Ex-10.1



 




Exhibit
10.1





Execution Copy




AGREEMENT AND PLAN OF MERGER




among




TAS HOLDING, INC.




and




TIMCO AVIATION SERVICES, INC.




Dated as of July 31, 2006




 









 





TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	ARTICLE I THE MERGER	 	 	3	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 1.01.	 	The Merger	 	 	3	 
	 
	 	Section 1.02.	 	Closing	 	 	3	 
	 
	 	Section 1.03.	 	Effective Time	 	 	3	 
	 
	 	Section 1.04.	 	Effects of the Merger	 	 	3	 
	 
	 	Section 1.05.	 	Certificate of Incorporation; By-laws	 	 	3	 
	 
	 	Section 1.06.	 	Directors and Officers	 	 	3	 
	 
	 	Section 1.07.	 	Conversion of Securities	 	 	4	 
	 
	 	Section 1.08.	 	Treatment of Options, Warrants	 	 	4	 
	 
	 	Section 1.09.	 	Dissenting Shares	 	 	5	 
	 
	 	Section 1.10.	 	Surrender of Shares; Payment; Stock Transfer Books.	 	 	6	 
	 
	 	Section 1.11.	 	Subsequent Actions	 	 	8	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY	 	 	9	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 2.01.	 	Organization and Qualification; Subsidiaries.	 	 	9	 
	 
	 	Section 2.02.	 	Certificate of Incorporation and By-laws	 	 	9	 
	 
	 	Section 2.03.	 	Capitalization	 	 	9	 
	 
	 	Section 2.04.	 	Authority Relative to the Transactions	 	 	10	 
	 
	 	Section 2.05.	 	No Conflict; Required Filings and Consents.	 	 	11	 
	 
	 	Section 2.06.	 	SEC Filings; Financial Statements	 	 	12	 
	 
	 	Section 2.07.	 	Absence of Certain Changes or Events	 	 	13	 
	 
	 	Section 2.08.	 	Absence of Litigation	 	 	14	 
	 
	 	Section 2.09.	 	Employee Benefit Plans	 	 	14	 
	 
	 	Section 2.10.	 	Property; Title to Assets	 	 	16	 
	 
	 	Section 2.11.	 	Taxes	 	 	17	 
	 
	 	Section 2.12.	 	Material Contracts	 	 	18	 
	 
	 	Section 2.13.	 	Environmental Matters	 	 	19	 
	 
	 	Section 2.14.	 	Labor and Employment Matters	 	 	20	 
	 
	 	Section 2.15.	 	Permits; Compliance	 	 	21	 
	 
	 	Section 2.16.	 	Intellectual Property	 	 	21	 
	 
	 	Section 2.17.	 	Insurance	 	 	22	 






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TABLE OF CONTENTS
(continued)





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	Section 2.18.	 	Opinion of Financial Advisor	 	 	22	 
	 
	 	Section 2.19.	 	Brokers	 	 	23	 
	 
	 	Section 2.20.	 	Antitakeover Provisions and Rights Agreements.	 	 	23	 
	 
	 	Section 2.21.	 	Investment Companies	 	 	23	 
	 
	 	Section 2.22.	 	Transactions With Affiliates	 	 	23	 
	 
	 	Section 2.23.	 	Certain Business Practices	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE III REPRESENTATIONS AND WARRANTIES OF TAS	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 3.01.	 	Corporate Organization	 	 	24	 
	 
	 	Section 3.02.	 	Authority Relative to the Transactions	 	 	24	 
	 
	 	Section 3.03.	 	No Conflict; Required Filings and Consents	 	 	24	 
	 
	 	Section 3.04.	 	Governmental Consents	 	 	25	 
	 
	 	Section 3.05.	 	Financing	 	 	25	 
	 
	 	Section 3.06.	 	Brokers	 	 	25	 
	 
	 	Section 3.07.	 	Interim Operations of TAS	 	 	25	 
	 
	 	Section 3.08.	 	Litigation	 	 	25	 
	 
	 	Section 3.09.	 	Stock Ownership and Contribution	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER	 	 	26	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 4.01.	 	Conduct of Business by the Company Pending the Merger	 	 	26	 
	 
	 	Section 4.02.	 	Advice of Changes; Government Filings	 	 	29	 
	 
	 	Section 4.03.	 	Tax Matters	 	 	30	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE V ADDITIONAL AGREEMENTS	 	 	31	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 5.01.	 	Stockholders’ Meeting	 	 	31	 
	 
	 	Section 5.02.	 	Approval of TAS	 	 	31	 
	 
	 	Section 5.03.	 	Proxy/Information Statement	 	 	32	 
	 
	 	Section 5.04.	 	Merger Without Meeting of Stockholders	 	 	33	 
	 
	 	Section 5.05.	 	Access to Information	 	 	34	 
	 
	 	Section 5.06.	 	No Solicitation of Transactions	 	 	34	 
	 
	 	Section 5.07.	 	Directors’ and Officers’ Indemnification; Insurance.	 	 	38	 
	 
	 	Section 5.08.	 	Further Action; Reasonable Best Efforts	 	 	39	 
	 
	 	Section 5.09.	 	Public Announcements	 	 	40	 






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TABLE OF CONTENTS
(continued)





	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page	 
	 
	 	Section 5.10.	 	Takeover Statute	 	 	40	 
	 
	 	Section 5.11.	 	Financing	 	 	40	 
	 
	 	Section 5.12.	 	Disposition of Litigation	 	 	40	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VI CONDITIONS TO THE MERGER	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 6.01.	 	Mutual Conditions to the Merger	 	 	41	 
	 
	 	Section 6.02.	 	Conditions to Obligations of TAS	 	 	41	 
	 
	 	Section 6.03.	 	Conditions to Obligations of the Company	 	 	42	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VII TERMINATION, AMENDMENT AND WAIVER	 	 	43	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 7.01.	 	Termination	 	 	43	 
	 
	 	Section 7.02.	 	Effect of Termination	 	 	44	 
	 
	 	Section 7.03.	 	Fees and Expenses	 	 	44	 
	 
	 	Section 7.04.	 	Amendment	 	 	46	 
	 
	 	Section 7.05.	 	Waiver	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	ARTICLE VIII GENERAL PROVISIONS	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	 
	 	Section 8.01.	 	Non-Survival of Representations and Warranties	 	 	46	 
	 
	 	Section 8.02.	 	Company Stock Purchase	 	 	46	 
	 
	 	Section 8.03.	 	Notices	 	 	47	 
	 
	 	Section 8.04.	 	Certain Definitions	 	 	48	 
	 
	 	Section 8.05.	 	Severability	 	 	54	 
	 
	 	Section 8.06.	 	Entire Agreement; Assignment	 	 	54	 
	 
	 	Section 8.07.	 	Parties in Interest	 	 	54	 
	 
	 	Section 8.08.	 	Specific Performance	 	 	54	 
	 
	 	Section 8.09.	 	Governing Law	 	 	54	 
	 
	 	Section 8.10.	 	Waiver of Jury Trial	 	 	55	 
	 
	 	Section 8.11.	 	Headings	 	 	55	 
	 
	 	Section 8.12.	 	Counterparts	 	 	55	 
	 
	 	Section 8.13.	 	Interpretation	 	 	55	 






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AGREEMENT AND PLAN OF MERGER




     THIS AGREEMENT AND PLAN OF MERGER, dated as of July 31, 2006 (this “Agreement”), is among TAS
HOLDING, INC., a Delaware corporation (“TAS”), and TIMCO AVIATION SERVICES, INC., a Delaware
corporation (the “Company”).



     WHEREAS, the Board of Directors of TAS, a Special Committee (the “Special Committee”) of the
Board of Directors of the Company (with authority delegated by the Board of Directors of the
Company, hereinafter the “Company Board”), and the Company Board have each determined that it is in
the best interests of their respective stockholders to enter into this Agreement providing for the
merger (the “Merger”) of TAS with and into the Company in accordance with the General Corporation
Law of the State of Delaware (the “DGCL”), upon the terms and subject to the conditions set forth
herein;



     WHEREAS, the Special Committee has recommended that the Company Board approve this Agreement
and declare its advisability and approve the Merger in accordance with the DGCL, upon the terms and
subject to the conditions set forth herein;



     WHEREAS, the Boards of Directors of TAS and the Company Board have each approved this
Agreement and declared its advisability and approved the Merger in accordance with the DGCL upon
the terms and subject to the conditions set forth herein;



     WHEREAS, pursuant to a Restructuring Agreement dated as of April 16, 2006 between the Company,
TAS and the TAS Stockholders (the “Restructuring Agreement”) the TAS Stockholders acquired from
Monroe Capital Advisors LLC indebtedness of the Company in the approximate amount of $18.4 million
(the “Monroe Debt”) and amended the terms of the Monroe Debt to decrease the interest rate and
fees payable thereunder and to waive certain existing events of default under the Monroe Debt for
the benefit of the Company and advanced to the Company additional working capital in the amount of
$6.0 million thereunder (the “Term C Loan” and together with the Monroe Debt, the “LJH Debt”),
which in turn allowed the Company to amend the terms of its indebtedness to CIT Group/Business
Credit, Inc. (the “CIT Debt”) to resolve certain existing events of default and to increase the
amount of funding available under that facility;



     WHEREAS, TAS and the Company desire to make certain representations, warranties, covenants and
agreements in connection with the Merger and also to prescribe various conditions to the Merger;



     WHEREAS, capitalized terms not defined in the context in the Section in which they first
appear shall have the meanings set forth in Section 8.03.



     NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements
herein contained, and intending to be legally bound hereby, TAS and the Company hereby agree as
follows:



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ARTICLE I




THE MERGER




     SECTION 1.01. The Merger. Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, at the Effective Time (as defined below), TAS shall be
merged with and into the Company. As a result of the Merger, the separate corporate existence of
TAS shall cease and the Company shall continue as the surviving corporation of the Merger (the
“Surviving Corporation”).



     SECTION 1.02. Closing.



     (a) Location and Time. The closing of the Merger (the “Closing”) shall take place no
later than the second Business Day after satisfaction or waiver (as permitted by this Agreement and
applicable Law) of the conditions (excluding conditions that, by their terms, cannot be satisfied
until the Closing Date) set forth in Article VI (the “Closing Date”), unless another time or date
is agreed to in writing by the parties hereto. The Closing shall be held at the offices of
Bracewell & Giuliani LLP, 500 N. Akard, Suite 4000, Dallas, Texas 75201, unless another place is
agreed to in writing by the parties hereto.



     (b) Closing Deliveries. At the Closing, including any Closing contemplated by Section
5.04 of this Agreement, the Company and TAS shall make the following deliveries:



     (i) The Company shall deliver to TAS a certificate of the Chief Executive Officer or Chief
Operating Officer and the Chief Financial Officer of the Company, certifying that:




(A) the representations and warranties of the Company set forth in this Agreement,
disregarding all materiality and Company Material Adverse Effect qualifiers (except as set
forth in Section 2.07(b)), are true and correct, in each case as of the date of this
Agreement and at and as of the Effective Time, as though made on and as of such date (unless
any such representation or warranty is made only as of a specific date, in which event as of
such specified date), except for failures to be true and correct which would not,
individually or in the aggregate, have a Company Material Adverse Effect and which result,
or would reasonably be expected to result, in costs or losses to the Company, together with
any costs or losses to the Company referenced in Subsection (B) next following, aggregating
in excess of $5 million, in each case determined on the basis of cash out-of-pocket costs to
the Company and its Subsidiaries;




(B) the Company has performed in all material respects each of the obligations, and complied
in all material respects with each of the agreements and covenants, required to be performed
by, or complied with by, it under this Agreement at or prior to the Closing, provided that
each of such obligations, agreements and covenants shall be deemed to have been performed in
all material respects so long as the costs or losses to the Company arising from any breach
of any thereof, or which would reasonably be expected to result in costs or losses to the
Company, together with costs or losses to the Company referenced in Subsection (A) above, do
not in the aggregate exceed $5 million, in each case determined on the basis of cash
out-of-pocket costs to the Company and its Subsidiaries; and



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(C) There has not occurred a Closing Material Adverse Effect.



     (ii) The Company shall deliver to TAS an executed original copy of the fairness opinion from
Houlihan Lokey Howard & Zukin as described in Section 2.18 that has not been withdrawn.



     (iii) The Company shall deliver to TAS an executed original copy of the opinion of Akerman &
Senterfitt LLP, counsel to the Company, as to the matters addressed in Sections 2.01(a) and (c),
2.03, 2.04 and 2.05, in form and substance reasonably acceptable to TAS and its counsel.



     (iii) TAS shall deliver to the Company a certificate of the Chief Executive Officer of TAS,
certifying that:




(A) the representations and warranties of TAS set forth in this Agreement, disregarding all
materiality and TAS Material Adverse Effect qualifiers, are true and correct, in each case
as of the date of this Agreement and at and as of the Effective Time, as though made on and
as of such date (unless any such representation or warranty is made only as of a specific
date, in which event as of such specified date), except for failures to be true and correct
which would not, individually or in the aggregate, reasonably be expected to have a TAS
Material Adverse Effect; and




(B) TAS has performed in all material respects each of the obligations, and complied in all
material respects with each of the agreements and covenants, required to be performed by or
complied with by it under this Agreement at or prior to the Closing.



     SECTION 1.03. Effective Time. At the Closing, the parties shall cause the Merger to be
consummated by filing a certificate of merger (the “Certificate of Merger”) with the Secretary of
State of the State of Delaware, in such form as is required by, and executed in accordance with,
the relevant provisions of the DGCL (the date and time of such filing of the Certificate of Merger
(or such later time as may be agreed by the parties hereto and specified in the Certificate of
Merger) being the “Effective Time”).



     SECTION 1.04. Effects of the Merger. The Merger shall have the effects set forth in the
applicable provisions of the DGCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time, all the property, rights, privileges, immunities, powers and
franchises of the Company and TAS shall vest in the Surviving Corporation, and all debts,
liabilities, obligations, restrictions, disabilities and duties of each of the Company and TAS
shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the
Surviving Corporation.



     SECTION 1.05. Certificate of Incorporation; By-laws. At the Effective Time, the Certificate
of Incorporation of the Surviving Corporation shall be amended in its entirety to read as set forth
in Exhibit A hereto, until thereafter amended in accordance with its terms and applicable
Law. At the Effective Time, the By-laws of the Surviving Corporation shall be amended in their
entirety to read as set forth in Exhibit B hereto, until thereafter duly amended in
accordance with their terms and applicable Law.



 - 3 -









 





     SECTION 1.06. Directors and Officers. The directors of TAS immediately prior to the Effective
Time shall, at the Effective Time, become the directors of the Surviving Corporation, each to hold
office in accordance with the Certificate of Incorporation and By-laws of the Surviving
Corporation. The officers of the Company immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified or until their earlier death, resignation or removal.



     SECTION 1.07. Conversion of Securities. At the Effective Time, by virtue of the Merger and
without any action on the part of TAS, the Company or the holders of any of the following
securities:



     (a) each share of common stock, par value $0.001 per share, of the Company (“Company Common
Stock”, and such shares, “Shares”) issued and outstanding immediately prior to the Effective Time
(other than any Shares to be canceled pursuant to Section 1.07(b) and any Dissenting Shares) shall
be canceled and shall be converted automatically into the right to receive $4.00 in cash, without
interest (the “Per Share Merger Consideration”);



     (b) each Share held in the treasury of the Company and each Share owned by TAS or its
stockholders immediately prior to the Effective Time shall be canceled without any conversion
thereof and no payment or distribution shall be made with respect thereto; and



     (c) each share of common stock, par value $0.001 per share, of TAS issued and outstanding
immediately prior to the Effective Time shall be converted into one share of common stock, par
value $0.001 per share, of the Surviving Corporation (“Surviving Corporation Shares”).



     SECTION 1.08. Treatment of Options, Warrants



     (a) Termination. Between the date of this Agreement and the Effective Time, the
Company shall take all necessary action (which shall be effective as of the Effective Time) to:



     (i) terminate (effective as of the Effective Time) each of the Company’s stock option plans
and restricted stock purchase plans, including but not limited to those included on Disclosure
Schedule 2.03, and, to the extent that it may legally do so, to terminate each stock option
agreement and restricted stock purchase agreement granted otherwise than under such plans, each as
amended through the date of this Agreement (collectively, the “Company Stock Plans”); and



     (ii) cancel, as of the Effective Time, each outstanding option to purchase Shares of Company
Common Stock granted under the Company Stock Plans (each, a “Company Stock Option”) that is
outstanding and unexercised, whether or not vested or exercisable, as of such date (in each case,
without the creation of additional liability to the Company or any of its Subsidiaries) and each
right to purchase Company Stock under any restricted stock purchase plan, to the extent that it may
legally do so.



 - 4 -









 





     (b) Treatment of Outstanding Options, Warrants, Conversion Rights.



     (i) As of the Effective Time, each holder of a Company Stock Option that is not cancelled by
agreement with the Company on or immediately prior to the Effective Time pursuant to Section
1.08(a) shall be entitled to receive from the Surviving Corporation an amount of cash, without
interest (the “Option Consideration”), equal to the product of:



     (A) the total number of Shares subject to such Company Stock Option, multiplied by



     (B) the excess, if any, of the Per Share Merger Consideration over the exercise price per
Share of such Company Stock Option (with the aggregate amount of such payment to the holder to be
rounded to the nearest cent), less applicable withholding taxes, and upon payment of such amount to
the holder of a Company Stock Option, such Company Stock Options will be deemed cancelled and of no
further legal effect; provided that with respect to the 47,083 Shares issuable pursuant to the LJH
Warrant, (as defined in the Company SEC Reports, the “LJH Warrant”), such payment shall be due upon
the conversion of the Company Convertible Debt into Shares in accordance with the terms of the
Company Convertible Debt and the LJH Warrant.



     (ii) As of the Effective Time, each holder of a warrant or other right to purchase Shares that
is not cancelled by agreement with the Company on or immediately prior to the Effective Time
pursuant to Section 1.08(a) (a “Company Stock Purchase Right”) having an exercise or purchase price
that is less than the Per Share Merger Consideration shall be entitled to receive from the
Surviving Corporation an amount of cash, without interest (the “Purchase Right Consideration”),
equal to the product of:



     (A) the total number of Shares subject to such Company Stock Purchase Right, multiplied by



     (B) the excess, if any, of the Per Share Merger Consideration over the exercise price per
Share of such Company Stock Purchase Right (with the aggregate amount of such payment to the holder
to be rounded to the nearest cent), less applicable withholding taxes, and upon payment of such
amount to the holder of a Company Stock Purchase Right, such Company Stock Purchase Right will be
deemed cancelled and of no further legal effect.



