EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
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AMONG
RDI ACQUISITION CORP.,
HEICO AEROSPACE HOLDINGS CORP.,
HEICO CORPORATION,
ROGERS-DIERKS, INC.,
WILLIAM ROGERS AND JOHN DIERKS
DECEMBER 4, 1998
TABLE OF CONTENTS
PAGE
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ARTICLE I. - SALE AND PURCHASE OF ASSETS..................................1
1.01 Sale and Purchase of Assets.................................1
1.02 Payment for Assets..........................................3
1.03 Purchase Price Adjustment...................................3
1.04 Closing Date Balance Sheet..................................4
1.05 Disputes....................................................4
1.06 Earn-Out....................................................4
1.07 Facilitation Fee............................................6
ARTICLE II. - CLOSING 6
2.01 Closing.....................................................6
2.02 Deliveries by Seller........................................6
2.03 Deliveries by Buyer.........................................6
2.04 Termination in Absence of Closing...........................6
ARTICLE III. - REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
SHAREHOLDERS ............................................7
3.01 Corporate Existence and Qualification.......................7
3.02 Authority, Approval and Enforceability......................7
3.03 Capitalization and Corporate Records........................8
3.04 No Shareholder Defaults or Consents.........................8
3.05 No Company Default or Consents..............................8
3.06 No Proceedings..............................................9
3.07 Employee Benefit Matters....................................9
3.08 Financial Statements; Liabilities; Accounts Receivable.....11
3.09 Absence of Certain Changes.................................12
3.10 Compliance with Laws.......................................13
3.11 Litigation.................................................13
3.12 Ownership of Company Assets................................13
3.13 Commitments................................................15
3.14 Insurance..................................................16
3.15 Inventories................................................16
3.16 Equipment and Other Tangible Property......................16
3.17 Permits; Environmental Matters.............................16
3.18 [Intentionally Deleted]....................................17
3.19 Suppliers and Customers....................................17
3.20 Absence of Certain Business Practices......................17
3.21 Products and Services......................................18
3.22 Transactions With Affiliates...............................18
3.23 Other Information..........................................18
3.24 Investment Representations.................................19
ARTICLE IV. - REPRESENTATIONS AND WARRANTIES OF BUYER AND HEICO
AEROSPACE................................................19
4.01 Corporate Existence and Qualification......................19
4.02 Authority, Approval and Enforceability.....................20
4.03 No Default or Consents.....................................20
4.04 No Proceedings.............................................20
4.05 Authorization and Issuance of Shares.......................20
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ARTICLE V. - OBLIGATIONS PRIOR TO CLOSING.................................21
5.01 Buyer's Access to Information and Assets...................21
5.02 Company's Conduct of Business and Operations...............21
5.03 General Restrictions.......................................21
5.04 Notice Regarding Changes...................................22
5.05 Preferential Purchase Rights...............................23
5.06 Ensure Conditions Met......................................23
5.07 Name Change................................................23
5.08 Environmental Assessment...................................23
5.09 Survey.....................................................24
5.10 Casualty Loss..............................................24
5.11 Employee Matters...........................................24
5.12 Payoff and Estoppel Letters................................25
ARTICLE VI. - CONDITIONS TO SELLER'S AND BUYER'S OBLIGATIONS..............25
6.01 Conditions to Obligations of the Seller....................25
6.02 Conditions to Obligations of Buyer.........................26
ARTICLE VII.- POST-CLOSING OBLIGATIONS...................................27
7.01 Further Assurances.........................................27
7.02 Publicity..................................................27
7.03 Indemnification............................................28
7.04 Non-Competition............................................28
7.05 Delivery of Property Received by the Company After Closing.29
7.06 Buyer Appointed Attorney for the Company...................29
7.07 Assignment of Contracts....................................30
7.08 Investment Representation Letter...........................30
ARTICLE VIII.- TAX MATTERS................................................30
8.01 Representations and Obligations Regarding Taxes............30
8.02 Indemnification for Taxes..................................31
ARTICLE IX. - MISCELLANEOUS...............................................32
9.01 Limitation on Liability....................................32
9.02 Confidentiality............................................33
9.03 Brokers....................................................34
9.04 Costs and Expenses.........................................34
9.05 Notices....................................................34
9.06 No Negotiations............................................35
9.07 Governing Law..............................................36
9.08 Representations and Warranties.............................36
9.09 Entire Agreement; Amendments and Waivers...................36
9.10 Binding Effect and Assignment..............................36
9.11 Remedies...................................................36
9.12 Interest on Overdue Payments...............................37
9.13 Withholding of Payments....................................37
9.14 Exhibits and Schedules.....................................37
9.15 Multiple Counterparts......................................37
9.16 References and Construction................................38
9.17 Survival...................................................38
9.18 Attorneys'Fees.............................................38
9.19 Risk of Loss...............................................38
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ARTICLE X. - DEFINITIONS.................................................37
10.01 Affiliate..................................................37
10.02 Collateral Agreements......................................38
10.03 Contracts..................................................38
10.04 Damages....................................................39
10.05 Financial Statements.......................................39
10.06 Governmental Authorities...................................39
10.07 Hazardous Material.........................................39
10.08 Knowledge of the Company...................................39
10.09 Legal Requirements.........................................39
10.10 Net Worth..................................................39
10.11 Permits....................................................40
10.12 Real Property..............................................40
10.13 Regulations................................................40
10.14 Used.......................................................40
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LIST OF SCHEDULES
Schedule 1.01(a)..........................Excluded Assets
Schedule 1.01(c)..........................Additional Assumed Liabilities
Schedule 1.06.............................Overlap Products
Schedule 3.01.............................Qualifications as Foreign Corporation
Schedule 3.03(b)..........................Investments
Schedule 3.04.............................Shareholder Defaults or Consents
Schedule 3.05.............................Company Defaults or Consents
Schedule 3.07(a)..........................Employee Arrangements
Schedule 3.07(c)..........................Benefit Plan Liabilities
Schedule 3.07(e)..........................Current Employees
Schedule 3.08(a)..........................Financial Statements
Schedule 3.08(b)..........................Scheduled Liabilities
Schedule 3.08(c)..........................Accounts Receivable
Schedule 3.09(a)..........................Certain Changes
Schedule 3.09(b)..........................Certain Actions
Schedule 3.10(1)..........................Compliance with Law
Schedule 3.10(2)..........................Citations
Schedule 3.11.............................Litigation
Schedule 3.12(a)..........................Encumbrances
Schedule 3.12(b)..........................Leased Premises Matters
Schedule 3.12(c)..........................Intangible Rights
Schedule 3.12(d)..........................Other Person Authorizations
Schedule 3.13.............................Commitments
Schedule 3.13(c)..........................Non-Arm's Length Contracts
Schedule 3.14.............................Insurance
Schedule 3.15(1)..........................Inventory Condition
Schedule 3.15(2)..........................Inventory Accounting
Schedule 3.16.............................Tangible Company Assets Condition
Schedule 3.17(a)..........................Permits
Schedule 3.17(b)..........................Environmental Claims
Schedule 3.17(c)..........................Storage of Hazardous Materials
Schedule 3.17(d)..........................Noncompliance with Environmental Laws
Schedule 3.19.............................Suppliers and Customers
Schedule 3.21(a)..........................Product Listing
Schedule 3.21(b)..........................Recalls
Schedule 3.22.............................Affiliate Transactions
Schedule 4.03.............................Buyer Defaults or Consents
Schedule 8.01(a)..........................Tax Returns
Schedule 8.01(b)..........................Tax Claims
Schedule 8.01(c)..........................Tax Extensions
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LIST OF EXHIBITS
Exhibit A - Kevin Kelly Employment Agreement........................ A-1
Exhibit B - Opinion of Seller's Counsel............................. B-1
Exhibit C - Blade Furbishing Development Agreement.................. C-1
Exhibit D - Set-Off Escrow Agreement................................ D-1
Exhibit E - Guaranty Agreement...................................... E-1
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ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 4th day of December, 1998, by and among (i) RDI Acquisition
Corp., a Florida corporation (the "Buyer"), (ii) HEICO Aerospace Holdings Corp.,
a Florida corporation and the parent of Buyer ("HEICO Aerospace"), (iii) HEICO
Corporation, a Florida corporation and the majority owner of HEICO Aerospace
("HEICO Corporation"), (iv) Rogers-Dierks, Inc., a Washington corporation
("Seller" or the "Company"), and (v) William Rogers, Trustee of the Rogers
Family Trust, dated October 10, 1989, and John Dierks, Trustee of the John E.
Dierks Living Trust (William Rogers and John Dierks are collectively referred to
as the "Shareholders" and each individually as a "Shareholder").
RECITALS
A. Buyer desires to purchase substantially all of the Seller's assets.
B. The Seller desires to sell and Buyer desires to purchase such assets
for a purchase price of approximately $22.5 million, upon the terms and subject
to the conditions set forth herein.
C. The Shareholders, through their respective trusts, own 100% of
Seller's outstanding capital stock.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties agree as follows:
ARTICLE I. - SALE AND PURCHASE OF ASSETS
1.01 SALE AND PURCHASE OF ASSETS.
(a) On the terms and subject to the conditions of this
Agreement, at the Closing referred to in Section 2.01 hereof, Seller shall sell,
convey, assign, transfer and deliver to Buyer, and Buyer shall purchase, acquire
and accept delivery of, all assets and properties owned or Used by the Company
in connection with its business, except for (i) the Purchase Price and other
rights of the Company under this Agreement, (ii) the Company's corporate minute
book and stock records, (iii) cash and cash equivalents, as well as all
insurance on the lives of the Shareholders, including the cash surrender value
thereof, and (iv) those assets specifically listed on Schedule 1.01(a) (such
specifically listed assets in clauses (i), (ii), (iii) and (iv) being referred
to as the "Excluded Assets"), including without limiting the generality of the
foregoing:
(i) all accounts receivable;
(ii) all raw materials, work-in-process, inventories
and other materials of the Company wherever located and including all
inventory in transit or on order and not yet delivered, and all rights
with respect to the processing and completion of any work-in-process of
the Company, including the right to collect and receive charges for
services performed by the Company with respect thereto;
(iii) all supplies, equipment, vehicles, machinery,
furniture, fixtures, leasehold improvements and other tangible property
Used by the Company in connection with its business, including the
tangible assets listed on Schedule 1.01(a)(iii), and the Company's
(and/or Seller's) interest as lessee in any leases with respect to any
of the foregoing;
(iv) all of the Company's right, title and interest
in and to the Contracts listed or required to be listed on Schedule
3.13 hereto;
(v) all proprietary knowledge, trade secrets,
technical information, computer software and licenses, formulae,
designs and drawings, quality control data, processes (whether secret
or not), methods, inventions and other similar know-how or rights Used
in the conduct of the Company's business, including, but not limited
to, the areas of manufacturing, marketing, advertising and personnel
training and recruitment, together with all other Intangible Rights (as
hereinafter defined) Used in connection with the Company's business,
including all files, manuals, documentation and source and object codes
related thereto;
(vi) all utility, security and other deposits and
prepaid expenses;
(vii) the Company's business as a going concern and
its franchises, Permits and other authorizations of Governmental
Authorities (to the extent such Permits and other authorizations of
Governmental Authorities are transferable) and third parties, licenses,
telephone numbers, customer lists, vendor lists, referral lists and
contracts, advertising materials and data, restrictive covenants,
choses in action and similar obligations owing to the Company from
Seller's present and former shareholders, officers, employees, agents
and others, together with all books, operating data and records
(including financial, accounting and credit records), files, papers,
records and other data of the Company;
(viii) all rights of the Company in and to all
tradenames, trademarks and slogans Used in its business, all variants
thereof and all goodwill associated therewith;
(ix) all rights to real property Used by the Company;
and
(x) all other property and rights of every kind or
nature Used by the Company in the operation of its business.
It is specifically understood and agreed by the parties hereto that the
Buyer is acquiring, and Seller is selling, all of the tangible and intangible
assets attributable to or Used by the Company in its business, except the
Excluded Assets. The aforesaid assets and properties to be transferred to the
Buyer hereunder are hereinafter collectively referred to as the "Assets." The
Purchase Price shall be allocated, apportioned and adjusted among the Assets in
the manner specified in IRS Form 8594 attached as Schedule 1.02 and the parties
agree to abide by such allocations for all tax reporting purposes.
(b) METHOD OF CONVEYANCE. The sale, transfer, conveyance,
assignment and delivery by the Seller of the Assets to the Buyer in accordance
with Section 1.01(a) hereof shall be effected on the Closing Date by Seller's
execution and delivery to the Buyer of one or more Bills of Sale, Assignments
and other conveyance instruments with respect to Seller's transfer of Intangible
Rights, real property interests and other Assets in form and scope reasonably
satisfactory to Buyer (collectively the "Conveyance Documents"). At the Closing,
good, valid and marketable title to all of the Assets shall be transferred,
conveyed, assigned and delivered by the Seller to the Buyer pursuant to the
Conveyance Documents, free and clear of any and all liens, encumbrances,
mortgages, security interests, pledges, claims, equities and other restrictions
or charges of any kind or nature whatsoever except those liens specifically
identified on Schedule 3.12(a) hereto as surviving the Closing.
(c) ASSUMED OBLIGATIONS. At the Closing, the Buyer shall
assume, and shall agree to satisfy and discharge as the same shall become due,
(i) all trade accounts payable and accrued expenses that have been incurred in
the ordinary course of the Company's business, (ii) the Company's liabilities
and other obligations arising subsequent to the Closing under (x) the Contracts
listed on Schedule 3.13, and (y) all other Contracts entered into by the Company
in the ordinary course of the Company's business, in each case to the extent
that the Company's rights thereunder are effectively transferred to
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Buyer at Closing and provided that such Contracts were not required to be listed
on Schedule 3.13, and (iii) the obligations listed on Schedule 1.01(c) hereto
(collectively, the "Assumed Obligations"). Except as expressly set forth in this
paragraph (c), the Buyer shall not assume or be responsible at any time for any
liability, obligation, debt or commitment of the Company, whether absolute or
contingent, accrued or unaccrued, asserted or unasserted, or otherwise,
including but not limited to any liabilities, obligations, debts or commitments
of the Company incident to, arising out of or incurred with respect to, this
Agreement and the transactions contemplated hereby (including any and all sales,
income or other taxes arising out of the transactions contemplated hereby), and
the Seller expressly acknowledges and agrees that the Seller shall retain, and
that Buyer shall not assume or otherwise be obligated to pay, perform, defend or
discharge, (a) any liability of the Company and/or the Shareholders for Taxes
(as hereafter defined), whether measured by income or otherwise, (b) any
liability of the Company in connection with any Plan or Benefit Program or
Agreement (as those terms are defined in Section 3.07 hereof), including,
without limitation, any liability of the Company under ERISA (as hereafter
defined), (c) any liability of the Company under any federal, state or local
law, rule, regulation, ordinance, program, Permit, or other Legal Requirement
relating to health, safety, Hazardous Materials and environmental matters
applicable to the Company's business and/or the facilities Used by the Company
(whether or not owned by the Company), or (d) any product liability pertaining
to products sold or manufactured by the Company prior to the Closing Date. The
Seller further agrees to satisfy and discharge as the same shall become due all
obligations and liabilities of the Company not specifically assumed by the Buyer
hereunder. Buyer's assumption of the Assumed Obligations shall in no way expand
the rights or remedies of third parties against Buyer as compared to the rights
and remedies which such parties would have had against the Company had this
Agreement not been consummated. Notwithstanding the foregoing, Buyer shall
reimburse the Company for 50% of any sales Taxes attributable to the sale of the
Assets pursuant to this Agreement up to a maximum of $20,000.
