STOCK PURCHASE AGREEMENT AMONG ROWAN COMPANIES, INC., ERA AVIATION, INC. AND SEACOR HOLDINGS INC. Dated as of October 14, 2004 TABLE OF CONTENTS Page

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ARTICLE I PURCHASE AND SALE OF SHARES	1
SECTION 1.01 Purchase and Sale of Shares	1
SECTION 1.02 Purchase Price	1
SECTION 1.03 Closing	1
SECTION 1.04 Deliveries by Seller	2
SECTION 1.05 Deliveries by Purchaser	2
SECTION 1.06 Books and Records	2
SECTION 1.07 Transition Services	2
SECTION 1.08 Intercompany Accounts	2
SECTION 1.09 Working Capital Adjustment	3
SECTION 1.10 Inventory Verification	5
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER AND THE COMPANY	6
SECTION 2.01 Organization and Qualification	6
SECTION 2.02 Articles of Incorporation and By-Laws	6
SECTION 2.03 Capitalization and Ownership	7
SECTION 2.04 Authority Relative to the Transaction Documents	7
SECTION 2.05 No Conflict; Required Filings and Consents	8
SECTION 2.06 Company Permits; Compliance With Laws	9
SECTION 2.07 Financial Statements; Liabilities; Contracts	9
SECTION 2.08 Material Contracts	10
SECTION 2.09 Absence of Certain Developments	12
SECTION 2.10 Absence of Litigation.	13
SECTION 2.11 Employee Benefit Plans; Labor Matters	13
SECTION 2.12 Taxes	16
SECTION 2.13 Environmental Matters	18
SECTION 2.14 Real Property	20
SECTION 2.15 Tangible Personal Property	22
SECTION 2.16 Intellectual Property	22
SECTION 2.17 Aircraft; Adequacy of Rights	25
SECTION 2.18 Aircraft Crew Members	26
SECTION 2.19 Accounts Receivable	27
SECTION 2.20 Insurance	27
SECTION 2.21 Related Party Transactions	27
SECTION 2.22 Customers and Suppliers	28
SECTION 2.23 Banks	28

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Section 1.09    Working Capital Adjustment.

(a)   SECTION 1.09 of the Disclosure Letter sets forth the components of Working Capital (as defined below) as of June 30, 2004, in the amount of $12,700,000 (“Target Working Capital”).

 

(b)   Within seventy-five (75) Business Days following the Closing:

(i)   Purchaser shall prepare and deliver, or cause to be prepared and delivered, to Seller a schedule of components of Working Capital as of the Closing Date prepared in a manner consistent with SECTION 1.09 of the Disclosure Letter (the “Closing Date Working Capital Schedule”) and a statement (the  7;Closing Statement”) reflecting the calculation of any adjustment to the Purchase Price under this SECTION 1.09(b), accompanied by a certificate of the chief financial officer or principal accounting officer of Purchaser, in such person’s capacity as an officer of Purchaser and not in any personal capacity, to the effect that such Closing Statement has, to his or her knowledge, been prepared in accordance with the terms of this Agreement.

(ii)   The Closing Date Working Capital Schedule shall reflect Working Capital consistent with financial reporting policies and procedures used by the Business prior to the Closing, which policies and procedures are set forth in SECTION 1.09 of the Disclosure Letter. As used in this Agreement, “Working Capital” means the amount of current assets of the Business (excluding (A) Inventory, (B) income taxes, (C) intercompany accounts, (D) accounts receivable as of the Closing Date that are not collected on or prior to the date the Closing Statement is delivered to Seller (“Uncollected Accounts Receivable”) and (E) proceeds from sales of non-current assets) minus the amount of current liabilities of the Business (excluding income taxes and intercompany accounts) and minus any new indebtedness incurred prior to the Closing, each as determined as of the relevant date and recorded in accordance with generally accepted accounting principles in the United States (“GAAP”) and calculated in a manner consistent with SECTION 1.09 of the Disclosure Letter. From and after the date the Closing Statement is delivered to Seller, Purchaser shall use commercially reasonable efforts, consistent with the Company’s past practice, to collect any Uncollected Accounts Receivable and shall promptly remit to Seller any proceeds thereof.

 

(iii)   Seller shall have a period of twenty (20) Business Days after delivery of the Closing Date Working Capital Schedule and the Closing Statement to review (and cause Seller’s auditors to review) such documents and make any objections it may have in writing to Purchaser. Purchaser will make the work papers and back-up materials used in preparing the Closing Date Working Capital Schedule and the Closing Statement available to Seller and Seller’s auditors at reasonable times and upon reasonable notice during such twenty (20) Business Day period in order to facilitate the resolution by the parties of any objections to the Closing Date Working Cap ital Schedule and the Closing Statement. If written objections are delivered to Purchaser by Seller within such twenty (20) Business

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Day period, then Purchaser and Seller shall attempt to resolve the matter or matters in dispute. If no written objections are made by Seller within such twenty (20) Business Day period, then the Closing Date Working Capital Schedule and the Closing Statement shall be final and binding on the parties. If disputes with respect to the Closing Date Working Capital Schedule or the Closing Statement cannot be resolved by Purchaser and Seller within five (5) Business Days after timely delivery of any objections thereto, then, at the request of Purchaser or Seller, the specific matters in dispute shall be submitted to KPMG International or such other independent accounting firm as may be approved by Seller and Purchaser (KPMG International or such other independent accounting firm, as applicable, the “Auditors”), which firm shall, not later than twenty (20) Business Days after such submission, render its opinion as to such specific matters. If no such submission is made within five (5) Business Days after the delivery of the objections, then any unresolved objections shall be disregarded, and the Closing Date Working Capital Schedule and the Closing Statement shall be final and binding on the parties. Based on such opinion, the Auditors will then send to Seller and Purchaser their determination of the specified matters in dispute, which determination shall be final and binding on the parties hereto. Each of the parties shall bear all costs and expenses incurred by it in connection with such arbitration, and the fees and expenses of the Auditors shall be borne one-half by Seller and one-half by Purchaser.