     (iii) As of the Effective Time, each holder of a Company Stock Option that is not cancelled by
agreement with the Company on or immediately prior to the Effective Time pursuant to Section
1.08(a) and which has an exercise price per Share that is equal to or greater than the Per Share
Merger Consideration shall, as of the Effective Time of the Merger, be entitled to an aggregate
payment of $100.00 in cash with respect to all such Company Stock Options held as of the Effective
Time, and all such Company Stock Options shall be deemed cancelled and of no further force or
effect upon such payment.



     (iv) The right to receive Shares upon conversion at maturity pursuant to the Company’s 8%
Senior Subordinated Convertible PIK Notes due December 31, 2006 issued pursuant to an Indenture,
dated as of February 28, 2002, among TIMCO Aviation Services, Inc., the Trustee and the Subsidiary
Guarantors named therein, as amended, and the Company’s 8% Junior Subordinated Convertible PIK
Notes due January 1, 2007, issued pursuant to an Indenture, dated as of September 20, 2002, among
TIMCO, the Trustee and the Subsidiary



 - 5 -









 







Guarantors named therein, as amended (together, the “Company Convertible Debt”), will be
unchanged by the Merger and will continue to exist pursuant to such Indentures, such that each
right to receive a Share pursuant to such Indentures prior to the Merger will after the Merger
represent the right to receive one share of common stock, $.001 par value per share, of the
Surviving Corporation.



     (v) To the extent that the right to receive Shares upon exercise of any Company Stock Option
or Company Stock Purchase Right is not extinguished upon the effectiveness of the Merger pursuant to
this Section 1.08, each right to receive a Share pursuant to such Company Stock Option or Company
Stock Purchase Right prior to the Merger will, after the Merger, represent the right to receive one
share of common stock, $.001 par value per share, of the Surviving Corporation.



     (c) Consents to Transaction. The Company agrees to use its reasonable best efforts to
obtain written agreements from each holder of a Company Stock Option to accept the treatment
described in Section 1.08(b) with respect to such Company Stock Option.



     SECTION 1.09. Dissenting Shares.



     (a) Right. Notwithstanding anything in this Agreement to the contrary, Shares that
are issued and outstanding immediately prior to the Effective Time and which are held by holders of
Shares who have not voted in favor of or consented to the Merger and who have properly demanded
appraisal for such Shares in accordance with Section 262 of the DGCL (the “Dissenting Shares”)
shall not be converted into the right to receive the Per Share Merger Consideration, and the
holders thereof shall be entitled to receive the “fair value” of such Shares as provided in Section
262 of the DGCL; provided, however, that if, after the Effective Time, any such stockholder of the
Company shall fail to perfect or shall effectively waive, withdraw, or lose such stockholder’s
rights under Section 262 of the DGCL, such stockholder’s Shares shall no longer be considered
Dissenting Shares for the purposes of this Agreement and shall thereupon be deemed to have been
converted, at the Effective Time, into the right to receive the Per Share Merger Consideration
without any interest thereon.



     (b) Notice of Demand. The Company shall give TAS prompt notice of any notice received
by the Company of intent to demand appraisal of any Shares, withdrawals of such notices and any
other instruments served pursuant to Section 262 of the DGCL and received by the Company. TAS shall
have the right to participate in and to direct all negotiations and proceedings with respect to the
exercise of appraisal rights under Section 262 of the DGCL. The Company shall not, except with the
prior written consent of TAS or as otherwise required by an order, decree, ruling or injunction of
a court of competent jurisdiction, make any payment with respect to any such exercise of appraisal
rights or offer to settle or settle any such rights.



     SECTION 1.10. Surrender of Shares; Payment; Stock Transfer Books.



     (a) Escrow. Pursuant to the Escrow Agreement, dated July 31, 2006, by and among the
Company, TAS and American Bank of Texas (the “Escrow Agent”) in the form attached hereto as
Exhibit C (the “Escrow Agreement”), TAS has deposited $10,006,524 in cash of its funds from
which the Per Share Merger Consideration will be paid.



 - 6 -









 





     (b) Paying Agent. TAS shall on or before the Effective Time designate by written
notice to the Company a bank or other financial institution to act as agent (the “Paying Agent”),
which Paying Agent shall be reasonably acceptable to the Company, to receive certificates
evidencing Company Common Stock and to disburse the Per Share Merger Consideration from the funds
held pursuant to the Escrow Agreement and the funds to which holders of Company Stock Options and
Company Stock Purchase Rights shall become entitled pursuant to Section 1.07 or Section 1.08, as
applicable. Until used for that purpose, the funds shall be invested by the Paying Agent, as
jointly directed by TAS and the Company prior to the Effective Time, in obligations of or
guaranteed by the United States of America or obligations of an agency of the United States of
America which are backed by the full faith and credit of the United States of America, in
commercial paper obligations rated A-1 or P-1 or better by Moody’s Investors Services Inc. or
Standard & Poor’s Corporation, or in deposit accounts, certificates of deposit or banker’s
acceptances of, repurchase or reverse repurchase agreements with, or Eurodollar time deposits
purchased from, commercial banks, each of which has a combined capital surplus aggregating more
than $500 million (based on the most recent financial statements of the banks which are then
publicly available at the Securities and Exchange Commission (the “SEC”) or otherwise), or in
mutual funds investing solely in one or more of the foregoing; provided that no such investment or
losses thereon shall affect the Per Share Merger Consideration payable to former stockholders of
the Company or the Option Consideration or Purchase Right Consideration payable to former holders
of Company Stock Options or Company Stock Purchase Rights. The Surviving Corporation shall
promptly provide additional funds to the Paying Agent for the benefit of the former holders of
Shares (other than TAS and the TAS Stockholders) and former holders of Company Stock Options and
Company Stock Purchase Rights in the amount of any such losses to the extent necessary to satisfy
the Surviving Corporation’s obligations under this Article I. All interest accrued on funds held
pursuant to the Escrow Agreement and by the Paying Agent shall be for the benefit of TAS, prior to
the Effective Time, and for the benefit of the Surviving Corporation after the Effective Time, and
not for the benefit of any holder of securities of the Company.



     (c) Termination of Agreement. Upon any termination of this Agreement in accordance
with the provisions of Section 7.01 hereof prior to the Effective Time, the funds held pursuant to
the Escrow Agreement and all accrued interest thereon will, subject to the disposition of any claim
that the Company may make in writing to TAS in connection with an alleged breach of this Agreement
by TAS, be promptly repaid to the TAS Stockholders as provided in the Escrow Agreement and the
Company will execute such documentation as is required by the Escrow Agreement or as may be
requested by TAS or the Escrow Agent in order to effect the termination of the escrow and return of
such funds.



     (d) Exchange of Certificates. Promptly after the Effective Time, the Surviving
Corporation shall cause to be mailed to each Person who was, at the Effective Time, a holder of
record of Shares entitled to receive the Per Share Merger Consideration pursuant to Section 1.07(a)
a form of letter of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the certificates evidencing such Shares (the “Certificates”) shall pass, only
upon proper delivery of the Certificates to the Paying Agent) and instructions for use in effecting
the surrender of the Certificates pursuant to such letter of transmittal. Upon surrender to the
Paying Agent of a Certificate, together with such letter of transmittal, duly completed and validly
executed in accordance with the instructions thereto, and such other documents as may be



 - 7 -









 







required pursuant to such instructions, the holder of such Certificate shall be entitled to
receive in exchange therefore the Per Share Merger Consideration for each Share formerly evidenced
by such Certificate, and such Certificate shall then be canceled. No interest shall accrue or be
paid on the Per Share Merger Consideration payable upon the surrender of any Certificate for the
benefit of the holder of such Certificate. If the payment equal to the Per Share Merger
Consideration is to be made to a Person other than the Person in whose name the surrendered
Certificate is registered on the stock transfer books of the Company, it shall be a condition of
payment that the Certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the Person requesting such payment shall have paid all transfer and
other taxes required by reason of the payment of the Per Share Merger Consideration to a Person
other than the registered holder of the Certificate surrendered, or shall have established to the
satisfaction of TAS that such taxes either have been paid or are not applicable. If any holder of
Shares is unable to surrender such holder’s Certificates because such Certificates have been lost,
stolen, mutilated or destroyed, such holder may deliver in lieu thereof an affidavit and indemnity
bond in form and substance and with surety reasonably satisfactory to the Surviving Corporation.
Comparable procedures shall be established to disburse the Option Consideration and the Purchase
Right Consideration.



     (e) Delivery; Escheat. At any time following the six months after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to deliver to it any funds
which had been made available to the Paying Agent and not disbursed to the persons (including,
without limitation, all interest and other income received by the Paying Agent in respect of all
funds made available to it) entitled thereto pursuant to this Agreement, and, thereafter, such
holders shall look solely to the Surviving Corporation (subject to abandoned property, escheat and
other similar laws) with respect to any Per Share Merger Consideration, Option Consideration or
Purchase Right Consideration that may be payable upon due surrender of the Certificates held by
them or satisfaction of the other requirements set forth in this Agreement. Notwithstanding the
foregoing, neither the Surviving Corporation, TAS nor the Paying Agent shall be liable to any
person for any Per Share Merger Consideration, Option Consideration or Purchase Right Consideration
delivered in respect of such Share to a public official pursuant to any abandoned property, escheat
or other similar Law. Any such amounts remaining unclaimed two years after the Effective Time (or
such earlier date, immediately prior to such time when the amounts would otherwise escheat to or
become property of any Governmental Authority) shall become, to the extent permitted by applicable
Law, the property of the Surviving Corporation free and clear of any claims or interest of any
Person previously entitled thereto.



     (f) Transfer Books. At the Effective Time, the stock transfer books of the Company
shall be closed and thereafter there shall be no further registration of transfers of Shares on the
records of the Company. From and after the Effective Time, the holders of Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with respect to such Shares
except as otherwise provided herein or by applicable Law.



     (g) Satisfaction. All Per Share Merger Consideration paid upon the surrender for
exchange of Certificates, all Option Consideration paid in respect of Company Stock Options and all
Purchase Right Consideration paid in respect of Company Stock Purchase Rights, in each case in
accordance with the terms of this Article I, shall be deemed to have been paid in full satisfaction
of all rights pertaining to the Shares theretofore represented by such Certificates,



 - 8 -









 







Company Stock Options or Company Stock Purchase Rights, as applicable. If, after the Effective
Time, Certificates are presented to the Surviving Corporation or the Paying Agent for any reason,
they shall be canceled and exchanged as provided in this Article I, except as otherwise provided by
Law.



     (h) Tax Deduction; Withholding. Each of the Surviving Corporation, the Paying Agent
or TAS shall be entitled to deduct and withhold from any amounts otherwise payable hereunder to any
Person such amounts as it is required to deduct and withhold with respect to the making of such
payment under any provision of Federal, state, local or foreign tax Law. To the extent that amounts
are so deducted and withheld, such deducted and withheld amounts shall be treated for all purposes
of this Agreement as having been paid to the Person in respect of which such deduction and
withholding was made.



     (i) Adjustment of Merger Consideration. Notwithstanding anything in this Agreement to
the contrary, but subject to Section 4.01, if, between the date of this Agreement and the Effective
Time, the issued and outstanding Shares shall have been changed into a different number of shares
or a different class by reason of any stock split, reverse stock split, stock dividend,
reclassification, redenomination, recapitalization, split-up, combination, exchange of shares or
other similar transaction, the Per Share Merger Consideration, the Option Consideration and the
Purchase Right Consideration and any other dependent items shall be appropriately adjusted to
provide to the holders of Company Common Stock or rights to acquire such Company Common Stock and
the parties hereto the same economic effect as contemplated by this Agreement prior to such action
and as so adjusted shall, from and after the date of such event, be the Per Share Merger
Consideration, the Option Consideration and the Purchase Right Consideration or other dependent
item, subject to further adjustment in accordance with this sentence.



     SECTION 1.11. Subsequent Actions. If, at any time after the Effective Time, the Surviving
Corporation shall consider or be advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest, perfect or confirm of record or
otherwise in the Surviving Corporation its right, title or interest in, to or under any of the
rights, properties or assets of either of the Company or TAS acquired or to be acquired by the
Surviving Corporation as a result of, or in connection with, the Merger or otherwise to carry out
this Agreement, the officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the Company or TAS, all such deeds, bills
of sale, assignments and assurances and to take and do, in the name and on behalf of each of such
corporations or otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this Agreement.



ARTICLE II




REPRESENTATIONS AND WARRANTIES OF THE COMPANY




     The Company hereby represents and warrants to TAS, except as set forth on the applicable
portion of the disclosure schedule delivered by the Company to TAS (the “Company Disclosure
Schedule”), that



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     SECTION 2.01. Organization and Qualification; Subsidiaries.



     (a) Organization. Each of the Company and each Subsidiary of the Company is a
corporation or other form of legal entity duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation and has the requisite power and authority and
all necessary governmental approvals to own, lease and operate its properties and to carry on its
business as it is now being conducted. Each of the Company and each of its Subsidiaries is duly
qualified or licensed as a foreign corporation or other form of legal entity to do business, and is
in good standing, in each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its business makes such qualification or licensing necessary,
except for such failures to be so qualified or licensed or in good standing that would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.



     (b) Subsidiaries. All of the capital stock of, or other equity interests in, each
Subsidiary of the Company are owned by the Company, directly or through one or more directly or
indirectly wholly owned Subsidiaries of the Company, free and clear of all encumbrances or other
restrictions (other than restrictions under applicable securities laws and pledges of such
securities pursuant to the CIT Debt and LJH Debt). All of the capital stock or other equity
interests in each such Subsidiary are validly issued, fully paid and nonassessable. The Company
does not own or have any right to acquire any ownership interest in, or debt or equity security of,
any Person.



     (c) Power. Each of the Company and each of its Subsidiaries has the requisite power
and authority as a corporation or other legal entity in all material respects to own, lease and
operate its properties and to carry on its respective businesses as they are now being conducted.



     SECTION 2.02. Certificate of Incorporation and By-laws. The Company has heretofore furnished
or made available to TAS a complete and correct copy of the Certificate of Incorporation and the
By-laws or equivalent organizational documents, each as amended to date, of the Company and any of
its Subsidiaries which TAS has requested be delivered to it. All certificates of incorporation,
By-laws or equivalent organizational documents of the Company and its Subsidiaries are in full
force and effect.



     SECTION 2.03. Capitalization.



     (a) Authorized Stock. The authorized capital stock of the Company consists of
101,000,000 shares, of which 100,000,000 are designated as Common Stock and 1,000,000 are
designated as Preferred Stock. As of the date of this Agreement, 21,441,040 Shares are issued and
outstanding, all of which are validly issued, fully paid and nonassessable and none are held in
treasury. Except as set forth in Section 2.03 of the Company Disclosure Schedule, which
Schedule sets forth the name of the holder of each option, warrant or other right to purchase
capital stock of the Company, the number of Shares that may be purchased by such holder and the
price per Share at which such Shares may be purchased, there are (i) no options, warrants,
agreements, or other arrangements of any character that are binding on the Company or any of its
Subsidiaries that obligate the Company or any of its Subsidiaries to issue, sell, redeem,
repurchase or exchange any shares of capital stock of, or other equity interests in, the Company or
any of its Subsidiaries or any interest convertible into or exchangeable or exercisable for any



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such capital stock or other equity interests, (ii) no voting trusts, proxies or other similar
agreements or understandings to which the Company or any of its Subsidiaries is bound with respect
to the voting of any such capital stock or other equity interests, (iii) no contractual obligations
or commitments restricting the transfer of, or requiring the registration for sale of, any such
capital stock or other equity interests and (iv) no bonds, debentures, notes or other indebtedness
having the right to vote on any matters on which shareholders of the Company may vote (whether or
not dependent on conversion or other triggering event). The Company Common Stock is not subject to
statutory preemptive rights.



     (b) Stock Plans. The Company has made available to TAS accurate and complete copies
of all Company Stock Plans pursuant to which the Company has granted the Company Stock Options that
are currently outstanding. All Shares subject to issuance prior to the Closing as aforesaid, upon
issuance on the terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.



     SECTION 2.04. Authority Relative to the Transactions. The Company has all necessary corporate
power and authority to execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the Transactions. The execution and delivery by the Company of this Agreement and the
consummation by the Company of the Transactions have been duly and validly authorized by all
necessary corporate action, and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the Transactions (other than, with respect
to the Merger, the approval and adoption of this Agreement and the Merger by the holders of a
majority of the then outstanding shares of Company Common Stock (the “Company Stockholder
Approval”), if necessary, and the filing and recordation of the certificate of merger as required
by the DGCL). The approval and adoption of this Agreement and the Merger by the holders of a
majority of the then outstanding shares of Company Common Stock and the filing and recordation of
the certificate of merger as required by the DGCL are the only actions required under the DGCL and
applicable Delaware Law to authorize the Merger. This Agreement has been duly and validly executed
and delivered by the Company and, assuming the due authorization, execution and delivery by the
other parties thereto, constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to the effect of any
applicable bankruptcy, insolvency (including, without limitation, all Laws relating to fraudulent
transfers), reorganization, moratorium or similar Laws affecting creditors’ rights generally and
subject to the effect of general principles of equity (regardless of whether considered in a
proceeding at Law or in equity). The Company Board, at a meeting duly called and held, and acting
in accordance with the unanimous recommendation of the Special Committee, has:



     (a) determined that this Agreement and the Merger contemplated hereby as well as the Company
Stock Purchase. and any additional agreements entered into pursuant to the same (collectively, the
“Transactions”) are fair to, and in the best interests of, the Company and the holders of Shares
(other than TAS and the TAS Stockholders);



     (b) approved, adopted and declared advisable this Agreement and the Transactions (such
approval and adoption having been made in accordance with the DGCL and the Company’s Certificate of
Incorporation); and



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     (c) resolved, subject to Section 5.06(d), to recommend that the holders of Shares approve and
adopt this Agreement and the Merger (the “Company Recommendation”).



     SECTION 2.05. No Conflict; Required Filings and Consents.



     (a) No Conflict. The execution and delivery by the Company of this Agreement do not,
and the performance by the Company of this Agreement and the consummation of the Transactions by
the Company do not and will not:



     (i) violate the Certificate of Incorporation or By-laws or any equivalent organizational
documents of the Company or any of its Subsidiaries;



     (ii) violate any United States or non-United States statute, law, ordinance, regulation, rule,
code, executive order, injunction, judgment, decree or other order (“Law”) applicable to the
Company or any of its Subsidiaries or by which any property or asset of the Company or any of its
Subsidiaries is bound or affected; or



     (iii) except as set forth on Section 2.05 of the Company Disclosure Schedules, result
in any breach of or constitute a default (or an event which, with notice or lapse of time or both,
would become a default) under, or give to others any rights of termination, amendment, acceleration
or cancellation of, require consent of or notification to any counterparty under, or result in the
creation of a lien or other encumbrance on any property or asset of the Company or any of its
Subsidiaries pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or any of its Subsidiaries
is a party or by which the Company or any of its Subsidiaries or any property or asset of any of
them is bound or affected, except for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect or with respect to agreements for which consents have been
obtained.



