Exhibit 2.1
Execution Copy
MEMBERSHIP INTEREST PURCHASE
AGREEMENT
THIS MEMBERSHIP
INTEREST PURCHASE AGREEMENT (together with the exhibits and
schedules hereto, this “ Agreement ”) is entered
into as of May 26, 2005 (the “ Effective Date
”), by and between GENE H. YAMAGATA, a resident of the state
of Nevada (“ Seller ”), and MACQUARIE FBO
HOLDINGS LLC, a Delaware limited liability company (“
Buyer ”). Unless otherwise defined in the Agreement,
capitalized terms used in this Agreement are defined in Exhibit
“A” .
RECITALS
A. Seller
owns all of the equity interests, including any and all rights to
acquire any such equity interests (collectively, the “
Membership Interests ”), of Eagle Aviation Resources,
Ltd., a Nevada limited liability company doing business as Las
Vegas Executive Air Terminal (the “ Company
”).
B. The
Company is comprised of a fixed base operation at McCarran
International Airport located in Las Vegas, Nevada (the “
Facility ”). The business operations relating to the
Facility are hereinafter referred to as the “ Business
.”
C. Buyer
desires to acquire from Seller, and Seller desires to sell and
transfer to Buyer, all of the Membership Interests on the terms and
subject to the conditions set forth herein.
AGREEMENT
THEREFORE, in
consideration of the foregoing and the mutual agreements and
covenants set forth below, the Parties hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF MEMBERSHIP
INTERESTS
1.1
Acquisition . Subject to the terms and conditions of this
Agreement, Buyer agrees to purchase, and Seller agrees to sell,
convey, assign, transfer and deliver to Buyer, the Membership
Interests, free and clear of all Encumbrances, on the Closing
Date.
1.2
Assignment of Membership Interests . The sale and transfer
of the Membership Interests will be effected by delivery by Seller
to Buyer of an Assignment of Limited Liability Company Membership
Interests in the form attached hereto as Exhibit
“B” .
ARTICLE 2
PURCHASE PRICE; OTHER
CONSIDERATION
2.1
Purchase Price . Subject to adjustment as set forth in
Section 2.2 below, the aggregate amount to be paid by
the Buyer at the Closing in consideration for the
Membership
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Interests shall be Fifty Eight
Million Dollars ($58,000,000) (the “ Purchase Price
”). Five Hundred Thousand Dollars ($500,000) of the Purchase
Price (the “ Escrow Funds ”) shall be delivered
to an escrow account with the Escrow Agent, to be held by the
Escrow Agent for a period of one year from the Closing Date,
pursuant to the terms of an escrow agreement substantially in the
form attached hereto as Exhibit “C” , and the
balance of the Purchase Price (the “ Closing Funds
”) shall be delivered to Seller or, at Seller’s
direction, to any third parties in satisfaction of Funded
Indebtedness. The Parties acknowledge that Buyer has deposited One
Hundred Twenty-Five Thousand Dollars ($125,000) (the “
Deposit ”) in an account acceptable to Seller naming
Seller as the beneficiary of the Deposit, which Deposit shall be
delivered to Seller at the Closing in partial satisfaction of the
Closing Funds.
2.2
Adjustment to Purchase Price .
(a) The Purchase
Price shall be subject to adjustment pursuant to this Section
2.2 , with such adjustment being referred to as the “
Closing Net Working Capital Adjustment. ” The Closing
Net Working Capital Adjustment shall be the positive or negative
amount by which the Closing Net Working Capital (as defined below)
differs from One Hundred Fifty Thousand Dollars ($150,000) (the
“ Target Closing Net Working Capital ”),
provided, however, no adjustment shall be made unless such
difference is more than Twenty Five Thousand Dollars ($25,000). If
the Closing Net Working Capital exceeds the Target Closing Net
Working Capital, then the Closing Net Working Capital Adjustment
shall be positive; and if the Closing Net Working Capital is less
than the Target Closing Net Working Capital, then the Closing Net
Working Capital Adjustment shall be negative. Seller shall estimate
in good faith the Closing Net Working Capital, as of the Closing,
and deliver such estimate, together with an unaudited balance sheet
of the Company as of the Closing Date (prepared in accordance with
GAAP, applied in a manner consistent with and using all of the same
accounting principles, practices, methodologies and policies used
in the preparation of the Financial Statements and the example set
forth on Schedule 2.2(a) (the “ Accounting
Principles ”)) to Buyer no later than two
(2) Business Days before the Closing Date. If the difference
between such estimate and the Target Closing Net Working Capital is
more than Twenty Five Thousand Dollars ($25,000), then the full
amount of such difference shall be added to or deducted from, as
the case may be, the Closing Funds. Any such adjustment is referred
to herein as the “ Estimated Net Working Capital
Adjustment ”. The Closing Net Working Capital shall be
finally determined in accordance with Section 2.2(b) and
(e) .
