EFTA01202993.pdf

FN1.1 Draft v2.0, #1919057.1 — 10/27/2014 STOCK PURCHASE AGREEMENT AMONG ZYLEX, LLC ("Purchaser"), JEGE, Inc. (the "Company"), AND [Jeffrey Epstein] ("Seller") October , 2014 EFTA01202993  TABLE OF CONTENTS Article I DEFINITIONS I 1.1 "Aircraft" I 1.2 "Business" I 1.3 "Certificate" I 1.4 "Closing" 1 1.5 "Closing Date" 1 1.6 "Code" 2 1.7 "Company" 2 1.8 "Company Statements" 2 1.9 "Consulting Agreement" 2 1.10 "Contemplated Transactions" 2 1.11 "Contracts" 2 1.12 "Delivery Conditions" 2 1.13 "Deposit" 2 1.14 "Encumbrance" 2 1.15 "Equipment" 2 1.16 "Escrow Account" 2 1.17 "Escrow Agent" 2 1.18 "Escrow Agreement" 3 1.19 "FAA" 3 1.20 "Goodwill" 3 1.21 "a.c" 3 1.22 "IRS" 3 1.23 "Key Personnel" 3 1.24 "Liabilities and Obligations" 3 1.25 "Noncompetition Agreements" 3 1.26 "Post Closing Escrow" 3 1.27 "Purchase Price" 3 1.28 "Second Deposit" 3 1.29 "Securities Act" 3 1.30 "Seller's Closing Documents" 3 1.31 "Seller Release" 3 1.32 "Shares" 3 1.33 "Tax" or "Taxes" 3 1.34 "Tax Return" 4 Article 2 PURCHASE AND SALE OF THE SHARES 4 2.1 Purchase and Sale of the Shares from the Seller 4 2.2 Further Assurances 4 2.3 The Closing 4 2.4 Actions at the Closing 4 2.5 Purchase Price for the Shares 4 2.6 Post Closing Escrow 5 2.7 Closing Deliverables 5 EFTA01202994 Article 3 AIRCRAFT 5 3.1 Inspection 5 3.2 Test Flight 6 3.3 Aircraft Condition 6 Article 4 REAL ESTATE MATTERS 7 4.1 Real Estate 7 4.2 West Palm Beach Facility 7 Article 5 INVESTIGATION 7 Article 6 REPRESENTATIONS AND WARRANTIES OF THE SELLER 7 6.1 Title to Shares 7 6.2 The Company 7 6.3 Authority; No Conflict 8 6.4 Capitalization 9 6.5 Financial Statements 9 6.6 No Undisclosed Liabilities 9 6.7 Business Operations 9 6.8 Taxes 10 6.9 Other Operations 10 6.10 Contracts 10 6.11 Accounts Receivable 12 6.12 Inventory 12 6.13 Equipment 12 6.14 Insurance 12 6.15 Real Estate 14 6.16 Assets Complete, Etc 14 6.17 Litigation 14 6.18 Compliance with Laws 14 6.19 Intellectual Property 15 6.20 Labor Relations; Compliance 15 6.21 Employee Benefits 15 6.22 Changes in Suppliers 17 6.23 Conduct of Business 17 6.24 Employees 18 6.25 Certain Payments 18 6.26 Licenses and Permits 19 6.27 Suppliers 19 6.28 Related Parties 19 6.29 Material Change 19 6.30 Disclosure 19 Article 7 REPRESENTATIONS AND WARRANTIES BY PURCHASER 20 7.1 Organization and Standing 20 7.2 No Conflict 20 7.3 Authority 20 EFTA01202995  7.4 Certain Proceedings 20 Article 8 COVENANTS OF THE SELLER 20 8.1 Action by the Company or the Seller 20 8.2 Fees 21 8.3 Further Assurances 21 8.4 Best Efforts 21 8.5 No Shop 21 8.6 Notification of Breaches or Potential Breaches 21 Article 9 NO BROKERS OR FINDERS 21 Article 10 CONDITIONS PRECEDENT OF PURCHASER 22 10.1 Accuracy of Representations 22 10.2 Seller's Performance 22 10.3 Consents 22 10.4 No Proceedings 22 10.5 No Claim Regarding Stock Ownership or Sale Proceeds 22 10.6 No Prohibition 22 10.7 Opinion of Seller's Counsel 22 10.8 Casualty 22 10.9 Adverse Development 23 10.10 Non-Compete Agreement 23 10.11 Consulting Agreement 23 10.12 Seller Release 23 10.13 Investigations 23 10.14 Representations and Warranties True at Closing 23 10.15 Seller's Compliance with the Agreement 23 10.16 Officers' Certificate 23 10.17 Injunction 23 Article 11 CONDITIONS PRECEDENT OF THE SELLER 23 11.1 Accuracy of Representations 23 11.2 Purchaser's Performance 24 11.3 Consents 24 11.4 Additional Documents 24 11.5 Representations and Warranties True at Closing 24 11.6 Purchaser's Compliance with the Agreement 24 11.7 Officers' Certificate 24 11.8 Injunction 24 Article 12 Termination 25 12.1 Termination Events 25 12.2 Effect of Termination 25 Article 13 INDEMNIFICATION 25 III EFTA01202996 Article 14 NATURE AND SURVIVAL OF REPRESENTATIONS 26 Article 15 MISCELLANEOUS 26 15.1 Notices 26 15.2 Binding Effect 27 15.3 Modification 27 15.4 Conflicts of Interest 27 15.5 Expenses 28 15.6 Assignment 28 15.7 Choice of Law 28 15.8 Exclusive Jurisdiction 28 15.9 Counterparts 28 15.10 Invalidity of Provisions 28 15.11 Headings 29 15.12 Access to Books and Records 29 15.13 Confidentiality 29 15.14 Joint and Several Liability 29 Exhibits: Exhibit A Non-Compete Agreement Exhibit B Consulting Agreement Exhibit C Aircraft Inspection Report Exhibit D Seller Release Exhibit E Escrow Agreement Schedules [Follow Exhibits] iv EFTA01202997  STOCK PURCHASE AGREEMENT This STOCK PURCHASE AGREEMENT (hereinafter, together with the exhibits and schedules annexed hereto the "Agreement") is made and entered into as of the day of October, 2014, by and among Zylex, LLC, a Florida limited liability company, ("Purchaser"), JEGE, Inc., a Delaware corporation, (the "Company"), and [Jeffrey Epstein], who are all the shareholders (collectively, the "Seller") of the Company. WHEREAS, the Company owns and operates a business (the "Business") that includes operations under Part 125 charter operation certified by the Federal Aviation