PURCHASE AND SALE AGREEMENT
by and among
ALPHA AIRPORTS GROUP PLC,
a company organized under the laws
of England,
ALPHA US HOLDINGS, INC.,
a Delaware corporation,
DYNCORP AVIATION SERVICES, INC.,
a Delaware corporation,
and
DYNCORP,
a Delaware corporation
August 8, 1995
TABLE OF CONTENTS
Page
SECTION 1. PURCHASE AND SALE OF SHARES 2
1.1 Purchase and Sale of Shares 2
1.2 Purchase Price 2
1.3 Purchase Price Determination 2
SECTION 2. CLOSING; CLOSING DATE 5
2.1 Closing; Closing Date 5
2.2 Delivery of Stock 5
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SELLER AND DYNCORP 6
3.1 Organization 6
3.2 Authorization 6
3.3 No Conflicts 6
3.4 No Brokers 7
3.5 Title to Stock 7
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER AND ALPHA 7
4.1 Organization 7
4.2 Authorization 7
4.3 No Conflict 8
4.4 No Brokers 8
SECTION 5. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANIES 8
5.1 Organization, Qualification, and Corporate Power 8
5.2 No Conflict 9
5.3 Capitalization 9
5.4 Subsidiaries; Parent 10
5.5 Financial Statements; Projections 11
5.6 Interim Changes 11
5.7 Absence of Undisclosed Liabilities 14
5.8 Litigation 14
5.9 Legal Compliance; Permits and Licenses 15
5.10 Contracts and Other Agreements 16
5.11 Compliance; Change of Control 18
5.12 No Brokers 18
5.13 Real Property 18
5.14 Tax Matters 20
5.15 Accounts and Notes Receivable 22
5.16 Inventory 23
5.17 Tangible Property 23
5.18 Proprietary Rights 23
5.19 Suppliers and Customers 24
5.20 Employee Benefit Plans 25
5.21 Labor Matters; Employees 26
5.22 Insurance 28
5.23 Company Services 28
5.24 Transactions with Affiliates 29
5.25 Environmental Matters 29
5.26 Disclosure 31
SECTION 6. CERTAIN COVENANTS AND AGREEMENTS 31
6.1 Best Efforts 31
6.2 Conduct of Business 31
6.3 Monthly Financial Statements 34
6.4 Transfer of Stock 34
6.5 Notice of Developments 34
6.6 Expenses 35
6.7 Actions With Respect to Sale of Parent and the Companies 35
6.8 Further Assurances 35
6.9 Access to Records 36
6.10 DynAir Russia. 36
6.11 Confidentiality 37
6.12 Public Announcements 38
6.13 Tax Covenants 38
6.14 Other Agreements 44
6.15 Seller Consents and Approvals 46
6.16 ALPHA Shareholder Approval 46
6.17 Insurance Matters 47
SECTION 7. CONDITIONS TO THE OBLIGATION OF BUYER 47
7.1 Representations, Warranties and Covenants 47
7.2 Opinion of the Seller's Counsel 48
7.3 Consents (Regulatory) 48
7.4 Corporate Services Letter Agreement 48
7.5 Material Adverse Change 48
7.6 Proceedings 48
7.7 Resignations 49
7.8 ALPHA Shareholder Approval 49
7.9 Underwriting Agreement 49
7.10 Bank Agreement 49
7.11 Actions of Seller 49
7.12 Repayment of Indebtedness 49
7.13 Release of Liens and Guarantees 49
7.14 Equipment Leases 50
7.15 DynAir Russia 50
7.16 Receivables Program 50
7.17 Pre-Closing Reorganizations. 50
7.18 Escrow Agreement. 50
7.19 Material Consents (Contracts and Permits) 50
7.20 DynCorp Class C Approval. 50
7.21 Waiver 50
SECTION 8. CONDITIONS TO OBLIGATIONS OF SELLER 51
8.1 Representations and Warranties 51
8.2 Opinion of the Buyer's Counsel 51
8.3 HSR 51
8.4 Waiver 51
SECTION 9. INDEMNIFICATION 51
9.1 Survival of Representations and Warranties 51
9.2 Obligations of Seller and DynCorp to Indemnify Buyer 52
9.3 Obligation of ALPHA and Buyer to Indemnify Seller and
DynCorp 55
9.4 Matters Involving Third Parties 55
9.5 Limitations on Indemnification 57
9.6 Other Indemnification Provisions 58
SECTION 10. NON-COMPETITION; NON-SOLICITATION 58
10.1 Covenant Not to Compete 58
10.2 DynAir Names 59
10.3 Enforceability 60
10.4 No Solicitation 60
SECTION 11. GUARANTEE OF ALPHA 61
SECTION 12. TERMINATION OF AGREEMENT 61
12.1 Termination 61
12.2 Effect of Termination 63
SECTION 13. MISCELLANEOUS PROVISIONS 64
13.1 Certain Definitions 64
13.2 Notices 72
13.3 Governing Law 73
13.4 Amendments and Waivers 73
13.5 Severability 74
13.6 Incorporation of Exhibits and Schedules 74
13.7 No Third-Party Beneficiaries 74
13.8 Entire Agreement 74
13.9 Specific Performance 74
13.10 No Strict Construction 74
13.11 Succession and Assignment 74
13.12 Counterparts 75
13.13 Headings 75
13.14 Time of the Essence; Computation of Time 75
Index to Exhibits and Schedules
Schedule 1.3 Reference Balance Sheet Accounting
Policies and Basis of Preparation
Schedule 5.3 Details of the Companies
Schedule 5.4 Details of the Subsidiaries
Schedule 5.5(a) Financial Statements
Schedule 5.5(b) Projections
Schedule 5.6 Interim Changes
Schedule 5.7 Undisclosed Liabilities
Schedule 5.8 Litigation
Schedule 5.9(a) Legal Compliance
Schedule 5.9(b) Permits and Licenses
Schedule 5.10(a) Contracts
Schedule 5.10(b) Exceptions to Contracts
Schedule 5.11 Compliance; Change of Control
Schedule 5.13(a) Real Property: Owned or Leased
Schedule 5.13(b) Exceptions to Owned Property
Schedule 5.13(c) Exceptions to Leased Property
Schedule 5.14 Tax Matters
Schedule 5.15 Receivables
Schedule 5.17 Tangible Property
Schedule 5.18 Proprietary Rights
Schedule 5.19 Suppliers and Customers
Schedule 5.20 Employee Benefit Plans
Schedule 5.21 Labor Matters
Schedule 5.22 Insurance
Schedule 5.23 Company Services
Schedule 5.24 Transactions With Affiliates
Schedule 5.25 Environmental Matters
Schedule 6.4 Transfer of Stock
Schedule 6.14(a)(i) Equipment Leases
Schedule 6.14(a)(ii) Retained Operating Leases
Schedule 6.14(b) Indebtedness Not Repaid; Liens Not
Released
Schedule 7.19 Material Consents
Exhibit A - Escrow Agreement
Exhibit B - DynCorp Class C Approval
Exhibit C - Employees List
Exhibit D - Confidentiality Letter
Exhibit E - Corporate Services Letter Agreement
Exhibit F - Opinion of Counsel for DynCorp and Seller
Exhibit G - Opinion of Counsel for ALPHA and Buyer
PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT (this "Agreement") dated as
of August 8, 1995, by and among ALPHA Airports Group Plc, a
company organized under the laws of England ("ALPHA"), ALPHA US
Holdings, Inc., a Delaware corporation ("Buyer") and an indirect
wholly owned subsidiary of ALPHA, DynCorp, a Delaware corporation
("DynCorp"), and DynCorp Aviation Services, Inc., a Virginia
corporation ("Seller") and a wholly owned subsidiary of DynCorp.
Capitalized terms used herein but not otherwise defined shall
have the meaning set forth in Section 13.1.
WHEREAS, Seller owns, directly or indirectly, all of
the issued and outstanding capital stock of the Companies, each
of which is engaged in, and which together comprise, the entirety
of the commercial aviation-ground handling services businesses of
Seller and its Subsidiaries (which principally includes line
maintenance, cargo handling, baggage handling and locating,
aircraft cleaning, passenger handling services, fueling, de-icing
and all other services generally furnished or available at
commercial airports provided to commercial customers) (also known
as the "General Services Group" of DynCorp) (the "Business");
WHEREAS, on July 28, 1995 Seller transferred to DynAv
Services, Inc., a newly formed Delaware corporation ("Parent")
and wholly owned subsidiary of Seller, all of the outstanding
capital stock of certain of the Companies held directly by Seller
such that following such transfer, Parent holds, directly or
indirectly, all of the outstanding capital stock of all of the
Companies (except as set forth on Schedule 5.3 hereto) as of the
date hereof (the "Parent Contribution");
WHEREAS, the outstanding capital stock of Parent as of
the date hereof consists of 100 shares of common stock
authorized, all of which are issued outstanding and held
beneficially and of record, by the Seller.
WHEREAS, Buyer wishes to purchase from Seller, and
Seller wishes to sell to Buyer, the Business through the purchase
and sale of all of the outstanding capital stock of Parent
subject to the terms and conditions hereinafter set forth; and
WHEREAS, ALPHA is agreeable to guaranteeing in favor of
Seller the obligations of Buyer hereunder;
NOW THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties to this agreement agree as follows:
1 PURCHASE AND SALE OF SHARES.
1.1 Purchase and Sale of Shares. Subject to the terms
and conditions of this Agreement, Seller agrees to sell, convey,
assign, transfer and deliver to Buyer, (or, at the option of
Buyer, to one or more direct or indirect wholly owned
Subsidiaries of Buyer designated by Buyer (its "designee(s)"),
and Buyer agrees to purchase (or cause its designee(s) to
purchase) from Seller all of the outstanding capital stock of
Parent as hereinabove recited (the "Stock") free and clear of any
Lien, for the consideration specified below in this Section 1.
1.2 Purchase Price.
(a) Buyer agrees to pay to Seller an aggregate of
$122,000,000, subject to adjustment in accordance with Section
1.3 below (as so adjusted, the "Purchase Price").
(b) Concurrently with the execution of this Agreement,
Buyer shall deposit with the Escrow Agent $5,000,000 by wire
transfer to an interest-bearing escrow account pursuant to the
terms of an escrow agreement dated as of the date hereof, a copy
of which is attached hereto as Exhibit A (the "Escrow
Agreement"). In the event the Closing does not occur, the Escrow
Agent shall either refund the Deposit to Buyer or pay the Deposit
to Seller in the circumstances and in the manner set forth in
Section 12 and pursuant to the terms of the Escrow Agreement.
(c) At the Closing, Buyer shall pay or cause to be paid
$117,000,000 of the Purchase Price by wire transfer to Seller;
provided, that Buyer may by agreement with Seller, on behalf of
Seller, remit a portion of such amount specified by Buyer
directly to the obligees on the Equipment Leases in connection
with the actions contemplated by Section 6.14(a) and the
transferor of accounts receivable in connection with the actions
contemplated by Section 6.14(d).
1.3 Purchase Price Determination.
(a) Preparation of Closing Balance Sheet.
(i) After the Closing Date, Buyer shall prepare a
consolidated balance sheet of the Parent and the Companies as of
the close of business on the Closing Date (the "Closing Balance
Sheet").
(ii) Buyer shall instruct its auditors to conduct a review
of the Closing Balance Sheet.
(iii) On or prior to the 120th day following the Closing
Date, Buyer shall deliver to Seller:
(A) the Closing Balance Sheet;
(B) a statement of the Tangible Net Worth on the basis of
the Closing Balance Sheet; and
(C) a statement of the adjustments (if any) required to be
made to the Purchase Price pursuant to the provisions of
Section 1.3(c) below.
(iv) The Closing Balance Sheet shall (A) comprise a
consolidated balance sheet of the Parent Group prepared in the
same format as the Reference Balance Sheet, (B) include all
assets and liabilities which have been transferred to, or
assumed by, respectively, the Parent Group in accordance with the
terms hereof, (C) exclude all assets and liabilities to the
extent that they have been retained or assumed by DynCorp, Seller
or any of their respective Subsidiaries (other than any members
of the Parent Group) and (D) shall be prepared in accordance with
the accounting policies and basis of preparation specified in
Schedule 1.3 hereto.
(v) Seller and DynCorp, on the one hand, and Buyer and
ALPHA, on the other, shall afford to Buyer's and Seller's
respective auditors reasonable access during normal business
hours to their respective personnel, premises, papers, books,
accounts, records and returns in each case as may reasonably be
required by Buyer's and Seller's respective auditors in
connection with the preparation and review of the Closing Balance
Sheet and the statements referred to in Sections 1.3(a)(iii) and
1.3(b)(i).
(vi) The out-of-pocket, third party costs and expenses
incurred in preparing the Closing Balance Sheet and the
statements referred to in Section 1.3(a)(iii) above shall be
borne 50% by Seller and 50% by Buyer.
(b) Dispute Resolution.
(i) On or prior to the 45th day after Seller's
receipt of the Closing Date Balance Sheet and the statements
described in clauses (A) and (B) of Section 1.3(a)(iii) (the
"Adjustment Statements"), Seller may give Buyer a written notice
stating in reasonable detail Seller's objections (an "Objection
Notice") to the Closing Date Balance Sheet and/or any of the
Adjustment Statements. If Seller does not give Buyer an
Objection Notice within such 45-day period, then the Closing Date
Balance Sheet and the Adjustment Statements will be conclusive
and binding upon the parties and the Tangible Net Worth and the
adjustments set forth in the Adjustment Statements will likewise
be binding on the parties for purposes of Section 1.3(c) below.
(ii) If Seller timely gives an Objection
Notice as described in Section 1.3(b)(i) above, then Seller and
Buyer will attempt amicably to resolve their disputes as
reflected in the Objection Notice, and any amount agreed to in
writing by Seller and Buyer as the Tangible Net Worth and the
other adjustments described in the Adjustment Statements will be
conclusive and binding upon the parties for purposes of Section
1.3(c) below.
(iii) If Seller and Buyer do not resolve all
disputes as reflected in the Objection Notice on or prior to the
30th day after the Objection Notice is given, then Seller and
Buyer will retain a mutually acceptable internationally-
recognized accounting firm and office thereof (the "Independent
Accounting Firm") to determine the Tangible Net Worth as of the
Closing Date as soon as practicable and, in any event, within 30
days, all in accordance with the standards and definitions set
forth herein and in Section 1.3(a)(iv) above. The Tangible Net
Worth as of the Closing Date determined by the Independent
Accounting Firm will be conclusive and binding upon the parties
for purposes of Section 1.3(c) below. The fees and expenses of
the Independent Accounting Firm will be paid 50% by Buyer and 50%
by Seller.
(c) Adjustment to Purchase Price.
(i) For the purposes of this Section 1.3, the "Tangible Net
Worth" shall mean the aggregate consolidated value of the fixed
and current assets (other than intangible assets), as disclosed
on the Closing Balance Sheet minus the aggregate consolidated
value of the liabilities of the Parent Group set forth thereon.
For the avoidance of doubt, "Tangible Net Worth" shall exclude
the Equipment Leases, Indebtedness and intra-group balances only
if and insofar as the same are fully extinguished, discharged,
cancelled and/or forgiven pursuant to Section 6.14.
(ii) If the Tangible Net Worth is (A) greater than
$37,700,000, then the Purchase Price shall be increased by the
amount of such excess and (B) less than $37,700,000, the Purchase
Price shall be reduced by an amount equal to such shortfall, and
the payment of either amount set forth in clause (A) or (B), as
the case may be, shall be made in accordance with Section 1.3(d)
hereof.
(d) Method of Payment; Treatment. Any amount to be paid
pursuant to this Section 1.3 will be paid promptly (but in any
event, within five (5) Business Days) by wire transfer in
immediately available funds to an account or accounts specified
by Buyer or Seller, as the case may be. Any amount to be paid
pursuant to this Section 1.3 will be treated as an adjustment to
the Purchase Price for all purposes.
2 CLOSING; CLOSING DATE.
2.1 Closing; Closing Date. The Closing shall take place at
the offices of Kirkland & Ellis, 153 East 53rd Street, New York,
New York 10022, at 11:59 p.m. local time, on August 31, 1995 or
on the first Business Day following the satisfaction or waiver of
all conditions to Closing set forth in Sections 7 and 8 or such
other time, date and place as Buyer and Seller may mutually
determine; provided, that in no event shall the Closing occur
later than September 15, 1995. The time and date upon which the
Closing occurs is herein called the "Closing Date."
2.2 Delivery of Stock. At the Closing, Seller shall
deliver to Buyer stock certificates representing all of the
Stock, duly endorsed in blank or accompanied by stock powers duly
executed in blank, in proper form for transfer.
3. REPRESENTATIONS AND WARRANTIES OF SELLER AND
DYNCORP. Seller and DynCorp hereby jointly and severally
represent and warrant to Buyer and ALPHA that the statements
contained in this Section 3 are correct and complete as of the
date hereof.
3.1 Organization. Each of Seller and DynCorp is duly
organized, validly existing, and in good standing under the laws
of the state of its incorporation and has all necessary corporate
power and authority to own and operate its respective properties
and carry on the Business as now conducted.
3.2 Authorization. Each of Seller and DynCorp has full
corporate power and authority to execute and deliver this
Agreement and to perform fully its respective obligations
hereunder. This Agreement has been duly executed and delivered
and constitutes the valid and legally binding obligation of each
of Seller and DynCorp, enforceable in accordance with its terms
and conditions, subject to applicable bankruptcy, insolvency and
other similar laws affecting the enforceability of creditors'
rights generally, general equitable principles and the discretion
of courts in granting equitable remedies. Other than (i) with
respect to the Hart-Scott-Rodino Improvements Act of 1976 ("HSR
Act"), (ii) in connection with the actions contemplated by
Section 6.14(f), or (iii) as set forth in Schedule 7.19, neither
Seller nor DynCorp needs to give any notice to, make any filing
with, or obtain any authorization, consent or approval of any
Governmental Body in order to consummate the transactions
contemplated by this Agreement. The holders representing a
majority of the outstanding shares of DynCorp's Class C
Convertible Preferred Stock, par value $0.10 per share, have
provided written and unconditional approval of the execution and
delivery of this Agreement by DynCorp and Seller and the
consummation of all of the transactions contemplated hereby, all
in accordance with DynCorp's certificate of incorporation as in
effect on the date hereof (the "DynCorp Class C Approval"), a
copy of which is attached hereto as Exhibit B.