(b) Promptly after
the Closing, Buyer shall cause to be prepared a balance sheet of
the Company as of the Closing Date (the “ Closing Date
Balance Sheet ”). The Closing Date Balance Sheet shall be
prepared in accordance with the Accounting Principles. The Parties
acknowledge that the sole purpose for determining Closing Net
Working Capital is to adjust the Purchase Price so as to reflect
the difference, if any, between the actual net working capital of
the Company as of the Closing Date and the Target Closing Net
Working Capital. For purposes of this Agreement, “ Closing
Net Working Capital ” shall mean the Company’s
current assets minus current liabilities, calculated in accordance
with GAAP, applied in a manner consistent with and using all of the
Accounting Principles, as of the Effective Time. At all times
through the Closing
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Date,
Company shall maintain a cash balance of at least Seventy Five
Thousand Dollars ($75,000), provided, however, that this cash
balance requirement shall in no way alter the calculation of either
the Estimated Net Working Capital Adjustment or the Actual Net
Working Capital Adjustment set forth in this
Section 2.2 .
(c) Buyer shall
provide to the Seller, within sixty (60) days after Closing,
(i) a copy of the Closing Date Balance Sheet, and (ii) a
calculation of (A) the actual Closing Net Working Capital
Adjustment (“ Actual Net Working Capital Adjustment
”); (B) the amount, if any, by which the Estimated Net
Working Capital Adjustment is less than the Actual Net Working
Capital Adjustment (an “ Adjustment in Favor of Seller
”); and (C) the amount, if any, by which the Estimated
Net Working Capital Adjustment is greater than the Actual Net
Working Capital Adjustment (an “ Adjustment in Favor of
Buyer ”) (such materials, the “ Buyer Adjustment
Notice ”).
(d) Buyer shall
allow Seller and his representatives access at all reasonable times
to the Company’s personnel, properties, books and records,
schedules and calculations relating to the Closing Date Balance
Sheet and the Actual Net Working Capital Adjustment for the purpose
of reviewing the Buyer Adjustment Notice and the Closing Date
Balance Sheet and confirming the accuracy of the preparation
thereof. In the event that the Seller provides notice (“
Seller Objection Notice ”) to Buyer no later than
sixty (60) days after receipt of the Buyer Adjustment Notice
that the Seller disputes Buyer’s determination of the Actual
Net Working Capital Adjustment, the Adjustment in Favor of Seller
or the Adjustment in Favor of Buyer, the Seller and Buyer shall
then meet and negotiate in good faith to resolve such dispute, such
negotiation to begin as soon as practicable (but in any case, no
later than thirty (30) days) after Buyer’s receipt of
the Seller Objection Notice; provided, that, Buyer shall promptly
pay any amount of an Adjustment in Favor of Seller that is not in
dispute.
(e) In the event
that Buyer and Seller are not able to resolve such dispute within
forty-five (45) days after the date on which the Seller
provides Buyer with the Seller Objection Notice, then either the
Seller or Buyer may refer the issues in dispute to a neutral
mutually acceptable independent accounting firm of national
reputation for resolution (the “ Referee ”). The
decision of such issues by the Referee shall be final and binding
on the Parties. The Parties shall submit their positions on the
dispute to the Referee within thirty (30) days after referral,
and shall direct the Referee to decide the dispute within fifteen
(15) days after submission to it. The fees and expenses of the
Referee shall be paid one-half by Buyer and one-half by Seller.
Buyer and Seller shall direct the Referee to promptly provide
invoices of all such fees and expenses directly to the Seller and
Buyer.
(f) After final
determination, either (i) Buyer shall pay to Seller the amount
of any Adjustment in Favor of Seller, or (ii) any Adjustment
in Favor of Buyer shall be distributed to Buyer from the Escrow
Funds. Any such payment is hereinafter referred to as the “
Final Payment ”.
(g) Any Final
Payment shall be made by wire transfer of immediately available
funds within three (3) Business Days after its final
determination in accordance
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with
this Section 2.2 to account(s) specified by Buyer and
Seller to receive the Final Payment; provided, however, that Buyer
shall not be required to make any payment by wire transfer in an
amount less than One Hundred Thousand Dollars ($100,000) and may
issue a check written against immediately available funds in lieu
of a wire transfer for such payment.
2.3
Transaction Taxes . Each Party shall pay all transfer,
registration, stamp, documentary, recording and similar taxes, if
any, that become due and payable by such Party as a result of the
assignment of the Membership Interests for the Purchase
Price.
ARTICLE 3
SELLER’S REPRESENTATIONS AND
WARRANTIES
For
the purposes of this Agreement, the phrase “ to the best
of Seller’s knowledge ” or words of similar import
shall mean the actual knowledge of the individuals listed on
Exhibit “D” hereto as well as the knowledge with
respect to a particular matter if a prudent individual would be
expected to discover or otherwise become aware of it after
reasonable inquiry. Subject to the foregoing and as an inducement
to Buyer to enter into this Agreement, Seller represents and
warrants to Buyer that as of the date hereof and as of the
Closing:
3.1
Organization . The Company is a limited liability company
duly organized or formed, validly existing and in good standing
under the Laws of Nevada. The Company does not have any
Subsidiaries. The Company has all requisite power and authority to
own and operate the Business as conducted as of the date hereof,
and to own, operate and lease the properties and assets owned,
operated or leased by the Company and used in the Business. The
Company is not required to be licensed or qualified to do business
in any jurisdiction other than the State of Nevada. Attached to
Schedule 3.1 are complete and correct copies of the
Charter Documents for the Company as currently in
effect.