     (b) Government Approval. The execution, delivery, and performance of this Agreement
by the Company and the consummation of the Transactions by the Company do not and will not require
any consent, approval, authorization or permit of, action by, filing with or notification to, any
government, any instrumentality, subdivision, court, administrative agency or commission or other
authority thereof, or any quasi-governmental or private body exercising any regulatory, taxing,
importing or other governmental or quasi-governmental authority (a “Governmental Authority”),
except for (i) those required under or in relation to (A) the Exchange Act or the Securities Act of
1933, as amended (the “Securities Act”), (B) compliance with the applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), (C) the DGCL with
respect to the filing of the Certificate of Merger and (D) rules such as may be required under any
applicable state securities or blue sky laws and (ii) such other consents, permits, approvals,
orders or authorizations the failure of which to obtain which would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.



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     SECTION 2.06. SEC Filings; Financial Statements.



     (a) Company SEC Reports. The Company has filed or furnished, as the case may be, all
forms, reports, registration statements and other documents required to be filed or furnished by it
with the SEC since December 31, 2004, and has heretofore made available to TAS:



     (i) its Annual Reports on Form 10-K, as amended, for the fiscal years ended December 31, 2003,
December 31, 2004 and December 31, 2005, respectively;



     (ii) its Quarterly Reports on Form 10-Q for the period ended March 31, 2006;



     (iii) all proxy statements relating to the Company’s meetings of stockholders (whether annual
or special) held since December 31, 2004; and



     (iv) all other forms, reports, registration statements and other documents filed by the
Company with the SEC since December 31, 2004 and prior to the Effective Time.



     (The forms, reports, registration statements and other documents referred to in clauses (i),
(ii), (iii) and (iv) above are collectively referred to herein as the “Company SEC Reports”.) The
Company SEC Reports were prepared in accordance with the applicable requirements of the Exchange
Act and the Securities Act, and the rules and regulations promulgated thereunder. The Company SEC
Reports, as of their respective dates (and, in the case of any Company SEC Report that is a
registration statement, as of the date such registration statement became effective), did not
contain any untrue statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. All Company SEC Reports, as of their respective dates,
complied as to form in all material respects with the applicable requirements of the Exchange Act
and the Securities Act and the rules and regulations promulgated thereunder. As of the date of this
Agreement, there are no outstanding or unresolved comments in comment letters received by the
Company from the SEC staff with respect to the SEC Reports. None of the Company’s Subsidiaries are
reporting companies under the Securities Act or the Exchange Act.



     (b) Financial Statements. Each of the audited consolidated financial statements
(including, in each case, any notes thereto) contained in the Company SEC Reports was prepared in
accordance with United States generally accepted accounting principles in effect as of the date of
such financial statements (“GAAP”) applied on a consistent basis throughout the periods indicated
(except as may be indicated in the notes thereto) and each fairly presents, in all material
respects, the consolidated financial position, results of operations and cash flows of the Company
and its consolidated Subsidiaries as at the respective dates thereof and for the respective periods
indicated therein. Each of the unaudited interim consolidated financial statements (including, in
each case, any notes thereto) contained in the Company SEC Reports was prepared in accordance with
GAAP applied on a consistent basis throughout the periods indicated (except as may be indicated in
the notes thereto) and each fairly presents, in all material respects, the consolidated financial
position, results of operations and cash flows of the Company and its consolidated Subsidiaries as
at the respective dates thereof and for the respective periods indicated therein (subject to normal
period-end adjustments which, individually or in the aggregate, were not and will not be material
(or, in the case of such interim



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consolidated financial statements for periods ending prior to April 1, 2006, to the Company’s
Knowledge were not, individually or in the aggregate, material)).



     (c) Sarbanes-Oxley Act. Since the adoption of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act”), the Company has been and is in compliance in all material respects with the
applicable provisions of the Sarbanes-Oxley Act and the related rules and regulations promulgated
thereunder and under the Exchange Act that are applicable to it.



     (d) Liabilities. Except for any liabilities or obligations disclosed in the Company
SEC Reports and liabilities not disclosed therein but which would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, neither the Company
nor any of its Subsidiaries has any liability or obligation (whether known, unknown, accrued,
absolute, contingent or otherwise):



     (i) except to the extent reflected, reserved for or disclosed in the consolidated balance
sheet of the Company and its consolidated subsidiaries as at December 31, 2005, as set forth in the
Company’s 2005 10-K; or



     (ii) that were incurred in the ordinary course of business consistent with past practice since
December 31, 2005.



     SECTION 2.07. Absence of Certain Changes or Events. Since March 31, 2006, except as set forth
in Section 2.07 of the Company Disclosure Schedule or in the Company SEC Reports, or as
expressly contemplated by this Agreement:



     (a) the Company and the Subsidiaries have conducted their businesses only in the ordinary
course and in a manner consistent with past practice;



     (b) there has not been any event, circumstance, change or effect that, individually or in the
aggregate, has had, or would reasonably be expected to have, a Company Material Adverse Effect;



     (c) except in the ordinary course of business or as disclosed hereunder, there has not been
any material increase in the compensation payable or which could become payable by the Company and
its Subsidiaries to their officers or key employees, or any amendment of any compensation and
benefit plans resulting in a material increase in payments thereunder;



     (d) there has not been any issuance or agreement to issue shares of Company Common Stock,
other than to the Company’s directors pursuant to the Company’s option plan applicable to them;



     (e) any material change in financial or tax accounting methods, principles or practices by the
Company or any of its Subsidiaries except insofar as may have been required by a change in GAAP or
Law and have been disclosed in Company SEC Reports;



     (f) any material Tax election by the Company or any of its Subsidiaries or settlement or
compromise by the Company or any of its Subsidiaries of any material Tax liability or refund; and



 - 14 -









 





     (g) none of the Company or any of its Subsidiaries has taken any action that, if taken after
the date of this Agreement, would constitute a material breach of, or require a consent under, any
of the covenants set forth in Section 4.01.



     SECTION 2.08. Absence of Litigation. Except as set forth in the Company SEC Reports or in
Section 2.08 of the Company Disclosure Schedule, there is no litigation, suit, claim,
action, proceeding, arbitration or investigation (an “Action”), or any judgments, decrees,
injunctions, rules or orders of any Governmental Authority pending or, to the Knowledge of the
Company, threatened against or affecting the Company or any of its Subsidiaries, or any property or
asset of the Company or any of its Subsidiaries, except for any of the foregoing that if decided
adversely to the Company or its Subsidiaries would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.



     SECTION 2.09. Employee Benefit Plans.



     (a) Plans. Except as set forth in Section 2.09(a) of the Company Disclosure
Schedule, the Company does not have any material employee benefit plans (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) which are not
disclosed in the Company SEC Reports or any bonus, stock option, stock purchase, restricted stock,
phantom stock or other equity based compensation incentive, deferred compensation, excess benefit,
retiree medical or life insurance, supplemental retirement, severance, salary continuation,
pension, profit sharing, savings, retirement, disability, insurance, Section 125 “cafeteria” or
“flexible” benefit, vacation, sick leave, employee loan, educational assistance, change in control,
termination or any other similar fringe or employee benefit plans, programs or arrangements, or any
employment, retention, termination, severance or other contracts or agreements, that cover any of
the current or former employees, officers, or directors of the Company or any of its Subsidiaries
and with respect to which the Company or any of its Subsidiaries has any material liability or
obligation or which are maintained, contributed to or sponsored by the Company or any of its
Subsidiaries (collectively, the “Plans”). Neither the Company, nor any employer that would be
considered a single employer with the Company under Sections 414(b), (c), (m) or (o) of the Code,
contributes, nor within the six-year period ending on the date hereof has any of them contributed
or been obligated to contribute, to any plan, program or agreement which is a “multiemployer plan”
(as defined in Section 3(37) of ERISA), which is subject to Section 412 of the Code or Section 302
or Title IV of ERISA, or which is maintained outside the jurisdiction of the United States. Except
as set forth in Section 2.09(a) of the Company Disclosure Schedule, no Plan provides or
permits the provision of, medical, surgical, hospitalization, death or similar benefits (whether or
not insured) for employees or former employees of the Company or any of its Subsidiaries for
periods extending beyond their retirement or other termination of service, except as may be
required by the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, and the
regulations thereunder (“COBRA”) or other applicable Law, and at the sole expense of the employee
or former employee. The Company may amend or terminate any Plan (other than an employment agreement
or any similar agreement that cannot be terminated without the consent of the other party) at any
time without incurring material liability thereunder, other than in respect of accrued and vested
obligations and medical or welfare claims incurred prior to such amendment or termination. The
Company has no plan, contract or commitment, whether legally binding or not,



 - 15 -









 







to create any additional employee benefit or compensation plans, policies or arrangements or,
except as may be required by Law, to modify any Plan.



     (b) Plan Compliance. Each Plan has been maintained, operated and administered in
material compliance with its terms and the requirements of all applicable Laws including, without
limitation, ERISA and the Code. The Company and the Subsidiaries have performed, in all material
respects, all obligations required to be performed by them under, are not in any material respect
in default under or in violation of, and to the Company’s Knowledge, no other party is in default
or violation of, any Plan, and there are no pending or, to the Company’s Knowledge, threatened
claims, lawsuits or arbitrations (other than routine claims for benefits), relating to any of the
Plans, or the assets of any trust for any Plan. With respect to each Plan, the Company has complied
in all material respects with the applicable health care continuation and notice provisions of
COBRA and the applicable requirements of the Health Insurance Portability and Accountability Act of
1996, as amended, and the regulations thereunder (“HIPAA”), including, but not limited to, the
applicable requirements concerning the privacy, security, and/or electronic transmission of health
information. Neither the Company or any of its Subsidiaries nor, to the Company’s Knowledge, any of
their respective directors, officers, employees or agents has, with respect to any Plan, engaged in
or been a party to any “prohibited transaction” (as defined in Section 4975 of the Code or Section
406 of ERISA), which could result in the imposition of either a penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the Code, in each case applicable to
the Company or any of its Subsidiaries or any Plan.



     (c) Payments. There will be no material payment, accrual of additional benefits,
acceleration of payments or vesting of any benefit under any contract, agreement, plan or other
arrangement, whether or not a Plan, and no employee, officer or director of the Company or any of
the Subsidiaries will become entitled to any severance, termination pay or similar payments or
benefits in connection with the Transactions (either alone or in combination with any other event),
other than as specifically provided for in this Agreement and set forth on Section 2.09(c)
of the Company Disclosure Schedule. No payment, accrual of additional benefits, acceleration of
payments or vesting of any benefit under this Agreement, any Plan or similar agreement or
arrangement between the Company or any of its Affiliates and any “disqualified individual” (as such
term is defined in Section 280G of the Code) could constitute an “excess parachute payment” (as
such term is defined in Section 280G of the Code) in connection with the transactions contemplated
by this Agreement (either alone or in combination with any other event) except as set forth on
Section 2.09(e) of the Company Disclosure Schedules, and any such payment, accrual or
acceleration has been waived by the “disqualified individual.”. No amounts payable under any Plan
or otherwise will fail to be deductible to the Company, the Surviving Corporation or their
Subsidiaries for federal income tax purposes by virtue of Section 162(m).



     (d) Contributions. All contributions, premiums or payments required to be made with
respect to any Plan have been made on or before their due dates, with such exceptions as would not
have a Company Material Adverse Effect. All liabilities or expenses of the Company or its
Subsidiaries in respect of any Plan (including workers compensation) which have not been paid, have
been properly accrued on the Company’s most recent financial statements in compliance with GAAP.



 - 16 -









 





     (e) Plan Actions. Prior to the date of this Agreement, for each Company Stock Plan,
the committee of the Company Board or other body authorized to administer and interpret such
Company Stock Plan has made the determination and directed, in each case in accordance with the
terms of such Company Stock Plan, that the Company Stock Options shall be treated as set forth in
Section 1.08(a) and Section 1.08(b) of this Agreement.



     SECTION 2.10. Property; Title to Assets.



     (a) Owned Real Property. The Company and its Subsidiaries do not own any real
property or fee simple interest in real property having a value, in the aggregate, in excess of
$5,000,000.



     (b) Leases. Section 2.10(b) of the Company Disclosure Schedule lists each
lease, sublease or license for each parcel of real property currently leased, subleased or licensed
by the Company or any of its Subsidiaries (the “Material Leased Real Property”) which requires
annual lease payments in excess of $1 million, true and correct copies of which, together with any
assignments, guaranties and amendments, have been made available to TAS. Except as would not,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect,
all such current leases, subleases and licenses relating to Material Leased Real Property are in
full force and effect, are valid and effective in accordance with their respective terms, and there
is not, under any of such leases, any existing default or event of default (or event which, with
notice or lapse of time, or both, would constitute a default) by the Company or any of its
Subsidiaries or, to the Company’s Knowledge, by the other party to such lease, sublease or license.



     (c) Liens. Except as disclosed in Section 2.10(a) or 2.10(b) of the
Company Disclosure Schedule, the Company and the Subsidiaries own or have valid leasehold fee
interests in each of their respective properties and assets having a fair value of more than $1
million, free and clear of all encumbrances except for defects in title, easements, encroachments,
restrictive covenants and similar encumbrances or impediments that would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect. Neither the
Company nor any of its Subsidiaries is a party to any agreement or option to purchase any real
property or interest therein other than options for renewal of Material Leased Real Property for
the benefit of the Company or its applicable Subsidiary.



     (d) Entire Interest. Except as set forth in Section 2.10(b) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries has vacated or abandoned any
portion of the Material Leased Real Property or given notice to any third party of their intent to
do the same.



     (e) Condemnation. Except as set forth on Section 2.10(e) of the Company
Disclosure Schedule, neither the Company nor any applicable Subsidiary of the Company has received
written notice of an expropriation or condemnation proceeding pending, threatened or proposed
against the Material Leased Real Property.



 - 17 -









 





     SECTION 2.11. Taxes



     (a) Tax Returns. The Company and its Subsidiaries have properly prepared and timely
filed (or caused to be timely filed) all material Tax Returns required to be filed by or with
respect to them and have fully and timely paid and discharged, or adequately provided for in the
financial statements included in the Company SEC Reports, all material Taxes required to be paid or
discharged (whether or not shown on such Tax Returns) and have made adequate provision for any
taxes that are not yet due and payable for all taxable periods, or portions thereof, ending on or
before the date of this Agreement. Except as set forth in Section 2.11(a) of the Company
Disclosure Schedule, all such Tax Returns (including information provided therewith or with respect
thereto) are true, correct and complete in all material respects. Neither the Company nor any of
its Subsidiaries has granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any Tax for any taxable period and no request for any
such waiver or extension is currently pending. All amounts of Taxes required to be withheld by or
with respect to the Company or any of its Subsidiaries have been timely withheld and remitted in
all material respects to the applicable Governmental Authority. The Company and its Subsidiaries
have each complied in all material respects with all Tax information reporting provisions under
applicable laws. Except as set forth in Section 2.11(a) of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries is a party to any indemnification, allocation or sharing
agreement with respect to Taxes or has any liability for Taxes of any Person (other than members of
the affiliated group, within the meaning of Section 1504(a) of the Code, filing consolidated
federal income tax returns of which the Company is the common parent) under Treasury Regulation
Section 1.1502-6, Treasury Regulation Section 1.1502-78 or any similar state, local or foreign
Laws, as a transferee or successor, or otherwise. The Company and its Subsidiaries have made
available to TAS correct and complete copies of all material Tax Returns, examination reports and
statements of deficiencies for taxable periods, or transactions consummated, for which the
applicable statutory periods of limitations have not expired.



     (b) Audits. There are no pending or, to the Knowledge of the Company, threatened in
writing, audits, examinations, investigations or other proceedings in respect of any Tax matter of
the Company or any of its Subsidiaries. No Governmental Authority has given notice of its intention
to assert any deficiency or claim for additional Taxes against the Company or any of its
Subsidiaries. All material deficiencies for Taxes asserted or assessed against the Company or any
of its Subsidiaries have been fully and timely paid, settled or properly reflected in the most
recent financial statements contained in the Company SEC Reports.



     (c) Tax Liens. There are no Tax liens upon any property or assets of the Company or
any of the Subsidiaries except for statutory liens for current Taxes not yet due and payable and
for such liens, which individually or in the aggregate, would not exceed $500,000.



     (d) Section 355. Neither the Company nor any of its Subsidiaries has constituted a
“distributing corporation” or a “controlled corporation” (within the meaning of Section
355(a)(1)(A) of the Code) in a distribution of shares qualifying for tax-free treatment under
Section 355 of the Code (i) in the two years prior to the date of this Agreement or (ii) in a
distribution that 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.



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     (e) Tax Adjustments. Except as set forth in Section 2.11(e) of the Company
Disclosure Schedule, there are no adjustments of Taxes of the Company or any of its Subsidiaries
made by the IRS which are required to be reported to any state, local, or foreign Taxing
authorities that have not been so reported.



     (f) Closing Agreements. Neither the Company nor any of its Subsidiaries has executed
or entered into a closing agreement under Section 7121 of the Code or any similar provision of
state, local or foreign Laws, and neither the Company nor any of its Subsidiaries is subject to any
private letter ruling of the Internal Revenue Service or comparable ruling of any other taxing
authority.



     (g) Employee Remuneration. There is no Contract, plan or arrangement covering any
Person that, individually or in the aggregate, could give rise to the payment of any amount that
would not be deductible by TAS, the Company or any of their respective Subsidiaries by reason of
Section 162(m) of the Code.



     (h) Reportable Transactions. Neither the Company nor any of its Subsidiaries has
entered into any transaction that constitutes (i) a “reportable transaction” within the meaning of
Treasury Regulation § 1.6011-4(b), (ii) a “confidential tax shelter” within the meaning of Treasury
Regulation § 301.6111-2(a)(2) or a “potentially abusive tax shelter” within the meaning of Treasury
Regulation § 301.6112-1(b).



     SECTION 2.12. Material Contracts.