3.3 No Conflicts. Neither the execution and delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any Governmental Body, or court
to which Seller or DynCorp is subject or any provision of its
respective charter or bylaws, or (b) except with respect to any
obligations that will be extinguished and satisfied in full
pursuant to the terms hereof, conflict with, result in a breach
of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any material agreement,
contract, lease, license, instrument or other arrangement to
which Seller or DynCorp is a party or by which Seller or DynCorp
is bound or to which any of Seller's or DynCorp's assets is
subject.
3.4 No Brokers. Neither Seller nor DynCorp has any
Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Buyer, ALPHA or any
member of the Parent Group could become liable or obligated.
3.5 Title to Stock. Parent holds of record and owns
beneficially, directly or indirectly, the number of shares of
capital stock of each Company set forth on Schedule 5.3, free and
clear of any restrictions on transfer, Taxes, Liens, options,
warrants, purchase rights, contracts, commitments, equities,
claims, and demands. None of DynCorp, Seller, or any member of
the Parent Group is a party to any option, warrant, purchase
right, or other contract or commitment that could require
DynCorp, Seller, or any member of the Parent Group to sell,
transfer, or otherwise dispose of any capital stock of any member
of the Parent Group (other than this Agreement). None of
DynCorp, Seller, or any member of the Parent Group is a party to
any voting trust, proxy, or other agreement or understanding with
respect to the voting of the capital stock of any member of the
Parent Group.
4. REPRESENTATIONS AND WARRANTIES OF BUYER AND
ALPHA. Buyer and ALPHA hereby jointly and severally represent
and warrant to Seller and DynCorp that the statements contained
in this Section 4 are correct and complete as of the date hereof:
4.1 Organization. Each of Buyer and ALPHA is a corporation
duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization and has all
necessary corporate power and authority to own and operate its
respective properties and carry on its respective business as now
conducted.
4.2 Authorization. Each of Buyer and ALPHA has full
corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. This
Agreement has been duly executed and delivered by each of Buyer
and ALPHA and constitutes a valid and binding obligation of each
of Buyer and ALPHA, enforceable against each of Buyer and ALPHA
in accordance with its terms, subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforceability of
creditors' rights generally, general equitable principles and the
discretion of courts in granting equitable remedies. Other than
with respect to the HSR Act, neither Buyer nor ALPHA need give
any notice to, make any filing with, or obtain any authorization,
consent, or approval of any Governmental Body in order to
consummate the transactions contemplated by this Agreement.
4.3 No Conflict. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any Governmental Body, or court
to which Buyer or ALPHA is subject or any provision of its
charter or bylaws or (b) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any material agreement,
contract, lease, license, instrument, or other arrangement to
which Buyer or ALPHA is a party or by which it is bound or to
which any of its assets is subject.
4.4 No Brokers. Neither Buyer nor ALPHA has any Liability
or obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions contemplated by
this Agreement for which Seller or DynCorp could become liable or
obligated.
5. REPRESENTATIONS AND WARRANTIES CONCERNING THE
COMPANIES. Seller and DynCorp hereby jointly and severally
represent and warrant to Buyer and ALPHA that the statements
contained in this Section 5 are correct and complete as of the
date hereof, as to each member of the Parent Group except as set
forth in the Schedules referred to in this Section 5.
5.1 Organization, Qualification, and Corporate Power. Each
member of the Parent Group is a corporation duly organized,
validly existing, and in good standing under the laws of the
jurisdiction of its incorporation. Each member of the Parent
Group is duly authorized to conduct business and is in good
standing under the laws of each jurisdiction where such
qualification is required, except where the failure to so qualify
would not have a Location Material Adverse Effect. Each member
of the Parent Group has full corporate power and authority and
all material licenses, permits, and authorizations necessary to
carry on the businesses in which it is engaged and in which it
presently proposes to engage and to own and use the properties
owned and used by it. Seller has delivered to Buyer correct, up-
to-date and complete copies of the charter and bylaws of each
member of the Parent Group (as amended to date) and these set out
in full the rights and restrictions attaching to the capital
stock of each member of the Parent Group. The minute books
(containing the records of meetings of the stockholders, the
board of directors, and any committees of the board of directors)
and the stock records of each member of the Parent Group are
correct, up-to-date and complete. No member of the Parent Group
is in default under or in violation of any provision of its
charter or bylaws.
5.2 No Conflict. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any Governmental Body, or court
to which any member of the Parent Group is subject or any
provision of the charter or bylaws of any member of the Parent
Group or (b) except with respect to any obligations that will be
extinguished and satisfied in full pursuant to the terms hereof,
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice
under any material agreement, contract, lease, license,
instrument, or other arrangement to which any member of the
Parent Group is a party or by which it is bound or to which any
of its assets is subject (or result in the imposition of any Lien
upon any of its assets or Lien on any of the Stock). No member
of the Parent Group needs to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any
Governmental Body in order for the parties to consummate the
transactions contemplated by this Agreement.
5.3 Capitalization. The authorized capital stock of each
of the Companies is as set forth on Schedule 5.3. All of the
issued and outstanding shares of the capital stock of each of the
Companies (the "Company Shares") have been duly authorized, are
validly issued, fully paid and nonassessable, and, except as set
forth on Schedule 5.3, are owned of record and beneficially,
directly or indirectly, by the Parent, free and clear of Liens,
in the amounts set forth in Schedule 5.3, which amounts represent
all of the issued and outstanding shares of capital stock of each
Company. No other Person has or shares any direct or indirect
interest or right with respect to the Company Shares. There are
no preemptive rights or rights of first refusal or similar rights
on the part of any holder of any class of securities of any
Company. There are no outstanding or authorized options,
warrants, conversion or other rights, agreements or commitment of
any kind authorized or in effect which call for the present or
future allotment, issue, sale or transfer of, or grant to any
Person the right (whether exercisable now or in the future and
whether conditional or not) to call for the allotment, issue,
sale or transfer of, any capital stock of any Company (including
by way of option or under any right of conversion or pre-
emption). There are no outstanding stock appreciation, phantom
stock, profit participation or similar rights with respect to any
Company. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of any
capital stock of any Company.
5.4 Subsidiaries; Parent.
(a) Except as set forth on Schedule 5.4 hereto, no Company
has any right to acquire any capital stock of or any interest in
any other Person, and no Company has or has had any Subsidiary.
(b) Schedule 5.3 hereto sets forth for the Parent
(i) its name and jurisdiction of incorporation, (ii) the number
of shares of authorized capital stock of each class of its
capital stock, and (iii) the number of issued and outstanding
shares of each class of its capital stock, the names of the
holders thereof, and the number of shares held by each such
holder. All of the issued and outstanding shares of capital
stock of the Parent have been duly authorized and are validly
issued, fully paid and nonassessable. The Seller holds of record
and owns beneficially all of the outstanding shares of capital
stock of the Parent, free and clear of any restrictions on
transfers, Taxes, Liens, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands. There are
no outstanding or authorized options, warrants, conversion or
other rights, agreements or commitments of any kind authorized or
in effect which call for the present or future allotment, issue,
sale or transfer of, or grant to any Person the right (whether
exercisable now or in the future and whether conditional or not)
to call for the allotment, issue, sale or transfer of, any
capital stock of the Parent (including by way of option or under
any right of conversion or pre-emption). There are no
outstanding stock appreciation, phantom stock, profit
participation or similar rights with respect to the Parent.
There are no voting trusts, proxies or other agreements or
understandings with respect to the voting of any capital stock of
the Parent. Except as set forth on Schedule 5.4, the Parent
(A) owns no assets other than the shares of capital stock
acquired by it in each of the Companies pursuant to the Parent
Contribution; (B) has no liabilities whatsoever; (C) does not
conduct any business, and has never conducted any business, and
has not at any time entered into any contract or contractual
arrangement with any third party other than the arrangement
comprising the Parent Contribution; and (D) has no employees and
has never had any employees.
5.5 Financial Statements; Projections.
(a) Attached hereto as Schedule 5.5(a) are
(i) the audited combined balance sheets, and the audited combined
statements of earnings, shareholders' equity and cash flows of
the Companies for the years ended December 31, 1992, December 31,
1993, and December 31, 1994 including the notes thereto, together
with the relevant auditors' report with respect thereto and (ii)
the unaudited proforma consolidated adjusted balance sheet of the
Companies as of December 31, 1994 (the "Reference Balance
Sheet"). All of the foregoing financial statements are
hereinafter collectively referred to as the "Company Financial
Statements." Except as set forth in Schedule 5.5(a), the Company
Financial Statements have been prepared from, and are in
accordance with, the books and records of Seller and the
Companies are correct and complete, and fairly present the
transactions, assets and liabilities of the Companies and the
consolidated financial position and consolidated results of
operations of the Companies as of the dates and for the periods
indicated, in each case in accordance with GAAP applied on a
consistent basis.
(b) Attached hereto as Schedule 5.5(b) are
projected balance sheets, and projected statements of earnings
and cash flows for the Companies for the period indicated therein
(the "Projections"). Such Projections have been prepared by the
Seller and DynCorp in good faith and nothing has to come to the
attention of DynCorp or Seller which could reasonably be expected
to lead it to believe that the assumptions upon which the
Projections were based are unreasonable.
5.6 Interim Changes. Except as set forth on Schedule 5.6
hereto, since the date of the Reference Balance Sheet, there have
not been any changes which could reasonably be expected to have a
Material Adverse Effect or Location Material Adverse Effect.
Without limiting the generality of the preceding sentence, except
as set forth on Schedule 5.6 or as expressly contemplated by this
Agreement (including, without limitation, the Parent Contribution
and Section 6 hereof), since the date of the Reference Balance
Sheet, none of the Companies has:
(a) experienced a material adverse change in any
relationship with its suppliers, customers, distributors,
brokers, lessors or others, other than changes in the ordinary
course of business, consistent with past custom and practice;
(b) sold, leased, transferred, or assigned any of its
assets, tangible or intangible, other than for fair consideration
in the ordinary course of business, consistent with past custom
and practice;
(c) entered into any agreement, contract, lease, or license
(or series of related agreements, contracts, leases or licenses)
involving more than $50,000 individually to which it is a party
or by which it is bound nor modified the terms of any such
existing contract or agreement, other than in the ordinary course
of business consistent with past custom and practice;
(d) engaged in any activity which has resulted in any
unusual acceleration or delay of the collection of its account or
notes receivables or any delay in the payment of its accounts
payables, in each case other than in the ordinary course of
business consistent with past custom and practice;
(e) (nor has any other party) accelerated, terminated,
modified or cancelled any Permit or agreement, contract, lease or
license involving more than $50,000 individually to which it is a
party or by which it is bound;
(f) suffered damages, destruction or loss, whether or not
covered by insurance, affecting any property or assets owned or
used by it having a Location Material Adverse Effect;
(g) adopted, modified, amended or terminated any bonus,
profit-sharing, incentive, severance, or other similar plan,
contract, or commitment for the benefit of any of its directors,
officers, or employees, nor has it taken any action with respect
to any other Benefit Plan;
(h) made any change in the employment terms (including any
increase in the base compensation) for any of its directors,
officers and employees except in the ordinary course of business,
consistent with past custom and practice;
(i) been subject to any Lien placed on any of its assets or
properties, tangible or intangible;
(j) made any capital expenditure other than in the ordinary
course of business consistent with past custom and practices;
(k) made any other investment (or series of related invest
ments) either involving more than $100,000 or outside the
ordinary course of business consistent with past custom and
practice;
(l) issued any note, bond, or other debt security or
created, incurred, assumed, or guaranteed any Indebtedness
involving more than $100,000 individually.
(m) delayed or postponed the payment of the accounts
payable and other Liabilities outside the ordinary course of
business, consistent with past custom and practice;
(n) cancelled, compromised, waived, or released any right
or claim (or series of related rights and claims) either
involving more than $100,000 or outside the ordinary course of
business, consistent with past custom and practice;
(o) made or authorized any change in its charter or bylaws;
(p) issued, sold, or otherwise disposed of any of its
capital stock, or granted any options, warrants, or other rights
to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
(q) declared, set aside, or paid any dividend or made any
distribution with respect to its capital stock (whether in cash
or in kind) or redeemed, purchased, or otherwise acquired any of
its capital stock;
(r) made or been subject to change in its accounting
practices, procedures or methods or in its cash management
practices;
(s) entered into or become party to any agreement,
arrangement or transaction with any of its Affiliates or any of
its directors, officers, employees or stockholders, including,
without limitation, any (i) loan or advance funds, or made any
other payments, to any of its directors, officers, employees,
stockholders or Affiliates, or (ii) creation or discharge of any
intercompany account, other than in the ordinary course of
business consistent with past practice;
(t) experienced any adverse changes with respect to its
Proprietary Rights;
(u) experienced any material changes in the amount or scope
of coverage of insurance now carried by it;
(v) undergone any capital reorganization (other than the
Parent Contribution) or change in its capital structure; and
(w) committed to do any of the foregoing.
Since the date of the Reference Balance Sheet the Business
has been carried on in the ordinary and usual course of business
without interruption and so as to maintain the same as a going
concern.
5.7 Absence of Undisclosed Liabilities. Except as set
forth on Schedule 5.7 hereto, no member of the Parent Group has
any Liability (and to DynCorp's and Seller's Knowledge, there is
no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand
against any of them giving rise to any Liability), except for (a)
Liabilities set forth on the face of the Reference Balance Sheet
and (b) Liabilities which have arisen after the date of the
Reference Balance Sheet in the ordinary course of business (which
shall not be deemed to include any Liabilities resulting from,
arising out of, relating to, in the nature of, or caused by any
breach of contract, breach of warranty, tort, infringement, or
violation of law).
5.8 Litigation.
(a) Schedule 5.8 sets forth each instance in which any
member of the Parent Group (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, complaint or charge
or (ii) involved in or, to DynCorp's and Seller's Knowledge, is
threatened to be made involved in any civil, criminal,
administrative, labor or arbitration proceedings (except for the
collection of debts in the ordinary course of business). Except
as set forth in Schedule 5.8, none of the actions, suits,
proceedings, hearings, and investigations set forth on Schedule
5.8, to DynCorp's and Seller's knowledge, could result in any
change in the business, financial condition, operations, results
of operations, or future prospects of any member of the Parent
Group which would have a Material Adverse Effect or a Location
Material Adverse Effect. To DynCorp's and Seller's Knowledge,
there are no existing facts or circumstances which give any
reason to believe that any such action, suit, proceeding,
hearing, or investigation may be brought or threatened against
any member of the Parent Group.
(b) No member of the Parent Group is subject to any
material order or judgment given by any court or Governmental
Body and has not been a party to any undertaking or assurance
given to any court or Governmental Body which is still in force
nor, to DynCorp's and Seller's Knowledge, are there any facts or
circumstances which (with or without the giving of notice or
lapse of time) would be likely to result in any member of the
Parent Group becoming subject to such an order or judgment or
being required to be a party to any such undertaking or
assurance.
5.9 Legal Compliance; Permits and Licenses.
(a) Except as set forth in Schedule 5.9(a) or Schedule
5.25, each member of the Parent Group and their respective
predecessors, Subsidiaries and Affiliates has complied in all
material respects with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders,
decrees, rulings, and charges thereunder) of federal, state,
local, and foreign authority or Governmental Body, and, to
DynCorp's and Seller's Knowledge, no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or
notice has been filed or commenced and is currently outstanding
against any of them alleging any failure so to comply.
(b) Schedule 5.9(b) sets forth all permits, licenses and other
governmental authorizations needed by the Companies to carry on
their businesses and which, if not held or obtained by the
Companies, could reasonably be expected to have a Location
Material Adverse Effect (the "Permits"), all of which have been
obtained and are in full force and effect and have not been
modified or amended. No member of the Parent Group is in breach
of any such Permits, and to DynCorp's and Seller's Knowledge,
there are no existing facts or circumstances which could
reasonably be expected to cause any of the Permits to be
suspended, cancelled, revoked or not renewed in whole or in part.
Schedule 5.9(b) sets forth all third party consents needed by
DynCorp, Seller, or any member of the Parent Group in relation to
the Permits to consummate the transactions contemplated hereby.
5.10 Contracts and Other Agreements.
(a) Other than this Agreement or as described on
Schedule 5.10(a) hereto, no member of the Parent Group is a party
to, nor are any of them or their respective assets or properties
bound by or subject to, any written or oral:
(i) agreement for the lease of real or personal property
(including tangible assets) to or from any Person providing for
lease payments in excess of $50,000 per annum individually or
$500,000 in the aggregate (provided that no such lease involving
lease payments of less than $25,000 per annum shall be included
in determining the $500,000 aggregate amount).
(ii) agreement for the purchase or sale of raw materials,
commodities, supplies, products, or personal property, or for the
furnishing or receipt of services, the performance or life of
which will extend over a period of more than one year or result
in a loss to any Company or involve consideration in excess of
$50,000 individually or $500,000 in the aggregate (provided that
no such agreement that results in a loss or involves
consideration of less than $25,000 shall be included in
determining the $500,000 aggregate amount).