3.2
Power and Authority . Seller has full power and authority to
own the Membership Interests, to execute and deliver this Agreement
and the Transaction Documents and to perform his obligations
hereunder or thereunder.
3.3
Authorization; No Breach . The execution, delivery and
performance of this Agreement has been, and the execution, delivery
and performance of the Transaction Documents as of the Closing will
have been, duly and validly authorized by Seller, and this
Agreement constitutes, and each of the Transaction Documents as of
the Closing will constitute, a valid and binding obligation of
Seller, enforceable against Seller in accordance with their
respective terms (except as may be limited by bankruptcy,
insolvency, reorganization and other similar laws and equitable
principles relating to or limiting creditors’ rights
generally). The execution, delivery and performance of this
Agreement and the Transaction Documents, and the consummation of
the transactions hereunder and thereunder, will not
(a) violate, conflict with, result in a breach or constitute a
default, or give rise to any right of amendment, termination,
cancellation or acceleration, under (with or without due notice or
lapse of time, or both) the Company’s Charter Documents, any
Law to which Seller is subject or any agreement to which the
Company is a party or to which it or its assets are otherwise bound
(including the Material Contracts), or
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(b) except as set forth on
Schedule 3.3 , require any authorization, notice,
consent or approval of, or action or filing with, any Person.
Except as set forth on Schedule 3.3 , no consent,
approval, order or authorization of or registration, declaration,
notice or filing with or exemption by any court, administrative
agency or commission or other governmental authority or
instrumentality, whether local, domestic or foreign is required by
or with respect to the Seller or the Company in connection with the
execution and delivery of this Agreement and the Transaction
Documents by Seller, or the consummation of the transactions
contemplated hereby or thereby.
3.4
Absence of Undisclosed Liabilities .
(a) Other than as
disclosed on the Liabilities Schedule, Schedule 3.4(a)
, the Company does not have any liabilities or obligations of any
nature whatsoever, whether accrued or absolute, contingent or
otherwise, and whether due or to become due, except
(i) liabilities and obligations that arise in the ordinary
course of business, consistent with past practices, under contracts
described on the Leases Schedule and the Contracts Schedule (other
than through any breach or default by the Company),
(ii) liabilities and obligations reflected in the Financial
Statements, and (iii) liabilities and obligations of the
Company that have arisen after the date of the Financial Statements
in the ordinary course of business, consistent with past practices
(other than through any breach or default by the Company) that do
not exceed Fifty Thousand Dollars ($50,000) in the
aggregate.
(b) Except as set
forth on Schedule 3.4(b) , the Company does not have
any Funded Indebtedness. As of the Closing Date, the Company will
not owe money to any other party pursuant to a loan agreement or
promissory note or otherwise have any Funded
Indebtedness.
3.5
Capitalization of the Company; Title to Membership Interests
.
(a) Seller is the
unconditional and sole legal, beneficial, record and equitable
owner of the Membership Interests, and has full power and authority
to sell and transfer the Membership Interests free and clear of all
Encumbrances.
(b) The Membership
Interests constitute all of the issued and outstanding equity in
the Company. All such Membership Interests are duly authorized,
validly issued, fully paid and non-assessable and were issued in
conformity with applicable Laws.
(c) There are no
outstanding warrants, options, rights, other securities,
agreements, subscriptions, or other commitments, arrangements or
undertakings pursuant to which the Company, the Seller or any other
Person is or may become obligated to issue, deliver or sell, or
cause to be issued, delivered or sold, any additional membership
interests or other securities of the Company.
3.6
Financial Statements . Seller has delivered to Buyer or,
with respect to the Interim Unaudited Statements, will deliver to
Buyer prior to Closing, correct and complete copies of
(a) audited financial statements for the Company prepared by
L.L. Bradford & Company for the year ended December 31,
2004 (the “ Audited 2004 Statements ”), and
(b) unaudited statements
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of income and cash flow for the
Company for the three (3) -month period ending March 31, 2005
(the “ Unaudited Statements ”) and each
month-end that has occurred since, or will occur after, March 31,
2005, and prior to the Closing Date ( the “ Interim
Unaudited Statements ” and collectively with the Audited
2004 Statements and the Unaudited Statements, the “
Financial Statements ”). The Financial Statements have
been (and, with respect to those statements that will be delivered
after the Effective Date but prior to Closing, will be) prepared in
accordance with the books and records of the Company and consistent
with past practices. The Audited 2004 Statements have been prepared
in accordance with GAAP consistently applied throughout the period
involved and fairly present the financial condition and results of
operation of the Business as December 31, 2004 and for the
period then ending, as the case may be. True, correct and complete
copies of the Financial Statements, are attached to
Schedule 3.6 hereto. Except as set forth on
Schedule 3.6 , the Company’s accounts receivable
arose, and all accounts receivable that will be outstanding as of
the Closing Date shall have arisen, from bona fide transactions in
the ordinary course of business and are fully collectible within
one hundred eighty (180) days of invoice, subject to recorded
reserves. The reserves for accounts receivables set forth in the
Financial Statements have been established consistently with the
Company’s historical accounting practices.