Association ("FAA"), operating a Boeing 727-100 aircraft (as defined further below, the "Aircraft"). WHEREAS, Seller owns the number of issued and outstanding shares of common stock, [S 1 par value, of the Company ("Common Shares") and the number of issued and outstanding shares of [preferred stock], [$ 1 par value, of the Company ("Preferred Shares")] set forth opposite his, her or its name on Schedule I attached hereto, which Common Shares and Preferred Shares in the aggregate represent all of the issued and outstanding shares of capital stock of the Company as of the date hereof (the Common Shares and the Preferred Shares referred to hereinafter as the "Shares"). WHEREAS, the Seller desire to sell, and Purchaser desire to purchase, all of the issued and outstanding shares (the "Shares") of capital stock of the Company, for the consideration and on the terms set forth in this Agreement. NOW, THEREFORE, in consideration of the purchase and sale of the Shares and the mutual promises, covenants and conditions hereinafter set forth, Company and Seller, jointly and severally, and Purchaser, hereby agree as follows: ARTICLE 1 DEFINITIONS As used herein, the following terms shall have the meanings set forth below, and where said meanings are intended, said terms shall be capitalized: 1.1 "Aircraft"» means that certain Boeing 727-100 aircraft, bearing manufacturer's serial number 20115, and currently registered with the United States Federal Aviation Agency as N908JE, together with said aircraft's two Pratt and Whitney JT8D-219 engines and one Pratt and Whitney JT8D-7B engine, as further described on Schedule 3.1. 1.2 "Business"» has the meaning set forth in the second "Whereas" clause above. 1.3 "Certificate"» means that certain Certificate No. issues by the FAA for Aircraft operations for hire of the Business. 1.4 "Closing"» means the closing of the transactions contemplated by this Agreement. 1 EFTA01202998  1.5 "Closing Date"» means the date on which the Closing hereunder is held. The Closing shall be held at 10:00 M., then current Eastern Standard time, on 2014, or at such other time or date as the parties may mutually agree upon in writing, unless delayed by a party for failure to satisfy conditions precedent to said party's obligations hereunder, in which case Closing shall be held as soon as practicable after such conditions are satisfied. 1.6 "Code"» means the Internal Revenue Code of 1986, as amended, and shall include all of the rules and regulations promulgated thereunder. 1.7 "Company"» means JEGE, Inc., a Delaware corporation, and all subsidiaries thereof. 1.8 "Company Statements"» has the meaning set forth in Section 6.5. 1.9 "Consulting Agreement"» means an agreement in the form of Exhibit B. 1.10 "Contemplated Transactions"» means all of the transactions contemplated by this Agreement, including: (a) the sale of the Shares by Seller to Purchaser; (b) the execution, delivery, and performance of the Consulting Agreements, the Noncompetition Agreements, the Seller Release, and the Escrow Agreement; (c) the performance by Purchaser and Seller of their respective covenants and obligations under this Agreement; and (d) Purchaser's acquisition and ownership of the Shares and exercise of control over the Company. 1.11 "Contracts"» means any agreement, contract, obligation, promise, or undertaking (whether written or oral and whether express or implied) that is legally binding. 1.12 "Delivery Conditions"» has the meaning set forth in Section 3.3. 1.13 "Deposit"» has the meaning set forth in Section 2.5(b). 1.14 "Encumbrance"» means any charge, claim, community property interest, condition, equitable interest, lien, option, pledge, security interest, right of first refusal, or restriction of any kind, including any restriction on use, voting, transfer, receipt of income, or exercise of any other attribute of ownership. 1.15 "Equipment"» means all of the Company's tangible assets, including but not limited to any furniture, machinery, equipment, tooling, computers and the software utilized therewith, and vehicles, in each case, if any. 1.16 "Escrow Account"» means 2 EFTA01202999  1.17 "Escrow Agent"» means Bank of New York Mellon at 200 Park Avenue, 56th floor, New York, New York. 1.18 "Escrow Agreement"» means an escrow agreement substantially in the form attached as Exhibit E among Escrow Agent, Purchaser and Seller. 1.19 "FAA"» means the United States Federal Aviation Administration. 1.20 "Goodwill"» means all goodwill and business of the Company. 1.21 "IRC"» means the Internal Revenue Code of 1986 or any successor law, and regulations issued by the IRS pursuant to the Internal Revenue Code or any successor law. 1.22 "IRS"» means the United States Internal Revenue Service or any successor agency, and, to the extent relevant, the United States Department of the Treasury. 1.23 "Key Personnel"» means [Larry Viscossi] and Larry Morrison. 