(iii) contract or other agreement with any current or former
officer, director, agent or other representative, including any
pension, profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, fee, severance or other plan
or arrangement providing for deferred or other compensation to
employees or any other employee benefit, welfare or stock plan
which is not described on Schedule 5.10(a) hereto, or any
contract or other agreement with any labor union or association
representing any employee;
(iv) contract or other agreement or arrangement not in the
ordinary course of business consistent with past custom and
practice, or which provides for the grant to any Person of any
preferential rights to purchase any of its assets or properties;
(v) service or handling agreement or contract with any
commercial or other aviation business pursuant to which the
Company receives revenues at a rate in excess of $50,000 per
annum;
(vi) joint venture agreement or partnership;
(vii) license or other agreement pursuant to which
Proprietary Rights (other than mass-marketed software) are
licensed by or to any Company;
(viii) contract or other agreement containing obligations or
liabilities of any kind to holders of capital stock of any
Company as such;
(ix) agreement containing covenants of confidentiality or
noncompetition;
(x) contract or other agreement relating to the acquisition
by any Company of any operating business or the capital stock of
any other Person;
(xi) agreement under which it has created, incurred, assumed,
or guaranteed any Indebtedness in excess of $100,000 or under which
it has imposed a Lien on any of its assets, tangible or
intangible;
(xii) outstanding powers of attorney executed on behalf of
any Company; and
(xiii) other agreement under which the consequences of a
default or termination could reasonably be expected to have a
Material Adverse Effect or a Location Material Adverse Effect.
(b) With respect to each contract or agreement described on
Schedule 5.10(a) hereto (the "Contracts"), except as set forth on
Schedule 5.10(b) hereto, (i) each such Contract is legal, valid,
binding and in full force and effect; provided, that the
Companies' ordinary course of business includes the provision of
services under agreements of the type described in Section
5.10(a)(v) under unsigned or oral contracts, (ii) each such
Contract will continue to be legal, valid, binding and in full
force and effect on identical terms upon the consummation of the
transactions contemplated hereby; (iii) to DynCorp's and Seller's
Knowledge, no third party is in breach or default, and no event
has occurred which with notice or lapse of time would constitute
a breach or default, or permit termination, modification, or
acceleration by reason thereof, under each such Contract; and
(iv) to DynCorp's and Seller's Knowledge, no third party has
repudiated any provision of each such Contract.
(c) All copies of written Contracts that Seller has caused to
be delivered or made available to Buyer are true and correct
copies, each as currently supplemented, amended, extended,
novated or otherwise modified.
5.11 Compliance; Change of Control.
(a) Except as described on Schedule 5.11 hereto, no Company is
in default under or in material breach in any respect of, (nor is
it in receipt of any claim of default or material breach nor does
any fact, condition, circumstance or event exist which with the
passage of time or the giving of notice or otherwise would result
in a default, breach or event of noncompliance under) any of its
obligations pursuant to any Contract.
(b) Except as specifically set forth in Schedule 5.11, the
Companies are not party to any Contract which contains a "change
in control," "potential change in control" or similar provision
or which to DynCorp's and Seller's Knowledge may or will be
terminated as a result of consummation of this Agreement. Except
as specifically set forth in Schedule 5.11 or as otherwise
contemplated by this Agreement, the consummation of the
transactions contemplated hereby will not (either alone or upon
the occurrence of any additional acts or events) result in any
payment (whether of severance pay or otherwise) becoming due from
the Companies to any Person.
5.12 No Brokers. No member of the Parent Group has any
Liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions
contemplated by this Agreement.
5.13 Real Property.
(a) Schedule 5.13(a) hereto lists with respect to each
Company: (i) all real property owned by each Company and all
buildings and other improvements located on such real property
(the "Owned Property"); (ii) all leases, subleases or other
agreements ("Leases") under which each Company is lessor or
lessee or has any other interest of any real property ("Leased
Property"); (iii) all options held by each Company or contractual
obligations on its part to purchase or acquire any interest in
real property; and (iv) all options granted by each Company or
contractual obligations on its part to sell or dispose of any
interest in real property. Each Company is the owner of record,
lessee under the leases or holder of the options, as the case may
be, of each of the items listed for it on Schedule 5.13.
(b) Except as set forth on Schedule 5.13(b), with respect
to Owned Property: each Company owns good and marketable title
to each of its Owned Properties in fee simple absolute subject to
no Liens, encroachments or other encumbrances on title other than
the Permitted Liens; there are no pending or threatened
condemnation proceedings, lawsuits, or administrative actions
involving any Owned Property; each Company has the right to use
any Owned Property owned by it for the purpose for which it is
being used; there are no leases, subleases, licenses,
concessions, or other agreements, written or oral, granting any
Person the right of use or occupancy of any portion of any Owned
Property; there are no outstanding options or rights of first
refusal to purchase any Owned Property, or any portion thereof or
interest therein; no Person (other than the Companies) is in
possession of any Owned Property; and all of the buildings and
other improvements constituting Owned Property are structurally
sound with no material defects, are in good condition and repair
and are adequate for their current use.
(c) Except as listed on Schedule 5.13(c) hereto with
respect to each Lease: (i) the Lease is legal, valid binding and
enforceable on the parties to it in accordance with its terms and
is in full force and effect; (ii) the leasehold interest of each
Company is subject to no Liens (other than Permitted Liens) and
enjoys a right of quiet possession as against any Lien on the
Leased Property; (iii) the Lease will continue to be legal,
valid, binding and in full force and effect on the terms thereof
upon the consummation of the transactions contemplated hereby;
(iv) to DynCorp's and Seller's Knowledge, no party to the Lease
is in material breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a material
breach or default or permit termination, modification, or
acceleration thereunder; (v) no party to the Lease has given any
notice of repudiation of any provision thereof; (vi) there are
no disputes, oral agreements, or forbearance programs in effect
as to the lease or sublease; and (vii) all rent and other charges
due under such Lease have been paid in full and the current use
of all Leased Property complies with all terms of the applicable
lease or tenancy agreement under which such Leased Property is
held.
5.14 Tax Matters. Except as disclosed in Schedule 5.14:
(a) all Tax Returns that are due have been
timely filed when due in accordance with all applicable laws;
(b) all Taxes that are due (whether or not
shown on any Tax Return) have been timely paid when due;
(c) the Tax Returns that have been filed are
accurate in all respects;
(d) there are no agreements or consents
currently in effect for the extension or waiver of the time (i)
to file any Tax Return or (ii) for assessment or collection of
any Taxes relating to any member of the Parent Group, and no
Person has been requested to enter into any such agreement or
consent;
(e) all Tax Returns with respect to taxable
years ending on or prior to December 31, 1984 have been examined
and closed, or are Tax Returns with respect to which the
applicable statute of limitations, after giving effect to any
extensions and waivers, has expired;
(f) all Taxes which each member of the
Parent Group and any Seller Group is required by law to withhold
or collect have been duly withheld or collected, and have been
timely paid over to the appropriate Governmental Bodies, except,
in each case, to the extent that any failure to so withhold,
collect or pay would not have an adverse effect on any member of
the Parent Group;
(g) there is no action, suit, proceeding,
investigation, audit or claim currently pending, or to DynCorp's
and Seller's Knowledge, threatened, regarding any Taxes relating
to any member of the Parent Group or any Seller Group;
(h) all Tax Deficiencies which have been
claimed, proposed or asserted against any member of the Parent
Group or any Seller Group have been fully paid or finally
settled;
(i) no Person has executed or entered into a
closing agreement pursuant to Code Section 7121 (or any
comparable provision of state, local or foreign law) that is
currently in force and determines the Liabilities for Taxes of
any member of the Parent Group or any Seller Group;
(j) there is no, and will not be any,
agreement or consent made under Code Section 341(f) (or any
comparable provision of state, local or foreign law) affecting
any member of the Parent Group;
(k) there are no liens, other than statutory
liens for Taxes not yet due and payable, for any Tax on the
assets of any member of the Parent Group;
(l) there are no Tax sharing agreements to
which any member of the Parent Group is now or ever has been a
party;
(m) no member of the Parent Group (A) is
required to (x) treat any asset of the Parent Group as owned by
another person pursuant to the "safe harbor" leasing provisions
of the Code or as "tax-exempt use property" within the meaning of
Code Section 168(h), or (y) apply any of the foregoing rules
under any comparable foreign, state or local Tax provision; and
(B) has leased or currently leases property to any other Person
under a "sale/leaseback" or similar arrangement;
(n) no member of the Parent Group is a party
to any agreement, contract, arrangement or plan that could or
would result, separately or in the aggregate, in the obligation
to make a payment of any "excess parachute payments" within the
meaning of Code Section 280G (or any comparable provision of
state, local or foreign law);
(o) no member of the Parent Group or any
group of which the Parent Group is a member has agreed, or is
required, to make any adjustment under Code Section 481(c) (or
any comparable provision of state, local or foreign law) by
reason of a change in accounting method or otherwise;
(p) no power of attorney is currently in
effect, and no Tax ruling has been requested of any governmental
authority, with respect to any Tax matter relating to any member
of the Parent Group;
(q) DynCorp has maintained adequate
provision for, and adequate funds to pay, Taxes payable by each
member of the Parent Group and each member of the Seller Group as
of December 31, 1994, and such provision and funds, as adjusted
for the passage of time through the Closing Date in accordance
with the past custom and practices of the Companies in filing its
Tax Returns) will be adequate for Taxes payable by the Companies
and any Seller Group as of the Closing Date;
(r) each member of the Parent Group and any
Seller Group has disclosed on its federal, state, local or
foreign income Tax Returns all positions taken therein that could
give rise to an accuracy-related penalty under Code Section 6662
(or any corresponding provision of state, local or foreign Tax
law);
(s) since January 1, 1983, no unresolved
claim has been made with respect to any member of the Parent
Group by a Tax authority in a jurisdiction where such Company
does not pay Taxes or file Tax Returns that such entity is or may
be subject to Taxes assessed by such jurisdiction;
(t) no member of the Parent Group has been a
United States real property holding corporation within the
meaning of Code Section 897(c)(2) during the applicable period
specified in Code Section 897(c)(1)(a)(ii); and
(u) no member of the Parent Group (i) has
been, on or after January 1, 1983, a member of an affiliated
group filing a consolidated federal income Tax Return (other than
a group the common parent of which was DynCorp), or (ii) has any
Liability for the Taxes of any other Person, whether under Treas.
Reg. section 1.1502-6 (or any similar provision of state, local, or
foreign law); as a partner, shareholder, transferee or successor;
by contract; or otherwise.
5.15 Accounts and Notes Receivable. Except as listed on
Schedule 5.15 hereto, all accounts and notes receivable of the
Companies reflected on the Reference Balance Sheet, and all
accounts and notes receivable arising subsequent to the date of
the Reference Balance Sheet, in each case, have arisen in the
ordinary course of business, consistent with past custom and
practice, and the reserves for doubtful accounts set forth on the
Reference Balance Sheet have been established in accordance with
past custom and practice and are substantially adequate in light
of the previous collectibility experience with respect to
accounts receivables generated by the Companies.
5.16 Inventory. The inventory stocks of the Companies held
on account of the Companies to the extent reflected on the
Reference Balance Sheet is or was, prior to the sale thereof, in
good and (with respect to finished goods) merchantable condition,
and suitable and usable or salable in the ordinary course of
business for the purposes for which intended subject only to the
reserve for inventory write-down reflected on the Reference
Balance Sheet as adjusted for the passage of time through the
Closing Date in accordance with past custom and practice.
5.17 Tangible Property. Except as set forth on
Schedule 5.17, the Companies own or lease all buildings,
machinery, equipment, and other tangible assets used in the
Business. Except as listed on Schedule 5.17 hereto, each such
tangible asset (a) is suitable for the purposes for which it is
presently used, and (b) if held on lease, is subject to a lease
the terms of which are either described on Schedule 5.10 or are
not required to be disclosed under Section 5.10(a). The
Companies have good and marketable title, to, or a valid
leasehold interest in, the properties and assets used by it,
located on its premises, or shown on the Reference Balance Sheet
or acquired after the date thereof, free and clear of all Liens
(other than Permitted Liens), except for properties and assets
disposed of in the ordinary course of business consistent with
past custom and practice, since the date of the Reference Balance
Sheet.
5.18 Proprietary Rights.
(a) Schedule 5.18 hereto contains a complete and accurate
list of all patented and registered Proprietary Rights owned by
the Companies and all pending patent applications and
applications for the registration of Proprietary Rights owned by
or licensed to the Companies. Schedule 5.18 also contains a
complete and accurate list of (i) all trade names used by the
Companies other than their corporate names; (ii) all computer
software owned and/or used by the Companies (other than mass-
marketed software); and (iii) all material licenses and other
material rights granted by the Companies with respect to
Proprietary Rights and all material licenses and other material
rights granted by any third party to the Companies, together with
a description of the subject matter of such licenses.
(b) Except as set forth on Schedule 5.18:
(i) the Companies own and possess all right, title and
interest in and to, or has a written or implied, enforceable
license to use, all of the Proprietary Rights necessary for the
operation of the Business as presently conducted and as proposed
to be conducted, free and clear of all Liens;
(ii) no claim by any third party contesting the validity,
enforceability, use or ownership of any Proprietary Rights owned
or used by the Companies has been made within the past six years
and is currently outstanding or, to DynCorp's and Seller's
Knowledge, is threatened, and there are no grounds for any such
claim;
(iii) none of the Companies have within the past six years
received any notices of, nor, to DynCorp's and Seller's
Knowledge, do any facts exist which indicate a likelihood of, any
infringement or misappropriation of, or other conflict with any
third party with respect to, any Proprietary Rights owned or used
by the Companies nor have the Companies received within the past
six years any claims of infringement or misappropriation of, or
conflict with, any Proprietary Rights of any third party;
(iv) within the past six years none of the Companies have
infringed, misappropriated or otherwise acted in conflict with
any Proprietary Rights of any third party, nor will any
infringement, misappropriation or conflict occur as a result of
the continued operation of the Business as presently conducted
and as currently proposed to be conducted;
(v) all Proprietary Rights that are owned or used by the
Companies immediately prior to the Closing will be owned or
available for use by the Companies on identical terms and
conditions immediately subsequent to Closing; and
(vi) there is no individual Proprietary Right or license of
Proprietary Rights the loss or expiration of which would cause a
Material Adverse Effect.
5.19 Suppliers and Customers. Schedule 5.19 hereto lists
each supplier and customer of each Company whose business
dealings with the Parent Group involves annual gross revenues of
more than $100,000 and/or gross expenditures of more than
$100,000, in each case, for the period from January 1, 1995
through June 30, 1995. Except as listed on Schedule 5.19, (a) no
such supplier or customer of any Company has cancelled or
otherwise terminated, or specifically threatened to cancel or
otherwise terminate its relationship with any Company in a
written or oral communication made by a Person with the authority
to effect such termination or cancellation to an officer of the
Companies, (b) to DynCorp's and Seller's Knowledge, no such
supplier has taken any action that could have a Location Material
Adverse Effect and (c) to DynCorp's and Seller's Knowledge, no
such supplier or customer intends to cancel or otherwise
materially modify its relationship with any Company or to
decrease materially or limit materially its services, supplies or
materials to any Company or its usage or purchase of the services
or products of any Company.
5.20 Employee Benefit Plans.
(a) Schedule 5.20 hereto lists all Company Benefit Plans.
Except as listed in Schedule 5.20, Seller and DynCorp have, with
respect to each such Company Benefit Plan, delivered or otherwise
made available to Buyer true and complete copies of: (i) any plan
texts and agreements and related trust agreements or annuity
contracts; (ii) any summary plan descriptions and material
employee communications; (iii) the most recent annual report
(including all schedules thereto); (iv) the most recent actuarial
valuation (if any); (v) the most recent annual audited financial
statement and opinion (if any); and (vi) details of any proposed
amendment to any such Company Benefit Plan which has been
announced or is being considered.
(b) Except as listed on Schedule 5.20:
(i) none of the Companies has any direct or indirect,
actual or contingent Liability with respect to any Benefit Plan
other than to make payments to Company Benefit Plans in
accordance with the terms of such Benefit Plans;
(ii) the Companies have made all payments due with respect
to each Benefit Plan;
(iii) all Liabilities with respect to any Benefit Plan which
have not been paid by the Companies have been properly reflected
on the Company Financial Statements;
(iv) each Benefit Plan conforms to, and its administration
is in compliance in all material respects with, ERISA, the Code
and all other applicable laws and regulations;
(v) there are no (A) unfunded benefit obligations with
respect to any current or former employee of the Companies, which
are not fairly reflected by reserves shown on the Reference
Balance Sheet or (B) reserves, assets, surpluses or prepaid
premiums with respect to any Benefit Plan (other than a Benefit
Plan qualified under Section 401(a) of the Code); and
(vi) the consummation of the transactions contemplated by
this Agreement will not accelerate the time of payment or
vesting, or increase the amount of any compensation due to, any
current or former employee of any Company.
5.21 Labor Matters; Employees.
(a) Except as set forth on Schedule 5.21 hereto, (i) none
of the Companies is a party to any collective bargaining
agreement or any employment, consulting or similar agreement
relating to the Business or any agreement or arrangement
providing for severance payments to any employee of any Company
upon termination of employment or which provides benefits upon a
change in control of any Company, and (ii) to DynCorp's and
Seller's Knowledge, there are no existing facts or circumstances
which could reasonably be expected to be the basis for any unfair
labor practice charge or complaint against any Company arising
out of the activities of any Company, and no such charges or
complaints are outstanding as of the date hereof. Except as set
forth on Schedule 5.21, there is no labor strike, work stoppage
or other material labor dispute pending or, to DynCorp's and
Seller's Knowledge, threatened against any Company. Except as
set forth on Schedule 5.21, there are no ongoing, formal
organizational efforts with respect to any employees of any
Company.
(b) DynCorp has delivered to Buyer a complete list of all
employees of the Companies actively employed by the Companies as
of the week ending on July 7, 1995 which (i) is derived from the
relevant books and records of the Companies (which are
substantially up-to-date) and (ii) sets forth the annual salaries
or hourly wage rates for such employees, a copy of which is
attached hereto as Exhibit C.