3.7
Absence of Certain Changes or Events . Since
December 31, 2004, and except as disclosed in
Schedule 3.7 , the Business has been operated in the
ordinary course and there has not been any:
(a) sale,
assignment or transfer, other than in the ordinary course of
business and consistent with past practice, of any assets of the
Company;
(b) acquisition by
merger, consolidation with, purchase of substantially all of the
assets or capital stock of, or any other acquisition of any
material assets or business of, any corporation, partnership,
association or other business organization or division
thereof;
(c) change in
accounting methods or practices by the Company;
(d) entry into, or
termination, amendment or modification of, any Material Contract,
Permit or material transaction (including, without limitation, any
borrowing, capital expenditure, capital contribution, capital
financing or factoring agreement);
(e) increase in
salary, bonuses or other compensation payable or to become payable
to any officer or employee of the Company, except in the ordinary
course of business, consistent with past practice, and Company has
not (i) entered into any Benefit Plan or Benefit Agreement,
employment, severance, or other agreements relating to compensation
or fringe benefits, (ii) adopted or changed any existing
Benefit Plan or Benefit Arrangement or (iii) advanced or
loaned any money to any officer or employee of the
Company;
(f) strike,
walkout, labor trouble or threat thereof, or any other new or
continued event, development or condition of any character which
has or could materially adversely affect the Business;
(g) cancellation
or waiver of any right material to the operation of the Business or
any cancellation or waiver of any debts or claims of substantial
value or any
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cancellation or waiver of any
debts or claims against any officer, manager or employee of the
Company;
(h)
payment, discharge or satisfaction of any liability or obligation
(whether accrued, absolute, contingent or otherwise), other than
the scheduled payment, discharge or satisfaction, in the ordinary
course of business, of liabilities or obligations shown or
reflected on the Financial Statements or incurred in the ordinary
course of business since December 31, 2004;
(i)
adverse change, or, to the best of the Seller’s knowledge
threat of any adverse change, in the Company’s relations
with, or any loss, or, to the best of the Seller’s knowledge,
threat of loss of, the Company’s landlords, suppliers,
clients or customers which, individually or in the aggregate, has
been or could be materially adverse to the Company;
(j)
write-offs as uncollectible of any notes owed to the Company or
accounts receivable of the Company or write-downs of the value of
any asset or inventory by the Company other than in immaterial
amounts or in the ordinary course of business consistent with past
practice and at a rate no greater than the rate applicable during
the twelve months ended on December 31, 2004;
(k)
creation, incurrence, assumption or guarantee by the Company of any
material obligations or liabilities (whether absolute, accrued,
contingent or otherwise and whether due or to become due), except
in the ordinary course of business, or any creation, incurrence,
assumption or guarantee by the Company of any indebtedness for
borrowed money;
(l)
any damage, destruction or loss that has, or could reasonably be
expected to, materially and adversely affected the Facility or the
Business; or
(m)
agreement by the Company or the Seller to do any of the
foregoing.
3.8
Real Property; Personal Property .
(a) The Leases
Schedule, Schedule 3.8(a) , lists all oral or written
leases, including the Ground Lease, subleases, licenses, concession
agreements or other use or occupancy agreements pursuant to which
the Company leases to or from any other party any real property,
including all renewals, extensions, modifications or supplements to
any of the foregoing or substitutions for any of the foregoing
(each a “ Lease ” and collectively, the “
Leases ”). The Leases are in full force and effect,
have not been modified, supplemented, amended or, to the best of
Seller’s knowledge, assigned, and are enforceable by and
against the Company and all other parties thereto. Seller has
delivered to Buyer complete and accurate copies of each of the
Leases (including all amendments, supplements and material
correspondence related thereto). A complete and accurate copy of
the Ground Lease is attached to Schedule 3.8(a) hereto.
Neither Seller nor the Company has (i) received any notice
that the Company is in default under, or not in compliance with any
material provision of, any Lease, that the Company may be subject
to any special assessments or that there may be any material
changes in property tax or land use law affecting any such Leases,
or (ii) delivered any notice to another party alleging any
default under, or failure to comply with any material provision of,
any Lease. To the best of Seller’s knowledge, no event has
occurred that, with notice, the
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passage of time or both, would constitute a
default by the Company under, or failure of the Company to comply
with a material provision of, any of the Leases, or otherwise give
any party a right of termination or modification thereof. The
Company does not own any fee interest in any real
property.
(b)
(i) Neither Seller nor the Company has received notice of any
threatened condemnation proceedings, lawsuits or administrative
actions relating to any of the real property used in the Business
or any other matters which do or may adversely effect the current
use, occupancy or value thereof, and there an no pending or, to the
best of the Seller’s knowledge, threatened condemnation
proceedings, lawsuits or administrative actions relating to any of
the real property used in the Business or any other matters which
do or may adversely effect the current use, occupancy or value
thereof.
(ii)
To the best of Seller’s knowledge, all facilities, buildings,
improvements and other structures used in the Business are located
on the real property. All present uses and operations of such real
property and the structures by the Company, comply in all material
respects with all applicable zoning, land-use, building, fire,
labor, safety, subdivision and other governmental requirements and
all deed or other title covenants or restrictions applicable
thereto. Neither Seller nor the Company has received any notice
that any of the leased real property or any of the structures used
in the Business, or the use, occupancy or operation thereof by the
Seller or the Company, violate any governmental requirements or
deed or other title, covenants or restrictions.