1.24 "Liabilities and Obligations"» means any indebtedness, claim, obligation or liability of any kind or nature whatsoever, whether absolute or contingent, liquidated or unliquidated, due or to become due, accrued or not accrued, or otherwise. 1.25 "Noncompetition Agreements"» has the meaning set forth in Section 6.3. 1.26 "Post Closing Escrow"» has the meaning set forth in Section 2.0. 1.27 "Purchase Price"» has the meaning set forth in Section 2.5(a). 1.28 "Second Deposit"» has the meaning set forth in Section 2.5(b). 1.29 "Securities Act"» means the Securities Act of 1933 or any successor law, and regulations and rules issued pursuant to that Act or any successor law. 1.30 "Seller's Closing Documents"» has the meaning set forth in Section 6.3. 1.31 "Seller Release"» means a release by Seller in the form attached as Exhibit D. 1.32 "Shares"» has the meaning set forth in the Recitals of this Agreement. 1.33 "Tax" or "Taxes"» shall mean all taxes, charges, fees, levies or other similar assessments or liabilities in the nature of taxes, including income, gross receipts, ad valorem, premium, value-added, excise, real property, personal property, sales, use, transfer, financial transaction, withholding, employment, unemployment, insurance, social security, business license, business organization, environmental, workers compensation, payroll, profits, license, lease, service, service use, severance, stamp, occupation, escheat, windfall profits, customs, duties, franchise, estimated and other taxes imposed by the United States of America or any state, local or foreign government, or any agency thereof, or other political subdivision of the United States or any such government, whether or not disputed, and any interest, fines, penalties, assessments or additions to tax resulting from, attributable to or incurred in connection with any 3 EFTA01203000 tax or any contest or dispute thereof. 1.34 "Tax Return"» means any return (including any information return), report, statement, schedule, notice, form, or other document or information filed with or submitted to, or required to be filed with or submitted to, any governmental body in connection with the determination, assessment, collection, or payment of any Tax or in connection with the administration, implementation, or enforcement of or compliance with any legal requirement relating to any Tax. ARTICLE 2 PURCHASE AND SALE OF THE SHARES 2.1 Purchase and Sale of the Shares from the Seller». Subject to and upon the terms and conditions of this Agreement, at the Closing, Seller shall sell, transfer, convey, assign and deliver to the Purchaser, and the Purchaser shall purchase, acquire and accept from Seller, all of the issued and outstanding Shares of the Company immediately prior to the Closing, as set forth opposite such Seller's name on Schedule 2.1 attached hereto. At the Closing, Seller shall deliver to the Purchaser appropriate evidence of the transfer of all of the Shares owned by such Seller to the Purchaser. 2.2 Further Assurances». At any time and from time to time after the Closing, at the Purchaser's request and without further consideration, Seller shall promptly execute and deliver such instruments of sale, transfer, conveyance, assignment and confirmation, and take all such other action as the Purchaser may reasonably request, more effectively to transfer, convey and assign to the Purchaser, and to confirm the Purchaser's title to, all of the Shares owned by all Seller immediately prior to the Closing, to put the Purchaser in actual possession and operating control of the assets, properties and business of the Company, to assist the Purchaser in exercising all rights with respect thereto and to carry out the purpose and intent of this Agreement and the transactions contemplated hereby. 2.3 The Closing». The Closing hereunder shall take place at the offices of JEGE, Inc. in West Palm Beach Florida on the Closing Date, or at such other place as may be mutually agreed upon in writing by Purchaser and the Seller. 2.4 Actions at the Closing». At the Closing: (a) the Company and the Seller shall deliver to the Purchaser the various certificates, instruments and documents referred to in Article 11. (b) the Purchaser shall deliver to the Company the various certificates, instruments and documents referred to in Article 10; and (c) Seller shall deliver to the Purchaser all of his, her or its Shares, with appropriate instruments of transfer. 