ASSET PURCHASE AGREEMENT

 

                                                                    Exhibit 10.1

 

                            ASSET PURCHASE AGREEMENT

 

      This Asset Purchase Agreement ("Agreement") is made and entered into as of

this 31st day of March,   2005, at Scottsdale,   Arizona,   by and between   Central

Plains   Aviation,   Inc.,   a Kansas   corporation   with   offices at 2145 South Air

Service Road, Garden City, Kansas 67846 ("Seller"), and F B O Air - Garden City,

Inc., a Kansas   corporation   with offices at 9087 East Charter Oak,   Scottsdale,

Arizona   85260   ("Buyer");   and Jon A. Crotts,   an   individual   and President of

Seller ("Crotts").

 

                                    RECITALS

 

      A. Seller is engaged in the   business   of a fixed base   operator at Garden

City Regional Airport (the "Business");

 

      B. Buyer and Seller are parties to that   certain   Offer to Purchase   dated

January 19, 2004 ("Offer to Purchase");

 

      C. Pursuant to the Offer to Purchase,   Buyer   desires to purchase   certain

assets, and none of the liabilities,   of Seller that are used in connection with

the Business at the price and under the terms and conditions set forth herein.

 

      NOW,   THEREFORE,   for good and   valuable   consideration,   the   receipt and

sufficiency of which are hereby acknowledged, the parties agree as follows:

 

                                   ARTICLE 1

                 PURCHASED ASSETS; TRANSFER OF PURCHASED ASSETS

 

      1.1 Purchased Assets. Subject to the terms and conditions set forth in the

recitals set forth above, which are incorporated   herein by reference,   and this

Agreement,   Seller   shall   sell,   assign,   transfer   and deliver to Buyer at the

Closing   (defined   below) and Buyer shall   purchase,   for the Purchase Price set

forth in   ARTICLE 2 hereof,   all of the   assets   and   business   of the   Business

specifically   set forth on Schedule 1.1 hereto,   excluding   the Excluded   Assets

defined in   Section   1.6,   all of which are   hereinafter   called   the   "Assets,"

including,   without limitation,   the following specific assets described in this

Section 1.1:

 

            (a) All   inventories,   including   JetA and Avgas   fuel   inventories,

finished goods,   work-in-progress and raw materials, supplies and parts owned by

Seller   pertaining to the Business (the "Inventory") as of the close of business

on the date immediately prior to the Closing Date including, without limitation,

the Inventory set forth on Schedule 1.1(a).

 

            (b) All   rights   and   interests   of Seller in and to all   contracts,

leases of personal   property,   purchase   orders,   orders from customers,   supply

agreements,     distribution    agreements,    independent    sales    representative

agreements,   license agreements, and other agreements entered into pertaining to

the   Business   or the   Assets in   effect   on the   Closing   Date,   excluding   any

amendments,   revisions,   changes   or   new   orders   under   such   agreements   (the

"Contracts"). All Contracts that are in effect on the date hereof, are set forth

on Schedule 1.1(b).

 

 

                                       E-70

<PAGE>

                                                                    Exhibit 10.1

 

 

            (c) All   rights   of   Seller   under or   pursuant   to all   warranties,

representations   and guaranties made by suppliers in connection with products or

services furnished to the Business,   or otherwise   pertaining to the Business of

affecting the Assets.

 

            (d) All of   Seller's   customer   lists,   together   with all   designs,

notes, and other intangibles which are used in the Business; and all records and

files (including   computer records and files) and papers useful in operating the

Business or relating to the Assets,   including,   but not limited to, manuals and

data, sales, advertising materials, sales and purchase correspondence,   shipping

records and employment   records for current   employees of Seller whom Buyer wish

to retain.

 

            (e) All federal,   foreign, state,   provincial,   municipal,   local or

other governmental consents,   certifications,   licenses, permits, registrations,

grants and other   authorizations   that are necessary to permit Seller to conduct

the Business as presently   conducted   (collectively,   the   "Authorizations"   and

individually,   an "Authorization").   All Authorizations in effect as of the date

of this Agreement are set forth on Schedule 1.1(e).