(iii)
The Company has obtained all approvals of governmental authorities
(including certificates of use and occupancy, licenses and permits)
required in connection with the construction, ownership, use,
occupation and operation of the leased real property and the
structures thereon used in the Business, and all equipment owned or
used by the Company. To the best of Seller’s knowledge, none
of the leased real property or any of the structures thereon used
in the Business are dependent upon or benefit from any
“non-conforming use” or similar zoning
classification.
(iv)
Other than in the ordinary course of business, there are no parties
other than the Company in possession of any of the leased real
property or any portion thereof, and, other than in the ordinary
course of business, there are no leases, subleases, licenses,
concessions or other agreements, written or oral, granting to any
party or parties the right of use or occupancy of any of the leased
real property or any portion thereof.
(v)
The legal descriptions for the real property contained in the
Leases adequately describe the leased real property subject
thereto. All structures on the leased real property are located
within the boundary lines of the leased real property and no
structures, facilities or other improvements on any parcel adjacent
to any of the leased real property encroach onto any of the leased
real property. All structural, mechanical and other physical
systems related to the leased real property are in good operating
condition and repair, reasonable wear and tear excepted, in all
material respects.
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(vi)
Except as set forth on Schedule 3.8(b)(vi) , or as
required by any document listed on Schedule 4.4 , the
Company is not subject to or bound by any obligation or commitment
(written or oral) to make any capital expenditures that exceed One
Hundred Thousand Dollars ($100,000) individually or in the
aggregate.
(c) Attached
hereto as Schedule 3.8(c) is a complete and accurate
list of all furniture, equipment, leasehold improvements, motor
vehicles and all other tangible personal property owned or leased
by the Company that the Company has reflected in its books and
records in accordance with generally accepted accounting principles
(the “ Personal Property ”).
(d) The Company
has good title to its Personal Property, free and clear of any
Encumbrances except as set forth on Schedule 3.8(c) .
The Company has valid titles and registrations for each motor
vehicle included in the Personal Property, copies of which have
been delivered to Buyer. The Company owns or leases from unrelated
third parties all assets and properties, and has all operational
capabilities, that are used in or necessary to the operation of the
Business.
3.9
Tax Matters .
(a) The Company
has filed (or had filed on its behalf) all Tax Returns required to
have been filed by it on or before the Closing Date. All such Tax
Returns were correct and complete in all respects. The Company has
duly paid (or had paid on its behalf) all Taxes required to have
been paid by it on or before the Closing Date, or which could
affect Seller’s ability to consummate the transaction
contemplated hereby, whether or not shown as due on such Tax
Returns. With respect to the Company, neither Seller nor the
Company has received notice of any claim made by a governmental
authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that
jurisdiction. The Company has not requested or obtained any
extension of time within which to file any Tax Return, which Tax
Return has not since been filed. There are no Liens on any of the
Membership Interests in or assets of the Company that arose in
connection with any failure (or alleged failure) to pay any
Tax.
(b) The Company
has complied in all respects with all applicable laws, rules and
regulations relating to withholding Taxes, and has, within the time
and manner prescribed by law, withheld and paid, when due (or made
adequate reserves for) all Taxes from payments made to its
employees, agents, and contractors as required by Law.
(c) To the best of
Seller’s knowledge, there is no proceeding or audit pending
or threatened by any governmental authority with respect to any
Taxes or Tax Returns of the Company.
(d) There are no
known existing circumstances which, if known to governmental
authorities, reasonably may be expected to result in the assertion
of any claim for Taxes against the Company by any governmental
authority with respect to any period for which Tax Returns have
been filed or Tax is required to have been paid. Neither Company
nor any Affiliate of the Company with respect to the Company
has
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received a written ruling from a governmental
authority relating to any Tax or entered into a written agreement
with a governmental authority relating to any Tax that could have a
continuing effect with respect to any taxable period for which the
Company has not filed a Tax Return. No property of the Company is
property that the Company or any party to this transaction is or
will be required to treat as being owned by another Person pursuant
to the provisions of Section 168(f)(8) of the Code (as in
effect prior to its amendment by the Tax Reform Act of 1986) or is
“tax-exempt use property” within the meaning of
Section 168 of the Code.
(e) The Company
has not waived any statute of limitations for assessment or
collection with respect to any Tax or Tax Return or agreed to any
extension of time with respect to a Tax assessment or deficiency,
which has continuing effect.
(f) The Company is
not and has not been a party to any Tax allocation, Tax sharing or
similar agreement or arrangement, is not and has not been a member
of a group of entities required to file Tax Returns on a combined,
consolidated or unitary basis, and does not have any liability for
Taxes owing by any other Person, including, without limitation by
contract or as a transferee or successor of such other Person by
merger or otherwise.
(g) The Seller has
made available to the Buyer complete and accurate copies of all of
the following materials related to the Company (during periods
ending after January 1, 2001: (i) all income Tax Returns,
(ii) all examination reports relating to Taxes, (iii) all
statements of Taxes, (iv) all written rulings received from
any governmental authority relating to any Tax, and (v) all
written agreements entered into with any governmental authority
relating to any Tax. To the extent specifically requested by Buyer,
the Seller has made available to Buyer: (i) complete and
accurate copies of all other Tax Returns related to the Company,
and (ii) complete and accurate copies of all documents
described in the previous sentence without regard to the period to
which they relate. Schedule 3.9 identifies all Tax
Returns that the Company has filed and the taxable period covered
by each such Tax Return, and identifies those Tax Returns or
periods that have been audited or are currently the subject of an
audit by a governmental authority.