2.5 Purchase Price for the Shares». (a) The aggregate purchase price to be paid by the Purchaser in respect of all 4 EFTA01203001  of the Shares shall be US $3,000,000 (the "Purchase Price"). The Purchase Price shall be payable in the manner described in Section 2.5(b). (b) Purchaser shall pay the Purchase Price as follows: (i) Upon execution and delivery of this Agreement and the Escrow Agreement, Seller shall deliver a refundable deposit of $ (the "Deposit") to the Escrow Agent, into the Escrow Account. (ii) At least one Business Day prior to the Closing Date, the Purchaser shall deliver to Escrow Agent an amount equal to (A) the remainder of the Purchase Price, plus (B) any other costs or expenses payable by Purchaser at Closing, plus (C) one half of the Escrow Agent's fees, less (D) any reductions negotiated in the due diligence period, if any (collectively, the "Second Deposit"). The amount of the Second Deposit shall be agreed upon in writing by Seller and Purchaser prior to and as a condition of Purchaser's delivery of such amount. (iii) At Closing, Escrow Agent shall disburse (A) the Escrow Fee to Escrow Agent, (B) any other amounts owed to third parties per the joint written instructions of Seller and Purchaser, including, without limitation, pursuant to the Non- Compete Agreements or Consulting Agreements, and (C) the Purchase Price less Seller's share of the Escrow Fee and less the Post Closing Escrow (if any) to Seller. (c) The Deposit and the Second Deposit shall be fully refundable to Purchaser upon written demand except as set forth in the Escrow Agreement. 2.6 Post Closing Escrow» If agreed in writing prior to Closing, at Closing the Escrow Agent shall retain an agreed upon amount (the "Post Closing Escrow"). The Post Closing Escrow shall be subject to the Escrow Agreement and any additional conditions agreed upon prior to Closing in writing by Seller and Purchaser. 2.7 Closing Deliverables». (a) At the closing, Purchaser and the Seller shall enter into a Non-Compete Agreement with Seller in the form of Exhibit A attached hereto, pursuant to which Seller will agree not to compete with Purchaser for a period of five years after the Closing. (b) At Closing, Purchaser and Seller also shall enter into Consulting Agreements substantially in the form of Exhibit B attached hereto with each of the Key Personnel. (c) At Closing, Seller and any other person that owns Shares of the Company or any residual rights therein shall execute and deliver a Seller Release. ARTICLE 3 AIRCRAFT 3.1 Inspection». Purchaser shall have the opportunity to inspect the Aircraft at a 5 EFTA01203002 reasonable time prior to delivery at Purchaser's expense to determine whether the Aircraft conforms to the Delivery Conditions of this Agreement or is otherwise acceptable. Such inspection shall take place at the Company's facility at West Palm Beach, Florida Airport (PBI) and shall include but not be limited to a visual inspection of the Aircraft, a review of the logbook and Aircraft records, and any other inspections as are reasonably necessary to examine the operation and condition of the Aircraft, including a test flight in compliance with Section 3.2. Purchaser shall complete its inspection of the Aircraft by no later than ten business days after Purchaser's satisfactory completion of the test flight. Within two business days of Purchaser's completion of the inspection, Purchaser shall deliver an aircraft inspection report substantially in the form of Exhibit C, whereby Purchaser accepts the aircraft, rejects the Aircraft or accepts the Aircraft subject to the correction of any Discrepancies listed in the Aircraft Inspection Report. "Discrepancies" means any failure of the Aircraft to comply with the Delivery Conditions. Upon delivery of such Aircraft Inspection Report accepting the Aircraft subject to the correction of Discrepancies, Purchaser shall, at its option, elect to either (i) have Seller correct all such Discrepancies at Seller's sole cost and expense, (ii) reduce the Purchase Price by an amount equal to the cost of correcting all the Discrepancies. If the Purchaser rejects the Aircraft for any reason, Purchaser and Seller shall cause the Deposit to be returned to Purchaser by the Escrow Agent, and thereafter this Agreement shall terminate and the parties shall have no further liability hereunder. 3.2 Test Flight». Purchaser shall have the opportunity prior to the completion of the Purchaser's inspection of the Aircraft as set out in Section 3.1 to conduct a test flight with at least two of Purchaser's representatives onboard in order to observe operation of all systems. Seller shall retain operational control of the Aircraft at all times during the test flight, and Seller shall name Purchaser and any Purchaser pilots onboard the Aircraft during the test flight as additional insureds on Seller's applicable liability policy. Purchaser shall be responsible for all fuel and costs of the test flight. During any and all inspections, and test flights conducted pursuant to the Agreement, care, custody and control, and risk of loss of the Aircraft shall remain with Seller. 