This STOCK PURCHASE AGREEMENT dated as of June 30, 1995
(herein, together with the Schedules and Exhibits attached
hereto, referred to as the "Agreement") between SABRELINER
CORPORATION, a Delaware corporation ("Buyer"), DYNCORP, a
Delaware corporation ("DynCorp"), and DYNCORP AVIATION SERVICES,
INC., a Virginia corporation ("Seller"), and a wholly-owned
subsidiary of DynCorp,
W I T N E S S E T H T H A T:
WHEREAS, Seller is the beneficial and record holder of
all of the outstanding shares of capital stock (the "Shares") of
DynAir Tech of Texas, Inc., a wholly-owned subsidiary of Seller
and a Texas corporation ("DynAir Texas"), DynAir Tech of Florida,
Inc., a wholly-owned subsidiary of Seller and a Florida
corporation ("DynAir Florida"), and DynAir Avionics, Inc., a
wholly-owned subsidiary of Seller and a Florida corporation
("DynAir Avionics") (DynAir Texas, DynAir Florida and DynAir
Avionics are hereinafter referred to collectively as the "DynAir
Companies" and individually as a "DynAir Company"); and
WHEREAS, effective May 16, 1995, Buyer and DynCorp
entered into a non-binding agreement in principle under which
Buyer paid DynCorp the amount of $500,000 as an earnest money
deposit for the purchase of the Shares (the "Deposit"); and
WHEREAS, DynAir Tech of Arizona, formerly a
wholly-owned subsidiary of Seller and an Arizona corporation
("DynAir Arizona") merged into DynAir Florida immediately prior
to the closing hereafter described (all references herein to
DynAir Florida to include DynAir Arizona); and
WHEREAS, DynAir Avionics is a newly formed subsidiary
of Seller which has acquired the assets and liabilities of the
division of Seller's subsidiary formerly doing business in
Florida under the name of DynAir Avionics, Inc.; and
WHEREAS, Seller wishes to sell and Buyer wishes to
purchase the Shares upon the terms of this Agreement;
NOW, THEREFORE, in reliance upon the representations
and warranties made herein and in consideration of the mutual
agreements herein contained, the parties agree as follows:
ARTICLE 1
SALE AND PURCHASE OF SHARES
1.1 Sale of Shares.
At the Closing provided for in Section 2.1, Seller
shall sell the Shares to Buyer and Buyer shall purchase the
Shares for the purchase price provided in Section 1.2.
1.2 Purchase Price and Payment for Shares.
(a) Purchase Price. The purchase price for the Shares is
(i) The amount determined pursuant to Exhibit A
(the "Base Purchase Price"), plus
(ii) (A) 10% of the DynAir Companies revenues
(excluding revenue from installation of 737 cargo doors) in
excess of $60 million per year for each of the two fiscal years
July 1, 1995 to June 30, 1996 and July 1, 1996 to June 30, 1997,
"revenues" for purposes of this Section 1.2(a)(ii)(A), being
determined in accordance with Exhibit B, and
(B) $125,000 for each 737 cargo door
installed by or under contract with the DynAir Companies during
the period from July 1, 1996 through June 30, 1999, as determined
in accordance with Section 1.5 hereof (the amounts set forth in
(ii)(A) and (B) being referred to herein as the "Contingent
Purchase Price"). For purposes of this Section 1.2, the term
"cargo door installed" shall mean each cargo door installation on
a Boeing 737 aircraft which is commenced during such period, and
each cargo door installation for a Boeing 737 aircraft for which
a firm written order has been received by any of the DynAir
Companies or any affiliate of Buyer during such period, even if
such installation actually occurs at a later date.
(b) Payment at Closing. At the Closing, Buyer shall
deliver to Seller, by wire transfer or other immediately
available federal funds to the following account, the amount of
$12,500,000 (the "Estimated Base Purchase Price") minus the
amount of the Deposit, for a net payment of $12,000,000:
NationsBank of Virginia
Richmond, Virginia
ABA No. 051 000 017
Credit the account of DynCorp
Account No.11209764
(c) Payment of Contingent Purchase Price.
(i) The Contingent Purchase Price, if any,
payable under Section 1.2 (a) (ii) (A) above shall be payable by
Buyer to Seller within 15 days from the date on which the final
financial results from the fiscal years ending June 30, 1996 and
June 30, 1997 are available to Buyer; provided that in no event
shall such payment be made later than 10 days following the date
on which Buyer files its annual report on Form 10-K with the
Securities and Exchange Commission for each of such years, but no
later than 120 days after the close of Buyer's fiscal year.
(ii) Contingent Purchase Price payments, if
any, payable under Section 1.2(a)(ii)(B) above shall be payable
by Buyer to Seller within 10 days from the conclusion of each
calendar quarter during the period described therein, but in no
event later than 90 days after delivery of the respective
aircraft to the customer and shall include payments for all 737
cargo door installations completed during the preceding quarter;
provided, that such payments shall also be continued after the
termination of the aforementioned period with respect to door
installations commenced or firm orders accepted during any
calendar quarter within such period. An installation shall be
deemed "completed" when Buyer or the DynAir Companies submits a
final invoice at the completion of work.
1.3 Transactions on the Closing Date.
(a) At the Closing, Seller will deliver to Buyer the following:
(i) stock certificates, in form suitable for
transfer, registered in the name of Seller, evidencing the
Shares, duly endorsed in blank or with a duly executed blank
stock transfer power attached, and with all necessary stock
transfer tax stamps attached thereto;
(ii) all stock certificates, stock books, stock
transfer ledgers, minute books and corporate seals of the DynAir
Companies;
(iii) resignations of the directors of the DynAir
Companies listed on Schedule 1.3; and
(iv) each of the certificates and documents
contemplated by Article 6.
(b) At the Closing, Buyer will deliver to Seller the following:
(i) the Estimated Base Purchase Price in
accordance with Section 1.2 above; and
(ii) each of the certificates and documents
contemplated by Article 7.
1.4 Post-Closing Adjustment.
(a) Preparation of Preliminary Calculation of
Base Purchase Price.
(i) Within 90 days after the Closing Date, Buyer
will prepare a Preliminary Calculation of Base Purchase Price
(the "Preliminary Calculation of Base Purchase Price") of the
DynAir Companies dated as of the Closing Date (which shall be
prepared in accordance with Exhibit A in consultation with
DynCorp's Internal Audit Department).
(b) Review of Preliminary Calculation of Base Purchase Price.
(i) The Preliminary Calculation of Base Purchase
Price shall be binding and conclusive upon, and deemed accepted
by, Seller unless Seller shall have notified Buyer in writing of
any objections thereto consistent with the provisions of this
Section 1.4 within 30 days after receipt thereof.
(ii) The written notice under Section 1.4(b)(i)
shall specify in reasonable detail each item on the Preliminary
Calculation of Base Purchase Price that Seller disputes, and a
summary of Seller's reasons for such dispute.
(iii) Buyer shall cooperate with Seller and
promptly provide all requested explanations, documentation or
data supporting the Preliminary Calculation of Base Purchase
Price.
(iv) The parties shall use their best efforts
during the 30-day period following the delivery of any Seller
objections to resolve all such objections in a manner mutually
acceptable to all parties.
(c) Escrow of Certain Disputed Amounts
(i) Should a dispute remain between Buyer
and DynCorp or Seller regarding the realization or
appropriateness, respectively, of any of the assets or
liabilities described on Exhibit A hereto as a result of the
Preliminary Calculation of Base Purchase Price, Buyer and DynCorp
shall jointly determine the dollar impact of such dispute on the
Base Purchase Price, and such amount in dispute shall be
deposited in accordance with the following procedures in the
interest bearing escrow account described in (ii) below:
(A) If the non-disputed portion of the
Base Purchase Price plus the disputed portion is less than
$12,500,000, then Seller or DynCorp shall make payment into
escrow, in accordance with (ii) below, of the disputed amount,
and shall refund to Buyer the difference, if any, between (i)
$12,500,000 and (ii) the sum of the disputed and undisputed
amounts.
(B) If the non-disputed portion of the
Base Purchase Price is more than $12,500,000, then Buyer shall
pay to Seller the difference between the non-disputed Base
Purchase Price and $12,500,000, and shall deposit into escrow, in
accordance with (ii) below, the disputed amount.
(C) If the non-disputed portion of the
Base Purchase Price is less than $12,500,000, but the sum of the
non-disputed and disputed portions is more than $12,500,000, then
Seller or DynCorp shall deposit into escrow, in accordance with
(ii) below, the difference between $12,500,000 and the
non-disputed portion, and Buyer shall deposit into escrow the
difference between $12,500,000 and the sum of (i) the
non-disputed portion and (ii) the disputed portion.
(ii) The escrow account shall be established
with Crestar Bank under the terms of an escrow agreement in the
form of Exhibit C hereto (the "Escrow Agreement"), to be held
until such time as any contingency regarding the disputed asset
or liability is finally resolved, at which time the funds in the
escrow account shall be distributed in accordance with the
parties' prior instructions included in the Escrow Agreement,
depending on the ultimate disposition of the asset or liability
using complete hindsight.
(iii) The form of the Escrow Agreement may not be
modified without the approval of both Buyer and DynCorp.
(iv) If the parties are unable to agree on the
amount in dispute under Section 1.4(c)(i) or if an escrow is
opened under this Section 1.4(c), the matter shall be resolved in
accordance with Section 1.4(d) below, provided that the time
periods set forth therein shall commence upon the final
disposition of all amounts in controversy.
(d) Disputes.
(i) (A) Disputes between Buyer and Seller
relating to the Preliminary Calculation of Base Purchase Price
that cannot be resolved by them within 30 days after receipt by
Buyer of the notice referred to in Section 1.4(b) may be referred
no later than 60 days after such receipt for decision, at the
option of Buyer or Seller, to Price Waterhouse LLP.
(B) If Price Waterhouse LLP is unavailable,
then Buyer and Seller shall, within 5 days from determining such
unavailability, select an independent nationally recognized
accounting firm to decide the matter (Price Waterhouse LLP or
such other firm being referred to herein as the "Arbitrator").
(ii) (A) Prior to referring the matter to the
Arbitrator, the parties shall agree on the procedures to be
followed by the Arbitrator (including procedures with regard to
presentation of evidence).
(B) Such procedures shall not alter the
accounting practices, principles and policies to be applied to
the Preliminary Calculation of Base Purchase Price, which will be
those required by this Agreement.
(C) If the parties are unable to agree upon
procedures before the end of 10 days after referral of the
dispute to the Arbitrator, the Arbitrator shall establish such
procedures giving due regard to the intention of the parties to
resolve disputes as quickly, efficiently and inexpensively as
possible, which procedures may be, but need not be, those
proposed by either party.
(D) The parties shall then submit evidence
in accordance with the procedures established, and the Arbitrator
shall decide the dispute in accordance therewith.
(iii) The Arbitrator's decision on any matter
referred to it shall be final and binding on Buyer and Seller,
and shall be subject to enforcement by any court having
jurisdiction over any of the parties.
(iv) The fee of the Arbitrator shall be borne by
Buyer and Seller in equal portions, unless the Arbitrator
decides, based on its determination with respect to the
reasonableness of the respective positions of the parties, that
the fee shall be borne in unequal proportions. Each party shall
be responsible for its own legal, accounting and other related
arbitration costs.
(e) Final Calculation of Base Purchase Price.
(i) The Preliminary Calculation of Base Purchase
Price shall become final and binding upon the parties upon the
earlier of
(A) the failure by Seller to object thereto
within the period permitted under Section 1.4(b);
(B) the execution of a written agreement
between Buyer and Seller with respect thereto; or
(C) the decision by the Arbitrator with
respect to any disputes under Section 1.4(c).
(ii) The results of the Preliminary Calculation of
Base Purchase Price, as adjusted pursuant to the agreement of the
parties or the decision of the Arbitrator, when final and
binding, is referred to herein as the "Final Calculation of Base
Purchase Price."
(f) Adjustment to the Estimated Base Purchase Price.
As soon as practicable (but not more than 5 days) after the
determination and delivery of the Final Calculation of Base
Purchase Price in accordance with this Section 1.4,
(i) if the Base Purchase Price as calculated
thereby is greater than $12,500,000, Buyer shall pay to Seller
the difference between such amounts, and
(ii) if the Base Purchase Price as calculated
thereby is less than $12,500,000, Seller shall pay to Buyer the
difference between such amounts,and the amount of such net
adjustment shall be payable by Buyer or Seller, as the case may be,
in immediately available funds.
(g) Interest. All payments required to be made
pursuant to this Section 1.4 shall include interest thereon at
the most recent prime rate as publicly announced by Citibank N.A.
(the "Applicable Rate") payable from the Closing Date to the date
of payment, or payment into the escrow account under the Escrow
Agreement.
(h) Seller may elect to have the DynAir Companies
assign, convey or otherwise transfer to DynCorp or any of its
affiliates any asset referred to on Exhibit A that is the subject
of any dispute under this Section 1.4, and to have DynCorp or any
of its affiliates assume any liability referred to on Exhibit A
that is the subject of any such dispute.
ARTICLE 2
CLOSING
The closing of the transactions provided for herein (the
"Closing") will take place at the offices of Winthrop, Stimson,
Putnam & Roberts, 1133 Connecticut Avenue, N.W., Washington, D.C.
at 10:00 A.M. (local time) on June 30, 1995, effective as of
11:59 p.m. local time on such date, or at such other place, time
and date as may be agreed upon by Buyer and Seller (the "Closing
Date").
