EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
10.7 Third Amendment, dated September 16, 1997, to Loan Agreement dated
February 28, 1994 between HEICO Corporation and SunTrust Bank, South
Florida, National Association.
10.8 Fourth Amendment, dated December 1, 1997, to Loan Agreement dated
February 28, 1994 between HEICO Corporation and SunTrust Bank, South
Florida, National Association.
10.17 HEICO Corporation 1993 Stock Option Plan.
10.31 Stock Purchase Agreement, dated October 30, 1997, by and among HEICO
Corporation, HEICO Aerospace Holdings Corp. and Lufthansa Technik AG.
10.32 Shareholders Agreement, dated October 30, 1997, by and between HEICO
Aerospace Holdings Corp., HEICO Aerospace Corporation and all of the
shareholders of HEICO Aerospace Holdings Corp. and Lufthansa Technik
AG.
11 Computation of earnings per share.
21 Subsidiaries of the Company.
23.1 Consent of independent auditors.
27 Financial Data Schedule.
EXHIBIT 10.7
THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT ("Amendment") is made and
entered into on September 16, 1997, by and among HEICO CORPORATION, a Florida
corporation ("Heico"), HEICO AEROSPACE CORPORATION, a Florida corporation, f/k/a
Heico Corporation, a Florida corporation ("Aerospace") (collectively with Heico,
the ("Borrower") and SUNTRUST BANK, SOUTH FLORIDA, NATIONAL ASSOCIATION, f/k/a
Sunbank/South Florida, National Association ("Lender").
RECITALS
WHEREAS, Borrower and Lender have previously entered into that certain
Loan Agreement dated February 28, 1994, as previously amended by that certain
First Amendment to Loan Agreement and Reaffirmation Agreement dated as of
October 13, 1994, and that certain Second Amendment to Loan Agreement dated as
of March 1, 1995 (collectively, the "Loan Agreement") pursuant to which Heico
obtained extensions of credit of up to Seven Million and 00/100 Dollars
($7,000,000.00) ("Loan"); and
WHEREAS, Borrower and Lender wish to extend the maturity date of the
Loan, and to modify the Loan Agreement to reflect the extended maturity date.
NOW, THEREFORE, for good and valuable consideration, and in
consideration of the extension of the Loan made for the benefit of the Borrower,
the receipt and sufficiency of which are hereby acknowledged, the parties do
hereby agree as follows:
1. The foregoing recitals are hereby acknowledged to be true
and correct and are incorporated herein by this reference.
2. All capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Loan Agreement.
3. Subsection 1.2(dd) of the Loan Agreement is hereby amended
and restated as follows to reflect the extend the maturity date of the Loan:
(dd) "MATURITY DATE": As to the Loan, November 30,
1997, unless extended pursuant to Section 2.6 hereof. As to the Letter of
Credit, five (5) years from the date of the issuance of the Letter of Credit.
4. Subsection 1.2(ff) of the Loan Agreement is hereby amended
and restated to read as follows:
(ff) "NOTE": A Renewal Master Revolving Promissory
Note in the principal amount of Seven Million and 00/100 Dollars ($7,000,000.00)
from Heico to Lender dated September 16, 1997, and any modifications, amendments
or renewals thereof, evidencing the Loan, which Note renews that certain
Consolidation Master Revolving Promissory Note in the principal face amount of
Seven Million and 00/100 Dollars ($7,000,000.00) from Heico to Lender dated June
29, 1995.
5. Article 12 of the Loan Agreement is hereby amended to add
the following additional sentence:
It is further agreed, acknowledged and understood
that Lender has issued a Letter of Credit in the amount of Three Million Five
Hundred Sixty-Three Thousand One Hundred Ninety-Five and 00/100 Dollars
($3,563,195.00) on behalf of Aerospace, Aerospace has entered into a
Reimbursement Agreement in connection therewith dated as October 1, 1996 ("1996
Reimbursement Agreement"), and that the occurrence of an Event of Default under
the 1996 Reimbursement Agreement, or any amendment, renewal of modification
thereof, shall constitute a default under this Loan Agreement.
6. Borrower warrants and represents that all representations
and warranties contained the Loan Agreement are true and correct on the date
hereof as if made on the date hereof, and that Borrower is not in default on the
date hereof under any of the terms of the Loan Agreement or any of the Loan
Documents to which it is a party. Heico further acknowledges and agrees that the
outstanding principal balance of the Loan as of September 12, 1997, is $ 0.00.
7. In the event of any inconsistencies between the terms of
the Loan Agreement and the terms of this Amendment, the terms and provisions of
this Amendment shall control. Except as modified herein, the terms and
provisions of the Loan Agreement are hereby ratified and confirmed in all
respects and shall remain unchanged and in full force and effect from and after
the date hereof.
8. AS A MATERIAL INDUCEMENT FOR LENDER TO EXTEND THE LOAN AS
PROVIDED IN THIS AMENDMENT, BORROWER COVENANTS WITH AND WARRANTS TO LENDER, AND
ITS AFFILIATES AND ASSIGNS, THAT THERE EXIST NO CLAIMS, COUNTERCLAIMS, DEFENSES,
OBJECTIONS, OFFSETS OR CLAIMS OF OFFSETS AGAINST LENDER RELATING IN ANY WAY TO
THE NOTE, LOAN AGREEMENT OR OTHER RELATED LOAN DOCUMENTS, THROUGH THE DATE
HEREOF, OR THE OBLIGATION OF BORROWER TO PAY THE INDEBTEDNESS TO THE LENDER
EVIDENCED BY THE NOTE OR OTHERWISE.
9. AS A MATERIAL INDUCEMENT FOR LENDER TO AMEND THE LOAN
AGREEMENT AS SET FORTH IN THIS AMENDMENT, BORROWER DOES HEREBY
RELEASE, WAIVE, DISCHARGE, COVENANT NOT TO SUE, ACQUIT, SATISFY AND FOREVER
DISCHARGE LENDER, ITS OFFICERS, DIRECTORS, EMPLOYEES ATTORNEYS AND AGENTS AND
ITS AFFILIATES AND ASSIGNS FROM ANY AND ALL LIABILITY, CLAIMS, COUNTERCLAIMS,
DEFENSES, ACTIONS, CAUSES OF ACTION, SUITS, CONTROVERSIES, AGREEMENTS, PROMISES
AND DEMANDS WHATSOEVER, IN LAW OR IN EQUITY, WHICH BORROWER EVER HAD, NOW HAS OR
WHICH ANY SUCCESSOR OR ASSIGN OF BORROWER HEREAFTER CAN, SHALL OR MAY HAVE
AGAINST LENDER, ITS OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS, AND
ITS AFFILIATES AND ASSIGNS, FOR, UPON OR BY REASON OF ANY MATTER, CAUSE OR THING
WHATSOEVER RELATING IN ANY WAY TO THE NOTE, THE LOAN AGREEMENT AND OTHER LOAN
DOCUMENTS, THROUGH THE DATE HEREOF. BORROWER FURTHER EXPRESSLY AGREES THAT THE
FOREGOING RELEASE AND WAIVER AGREEMENT IS INTENDED TO BE AS BROAD AND INCLUSIVE
AS IS PERMITTED BY THE LAWS OF THE SATE OF FLORIDA.
10. LENDER AND BORROWER HEREBY MUTUALLY, KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO
ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THE
LOAN AGREEMENT AND ANY AGREEMENT CONTEMPLATED OR TO BE EXECUTED IN CONJUNCTION
THEREWITH, UNDER ANY OF THE LOAN DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF ANY PARTY.
BORROWER ACKNOWLEDGES THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL INDUCEMENT TO
LENDER IN ACCEPTING THIS AMENDMENT, AND THAT LENDER WOULD NOT HAVE ACCEPTED THIS
AMENDMENT WITHOUT THIS JURY TRIAL WAIVER. BORROWER ACKNOWLEDGES THAT BORROWER
HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD AN OPPORTUNITY TO CONSULT WITH AN
ATTORNEY REGARDING THIS JURY TRIAL WAIVER, AND UNDERSTANDS THE LEGAL EFFECT OF
THIS JURY TRIAL WAIVER. THE WAIVER CONTAINED HEREIN IS IRREVOCABLE, CONSTITUTES
A KNOWING AND VOLUNTARY WAIVER, AND SHALL BE SUBJECT TO NO EXCEPTIONS. LENDER
HAS IN NO WAY AGREED WITH OR REPRESENTED TO BORROWER OR ANY OTHER PARTY THAT THE
PROVISIONS OF THIS JURY TRIAL WAIVER WILL NOT BE FULLY ENFORCED IN ALL
INSTANCES.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the respective dates set forth below, to be effective as of the date first above
written.
Witnesses:
HEICO CORPORATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Date: September 16, 1997
HEICO AEROSPACE CORPORATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Date: September 16, 1997
SUNTRUST BANK, SOUTH FLORIDA,
NATIONAL ASSOCIATION
By:
-------------------------------
Name:
--------------------------
Title:
-------------------------
Date: September 16, 1997
EXHIBIT 10.8
FOURTH AMENDMENT TO LOAN AGREEMENT
THIS FOURTH AMENDMENT TO LOAN AGREEMENT ("Amendment") is made and
entered into on December 1, 1997, by and among HEICO CORPORATION, a Florida
corporation ("Heico"), HEICO AEROSPACE CORPORATION, a Florida corporation, f/k/a
Heico Corporation, a Florida corporation ("Aerospace") (collectively with Heico,
the "Borrower") and SUNTRUST BANK, SOUTH FLORIDA, NATIONAL ASSOCIATION, f/k/a
SunBank/South Florida, National Association ("Lender").
RECITALS
WHEREAS, Borrower and Lender have previously entered into that certain
Loan Agreement dated February 28, 1994, as previously amended by that certain
First Amendment to Loan Agreement and Reaffirmation Agreement dated as of
October 13, 1994, and that certain Second Amendment to Loan Agreement dated as
of March 1, 1995, and that Third Amendment to Loan Agreement dated as of
September 16, 1997 (collectively, the "Loan Agreement") pursuant to which Heico
obtained extensions of credit of up to Seven Million and 00/100 Dollars
($7,000,000.00) ("Loan"); and
WHEREAS, Borrower and Lender wish to extend the maturity date of the
Loan, and to modify the Loan Agreement to reflect the extended maturity date.
NOW, THEREFORE, for good and valuable consideration, and in
consideration of the extension of the Loan made for the benefit of the Borrower,
the receipt and sufficiency of which are hereby acknowledged, the parties do
hereby agree as follows:
1. The foregoing recitals are hereby acknowledged to be true
and correct and are incorporated herein by this reference.
2. All capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to them in the Loan Agreement.
3. Subsection 1.2(dd) of the Loan Agreement is hereby amended
and restated as follows to reflect and extend the maturity date of the Loan:
(dd) "MATURITY DATE": As to the Loan, February 28,
1998, unless extended pursuant to Section 2.6 hereof. As to the Letter of
Credit, five (5) years from the date of the issuance of the Letter of Credit.
4. Subsection 1.2(ff) of the Loan Agreement is hereby
amended and restated to read as follows:
(ff) "NOTE": a Renewal Master Revolving Promissory
Note in the principal amount of Seven Million and 00/100 Dollars ($7,000,000.00)
from Heico to Lender dated December 1, 1997, and any modifications, amendments
or renewals thereof, evidencing the Loan, which Note renews that certain Renewal
Master Revolving Promissory Note in the principal face amount of Seven Million
and 00/100 Dollars ($7,000,000.00) from Heico to Lender dated September 16,
1997.
5. Borrower warrants and represents that all representations
and warranties contained the Loan Agreement are true and correct on the date
hereof as if made on the date hereof, and that Borrower is not in default on the
date hereof under any of the terms of the Loan Agreement or any of the Loan
Documents to which it is a party. Heico further acknowledges and agrees that the
outstanding principal balance of the Loan as of December 1, 1997, is $ 0.00.
6. In the event of any inconsistencies between the terms of
the Loan Agreement and the terms of this Amendment, the terms and provisions of
this Amendment shall control. Except as modified herein, the terms and
provisions of the Loan Agreement are hereby ratified and confirmed in all
respects and shall remain unchanged and in full force and effect from and after
the date hereof.
7. AS A MATERIAL INDUCEMENT FOR LENDER TO EXTEND THE LOAN AS
PROVIDED IN THIS AMENDMENT, BORROWER COVENANTS WITH AND WARRANTS TO LENDER, AND
ITS AFFILIATES AND ASSIGNS, THAT THERE EXIST NO CLAIMS, COUNTERCLAIMS, DEFENSES,
OBJECTIONS, OFFSETS OR CLAIMS OF OFFSETS AGAINST LENDER RELATING IN ANY WAY TO
THE NOTE, LOAN AGREEMENT OR OTHER RELATED LOAN DOCUMENTS, THROUGH THE DATE
HEREOF, OR THE OBLIGATION OF BORROWER TO PAY THE INDEBTEDNESS TO THE LENDER
EVIDENCED BY THE NOTE OR OTHERWISE.