(iv)   If the Working Capital reflected on the Closing Date Working Capital Schedule as finally determined under SECTION 1.09(b)(iii) of this Agreement is less than the Target Working Capital, then within five (5) Business Days following the final determination thereof, Seller shall pay to Purchaser, by wire transfer of immediately available funds to the account or accounts designated by Purchaser, the amount of such deficiency with interest thereon at a rate per annum equal to the rat e of interest published by the Wall Street Journal from time to time as the “prime rate” at the large U.S. money center banks (the “Agreed Rate”) during the period from the Closing Date to the date of payment. If the Working Capital reflected on the Closing Date Working Capital Schedule as finally determined under SECTION 1.09(b)(iii) is greater than the Target Working Capital, then within five (5) Business Days following the final determination thereof, Purchaser shall pay to Seller, by wire transfer of immediately available funds to the account or accounts designated by Seller, the amount of such excess with interest thereon at the Agreed Rate during the period from the Closing Date to the date of payment.

(c)   Purchaser and Seller shall, and shall cause their respective representatives to, cooperate and assist in the preparation of the Closing Date Working Capital Schedule and Closing Statement and the calculation of Working Capital and in the conduct of the review described in this SECTION 1.09, including, without limitation, the making available to the extent necessary of books, records, work papers and personnel.

 

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Section 1.10    Inventory Verification.

 

(a)   SECTION 1.10(a) of the Disclosure Letter contains a preliminary list of all of the items comprising the Inventory on hand as of June 30, 2004 (the “Preliminary Inventory”), which list includes the quantities of such items on hand as of such date, as well as the book values of such items.

 

(b)   Promptly following the date hereof, in the presence of representatives of both Seller and Purchaser, the Company shall commence a physical count and reconciliation of the Inventory in accordance with the Company’s normal inventory procedures, as described in the Summary of Inventory Accounting Policies, a copy of which is set forth in SECTION 1.10(b) of the Disclosure Letter, as of November 1, 2004 and shall prepare an updated version of the list contained in SECTION 1.10(a) of the Disclosure Letter reflecting the results of such physical count and reconciliation (the “Final Inventory”). Such physical count and reconciliation shall be completed as expeditiously as possible but in any event within thirty (30) Business Days after the date hereof (or, if necessary, such later time as the parties may mutually agree, but in no event later than seventy-five (75) Business Days after the Closing) (the “Inventory Verification Period”). If, upon complet ion of such physical count, the parties agree on the Final Inventory, each of them shall execute a certificate in writing certifying as to their agreement regarding the Final Inventory and attach thereto a copy of the list of the Final Inventory so agreed to. Any items of Inventory that cannot be used or returned to a usable state in accordance with the Company’s past practices due to improper or missing documentation related to such items required under applicable Company Permits or Law shall not be included in the determination of the Final Inventory.

(c)   If the parties are unable to agree upon the Final Inventory on or before the expiration of the Inventory Verification Period, Seller on the one hand and Purchaser on the other shall each prepare a written statement specifying therein in detail the basis and reason for all disputes between the parties regarding the determination of the Final Inventory and the amounts in dispute. Within five (5) Business Days after the expiration of the Inventory Verification Period, they shall each submit such written statements to the Auditors, who shall act as an arbitrator, for resolution of all disputes set forth in such written statements. The Auditors shall be in structed to use commercially reasonable efforts to resolve all disputes as soon as practicable and in any event within twenty (20) Business Days after the submission to it of the parties’ written statements. Each of the parties shall bear all costs and expenses incurred by it in connection with such arbitration, and the fees of the Auditors shall be shared equally by Purchaser and Seller. This provision for arbitration shall be specifically enforceable by the parties, and the decision of the Auditors shall be final and binding and there shall be no right of appeal therefrom.

(d)   Within five (5) Business Days after the date on which the Final Inventory is finally determined in accordance with this SECTION 1.10 (whether by agreement of the parties or by decision of the Auditors), (i) if the Final Inventory exceeds the aggregate book value of the Preliminary Inventory set forth in SECTION 1.10(a) of the Disclosure Letter by more than $200,000, then Purchaser shall pay Seller the amount of such excess in immediately available funds, or (ii) if the aggregate book value of the Preliminary

 

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Inventory set forth in SECTION 1.10(a) of the Disclosure Letter exceeds the aggregate book value of the Final Inventory by more than $100,000, then Seller shall pay Purchaser the amount of such excess in immediately available funds.

 

 

 

 

Except as set forth in a Disclosure Letter delivered by Seller and the Company concurrently with the execution of this Agreement (the “Disclosure Letter”), Seller and the Company hereby jointly and severally represent and warrant to Purchaser as follows:

 

Section 2.01    Organization and Qualification. Each of Seller and the Company is a corporation duly incorporated, validly existing and in good standing under the Laws of the jurisdiction of its incorporation and has the requisite power and authority to own, lease and operate its properties and to carry on its business as it is now being conducted. Each of Seller and the Company is duly qualified or licensed as a foreign corporation to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by Seller or the Company, as applicable, or the nature of their respective businesses makes such qualification or licensing necessary, except for such failures to be so qualified or licensed and in good standing as would not, individually or in the aggregate, have a Company Material Adverse Effect. As used in this Agreement, the term “Company Material Adverse Effect” means (a) a material impairment or delay of the ability of Seller to consummate the transactions contemplated by this Agreement or (b) a material adverse change in, or effect on, the business, assets and liabilities (taken together), properties, condition (financial or otherwise) or results of operations o f the Company; provided, however, that (i) any adverse change or effect directly and substantially attributable to the announcement, pendency or consummation of the transactions contemplated by this Agreement (including any decrease in customer demand, any reduction in revenues, any disruption in supplier, partner or similar relationships or any loss of employees), (ii) general business or economic conditions affecting the economy as a whole, (iii) conditions generally affecting the helicopter or aviation industries as a whole and (iv)  changes or developments in financial or securities markets or the economy in general, any outbreak or escalati on of hostilities or the declaration by the United States of a national emergency or war, any acts of terrorism, any other international or domestic calamity or crisis or geopolitical event, or effects of weather or meteorological events shall each be excluded from such determination.

