinancing, replacing or otherwise
restructuring (including increasing the amount of available borrowings
thereunder or adding Subsidiaries as additional borrowers or guarantors
thereunder (provided that such increase in borrowings or adding Subsidiaries of
the Company as additional borrowers or guarantors is permitted by Section 4.06)
all or any portion of the Indebtedness under such agreement or any successor or
replacement agreement and whether by the same or any other agent, lender or
group of lenders.
"Subsidiary" of any specified Person means any corporation,
partnership, limited liability company, joint venture, association or other
business entity, whether now existing or hereafter organized or acquired, (i) in
the case of a corporation, of which more than 50% of the total voting power of
the
<PAGE> 35
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Capital Stock entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, officers or trustees thereof is held by such
first-named Person or any of its Subsidiaries; or (ii) in the case of a
partnership, limited liability company, joint venture, association or other
business entity, with respect to which such first-named Person or any of its
Subsidiaries has the power to direct or cause the direction of the management
and policies of such entity by contract or otherwise or if in accordance with
GAAP such entity is consolidated with the first-named Person for financial
statement purposes.
"Temporary Cash Investments" means (i) Investments in
marketable direct obligations issued or guaranteed by the United States of
America, or of any governmental agency or political subdivision thereof,
maturing within 365 days of the date of purchase; (ii) Investments in
certificates of deposit and eurodollar time deposits issued by a bank organized
under the laws of the United States of America, any state thereof (or the
District of Columbia) or any foreign country recognized by the United States, in
each case having capital, surplus and undivided profits at the time of
investment totaling more than $500,000,000 (or the foreign currency equivalent
thereof) and rated at the time of investment at least A by S&P and A-2 by
Moody's (or similar equivalent foreign ratings), maturing within 365 days of
purchase; (iii) Investments not exceeding 365 days in duration in money market
funds that invest substantially all of such funds' assets in the Investments
described in the preceding clauses (i) and (ii); (iv) Investments in commercial
paper with a maturity of 180 days or less issued by a corporation (except an
Affiliate of the Company) organized under the laws of any state of the United
States (or the District of Columbia) or any foreign country recognized by the
United States and at the time of investment rated at least A-1 by S&P or at
least P-1 by Moody's (or similar equivalent foreign ratings) and (v) Investments
in repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (i) above entered into with a bank
meeting the qualifications described in clause (ii) above.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) as in effect on the date of this Indenture (except as
provided in Section 8.03 hereof).
"Tioga" means Tioga Capital Corporation.
<PAGE> 36
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"Tioga Letter" means the letter from Tioga to the Company
regarding payment of advisory fees, dated April 2, 1998.
"Trustee" means the party named as such in this Indenture
until a successor replaces it pursuant to this Indenture and thereafter means
the successor.
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary and (b) any Subsidiary of the Company which is
classified after the Issue Date as an Unrestricted Subsidiary by a resolution
adopted by the Board of Directors of the Company; provided that a Subsidiary
organized or acquired after the Issue Date may be so classified as an
Unrestricted Subsidiary only if such classification is in compliance with
Section 4.09. The Purchaser shall be given prompt notice by the Company of each
resolution adopted by the Board of Directors of the Company under this
provision, together with a copy of each such resolution adopted.
"U.S. Government Obligations" means (a) securities that are
direct obligations of the United States of America for the payment of which its
full faith and credit are pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America, which, in either case, are
not callable or redeemable at the option of the issuer thereof, and shall also
include a depository receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S. Government
Obligation or a specific payment of principal of or interest on any such U.S.
Government Obligation held by such custodian for the account of the holder of
such depository receipt; provided that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to the
holder of such depository receipt from any amount received by the custodian in
respect of the U.S. Government Obligation or a specific payment of principal or
interest on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depository receipt.
"Wholly-Owned Subsidiary" of a specified Person means any
Subsidiary (or, if such specified Person is the Company, a Restricted
Subsidiary), all of the outstanding voting securities (other than, in respect of
non-Domestic Subsidiaries, directors' qualifying shares or immaterial amounts of
shares held
<PAGE> 37
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by foreign nationals to the extent mandated by or advantageous under
applicable law) of which are owned, directly or indirectly, by such Person.
Section 1.02. Other Definitions.
The definitions of the following terms may be found in the
sections indicated as follows:
Term Defined in Section
- - ---- ------------------
"Affiliate Transaction"................................. 4.11(a)
"Agent Members"......................................... 2.16(a)
"Bankruptcy Law"........................................ 6.01
"Business Day".......................................... 11.07
"CEDEL"................................................. 2.16(a)
"Change of Control Offer"............................... 4.18(a)
"Change of Control Payment Date"........................ 4.18(b)
"Change of Control Purchase Price"...................... 4.18(a)
"Covenant Defeasance"................................... 9.03
"Custodian"............................................. 6.01
"Euroclear"............................................. 2.16(a)
"Event of Default"...................................... 6.01
"Excess Proceeds Offer"................................. 4.10(a)
"Global Notes".......................................... 2.16(a)
"Legal Defeasance"...................................... 9.02
"Legal Holiday"......................................... 11.07
"Offer Period".......................................... 4.10(b)
"Other Notes"........................................... 2.02
"Paying Agent".......................................... 2.04
"Purchase Date"......................................... 4.10(b)
"Registrar"............................................. 2.04
"Regulation S Global Notes"............................. 2.16(a)
"Regulation S Notes".................................... 2.02
"Reinvestment Date"..................................... 4.10(a)
"Restricted Global Note"................................ 2.16(a)
"Restricted Period"..................................... 2.16(f)
"Rule 144A Notes"....................................... 2.02
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
portion of such provision required to be incorporated herein in order for this
Indenture to be qualified under the TIA is incorporated by reference in and made
a part of this In-
<PAGE> 38
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denture. The following TIA terms used in this Indenture have the following
meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"indenture securityholder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor on the indenture securities" means the Company, the
Guarantors or any other obligor on the Notes.
All other terms used in this Indenture that are defined by the
TIA, defined in the TIA by reference to another statute or defined by SEC rule
have the meanings therein assigned to them.
Section 1.04. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it herein, whether defined
expressly or by reference;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural include
the singular;
(5) words used herein implying any gender shall apply to every gender;
and
(6) whenever in this Indenture there is mentioned, in any context,
principal, interest or any other amount payable under or with respect to
any Note, such mention shall be deemed to include mention of the payment
of Additional Interest to the extent that, in such context, Additional
Interest is, was or would be payable in respect thereof.
<PAGE> 39
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ARTICLE 2
THE NOTES
Section 2.01. Amount of Notes.
The Trustee shall authenticate Notes for original issue on the
Issue Date in the aggregate principal amount of $80,000,000, upon a written
order of the Company in the form of an Officers' Certificate of the Company.
Such written order shall specify the amount of Notes to be authenticated and the
date on which the Notes are to be authenticated.
Upon receipt of a Company Request and an Officers' Certificate
certifying that a registration statement relating to an exchange offer specified
in the Registration Rights Agreement is effective and that the conditions
precedent to a private exchange thereunder have been met, the Trustee shall
authenticate an additional series of Notes in an aggregate principal amount not
to exceed $80,000,000 for issuance in exchange for the Notes tendered for
exchange pursuant to such exchange offer registered under the Securities Act not
bearing the Private Placement Legend or pursuant to a Private Exchange. Exchange
Notes or Private Exchange Notes may have such distinctive series designations
and such changes in the form thereof as are specified in the Company Request
referred to in the preceding sentence.
Section 2.02. Form and Dating.
The Notes and the Trustee's certificate of authentication with
respect thereto shall be substantially in the form set forth in Exhibit A, which
is incorporated in and forms a part of this Indenture. The Notes may have
notations, legends or endorsements required by law, rule or usage to which the
Company is subject. Any such notations, legends or endorsements shall be
furnished to the Trustee in writing. Without limiting the generality of the
foregoing, Notes offered and sold to Qualified Institutional Buyers in reliance
on Rule 144A ("Rule 144A Notes") shall bear the legend and include the form of
assignment set forth in Exhibit B, Notes offered and sold in offshore
transactions in reliance on Regulation S ("Regulation S Notes") shall bear the
legend and include the form of assignment set forth in Exhibit C and Notes
offered and sold to Institutional Accredited Investors in transactions exempt
from registration under the Securities Act not made in reliance on Rule 144A or
Regulation S ("Other Notes") shall be represented
<PAGE> 40
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by Physical Notes bearing the Private Placement Legend. Each Note shall be dated
the date of its authentication.
The terms and provisions contained in the Notes shall
constitute, and are expressly made, a part of this Indenture and, to the extent
applicable, the Company, the Guarantor and the Trustee, by their execution and
delivery of this Indenture, expressly agree to such terms and provisions and
agree to be bound thereby.
The Notes may be presented for registration of transfer and
exchange at the offices of the Registrar in the Borough of Manhattan, The City
of New York, State of New York.
Section 2.03. Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one
Officer for the Company and each Guarantor (each of whom shall, in each case,
have been duly authorized by all requisite corporate actions) shall attest to,
the Notes for the Company and the Guarantees for each Guarantor by manual or
facsimile signature.
If an Officer whose signature is on a Note was an Officer at
the time of such execution but no longer holds that office at the time the
Trustee authenticates the Note, the Note shall be valid nevertheless.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder. Notwithstanding the foregoing, if
any Note shall have been authenticated and delivered hereunder but never issued
and sold by the Company, and the Company shall deliver such Note to the Trustee
for cancellation as provided in Section 2.12, for all purposes of this Indenture
such Note shall be deemed never to have been authenticated and delivered
hereunder and shall never be entitled to the benefits of this Indenture.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Notes. Unless otherwise provided
in the appointment, an authenticating agent may authenticate the Notes whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
<PAGE> 41
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Trustee includes authentication by such agent. An authenticating agent has the
same rights as an Agent to deal with the Company and Affiliates of the Company.
Each Paying Agent is designated as an authenticating agent for purposes of this
Indenture.
The Notes shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
Section 2.04. Registrar and Paying Agent.
The Company shall maintain an office or agency (which shall be
located in the Borough of Manhattan in The City of New York, State of New York)
where Notes may be presented for registration of transfer or for exchange (the
"Registrar"), an office or agency where Notes may be presented for payment (the
"Paying Agent") and an office or agency where notices and demands to or upon the
Company, if any, in respect of the Notes and this Indenture may be served. The
Company hereby initially designate the office of State Street Bank and Trust
Company, 61 Broadway, New York, New York 10006, Attn: Corporate Trust Division,
as their office or agency in the Borough of Manhattan, The City of New York. The
Registrar shall keep a register of the Notes and of their transfer and exchange.
The Company may have one or more additional Paying Agents. The term "Paying
Agent" includes any additional Paying Agent. Neither the Company nor any
Affiliate thereof may act as Paying Agent. The Company may change any Paying
Agent or Registrar without notice to any Noteholder.
The Company shall enter into an appropriate agency agreement
with any Agent not a party to this Indenture, which shall incorporate the
provisions of the TIA. The agreement shall implement the provisions of this
Indenture that relate to such Agent. The Company shall notify the Trustee of the
name and address of any such Agent. If the Company fails to maintain a Registrar
or Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to compensation in accordance with Section 7.07.
The Company initially designates the Corporate Trust Office of
the Trustee as Registrar, Paying Agent and agent for service of notices and
demands in connection with the Notes and this Indenture.
<PAGE> 42
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Section 2.05. Paying Agent to Hold Money in Trust.
Each Paying Agent shall hold in trust for the benefit of the
Noteholders or the Trustee all money held by the Paying Agent for the payment of
principal of or premium or interest on the Notes (whether such money has been
paid to it by the Company or any other obligor on the Notes), and the Company
and the Paying Agent shall notify the Trustee of any default by the Company (or
any other obligor on the Notes) in making any such payment. Money held in trust
by the Paying Agent need not be segregated except as required by law and in no
event shall the Paying Agent be liable for any interest on any money received by
it hereunder. The Company at any time may require the Paying Agent to pay all
money held by it to the Trustee and account for any funds disbursed and the
Trustee may at any time during the continuance of any Event of Default specified
in Section 6.01(1) or (2), upon written request to the Paying Agent, require
such Paying Agent to pay forthwith all money so held by it to the Trustee and to
account for any funds disbursed. Upon making such payment, the Paying Agent
shall have no further liability for the money delivered to the Trustee.
Section 2.06. Noteholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Noteholders. If the Trustee is not the Registrar, the Company
shall furnish to the Trustee at least five Business Days before each Interest
Payment Date, and at such other times as the Trustee may request in writing, a
list in such form and as of such date as the Trustee may reasonably require of
the names and addresses of the Noteholders.
Section 2.07. Transfer and Exchange.
Subject to Sections 2.16 and 2.17, when Notes are presented to
the Registrar with a request from the Holder of such Notes to register a
transfer or to exchange them for an equal principal amount of Notes of other
authorized denominations, the Registrar shall register the transfer as
requested. Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Registrar, duly executed by
the Holder thereof or his attorneys duly authorized in writing. To permit
registrations of transfers and exchanges, the Company shall issue and execute
and the Trustee shall authenticate new Notes (and the Guarantors shall execute
the Guarantees thereon evidencing such
<PAGE> 43
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transfer or exchange at the Registrar's request. No service charge shall be made
to the Noteholder for any registration of transfer or exchange. The Company may
require from the Noteholder payment of a sum sufficient to cover any transfer
taxes or other governmental charge that may be imposed in relation to a transfer
or exchange, but this provision shall not apply to any exchange pursuant to
Section 2.11, 3.06, 4.10, 4.18 or 8.05 (in which events the Company shall be
responsible for the payment of such taxes). The Trustee shall not be required to
exchange or register a transfer of any Note for a period of 15 days immediately
preceding the selection of Notes to be redeemed or any Note selected for
redemption.
Any Holder of the Global Note shall, by acceptance of such
Global Note, agree that transfers of the beneficial interests in such Global
Note may be effected only through a book entry system maintained by the Holder
of such Global Note (or its agent), and that ownership of a beneficial interest
in the Global Note shall be required to be reflected in a book entry.
Each Holder of a Note agrees to indemnify the Company and the
Trustee against any liability that may result from the transfer, exchange or
assignment of such Holder's Note in violation of any provision of this Indenture
and/or applicable U.S. Federal or state securities law.
Except as expressly provided herein, neither the Trustee nor
the Registrar shall have any duty to monitor the Company's compliance with or
have any responsibility with respect to the Company's compliance with any
Federal or state securities laws.
Section 2.08. Replacement Notes.
If a mutilated Note is surrendered to the Registrar or the
Trustee, or if the Holder of a Note claims that the Note has been lost,
destroyed or wrongfully taken, the Company shall issue and the Trustee shall
authenticate a replacement Note (and the Guarantors shall execute Guarantees
thereon) if the Holder of such Note furnishes to the Company and the Trustee
evidence reasonably acceptable to them of the ownership and the destruction,
loss or theft of such Note and if the requirements of Section 8-405 of the New
York Uniform Commercial Code as in effect on the date of this Indenture are met.
If required by the Trustee or the Company, an indemnity bond shall be posted,
sufficient in the judgment of both to protect the Company, the Trustee or any
Paying Agent from any loss that any of them may suffer if such Note is replaced.
The Company may charge such
<PAGE> 44
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Holder for the Company's reasonable out-of-pocket expenses in replacing such
Note and the Trustee may charge the Company for the Trustee's expenses
(including, without limitation, attorneys' fees and disbursements) in replacing
such Note. Every replacement Note shall constitute an additional contractual
obligation of the Company.
Section 2.09. Outstanding Notes.
The Notes outstanding at any time are all Notes that have been
authenticated by the Trustee except for (a) those canceled by it, (b) those
delivered to it for cancellation, (c) to the extent set forth in Sections 9.01
and 9.02, on or after the date on which the conditions set forth in Section 9.01
or 9.02 have been satisfied, those Notes theretofore authenticated and delivered
by the Trustee hereunder and (d) those described in this Section 2.09 as not
outstanding. Subject to Section 2.10, a Note does not cease to be outstanding
because an Issuer or one of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.08, it ceases to
be outstanding unless the Trustee receives written notice that the replaced Note
is held by a bona fide purchaser in whose hands such Note is a legal, valid and
binding obligation of the Company.
If the Paying Agent holds, in its capacity as such, on any
Maturity Date or on any optional redemption date, money sufficient to pay all
accrued interest and principal with respect to the Notes payable on that date
and is not prohibited from paying such money to the Holders thereof pursuant to
the terms of this Indenture, then on and after that date such Notes cease to be
outstanding and interest on them ceases to accrue.
Section 2.10. Treasury Notes.
In determining whether the Holders of the required principal
amount of Notes have concurred in any declaration of acceleration or notice of
default or direction, waiver or consent or any amendment, modification or other
change to this Indenture, Notes owned by an Issuer or any Affiliate of an Issuer
shall be disregarded as though they were not outstanding, except that for the
purposes of determining whether the Trustee shall be protected in relying on any
such declaration, notice, direction, waiver or consent or any amendment,
modification or other change to this Indenture, only Notes as to which a
Responsible Officer of the Trustee has received an Officers' Certificate stating
that such Notes are so owned shall be so dis-
<PAGE> 45
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regarded. Notes so owned which have been pledged in good faith shall not be
disregarded if the pledgee establishes the pledgee's right so to act with
respect to the Notes and that the pledgee is not the Company, any other obligor
or guarantor on the Notes or any of their respective Affiliates.
Section 2.11. Temporary Notes.
Until definitive Notes are prepared and ready for delivery,
the Company may prepare and the Trustee shall authenticate temporary Notes.
Temporary Notes shall be substantially in the form of definitive Notes but may
have variations that the Company consider appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Notes in exchange for temporary Notes. Until such
exchange, temporary Notes shall be entitled to the same rights, benefits and
privileges as definitive Notes.
Section 2.12. Cancellation.
The Company at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee shall cancel all Notes surrendered for registration of transfer,
exchange, payment, replacement or cancellation and shall (subject to the
record-retention requirements of the Exchange Act) destroy canceled Notes and
deliver a certificate of destruction thereof to the Company. The Company may not
reissue or resell, or issue new Notes to replace, Notes that the Company have
redeemed or paid, or that have been delivered to the Trustee for cancellation.
Section 2.13. Defaulted Interest.
If the Company defaults on a payment of interest on the Notes,
it shall pay the defaulted interest, plus (to the extent permitted by law) any
interest payable on the defaulted interest, pursuant to Section 4.01 hereof, to
the Persons who are Noteholders on a subsequent special record date, which date
shall be at least five Business Days prior to the payment date. The Company
shall fix such special record date and payment date and provide the Trustee at
least 20 days notice of the proposed amount of defaulted interest to be paid and
the special payment date and at the same time the Company shall deposit with the
Trustee the aggregate amount proposed to be paid in respect of such defaulted
interest. At least 15 days before such special
<PAGE> 46
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record date, the Company shall mail to each Noteholder a notice that states the
special record date, the payment date and the amount of defaulted interest, and
interest payable on defaulted interest, if any, to be paid. The Company may make
payment of any defaulted interest in any other lawful manner not inconsistent
with the requirements (if applicable) of any securities exchange on which the
Notes may be listed and, upon such notice as may be required by such exchange,
if, after written notice given by the Company to the Trustee of the proposed
payment pursuant to this sentence, such manner of payment shall be deemed
practicable by the Trustee.
Section 2.14. CUSIP Number.
The Company in issuing the Notes may use a "CUSIP" number, and
if so, such CUSIP number shall be included in notices of redemption or exchange
as a convenience to Holders; provided that any such notice may state that no
representation is made as to the correctness or accuracy of the CUSIP number
printed in the notice or on the Notes, and that reliance may be placed only on
the other identification numbers printed on the Notes. The Company shall
promptly notify the Trustee of any such CUSIP number used by the Company in
connection with the issuance of the Notes and of any change in the CUSIP number.
Section 2.15. Deposit of Moneys.
Prior to 10:00 a.m., New York City time, on each Interest
Payment Date and Maturity Date, the Company shall have deposited with the Paying
Agent in immediately available funds money sufficient to make cash payments, if
any, due on such Interest Payment Date or Maturity Date, as the case may be, in
a timely manner which permits the Trustee to remit payment to the Holders on
such Interest Payment Date or Maturity Date, as the case may be. The principal
and interest on Global Notes shall be payable to the Depository or its nominee,
as the case may be, as the sole registered owner and the sole holder of the
Global Notes represented thereby. The principal and interest on Physical Notes
shall be payable at the office of the Paying Agent. The Company shall deliver an
Officers' Certificate to the Trustee, at least 5 business days before any
applicable payment date, setting forth the amount of Additional Interest due per
$1,000 aggregate principal amount of Notes.
Section 2.16. Book-Entry Provisions for Global Notes.
(a) Rule 144A Notes initially shall be represented by one or
more notes in registered, global form without inter-
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est coupons (collectively, the "Restricted Global Note"). Regulation S Notes
initially shall be represented by one or more notes in registered, global form
without interest coupons (collectively, the "Regulation S Global Note," and,
together with the Restricted Global Note and any other global notes representing
Notes, the "Global Notes"). The Global Notes shall bear legends as set forth in
Exhibit D. The Global Notes initially shall (i) be registered in the name of the
Depository or the nominee of such Depository, in each case for credit to an
account of an Agent Member (or, in the case of the Regulation S Global Notes,
Agent Members of the Depository holding for Euroclear System ("Euroclear") and
Cedel Bank, S.A. ("CEDEL")), (ii) be delivered to the Trustee as custodian for
such Depository and (iii) bear legends as set forth in Exhibit B with respect to
Restricted Global Notes and Exhibit C with respect to Regulation S Global Notes.
Members of, or direct or indirect participants in, the
Depository ("Agent Members") shall have no rights under this Indenture with
respect to any Global Note held on their behalf by the Depository, or the
Trustee as its custodian, or under the Global Notes, and the Depository may be
treated by the Company, the Trustee and any agent of the Company or the Trustee
as the absolute owner of the Global Note for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Trustee or any
agent of the Company or the Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Depository or
impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a Holder of any
Note.
(b) Transfers of Global Notes shall be limited to transfer in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Notes may be transferred
or exchanged for Physical Notes in accordance with the rules and procedures of
the Depository and the provisions of Section 2.17. In addition, a Global Note
shall be exchangeable for Physical Notes if (i) the Depository (x) notifies the
Company that it is unwilling or unable to continue as depository for such Global
Note and the Company thereupon fail to appoint a successor depository or (y) has
ceased to be a clearing agency registered under the Exchange Act, (ii) the
Company, at its option, notifies the Trustee in writing that it elects to cause
the issuance of such Physical Notes or (iii) there shall have occurred and be
continuing a Default or an Event of Default with respect to the Notes. In all
cases, Physical Notes delivered in exchange for
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any Global Note or beneficial interests therein shall be registered in the
names, and issued in any approved denominations, requested by or on behalf of
the Depository (in accordance with its customary procedures).
(c) In connection with any transfer or exchange of a portion
of the beneficial interest in any Global Note to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Notes are to be
issued) reflect on its books and records the date and a decrease in the
principal amount of the Global Note in an amount equal to the principal amount
of the beneficial interest in the Global Note to be transferred, and the Company
shall execute, and the Trustee shall upon receipt of a written order from the
Company authenticate and make available for delivery, one or more Physical Notes
of like tenor and amount.
(d) In connection with the transfer of Global Notes as an
entirety to beneficial owners pursuant to paragraph (b), the Global Notes shall
be deemed to be surrendered to the Trustee for cancellation, and the Company
shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in writing in exchange for its
beneficial interest in the Global Notes, an equal aggregate principal amount of
Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Note delivered
in exchange for an interest in a Global Note pursuant to paragraph (b), (c) or
(d) shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of
Section 2.17, bear the Private Placement Legend or, in the case of the
Regulation S Global Note, the legend set forth in Exhibit C, in each case,
unless the Company determines otherwise in compliance with applicable law.
(f) On or prior to the 40th day after the later of the
commencement of the offering of the Notes represented by a Regulation S Global
Note and the original issue date of such Notes (such period through and
including such 40th day, the "Restricted Period"), a beneficial interest in the
Regulation S Global Note may be held only through Euroclear or CEDEL, as
indirect participants in DTC, unless transferred to a Person who takes delivery
in the form of an interest in the corresponding Restricted Global Note, only
upon receipt by the Trustee of a written certification from the transferor to
the effect that such transfer is being made (i)(a) to a Person who the
transferor reasonably believes is a Qualified Institutional Buyer in a
transaction meeting the requirements of Rule 144A or (b) pur-
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suant to another exemption from the registration requirements under the
Securities Act which is accompanied by an opinion of counsel regarding the
availability of such exemption and (ii) in accordance with all applicable
securities laws of any state of the United States or any other jurisdiction.
(g) Beneficial interests in the Restricted Global Note may be
transferred to a Person who takes delivery in the form of an interest in the
Regulation S Global Note, whether before or after the expiration of the
Restricted Period, only if the transferor first delivers to the Trustee a
written certificate to the effect that such transfer is being made in accordance
with Rule 903 or 904 of Regulation S or Rule 144 (if available) and that, if
such transfer occurs prior to the expiration of the Restricted Period, the
interest transferred shall be held immediately thereafter through Euroclear or
CEDEL.
(h) Any beneficial interest in one of the Global Notes that is
transferred to a Person who takes delivery in the form of an interest in another
Global Note shall, upon transfer, cease to be an interest in such Global Note
and become an interest in such other Global Note and, accordingly, shall
thereafter be subject to all transfer restrictions and other procedures
applicable to beneficial interests in such other Global Note for as long as it
remains such an interest.
(i) The Holder of any Global Note may grant proxies and
otherwise authorize any Person, including Agent Members and Persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Notes.
Section 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors
and Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted Note
to any Institutional Accredited Investor which is not a QIB or to any Non-U.S.
Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Note, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after August
13, 2000 or such other date as such Note shall be freely transferable
under Rule 144 as certified in an Officers' Certificate or (y) (1) in
the case of a transfer to an Institutional Accredited In-
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vestor which is not a QIB (excluding Non-U.S. Persons), the proposed
transferee has delivered to the Registrar a certificate substantially
in the form of Exhibit E hereto or (2) in the case of a transfer to a
Non-U.S. Person (including a QIB), the proposed transferor has
delivered to the Registrar a certificate substantially in the form of
Exhibit F hereto; provided that in the case of a transfer of a Note
bearing the Private Placement Legend for a Note not bearing the Private
Placement Legend, the Registrar has received an Officers' Certificate
authorizing such transfer; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in a Global Note, upon receipt by the Registrar of
(x) the certificate, if any, required by paragraph (i) above and (y)
instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in a Global Note to be transferred,
and (b) the Registrar shall reflect on its books and records the date and an
increase in the principal amount of a Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note transferred or
the Company shall execute and the Trustee shall authenticate and make available
for delivery one or more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply
with respect to the registration of any proposed registration of transfer of a
Note constituting a Restricted Note to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on such Holder's Note stating, or has otherwise advised
the Company and the Registrar in writing, that the sale has been made
in compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on such Holder's Note stating, or
has otherwise advised the Company and the Registrar in writing, that it
is purchasing the Note for its own account or an account with respect
to which it exercises sole investment discretion and that it and any
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such account is a QIB within the meaning of Rule 144A, and is aware
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Company as it has requested pursuant to Rule 144A or has determined not
to request such information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in the Restricted Global Note, upon
receipt by the Registrar of instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of the Restricted Global Note in an amount equal to
the principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.
(c) Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Notes not bearing the Private Placement
Legend, the Registrar shall deliver Notes that do not bear the Private Placement
Legend. Upon the registration of transfer, exchange or replacement of Notes
bearing the Private Placement Legend, the Registrar shall deliver only Notes
that bear the Private Placement Legend unless (i) it has received the Officers'
Certificate required by paragraph (a)(i)(x) of this Section 2.17, (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Company to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act or (iii) such Note has been sold pursuant to an effective
registration statement under the Securities Act and the Registrar has received
an Officers' Certificate from the Company to such effect.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it shall transfer such Note only as provided in this
Indenture.
The Registrar shall retain for a period of two years copies of
all letters, notices and other written communications received pursuant to
Section 2.16 or this Section 2.17. The
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Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable notice to the Registrar.
Section 2.18. Computation of Interest.
Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months.
ARTICLE 3
REDEMPTION
Section 3.01. Notices to Trustee.
If the Company elects to redeem Notes pursuant to paragraph 5
of the Notes, at least 45 days prior to the Redemption Date or during such other
period as the Trustee may agree to (which agreement shall not unreasonably be
withheld) the Company shall notify the Trustee in writing of the Redemption
Date, the principal amount of Notes to be redeemed and the redemption price, and
deliver to the Trustee an Officers' Certificate stating that such redemption
shall comply with the conditions contained in paragraph 6 of the Notes, as
appropriate.
Section 3.02. Selection by Trustee of Notes to Be Redeemed.
In the event that fewer than all of the Notes are to be
redeemed, the Trustee shall select the Notes to be redeemed, if the Notes are
listed on a national securities exchange, in accordance with the rules of such
exchange or, if the Notes are not so listed, either on a pro rata basis or by
lot, or such other method as it shall deem fair and equitable; provided,
however, that the Company shall have previously notified the Trustee in writing
of any such exchange on which the Notes are listed, and provided, further, that
if a partial redemption is made with the proceeds of a Public Equity Offering,
selection of the Notes or portion thereof for redemption shall be made by the
Trustee on a pro rata basis, unless such a method is prohibited. The Trustee
shall promptly notify the Company of the Notes selected for redemption and, in
the case of any Notes selected for partial redemption, the principal amount
thereof to be redeemed. The Trustee may select for redemption portions of
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the principal of the Notes that have denominations larger than $1,000. Notes and
portions thereof the Trustee selects shall be redeemed in amounts of $1,000 or
whole multiples of $1,000. For all purposes of this Indenture unless the context
otherwise requires, provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
Section 3.03. Notice of Redemption.
At least 30 days, and no more than 60 days, before a
Redemption Date, the Company shall mail, or cause to be mailed, a notice of
redemption by first-class mail to each Holder of Notes to be redeemed at his or
her last address as the same appears on the registry books maintained by the
Registrar pursuant to Section 2.03 hereof.
The notice shall identify the Notes to be redeemed (including
the CUSIP numbers thereof) and shall state:
(1) the Redemption Date and the amount of premium and
accrued interest to be paid;
(2) the redemption price and the amount of premium and
accrued interest to be paid;
(3) if any Note is being redeemed in part, the portion of
the principal amount of such Note to be redeemed and that, after the
Redemption Date and upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion shall be issued;
(4) the name and address of the Paying Agent;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
(6) that unless the Company defaults in making the
redemption payment, interest on Notes called for redemption ceases to
accrue on and after the Redemption Date;
(7) the provision of paragraph 6 of the Notes pursuant to
which the Notes called for redemption are being redeemed; and
(8) the aggregate principal amount of Notes that are being
redeemed.
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At the Company's written request made at least five Business
Days prior to the date on which notice is to be given, the Trustee shall give
the notice of redemption in the Company's name and at the Company's sole
expense.
Section 3.04. Effect of Notice of Redemption.
Once the notice of redemption described in Section 3.03 is
mailed, Notes called for redemption become due and payable on the Redemption
Date and at the redemption price, including any premium, plus interest accrued
to the Redemption Date. Upon surrender to the Paying Agent, such Notes shall be
paid at the redemption price, including any premium, plus interest accrued to
the Redemption Date, provided that if the Redemption Date is after a regular
record date and on or prior to the Interest Payment Date, the accrued interest
shall be payable to the Holder of the redeemed Notes registered on the relevant
record date, and provided, further, that if a Redemption Date is a Legal
Holiday, payment shall be made on the next succeeding Business Day and no
interest shall accrue for the period from such Redemption Date to such
succeeding Business Day.
Section 3.05. Deposit of Redemption Price.
On or prior to 10:00 A.M., New York City time, on each
Redemption Date, the Company shall deposit with the Paying Agent in immediately
available funds money sufficient to pay the redemption price of and accrued
interest on all Notes to be redeemed on that date other than Notes or portions
thereof called for redemption on that date which have been delivered by the
Company to the Trustee for cancellation.
On and after any Redemption Date, if money sufficient to pay
the redemption price of and accrued interest on Notes called for redemption
shall have been made available in accordance with the preceding paragraph, the
Notes called for redemption shall cease to accrue interest and the only right of
the Holders of such Notes shall be to receive payment of the redemption price of
and, subject to the first proviso in Section 3.04, accrued and unpaid interest
on such Notes to the Redemption Date. If any Note surrendered for redemption
shall not be so paid, interest shall be paid, from the Redemption Date until
such redemption payment is made, on the unpaid principal of the Note and any
interest not paid on such unpaid principal, in each case, at the rate and in the
manner provided in the Notes.
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Section 3.06. Notes Redeemed in Part.
Upon surrender of a Note that is redeemed in part, the Trustee
shall authenticate for a Holder a new Note equal in principal amount to the
unredeemed portion of the Note surrendered.
ARTICLE 4
COVENANTS
Section 4.01. Payment of Notes.
The Company shall pay the principal of and interest (including
all Additional Interest as provided in the Registration Rights Agreement) on the
Notes on the dates and in the manner provided in the Notes and this Indenture.
An installment of principal or interest shall be considered paid on the date it
is due if the Trustee or Paying Agent holds on that date money designated for
and sufficient to pay such installment.
The Company shall pay interest on overdue principal (including
post-petition interest in a proceeding under any Bankruptcy Law), and overdue
interest, to the extent lawful, at the rate specified in the Notes.
Section 4.02. SEC Reports.
(a) The Company and the Guarantors shall file with the SEC all
information, documents and reports to be filed with the SEC pursuant to Section
13 or 15(d) of the Exchange Act, in the case of the Company, whether or not the
Company is required to file with the SEC pursuant to Section 13 or 15(d) of the
Exchange Act, and in the case of the Guarantors, only to the extent subject to
such filing requirements; provided, however, that the Company shall not be
required to make any such filings prior to the date on which the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 1998
would have been required to be filed, if, at the time such filings would have
been required to be made with the SEC, either (i) the Company shall have
provided to each Holder of the Notes the information that would have been
required to be filed or (ii) the Exchange Registration Statement (as such term
is defined in the Registration Rights Agreement) has been filed with the SEC but
has not yet been declared effective and copies of the Ex-
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change Registration Statement and any amendments thereto (to the extent such
Registration Statement and/or amendments contain additional information not
disclosed in the Offering Memorandum that would have been the subject of a
filing required to be made under Section 13 or 15(d) of the Exchange Act) have
been provided to each Holder of the Notes, provided that any exhibits to the
Exchange Registration Statement (or any amendments thereto) need not be
delivered to any Holder of the Notes, but sufficient copies thereof shall be
furnished to the Trustee as reasonably requested to permit the Trustee to
deliver any such exhibits to any Holder of the Notes upon request. The Company
and the Guarantors (at their own expense) shall file with the Trustee within 15
days after they file them with the SEC, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the SEC may by rules and regulations prescribe) which the
Company and the Guarantors file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act. Upon qualification of this Indenture under the TIA, the
Company shall also comply with the provisions of TIA ss. 314(a). Delivery of
such reports, information and documents to the Trustee is for informational
purposes only and the Trustee's receipt of such shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein, including the Company's compliance with any of
their covenants hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
(b) At the Company's expense, regardless of whether the
Company is required to furnish such reports and other information referred to in
paragraph (a) above to their equityholders pursuant to the Exchange Act, the
Company shall cause such reports and other information to be mailed to the
Holders at their addresses appearing in the register of Notes maintained by the
Registrar within 15 days after they file them with the SEC.
(c) The Company shall, upon request, provide to any Holder of
Notes or any prospective transferee of any such Holder any information
concerning the Company (including financial statements) necessary in order to
permit such Holder to sell or transfer Notes in compliance with Rule 144A under
the Securities Act; provided, however, that the Company shall not be required to
furnish such information in connection with any request made on or after the
date which is two years from the later of (i) the date such Note (or any
predecessor Note) was acquired from the Company or (ii) the date such Note (or
any predecessor Note) was last acquired from an "affiliate" of the
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Company within the meaning of Rule 144 under the Securities Act.
Section 4.03. Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantors covenant (to the extent
that it may lawfully do so) that it shall not at any time insist upon, or plead
(as a defense or otherwise) or in any manner whatsoever claim or take the
benefit or advantage of, any stay or extension or any usury law or other law
which would prohibit or forgive each of the Company or the Guarantors from
paying all or any portion of the principal of, premium, if any, and/or interest
on the Notes as contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the performance of this
Indenture; and (to the extent that they may lawfully do so) each of the Company
and the Guarantors hereby expressly waive all benefit or advantage of any such
law, and covenant that they will not hinder, delay or impede the execution of
any power herein granted to the Trustee, but will suffer and permit the
execution of every such power as though no such law had been enacted.
Section 4.04. Compliance Certificate.
(a) The Company shall deliver to the Trustee, within 90 days
after the end of each fiscal year and on or before 45 days after the end of the
first, second and third quarters of each fiscal year, an Officers' Certificate
stating that a review of the activities of the Company and its Subsidiaries
during such fiscal year or fiscal quarter, as the case may be, has been made
under the supervision of the signing Officers with a view to determining whether
the Company has kept, observed, performed and fulfilled their obligations under
this Indenture, and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and are not in default in the performance or observance of any of the
terms, provisions and conditions hereof (or, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of which
he or she may have knowledge and what action they are taking or propose to take
with respect thereto) and that to the best of his or her knowledge no event has
occurred and remains in existence by reason of which payments on account of the
principal of or interest, if any, on the Notes is prohibited or if such event
has occurred, a description of the
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event and what action the Company is taking or proposes to take with respect
thereto.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
year-end financial statements delivered pursuant to Section 4.02 above shall be
accompanied by a written statement of the Company's independent public
accountants (who shall be a firm of established national reputation) that in
making the examination necessary for certification of such financial statements
nothing has come to their attention which would lead them to believe that the
Company has violated any provisions of this Article 4 or Article 5 of this
Indenture or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall not
be liable directly or indirectly for any failure to obtain knowledge of any such
violation.
(c) The Company shall, so long as any of the Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
(d) The Company's fiscal year currently ends on March 31. The
Company shall provide notice to the Trustee of any change in fiscal year.
Section 4.05. Taxes.
The Company shall, and shall cause each of its Subsidiaries
to, pay prior to delinquency all material taxes, assessments, and governmental
levies except as contested in good faith and by appropriate proceedings.
Section 4.06. Limitation on Additional Indebtedness.
The Company shall not, and shall not permit any Restricted
Group Member of the Company to, directly or indirectly, incur any Indebtedness
(including Acquired Indebtedness and including Disqualified Capital Stock);
provided that the Company may incur Indebtedness (including Acquired
Indebtedness or Disqualified Capital Stock) if (a) after giving effect to the
incurrence of such Indebtedness and the receipt and application of the proceeds
thereof, the Company's Consolidated Fixed Charge Coverage Ratio is at least 2.0
to 1 if the Indebtedness is incurred prior to December 31, 1999 and 2.25 to 1 if
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the Indebtedness is incurred thereafter and (b) no Default or Event of Default
shall have occurred and be continuing at the time or as a consequence of the
incurrence of such Indebtedness.
Notwithstanding the foregoing, (a) the Company and its
Restricted Group Members may incur Permitted Indebtedness; (b) nothing in this
Section 4.06 shall prohibit or restrict the ability of Ranger to incur
Indebtedness directly except to the extent such Indebtedness is guaranteed by
the Company or any Restricted Group Member; and (c) the issuance of Indebtedness
representing only PIK Interest shall not constitute an incurrence of
Indebtedness for purposes of this covenant.
The Company shall not, and shall not permit any of its
Restricted Group Members to, incur any Indebtedness which by its terms (or by
the terms of any agreement governing such Indebtedness) is subordinated in right
of payment to any other Indebtedness of the Company or such Restricted Group
Member unless such Indebtedness is also by its terms (or by the terms of any
agreement governing such Indebtedness) made expressly subordinate in right of
payment to the Notes pursuant to subordination provisions that are substantively
identical to the subordination provisions of such Indebtedness (or such
agreement) that are most favorable to the holders of any other Indebtedness of
the Company or such Restricted Group Member, as the case may be.
Any Indebtedness of an Unrestricted Subsidiary or Permitted
Joint Venture that is not incurred by such Unrestricted Subsidiary or Permitted
Joint Venture on a basis that is entirely non-recourse to the Company and its
Restricted Group Members shall, for purposes of this covenant and all
determinations, hereunder with respect to both the original incurrence of such
Indebtedness and any subsequent determinations, hereunder relating to any other
Indebtedness, be deemed Indebtedness of a Restricted Group Member to the extent
of such recourse.
Section 4.07. Limitation on Preferred Stock of Restricted Group
Members.
The Company shall not permit (a) any Restricted Subsidiary to
issue any Preferred Stock (other than to the Company or one or more of its
Domestic Wholly-Owned Subsidiaries) or permit any Person (other than the Company
or one or more of its Domestic Wholly-Owned Subsidiaries) to hold any such
Preferred Stock or (b) any Restricted Joint Venture to issue any Pre-
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ferred Stock (other than to the partners, owners or other equity holders in such
Restricted Joint Venture) or permit any Person (other than the partners, owners
or other equity holders in such Restricted Joint Venture) to hold any such
Preferred Stock.
Section 4.08. Limitation on Capital Stock of Restricted
Group Members.
The Company shall not (i) sell, pledge, hypothecate or
otherwise convey or dispose of any of its Capital Stock of a Restricted Group
Member (other than under the Senior Credit Facility or one or more of the credit
facilities permitted to be secured pursuant to clause (xi) of the definition of
"Permitted Liens") or (ii) permit any of its Restricted Group Members to issue
any Capital Stock, other than to the Company or a Wholly-Owned Subsidiary of the
Company or, in the case of a Restricted Joint Venture to its partners, owners or
other equity holders. The foregoing restrictions shall not apply to (a) an Asset
Sale made in compliance with Section 4.10, (b) the issuance to or ownership by
directors of directors' qualifying shares or the ownership by foreign nationals
of Capital Stock of any Restricted Group Member to the extent mandated by
applicable law, (c) the issuance of Capital Stock of a Subsidiary that becomes a
Restricted Joint Venture or Permitted Joint Venture as a result thereof, (d) the
issuance of Preferred Stock in accordance with Section 4.07 or (e) the issuance
of Capital Stock by a Restricted Joint Venture so long as the proceeds thereof
are either distributed proportionately to the other partners, owners or other
equity holders in such Restricted Joint Venture, used to repurchase the entire
equity interests of one or more other partners, owners or other equity holders
or applied in accordance with Section 4.10(iii)(B).
Section 4.09. Limitation on Restricted Payments.
The Company shall not make, and shall not permit any of its
Restricted Group Members to, directly or indirectly, make, any Restricted
Payment, unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or immediately after giving effect to such
Restricted Payment;
(b) immediately after giving pro forma effect to such
Restricted Payment, the Company could incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) under Section 4.06;
and
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(c) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the Issue Date
does not exceed the sum of (1) 50% of the cumulative Consolidated Net
Income of the Company subsequent to the Issue Date (or minus 100% of any
cumulative deficit in Consolidated Net Income during such period) plus (2)
100% of the aggregate Net Proceeds and the fair market value of securities
or other property received by the Company from the issue or sale, after
the Issue Date, of Capital Stock (other than Disqualified Capital Stock or
Capital Stock of the Company issued to any Subsidiary of the Company or a
Restricted Joint Venture) of the Company or any Indebtedness or other
securities of the Company convertible into or exercisable or exchangeable
for Capital Stock (other than Disqualified Capital Stock) of the Company
which has been so converted or exercised or exchanged, as the case may be,
plus (3) without duplication of any amounts included in clauses (1) and
(2) above, 100% of the aggregate net proceeds of any equity contribution
received by the Company from a holder of the Company's Capital Stock,
excluding, in the case of clauses (2) and (3) above, any Net Proceeds from
a Public Offering to the extent used to redeem the Notes plus (4)
$2,500,000. For purposes of determining under this clause (c) the amount
expended for Restricted Payments, cash distributed shall be valued at the
face amount thereof and property other than cash shall be valued at its
fair market value determined, in good faith, by the Board of Directors of
the Company.
The provisions of this Section 4.09 shall not prohibit: (i) the payment
of any distribution within 60 days after the date of declaration thereof, if at
such date of declaration such payment would comply with the provisions of this
Agreement; (ii) the repurchase redemption or other acquisition or retirement of
any shares of Capital Stock of the Company or Indebtedness of the Company
subordinated to the Notes, by conversion into, or by or in exchange for, shares
of Capital Stock (other than Disqualified Capital Stock), or out of, the Net
Proceeds of the substantially concurrent sale (other than to a Subsidiary of
the Company or a Restricted Joint Venture) of other shares of Capital Stock of
the Company (other than Disqualified Capital Stock); (iii) the redemption or
retirement of Indebtedness of the Company subordinated to the Notes in exchange
for, by conversion into, or out of the Net Proceeds of, a substantially
concurrent sale or incurrence of Indebtedness (other than any Indebtedness owed
to a Subsidiary or a Restricted Joint Venture) of the Company that (A) is
contractu-
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ally subordinated in right of payment to the Notes to at least the
same extent as the subordinated Indebtedness being redeemed or retired, (B) is
scheduled to mature either (I) no earlier than the Indebtedness being redeemed
or retired, or (II) after the maturity date of the Notes, (C) the portion, if
any, of which Indebtedness that is scheduled to mature on or prior to the
maturity date of the Notes has a weighted average life to maturity at the time
such Indebtedness is incurred that is equal to or greater than the weighted
average life to maturity of the portion of the Indebtedness being redeemed or
retired that is scheduled to mature on or prior to the maturity date of the
Notes, and (D) is in an aggregate principal amount that is equal to or less
than the sum of (x) the aggregate principal then outstanding under the
Indebtedness being redeemed or retired, (y) the amount of accrued and unpaid
interest, if any, and premiums owed, if any, not in excess of preexisting
prepayment provisions on such Indebtedness being redeemed or retired and (z)
the amount of customary fees, expenses and costs related to the incurrence of
such Indebtedness; (iv) the retirement of any shares of Disqualified Capital
Stock of the Company by conversion into, or by exchange for, shares of
Disqualified Capital Stock of the Company, or out of the Net Proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company or a
Restricted Joint Venture) of other shares of Disqualified Capital Stock of the
Company that (A) is subordinated to the Notes to at least the same extent as
the Disqualified Capital Stock being retired, (B) is scheduled to be
mandatorily redeemed, if at all, either (I) no earlier than the Disqualified
Capital Stock being retired, or (II) after the maturity date of the Notes, (C)
the portion, if any, of which Disqualified Capital Stock that is scheduled to
be mandatorily redeemed on or prior to the maturity date of the Notes has a
weighted average life to mandatory redemption at the time such Disqualified
Capital Stock is issued that is equal to or greater than the weighted average
life to mandatory redemption of the portion of the Disqualified Capital Stock
being retired that is scheduled to be mandatorily redeemed on or prior to the
maturity date of the Notes, and has an aggregate liquidation preference that is
equal to or less than the sum of (a) the aggregate liquidation preference then
outstanding of the Disqualified Capital Stock being retired, (b) the amount of
accrued and unpaid dividends, if any, and premiums owed, if any, not in excess
of preexisting redemption provisions on such Disqualified Capital Stock being
retired and (c) the amount of customary fees, expenses and costs related to the
issuance of such Disqualified Capital Stock; (v) payments to the Initial
Purchaser, Tioga or their respective Affiliates representing customary
investment banking fees for services rendered; (vi)
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payments to Hancock representing insurance premiums not in excess of prevailing
market rates; (vii) payments to Tioga of a chairman's fee pursuant to the
investment agreement in effect on the Issue Date; (viii) the payment of
distributions to Ranger solely for the purpose of enabling Ranger to pay its
reasonable, ordinary course operating and administrative expenses and taxes,
the amount of which in any fiscal year shall not exceed $200,000; and (ix) so
long as no Default or Event of Default shall have occurred and be continuing at
the time of or immediately after giving effect to such payment, the payment of
distributions to Ranger for the sole purpose of purchasing, redeeming or
otherwise acquiring for value shares of Capital Stock of Ranger (other than
Disqualified Capital Stock) or options on such shares held by Ranger's, the
Company's or its Subsidiaries' officers or employees or former officers or
employees (or their estates or beneficiaries under their estates) upon the
death, disability, retirement or termination of employment of such current or
former officers or employees pursuant to the terms of an employee benefit plan
or any other agreement pursuant to which such shares of Capital Stock or
options were issued or pursuant to a severance, buy-sell or right of first
refusal agreement with such current or former officer or employee; provided
that the aggregate cash consideration paid, or distributions or payments made,
pursuant to this clause (ix) shall not exceed $250,000 in any fiscal year;
provided, further, that the Company may carry over and make for one fiscal
year, in addition to the amounts permitted for such fiscal year, the amount of
such distributions permitted to have been made, but not made, in the
immediately preceding fiscal year; provided, further, that such distributions
in any fiscal year of the Company shall be deemed made first from the
aforementioned permitted amount for such fiscal year and then from any amount
carried over into such fiscal year in accordance with this proviso.
Notwithstanding the foregoing, the amount of any payments made in reliance on
clauses (i) and (ix) above shall reduce the amount otherwise available for
Restricted Payments pursuant to subparagraphs (a)-(c) above.
Not later than the date of making any Restricted Payment, the Company
shall deliver to the Purchaser on behalf of the Holders an Officers'
Certificate stating that such Restricted Payment is permitted and setting forth
the basis upon which the calculations required by this Section 4.09 were
computed, which calculations may be based upon the Company's latest available
financial statements, and, to the extent that the absence of a Default or an
Event of Default is a condition to the making of such Restricted Payment, that
no Default or Event of Default exists and is continuing and no Default or Event
of
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Default shall occur immediately after giving effect to any Restricted
Payments.
Section 4.10. Limitation on Certain Asset Sales.
(a) The Company shall not, and shall not permit any of its Restricted
Group Members to, consummate an Asset Sale unless (i) the Company or such
Restricted Group Member, as the case may be, receives consideration at the time
of such sale or other disposition at least equal to the fair market value
thereof (as determined in good faith by the Board of Directors of the Company,
and evidenced by a board resolution); (ii) not less than 75% of the
consideration received by the Company or its Subsidiaries, as the case may be,
is in the form of cash or Temporary Cash Investments; and (iii) the Asset Sale
Proceeds received by the Company or such Restricted Group Member are applied
(A) first, to the extent the assets that are the subject of such Asset Sale
constitute collateral securing only the Senior Credit Facility or Purchase
Money Indebtedness and the Company is required to prepay, repay or purchase
debt or to reduce an unused commitment to lend under the Senior Credit Facility
or such Purchase Money Indebtedness, as the case may be, within 180 days
following the receipt of the Asset Sale Proceeds from any Asset Sale, but only
to the extent that any such repayment shall result in a permanent reduction of
the commitments thereunder in an amount equal to the principal amount so
repaid; (B) second, to the extent the Company elects, to an investment in
assets used or useful in businesses similar or ancillary to the business of the
Company or such Restricted Group Member as conducted at the time of such Asset
Sale, provided that such investment occurs on or prior to the 365th day
following receipt of such Asset Sale Proceeds (the "Reinvestment Date"); and
(C) third, if, on the Reinvestment Date with respect to any Asset Sale, the
Available Asset Sale Proceeds exceed $5,000,000, the Company shall apply an
amount equal to such Available Asset Sale Proceeds to an offer to repurchase
the Notes, at a purchase price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of repurchase (an
"Excess Proceeds Offer").
(b) If the Company is required to make an Excess Proceeds Offer, the
Company shall mail, within 30 days following the Reinvestment Date, a notice to
the Holders stating, among other things: (1) that such Holders have the right
to require the Company to apply the Available Asset Sale Proceeds to repurchase
such Notes at a purchase price in cash equal to 100% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase; (2)
the purchase date
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(the "Purchase Date"), which shall be no earlier than 30 days and not later
than 60 days from the date such notice is mailed; (3) the instructions,
determined by the Company, that each Holder must follow in order to have such
Notes repurchased; and (4) the calculations used in determining the amount of
Available Asset Sale Proceeds to be applied to the repurchase of such Notes.
The Excess Proceeds Offer shall remain open for a period of 20 business days
following its commencement (the "Offer Period"). The notice, which shall govern
the terms of the Excess Proceeds Offer, shall state:
(1) that the Excess Proceeds Offer is being made pursuant to this
covenant and the length of time the Excess Proceeds Offer shall remain
open;
(2) the purchase price and the Purchase Date;
(3) that any Note not tendered or accepted for payment shall continue
to accrue interest;
(4) that any Note accepted for payment pursuant to the Excess
Proceeds Offer shall cease to accrue interest on and after the Purchase
Date and the payment of the purchase price to the Holder thereof;
(5) that Holders electing to have a Note purchased pursuant to any
Excess Proceeds Offer shall be required to surrender the Note, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Note completed, to the Company, a depositary, if appointed by the Company,
or a paying agent at the address specified in the notice prior to the
close of business on the business day preceding the Purchase Date;
(6) that Holders shall be entitled to withdraw their election if the
Company, depositary or paying agent, as the case may be, receives, not
later than the expiration of the Offer Period, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the
Note the Holder delivered for purchase and a statement that such Holder is
withdrawing its election to have the Note purchased;
(7) that, if the aggregate principal amount of Notes surrendered by
Holders exceeds the Available Asset Sale Proceeds the Company shall select
the Notes to be purchased on a pro rata basis (with such adjustments as
may be deemed appropriate by the Company so that only Notes in
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denominations of $1,000, or integral multiples thereof, shall be
purchased); and
(8) that Holders whose Notes were purchased only in part shall be
issued new Notes equal in principal amount to the unpurchased portion of
the Notes surrendered.
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a pro rata basis to the extent necessary, Notes
or portions thereof tendered pursuant to the Excess Proceeds Offer, and shall
promptly (but in any case not later than five days after the Purchase Date)
mail or deliver to each tendering Holder an amount equal to the purchase price
of the Note tendered by such Holder and accepted by the Company for purchase,
and the Company shall promptly issue a new Note and the Guarantors shall
endorse the guarantee thereon and the Company shall mail or make available for
delivery such new Note to such Holder equal in principal amount to any
unpurchased portion of the Note surrendered. Any Note not so accepted shall be
promptly mailed or delivered by the Company to the Holder thereof. The Company
shall publicly announce the results of the Excess Proceeds Offer on the
Purchase Date by sending a press release to the Dow Jones News Service or
similar business news service in the United States. If an Excess Proceeds Offer
is not fully subscribed, the Company may retain that portion of the Available
Asset Sale Proceeds not required to repurchase Notes and use such portion for
general corporate purposes, and such retained portion shall not be considered
in the calculation of "Available Asset Sale Proceeds" with respect to any
subsequent offer to purchase Notes.
In the event of the transfer of substantially all of the property and
assets of the Company and its Restricted Group Members as an entirety to a
Person in a transaction permitted by Section 5.01, the successor Person shall
be deemed to have sold the properties and assets of the Company and its
Restricted Group Members not so transferred for purposes of this covenant and
shall comply with the provision of this covenant with respect to such deemed
sale as if it were an Asset Sale.
Section 4.11. Limitation on Transactions with Affiliates.
(a) The Company shall not, and shall not permit any of its Restricted
Group Members to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of assets, property or services) with any
Affiliate or holder of 10% or more of the Company's
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Common Stock (an "Affiliate Transaction") or extend, renew, waive or otherwise
modify the terms of any Affiliate Transaction entered into prior to the date of
this Indenture if such extension, renewal, waiver or other modification is more
disadvantageous to the Holders in any material respect than the original
agreement as in effect on the date of this Indenture unless (i) such Affiliate
Transaction is between or among the Company and/or its Wholly-Owned
Subsidiaries; or (ii) the terms of such Affiliate Transaction are at least as
favorable as the terms which could be obtained by the Company or such
Restricted Group Member, as the case may be, in a comparable transaction made
on an arm's-length basis between unaffiliated parties. In any Affiliate
Transaction involving an amount or having a value in excess of $1,000,000 which
is not permitted under clause (i) above, the Company shall obtain a resolution
of the Board of Directors certifying that such Affiliate Transaction complies
with clause (ii) above. In any Affiliate Transaction with a value in excess of
$5,000,000 which is not permitted under clause (i) above the Company shall
obtain a written opinion as to the fairness of such a transaction from an
independent investment banking firm.
(b) The limitations set forth in this Section 4.11 shall not apply to
(i) any Restricted Payment that is not prohibited by Section 4.09, (ii) any
transaction pursuant to an agreement, arrangement or understanding existing on
the date of this Indenture, (iii) any transaction, approved by the Board of
Directors of the Company, with an officer or director of the Company or of any
Subsidiary in his or her capacity as officer or director entered into in the
ordinary course of business or (iv) transactions permitted by Section 5.01.
Section 4.12. Limitations on Liens.
The Company shall not, and shall not permit any of its Restricted
Group Members to, create, incur or otherwise cause or suffer to exist or become
effective any Liens of any kind (other than Permitted Liens) upon any property
or asset of the Company or any Restricted Group Member or any shares of stock
or debt of any Restricted Group Member which owns property or assets, now owned
or hereafter acquired, unless (i) if such Lien secures Indebtedness which is
pari passu with the Notes, then the Notes are secured on an equal and ratable
basis with the obligations so secured until such time as such obligation is no
longer secured by a Lien or (ii) if such Lien secures Indebtedness which is
subordinated to the Notes, any such Lien is subordinated to the Lien granted to
the Holders of the
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Notes to the same extent as such subordinated Indebtedness is subordinated to
the Notes.
Section 4.13. Limitations on Investments.
The Company shall not, and shall not permit any of its Restricted
Group Members to, make any Investment other than (i) a Permitted Investment or
(ii) an Investment that is made as a Restricted Payment in compliance with
Section 4.09, after the Issue Date.
Section 4.14. Limitation on Creation of Certain Subsidiaries.
The Company shall not create or acquire, nor permit any of its
Restricted Group Members to create or acquire, any Domestic Restricted
Subsidiary unless such Domestic Restricted Subsidiary has executed a guarantee
in the form set forth in this Indenture, pursuant to which such Domestic
Restricted Subsidiary shall become a Guarantor. As of the Issue Date, the
Company has no Domestic Restricted Subsidiaries, other than the Guarantors.
Section 4.15. Limitation on Sale and Lease-Back Transactions.
The Company shall not, and shall not permit any Restricted Group
Member to, enter into any Sale and Lease-Back Transaction unless (i) the
consideration received in such Sale and Lease-Back Transaction is at least
equal to the fair market value of the property sold, as determined, in good
faith, by the Board of Directors of the Company and evidenced by a board
resolution, (ii) the Company could incur the Attributable Indebtedness in
respect of such Sale and Lease-Back Transaction in compliance with Section 4.08
and (iii) such Sale and Lease-Back Transaction is permitted by, and the
proceeds thereof are applied in compliance with Section 4.10.
Section 4.16. Payments for Consent.
Neither the Company nor any of its Restricted Group Members shall,
directly or indirectly, pay or cause to be paid any consideration, whether by
way of interest, fee or otherwise, to any Holder of any Notes for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Notes unless such consideration is offered
to be paid or agreed to be paid to all Holders of the Notes which so consent,
waive or agree to amend in the time
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frame set forth in solicitation documents relating to such consent, waiver or
agreement.
Section 4.17. Legal Existence.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
legal existence, and the corporate, partnership or other existence of each
Restricted Group Member, in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Restricted
Group Member and the rights (charter and statutory), licenses and franchises of
the Company and its Restricted Group Member; provided, however, that the
Company shall not be required to preserve any such right, license or franchise,
or the corporate, partnership or other existence of any of its Restricted Group
Member if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and its Restricted Group Member, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders.
Section 4.18. Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
make an offer to purchase (the "Change of Control Offer") each Holder's
outstanding Notes at a purchase price (the "Change of Control Purchase Price")
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the Change of Control Payment Date (as defined below) in accordance
with the procedures set forth below.
(b) Within 30 days of the occurrence of a Change of Control, the
Company shall (i) cause a notice of the Change of Control Offer to be sent at
least once to the Dow Jones News Service or similar business news service in
the United States and (ii) send by first-class mail, postage prepaid, to the
Trustee and to each holder of the Notes, at the address appearing in the
register maintained by the registrar of the Notes, a notice stating:
(i) that a Change of Control Offer is being made and that all
Notes validly tendered prior to the expiration date stated in such
notice shall be accepted for payment;
(ii) the purchase date, which shall be no earlier than 20
business days from the date such notice is mailed (the "Change of
Control Payment Date"), and the Purchase
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Price, which shall be 101% of outstanding principal together
with accrued interest to the Offer Payment Date;
(iii) that any Note not timely tendered in accordance with such
notice shall remain outstanding and shall continue to accrue
interest;
(iv) that any Note accepted for payment pursuant to the Change
of Control Offer shall cease to accrue interest after the Change of
Control Payment Date unless the Company shall default in the payment
of the repurchase price of the Notes;
(v) that if the Holders elect to have a Note purchased pursuant
to the Change of Control Offer they shall be required to surrender
the Note, with the form entitled "Option of Holder to Elect Purchase"
on the reverse of the Note completed, to the Company prior to 5:00
p.m. New York time on the Change of Control Payment Date;
(vi) that the Holders shall be entitled to withdraw their
election if the Company receives, not later than 5:00 p.m. New York
time on the business day preceding the Change of Control Payment
Date, a telegram, telex, facsimile transmission or letter setting
forth the principal amount of Notes such Holders delivered for
purchase, and a statement that such Holders are withdrawing their
election to have such Note purchased; and
(vii) that if Notes are purchased only in part a new Note of
the same type shall be issued in principal amount equal to the
unpurchased portion of the Notes surrendered.
On or before the Change of Control Payment Date, the Company shall (x)
accept for payment Notes or portions thereof which are to be purchased in
accordance with the above, and (y) deposit at the payment office established by
the Company cash in U.S. dollars sufficient to pay the purchase price of all
Notes to be purchased.
(c) (i) If the Company or any Restricted Group Member thereof has
issued any outstanding (A) Indebtedness that is subordinated in right of
payment to the Notes or (B) Preferred Stock, and the Company or such Restricted
Group Member is required to make a change of control offer or to make a
distribution with respect to such subordinated Indebtedness or Preferred Stock
in the event of a change of control, the Company shall not consummate any such
offer or distribution with re-
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spect to such subordinated Indebtedness or Preferred Stock until such time
as the Company shall have paid the Change of Control Purchase Price in full to
the Holders of Notes that have accepted the Company's Change of Control Offer
and shall otherwise have consummated the Change of Control Offer made to
Holders of the Notes and (ii) the Company shall not issue Indebtedness that is
subordinated in right of payment to the Notes or Preferred Stock with change of
control provisions requiring the payment of such Indebtedness or Preferred
Stock prior to the payment of the Notes in the event of a Change in Control.
The Company shall comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes pursuant to an offer hereunder. To the extent the provisions of any
securities laws or regulations conflict with the provisions under this Section
4.18, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.18 by virtue thereof.
Section 4.19. Maintenance of Office or Agency.
The Company shall maintain an office or agency where Notes may be
surrendered for registration of transfer or exchange or for presentation for
payment and where notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Company shall give prompt written
notice to the Trustee of the location, and any change in the location, of such
office or agency. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the Corporate Trust Office of the Trustee as set forth in Section
11.02.
The Company may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations. The
Company shall give prompt written notice to the Trustee of such designation or
rescission and of any change in the location of any such other office or
agency.
The Company hereby initially designates the Corporate Trust Office of
the Trustee as such office of the Company.
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Section 4.20. Maintenance of Properties; Insurance; Books and Records;
Compliance with Law.
(a) The Company shall, and shall cause each of its Restricted Group
Members to, at all times cause all properties used or useful in the conduct of
their business to be maintained and kept in good condition, repair and working
order (reasonable wear and tear excepted) and supplied with all necessary
equipment, and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereto.
(b) The Company shall, and shall cause each of its Restricted Group
Members to, maintain insurance (which may include self-insurance) in such
amounts and covering such risks as are usually and customarily carried with
respect to similar facilities according to their respective locations.
(c) The Company shall, and shall cause each of its Subsidiaries and
Restricted Joint Ventures to, keep proper books of record and account, in which
full and correct entries shall be made of all financial transactions and the
assets and business of the Company and each Subsidiary and Restricted Joint
Ventures, in accordance with GAAP consistently applied to the Company and its
Subsidiaries and Restricted Joint Ventures taken as a whole.
(d) The Company shall and shall cause each of its Subsidiaries and
Restricted Joint Ventures to comply with all statutes, laws, ordinances or
government rules and regulations to which they are subject, non-compliance with
which would materially adversely affect the business, earnings, assets or
financial condition of the Company and its Subsidiaries taken as a whole.
Section 4.21. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Group Members.
The Company shall not, and shall not permit any of its Restricted
Group Members to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Group Member to (a)(i) pay dividends or make any other distributions
to the Company or any Restricted Group Member (A) on its Capital Stock or (B)
with respect to any other interest or participation in, or measured by, its
profits or (ii) repay any Indebtedness or any other obligation owed to the
Company or any
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Restricted Group Member, (b) make loans or advances or capital contributions to
the Company or any of its Restricted Group Members or (c) transfer any of its
properties or assets to the Company or any of its Restricted Group Members,
except for such encumbrances or restrictions existing under or by reason of (i)
encumbrances or restrictions existing on the date of this Indenture to the
extent and in the manner such encumbrances and restrictions are in effect on
the date hereof (including without limitation pursuant to the Senior Credit
Facility), (ii) this Indenture, the Notes and the Guarantees, (iii) applicable
law, (iv) any instrument governing Acquired Indebtedness, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person, or the property or assets of the Person
(including any Subsidiary of the Person), so acquired, (v) customary
non-assignment provisions in leases or other agreements entered in the ordinary
course of business and consistent with past practices, (vi) Refinancing
Indebtedness; provided that such payment restrictions are no more restrictive
than those contained in the agreements governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded, (vii) customary
restrictions in security agreements or mortgages securing Indebtedness of the
Company or a Restricted Group Member to the extent such restrictions restrict
the transfer of the property subject to such security agreements and mortgages
or (viii) customary restrictions with respect to a Restricted Group Member
pursuant to an agreement that has been entered into for the sale or disposition
of all or substantially all of the Capital Stock or assets of such Restricted
Group Member.
Section 4.22. Further Assurance to the Trustee.
The Company shall, upon the reasonable request of the Trustee, execute
and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the provisions of
this Indenture.
Section 4.23. Limitation on Conduct of Business.