 

            (f)   All   fuel   trucks,    aircraft   tows,   utility   carts,   portable

generators, equipment, heavy equipment, machinery and vehicles of Seller used in

connection   with   the   Business   as   of   the   Closing   Date   (collectively,   the

"Equipment").   All of such assets as of the date of this Agreement are set forth

on Schedule 1.1(f).

 

      1.2   Transfer   of   Title   to   the   Assets.    Seller's   sale,    assignment,

conveyance,   transfer,   and delivery of the Assets to Buyer shall be made at the

Closing by appropriate   instruments of transfer as shall be reasonably requested

by Buyer or otherwise   sufficient to vest in Buyer, as of the Closing Date, good

and   marketable   title to the Assets that are owned,   as of the Closing   Date by

Seller,   and a valid and   assignable   leasehold   interest in the Assets that are

leased   by   Seller as of the   Closing   Date,   in each case free and clear of any

liens, charges and encumbrances. Such instruments of assignment, conveyance, and

transfer shall include, without limitation, a bill of sale transferring title to

tangible   assets   in the form of   Exhibit   A hereto   (the   "Bill of   Sale")   and

anything else reasonably contemplated by this Agreement to be delivered in order

to transfer possession and enjoyment of the Assets to Buyer. Risk of loss of the

Assets shall pass from Seller to Buyer at Closing.

 

      1.3   Non-Assignable   Assets.   To the   extent   that any of the Assets to be

assigned to Buyer   hereunder are not   assignable   without the consent of another

party,   this   Agreement   shall not   constitute   an   assignment   or an   attempted

assignment if such assignment or attempted   assignment would constitute a breach

of any contract,   right or   commitment.   Seller agree to use its best efforts to

obtain the consent of each other party to any such contract, right or commitment

to the   assignment   thereof   to Buyer in all   cases in   which   such   consent   is

required for assignment or transfer. If such consent is not obtained at or prior

to the Closing and Buyer shall have waived the conditions in Section 5.2(b) with

respect   thereto,   Seller   agree to   cooperate   with Buyer in   seeking   (i) such

consent after the Closing Date and (ii) any reasonable   arrangements designed to

provide   for Buyer the   benefits   accruing   under   any such   contract,   right or

commitment,   including   enforcement   at the cost and for the account of Buyer of

any and all rights of Seller against each other party thereto arising out of the

cancellation   by such other party or   otherwise.   If and to the extent that such

arrangement   cannot be made,   Buyer shall have no obligation with respect to any

such   contract,   right or   commitment   and each such asset shall   thereafter   be

deemed an Excluded Asset (as defined below).

 

 

                                      E-71

<PAGE>

                                                                    Exhibit 10.1

 

 

      1.4   Further   Assurances.   At any   time and from   time to time   after   the

Closing, at Buyer's reasonable request and without further consideration, Seller

shall   execute and   deliver   such   instruments   of sale,   transfer,   conveyance,

assignment and confirmation, and take such other action, as Buyer may reasonably

request to more effectively transfer, convey and assign to Buyer, and to confirm

Buyer's title to, the Assets,   to put Buyer in actual   possession   and operating

control   thereof,   to assist Buyer in exercising all rights with respect thereto

and to carry out the purpose and intent of this Agreement.

 

      1.5 Non-Assumption of Liabilities.   Buyer shall not assume and shall under

no   circumstances   be responsible   for any   liabilities or obligations of Seller

(whether personal or corporate) including,   without limitation,   any liabilities

or   obligations   arising out of the Assets   and/or   operation   of the   Business,

regardless of amount, character or description,   or whether accrued,   contingent

or otherwise.

 

      1.6 Excluded   Assets.   Excluded Assets means (i) the aircraft set forth on

Schedule 1.6   (collectively   the   "Aircraft");   (ii) that certain 2002 Chevrolet

Tahoe bearing Kansas vehicle   registration   1GNEK13Z8ZR180592,   and that certain

2001 Chevrolet Silverado bearing Kansas vehicle   registration   1GCEK19T11E185943

(collectively   the   "Retained    Vehicles");    (iii)   any   Non-assignable   assets

described in Section 1.3; (iv) any assets of Seller not used in connection   with

the Business as more fully set forth on Schedule 1.6 ("Unrelated   Assets");   and

(v) any real property   owned by Seller or any or real property   leases leased by

Seller and not set forth on Schedule 1.1(b).