8. AS A MATERIAL INDUCEMENT FOR LENDER TO AMEND THE LOAN
AGREEMENT AS SET Forth IN THIS AMENDMENT, BORROWER DOES HEREBY RELEASE, WAIVE,
DISCHARGE, COVENANT NOT TO SUE, ACQUIT, SATISFY AND FOREVER DISCHARGE LENDER,
ITS OFFICERS, DIRECTORS, EMPLOYEES ATTORNEYS AND AGENTS AND ITS AFFILIATES AND
ASSIGNS FROM ANY AND ALL LIABILITY, CLAIMS, COUNTERCLAIMS, DEFENSES, ACTIONS,
CAUSES OF ACTION, SUITS, CONTROVERSIES, AGREEMENTS, PROMISES AND DEMANDS
WHATSOEVER, IN LAW OR IN EQUITY, WHICH BORROWER EVER HAD, NOW HAS OR WHICH ANY
SUCCESSOR OR ASSIGN OF BORROWER HEREAFTER CAN, SHALL OR MAY HAVE AGAINST LENDER,
ITS OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS, AND ITS AFFILIATES AND
ASSIGNS, FOR, UPON OR BY REASON OF ANY MATTER, CAUSE OR THING WHATSOEVER
RELATING IN ANY WAY TO THE NOTE, THE LOAN AGREEMENT AND OTHER LOAN DOCUMENTS,
THROUGH THE DATE HEREOF. BORROWER FURTHER EXPRESSLY AGREES THAT THE FOREGOING
RELEASE AND WAIVER AGREEMENT IS INTENDED TO BE AS BROAD AND INCLUSIVE AS IS
PERMITTED BY THE LAWS OF THE SATE O FLORIDA.
9. LENDER AND BORROWER HEREBY MUTUALLY, KNOWINGLY, VOLUNTARILY
AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT
TO ANY LITIGATION BASED HEREON OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH
THE LOAN AGREEMENT AND ANY AGREEMENT CONTEMPLATED OR TO BE EXECUTED IN
CONJUNCTION THEREWITH, UNDER ANY OF THE LOAN DOCUMENTS, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS
OF ANY PARTY. BORROWER ACKNOWLEDGES THAT THIS WAIVER OF JURY TRIAL IS A MATERIAL
INDUCEMENT TO LENDER IN ACCEPTING THIS AMENDMENT, AND THAT LENDER WOULD NOT HAVE
ACCEPTED THIS AMENDMENT WITHOUT THIS JURY TRIAL WAIVER. BORROWER ACKNOWLEDGES
THAT BORROWER HAS BEEN REPRESENTED BY AN ATTORNEY OR HAS HAD AN OPPORTUNITY TO
CONSULT WITH AN ATTORNEY REGARDING THIS JURY TRIAL
WAIVER, AND UNDERSTANDS THE LEGAL EFFECT OF THIS JURY TRIAL WAIVER. THE WAIVER
CONTAINED HEREIN IS IRREVOCABLE, CONSTITUTES A KNOWING AND VOLUNTARY WAIVER, AND
SHALL BE SUBJECT TO NO EXCEPTIONS. LENDER HAS IN NO WAY AGREED WITH OR
REPRESENTED TO BORROWER OR ANY OTHER PARTY THAT THE PROVISIONS OF THIS JURY
TRIAL WAIVER WILL NOT BE FULLY ENFORCED IN ALL INSTANCES.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment on
the respective dates set Forth below, to be effective as of the date first above
written.
Witnesses:
HEICO CORPORATION
- -------------------------------
- -------------------------------- By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Date: December 17, 1997
HEICO AEROSPACE
CORPORATION
- -------------------------------
- -------------------------------- By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Date: December 17, 1997
SUNTRUST BANK, SOUTH
FLORIDA, NATIONAL
ASSOCIATION
- -------------------------------
- -------------------------------- By:
--------------------------------
Name:
---------------------------
Title:
--------------------------
Date: December 17, 1997
EXHIBIT 10.17
HEICO CORPORATION
1993 STOCK OPTION PLAN
1. PURPOSE. The purpose of this Plan is to advance the interests of
HEICO Corporation, a Florida corporation (the "Company"), and its Subsidiaries
by providing an additional incentive to attract and retain qualified and
competent persons who provide management and other services and upon whose
efforts and judgement the success of the Company and Subsidiaries is largely
dependent, through the encouragement of stock ownership in the Company by such
persons.
2. DEFINITIONS. As used herein, the following terms shall have the
meanings indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Committee" shall mean the stock option committee
appointed by the Board pursuant to Section 12 hereof, or if not
appointed, the Board.
(c) "Common Stock" shall mean the common stock, par value $.01
per share, of the Company.
(d) "Director" shall mean a member of the Board.
(e) "Disinterested Person" shall mean a Director who, during
one year prior to the time he serves on the Committee and during such
service, has not received Shares, options for Shares or any rights with
respect to Shares under this Plan or any other employee and/or Director
benefit plan of the Company or any of its affiliates except pursuant to
an election to receive annual director's fees in securities of the
Company.
(f) "Employee" and "employment" shall, except where the
context otherwise requires, mean or refer to a Director and his
Directorship as well as to a regular employee and his employment.
(g) "Fair Market Value" of a Share on any date of reference
shall mean the Closing Price of the Common Stock on such date, unless
the Committee in its sole discretion shall determine otherwise in a
fair and uniform manner. For this purpose, the Closing Price of the
Common Stock on any business day shall be (i) if the Common Stock is
listed or admitted for trading on any United States national securities
exchange, or if actual transactions are otherwise reported on a
consolidated transaction reporting system, the last reported sale price
of Common Stock on such exchange or reporting system, as reported in
any newspaper of general circulation, or (ii) if the Common Stock is
quoted on the National Association of Securities Dealers Automated
Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the
mean between the closing bid and asked quotations for Common Stock as
reported by the National Quotation Bureau, Incorporated, if at least
two securities dealers have inserted both bid and asked quotations for
Common Stock on at least 5 of the 10 preceding business days.
(h) "Grantee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of
such person under this Plan by reason of death of such person or
transfer of such option as may be allowed under this Plan.
(i) "Incentive Stock Option" means an option to purchase
Shares of Common Stock which is intended to qualify as an incentive
stock option as defined in Section 422 of the Internal Revenue Code.
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(j) "Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended from time to time.
(k) "Key Employee" means any person, including officers and
Directors, in the regular full-time employment of the Company or any
Subsidiary who, in the opinion of the Committee, is or is expected to
be responsible for the management, growth or protection of some part or
all of the business of the Company or a Subsidiary.
(l) "Non-qualified Stock Option" means an option to purchase
Shares of Common Stock which is not intended to qualify as an Incentive
Stock Option.
(m) "Option" (when capitalized) shall mean any option granted
under this Plan.
(n) "Plan" shall mean this 1993 Stock Option Plan for HEICO
Corporation.
(o) "Share(s)" shall mean a share or shares of the Common
Stock.
(p) "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations, beginning with the
Company if, at the time of the granting of the Option, each of the
corporations other than the last corporation in the unbroken chain owns
stock possessing ten (10) percent or more of any class of any equity
security in one of the other corporations in such chain and has the
right to direct the management of the other corporation.
3. SHARES AND OPTIONS. The Company may grant to Grantees from time to
time Options to purchase an aggregate of up to 855,000 Shares from Shares held
in the Company's treasury or from authorized and unissued Shares. Of this
amount, all or any may be optioned as Incentive Stock Options, as Non-qualified
Stock Options, or any combination thereof. If any Option granted under this Plan
shall terminate, expire, or be cancelled or surrendered as to any Shares, new
Options may thereafter be granted covering such Shares.
4. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an Option Agreement,
which Option Agreement may be altered consistent with this Plan and
with the approval of both the Committee and the Grantee, that may
contain terms deemed necessary or desirable by the Committee,
including, but not limited to, a requirement that the Grantee agree
that, for a specified period after termination of his employment, he
will not enter into any employment with, or participate directly or
indirectly in, any entity which is directly or indirectly competitive
with the Company or any of its Subsidiaries, provided such terms are
not inconsistent with this Plan or any applicable law. Grantees shall
be selected by the Committee in its discretion and shall be employees
and Directors who are not employees; provided, however, that Directors
who are not employees shall not be eligible to receive Incentive Stock
Options. Any person who files with the Committee, in a form
satisfactory to the Committee, a written waiver of eligibility to
receive any Option under this Plan shall not be eligible to receive any
Option under this Plan for the duration of such waiver.
(b) In granting Options, the Committee shall take into
consideration the contribution the person has made to the success of
the Company or its Subsidiaries and such other factors as the Committee
shall determine. The Committee shall also have the authority to consult
with and receive recommendations from officers and other personnel of
the Company and its Subsidiaries with regard to these matters. The
Committee may from time to time in granting Options under the Plan
prescribe such other terms and conditions concerning such Options as it
deems appropriate, including, without limitation, (i) prescribing the
date or dates on which the Option becomes exercisable, (ii) providing
that the Option rights accrue or become exercisable in installments
over a period of years, or upon the attainment of stated goals or both,
or (iii) relating an Option to the continued employment of the Grantee
for a specified period of time, provided that such terms and conditions
are not more favorable to the Grantee than those expressly permitted
herein.
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(c) The Options granted to Grantees under this Plan shall be
in addition to regular salaries, Director's fees, pension, life
insurance or other benefits related to their employment or
Directorships with the Company or its Subsidiaries. Neither the Plan
nor any Option granted under the Plan shall confer upon any person any
right to employment or Directorship or continuation of employment or
Directorship by the Company or any of its Subsidiaries.
(d) The Committee in its sole discretion shall determine in
each case whether periods of military or government service shall
constitute a continuation of employment for the purposes of this Plan
or any Option.
(e) During each fiscal year of the Company, no Employee may be
granted Option(s) to purchase more than 100,000 Shares.
(f) No employee may be granted any Incentive Stock Option
pursuant to this plan to the extent that the aggregate fair market
value (determined at the time the Option is granted) of the Shares with
respect to which Incentive Stock Options granted to the employee under
the terms of this Plan or its predecessor after December 31, 1986 are
exercisable for the first time by the employee during any calendar year
exceeds $100,000.
(g) Option agreements with respect to Incentive Stock Options
shall contain such terms and conditions as may be required under
Section 422 of the Internal Revenue Code, as such section may be
amended from time to time.
5. OPTION PRICE. The option price per share of any Option shall be the
price determined by the Committee; provided, however, that in no event shall the
option price per Share of any Incentive Stock Option be less than (i) 100% or
(ii) in the case of an individual who owns stock possessing more than 10% of the
total combined voting power of all classes of stock of the Company, 110%, of the
Fair Market Value of the Shares underlying such Option on the date such Option
is granted.
6. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee in its sole discretion have been made for
the Grantee's payment to the Company of the amount, if any, that is necessary to
withhold in accordance with applicable Federal or State tax withholding
requirements. Unless further limited by the Committee in any Option Agreement,
the option price of any Shares shall be paid in cash, by certified check or
official bank check, by money order, by the Grantee's promissory note, with
Shares (including Shares acquired pursuant to a partial and simultaneous
exercise of the Option) or by a combination of the above; provided further,
however, that the Committee in its sole discretion may accept a personal check
in full or partial payment of any Shares. If the exercise price is paid in whole
or in part with Shares, the value of the Shares surrendered shall be their Fair
Market Value on the business day immediately preceding the date the Option is
exercised. The Company in its sole discretion may, on an individual basis or
pursuant to a general program established in connection with this Plan, lend
money to a Grantee to obtain the cash necessary to exercise all or a portion of
an Option granted hereunder or to pay any tax liability of the Grantee
attributable to such exercise. If the exercise price is paid in whole or in part
with the Grantee's promissory note, such note shall, unless specified by the
Committee at the time of grant or any time thereafter, (w) provide for full
recourse to the maker, (x) be collateralized by the pledge of the Shares that
the Grantee purchases upon exercise of the Option, (y) bear interest at the
prime rate of the Company's principal lender and (z) contain such other terms as
the Committee in its sole discretion shall reasonably require. No Grantee or
permitted transferee(s) thereof shall be deemed to be a holder of any Shares
subject to an Option unless and until exercise has been completed pursuant to
clauses (i-iii) above. No adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash, securities or other property) or distributions
or other rights for which the record date is prior to the date of exercise,
except as expressly provided in Section 9 hereof.
7. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee shall
provide in the corresponding Option agreement, except as otherwise provided in
this Section 7.