3.3 Aircraft Condition». Seller covenants and agrees that the Aircraft shall be in the following condition at Closing (the "Delivery Conditions"): (a) The Aircraft shall be airworthy, with all equipment, systems and engines shall be functioning in accordance with the manufacturer's tolerances and limitations, with no extensions or deferments. (b) All calendar and hourly inspections shall be in compliance with the manufacturer's recommended maintenance program. The aircraft will be considered maintenance current. (c) The Aircraft shall be in compliance with all known FAA Airworthiness Directives and known Mandatory Service Bulletins and type certificate for such Aircraft. (d) All Aircraft Documents shall be in English and in compliance with Federal Aviation Regulations (FAR) and include applicable STC and FAA Form 337 documentation, and all logbooks will be complete and continuous. 6 EFTA01203003  (e) The aircraft will be delivered with all loose equipment, spare parts, maintenance manuals, log books, spare parts, and any other items that normally pertain to the Aircraft will be delivered to Purchaser. (1) The Aircraft shall conform to the specifications in Schedule 3.1 with no more than total airframe hours. ARTICLE 4 REAL ESTATE MATTERS 4.1 Real Estate». Except as set forth in Schedule 6.15, the Company does not own, lease, license or use any real property in the Business, including, without limitation, any buildings, hangars, offices or other facilities. 4.2 West Palm Beach Facility». [To address: what company or person has the facility at this airport and any future use of the facility by the Company in the future.' ARTICLE 5 INVESTIGATION From and after the date hereof and through the Closing Date, Company and the Seller shall afford to the officers and representatives of Purchaser free access to the properties and records of the Company in order that Purchaser may have full opportunity to make such investigation at reasonable times as it shall desire of the assets and of the affairs of Company, including, without limitation, inspection of the Aircraft pursuant to Article 3, and Company and the Seller shall provide to Purchaser reasonable assistance in the conduct of said investigation. During such access, such personnel shall not cause any unreasonable interference with the Company's operations or damage to its assets. ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF THE SELLER Seller and the Company, jointly and severally, represent and warrant to Purchaser that, except as specifically set forth on the exhibits and schedules listed below, the following statements are true and correct as of the date of this Agreement and will be true and correct on the Closing Date as if made on said Date: 6.1 Title to Shares». As of the date of this Agreement, Seller holds beneficially and of record and has good and marketable title to the Shares set forth opposite such Seller's name on Schedule I hereto, free and clear of any and all Encumbrances whatsoever, other than restrictions on transferability under the applicable U.S. federal and state securities laws. As of the Closing, Seller shall hold beneficially and of record and shall have good and marketable title to the Shares which are to be transferred to the Purchaser by such Seller pursuant hereto, as set forth opposite Seller's name on Schedule 2.1 attached hereto, free and clear of any and all Encumbrances, other than restrictions on transferability under the applicable U.S. federal and 7 EFTA01203004 state securities Laws. 6.2 The Company». The Company is a corporation duly organized and existing and in good standing under the laws of the State of Delaware and is entitled to own or lease its properties and to carry on its business as and in the places where such properties are now owned, leased or operated, or such business is now conducted. The Company is qualified to do business as a foreign corporation in all jurisdictions in which the nature of the Company's Business, the location of its assets or other factors require it to be so qualified. The Seller has delivered to Purchaser copies of the organizational documents of the Company, as currently in effect. 6.3 Authority; No Conflicb>. (a) This Agreement constitutes the legal, valid, and binding obligation of the Seller, enforceable against the Seller in accordance with its terms. Upon the execution and delivery by the Seller of the Escrow Agreement, the Consulting Agreements, the Seller Release, and the Noncompetition Agreements (collectively, the "Seller's Closing Documents"), the Seller's Closing Documents will constitute the legal, valid, and binding obligations of the Seller, enforceable against the Seller in accordance with their respective terms. The Seller have the absolute and unrestricted right, power, authority, and capacity to execute and deliver this Agreement and the Seller's Closing Documents and to perform their obligations under this Agreement and the Seller's Closing Documents. (b) Except as set forth in Schedule 6.3, neither the