 

Section 2.02    Articles of Incorporation and By-Laws.

(a)   Seller has made available to Purchaser complete and correct copies of its certificate of incorporation and by-laws and the articles of incorporation and by-laws of the Company, in each case as amended to the date of this Agreement. Seller is not in violation of any of the provisions of its certificate of incorporation or by-laws, and the Company is not in violation of any of the provisions of its articles of incorporation or by-laws.

 

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(b)   The minute books of the Company previously made available to Purchaser contain true, correct and complete records of all meetings and accurately reflect all other corporate action of the stockholders and board of directors of the Company. The stock certificate books and stock transfer ledgers of the Company previously made available to Purchaser are true, correct and complete. All stock transfer taxes levied or payable with respect to all transfers of shares of the Company prior to the date hereof have been paid and appropriate transfer tax stamps affixed.

 

Section 2.03    Capitalization and Ownership. 

(a)   The authorized capital stock of the Company consists of 3,000 shares of Company Common Stock. Two thousand shares of Company Common Stock are outstanding, all of which are validly issued, fully paid and nonassessable. Except for the Shares, there are no shares of capital stock or other equity interests in the Company issued or outstanding, and except for this Agreement, there are no options, warrants or other rights, agreements, arrangements or commitments obligating the Company to issue or sell any shares of capital stock of, or other equity interests in, the Company.

(b)   All of the Shares are owned of record and beneficially by Seller, and the consummation of the Stock Purchase will convey to Purchaser good title to the Shares, free and clear of all Liens (as hereinafter defined), except for those created by Purchaser or arising out of ownership of the Shares by Purchaser. Seller has the corporate power and authority to sell, transfer, assign and deliver the Shares as provided in this Agreement, and such delivery will convey to Purchaser good and marketable title to the Shares, free and clear of all Liens.

 

(c)   Except as set forth on SECTION 2.03(c) of the Disclosure Letter, there is no existing option, warrant, call, right or contract of any character to which Seller or the Company is a party requiring, and there are no securities of the Company outstanding which upon conversion or exchange would require, the issuance, sale or transfer of any additional shares of capital stock or other equity securities of the Company or other securities convertible into, exchangeable for or evidencing the right to subscribe for or purchase shares of capital stock or other equity securities of the Company. Neither Seller nor the Company is a party to any voting trust or other Contract (other than this Agreement) with respect to the voting, redemption, sale, transfer or other disposition of the capital stock of the Company.

 

Section 2.04    Authority Relative to the Transaction Documents. Each of Seller and the Company has all necessary corporate power and authority to execute and deliver the Transaction Documents, to perform its obligations thereunder and to consummate the transactions contemplated thereby. The execution and delivery of the Transaction Documents by Seller and the Company and the consummation by Seller and the Company of the transactions contemplated thereby have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Seller or the Company are necessary to authorize the Transaction Documents or to consummate the transactions contemplated thereby. The Transaction Documents have been duly and validly executed and delivered by Seller and the Company and, assuming the due authorization, execution and delivery by Purchaser, constitute

 

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the legal, valid and binding obligation of Seller and the Company, enforceable against Seller and the Company in accordance with their terms (except insofar as enforceability may be limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or similar laws affecting creditors’ rights generally, or principles governing the availability of equitable remedies).

 

Section 2.05    No Conflict; Required Filings and Consents.

 

(a)   The execution and delivery of the Transaction Documents and the consummation of the transactions contemplated thereby by Seller and the Company will not, (i) conflict with or violate the certificate of incorporation or by-laws of Seller or the articles of incorporation or by-laws of the Company or (ii) except as set forth in SECTION 2.05(a) of the Disclosure Letter and assuming that all consents, approvals, authorizations and other actions described in SECTION 2.05(b) have been obtained and all filings and obligations described in SECTION 2.05(b) have been made, conflict with or result in any violation of or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or loss of a benefit under, or give rise to any obligation of the Company to make any payment under, or to the increased, additional, accelerated or guaranteed rights or entitlements of any Person under, or result in the creation of any Liens upon any of the properties or assets of the Company under, any provision of (A) any contract, or permit to which the Company is a party or by which any of the properties or assets of the Company are bound; (B) any Order of any Governmental Entity applicable to the Company or any of the properties or assets of the Company as of the date hereof; or (C) any applicable Law, except, with respect to clause (ii), for any such conflicts, violations, breaches, defaults, or other occurrences as would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

(b)   Except as set forth in SECTION 2.05(b) of the Disclosure Letter, the execution and delivery of the Transaction Documents by Seller do not, and the performance of them by Seller will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity, except (i) for applicable requirements, if any, of state securities or “blue sky” Laws (“Blue Sky Laws”) and the pre-merger notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder (“HSR Act”), (ii) notices to, filings with or approvals of the U.S. Federal Aviation Administration (“FAA”) required under applicable Law, if any, (iii) notices to, filings with or approvals of the U.S. Department of Transportation (“DOT”) required under applicable Law, if any and (iv) where failure to obtain such consents, approvals, authorizations or permits , or to make such filings or notifications, would not prevent or delay consummation of the transactions contemplated by the Transaction Documents, or otherwise prevent Seller from performing its obligations under the Transaction Documents, and would not, individually or in the aggregate, have a Company Material Adverse Effect.

 

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Section 2.06    Company Permits; Compliance With Laws.