 

                                   ARTICLE 2

                  PURCHASE PRICE; ALLOCATION OF PURCHASE PRICE

 

      2.1 Purchase   Price.   The total purchase price for the Assets shall be Six

Hundred Seventy Five Thousand Dollars ($675,000) ("Purchase Price").

 

      2.2 Payment of Purchase   Price.   The Purchase Price shall be paid by Buyer

to Seller as follows:

 

            (a) Cash at   Closing.   Four   Hundred   Thirty Five   Thousand   Dollars

($435,000), by wire transfer at Closing.

 

            (b) Promissory Note. Two Hundred Forty Thousand   Dollars   ($240,000)

shall   be paid by Buyer   to   Seller   under a   promissory   note   having a term of

eighteen   (18) months and bearing an interest of five   percent (5%) per annum in

the form attached hereto as Exhibit B ("Promissory   Note").   The Promissory Note

shall be payable on a quarterly basis to Seller.

 

      2.3   Allocation of Purchase   Price.   The Purchase Price shall be allocated

among the Assets as set forth on Schedule   2.3,   which   Buyer   shall   deliver to

Seller at least five business days prior to Closing.

 

 

                                      E-72

<PAGE>

                                                                     Exhibit 10.1

 

 

                                   ARTICLE 3

                         REPRESENTATIONS AND WARRANTIES

 

      3.1   Representations   and   Warranties of Seller and Crotts.   As a material

inducement   to   Buyer   to   enter   into   this   Agreement   and to   consummate   the

transactions   contemplated   hereby,   each of Seller   and Crotts   represents   and

warrants to Buyer that the   statements set forth in this Section 3.1 are correct

and complete as of the date of this   Agreement   and will be correct and complete

as of the Closing   Date (as though made then and as though the Closing Date were

substituted for the date of this Agreement throughout this Section 3.1). Certain

exceptions to such   representations and warranties are set forth on Schedule 3.1

("Schedule of Exceptions")   attached hereto and incorporated herein, which shall

be arranged in sections corresponding to the subsections of this Section 3.1.

 

            (a)   Organization   and   Qualification.   Seller is a corporation duly

organized,   validly existing and in good standing under the laws of the State of

Kansas and has full corporate power and corporate   authority to own or lease its

properties   and to conduct its   business   in the manner and in the places   where

such properties are owned or leased or as such business is currently   conducted.

The   copies   of   Seller's   Articles   of    Incorporation,    as   amended   to   date

(hereinafter referred to as its "Articles"), certified by the Secretary of State

of the State of Kansas,   and of Seller's Bylaws, as amended to date (hereinafter

referred to as its "Bylaws"),   certified by Seller's Secretary, are complete and

correct and no amendments thereto have been filed or are pending.   Seller is and

has been at all times in compliance with its Articles and Bylaws. Seller is duly

qualified or licensed to conduct business as a foreign corporation in, and is in

good   standing   in,   each   jurisdiction   in which the nature of the   business as

conducted by Seller or the   character and nature of any of the Assets makes such

qualification necessary.

 

            (b) Authority.   Seller has full right,   power and authority to enter

into this Agreement and each   agreement,   document and instrument to be executed

and delivered by Seller   pursuant to this Agreement   (the "Related   Agreements")

and   to   carry   out   the   transactions   contemplated   hereby   and   thereby   (the

"Transactions").   The execution,   delivery and performance of this Agreement and

the   Related   Agreements   by Seller   has been duly and   validly   authorized   and

approved by all necessary   action on the part of Seller,   and no other action on

the part of Seller is required in connection therewith.   This Agreement and each

Related Agreement   constitutes,   or when executed and delivered will constitute,

the   legal,   valid   and   binding   obligation   of   Seller,   each   enforceable   in

accordance with its respective terms. The execution, delivery and performance by

Seller of this Agreement and each Related Agreement:

 

                   (i) does not and will not violate any foreign, federal, state,

local or other laws, regulations or ordinances applicable to Seller;

 

                  (ii) does not or will not violate any term or provision of the

Articles or Bylaws of Seller; or

 