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER AND DYNCORP
Seller and DynCorp jointly and severally represent and
warrant to Buyer as follows, it being understood that as used in
this Agreement, the term "Material Adverse Effect" means, with
respect to any party, a material adverse effect on the financial
condition, assets, liabilities (contingent or otherwise), results
of operation, business or business prospects of the party and its
subsidiaries, if any, considered as a whole and in relation to
the historical operating results of the DynAir Companies.
3.1 Corporate Organization and Authority of Seller and DynCorp.
(a) Each of Seller and DynCorp is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and is duly licensed or
qualified and in good standing as a foreign corporation in each
jurisdiction in which it is required to be so licensed or so
qualified, except where the failure to be so licensed or so
qualified would not have a Material Adverse Effect on Seller's or
DynCorp's ability to consummate the transactions contemplated
hereby.
(b) Seller has all corporate power and authority to
own the Shares.
(c) Each of Seller and DynCorp has heretofore
delivered to Buyer complete and correct copies of its certificate
of incorporation and by-laws, as currently in effect.
(d) Each of Seller and DynCorp has full corporate
power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby.
(e) The execution, delivery and performance by each of
Seller and DynCorp of the Agreement has been duly authorized by
all requisite corporate action on the part of each of them.
(f) This Agreement has been duly executed and
delivered by each of Seller and DynCorp, and (assuming due
execution and delivery by Buyer) this Agreement constitutes a
valid and binding obligation of each of them, except as may be
limited or otherwise affected by
(i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application,
and legal and equitable principles relating to or affecting
creditors' rights, including, without limitation, the effect of
statutory or other law regarding fraudulent conveyances and
preferential transfers, and
(ii) equitable principles of general applicability
(regardless of whether such enforceability is considered in a
proceeding at law or in equity) including, without limitation,
concepts of reasonableness, materiality, good faith and fair
dealing.
3.2 Corporate Organization and Authority of the DynAir
Companies.
(a) Each of the DynAir Companies is a corporation duly
organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation and has all corporate power
and authority to own, lease and operate its properties and to
carry on its business as now being conducted and each is duly
licensed or qualified and in good standing as a foreign
corporation in each jurisdiction in which it is required to be so
licensed or so qualified, except where the failure to be so
licensed or so qualified would not have a Material Adverse Effect
on its business as now being conducted; provided, however, that
DynAir Florida shall carry on the operations of DynAir Arizona as
a result of the merger of DynAir Arizona into DynAir Florida
prior to the Closing.
(b) Schedule 3.2 sets forth the jurisdictions in which
each of the DynAir Companies is qualified to do business.
(c) Seller and DynCorp have heretofore delivered to
Buyer complete and correct copies of the certificate of
incorporation and by-laws or similar corporate organizational
documents of each of the DynAir Companies, as currently in
effect.
3.3 Subsidiaries and Equity Investments. Except as
disclosed on Schedule 3.3 none of the DynAir Companies has any
subsidiaries and none of the DynAir Companies is a general
partner in any partnership, a member of any limited liability
company or a coventurer in any joint venture or other business
enterprise.
3.4 Ownership of Shares.
(a) Seller is the lawful record and beneficial owner
of the Shares.
(b) Seller owns the Shares free and clear of all
pledges, liens, charges, encumbrances, easements, defects,
security interests, claims, options and restrictions of every
kind ("Encumbrances"), except for restrictions on transfer under
federal and state securities laws, and as disclosed in Schedule
3.4.
(c) Upon the delivery of the Shares in the manner
contemplated under Section 1.3, Buyer will acquire the beneficial
and legal, valid and indefeasible title to such Shares, free and
clear of all Encumbrances, except for restrictions on transfer
under federal and state securities laws.
3.5 Capitalization.
(a) As of the date hereof,
(i) the authorized capital stock of DynAir Texas
consists of 1,000 shares of common stock, par value $1.00 per
share, of which 1,000 shares are issued and outstanding,
(ii) the authorized capital stock of DynAir
Florida consists of 9 shares of common stock, no par value, of
which 9 shares are issued and outstanding, and
(iii) the authorized capital stock of DynAir
Avionics consists of 100 shares of common stock, par value $1.00
per share, of which 100 shares are issued and outstanding
(together, the "DynAir Companies Common Stock").
(b) All such issued and outstanding shares of the
DynAir Companies Common Stock have been validly issued and are
fully paid and nonassessable.
(c) There are no outstanding options, warrants or
other rights of any kind to acquire any additional shares of
capital stock of any of the DynAir Companies or securities
convertible into or exchangeable for, or which otherwise confer
on the holder thereof any right to acquire, any such additional
shares, nor are any of the DynAir Companies committed to issue
any such option, warrant, right or security.
3.6 DynAir Companies Common Stock Holdings. All of the
outstanding shares of the DynAir Companies Common Stock are owned
of record by Seller.
3.7 No Violation; Consents.
(a) Except as disclosed in Schedule 3.7, Seller,
DynCorp and the DynAir Companies are not subject to or bound by
any provision of:
(i) any law, statute, rule, regulation or
judicial or administrative decision;
(ii) any articles or certificates of
incorporation or by-laws;
(iii) any mortgage, deed of trust, lease, note,
shareholders' agreement, bond, indenture, instrument, agreement,
license, permit, trust or custodianship, in each case to which
any of them is a party or under which any of them is bound; or
(iv) any judgment, order, writ, injunction or
decree of any court, governmental body, administrative agency or
arbitrator,
that would prevent or be violated by or that would result in
the creation of any Encumbrance as a result of, or under which
there would be a default or right of termination as a result of,
the execution, delivery and performance by Seller and DynCorp of
this Agreement and the consummation of the transactions
contemplated hereby.
(b) Except as disclosed in Schedule 3.7, no consent,
order, approval or authorization of, or declaration, notice,
registration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality
(each a "Governmental Entity"), individual, corporation,
partnership, limited liability company, trust or unincorporated
organization (together with Governmental Entities, each a
"Person") is required by or with respect to Seller, DynCorp or
the DynAir Companies in connection with the execution, delivery
and performance by Seller and DynCorp of this Agreement and the
consummation of the transactions contemplated hereby.
3.8 Litigation.
(a) Except as disclosed in Schedule 3.8, there is
(i) no outstanding consent, order, judgment,
injunction, award, decree, civil penalty or certificate action of
any Governmental Entity or arbitration tribunal against,
involving or affecting the DynAir Companies,
(ii) no action, suit, dispute or governmental,
administrative, arbitration or regulatory proceeding pending or,
to Seller's or DynCorp's best knowledge, threatened against,
involving or affecting the DynAir Companies, and
(iii) to Seller's or DynCorp's best knowledge, no
investigation pending or threatened against or relating to the
DynAir Companies or affecting any of their respective officers or
directors as such (collectively, "Proceedings"), except, in each
case, for Proceedings ("known Proceedings") against the DynAir
Companies that would not have a Material Adverse Effect on
Seller's or DynCorp's ability to consummate the transactions
contemplated hereby.
(b) Except as set forth in Schedule 3.8, none of the
foregoing known Proceedings, if adversely determined against the
DynAir Companies, would have a Material Adverse Effect on the
DynAir Companies in the aggregate, and no other proceedings
involving Seller or DynCorp would have any adverse effect on the
ability of Seller or DynCorp to consummate the transactions
contemplated hereby.
3.9 Personal Property.
(a) DynCorp and Seller have given Buyer access to the
personal property of the DynAir Companies used in their business
(including machinery, equipment, tools, dies, furniture,
furnishings, leasehold improvements, vehicles, buildings and
fixtures, but excluding inventories of parts held for resale or
on consignment) and that have a value in excess of $1,000 per
item or per category of items;
(b) Except as disclosed in Schedule 3.9(b):
(i) each of the DynAir Companies has good and
valid title to all of its personal property, free and clear of
all Encumbrances;
(ii) each of the DynAir Companies owns, has
valid leasehold interests (pursuant to leases disclosed in
Schedule 3.10(a)) in or valid contractual rights to use, pursuant
to contracts disclosed in Schedule 3.21(a) or not required to be
disclosed therein due to the dollar thresholds set forth in
Section 3.21(a)(i), all of the assets, tangible and intangible,
used by, or necessary for the conduct of its business.
(c) All property delivered to the DynAir Companies for
bailment or consignment is held in possession of the DynAir
Companies in accordance with the respective bailment or
consignment agreement, if any. Each DynAir Company has instituted
adequate procedures to safeguard bailed and consigned property.
To the best knowledge of DynCorp and Seller, the DynAir Companies
do not permit use by third parties of non-owned property contrary
to the terms and conditions under which the DynAir Companies have
possession of such property.
3.10 Real Property.
(a) Schedule 3.10(a) sets forth each and every parcel
of real property or interest in real estate held under a lease or
used by each of the DynAir Companies ("Real Property").
(b) The DynAir Companies do not own any Real Property.
Seller or DynCorp has heretofore delivered to Buyer complete and
correct copies of each and every lease and all documents relating
thereto, including any amendments thereto and any assignment
thereof relating to the Real Property.
(c) Except as disclosed in Schedule 3.10(c), each of
the DynAir Companies:
(i) with respect to the Real Property designated
in Schedule 3.10(a), is in peaceful and undisturbed possession of
the space and/or estate under each lease under which it is a
tenant, and there are no material defaults by it as tenant
thereunder; and
(ii) has good and valid rights of ingress and
egress to and from all the Real Property from and to the public
street systems for all usual street, road and utility purposes
and other purposes necessary or incidental to its business.
(d) Since January 1, 1992, neither Seller, DynCorp nor
any DynAir Company has received any notice of any appropriation,
condemnation or like proceeding, or of any violation of any
applicable zoning law, regulation or other law, order, regulation
or requirement relating to or affecting the Real Property, and to
Seller's or DynCorp's best knowledge, no such proceeding has been
threatened or commenced.
(e) Except as disclosed in Schedule 3.10(e), all of
the buildings, structures, improvements and fixtures used in the
business of any of the DynAir Companies, owned or leased by any
of the DynAir Companies, are in a state of repair, maintenance
and operating condition adequate for the present conduct of such
business and, except as so disclosed and, except for normal wear
and tear, there are no defects with respect thereto which would
impair the day-to-day use of any such buildings, structures,
improvements or fixtures or which would subject any DynAir
Company to liability under applicable law.
3.11 Financial Statements.
(a) Seller or DynCorp has heretofore furnished Buyer
with copies of the following financial statements of the DynAir
Companies:
(i) unaudited combining balance sheets as at December
31 for each of the fiscal years ended December 31, 1994, 1993 and
1992, respectively;
(ii) unaudited combining statements of operations
for each of the three fiscal years then ended; and
(iii) unaudited combining balance sheets and
statements of operations as of and for the three-month period
ended on March 30, 1995.
(b) All of the summary financial information listed in
subsection (a) above (the "Financial Statements") were prepared
from the local ledgers maintained by the DynAir Companies,
adjusted for the items described in Schedule 3.11(b). Subject to
Seller's reservations concerning inventory set forth in Section
3.17, DynCorp and Seller are not aware of any material
adjustments which would be necessary to make such financial
statements in the aggregate not misleading, except for
adjustments reflected on Schedule 3.11(b).
(c) There are no material liabilities, debts,
obligations or claims against any of the DynAir Companies of any
nature, absolute or, to the best knowledge of Seller or DynCorp,
contingent, except:
(i) as and to the extent reflected or reserved against
on the Financial Statements;
(ii) incurred since March 30, 1995 in the
ordinary course of business consistent with prior practice and
Section 3.20 hereof;
(iii) open purchase or sales orders or agreements
for delivery of goods and services in the ordinary course of
business consistent with prior practice, provided none of the
DynAir Companies is in default thereunder;
(iv) intercompany liabilities, debts,
obligations, or claims; or
(v) operating leases.
3.12 Books and Records. Seller and DynCorp have made and
will make available for inspection by Buyer all the books of
account relating to the business of the DynAir Companies. Neither
DynCorp nor Seller have knowledge of any material errors in the
maintenance of the DynAir Companies' accounting records.
3.13 Tax Matters.
(a) For purposes of this Agreement:
(i) "Tax" or "Taxes" shall mean any federal,
state, local, foreign or other taxes (including, without
limitation, income (net or gross), gross receipts, profits,
alternative or add-on minimum, franchise, license, capital,
capital stock, intangible, services, premium, mining, transfer,
sales, use, ad valorem, payroll, wage, severance, employment,
occupation, property (real or personal), windfall profits,
import, excise, custom, stamp, withholding or estimated taxes),
fees, duties, assessments, withholdings or governmental charges
of any kind whatsoever (including interest, penalties, additions
to tax or additional amounts with respect to such items);
(ii) "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;
(iii) "Returns" shall mean all returns,
declarations, reports, estimates, information returns and
statements of any nature regarding Taxes for any Pre-Closing
Period required to be filed by any Person and relating to the
income, properties or operations of the DynAir Companies;
(iv) "Code" shall mean the Internal Revenue Code
of 1986, as amended, or, if appropriate, any predecessor statute;
and
(v) the term "Tax Deficiency" shall include a
reduction in any net operating losses.