(a)   The Company is in possession of, and (assuming that all consents, approvals, authorizations and other actions described in SECTION 2.05(b) have been obtained and all filings and obligations described in SECTION 2.05(b) have been made) immediately following the Closing will continue to possess, all franchises , grants, authorizations, licenses, permits, easements, variances, exceptions, consents, certificates, approvals and orders of any Governmental Entity necessary for the Company to own, lease and operate its properties and to carry on the Business in all material respects as it is now being conducted (the “Company Permits”), and, as of the date hereof, no suspension or cancellation of any material Company Permit is pending or, to the Knowledge of Seller, threatened. The Company has delivered copies or otherwise made available to Purchaser for inspection all Company Permits. The Company is up-to-date and current in all material respects with regard to record keeping and reporting that is necessary under any Company Permit, and no material Company Permit has been revoked, suspended, or limited in any material respect within the l ast five (5) years. All manuals, ratings, systems, and programs required to be in force, offered, promulgated, compiled, or assembled by the Company under any material Company Permit or other applicable Law, Federal Aviation Regulation (“FAR”) or Department of Transportation regulation are complete, current, up-to-date, in full force and effect, and comply in all material respects with the Company Permit applicable thereto.

(b)   The Company is not in conflict with, or in default or violation of, and there has been no event that with the giving of notice or the lapse of time or both would become a default or violation of, in any material respect (i) any Law applicable to the Company or by which any property or asset of the Company is bound or affected, nor has it received notice of or been charged with such, nor, to the Knowledge of the Company or Seller, is the Company under investigation for any such violation, (ii) any note, bond, mortgage, indenture, contract, agreement, lease, license, franchise or other instrument or obligation to which the Company is a party or by which the Company or any property or asset of the Company is bound or affected or (iii) any Company Permits.

 

Section 2.07    Financial Statements; Liabilities; Contracts.

 

(a)   SECTION 2.07(a) of the Disclosure Letter contains a balance sheet and income statement of the Company as of and for the period ending June 30, 2004 (the “Company Financial Statements”). Except as disclosed therein, such Company Financial Statements were prepared from the books of account and other financial records of the Company, are complete and correct in all material respects and present fairly the financial position and results of operation of the Company as at the dates and for the periods indicated therein, and, except as set forth in SECTION 2.07(a) of the Disclosure Letter, each of the items reflected in such Company Financial Statements was recorded in accordance with GAAP.

(b)   The Company makes and keeps books, records and accounts which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of its assets.

 

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(c)   Except (i) for liabilities and obligations incurred in the ordinary course of business and consistent with past practice since the date of the Company Financial Statements, (ii) as otherwise disclosed herein or in SECTION 2.07(c) of the Disclosure Letter or (iii) for executory obligations existing as of the date of the Company Financial Statements that arose in the ordinary course of business consistent with past practice under contracts and agreements and that are disclosed in < /font>SECTION 2.08 of the Disclosure Letter (or to contracts or agreements that are not otherwise required to be disclosed in the Disclosure Letter by the terms of SECTION 2.08 of this Agreement), all liabilities and obligations of the Company (whether direct, indirect, accrued, contingent or otherwise) that would be required to be reflected or reserved against in the balance sheet of the Company included in the Company Financial Statements are so reflected or reserved against in such balance sheet of the Company.

 

Section 2.08    Material Contracts.

(a)   SECTION 2.08 of the Disclosure Letter sets forth all of the following Contracts (as defined in SECTION 8.10) to which the Company is a party or by which it is bound (collectively, the “Material Contracts”):

(i)   Contracts with Seller or any current or former officer, director, stockholder or Affiliate of Seller;

(ii)   Contracts with any labor union or association representing any employee of the Company;

(iii)  Contracts pursuant to which any party is required to purchase or sell a stated portion of its requirements or output from or to another party;

(iv)  Contracts for the sale of any of the assets of the Company other than in the ordinary course of business or for the grant to any person of any preferential rights to purchase any of its assets;

(v)   Contracts for joint ventures, strategic alliances or partnerships;

(vi)   charter Contracts and master services agreements;

(vii)  Contracts containing covenants of the Company not to compete in any line of business or with any Person in any geographical area or covenants of any other Person not to compete with the Company in any line of business or in any geographical area;

(viii)  Contracts relating to the acquisition by the Company of any operating business or the capital stock of any other Person;

(ix)   Contracts relating to the incurrence, assumption or guarantee of any Indebtedness or imposing a Lien other than a Permitted Lien on any of its assets;

 

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(x)   Contracts under which the Company has made advances or loans to any other Person in excess of $100,000;

(xi)  Contracts providing for severance, retention, change in control or other similar payments;

(xii)  Contracts for the employment of any individual on a full-time, part-time or consulting or other basis providing for annual compensation in excess of $100,000;

(xiii)  Contracts for the provision of goods or services involving consideration in excess of $100,000 over the term of the Contract;

(xiv)  outstanding agreements of guaranty, surety or indemnification, direct or indirect, by the Company;

(xv)   Contracts (or group of related contracts) which involve the expenditure of more than $100,000 and require performance by any party more than one year from the date hereof; and

(xvi)  Contracts with any Governmental Entity (each a “Government Contract”)

(xvii)  Contracts that are otherwise material to the Company.

(b)   Each Material Contract is in full force and effect and is the legal, valid and binding obligation of the Company, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and subject, as to enforceability, to general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity). The Company is not in default under any Material Contract, nor, to the Knowledge of Seller or the Company, is any other party to any Material Contract in default thereunder, and no event has occur red that with the lapse of time or the giving of notice or both would constitute a default by the Company or, to the Knowledge of Seller or the Company, any other party thereunder. No party to any of the Material Contracts has exercised any termination rights with respect thereto. Except as indicated in SECTION 2.08 of the Disclosure Letter, Seller has delivered or otherwise made available to Purchaser true, correct and complete copies of all of the Material Contracts, together with all amendments, modifications or supplements thereto.

(c)   None of the Government Contracts requires the Company to have a U.S. Government approved accounting system, and the Company is in substantial compliance with all material obligations imposed by Law upon the Company as a result of any Government Contract, including all material reporting or filing requirements (such as, by example but not by way of limitation, EEO-1 and VETS-100 forms) with all applicable Governmental Entities.

