SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
April 30, 1998
THE PITTSTON COMPANY
(Exact Name of registrant as specified in its charter)
Virginia 1-9148 54-1317776
(State or other (Commission (I.R.S. Employer
jurisdiction File Number) Identification No.)
of Incorporation)
1000 Virginia Center Parkway
P.O. Box 4229
Glen Allen, VA 23058-4229
(Address of principal (Zip Code)
executive offices)
(804) 553-3600
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
On April 30, 1998, the Registrant's wholly-owned
subsidiary, BAX Global Inc. ("BAX Global"), the operating
unit of the Pittston BAX Group (formerly the Pittston
Burlington Group), completed its previously announced
acquisition of Air Transport International LLC ("ATI") for
total consideration of approximately $29 million; including
approximately $27 million in cash and cash equivalents and
approximately $2 million in acquisition related costs. The
purchase price was established through arms-length
negotiations among the parties. The acquisition was funded
through the Registrant's existing revolving credit agreement
with a syndicate of banks.
ATI is a US-based freight and passenger airline which
operates a certificated fleet of aircraft providing services
to BAX Global along with other customers. A significant
portion of acquired property, plant and equipment of ATI
consists of aircraft and related parts used to operate the
fleet. As a subsidiary of BAX Global, ATI will continue to
operate this fleet. BAX Global will continue its business
relationship with ATI in connection with its overall
strategy to improve the quality of its service offerings for
its customers by increasing its control over flight
operations.
Item 7. Financial Statements and Exhibits
(a) Financial statements of ATI
Because definitive financial statements for ATI's
last completed fiscal year have not yet been
finalized, the Registrant has not yet determined
whether ATI is a significant subsidiary, as
defined by the Securities and Exchange Commission
Regulation S-X, Rule 1-02(w). If it is determined
that ATI is a significant subsidiary, such
statements will be filed under cover of Form 8-K/A
not later than July 13, 1998.
(b) Pro forma financial statements for BAX Global Inc.
Because definitive financial statements for ATI's
last completed fiscal year have not yet been
finalized, the Registrant has not yet determined
whether ATI is a significant subsidiary, as
defined by the Securities and Exchange Commission
Regulation S-X, Rule 1-02(w). If it is determined
that ATI is a significant subsidiary, pro forma
financial statements will be filed under cover of
Form 8-K/A not later than July 13, 1998.
(c) Index of Exhibits
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2. Membership Interest Acquisition Agreement
Among Air Transport International Limited
Liability Company and BAX Global Inc., dated
February 3, 1998.
SIGNATURE
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
THE PITTSTON COMPANY
(Registrant)
By /s/ Austin F. Reed
Secretary
Date: May 14, 1998
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EXHIBITS
Exhibit Description
2 Membership Interest Acquisition Agreement
Among Air Transport International Limited
Liability Company and BAX Global Inc., dated
February 3, 1998.
MEMBERSHIP INTEREST ACQUISITION AGREEMENT
AMONG
AIR TRANSPORT INTERNATIONAL LIMITED LIABILITY COMPANY
AND
BAX GLOBAL INC.
________________
Dated as of February 3, 1998
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MEMBERSHIP INTEREST ACQUISITION AGREEMENT
THIS MEMBERSHIP INTEREST ACQUISITION AGREEMENT (this
"Agreement") is made and entered into as of February 3, 1998
(the "Execution Date") by and among AIR TRANSPORT INTERNATIONAL
LIMITED LIABILITY COMPANY, a Nevada limited liability company
(the "Company" or "Debtor"), and BAX GLOBAL INC., a Delaware
corporation, alone or in conjunction with an Affiliate or one or
more assignee(s) ("Buyer"). Certain capitalized terms used
herein have the meanings set forth in Article I hereof.
BACKGROUND
A. The Company is engaged in the business of operating an
air carrier certificated under Part 121, among others, of the
Federal Air Regulations for the carriage of cargo and passengers
in the domestic United States and international markets (the
"Business").
B. The Company will seek relief under Chapter 11 of title
11 of the United States Code (the "Bankruptcy Code") by filing a
case (the "Chapter 11 Case") in the United States Bankruptcy
Court for the District of Nevada (the "Bankruptcy Court") to
facilitate the transactions contemplated hereunder.
C. The Company will file a Plan of Reorganization under
Section 1121 of the Bankruptcy Code (the "Plan"). Upon entry of
an order of the Bankruptcy Court confirming the Plan pursuant to
Section 1129 of the Bankruptcy Code (the "Confirmation Order")
and upon satisfaction or waiver of the conditions set forth in
this Agreement, (i) the Buyer will purchase all of the New
Membership Interests and the New Membership Interests will be
transferred to the Buyer in accordance with the procedures set
forth in this Background section and upon the terms and subject
to the satisfaction of the conditions set forth in this Agreement
and (ii) a Creditor Trust will receive the cash consideration
paid by the Buyer for the Membership Interests, certain
designated excluded assets (the "Excluded Assets") and the
Excluded Liabilities.
NOW, THEREFORE, in consideration of the premises and
the representations, warranties, covenants and agreements
contained in this Agreement, the parties hereto, intending to be
legally bound hereby, agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. As used in this Agreement, the
following terms shall have the following meanings, respectively:
"Accounts Receivable" means all of the Company's trade
accounts receivable and all evidences of Indebtedness of and
rights to receive payments arising out of sales of Inventory and
other property, assets or services to any Person; provided,
however, Accounts Receivable
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does not include any accounts receivable representing amounts due
from BAX as of the Execution Date and does not include a portion
of the Military Receivable equal to the amount of the Military
Payable, if any, that exists on the Closing Date and is not
discharged pursuant to the Plan.
"Adjustment" means a sum equal to the following: Two
Hundred Thousand Dollars ($200,000.00) times the number of full
calendar months (and a pro-rata portion of such amount for any
partial calendar months) after the Execution Date until the
Closing that the Company fails to maintain Schedule Reliability
And Departure Reliability Factors equal to at least ninety-five
percent (95%) of the Company's average actual, historical
performance during the three-month period beginning September 1,
1997.
"Affiliate" of a Person means any Person which,
directly or indirectly, controls, is controlled by, or is under
common control with such Person. The term "control" (including,
with correlative meaning, the terms "controlled by" and "under
common control with"), as used with respect to any Person, means
the possession, directly or indirectly, of the power to elect a
majority of the board of directors (or other governing body) or
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 and, in any event and
without limiting the generality of the foregoing, any Person
owning 10% or more of the voting securities of another Person
shall be deemed to control that Person.
"AMC Contract" means Contract No. F11626-97-D-0025
issued by AMC/DOYAI and Federal Express Charter Programs, dated
July 15, 1997.
"Appraisal" means the appraisal performed by BK
Associates, Inc., dated December 24, 1997.
"Audited Financial Statements" means the audited
financial statements consisting of balance sheets and statements
of income, retained earnings and cash flows as at and for the
fiscal years ended 1994 and 1995, together with the notes
thereto, and the opinion thereon of the Company's accountants.
"Aviation Authority" means the FAA and the aviation
authority of any foreign jurisdiction.
"Bankruptcy Claims" has the same meaning as that set
forth in Section 101(5) of the Bankruptcy Code.
"Bankruptcy Code" has the meaning set forth in
Paragraph B of the Background Section hereof.
"Bankruptcy Court" has the meaning set forth in
Paragraph B of the Background Section hereof.
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"Banks" means Comerica Bank, LaSalle National Bank, NBD
Bank, and Fort Wayne National Bank.
"BAX" means BAX Global Inc.
"Benefit Plan" means any employee benefit plan as
defined in Section 3(3) of ERISA and any salary, bonus,
severance, deferred compensation, annuity, retirement, stock
option, stock purchase, executive compensation, incentive
compensation, educational assistance, insurance or other plan or
arrangement providing benefits to past or present employees of
the Company.
"Bidding Procedures" has the meaning set forth in
Section 2.1 hereof.
"Books and Records" means all financial ledgers,
manuals and logs (maintenance and operating), parts records,
books and records that a Governmental Entity requires the Company
to maintain, any pricing and cost information used in bidding for
or negotiating the AMC Contract, books and records relating to
the inventorying and repair of engines, parts, and components,
Tax Returns and financial statements of the Company, personnel
records, and books and records relating to the Business Plan and
the AMC Contract.
"Break-Up Fee" has the meaning set forth in Section 2.1
hereof.
"Business" has the meaning set forth in Paragraph A of
the Background Section hereof.
"Business Day" means any calendar day which is not a
Saturday, Sunday or public holiday under the laws of the State of
Michigan.
"Business Plan" has the meaning set forth in the
Funding Agreement.
"Buyer" has the meaning set forth in the Preamble
hereof.
"Chapter 11 Case" has the meaning set forth in
Paragraph B of the Background Section hereof.
"Claim" means any demand, claim, complaint, suit,
action, cause of action, investigation, proceeding or notice by
any Person, including any Environmental Claim or Bankruptcy
Claim, alleging actual or potential Liability for any Loss,
including any Environmental Loss, or any Default under any Law,
Contract, License, Permit or Benefit Plan.
"Closing" and "Closing Date" shall have the respective
meanings set forth in Section 2.1 hereof.
"COBRA" means the Consolidated Omnibus Budget
Reconciliation Act of 1985.
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"Code" means the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder or
with respect thereto.
"Collateral Documents" means the Escrow Agreement, the
Transition Services Agreement, and the Funding Agreement.
"Company" has the meaning set forth in the Preamble
hereof.
"Company Intellectual Property" has the meaning set
forth in Section 3.9(d) hereof.
"Competing Transaction" has the meaning set forth in
Section 2.1 hereof.
"Confirmation Order" has the meaning set forth in
Paragraph C of the Background Section hereof.
"Contemplated Transactions" means filing of the Plan,
entry of the Confirmation Order, and completion of the Closing,
and all of the transactions ancillary thereto, which are referred
to in this Agreement and the Collateral Documents.
"Contract" means any written or oral contract,
agreement, commitment, note, bond, pledge, Lease (including
without limitation aircraft leases), mortgage, deed, guaranty,
indenture, license, consulting agreement, supply contract, repair
contract, distribution agreement, purchase order, joint venture
agreement, franchise, technology and know-how agreement,
instrument or any other contractual commitment, and any amendment
thereto, but excluding any Benefit Plan.
"Court Order" means any judgment, decree, edict, writ,
injunction, award, order or ruling of any Governmental Entity or
of any arbitration or similar panel.
"Creditor Trust" means a trust or escrow arrangement
established pursuant to the Plan to accept the transfer of, and
thereafter hold and administer, the Excluded Assets and the
Purchase Price for the benefit of the creditors and interest
holders.
"Debtor" has the meaning set forth in the Preamble
hereof.
"Default" means (1) a violation, breach or default, (2)
the occurrence of an event which with the passage of time or the
giving of notice or both would constitute a violation, breach or
default, or (3) the occurrence of an event that (with or without
the passage of time or the giving of notice or both) would give
rise to a right of damages, specific performance, termination,
renegotiation or acceleration (including the acceleration of
payment).
"Disclosure Statement" means a disclosure statement as
approved pursuant to Section 1125 of the Bankruptcy Code.
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"DOT" means the Department of Transportation.
"Employees" means employees of the Company at any time
prior to or up to the Closing, including employees who are on
paid leave of absence, military leave or disability leave.
"Environmental Claim" means any Claim arising out of,
related to or in connection with the use, treatment, removal,
storage, disposal, presence, migration, transport, handling,
manufacture, possession, distribution, or the actual or
threatened emission, injection, escape, dumping, spill, leak,
discharge or release of Hazardous Materials.
"Environmental Laws" means all federal, state, local
and foreign laws and regulations relating to pollution or
protection of human health or the environment (including ambient
air, surface water, groundwater, land surface or subsurface
strata), including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act
("CERCLA"), 42 U.S.C.A. Section 9601 et seq., the Resource
Conversation and Recovery Act ("RCRA"), 42 U.S.C.A. Section 6901 et
seq., the Clean Water Act, 33 U.S.C.A. Section 1251 et seq., the Clean
Air Act 42 U.S.C.A. Section 7401 et seq., the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq., The Toxic Substances Control
Act, 15 U.S.C. Section 2601 et seq., and laws and regulations relating
to emissions, spills, leaks, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the
manufacture, possession, distribution, use, treatment, storage,
disposal, presence, transport or handling of Hazardous Materials.
"Environmental Loss" means any and all Losses arising
out of, related to or in connection with any clean-up of
Hazardous Materials providing that such Hazardous Materials were
used, treated, removed, stored, disposed of, present,
transported, handled, manufactured possessed, or distributed by
the Company prior to the Closing Date or from the actual
emission, injection, escape, dumping, spill, leak, discharge or
release of Hazardous Materials prior to the Closing Date,
including potential or actual liability for investigatory costs,
cleanup costs, response costs, natural resource damages,
property damages, personal injuries or penalties.
"Equipment" means furniture, fixtures, machinery,
equipment, motor vehicles, office equipment, computers, tools and
replacement parts, wherever located.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended, and the rules and regulations
promulgated thereunder or with respect thereto.
"Escrow Agent" means the escrow agent appointed in
accordance with the Escrow Agreement.
"Escrow Agreement" means the escrow agreement dated the
Execution Date among the Buyer, the Escrow Agent, and the Debtor,
in such form that is mutually agreeable to Buyer, Debtor, and
Escrow Agent.
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"Excluded Assets" has the meaning set forth in
Paragraph C of the Background Section hereof and will be
identified by Buyer on Annex I to be attached hereto within sixty
(60) days after the Execution Date. Buyer will prepare Annex I
and deliver it to the Company. Excluded Assets will at least
include cash, Accounts Receivable, and the Company's Claims
(including under Chapter 5 of the Bankruptcy Code, but excluding
Claims released pursuant to this Agreement and/or the Plan)
against Persons.