(b) Except as disclosed in Schedule 3.13:
(i) all Returns have been or will be timely filed
when due in accordance with all applicable laws;
(ii) all Taxes shown on the Returns have been or
will be timely paid when due;
(iii) the Returns completely, accurately and
correctly reflected or will reflect the facts regarding the
income, properties, operations and status of any entity required
to be shown thereon;
(iv) there are no agreements or consents
currently in effect for the extension or waiver of the time
(A) to file any Return or
(B) for assessment or collection of any
Taxes relating to any of the DynAir Companies for any Pre-Closing
Period, and no Person has been requested to enter into any such
agreement or consent;
(v) all Returns with respect to taxable years
ending on or prior to December 31, 1984 have been examined and
closed, or are Returns with respect to which the applicable
statute of limitations, after giving effect to any extensions and
waivers, has expired;
(vi) all Taxes which each of the DynAir Companies
is required by law to withhold or collect have been duly withheld
or collected, and have been timely paid over to the appropriate
governmental authorities to the extent due and payable;
(vii) there is no action, suit, proceeding,
investigation, audit or claim currently pending, or to Seller's
or DynCorp's best knowledge, threatened, regarding any Taxes
relating to any of the DynAir Companies or any group of which any
of the DynAir Companies is now or was formerly a member, for any
Pre-Closing Period;
(viii) all Tax Deficiencies which have been
claimed, proposed or asserted against any of the DynAir Companies
or any group of which any of the DynAir Companies is now or was
formerly a member, have been fully paid or finally settled;
(ix) 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 Tax liabilities of any of
the DynAir Companies;
(x) 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 of the
DynAir Companies;
(xi) there are no liens, other than statutory
liens for taxes not yet due and payable, for any Tax on the
assets of any of the DynAir Companies;
(xii) there are no tax sharing agreements to
which any of the DynAir Companies is now or ever has been a
party;
(xiii) (A) as of and after the Closing,
(I) none of the DynAir Companies shall be required to
(a) treat any asset of the DynAir
Companies 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
(b) apply any of the foregoing
rules under any comparable foreign, state or local Tax provision,
and
(II) none of the DynAir Companies
leases or will lease property to any other Person under a
"sale/leaseback" or similar arrangement; and
(B) prior to the Closing, all safe harbor
leases to which any of the DynAir Companies was a party were
assigned to, and all debt related to any such leases was assumed
by, DynCorp or one of its Subsidiaries other than a DynAir
Company;
(xiv) none of the DynAir Companies is a party to
any agreement, contract, arrangement or plan that would result,
separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Code Section 280G (or
any comparable provision of state, local or foreign law);
(xv) none of the DynAir Companies has agreed, or
is required, to make any adjustment under Code Section 481(a) (or
any comparable provision of state, local or foreign law) by
reason of a change in accounting method or otherwise;
(xvi) none of the DynAir Companies has been or is
included in any consolidated, affiliated, combined, unitary or
other similar Tax Returns that include any affiliates of the
DynAir Companies (other than the United States federal
consolidated income Tax Returns that include any of the DynAir
Companies and unitary returns for California, Illinois, Florida
and Arizona);
(xvii) 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 of the
DynAir Companies; and
(xviii) the charges, accruals, and reserves for
Taxes, other than income Taxes, due, or accrued but not yet due,
relating to the properties and operations of the DynAir Companies
for the period prior to Closing as reflected on their books are
reflected as accrued liabilities and will be adequate to cover
such Taxes.
3.14 Employee Matters.
(a) Schedule 3.14(a) attached hereto sets forth:
(i) the name, current annual compensation rate
(including bonus and commissions), title, current base salary
rate, accrued bonus, accrued sick leave, accrued severance pay
and accrued vacation benefits of each present employee of the
DynAir Companies, as of dates no earlier than 30 days prior to
Closing;
(ii) organizational charts of the DynAir Companies;
(iii) a list of collective bargaining, union or
other employee association agreements of the DynAir Companies;
(iv) a list of employment, managerial, advisory
and consulting agreements of the DynAir Companies;
(v) a list of employee confidentiality or other
agreements protecting proprietary processes, formulae or
information of the DynAir Companies;
(vi) a list of any reports and/or plans of the
DynAir Companies prepared or adopted pursuant to the Equal
Employment Opportunity Act of 1972, as amended;
(vii) a list of each employee benefit plan
(within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), stock
purchase plan, stock option plan, fringe benefit plan, bonus
plan, severance pay plan and any other deferred compensation
agreement or plan or funding arrangement sponsored, maintained or
to which contributions are made by
(A) the DynAir Companies, or
(B) any other organization which is a member
of a controlled group of organizations (within the meaning of
Sections 414(b), (c), (m) or (o) of the Code) of which any DynAir
Company is a member (the "Controlled Group"), in which any
employees of the DynAir Companies are participating as of the
Closing or in which they have participated during the preceding
year.
(such plans described in (A) and (B) are referred to
collectively as the "DynAir Plans"); and
(viii) the amount of any unfunded retirement
liabilities, including medical coverage (except obligations to
provide continuing medical coverage on a reimbursable basis for
employees who terminate employment on or after the Closing and
obligations of DynCorp and Seller to contribute to the DynCorp
Employee Stock Ownership Plan for the period prior to the
Closing), arising under any plan, fund, or arrangement described
in this Section 3.14 and the identity of the plan, fund, or
arrangement giving rise thereto.
(b) For each plan, fund or arrangement disclosed or
required to be disclosed in Schedule 3.14(a), each of the
following is true:
(i) if such plan, fund or arrangement is an
employee pension benefit plan (as such term is defined in ERISA
Section 3(2)) intended to qualify under the Code, the Plan has
received a favorable determination letter as to its qualification
under the Code and nothing has occurred, whether by action or
failure to act, which would cause the loss of such qualification;
(ii) there are no actions, suits or claims
(other than routine claims for benefits in the ordinary course)
pending, or to Seller's or DynCorp's best knowledge, threatened,
and to Seller's or DynCorp's best knowledge, there are no facts
which could give rise to any such actions, suits or claims (other
than routine claims for benefits in the ordinary course);
(iii) none of the DynAir Companies, the
members of the Controlled Group or any other party has engaged in
a prohibited transaction, as such term is defined in Code Section
4975 or ERISA Section 406, which would subject the DynAir
Companies or Buyer to any Taxes, penalties or other liabilities
resulting from prohibited transactions under Code Section 4975 or
under ERISA Section 409 or 502(i);
(iv) no event has occurred and no condition
exists that would subject the DynAir Companies or Buyer to any
Tax under Chapter 43 of the Code or Section 6699 of the Internal
Revenue Code of 1954, as amended (as in effect pursuant to
Section 1171 of the Tax Reform Act of 1986) or to a fine under
ERISA Section 502(c);
(v) each of the DynAir Companies and the
members of the Controlled Group has complied in all material
respects with the reporting and disclosure requirements of ERISA;
(vi) all insurance premiums required to be
paid as of the Closing Date have been paid;
(vii) there are no more than 50 leased
employees (as such term is defined in Code Section 414(n)) who
must be taken into account for the requirements listed in Code
Section 414(n)(3); and
(vii) the execution and delivery of this
Agreement by Seller and DynCorp and the consummation of the
transactions contemplated hereunder will not result in any
obligation or liability (with respect to accrued benefits or
otherwise) to any such plan, fund, or arrangement, to any
employee or former employee of any DynAir Company.
(c) No DynAir Plan is subject to Title IV of ERISA or
to the requirements of Section 412 of the Code.
(d) No DynAir Plan is a multi-employer plan (within
the meaning of Section 3(37) or Section 4001(a)(3) of ERISA or
Section 414(f) of the Code).
(e) For each DynAir Plan which is intended to be an
employee stock ownership plan (within the meaning of Section
4975(e)(7) of the Code) or a tax credit employee stock ownership
plan (within the meaning of Section 409(a) of the Code), each of
the following is true:
(i) there is no securities acquisition loan
(within the meaning of Section 133 of the Code) outstanding with
respect to the plan;
(ii) except for the transactions contemplated in
this Agreement no event has occurred and no condition exists
which would give rise to the recapture of any Tax credit
previously claimed with respect to the plan or to any Tax or
penalties assessable against the DynAir Companies or Buyer; and
(iii) except for the transactions contemplated in
this Agreement no event has occurred and no condition exists
which would cause the termination of the plan and the
distribution of all amounts held thereunder to give rise to the
recapture of any Tax credit previously claimed with respect to
the plan or to any Tax or penalties assessable against the DynAir
Companies or Buyer.
(f) For each plan, fund, or arrangement of any DynAir
Company which is an employee welfare benefit plan (within the
meaning of ERISA Section 3(1)) (a "Welfare Plan"), the following
is true:
(i) each such Welfare Plan intended to meet the
requirements for tax-favored treatment under Subchapter B of
Chapter 1 of the Code meets such requirements;
(ii) DynCorp maintains a VEBA with respect to
such Welfare Plan;
(iii) there is no disqualified benefit (as such
term is defined in Code Section 4976(b)) which would subject the
DynAir Company or Buyer to a Tax under Code Section 4976(a);
(iv) each such Welfare Plan which is a group
health plan (as such term is defined in Code Section 5000(b)(1))
complies and has complied with the applicable requirements of
Code Section 4980B, Title XXII of the Public Health Service Act
and the applicable provisions of the Social Security Act; and
(v) each such Welfare Plan (including any such
plan covering former employees of any DynAir Company) may be
amended or terminated by such DynAir Company or Buyer on or at
any time after the Closing Date.
(g) With respect to the DynAir Companies, except as
disclosed in Schedule 3.14(g) and in other schedules appended
hereto, each of the following is true:
(i) each of the DynAir Companies is in compliance
with all applicable laws and collective bargaining agreements
respecting employment and employment practices, terms and
conditions of employment and wages and hours and occupational
safety and health, and is not engaged in any unfair labor
practice within the meaning of Section 8 of the National Labor
Relations Act, and there is no action, suit or legal,
administrative, arbitration, grievance or other proceeding
pending or, to Seller's or DynCorp's best knowledge, threatened,
or, to Seller's or DynCorp's best knowledge, any investigation
pending or threatened against any of the DynAir Companies
relating to any thereof, and, to Seller's or DynCorp's best
knowledge, no basis exists for any such action, suit or legal,
administrative, arbitration, grievance or other proceeding or
governmental investigation;
(ii) there is no labor strike, dispute, slowdown
or stoppage actually pending or, to Seller's or DynCorp's best
knowledge, threatened against any of the DynAir Companies;
(iii) none of the employees of the DynAir
Companies is a member of or represented by any labor union and,
to Seller's or DynCorp's best knowledge, there are no attempts of
whatever kind and nature being made to organize any of such
employees;
(iv) without limiting the generality of paragraph
(iii) above, no certification or decertification is pending or
was filed within the past twelve months respecting the employees
of the DynAir Companies and, to Seller's or DynCorp's best
knowledge, no certification or decertification petition is being
or was circulated among the employees of any of the DynAir
Companies within the past twelve months;
(v) no agreement (including any collective
bargaining agreement), arbitration or court decision, decree or
order or governmental order which is binding on any of the DynAir
Companies in any way limits or restricts any of the DynAir
Companies from relocating or closing any of its operations;
(vi) none of the DynAir Companies has experienced
any organized work stoppage in the last five years; and
(vii) there are no charges, administrative
proceedings or formal complaints of discrimination (including but
not limited to discrimination based upon sex, age, marital
status, race, national origin, sexual preference, handicap or
veteran status) pending or, to Seller's or DynCorp's best
knowledge, threatened, or to Seller's or DynCorp's best
knowledge, any investigation pending or threatened before the
Equal Employment Opportunity Commission or any federal, state or
local agency or court, and there have been no audits of the equal
employment opportunity practices of any of the DynAir Companies
and, to Seller's or DynCorp's best knowledge, no basis for any
such claim exists.
(h) With respect to any pension plan (within the
meaning of Section 3(2) of ERISA) that (i) has been sponsored,
maintained or contributed to by any member of the Controlled
Group during the six year period prior to the date hereof, and
(ii) is not a DynAir Plan, no liability has been incurred or is
expected to be incurred under Title IV of ERISA or Section 412 of
the Code, which liability could become a liability of Buyer or
the DynAir Companies.
3.15 Intellectual Property.
(a) The DynAir Companies do not own or use any
trademarks, service marks, trade names (except their corporate
names), registered copyrights, or patents.
(b) The DynAir Companies have not received any notice
to the effect that any product they make or sell, or the
distribution or use by them or another of any such product, or
any services it performs in the course of its business may
infringe any trademark, service mark, trade name, registered
copyright, patent, trade secret, or similar legally protectable
right of another.
3.16 Accounts Receivable.
(a) Schedule 3.16 sets forth all of the billed
accounts receivable held by the DynAir Companies as of June 26,
1995. The DynAir Companies shall, as of the Closing, own the
accounts receivable that exist as of that date.
(b) The accounts receivable of the DynAir Companies,
and the accounts receivable generated since June 26, 1995,
represent valid obligations owing to the Company, subject to the
applicable reserve for doubtful accounts.
3.17 Inventory. Seller has given Buyer access to and
provided Buyer with information concerning all inventory owned or
used by the DynAir Companies. Seller and DynCorp make no
representations regarding the quantity, condition,
non-obsolescence, or usefulness of such inventory, it being
understood by the Buyer that all such inventory is owned and used
by the DynAir Companies in an "as is, where is" condition. The
only representations made by Seller or DynCorp with respect to
such inventory are those set forth in Section 3.9 concerning
Personal Property.