execution and delivery of this Agreement nor the consummation or performance of any of the Contemplated Transactions will, directly or indirectly (with or without notice or lapse of time): (i) contravene, conflict with, or result in a violation of (A) any provision of the organizational documents of the Company, or (B) any resolution adopted by the board of directors or the stockholders of the Company; (ii) contravene, conflict with, or result in a violation of, or give any governmental body or other person the right to challenge any of the Contemplated Transactions or to exercise any remedy or obtain any relief under, any legal requirement or any governmental order to which the Company or any Seller, or any of the assets owned or used by the Company, may be subject; (iii) contravene, conflict with, or result in a violation of any of the terms or requirements of, or give any governmental body the right to revoke, withdraw, suspend, cancel, terminate, or modify, any governmental authorization that is held by the Company or that otherwise relates to the business of, or any of the assets owned or used by, the Company; (iv) cause Purchaser or the Company to become subject to, or to become liable for the payment of, any tax; (v) cause any of the assets owned by the Company to be reassessed or revalued by any taxing authority or other governmental body; 8 EFTA01203005  (vi) contravene, conflict with, or result in a violation or breach of any provision of, or give any person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, or to cancel, terminate, or modify, any Contract; or (vii) result in the imposition or creation of any Encumbrance upon or with respect to any of the assets owned or used by the Company. (c) Except as set forth in Schedule 6.3, neither the Company nor any Company is or will be required to give any notice to or obtain any consent from any person in connection with the execution and delivery of this Agreement or the consummation or performance of any of the Contemplated Transactions. 6.4 Capitalization». The authorized equity securities of the Company consist of shares of common stock, par value $ per share, of which shares are issued and outstanding and constitute the Shares. Seller is and will be on the Closing Date the record and beneficial owners and holders of the Shares, free and clear of all Encumbrances. With the exception of the Shares (which are owned by Seller), all of the outstanding equity securities and other securities of each subsidiary of the Company are owned of record and beneficially by either the Company or a wholly-owned subsidiary of the Company, free and clear of all Encumbrances. No legend or other reference to any purported Encumbrance appears upon any certificate representing equity securities of the Company. All of the outstanding equity securities of the Company have been duly authorized and validly issued and are fully paid and nonassessable. There are no Contracts relating to the issuance, sale, or transfer of any equity securities or other securities of the Company. None of the outstanding equity securities or other securities of the Company was issued in violation of the Securities Act or any other legal requirement. The Company does not own, or have any Contract to acquire, any equity securities or other securities of any Person (other than its subsidiaries) or any direct or indirect equity or ownership interest in any other business. 6.5 Financial Statements». The Company does not maintain financial statements of any kind other than the balance sheet, accounts receivable and accounts payable lists dated as of October 30, 2014 prepared in connection with the Contemplated Transactions (the "Company Statements"). The Company Statements are true, complete and correct in all respects and fairly present the financial condition and assets and liabilities (whether accrued, absolute, contingent or otherwise) of the Company as of the dates indicated, and the results of operations of the Company for the periods then ended. As of the Closing, there have been no changes in the financial condition of the Company as reflected in the Company Statements. 6.6 No Undisclosed Liabilities». Except as set forth in Schedule 6.6, the Company has no liabilities or obligations of any nature (whether known or unknown and whether absolute, accrued, contingent, or otherwise) except for liabilities or obligations reflected or reserved against in the Company Statements. 6.7 Business Operations». The Business and its operations do not violate and have not in the past violated in any material respect any provisions of any currently applicable laws or regulations regarding the operation of businesses and there is no claim by or notice from any 9 EFTA01203006 government instrumentality that the Company has violated or does violate any applicable laws or regulations regarding the operation of businesses. 