The Company and its Restricted Group Members shall not engage in any
business other than the business of providing aviation services or aerospace
support.
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ARTICLE 5
SUCCESSOR CORPORATION
Section 5.01. Limitation on Consolidation, Merger and Sale of Assets.
(a) The Company, nor shall not permit any Guarantor to, consolidate
with, merge with or into, or transfer all or substantially all of its assets
(as an entirety or substantially as an entirety in one transaction or a series
of related transactions) to, any Person unless: (i) the Company or such
Guarantor, as the case may be, shall be the continuing Person, or the Person
(if other than the Company or such Guarantor) formed by such consolidation or
into which the Company or such Guarantor, as the case may be, is merged or to
which the properties and assets of the Company or such Guarantor, as the case
may be, are transferred shall be a corporation (or in the case of the Company,
a corporation or a limited partnership) organized and existing under the laws
of the United States or any State thereof or the District of Columbia and shall
expressly assume, in writing by a supplemental indenture, executed and
delivered to the Trustee, in form and substance satisfactory to the Trustee,
all of the obligations of the Company or such Guarantor, as the case may be,
under the Notes and this Indenture, and the obligations under this Indenture
shall remain in full force and effect; provided that at any time the Company or
its successor is a limited partnership there shall be a co-issuer of the Notes
that is a corporation; (ii) immediately before and immediately after giving
effect to such transaction, no Default or Event of Default shall have occurred
and be continuing; (iii) immediately after giving effect to such transaction or
series of transactions on a pro forma basis the Consolidated Net Worth of the
Company or the surviving entity as the case may be is at least equal to the
Consolidated Net Worth of the Company immediately before such transaction or
series of transactions; and (iv) immediately after giving effect to such
transaction on a pro forma basis the Company or such Person could incur at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.06 hereof.
(b) In connection with any consolidation, merger or transfer of
assets contemplated by this Section 5.01, the Company shall deliver, or cause
to be delivered, to the Holders, in form and substance reasonably satisfactory
to the Trustee, an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and the supple-
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mental indenture in respect thereto comply with this Section 5.01 and that all
conditions precedent herein provided for relating to such transaction or
transactions have been complied with.
Section 5.02. Successor Person Substituted.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Company or any Guarantor in accordance
with Section 5.01 above, the successor corporation formed by such consolidation
or into which the Company is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company or such Guarantor under this Indenture with the same effect as if
such successor corporation had been named as the Company or such Guarantor
herein, and thereafter the predecessor corporation shall be relieved of all
obligations and covenants under this Indenture and the Notes.
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs if
(1) there is a default in the payment of any principal of, or
premium, if any, on the Notes when the same becomes due and payable
whether at maturity, upon acceleration, redemption or otherwise;
(2) there is a default in the payment of any interest on any
Note when the same becomes due and payable and the Default continues
for a period of 30 days;
(3) there is a default in the observance or performance of the
covenants set forth in Section 4.06, Section 4.09, Section 4.10 or
Section 4.18;
(4) the Company or any Guarantor defaults in the observance or
performance of any other covenant in the Notes or this Indenture for
60 days after written notice from the Trustee or the Holders of not
less than 25% in the aggregate principal amount of the Notes then
outstanding;
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(5) there is a default in the payment at final maturity of
principal in an aggregate amount of $5,000,000 or more with respect
to any Indebtedness of the Company or any Restricted Group Member, or
there is an acceleration of any such Indebtedness aggregating
$5,000,000 or more which default shall not be cured, waived or
postponed pursuant to an agreement with the holders of such
Indebtedness within 30 days after written notice by the Trustee or
any Holder, or which acceleration shall not be rescinded or annulled
within 10 days after written notice to the Company of such Default by
the Trustee or any Holder;
(6) the entry of a final judgment or judgments which can no
longer be appealed for the payment of money in excess of $5,000,000
against the Company or any Restricted Group Member thereof and such
judgment remains undischarged, for a period of 60 consecutive days
during which a stay of enforcement of such judgment shall not be in
effect;
(7) the Company or any Restricted Group Member pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case,
(B) consents to the entry of an order for relief against it
in an involuntary case,
(C) consents to the appointment of a Custodian of it or for
all or substantially all of its property,
(D) makes a general assignment for the benefit of its
creditors, or
(E) generally is not paying its debts as they become due;
(8) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company or any Restricted
Subsidiary in an involuntary case,
(B) appoints a Custodian of the Company or any Restricted
Subsidiary or for all or substantially all of the property of the
Company or any Restricted Subsidiary, or
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(C) orders the liquidation of the Company or any Restricted
Subsidiary,
and the order or decree remains unstayed and in effect for 60 days; or
(9) any of the Guarantees ceases to be in full force and effect
or any of the Guarantees is declared to be null and void and
unenforceable or any of the Guarantees is found to be invalid or any
of the Guarantors denies in writing its liability under its Guarantee
(other than by reason of release of a Guarantor in accordance with
the terms of this Indenture).
The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal or state law for the relief of debtors. The term "Custodian" means any
receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
The Trustee may withhold notice to the Holders of the Notes of any
Default (except in payment of principal or premium, if any, or interest on the
Notes) if the Trustee considers it to be in the best interest of the Holders of
the Notes to do so. The Trustee shall not be charged with knowledge of any
Default, Event of Default, Change of Control or Asset Sale in payment of
Additional Interest unless written notice thereof shall have been given to a
Responsible Officer at the corporate trust office of the Trustee by the Company
or any other Person.
Section 6.02. Acceleration.
If an Event of Default (other than an Event of Default arising under
Section 6.01(7) or (8)) occurs and is continuing, then the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Notes then
outstanding may declare to be immediately due and payable the entire principal
amount of all the Notes then outstanding plus accrued interest to the date of
acceleration and the same shall become immediately due and payable (plus, in
the event of any such declaration following a Default resulting from a willful
action of the Company with the intent to avoid the payment of any premium on
the Notes, which declaration occurs (a) before the fifth anniversary of the
Issue Date, a premium (expressed as a percentage of principal amount) equal to
the interest rate per annum then being paid on the Notes, or (b) on or after
the fifth anniversary of the Issue Date, a premium (expressed as a percentage
of principal amount) equal to the then applicable redemption premium);
provided, however, that after such acceleration but be-
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fore a judgment or decree based on acceleration is obtained by the Trustee,
the Holders of a majority in aggregate principal amount of outstanding Notes
may rescind and annul such acceleration if (i) all Events of Default, other
than nonpayment of principal, premium, if any, or interest that has become due
solely because of the acceleration, have been cured or waived as provided in
this Indenture, (ii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iii) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and (iv) in
the event of the cure or waiver of an Event of Default of the type described in
Section 6.01(7) or (8), the Trustee shall have received an Officers'
Certificate and an Opinion of Counsel that such Event of Default has been cured
or waived. No such rescission shall affect any subsequent Default or impair any
right consequent thereto. In case an Event of Default resulting from Section
6.01(7) or (8) occurs, the principal, premium and interest amount with respect
to all of the Notes shall be due and payable immediately without any
declaration or other act on the part of the Trustee or the Holders of the
Notes.
Section 6.03. Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of, or premium, if any, and interest on the Notes or to
enforce the performance of any provision of the Notes or this Indenture and may
take any necessary action requested of it as Trustee to settle, compromise,
adjust or otherwise conclude any proceedings to which it is a party.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Noteholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
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Section 6.04. Waiver of Past Defaults and Events of Default.
Subject to Sections 6.02, 6.07 and 8.02 hereof, the Holders of a
majority in principal amount of the Notes then outstanding have the right to
waive any existing Default or Event of Default or compliance with any provision
of this Indenture or the Notes. Upon any such waiver, such Default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereto.
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the Notes then
outstanding may direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee or exercising any trust or power
conferred on the Trustee by this Indenture. The Trustee, however, may refuse to
follow any direction that conflicts with law or this Indenture or that the
Trustee determines may be unduly prejudicial to the rights of another
Noteholder not taking part in such direction, and the Trustee shall have the
right to decline to follow any such direction if the Trustee, being advised by
counsel, determines that the action so directed may not lawfully be taken or if
the Trustee in good faith shall, by a Responsible Officer, determine that the
proceedings so directed may involve it in personal liability; provided that the
Trustee may take any other action deemed proper by the Trustee which is not
inconsistent with such direction.
Section 6.06. Limitation on Suits.
Subject to Section 6.07 below, a Noteholder may not institute any
proceeding or pursue any remedy with respect to this Indenture or the Notes
unless:
(1) the Holder gives to the Trustee written notice of a
continuing Event of Default;
(2) the Holders of at least 25% in aggregate principal amount
of the Notes then outstanding make a written request to the Trustee
to pursue the remedy;
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(3) such Holder or Holders offer and if requested provide to
the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;
(4) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer, and, if requested
provision, of indemnity; and
(5) no direction inconsistent with such written request has
been given to the Trustee during such 60 day period by the Holders of
a majority in aggregate principal amount of the Notes then
outstanding.
A Noteholder may not use this Indenture to prejudice the rights of
another Noteholder or to obtain a preference or priority over another
Noteholder.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal of, or premium, if
any, and interest of the Note (including Additional Interest) on or after the
respective due dates expressed in the Note, or to bring suit for the
enforcement of any such payment on or after such respective dates, is absolute
and unconditional and shall not be impaired or affected without the consent of
the Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default in payment of principal, premium or interest
specified in Section 6.01(1) or (2) hereof occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company or the Guarantors (or any other obligor on the Notes) for
the whole amount of unpaid principal and accrued interest remaining unpaid,
together with interest on overdue principal and, to the extent that payment of
such interest is lawful, interest on overdue installments of interest, in each
case at the rate set forth in the Notes, and such further amounts as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
Section 6.09. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order
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to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel) and the Noteholders allowed in any judicial proceedings
relative to the Company or the Guarantors (or any other obligor upon the
Notes), its creditors or its property and shall be entitled and empowered to
collect and receive any monies or other property payable or deliverable on any
such claims and to distribute the same after deduction of its charges and
expenses to the extent that any such charges and expenses are not paid out of
the estate in any such proceedings and any custodian in any such judicial
proceeding is hereby authorized by each Noteholder to make such payments to the
Trustee, and in the event that the Trustee shall consent to the making of such
payments directly to the Noteholders, to pay to the Trustee any amount due to
it for the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel, and any other amounts due the Trustee under
Section 7.07 hereof.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder any plan
or reorganization, arrangement, adjustment or composition affecting the Notes
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Noteholder in any such proceedings.
Section 6.10. Priorities.
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07
hereof;
SECOND: to Noteholders for amounts due and unpaid on the Notes
for principal, premium, if any, and interest (including Additional
Interest, if any) as to each, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes;
and
THIRD: to the Company or, to the extent the Trustee collects
any amount from any Guarantor, to such Guarantor.
The Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 6.10.
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Section 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 hereof or a suit by Holders of more than 10% in
principal amount of the Notes then outstanding.
Section 6.12. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders
shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and the Holders
shall continue as though no such proceeding had been instituted.
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default actually known to a Responsible Officer of
the Trustee has occurred and is continuing, the Trustee shall exercise such of
the rights and powers vested in it by this Indenture and use the same degree of
care and skill in their exercise as a prudent man would exercise or use under
the same circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
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(1) The Trustee need perform only those duties that are
specifically set forth in this Indenture and no others and no implied
covenants or obligations shall be read into this Indenture against
the Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture but, in the case of any such certificates or
opinions which by any provision hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate
the accuracy of mathematical calculations or other facts stated
therein).
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved that
the Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Sections 6.02, 6.05 or 6.06
hereof.
(4) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its rights, powers or duties
or to take or omit to take any action under this Indenture or take
any action at the request or direction of Holders if it shall have
reasonable grounds for believing that repayment of such funds is not
assured to it or it does not receive an indemnity satisfactory to it
in its sole discretion against such risk, liability, loss, fee or
expense which may be incurred by it in connection with such
performance.
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(d) Whether or not therein expressly so provided, paragraphs (a),
(b), (c) and (e) of this Section 7.01 shall govern every provision of this
Indenture that in any way relates to the Trustee.
(e) The Trustee may refuse to perform any duty or exercise any right
or power unless it receives indemnity satisfactory to it in its sole discretion
against any loss, liability, expense or fee.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company or
any Guarantor. Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by the law.
Section 7.02. Rights of Trustee.
Subject to Section 7.01 hereof:
(1) The Trustee may rely on any document reasonably believed by
it to be genuine and to have been signed or presented by the proper
person. The Trustee need not investigate any fact or matter stated in
the document.
(2) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel, or both,
which shall conform to the provisions of Section 11.05 hereof. The
Trustee shall be protected and shall not be liable for any action it
takes or omits to take in good faith in reliance on such certificate
or opinion.
(3) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any
agent appointed by it with due care.
(4) The Trustee shall not be liable for any action it takes or
omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(5) The Trustee may consult with counsel of its selection, and
the advice or opinion of such counsel as to matters of law shall be
full and complete authorization and protection from liability in
respect of any action taken, omitted or suffered by it hereunder in
good faith
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and in accordance with the advice or opinion of such counsel.
Section 7.03. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Notes and may make loans to, accept deposits from,
perform services for or otherwise deal with either of the Company or any
Guarantor, or any Affiliates thereof, with the same rights it would have if it
were not Trustee. Any Agent may do the same with like rights. The Trustee,
however, shall be subject to Sections 7.10 and 7.11 hereof.
Section 7.04. Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes or any Guarantee,
it shall not be accountable for the Company's or any Guarantor's use of the
proceeds from the sale of Notes or any money paid to the Company or any
Guarantor pursuant to the terms of this Indenture and it shall not be
responsible for any statement in the Notes, Guarantee or this Indenture other
than its certificate of authentication.
Section 7.05. Notice of Defaults.
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Noteholder notice of the Default within
90 days after it occurs. Except in the case of a Default in payment of the
principal of, or premium, if any, or interest on any Note the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers
in good faith determine(s) that withholding the notice is in the interests of
the Noteholders.
Section 7.06. Reports by Trustee to Holders.
If required by TIA ss. 313(a), within 60 days after November 15 of any
year, commencing November 15, 1998, the Trustee shall mail to each Noteholder a
brief report dated as of such November 15 that complies with TIA ss. 313(a).
The Trustee also shall comply with TIA ss. 313(b)(2). The Trustee shall also
transmit by mail all reports as required by TIA ss. 313(c) and TIA ss. 313(d).
Reports pursuant to this Section 7.06 shall be transmitted by mail:
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(1) to all registered Holders of Notes, as the names and
addresses of such Holders appear on the Registrar's books; and
(2) to such Holder of Notes as have, within the two years
preceding such transmission, filed their names and addresses with the
Trustee for that purpose.
A copy of each report at the time of its mailing to Noteholders shall
be filed with the SEC and each stock exchange on which the Notes are listed.
The Company shall promptly notify the Trustee when the Notes are listed on any
stock exchange.
Section 7.07. Compensation and Indemnity.
The Company and the Guarantors shall pay to the Trustee and Agents
from time to time such compensation as shall be agreed in writing between
the Company and the Trustee for its services hereunder (which compensation
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust). The Company and the Guarantors shall reimburse
the Trustee and Agents upon request for all reasonable disbursements, expenses
and advances incurred or made by it in connection with its duties under this
Indenture, including the reasonable compensation, disbursements and expenses of
the Trustee's agents and counsel.
The Company and the Guarantors shall, jointly and severally, indemnify
each of the Trustee and any predecessor Trustee for, and hold each of them
harmless against, any and all loss, damage, claim, liability or expense,
including without limitation taxes (other than taxes based on the income of the
Trustee or such Agent) and reasonable attorneys' fees and expenses incurred by
each of them in connection with the acceptance or performance of its duties
under this Indenture including the reasonable costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder (including, without
limitation, settlement costs). The Trustee or Agent shall notify the Company
and the Guarantors in writing promptly of any claim asserted against the
Trustee or Agent for which it may seek indemnity. However, the failure by the
Trustee or Agent to so notify the Company and the Guarantors shall not relieve
the Company and Guarantors of their obligations hereunder except to the extent
the Company and the Guarantors are prejudiced thereby.
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Notwithstanding the foregoing, the Company and the Guarantors need not
reimburse the Trustee for any expense or indemnify it against any loss or
liability incurred by the Trustee through its negligence or bad faith. To
secure the payment obligations of the Company and the Guarantors in this
Section 7.07, the Trustee shall have a lien prior to the Notes on all money or
property held or collected by the Trustee except such money or property held in
trust to pay principal of and interest on particular Notes. The obligations of
the Company and the Guarantors under this Section 7.07 to compensate, reimburse
and indemnify the Trustee, Agents and each predecessor Trustee and to pay or
reimburse the Trustee, Agents and each predecessor Trustee for expenses,
disbursements and advances shall be joint and several liabilities of the
Company and each of the Guarantors and shall survive the satisfaction,
discharge and termination of this Indenture, including any termination or
rejection hereof under any bankruptcy law or the resignation or removal of the
Trustee.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(6) or (7) hereof occurs, the expenses and the
compensation for the services are intended to constitute expenses of
administration under any Bankruptcy Law.
For purposes of this Section 7.07, the term "Trustee" shall include
any trustee appointed pursuant to Article 9.
Section 7.08. Replacement of Trustee.
The Trustee may resign by so notifying the Company and the Guarantors
in writing. The Holders of a majority in principal amount of the outstanding
Notes may remove the Trustee by notifying the removed Trustee in writing and
may appoint a successor Trustee with the Company's written consent which
consent shall not be unreasonably withheld. The Company may remove the Trustee
at their election if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property;
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(4) the Trustee otherwise becomes incapable of acting; or
(5) a successor corporation becomes successor Trustee
pursuant to Section 7.09 below.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall notify the holders of such
event and promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in principal amount
of the Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of a majority in principal amount of the outstanding Notes may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately following
such delivery, the retiring Trustee shall, subject to its rights under Section
7.07 hereof, transfer all property held by it as Trustee to the successor
Trustee, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Noteholder. Notwithstanding replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations under Section
7.07 hereof shall continue for the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Consolidation, Merger, Etc.
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust assets to, another
corporation, subject to Section 7.10 hereof, the successor corporation without
any further act shall be the successor Trustee.
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Section 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA ss. 310(a)(1) and (2) in every respect. The Trustee shall
have a combined capital and surplus of at least $80,000,000 as set forth in its
most recent published annual report of condition. The Trustee shall comply with
TIA ss. 310(b), including the provision in ss. 310(b)(1).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein.
Section 7.12. Paying Agents.
The Company shall cause each Paying Agent other than the Trustee to
execute and deliver to it and the Trustee an instrument in which such agent
shall agree with the Trustee, subject to the provisions of this Section 7.12:
(A) that it shall hold all sums held by it as agent for the
payment of principal of, or premium, if any, or interest on, the
Notes (whether such sums have been paid to it by the Company or by
any obligor on the Notes) in trust for the benefit of Holders of the
Notes or the Trustee;
(B) that it shall at any time during the continuance of any
Event of Default, upon written request from the Trustee, deliver to
the Trustee all sums so held in trust by it together with a full
accounting thereof; and
(C) that it shall give the Trustee written notice within three
(3) Business Days of any failure of the Company (or by any obligor on
the Notes) in the payment of any installment of the principal of,
premium, if any, or interest on, the Notes when the same shall be due
and payable.
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ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND WAIVERS
Section 8.01. Without Consent of Holders.
The Company and the Guarantors, when authorized by a Board Resolution
of each of them, and the Trustee may amend, waive or supplement this Indenture
or the Notes without notice to or consent of any Noteholder:
(1) to comply with Section 5.01 hereof;
(2) to provide for uncertificated Notes in addition to or in
place of certificated Notes;
(3) to comply with any requirements of the SEC under the TIA;
(4) to cure any ambiguity, defect or inconsistency;
(5) to make any other change that does not, in the opinion of the
Trustee materially and adversely affect the rights of any Noteholder
hereunder; or
(6) to add a Guarantor.
The Trustee is hereby authorized to join with the Company and the
Guarantors in the execution of any supplemental indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations which may be therein contained, but the Trustee
shall not be obligated to enter into any such supplemental indenture which
adversely affects its own rights, duties or immunities under this Indenture.
Section 8.02. With Consent of Holders.
The Company and the Guarantors, when authorized by a Board Resolution
of each of them, and the Trustee may modify or supplement this Indenture or the
Notes with the written consent of the Holders of not less than a majority in
aggregate principal amount of the outstanding Notes. The Holders of not less
than a majority in aggregate principal amount of the outstanding Notes may
waive compliance in a particular instance by the Company or the Guarantors with
any provision of this Indenture or the Notes. Subject to Section 8.04, without
the consent of
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each Noteholder affected, however, an amendment, supplement or waiver,
including a waiver pursuant to Section 6.04, may not:
(1) reduce the amount of Notes whose Holders must consent to an
amendment, supplement or waiver to this Indenture or the Notes;
(2) reduce the rate of or change the time for payment of
interest, included defaulted interest, on any Note;
(3) reduce the principal of or premium on or change the stated
maturity of any Note or change the date on which any Notes may be
subject to redemption or repurchase or reduce the redemption or
repurchase price therefor;
(4) make any Note payable in money other than that stated in
the Note or change the place of payment from New York, New York;
(5) waive a default in the payment of the principal of, or
interest on, or redemption payment with respect to, any Note
(including any obligation to make a Change of Control Offer or, after
the Company's obligation to purchase Notes arises thereunder, an
Excess Proceeds Offer or modify any of the provisions or definitions
with respect to such offers);
(6) make any changes in Sections 6.04 or 6.07 hereof or this
sentence of Section 8.02;
(7) amend, change or modify in any material respect the
obligation of the Company to make and consummate a Change of Control
Offer in the event of a Change of Control or make and consummate an
Asset Sale Offer with respect to any Asset Sale that has been
consummated or modify any of the provisions or definitions with
respect thereto;
(8) modify or change any provision of this Indenture or the
related definitions affecting the ranking of the Notes or any
Guarantee in a manner which adversely affects the Holders; or
(9) release any Guarantor from any of its obligations under its
Guarantee or this Indenture otherwise than in accordance with the
terms of this Indenture.
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After an amendment, supplement or waiver under this Section 8.02 or
Section 8.01 becomes effective, the Company shall mail to the Holders a notice
briefly describing the amendment, supplement or waiver.
Upon the written request of the Company, accompanied by a Board
Resolution authorizing the execution of any such supplemental indenture, and
upon the receipt by the Trustee of evidence reasonably satisfactory to the
Trustee of the consent of the Noteholders as aforesaid and upon receipt by the
Trustee of the documents described in Section 8.06 hereof, the Trustee shall
join with the Company and the Guarantors in the execution of such supplemental
indenture unless such supplemental indenture affects the Trustee's own rights,
duties or immunities under this Indenture, in which case the Trustee may, but
shall not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
Section 8.03. Compliance with Trust Indenture Act.
Every amendment to or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect.
Section 8.04. Revocation and Effect of Consents.
Until an amendment, supplement, waiver or other action becomes
effective, a consent to it by a Holder of a Note is a continuing consent
conclusive and binding upon such Holder and every subsequent Holder of the same
Note or portion thereof, and of any Note issued upon the transfer thereof or in
exchange therefor or in place thereof, even if notation of the consent is not
made on any such Note. Any such Holder or subsequent Holder, however, may
revoke the consent as to his Note or portion of a Note, if the Trustee receives
the written notice of revocation before the date the amendment, supplement,
waiver or other action becomes effective.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement, or waiver. If a record date is fixed, then, notwithstanding the
preceding paragraph, those Persons who were Holders at such record date (or
their duly designated proxies), and only such Persons, shall be entitled to
consent to such amendment, supplement, or waiver or
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to revoke any consent previously given, whether or not such Persons continue
to be Holders after such record date. No such consent shall be valid or
effective for more than 90 days after such record date unless the consent of
the requisite number of Holders has been obtained.
After an amendment, supplement, waiver or other action becomes
effective, it shall bind every Noteholder, unless it makes a change described
in any of clauses (1) through (8) of Section 8.02 hereof. In that case the
amendment, supplement, waiver or other action shall bind each Holder of a Note
who has consented to it and every subsequent Holder of a Note or portion of a
Note that evidences the same debt as the consenting Holder's Note.
Section 8.05. Notation on or Exchange of Notes.
If an amendment, supplement, or waiver changes the terms of a Note,
the Trustee (in accordance with the specific written direction of the Company)
shall request the Holder of the Note (in accordance with the specific written
direction of the Company) to deliver it to the Trustee. In such case, the
Trustee shall place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Company or the Trustee so
determines, the Company in exchange for the Note shall issue, the Guarantors
shall endorse, and the Trustee shall authenticate a new Note that reflects the
changed terms. Failure to make the appropriate notation or issue a new Note
shall not affect the validity and effect of such amendment supplement or
waiver.
Section 8.06. Trustee to Sign Amendments, etc.
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article 8 if the amendment, supplement or waiver does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, sign it. In signing or refusing to
sign such amendment, supplement or waiver the Trustee shall be entitled to
receive and, subject to Section 7.01 hereof, shall be fully protected in
relying upon an Officers' Certificate and an Opinion of Counsel stating that
such amendment, supplement or waiver is authorized or permitted by this
Indenture and is a legal, valid and binding obligation of the Company and the
Guarantors, enforceable against the Company and the Guarantors in accordance
with its terms (subject to customary exceptions).
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ARTICLE 9
DISCHARGE OF INDENTURE; DEFEASANCE
Section 9.01. Discharge of Indenture.
The Company and the Guarantors may terminate their obligations under
the Notes, the Guarantees and this Indenture, except the obligations referred
to in the last paragraph of this Section 9.01, if there shall have been
canceled by the Trustee or delivered to the Trustee for cancellation all Notes
theretofore authenticated and delivered (other than any Notes that are asserted
to have been destroyed, lost or stolen and that shall have been replaced as
provided in Section 2.07 hereof) and the Company has paid all sums payable by
them hereunder or deposited all required sums with the Trustee.
After such delivery the Trustee upon Issuer request shall acknowledge
in writing the discharge of the Company's and the Guarantors' obligations under
the Notes, the Guarantees and this Indenture except for those surviving
obligations specified below.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company in Sections 7.07, 9.05 and 9.06 hereof shall
survive.
Section 9.02. Legal Defeasance.
The Company may at its option, by Board Resolution of the Board of
Directors of the Company, be discharged from its obligations with respect to
the Notes and the Guarantors discharged from their obligations under the
Guarantees on the date the conditions set forth in Section 9.04 below are
satisfied (hereinafter, "Legal Defeasance"). For this purpose, such Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire indebtedness represented by the Notes and to have satisfied all its
other obligations under such Notes and this Indenture insofar as such Notes are
concerned (and the Trustee, at the expense of the Company, shall, subject to
Section 9.06 hereof, execute instruments in form and substance reasonably
satisfactory to the Trustee and Company acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (A) the rights of Holders of outstanding Notes to receive solely
from the trust funds described in Section 9.04 hereof and as more fully set
forth in such Section, payments in re-
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spect of the principal of, premium, if any, and interest on such Notes when
such payments are due, (B) the Company's obligations with respect to such
Notes under Sections 2.03, 2.04, 2.05, 2.06, 2.07, 2.08, 2.09 and 4.20 hereof,
(C) the rights, powers, trusts, duties, and immunities of the Trustee hereunder
(including claims of, or payments to, the Trustee under or pursuant to Section
7.07 hereof) and (D) this Article 9. Subject to compliance with this Article 9,
the Company may exercise at its option under this Section 9.02 with respect to
the Notes notwithstanding the prior exercise of its option under Section 9.03
below with respect to the Notes.
Section 9.03. Covenant Defeasance.
At the option of the Company, pursuant to a Board Resolution of the
Board of Directors of the Company, the Company will be released from its
obligations under Sections 4.02, through 4.18, 4.20, 4.21 and 4.23 hereof and
clauses (a)(ii), (iii) and (iv) of Section 5.01 hereof with respect to the
outstanding Notes on and after the date the conditions set forth in Section
9.04 hereof are satisfied (hereinafter, "Covenant Defeasance"). For this
purpose, such Covenant Defeasance means that the Company and the Guarantors may
omit to comply with and shall have no liability in respect of any term,
condition or limitation set forth in any such specified Section or portion
thereof, whether directly or indirectly by reason of any reference elsewhere
herein to any such specified Section or portion thereof or by reason of any
reference in any such specified Section or portion thereof to any other
provision herein or in any other document, but the remainder of this Indenture
and the Notes shall be unaffected thereby.
Section 9.04. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of Section 9.02
or Section 9.03 hereof to the outstanding Notes:
(1) the Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section 7.10 hereof who shall agree to comply with
the provisions of this Article 9 applicable to it) as funds in trust
for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the
Holders of the Notes, (A) money in an amount, or (B) U.S. Government
Obligations which through the scheduled payment
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of principal and interest in respect thereof in accordance with
their terms shall provide, not later than the due date of any
payment, money in an amount, or (C) a combination thereof,
sufficient, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge, and which
shall be applied by the Trustee (or other qualifying trustee) to pay
and discharge, the principal of, premium, if any, and accrued
interest on the outstanding Notes at the maturity date of such
principal, premium, if any, or interest, or on dates for payment and
redemption of such principal, premium, if any, and interest selected
in accordance with the terms of this Indenture and of the Notes;
(2) no Event of Default or Default with respect to the Notes
shall have occurred and be continuing on the date of such deposit, or
shall have occurred and be continuing at any time during the period
ending on the 91st day after the date of such deposit or, if longer,
ending on the day following the expiration of the longest preference
period under any Bankruptcy Law applicable to the Company in respect
of such deposit (it being understood that this condition shall not be
deemed satisfied until the expiration of such period);
(3) such Legal Defeasance or Covenant Defeasance shall not
cause the Trustee to have a conflicting interest for purposes of the
TIA with respect to any securities of the Company;
(4) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute default under any
other agreement or instrument to which the Company is a party or by
which it is bound;
(5) the Company shall have delivered to the Trustee an Opinion
of Counsel stating that, as a result of such Legal Defeasance or
Covenant Defeasance, neither the trust nor the Trustee shall be
required to register as an investment company under the Investment
Company Act of 1940, as amended;
(6) in the case of an election under Section 9.02 above, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling to the effect
that or (ii) there
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has been a change in any applicable Federal income tax law with
the effect that, and such opinion shall confirm that, the Holders of
the outstanding Notes or persons in their positions shall not
recognize income, gain or loss for Federal income tax purposes solely
as a result of such Legal Defeasance and shall be subject to Federal
income tax on the same amounts, in the same manner, including as a
result of prepayment, and at the same times as would have been the
case if such Legal Defeasance had not occurred;
(7) in the case of an election under Section 9.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders of the outstanding Notes shall not
recognize income, gain or loss for Federal income tax purposes as a
result of such Covenant Defeasance and shall be subject to Federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(8) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent provided for relating to either the Legal
Defeasance under Section 9.02 above or the Covenant Defeasance under
Section 9.03 hereof (as the case may be) have been complied with;
(9) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit under clause (1) was
not made by the Company with the intent of defeating, hindering,
delaying or defrauding any creditors of the Company or others;
(10) the Company shall have paid or duly provided for payment
under terms mutually satisfactory to the Company and the Trustee all
amounts then due to the Trustee pursuant to Section 7.07 hereof; and
(11) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel (to the extent
matters of law are involved), each stating that (x) all conditions
precedent herein provided for relating to either the legal defeasance
under paragraph 9.02 above or the covenant defeasance under paragraph
9.03 above, as the case may be, have been complied with and (y) if
any other Indebtedness of the Company shall then be outstanding or
committed, such legal defeasance or covenant defea-
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sance shall not violate the provisions of the agreements or
instruments evidencing such Indebtedness.
Section 9.05. Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee pursuant to Section 9.04 hereof in respect
of the outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent, to the Holders of such
Notes, of all sums due and to become due thereon in respect of principal,
premium, if any, and accrued interest, but such money need not be segregated
from other funds except to the extent required by law.
The Company and the Guarantors shall (on a joint and several basis)
pay and indemnify the Trustee against any tax, fee or other charge imposed on or
assessed against the U.S. Government Obligations deposited pursuant to Section
9.04 hereof or the principal, premium, if any, and interest received in respect
thereof other than any such tax, fee or other charge which by law is for the
account of the Holders of the outstanding Notes.
Anything in this Article 9 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon an Issuer
Request any money or U.S. Government Obligations held by it as provided in
Section 9.04 hereof which, in the opinion of a nationally-recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof which would then
be required to be deposited to effect an equivalent Legal Defeasance or
Covenant Defeasance.
Section 9.06. Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with Section 9.01, 9.02 or 9.03 hereof by
reason of any legal proceeding or by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, the Company's and each Guarantor's obligations under this
Indenture, the Notes and the Guarantees shall be revived and reinstated as
though no deposit had occurred pursuant to this Article 9 until such time as
the Trus-
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tee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 9.01 hereof; provided, however, that if
the Company or the Guarantors have made any payment of principal of, premium, if
any, or accrued interest on any Notes because of the reinstatement of their
obligations, the Company or the Guarantors, as the case may be, shall be
subrogated to the rights of the Holders of such Notes to receive such payment
from the money or U.S. Government Obligations held by the Trustee or Paying
Agent.
Section 9.07. Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this Indenture,
all moneys then held by any Paying Agent under the provisions of this Indenture
shall, upon written demand of the Company, be paid to the Trustee, or if
sufficient moneys have been deposited pursuant to Section 9.01 hereof, to the
Company upon an Issuer Request (or, if such moneys had been deposited by the
Guarantors, to such Guarantors), and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
Section 9.08. Moneys Held by Trustee.
Any moneys deposited with the Trustee or any Paying Agent or then held
by the Company or the Guarantors in trust for the payment of the principal of,
or premium, if any, or interest on any Note that are not applied but remain
unclaimed by the Holder of such Note for two years after the date upon which
the principal of, or premium, if any, or interest on such Note shall have
respectively become due and payable shall be repaid to the Company (or, if
appropriate, the Guarantors) upon an Issuer Request, or if such moneys are then
held by the Company or the Guarantors in trust, such moneys shall be released
from such trust; and the Holder of such Note entitled to receive such payment
shall thereafter, as an unsecured general creditor, look only to the Company
and the Guarantors for the payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money shall thereupon cease;
provided, however, that the Trustee or any such Paying Agent, before being
required to make any such repayment, may, at the expense of the Company and the
Guarantors, either mail to each Noteholder affected, at the address shown in
the register of the Notes maintained by the Registrar pursuant to Section 2.04
hereof, or cause to be published once a week for two successive weeks, in a
newspaper published in the English language, customarily published each
Business Day and of general circulation in the City of New York, New York, a
notice that such money re-
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mains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such mailing or publication, any unclaimed
balance of such moneys then remaining shall be repaid to the Company.
After payment to the Company or the Guarantors or the release of any money held
in trust by the Company or any Guarantors, as the case may be, Noteholders
entitled to the money must look only to the Company and the Guarantors for
payment as general creditors unless applicable abandoned property law
designates another person.
ARTICLE 10
GUARANTEE OF NOTES
Section 10.01. Guarantee.
Subject to the provisions of this Article 10, each Guarantor, by
execution of the Guarantee, shall jointly and severally unconditionally
guarantee to each Holder and to the Trustee, (i) the due and punctual payment
of the principal of, and premium, if any, and interest on each Note, when and
as the same shall become due and payable, whether at maturity, by acceleration
or otherwise, the due and punctual payment of interest on the overdue principal
of, and premium, if any, and interest on the Notes, to the extent lawful, and
the due and punctual performance of all other Obligations of the Company to the
Holders or the Trustee (including without limitation amounts due the Trustee
under Section 7.07) all in accordance with the terms of such Note and this
Indenture, and (ii) in the case of any extension of time of payment or renewal
of any Notes or any of such other Obligations, that the same shall be promptly
paid in full when due or performed in accordance with the terms of the
extension or renewal, at stated maturity, by acceleration or otherwise. Each
Guarantor, by execution of the Guarantee, shall agree that its obligations
thereunder and hereunder shall be absolute and unconditional, irrespective of,
and shall be unaffected by, any invalidity, irregularity or unenforceability of
any such Note or this Indenture, any failure to enforce the provisions of any
such Note or this Indenture, any waiver, modification or indulgence granted to
the Company with respect thereto by the Holder of such Note or the Trustee, or
any other circumstances which may otherwise constitute a legal or equitable
discharge of a surety or such Guarantor.
Each Guarantor, by execution of the Guarantee, shall waive diligence,
presentment, demand for payment, filing of
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claims with a court in the event of merger or bankruptcy of the Company, any
right to require a proceeding first against the Company, protest or notice with
respect to any such Note or the Indebtedness evidenced thereby and all demands
whatsoever, and shall covenant that this Guarantee shall not be discharged as
to any such Note except by payment in full of the principal thereof, premium if
any, and interest thereon and as provided in Section 9.01 hereof. Each
Guarantor, by execution of the Guarantee, shall further agree that, as between
such Guarantor, on the one hand, and the Holders and the Trustee, on the other
hand, (i) the maturity of the Obligations guaranteed hereby may be accelerated
as provided in Article 6 hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed hereby, and (ii) in the
event of any declaration of acceleration of such Obligations as provided in
Article 6 hereof, such Obligations (whether or not due and payable) shall
forthwith become due and payable by each Guarantor for the purpose of this
Guarantee. In addition, without limiting the foregoing provisions, upon the
effectiveness of an acceleration under Article 6 hereof, the Trustee shall
promptly make a demand for payment on the Notes under the Guarantee provided
for in this Article 10 and not discharged.
A Guarantee shall not be valid or become obligatory for any purpose
with respect to a Note until the certificate of authentication on such Note
shall have been signed by or on behalf of the Trustee.
Section 10.02. Execution and Delivery of Guarantees.
A Guarantee shall be executed on behalf of a Guarantor by the manual
or facsimile signature of an Officer of such Guarantor.
If an Officer of a Guarantor whose signature is on the Guarantee no
longer holds that office, such Guarantee shall be valid nevertheless.
Section 10.03. Limitation of Guarantee.
The obligations of each Guarantor are limited to the maximum amount as
shall, after giving effect to all other contingent and fixed liabilities of
such Guarantor (including, without limitation, any guarantees of Senior
Indebtedness) and after giving effect to any collections from or payments made
by or on behalf of any other Guarantor in respect of the obligations of such
other Guarantor under its Guarantee or pursuant
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to its contribution obligations under this Indenture, result in the obligations
of such Guarantor under the Guarantee not constituting a fraudulent conveyance
or fraudulent transfer under federal or state law. Each Guarantor that makes a
payment or distribution under a Guarantee shall be entitled to a contribution
from each other Guarantor in a pro rata amount based on the Adjusted Net
Assets of each Guarantor.
Section 10.04. Release of Guarantor.
A Guarantor shall be released from all of its obligations under its
Guarantee if:
(i) the Guarantor has sold all or substantially all of its
assets or the Company and its Restricted Subsidiaries have sold all
of the Capital Stock of the Guarantor owned by them, in each case in
a transaction in compliance with Sections 4.10 and 5.01 hereof; or
(ii) the Guarantor merges with or into or consolidates with, or
transfers all or substantially all of its assets to, the Company or
another Guarantor in a transaction in compliance with Section 5.01
hereof;
and in each such case, such Guarantor has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to such transactions have been complied
with.
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or conflicts with
another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
Section 11.02. Notices.
Except for notice or communications to Holders, any notice or
communication shall be given in writing and delivered in person, sent by
facsimile, delivered by commercial courier
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service or mailed by first-class mail, postage prepaid, addressed as follows:
If to the Company or any Guarantor:
Aircraft Service International Group, Inc.
8240 N.W. 52 Terrace, Suite 200
Miami, FL 33166-7766
Attention: Chief Financial Officer
Fax Number: (305) 592-7864
Copy to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, Illinois 60601
Attention: William S. Kirsch, P.C., and
Richard W. Porter, Esq.
Fax Number: (312) 861-2200
If to the Trustee:
State Street Bank and Trust Company
Goodwin Square,
225 Asylum Street
Hartford, CT 06103
Attention: Mark Forgetta
Fax Number: (860) 244-1897
Copy to:
Reid & Riege
One State Street
Hartford, CT 06103
Attention: Earl McMahon, Esq.
Fax Number: (860) 240-1002
Such notices or communications shall be effective when received and
shall be sufficiently given if so given within the time prescribed in this
Indenture.
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The Company, the Guarantors or the Trustee by written notice to the
others may designate additional or different addresses for subsequent notices
or communications.
Any notice or communication mailed to a Noteholder shall be mailed to
him by first-class mail, postage prepaid, at his address shown on the register
kept by the Registrar.
Failure to mail a notice or communication to a Noteholder or any
defect in it shall not affect its sufficiency with respect to other
Noteholders. If a notice or communication to a Noteholder is mailed in the
manner provided above, it shall be deemed duly given, whether or not the
addressee receives it.
In case by reason of the suspension of regular mail service, or by
reason of any other cause, it shall be impossible to mail any notice as
required by this Indenture, then such method of notification as shall be made
with the approval of the Trustee shall constitute a sufficient mailing of such
notice.
Section 11.03. Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Guarantors, the Trustee, the Registrar and anyone else shall have
the protection of TIA ss. 312(c).
Section 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such Guarantor
shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include the
statements set forth in Section 11.05 below) stating that, in the
opinion of the signers, all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been
complied with; and
(2) an Opinion of Counsel (which shall include the statements
set forth in Section 11.05 below) stating that,
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in the opinion of such counsel, all such conditions precedent
have been complied with.
Section 11.05. Statements Required in Certificate and Opinion.
Each certificate and opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, it or he has
made such examination or investigation as is necessary to enable it or
him to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such Person,
such covenant or condition has been complied with.
Section 11.06. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or meetings of
Noteholders. The Registrar and Paying Agent may make reasonable rules for their
functions.
Section 11.07. Business Days; Legal Holidays.
A "Business Day" is a day that is not a Legal Holiday. A "Legal
Holiday" is a Saturday, a Sunday, a federally-recognized holiday or a day on
which banking institutions are not required to be open in the State of New York
or the State of Delaware. If a payment date is a Legal Holiday at a place of
payment, payment may be made at that place on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
<PAGE> 106
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Section 11.08. Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS INDENTURE OR THE NOTES.
Section 11.09. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan,
security or debt agreement of the Company or any Subsidiary thereof. No such
indenture, loan, security or debt agreement may be used to interpret this
Indenture.
Section 11.10. No Recourse Against Others.
No recourse for the payment of the principal of or premium, if any, or
interest on any of the Notes, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company or any Guarantor in this Indenture or in any
supplemental indenture, or in any of the Notes, or because of the creation of
any Indebtedness represented thereby, shall be had against any stockholder,
officer, director or employee, as such, past, present or future, of the Company
or of any successor corporation or against the property or assets of any such
stockholder, officer, employee or director, either directly or through the
Company or any Guarantor, or any successor corporation thereof, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise; it being expressly understood that this
Indenture and the Notes are solely obligations of the Company and the
Guarantors, and that no such personal liability whatever shall attach to, or is
or shall be incurred by, any stockholder, officer, employee or director of the
Company or any Guarantor, or any successor corporation thereof, because of the
creation of the indebtedness hereby authorized, or under or by reason of the
obligations, covenants or agreements contained in this Indenture or the Notes
or implied therefrom, and that any and all such personal liability of, and any
and all claims against every stockholder, officer, employee and director, are
hereby expressly waived and released as a condition of, and as a con-
<PAGE> 107
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sideration for, the execution of this Indenture and the issuance of the Notes.
It is understood that this limitation on recourse is made expressly for the
benefit of any such shareholder, employee, officer or director and may be
enforced by any of them.
Section 11.11. Successors.
All agreements of the Company and the Guarantors in this Indenture and
the Notes shall bind their respective successors. All agreements of the
Trustee, any additional trustee and any Paying Agents in this Indenture shall
bind its successor.
Section 11.12. Multiple Counterparts.
The parties may sign multiple counterparts of this Indenture. Each
signed counterpart shall be deemed an original, but all of them together
represent one and the same agreement.
Section 11.13. Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
Section 11.14. Separability.
Each provision of this Indenture shall be considered separable and if
for any reason any provision which is not essential to the effectuation of the
basic purpose of this Indenture or the Notes shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
<PAGE> 108
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IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed all as of the date and year first written above.
AIRCRAFT SERVICE INTERNATIONAL
GROUP, INC.
By: /s/ Stephen D. Townes
----------------------------------
Name: Stephen D. Townes
Title: President and CEO
By: /s/ F. Andrew Mitchell
----------------------------------
Name: F. Andrew Mitchell
Title: Chief Financial Officer
AIRCRAFT SERVICE INTERNATIONAL GROUP,
INC., as Guarantor
By: /s/ Stephen D. Townes
----------------------------------
Name: Stephen D. Townes
Title: President and CEO
By: /s/ F. Andrew Mitchell
----------------------------------
Name: F. Andrew Mitchell
Title: Chief Financial Officer
<PAGE> 109
-103-
FLORIDA AVIATION FUELING COMPANY,
INC., as Guarantor
By: /s/ Stephen D. Townes
----------------------------------
Name: Stephen D. Townes
Title: President and CEO
By: /s/ F. Andrew Mitchell
----------------------------------
Name: F. Andrew Mitchell
Title: Chief Financial Officer
DISPATCH SERVICES, INC., as Guarantor
By: /s/ Stephen D. Townes
----------------------------------
Name: Stephen D. Townes
Title: President and CEO
By: /s/ F. Andrew Mitchell
----------------------------------
Name: F. Andrew Mitchell
Title: Chief Financial Officer
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By: /s/ Philip G. Kane, Jr.
----------------------------------
Name: Philip G. Kane, Jr.
Title: Vice President
<PAGE> 110
EXHIBIT A
[FORM OF FACE OF NOTE]
Number CUSIP
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
11% SENIOR NOTE DUE 2005
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC., a Delaware corporation
(the "Issuer", which term includes any successor corporation), for value
received promises to pay to [ ] or registered assigns the principal sum of
[ ] DOLLARS ($ ), on August 15, 2005.
Interest Payment Dates: February 15 and August 15, commencing
February 15, 1999.
Record Dates: February 1 and August 1
This Note shall not be valid or obligatory for any purpose until the
certificate of authentication shall have been executed by the Trustee by its
manual signature.
Reference is made to the further provisions of this Security contained
herein, which shall for all purposes have the same effect as if set forth at
this place.
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<PAGE> 111
IN WITNESS WHEREOF, the Issuer has caused this Note to be signed
manually or by facsimile by its duly authorized Officers.
AIRCRAFT SERVICE INTERNATIONAL
GROUP, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Name:
Title:
Certificate of Authentication:
This is one of the 11% Senior
Notes due 2005 referred to in
the within-mentioned Indenture
Dated: August 18, 1998
STATE STREET BANK AND TRUST COMPANY,
as Trustee
By:
---------------------------------
Authorized Signatory
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<PAGE> 112
(REVERSE SIDE)
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
11% SENIOR NOTE DUE 2005
1. INTEREST.
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC., a Delaware corporation
(the "Issuer"), promises to pay interest on the principal amount of this Note
semiannually on February 15 and August 15 of each year (each an "Interest
Payment Date"), commencing on February 15, 1999, at the rate of 11% per annum.
Interest will be computed on the basis of a 360-day year of twelve 30-day
months. Interest on the Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the date of the
original issuance of the Notes.
The Issuer shall pay interest on overdue principal, and on overdue
premium, if any, and overdue interest, to the extent lawful, at the rate equal
to 2% per annum in excess of the rate borne by the Notes.
2. METHOD OF PAYMENT.
The Issuer will pay interest on this Note provided for in Paragraph 1
above (except defaulted interest) to the person who is the registered Holder of
this Note at the close of business on the February 1 or August 1 preceding the
Interest Payment Date (whether or not such day is a Business Day). The Holder
must surrender this Note to a Paying Agent to collect principal payments. The
Issuer will pay principal, premium, if any, and interest in money of the United
States that at the time of payment is legal tender for payment of public and
private debts; provided, however, that the Issuer may pay principal, premium,
if any, and interest by check payable in such money. The Issuer may mail an
interest check to the Holder's registered address.
3. PAYING AGENT AND REGISTRAR.
Initially, State Street Bank and Trust Company (the "Trustee") will
act as Paying Agent and Registrar. The Issuer may change any Paying Agent or
Registrar without notice to the
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<PAGE> 113
Holders of the Notes. Neither the Issuer nor any of its Subsidiaries or
Affiliates may act as Paying Agent but may act as Registrar.
4. INDENTURE; RESTRICTIVE COVENANTS.
The Issuer issued this Note under an Indenture dated as of August 18,
1998 (the "Indenture") among the Issuer, the Guarantors and the Trustee. The
terms of this Note include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) as in effect on the date of the Indenture. This Note is
subject to all such terms, and the Holder of this Note is referred to the
Indenture and said Trust Indenture Act for a statement of them. All capitalized
terms in this Note, unless otherwise defined, have the meanings assigned to
them by the Indenture.
The Notes are limited in aggregate principal amount to $80,000,000.
The Notes are general unsecured obligations of the Company, pari passu in right
of payment to senior obligations of the Company and senior in right of payment
to any current or future subordinated obligations of the Company. The Indenture
imposes certain restrictions on, among other things, the incurrence of
indebtedness, the issuance of common and preferred stock of subsidiaries of the
Issuer, the payment of dividends and making of other restricted payments, the
transfer and sale of assets, certain transactions with affiliates, the creation
of liens, the making of certain investments, certain sale and leaseback
transactions, agreements restricting the ability of Restricted Group Members to
declare dividends and make distributions and the merger or consolidation of the
Company or any Guarantors.
5. OPTIONAL REDEMPTION.
The Issuer, at its option, may redeem the Notes, in whole or in part,
from time to time on or after August 15, 2003 upon not less than 30 nor more
than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount thereof), set forth below, together, in each case, with
accrued and unpaid interest, if any, to the Redemption Date, if redeemed during
the twelve month period beginning on August 15 of each year listed below:
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<PAGE> 114
<TABLE>
<CAPTION>
Year Redemption Price
---- ----------------
<S> <C>
2003.................................................. 105.500%
2004 and thereafter................................... 100.000%
</TABLE>
Notwithstanding the foregoing, the Issuer, at its option, may redeem
in the aggregate up to 33 1/3% of the original principal amount of Notes at any
time and from time to time prior to August 15, 2001 at a redemption price equal
to 111.000% of the aggregate principal amount so redeemed, together with accrued
and unpaid interest, if any, to the redemption date out of the Net Proceeds of
one or more Public Offerings; provided that at least $53.3 million of the
principal amount of Notes originally issued remain outstanding immediately after
the occurrence of any such redemption and that any such redemption occurs within
90 days following the closing of such Public Offering and provided, further,
that with respect to any Public Offering by Ranger, the net proceeds thereof are
contributed to the Issuer as common equity.
6. NOTICE OF REDEMPTION.
Notice of redemption will be mailed via first class mail at least 30
days but not more than 60 days prior to the redemption date to each Holder of
Notes to be redeemed at its registered address as it shall appear on the
register of the Notes maintained by the Registrar. On and after any Redemption
Date, interest will cease to accrue on the Notes or portions thereof called for
redemption unless the Company shall fail to redeem any such Note.
7. OFFERS TO PURCHASE.
The Indenture requires that certain proceeds from Asset Sales be used,
subject to further limitations contained therein, to make an offer to purchase
certain amounts of Notes in accordance with the procedures set forth in the
Indenture. The Company is also required to make an offer to purchase Notes upon
the occurrence of a Change of Control in accordance with procedures set forth in
the Indenture.
8. REGISTRATION RIGHTS.
Pursuant to the Registration Rights Agreement among the Issuer, the
Guarantors and CIBC Oppenheimer Corp., as initial purchaser of the Notes, the
Issuer and the Guarantors will
A-5
<PAGE> 115
be obligated to consummate an exchange offer pursuant to which the Holder of
this Note shall have the right to exchange this Note for Notes of a separate
series issued under the Indenture (or a trust indenture substantially
identical to the Indenture in accordance with the terms of the Registration
Rights Agreement) which have been registered under the Securities Act, in like
principal amount and having substantially identical terms as the Notes. The
Holders shall be entitled to receive certain additional interest payments in the
event such exchange offer is not consummated and upon certain other conditions,
all pursuant to and in accordance with the terms of the Registration Rights
Agreement.
9. DENOMINATIONS, TRANSFER, EXCHANGE.
The Notes are in registered form without coupons in denominations of
$1,000 and integral multiples thereof. A Holder may register the transfer or
exchange of Notes in accordance with the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any Note
selected for redemption or register the transfer of or exchange any Note for a
period of 15 days before the mailing of notice of redemption of Notes to be
redeemed or any Note after it is called for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part.
10. PERSONS DEEMED OWNERS.
The registered Holder of this Note may be treated as the owner of it
for all purposes.
11. UNCLAIMED MONEY.
If money for the payment of principal, premium or interest on any Note
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Issuer at its written request. After that, Holders entitled to money
must look to the Issuer for payment as general creditors unless an "abandoned
property" law designates another person.
12. AMENDMENT, SUPPLEMENT AND WAIVER.
Subject to certain exceptions, the Indenture or the Notes may be
modified, amended or supplemented by the Issuer,
A-6
<PAGE> 116
the Guarantors and the Trustee with the consent of the Holders of at least a
majority in principal amount of the Notes then outstanding and any existing
default or compliance with any provision may be waived in a particular instance
with the consent of the Holders of a majority in principal amount of the Notes
then outstanding. Without the consent of Holders, the Issuer, the Guarantors
and the Trustee may amend the Indenture or the Notes or supplement the
Indenture for certain specified purposes including providing for
uncertificated Notes in addition to certificated Notes, and curing any
ambiguity, defect or inconsistency, or making any other change that does not, in
the opinion of the Trustee, materially and adversely affect the rights of any
Holder.
13. SUCCESSOR ENTITY.
When a successor corporation assumes all the obligations of its
predecessor under the Notes and the Indenture and immediately before and
thereafter no Default exists and certain other conditions are satisfied, the
predecessor corporation will be released from those obligations.
14. DEFAULTS AND REMEDIES.
Events of Default are set forth in the Indenture. If an Event of
Default (other than an Event of Default pursuant to Section 6.01(7) or (8)) of
the Indenture occurs and is continuing, then the Trustee or the holders of not
less than 25% in aggregate principal amount of the Notes then outstanding may
declare to be immediately due and payable the entire principal amount of all the
Notes then outstanding plus accrued interest to the date of acceleration and the
same will become immediately due and payable (plus, in the event of any such
declaration following a Default resulting from a willful action of the Company
with the intent to avoid the payment of any premium on the Notes, which
declaration occurs (a) before the fifth anniversary of the Issue Date, a premium
(expressed as a percentage of principal amount) equal to the interest rate per
annum then being paid on the Notes, or (b) on or after the fifth anniversary of
the Issue Date, a premium (expressed as a percentage of principal amount) equal
to the then applicable redemption premium)); provided, however, that after such
acceleration but before a judgment or decree based on acceleration is obtained
by the Trustee, the holders of a majority in aggregate principal amount of
outstanding Notes may rescind and annul such acceleration if (i) all Events of
Default, other than nonpayment of principal, premium, if any, or interest that
has become due
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<PAGE> 117
solely because of the acceleration, have been cured or waived as provided in
the Indenture, (ii) to the extent the payment of such interest is lawful,
interest on overdue installments of interest and overdue principal, which has
become due otherwise than by such declaration of acceleration, has been paid,
(iii) if the Company has paid the Trustee its reasonable compensation and
reimbursed the Trustee for its expenses, disbursements and advances and (iv) in
the event of the cure or waiver of an Event of Default of the type described in
Section 6.01(7) or (8) of the Indenture, the Trustee will have received an
Officers' Certificate and an Opinion of Counsel that such Event of Default has
been cured or waived. No such rescission will affect any subsequent Default or
impair any right consequent thereto. In case an Event of Default resulting from
Section 6.01(7) or (8) of the Indenture occurs, the principal, premium and
interest amount with respect to all of the Notes will be due and payable
immediately without any declaration or other act on the part of the Trustee or
the holders of the Notes.
15. TRUSTEE DEALINGS WITH THE ISSUERS
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Issuer, any Guarantor or their Affiliates, and may otherwise deal with the
Issuer any Guarantor or their Affiliates, as if it were not Trustee.
16. NO RECOURSE AGAINST OTHERS.
As more fully described in the Indenture, a director, officer,
employee or stockholder, as such, of the Issuer or any Guarantor shall not have
any liability for any obligations of the Issuer or any Guarantor under the Notes
or the Indenture or for any claim based on, in respect or by reason of, such
obligations or their creation. The Holder of this Note by accepting this Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of this Note.
17. DEFEASANCE AND COVENANT DEFEASANCE.
The Indenture contains provisions for defeasance of the entire
indebtedness on this Note and for defeasance of certain covenants in the
Indenture upon compliance by the Issuer with certain conditions set forth in the
Indenture.
A-8
<PAGE> 118
18. ABBREVIATIONS.
Customary abbreviations may be used in the name of a Holder of a Note
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (Uniform Gifts to Minors
Act).
19. CUSIP NUMBERS.
Pursuant to a recommendation promulgated by the Committee on Uniform
Note Identification Procedures, the Issuer has caused CUSIP Numbers to be
printed on the Notes and have directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders of the Notes. No
representation is made as to the accuracy of such numbers either as printed on
the Notes or as contained in any notice of redemption and reliance may be placed
only on the other identification numbers placed thereon.
20. GOVERNING LAW.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE AND PERFORMED
WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF
THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE.
THE ISSUER WILL FURNISH TO ANY HOLDER OF A NOTE UPON WRITTEN REQUEST
AND WITHOUT CHARGE A COPY OF THE INDENTURE. REQUESTS MAY BE MADE TO: AIRCRAFT
SERVICE INTERNATIONAL GROUP, INC., 8240 N.W. 52nd Terrace, Suite 200, Miami,
Florida 33166-7766, Attention: Chief Financial Officer.
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<PAGE> 119
21. GUARANTEES BY FUTURE SUBSIDIARIES.
The Notes will be entitled to the benefits of certain Guarantees by
future subsidiaries made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Guarantors, the Trustee and the
Holders.
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<PAGE> 120
ASSIGNMENT
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Issuer. The Agent may substitute
another to act for him.
Date: Your Signature:
--------------- -------------------------------------------
(Sign exactly as your name appears on the
other side of this Note)
Signature Guarantee:
------------------------------------------------------
<PAGE> 121
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have all or any part of this Note purchased by
the Issuer pursuant to Section 4.10 or Section 4.18 of the Indenture, check the
appropriate box:
[ ] Section 4.10 [ ] Section 4.18
If you want to have only part of the Note purchased by the Issuer
pursuant to Section 4.10 or Section 4.18 of the Indenture, state the amount you
elect to have purchased:
$ ________________________
Date: ____________________
Your Signature:
--------------------------------------------------
(Sign exactly as your name appears on
the face of this Note)
- - -----------------------------
Signature Guaranteed
<PAGE> 122
EXHIBIT B
[FORM OF LEGEND FOR 144A NOTE]
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE
UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS, EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT
PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE OF THIS NOTE AND THE LAST DATE ON
WHICH THE ISSUERS OR ANY AFFILIATE OF THE ISSUERS, WAS THE OWNER OF THIS NOTE
(OR ANY PREDECESSOR OF SUCH NOTE), RESELL OR OTHERWISE TRANSFER THIS NOTE EXCEPT
(A) TO AN ISSUER OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, (C) INSIDE THE UNITED STATES TO A
QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE ACT, (D)
INSIDE THE UNITED STATES TO AN ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE
COMPANY AND THE TRUSTEE A SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS NOTE (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE), (E) OUTSIDE THE UNITED STATES IN
AN OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE ACT OR (F)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE ACT
(IF AVAILABLE) AND (2) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS NOTE
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS NOTE PRIOR TO THE RESALE RESTRICTION
TERMINATION DATE, IF THE PROPOSED TRANSFEREE IS AN ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND THE COMPANY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM OR IN A TRANSACTION NOT SUBJECT TO THE REGISTRATION REQUIREMENTS
OF THE ACT. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION," "UNITED STATES"
AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO THEM BY REGULATION S UNDER THE ACT.
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<PAGE> 123
[FORM OF ASSIGNMENT FOR 144A NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Issuer. The Agent may substitute
another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act provided by Rule
144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance
with (a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been
satisfied.
Date: _________________ Your Signature: ________________________________________
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee: ______________________________________________________
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<PAGE> 124
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: __________________ ________________________________
NOTICE: To be executed by
an executive officer
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<PAGE> 125
EXHIBIT C
[FORM OF LEGEND FOR REGULATION S NOTE]
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, UNLESS SO
REGISTERED, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR
THE ACCOUNT OR BENEFIT OF, U.S. PERSONS UNLESS REGISTERED UNDER THE SECURITIES
ACT OR EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
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<PAGE> 126
[FORM OF ASSIGNMENT FOR REGULATION S NOTE]
I or we assign and transfer this Note to:
(Insert assignee's social security or tax I.D. number)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
and irrevocably appoint:
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
Agent to transfer this Note on the books of the Issuer. The Agent may substitute
another to act for him.
[Check One]
[ ] (a) this Note is being transferred in compliance with the
exemption from registration under the Securities Act provided by Rule
144A thereunder.
or
[ ] (b) this Note is being transferred other than in accordance
with (a) above and documents are being furnished which comply with
the conditions of transfer set forth in this Note and the Indenture.
If none of the foregoing boxes is checked, the Trustee or Registrar shall not be
obligated to register this Note in the name of any person other than the Holder
hereof unless and until the conditions to any such transfer of registration set
forth herein and in Sections 2.16 and 2.17 of the Indenture shall have been
satisfied.
Date: _________________ Your Signature: ________________________________________
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee: _________________________________________________
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<PAGE> 127
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this
Note for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Issuer as the
undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: __________________ ________________________________
NOTICE: To be executed by
an executive officer
C-3
<PAGE> 128
EXHIBIT D
---------
[FORM OF LEGEND FOR GLOBAL NOTE]
Any Global Note authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Note or Regulation S Note) in substantially the following form:
THIS NOTE IS A GLOBAL NOTE WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY. THIS NOTE IS NOT EXCHANGEABLE FOR NOTES REGISTERED IN
THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER OF THIS NOTE AS A WHOLE BY THE DEPOSITORY TO A NOMINEE
OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR
ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (A NEW YORK CORPORATION) ("DTC") TO THE ISSUERS
OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IT REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
D-1
<PAGE> 129
EXHIBIT E
---------
Form of Certificate to Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
-----------, ----
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, CT 06103
Attention: Mark Forgetta
Re: AIRCRAFT SERVICE INTERNATIONAL GROUP, INC. (the "Company") 11%
Senior Notes due 2005 (the "Notes")
--------------------------------------------------------------
Dear Sirs:
In connection with our proposed purchase of Notes, we confirm that:
1. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
Indenture dated as of August 18, 1998 relating to the Notes and we
agree to be bound by, and not to resell, pledge or otherwise transfer
the Notes except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
2. We understand that the Notes have not been registered under
the Securities Act, and that the Notes may not be offered, sold,
pledged or otherwise transferred except as permitted in the following
sentence. We agree, on our own behalf and on behalf of any accounts
for which we are acting as hereinafter stated, that if we should sell
any Notes, we will do so only (i) to the Company or any subsidiary
thereof, (ii) pursuant to an effective registration statement under
the Securities Act, (iii) in accordance with Rule 144A under the
Securities Act to a "qualified institutional buyer" (as defined in
Rule 144A), (iv) to an institutional "accredited investor" (as
defined below) that, prior to such transfer, furnishes (or has
E-1
<PAGE> 130
furnished on its behalf by a U.S. broker-dealer) to you a signed
letter containing certain representations and agreements relating to
the restrictions on transfer of the Notes, (v) outside the United
States to persons other than U.S. persons in offshore transactions
meeting the requirements of Rule 904 of Regulation S under the
Securities Act, or (vi) pursuant to any other exemption from
registration under the Securities Act (if available), and we further
agree to provide to any person purchasing any of the Notes from us a
notice advising such purchaser that resales of the Notes are
restricted as stated herein.
3. We understand that, on any proposed resale of any Notes, we
will be required to furnish to you and the Company such
certifications, legal opinions and other information as you and the
Company may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that
the Notes purchased by us will bear a legend to the foregoing effect.
4. We are an institutional "accredited investor" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are
acting each are able to bear the economic risk of our or their
investment, as the case may be.
5. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole
investment discretion.
E-2
<PAGE> 131
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceeding or official inquiry
with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:
----------------------------
Authorized Signature
E-3
<PAGE> 132
EXHIBIT F
---------
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
----------, ----
State Street Bank and Trust Company
Goodwin Square, 225 Asylum Street
Hartford, CT 06103
Attention: Mark Forgetta
Re: AIRCRAFT SERVICE INTERNATIONAL GROUP, INC. (the "Company"), 11%
Senior Notes due 2005 (the "Notes")
--------------------------------------------------------------
Dear Sirs:
In connection with our proposed sale of $__________ aggregate
principal amount of the Notes, we confirm that such sale has been effected
pursuant to and in accordance with Regulation S under the U.S. Securities Act
of 1933, as amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a U.S. person
or to a person in the United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting
on our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated offshore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been prearranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
F-1
<PAGE> 133
(5) we have advised the transferee of the transfer restrictions
applicable to the Notes.
You and the Company are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
----------------------------
Authorized Signature
F-2
<PAGE> 134
EXHIBIT G
---------
[FORM OF GUARANTEE]
The undersigned (the "Guarantor") hereby unconditionally guarantees,
on a senior unsecured basis, jointly and severally with all other guarantors
under the Indenture dated as of August 18, 1998 by and among Aircraft Service
International Group, Inc., a Delaware corporation (the "Company"), Aircraft
Service International, Inc., a Delaware corporation, Florida Aviation Fueling
Company, Inc., a Florida corporation, and Dispatch Services, Inc., a Florida
corporation (collectively, the "Guarantors"), and State Street Bank and Trust
Company, as trustee (as amended, restated or supplemented from time to time,
the "Indenture"), to the extent set forth in the Indenture and subject to the
provisions of the Indenture, (a) the due and punctual payment of the principal
of and premium, if any, and interest on the Notes, whether at maturity, by
acceleration or otherwise, the due and punctual payment of interest on overdue
principal of, and premium, if any, and interest on the Notes, to the extent
lawful, and the due and punctual performance of all other obligations of the
Company to the Noteholders or the Trustee, all in accordance with the terms set
forth in Article 10 of the Indenture, and (b) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of the Guarantor to the Noteholders and to the Trustee
pursuant to this Guarantee and the Indenture are expressly set forth in Article
10 of the Indenture and reference is hereby made to the Indenture for the
precise terms and limitations of this Guarantee.