     (a) List of Contracts: Section 2.12(a) of the Company Disclosure Schedule
sets forth a true and complete list of each material contract and agreement of the following types
to which the Company or any of its Subsidiaries is a party or is bound by, or to which any of the
assets of the Company or its Subsidiaries are subject (such contracts and agreements as are
required to be set forth in Section 2.12(a) of the Company Disclosure Schedule and as are
disclosed in the Company SEC Reports being the “Material Contracts”):



     (i) all “material contracts” (as such term is defined in Item 601 (b)(10) of Regulation S-K of
the SEC) with respect to the Company and its Subsidiaries that are not disclosed in the Company SEC
Reports;



     (ii) all material contracts and agreements relating to issuances of securities of the Company
or any of its Subsidiaries (and all letters of intent, term sheets and draft agreements relating to
any such pending transactions);



     (iii) all material contracts and agreements relating to indebtedness for borrowed money or
capitalized lease obligations, in each case for which the Company or any of its Subsidiaries is
primarily or secondarily liable, or which are secured by assets of the Company or any of its
Subsidiaries, and in each case in an amount in excess of $1,000,000 that are not disclosed in the
Company SEC Reports;



     (iv) all material contracts and agreements (A) containing any non-compete covenant or other
covenant limiting the right of the Company or any of its Affiliates (or, after the Effective Time,
TAS or its Affiliates) to engage in any line of business or to make use of any Intellectual



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Property Rights or (B) containing any material exclusive or sole supplier arrangement, or
other exclusive business arrangement, to which the Company or any of its Affiliates is (or, after
the Effective Time, TAS or its Affiliates would be) subject;



     (v) material lease agreements relating to leased facilities of the Company and its
Subsidiaries located in Greensboro, NC, Lake City FL, Oscoda MI, Macon GA and Pacoima CA;



     (vi) material contracts and agreements between any of the Company and its Subsidiaries and
Boeing and Airbus or their Affiliates;



     (vii) material contracts and agreements between the Company and its Subsidiaries and Delta
Airlines, Inc., United Air Lines, America West Airlines/U.S. Airways and Federal Express;



     (viii) all other material contracts and agreements providing for payments by or to the Company
or any of its Subsidiaries, or the guarantee (whether or not contingent) by the Company or any of
its Subsidiaries of obligations of any third party, in excess of $1,000,000 and not made in the
ordinary course of business, or which are otherwise material to the Company or any of its
Subsidiaries or the conduct of its and their respective businesses, or the absence of which would,
individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.



     (b) Validity; Default.



     (i) Each Material Contract is valid and in full force and effect and enforceable against the
Company or its applicable Subsidiary and against each other party thereto, in accordance with its
terms; and



     (ii) (A) neither the execution of this Agreement nor the consummation of the Merger shall
constitute a default under, give rise to cancellation rights under, or otherwise adversely affect,
in each case, in any material respect, any of the rights of the Company or any of its Subsidiaries
under any Material Contract, and (B) except as would not have, in the aggregate, a Company Material
Adverse Effect, neither the Company nor any of its Subsidiaries nor, to the Knowledge of the
Company, any other party thereto, is in breach of, or default under, any Material Contract to which
it is a party nor, to the Knowledge of the Company, has any event occurred that, with notice or
lapse of time or both, would constitute such a breach or default, or permit termination,
modification or acceleration of any party’s rights under any Material Contract.



     The Company has furnished or made available to TAS true and complete copies of all Material
Contracts, including any amendments thereto.



     SECTION 2.13. Environmental Matters.



     (a) Except as set forth in the Company SEC Reports or in Section 2.13(a) of the
Company Disclosure Schedule, neither the Company nor any of its Subsidiaries has since January 1,
2003 received any written notice, demand, letter, claim or request for information alleging
violation of or liability under any Environmental Law on the part of the Company or any of its
Subsidiaries. Except as set forth in Section 2.13(a) of the Company Disclosure Schedule,



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there are no proceedings, actions, orders, decrees, investigations, injunctions or other
claims pending, or to the Knowledge of the Company, threatened, relating to or otherwise alleging
liability under any Environmental Law or relating to the exposure of any person to hazardous
substances.



     (b) Except as would not, individually or in the aggregate, reasonably be expected to result,
in a Company Material Adverse Effect:



     (i) The Company and each of its Subsidiaries are and have been since January 1, 2003 in
compliance with all applicable Environmental Laws.



     (ii) There are no past or present actions, activities, circumstances, conditions, events or
incidents that are reasonably likely to prevent future compliance with Environmental Laws or that
have resulted in liability or are reasonably likely to result in liability under Environmental
Laws.



     (iii) Neither the Company nor any of its Subsidiaries has assumed, either contractually or by
operation of law, any liability of any other Person pursuant to Environmental Laws.



     (c) The Company has made available to TAS true, complete and correct copies and results of any
reports, studies, analyses, tests or monitoring in the possession or control of the Company or any
of its Subsidiaries that pertain to material environmental contamination in, on, beneath or
adjacent to any property currently or formerly owned, operated, occupied or leased by the Company
or any of its Subsidiaries, or regarding the Company’s or any of its Subsidiaries’ compliance with
applicable Environmental Laws.



     SECTION 2.14. Labor and Employment Matters.



     (a) (i) Neither the Company nor any of its Subsidiaries has entered into, is a party to or is
bound by any express or implied collective bargaining agreements or other agreement, contract,
commitment, arrangement or understanding with any labor union or labor organization, and (ii) no
union or other labor organization campaign is pending, or to the Knowledge of the Company has since
January 1, 2005 been threatened, with respect to the employees of the Company or any of its
Subsidiaries. Neither the Company nor any of its Subsidiaries is currently, nor has any of them
since January 1, 2003 been, the subject of any strike, dispute, walk-out, work stoppage, slowdown
or other organized labor dispute involving the Company or any of its Subsidiaries, nor, to the
Knowledge of the Company, is any such activity threatened.



     (b) Except as would not, in the aggregate, reasonably be expected to have a Company Material
Adverse Effect, (i) each of the Company and each of its Subsidiaries has complied with all Laws
relating to the employment and safety of labor, including without limitation the National Labor
Relations Act and other provisions relating to wages, hours, benefits, collective bargaining,
employment of minors, withholding, immigration and all applicable occupational safety and health
acts and Laws, (ii) neither the Company nor any of its Subsidiaries has engaged in any unfair labor
practice or discriminated on the basis of race, age, sex, disability or any other protected
category in its employment conditions or practices with respect to its employees, customers or
suppliers, and (iii) no action, suit, complaint, charge, grievance, arbitration, employee
proceeding or investigation by or before any Governmental Authority brought by or on



 - 21 -









 







behalf of any employee, prospective employee, former employee, retired employee, labor
organization or other representative of the Company’s and its Subsidiaries’ employees is pending
or, to the Knowledge of the Company, threatened against the Company or any of its Subsidiaries
which claim damages in excess of $250,000, except as disclosed in Section 2.14(b) of the
Company Disclosure Schedule. Except as disclosed in Section 2.14(b) of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party to or otherwise
bound by any consent decree with or citation by any Governmental Authority relating to the
Company’s or its Subsidiaries’ employees or employment practices relating to the Company’s or its
Subsidiaries’ employees.



     SECTION 2.15. Permits; Compliance. Except as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect or as disclosed in the Company SEC
Reports filed prior to the date hereof, each of the Company and each its Subsidiaries is in
possession of all franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its
properties and to carry on its business as now being conducted (the “Company Permits”) and each
such Company Permit is valid and in full force and effect. Except as would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect or as disclosed in
the Company SEC Reports, each of the Company and each of its Subsidiaries is, and has been, in
compliance with, and to the Knowledge of the Company is not under investigation with respect to and
has not been threatened to be charged with or given any notice of any violation of, any applicable
Law or the terms and conditions of any Company Permit.



     SECTION 2.16. Intellectual Property.



     (a) Identification. Section 2.16(a) of the Company Disclosure Schedule sets
forth a true, correct and complete list of all U.S. and material foreign (i) issued Patents and
Patent applications, (ii) Trademark registrations and applications, (iii) Copyright registrations
and applications, in each case, which are owned by the Company.



     (b) Licenses. Section 2.16(b) of the Company Disclosure Schedule sets forth a
list of all material licenses of Intellectual Property Rights under which the Company is either a
(i) licensor, or (ii) licensee, distributor or reseller, the loss of which could have a Company
Material Adverse Effect.



     (c) Validity and Enforceability. The Company owns or has a valid right to use, free
and clear of all liens, all Intellectual Property Rights necessary, or used or held for use in
connection with the business of the Company, excepting only such matters as would not, in the
aggregate, have a Company Material Adverse Effect. All such Intellectual Property Rights are
subsisting, valid and enforceable, excepting only such matters as would not, in the aggregate, have
a Company Material Adverse Effect.



     (d) Rights. Except for the matters identified in Section 2.16(d) of the
Company Disclosure Schedule, (i) none of the Intellectual Property Rights that are owned or
licensed by the Company or any of its Subsidiaries conflicts with, infringes upon or
misappropriates or otherwise violates the Intellectual Property Rights of any third party,
excepting only such matters as would not, in the aggregate, have a Company Material Adverse Effect,
(ii) the Company has



 - 22 -









 







not been sued, charged in writing with, or named a defendant in, any claim, suit, action or
proceeding involving a claim of infringement of any Intellectual Property Rights of others, (iii)
to the Knowledge of the Company, there is no threatened claim of infringement by the Company or any
of its Subsidiaries of any Intellectual Property Rights of others, and to the Knowledge of the
Company, there is no continuing infringement by others of the Intellectual Property Rights of the
Company or any of its Subsidiaries. No Intellectual Property Rights of the Company are subject to
any outstanding order, judgment, decree, stipulation or agreement restricting the use thereof by
the Company or any of its Subsidiaries. None of the Company or any of its Subsidiaries has entered
into any agreement to indemnify any other individual or entity against any charge of infringement
of any Intellectual Property Right other than in the ordinary course of business. Except as set
forth in Section 2.20(a)(i) of the Company Disclosure Schedule, there are no Persons
authorized or privileged to use the Intellectual Property Rights under any contract other than such
rights as are granted to customers in the ordinary course of business.



     (e) Definitions. For purposes of this Agreement, “Intellectual Property Rights” means
all U.S. and foreign (i) patents, patent applications, patent disclosures, and all related
continuations, continuations-in-part, divisionals, reiusses, re-examinations, substitutions, and
extensions thereof (“Patents”), (ii) trademarks, service marks, trade names, domain names, logos,
slogans, trade dress, and other similar designations of source or origin, together with the
goodwill symbolized by any of the foregoing (“Trademarks”), (iii) copyrights and copyrightable
subject matter (“Copyrights”), (iv) rights of publicity (v) Company Software and (vi) any other
relevant proprietary intellectual property rights. For purposes of this Agreement, “Company
Software” means computer software, programs and databases in any form (including Internet web
sites, web content and links, all versions, updates, corrections, enhancements, and modifications
thereof, and all related documentation) (i) material to the operation of the business of the
Company or any of its Subsidiaries, including all computer software and databases operated by the
Company or any of its Subsidiaries on its web sites or used by the Company or any of its
Subsidiaries in connection with processing customer orders, storing customer information, or
storing or archiving data, but excluding software that is in general distribution to users of
personal computers, and (ii) owned, manufactured, distributed, sold, licensed or marketed by the
Company or any of its Subsidiaries.



     SECTION 2.17. Insurance. Section 2.17 of the Company Disclosure Schedule lists all
insurance policies, binders and surety and fidelity bonds relating to the Company or any of its
Subsidiaries (including, without limitation, all policies or binders of casualty, general liability
and workers’ compensation insurance), all of which are currently in effect, and the Company has
made available to TAS or its representatives for review documentation evidencing such policies and
binders. All premiums and other amounts due and payable under each such policy, binder and bond
have been paid. Neither the Company nor any of its Subsidiaries is in default with respect to any
material provision contained in any such policy, binder or bond and neither the Company nor any of
its Subsidiaries has failed to give any notice of or present any material claim thereunder as
required by the terms thereof. The Company has not received any written notice of cancellation or
non-renewal of any such policy, binder or bond.



     SECTION 2.18. Opinion of Financial Advisor. The Special Committee has received the opinions
of Houlihan Lokey Howard & Zukin Financial Advisors, Inc., financial advisor to the Special
Committee, to the effect that, as of the date of this Agreement, (i) the Per



 - 23 -









 







Share Merger Consideration is fair, from a financial point of view, to the holders of Shares
and rights to acquire Shares (other than TAS and the TAS Stockholders) and (ii) the Stock
Conversion Price is fair, from a financial point of view, to the holders of Shares (other than TAS
and the TAS Stockholders), which opinions will be confirmed in writing and a copy of which will be
(i) delivered to TAS solely for informational purposes after receipt thereof by the Company and
(ii) made available to TAS and the Company for inclusion in the Proxy/Information Statement or
other documents contemplated by Section 5.03 describing the transactions provided for in this
Agreement which will be distributed to the stockholders of the Company.



     SECTION 2.19. Brokers. No broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the Transactions based upon arrangements
made by or on behalf of the Company or any of its Affiliates.



     SECTION 2.20. Antitakeover Provisions and Rights Agreements.



     (a) Antitakeover Provisions. The Company has taken all actions necessary such that no
restrictive provision of any “fair price,” “moratorium,” “control share acquisition,” “business
combination,” “stockholder protection,” “interested shareholder” or other similar anti-takeover
statute or regulation (including, without limitation, Section 203 of the DGCL) or similar
restrictive provision in the Certificate of Incorporation or By-laws or comparable organizational
documents of any of the Company’s Subsidiaries is, or at the Effective Time will be, applicable to
the this Agreement or to the transactions contemplated hereby.



     (b) Rights Agreements. The Company does not have any stockholder rights plan or
similar agreement or arrangement.



     SECTION 2.21. Investment Companies. Neither the Company nor any Subsidiary of the Company is
an “investment company” as defined under the Investment Company Act of 1940, as amended.



     SECTION 2.22. Transactions With Affiliates. All transactions, agreements, arrangements or
understandings between the Company or any of its Subsidiaries, on the one hand, and the Company’s
affiliates (other than wholly-owned subsidiaries of the Company) or other Persons, on the other
hand (an “Affiliate Transaction”), that are required to be disclosed in the Company SEC Reports in
accordance with Item 404 of Schedule S-K under the Securities Act have been so disclosed. There
have been no Affiliate Transactions that are required to be disclosed under the Exchange Act
pursuant to Item 404 of Schedule S-K under the Securities Act which have not already been disclosed
in the SEC Reports.



     SECTION 2.23. Certain Business Practices. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect, neither the Company
nor any of its Subsidiaries nor any director, officer, agent or employee of the Company or any of
its Subsidiaries has (i) used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity or for the business of the Company or any of its
Subsidiaries, (ii) made any unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns or violated any provision of



 - 24 -









 







the Foreign Corrupt Practices Act of 1977, as amended, or (iii) made any other unlawful
payment.



ARTICLE III




REPRESENTATIONS AND WARRANTIES OF TAS




     TAS hereby represents and warrants to the Company that:



     SECTION 3.01. Corporate Organization. TAS is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. TAS has the requisite corporate power
and corporate authority to own, lease and operate its properties and to carry on its business as
now being conducted, and is duly qualified and in good standing to do business in each jurisdiction
in which the nature of its business or the ownership or leasing of its properties makes such
qualification necessary other than in such jurisdictions where the failure to so qualify or to be
in good standing would not, individually or in the aggregate, reasonably be expected to have a TAS
Material Adverse Effect.



     SECTION 3.02. Authority Relative to the Transactions. TAS has all necessary corporate power
and authority to execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the Transactions. The execution and delivery by TAS of this Agreement and the
consummation by TAS of the Transactions have been duly and validly authorized by all necessary
corporate action, and, except as provided in this Section 3.02, no other corporate proceedings on
the part of TAS are necessary to authorize this Agreement or to consummate the Transactions. The
approval and adoption of this Agreement and the Merger by the holders of a majority of the then
outstanding shares of common stock of TAS and the filing and recordation of the Certificate of
Merger as required by the DGCL are the only actions required under the DGCL and applicable Delaware
Law to authorize the Merger. This Agreement has been duly and validly executed and delivered by
TAS and, assuming due authorization, execution and delivery by the Company, constitutes the legal,
valid and binding obligation of each of TAS, enforceable against TAS in accordance with its terms,
subject to the effect of any applicable bankruptcy, insolvency (including, without limitation, all
Laws relating to fraudulent transfers), reorganization, moratorium or similar Laws affecting
creditors’ rights generally and subject to the effect of general principles of equity (regardless
of whether considered in a proceeding at Law or in equity). The Board of Directors of TAS, at a
meeting duly called and held prior to the execution of this Agreement, has adopted resolutions
approving and declaring advisable this Agreement and the Merger (such approval and adoption having
been made in accordance with the DGCL and the Certificate of Incorporation of TAS).



     SECTION 3.03. No Conflict; Required Filings and Consents. The execution and delivery by TAS
of this Agreement does not, and the performance by TAS of this Agreement and the consummation of
the Transactions by TAS will not:



     (a) violate the Certificate of Incorporation or By-laws of TAS;



     (b) violate any Law applicable to TAS or by which any of its property or assets is bound or
affected, other than any such violation that would not, individually or in the aggregate,
reasonably be expected to have a TAS Material Adverse Effect; or



 - 25 -









 





     (c) result in any breach of, or constitute a default (or an event which, with notice or lapse
of time or both, would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of TAS pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or obligation to which
TAS is a party or by which TAS or any of its property or assets is bound or affected, except for
any such conflicts, violations, breaches, defaults or other occurrences which would not,
individually or in the aggregate, reasonably be expected to have an TAS Material Adverse Effect.



     SECTION 3.04. Governmental Consents. The execution, delivery, and performance of this
Agreement by TAS and the consummation by TAS of the transactions contemplated hereby do not and
will not require any consent, approval, authorization or permit of, action by, filing with or
notification to, any Governmental Authority, except for (i) those required under or in relation to
(A) the Exchange Act or the Securities Act, (B) compliance with the applicable requirements of the
HSR Act, (C) the DGCL with respect to the filing of the Certificate of Merger, (D) rules and
regulations of the New York Stock Exchange and (E) such as may be required under any applicable
state securities or blue sky laws and (ii) such other consents, permits, approvals, orders or
authorizations the failure of which to obtain would not, individually or in the aggregate,
reasonably be expected to have a TAS Material Adverse Effect.



     SECTION 3.05. Financing. TAS will have at the Effective Time, through cash held in escrow
pursuant to the terms of the Escrow Agreement and cash provided by the TAS Stockholders, the funds
necessary to consummate the Merger, including the payment of the aggregate Per Share Merger
Consideration and the consideration contemplated by Section 1.08 of this Agreement and to pay all
related fees and expenses of TAS.



     SECTION 3.06. Brokers. No broker, finder or investment banker is entitled to any brokerage,
finder’s or other fee or commission in connection with the Transactions based upon arrangements
made by or on behalf of TAS or any of its Affiliates.



     SECTION 3.07. Interim Operations of TAS. TAS was formed solely for the purpose of effecting
the Merger, has engaged in no other business activities and has conducted its operations only as
contemplated hereby or in connection therewith.



     SECTION 3.08. Litigation. There is no action, suit or proceeding pending or threatened before
any Governmental Authority against TAS or any of its Subsidiaries, and no judgment, decree,
injunction, rule, order or similar action of any Governmental Authority is outstanding against TAS
or any of its Subsidiaries that, in any such case, seeks directly or indirectly to restrain or
prohibit the consummation of the Merger.