(c) Except as set forth in Schedule 5.21, (i) there is not
in existence any written employment or consulting agreement with
any employees of any member of the Parent Group which cannot be
terminated at will without giving rise to any claim for damages
or compensation and (ii) no member of the Parent Group has
received notice of resignation from any such Person who receives
compensation at an annual rate in excess of $100,000 per annum.
(d) Except as set forth on Schedule 5.21, none of the
employees of any member of the Parent Group has been offered, nor
has any member of the Parent Group agreed to any future variation
to the terms and conditions of employment of any such employees
and no negotiations for any increase in the remuneration or
benefits of any such employees are current, other than with
respect to such offers, agreements or negotiations with employees
(except for salaried employees who receive compensation at an
annual rate in excess of $50,000 per annum) made or entered into
in the ordinary course of business, consistent with past custom
and practice.
(e) Except as set forth on Schedule 5.21, there are no
outstanding claims against the Companies by any Person who is now
or has been an officer or employee of or consultant to any of the
Companies and no disputes have during the preceding three (3)
years arisen between the Companies and any material number or
category of employees and to DynCorp's and Seller's Knowledge,
there are no present circumstances which are likely to give rise
to any such dispute.
(f) The Companies have in relation to each of their
employees and former employees complied in all material respects
with all obligations imposed on them by all statutes, regulations
and codes of conduct and practice relating to or affecting the
employment of its employees or in relation to any trade union and
has maintained current, adequate and suitable records regarding
the service and terms and conditions of employment for each of
their employees, all collective agreements, recognition
agreements and customs and practices for the time being dealing
with such relations or the conditions of service of their
employees and all relevant orders and awards and recommendations
made under any relevant statute, regulation or code of conduct
and practice affecting the conditions of service or otherwise in
relation to their employees or former employees.
(g) The Companies have engaged in no plant closing or
employee layoff activities within the last two years that would
violate or in any way implicate the Worker Adjustment Retraining
and Notification ("WARN") Act of 1988, as amended, or any similar
state or local plant closing or mass layoff statute, rule or
regulation.
5.22 Insurance. Schedule 5.22 hereto contains an accurate
and complete description of all policies of fire, liability,
workmen's compensation and other forms of insurance owned and
held by DynCorp under which coverage has been and will, subject
to normal renewals, through the Closing, be made available to the
Companies. Such policies are in adequate amounts. Except as set
forth in Schedule 5.22, all such policies are in full force and
effect, all premiums with respect thereto covering all periods up
to and including the Closing Date which are due and payable will
have been paid, none of the Companies has received any notice of
cancellation or termination with respect to any such policy, and
nothing has been done or has been omitted to be done which could
result in any such policies being or becoming void or voidable as
to the activities of the Company through the Closing. Except as
set forth in Schedule 5.22, such policies will remain in full
force and effect in accordance with their respective terms and
conditions and will cover all claims of the type normally covered
by such insurance policies made against any member of the Parent
Group which have their causes or origin during such period of
coverage through the Closing. All of such policies have been
issued by reputable insurance companies actively engaged in the
insurance business. All known claims or circumstances likely to
give rise to any claims, if any, made against any Company have
been disclosed and tendered to the appropriate insurance
companies and are being defended by such appropriate insurance
companies in accordance with the policy terms and limits.
5.23 Company Services. Except as listed on Schedule 5.23
hereto, (a) none of the Companies within the past three years has
received any statements, citations or decisions by any
Governmental Body that any services rendered or marketed at any
time by the Companies ("Company Services") fails to meet any
standards promulgated by any Governmental Body in any material
respect, and (b) to DynCorp's and Seller's Knowledge, there is no
(i) fact relating to any Company Service that could be reasonably
expected to impose upon any Company a duty to disclose to
customers any legal problem with any Company Service,
(ii) Liability for warranty claims with respect to any Company
Service rendered prior to the Closing Date, except as may be
incurred in the ordinary course of business not in excess of
$100,000 per year, and (iii) basis for any present or future
charge, claim, or demand which is material against the Company
arising out of any injury to Persons or property as a result of
any Company Service rendered by any Company.
5.24 Transactions with Affiliates. Except as set forth on
Schedule 5.24 hereto and for intercompany charges and credits
between DynCorp and the Companies incurred or granted in
connection with intercompany corporate and cash management
services rendered in accordance with past custom and practice, no
stockholder, officer, director, or Affiliate, or any of their
respective Affiliates or Relatives, of any Company is involved in
any business arrangement or relationship with any of the
Companies (whether written or oral), and none of such
stockholders, officers, directors, Affiliates and their
respective Affiliates or Relatives owns any property or right,
tangible or intangible, which is used by any of the Companies.
5.25 Environmental Matters. Except as set forth in Schedule
5.25 hereto:
(a) the Companies have complied and are in compliance in
all material respects with all Environmental and Safety
Requirements;
(b) the Companies have obtained and complied in all
material respects with, and are in compliance in all material
respects with, all permits, licenses and other authorizations
that are required pursuant to Environmental and Safety
Requirements for the occupation of its facilities and the
operation of the Business (true and complete copies of which have
been provided to Buyer), and such permits, licenses and other
authorizations may be relied upon for continued lawful operation
of the Business on and after the Closing Date without transfer,
reissuance, or other governmental approval or action;
(c) none of the Companies has received any claim,
complaint, citation, report or other written notice (or oral
notice provided to a senior officer, or officer having
responsibility over environmental matters, of any of the
Companies) that is outstanding regarding any Liabilities or
potential Liabilities, including any investigatory, remedial or
corrective obligations, arising under Environmental and Safety
Requirements;
(d) none of the following exists at any property owned or
occupied by any of the Companies:
(i) underground storage tanks or surface impoundments; or
(ii) wetlands;
(e) to DynCorp's and Seller's Knowledge, none of the
following exists at any property owned or occupied by any of the
Companies:
(i) asbestos-containing material in any form or condition; or
(ii) materials or equipment containing polychlorinated
biphenyls;
(f) none of the Companies has treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled,
or released any substance, including, without limitation, any
hazardous substance, or owned or operated any facility or
property, which could reasonably be expected to result in any
material Liabilities of any of the Companies for response costs,
natural resource damages or attorneys fees pursuant to any
Environmental and Safety Requirements;
(g) no facts, events or conditions relating to the past or
present facilities, properties or operations of any of the
Companies will (i) prevent, hinder or limit continued compliance
in all material respects with Environmental and Safety
Requirements, (ii) give rise to any material investigatory,
remedial or corrective obligations pursuant to Environmental and
Safety Requirements, or (iii) give rise to any other material
Liabilities pursuant to Environmental and Safety Requirements,
including, without limitation, any relating to onsite or offsite
releases or threatened releases of hazardous or otherwise
regulated materials, substances or wastes, personal injury,
property damage or natural resources damage;
(h) neither this Agreement nor the consummation of the
transactions contemplated hereby imposes any obligations for site
investigation or cleanup, or notification to or consent of
Governmental Body or third parties, pursuant to any Environmental
and Safety Requirement;
(i) none of the Companies has, either expressly or by
operation of law, assumed or undertaken any Liability or
corrective or remedial obligation of any other Person relating to
Environmental and Safety Requirements; and
(j) no Lien, either recorded or unrecorded, in favor of any
Governmental Body relating to any Liability of any of the
Companies arising under Environmental and Safety Requirements has
been attached to any property owned, leased or operated by any of
the Companies.
5.26 Disclosure. The representations and warranties
contained in this Section 5 do not, and all information delivered in
any Schedule or Exhibit hereto is complete and does not, contain
any untrue statement of fact or omit to state any fact necessary
in order to make the statements and information contained in this
Section or in such Schedules or Exhibits not misleading.
6. CERTAIN COVENANTS AND AGREEMENTS. Buyer and
Seller covenant and agree as follows:
6.1 Best Efforts. DynCorp and Seller, on the one hand, and
Buyer and ALPHA, on the other hand, will each use their
respective reasonable best efforts to take all action and to do
all things necessary, proper, or advisable to the extent within
their respective control in order to consummate and make
effective the transactions contemplated by this Agreement.
Without prejudice to the generality of the foregoing, DynCorp and
Seller shall use their respective best efforts to procure
satisfaction of the closing conditions set forth in Section 7
hereto and Buyer and ALPHA shall use their respective best
efforts to procure satisfaction of the closing conditions set
forth in Section 8 hereto.
6.2 Conduct of Business.
(a) From the date hereof to the Closing Date, DynCorp and
Seller will cause the Companies to conduct the Business in the
ordinary course in accordance with past practice, and will use
their respective best efforts to preserve intact the business
organization and relationships with third parties of the Business
and to keep available the services of the present officers and
employees of the Business consistent with past practice.
(b) From the date hereof to the Closing Date, DynCorp and
Seller will not, without the consent of Buyer or ALPHA, which
will not be unreasonably withheld in the case of any proposed
matter arising in the ordinary course of business and consistent
with past custom and practice, cause or permit any member of the
Parent Group to:
(i) change its personnel or operations or its relationships
with suppliers, customers, distributors, brokers, lessors or others,
other than changes in the ordinary course of business, consistent
with past custom and practice;
(ii) other than in connection with the Wrightstown Property as
set forth in Section 6.14(f), sell, lease, transfer, or assign
any of its assets, tangible or intangible, other than for fair
consideration in the ordinary course of business, consistent with
past custom and practice;
(iii) enter into any agreement, contract, lease, or license
(or series of related agreements, contracts, leases or licenses)
to which it is a party or by which it is bound nor modify the
terms of any such existing agreement or contract, other than such
agreements or contracts entered into in the ordinary course of
business;
(iv) accelerate, terminate, modify or cancel any material
agreement, contract, lease or license to which it is a party or
by which it is bound, other than in the ordinary course of
business, consistent with past custom and practice;
(v) adopt, modify, amend or terminate any bonus, profit-sharing,
incentive, severance, or other plan, contract, or commitment for
the benefit of any directors, officers, or employees, excluding,
however, the termination of the Companies' participation in the
DynCorp Employee Stock Ownership Plan and the DynCorp Welfare
Benefits Plan and Trust, which will become effective as of the
Closing;
(vi) make any change in the employment terms (including base
compensation) for any of its directors, officers and employees
outside the ordinary course of business, consistent with past
custom and practice;
(vii) permit any Liens to be placed on any of its assets or
properties, tangible or intangible;
(viii) make any capital expenditure in excess of $25,000
individually, or $250,000 in the aggregate, other than capital
expenditures committed to be made prior to the date hereof and
set forth in Schedule 5.7;
(ix) make any investment either involving more than $100,000 or
outside the ordinary course of business consistent with past
custom and practice;
(x) issue any note, bond, or other debt security or create,
incur, assume, or guarantee any Indebtedness;
(xi) delay or postpone the payment of the accounts payable and
other Liabilities outside the ordinary course of business,
consistent with past custom and practice;
(xii) cancel, compromise, waive, or release any right or
claim either involving more than $50,000 or outside the ordinary
course of business, consistent with past custom and practice;
(xiii) change its charter or bylaws;
(xiv) issue, sell or otherwise dispose of any of its capital
stock, or grant any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
(xv) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock (whether in cash
or in kind) or redeem, purchase, or otherwise acquire any of its
capital stock, other than such as to cause the extinguishment of
intercompany accounts of the Companies, the Parent Contribution,
or in connection with the activities contemplated in Sections
6.10 and 6.14(e);
(xvi) change its accounting practices, procedures or methods;
(xvii) enter into any agreement, arrangement or transaction
with any of its Affiliates or any of its directors, officers,
employees or stockholders, including, without limitation, any
loan or advance funds to any of its directors, officers,
employees, stockholders or Affiliates, except as conducted in
accordance with DynCorp's normal cash management practices,
consistent with past custom and practice;
(xviii) change or alter in any way its Proprietary Rights;
(xix) change the amount or scope of coverage of insurance it
now carries; or
(xx) commit to do any of the foregoing.
6.3 Monthly Financial Statements. Seller and DynCorp shall
each cause to be prepared and delivered to Buyer in a timely
manner (but in any event within 30 days after the end of each
month unaudited financial statements of the Companies as of and
for each monthly accounting period ending on the last day of each
month subsequent to the date of the Reference Balance Sheet and
prior to the Closing Date. Such unaudited financial statements,
when delivered to Buyer, shall fairly present in all material
respects the financial condition and results of operations of the
Companies as of and for the period ending on the last day of the
calendar month covered thereby, in accordance with accounting
principles used in the preparation of the Reference Balance
Sheet.
6.4 Transfer of Stock. Other than in connection with the
actions contemplated by Section 6.14(e) or as set forth on
Schedule 6.4, hereto, from the date hereof through the Closing
Date, neither Seller, DynCorp nor any of the Companies shall
sell, transfer, assign, pledge or otherwise dispose of (whether
with or without consideration and whether voluntarily or
involuntarily or by operation of law) any interest in the Stock,
any other capital stock and any common stock equivalents
(including any options, warrants, conversion or other rights, and
stock appreciation rights, phantom stock, profit participation or
similar rights) of any member of the Parent Group.
6.5 Notice of Developments.
(a) Seller and DynCorp will give prompt written notice to
Buyer and ALPHA of any development causing, or which could
reasonably be expected to cause, a breach of any of the
representations and warranties in Sections 3 and 5 above were the
same to have occurred on or prior to the date hereof and Buyer
will give prompt written notice to Seller of any development
causing, or which could reasonably be expected to cause, a
breach of any of the representations and warranties in Section 4
above. No disclosure by any party hereto pursuant to this
Section 6.5 shall be deemed to amend or supplement any Schedule
or to prevent or cure any misrepresentation, breach of warranty,
or breach of covenant.
(b) Without prejudice to the provisions of Section 6.5(a)
above, Seller and DynCorp will give prompt notice to Buyer and
ALPHA of:
(i) any notice or other written communication from any Person
alleging that the consent of such Person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other written communication from any
governmental or regulatory agency or authority in connection with
the transactions contemplated by this Agreement; and
(iii) any actions, suits, claims, investigations or proceedings
commenced or, to DynCorp's and Seller's Knowledge, threat
ened against, relating to or involving or otherwise affecting any
member of the Parent Group which relates to the consummation of
the transactions contemplated by this Agreement.
6.6 Expenses. Except as otherwise provided in Sections 1.3
and 12.2, each of Seller and DynCorp on the one hand, and Buyer,
on the other hand, will be responsible for their respective
expenses incurred in connection with the transactions
contemplated hereby and any related transactions. For purposes
of this Section 6.6, any such expenses incurred by any member of
the Parent Group prior to the Closing shall be deemed to have
been incurred by or on behalf Seller and DynCorp, and not by
Buyer.
6.7 Actions With Respect to Sale of Parent and the Companies.
Seller and DynCorp will (a) consent to and raise no
objections against the transactions contemplated hereby,
(b) waive any dissenter's rights and other similar rights, and
(c) vote any Stock held by them in any manner necessary to
consummate the transactions contemplated hereby.
6.8 Further Assurances. Each of Seller, DynCorp, ALPHA and
Buyer shall, and prior to Closing Seller and DynCorp shall cause
each member of the Parent Group to, and after Closing ALPHA and
Buyer shall cause each member of the Parent Group to, (a) execute
such documents and other papers and take such further actions as
may be reasonably required or desirable to (i) carry out the
provisions hereof and the transactions contemplated hereby
including, without limitation, voting of the Stock in any manner
necessary to consummate the transactions contemplated hereby, and
(ii) return to DynCorp each of the standby letters of credit
provided by DynCorp which support obligations of the Companies
(including, without limitation, a beneficiary statement by an
authorized officer on its letterhead to the effect that such
letter of credit is cancelled) no later than the expiry date for
each such letter of credit, and (b) cooperate in good faith to
release DynCorp's guarantees for the performance of any of the
Company's obligations under certain contracts and agreements (at
no cost or expense to ALPHA, Buyer or any member of the Parent
Group).
6.9 Access to Records.
(a) From the date hereof and through the Closing Date,
Seller and DynCorp will permit and will cause each Company to
permit, representatives of Buyer to have reasonable access during
normal business hours to all premises, properties, personnel,
books, records (including Tax records), contracts, and documents
of or pertaining to Seller and each member of the Parent Group.
(b) Following the Closing Date, (i) each of Seller and
DynCorp shall, upon reasonable request of Buyer, permit
representatives of Buyer, ALPHA or the Parent Group to have
reasonable access during normal business hours to all books and
records (including tax records), contracts, and documents in the
possession of Seller or DynCorp pertaining to each member of the
Parent Group and (ii) each of Buyer and the Parent Group shall,
upon reasonable request of DynCorp, permit representatives of
DynCorp and Seller to have reasonable access during normal
business hours to all books and records (including tax records),
contracts, and documents in possession of Buyer or the Parent
Group pertaining to DynCorp and Seller.
6.10 DynAir Russia.
(a) Seller, DynCorp, ALPHA and Buyer shall both before and
after the Closing cooperate with each other in good faith, and
shall use their respective reasonable best efforts, to
restructure the portion of the Business conducted through DynAir
Russia (the "Russian Restructuring") in a manner satisfactory to
ALPHA.
(b) As of the date hereof, all the capital stock of DynAir
Russia shall have been transferred, dividended, sold, or
otherwise disposed to a Person other than a member of the Parent
Group, and without Liability to any member of the Parent Group
and as of the Closing, the capital stock of Russia shall continue
to be held by a Person other than a member of the Parent Group.
(c) In addition, Seller and DynCorp shall, prior to the
Closing, except as otherwise agreed in writing, cause all of the
assets (net of any liabilities) of DynAir Russia (including,
without limitation, its interest in the general partnership (the
"Russian Partnership") formed pursuant to the Joint Venture and
Partnership Agreement dated as of September 1, 1993 by and
between DynAir Russia and Khabarovsk Airport and Khabarovsk
Branch of Production and Commercial Association ("Aeroflot")) to
be assigned and transferred to, or novated in favor of, DynAir
Euroservices (UK) Ltd., without any Liability to any member of
the Parent Group.