"Excluded Liabilities" means Liabilities of the Company
as of the Closing, except the Military Payable to the extent, if
any, that the Military Payable is not discharged pursuant to the
Plan; provided, however, Excluded Liabilities does not include
Liabilities of the Company in respect of accrued and unpaid
vacation time.
"Execution Date" has the meaning set forth in the
Preamble hereof.
"Existing Membership Interests" means the membership
interests in the Company as they exist as of the Execution Date
and from the Execution Date until immediately before the Closing.
"Expenses" means Buyer's actual, reasonable,
out-of-pocket expenses incurred in connection with its due
diligence investigation and negotiation and legal, accounting and
other reasonable professional fees and expenses in connection
with the Contemplated Transactions, not to exceed Seven Hundred
Fifty Thousand Dollars ($750,000.00).
"FAA" means the Federal Aviation Administration.
"Filing Date" means the date on which the Company files
the Chapter 11 petition commencing the Chapter 11 Case.
"Foreign Jurisdictions" has the meaning set forth in
Section 3.1 hereof.
"Foreign Liabilities" has the meaning set forth in
Section 3.23 hereof.
"Funding" means the Postpetition Debt as defined in the
Funding Agreement.
"Funding Agreement" means the Order Authorizing Debtor
to (A) Use Cash Collateral; (B) Incur Postpetition Debt; and (C)
Grant Adequate Protection and Provide Other Security between the
Company and the Buyer to be entered by the Bankruptcy Court and
mutually acceptable to the Company and the Buyer.
"GAAP" means generally accepted accounting principles,
consistently applied, as adopted in the United States of America
by the Financial Accounting Standards Board.
"Good Faith Deposit" has the meaning set forth in
Section 2.1 hereof.
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"Governmental Consent" means any and all licenses,
franchises, permits, easements, rights, consents, orders,
approvals, variances, waivers, filings and other authorizations
with, of or from any Governmental Entity, including the
Bankruptcy Court, any Aviation Authority, and the DOT (i)
necessary to consummate the Contemplated Transactions in the
manner contemplated hereby, or (ii) necessary for Buyer to
operate the Business in the manner contemplated by this
Agreement, or (iii) otherwise relating to (A) any Contract or
other instrument with any Governmental Entity and to which the
Company is a party (or by which any of their respective
properties or assets is bound or affected), or (B) any Permit,
including the transfer of any such Contract, Permit or other
instrument in accordance with the terms hereof.
"Governmental Entity" means any government, or
political subdivisions thereof, court, arbitral tribunal,
administrative agency, tribunal or commission or any other
governmental or regulatory body, instrumentality or authority,
whether domestic (federal, state or local) or foreign.
"Hazardous Materials" means all explosive or regulated
radioactive materials or substances, hazardous or toxic
substances, reactive, corrosive, carcinogenic, flammable or
hazardous substance, waste or chemical, petroleum or petroleum
distillates, natural gas or synthetic gas, asbestos or asbestos
containing materials and all other materials or chemicals covered
by the International Civil Aeronautics Organization's (ICAO)
Technical Instructions for the Safe Transport of Dangerous Goods
by Air or regulated pursuant to any Environmental Laws, including
any "hazardous substance", or "hazardous waste", or "pollutant"
as defined in Environmental Laws, materials listed in 49 C.F.R.
Section 172.101, materials defined as hazardous pursuant to Section
101(14) of CERCLA, special nuclear or by-product material, as
defined by the Atomic Energy Act of 1954, 42 U.S.C.A. Section 3011 et
seq. and the rules and regulations promulgated thereunder or with
respect thereto.
"HSR Act" means Section 7A of the Clayton Act (Title II of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended)
and the rules and regulations promulgated thereunder or with
respect thereto.
"Indebtedness" of any Person means all obligations of
such Person (i) for borrowed money, (ii) evidenced by notes,
bonds, debentures or similar instruments, (iii) for the deferred
purchase price of goods or services (other than trade payables or
accruals incurred in the ordinary course of business), (iv) under
capital leases or (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any
other Person.
"Intellectual Property" means, collectively, (1) all
Patents, (2) all Trademarks, trade dress, logos, trade names,
fictitious names, brand names, brand marks and corporate names,
together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in
connection therewith, and (3) all computer software (including
data, source codes and related documentation).
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"Inventory" means packaging, finished goods, spare
parts (including both rotable and expendable), stock room
inventory and raw materials of whatever nature, wherever located.
"Inventory Adjustment" means an amount, if any, equal
to the sum of (a) the amount by which the Inventory Appraisal is
less than Twelve Million Dollars ($12,000,000.00), not to exceed
Four Million Dollars ($4,000,000.00), and in addition (b) forty
percent (40%) of the amount by which the Inventory Appraisal is
less than Eight Million Dollars ($8,000,000.00).
"Inventory Appraisal" has the meaning set forth in
Section 6.14 hereof.
"Knowledge" or words of similar import means with
respect to the Company the actual knowledge of Martin Goldman,
Brian Hermelin, and (i) with respect to the representations set
forth in Section 3.7, the Company's chief executive officer,
treasurer, director of maintenance, director of operations,
director of safety, director of quality assurance, director of
finance, chief pilot, vice president of technical services, and
director of passengers and cargo, and (ii) with respect to all
other matters, the Company's chief executive officer, treasurer,
director of maintenance, director of operations, chief pilot,
vice president of technical services, director of passengers and
cargo, and director of finance, together with the knowledge each
such Person would have if he or she had performed his or her
services and duties on behalf of the Company in the ordinary
course in a reasonably diligent manner, but without additional
investigation or inquiry beyond that required for the discharge
of his or her duties in the ordinary course in a reasonably
diligent manner.
"Labor Act" means the United States Railway Labor Act
or the Labor Management Relations Act, as applicable, and the
rules and regulations promulgated thereunder or with respect
thereto.
"Law" means any applicable law, statute, ordinance,
rule, regulation, order, decree, edict, judgment or other
requirements of any Governmental Entity, including those covering
environmental, safety, health, transportation, bribery, record
keeping, zoning, employment, tax, anti-discrimination, antitrust,
wage and hour and price and wage control matters.
"Lease" means any lease or tenancy for property or
assets (real or personal or mixed), together with all subleases,
amendments, extensions, addenda, assignments, waivers and all
other rights of occupancy and Contracts and documents relating
thereto.
"Leased Real Property" means all Real Property
presently leased by the Company.
"Liabilities" means all Indebtedness, Claims,
obligations and other liabilities, and any loss, damage, cost,
contingent liability, loss contingency, unpaid expense, claim,
deficiency, guaranty or endorsement of or by any Person whether
direct or indirect, known or unknown, asserted or unasserted,
absolute or contingent, liquidated or unliquidated, or due or to
become due.
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"Licenses" means all licenses, permits, authorizations,
approvals, franchises, rights, orders, variances (including
zoning variances), easements, rights of way, and similar consents
or certificates granted or issued by any Person, other than a
Governmental Entity, relating to the Business.
"Lien" means any mortgage, lien (including any federal,
state and local tax liens), security interest, pledge, negative
pledge, encumbrance, assessment, title retention agreement,
restriction or restraint on transfer, defect of title, charge in
the nature of a lien or security interest, or option (whether
consensual, statutory or otherwise), or any conditional sale
contract, title retention contract or other contract to give any
of the foregoing.
"Litigation" means (1) any action, lawsuit,
arbitration, criminal prosecution, tax audit, legal,
administrative or other proceeding brought by, before or on
behalf of any Person, including any Governmental Entity, or (ii)
any investigation or any inquiry asserting a violation of any Law
brought by, before or on behalf of Governmental Entity.
"Litigation Expenses" of a Person means any and all
reasonable out-of-pocket fees, costs and expenses of any kind
incurred by such Person and its counsel, accountants,
consultants, experts and other advisors in investigating,
preparing for, defending against or providing evidence, producing
documents or taking other action with respect to any Litigation,
Claim, Loss or Default.
"Losses" means any and all damages (including direct,
incidental, consequential and special damages), losses,
obligations, deficiencies, Liabilities, Liens, penalties, fines,
costs and expenses (including any Litigation Expenses), and any
diminution in value of any real or personal property.
"Material Adverse Change" or "Material Adverse Effect"
means an event, fact, circumstance, change or effect which, by
itself or in combination with other events, facts, circumstances,
changes, or effects, is or would be materially adverse to the
business, operations, properties, assets, prospects, Liabilities
(to the extent such Liabilities will not be discharged by the
confirmation of the Plan), financial condition or results of
operation, of the relevant Person. The mere receipt by the
Company (without more) of the letter dated January 9, 1998, from
the Air Force (Headquarters Air Mobility Command) requesting that
the Company cure its "substandard performance reliability" is not
a Material Adverse Change. Termination of the Services Agreement
by the Company would constitute a "Material Adverse Change."
"Material Claims" means any Claim under any insurance
policy regarding a single Loss of $50,000 or more.
"Material Contract" has the meaning set forth in
Section 3.13 hereof.
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"Material License" means any License to the extent that
the failure to have such License would, alone or in connection
with other Licenses, have a Material Adverse Effect on the
Ongoing Business or the Reorganized Company.
"Material Permits" has the meaning set forth in Section
3.7(b) hereof.
"Members" means each and every individual or entity who
or which now owns or holds a membership interest in the Company.
"Memorandum" means the letter dated October 3, 1997,
between the Company and Buyer concerning "Evaluation Material"
(as defined in the letter).
"Military Payable" means the payable for fuel owed by
the Company as of the Closing Date to the U.S. Government or any
department or agency thereof pursuant to the AMC Contract.
"Military Receivable" means all amounts payable to the
Company by or on behalf of the U.S. Government or any department
or agency thereof pursuant to the AMC Contract.
"Most Recent Balance Sheet" means the balance sheet
contained within the November 30 Financial Statements.
"Most Recent Balance Sheet Date" means November 30,
1997.
"Motion" or "Motions" has the meaning set forth in
Section 2.1 hereof.
"New Membership Interests" means the membership
interests in the Reorganized Company issued as part of the
Closing as contemplated by the Plan.
"November 30 Financial Statements" means the unaudited
balance sheet, statement of operations and related statements of
the Company as at and for the eleven months ending November 30,
1997, prepared in accordance with GAAP, except for the treatment
of goodwill and the absence of a statement of cash flows and
footnotes.
"Ongoing Business" means the Business of the Company
conducted pursuant to (or that is necessary for the Company to
fulfill its obligations under) the Services Agreement and the AMC
Contract.
"Organizational Documents" has the meaning set forth in
Section 3.1 hereof.
"Patents" means all letters patent and pending
applications for patents of the United States and all countries
foreign thereto, including regional patents, certificates of
invention and utility models, rights of license or otherwise to
or under letters patent, certificates
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of intention and utility models which have been opened for public
inspection and all reissues, divisions, continuations and
extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" means any and all licenses, franchises,
permits, easements, certificates of authority, rights, consents,
orders, approvals, variances (including zoning variances) and
other authorizations of or issued by any Governmental Entity.
"Permitted Liens" means (i) Liens for current taxes not
yet delinquent for which appropriate accruals in accordance with
GAAP have been created, (ii) statutory Liens imposed by law which
are incurred in the ordinary course of business for obligations
not yet due to carriers, warehousemen, laborers and materialmen,
none of which Permitted Liens, individually or in the aggregate,
has or could have a Material Adverse Effect on the Company, the
Reorganized Company, or the Ongoing Business, or will materially
detract from or materially interferes or will materially
interfere with the Reorganized Company's right to use or dispose
of any of the properties or assets to which such Lien may attach.
"Person" means an individual, a sole proprietorship, a
corporation, a partnership, a joint venture, an association, a
trust, or any other entity or organization, including a
government or a political subdivision, agency or instrumentality
thereof.
"Plan" has the meaning set forth in Paragraph C of the
Background Section hereof.
"Prohibited Transaction" has the meaning assigned to it
in the Code and ERISA.
"Proposed Adjustment" means any adjustment proposed by
any Governmental Entity to an item of income, deduction, gain,
loss or credit on any Tax Return, which item is attributable to
the operations of the Company.
"Purchase Price" has the meaning set forth in Section
2.1 hereof.
"Real Property Leases" has the meaning set forth in
Section 3.9(c) hereof.
"Real Property" means any real estate, together with
all buildings, improvements, fixtures, easements, options to
acquire real estate.
"Rejection Notice" has the meaning set forth in Section
6.1 hereof.
"Releasing Parties" means the Company and its Members,
their officers, directors, and Affiliates, and the Debtor, the
Debtor-in-Possession, and any bankruptcy trustee for the Debtor.
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"Reportable Event" has the meaning assigned to it in
ERISA.
"Required Consents" means any and all Governmental
Consents and Third-Party Consents listed on Schedules 3.4 and 3.5
attached hereto.
"Reorganized Company" means the Company after the
Closing.
"Revested Assets" has the meaning set forth in Section
2.1(b) hereof.
"Schedule Reliability And Departure Reliability
Factors" has the meaning set forth in the Services Agreement.
"Securities Act" means the Securities Act of 1933, as
amended, and any rules or regulations promulgated thereunder or
with respect thereto.
"Services Agreement" means the Agreement to Furnish
McDonnell Douglas DC8-71F Air Cargo Services dated as of February
12, 1993, between the Company and Burlington Air Express, now
known as BAX Global Inc., as amended.
"Tax Claim" means a claim for Taxes by a Governmental
Entity by audit, Litigation, Proposed Adjustment or otherwise.
"Taxes" means all taxes, charges, fees, levies or other
assessments, whether federal, state, local or foreign, based upon
or measured by income, capital, net worth or gain and any other
tax including but not limited to all net income, gross income,
gross receipts, sales, use, ad valorem, transfer, franchise,
profits, withholding, payroll (including withholding),
employment, social security, unemployment, FICA, FUTA, excise,
estimated, stamp, occupation, property or other taxes, customs
duties, fees, assessments or charges of any kind whatsoever,
including all interest and penalties thereon, and additions to
tax or additional amounts imposed by any Governmental Entity,
domestic or foreign.