1.02 PAYMENT FOR ASSETS. As payment for the Assets being acquired by
the Buyer hereunder, Buyer and/or HEICO Aerospace shall deliver to the Seller at
Closing, by official bank check or wire transfer (to an account specified by
Seller in writing at least three business days prior to Closing) in same day
funds (or next day funds if payment is made by official bank check), an amount
equal to $14,134,000 (the "Initial Cash Consideration"). As additional
consideration for such sale, conveyance, assignment, transfer and delivery of
Assets, the Buyer and/or HEICO Aerospace shall deliver to Seller, by official
bank check or wire transfer, the following (the "Deferred Cash Consideration"):
(i) $250,000 on the one-year anniversary of the Closing Date; and (ii) $175,000
on the two-year anniversary of the Closing Date. As additional consideration,
Buyer shall deliver to Seller, no later than six (6) months from the date
hereof, $532,000 (the "Initial Deferred Cash Consideration"). Interest at the
prime rate established from time to time by Citibank, N.A. shall accrue on the
unpaid Initial Deferred Cash Consideration from the Closing Date until full
payment is made. As further consideration for such sale, conveyance, assignment,
transfer and delivery of Assets, the Seller will be entitled to receive
contingent purchase price payments in accordance with the provisions of Section
1.06 (the "Earnout"). The Initial Cash Consideration, the Initial Deferred Cash
Consideration, the Deferred Cash Consideration and the Earnout are referred to
herein collectively as the "Purchase Price." The Purchase Price will also be
subject to adjustment as set forth in Section 1.04, Section 7.03 and Section
8.02.
1.03 PURCHASE PRICE ADJUSTMENT. The Purchase Price shall be reduced or
increased (the "Purchase Price Adjustment") by EITHER adding (x) the excess, if
any, of the Company's Net Worth as of the Closing OVER $1,484,453, OR
subtracting (y) the excess, if any, of $1,484,453 OVER the Company's Net Worth
as of the Closing. The Purchase Price Adjustment, if any, will be paid within 30
days of the final determination of such Purchase Price Adjustment.
1.04 CLOSING DATE BALANCE SHEET. As soon as practical (and in no event
later than 90 days after the Closing Date), Buyer shall cause to be prepared and
delivered to the Seller (i) a balance sheet for the Company dated as of the
Closing Date (the "Closing Date Balance Sheet"), and (ii) a calculation of the
Purchase Price Adjustment, including such schedules and data as may be
appropriate to support such calculation. The Seller and its accountants shall be
entitled to review the Closing Date Balance Sheet,
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Buyer's calculations of the Purchase Price Adjustment and Earnout, and any
working papers, trial balances and similar materials relating to the Closing
Date Balance Sheet and/or the calculation of the Earnout prepared by Buyer or
its accountants. Buyer shall also provide Seller and its accountants with timely
access, during Buyer's normal business hours, to Buyer's personnel, properties,
books and records to the extent related to the determination of the Purchase
Price Adjustment and/or Earnout.
1.05 DISPUTES. The following clauses (i) and (ii) set forth the
procedures for resolving disputes among the parties with respect to the
determination of the Purchase Price Adjustment:
(i) Within thirty (30) days after delivery to the
Seller of Buyer's calculation of the Purchase Price Adjustment pursuant to this
Article I, the Seller may deliver to Buyer a written report (a "Seller's
Report") prepared by the Seller's accountants (the "Seller's Accountants")
advising Buyer either that the Seller's Accountants (A) agree with the Buyer's
calculations of the Purchase Price Adjustment, or (B) deem that one or more
adjustments are required. The costs and expenses of the services of the Seller's
Accountants shall be borne by the Seller. If Buyer's accountants ("Buyer's
Accountants") shall concur with the adjustments proposed by the Seller's
Accountants, or if Buyer shall not object thereto in writing delivered to the
Seller within thirty (30) days after Buyer's receipt of the Seller's Report, the
calculations of the Purchase Price Adjustment set forth in such Seller's Report
shall become final and shall not be subject to further review, challenge or
adjustment absent fraud. If the Seller does not submit a Seller's Report within
the 30-day period provided herein, then the Purchase Price Adjustment as
calculated by Buyer shall become final and shall not be subject to further
review, challenge or adjustment absent fraud.
(ii) In the event that the Seller submits a Seller's
Report and Buyer's Accountants and the Seller's Accountants are unable to
resolve the disagreements set forth in such report within (30) days after the
date of the Seller's Report, then such disagreements shall be referred to a
recognized firm of independent certified public accountants experienced in
auditing manufacturing companies and selected by mutual agreement of the
Seller's Accountants and Buyer's Accountants (the "Settlement Accountants"), and
the determination of the Settlement Accountants shall be final and shall not be
subject to further review, challenge or adjustment absent fraud. The Settlement
Accountants shall use their best efforts to reach a determination not more than
forty-five (45) days after such referral and shall act as an arbitrator to
determine, based solely on presentations by the Seller and the Buyer (and not by
independent review) only those matters which remain in dispute. The costs and
expenses of the services of the Settlement Accountants shall be paid by the
Seller if (A) the difference between (i) the Purchase Price Adjustment resulting
from the determinations of the Settlement Accountants, and (ii) the Purchase
Price Adjustment resulting from the determinations set forth in the Seller's
Report, is greater than (B) the difference between (i) the Purchase Price
Adjustment resulting from the determinations of the Settlement Accountants, and
(ii) the Purchase Price Adjustment resulting from Buyer's calculations as set
forth in the deliveries pursuant to Section 1.04 hereof; otherwise, such costs
and expenses of the Settlement Accountants shall be paid by Buyer.
1.06 EARN-OUT. The amount of the Earnout will equal 96.5% of the amount
by which the Operating Profit for the Company's business acquired pursuant to
this Agreement (the "Business") during the 24 months ending on the second
anniversary of the Closing Date exceeds $0; provided, however, that in no event
will the aggregate Earnout exceed $7,334,000. At the option of the Buyer,
Earnout payments will be paid by either (i) wire transfer of next day funds to
an account or accounts designated by Seller in writing, or (ii) delivery of
certificates representing Class A Common Stock of HEICO Corporation having an
aggregate value equal to the amount of the Earnout (with each share of Class A
Common Stock being valued at the closing price on the American Stock Exchange
for such Class A Common Stock on the third business day prior to the date of the
Earnout is to be paid). Buyer shall notify Seller, in writing, not less than
twenty (20) days prior to the date the Earnout is to be paid of its election to
pay the Earnout in cash or stock. Failure on the part of the Buyer to give such
notice shall be deemed an election to pay the Earnout in cash. If Buyer elects
to pay the Earnout in stock, within ten (10) days of receipt of such notice,
Seller shall notify Buyer, in writing, of its election to receive the stock or
to demand cash in lieu of such
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stock. Failure on the part of the Seller to give such notice shall be deemed an
election to receive the Earnout in cash. Subject to the next sentence, within 15
months of the Closing Date Buyer shall pay Seller the Earnout amount applicable
to the Operating Profit of the Business during the 12-month period ending on the
first anniversary of the Closing Date (up to a maximum of $3,667,000), and the
balance of the Earnout shall be paid by Buyer to Seller not later than the
27-month anniversary of the Closing Date. In the event that Buyer chooses to pay
the Earnout in shares of Class A Common Stock of HEICO Corporation and Seller
timely elects to receive cash in lieu of such stock, Buyer shall have six (6)
months from the date the Earnout was to be paid in which to make a cash payment
to Seller of the Earnout. In the event Seller elects to receive cash in lieu of
stock, interest at the prime rate established from time to time by Citibank,
N.A., shall accrue on the unpaid Earnout from the date the Earnout was due to be
paid until full payment is made. Buyer shall indemnify and hold harmless the
Seller for any increase in Seller's Tax liability directly resulting from
Seller's election to receive stock in lieu of cash. For purposes of this
Agreement, "Operating Profit" means the Net Income of the Business for the
applicable period, PLUS (a) income Taxes deducted in determining Net Income, (b)
any interest (including any interest payable with respect to the Earnout) on
indebtedness incurred to finance the acquisition of the Assets contemplated
hereby (including, without limitation, any original issue discount), (c) any
general and administrative and/or cost of sales "overhead" or similar allocation
by Buyer or its affiliates, unless such costs would have been incurred by the
Company on a stand-alone basis, (d) any depreciation or amortization to the
extent attributable to the purchase accounting "write-up" resulting from the
transactions contemplated hereby and deducted in determining Net Income, and (e)
all expenses related to the transactions contemplated by this Agreement,
including legal, accounting and due diligence expenses, in each case to the
extent deducted in the calculation of Net Income (it being understood that
expenses related to the preparation of the Closing Date Balance Sheet and any
expenses incurred in converting the accounting system of the Seller to that of
the Buyer shall be considered an expense related to the transactions
contemplated by this Agreement). For purposes of this Agreement, "Net Income"
means, for any of the foregoing annual periods, the net income (or loss) of the
Business, determined in accordance with generally accepted accounting principles
consistently applied. Any disputes with respect to the calculation of the
Operating Profit of the Business shall be resolved in accordance with the
procedures contemplated by Section 1.05 hereof (with "Operating Profit" being
substituted for "Purchase Price Adjustment"). Schedule 1.06 hereto sets forth a
listing of certain substantially similar products (the "Substantially Similar
Products") that are currently sold to the same customers by both the Company, on
the one hand, and Buyer and/or its affiliates, on the other (collectively, the
"Overlap Products"), as well as the percentage of units of each such Overlap
Product sold by the Company in relation to the total number of units of each
such product collectively sold by the Company and the Buyer and its affiliates
during the 12 months ended August 31, 1998. Each of Buyer and Seller represents
to the other that Schedule 1.06 accurately sets forth its sales of Overlap
Products during the 12 months ended August 31, 1998. For purposes of calculating
the Earnout, all sales of Overlap Products by Buyer and/or its affiliates during
the 24 month period commencing on the Closing Date (together with all related
expenses) shall be allocated to the Business according to the percentages set
forth opposite each Overlap Product noted on Schedule 1.06 under the heading
"Percentage Gross - Company." In the event that Buyer directs the Company to
manufacture and market all of any of the Substantially Similar Products, or
Buyer itself determines to manufacture and market all of any such Substantially
Similar Products, the allocation of Operating Profit with respect to sales of
such Substantially Similar Product(s) will be calculated as follows: (i) gross
profit and net sales with respect to each Substantially Similar Product will be
allocated to the Buyer and to the Company's Business according to the
percentages set forth on Schedule 1.06 hereto (such percentages being based on
relative unit sales of each such product during the 12 months ended June 30,
1998), and (ii) the party which then no longer makes and distributes the
particular Substantially Similar Product(s) will have its gross profit
determined under (i) above further reduced by the product of (x) the net sales
allocation for such party under (i) above and (y) 11.1% (the Company's general
and administrative "overhead" rate as a percentage of net sales during the
6-month period ended June 30, 1998). In no event shall the operations of the
Business be relocated during the 24-month period commencing on the Closing Date.
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1.07 FACILITATION FEE. In addition to the amounts payable as set forth
above, on or before December 31, 1998, Buyer and/or HEICO Aerospace shall pay to
W. A. Rogers Engineering, Inc., an entity owned by William Rogers, a
facilitation fee for services rendered in connection with the transactions
contemplated by this Agreement in the amount of $100,000.
ARTICLE II. - CLOSING
2.01 CLOSING. Subject to the conditions stated in Article VI of this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
shall be held at 9:00 a.m., Miami time, on December 4, 1998, or, if the
conditions set forth in Section 6.02 have not been satisfied or waived on such
date, no later than seven (7) days after all such conditions shall have been
satisfied or waived, at the offices of Greenberg Traurig, P.A., 1221 Brickell
Avenue, 22nd Floor, Miami, Florida. The date upon which the Closing occurs is
hereinafter referred to as the "Closing Date." The Closing shall be deemed
completed as of 11:59 p.m. Miami time on the night of the Closing Date.
2.02 DELIVERIES BY SELLER. At or prior to the Closing, the Seller shall
deliver to Buyer:
(i) the Conveyance Documents;
(ii) a certificate executed by the Seller to the
effect that the conditions set forth in Sections 6.02(a) and 6.02(d) have been
satisfied; and
(iii) constructive possession of all originals and
copies of agreements, instruments, documents, deeds, books, records, files, tax
returns and other data and information within the possession of the Seller or
any Affiliate of any Seller pertaining to the Company (collectively, the
"Records"); provided, however, that the Seller may retain (1) copies of any tax
returns and copies of Records relating thereto; (2) copies of any Records that
the Seller is reasonably likely to need for complying with requirements of law;
and (3) copies of any Records that in the reasonable opinion of the Seller will
be required in connection with the performance of its obligations under Article
VIII hereof.
2.03 DELIVERIES BY BUYER. At or prior to the Closing, Buyer shall
deliver to Seller.
(i) the Initial Cash Consideration; and
(ii) a certificate executed by an authorized officer
of the Buyer, on behalf of the Buyer, to the effect that the conditions set
forth in Section 6.01(b) have been satisfied.
2.04 TERMINATION IN ABSENCE OF CLOSING.
(a) Subject to the provisions of Section 2.04(b), if by the
close of business on December 31, 1998, the Closing has not occurred, then any
party hereto may thereafter terminate this Agreement by written notice to such
effect, to the other parties hereto, without liability of or to any party to
this Agreement or any shareholder, director, officer, employee or representative
of such party unless the reason for Closing having not occurred is (i) such
party's willful breach of the provisions of this Agreement, or (ii) if all of
the conditions to such party's obligations set forth in Article VI have been
satisfied or waived in writing by the date scheduled for the Closing pursuant to
Section 2.01, the failure of such party to perform its obligations under this
Article II on such date; provided, however, that the provisions of Sections
9.02, 9.03, 9.04, 9.07 and 9.08 shall survive any such termination; and provided
further, however, that any termination pursuant to this Section 2.04 shall not
relieve any party hereto who was responsible for Closing having not occurred as
described in clauses (i) or (ii) above of any liability for (x) such party's
willful breach of the provisions of this Agreement, or (y) if all of the
conditions to such party's obligations set forth in Article VI have been
satisfied or waived in writing by the date scheduled for the Closing
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pursuant to Section 2.01, the failure of such party to perform its obligations
under this Article II on such date.
(b) Buyer shall also have the right to terminate this
Agreement without liability to any party by so notifying the Seller at any time
within fifteen (15) days after the date of this Agreement if, in Buyer's sole
discretion, any Schedule (or any instrument referred to therein) that was not
furnished to Buyer at least ten (10) business days prior to the date of this
Agreement contains or refers to any matter that, or may cause or lead to any
result that, in Buyer's sole discretion and judgment, is adverse to Buyer in any
way; provided, however, that the provisions of Sections 9.02, 9.03, 9.04, 9.07
and 9.08 shall survive any such termination.
(c) Notwithstanding the approval of the Board of Directors of
Buyer, this Agreement and the transactions contemplated herein may be terminated
and abandoned at any time on or prior to the Closing Date by the Buyer if:
(i) any representations or warranties made herein for
the benefit of Buyer, or any certificate, schedule or document furnished to
Buyer pursuant to this Agreement is untrue in any material respect; or
(ii) the Seller shall have defaulted in any material
respect in the performance of any material obligation under this Agreement.
ARTICLE III. - REPRESENTATIONS AND WARRANTIES OF THE SELLER AND THE
SHAREHOLDERS
The Seller and the Shareholders hereby represent and warrant to Buyer
that:
3.01 CORPORATE EXISTENCE AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Washington; the Company has the corporate power to own, manage,
lease and hold its Assets and to carry on its business as and where such Assets
are presently located and such business is presently conducted; and neither the
character of the Company's Assets nor the nature of the Company's business
requires the Company to be duly qualified to do business as a foreign
corporation in any jurisdiction outside those identified in Schedule 3.01
attached hereto, and the Company is qualified as a foreign corporation and in
good standing in each listed jurisdiction.
3.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been
duly executed and delivered by the Company, and the Company has all requisite
power and legal capacity to execute and deliver this Agreement and all
Collateral Agreements executed and delivered or to be executed and delivered in
connection with the transactions provided for hereby, to consummate the
transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. This
Agreement and each Collateral Agreement to which the Company is a party
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of such party, enforceable in accordance with its terms,
except as such enforcement may be limited by general equitable principles or by
applicable bankruptcy, insolvency, moratorium, or similar laws and judicial
decisions from time to time in effect which affect creditors' rights generally.
3.03 CAPITALIZATION AND CORPORATE RECORDS.
(a) All of the issued and outstanding shares of the Company's
capital stock are owned beneficially and of record by the Shareholders, through
their respective trusts, free and clear of any and all liens, mortgages, adverse
claims, charges, security interests, encumbrances or other restrictions or
limitations whatsoever. The copies of the Articles or Certificate of
Incorporation and Bylaws of the
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Company provided to Buyer are true, accurate, and complete and reflect all
amendments made through the date of this Agreement. The Company's minute books
made available to Buyer for review were correct and complete as of the date of
such review, no further entries have been made through the date of this
Agreement, and such minute books contain an accurate record of all material
corporate actions of the shareholders and directors (and any committees thereof)
of the Company taken by written consent or at a meeting since January 1, 1995.