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(a) The expiration date of an Option shall be determined by
the Committee at the time of grant, but in no event shall an Incentive
Stock Option be exercisable after the expiration of (i) ten (10) years
from the date of grant of the Option or (ii) in the case of an
individual who owns stock possessing more than 10% of the total
combined voting power of all classes of voting stock of the Company,
five years from the date of the grant of the Option.
(b) Except to the extent otherwise provided in any Option
agreement, each outstanding Option shall become immediately fully
exercisable
(i) if any "person" (as such term is used in Sections
13(d) and 14(d) (2) of the Securities Exchange Act of 1934),
except the Mendelson Reporting Group, as that group is defined
in an Amendment to a Schedule 13D filed on February 26, 1992
or any subsequent amendment to the aforementioned 13D, is or
becomes a beneficial owner, directly or indirectly, of
securities of the Company representing 15% or more of the
combined voting power of the Corporation's then outstanding
securities;
(ii) if, during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board cease for any reason to constitute at least a majority
thereof, unless the Board in existence immediately preceding
the two year period shall have nominated the new Directors
whose Directorships have create the altered Board composition;
or
(iii) if the stockholders of the Company shall
approve a plan of merger, consolidation, reorganization,
liquidation or dissolution in which the Company does not
survive (unless the merger, consolidation, reorganization,
liquidation or dissolution is subsequently abandoned)
provided, however, that a merger or reorganization pursuant to
which the Company merges with a Subsidiary which is owned
principally by the Company's pre-merger or reorganization
shareholders and which becomes publicly traded within five (5)
business days thereafter shall not trigger immediate
exercisability under this Section 7; or
(iv) if the stockholders of the Company shall approve
a plan for the sale, lease, exchange or other disposition of
all or substantially all of the property and assets of the
Company (unless such approved plan is subsequently abandoned).
(c) The Committee may in its sole discretion accelerate the
date on which any Option may be exercised.
8. TERMINATION OF OPTION PERIOD.
(a) The unexercised portion of any Option shall automatically
and without notice terminate and become null and void at the time of
the earliest to occur of the following:
(i) one week after the date on which the Grantee's
employment is terminated for any reason other than by reason
of (A) cause (which, for purposes of this Plan, shall mean the
termination of the Grantee's employment by reason of the
Grantee's willful misconduct or gross negligence), (B) a
mental or physical disability as determined by a medical
doctor satisfactory to the Committee, or (C) death; provided,
however, that the one week period may be extended by the
Committee to up to three (3) months with respect to Incentive
Stock Options and up to thirty six (36) months in the case of
Non-qualified Stock Options;
(ii) immediately upon termination of the Grantee's
employment for cause, provided, however, that the Committee
may extend the period to up to three (3) months with respect
to Incentive Stock Options and up to thirty six (36) months in
the case of Non-qualified Stock Options;
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(iii) six months after the date on which the
Grantee's employment is terminated by reason of mental or
physical disability as determined by a medical doctor
satisfactory to the Committee, provided, however, that the
Committee may extend the period to up to thirty six (36)
months in respect to Non-qualified Stock Options;
(iv) (A) twelve months after the date of termination
of the Grantee's employment by reason of death of the Grantee,
or (B) three months after the date on which the Grantee shall
die if such death shall occur during the six (6) month period
specified in Subsection 8(a)(iii) hereof, provided, however,
that the Committee may extend the period to up to thirty six
(36) months in respect to Non-qualified Stock Options.
(b) The Committee in its sole discretion may by giving written
notice ("cancellation notice") cancel, effective upon the date of the
consummation of any corporate transaction described in Subsections
7(b)(iii) or (iv) hereof, any Option that remains unexercised on such
date. Such cancellation notice shall be given a reasonable period of
time prior to the proposed date of such cancellation and may be given
either before or after stockholder approval of such corporate
transaction.
9. ADJUSTMENT OF SHARES.
(a) If, at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the
number of issued and outstanding Shares through the declaration of a
stock dividend or through any recapitalization resulting in a stock
split-up, combination or exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under the Plan
(including, but not limited to, shares permitted to be granted
to any one individual employee), so that the same percentage
of the Company's issued and outstanding Shares shall continue
to be subject to being so optioned; and
(ii) appropriate adjustment shall be made in the
number of Shares and the option price per Share thereof then
subject to any outstanding Option, so that the same percentage
of the Company's issued and outstanding Shares shall remain
subject to purchase at the same aggregate option price.
(b) Subject to the specific terms of any Option agreement, the
Committee may change the terms of Options outstanding under this Plan
with respect to the option price or the number of Shares subject to the
Options, or both, when, in the Committee's sole discretion, such
adjustments become appropriate by reason of a corporate transaction
described in Subsections 7(b)(iii) or (iv) hereof.
(c) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class,
either in connection with direct sale or upon the exercise of rights or
warrants to subscribe therefor, or upon conversion of shares or
obligations of the Company convertible into such shares or other
securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to the number of or option price of Shares then
subject to outstanding Options granted under this Plan.
(d) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not
affect in any manner the right or power of the Company to make,
authorize or consummate (i) any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital structure or
its business; (ii) any merger or consolidation of the Company; (iii)
any issuance by the Company of debt securities or preferred or
preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the
Company; (v) any sale, transfer or assignment of all or any part of the
assets or business of the Company; or (vi) any other corporate act or
proceeding, whether of a similar character or otherwise.
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10. TRANSFERABILITY OF OPTIONS. Each Option agreement shall provide
that the Option shall not be transferable by the Grantee otherwise than by will
or the laws of descent and distribution or, in the case of Nonqualified Stock
Options, pursuant to a qualified domestic relations order as defined by the
Internal Revenue Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder; provided, however, that the Committee may waive the
foregoing transferability restriction with respect to Non-qualified Stock
Options on a case-by-case basis.
11. ISSUANCE OF SHARES. As a condition of any sale or issuance of
Shares upon exercise of any Option, the Committee may require such arrangement
or undertakings, if any, as the Committee may deem necessary or advisable to
ensure compliance with any applicable federal or state securities law or
regulation, including, but not limited to, the following:
(i) a representation and warranty by the Grantee to
the Company, at the time any Option is exercised, that he is
acquiring the Shares to be issued to him for investment and
not with a view to, or for sale in connection with, the
distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to
be bound by any legends that are, in the opinion of the
Committee, necessary or appropriate to comply with the
provisions of any securities laws deemed by the Committee to
be applicable to the issuance of the Shares and are endorsed
upon the Share certificates.
12. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by a stock option committee
(herein called the "Committee") consisting of not less than two (2)
Directors, all of whom shall be Disinterested Persons; provided,
however, that if no Committee is appointed, the Board may administer
the Plan provided that all members of the Board at the time are
Disinterested Persons. The Committee shall have all of the powers of
the Board with respect to the Plan. Any member of the Committee may be
removed at any time, with or without cause, by resolution of the Board,
and any vacancy occurring in the membership of the Committee may be
filled by appointment of the Board.
(b) The Committee, from time to time, may adopt rules and
regulations for carrying out the purposes f the Plan. The
determinations and the interpretation and construction of any provision
of the Plan by the Committee shall be final and conclusive.
(c) Any and all decisions or determinations of the Committee
shall be made either (i) by a majority vote of the members of the
Committee at a meeting or (ii) without a meeting by the unanimous
written approval of the members of the Committee.
13. INTERPRETATION.
(a) If any provision of the Plan should be held invalid for
any reason, such holding shall not affect the remaining provisions
hereof, but instead the Plan shall be construed and enforced as if such
provision had never been included in the Plan.
(b) This Plan shall be governed by the laws of the State of
Florida.
(c) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
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14. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Committee may from
time to time amend the Plan or any Option consistent with the Plan; provided,
however, that (except to the extent provided in Section 9) no such amendment
may, without approval by the stockholders of the Company, (a) increase the
number of Shares reserved for Options, (b) change the requirements for
eligibility to receive Options, or (c) materially increase the benefits accruing
to the participants under the Plan; and provided, further, that (except to the
extent provided in Section 8) no amendment or suspension of the Plan or any
Option issued hereunder shall substantially impair any Option previously granted
to any Grantee without the consent of such Grantee.
15. EFFECTIVE DATE AND TERMINATION DATE. The effective date of this
Plan shall be March 17, 1993 provided that the Plan is approved by the Company's
Stockholder(s), and the Plan shall terminate on the tenth (10th) anniversary of
the effective date. After such termination date, no Options may be granted
hereunder; provided, however, that Options outstanding at such date may be
exercised pursuant to their terms.
Dated as of the 18TH HEICO CORPORATION
day of MARCH, 1997.
By: /S/ LAURANS A. MENDELSON
-------------------------
Laurans A. Mendelson
Chairman, President and
Chief Executive Officer
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EXHIBIT 10.31
EXECUTION COPY
STOCK PURCHASE AGREEMENT
BETWEEN
HEICO AEROSPACE HOLDINGS CORP.
AND
HEICO CORPORATION
AND
LUFTHANSA TECHNIK AG
DATED OCTOBER 30, 1997
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TABLE OF CONTENTS
1. DEFINITIONS.............................................................. 1
2. SALE AND TRANSFER OF SHARES; CLOSING..................................... 8
2.1 Shares.......................................................... 8
2.2 Purchase Price.................................................. 9
2.3 Closing......................................................... 9
2.4 Closing Obligations............................................. 9
3. REPRESENTATIONS AND WARRANTIES
OF SELLER AND HEICO.................................................... 10
3.1 Organization and Good Standing.................................. 10
3.2 Authority; No Conflict......................................... 10
3.3 Capitalization.................................................. 11
3.4 Financial Statements............................................ 12
3.5 SEC Documents................................................... 12
3.6 No Undisclosed Liabilities or Material Adverse Change........... 13
3.7 Legal Proceedings; Orders ...................................... 13
3.8 Absence of Certain Changes and Events........................... 15
3.9 Insurance....................................................... 15
3.10 Environmental Matters........................................... 16
3.11 Labor Relations; Compliance..................................... 17
3.12 Compliance with Laws and Permits................................ 17
3.13 Intellectual Property........................................... 17
3.14 Disclosure...................................................... 20
3.15 Employee Benefit Matters........................................ 20
3.16 Relationships with Related Persons ............................. 22
3.17 Brokers or Finders.............................................. 22
4. REPRESENTATIONS AND WARRANTIES
OF INVESTOR............................................................ 22
4.1 Organization and Good Standing.................................. 22
4.2 Authority; No Conflict......................................... 22
4.3 Certain Proceedings............................................. 23
4.4 Brokers or Finders.............................................. 23
4.5 Investment Representation....................................... 23
5. INDEMNIFICATION; REMEDIES............................................... 24
5.1 Survival; Right to Indemnification Not Affected
by Knowledge.................................................... 24
5.2 Indemnification and Payment of Damages
by Seller and HEICO............................................. 24
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5.3 Indemnification and Payment of Damages
by Investor..................................................... 25
5.4 Limitations on Amount- HEICO.................................... 26
5.5 Limitations on Amount-Investor.................................. 26
5.6 Procedure for Indemnification-Third Party Claims................ 26
5.7 Procedure for Indemnification-Other Claims...................... 27
5.8 Attorneys' Fees................................................. 28
6. GENERAL PROVISIONS....................................................... 28
6.1 Expenses........................................................ 28
6.2 Public Announcements............................................ 28
6.3 Notices......................................................... 28
6.4 Jurisdiction; Service of Process............................... 29
6.5 Further Assurances.............................................. 30
6.6 Waiver.......................................................... 30
6.7 Entire Agreement and Modification............................... 30
6.8 Disclosure Letter............................................... 30
6.9 Assignments, Successors, and
No Third-Party Rights........................................... 31
6.10 Severability.................................................... 31
6.11 Section Headings, Construction.................................. 31
6.12 Governing Law................................................... 31
6.13 Counterparts.................................................... 31
EXHIBITS
Exhibit 1 Disclosure Letter
Exhibit 2 Public Announcement
Exhibit 3 Other Matters
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of October 30,
1997, by and among HEICO Aerospace Holdings Corp., a Florida corporation
("Seller"), HEICO Corporation, a Florida corporation ("HEICO") and Lufthansa
Technik AG, a German corporation ("Investor").
RECITALS
Seller desires to sell, and Investor desires to purchase, two hundred
(200) shares representing twenty percent (20%) of the issued and outstanding
shares of common stock ("Shares") of Seller for the consideration and on the
terms set forth in this Agreement.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
1. DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Section 1:
"BREACH" -- a "Breach" of a representation, warranty, covenant, obligation, or
other provision of this agreement or any instrument delivered pursuant to this
Agreement will be deemed to have occurred if there is or has been any inaccuracy
in or breach of, or any failure to perform or comply with, such representation,
warranty, covenant or obligation.
"INVESTOR" -- as defined in the first paragraph of this Agreement.