 

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Section 2.09    Absence of Certain Developments. Except as expressly contemplated by this Agreement or as set forth in SECTION 2.09 of the Disc losure Letter, since the date of the Company Financial Statements the Company has conducted the Business only in the ordinary course of business, and there has not been any event, change, occurrence or circumstance that has had or would reasonably be expected to have a Company Material Adverse Effect. Without limiting the generality of the foregoing, except as expressly contemplated by this Agreement or as set forth in the Disclosure Letter, since the date of the Company Financial Statements:

(a)   as of the date hereof, there has not been any damage, destruction or loss, whether or not covered by insurance, with respect to (i) any Aircraft or Company Property or (ii) any other property or asset of the Company having a replacement cost of more than $200,000 for all such losses;

(b)   there has not been any declaration, setting aside or payment of any dividend or other distribution in respect of any shares of capital stock of the Company or any repurchase, redemption or other acquisition by the Company of any outstanding shares of capital stock or other securities of, or other ownership interest in, the Company;

(c)   the Company has not awarded or paid any bonuses to employees of the Company with respect to the fiscal year ending December 31, 2004, except to the extent accrued on the Company Financial Statements or entered into any employment, deferred compensation, severance or similar agreement (nor amended any such agreement) or agreed to increase the compensation payable or to become payable by it to any of the Company’s directors, officers, employees, agents or representatives or agreed to increase the coverage or benefits available under any severance pay, termination pay, vacation pay, company awards, salary continuation for disability, sick leave, def erred compensation, bonus or other incentive compensation, insurance, pension or other employee benefit plan, payment or arrangement made to, for or with such directors, officers, employees, agents or representatives;

(d)   there has not been any change by the Company in accounting or Tax reporting principles, methods or policies;

(e)   the Company has not made or rescinded any election relating to Taxes, or settled or compromised any material claim relating to Taxes;

(f)   the Company has not failed to promptly pay and discharge current liabilities except where disputed in good faith by appropriate proceedings;

(g)   the Company has not made any loans, advances or capital contributions to, or investments in, any Person or paid any fees or expenses to any director, officer or partner of the Company, Seller or any Affiliate of Seller;

(h)   the Company has not mortgaged, pledged or subjected to any Lien, other than Permitted Liens, any of its assets, or acquired any assets or sold, assigned, transferred, conveyed, leased or otherwise disposed of any assets of the Company, except for assets acquired or sold, assigned, transferred, conveyed, leased or otherwise disposed of in the ordinary course of business;

 

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(i)   the Company has not discharged or satisfied any Lien, or paid any obligation or liability (fixed or contingent), except in the ordinary course of business and not otherwise material to the Company;

(j)   the Company has not canceled or compromised any debt or claim or amended, canceled, terminated, relinquished, waived or released any Contract or right except in the ordinary course of business and which, in the aggregate, would not be material to the Company;

(k)   the Company has not made or committed to make any capital expenditures or capital additions or betterments in excess of $1,000,000 individually or $5,000,000 in the aggregate;

(l)   other than pursuant to the intercompany relationships described in SECTION 1.08 of the Disclosure Letter, the Company has not issued, created, incurred, assumed or guaranteed any indebtedness;

(m)   the Company has not granted any license or sublicense of any rights under or with respect to any Intellectual Property;

(n)   the Company has not instituted or settled any material Litigation; and

(o)   the Company has not agreed, committed, arranged or entered into any understanding to do anything set forth in this SECTION 2.09.

 

Section 2.10    Absence of Litigation.

 

(a)   Except as set forth in SECTION 2.10(a) of the Disclosure Letter or in any notice provided pursuant to SECTION 4.14 hereof, there is no Litigation pending or, to the Knowledge of Seller or the Company, threatened against the Company, or any property or asset of the Company.

 

(b)   Except as set forth in SECTION 2.10(b) of the Disclosure Letter, neither the Company nor any property or asset of the Company is subject to any continuing order of, consent decree, settlement agreement or other similar written agreement with, or, to the Knowledge of Seller or the Company, continuing investigation by, any Governmental Entity, or any Order, determination or award of any Governmental Entity or arbitrator. Except as set forth in SECTION 2.10(b) of the Disclosure Letter, the Company is not engaged in any legal action to recover monies due it or for damages sustained by it.

 

Section 2.11    Employee Benefit Plans; Labor Matters.

 

(a)   SECTION 2.11(a) of the Disclosure Letter contains a true and complete list of all “employee benefit plans” (within the meaning of Section 3(3) of ERISA and all other employee benefit plans, programs, agreements, policies, arrangements or payroll practices, including bonus or other incentive compensation, collective bargaining agreements, employment, consulting or other compensatio n, incentive, equity or equity-based compensation, deferred compensation, retention, change in control, severance, sick

 

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leave, vacation pay, salary continuation, health, life insurance and educational assistance plans, policies agreements or arrangements as to which the Company has any obligations, contingent or otherwise (collectively, the “Company Plans”).

(b)   Correct and complete copies of the following documents, with respect to each of the Company Plans have been delivered or otherwise made available to Purchaser by Seller, to the extent applicable: (i) plan documents, summary plan descriptions, related trust documents, insurance contracts or other funding arrangements, and in each case, all amendments thereto; (ii) the most recently filed Internal Revenue Service (“IRS”) Form 5500 and all schedules thereto, (iii) the most recent IRS determination letter and (iv) the most recently prepared actuarial report and financial statement.

(c)   The Company has no express or implied legally binding arrangement that would constitute a commitment to create any additional Company Plan or to modify any existing Company Plan (other than with respect to a modification, change or termination required by ERISA or the Code).

 

(d)   Except as set forth in SECTION 2.11(d) of the Disclosure Letter, neither the execution and delivery of this Agreement nor the consummation of the Stock Purchase will (i) result in any payment becoming due to any Employee, (ii) increase any benefits otherwise payable under any Company Plan or (iii) result in the acceleration of the time of payment or vesting of any such benefits under any such Company Plan.