                  (iii) except as set forth on Schedule 3.1(b)(iii) does not and

will not   result in a breach   of,   constitute   or   result   in a   default   under,

accelerate any obligation   under or give rise to a right of termination   of, any

indenture,   loan   or   credit   agreement,   or   any   other   agreement,    contract,

instrument, mortgage, lien, lease, permit, authorization, order, writ, judgment,

injunction,   decree,   determination   or   arbitration   award to which Seller is a

party or by which   Seller or any   property   of Seller is bound or   affected,   or

result in the creation or   imposition of any mortgage,   pledge,   lien,   security

interest or other   charge or   encumbrance   on any of the   Assets.   Except as set

forth on   Schedule   3.1(b)(iii),   no   consent   or   waiver   by,   approval   of, or

designation,   declaration   or filing with,   any Person is required in connection

with the   execution,   delivery and   performance   by Seller of this Agreement and

each Related   Agreement.   "Person"   shall mean an individual,   a partnership,   a

corporation, an association, a joint stock company, a trust, a joint venture, an

unincorporated    organization,    a   governmental   authority   or   entity   or   any

department, agency or political subdivision thereof.

 

 

                                       E-73

<PAGE>

                                                                    Exhibit 10.1

 

 

            (c)   Financial   Statements.   The   audited,   or   unaudited if audited

unavailable,   balance   sheets and   statements of income of Seller for the fiscal

years ended December 31, 2004, December 31, 2003 and December 31, 2002 have been

previously   provided   to Buyer   (such   financial   statements   being   referred to

collectively   herein   as the   "Financial   Statements").   All   of   the   Financial

Statements   (including the notes thereto) have been prepared in accordance   with

generally accepted accounting principles applied consistently during the periods

covered   thereby,   are   complete   and   correct,   present   fairly   the   financial

condition   of Seller and the results of its   operations   as of the dates of such

statements and for the periods   covered   thereby,   and are   consistent   with the

books and records of Seller.

 

            (d) Title to Assets; Liens; Condition of Assets. Except as set forth

on Schedule 3.1(d),   Seller has good and marketable title to the Assets that are

owned and a valid and   assignable   leasehold   interest   in the   Assets   that are

leased.   The   Assets   are   free   and   clear of all   mortgages,   liens,   security

interests,   pledges,   charges and other encumbrances of every nature whatsoever,

except for liens for current taxes not yet due and payable or being contested in

good   faith   by   appropriate   proceedings,   and   such   imperfections   of   title,

easements and   encumbrances   as do not materially   detract from the value of the

properties   subject   thereto or affected   thereby or otherwise do not materially

interfere with their present or future use in a manner   consistent   with present

practices of the Business. The Assets constitute all of the material assets used

to conduct   the   Business.   All of the   leasehold   improvements   included in the

Assets   are in   good   repair,   have   been   well   maintained,   conform   with   all

applicable   ordinances,   regulations and zoning,   environmental   and other laws,

regulations   and   ordinances   and do not   encroach on   property   of others.   All

machinery   and   equipment is in good working   order subject to ordinary wear and

tear.

 

            (e) Taxes

 

                   (i)   Definitions.   As used   herein,   "IRC" means the   Internal

Revenue Code of 1986, as amended and interpreted by treasury   regulations;   "Tax

Return" means any return, declaration,   report, claim for refund, or information

return or statement   relating to Taxes,   including   any   schedule or   attachment

thereto,   and   including any   amendment   thereof,   and "Taxes means any federal,

state, local, or foreign income, gross receipts,   license, payroll,   employment,

excise, severance, stamp, occupation,   premium, windfall profits, environmental,

customs duties, capital stock, franchise, profits, withholding,   social security

(or similar), unemployment, disability, real property, personal property, sales,

use,   transfer,   registration,   value   added,   alternative   or   add-on   minimum,

estimated, or other tax of any kind whatsoever, including any interest, penalty,

or addition thereto, whether disputed or not.

 

 

                                      E-74

<PAGE>

                                                                     Exhibit 10.1

 

 

                  (ii)   Returns and   Payments.   Seller has filed all Tax Returns

that it was   required to file.   All such Tax Returns are correct and complete in

all respects.   All Taxes owed by Seller (whether or not shown on any Tax Return)

have been paid. Seller currently is not the beneficiary of any extension of time

within which to file any Tax Return,   or to the extent due,   reserved for on the

Financial   Statements.   No   claim   has   ever   been   made   by an   authority   in a

jurisdiction where Seller does not file Tax Returns that it is or may be subject

to taxation by that jurisdiction.   There are no liens, encumbrances,   or charges

against   any of the assets of Seller that arose in   connection   with any failure

(or alleged failure) to pay any Tax.