Dated: [Guarantor]
By:
--------------------------------------
Name:
Title:
G-1
<PAGE> 1
EXHIBIT 4.3
- - --------------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated as of August 18, 1998
by and among
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.,
the GUARANTORS named herein
and
CIBC OPPENHEIMER CORP.,
as Initial Purchaser
- - --------------------------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
Page
----
1. Definitions..............................................................1
2. Exchange Offer...........................................................5
3. Shelf Registration.......................................................9
4. Additional Interest.....................................................10
5. Registration Procedures.................................................12
6. Registration Expenses...................................................23
7. Indemnification.........................................................25
8. Rules 144 and 144A......................................................28
9. Underwritten Registrations..............................................29
10. Miscellaneous..........................................................29
(a) Remedies..............................................................29
(b) Enforcement...........................................................30
(c) No Inconsistent Agreements............................................30
(d) Adjustments Affecting Registrable Notes...............................30
(e) Amendments and Waivers................................................30
(f) Notices...............................................................31
(g) Successors and Assigns................................................31
(h) Counterparts..........................................................32
(i) Headings..............................................................32
(j) Governing Law.........................................................32
(k) Severability..........................................................32
(l) Entire Agreement......................................................32
(m) Joint and Several Obligations.........................................32
(n) Notes Held by the Company or Its Affiliates...........................32
-i-
<PAGE> 3
REGISTRATION RIGHTS AGREEMENT (the "Agreement") dated as of
August 18, 1998, by and among AIRCRAFT SERVICE INTERNATIONAL GROUP, INC., a
Delaware corporation (the "Company"), the Guarantors named on the signature
pages hereto (the "Guarantors"), and CIBC OPPENHEIMER CORP. ("CIBC"), as initial
purchaser (the "Initial Purchaser").
This Agreement is entered into in connection with the
Securities Purchase Agreement, dated as of August 13, 1998 among the Company,
the Guarantors and the Initial Purchaser (the "Purchase Agreement") relating to
the sale by the Company to the Initial Purchaser of $80,000,000 aggregate
principal amount of the Company's 11% Senior Notes due 2005 (the "Notes"). In
order to induce the Initial Purchaser to enter into the Purchase Agreement, the
Company and the Guarantors have agreed to provide the registration rights set
forth in this Agreement to the Initial Purchaser and its direct and indirect
transferees and assigns. The execution and delivery of this Agreement is a
condition to the Initial Purchaser's obligation to purchase the Notes under the
Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Additional Interest: See Section 4(a).
Advice: See the last paragraph of Section 5.
Applicable Period: See Section 2(b).
Closing: See the Purchase Agreement.
Company: See the introductory paragraphs to this Agreement.
Consummation Date: The 180th day after the Issue Date.
Effectiveness Date: The 150th day after the Issue Date.
Effectiveness Period: See Section 3(a).
Event Date: See Section 4(b).
<PAGE> 4
-2-
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2(a).
Exchange Offer: See Section 2(a).
Exchange Registration Statement: See Section 2(a).
Filing Date: The 60th day after the Issue Date.
Guarantors: See the introductory paragraphs to this Agreement.
Holder: Any holder of a Registrable Note or Registrable Notes.
Indemnified Person: See Section 7(c).
Indemnifying Person: See Section 7(c).
Indenture: The Indenture, dated as of August 18, 1998, among
the Company, the Guarantors and State Street Bank and Trust Company, as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time in accordance with the terms thereof.
Initial Purchaser: See the introductory paragraph to this
Agreement.
Initial Shelf Registration: See Section 3(a).
Inspectors: See Section 5(o).
Issue Date: The date on which the original Notes are sold to
the Initial Purchaser pursuant to the Purchase Agreement.
NASD: See Section 5(t).
Notes: See the introductory paragraphs to this Agreement.
Participant: See Section 7(a).
Participating Broker-Dealer: See Section 2(b).
<PAGE> 5
-3-
Person: An individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government (including any agency or political
subdivision thereof).
Private Exchange: See Section 2(b).
Private Exchange Notes: See Section 2(b).
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, with respect to the terms of the offering of any
portion of the Registrable Notes covered by such Registration Statement, and all
other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs to this
Agreement.
Records: See Section 5(o).
Registrable Notes: The Notes upon original issuance of the
Notes and at all times subsequent thereto and, if issued, the Private Exchange
Notes, until in the case of any such Notes or any such Private Exchange Notes,
as the case may be, (i) a Registration Statement covering such Notes or such
Private Exchange Notes has been declared effective by the SEC and such Notes or
such Private Exchange Notes, as the case may be, have been exchanged and/or
disposed of in accordance with such effective Registration Statement, (ii) such
Notes or such Private Exchange Notes, as the case may be, are sold in compliance
with Rule 144, (iii) in the case of any Note, such Note has been exchanged for
an Exchange Note or Exchange Notes pursuant to an Exchange Offer or (iv) such
Notes or such Private Exchange Notes, as the case may be, cease to be
outstanding.
Registration Default: See Section 4(a).
Registration Statement: Any registration statement of the
Company, including, but not limited to, the Exchange Registration Statement,
which covers any of the Registrable Notes pursuant to the provisions of this
Agreement, including
<PAGE> 6
-4-
the Prospectus, amendments and supplements to such registration statement,
including post-effective amendments, all exhibits, and all material incorporated
by reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Shelf Notice: See Section 2(c).
Shelf Registration: See Section 3(b).
Subsequent Shelf Registration: See Section 3(b).
TIA: The Trust Indenture Act of 1939, as amended.
Trustee: The trustee under the Indenture and, if existent, the
trustee under any indenture governing the Exchange Notes and Private Exchange
Notes (if any).
Underwritten registration or underwritten offering: A
registration under the Securities Act in which securities of
<PAGE> 7
-5-
the Company are sold to an underwriter or underwriters for reoffering to the
public.
2. Exchange Offer
(a) The Company and the Guarantors jointly and severally agree
to use their reasonable best efforts to file with the SEC as soon as practicable
after the Closing, but in no event later than the Filing Date, documents
pertaining to an offer to exchange (the "Exchange Offer") any and all of the
Registrable Notes for a like aggregate principal amount of debt securities of
the Company which are identical in all material respects to the Notes (the
"Exchange Notes") (and which are entitled to the benefits of the Indenture or a
trust indenture which is substantially identical to the Indenture (other than
such changes to the Indenture or any such identical trust indenture as are
necessary to comply with any requirements of the SEC to effect or maintain the
qualification thereof under the TIA) and which, in either case, has been
qualified under the TIA), except that the Exchange Notes shall have been
registered pursuant to an effective registration statement under the Securities
Act and will not contain terms with respect to transfer restrictions. The
Exchange Offer will be registered under the Securities Act on the appropriate
form (the "Exchange Registration Statement"), and the Exchange Offer will comply
with all applicable tender offer rules and regulations under the Exchange Act.
The Company and the Guarantors jointly and severally agree to use their
reasonable best efforts to (x) cause the Exchange Registration Statement to
become effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 30 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders; and (z) consummate the Exchange Offer with respect to all Notes validly
tendered on or prior to the 60th day following the date the Exchange
Registration Statement is declared effective (in any event on or prior to the
Consummation Date) (or, in the event of any extension of the Exchange Offer
required by applicable law, the earliest day following any such extension). Each
Holder who participates in the Exchange Offer will be required to represent that
any Exchange Notes received by it will be acquired in the ordinary course of its
business, that at the time of the consummation of the Exchange Offer such Holder
will have no arrangement or understanding with any Person to participate in the
distribution of the Exchange Notes in violation of the provisions of the
Securities Act, that such Holder is not an affiliate of the Company or the
Guarantors within the meaning of Rule 405 promulgated under the Securities Act
or if it is such an affiliate,
<PAGE> 8
-6-
that it will comply with the registration and prospectus delivery requirements
of the Securities Act, to the extent applicable, and that is not acting on
behalf of any Person who could not truthfully make the foregoing
representations. Upon consummation of the Exchange Offer in accordance with this
Section 2, the provisions of this Agreement shall continue to apply, mutatis
mutandis, solely with respect to Registrable Notes that are Private Exchange
Notes and Exchange Notes held by Participating Broker-Dealers, and the Company
and the Guarantors shall have no further obligation to register Registrable
Notes (other than Private Exchange Notes and Exchange Notes held by
Participating Broker-Dealers) pursuant to Section 3 of this Agreement.
(b) The Company and the Gurantors shall include within the
Prospectus contained in the Exchange Registration Statement a section entitled
"Plan of Distribution," reasonably acceptable to the Initial Purchaser, which
shall contain a summary statement of the positions taken or policies made by the
staff of the SEC with respect to the potential "underwriter" status of any
broker-dealer that is the beneficial owner (as defined in Rule 13d-3 promulgated
under the Exchange Act) of Exchange Notes received by such broker-dealer in the
Exchange Offer (a "Participating Broker-Dealer"), whether such positions or
policies have been publicly disseminated by the staff of the SEC or such
positions or policies, in the reasonable judgment of the Initial Purchaser,
represent the prevailing views of the staff of the SEC. Such "Plan of
Distribution" section shall also allow the use of the Prospectus by all Persons
subject to the prospectus delivery requirements of the Securities Act, including
all Participating Broker-Dealers, and include a statement describing the means
by which Participating Broker-Dealers may resell the Exchange Notes.
The Company and the Guarantors shall use their reasonable best
efforts to keep the Exchange Registration Statement effective and to amend and
supplement the Prospectus contained therein in order to permit such Prospectus
to be lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as such Persons must
comply with such requirements in order to resell the Exchange Notes, provided
that such period shall not exceed 180 days (or such longer period if extended
pursuant to the last paragraph of Section 5) (the "Applicable Period").
Notwithstanding the foregoing, the Company and the Guarantors shall have no
obligation to keep the Exchange Registration Statement effective or to amend and
supplement the Prospectus contained therein in the event that the Company has
not
<PAGE> 9
-7-
received written notice within 30 days following completion of the Exchange
Offer that a Participating Broker-Dealer received Exchange Notes in the Exchange
Offer.
If, prior to consummation of the Exchange Offer, the Initial
Purchaser holds any Notes acquired by it and having, or which are reasonably
likely to be determined to have, the status as an unsold allotment in the
initial distribution, the Company and the Guarantors upon the request of the
Initial Purchaser shall, simultaneously with the delivery of the Exchange Notes
in the Exchange Offer, issue and deliver to the Initial Purchaser, in exchange
(the "Private Exchange") for the Notes held by the Initial Purchaser, a like
principal amount of debt securities of the Company that are identical in all
material respects to the Exchange Notes (the "Private Exchange Notes") (and
which are issued pursuant to the same indenture as the Exchange Notes) except
for the placement of a restrictive legend on the Private Exchange Notes. If
possible, the Private Exchange Notes shall bear the same CUSIP number as the
Exchange Notes. Interest on the Exchange Notes and Private Exchange Notes will
accrue from the last interest payment date on which interest was paid on the
Notes surrendered in exchange therefor or, if no interest has been paid on the
Notes, from the Issue Date.
In connection with the Exchange Offer, the Company and the
Guarantors shall:
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Registration Statement, together with an
appropriate letter of transmittal and related documents;
(ii) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York; and
(iii) permit Holders to withdraw tendered Notes at any time
prior to the close of business, New York City time, on the last
business day on which the Exchange Offer shall remain open.
As soon as practicable after the close of the Exchange Offer
or the Private Exchange, as the case may be, the Company and the Guarantors
shall:
<PAGE> 10
-8-
(i) accept for exchange all Notes tendered and not validly
withdrawn pursuant to the Exchange Offer or the Private Exchange;
(ii) deliver to the Trustee for cancellation all Notes so
accepted for exchange; and
(iii) cause the Trustee to authenticate and deliver promptly
to each Holder of Notes, Exchange Notes or Private Exchange Notes,
as the case may be, equal in principal amount to the Notes of such
Holder so accepted for exchange.
The Exchange Notes and the Private Exchange Notes may be
issued under (i) the Indenture or (ii) an indenture substantially identical to
the Indenture, which in either event will provide that (1) the Exchange Notes
will not be subject to the transfer restrictions set forth in the Indenture and
(2) the Private Exchange Notes will be subject to the transfer restrictions set
forth in the Indenture. The Indenture or such indenture shall provide that the
Exchange Notes, the Private Exchange Notes and the Notes will have the right to
vote and give consents together on all matters presented to such holders for
votes or consents as one class and that neither the Exchange Notes, the Private
Exchange Notes nor the Notes will have the right to vote or consent as a
separate class on any matter.
(c) If (1) prior to the consummation of the Exchange Offer,
the Company, the Guarantors or Holders of at least a majority in aggregate
principal amount of the Registrable Notes reasonably determine in good faith
that (i) the Exchange Notes would not, upon receipt, be freely transferable by
such Holders which are not affiliates (within the meaning of the Securities Act)
of the Company and the Guarantors without restriction under the Securities Act
and without restrictions under applicable state securities laws, (ii) the
interests of the Holders under this Agreement would be adversely affected by the
consummation of the Exchange Offer or (iii) after conferring with counsel, the
SEC is unlikely to permit the commencement of the Exchange Offer prior to the
Effectiveness Date, (2) subsequent to the consummation of the Private Exchange,
any holder of the Private Exchange Notes so requests or (3) the Exchange Offer
is commenced and not consummated prior to the Consummation Date, then the
Company and the Guarantors shall promptly deliver to the Holders and the Trustee
written notice thereof (the "Shelf Notice") and shall file an Initial Shelf
Registration pursuant to Section 3. The parties hereto agree that following the
delivery of a Shelf Notice to the Holders of Registrable Notes
<PAGE> 11
-9-
(in the circumstances contemplated by clauses (1) and (3) of the preceding
sentence), the Company and the Guarantors shall not have any further obligation
to conduct the Exchange Offer or the Private Exchange under this Section 2.
3. Shelf Registration
If a Shelf Notice is required to be delivered as contemplated
by Section 2(c), then:
(a) Initial Shelf Registration. The Company and the Guarantors
shall prepare and file with the SEC a Registration Statement for an offering to
be made on a continuous basis pursuant to Rule 415 covering all of the then
existing Registrable Notes (the "Initial Shelf Registration"). If the Company
and the Guarantors shall have not yet filed an Exchange Registration Statement,
the Company and the Guarantors shall use their reasonable best efforts to file
with the SEC the Initial Shelf Registration on or prior to the Filing Date. In
any other instance, the Company and the Guarantors shall use their reasonable
best efforts to file with the SEC the Initial Shelf Registration as promptly as
practicable but, in any event, within 45 days following delivery of the Shelf
Notice. The Initial Shelf Registration shall be on Form S-1 or another
appropriate form permitting registration of such Registrable Notes for resale by
such Holders in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company and the Guarantors
shall not permit any securities other than the Registrable Notes to be included
in the Initial Shelf Registration or any Subsequent Shelf Registration. The
Company and the Guarantors shall use their reasonable best efforts to cause the
Initial Shelf Registration to be declared effective under the Securities Act, if
an Exchange Registration Statement has not yet been declared effective, on or
prior to the Effectiveness Date, or, in any other instance, as soon as
practicable after the filing thereof and in no event later than 60 days after
filing of the Initial Shelf Registration, and to keep the Initial Shelf
Registration continuously effective under the Securities Act until the date
which is 24 months from the date on which such Initial Shelf Registration is
declared effective (subject to extension pursuant to the last paragraph of
Section 5 hereof), or such shorter period ending when (i) all Registrable Notes
covered by the Initial Shelf Registration have been sold in the manner set forth
and as contemplated in the Initial Shelf Registration or (ii) a Subsequent Shelf
Registration covering all of the Registrable Notes has been declared effective
under the Securities Act (the "Effectiveness Period").
<PAGE> 12
-10-
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time prior to the termination of the Effectiveness Period, the
Company and the Guarantors shall use their reasonable best efforts to promptly
restore the effectiveness thereof, and in any event shall, within 45 days of
such cessation of effectiveness, amend the Shelf Registration in a manner
reasonably expected to restore the effectiveness thereof, or file an additional
"shelf" Registration Statement pursuant to Rule 415 covering all of the then
existing Registrable Notes (a "Subsequent Shelf Registration"). If a Subsequent
Shelf Registration is filed, the Company and the Guarantors shall use their
reasonable best efforts to cause the Subsequent Shelf Registration to be
declared effective as soon as practicable after such filing and to keep such
Registration Statement continuously effective for a period equal to the number
of days in the Effectiveness Period less the aggregate number of days during
which the Initial Shelf Registration or any Subsequent Shelf Registration was
previously continuously effective. As used herein the term "Shelf Registration"
means the Initial Shelf Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Company and the Guarantors
shall promptly supplement and amend the Shelf Registration if required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration or if required by the Securities Act. The Company and
the Guarantors shall promptly supplement and amend the Shelf Registration if any
such supplement or amendment is requested by the Holders of a majority in
aggregate principal amount of the Registrable Notes covered by such Registration
Statement or by any underwriter(s) of such Registrable Notes.
4. Additional Interest
(a) The Company, the Guarantors and the Initial Purchaser
agree that the Holders of Registrable Notes will suffer damages if the Company
fails to fulfill its obligations under Section 2 or Section 3 hereof and that it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, the Company agrees to pay additional interest on the Notes
("Additional Interest") under the circumstances and to the extent set forth
below:
(i) if neither the Exchange Registration Statement nor the
Initial Shelf Registration has been filed on or prior to the Filing
Date;
<PAGE> 13
-11-
(ii) if neither the Exchange Registration Statement nor the
Initial Shelf Registration has been declared effective on or prior to
the Effectiveness Date;
(iii) if an Initial Shelf Registration required by Section
2(c)(2) has not been filed on or prior to the date 60 days after
delivery of the Shelf Notice;
(iv) if an Initial Shelf Registration required by Section
2(c)(2) has not been declared effective on or prior to the date 120
days after the delivery of the Shelf Notice; and/or
(v) if (A) the Company has not exchanged the Exchange Notes
for all Notes validly tendered in accordance with the terms of the
Exchange Offer on or prior to the Consummation Date or (B) the Exchange
Registration Statement ceases to be effective at any time prior to the
time that the Exchange Offer is consummated as to all Notes validly
tendered or (C) if applicable, the Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any
time prior to the termination of the Effectiveness Period.
(each such event referred to in clauses (i) through (v) above is a "Registration
Default"). The sole remedy available to Holders of the Notes for a Registration
Default will be the accrual of Additional Interest as follows: the per annum
interest rate on the Notes will increase by 0.50% during the first 90-day period
following the occurrence of a Registration Default and until it is waived or
cured; and the per annum interest rate will increase by an additional 0.25% for
each subsequent 90-day period during which the Registration Default remains
uncured, up to a maximum additional interest rate of 2.0% per annum, provided,
however, that only Holders of Private Exchange Notes shall be entitled to
receive Additional Interest as a result of a Registration Default pursuant to
clause (iii) or (iv), provided, further, that (1) upon the filing of the
Exchange Registration Statement or the Initial Shelf Registration (in the case
of (i) above), (2) upon the effectiveness of the Exchange Registration Statement
or a Shelf Registration (in the case of (ii) above), (3) upon the filing of the
Shelf Registration (in the case of (iii) above), (4) upon the effectiveness of
the Shelf Registration (in the case of (iv) above), or (5) upon the exchange of
Exchange Notes for all Notes tendered or the effectiveness of a Shelf
Registration (in the case of (v)(A) above), or upon the subsequent effectiveness
of the Exchange Registration Statement which had ceased to remain
<PAGE> 14
-12-
effective or the effectiveness of a Shelf Registration (in the case of (v)(B)
above), or upon the subsequent effectiveness of the Shelf Registration which had
ceased to remain effective (in the case of (v)(C) above), Additional Interest on
the Notes as a result of such clause (i), (ii), (iii), (iv) or (v) (or the
relevant subclause thereof), as the case may be, shall cease to accrue and the
interest rate on the Notes will revert to the interest rate originally borne by
the Notes.
(b) The Company shall notify the Trustee within one business
day after each and every date on which an event occurs in respect of which
Additional Interest is required to be paid (an "Event Date"). Any amounts of
Additional Interest due pursuant to (a)(i), (a)(ii), (a)(iii), (a)(iv) or (a)(v)
of this Section 4 will be payable in cash semi-annually on each February 15 and
August 15 (to the Holders of record on each February 1 and August 1 immediately
preceding such dates), commencing with the first such date occurring after any
such Additional Interest commences to accrue and until such Registration Default
is cured, by depositing with the Trustee, in trust for the benefit of such
Holders, immediately available funds in sums sufficient to pay such Additional
Interest. The amount of Additional Interest will be determined by multiplying
the applicable Additional Interest rate by the principal amount of the
Registrable Notes, multiplied by a fraction, the numerator of which is the
number of days such Additional Interest rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed), and the
denominator of which is 360.
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Section 2 or 3 hereof, the Company and the Guarantors shall effect
such registrations to permit the sale of the securities covered thereby in
accordance with the intended method or methods of disposition thereof, and
pursuant thereto the Company and the Guarantors shall:
(a) Prepare and file with the SEC, as provided herein, a
Registration Statement or Registration Statements as prescribed by
Section 2 or 3, and use their respective reasonable best efforts to
cause each such Registration Statement to become effective and remain
effective as provided herein, provided that, if (1) such filing is
pursuant to Section 3, or (2) a Prospectus contained in an Exchange
Registration Statement filed pursuant to Section
<PAGE> 15
-13-
2 is required to be delivered under the Securities Act by any
Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, before filing any Registration Statement or
Prospectus or any amendments or supplements thereto, the Company and
the Guarantors shall, upon written request, furnish to and afford the
Holders of the Registrable Notes covered by such Registration
Statement and each such Participating Broker-Dealer, as the case may
be, their counsel and the managing underwriter(s), if any, a
reasonable opportunity to review copies of all such documents
(including copies of any documents to be incorporated by reference
therein and all exhibits thereto) proposed to be filed (to the extent
practicable, at least 5 business days prior to such filing). The
Company and the Guarantors shall not file any Registration Statement
or Prospectus or any amendments or supplements thereto in respect of
which the Holders must be afforded an opportunity to review prior to
the filing of such document, if the Holders of a majority in aggregate
principal amount of the Registrable Notes covered by such Registration
Statement, or such Participating Broker-Dealer, as the case may be,
their counsel, or the managing underwriter(s), if any, shall
reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration or Exchange
Registration Statement, as the case may be, as may be necessary to
keep such Registration Statement continuously effective for the
Effectiveness Period or the Applicable Period, as the case may be;
cause the related Prospectus to be supplemented by any prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
under the Securities Act; and comply with the provisions of the
Securities Act and the Exchange Act applicable to them with respect to
the disposition of all securities covered by such Registration
Statement as so amended or in such Prospectus as so supplemented and
with respect to the subsequent resale of any securities being sold by
a Participating Broker-Dealer covered by any such Prospectus; the
Company and the Guarantors shall be deemed not to have used their
reasonable best efforts to keep a Registration Statement effective
during the Applicable Period if either of them voluntarily takes any
action that would result in selling Holders of the Registrable Notes
covered thereby or Participating Broker-Dealers seeking to sell
Exchange Notes not being able to sell such Registrable Notes or such
Exchange Notes during that period unless
<PAGE> 16
-14-
such action is required by applicable law or unless the Company and
the Guarantors comply with this Agreement, including without
limitation, the provisions of clauses 5(c)(v) and (vi) below.
(c) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, notify the selling
Holders of Registrable Notes, or each such Participating
Broker-Dealer, as the case may be, their counsel and the managing
underwriter(s), if any, promptly (but in any event within two business
days), and confirm such notice in writing, (i) when a Prospectus or
any prospectus supplement or post-effective amendment thereto has been
filed, and, with respect to a Registration Statement or any
post-effective amendment thereto, when the same has become effective
under the Securities Act (including in such notice a written statement
that any Holder may, upon request, obtain, without charge, one
conformed copy of such Registration Statement or post-effective
amendment thereto including financial statements and schedules,
documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement or of any
order preventing or suspending the use of any preliminary Prospectus
or the initiation of any proceedings for that purpose, (iii) if at any
time when a Prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Notes or resales
of Exchange Notes by Participating Broker-Dealers the representations
and warranties of the Company and the Guarantors contained in any
agreement (including any underwriting agreement) contemplated by
Section 5(n) below cease to be true and correct, (iv) of the receipt
by the Company and the Guarantors of any notification with respect to
the suspension of the qualification or exemption from qualification of
a Registration Statement or any of the Registrable Notes or the
Exchange Notes to be sold by any Participating Broker-Dealer for offer
or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, (v) of the happening of any event or any
information becoming known that makes any statement made in such
Registration Statement or related Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue
in any
<PAGE> 17
-15-
material respect or that requires the making of any changes in, or
amendments or supplements to, such Registration Statement, Prospectus
or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and that in the case of
the Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (vi) of
the reasonable determination of the Company and the Guarantors that a
post-effective amendment to a Registration Statement would be
necessary or appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, use their reasonable best
efforts to prevent the issuance of any order suspending the
effectiveness of a Registration Statement or of any order preventing
or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes or
the Exchange Notes to be sold by any Participating Broker-Dealer, for
sale in any jurisdiction, and, if any such order is issued, to use
their reasonable best efforts to obtain the withdrawal of any such
order as promptly as practicable.
(e) If a Shelf Registration is filed pursuant to Section 3 and
if requested by the managing underwriter(s), if any, or the Holders of
a majority in aggregate principal amount of the Registrable Notes
being sold in connection with an underwritten offering, (i) promptly
incorporate in a Prospectus supplement or post-effective amendment
such information as the managing underwriter(s), if any, or such
Holders reasonably request to be included therein and (ii) make all
required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received
notification of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(f) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange
<PAGE> 18
-16-
Registration Statement filed pursuant to Section 2 is required to be
delivered under the Securities Act by any Participating Broker-Dealer
who seeks to sell Exchange Notes during the Applicable Period, furnish
to each selling Holder of Registrable Notes who so requests and to
each such Participating Broker-Dealer who so requests and to counsel
and the managing underwriter(s), if any, without charge, one conformed
copy of the Registration Statement or Registration Statements and each
post-effective amendment thereto, including financial statements and
schedules, and, if requested, all documents incorporated or deemed to
be incorporated therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, deliver to each selling
Holder of Registrable Notes, or each such Participating Broker-Dealer,
as the case may be, their counsel, and the managing underwriter or
underwriters, if any, without charge, as many copies of the Prospectus
or Prospectuses (including each form of preliminary Prospectus) and
each amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject
to the last paragraph of this Section 5, the Company and the
Guarantors hereby consent to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Holders of
Registrable Notes or each such Participating Broker-Dealer, as the
case may be, and the managing underwriter or underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale
of the Registrable Notes covered by, or the sale by Participating
Broker-Dealers of the Exchange Notes pursuant to, such Prospectus and
any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes or any
delivery of a Prospectus contained in the Exchange Registration
Statement by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, to use their reasonable
best efforts to register or qualify, and to cooperate with the selling
Holders of Registrable Notes or each such Participating Broker-Dealer,
as the case may be, the managing underwriter or underwriters, if any,
and their respective counsel in
<PAGE> 19
-17-
connection with the registration or qualification of (or exemption
from such registration or qualification), such Registrable Notes for
offer and sale under the securities or Blue Sky laws of such
jurisdictions within the United States as any selling Holder,
Participating Broker-Dealer, or the managing underwriter or
underwriters, if any, reasonably request in writing, provided that
where Exchange Notes held by Participating Broker-Dealers or
Registrable Notes are offered other than through an underwritten
offering, the Company and the Guarantors agree to cause their counsel
to perform Blue Sky investigations and file registrations and
qualifications required to be filed pursuant to this Section 5(h);
keep each such registration or qualification (or exemption therefrom)
effective during the period such Registration Statement is required to
be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions
of the Exchange Notes held by Participating Broker-Dealers or the
Registrable Notes covered by the applicable Registration Statement;
provided that the Company and the Guarantors shall not be required to
(A) qualify generally to do business in any jurisdiction where it is
not then so qualified, (B) take any action that would subject it to
general service of process in any such jurisdiction where it is not
then so subject or (C) subject itself to taxation in any such
jurisdiction where it is not otherwise so subject.
(i) If a Shelf Registration is filed pursuant to Section 3,
cooperate with the selling Holders of Registrable Notes and the
managing underwriter or underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Registrable
Notes to be sold, which certificates shall not bear any restrictive
legends and shall be in a form eligible for deposit with The
Depository Trust Company; and enable such Registrable Notes to be in
such denominations and registered in such names as the managing
underwriter or underwriters, if any, or Holders may reasonably
request.
(j) Use their reasonable best efforts to cause the Registrable
Notes covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the managing
underwriter or underwriters, if any, to consummate the disposition of
such Registrable Notes, except as may be required solely as a
consequence of the nature of such selling Holder's
<PAGE> 20
-18-
business, in which case the Company and the Guarantors will cooperate
in all reasonable respects with the filing of such Registration
Statement and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, upon the occurrence of
any event contemplated by paragraph 5(c)(v) or 5(c)(vi), as promptly
as reasonably practicable prepare and (subject to Section 5(a)) file
with the SEC, at the joint and several expense of the Company and the
Guarantors, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or
any document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Notes being sold
thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any
such Prospectus will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(l) Use their reasonable best efforts to cause the Registrable
Notes covered by a Registration Statement or the Exchange Notes, as
the case may be, to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal
amount of Registrable Notes covered by such Registration Statement or
the Exchange Notes, as the case may be, or the managing underwriter or
underwriters, if any.
(m) Prior to the effective date of the first Registration
Statement relating to the Registrable Notes, (i) provide the Trustee
with certificates for the Registrable Notes or Exchange Notes, as the
case may be, in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registrable Notes or
Exchange Notes, as the case may be.
(n) In connection with an underwritten offering of Registrable
Notes pursuant to a Shelf Registration, enter
<PAGE> 21
-19-
into an underwriting agreement upon such reasonable terms and
conditions as are customary in underwritten offerings of debt
securities similar to the Notes and take all such other actions as are
reasonably requested by the managing underwriter(s), if any, in order
to expedite or facilitate the registration or the disposition of such
Registrable Notes, and in such connection, (i) make such reasonable
representations and warranties to the managing underwriter or
underwriters on behalf of any underwriters, with respect to the
business of the Company and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to
the Notes, and confirm the same if and when requested; (ii) obtain
opinions of counsel to the Company and the Guarantors and updates
thereof in form and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the managing underwriter or
underwriters covering the matters customarily covered in opinions
received in underwritten offerings of debt securities similar to the
Notes and such other customary matters as may be reasonably requested
by the managing underwriter(s); (iii) obtain "cold comfort" letters
and updates thereof in form and substance reasonably satisfactory to
the managing underwriter or underwriters from the independent
certified public accountants of the Company and the Guarantors (and,
if necessary, any other independent certified public accountants of
any business acquired by the Company for which financial statements
and financial data are, or are required to be, included in the
Registration Statement), addressed to the managing underwriter or
underwriters on behalf of any underwriters, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with underwritten offerings of
debt securities similar to the Notes and such other matters as may be
reasonably requested by the managing underwriter or underwriters; and
(iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable
than those set forth in Section 7 hereof (or such other provisions and
procedures acceptable to Holders of a majority in aggregate principal
amount of Registrable Notes covered by such Registration Statement and
the managing underwriter or underwriters or agents) with respect to
all parties to be indemnified pursuant to said Section. The above
shall be done at each closing under such underwriting agreement, or as
and to the extent required thereunder.
<PAGE> 22
-20-
(o) If (1) a Shelf Registration is filed pursuant to Section
3, or (2) a Prospectus contained in an Exchange Registration Statement
filed pursuant to Section 2 is required to be delivered under the
Securities Act by any Participating Broker-Dealer who seeks to sell
Exchange Notes during the Applicable Period, make available for
inspection by any selling Holder of such Registrable Notes being sold,
or each such Participating Broker-Dealer, as the case may be, the
managing underwriter or underwriters participating in any such
disposition of Registrable Notes, if any, and any attorney, accountant
or other agent retained by any such selling Holder or each such
Participating Broker-Dealer, as the case may be (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable
business hours, all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers,
directors and employees of the Company to supply all information in
each case reasonably requested by any such Inspector in connection
with such Registration Statement. Records which the Company
determines, in good faith, to be confidential and any Records which
they notify the Inspectors are confidential shall not be disclosed by
the Inspectors unless (i) the disclosure of such Records is necessary
to avoid or correct a material misstatement or material omission in
such Registration Statement, (ii) the release of such Records is
ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or (iii) the information in such Records has
been made generally available to the public. Each selling Holder of
such Registrable Notes and each such Participating Broker-Dealer or
underwriter will be required to agree that information obtained by it
as a result of such inspections shall be deemed confidential and shall
not be used by it as the basis for any market transactions in the
securities of the Company and the Guarantors or for any purpose other
than in connection with such Registration Statement unless and until
such is made generally available to the public. Each selling Holder of
such Registrable Notes and each such Participating Broker-Dealer will
be required to further agree that it will, upon learning that
disclosure of such Records is sought in a court of competent
jurisdiction, give prompt notice to the Company and allow the Company
<PAGE> 23
-21-
to undertake appropriate action to prevent disclosure of the Records
deemed confidential at sole expense of the Company and the Guarantors.
(p) Provide an indenture trustee for the Registrable Notes or
the Exchange Notes, as the case may be, and cause the Indenture or the
trust indenture provided for in Section 2(a), as the case may be, to
be qualified under the TIA not later than the effective date of the
Exchange Registration Statement or the first Registration Statement
relating to the Registrable Notes; and in connection therewith,
cooperate with the trustee under any such indenture and the Holders of
the Registrable Notes, to effect such changes to such indenture as may
be required for such indenture to be so qualified in accordance with
the terms of the TIA; and execute, and use their respective reasonable
best efforts to cause such trustee to execute, all documents as may be
required to effect such changes, and all other forms and documents
required to be filed with the SEC to enable such indenture to be so
qualified in a timely manner.
(q) Comply in all material respects with all applicable rules
and regulations of the SEC and make generally available to its
securityholders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder (or any
similar rule promulgated under the Securities Act) no later than 90
days after the end of any 12-month period (i) commencing at the end of
any fiscal quarter in which Registrable Notes are sold to underwriters
in a firm commitment or best efforts underwritten offering and (ii) if
not sold to underwriters in such an offering, commencing on the first
day of the first fiscal quarter of the Company after the effective
date of a Registration Statement, which statements shall cover said
12-month periods.
(r) Upon consummation of an Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Company and the
Guarantors, in a form reasonable and customary for underwritten
offerings of debt securities similar to the Notes, addressed to the
Trustee for the benefit of all Holders of Registrable Notes
participating in the Exchange Offer or the Private Exchange, as the
case may be, and which includes an opinion that (i) the Company and
the Guarantors have duly authorized, executed and delivered the
Exchange Notes and Private Exchange Notes and the related indenture
and (ii) each of the Exchange Notes or the
<PAGE> 24
-22-
Private Exchange Notes, as the case may be, and related indenture
constitute a legal, valid and binding obligation of the Company and
the Guarantors, enforceable against the Company and the Guarantors in
accordance with its respective terms (with reasonable and customary
exceptions and qualifications).
(s) If an Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Registrable Notes by Holders to the
Company (or to such other Person as directed by the Company) in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be, the Company shall mark, or cause to be marked, on such
Registrable Notes that such Registrable Notes are being canceled in
exchange for the Exchange Notes or the Private Exchange Notes, as the
case may be; and, in no event shall such Registrable Notes be marked
as paid or otherwise satisfied.
(t) Cooperate with each seller of Registrable Notes covered by
any Registration Statement and the managing underwriter(s), if any,
participating in the disposition of such Registrable Notes and their
respective counsel in connection with any filings required to be made
with the National Association of Securities Dealers, Inc. (the
"NASD").
(u) Use their respective reasonable best efforts to take all
other reasonable steps necessary to effect the registration of the
Registrable Notes covered by a Registration Statement contemplated
hereby.
The Company and the Guarantors may require each seller of
Registrable Notes or Participating Broker-Dealer as to which any registration is
being effected to furnish to the Company and the Guarantors such information
regarding such seller or Participating Broker-Dealer and the distribution of
such Registrable Notes or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, as the Company and the Guarantors may, from
time to time, reasonably request. The Company and the Guarantors may exclude
from such registration the Registrable Notes of any seller or Participating
Broker-Dealer who fails to furnish such information within a reasonable time
after receiving such request. Each seller as to which any Shelf Registration is
being effected agrees to furnish promptly to the Company and the Guarantors all
information required to be disclosed in order to make the information previously
furnished to the Company and the Guarantors by such seller not materially
misleading.
<PAGE> 25
-23-
Each Holder of Registrable Notes and each Participating
Broker-Dealer agrees by acquisition of such Registrable Notes or Exchange Notes
to be sold by such Participating Broker-Dealer, as the case may be, that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5(c)(ii), 5(c)(iv), 5(c)(v) or 5(c)(vi) hereof, such Holder
will forthwith discontinue disposition of such Registrable Notes covered by such
Registration Statement or Prospectus or Exchange Notes to be sold by such Holder
or Participating Broker-Dealer, as the case may be, until such Holder's or
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k), or until it is advised in
writing (the "Advice") by the Company that the use of the applicable Prospectus
may be resumed, and has received copies of any amendments or supplements
thereto. In the event the Company shall give any such notice, each of the
Effectiveness Period and the Applicable Period shall be extended by the number
of days during such periods from and including the date of the giving of such
notice to and including the date when each seller of Registrable Notes covered
by such Registration Statement or Exchange Notes to be sold by such Holder or
Participating Broker-Dealer, as the case may be, shall have received (x) the
copies of the supplemented or amended Prospectus contemplated by Section 5(k) or
(y) the Advice.
6. Registration Expenses
(a) All reasonable fees and expenses incident to the
performance of or compliance with this Agreement by the Company and the
Guarantors shall be borne by the Company and the Guarantors, jointly and
severally, whether or not the Exchange Offer or a Shelf Registration is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Registrable Notes or Exchange
Notes and determination of the eligibility of the Registrable Notes or Exchange
Notes for investment under the laws of such jurisdictions in the United States
(x) where the Holders of Registrable Notes are located, in the case of the
Exchange Notes, or (y) as provided in Section 5(h) hereof,
<PAGE> 26
-24-
in the case of Registrable Notes or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses (including,
without limitation, expenses of printing certificates for Registrable Notes or
Exchange Notes in a form eligible for deposit with The Depository Trust Company
and of printing Prospectuses if the printing of Prospectuses is reasonably
requested by the managing underwriter or underwriters, if any, or, in respect of
Registrable Notes or Exchange Notes to be sold by any Participating
Broker-Dealer during the Applicable Period, if reasonably requested by the
Holders of a majority in aggregate principal amount of the Registrable Notes
included in any Registration Statement or of such Exchange Notes, as the case
may be), (iii) messenger, telephone and delivery expenses, (iv) reasonable fees
and disbursements of counsel for the Company and the Guarantors and reasonable
fees and disbursements of special counsel for the sellers of Registrable Notes
(subject to the provisions of Section 6(b)), (v) fees and disbursements of all
independent certified public accountants referred to in Section 5(n)(iii)
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) rating
agency fees, (vii) Securities Act liability insurance, if the Company and the
Guarantors desire such insurance, (viii) fees and expenses of the Trustee, (ix)
fees and expenses of all other Persons retained by the Company and the
Guarantors, (x) internal expenses of the Company and the Guarantors (including,
without limitation, all salaries and expenses of officers and employees of the
Company and the Guarantors performing legal or accounting duties), (xi) the
expense of any annual audit, (xii) the fees and expenses incurred in connection
with any listing of the securities to be registered on any securities exchange
and (xiii) the expenses relating to printing, word processing and distributing
all Registration Statements, underwriting agreements, securities sales
agreements, indentures and any other documents necessary in order to comply with
this Agreement. In the event of an underwritten offering of Registrable Notes
the Company shall not be responsible for any "roadshow" expenses in connection
therewith.
(b) In connection with any Shelf Registration hereunder, the
Company and the Guarantors, jointly and severally, shall reimburse the Holders
of the Registrable Notes being registered in such registration for the
reasonable fees and disbursements of not more than one counsel (in addition to
appropriate local counsel) chosen by the Holders of a majority in aggregate
principal amount of the Registrable Notes to be included in such Registration
Statement and other reasonable out-of-pocket expenses of the Holders of
Registrable Notes incurred in connection with the registration of the
Registrable Notes.
<PAGE> 27
-25-
(c) Notwithstanding any of the foregoing, the Company and the
Guarantors shall not have any obligation to pay any underwriting fees, discounts
or commissions attributable to the sale of Registrable Notes.
7. Indemnification
(a) Each of the Company and the Guarantors, jointly and
severally, agrees to indemnify and hold harmless each Holder of Registrable
Notes and each Participating Broker-Dealer selling Exchange Notes during the
Applicable Period, the officers and directors of each such Person, and each
Person, if any, who controls any such Person within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act (each, a
"Participant"), from and against any and all losses, claims, damages and
liabilities (including, without limitation, the reasonable legal fees and other
expenses actually incurred in connection with any suit, action or proceeding or
any claim asserted) caused by, arising out of or based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement or Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) or any preliminary Prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with information
relating to any Participant furnished to the Company in writing by such
Participant expressly for use therein; provided that the foregoing indemnity
with respect to any preliminary Prospectus shall not inure to the benefit of any
Participant (or to the benefit of an officer or director of such Participant or
any Person controlling such Participant) from whom the Person asserting any such
losses, claims, damages or liabilities purchased Registrable Notes or Exchange
Notes if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary Prospectus is eliminated or remedied in the
related Prospectus (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) and a copy of the related
Prospectus (as so amended or supplemented) shall have been furnished to such
Participant at or prior to the sale of such Registrable Notes or Exchange Notes,
as the case may be, to such Person.
<PAGE> 28
-26-
(b) Each Participant will be required to agree, severally and
not jointly, to indemnify and hold harmless the Company and the Guarantors,
their respective directors and officers and each Person who controls either the
Company and the Guarantors within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company and the Guarantors to each Participant, but only with
reference to information relating to such Participant furnished to the Company
and the Guarantors in writing by such Participant expressly for use in any
Registration Statement or Prospectus, any amendment or supplement thereto, or
any preliminary Prospectus. The liability of any Participant under this
paragraph (b) shall in no event exceed the proceeds received by such Participant
from sales of Registrable Notes or Exchange Notes giving rise to such
obligations.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought pursuant
to either paragraph (a) or (b) of this Section 7, such Person (the "Indemnified
Person") shall promptly notify the Person against whom such indemnity may be
sought (the "Indemnifying Person") in writing, and the Indemnifying Person, upon
request of the Indemnified Person, shall retain one counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Person may reasonably designate in such proceeding
and shall pay the reasonable fees and expenses incurred by such counsel related
to such proceeding. In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless (i) the Indemnifying
Person and the Indemnified Person shall have mutually agreed in writing to the
contrary, (ii) the Indemnifying Person has failed to retain counsel reasonably
satisfactory to the Indemnified Person or (iii) the named parties in any such
proceeding (including any impleaded parties) include both the Indemnifying
Person and the Indemnified Person and such Indemnified Person shall have been
advised by counsel that there may be one or more legal defenses available to it
which are different from or additional to those available to any such
Indemnifying Person. It is understood that the Indemnifying Person shall not, in
connection with any proceeding or related proceeding in the same jurisdiction,
be liable for the reasonable fees and expenses of more than one separate law
firm
<PAGE> 29
-27-
(in addition to any local counsel) for all Indemnified Persons, and that all
such reasonable fees and expenses shall be reimbursed as they are incurred. Any
such separate firm for the Participants and such control Persons of Participants
shall be designated in writing by Participants who sold a majority in interest
of Registrable Notes and Exchange Notes sold by all such Participants and any
such separate firm for the Company and the Guarantors, their directors, their
officers and such control Persons of the Company and the Guarantors shall be
designated in writing by the Company and the Guarantors. The Indemnifying Person
shall not be liable for any settlement of any proceeding effected without its
prior written consent, but if settled with such consent or if there is a final
judgment for the plaintiff for which the Indemnified Person is entitled to
indemnification pursuant to this Agreement, the Indemnifying Person agrees to
indemnify any Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. Notwithstanding the foregoing sentence,
if at any time an Indemnified Person shall have requested an Indemnifying Person
to reimburse the Indemnified Person for reasonable fees and expenses incurred by
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 60 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have reimbursed
the Indemnified Person in accordance with such request prior to the date of such
settlement; provided, however, that the Indemnifying Person shall not be liable
for any settlement effected without its consent pursuant to this sentence if the
Indemnifying Party is contesting, in good faith, the request for reimbursement.
No Indemnifying Person shall, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is a party and indemnity
has been sought hereunder by such Indemnified Person, unless such settlement
includes an unconditional release (or any other release reasonably acceptable to
the Indemnified Person) of such Indemnified Person from all liability on claims
that are the subject matter of such proceeding.
(d) If the indemnification provided for in paragraphs (a) and
(b) of this Section 7 is unavailable to an Indemnified Person in respect of any
losses, claims, damages or liabilities referred to therein (other than as a
result of the proviso set forth in Section 7(a)), then each Indemnifying Person
under such paragraphs, in lieu of indemnifying such Indemnified Person
thereunder, shall contribute to the amount paid
<PAGE> 30
-28-
or payable by such Indemnified Person as a result of such losses, claims,
damages or liabilities in such proportion as is appropriate to reflect the
relative fault of the Company and the Guarantors on the one hand and the
Participants on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of the Company and the
Guarantors on the one hand and the Participants on the other shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company and the Guarantors
or by the Participants and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The parties agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any reasonable legal or other expenses actually incurred by such
Indemnified Person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 7, in no event shall a
Participant be required to contribute any amount in excess of the amount by
which proceeds received by such Participant from sales of Registrable Notes or
Exchange Notes exceeds the amount of any damages that such Participant has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in
this Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
<PAGE> 31
-29-
8. Rules 144 and 144A
The Company and the Guarantors covenant that they will file
the reports required to be filed by it under the Securities Act and the Exchange
Act and the rules and regulations adopted by the SEC thereunder in a timely
manner and, if at any time the Company and the Guarantors are not required to
file such reports, they will, upon the request of any Holder of Registrable
Notes, make publicly available other information of a like nature so long as
necessary to permit sales pursuant to Rule 144 or Rule 144A. The Company and the
Guarantors further covenant that so long as any Registrable Notes remain
outstanding to make available to any Holder of Registrable Notes in connection
with any sale thereof, the information required by Rule 144A(d)(4) under the
Securities Act in order to permit resales of such Registrable Notes pursuant to
(a) such Rule 144A, or (b) any similar rule or regulation hereafter adopted by
the SEC.
9. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf
Registration are to be sold in an underwritten offering, the investment banking
firm or firms that will underwrite the offering and the manager or managers that
will manage the offering will be selected by the Holders of a majority in
aggregate principal amount of such Registrable Notes included in such offering
and shall be reasonably acceptable to the Company and the Guarantors.
No Holder of Registrable Notes may participate in any
underwritten offering hereunder unless such Holder (a) agrees to sell such
Holder's Registrable Notes on the basis provided in any underwriting
arrangements approved by the Persons entitled hereunder to approve such
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
10. Miscellaneous
(a) Remedies. In the event of a breach by the Company or the
Guarantors of any of its obligations under this Agreement, other than the
occurrence of an event which requires payment of Additional Interest, each
Holder of Registrable Notes, in addition to being entitled to exercise all
rights provided herein, in the Indenture or, in the case of the Initial
Purchaser, in the Purchase Agreement or granted by law, including recovery of
damages, will be entitled to specific performance of its rights under this
Agreement. The Company
<PAGE> 32
-30-
and the Guarantors, jointly and severally, agree that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agrees, jointly and
severally, that, in the event of any action for specific performance in respect
of such breach, it shall waive the defense that a remedy at law would be
adequate.
(b) Enforcement. The Trustee shall be authorized to enforce
the provisions of this Agreement for the ratable benefit of the Holders.
(c) No Inconsistent Agreements. None of the Company or the
Guarantors has entered, as of the date hereof, and the Company and the
Guarantors shall not enter, after the date of this Agreement, into any agreement
with respect to any of their securities that is inconsistent with the rights
granted to the Holders of Registrable Notes in this Agreement or otherwise
conflicts with the provisions hereof. None of the Company or the Guarantors has
entered or will enter into any agreement with respect to any of its securities
which will grant to any Person piggy-back rights with respect to a Registration
Statement required to be filed under this Agreement.
(d) Adjustments Affecting Registrable Notes. None of the
Company or the Guarantors shall, directly or indirectly, take any action with
respect to the Registrable Notes as a class that would adversely affect the
ability of the Holders of Registrable Notes to include such Registrable Notes in
a registration undertaken pursuant to this Agreement.
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Company and the Guarantors have obtained the
written consent of Holders of at least a majority of the then outstanding
aggregate principal amount of Registrable Notes. Notwithstanding the foregoing,
a waiver or consent to depart from the provisions hereof with respect to a
matter that relates exclusively to the rights of Holders of Registrable Notes
whose securities are being sold pursuant to a Registration Statement and that
does not directly or indirectly affect, impair, limit or compromise the rights
of other Holders of Registrable Notes may be given by Holders of at least a
majority in aggregate principal amount of the Registrable Notes being sold by
such Holders pursuant to such Registration Statement, provided that the
provisions of this sentence may not be amended, modified or
<PAGE> 33
-31-
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(f) Notices. All notices and other communications (including
without limitation any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day courier or telecopier:
(i) if to a Holder of Registrable Notes or any Participating
Broker-Dealer, at the most current address given by the Trustee to the
Company and the Guarantors; and
(ii) if to the Company or the Guarantors, to Aircraft Service
International Group, Inc., 8240 N.W. 52nd Terrace, Suite 200, Miami,
Florida 33166-7766, Attention: Chief Financial Officer and with a copy
to Kirkland & Ellis, 200 East Randolph Drive, Chicago, Illinois 60601
Attention: William S. Kirsch, P.C. and Richard W. Porter.
All such notices and communications shall be deemed to have
been duly given: (i) when delivered by hand, if personally delivered; (ii) five
business days after being deposited in the mail, postage prepaid, if mailed;
(iii) one business day after being timely delivered to a next-day courier; and
(iv) when receipt is acknowledged by the addressee, if telecopied.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee
under the Indenture at the address specified in such Indenture.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Registrable Notes; provided that, with respect
to the indemnity and contribution agreements in Section 7, each Holder of
Registrable Notes subsequent to the Initial Purchaser shall be bound by the
terms thereof if such Holder elects to include Registrable Notes in a Shelf
Registration; provided, however, that this Agreement shall not inure to the
benefit of or be binding upon a successor or assign of a Holder unless and
except to the extent such successor or assign holds Registrable Notes.
<PAGE> 34
-32-
(h) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(i) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. EACH OF THE PARTIES HERETO AGREES TO SUBMIT TO
THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.
(k) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction.
(l) Entire Agreement. This Agreement, together with the
Purchase Agreement and the Indenture, is intended by the parties as a final
expression of their agreement, and is intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein.
(m) Joint and Several Obligations. Unless otherwise stated
herein, each of the obligations of the Company and the Guarantors under this
Agreement shall be joint and several obligations of each of them.
(n) Notes Held by the Company or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Company or their affiliates
(as such term is defined in Rule 405 under the Securities Act) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
<PAGE> 35
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.,
as Company
By: /s/ STEPHEN D. TOWNES
--------------------------------------
Name: Stephen D. Townes
Title: President & CEO
AIRCRAFT SERVICE INTERNATIONAL, INC.
as Guarantor
By: /s/ STEPHEN D. TOWNES
--------------------------------------
Name: Stephen D. Townes
Title: President & CEO
FLORIDA AVIATION FUELING COMPANY, INC.,
as Guarantor
By: /s/ STEPHEN D. TOWNES
--------------------------------------
Name: Stephen D. Townes
Title: President & CEO
DISPATCH SERVICES, INC.,
as Guarantor
By: /s/ STEPHEN D. TOWNES
--------------------------------------
Name: Stephen D. Townes
Title: President & CEO
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
CIBC OPPENHEIMER CORP.
By: /s/ EDWARD LEVY
-------------------------------
Name: Edward Levy
Title: Managing Director
<PAGE> 1
EXHIBIT 10.2
================================================================================
RANGER AEROSPACE CORPORATION
10.5% PIK NOTES DUE MARCH 31, 2010
PPN: 75281@ AA 8
10.5% PAY-IN-KIND REDEEMABLE PREFERRED STOCK
PPN: 85281@ 11 8
29,862 SHARES OF CLASS A VOTING COMMON STOCK
PPN: 75281@ 12 6
and
66,718 SHARES OF CLASS B NON-VOTING COMMON STOCK
PPN: 75281@ 13 4
_______________________________________________________________________________
SECURITIES PURCHASE AGREEMENT
________________________________________________________________________________
Dated as of April 1, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Paragraph Page
- - --------- ----
<S> <C> <C>
1 AUTHORIZATION; RANKING.............................................................. 1
1.1 AUTHORIZATION OF ISSUE OF SECURITIES...................................... 1
2 PURCHASE AND SALE OF THE SECURITIES................................................. 1
3 CLOSING............................................................................. 1
4 CONDITIONS OF CLOSING............................................................... 2
4.1 REPRESENTATION AND WARRANTIES............................................. 2
4.2 PERFORMANCE; NO DEFAULT................................................... 2
4.3 COMPLIANCE CERTIFICATES................................................... 2
4.4 OPINION OF COMPANY COUNSEL................................................ 2
4.5 OPINION OF PURCHASERS' SPECIAL COUNSEL.................................... 2
4.6 PURCHASE PERMITTED BY APPLICABLE LAWS..................................... 2
4.7 SALE OF ALL SECURITIES.................................................... 2
4.8 PAYMENT OF SPECIAL COUNSEL FEES........................................... 2
4.9 PRIVATE PLACEMENT NUMBERS................................................. 3
4.10 CHANGES IN ORGANIZATIONAL STRUCTURE....................................... 3
4.11 DOCUMENTS AND PROCEEDINGS................................................. 3
4.12 REGISTRATION RIGHTS AGREEMENT............................................. 3
4.13 ACQUISITION............................................................... 3
4.14 SECURITYHOLDERS AGREEMENT................................................. 3
4.15 FORMS OF CERTIFICATES..................................................... 3
4.16 EXECUTIVE AND INVESTOR STOCK AGREEMENTS................................... 3
4.17 APPOINTMENT OF AGENT FOR SERVICE OF PROCESS............................... 3
5 REPRESENTATIONS AND WARRANTIES...................................................... 4
5.1 ORGANIZATION, POWER AND AUTHORITY; CAPITALIZATION......................... 4
5.2 AUTHORIZATION, ETC........................................................ 4
5.3 CONFLICTING AGREEMENTS AND OTHER MATTERS.................................. 4
5.4 GOVERNMENTAL AUTHORIZATIONS, ETC.......................................... 4
5.5 OFFERING OF SECURITIES.................................................... 5
5.6 REGULATION G, ETC......................................................... 5
5.7 EXISTING INDEBTEDNESS..................................................... 5
5.8 STATUS UNDER CERTAIN FEDERAL STATUTES; FOREIGN ASSET CONTROL.............. 5
5.9 FINANCIAL CONDITION....................................................... 5
6 REPRESENTATIONS OF THE PURCHASERS................................................... 6
7 INFORMATION AS TO THE COMPANY....................................................... 7
7.1 FINANCIAL AND OTHER REPORTING BY THE COMPANY.............................. 7
7.2 INFORMATION REQUIRED BY RULE 144A......................................... 9
7.3 COMPLIANCE WITH SMALL BUSINESS INVESTMENT ACT............................. 9
7.4 INSPECTION OF PROPERTY.................................................... 10
8 PREPAYMENT, REPAYMENT AND REDEMPTION................................................ 10
8.1 SCHEDULED REPAYMENT OF NOTES.............................................. 10
8.2 OPTIONAL PREPAYMENT OF NOTES.............................................. 10
8.3 MATURITY; SURRENDER, ETC.................................................. 10
8.4 PURCHASE, REDEMPTION AND RETIREMENT OF NOTES AND PIK PREFERRED SHARES..... 10
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
Paragraph Page
- - --------- ----
<S> <C> <C>
9 AFFIRMATIVE COVENANTS............................................................... 11
9.1 COMPLIANCE WITH LAWS, ETC................................................. 11
9.2 INSURANCE................................................................. 11
9.3 MAINTENANCE OF PROPERTIES AND LEASES...................................... 11
9.4 CORPORATE EXISTENCE, ETC.................................................. 12
9.5 PAYMENT OF TAXES AND CLAIMS............................................... 12
9.6 SCOPE OF BUSINESS......................................................... 12
9.7 USE OF PROCEEDS........................................................... 12
9.8 ENVIRONMENTAL COMPLIANCE.................................................. 12
9.9 MAINTENANCE OF BOOKS AND RECORDS.......................................... 13
9.10 PREEMPTIVE RIGHTS......................................................... 13
9.11 AMENDMENT TO CERTIFICATE OF INCORPORATION................................. 13
10 EVENTS OF DEFAULT................................................................... 13
11 REMEDIES ON DEFAULT, ETC............................................................ 15
11.1 ACCELERATION.............................................................. 15
11.2 OTHER REMEDIES............................................................ 15
11.3 RESCISSION OF ACCELERATION................................................ 15
11.4 NOTICE OF ACCELERATION OR RESCISSION...................................... 16
11.5 NO WAIVERS OR ELECTION OF REMEDIES........................................ 16
12 REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT OF NOTES........................... 16
12.1 REGISTRATION............................................................. 16
12.2 TRANSFER AND EXCHANGE.................................................... 16
12.3 REPLACEMENT.............................................................. 17
13 PAYMENTS............................................................................ 17
13.1 HOME OFFICE PAYMENT....................................................... 17
13.2 NO DEDUCTION OR SET-OFF................................................... 17
13.3 SENIOR SECURITIES ARE PARI PASSU.......................................... 17
13.4 SHARING OF PAYMENTS....................................................... 18
14 EXPENSES............................................................................ 18
15 SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT........................ 19
16 AMENDMENT AND WAIVER................................................................ 19
16.1 REQUIREMENTS.............................................................. 19
16.2 SOLICITATION OF HOLDERS................................................... 19
16.3 BINDING EFFECT, ETC....................................................... 20
17 NOTICES............................................................................. 20
18 REPRODUCTION OF DOCUMENTS........................................................... 21
19 SUBSTITUTION OF PURCHASER........................................................... 21
20 MISCELLANEOUS....................................................................... 21
20.1 SUCCESSORS AND ASSIGNS.................................................... 21
20.2 PAYMENTS DUE ON NON-BUSINESS DAYS......................................... 21
20.3 SEVERABILITY.............................................................. 21
20.4 CONSTRUCTION.............................................................. 21
20.5 COUNTERPARTS.............................................................. 22
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Paragraph Page
- - --------- ----
<S> <C> <C>
20.6 DESCRIPTIVE HEADINGS..................................................... 22
20.7 GOVERNING LAW............................................................ 22
20.8 CONSENT TO JURISDICTION AND SERVICE AND WAIVER OF TRIAL BY JURY......... 22
20.9 TERMINATION.............................................................. 22
20.10 COMPLIANCE BY SUBSIDIARIES............................................... 23
SIGNATURE PAGE........................................................................... 32
</TABLE>
SCHEDULES AND EXHIBITS
<TABLE>
<CAPTION>
<S> <C>
EXHIBIT A - Form of Note
EXHIBIT B - Form of Certificate of Incorporation
EXHIBIT C - Opinion of Special Counsel to the Company
EXHIBIT D - Registration Rights Agreement
EXHIBIT E - Securityholders Agreement
EXHIBIT F - Forms of Certificates
EXHIBIT G - Executive and Investor Stock Agreements
SCHEDULE A - Purchasers
SCHEDULE B - Definitions
SCHEDULE 5.1 - Security Ownership
SCHEDULE 5.7 - Existing Debt
</TABLE>
iii
<PAGE> 5
RANGER AEROSPACE COMPANY
GSP International Airport
Box 12233
Greenville, SC 29612
As of April 1, 1998
To: The Purchasers Listed
on SCHEDULE A
Gentlemen:
The undersigned, Ranger Aerospace Company, a Delaware corporation (the
"COMPANY") agrees with each of you (individually a "PURCHASER" and
collectively, the "PURCHASERS") as follows:
1 AUTHORIZATION; RANKING.
1.1 AUTHORIZATION OF ISSUE OF SECURITIES. The Company has authorized the
issue and sale of (i) $8,460,000 in aggregate principal amount of its 10.5% PIK
Notes due March 31, 2010, to be in the form of EXHIBIT A (together with all
notes issued in substitution, replacement or exchange therefor in accordance
with the terms of this Agreement, the "NOTES"); (ii) 6,000 shares of its 10.5%
Payment-In-Kind Redeemable Preferred Stock (the "PIK PREFERRED SHARES"), with
the terms set forth in the Certificate of Incorporation with respect thereto in
the form of EXHIBIT B; (iii) 27,730 shares of its Class A Voting Common Stock,
par value $0.01 per share (the "VOTING SHARES"); and (iv) 69,030 shares of its
Class B Non-Voting Common Stock, par value $0.01 per share (the "NON-VOTING
SHARES;" collectively with the PIK Preferred Shares and the Voting Shares, the
"SHARES"). The Notes and the Shares are collectively referred to as the
"SECURITIES". Certain capitalized terms used in this Agreement are defined in
SCHEDULE B; references to a "SCHEDULE" or an "EXHIBIT" are, unless otherwise
specified, to a SCHEDULE or an EXHIBIT attached to this Agreement.
2 PURCHASE AND SALE OF THE SECURITIES.
Subject to the terms and conditions of this Agreement, the Company shall
sell to each Purchaser, and each Purchaser shall purchase from the Company,
Securities in the principal amount or number specified below such Purchaser's
name in SCHEDULE A, at the price specified therein, registered in such
Purchaser's name or that of the Purchasers' nominee or nominees as specified in
SCHEDULE A. Notwithstanding the foregoing, each Purchaser's obligations under
this Agreement are several and not joint obligations and no Purchaser shall
have any obligation or liability for the performance or non-performance by any
other Purchaser of such other Purchaser's obligations under this Agreement.
3 CLOSING.
The purchase and sale of the Securities shall take place at the offices of
Sullivan & Worcester LLP, One Post Office Square, Boston, Massachusetts 02109,
at a closing (the "CLOSING") to be held on April 1, 1998 or on such other
Business Day as the Purchasers and the Company may agree (the "CLOSING DATE").
At the Closing, the Company will deliver to each Purchaser, the Notes and
certificates in definitive form representing the Shares to be purchased by it,
against payment of the purchase price therefor by transfer of immediately
available funds to the Company. If at the Closing, the Company fails to tender
any Notes or any certificates representing Shares to any Purchaser as provided
in this PARAGRAPH 3, or if any of the conditions specified in
<PAGE> 6
PARAGRAPH 4 shall not have been fulfilled to a Purchaser's satisfaction or
waived by such Purchaser, such Purchaser may, at its election, be relieved of
all further obligations under this Agreement, without thereby waiving any
rights such Purchaser may have by reason of such failure or non-fulfillment.
4 CONDITIONS OF CLOSING. Each Purchaser's obligation to purchase and pay for
its Securities is subject to the fulfillment to its satisfaction or its written
waiver, at or before the Closing, of the following conditions:
4.1 REPRESENTATION AND WARRANTIES. The representations and warranties of
the Company in this Agreement, the other Transaction Documents and any
certificates delivered at Closing to the Purchasers in connection therewith
shall be correct when made and at the time of the Closing.
4.2 PERFORMANCE; NO DEFAULT. The Company shall have performed and
complied with all agreements and conditions contained in this Agreement
required to be performed or complied with by it prior to or at the Closing, and
after giving effect to the issue and sale of the Securities (and the
application of the proceeds thereof as contemplated by PARAGRAPH 9.7) no
Default or Event of Default shall have occurred and be continuing.
4.3 COMPLIANCE CERTIFICATES.
(1) The Company shall have delivered to you an Officer's Certificate,
dated the date of the Closing, certifying that the conditions specified in
PARAGRAPHS 4.1, 4.2, 4.10, 4.13, 4.14 and 4.16 have been fulfilled.
(2) The Company shall have delivered to the Purchasers a certificate from
its Secretary certifying as to its organizational documentation and the
resolutions and other proceedings relating to the authorization, execution and
delivery of the Transaction Documents.
4.4 OPINION OF COMPANY COUNSEL. The Purchasers shall have received an
opinion, in form and substance satisfactory to them, dated the Closing Date and
addressed to them, from Kirkland & Ellis, special counsel to the Company,
covering the matters set forth in EXHIBIT C.
4.5 OPINION OF PURCHASERS' SPECIAL COUNSEL. The Purchasers shall have
received from Special Counsel an opinion satisfactory to them as to such
matters incident to the transactions contemplated by this Agreement as they may
reasonably request.
4.6 PURCHASE PERMITTED BY APPLICABLE LAWS. On the date of the Closing,
each Purchaser's purchase of its Securities shall (i) be permitted by the laws
and regulations of each jurisdiction to which it is subject, without recourse
to provisions (such as Section 1405(a)(8) of the New York Insurance Law)
permitting limited investments by insurance companies without restriction as to
the character of the particular investment, (ii) not violate any applicable law
or regulation (including, without limitation, Section 5 of the Securities Act
or Regulation G, T or X of the Board of Governors of the Federal Reserve
System) and (iii) not subject any Purchaser to any tax, penalty or liability
under or pursuant to any applicable law or regulation, which law or regulation
was not in effect on the date hereof.
4.7 SALE OF ALL SECURITIES. At the Closing, the Company shall have sold
to each Purchaser, and each Purchaser shall have purchased, all Securities to
be purchased by it as set forth in SCHEDULE A.
4.8 PAYMENT OF SPECIAL COUNSEL FEES. Without limiting the provisions of
PARAGRAPH 14, the Company shall have paid, at or before the Closing, the fees,
charges and disbursements of
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<PAGE> 7
Special Counsel (which may include a reasonable reserve for anticipated fees
and expenses for closing the transactions contemplated hereby) to the extent
reflected in a statement of Special Counsel rendered to the Company at least
one Business Day prior to the Closing.
4.9 PRIVATE PLACEMENT NUMBERS. A Private Placement Number shall have been
assigned to the Notes and to the Shares by Standard & Poor's CUSIP Service
Bureau.