(e)   None of the Company Plans is a multiemployer plan, within the meaning of Section 3(37) or 4001(a)(3) of ERISA (a “Multiemployer Plan”) nor will the Company have any obligation to make any contribution to any Multiemployer Plan. None of the Company Plans is a single employer pension plan, within the meaning of Section 4001(a)(15) of ERISA, for which the Company could incur liability under Section 4063 or 4064 of ERISA (a “Multiple Employer Plan”). With respect to each Company Plan, neither the Company nor any trade or business, whether or not incorporated, that together with the Company would be deemed a “single employer” within the meaning of Section 4001(b) of ERISA has made or suffered a “complete withdrawal” or a “partial withdrawal” as such terms are respectively defined in Sections 4203 and 4205 of ERISA (or any liability resulting therefrom has been satisfied in full).

 

(f)   Except as set forth in SECTION 2.11(f) of the Disclosure Letter, none of the Company Plans (i) provides for the payment of separation, severance, termination or similar-type benefits to any Person or (ii) obligates the Company to pay separation, severance, termination or other benefits as a result of the transactions contemplated by this Agreement.

(g)   To the Company’s or Seller’s Knowledge, there has been no non-exempt prohibited transaction (within the meaning of Section 406 of ERISA or Section 4975 of the Code) with respect to any Company Plan, which could reasonably be expected to give rise to liability of the Company equal to or greater than $500,000 in the aggregate. The Company is not currently liable and has not previously incurred any liability for any tax or penalty arising under Section 4971, 4972, 4979, 4980 or 4980B of the Code or Section

 

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502(c) of ERISA which could reasonably be expected to give rise to liability of the Company equal to or greater than $500,000 in the aggregate, and to the Company or Seller’s Knowledge, no fact or event exists which could reasonably be expected to give rise to any such liability.

 

(h)   Except as set forth in SECTION 2.11(h) of the Disclosure Letter, there are no pending actions, claims or lawsuits which have been asserted or instituted relating to the Company Plans, the assets of any of the trusts under such plans or the sponsor, administrator or fiduciary of any of the Company Plans, with respect to the operation of such plans (other than routine benefit claims which could not reasonably be expected to result in a Company Material Adverse Effect), nor does the Company have any Knowledge of facts that could form the basis for any such claim or lawsuit.

 

(i)   Except as set forth in SECTION 2.11(i) of the Disclosure Letter, none of the Company Plans provide for post-employment life or health insurance, benefits or coverage for any participant or any beneficiary of a participant, except as may be required under the Consolidate Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”).

(j)   The Company has not incurred any liability under, arising out of or by operation of Title IV of ERISA that has not been satisfied in full (other than liability for premiums to the Pension Benefit Guaranty Corporation (“PBGC”) arising in the ordinary course), including, without limitation, any liability in connection with the termination or reorganization of any employee pension benefit plan subject to Title IV of ERISA maintained by the Company or any ERISA Affiliate (a s defined at the end of this paragraph) or to which the Company or any ERISA Affiliate contributed or has ever been obligated to contribute thereunder (a “Title IV Plan”). With respect to the Title IV Plans, (i) no complete or partial termination has occurred within the five (5) years preceding the date of this Agreement with respect to any Title IV Plan, (ii) no reportable event (within the meaning of Section 4043 of ERISA) for which the 30-day notice requirement to the PBGC has not been waived has occurred or is expected to occur with respect to any Title IV Plans, (iii) no asset of the Company is the subject of any lien arising under Section 302(f) of ERISA or Section 412(n) of the Code, (iv) the Company has not been required to post any security under Section 307 of ERISA or Section 401(a)(29) of the Code and (v) no fact o r event exists which would give rise to any such lien or requirement to post any such security, which could, in each of (i)-(v) listed above, reasonably be expected to give rise to liability of the Company equal to or greater than $500,000 in the aggregate. An “ERISA Affiliate” shall mean any Affiliate of the Company and any trade or business (whether or not incorporated) which is or has ever been under common control, or which is or has ever been treated as a single employer, with any of them under Section 414(b), (c), (m) or (o) of the Code.

(k)   The Company Plans have been maintained, in all material respects, in accordance with their terms and with the requirements of all applicable Laws, including, without limitation, ERISA and the Code, except for such Law violations as could not reasonably be expected to give rise to liability of the Company equal to or greater than $500,000 in the aggregate. To the Knowledge of Seller or the Company, nothing has

 

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occurred with respect to the operation of the Company Plans that would reasonably be expected to cause the imposition to the Company of any liabilities, penalties or taxes under ERISA or the Code which, in the aggregate, could reasonably be expected to result in a Company Material Adverse Effect.

 

(l)   The Company has not incurred any liability under, and has complied in all respects with all applicable Laws relating to the employment of labor, including all such applicable Laws relating to wages, hours, WARN, collective bargaining, discrimination, civil rights, safety and health, workers’ compensation and the collection and payment of withholding and/or social security taxes and any similar tax, except for immaterial non-compliance. The Company does not reasonably expect to incur any such liability as a result of actions taken or not taken prior to the Closing. SECTION 2.11(l) of the Disclosure Letter lists all notices given by the Company in connection with WARN.

(m)   (i) The Company is not a party to any collective bargaining agreement or other labor union contract applicable to Persons employed by the Company, nor, to the Knowledge of Seller and the Company, are there any activities or proceedings of any labor union to organize any such employees; (ii) the Company has not breached or otherwise failed to comply with any provision of any such agreement or contract, and there are no grievances outstanding against the Company under any such agreement or contract; (iii) there are no unfair labor practice complaints pending against the Company before the National Labor Relations Board or any current union represen tation questions involving employees of the Company; and (iv) there is no strike, slowdown, work stoppage or lockout, or, to the Knowledge of Seller and the Company, threat thereof, by or with respect to any employees of the Company.

 

Section 2.12    Taxes. 

(a)   All income and other material Tax Returns required to be filed by or with respect to the Company (or any Affiliated Group of which the Company is or was a member) prior to the date of this Agreement (taking into account extensions) have been filed, and all such Tax Returns are true, correct and complete in all material respects. All Taxes shown due on such returns and all other material amounts of Taxes (whether or not required to be shown on a Tax Return) payable by or with respect to the Company (or any Affiliated Group of which the Company is or was a member) have been timely paid or accrued on the Company Financial Statements.