6.11 Confidentiality. Attached hereto as Exhibit D is a letter
agreement executed by DynCorp and ALPHA as of February 2, 1995,
as amended on May 24, 1995, regarding ALPHA's undertaking with
respect to Confidential Information. Each of Seller and DynCorp
will, and will cause all of its Subsidiaries, Affiliates,
employees, directors, officer, agents and representatives to,
treat and hold as such all of the Confidential Information,
refrain from using any of the Confidential Information except in
connection with this Agreement, and, following the Closing Date,
deliver promptly to the other or destroy, at the request and
option of ALPHA, all tangible embodiments (and all copies) of
the Confidential Information which are in their possession. In
the event that Seller or DynCorp is requested or required (by
oral question or request for information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative
demand, or similar process) to disclose any Confidential
Information, Seller or DynCorp, as the case may be, will notify
ALPHA promptly of the request or requirement so that ALPHA may
seek an appropriate protective order or waive compliance with the
provisions of this Section. If, in the absence of a protective
order or the receipt of a waiver hereunder, Seller or DynCorp is,
on the advice of counsel, compelled to disclose any Confidential
Information to any tribunal or else stand liable for contempt,
Seller or DynCorp, as the case may be, may disclose the
Confidential Information to the tribunal; provided, that Seller
or DynCorp, as the case may be, shall use its best efforts to
obtain, at the request and cost (with respect to out of pocket
costs only) of ALPHA, an order or other assurance that
confidential treatment will be accorded to such portion of the
Confidential Information required to be disclosed as ALPHA shall
designate. The foregoing provisions shall not apply to any
Confidential Information which is generally available to the
public immediately prior to the time of disclosure. As of the
Closing, DynCorp and Seller hereby assign to Buyer and ALPHA all
of their respective rights pursuant to any confidentiality
agreements with other Persons regarding any confidential
information of the Companies.
6.12 Public Announcements.
(a) Subject to clause (b) below, the timing and content of
all announcements regarding any aspect of this Agreement to the
financial community, Governmental Bodies, employees or the
general public at any time before or within a period of two
months after Closing shall be mutually agreed upon in advance by
DynCorp and ALPHA (such agreement in each case not to be
unreasonably withheld or delayed).
(b) Where an announcement is required by law (including,
without limitation, the HSR Act) or any regulation or rule of any
stock exchange (including, without limitation, the rules of the
London Stock Exchange or compliance with the Securities Exchange
Commission), it shall so far as is practicable be made by the
affected party after consultation with the other parties and
taking into account their reasonable requirements, but so that
any reference in any such announcement to any other party must be
agreed by that party (such agreement not to be unreasonably
withheld or delayed).
6.13 Tax Covenants.
(a)(i) DynCorp shall cause the Parent Group to be
included in DynCorp's consolidated federal income Tax Returns for
all periods for which they are eligible to be so included,
including, without limitation, the period from January 1, 1995
through the Closing Date, and in any other required state, local
and foreign consolidated, affiliated, combined, unitary or other
similar group income Tax Returns that include Seller or any
affiliate of Seller for all Pre-Closing Periods for which any of
them are required or permitted to be so included.
(ii) DynCorp shall (A) timely prepare and
file all such Tax Returns and timely pay when due all Taxes
relating to such Tax Returns, and (B) timely prepare and file, or
cause to be prepared and filed, all other income Tax Returns of
the Parent Group for all taxable periods ending on or prior to
the Closing Date and timely pay, or cause to be paid, when due
all Taxes relating to such Tax Returns.
(iii) The Tax Returns described in clause
(ii) above shall be prepared or completed in a manner consistent
with prior practice of DynCorp and the Parent Group with respect
to Returns concerning the income, properties or operations of the
Parent Group (including elections and accounting methods and
conventions), except as otherwise required by law or regulation
or otherwise agreed to by Buyer prior to the filing thereof.
DynCorp will take no position on such returns that relate to the
Parent Group that would adversely affect the Parent Group after
the Closing Date. Except as provided in Section 6.13(b), the
income of the Parent Group up to and including the Closing Date
will be determined by closing the books of the Parent Group as of
the close of business on the Closing Date.
(b)(i) Any Taxes with respect to the income, property or
operations of the Parent Group that relate to a Tax period
beginning before the Closing Date and ending after the Closing
Date (an "Overlap Period") shall be apportioned between Buyer and
DynCorp:
(A) in the case of real and personal
property Taxes (and any other Taxes not measured or measurable,
in whole or in part, by net or gross income or receipts), on a
per diem basis and,
(B) in the case of other Taxes, as
determined from the books and records of the Parent Group during
the portion of such period ending on the Closing Date and the
portion of such period beginning on the day following the Closing
Date consistent with the past practices of DynCorp and the Parent
Group.
(ii) Buyer shall cause the Parent Group to
file any Tax Returns for any Overlap Period, and Buyer shall pay,
or cause to be paid, all state, local or foreign Taxes shown as
due on any such Tax Returns.
(iii) DynCorp shall pay Buyer its share
of any such Taxes (to the extent DynCorp is liable therefor in
accordance with this Section 6.13(b) to the extent not already
paid by DynCorp) within five (5) Business Days of receipt of
notice of such filing by Buyer, which notice shall set forth in
reasonable detail the calculations regarding DynCorp's share of
such Taxes.
(iv) Buyer shall pay to DynCorp its share of
any refunds from prior payments of any such Taxes within five (5)
Business Days of Buyer's receipt of such refunds.
(c)(i) DynCorp shall have the right to represent the
interests of the Parent Group in any Tax audit or administrative
or court proceeding relating to Tax Returns described in Section
6.13(a) with respect to which DynCorp may be liable for Taxes
pursuant to this Agreement (including any such proceedings
relating to the income, properties or operations of the Parent
Group); provided, that Buyer shall have the right (i) to
participate in any such audit or proceeding to the extent that
any such audit or proceeding may affect the Tax Liability of the
Buyer or any of its Affiliates (including the Parent Group) and
(ii) to employ counsel of its choice at its own expense for
purposes of such participation.
(ii) Notwithstanding anything to the contrary
contained or implied in this Agreement, without the prior written
approval of Buyer (which shall not be unreasonably withheld),
neither DynCorp nor any Affiliate of DynCorp shall agree or
consent to compromise or settle, either administratively or after
the commencement of litigation, any issue or claim arising in any
such audit or proceeding, or otherwise agree or consent to any
Tax Liability, to the extent that any such compromise,
settlement, consent or agreement may affect the Tax Liability of
Buyer, any of its Affiliates or the Parent Group for any period
ending after the Closing Date (including, but not limited to, the
imposition of Tax Deficiencies, the reduction of asset basis or
cost adjustments, the lengthening of any amortization or
depreciation period, the denial of amortization or depreciation
deductions, or the reduction of loss or credit carry forwards).
(d)(i) Buyer shall promptly notify DynCorp in writing
upon receipt by Buyer, any Affiliate of Buyer or the Parent Group
of any notice of any pending or threatened Tax audits or
assessments relating to the income, properties or operations of
the Parent Group, in each case for Pre-Closing Periods only, so
long as Pre-Closing Periods remain open; provided, that failure
by Buyer to comply with this Section 6.13(d)(i) shall not affect
Buyer's right to indemnification relating to Taxes if such
failure does not prejudice the rights of DynCorp.
(ii) DynCorp shall promptly notify Buyer in
writing upon receipt by DynCorp or any affiliate of DynCorp of
notice of any pending or threatened Tax Audits or assessments
relating to the income, properties or operations of the Parent
Group, in each case for Pre-Closing Periods only; provided, that
failure by DynCorp to comply with this Section 6.13(d)(ii) shall
not affect DynCorp's right to indemnification relating to Taxes
if such failure does not prejudice the rights of Buyer.
(e) If the Parent Group or any consolidated, affiliated,
combined, unitary or other similar Tax group of which any of the
Parent Group is now or was formerly a member has any reduction in
Tax Liability by reason of an adjustment with respect to a Pre-
Closing Period and such adjustment has the effect of decreasing
deductions or credits, or increasing income, for any taxable year
or tax period (including an Overlap Period) ending after the
Closing Date, then DynCorp shall pay to Buyer an amount equal to
the Tax detriment attributable to such decreased deductions or
credits, or increased income, as and when the Parent Group or any
consolidated, affiliated, combined, unitary or other similar Tax
group of which any of the Parent Group may be a member actually
suffers such detriment and is required to make a payment on
account thereof.
(f) Neither DynCorp nor any Affiliate of DynCorp shall,
without the prior written consent of Buyer (which shall not be
unreasonably withheld), file, or cause to be filed, any amended
Tax Return or claim for Tax refund, with respect to the Parent
Group for any Pre-Closing Period, to the extent that any such
filing may affect the Tax Liability of Buyer, any of its
Affiliates or the Parent Group for any period ending after the
Closing Date (including, without limitation, the imposition of
Tax deficiencies, the reduction of asset basis or cost
adjustments, the lengthening of any amortization or depreciation
periods, the denial of amortization or depreciation deductions,
or the reduction of loss or credit carryforwards).
(g) Any and all existing Tax sharing, allocation,
compensation or like agreements or arrangements, whether or not
written, that include the Parent Group, including, without
limitation, any arrangement by which any of the Parent Group
makes compensating payments to each other or any other member of
any affiliated, consolidated, combined, unitary or other similar
Tax group for the use of certain tax attributes, shall be
terminated as of the Closing Date and shall have no further force
or effect for any taxable year or period thereof.
(h) (i) After the Closing Date, Buyer and DynCorp shall
provide each other, and Buyer shall cause the Parent Group to
provide DynCorp, with such cooperation and information relating
to the Parent Group as either party reasonably may request in:
(A) filing any Tax Return, amended Tax
Return or claim for refund;
(B) determining any Tax Liability or a
right to refund of Taxes;
(C) conducting or defending any audit or
other proceeding in respect of Taxes; or
(D) effectuating the terms of this Agreement.
The tax package which DynCorp has customarily required
of the Companies will be delivered to DynCorp within 30 days
after the final determination of the Closing Balance Sheet
pursuant to Section 1.3.
(ii) The parties shall retain, and Buyer
shall cause the Parent Group to retain, all Tax Returns,
schedules and work papers, and all material records and other
documents relating thereto, until the earlier of (a) the
expiration of the statute of limitation (and, to the extent
notified by any party, any extensions thereof) of the taxable
years to which such returns and other documents relate or (b)
five years after the Closing Date. During such period, Buyer and
DynCorp shall be entitled to copy any related documents in the
other's possession at its own expense.
(iii) Any information obtained under this
Section 6.13 shall be kept confidential, except as may be
otherwise necessary in connection with filing any Tax Return,
amended return, or claim for refund, determining any Tax
liability or right to refund of Taxes, or in conducting or
defending any Tax audit or other proceeding in respect of Taxes.
(i) Seller shall be liable for, and shall pay when due, any
transfer, gains, documentary, sales, use, registration, stamp,
value added or other similar Taxes payable by reason of the
transactions contemplated by this Agreement and Seller or DynCorp
shall, at its own expense, file all necessary Tax Returns and
other documentation with respect to all such Taxes.
(j)(i) With respect to Parent, DynAir Services Inc. and
DynAir CFE Services Inc. (and such other Companies as the Buyer
determines in its sole discretion), (A) Seller and DynCorp will
join with Buyer in making an irrevocable election under Code
Section 338(h)(10) and the regulations promulgated thereunder
(and any corresponding provisions under state, local, or foreign
law) and (B) with respect to any state, local, or foreign
jurisdiction that does not recognize an election under the
preceding clause (A), Buyer shall make an irrevocable election
under Section 338(g) of the Code and the regulations promulgated
thereunder, and any corresponding provision under state, local or
foreign law (the elections in clauses (A) and (B) immediately
above are referred to collectively as the "Elections"). Seller
and DynCorp will pay any Tax attributable to or resulting from
the making of the Elections and will indemnify Buyer and each
member of the Parent Group against any Adverse Consequences
arising out of any failure to pay such Tax.
(ii) Buyer and DynCorp agree to comply with
all of the requirements and conditions of Code Sections 338(g)
and 338(h)(10), the Treasury Regulations promulgated thereunder
and all other applicable Code sections and Treasury Regulations
relating thereto, including, without limitation, the timely
filing of Department of Treasury Form 8023 entitled "Corporate
Qualified Stock Purchase Election," which Buyer shall be
responsible for preparing.
(iii) Neither Buyer, Seller nor DynCorp will
take any action, including, without limitation, any action in
connection with the filing of income Tax Returns of any Person,
which would be inconsistent with or prejudice the Elections.
(iv) Within the earlier of (x) 60 days
following the final determination of the Closing Balance Sheet
pursuant to Section 1.3 and (y) 195 days following the Closing
Date, Buyer and ALPHA shall, at their own expense cause American
Appraisal Associates to deliver an appraisal to ALPHA and/or
Buyer and DynCorp for the purposes of determining an allocation
of the Purchase Price (together with liabilities assumed by
operation of law hereunder and other relevant items) among the
assets of the Parent Group. Such allocation shall be binding on
Buyer, ALPHA, Seller and DynCorp and shall comply with the
requirements of Code Section 338 and the Treasury Regulations
thereunder.
(k) DynCorp (i) at its own expense shall report, or shall
cause any of its affiliates to report, any final federal income
Tax adjustment made by the U.S. Internal Revenue Service with
respect to Pre-Closing Periods to the appropriate state, local
and foreign Tax authorities, and (ii) shall be solely liable for
payment of any local, foreign, or local Taxes payable as a result
of any such adjustment.
6.14 Other Agreements.
(a) Seller and DynCorp shall cause the Heller Funding
Arrangements, the Operating Leases and all equipment leases, sale
leaseback agreements, fixed-asset financings, equipment funding
agreements and other similar agreements regarding any assets used
or usable by the Companies in the conduct of the Business as
presently conducted or proposed to be conducted with outstanding
obligations of principal, interest, lease payment, or other cash
obligations (whether contingent or otherwise) (including, without
limitation, all safe harbor leases to which any member of the
Parent Group was a party and the rights of which were assigned
to, and all debt related to which was assumed by, DynCorp or one
of its Subsidiaries other than a member of the Parent Group), all
of which are set forth on Schedule 6.14(a)(i) hereto
(collectively, the "Equipment Leases"), to be terminated and to
have all other obligations thereunder satisfied or waived on or
prior to the Closing, and all such assets shall be owned or
acquired by the Companies free and clear of any Liens on or prior
to the Closing (subject only to the filing of the requisite UCC-3
termination statements). All operating leases of the Companies
(other than the Equipment Leases) relating to assets used in the
operation of Business are set forth on Schedule 6.14(a)(ii) and
shall remain in full force and effect.
(b) Seller and DynCorp shall cause all Indebtedness to be
repaid (other than as set forth in Schedule 6.14(b)), all
guarantees of Indebtedness executed by the Companies (other than
such guarantees executed solely in favor of one of the other
Companies) to be terminated and all accounts receivable and
accounts payable of the Business, on the one hand, arising from
transactions with the other businesses, operations, Affiliates of
DynCorp and Seller, on the other hand, to be written off and
thereby treated to that extent as repaid and discharged in full
and the remaining balance to be terminated, cancelled, released
and/or forgiven, in their entirety, on or prior to the Closing
Date by the payment of a dividend to Seller of not more than
amounts legally distributable. Except as set forth in Schedule
6.14(b) hereto, Seller and DynCorp shall cause all Liens on any
assets used by the Companies in the conduct of the Business as
presently conducted or proposed to be conducted, to be released
and discharged substantially contemporaneously with the Closing
on terms and conditions reasonably satisfactory to ALPHA.
(c) DynCorp and ALPHA shall enter into a letter agreement
(the "Corporate Services Letter Agreement") regarding the
provision of certain corporate services by DynCorp and Seller to
the Companies after the Closing Date (including the lease of
certain office space) in the form set forth in Exhibit E hereto.
(d) Seller and DynCorp shall cause (i) all accounts
receivables of the Companies sold pursuant to the Receivables
Program as of the Closing Date to be transferred to the
Companies, without any cost or Liability to the Companies, and
(ii) all obligations of the Companies under the Receivables
Program to be unconditionally released and terminated on terms
and conditions reasonably satisfactory to ALPHA.
(e) DynCorp and Seller shall cause any shares of capital
stock of DynAir Euroservices (UK) Ltd. not held by a member of
the Parent Group to be transferred to a member of the Parent
Group, without any cost or Liability to any member of the Parent
Group.
(f) DynCorp and Seller shall (i) transfer title to the
property held by DynAir Services, Inc. (the "Wrightstown
Property") to a Person other than a member of the Parent Group,
in full compliance with ISRA and all rules and regulations of the
New Jersey Department of Environmental Protection, and DynCorp or
the Seller shall perform all undertakings required in connection
therewith, and shall submit written notification to the
appropriate Governmental Bodies of the State of New Jersey as
required by ISRA and shall designate DynCorp or Seller or one of
its respective Subsidiaries (other than a member of the Parent
Group) as the "Ordered Party" as defined by ISRA and (ii) use
their respective best efforts to conduct a "Phase II"
environmental audit of the property leased by the Companies in
Vincentown, New Jersey (the "Vincentown Property") as
contemplated by the Lease Agreement, dated as of May 1, 1995, by
and among DynAir Services Inc., as lessee, and Frank Giordano and
Frances Cappuccio, as lessors, at no cost and expense to ALPHA,
Buyer or any member of the Parent Group, in a manner which
apportions Liabilities for failures to meet or satisfy any
Environmental or Safety Requirements between the lessors of the
Vincentown Property and the Companies.
(g) Seller and DynCorp, on the one hand, and ALPHA and
Buyer, on the other hand, agree to cooperate in good faith in
attempting to locate aircraft fueling business opportunities in
Mexico through DynAir Mexico and if successful, to execute a
mutually satisfactory operating agreement in connection
therewith.