     SECTION 3.09. Stock Ownership and Contribution. LJH, Ltd. (“LJH”) is the beneficial owner of
15,385,812 shares of Company Common Stock (the “LJH Shares”). Owl Creek Partners, L.P., Owl Creek
Partners II, L.P., Owl Creek Overseas Fund I, Ltd. and Owl Creek Overseas Fund II, Ltd. (together,
the “Owl Creek Entities”) are the beneficial owners of an aggregate of 3,722,399 shares of the
Company Common Stock (the “Owl Creek Shares”). LJH and the Owl Creek Entities are the sole
stockholders of TAS (collectively, the “TAS Stockholders”). Prior to the Effective Time of the
Merger, the LJH Shares and the Owl Creek



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Shares (collectively, the “TAS Shares”) will be contributed to TAS and TAS will be the record
holder of the TAS Shares at the Effective Time of the Merger.



ARTICLE IV




CONDUCT OF BUSINESS PENDING THE MERGER




     SECTION 4.01. Conduct of Business by the Company Pending the Merger.



     (a) Ordinary Course. The Company agrees that, between the date of this Agreement and
the Effective Time, except as expressly contemplated by any other provision of this Agreement or as
set forth in Section 4.01 of the Company Disclosure Schedule, unless TAS shall otherwise
consent in writing (such consent not to be unreasonably withheld or delayed) it being agreed by TAS
that any action approved or authorized by John Cawthron in his capacity as Chief Executive Officer
of the Company will be deemed to have received such consent:



     (i) the businesses of the Company and its Subsidiaries shall be conducted in the ordinary
course of business and in a manner consistent with past practice; and



     (ii) the Company shall use commercially reasonable efforts to preserve intact the business
organization of the Company and its Subsidiaries, to keep available the services of the current
officers and employees of the Company and its Subsidiaries and to preserve the current
relationships of the Company and its Subsidiaries with customers, suppliers and other Persons with
which the Company or any of its Subsidiaries has significant business relations.



     (b) Required Consent. Except as expressly contemplated by any other provision of this
Agreement or as set forth in Section 4.01 of the Company Disclosure Schedule, neither the
Company nor any of its Subsidiaries shall, between the date of this Agreement and the Effective
Time, directly or indirectly, do, or propose to do, any of the following without the prior written
consent of TAS (such consent not to be unreasonably withheld or delayed), it being agreed by TAS
that any action approved or authorized by John Cawthron in his capacity as Chief Executive Officer
of the Company will be deemed to have received such consent:



     (i) amend or otherwise change its Certificate of Incorporation or By-laws or equivalent
organizational documents;



     (ii) issue, purchase, sell, pledge, dispose of, grant or encumber, or authorize such
issuance, purchase, sale, pledge, disposition, grant, or encumbrance of:



     (A) any shares of any class of capital stock or other equity interests or other securities of
the Company or any of its Subsidiaries, or any options, warrants, convertible securities or other
rights of any kind to acquire any shares of such capital stock or other equity interest or other
securities (including, without limitation, any phantom interest), of the Company or any of its
Subsidiaries (except for the issuance of Shares issuable pursuant to warrants and employee stock
options outstanding on the date of this Agreement and granted under Company Stock Plans in effect
on the date of this Agreement); or



 - 27 -









 





     (B) any material assets of the Company or any of its Subsidiaries having an aggregate fair
value in excess of $1,000,000;



     (iii) declare, set aside, make or pay any dividend or other distribution, payable in cash,
stock, property or otherwise, with respect to any of its capital stock, other than to the Company
or to any wholly owned Subsidiary of the Company;



     (iv) repurchase, redeem or otherwise acquire or cause to cease to be issued and outstanding
any capital stock of the Company without the consent of TAS and the Special Committee;



     (v) reclassify, combine, split, subdivide or effect any similar transaction with respect to,
or redeem, or purchase or otherwise acquire, directly or indirectly, any of its capital stock;



     (vi) other than in the ordinary course of business and consistent with past practice:



     (A) acquire (including, without limitation, by merger, consolidation, or acquisition of stock
or assets or any other business combination) any corporation, partnership, other business
organization or any division thereof or any significant amount of assets; or



     (B) issue any debt securities or similar obligations, incur indebtedness for borrowed money or
grant any lien or security interest securing obligations with respect to indebtedness, or assume,
guarantee or endorse, or otherwise become responsible for, the obligations of any Person other than
pursuant to the CIT Debt; or



     (C) make any material loan, advance or capital contribution to, or investment in, any other
Person, other than to the Company or to any wholly owned Subsidiary of the Company;



     (vii) (A) hire any additional employees other than in the ordinary course of business, except
(A) to fill vacancies arising after the date of this Agreement; or (B) to meet increased demand.



     (B) make any offers to any officer or other executive employee (or any person who following
such action, would be an officer or executive employee) of an employment position other than the
employment position he or she currently holds, except for offers of an employment position made in
the ordinary course of business and consistent with past practice in connection with the promotion
or demotion of any employee of the Company or any of its Subsidiaries who is not a director or
officer of the Company;



     (C) increase the compensation payable or to become payable to, or except as required to comply
with applicable Law, adopt, enter into, terminate, amend or increase the amount or accelerate the
payment or vesting of any benefit or award or amount payable under any Company Stock Plan or other
Plan or other arrangement for the current or future benefit or welfare of, any director, officer or
employee, except for increases in the ordinary course of business and consistent with past practice
in salaries or wages of executive employees of the Company or any of its Subsidiaries who are not
directors or officers of the Company;



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     (D) grant any loan, advance, extensions of credit to current or former employees or
forgiveness or deferral of any loans due from any employee other than in the ordinary course of
business in amounts not to exceed $50,000 in any individual case and $500,000 in the aggregate;



     (E) establish, adopt, enter into, terminate or amend any Plan or establish, adopt or enter
into any plan, agreement, program, policy, trust, fund or other arrangement that would be a Plan if
it were in existence as of the date of this Agreement for the benefit of any director, officer or
employee except as required by this Agreement or the Transactions contemplated hereby, or as
required by ERISA, the Code or to otherwise comply with applicable Law;



     (F) other than bonuses earned through the date hereof and other than in the ordinary course of
business consistent with past practice for employees other than officers and directors, grant any
awards under any bonus, incentive, performance or other compensation plan or arrangement or Plan;
provided that there shall be no grant or award to any director, officer or employee of stock
options, restricted stock, stock appreciation rights, or other stock-based awards, or any removal
of existing restrictions in any Company Stock Plan or other Plan or agreements or awards made
thereunder (provided that equity awards may be transferred in accordance with the applicable plan
document or agreement);



     (G) enter into, amend or terminate any employment or severance agreement with or, except in
accordance with the existing obligations of the Company or any of its Subsidiaries, grant any
severance, termination, change in control or transaction bonus or pay to, any employee, officer or
director of the Company or any of its Subsidiaries, except, with respect to non-officer employees,
in the ordinary course of business;



     (H) other than benefits accrued through the date hereof and other than in the ordinary course
of business for employees other than officers or directors of the Company, pay any benefit not
provided for under any Plan;



     (viii) enter into, amend or modify in any material respect, or consent to the termination of,
any Material Contract, or amend, waive or modify in any material respect, fail to renew, or consent
to the termination of, the Company’s or any of its Subsidiaries’ rights thereunder other than in
the ordinary course of business consistent with past practice;



     (ix) fail to make in a timely manner any required filings with the SEC required under, and in
compliance with, the Securities Act or the Exchange Act or the rules and regulations promulgated
thereunder;



     (x) change any Tax election, annual tax accounting period, or method of tax accounting, file
amended Tax Returns or claims for Tax refunds by the Company or its Subsidiaries, enter into a
closing agreement relating to Taxes or any settlement of any Tax claim, audit or assessment;



     (xi) make any changes in its accounting methods, principles or practices currently in effect,
except as required by changes in GAAP or by Regulation S-X under the Exchange Act, in each case as
concurred in by its independent public accountants;



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     (xii) file a petition under Chapter 11 of the United States Bankruptcy Code or adopt a plan of
complete or partial liquidation, dissolution, merger, consolidation, restructuring,
recapitalization or other reorganization of the Company or any of its Subsidiaries;



     (xiii) except as required by applicable Law or GAAP, revalue in any material respect any of
its assets, including writing down the value of inventory in any material manner, or writing-off
notices or accounts receivable in any material manner;



     (xiv) pay, discharge, satisfy, settle or compromise any claim, litigation, liability,
obligation (absolute, asserted or unasserted, contingent or otherwise) or any Action, except for
settlements or compromises involving amounts not exceeding $300,000 in the aggregate, including all
fees, costs and expenses associated therewith;



     (xv) enter into any negotiation with respect to, or adopt or amend in any respect, any
collective bargaining agreement;



     (xvi) enter into any material agreement or arrangement with any of its officers, directors,
employees or any “affiliate” or “associate” of any of its officers or directors (as such terms are
defined in Rule 405 under the Securities Act);



     (xvii) make, authorize or agree to make any capital expenditures, or enter into any agreement
or agreements providing for payments, except for capital expenditures not exceeding (i) $2,000,000
in the aggregate, or (ii) $1,000,000 in respect of any single capital expenditure or series of
related capital expenditures;



     (xviii) terminate or fail to renew any Company Permit that is material to the conduct of the
businesses of the Company or any of its Subsidiaries;



     (xix) fail to maintain in full force and effect all insurance (including self-insurance)
currently in effect, subject to renewal in the ordinary course of business consistent with past
practice;



     (xx) take any action or omit to take any action within its control that would, or is
reasonably likely to, result in any of the conditions to the Merger set forth in Article VI of this
Agreement not being satisfied; or



     (xxi)authorize, agree or commit to do any of the foregoing.



     SECTION 4.02. Advice of Changes; Government Filings.



     (a) Advice of Changes. Each party shall promptly advise the other orally and in
writing of (i) any representation or warranty made by it in this Agreement (A) to the extent
qualified by Material Adverse Effect or other materiality qualifier becoming untrue or inaccurate
and (B) to the extent not qualified by Material Adverse Effect becoming untrue or inaccurate in any
material respect except that this clause (B) shall be deemed satisfied so long as such
representations or warranties being untrue or inaccurate do not have a Material Adverse Effect on
the Company or TAS, as the case may be, or (ii) the failure by it to comply with or satisfy in any
material respect any covenant, condition or agreement required to be complied with or satisfied by
it under this Agreement. However, no such notification shall affect the



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representations, warranties, covenants or agreements of the parties or the conditions to the
obligations of the parties or the remedies available under this Agreement.



     (b) Filings. The Company shall deliver to TAS copies of all reports and filings made
with the SEC before the same are filed. Subject to applicable Laws relating to the exchange of
information, each of the Company and TAS shall have the right to review in advance, and to the
extent practicable each will consult with the other, with respect to all the information relating
to the other party and each of their respective Subsidiaries, which appears in any filings,
announcements or publications made with, or written materials submitted to, any third party or any
Governmental Authority in connection with the transactions contemplated by this Agreement. In
exercising the foregoing right, each of the parties hereto agrees to act reasonably and as promptly
as practicable. Each party agrees that, to the extent practicable, it will consult with the other
party with respect to the obtaining of all permits, consents, approvals and authorizations of all
third parties and Governmental Authorities necessary or advisable to consummate the transactions
contemplated by this Agreement and each party will keep the other party apprised of the status of
matters relating to completion of the transactions contemplated hereby.



     SECTION 4.03. Tax Matters. During the period from the date of this Agreement to the Effective
Time, the Company and its Subsidiaries shall:



     (a) prepare and timely file all Tax Returns required to be filed by them on or before the
Closing Date (“Post-Signing Returns”) in a manner consistent with past practice, except as
otherwise required by applicable Laws;



     (b) consult with TAS with respect to all material Post-Signing Returns and deliver drafts of
such Post-Signing Returns to TAS no later than ten Business Days prior to the date on which such
Post-Signing Returns are required to be filed;



     (c) fully and timely pay all Taxes due and payable in respect of such Post-Signing Returns
that are so filed;



     (d) properly reserve (and reflect such reserve in their books and records and financial
statements), for all Taxes payable by them for which no Post-Signing Return is due prior to the
Effective Time in a manner consistent with past practice;



     (e) promptly notify TAS of any Legal Action or audit pending or threatened against the Company
or any of its Subsidiaries in respect of any Tax matter, including Tax liabilities and refund
claims, and not settle or compromise any such Legal Action or audit without TAS’s prior written
consent in excess of $250,000;



     (f) not make or revoke any election with regard to Taxes or file any amended Tax Returns;




     (g) not make any change in any Tax or accounting methods or systems of internal accounting
controls (including procedures with respect to the payment of accounts payable and collection of
accounts receivable), except as may be appropriate to conform to changes in Tax laws or regulatory
accounting requirements or GAAP; and



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     (h) terminate all Tax Sharing Agreements to which the Company or any of its Subsidiaries is a
party such that there are no further Liabilities thereunder.



ARTICLE V




ADDITIONAL AGREEMENTS




     SECTION 5.01. Stockholders’ Meeting. The Company, acting through the Special Committee, upon
the date (the “Meeting Commencement Date”) that is the earlier to occur of (a) receipt of written
notice from TAS requesting that the Company proceed to call and hold a stockholders meeting
pursuant to this Section 5.01 and (b) the date that is the earlier of (x) seventy-five (75) days
after the date of the initial Schedule 13E-3 filing with respect to the Merger and (y) October 30,
2006, and subject to Section 5.04, shall:



     (i) in accordance with applicable Law and the Company’s Certificate of Incorporation and
By-laws, duly and promptly call, give notice of, convene and hold, an annual or special meeting of
its stockholders for the purpose of considering and taking action on this Agreement and the Merger
(the “Stockholders’ Meeting”) no later than ninety (90) days following the Meeting Commencement
Date and without regard to any Change in the Company Recommendation; and



     (ii) (A) subject to Section 5.06(d), include in the Proxy/Information Statement, and not
subsequently withdraw or modify in any manner adverse to TAS, the unanimous resolution of the
Special Committee and the Company Board (1) that the terms of this Agreement are fair to and in the
best interests of the stockholders of the Company (other than TAS and the TAS Stockholders), (2)
declaring this Agreement to be advisable, and (3) recommending that the stockholders of the Company
vote to approve and adopt this Agreement and the Merger; and



     (B) use its best efforts to obtain the Company Stockholder Approval, subject to Section
5.06(d), and otherwise comply with all requirements of Law applicable to the Stockholders’ Meeting.



     SECTION 5.02. Approval of TAS.



     (a) TAS will, following the execution of this Agreement (and in no event later than 48 hours
from the execution of this Agreement), deliver to the Company a copy of a written consent and proxy
executed by TAS adopting this Agreement and the Merger in its capacity as a stockholder of the
Company with respect to all shares of Company Common Stock it owns or may hereafter acquire.



     (b) TAS shall, at any meeting of the stockholders of the Company (whether annual or special
and whether or not an adjourned or postponed meeting), however called, pursuant to Section 5.01,
(A) when a meeting is held, appear at such meeting or otherwise cause all TAS Shares owned of
record or beneficially by it to be counted as present thereat for the purpose of establishing a
quorum, (B) vote (or cause to be voted) in person or by proxy all TAS Shares owned of record or
beneficially by it in favor of the adoption of the Agreement and the approval of the Merger and for
any other matters necessary for consummation of the Transactions and (C)



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vote (or cause to be voted) all TAS Shares owned of record or beneficially by it against (X)
any proposal for any recapitalization, reorganization, liquidation, merger, sale of assets or other
business combinations between the Company and any other Person (other than the Merger) and (Y) any
other action that could reasonably be expected to impede, interfere with, delay, postpone or
adversely affect the Merger or any of the Transactions.



     SECTION 5.03. Proxy/Information Statement.



     (a) Filing. The Company shall file with the SEC, as promptly as practicable following
the calling of a Stockholders’ Meeting, if any, a proxy statement under Section 14 of the Exchange
Act and otherwise complying with the applicable provisions of the Exchange Act and of the rules and
regulations promulgated under the Exchange Act, relating to the Company Stockholders’ Meeting (the
“Proxy Statement”). The Company shall cooperate with TAS and the TAS Stockholders, and assist them
as reasonably requested, in filing, with the SEC, as promptly as practicable following the
execution of this Agreement, an information statement on Schedule 13E-3 under Section 13(e) of the
Exchange Act, and otherwise in complying with the applicable provisions of the Exchange Act and the
rules and regulations promulgated under the Exchange Act, relating to the Company Stock Purchase,
the Merger, and, if applicable, the Stockholders’ Meeting (the “Information Statement,” and
referred to herein together with the Proxy Statement as the “Proxy/Information Statement”). TAS and
the Company shall cooperate with each other in the preparation of the Proxy/Information Statement
and in responding to any comments of the SEC with respect to the Proxy/Information Statement or any
requests by the SEC for any amendment or supplement thereto or for additional information and to
cause the Proxy/Information Statement and all required amendments and supplements thereto to be
mailed to the holders of Shares entitled to vote at the Stockholders’ Meeting or to receive the
Information Statement at the earliest practicable time. Each of TAS and the Company shall
promptly inform the other and its counsel of all communications received from the SEC with respect
to the Proxy/Information Statement and consult together with their respective counsel regarding all
communications proposed to be delivered to the SEC with respect to the Proxy/Information Statement
prior to the delivery thereof, in each case on as prompt a basis as is practicable



     (b) Review. Each of TAS and the Company and its respective counsel shall have a
reasonable opportunity to review and comment on:



     (i) the Proxy/Information Statement, including all amendments and supplements thereto, prior
to such documents being filed with the SEC or disseminated to holders of Shares; and



     (ii) all responses to requests for additional information and replies to comments from the SEC
or the staff thereof prior to their being filed with, or sent to, the SEC. Each of the Company and
TAS agrees to use its reasonable best efforts, after consultation with the other parties hereto, to
respond promptly to all such comments of and requests by the SEC.



     (c) TAS Information. In accordance with the foregoing, TAS will furnish such
information relating to TAS as may be required by the Exchange Act to be included in the
Proxy/Information Statement. TAS agrees that none of the information supplied or to be supplied by
or on behalf of TAS for inclusion or incorporation by reference in the Proxy/Information



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Statement will, at the date it is first mailed to the stockholders of the Company or at the
time of the Stockholders’ Meeting pursuant to the Proxy Statement or purchase of securities of the
Company pursuant to the Information Statement, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances in which they are made, not misleading.
Notwithstanding the foregoing, TAS makes no covenant with respect to the information supplied or to
be supplied by or on behalf of the Company or its Subsidiaries for inclusion or incorporation by
reference in the Proxy/Information Statement.