 

(b)   SECTION 2.12(b) of the Disclosure Letter lists all income and other material Tax Returns filed with respect to the Company since December 31, 2000. Seller has made available to Purchaser complete copies of the relevant portions of all income and other material Tax Returns of, examination reports relating to, and statements of deficiencies assessed against or agreed to by, the Company during such period.

 

(c)   Except as set forth in SECTION 2.12(c) of the Disclosure Letter, neither the Company nor any Person on its behalf has waived any statute of limitations in respect of Taxes or agreed to, or become a party to, any extension of time with respect to a Tax

 

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assessment or deficiency or the period for filing any Tax Return, which waiver of statute of limitations or extension of time has not since expired.

 

(d)   Except as set forth in SECTION 2.12(d) of the Disclosure Letter, the Company is not a party to any pending action or proceeding, and, neither Seller nor the Company has received any written notice that there is any action or proceeding threatened by any Governmental Entity against the Company for assessment or collection of Taxes. All deficiencies asserted or assessments made as a result of any examinations by any Governmental Entity of the Tax Returns of or with respect to the C ompany have been fully paid.

(e)   The Company has not been a member of any Affiliated Group other than the Affiliated Group of which Seller is the common parent, and the Company does not have any liability for Taxes of any Person under Treasury Regulation Section 1.1502-6 or any comparable provision of state, local or foreign Law (other than as a member of such group).

(f)   The Company has withheld or collected and timely paid over to the appropriate Governmental Entity (or is properly holding for such payment) all Taxes required by applicable Law to be withheld or collected.

(g)   Neither Seller nor the Company has received any written notice that a claim with regard to Taxes has been made by a Governmental Entity in a jurisdiction in which no Tax Return is filed by or with respect to the Company such that the Company may be subject to taxation by that jurisdiction.

(h)   Other than any Lien for current taxes and assessments not yet past due, there are no Liens for Taxes upon the assets of the Company.

(i)   The Company is not subject to private letter rulings of the IRS or comparable rulings from any other Governmental Entity.

(j)   Neither the Company nor any Person on its behalf has (i) agreed, is required or has any application pending, to make any adjustment pursuant to Section 481(a) of the Code or any similar provision of applicable Law or has received notice that any Governmental Entity has proposed any such adjustment, (ii) executed or entered into a closing agreement pursuant to Section 7121 of the Code or any similar provision of applicable Law or (iii) granted to any Person any power of attorney that is currently in force with respect to any Tax matter.

(k)   None of the property owned by the Company is (i) property required to be treated as being owned by another Person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986, (ii) “tax-exempt use property” within the meaning of Section 168(h)(1) of the Code, (iii) “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code, (iv) “limited use property” within the meaning of Rev. Proc. 2001-28, (v) subject to Section 168(g)(1)(A) of the Code, or

 

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(vi) subject to any provision of state, local or foreign Law comparable to any of the provisions listed above.

(l)   The Company is not a party to or bound by any tax sharing, allocation, indemnity or similar agreement or arrangement (whether or not written) pursuant to which Purchaser or any of its Affiliates (including the Company) will have any obligation to make any payments after the Closing.

(m)   The Company has not constituted either a “distributing corporation” or a “controlled corporation” (within the meaning of Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for tax-free treatment under Section 355 of the Code (i) in the two (2) years prior to the date of this Agreement or (ii) in a distribution which could otherwise constitute part of a “plan” or “series of related transactions” (within the meaning of Section 355(e) of the Code) in conjunction with the transactions contemplated by this Agreement.

(n)   There is no taxable income of the Company that will be required under applicable Law to be reported by Purchaser or any of its Affiliates (including the Company) for a taxable period (or portion thereof) beginning after the Closing Date which taxable income was realized (and reflects economic income) arising prior to the Closing Date.

 

(o)   Except as set forth in SECTION 2.12(o) of the Disclosure Letter, the Company is not and within the last five (5) years has not been, or treated as having been, engaged in a trade or business or a permanent establishment in any jurisdiction other than the United States, and the Company has not within the last five (5) years been and is not subject to taxation (including any withholding tax) in any jurisdiction other than the (i) United States or (ii) a jurisdiction in the Uni ted States.

 

(p)   Except as set forth in SECTION 2.12(p) of the Disclosure Letter, the Company has not made any payments, is not obligated to make any payments, and is not a party to any agreement that under certain circumstances would obligate the Company to make any payments that will not be deductible under Section 280G of the Code or subject to Section 4999 of the Code.

 

(q)   The Company does not, directly or indirectly, own any capital stock or other equity interest in any other Person.

 

(r)   The Company is a member of a “selling consolidated group” within the meaning of Treasury Regulation Section 1.338(h)(10)-1(b)(2), and Seller is eligible to make the Section 338(h)(10) Election with respect to the Company.

 

Section 2.13    Environmental Matters.

(a)   For purposes of this Agreement, the following terms shall have the following meanings: (i) “Environmental Action” means any claim, proceeding or other Action brought or threatened under any Environmental Law or otherwise asserting that the Company has incurred or is responsible for Environmental Costs and Liabilities,

 