"Tax Records" means any and all Books and Records which
in any way relate to Taxes for periods prior to or including the
Closing Date, including all Tax Returns and all computerized
books and records.
"Tax Returns" means all returns, reports, claims for
refunds or other information required or permitted to be supplied
to or filed with any Governmental Entity in connection with Taxes
(including information returns and declarations of estimated
tax).
"Third-Party Consents" means any and all licenses,
franchises, permits, easements, rights, consents, orders
approvals, variances, waivers, filings and other authorizations
with, of or from Persons (other than Governmental Entities) which
are parties to any Material Contract, Material License and other
material instrument to which the Company is a party (or by which
any of their respective properties or assets is bound or
affected) and which are necessary
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for the consummation of the Contemplated Transactions in the
manner contemplated hereby, including the transfer of any such
Material Contract, Material License or other material instrument
in accordance with the terms hereof.
"Trademarks" means registered trademarks, registered
service marks, trademark and service mark applications, and
unregistered trademarks and service marks.
"Transition Services Agreement" means the agreement
between and to be executed by the Reorganized Company and the
Creditor Trust on or prior to the Closing Date to afford
reasonable access to personnel and books and records of the
Reorganized Company by representatives of the Creditor Trust to
perform its tasks under the Plan.
"Unaudited Financial Statements" means the Company's
unaudited balance sheet, statement of income, retained earnings
and cash flows for the fiscal year ended 1996, together with the
notes thereto.
ARTICLE II
ACQUISITION BY BUYER
2.1. Basic Transaction.
(a) Purchase and Sale of New Membership
Interests. On and subject to the terms and conditions of this
Agreement and the Plan, the Buyer agrees to purchase from the
Company, and the Company agrees to sell, transfer, convey, and
deliver to the Buyer, the New Membership Interests at the Closing
for the consideration specified below in this Article II.
(b) Revesting of Assets. On the Closing Date and
simultaneously with the Closing, the assets of the Company,
except the Excluded Assets, shall revest in the Reorganized
Company (the "Revested Assets").
(c) Purchase Price. At the Closing in exchange
for the New Membership Interests, the Buyer shall pay the
Creditor Trust a cash amount equal to TWENTY-FOUR MILLION FIVE
HUNDRED THOUSAND AND 00/100 DOLLARS ($24,500,000.00), less the
Adjustment, if any, and less the Inventory Adjustment, if any (as
adjusted, the "Purchase Price"). The sum of the Funding and the
Adjustment to be deducted from the Purchase Price shall not
exceed Four Million Three Hundred Fifty Thousand Dollars
($4,350,000.00).
(d) Discharge of Claims, Interests, and
Liabilities and Transfer of Liens. Unless otherwise agreed by
the Parties in writing, the Plan shall provide that all Excluded
Liabilities and all Claims against or interests in the Company
shall be discharged, and neither the Reorganized Company nor the
Buyer (nor any affiliated entity) shall assume or retain any
Liabilities or obligation in connection with the Excluded
Liabilities or Claims against or interests in the Company. The
Plan shall further provide that all Excluded Liabilities and all
Claims
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against and interests in (of whatever nature, and whether
contingent or otherwise) the Company shall be transferred to and
assumed by the Creditor Trust for administration and shall be
paid solely from the assets of the Creditor Trust in accordance
with and to the extent permitted under the Bankruptcy Code. The
Revested Assets shall be free and clear of any Claim, interest or
Lien of any kind or nature whatsoever to the fullest extent
possible under the Bankruptcy Code, with such Claims, interests,
or Liens transferring to the Purchase Price deposited into the
Creditor Trust.
(e) The Closing. The consummation of the
Contemplated Transactions (the "Closing") shall take place at the
offices of Pepper Hamilton LLP, 100 Renaissance Center, 36th
Floor, Detroit, Michigan, or such other location as the Parties
may agree, commencing at 10:00 a.m. on a date not later than
eleven (11) days after the later of (a) the date on which the
Confirmation Order shall have been entered, provided that if any
stay should be entered with respect to the Confirmation Order,
this time period shall commence on the date when such stay is
vacated, or (b) the date on which all conditions to the
obligations of the Parties to consummate the Contemplated
Transactions (other than conditions with respect to actions the
respective Parties will take at the Closing itself) shall have
been satisfied or waived as noticed by either Party to the other;
or such other date as the Parties may mutually determine (the
"Closing Date").
(f) Deliveries at the Closing. At the Closing,
(i) the Company will execute, acknowledge (if
appropriate), and deliver to the Buyer (a) certificates
evidencing the New Membership Interests, and such other
instruments of sale, transfer, conveyance, and assignment as
the Buyer and its counsel reasonably may request and (b) the
Company's Organizational Documents, qualifications to
conduct business as a foreign limited liability company,
arrangements with registered agents relating to foreign
qualifications, taxpayer and other identification numbers,
seals, minute books, and other documents relating to the
organization, maintenance, and existence of the Company as a
limited liability company; and
(ii) the Buyer will deliver to the Creditor
Trust (a) the Purchase Price, less the Good Faith Deposit
and the Funding and (b) a fully executed Transition Services
Agreement; and
(iii) the Buyer will direct the Escrow Agent
to deliver, and the Escrow Agent shall deliver, to the
Creditor Trust the Good Faith Deposit.
The Purchase Price (including the portion represented by the Good
Faith Deposit) payable pursuant to this Section 2.1(f) will be
paid by wire transfer of immediately available federal funds to
the account designated by the Company by notice to Buyer at least
three Business Days prior to Closing, which payment to the
Creditor Trust will be full and complete payment of the Purchase
Price.
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(g) Fees and Expenses. Notwithstanding any other
conflicting or inconsistent provision of this Agreement, the
Company and the Buyer agree that, if the transactions
contemplated by this Agreement and the Plan are not consummated
because another offer for the New Membership Interests (or
another form of offer the effect of which is to prevent the Buyer
from consummating the transaction contemplated herein) is
accepted and approved by the Bankruptcy Court (a "Competing
Transaction"), then in such event the Company shall pay, subject
to the approval of the Bankruptcy Court, a fee (the "Break-Up
Fee") to the Buyer equal to One Million Dollars ($1,000,000) and
the Funding. In the case of a Competing Transaction, if not paid
earlier, the Break-Up Fee and the Funding will be paid from and
at the time the Company receives the first proceeds of the sale
in the Competing Transaction. In the event a Competing
Transaction is approved but not consummated, Buyer shall be
deemed the successful purchaser pursuant to the terms of this
Agreement and to the extent received, shall return to the Company
the Break-Up Fee. Attached hereto as Exhibit A are the bidding
procedures (the "Bidding Procedures"), subject to Bankruptcy
Court approval, to be adhered to by the Company in connection
with any Competing Transaction, including, without limitation,
minimum and incremental overbid levels. If the transactions
contemplated by this Agreement and the Plan are not consummated
for any reason other than the Buyer's breach or a Competing
Transaction, then the Company shall immediately pay to Buyer the
Expenses. On the Filing Date, the Company will file with the
Bankruptcy Court one or more motions (individually a "Motion" and
collectively the "Motions") to approve payment of the Expenses,
the Break-Up Fee, and the Funding, to approve the Bidding
Procedures and to approve this Agreement.
(h) Good Faith Deposit. Within three days after
the Execution Date, the Buyer shall deliver to the Escrow Agent a
certified check in the amount of One Million Dollars
($1,000,000.00) payable to the order of the Escrow Agent
(together with the interest, if any, earned thereon after deposit
with the Escrow Agent, the "Good Faith Deposit"). The Escrow
Agent shall deposit the Good Faith Deposit in an interest bearing
escrow account. Unless otherwise agreed by the Parties and
approved by the Bankruptcy Court, the Good Faith Deposit shall be
returned to the Buyer if: (A) the Buyer terminates this Agreement
in accordance with Section 9.1 hereof or (B) the Company is
unable to consummate the transactions contemplated under this
Agreement as a result of a Competing Transaction. The Good Faith
Deposit shall be released (y) to the Creditor Trust at the
Closing, in which event the Good Faith Deposit shall be applied
toward the Buyer's payment of the Purchase Price, or (z) to the
Company if the Company terminates this Agreement in accordance
with Section 9.1(d) hereof, in which event the Buyer shall
forfeit all of its rights, claims and entitlement with respect to
the Good Faith Deposit or to the return of an equivalent sum, and
the Company will retain the Good Faith Deposit as liquidated
damages and not as a penalty (the parties agreeing that the Good
Faith Deposit represents their best estimate of the damages of
the Company in such event, the actual damages being impossible to
ascertain), as the Company's sole and exclusive remedy and right
for Buyer's breach. If the Company fails to consummate the
transactions contemplated by this Agreement for any reason other
than a termination pursuant to Section 9.1(d) hereof or as a
result of a Competing Transaction, then Buyer will receive back
the Good Faith Deposit and will be entitled to pursue all
remedies and damages available to it in law or in equity.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
THE COMPANY
The Company makes the following representations and
warranties to Buyer:
3.1. Organization, Standing and Power. The Company is
a limited liability company, duly organized, validly existing and
in good standing under the laws of the State of Nevada and has
the requisite power and authority to carry on its business as
now being conducted, except where the failure to be so organized,
existing or in good standing or to have such power would not,
individually or in the aggregate, have a Material Adverse Effect
on the Reorganized Company or the Ongoing Business. The Company
is duly qualified or licensed to transact business and is in good
standing in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed
would not, individually or in the aggregate, have a Material
Adverse Effect on the Reorganized Company or the Ongoing Business
(the "Foreign Jurisdictions"). Schedule 3.1 attached hereto is a
true and correct listing of each of the Foreign Jurisdictions
applicable to the Company. Correct and complete copies of the
Company's certificate of formation and operating agreement
(collectively, the "Organizational Documents"), in each case as
amended through and including the Closing Date, shall have been
delivered to Buyer prior to Closing. The Company is not in
violation of its Organizational Documents. A true and complete
listing of the officers and directors of the Company is set forth
on Schedule 3.1 attached hereto.
3.2. Authorization. The Company has the power and
authority to enter into and perform this Agreement and each of
the Collateral Documents to which it is a party, and to
consummate the Contemplated Transactions. The execution,
delivery and performance by the Company of this Agreement and
each of the Collateral Documents to which it is a party, and the
consummation by the Company of the Contemplated Transactions have
been duly authorized by all necessary action on the part of the
Company. This Agreement and each of the Collateral Documents to
which the Company is a party has been duly executed and delivered
by the Company and constitutes a legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium or
similar laws affecting the rights of creditors' generally and
general equity principles (regardless of whether enforceability
is considered a proceeding at law or in equity).
3.3. Issuance of Interests.
(a) Pursuant to the Plan, all of the New
Membership Interests will be transferred to Buyer free and clear
of any and all Claims, Liabilities, Liens or other interests.
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(b) On the Execution Date and at all times up to
and including immediately prior to the Closing, the issued and
reserved membership interests of the Company are as set forth on
Schedule 3.3 attached hereto, all of which will be extinguished
pursuant to the Plan immediately upon the Closing.
(c) The Company does not have, directly or
indirectly, any Subsidiaries or any investment in any equity
securities or other ownership interest in any other Person. The
Company does not have the right to acquire, directly or
indirectly, any equity securities or other ownership interest in
any Person.
3.4. Conflict with other Instruments; Absence of
Restrictions. Except to the extent that any breach is held to be
nonbinding and without financial impact on the Reorganized
Company or the Ongoing Business pursuant to the Confirmation
Order, the execution and delivery of this Agreement and each of
the Collateral Documents by the Company and the consummation of
the Contemplated Transactions by the Company does not and will
not (i) result in a Default of or under (A) any of the terms of
the Organizational Documents of the Company, (B) assuming the
receipt of all Governmental Consents listed on Schedule 3.4
attached hereto, any Law, Court Order or Permit applicable to or
binding upon the Company, or (C) assuming the receipt of all
Required Consents, any Material Contracts, Material Licenses or
Material Permits to which the Company is a party or by which the
Company is bound, (ii) result in the creation or imposition of
any Lien upon any of the equity interests of the Company or,
except for Permitted Liens, upon any of the assets or properties
of the Company, or (iii) assuming the receipt of all Required
Consents, (A) result in the termination, amendment or
modification of, or give any party the right to terminate, amend,
modify, abandon, or refuse to perform any Material Contract,
Material License or Material Permit to which the Company is a
party or by which the Company, or any of its properties or
assets, is bound, or (B) except as set forth in Schedule 3.4
attached hereto, result in the acceleration or modification, or
give any party the right to accelerate or modify, the time within
which, or the terms under which, any duties or obligations are to
be performed, or any rights or benefits are to be received under
any Material Contract, Material License or Material Permit to
which the Company is a party or by which the Company, or any of
its properties or assets, is bound.
3.5. Government and Third-Party Consents. Except as
set forth in Schedule 3.4 and Schedule 3.5 attached hereto, no
Governmental Consent or Third-Party Consent is required by or
with respect to the Company in connection with the execution,
delivery or performance by the Company of this Agreement or any
of the Collateral Documents to which the Company is a party, or
the consummation by the Company of the Contemplated Transactions.
3.6. Litigation. Except as set forth in Schedule 3.6
attached hereto, (a) there is no Litigation, pending or, to the
Knowledge of the Company, threatened against or affecting the
Company that (i) relates to or affects the Existing Membership
Interests or the New Membership Interests of the Company, the
Members, the Business or the assets or the properties of the
Company, or (ii) could reasonably be expected, individually or in
the aggregate, to (A) have a Material Adverse Effect on the
Reorganized Company or the Ongoing Business, (B) impair the
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ability of the Company to perform its obligations under this
Agreement or any of the Collateral Documents or (C) prevent the
consummation of any of the Contemplated Transactions, (b) there
is no Court Order outstanding against the Company having or which
in the future, insofar as reasonably can be foreseen, could have
any of the effects described in clause (ii) above, and (c) the
Company does not know of any events, facts or circumstances which
could reasonably form the basis for any such Litigation or Court
Order which in the future, insofar as reasonably can be foreseen,
could have any of the effects described in clause (ii) above.