4.10 CHANGES IN ORGANIZATIONAL STRUCTURE. The Company shall not have
changed its jurisdiction of organization or been a party to any merger or
consolidation or succeeded to all or any substantial part of the liabilities of
any other Person other than as contemplated by the Viad Purchase Agreement at
any time after the date of this Agreement.
4.11 DOCUMENTS AND PROCEEDINGS. All proceedings taken or to be taken in
connection with the transactions contemplated by this Agreement and all
documents and instruments incident thereto shall be satisfactory to the
Purchasers and Special Counsel, and the Purchasers shall have received all such
counterpart originals or certified or other copies of such documents as they
may reasonably request.
4.12 REGISTRATION RIGHTS AGREEMENT. The Company shall have executed the
Registration Rights Agreement in the form of EXHIBIT D and the Registration
Rights Agreement shall be in full force and effect and the Purchasers shall
have received such confirmation thereof as they may reasonably request.
4.13 ACQUISITION. The transactions contemplated by the Viad Purchase
Agreement shall have been consummated on substantially the terms thereof or
otherwise on terms satisfactory to the Purchasers, and the Viad Purchase
Agreement shall be in full force and effect, and the Purchasers shall have
received such confirmation thereof (which may include an opinion of counsel) as
they may reasonably request.
4.14 SECURITYHOLDERS AGREEMENT. The Company and each of the Persons named
therein shall have executed the Securityholders Agreement and the
Securityholders Agreement shall be in full force and effect, and the Purchasers
shall have received such confirmation thereof as they may reasonably request.
4.15 FORMS OF CERTIFICATES. The certificates representing the Shares
shall be in the form of EXHIBITS F-1, F-2 or F-3, as the case may be, and shall
not contain any restrictive legends other than the legends set forth on EXHIBIT
F or in the Securityholders Agreement.
4.16 EXECUTIVE AND INVESTOR STOCK AGREEMENTS. The Company and Steven
Townes shall have executed the Executive Stock Agreement, and the Company, Gene
Z. Salkind, M.D., Trustee of the Danielle Schwartz Trust UAD 10/1/93, and
George Schwartz shall have executed the Investor Stock Agreement, and the
Executive Stock Agreement and the Investor Stock Agreement shall each be in
full force and effect, and the Purchasers shall have received such confirmation
thereof as they may reasonably request.
4.17 APPOINTMENT OF AGENT FOR SERVICE OF PROCESS. The Purchasers shall
have received written evidence satisfactory to them that CT Company has been
appointed, and has accepted such appointment, by the Company as its agent for
service of process in the State of New York and that CT Company has agreed to
provide the Purchasers with not less than 30 days prior notice of any
termination of such appointment.
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<PAGE> 8
5 REPRESENTATIONS AND WARRANTIES. The Company represents and warrants that:
5.1 ORGANIZATION, POWER AND AUTHORITY; CAPITALIZATION.
(a) Each Member is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and is qualified and in
good standing in each jurisdiction in which it is required to be qualified to
do business (other than those jurisdictions in which the failure to be so
qualified or in good standing, individually or in aggregate, could not
reasonably be expected to have a Material Adverse Effect). Each Member has all
requisite corporate or partnership, as applicable, power and authority to own,
operate and lease the property it purports to own, operate or lease and to
carry on its business as now being conducted. The Company has all requisite
corporate power and authority to execute, deliver and perform each Transaction
Document to which it is a party and to issue and sell the Notes and the Shares.
(b) The authorized capital stock of the Company consists of 200,000 shares
of preferred stock, of which 100,000 shares are 10.5% Pay-In-Kind Redeemable
Preferred Stock, and 2,000,000 shares of Common Stock, $0.01 par value per
share, of which 1,000,000 shares are Class A Voting Common Stock and 1,000,000
shares are Class B Non-Voting Common Stock. Immediately following the Closing,
all of the outstanding capital stock of the Company will be validly issued,
fully paid and non-assessable and will be owned of record and beneficially, in
the amounts and by the Persons as set forth in SCHEDULE 5.1. The Shares when
issued in accordance with this Agreement, will be validly issued, fully paid
and nonassessable with no personal liability attaching to the ownership thereof
and will be free and clear of all liens, charges, restrictions, claims and
encumbrances imposed by or through the Company or any other Member. Neither
the issuance, sale or delivery of the Shares are subject to any preemptive
right of stockholders of the Company or to any right of first refusal or other
right in favor of any other Person.
5.2 AUTHORIZATION, ETC. Each Transaction Document has been duly
authorized by all necessary corporate action on the part of the Company and has
been (or will have been as of the Closing Date) duly executed and delivered by
an authorized officer of the Company and constitutes (or will constitute upon
execution thereof by the Company) the legal, valid and binding obligation of
the Company, enforceable in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and (ii) general equitable
principles (whether considered in a proceeding in equity or at law).
5.3 CONFLICTING AGREEMENTS AND OTHER MATTERS. The execution, delivery and
performance of the Transaction Documents and the Viad Purchase Agreement by the
Company and the offering, issuance and sale of the Securities hereunder do not
and will not (i) contravene, result in any breach of, or constitute a default
under, or result in the creation of any Lien in respect of any property of any
Member under, any indenture, mortgage, deed of trust, loan, purchase or credit
agreement, lease, corporate charter or by-laws or similar organizational
documentation, or any other agreement or instrument to which any Member is a
party or by which any Member or any of their respective properties are bound or
affected, (ii) conflict with or result in a breach of any of the terms,
conditions or provisions of any order, judgment, decree, or ruling of any
court, arbitrator or Governmental Authority applicable to any Member or (iii)
violate any provision of any statute or other rule or regulation of any law,
Governmental Authority applicable to any Member.
5.4 GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of this Agreement or the other Transaction Documents or the Viad
Purchase Agreement, or the Company's offer, issuance and sale of the
Securities.
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<PAGE> 9
5.5 OFFERING OF SECURITIES. Neither the Company nor anyone acting on its
behalf has, directly or indirectly, offered the Notes, Shares or any similar
securities for sale to, or solicited any offers to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, any Person other
than the Purchasers (or as set forth in the Executive Security Agreements),
each of which has been offered the Notes and/or Shares at a private sale for
investment. Neither the Company nor anyone acting on its behalf has taken or
will take any action which would subject the issuance or sale of the Notes or
Shares to the provisions of Section 5 of the Securities Act or to the
registration provisions of any securities or Blue Sky law of any applicable
jurisdiction. As of the Closing Date, neither the Notes nor the Shares will be
of the same class as securities of the Company listed on a national securities
exchange registered under Section 6 of the Exchange Act or quoted in a U.S.
automated inter-dealer quotation system, within the meaning of Rule 144A.
5.6 REGULATION G, ETC. None of the proceeds of the sale of the Securities
will be used, directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System
(12 CFR Part 207) or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of such Board (12 CFR 224) or to involve any broker or dealer in a
violation of Regulation T of such Board (12 CFR 220). Margin stock does not
constitute more than 25% of the value of the assets of the Consolidated Group
or of the Company and the Company has no present intention that margin stock
will constitute more than 25% of the value of its or the Consolidated Group's
assets. As used in this PARAGRAPH 5.7, the terms "MARGIN STOCK" and "PURPOSE
OF BUYING OR CARRYING" shall have the meanings assigned to them in said
Regulation G.
5.7 EXISTING INDEBTEDNESS. SCHEDULE 5.7 sets forth a complete and correct
list of all outstanding Debt of the Consolidated Group as of the Closing Date
after consummation of the transactions contemplated by the Viad Purchase
Agreement and the Transaction Documents, and a list of each instrument or
agreement evidencing or otherwise governing the terms and conditions of such
Debt (in each case other than the Notes and the Debt specifically contemplated
to be incurred by any Member under the Viad Purchase Agreement). The Company
has previously delivered to Special Counsel true, correct and complete copies
of each instrument or agreement listed on SCHEDULE 5.7. No Member is in
default and no waiver of default is currently in effect, in the payment of any
principal or interest on any such Debt and no event or condition exists with
respect to any such Debt that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to become
due and payable before its stated maturity or before its regularly scheduled
dates of payment.
5.8 STATUS UNDER CERTAIN FEDERAL STATUTES; FOREIGN ASSET CONTROL. As of
the Closing Date and after consummation of the transactions contemplated by the
Transaction Documents and the Viad Purchase Agreement, no Member shall be
subject to regulation under the Investment Company Act of 1940, as amended, the
Public Utility Holding Company Act of 1935, as amended, the Interstate Commerce
Act, as amended, or the Federal Power Act, as amended. Neither the sale of
the Securities hereunder nor the use of the proceeds thereof will violate the
Trading with the Enemy Act, as amended, or any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto.
5.9 FINANCIAL CONDITION. After giving effect to the transactions
contemplated hereby, (i) the aggregate present fair saleable value of the
assets of the Company will be greater than the amount that will be required to
pay the probable liabilities of the Company on its debts, including contingent
liabilities, as they become absolute and mature; (ii) the Company has (and has
no reason to believe that it will not have) sufficient capital for the conduct
of its business as presently
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<PAGE> 10
conducted; and (iii) the Company does not intend to incur, or believe it has
incurred, debts beyond its ability to pay as they mature.
6 REPRESENTATIONS OF THE PURCHASERS.
(a) Each Purchaser represents that: (i) this Agreement has been duly
authorized, executed and delivered by Purchaser and constitutes a valid and
legally binding obligation of such Purchaser enforceable in accordance with its
terms, and (ii) the execution, delivery and performance of this Agreement by
Purchaser does not conflict with, violate or result in the breach of any
agreement, instrument, order, judgement, decree, law or governmental regulation
to which such Purchaser is a party or by which it is bound.
(b) Each Purchaser of PIK Preferred Shares or Voting Shares represents
that (i) it is an "Accredited Investor" as defined in Regulation D promulgated
under the Securities Act and has substantial experience in evaluating and
investing in similar private placement transactions, is capable of evaluating
the merits and risks of this investment in the Company and has the capacity to
protect its own interests, (iii) it understands and acknowledges that the
purchase of Securities hereunder represents a speculative investment, and that
such Purchaser is able, without impairing its financial condition, to hold such
investment for an indefinite period of time and/or to suffer a complete loss of
such investment, (iii) it is acquiring the Securities purchased hereunder for
its own account with the present intention of holding such Securities for
purposes of investment, and that it has no intention of selling such securities
in a public distribution in violation of the federal securities laws or any
applicable state securities laws, and (iv) it is aware of and has investigated
the Company's business, management and financial condition, has had a
satisfactory opportunity to ask questions of, and receive answers from, agents
and employees of the Company concerning the business of the Company and the
terms and conditions of this transaction and has had access to such other
information about the Company as such Purchaser deemed necessary or desirable
to reach an informed and knowledgeable decision to purchase the Securities.
(c) The Purchaser listed on the signature pages hereto under the caption
"Hancock Purchaser" (the "HANCOCK PURCHASER") represents that it is an
Accredited Investor and that it is purchasing its Securities for its own
account or for one or more separate accounts maintained by it or for the
account of one or more pension or trust funds, in each case for investment and
not with a view to the distribution thereof, provided that the disposition of
such Purchaser's property shall at all times be within its control. The Company
acknowledges that such Purchaser's sale of all or a portion of its Securities
to one or more Qualified Institutional Buyers in compliance with Rule 144A
would not be a breach of this representation.
(d) Each Purchaser represents that, with respect to each source of funds
to be used by it to pay the purchase price of its Securities (respectively, the
"SOURCE"), at least one of the following statements is accurate as of the
Closing Date:
(i) the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE")
95-60 (issued July 12, 1995) and there is no "employee benefit plan"
(within the meaning of Section 3(3) of ERISA or Section 4975(e)(1) of the
Code and treating as a single plan all plans maintained by the same
employer or employee organization) with respect to which the amount of the
general account reserves and liabilities for all contracts held by or on
behalf of such plan exceed ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the NAIC Annual Statement filed
with the state of domicile of the Purchaser.
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<PAGE> 11
(ii) The Source is either (i) an insurance company pooled separate
account and the purchase is exempt in accordance with PTE 90-1 (issued
January 29, 1990), or (ii) a bank collective investment fund, within the
meaning of PTE 91-38 (issued July 21, 1991) and, except as such Purchaser
has disclosed to the Company in writing pursuant to this CLAUSE (ii), no
employee benefit plan or group of plans maintained by the same employer or
employee organization beneficially owns more than 10% of all assets
allocated to such pooled separate account or collective investment fund;
or
(iii) The Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of the
QPAM Exemption), no employee benefit plan's assets that are included in
such investment fund, when combined with the assets of all other employee
benefit plans established or maintained by the same employer or by an
affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of
such employer or by the same employee organization and managed by such
QPAM, exceed 20% of the total client assets managed by such QPAM, the
conditions of Part I(c) and (g) of the QPAM Exemption are satisfied,
neither the QPAM nor a person controlling or controlled by the QPAM
(applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity
of such QPAM and (ii) the names of all employee benefit plans whose assets
are included in such investment fund have been disclosed to the Company in
writing pursuant to this CLAUSE (iii); or
(iv) The Source is a "governmental plan" as defined in Title I,
Section 3(32) of ERISA; or
(v) The Source is one or more plans or a separate account or trust
fund comprised of one or more plans each of which has been identified to
the Company in writing pursuant to this CLAUSE (v); or
(vi) The Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this PARAGRAPH 6, the terms "EMPLOYEE BENEFIT PLAN", "GOVERNMENTAL
PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall have the respective
meanings assigned to such terms in Section 3 of ERISA.
7 INFORMATION AS TO THE COMPANY. So long as any of the Notes or PIK Preferred
Shares are outstanding;
7.1 FINANCIAL AND OTHER REPORTING BY THE COMPANY. The Company will
deliver to each Holder of any Note or PIK Preferred Share:
(i) as soon as practicable, and in any event not more than 30 days
after the end of each fiscal month (other than the third month of any
fiscal quarter), the unaudited consolidated and consolidating balance
sheets of the Consolidated Group as at the end of such quarter and the
related unaudited consolidated and consolidating statements of operations,
cash flows and stockholders equity of the Consolidated Group for such
period and for the fiscal year to date, setting forth, in each case in
comparative form, figures for the corresponding period(s) in the preceding
fiscal year, all in reasonable detail and in accordance with GAAP, and
certified by the chief accounting officer or chief financial officer of
the Company as fairly presenting the financial condition of the
Consolidated Group as at the dates indicated and the results of its
operations and cash flows, in each case for
7
<PAGE> 12
the periods indicated, in conformity with GAAP subject to changes
resulting from normal year-end adjustments;
(ii) as soon as practicable, and in any event not more than 45 days
after the end of each fiscal quarter (other than the fourth quarter), the
unaudited consolidated and consolidating balance sheets of the
Consolidated Group as at the end of such quarter and the related unaudited
consolidated and consolidating statements of operations, cash flows and
stockholders equity of the Consolidated Group for such period and for the
fiscal year to date, setting forth, in each case in comparative form,
figures for the corresponding period(s) in the preceding fiscal year, all
in reasonable detail and in accordance with GAAP, and certified by the
chief accounting officer or chief financial officer of the Company as
fairly presenting the financial condition of the Consolidated Group as at
the dates indicated and the results of its operations and cash flows, in
each case for the periods indicated, in conformity with GAAP subject to
changes resulting from normal year-end adjustments;
(iii) as soon as practicable, and in any event not more than 90 days
after the end of each fiscal year of the Company, the audited consolidated
and unaudited consolidating balance sheet of the Consolidated Group as of
the end of such year and the related audited consolidated and unaudited
consolidating statements of operations, cash flows and stockholders equity
of the Consolidated Group for such year, and setting forth in each case in
comparative form, corresponding figures for the preceding fiscal year, all
in reasonable detail and in accordance with GAAP and accompanied (A) by an
opinion thereon of the Approved Auditor, which opinion shall be without
limitation as to the scope of the audit and shall state that such
consolidated financial statements present fairly in all material respects
the consolidated financial condition of the Consolidated Group as at the
dates indicated and the results of their consolidated operations and cash
flows for the periods indicated in conformity with GAAP and that the
examination by such accountants in connection with such financial
statements has been made in accordance with generally accepted auditing
standards and provides a reasonable basis for such opinion and (B) a
certificate of the Approved Auditor stating that they have reviewed this
Agreement and stating further whether, in making their audit, they have
become aware of any condition or event that then constitutes a Default or
an Event of Default, and, if they are aware that any such condition or
event then exists, specifying the nature and period of the existence
thereof (it being understood that the Approved Auditor shall not be
liable, directly or indirectly, for any failure to obtain knowledge of any
Default or Event of Default unless the Approved Auditor should have
obtained knowledge thereof in making an audit in accordance with generally
accepted auditing standards or did not make such an audit);
(iv) promptly and in any event within 5 days after (A) any Senior
Officer obtains knowledge of the existence of any Default or Event of
Default or (B) any Holder gives notice to the Company or takes any other
action with respect to a claimed Default or Event of Default under this
Agreement, or (C) any Person gives any notice to any Member or takes any
other action with respect to a claimed default or event or condition of
the type referred to in CLAUSE (iv) of PARAGRAPH 10, an Officer's
Certificate specifying the nature and period of existence of any such
condition or event, or specifying the notice given or action taken by such
Holder or Person and the nature of such claimed Default, Event of Default,
event or condition, and what action the Company has taken, is taking or
proposes to take with respect thereto;
(v) promptly, and in any event within 5 days after any Senior Officer
obtains knowledge of any of the following, a written notice setting forth
the nature thereof and the action, if any, that the Company or any ERISA
Affiliate proposes to take with respect thereto:
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<PAGE> 13
(A) with respect to any Plan, any reportable event, as defined
in Section 4043(b) of ERISA and the regulations thereunder, for
which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or
(B) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by any Member or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer
Plan; or
(C) any event, transaction or condition that could result in
the incurrence of any liability by any Member or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of
any Member or any ERISA Affiliate pursuant to Title I or IV of ERISA
or such penalty or excise tax provisions, if such liability or Lien,
taken together with any other such liabilities or Liens then
existing, is reasonably expected to have a Material Adverse Effect;
(vi) (A) promptly upon their becoming available, copies of (i) all
financial statements, proxy statements, notices and reports as any Member
shall send or make available to its security holders generally and (ii)
all registration statements (with exhibits), prospectuses and all regular
or periodic reports which it files with the SEC or any stock exchange and
of all press releases and other statements made available generally by any
Member to the public concerning material developments and (B) promptly
after receipt thereof, copies of any reports, statements and notices any
Member may receive in accordance with Section 13(d) or 14(d) of the
Exchange Act or the rules and regulations of any stock exchange; and
(vii) with reasonable promptness, such other information and data
relating to the business, operations, affairs, financial condition, assets
or properties of the Consolidated Group or any Member or relating to the
ability of the Company to perform their obligations under the Transaction
Documents or relating to the ability of any Member to comply with the
terms of the Transaction Documents as may from time to time be reasonably
requested by any Holder.
7.2 INFORMATION REQUIRED BY RULE 144A. The Company will, upon the request
of any Holder of a Note or PIK Preferred Share provide to such Holder, and any
Qualified Institutional Buyer designated by such Holder, such financial and
other information as such Holder may reasonably determine to be necessary in
order to permit compliance with the information requirements of Rule 144A in
connection with a resale or proposed resale of any of the Securities.
7.3 COMPLIANCE WITH SMALL BUSINESS INVESTMENT ACT. The Company shall and
shall cause each Member to provide CIBC Wood Gundy Ventures, Inc. ("CIBC-WGV")
with sufficient information to comply with its obligations under the Small
Business Investment Company Act of 1958, as amended, and the regulations
promulgated thereunder. The Company shall and shall cause each Member to
provide CIBC-WGV and the United States Small Business Administration with
access to its books and records for the purpose of verifying that the proceeds
of CIBC-WGV's investment hereunder is not used for any purpose for which a
Small Business Investment Company is prohibited from providing funds by the
Small Business Investment Act of 1958, as amended, and the regulations
promulgated thereunder (including Title 13, Code of Federal Regulations,
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<PAGE> 14
Section 107.901). As long as CIBC-WGV holds any Shares or any securities
issued in exchange therefore, the Company shall notify CIBC-WGV (a) at least 15
days prior to taking any action after which the record holders of the Company's
capital stock would be increased from fewer than 50 to 50 or more, and (b) of
any other action or occurrence after which the record holders of the Company's
capital stock was increased (or would increase) from fewer than 50 to 50 or
more, as soon as practicable after the Company becomes aware that such other
action has occurred or is proposed to occur.
7.4 INSPECTION OF PROPERTY. The Company shall permit the representatives
of any Holder that is an Institutional Investor:
(a) if no Default or Event of Default then exists, at the expense of such
Holder and upon reasonable prior notice to the Company, to visit the principal
executive office of the Company, to discuss the affairs, finances and accounts
of the Consolidated Group with the officers of the general partner of the
Company and, with the consent of the Company, which consent will not be
unreasonably withheld or delayed, the independent public accountants of the
Company and, with the consent of the Company, which consent will not be
unreasonably withheld or delayed, to visit the offices of each Member, all at
such reasonable times and as often as may be reasonably requested in writing;
and
(b) if a Default or Event of Default then exists, at the expense of the
Company, to visit and inspect any of the offices or properties of any Member,
to examine all their respective books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of each Member), all
at such times and as often as may be requested.
8 PREPAYMENT, REPAYMENT AND REDEMPTION. The Notes may be prepaid only under
the circumstances set forth in PARAGRAPH 8.2 and shall be repaid in accordance
with PARAGRAPH 8.1 and upon any acceleration of final maturity as provided in
PARAGRAPH 11.1.
8.1 SCHEDULED REPAYMENT OF NOTES. The Company shall on March 31, 2010
repay in full all unpaid principal of the Notes at 100% of the principal amount
so repaid, plus accrued and unpaid interest thereon.
8.2 OPTIONAL PREPAYMENT OF NOTES. The Company may prepay the Notes in
full at any time at 100% of the principal amount so prepaid, plus interest
accrued thereon to the Settlement Date; provided that the Company's right to
prepay the Notes under this PARAGRAPH 8.2 is expressly conditioned upon the
redemption of the PIK Preferred Shares in full in accordance with the
Certificate of Incorporation on such Settlement Date. The Company shall give
each Holder irrevocable written notice of any prepayment to be made pursuant to
this PARAGRAPH 8.2 at least 30 days, and not more than 60 days, prior to the
Settlement Date, specifying the Settlement Date. Upon the giving of such
notice, the principal amount of the Notes, together with interest accrued and
unpaid thereon to the Settlement Date shall become due and payable on the
Settlement Date.
8.3 MATURITY; SURRENDER, ETC. In the case of prepayment of Notes pursuant
to PARAGRAPH 8.2, the principal amount of each Note to be prepaid shall mature
and become due and payable on the Settlement Date, together with interest on
such principal amount accrued to such date. Any Note paid or prepaid in full
shall be surrendered to the Company and cancelled and shall not be reissued,
and no Note shall be issued in lieu of any prepaid or repaid Note.
8.4 PURCHASE, REDEMPTION AND RETIREMENT OF NOTES AND PIK PREFERRED SHARES.
The Company shall not, and shall not permit any of its Affiliates to, (i)
prepay or otherwise retire any
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Note prior to its stated maturity (other than by prepayment pursuant to
PARAGRAPH 8.2 or upon acceleration of final maturity pursuant to PARAGRAPH
11.1), or purchase or otherwise acquire, directly or indirectly, any Note or
(ii) redeem or otherwise retire any PIK Preferred Share prior to March 31, 2010
(other than by optional redemption pursuant to Section 4(b) of the Certificate
of Incorporation or mandatory redemption pursuant to Section 4(b)(ii) or (iii)
of the Certificate of Incorporation), or purchase or otherwise acquire,
directly or indirectly, any PIK Preferred Share, unless, in either event, the
Company or such Affiliate shall have offered to prepay, redeem or otherwise
retire, purchase, redeem or otherwise acquire, as the case may be, all Notes
and PIK Preferred Shares held by each other Holder at the time outstanding upon
the same terms and conditions. Any such offer shall provide each Holder with
sufficient information to enable it to make an informed decision with respect
to such offer, and shall remain open for at least 5 Business Days. If the
Required Holders accept such offer, the Company shall promptly notify the
remaining Holders of such fact and the expiration date for the acceptance by
Holders of such offer shall be extended by the number of days necessary to give
each such Holder at least 5 Business Days from its receipt of such notice to
accept such offer. No Notes or PIK Preferred Shares so prepaid, redeemed or
otherwise retired or purchased or otherwise acquired by the Company or any of
its Affiliates shall thereafter be reissued or deemed to be outstanding for any
purpose under this Agreement.
9 AFFIRMATIVE COVENANTS.
The Company covenants that so long as any Note or PIK Preferred Share is
outstanding;
9.1 COMPLIANCE WITH LAWS, ETC. Each Member will comply with the
requirements of all applicable laws, rules, regulations and orders of any
Governmental Authority (including, without limitation, the Occupational Safety
and Health Act of 1970, as amended, ERISA and all Environmental Laws), and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of its
properties or to the conduct of its businesses, in each case to the extent
necessary to ensure that any non-compliance with such laws, ordinances or
governmental rules or regulations or any failure to obtain or maintain in
effect such licenses, permits, franchises and other governmental authorizations
does not, and could not reasonably be expected, individually or in the
aggregate, to have a Material Adverse Effect.
9.2 INSURANCE. Each Member will maintain, with financially sound and
reputable insurers, rated at least A or A+ by A.M. Best, insurance with respect
to its properties and business of such types and in such forms and amounts
(including deductibles, co-insurance and self-insurance if adequate reserves
are maintained with respect thereto) and against such risks as are reasonable
and prudent in the circumstances and as are customarily insured against by
Persons of like size, and with an established reputation engaged in the same or
similar business and similarly situated.
9.3 MAINTENANCE OF PROPERTIES AND LEASES. Each Member will (i) maintain
all its properties in good repair and working order and condition (other than
ordinary wear and tear) so that the business carried on in connection therewith
may be properly conducted at all times and from time to time make or cause to
be made all appropriate repairs, renewals, replacements, additions and
improvements thereof as needed, provided that this PARAGRAPH 9.3 shall not
prevent any Member from discontinuing the operation or maintenance of any of
its properties if such discontinuance is desirable in the conduct of its
business and the Company has concluded that such discontinuance could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and (ii) comply in all material respects with the provisions of
all leases or licenses under which it leases or licenses any such properties to
the extent necessary to ensure
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that any such non-compliance with such leases or licenses could not reasonably
be expected to have a Material Adverse Effect.
9.4 CORPORATE EXISTENCE, ETC. Except as otherwise specifically permitted
by this Agreement, each Member will at all times preserve and keep in full
force and effect its separate legal existence and all its Material rights and
franchises, and qualify and maintain its qualification to do business and good
standing in any jurisdiction, except in each case where the failure to do so,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
9.5 PAYMENT OF TAXES AND CLAIMS.
(a) Each Member will file all tax returns required to be filed in any
jurisdiction and pay all Taxes shown to be due and payable on such returns and
all other Taxes imposed upon it or any of its properties or assets or in
respect of any of its franchises, business, income, sales and services, or
profits when the same become due and payable, but in any event before any
penalty or interest accrues thereon, and all claims (including, without
limitation, claims for labor, services, materials and supplies) for sums which
have become due and payable and which have or might become a Lien upon any of
its properties or assets, provided, that no such Tax or claim need be paid if
(a) it is being contested in good faith by appropriate proceedings promptly
initiated and diligently conducted and if such reserves or other appropriate
provision, if any, as shall be required by GAAP shall have been made therefor,
and (b) the failure to pay such Tax or claim could not reasonably be expected,
if such contest were adversely determined, individually or in the aggregate, to
have a Material Adverse Effect.
(b) No Member will consent to or permit the filing of or be a party to any
consolidated income tax return on its behalf with any Person (other than a
consolidated return that includes solely the Consolidated Group).
9.6 SCOPE OF BUSINESS. No Member will engage to a substantial extent in
any business other than the business engaged in by it on the close on business
on the Closing Date, and businesses reasonably related thereto or in
furtherance thereof.
9.7 USE OF PROCEEDS. The Company will use the proceeds of the sale of the
Securities to pay, in part the purchase price under the Viad Purchase
Agreement, and to pay related costs and expenses, and not for any purpose which
would violate any applicable law or governmental regulation or which is
otherwise prohibited under PARAGRAPH 5.7.
9.8 ENVIRONMENTAL COMPLIANCE. Each Member will (i) obtain and maintain
all permits, licenses, and other authorizations that are required of it under
all Environmental Laws other than those which the failure to obtain or
maintain, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect, and (ii) comply with all terms and conditions
of all such permits, licenses, and authorizations and with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules, and timetables contained in all Environmental Laws or
in any regulation, ordinance or code applicable to such Member and any, plan,
order, decree, judgment, injunction, notice, or demand letter issued, entered,
promulgated, or approved thereunder directly applicable to such Member, except
to the extent of any noncompliance which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect, and (iii)
operate all property owned or leased by it such that no claim or obligation,
including a clean-up obligation, which, individually or in the aggregate, with
all such other obligations could reasonably be expected to have a Material
Adverse Effect, shall arise under any Environmental Law, and if any claim is
made against it or any such obligation shall arise under any Environmental Law,
it shall at its own cost and expense, timely satisfy such claim or obligation,
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provided no such claim or obligation need be satisfied for so long as (A) it is
being contested in good faith by appropriate proceedings promptly initiated and
diligently conducted and (B) such reserves or other appropriate provision, if
any, as shall be required by GAAP shall have been made therefor.
9.9 MAINTENANCE OF BOOKS AND RECORDS. Each Member will: (i) keep proper
records and books of account with respect to its business activities in which
proper entries are made in the ordinary course of all dealings or transactions
of or in relation to its business and affairs; (ii) set up on its books
adequate reserves with respect to all Taxes, assessments, charges, levies and
claims; and (iii) set up on its books reserves against doubtful accounts
receivable, advances and all other proper reserves (including reserves for
depreciation, obsolescence or amortization of its property). All
determinations pursuant to this PARAGRAPH 9.9 shall be made in accordance with,
or as required by, GAAP in order to fairly reflect all of the Consolidated
Group's financial transactions.
9.10 PREEMPTIVE RIGHTS. If the Company proposes to issue any shares of
Common Equity or Convertible Securities to any Person other than in a Qualified
Public Offering, the Company shall offer to sell to the Purchasers such number
of shares of Common Equity or Convertible Securities as is equal to the
percentage obtained by multiplying 100 times the decimal obtained by dividing
the number of Shares owned by a Purchaser by the total number of shares of
Common Equity outstanding on a fully diluted basis.
9.11 AMENDMENT TO CERTIFICATE OF INCORPORATION. The Company may not amend
or modify the provisions of its Certificate of Incorporation without the prior
written consent of the Required Holders.
10 EVENTS OF DEFAULT.
If any of the following events shall occur or conditions shall exist for
any reason whatsoever, and whether such occurrence or condition shall be
voluntary or involuntary or come about or be effected by operation of law or
otherwise, such occurrence or condition shall constitute an "EVENT OF DEFAULT":
(i) the Company defaults in the payment of any principal of any Note
or interest thereon when the same shall become due and payable, whether by
the terms thereof or otherwise as provided by the terms of this Agreement;
or
(ii) the Company fails to redeem any PIK Preferred Shares or to pay
dividends thereon in accordance with the terms of the Certificate of
Incorporation; or
(iii) any representation or warranty made in writing by the Company
in any Transaction Document or in any writing furnished at Closing in
connection with any Transaction Document proves to have been false or
incorrect in any Material respect on the date as of which made; or
(iv) with respect to any Debt, other than the Debt represented by the
Notes or the PIK Preferred Shares, any Member (A) defaults (whether as
primary obligor or guarantor or surety) in any payment of principal of,
premium, if any, make-whole amount or interest on any such Debt, the
outstanding principal amount of which exceeds $500,000 in the aggregate,
beyond any period of grace provided with respect thereto, or (B) fails to
perform or observe any other agreement, term or condition contained in any
agreement under which such Debt is created (or if any other event
thereunder or under any such agreement shall occur and be continuing) and
the effect of such default or other event is to cause, or to permit the
holder or holders of such Debt (or a trustee on behalf of such holder or
holders)
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to declare such Debt to become due or to be required to be redeemed or
repurchased prior to any stated maturity or regularly scheduled dates of
payment, or (C) as a consequence of the occurrence or continuation of any
event or condition (other than the passage of time or the right of the
holder of Debt to convert such Debt into Equity Interests), (x) any Member
has become obligated to purchase or repay or redeem an aggregate
outstanding principal amount of $500,000 or more of Debt before its
regular maturity or before its regularly scheduled dates of payment or
redemption, or (y) one or more Persons have the right to require any
Member so to purchase or repay such Debt (other than the right to demand
repayment of any Debt payable by its terms on demand);
(v) any Member fails to perform or observe any covenant contained in
PARAGRAPH 7.1(iv), 9.4 or 9.7;
(vi) the Company fails to perform or observe any other agreement,
term or condition of any of the Transaction Documents applicable to it and
such failure shall not be remedied within 30 days; or
(vii) the Company voluntarily or involuntarily suspends or
discontinues operation or liquidates all or substantially all of its
assets; or
(viii) any Member (A) is generally not paying, or admits in writing
that it is not able to pay, its debts as such debts become due; or (B)
files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition
in bankruptcy, for liquidation or to take advantage of any bankruptcy or
insolvency law of any jurisdiction; or (C) makes an assignment for the
benefit of its creditors; or (D) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property; (E)
is adjudicated insolvent or to be liquidated or (F) takes corporate action
for the purpose of any of the foregoing; or
(ix) a Governmental Authority enters an order appointing, without the
consent of such Member, a custodian, receiver, trustee or other officer
with similar powers with respect to such Member or with respect to any
substantial part of the property of such Member, or constituting an order
for relief or approving a petition for relief or reorganization or any
other petition in bankruptcy or for liquidation or to take advantage of
any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of any Member without the consent
of such Member and such order remains unstayed and in effect for 60 days;
or
(x) a final judgment or judgments for the payment of money
aggregating in excess of $500,000 is rendered against any Member and
within 60 days thereof such judgment or judgments are not bonded or
discharged or execution thereof stayed pending appeal, or within 60 days
after the expiration of any such stay, such judgment or judgments are not
discharged; or
(xi) if (A) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any year or part thereof or a waiver of
such standards or extension of any amortization period is sought or
granted under section 412 of the Code, (B) a notice of intent to terminate
(other than a notice of a "standard termination" as defined in Section
4041(b) of ERISA) any Plan shall have been or is reasonably expected to be
filed with the PBGC or the PBGC shall have instituted proceedings under
ERISA section 4042 to terminate or appoint a trustee to administer any
Plan or the PBGC shall have notified any Member or any ERISA Affiliate
that a Plan may become a subject of any such proceedings, (C) the
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aggregate "amount of unfunded benefit liabilities" (within the meaning of
section 4001(a)(18) of ERISA) under all Plans, determined in accordance
with Title IV of ERISA, shall exceed $500,000, (D) any Member or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (E) any Member
or any ERISA Affiliate withdraws from any Multiemployer Plan, or (F) any
Member establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would increase
the liability of any Member thereunder; and any such event or events
described in CLAUSES (A) through (F) above, either individually or
together with any other such event or events, could reasonably be expected
to result in a Material Adverse Effect. As used in this CLAUSE (xi), the
terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE WELFARE BENEFIT PLAN" shall
have the respective meanings assigned to such terms in Section 3 of ERISA;
or
(xii) a Change in Control shall have occurred.
11 REMEDIES ON DEFAULT, ETC.
11.1 ACCELERATION.
(a) If any Event of Default has occurred, the Required Holders may, at
their option, elect to simultaneously (i) declare the Notes to be, and each
Note shall thereupon be immediately due and payable at 100% of the principal
amount thereof together with all interest accrued thereon, and (ii) require the
immediate redemption of the PIK Preferred Shares in full in accordance with
Section 4(b)(ii) of the Certificate of Incorporation for the redemption price
set forth therein, in each case without presentment, demand, protest or notice
of any kind, all of which are expressly waived by the Company; provided however
that if an Event of Default with respect to the Company described in CLAUSE
(viii) of PARAGRAPH 10 has occurred, the Required Holders shall conclusively be
deemed to have elected to take the actions described in CLAUSES (i) and (ii)
above.
(b) If an Event of Default specified in CLAUSE (i) of PARAGRAPH 10 has
occurred with respect to any Note, the Holder thereof, whether or not the
Required Holders have declared the Senior Securities to be due and payable or
redeemable pursuant to the immediately preceding SUBPARAGRAPH (a), may declare
such Note to be immediately due and payable at 100% of the principal amount
thereof together with interest accrued thereon, without presentment, demand,
protest or notice of any kind, all of which are expressly waived by the
Company.
(c) If an Event of Default specified in CLAUSE (ii) of PARAGRAPH 10 has
occurred with respect to any PIK Preferred Share, the Holder thereof, whether
or not the Required Holders have declared the Senior Securities to be due and
payable or redeemable pursuant to the preceding SUBPARAGRAPH (a), may require
the immediate redemption of such PIK Preferred Share in full in accordance with
Section 4(b)(iii) of the Certificate of Incorporation for the redemption price
set forth therein, without presentment, demand, protest or notice of any kind,
all of which are expressly waived by the Company.
11.2 OTHER REMEDIES. If any Default or Event of Default has occurred and
is continuing, and irrespective of whether any Senior Securities shall have
become or have been declared immediately due and payable or redeemable under
PARAGRAPH 11.1, the Required Holders may proceed to protect and enforce the
rights of the Holders by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement contained
herein or in any Senior Security, or for an injunction against a violation of
any of the terms hereof or thereof, or in aid of the exercise of any power
granted hereby or thereby or by law or otherwise.
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]
11.3 RESCISSION OF ACCELERATION. At any time after the Notes shall have
been declared immediately due and payable and the PIK Preferred Shares shall be
redeemable pursuant to SUBPARAGRAPH (a) OR (b) OF PARAGRAPH 11.1, and provided
that no Event of Default with respect to the Company under CLAUSE (viii) of
PARAGRAPH 10 has occurred, the Required Holders may, by written notice to the
Company, rescind and annul any such election. No such rescission or annulment
shall extend to or affect any subsequent Default or Event of Default or impair
any right arising therefrom.
11.4 NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note shall be
declared immediately due and payable and the PIK Preferred Shares redeemable
pursuant to PARAGRAPH 11.1, or any such declaration under PARAGRAPH 11.1 shall
be rescinded and annulled pursuant to PARAGRAPH 11.3, the Company shall
forthwith give written notice thereof to each other Holder at the time
outstanding, provided, the failure to give such notice shall not affect the
validity of any such declaration, rescission or annulment.
11.5 NO WAIVERS OR ELECTION OF REMEDIES. No course of dealing or failure
or delay by any Holder in exercising any right, power or remedy under a
Transaction Document or any other document executed in connection therewith
shall operate as a waiver thereof or otherwise prejudice such Holder's rights,
powers or remedies, nor shall any single or partial exercise of any such right
or remedy preclude any other right or remedy hereunder or thereunder. No
right, power or remedy conferred by this Agreement, any Note or the Certificate
of Incorporation, or upon any Holder, shall be exclusive of any other right,
power or remedy referred to herein or therein or now or hereafter available at
law, in equity, by statute or otherwise. Without limiting the obligations of
the Company under PARAGRAPH 14, the Company will pay to the holder of each Note
or PIK Preferred Share, on demand such further amount as shall be sufficient to
cover all costs and expenses of such holder incurred in any enforcement or
collection under this PARAGRAPH 11, including, without limitation, reasonable
attorneys' fees, expenses and disbursements.
12 REGISTRATION, TRANSFER, EXCHANGE AND REPLACEMENT OF NOTES.
12.1 REGISTRATION. The Notes are to be issued and are transferable in
whole or in part as registered Notes without coupons in denominations of at
least $100,000, except as may be necessary to reflect any remaining principal
amount less than $100,000 and may be exchanged for one or more Notes of any
authorized denomination and like class and like aggregate outstanding principal
amount. The Company shall keep at the principal executive office of the
Company a register in which the Company shall record the registrations of the
Notes and the names and addresses of the Holders from time to time and all
transfers thereof. The Company shall provide any Holder, promptly upon
request, a complete and correct copy of the names and addresses of the then
Holders. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the
owner and Holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary.
12.2 TRANSFER AND EXCHANGE. Upon surrender of any Note at the principal
executive office of the Company for registration of transfer or exchange (and
in the case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
Holder of such Note or his attorney duly authorized in writing and accompanied
by the address for notices of each transferee of such Note or part thereof),
the Company shall execute and deliver, within 5 Business Days, at the Company's
expense (except as provided below), one or more new Notes (as requested by the
Holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Note. Each such new Note shall
be payable to such Person as such holder may request and shall be substantially
in the form of EXHIBIT A. Each such new Note shall be dated and bear interest
from
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the date to which interest shall have been paid on the surrendered Note or
dated the date of the surrendered Note if no interest shall have been paid
thereon. The Company may require payment of a sum sufficient to cover any
stamp tax or governmental charge imposed in respect of any such transfer of
Notes. Notes shall not be transferred in denominations of less than $100,000,
provided that if necessary to enable the registration of transfer by a Holder
of its entire holding of Notes, one Note may be in a denomination of less than
$100,000. Any transferee, by its acceptance of a Note registered in its name
(or the name of its nominee), shall be deemed to have made the representations
set forth in PARAGRAPH 6.
12.3 REPLACEMENT. Upon receipt of written notice from a Holder of the
loss, theft, destruction or mutilation of a Note and, in the case of any such
loss, theft or destruction, upon receipt of an indemnification agreement of
such Holder (and, in the case of a Holder which is not a Institutional
Investor, with such security as may be reasonably requested by the Company)
satisfactory to the Company, or in the case of any such mutilation upon
surrender and cancellation of such Note, the Company will make and deliver,
within 5 Business Days, a new Note, at its expense, of like class and tenor, in
lieu of the lost, stolen, destroyed or mutilated Note, and each new Note will
bear interest from the date to which interest shall have been paid on such
lost, stolen, destroyed or mutilated Note or if no interest has been paid
thereon, the date of such lost, stolen, destroyed or mutilated Note.
13. PAYMENTS.
13.1 HOME OFFICE PAYMENT. The Company agrees that, so long as a Purchaser
shall hold any Notes or PIK Preferred Shares, all payments in respect of such
Notes or PIK Preferred Shares, required by the terms thereof or otherwise by
this Agreement, will be made in compliance with the applicable terms thereof
and hereof by wire transfer to such Purchaser of immediately available funds
for credit to the account or accounts as specified in SCHEDULE A for such
Purchaser, or such other account or accounts in the United States as a
Purchaser may designate in writing, notwithstanding any contrary provision in
this Agreement or the Notes or the Certificate of Incorporation, with respect
to the place of payment. Each Purchaser agrees that, before disposing of any
Note, it will make a notation thereon (or on a schedule attached thereto) of
all principal payments previously made and of the date to which interest has
been paid. The Company agrees to afford the benefits of this PARAGRAPH 15.1 to
any Holder which shall have made the same agreement in writing as the
Purchasers have made in this PARAGRAPH 15.1.
13.2 NO DEDUCTION OR SET-OFF. The obligation of the Company to pay
principal, interest, dividends, liquidation value and any other amounts under
the Transaction Documents owed by the Company shall be absolute and
unconditional and shall not be affected by any circumstances, including without
limitation any set-off, counterclaim, recoupment, defense or other right which
the Company may have against a Purchaser or any Holder for any reason
whatsoever.
13.3 SENIOR SECURITIES ARE PARI PASSU. In the event of the Sale of the
Company or the liquidation, dissolution or winding up of the Company or in any
reorganization or recapitalization of the Company (including pursuant to a
bankruptcy of the Company or its Subsidiaries), each Holder of Notes and PIK
Preferred Shares shall be entitled to be paid, on a pari passu basis
(notwithstanding any term of the contrary herein, or in the Notes, the
Certificate of Incorporation or the Company's Certificate of Incorporation, and
notwithstanding the designation of one instrument as "debt" and the other as
"equity") before any distribution or payment is made upon the Common Stock,
consideration in an amount equal to the aggregate sum of the Liquidation Value
and/or the principal amount of the Senior Securities held by such Holder (plus
all unpaid dividends and interest which have accrued or been declared thereon)
(the "SENIOR SECURITY PREFERENCE AMOUNT"). If upon any such Sale of the
Company or the liquidation, dissolution or winding up of the Company, the
Company's assets to be distributed among the holders of the Senior Securities
are insufficient to
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permit payment of the Senior Security Preference Amount, then the entire
consideration to be distributed to the holders of Senior Securities shall be
distributed pro rata among such holders on a pari passu basis (notwithstanding
any term to the contrary herein, or in the Notes, the Certificate of
Incorporation or the Company's Certificate of Incorporation, and
notwithstanding the designation of one instrument as "debt" and the other as
"equity") based upon the sum of the Liquidation Value and principal amount
(plus all unpaid dividends and interest which have accrued or been declared
thereon) of the Senior Securities held by each such Holder relative to the
aggregate sum of the Liquidation Value and principal amount of all Senior
Securities then outstanding. In the event of any bankruptcy, recapitalization
or reorganization of the Company, the Holders of the Notes shall use reasonable
efforts to provide the Holders of PIK Preferred Shares representation (along
with the Holders of the Notes), based on such Holders pro rata share of the
aggregate sum of the Liquidation Value and principal amount of all Senior
Securities then outstanding, or any Creditors Committee or other formal or
informal group representing Holders of Notes, it being the irrevocable
agreement and understanding that the Notes and the PIK Preferred Shares are, in
any such scenario, to be treated as one and the same class of securities, with
all holders of such Senior Securities entitled to share in all the rights,
privileges and preferences that any Holder of Notes may have, notwithstanding
the designation of one instrument as "debt" and the other as "equity."
13.4 SHARING OF PAYMENTS. If any Holder of a Note or of PIK Preferred
Shares (a "PIK HOLDER") shall obtain at any time any cash payment (whether
voluntary, involuntary, through the exercise of any right of set-off, or
otherwise) (a) on account of principal, interest, dividends, liquidation value
under its Note or PIK Preferred Shares (collectively, the "PIK OBLIGATIONS") in
excess of its ratable share (according to the proportion of (i) the amount of
such PIK Obligations due and payable to such PIK Holder at such time to (ii)
the aggregate amount of the PIK Obligations due and payable to all PIK Holders
under the Notes and the PIK Preferred Shares at such time) of payments on
account of the PIK Obligations due and payable to all PIK Holders under the
Notes and the PIK Preferred Shares at such time obtained by all the PIK Holders
at such time or (b) on account of PIK Obligations owing (but not due and
payable) to such PIK Holder under the PIK Notes and the PIK Preferred Shares at
such time in excess of its ratable share (according to the proportion of (i)
the amount of such PIK Obligations owing to such PIK Holder at such time to
(ii) the aggregate amount of the PIK Obligations owing (but not due and
payable) to all PIK Holders under the PIK Notes and the PIK Preferred Shares at
such time) of payments on account of the PIK Obligations owing (but not due and
payable) to all PIK Holders under the PIK Notes and the PIK Preferred Shares at
such time obtained by all of the PIK Holders at such time, such PIK Holder
shall forthwith purchase from the other PIK Holders such participation in the
PIK Obligations due and payable or owing to them, as the case may be, as shall
be necessary to result in all PIK Holders receiving their ratable share of
payments on account of PIK Obligations. The Company agrees that any PIK Holder
so purchasing a participation from another PIK Holder pursuant to this
PARAGRAPH 13.4 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such PIK Holder were the direct creditor of the
Company in the amount of such participation.
14 EXPENSES.
Whether or not the transactions provided for hereby shall be consummated,
the Company will pay on demand and save each Purchaser and each Holder harmless
against liability for the payment of, all out-of-pocket expenses arising in
connection with such transactions and in connection with any subsequent or
proposed modification of, or waiver or consent under or in respect of, the
Transaction Documents, whether or not such transactions are consummated or
modification shall be effected or consent or waiver granted ("EXPENSES"),
including (i) the reasonable fees and expenses of Special Counsel and its
agents and of any other special or local counsel or other special advisers
engaged and reasonably required by the Purchasers in connection with the
transactions contemplated by this Agreement; provided the Company shall not be
liable for
18
<PAGE> 23
the fees and expenses of more than one Special Counsel in any single matter,
(ii) the costs of obtaining the private placement numbers from Standard &
Poor's Ratings Group for the Securities, (iii) the costs and expenses,
including reasonable attorneys' fees and the fees of any other special or
financial advisers, incurred in enforcing and defending and, during the
continuance of a Default or after the occurrence of an Event of Default,
monitoring or evaluating any rights under the Transaction Documents (including,
without limitation, any costs, expenses or fees incurred in connection with
perfecting or maintaining perfection of any Lien now or hereafter existing in
favor of the Purchasers or any Holder as security for the obligations of the
Company under the Transaction Documents or maintaining or protecting the
collateral which is the subject of such Lien) or in responding to any subpoena
or other legal process or informal investigation issued in connection with the
Transaction Documents or the transactions provided for hereby or thereby or by
reason of a Purchaser or any Holder having acquired any of its Securities, and
(iv) costs and expenses, including financial advisors fees, incurred in
connection with any bankruptcy or insolvency of any Member or in connection
with any workout or restructuring of any of the transactions contemplated by
the Transaction Documents. The Company will pay and will save each Purchaser
and each Holder from all claims in respect of any fees, costs or expenses, if
any, of any brokers and finders not retained by such Purchaser or Holder. The
obligations of the Company under this PARAGRAPH 14 shall survive the transfer
of any of its Securities or any interest therein by a Purchaser or any Holder
and the payment of any Notes.
15. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained in any Transaction Document
or made in any other writing by or on behalf of the Company in connection
herewith shall survive the execution and delivery of such Transaction Document
or other writing, the transfer by a Purchaser of any Notes or PIK Preferred
Shares or portion thereof or interest therein and the payment or redemption of
any Notes or PIK Preferred Shares and may be relied upon by any Holder as
having been true when made, regardless of any investigation made at any time by
or on behalf of the Purchasers or any Holder. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company, any
Subsidiary pursuant to any Transaction Document shall be deemed representations
and warranties of the Company under this Agreement. Subject to the preceding
sentence, the Transaction Documents embody the entire agreement and
understanding between the Purchasers and the Company and supersede all prior
agreements and understandings relating to the subject matter hereof and
thereof.
16. AMENDMENT AND WAIVER.
16.1 REQUIREMENTS. This Agreement, the Notes and the Certificate of
Incorporation may be amended, and the observance of any term hereof or of the
Notes or the Certificate of Incorporation may be waived (either retroactively
or prospectively), with (and only with) the written consent of the Company and
the Required Holders, except that (i) no amendment or waiver of any of the
provisions of PARAGRAPHS 1, 2, 3, 4, or 5 hereof, or any defined term (as it is
used therein), will be effective as to any Holder unless consented to by such
Holder in writing, (ii) no such amendment or waiver may, without the written
consent of each Holder affected thereby, (A) subject to the provisions of
PARAGRAPH 11 relating to acceleration or rescission, change the amount or time
of any prepayment or payment of principal or Liquidation Value of, or reduce
the rate or change the time of payment or method of computation of interest or
dividends on, the Senior Securities, (B) change the percentage of the principal
amount or the Liquidation Value of the Senior Securities the Holders of which
are required to consent to any such amendment or waiver or (C) amend any of
PARAGRAPHS 8, 10(i), 11 or 16, and (iii) no substantive modification of the
terms of the Notes may be effected without also effecting a similar
modification to the Certificate of Incorporation for the PIK Preferred Shares,
and no substantive modification of the Certificate of
19
<PAGE> 24
Incorporation for the PIK Preferred Shares may be effected without also
effecting a similar modification to the Notes.
16.2 SOLICITATION OF HOLDERS.
16.2.1 SOLICITATION. The Company will provide each Holder (irrespective
of the amount of Notes or Shares then owned by it) with sufficient information,
sufficiently far in advance of the date a decision is required, to enable such
Holder to make an informed and considered decision with respect to any proposed
amendment, waiver or consent in respect of any of the provisions of any
Transaction Document. The Company will deliver executed or true and correct
copies of each amendment, waiver or consent effected pursuant to the provisions
of this PARAGRAPH 16.2 to each Holder promptly following the date on which it
is executed and delivered by, or receives the consent or approval of, the
Required Holders.
16.2.2 PAYMENT. The Company will not directly or indirectly pay or cause
to be paid any remuneration, whether by way of supplemental or additional
interest, fee, expense (other than such Holder's Expenses) or otherwise, or
grant any security, to any Holder as consideration for or as an inducement to
the entering into by any Holder of any waiver or amendment of any of the terms
and provisions of any Transaction Document unless such remuneration is
concurrently paid, or security is concurrently granted, on the same terms,
ratably to each Holder whether or not such Holder consented to such waiver or
amendment.
16.3 BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this PARAGRAPH 16
applies equally to all Holders and is binding upon them and upon each future
Holder and upon the Company without regard to whether any Note or PIK Preferred
Share has been marked to indicate such amendment or waiver. No such amendment
or waiver will extend to or affect any obligation, covenant, agreement, Default
or Event of Default not expressly amended or waived or impair any right
consequent thereon. No course of dealing between the Company and any Holder
nor any delay in exercising any rights hereunder or under any Senior Security
shall operate as a waiver of any rights of any such Holder.
17. NOTICES.
All notices and communications provided for hereunder shall be in writing
and sent (a) by telecopy if the sender on the same day sends a confirming copy
of such notice by a recognized overnight delivery service (charges prepaid), or
(b) by registered or certified mail with return receipt requested (postage
prepaid), or (c) by a recognized overnight delivery service (with charges
prepaid). Any such notice must be sent:
(i) if to a Purchaser or its nominee, to it at the address specified
for it for such communications in SCHEDULE A, or at such other address as
such Purchaser shall have specified to the Company in writing,
(ii) if to a Holder of a Note, to such Holder at such address or fax
number as is then specified for such Holder in the Note register
referenced in PARAGRAPH 12,
(iii) if to a Holder of Shares, to such Holder at such address or fax
number as is then specified for such Holder in the Company Stock Records
or such other address or fax number as such Holder shall have specified to
the Company in writing, or
20
<PAGE> 25
(iv) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of President, or at such other
address or fax number as the Company shall have specified to each Holder
in writing.
Notices given in accordance with this PARAGRAPH 17 will be deemed given upon
the earlier of actual receipt or the second Business Day after dispatch.
18 REPRODUCTION OF DOCUMENTS.
Any Transaction Document and any documents relating thereto, including,
without limitation, (i) consents, waivers and modifications that may hereafter
be executed, (ii) documents received by the Purchasers at the Closing (except
the Notes), and (iii) financial statements, certificates (other than
certificates representing Shares) and other information previously or hereafter
furnished to the Purchasers, may be reproduced by any Purchaser by any
photographic, photostatic, microfilm, microcard, miniature photographic or
other similar process and the Purchasers may destroy any original document so
reproduced. The Company agrees and stipulates that, to the extent permitted by
applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not
the original is in existence and whether or not such reproduction was made by
such Purchaser in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise be
admissible in evidence. This PARAGRAPH 18 shall not prohibit the Company or
any Holder from contesting any such reproduction to the same extent that it
could contest the original, or from introducing evidence to demonstrate the
inaccuracy of any such reproduction.
19 SUBSTITUTION OF PURCHASER.
Each Purchaser has the right to substitute any one of its Affiliates as
the purchaser of the Securities that it has agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by such Purchaser
and its Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in PARAGRAPH 6. In the
event that such Affiliate is so substituted as a Purchaser hereunder and such
Affiliate thereafter transfers to the original Purchaser all of the Securities
then held by such Affiliate, upon receipt by the Company of notice of such
transfer, such Purchaser shall have all the rights of a Purchaser.
20 MISCELLANEOUS.
20.1 SUCCESSORS AND ASSIGNS. All covenants and other agreements contained
in this Agreement by or on behalf of any of the parties hereto bind and inure
to the benefit of their respective successors and assigns (including, without
limitation, any subsequent Holder) whether so expressed or not; provided, that
except as expressly permitted by this Agreement, the Company may not delegate
the performance of any of its obligations hereunder.
20.2 PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this Agreement or the
Notes to the contrary notwithstanding, any payment of principal of or interest
on any Note that is due on a date other than a Business Day shall be made on
the next succeeding Business Day without including the additional days elapsed
in the computation of the interest payable on such next succeeding Business
Day.
21
<PAGE> 26
20.3 SEVERABILITY. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by
law) not invalidate or render unenforceable such provision in any other
jurisdiction.
20.4 CONSTRUCTION. Each covenant contained herein shall be construed
(absent express provision to the contrary) as being independent of each other
covenant contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse compliance with
any other covenant. Where any provision herein refers to action to be taken by
any Person, or which such Person is prohibited from taking, such provision
shall be applicable whether such action is taken directly or indirectly by such
Person.
20.5 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 instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by all, of the
parties hereto.
20.6 DESCRIPTIVE HEADINGS. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.
20.7 GOVERNING LAW. THIS AGREEMENT IS TO BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAWS
OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY LAWS OR RULES RELATING
TO CONFLICTS OF LAWS THAT WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY
JURISDICTION OTHER THAN THE STATE OF NEW YORK).
20.8 CONSENT TO JURISDICTION AND SERVICE AND WAIVER OF TRIAL BY JURY. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE COMPANY HEREBY ABSOLUTELY AND
IRREVOCABLY CONSENTS AND SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND OF ANY FEDERAL COURT LOCATED IN SAID
JURISDICTION IN CONNECTION WITH ANY ACTIONS OR PROCEEDINGS BROUGHT AGAINST IT
BY ANY HOLDER ARISING OUT OF OR RELATING TO ANY OF THE TRANSACTION DOCUMENTS
AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY HEREBY
WAIVES AND AGREES NOT TO ASSERT IN ANY SUCH ACTION OR PROCEEDING, IN EACH CASE,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY CLAIM THAT (A) IT IS
NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, (B) IT IS IMMUNE
FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO
JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT
TO IT OR ITS PROPERTY, (C) ANY SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, OR (D) SUCH TRANSACTION DOCUMENT MAY NOT BE ENFORCED IN OR
BY ANY SUCH COURT. IN ANY SUCH ACTION OR PROCEEDING, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, THE COMPANY HEREBY ABSOLUTELY AND IRREVOCABLY
WAIVES TRIAL BY JURY AND PERSONAL IN HAND SERVICE OF ANY SUMMONS, COMPLAINT,
DECLARATION OR OTHER PROCESS AND HEREBY ABSOLUTELY AND IRREVOCABLY AGREES THAT
THE SERVICE MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, DIRECTED TO IT AT ITS ADDRESS SET FORTH IN OR FURNISHED PURSUANT TO
THE PROVISIONS OF THIS AGREEMENT, OR BY ANY OTHER MANNER PROVIDED BY LAW.
ANYTHING HEREINBEFORE TO THE CONTRARY NOTWITHSTANDING, ANY HOLDER MAY SUE THE
COMPANY IN ANY OTHER APPROPRIATE JURISDICTION AND ANY PARTY MAY SUE ANY OTHER
PARTY ON A JUDGMENT RENDERED BY ANY COURT PURSUANT TO THE PROVISIONS OF THE
FIRST SENTENCE OF THIS PARAGRAPH 20.8 IN THE COURTS OF ANY COUNTRY, STATE
22
<PAGE> 27
OF THE UNITED STATES OR PLACE WHERE SUCH OTHER PARTY OR ANY OF ITS PROPERTY OR
ASSETS MAY BE FOUND OR IN ANY OTHER APPROPRIATE JURISDICTION.
20.9 TERMINATION. This Agreement and the rights of the Holders and the
obligations of the Company hereunder shall not terminate until each of the
Notes, including all principal, interest and interest on overdue interest has
been indefeasibly paid in full and all Expenses and all other amounts owed to
any Purchaser or any Holder pursuant to the terms of any Transaction Document
have been indefeasibly paid in full.
20.10 COMPLIANCE BY SUBSIDIARIES. The Company, as the holder of the
Equity Interests of its Subsidiaries, shall cause such meetings to be held,
votes to be cast, resolutions to be passed, by-laws to be made and confirmed,
documents to be executed and all other things and acts to be done to ensure
that, at all times, the provisions of this Agreement relating to its
Subsidiaries are complied with.
[SIGNATURES FOLLOW ON PAGE 24]
23
<PAGE> 28
If you are in agreement with the foregoing, please sign the form of
acceptance on the enclosed counterpart of this letter and return the same to
the Company, whereupon this letter shall become a binding agreement, executed
under seal between you and the Company.
Very truly yours,
RANGER AEROSPACE CORPORATION
By: /s/ STEPHEN D. TOWNES
---------------------------
Name: STEPHEN D. TOWNES
Title: President and CEO
The foregoing Agreement is hereby
accepted as of the date first above written.
HANCOCK PURCHASER:
- - ------------------
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ D. DANA DONOVAN
--------------------------------
Name: D. DANA DONOVAN
Title: Senior Investment Officer
CIBC PURCHASER:
- - ---------------
CIBC WOOD GUNDY VENTURES, INC.
By: /s/ LORI KOFFMAN
------------------------
Name: LORI KOFFMAN
Title: Managing Director
RANDOLPH STREET PARTNERS II
By: /s/ WILLIAM S. KIRSCH
----------------------
partner
/s/ GREGG L. ENGLES
- - -------------------------
GREGORY ENGLES
24
<PAGE> 29
EXHIBIT A
RANGER AEROSPACE CORPORATION
10.5% PIK Note due March 31, 2010
PPN 75218@ AA 8
No. ___ _________, ____
$_______________
FOR VALUE RECEIVED, the undersigned, RANGER AEROSPACE CORPORATION, a
Delaware corporation, (the "BORROWER") hereby promises to pay to [NAME OF
PAYEE], or its registered assigns ("HOLDER"), the principal sum of
__________________________ DOLLARS ($_____________), with interest (computed on
the basis of a 360-day year of twelve 30-day months) on the principal amount
from time to time unpaid and not yet due at the rate of 10.5% per annum from
the date hereof. Interest on this Note shall be due and payable semi-annually
in arrears on the last day of each September and March in each year commencing
the first such interest payment date occurring after the later of April 1, 1998
and the date hereof, through and including March 31, 2010. All interest
payable on any interest payment date shall be added to the principal balance
hereof ("PAID-IN-KIND INTEREST") as of such interest payment date and any such
Paid-in-Kind Interest shall, when so added to principal, be treated for all
purposes hereof on the same terms as all other principal hereof. Any overdue
principal, and, to the extent permitted by applicable law, overdue interest,
shall bear interest at the rate of 12.5% per annum, whether overdue by
acceleration or otherwise.
This note (this "NOTE") is one of the series of 10.5% PIK Notes issued by
the Borrower (the "NOTES") pursuant to, and is subject to, a Securities
Purchase Agreement dated as of April 1, 1998 among the Borrower and the
Purchasers parties thereto (the "PURCHASERS"), as amended from time to time
(the "AGREEMENT"). Capitalized terms used in this Note and not defined herein
have the meanings given therefor in the Agreement. The Holder is entitled,
equally and ratably with the other holders of the Notes, to the benefits of the
Agreement and the other Transaction Documents.
All dollar amounts in this Note refer to United States dollars. Payments
of principal and interest are to be made at the place and in the manner
specified by the Purchaser of this Note in Schedule A to the Agreement or at
such other place or manner as the Holder shall designate to the Borrower in
writing in accordance with the Agreement, in lawful money of the United States
of America. If any payment of principal or interest on or in respect of this
Note becomes due and payable on any day which is not a Business Day, the
payment shall be due and payable on the next succeeding Business Day.
This Note is a registered note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer in accordance with the
Agreement, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Borrower may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment and
for all other purposes, and the Borrower shall not be affected by any notice to
the contrary.
This Note may be declared or may otherwise become due and payable prior to
its expressed maturity in the events, on the terms and in the manner and
amounts as provided in the Agreement.
This Note is not subject to prepayment or redemption at the option of the
Borrower prior to its expressed maturity except on the terms and in the manner
and amounts as provided in the Agreement.
<PAGE> 30
The Borrower and every maker, endorser and guarantor hereof or of the debt
evidenced by this Note waive presentment, demand, notice protest, and all other
demands, notices (other than notices expressly required by the Agreement) and
suretyship defenses generally, in connection with the delivery, acceptance,
performance, default or enforcement of or under this Note. This Note is to be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New York (without giving effect to any
laws or rules relating to conflicts of laws that would cause the application of
the laws of any jurisdiction other than the State of New York).
WITNESS: BORROWER:
RANGER AEROSPACE CORPORATION
By:
- - ----------------------------- -------------------------
Name: Title:
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR QUALIFIED UNDER STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, AND
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES, OR (B) IF SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE
RULES AND REGULATIONS IN EFFECT THEREUNDER AND ANY APPLICABLE STATE SECURITIES
LAWS.
-2-
<PAGE> 31
SCHEDULE A
PURCHASER SCHEDULE
JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY
10.5% PIK Note No. R-1 - $4,230,000
10.5% PIK Note No. R-2 - $4,230,000
Certificate no. B-1 representing 56,400 Shares of Class B Non-Voting Common
Stock, par value $0.01 ($1,000 per share issue price)
1. All payments on account of the Note or Shares described above or other
obligations in accordance with the provisions thereof shall be made by
bank wire transfer of immediately available funds for credit, not later
than 12 noon, Boston time, to:
BankBoston
ABA No. 011000390
Boston, Massachusetts 02110
Account of: John Hancock Mutual Life Insurance Company
Private Placement Collection Account
Account Number: 541-55417
On Order of: Ranger Aerospace Corporation [insert
appropriate PPN no. and full name, interest rate and
maturity date of the Note, Shares or other obligations]
2. Contemporaneous with the above wire transfer, advice setting forth:
(1) the full name, interest rate and maturity date of the Note, Share or
other obligations;
(2) allocation of payment between principal and interest, if applicable,
and any special payment; and
(3) name and address of bank (or Trustee) from which wire transfer was
sent, shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Marie Mazzulli
Investment Accounting Division T-10
3. All notices with respect to prepayments, both scheduled and unscheduled,
whether partial or in full, and notice of maturity shall be delivered or
mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Marie Mazzulli
Investment Accounting Division T-10
<PAGE> 32
4. All other communications which shall include, but not be limited to,
financial statements and certificates of compliance with financial
covenants, shall be delivered or mailed to:
John Hancock Mutual Life Insurance Company
200 Clarendon Street
Boston, MA 02117
Attention: Bond & Corporate Finance Department, T-57
5. A copy of the foregoing notices relating to change in issuer's name,
address or principal place of business or location of collateral and a
copy of any legal opinions shall be delivered or mailed to John Hancock
Mutual Life Insurance Company, John Hancock Place, 200 Clarendon Street,
Boston, MA 02117, Attention: Investment Law Division, T-50.