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including, but not limited to, assessments, judgments, damages, penalties, fines, or remedial obligations; (ii) “Environmental Clean-up Site” means any location which is listed on the National Priorities List, the Comprehensive Environmental Response, Compensation and Liability Information System, or on any similar local, state or foreign list of sites requiring investigation or cleanup, or which is the subject of any pending or threatened Action related to or arising from any alleged violation of any Environmental Law, or at which there has been an actual or threatened Release of a Hazardous Substance; (iii) “Environmental Costs and Liabilities” means Liabilities arising out of the ownership or operation of the business of the Company or the ownership, operation or condition of the Real Property or any other real property currently or formerly owned, occupied, operated or leased by the Company, in each case to the extent based upon or arising out of (A) Environmental Law, (B) a failure to obtain, maintain or comply with any Environmental Permit, (C) a Release of any Hazardous Substance, or (D) the use, generation, storage, transportation, treatment, manufacture, distribution, sale, or off-site disposal of Hazardous Substances; (iv) “Environmental Laws” means any and all applicable Laws issued, promulgated or entered into by any Governmental Entity relating to the environment, worker health and safety, preservation or reclamation of natural resources, or to the management, handling, use, generation, treatment, storage, transportation, disposal, manufacture, distribution, formulation, packaging, labeling, Release or threatened Release of or exposure to Hazardous Substances, whether now existing or subsequently enacted including, but not limited to, the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (“CERCLA”); the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.; the Clean Air Act, 42 U.S.C. Section 7401 et seq.; the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, 29 U.S.C. Section 651 et seq. the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300(f) et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801 et seq.; the Federal Insecticide, Fungicide and Rodenticide Act 7 U.S.C. Section 136 et seq.; the Resource Conservation and Recovery Act of 1976 (“RCRA”), 42 U.S.C. Section 6901 et seq.; the Oil Pollution Act of 1990, 33 U.S.C. Section 2701 et seq.; and any similar or implementing state or local Law, any all amendments or regulations promulgated thereunder; and any common law doctrine, including but not limited to, negligence, nuisance, trespass, personal injury, or property damage related to or arising out of the presence, Release, or exposure to Hazardous Substances; (v) “Environmental Permit” means any Authorization under Environmental Law, and includes any and all Orders issued or entered into by a Governmental Entity under Environmental Law; (vi) “Hazardous Substances” means all explosive or regulated radioactive materials or substances, hazardous or toxic materials, wastes or chemicals, petroleum and petroleum products (including crude oil or any fraction thereof), asbestos or asbestos containing materials, polychlorinated biphenyls (“PCBs”) and all other materials, che micals or substances which are regulated by, form the basis of liability or are defined as pollutants, contaminants, wastes, hazardous, extremely hazardous, toxic or words of similar import, under any Environmental Law, including materials listed in 49 C.F.R. Section 172.101 and materials defined as hazardous pursuant to Section 101(14) of CERCLA (vii) “Release” means any spilling, leaking, pumping, pouring, emitting, emptying,

 

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discharging, injecting, escaping, leaching, dumping, exposure to or disposing of Hazardous Substances into or in the Environment.

 

(b)   Except as set forth in SECTION 2.13(b) of the Disclosure Letter or as would not be reasonably expected to result in Environmental Costs and Liabilities of $100,000 individually or $500,000 in the aggregate: (i) the Company has secured, and is in compliance with, all Environmental Permits required in connection with its operations and the Company Properties, all such Environmen tal Permits are valid and in full force and effect, and none of such Environmental Permits will be terminated or impaired or become terminable as a result of this transaction; (ii) the Company has not violated and is not in violation of any Environmental Laws, the Company has not received notice alleging that it is not in compliance with Environmental Laws, and the Company is not aware of facts or circumstances that are likely to result in the failure of the Company to comply with or constitute a violation of any Environmental Laws or Environmental Permits; (iii) none of the properties owned or leased by the Company (including soils and surface and ground waters) are contaminated with any Hazardous Substance, there has been no treatment, storage, disposal or Release of any Hazardous Substance at, from, into, on or under any Company Property or any other property currently or formerly owned, occupied, operated or leased b y the Company; (iv) the Company is not actually or potentially or, to the Knowledge of Seller or the Company, allegedly liable for any off-site contamination, the Company has not received a CERCLA 104(e) information request nor has the Company been named a potentially responsible party for any National Priorities List site under CERCLA or any site under analogous state Law, and the Company has not transported or arranged for the treatment, storage, handling, disposal, or transportation of any Hazardous Substances to any off-site location that is an Environmental Clean-up Site; (v) there are no past, pending or, to Seller’s or the Company’s Knowledge, threatened Environmental Actions against or affecting the Company, the Company is not aware of any facts or circumstances which could be expected to form the basis for any Environmental Action against the Company, and the Company is not subject to any Order relating to compliance with any Environmental Law or to investigation or cleanup of a Hazar dous Substance, and there are no past Environmental Actions under which the Company has any unfulfilled remedial obligations or ongoing monitoring or reporting obligations; (vi) any aboveground or underground tanks previously situated on the Company Properties or any other property currently or formerly owned, occupied, operated or leased by the Company have been removed in accordance with all Environmental Laws, there are no articles, containers or equipment containing PCBs in, at, on, under or within the Company Properties in excess of applicable standards, and there is no asbestos-containing material in, at, on, under or within the Company Properties in excess of applicable standards; and (vii) the Company has made available to Purchaser all material written environmental and worker health and safety investigations, assessments, studies, audits, tests and reports that have been prepared by or on behalf of the Company.

 

Section 2.14    Real Property.

 

(a)   SECTION 2.14(a) of the Disclosure Letter sets forth a complete list of (i) all real property and interests in real property owned in fee by the Company (individually,

 

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an “Owned Property” and collectively, the “Owned Properties”), and (ii) all real property and interests in real property leased by the Company (individually, a “Real Property Lease” and collectively, the “Real Property Leases< /u>” and, together with the Owned Properties, being referred to herein individually as a “Company Property” and collectively as the “Company Properties”) as lessee or lessor. The Company has good and marketable fee title to all Owned Property, free and clear of all Liens of any nature whatsoever except (A) Liens set forth in SECTION 2.14(a) of the Disclosure Letter and (B) Permitte d Liens. The Company Properties constitute all interests in real property currently used or currently held for use in connection with the business of the Company and which are necessary for the continued operation of the business of the Company as the business is currently conducted. The Company has not used, nor allowed any other Person to use, any Company Property for any purpose other than helicopter or fixed-wing aviation operations and such other uses as are normally incident thereto. Except as indicated in SECTION 2.14(a) of the Disclosure Letter, the Company has delivered or otherwise made available to Purchaser true, correct and complete copies of (i) all deeds, title reports and surveys for the Owned Properties and (ii) the Real Property Leases, together with all amendments, modifications or supplements, if any, thereto.