3.7. Compliance with Laws; and Permits.
(a) The Company has complied and is in
compliance, in all material respects, with all applicable Laws or
Court Orders. Except as set forth on Schedule 3.7(a) attached
hereto, the Company has neither received, nor knows of the
issuance of, any notice from any Governmental Entity, citizens
group or other third party of any such violation or alleged
violation of any applicable Laws or Court Orders by the Company.
(b) To the Knowledge of the Company, the Company
has in full force and effect all Permits necessary for it to own,
lease or operate its properties and assets and to carry on the
Business as now conducted, except where the failure to have such
Permits would not, individually or in the aggregate, have a
Material Adverse Effect on the Reorganized Company or the Ongoing
Business (the "Material Permits"), and the Company has complied,
in all material respects, with all of the terms and conditions of
the Material Permits, and there is no Default under any of the
Material Permits entitling the Person issuing such Permit to
damages or to cancel such Permit. A true and complete list of
all Material Permits is set forth on Schedule 3.7(b) attached
hereto. The Company has not taken any action or failed to take
any action which could result in or enable, or after notice or
lapse of time would result in or enable, the revocation or
termination of any of the Material Permits or the imposition of
any restrictions thereon. Except as set forth on Schedule
3.7(a), no Litigation is pending or, to the Knowledge of the
Company, threatened to revoke, refuse to renew or modify any of
the Material Permits.
3.8. Title to Properties; Adequacy of Properties.
(a) The Company does not own and, to the
Knowledge of the Company, has never owned any Real Property. The
Company has title to, or valid leasehold interests in, all of its
properties and assets, whether tangible or intangible, and
whether consisting of Real Property, in the case of its material
leasehold interests, or personal property, including all
Intellectual Property and other intangibles which it purports to
own, as well as all of the properties and assets (including all
material Equipment which it purports to own) which (i) are
reflected on its Most Recent Balance Sheet or (ii) were acquired
since December 1, 1997. Section (ii) of Schedule 3.8(a) attached
hereto sets forth a true and complete list of all material items
of Equipment owned or used by the Company (and will identify
whether each item is owned or leased) (a) in its brake assembly
operations or (b) at its training center located in Dayton, Ohio,
and a true and complete list of all rolling stock. Section (iii)
of Schedule 3.8(a) sets forth a true and complete list of
aircraft and aircraft engines (in each case other than those
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aircraft and aircraft engines used in the performance by the
Company of its obligations under the Services Agreement) owned or
used by the Company and will identify whether each item is owned
or leased. Each of the material portions of all of the tangible
personal property included in the properties and assets
(including all Equipment, but excluding Inventory) owned or used
by the Company in the operation of the Business is in good
working order, repair and condition, reasonable wear and tear
excepted. The properties and assets of the Company are adequate
to conduct its Business as conducted as of the Execution Date and
as will be conducted as contemplated by the Business Plan.
(b) Except as set forth on Schedule 3.8(b)
attached hereto, no material assets or properties (other than
Real Property) used by the Company in connection with the
Business is held under any Lease, or is subject to any lending
agreement, mortgage, deed of trust, indenture, loan agreement,
security agreement, pledge agreement or other arrangement or is
located other than in the possession of the Company.
3.9. Other Representations Regarding the Company's
Assets.
(a) Cash Accounts. Schedule 3.9(a) attached
hereto contains a true and complete list of (i) the name and
address of every bank or other financial institution in which the
Company maintains an account (whether checking, savings,
investment or otherwise), lock box or safe deposit box, (ii) the
account number of each account, and the identity of each natural
person who is a signatory on each such account.
(b) Inventory. Schedule 3.9(b) attached hereto
contains a true and correct list of all Inventory of the Company
as of December 3, 1997, and identifies the location, condition
(to the extent known), serial numbers and part numbers of the
Inventory. All items of Inventory of the Company will be used,
repaired, depleted, maintained, and replenished in accordance
with the Company's current practices and according to the
Business Plan. Except as set forth on Schedule 3.9(b) attached
hereto, the Company does not hold any items of Inventory on
consignment or have title to any items of Inventory in the
possession of others, except for items of Inventory in shipment
to the Company. The Company has delivered the Appraisal to
Buyer, and the Appraisal is the most recent Company appraisal of
the Inventory.
(c) Real Property.
(i) Section (i) of Schedule 3.9(c) attached
hereto sets forth a true and complete list of each material Lease
for Real Property executed by or binding upon the Company, as
lessor or lessee, sublessor or sublessee, landlord or tenant, or
assignor or assignee (the "Real Property Leases"), relating to
any material Leased Real Property. Each of the Real Property
Leases is legal, valid and binding on the Company and in full
force and effect without any material Default thereof by the
Company or, to the Knowledge of the Company, any other party
thereto and each of the Real Property Leases affords the Company
possession of the Leased Real Property which is the subject
matter of the applicable Real Property Lease. True and
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complete copies of the Real Property Leases have been delivered
to Buyer prior to the Execution Date.
(ii) Except as set forth in Section (ii) of
Schedule 3.9(c) attached hereto, the Company has not received any
notice of (A) any requirements by any insurance company that has
issued a policy covering any part of any Leased Real Property, or
by any board of fire underwriters or other body exercising
similar functions, requiring any repairs or work to be done on
any part of any Leased Real Property, except for such repairs or
work that have been performed, or (B) any defects or inadequacies
in, on or about any part of the Leased Real Property that would,
if not corrected, result in the termination of insurance coverage
or an increase in the cost thereof. All public utilities,
including water, electric sewage or subsurface disposal systems,
required for the normal operation of the Business as currently
conducted are sufficient for the operation of the Business as
currently conducted. There is no outstanding notice of
violation, order or citation received by the Company against the
Company under any Law relating to any of the Leased Real Property
that would have a Material Adverse Effect on the Reorganized
Company or the Ongoing Business.
(iii) To the Knowledge of the Company,
there are no pending or threatened condemnation, eminent domain,
expropriation, or similar proceedings that would affect all or
any substantial portion of the material Leased Real Property.
The Company has not received notice of any assessments for public
improvements against any of the Leased Real Property for which
the Company is responsible and that have not been paid, and no
current installments of such assessments remain unpaid.
(iv) To the Knowledge of the Company, no
ordinance authorizing improvements, the cost of which exceeds
$50,000 and might be assessed against any of the Leased Real
Property, is pending or proposed. From the Execution Date
through the Closing Date, the Company agrees to notify Buyer
immediately upon learning that any condemnation, eminent domain,
expropriation or similar proceeding, has been commenced or is
threatened to be commenced, which could affect any of the Leased
Real Property, or that any ordinance authorizing improvements,
the cost of which exceed $50,000 and might be assessed against
any of the Leased Real Property, is pending or proposed.
(d) Intellectual Property. A true and complete
list of all Intellectual Property owned by, licensed by or
otherwise used in connection with the Business, together with a
summary description and full information with respect to the
filing, registration or issuance thereof (including the identity
of the record owner of such Intellectual Property), to the extent
applicable, is contained in Schedule 3.9(d) attached hereto (the
"Company Intellectual Property"). Other than the Company
Intellectual Property, no Intellectual Property is necessary to
permit the Company to operate the Business as currently
conducted, except where the failure to have such Intellectual
Property would not, individually or in the aggregate, have a
Material Adverse Effect on the Reorganized Company and the
Ongoing Business. No claim is pending or, to the Knowledge of
the Company, threatened to the effect that (i) the operations of
the Business, as heretofore conducted or as currently or proposed
to be conducted, infringe upon, conflict with
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or are otherwise adverse to the rights of any other Person in
respect of any Intellectual Property or (ii) any Company
Intellectual Property is invalid or unenforceable. To the
Knowledge of the Company, (i) none of the Company Intellectual
Property infringes upon, conflicts with or is otherwise adverse
to the rights of any other Person in respect of any Intellectual
Property, and (ii) neither the Company nor any of its Employees
is making unauthorized use of any confidential or proprietary
information, or any trade secrets, of any Person.
3.10. Financial Statements. The Company has
delivered to Buyer the Audited Financial Statements and the
Unaudited Financial Statements. The Most Recent Balance Sheet
fairly presents the assets and liabilities of the Company in all
material respects as of the Most Recent Balance Sheet Date in
accordance with GAAP, except for the treatment of goodwill and
the absence of a statement of cash flows and footnotes.
3.11. Employees and Employee Plans.
(a) Effective as of the Closing, the Reorganized
Company shall continue employment of each of the Employees who is
in active employment or on a leave under the Family and Medical
Leave Act ("FMLA Leave") as of the Closing Date. Each such
Employee who continues employment with the Reorganized Company as
of the Closing Date or within two weeks thereafter or, if later,
at the termination of an FMLA Leave, shall be referred to herein
as a "Transferred Employee." No provision contained in this
Agreement (i) shall prevent the Reorganized Company from treating
any other former employee of the Company who becomes an employee
of Reorganized Company more than two weeks after the Closing Date
as a new employee; or (ii) is intended to require the Reorganized
Company to treat transferred Employees as other than employees at
will.
(b) Each Transferred Employee shall be given
credit for service with the Company toward participation and
vesting (but not benefit accrual) in any benefit plan of the
Reorganized Company that is made available to such Transferred
Employee.
(c) At least one week prior to the Closing, the
Buyer shall advise the Company as to whether the Reorganized
Company intends to adopt and maintain the Air Transport
International Limited Liability Company Profit Sharing 401(k)
Plan. If the Buyer has advised the Company that it will not
adopt and maintain such plan, the Company shall terminate such
plan as of the Closing (to the extent permitted by the Bankruptcy
Code), and shall appoint the Reorganized Company as Plan
Administrator for the sole purpose of completing the termination
of such plan, filing with the appropriate government agencies,
and distributing participant accounts. In the event of such plan
termination as of the Closing, the Reorganized Company may offer
participation in a new 401(k) profit sharing plan or a related
company's 401(k) profit sharing plan to Transferred Employees
within a reasonable time after Closing, and may permit
Transferred Employees to elect direct rollovers of their
Company's plan accounts to such new plan. The Reorganized
Company shall have no obligation hereunder to offer any other
qualified retirement plan to Transferred Employees.
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(d) The Reorganized Company shall make available
to Transferred Employees a group medical plan, and Transferred
Employees' periods of participation with the Company's group
medical plan shall be counted toward the satisfaction of any
waiting periods or preexisting conditions contained in the
Reorganized Company's group medical plan. The Reorganized
Company may elect to adopt the Company's group medical plan in
accordance with Subsection 3.11(e) below. At least 30 days
before the Closing, the Company shall provide to the Reorganized
Company a list of all qualified beneficiaries (as defined in
ERISA) who have elected continuation coverage, or who have
acquired a right to elect continuation coverage on account of a
qualifying event and whose election right has not yet expired,
along with the date of the qualifying event with respect to each
such qualified beneficiary, and shall inform the Reorganized
Company at Closing of any additional qualified beneficiaries who
have become qualified beneficiaries as a result of employment
termination or receipt of notice of another qualified event
during such 30-day period. If and only if the Reorganized
Company adopts the Company's group medical plan, the Reorganized
Company shall assume the Company's obligation to provide
continuation coverage with respect to such plan for qualified
beneficiaries identified on such lists and former Company
employees who continue employment with the Reorganized Company
but do not accept such offer, and the Reorganized Company shall
have no other obligation to provide continuation coverage except
as provided by law.
(e) On or before Closing, the Buyer may inform
the Company of the Reorganized Company's intention to adopt any
insured welfare benefit plan covering Transferred Employees, in
which event the Company shall make best efforts to obtain
transfer or assignment of the insurance contracts and any other
administrative agreements relating to the provision of benefits
to Transferred Employees. Upon such transfer or assignment, the
Reorganized Company shall assume full responsibility for funding,
reporting and disclosure obligations arising after Closing with
respect to such welfare benefit plan.
3.12. Absence of Certain Changes or Events. Since
December 31, 1997, there has not been any Material Adverse Change
to the Ongoing Business, except as reflected in the Business
Plan.
3.13. Contracts. Schedule 3.13 attached hereto
sets forth a true and complete list of all Contracts to which the
Company is a party, or by which the Company or any of its assets
or properties is bound that individually, in the case of a single
arrangement or commitment, or in the aggregate, in the case of a
series of related arrangements or commitments, require an
expenditure of $50,000 or more (collectively, the "Material
Contracts"). Except as set forth in Schedule 3.13 attached
hereto, each of the Material Contracts is in full force and
effect, there is no Default entitling the other party to cancel
or terminate any such Material Contract by the Company or, to the
Knowledge of the Company, by any of the other parties thereto,
and there has been no cancellation, termination, limitation or
modification or any notice of cancellation, termination,
limitation or modification of any such Material Contract. Each
of the Material Contracts (i) constitutes a legal, valid and
binding obligation of the Company, enforceable against the
Company in accordance with its terms, except to the extent
limited by applicable bankruptcy, insolvency, moratorium and
other similar laws of general application relating to
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creditors' rights generally and general equity principles and
(ii) to the Knowledge of the Company, constitutes a legal, valid
and binding obligation of such other party thereto, enforceable
against such other party thereto in accordance with its terms,
except to the extent limited by applicable bankruptcy,
insolvency, moratorium and other similar laws of general
application relating to creditors' rights generally and general
equity principles. The Company has not, and to the Knowledge of
the Company none of the other parties thereto has, assigned any
of its rights or obligations under any such Material Contract.