 

                  (iii)   Withholding   Taxes.   Seller has   withheld   and paid all

Taxes required to have been withheld and paid in connection with amounts paid or

owing to any employee, independent contractor,   creditor,   shareholder, or other

third party.

 

                  (iv) Tax   Liabilities.   Neither   Seller's   nor any of Seller's

officers,   directors,   or employees responsible for Tax matters has knowledge of

any facts that would lead them to expect any authority to assess any   additional

Taxes for any period for which Tax Returns have been filed.   There is no dispute

or claim   concerning any Tax liability of Seller either claimed or raised by any

authority in writing or as to which any of Seller or any of Seller's,   officers,

directors,   or employees   responsible   for Tax matters has knowledge   based upon

personal contact with any agent of such authority. Schedule 3.1(e) lists all Tax

Returns filed for taxable periods ended on or after December 31, 2001, indicates

those Tax Returns   that have been audited and   indicates   those Tax Returns that

currently   are the   subject of an audit.   Seller has   disclosed   on its   federal

income   Tax   Returns   all   positions   taken   therein   that   could give rise to a

substantial   understatement   of federal   income   Tax   within the   meaning of IRC

Section 6662.

 

                  (v) Statute of Limitations.   Seller has not waived any statute

of   limitations   in   respect   of Taxes or agreed to any   extension   of time with

respect to a Tax assessment or deficiency.

 

            (f)   Absence   of   Undisclosed   Liabilities.   Except   as set forth on

Schedule 3.1(f), Seller had and has no indebtedness,   liabilities or obligations

of any   nature or kind,   whether   accrued,   absolute,   contingent   or   otherwise

asserted   or   unasserted,   known or   unknown   and   whether   due or to become due

(including,   without limitation,   potential   liabilities relating to products or

services   provided   by   Seller   or the   conduct   of the   Business   prior   to the

Effective   Date,   regardless   of   whether   claims in   respect   thereof   had been

asserted as of such date).

 

            (g)   Inventory.   Except to the extent of   reserves   set forth in the

Financial Statements, all Inventory is of a quality and quantity saleable in the

ordinary   course of the Business at prevailing   market prices and is adequate in

amount,   consistent with past practices of the Business,   to continue operations

without creating backlogs, in excess of customary levels for the Business.

 

            (h) Absence of Certain   Changes.   Since the December 31, 2003, there

has not been:

 

                  (i) any   operation of the Business out of the ordinary   course

of   business   or any   change in the   financial   condition,   properties,   assets,

liabilities,   business,   prospects or operations of the Business that, by itself

or in   conjunction   with all   other   such   changes,   has or is   likely to have a

materially adverse effect on the Business;

 

 

                                      E-75

<PAGE>

                                                                    Exhibit 10.1

 

 

                  (ii) any purchase, sale, license or other disposition,   or any

agreement   or   other   arrangement   for the   purchase,   sale,   license   or   other

disposition,   of any   part of   Seller's   properties   or   assets   (including   any

patents, trademarks and copyrights) included in the Assets, other than purchases

for and sales from inventory in the ordinary course of business;

 

                  (iii) any damage,   destruction or loss, whether or not covered

by insurance,   adversely affecting Seller's properties or assets included in the

Assets or the Business in excess of $5,000 per single occurrence;

 

                  (iv) any change with respect to Seller's officers,   management

or   supervisory   personnel   employed   in the   Business,   other   than   changes in

supervisory personnel occurring in the ordinary course of business;

 

                  (v) any payment or   discharge of a lien or liability of Seller

that is not shown on the Financial Statements incurred in the ordinary course of

business thereafter;

 

                  (vi) any   obligation   or   liability   incurred by Seller to any

bank,   officer,   director,   employee,   other   than   in the   ordinary   course   of

business,   or any loans or   advances   made by Seller to any   officer,   director,

employee,   except for normal   compensation   and   expense   allowances   payable to

officers or employees;

 