3.18 No Material Change. To the best knowledge of DynCorp
and Seller, since March 30, 1995, there have been no changes in
the financial condition, assets, liabilities (contingent or
otherwise), results of operations, business or business prospects
of the DynAir Companies taken as a whole, that would have, in the
aggregate a Material Adverse Effect; provided, however, that
nothing herein shall imply that any potential sales or marketing
opportunities of the DynAir Companies identified to Buyer are
likely or probable sources of revenue.
3.19 Absence of Change or Event. With the exception of the
merger described in the third recital, and except as disclosed in
Schedule 3.19, since March 30, 1995, the DynAir Companies have
conducted their respective businesses only in the ordinary course
and have not:
(a) incurred any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due,
in excess of $5,000 in the aggregate, except liabilities or
obligations incurred in the ordinary course of business and
consistent with prior practice;
(b) mortgaged, pledged or subjected to lien,
restriction or any other Encumbrance any of the property,
businesses or assets, tangible or intangible, of the DynAir
Companies, except in connection with DynCorp risk management
practices;
(c) sold, transferred, leased to others or otherwise
disposed of any of its assets (or committed to do any of the
foregoing), excluding the payment of any loans owed to any
affiliate, except for inventory sold to customers or returned to
vendors and payments to any non-affiliates on account of accounts
payable, scheduled payments in respect of indebtedness for money
borrowed, sales of receivables to and repurchases of receivables
from its affiliate Dyn Funding Corporation, and transfers in
accordance with DynCorp's cash management program, in each case
in the ordinary course of business and consistent with prior
practice, or canceled, waived, released or otherwise compromised
any debt or claim, or any right of significant value, except in
the ordinary course of business and consistent with prior
practice;
(d) suffered any damage, destruction or loss (whether
or not covered by insurance) which has had or could have a
Material Adverse Effect on any of the DynAir Companies;
(e) made or committed to make any capital expenditures
or capital additions or betterments in excess of an aggregate of
$5,000;
(f) encountered any labor union organizing activity or
had any actual or threatened employee strikes, work stoppages,
slow-downs or lock-outs;
(g) instituted any litigation, action or proceeding
before any court, governmental body or arbitration tribunal
relating to it or its property, except for litigation, actions or
proceedings instituted in the ordinary course of business and
consistent with prior practice;
(h) declared or paid any dividend or made any other
payment or distribution in respect of its capital stock, or
directly or indirectly redeemed, purchased or otherwise acquired
any of its capital stock, except for
(i) normal intercompany transfers pursuant to
DynCorp's cash management program,
(ii) the merger of DynAir Arizona into DynAir
Florida described in the third recital, and
(iii) the formation of DynAir Avionics described
in the fourth recital;
(i) sold or otherwise granted any options or warrants
to purchase any securities of any of the DynAir Companies;
(j) increased the compensation of any officer,
employee or agent of any of the DynAir Companies, directly or
indirectly, including by means of any bonus, pension plan, profit
sharing, deferred compensation, savings, insurance, retirement,
or any other employee benefit plan, except in the ordinary course
of business consistent with prior practice;
(k) terminated or otherwise modified the terms of
employment of any of the ten highest paid employees of the DynAir
Companies;
(l) increased promotional or advertising expenditures
except in the ordinary course of business consistent with prior
practice or otherwise changed its policies or practices with
respect thereto; or
(m) made or changed any election concerning Taxes or
Tax Returns, changed an annual accounting period, adopted or
changed any accounting method, filed any amended return, entered
into any closing agreement with respect to Taxes, settled any Tax
claim or assessment or surrendered any right to claim a refund of
Taxes or obtained or entered into any Tax ruling, agreement,
contract, understanding, arrangement or plan.
3.20 Compliance with Law; Environmental Matters.
(a) The following terms shall be defined as follows:
"Cleanup" means all actions required to: (1)
cleanup, remove, treat or remediate Hazardous Substances, Oils,
Pollutants or Contaminants in the indoor or outdoor environment;
(2) prevent the Release of Hazardous Substances, Oils, Pollutants
or Contaminants so that they do not migrate, endanger or threaten
to endanger public health or welfare or the indoor or outdoor
environment; (3) perform pre-remedial studies and investigations
and post-remedial monitoring and care; or (4) respond to any
government requests for information or documents in any way
relating to cleanup, removal, treatment or remediation or
potential cleanup, removal, treatment or remediation of Hazardous
Substances, Oils, Pollutants or Contaminants in the indoor or
outdoor environment.
"Environmental Laws" means all foreign, federal,
state and local laws, regulations, rules and ordinances relating
to pollution or protection of the environment, including, without
limitation, laws relating to Releases or threatened Releases of
Hazardous Substances, Oils, Pollutants or Contaminants into the
indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater, land, surface and
subsurface strata) or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Substances, Oils, Pollutants
or Contaminants, and all laws and regulations with regard to
recordkeeping, notification, disclosure and reporting
requirements respecting Hazardous Substances, Oils, Pollutants or
Contaminants.
"Environmental Liabilities and Costs" means all
liabilities, obligations, responsibilities, obligations to
conduct Cleanup, losses, damages, deficiencies, punitive damages,
consequential damages, treble damages, costs and expenses
(including, without limitation, all fees, disbursements and
expenses of counsel, expert and consulting fees and costs of
investigations and feasibility studies and responding to
government requests for information or documents), fines,
penalties, restitution and monetary sanctions, interest, direct
or indirect, known or unknown, absolute or contingent, past,
present or future, resulting from any claim or demand, by any
Person, whether based in contract, tort, implied or express
warranty, strict liability, joint and several liability, criminal
or civil statute, including any Environmental Law, or arising
from environmental, health or safety conditions, the Release or
threatened Release of Hazardous Substances, Oils, Pollutants or
Contaminants into the environment, as a result of past or present
ownership, leasing or operation of any properties, owned, leased
or operated by the DynAir Companies, including, without
limitation, any of the foregoing incurred in connection with the
conduct of any Cleanup.
"Hazardous Substances, Oils, Pollutants or
Contaminants" means all substances defined as such in the
National Oil and Hazardous Substances Pollution Contingency Plan,
40 C.F.R. Section 300.5, or defined as such by, or regulated as such
under, any Environmental Law.
"Release" means, when used as a noun, any release,
spill, emission, discharge, leaking, pumping, injection, deposit,
disposal, discharge, dispersal, leaching or migration into the
indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater, and surface or
subsurface strata) or into or out of any property, including the
movement of Hazardous Substances, Oils, Pollutants or
Contaminants through or in the air, soil, surface water,
groundwater or property, and when used as a verb, the occurrence
of any Release.
(b) Except as disclosed in Schedule 3.20(b), to the
best of DynCorp's and Seller's knowledge, the operations and
activities of the DynAir Companies have complied and are in
compliance in all material respects with all applicable federal,
state and local laws, including, without limitation, the Federal
Aviation Regulation, 14 C.F.R. Section 1 et seq. to the extent
applicable to the business of the DynAir Companies as currently
conducted, health and safety statutes and regulations and all
Environmental Laws, including, without limitation, all
restrictions, conditions, standards, limitations, prohibitions,
requirements, obligations, schedules and timetables contained in
the Environmental Laws or contained in any regulation, code,
plan, order, decree, judgment, injunction, notice or demand
letter issued, entered, promulgated or approved thereunder.
(c) Schedule 3.20(c) sets forth:
(i) a description of all federal, state, local
and foreign governmental licenses, permits and other
authorizations of the DynAir Companies, the lack of which would
have a Material Adverse Effect upon the DynAir Companies
("Permits"); and
(ii) a list of all reports of inspection of the
DynAir Companies and properties to the date hereof received by
the DynAir Companies since July 1, 1994 under all applicable
federal, state and local health and safety laws and regulations,
excluding, however, privileged audit reports prepared by the
DynCorp Environmental Compliance Department;
Seller or DynCorp has heretofore given Buyer access to
complete and correct copies of all of the foregoing and
applications relating thereto. The DynAir Companies have
maintained such log books and maintenance records as are required
pursuant to the Permits.
(d) Except as disclosed in Schedule 3.20(d), the
DynAir Companies have obtained all Permits that are
(i) required under all federal, state and local
laws, including the Environmental Laws, for the ownership, use
and operation of each location owned, operated or leased by the
DynAir Companies (the "Property") or
(ii) otherwise necessary in the conduct of the
business of the DynAir Companies.
Except as disclosed in Schedule 3.20(d), all such Permits
are in effect, no appeal nor any other action is pending to
revoke any such Permit, and each of the DynAir Companies is in
full compliance with all terms and conditions of all such
Permits.
(e) Seller has heretofore delivered to or made
available for inspection by, Buyer true and complete copies of
all environmental studies in the custody of Seller or the DynAir
Companies made in the last five years relating to the Property or
any other property or facility previously owned, operated or
leased by the DynAir Companies.
(f) Except as disclosed in Schedule 3.20(f), there is
no civil, criminal or administrative action, suit, demand, claim,
hearing, notice of violation, investigation, proceeding, notice
or demand letter pending relating to the DynAir Companies or the
Property (or any other property or facility formerly owned,
operated or leased by the DynAir Companies) or, to Seller's or
DynCorp's best knowledge, threatened relating to the DynAir
Companies or the Property (or any other such property of
facility) and relating in any way to the Environmental Laws or
any regulation, code, plan, order, decree, judgment, injunction,
notice or demand letter issued, entered, promulgated or approved
thereunder.
(g) Except as disclosed in Schedule 3.20(g), none of
the DynAir Companies has, and to Seller's or DynCorp's best
knowledge, no other Person has, Released, placed, stored, buried
or dumped any Hazardous Substances, Oils, Pollutants or
Contaminants or any other wastes produced by, or resulting from,
any business, commercial, or industrial activities, operations,
or processes, on, beneath, or adjacent to the Property (or any
other property or facility formerly owned, operated or leased by
the DynAir Companies), except for inventories of such substances
to be used, and wastes generated therefrom, in the ordinary
course of business (which inventories and wastes, if any, were
and are stored or disposed of in accordance with applicable laws
and regulations and in a manner such that there has been no
Release of any such substances into the environment).
(h) Except as disclosed in Schedule 3.20(h), no
Release or Cleanup occurred at the Property (or any other
property or facility formerly owned, operated or leased by the
DynAir Companies) which to the best knowledge of DynCorp or
Seller could result in the assertion or creation of a lien on the
Property by any Governmental Entity with respect thereto, nor has
any such assertion of a lien been made by any Governmental Entity
with respect thereto.
(i) Except as disclosed in Schedule 3.20(i), to the
best knowledge of DynCorp or Seller, no employee of the DynAir
Companies in the course of his or her employment with the DynAir
Companies has been exposed to any Hazardous Substances, Oils,
Pollutants, Contaminants or other substance, generated, produced
or used by the DynAir Companies which could give rise to any
claim against the DynAir Companies.
(j) Except as disclosed in Schedule 3.20(j), none of
the DynAir Companies has received any notice or order from any
Governmental Entity or private or public entity advising it that
any DynAir Company is responsible for or potentially responsible
for Cleanup or paying for the cost of Cleanup of any Hazardous
Substances, Oils, Pollutants or Contaminants or any other waste
or substance, and no DynAir Company has entered into any
agreements concerning such Cleanup, nor is any DynAir Company
aware of any facts which might reasonably give rise to such
notice, order or agreement.
(k) Except as disclosed in Schedule 3.20(k), the
Property does not contain any:
(i) underground storage tanks;
(ii) asbestos;
(iii) equipment using PCBs;
(iv) underground injection wells; or
(v) septic tanks in which process wastewater or
any Hazardous Substances, Oils, Pollutants or Contaminants have
been disposed.
(l) Except as disclosed in Schedule 3.20(l), with
regard to the DynAir Companies and the Property (or any other
property or facility formerly owned, operated or leased by the
DynAir Companies), there are no past or present (or, to Seller's
or DynCorp's best knowledge, future) events, conditions,
circumstances, activities, practices, incidents, actions or plans
which may interfere with or prevent compliance or continued
compliance with the Environmental Laws as in effect on the date
hereof or with any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder, or which may give rise to any
common law or legal liability under the Environmental Laws, or
otherwise form the basis of any claim, action, demand, suit,
proceeding, hearing, notice of violation, study or investigation,
based on or related to the manufacture, generation, processing,
distribution, use, treatment, storage, place of disposal,
transport or handling, or the Release or threatened Release into
the indoor or outdoor environment by the DynAir Companies or a
present or former facility of the DynAir Companies of any
Hazardous Substances, Oils, Pollutants or Contaminants.
(m) None of the DynAir Companies has entered into any
agreement that may require it to pay to, reimburse, guaranty,
pledge, defend, indemnify or hold harmless any Person for or
against Environmental Liabilities and Costs.