     (d) Company Information. In accordance with the foregoing, the Company will furnish
such information relating to the Company and its Subsidiaries as may be required by the Exchange
Act to be included in the Proxy/Information Statement. The Company agrees that none of the
information supplied or to be supplied by or on behalf of the Company or its Subsidiaries for
inclusion or incorporation by reference in the Proxy/Information Statement will, at the date it is
first mailed to the stockholders of the Company or at the time of the Stockholders’ Meeting or
purchase of securities of the Company pursuant to the Information Statement, contain any untrue
statement of a material fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the circumstances in which they
are made, not misleading. Notwithstanding the foregoing, the Company makes no covenant with respect
to the information supplied or to be supplied by or on behalf of TAS for inclusion or
incorporation by reference in the Proxy/Information Statement.



     SECTION 5.04. Merger Without Meeting of Stockholders. Notwithstanding the foregoing, in the
event that TAS shall own at least ninety percent (90%) of the outstanding Shares at any time prior
to the Effective Time (including without limitation as a result of the Conversion) (the “90%
Threshold”), the parties hereto agree, within two Business Days after TAS attains the 90%
Threshold, to take all necessary and appropriate action to cause the Merger to become effective,
without a meeting of stockholders of the Company, in accordance with Section 253 of the DGCL. In
such event, the consideration payable in the Merger shall be the Per Share Merger Consideration,
the Option Consideration and the Purchase Right Consideration as provided in Article I hereof, and
all conditions to closing the Merger pursuant to Article VI shall no longer be applicable to the
Merger, it being understood that TAS and the TAS Stockholders may not acquire any additional Shares
unless all required filings with the SEC by the Company, TAS and its Affiliates shall have been
made, and all related deliveries of documents to the stockholders of the Company and the passage of
notice periods required under the Exchange Act, shall have occurred, including those contemplated
by Sections 14(a) and 13(e) of the Exchange Act and the rules and regulations thereunder, to the
extent applicable. Without limiting the Company’s obligations pursuant to this Section 5.04, the
Company shall take all necessary and appropriate action requested by TAS to enable TAS to give any
notice to the Company stockholders required by Law, including, without limitation, any notice
required by Section 262 of the DGCL.



     SECTION 5.05. Access to Information.



     (a) Access. Subject to applicable Law, from the date of this Agreement until the
Effective Time, the Company shall (and shall cause its Subsidiaries to):



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     (i) provide to TAS and TAS’s Representatives access, during normal business hours and upon
reasonable notice by TAS, to the officers, employees, agents, properties, offices and other
facilities of the Company and its Subsidiaries and to the books and records thereof; and



     (ii) furnish to TAS such information concerning the business, properties, contracts, assets,
liabilities, personnel and other aspects of the Company as TAS or its Representatives may
reasonably request.



     (b) No Waiver. Except as otherwise expressly provided herein, no information or
knowledge obtained by any party pursuant to this Section 5.05 or otherwise shall affect or be
deemed to modify any representation or warranty made by any party hereunder.



     SECTION 5.06. No Solicitation of Transactions.



     (a) Acquisition Proposals. The Company shall not, and the Company shall cause its
Subsidiaries, and the Company and the Subsidiaries shall instruct their respective Representatives,
not to, directly or indirectly:



     (i) solicit, initiate or knowingly facilitate or encourage any inquiries for the making of any
proposal or offer (including any proposal or offer to Company stockholders) that constitutes, or
would reasonably be expected to lead to, any Competing Transaction (as defined below) (each such
proposal or offer an “Acquisition Proposal”);



     (ii) participate in discussions or negotiations with, disclose or provide any non-public
information relating to the Company or its Subsidiaries to any Person with respect to or in
connection with any Acquisition Proposal (except to notify such Person of the existence and terms
of this Section 5.06);



     (iii) agree to, approve, endorse or recommend any Competing Transaction or enter into any
letter of intent, agreement in principle, merger or sale agreement or similar agreement providing
for or otherwise relating to any Competing Transaction;



     (iv) grant any waiver or release under any standstill or similar agreement by any Person who
has made an Acquisition Proposal; or



     (v) authorize or direct any Representative of the Company or any of its Subsidiaries to take
any such action.



     The Company shall, and shall cause its Subsidiaries and instruct its and their Representatives to,
immediately cease and cause to be terminated all existing discussions or negotiations with any
Person conducted heretofore with respect to any proposal relating to a Competing Transaction.
Notwithstanding the foregoing, actions taken or authorized by John Cawthron in relation to any
Acquisition Proposal will not be deemed to violate this Section 5.06.



     (b) Response to Acquisition Proposal. Notwithstanding the foregoing and anything to
the contrary in this Agreement, before the receipt of the Company Stockholder Approval, the Company
Board or Special Committee may furnish information to, and enter into discussions and negotiations
with, a Person who has made a written Acquisition Proposal, but only if:



 - 35 -









 





     (i) such Acquisition Proposal was made after the date of this Agreement (it being understood
that, subject to compliance with Section 5.06(a), such an Acquisition Proposal made after the date
of this Agreement by a Person who made an Acquisition Proposal regarding a Competing Transaction
prior to the date of this Agreement shall be considered a new Acquisition Proposal made after the
date of this Agreement) and none of the Company, its Subsidiaries and their Representatives has
violated any of the restrictions set forth in this Section 5.06;



     (ii) the Company Board or Special Committee has determined in good faith after consultation
with outside legal counsel (who may be the Company’s regularly engaged outside legal counsel or
counsel to the Special Committee) and a financial advisor that such Acquisition Proposal
constitutes, or is reasonably likely to result in, a Superior Proposal (as defined below);



     (iii) prior to taking such action such Person shall have executed a confidentiality agreement
(a copy of which shall promptly be provided to TAS);



     (iv) there is provided or made available to TAS, on a substantially concurrent basis, any
non-public information provided or made available to such Person that was not previously provided
or made available to TAS and its Representatives; and



     (v) the Company shall have delivered to TAS a prior written notice advising TAS that the
Company Board or Special Committee, as applicable, intends to take such action, and shall keep TAS
reasonably informed on a current basis as to the status of and any material developments regarding
any such inquiry or proposal.



     (c) Notice of Superior Proposal. In addition to the obligations of the Company set
forth in Sections 5.06(a) and (b), the Company shall promptly as practicable (and, in any event,
within 24 hours) (i) advise TAS, telephonically and in writing, of the Company’s receipt of any
Acquisition Proposal, any request for information relating to the Company or any of its
Subsidiaries or for access to the officers, employees, agents, business, properties, assets, books
or records of the Company or any of its Subsidiaries by any Person that has made, or would
reasonably be expected to make, an Acquisition Proposal and (ii) provide TAS, in writing, with the
material terms and conditions of any such Acquisition Proposal, and a copy of such Acquisition
Proposal, inquiry or request and the identity of the Person making the same. The Company shall
inform TAS as promptly as practicable (and, in any event, within 24 hours) of any change to the
material terms of any such Acquisition Proposal. As promptly as practicable (and, in any event,
within 24 hours) after determination by the Company Board or Special Committee that an Acquisition
Proposal constitutes a Superior Proposal, the Company shall deliver to TAS a written notice (a
“Notice of Superior Proposal”) advising it of such determination, specifying the terms and
conditions of such Superior Proposal and the identity of the Person making such Superior Proposal,
and providing TAS with a copy of the Superior Proposal. Any notice or action required to be taken
within 24 hours in this Section 5.06, will, if the triggering event for such action or notice
occurred after 3:00 p.m. on a Friday, Saturday or Sunday or the day before a holiday, be timely
taken or delivered if acted upon by the earlier to occur of (i) within 24 hours of the receipt of
actual notice thereof by any member of the Special Committee or (ii) by 5:00 p.m. on the next
succeeding Business Day. An Acquisition Proposal received by John Cawthron will not be deemed
received by the Company unless and until he delivers it to counsel for the Special Committee and to
a member of the Special Committee.



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     (d) Change in Recommendation. If, prior to the Company Stockholder Approval, the
Company Board or the Special Committee determines, in its good faith judgment and after consulting
with outside legal counsel (who may be the Company’s regularly engaged outside legal counsel or
counsel to the Special Committee), that making a Change in the Company Recommendation (as defined
below) is necessary in order for the Company Board to comply with its fiduciary duties to the
Company’s stockholders under applicable Law, then the Company Board or the Special Committee may
make a Change in the Company Recommendation in accordance with this Section 5.06 and following such
Change in Company Recommendation, the Company may terminate this Agreement solely in accordance
with Section 7.01(d). “Change in the Company Recommendation” means the Special Committee or Company
Board’s (i) failure to make, withdrawal of, or modification in a manner adverse to TAS of the
Company Recommendation, (ii) failure to publicly confirm the Company Recommendation within seven
days following TAS’s written request, (iii) recommendation or endorsement of a Competing
Transaction or (iv) resolution or public announcement of an intention to do any of the foregoing.
The Company Board may not make a Change in the Company Recommendation unless (i) at least two
Business Days prior to taking such action TAS shall have received written notice from the Company
(an “Adverse Recommendation Notice”) (A) advising that the Company Board intends to make such
Change in the Company Recommendation, (B) if such Change in Company Recommendation is made in
response to a Superior Proposal, advising TAS that the Company Board has received a Superior
Proposal, and (C) if such Change in Company Recommendation is made in response to a Superior
Proposal, containing all information required by Section 5.06(c), together with copies of any
written offer or proposal in respect of such Superior Proposal (it being understood and agreed that
any material amendment to the financial terms or other material terms of such Superior Proposal
shall require a new Adverse Recommendation Notice and a new two (2) Business Day period) and (ii)
during such two Business Day period the Special Committee shall have negotiated in good faith with
TAS concerning any amendments proposed by TAS to this Agreement and to the transactions
contemplated hereby. Nothing contained in this Agreement shall prohibit the Company, the Company
Board or the Special Committee from disclosing to the Company Stockholders a position contemplated
by Rules 14d-9 and 14e-2(a) promulgated under the Exchange Act, if, in the good faith judgment of
the Company Board or the Special Committee, after consultation with its outside legal and financial
advisors, such disclosure is required in order for the Company Board or the Special Committee, as
applicable, to comply with its fiduciary obligations, or is otherwise required under applicable
Law. Nothing in this Agreement shall prohibit the Company Board or the Special Committee from
making a Change in Company Recommendation prior to the Company Stockholder Approval if the Company
Board or Special Committee, as applicable, determines in good faith (after consultation with
outside legal counsel) that such action is necessary under applicable Law in order for the
directors to comply with their fiduciary duties to the Company’s stockholders.



     (e) Discussions Prior to Agreement. The fact that the Company, any of its
Subsidiaries, or any of their Representatives have had discussions or negotiations with Persons
prior to the date of this Agreement regarding a possible Acquisition Proposal shall not prevent the
Company from taking any of the actions permitted by this Section 5.06 with respect to a new
Acquisition Proposal submitted by any such Person after the date of this Agreement, that was not
solicited in violation of this Section 5.06.



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     (f) Definition of Competing Transaction. A “Competing Transaction” means any of the
following (other than the Transactions) involving the Company or any of its Subsidiaries, other
than the Merger or any other Competing Transaction to which TAS, the TAS Stockholders or any of
their Affiliates are a party:



     (i) any merger, consolidation, share exchange, business combination, recapitalization,
liquidation, dissolution or other similar transaction (including any so-called merger-of-equals and
whether or not the Company is the entity surviving any such transaction) involving the Company or
any of its Subsidiaries which results in any person beneficially owning 20% or more of any class of
equity or voting securities of the Company or of any of its Subsidiaries or 20% or more of the
assets of the Company and its Subsidiaries (directly or indirectly, including by the ownership of
equity or voting securities);



     (ii) any sale, lease, exchange, transfer or other disposition (directly or indirectly,
including by the transfer of equity or voting securities) of 20% or more of the assets of the
Company and its Subsidiaries;



     (iii) any sale, exchange, transfer or other disposition of equity or voting securities in
which the Company or any of its Subsidiaries participates and which results in any person
beneficially owning 20% or more of any class of equity or voting securities of the Company or of
any of its Subsidiaries; or



     (iv) any transaction or series of transactions, including a tender offer or exchange offer,
that, if consummated, would result in any person beneficially owning more than 20% of any class of
equity or voting securities of the Company or of any of its Subsidiaries.



     (g) Definition of Superior Proposal. A “Superior Proposal” means an unsolicited
written offer (in its most recently amended or modified terms, if amended or modified) made in
compliance with this Section 5.06 by a Person to enter into a Competing Transaction, the effect of
which would be that a Person would beneficially own more than twenty percent (20%) of the issued
and outstanding Common Stock, acquire more than twenty percent (20%) of the Consolidated assets of
the Company and its subsidiaries, as applicable, and which the Company Board or Special Committee
determines, in its good faith judgment (after consulting with its financial advisor and/or legal
counsel and taking into account any amendments proposed by TAS to this Agreement or to the
transactions contemplated hereby) and taking into account all relevant legal, financial, regulatory
and other aspects of the offer that it deems relevant in such circumstances under the DGCL, to be
more favorable to Company stockholders, from a financial point of view, than the Merger.



     SECTION 5.07. Directors’ and Officers’ Indemnification; Insurance.



     (a) Indemnification. Without limiting any additional rights that any employee,
officer or director may have under any employment agreement or benefit Plan or under the Company’s
Certificate of Incorporation or By-laws, for a period of six (6) years from the Effective Time, the
Surviving Corporation shall indemnify and hold harmless each present (as of immediately prior to
the Effective Time) and former officer or director of the Company and the Company’s Subsidiaries
(the “Indemnified Directors and Officers”), against all claims, losses, liabilities, damages,
judgments, inquiries, fines and reasonable fees, costs and expenses,



 - 38 -









 







including, attorneys’ fees and disbursements (collectively, “Costs”), incurred in connection
with any claim, action, suit, proceeding or investigation, whether civil, criminal, administrative
or investigative, arising out of matters occurring or actions taken by them in their capacity as
officers or directors at or prior to the Effective Time (including this Agreement and the
transactions and actions contemplated hereby), or taken by them at the request of the Company or
any Company Subsidiary, whether asserted or claimed prior to, at or after the Effective Time, to
the fullest extent that applicable Law permits a Delaware corporation to indemnify its officers and
directors. Each Indemnified Director and Officer will be entitled to advancement of expenses
incurred in the defense of any claim, action, suit, proceeding or investigation from the Surviving
Corporation within ten (10) Business Days of receipt by the Surviving Corporation from the
Indemnified Director or Officer of a request therefor and reasonable documentation thereof;
provided that any Person to whom expenses are advanced provides an undertaking to repay such
advances if it is ultimately determined that such person is not entitled to indemnification. The
Surviving Corporation shall not settle, compromise or consent to the entry of any judgment in any
proceeding or threatened action, suit, proceeding, investigation or claim (and in which
indemnification could be sought by such Indemnified Director or Officer hereunder), unless such
settlement, compromise or consent includes an unconditional release of such Indemnified Director or
Officer from all liability arising out of such action, suit, proceeding, investigation or claim or
such Indemnified Director or Officer otherwise consents.



     (b) Maintenance. The Certificate of Incorporation and By-laws of the Surviving
Corporation shall continue to contain provisions no less favorable with respect to indemnification,
advancement of expenses and exculpation of former or present directors and officers than are
presently set forth in the Company’s Certificate of Incorporation and By-laws, which provisions
shall not, except to the extent required to comply with applicable Law, be amended, repealed or
otherwise modified for a period of six (6) years from the Effective Time in any manner that would
adversely affect the rights thereunder of any such individuals.



     (c) D&O Insurance. Prior to the Effective Time, the Company shall obtain, and the
Surviving Corporation shall maintain for a period of six (6) years following the Effective Time,
directors’ and officers’ liability insurance coverage with respect to matters existing or occurring
at or prior to the Effective Time, from an insurance carrier with the same or better credit rating
as the Company’s current insurance carrier with respect to directors’ and officers’ liability
insurance, having terms and conditions and providing coverage in an amount at least as favorable to
the insured parties as the terms and conditions and amounts of coverage of the Company’s existing
policies; provided, that TAS and its Subsidiaries shall not be required by this Section 5.07(c) to
pay annual premiums in excess of 200% of the annual premiums paid by the Company under its
directors’ and officers’ liability policies as in effect as of the date hereof (the “Maximum
Premium”). If the Company’s existing insurance expires, is terminated or canceled during the six
(6) year period following the Effective Time or exceeds the Maximum Premium, the Surviving
Corporation shall obtain as much directors’ and officers’ liability insurance as can be obtained
for the remainder of such period for an annualized premium not in excess of the Maximum Premium, on
terms and conditions no less advantageous to the covered parties than the Company’s existing
directors’ and officer’s liability insurance.



     (d) Existing Agreements. The Surviving Corporation shall honor and perform under all
indemnification agreements entered into by the Company or any Company Subsidiary



 - 39 -









 







identified in Section 5.07 of the Company Disclosure Schedule as being subject to this
Section 5.07(d).



     (e) Survivability. Notwithstanding anything herein to the contrary, if any claim,
action, suit or proceeding or investigation (whether arising before, at or after the Effective
Time) is made against any Indemnified Director or Officer, on or prior to the sixth anniversary of
the Effective Time, the provisions of this Section 5.07 shall continue in effect until the final
disposition of such claim, action, suit, proceeding or investigation.



     (f) Heirs. This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Directors and Officers and their respective heirs and legal
representatives. The indemnification provided for herein shall not be deemed exclusive of any other
rights to which an Indemnified Director or Officer is entitled, whether pursuant to Law, contract
or otherwise.



     (g) Successors and Assigns. In the event that the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any other Person and
shall not be the continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets as an entirety in
one or a series of related transactions to any Person(s), then, and in each such case, proper
provision shall be made so that such continuing or surviving corporation or entity or such
Persons(s), as the case may be, shall assume the obligations set forth in this Section 5.07;
provided that the Surviving Corporation shall not be relieved from such obligation. In addition,
the Surviving Corporation shall not distribute, sell, transfer or otherwise dispose of any of its
assets in a manner that would reasonably be expected to render the Surviving Corporation unable to
satisfy its obligations under this Section 5.07.



     SECTION 5.08. Further Action; Reasonable Best Efforts. Upon the terms and subject to the
conditions of this Agreement:



     (a) each of the parties hereto shall make promptly its respective filings, and thereafter make
any other required submissions, under any applicable foreign, federal or state antitrust,
competition or fair trade Laws with respect to the Transactions; and



     (b) the Company shall cooperate with TAS and use its reasonable best efforts to take, or cause
to be taken, all appropriate action, and to do, or cause to be done, all things necessary, proper
or advisable under applicable Laws or otherwise to consummate and make effective the Merger and the
Transactions, including, without limitation, (i) using its reasonable best efforts to obtain all
Permits, consents, approvals, authorizations, qualifications and orders of Governmental Authorities
and parties to contracts with the Company and its Subsidiaries as are necessary for the
consummation of the Transactions and to fulfill the conditions to the Merger and (ii) cooperating
with TAS to respond to and defend against any litigation brought against the Company, TAS or the
TAS Stockholders because of the Merger or the transactions.