"CLOSING" -- as defined in Section 2.3.
"CLOSING DATE" -- the date and time as of which the Closing actually takes
place.
"CONSENT" -- any approval, consent, ratification, waiver, or other authorization
(including any Governmental Authorization).
"CONTEMPLATED TRANSACTIONS" -- all of the transactions contemplated by this
Agreement, including:
(a) the sale of the Shares by Seller to Investor;
(b) the execution and delivery of the Shareholders Agreement, the
Research and Development Cooperation Agreement, and the Tax Allocation and
Sharing Agreement;
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(c) the performance by Investor and Seller and HEICO of their
respective covenants and obligations under this Agreement; and
(d) Investor's acquisition and ownership of the Shares.
"CONTRACT" -- any agreement, contract, obligation, promise, or undertaking
(whether written or oral and whether express or implied) that is legally
binding.
"DAMAGES" -- as defined in Section 5.2
"DISCLOSURE LETTER" -- the disclosure letter delivered by Seller and HEICO to
Investor concurrently with the execution and delivery of this Agreement.
"ENVIRONMENT" -- soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" -- any cost, damages, expense,
liability, obligation or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.
The terms "removal", "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
compensation, and Liability Act, 42 U.S.C. /section/9601 et seq., as amended
("CERCLA").
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"ENVIRONMENTAL LAW" -- any Legal requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of
them for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"ENVIRONMENTAL PERMITS" -- refers to all permits, licenses, authorizations,
certificates and approvals of governmental authorities relating to or required
by Environmental Laws and necessary for the businesses of Seller or any Seller's
Company, as currently conducted.
"EXCHANGE ACT" -- the Securities and Exchange Act of 1934 or any successor law,
and regulations and rules issued pursuant to that Act or any successor law.
"FACILITIES" -- any real property, leaseholds, or other interest currently or
formerly owned or operated by any Seller's Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and rolling
stock) currently or formerly owned or operated by any Seller's Company.
"FAA" -- the Federal Aviation Administration of the United States.
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"GAAP" -- generally accepted United states accounting principles, applied on a
basis consistent with the basis on which the Balance Sheet and the other
financial statements referred to in section 3.4(b) were prepared.
"GOVERNMENTAL AUTHORIZATION" -- any approval, consent, license, permit, waiver,
or other authorization issued, granted, given, or otherwise made available by or
under the authority of any Governmental Body or pursuant to any Legal
Requirement.
"GOVERNMENTAL BODY" -- any:
(a) nation, state, county, city, town, village, district, or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental agency, branch, department, official, or entity and
any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"HAZARDOUS ACTIVITY" -- the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses and unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the Seller's
Companies.
"HAZARDOUS MATERIALS" -- includes any (i) "hazardous substance," "pollutants,"
or "contaminant" (as defined in Sections 101(14) and (33) of CERCLA or the
regulations issued pursuant to Section 102 of CERCLA and found at 40 C.F.R.
/section/302), including any element, compound, mixture, solution, or substance
that is or may be designated pursuant to Section 102 of CERCLA; (ii) substance
that is or may be designated pursuant to Section 311(b)(2)(A) of the Federal
Water Pollution Control Act, as amended (33 U.S.C. /section//section/ 6901,
6921) ("RCRA") or having characteristics that may subsequently be considered
under RCRA to constitute a hazardous waste; (iv) substance containing petroleum,
as that term is defined in Section 9001(8) of RCRA; (v) toxic pollutant that is
or may be listed under Section 307(a) of FWPCA; (vi) hazardous air pollutant
that is or may be listed under section 112 of the Clean Air Act, as amended (42
U.S.C. /section//section/ 7401, 7412); (vii) imminently hazardous chemical
substance or mixture with respect to which action has
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been or may be taken pursuant to Section 7 of the Toxic substances Control Act,
as amended (15 U.S.C. /section//section/ 2601, 2606); (viii) source, special
nuclear, or by-product material as defined by the Atomic Energy Act of 1954, as
amended (42 U.S.C. /section/ 2011 et seq.); (ix) asbestos, asbestos-containing
material, or urea formaldehyde or material that contains it; (x) waste oil and
other petroleum products; and (xii) any other toxic materials, contaminants, or
hazardous substances or wastes pursuant to any Environmental Law.
"INDEMNIFIED PERSONS" -- as defined in Section 5.2.
"INTELLECTUAL PROPERTY ASSETS" -- as defined in Section 3.13.
"INTERIM BALANCE SHEET" -- as defined in Section 3.4.
"KNOWLEDGE" -- an individual will be deemed to have "Knowledge" of a particular
fact or other matter if:
(a) such individual is actually aware of such fact or other matter; or
(b) such individual as an officer or director of a public company
should be aware of or should have knowledge of such fact or other matter under
applicable U.S. federal securities laws.
"KNOWLEDGE OF SELLER, ANY SELLER'S COMPANY, AND HEICO" -- the Knowledge of
Laurans Mendelson, Eric Mendelson, Victor Mendelson, Thomas Irwin or James Reum.
"LEGAL REQUIREMENT" -- any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"OCCUPATIONAL SAFETY AND HEALTH LAW" -- any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"ORDER" -- any award, decision, injunction, judgment, order, ruling, subpoena,
or verdict entered, issued, made, or rendered by any court, administrative
agency, or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" -- an action taken by a Person will be deemed to
have been taken in the "Ordinary Course of Business" only if:
(a) such action is consistent with the past practices of such Person
and is taken in the ordinary course of the normal day-to-day operations of such
Person; or
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(b) such action is similar in nature and magnitude to actions
customarily taken, without any authorization by the board of directors (or by
any individual or group of individuals exercising similar authority), in the
ordinary course of the normal day-to-day operations of other Persons that are in
similar lines of business as such Person.
"ORGANIZATIONAL DOCUMENTS" -- the articles or certificate of incorporation and
the bylaws of a corporation and any amendment to any of the foregoing.
"PERSON" -- any individual, corporation (including any non-profit corporation),
general or limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other entity or
Governmental Body.
"PRE-CLOSING ENVIRONMENTAL LIABILITIES" -- (i) any conditions existing prior to
the Closing Date on any property (whether real, personal, or mixed and whether
tangible or intangible) owned, leased or operated by Seller, or any Seller's
Company which violates an Environmental Law in effect on the Closing Date, (ii)
a Release of a Hazardous Material on any property (whether real, personal, or
mixed and whether tangible or intangible) owned, leased or operated by Seller,
or any Seller's Company which violates an Environmental Law in effect on the
Closing Date or any Release of a Hazardous Material wherever located which any
of such parties may be held responsible, and (iii) any operation of the business
by Seller or any Seller's Company prior to the Closing Date which violates an
Environmental Law in effect on the Closing Date.
"PROCEEDING" -- any action, arbitration, audit, hearing, investigation,
litigation, or suit (whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or otherwise
involving, any Governmental Body or arbitrator.
"RELATED PERSON" -- with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual or one or more members of such individual's Family;
(c) any Person in which such individual or members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which such individual or one or more
members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
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(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified Person;
(c) each Person that serves as a director, officer, partner, executor,
or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b) or
(c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who is related to the individual or the individual's spouse
within the second degree, and (iv) any other natural person who resides with
such individual, and (b) "Material Interest" means direct or indirect beneficial
ownership (as defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of voting securities or other voting interests representing at least ten percent
(10%) of the outstanding equity securities or equity interest in a Person.
"RELEASE" -- any spilling, leaking, emitting, discharging, depositing, escaping,
leaching, dumping, or other releasing into the Environment, whether intentional
or unintentional.
"REPRESENTATIVE" -- with respect to a particular Person, any director, officer,
employee, agent consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial advisors.
"RESEARCH AND DEVELOPMENT COOPERATION AGREEMENT" -- the research and development
cooperation agreement by and between the Seller and Investor of even date
herewith.
"SECURITIES ACT" -- the Securities Act of 1933 or any successor law, and
regulations and rules issued pursuant to that Act or any successor law.
"SELLER'S COMPANIES" -- the Seller and its Subsidiaries, collectively.
"SHAREHOLDERS AGREEMENT" -- the shareholders agreement by and between Seller,
Investor and HEICO of even date herewith.
"SHARES" -- as defined in the Recitals of this Agreement.
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"SUBSIDIARY" -- with respect to any Person (the "Owner"), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation's or other Person's board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interest having such power only upon the happening of a contingency that has not
occurred) are held by the Owner or one or more of its Subsidiaries; when used
without reference to a particular Person, "Subsidiary" means a Subsidiary of the
Seller.
"TAX" -- (and, with correlative meaning, "Taxes" and "Taxable") means (A) any
net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, franchise, profits, license, withholding on amounts
paid, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any governmental authority (hereinafter a "Taxing Authority")
responsible for the imposition of any such tax (domestic or foreign).
"TAX ALLOCATION AND SHARING AGREEMENT" -- the tax allocation and sharing
agreement by and between the HEICO and Seller of even date herewith.
"TAX RETURN" -- any return (including any information return), report,
statement, schedule, notice, form, or other document or information file with or
submitted to, or required to be filed with or submitted to, any Governmental
Body in connection with the determination, assessment, collection, or payment of
any Tax or in connection with the administration, implementation, or enforcement
of or compliance with any Legal Requirement relating to any Tax.
"THREATENED" -- a claim, Proceeding, dispute, action, or other matter will be
deemed to have been "Threatened" if any demand or statement has been made
(orally or in writing) or any notice has been given (orally or in writing), or
if any other event has occurred or any other circumstances exist, that would
require a Person to make a disclosure under U.S. federal securities laws.
2. SALE AND TRANSFER OF SHARES; CLOSING
2.1 SHARES
Subject to the terms and conditions of this Agreement, at the Closing, Seller
will issue and sell the Shares to Investor, and Investor will purchase the
Shares from Seller.
2.2 PURCHASE PRICE
The purchase price (the "Purchase Price") for the Shares will be $10,000,000.
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2.3 CLOSING
The purchase and sale (the "Closing") provided for in this Agreement will take
place at the offices of Investor's counsel at Barnett Tower, Suite 1600, 701
Brickell Ave., Miami, Florida 33131, at 4:30 p.m. (local time) on October 30,
1997 or at such other time and place as the parties may agree, and will be
effective as of the close of business on October 31, 1997.
2.4 CLOSING OBLIGATIONS
At the Closing:
(a) Seller and HEICO will deliver to Investor:
(i) certificates representing the Shares;
(ii) the Shareholders Agreement, duly executed by Seller and
HEICO;
(iii) the Research and Development Cooperation Agreement, duly
executed by the Seller;
(iv) the Tax Allocation and Sharing Agreement, duly executed
by Seller and HEICO;
(v) an opinion letter from Seller's and HEICO's counsel in a
form reasonably acceptable to Investor; and
(vi) a certified copy of the amended Articles of Incorporation
of Seller reflecting Investor's preemptive rights;
(b) Investor will deliver to Seller:
(i) the Purchase Price by wire transfer to accounts specified
by Seller or by any other means mutually agreed to by Seller and
Investor;
(ii) the Shareholders Agreement duly executed by Investor;
(iii) the Research and Development Cooperation Agreement, duly
executed by Investor; and
(iv) an opinion letter from counsel of Investor (that may rely
on issues of German law on an opinion from Investor's in-house counsel)
in a form reasonably acceptable to Seller and HEICO.
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3. REPRESENTATIONS AND WARRANTIES OF SELLER AND HEICO
Seller and HEICO represent and warrant to Investor as follows, provided however,
none of the following representations and warranties are made with respect to
the business or assets of Northwings:
3.1 ORGANIZATIONS AND GOOD STANDING
(a) The Seller, HEICO and each Seller's Company is a corporation duly
organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the properties
and assets that it purports to own or use, and to perform all its obligations
under Seller's or Seller's Companies' Contracts. The Seller, HEICO and each
Seller's Company is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification.
(b) Seller or HEICO has made available to Investor copies of the
Organizational Documents of each Seller's Company, as currently in effect.
3.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation
of Seller and HEICO, enforceable against Seller and HEICO in accordance with its
terms. Upon the execution and delivery by Seller and HEICO of the Shareholders
Agreement, the Research and Development Cooperation Agreement and the Tax
Allocation and Sharing Agreement (collectively, the "Seller's Closing
Documents"), the Seller's Closing Documents will constitute the legal, valid,
and binding obligations of Seller and HEICO, as may be applicable, enforceable
against Seller and HEICO, as may be applicable, in accordance with their
respective terms. Seller and HEICO have the absolute and unrestricted right,
power, authority, and capacity to execute and deliver this Agreement and the
Seller's Closing Documents and to perform its obligations under this Agreement
and the Seller's Closing Documents.