6. All securities shall be registered in the name of John Hancock Mutual
Life Insurance Company.
7. Tax I.D. No. 04-1414660.
-2-
<PAGE> 33
PURCHASER SCHEDULE
CIBC WOOD GUNDY VENTURES, INC.
Certificate no. 1 representing 4,650 shares of 10.5% Payment-In-Kind Redeemable
Preferred Stock ($1,000 per share issue price)
Certificate no. A-1 representing 18,370 shares of Class A Voting Common Stock,
par value $0.01 ($1,000 per share issue price)
Certificate no. B-2 representing 12,630 shares of Class B Non-Voting Common
Stock, par value $0.01 ($1,000 per share issue price)
CIBC Oppenheimer Corp.
425 Lexington Avenue, Third Floor
New York, NY 10017
Attention: Jay R. Levine
Telephone: (212) 885-4475
Fax: (212) 885-4998
-3-
<PAGE> 34
PURCHASER SCHEDULE
RANDOLPH STREET PARTNERS II
Certificate no. 2 representing 750 shares of 10.5% Payment-In-Kind Redeemable
Preferred Stock ($1,000 per share issue price)
Certificate no. A-2 representing 5,000 shares of Class A Voting Common Stock,
par value $0.01 ($1,000 per share issue price)
Address for notices and payments:
Randolph Street Partners II
200 East Randolph Drive
Chicago, IL 60601
Attention: William S. Kirsch
Telephone: 312-861-2000
Fax: 312-861-2200
-4-
<PAGE> 35
PURCHASER SCHEDULE
GREGG L. ENGLES
Certificate no. 3 representing 600 shares of 10.5% Payment-In-Kind Redeemable
Preferred Stock ($1,000 per share issue price)
Certificate no. A-3 representing 4,000 shares of Class A Voting Common Stock,
par value $0.01 ($1,000 per share issue price)
Address for notices and payments:
Gregg L. Engles
c/o Suiza Foods Corporation
3800 Turtle Creek Blvd., #1300
Dallas, TX 75219
Telephone: 214-528-9922
Fax: 214-528-9929
-5-
<PAGE> 36
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings set forth
below or set forth in the paragraph of the Agreement following such terms:
"AFFILIATE" means, at any time and as to any Person, any other Person
(including in the case of a Subsidiary, another Subsidiary) directly or
indirectly (i) controlling, controlled by, or under common control with, such
Person or (ii) beneficially owning or holding, directly or indirectly, 10% or
more of the Equity Interest or Voting Stock of such Person, or (iii) of which
such Person beneficially owns or holds, directly or indirectly, 10% or more of
the Equity Interest or Voting Stock of such other Person, as well as, in the
case of an individual, such individual's spouse, issue, parents, siblings and
issue of siblings (in each case by blood, adoption or marriage). A Person
shall be deemed to control another Person if such Person possesses, directly or
indirectly, the power to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting securities, by
contract or otherwise.
"AGREEMENT" means this Securities Purchase Agreement as it may from time
to time be amended in accordance with PARAGRAPH 16.
"APPROVED AUDITOR" means Deloitte & Touche, Arthur Anderson LLP, Coopers &
Lybrand, Ernst & Young, KPMG, Peat Marwick or Price Waterhouse.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which commercial banks in New York, New York are required or authorized to be
closed.
"CAPITALIZED LEASE" means any lease of property (whether real, personal or
mixed), as to which the lessee is required, in accordance with GAAP, to
recognize, concurrently, the acquisition of an asset and the incurrence of a
liability.
"CAPITALIZED LEASE OBLIGATION" means any rental obligation under a
Capitalized Lease, taken at the amount thereof that is accounted for as
indebtedness (net of interest expense) in accordance with GAAP.
"CERTIFICATE OF INCORPORATION" has the meaning specified in PARAGRAPH 1.1.
"CHANGE OF CONTROL" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or
a series of related transactions) of all or substantially all of the assets of
the Company to any Person or group of related Persons for purposes of Section
13(d) of the Exchange Act (a "GROUP"); or (ii) a majority of the Board of
Directors of the Company shall consist of Persons who are not Continuing
Directors; or (iii) the acquisition by any Person or Group (other than the
Purchasers) of the power, directly or indirectly, to vote or direct the voting
of securities having more than 30% of the ordinary voting power for the
election of directors of the Company.
"CLOSING" and "CLOSING DATE" have the meanings specified in PARAGRAPH 4.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time and the rules and regulations promulgated thereunder as from time to time
in effect.
"COMMON EQUITY" includes the Shares and any other class of equity interest
in the Company having no preference over the Shares as to distributions which,
as of the date of this Agreement,
<PAGE> 37
are or may be authorized in the future by an amendment to the Company's
Certificate of Incorporation.
"COMPANY" has the meaning specified in the FIRST PARAGRAPH of this
Agreement.
"CONSOLIDATED GROUP" means the Company and each of its Subsidiaries.
"CONTINUING DIRECTOR" means, as of the date of determination, any Person
who (i) was a member of the Board of Directors or the Company on the Closing
Date, (ii) was nominated for election or elected to the Board of Directors of
the Company with the affirmative vote of a majority of the Continuing Directors
who were members of such Board of Directors at the time of such nomination or
election, or (iii) is a representative of a Securityholder (as such term is
defined in the Securityholders Agreement).
"DEBT" means, as applied to any Person without duplication, (i)
obligations of such Person for borrowed money, (ii) obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments, (iii)
obligations of such Person to pay the deferred purchase price of property or
services (other than current Trade Payables to be paid in accordance with
customary practices), (iv) Capitalized Lease Obligations of such Person, (v)
obligations of such Person to purchase securities or other property that arise
out of or in connection with the sale of the same or substantially similar
securities or property, (vi) obligations of such Person to reimburse any other
Person in respect of amounts paid under a letter of credit or similar
instrument, (vii) obligations with respect to Interest Rate Agreements and
similar obligations requiring such Person to make payments, whether
periodically or upon the happening of a contingency, (viii) any obligations
secured by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) a Lien on any asset of such Person,
whether or not such obligation is assumed by such Person, the amount of such
obligation being deemed to be the lesser of the fair market value of such asset
or the amount of the obligation so secured, (ix) any recourse obligations of
such Person in connection with a sale of receivables, (x) Guaranties by such
Person of Debt of others, (xi) any outstanding Preferred Stock of a Subsidiary
of such Person (other than Preferred Stock owned beneficially and of record by
such Person or a Wholly-Owned Subsidiary of such Person) and any outstanding
Redeemable Preferred Stock of such Person, and (xii) any other items (excluding
Trade Payables, items of contingency reserves or reserves for deferred income
Taxes or other reserves, to the extent that such reserves do not represent an
obligation) which in accordance with GAAP would be shown on the liabilities
side of the balance sheet of such Person.
"DEFAULT" means any occurrence or condition which with the giving of
notice or the passage of time, or both, and remaining uncured after the
expiration of any applicable grace period would be an Event of Default.
"ENVIRONMENTAL LAWS" means any and all Federal, state and local statutes,
laws, regulations, ordinances, rules, judgments, orders, decrees, permits,
concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including but not limited to
those related to hazardous substances or wastes, air emissions and discharges
to waste or public systems.
"EQUITY INTEREST" means as to any Person, the capital stock or other
equity or beneficial interest in such Person.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated
thereunder, as from time to time, in effect.
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<PAGE> 38
"ERISA AFFILIATE" means, with respect to any Person, any trade or
business, whether or not incorporated, which, is treated as a single employer
together with such Person under section 414 of the Code.
"EVENT OF DEFAULT" has the meaning specified in PARAGRAPH 10.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time and the rules and regulations promulgated thereunder, as from time
to time in effect.
"EXECUTIVE STOCK AGREEMENT" means the Executive Stock Agreement between
the Company and Steven Townes, in the form of EXHIBIT G-1.
"EXPENSES" has the meaning specified in PARAGRAPH 14.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States.
"GOVERNMENTAL AUTHORITY" means (a) the governments of (i) the United
States of America and its states and political subdivisions, and (ii) any other
jurisdiction in which any Member conducts all or any part of its business, or
which asserts jurisdiction over any properties of any Member, and (b) any
entity exercising executive, legislative, judicial, regulatory or
administrative functions of, or pertaining to, any such government or
jurisdiction.
"GUARANTY", as applied to any Person, means any direct or indirect
liability, contingent or otherwise, of such Person with respect to any
indebtedness, dividend or obligation of another, including, without limitation,
any such obligation directly or indirectly guaranteed, endorsed (otherwise than
for collection or deposit in the ordinary course of business) or discounted or
sold with recourse by such Person, or in respect of which such Person is
otherwise directly or indirectly liable, including, without limitation, any
such obligation in effect guaranteed by such Person through any agreement
(contingent or otherwise) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to advance to or provide funds for the
payment or discharge of such obligation (whether in the form of loans,
advances, stock purchases, capital contributions or otherwise), or to maintain
the working capital, equity capital, net worth, solvency or any balance sheet
or other financial condition of the obligor of such obligation, or to make
payment for any securities, products, materials or supplies or for any
transportation or services without regard to the non-delivery or nonfurnishing
thereof, or that any agreements relating thereto will be complied with, or that
the holders of such obligation will be protected against loss in respect
thereof. The amount of any Guaranty shall be deemed to be equal to the lower
of (a) the amount of the obligation guaranteed and (b) the maximum amount for
which such Person may be contingently liable pursuant to the terms of the
instrument evidencing such Guaranty, unless such guaranteed obligation and the
amount for which such Person may be liable are not stated or determinable, in
which case the amount of such Guaranty shall be the maximum reasonably
anticipated liability for which such Person is contingently liable in respect
thereof as determined by such Person in good faith (but in any event not less
than the amount which is, or would otherwise be required, in accordance with
GAAP, to be reflected in such Person's balance sheet or the notes thereto) as
the amount of such obligation.
"HAZARDOUS MATERIALS" means any and all substances: the presence of which
requires notification, investigation, monitoring or remediation under any
Environmental Law; which at such time is defined as a "hazardous waste",
"hazardous material", "hazardous substance", "toxic substance", "pollutant" or
"contaminant" under any Environmental Law, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.) and any applicable local statutes and the regulations
promulgated thereunder;
-3-
<PAGE> 39
or without limitation, which contains gasoline, diesel fuel or other petroleum
products, asbestos or polychlorinated biphenyls.
"HOLDER" means any Person at the time shown as the holder of a Note on the
register referred to in PARAGRAPH 12 or a holder of record of any PIK Preferred
Share as determined in accordance with the Certificate of Incorporation of the
Company.
"INSTITUTIONAL INVESTOR" means any bank, savings institution, trust
company, insurance company, investment company, pension or profit sharing trust
or other financial institution or institutional buyer, regardless of legal
form.
"INTELLECTUAL PROPERTY" means all patents, copyrights, trademarks, trade
names, service marks or other intellectual or industrial property rights.
"INTEREST RATE AGREEMENT" means, with respect to any Person, any one or
more of the following agreements entered into by such Person with one or more
financial institutions: interest rate protection agreements, interest rate
swaps and/or other types of interest rate hedging agreements obligating such
Person to make payments, whether periodically or upon the happening of a
contingency. The amount of the obligation under any Interest Rate Agreement
shall be the amount determined in respect thereof as of the end of the then
most recently ended fiscal quarter of such Person, based on the assumption that
such Interest Rate Agreement had terminated at the end of such fiscal quarter,
and in making such determination, if any agreement relating to such Interest
Rate Agreement provides for the netting of amounts payable by and to such
Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount of
such obligation shall be the net amount so determined.
"INVESTOR STOCK AGREEMENT" means the Investor Stock Agreement between the
Company, Gene Z. Salkind, M.D., Trustee of the Danielle Schwartz Trust UAD
10/1/93, and George Schwartz, in the form of EXHIBIT G-2 and the Investor Stock
Agreement between the Company, Kraig Danielson and George Schwartz in the form
of EXHIBIT G-3.
"KNOWLEDGE OF THE COMPANY" means the actual knowledge of any Senior
Officer of the Company.
"LIEN" means any interest in property securing an obligation owed to, or a
claim by, a Person other than the owner of the property, whether such interest
is based on the common law, statute, court decision or contract, and including,
without limitation, any mortgage, pledge, security interest, lease,
encumbrance, lien, purchase option, call or right, or charge of any kind
(including any agreement to give or permit any of the foregoing), any
conditional sale or other title retention agreement, any Capitalized Lease, and
the filing of, or agreement to give or permit the filing on its behalf, of any
financing statement under the Uniform Commercial Code or personal property
security legislation of any jurisdiction.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means, (i) any material adverse effect on the
Company's business, assets, liabilities, financial condition or results of
operations, (ii) any material adverse effect on the Consolidated Group's
business, assets, liabilities, financial condition or results of operations
taken as a whole, and (iii) any adverse effect, WHETHER OR NOT MATERIAL, on the
binding nature, validity or enforceability of any Transaction Document as the
obligation of any party
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<PAGE> 40
thereto and (iv) any material adverse effect on the ability of the Company to
perform its obligations under any Transaction Document applicable to it.
"MEMBER" means any Person included in the Consolidated Group.
"MULTIEMPLOYER PLAN" means any plan which is a "multiemployer plan" as
such term is defined in section 4001(a)(3) of ERISA.
"NAIC" means the National Association of Insurance Commissioners.
"NOTES" has the meaning specified in PARAGRAPH 1.1.
"OFFICER'S CERTIFICATE" means a certificate signed in the name of the
Company by any Senior Officer.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PERSON" means and includes an individual, a partnership, a joint venture,
a corporation, a limited liability company, a trust and any other form of
business organization (whether or not a legal entity), or any Governmental
Authorities.
"PIK PREFERRED SHARES" has the meaning specified in PARAGRAPH 1.1.
"PLAN" means an "employee pension benefit plan" (as defined in Section 3
of ERISA) which is or within the preceding five years has been established or
maintained, or to which contributions are or have been made, by the Company or
any ERISA Affiliate, or for which the Company or any ERISA Affiliate may have
any liability.
"PREFERRED STOCK" means as to any Person, any Redeemable Preferred Stock
and any other class or series of Equity Interest of such Person that has a
priority as to the payment of any dividends or distributions over the holders
of the most junior class of Equity Interest of such Person.
"PURCHASER" and "PURCHASERS" have the meaning specified in PARAGRAPH 2.
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14 issued
by the United States Department of Labor.
"QUALIFIED INSTITUTIONAL BUYER"means a qualified institutional buyer, as
defined in Rule 144A.
"REDEEMABLE PREFERRED STOCK" means any class or series of Equity Interest
which has fixed payment or redemption obligations due and payable prior to the
final scheduled due date for the repayment of principal of the Notes or is
redeemable at the option of the holder, unless such fixed payment obligations
or repurchase obligations or exercise of such redemption option can be
satisfied, at the election of the issuer, through the issuance of shares of its
most junior class of Equity Interest.
"REQUIRED HOLDERS" means the Holder or Holders of Notes and/or PIK
Preferred Shares holding not less than 75% of the sum of the aggregate
principal amount of the Notes at the time outstanding and the then effective
liquidation value of the PIK Preferred Shares then outstanding.
"RULE 144A" means Rule 144A promulgated under the Securities Act and
including any successor rule thereto, as such rule may be amended from time to
time.
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<PAGE> 41
"SALE OF THE COMPANY" shall have the meaning set forth in the
Securityholders Agreement as in effect on the Closing Date
"SEC" means the United States Securities and Exchange Commission, or any
Governmental Authority succeeding to the functions of such Commission in the
administration of the Securities Act and/or the Exchange Act.
"SECURITIES" has the meaning specified in PARAGRAPH 1.1.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations promulgated thereunder, as from time to
time in effect.
"SECURITYHOLDERS AGREEMENT" means the Securityholders Agreement dated the
date hereof among the Company and the Persons named therein, in the form of
EXHIBIT E.
"SENIOR OFFICER" means the Chairman of the Board, the President, Chief
Executive Officer, any Senior Vice President, Chief Financial Officer,
Treasurer or principal accounting officer of the Company or any other
individual, whether or not an officer, who performs similar functions, on
behalf of the Company.
"SENIOR SECURITIES" means, collectively, the Notes and the PIK Preferred
Shares.
"SETTLEMENT DATE" means, with respect to any Note, the date on which such
Note is to be prepaid in whole or in part pursuant to PARAGRAPH 8.2 or is
declared to be immediately due and payable pursuant to PARAGRAPH 11.1.
"SHARES" has the meaning specified in PARAGRAPH 1.1.
"SPECIAL COUNSEL" means the law firm of Sullivan & Worcester or such other
firm of legal counsel as the Purchasers may from time to time designate as
their Special Counsel for the purposes of this Agreement or any matters related
hereto.
"SUBSIDIARY" means, as to any Person, any corporation, association or
other business entity in which such Person and/or one or more of its
Subsidiaries collectively owns sufficient equity or voting interests to enable
it or them (as a group) ordinarily, in the absence of contingencies, to elect a
majority of the directors (or Persons performing similar functions) of such
entity, and any partnership or joint venture if more than a 50% interest in the
profits or capital thereof is collectively owned by such Person and/or one or
more of its Subsidiaries (unless such partnership can and does ordinarily take
major business actions without the prior approval of such Person and/or one or
more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"TAXES" means any and all present or future taxes, assessments, stamps,
duties, fees, levies, imposts, deductions, withholdings or other governmental
charges of any nature whatsoever and any liabilities with respect thereto,
including any surcharge, penalties, additions to tax, fines or interest
thereon, now or hereafter imposed, levied, collected, withheld or assessed by
any government or taxing authority of any country or political subdivision of
any country, or any international taxing authority.
"TRADE PAYABLES" means amounts payable to suppliers of goods and services
in the ordinary course of a Person's business.
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<PAGE> 42
"TRANSACTION DOCUMENTS" means this Agreement, the Notes, the Shares, the
Registration Rights Agreement, the Securityholders Agreement, the Executive
Stock Agreement and the Investors Stock Agreement.
"VIAD PURCHASE AGREEMENT" means the Share Purchase Agreement between Viad
Corp. and Viad Service Companies Limited, as sellers, and the Company, as
buyer, dated as of March 14, 1998.
"VOTING SHARES" has the meaning specified in PARAGRAPH 1.1.
"VOTING STOCK" means any securities of any class of a Person whose holders
are entitled under ordinary circumstances to vote for the election of directors
of such Person (or Persons performing similar functions) (irrespective of
whether at the time securities of any other class or classes shall have or
might have voting power by reason of the happening of any contingency).
"WHOLLY-OWNED SUBSIDIARY" means any Subsidiary of the Company all of the
voting power of all classes of the Voting Stock and all of the beneficial
ownership of which is owned directly or indirectly through one or more other
Wholly-Owned Subsidiaries.
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<PAGE> 43
SCHEDULE 5.7
EXISTING DEBT
Aircraft Service International Group, Inc. ("ASIG")
1. Note Purchase Agreement, dated March 31, 1998, between CIBC Oppenheimer
Corp. and ASIG in the aggregate principal amount of $75,000,000.
2. Key Corporate Capital Inc. has extended to ASIG a $10 million revolving
line of credit.
<PAGE> 1
EXHIBIT 10.3
RANGER AEROSPACE CORPORATION
SECURITYHOLDERS AGREEMENT
THIS AGREEMENT is made as of April 1, 1998 between Ranger
Aerospace Corporation, a Delaware corporation (the "Company"), John Hancock
Mutual Life Insurance Company ("Hancock"), CIBC Wood Gundy Ventures, Inc.
("CIBC"), Gene Z. Salkind, M.D., Trustee of the Danielle Schwartz Trust UAD
10/1/93, and each other Person designated as an Investor on the Schedule of
Securityholders attached hereto (collectively, the "Investors") and each Person
designated as an Executive on the Schedule of Securityholders attached hereto
(the "Executives"). The Investors and the Executives are collectively referred
to as the "Securityholders" and individually as a "Securityholder." Capitalized
terms used herein and not otherwise defined are defined in paragraph 9 hereof.
Hancock is purchasing Notes and Common Stock and certain other
Investors are purchasing Common Stock and Preferred Stock, pursuant to a
Securities Purchase Agreement dated as of the date hereof between the Company
and the Persons named therein (the "Securities Purchase Agreement"). The Company
and each other Securityholder are parties to either an Executive Stock Agreement
or an Investor Stock Agreement (each, an "Executive Stock Agreement"), pursuant
to which such Person shall purchase Securities of the Company as set forth on
the Schedule of Securityholders attached hereto.
The Company and the Securityholders desire to enter into this
Agreement for the purposes, among others, of (i) establishing the composition of
the Company's Board of Directors (the "Board"), (ii) assuring continuity in the
management and ownership of the Company and (iii) limiting the manner and terms
by which the Securityholders' Securities may be transferred. The execution and
delivery of this Agreement is a condition to the Investors' obligation to
purchase Securities of the Company pursuant to the Securities Purchase
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. Board of Directors.
(a) Election of Directors. From and after the Closing (as
defined in the Securities Purchase Agreement) and until the provisions of this
paragraph 1 cease to be effective, each holder of Securityholder Securities
shall vote all of his or its Securityholder Securities which are voting shares
and any other voting securities of the Company over which such holder has voting
control and shall take all other reasonably necessary or desirable actions
within his or its control (whether in his or its capacity as a Securityholder,
director, member of a board committee or officer of the Company or otherwise,
and including, without limitation, attendance at meetings in person or by proxy
for
<PAGE> 2
purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Company shall take all reasonably necessary or desirable
actions within its control (including, without limitation, calling special board
and stockholder meetings), so that:
(i) the authorized number of directors on the Board shall
be established at six (6) directors;
(ii) the following individuals shall be elected to the
Board:
(A) two (2) representatives designated by Hancock
(the "Hancock Directors");
(B) two (2) representatives designated by CIBC (the
"CIBC Directors");
(C) two (2) representatives jointly designated by
Hancock and CIBC (the "Executive Directors"); provided that such
Executive Directors shall be executive officers or employees of
the Company; provided further, that until their earlier
resignation or removal, Stephen D. Townes and George Schwartz
shall serve as Executive Directors;
(iii) the composition of the board of directors of each of
the Company's Subsidiaries (a "Sub Board") shall be determined by the
Board; provided that George Schwartz shall serve as a director of
ASIG;
(iv) any committees of the Board or a Sub Board shall be
created only upon the approval of a majority of the members of the
Board and the composition of each such committee (if any) shall be
determined by the Board;
(v) the removal from the Board (with or without cause)
of any representative designated pursuant to subparagraph (a)(ii)
above shall be at the written request of the party entitled to
designate such representative and under no other circumstance;
provided that if any director elected pursuant to subparagraph (ii)(C)
above ceases to be an employee of the Company and its Subsidiaries
(or, in the case of George Schwartz, Chairman) he may be removed as a
director at any time thereafter at the option of the Investors
(determined on the basis of a vote of the holders of a majority of the
Voting Power possessed by the Investors); and
(vi) in the event that any representative designated
pursuant to subparagraph (a)(ii) above ceases to serve as a member of
the Board during his term of office, the resulting vacancy shall be
filled by a representative designated by the party entitled to
designate such representative.
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<PAGE> 3
(b) Director Expenses. The Company shall pay the reasonable
out-of-pocket expenses incurred by each director in connection with attending
the meetings of the Board, any Sub Board and any committee thereof.
(c) Termination of Rights of Investors. The rights of any
Investor entitled to designate any representative pursuant to subparagraph
(a)(ii) above shall terminate at such time as such Investor and its Permitted
Transferees hold in the aggregate less than 50% of the Securityholder Securities
held by such Persons on the date hereof.
(d) Termination of Rights of Executives. The rights of the
Executives under this paragraph 1 shall terminate at such time as the Executives
and their Permitted Transferees hold in the aggregate less than 50% of the
Securityholder Securities held by such Persons on the date hereof.
(e) Termination of Provisions. The provisions of this
paragraph 1 shall terminate automatically and be of no further force and effect
upon the first to occur of (i) the tenth anniversary of the date hereof unless
extended by the holders of at least 75% of the Voting Power held by all
Securityholders or (ii) a Qualified Public Offering.
(f) Failure to Designate. If any party fails to designate a
representative to fill a directorship pursuant to the terms of this paragraph 1,
the individual previously holding such directorship shall be elected to such
position, or if such individual fails or declines to serve as a director, such
directorship shall remain vacant until the resulting vacancy is filled by a
representative designated by the party entitled to designate such representative
pursuant to subparagraph (a)(ii) above.
2. Representations and Warranties. Each Securityholder
represents and warrants that (i) such Securityholder is the record owner of the
number and class of Securityholder Securities set forth opposite its name on the
Schedule of Securityholders attached hereto, (ii) this Agreement has been duly
authorized, executed and delivered by such Securityholder and constitutes the
valid and binding obligation of such Securityholder, enforceable in accordance
with its terms, and (iii) such Securityholder has not granted and is not a party
to any proxy, voting trust or other agreement which is inconsistent with,
conflicts with or violates any provision of this Agreement. No holder of
Securityholder Securities shall grant any proxy or become party to any voting
trust or other agreement which is inconsistent with, conflicts with or violates
any provision of this Agreement.
3. Restrictions on Transfer of Securityholder Securities.
(a) Transfer of Securityholder Securities. No holder of
Securityholder Securities shall sell, transfer, assign, pledge or otherwise
dispose of (whether with or without consideration and whether voluntarily or
involuntarily or by operation of law) any interest in his Securityholder
Securities (a "Transfer"), except pursuant to (i) paragraph 4, (ii) a Public
Sale or (iii) this paragraph 3 (collectively, an "Exempt Transfer"); provided
that in no event shall any Transfer of Securityholder
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<PAGE> 4
Securities pursuant to this paragraph 3 be made for any consideration other than
cash payable upon consummation of such Transfer or in installments over time and
no Securityholder Securities may be pledged (except for a pledge of
Securityholder Securities pursuant to the Executive Stock Agreements or by a
transferee to secure indebtedness to the transferor or an Affiliate of the
transferor). No holder of Securityholder Securities shall consummate any
Transfer (other than an Exempt Transfer) until 30 days after the later of the
delivery to the Company and the other holders of Securityholder Securities of
such Securityholder's Offer Notice or Sale Notice (if any), unless the parties
to the Transfer have been finally determined pursuant to this paragraph 3 prior
to the expiration of such 30-day period (the "Election Period").
(b) Right of First Refusal At least 30 days prior to making
any Transfer of any Securityholder Securities (other than an Exempt Transfer),
the transferring Securityholder (the "Transferring Securityholder") shall
deliver a written notice (an "Offer Notice") to the Company and the other
Securityholders (the "Other Securityholders"). The Offer Notice shall disclose
in reasonable detail the proposed number of Securityholder Securities to be
transferred (the "Offered Securities"), the proposed terms and conditions of the
Transfer and the identity of the prospective transferee(s) (if known). The
purchase price specified in any Offer Notice shall be payable solely in cash at
the closing of the transaction or in installments over time. The rights under
this paragraph 3(b) shall apply as follows:
(i) First, each Other Securityholder may elect to
purchase all or any portion of the Offered Securities at the price and
on the terms specified in the Offer Notice by delivering written notice
of such election to the Transferring Securityholder as soon as
practical, but in any event within 20 days after delivery of the Offer
Notice; provided that if the Offered Securities include any
Securityholder Securities other than Common Stock, any election to
purchase Common Stock by any Other Securityholder must also include an
election to purchase shares or Preferred Stock or Notes, pro rata based
upon the number of shares of Preferred Stock or principal amount of
Notes included in the Offered Securities. If the Other Securityholders
have in the aggregate elected to purchase more than those Offered
Securities being offered by the Transferring Securityholder, the
Offered Securities shall be allocated among the Other Securityholders
electing to purchase shares pro rata based upon the number of shares
(and/or principal amount of Notes) elected to be purchased.
(ii) Second, if the Other Securityholders have not
elected to purchase all of the Offered Securities within such
twenty-day period, the Company may elect to purchase all (but not less
than all) of the remaining Offered Securities at the price and on the
terms specified in the Offer Notice by delivering written notice of
such election to the Transferring Securityholder as soon as practical
but in any event within 30 days after delivery of the Offer Notice. If
the Company or any Other Securityholders have elected to purchase
Securityholder Securities from the Transferring Securityholder, the
transfer of such securities shall be consummated as soon as practical
after the delivery of the election notice(s) to the Transferring
Securityholder, but in any event within 15 days after the expiration of
the Election Period.
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<PAGE> 5
(iii) Third, to the extent that the Company and the
Other Securityholders have not elected to purchase all of the Offered
Securities, the Transferring Securityholder may, within 90 days after
the expiration of the Election Period and subject to the provisions of
subparagraph (c) below, transfer the remaining Offered Securities to
one or more third parties at a price no less than 95% of the price
specified in the Offer Notice and on other terms no more favorable to
the transferees thereof than offered to the Company and the Other
Securityholders in the Offer Notice. Any Offered Securities not
transferred within such 90-day period shall be reoffered to the Company
and the Other Securityholders under this paragraph 3(b) prior to any
subsequent Transfer.
(c) Participation Rights. At least 30 days prior to an
Investor making any Transfer of Securityholder Securities (other than an Exempt
Transfer), the Investor making such Transfer (the "Transferring Investor") shall
deliver a written notice (the "Sale Notice") to the Company and the other
Investors (the "Other Investors"), specifying in reasonable detail the identity
of the prospective transferee(s), the class and number of securities to be
transferred and the aggregate price, price per share, terms and conditions of
the Transfer (which notice may be the same notice and given at the same time as
the Offer Notice under paragraph 3(b)). The Other Investors may elect to
participate in the contemplated Transfer at the same price and on the same terms
as the Transferring Investor by delivering written notice to the Transferring
Investors within 30 days after delivery of the Sale Notice, it being understood
that holders of Preferred Stock shall be entitled to participate in any Transfer
(other than an Exempt Transfer) by a Noteholder on a pro rata basis, treating
for purposes of this section the Preferred Stock as Notes, and vice versa
(together, the Notes and the Preferred Stock are the "Senior Securities"). If
any Other Investors have elected to participate in such Transfer, the
Transferring Investor and such Other Investors shall be entitled to sell in the
contemplated Transfer, at the same price and on the same terms, a number of each
class of Securityholder Securities equal to the product of (i) the quotient
determined by dividing the percentage of the class of the Securityholder
Securities owned by such Person by the aggregate percentage of such class of
Securityholder Securities owned by the Transferring Investor and the Other
Investors participating in such sale and (ii) the number of such class of
Securityholder Securities to be sold in the contemplated Transfer. Because Notes
and Preferred Stock must be treated as one and the same class of securities
hereunder, the percentage of Notes and/or Preferred Stock owned by a Person
pursuant to clause (i) above is equal to the quotient determined by dividing (x)
the sum of the Liquidation Value (including accrued but unpaid dividends) of the
Preferred Stock plus the principal amount (together with all accrued but unpaid
interest) of the Notes held by such Person by (y) the sum of the Liquidation
Value (including accrued but unpaid dividends) of all Preferred Stock then
outstanding plus the principal amount (together with all accrued but unpaid
interest) of all Notes then outstanding (such percentage being the "Senior
Security Percentage").
For example, if the Sale Notice contemplated a sale of 100 shares of
Common Stock and 100 shares of Preferred Stock by the Transferring
Investor, and if the Transferring Investor at such time owns 30% of all
shares of Common Stock and has a Senior Security Percentage of 20% and
if two Other Securityholders elect to participate and if the first
Other Securityholder owns 20% of all shares of Common
- 5 -
<PAGE> 6
Stock and has a Senior Security Percentage of 5%, and if the second
Other Securityholder owns 10% of all shares of Common Stock and has a
Senior Security Percentage of 0%, the Transferring Investor would be
entitled to sell 50 shares of Common Stock (30% divided by 60% x 100
shares) and that number of Senior Securities, which may be either
Preferred Stock or Notes, the Liquidation Value or principal amount of
which is equal to the Liquidation Value of 80 shares of Preferred Stock
(20% divided by 25% x 100 shares), the first Other Investor would be
entitled to sell 33 1/3 shares of Common Stock (20% divided by 60% x
100 shares) and that number of Senior Securities, which may be either
Preferred Stock or Notes, the Liquidation Value or principal amount of
which is equal to the Liquidation Value of 20 shares of Preferred
Stock, and the second Other Securityholder would be entitled to sell 16
2/3 shares of Common Stock (10% divided by 60% x 100 shares) and no
Senior Securities.
Each Transferring Investor shall use its best efforts to obtain the agreement of
the prospective transferee(s) to the participation of the Other Investors in any
contemplated Transfer, and no Transferring Investor shall transfer any of its
Securityholder Securities to any prospective transferee if such prospective
transferee declines to allow the participation of the Other Investors, it being
understood that transferees must agree to accept Notes in lieu of Preferred
Stock and vice versa. Each Investor transferring Securityholder Securities
pursuant to this paragraph 3(c) shall pay its pro rata share (based on their
share of the aggregate proceeds received) of the expenses incurred by the
Investors in connection with such transfer and shall be obligated to join on a
pro rata basis (based on their share of the aggregate proceeds received) in any
indemnification or other obligations that the Transferring Investor agrees to
provide in connection with such transfer (other than any such obligations that
relate specifically to a particular Investor such as indemnification with
respect to representations and warranties given by an Investor regarding such
Investor's title to and ownership of Securityholder Securities; provided that no
holder shall be obligated in connection with such Transfer to agree to indemnify
or hold harmless the transferee(s) with respect to an amount in excess of the
net cash proceeds paid to such holder in connection with such Transfer).
(d) Permitted Transfers. The restrictions set forth in this
paragraph 3 shall not apply with respect to any Transfer of Securityholder
Securities by any Securityholder (i) in the case of an Executive, pursuant to
applicable laws of descent and distribution or among such Executive's Family
Group or (ii) in the case of an Investor, among its Affiliates (collectively
referred to herein as "Permitted Transferees"). The restrictions applicable to
the Danielle Schwartz Trust under this paragraph 3(d) shall be applied as if
George Schwartz was an Executive hereunder. For purposes of this Agreement,
"Family Group" means an Executive's spouse and descendants (whether natural or
adopted) and any trust solely for the benefit of, or any partnership,
corporation, limited liability company or other entity which is wholly owned by,
the Executive and/or the Executive's spouse and/or descendants, and "Affiliate"
of an Investor means any other Person, directly or indirectly controlling,
controlled by or under common control with such Investor. A Person shall be
deemed to be "controlled by" an Investor if such Investor possesses, directly or
indirectly, power to direct or cause the direction of the management or policies
of such Person or the disposition of its assets or property, whether by equity
or other ownership, contract, agreement or understanding, or
- 6 -
<PAGE> 7
otherwise. For clarity, CIBC WG, Argosy Merchant Fund 1, L.L.C., and any
Affiliate thereof shall be deemed an Affiliate of CIBC hereunder. The
restrictions contained in this paragraph 3 shall continue to be applicable to
the Securityholder Securities after any such Transfer. Notwithstanding anything
contained herein to the contrary, no party hereto shall avoid the provisions of
this Agreement by making one or more transfers to one or more Permitted
Transferees and then disposing of all or any portion of such party's interest in
any such Permitted Transferee.
(e) Termination of Restrictions. The restrictions on the
Transfer of Securityholder Securities set forth in this paragraph 3 shall
continue with respect to each Securityholder Security until the earlier of (i)
the date on which such Securityholder Security has been transferred in a Public
Sale or pursuant to paragraph 4 hereof or (ii) the consummation of a Qualified
Public Offering.
4. Sale of Company.
(a) Third Party Transaction. If CIBC and Hancock (so long as
each such Person holds not less than 50% of the Securityholder Securities held
by such Person on the date hereof) (the "Approving Securityholders") and the
Board approve a Sale of the Company (the "Approved Sale"), each of the other
Securityholders (the "Other Securityholders") shall consent to, vote in favor of
and raise no objections against the Approved Sale. If the Approved Sale is
structured as (i) a merger or consolidation, each holder of Securityholder
Securities shall waive any dissenters rights, appraisal rights or similar rights
in connection with such merger or consolidation or (ii) a sale of stock, each
holder of Securityholder Securities shall agree to sell all of his or its
Securityholder Securities and options to acquire Securityholder Securities on
the terms and conditions approved by the Board. Each holder of Securityholder
Securities shall take all necessary or desirable actions in connection with the
consummation of the Approved Sale as reasonably requested by the Board or the
Approving Investors.
(b) Conditions to Obligation. The obligations of the holders
of Securityholder Securities with respect to the Approved Sale are subject to
the satisfaction of the following conditions: (i) upon the consummation of the
Approved Sale, each holder of Securityholder Securities shall receive the same
form of consideration and the same portion of the aggregate consideration such
holder would have received if such aggregate consideration had been distributed
by the Company in complete liquidation pursuant to the rights and preferences
set forth in the Company's Certificate of Incorporation as in effect immediately
prior to the consummation of the Approved Sale; (ii) if any holders of
Securityholder Securities are given an option as to the form and amount of
consideration to be received, each holder of Securityholder Securities shall be
given the same option; and (iii) each holder of then currently exercisable
rights to acquire Securityholder Securities shall be given an opportunity to
exercise such rights prior to the consummation of the Approved Sale and
participate in such sale as a holder of such Securityholder Securities.
(c) Purchaser Representative. If the Company or any of the
holders of Securityholder Securities enter into any negotiation or transaction
for which Rule 506 (or any similar
- 7 -
<PAGE> 8
rule then in effect) promulgated by the Securities and Exchange Commission may
be available with respect to such negotiation or transaction (including a
merger, consolidation or other reorganization), each holder of Securityholder
Securities shall, at the request of the Company, appoint (and be responsible for
the fees and expenses of the person so appointed, if any) either: (i) a
purchaser representative (as such term is defined in Rule 501 (or any similar
rule then in effect) promulgated by the Securities and Exchange Commission)
designated by the Company; or (ii) another purchaser representative (reasonably
acceptable to the Company) designated by such holder of Securityholder
Securities.
(d) Expenses; Indemnification. All holders of Securityholder
Securities shall bear their pro rata share (based upon their share of the
aggregate proceeds received by such holders in connection therewith) of the
costs of any Approved Sale to the extent such costs are incurred for the
benefit of all holders of securities of the Company and are not otherwise paid
by the Company or the acquiring party. Costs incurred by the holders of
Securityholder Securities on their own behalf shall not be considered costs of
the Approved Sale. In addition, all holders of Securityholder Securities shall
be obligated to join on a pro rata basis (based upon their share of the
aggregate proceeds received by such holders in connection therewith) in any
indemnification or other obligations that the Approving Securityholders agree to
provide in connection with such Approved Sale (other than any such obligations
that relate specifically to a particular holder of Securityholder Securities
such as indemnification with respect to representations and warranties given by
a holder regarding such holder's title to and ownership of Securityholder
Securities).
(e) Termination. The provisions of this paragraph 4 shall
terminate upon the consummation of a Qualified Public Offering.
5. Legend. Each note or certificate evidencing Securityholder
Securities and each note or certificate issued in exchange for or upon the
transfer of any Securityholder Securities (if such Securities remain
Securityholder Securities after such transfer) shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The securities represented by this certificate are subject to
a Securityholders Agreement dated as of April 1, 1998 among
the issuer of such securities (the "Company") and certain of
the Company's Securityholders, as amended and modified from
time to time. A copy of such Securityholders Agreement shall
be furnished without charge by the Company to the holder
hereof upon written request."
The Company shall imprint such legend on certificates evidencing Securityholder
Securities outstanding as of the date hereof. The legend set forth above shall
be removed from the certificates evidencing any shares which cease to be
Securityholder Securities in accordance with the definition of Securityholder
Security in paragraph 8 hereof.
- 8 -
<PAGE> 9
6. Transfer. Prior to transferring any Securityholder
Securities (other than pursuant to a Public Sale or a Sale of the Company) to
any Person, the transferring holders of Securityholder Securities shall cause
the prospective transferee to be bound by this Agreement and to execute and
deliver to the Company and the other holders of Securityholder Securities a
counterpart of this Agreement, and in the case of any transfer (whether directly
or indirectly) by an Executive to any member of his Family Group, the
transferring Executive shall cause each prospective transferee to execute and
deliver to the Executive (in form and substance reasonably acceptable to the
Company) an agreement irrevocably appointing the Executive as the transferee's
true and lawful proxy, agent and attorney-in-fact, with full power and
substitution, to vote all of the transferee's Securityholder Securities and
other voting securities of the Company in respect of all matters as provided in
this Agreement, in the Company's Certificate of Incorporation, or pursuant to
applicable law.
7. Senior Securities are Pari Passu. In the event of a Sale
of the Company or the liquidation, dissolution or winding up of the Company, or
in any reorganization or recapitalization of the Company (including pursuant to
a bankruptcy of the Company or its Subsidiaries), each holder of Notes and
Preferred Stock shall be entitled to be paid, on a pari passu basis
(notwithstanding any term to the contrary in the Purchase Agreement, the Notes
or the Company's Certificate of Incorporation and notwithstanding the
designation of one instrument as "debt" and the other as "equity") before any
distribution or payment is made upon the Common Stock, consideration in an
amount equal to the aggregate sum of the Liquidation Value and principal amount
of all Senior Securities held by such holder (plus all unpaid dividends and
interest which have accrued or been declared thereon) (the "Senior Security
Preference Amount"). If upon any such Sale of the Company or the liquidation,
dissolution or winding up of the Company, the Company's assets to be distributed
among the holders of the Senior Securities are insufficient to permit payment of
the Senior Security Preference Amount, then the entire consideration to be
distributed to the holders of Senior Securities shall be distributed pro rata
among such holders on a pari passu basis (notwithstanding any term to the
contrary in the Purchase Agreement, the Notes or the Company's Certificate of
Incorporation and notwithstanding the designation of one instrument as "debt"
and the other as "equity") based upon the sum of the Liquidation Value and
principal amount (plus all unpaid dividends and interest which have accrued or
been declared thereon) of the Senior Securities held by each such holder
relative to the aggregate sum of the Liquidation Value and principal amount of
all Senior Securities then outstanding. In the event of any bankruptcy,
recapitalization or reorganization of the Company, the holders of Notes covenant
and agree that they shall use their reasonable efforts to provide holders of
Preferred Stock (together with the holders of Notes), based on such holders pro
rata share of the aggregate sum of the Liquidation Value and principal amount of
all Senior Securities then outstanding (plus all unpaid dividends and interest
which have accrued or been declared thereon), representation on any creditors
committee or other formal or informal group representing holders of Notes, it
being the irrevocable agreement and understanding that the Notes and the
Preferred Stock are, in any such circumstance, to be treated as one and the same
class of securities, and all holders of Senior Securities shall be entitled to
share in all the rights, privileges and preferences that any holder of Notes may
have, notwithstanding the designation of one instrument as "debt" and the other
as "equity."
- 9 -
<PAGE> 10
8. Required Consent. Without the vote or consent of both the
Hancock Representatives and the CIBC Representatives, the Company shall not:
(a) except as expressly contemplated by the Securities
Purchase Agreement or the Executive Stock Agreements, as in effect on the date
hereof, authorize, issue or enter into any agreement providing for the issuance
(contingent or otherwise), and whether in a public offering registered under the
Securities Act or pursuant to a private placement exempt from registration
thereunder, of any equity securities or any securities or rights convertible
into or exercisable or exchangeable for any equity securities in excess of 2,500
shares of Common Stock;
(b) and shall not permit any Subsidiary to, consolidate or
merge with, or sell, assign, transfer or lease all or substantially all of its
assets in a single transaction or a series of transactions to any Person;
(c) permit any Subsidiary of the Company to, directly or
indirectly, issue, contingently or otherwise, and whether in a public offering
registered under the Securities Act or pursuant to a private placement exempt
from registration thereunder, any shares representing an equity interest in the
Subsidiary, warrants, rights or options to purchase or acquire an equity
interest now or thereafter authorized for issuance, except to the Company or a
wholly-owned Subsidiary of the Company;
(d) acquire, or permit any Subsidiary to acquire, any interest
in any business, including any assumption of liabilities, contingent or
otherwise, and whether by a purchase of assets, purchase of stock, merger or
otherwise, or make any loans or advances to any Person (other than to a
Subsidiary, or as contemplated in the Executive Stock Agreement and the Investor
Stock Agreement as in effect on the date hereof), where the total consideration,
including the assumption of liabilities and issuance of stock is, in the
aggregate, more than $1,000,000; or
(e) amend the Company's certificate of incorporation.
9. Definitions.
"Affiliate" has the meaning set forth in paragraph 3(d).
"ASIG" means Aircraft Services International Group, Inc.,
a Delaware corporation.
"Approved Sale" has the meaning set forth in paragraph 4(a).
"Approving Securityholders" has the meaning set forth in
paragraph 4(a).
"Board" has the meaning set forth in the preamble.
"CIBC Directors" has the meaning set forth in paragraph
1(a)(ii).
- 10 -
<PAGE> 11
"Chairman Agreement" means the Chairman Agreement, dated as of
the date hereof, between the Company, ASIG, Tioga Capital Corporation and George
Schwartz.
"Common Stock" means either or both of the Company's Class A
voting common stock, par value $.01 per share, and Class B nonvoting common
stock, par value $.01 per share.
"Company" has the meaning set forth in the preamble.
"Company Stock" means the Common Stock, the Preferred Stock
and the Notes.
"Election Period" has the meaning set forth in paragraph 3(a).
"Executive Directors" has the meaning set forth in paragraph
1(a)(ii).
"Executive Stock Agreements" has the meaning set forth in the
preamble.
"Executives" has the meaning set forth in the preamble.
"Exempt Transfer" has the meaning set forth in paragraph 3(a).
"Family Group" has the meaning set forth in paragraph 3(d).
"Hancock Directors" has the meaning set forth in paragraph
1(a)(ii).
"Independent Third Party" means any person (other than George
Schwartz, each Executive, and each other executive employee of the Company and
its subsidiaries) (i) who, immediately prior to the contemplated transaction,
does not own Company Stock representing in excess of 5% of the Company's Voting
Power, (ii) who is not controlling, controlled by or under common control with
any such person and (iii) who is not the spouse or descendant (by birth or
adoption) of any such person.
"Investors" has the meaning set forth in the preamble.
"Liquidation Value" has the meaning set forth in the Company's
Certificate of Incorporation.
"Notes" has the meaning set forth in the Securities Purchase
Agreement.
"Offer Notice" has the meaning set forth in paragraph 3(b).
"Offered Securities" has the meaning set forth in paragraph
3(b).
"Other Investors" has the meaning set forth in paragraph 3(c).
- 11 -
<PAGE> 12
"Other Securityholders" has the meanings set forth in
paragraph 3(b) and paragraph 4(a), as appropriate.
"Outside Director" has the meaning set forth in paragraph
1(a)(ii).
"Permitted Transferee" has the meaning set forth in paragraph
3(d).
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Stock" means the Company's Series A Preferred
Stock, par value $.01 per share.
"Public Sale" means any sale of Securityholder Securities to
the public pursuant to an offering registered under the Securities Act or to the
public through a broker, dealer or market maker pursuant to the provisions of
Rule 144 adopted under the Securities Act.
"Qualified Public Offering" means the sale in an underwritten
public offering by Company registered under the Securities Act of shares of
Common Stock having an aggregate primary offering value of at least $35 million
and a share price for each share of Common Stock of at least four times the
purchase price paid for shares of Common Stock in the Securities Purchase
Agreement.
"Sale Notice" has the meaning set forth in paragraph 3(c).
"Sale of the Company" means the sale of the Company to an
Independent Third Party or affiliated group of Independent Third Parties
pursuant to which such party or parties acquire (i) capital stock of the Company
possessing a majority of the Company's Voting Power (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
"Securities" means any of the Notes, the Preferred Stock or
the Common Stock.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securities Purchase Agreement" has the meaning set forth in
the preamble.
"Securityholder Securities" means: (i) any Common Stock
purchased or otherwise acquired by any Securityholder; (ii) any Preferred Stock
purchased or otherwise acquired by any Securityholder; (iii) any Notes purchased
or otherwise acquired by any Securityholder; and (iv) any debt securities,
capital stock or other equity securities issued or issuable directly or
indirectly with respect to the securities referred to in clauses (i), (ii) or
(iii) above by way of stock dividend or stock
- 12 -
<PAGE> 13
split or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization. As to any particular securities
constituting Securityholder Securities, such securities shall cease to be
Securityholder Securities when they have been (x) effectively registered under
the Securities Act and disposed of in accordance with the registration statement
covering them or (y) sold to the public through a broker, dealer or market maker
pursuant to Rule 144 (or any similar provision then in force) under the
Securities Act.
"Securityholders" has the meaning set forth in the preamble.
"Senior Securities" has the meaning set forth in paragraph
3(c).
"Senior Security Percentage" has the meaning set forth in
paragraph 3(c).
"Senior Security Preference Amount" has the meaning set forth
in paragraph 7.
"Sub Board" has the meaning set forth in paragraph 1(a)(iii).
"Subsidiary" means, with respect to any Person, any
corporation, limited liability company, partnership, association or other
business entity of which (i) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by that Person or
one or more of the other Subsidiaries of that Person or a combination thereof,
or (ii) if a limited liability company, partnership, association or other
business entity, a majority of the limited liability company, partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of limited liability company, partnership,
association or other business entity gains or losses or shall be or control the
managing director or general partner of such limited liability company,
partnership, association or other business entity.
"Transfer" has the meaning set forth in paragraph 3(a).
"Transferring Securityholder" has the meaning set forth in
paragraph 3(b).
"Transferring Investor" has the meaning set forth in paragraph
3(c).
"Voting Power" means, with respect to each share of Company
Stock as determined on a fully-diluted basis, one (1) vote per share with
respect to the Class A Common Stock and Class B Common Stock (whether designated
as voting or nonvoting).
- 13 -
<PAGE> 14
10. Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Securityholder Securities in violation of any
provision of this Agreement shall be void, and the Company shall not record such
Transfer on its books or treat any purported transferee of such Securityholder
Securities as the owner of such shares for any purpose.
11. Amendment and Waiver. Except as otherwise provided herein,
no modification, amendment or waiver of any provision of this Agreement shall be
effective against the Company or the Securityholders unless such modification,
amendment or waiver is approved in writing by the Company or the holders of at
least 75% of Company's Voting Power, respectively; provided that no
modification, amendment or waiver of subparagraphs 1(a)(ii)(C) and 1(e) (to the
extent such amendment relates to George Schwartz) shall be effective without the
consent of George Schwartz (so long as he is Chairman pursuant to the Chairman
Agreement). The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms.
12. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
13. Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
14. Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company and its successors and assigns and the Securityholders and any
subsequent holders of Securityholder Securities and the respective successors
and assigns of each of them, so long as they hold Securityholder Securities.
15. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be an original and all of which taken
together shall constitute one and the same agreement.
16. Remedies. The Company, the Investors and the Executives
shall be entitled to enforce their rights under this Agreement specifically, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in their favor. The parties
- 14 -
<PAGE> 15
hereto agree and acknowledge that money damages would not be an adequate remedy
for any breach of the provisions of this Agreement and that the Company, any
Investor and any Executive shall be entitled to specific performance and/or
injunctive relief (without posting a bond or other security) from any court of
law or equity of competent jurisdiction in order to enforce or prevent any
violation of the provisions of this Agreement.
17. Notices. Any notice provided for in this Agreement shall
be in writing and shall be either personally delivered, or mailed first class
mail (postage paid) or sent by reputable overnight courier service (charges
prepaid) to the Company at the address set forth below and to any other
recipient at the address indicated on the schedules hereto and to any subsequent
holder of Securityholder Securities subject to this Agreement at such address as
indicated by the Company's records, or at such address or to the attention of
such other person as the recipient party has specified by prior written notice
to the sending party. Notices shall be deemed to have been given hereunder when
delivered personally, three days after deposit in the U.S. mail and one day
after deposit with a reputable overnight courier service. The Company's address
is:
Ranger Aerospace Corporation
GSP International Airport
Box 12233
Greenville, SC 29612
Attn: Chief Financial Officer
with a copy (which shall not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attn: William S. Kirsch, P.C.
Telephone: (312) 861-2000
Facsimile: (312) 861-2200
18. GOVERNING LAW. ALL ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEABILITY OF THIS AGREEMENT AND
THE EXHIBITS AND SCHEDULES HERETO SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY
CHOICE OF LAW OR CONFLICT OF LAW RULES OR PROVISIONS (WHETHER OF THE STATE OF
DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE.
19. Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
* * * *
- 15 -
<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
RANGER AEROSPACE CORPORATION,
a Delaware corporation
By: /s/ STEPHEN D. TOWNES
-------------------------
Its: President
-------------------------
INVESTORS
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ D. DANA DONOVAN
-------------------------
Its: Senior Investment Officer
-------------------------
CIBC WOOD GUNDY VENTURES, INC.
By: ILLEGIBLE
-------------------------
Its: Managing Director
-------------------------
DANIELLE SCHWARTZ TRUST, UAD 10/1/93
By: /s/ GENE Z. SALKIND
-------------------------
Its: Trustee
-------------------------
RANDOLPH STREET PARTNERS II
By: /s/ WILLIAM S. KIRSCH
-------------------------
Its: partner
-------------------------
/s/ GREGG L. ENGLES
-------------------------
GREGORY ENGLES
EXECUTIVES
/s/ STEPHEN D. TOWNES
-------------------------
STEPHEN D. TOWNES
- 16 -
<PAGE> 17
SCHEDULE OF SECURITYHOLDERS
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------
Class of Number of
Securityholder Securityholder
Name and Address Shares Shares
- - -----------------------------------------------------------------------------------------------------------
<S> <C>
John Hancock Mutual Life Insurance Company Class B Non-Voting 56,400
John Hancock Place, Box 111 Common Stock
Boston, MA 02117
Telephone: (617) 572-1605 10.5% Payment-In- $8,460,000
Facsimile: (617) 572-1606 Kind Notes
Attention: Dana Donovan
- - -----------------------------------------------------------------------------------------------------------
CIBC Wood Gundy Ventures, Inc. Class A Voting 18,370
425 Lexington Avenue, 3rd Floor Common Stock
New York, NY 10017
Telephone: (212) 885-4400 Class B Non-Voting 12,630
Facsimile: (212) 885-4998 Common Stock
Attention: Jay Levine
10.5% Pay-In-Kind 4,650
Redeemable
Preferred Stock
- - -----------------------------------------------------------------------------------------------------------
Danielle Schwartz Trust, UAD 10/1/93 Class A Voting 5,964.8
c/o George Schwartz Common Stock
644 Santa Helena
Solana Beach, CA 92075
Telephone: (619) 481-5151
Facsimile: (619) 481-1355
- - -----------------------------------------------------------------------------------------------------------
Randolph Street Partners, II Class A Voting 5,000
200 E. Randolph Common Stock
Chicago, IL 60601
Telephone: (312) 861-2000 10.5% Pay-In-Kind 750
Facsimile: (312) 861-2200 Redeemable
Attention: William S. Kirsch, P.C. Preferred Stock
- - -----------------------------------------------------------------------------------------------------------
Gregg Engles Class A Voting 4,000
c/o Suiza Foods Corporation Common Stock
384 Turtle Creek Blvd.
Dallas, TX 75219 10.5% Pay-In-Kind 600
Telephone: (214) 528-9922 Redeemable
Facsimile: (214) 528-9929 Preferred Stock
- - -----------------------------------------------------------------------------------------------------------
Kraig Danielson Class A Voting 1,491.2
205 Courtland Avenue Common Stock
Stamford, CT 06906
Telephone: (203) 323-3621
Facsimile: (203) 323-4215
- - -----------------------------------------------------------------------------------------------------------
</TABLE>
- 17 -
<PAGE> 18
EXECUTIVES
<TABLE>
<CAPTION>
- - --------------------------------------------------------------------------------
Class of Number of
Securityholder Securityholder
Name and Address Shares Shares
- - --------------------------------------------------------------------------------
<S> <C> <C>
Stephen D. Townes Class A Voting 2,663
318 Scarborough Drive Common Stock
Greer, SC 29650
Telephone: (864) 848-2760
Facsimile: (864) 848-7544
- - --------------------------------------------------------------------------------
</TABLE>
- 18 -
<PAGE> 1
EXHIBIT 10.4
RANGER AEROSPACE CORPORATION
RIGHTS AGREEMENT
THIS AGREEMENT is made as of April 1, 1998, among RANGER AEROSPACE
CORPORATION, a Delaware corporation ("RANGER") and the parties identified as
Purchasers on the signature pages hereto (individually a "PURCHASER", and
collectively the "PURCHASERS").
RECITAL:
The parties to this Agreement are also parties to a Securities Purchase
Agreement of even date (the "SECURITIES AGREEMENT"). In order to induce the
Purchasers to enter into the Securities Agreement, Ranger has agreed to provide
the rights set forth in this Agreement. The execution and delivery of this
Agreement is a condition to the Closing under the Securities Agreement. Certain
terms used in this Agreement are defined in SECTION 8. Capitalized terms not
otherwise defined in this Agreement have the meanings given therefor in the
Securities Agreement.
NOW THEREFORE, the parties agree as follows:
1. DEMAND REGISTRATION OF SHARES.
(a) At any time after the occurrence of a Qualified Public Offering,
the Hancock Holders and the CIBC Holders shall each be entitled to request (a
"DEMAND REQUEST") (i) two Demand Registrations on a Form S-1 or S-2 (or any
successor form) under the Securities Act and (ii) unlimited Demand Registrations
on Form S-3 (or any successor form) under the Securities Act, of all or any
portion of their Shares. A registration requested pursuant to this SECTION 1(a)
is referred to in this Agreement as a "DEMAND REGISTRATION". The request for a
Demand Registration shall specify the approximate number of Shares requested to
be registered and the intended method of distribution thereof. Within ten days
after receipt of such a request, Ranger shall give written notice of such
requested registration to all other holders of Shares and shall include in such
registration all Shares with respect to which Ranger has received written
requests for inclusion therein and the intended method of distribution thereof
within 30 days after the receipt of Ranger's notice.
(b) Ranger shall pay all Registration Expenses (defined in SECTION 6)
in connection with each Demand Registration and shall pay all Registration
Expenses in connection with a registration initiated as a Demand Registration
whether or not it becomes effective or is not otherwise counted as a Demand
Registration. A registration shall not count as a Demand Registration until it
has become effective under the Securities Act and any blue sky laws of any
applicable state and remains so effective until all Shares included therein have
been sold pursuant thereto, unless such registration statement is withdrawn at
the request of the Requesting Holders (other than a withdrawal in the case
described in the next following sentence). If so requested in the Demand
Request, Ranger shall use its best efforts to effect such Demand Registration as
an underwritten offering on a firm commitment basis, provided if Ranger is
unable to effect the registration as an underwritten offering on a firm
commitment basis, Ranger will continue to effect such registration if requested
to do so by the Requesting Holders in accordance with the method of distribution
as is specified by the Requesting Holders, and in such case the registration
statement shall count as a Demand Registration; otherwise such Demand Request
shall be deemed withdrawn and not to have been made and shall not count as a
Demand Registration.
<PAGE> 2
-2-
(c) PRIORITY ON DEMAND REGISTRATION. On any Demand Registration, all
Shares requested to be included shall be included unless the managing
underwriters advise Ranger and the Requesting Holders in writing that all of the
Shares requested to be included may not be sold without adversely affecting the
marketability of the offering. In such case, to the extent required, the number
of Investor Purchase Shares that have been requested to be included in the
Demand Registration shall first be excluded therefrom pro rata on the basis of
the number of Investor Purchase Shares requested by holders of such Shares
(regardless of whether such holder was a Requesting Holder). Thereafter, to the
extent required, the number of Securities Purchase Shares that have been
requested to be included in the Demand Registration shall be excluded therefrom
pro rata on the basis of the number of the number of Securities Purchase Shares
requested by the holders of such Shares (regardless of whether such holder was a
Requesting Holder). If all Shares requested to be included in the Demand
Registration are so included, Ranger may include in the Demand Registration
other securities to be sold by Ranger for its own account or to be sold by other
Persons (including other holders of Common Stock exercising their right to a
Piggyback Registration pursuant to SECTION 2), provided that the managing
underwriters advise Ranger in writing that in their opinion the inclusion of
such securities will not cause the number of Shares and other securities
requested to be included in the offering to exceed the number which may be sold
without adversely affecting the marketability of the offering.
(d) SELECTION OF UNDERWRITERS. The Requesting Holders shall select a
nationally recognized firm of investment banker(s) and/or manager(s) to
administer each Demand Registration.
(e) OTHER REGISTRATIONS. Except for registration statements on Form
S-4, S-8 or any successor thereto, Ranger will not file any other registration
statement with respect to its common stock or any other class of debt or equity
securities, whether for its own account or that of other stockholders, from the
date of receipt of a notice from holders of Shares requesting a Demand
Registration pursuant to this SECTION 1 until the completion of the period of
distribution of the registration contemplated thereby.
(f) GRANT OF OTHER DEMAND REGISTRATION RIGHTS. Until the date that no
holder of Shares has any further right to request a Demand Registration, Ranger
shall not grant to any Persons the right to request Ranger to register any
equity securities of Ranger, or any securities convertible or exchangeable into
or exercisable for such securities, without the prior written consent of the
Required Holders, provided that Ranger may without the consent of such holders,
grant rights to other Persons to (i) participate in Piggyback Registrations so
long as such rights are subordinate to the rights of the holders of Shares with
respect to such Piggyback Registrations; and (ii) request underwritten
registrations so long as the holders of Shares are entitled to participate in
any such registrations pari passu with such Persons.
2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever Ranger proposes to register any of its
securities under the Securities Act (whether for its own account or to be sold
by other Persons) and the registration form to be used may be used for the
registration of Shares (except for the registration statements on Form S-4, S-8
or any successor thereto, or other form which does not include substantially the
same information as would be required in a form for the general registration of
securities), Ranger shall give prompt written notice to the holders of Shares
which may be so included (a "REGISTRABLE SECURITY") of its intention to effect
such a registration and shall include in such registration (a "PIGGYBACK
REGISTRATION") all Registrable Securities with respect to which Ranger has
received written requests for inclusion therein (which request shall state the
intended
<PAGE> 3
-3-
method of distribution thereof) within 30 days after the receipt of Ranger's
notice on the same terms and conditions as the other securities included
therein.
(b) PIGGYBACK EXPENSES The Registration Expenses of the holders of
Registrable Securities shall be paid by Ranger in all Piggyback Registrations.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration is
an underwritten primary registration on behalf of Ranger, and the managing
underwriters advise Ranger in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, Ranger shall include in such registration first, the securities
Ranger proposes to sell, second, the Securities Purchase Shares requested to be
included in such registration, third, the Investor Purchase Shares requested to
be included in such registration and fourth, any other securities requested to
be included in such registration. If less than all of the Securities Purchase
Shares or Investor Purchase Shares, respectively, may be so included, the number
of such Shares, if any, included in the Piggyback Registration shall be
allocated pro rata among the holders of such Shares on the basis of the number
of such Shares requested by each such holder to be included therein.
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration is
an underwritten secondary registration on behalf of other holders of Ranger's
securities, and the managing underwriters advise Ranger in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, Ranger shall include in such
registration first, the securities of the holders on whose behalf the
registration is initially being made, second, the Securities Purchase Shares
requested to be included in such registration, third, the Investor Purchase
Shares requested to be included in such registration and fourth, any other
securities requested to be included in such registration. If less than all of
the Securities Purchase Shares or Investor Purchase Shares, respectively, may be
so included, the number of such Shares, if any, included in the Piggyback
Registration shall be allocated pro rata among the holders of such Shares on the
basis of the number of such Shares requested by each such holder to be included
therein.
(e) CONTINUED OBLIGATION FOR DEMAND REGISTRATION. No registration of
Shares effected under this SECTION 2 shall relieve Ranger of its obligation to
effect registration of the Shares upon any Demand Request made pursuant to the
provisions of SECTION 1.
(f) WITHDRAWAL OR DELAY. If at any time after giving written notice of
its intention to register any securities and prior to the effective date of the
registration statement filed in connection with such registration, Ranger shall
determine for any reason not to register or to delay registration of such
securities, Ranger may, at its election, give written notice of such
determination to each holder of Registrable Securities requested to be included
in such offering and (i) in the case of a determination not to register, shall
be relieved of its obligation to register any Registrable Securities in
connection with such registration (but not from any obligation of Ranger to pay
the Registration Expenses in connection therewith), without prejudice, however,
to the rights of any holder of Registrable Securities to include Registrable
Securities in any future registrations pursuant to this SECTION 2 or to cause a
registration to be effected as a Demand Registration under SECTION 1, and (ii)
in the case of a determination to delay registering, shall be permitted to delay
registering any Registrable Securities, for the same period as the delay in
registering such other securities.
3. HOLDBACK AGREEMENTS.
<PAGE> 4
-4-
(a) No holder of Shares shall effect any public sale or distribution
(which shall not include any sales pursuant to Rule 144 or Rule 144A) of equity
securities of Ranger, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 90-day
period beginning on the effective date of the registration statement for a
Demand Registration or any underwritten Piggyback Registration in which
Registrable Securities are or may be included (except as part of the offering
covered by such registration statement) unless the underwriters managing the
registered public offering otherwise agree.
(b) Ranger shall not effect on its own behalf any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and during the 120-day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registrations
on Form S-4, Form S-8 or any successor form), unless the underwriters managing
the registered public offering otherwise agree, and (ii) shall cause, to the
extent it has the power (by contract or ownership), or otherwise use its
reasonable best efforts to cause, each holder of at least 5% (on a fully-diluted
basis) of its common stock to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144 and Rule 144A) of any such
securities during such period (except as part of such underwritten registration,
if otherwise permitted) unless the underwriters managing the registered public
offering otherwise agree.