All corporate actions taken by the Company have been duly authorized or
ratified. All accounts, books, ledgers and official and other records of the
Company fairly and accurately reflect all of the Company's transactions,
properties, assets and liabilities.
(b) Except as shown on Schedule 3.03(b) hereto, the Company
does not own, directly or indirectly, any outstanding voting securities of or
other interests in, or controls, any other corporation, partnership, joint
venture or other business entity.
3.04 NO SHAREHOLDER DEFAULTS OR CONSENTS. Except as otherwise set forth
in Schedule 3.04 hereto, the execution and delivery of this Agreement and the
Collateral Agreements by the Company and the Shareholders and the performance by
such parties of their respective obligations hereunder and thereunder will not
violate any provision of law or any judgment, award or decree or any indenture,
agreement or other instrument to which either Shareholder is a party, or by
which Company or any properties or assets of either Shareholder is bound or
affected, or conflict with, result in a breach of or constitute (with due notice
or lapse of time or both) a default under, any such indenture, agreement or
other instrument, in each case except to the extent that such violation, default
or breach could not reasonably be expected to delay or otherwise significantly
impair the ability of the parties to consummate the transactions contemplated
hereby.
3.05 NO COMPANY DEFAULT OR CONSENTS. Except as otherwise set forth in
Schedule 3.05 attached hereto, neither the execution and delivery of this
Agreement nor the carrying out of any of the transactions contemplated hereby
will:
(i) violate or conflict with any of the terms,
conditions or provisions of the charter or bylaws of the Company;
(ii) violate any Legal Requirements applicable to the
Company;
(iii) violate, conflict with, result in a breach of,
constitute a default under (whether with or without notice or the lapse
of time or both), or accelerate or permit the acceleration of the performance
required by, or give any other party the right to terminate, any Contract or
Permit binding upon or applicable to the Company;
(iv) result in the creation of any lien, charge or
other encumbrance on any Assets of the Company; or
(v) require the Company to obtain or make any waiver,
consent, action, approval or authorization of, or registration, declaration,
notice or filing with, any private non-governmental third party or any
Governmental Authority.
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3.06 NO PROCEEDINGS. No suit, action or other proceeding is pending or,
to the Knowledge of the Company, threatened before any Governmental Authority
seeking to restrain the Company or Shareholder or prohibit their entry into this
Agreement or prohibit the Closing, or seeking damages against the Company or its
Assets as a result of the consummation of this Agreement.
3.07 EMPLOYEE BENEFIT MATTERS.
(a) Schedule 3.07(a) provides a description of each of the
following, if any, which is sponsored, maintained or contributed to by the
Company for the benefit of the employees or agents of the Company, or has been
so sponsored, maintained or contributed to at any time since 1992:
(i) each "employee benefit plan", as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA") (including, but not limited to, employee benefit plans, such as
foreign plans, which are not subject to the provisions of ERISA) ("Plan"),
(ii) each personnel policy, employee manual or other
written statements of rules or policies concerning employment, stock option
plan, collective bargaining agreement, bonus plan or arrangement, incentive
award plan or arrangement, vacation and sick leave policy, severance pay policy
or agreement, deferred compensation agreement or arrangement, consulting
agreement, employment contract and each other employee benefit plan, agreement,
arrangement, program, practice or understanding which is not described in
Section 3.07(a)(i) ("Benefit Program or Agreement").
(b) True, correct and complete copies of each of the Plans (if
any), and related trusts, if applicable, including all amendments thereto, have
been furnished to Buyer. There has also been furnished to Buyer, with respect to
each Plan required to file such report and description, the three most recent
reports on Form 5500 and the summary plan description. True, correct and
complete copies or descriptions of all Benefit Programs or Agreements have also
been furnished to Buyer.
(c) Except as otherwise set forth in Schedule 3.07(c),
(i) The Company does not contribute to or have an
obligation to contribute to, and the Company has not at any time contributed to
or had an obligation to contribute to, a multiemployer plan within the meaning
of Section 3(37) of ERISA ("Multiemployer Plan") or a multiple employer plan
within the meaning of Section 413(b) and (c) of the Code.
(ii) The Company has substantially performed all
obligations, whether arising by operation of law or by contract, required to be
performed by it in connection with the Plans and the Benefit Programs and
Agreements, and to the Knowledge of the Company, there have been no defaults or
violations by any other party to the Plans or Benefit Programs or Agreements;
(iii) All reports and disclosures relating to the
Plans required to be filed with or furnished to governmental agencies, Plan
participants or Plan beneficiaries have been filed or furnished in accordance
with applicable law in a timely manner, and each Plan and each Benefit Program
or Agreement has been administered in substantial compliance with its governing
documents;
(iv) Each of the Plans intended to be qualified under
Section 401 of the Code satisfies the requirements of such Section and has
received a favorable determination letter from the Internal Revenue Service
regarding such qualified status and has not, since receipt of the most recent
favorable determination letter, been amended or operated in a way which could
adversely affect such qualified status;
(v) There are no actions, suits or claims pending
(other than routine claims for benefits) or, to the Knowledge of the Company,
threatened against, or with respect to, any of the Plans or Benefit Programs or
Agreements or their assets;
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(vi) All contributions required to be made to the
Plans pursuant to their terms and provisions and applicable law have been made
timely;
(vii) As to any Plan subject to Title IV of ERISA,
there has been no event or condition which presents the material risk of Plan
termination, no accumulated funding deficiency, whether or not waived, within
the meaning of Section 302 of ERISA or Section 412 of the Code has been
incurred, no reportable event within the meaning of Section 4043 of ERISA (for
which the disclosure requirements of Regulation Section 2615.3 promulgated by
the Pension Benefit Guaranty Corporation ("PBGC") have not been waived) has
occurred, no notice of intent to terminate the Plan has been given under Section
4041 of ERISA, no proceeding has been instituted under Section 4042 of ERISA to
terminate the Plan, there has been no termination or partial termination of the
Plan within the meaning of Section 411(d)(3) of the Code, no liability to the
PBGC has been incurred, and the assets of the Plan equal or exceed the aggregate
present value of the benefit liabilities (within the meaning of Section
4001(a)(16) of ERISA) under the Plan, computed on a "plan termination basis"
based upon reasonable actuarial assumptions and the asset valuation principles
established by the PBGC;
(viii) None of the Plans nor any trust created
thereunder or with respect thereto has engaged in any "prohibited transaction"
or "party-in-interest transaction" as such terms are defined in Section 4975 of
the Code and Section 406 of ERISA which could subject any Plan, the Company or
any officer, director or employee thereof to a tax or penalty on prohibited
transactions or party-in-interest transactions pursuant to Section 4975 of the
Code or Section 502(i) of ERISA;
(ix) To the Knowledge of the Company, there is no
matter pending (other than routine qualification determination filings) with
respect to any of the Plans or Benefit Programs or Agreements before the
Internal Revenue Service, the Department of Labor or the PBGC;
(x) Each trust funding a Plan, which trust is
intended to be exempt from federal income taxation pursuant to Section 501(c)(9)
of the Code, satisfies the requirements of such section and has received a
favorable determination letter from the Internal Revenue Service regarding such
exempt status and has not, since receipt of the most recent favorable
determination letter, been amended or operated in a way which would adversely
affect such exempt status.
(xi) The Company does not have any obligation to
provide health benefits to former employees, except as specifically required by
law;
(xii) Neither the execution and delivery of this
Agreement nor the consummation of any or all of the transactions contemplated
hereby will: (A) entitle any current or former employee of the Company to
severance pay, unemployment compensation or any similar payment for which the
Buyer will be responsible, (B) accelerate the time of payment or vesting or
increase the amount of any compensation due to any such employee or former
employee, or (C) directly or indirectly result in any payment made to or on
behalf of any person to constitute a "parachute payment" within the meaning of
Section 280G of the Code;
(xiii) The Company has not incurred any liability or
taken any action, and no action or event has occurred that could cause the
Company to incur any liability (A) under Section 412 of the Code or Title IV of
ERISA with respect to any "single-employer plan" within the meaning of Section
4001(a)(15) of ERISA that is not a Plan, or (B) to any Multiemployer Plan,
including without limitation an account of a partial or complete withdrawal
within the meaning of Sections 4203 and 4205 of ERISA.
(xiv) Since January 31, 1995, there have not been any
(i) work stoppages, labor disputes or other significant controversies between
the Company and its employees, (ii) labor union grievances or organizational
efforts, or (iii) unfair labor practice or labor arbitration proceedings pending
or threatened.
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(d) Except as set forth in Schedule 3.07(a), the Company is
not a party to any agreement, and has not established any policy or practice,
requiring the Company to make a payment or provide any other form or
compensation or benefit to any person performing services for the Company upon
termination of such services which would not be payable or provided in the
absence of the consummation of the transactions contemplated by this Agreement.
(e) Schedule 3.07(e) sets forth by number and employment
classification the approximate numbers of employees employed by the Company as
of the date of this Agreement, and, except as set forth therein, none of said
employees are subject to union or collective bargaining agreements with the
Company.
(f) Neither the Buyer nor any of its Affiliates shall have any
liability or obligations under or with respect to the Workers Adjustment
Retraining Notification Act in connection with any of the transactions
contemplated in connection herewith.
3.08 FINANCIAL STATEMENTS; LIABILITIES; ACCOUNTS RECEIVABLE.
(a) The Company has delivered to Buyer true and complete
copies of Financial Statements with respect to the Company and its business as
of and for the years ended December 31, 1996 and 1997 and as of and for the six
months ended June 30, 1998 (the "Financial Statements"), and said Financial
Statements are attached hereto as Schedule 3.08(a). All of such Financial
Statements present fairly the financial condition and results of operations of
the Company for the dates or periods indicated thereon. Except for the omission
of certain notes and the absence of year-end adjustments (consisting only of
normal recurring adjustments) in the interim Financial Statements, all of such
Financial Statements have been prepared in accordance with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout the
periods indicated. The Financial Statements as of and for the year ended
December 31, 1997 have been audited by Bauch, Firestone, Carmany and Ciolfi, the
Company's independent certified public accountants.
(b) Except for (i) the liabilities reflected on the Company's
June 30, 1998 balance sheet included with the Financial Statements attached as
Schedule 3.08(a), (ii) trade payables and accrued expenses incurred since June
30, 1998 in the ordinary course of business, (iii) executory contract
obligations, and (iv) the liabilities set forth in Schedule 3.08(b) attached
hereto, the Company does not have any liabilities or obligations (whether
accrued, absolute, contingent, known, unknown or otherwise, and whether or not
of a nature required to be reflected or reserved against in a balance sheet in
accordance with GAAP).
(c) Except as otherwise set forth in Schedule 3.08(c), the
accounts receivable reflected on the June 30, 1998 balance sheet included in the
Financial Statements referenced in Section 3.08(a) and all of the Company's
accounts receivable arising since June 30, 1998 (the "Balance Sheet Date") arose
from bona fide transactions in the ordinary course of business, and the goods
and services involved have been sold, delivered and performed to the account
obligors, and no further filings (with governmental agencies, insurers or
others) are required to be made, no further goods are required to be provided
and no further services are required to be rendered in order to complete the
sales and fully render the services and to entitle the Company to collect the
accounts receivable in full. Except as set forth in Schedule 3.08(c), no such
account has been assigned or pledged to any other person, firm or corporation,
and, except only to the extent fully reserved against as set forth in the June
30, 1998 balance sheet included in such Financial Statements, no defense or
set-off to any such account has been asserted by the account obligor or exists.
3.09 ABSENCE OF CERTAIN CHANGES.
(a) Except as otherwise set forth in Schedule 3.09(a) attached
hereto, since January 1, 1998, there has not been:
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(i) any event, circumstance or change that had or
might have a material adverse effect on the business, operations, prospects,
Assets, securities, financial condition or working capital of the Company;
(ii) any damage, destruction or loss (whether or not
covered by insurance) that had or might have a material adverse effect on the
business, operations, prospects, Assets, securities or financial condition of
the Company; or
(iii) any material adverse change in the Company's
sales patterns, pricing policies, accounts receivable or accounts payable.
(b) Except as otherwise set forth in Schedule 3.09(b) attached
hereto, since January 1, 1998, the Company has not done any of the following:
(i) merged into or with or consolidated with, any
other corporation or acquired the business or assets of any person;
(ii) purchased any securities of any person;
(iii) created, incurred, assumed, guaranteed or
otherwise become liable or obligated with respect to any indebtedness, or made
any loan or advance to, or any investment in, any person, except in each case in
the ordinary course of business;
(iv) made any change in any existing election, or
made any new election, with respect to any tax law in any jurisdiction which
election could have an effect on the tax treatment of the Company or the
Company's business operations;
(v) entered into, amended or terminated any material
agreement;
(vi) sold, transferred, leased, mortgaged, encumbered
or otherwise disposed of, or agreed to sell, transfer, lease, mortgage, encumber
or otherwise dispose of, any Assets except (i) in the ordinary course of
business, or (ii) pursuant to any agreement specified in Schedule 3.13;
(vii) settled any claim or litigation, or filed any
motions, orders, briefs or settlement agreements in any proceeding before any
Governmental Authority or any arbitrator;
(viii) incurred or approved, or entered into any
agreement or commitment to make, any expenditures in excess of $10,000 (other
than those required pursuant to any agreement specified in Schedule 3.13);
(ix) maintained its books of account other than in
the usual, regular and ordinary manner in accordance with generally accepted
accounting principles and on a basis consistent with prior periods or made any
change in any of its accounting methods or practices that would be required to
be disclosed under generally accepted accounting principles;
(x) adopted any Plan or Benefit Program or Agreement,
or granted any increase in te compensation payable or to become payable to
directors, officers or employees (including, without limitation, any such
increase pursuant to any bonus, profit-sharing or other plan or commitment),
other than merit increases to non-officer employees in the ordinary course of
business and consistent with past practice;
(xi) suffered any extraordinary losses or waived any
rights of material value;
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(xii) made any payment to either Shareholder (other
than dividends or compensation payable in the ordinary course of business) or
forgiven any indebtedness due or owing from either Shareholder to the Company;
(xiii) (A) except in the ordinary course of business,
liquidated inventory or accepted product returns, (B) accelerated receivables,
(C) delayed payables, or (D) changed in any material respect the Company's
practices in connection with the payment of payables and/or the collection of
receivables;
(xiv) engaged in any one or more activities or
transactions with an Affiliate or outside the ordinary course of business; or
(xv) committed to do any of the foregoing.
3.10 COMPLIANCE WITH LAWS. Except as otherwise set forth in Schedule
3.10(1), the Company is and has been in compliance in all respects with any and
all Legal Requirements applicable to the Company, other than failures to so
comply that would not have an adverse effect on the business, operations,
prospects, Assets, securities or financial condition of the Company. Except as
otherwise set forth in Schedule 3.10(2), the Company (x) has not received or
entered into any citations, complaints, consent orders, compliance schedules, or
other similar enforcement orders or received any written notice from any
Governmental Authority or any other written notice that would indicate that
there is not currently compliance with all such Legal Requirements, except for
failures to so comply that would not have an adverse effect on the business,
operations, prospects, Assets, securities or financial condition of the Company,
and (y) is not in default under, and no condition exists (whether covered by
insurance or not) that with or without notice or lapse of time or both would
constitute a default under, or breach or violation of, any Legal Requirement or
Permit applicable to the Company. Without limiting the generality of the
foregoing, the Company has not received notice of and there is no basis for, any
claim, action, suit, investigation or proceeding that might result in a finding
that the Company is not or has not been in compliance with Legal Requirements
relating to (a) the development, testing, manufacture, packaging, distribution
and marketing of products, (b) employment, safety and health, and (c)
environmental protection, building, zoning and land use.
3.11 LITIGATION. Except as otherwise set forth in Schedule 3.11, there
are no claims, actions, suits, investigations or proceedings against the Company
pending or, to the Knowledge of the Company, threatened in any court or before
or by any Governmental Authority, or before any arbitrator, that might have an
adverse effect (whether covered by insurance or not) on the business,
operations, prospects, Assets, securities or financial condition of the Company
and there is no basis for any such claim, action, suit, investigation or
proceeding. Schedule 3.11 also includes a true and correct listing of all
material actions, suits, investigations, claims or proceedings that were
pending, settled or adjudicated since January 1, 1995.