3.21 Contracts and Commitments.
(a) Schedule 3.21(a) contains a description of each
written contract or agreement outstanding as of the date hereof
to which any of the DynAir Companies is a party (other than any
contract or agreement required to be disclosed on any other
Schedule) and which:
(i) involves future payment or receipt of in
excess of $5,000 or future performance or receipt of services or
delivery or receipt of goods and materials, in each case with an
aggregate value in excess of $5,000, including but not limited to
sale and purchase agreements, distributorship and sales
representative agreements and loan agreements, notes and other
financing documents or commitments to enter into any of the
foregoing agreements;
(ii) is a guarantee or indemnity in respect of
indebtedness of any Person (including the DynAir Companies or any
other affiliate thereof) which may involve future payment in
excess of $5,000 or is a mortgage, security agreement or other
arrangement intended to secure indebtedness of any Person
(including the DynAir Companies or any other affiliate thereof)
in excess of $5,000 and creating an Encumbrance on any asset of
any of the DynAir Companies;
(iii)is an agreement, indenture or other
instrument which contains restrictions with respect to the
payment of dividends or any other distribution in respect of the
capital stock of any of the DynAir Companies;
(iv) imposes a right of first refusal, option or
other restriction with respect to any assets of any of the DynAir
Companies;
(v) is a loan or advance to, or investment in,
any Person or an agreement, contract or commitment relating to
the making of any such loan, advance or investment in excess of
$500;
(vi) is an agreement, contract or commitment
limiting the freedom of any of the DynAir Companies to engage in
any line of business or to compete with any Person; or
(vii)is a stockholders agreement or voting agreement
(b) Except as disclosed on Schedule 3.21(b):
(i) Each of the agreements set forth in Schedule
3.21(a) and the agreements or contracts of the DynAir Companies
disclosed in any other Schedule (the "Contracts") was entered
into in a bona fide transaction in the ordinary course of
business and is in full force and effect.
(ii) Seller has heretofore made available for
inspection by Buyer complete and correct copies of the Contracts.
(iii)There is not under any Contract:
(A) any existing default by any of the DynAir
Companies or, to Seller's or DynCorp's best knowledge, by any
other party thereto, or
(B) any event which, after notice or lapse of
time or both, would constitute a default by any of the DynAir
Companies or, to Seller's or DynCorp's best knowledge, by any
other party, or result in a right to accelerate or terminate or
result in a loss of rights of any of the DynAir Companies.
(iv) No purchase contracts or commitments of any
of the DynAir Companies continue for a period of more than 12
months, other than the warranty provisions thereof, or are in
excess of the normal, ordinary and usual requirements of business
or at any excessive price.
(v) There are no outstanding sales contracts,
commitments or proposals of any of the DynAir Companies which
continue for a period of more than 12 months.
(vi) None of the DynAir Companies is under any
liability or obligation with respect to the return of inventory
or merchandise in the possession of customers or other Persons,
except as to customary warranty provisions of sales and other
contracts and pursuant to normal consignment practices with
respect to aircraft and avionics parts and equipment.
(vii) There are no agreements or contracts of
any of the DynAir Companies, the performance of which contravene
this Agreement.
3.22 Insurance.
(a) Schedule 3.22 sets forth
(i) a description of DynCorp policies covering the
DynAir Companies' general comprehensive liability, comprehensive
aviation liability, workers compensation and their respective
personnel, properties, buildings, machinery, equipment,
furniture, fixtures and operations, specifying with respect to
each such policy, the name of the insurer, type of coverage, term
of policy, and limits of liability;
(ii) all of the DynAir Companies' claims by year
and by type of coverage, for the past five years, based on
information received from the DynAir Companies' insurance
carrier(s) as of the date(s) specified, and subject to the terms
and conditions of the applicable insurance policies, which claims
and any related losses shall continue after closing to be the
responsibility of DynCorp or its insurance carriers;
(iii) any agreements, arrangements or commitments
by or relating to the DynAir Companies, other than the contracts
described in Section 3.21, under which the DynAir Companies
indemnify or hold harmless any other Person or are required to
carry insurance for the benefit of any other Person.
(b) The insurance policies set forth in Schedule 3.22
are in full force and effect, will cover the DynAir Companies for
all occurrences described in the policies listed in Section
3.22(a)(i) above (except for directors' and officers' coverages,
which are issued on a claims-made basis) on or prior to the
Closing Date, all premiums currently due and owing with respect
thereto covering all periods up to and including the date of the
Closing have been or will be paid prior to their specified due
dates, and no notice of cancellation or termination has been
received with respect to any such policy within the past 6
months.
(c) Schedule 3.22 identifies all risks which have been
designated as being self insured.
3.23 Affiliate Interests.
(a) Schedule 3.23(a) sets forth a general description
of services provided by the DynAir Companies to, or received by
the DynAir Companies from, any affiliate of the DynAir Companies
during the last fiscal year for products or services (including
any charge for administrative, purchasing, financial or other
services) and all amounts currently owed by the DynAir Companies
to, or to the DynAir Companies by, any affiliate of the DynAir
Companies.
(b) Each contract, agreement or arrangement between
the DynAir Companies, on the one hand, and Seller, DynCorp or any
affiliate of Seller or DynCorp (other than the DynAir Companies)
or any stockholder, officer or director of Seller, DynCorp, the
DynAir Companies or any affiliate of Seller, on the other hand
("Affiliate Agreements") is described in Schedule 3.23(b).
(c) Except as set forth in Schedule 3.23(c), no
officer or director of any of the DynAir Companies has any
material interest in any property, real or personal, tangible or
intangible, including without limitation, inventions, patents,
trademarks or trade names, used in or pertaining to the business
of any of the DynAir Companies.
3.24 Customers and Suppliers. Except as set forth in
Schedule 3.24, to the best of Seller's and DynCorp's knowledge,
no supplier, customer, distributor or sales representative of any
of the DynAir Companies has canceled or otherwise terminated, or
made any written threat to any of the DynAir Companies or to any
of their affiliates to cancel or otherwise terminate, for any
reason, including the consummation of the transactions
contemplated hereby, its relationship with any of the DynAir
Companies, or has at any time on or after March 31, 1995
decreased materially its services or supplies to any of the
DynAir Companies, in the case of any such supplier, or its usage
of the services or products of any of the DynAir Companies. For
purposes of this Section 3.24, completion of work or final
billing under a contract does not constitute "termination".
3.25 Absence of Questionable Payments.
(a) Except as set forth on Schedule 3.25(a), to the
best knowledge of DynCorp or Seller, neither any of the DynAir
Companies nor any director, officer, agent, employee or other
Person acting on behalf of any of the DynAir Companies, has,
during the past three years, used any corporate or other funds
for unlawful contributions, payments, gifts, or entertainment, or
made any unlawful expenditures relating to political activity to
government officials or others or established or maintained any
unlawful or unrecorded funds in violation of Section 30A of the
Exchange Act.
(b) None of the DynAir Companies is or will be subject
to any liability, cost or judicial, administrative or other
penalty with respect to any matter set forth on Schedule 3.25(a).
(c) To the best knowledge of DynAir or Seller, none of
the DynAir Companies nor any current director, officer, agent,
employee or other Person acting on behalf of any of the DynAir
Companies has accepted or received any unlawful contributions,
payments, gifts, or expenditures.
3.26 Products.
(a) Schedule 3.26(a) sets forth
(i) all claims asserted or, to Seller's best
knowledge, threatened at any time during the past two years
against any of the DynAir Companies in respect of personal
injury, wrongful death or property damage alleged to have
resulted from products or services provided by the DynAir
Companies, together with a description of each such claim or
action initiated with respect thereto and the disposition
thereof; and
(ii) all express warranties and disclaimers of
warranty normally used by any of the DynAir Companies in
connection with the products or services provided by the DynAir
Companies.
(b) To the best of Seller's and DynCorp's knowledge,
the DynAir Companies have not experienced product recall or
warranty claims in excess of 3% of aggregate gross sales for any
of the past three years.
3.27 Disclosure.
(a) This Agreement, the Exhibits, the Schedules, and
the other documents, certificates, and statements to be delivered
to Buyer pursuant hereto or in connection herewith or with the
transactions contemplated hereby, when read together as a single
disclosure, do not contain any untrue statement of a fact and do
not omit to state a fact necessary in order to make the
statements contained herein and therein not misleading. All facts
material to the business, assets, liabilities, financial
condition, results of operations, and prospects of the DynAir
Companies have been set forth in this Agreement, the Schedules,
or the other documents, certificates, and written statements
furnished or to be furnished to the Purchaser by or on behalf of
DynCorp and Seller.
(b) Seller or DynCorp has furnished or caused to be
furnished or made available to Buyer complete and correct copies
of all agreements, instruments and documents set forth or
referred to on a Schedule. Each of the Schedules is complete and
correct.
3.28 Seller's or DynCorp's Best Knowledge. The term
"Seller's or DynCorp's best knowledge", and terms of like import,
shall mean the actual knowledge of a director, officer or manager
of Seller, DynCorp or a DynAir Company.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller and DynCorp that:
4.1 Organization. Buyer is a corporation duly organized and
validly existing and in good standing under the laws of the State
of Delaware.
4.2 Corporate Authority.
(a) Buyer has full corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby.
(b) The execution, delivery and performance by Buyer
of this Agreement has been duly authorized by all requisite
corporate action.
(c) This Agreement has been duly executed and
delivered by Buyer, and (assuming due execution and delivery by
Seller and DynCorp) this Agreement constitutes a valid and
binding obligation of Buyer, enforceable in accordance with its
terms, except as may be limited or otherwise affected by
(i) applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application,
and legal and equitable principles relating to or affecting
creditors' rights, including, without limitation, the effect of
statutory or other law regarding fraudulent conveyances and
preferential transfers, and
(ii) equitable principles of general applicability
(regardless of whether such enforceability is considered in a
proceeding at law or in equity) including, without limitation,
concepts of reasonableness, materiality, good faith and fair
dealing.
4.3 No Violation; Consents.
(a) Except as set forth in Schedule 4.3, Buyer is not
subject to or bound by any provision of:
(i) any law, statute, rule, regulation or judicial or
administrative decision;
(ii) any certificate of incorporation or by-laws;
(iii) any mortgage, deed of trust, lease, note,
shareholders' agreement, bond, indenture, other instrument or
agreement, license, permit, trust, custodianship, other
restriction; or
(iv) any judgment, order, writ, injunction or decree
of any court, governmental body, administrative agency or
arbitrator, that would prevent or be violated by, or under which there
would be a default as a result of, the execution, delivery and
performance by Buyer of this Agreement and the consummation of
the transactions contemplated hereby.
(b) Except as set forth in Schedule 4.3, no consent,
approval or authorization of or declaration or filing with any
Person is required for the valid execution, delivery and
performance by Buyer of this Agreement and the consummation of
the transactions contemplated hereby.
4.4 Investment Intent.
(a) Buyer acknowledges that the Shares have not been
registered under the Securities Act or any state securities laws,
and that Seller is transferring the Shares to Buyer in reliance
upon exemptions from the registration requirements of the
Securities Act and state securities laws.
(b) Buyer is acquiring the Shares for investment and
not for the purpose of or with a view to the sale or other
distribution thereof.
(c) Buyer understands that it may have to hold the
Shares indefinitely unless they are subsequently registered under
the Securities Act and state securities laws, or exemptions from
registration are available.
(d) Buyer
(i) has no present intention to resell or
distribute any portion of the Shares;
(ii) will receive and hold the Shares for
investment for its own account; and
(iii) has no contract, undertaking, agreement or
arrangement with any person to sell or transfer to any such
person or anyone, or to have any such person sell for them, any
portion of the Shares, and is not engaged in any discussion with
any person relative to the sale or transfer of any portion of the
Shares.
4.5 Disclosure. This Agreement, the Exhibits, the
Schedules, and the other documents, certificates, and statements
to be delivered to DynCorp and Seller pursuant hereto or in
connection herewith or with the transactions contemplated hereby,
when read together as a single disclosure, do not contain any
untrue statement of a fact and do not omit to state a fact
necessary in order to make the statements contained herein and
therein not misleading.
4.6 Buyer Knowledge Concerning Potential Breaches of Seller
Representations and Warranties. Buyer confirms that it has no
knowledge as of the date of the execution of this Agreement of
any actual or potential material breach of any Seller
representation or warranty set forth in Article 3 above. For
purposes of this Section 4.6, "material breach" shall mean
breaches which, in the aggregate, would exceed $250,000.
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS OF BUYER, SELLER AND DYNCORP
5.1 Tax Covenants.
(a) (i) DynCorp shall cause the DynAir Companies 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 to
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 to be so included.
(ii) DynCorp shall
(A) timely prepare and file all such Returns
and timely pay when due all Taxes relating to such Returns and
(B) timely prepare and file, or cause to be
prepared and filed, all other income tax Returns of the DynAir
Companies 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 Returns.
(iii) Such Returns shall be prepared or completed
in a manner consistent with prior practice of DynCorp and the
DynAir Companies with respect to Returns concerning the income,
properties or operations of the DynAir Companies (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.
(b) (i) Any Taxes with respect to the income, property
or operations of the DynAir Companies 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 DynAir Companies
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 DynAir Companies.
(ii) Buyer shall cause the DynAir Companies to
file any 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 Returns.
(iii) DynCorp shall pay Buyer its share of any
such Taxes (to the extent DynCorp is liable therefor in
accordance with this Section 5.1(b) and to the extent not already
paid by DynCorp the DynAir Companies or accrued or otherwise
reflected as a liability on the Final Calculation of Base
Purchase Price due pursuant to the filing of any such Returns
under the provisions of this Section 5.1(b) 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
business days or Buyer's receipt of such refunds.