4. REGISTRATION PROCEDURES. Whenever any Shares are required to be
registered pursuant to this Agreement, Ranger shall use its best efforts to
effect the registration and the sale of such Shares in accordance with the
intended method of disposition thereof and pursuant thereto Ranger shall as
expeditiously as possible:
(i) prepare and file with the SEC a registration statement
with respect to such Shares (which shall be on Form S-1 or such other
form of general applicability satisfactory to the managing underwriter
(if any), or on Form S-3 or any successor form if the Required Holders
shall have requested registration on such Form and Ranger shall then be
entitled to use such Form to register such Shares ) and use its best
efforts to cause such registration statement to become effective
(provided that Ranger may delay or discontinue any registration
statement effected under SECTION 2 in accordance with SECTION 2(f)) and
prepare and file with the SEC such amendments and post-effective
amendments to such registration statement and supplements to the
prospectus used in connection therewith as may be necessary to keep
such registration statement effective under the Securities Act and the
blue sky laws of any applicable state for a period of not less than 90
days in the case of an underwritten offering, and in any other
offering, until the disposition of all Shares covered by such
registration statement; provided that at any time after the
registration statement has been continuously effective for 12
consecutive months, if Ranger determines in its reasonable business
judgment that having such registration statement remain in effect would
materially interfere with any financing, refinancing, acquisition,
disposition, corporate reorganization or other material corporate
transaction or development involving Ranger or any of its Subsidiaries,
Ranger may, upon 10 Business Days' prior notice to each holder of
Shares included therein, withdraw such registration statement; and, if
such Registration Statement is withdrawn, such Demand Registration will
not count as a Demand Registration under SECTION 1.
(ii) before filing a registration statement or prospectus or
any amendments or supplements thereto or incorporating any document by
reference therein, Ranger shall
<PAGE> 5
-5-
furnish to the holders of Shares included in such registration
statement copies of all such documents proposed to be filed or
incorporated therein, which documents shall be subject to the
reasonable review and comment of such holders and their counsel;
(iii) notify in writing each holder of Shares included in such
registration statement of (i) the filing and effectiveness of such
registration statement or any amendment or post-effective amendments
thereto and the prospectus and any supplement thereto, (ii) any request
by the SEC for amendments or post-effective amendments to the
registration statement or supplements to the prospectus or for
additional information, (iii) the issuance by the SEC of any stop order
suspending the effectiveness of such registration statement or the
initiation or threatening of any proceedings for that purpose, and (iv)
of the receipt by Ranger of any notification with respect to the
suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose;
(iv) comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement during the period of, and in accordance with the
intended methods of, disposition by the sellers thereof as set forth in
such registration statement;
(v) furnish, without charge, to each holder of Shares
included in a registration statement such number of copies of such
registration statement, the prospectus included in such registration
statement (including each preliminary prospectus), each amendment and
supplement thereto, and such other documents as such holder may
reasonably request in order to facilitate the disposition of the
Shares included therein owned by such holder, and Ranger hereby
consents to the use of each prospectus or any supplement thereto by
each such holder and the underwriters, if any, in connection with the
offering and sale of the Shares covered by such registration statement
or any amendment thereto;
(vi) use its best efforts to register or qualify all Shares
included in a registration statement under such other securities or
blue sky laws of such jurisdictions as any holder of such Shares
reasonably requests and do any and all other acts and things which may
be reasonably requested by any such state securities administrator to
enable such holder to consummate the disposition in such jurisdictions
of such Shares (provided that Ranger shall not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this SUBPARAGRAPH, (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to
general service of process in any such jurisdiction);
(vii) notify each holder of Shares included in a registration
statement, at any time when a prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event
as a result of which the prospectus included in such registration
statement contains an untrue statement of a material fact or omits any
fact necessary to make the statements therein not misleading, and shall
prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Shares, such prospectus
shall not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading;
(viii) cause all Shares included in a registration statement
to be listed on each securities exchange on which similar securities
issued by Ranger are then listed and, if not so listed, but similar
securities are then listed on the NASD automated
<PAGE> 6
-6-
quotation system, to be listed on the NASD automated quotation system
and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Shares as a NASDAQ national
market system security within the meaning of Rule 11Aa2-1 of the SEC
or failing that, at such time as Ranger becomes eligible for such
authorization, to secure NASDAQ authorization for such Shares if
available and, without limiting the generality of the foregoing, to
arrange for at least two market makers to register as such with
respect to such Shares with the NASD;
(ix) if the offering is underwritten, use its best efforts to
furnish on the date that Shares are delivered to the underwriters for
sale pursuant to such registration statement, and to the extent
required by any underwriting agreement or from time to time upon
request by any holder of Shares in connection with its disposition of
its Shares under such registration statement: (i) an opinion dated such
date of counsel representing Ranger for the purposes of such
registration, addressed to the underwriters and to each such holder,
stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no
stop order suspending the effectiveness thereof has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the registration statement,
the related prospectus and each amendment or supplement thereof comply
as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any opinion
as to financial statements or financial data contained therein) and (C)
to such other effect as reasonably may be requested by counsel for the
underwriters or by such holder or its counsel and (ii) a letter dated
such date from the independent public accountants retained by Ranger,
addressed to the underwriters and to each such holder, stating that
they are independent public accountants within the meaning of the
Securities Act and that, in the opinion of such accountants, the
financial statements of Ranger included in the registration statement
or the prospectus, or any amendment or supplement thereof, comply as to
form in all material respects with the applicable accounting
requirements of the Securities Act, and such letter shall additionally
cover such other financial matters (including information as to the
period ending no more than five Business Days prior to the date of such
letter) with respect to such registration as such underwriters or
holder reasonably may request;
(x) provide a transfer agent and registrar for all Shares
included in a registration statement not later than the effective date
of such registration statement, and a CUSIP number for all such Shares
and provide the applicable transfer agent with printed certificates or
instruments for such Shares which are in a form eligible for deposit
with Depositary Trust Company and otherwise meeting the requirements of
any securities exchange on which such Shares are then listed;
(xi) cooperate with the holders of Shares included in a
registration statement and the underwriters, if any, to facilitate the
timely preparation and delivery of certificates representing Shares to
be sold not bearing any restrictive legends; and to enable such Shares
to be in such denominations and registered in such names as the
underwriters may request at least two Business Days prior to any sale
of such Shares to the underwriters;
(xii) enter into such customary agreements (including
underwriting agreements in customary form) as the underwriters of any
registration statement pursuant to an underwritten offering, reasonably
request in order to expedite or facilitate the disposition of such
Shares;
<PAGE> 7
-7-
(xiii) make available for inspection by any holder of Shares
included in a registration statement, any underwriter participating in
any disposition pursuant to such registration statement and any
attorney, accountant or other agent retained by any such holder or
underwriter, all financial and other records, pertinent corporate
documents and properties of Ranger as they reasonably deem necessary to
conduct their due diligence review, and cause Ranger's officers,
directors, employees and independent accountants to supply all
information reasonably requested by any such holder, underwriter,
attorney, accountant or agent in connection with such registration
statement;
(xiv) make Ranger's officers, directors and employees
available to participate in such "road show" marketing tours and
meetings, at such locations, as any holder of Shares included in a
registration statement, or any underwriter participating in any
disposition pursuant to such registration statement, may request from
time to time;
(xv) otherwise to comply with the Securities Act, the
Exchange Act, all applicable rules and regulations of the Commission
and all applicable state blue sky and other securities laws, rules and
regulations, and make generally available to its security holders,
earnings statements satisfying the provisions of SECTION 11(a) of the
Securities Act, no later than 30 days after the end of any 12 month
period (or 90 days if the end of such 12 month period coincides with
the end of a fiscal quarter or fiscal year, respectively) of Ranger (A)
commencing at the end of any month in which Shares are sold to
underwriters in an underwritten offering, or, (B) if not sold to
underwriters in such an offering, beginning within the first three
months commencing after the effective date of the registration
statement, which statements shall cover said 12 month periods;
(xvi) permit any holder of Shares which, in such holder's
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of Ranger, to participate in the preparation of such
registration or comparable statement and to require the insertion
therein of material, furnished to Ranger in writing, which in the
reasonable judgment of such holder and its counsel should be included;
and
(xvii) if the offering is underwritten, then immediately upon
notification to Ranger from the managing underwriter of the price at
which the securities are to be sold under such registration statement,
and, in any event, prior to the effective date of the registration
statement filed in connection with such registration, Ranger shall
advise each holder requesting inclusion of Shares in such registration
statement of such price. If such price is below the price which is
acceptable to a holder of Shares requested to be included in such
offering, then such holder shall have the right, by written notice to
Ranger given prior to the effectiveness of such registration statement,
to withdraw its request to have its Shares included in such
registration statement.
5. CONDITIONS TO REGISTRATION.
Each holder's right to have its Shares included in any registration
statement filed by Ranger in accordance with the provisions of this Agreement
shall be subject to the following conditions:
(a) The holders of Shares to be included in such registration statement
shall furnish Ranger in a timely manner with all information requested by Ranger
in writing and required by the applicable rules and regulations of the SEC or
otherwise reasonably required by Ranger or its counsel in order to enable them
properly to prepare and file such registration statement in accordance with
applicable provisions of the Securities Act and if the offering is underwritten
such
<PAGE> 8
-8-
holder shall (i) agree to sell its Shares on the basis provided in any
underwriting arrangements approved by (A) the Requesting Holders in the case of
a Demand Registration, or (B) Ranger or such other holders of securities on
whose account the registration is initially being made in the case of a
Piggyback Registration and (ii) complete and execute all questionnaires, powers
of attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements; provided that in no
case shall a holder of Shares included in any registration shall be required to
make any representations or warranties to Ranger or the underwriters other than
representations and warranties regarding such holder, the Shares held by such
holder and such holder's intended method of distribution;
(b) If any such holder desires to sell and distribute Shares over a
period of time, or from time to time, at then prevailing market prices, then any
such holder shall execute and deliver to Ranger such written undertakings as
Ranger and its counsel may reasonably request in order to assure full compliance
with applicable provisions of the Securities Act and the Exchange Act;
(c) Such holder shall agree that as of the date that a final prospectus
is made available to it for distribution to prospective purchasers of Shares it
shall cease to distribute copies of any preliminary prospectus prepared in
connection with the offer and sale of such Shares and will deliver or cause to
be delivered a copy of such final prospectus to each Person who received a copy
of any preliminary prospectus prior to sale of any of the Shares to such
Persons; and
(d) Upon receipt of any notice from Ranger of the existence of any
event of the nature described in SECTION 4(vii), such holder will forthwith
discontinue disposition of Shares until such holder receives copies of the
supplemented or amended prospectus contemplated by SECTION 4(vii) or until it is
advised in writing by Ranger that the use of the prospectus may be resumed, and
has received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so directed by Ranger, such
holder will deliver to Ranger (at Ranger's expense) all copies, other than
permanent file copies then in such holder's possession, of the prospectus
covering such Shares current at the time of receipt of such notice.
6. REGISTRATION EXPENSES.
(a) All expenses incident to Ranger's performance of or compliance with
this Agreement and the preparation, filing, amendment or supplement of any
registration statement in which Shares are to be included, including without
limitation all registration and filing fees, fees and expenses (including
counsel fees) of compliance with securities or blue sky laws, printing and
copying expenses, messenger and delivery expenses, fees and disbursements of
custodians, and fees and disbursements of counsel for Ranger and for the holders
of the Securities Purchase Shares, all independent certified public accountants,
underwriters (excluding discounts and commissions and fees in lieu of discounts
and commissions), and other Persons retained by Ranger and or by the holders of
the Securities Purchase Shares, the expenses and fees for listing the securities
to be registered on each securities exchange on which similar securities issued
by Ranger are then listed or on the NASD automated quotation system, transfer
taxes, fees of transfer agents and registrars and cost of insurance (all such
expenses being called "REGISTRATION EXPENSES") shall be borne by Ranger, whether
or not any such registration statement becomes effective.
(b) In connection with each registration effected pursuant to SECTION 1
or 2, Ranger shall reimburse the holders of Shares included in such registration
for the reasonable fees and disbursements of one counsel chosen by the
Requesting Holders.
<PAGE> 9
-9-
7. INDEMNIFICATION.
(a) Ranger agrees to indemnify and reimburse, to the extent permitted
by law, each holder of Shares included in a registration statement, its
directors, officers and employees and each Person who controls such holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses (including legal expenses and any expenses incurred in
investigating any claims) caused by any untrue or alleged untrue statement of
material fact contained in such registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading or any other violation
or breach of the Securities Act, the Exchange Act or any state securities or
blue sky law or any other law by Ranger or its officers or directors or any
other Person acting or purporting to act on Ranger's behalf, except insofar as
the same are caused by or contained in any information furnished in writing to
Ranger by such holder specifically stating that it is to be used in the
preparation thereof or by such holder's failure to deliver a copy of the
registration statement or prospectus or any amendments or supplements thereto
after Ranger has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, Ranger shall indemnify such
underwriters, their officers and directors and each Person who controls such
underwriters (within the meaning of the Securities Act) to the same extent as
provided above with respect to the indemnification of the holders of Shares.
(b) In connection with any registration statement in which a holder of
Shares is participating, each such holder shall indemnify Ranger, its directors,
officers and employees and each Person who controls Ranger (within the meaning
of the Securities Act) against any losses, claims, damages, liabilities and
expenses (including legal expenses and any expenses incurred in investigating
any claims) resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder specifically stating that it is to be used
in the preparation thereof; provided that the obligation to indemnify shall be
individual to each holder and in no event shall the aggregate liability of a
holder for indemnities pursuant to this SECTION 7 exceed the net amount of
proceeds received by such holder from the sale of its Shares pursuant to such
registration statement.
(c) Any Person entitled to indemnification hereunder (an "INDEMNIFIED
PARTY") shall (i) give prompt written notice to any Person obligated to make
such indemnification (an "INDEMNIFYING PARTY") of any claim with respect to
which it seeks indemnification (provided that the failure to give prompt notice
shall not impair any Person's right to indemnification hereunder to the extent
such failure has not prejudiced the indemnifying party) and (ii) unless in such
indemnified party's reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
<PAGE> 10
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(d) In order to provide for just and equitable contribution to joint
liability in any case in which either (i) the indemnity provided for in this
SECTION 7 is unavailable to a party that would otherwise have been an
indemnified party, or (ii) contribution under the Securities Act or any other
applicable law may be required on the part of any such holder of Shares or any
controlling Person of such a holder in circumstances for which indemnification
is provided under this SECTION 7; then, and in each such case, the indemnifying
and indemnified party will contribute to the aggregate losses, claims, damages
or liabilities to which they may be subject (after contribution from others) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and such indemnified party on the other in
connection with the statement or omission or circumstance which resulted in such
loss, claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the indemnifying party or such indemnified
party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided, however,
that, in any such case, (A) no such holder will be required to contribute any
amount in excess of the amounts received by it from the sale of its Shares
pursuant to such registration statement; and (B) no Person guilty of fraudulent
misrepresentation (within the meaning of SECTION 11(f) of the Securities Act)
will be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(e) The indemnification provided for under this Agreement shall remain
in full force and effect regardless of any investigation made by or on behalf of
the indemnified party or any officer, director or controlling Person of such
indemnified party and shall survive the transfer of any Shares.
8. Definitions.
"CIBC HOLDERS" means, the holder or holders of the Shares issued to
CIBC under the Securities Agreement.
"CIBC" means CIBC Wood Gundy Ventures, Inc.
"COMMON STOCK" means Ranger's Class A Voting Common Stock, $0.01 par
value, and its Class B Non-Voting Common Stock, $0.01 par value.
"HANCOCK" means John Hancock Mutual Life Insurance Company.
"HANCOCK HOLDERS" means, the holder or holders of the Shares issued to
the Hancock Purchaser under the Securities Agreement.
"HOLDER GROUP" means the CIBC Holders or the Hancock Holders, as the
case may be.
"INVESTOR PURCHASE SHARES" means Shares purchased under the Investor
Stock Agreements.
"INVESTOR STOCK AGREEMENTS" means each of (i) the Investor Stock
Agreements dated as of even date herewith, between Ranger, Gene Z. Salkind,
M.D., Trustee of the Danielle Schwartz Trust UAD 10/1/93, and George Schwartz,
and (ii) the Investor Stock Agreement dated as of even date herewith, between
Ranger, Kraig Danielson and George Schwartz.
"QUALIFIED PUBLIC OFFERING" means the sale in an underwritten public
offering by Ranger registered under the Securities Act, of shares of Common
Stock having an aggregate primary
<PAGE> 11
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offering value of at least $35,000,000 and a share price for each class of
Common Stock of at least four times the original purchase price therefor under
the Securities Agreement.
"REQUESTING HOLDERS" means, in connection with a Demand Registration,
the Holder Group that initiated the request for its Shares to be included in
such Demand Registration.
"REQUIRED HOLDERS" means, at any time, the holder or holders of at
least 75% of the aggregate number of Shares outstanding at such time (exclusive
of any Shares which, pursuant to SECTION 9(a), are no longer entitled to be
included in a Demand Registration).
"SECURITIES PURCHASE SHARES" means Shares purchased under the
Securities Agreement.
"SHARES" means, at any time, the shares of Common Stock held by the
Purchasers at such time, including without limitation, all shares of Common
Stock issued to the Purchasers under the Securities Agreement or the Investor
Stock Agreements, and shares of capital stock issued or issuable in exchange or
substitution therefor.
9. MISCELLANEOUS.
(a) TERMINATION OF REGISTRATION RIGHTS; SECURITIES. As to any
particular Shares, the holder of such Shares shall cease to be entitled to
request either a Demand Registration for such Shares or inclusion of such Shares
in a Piggyback Registration after they have been distributed to the public
pursuant to an offering registered under the Securities Act or sold to the
public through a broker, dealer or market maker in compliance with Rule 144 or
Rule 144A under the Securities Act (or any similar rule then in force) or
repurchased by Ranger or any of its Affiliates. This Agreement, other than
SECTION 7, shall terminate and be of no further force or effect at the time
there are no more Shares entitled to be included in a Demand Registration or a
Piggyback Registration under this Agreement.
(b) NO INCONSISTENT AGREEMENTS. Ranger shall not hereafter enter into
any agreement with respect to its securities or amend its charter or bylaws in
any manner which is inconsistent with or violates the rights granted to the
holders of Shares in this Agreement.
(c) REMEDIES. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or security of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(d) AMENDMENTS AND WAIVERS. This Agreement may not be amended, and
Ranger may not take any action herein prohibited, or omit to perform any act
herein required to be performed by it, without the written consent of the
Required Holders. Each holder of Shares at the time or thereafter shall be bound
by any consent so authorized by this SECTION 9(d). No course of dealing between
Ranger and any holder nor any delay in exercising any rights under this
Agreement shall operate as a waiver of any rights of any holder.
(e) SUCCESSORS AND ASSIGNS. All covenants and other agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective
<PAGE> 12
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successors and assigns of the parties hereto whether so expressed or not;
provided Ranger may not assign any of its obligations hereunder. In addition,
whether or not any express assignment has been made, the provisions of this
Agreement which are for such benefit of purchasers or holders of Shares are also
for the benefit of, and enforceable by, any subsequent holder of Shares.
(f) SEVERABILITY. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative, illegal or
unenforceable as applied to any particular case in any jurisdiction because of
the conflicting of any provision with any constitution or statute or rule of
public policy or for any other reason, such circumstance shall not have the
effect of rendering the provision or provisions in question invalid,
inoperative, illegal or unenforceable in any other jurisdiction or in any other
case or circumstance or of rendering any other provision or provisions herein
contained invalid, inoperative, illegal or unenforceable to the extent that such
other provisions are not themselves actually in conflict with such constitution,
statute or rule of public policy, but this Agreement shall be reformed and
construed in any such jurisdiction or case as if such invalid, inoperative,
illegal or unenforceable provision had never been contained herein and such
provision reformed so that it would be valid, operative and enforceable to the
maximum extent permitted in such jurisdiction or in such case.
(g) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together shall constitute one and the
same Agreement.
(h) DESCRIPTIVE HEADINGS. The descriptive headings of the SECTIONs of
this Agreement are inserted for convenience only and do not constitute a part of
this Agreement.
(i) GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF DELAWARE SHALL
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS OF RANGER AND ITS
STOCKHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING THE CONSTRUCTION,
VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (WITHOUT
GIVING EFFECT TO ANY LAWS OR RULE RELATING TO CONFLICTS OF LAWS THAT WOULD CAUSE
THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
YORK).
(j) NOTICES. All notices and other written communications provided for
hereunder shall be given in writing and sent by overnight delivery service (with
charges prepaid) or by facsimile transmission with the original of such
transmission being sent by overnight delivery service (with charges prepaid) by
the next succeeding Business Day and (i) if to a holder of Shares addressed to
such holder at such address or fax number as is specified for such holder in the
stock register of Ranger and (iii) if to Ranger, addressed to it at GSP
International Airport, Box 12233, Greenville, SC 29612, Attention: President,
Fax No. 864-848-2759 or at such other address or fax number as Ranger shall have
specified to each holder of Shares in writing given in accordance with this
SECTION 9(j). Notice given in accordance with this SECTION 9(j) shall be
effective upon the earlier of the date of delivery or the second Business Day at
the place of delivery after dispatch.
[SIGNATURES FOLLOW ON NEXT PAGE]
<PAGE> 13
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IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first written above.
RANGER AEROSPACE CORPORATION
By: /s/ STEPHEN D. TOWNES
----------------------------
Name: S.D. TOWNES
---------------------------
Title: President and CEO
--------------------------
THE PURCHASERS:
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY
By: /s/ D. DANA DONOVAN
-----------------------------
Name: D. DANA DONOVAN
---------------------------
Title: Senior Investment Officer
--------------------------
CIBC WOOD GUNDY VENTURES, INC.
By: /s/ LORI KOFFMAN
-----------------------------
Name: LORI KOFFMAN
---------------------------
Title: Managing Director
--------------------------
RANDOLPH STREET PARTNERS II
By: /s/ WILLIAM S. KIRSCH
-----------------------------
Partner
-----------------------------
/s/ GREGG L. ENGLES
--------------------------------
GREGORY ENGLES
/s/ GEORGE B. SCHWARTZ
--------------------------------
GEORGE SCHWARTZ
<PAGE> 1
EXHIBIT 10.5
RANGER AEROSPACE CORPORATION
EXECUTIVE STOCK AGREEMENT
THIS AGREEMENT is made as of April 2, 1998, between Ranger
Aerospace Corporation, a Delaware corporation (the "Company") and Stephen D.
Townes ("Executive").
The Company and the Executive desire to enter into an
agreement pursuant to which Executive shall purchase, and the Company shall
sell, 2,663 shares of the Company's Class A Common Stock, par value $.01 per
share (the "Class A Common Stock") at a price of $100 per share. Together, the
Class A Common Stock, the Class B Common Stock, par value $.01 per share (the
"Class B Common Stock" and, together with the Class A Common Stock, the "Common
Stock"), 10 1/2% Subordinated Notes (the "Notes") and the Series A Preferred
Stock (the "Preferred Stock") (it being understood that the Notes and the
Preferred Stock shall be treated as one and the same class of securities, with
identical rights hereunder) are referred to herein as the "Company Stock." All
of such shares of Company Stock and all shares of Company Stock hereafter
acquired by Executive are referred to herein as "Executive Stock." All shares of
Executive Stock shall be designated as Time-Vesting Stock. Certain definitions
are set forth in paragraph 7 of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Purchase and Sale of Executive Stock.
(a) Upon execution of this Agreement, Executive shall
purchase, and the Company shall sell, 2,663 shares of Class A Common Stock at a
price of $100 per share. The Company shall deliver to Executive the certificate
representing such shares of Company Stock, and Executive shall deliver to the
Company a promissory note in the form of Annex A attached hereto in an aggregate
principal amount of $266,300 (the "Executive Note"). Executive's obligations
under the Executive Note shall be secured by a pledge of the Executive Stock to
the Company, and in connection therewith, Executive shall enter into a pledge
agreement in the form of Annex B attached hereto.
(b) Within 30 days after Executive purchases any shares of
Executive Stock from the Company hereunder, Executive shall make an effective
election with the Internal Revenue Service under Section 83(b) of the Internal
Revenue Code and the regulations promulgated there under in the form of Annex C
attached hereto and any similar filing required by applicable state law.
(c) In connection with the purchase and sale of the Executive
Stock hereunder, Executive represents and warrants to the Company that:
<PAGE> 2
(i) The Executive Stock to be acquired by Executive
pursuant to this Agreement shall be acquired for Executive's own
account and not with a view to, or intention of, distribution thereof
in violation of the 1933 Act, or any applicable state securities laws,
and the Executive Stock shall not be disposed of in contravention of
the 1933 Act or any applicable state securities laws.
(ii) Executive is sophisticated in financial matters
and is able to evaluate the risks and benefits of the investment in the
Executive Stock.
(iii) Executive is able to bear the economic risk of
his investment in the Executive Stock for an indefinite period of time.
Executive understands that the Executive Stock has not been registered
under the 1933 Act and, therefore, cannot be sold unless subsequently
registered under the 1933 Act or an exemption from such registration is
available.
(iv) Executive has had an opportunity to ask
questions and receive answers concerning the terms and conditions of
the offering of Executive Stock and has had full access to (A) such
other information concerning the Company as he has requested and (B)
such other information which is necessary and desirable to make an
informed investment decision regarding the purchase Executive Stock
hereunder. Executive has reviewed a copy of the Share Purchase
Agreement, dated as of March 14, 1998 and amended as of the date
hereof, between the Company, Viad Corp. and Viad Service Company,
Limited pursuant to which the Company acquired substantially all of the
stock of certain subsidiaries of Aircraft Service International Group,
Inc. and the Security Purchase Agreement dated as of the date hereof,
between the Company, John Hancock Mutual Life Insurance Company and
CIBC Wood Gundy Ventures, Inc. and Executive is familiar with the
transactions contemplated thereby.
(v) This Agreement constitutes the legal, valid and
binding obligation of Executive, enforceable in accordance with its
terms, and the execution, delivery and performance of this Agreement by
Executive do not and shall not conflict with, violate or cause a breach
of any agreement, contract or instrument to which Executive is a party
or any judgment, order or decree to which Executive is subject.
(d) As an inducement to the Company to issue the Executive
Stock to Executive, and as a condition thereto, Executive acknowledges and
agrees that:
(i) neither the issuance of the Executive Stock to
Executive nor any provision contained herein shall entitle Executive to
remain in the employment of the Company or its Subsidiaries or affect
the right of the Company to terminate Executive's employment at any
time; and
(ii) the Company shall have no duty or obligation to
disclose to Executive, and Executive shall have no right to be advised
of, any material information regarding the
2
<PAGE> 3
Company or its Subsidiaries at any time prior to, upon or in
connection with the repurchase of Executive Stock upon the termination
of Executive's employment with the Company or its Subsidiaries or as
otherwise provided hereunder.
(e) The Company and Executive acknowledge and agree that this
Agreement has been executed and delivered, and the Executive Stock has been
issued hereunder, in connection with and as a part of the compensation and
incentive arrangements between the Company and Executive.
2. Time-Vesting Nature of Executive Stock.
(a) Executive Stock purchased hereunder shall become vested,
and shall only vest, upon the third anniversary of the date hereof; provided
that:
(i) Upon the occurrence of a Sale of the Company or a
Qualified Public Offering, all shares of Executive Stock purchased hereunder
which have not yet become vested shall become vested at the time of such event;
(ii) In the event of that Executive is terminated without
Cause or the Executive resigns with Good Reason, all shares of Executive Stock
purchased hereunder which have not yet become vested shall become vested at the
time of such event.
(b) Shares of Executive Stock which have become vested
pursuant to this paragraph 2 are referred to herein as "Vested Shares," and all
other shares of Executive Stock are referred to herein as "Unvested Shares."
3. Repurchase Option.
(a) In the event Executive ceases to be employed by the
Company or its Subsidiaries (the "Termination"), the Executive Stock (whether
held by Executive or one or more of Executive's transferees) shall be subject to
repurchase by the Company pursuant to the terms and conditions set forth in this
paragraph 3 (the "Repurchase Option").
(b) The purchase price for each Vested Share shall be (i)
equal to the Fair Market Value of such share if Executive is terminated without
Cause, the Executive resigns with Good Reason or Executive is terminated
pursuant to Executive's death or Permanent Disability, or (ii) equal to the
lower of the Executive's Original Cost for such shares (with shares having the
lowest cost subject to repurchase prior to shares with a higher cost) and Fair
Market Value if Executive is terminated for Cause or resigns without Good
Reason. The purchase price for each Unvested Share shall be the Original Cost
for such share.
(c) The Company may elect to purchase all or any portion of
such Executive Stock by delivering written notice (the "Repurchase Notice") to
the holder or holders of the Executive Stock within 150 days after the
Termination. The Repurchase Notice shall set forth the number of shares of each
class of Executive Stock to be acquired from each holder of Executive
3
<PAGE> 4
Stock, the aggregate consideration to be paid for such shares and the time and
place for the closing of the transaction. The number of shares to be repurchased
by the Company shall first be satisfied to the extent possible from the shares
of Executive Stock held by Executive at the time of delivery of the Repurchase
Notice. If the number of shares of Executive Stock then held by Executive is
less than the total number of shares of Executive Stock the Company has elected
to purchase, the Company shall purchase the remaining shares elected to be
purchased from the other holder(s) of Executive Stock under this Agreement, pro
rata according to the number of shares of Executive Stock held by such other
holder(s) at the time of delivery of such Repurchase Notice (determined as close
as practicable to the nearest whole shares).
(d) If for any reason the Company does not elect to purchase
all of the Unvested Stock pursuant to the Repurchase Option, the Investors shall
be entitled to exercise the Repurchase Option for the shares of Executive Stock
the Company has not elected to purchase (the "Available Shares"). As soon as
practicable after the Company has determined that there will be Available
Shares, but in any event within 90 days after the Termination, the Company shall
give written notice (the "Option Notice") to the Investors setting forth the
number of Available Shares and the purchase price for the Available Shares. The
Investors may elect to purchase any number of Available Shares by delivering
written notice (the "Election Notice") to the Company within 45 days after
receipt of the Option Notice from the Company; provided that if more than one
Investor elects to purchase any or all Available Shares and the number of
Available Shares is less than the aggregate number of Shares of Executive Stock
elected to be purchased by such electing Investors, each Investor shall be
entitled to purchase the lesser of (i) the number of shares of such class that
such Investor has elected to purchase as indicated in the Election Notice or
(ii) the number of shares of such class ob tained by multiplying the number of
shares specified in the Option Notice by a fraction, the numerator of which is
the number of shares of such class of Company Stock (on a fully-diluted basis)
held by such Investor and the denominator of which is the aggregate number of
Shares of such class of Company Stock (on a fully-diluted basis) held by all
electing Investors. In the event all Available Shares are not purchased by the
Investors pursuant to the immediately preceding sentence, the Available Shares
remaining to be purchased shall be allocated among the Investors who elect to
purchase more Available Shares (as indicated in their respective Election
Notices) than they are entitled to purchase pursuant to the immediately
preceding sentence as the Investors shall agree in writing. As soon as
practicable, and in any event within 15 days after the expiration of the 45-day
period set forth above, the Company shall notify each holder of Executive Stock
as to the number of shares being purchased from such holder by the Investors
(the "Supplemental Repurchase Notice"). At the time the Company delivers the
Supplemental Repurchase Notice to the holder(s) of Executive Stock, the Company
shall also deliver written notice to each Investor setting forth the number of
shares such Investor is entitled to purchase, the aggregate purchase price and
the time and place of the closing of the transaction.
(e) The closing of the purchase of the Executive Stock
pursuant to the Repurchase Option shall take place on the date designated by the
Company in the Repurchase Notice or Supplemental Repurchase Notice, which date
shall not be more than sixty (60) days nor less than five days after the
delivery of the later of either such notice to be delivered. The Company and/or
the Investors shall pay for the Executive Stock to be purchased pursuant to the
Repurchase Option
4
<PAGE> 5
by delivery of, in the case of each Investor, a check or wire transfer of funds
and, in the case of the Company at its option, (i) cancellation or exchange of
the Executive Note, (ii) a check or wire transfer of funds, (iii) a subordinated
note or notes payable in up to, three equal annual installments beginning on the
first anniversary of the closing of such purchase and bearing interest (payable
quarterly) at a rate per annum equal to the interest rate then being charged to
the Company under any revolving working capital credit facility, or (iv) any
combination of (i)-(iii), in the aggregate amount of the purchase price for such
shares; provided that the Company shall use reasonable efforts to make all such
repurchases in excess of the amount due under any Executive Note with a check or
wire transfer of funds. Any notes issued by the Company pursuant to this
paragraph 3(e) shall be subject to any restrictive covenants to which the
Company or any of its subsidiaries is subject at the time of such purchase. In
addition to offsetting amounts outstanding under the Executive Note issued to
the Company hereunder, the Company may pay the purchase price for such shares by
offsetting any other bona fide debts owed by Executive to the Company. The
purchasers of Executive Stock hereunder shall be entitled to receive customary
representations and warranties from the sellers regarding such sale of shares
(including representations and warranties regarding good title to such shares,
free and clear of any liens or encumbrances) and to require all sellers'
signatures be guaranteed by a national bank or reputable securities broker.
(f) The right of the Company and the Investors to repurchase
Executive Stock pursuant to this paragraph 3 shall not terminate.
(g) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Stock by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and its Subsidiaries debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Executive Stock hereunder which the
Company is otherwise entitled or required to make, the time periods provided in
this paragraph 3 shall be suspended, and the Company may make such repurchases
as soon as it is permitted to do so under such restrictions.
4. Put Option.
(a) In the event of a Termination for any reason other than
(i) Executive's death or Permanent Disability, (ii) Executive's Termination with
Cause or (iii) Executive's Termination without Good Reason, the holder of
Executive Stock (whether such holder is Executive or one or more of Executive's
transferees) shall have the right to require the Company to repurchase all or
any shares of Executive Stock held by the Executive at the Put Price (the "Put")
by delivering a written notice to the Company specifying the number of shares to
be purchased (the "Put Notice") within 90 days after the Termination.
(b) The Put Notice shall set forth the number and class of
shares of Executive Stock to be Put to the Company. Upon the delivery of the Put
Notice, the Company shall in good faith promptly determine the Put Price as
provided hereunder, and subject to the provisions hereof within 30 days after
the determination of the Put Price, the Company shall purchase and the holder
5
<PAGE> 6
of the Executive Stock shall sell the number of shares of Executive Stock
specified in the Put Notice at a mutually agreeable time and place (the "Put
Closing").
(c) At the Put Closing, the Executive shall deliver to the
Company certificates representing the Executive Stock to be repurchased by the
Company free and clear of all liens and encumbrances and duly endorsed in blank
or accompanied by duly executed forms of assignment (with signatures
guaranteed), and the Company shall deliver to the Executive the Put Price by
cancellation of the Executive Note or by cashier's or certified check payable to
the Investor or by wire transfer of immediately available funds to an account
designated by the Executive; provided that if and to the extent any such
purchase for cash is prohibited by the provisions of applicable state law or by
the provisions of the Company's or its subsidiaries' debt agreements or would
cause the Company to violate any minimum working capital level in any such debt
agreements (set at 110% of the required level for purposes of this Agreement),
the amount of the Put Price which is not able to be paid in cash shall be paid
for by the issuance of subordinated promissory notes in form and substance
reasonably satisfactory to the Executive with the principal amount payable in
three equal annual installments beginning on the first anniversary of issuance,
bearing interest (payable annually) at a floating rate per annum equal to the
highest interest rate then being charged to the Company under any revolving
working capital credit facility; provided that the Executive shall be entitled
to rescind any portion of the exercised Put if any portion of the Put Price
would be payable by a note.
(d) The "Put Price" for each share of Executive Stock shall be
equal to the Fair Market Value thereof
(e) The right of the Executive to Put shares of Executive
Stock pursuant to this paragraph 4 shall terminate upon the first to occur of
the Sale of the Company or a Qualified Public Offering.
(f) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Executive Stock by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and its Subsidiaries debt and equity financing agreements. If any
such restrictions prohibit the repurchase of Executive Stock hereunder which the
Company is otherwise entitled or required to make, the time periods provided in
this paragraph 4 shall be suspended, and shall recommence when the Company may
make such repurchases under such restrictions.
5. Restrictions on Transfer. Executive shall not sell,
transfer, assign, pledge, or otherwise dispose of any interest in any shares of
Executive Stock (each, a "Transfer"), except with the consent of the Board of
Directors (the "Board") or pursuant to paragraphs 2 and 3 of the Securityholders
Agreement of even date.
6. Legend. Each note or certificate evidencing Executive Stock
pursuant to the terms of this Agreement shall be stamped or otherwise imprinted
with a legend in substantially the following form:
6
<PAGE> 7
"The securities represented by this certificate are subject to
a Executive Stock Agreement dated as of April 2, 1998 among
the issuer of such securities (the "Company") and the
Executive named therein, as amended and modified from time to
time. A copy of such Executive Stock Agreement shall be
furnished without charge by the Company to the holder hereof
upon written request."
The Company shall imprint such legend on certificates evidencing Executive Stock
outstanding as of the date hereof.
7. Definitions.
"Cause" shall have the definition provided in the Employment
Agreement between the Company and Executive of even date herewith.
"Company Stock" shall have the meaning set forth in the
preamble of this Agreement.
"Employment Agreement" shall mean the employment agreement
between Aircraft Service International Group, Inc. and Executive of even date.
"Executive Stock" shall include Executive Stock in the hands
of any holder other than Executive (except for the Company and the Investors and
except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Executive Stock shall succeed to all rights
and obligations attributable to Executive as a holder of Executive Stock
hereunder. Executive Stock shall also include shares of the Company's capital
stock issued with respect to Executive Stock by way of a stock split, stock
dividend or other recapitalization.
"Fair Market Value" of each share of Executive Stock means the
average of the closing prices of the sales of each class of Executive Stock on
all securities exchanges on which the Company Stock may at the time be listed,
or, if there have been no sales on any such exchange on any day, the average of
the highest bid and lowest asked prices on all such exchanges at the end of such
day, or, if on any day a class of Executive Stock is not so listed, the average
of the representative bid and asked prices quoted in the NASDAQ System as of
4:00 P.M., New York time, or, if on any day a class of Executive Stock is not
quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau Incorporated, or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which the Fair Market Value is being determined and the 20 consecutive business
days prior to such day. If at any time a class of Executive Stock is not listed
on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the Fair Market Value shall be the fair value of the
share of Executive Stock determined in good faith by the Board (without taking
into account the effect of any contemporaneous repurchase of Unvested Shares
under paragraph 4 hereof), which determination shall not require an independent
appraisal of the value of the share of Executive Stock.
7
<PAGE> 8
"Good Reason" shall mean the Constructive Termination (as
defined in the Employment Agreement) of the Executive.
"Independent Third Party" means any person (i) who,
immediately prior to the contemplated transaction, does not own Company Stock
representing in excess of 5% of the Company's Voting Power, (ii) who is not
controlling, controlled by or under common control with any such person and
(iii) who is not the spouse or descendant (by birth or adoption) of any such
person.
"Investors" means each of John Hancock Mutual Life Insurance
Company and CIBC Wood Gundy Ventures, Inc.
"1933 Act" means the Securities Act of 1933, as amended from
time to time.
"Original Cost" of each share of Common Stock purchased
hereunder shall be equal to $100 (as proportionately adjusted for all subsequent
stock splits, stock dividends and other recapitalizations).
"Permanent Disability" means a mental incapacity or physical
disability of the Executive, rendering him unable to engage in his usual duties
for a period of ninety (90) days or more, whether consecutive or not, within any
twelve (12) consecutive month period, and shall be determined in good faith by
the Board of Directors of the Company.
"Public Sale" means any sale pursuant to a registered public
offering under the 1933 Act or any sale to the public pursuant to Rule 144
promulgated under the 1933 Act effected through a broker, dealer or market
maker.
"Qualified Public Offering" means the sale, in an underwritten
public offering by the Company registered under the 1933 Act, of shares of
Common Stock having an aggregate offering value of at least $35 million and a
per share price for each class of Company Stock of at least four times Original
Cost.
"Sale of the Company" means the sale of the Company to an
Independent Third Party or affiliated group of Independent Third Parties
pursuant to which such party or parties acquire (i) capital stock of the Company
possessing a majority of the Company's Voting Power (whether by merger,
consolidation or sale or transfer of the Company's capital stock) or (ii) all or
substantially all of the Company's assets determined on a consolidated basis.
"Securityholders Agreement" means the securityholders
agreement of even date between the Company, John Hancock Mutual Life Insurance
Company, CIBC Wood Gundy Ventures, Inc., the Danielle Schwartz Trust and certain
other persons named therein.
8
<PAGE> 9
"Subsidiary" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"Voting Power" means, with respect to each shares of Company
Stock as determined on a fully-diluted basis, one (1) vote per share with
respect to the Class A Common Stock and Class B Common Stock (whether designated
as voting or nonvoting).
8. Notices. Any notice provided for in this Agreement must be
in writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
To the Company:
Ranger Aerospace Corporation
GSP International Airport
Box 12233
Greenville, SC 29612
Attn: Chief Financial Officer
With copies (which shall not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Telephone: (312) 861-2288
Facsimile: (312) 861-2200
Attention: William S. Kirsch, P.C.
To Executive:
Stephen D. Townes
318 Scarborough Drive
Greer, SC 29650
Telephone: (864) 848-2760
Facsimile: (864) 848-2759
9
<PAGE> 10
To the Investors:
CIBC Wood Gundy Ventures, Inc.
425 Lexington Avenue, 3rd Floor
New York, NY 10017
Telephone: (212) 885-4400
Facsimile: (212) 885-4493
Attention: Jay Levine
John Hancock Mutual Life Insurance Company
John Hancock Place
Box 111
Boston, MA 82117
Telephone: (617) 572-1605
Facsimile: (617) 572-1606
Attention: Dana Donovan
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
9. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Executive Stock in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Executive Stock as the owner of
such stock for any purpose. Notwithstanding the preceding sentence and the
Securityholders Agreement of even date, Executive may pledge all shares of
Executive Stock to the Company to secure payment of the Executive Note.
(b) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement, those documents
expressly referred to herein and other documents of even date herewith embody
the complete agreement and understanding among the parties and supersede and
preempt any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
10
<PAGE> 11
(d) Counterparts. This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company, the Investors and their respective successors and
assigns (including subsequent holders of Executive Stock); provided that the
rights and obligations of Executive under this Agreement shall not be assignable
except in connection with a permitted transfer of Executive Stock hereunder.
(f) Choice of Law. The corporate law of the State of Delaware
shall govern all questions concerning the relative rights of the Company or its
stockholders. All other questions con cerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits hereto shall
be governed by the internal law, and not the law of conflicts, of the State of
Delaware.
(g) Remedies. Each of the parties to this Agreement (including
the Investors) shall be entitled to enforce its rights under this Agreement
specifically, to recover damages and costs (including reasonable attorney's
fees) caused by any breach of any provision of this Agreement and to exercise
all other rights existing in its favor. The parties hereto agree and acknowledge
that money damages would not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction (without posting any
bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only by (i) the Company (ii) the holders of a majority of
the Voting Power of Executive Stock and (iii) with respect to Section 2 only,
the holders of a majority of the Voting Power held by Investors voting as a
single class.
(i) Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which the Company's chief executive office is located,
the time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or holiday.
10. Third Party Beneficiaries. Investors shall be deemed to be
third party beneficiaries of the provisions of this Agreement which specifically
reference them. No other third party beneficiaries are intended or shall be
deemed to be created hereby.
* * * *
11
<PAGE> 12
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
RANGER AEROSPACE CORPORATION
By: /s/ STEPHEN D. TOWNES
-----------------------------
Its: President and CEO
----------------------------
/s/ STEPHEN D. TOWNES
--------------------------------
STEPHEN D. TOWNES
Agreed and Accepted:
JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By: /s/ D. DANA DONOVAN
-------------------------------
Its: Senior Investment Officer
------------------------------
CIBC WOOD GUNDY VENTURES, INC.
By: Illegible
-------------------------------
Its: Managing Director
------------------------------
12
<PAGE> 13
ANNEX A
PROMISSORY NOTE
$266,300 April 1, 1998
For value received, Stephen D. Townes ("Promisor") promises to
pay to the order of Ranger Aerospace Corporation, a Delaware corporation (the
"Company"), the aggregate principal sum of $266,300. This Note was issued
pursuant to and is subject to the terms of the Executive Stock Agreement, dated
as of the date hereof, between the Company and Promisor (the "Executive Stock
Agreement"). Unless otherwise indicated herein, capitalized terms used in this
Note have the meaning set forth in the Executive Stock Agreement.
Interest shall accrue on a daily basis on the outstanding
principal amount of this Note at a rate equal to the lesser of (i) 9.5% per
annum, compounded annually, computed on the basis of a 360 day year and the
actual number of days elapsed or (ii) the highest rate permitted by applicable
law, and shall be payable at such time as the principal of this Note becomes due
and payable.
Payments of principal of, and accrued and unpaid interest
under, this Note shall be due and payable on demand.
Payments of principal of, and accrued and unpaid interest
under, this Note shall be due and payable upon Executive's receipt of proceeds
from the transfer of any Executive Stock (other than a transfer to a Permitted
Transferee, as defined in, and in accordance with, the Securityholders
Agreement) in the full amount of such proceeds or such lesser amount as is
necessary to pay the full amount of outstanding principal of and accrued
interest under this Note and for Promisor to otherwise fully and finally
discharge its obligations under this Note. Promisor may, at his option, pay all
or any portion of the principal of, and accrued and unpaid interest under, this
Note at any time prior to the maturity hereof without penalty or premium.
Promisor may, at his option, pay all or any portion of amounts due under this
Note by surrendering to the Company shares of Executive Stock having a Fair
Market Value equal to the amount of such payment. Any payment hereunder shall be
applied first to pay accrued and unpaid interest under this Note and second to
reduce the outstanding principal amount of this Note.
The amounts due under this Note are secured by a pledge of the
Pledged Shares (as such term is defined in the Pledge Agreement, dated as of the
date hereof, between Promisor and the Company). Any cash dividends declared and
paid with respect to the Pledged Shares shall be payable directly to the Company
and shall be applied to reduce the outstanding principal amount (and any
interest thereon) of this Note and any cash dividends paid to Promisor with
respect to the Pledged Shares will be promptly remitted to the Company and shall
be applied to reduce the outstanding principal amount (and any interest thereon)
of this Note.
1
<PAGE> 14
Notwithstanding anything to the contrary contained herein or
in the Executive Stock Agreement, it is expressly agreed that the Company or any
subsequent holder of this Note shall look only to the Pledged Shares with
respect to aggregate Defaults in excess of the sum of (i) 25% of the original
principal amount of this Note and (ii) 25% of all interest (both paid and
unpaid) accrued on the Note, it being understood that, with respect to such
amounts, this Note shall be without recourse to Promisor with respect to
aggregate Defaults exceeding such amount.
In the event Promisor fails to pay any amounts due hereunder
when due, Promisor shall pay to the holder hereof, in addition to such amounts
due, all costs of collection, including reasonable attorneys fees.
Promisor, or his successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of Promisor hereunder.
Any failure by the Company to exercise any right hereunder
shall not be construed as a waiver of its right to exercise the same or any
other right hereunder at any other time.
This Note and all rights hereunder shall be governed by the
internal laws, and not the laws of conflicts, of the State of Florida.
* * * *
2
<PAGE> 15
IN WITNESS WHEREOF, this has been executed as of the date
first above written.
RANGER AEROSPACE CORPORATION
By: /s/ STEPHEN D. TOWNES
-----------------------------
Its: President and CEO
----------------------------
/s/ STEPHEN D. TOWNES
-------------------------------
STEPHEN D. TOWNES
3
<PAGE> 16
ANNEX B
RANGER AEROSPACE CORPORATION
EXECUTIVE STOCK PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of April 2, 1998, between
Stephen D. Townes ("Pledgor"), and Ranger Aerospace Corporation, a Delaware
corporation (the "Company").
The Company and Pledgor are parties to an Executive Stock
Agreement of even date, pursuant to which Pledgor purchased 2,663 shares of the
Company's Class A Common Stock, $.01 par value per share and (the "Executive
Stock"), for an aggregate purchase price of $266,300. The Company has allowed
Pledgor to purchase the Pledged Shares by delivery to the Company of a note (the
"Note") in the aggregate principal amount of $266,300. This Pledge Agreement
provides the terms and conditions upon which the Note is secured by a pledge to
the Company of the Pledged Shares.
NOW, THEREFORE, in consideration of the premises contained
herein and other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, and in order to induce the Company to accept the
Note as payment for the Pledged Shares, Pledgor and the Company hereby agree as
follows:
1. Pledge. Pledgor hereby pledges to the Company, and grants
to the Company a security interest in, the Executive Stock and any other
securities of the Company held by Pledgor ("Pledged Shares") as security for the
prompt and complete payment when due of the unpaid principal of and interest on
the Note and full payment and performance of the obligations and liabilities of
Pledgor hereunder.
2. Delivery of Pledged Shares. Upon the execution of this
Pledge Agreement and, thereafter, immediately upon Pledgor's receipt of any
additional Pledged Shares, Pledgor shall deliver to the Company the
certificate(s) representing the Pledged Shares, together with duly executed
forms of assignment sufficient to transfer title thereto to the Company.
3. Voting Rights; Cash Dividends. Notwithstanding anything to
the contrary contained herein, during the term of this Pledge Agreement until
such time as there exists a default in the payment of principal or interest on
the Note or any other default under the Note or hereunder, Pledgor shall be
entitled to all voting rights with respect to the Pledged Shares and shall be
entitled to receive all cash dividends paid in respect of the Pledged Shares.
Upon the occurrence of and during the continuance of any such default, Pledgor
shall no longer be able to vote the Pledged
1
<PAGE> 17
Shares and the Company shall retain all such cash dividends payable on the
Pledged Shares as additional security hereunder.
4. Stock Dividends; Distributions, etc. If, while this Pledge
Agreement is in effect, Pledgor becomes entitled to receive or receives any
securities or other property in addition to, in substitution of, or in exchange
for any of the Pledged Shares (whether as a distribution in connection with any
recapitalization, reorganization or reclassification, a stock dividend or
otherwise), Pledgor shall accept such securities or other property on behalf of
and for the benefit of the Company as additional security for Pledgor's
obligations under the Note and shall promptly deliver such additional security
to the Company together with duly executed forms of assignment, and such
additional security shall be deemed to be part of the Pledged Shares hereunder.
5. Default. If Pledgor defaults in the payment of the
principal or interest under the Note when it becomes due (whether upon demand,
acceleration or otherwise) or any other event of default under the Note or this
Pledge Agreement occurs (including the bankruptcy or insolvency of Pledgor), the
Company may exercise any and all the rights, powers and remedies of any owner of
the Pledged Shares (including the right to vote the shares and receive dividends
and distributions with respect to such shares) and shall have and may exercise
without demand any and all the rights and remedies granted to a secured party
upon default under the Uniform Commercial Code of the State of Florida or
otherwise available to the Company under applicable law. Without limiting the
foregoing, the Company is authorized to sell, assign and deliver at its
discretion, from time to time, all or any part of the Pledged Shares at any
private sale or public auction, on not less than ten days written notice to
Pledgor, at such price or prices and upon such terms as the Company may deem
advisable. Pledgor shall have no right to redeem the Pledged Shares after any
such sale or assignment. At any such sale or auction, the Company may bid for,
and become the purchaser of, the whole or any part of the Pledged Shares offered
for sale. In case of any such sale, after deducting the costs, attorneys' fees
and other expenses of sale and delivery, the remaining proceeds of such sale
shall be applied to the principal of and accrued interest on the Note; provided
that after payment in full of the indebtedness evidenced by the Note, the
balance of the proceeds of sale then remaining shall be paid to Pledgor and
Pledgor shall be entitled to the return of any of the Pledged Shares remaining
in the hands of the Company. Pledgor shall be liable for any deficiency if the
remaining proceeds are insufficient to pay the indebtedness under the Note in
full, including the fees of any attorneys employed by the Company to collect
such deficiency.
6. Costs and Attorneys' Fees. All costs and expenses
(including reasonable attorneys' fees) incurred in exercising any right, power
or remedy conferred by this Pledge Agreement or in the enforcement thereof,
shall become part of the indebtedness secured hereunder and shall be paid by
Pledgor or repaid from the proceeds of the sale of the Pledged Shares hereunder.
7. Payment of Indebtedness and Release of Pledged Shares. Upon
payment in full of the indebtedness evidenced by the Note, the Company shall
surrender the Pledged Shares to Pledgor together with all forms of assignment.
2
<PAGE> 18
8. No Other Liens; No Sales or Transfers. Pledgor hereby
represents and warrants that he has good and valid title to all of the Pledge
Shares, free and clear of all liens, security interests and other encumbrances,
and Pledgor hereby covenants that, until such time as all of the outstanding
principal of and interest on the Note has been repaid, Pledgor shall not (i)
create, incur, assume or suffer to exist any pledge, security interest,
encumbrance, lien or charge of any kind against the Pledged Shares or Pledgor's
rights or a holder thereof, other than pursuant to this Agreement and the
Securityholders Agreement of even date, or (ii) sell or otherwise transfer any
Pledged Shares or any interest therein.
9. Further Assurances. Pledgor agrees that at any time and
from time to time upon the written request of the Company, Pledgor shall execute
and deliver such further documents (including UCC financing statements) and do
such further acts and things as the Company may reasonably request in order to
effect the purposes of this Pledge Agreement.
10. Severability. Any provision of this Pledge Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
11. No Waiver; Cumulative Remedies. The Company shall not by
any act, delay, omission or otherwise be deemed to have waived any of its rights
or remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise have
on any future occasion. No failure to exercise nor any delay in exercising on
the part of the Company, any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
12. Waivers, Amendments; Applicable Law. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended
except by an instrument in writing, duly executed by the parties hereto. This
Agreement and all obligations of the Pledgor hereunder shall together with the
rights and remedies of the Company hereunder, inure to the benefit of the
Company and its successors and assigns. This Pledge Agreement shall be governed
by, and be construed and interpreted in accordance with, the laws of the State
of Florida.
* * * *
3
<PAGE> 19
IN WITNESS WHEREOF, this Pledge Agreement has been executed as
of the date first above written.
RANGER AEROSPACE CORPORATION
By: /s/ STEPHEN D. TOWNES
----------------------------
Its: President & CEO
----------------------------
/s/ STEPHEN D. TOWNES
--------------------------------
STEPHEN D. TOWNES
4
<PAGE> 20
ANNEX C
________ __, 1998
ELECTION TO INCLUDE STOCK IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned purchased shares of Class A Common Stock, par
value $.01 per share (the "Shares"), of Ranger Aerospace Corporation (the
"Company") on ______ __,1998. Under certain circumstances, the Company has the
right to repurchase the Shares at cost from the undersigned (or from the holder
of the Shares, if different from the undersigned) should the undersigned cease
to be employed by the Company or its subsidiaries. Hence, the Shares are subject
to a substantial risk of forfeiture and are nontransferable. The undersigned
desires to make an election to have the Shares taxed under the provision of Code
Section 83(b) at the time he purchased the Shares.
Therefore, pursuant to Code Section 83(b) and Treasury
Regulation Section 1.83-2 promulgated thereunder, the undersigned hereby makes
an election, with respect to the Shares (described below), to report as taxable
income for calendar year 1998 the excess (if any) of the Shares' fair market
value on _______ __, 1998 over purchase price thereof.
The following information is supplied in accordance with
Treasury Regulation Section 1.83-2(e):
1. The name, address and social security number of the
undersigned:
Stephen D. Townes
318 Scarborough Drive
Greer, SC 29650
SSN: ###-##-####
2. A description of the property with respect to which the
election is being made: _______ shares of Ranger Aerospace Corporation Class A
Common Stock, par value $.01 per share.
3. The date on which the property was transferred: _________
__, 1998. The taxable year for which such election is made: calendar 1998.
5
<PAGE> 21
4. The restrictions to which the property is subject: the
Class A Common Stock shall vest over time. If at any time during the first three
years after the purchase of the Shares the undersigned ceases to be employed by
the Company or any of its subsidiaries, the unvested portion of the Shares shall
be subject to repurchase by the Company at cost or fair market value.
5. The fair market value on _______ __, 1998 of the property
with respect to which the election is being made, determined without regard to
any lapse restrictions: $______ per share of Class A Common Stock.
6. The amount paid for such property: $______ per share of
Class A Common Stock.
A copy of this election has been furnished to the Secretary of
the Company pursuant to Treasury Regulations Section 1.83-2(e)(7).
Dated: April 2, 1998 /s/ STEPHEN D. TOWNES
------------------ ---------------------------
STEPHEN D. TOWNES
6
<PAGE> 1
EXHIBIT 10.6
RANGER AEROSPACE CORPORATION
INVESTOR STOCK AGREEMENT
THIS AGREEMENT is made as of April 2, 1998, between Ranger
Aerospace Corporation, a Delaware corporation (the "Company"), and Gene Z.
Salkind, M.D., in his sole capacity as Trustee of the Danielle Schwartz Trust
UAD 10/1/93 ("Investor") and George Schwartz ("Chairman").
The Company and the Investor desire to enter into an agreement
pursuant to which Investor shall acquire 5,964.8 shares of the Company's Class A
Common Stock, par value $.01 per share (the "Class A Common Stock") at a price
of $100 per share. Together, the Class A Common, the Company's Class B Common
Stock par value $.01 per share (the "Class B Common" and, together with the
Class A Common, the "Common Stock"), the Company's 10 1/2 Subordinated Notes
(the "Notes") and the Company's Series A Preferred Stock (the "Preferred Stock")
are referred to herein as the "Company Stock." All of such shares of Company
Stock acquired hereunder and all shares of Company Stock hereafter acquired by
Investor are referred to herein as "Investor Stock." Certain definitions are set
forth in paragraph 5 of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Acquisition, Purchase and Sale of Investor Stock.
(a) Upon execution of this Agreement, Investor shall purchase,
and the Company shall sell 5,964.8 shares of Class A Common for an aggregate
purchase price of $596,480. The Company shall deliver to Investor the
certificate representing such shares of Class A Common, and Investor shall
deliver to the Company a promissory note in the form of Annex A attached hereto
in an aggregate principal amount of $596,480 (the "Investor Note"). Investor's
obligations under the Investor Note shall be secured by a pledge to the Company
of the Investor Stock purchased hereunder, and in connection therewith, Investor
shall enter into a pledge agreement in the form of Annex B attached hereto.
(b) In connection with the purchase and sale of Investor Stock
hereunder, Investor represents and warrants to the Company that:
(i) The Investor Stock to be acquired by Investor
pursuant to this Agreement shall be acquired for Investor's own account
and not with a view to, or intention of, distribution thereof in
violation of the 1933 Act, or any applicable state securities laws, and
the Investor Stock shall not be disposed of in contravention of the
1933 Act or any applicable state securities laws.
(ii) Investor is sophisticated in financial matters
and is able to evaluate the risks and benefits of the investment in the
Investor Stock.
<PAGE> 2
(iii) Investor is able to bear the economic risk of his
investment in the Investor Stock for an indefinite period of time.
Investor understands that the Investor Stock has not been registered
under the 1933 Act and, therefore, cannot be sold unless subsequent ly
registered under the 1933 Act or an exemption from such registration is
available.
(iv) Investor has had an opportunity to ask questions and
receive answers concerning the terms and conditions of the offering of
Investor Stock and has had full access to (A) such other information
concerning the Company as he has requested and (B) such other
information which is necessary and desirable to make an informed
investment decision regarding the purchase of Investor Stock hereunder.
Investor has reviewed a copy of the Share Purchase Agreement, dated as
of March 14, 1998 and as amended as of the date hereof, between the
Company, Viad Corp. and Viad Service Company, Limited and the
Securities Purchase Agreement dated as of the date hereof, between the
Company, John Hancock Mutual Life Insurance Company and CIBC Wood Gundy
Ventures, Inc., and the other Persons named therein, and Investor is
familiar with the transactions contemplated thereby.
(v) This Agreement constitutes the legal, valid and
binding obligation of Investor, enforceable in accordance with its
terms, and the execution, delivery and performance of this Agreement by
Investor does not and shall not conflict with, violate or cause a
breach of any agreement, contract or instrument to which Investor is a
party or any judgment, order or decree to which Investor is subject.
(c) As an inducement to the Company to issue the Investor
Stock to Investor, and as a condition thereto, Investor and Chairman acknowledge
and agree that:
(i) neither the issuance of the Investor Stock to
Investor nor any provision contained herein shall entitle Chairman to
remain in the employment of the Company or its Subsidiaries or affect
the right of the Company to terminate Chairman's employment at any
time; and
(ii) the Company shall have no duty or obligation to
disclose to Investor, and Investor shall have no right to be advised
of, any material information regarding the Company or its Subsidiaries
at any time prior to, upon or in connection with the repurchase of
Investor Stock upon the Chairman's Termination or as otherwise provided
hereunder.
(d) The Company and Investor acknowledge and agree that this
Agreement has been executed and delivered, and the Investor Stock has been
issued hereunder, in connection with and as a part of the compensation and
incentive arrangements between ASIG and Chairman.
2
<PAGE> 3
2. Repurchase Option.
(a) In the event of Chairman's Termination for Cause, the
Investor Stock (whether held by Investor or one or more of Investor's
transferees) shall be subject to repurchase by the Company pursuant to the terms
and conditions set forth in this paragraph 2 (the "Repurchase Option").
(b) The purchase price for each share of Investor Stock
purchased pursuant to this paragraph 2 shall be the Fair Market Value of such
share (determined as of the date of Chairman's Termination).
(c) The Company may elect to purchase all of the Investor
Stock by delivering written notice (the "Repurchase Notice") to the holder or
holders of Investor Stock within 90 days after the Chairman's Termination. The
Repurchase Notice shall set forth the number of shares of each class of Investor
Stock to be acquired from each holder of Investor Stock, the aggregate consid
eration to be paid for such shares and the time and place for the closing of the
transaction. The number of shares to be repurchased by the Company shall first
be satisfied to the extent possible from the shares of Investor Stock held by
Investor at the time of delivery of the Repurchase Notice. If the number of
shares of Investor Stock then held by Investor is less than the total number of
shares of Investor Stock the Company has elected to purchase, the Company shall
purchase the remaining shares elected to be purchased from the other holder(s)
of Investor Stock under this Agreement, pro rata according to the number of
shares of Investor Stock held by such other holder(s) at the time of delivery of
such Repurchase Notice (determined as close as practicable to the nearest whole
shares).
(d) The closing of the purchase of Investor Stock pursuant to
the Repurchase Option shall take place on the date designated by the Company in
the Repurchase Notice, which date shall not be more than thirty (30) days nor
less than five days after the delivery of such notice. The Company shall pay for
the Investor Stock to be purchased pursuant to the Repurchase Option by
delivery, at the option of the Company, of (i) cancellation or exchange of the
Investor Note, (ii) a check or wire transfer of funds, (iii) any combination of
(i) or (ii) in the aggregate amount of the purchase price for such shares. In
addition, the Company may pay the purchase price for such shares by offsetting
amounts outstanding under the Investor Note issued to the Company hereunder and
any other bona fide debts owed by Investor or Chairman to the Company. The
Company shall be entitled to receive customary representations and warranties
from the sellers regarding such sale of shares (including representations and
warranties regarding good title to such shares and that such shares are free and
clear of any liens or encumbrances) and to require all sellers' signatures be
guaranteed by a national bank or reputable securities broker.
(e) The right of the Company to repurchase Investor Stock
pursuant to this paragraph 2 shall terminate 90 days after Chairman's
Termination unless the Company has otherwise made a timely election to
repurchase Investor Stock pursuant to paragraph 2(c).
(f) Notwithstanding anything to the contrary contained in this
Agreement, all repurchases of Investor Stock by the Company shall be subject to
applicable restrictions contained in the Delaware General Corporation Law and in
the Company's and its Subsidiaries debt and equity
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<PAGE> 4
financing agreements. If any such restrictions prohibit the repurchase of
Investor Stock hereunder which the Company is otherwise entitled to make, the
time periods provided in this paragraph 2 shall be suspended, and the Company
may make such repurchases as soon as it is permitted to do so under such
restrictions; provided that the purchase price for such shares of Investor Stock
shall be determined as of the date of Chairman's Termination and shall accrue
interest at an annual rate of 9.5% from the date of Chairman's Termination to
the date on which such purchase price is paid.
3. Restrictions on Transfer. Investor shall not sell,
transfer, assign, pledge, or otherwise dispose of any interest in any shares of
Investor Stock (each, a "Transfer"), except with the consent of the Board of
Directors (the "Board") and pursuant to paragraphs 2 and 3 of the
Securityholders Agreement of even date. Any prospective transferee should
execute and deliver to the Company an instrument evidencing its agreement to be
bound to the provisions hereof.
4. Legend. Each note or certificate evidencing Investor Stock
issued pursuant to the terms of this Agreement shall be stamped or otherwise
imprinted with a legend in substantially the following form:
"The securities represented by this certificate are subject to
an Investor Stock Agreement dated as of April 2, 1998 among
the issuer of such securities (the "Company") and the Investor
named therein, as amended and modified from time to time. A
copy of such Investor Stock Agreement shall be furnished
without charge by the Company to the holder hereof upon
written request."
5. Definitions.
"ASIG" means Aircraft Services International Group, Inc., a
Delaware corporation.
"Board" has the meaning set forth in paragraph 3.
"Cause" shall have the meaning set forth in the Chairman
Agreement.
"Chairman Agreement" means the Chairman Agreement of even date
herewith between the Company, ASIG, Tioga Capital Corporation and George
Schwartz.
"Fair Market Value" means, with respect to each share of
Investor Stock, the average of the closing prices of the sales of Investor Stock
of such class on all securities exchanges on which such class of Investor Stock
may at the time be listed, or, if there have been no sales on any such exchange
on any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day a class of Investor Stock is
not so listed, the average of the representative bid and asked prices quoted in
the NASDAQ System as of 4:00 P.M., New York time, or, if on any day the class of
Investor Stock is not quoted in the NASDAQ System, the average of the highest
bid and lowest asked prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau Incorporated, or any similar
successor organization, in each such case averaged over a period of 21 days
consisting of the day as of which the Fair Market
4
<PAGE> 5
Value is being determined and the 20 consecutive business days prior to such
day. If at any time a class of Investor Stock is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the Fair
Market Value shall be the fair value of such share of Investor Stock shall be
determined in good faith by the Board; provided that if Chairman disagrees with
the Board's determination of fair value, the Chairman shall provide its
indication of Fair Market Value within ten (10) days. Then, the Board shall
select an appraiser of nationally recognized standing qualified in valuing
interests in businesses such as the Investor Stock (a "Qualified Appraiser"),
Chairman shall select a Qualified Appraiser, and the two Qualified Appraisers
will together select a third Qualified Appraiser who shall determine the Fair
Market Value of the Investor Stock. The determination of the third Qualified
Appraiser shall be final, nonappealable and binding upon the parties and the
fees and expenses of all three Qualified Appraisers shall be borne by the party
whose indication of Fair Market Value is farther from the determination of the
Qualified Appraiser. For example, if the Board determines Fair Market Value to
be $100 per share and Chairman indicates Fair Market Value is $200 per share,
and the Qualified Appraiser determines Fair Market Value to be $120 per share,
the fees and expenses of all three Qualified Appraisers shall be borne by
Chairman.