3.14. Insurance. Schedule 3.14 attached hereto
sets forth a true and complete list of all policies or binders of
fire, liability, aviation, directors and officers, worker's
compensation, health, vehicular or other insurance held by or on
behalf of the Company (specifying for each such insurance policy
the insurer and the policy number or covering note number with
respect to binders). Except as set forth on Schedule 3.14, all
Claims that have been asserted against the Company have been
submitted to the Company's insurer. All such policies and
binders are valid, in full force and effect, there has been no
Default on the part of the Company with respect to any provision
contained in any such policy or binder that would entitle the
applicable insurer to cancel such coverage, and the Company has
not failed to give any notice or present any claim of which it
has notice under any such policy or binder in a timely fashion.
The Company has not received or given a notice of cancellation or
non-renewal with respect to any such policy or binder. The
Company has no Knowledge of any material inaccuracy in any
application for such policies or binders, any failure to pay
premiums when due or any similar state of facts, event or
circumstances which might form the basis for termination of any
such insurance. Except as set forth on Schedule 3.14 attached
hereto (a) there is no Material Claim by or against the Company
pending or, to the Knowledge of the Company, threatened, and (b)
none of the Material Claims referenced in clause (a) above, under
any of such policies or binders, has resulted in or involved or
involves coverage being questioned, denied or disputed by the
carriers or underwriters of such policies or binders. Except as
set forth on Schedule 3.14, the Company has not received any
written notice from any of its insurance carriers that any
insurance premiums will be materially increased in the future or
that any insurance coverage listed on Schedule 3.14 will not be
available in the future on substantially the same terms as now in
effect.
3.15. Transactions with Affiliates. Schedule 3.15
attached hereto sets forth a true and complete statement of the
Company's accounts with Affiliates since January 1, 1997. Except
as set forth in Schedule 3.15, the Company has not made payments
to or received payments from or provided services to or received
services from any Affiliate since January 1, 1997, other than
lift-related services.
3.16. Employee Relations.
(a) Schedule 3.16(a) attached hereto sets forth a
true and complete list of all (i) Employees or commission
salespersons of the Company as of December 31, 1997, (ii) the
then current annual compensation of, and a description of bonuses
and material fringe benefits (other than those generally
available to Employees of the Company) provided by the Company to
any such Employees or commission salespersons and (iii) any
increase, effective on
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or after January 1, 1998, in the rate of compensation of any
Employees or commission salespersons if such increase exceeds 5%
of the previous annual compensation of such Employee or
commission salesperson.
(b) The Company has complied and is in
compliance, in all material respects, with all Laws which relate
to wages, hours, discrimination in employment and collective
bargaining, and the Company is not liable for any arrears of
wages, any Taxes or penalties for failure to comply, in all
material respects, with any of the foregoing.
(c) Except as set forth on Schedule 3.16(c)
attached hereto, none of the Employees of the Company is
represented for purposes of their employment by a labor
organization and, to the Knowledge of the Company, no petition
has been filed for recognition of a labor union or association as
the exclusive bargaining agent for any and all of the Employees
of the Company. Schedule 3.16(c) will describe, to the Knowledge
of the Company, any general solicitation of representation cards
by any union seeking to represent any or all of the Employees of
the Company as their bargaining agent since January 1, 1995.
3.17. Employee Benefit Plans.
(a) Controlled Group. Except as set forth on
Schedule 3.17(a), the Company is not now, and has not since April
30, 1996, been, and will not be at any time prior to the Closing
Date, a member of: (i) a controlled group of corporations as
defined in Section 414(b) of the Code; (ii) a group of trades or
businesses under common control as defined in Section 414(c) of
the Code; (iii) an affiliated service group as defined in Section
414(m) of the Code; (iv) a group of business referred to in
Section 414(o) of the Code; or (v) a group of trades or
businesses under common control as defined in Section 4001(b) of
ERISA.
(b) Company Employee Benefit Plans and Documents.
Except as set forth on Schedule 3.17(b), the Company does not
now, and will not at any time prior to the Closing Date,
maintain, sponsor, participate in or contribute to, nor has it
maintained, sponsored, participated in or made contributions to,
any Benefit Plan subsequent to April 30, 1996. The Company has
made available to the Buyer true and accurate copies of the
following documents relating to the Benefit Plans listed on
Schedule 3.17(b): (i) plan documents; (ii) trust documents; (iii)
plan amendments; (iv) summary plan descriptions, and amendments
thereto; (v) summaries of material modifications; (vi) insurance
or annuity contracts; (vii) agreements with respect to leased or
temporary employees; (viii) all Internal Revenue Service rulings,
if any; and (ix) the most recent Internal Revenue Service
determination letters, if any.
(c) Qualification. All the pension plans set
forth on Schedule 3.17(c), and the related trusts, if any, now
meet, and since their inception have met, the requirements for
qualification under Section 401(a) of the Code and are now, and
since their inception have been, exempt from taxation under
Section 501(a) of the Code.
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(d) Determination Letters. Except as set forth
on Schedule 3.17(d), the Internal Revenue Service has issued a
favorable determination letter with respect to the qualified
status of each such pension plan and trust, and to the Knowledge
of the Company has not taken any action to revoke such letter.
(e) Satisfaction of Obligation. The Company has
in all material respects performed all obligations required to be
performed by it under the Benefit Plans, and is not in default
under, or in violation of, and has no knowledge of any such
default or violation of any other party to, any and all of the
Benefit Plans.
(f) Compliance With Laws. Each Benefit Plan has
been administered in compliance in all material respects with the
applicable provisions of ERISA, the Code, COBRA, and any other
applicable federal, state or local laws, and, if applicable, any
foreign laws, and each Benefit Plan is valid and binding, in full
force and effect, and there are no defaults thereunder.
(g) No Prohibited Transactions. None of the
Benefit Plans maintained by the Company, nor any trust created
thereunder, nor the Company, nor, to the Knowledge of the
Company, any trustee or administrator thereof, has engaged in any
transaction or will prior to the Closing Date, engage in any
transaction, which would constitute a Prohibited Transaction.
(h) No Claims Pending or Threatened. There are
no actions, suits or claims pending (other than routine claims
for benefits) or, to the Knowledge of the Company, threatened
against any Benefit Plan or against the assets of any Benefit
Plan.
(i) No Funding Deficiency. The Company does not
have, and on the Closing Date will not have, a "funding
deficiency," as that term is used in Section 412 of the Code,
whether or not waived, with regard to any Benefit Plan.
(j) Bonding. Each "plan official," within the
meaning of Section 412 of ERISA, of a pension plan is bonded to
the extent required by said Section 412.
(k) No Reportable Event. No proceeding has been
initiated to terminate any Benefit Plan and no Reportable Event
has occurred with respect to any Benefit Plan.
(l) No Multiple Employer Plan. The Company does
not, nor will it prior to the Closing Date, participate in,
contribute to, nor employ any persons covered by any "multiple
employer plan" as discussed in Section 413(c) of the Code.
(m) No Multiemployer Plan. The Company does not,
nor will it prior to the Closing Date, participate in, contribute
to, nor employ any persons covered by a "multiemployer plan" as
defined in Section 3(37) of ERISA.
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(n) No Withdrawal Liability. The Company has not
incurred, nor will it prior to the Closing Date incur, any
withdrawal liability, as defined in Title IV of ERISA, to a
multiemployer plan.
(o) No Retiree Benefits. No retiree benefits are
payable pursuant to any welfare plan, as defined in Section 3 of
ERISA.
(p) Reporting, and Disclosure. With regard to
each Benefit Plan, the Company has complied with, and will
through the Closing Date, continue to comply with all applicable
reporting and disclosure requirements of ERISA and the Code.
(q) No Title IV Plans. The Company does not, nor
will it, prior to the Closing Date, sponsor, participate in or
contributed to a Benefit Plan that is subject to Title IV of
ERISA.
(r) No Further Liabilities. Except as set forth
on Schedule 3.17, the Company does not have any liability or
obligation to any Benefit Plan or to the PBGC, Department of
Labor, Department of Treasury or similar agency of a foreign
government, any other plan or entity, or any employee,
participant or beneficiary of any Benefit Plan, arising out of or
pursuant to any Benefit Plan.
(s) Termination and Amendment. Each Benefit Plan
listed on any part of Schedule 3.17, is, and through the Closing
Date will be, terminable and subject to amendment by the Company,
at the discretion of the Company, with no liability for benefits
incurred after such termination or inconsistent with the terms of
any amendment after its effective date.
3.18. Environmental Laws.
(a) Except as set forth in Schedule 3.18(a)
attached hereto, (i) the Company has complied in all material
respects with each, and is not in material violation of any,
Environmental Law, (ii) the Company has not received any written
communication from a Governmental Entity alleging that the
Company is not in compliance in any material respect with, or has
a Liability under (including being a potentially responsible
party or allegedly liable for costs associated for remediation of
any site), any Environmental Laws, (iii) the Company holds, and
has complied with and is in compliance with all Material Permits
required by any Environmental Law for the Company to conduct its
business as currently conducted.
(b) From the date upon which the Company acquired
the Leased Real Property leased by it, and continuing until the
Closing Date, there have been no material releases or disposals
into the environment of Hazardous Materials under any
Environmental Law by the Company. Except as set forth on Schedule
3.18(b), there are no above-ground or underground storage tanks
located on and no Hazardous Materials were stored or used on or
in the Real Property located at 7511 Scott Hamilton Drive, Little
Rock, Arkansas.
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(c) No polychlorinated biphenyls or substances
containing polychlorinated biphenyls are present at the Leased
Real Property and there are no exposed, friable asbestos or
materials containing asbestos at the Leased Real Property.
(d) The Company has not entered into any written
agreement pursuant to which it has assumed or undertaken any
Liability for, and is not subject to or a party to any order
requiring, corrective remedial action under any Environmental
Laws.
3.19. Suppliers. Schedule 3.19 attached hereto
sets forth a true and complete list of the names and addresses of
those suppliers which each accounted for the 20 largest net
purchases, as determined from the Books and Records of the
Company utilized to prepare the November 30 Financial Statements.
There exists no actual termination or cancellation of the
business relationship of the Company with any supplier or group
of suppliers listed on Schedule 3.19 attached hereto.
3.20. Corporate Records. To the Knowledge of the
Company, the Books and Records of the Company (other than the
Books and Records relating to the Business Plan and other than
the perpetual inventory records) are true and complete in all
material respects and fairly record and reflect all transactions
material to the operations of the Ongoing Business or the
Reorganized Company. The Company's Books and Records used in the
development of the Business Plan were prepared in good faith by
the officers of the Company.
3.21. Brokers. No broker, investment banker,
financial advisor or other person, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the
Company or any Person acting on its behalf, except Equity
Partners Ltd., which shall be entitled to receive fees and
expenses upon the closing of the Contemplated Transactions from
the Creditor Trust and which fees and expenses shall not be a
Liability of the Reorganized Company or Buyer.
3.22. Tax Matters. The Reorganized Company will
receive the Company's assets and the Buyer will receive the New
Membership Interests free and clear of all Taxes. The
Reorganized Company will have no liability for any Taxes of the
Company. The Company has paid any and all taxes or other Claims
that create or allow a lien that cannot be discharged by the
Company's bankruptcy proceedings.
3.23. Foreign Liabilities. Schedule 3.23 attached
hereto contains (and will be updated and certified as correct at
the Closing) a true and complete list of any and all Liabilities
of the Company owed to creditors of the Company located in
jurisdictions other than the United States (the "Foreign
Liabilities").
3.24. Statements and Other Documents Not
Misleading. Except as set forth on Schedule 3.24 attached
hereto, to the Knowledge of the Company, there is no fact known
to the Company which may reasonably be expected to have a
Material Adverse Effect on the
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Reorganized Company or the Ongoing Business which has not been
set forth in this Agreement, the schedules referenced in this
Article III, or the other documents furnished by or on behalf of
the Company to Buyer on or prior to the Execution Date in
connection with the Contemplated Transactions.
ARTICLE IV
TAX RELATED MATTERS
4.1. Discontinuation of Status. The Company agrees to
refrain from taking any action on or after the Execution Date
which could cause the status of the Company as a partnership for
United States federal income tax purposes to terminate. If such
partnership status is terminated for any reason on or after the
Execution Date, the Company shall take such steps as are
reasonably necessary to request relief from such termination
pursuant to the Code and the regulations thereunder and the
corresponding provisions of state income tax or other relevant
Laws. The Company warrants and agrees that no election has been
filed pursuant to Code Section 754 by or with respect to the
Company and no such election will be filed by or with respect to
the Company for any taxable periods, except that an election
under Section 754 of the Code was filed on the federal tax return
for the period ended March 31, 1996.
4.2. Tax Returns. The Company shall prepare and file
any Tax Returns with respect to the Company for any tax periods
prior to the Closing Date. The Reorganized Company shall prepare
and file any tax returns with respect to the Company for any tax
periods after the Closing Date.
4.3. Tax Returns. The Tax Returns with respect to the
Company for the calendar year 1997 and for the short period
beginning January 1, 1998, and ending on the Closing Date, will
not make or change any election that will have a Material Adverse
Effect (which shall include any reduction in the tax basis of the
assets) upon the Reorganized Company or the Ongoing Business,
reasonable evidence of which shall be provided to the Buyer at or
before the Closing. Notwithstanding the aforementioned
obligation to provide reasonable evidence, final copies of such
Tax Returns shall be provided to the Reorganized Company prior to
filing. Notwithstanding the foregoing, no information will be
provided with respect to USA Jet/Active Aero.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and
warranties to the Company as follows:
5.1. Organization, Standing and Corporate Power. Buyer
is a corporation, duly organized, validly existing and in good
standing under the laws of the State of Delaware and has
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the requisite corporate power and authority to carry on its
business as now being conducted, except where the failure to be
so organized, existing or in good standing or to have such power
would not, individually or in the aggregate, have a Material
Adverse Effect on Buyer.