(h) Since the date
of its formation, the Company has been an entity which is
disregarded for federal tax purposes as separate from its owner
pursuant to Treas. Reg. §301.7701-2(b)(1)(ii).
3.10
Contracts and Commitments .
(a) Except as set
forth in the Contracts Schedule, Schedule 3.10 , the
Company is not a party to any contract or agreement, written or
oral:
(i) for a bonus,
pension, profit sharing, retirement, deferred compensation, medical
or life insurance plan, membership purchase or option or any other
plans or arrangements providing for benefits of any type to
employees (either current or former) of Company;
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(ii) for
collective bargaining or with any labor union;
(iii) for the
borrowing of money or mortgaging, pledging or encumbering any of
the Company’s assets;
(iv) for the
lending or investing of funds to or in other persons or
entities;
(v) granting any
power of attorney (irrevocable or otherwise) to any Person for any
purpose relating to the Business or the Company’s assets,
other than powers of attorney given to regulatory authorities in
connection with routine qualifications to do business;
or
(vi) with an
Affiliate of Seller or the Company (other than the Company’s
Charter Documents).
(b) The Contracts
Schedule lists each of the Material Contracts. For purposes of this
Agreement, “ Material Contracts ” includes the
following:
(i) any and all
contracts for the sale of goods or services with a value in excess
of Fifty Thousand Dollars ($50,000) individually or One Hundred
Thousand Dollars ($100,000) in the aggregate, or which is not
terminable without penalty by or on behalf of the Company on less
than ninety (90) days’ notice;
(ii) any and all
contracts, agreements, licenses, leases (other than the Leases),
sales and purchase orders and other legally binding commitments
that obligate the Company to pay, assume, guaranty or secure an
amount of Fifty Thousand Dollars ($50,000) or more individually or
One Hundred Thousand Dollars ($100,000) or more in the aggregate,
or that cannot be terminated without penalty by or on behalf of the
Company on less than ninety (90) days’
notice;
(iii) any and all
contracts between the Company on the one hand and any Affiliate of
the Company on the other hand (other than the Company’s
Charter Documents);
(iv) any and all
broker, distributor, dealer, representative or agency
agreements;
(v) any and all
insurance policies insuring the Business, the Facility or any of
the Company’s assets (collectively, the “ Insurance
Policies ”);
(vi) any and all
employment, non-competition or consulting agreement;
(vii) each
contract containing covenants purporting to materially limit the
freedom of the Company to compete in any line of business or in any
geographic area;
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(viii) each
contract that is not for the purchase, sale or license of goods or
services in the ordinary course of business consistent with past
practice, including any factoring agreements;
(ix) each
partnership, joint venture or other similar agreement or
arrangement to which the Company is a party;
(x) any and all
agreements requiring a loan or advance by the Company;
and
(xi) any other
contract or agreement that is material to the Business or the
financial condition or results of operations of the
Company.
(c) Seller has
delivered to Buyer true and complete copies of all written Material
Contracts, together with all amendments, supplements and material
correspondence related thereto. The Contracts Schedule includes a
description of the material terms of each Material Contract that is
oral. The Material Contracts are in full force and effect and are
enforceable against the Company and, to the best of the
Seller’s knowledge, all other parties thereto. Except as set
forth on the Contracts Schedule, neither Seller nor the Company has
(i) received any notice that it is in default under, or not in
compliance with any material provision of, any Material Contract,
or (ii) delivered any notice to another party alleging any
default under, or failure to comply with any material provision of,
any Material Contract. To the best of the Seller’s knowledge,
no event has occurred that, with notice, the passage of time or
both, would constitute a default by the Company or any other party
under, or failure of the Company or any other party to comply with
a material provision of, any of the Material Contracts, or
otherwise give any party a right of termination or modification
thereof.
(d) Set forth on
Schedule 3.10(d) is a list of the twenty-five
(25) largest customers of the Company by gallons of fuel
purchased in the 2004 calendar year.
(e) Except as
disclosed on Schedule 3.10(e) , to the best of
Seller’s knowledge, no material supplier to or landlord of
the Company, including any party to the Ground Lease, or any
governmental entity has taken, and neither Seller nor the Company
has received any notice that, any material supplier to or landlord
of the Company, including any party to the Ground Lease, or any
governmental entity contemplates taking, any steps to terminate or
materially alter the business relationship of Company with such
supplier or landlord, including any party to the Ground
Lease.
(f) The Insurance
Policies are in full force and effect and shall remain in full
force and effect until 11:59 p.m. on the day following the
Closing Date. Except as set forth on Schedule 3.10(f) ,
there are no claims related to or arising out of the operation of
the Business pending under any Insurance Policies. To the best of
the Seller’s knowledge, no event has occurred, and no
condition or circumstances exist, that could reasonably be expected
to (with or without notice or lapse of time) give rise to or serve
as a basis for any claims related to or arising out of the
operation of the Business under the Insurance Policies.