     SECTION 5.09. Public Announcements. The initial press release relating to this Agreement
shall be a joint press release the text of which has been agreed to by each of TAS and the Company.
Thereafter, subject to applicable Law, each of TAS and the Company shall use its reasonable best
efforts to consult with each other before issuing any press release or otherwise



 - 40 -









 







making any public statements with respect to this Agreement, the Merger, or any of the other
Transactions.



     SECTION 5.10. Takeover Statute. If any “fair price,” “moratorium,” “control share
acquisition,” “interested stockholder,” “business combination,” “stockholder protection,”
“interested shareholder” or other similar anti-takeover statute or regulation (including, without
limitation, Section 203 of the DGCL) or similar restrictive provision of the Certificate of
Incorporation or By-laws or comparable organizational documents of the Company or any of its
Subsidiaries (each a “Takeover Provision”) shall become applicable to the transactions contemplated
hereby, the Company and the members of the Company Board or the Special Committee of the Company,
subject to Section 5.06(d), shall grant such approvals and take such actions as are necessary so
that the transactions contemplated hereby may be consummated as promptly as practicable on the
terms contemplated hereby and otherwise act to eliminate the effects of such Takeover Provision on
the transactions contemplated hereby.



     SECTION 5.11. Financing. The Company agrees to provide, and will cause its Subsidiaries and
its and their respective directors, officers and employees to provide, all cooperation reasonably
necessary in connection with the arrangement of financing to be consummated contemporaneously with
or after the date hereof in respect of the transactions contemplated by this Agreement, including
participation in meetings, the execution and delivery of any commitment letters, pledge and
security documents, other definitive financing documents, or other requested certificates or
documents (including a certificate of the chief financial officer of the Company with respect to
solvency matters, to the extent such certification may be accurately made), audited and unaudited
financial statements, comfort letters of accountants and legal opinions as may be reasonably
requested by TAS and taking such other actions as are reasonably required to be taken by the
Company, providing that such cooperation shall not interfere unreasonably with the business or
operations of the Company or its Subsidiaries.



     SECTION 5.12. Disposition of Litigation. In connection with any litigation which may be
brought against the Company or its directors relating to the transactions contemplated hereby, the
Company shall keep TAS, and any counsel which TAS may retain at its own expense, informed of the
status of such litigation and will provide TAS’s counsel the right to participate in the defense of
such litigation to the extent TAS is not otherwise a party thereto, and the Company shall not enter
into any settlement or compromise of any such stockholder litigation without TAS’s prior written
consent, which consent shall not be unreasonably withheld or delayed.



ARTICLE VI




CONDITIONS TO THE MERGER




     SECTION 6.01. Mutual Conditions to the Merger. The obligations of the Company and TAS to
consummate the Merger shall be subject to the satisfaction or waiver (where permissible), at or
prior to the Closing, of the following conditions:



     (a) the Company shall have obtained the Company Stockholder Approval to the extent necessary
under applicable Law;



 - 41 -









 





     (b) no Governmental Authority shall have enacted, issued, promulgated, enforced or entered any
Law, rule, regulation, judgment, decree, executive order or award (an “Order”) which is then in
effect and has the effect of making the Merger illegal or otherwise preventing or prohibiting
consummation of the Merger;



     (c) any waiting period (and any extension thereof) applicable to the Merger under the HSR Act
shall have been terminated or shall have expired;



     (d) no temporary restraining order, preliminary or permanent injunction or other order issued
by any court of competent jurisdiction preventing the consummation of the Merger or the performance
by TAS, the TAS Stockholders or the Company of any covenant or condition required in order to
consummate the Merger, shall be in effect;



and is also subject to the following condition, which may not be waived by the parties:



     (e) all required filings with the SEC by the Company, TAS and its Affiliates shall have been
made, and all related deliveries of documents to the stockholders of the Company and the passage of
notice periods required under the Exchange Act, shall have occurred, including those contemplated
by Sections 14(a) and 13(e) of the Exchange Act and the rules and regulations thereunder, to the
extent applicable.



     SECTION 6.02. Conditions to Obligations of TAS. The obligations of TAS to effect the Merger
shall be further subject to the satisfaction or waiver at or prior to the Effective Time of the
following conditions:



     (a) the representations and warranties of the Company set forth in this Agreement,
disregarding all materiality and Company Material Adverse Effect qualifiers (except as set forth in
Section 2.07(b)), shall be true and correct, in each case as of the date of this Agreement and at
and as of the Effective Time, as though made on and as of such date (unless any such representation
or warranty is made only as of a specific date, in which event as of such specified date), except
for failures to be true and correct which would not, individually or in the aggregate, have a
Company Material Adverse Effect and which result, or would reasonably be expected to result, in
costs or losses to the Company, together with any costs or losses to the Company referenced in
Subsection 6.02(b), aggregating in excess of $5 million, in each case determined on the basis of
cash out-of-pocket costs to the Company and its Subsidiaries;



     (b) the Company shall have performed in all material respects each of the obligations, and
complied in all material respects with each of the agreements and covenants, required to be
performed by, or complied with by, it under this Agreement at or prior to the Closing, provided
that each of such obligations, agreements and covenants shall be deemed to have been performed in
all material respects so long as the costs or losses to the Company arising from any breach of any
thereof, or which would reasonably be expected to result in costs or losses to the Company,
together with costs or losses to the Company referenced in Section 6.02(a), do not in the aggregate
exceed $5 million, in each case determined on the basis of cash out-of-pocket costs to the Company
and its Subsidiaries;



 - 42 -









 





     (c) TAS shall have received a certificate of the Chief Executive Officer or the Chief
Financial Officer of the Company, certifying that the conditions set forth in Sections 6.02(a), (b)
and (d) have been satisfied;



     (d) There shall not have occurred a Closing Material Adverse Effect;




     (e) If LJH has given notice to the Company of its intention to exercise its right under
Section 1.2(a) of the Conversion Agreement to convert the Term Loan C into shares of Common Stock,
and LJH has otherwise performed its obligations under this Agreement and the Conversion Agreement,
the Company shall have caused the shares of Common Stock subject to issuance pursuant to the
Conversion Agreement to be issued to the TAS Stockholders;



     (f) John Cawthron shall not have been removed by the Board from his positions of Chairman of
the Board and Chief Executive Officer of the Company;



     (g) the Company shall have obtained a fairness opinion from Houlihan Lokey Howard & Zukin as
described in Section 2.18 that has not been withdrawn; and



     (h) TAS shall have received from Akerman Senterfitt, counsel to the Company, their opinion as
to the matters addressed in Sections 2.01(a) and (c), 2.03, 2.04 and 2.05 in form and substance
reasonably acceptable to TAS and its counsel.



     SECTION 6.03. Conditions to Obligations of the Company. The obligation of the Company to
effect the Merger shall be further subject to the satisfaction or waiver at or prior to the Closing
of the following conditions:



     (a) the representations and warranties of TAS set forth in this Agreement, disregarding all
materiality and TAS Material Adverse Effect qualifiers, shall be true and correct, in each case as
of the date of this Agreement and at and as of the Effective Time, as though made on and as of such
date (unless any such representation or warranty is made only as of a specific date, in which event
as of such specified date), except for failures to be true and correct which would not,
individually or in the aggregate, reasonably be expected to have a TAS Material Adverse Effect;



     (b) TAS shall have performed in all material respects each of the obligations, and complied in
all material respects with each of the agreements and covenants, required to be performed by or
complied with by it under this Agreement at or prior to the Closing; and



     (c) the Company shall have received certificates of the Chief Executive Officer or the Chief
Financial Officer of TAS, certifying that the conditions set forth in Sections 6.03(a) and (b) have
been satisfied.



ARTICLE VII




TERMINATION, AMENDMENT AND WAIVER




     SECTION 7.01. Termination. This Agreement may only be terminated and the Merger contemplated
hereby may be abandoned at any time prior to the Effective Time, notwithstanding adoption thereof
by the stockholders of the Company:



 - 43 -









 





     (a) by mutual written consent of TAS and the Company;




     (b) by TAS or the Company if any court or other Governmental Authority of competent
jurisdiction shall have issued a final order, decree or ruling or taken any other final action
restraining, enjoining or otherwise prohibiting the Merger and such order, decree, ruling or other
action is or shall have become final and non-appealable;



     (c) by either TAS or the Company if the Effective Time shall not have occurred on or before
the later of (i) February 15, 2007 or (ii) one hundred twenty (120) days after the Meeting
Commencement Date (the “Termination Date”); provided that the right to terminate this Agreement
pursuant to this Section 7.01(c) shall not be available to the party seeking to terminate if any
action of such party or the failure of such party to perform any of its obligations under this
Agreement required to be performed at or prior to the Effective Time has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before the Termination Date and such
action or failure to perform constitutes a breach of this Agreement;



     (d) by the Company (i) if there shall have been a breach of any representation, warranty,
covenant or agreement on the part of TAS contained in this Agreement such that the conditions set
forth in Sections 6.03(a) or 6.03(b) would not be satisfied and, in either such case, such breach
is not capable of being cured or, if capable of being cured, shall not have been cured prior to the
Termination Date; provided that the Company shall not have the right to terminate this Agreement
pursuant to this Section 7.01(d)(i) if the Company is then in material breach of any of its
covenants or agreements contained in this Agreement or (ii) if prior to the obtaining of the
Company Stockholder Approval (A) the Company shall have received a Superior Proposal, (B) the
Company, the Company Board and the Special Committee shall have complied in all material respects
with Sections 5.01 and 5.06 (including Section 5.06(d)) and (C) TAS shall have received payment of
the Company Termination Fee and TAS Expenses;



     (e) by TAS (i) if there shall have been a breach of any representation, warranty, covenant or
agreement on the part of the Company contained in this Agreement such that the conditions set forth
in Sections 6.02(a) or 6.02(b), would not be satisfied and, in any such case, such breach is not
capable of being cured or, if capable of being cured, shall not have been cured prior the
Termination Date; provided that TAS shall not have the right to terminate this Agreement pursuant
to this Section 7.01(e)(i) if TAS is then in material breach of any of its covenants or agreements
contained in this Agreement, (ii) if the Company Board shall have made a Change in Company
Recommendation; or (iii) if at any time after the date of this Agreement the conditions set forth
in Sections 6.02(d), (e) or (f) shall not be satisfied and in any such case (A) such failure shall
not be cured by the Company within five (5) business days following written notice by TAS delivered
to the Company describing in reasonable detail such failure and (B) TAS is not then in material
breach of any of its covenants or agreements contained in this Agreement; or



     (f) by the Company if, upon a vote taken thereon at the Stockholders Meeting or any
postponement or adjournment thereof, this Agreement shall not have been adopted by the holders of
at least a majority in combined voting power of the outstanding Shares.



 - 44 -









 





     SECTION 7.02. Effect of Termination. In the event of the termination of this Agreement
pursuant to Section 7.01, this Agreement shall forthwith become void, and there shall be no
liability under this Agreement on the part of any party hereto, except:



     (a) as set forth in Section 7.03; and




     (b) except as set forth in Section 7.03, nothing herein shall relieve any party from liability
for fraud or for any willful breach of any of its representations, warranties, covenants or
agreements set forth in this Agreement prior to such termination.



The terms of this Section 7.02, Section 1.10(c), 7.03, and Article VIII, shall survive any
termination of this Agreement.



     SECTION 7.03. Fees and Expenses.



     (a) Generally. Except as otherwise expressly set forth in this Agreement, all fees
and expenses incurred in connection with the Transactions shall be paid by the party incurring such
expenses, whether or not the Merger is consummated. “Expenses” includes all reasonable
out-of-pocket expenses (including all fees and expenses of financing sources, counsel, accountants,
investment bankers, experts and consultants to a party hereto and its affiliates) incurred by or on
behalf of a party or its prospective financing sources in connection with or related to the
authorization, preparation, negotiation, execution and performance of this Agreement.



     (b) Company Termination Fee and TAS Expenses.



     (i) In the event that this Agreement is terminated by TAS pursuant to Section 7.01(e)(ii),
then the Company shall pay $750,000 (such amount, the “Company Termination Fee”) to TAS or as
directed by TAS plus the TAS Expenses to TAS or as directed by TAS, as promptly as reasonably
practicable (and in any event within five Business Days following such termination), payable by
wire transfer of immediately available funds.



     (ii) In the event that (a) this Agreement is terminated (A) by TAS pursuant to Section
7.01(e)(i) or (B) by TAS or the Company pursuant to Section 7.01(c), then the Company shall
reimburse TAS for all Expenses incurred by or on behalf of TAS and its Affiliates as of the time of
such reimbursement (the “TAS Expenses”), as promptly as reasonably practicable following delivery
of reasonable documentation thereof (and, in any event, within five Business Days following
delivery of such documentation), payable by wire transfer of immediately available funds, provided
that the aggregate amount of TAS Expenses paid pursuant to this Agreement will not exceed
$1,000,000.



     (iii) In the event that (a) this Agreement is terminated (A) by TAS pursuant to Section
7.01(e)(i), and, at any time after the date of this Agreement and prior to the event giving rise to
TAS’s right to terminate under Section 7.01(e)(i), an Acquisition Proposal shall have been publicly
disclosed or otherwise communicated to the Company Board or the Special Committee, or (B) by TAS or
the Company pursuant to Section 7.01(c), and at any time after the date of this Agreement and prior
to the termination of this Agreement, an Acquisition Proposal shall have been publicly disclosed or
otherwise communicated to the Company Board or the Special Committee and (b) within eight (8)
months after such termination, the Company enters into an



 - 45 -









 







agreement in respect of any Competing Transaction, which Competing Transaction is thereafter
consummated, then the Company shall pay to TAS the Company Termination Fee (minus the amount, if
any, previously paid pursuant to Section 7.03(b)(ii)) by wire transfer of immediately available
funds, on the date of the consummation of the Competing Transaction; provided that, for purpose of
this Section 7.03(b)(iii), the term “Competing Transaction” shall have the meaning assigned to such
term in Section 5.06(f), except that the references to “20%” shall be deemed to be references to
“50%”.



     (iv) The payment of the Company Termination Fee and the TAS Expenses in accordance with this
Section 7.03(b) shall constitute the sole and exclusive remedy of TAS for any and all damages
arising under or in connection with any breach of any representation, warranty, covenant or
agreement on the part of the Company contained in this Agreement. Except as provided in this
Section 7.03(b), in no event shall TAS and its Affiliates or any party acting on behalf of TAS or
its Affiliates, (i) seek to obtain any recovery or judgment in connection with any breach of any
representation, warranty, covenant or agreement on the part of the Company contained this Agreement
or (ii) be entitled to seek or obtain any other damages of any kind, including, without limitation,
consequential, indirect or punitive damages, in connection with any breach of any representation,
warranty, covenant or agreement on the part of the Company contained in this Agreement. The parties
acknowledge that the Company Termination Fee and the TAS Expenses together constitute a reasonable
estimate of the damages that will be suffered by reason of any action or omission giving rise to a
right of payment of the Company Termination Fee and/or the TAS Expenses.



     (v) The payment of money damages not to exceed $1,750,000 shall constitute the sole and
exclusive remedy of the Company for any and all damages arising under or in connection with any
breach of any representation, warranty, covenant or agreement on the part of TAS or its Affiliates
contained in or contemplated by this Agreement. Except as provided in this Section 7.03(b), in no
event shall the Company and its Affiliates or any party acting on behalf of the Company or its
Affiliates, (i) seek to obtain any recovery or judgment in connection with any breach of any
representation, warranty, covenant or agreement on the part of the TAS and its Affiliates contained
or contemplated by this Agreement or (ii) be entitled to seek or obtain any other damages of any
kind, including, without limitation, consequential, indirect or punitive damages, in connection
with any breach of any representation, warranty, covenant or agreement on the part of TAS and its
Affiliates contained in or contemplated by this Agreement. The parties acknowledge that the sum of
$1,750,000 constitutes a reasonable estimate of maximum amount of damages that will be suffered by
the Company and its Affiliates by reason of any action or omission of TAS or its Affiliates arising
out of or relating to this Agreement.



     (c) Acknowledgement. Each of the Company and TAS acknowledges that the agreements
contained in this Section 7.03 are an integral part of the transactions contemplated by this
Agreement. In the event that the Company shall fail to pay the Company Termination Fee or TAS
Expenses when due, the Company shall reimburse TAS for all reasonable costs and expenses actually
incurred or accrued by TAS (including reasonable fees and expenses of counsel) in connection with
the collection under and enforcement of this Section 7.03.



     SECTION 7.04. Amendment. This Agreement may be amended by the parties hereto by action taken
by or on behalf of their respective Boards of Directors (subject, in the case of the Company, to
the prior recommendation of the Special Committee) at any time prior to the



 - 46 -









 







Effective Time. However, after the approval and adoption of this Agreement and the
Transactions by the stockholders of the Company, no amendment of the type described in the proviso
to the second sentence of Section 251(d) of the DGCL shall be made unless the Company shall have
obtained such consents as may be required by the DGCL. This Agreement may not be amended except by
an instrument in writing signed by each of the parties hereto.



     SECTION 7.05. Waiver. At any time prior to the Effective Time, any party hereto may:



     (a) extend the time for the performance of any obligation or other act of any other party
hereto;



     (b) waive any inaccuracy in the representations and warranties of any other party contained
herein or in any document delivered pursuant hereto; and



     (c) waive compliance with any agreement of any other party or any condition to its own
obligations contained herein.



Any such extension or waiver shall be valid if set forth in an instrument in writing signed by the
party or parties to be bound thereby.



ARTICLE VIII




GENERAL PROVISIONS




     SECTION 8.01. Non-Survival of Representations and Warranties. The representations and
warranties in this Agreement and in any certificate delivered pursuant hereto shall terminate at
the Effective Time or upon the termination of this Agreement pursuant to Section 7.01, as the case
may be.



     SECTION 8.02. Company Stock Purchase. The Company has agreed to issue to the TAS Stockholders
up to 2,400,000 shares of Common Stock pursuant to the Agreement dated July 31, 2006 between the
Company, TAS and the TAS Stockholders (the “Conversion Agreement”) (subject to adjustment as
provided therein) at a price of $2.50 per share (the “Stock Conversion Price”), upon conversion of
the Term C Loan (the “Company Stock Purchase”). The right of the TAS Stockholders to purchase
shares of Common Stock pursuant to the Conversion Agreement is subject to the condition that all
required filings with the SEC by the Company, TAS, the TAS Stockholders and their respective
Affiliates shall have been made, and all related deliveries of documents to the stockholders of the
Company and the passage of notice periods required under 13(e) of the Exchange Act and the rules
and regulations thereunder shall have occurred. The Company covenants and agrees to comply with
Section 5.03 of this Agreement with respect to such matters before the SEC, and agrees that any
breach of the Conversion Agreement by the Company shall constitute a breach of this Agreement as
well.