6.8 Taxes». (a) The Company has filed or caused to be filed (on a timely basis since 2007) all Tax Returns that are or were required to be filed by or with respect to it, either separately or as a member of a group of corporations. The Seller has delivered to Purchaser copies of, and Schedule 6.8 contains a complete and accurate list of, all such Tax Returns filed since January 1, 2008. The Company has paid, or made provision for the payment of, all Taxes that have or may have become due pursuant to those Tax Returns or otherwise, or pursuant to any assessment received by the Company, except such Taxes, if any, as are listed in Schedule 6.8 and are being contested in good faith and as to which adequate reserves (determined in accordance with GAAP) have been provided in the Company Statements. (b) The United States federal and state income Tax Returns of the Company have not been audited by the IRS or relevant state tax authorities or are closed by the applicable statute of limitations for all taxable years through 2007. Schedule 6.8 contains a complete and accurate list of all audits of all such Tax Returns, including a reasonably detailed description of the nature and outcome of each audit. All deficiencies proposed as a result of such audits have been paid, reserved against, settled, or, as described in Schedule 6.8, are being contested in good faith by appropriate proceedings. Schedule 6.8 describes all adjustments to the United States federal income Tax Returns filed by the Company or any group of corporations including the Company for all taxable years since and the resulting deficiencies proposed by the IRS. Except as described in Schedule 6.8, no Seller nor the Company has given or been requested to give waivers or extensions (or is or would be subject to a waiver or extension given by any other person) of any statute of limitations relating to the payment of Taxes of the Company or for which the Company may be liable. (c) All Tax Returns filed by (or that include on a consolidated basis) the Company are true, correct, and complete. There is no tax sharing agreement that will require any payment by the Company after the date of this Agreement. [The Company is not, nor within the five-year period preceding the Closing Date has been, an "S" corporation.] 6.9 Other Operations». Neither the Company nor any of the Seller owns or controls, directly or indirectly (including through relatives), any divisions or other operations, nor do any subsidiaries or other affiliated or controlled corporations or entities of the Company or any of the Seller own or control, directly or indirectly, any divisions or operations, which provide services similar to those provided by the Company. During the past four years, each of the Company and the Seller, and any subsidiaries or affiliated or controlled entities of the Company or the Seller, have not sold, transferred or otherwise disposed of companies, assets or businesses selling products which compete with the products produced by the Company. 6.10 Contracts». Except as listed in Schedule 6.10, the Company is not a party to any 10 EFTA01203007 written or oral: (i) contract, agreement or understanding for the employment of any officer, consultant, director or employee; (ii) contract, agreement or understanding with any labor union; (iii) contract, agreement or understanding for the purchase of any materials, supplies or equipment; (iv) contract, agreement or understanding for the sale of products or performance of services; (v) license or franchise agreement, either as licensor or licensee or franchisor or franchisee, including any related to intellectual property, or distributor, dealership or sales agency contract, agreement or understanding; (vi) lease for real or personal property (including, without limitation, the Aircraft) under which the Company is a lessor or lessee, or contract, agreement or understanding to purchase or sell real property or a material amount of personal property; (vii) contract or agreement granting to any person the right to use any property or property right of the Company, including any trademark or patent licensing agreement, contract or understanding; (viii) plan or contract or other arrangement providing for insurance for any officer, director or employee or member of their families; (ix) contract or agreement containing covenants by the Company not to compete in any line of business or with any person; (x) joint venture contract or partnership or arrangement or other agreement involving a sharing of profits; or (xi) contract or agreement relating to the borrowing or lending of money by the Company, providing for letters of credit, or providing for any mortgage, lien or security interest upon any of the Company's assets; or (xii) any guaranties or indemnifications by the Company, except for the Company's obligations resulting from