6.15 Seller Consents and Approvals. Seller and DynCorp
will, and will cause their Subsidiaries to, promptly prepare and
file in co-operation with Buyer and ALPHA a notification and
report form under the HSR Act and all other notices, applications
and other instruments required in connection therewith, and will
thereafter use and cause its Subsidiaries to use its and their
best efforts to obtain, at the earliest practical date,
termination of the waiting period under the HSR Act with respect
to the transactions contemplated hereby and all other
governmental or regulatory consent, approvals or clearances
required in connection with the consummation of the transactions
contemplated by this Agreement (the "Seller Consents and
Approvals"). Seller and DynCorp will notify Buyer and ALPHA of
all requests, terms and conditions made or sought to be imposed
on Seller and DynCorp or any of their Subsidiaries (whether such
requests, terms or conditions are made or to be fulfilled prior
to or subsequent to the receipt of the Seller Consents and
Approvals) in connection with obtaining such Seller Consents and
Approvals and will discuss with Buyer and ALPHA the acceptability
of such requests, terms and conditions, and will mutually agree
on the nature of the response to be made by Seller and DynCorp or
any of their Subsidiaries with respect thereto. Seller and
DynCorp will, and will cause their Subsidiaries to, comply with
all such requests and terms and conditions made or sought to be
imposed in connection with obtaining the Seller Consents and
Approvals.
6.16 ALPHA Shareholder Approval. ALPHA hereby agrees to
include in the ALPHA Circular to be issued to its shareholders a
recommendation from its Directors to vote in favor of the
resolutions to approve the transactions contemplated hereby and,
to the extent consistent with the fiduciary duties of its
Directors, ALPHA shall use all reasonable efforts to secure the
passing of such resolutions.
6.17 Insurance Matters.
(a) ALPHA agrees that as of 11:59 p.m., New York time on
the Closing Date, DynCorp may cease providing insurance and self-
insurance coverage for the assets or Business of the Parent Group
and may permit coverage under the Insurance Policies to cease for
any occurrence after that time.
(b) Any premium adjustments made to the Insurance Policies in
respect of any periods up to and including the Closing Date shall
(if such adjustments result in a net credit) belong to DynCorp
and shall (if such adjustments result in an additional premium
payable) be borne and paid for by DynCorp, except to the extent
that such adjustments are reflected on the Closing Balance
Sheet.
(c) DynCorp further agrees that it shall at its own cost
and expense continue with the administration of all insurance
claims arising from incidents which have occurred before the
Closing Date in relation to the assets or Business of the Parent
Group. Insofar as DynCorp shall have paid and discharged any
Liabilities incurred or to be incurred by any member of the
Parent Group in respect of any such incidents DynCorp, shall be
entitled to retain for its own benefit all and any monies
received under the Insurance Policies in respect of such claims.
(d) DynCorp hereby agrees with Buyer, for the benefit of
Buyer and each of the Companies, that it will not terminate
coverage under the Insurance Policies in respect of claims that
may be made against any of the Companies which have their cause
or origin wholly or partly in the period prior to Closing, and
that it will not at any time after the Closing take any action
which might cause or otherwise result in such coverage ceasing.
(e) Buyer hereby agrees that it shall, and shall cause
personnel of the Companies, to cooperate in good faith in
connection with DynCorp's obligations set forth in Section
6.17(c).
7. CONDITIONS TO THE OBLIGATION OF BUYER. The
obligation of Buyer to consummate the transactions to be
performed by it in connection with the Closing is subject to
satisfaction of the following conditions precedent:
7.1 Representations, Warranties and Covenants. Each
representation and warranty set forth in Section 3 or Section 5 above
shall be true and correct in all material respects at and as of
the Closing Date as though then made, or an event or act shall
occur which, had it occurred before the date of this Agreement,
would have constituted a breach of any of such representations or
warranties, and Seller, DynCorp and the Companies shall have
performed and observed in all material respects each covenant or
other obligation to be performed or observed by them pursuant to
this Agreement and unrelated documents prior to the Closing.
7.2 Opinion of the Seller's Counsel. Buyer shall have
received an opinion of H. Montgomery Hougen, Esq., counsel to
Seller and DynCorp, dated as of the Closing Date, substantially
in the form of Exhibit F hereto.
7.3 Consents (Regulatory). All consents, authorizations,
orders and approvals of (or filings or registrations with) any
Governmental Body (including, without limitation, all filings
required under the HSR Act) required in connection with the
execution, delivery and performance of this Agreement shall have
been obtained or made, and the expiration or early termination of
all applicable waiting periods (including any extensions thereof)
under the HSR Act and the regulations thereunder shall have
occurred. All consents required from third parties (including,
without limitation, those set forth in Schedule 5.9) in order for
Seller and DynCorp to consummate the transactions contemplated
hereby shall have been obtained, except for such consents, the
failure of which to obtain could not have a Material Adverse
Effect.
7.4 Corporate Services Letter Agreement. DynCorp and
Seller shall have entered into the Corporate Services Letter
Agreement, which shall be in full force and effect as of the
Closing.
7.5 Material Adverse Change. No change which could
reasonably be expected to have a Material Adverse Effect shall
have occurred following the date hereof.
7.6 Proceedings. No action, suit, or proceeding shall be
pending or threatened before any court or quasi-judicial or
administrative agency of any federal, state, local or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, stipulation, or
charge would (a) prevent consummation of any of the transactions
contemplated by this Agreement, (b) cause any of the transactions
contemplated by this Agreement to be rescinded following
consummation, (c) affect adversely the right of the Buyer to own
the Stock and to control the Companies, or (d) affect adversely
the right of any Company to own any significant portion of its
assets and to operate its business (and no such injunction,
judgment, order, decree, ruling, stipulation or charge having
such effect, shall then exist).
7.7 Resignations. Buyer shall have received the
resignations, effective as of the Closing, of each director and
officer of each Company who is not an employee of a Company at
the Closing.
7.8 ALPHA Shareholder Approval. The ordinary shareholders
of ALPHA shall have resolved to approve the execution and
performance of this Agreement and the transactions contemplated
hereby at a general meeting of ALPHA to be convened by the ALPHA
Circular.
7.9 Underwriting Agreement. The Underwriting and Placing
Agreement dated as of the date hereof between ALPHA and UBS
Limited shall have become unconditional in all respects in
accordance with its terms and shall not have lapsed or been
terminated for any reason prior to such time.
7.10 Bank Agreement. The conditions to drawdown under the
Credit Facility Agreement dated as of the date hereof by and
among ALPHA, certain Subsidiaries of ALPHA, Midland Bank, plc, as
arranger and certain other parties thereto shall have been met to
the satisfaction of the Agent (as therein defined).
7.11 Actions of Seller. All actions to be taken by Seller
and DynCorp in connection with consummation of the transactions
contemplated hereby and all certificates, opinions, instruments,
and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and
substance to Buyer.
7.12 Repayment of Indebtedness. Seller shall deliver
evidence reasonably satisfactory to Buyer that all Indebtedness
(including any obligation described in Sections 6.14(a) or
6.14(b)) owed by any member of the Parent Group has been repaid
and satisfied or otherwise released, extinguished or forgiven in
full in accordance with Section 6.14(b) prior to the Closing.
7.13 Release of Liens and Guarantees. Seller shall deliver
evidence reasonably satisfactory to Buyer that all Liens shall
have been released and all guarantees of Indebtedness executed by
any member of the Parent Group terminated, in each case in
accordance with Section 6.14(b).
7.14 Equipment Leases. Seller shall deliver evidence
reasonably satisfactory to Buyer that the Heller Funding
Arrangements and all other Equipment Leases shall have been
terminated and the assets comprised therein acquired or re-
acquired by the Parent Group all in accordance with Section
6.14(a).
7.15 DynAir Russia. Seller shall deliver evidence
reasonably satisfactory to Buyer that all actions required by
Sections 6.10(b) and 6.10(c) have been completed.
7.16 Receivables Program. Seller shall deliver evidence
reasonably satisfactory to Buyer that the actions referred to in
Section 6.14(d) have been completed.
7.17 Pre-Closing Reorganizations. Seller shall deliver
evidence reasonably satisfactory to Buyer that the actions
required by Section 6.14(e) have been completed.
7.18 Escrow Agreement. The Escrow Agreement shall remain in
full force and effect.
7.19 Material Consents (Contracts and Permits). Seller
shall deliver evidence reasonably satisfactory to Buyer that all
such consents, approvals, confirmations and agreements have been
obtained and have not been revoked or withdrawn or in any way
modified prior to Closing as to ensure that the Parent Group will
be able to provide the necessary services and perform its
obligations under and secure the benefit of each of the Contracts
and Permits listed in Schedule 7.19 on no less favorably terms
(including, without limitation, as to duration and price) than
pertain immediately prior to the date of this Agreement.
7.20 DynCorp Class C Approval. The DynCorp Class C Approval
shall remain in full force and effect.
7.21 Waiver. Buyer may waive any condition specified in
this Section 7 if it executes a writing so stating at or prior to
the Closing; provided, that neither Buyer, ALPHA nor (following
Closing) the Parent Group is as a result of such waiver or as a
result of Closing rendered in breach of any applicable law or
regulation in any applicable state or jurisdiction.
8. CONDITIONS TO OBLIGATIONS OF SELLER AND DYNCORP.
The obligation of Seller and DynCorp to consummate the
transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions precedent:
8.1 Representations and Warranties. The representations
and warranties of Buyer set forth in this Agreement shall be true
and correct in all material respects at and as of the Closing
Date.
8.2 Opinion of the Buyer's Counsel. The Company shall have
received an opinion of Paisner & Co., U.K. counsel to the Buyer,
dated the Closing Date, substantially in the form of Exhibit G
hereto.
8.3 HSR. All filings required by the HSR Act in connection
with the transactions contemplated hereby shall have been made,
and the expiration or early termination of all applicable waiting
periods (including any extensions thereof) under the HSR Act
shall have occurred.
8.4 Waiver. Seller may waive any condition specified in
this Section 8 if it executes a writing so stating at or prior to
the Closing.
9. INDEMNIFICATION.
9.1 Survival of Representations and Warranties. All of the
representations and warranties of the parties hereto contained in
this Agreement shall survive the Closing and continue in full
force and effect for 20 months thereafter (subject to any
applicable statutes of limitations); provided, that (i) the
representations and warranties made in Section 5.25 shall survive
for a period of four (4) years following the Closing, (ii) the
representations and warranties made in Section 5.14 shall survive
until six months following the expiration of the applicable
statute of limitations, and (iii) the representations and
warranties made in Section 3.2 and Sections 3.5, 5.3 and 5.4
shall survive forever; provided further, that in the event that
any party hereto makes a claim for a breach of a representation
or warranty under this Section 9 prior to the last day such
representation or warranty would otherwise survive pursuant to
this Section 9.1, such representation and warranty shall survive
until final disposition of such claim.
9.2 Obligations of Seller and DynCorp to Indemnify Buyer.
(a) Subject to the terms of Sections 9.1 and 9.5, Seller
and DynCorp hereby agree to indemnify, jointly and severally,
Buyer, and following the Closing, each member of the Parent Group
and their Affiliates, employees, directors, officers, agents and
representatives (other than any such officer or employee of the
Companies (1) who was an officer or employee of one of the
Companies prior to the Closing Date and (2) who contributed to
the facts or circumstances which are the subject of the
representation and warranty that has been breached in bad faith
or by a negligent or wrongful act) (collectively, "Buyer
Indemnitees"), from and against the entirety of any Adverse
Consequences any Buyer Indemnitees may suffer through and after
the date of the claim for indemnification resulting from, arising
out of, relating to, or caused by the breach by Seller or DynCorp
of (or in the event any third party alleges facts that, if true,
would mean that Seller, DynCorp or their respective Affiliates,
employees, directors, officers, agents and representatives have
breached) (i) any of the representations or warranties of Seller
or DynCorp contained herein (including, without limitation, the
representations and warranties contained in Section 3 and 5
hereof) and (ii) any of the covenants of Seller or DynCorp
contained herein. All amounts payable hereunder shall be made in
full without deduction or withholding whatsoever (whether in
respect of set-off, counterclaim, duties, Taxes, charges or
otherwise unless such deduction or withholding is required by
law), except that (A) all such amounts payable hereunder shall be
reduced by an amount equal to the net reduction in any year in
the Taxes payable for such year by any Buyer Indemnitee, or any
member of a consolidated group of which such Buyer Indemnitee is
a part, which reduction is actually realized in such year solely
as a result of the payment of such amounts and (B) if such Buyer
Indemnitee (or related consolidated group) is liable for any
additional Taxes as a result of a payment of any amount
hereunder, Seller or DynCorp shall pay such Buyer Indemnitee (x)
an additional amount equal to the amount of such additional Taxes
plus (y) any additional amounts required to pay additional Taxes
imposed with respect to the amounts payable under clause (x) and
this clause (y), such that such Buyer Indemnitee receives, net of
the payment of such additional Taxes, the amount it would have
received had such Taxes not been payable.
(b)Irrespective of any disclosure by DynCorp and Seller
hereunder or in the Schedules hereto, or any knowledge of ALPHA
or Buyer (or any officer or employee thereof), and subject to the
terms of Sections 9.1 and 9.5, Seller and DynCorp hereby agree to
indemnify, jointly and severally, Buyer Indemnities from and
against the entirety of any Adverse Consequences any Buyer
Indemnitees may suffer through or after the date of the claim for
indemnification resulting from, arising out of, relating to, or
caused by (i) the termination of the Equipment Leases in
accordance with Section 6.14(f), (ii) the operations of DynAir
Russia, including Liabilities of the Russian Partnership or the
partners thereof, to the extent that the same have their cause or
origin wholly or partly in the period prior to the Closing Date,
and any Liabilities resulting from, relating to, or arising out
of the implementation of the actions referred to in Sections
6.10(b) or 6.10(c), (iii) the Receivables Program or termination
thereof with respect to the Companies as described in Section
6.14(d), (iv) any agreement under which any Parent Group acquired
the shares of any other company or any business and related
assets and liabilities, including (but without limitation) any
deferred consideration of any kind required to be paid at any
time in respect of any such acquisition, (v) any agreement under
which any member of the Parent Group disposed of the shares of
any other company or any business and related assets and
liabilities, including, but without limitation, any liabilities
in respect of warranties or indemnities given in connection
therewith, (vi) any agreement or arrangement no longer in force
to which any member of the Parent Group was an original
contracting party and under which any member of the Parent Group
has any residual Liability, (vii) any Liability of DynCorp or any
of its Subsidiaries or Affiliates (other than a member of the
Parent Group), (viii) the implementation of the actions required
by Section 6.14(f)(i), or the environmental conditions of the
Wrightstown Property, the Vincentown Property, the JFK Property
or the Specified Properties to the extent that the same have
their cause or origin wholly or partly in the period prior to the
Closing, (ix) all worker's compensation, general and aviation
Liabilities of the Companies of the type or nature included, or
which would have been included, under DynCorp's or the Seller
Group's insurance programs in effect prior to Closing (including,
without limitation, amounts which would be borne by the Companies
under the deductible or self-insured portion of any such
Liabilities) arising out of, or based upon, occurrences prior to
the Closing, (x) any Liabilities resulting from, payable to or in
respect of any employee benefit plans of DynCorp or Seller not
assumed by Buyer pursuant to the terms hereof, and (xi) the
Parent Contribution and the actions set forth in Section 6.14(e).
All amounts payable hereunder shall be payable in US Dollars and
shall be made in full without deduction or withholding whatsoever
(whether in respect of set-off, counterclaim, duties, taxes,
charges or otherwise unless such deduction or withholding is
required by law), except that (A) all such amounts shall be
reduced by an amount equal to the net reduction in any year in
the Taxes payable for such year by any Buyer Indemnitee, or any
member of a consolidated group of which such Buyer Indemnitee is
a part, which reduction is actually realized in such year solely
as a result of the payment of such amounts and (B) if such Buyer
Indemnitee (or related consolidated group) is liable for any
additional Taxes as a result of a payment of any amount
hereunder, Seller or DynCorp shall pay such Buyer Indemnitee (x)
an additional amount equal to the amount of such additional Taxes
plus (y) any additional amounts required to pay additional Taxes
imposed with respect to the amounts payable under clause (x) and
this clause (y), such that such Buyer Indemnitee receives, net of
the payment of such additional Taxes, the amount it would have
received had such Taxes not been payable.
(c) Irrespective of any disclosure by DynCorp and Seller
hereunder or in the Schedules hereto, or any knowledge of ALPHA
or Buyer (or any officer or employee thereof), and subject to
Sections 9.1 and 9.5, DynCorp and Seller will jointly and
severally indemnify Buyer and each member of the Parent Group,
and each of their respective Affiliates, successors and assigns,
in respect of, and save and hold harmless against any and all
Liability for (i) Taxes assessed against (x) each member of the
Parent Group with respect to any Pre-Closing Periods and
(y) DynAir Russia, and (ii) Taxes assessed against each member of
the Parent Group with respect to any Overlap Period to the extent
such Taxes relate to the portion of such period ending on the
Closing Date, (iii) Taxes assessed against any of them with
respect to activities or operations of the Business on or prior
to the Closing Date and (iv) the Taxes of any other Person (other
than a member of the Parent Group), whether under Treas. Reg. section
1.1502-6 (or any similar provision of state, local or foreign
law), as a partner, shareholder, transferee or successor, by
contract or otherwise. All amounts payable hereunder shall be
payable in US Dollars and shall be made in full without deduction
or withholding whatsoever (whether in respect of set-off,
counterclaim, duties, taxes, charges or otherwise unless such
deduction or withholding is required by law), except that (A) all
such amounts payable hereunder shall be reduced by an amount
equal to the net reduction in any year in the Taxes payable for
such year by any Buyer Indemnitee, or any member of a
consolidated group of which such Buyer Indemnitee is a part,
which reduction is actually realized in such year solely as a
result of the payment of such amounts and (B) if such Buyer
Indemnitee (or related consolidated group) is liable for any
additional Taxes as a result of a payment of any amount
hereunder, Seller or DynCorp shall pay such Buyer Indemnitee
(x) an additional amount equal to the amount of such additional
Taxes plus (y) any additional amounts required to pay additional
Taxes imposed with respect to the amounts payable under clause
(x) and this clause (y), such that such Buyer Indemnitee receives
net of the payment of such additional Taxes, the amount it would
have received had such Taxes not been payable.