     SECTION 8.03. Notices. All notices, requests, claims, demands and other communications
hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon
receipt) by delivery in person, by facsimile transmissions between the hours of 9:00 A.M. and 5:00
P.M. in the recipient party’s time zone, or by registered or certified



 - 47 -









 







mail (postage prepaid, return receipt requested) or recognized overnight courier to the
respective parties at the following addresses (or at such other address for a party as shall be
specified in a notice given in accordance with this Section 8.03):



	 	 	 	 	 
	 

	 	if to TAS:
	 	TAS Holding, Inc
	 

	 	 	 	c/o Cawthron, Womack & Coker, P.C.
	 

	 	 	 	First Waco Center
	 

	 	 	 	1700 N. Valley Mills Drive
	 

	 	 	 	P. O. Box 8256
	 

	 	 	 	Waco, TX 76714
	 

	 	 	 	Telephone No.: (817) 776-3871
	 

	 	 	 	Facsimile No.: (254) 776-4346
	 

	 	 	 	Attention: John Cawthron
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Bracewell & Giuliani LLP
	 

	 	 	 	500 N. Akard Street, Suite 4000
	 

	 	 	 	Dallas, TX 75201
	 

	 	 	 	Telephone No.: (214) 758-1000
	 

	 	 	 	Facsimile No.: (214) 758-1010
	 

	 	 	 	Attention: Michael W. Tankersley
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Beard, Kultgen, Brophy, Bostwick &
	 

	 	 	 	Dickson, LLP
	 

	 	 	 	Central Tower
	 

	 	 	 	5400 Bosque Boulevard, Suite 301
	 

	 	 	 	Waco, TX 76710
	 

	 	 	 	Telephone No.: (254) 776-5500
	 

	 	 	 	Facsimile No.: (254) 776-3591
	 

	 	 	 	Attention: Richard E. Brophy, Jr.
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Schulte Roth & Zabel, LLP
	 

	 	 	 	919 Third Avenue
	 

	 	 	 	New York NY 10022
	 

	 	 	 	Telephone No.: (212) 756-2000
	 

	 	 	 	Facsimile No.: (212) 593-5955
	 

	 	 	 	Attention: Peter J. Halasz
	 
	 	 	 	 
	 

	 	if to the Company:
	 	TIMCO Aviation Services, Inc.
	 

	 	 	 	623 Radar Road
	 

	 	 	 	Greensboro, NC 27410
	 

	 	 	 	Telephone No.: (336) 668-4410
	 

	 	 	 	Facsimile No: (336) 337-1867
	 

	 	 	 	Attention: Chairman, CEO and CFO
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Akerman Senterfitt
	 

	 	 	 	One Southeast Third Avenue, 28th Floor
	 

	 	 	 	Miami, FL 33131
	 

	 	 	 	Telephone No.: (305) 982-5604






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	 	 	 	Facsimile No: (305) 374-5095
	 

	 	 	 	Attention: Philip B. Schwartz
	 
	 	 	 	 
	 

	 	with a copy to:
	 	Richards, Layton & Finger, P.A.
	 

	 	 	 	One Rodney Square
	 

	 	 	 	P. O. Box 551
	 

	 	 	 	Wilmington, DE 19899
	 

	 	 	 	Telephone No.: (302) 658-6500
	 

	 	 	 	Facsimile No.: (302) 658-6548
	 

	 	 	 	Attention: Mark Gentile






     SECTION 8.04. Certain Definitions.



     (a) For purposes of this Agreement:


“Affiliate” of a specified Person means a Person who, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, such specified Person.



“Business Day” means any day on which the principal offices of the SEC in Washington, D.C. are open
to accept filings, or, in the case of determining a date when any payment is due, any day on which
banks are authorized or required by Law to close in the City of Dallas, Texas.



“Code” means the United States Internal Revenue Code of 1986, as amended including any successor
provisions and transition rules, whether or not codified.



“Closing Material Adverse Effect” shall mean that (i) Delta Airlines, Inc. shall have given the
Company written notice of its intention to terminate substantially all of the engineering projects
pending at the time of such notice, including a request for the return of the related deposits or
(ii) United Airlines, Inc. shall have given the Company written notice of its intention to
terminate substantially all of its business that it sends to the Company’s MRO services.



“Company Material Adverse Effect” means any event, circumstance, change or effect that is
materially adverse to the business, financial condition or results of operations of the Company and
its Subsidiaries taken as a whole provided that none of the following shall constitute or shall be
considered in determining whether there has occurred a Company Material Adverse Effect;




     (i) general economic conditions worldwide, in the United States, or in any nation or region in
which the Company or any of its Subsidiaries has a substantial presence or operations;



     (ii) any acts of terrorism not directed at the Company or any outbreak of war;



     (iii) the public announcement by the Parties of this Agreement, the pendency of the Merger or
the other transactions contemplated hereby, or any action taken which is required by this Agreement
or specifically requested by TAS or its stockholders or consented to by TAS or its stockholders, in
each case including losses of employees or any stockholder litigation arising from or relating to
the Merger;



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     (iv) factors generally affecting the industries or markets in which the Company and its
Subsidiaries operate;



     (v) changes in Law not specifically directed at the Company or its Subsidiaries or generally
accepted accounting principles or the interpretation thereof not specifically directed at the
Company or its Subsidiaries;



     (vi) any failure by the Company to meet any Company or published securities analyst estimates
of revenues or earnings for any period ending on or after the date of this Agreement and prior to
the Closing;



     (vii) a decline in the trading price or change in trading volume of the Company Common Stock.


“Company Required Consents” means all consents, authorizations and approvals the failure to obtain
in connection with the execution and delivery by the Company of this Agreement and the consummation
of the Transactions by the Company, would, individually or in the aggregate, reasonably be expected
to have a Company Material Adverse Effect.



“Control” (including the terms “controlled by” and “under common control with”) means the
possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the
direction of the management and policies of a Person, whether through the ownership of voting
securities, as trustee or executor, by contract or credit arrangement or otherwise.



“Environmental Law” means any Law relating to: (A) the protection, investigation, remediation, or
restoration of the environment or natural resources, (B) the handling, use, storage, treatment,
disposal, release or threatened release of any hazardous substance, (C) noise, odor, pollution,
contamination, land use, any injury or threat of injury to persons or property, or (D) the
protection of the health and safety of employees or the public.



“Exchange Act” means the Securities Exchange Act of 1934, as amended.



“Knowledge of the Company” and the “Company’s Knowledge” and words of similar import means the
actual knowledge (after due inquiry) of John Cawthron, Ron Utecht, Jim Tate, Kevin Carter or
Elizabeth Mehaffey.



“TAS Material Adverse Effect” means any event, circumstance, change or effect that, individually or
in the aggregate with all other events, circumstances, changes and effects, is or is reasonably
likely to prevent or materially impede, interfere with, hinder, or delay the consummation by TAS
of the transactions contemplated by this Agreement.



“Person” means an individual, corporation, partnership, limited partnership, limited liability
company, person (including, without limitation, a “person” as defined in Section 13(d)(3) of the
Exchange Act), trust, association or entity or government, political subdivision, agency or
instrumentality of a government.



“Representative” means, with respect to any Person, such the officers, directors, employees,
accountants, auditors, attorneys, consultants, legal counsel, agents, investment bankers, financial


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advisors and other representatives of such Person and of such Person’s anticipated sources of
financing.



“Subsidiary” or “Subsidiaries” when used with respect to any party, shall mean any corporation or
other organization, whether incorporated or unincorporated, at least a majority of the securities
or other interests of which by their terms ordinary voting power to elect a majority of the Board
of Directors or others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by any one or more of
its subsidiaries, or by such party and one or more of its subsidiaries.



“Tax Returns” means in respect of any Tax, any return, declaration, report, election, estimate
claim for refund or information return or other statement, form or disclosure filed or required to
be filed with any Governmental Authority or taxing authority, including any schedule or attachment
thereto, and including any amendment thereof.



“Tax” or “Taxes” shall mean (i) any and all federal, state, provincial, local, foreign and other
taxes, assessments, fees, levies, duties, tariffs, customs, imposts and other governmental charges
of any kind (together with any and all interest, penalties, assessments additions to tax and
additional amounts imposed with respect thereto) imposed in connection therewith or by any
Governmental Authority or taxing authority, including, without limitation: taxes or other charges
on or with respect to income, capital gains franchise, windfall or other profits, gross receipts,
real or personal property, sales, goods and services use, capital stock, branch payroll,
employment, social security (or similar), workers’ compensation, utility, severance, production,
occupation, premium, unemployment compensation or net worth’s-taxes or other charges in the nature
of excise, withholding, ad valorem, stamp, transfer, value-added or gains taxes; license,
registration and documentation fees; customs duties; tariffs and similar charges, (ii) any
liability for payment of amounts described in clause (i) whether as a result of transferee
liability, of being a member of an affiliated, consolidated, combined or unitary group for any
period, or otherwise through operation of Law, and (iii) any liability for the payment of amounts
described in clause (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation
agreement or any other express or implied agreement to indemnify any other person.




     (b) The following terms have the meaning set forth in the Sections set forth below:



	 	 	 
	Defined Term	 	Location of definition
	90% Threshold
	 	Section 5.04
	 
	 	 
	Acquisition Proposal
	 	Section 5.06(a)(i)
	 
	 	 
	Action
	 	Section 2.08
	 
	 	 
	Adverse Recommendation Notice
	 	Section 5.06(d)
	 
	 	 
	Affiliate Transaction
	 	Section 2.22(a)
	 
	 	 
	Agreement
	 	Preamble






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	Defined Term	 	Location of definition
	Assignee
	 	Section 5.02(c)
	 
	 	 
	Certificate of Merger
	 	Section 1.03
	 
	 	 
	Certificates
	 	Section 1.10(d)
	 
	 	 
	Change in the Company Recommendation
	 	Section 5.06(d)
	 
	 	 
	CIT Debt
	 	Recitals
	 
	 	 
	CIT Financing Agreement
	 	Section 6.02(d)
	 
	 	 
	Closing
	 	Section 1.02
	 
	 	 
	Closing Date
	 	Section 1.02
	 
	 	 
	COBRA
	 	Section 2.09(a)
	 
	 	 
	Company
	 	Recitals
	 
	 	 
	Company Board
	 	Recitals
	 
	 	 
	Company Common Stock
	 	Section 1.07(a)
	 
	 	 
	Company Convertible Debt
	 	Section 1.08(b)(v)
	 
	 	 
	Company Disclosure Schedule
	 	ARTICLE II
	 
	 	 
	Company Permits
	 	Section 2.15
	 
	 	 
	Company Recommendation
	 	Section 2.04(c)
	 
	 	 
	Company SEC Reports
	 	Section 2.06(a)(iv)
	 
	 	 
	Company Software
	 	Section 2.16(e)
	 
	 	 
	Company Stock Option
	 	Section 1.08(a)(ii)
	 
	 	 
	Company Stock Plans
	 	Section 1.08(a)(i)
	 
	 	 
	Company Stock Purchase
	 	Section 8.02
	 
	 	 
	Company Stock Purchase Right
	 	Section 1.08(b)(ii)
	 
	 	 
	Company Stockholder Approval
	 	Section 2.04






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	Defined Term	 	Location of definition
	Company Termination Fee
	 	Section 7.03(b)(i)
	 
	 	 
	Competing Transaction
	 	Section 5.06(f)
	 
	 	 
	Conversion Agreement
	 	Section  8.02
	 
	 	 
	Copyrights
	 	Section 2.16(e)
	 
	 	 
	Costs
	 	Section 5.07(a)
	 
	 	 
	DGCL
	 	Recitals
	 
	 	 
	Dissenting Shares
	 	Section 1.09(a)
	 
	 	 
	Effective Time
	 	Section 1.03
	 
	 	 
	ERISA
	 	Section 2.09(a)
	 
	 	 
	Escrow Agent
	 	Section 1.10(a)
	 
	 	 
	Escrow Agreement
	 	Section 1.10(a)
	 
	 	 
	Expenses
	 	Section 7.03(a)
	 
	 	 
	GAAP
	 	Section 2.06(b)
	 
	 	 
	Governmental Authority
	 	Section 2.05(b)
	 
	 	 
	HIPAA
	 	Section 2.09(b)
	 
	 	 
	HSR Act
	 	Section 2.05(b)
	 
	 	 
	Indemnified Directors and Officers
	 	Section 5.07(a)
	 
	 	 
	Information Statement
	 	Section 5.03(a)
	 
	 	 
	Intellectual Property Rights
	 	Section 2.16(e)
	 
	 	 
	Law
	 	Section 2.05(a)(ii)
	 
	 	 
	LJH
	 	Section 3.09
	 
	 	 
	LJH Shares
	 	Section 3.09
	 
	 	 
	LJH Warrant
	 	Section 1.08(b)(i)(B)
	 
	 	 
	Material Contracts
	 	Section 2.12(a)






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	Defined Term	 	Location of definition
	Material Leased Real Property
	 	Section 2.10(b)
	 
	 	 
	Maximum Premium
	 	Section 5.07(c)
	 
	 	 
	Meeting Commencement Date
	 	Section 5.01
	 
	 	 
	Merger
	 	Recitals
	 
	 	 
	Monroe Debt
	 	Recitals
	 
	 	 
	Notice of Superior Proposal
	 	Section 5.06(c)
	 
	 	 
	Option Consideration
	 	Section 1.08(b)
	 
	 	 
	Order
	 	Section 6.01(b)
	 
	 	 
	Owl Creek Entities
	 	Section 3.09
	 
	 	 
	Owl Creek Shares
	 	Section 3.09
	 
	 	 
	Owned Real Property
	 	Section 2.10(b)
	 
	 	 
	Patents
	 	Section 2.16(e)
	 
	 	 
	Paying Agent
	 	Section 1.10(b)
	 
	 	 
	Per Share Merger Consideration
	 	Section 1.07(a)
	 
	 	 
	Plans
	 	Section 2.09(a)
	 
	 	 
	Post-Signing Returns
	 	Section 4.03(a)
	 
	 	 
	Proxy Statement
	 	Section 5.03(a)
	 
	 	 
	Proxy/Information Statement
	 	Section 5.03(a)
	 
	 	 
	Purchase Right Consideration
	 	Section 1.08(b)(ii)
	 
	 	 
	Real Property
	 	Section 2.10(c)
	 
	 	 
	Restructuring Agreement
	 	Recitals
	 
	 	 
	Sarbanes-Oxley Act
	 	Section 2.06(c)
	 
	 	 
	SEC
	 	Section 1.10(b)
	 
	 	 
	Securities Act
	 	Section 2.05(b)






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	Defined Term	 	Location of definition
	Shares
	 	Section 1.07(a)
	 
	 	 
	Special Committee
	 	Recitals
	 
	 	 
	Stockholders’ Meeting
	 	Section 5.01(i)
	 
	 	 
	Stock Conversion Price
	 	Section 8.02
	 
	 	 
	Superior Proposal
	 	Section 5.06(g)
	 
	 	 
	Surviving Corporation
	 	Section 1.01
	 
	 	 
	Surviving Corporation Shares
	 	Section 1.07(c)
	 
	 	 
	Takeover Provision
	 	Section 5.10
	 
	 	 
	TAS
	 	Preamble
	 
	 	 
	TAS Expenses
	 	Section 7.03(b)(ii)
	 
	 	 
	TAS Shares
	 	Section 3.09
	 
	 	 
	TAS Stockholders
	 	Section 3.09
	 
	 	 
	Term C Loan
	 	Preamble
	 
	 	 
	Termination Date
	 	Section 7.01(c)
	 
	 	 
	Trademarks
	 	Section 2.16(e)
	 
	 	 
	Transactions
	 	Section 2.04(a)






     SECTION 8.05. Severability. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law, or public policy, all other conditions
and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions is not affected in any manner materially adverse to
any party. Upon such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable manner in order that
the Transactions be consummated as originally contemplated to the fullest extent possible.



     SECTION 8.06. Entire Agreement; Assignment. This Agreement, including all exhibits, annexes
and schedules hereto, and the Transaction Documents constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all prior



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agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject
matter hereof.



     SECTION 8.07. Parties in Interest. This Agreement shall be binding upon and inure solely to
the benefit of each party hereto, and nothing in this Agreement, express or implied, is intended to
or shall confer upon any other Person any right, benefit or remedy of any nature whatsoever under
or by reason of this Agreement, other than as provided in Section 7.03(b)(iv) and, following the
Effective Time, Section 5.07 (which is intended to be for the benefit of the Persons covered
thereby and may be enforced by such Persons).



     SECTION 8.08. Specific Performance. The parties hereto agree that irreparable damage would
occur in the event any provision of this Agreement were not performed in accordance with the terms
hereof and that the parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at Law or equity.



     SECTION 8.09. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Delaware applicable to contracts executed in and to be performed in
that State, without giving effect to any other choice of Law or conflict of Law provision or rule
(whether of the State of Delaware or otherwise). The parties hereto hereby:



     (a) submit to the exclusive jurisdiction of any such state or federal court sitting in the
State of Delaware for the purpose of any Action arising out of or relating to this Agreement
brought by any party hereto; and



     (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any
such Action, any claim that it is not subject personally to the jurisdiction of the above-named
courts, that its property is exempt or immune from attachment or execution, that the Action is
brought in an inconvenient forum, that the venue of the Action is improper, or that this Agreement
or the Transactions may not be enforced in or by any of the above-named courts.



     SECTION 8.10. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
ACTION, SUIT OR PROCEEDING ARISING OUT OF THIS AGREEMENT.



     SECTION 8.11. Headings. The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or interpretation of this
Agreement.



     SECTION 8.12. Counterparts. This Agreement may be executed and delivered (including by
facsimile transmission) in one or more counterparts, and by the different parties hereto in
separate counterparts, each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.



     SECTION 8.13. Interpretation. The words “hereof”, “herein” and “hereunder” and words of like
import used in this Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. The captions herein are included for convenience of



 - 56 -









 







reference only and
shall be ignored in the construction or interpretation hereof. References to Articles and Sections
are, unless otherwise indicated, references to Articles and Sections of this Agreement. Any
singular term in this Agreement shall be deemed to include the plural, and any plural term the
singular. Whenever the words “include”, “includes” or “including” are used in this Agreement, they
shall be deemed to be followed by the words “without limitation”, whether or not they are in fact
followed by those words or words of like import. References to any statute are to that statute as
amended from time to time, and to the rules and regulations promulgated thereunder, and, in each
case, to any successor statute, rules or regulations thereto.



     IN WITNESS WHEREOF, TAS and the Company have caused this Agreement to be executed as of the
date first written above by their respective officers thereunto duly authorized.



[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]





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	 	 	TAS HOLDING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John R. Cawthron	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	John R. Cawthron	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	President	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	TIMCO AVIATION SERVICES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Ronald Utecht	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Ronald Utecht	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	President	 	 
	 

	 	 	 	 	 	 






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