5.2. Authorization. Buyer has the requisite power and
authority to enter into and perform this Agreement and each of
the Collateral Documents to which it is a party, and to
consummate the appropriate Contemplated Transactions. The
execution, delivery and performance by Buyer of this Agreement
and each of the Collateral Documents to which it is a party, and
the consummation by Buyer of the Contemplated Transactions, have
been duly authorized by all necessary action on the part of
Buyer. This Agreement and each of the Collateral Documents to
which Buyer is a party has been duly executed and delivered by
Buyer and constitutes a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms,
except as such enforcement may be limited by applicable
bankruptcy, insolvency, moratorium or similar laws affecting the
rights of creditors' generally and general equity principles
(regardless of whether enforceability is considered a proceeding
at law or in equity) .
5.3. Conflict with other Instruments; Absence of
Restrictions. The execution, delivery and performance of this
Agreement by Buyer and each of the Collateral Documents to which
Buyer is a party, and the consummation of the Contemplated
Transactions by Buyer do not or will not (i) result in a Default
of or under (A) the certificate of incorporation or by-laws, (B)
assuming the termination of the waiting period under the HSR Act,
any Law, Court Order or Permit applicable to or binding upon
Buyer, or any Contracts or Licenses to which Buyer is a party or
by which Buyer is bound, (ii) result in the creation or
imposition of any Lien (other than Permitted Liens) upon any of
the assets or properties of Buyer, or (iii) result in the
termination, amendment or modification of, or give any party the
right to terminate, amend, modify, abandon, or refuse to perform
any Contract, License or Permit to which Buyer is a party or by
which Buyer, or any of its properties or assets, is bound, or
result in the acceleration or modification, or give any party the
right to accelerate or modify, the time within which, or the
terms under which, any duties or obligations are to be performed
under, or any rights or benefits are to be received under any
Contract, License or Permit to which Buyer is a party or by which
Buyer, or any of its properties or assets, is bound.
5.4. Financial Ability. The Buyer has the present
financial wherewithal, either from its present assets or from
third party financial commitments, to effectuate the transactions
hereunder, including payment of the Purchase Price.
5.5. Government and Third-Party Approvals. Except as
set forth on Schedule 5.5 attached hereto, and except for the
termination of the waiting period under the HSR Act, no consent,
approval, order or authorization of, or registration, declaration
or filing with, any Person (including, without limitation, any
Governmental Entity) is required by or with respect to Buyer in
connection with the execution, delivery or performance by Buyer
of this Agreement or the Collateral Documents to which it is a
party, or the consummation by the Buyer of the Contemplated
Transactions.
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5.6. Litigation. There is no Litigation pending or, to
the knowledge of Buyer, threatened against or affecting Buyer
that could reasonably be expected, individually or in the
aggregate, to impair the ability of Buyer to perform its
obligations under this Agreement or any of the Collateral
Documents, or prevent the consummation of any of the Contemplated
Transactions, and there is no Court Order outstanding against
Buyer having or which in the future, insofar as reasonably can be
foreseen, could have, any such effect.
5.7. Brokers. No broker, investment banker, financial
advisor or other Person, the fees and expenses of which will be
paid by Buyer, is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with
the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Buyer.
5.8. Statements and Other Documents Not Misleading.
Neither this Agreement, including all schedules referenced in
this Article V, nor any other financial statement, document or
other instrument heretofore or hereafter furnished by or on
behalf of Buyer in connection with the Contemplated Transactions
contains or will contain any untrue statement of any material
fact or omits or will omit to state any material fact required to
be stated in order to make sure that such statement, document or
other instrument is not misleading. There is no fact known to
Buyer which may reasonably be expected to have a Material Adverse
Effect on Buyer which has not been set forth in this Agreement,
the schedules referenced in this Article V, or the other
documents furnished by or on behalf of Buyer on or prior to the
Execution Date in connection with the Contemplated Transactions.
ARTICLE VI
CERTAIN COVENANTS AND OTHER MATTERS
6.1. Conduct of Business. Except as otherwise
contemplated by the Business Plan and as long as the Buyer is
providing the Funding, during the period from the Execution Date
to the Closing Date or earlier if this Agreement is terminated in
accordance with its terms, the Company agrees to cause the
Ongoing Business to be conducted in the ordinary course
consistent with current practices, and with respect to the
Business and the Company, will:
(a) not sell, transfer, pledge, or otherwise
dispose of any assets or properties relating to the Business,
except as contemplated by the Funding Agreement;
(b) not remove any fixtures, equipment or
personal property from any of the Leased Real Property;
(c) not make or agree to make any capital
expenditures which in the aggregate are in excess of the capital
expenditure amount in the Business Plan;
(d) not change the Company name or permit the use
thereof by any other Person;
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(e) not (i) cause, suffer, or permit the
termination of any Benefit Plan other than as provided in Section
3.11 or as otherwise consented to by Buyer, (ii) permit any
Prohibited Transaction or other violation of the Code or ERISA
involving any Benefit Plan, or (iii) fail to pay to any Benefit
Plan any contribution which it is obligated to pay under the
terms of such Benefit Plan;
(f) not enter into any new, or amend or otherwise
alter any existing, Benefit Plan;
(g) not, except in the ordinary course of
business consistent with past practices, (i) enter into any
Contract which would be required to be disclosed on Schedule 3.13
attached hereto; or (ii) waive or release any rights of material
value relating to the Ongoing Business; provided, however, that
nothing in this Section 6.1(g) will prohibit or restrict the
Company from entering into or modifying its arrangements with its
professional advisors consistent with the Business Plan;
(h) not, except as may be adjusted by mutual
agreement of the Company and Buyer as a result of the Excluded
Assets (i) make a material change in the character of its
Business or in the properties or assets of the Company, or enter
into any new business (other than short-term, ad hoc contracts,
consistent with past practices, and in the case of aircraft
described in subparagraph (ii) of the last paragraph of this
Section 6.1, in accordance with such subparagraph) or relocate
any of their facilities or acquire any additional operations or
business; (ii) terminate, discontinue, reduce, close or dispose
of any facility or business operation; or (iii) terminate,
discontinue, reduce, close or dispose of any of its operations in
connection with the carriage of Buyer material;
(i) except as otherwise provided in this
Agreement with respect to aircraft and engines, maintain the
facilities, assets and properties of the Company in their current
operating repair, order and condition, reasonable wear and tear
excepted, and notify Buyer immediately upon any loss of, damage
to, or destruction of any of the facilities, assets or properties
of the Company, whether or not covered by insurance;
(j) maintain in full force and effect insurance
coverage of the types and in the amounts set forth in Schedule
3.14 attached hereto;
(k) promptly advise Buyer in writing of the
commencement of, any known threat to commence, and any
developments or changes in any, pending or threatened Litigation
against the Company;
(l) except as to Contracts rejected by the
Company as authorized by Buyer pursuant to this Agreement,
maintain in full force and effect each, and not cause, suffer or
permit to occur any Default under any, Material Contract,
Material License or Material Permit required to be listed in any
Schedule attached to this Agreement that would permit the
termination or cancellation of such Material Contract, Material
License, or Material Permit and,
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until the Closing Date, pay all post-petition accounts payable
when due, except as prohibited by the Bankruptcy Code;
(m) not cause, suffer or permit to occur a
violation, in any material respect, of any Laws applicable to the
Company;
(n) use its reasonable efforts to (i) preserve
the business organizations of the Company intact, (ii) except as
contemplated by subparagraph (i) of the last paragraph of this
Section 6.1, keep available the services of each of the Company's
Employees, (iii) preserve the goodwill of the customers and (iv)
maintain the existence of the Company as a limited liability
company;
(o) promptly provide Buyer with a copy of the
Company's draft and final 1997 annual financial statements and
subsequent 1998 monthly financial statements; and
(p) use its reasonable efforts to not take,
suffer or permit any action, or omit to take any action, that
would render untrue in any material respect the Company's
representations or warranties set forth in this Agreement.
Notwithstanding the foregoing provisions of this Section 6.1:
(i) if the Company determines that it is in the best
interest of the Company to terminate, cancel or reject any
Contract, License or Permit, or to terminate the employment of
any Employee, other than a Contract, License, Permit, or Employee
necessary for the Business Plan, it shall provide the Buyer with
written notice (a "Rejection Notice") of its desire to terminate,
cancel or reject such Contract, License or Permit or to terminate
the employment of such Employee. Within five (5) Business Days
of receipt of a Rejection Notice, the Buyer shall either grant
its consent to the actions requested in such Rejection Notice or
provide the Company with an undertaking to pay all costs
associated with maintaining such Contact, License or Permit, or
the continued employment of such Employee from the date of the
Rejection Notice to the Closing Date. The parties hereby confirm
that the Company has notified the Buyer of its intention to
terminate its Aircraft Lease Agreement dated August 4, 1997, with
Falcon Express Cargo (L.L.C.) and its Letter of Agreement with
Emery Worldwide Airlines, and the Buyer has consented to the
termination of such Contracts.
(ii) Beginning on the Execution Date, BAX will
reimburse the Company for the lease payments made, if any, by the
Company for the period beginning with the Execution Date on the
following aircraft: 786AL, 61CX, 906R, and 735PL; and,
notwithstanding anything to the contrary in this Agreement, the
Company will remain responsible for funding maintenance and
maintenance reserves costs incurred after February 1, 1998 on
each aircraft used by it after February 1, 1998. The Company
will be permitted to use aircraft 61CX or 906R for AMC freighter
business without additional charge from BAX. With the consent of
BAX, the Company will be authorized to use aircraft 786AL, 735PL,
61CX, and 906R for business other than AMC freighter business,
provided it pays to BAX the following: the product of (a) the
number of hours
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the aircraft is used by the Company multiplied by (b) the
quotient of Buyer's monthly rent on such aircraft divided
by 220. BAX will have the right of first refusal to use any of
the following aircraft: 861PL at a cost of $2,200 per hour,
aircraft 61CX and aircraft 735PL at a cost of $2,200 per hour,
and aircraft 906R and aircraft 786AL at a cost of $2,400 per
hour, payable contemporaneously with delivery of the service,
from which BAX will offset the amounts owed to BAX from the
Company pursuant to the immediately preceding sentence.
6.2. Notice of Certain Events.
(a) The Company covenants and agrees to provide
Buyer with prompt notice of (i) any event, fact or circumstance
which could have a Material Adverse Effect on the Reorganized
Company or the Ongoing Business, (ii) any representation or
warranty made by it contained in this Agreement which has become
untrue or inaccurate in a manner that would have a Material
Adverse Effect on the Ongoing Business or the Reorganized Company
or (iii) the failure by it to comply with or satisfy any
covenant, agreement or condition to be complied with or satisfied
under this Agreement, within the time frame set forth in this
Agreement; provided, however, that such notification shall not
excuse or otherwise affect the representations, warranties,
covenants or agreements of the Company, or the conditions to the
obligations of the parties, under this Agreement.
(b) Buyer covenants and agrees to provide the
Company with prompt notice of (i) any event, fact or circumstance
which could have a Material Adverse Effect on Buyer, (ii) any
representation or warranty made by it contained in this Agreement
which has become untrue or inaccurate or (iii) the failure by it
to comply with or satisfy any covenant, agreement or conditioned
to be complied with or satisfied by it under this Agreement,
within the time frame set forth in this Agreement; provided,
however, that such notification shall not excuse or otherwise
affect the representations, warranties, covenants or agreements
of the Buyer, or the conditions to the obligations of the
parties, under this Agreement.
6.3. Cooperation; Access to Books and Records. The
Company will cooperate generally with Buyer in connection with
the Contemplated Transactions and, until the Closing Date or
earlier if this Agreement is terminated in accordance with its
terms, shall afford to one or more employees or agents of Buyer
(which will not be the preceding former owner of the Company or
any of his Affiliates (other than BAX) or any employees,
officers, directors, or agents of any Person owned or controlled
by the preceding former owner of the Company), who are reasonably
satisfactory to the Company, on-site access such that the Buyer
is aware of all material events, as they happen, affecting the
Company, access to observe all Company meetings (including
without limitation crew scheduling meetings, but excluding the
Company's daily 9:00 a.m. meeting), and on-site access to all of
the properties, assets, financial condition, operations, books,
records, files, correspondence, computer output, data, files, log
books, technical and operating manuals and other materials of the
Company (including those in the possession or control or their
accountants, attorneys and any other third party), as the case
may be, for the purpose of permitting Buyer to make such due
diligence investigation and examination of the business, assets
(including without limitation owned and leased aircraft),
properties and Books
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and Records of the Company as Buyer, in its discretion, shall
deem to be reasonably necessary or appropriate. Any such
investigation, access and examination shall be conducted
during regular business hours and upon reasonable prior notice
under the circumstances and will be conducted in a manner that
will not materially disrupt the operation of the Business. If
the preceding former owner of the Company is included in the
definition of Buyer, the Company will provide him with access,
but such access may be limited in the reasonable discretion of
the Company's chief executive officer. The Company will permit
the Buyer to perform, at Buyer's expense, a full and complete
appraisal of the Company's real and personal property and assets.
The Company will cause its counsel, accountants and
representatives, and its directors, officers and employees, to
cooperate fully with the employees and representatives of Buyer
in connection with all such investigation, access and
examination. The results of such investigation and examination
shall not relieve the Company from its obligations with respect
to the representations and warranties made in this Agreement or
reduce Buyer's right to pursue such remedies at Law or hereunder,
as it would otherwise have in the absence of having conducted
such investigation. Buyer will not contact any employee,
customer or supplier of the Company without the Company's prior
consent, which will not be unreasonably withheld, delayed or
conditioned.
6.4. Best Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, the parties shall use
their good faith best efforts to take, or cause to be taken, all
actions, and to do, or cause to be done, and to assist and
cooperate with the other party in doing, all things necessary,
proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Closing, and the other
Contemplated Transactions, including (i) obtaining all Required
Consents and the termination of the waiting period under the HSR
Act, (ii) defending any Litigation or Claims challenging this
Agreement or the consummation of any of the Contemplated
Transactions, including, if the circumstances warrant, seeking to
have any stay or temporary restraining Court Order vacated or
reversed, and (iii) the execution and delivery of any additional
documents, agreements and instruments necessary to consummate the
Contemplated Transactions by, and to fully carry out the purposes
of, this Agreement.