(b) Except as set forth in Part 3.2 of the Disclosure Letter, neither
the execution and delivery of this Agreement nor the consummation or performance
of any of the Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(i) contravene, conflict with, or result in a violation of (A)
any provision of the Organizational Documents of the Seller's
Companies, or (B) any resolution adopted by the board of directors or
the stockholders of any Seller's Company;
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(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge
any of the Contemplated Transactions or to exercise any remedy or
obtain any relief under, any Legal Requirement or any Order to which
Seller, any Seller's Company or HEICO or any of the assets owned or
used by any Seller's Company, may be subject;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by any Seller's Company or that
otherwise relates to the business of, or any of the assets owned or
used by, any Seller's Company;
(iv) contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any applicable
contract; or
(v) result in the imposition or creation of any encumbrance
upon or with respect to any of the assets owned or used by any Seller's
Company.
Except as set forth in Part 3.2 of the Disclosure Letter, neither the Seller,
HEICO or any Seller's Company is or will be required to give any notice to or
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
3.3 CAPITALIZATION
The authorized equity securities of the Seller consist of 10,000 shares of
common stock, par value $0.01 per share, of which 800 shares are issued and
outstanding. The Shares, upon consummation of the Contemplated Transactions
shall constitute twenty percent (20%) of the issued and outstanding equity
securities of the Seller. HEICO is and will be on the Closing Date the record
and beneficial owner and holder of all the other equity securities of the
Seller, free and clear of all encumbrances except for the lien of that certain
credit facility with SunTrust Bank, N.A. All of the outstanding equity
securities and other securities of each Seller's Company are owned of record and
beneficially by one or more of the Seller's Companies, free and clear of all
encumbrances except for the lien of that certain credit facility with SunTrust
Bank, N.A. No legend or other reference to any purported encumbrance appears
upon any certificate representing equity securities of any Seller's Company
other than legends required by applicable securities laws. All of the
outstanding equity securities of each Seller's Company have been duly authorized
and validly issued and are fully paid and nonassessable. There are no Contracts
relating to the issuance, sale, or transfer of any equity securities or other
securities of any Seller's Company. None of the outstanding equity securities or
other securities of any Seller's Company was issued in violation of the
Securities Act or any other Legal Requirement.
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No Seller's Company owns, or has any Contract to acquire, any equity securities
or other securities of any Person (other than Seller's Companies) or any direct
or indirect equity or ownership interest in any other business in excess of ten
percent (10%) of the total equity of any such business.
3.4 FINANCIAL STATEMENTS
Seller or HEICO has made available to Investor: (a) unaudited balance sheets of
the Seller's Companies as at October 31, 1996 and the related unaudited
statements of income, changes in stockholders' equity, and cash flow for the
fiscal year then ended, and (b) an unaudited balance sheet of the Seller's
Companies as at July 31, 1997 (the "Interim Balance Sheet") and the related
unaudited statements of income, changes in stockholders' equity, and cash flow
for the nine (9) months then ended. Such financial statements fairly present the
financial condition and the results of operations, changes in stockholders'
equity, and cash flow of the Seller's Companies as at the respective dates of
and for the periods referred to in such financial statements, all in accordance
with GAAP, subject to normal recurring year-end adjustments (the effect of which
will not, individually or in the aggregate, be materially adverse) and the
absence of notes and deferred taxes; the financial statements referred to in
this Section 3.4 reflect the consistent application of such accounting
principles throughout the periods involved. No financial statements of any
Person other than the Seller's Companies are required by GAAP to be included in
the consolidated financial statements of the Seller.
3.5 SEC DOCUMENTS.
HEICO has filed all required reports, schedules, forms, statements and other
documents required to be filed under the Exchange Act with the SEC since January
1, 1995 (the "HEICO SEC Documents"). As of their respective dates, the HEICO SEC
Documents complied as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to such HEICO SEC Documents. Except to the extent that information
contained in any HEICO SEC Document has been revised or superseded by a
later-filed HEICO SEC Document, filed and publicly available prior to the date
of this Agreement, none of the HEICO SEC Documents contained when filed any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of HEICO included in the HEICO SEC
Documents complied as of their respective dates of filing with the SEC as to
form in all material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles (except, in
the case of unaudited statements, as permitted by Form 10-Q of the SEC) applied
on a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly present the financial position of HEICO as of the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit
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adjustments). The representations and warranties set forth in this Section
3.5 shall not apply to any noncompliance, nonfilings, misstatements, omissions
or failures to present fairly or conform to generally accepted accounting
principles, which would not, individually or in the aggregate, have a material
adverse effect on HEICO. Except as set forth in the HEICO SEC Documents, and
except for liabilities and obligations incurred in the Ordinary Course of
Business, to the Knowledge of Seller, any Seller's Company and HEICO, HEICO has
no liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles to
be set forth on a balance sheet of HEICO or in the notes thereto which,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on HEICO. Notwithstanding anything to the contrary
contained in this Agreement, neither HEICO nor Seller shall have any
responsibility for the breach of this Section 3.5 unless such breach relates to
the financial statements, assets or liabilities of Seller's Companies.
3.6 NO UNDISCLOSED LIABILITIES OR MATERIAL ADVERSE CHANGE
Except for the Northwings Accessories Corp., a Florida corporation
("Northwings") acquisition by Seller, since the date of the Interim Balance
Sheet, to the Knowledge of Seller, any Seller's Company and HEICO, there has not
been any material adverse change in the business, operations, properties, assets
or condition of any Seller's Companies taken as a whole, and to the Knowledge of
Seller, any Seller's Company and HEICO, no event has occurred or circumstance
exists that may result in such a material adverse change.
Except as set forth in Part 3.6 of the Disclosure Letter, to the Knowledge of
Seller, any Seller's Company and HEICO, the Seller's Companies have no
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) except for liabilities or
obligations reflected or reserved against in the Interim Balance Sheet and
liabilities and obligations incurred in the Ordinary Course of Business since
the respective dates thereof. The liabilities or obligations referred to in this
paragraph include, but are not limited to, any liability for or with respect to
any Taxes which were incurred or suffered by any Seller's Company during any Tax
period (or portion thereof) up to and including the Closing Date including
without limitation Taxes that are owed as a result of any dividends which are
declared before the Closing Date but paid after the Closing Date.
3.7 LEGAL PROCEEDINGS; ORDERS
(a) Except as set forth in Part 3.7 of the Disclosure Letter, there is
no pending Proceeding:
(i) that has been commenced by or against any Seller's
Company or that otherwise relates to or may affect the business of, or
any of the assets owned or used by, any Seller's Company; or
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(ii) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with,
any of the Contemplated Transactions.
To the Knowledge of Seller, any Seller's Company and HEICO, (1) no such
Proceeding has been Threatened, and (2) no event has occurred or circumstance
exists that is likely to give rise to or serve as a basis for the commencement
of any such Proceeding. Seller or on Seller's behalf, has made available to
Investor copies of all pleadings, correspondence, and other documents relating
to each Proceeding listed in Part 3.7 of the Disclosure Letter. The Proceedings
listed in Part 3.7 of the Disclosure Letter will not have a material adverse
effect on the business, operations, assets or financial condition of any
Seller's Company.
(b) Except as set forth in Part 3.7 of the Disclosure Letter:
(i) there is no Order to which any of the Seller's
Companies, or any of the assets owned or used by any Seller's Company,
is subject that prohibits or prevents Seller's Companies from
conducting its business in the Ordinary Course of Business;
(ii) neither Seller or HEICO is subject to any Order
that relates to the business of, or any of the assets owned or used by,
any Seller's Company that prohibits or prevents Seller's Companies from
conducting its business in the Ordinary Course of Business; and
(iii) to the Knowledge of Seller, any Seller's Company
and HEICO, no officer, director, agent, or employee of any Seller's
Company is subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any conduct,
activity, or practice relating to the business of any Seller's Company
in the Ordinary Course of Business.
(c) Except as set forth in Part 3.7 of the Disclosure Letter:
(i) each Seller's Company is, and has been, in full
compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been
subject;
(ii) to the Knowledge of Seller, any Seller's Company
and HEICO, no event has occurred or circumstance exists that may
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any
Order to which any Seller's Company, or any of the assets owned or used
by any Seller's Company, is subject; and
(iii) no Seller's Company has received any notice or
other communication (whether oral or written) from any Governmental
Body or any
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other Person regarding any actual, alleged, possible, or
potential violation of, or failure to comply with, any term or
requirement of any Order to which any Seller's Company, or any of the
assets owned or used by any Seller's Company, is or has been subject.
3.8 ABSENCE OF CERTAIN CHANGES AND EVENTS
Except as set forth in Part 3.8 of the Disclosure Letter, since the date of the
Interim Balance Sheet, the Seller's Companies have conducted their businesses
only in the Ordinary Course of Business and there has not been any:
(a) change in any Seller's Company's authorized or issued capital
stock; grant of any stock option or right to purchase shares of capital stock of
any Seller's Company; issuance of any security convertible into such capital
stock; grant of any registration rights; purchase, redemption, retirement, or
other acquisition by any Seller's Company of any shares of any such capital
stock; or declaration or payment of any dividend or other distribution or
payment in respect of shares of capital stock other than that certain dividend
in the amount of ten million U.S. Dollars (US$ 10,000,000) previously declared;
(b) amendment to the Organizational Documents of any Seller's Company;
(c) except for the Northwings acquisition, purchase, sale (other than
sales of inventory in the Ordinary Course of Business), lease, or other
disposition of any assets or property of any Seller's Company or mortgage,
pledge, or imposition of any lien or other encumbrance on any material assets or
property of any Seller's Company, including the sale, lease, or other
disposition of any of the Intellectual Property Assets; and
(d) payment or increase by any Seller's Company of any bonuses,
salaries, or other compensation to any stockholder, director, officer, or
(except in the Ordinary Course of Business) employee.
3.9 INSURANCE
Part 3.9 of the Disclosure Letter contains a complete and accurate list of all
policies of liability insurance to which Seller or any Seller's Company is a
party or that provide coverage to Seller, any Seller's Company, or any director
or officer of a Seller's Company.
3.10 ENVIRONMENTAL MATTERS
Except as set forth in Part 3.10 of the Disclosure Letter:
(a) No notice, demand, summons, or similar request for information, or
complaint or Order has been issued or served on Seller or any Seller's Company
and, to the Knowledge of Seller, any Seller's Company and HEICO, no penalty has
been assessed,
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no investigation or review is pending, or is Threatened, against any of them,
and to the Knowledge of Seller, any Seller's Company and HEICO, no
Environmental, Health, and Safety Liabilities exist with respect to (i) any
alleged violation of any Environmental Law, (ii) any alleged failure to have any
Environmental Permit, (iii) any Hazardous Activity, or (iv) any Release of
Hazardous Materials.
(b) To the Knowledge of Seller, any Seller's Company and HEICO, no
underground storage tank for Hazardous Materials is present at any real property
owned, leased or otherwise operated by Seller or any Seller's Company, currently
or (i) during the three (3) year period prior to the date of this Agreement for
leased or operated real property, or (b) during the five (5) year period prior
to the date of this Agreement for owned real property.
(c) To the Knowledge of Seller, any Seller's Company and HEICO, there
are no Pre-Closing Environmental Liabilities that have had or are likely to have
a material adverse effect on the business, financial condition, results of
operations or prospects of Seller, or any Seller's Company.
(d) To the Knowledge of Seller, any Seller's Company and HEICO, no
Hazardous Material has been Released by Seller or any Seller's Company at or
under any (i) owned real property, leased real property or other real property
during the period which Seller or any Seller's Company owned, leased or
otherwise operated such property. To the Knowledge of Seller, any Seller's
Company and HEICO, all Hazardous Materials used in the business of Seller or any
Seller's Company have been reported in accordance with all applicable legal
requirements.
(e) To the Knowledge of Seller, any Seller's Company and HEICO, no
owned, leased or operated real property has directly or indirectly transported
or arranged for the transportation of any Hazardous Materials in violation of
any Environmental Law listed or proposed for listing on the National Priorities
List promulgated pursuant to CERCLA, on CERCLIS (as defined in CERCLA) or on any
similar federal, state, local or foreign site lists requiring investigation or
clean-up.
(f) To the Knowledge of Seller, any Seller's Company and HEICO, there
are no liens under any Environmental Laws on any owned real property, leased
real property or other real property and no governmental actions have or are in
the process of being taken that could subject such real property to such liens.
(g) There has been no environmental investigation, study, audit test,
review or other analysis conducted within the last two (2) years on any owned
real property, leased real property or other real property of Seller or any
Seller's Company that has not been delivered or made available to Investor.
3.11 LABOR RELATIONS; COMPLIANCE
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No Seller's Company has been or is a party to any collective bargaining or other
labor Contract and there has not been, there is not presently pending or
existing, and to the Knowledge of Seller, any Seller's Company and HEICO, there
is not Threatened, any strike, slowdown, picketing, work stoppage.