3.12 OWNERSHIP OF COMPANY ASSETS.
(a) Except as provided under the provisions of the agreements
described in Schedule 3.12(a), the Company has and will have as of the Closing
Date legal and beneficial ownership of its Assets, free and clear of any and all
liens, mortgages, pledges, adverse claims, encumbrances or other restrictions or
limitations whatsoever ("Liens").
(b) Except as otherwise set forth in Schedule 3.12(b), the
Company does not own, and has never owned, any real property or any interest
therein (including without limitation any option or other right or obligation to
purchase any real property or any interest therein). Schedule 3.12(b) sets forth
a list of all leases, licenses or similar agreements relating to the Company's
use or occupancy of real estate owned by a third party ("Leases"), true and
correct copies of which have previously been furnished to Buyer, in each case
setting forth (i) the lessor and lessee thereof and the commencement date, term
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and renewal rights under each of the Leases, and (ii) the street address or
legal description of each property covered thereby (the "Leased Premises"). The
Leases are in full force and effect and have not been amended, and no party
thereto is in default or breach under any such Lease. No event has occurred
which, with the passage of time or the giving of notice or both, would cause a
material breach of or default under any of such Leases. With respect to each
such Leased Premises: (i) the Company has a valid leasehold interest in the
Leased Premises, free and clear of any Liens, covenants and easements or title
defects that have had or would have an adverse effect on the Company's use and
occupancy of the Leased Premises; (ii) the portions of the buildings located on
the Leased Premises that are used in the business of the Company are each in
good repair and condition, normal wear and tear excepted, and are in the
aggregate sufficient to satisfy the Company's current and reasonably anticipated
normal business activities as conducted thereat; (iii) each of the Leased
Premises (a) has direct access to public roads or access to public roads by
means of a perpetual access easement, such access being sufficient to satisfy
the current transportation requirements of the business presently conducted at
such parcel; and (b) is served by all utilities in such quantity and quality as
are sufficient to satisfy the current normal business activities conducted at
such parcel; and (iv) the Company has not received notice of (a) any
condemnation, eminent domain or similar proceeding affecting any portion of the
Leased Premises or any access thereto, and, to the Knowledge of the Company, no
such proceedings are contemplated, or (b) any special assessment which may
affect any of the Leased Premises.
(c) Set forth on Schedule 3.12(c) is a list and description
of all material foreign and domestic patents, patent rights, trademarks, service
marks, trade names, brands and copyrights (whether or not registered and, if
applicable, including pending applications for registration) owned, Used,
licensed or controlled by the Company and all goodwill associated therewith. The
Company owns or has the right to use and shall as of the Closing Date own or
have the right to use any and all information, know-how, trade secrets, patents,
copyrights, trademarks, tradenames, software, formulae, methods, processes and
other intangible properties that are necessary or customarily Used by the
Company for the ownership, management or operation of its Assets ("Intangible
Rights") including, but not limited to, the Intangible Rights listed on Schedule
3.12(c). Except as set forth on Schedule 3.12(c): (i) the Company is the sole
and exclusive owner of all right, title and interest in and to all of the
Intangible Rights, and has the exclusive right to use and license the same, free
and clear of any claim or conflict with the Intangible Rights of others; (ii) no
royalties, honorariums or fees are payable by the Company to any person by
reason of the ownership or use of any of the Intangible Rights; (iii) there have
been no claims made against the Company asserting the invalidity, abuse, misuse,
or unenforceability of any of the Intangible Rights and no grounds for any such
claims exist; (iv) the Company has not made any claim of any violation or
infringement by others of any of its Intangible Rights or interests therein and,
to the Knowledge of the Company, no grounds for any such claims exist; (v)
neither the Company nor any of the Shareholders has received any notice that it
is in conflict with or infringing upon the asserted intellectual property rights
of others in connection with the Intangible Rights, and neither the use of the
Intangible Rights nor the operation of the Company's businesses is infringing or
has infringed upon any intellectual property rights of others (including,
without limitation, any intellectual property right of Pratt & Whitney); (vi)
the Intangible Rights are sufficient and include all intellectual property
rights necessary for the Company to lawfully conduct its businesses as presently
being conducted; (vii) no interest in any of the Company's Intangible Rights has
been assigned, transferred, licensed or sublicensed by the Company to any person
other than the Buyer pursuant to this Agreement; (viii) to the extent that any
item constituting part of the Intangible Rights has been registered with, filed
in or issued by, any Governmental Authority, such registrations, filings or
issuances are listed on Schedule 3.12(c) and were duly made and remain in full
force and effect; and (ix) to the Knowledge of the Company, there has not been
any act or failure to act by the Company or any of its directors, officers,
employees, attorneys or agents during the prosecution or registration of, or any
other proceeding relating to, any of the Intangible Rights or of any other fact
which could render invalid or unenforceable, or negate the right to issuance of
any of the Intangible Rights. To the extent any of the Intangible Rights
constitutes proprietary or confidential information, the Company has adequately
safeguarded such information from disclosure. All of the Intangible Rights are
assignable to the Buyer without alteration or impairment. Without limiting the
generality of the foregoing, the Intangible Rights do not include any aspect of
the "Technology" transferred by the Shareholders pursuant to that
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certain Technology Sale Agreement, dated December 31, 1986, between the
Shareholders and Airfoil Limited.
(d) Set forth on SCHEDULE 3.12(D) is a list of all
authorizations, consents, approvals, franchises, licenses and permits required
by any person or entity (other than a Governmental Authority) for the operation
of the business of the Company as presently operated (the "Other Person
Authorizations"). All of the Other Person Authorizations have been duly issued
or obtained and are in full force and effect, and the Company is in compliance
with the terms of all the Other Person Authorizations. Neither the Shareholders
nor the Seller have any knowledge of any facts which could be expected to cause
them to believe that the Other Person Authorizations will not be renewed by the
appropriate person in the ordinary course. Each of the Other Person
Authorizations may be assigned and transferred to the Buyer in accordance with
this Agreement and will continue in full force and effect thereafter, in each
case without (i) the occurrence of any breach, default or forfeiture of rights
thereunder, or (ii) the consent, approval, or act of, or the making of any
filings with, any person.
3.13 COMMITMENTS.
(a) Except as otherwise set forth in Schedule 3.13, the
Company is not a party to or bound by any of the following, whether written or
oral:
(i) any Contract that cannot by its terms be
terminated by the Company with 30 days' or less notice without penalty or whose
term continues beyond one year after the date of this Agreement;
(ii) contract or commitment for capital expenditures
by the Company in excess of $25,000 per calendar quarter in the aggregate;
(iii) lease or license with respect to any Assets,
real or personal, whether as landlord, tenant, licensor or licensee;
(iv) agreement, contract, indenture or other
instrument relating to the borrowing of money or the guarantee of any obligation
or the deferred payment of the purchase price of any Assets;
(v) partnership agreement;
(vi) contract with any Affiliate of Company
(including the Shareholders) relating to the provision of goods or services by
or to the Company;
(vii) agreement for the sale of any assets that in
the aggregate have a net book value on the Company's books of greater than
$25,000;
(viii) agreement that purports to limit the Company's
freedom to compete freely in any line of business or in any geographic area;
(ix) preferential purchase right, right of first
refusal, or similar agreement; or
(x) other Contract that is material to the business
of the Company.
(b) All of the Contracts listed or required to be listed in
Schedule 3.13 are valid, binding and in full force and effect, and the Company
has not been notified or advised by any party thereto of such party's intention
or desire to terminate or modify any such Contract in any respect, except as
disclosed in Schedule 3.13. Neither the Company nor, to the Knowledge of the
Company, any other party is in breach of any of the terms or covenants of any
Contract listed or required to be listed in Schedule
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3.13. Following the Closing, Buyer will be entitled to all of the benefits of
the Company under each Contract listed or required to be listed in Schedule
3.13.
(c) Except as otherwise set forth in Schedule 3.13(c), the
Company is not a party to or bound by any Contract or Contracts the terms of
which were arrived at by or otherwise reflect less-than-arm's-length
negotiations or bargaining.
3.14 INSURANCE. Schedule 3.14 hereto is a complete and correct list of
all insurance policies presently in effect that relate to the Company or its
Assets, all of which have been in full force and effect from and after the
date(s) set forth on Schedule 3.14. Such policies are sufficient for compliance
by the Company with all applicable Legal Requirements and all material
Contracts. None of the insurance carriers has indicated to the Company an
intention to cancel any such policy. The Company has no claim pending or
anticipated against any of the insurance carriers under any of such policies
and, to the Knowledge of the Company, there has been no actual or alleged
occurrence of any kind which could reasonably be expected to give rise to any
such claim.
3.15 INVENTORIES. Except as otherwise set forth in Schedule 3.15(1),
the inventory of the Company as of the Closing Date shall consist of items of a
quality, condition and quantity consistent with normal seasonally-adjusted
inventory levels of the Company and be usable and saleable in the ordinary and
usual course of business for the purposes for which intended. Except as
otherwise set forth in Schedule 3.15(2), such inventory is carried on the
Company's books of account in accordance with GAAP.
3.16 EQUIPMENT AND OTHER TANGIBLE PROPERTY. Except as otherwise set
forth on Schedule 3.16, the Company's equipment, furniture, machinery, vehicles,
structures, fixtures and other tangible Property included in the Assets (the
"Tangible Company Assets"), other than inventory, is suitable for the purposes
for which intended and in good operating condition and repair consistent with
normal industry standards, except for ordinary wear and tear, and except for
such Tangible Company Assets as shall have been taken out of service on a
temporary basis for repairs or replacement consistent with the Company's prior
practices and normal industry standards.
3.17 PERMITS; ENVIRONMENTAL MATTERS.
(a) Except as otherwise set forth in Schedule 3.17(a), the
Company has all Permits necessary for the Company to construct, own, operate,
use and/or maintain its Assets and to conduct its business and operations as
presently conducted and as expected to be conducted in the future. Except as
otherwise set forth in Schedule 3.17(a), all such Permits are in effect, no
proceeding is pending or, to the Knowledge of the Company, threatened to modify,
suspend or revoke, withdraw, terminate, or otherwise limit any such Permits, and
no administrative or governmental actions have been taken or, to the Knowledge
of the Company, threatened in connection with the expiration or renewal of such
Permits which could adversely affect the ability of the Company to own, operate,
use or maintain any of its Assets or to conduct its business and operations as
presently conducted and as expected to be conducted in the future. Except as
otherwise set forth in Schedule 3.17(a), (i) no violations have occurred that
remain uncured, unwaived, or otherwise unresolved, or are occurring in respect
of any such Permits, other than inconsequential violations, and (ii) no
circumstances exist that would prevent or delay the obtaining of any requisite
consent, approval, waiver or other authorization of the transactions
contemplated hereby with respect to such Permits that by their terms or under
applicable law may be obtained only after Closing.
(b) Except as set forth on Schedule 3.17(b), there are no
claims, liabilities, investigations, litigation, administrative proceedings,
whether pending or, to the Knowledge of the Company, threatened, or judgments or
orders relating to any Hazardous Materials (collectively called "Environmental
Claims") asserted or threatened against the Company or relating to any real
property currently or formerly owned, leased or otherwise Used by the Company.
Neither the Company nor, to the Knowledge of the Company, any prior owner,
lessee or operator of said real property, has caused or
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permitted any Hazardous Material to be used, generated, reclaimed, transported,
released, treated, stored or disposed of in a manner which could form the basis
for an Environmental Claim against the Company, the Buyer or the Business.
Except as set forth on Schedule 3.17(b), the Company has not assumed any
liability of any Person for cleanup, compliance or required capital expenditures
in connection with any Environmental Claim.
(c) Except as set forth on Schedule 3.17(c), no Hazardous
Materials are or were stored or otherwise located, and no underground storage
tanks or surface impoundments are or were located, on real property currently or
formerly owned, leased or Used by the Company or, to the Knowledge of the
Company, on adjacent parcels of real property, and no part of such real property
or, to the Knowledge of the Company, any part of such adjacent parcels of real
property, including the groundwater located thereon, is presently contaminated
by Hazardous Materials.
(d) Except as set forth on Schedule 3.17(d), the Company has
been and is currently in compliance with all applicable Environmental Laws,
including obtaining and maintaining in effect all Permits required by applicable
Environmental Laws.
3.18 [INTENTIONALLY DELETED].
3.19 SUPPLIERS AND CUSTOMERS. Schedule 3.19 sets forth (i) the ten
principal suppliers of the Company during each of calendar 1997 and the six
months ended June 30, 1998, together with the dollar amount of goods purchased
by the Company from each such supplier during each such period, and (ii) the ten
principal customers of the Company during each of 1997 and the six months ended
June 30, 1998, together with the dollar amount of goods and/or services sold by
the Company to each such customer during each such period. Except as otherwise
set forth in Schedule 3.19, to the Knowledge of the Company, the Company
maintains good relations with all suppliers and customers listed or required to
be listed in Schedule 3.19 as well as with governments, partners, financing
sources and other parties with whom the Company has significant relations, and
no such party has canceled, terminated or made any threat to the Company to
cancel or otherwise terminate its relationship with the Company or to materially
decrease its services or supplies to the Company or its direct or indirect
purchase or usage of the products or services of the Company.
3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither of the
Shareholders, the Company nor any other Affiliate or agent of the Company, or
any other person acting on behalf of or associated with the Company, acting
alone or together, has: (a) received, directly or indirectly, any rebates,
payments, commissions, promotional allowances or any other economic benefits,
regardless of their nature or type, from any customer, supplier, employee or
agent of any customer or supplier, official or employee of any government
(domestic or foreign,) or any political party or candidate for office (domestic
or foreign) or other person; or (b) directly or indirectly, given or agreed to
give any money, gift or similar benefit to any customer, supplier, employee or
agent of any customer or supplier, official or employee of any government
(domestic or foreign), or any political party or candidate for office (domestic
or foreign) or other person who was, is or may be in a position to help or
hinder the business of the Company (or assist the Company in connection with any
actual or proposed transaction) which (i) may subject the Company to any damage
or penalty in any civil, criminal or governmental litigation or proceeding, (ii)
if not given in the past, may have had an adverse effect on the assets,
business, operations or prospects of the Company, or (iii) if not continued in
the future, may adversely affect the assets, business, operations or prospects
of the Company.
3.21 PRODUCTS AND SERVICES.
(a) Schedule 3.21(a) lists each product, repair process or
service under development, developed, manufactured, licensed, distributed or
sold by the Company and any other products in which the Company has any
proprietary rights or beneficial interest (collectively the "Products"). Each
Product designed, manufactured, repaired or serviced by the Company has been
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designed, manufactured, repaired or serviced in accordance with (i) the
specifications under which the Product is normally and has normally been
manufactured, and (ii) the provisions of all applicable laws, policies,
guidelines and any other governmental requirements.
(b) Schedule 3.21(b) sets forth (i) a list of all Products
which at any time have been recalled, withdrawn or suspended by the Company,
whether voluntarily or otherwise, including the date recalled, withdrawn or
suspended and a brief description of all completed or pending proceedings
seeking the recall, withdrawal, suspension or seizure of any Product, (ii) a
brief description of all completed or pending proceedings seeking the recall,
withdrawal, suspension or seizure of any Product, and (iii) a list of all
regulatory letters received by the Company or any of its agents relating to the
Company or any of the Products or the Company's establishments.
(c) There exists no set of facts which could reasonably be
expected to furnish a basis for the recall, withdrawal or suspension of any
product registration, product license, repair or overhaul license, manufacturing
license, wholesale dealers license, export license or other license, approval or
consent of any governmental or regulatory authority with respect to the Company
or any of the Products.
(d) There are no claims existing or threatened under or
pursuant to any warranty, whether express or implied, on products or services
sold by the Company. There are no claims existing and there is no basis for any
claim against the Company for injury to persons, animals or property as a result
of the sale, distribution or manufacture of any product or performance of any
service by the Company, including, but not limited to, claims arising out of the
defective or unsafe nature of its products or services. The Company has full and
adequate insurance coverage for products liability claims against it.
3.22 TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule 3.22
and except for normal advances to employees consistent with past practices,
payment of compensation for employment to employees consistent with past
practices, and participation in scheduled Plans or Benefit Programs and
Agreements by employees, the Company has not purchased, acquired or leased any
property or services from, or sold, transferred or leased any property or
services to, or loaned or advanced any money to, or borrowed any money from, or
entered into or been subject to any management, consulting or similar agreement
with, or engaged in any other significant transaction with either Shareholder or
any other officer, director or shareholder of the Company or any of their
respective Affiliates. Except as set forth on Schedule 3.22, no Shareholder or
other Affiliate of the Company is indebted to the Company for money borrowed or
other loans or advances, and the Company is not indebted to any such Affiliate.