6.5. Notices and Consents. During the period from the
Execution Date to the Closing Date or earlier if this Agreement
is terminated in accordance with its terms:
(a) The Company and Buyer will give any required
notices to third parties, and will each use their best efforts to
obtain any third party consents that are legally required to
effectuate the transactions hereunder.
(b) The Company and Buyer will each give any
notices to, make any filings with, and use their best efforts to
obtain any Governmental Consents in connection with the matters
referred to herein. Without limiting the generality of the
foregoing, the Company and Buyer will each file any Notification
and Report Forms and related material that they may be required
to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR
Act, will use their best efforts to obtain any early termination
of the applicable waiting period, and will make any further
filings pursuant thereto that may be necessary, proper, or
advisable in connection therewith.
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(c) On a monthly basis, the Company must provide
Buyer with the engine and airframe service and status information
on all Company owned or leased aircraft.
6.6. Plan Notices. The Company will notify, as is
required by the Bankruptcy Code, all known holders of Claims,
interests, or Liens, and the Company will serve the Plan and
Disclosure Statement and notice of the transactions contemplated
by the Agreement on parties entitled to such notice under the
Bankruptcy Code, as modified by orders in respect of notice which
may be issued at any time and from time to time by the Bankruptcy
Court.
6.7. Services Agreement. The Services Agreement is not
modified by any provision of, or reference to same in, this
Agreement. Any reference in this Agreement to any provision of
or defined term used in the Services Agreement is without
prejudice to any claims Buyer or the Company may each have
against the other under the Services Agreement; provided,
however, that upon the Closing (whether to Buyer or any
overbidder), any and all disputes between BAX and the Company as
of the Execution Date arising under the Services Agreement will
be deemed extinguished, with the exception that Buyer shall
remain liable for services by the Company for January 1998, in
excess of $292,107, and thereafter.
6.8. Transition Services Agreement. By the Closing
Date, the Company and Buyer will negotiate in good faith and
execute an appropriate Transition Services Agreement to be
effective on the Closing Date.
6.9. Schedules. Buyer will be permitted until 5:00
p.m., eastern standard time, Monday, February 2, 1998, to object
to the contents of any of the schedules and if such objections
cannot be resolved with the Company, then, in Buyer's sole
discretion, Buyer will have the right on February 2, 1998, to
terminate this Agreement and receive back the Good Faith Deposit
and the Funding.
6.10. Customer Discussions. Until the Closing
Date, the Company shall afford the Buyer the opportunity to
discuss the transaction contemplated by this Agreement with AMC.
The Company will be present at all conversations with AMC.
6.11. Aircraft. Through the Closing Date, the
Company will maintain all aircraft (both engines and airframes)
owned or leased by the Company (and, pursuant to the provisions
of subparagraph (ii) of the last paragraph of Section 6.1, the
following aircraft: 786AL, 61CX, 906R, and 735PL) in accordance
with FAA approved maintenance programs, ordinary wear and tear
excepted. Through the Closing Date, the Company will comply in
all respects with all mandatory inspections and modification
requirements, airworthiness directives and similar requirements
applicable to such aircraft, any engine, part or component. On
the Closing Date, all aircraft under leases listed in a Rejection
Notice which are not rejected because of Buyer's exercise of its
option to pay the costs pursuant to subparagraph (i) of the last
paragraph of Section 6.1 will be in the same condition as such
aircraft are in on the Execution Date, ordinary wear and tear
excepted.
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6.12. Labor Relations. Subject to subparagraph (i)
of the final paragraph of Section 6.1, the Company will not
change any of the terms or conditions of employment of any
Company Employees without consultation with and written approval
from the Buyer.
6.13. Status. Through the Closing Date, the
Company will not allow the Company's status as a partnership for
U.S. Federal income tax purposes to be changed and will not allow
an election pursuant to Code Section 754 to be filed by or with
respect to the Company.
6.14. Inventory Appraisal. The Buyer shall retain,
at its expense, BK Associates to perform an appraisal (the
"Inventory Appraisal") of the Company's Inventory in order to
confirm that the value of the Company's Inventory is at least
$12,000,000 as of the date of completion of the Inventory
Appraisal. The Buyer shall with representatives of the Company
and the Banks present, conduct the physical inventory and deliver
the results thereof to BK Associates a sufficient number of days
prior to the Closing to allow BK Associates to complete and
deliver to the Company the Inventory Appraisal at least ten (10)
days before the Closing Date. In addition, the Buyer shall, and
shall cause BK Associates to, perform the Inventory Appraisal
using the same valuation methodology as was used in the
Appraisal. The Buyer shall be responsible for conducting the
physical inventory for the Inventory Appraisal, and the Company
agrees to cooperate in such process. The Buyer shall give the
Company and the Banks at least ten (10) Business Days' prior
written notice of its intention to conduct such physical
inventory, which notice shall contain the time and locations of
such physical inventory. The Buyer shall devote such resources
to the taking of the physical inventory as are necessary to
ensure that the physical inventory is complete and the
information is delivered to BK Associates at least fourteen (14)
days before the Closing. The Buyer agrees to schedule and
conduct such physical inventory in a manner that does not
materially interfere with the Company's operations. In
furtherance of the foregoing, the Buyer and the Company agree to
cooperate to identify the inventory locations containing the most
Inventory (determined on the basis of aggregate value at a
particular location as opposed to quantity of items) with the
goal of minimizing the number of sites at which a physical
inventory is required in order to confirm that the aggregate
value of the Company's inventory is at least equal to
$12,000,000.
6.15. Bank Payments. During the period from the
Execution Date through the Closing, the Company will not consent
to making any payments, directly or indirectly, to the Banks
other than payments in respect of the Company's credit cards
pursuant to the Company's Credit Card Agreement with Comerica
Bank.
6.16. Foreign Liabilities. To the extent the
Company pays Foreign Liabilities in order to prevent imminent
seizure of its assets, and provided that prior to such payment it
has, to the extent reasonable, provided prior notice to and
consulted with the Buyer in connection with such payment, Buyer
shall reimburse the Company for such amounts so paid. If a
Closing with Buyer does not occur as a result of a Competing
Transaction, the Buyer will receive, from the first proceeds paid
by the buyer in the Competing Transaction, repayment of all such
reimbursements paid by the Buyer to the Company.
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6.17. Cure Costs. If the Closing with Buyer
occurs, the Company will bear the first Fifty Thousand Dollars
($50,000.00) of all pre-petition cure costs, and the Buyer will
bear the remaining pre-petition and all post-petition cure costs,
on executory contracts and leases assumed by the Company.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the transactions
contemplated hereby on the Closing Date shall be subject to the
satisfaction (or waiver by Buyer) of each of the following
conditions on or prior to the Closing Date:
7.1. Accuracy of Representations and Warranties. Each
of the representations and warranties of the Company contained
in this Agreement or in any Collateral Document, and the
information contained in the schedules to this Agreement referred
to in Article III hereof, and any documents or instruments
delivered at the Closing by the Company in connection with this
Agreement or any of the Collateral Documents, shall have been
true and correct when made and at and as of the Closing Date as
though made at such times, and Buyer shall have received a
certificate to such effect dated the Closing Date signed on
behalf of the Company by its chief executive officer or chief
financial officer.
7.2. Performance of Obligations. The Company shall
have performed all covenants and agreements to be performed by it
on or before the Closing Date, including each of the items
identified in Article VI hereof, and Buyer shall have received a
certificate to such effect dated the Closing Date signed on
behalf of the Company by its chief executive officer or chief
financial officer.
7.3. Chapter 11 Case.
(a) The substance of the Motions and all
Bankruptcy Court orders entered in response to the Motions shall
be acceptable to Buyer.
(b) The Company will validly assume all leases
and executory contracts identified by Buyer and will reject all
others pursuant to Section 365 of the Bankruptcy Code.
(c) The substance of the Plan shall be reasonably
acceptable to Buyer and will include, among other items, a
cancellation of all Existing Membership Interests and a release
of all Claims against BAX (other than Claims under the Services
Agreement for January 1998, over $292,107, and thereafter) and
any Person included within the definition of Buyer who has had no
previous relationship with the Company, the Reorganized Company,
the Company, and each of its officers, Members, directors,
employees, and legal, accounting, and financial representatives,
in their capacity as such.
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(d) BAX and its Affiliates, any Person included
within the definition of Buyer who has had no previous
relationship with the Company, the Reorganized Company, and each
of their officers, directors, employees, legal and accounting
representatives, in their capacity as such, must have received
releases from the Releasing Parties.
(e) The Confirmation Order shall be reasonably
acceptable to Buyer and final and non-appealable within one
hundred fifty (150) days after the Execution Date and there shall
be no injunction prohibiting the Contemplated Transaction.
7.4. Maintenance. The Company will have maintained
Schedule Reliability And Departure Reliability Factors equal to
at least 90% of the Company's average actual, historical
performance during the three-month period beginning September 1,
1997.
7.5. Consents and Estoppels. There shall not exist any
action or threat of action by a Governmental Entity seeking to
enjoin any of the Contemplated Transactions or revoke or limit a
Permit, and the waiting period under the HSR Act shall have
expired or shall have been terminated. All Required Consents
(other than from any Aviation Authority or the DOT, all of which
will be obtained following the Closing) shall have been obtained.
Buyer must have received all Governmental Approvals, including
without limitation from any Aviation Authority and the DOT, and
courts or other judicial or quasi-judicial bodies, as applicable,
sufficient to ensure a smooth, uninterrupted transition of the
operations of the Company to the account and for the benefit of
the Reorganized Company and there shall not exist any action or
threat of action by a Governmental Entity against the operations
of the Ongoing Business.
7.6. No Material Adverse Change. Between the Execution
Date and the Closing Date, there must not have occurred any
Material Adverse Change in the Ongoing Business.
7.7. AMC Contract. Notwithstanding anything disclosed
in the schedules attached hereto or in any document delivered to
Buyer in connection with this Agreement, including without
limitation the letter to the Company dated January 9, 1998, from
the Air Force (Headquarters Air Mobility Command) requesting that
the Company cure its "substandard performance reliability," and
any letters or other documents delivered to the Company or the
Buyer after the Execution Date, Buyer shall be satisfied, in
Buyer's sole discretion, that the AMC Contract will not be
terminated or modified in a way materially adverse to the Ongoing
Business during the current contract period.
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ARTICLE VIII
CONDITIONS TO THE
OBLIGATIONS OF THE COMPANY
The obligation of the Company to consummate the
transactions contemplated hereby on the Closing Date shall be
subject to the satisfaction (or waiver by the Company) of each of
the following conditions on or prior to the Closing Date:
8.1. Accuracy of Representations and Warranties. Each
of the representations and warranties of the Buyer contained in
this Agreement or in any Collateral Document, and any documents
or instruments delivered at the Closing by Buyer in connection
with this Agreement or any of the Collateral Documents, shall
have been true and correct when made and shall be true and
correct at and as of the Closing Date as though made at such
time, and the Company shall have received a certificate to such
effect dated the Closing Date signed on behalf of Buyer by its
President.
8.2. Performance of Obligations. Buyer shall have
performed all covenants and agreements to be performed by it on
or before the Closing Date, and the Company shall have received
a certificate to such effect dated the Closing Date signed on
behalf of Buyer by its President.
8.3. Other Documents. The Company shall have received
all of the documents, agreements and instruments to be delivered
to it as contemplated by this Agreement and as necessary to
consummate the Contemplated Transactions, and shall have been
provided with such other documents as it shall have reasonably
requested from Buyer. Buyer shall provide the Company with a
release of all Claims against the Company and its officers,
Members, directors, employees, and legal, accounting, and
financial representatives, in their capacity as such.
8.4. Consents and Estoppels. The waiting period under
the HSR Act shall have expired or shall have been terminated and
the Confirmation Order shall have been entered.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination. This Agreement may be terminated at
any time prior to the Closing Date:
(a) at the election of Buyer, if any one or more
of the conditions set forth in Article VII to its obligation to
proceed with the Closing (other than the conditions relating to
the delivery of documents, agreements and instruments at the
Closing) has not been fulfilled by June 30, 1998, or earlier if
incapable of being fulfilled, unless the failure to fulfill any
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such conditions to the Closing results from the breach by Buyer
of any of its representations, warranties, covenants or
agreements contained in this Agreement or the Funding Agreement;
(b) at the election of the Company, if any one or
more of the conditions set forth in Article VIII to its
obligation to proceed with the Closing (other than the conditions
relating to the delivery of documents, agreements and instruments
at the Closing) has not been fulfilled by June 30, 1998, unless
the failure to fulfill any such condition to the Closing results
from the breach by the Company of any of its representations,
warranties, covenants or agreements contained in this Agreement
or the Funding Agreement;
(c) at the election of Buyer, if the Company has
breached any representation, warranty, covenant or agreement
contained in this Agreement, which breach cannot be or is not
cured by the earlier of (i) 15 days following the Company's
receipt from Buyer of notice of such breach or (ii) the Closing
Date, unless the breach results from the breach by Buyer of any
of its representations, warranties, covenants or agreements
contained in this Agreement or the Funding Agreement;
(d) at the election of the Company, if Buyer has
breached any representation, warranty, covenant or agreement
contained in this Agreement, which breach cannot be or is not
cured by the earlier of (i) 15 days following the Buyer's receipt
from the Company of notice of such breach or (ii) the Closing
Date, unless the breach results from the breach by the Company of
any of its representations, warranties, covenants or agreements
contained in this Agreement or the Funding Agreement;
(e) at the election of Buyer, if any Litigation
is commenced or threatened to be commenced by any Person (other
than by any party hereto) directed against the consummation of
the Closing and the Buyer reasonably and in good faith deems it
impractical or inadvisable to proceed in view of such Litigation,
or threat thereof, taking into account the potential expense and
delay likely to be involved;
(f) at the election of any party hereto, if any
Court Order permanently enjoining, restraining or otherwise
prohibiting the Closing is issued and shall have become final and
nonappealable; or
(g) at any time on or prior to the Closing Date,
by mutual written consent of the parties hereto.