3.12 COMPLIANCE WITH LAWS AND PERMITS
To the Knowledge of Seller, any Seller's Company and HEICO, the business of the
Seller's Companies is being conducted in compliance with all applicable Legal
Requirements, including without limitation, applicable Environmental Laws and
the rules and regulations promulgated by the FAA. No notice of any default,
violation or non-compliance of any Legal Requirement relating to any Seller's
Company has been received by Seller, any Seller's Company and HEICO within the
last two (2) years and, to the Knowledge of Seller, any Seller's Company and
HEICO, no notice of any default, violation or non-compliance of any Legal
Requirement relating to any Seller's Company has been received by Seller, any
Seller's Company and HEICO prior to the two (2) year period mentioned above. To
the Knowledge of Seller, any Seller's Company and HEICO, all reengineering
processes used by Seller, any Seller's Company or any of their Affiliates for
designing, manufacturing and testing any and all parts comply with all
applicable Legal Requirements, including without limitation, applicable patent,
copyright and other laws relating to intellectual property and the rules and
regulations promulgated by the FAA. To the Knowledge of Seller, any Seller's
Company and HEICO, any and all parts, spare or replacement parts, or other items
produced by any Seller's Company or any of their Affiliates are designed,
manufactured and tested consistent with such reengineering processes.
To the Knowledge of Seller, any Seller's Company and HEICO, Seller and the
Seller's Companies possess all material permits including, without limitation,
licenses and other authorizations required to conduct their business, including
all appropriate FAA certificates, and all such permits are valid, current and in
full force and effect.
3.13 INTELLECTUAL PROPERTY
(a) INTELLECTUAL PROPERTY ASSETS --The term "Intellectual Property
Assets" includes:
(i) the name HEICO Aerospace Holdings Corporation, all
fictional business names, trading names, registered and unregistered
trademarks, service marks, and applications (collectively, "Marks");
(ii) all patents, patent applications, and inventions and
discoveries that may be patentable (collectively, "Patents");
(iii) all copyrights in both published works and unpublished
works (collectively, "Copyrights"); and
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(iv) all know-how, trade secrets, confidential information,
customer lists, software, technical information, data, process
technology, plans, drawings, and blue prints (collectively "Trade
Secrets"); owned, used, or licensed by any Seller's Company as licensee
or licensor.
(b) KNOW-HOW NECESSARY FOR THE BUSINESS
(i) To the Knowledge of Seller, any Seller's Company and
HEICO, the Intellectual Property Assets are all those necessary for the
operation of the Seller's Companies' businesses as they are currently
conducted. To the Knowledge of Seller, any Seller's Company and HEICO,
one or more of the Seller's Companies is the owner of all right, title,
and interest in and to each of the Intellectual Property Assets, free
and clear of all liens, security interests, charges, encumbrances,
equities, and other adverse claims, and has the right to use without
payment to a third party all of the Intellectual Property Assets.
(ii) To the Knowledge of Seller, any Seller's Company and
HEICO, no employee of any Seller's Company has entered into any
Contract that restricts or limits in any way the scope or type of work
in which the employee may be engaged or requires the employee to
transfer, assign, or disclose information concerning his work to anyone
other than one or more of the Seller's Companies.
(c) PATENTS
(i) To the Knowledge of Seller, any Seller's Company and
HEICO, all of the issued Patents are currently in compliance with
formal legal requirements (including payment of filing, examination,
and maintenance fees and profits of working or use), are valid and
enforceable, and are not subject to any maintenance fees or taxes or
actions falling due within ninety days after the Closing Date.
(ii) To the Knowledge of Seller, any Seller's Company and
HEICO, no Patent has been or is now involved in any interference,
reissue, reexamination, or opposition proceeding. To the Knowledge of
Seller, any Seller's Company and HEICO, there is no potentially
interfering patent or patent application of any third party.
(iii) To the Knowledge of Seller, any Seller's Company and
HEICO, no Patent is infringed or, has been challenged or threatened in
any way except as claimed in the litigation set forth in Part 3.7 of
the Disclosure Letter. To the Knowledge of Seller, any Seller's Company
and HEICO, none of the products manufactured and sold, nor any process
or know-how used, by any Seller's Company infringes or is alleged to
infringe any patent or other proprietary right of any other Person.
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(iv) To the Knowledge of Seller, any Seller's Company and
HEICO, all products made, used, or sold under the Patents have been
marked with the proper patent notice.
(d) Trademarks
(i) To the Knowledge of Seller, any Seller's Company and HEICO
all Marks that have been registered with the United states Patent and
Trademark Office are currently in compliance with all formal legal
requirements (including the timely post-registration filing of
affidavits of use and incontestability and renewal applications), are
valid and enforceable, and are not subject to any maintenance fees or
taxes or actions falling due within ninety days after the Closing Date.
(ii) To the Knowledge of Seller, any Seller's Company and
HEICO, no Mark is now involved in any opposition, invalidation, or
cancellation and, no such action its Threatened with respect to any of
the Marks.
(iii) To the Knowledge of Seller, any Seller's Company and
HEICO, there is no potentially interfering trademark or trademark
application of any third party.
(iv) To the Knowledge of Seller, any Seller's Company and
HEICO, no Mark is infringed or threatened in any way. To the Knowledge
of Seller, any Seller's Company and HEICO, none of the Marks used by
any Seller's Company infringes or is now alleged to infringe any trade
name, trademark, or service mark of any third party.
(e) Copyrights
(i) To the Knowledge of Seller, any Seller's Company and
HEICO, all the Copyrights have been registered and are currently in
compliance with formal legal requirements, are valid and enforceable,
and are not subject to any maintenance fees or taxes or actions falling
due within ninety (90) days after the date of Closing.
(ii) To the Knowledge of Seller, any Seller's Company and
HEICO, no Copyright is infringed or, has been challenged or threatened
in any way. To the Knowledge of Seller, any Seller's Company and HEICO,
none of the subject matter of any of the Copyrights infringes or is
alleged to infringe any copyright of any third party or is a derivative
work based on the work of a third party.
(f) TRADE SECRETS
(i) To the Knowledge of Seller, any Seller's Company and
HEICO, with respect to each Trade Secret, the documentation relating to
such Trade
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Secret is current, accurate, and sufficient in detail and
content to identify and explain it and to allow its full and proper
use.
(ii) To the Knowledge of Seller, any Seller's Company and
HEICO, Seller, HEICO and the Seller's Companies have taken all
reasonable precautions to protect the secrecy, confidentiality, and
value of their Trade Secrets.
(iii) To the Knowledge of Seller, any Seller's Company and
HEICO, one or more of the Seller's Companies has good title and an
absolute (but not necessarily exclusive) right to use the Trade
Secrets. The Trade Secrets are not part of the public knowledge or
literature, and, to the Knowledge of Seller, any Seller's Company and
HEICO, have not been used, divulged, or appropriated either for the
benefit of any Person (other than one or more of the Seller's
Companies) or to the detriment of the Seller's Companies. To the
Knowledge of Seller, any Seller's Company and HEICO, and any of their
Affiliates, no Trade Secret is subject to any adverse claim or has been
challenged or threatened in any way except as claimed in the litigation
set forth in Part 3.7 of the Disclosure Letter.
3.14 DISCLOSURE
No representation or warranty of Seller or HEICO in this Agreement and no
statement in the Disclosure Letter omits to state a material fact necessary to
make the statements herein or therein, in light of the circumstances in which
they were made, not misleading.
3.15 EMPLOYEE BENEFIT MATTERS
(a) No unwritten amendment exists with respect to any Employee Benefit
Plan of the Seller or any Seller's Company. For purposes of this Agreement an
"Employee Benefit Plan" means each employee benefit plan, as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA").
(b) To the Knowledge of Seller, any Seller's Company and HEICO, each
Employee Benefit Plan of the Seller or any Seller's Company has been
administered and maintained in compliance with all laws, rules and regulations,
except for such noncompliance that would not have a material adverse effect on
the Seller or any Seller's Company. To the Knowledge of Seller, any Seller's
Company and HEICO, no Employee Benefit Plans of the Seller or any Seller's
Company is currently the subject of an audit, investigation, enforcement action
or other similar proceeding conducted by any state or federal agency. No
prohibited transactions (within the meaning of Section 4975 of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder
(the "Code")) have occurred with respect to any Employee Benefit Plan of the
Seller or any Seller's Company. No pending or, to the Knowledge of Seller, any
Seller's Company and HEICO, Threatened, claims, suits or other proceedings exist
with respect to any
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Employee Benefit Plan of the Seller or any Seller's Company other than normal
benefit claims filed by participants or beneficiaries.
(c) Except as disclosed in Part 3.15 of the Disclosure Letter, to the
Knowledge of Seller, any Seller's Company and HEICO, no accumulated funding
deficiency (within the meaning of Section 412 of the Code), whether waived or
unwaived, exists with respect to any Employee Benefit Plan of Seller or any
Seller's Company or any plan sponsored by any member of a "controlled group" (as
defined in Section 414(b) of the Code ("Controlled Group"). With respect to each
Employee Benefit Plan of Seller or any Seller's Company subject to Title IV of
ERISA, to the Knowledge of Seller, any Seller's Company and HEICO, the assets of
each such plan are at least equal in value to the present value of accrued
benefits determined on an ongoing basis as of the date hereof. With respect to
each Employee Benefit Plan of Seller or any Seller's Company described in
Section 501(c)(9) of the Code, to the Knowledge of Seller, any Seller's Company
and HEICO, the assets of each such plan are at least equal in value to the
present value of accrued benefits as of the date hereof. To the Knowledge of
Seller, any Seller's Company and HEICO, neither the Seller or any Seller's
Company or any member of a Controlled Group has any liability to pay excise
taxes with respect to any Employee Benefit Plan of Seller or any Seller's
Company under applicable provisions of the Code or ERISA. To the Knowledge of
Seller, any Seller's Company and HEICO, neither the Seller or any Seller's
Company nor any member of a Controlled Group is or ever has been obligated to
contribute to a multiemployer plan within the meaning of Section 3(37) of ERISA.
(d) To the Knowledge of Seller, any Seller's Company and HEICO, no
reportable event (within the meaning of Section 4043 of ERISA) for which the
notice requirement has not been waived has occurred with respect to any Employee
Benefit Plan of Seller or any Seller's Company subject to the requirements of
Title IV of ERISA.
(e) To the Knowledge of Seller, any Seller's Company and HEICO, neither
the Seller or any Seller's Company has any obligation or commitment to provide
medical, dental or life insurance benefits to or on behalf of any of its
employees who may retire or any of its former employees who have retired from
employment with the Seller or any Seller's Company.
3.16 RELATIONSHIPS WITH RELATED PERSONS
Neither Seller, HEICO or any Related Person of Seller, HEICO or of any Seller's
Company has any material interest in any property (whether real, personal, or
mixed and whether tangible or intangible), used in or pertaining to the Seller's
Companies' businesses except with respect to the ownership of the building which
Northwings leases as its premises. Neither Seller, HEICO or any Related Person
of Seller, HEICO or of any Seller's Company owns (of record or as a beneficial
owner) an equity interest or any other financial or profit interest in, a Person
that has (i) had business dealings or a material financial interest in any
transaction with any Seller's Company other than business dealings or
transactions conducted in the Ordinary Course of Business with the Seller's
Companies
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at substantially prevailing market prices and on substantially prevailing market
terms, or (ii) engaged in competition with any Seller's Company with respect to
any line of the products or services of such Seller's Company (a "Competing
Business") in any market presently served by such Seller's Company.
3.17 BROKERS OR FINDERS
Seller, HEICO and their agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement.
4. REPRESENTATIONS AND WARRANTIES OF INVESTOR
4.1 ORGANIZATION AND GOOD STANDING
Investor is a corporation duly organized, validly existing, and in good standing
under the laws of the Federal Republic of Germany.
4.2 AUTHORITY; NO CONFLICT
(a) This Agreement constitutes the legal, valid, and binding obligation
of Investor, enforceable against Investor in accordance with its terms. Upon the
execution and delivery by Investor of the Shareholders Agreement and the
Research and Development Cooperation Agreement (collectively, the "Investor's
Closing Documents"), the Investor's Closing Documents will constitute the legal,
valid, and binding obligations of Investor, enforceable against Investor in
accordance with their respective terms. Investor has the absolute and
unrestricted right, power, and authority to execute and deliver this Agreement
and the Investor's Closing Documents and to perform its obligations under this
Agreement and the Investor's Closing Documents.
(b) Except as set forth in Schedule 4.2, neither the execution and
delivery of this Agreement by Investor nor the consummation or performance of
any of the Contemplated Transactions by Investor will give any Person the right
to present, delay, or otherwise interfere with any of the Contemplated
Transactions pursuant to:
(i) any provision of Investor's Organizational Documents;
(ii) any resolution adopted by the board of directors or the
stockholders of Investor;
(iii) any Legal Requirements or Order to which Investor may be
subject; or
(iv) any Contract to which Investor is a party or by which
Investor may be bound.