3.23 OTHER INFORMATION. The information with respect to the Company
furnished to Buyer pursuant to this Agreement (including, without limitation,
information contained in the exhibits hereto, the Schedules identified herein,
the instruments referred to in such Schedules and the certificates and other
documents to be executed or delivered pursuant hereto by Company at or prior to
the Closing) is not, nor at the Closing will be, false or misleading in any
material respect, or contains, or at the Closing will contain, any misstatement
of material fact, or omits, or at the Closing will omit, to state any material
fact required to be stated in order to make the statements therein not
misleading. Without limiting the generality of the foregoing, the Assets and
Leased Premises constitute, in the aggregate, all of the assets and properties
necessary for the conduct of the business of the Company in the manner in which
and to the extent to which such business is currently being conducted.
3.24 INVESTMENT REPRESENTATIONS.
With respect to any shares of stock to be issued in connection
with the Earnout (such shares being referred to herein as the "Shares"), each of
the Seller and the Shareholders severally represents and warrants to the Buyer
that:
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(a) it or he is an "accredited investor" within the meaning of
Rule 501 of Regulation D under the Securities Act and, with respect to the
Seller, either (i) it was not organized for the specific purpose of acquiring
the Shares, or (ii) each person who has invested in the Seller is an "accredited
investor" within the meaning of Rule 501 of Regulation D under the Securities
Act of 1933, as amended (the "Securities Act");
(b) it or he has sufficient knowledge and experience in
investing in companies similar to HEICO Corporation so as to be able to evaluate
the risks and merits of its or his investment in HEICO Corporation and it or he
is able financially to bear the risks thereof, and it or he believes that it or
he has received all information which it or he considers necessary or
appropriate for deciding whether or not to accept the Shares in payment of the
Earnout;
(c) it is the present intention that the Shares being
purchased by such Seller or Shareholder will be acquired for such person's own
account for the purpose of investment and not with a present view to or for sale
in connection with any distribution thereof; provided, nevertheless, that the
disposition of property of each of the Seller and the Shareholders shall at all
times be within its or his control; and
(d) such person understands that (i) the Shares have not been
registered under the Securities Act by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) thereof or Rule 505 or 506 promulgated under the Securities Act,
(ii) the Shares must be held indefinitely unless a subsequent disposition
thereof is registered under the Securities Act or is exempt from such
registration, (iii) the Shares will bear a legend to such effect, and (iv) HEICO
Corporation will make a notation on its transfer books to such effect.
ARTICLE IV. - REPRESENTATIONS AND WARRANTIES OF BUYER AND
HEICO AEROSPACE
Buyer and HEICO Aerospace hereby represent and warrant to the Seller
that:
4.01 CORPORATE EXISTENCE AND QUALIFICATION. Each of Buyer and HEICO
Aerospace is a corporation duly organized, validly existing and in good standing
under the laws of the State of Florida; has the corporate power to own, manage,
lease and hold its properties and to carry on its business as and where such
properties are presently located and such business is presently conducted; and
is duly qualified to do business and is in good standing as a foreign
corporation in each of the jurisdictions where the character of its properties
or the nature of its business requires it to be so qualified.
4.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been
duly executed and delivered by each of Buyer and HEICO Aerospace, and each has
all requisite corporate power and legal capacity to execute and deliver this
Agreement and all Collateral Agreements executed and delivered or to be executed
and delivered by Buyer and HEICO Aerospace in connection with the transactions
provided for hereby, to consummate the transactions contemplated hereby and by
the Collateral Agreements, and to perform its obligations hereunder and under
the Collateral Agreements. The execution and delivery of this Agreement and the
Collateral Agreements and the performance of the transactions contemplated
hereby and thereby have been duly and validly authorized and approved by all
corporate action necessary on behalf of Buyer and HEICO Aerospace. This
Agreement and each Collateral Agreement to which Buyer and HEICO Aerospace is a
party constitutes, or upon execution and delivery will constitute, the legal,
valid and binding obligation of Buyer and HEICO Aerospace, enforceable in
accordance with its terms, except as such enforcement may be limited by general
equitable principles or by applicable bankruptcy, insolvency, moratorium, or
similar laws and judicial decisions from time to time in effect which affect
creditors' rights generally.
4.03 NO DEFAULT OR CONSENTS. Except as otherwise set forth in Schedule
4.03, neither the execution and delivery of this Agreement nor the carrying out
of the transactions contemplated hereby will:
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(i) violate or conflict with any of the terms,
conditions or provisions of Buyer's or HEICO Aerospace's Articles of
Incorporation or bylaws;
(ii) violate any Legal Requirements applicable to
Buyer or HEICO Aerospace;
(iii) violate, conflict with, result in a breach of,
constitute a default under (whether with or without notice or the lapse of time
or both), or accelerate or permit the acceleration of the performance required
by, or give any other party the right to terminate, any contract or Permit
applicable to Buyer or HEICO Aerospace;
(iv) result in the creation of any lien, charge or
other encumbrance on any property of Buyer or HEICO Aerospace; or
(v) require Buyer or HEICO Aerospace to obtain or
make any waiver, consent, action, approval or authorization of, or registration,
declaration, notice or filing with, any private non-governmental third party or
any Governmental Authority.
4.04 NO PROCEEDINGS. No suit, action or other proceeding is pending or,
to Buyer's or HEICO Aerospace's knowledge, threatened before any Governmental
Authority seeking to restrain Buyer or HEICO Aerospace or prohibit their entry
into this Agreement or prohibit the Closing, or seeking Damages against Buyer or
HEICO Aerospace or their properties as a result of the consummation of this
Agreement.
4.05 AUTHORIZATION AND ISSUANCE OF SHARES. The Shares have been duly
authorized and, when issued and delivered in accordance with this Agreement for
the consideration expressed herein, will be validly issued, fully paid and
non-assessable and will be free and clear of all liens, charges and encumbrances
of any nature whatsoever except for restrictions on transfer under applicable
federal and state securities laws.
ARTICLE V. - OBLIGATIONS PRIOR TO CLOSING
From the date of this Agreement through the Closing:
5.01 BUYER'S ACCESS TO INFORMATION AND ASSETS. The Seller shall permit
Buyer and its authorized employees, agents, accountants, legal counsel and other
representatives to have access to the books, records, employees, counsel,
accountants, engineers and other representatives of the Company at all times
reasonably requested by Buyer for the purpose of conducting an investigation of
the Company's financial condition, corporate status, operations, prospects,
business and Assets. The Seller shall make available to Buyer for examination
and reproduction all documents and data of every kind and character relating to
the Company in possession or control of, or subject to reasonable access by, the
Seller, including, without limitation, all files, records, data and information
relating to the Assets (whether stored in paper, magnetic or other storage
media) and all agreements, instruments, contracts, assignments, certificates,
orders, and amendments thereto. Also, the Seller shall allow Buyer access to,
and the right to inspect, all of the Company's Assets, except to the extent that
such Assets are operated by a third-party operator, in which case the Seller
shall use its best efforts to cause the operator of such Assets to allow Buyer
access to, and the right to inspect, such Assets.
5.02 COMPANY'S CONDUCT OF BUSINESS AND OPERATIONS. The Seller shall
keep Buyer advised as to all material operations and proposed material
operations relating to the Company. The Company shall (a) conduct its business
in the ordinary course, (b) use its best efforts to keep available the services
of present employees, (c) maintain and operate its Assets in a good and
workmanlike manner, (d) pay or cause to be paid all costs and expenses
(including but not limited to insurance premiums) incurred in connection
therewith in a timely manner, (e) use reasonable efforts to keep all Contracts
listed or required
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to be listed on Schedule 3.13 in full force and effect, (f) comply with all of
the covenants contained in all such material Contracts, (g) maintain in force
until the Closing Date insurance policies (subject to the provisions of Section
5.07) equivalent to those in effect on the date hereof, and (h) comply in all
material respects with all applicable Legal Requirements. Except as otherwise
contemplated in this Agreement, the Seller will use its best efforts to preserve
the present relationships of the Company with persons having significant
business relations therewith.
5.03 GENERAL RESTRICTIONS. Except as otherwise expressly permitted in
this Agreement, without the prior written consent of Buyer, which consent shall
not be unreasonably withheld, the Company shall not:
(i) merge into or with or consolidate with, any other
corporation or acquire the business or assets of any person;
(ii) purchase any securities of any person;
(iii) create, incur, assume, guarantee or otherwise
become liable or obligated with respect to any indebtedness, or make any loan or
advance to, or any investment in, any person, except in each case in the
ordinary course of business;
(iv) make any change in any existing election, or
make any new election, with respect to any tax law in any jurisdiction which
election could have an effect on the tax treatment of the Company or the
Company's business operations;
(v) enter into, amend or terminate any material
agreement (which shall include any of the arrangements described in Section
3.13(a), whether written or oral);
(vi) sell, transfer, lease, mortgage, encumber or
otherwise dispose of, or agree to sell, transfer, lease, mortgage, encumber or
otherwise dispose of, any Assets except (i) in the ordinary course of business,
or (ii) pursuant to any agreement specified in Schedule 3.13;
(vii) settle any material claim or litigation, or
file any material motions, orders, briefs or settlement agreements in any
proceeding before any Governmental Authority or any arbitrator;
(viii) incur or approve, or enter into any agreement
or commitment to make, any expenditures in excess of $10,000 (other than those
required pursuant to any agreement specified in Schedule 3.13);
(ix) maintain its books of account other than in the
usual, regular and ordinary manner in accordance with generally accepted
accounting principles and on a basis consistent with prior periods or make any
change in any of its accounting methods or practices;
(x) adopt any Plan or Benefit Program or Agreement,
or grant any increase in the compensation payable or to become payable to
directors, officers or employees (including, without limitation, any such
increase pursuant to any bonus, profit-sharing or other plan or commitment),
other than merit increases to non-officer employees in the ordinary course of
business and consistent with past practice;
(xi) accelerate or delay collection of any notes or
accounts receivable in advance of or beyond their regular due dates or the dates
when the same would have been collected in the ordinary course of business
consistent with past practices;
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(xii) delay or accelerate payment of any account
payable or other liability beyond or in advance of its due date or the date when
such liability would have been paid in the ordinary course of business
consistent with past practices;
(xiii) allow its levels of inventory to vary in any
material respect from the levels customarily maintained;
(xiv) except to the extent that such distributions
could not reasonably be expected to result in a Purchase Price Adjustment that
would require a payment by Seller to Buyer hereunder, declare or pay any
dividend or other distribution (whether in cash, stock or other property) with
respect to its capital stock;
(xv) apply any of its assets to the direct or
indirect payment, prepayment, discharge, satisfaction or reduction of any amount
payable, directly or indirectly, to or for the benefit of either Shareholder or
any other Affiliate of the Company (except for salary and benefits as currently
in effect and except in accordance with existing agreements and arrangements
which have been disclosed to the other parties hereto in writing);
(xvi) engage in any one or more activities or
transactions with an Affiliate or outside the ordinary course of business;
(xvii) enter into any transaction or make any
commitment which could result in any of the representations, warranties or
covenants of the Seller contained in this Agreement not being true and correct
after the occurrence of such transaction or event; or
(xviii) commit to do any of the foregoing.
5.04 NOTICE REGARDING CHANGES. The Seller shall promptly inform Buyer
in writing of any change in facts and circumstances that could render any of the
representations and warranties made herein by the Seller inaccurate or
misleading if such representations and warranties had been made upon the
occurrence of the fact or circumstance in question. The Buyer shall promptly
inform the Seller in writing of any change in facts and circumstances that could
render any of the representations and warranties made herein by it inaccurate or
misleading if such representations and warranties had been made upon the
occurrence of the fact or circumstance in question.
5.05 PREFERENTIAL PURCHASE RIGHTS. To the extent there are any parties
entitled or who may become entitled to exercise preferential purchase or consent
rights with respect to the transactions contemplated hereby, the Seller shall
promptly use its best efforts to obtain the agreement in writing of such parties
to waive or not exercise such rights, which request shall be in form reasonably
satisfactory to and approved by Buyer.
5.06 ENSURE CONDITIONS MET. Subject to the terms and conditions of this
Agreement, each party hereto shall use all reasonable commercial efforts to take
or cause to be taken all actions and do or cause to be done all things required
under applicable Legal Requirements in order to consummate the transactions
contemplated hereby, including, without limitation, (i) obtaining all Permits,
authorizations, consents and approvals of any Governmental Authority or other
person which are required for or in connection with the consummation of the
transactions contemplated hereby and by the Collateral Agreements, (ii) taking
any and all reasonable actions necessary to satisfy all of the conditions to
such party's obligations hereunder as set forth in Article VI, and (iii)
executing and delivering all agreements and documents required by the terms
hereof to be executed and delivered by such party on or prior to the Closing.
The parties hereto specifically agree to promptly prepare and file their
respective Notification and Report Forms under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended ("HSR Act"), in accordance with applicable
law, if such filings are required under applicable law with respect to this
Agreement and the transactions contemplated hereby. Each of the parties hereto
shall furnish to the others
-22-
such information and assistance as any other party may reasonably request in
connection with the preparation of any such HSR Act filings or submissions and
provide the others with copies of all correspondence, filings or communications
(or memoranda setting forth the substance thereof) between such party or any of
its representatives, on the one hand, and any Governmental Authority or members
of their respective staffs, on the other hand, with respect to this Agreement
and the transactions contemplated hereby. Buyer and Seller shall share equally
any required HSR Act filing fees.
5.07 NAME CHANGE. The Seller hereby represents, warrants and covenants
to the Buyer that the corporate name of the Company is as set forth on the
signature page hereof and further agrees and acknowledges that such name is
included with the Assets and that the exclusive right to use such name will be
transferred to the Buyer on the Closing Date. On or before the Closing Date, the
Company and the Shareholders shall file an appropriate amendment to the
Company's Articles or Certificate of Incorporation changing its name to a name
which shall in no way be similar to its present name and shall furnish such
written consents and assignments as the Buyer shall reasonably request and may
thereafter reasonably request in connection therewith.
5.08 ENVIRONMENTAL ASSESSMENT. As part of its general due diligence
review of the assets, properties, books and records of the Company, and subject
to any required landlord consent, Buyer shall be entitled at its expense to
conduct prior to Closing an environmental assessment of the Leased Premises
(hereinafter referred to as "Environmental Assessment"). The Environmental
Assessment may include, but not be limited to, a physical examination of the
Leased Premises and any structures, facilities or equipment located thereon,
soil samples, ground and surface water samples, storage tank testing, review of
pertinent records (including but not limited to, off-site disposal records and
manifests), documents and licenses of the Company. The Company shall use its
reasonable commercial efforts to cause its landlord to provide Buyer or its
designated agents or consultants with the access to such property which Buyer,
its agents or consultants require to conduct the Environmental Assessment, and
Buyer shall provide such landlord with reasonable indemnification protections in
connection with such Environmental Assessment. If the Environmental Assessment
identifies Recognized Environmental Conditions (as defined by ASTM Standard
Practice E-1527) which require remediation or further evaluation under
applicable environmental Legal Requirements, or if the results of the
Environmental Assessment are otherwise not satisfactory to Buyer in its sole
discretion, then Buyer shall notify the Company and the Shareholders in writing
prior to Closing, and (a) with respect to any unsatisfactory results other than
any Recognized Environmental Condition, the Company and the Shareholders shall
take all remedial action reasonably required to comply with the representations
and warranties in Article III; and (b) with respect to Recognized Environmental
Conditions, the Company and Shareholders shall be financially responsible for
the remediation of all such Recognized Environmental Conditions for which
remediation is, may or would be required by any appropriate governmental agency;
provided, however, that if the cost of the remedial action for any Recognized
Environmental Condition would equal or exceed $200,000, then the Company will
have the option of taking the remedial action or, unless Buyer agrees to bear
remedial costs in excess of $200,000, terminating this Agreement. Buyer's
failure or decision not to conduct any such Environmental Assessment shall not
affect any representation or warranty of the Company and/or the Shareholders
under this Agreement.