9.3 Obligation of ALPHA and Buyer to Indemnify Seller and
DynCorp. ALPHA and Buyer hereby agree to indemnify Seller,
DynCorp and their respective Affiliates, employees, directors,
officers, agents and representatives (collectively, "Seller
Indemnitees") from and against the entirety of any Adverse
Consequences any Seller Indemnitees may suffer through and after
the date of the claim for indemnification resulting from, arising
out of, relating to, or caused by the breach by ALPHA or Buyer
(or in the event any third party alleges facts that, if true,
would mean ALPHA or Buyer has breached) any of its
representations, warranties, and covenants of ALPHA or Buyer
contained herein. All amounts payable hereunder shall be made in
full without deduction or withholding whatsoever (whether in
respect of set-off, counterclaim, duties, Taxes, charges, or
otherwise unless such deduction or withholding is required by
law), except that (A) all such amounts payable hereunder shall be
reduced by an amount equal to the net reduction in any year in
the Taxes payable for such year by any Seller Indemnitee, or any
member of a consolidated group of which Seller Indemnitee is a
part, which reduction is actually realized in such year solely as
a result of the payment of such amounts and (B) if such Seller
Indemnitee (or related consolidated group) is liable for any
additional Taxes as a result of a payment of any amount
hereunder, Buyer or ALPHA shall pay such Seller Indemnitee (x) an
amount equal to the amount of such additional Taxes plus (y) any
additional amounts required to pay additional Taxes imposed with
respect to the amounts payable under clause (x) and this clause
(y), such that such Seller Indemnitee receives, net of the
payment of such additional Taxes, the amount it would have
received had such Taxes not been payable.
9.4 Matters Involving Third Parties.
(a) If any third party (including any Governmental Body)
shall notify any party hereto (the "Indemnified Party") with
respect to any matter (a "Third Party Claim") which may give rise
to a claim for indemnification against any other party hereto
(the "Indemnifying Party") under this Section 9, then the
Indemnified Party shall promptly notify each Indemnifying Party
thereof in writing; provided, that no delay on the part of the
Indemnified Party in notifying any Indemnifying Party shall
relieve the Indemnifying Party from any obligation hereunder
unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend
the Indemnified Party against, and undertake resolution of, the
Third Party Claim with counsel of its choice reasonably
satisfactory to the Indemnified Party so long as (i) the
Indemnifying Party notifies the Indemnified Party in writing
within 15 days after the Indemnified Party has given notice of
the Third Party Claim (provided that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to or caused by, and
would not have resulted but for, the Indemnifying Party's
exercise of its rights under this Section 9.4(b)), (ii) the Third
Party Claim involves only money damages and does not seek an
injunction or other equitable relief (provided that the
Indemnifying Party may participate, at its own cost and expense,
in any Third Party Claim which involves injunctive or equitable
relief), and (iii) the Indemnifying Party conducts the defense of
the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with
Section 9.4(b) above, (i) the Indemnified Party may retain
separate co-counsel at its sole cost and expense and participate
in the defense of the Third Party Claim, (ii) the Indemnified
Party will not consent to the entry of any judgment or enter into
any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (provided that if
such consent is not given and there was no reasonable basis for
not giving such consent, and such Third Party Claim ultimately
results in a monetary judgment or settlement greater than such
proposed judgment or settlement, the party withholding such
consent shall be responsible for (x) any amount of such ultimate
judgment or settlement in excess of the amount of judgment or
settlement so proposed and (y) for all reasonable out-of-pocket
expenses of defense or settlement incurred subsequent to the time
that such consent was withheld), (iii) the Indemnifying Party
will not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (provided that if
such consent is not given and there was no reasonable basis for
not giving such consent, and such Third Party Claim ultimately
results in a monetary judgment or settlement greater than such
proposed judgment or settlement, the party withholding such
consent shall be responsible for (x) any amount of such ultimate
judgment or settlement in excess of the amount of judgment or
settlement so proposed and (y) for all reasonable out-of-pocket
expenses of defense or settlement incurred subsequent to the time
that such consent was withheld) and (iv) the Indemnified Party
shall cooperate in good faith to assist the Indemnifying Party in
its defense or settlement of such Third Party Claim, and shall
use reasonable best efforts to mitigate the monetary damages with
respect thereto; provided, that nothing in this clause (iv) shall
be deemed to obligate the Indemnified Party to take any action
which could, in its reasonable judgment, adversely affect the
continuing business interests of the Indemnified Party.
(d) In the event any of the conditions in Section 9.4(b)
above is or becomes unsatisfied, and with respect to the
condition set forth in Section 9.4(b)(iii) only, continues to be
unsatisfied for a period of 15 days after receipt by the
Indemnifying Party of written notice of such event, (i) the
Indemnified Party may, after consultation with the Indemnifying
Party, defend against, and consent to the entry of any judgment
or enter into any settlement with respect to, the Third Party
Claim in any manner it may deem reasonably appropriate, (ii) the
Indemnifying Parties will reimburse the Indemnified Party
promptly and periodically for the costs of defending against the
Third Party Claim (including reasonable attorneys' fees and
expenses), and (iii) the Indemnifying Parties will remain
responsible for any Adverse Consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim to the fullest
extent provided in this Section 9.
9.5 Limitations on Indemnification.
(a) Neither Seller nor DynCorp shall be required to
indemnify a Buyer Indemnitee pursuant to Section 9.2(a)(i) in the
event and to the extent that DynCorp and Seller can establish
that any officer or senior manager of ALPHA had actual and
specific knowledge of such misrepresentation or breach on the
date hereof.
(b) Neither DynCorp nor Seller shall be required to pay
any indemnification otherwise due to any Person under Section 9.2
unless the aggregate of all amounts for which indemnity would
otherwise be payable by DynCorp or Seller exceeds $300,000 (the
"Threshold"), and in such event, DynCorp and Seller be liable for
the Threshold and any such amounts in excess of the Threshold.
(c) The total indemnification to be paid by DynCorp and
Seller under Sections 9.2(a)(i) and 9.2(b)(iv), (v), (vi) and
(viii), shall not exceed an aggregate of $20,000,000. Any
amounts payable by DynCorp or Seller under the provisions set
forth in this Section 9.5(c) shall be applied to the
indemnification limitations set forth in Section 9.5(d).
(d) Other than expressly set forth in Section 9.5(c), the
total indemnification to be paid by DynCorp and Seller under
Sections 9.2(a), 9.2(b) (other than with respect to indemnities
contained in the subclauses referred to in Section 9.5(c)) and
9.2(c) shall not exceed in the aggregate the Purchase Price. Any
indemnification amounts payable by DynCorp or Seller under the
provisions set forth in this Section 9.5(d) shall not be applied
to the indemnification limitations set forth in Section 9.5(c).
(e) Neither DynCorp nor Seller shall be required in respect
of any Liability to pay any indemnification otherwise due any
Person under Section 9.2 if, and only to the extent that, an
amount in respect of such Liability has been provided for in the
Closing Balance Sheet.
9.6 Other Indemnification Provisions. The foregoing
indemnification provisions are in addition to, and not in derogation
of, any statutory, equitable, or common law remedy any party
hereto may have for any claim or cause of action based on fraud.
10. NON-COMPETITION; NON-SOLICITATION.
10.1 Covenant Not to Compete. DynCorp and Seller undertake
that they shall not, and shall procure that none of its
Affiliates (including but without limitation Seller) will, for a
period of five (5) years after the date of this Agreement (except
in the case of Section 10.1(b) and (c) where the undertaking
shall be without limit of time) either alone or jointly with,
through or as manager, adviser, consultant or agent for any
Person, directly or indirectly:
(a) carry on, or be engaged, concerned or interested in the
Business or any business which competes, directly or indirectly,
with the Business of any member of the Parent Group as carried on
at the date of this Agreement and at Closing within the United
Kingdom, Europe, the Pacific Basin or any geographical area in
which the Business or such business was carried on, or was
planned to be carried on, as of such dates; provided, that
nothing herein shall preclude DynCorp, Seller or any of its
Affiliates and Subsidiaries from conducting any such business in
Mexico in accordance with DynCorp's obligations pursuant to
Section 6.14(g).
(b) use in connection with any business, or procure the use
of, any trade or business name or distinctive mark, style or logo
owned by any member of the Parent Group or used by it in the
Business at the date of this Agreement or at the Closing;
(c) solicit or endeavor to entice away, offer employment to
or contract for the services of, any person who was an employee
of any member of the Parent Group or employed in the Business
engaged in skilled or managerial work at any time in the period
of two (2) years immediately prior to the Closing Date.
It is intended that each of the foregoing provisions of this
Section 10.1 shall constitute an entirely separate and
independent restriction.
10.2 DynAir Names. DynCorp and Seller agree that, following
the Closing, (a) they and their respective Subsidiaries and
Affiliates, other than members of the Parent Group, shall have no
right to, and will cease to use, the "DynAir" name, including any
words or letters confusingly similar to such names (collectively,
the "DynAir Names"), and that all of their respective rights to
use the DynAir Names and the goodwill represented thereby and
pertaining thereto will be terminated at the Closing, (b) if any
assets owned by them or any of their respective Subsidiaries and
Affiliates and not owned by Buyer or the Parent Group following
the Closing, including, without limitation, any promotional
materials or printed forms, bear the DynAir Names, DynCorp and
Seller shall, prior to the use of such assets, delete or cover
the DynAir Names and clearly indicate thereon that the Business
is no longer affiliated with DynCorp, Seller or any of their
respective Subsidiaries and (c) they shall cause DynAir Russia
and any other of their respective Subsidiaries and Affiliates,
the corporate or tradenames of which include the DynAir Names, to
change their respective names so as not to include the DynAir
Names on or immediately following the Closing (except that DynAir
Russia's name need only be changed within six months following
Closing); provided, that no such change to DynAir Mexico's
corporate name will be required to be made hereunder so long as
DynCorp and Seller are in compliance with Section 6.14(g).
DynCorp and Seller agree that they will enforce in good faith all
remedies available at law or equity for any breach of any of the
provisions of Section 5.5 of the Stock Purchase Agreement dated
as of June 30, 1995 by and among DynCorp, DynCorp Aviation
Services, Inc. and Sabreliner Corporation.
10.3 Enforceability.
(a) DynCorp, Seller, Buyer and ALPHA hereby agree that
whilst the restrictions set out in Section 10.1 are considered
fair and reasonable, if a court of competent jurisdiction shall
hold that any of the restrictions stated herein are void or
unenforceable as going beyond what is fair and reasonable in all
the circumstances and if by deleting part of the wording or
substituting a shorter period of time or different geographical
limit or a more restricted range of activities for any of the
periods of time, geographical limits or ranges of activities set
out in Section 10.1 it would not be void, then there shall be
substituted such next less extensive period or limit or activity
or such deletions shall be made as shall render Section 10.1
valid and enforceable.
(b) In the event that DynCorp sells all or more than 50% of
the assets of DynCorp or any of its Subsidiaries to any Person,
or any Person acquires or otherwise obtains, by way of merger,
stock purchase, recapitalization or otherwise, more than 50% of
the common stock of DynCorp (calculated on a fully diluted basis)
or its Subsidiaries, prior to the termination of its obligation
under this Section 10, DynCorp shall cause such Person to enter
into a binding agreement in favor and on terms enforceable by the
Companies in which such Person shall agree to be bound by the
terms of this Section 10 in relation to the company or companies
acquired by it until the expiration of the obligations of DynCorp
and Seller as set forth this Section 10.
10.4 No Solicitation. Neither DynCorp nor any of its
Subsidiaries shall, nor will DynCorp permit its affiliates,
officer, directors, employees, representatives and agents to,
directly or indirectly, solicit, initiate or participate in
discussions or negotiations with, or provide any information
(including a copy or terms of this Agreement) to, any Person or
group of Persons (other than ALPHA or an Affiliate,
representative or agent of ALPHA) concerning, or enter into any
agreement providing for (other than in the ordinary course of
business), the merger, sale of material assets, sales of shares
of capital stock or similar transactions involving the Companies
or any of them, or DynAir Russia (except as otherwise
contemplated hereby) (a "Company Sale"); provided, that DynCorp
may furnish or cause to be furnished information to such Persons,
may participate in such discussions or negotiations with such
Persons in response to an unsolicited communication or take any
other action as directed by DynCorp's outside counsel if
DynCorp's outside counsel issues a written opinion that the terms
of the related proposal are such that the failure to provide such
information, participate in such discussions or negotiations or
take such other action could reasonably involve the members of
DynCorp's Board of Directors in a breach of their fiduciary
duties (a "Specified Offer"). DynCorp will immediately
communicate to ALPHA the terms of any proposal received or the
fact that DynCorp has received an inquiry with respect to, or has
participated in discussions or negotiations or taken any such
other action in respect of, any such transaction with any Person,
and DynCorp shall keep ALPHA fully informed, on a prompt basis,
of all communications between DynCorp and such Persons in
connection therewith.
11. GUARANTEE OF ALPHA. In consideration of the
mutual covenants contained herein ALPHA hereby guarantees in
favor of Seller and DynCorp the prompt and timely performance of
each of the obligations made and assumed by Buyer under this
Agreement and ALPHA shall on demand by Seller or DynCorp perform
and discharge in a timely fashion any obligation of Buyer under
this Agreement if Buyer fails to perform and discharge the same
on its due date.
12. TERMINATION OF AGREEMENT.
12.1 Termination. The parties hereto may terminate this
Agreement as provided below:
(a) The parties hereto may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) Buyer may terminate this Agreement by giving written
notice to Seller and DynCorp at any time prior to the Closing in
the event (i) Seller or DynCorp has breached any material
representation, warranty, or covenant contained in this Agreement
in any material respect, or it appears that any of the said
representations or warranties are or have been inaccurate or
misleading in a material respect or (ii) any act or event occurs
which, had it occurred before the date of this Agreement would
have constituted a breach of any of the said representations or
warranties; provided, that in determining the materiality of a
misrepresentation or breach of any such representation or
warranty, Buyer shall consider whether the matter misrepresented
or breached is solely of a financial nature without any other
material consequence for the Parent Group, Buyer or ALPHA, and if
so, whether a payment by DynCorp by way of financial
indemnification of not more than 10% of the Purchase Price is
sufficient to remedy such misrepresentation or breach in its
entirety;
(c) Buyer may terminate this Agreement by giving written
notice to Seller and DynCorp at any time prior to the Closing if
the Closing shall not have occurred on or before September 15,
1995 by reason of the failure of any condition precedent under
Section 7 hereof (unless the failure results primarily from Buyer
itself breaching any representation, warranty, or covenant
contained in this Agreement);
(d) Seller may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing in the event
Buyer has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect;
(e) Seller may terminate this Agreement by giving written
notice to Buyer at any time prior to Closing if the Closing shall
not have occurred on or before September 15, 1995, by reason of
the failure of any condition precedent under Section 8 hereof
(unless the failure results primarily from the Seller breaching
any representation, warranty, or covenant contained in this
Agreement);
(f) Notwithstanding anything contained herein to the
contrary, this Agreement shall automatically terminate if, prior
to the purchase of Stock at the Closing (i) a Person or group of
Persons shall have made a binding offer to complete a Specified
Offer, (ii) ALPHA does not make, within five days of ALPHA's
receiving notice of such third-party offer (which notice shall be
made immediately), an offer which the Board of Directors of
DynCorp believes, in good faith after consultation with DynCorp's
outside legal and financial advisors, is at least as favorable to
DynCorp's stockholders as such third-party offer and
(iii) DynCorp or Seller accepts such binding offer; provided,
that if the Closing has not occurred on or prior to September 15,
1995 and a Specified Offer has been made which has not been
rejected by DynCorp and Seller in writing as of such date, this
Agreement shall automatically terminate on September 15, 1995;
(g) ALPHA or DynCorp may terminate this Agreement if any
court of competent jurisdiction in the United States or other
United States governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining
or otherwise prohibiting the transactions described herein and
such order, decree, ruling or other action shall have become
final and non-appealable.
12.2 Effect of Termination.
(a) If any party terminates this Agreement pursuant to
Section 12.1 above, Escrow Agent shall be instructed to return
the Deposit to ALPHA unless:
(i) Seller terminates this Agreement pursuant to Section
12.1(d); or
(ii) Buyer terminates this Agreement pursuant to Section
12.1(c) solely as a result of the failure of one or more of the
conditions precedent set forth in Sections 7.8, 7.9 and 7.10;
(b) If any party terminates this Agreement, DynCorp shall
pay ALPHA $5,000,000 (in addition to the return of the Deposit
pursuant to Section 12.2(a) above) in the event that:
(i) Buyer terminates this Agreement pursuant to
Section 12.1(b)(i); or
(ii) Buyer terminates this Agreement pursuant to
Section 12.1(c) solely as a result of the failure of one or more
of the conditions precedent set forth in Sections 7.12, 7.14,
7.15, 7.16, 7.17 and 7.20.