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Except as set forth in Schedule 4.2, Investor is not and will not be required to
obtain any Consent from any Person in connection with the execution and delivery
of this Agreement or the consummation or performance of any of the Contemplated
Transactions.
4.3 CERTAIN PROCEEDINGS
There is no pending Proceeding that has been commenced against Investor and that
challenges, or may have the effect of preventing, delaying, making illegal, or
otherwise interfering with, any of the Contemplated Transactions. To Investor's
Knowledge, no such Proceeding has been Threatened.
4.4 BROKERS OR FINDERS
Investor and its officers and agents have incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement and will indemnify
and hold Seller and HEICO harmless from any such payment alleged to be due by or
through Investor as a result of the action of Investor or its officers or
agents.
4.5 INVESTMENT REPRESENTATION
(a) The Investor understands and acknowledges that (i) the Shares have
not been registered under the Securities Act or any applicable Blue Sky Laws in
reliance upon exemptions provided thereunder and that the Shares may not be
transferred or sold except pursuant to the registration provisions of the
Securities Act or pursuant to an applicable exemption therefrom and pursuant to
applicable Blue Sky Laws and regulations and (ii) the representations and
warranties contained herein are being relied upon by the Seller as a basis for
the exemption of the offer and sale of the Shares to the Investor under the
registration requirements of the Securities Act and any applicable Blue Sky
Laws. The Investor acknowledges that the stock certificate for the Shares shall
bear a restrictive legend as required by applicable U.S. federal securities
laws. The Investor is acquiring the Shares for the Investor's own account, and
not as a nominee for any other party for the purpose of investment and not with
a view to, or for sale in connection with, any "distribution," as such term is
defined in Rule 501 of Regulation D under the Securities Act. The Investor has
had the opportunity to review the books and records of the Seller and has been
furnished or provided access to such relevant information that the Investor has
requested. The Investor is knowledgeable, sophisticated and experienced in
business and financial matters of the type contemplated hereby and is able to
bear the economic risks inherent in its investment in the Seller.
(b) The Investor is an "accredited investor" within the meaning of Rule
501 of Regulation D under the Securities Act. The Investor has not been
organized for the purpose of acquiring the Shares.
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(c) The Investor has considered the risks associated with an investment
in the Shares and has had the opportunity to ask questions of and receive
answers from the officers of the Seller about an investment in the Shares and
the business and financial condition of the Seller sufficient to enable it to
evaluate the risks and merits of its investment in the Seller.
5. INDEMNIFICATION; REMEDIES
5.1 SURVIVAL; RIGHT TO INDEMNIFICATION NOT AFFECTED BY KNOWLEDGE
All representations, warranties, covenants, and obligations in this Agreement,
the Disclosure Letter, and any other certificate or document delivered pursuant
to this Agreement will survive the Closing for a period of eighteen (18) months,
except for the representations and warranties contained in Sections 3.2, 3.3 and
4.2, and in Exhibit 3, which shall survive indefinitely, and the representations
and warranties contained in Section 3.10, which shall survive for the applicable
statute of limitations periods. The right to indemnification, payment of Damages
or other remedy based on such representations, warranties, covenants, and
obligations will not be affected by any investigation conducted with respect to,
or any Knowledge acquired (or capable of being acquired) at any time by
Investor, whether before or after the Closing Date, with respect to the accuracy
or inaccuracy of or compliance with, any such representation, warranty,
covenant, or obligation. The waiver of any condition based on the accuracy of
any representation or warranty, or on the performance of or compliance with any
covenant or obligation, will not affect the right to indemnification, payment of
Damages, or other remedy based on such representations, warranties, covenants,
and obligations.
5.2 INDEMNIFICATION AND PAYMENT OF DAMAGES BY HEICO
HEICO will indemnify and hold harmless Investor and their respective
representatives, stockholders, controlling persons, and affiliates
(collectively, the "Investor Indemnified Persons") for, and will pay to the
Indemnified Persons based on their ownership of Seller the amount of, any loss,
liability, claim, damage (including incidental and consequential damages),
expense (including (i) costs of investigation and defense and reasonable
attorneys' fees, and (ii) costs of cleanup, containment, or other remediation
with respect to the representation and warranty made in Section 3.10 but (iii)
net of recoveries and all reserves on the books of the Seller's Companies on the
date of this Agreement) or diminution of value, whether or not involving a
third-party claim (collectively, "Damages"), arising, directly or indirectly,
from or in connection with:
(a) any Breach of any representation or warranty made by Seller or
HEICO in this Agreement, the Disclosure Letter, or any other certificate or
document delivered by Seller or HEICO pursuant to this Agreement; and.
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(b) any Breach by Seller or HEICO of any covenant or obligation of same
in this Agreement.
By way of illustration, (i) if Seller incurs $2,000,000 in Damages under this
Section 5.2, HEICO shall pay $300,000 to Investor if Investor owns twenty
percent (20%) of the issued and outstanding shares of common stock of Seller and
(ii) if Seller incurs $2,000,000 in Damages under this Section 5.2, HEICO shall
pay $150,000 to Investor if Investor owns ten percent (10%) of the issued and
outstanding shares of common stock of Seller.
The remedies provided in this Section 5.2 will be the exclusive remedies that
will be available to Investor or the other Investor Indemnified Persons pursuant
to this Agreement.
Notwithstanding the foregoing, the parties have agreed to the terms and
conditions set forth in Exhibit 3 hereof with respect to Prior Litigation (as
defined hereinafter in Exhibit 3).
5.3 INDEMNIFICATION AND PAYMENT OF DAMAGES BY INVESTOR
Investor will indemnify and hold harmless Seller and HEICO, and will pay to
Seller, HEICO and their respective representatives, stockholders, controlling
persons and Affiliates ("Seller Indemnified Persons") the amount of any Damages
arising, directly or indirectly, from or in connection with (a) any Breach of
any representation or warranty made by Investor in this Agreement or in any
certificate delivered by Investor pursuant to this Agreement, and (b) any Breach
by Investor of any covenant or obligation of Investor in this Agreement.
The remedies provided in this Section 5.3 will be the exclusive remedies that
will be available to Seller and HEICO or the Seller Indemnified Persons pursuant
to this Agreement.
5.4 LIMITATIONS ON AMOUNT - HEICO
HEICO will have no liability (for indemnification or otherwise) with respect to
the matters described until the total of all Damages with respect to such
matters exceeds $500,000, and then only for the amount by which such Damages
exceed $500,000 except with respect to Damages directly or indirectly incurred
by Investor arising from the Prior Litigation for which such indemnification
shall be exclusively governed by, except for the limitation provided in the next
paragraph of this Section 5.4, the terms and conditions set forth in Exhibit 3.
However, this Section 5.4 will not apply to any intentional Breach by Seller or
HEICO of any covenant or obligation, and HEICO will be liable for all Damages
with respect to such Breaches.
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The indemnification obligations of HEICO under this Agreement, including those
in Exhibit 3, may not exceed the Purchase Price.
5.5 LIMITATIONS ON AMOUNT - INVESTOR
Investor will have no liability (for indemnification or otherwise) with respect
to the matters described in Section 5.3 until the total of all Damages with
respect to such matters exceeds $500,000, and then only for the amount by which
such Damages exceed $500,000. However, this Section 5.5 will not apply to any
intentional Breach by Investor of any covenant or obligation, and Investor will
be liable for all Damages with respect to such Breaches.
The indemnification obligations of Investor under this Agreement may not exceed
$2,000,000.
5.6 PROCEDURE FOR INDEMNIFICATION - THIRD PARTY CLAIMS
(a) Promptly after receipt by an indemnified party under Section 5.2 or
5.3 of notice of the commencement of any Proceeding against it, such indemnified
party (Investor Indemnified Persons or Seller Indemnified Persons, as the case
may be) will, if a claim is to be made against an indemnifying party under such
Section, give notice to the indemnifying party of the commencement of such
claim, but the failure to notify the indemnifying party will not relieve the
indemnifying party of any liability that it may have to any indemnified party,
except to the extent that the indemnifying party demonstrates that the defense
of such action is prejudiced by the indemnified party's failure to give such
notice.
(b) If any Proceeding referred to in Section 5.6(a) is brought against
an indemnified party and it gives notice to the indemnifying party of the
commencement of such Proceeding, the indemnifying party will, unless the claim
involves Taxes, be entitled to participate in such Proceeding and, to the extent
that it wishes (unless (i) the indemnifying party is also a party to such
Proceeding and the indemnified party determines in good faith that joint
representation would be inappropriate, or (ii) the indemnifying party fails to
provide reasonable assurance to the indemnified party of its financial capacity
to defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel satisfactory
to the indemnified party and, after notice from the indemnifying party to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will not, as long as it diligently conducts such defense, be
liable to the indemnified party under this Section 5 for any fees of other
counsel or any other expenses with respect to the defense of such Proceeding, in
each case subsequently incurred by the indemnified party in connection with the
defense of such Proceeding. If the indemnifying party assumes the defense of a
Proceeding, (i) it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within the scope of and
subject to indemnification; (ii)
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no compromise or settlement of such claims may be effected by the indemnifying
party without the indemnified party's consent unless (A) there is no finding or
admission of any violation of Legal Requirements or any violation of the rights
of any Person and no effect on any other claims that may be made against the
indemnified party, and (B) the sole relief provided is monetary damages that are
paid in full by the indemnifying party; and (iii) the indemnified party will
have no liability with respect to any compromise or settlement of such claims
effected without its consent. If notice is given to an indemnifying party of the
commencement of any Proceeding and the indemnifying party does not, within ten
(10) days after the indemnified party's notice is given, give notice to the
indemnified party of its election to assume the defense of such Proceeding, the
indemnifying party will be bound by any determination made in such Proceeding or
any compromise or settlement effected by the indemnified party.
(c) Notwithstanding the foregoing, if an indemnified party determines
in good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its affiliates other than as a result of monetary damages
for which it would be entitled to indemnification under this Agreement, the
indemnified party may, by notice to the indemnifying party, assume the exclusive
right to defend, compromise, or settle such Proceeding, but the indemnifying
party will not be bound by any determination of a Proceeding so defended or any
compromise or settlement effected without its consent (which may not be
unreasonably withheld).
(d) The parties to this Agreement hereby consent to the exclusive
jurisdiction of the courts identified in Section 6.4 hereof.
5.7 PROCEDURE FOR INDEMNIFICATION - OTHER CLAIMS
A claim for indemnification for any matter not involving a third-party claim may
be asserted by notice to the party from whom indemnification is sought.
5.8 ATTORNEYS' FEES
If any action is taken to enforce or interpret the provisions of this Agreement,
the prevailing party shall be entitled to its reasonable costs and expenses,
including attorneys' fees from the non-prevailing party, in addition to any
other relief to which that party may be entitled.
6. GENERAL PROVISIONS
6.1 EXPENSES
Except as otherwise expressly provided in this Agreement, each party to this
Agreement will bear its respective expenses incurred in connection with the
preparation, execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents, representatives,
counsel, and accountants. Seller and HEICO will
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cause the Seller's Companies not to incur any out-of-pocket expenses in
connection with this Agreement.
6.2 PUBLIC ANNOUNCEMENTS
Any public announcement or similar publicity with respect to this Agreement or
the Contemplated Transactions will be issued, if at all, at such time and in
such manner as Investor and Seller shall mutually agree, subject to the parties'
obligations under applicable U.S. laws, as attached hereto as Exhibit 2. Seller,
HEICO and Investor will consult with each other concerning the means by which
the Seller's Companies' employees, customers, and suppliers and others having
dealings with the Seller's Companies will be informed of the Contemplated
Transactions, and Investor will have the right to be present for any such
communication.