5.09 SURVEY. The Company will cooperate with Buyer if Buyer elects in
its sole discretion to obtain at Buyer's expense an as-built plat or survey of
the Leased Premises (the "Survey") prepared by a registered land surveyor or
engineer, licensed in the state in which such property is located, dated on or
after the date hereof, certified to Buyer, and such other entities as Buyer may
designate in writing to the Company and the Shareholders prior to the Closing,
and conforming to current ALTA Minimum Detail Requirements for Land Title
Surveys. The Survey shall show access from the land to dedicated roads and shall
include a flood plain certification. The Survey may be a recertification of a
prior survey; provided, that it meets the above-described criteria.
5.10 CASUALTY LOSS. If, between the date of this Agreement and the
Closing, any of the Assets of the Company shall be destroyed or damaged in whole
or in part by fire, earthquake, flood, other
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casualty or any other cause, then the Seller shall, at Buyer's election, (i)
cause such Assets to be repaired or replaced prior to the Closing with Assets of
substantially the same condition and function, (ii) deposit in a separate
account an amount sufficient to cause such Assets to be so repaired or replaced,
or (iii) enter into contractual arrangements satisfactory to Buyer so that the
Company will have at the Closing the same economic value as if such casualty had
not occurred.
5.11 EMPLOYEE MATTERS.
(a) Effective as of 12:01 a.m., local time, on the day after
the Closing Date, the employment by the Company of all then existing employees
shall terminate and the Buyer shall be deemed to have offered employment to each
individual whose employment was so terminated (the "Business Employees"),
effective at 12:01 a.m., local time, on the day after the Closing Date or, in
the case of a Business Employee not actively at work on the Closing Date on
account of a disability, on the day such employee reports for work after
termination of such disability upon substantially the same terms and conditions
with substantially the same duties and responsibilities and at substantially the
same rate of pay as in effect on the Closing Date while such individuals were
employed by the Company. The Company shall retain responsibility for the payment
of any employee benefits or entitlement, including severance pay, accrued
vacation, sick or holiday pay, to any Business Employee pursuant to any Plan,
Benefit Program or Agreement or law or regulation as a result of the
consummation of the transactions contemplated hereby.
(b) The Seller shall permit Buyer to contact and make
arrangements with the Company's employees for the purpose of assuring their
employment by Buyer after the Closing and for the purpose of ensuring the
continuity of the Company's business, and the Seller agrees not to discourage
any such employees from being employed by or consulting with Buyer.
(c) The parties acknowledge that the transactions provided for
in this Agreement may result in obligations on the part of the Company and one
or more of the Plans that is a welfare benefit plan (within the meaning of
Section 3(1) of ERISA) to comply with the health care continuation requirements
of Part 6 of Title 1 of ERISA and Code Section 4980B, as applicable. The parties
expressly agree that Buyer and Buyer's benefit plans shall have no
responsibility for compliance with such health care continuation requirements
(i) for qualified beneficiaries who previously elected to receive continued
coverage under the Company's ERISA benefit plans or who between the date of this
Agreement and the Closing Date elect to receive continued coverage, or (ii) with
respect to those employees or former employees of the Company who may become
eligible to receive such continued coverage as a result of the transactions
provided for in this Agreement.
(d) Except as specifically set forth in this Agreement: (i)
the Buyer shall not be obligated to assume, continue or maintain any of the
Plans or Benefit Programs or Agreements; (ii) no assets or liabilities of the
Plans shall be transferred to, or assumed by, the Buyer or the Buyer's benefit
plans; and (iii) the Company shall be solely responsible for funding and/or
paying any benefits under any of the Plans or Benefit Programs or Agreements,
including any termination benefits and other employee entitlements accrued under
such plans by or attributable to employees of the Company prior to the Closing
Date.
(e) Nothing in this Agreement, express or implied, shall
confer upon any employee of the Company, or any representative of any such
employee, any rights or remedies, including any right to employment or continued
employment for any period, of any nature whatsoever.
5.12 PAYOFF AND ESTOPPEL LETTERS. Prior to Closing and as requested by
Buyer, (a) the Company shall request payoff and estoppel letters with respect to
any indebtedness being assumed by Buyer which Buyer, in its sole discretion,
elects to pay off on or after the Closing Date, which letters shall contain
payoff amounts, per diems, wire transfer instructions and an agreement to
deliver, upon full payment, UCC-3 termination statements, satisfactions of
mortgage or other appropriate releases and any
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original promissory notes or other evidences of indebtedness marked canceled,
and (b) the Company shall provide Buyer with evidence of satisfaction in full or
release of all guarantees, notes, or obligations of the Company to or on behalf
of either Shareholder or any Affiliate of the Company or either Shareholder.
ARTICLE VI. - CONDITIONS TO SELLER'S AND BUYER'S OBLIGATIONS
6.01 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of Seller
to carry out the transactions contemplated by this Agreement are subject, at the
option of Seller, to the satisfaction, or waiver of the following conditions (it
being understood that upon the occurrence of the Closing, all of such conditions
shall be deemed to have been satisfied or waived):
(a) Buyer shall have furnished Seller with a certified copy of
all necessary corporate action on its behalf approving its execution, delivery
and performance of this Agreement.
(b) All representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing as if such representations and warranties were made at and as of the
Closing, except for changes contemplated by the terms of this Agreement, and
Buyer shall have performed and satisfied in all material respects all covenants
and agreements required by this Agreement to be performed and satisfied by Buyer
at or prior to the Closing.
(c) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by or on behalf of the Seller)
shall be pending or threatened before any Governmental Authority seeking to
restrain the Company or prohibit the Closing or seeking Damages against the
Company as a result of the consummation of this Agreement.
(d) Seller shall have received the opinion of Greenberg
Traurig, P.A., counsel to Buyer, dated as of the Closing Date, in form and
substance reasonably satisfactory to the Company, to the effect of Sections
4.01, 4.02 and 4.03(i). In rendering such opinion, Greenberg Traurig may rely as
to factual matters on certificates of officers and directors of Buyer and on
certificates of governmental officials.
(e) Buyer (or, at Buyer's option, the Buyer subsidiary that
will acquire the Assets and operate the Business) shall have executed and
delivered to Kevin Kelly the Employment Agreement in the form attached hereto as
EXHIBIT A (the "Employment Agreement").
(f) Buyer shall have executed and delivered to Seller the
Set-Off Escrow Agreement attached hereto as EXHIBIT D.
(g) HEICO Aerospace shall have executed and delivered to
Seller the Guaranty Agreement attached hereto as EXHIBIT E.
6.02 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
carry out the transactions contemplated by this Agreement are subject, at the
option of Buyer, to the satisfaction, or waiver by Buyer, of the following
conditions (it being understood that upon the occurrence of the Closing, all of
such conditions shall be deemed to have been satisfied or waived):
(a) All representations and warranties of the Seller contained
in this Agreement shall be true and correct in all material respects at and as
of the Closing as if such representations and warranties were made at and as of
the Closing, except for changes contemplated by the terms of this Agreement, and
the Seller shall have performed and satisfied in all material respects all
agreements and covenants required by this Agreement to be performed and
satisfied by it at or prior to the Closing.
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(b) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by or on behalf of Buyer) shall
be pending or threatened before any court or governmental agency seeking to
restrain Buyer or prohibit the Closing or seeking Damages against Buyer or the
Company or its Assets as a result of the consummation of this Agreement.
(c) Except for matters disclosed in Schedule 3.09(a) or
3.09(b) attached hereto, since January 1, 1998 and up to and including the
Closing, there shall not have been any event, circumstance, change or effect
that, individually or in the aggregate, had or might have a material adverse
effect on the Company's business, operations, prospects, Assets or financial
condition.
(d) The Buyer shall have received the opinion of Magasinn &
Magasinn, counsel to the Seller, dated as of the Closing Date, addressed to the
Buyer and in form and substance reasonably satisfactory to the Buyer, to the
effect set forth on EXHIBIT B hereto. In rendering such opinion, Magasinn &
Magasinn may rely as to factual matters on certificates of officers, directors
and shareholders of the Company and on certificates of governmental officials.
(e) Kevin Kelly shall have executed and delivered to Buyer the
Employment Agreement.
(f) Seller shall have furnished Buyer with a certified copy of
all necessary corporate action on its behalf approving Seller's execution,
delivery and performance of this Agreement.
(g) All agreements, commitments and understandings between the
Company and the Shareholders (or any Affiliate thereof) shall have been
terminated in all respects on terms satisfactory to Buyer, and all obligations,
claims or entitlements thereunder shall be unconditionally waived and released
by the Shareholders and/or such Affiliates, as applicable, and written evidence
thereof satisfactory in form and substance to Buyer shall have been delivered to
Buyer.
(h) Buyer shall have completed its due diligence
investigation, and the results thereof shall not have revealed that any of the
representations of the Company and Sellers set forth herein are untrue or
incorrect in any respect or otherwise be unsatisfactory to Buyer.
(i) All proceedings to be taken by the Company in connection
with the transactions contemplated hereby and all documents incident thereto
shall be satisfactory in form and substance to Buyer and its counsel, and Buyer
and said counsel shall have received all such counterpart originals or certified
or other copies of such documents as it or they may reasonably request.
(j) Buyer shall have received written evidence, in form and
substance satisfactory to Buyer, of the consent to the transactions contemplated
by this Agreement of all governmental, quasi-governmental and private third
parties (including, without limitation, persons or other entities leasing real
or personal property to the Company) where the absence of any such consent would
result in a violation of law or a breach or default under any agreement to which
the Company is subject.
(k) The Board of Directors of Buyer shall have approved this
Agreement and Buyer's acquisition of the Assets contemplated hereby (it being
agreed that this condition shall automatically lapse in five business days, with
Buyer having the right to terminate this Agreement within such period if Board
approval is not obtained).
(l) Buyer shall be satisfied that it will be able to obtain,
not later than sixty (60) days after the Closing Date, all audited historical
and unaudited pro forma Financial Statements with respect to the Company's
Business, if any, together with any required consent of the Company's
independent public accountants, that may be required to be included in a Current
Report on Form 8-K.
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(m) No proceeding in which either Shareholder or the Seller
shall be a debtor, defendant or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or against such person
under any United States or state bankruptcy or insolvency law.
(n) Seller shall have executed and delivered to Buyer the
Set-Off Escrow Agreement attached hereto as EXHIBIT D.
(o) The Buyer shall have received copies of "payoff" or
"estoppel" letters or other evidence, reasonably satisfactory to it, of the
termination, at or prior to Closing, of all long-term debt and any and all Liens
that encumber the Company's Assets pursuant thereto.
(p) The Seller shall have delivered to Buyer a "comfort
letter" from Bauch, Firestone, Carmany and Ciolfi with respect to the Financial
Statements.
ARTICLE VII. - POST-CLOSING OBLIGATIONS
7.01 FURTHER ASSURANCES. Following the Closing, Seller and the Buyer
shall execute and deliver such documents, and take such other action, as shall
be reasonably requested by any other party hereto to carry out the transactions
contemplated by this Agreement.
7.02 PUBLICITY. None of the parties hereto shall issue or make, or
cause to have issued or made, any public release or announcement concerning this
Agreement or the transactions contemplated hereby, without the advance approval
in writing of the form and substance thereof by each of the other parties,
except as required by law or by the rules of the National Association of
Securities Dealers or the United States Securities Exchange Commission (in which
case, so far as possible, there shall be consultation between the parties prior
to such announcement), and the parties shall endeavor jointly to agree on the
text of any announcement or circular so approved or required.
7.03 INDEMNIFICATION.
(a) POST-CLOSING INDEMNITY BY THE SELLER. Subject to the
provisions of Section 9.01, from and after the Closing, the Company and
Shareholders shall jointly and severally indemnify and hold harmless Buyer and
its Affiliates, directors, officers and employees from and against any and all
Damages arising out of, resulting from or in any way related to (i) a breach of,
or the failure to perform or satisfy any of, the representations, warranties,
covenants and agreements made by the Seller and/or Shareholders in this
Agreement or in any document or certificate delivered by the Seller and/or
Shareholders at the Closing pursuant hereto, (ii) the occurrence of any event on
or prior to the date of Closing that is (or would be, but for any deductible
thereunder) covered by individual policies of insurance, blanket insurance
policies or self insurance programs maintained by the Company, and/or (iii) the
existence of any liabilities or obligations of the Company (whether accrued,
absolute, contingent, known or unknown, or otherwise, and whether or not of a
nature appropriate for inclusion in a balance sheet in accordance with GAAP)
other than the Assumed Obligations and those contemplated by Section 3.08(b)
hereof. Any payment made to Buyer by Seller pursuant to the indemnification
obligations under this Section 7.03 shall constitute a reduction in the Purchase
Price hereunder.
(b) POST-CLOSING INDEMNITY BY THE BUYER. From and after the
Closing, the Buyer shall indemnify and hold harmless the Company and the
Shareholders from and against any and all Damages arising out of, resulting from
or in any way related to a breach of, or the failure to perform or satisfy any
of, the representations, warranties, covenants and agreements made by the Buyer
in this Agreement or in any document or certificate delivered by Buyer at the
Closing pursuant hereto; provided however, that Buyer shall be obligated to
indemnify only if the aggregate of all of Buyer's liability under this Section
7.03(b) exceeds $50,000, it being understood that said $50,000 figure is to
serve as a "trigger" for the indemnification and not as a "deductible" (for
example, if the indemnity claims for which the Buyer would,
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but for the provisions of this paragraph (b), be liable for aggregate $51,000,
the Buyer would be liable for the full $51,000, and not just $1,000).
7.04 NON-COMPETITION.
(a) GENERAL. In consideration of the payment of the Purchase
Price, and in order to induce the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, except and to the extent
permitted under the Employment Agreement, each of the Shareholders hereby
severally covenants and agrees as follows:
(i) Such Shareholder, without the prior written
consent of Buyer, shall not for a period of five (5) years from and after the
Closing Date, directly or indirectly, for himself or for any other person, firm,
corporation, partnership, association or other entity, employ or attempt to
employ any employee of the Company or Buyer or any of Buyer's Affiliates until
at least six months after the date such employee was not employed by the Buyer
or any of its Affiliates.
(ii) Neither such Shareholder nor any of its
Affiliates shall, without the prior written consent of the Buyer and for a
period of five (5) years from and after the Closing Date (A) directly or
indirectly acquire or own in any manner any interest in any person, firm,
partnership, corporation, association or other entity which engages or plans to
engage in any facet of the Business or which competes or plans to compete in any
way with the existing business of Buyer or any of its subsidiaries or
Affiliates, anywhere in United States (the "Territory"), (B) be employed by or
serve as an employee, agent, officer, director of, or as a consultant to, any
person, firm, partnership, corporation, association or other entity which
engages or plans to engage in any facet of the Business or which competes or
plans to compete in any way with the Buyer or any of its subsidiaries or
Affiliates within the Territory, or (C) utilize their special knowledge of the
business of the Company and their relationships with customers, suppliers and
others to compete with Buyer and/or any of its Affiliates in any business which
engages or plans to engage in the design, manufacture and/or sale of FAA/PMA or
similar aircraft parts. Nothing herein shall limit the right of the Shareholders
or their Affiliates to engage in the blade refurbishing business contemplated by
that certain Development Agreement among Buyer and the Shareholders being
executed contemporaneously herewith, a copy of which is attached as EXHIBIT C.
Notwithstanding the foregoing, in the event the Buyer defaults in its obligation
to pay the Earnout following final determination pursuant to Sections 1.06 and,
if applicable, 1.05, the non-competition covenants set forth in this Section
7.04(a) shall terminate on the date that a final, non-appealable judicial
judgment is rendered which establishes Buyer's liability to Seller for payment
of the Earnout.
(b) NONDISCLOSURE. Such Shareholder shall not at any time,
disclose, directly or indirectly, to any person, firm, corporation, partnership,
association or other entity, any confidential information relating to the
Company or to Buyer, its subsidiaries or Affiliates, or any information
concerning their respective financial condition, customers, sources of leads and
methods of obtaining new business or the methods generally of doing and
operating their respective businesses, except to the extent that such
information is a matter of public knowledge or is required to be disclosed by
law of judicial or administrative process.
(c) INJUNCTION. It is recognized and hereby acknowledged by
the parties hereto that a breach or violation by either Shareholder or any of
their respective Affiliates of any or all of the covenants and agreements
contained in this Agreement may cause irreparable harm and damage to Buyer in a
monetary amount which may be virtually impossible to ascertain. As a result,
each Shareholder recognizes and hereby acknowledges that Buyer shall be entitled
to an injunction from any court of competent jurisdiction enjoining and
restraining any breach or violation of any or all of the covenants and
agreements contained in this Agreement by such Shareholder and/or his
associates, Affiliates, partners or agents, either directly or indirectly, and
that such right to injunction shall be cumulative and in addition to whatever
other rights or remedies the Buyer may possess hereunder, at law or in equity.