the endorsement of checks deposited for collection; (xiii) any contracts calling for payments by the Company in excess of $2,000; (xiv) other material contract, agreement or understanding. Seller has provided to Purchaser true, current, correct and complete copies of all of the II EFTA01203008 Contracts, including all items specified in the preceding paragraph. The Company has performed all obligations required to be performed by it to date under, and neither the Company nor any other party to each Contract is in default under, each of the Contracts, all of which are in full force and effect and enforceable by the Company in accordance with their terms. There is no event, which after notice or lapse of time or both, which would constitute a default under any such Contracts. The consummation of the transactions contemplated under this Agreement will not give rise to any violation or any default or event or condition which, after notice or lapse of time or both, would constitute a default under any such Contracts on the part of the Company. Except as stated on Schedule 6.10, the purchase of the Shares by Purchaser does not require the consent of any third party under any assignment or similar clause to any Contract. 6.11 Accounts Receivable». All accounts receivable of the Company that are reflected on the Company Statements or on the accounting records of the Company as of the Closing Date (collectively, the "Accounts Receivable") represent or will represent valid obligations arising from sales actually made or services actually performed in the ordinary course of business. Unless paid prior to the Closing Date, the Accounts Receivable are or will be as of the Closing Date current and collectible net of the respective reserves shown on the Company Statements or on the accounting records of the Company as of the Closing Date. Each of the Accounts Receivable either has been or will be collected in full, without any set-off, within ninety days after the day on which it first becomes due and payable. There is no contest, claim, or right of set-off, other than returns in the ordinary course of business, under any Contract with any obligor of an Accounts Receivable relating to the amount or validity of such Accounts Receivable. 6.12 Inventory». The Company owns no inventory, whether or not reflected in the Company Statements. 6.13 Equipment». Except as may be set forth on Schedule 6.13, all items included in the Equipment are located on the premises of the Company, and are in good condition and repair, ordinary wear and tear excepted. 6.14 Insurance». (a) Seller has delivered to the Purchaser: (i) true and complete copies of all policies of insurance to which the Company is a party or under which the Company, or any director of the Company, is or has been covered at any time within the three years preceding the date of this Agreement, including, without limitation, (A) comprehensive aviation legal liability insurance (including, without limitation, third party and passenger liability and property damage and products liability with limits of not less than US $ per occurrence, and (B) aircraft hull insurance covering the Aircraft and engines in a dollar amount not less than the fair market value of the Aircraft; (ii) true and complete copies of all pending applications for policies of insurance; and 12 EFTA01203009  (iii) any statement by the auditor of the Company's financial statements with regard to the adequacy of such entity's coverage or of the reserves for claims. (b) Schedule 6.14 describes: (i) any self-insurance arrangement by or affecting the Company, including any reserves established thereunder; (ii) any contract or arrangement, other than a policy of insurance, for the transfer or sharing of any risk by the Company; and (iii) all obligations of the Company to third parties with respect to insurance (including such obligations under leases and service agreements) and identifies the policy under which such coverage is provided. (c) Schedule 6.14 sets forth, by year, for the current policy year and each of the three (3) preceding policy years: (i) a summary of the loss experience under each policy; (ii) a statement describing each claim under an insurance policy, which sets forth: 1. the name of the claimant; 2. a description of the policy by insurer, type of insurance, and period of coverage; and 3. the amount and a brief description of the claim; and 4. a statement describing the loss experience for all claims that were self-insured, including the number and aggregate cost of such claims. (d) Except as set forth on Schedule 6.14: (i) All policies to which the Company is a party or that provide coverage to any of Seller, the Company, or any director or officer of the Company: 1. are valid, outstanding, and enforceable; 2. are issued by an insurer that is financially sound and reputable; 3. taken together, pr