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(g) The Company
does not have, directly or indirectly, any (i) interest in the
outstanding stock or ownership interests of any corporation or in
any partnership, joint venture or other entity, or
(ii) agreement, understanding, contract or commitment relating
to an interest in any such entity.
3.11
Litigation; Proceedings . Except as set forth in
Schedule 3.11 , neither the Company nor the Seller has
received notice or service of process regarding or otherwise been
named as a party to any pending action, suit, proceeding, judgment,
order or governmental investigation. To the best of the
Seller’s knowledge, no such action, suit, proceeding or
governmental investigation has been threatened. The Company is not
subject to or in violation of any judgment, decree, injunction or
order.
3.12
Brokerage . No agent, broker, finder, or investment or
commercial banker engaged by or on behalf of Seller or the Company
is or will be entitled to any brokerage commission, finders’
fees or similar compensation from the Company or Buyer as a result
of this Agreement or any of the transactions contemplated
herein.
3.13
Employee Benefit Plans.
(a) “
Benefit Plans ” means: (i) each plan, program,
agreement or arrangement for the provision of executive
compensation, deferred or incentive compensation, profit sharing,
bonus, employee assistance, supplemental retirement, severance,
vacation, sickness, disability, death, fringe benefit, insurance,
medical or other benefits (whether provided through insurance, on a
funded or unfunded basis, or otherwise) to any current or former
employee, director, consultant or independent contractor, or any
dependent, survivor or beneficiary with respect to any of the
foregoing, which is maintained, administered or contributed to by
the Company or any ERISA Affiliate of the Company; (ii) each
Employee Pension Benefit Plan which has been maintained,
administered or contributed to by the Company or any ERISA
Affiliate in the past six (6) years (the “ Pension
Plans ”); and (iii) each Employee Welfare Benefit Plan
which is currently maintained, administered or contributed to by
the Company or any ERISA Affiliate (such plans, together with
Employee Welfare Benefit Plans which were previously maintained,
administered or contributed to by the Company or an ERISA
Affiliate, collectively, the “ Welfare Plans
”).
(b) (i) Each
Benefit Plan that is sponsored, maintained or contributed to by
Company or with respect to which the Company has or may have any
liability is listed on Schedule 3.13(b)(i) (hereinafter
referred to as the “ Company Benefit Plans
”).
(ii) Each Pension
Plan is listed on Schedule 3.13(b)(ii) .
(iii) Each ERISA
Affiliate is identified on
Schedule 3.13(b)(iii).
(c) Each Pension
Plan that covers any Company Employee or any manager, officer,
agent, consultant or professional adviser to the Company, and which
is intended to qualify under Section 401(a) of the Code so
qualifies. No Pension Plan has ever held any Company
securities.
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(d) To the best of
Seller’s knowledge, each Company Benefit Plan (and each
related trust, insurance contract or fund) has been administered in
all material respects in accordance with its governing instruments
and all applicable Laws. To the best of Seller’s knowledge,
all reports and information relating to each Company Benefit Plan
required to be filed with a governmental authority have been timely
filed and are accurate in all material respects and all reports and
information relating to each such Company Benefit Plan required to
be disclosed or provided to participants or their beneficiaries
have been timely disclosed or provided. To the best of
Seller’s knowledge, no officer, manager, agent or employee of
the Company or any ERISA Affiliate has made any oral or written
representation which is inconsistent with the terms of any Company
Benefit Plan which may be binding on such plan or the Company. To
the best of Seller’s knowledge, there are no restrictions or
limitations on the right of the Company or any ERISA Affiliate to
terminate or decrease (prospectively) the level of benefits
under any Company Benefit Plan after the Closing Date without
liability to the Company or any participant or beneficiary
thereunder. The Company may, without cost, withdraw its employees,
managers, officers and consultants from any Benefit Plan which is
not sponsored by the Company. No Benefit Plan covering employees
engaged in the Business imposes withdrawal charges, redemption
fees, contingent deferred sales charges or similar expenses
triggered by termination of the plan or cessation of participation
or withdrawal of employees thereunder.
(e) To the best of
Seller’s knowledge, all contributions, premiums or other
payments due under the terms of each Benefit Plan or required by
applicable Law have been made within the time due. All unpaid
amounts attributable to any Company Benefit Plan for any period
prior to the Closing Date will be accrued on the Company’s
consolidated books and records in accordance with GAAP. To the best
of Seller’s knowledge, there have been no Prohibited
Transactions with respect to any Benefit Plan which could result in
liability to the Buyer, the Company or any of their respective
employees. There has been no breach of fiduciary duty (including
violations under Part 4 of Title I of ERISA) with respect to
any Benefit Plan which could result in liability to the Buyer, the
Company or any of their respective employees. No action, suit,
proceeding, hearing or investigation relating to any Company
Benefit Plan (other than routine claims for benefits) is pending
or, to the best of the Seller’s knowledge, has been
threatened, and the Seller has no knowledge of any fact that could
form the basis for such action, suit, proceeding, hearing or
investigation.