Nothing contained in this Section 7.04 shall be construed to prevent Buyer from
seeking and recovering from a
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Shareholder damages sustained by it as a result of any breach or violation by
such Shareholder of any of the covenants or agreements of the Shareholders
and/or the Company contained herein.
7.05 DELIVERY OF PROPERTY RECEIVED BY THE COMPANY AFTER CLOSING. From
and after the Closing, Buyer shall have the right and authority to collect, for
the account of Buyer, all receivables and other items which shall be transferred
or are intended to be transferred to Buyer as part of the Assets as provided in
this Agreement, and to endorse with the name of the Company any checks or drafts
received on account of any such receivables or other Assets. The Company agrees
that it will transfer or deliver to Buyer, promptly after the receipt thereof,
any cash or other property which the Company receives after the Closing Date in
respect of any claims, contracts, licenses, leases, commitments, sales orders,
purchase orders, receivables of any character or any other items transferred or
intended to be transferred to Buyer as part of the Assets under this Agreement.
7.06 BUYER APPOINTED ATTORNEY FOR THE COMPANY. Effective at the Closing
Date, the Company hereby constitutes and appoints Buyer, and Buyer's successors
and assigns, its true and lawful attorney, in the name of either Buyer or the
Company (as Buyer shall determine in its sole discretion) but for the benefit
and at the expense of Buyer (except as otherwise herein provided), (a) to
institute and prosecute all proceedings which Buyer may deem proper in order to
collect, assert or enforce any claim, right or title of any kind in or to the
Assets as provided for in this Agreement; (b) to defend or compromise any and
all actions, suits or proceedings in respect of any of the Assets, and to do all
such acts and things in relation thereto as Buyer shall reasonably deem
advisable; and (c) to take all action which Buyer may reasonably deem proper in
order to provide for Buyer the benefits under any of the Assets where any
required consent of another party to the sale or assignment thereof to Buyer
pursuant to this Agreement shall not have been obtained. The Company
acknowledges that the foregoing powers are coupled with an interest and shall be
irrevocable. Buyer shall be entitled to retain for its own account any amounts
respecting the Assets collected pursuant to the foregoing powers, including any
amounts payable as interest in respect thereof.
7.07 ASSIGNMENT OF CONTRACTS. At the option of Buyer, and
notwithstanding anything in this Agreement to the contrary, this Agreement shall
not constitute an assignment of any claim, contract, license, franchise, lease,
commitment, sales order, sales contract, supply contract, service agreement,
purchase order or purchase commitment if an attempted assignment thereof without
the consent of a third party thereto would constitute a breach thereof or in any
way adversely affect the rights of Buyer thereunder. If such consent is not
obtained, or if any attempt at an assignment thereof would be ineffective or
would affect the rights of the Company thereunder so that Buyer would not in
fact receive all such rights, the Company shall cooperate with Buyer to the
extent necessary to provide for Buyer the benefits under such claim, contract,
license, franchise, lease, commitment, sales order, sales contract, supply
contract, service agreement, purchase order or purchase commitment, including
enforcement for the benefit of Buyer of any and all rights of the Company
against a third party thereto arising out of the breach or cancellation by such
third party or otherwise.
7.08 INVESTMENT REPRESENTATION LETTER. In connection with the issuance
of the Shares pursuant to the Earnout, Seller and the Shareholders shall, at the
request of the Buyer, execute a letter affirming the representations made in
Section 3.24 hereof.
ARTICLE VIII. - TAX MATTERS
8.01 REPRESENTATIONS AND OBLIGATIONS REGARDING TAXES. Seller and the
Shareholders represent and warrant to and agree with the Buyer as follows:
(a) Except as set forth in Schedule 8.01(a), (i) all returns
and reports, including without limitation, information and withholding returns
and reports ("Tax Returns") of or relating to any foreign, federal, state or
local tax assessment or other governmental charge (all herein referred to
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collectively as "Taxes" or singularly as a "Tax") that are required to be filed
on or before the Closing Date by or with respect to the income, business,
operations or property of the Company have been duly and timely filed, (ii) all
items of income, gain, loss, deduction and credit or other items required to be
included in such Tax Returns have been so included, (iii) all information
provided in such Tax Returns is true, correct and complete, (iv) all Taxes that
have become due with respect to the taxable years covered by such Tax Returns
have been timely paid in full, (v) no penalty, interest or other charge is or
will become due with respect to the late filing of any such Tax Return or late
payment of any such Tax, and (vi) all withholding Tax requirements imposed on
the Company for all taxable periods through the close of business on the Closing
Date have been satisfied in full in all respects.
(b) There is no claim against the Company with respect to any
Taxes and no assessment, deficiency or adjustment has been asserted or proposed
with respect to any Tax Return of or with respect to the Company, other than
those disclosed (and to which are attached true and complete copies of all audit
or similar reports) in Schedule 8.01(b).
(c) Except as set forth in Schedule 8.01(c), there is not in
force any extension of time with respect to the date on which any Tax Return of
or with respect to the Company is due to be or have been filed, or any waivers
or agreements by or with respect to the Company or Seller of or for any
extension of time for the assessment or payment of any Tax.
(d) The total amounts set up as liabilities for Taxes in the
Financial Statements are sufficient to cover the payment of all Taxes, including
any penalties or interest thereon and whether or not assessed or disputed, which
are, or are hereafter found to be, or to have been, due with respect to the
conduct of the business of the Company for the taxable periods covered thereby.
(e) The Seller shall grant to Buyer or its designees access at
all reasonable times to all of its books and records (including tax workpapers
and returns and correspondence with tax authorities),, including the right to
take extracts therefrom and make copies thereof, to the extent such books and
records relate to taxable periods ending on or prior to or that include the
Closing Date. Buyer shall (i) grant to Seller access at all reasonable times to
all of its books and records (including tax workpapers and returns and
correspondence with tax authorities) insofar as they relate to the operations of
the Company, including the right to take extracts therefrom and make copies
thereof, to the extent that such books and records relate to taxable periods
ending on or prior to or that include the Closing Date, and (ii) otherwise
cooperate with Seller in connection with any audit of Taxes that relate to the
business of the Company prior to Closing.
8.02 INDEMNIFICATION FOR TAXES.
(a) Seller and the Shareholders hereby jointly and severally
agree to indemnify Buyer and its Affiliates (each herein sometimes referred to
as an "Indemnified Taxpayer") against, and agree to protect, save and hold
harmless each Indemnified Taxpayer from, any and all claims, damages,
deficiencies, losses (including Taxes, interest and penalties) and all expenses,
including attorneys' and accountants' fees and disbursements (all herein
referred to as "Losses") resulting from:
(i) A claim by any taxing authority for (A) any Taxes
of the Company allocable to any period ending on or prior to the Closing Date,
and (B) any Taxes of Seller or any corporation that is or was a member of an
affiliated group of corporations of which the Seller was or is a member;
(ii) A claim by any taxing authority for any Taxes
arising from or occasioned by the sale of the Company's Assets pursuant to this
Agreement (except with respect to the 50% of the sales Taxes contemplated by the
last sentence of Section 1.01(c) herein); or
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(iii) Any misrepresentation or breach of any
representation, warranty or obligation set forth in this Article VIII.
(b) Subject to the resolution of any Tax contest pursuant to
Section 8.02(c), upon notice from Buyer to the Seller that an Indemnified
Taxpayer is entitled to an indemnification payment for a Loss pursuant to
Section 8.02(a), the Seller shall thereupon pay to the Indemnified Taxpayer an
amount that, net of any Taxes imposed on the Indemnified Taxpayer with respect
to such payment, will indemnify and hold the Indemnified Taxpayer harmless from
such Loss.
(c) (i) If a claim shall be made by any taxing authority that,
if successful, would result in the indemnification of an Indemnified Taxpayer,
the Indemnified Taxpayer shall promptly notify the Seller in writing of such
fact; provided, however, that any failure to give such notice will not waive any
rights of the Indemnified Taxpayer except to the extent the rights of the
indemnifying party are actually prejudiced.
(ii) The Indemnified Taxpayer shall take such action in
connection with contesting such claim as the Seller shall reasonably request in
writing from time to time; provided that (A) within 30 days (or such earlier
date that any payment of Taxes is due by the Indemnified Taxpayer) after the
notice described in (i) above has been delivered, the Seller requests that such
claim be contested, (B) the Seller shall have agreed to pay to the Indemnified
Taxpayer on demand all costs and expenses that the Indemnified Taxpayer may
incur in connection with contesting such claim, including, without limitation,
reasonable attorneys' and accountants' fees and disbursements, and (C) if the
Indemnified Taxpayer is requested to pay the Tax claimed and sue for a refund,
the Seller shall have advanced to the Indemnified Taxpayer, on an interest free
basis, the amount of such claim. In the case of any such claim referred to
above, the Indemnified Taxpayer shall not make payment of such claim for at
least 30 days (or such shorter period as may be required by applicable law)
after the giving of the notice required by (i) above, shall give to the Seller
any information reasonably requested relating to such claim and otherwise shall
cooperate with the Seller in good faith in order to contest effectively any such
claim.
(iii) Subject to the provisions of paragraph (ii) above,
the Indemnified Taxpayer shall prosecute such contest to a determination in a
court of initial jurisdiction, and if the Seller shall reasonably request, the
Indemnified Taxpayer shall prosecute such contest to a determination in an
appellate court.
(iv) If, after actual receipt by the Indemnified Taxpayer
of an amount advanced by Seller pursuant to paragraph (ii)(C) above, the extent
of the liability of the Indemnified Taxpayer with respect to the indemnified
matter shall be established by the final judgment or decree of a court or a
final or binding settlement with an administrative agency having jurisdiction
thereof, the Indemnified Taxpayer shall promptly pay to Seller any refund
received by or credited to the Indemnified Taxpayer with respect to the
indemnified matter (together with any interest paid or credited thereon by the
taxing authority and any recovery of legal fees from such taxing authority).
Notwithstanding the foregoing, the Indemnified Taxpayer shall not be required to
make any payment hereunder before such time as the Seller shall have made all
payments or indemnities then due with respect to Indemnified Taxpayer pursuant
to this Article VIII.
(d) Anything to the contrary in this Agreement
notwithstanding, the indemnification obligations of the Seller under this
Article VIII shall survive the Closing until expiration of the applicable
statutes of limitations. Any payment made to Buyer by Seller pursuant to the
indemnification obligations under this Section 8.02 shall constitute a reduction
in the Purchase Price hereunder.
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ARTICLE IX. - MISCELLANEOUS
9.01 LIMITATION ON LIABILITY.
(a) The representations, warranties, agreements, and
indemnities of the Seller and the Buyer set forth in this Agreement or in
connection with the transactions contemplated hereby shall survive the Closing
except as expressly provided in Section 9.01(b).
(b) The Seller shall have no liability under the Agreement to
indemnify under either (A) clause (iii) of Section 7.03(a), or (B) clause (i) of
Section 7.03(a) against breaches of the provisions of Sections 3.05 (clauses
(ii), (iii), (iv) and (v)), 3.06, and 3.08 through 3.23, in each case unless the
indemnifying party receives notice in writing from Buyer of Buyer's claim under
said indemnity on or before January 31, 2000. The Buyer shall have no liability
under the Agreement to indemnify under Section 7.03(b) against breaches of the
provisions of Sections 4.03 and 4.04 unless the indemnifying party receives
notice in writing from Seller of Seller's claim under said indemnity on or
before January 31, 2000. Said limitations shall not apply to any breaches of or
obligations to comply with any of the other provisions of this Agreement,
regardless of whether such breach or obligation also constitutes a breach or
obligation under any of the provisions specifically listed in this Section
9.01(b).
(c) The Seller shall be obligated to indemnify as and to the
extent set forth in Section 7.03(a) only if the aggregate of all of the Seller's
liability under such indemnity obligations exceeds $50,000, it being understood
that said $50,000 figure is to serve as a "trigger" for the indemnification and
not as a "deductible" (for example, if the indemnity claims for which the
Sellers would, but for the provisions of this paragraph (c), be liable aggregate
$51,000, the Seller would then be liable for the full $51,000, and not just
$1,000).
(d) For purposes of this Section 9.01(d), a party making a
claim for indemnity under Section 7.03 is hereinafter referred to as an
"Indemnified Party" and the party against whom such claim is asserted is
hereinafter referred to as the "Indemnifying Party". All claims by any
Indemnified Party under Section 7.03 hereof shall be asserted and resolved in
accordance with the following provisions. If any claim or demand for which an
Indemnifying Party would be liable to an Indemnified Party is asserted against
or sought to be collected from such Indemnified Party by such third party, said
Indemnified Party shall with reasonable promptness notify in writing the
Indemnifying Party of such claim or demand stating with reasonable specificity
the circumstances of the Indemnified Party's claim for indemnification;
provided, however, that any failure to give such notice will not waive any
rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually prejudiced or to the extent that any applicable
period set forth in Section 9.01(b) has expired without such notice being given.
After receipt by the Indemnifying Party of such notice, then upon reasonable
notice from the Indemnifying Party to the Indemnified Party, or upon the request
of the Indemnified Party, the Indemnifying Party shall defend, manage and
conduct any proceedings, negotiations or communications involving any claimant
whose claim is the subject of the Indemnified Party's notice to the Indemnifying
Party as set forth above, and shall take all actions necessary, including but
not limited to the posting of such bond or other security as may be required by
any Governmental Authority, so as to enable the claim to be defended against or
resolved without expense or other action by the Indemnified Party. Upon request
of the Indemnifying Party, the Indemnified Party shall, to the extent it may
legally do so and to the extent that it is compensated in advance by the
Indemnifying Party for any costs and expenses thereby incurred,
(i) take such action as the Indemnifying Party may
reasonably request in connection with such action,
(ii) allow the Indemnifying Party to dispute such
action in the name of the Indemnified Party and to conduct a defense to such
action on behalf of the Indemnified Party, and
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(iii) render to the Indemnifying Party all such
assistance as the Indemnifying Party may reasonably request in connection with
such dispute and defense.
9.02 CONFIDENTIALITY.
(a) Prior to the Closing, Buyer shall, and shall cause its
Affiliates and its and their employees, agents, accountants, legal counsel and
other representatives and advisers to, hold in strict confidence all, and not
divulge or disclose any, information of any kind concerning the Company and its
business; provided, however, that the foregoing obligation of confidence shall
not apply to (i) information that is or becomes generally available to the
public other than as a result of a disclosure by Buyer or its Affiliates or any
of its or their employees, agents, accountants, legal counsel or other
representatives or advisers, (ii) information that is or becomes available to
Buyer or its Affiliates or any of its or their employees, agents, accountants,
legal counsel or other representatives or advisers on a nonconfidential basis
prior to its disclosure by Buyer or its Affiliates or any of its or their
employees, agents, accountants, legal counsel or other representatives or
advisers and (iii) information that is required to be disclosed by Buyer or its
Affiliates or any of its or their employees, agents, accountants, legal counsel
or other representatives or advisers as a result of any applicable law, rule or
regulation of any Governmental Authority; and provided further that Buyer
promptly shall notify the Sellers of any disclosure pursuant to clause (iii) of
this Section 9.02(a); and, provided, further, that the foregoing obligation of
confidence shall not apply to the furnishing of information by Buyer in bona
fide discussions or negotiations with prospective lenders as long as Buyer first
obtains from such prospective lenders an undertaking of confidentiality to the
effect of this Section 9.02(a). Without limiting the generality of the
foregoing, Buyer agrees that it shall be subject to the restrictions of the
Confidentiality Agreement heretofore executed by "HEICO East Corporation" in
favor of the Company as if a signatory thereto (provided, however, that such
agreement shall automatically terminate on the Closing hereunder).