(c) (i) DynCorp shall have the right to represent the
interests of the DynAir Companies in any Tax audit or
administrative or court proceeding relating to Returns described
in Section 5.1(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 DynAir
Companies); provided, however, that Buyer shall have the right to
participate in any such audit or proceeding to the extent that
any such audit or proceeding may affect the Tax liability of
Buyer, any of its affiliates or the DynAir Companies for any
period ending after the Closing Date and 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, 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
DynAir Companies 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 periods, 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 DynAir
Companies of notice of any pending or threatened Tax audits or
assessments relating to the income, properties or operations of
the DynAir Companies, 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 5.1(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 DynAir
Companies, in each case for Pre-Closing Periods only, provided
that failure by DynCorp to comply with this Section 5.1(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 DynAir Companies or any consolidated,
affiliated, combined, unitary or other similar Tax group of which
any of the DynAir Companies 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
DynAir Companies or any consolidated, affiliated, combined,
unitary or other similar Tax group of which any of the DynAir
Companies 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, file, or cause
to be filed, any amended Tax return or claim for Tax refund, with
respect to the DynAir Companies 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 DynAir Companies 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 periods, the denial of amortization or depreciation
deductions, or the reduction of loss or credit carryforwards).
(g) (i) Any and all existing Tax sharing, allocation,
compensation or like agreements or arrangements, whether or not
written, that include the DynAir Companies, including, without
limitation, any arrangement by which any of the DynAir Companies
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 day before the Closing Date (pursuant to a
writing executed on or before the Closing Date by all parties
concerned) and shall have no further force or effect.
(ii) All liabilities of the DynAir Companies to
DynCorp or any affiliate of DynCorp (for Taxes or otherwise
pursuant to such agreements or arrangements) shall be canceled on
or prior to the Closing Date.
(h) (i) After the Closing Date, Buyer and DynCorp
shall provide each other, and Buyer shall cause the DynAir
Companies to provide DynCorp, with such cooperation and
information relating to the DynAir Companies as either party
reasonably may request in
(A) filing any Tax return, amended 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.
(ii) The parties shall retain, and Buyer shall
cause the DynAir Companies to retain, all returns, schedules and
work papers, and all material records and other documents
relating thereto, until 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 and, unless such returns and other
documents are offered and delivered to Buyer or DynCorp, as
applicable, until the final determination of any Tax in respect
of such years.
(iii) Any information obtained under this Section
5.1 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 audit
or other proceeding in respect of Taxes.
(iv) Notwithstanding the foregoing, neither Buyer
nor DynCorp, nor any of their affiliates, shall be required
unreasonably to prepare any document, or determine any
information not then in its possession, in response to a request
under this Section 5.1(h).
(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 or attributable
to the sale, transfer or delivery of the Shares or the assets of
Avionics to Avionics hereunder, 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) Buyer and DynCorp agree to jointly make an
election pursuant to Code Section 338(h)(10) regarding the sale
and purchase of the DynAir Companies Common Stock under this
Agreement, and Buyer agrees to make an election pursuant to Code
Section 338(g) regarding the purchase of the DynAir Companies
Common Stock under this Agreement.
(ii) Buyer and DynCorp agree to comply with all
of the requirements and conditions of Code Sections 338(g) and
338(h)(10), the Temporary Treasury Regulations 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 Elections," which Buyer shall be responsible for
preparing.
(iii) Buyer and DynCorp also agree to make any
analogous elections pursuant to any state or local income tax
provisions, and shall take all necessary steps to effectuate such
elections.
(iv) Neither Buyer nor DynCorp will take any
action, including, without limitation, any action in connection
with the filing of federal, state or local income Tax returns of
any Person, which would be inconsistent with or prejudice the
Code Section 338(h)(10) elections.
(v) (A) Within 90 days after the Closing Date,
Buyer, Seller and DynCorp shall agree to an allocation of the
Base Purchase Price (together with liabilities assumed by
operation of law hereunder and other relevant items) among the
assets of the DynAir Companies (the "Purchased Assets"), provided
that if Buyer, Seller and DynCorp are unable so to agree within
such period, the parties shall not be required so to agree and
each party may use its own allocation.
(B) Such allocation will comply with the
requirements of Code Section 338 and the Temporary Treasury
Regulations thereunder.
(C) Buyer, Seller and DynCorp represent,
warrant and agree that such allocation has been determined
through arm's length negotiations.
(D) Buyer, Seller and DynCorp each agrees
that, to the extent permitted by applicable law, it will adopt
and utilize the amounts allocated to each asset or class of
assets for purposes of all federal, state and other income Tax
returns or reports of any nature filed by it and that it will not
voluntarily take any position inconsistent therewith upon
examination of any such Tax returns or reports, in any claim for
refund, in any litigation or otherwise with respect to such Tax
returns or reports.
5.2 Expenses and Finder's Fees.
(a) (i) Buyer acknowledges that DynCorp has retained
Arthur Andersen LLP in connection with the transaction
contemplated hereby.
(ii) DynCorp shall be solely responsible for all
fees and expenses of Arthur Andersen LLP in connection therewith.
(iii) Each of the parties represents, warrants
and agrees that no other finder's fee or broker's commission
shall, by reason of its actions, be payable in connection with
the transactions contemplated hereby.
(b) Buyer, Seller and DynCorp hereby agree that,
whether or not the proposed transaction outlined herein is ever
consummated, each will pay its own (and its representatives')
respective fees and expenses incurred in connection with the
negotiation, preparation and execution of the Agreement and any
other document contemplated hereby.
5.3 Press Releases. Except as required by law or stock
exchange regulation, any public announcements regarding the
transactions contemplated hereby shall be made only with the
mutual consent of Buyer and DynCorp.
5.4 Termination of Benefit Plan Participation. The parties
acknowledge that, on or about the Closing Date, DynCorp intends
to terminate the participation of all DynAir Companies and their
employees in the DynCorp Employee Stock Ownership Plan, the
DynCorp Executive and Management Incentive Plans, and the DynCorp
group health, life and salary continuation benefit plans;
provided, that all terminations will be in accordance with the
terms of such plans. DynCorp will indemnify and hold Buyer and
the DynAir Companies harmless from any and all liabilities
incurred by or threatened against the Buyer or the DynAir
Companies by DynAir Company employees as a result of termination
of such plan participation.
5.5 Discontinuation of Use of "DynAir Tech" Name.
(a) (i) Seller and DynCorp hereby consent to the use
by Buyer and the DynAir Companies of the name "DynAir Tech" for a
period up to and including December 31, 1995.
(ii) With respect to the period from January 1,
1996 through June 30, 1997, Seller and DynCorp hereby consent to
the use by Buyer of the name "DynAir Tech", provided that such
use is limited to the inclusion of the name "DynAir Tech" in a
transition name such as "Sabreliner Maintenance, Inc., formerly
DynAir Tech of Arizona", "DynAir Tech of Florida, Inc., a
subsidiary of Sabreliner Corporation," or some similar treatment
that clearly indicates the new affiliation of the DynAir
Companies.
(iii) For the period beginning July 1, 1997,
Seller and DynCorp hereby specifically consent to the use of the
name "Air Tech" and similar names not containing the name "Dyn."
(b) (i) The Seller's consents contained in Section
5.5(a)(i) and (ii) shall be deemed to constitute a limited, paid
up, world-wide license for the use of the name "DynAir Tech"
subject to the terms and for the periods described herein.
(ii) Upon the termination of this limited
license, Buyer agrees to cause the DynAir Companies to change
their names to dissimilar names not incorporating the term
"DynAir Tech" or any similar terminology, provided that the name
"Air Tech" shall not be deemed to be similar terminology.
5.6 Disclaimer Related to Forecasts. Buyer acknowledges
that, at its request, certain employees of the DynAir Companies
provided Buyer and its agents and representatives with estimates
of future revenues and profits during the due diligence
examination of the DynAir Companies conducted by Buyer prior to
the Closing Date. Buyer acknowledges that all such estimates were
given to Buyer subject to a specific disclaimer as to future
accuracy and reliability. Buyer acknowledges and agrees that, in
the event any of such forecasts prove with the passage of time or
otherwise to be inaccurate, Buyer will not assert any claim
against DynCorp, Seller, or any of their agents, representatives,
advisors, or contractors, or any of their employees, directors or
advisors.
5.7 Insurance. Buyer acknowledges that the DynAir Companies
will not be covered by DynCorp's and Seller's insurance programs
after the Closing, except to the extent that occurrence-type
coverages are applicable to events which occurred prior to
Closing. The parties agree to cooperate in tendering defense to
insurance carriers and settling claims against the DynAir
Companies for pre-Closing matters.
5.8 Certain Disability and Health Benefits.
(a) Notwithstanding any other provision of this
Agreement, with respect to any employee of any DynAir Company who
is absent from work on the Closing Date on account of a condition
entitling such employee to benefits under a DynCorp short-term or
long-term disability benefit plan, program or policy, DynCorp and
its applicable benefit plans, programs and policies shall remain
responsible on and after the Closing Date for all short-term and
long-term disability benefits payable to such employee pursuant
to the terms of the DynCorp disability plans, programs and
policies until such time as the employee returns to full-time
active employment with a DynAir Company, as well as for the
health, life and other welfare plan coverage of such employee and
his or her covered dependents during such period of absence.
(b) (i) With respect to all other employees of the
DynAir Companies and their covered dependents, the DynCorp
health, life and other welfare benefit plans (other than
disability plans, programs and policies) shall be responsible
(subject to the terms of such plans) for all claims incurred
prior to the Closing Date, and the health, life and other welfare
benefit plans (other than disability plans) established by Buyer
or the DynAir Companies shall be responsible (subject to the
terms and conditions of such plans) for claims incurred on or
after the Closing Date.
(ii) For purposes of this Section 5.8(b), a claim
shall be deemed to be incurred
(A) when an individual obtains professional
services, equipment or prescription drugs covered by a medical,
prescription drug, dental or vision benefit plan,
(B) upon death in the case of a life
insurance plan, and
(C) as of the date of the accident in the
case of an accidental death and dismemberment plan.
(iii) Notwithstanding the foregoing, the DynCorp
health and welfare plans shall be responsible for the cost of all
professional services, equipment and prescription drugs provided
during a hospital stay or similar confinement of any employee of
a DynAir Company or his or her covered dependent that begins
prior to the Closing Date and ends after the Closing Date
(subject to the terms and conditions of such plans).
5.9 Release of Financing Statements. As soon as practicable
after the Closing Date, and in no event later than five business
days thereafter, Seller and DynCorp shall provide to Buyer
executed releases of financing statements on Form UCC-3, relating
to all of the outstanding financing statements filed against the
DynAir Companies in favor of Dyn Funding Corporation.
5.10 Certain Guaranties. After the Closing, Buyer shall use
its best efforts to obtain releases of DynCorp and its affiliates
(other than the DynAir Companies) from all guaranties of
obligations of the DynAir Companies, and, if necessary, to
substitute Buyer's guaranties therefor.
ARTICLE 6
CONDITIONS PRECEDENT OF BUYER
Buyer need not consummate the transactions contemplated
by this Agreement unless the following conditions shall be
fulfilled, each of which shall be considered satisfied or waived
in full by Buyer upon Closing:
6.1 Representations and Warranties; Covenants. Except as
otherwise contemplated or permitted by this Agreement,
(a) the representations and warranties of Seller and
DynCorp contained in this Agreement or in any certificate or
document delivered to Buyer pursuant hereto shall be true and
correct in all material respects,
(b) Seller and DynCorp shall, and shall require the
DynAir Companies to, have performed and complied in all material
respects with all agreements and conditions required by this
Agreement to be performed or complied with by Seller, DynCorp or
the DynAir Companies prior to or on the Closing Date, and
(c) Buyer shall have been furnished with a certificate
of the president or an executive or senior vice president of each
of Seller and DynCorp, dated the Closing Date, certifying, to
such officer's knowledge, to the effect of clauses (a) and (b) of
this Section 6.1.
6.2 Opinion of Seller's Counsel. Buyer shall have been
furnished with an opinion dated the Closing Date of H. Montgomery
Hougen, counsel for Seller and DynCorp, substantially in the form
attached hereto as Exhibit D.
6.3 No Actions. No action, suit, or proceeding before any
court or governmental or regulatory authority shall be pending,
no investigation by any governmental or regulatory authority
shall have been commenced, and no action, suit or proceeding by
any governmental or regulatory authority shall have been
threatened, against Buyer, Seller, DynCorp, any of the DynAir
Companies or any of the principals, officers or directors of any
of them, seeking to restrain, prevent or change the transactions
contemplated hereby or questioning the legality or validity of
any such transactions or seeking damages in connection with any
such transactions.
6.4 Consents. All consents of third parties, including,
without limitation, Governmental Entities and non-governmental
self-regulatory agencies, and all filings with and notifications
of Governmental Entities, regulatory agencies (including
non-governmental self-regulatory agencies) or other entities
which regulate the business of Buyer or the DynAir Companies
necessary on the part of Buyer or the DynAir Companies, to the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby and to permit the continued
operation of the respective businesses of Buyer and the DynAir
Companies in substantially the same manner after the Closing Date
as theretofore conducted, other than routine post-closing
notifications or filings, shall have been obtained or effected.
6.5 Intercompany Accounts. On the Closing Date, Buyer shall
have received evidence of the elimination of all intercompany
accounts between Seller or DynCorp and their affiliates, on the
one hand, and the DynAir Companies, on the other hand.
6.6 Merger; Plan of Liquidation. DynAir Arizona shall have
merged into DynAir Florida, and DynAir Florida shall have adopted
a plan of liquidation.
6.7 Miscellaneous. Buyer shall have received such other
certificates and other documents as Buyer shall have reasonably
requested.