9.2. Survival. If this Agreement is validly terminated
pursuant to Section 9.1 and the Contemplated Transactions are not
consummated as described above, this Agreement shall become void
and of no further force and effect; provided, however, that the
provisions of Sections 2.1(g), 2.1(h), 6.7, and 11.11 shall
survive.
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ARTICLE X
POST-CLOSING COVENANTS
10.1. Further Assurances. At any time and from
time to time from and after the Closing, each of the parties
hereto (at its own expense) will, at the request of any other
party hereto, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such instruments and other
documents and perform or cause to be performed such acts and
provide such information, as may reasonably be required to
evidence or effectuate the Contemplated Transactions or for the
performance by such party of any of his or its other respective
obligations under this Agreement.
10.2. Survival. From and after the Closing Date,
the representations and warranties contained in this Agreement
and the indemnification obligations related thereto shall not
survive, except that the provisions of Section 4.3 hereof shall
survive.
ARTICLE XI
GENERAL PROVISIONS
11.1. Expenses. The Company shall be responsible
for the payment of costs that it has incurred or will incur in
connection with the negotiations, execution and delivery of this
Agreement and the consummation of the Contemplated Transactions.
Buyer shall be responsible for the payment of costs it has
incurred or will occur in connection with the execution and
delivery of this Agreement and the consummation of the
Contemplated Transactions.
11.2. Notices. All notices, requests, demands,
claims, and other communications hereunder will be in writing.
Any notice, request, demand, claim, or other communication
hereunder shall be deemed duly given upon receipt or, if later,
three business days after its deposit if it is sent by registered
or certified mail, return receipt requested, postage prepaid and
addressed to the intended recipient as set forth below:
If to the Company:
James J. Bonsall
Chief Executive Officer
Air Transport International Limited Liability Company
One Cantrell Center
2800 Cantrell Road
Little Rock, Arkansas 72202
Telecopy No.: (501) 603-2099
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With a Copy to:
Patrick D. May
Equity Partners Ltd.
1450 West Long Lake
Suite 340
Troy, Michigan 48098
Telecopy No.: (248) 952-0314
- and -
N. Lynn Hiestand, Esq.
Skadden, Arps, Slate, Meagher & Flom (Illinois)
333 W. Wacker Drive
Suite 2100
Chicago, Illinois 60606
Telecopy No.: (312) 407-0411
If to the Buyer:
BAX Global Inc.
James B. Hartough, Treasurer
c/o The Pittston Company
1000 Virginia Center Parkway
P.O. Box 4229
Glen Allen, VA 23058-4299
Telecopy No.: (804) 553-3750
With a Copy to:
Brian Cole, Esq.
Burlington Air Express
16808 Armstrong Avenue
Irvine, CA 92606
Telecopy No.: (714) 250-8971
-and-
I. William Cohen, Esq.
Pepper Hamilton LLP
100 Renaissance Center, 36th Floor
Detroit, MI 48243-1157
Telecopy No.: (313) 259-7926
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Cary S. Levinson, Esq.
Pepper Hamilton LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
Telecopy No.: (215) 981-4750
If to the Banks:
Comerica Bank
Attn: Stephen E. Lyons
Comerica Tower at Detroit Center
Third Floor, Mail Code 3205
500 Woodward Avenue
Detroit, Michigan 48226
Telecopy No.: (313) 222-5706
Any party may send notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address
set forth above using any other means (including personal
delivery, expedited courier, messenger service, telecopy, telex,
ordinary mail, or electronic mail), but no such notice, request,
demand, claim, or other communications shall be deemed to have
been duly given unless and until it actually is received by the
intended recipient. Any party may change the address to which
notices, requests, demands, claims, and other communications
hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
11.3. Interpretation. Unless the context of this
Agreement otherwise requires, (i) words of any gender include
each other gender and the neuter; (ii) words using the singular
or plural number also include the plural or singular number,
respectively; (iii) the terms "hereof," "herein," "hereby" and
derivative or similar words refer to this entire Agreement; (iv)
the terms "Article" or "Section" refer to the specified Article
or Section of this Agreement; and (v) the term "including" or
similar words shall be construed as to refer to such matter
without limitation thereof . Whenever this Agreement refers to a
number of days, such number shall refer to calendar days unless
Business Days are specified. The table of contents and headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
11.4. Counterparts. This Agreement may be executed
in one or more counterparts, all of which shall be considered one
and the same agreement and shall become effective when one or
more counterparts have been signed by each of the parties and
delivered to the other parties.
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11.5. Entire Agreement; No Third-Party
Beneficiaries. This Agreement (a) constitutes the entire
agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the
subject matter of this Agreement, including the Memorandum and
(b) is not intended to confer upon any Person other than the
parties any rights or remedies hereunder. This Agreement shall
not be amended or terminated except by a written instrument duly
executed by Buyer and the Company.
11.6. Governing Law. This Agreement shall be
governed by, and construed and enforced in accordance with, the
laws of the State of Michigan, regardless of the laws that might
otherwise govern under applicable principles of conflict of laws
thereof.
11.7. Assignment. Neither this Agreement nor any
of the rights, interests or obligations under this Agreement
shall be assigned, in whole or in part, by operation of law or
otherwise by either Buyer or the Company without the prior
written consent of the other party hereto, except that Buyer
shall have the right to assign, in whole or in part, its rights,
interests, and obligations to one or more assignee(s) who assume
Buyer's obligations under this Agreement. Subject to the
preceding sentence, this Agreement will be binding upon, inure to
the benefit of, and be enforceable by, the parties and their
respective successors and assigns.
11.8. Press Releases. Except as may be required by
Law, prior to or after the Closing, no party shall issue a press
release or make any other public announcement concerning this
Agreement or its subject matter without advance approval thereof
by the other party, which approval shall not be unreasonably
withheld, delayed or conditioned; provided, however, the parties
agree that they will cooperate with one another to make a public
announcement upon the consummation of the Contemplated
Transactions.
11.9. Construction. The parties hereto have
participated jointly in the negotiation and drafting of this
Agreement. If an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if
drafted jointly by the parties and no presumption or burden of
proof shall arise favoring or disfavoring any party by virtue of
the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise.
11.10. Incorporation of Exhibits and Schedules. The
exhibits and schedules identified in and attached to this
Agreement are incorporated herein by reference and made a part
hereof.
11.11. No Releases; No Obligation of Members.
Except as provided in Sections 7.3(c) and 7.3(d), the parties
agree that this Agreement shall not operate to release any Person
from, or otherwise affect the rights or Liabilities of any Person
with respect to, any Claims brought by, pending or threatened
against or otherwise affecting such Person. Nothing in this
Agreement is intended to create any personal liability or
obligations for the Members, except pursuant to Section 4.3.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the Execution Date.
AIR TRANSPORT INTERNATIONAL LIMITED
LIABILITY COMPANY
By: /s/ James J. Bonsall, Jr.
Its: Chief Executive Officer
BAX GLOBAL INC.
By: /s/ Michael E. Odom
Its: Senior Vice President
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TABLE OF CONTENTS
Page
BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .1
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . .1
ARTICLE II ACQUISITION BY BUYER. . . . . . . . . . . . . . . . 13
2.1. Basic Transaction. . . . . . . . . . . . . . . . . . 13
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . 16
3.1. Organization, Standing and Power. . . . . . . . . . 16
3.2. Authorization. . . . . . . . . . . . . . . . . . . . 16
3.3. Issuance of Interests. . . . . . . . . . . . . . . . 16
3.4. Conflict with other Instruments; Absence of
Restrictions . . . . . . . . . . . . . . . . . . . . 17
3.5. Government and Third-Party Consents. . . . . . . . . 17
3.6. Litigation . . . . . . . . . . . . . . . . . . . . . 17
3.7. Compliance with Laws; and Permits. . . . . . . . . . 18
3.8. Title to Properties; Adequacy of Properties. . . . . 18
3.9. Other Representations Regarding the Company's Assets 19
3.10. Financial Statements. . . . . . . . . . . . . . 21
3.11. Employees and Employee Plans. . . . . . . . . . 21
3.12. Absence of Certain Changes or Events. . . . . . 22
3.13. Contracts . . . . . . . . . . . . . . . . . . . 22
3.14. Insurance . . . . . . . . . . . . . . . . . . . 23
3.15. Transactions with Affiliates. . . . . . . . . . 23
3.16. Employee Relations. . . . . . . . . . . . . . . 23
3.17. Employee Benefit Plans. . . . . . . . . . . . . 24
3.18. Environmental Laws. . . . . . . . . . . . . . . 26
3.19. Suppliers . . . . . . . . . . . . . . . . . . . 27
3.20. Corporate Records . . . . . . . . . . . . . . . 27
3.21. Brokers . . . . . . . . . . . . . . . . . . . . 27
3.22. Tax Matters . . . . . . . . . . . . . . . . . . 27
3.23. Foreign Liabilities . . . . . . . . . . . . . . 27
3.24. Statements and Other Documents Not Misleading . 27
ARTICLE IV TAX RELATED MATTERS . . . . . . . . . . . . . . . . 28
4.1. Discontinuation of Status. . . . . . . . . . . . . . 28
4.2. Tax Returns. . . . . . . . . . . . . . . . . . . . . 28
4.3. Tax Returns. . . . . . . . . . . . . . . . . . . . . 28
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . 28
5.1. Organization, Standing and Corporate Power . . . . . 28
5.2. Authorization. . . . . . . . . . . . . . . . . . . . 29
5.3. Conflict with other Instruments; Absence of
Restrictions . . . . . . . . . . . . . . . . . . . . 29
5.4. Financial Ability. . . . . . . . . . . . . . . . . . 29
5.5. Government and Third-Party Approvals . . . . . . . . 29
5.6. Litigation . . . . . . . . . . . . . . . . . . . . . 30
5.7. Brokers. . . . . . . . . . . . . . . . . . . . . . . 30
5.8. Statements and Other Documents Not Misleading. . . . 30
ARTICLE VI CERTAIN COVENANTS AND OTHER MATTERS . . . . . . . . 30
6.1. Conduct of Business. . . . . . . . . . . . . . . . . 30
6.2. Notice of Certain Events . . . . . . . . . . . . . . 33
6.3. Cooperation; Access to Books and Records . . . . . . 33
6.4. Best Efforts . . . . . . . . . . . . . . . . . . . . 34
6.5. Notices and Consents . . . . . . . . . . . . . . . . 34
6.6. Plan Notices . . . . . . . . . . . . . . . . . . . . 35
6.7. Services Agreement . . . . . . . . . . . . . . . . . 35
6.8. Transition Services Agreement. . . . . . . . . . . . 35
6.9. Schedules. . . . . . . . . . . . . . . . . . . . . . 35
6.10. Customer Discussions. . . . . . . . . . . . . . 35
6.11. Aircraft. . . . . . . . . . . . . . . . . . . . 35
6.12. Labor Relations . . . . . . . . . . . . . . . . 36
6.13. Status. . . . . . . . . . . . . . . . . . . . . 36
6.14. Inventory Appraisal . . . . . . . . . . . . . . 36
6.15. Bank Payments . . . . . . . . . . . . . . . . . 36
6.16. Foreign Liabilities . . . . . . . . . . . . . . 36
6.17. Cure Costs. . . . . . . . . . . . . . . . . . . 37
ARTICLE VII CONDITIONS TO THE OBLIGATIONS OF BUYER . . . . . . 37
7.1. Accuracy of Representations and Warranties . . . . . 37
7.2. Performance of Obligations . . . . . . . . . . . . . 37
7.3. Chapter 11 Case. . . . . . . . . . . . . . . . . . . 37
7.4. Maintenance. . . . . . . . . . . . . . . . . . . . . 38
7.5. Consents and Estoppels . . . . . . . . . . . . . . . 38
7.6. No Material Adverse Change . . . . . . . . . . . . . 38
7.7. AMC Contract . . . . . . . . . . . . . . . . . . . . 38
ARTICLE VIII CONDITIONS TO THE OBLIGATIONS OF THE COMPANY . . 39
8.1. Accuracy of Representations and Warranties . . . . . 39
8.2. Performance of Obligations . . . . . . . . . . . . . 39
8.3. Other Documents. . . . . . . . . . . . . . . . . . . 39
8.4. Consents and Estoppels . . . . . . . . . . . . . . . 39
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ARTICLE IX TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . 39
9.1. Termination. . . . . . . . . . . . . . . . . . . . . 39
9.2. Survival . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X POST-CLOSING COVENANTS . . . . . . . . . . . . . . . 41
10.1. Further Assurances. . . . . . . . . . . . . . . 41
10.2. Survival. . . . . . . . . . . . . . . . . . . . 41
ARTICLE XI GENERAL PROVISIONS. . . . . . . . . . . . . . . . . 41
11.1. Expenses. . . . . . . . . . . . . . . . . . . . 41
11.2. Notices . . . . . . . . . . . . . . . . . . . . 41
11.3. Interpretation. . . . . . . . . . . . . . . . . 43
11.4. Counterparts. . . . . . . . . . . . . . . . . . 43
11.5. Entire Agreement; No Third-Party Beneficiaries. 44
11.6. Governing Law . . . . . . . . . . . . . . . . . 44
11.7. Assignment. . . . . . . . . . . . . . . . . . . 44
11.8. Press Releases. . . . . . . . . . . . . . . . . 44
11.9. Construction. . . . . . . . . . . . . . . . . . 44
11.10. Incorporation of Exhibits and Schedules . . . . 44
11.11. No Releases; No Obligation of Members . . . . . 44
Annexes, Exhibits and Schedules:
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