                  (vii)   any   change   in the   accounting   methods   or   practices

followed by Seller or any change in   depreciation   or   amortization   policies or

rates theretofore adopted;

 

                  (viii) any change in the manner in which   Inventory   of Seller

used in the Business is marketed or any   increase in Inventory   levels in excess

of historical levels for comparable periods;

 

                  (ix) any delay or   postponement   of   payment   of any   accounts

payable or other   liabilities   relating to the   Business   outside   the   ordinary

course of business;

 

                  (x) any declaration,   setting aside or payment of any dividend

or distribution   with respect to its capital stock,   or redemption,   purchase or

other acquisition of its capital stock;

 

                  (xi) any change in the employment terms or   employment-related

benefits for any independent   sales   representative   or employee employed in the

Business outside the ordinary course of business; or

 

                  (xii) any   agreement or   understanding,   whether in writing or

otherwise,   for Seller to take any of the actions   specified in subsections   (i)

through (xi) above.

 

            (i) Trade Secrets and Customer   Lists.   Seller owns or has the right

to use,   free and clear of any   claims or rights of others,   all trade   secrets,

inventions,   developments,   customer lists,   manufacturing and secret processes,

hardware designs,   programming   processes,   software and other information,   and

know-how (if any) required for the Business,   including   products   licensed from

others. There are no payments that are required to be made by Seller for the use

of such trade secrets,   inventions,   developments,   customer lists,   copyrighted

materials,   manufacturing and secret processes and know-how. Seller is not using

or in   any   way   making   any   unlawful   or   wrongful   use   of   any   confidential

information,   copyrighted   materials,   know-how   or trade   secrets   of any third

party, including, without limitation, any former employer of any present or past

employee, of Seller or of any of Seller's predecessors. To Seller's knowledge no

employee is or was a party to any   non-competition or confidentiality   agreement

with any party other than Seller or Buyer.

 

 

                                      E-76

<PAGE>

                                                                     Exhibit 10.1

 

 

            (j) Contracts. All of the Contracts are in full force and effect and

are freely assignable in accordance with the terms of this Agreement.

 

                  (i) Copies of all   Contracts,   have been   provided to Buyer or

their counsel prior to the execution of this Agreement and are true, correct and

complete,   and   have not   been   subject   to any   amendment,   extension   or other

modification as of the date hereof.

 

                  (ii) Each   Contract   is in full force and effect   without   any

default   thereunder by Seller or, to the knowledge of Seller, by any other party

thereto (a "default"   being defined for purposes   hereof as an actual default or

any set of facts   that   would,   upon   receipt   of   notice   or   passage   of time,

constitute a default).

 

                  (iii) All Contracts   with respect to the real estate   premises

on which the Business has been   conducted   as of the   Effective   Date shall each

have a   minimum   remaining   term of at least   twenty   five (25)   years,   pending

approval of the applicable municipality and/or airport authority.

 

                  (iv) There are no employment   contracts   with any employees of

the Seller and all Seller employees are at-will employees.

 

            (k)   Litigation.   There are no   suits,   actions   or   administrative,

arbitration or other proceedings or governmental   investigations   pending or, to

the knowledge of Seller, threatened against or relating to Seller, the Assets or

the Business.   Seller is not otherwise engaged as a party in any suit, action or

administrative,   arbitration or other proceeding. Seller has not entered into or

been subject to any consent decree,   compliance order, or   administrative   order

with respect to any property owned, operated,   leased, or used by Seller. Seller

has   not   received   any   request   for    information,    notice,    demand   letter,

administrative inquiry, or formal or informal complaint or claim with respect to

any property   owned,   operated,   leased or used by Seller or any   facilities   or

operations   thereon.   Seller   has   not   been   named   by the   U.S.   Environmental

Protection   Agency or a state or local   environmental   agency   as a   potentially

responsible   party   (or   similar   designation   under   applicable   state   law) in

connection with any site at which   hazardous   substances,   hazardous   materials,

toxic   substances,   oil,   or   petroleum   products   have   been   released   or   are

threatened to be released. There are no existing or, to the knowledge of Seller,

threatened   product   liability,   warranty or other similar claims,   or any facts

upon which a claim of such nature could be based, against Seller or the Business

for   services   or   products   that are   defective   or fail to meet any service or

product   warranties.   Seller is no