"Independent Third Party" means any person (other than
Chairman and the executive employees of the Company and its Subsidiaries) (i)
who, immediately prior to the contemplated transaction, does not own Company
Stock representing in excess of 5% of the Company's Voting Power, (ii) who is
not controlling, controlled by or under common control with any such person, or
(iii) who is not the spouse or descendant (by birth or adoption) of any such
person.
"Investor Stock" includes Investor Stock in the hands of any
holder other than Investor (except for the Company and the Others Investors and
except for transferees in a Public Sale), and except as otherwise provided
herein, each such other holder of Investor Stock shall succeed to all rights and
obligations attributable to Investor as a holder of Investor Stock hereunder.
Investor Stock shall also include shares of the Company's capital stock issued
with respect to Investor Stock by way of a stock split, stock dividend or other
recapitalization.
"1933 Act" means the Securities Act of 1933, as amended from
time to time.
"Permanent Disability" means a disability which, in the good
faith judgment of the Board of Directors, renders the Chairman mentally
incapacitated or physically disabled so that he is unable to engage in his usual
duties for a period of ninety (90) days or more, whether consecutive or not,
within any twelve (12) consecutive month period.
"Public Sale" means any sale pursuant to a registered public
offering under the 1933 Act or any sale to the public pursuant to Rule 144
promulgated under the 1933 Act effected through a broker, dealer or market
maker.
"Sale of the Company" means the sale of the Company to an
Independent Third Party or affiliated group of Independent Third Parties
pursuant to which such party or parties acquire (i) capital stock of the Company
possessing a majority of the Company's Voting Power (whether by
5
<PAGE> 6
merger, consolidation or sale or transfer of the Company's capital stock) or
(ii) all or substantially all of the Company's assets determined on a
consolidated basis.
"Securityholders Agreement" means the securityholders
agreement of even date herewith between the Company, Investor, John Hancock
Mutual Life Insurance Company, CIBC Wood Gundy Ventures, Inc., and certain other
Persons.
"Subsidiary" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"Termination" has the meaning set forth in the Chairman
Agreement.
"Voting Power" means, with respect to each share of Company
Stock as determined on a fully-diluted basis, one (1) vote per share with
respect to each share of Class A Common and each share of Class B Common
(whether designated as voting or nonvoting) and one (1) vote for every $100 of
liquidation value of Preferred Stock or principal amount of Notes.
6. Notices. Any notice provided for in this Agreement must be
in writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
To the Company:
Ranger Aerospace Corporation
GSP International Airport
Box 12233
Greenville, SC 29612
Attention: Chief Financial Officer
With copies (which will not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: William S. Kirsch, P.C.
Telephone: (312) 861-2000
Facsimile: (312) 861-2200
6
<PAGE> 7
To Investor:
Danielle Schwartz Trust, UAD 10/1/93
c/o George Schwartz
Tioga Capital Corporation
644 Santa Helena
Solana Beach, CA 92075
Telephone: (619) 481-5151
Facsimile: (619) 481-8484
with a copy (which shall not constitute notice) to:
Gregory Keever, Esq.
Coudert Brothers
1055 West Seventh Street, 20th Floor
Los Angeles, CA 90017
Telephone: (213) 891-0232
Facsimile: (213) 689-4467
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so
delivered.
7. General Provisions.
(a) Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of Investor Stock in violation of any provision of this
Agreement shall be void, and the Company shall not record such Transfer on its
books or treat any purported transferee of such Investor Stock as the owner of
such stock for any purpose. Notwithstanding the preceding sentence and the
Securityholders Agreement of even date herewith, Investor may pledge all shares
of Investor Stock to the Company to secure payment of the Investor Note.
(b) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(c) Complete Agreement. This Agreement and those documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
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<PAGE> 8
(d) Counterparts. This Agreement may be executed in any number
of counterparts, each of which is deemed to be an original and all of which
taken together constitute one and the same agreement.
(e) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by the Company, Chairman and Investor and their respective successors and
assigns (including subsequent holders of Investor Stock); provided that the
rights and obligations of Investor under this Agreement shall not be assignable
except in connection with a permitted transfer of Investor Stock hereunder; and
provided further that the Company's right to repurchase shares of Investor Stock
pursuant to paragraph 2 shall not be assignable.
(f) Choice of Law. The corporate law of the State of Delaware
shall govern all questions concerning the relative rights of the Company or its
stockholders. All other questions con cerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits hereto shall
be governed by the internal law, and not the law of conflicts, of the State of
Delaware.
(g) Remedies. Each of the parties to this Agreement shall be
entitled to enforce its rights under this Agreement specifically, to recover
damages and costs (including reasonable attorney's fees) caused by any breach of
any provision of this Agreement and to exercise all other
rights existing in its favor. The parties hereto agree and acknowledge that
money damages would not be an adequate remedy for any breach of the provisions
of this Agreement and that any party shall be entitled to specific performance
and/or other injunctive relief (without posting any bond or deposit) from any
court of law or equity of competent jurisdiction in order to enforce or prevent
any violations of the provisions of this Agreement.
(h) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only in a writing signed by the Company and Investor.
(i) Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which the Company's executive office is located, the
time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or holiday.
(j) Information. If at any time after the termination of
George Schwartz's service as Chairman under the Chairman Agreement, Investor and
its Permitted Transferees hold, in the aggregate, in excess of 1% of the
outstanding capital stock of the Company, the Company shall provide to Investor
unaudited quarterly financial statements and audited annual financial statements
within thirty (30) days after such financial statements have been prepared.
8. Third Party Beneficiaries. Except as expressly provided
herein, no third party beneficiaries are intended or shall be deemed to be
created hereby.
* * * *
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
RANGER AEROSPACE CORPORATION,
a Delaware corporation
By: /s/ STEPHEN D. TOWNES
---------------------------
Its: President
---------------------------
DANIELLE SCHWARTZ TRUST,
UAD 10/1/93
By: /s/ GENE Z. SALKIND
---------------------------
Its: Trustee
---------------------------
/s/ GEORGE B. SCHWARTZ
--------------------------------
GEORGE SCHWARTZ
9
<PAGE> 10
ANNEX A
PROMISSORY NOTE
$596,480 April 2, 1998
For value received, the Danielle Schwartz Trust ("Promisor")
promises to pay to the order of Ranger Aerospace Corporation, Inc., a Delaware
corporation (the "Company"), the aggregate principal sum of $596,480. This Note
was issued pursuant to and is subject to the terms of the Investor Stock
Agreement, dated as of the date hereof, between the Company and Promisor (the
"Investor Stock Agreement"). Unless otherwise indicated herein, capitalized
terms used in this Note have the meaning set forth in the Investor Stock
Agreement.
Interest shall accrue on a daily basis on the outstanding
principal amount of this Note at a rate equal to the lesser of (i) 9.5% per
annum, compounded annually, computed on the basis of a 360 day year and the
actual number of days elapsed or (ii) the highest rate permitted by applicable
law, and shall be payable at such time as the principal of this Note becomes due
and payable.
Payments of principal of, and accrued and unpaid interest
under, this Note shall be due and payable on the tenth anniversary of the date
hereof, except as otherwise provided herein or in the Investor Stock Pledge
Agreement of even date herewith (the "Investor Stock Pledge Agreement").
Payments of principal of, and accrued and unpaid interest
under, this Note shall be due and payable upon Investor's receipt of proceeds
from the transfer of any Investor Stock (other than a transfer to a Permitted
Transferee, as defined in, and in accordance with, the Securityholders
Agreement) in the full amount of such proceeds (net of costs of sale and any
taxes attributable thereto) or such lesser amount as is necessary to pay the
full amount of outstanding principal of and accrued interest under this Note and
for Promisor to otherwise fully and finally discharge its obligations under this
Note. Promisor may, at his option, pay all or any portion of the principal of,
and accrued and unpaid interest under, this Note at any time prior to the
maturity hereof without penalty or premium. Promisor may, at his option, pay all
or any portion of amounts due under this Note by surrendering to the Company
shares of Investor Stock having a Fair Market Value equal to the amount of such
payment. Any payment hereunder shall be applied first to pay accrued and unpaid
interest under this Note and second to reduce the outstanding principal amount
of this Note.
The amounts due under this Note are secured by a pledge of the
Pledged Shares (as such term is defined in the Investor Stock Pledge Agreement.
Any cash dividends declared and paid with respect to the Pledged Shares shall be
payable directly to the Company and shall be applied to reduce the outstanding
principal amount (and any interest thereon) of this Note and any cash dividends
paid to Promisor with respect to the Pledged Shares will be promptly remitted to
the Company and shall be applied to reduce the outstanding principal amount (and
any interest thereon) of this Note.
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<PAGE> 11
Notwithstanding anything to the contrary contained herein or
in the Investor Stock Agreement, it is expressly agreed that the Company or any
subsequent holder of this Note shall look only to the Pledged Shares (and not to
the Promisor) with respect to amounts owed under this Note in excess of the sum
of (i) 25% of the outstanding principal amount of this Note and (ii) 25% of all
accrued interest on the Note, it being understood that, with respect to such
amounts, this Note shall be without recourse to Promisor with respect to
aggregate defaults in payment on the Note exceeding such amount.
In the event Promisor fails to pay any amounts due hereunder
when due, Promisor shall pay to the holder hereof, in addition to such amounts
due, all costs of collection, including reasonable attorneys fees.
Promisor, or his successors and assigns, hereby waives
diligence, presentment, protest and demand and notice of protest, demand,
dishonor and nonpayment of this Note, and expressly agrees that this Note, or
any payment hereunder, may be extended from time to time and that the holder
hereof may accept security for this Note or release security for this Note, all
without in any way affecting the liability of Promisor hereunder.
Any failure by the Company to exercise any right hereunder
shall not be construed as a waiver of its right to exercise the same or any
other right hereunder at any other time.
This Note and all rights hereunder shall be governed by the
internal laws, and not the laws of conflicts, of the State of Delaware.
* * * *
2
<PAGE> 12
IN WITNESS WHEREOF, this Promissory Note has been executed as
of the date first above written.
RANGER AEROSPACE CORPORATION,
a Delaware Corporation
By: /s/ STEPHEN D. TOWNES
-----------------------------
Its: President
----------------------------
DANIELLE SCHWARTZ TRUST,
UAD 10/1/93
By: /s/ GENE Z. SALKIND
-----------------------------
Its: Trustee
----------------------------
<PAGE> 13
ANNEX B
RANGER AEROSPACE CORPORATION
INVESTOR STOCK PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of April 2, 1998, between the
Danielle Schwartz Trust ("Pledgor"), and Ranger Aerospace Corporation, a
Delaware corporation (the "Company").
The Company and Pledgor are parties to an Investor Stock
Agreement of even date herewith, pursuant to which Pledgor acquired and
purchased 5,964.8 shares of the Company's Class A Common Stock, $.01 par value
per share (the "Pledged Shares"), for an aggregate purchase price of $596,480.
The Company has allowed Pledgor to purchase the Pledged Shares by delivery to
the Company of a promissory note (the "Note") in the aggregate principal amount
of $596,480. This Pledge Agreement provides the terms and conditions upon which
the Note is secured by a pledge to the Company of the Pledged Shares.
NOW, THEREFORE, in consideration of the premises contained
herein and other good and valuable consideration the receipt and sufficiency of
which are hereby acknowledged, and in order to induce the Company to accept the
Note as payment for the Pledged Shares, Pledgor and the Company hereby agree as
follows:
1. Pledge. Pledgor hereby pledges to the Company, and grants
to the Company a security interest in, the Pledged Shares as security for the
prompt and complete payment when due of the unpaid principal of and interest on
the Note and full payment and performance of the obligations and liabilities of
Pledgor hereunder.
2. Delivery of Pledged Shares. Upon the execution of this
Pledge Agreement, Pledgor shall deliver to the Company the certificate(s)
representing the Pledged Shares, together with duly executed forms of assignment
sufficient to transfer title thereto to the Company.
3. Voting Rights; Cash Dividends. Notwithstanding anything to
the contrary contained herein, during the term of this Pledge Agreement until
such time as there exists a default in the payment of principal or interest on
the Note or any other default under the Note or hereunder, Pledgor shall be
entitled to all voting rights with respect to the Pledged Shares and shall be
entitled to receive all cash dividends paid in respect of the Pledged Shares.
Upon the occurrence of and during the continuance of any such default, Pledgor
shall no longer be able to vote the Pledged Shares and the Company shall retain
all such cash dividends payable on the Pledged Shares as additional security
hereunder.
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<PAGE> 14
4. Stock Dividends; Distributions, etc. If, while this Pledge
Agreement is in effect, Pledgor becomes entitled to receive or receives any
securities or other property as an addition to, in substitution of, or in
exchange for any of the Pledged Shares (whether as a distribution in connection
with any recapitalization, reorganization or reclassification, a stock dividend
or otherwise), Pledgor shall accept such securities or other property on behalf
of and for the benefit of the Company as additional security for Pledgor's
obligations under the Note and shall promptly deliver such additional security
to the Company together with duly executed forms of assignment, and such
additional security shall be deemed to be part of the Pledged Shares hereunder.
5. Default. If Pledgor defaults in the payment of the
principal or interest under the Note when it becomes due (whether upon demand,
acceleration or otherwise) or any other event of default under the Note or this
Pledge Agreement occurs (including the bankruptcy or insolvency of Pledgor), the
Company may exercise any and all the rights, powers and remedies of any owner of
the Pledged Shares (including the right to vote the shares and receive dividends
and distributions with respect to such shares) and shall have and may exercise
without demand any and all the rights and remedies granted to a secured party
upon default under the Uniform Commercial Code of the State of Florida or
otherwise available to the Company under applicable law. Without limiting the
foregoing, the Company is authorized to sell, assign and deliver at its
discretion, from time to time, all or any part of the Pledged Shares at any
private sale or public auction, on not less than ten days written notice to
Pledgor, at such price or prices and upon such terms as the Company may deem
advisable. Pledgor shall have no right to redeem the Pledged Shares after any
such sale or assignment. At any such sale or auction, the Company may bid for,
and become the purchaser of, the whole or any part of the Pledged Shares offered
for sale. In case of any such sale, after deducting the costs, attorneys' fees
and other expenses of sale and delivery, the remaining proceeds of such sale
shall be applied to the principal of and accrued interest on the Note; provided
that after payment in full of the indebtedness evidenced by the Note, the
balance of the proceeds of sale then remaining shall be paid to Pledgor and
Pledgor shall be entitled to the return of any of the Pledged Shares remaining
in the hands of the Company. Pledgor shall be liable for an amount not to exceed
25% of the outstanding principal and accrued interest on the Note for any
deficiency if the remaining proceeds are insufficient to pay the indebtedness
under the Note in full, including the fees of any attorneys employed by the
Company to collect such deficiency.
6. Costs and Attorneys' Fees. All costs and expenses
(including reasonable attorneys' fees) incurred in exercising any right, power
or remedy conferred by this Pledge Agreement or in the enforcement thereof,
shall become part of the indebtedness secured hereunder and shall be paid by
Pledgor or repaid from the proceeds of the sale of the Pledged Shares hereunder.
7. Payment of Indebtedness and Release of Pledged Shares. Upon
payment in full of the indebtedness evidenced by the Note, the Company shall
surrender the Pledged Shares to Pledgor together with all forms of assignment.
8. No Other Liens; No Sales or Transfers. Pledgor hereby
represents and warrants that he has good and valid title to all of the Pledge
Shares, free and clear of all liens, security interests and other encumbrances
(except as expressly contemplated by the Investor Stock Agreement and the
Securityholders Agreement of even date herewith), and Pledgor hereby covenants
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<PAGE> 15
that, until such time as all of the outstanding principal of and interest on the
Note has been repaid, Pledgor shall not (i) create, incur, assume or suffer to
exist any pledge, security interest, encum brance, lien or charge of any kind
against the Pledged Shares or Pledgor's rights or a holder thereof, other than
pursuant to this Agreement and the Securityholders Agreement of even date
herewith, or (ii) sell or otherwise transfer any Pledged Shares or any interest
therein.
9. Further Assurances. Pledgor agrees that at any time and
from time to time upon the written request of the Company, Pledgor shall execute
and deliver such further documents (including UCC financing statements) and do
such further acts and things as the Company may reasonably request in order to
effect the purposes of this Pledge Agreement.
10. Severability. Any provision of this Pledge Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
11. No Waiver; Cumulative Remedies. The Company shall not by
any act, delay, omission or otherwise be deemed to have waived any of its rights
or remedies hereunder, and no waiver shall be valid unless in writing, signed by
the Company, and then only to the extent therein set forth. A waiver by the
Company of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Company would otherwise have
on any future occasion. No failure to exercise nor any delay in exercising on
the part of the Company, any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein provided are cumulative and may be
exercised singly or concurrently, and are not exclusive of any rights or
remedies provided by law.
12. Waivers, Amendments; Applicable Law. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended
except by an instrument in writing, duly executed by the parties hereto. This
Agreement and all obligations of the Pledgor hereunder shall together with the
rights and remedies of the Company hereunder, inure to the benefit of the
Company and its successors and assigns. This Pledge Agreement shall be governed
by, and be construed and interpreted in accordance with, the laws of the State
of Florida.
* * * *
3
<PAGE> 16
IN WITNESS WHEREOF, this Pledge Agreement has been executed as of the
date first above written.
RANGER AEROSPACE CORPORATION
By: /s/ STEPHEN D. TOWNES
-----------------------------
Its: President
----------------------------
DANIELLE SCHWARTZ TRUST
UAD 10/1/93
By: /s/ GENE Z. SALKIND
-----------------------------
Its: Trustee
----------------------------
<PAGE> 1
EXHIBIT 10.7
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of April 2, 1998, by and among STEPHEN D. TOWNES ("Executive"),
and AIRCRAFT SERVICES INTERNATIONAL GROUP, INC., a Delaware corporation (the
"Company").
WHEREAS, the Company desires to employ Executive to render
employment services for the Company; and
WHEREAS, Executive desires and is willing to become employed
by the Company under the terms and conditions hereof.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and Executive hereby
covenant and agree as follows:
(1) Employment. The Company hereby employs Executive and
Executive hereby accepts such employment upon the terms and conditions set forth
herein.
(2) Term. The initial term of this Agreement shall be for a
period of three (3) consecutive years beginning on the 1st day of April 1998 and
ending on the 31st day of March, 2001 (the "Employment Period"), unless further
extended or sooner terminated as herein provided. The Employment Period shall be
automatically renewed for additional terms of one (1) year each, unless the
Company notifies Executive in writing or Executive notifies the Company in
writing of its intention not to renew this Agreement no less than ninety (90)
days prior to the expiration of the then current term. References to this
Agreement's term shall mean the initial term and all successive terms unless the
context clearly indicates otherwise.
(3) Executive's Position and Duties. Executive shall (a) serve
as President and Chief Executive Officer of both the Company and its
stockholder, Ranger Aerospace Corporation ("Ranger"), during the Employment
Period, (b) render such administrative, sales, marketing and other executive and
managerial services to the Company, Ranger and its Subsidiaries as Ranger's
board of directors (the "Board") may from time to time direct, and (c) report to
and take directions from the Board. Executive shall devote his full working time
and attention to the performance of services for the benefit of the Company.
Executive shall present to the Board and to Ranger every acquisition or
investment opportunity in the aerospace and related industries, whether foreign
or domestic, of which Executive becomes aware and desires to pursue. Executive
shall not pursue any such opportunity (as investor or otherwise) unless the
Board has indicated in writing its intention not to pursue such opportunity.
<PAGE> 2
(4) Performance of Duties. Executive will, at all times,
faithfully, industriously, and to the best of Executive's ability, experience
and talents perform his duties and responsibilities to the Company.
(5) Compensation. For all services rendered by Executive under
this Agreement, compensation shall be paid to Executive as follows:
(a) Executive shall be paid a minimum base salary of
$275,000 per year, beginning April 1, 1998 and payable in equal monthly
installments or more frequently as the Company shall determine. The base salary
may from time to time be adjusted by the Company by entering such adjusted base
salary upon Schedule A attached hereto which, when signed by Executive and the
Company, shall become effective as an amendment to this Agreement. At minimum,
the base salary shall adjust automatically on each anniversary hereof by the
then current Consumer Price Index percentage; the Board may elect at any time
hereafter to increase Executive's base salary in its sole discretion.
(b) In addition to Executive's base salary, the Board may,
in its sole discretion, award a bonus to Executive following the end of each
fiscal year during the Employment Period based on Executive's performance and
the Company's operating results in accordance with the management bonus plan to
be adopted by the Board.
(c) In connection with future private placements of equity
securities of the Company, the Company shall offer to Executive the right to
purchase shares of such equity securities, at the price and on other terms
offered for sale by the Company pro rata (based on the aggregate fully diluted
percentage of equity securities of the Company owned by Executive up to an
amount equal to the product determined below in this paragraph (c), and in
connection therewith, the Company shall make additional loans to Executive for
the purpose of acquiring such equity, except that the Company shall not be
obligated, under any circumstances, to loan Executive, in the aggregate, an
amount greater than an amount equal to the product of (i) $1,500,000 multiplied
by (ii) a fraction, the numerator of which is the aggregate number of fully
vested shares of Common Stock held by Executive and his Family Group (as defined
in the Securityholders Agreement dated as of the date hereof) and the
denominator of which is the aggregate number of fully vested shares of Common
Stock, calculated on a fully-diluted basis, held by all employees of the Company
and its Subsidiaries, Executive, and their respective Family Groups on such
date.
(6) Severance Compensation. Upon termination of Executive's
employment by the Company prior to the expiration of the Employment Period other
than (a) for Cause as defined in Paragraph (17) or (b) Executive's choice to
terminate his employment for a reason other than his Constructive Termination as
defined below, the Company shall pay to Executive (subject to the terms hereof)
severance compensation equal to eighteen (18) months (x) of Executive's base
salary at the rate of base salary in effect immediately preceding the date of
termination and (y) of the then current health benefit coverage in effect. The
Company shall pay the severance compensation in eighteen (18) monthly
installments commencing thirty (30) days after the date of termination of
Executive's employment with the Company; provided that such severance payments
shall be made to Executive
2
<PAGE> 3
only if Executive fully complies with the surviving terms of this Agreement,
including, without limitation, Paragraphs 14 and 15 hereof. Executive may, at
any time and from time to time, designate a beneficiary to receive the severance
compensation in the event of his death, or if no beneficiary is designated then
the severance compensation shall be paid to Executive's estate. A Constructive
Termination shall be deemed to have occurred if Executive's employment with the
Company terminates, either voluntarily or involuntarily, following any one of
the following:
(a) The Company reduces Executive's base salary; or
(b) The Company assigns to Executive to any duties
inconsistent with his duties or responsibilities as President and Chief
Executive Officer, or changes his reporting responsibilities or title.
(7) Withholding. All payments of compensation paid to
Executive under this Agreement shall be reduced by applicable federal, state and
local withholding taxes.
(8) Additional Benefits. During the Employment Period,
Executive shall be entitled to receive Executive benefits at levels and coverage
generally provided to senior executives of the Company, including health
benefits, life and disability insurance, and participation in the Company's
retirement plan(s).
(9) Working Facilities. The Company will furnish Executive
with an office, technical and secretarial assistance and other facilities and
services suitable to his position of President and Chief Executive Officer and
fully adequate for the performance of his duties.
(10) Expenses. As a condition of his employment, Executive is
required to incur reasonable and necessary expenses for the promotion of the
business of the Company, including expenses of entertainment, travel, dues and
similar expenses. Provided that Executive provides the Company with reasonable
written documentation as required under the Company's policies and procedures to
support reimbursement, the Company shall reimburse Executive for all travel and
other expenses reasonably incurred by Executive in the performance of his duties
under this Agreement.
(11) Vacations and Holidays. Executive shall be entitled each
calendar year (or portion thereof) during the Employment Period to a vacation of
twenty (20) working days during which time his salary shall be paid in full.
Executive shall accrue all of his vacation days for calendar year 1998 on the
effective date of this Agreement and thereafter on the first day of each
calendar year. Executive shall take his vacation at such time or times as shall
be reasonably approved by the Company. The Company may grant additional vacation
time and time off to Executive in its sole discretion. The length of Executive's
vacation may from time to time be adjusted by the Company by entering such
change upon Schedule B attached hereto which, when signed by Executive and the
Company, shall become effective as an amendment to this Agreement. If Executive
fails to use his permitted vacation in any calendar year, the unused time may
not be carried over to the succeeding calendar year, nor may Executive elect to
receive an equivalent amount of cash, based on his base salary, in lieu of
accrued vacation time. In addition to the above, Executive shall be entitled to
be off
3
<PAGE> 4
from work on all regular Company holidays including, but not limited to, New
Year's Day, July 4, Labor Day, Thanksgiving, and Christmas with full
compensation.
(12) Leaves of Absence. Executive will be granted leaves of
absence with full payment of salary up to five (5) working days each calendar
year (or portion thereof) during the Employment Period for attendance at
professional conventions, continuing education seminars and other professional
or business activities. Executive shall accrue all of such days for calendar
year 1998 on the effective date of this Agreement and thereafter on the first
day of each calendar year. All expenses reasonable and necessarily incurred by
the Executive for such activities shall be paid for, or reimbursed by, the
Company. In addition, the Company may grant, in its sole discretion, Executive's
requests for leaves of absence with full or partial payment of salary and other
expenses for reasons other than those described in this Paragraph.
(13) Sick Leave. Executive shall be entitled to ten (10) days
of sick leave with payment of his base salary by the Company each calendar year
during the Employment Period. Executive shall accrue all of his sick leave days
for calendar year 1998 on the effective date of this Agreement and thereafter on
the first day of each calendar year.
(14) Confidentiality. Executive understands and agrees that
the nature of the Company's business, including the Company's customer lists,
business plans, budgets, contracts, personnel information, methods and systems
used in conducting business, pricing policies, technical bulletins, manuals,
profit and loss information, prospects, business opportunities and other related
internal business information and trade secrets are all of a confidential nature
and are valuable assets of the Company. Executive covenants and agrees, upon
termination of the Employment Period for any reason, to immediately return to
the Company all such confidential information and documents referred to in the
preceding sentence (including any other trade secret information) and will not
make copies of such materials. Further, Executive covenants and agrees that he
will not at any time furnish, divulge or otherwise disclose such confidential
information or material to anyone other than those authorized by the Company to
receive such information, and will not otherwise use or disclose such material
and information, except as required by law. In the event of any actual or
threatened breach by Executive of the provisions of this confidentiality
covenant, the Company shall be entitled to a temporary and/or permanent
injunction from any court of competent jurisdiction, without posting bond or
other security, restraining Executive from violating this confidentiality
covenant. Nothing herein stated shall be construed as prohibiting the Company
from pursuing any other remedies available to Employer for such breach or
threatened breach, including the recovery of damages from Executive.
Executive's obligation of confidentiality in this Agreement
shall not apply to:
(a) information which at the time of disclosure is in the
public domain or which becomes part of the public domain without the breach of
any confidentiality obligation owed to the Company by Executive or any other
person or entity bound by any confidentiality agreement with the Company or its
affiliates; or
4
<PAGE> 5
(b) a disclosure by Executive to the extent required by
law.
(15) Non-Competition and Non-Solicitation Covenant. During the
Employment Period and for a period of eighteen (18) months after Executive's
employment with the Company terminates for any reason, Executive will not (for
himself or on behalf of, or in conjunction with any other person or persons,
limited liability company, partnership, proprietorship, corporation or other
business entity), directly or indirectly, own, manage, operate, control, be
employed by, consult with, participate in, or be connected in any manner with
the ownership, management, operation, consulting or control of any business
engaged in the Company's Business as defined below, and operating anywhere in
North America, Continental Europe and the United Kingdom, the Bahamas and any
other country where the Company is operating or has a joint venture on the date
of Executive's termination of employment. The Company's Business, for the
purpose of this paragraph, is (a) to provide fueling services at airports, (b)
to own or operate fuel storage and distribution facilities, (c) to provide
ground handling, baggage and supply services at airports, and (d) any other
activity in which the Company is engaged at the time of the termination of
Executive's employment with the Company. Notwithstanding anything contrary in
this Paragraph, this covenant not to compete shall not prohibit Executive from
owning less than 2% of any class of stock in any publicly traded corporation,
provided that Executive has no rights of affiliation with such corporation other
than his rights as a stockholder. In the event of any actual or threatened
breach by Executive of the provisions of this non-competition covenant, the
Company shall be entitled to a temporary and/or permanent injunction from any
court of competent jurisdiction, without posting bond or other security,
restraining Executive from owning, managing, operating, controlling, being
employed by, participating in or being in any way so connected with any such
business. Nothing herein stated shall be construed as prohibiting the Company
from pursuing any other remedies available to the Company for such breach or
threatened breach, including the recovery of monetary damages from Executive.
The Company will not unreasonably prohibit Executive from securing new
employment after leaving the Company, so long as such employment is not
competitive (whether directly or indirectly) with the Company.
For a period of eighteen (18) months after the termination of
Executive's employment with the Company for any reason, Executive shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company, or in any way interfere with the relationship
between the Company and any employee thereof, (ii) hire any person who was an
employee of the Company at any time during the Employment Period or (iii) induce
or attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company to cease doing business with the Company,
or in any way interfere with the relationship between any such customer,
supplier, licensee or business relation and the Company (including, without
limitation, making any negative statements or communications about the Company).
If any one of the restrictions contained herein shall for any
reason be held to be excessively broad as to duration or geographical area, it
shall be deemed amended by limiting and reducing it so as to be valid and
enforceable to the extent compatible with applicable law.
5
<PAGE> 6
(16) Termination. Notwithstanding anything herein contained to
the contrary, Executive's employment and this Agreement may be terminated by
either Executive or the Company at any time and for any reason.
(17) Cause. For purposes of this Agreement "Cause" shall mean
any of the following acts by Executive: (i) the commission of a felony or a
crime involving moral turpitude or the commission of any other act or omission
involving dishonesty, disloyalty or fraud with respect to the Company or any of
its Subsidiaries or any of their customers or suppliers, (ii) conduct tending to
bring the Company or any of its Subsidiaries into substantial public disgrace or
disrepute, (iii) failure to perform duties as reasonably directed by the Board,
(iv) gross negligence or willful misconduct with respect to the Company or any
of its Subsidiaries or (v) any other material breach of this Agreement which is
not cured within 15 days after written notice thereof to Executive.
Should the Company and Executive be unable to agree on whether
or not Executive's conduct, acts or omissions constitute Cause for termination
of employment within thirty (30) days after Executive's employment with the
Company has been terminated, the controversy shall be settled by arbitration,
which decision shall be binding on both parties. Executive shall not be deemed
to have been terminated for "Cause" without:
(a) delivery to Executive of a written notice of
termination from the Company explaining the Company's reason for terminating
Executive for "Cause" and specifying in reasonable detail the facts and
circumstances that are the basis for terminating Executive's employment; and
(b) providing an opportunity for Executive to cure any
curable default specified in the notice of termination within twenty (20) days
after receipt of such notice.
(18) Executive's Representations. Executive hereby represents
and warrants to the Company that (a) the execution, delivery and performance of
this Agreement by Executive does not and shall not conflict with, breach,
violate or cause a default under any contract, agreement, instrument, order,
judgment or decree to which Executive is a party or by which he is bound, (b)
Executive is not a party to or bound by any employment agreement, noncompete
agreement or confidentiality agreement with any other person or entity and (c)
upon the execution and delivery of this Agreement by the Company, this Agreement
shall be the valid and binding obligation of Executive, enforceable in
accordance with its terms. Executive hereby acknowledges and represents that he
has consulted with independent legal counsel regarding his rights and
obligations under this Agreement and that he fully understands the terms and
conditions contained herein.
(19) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
accordance with the requirements of the Florida arbitration law then in effect.
All arbitrators' expenses and fees incurred in the conduct of the arbitration
shall be shared by Executive and the Company. Each party shall bear its own
respective attorneys' and other legal fees.
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<PAGE> 7
(20) Binding Effect. Except as provided in Paragraph (25)
below, this Agreement, together with any amendments hereto, shall be binding
upon and inure to the benefit of Executive and the Company, their heirs,
personal representatives, legal representatives, executors, administrators,
permitted successors and permitted assigns. Executive hereby consents to the
Company's assignment of this Agreement to a successor entity.
(21) Application to Subsidiaries. The promises and covenants
made by Executive to the Company in this Agreement shall apply with the same
force and effect and shall inure to the benefit of any Subsidiary or joint
venture of the Company, whether such Subsidiary or joint venture exists as of
the date hereof or shall exist at any date for which a promise or covenant made
by Executive pursuant to this Agreement shall be in effect. "Subsidiary" shall
mean any corporation of which the Company owns securities having a majority of
the ordinary voting power in electing the board of directors directly or through
one or more subsidiaries.
(22) Survival. Notwithstanding anything to the contrary in
this Agreement, the only provisions of this Agreement which survive expiration
of the Employment Period (and any subsequent renewal thereof) pursuant to
Paragraph 2 are Paragraphs 14, 15, 18, 19, 20, 21, 22, 23, 25, 26, 27, 29 and 31
hereof.
(23) Notice. Any notice required or permitted to be given
under this Agreement must be in writing and must be either personally delivered,
mailed by first class mail (postage prepaid and return receipt requested) or
sent by reputable overnight courier service (charges prepaid) to the recipient
at the address below indicated:
To the Company:
Aircraft Services International Group, Inc.
8240 NW 52 Terrace, #200
Miami, FL 33166-7766
Telephone: (305) 597-1600
Facsimile: (305) 592-7864
With copies (which shall not constitute notice) to:
William S. Kirsch, P.C.
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Telephone: (312) 861-2000
Facsimile: (312) 861-2200
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<PAGE> 8
To Executive:
Stephen D. Townes
318 Scarborough Drive
Greer, SC 29650
Telephone: (864) 848-2760
Facsimile: (864) 848-2759
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
(24) Situs. This Agreement shall be controlled, construed and
governed under the laws of the State of Florida regardless of the fact that one
or more parties is now, or may become, residents of another state, and without
regard to any conflict of laws.
(25) Amendment. This Agreement may not be amended changed,
altered or modified except by a writing signed by Executive and the Company.
(26) Severability. If any Paragraph, clause or provision of
this Agreement is or becomes illegal, invalid or unenforceable because of
present or future laws, rules or regulations of any governmental body, or become
unenforceable for any reason, the intention of Executive and the Company is that
the remaining parts of this Agreement shall not be thereby affected.
(27) Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements, understandings, inducement or conditions,
express or implied, oral or written, with respect thereto, except as contained
herein. Moreover, no waiver by any party of any condition or breach or any term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed or construed
as a further or continuing waiver of any such condition or breach, nor shall it
be deemed or construed as a waiver of any other condition or as a waiver of the
breach of any other term, covenant, representation or warranty set forth in this
Agreement.
(28) Captions. The captions of the various Paragraphs are
solely for the convenience of the parties hereto and shall not control or affect
the meaning or construction of this Agreement.
(29) Specific Performance. If a party to this Agreement fails
to comply with any of the covenants, provisions or conditions contained in this
Agreement, then, in addition to any other remedy provided by law or equity, the
non-defaulting party shall be entitled to equitable relief including, without
limitation, the right to specific performance of the terms and conditions of
this Agreement.
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<PAGE> 9
(30) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original Agreement but all
of which together shall constitute one and the same instrument.
(31) Non-Assignable. This Agreement is personal to Executive
and he may not assign this Agreement. Any attempted assignment shall be null and
void.
* * * * *
9
<PAGE> 10
IN WITNESS WHEREOF, by its duly authorized officer, has executed and
sealed this Agreement the day and year first above written.
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
By: /s/ STEPHEN D. TOWNES
----------------------------------------
Its: President and CEO
---------------------------------------
/s/ STEPHEN D. TOWNES
-------------------------------------------
Stephen D. Townes
10
<PAGE> 11
SCHEDULE A
to
Employment Agreement
among
STEPHEN D. TOWNES AND
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
- - --------------------------------------------------------------------------------
Amount of Stephen D.
Annual Salary Date Changed Company Sign Townes Sign
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- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
11
<PAGE> 12
SCHEDULE B
to
Employment Agreement
among
STEPHEN D. TOWNES AND
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
- - --------------------------------------------------------------------------------
Length of Stephen D.
Annual Vacation Date Changed Company Sign Townes Sign
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
12
<PAGE> 1
EXHIBIT 10.8
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of April 1, 1998, by and among F. ANDREW MITCHELL (the
"Employee") and AIRCRAFT SERVICES INTERNATIONAL GROUP, INC., a Delaware
corporation (the "Company").
WHEREAS, the Company desires to employ the Employee to render
employment services for the Company; and
WHEREAS, the Employee desires and is willing to become
employed by the Company under the terms and conditions hereof.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Employee hereby
covenant and agree as follows:
(1) Employment. The Company hereby employs the Employee and
the Employee hereby accepts such employment upon the terms and conditions set
forth herein.
(2) Term. The initial term of this Agreement shall be for a
period of three (3) years beginning on the 1st day of April 1998 and ending on
the 31st day of March, 2001 (the "Employment Period"), unless further extended
or sooner terminated as herein provided. The Employment Period shall be
automatically renewed for additional terms of one (1) year each, unless the
Company notifies the Employee in writing or the Employee notifies the Company in
writing of the intention not to renew this Agreement no less than ninety (90)
days prior to the expiration of the then current term.
(3) Employee's Position and Duties. The Employee shall (a)
serve as Executive Vice President and Chief Financial Officer of Ranger
Aerospace Corporation, a Delaware corporation ("Ranger") and the Company during
the Employment Period, (b) render such administrative, sales, marketing and
other executive and managerial services to Ranger and the Company and its
Subsidiaries as Ranger's board of directors (the "Board") may from time to time
direct and (c) report to the President and Chief Executive Officer of Ranger and
the Company. The Employee shall devote his full working time and attention to
the performance of services for the benefit of Ranger and the Company. The
Employee shall present to the Board and the Chief Executive Officer every
acquisition or investment opportunity in the aerospace and related industries,
whether foreign or domestic, of which the Employee becomes aware and desires to
pursue. The Employee shall not pursue any such opportunity (as investor or
otherwise) unless the Board declines to pursue such opportunity.
<PAGE> 2
(4) Performance of Duties. The Employee will, at all times,
faithfully, industriously, and to the best of the Employee's ability, experience
and talents perform his duties and responsibilities to Ranger and the Company.
(5) Compensation. For all services rendered by the Employee
under this Agreement, the Company shall compensate the Employee as follows:
(a) The Employee shall be paid a minimum base salary of
$212,000 per year, beginning April 1, 1998 which shall be payable in equal
monthly installments or more frequently as the Company shall determine. The base
salary may from time to time be adjusted by the Company by entering such
adjusted base salary upon Schedule A attached hereto which, when signed by the
Employee and the Company, shall become effective as an amendment to this
Agreement. At minimum, the base salary shall adjust automatically on each
anniversary hereof by the then current Consumer Price Index percentage; the
Board may elect at anytime to increase the Employee's base salary.
(b) In addition to the Employee's base salary, the Board
may, in its sole discretion, award a bonus to the Employee following the end of
each fiscal year during the Employment Period based on the Employee's
performance and the Company's operating results in accordance with the
management bonus plan to be adopted by the Board.
(6) Severance Compensation. Upon termination of the Employee's
employment with the Company prior to the expiration of the Employment Period
other than (a) for Cause as defined in Paragraph (16) or (b) on account of the
Employee's choice to terminate his employment for a reason other than his
Constructive Termination as defined below, the Company shall pay the Employee,
for so long as the Employee complies with the terms hereof (including without
limitation Sections 13 and 14 hereof), the following amounts as "Severance"
hereunder:
Date Upon Which
Notice of Termination Given Severance Amount
--------------------------- ----------------
Before 12/31/98 12 months' salary
Thereafter 18 months' salary
Notwithstanding the above sentence and table, if the Employee refuses the
Company's request to relocate to the Company's headquarters at any time during
the Employment Period and the Employee's employment with the Company is
terminated in connection therewith, the Employee shall be entitled to Severance
equal to 9 months' salary. The Employee may, at any time and from time to time,
designate a beneficiary to receive the Severance in the event of his death, or
if no beneficiary is designated then the Severance shall be paid to the
Employee's estate. All Severance amounts hereunder shall be paid in equal
monthly installments so long as the Employee fully complies with the surviving
terms of this Agreement, including, without limitation, Paragraphs 13 and 14
hereof. A Constructive Termination shall be deemed to have occurred if, after
the date hereof, the Employee's employment with the Company terminates following
any one of the following:
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(a) The Company reduces the Employee's base salary; or
(b) The Company assigns to the Employee any duties
inconsistent with his duties or responsibilities as Executive Vice President and
Chief Financial Officer, or changes his reporting responsibilities or title.
(7) Withholding. All payments of compensation paid to the
Employee under this Agreement shall be reduced by applicable federal, state and
local withholding taxes.
(8) Additional Benefits. During the Employment Period, the
Employee shall be entitled to receive employee benefits at levels and coverage
generally provided to senior executives at the Company, including health
benefits, life and disability insurance, and participation in the Company's
retirement plan(s).
(9) Working Facilities. The Company will furnish the Employee
with an office, technical and secretarial assistance and other facilities and
services suitable to his position of Executive Vice President and fully adequate
for the performance of his duties.
(10) Expenses. As a condition of his employment, the Employee
is required to incur reasonable and necessary expenses for the promotion of the
business of the Company, including expenses of entertainment, travel, dues and
similar expenses. Provided that the Employee provides the Company with
reasonable written documentation as required under the Company's policies and
procedures to support reimbursement, the Company shall reimburse the Employee
for all travel and other expenses reasonably incurred by the Employee in the
performance of his duties pursuant to this Agreement.
(11) Vacations and Holiday. The Employee shall be entitled
each calendar year (or portion thereof) during the Employment Period to a
vacation of fifteen (15) working days during which time his salary shall be paid
in full. The Employee shall accrue all of his vacation days for calendar year
1998 on the effective date of this Agreement and thereafter on the first day of
each calendar year. The Employee shall take his vacation at such time or times
as shall be reasonably approved by the Company. The Company may grant additional
vacation time and time off in its sole discretion. The length of the Employee's
vacation may from time to time be adjusted by the Company by entering such
change upon Schedule B attached hereto which, when signed by the Employee and
the Company, shall become effective as an amendment to this Agreement. If the
Employee fails to use his permitted vacation in any calendar year, the unused
time may not be carried over to the succeeding calendar year, nor may the
Employee elect to receive an equivalent amount of cash, based on his base
salary, in lieu of accrued vacation time. In addition to the above, the Employee
shall be entitled to be off from work on all regular Company holidays including,
but not limited to, New Year's Day, July 4, Labor Day, Thanksgiving, and
Christmas with full compensation.
(12) Sick Leave. The Employee shall be entitled to ten (10)
days of sick leave with payment of his base salary by the Company each calendar
year during the Employment Period. The
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<PAGE> 4
Employee shall accrue all of his sick leave days for calendar year 1998 on the
effective date of this Agreement and thereafter on the first day of each
calendar year.
(13) Confidentiality. The Employee understands and agrees that
the nature of the Company's business, including the Company's customer lists,
business plans, budgets, contracts, personnel information, methods and systems
used in conducting business, pricing policies, technical bulletins, manuals,
profit and loss information prospects, business opportunities and other related
internal business information and trade secrets are all of a confidential nature
and are valuable assets of the Company. The Employee covenants and agrees, upon
termination of the Employment Period for any reason, to immediately return to
the Company all such confidential information and documents referred to in the
preceding sentence (including any other trade secret information) and will not
make copies of such materials. Further, the Employee covenants and agrees that
he will not at any time furnish, divulge or otherwise disclose such confidential
information or material to anyone other than those within the Company authorized
to receive information, and will not use such material and information for any
purpose, except as required by law. In the event of any actual or threatened
breach by the Employee of the provisions of this confidentiality covenant, the
Company shall be entitled to a temporary and/or permanent injunction from any
court of competent jurisdiction, without posting bond or other security,
restraining the Employee from violating this confidentiality covenant. Nothing
herein stated shall be construed as prohibiting the Company from pursuing any
other remedies available to Employer for such breach or threatened breach,
including the recovery of monetary damages from the Employee.
The Employee's obligation of confidentiality in this Agreement
shall not apply to:
(a) information which at the time of disclosure is in the
public domain or which becomes part of the public domain without the breach of
any confidentiality obligation owed to the Company by the Employee or by any
other person or entity.
(b) a disclosure by the Employee required by law.
(14) Non-Competition and Non-Solicitation Covenant. During the
Employment Period and for a period of eighteen (18) months after the Employee's
employment terminates with the Company for any reason, the Employee will not
(for himself or on behalf of, or in conjunction with any other person or
persons, limited liability company, partnership, proprietorship, corporation or
other business entity), directly or indirectly, own, manage, operate, control,
be employed by, consult with, participate in, or be connected in any manner with
the ownership, management, operation, consulting or control of any business
engaged in the Company's Business as defined below, and operating anywhere in
North America, Continental Europe and the United Kingdom, the Bahamas and any
other country where the Company is operating or has a joint venture on the date
of the Employee's termination of employment. The Company's Business, for the
purpose of this paragraph, is (a) to provide fueling services at airports, (b)
to own or operate fuel storage and distribution facilities, (c) to provide
ground handling, baggage and supply services at airports, and (d) any other
activity in which the Company is engaged at the time of the Employee's
termination with the Company. Notwithstanding anything contrary in this
Paragraph, this covenant not to compete
- 4 -
<PAGE> 5
shall not prohibit the Employee from owning less than 2% of any class of stock
in any publicly traded corporation provided that the Employee has no rights of
affiliation with such corporation other than his rights as a stockholder. In the
event of any actual or threatened breach by the Employee of the provisions of
this non-competition covenant, the Company shall be entitled to a temporary
and/or permanent injunction from any court of competent jurisdiction, without
posting bond or other security, restraining the Employee from owning, managing,
operating, controlling, being employed by, participating in or being in any way
so connected with any such business. Nothing herein stated shall be construed as
prohibiting the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including the recovery of damages
from the Employee. The Company will not unreasonably prohibit the Employee from
securing new employment after leaving the Company, so long as such employment is
not competitive (whether directly or indirectly) with the Company.
For a period of eighteen (18) months after the Employee's
employment terminates with the Company for any reason, the Employee shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company, or in any way interfere with the relationship
between the Company and any employee thereof, (ii) hire any person who was an
employee of the Company at any time during the Employment Period or (iii) induce
or attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company to cease doing business with the Company,
or in any way interfere with the relationship between any such customer,
supplier, licensee or business relation and the Company (including, without
limitation, making any negative statements or communications about the Company).
If any one of the restrictions contained herein shall for any
reason be held to be excessively broad as to duration or geographical area, it
shall be deemed amended by limiting and reducing it so as to be valid and
enforceable to the extent compatible with applicable law.
(15) Termination. Notwithstanding anything herein contained to
the contrary, the Employee's employment and this Agreement may be terminated by
either the Employee or the Company at any time and for any reason.
(16) Cause. For purposes of this Agreement "Cause" shall mean
any of the following acts by the Employee: (i) the commission of a felony or a
crime involving moral turpitude or the commission of any other act or omission
involving dishonesty, disloyalty or fraud with respect to the Company or any of
its Subsidiaries or any of their customers or suppliers, (ii) conduct tending to
bring the Company or any of its Subsidiaries into substantial public disgrace or
disrepute, (iii) failure to perform duties as reasonably directed by the Board
or the Company's president, (iv) gross negligence or willful misconduct with
respect to the Company or any of its Subsidiaries or (v) any other material
breach of this Agreement which is not cured within 15 days after written notice
thereof to the Employee.
Should the Company and the Employee be unable to agree on
whether or not the Employee's conduct, acts or omissions constitute Cause for
termination of employment within thirty (30) days after the Employee's
employment with the Company has been terminated, the controversy
- 5 -
<PAGE> 6
shall be settled by arbitration, which decision shall be binding on both
parties. The Employee shall not be deemed to have been terminated for "Cause"
without:
(a) delivery to the Employee of a written notice of
termination from the Company explaining the Company's intention to terminate the
Employee for "Cause" and specifying in reasonable detail the facts and
circumstances that are the basis for terminating the Employee's employment; and
(b) providing an opportunity for the Employee to cure any
curable default specified in the notice of termination within twenty (20) days
after receipt of such notice.
(17) Employee's Representations. The Employee hereby
represents and warrants to the Company that (a) the execution, delivery and
performance of this Agreement by the Employee does not and shall not conflict
with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Employee is a party or by
which he is bound, (b) the Employee is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any other
person or entity and (c) upon the execution and delivery of this Agreement by
the Company, this Agreement shall be the valid and binding obligation of the
Employee, enforceable in accordance with its terms. The Employee hereby
acknowledges and represents that he has consulted with independent legal counsel
regarding his rights and obligations under this Agreement and that he fully
understands the terms and conditions contained herein.
(18) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
accordance with the requirements of the Florida arbitration law then in effect.
All arbitrators' expenses and fees incurred in the conduct of the arbitration
shall be shared by the Employee and the Company. Each party shall bear its own
respective attorneys' and other legal fees.
(19) Binding Effect. Except as provided in Paragraph (24)
below, this Agreement, together with any amendments hereto, shall be binding
upon and inure to the benefit of the Employee and the Company, their heirs,
personal representatives, legal representatives, executors, administrators,
permitted successors and permitted assigns. The Employee hereby consents to the
Company's assignment of this Agreement to a successor entity.
(20) Application to Subsidiaries. The promises and covenants
made by the Employee to the Company in this Agreement shall apply with the same
force and effect and shall inure to the benefit of any Subsidiary or joint
venture of the Company, whether such Subsidiary or joint venture exists as of
the date hereof or shall exist at any date for which a promise or covenant made
by the Employee pursuant to this Agreement shall be in effect. "Subsidiary"
shall mean any corporation of which the Company owns securities having a
majority of the ordinary voting power in electing the board of directors
directly or through one or more subsidiaries.
(21) Survival. Notwithstanding anything to the contrary in
this Agreement, the only provisions of this Agreement which survive expiration
of the Employment Period (and any subsequent
- 6 -
<PAGE> 7
renewal thereof) pursuant to Paragraph 2 are Paragraphs 13, 14, 17, 18, 19, 20,
21, 22, 23, 24, 25, 26, 28 and 31.
(22) Notice. Any notice required or permitted to be given
under this Agreement must be in writing and must be either personally delivered,
mailed by first class mail (postage prepaid and return receipt requested) or
sent by reputable overnight courier service (charges prepaid) to the recipient
at the address below indicated:
To the Company:
Aircraft Services International Group, Inc.
8240 NW 52 Terrace, #200
Miami, FL 33166-7766
Telephone: (305) 597-1600
Facsimile: (305) 592-7864
With copies (which shall not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: William S. Kirsch, P.C.
Telephone: (312) 861-2000
Facsimile: (312) 861-2200
To Employee:
F. Andrew Mitchell
101 Chelsea Lane
Greer, SC 29650
Telephone: (864) 268-8708
Facsimile: (864) 609-5764
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
(23) Situs. This Agreement shall be controlled, construed and
governed under the laws of the State of Florida regardless of the fact that one
or more parties is now, or may become, residents of another state, and without
regard to any conflict of laws.
(24) Amendment. This Agreement may not be amended changed,
altered or modified except by a writing signed by the Employee and the Company.
- 7 -
<PAGE> 8
(25) Severability. If any Paragraph, clause or provision of
this Agreement is or becomes illegal, invalid or unenforceable because of
present or future laws, rules or regulations of any governmental body, or become
unenforceable for any reason, the intention of the Employee and the Company is
that the remaining parts of this Agreement shall not be thereby affected.
(26) Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements, understandings, inducement or conditions,
express or implied, oral or written, with respect thereto, except as contained
herein. Moreover, no waiver by any party of any condition or breach or any term,
covenant, representation or Warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed or construed
as a further or continuing waiver of any such condition or breach, nor shall it
be deemed or construed as a waiver of any other condition or as a waiver of the
breach of any other term, covenant, representation or warranty set forth in this
Agreement.
(27) Captions. The captions of the various Paragraphs are
solely for the convenience of the parties hereto and shall not control or affect
the meaning or construction of this Agreement.
(28) Specific Performance. If a party to this Agreement fails
to comply with any of the covenants, provisions or conditions contained in this
Agreement, then, in addition to any other remedy provided by law or equity, the
non-defaulting party shall be entitled to equitable relief including, without
limitation, the right to specific performance of the terms and conditions of
this Agreement.
(29) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original Agreement but all
of which together shall constitute one and the same instrument.
(30) Non-Assignable. This Agreement is personal to the
Employee and he may not assign this Agreement. Any attempted assignment shall be
null and void.
(31) Waiver and Release of Ranger. The Employee hereby agrees
to waive and release Ranger from any obligation, liability or claim in any and
all matters arising out of or related to this Agreement.
* * * * *
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the day and year first above written.
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
By: /s/ STEPHEN D. TOWNES
----------------------------------------
Its: President and CEO
---------------------------------------
/s/ F. ANDREW MITCHELL
-------------------------------------------
F. ANDREW MITCHELL
- 9 -
<PAGE> 10
SCHEDULE A
to
Employment Agreement
among
F. ANDREW MITCHELL AND
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
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Amount of F. Andrew
Annual Salary Date Changed Company Sign Mitchell Sign
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
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<PAGE> 11
SCHEDULE B
to
Employment Agreement
among
F. ANDREW MITCHELL AND
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
- - --------------------------------------------------------------------------------
Length of F. Andrew
Annual Vacation Date Changed Company Sign Mitchell Sign
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- 11 -
<PAGE> 1
EXHIBIT 10.9
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and
entered into as of April 1, 1998, by and among GEORGE W. WATTS (the "Employee")
and AIRCRAFT SERVICES INTERNATIONAL GROUP, INC., a Delaware corporation (the
"Company").
WHEREAS, the Company desires to employ the Employee to render
employment services for the Company; and
WHEREAS, the Employee desires and is willing to become
employed by the Company under the terms and conditions hereof.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the Company and the Employee hereby
covenant and agree as follows:
(1) Employment. The Company hereby employs the Employee and
the Employee hereby accepts such employment upon the terms and conditions set
forth herein.
(2) Term. The initial term of this Agreement shall be for a
period of three (3) years beginning on the 1st day of April 1998 and ending on
the 31st day of March, 2001 (the "Employment Period"), unless further extended
or sooner terminated as herein provided. The Employment Period shall be
automatically renewed for additional terms of one (1) year each, unless the
Company notifies the Employee in writing or the Employee notifies the Company in
writing of the intention not to renew this Agreement no less than ninety (90)
days prior to the expiration of the then current term.
(3) Employee's Position and Duties. The Employee shall (a)
serve as Executive Vice President of Ranger Aerospace Corporation, a Delaware
corporation ("Ranger") and the Company during the Employment Period, (b) render
such administrative, sales, marketing and other executive and managerial
services to Ranger and the Company and its Subsidiaries as Ranger's board of
directors (the "Board") may from time to time direct and (c) report to the
President and Chief Executive Officer of Ranger and the Company. The Employee
shall devote his full working time and attention to the performance of services
for the benefit of Ranger and the Company. The Employee shall present to the
Board and the Chief Executive Officer every acquisition or investment
opportunity in the aerospace and related industries, whether foreign or
domestic, of which the Employee becomes aware and desires to pursue. The
Employee shall not pursue any such opportunity (as investor or otherwise)
unless the Board declines to pursue such opportunity.
<PAGE> 2
(4) Performance of Duties. The Employee will, at all times,
faithfully, industriously, and to the best of the Employee's ability, experience
and talents perform his duties and responsibilities to Ranger and the Company.
(5) Compensation. For all services rendered by the Employee
under this Agreement, the Company shall compensate the Employee as follows:
(a) The Employee shall be paid a minimum base salary of
$212,000 per year, beginning April 1, 1998 which shall be payable in equal
monthly installments or more frequently as the Company shall determine. The base
salary may from time to time be adjusted by the Company by entering such
adjusted base salary upon Schedule A attached hereto which, when signed by the
Employee and the Company, shall become effective as an amendment to this
Agreement. At minimum, the base salary shall adjust automatically on each
anniversary hereof by the then current Consumer Price Index percentage; the
Board may elect at anytime to increase the Employee's base salary.
(b) In addition to the Employee's base salary, the Board
may, in its sole discretion, award a bonus to the Employee following the end of
each fiscal year during the Employment Period based on the Employee's
performance and the Company's operating results in accordance with the
management bonus plan to be adopted by the Board.
(6) Severance Compensation. Upon termination of the Employee's
employment with the Company prior to the expiration of the Employment Period
other than (a) for Cause as defined in Paragraph (16) or (b) on account of the
Employee's choice to terminate his employment for a reason other than his
Constructive Termination as defined below, the Company shall pay the Employee,
for so long as the Employee complies with the terms hereof (including without
limitation Sections 13 and 14 hereof), the following amounts as "Severance"
hereunder:
Date Upon Which
Notice of Termination Given Severance Amount
--------------------------- ----------------
Before 12/31/98 12 months' salary
Thereafter 18 months' salary
Notwithstanding the above sentence and table, if the Employee refuses the
Company's request to relocate to the Company's headquarters at any time during
the Employment Period and the Employee's employment with the Company is
terminated in connection therewith, the Employee shall be entitled to Severance
equal to 9 months' salary. The Employee may, at any time and from time to time,
designate a beneficiary to receive the Severance in the event of his death, or
if no beneficiary is designated then the Severance shall be paid to the
Employee's estate. All Severance amounts hereunder shall be paid in equal
monthly installments so long as the Employee fully complies with the surviving
terms of this Agreement, including, without limitation, Paragraphs 13 and 14
hereof. A Constructive Termination shall be deemed to have occurred if, after
the date
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<PAGE> 3
hereof, the Employee's employment with the Company terminates following any one
of the following:
(a) The Company reduces the Employee's base salary; or
(b) The Company assigns to the Employee any duties
inconsistent with his duties or responsibilities as Executive Vice President, or
changes his reporting responsibilities or title.
(7) Withholding. All payments of compensation paid to the
Employee under this Agreement shall be reduced by applicable federal, state and
local withholding taxes.
(8) Additional Benefits. During the Employment Period, the
Employee shall be entitled to receive employee benefits at levels and coverage
generally provided to senior executives at the Company, including health
benefits, life and disability insurance, and participation in the Company's
retirement plan(s).
(9) Working Facilities. The Company will furnish the Employee
with an office, technical and secretarial assistance and other facilities and
services suitable to his position of Executive Vice President and fully adequate
for the performance of his duties.
(10) Expenses. As a condition of his employment, the Employee
is required to incur reasonable and necessary expenses for the promotion of the
business of the Company, including expenses of entertainment, travel, dues and
similar expenses. Provided that the Employee provides the Company with
reasonable written documentation as required under the Company's policies and
procedures to support reimbursement, the Company shall reimburse the Employee
for all travel and other expenses reasonably incurred by the Employee in the
performance of his duties pursuant to this Agreement.
(11) Vacations and Holiday. The Employee shall be entitled
each calendar year (or portion thereof) during the Employment Period to a
vacation of fifteen (15) working days during which time his salary shall be paid
in full. The Employee shall accrue all of his vacation days for calendar year
1998 on the effective date of this Agreement and thereafter on the first day of
each calendar year. The Employee shall take his vacation at such time or times
as shall be reasonably approved by the Company. The Company may grant additional
vacation time and time off in its sole discretion. The length of the Employee's
vacation may from time to time be adjusted by the Company by entering such
change upon Schedule B attached hereto which, when signed by the Employee and
the Company, shall become effective as an amendment to this Agreement. If the
Employee fails to use his permitted vacation in any calendar year, the unused
time may not be carried over to the succeeding calendar year, nor may the
Employee elect to receive an equivalent amount of cash, based on his base
salary, in lieu of accrued vacation time. In addition to the above, the Employee
shall be entitled to be off from work on all regular Company holidays including,
but not limited to, New Year's Day, July 4, Labor Day, Thanksgiving, and
Christmas with full compensation.
- 3 -
<PAGE> 4
(12) Sick Leave. The Employee shall be entitled to ten (10)
days of sick leave with payment of his base salary by the Company each calendar
year during the Employment Period. The Employee shall accrue all of his sick
leave days for calendar year 1998 on the effective date of this Agreement and
thereafter on the first day of each calendar year.
(13) Confidentiality. The Employee understands and agrees that
the nature of the Company's business, including the Company's customer lists,
business plans, budgets, contracts, personnel information, methods and systems
used in conducting business, pricing policies, technical bulletins, manuals,
profit and loss information prospects, business opportunities and other related
internal business information and trade secrets are all of a confidential nature
and are valuable assets of the Company. The Employee covenants and agrees, upon
termination of the Employment Period for any reason, to immediately return to
the Company all such confidential information and documents referred to in the
preceding sentence (including any other trade secret information) and will not
make copies of such materials. Further, the Employee covenants and agrees that
he will not at any time furnish, divulge or otherwise disclose such confidential
information or material to anyone other than those within the Company authorized
to receive information, and will not use such material and information for any
purpose, except as required by law. In the event of any actual or threatened
breach by the Employee of the provisions of this confidentiality covenant, the
Company shall be entitled to a temporary and/or permanent injunction from any
court of competent jurisdiction, without posting bond or other security,
restraining the Employee from violating this confidentiality covenant. Nothing
herein stated shall be construed as prohibiting the Company from pursuing any
other remedies available to Employer for such breach or threatened breach,
including the recovery of monetary damages from the Employee.
The Employee's obligation of confidentiality in this Agreement
shall not apply to:
(a) information which at the time of disclosure is in the
public domain or which becomes part of the public domain without the breach of
any confidentiality obligation owed to the Company by the Employee or by any
other person or entity.
(b) a disclosure by the Employee required by law.
(14) Non-Competition and Non-Solicitation Covenant. During the
Employment Period and for a period of eighteen (18) months after the Employee's
employment terminates with the Company for any reason, the Employee will not
(for himself or on behalf of, or in conjunction with any other person or
persons, limited liability company, partnership, proprietorship, corporation or
other business entity), directly or indirectly, own, manage, operate, control,
be employed by, consult with, participate in, or be connected in any manner with
the ownership, management, operation, consulting or control of any business
engaged in the Company's Business as defined below, and operating anywhere in
North America, Continental Europe and the United Kingdom, the Bahamas and any
other country where the Company is operating or has a joint venture on the date
of the Employee's termination of employment. The Company's Business, for the
purpose of this paragraph, is (a) to provide fueling services at airports, (b)
to own or operate fuel storage and distribution facilities, (c) to provide
ground handling, baggage and supply services at airports, and
- 4 -
<PAGE> 5
(d) any other activity in which the Company is engaged at the time of the
Employee's termination with the Company. Notwithstanding anything contrary in
this Paragraph, this covenant not to compete shall not prohibit the Employee
from owning less than 2% of any class of stock in any publicly traded
corporation provided that the Employee has no rights of affiliation with such
corporation other than his rights as a stockholder. In the event of any actual
or threatened breach by the Employee of the provisions of this non-competition
covenant, the Company shall be entitled to a temporary and/or permanent
injunction from any court of competent jurisdiction, without posting bond or
other security, restraining the Employee from owning, managing, operating,
controlling, being employed by, participating in or being in any way so
connected with any such business. Nothing herein stated shall be construed as
prohibiting the Company from pursuing any other remedies available to the
Company for such breach or threatened breach, including the recovery of damages
from the Employee. The Company will not unreasonably prohibit the Employee from
securing new employment after leaving the Company, so long as such employment is
not competitive (whether directly or indirectly) with the Company.
For a period of eighteen (18) months after the Employee's
employment terminates with the Company for any reason, the Employee shall not
directly or indirectly through another entity (i) induce or attempt to induce
any employee of the Company, or in any way interfere with the relationship
between the Company and any employee thereof, (ii) hire any person who was an
employee of the Company at any time during the Employment Period or (iii) induce
or attempt to induce any customer, supplier, licensee, licensor, franchisee or
other business relation of the Company to cease doing business with the Company,
or in any way interfere with the relationship between any such customer,
supplier, licensee or business relation and the Company (including, without
limitation, making any negative statements or communications about the Company).
If any one of the restrictions contained herein shall for any
reason be held to be excessively broad as to duration or geographical area, it
shall be deemed amended by limiting and reducing it so as to be valid and
enforceable to the extent compatible with applicable law.
(15) Termination. Notwithstanding anything herein contained to
the contrary, the Employee's employment and this Agreement may be terminated by
either the Employee or the Company at any time and for any reason.
(16) Cause. For purposes of this Agreement "Cause" shall mean
any of the following acts by the Employee: (i) the commission of a felony or a
crime involving moral turpitude or the commission of any other act or omission
involving dishonesty, disloyalty or fraud with respect to the Company or any of
its Subsidiaries or any of their customers or suppliers, (ii) conduct tending to
bring the Company or any of its Subsidiaries into substantial public disgrace or
disrepute, (iii) failure to perform duties as reasonably directed by the Board
or the Company's president, (iv) gross negligence or willful misconduct with
respect to the Company or any of its Subsidiaries or (v) any other material
breach of this Agreement which is not cured within 15 days after written notice
thereof to the Employee.
- 5 -
<PAGE> 6
Should the Company and the Employee be unable to agree on
whether or not the Employee's conduct, acts or omissions constitute Cause for
termination of employment within thirty (30) days after the Employee's
employment with the Company has been terminated, the controversy shall be
settled by arbitration, which decision shall be binding on both parties. The
Employee shall not be deemed to have been terminated for "Cause" without:
(a) delivery to the Employee of a written notice of
termination from the Company explaining the Company's intention to terminate the
Employee for "Cause" and specifying in reasonable detail the facts and
circumstances that are the basis for terminating the Employee's employment; and
(b) providing an opportunity for the Employee to cure any
curable default specified in the notice of termination within twenty (20) days
after receipt of such notice.
(17) Employee's Representations. The Employee hereby
represents and warrants to the Company that (a) the execution, delivery and
performance of this Agreement by the Employee does not and shall not conflict
with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which the Employee is a party or by
which he is bound, (b) the Employee is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any other
person or entity and (c) upon the execution and delivery of this Agreement by
the Company, this Agreement shall be the valid and binding obligation of the
Employee, enforceable in accordance with its terms. The Employee hereby
acknowledges and represents that he has consulted with independent legal counsel
regarding his rights and obligations under this Agreement and that he fully
understands the terms and conditions contained herein.
(18) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
accordance with the requirements of the Florida arbitration law then in effect.
All arbitrators' expenses and fees incurred in the conduct of the arbitration
shall be shared by the Employee and the Company. Each party shall bear its own
respective attorneys' and other legal fees.