(f) Except as set
forth on Schedule 3.13(f) , neither the Company, nor
any ERISA Affiliate has ever sponsored, maintained, contributed to,
had any obligation to contribute to, or had any other liability
under or with respect to any: (i) Employee Pension Benefit
Plan covered by Title IV of ERISA, Section 302 of ERISA or
Section 412 of the Code, (ii) Employee Welfare Benefit Plan
which provides health, life or other coverage for former directors,
officers or employees (or any spouse or former spouse or other
dependent thereof), other than benefits required by COBRA, (iii)
“voluntary employees beneficiary association” within
the meaning of Section 501(c)(9) of the Code or any other
“welfare benefit fund” as defined in Section 419(e) of
the Code, (iv) a nonqualified deferred compensation plan
within the meaning of Code Section 409A for the benefit of
anyone who has provided services with respect to the Business or
(v)
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“multiemployer plan” as defined in
ERISA Section 3(37) or any “multiple employer welfare
arrangement” as defined in Section 3(40)(A) of
ERISA.
3.14
Employee Matters .
(a)
Schedule 3.14(a)(i) contains a complete and correct
list of all employees of the Company, their respective titles as of
the date hereof (the “ Company Employees ”), the
2004 compensation paid or payable to each such employee, the year
of employment of each such employee and the accrued vacation time
and sick leave or other paid time off of each such employee. Except
as set forth on Schedule 3.14(a)(ii) , (i) the
terms of employment or engagement of all Company Employees and
managers, agents, consultants and professional advisers to the
Company are such that their employment or engagement may be
terminated at will with notice given at any time and without
liability for payment of compensation or damages, (ii) there
are no severance payments which are or could become payable by the
Company to any such person under the terms of any oral or written
agreement or commitment or any Law, custom, trade or practice,
(iii) there are no other agreements, contracts or commitments,
oral or written, between the Company and any such Person, and
(iv) as of the date hereof, to the best of the Seller’s
knowledge, no Company Employee has any plans to terminate his or
her employment with the Company. Schedule 3.14(a)(iii)
lists all of the Company Employees who are currently on leave
relating to work-related injuries and/or receiving disability
benefits under any Benefit Plan.
(b) The Company
has not, nor has it ever been, bound by or subject to (and none of
its assets or properties are bound by or subject to) any
arrangement with any labor union or other collective bargaining
representative. With respect to the Company, there is no pending
or, to the best of the Seller’s knowledge, threatened
(i) union organizational activity or other labor or employment
dispute against or affecting the Company, or (ii) application for
certification of a collective bargaining agent.
(c) To the best of
Seller’s knowledge, all persons classified by the Company as
independent contractors do satisfy and have satisfied the
requirements of Law to be so classified, and the Company has fully
and accurately reported its compensation on IRS Forms 1099 when
required to do so. No individual who has performed services for or
on behalf of the Company and who has been treated by the Company as
an independent contractor, is classifiable as a “leased
employee” within the meaning of Section 414(n)(2) of the
Code with respect to the Company.
3.15
Compliance with Laws; Permits . The Company has complied,
and the use and operation of the Facility are in compliance, in all
material respects, with all applicable Laws which affect the
Business, and has timely filed with the proper authorities all
material statements and reports required by the Laws to which the
Business is subject. The Company holds all permits, licenses,
certificates, approvals, registrations, franchises, rights,
qualifications and other authorizations of federal, state and local
governments, agencies and regulatory authorities required or
advisable for the conduct of the Business as operated to the date
hereof (collectively, the “ Permits ”).
Schedule 3.15 sets forth a complete and accurate list
of each Permit. The Company does not (1) hold any Permit
issued by the Federal Aviation Administration or by the
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U.S. Department of Transportation
or (2) own or lease aircraft or (3) operate aircraft for
a third party under a management agreement or other similar
arrangement. Neither Seller nor the Company has received any notice
of any (x) order, rule or directive, or any proposed order,
rule or directive, issued by any governmental authority against the
Company, or (y) threatened legal or regulatory proceeding
which could adversely affect the Business or assets of the Company,
or any Permit required to be obtained and maintained by the
Company.
3.16
Environmental Matters . Except as set forth in
Schedule 3.16 , Seller represents and warrants
that:
(a) The Company
materially complies, and at all times during Seller’s
ownership of the Membership Interests has been in material
compliance, with applicable Environmental Laws and there are no
circumstances that will prevent such compliance in the
future;
(b) Neither Seller
nor the Company has received any written request for information,
or has been notified that it is a potentially responsible party,
under the CERCLA, or any similar state or local law with respect to
any on-site or offsite location;
(c) The Company
has obtained all required Environmental Permits relating to the
Business, enabling the Business to operate as of the Closing Date
in the ordinary course of business consistent with past
practices;
(d) Neither Seller
nor the Company has received any notice, notification, demand,
request for information, citation, summons, complaint or order and,
to the best of Seller’s knowledge, there is no violation,
claim, demand, litigation, proceeding or governmental investigation
(whether pending or threatened) arising from applicable
Environmental Laws relating to the Company. The Company is not
subject to any judgment, decree, order, or consent agreement
relating to compliance with any Environmental Laws, or the cleanup
of Hazardous Materials under any Environmental Laws;
(e) Seller has
delivered true, complete and correct copies of any reports, or
other documents possessed by or in the control of Seller or the
Company pertaining to the environmental condition of the Facility,
Hazardous Materials on the Facili
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