ARTICLE 7
CONDITIONS PRECEDENT OF SELLER AND DYNCORP
Seller and DynCorp need not consummate the transactions
contemplated hereby unless the following conditions shall be
fulfilled, each of which shall be considered satisfied or waived
in full by Seller and DynCorp upon Closing:
7.1 Representations and Warranties; Covenants.
Except as otherwise contemplated or permitted by this
Agreement,
(a) the representations and warranties of Buyer
contained in this Agreement or in any certificate or document
delivered to Seller or DynCorp pursuant hereto shall be true in
all material respects,
(b) Buyer shall have performed and complied in all
material respects with all agreements and conditions required by
this Agreement to be performed or complied with by it prior to or
on the Closing Date, and
(c) Seller and DynCorp shall have been furnished a
certificate of the Chairman of the Board of Directors and Chief
Executive Officer or the Senior Vice President, Finance and
Corporate Development, and Chief Financial Officer of Buyer,
dated the Closing Date, certifying to the effect of clauses (a)
and (b) of this Section 7.1.
7.2 Opinion of Buyer's Counsel. Seller and DynCorp shall
have been furnished with an opinion dated the Closing Date of
Winthrop, Stimson, Putnam & Roberts, special counsel for Buyer,
substantially in the form attached hereto as Exhibit E.
7.3 No Actions. No action, suit, or proceeding before any
court or governmental or regulatory authority shall be pending,
no investigation by any governmental or regulatory authority
shall have been commenced, and no action, suit or proceeding by
any governmental or regulatory authority shall have been
threatened, against Seller, DynCorp or any of their respective
principals, officers or directors, seeking to restrain, prevent,
or change the transactions contemplated hereby or questioning the
legality or validity of any such transactions or seeking damages
in connection with any such transactions.
7.4 Consents. All consents of third parties, including,
without limitation, Governmental Entities and non-governmental
self-regulatory agencies, and all filings with and notifications
of Governmental Entities, regulatory agencies (including
non-governmental self-regulatory agencies) or other entities
which regulate the businesses of Seller and DynCorp, necessary on
the part of Seller or DynCorp, to the execution and delivery of
this Agreement and the consummation of the transactions
contemplated hereby, other than routine post-closing
notifications or filings, shall have been obtained or effected.
7.5. Merger; Plan of Liquidation. DynAir Arizona shall have
merged into DynAir Florida, and DynAir Florida shall have adopted
a plan of liquidation.
7.6 Miscellaneous. Seller and DynCorp shall have received
such other certificates and other documents as they shall have
reasonably requested.
ARTICLE 8
INDEMNIFICATION
8.1 Indemnification by Seller and DynCorp After Closing.
Except to the extent compensated for in the purchase price
adjustment under Section 1.4 above, Seller and DynCorp hereby
jointly and severally agree after the Closing Date to defend,
indemnify and hold harmless Buyer, the DynAir Companies and their
respective successors, assigns and affiliates (collectively, the
"Buyer Indemnities") from and against any and all losses,
deficiencies, liabilities, damages, assessments, judgments, costs
and expenses, including reasonable attorneys' fees (both those
incurred in connection with the defense or prosecution of the
indemnifiable claim and those incurred in connection with the
enforcement of this provision), including Environmental
Liabilities and Costs (collectively, "Buyer Losses"), caused by,
resulting from or arising out of:
(a) (i) breaches of representation or warranty
hereunder on the part of Seller or DynCorp; and
(ii) failures by Seller or DynCorp to perform or
otherwise fulfill any undertaking or other agreement or
obligation hereunder after the Closing, including, without
limitation, those set forth in Section 5.1 (Tax Covenants);
(b) (i) loss of life, injury to persons or property,
or damage to natural resources caused by the actual, alleged or
threatened Release, storage, transportation, treatment or
generation of Hazardous Substances, Oils, Pollutants or
Contaminants generated, stored, used, disposed of, treated,
handled or shipped by Seller or the DynAir Companies prior to the
Closing;
(ii) Cleanup of Hazardous Materials Released,
disposed of or discharged:
(A) on, beneath or adjacent to the Property
prior to the Closing; and
(B) at any other location if such substances
were generated, used, stored, treated, transported or Released by
or on behalf of Seller or the DynAir Companies prior to the
Closing;
(iii) the cost of installation of oil-water
separator or other remediation system for the purpose of treating
water run-off through DynAir Florida's Miami hangar floor drain
system; provided that the liability of Seller and DynCorp
hereunder shall be limited to the lesser of (A) 50% of such cost
incurred by Buyer and/or the DynAir Companies, and (B) $100,000;
and provided further that before asserting any claim against
DynCorp or Seller under this Section (iii), the DynAir Companies
and Buyer shall use their best efforts to recover such costs from
Dade County.
(c) any liability of the DynAir Companies for unpaid
Taxes (including, without limitation, any such arising out of the
merger of DynAir Arizona with and into DynAir Florida and the
adoption of a plan of liquidation by DynAir Florida) or pension
liabilities incurred by virtue of being a member of an affiliated
group filing a consolidated federal income Tax return with
DynCorp or its status as an ERISA affiliate of Seller or DynCorp
or any subsidiary or affiliate of Seller or DynCorp prior to
Closing, and to the extent not attributable directly and solely
to the separate operations of each of the DynAir Companies;
(d) any and all claims, liabilities, demands, actions,
suits or proceedings ("Insurance Losses") that would be covered
by available policies of insurance as set forth in Schedule 3.22,
but which are not so covered by reason of being below the
applicable deductible amounts, and all deductibles with respect
to Insurance Losses that exceed such deductibles; and
(e) any and all actions, suits, proceedings, claims,
demands, incident to any of the foregoing or such
indemnification; provided, however, that if any claim, liability,
demand, assessment, action, suit or proceeding shall be asserted
in respect of which a Buyer Indemnity proposes to demand
indemnification ("Buyer Indemnified Claims"), Buyer or such other
Buyer Indemnity shall notify Seller and DynCorp in writing
thereof, provided further, however, that subject to Section 8.2
below the failure so to notify Seller or DynCorp shall not reduce
or affect Seller's or DynCorp's obligations with respect thereto
except to the extent that Seller or DynCorp is materially
prejudiced thereby;
Subject to rights of or duties to any insurer or other third
Person having liability therefor, Seller and DynCorp shall have
the right promptly upon receipt of such notice to assume the
control of the defense, compromise or settlement of any such
Buyer Indemnified Claims (provided that any compromise or
settlement must be approved by Buyer, which approval may not
unreasonably be withheld), including, at its own expense,
employment of counsel reasonably satisfactory to Buyer; provided,
however, that if Seller or DynCorp shall have exercised its right
to assume such control, Buyer may, in its sole discretion and at
its expense, employ counsel to represent it (in addition to
counsel employed by Seller or DynCorp) in any such matter, and in
such event counsel selected by Seller or DynCorp shall be
required to cooperate with such counsel of Buyer in such defense,
compromise or settlement.
8.2 Certain Limitations. All other provisions of this
Article 8 to the contrary notwithstanding, the parties agree and
understand as follows with respect to DynCorp or Seller's
obligations to indemnify Buyer or the DynAir Companies hereunder:
(a) With the exception of tax liabilities which shall
be subject to the limitations set forth in 8.2(b) below, DynCorp
and Seller shall only be liable to indemnify Buyer for breaches
of representations and warranties hereunder that are asserted
against DynCorp in writing prior to December 31, 1996 or, in the
case of representations and warranties pursuant to Sections
3.14(h), 3.20(e)-(m) and 3.22, prior to December 31, 1997.
Thereafter, neither DynCorp nor the Seller shall have any
obligation hereunder to indemnify Buyer for claims asserted after
such date, except to the extent permitted under 8.2(b) below.
(b) DynCorp shall be obligated to indemnify Buyer for
tax liabilities arising out of a breach of the covenants
contained in Section 5.1 concerning taxes and taxation, so long
as such claims for indemnification are asserted against DynCorp
in writing on or before the date for the running of the statute
of limitations applicable to such taxes.
(c) Neither DynCorp nor Seller shall have any
liability for breaches of representations and warranties under
this Article 8 or any other provision contained in this Agreement
unless and until such liabilities in the aggregate exceed the
amount of $125,000, but in the event such threshold of liability
is reached, then DynCorp and/or Seller shall be liable for the
full amount of such liabilities, provided that in no event shall
DynCorp and Seller have liability to Buyer or the DynAir
Companies for any amount exceeding $2,500,000 in the aggregate
for all claims arising under or in connection with this
Agreement.
8.3 Indemnification by Buyer. Buyer hereby agrees to
defend, indemnify and hold harmless Seller and DynCorp, their
respective directors, officers and employees and their respective
successors, assigns and affiliates (collectively, "Seller
Indemnities") from and against any and all losses, deficiencies,
liabilities, damages, assessments, judgments, costs and expenses,
including attorneys' fees (both those incurred in connection with
the defense or prosecution of the indemnifiable claim and those
incurred in connection with the enforcement of this provision)
(collectively, "Seller Losses"), resulting from or arising out
of:
(a) (i) breaches of representation and warranty
hereunder on the part of Buyer; and
(ii) failures by Buyer to perform or otherwise
fulfill any undertaking or agreement or obligation hereunder;
(b) any and all actions, suits, proceedings, claims
and demands incident to any of the foregoing or such
indemnification; provided, however, that if any claim, liability,
demand, assessment, action, suit or proceeding shall be asserted
in respect of which a Seller Indemnity proposes to demand
indemnification ("Seller Indemnified Claims"), Seller, DynCorp or
such other Seller Indemnity shall notify Buyer thereof, provided
further, however, that the failure to so notify Buyer shall not
reduce or affect Buyer's obligations with respect thereto except
to the extent that Buyer is materially prejudiced thereby; and
(c) all liabilities and obligations of the DynAir
Companies arising out of the operations of the DynAir Companies
following the Closing, including, without limitation, liabilities
and obligations subject to the guaranties of DynCorp and its
affiliates that are not released.
Subject to rights of or duties to any insurer or other third
Person having liability therefor, Buyer shall have the right
promptly upon receipt of such notice to assume the control of the
defense, compromise or settlement of any such Seller Indemnified
Claims (provided that any compromise or settlement must be
reasonably approved by DynCorp) including, at its own expense,
employment of counsel reasonably satisfactory to DynCorp;
provided, however, that if Buyer shall have exercised its right
to assume such control, DynCorp may, in its sole discretion and
at its expense, employ counsel to represent it (in addition to
counsel employed by Buyer) in any such matter, and in such event
counsel selected by Buyer shall be required to cooperate with
such counsel of DynCorp in such defense, compromise or
settlement.
ARTICLE 9
SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
The covenants contained in this Agreement shall survive the
Closing Date without limitation. The representations and
warranties contained herein shall survive the Closing Date for a
period of 18 months, except that the representations and
warranties contained in Sections 3.14(h), 3.20(e)-(m) and 3.22
shall survive for a period of 30 months.
ARTICLE 10
MISCELLANEOUS
10.1 Cooperation. Each of the parties hereto shall use its
reasonable efforts to take or cause to be taken all actions, to
cooperate with the other parties hereto, with respect to all
actions, and to do or cause to be done all things necessary,
proper or advisable to consummate and make effective the
transactions contemplated by this Agreement.
10.2 Waiver.
(a) Any failure of Seller or DynCorp to comply with
any of its obligations or agreements herein contained may be
waived only in writing by Buyer.
(b) Any failure of Buyer to comply with any of its
obligations or agreements herein contained may be waived only in
writing by DynCorp.
10.3 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been
duly given upon receipt of hand delivery, certified or registered
mail, return receipt requested, or telecopy transmission with
confirmation of receipt:
(a) If to Seller or DynCorp, to:
DYNCORP
2000 Edmund Halley Drive
Reston, Virginia 22091
Telecopier: (703)264-9147
Telephone: (703)264-9106
Attention: Senior Vice President & General Counsel
(b) If to Buyer, to
SABRELINER CORPORATION
Pierre Laclede Center
Suite 1500
7733 Forsyth Blvd.
St. Louis, Missouri 63105-1821
Telecopier: (314) 863-6774
Telephone: (314) 863-6880
Attention: Rodney E. Olson
Senior Vice President, Finance
and Corporate Development and
Chief Financial Officer
with a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
Telecopier: (212) 858-1500
Telephone: (212) 858-1000
Attention: Arthur H. Fredston, Esq.
Such names and addresses may be changed by written notice to each
person listed above.
10.4 Governing Law; Consent to Jurisdiction.
(a) This Agreement shall be governed by and construed
in accordance with the internal substantive laws and not the
choice of law rules of the State of New York.
(b) Any judicial proceeding brought with respect to
this Agreement must be brought in any court of competent
jurisdiction in the State of New York, and, by execution and
delivery of this Agreement, each party
(i) accepts, generally and unconditionally, the
exclusive jurisdiction of such courts and any related appellate
court, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement and
(ii) irrevocably waives any objection it may now
or hereafter have as to the venue of any such suit, action or
proceeding brought in such a court or that such court is an
inconvenient forum.
10.5 Counterparts; Execution by Facsimile. This Agreement
may be executed in two or more counterparts, manually or by
facsimile transmission, each of which shall be deemed an original
but all of which together shall constitute one and the same
instrument.
10.6 Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement.
10.7 Entire Agreement. This Agreement, including the
Exhibits and Schedules hereto and the documents referred to
herein, embodies the entire agreement and understanding of the
parties hereto in respect of the subject matter contained herein,
and supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
10.8 Amendment and Modification. This Agreement may be
amended or modified only by written agreement of the parties
hereto.