(b) The Seller and each Shareholder shall, and shall cause its
or his Affiliates and their respective employees, agents, accountants, legal
counsel and other representatives and advisers to, hold in strict confidence
all, and not divulge or disclose any, information of any kind concerning the
transactions contemplated by this Agreement, the Company, Buyer or their
respective businesses; provided, however, that the foregoing obligation of
confidence shall not apply to (i) information that is or becomes generally
available to the public other than as a result of a disclosure by the Seller or
its Affiliates or any of their respective employees, agents, accountants, legal
counsel or other representatives or advisers, (ii) information that is or
becomes available to the Seller or its Affiliates or any of their respective
employees, agents, accountants, legal counsel or other representatives or
advisers after the Closing on a nonconfidential basis prior to its disclosure by
the Seller or its Affiliates or any of their respective employees, agents,
accountants, legal counsel or other representatives or advisers and (iii)
information that is required to be disclosed by the Seller or its Affiliates or
any of their respective employees, agents, accountants, legal counsel or other
representatives or advisers as a result of any applicable law, rule or
regulation of any Governmental Authority; and provided further that the Seller
shall promptly shall notify Buyer of any disclosure pursuant to clause (iii) of
this Section 9.02(b).
9.03 BROKERS. Regardless of whether the Closing shall occur, (i) the
Seller shall indemnify and hold harmless Buyer from and against any and all
liability for any brokers or finders' fees arising with respect to brokers or
finders retained or engaged by the Seller in respect of the transactions
contemplated by this Agreement, and (ii) Buyer shall indemnify and hold harmless
the Seller from and against any and all liability for any brokers' or finders'
fees arising with respect to brokers or finders retained or engaged by Buyer in
respect of the transactions contemplated by this Agreement.
9.04 COSTS AND EXPENSES. Each of the parties to this Agreement shall
bear his or its own expenses incurred in connection with the negotiation,
preparation, execution and closing of this Agreement and the transactions
contemplated hereby.
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9.05 NOTICES. Any notice, request, instruction, correspondence or other
document to be given hereunder by any party hereto to another (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed by registered or certified mail, postage prepaid and return receipt
requested, or by telecopier, as follows:
BUYER, HEICO AEROSPACE OR RDI Acquisition Corp., HEICO Aerospace Holdings
HEICO CORPORATION Corp. or HEICO Corporation, as applicable
c/o HEICO Corporation
825 Brickell Bay Drive
Suite 1644
Miami, Florida 33131
Attention: Mr. Victor H. Mendelson, Vice
President and General Counsel
Telecopy No. (305) 374-6742
WITH A COPY TO:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Bruce E. Macdonough
Telecopy No. (305) 579-0717
SELLER OR EITHER SHAREHOLDER: Rogers-Dierks, Inc.
501B 30th Street
Anacortes, Washington 98221
Attention: President
Telecopy No. (360) 293-8238
WITH COPIES TO:
Magasinn & Magasinn
4640 Admiralty Way, Suite 402
Marina Del Rey, California 90292
Attention: Arnold W. Magasinn
Telecopy No. (310) 301-0035
William Rogers
20 Portuguese Bend Road
Rolling Hills, CA 90274-5071
Telecopy No. (310) 541-4869
John Dierks
1350 E. Flamingo Road
Suite 489
Las Vegas, NV 89119
Telecopy No. (702) 253-7551
011-417-90-43-30-111 - France
Each of the above addresses for notice purposes may be changed by providing
appropriate notice hereunder. Notice given by personal delivery or registered
mail shall be effective upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next normal business day after
receipt if not received
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during the recipient's normal business hours. All Notices by telecopier shall be
confirmed by the sender thereof promptly after transmission in writing by
registered mail or personal delivery. Anything to the contrary contained herein
notwithstanding, notices to any party hereto shall not be deemed effective with
respect to such party until such Notice would, but for this sentence, be
effective both as to such party and as to all other persons to whom copies are
provided above to be given.
9.06 NO NEGOTIATIONS. Seller shall not itself, and shall cause the
Shareholders and its other Affiliates and all of its and its Affiliates'
respective officers, directors, employees, partners, agents and advisors not to,
directly or indirectly, encourage, solicit or engage in discussions or
negotiations with, or provide any information to, or consider any proposal or
offer presented by, any party concerning any sale of the Company or any of its
Assets or any similar transaction or enter into any agreement or take any action
that by its terms or effect could reasonably be expected to affect adversely the
ability of the parties hereto to consummate the transactions contemplated
hereby.
9.07 GOVERNING LAW. The provisions of this agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Florida (excluding any conflict of law rule or
principle that would refer to the laws of another jurisdiction). Each party
hereto irrevocably submits to the jurisdiction of the Circuit Court of the State
of Florida, Miami-Dade County, in any action or proceeding arising out of or
relating to this Agreement or any of the Collateral Agreements, and each party
hereby irrevocably agrees that all claims in respect of any such action or
proceeding must be brought and/or defended in such court; provided, however,
that (x) matters which are under the exclusive jurisdiction of the Federal
courts shall be brought in the Federal District Court for the Southern District
of Florida, and (y) nothing herein shall limit the right of Seller and/or the
Shareholders to bring suit in California to enforce the payment of any Earnout
once finalized (following, if applicable, any requisite determination by the
Settlement Accountants). Should the Seller and/or the Shareholders bring suit in
California to enforce the payment of any Earnout, the Buyer hereby irrevocably
submits to jurisdiction of the Superior Court of the State of California, Los
Angeles County, in any action brought in connection with the enforcement of the
Earnout. Each party hereto consents to service of process by any means
authorized by the applicable law of the forum in any action brought under or
arising out of this Agreement or any of the Collateral Agreements, and each
party irrevocably waives, to the fullest extent each may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY
JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING HEREUNDER.
9.08 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of each of the parties to this Agreement shall be deemed to have been
made, and the certificates delivered pursuant to clause (ii) of Section 2.02 and
clause (ii) of Section 2.03 by a party are agreed to and shall be deemed to
constitute the making of such representations and warranties, again at and as of
the Closing by and on behalf of the party on behalf of whom such certificates
are delivered.
9.09 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all exhibits and schedules attached hereto, constitutes the entire
agreement between and among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
9.10 BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this
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Agreement nor any of the rights, benefits or obligations hereunder shall be
assigned, by operation of law or otherwise, by any party hereto without the
prior written consent of the other party, provided, however, that nothing herein
shall prohibit the assignment of Buyer's rights and obligations to any direct or
indirect subsidiary or prohibit the assignment of Buyer's rights (but not
obligations) to any lender. Nothing in this Agreement, express or implied, is
intended to confer upon any person or entity other than the parties hereto and
their respective permitted successors and assigns, any rights, benefits or
obligations hereunder.
9.11 REMEDIES. The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by any party hereto shall not
preclude or constitute a waiver of its right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights and remedies
a party may have by law, statute or otherwise.
9.12 INTEREST ON OVERDUE PAYMENTS. Except if held pursuant to a right
to withhold such payment provided in Section 9.13, if any amount payable under
this Agreement is not paid when due, the amount unpaid shall bear interest from
the due date to the actual date of payment calculated and compounded at a rate
equal to the lesser of (i) eighteen percent (18%) per annum (simple interest),
or (ii) the maximum lawful interest rate permitted under applicable law.
9.13 WITHHOLDING OF PAYMENTS.
(a) Notwithstanding any other provision of this Agreement,
Seller and the Shareholders agree that Buyer shall after the Closing have the
right to withhold any payment owing to the Seller and/or the Shareholders under
or by reason of this Agreement to the extent of any and all payments due to but
not yet received by Buyer from Seller and/or the Shareholders pursuant to this
Agreement. Seller and each Shareholder specifically agrees that, subject to
paragraphs (b) and (c) of this Section 9.13 (i) any claims for indemnification
by Buyer against the Seller and Shareholders (or any of them) hereunder may be
satisfied by deducting and otherwise offsetting such claims against any amounts
that might otherwise be payable by Buyer to such persons pursuant to the Earnout
or otherwise, and (ii) to the extent that there remain unsatisfied
indemnification claims after the deductions and set-offs described above, Buyer
shall have full recourse against each of the Shareholders and the Seller
(including their assets of whatsoever kind or nature) for payment of such
indemnification claims.
(b) Buyer shall give Seller not less than fifteen (15) days'
notice (each a "Buyer's Notice") of its intention to deduct or set-off any
amounts pursuant to this Section 9.13, including in such notice a description of
Buyer's indemnification claim. If Seller does not object to such deduction or
set-off at least two business days prior to the date of the proposed deduction
or set-off set forth in the Buyer's Notice (the "Set-Off Date"), then such
proposed deduction or set-off shall become effective on such date and shall not
be subject to further review, challenge or adjustment absent fraud.
(c) If the Seller timely objects to the deduction or set-off
proposed in Buyer's Notice, and if Buyer and the Seller are unable to resolve
such dispute on or prior to the Set-Off Date, then (i) the proposed deduction or
set-off shall be effective only as to undisputed amounts, and (ii) any disputed
amounts shall be deposited, held and paid under the escrow agreement in
substantially the form annexed hereto as EXHIBIT D (the "Set-Off Escrow
Agreement"), such amounts to be held and disbursed by the Escrow Agent in
accordance with the terms of the Set-Off Escrow Agreement. In the event that a
dispute among the parties leads to a deposit with the Escrow Agent as aforesaid,
the party who is later determined to have been in error in attempting to enforce
or disputing the payment or set-off shall (i) pay the reasonable legal and
accounting fees, costs and expenses incurred by the prevailing party in
presenting, arguing and resolving such dispute, and (ii) pay to the party to
which such payment or set-off is determined to be payable an amount sufficient,
when added to the amount of interest earned on the disputed amount so deposited
in escrow, to equal a return at the rate of 18% per annum (simple interest) on
the disputed amount from the date payment of such amount was originally due
through the date payment is actually made.
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9.14 EXHIBITS AND SCHEDULES. The exhibits and Schedules referred to
herein are attached hereto and incorporated herein by this reference. Disclosure
of a specific item in any one Schedule shall be deemed restricted only to the
Section to which such disclosure specifically relates except where (i) there is
an explicit cross-reference to another Schedule, and (ii) Buyer could reasonably
be expected to ascertain the scope of the modification to a representation
intended by such cross-reference.
9.15 MULTIPLE COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.16 REFERENCES AND CONSTRUCTION.
(a) Whenever required by the context, and is used in this
Agreement, the singular number shall include the plural and pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identification the person may require. References to
monetary amounts, specific named statutes and generally accepted accounting
principles are intended to be and shall be construed as references to United
States dollars, statutes of the United States of the stated name and United
States generally accepted accounting principles, respectively, unless the
context otherwise requires.
(b) The provisions of this Agreement shall be construed
according to their fair meaning and neither for nor against any party hereto
irrespective of which party caused such provisions to be drafted. Each of the
parties acknowledge that it has been represented by an attorney in connection
with the preparation and execution of this Agreement.
9.17 SURVIVAL. Any provision of this Agreement which contemplates
performance or the existence of obligations after the Closing Date, and any and
all representations and warranties set forth in this Agreement, shall not be
deemed to be merged into or waived by the execution and delivery of the
instruments executed at the Closing, but shall expressly survive Closing and
shall be binding upon the party or parties obligated thereby in accordance with
the terms of this Agreement, subject to any limitations expressly set forth in
this Agreement.
9.18 ATTORNEYS' FEES. In the event any suit or other legal proceeding
is brought for the enforcement of any of the provisions of this Agreement, the
parties hereto agree that the prevailing party or parties shall be entitled to
recover from the other party or parties upon final judgment on the merits
reasonable attorneys' fees (and sales taxes thereon, if any), including
attorneys' fees for any appeal, and costs incurred in bringing such suit or
proceeding.
9.19 RISK OF LOSS. Prior to the Closing, the risk of loss of damage to,
or destruction of, any and all of the Company's Assets shall remain with the
Seller, and the legal doctrine known as the "Doctrine of Equitable Conversion"
shall not be applicable to this Agreement or to any of the transactions
contemplated hereby.
ARTICLE X. - DEFINITIONS
Capitalized terms used in this Agreement are used as defined in this
Article X or elsewhere in this Agreement.
10.01 AFFILIATE. The term "Affiliate" shall mean, with respect to any
person, any other person controlling, controlled by or under common control with
such person. The term "Control" as used in the preceding sentence means, with
respect to a corporation, the right to exercise, directly or indirectly, more
than 50% of the voting rights attributable to the shares of the controlled
corporation and, with respect to
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any person other than a corporation, the possession, directly or indirectly, of
the power to direct or cause the direction of the management or policies of such
person.
10.02 COLLATERAL AGREEMENTS. The term "Collateral Agreements" shall
mean any or all of the exhibits to this Agreement and any and all other
agreements, instruments or documents required or expressly provided under this
Agreement to be executed and delivered in connection with the transactions
contemplated by this Agreement.
10.03 CONTRACTS. The term "Contracts", when described as being those of
or applicable to any person, shall mean any and all contracts, agreements,
franchises, understandings, arrangements, leases, licenses, registrations,
authorizations, easements, servitudes, rights of way, mortgages, bonds, notes,
guaranties, liens, indebtedness, approvals or other instruments or undertakings
to which such person is a party or to which or by which such person or the
property of such person is subject or bound, excluding any Permits.
10.04 DAMAGES. The term "Damages" shall mean any and all damages,
liabilities, obligations, penalties, fines, judgments, claims, deficiencies,
losses, costs, expenses and assessments (including without limitation income and
other taxes, interest, penalties and attorneys' and accountants' fees and
disbursements) to which a party becomes obligated.
10.05 FINANCIAL STATEMENTS. The term "Financial Statements" shall mean
any or all of the financial statements, including balance sheets and related
statements of income and statements of changes in financial position and the
accompanying notes thereto, of the Company's business prepared in accordance
with generally accepted accounting principles consistently applied, except as
may be otherwise provided herein.
10.06 GOVERNMENTAL AUTHORITIES. The term "Governmental Authorities"
shall mean any nation or country (including but not limited to the United
States) and any commonwealth, territory or possession thereof and any political
subdivision of any of the foregoing, including but not limited to courts,
departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
10.07 HAZARDOUS MATERIAL. The term "Hazardous Material" means all or
any of the following: (a) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as "hazardous
substances," "hazardous materials," "Hazardous wastes," "toxic substances" or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or "EP toxicity"; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million.
10.08 KNOWLEDGE OF THE COMPANY. The term "Knowledge of the Company"
shall mean the actual knowledge of the Company or any of the Shareholders, Kevin
Kelly and/or Sean Kelly with respect to the matter in question, and such
knowledge as the Company or any such managerial personnel of the Company
reasonably should have obtained upon diligent investigation and inquiry into the
matter in question.
10.09 LEGAL REQUIREMENTS. The term "Legal Requirements", when described
as being applicable to any person, shall mean any and all laws (statutory,
judicial or otherwise), ordinances, regulations, judgments, orders, directives,
injunctions, writs, decrees or awards of, and any Contracts with, any
Governmental Authority, in each case as and to the extent applicable to such
person or such person's business, operations or properties.
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10.10 NET WORTH. The term "Net Worth" shall mean the Company's
"stockholders' equity" computed in accordance with generally accepted accounting
principles consistently applied with the Company's prior practices except that
(i) no effect shall be given to any purchase accounting or other similar
adjustments resulting from the consummation of the transactions contemplated
herein and (ii) the Excluded Assets shall not be considered assets of the
Company in determining stockholders' equity.
10.11 PERMITS. The term "Permits" shall mean any and all permits,
rights, approvals, licenses, authorizations, legal status, orders or Contracts
under any Legal Requirement or otherwise granted by any Governmental Authority.
10.12 REAL PROPERTY. The term "Real Property" shall mean the real
property Used by the Company in the conduct of its business.
10.13 REGULATIONS. The term "Regulations" shall mean any and all
regulations promulgated by the Department of the Treasury pursuant to the Code.
10.14 USED. The term "Used" shall mean, with respect to the Assets,
Contracts or Permits of the Company, those owned, leased, licensed or otherwise
held by the Company which were acquired for use or held for use by the Company
in connection with the Company's business and operations, whether or not
reflected on the Company's books of account.
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EXECUTED as of the date first written above.
BUYER:
RDI ACQUISITION CORP.
By: _________________________________________
Victor H. Mendelson
PARENT:
HEICO AEROSPACE HOLDINGS CORP.
By: ________________________________________
Victor H. Mendelson
HEICO CORPORATION (solely for purposes of
Sections 1.06 and 4.05)
By: _________________________________________
Victor H. Mendelson
SELLER:
ROGERS-DIERKS, INC.
By: _________________________________________
SHAREHOLDERS:
By: _________________________________________
William Rogers
By: _________________________________________
John Dierks
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