(c) If this Agreement is terminated in accordance with
Section 12.1(f) above (including, without limitation, the proviso
set forth therein), DynCorp shall pay ALPHA $8,000,000 (in
addition to the return of the Deposit pursuant to Section 12.2(a)
above). In the event that (i) this Agreement is terminated in
any of the circumstances described in Section 12.2(b) above, (ii)
ALPHA did not receive the $8,000,000 payment described in the
immediately preceding sentence of this Section 12.2(c) and (iii)
DynCorp or Seller accepts, within twelve (12) months following
the date of termination of this Agreement, an offer to consummate
a Company Sale from a Person or group of Persons (or any of their
respective Affiliates) who made a Specified Offer prior to the
termination of this Agreement, DynCorp and Seller shall pay ALPHA
an amount equal to $8,000,000 less the amount, if any, previously
paid to ALPHA pursuant to Section 12.2(b) above (other than the
Deposit).
(d) Each of the parties hereby acknowledges that all
amounts payable and any forfeiture of the Deposit under this
Section 12.2 shall constitute liquidated damages in lieu of any
actual damages for termination of this Agreement.
(e) All amounts payable hereunder shall be made promptly
(but in any event within five (5) Business Days following the
date of termination.
(f) Notwithstanding the foregoing, nothing contained herein
shall relieve any party hereto from liability for any claim or
cause of action based on fraud (whether at common law, statutory,
equity or otherwise).
13. MISCELLANEOUS PROVISIONS.
13.1 Certain Definitions. As used in this Agreement, the
following terms have the meanings set forth below:
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts paid in
settlements, Liabilities, obligations, Taxes, Liens, losses,
expenses, and fees, including court costs and reasonable
attorneys' fees.
"Aeroflot" has the meaning set forth in Section 6.10.
"Affiliate" means with respect to any Person, any
other Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person. For the purpose of this definition,
"control" as applied to any Person means the possession,
directly, or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract, or
otherwise.
"ALPHA Circular" means the Circular (incorporation
listing particulars concerning ALPHA) required by the rules of
The London Stock Exchange to be issued by ALPHA to its
shareholders describing the transaction as provided for by this
Agreement and (inter alia) convening the meeting of such
shareholders at which a resolution is to be proposed to approve
the same.
"Benefit Plan" means, with respect to any Company
any employee benefit plan, arrangement, policy or commitment,
including, without limitation, any employment, consulting or
deferred compensation agreement, executive compensation, bonus,
incentive, pension, profit-sharing, savings, retirement, stock
option, stock purchase or severance pay plan, any life, health,
disability or accident insurance plan, any holiday or vacation
practice or any employee benefit plan within the meaning of
Section 3(3) of ERISA, as to which such Company has any direct or
indirect, actual or contingent Liability.
"Business Day" means a day which is not a
Saturday, Sunday, or day on which banking institutions in London,
England, are authorized or required by law, regulation, executive
order or otherwise, to be closed.
"Closing" means the closing of the transactions
contemplated by this Agreement.
"Closing Date" has the meaning set forth in Section 2.1.
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies" means, collectively, Air Carrier
Services, Inc., a Virginia corporation, DynAir Fueling Inc., a
Delaware corporation, DynAir Fueling of Nevada Inc., a Nevada
Corporation, DynAir CFE Services, Inc., a Delaware corporation,
DynAir Technologies International, Inc., a Virginia corporation,
DynAir Services Inc., a Delaware corporation, DynAir Maintenance,
Inc., a New York corporation, DynCorp/DynAir Corporation, a
California corporation, DAPSCO, Inc., a California Corporation,
DynAir Euroservices (UK) Ltd., and DynAir Euroservices (Italia)
S.p.A., the details of each of which are set forth in Schedule
5.3.
"Company Benefit Plan" means any Benefit Plan
which provides benefits with respect to current or former
employees of any of the Companies.
"Company Financial Statements" has the meaning set
forth in Section 5.5(a).
"Company Sale" has the meaning set forth in Section 10.4.
"Company Services" has the meaning set forth in Section 5.23.
"Confidential Information" means any information
concerning the businesses or affairs of ALPHA, Buyer, any member
of the Parent Group or any of their respective Affiliates that is
not already generally available to the public.
"Contracts" has the meaning set forth in Section 5.10(b).
"Corporate Services Agreement" has the meaning set
forth in Section 6.14.
"Deposit" means the amount of $5,000,000 as set
forth in Section 1.2(b), together with interest accrued thereon
under the terms of the Escrow Agreement.
"DynAir Mexico" means DynAir de Mexico S.A de C.V.
"DynAir Names" has the meaning set forth in Section 10.2.
"DynAir Russia" means DynAir Russia Services,
Inc., a Delaware corporation and wholly owned subsidiary of
DynAir Services Inc.
"DynCorp Class C Approval" has the meaning set
forth in Section 3.2.
"DynCorp's and Seller's Knowledge" means the
actual knowledge by an officer or senior manager having
responsibility for the relevant function of the Companies.
"Elections" has the meaning set forth in Section 6.13(j).
"Environmental and Safety Requirements" shall mean
all federal, state, local and foreign statutes, regulations,
ordinances and similar provisions having the force or effect of
law, all judicial or administrative orders and determinations,
all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all
those relating to the presence, use, production, generation,
handling, transport, treatment, storage, disposal, distribution,
labeling, testing, processing, discharge, release, threatened
release, control, or cleanup of any hazardous or otherwise
regulated materials, substances or wastes, chemical substances or
mixtures, pesticides, pollutants, contaminants, toxic chemicals,
petroleum products or byproducts, asbestos, polychlorinated
biphenyls, noise or radiation.
"Equipment Leases" has the meaning set forth in
Section 6.14(a).
"ERISA" means the Employment Retirement Income
Security Act of 1974, as amended.
"Escrow Agent" means Bankers Trust Company, as
escrow agent under the terms of the Escrow Agreement.
"Escrow Agreement" has the meaning set forth in
Section 1.2(b).
"GAAP" means United States generally accepted
accounting principles, as in effect from time to time.
"Governmental Body" means any government entity,
department, agency or political subdivision of any foreign,
federal, state, local or municipal government.
"Heller Funding Arrangements" means the funding
arrangements pursuant to (i) the Equipment Funding Agreement
dated as of January 20, 1995, and (ii) the Equipment Funding
Agreement dated as of February 8, 1995, in each case by and among
Heller Financial Leasing, Inc. and certain of the Companies.
"HSR Act" has the meaning set forth in Section 3.3.
"Indebtedness" means, without duplication,
(i) indebtedness for borrowed money or for the deferred purchase
price of property or services in respect of which any Company is
liable, contingently or otherwise, as obligor or otherwise (other
than trade payables and other current liabilities incurred in the
ordinary course of business) or any commitment by which any
Company assures a creditor against loss, including contingent
reimbursement obligations with respect to letters of credit,
(ii) indebtedness guaranteed in any manner by any Company,
including guarantees in the form of an agreement to repurchase or
reimburse, (iii) all present and future obligations under all
leases classified as a finance lease or under Equipment Leases in
respect of which obligations any Company is liable, contingently
or otherwise, as obligor, guarantor or otherwise, or in respect
of which obligations any Company assures a creditor against loss,
(iv) (other than with respect to Section 6.14(b)) any unsatisfied
obligation of any Company or any of its Subsidiaries for
"withdrawal liability" to a "multiemployer plan" as such terms
are defined under ERISA, and (v) amounts paid or payable under
any other transaction having the commercial effect of a borrow
ing.
"Indemnified Party" has the meaning set forth in Section 9.4.
"Indemnifying Party" has the meaning set forth in Section 9.4.
"Insurance Policies" means the workers'
compensation, aviation liability and other third party policies
of insurance effected by DynCorp for the benefit (among others)
of the Parent Group, the details of which are set forth in
Schedule 5.22.
"Interim Office Lease" has the meaning set forth
in Section 6.14(c).
"ISRA" means Industrial Site Recovery Act enacted
by the State of New Jersey, as amended from time to time.
"JFK Property" means the property at John F.
Kennedy International Airport in which the Companies conduct a
portion of the Business.
"Liability" means any liability, (whether known or
unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated, or
unliquidated, and whether due or to become due), including any
liability for Taxes.
"Lien" means any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind.
"Location Material Adverse Effect" means any
material adverse effect on the ability of any Company to conduct
the Business at one or more locations at which the Company
presently operates; provided, that a Location Material Adverse
Effect shall not be deemed to have occurred unless such location
or locations, individually or in the aggregate (i) comprised, for
the fiscal year ended December 31, 1994, or (ii) could reasonably
be expected to comprise in the future, in each case, five percent
(5%) or more of the Companies' combined revenues, assets or
earnings, determined in accordance with the accounting policies
and principles used in the preparation of the Reference Balance
Sheet.
"Material Adverse Effect" means any material
adverse effect upon (a) the business, assets, operations,
condition (financial or otherwise) or prospects in respect of
existing operations of the Parent Group taken as a whole, which
could reasonably be expected to result in either (i) a decrease
of 2% or more of the Companies' combined tangible net assets as
set forth on the Reference Balance Sheet, or (ii) a decrease of
0.5% or more of the Companies' combined revenues or operating
profit as compared to the Companies' combined revenues or
operating profit for the fiscal year ended December 31, 1994, in
each case determined in accordance with the accounting policies
and procedures used in the preparation of the Reference Balance
Sheet, or (b) the ability of Seller, DynCorp or ALPHA, as the
case may be, to perform its obligations hereunder or consummate
the transactions contemplated hereby.
"Operating Leases" means (a) the Master Lease
dated December 31, 1991 between DynCorp and General Electric
Credit Corporation and (b) the Operating Lease dated November 4,
1987 between DynCorp and PHH FleetAmerica, Inc., the details of
which are set forth on Schedule 6.14(a)(i).
"Overlap Period" has the meaning set forth in
Section 6.13(b).
"Parent" has the meaning set forth in the recitals
hereto.
"Parent Group" means the Parent and the Companies
taken together or (as the context so requires) any of them, and
references to a "member of the Parent Group" shall mean any one
or more of them (as the case may be).
"Permits" has the meaning set forth in Section 5.9(b).
"Permitted Liens" means (a) Liens disclosed on the
Reference Balance Sheet or the footnotes thereto, (b) Liens
securing Taxes, assessments, governmental charges or levies, or
the claims of materialmen, carriers, landlords, and like persons,
all of which are not yet due and payable or are being contested
in good faith and for which adequate reserves have been
established on the Company Financial Statements in accordance
with GAAP, (c) Liens pursuant to any operating leases of the
Companies (other than the Equipment Leases), or (d) minor Liens
of a character that do not substantially impair the value of the
assets or properties subject thereto or interfere in any material
respect with the conduct of any Company's business.
"Person" means an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a government
entity (or any department, agency or political subdivision
thereof.)
"Pre-Closing Periods" shall mean all Tax periods
ending on or before the Closing Date and, with respect to any Tax
period that includes but does not end on the Closing Date, the
portion of such period that ends on and includes the Closing
Date;
"Projections" has the meaning set forth in Section 5.5(b).
"Proprietary Rights" means all patents, patent
applications, patent disclosures and inventions (whether or not
patentable and whether or not reduced to practice); all trade and
corporate names, service marks, trademarks, trade dress and all
goodwill associated therewith; all copyrights; all registrations
and applications and renewals for any of the foregoing; all trade
secrets, confidential information, ideas, formulae, compositions,
know-how, manufacturing and production processes and techniques,
research information, drawings, specifications, designs, plans,
improvements, proposals, technical and computer data,
documentation and software, financial, business and marketing
plans, customer and supplier lists and related information,
marketing and promotional materials and all other information,
know-how and intellectual property rights and all tangible
embodiments thereof and the benefit (and burden) of any and all
licenses in connection with any of the foregoing.
"Receivables Program" means the arrangements
pursuant to each of the Sale and Purchase Agreements by and
between Dyn Funding Corporation, a Delaware corporation, and
certain of the Companies, each dated as of January 1, 1992, under
which each such Company sells certain accounts receivables to Dyn
Funding Corporation.
"Reference Balance Sheet" has the meaning set
forth in Section 5.5(a).
"Relative" means a natural person who is the
parent, child, spouse or sibling of the natural person specified.
"Russian Partnership" has the meaning set forth in Section 6.10.
"Russian Restructuring" has the meaning set forth in
Section 6.10.
"Seller Group" means any affiliated group (within
the meaning of Section 1504 of the Code or any similar group
defined under a similar provision of state, local or foreign law)
of which any Company is or has been a member.
"Seller Indemnitees" has the meaning set forth in Section 9.3.
"Specified Offer" has the meaning set forth in Section 10.4.
"Specified Properties" are the properties and
locations in Reno, Nevada and Oklahoma City, Oklahoma at which
the Companies conduct a portion of the Business.
"Subsidiaries" means any Person with respect to
which another specified Person (or a subsidiary thereof) owns a
majority of the common stock or has the power to vote or direct
the voting of sufficient securities to elect a majority of the
directors.
"Tangible Net Worth" has the meaning set forth in
Section 1.3(e).
"Tax" means any federal, state, local or foreign
income, gross receipts, franchise, estimated, alternative
minimum, add-on minimum, sales, use, transfer, real property
gains, registration, value added, excise, natural resources,
severance, stamp, occupation, windfall profits, environmental,
customs, duties, real property, personal property, capital stock,
social security, unemployment, disability, payroll, license,
employee or other withholding, commercial rent or other tax or
fee (including airport permit and port fees and Russian excess
wage tax, housing and road taxes), of any kind whatsoever,
including any interest, penalties or additions to tax or similar
items in respect of the foregoing (whether disputed or not).
"Tax Deficiency", for purposes of Section 5.14,
shall include a reduction in any net operating losses.
"Tax Return" means any return, report,
declaration, claim for refund, information return or other
document (including any related or supporting schedule, statement
or information and including any amendment thereof) filed or
required to be filed by any Person and relating to the income,
properties or operations of any member of the Parent Group or the
Seller Group connection with the determination, assessment or
collection of any Tax of any part or the administration of any
laws, regulations or administrative requirements relating to any
Tax in all cases only for any Pre-Closing Period.
"Third Party Claim" has the meaning set forth in Section 9.4.
"Threshold" has the meaning set forth in Section 9.5.
"Vincentown Property" has the meaning set forth in
Section 6.14(f).
"Wrightstown Property" has the meaning set forth
in Section 6.14(f).
13.2 Notices. All notices, communications and deliveries
hereunder shall be made in writing signed by the party making the
same, shall specify the Section hereunder pursuant to which it is
given or being made, and shall be deemed given or made on (a) the
date delivered if delivered in person or sent by telecopier,
(b) the first Business Day after the date it is sent by a
nationally recognized courier, or (c) the third Business Day
after the date it is mailed if mailed by registered or certified
mail (return receipt requested) (with postage and other fees
prepaid) as follows:
If to Seller or DynCorp:
DynCorp
2000 Edmund Halley Drive
Reston, VA 22091-3426
Telecopier: (703) 264-9199
(703) 264-9147
Attn: Senior Vice President and
General Counsel
If to Buyer or ALPHA:
Alpha Airports Group Plc
Europa House
804 Bath Road
Cranford
Middlesex TW5 9US
Telecopier: (44) 181-754-7603
Attn: Chief Executive Officer
with a copies to (which shall
not constitute notice to Buyer or ALPHA):
Paisner & Co.
Bouverie House
154 Fleet Street
London EC4A 2DQ
Telecopier: (44) 171-583-8621
Attn: Keith Stella, Esq.
Kirkland & Ellis
Citicorp Center
153 East 53rd Street
New York, NY 10022-4675
Telecopier: (212) 446-4900
Attn: Stephen M. Zide, Esq.
or to such other representative or at such other address of
a party as such party hereto may furnish to the other parties in
writing.
13.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York,
without regard to the conflicts of laws provisions thereof.
13.4 Amendments and Waivers. No amendment of any provision
of this Agreement shall be valid unless the same shall be in
writing and signed by Buyer and DynCorp. No waiver by any party
of any default, misrepresentation, or breach of warranty or
covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any way
any rights arising by virtue of any prior or subsequent such
occurrence.
13.5 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
13.6 Incorporation of Exhibits and Schedules. The Exhibits
and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.
13.7 No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
parties and their respective successors and permitted assigns.
13.8 Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement
among the parties and supersedes any prior understandings,
agreements, or representations by or among the parties, written
or oral, to the extent they related in any way to the subject
matter hereof.
13.9 Specific Performance. Each of the parties acknowledges
and agrees that the other parties would be damaged irreparably in
the event any of the provisions of this Agreement are not
performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the parties agrees that the
other parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions
hereof in any action instituted in any court having jurisdiction
over the parties and the matter, in addition to any other remedy
to which they may be entitled, at law or in equity.
13.10 No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict
construction will be applied against any person.
13.11 Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties named herein
and their respective successors and permitted assigns. No party
may assign either this Agreement or any of its rights, interests,
or obligations hereunder without the prior written approval of
Buyer and DynCorp; provided, that Buyer may (a) assign any or all
of its rights and interests hereunder to one or more of its
Affiliates or any Person providing financing to Buyer, its
designee(s) or the Companies and (b) designate one or more of its
Affiliates to perform its obligations hereunder (in any or all of
which cases Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
13.12 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
13.13 Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
13.14 Time of the Essence; Computation of Time. Time is of the
essence for each and every provision of this Agreement. Whenever
the last day for the exercise of any privilege or the discharge
of any duty hereunder shall fall upon any day which is not a
Business Day, the party having such privilege or duty may
exercise such privilege or discharge such duty on the next
succeeding Business Day.
IN WITNESS WHEREOF,the parties have executed this Agreement
on the date first above written.
DYNCORP AVIATION SERVICES, INC.
By: D.L. Reichardt
Name: D.L. Reichardt
Title: Vice President
DYNCORP
By: D.L. Reichardt
Name: D.L. Reichardt
Title: Senior Vice President
ALPHA AIRPORTS GROUP PLC
By: P. Harrison
Name: P. Harrison
Title: Chief Executive Officer
ALPHA US HOLDINGS, INC.
By: P. Harrison
Name: P. Harrison
Title: Director
Purchase and Sale Agreement - Alpha Airports Group PLC and DynCorp
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