10.9 Binding Effect; Benefits. This Agreement shall inure
to the benefit of and be binding upon the parties hereto and
their respective successors and assigns; nothing in this
Agreement, express or implied, is intended to confer on any
Person other than the parties hereto and their respective
successors and assigns (and, to the extent provided in Sections
8.1 and 8.2, the other Buyer Indemnities and Seller Indemnities)
any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
10.10 Assignability. This Agreement shall not be assignable
by any party hereto without the prior written consent of the
other party.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the date first above written.
SABRELINER CORPORATION
By
Name:
Title:
DYNCORP AVIATION SERVICES, INC.
By
Name:
Title:
DYNCORP
By
Name:
Title:
EXHIBIT A
DETERMINATION OF PURCHASE PRICE
(A) The Purchase Price shall be equal to $7,532,312;
(1) Plus the sum of the following
(i) Billed Accounts Receivable. The sum of all issued
and outstanding invoices as of the Closing less any subsequent
cash receipts received by the Seller or DynCorp and not remitted
to the Companies and less a reserve for uncollectible accounts.
Included in this category are the billed accounts receivable of
DynAir Parts which have previously been classified as Other
Accounts Receivable.
(ii) Unbilled Accounts Receivable and Work In Process.
The sum of all billable but unbilled accounts receivable and work
in process as of the Closing determined, with hindsight, as
follows:
(a) For fixed price contracts or tasks within a
contract: The product obtained by multiplying the fixed price
amount times the percentage obtained by dividing the total direct
costs incurred as of the Closing by the total direct costs
incurred on the task or contract as of the date the task is
completed. In the event that the task or contract is not complete
within 60 days after the Closing, an estimate to complete the
task shall be prepared and the estimated cost shall be added to
the total direct cost.
(b) For tasks or contracts that are not fixed price:
(1) The product obtained by multiplying the
contractual labor rate times the hours incurred prior to the
Closing; plus
(2) The billing amount for direct materials
charged to the task or contract including the contractual
material mark ups, handling fees, or other additional charges
pursuant to the contract; plus
(3) The contractual billing amount for other
charges incurred prior to the Closing; plus
(4) The contractual billing amount for
rotables removed prior to the Closing less the estimated costs of
repair; plus
(5) Other billable amounts in accordance
with the applicable contracts.
(c) Less any progress billings against the
contract not included in Customer Deposits
(iii) Other Accounts Receivable. The sum of all other
accounts billed or billable or otherwise due from third parties
or employees as of the Closing which are not included in items
(i) or (ii) above, calculated at the estimated recoverable
amounts.
(2) Less the sum of the following:
(i) Accounts Payable. Accounts payable for services
rendered or products received subsequent to the Closing (less
returns subsequent to the Closing) at the amount subsequently
paid or estimated to be paid, including bank overdrafts. Cash
discounts taken subsequent to the Closing shall be deducted from
the otherwise payable amount for purposes of this calculation.
(ii) Accrued Salaries and Related Employer and
Withheld Taxes and Fringe Benefits (Accrued Salaries). Accrued
salaries, incentives and bonuses and related employer and
withheld taxes and fringe benefits due to be paid to third
parties for services rendered prior to the Closing. Accrued
salaries for non-hourly employees shall be determined by
pro-rating the subsequent payroll based on the number of calendar
days prior to the Closing and the number of calendar days
subsequent to the Closing. Accrued salaries for hourly employees
shall be determined by calculating the actual wages earned prior
to the Closing. Amounts payable to the Seller, DynCorp or
parties related to DynCorp shall not be included in the
calculation of Accrued Salaries.
(iii) Accrued Vacation Liability. Accrued Vacation
Liability shall be determined by calculating the amounts due to
employees using the same methodology used in the unaudited
combining balance sheets as of March 30, 1995.
(vi) Other Accrued Liabilities. Other Accrued
Liabilities shall be determined by calculating the amounts not
other wise covered by this Exhibit due to be paid to third
parties in cash subsequent to the Closing but within one calendar
year thereafter for services rendered or obligations incurred
prior to the Closing. Amounts payable to the Seller, DynCorp or
parties related to DynCorp shall not be included in the
calculation of Other Accrued Liabilities. Excluded from this
calculation are any Capitalized Lease or Debt obligations
(including the current portion thereof) or any other Long Term
Liabilities. Also excluded from this calculation are accrued or
deferred state or Federal income tax amounts.
(v) Sales and Property Taxes. Sales and Property Taxes
shall be equal to the amount of unremitted sales taxes collected
from or billed to customers prior to the Closing and personal
property taxes calculated on a pro-rata basis as of the Closing,
based on the most recently received or paid personal property tax
bills, less disputed amounts. Personal property taxes paid in
advance shall likewise be pro-rated through the Closing and
deducted from Sales and Property Taxes.
(vi) Customer Deposits. Customer Deposits and Advances
shall be equal to amounts collected from customers prior to the
Closing and not yet applied against Billed or Unbilled Accounts
for services performed.
(B) Items which will not be a part of the calculation of the
Purchase Price: Notwithstanding the above, the calculation of
the Purchase Price shall not include an addition or subtraction
for amounts due to or from DynCorp or any of its subsidiaries or
affiliates.
EXHIBIT B
REVENUES
For purposes of calculating revenues pursuant to Section
1.2(a)(ii)(A), revenues shall be determined in accordance with
GAAP and by the following:
(1) All amounts billed or billable to customers (a) for services
performed by or under the direction of the DynAir Companies,
including subcontract revenues and/or other billable costs, and
(b) for parts and other products sold.
(2) Facility sublease revenues and revenues from the DynCorp
Aerospace Technology C-141 drop-in contract, if awarded, shall
not be included in the determination of revenues.
(3) In the event that the DynAir Companies perform work as a
subcontractor to or joint venturer in other companies owned at
least 30% directly or indirectly by Sabreliner Corporation,
revenues shall be determined based on Time and Materials incurred
with hourly labor charges and material mark-ups being no less
than those in effect between the Companies and McDonnell Douglas
Corporation.
(4) Revenues on work in process contracts at June 30, 1996 and
1997 shall be determined in accordance with the procedures used
to determine Unbilled Accounts Receivable and Work in Process on
Exhibit A.
STOCK PURCHASE AGREEMENT
Between
Sabreliner Corporation,
DynCorp Aviation Services, Inc.
and
DynCorp
Dated as of June 30, 1995
EXHIBIT C
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, executed as of ,
1995, by and among DynCorp Aviation Services, Inc. (the
"Seller"), Sabreliner Corporation (the "Buyer"), and Crestar Bank
(the "Agent),
WITNESSETH THAT,
WHEREAS, the Seller and the Buyer have entered into a
Stock Purchase Agreement (the "Agreement"), whereby the Buyer
will purchase certain securities from the Seller;
WHEREAS, the Agreement provides that certain monies
shall be placed in escrow upon the occurrence of certain events
described more particularly herein; and
WHEREAS, the Seller and the Buyer have agreed to engage
the agent to hold such monies in escrow and to act in accordance
with the written instructions contained herein in the handling
and delivery of such monies deposited with the Agent pursuant
hereto,
NOW, THEREFORE, in consideration of the foregoing, of
the mutual promises hereinafter set forth, and of other good and
valuable consideration, the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
ESCROW PROVISIONS
1.1 Appointment of the Agent. The Seller and the Buyer
hereby appoint the Agent to serve as escrow agent in connection
with the deposit of funds in connection with disputes relating to
the purchase by the Buyer of certain securities from the Seller,
and the Agent hereby accepts such appointment.
1.2 Meaning of Terms. All capitalized terms used herein,
unless otherwise defined herein, shall have the meanings set
forth in the Agreement.
1.3 Deposit of Funds. [The Buyer][The Seller] shall
deposit with the Agent, in immediately available funds, $ ,
which is an amount determined by the Seller and the Buyer in
accordance with Section 1.4(c) of the Agreement (the "Disputed
Amount").
1.4 Receipt Acknowledged; Instructions. The Agent hereby
acknowledges receipt of the Disputed Amount and agrees to hold
the Disputed Amount and to deliver the Disputed Amount to the
Seller and/or the Buyer upon receipt of, and in accordance with,
written instructions executed jointly by the Seller and the Buyer.
1.5 The Agent's Investment of the Escrow. The Agent shall
invest the Disputed Amount in short-term securities issued or
guaranteed by the United States Government or money market or
other funds which invest exclusively in short-term securities
issued or guaranteed by the United States Government, including
funds managed by the Agent or a subsidiary thereof. Upon
distribution, earnings shall be distributed to the Seller and/or
the Buyer, as applicable, in the same ratios as the Disputed
Amount is distributed.
1.6 Absence of Instructions. In the absence of
instructions jointly executed by the Seller and Buyer, the Agent
is authorized to deliver the Disputed Amount to the Seller and/or
Buyer in full or partial satisfaction of any final judgment of a
court of competent jurisdiction in favor of such party. A final
judgment shall be a judgment as to which the period of time for
appealing such judgment has expired without an appeal having been
timely made, or, if an appeal is timely made, as to which such
appeal has been disposed of and there is no recourse to further
appeals.
1.7 Termination of Agreement. Following final distribution
of the Disputed Amount and all portions thereof, the Agent shall
close out the escrow and make a final accounting to the other
parties to this Escrow Agreement in accordance with Section 3.1.
AGENT'S LIABILITY
2.1 The Agent Bound Only by this Agreement. The Agent
shall not be bound by any agreement or contract other than this
Escrow Agreement.
2.2 The Agent's Liability. The Agent acts hereunder as a
depository only and shall have no liability hereunder for the
performance by it in good faith of the acts to be performed
hereunder, except for its own willful misconduct or negligence.
The Agent is not responsible or liable in any manner for the
sufficiency, correctness, genuineness, or validity of any of the
documents deposited with it, and undertakes no responsibility or
liability for the form of execution of such documents or the
identity, authority, title, or rights of any persons deposition
or executing any of the documents. The Agent shall be authorized
to act on any document believed to be genuine and to be signed by
the proper party or parties and will incur no liability in so
acting. In the event of any disagreement or the presentation of
the adverse claims or demands in connection with or for any item
affected hereby, the Agent shall, at its option, be entitled to
refuse to comply with any such claims or demands during the
continuance of such disagreement and may refrain from delivering
any item affected hereby, and in so doing the Agent shall not
become liable to the parties, or to any other person, due to its
failure to comply with any such adverse claim or demand. The
Agent shall be entitled to continue, without liability, to
refrain and refuse to act until all of the rights of the adverse
claimants have been fully resolved among themselves or finally
adjudicated by a court having jurisdiction over the parties and
the items affected hereby. In the alternative, the Agent may
deposit the items in dispute with the registry of the court
having jurisdiction over the dispute. The Agent shall be held
harmless and indemnified by the parties hereto in connection with
any claims against it in connection with its acting as the Agent.
2.3 The Agent's Compensation. The Agent shall receive as
compensation for services rendered hereunder an initial fee of
$1,000 for the first 90 days of service hereunder, and a monthly
fee of $200 hereafter until the Disputed Amount is finally
disposed of. The Agent shall be reimbursed for any reasonable
expenses and the actual cost of legal services should the Agent
deem it necessary to retain and attorney. Compensation or
reimbursement for fees for the periods shall be borne 50% by the
Buyer and 50% by the Seller. Upon the closing of the escrow in
accordance with Section 1.7, the Agent shall not incur any
additional expenses or become entitled to any additional fees.
GENERAL PROVISIONS
3.1 Notice. All notices, instructions and requests
required or permitted to be given under the provisions hereof
shall be deemed to have been fully given if delivered, or mailed,
by registered or certified mail, postage prepaid, as follows:
If to the Seller, to:
DYNCORP AVIATION SERVICES, INC.
2000 Edmund Halley Drive
Reston, Virginia 22091
Telecopier: (703)264-9147
Telephone: (703)264-9106
Attention: Senior Vice President & General Counsel
If to Buyer, to
SABRELINER CORPORATION
Pierre Laclede Center
Suite 1500
7733 Forsyth Blvd.
St. Louis, Missouri 63105-1821
Telecopier: (314) 863-6774
Telephone: (314) 863-6880
Attention: Rodney E. Olson
Senior Vice President, Finance
and Corporate Development and
Chief Financial Officer
with a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
Telecopier: (212) 858-1500
Telephone: (212) 858-1000
Attention: Arthur H. Fredston, Esq.
If to the Agent, to:
Crestar Bank
[address]
Attention:
3.2 Benefit. This Escrow Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
respective heirs, legal representatives, successors, and assigns.
3.3 Headings. The headings of the paragraphs of this
Escrow Agreement are for the convenience of reference only, and
do not form a part hereof, and in no way affect the
interpretation of this Escrow Agreement.
3.4 Counterpart and Facsimile Signatures. This Escrow
Agreement may be executed by the parties in any number of
counterparts, by facsimile transmission or otherwise, and each
executed copy shall be an original for all purposes without
accounting for the other copies.
3.5 Governing Law. This Escrow Agreement shall be
construed and interpreted under the laws of the Commonwealth of
Virginia, without reference to conflict of laws principles.
IN WITNESS WHEREOF, the parties have executed or have
caused to be executed this Escrow Agreement on the date and year
first above written.
DYNCORP AVIATION SERVICES, INC.
By
Name:
Title:
SABRELINER CORPORATION
By
Name:
Title:
CRESTAR BANK
By
Name:
Title:
Stock Purchase Agreement - Sabreliner Corp. and DynCorp
Was this helpful?