(19) Binding Effect. Except as provided in Paragraph (24)
below, this Agreement, together with any amendments hereto, shall be binding
upon and inure to the benefit of the Employee and the Company, their heirs,
personal representatives, legal representatives, executors, administrators,
permitted successors and permitted assigns. The Employee hereby consents to the
Company's assignment of this Agreement to a successor entity.
(20) Application to Subsidiaries. The promises and covenants
made by the Employee to the Company in this Agreement shall apply with the same
force and effect and shall inure to the benefit of any Subsidiary or joint
venture of the Company, whether such Subsidiary or joint venture exists as of
the date hereof or shall exist at any date for which a promise or covenant made
by the Employee pursuant to this Agreement shall be in effect. "Subsidiary"
shall mean any corporation of which the Company owns securities having a
majority of the ordinary voting power in electing the board of directors
directly or through one or more subsidiaries.
- 6 -
<PAGE> 7
(21) Survival. Notwithstanding anything to the contrary in
this Agreement, the only provisions of this Agreement which survive expiration
of the Employment Period (and any subsequent renewal thereof) pursuant to
Paragraph 2 are Paragraphs 13, 14, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 28
and 31.
(22) Notice. Any notice required or permitted to be given
under this Agreement must be in writing and must be either personally delivered,
mailed by first class mail (postage prepaid and return receipt requested) or
sent by reputable overnight courier service (charges prepaid) to the recipient
at the address below indicated:
To the Company:
Aircraft Services International Group, Inc.
8240 NW 52 Terrace, #200
Miami, FL 33166-7766
Telephone: (305) 597-1600
Facsimile: (305) 592-7864
With copies (which shall not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: William S. Kirsch, P.C.
Telephone: (312) 861-2000
Facsimile: (312) 861-2200
To the Employee:
George Watts
6151 Sugar Hill
Houston, TX 77057
Telephone: (713) 464-5915
Facsimile: (713) 984-9860
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
(23) Situs. This Agreement shall be controlled, construed and
governed under the laws of the State of Florida regardless of the fact that one
or more parties is now, or may become, residents of another state, and without
regard to any conflict of laws.
- 7 -
<PAGE> 8
(24) Amendment. This Agreement may not be amended changed,
altered or modified except by a writing signed by the Employee and the Company.
(25) Severability. If any Paragraph, clause or provision of
this Agreement is or becomes illegal, invalid or unenforceable because of
present or future laws, rules or regulations of any governmental body, or become
unenforceable for any reason, the intention of the Employee and the Company is
that the remaining parts of this Agreement shall not be thereby affected.
(26) Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings between the
parties hereto with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements, understandings, inducement or conditions,
express or implied, oral or written, with respect thereto, except as contained
herein. Moreover, no waiver by any party of any condition or breach or any term,
covenant, representation or Warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances, shall be deemed or construed
as a further or continuing waiver of any such condition or breach, nor shall it
be deemed or construed as a waiver of any other condition or as a waiver of the
breach of any other term, covenant, representation or warranty set forth in this
Agreement.
(27) Captions. The captions of the various Paragraphs are
solely for the convenience of the parties hereto and shall not control or affect
the meaning or construction of this Agreement.
(28) Specific Performance. If a party to this Agreement fails
to comply with any of the covenants, provisions or conditions contained in this
Agreement, then, in addition to any other remedy provided by law or equity, the
non-defaulting party shall be entitled to equitable relief including, without
limitation, the right to specific performance of the terms and conditions of
this Agreement.
(29) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall constitute an original Agreement but all
of which together shall constitute one and the same instrument.
(30) Non-Assignable. This Agreement is personal to the
Employee and he may not assign this Agreement. Any attempted assignment shall be
null and void.
(31) Waiver and Release of Ranger. The Employee hereby agrees
to waive and release Ranger from any obligation, liability or claim in any and
all matters arising out of or related to this Agreement.
* * * * *
- 8 -
<PAGE> 9
IN WITNESS WHEREOF, this Agreement has been executed and delivered as
of the day and year first above written.
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
By: /s/ STEPHEN D. TOWNES
----------------------------------------
Its: President and CEO
---------------------------------------
/s/ GEORGE W. WATTS
-------------------------------------------
George W. Watts
- 9 -
<PAGE> 10
SCHEDULE A
to
Employment Agreement
among
GEORGE W. WATTS AND
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
- - --------------------------------------------------------------------------------
Amount of George
Annual Salary Date Changed Company Sign Watts Sign
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- 10 -
<PAGE> 11
SCHEDULE B
to
Employment Agreement
among
GEORGE W. WATTS AND
AIRCRAFT SERVICES INTERNATIONAL GROUP, INC.
- - --------------------------------------------------------------------------------
Length of George
Annual Vacation Date Changed Company Sign Watts Sign
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
- 11 -
<PAGE> 1
EXHIBIT 10.10
RANGER AEROSPACE CORPORATION
CHAIRMAN AGREEMENT
THIS AGREEMENT is made as of April 2, 1998, between Ranger
Aerospace Corporation, a Delaware corporation (the "Company"), Aircraft Services
International Group, Inc. ("ASIG"), Tioga Capital Corporation ("Tioga"), and
George Schwartz ("Executive").
The Company, ASIG and the Tioga desire to enter into an
agreement pursuant to which the Executive shall serve as Chairman of both the
Company and ASIG.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Chairman of the Board. The Company and ASIG hereby offer,
and Executive hereby accepts, the position of Chairman upon the terms and
conditions set forth in this Agreement.
2. Position and Duties.
(a) During the Board Period, as defined in paragraph 4,
Executive shall serve as Chairman of both the Company and ASIG and shall report
to and receive direction from the Board.
(b) Executive shall devote his best efforts to the business
and affairs of the Company and its Subsidiaries. Executive shall perform his
duties and responsibilities to the best of his abilities in a diligent,
trustworthy, businesslike and efficient manner. The parties hereto acknowledge
and agree that Executive will not devote 100% of his business efforts to matters
pertaining to the Company and its Subsidiaries. During the Board Period,
Executive shall present to the Company, the Board and to the chief executive
officer of the Company every acquisition or investment opportunity in the
aerospace and aviation industries, whether foreign or domestic, of which
Executive becomes aware and desires to pursue. Executive may pursue any such
opportunity (as investor or otherwise) unless the Board provides written notice
to Executive within five business days after Executive has provided such
opportunity to the Board that the Company intends to pursue such opportunity.
3. Compensation.
(a) During the Board Period, Tioga shall be entitled to, and
ASIG or the Company shall pay, a Chairman's fee of $150,000 per year for
services Executive renders as Chairman, which shall adjust automatically on each
anniversary hereof by the Consumer Price Index, and which the Board may elect,
in its sole discretion, to increase at any time.
(b) Upon the occurrence of a Liquidity Event (provided that
Executive has not breached the terms of this Agreement or any other agreement
between Executive or Tioga on the one hand and the Company or ASIG on the other
and has not been terminated for Cause), Tioga shall be
<PAGE> 2
entitled to, and Ranger or ASIG shall pay, a bonus of $1,350,000, which amount
shall represent consideration and compensation for services rendered by
Executive under the terms of this Agreement.
(c) In connection with future private placements of equity
securities of the Company, the Company shall offer Tioga and/or Chairman the
right to purchase shares of such equity securities, at the price and on other
terms offered for sale by the Company pro rata (based on the aggregate fully
diluted percentage of equity securities of the Company owned by such Persons up
to an amount equal to the product determined below in this paragraph (c), and in
connection therewith, the Company shall make additional loans to Tioga or
Executive for the purpose of acquiring such equity, except that the Company
shall not be obligated, under any circumstances, to loan Tioga and/or Executive,
in the aggregate, an amount greater than an amount equal to the product of (i)
$1,500,000 multiplied by (ii) a fraction, the numerator of which is the
aggregate number of fully vested shares of Common Stock held by Executive and
his Family Group (as defined in the Securityholders Agreement dated as of the
date hereof) and the denominator of which is the aggregate number of fully
vested shares of Common Stock, calculated on a fully-diluted basis, held by all
employees of the Company and its Subsidiaries, Executive, and their respective
Family Groups on such date. At any time prior to a Qualified Public Offering, in
the event the Company offers common equity securities for sale to the Other
Investors or any of them, at a price per share below the per share price paid by
the Other Investors for common equity securities purchased under the Securities
Purchase Agreement, Chairman shall have the right to purchase for cash at the
same price and on the same terms his pro rata share (based on the percentage of
the total common equity securities of the Company held by Chairman or his Family
Group) of the securities offered by the Company; provided that if the Company
offers common equity securities for sale only in connection with its offer of
other securities of the Company, Chairman must also purchase his pro rata share
of such other securities.
(d) ASIG shall reimburse Executive for all travel and other
expenses reasonably incurred by Executive in the performance of his duties
pursuant to this Agreement, provided that Executive provides ASIG with
reasonable written documentation as required under ASIG's policies and
procedures to support reimbursement.
(e) For a period of three years from the date hereof,
Executive shall be entitled to receive health benefits and health, life and
disability insurance at levels and coverage generally provided to senior
executives at the Company, but shall receive no other benefits generally
provided to senior executives at the Company.
(f) If the Company has terminated Executive as Chairman, other
than for Cause, the Company or ASIG shall pay to Tioga (or such other person as
Chairman may direct), as severance compensation, so long as Executive complies
with the terms of this Agreement (including, without limitation paragraphs 5 and
6 hereof), an amount equal to the fee otherwise payable under paragraph 3(a)
above. Such payment shall be made in twelve equal monthly installments and shall
be subject to customary withholding taxes (if any).
4. Term. Executive shall serve as the Chairman for three (3)
years from the date hereof (the "Board Period"). Subject to earlier termination
as specifically provided in this Agreement, the Board Period shall be
automatically extended for additional terms of one (1) year each, unless,
- 2 -
<PAGE> 3
by an action of a majority of the directors then on the Board (excluding
Executive), the Company notifies Executive of its election not to extend the
Board Period in writing no less than ninety (90) days prior to the expiration of
the then current term,. The Board Period shall terminate (the "Termination")
prior to such date upon (i) Executive's resignation, death or Permanent
Disability, (ii) upon the removal of the Executive for Cause or (iii) a
Qualified Public Offering. The Board Period may be terminated, and the Executive
may be removed as Chairman at any time (whether with or without Cause) at the
option of the Board.
5. Confidentiality. Executive understands and agrees that the
nature of the Company's business, including the Company's customer lists,
business plans, budgets, contracts, personnel information, methods and systems
used in conducting business, pricing policies, technical bulletins, manuals,
profit and loss information and other related internal business information and
trade secrets are all of a confidential nature and are valuable assets of the
Company. Executive covenants and agrees, upon due termination of the Board
Period for any reason, to immediately return to the Company all such
confidential information and documents referred to in the preceding sentence
(including any other trade secret information) and will not make copies of such
materials. Further, Executive covenants and agrees that he will not at any time
furnish, divulge or otherwise disclose such confidential information or material
to anyone other than those within the Company authorized to receive information,
and will not use such material and information against the best interest of the
Company, except as required by law. In the event of any actual or threatened
breach by Executive of the provisions of this confidentiality covenant, the
Company shall be entitled to a temporary and/or permanent injunction from any
court of competent jurisdiction, without posting bond or other security,
restraining Executive from violating this confidentiality covenant. Nothing
herein stated shall be construed as prohibiting the Company from pursuing any
other remedies available to Company for such breach or threatened breach,
including the recovery of damages from Executive.
6. Noncompete and Nonsolicitation. During the Board Period and
for a period of eighteen (18) months after Executive's Termination (unless
Executive has been terminated without Cause, in which case, during the Board
Period and for a period of twelve(12) months thereafter) , Executive will not
(for himself or on behalf of, or in conjunction with any other person or
persons, limited liability company, partnership, proprietorship, corporation or
other business entity), directly or indirectly, own, manage, operate, control,
be employed by, consult with, participate in, or be connected in any manner with
the ownership, management, operation, consulting or control of, any business
engaged in the Company's Business, and operating anywhere in North America,
Continental Europe and the United Kingdom, Bahamas and any other country where
the Company is operating or has a joint venture on the date of Executive's
termination of employment. Notwithstanding anything contrary in this paragraph,
this covenant not to compete shall not prohibit Executive from owning less than
2% of any class of stock in any publicly traded corporation provided that
Executive has no rights or affiliation with such corporation other than his
rights as a stockholder. In the event of any actual or threatened breach by
Executive of the provisions of this non-competition covenant, the Company and/or
ASIG shall, notwithstanding the provisions of paragraph 9(j), be entitled to a
temporary and/or permanent injunction from any court of competent jurisdiction,
without posting bond or other security, restraining Executive from owning,
managing, operating, controlling, being employed by, participating in or being
in any way so connected with any such business. Nothing herein stated shall be
construed as prohibiting the Company and/or ASIG from pursuing any other
remedies available to the Company and/or ASIG for such breach or threatened
breach, including the recovery of damages from Executive.
- 3 -
<PAGE> 4
During the Board Period and for a period of eighteen (18)
months after Executive's Termination, Executive shall not directly or indirectly
through another entity (i) induce or attempt to induce any employee of the
Company or its direct or indirect Subsidiaries, or in any way interfere with the
relationship between the Company or its direct or indirect Subsidiaries and any
employee thereof, (ii) hire any person who was an employee of the Company or its
direct or indirect Subsidiaries at any time while Executive served as Chairman
or (iii) induce or attempt to induce any customer, supplier, licensee, licensor,
franchisee or other business relation of the Company or its direct or indirect
Subsidiaries to cease doing business with the Company or its direct or indirect
Subsidiaries, or in any way interfere with the relationship between any such
customer, supplier, licensee or business relation and the Company or its direct
or indirect Subsidiaries (including, without limitation, making any negative
statements or communications about the Company or the Company's stockholders,
other directors or management).
If any one of the restrictions contained herein shall for any
reason be held to be excessively broad as to duration or geographical area, it
shall be deemed amended by limiting and reducing it so as to be valid and
enforceable to the extent compatible with applicable law.
7. Definitions.
"Board' means the Board of Directors of the Company.
"Cause" shall mean any of the following acts by Executive: (i)
the commission of a felony or a crime involving moral turpitude (as determined
by the Board in its good faith judgment) or any indictment for a felony or crime
involving moral turpitude, (ii) the commission of any other act or omission
involving dishonesty, disloyalty or fraud with respect to the Company or any of
its Subsidiaries or any of their customers or suppliers, (iii) conduct tending
to bring the Company or any of its Subsidiaries into substantial public disgrace
or disrepute, (iv) failure to perform duties as reasonably directed by the Board
which failure is not cured within 15 days after written notice thereof to
Executive, (v) gross negligence or willful misconduct with respect to the
Company or any of its Subsidiaries or (vi) any other material breach of this
Agreement which is not cured within 15 days after written notice thereof to
Executive.
Should the Company and Executive be unable to agree on whether
or not the Executive's conduct, acts or omissions constitute Cause within thirty
(30)days after the Board Period and Executive's duties as Chairman have been
terminated, the controversy as to whether Executive's conduct constitutes Cause
(without regard to whether the Board acted in good faith) shall be settled by
arbitration as provided in paragraph 9(j). Executive shall not be deemed to have
been terminated for "Cause" without delivery to Executive of a written notice
from the Company specifying in reasonable detail the facts and circumstances
that are the basis for terminating the Board Period and Executive's duties as
Chairman.
"Common Stock" shall mean any class of common stock of the
Company, whether voting or nonvoting, issued and outstanding.
- 4 -
<PAGE> 5
"Company Stock" means the Company's Common Stock, Notes and
Preferred Stock.
"Company Business" shall include any business engaged in by
the Company and/or ASIG at any time during the Board Period, including without
limitation, ASIG's business of (a) providing fueling services at airports, (b)
owning or operating fuel storage and distribution facilities, and (c) providing
ground handling, baggage and supply services at airports.
"Independent Third Party" means any person (other than
Chairman and all other executive employees of the Company and its Subsidiaries)
(i) who, immediately prior to the contemplated transaction, does not own Company
Stock representing in excess of 5% of the Company's Voting Power, (ii) who is
not controlling, controlled by or under common control with any such person, and
(iii) who is not the spouse or descendant (by birth or adoption) of any such
person.
"Liquidity Event" means (i) a sale for cash of all or
substantially all of the assets of the Company or ASIG to an Independent Third
Party pursuant to which the holders of Company Stock receive cash or Readily
Marketable Securities sufficient to return to the Other Investors in an amount
in excess of the aggregate purchase price paid for Company stock under the
Purchase Agreement plus $1,350,000, (ii) a recapitalization pursuant to which
the Notes are repaid in full, the Preferred Stock is redeemed and the holders of
Common Stock receive cash or Readily Marketable Securities sufficient to return
to the Other Investors in an amount in excess of the aggregate purchase price
paid for Company stock under the Purchase Agreement plus $1,350,000, (iii) a
sale of all of the capital stock of the Company for cash or Readily Marketable
Securities sufficient to return to the Other Investors in an amount in excess of
the aggregate purchase price paid for Company stock under the Purchase
Agreement, (iv) upon the termination of all holdback or standstill agreements
entered into by the Company or the Other Investors in connection with the
consummation of a Qualified Public Offering or (v) the Company Stock satisfying
the Market Float Requirements.
"1933 Act" means the Securities Act of 1933, as amended from
time to time.
"Market Float Requirements" means that the Common Stock which
has been registered and sold in one or more underwritten public offerings has an
aggregate capitalization value in excess of $30,000,000 of Common Stock.
"Notes" means the subordinated notes issued by the Company
under the Securities Purchase Agreement.
"Other Investors" means each of John Hancock Mutual Life
Insurance Company and CIBC Wood Gundy Ventures, Inc., Gregory Engles and
Randolph Street Partners, II.
"Permanent Disability" means a disability which, in the good
faith judgment of the Board of Directors, renders Executive mentally
incapacitated or physically disabled so that he is unable to engage in his usual
duties for a period of ninety (90) days or more, whether consecutive or not,
within any twelve (12) consecutive month period.
- 5 -
<PAGE> 6
"Preferred Stock" means the Series A Preferred Stock of the
Company, issued and outstanding.
"Qualified Public Offering" means the sale, in an underwritten
public offering by the Company registered under the 1933 Act, of shares of
Common Stock having an aggregate primary offering value of at least $30 million
and a market valuation of the Common Stock that would, should the Company be
liquidated, be sufficient to return to the Other Investors their investments
made pursuant to the Securities Purchase Agreement plus $1,350,000.
"Readily Marketable Securities" means securities of any class
which are freely tradeable without restriction, and of which securities of such
class have been registered and sold in one or more underwritten public offerings
and that at the time of determination have an aggregate market value in excess
of $30,000,000.
"Securities Purchase Agreement" means the Securities Purchase
Agreement of even date between the Company and the other persons named therein.
"Securityholders Agreement" means the Securityholders
Agreement of even date between the Company, John Hancock Mutual Life Insurance
Company, CIBC Wood Gundy Ventures, Inc., the Danielle Schwartz Trust and certain
other persons named therein.
"Subsidiary" means any corporation of which the Company owns
securities having a majority of the ordinary voting power in electing the board
of directors directly or through one or more subsidiaries.
"Termination" has the meaning set forth in paragraph 4.
"Voting Power" means, with respect to each share of Company
Stock as determined on a fully-diluted basis, one (1) vote per share with
respect to each share of Class A Common Stock and each share of Class B Common
Stock (whether designated as voting or nonvoting).
8. Notices. Any notice provided for in this Agreement must be
in writing and must be either personally delivered, mailed by first class mail
(postage prepaid and return receipt requested) or sent by reputable overnight
courier service (charges prepaid) to the recipient at the address below
indicated:
To the Company:
Ranger Aerospace Corporation
GSP International Airport
Box 12233
Greenville, SC 29612
Attention: Chief Financial Officer
- 6 -
<PAGE> 7
With copies (which shall not constitute notice) to:
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: William S. Kirsch, P.C.
Telephone: (312) 861-2288
Facsimile: (312) 861-2200
To ASIG:
Aircraft Service International Group, Inc.
8240 NW 52 Terrace, #200
Miami, FL 33166-7766
Telephone: (305) 599-1600
Facsimile: (305) 592-7864
Attention: Chief Financial Officer
To Executive:
George Schwartz
Tioga Capital Corporation
644 Santa Helena
Solana Beach, CA 92075
Telephone: (619) 481-5151
Facsimile: (619) 481-8484
with a copy (which shall not constitute notice) to:
Gregory Keever, Esq.
Coudert Brothers
1055 West Seventh Street, 20th Floor
Los Angeles, CA 90017
Telephone: (213) 891-0232
Facsimile: (213) 689-4467
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party. Any
notice under this Agreement shall be deemed to have been given when so delivered
or sent or, if mailed, five days after deposit in the U.S.
mail.
- 7 -
<PAGE> 8
9. General Provisions.
(a) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this Agreement shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.
(b) Complete Agreement. This Agreement and those documents
expressly referred to herein embody the complete agreement and understanding
among the parties and supersede and preempt any prior understandings, agreements
or representations by or among the parties, written or oral, which may have
related to the subject matter hereof in any way.
(c) Counterparts. This Agreement may be executed in any number
of counterparts, each of which is deemed to be an original and all of which
taken together constitute one and the same agreement.
(d) Successors and Assigns. Except as otherwise provided
herein, this Agreement shall bind and inure to the benefit of and be enforceable
by Executive, the Company, ASIG and their respective successors and assigns;
provided that the rights and obligations of Executive under this Agreement shall
not be assignable.
(e) Choice of Law. The corporate law of the State of Delaware
shall govern all questions concerning the relative rights of the Company or its
stockholders. All other questions con cerning the construction, validity,
enforcement and interpretation of this Agreement and the exhibits hereto shall
be governed by the internal law, and not the law of conflicts, of the State of
Delaware.
(f) Remedies. Each of the parties to this Agreement shall be
entitled to enforce its rights under this Agreement specifically, to recover
damages and costs (including reasonable attorney's fees) caused by any breach of
any provision of this Agreement and to exercise all other rights existing in its
favor. The parties hereto agree and acknowledge that money damages would not be
an adequate remedy for any breach of the provisions of this Agreement and that
any party shall be entitled to specific performance and/or other injunctive
relief (without posting any bond or deposit) from any court of competent
jurisdiction in order to enforce or prevent any violations of the provisions of
this Agreement.
(g) Amendment and Waiver. The provisions of this Agreement may
be amended and waived only by the written agreement of the Company and the
Chairman.
(h) Business Days. If any time period for giving notice or
taking action hereunder expires on a day which is a Saturday, Sunday or legal
holiday in the state in which the Company's chief executive office is located,
the time period shall be automatically extended to the business day immediately
following such Saturday, Sunday or holiday.
(i) Executive's Representations. Executive hereby represents
and warrants to the Company that (a) the execution, delivery and performance of
this Agreement by Executive does not and shall not conflict with, breach,
violate or cause a default under any contract, agreement,
- 8 -
<PAGE> 9
instrument, order, judgment or decree to which Executive is a party or by which
he is bound, (b) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any other
person or entity and (c) upon the execution and delivery of this Agreement by
the Company, this Agreement shall be the valid and binding obligation of
Executive, enforceable in accordance with its terms. Executive hereby
acknowledges and represents that he has consulted with independent legal counsel
regarding his rights and obligations under this Agreement and that he fully
understands the terms and conditions contained herein.
(j) Arbitration. Any dispute or controversy arising under or
in connection with this Agreement shall be settled exclusively by arbitration in
accordance with the requirements of the labor arbitration rules of the American
Arbitration Association then in effect. Arbitration shall commence upon the
appointment of arbitrators mutually agreeable to the parties and shall continue,
without interruption unless required by arbitrator, with written decision of the
arbitrator(s) to be issued within one-hundred fifty (150) days after filing a
Notice of Arbitration. All expenses and fees incurred in the conduct of the
arbitration shall be shared by Executive and ASIG. Each party shall bear its own
respective attorneys' and other legal fees. Any decision, award or order by
arbitration shall be binding upon the parties hereof.
* * * *
- 9 -
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first written above.
RANGER AEROSPACE CORPORATION
By: /s/ STEPHEN D. TOWNES
---------------------------------
Its: President and CEO
--------------------------------
AIRCRAFT SERVICES INTERNATIONAL
GROUP, INC.
By: /s/ STEPHEN D. TOWNES
---------------------------------
Its: President
--------------------------------
TIOGA CAPITAL CORPORATION
By: /s/ GEORGE B. SCHWARTZ
---------------------------------
Its: President
--------------------------------
/s/ GEORGE B. SCHWARTZ
------------------------------------
GEORGE SCHWARTZ
<PAGE> 1
Exhibit 21.1
SUBSIDIARIES OF AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
<TABLE>
<CAPTION>
NAME OF COMPANY JURISDICTION OF FORMATION
- - --------------- -------------------------
<S> <C>
Aircraft Service International, Inc. Delaware
ASII (Aircraft Service Canada) LTD. Canada
ASII Holding GmbH Germany
ASIG Europe Limited England
Aircraft Service Ltd. England
Dispatch Services, Inc. Florida
Florida Aviation Fueling Company, Inc. Florida
Bahamas Airport Services Limited Bahamas
Freeport Flight Services, LTD. Bahamas
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated May 1, 1998 for Aircraft Service International Group
and September 16, 1998 for Aircraft Service International Group, Inc., in
Amendment No. 1 to the Registration Statement (Form S-4 No. 333-64513) and
related Prospectus of Aircraft Service International Group, Inc. for the
registration of $80,000,000 aggregate principal amount of its Series B 11%
Senior Notes due 2005.
/s/ Ernst & Young LLP
Miami, Florida
November 11, 1998
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the use in this Registration Statement of Aircraft Service
International Group, Inc. of our report dated July 7, 1998 (relating to the
financial statements of Aircraft Service Limited not presented separately
herein) appearing in the Prospectus, which is part of this Registration
Statement.
We also consent to the reference to us under the heading "Experts" in such
Prospectus.
DELOITTE & TOUCHE
Chartered Accountant
Hill House
1 Little New Street
London EC4A 3TR
November 13, 1998
<PAGE> 1
EXHIBIT 99.1
LETTER OF TRANSMITTAL
To Tender for Exchange
11% Senior Notes due 2005
of
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
Pursuant to the Prospectus
Dated , 1998
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 199 UNLESS EXTENDED.
TO: STATE STREET BANK AND TRUST COMPANY (THE "EXCHANGE AGENT")
By Registered or Certified Mail
State Street Bank and Trust Company
Corporate Trust Department
P.O. Box 778
Boston, Massachusetts 02110
Attn:
By Hand in New York (as Drop Agent):
State Street Bank and Trust Company, N.A.
61 Broadway
Concourse Level, Corporate Trust Window
New York, New York 10006
By Facsimile:
(For Eligible Institutions only)
(617) 664-5290
Overnight Courier:
State Street Bank and Trust Company
Corporate Trust Department
Two International Place
Boston, Massachusetts 02110
Attn:
By Hand in Hartford:
State Street Bank and Trust Company
Two International Place
Fourth Floor, Corporate Trust Department
Boston, Massachusetts 02110
Attn:
Confirm by Telephone:
(617) 664-5314
------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF THIS LETTER OF TRANSMITTAL VIA A FACSIMILE NUMBER
OTHER THAN THE ONE LISTED ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned acknowledges receipt of the Prospectus, dated ,
1998 (the "Prospectus") of Aircraft Service International Group, Inc. (the
"Company") and the related Letter of Transmittal (the "Letter of Transmittal"),
which together describe the Company's offer (the "Exchange Offer") to exchange
$1,000 principal amount at maturity of its Series B 11% Senior Notes due 2005
(the "Exchange Notes"), which have been registered under the Securities Act of
1933, as amended (the "Securities Act"), pursuant to a Registration Statement,
for each $1,000 principal amount at maturity of its outstanding 11% Senior Notes
due 2005 (the "Notes"), of which $80,000,000 principal amount at maturity is
outstanding. The term "Expiration Date" shall mean 5:00 p.m., New York City
time, on , 1998, unless the Company, in its sole discretion, extends
the Exchange Offer, in which case the term shall mean the latest date and time
to which the Exchange Offer is extended. The term "holder" with respect to the
Exchange Offer means any
<PAGE> 2
person in whose name Notes are registered on the books of the Company or any
other person who has obtained a properly completed bond power from the
registered holder. Capitalized terms used but not defined herein have the
respective meanings set forth in the Prospectus.
This Letter of Transmittal is to be used by holders of Notes if (i)
certificates representing the Notes are to be physically delivered to the
Exchange Agent herewith, (ii) tender of the Notes is to be made by book-entry
transfer to the Exchange Agent's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Procedures for Tendering" by
any financial institution that is a participant in the Book-Entry Transfer
Facility and whose name appears on a security position listing as the owner of
Notes to the extent provided herein or (iii) tender of the Notes is to be made
according to the guaranteed delivery procedures described in the Prospectus
under the caption "The Exchange Offer -- Guaranteed Delivery Procedures." See
Instruction 2. Delivery of documents to the Book-Entry Transfer Facility does
not constitute delivery to the Exchange Agent.
Notwithstanding the foregoing, valid acceptance of the terms of the
Exchange Offer may be effected by a participant in the Book-Entry Transfer
Facility tendering Notes through the Book-Entry Transfer Facility's Automated
Tender Offer Program ("ATOP") where the Exchange Agent receives an Agent's
Message prior to the Expiration Date. Accordingly, such participant must
electronically transmit its acceptance to the Book-Entry Transfer Facility
through ATOP, and then the Book-Entry Transfer Facility will edit and verify the
acceptance, execute a book-entry delivery to the Exchange Agent's account at the
Book-Entry Transfer Facility and send an Agent's Message to the Exchange Agent
for its acceptance. By tendering through ATOP, participants in the Book-Entry
Transfer Facility will expressly acknowledge receipt of this Letter of
Transmittal and agree to be bound by its terms and the Company will be able to
enforce such agreement against such Book-Entry Transfer Facility participants.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Exchange Offer. Holders who wish to tender their Notes must complete this
letter in its entirety.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE BOOK-ENTRY
TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution:
- - -------------------------------------------------------------------------------
Account Number:
- - --------------------------------------------------------------------------------
Transaction Code Number:
- - --------------------------------------------------------------------------------
Principal Amount at Maturity of Tendered Notes:
- - ------------------------------------------------------------
If holders desire to tender Notes pursuant to the Exchange Offer and (i)
time will not permit this Letter of Transmittal, certificates representing
Notes, an Agent's Message or other required documents to reach the Exchange
Agent prior to the Expiration Date, or (ii) the procedures for book-entry
transfer cannot be completed prior to the Expiration Date, such holders may
effect a tender of such Notes in accordance with the guaranteed delivery
procedures set forth in the Prospectus under the caption "The Exchange Offer --
Guaranteed Delivery Procedures." See Instruction 2 below.
2
<PAGE> 3
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE THE
FOLLOWING (SEE INSTRUCTION 2):
Name of Registered or Acting Holder(s):
- - --------------------------------------------------------------------
Window Ticket No. (if any):
- - --------------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
- - --------------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
- - ------------------------------------------------------
If Delivered by Book-Entry Transfer, the Account Number:
- - -------------------------------------------------
Transaction Code Number:
- - --------------------------------------------------------------------------------
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
PLEASE NOTE: THE COMPANY HAS AGREED THAT, FOR A PERIOD OF 180 DAYS AFTER
THE EXPIRATION DATE, IT WILL MAKE COPIES OF THE PROSPECTUS AVAILABLE TO ANY
PARTICIPATING BROKER-DEALER FOR USE IN CONNECTION WITH RESALES OF THE
EXCHANGE NOTES (PROVIDED THAT THE COMPANY RECEIVES NOTICE FROM ANY
PARTICIPATING BROKER-DEALER OF ITS STATUS AS A PARTICIPATING BROKER-DEALER
WITHIN 30 DAYS AFTER THE CONSUMMATION OF THE EXCHANGE OFFER).
Name:
----------------------------------------------------------------------------
Address:
----------------------------------------------------------------------------
Attention:
----------------------------------------------------------------------------
List below the Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the certificate numbers and principal amount
of Notes should be listed on a separate signed schedule affixed hereto.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL CAREFULLY BEFORE COMPLETING
<TABLE>
<S> <C> <C> <C>
- - ---------------------------------------
BOX 1
DESCRIPTION OF NOTES
- - ---------------------------------------
PRINCIPAL AMOUNT AT
AGGREGATE PRINCIPAL MATURITY TENDERED
NAME(S) AND ADDRESS(ES) OF AMOUNT AT MATURITY (MUST BE AN INTEGRAL
REGISTERED HOLDER(S) CERTIFICATE REPRESENTED MULTIPLE
(PLEASE FILL IN, IF BLANK) NUMBER(S)* BY CERTIFICATE(S) OF $1,000)**
- - ------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
--------------------------------------------------------------------
TOTAL
- - ---------------------------------------
* Need not be completed by holders tendering by book-entry transfer.
** Unless indicated in the column labeled "Principal Amount at Maturity Tendered," any tendering holder of
Notes will be deemed to have tendered the entire aggregate principal amount at maturity represented by
the column labeled "Aggregate Principal Amount at Maturity Represented by Certificate(s)." If the space
provided above is inadequate, list the certificate numbers and principal amounts on a separate signed
schedule and affix the list to this Letter of Transmittal.
The minimum permitted tender is $1,000 in principal amount at maturity of Notes. All other tenders must
be in integral multiples of $1,000.
- - ---------------------------------------
</TABLE>
3
<PAGE> 4
BOX 2
SPECIAL REGISTRATION INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5, AND 6)
To be completed ONLY if certificates for Notes in a principal amount not
tendered, or Exchange Notes issued in exchange for Notes accepted for exchange,
are to be issued in a name other than the name appearing in Box 1 above.
Issue certificate(s) to:
Name
- - ----------------------------------------------
(Please Print)
Address
- - --------------------------------------------
-----------------------------------------------------
(Include Zip Code)
- - ------------------------------------------------------
(Tax Identification or Social Security Number)
BOX 3
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4, 5 AND 6)
To be completed ONLY if certificates for Notes in a principal amount not
tendered, or Exchange Notes issued in exchange for Notes accepted for exchange,
are to be sent to an address other than the address appearing in Box 1 above, or
if Box 2 is filled in, to an address other than the address appearing in Box 2.
Deliver certificate(s) to:
Name
- - ----------------------------------------------
(Please Print)
Address
- - --------------------------------------------
-----------------------------------------------------
(Include Zip Code)
- - ------------------------------------------------------
(Tax Identification or Social Security Number)
BOX 4
BROKER-DEALER STATUS
[ ] Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes for
its own account as a result of market-making activities or other trading
activities. IF THIS BOX IS CHECKED, PLEASE SEND A COPY OF THIS LETTER OF
TRANSMITTAL TO F. ANDREW MITCHELL, CHIEF FINANCIAL OFFICER, VIA FACSIMILE
(305)592-7864.
4
<PAGE> 5
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Subject to the terms and conditions of the Exchange Offer, the undersigned
hereby tenders to the Company, the principal amount of Notes indicated above.
Subject to and effective upon the acceptance for exchange of the principal
amount of Notes tendered in accordance with this Letter of Transmittal, the
undersigned sells, assigns and transfers to, or upon the order of, the Company
all right, title and interest in and to the Notes tendered hereby. The
undersigned hereby irrevocably constitutes and appoints the Exchange Agent its
agent and attorney-in-fact (with full knowledge that the Exchange Agent also
acts as the agent of the Company) with respect to the tendered Notes with the
full power of substitution to (i) present such Notes and all evidences of
transfer and authenticity to, or transfer ownership of, such Notes on the
account books maintained by the Book-Entry Transfer Facility to, or upon, the
order of, the Company, (ii) deliver certificates for such Notes to the Company
and deliver all accompanying evidences of transfer and authenticity to, or upon
the order of, the Company and (iii) present such Notes for transfer on the books
of the Company and receive all benefits and otherwise exercise all rights of
beneficial ownership of such Notes, all in accordance with the terms of the
Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Notes tendered
hereby and that the Company will acquire good, valid and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claims, when the same are acquired by the Company.
The undersigned hereby further represents that any Exchange Notes acquired in
exchange for Notes tendered hereby will have been acquired in the ordinary
course of business of the person receiving such Exchange Notes, whether or not
such person is the undersigned, that neither the undersigned nor any other such
person has any arrangement or understanding with any person to participate in
the distribution of such Exchange Notes and that neither the undersigned nor any
such other person is an "affiliate," as defined in Rule 405 under the Securities
Act, of the Company. In addition, the undersigned and any such person
acknowledge that (a) any person participating in the Exchange Offer for the
purpose of distributing the Exchange Notes must, in the absence of an exemption
therefrom, comply with the registration and prospectus delivery requirements of
the Securities Act in connection with a secondary resale of the Exchange Notes
and cannot rely on the position of the staff of the Securities and Exchange
Commission enunciated in no-action letters and (b) failure to comply with such
requirements in such instance could result in the undersigned or such person
incurring liability under the Securities Act for which the undersigned or such
person is not indemnified by the Company. The undersigned will, upon request,
execute and deliver any additional documents deemed by the Exchange Agent or the
Company to be necessary or desirable to complete the assignment, transfer and
purchase of the Notes tendered hereby. If the undersigned is not a
broker-dealer, the undersigned represents that it is not engaged in and does not
intend to engage in, a distribution of Exchange Notes. If the undersigned is a
broker-dealer that will receive Exchange Notes for its own account in exchange
for Notes that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a Prospectus in
connection with any resale of such Exchange Notes, however, by so acknowledging
and by delivering a Prospectus, the undersigned will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act. Unless
otherwise notified in accordance with the instructions set forth herein in Box 4
under "Broker-Dealer Status," the Company will assume that the undersigned is
not a Participating Broker-Dealer.
For purposes of the Exchange Offer, the Company shall be deemed to have
accepted validly tendered Notes when, as and if the Company has given notice
thereof to the Exchange Agent.
If any Notes tendered herewith are not accepted for exchange pursuant to
the Exchange Offer for any reason, certificates for any such unaccepted Notes
will be returned, without expense, to the undersigned at the address shown below
or to a different address as may be indicated herein in Box 3 under "Special
Delivery Instructions" as promptly as practicable after the Expiration Date.
5
<PAGE> 6
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death, incapacity or dissolution of the
undersigned, and every obligation of the undersigned under this Letter of
Transmittal shall be binding upon the undersigned's heirs, personal
representative, successors and assigns.
The undersigned understands that tenders of Notes pursuant to the
procedures described under the caption "The Exchange Offer -- Procedures for
Tendering" in the Prospectus and in the instructions hereto will constitute a
binding agreement between the undersigned and the Company upon the terms and
subject to the conditions of the Exchange Offer, subject only to withdrawal of
such tenders on the terms set forth in the Prospectus under the caption "The
Exchange Offer -- Withdrawal of Tenders."
Unless otherwise indicated in Box 2 under "Special Registration
Instructions," please issue the certificates representing the Exchange Notes
issued in exchange for the Notes accepted for exchange and any certificates for
Notes not tendered or not exchanged, in the name(s) of the registered holder of
the Notes appearing in Box 1 above. Similarly, unless otherwise indicated in Box
3 under "Special Delivery Instructions," please send the certificates, if any,
representing the Exchange Notes issued in exchange for the Notes accepted for
exchange and any certificates for Notes not tendered or not exchanged (and
accompanying documents, as appropriate) to the undersigned at the address shown
below in the undersigned's signature(s). In the event that the box entitled
"Special Registration Instructions" and the box entitled "Special Delivery
Instructions" both are completed, please issue the certificates representing the
Exchange Notes issued in exchange for the Notes accepted for exchange in the
name(s) of, and return any certificates for Notes not tendered or not exchanged
to, the person(s) so indicated. The undersigned understands that the Company has
no obligation pursuant to the "Special Registration Instructions" and "Special
Delivery Instructions" to transfer any Notes from the name of the registered
holder(s) thereof if the Company does not accept for exchange any of the Notes
so tendered.
Holders who wish to tender their Notes and (i) whose Notes are not
immediately available or (ii) who cannot deliver the Notes, an Agent's Message,
this Letter of Transmittal or any other documents required hereby to the
Exchange Agent prior to the Expiration Date, may tender their Notes according to
the guaranteed delivery procedures set forth in the Prospectus under the caption
"The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction 2.
6
<PAGE> 7
The lines below must be signed by the registered holder(s) exactly as their
name(s) appear(s) on the Notes or by person(s) authorized to become registered
holder(s) by a properly completed bond power from the registered holder(s), a
copy of which must be transmitted with this Letter of Transmittal. If Notes to
which this Letter of Transmittal relate are held of record by two or more joint
holders, then all such holders must sign this Letter of Transmittal.
- - --------------------------------------------------------------------------------
SIGNATURES
<TABLE>
<S> <C> <C> <C>
x
------------------------------------------------------------ -------------------------------
Date
x
------------------------------------------------------------ -------------------------------
Date
</TABLE>
Area Code and Telephone Number:
----------------------------------------------
If signature is by a trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a
fiduciary or representative capacity, then such person must (i) set forth
his or her full title below and (ii) submit evidence satisfactory to the
Company of such person's authority so to act. See Instruction 5.
Name(s)
--------------------------------------------------------------------------
(PLEASE PRINT)
Capacity:
--------------------------------------------------------------------------
Address
--------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
MEDALLION SIGNATURE GUARANTEE
(If required by Instruction 5)
Certain Signatures must be Guaranteed by an Eligible Institution
Signature(s) Guaranteed by an Eligible Institution:
---------------------------------------------------------------
(Authorized Signature)
--------------------------------------------------------------------------
(TITLE)
--------------------------------------------------------------------------
(NAME OF FIRM)
--------------------------------------------------------------------------
(ADDRESS, INCLUDE ZIP CODE)
--------------------------------------------------------------------------
(AREA CODE AND TELEPHONE NUMBER)
- - --------------------------------------------------------------------------------
7
<PAGE> 8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS
OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES FOR NOTES OR
BOOK-ENTRY CONFIRMATIONS. Certificates representing the tendered Notes (or a
confirmation of book-entry transfer of such Notes into the Exchange Agent's
account with the Book-Entry Transfer Facility), as well as a properly completed
and duly executed copy of this Letter of Transmittal (or, in the case of a book-
entry transfer, an Agent's Message), a Substitute Form W-9 and any other
documents required by this Letter of Transmittal must be received by the
Exchange Agent at its address set forth herein prior to the Expiration Date. The
method of delivery of certificates for Notes and all other required documents is
at the election and sole risk of the tendering holder and delivery will be
deemed made only when actually received by the Exchange Agent. If delivery is by
mail, registered mail with return receipt requested, properly insured, is
recommended. As an alternative to delivery by mail, the holder may wish to use
an overnight or hand delivery service. In all cases, sufficient time should be
allowed to assure timely delivery. Neither the Company nor the Exchange Agent is
under an obligation to notify any tendering holder of the Company's acceptance
of tendered Notes prior to the completion of the Exchange Offer.
2. GUARANTEED DELIVERY PROCEDURES. Holders who wish to tender their Notes
but whose Notes are not immediately available and who cannot deliver their
certificates for Notes (or comply with the procedures for book-entry transfer
prior to the Expiration Date), the Letter of Transmittal and any other documents
required by the Letter of Transmittal to the Exchange Agent prior to the
Expiration Date must tender their Notes according to the guaranteed delivery
procedures set forth below. Pursuant to such procedures:
(i) such tender must be made by or through a firm which is a member of
a registered national securities exchange or of the National Association of
Securities Dealers, Inc., or a commercial bank or trust company having an
office or correspondent in the United States (an "Eligible Institution");
(ii) prior to the Expiration Date, the Exchange Agent must have
received from the holder and the Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by facsimile transmission,
mail, or hand delivery) setting forth the name and address of the holder,
the certificate number or numbers of the tendered Notes, and the principal
amount of tendered Notes and stating that the tender is being made thereby
and guaranteeing that, within three New York Stock Exchange trading days
after the Expiration Date, the Letter of Transmittal (or facsimile thereof)
(or, in the case of a book-entry transfer, an Agent's Message), together
with the tendered Notes (or a confirmation of book-entry transfer of such
Notes into the Exchange Agent's account with the Book-Entry Transfer
Facility) and any other required documents will be deposited by the
Eligible Institution with the Exchange Agent; and
(iii) the certificates representing the tendered Notes in proper form
for transfer (or a confirmation of book-entry transfer of such Notes into
the Exchange Agent's account with the Book-Entry Transfer Facility),
together with this Letter of Transmittal (or facsimile thereof), properly
completed and duly executed, with any required signature guarantees (or, in
the case of a book-entry transfer, an Agent's Message) and all other
documents required by the Letter of Transmittal must be received by the
Exchange Agent within three New York Stock Exchange trading days after the
Expiration Date.
Failure to complete the guaranteed delivery procedures outlined above will
not, of itself, affect the validity or effect a revocation of any Letter of
Transmittal form properly completed and executed by a Holder who attempted to
use the guaranteed delivery procedure.
3. TENDER BY HOLDER. Only a registered holder of Notes may tender such
Notes in the Exchange Offer. Any beneficial owner of Notes who is not the
registered holder and who wishes to tender should arrange with such registered
holder to execute and deliver this Letter of Transmittal on such owner's behalf
or must, prior to completing and executing this Letter of Transmittal and
delivering such Notes, either make appropriate arrangements to register
ownership of the Notes in such owner's name or obtain a properly completed bond
power from the registered holder.
8
<PAGE> 9
4. PARTIAL TENDERS. Tenders of Notes will be accepted only in integral
multiples of $1,000 in principal amount at maturity. If less than the entire
principal amount at maturity of Notes is tendered, the tendering holder should
fill in the principal amount tendered in the column labeled "Principal Amount at
Maturity Tendered" of the box entitled "Description of Notes" (Box 1) above. The
entire principal amount at maturity of Notes delivered to the Exchange Agent
will be deemed to have been tendered unless otherwise indicated. If the entire
principal amount of Notes is not tendered, Notes for the principal amount at
maturity of Notes not tendered and Exchange Notes exchanged for any Notes
tendered will be sent to the holder at his or her registered address, unless a
different address is provided in the appropriate box on this Letter of
Transmittal, as soon as practicable following the Expiration Date.
5. SIGNATURES ON THE LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
MEDALLION GUARANTEE OF SIGNATURE. If this Letter of Transmittal is signed by the
registered holder(s) of the Notes tendered herewith, the signatures must
correspond with the name(s) as written on the face of the tendered Notes without
alteration, enlargement, or any change whatsoever.
If any of the tendered Notes are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any tendered
Notes are held in different names on several Notes, it will be necessary to
complete, sign, and submit as many separate copies of the Letter of Transmittal
documents as there are names in which tendered Notes are held.
If this Letter of Transmittal is signed by the registered holder, and
Exchange Notes are to be issued and any untendered or unaccepted principal
amount of Notes are to be reissued or returned to the registered holder, then,
the registered holder need not and should not endorse any tendered Notes nor
provide a separate bond power. In any other case, the registered holder must
either properly endorse the Notes tendered or transmit a properly completed
separate bond power with this Letter of Transmittal (executed exactly as the
name(s) of the registered holder(s) appear(s) on such Notes), with the
signature(s) on the endorsement or bond power guaranteed by an Eligible
Institution unless such certificates or bond powers are signed by an Eligible
Institution.
If this Letter of Transmittal or any Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing and evidence satisfactory to the Company
of their authority to so act must be submitted with this Letter of Transmittal.
No medallion signature guarantee is required if this Letter of Transmittal
is signed by the registered holder(s) of the Notes tendered herewith and the
Exchange Notes (and any Notes not tendered or not accepted) are to be issued
directly to such registered holder(s) and neither the "Special Registration
Instructions" (Box 2) nor the "Special Delivery Instructions" (Box 3) has been
completed. In all other cases, all signatures on this Letter of Transmittal must
be guaranteed by an Eligible Institution.
6. SPECIAL REGISTRATION AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate, in the applicable box, the name and address in which the Exchange
Notes and/or substitute Notes for principal amounts not tendered or not accepted
for exchange are to be sent, if different from the name and address or account
of the person signing this Letter of Transmittal. In the case of issuance in a
different name, the employer identification number or social security number of
the person named must also be indicated and the tendering holders should
complete the applicable box.
If no such instructions are given, the Exchange Notes (and any Notes not
tendered or not accepted) will be issued in the name of and sent to the
registered holder of the Notes.
7. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the sale and transfer of Notes to it or its order pursuant to the
Exchange Offer. If, however, a transfer tax is imposed for any reason other than
the transfer and sale of Notes to the Company or its order pursuant to the
Exchange Offer, then the amount of any such transfer taxes (whether imposed on
the registered holder or on any other person) will be payable by the tendering
holder. If satisfactory evidence of payment of such taxes or exemption from
taxes therefrom is not submitted with this Letter of Transmittal, the amount of
transfer taxes will be billed directly to such tendering holder.
9
<PAGE> 10
Except as provided in this Instruction 7, it will not be necessary for
transfer tax stamps to be affixed to the Notes listed in this Letter of
Transmittal.
8. TAX IDENTIFICATION NUMBER. Federal income tax law required that a holder
of any Notes which are accepted for exchange must provide the Company (as payor)
with its correct taxpayer identification number ("TIN"), which, in the case of a
holder who is an individual, is his or her social security number. If the
Company is not provided with the correct TIN, the holder may be subject to a $50
penalty imposed by Internal Revenue Service. (If withholding results in an
over-payment of taxes, a refund may be obtained.) Certain holders (including,
among other, all corporations and certain foreign individuals) are not subject
to these backup withholding and reporting requirements. See the enclosed
"Guidelines for Certification of Taxpayer Identification Number on Substitute
Form W-9" for additional instructions.
To prevent backup withholding, each tendering holder must provide such
holder's correct TIN by completing the Substitute Form W-9 set forth herein,
certifying that the TIN provided is correct (or that such holder is awaiting a
TIN), and that (i) the holder has not been notified by the Internal Revenue
Service that such holder is subject to backup withholding as a result of failure
to report a interest or dividends or (ii) the Internal Revenue Service has
notified the holder that such holder is no longer subject to backup withholding.
If the Notes are registered in more than one name or are not in the name of the
actual owner, see the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for information on which TIN to
report.
The Company reserves the right in its sole discretion to take whatever
steps are necessary to comply with the Company's obligation regarding backup
withholding.
9. VALIDITY OF TENDERS. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of tendered Notes will be determined
by the Company, in its sole discretion, which determination will be final and
binding. The Company reserves the right to reject any and all Notes not validly
tendered or any Notes, the Company's acceptance of which would, in the opinion
of the Company or its counsel, be unlawful. The Company also reserves the right
to waive any conditions of the Exchange Offer or defects or irregularities in
tenders of Notes as to any ineligibility of any holder who seeks to tender Notes
in the Exchange Offer. The interpretation of the terms and conditions of the
Exchange Offer (including this Letter of Transmittal and the instructions
hereto) by the Company shall be final and binding on all parties. Unless waived,
any defects or irregularities in connection with tenders of Notes must be cured
within such time as the Company shall determine. The Company will use reasonable
efforts to give notification of defects or irregularities with respect to
tenders of Notes, but shall not incur any liability for failure to give such
notification.
10. WAIVER OF CONDITIONS. The Company reserves the absolute right to amend,
waive, or modify specified conditions in the Exchange Offer in the case of any
tendered Notes.
11. NO CONDITIONAL TENDER. No alternative, conditional, irregular, or
contingent tender of Notes will be accepted.
12. MUTILATED, LOST, STOLEN, OR DESTROYED NOTES. Any tendering holder whose
Notes have been mutilated, lost, stolen, or destroyed should contact the
Exchange Agent at the address indicated above for further instruction.
13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Requests for information
and for additional copies of the Prospectus may be directed to the Exchange
Agent at the address set forth on the first page of this Letter of Transmittal.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
14. ACCEPTANCE OF TENDERED NOTES AND ISSUANCE OF EXCHANGE NOTES; RETURN OF
NOTES. Subject to the terms and conditions of the Exchange Offer, the Company
will accept for exchange all validly tendered Notes as soon as practicable after
the Expiration Date and will issue Exchange Notes therefor as soon as
practicable thereafter. For purposes of the Exchange Offer, the Company shall be
deemed to have accepted tendered Notes when, as and if the Company has given
notice thereof to the
10
<PAGE> 11
Exchange Agent. If any tendered Notes are not exchanged pursuant to the Exchange
Offer for any reason, such unexchanged Notes will be returned, without expense,
to the undersigned at the address shown above or at a different address as may
be indicated under "Special Delivery Instructions."
15. WITHDRAWAL. Tenders may be withdrawn only pursuant to the limited
withdrawal rights set forth in the Prospectus under the caption "The Exchange
Offer--Withdrawal of Tenders."
<TABLE>
<C> <S> <C> <C>
- - -----------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
- - -----------------------------------------------------------------------------------------------------------------------
SUBSTITUTE Part 1 -- PLEASE PROVIDE YOUR TAXPAYER Social Security Number
FORMW-9 IDENTIFICATION NUMBER ("TIN") IN THE BOX AT
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW or TIN
----/ ----/ ----
------------------------------------------------------------------------------------
Department of the
Treasury Internal Part 2 -- Check the box if you are NOT subject to backup withholding under the
Revenue Service provisions of section 3408(a)(1)(C) of the Internal Revenue Code because (1) you
have not been notified that you are subject to backup withholding as a result of
failure to report all interest of dividends or (2) the Internal Revenue Service has
notified you that you are no longer subject to backup withholding. [ ]
</TABLE>
<TABLE>
<C> <S> <C> <C>
---------------------------------------------------------------------------------
PAYER'S REQUEST FOR
TAXPAYER IDENTIFICATION CERTIFICATION -- UNDER THE PENALTIES OF PERJURY, I
NUMBER (TIN) CERTIFY THAT THE INFORMATION PROVIDED ON THIS FORM Part 3--
IS TRUE, CORRECT AND COMPLETE. Awaiting TIN , N
SIGNATURE ---------------------- DATE ------------
---------------------------------------------------------------------------------
Name (if joint names, list first and circle the name of the person or entity
whose number you enter in Part 1 below. See instructions if your name has
changed.)
---------------------------------------------------------------------------------
Address
---------------------------------------------------------------------------------
City, State and ZIP Code
---------------------------------------------------------------------------------
List account number(s) here (optional)
- - -----------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE EXCHANGE OFFER. PLEASE
REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9
- - --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(2) I intend to mail or deliver an application in the near future. I
understand that if I do not provide a taxpayer identification number by the
time of payment, 31% of all payments made to me on account of the Exchange
Notes shall be retained until I provide a taxpayer identification number to
the Exchange Agent and that, if I do not provide my taxpayer identification
number within 60 days, such retained amounts shall be remitted to the Internal
Revenue Service as backup withholding and 31% of all reportable payments made
to me thereafter will be withheld and remitted to the Internal Revenue Service
until I provide a taxpayer identification number.
Signature
----------------------------------------------------------- Date
---------------------------- , 199
-----
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11
<PAGE> 1
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
WITH RESPECT TO
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
11% SENIOR NOTES DUE 2005
This form must be used by a holder of 11% Senior Notes due 2005 (the
"Notes") of Aircraft Service International Group, Inc. (the "Company"), who
wishes to tender Notes to the Exchange Agent pursuant to the guaranteed delivery
procedures described in the section of the Prospectus entitled "The Exchange
Offer -- Guaranteed Delivery Procedures," and in Instruction 2 to the related
Letter of Transmittal. Any holder who wishes to tender Notes pursuant to such
guaranteed delivery procedures must ensure that the Exchange Agent receives this
Notice of Guaranteed Delivery prior to the Expiration Date of the Exchange
Offer. Capitalized terms not defined herein have the meanings ascribed to them
in the Letter of Transmittal.
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , , 199 UNLESS EXTENDED (THE "EXPIRATION DATE").
TO: STATE STREET BANK AND TRUST COMPANY
(THE "EXCHANGE AGENT")
<TABLE>
<S> <C>
By Registered or Certified Mail: Overnight Courier:
State Street Bank and Trust Company State Street Bank and Trust Company
Corporate Trust Department Corporate Trust Department
P.O. Box 778 Two International Place
Boston, Massachusetts 02110 Boston, Massachusetts 02110
Attn: Attn:
By Hand in New York (as Drop Agent): By Hand in Boston
State Street Bank and Trust Company, N.A. State Street Bank and Trust Company
61 Broadway Two International Place
Concourse Level, Corporate Trust Window Fourth Floor, Corporate Trust Department
New York, New York 10006 Boston, Massachusetts 02110
Attn:
By Facsimile:
Confirm by Telephone:
(For Eligible Institutions only)
(617) 664-529 (617) 664-5314
</TABLE>
DELIVERY OF THIS FORM TO AN ADDRESS, OR TRANSMISSION VIA FACSIMILE, OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on the
Letter of Transmittal is required to be guaranteed by an "Eligible Institution"
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal, receipt of which is hereby acknowledged, the principal amount at
maturity of Notes set forth below pursuant to the guaranteed delivery procedures
set forth in the Prospectus and in Instruction 2 of the Letter of Transmittal.
The undersigned hereby tenders the Notes listed below:
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------------------------------
CERTIFICATE NUMBER(S) (IF KNOWN) OF NOTES OR AGGREGATE PRINCIPAL AMOUNT AT AGGREGATE PRINCIPAL AMOUNT AT
ACCOUNT NUMBER AT THE BOOK-ENTRY FACILITY MATURITY REPRESENTED MATURITY TENDERED
<S> <C> <C>
- - -------------------------------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------------------------------
- - -------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
- - --------------------------------------------------------------------------------------------------
PLEASE SIGN AND COMPLETE
- - --------------------------------------------------------------------------------------------------
Signatures of Registered Holder(s) or Date: --------------------- ,199 -
Authorized Signatory:
- - ------------------------------- Address:
- - ----------------------------------------------- -----------------------------------------------
- - ----------------------------------------------- -----------------------------------------------
Name of Registered Holder(s): Area Code and Telephone No.:
- - ----------------- ----------------------
- - -----------------------------------------------
- - -----------------------------------------------
- - --------------------------------------------------------------------------------------------------
</TABLE>
- - --------------------------------------------------------------------------------
This Notice of Guaranteed Delivery must be signed by the Holder(s)
exactly as their name(s) appear on certificates for Notes or on a security
position listing as the owner of Notes, or by person(s) authorized to become
Holder(s) by endorsements and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must provide the following information:
Please print name(s) and address(es)
Name(s):
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Capacity:
------------------------------------------------------------------------------
Address(es):
------------------------------------------------------------------------------
------------------------------------------------------------------------------
------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
2
<PAGE> 3
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers,
Inc., or is a commercial bank or trust company having an office or
correspondent in the United States, or is otherwise an "eligible guarantor
institution" within the meaning of Rule 17Ad-15 under the Securities Exchange
Act of 1934, as amended, guarantees that either the Notes tendered hereby in
proper form for transfer (or confirmation of the book-entry transfer of such
Notes into the exchange Agent's account at Book-Entry Transfer Facility as
described in the Prospectus under the caption "The Exchange Offer--Guaranteed
Delivery Procedures"), together with a properly completed Letter of
Transmittal (or facsimile thereof) (or, in the case of a book-entry transfer,
an Agent's Message) and any other required documents will be received by the
Exchange Agent by 5:00 p.m., New York City time, on the third New York Stock
Exchange trading day following the Expiration Date.
Name of Firm:
------------------------------------
Address:
-------------------------------------------
-----------------------------------------------------
Area Code and Telephone No.:
-------------------
------------------------------------------------------
Authorized Signature
Name:
----------------------------------------------
Title:
------------------------------------------------
Date:
--------------------------------------, 199
DO NOT SEND NOTES WITH THIS FORM. ACTUAL SURRENDER OF NOTES MUST BE MADE
PURSUANT TO, AND BE ACCOMPANIED BY, AN EXECUTED LETTER OF TRANSMITTAL.
<PAGE> 4
INSTRUCTIONS FOR NOTICE OF GUARANTEED DELIVERY
1. Delivery of this Notice of Guaranteed Delivery. A properly completed and
duly executed copy of this Notice of Guaranteed Delivery and any other documents
required by this Notice of Guaranteed Delivery must be received by the Exchange
Agent at its address set forth herein prior to the Expiration Date. The method
of delivery of this Notice of Guaranteed Delivery and any other required
documents to the Exchange Agent is at the election and sole risk of the holder,
and the delivery will be deemed made only when actually received by the Exchange
Agent. If delivery is by mail, registered mail with return receipt requested,
properly insured, is recommended. As an alternative to delivery by mail, the
holders may wish to consider using an overnight or hand delivery service. In all
cases, sufficient time should be allowed to assume timely delivery. For a
description of the guaranteed delivery procedures, see Instruction 2 of the
Letter of Transmittal.
2. Signatures on this Notice of Guaranteed Delivery. If this Notice of
Guaranteed Delivery is signed by the registered holder(s) of the Notes referred
to herein, the signature must correspond with the name(s) written on the face of
the Notes without alteration, enlargement, or any change whatsoever. If this
Notice of Guaranteed Delivery is signed by a participant of the Book-Entry
Transfer Facility whose name appears on a security position listing as the owner
of Notes, the signature must correspond with the name shown on the security
position listing as the owner of the Notes.
If this Notice of Guaranteed Delivery is signed by a person other than the
registered holder(s) of any Notes listed or a participant of the Book-Entry
Transfer Facility, this Notice of Guaranteed Delivery must be accompanied by
appropriate bond powers, signed as the name of the registered holder(s) appears
on the Notes or signed as the name of the participant shown on the Book-Entry
Transfer Facility's security position listing.
If this Notice of Guaranteed Delivery is signed by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation, or other
person acting in a fiduciary or representative capacity, such person should so
indicate when signing and submit with the Letter of Transmittal evidence
satisfactory to the Company of such person's authority to so act.
3. Requests for Assistance or Additional Copies. Requests for information
and additional copies of the Prospectus may be directed to the Exchange Agent at
the address set forth on the first page of this Notice of Guaranteed Delivery.
Holders may also contact their broker, dealer, commercial bank, trust company,
or other nominee for assistance concerning the Exchange Offer.
<PAGE> 1
EXHIBIT 99.3
INSTRUCTIONS TO REGISTERED HOLDER AND/OR
BOOK-ENTRY TRANSFER FACILITY PARTICIPANT
FROM BENEFICIAL OWNER OF
AIRCRAFT SERVICE INTERNATIONAL GROUP, INC.
11% SENIOR NOTES DUE 2005
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 199 , UNLESS EXTENDED (THE "EXPIRATION DATE").
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned hereby acknowledges receipt of the Prospectus, dated
, 1998 (the "Prospectus"), of Aircraft Service International Group,
Inc., a Delaware corporation (the "Company"), and the accompanying Letter of
Transmittal (the "Letter of Transmittal"), that together constitute the
Company's offer (the "Exchange Offer") to exchange $1,000 principal amount at
maturity of its Series B 11% Senior Notes due 2005 (the "Exchange Notes"), for
each $1,000 principal amount at maturity of its outstanding 11% Senior Notes due
2005 (the "Notes"). Capitalized terms used but not defined herein have the
meanings ascribed to them in the Prospectus.
This will instruct you, the registered holder and/or book-entry transfer
facility participant, as to the action to be taken by you relating to the
Exchange Offer with respect to the Notes held by you for the account of the
undersigned.
The aggregate face amount at maturity of the Notes held by you for the account
of the undersigned is (FILL IN AMOUNT):
$ of the 11% Senior Notes due 2005.
With respect to the Exchange Offer, the undersigned hereby instructs you (CHECK
APPROPRIATE BOX):
[ ] TO TENDER the following Notes held by you for the account of the
undersigned (INSERT PRINCIPAL AMOUNT AT MATURITY OF NOTES TO BE TENDERED):
$
[ ] NOT TO TENDER any Notes held by you for the account of the undersigned.
If the undersigned instructs you to tender the Notes held by you for the
account of the undersigned, it is understood that you are authorized (a) to
make, on behalf of the undersigned (and the undersigned, by its signature below,
hereby makes to you), the representations and warranties contained in the Letter
of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations that (i) the
undersigned's principal residence is in the state of (fill in state) ,
(ii) the undersigned is acquiring the Exchange Notes in the ordinary course of
business of the undersigned, (iii) the undersigned is not participating, does
not intend to participate, and has no arrangement or understanding with any
person to participate in the distribution of the Exchange Notes, (iv) the
undersigned acknowledges that any person participating in the Exchange Offer for
the purpose of distributing the Exchange Notes must comply with the registration
and prospectus delivery requirements of the Securities Act of 1933, as amended
(the "Act"), in connection with a secondary resale transaction of the Exchange
Notes acquired by such person and cannot rely on the position of the staff of
the Securities and Exchange Commission set forth in no-action letters that are
discussed in the section of the Prospectus entitled "The Exchange
Offer -- Resale of the New Notes," and (v) the undersigned is not an
"affiliate," as defined in Rule 405 under the Act, of the Company; (b) to agree,
on behalf of the undersigned, as set forth in the Letter of Transmittal; and (c)
to take such other action as necessary under the Prospectus or the Letter of
Transmittal to effect the valid tender of such Notes.
<PAGE> 2
PLEASE NOTE: THE COMPANY HAS AGREED THAT, FOR A PERIOD OF 180 DAYS AFTER THE
EXPIRATION DATE, IT WILL MAKE COPIES OF THE PROSPECTUS AVAILABLE TO ANY
PARTICIPATING BROKER-DEALER FOR USE IN CONNECTION WITH RESALES OF THE EXCHANGE
NOTES (PROVIDED THAT THE COMPANY RECEIVES NOTICE FROM ANY PARTICIPATING
BROKER-DEALER OF ITS STATUS AS A PARTICIPATING BROKER-DEALER WITHIN 30 DAYS
AFTER THE CONSUMMATION OF THE EXCHANGE OFFER).
- - --------------------------------------------------------------------------------
[ ] Check this box if the Beneficial Owner of the Notes is a Participating
Broker-Dealer and such Participating Broker-Dealer acquired the Notes for
its own account as a result of market-making activities or other trading
activities. IF THIS BOX IS CHECKED, PLEASE SEND A COPY OF THESE
INSTRUCTIONS TO F. ANDREW MITCHELL, CHIEF FINANCIAL OFFICER, VIA FACSIMILE
(305) 592-7864.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
SIGN HERE
Name of beneficial owner(s):
------------------------------------------------------------------------------
Signature(s):
------------------------------------------------------------------------------
Name (please print):
------------------------------------------------------------------------------
Address:
------------------------------------------------------------------------------
Telephone number:
------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number:
------------------------------------------------------
Date:
------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
2