6.3 NOTICES
All notices, consents, waivers, and other communications under this Agreement
must be in writing and will be deemed to have been duly given when (a) delivered
by hand (with written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by registered
mail, return receipt requested, or (c) when received by the addressee, if sent
by a nationally recognized overnight delivery service (receipt requested), in
each case to the appropriate addresses and telecopier numbers set forth below
(or to such other addressees and telecopier numbers as a party may designate by
notice to the other parties):
Seller: HEICO Aerospace Holdings Corporation
3000 Taft Street
Hollywood, Florida 33021
Attention: Eric Mendelson
Facsimile No.: (954) 987-8228
HEICO: HEICO Corporation
825 Brickell Bay Drive, Suite 1644
Miami, Florida 33131
Attention: Victor Mendelson
Facsimile No.: (305) 374-6742
3000 Taft Street
Hollywood, Florida 33021
Attention: Thomas Irwin
Facsimile No.: (954) 987-8228
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with a copy to: Greenberg Traurig
1221 Brickell Ave.
Miami, Florida 33131
Attention: Cesar Alvarez
Facsimile No.: (305) 579-0717
Investor: Lufthansa Technik AG
Dept. HAM TV/J
P. O. Box 63 03 00
D-22313 Hamburg, Germany
Attention: Bernhard Langlotz
Facsimile No.: (49-40) 5070-4909
with a copy to: Baker & McKenzie
Barnett Tower, Suite 1600
701 Brickell Ave.
Miami, Florida 33131
Attention: Noel H. Nation
Facsimile No.: (305) 789-8953
6.4 JURISDICTION; SERVICE OF PROCESS
Any action or proceeding seeking to enforce any provision of, or based on any
right arising out of, this Agreement shall be brought against any of the parties
exclusively in the courts of the State of Florida, County of Dade, or, if it has
or can acquire jurisdiction, in the United States District Court for the
Southern District of Florida, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world pursuant to the rules of the court
under which the action is filed in Dade County, Florida.
6.5 FURTHER ASSURANCES
The parties agree (a) to furnish upon request to each other such further
information, (b) to execute and delivery to each other such other documents, and
(c) to do such other acts and things, all as the other party may reasonably
request for the purpose of carrying out the intent of this Agreement and the
documents referred to in this Agreement.
6.6 WAIVER
The rights and remedies of the parties to this Agreement are cumulative and not
alternative. Neither the failure nor any delay by any party in exercising any
right, power,
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or privilege under this Agreement or the documents referred to in this Agreement
will operate as a waiver of such right, power, or privilege, and no single or
partial exercise of any such right, power, or privilege will preclude any other
or further exercise of such right, power, or privilege or the exercise of any
other right, power, or privilege. To the maximum extent permitted by applicable
law, (a) no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one party, in whole or in
part, by a waiver or renunciation of the claim or right unless in writing signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c) no
notice to or demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
6.7 ENTIRE AGREEMENT AND MODIFICATION
This Agreement supersedes all prior agreements between the parties with respect
to its subject matter and constitutes (along with the documents referred to in
this Agreement) a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the party to be charged
with the amendment.
6.8 DISCLOSURE LETTER
(a) The disclosures in the Disclosure Letter relate to the
representations and warranties in any of the Sections of the Agreement.
(b) In the event of any inconsistency between the statements in the
body of this Agreement and those in the Disclosure Letter (other than an
exception expressly set forth as such in the Disclosure Letter with respect to
the representations or warranties), the statements in the body of this Agreement
will control.
6.9 ASSIGNMENTS, SUCCESSORS, AND NO THIRD-PARTY RIGHTS
Neither party may assign any of its rights under this Agreement without the
prior consent of the other party except that either party may assign any of its
rights under this Agreement to any wholly owned subsidiary thereof. Subject to
the preceding sentence, this Agreement will apply to, be binding in all respects
upon, and inure to the benefit of the successors and permitted assigns of the
parties. Nothing expressed or referred to in this Agreement will be construed to
give any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any provision
of this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
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6.10 SEVERABILITY
If any provision of this Agreement is held invalid or unenforceable by any court
of competent jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
6.11 SECTION HEADINGS, CONSTRUCTION
The headings of Sections in this Agreement are provided for convenience only and
will not affect its construction or interpretation. All references to "Section"
or "Sections" refer to the corresponding Sections of this Agreement. All words
used in this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
6.12 GOVERNING LAW
This Agreement will be governed by the laws of the State of Florida without
regard to conflicts of laws principles.
6.13 COUNTERPARTS
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
Investor: Seller:
By: By:
--------------------------- ----------------------------
Name: Name:
------------------------- --------------------------
Title: Title:
------------------------ -------------------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
HEICO Corporation
By:
---------------------------
Name:
-------------------------
Title:
------------------------
32
EXHIBIT 10.32
SHAREHOLDERS AGREEMENT
BY AND AMONG
HEICO AEROSPACE HOLDINGS CORP.
AND
HEICO AEROSPACE CORPORATION
AND
ALL OF THE SHAREHOLDERS
OF
HEICO AEROSPACE HOLDINGS CORP.
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS........................................................1
ARTICLE 2 REPRESENTATIONS AND WARRANTIES.....................................3
2.1 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS.....................3
2.2 REPRESENTATIONS AND WARRANTIES OF NEWCO AND THE COMPANY............4
ARTICLE 3 BOARDS OF DIRECTORS AND COMMITTEES.................................4
3.1 NEWCO BOARD........................................................4
3.2 VISITATION RIGHTS OF LHT...........................................5
3.2.1 DESIGNATED REPRESENTATIVE AND ALTERNATE......................5
3.2.2 NOTICE TO DESIGNATED REPRESENTATIVE OR ALTERNATE.............6
3.2.3 CONFIDENTIAL INFORMATION.....................................6
3.3 APPLICATION TO OTHER RIGHTS........................................6
ARTICLE 4 STRATEGIC COMMITTEE................................................7
4.1 COMPOSITION OF STRATEGIC COMMITTEE.................................7
4.2 PURPOSE OF STRATEGIC COMMITTEE.....................................7
ARTICLE 5 AEROSPACE AND AVIATION INDUSTRY INVESTMENTS .......................8
5.1 FUTURE INVESTMENTS.................................................8
5.1.1 RIGHT OF PARTICIPATION AND VETO POWER OF LHT.................8
5.1.2 RIGHT TO PARTICIPATE WITH PARENT.............................8
5.1.3 PROCEDURE RELATING TO SECTION 5.1.2..........................8
5.1.4 MUTUAL BUSINESS INTERESTS....................................9
5.2 LHT'S RIGHT TO PARTICIPATE IN DEBT FINANCING
FOR NORTHWINGS ACQUISITION........................................9
ARTICLE 6 LIAISON OFFICER AND EXCHANGE OF EXPERTS ..........................10
6.1 LIAISON OFFICER...................................................10
6.2 EXCHANGE OF EXPERTS...............................................10
ARTICLE 7 PREEMPTIVE RIGHTS.................................................10
7.1 PREEMPTIVE RIGHTS.................................................10
7.2 PROCEDURE.........................................................11
i
ARTICLE 8 RESTRICTIONS ON AND RIGHTS OF LHT
WITH RESPECT TO PARENT...........................................11
8.1 RESTRICTION ON ACQUIRING SECURITIES OF PARENT.....................11
8.2 RIGHTS OF LHT WITH RESPECT TO SALE OF OR TENDER OFFER FOR PARENT..12
ARTICLE 9 RIGHTS OF FIRST REFUSAL...........................................12
9.1 PARENT'S RIGHT OF FIRST REFUSAL...................................12
9.2 LHT'S RIGHT OF FIRST REFUSAL......................................13
ARTICLE 10 RIGHTS OF LHT AND TRANSFEREE IN EVENT
OF PARTIAL TRANSFER BY LHT.......................................13
ARTICLE 11 BUY AND SELL OF NEWCO SHARES......................................14
11.1 RESTRICTION ON TRANSFER DURING HOLDING PERIOD.....................14
11.2 CHANGE IN CONTROL OF LHT..........................................14
11.3 RESTRICTION ON SALE BY LHT TO COMPETITOR .........................14
ARTICLE 12 CERTAIN COVENANTS.................................................15
12.1 REVIEW OF DRAFT TAX RETURNS.......................................15
12.2 LHT'S RIGHTS IN CONNECTION WITH TAX CONTROVERSIES.................15
ARTICLE 13 CERTAIN GUIDELINES................................................16
13.1 DIVIDENDS.........................................................16
13.2 DEBT TO EQUITY RATIO..............................................16
ARTICLE 14 ALLOCATION OF OVERHEAD............................................16
ARTICLE 15 APPROVAL OF CERTAIN TRANSACTIONS..................................17
15.1 APPROVAL OF LHT DIRECTORS.........................................17
15.2 GOOD FAITH CONSULTATION REQUIREMENT...............................17
ARTICLE 16 LEGEND............................................................18
ARTICLE 17 TRANSFERS.........................................................19
17.1 TRANSFERS.........................................................19
17.2 TRANSFERS IN VIOLATION OF THIS AGREEMENT..........................19
ARTICLE 18 ENCUMBRANCE OF NEWCO'S ASSETS BY PARENT...........................19
ii
ARTICLE 19 MISCELLANEOUS.....................................................19
19.1 AFTER-ACQUIRED SHARES.............................................19
19.2 AMENDMENT AND WAIVER..............................................20
19.3 SEVERABILITY......................................................20
19.4 ENTIRE AGREEMENT..................................................20
19.5 SUCCESSORS AND ASSIGNS............................................20
19.6 COUNTERPARTS......................................................20
19.7 CURE PERIOD.......................................................20
19.8 FURTHER ASSURANCES................................................21
19.9 ATTORNEYS' FEES...................................................21
19.10 NOTICES...........................................................21
19.11 GOVERNING LAW.....................................................22
19.12 JURISDICTION; SERVICE OF PROCESS..................................22
19.13 DESCRIPTIVE HEADINGS..............................................22
19.14 CONSTRUCTION......................................................22
19.15 FAILURE OF NEWCO TO RECEIVE PAYMENT UNDER THE
RESEARCH AND DEVELOPMENT COOPERATION AGREEMENT.....................
SCHEDULE 2.1
iii
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT (this "Agreement") dated as of October 30,
1997 by and among HEICO Aerospace Holdings Corp., a Florida corporation
("Newco"), HEICO Aerospace Corporation, a Florida corporation ("Company") which
is a wholly owned subsidiary of Newco, HEICO Corporation, a Florida corporation
("Parent"), Lufthansa Technik AG, a corporation organized under the laws of the
Federal Republic of Germany ("LHT") and the parties which may execute and join
in this Agreement in the future. Parent, LHT, and any party which may execute
and join in this Agreement in the future are collectively referred to as the
"Shareholders" and individually as a "Shareholder."
INTRODUCTION
Simultaneously with the execution and delivery of this Agreement, LHT is
purchasing 200 shares (the "Acquired Shares") of Newco's common stock, par value
$.0l per share (the "Common Stock") representing twenty percent (20%) of the
voting securities of Newco, pursuant to a Stock Purchase Agreement of even date
herewith, by and among Parent, LHT, and Newco (the "Purchase Agreement");
Newco, Company and the Shareholders desire to enter into this Agreement
for the purposes contained in this Agreement, including (i) establishing the
composition of Newco's Board of Directors (the "Newco Board") and committees
thereof, (ii) agreeing upon certain matters with respect to future investments
in the Aerospace and Aviation Industry, (iii) agreeing upon certain matters with
respect to the operation of Newco under certain circumstances, and (iv) agreeing
upon certain preemptive and special rights and rights of first refusal with
respect to the Common Stock of Newco.
The execution and delivery of this Agreement by Newco and the existing
shareholders of Newco is a condition to LHT's purchase, and the sale by Newco,
of the Acquired Shares pursuant to the Purchase Agreement.
In consideration of the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties to this Agreement hereby agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms have the following
meanings:
"AEROSPACE AND AVIATION INDUSTRY" means all businesses and
industries producing,
manufacturing, procuring, supplying, servicing or using aircraft or spacecraft
or equipment used to service such aircraft or spacecraft, or parts thereof,
other than ground support equipment used in the Aerospace and Aviation Industry.
"AFFILIATE" An "Affiliate" of, or a person "Affiliated" with, a
specified person, is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the person specified, but in no case shall a Person owning less than twenty five
percent (25%) of the equity of LHT or Parent be deemed to be an "Affiliate" of,
or a person "Affiliated" with either LHT or Parent, respectively.
"ACQUIRED SHARES" has the meaning set forth in the recitals.
"CLOSING" means the closing date of the Purchase Agreement.
"COMMON STOCK" has the meaning set forth in the recitals.
"COMPANY" has the meaning set forth in the preamble.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations thereunder, or any successor
statute, rules and regulations.
"INVESTMENT" means any expenditure or contribution of assets to
acquire or form a business or to acquire a substantial portion of the assets of
a business in order to produce revenue, including but not limited to the
acquisition of an equity interest in any newly formed joint venture or
subsidiary.
"LHT" has the meaning set forth in the preamble.
"NEWCO" has the meaning set forth in the preamble.
"NEWCO BOARD" has the meaning set forth in the recitals.
"PARENT" has the meaning set forth in the preamble.
"PERSON" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a governmental entity or any
department, agency or political subdivision thereof.
"PURCHASE AGREEMENT" has the meaning set forth in the recitals.
"RESEARCH AND DEVELOPMENT COOPERATION AGREEMENT" means that certain
research and development cooperation agreement entered into by Newco and LHT of
even date hereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
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"SHARES" means (i) any Common Stock purchased or otherwise acquired
by any Shareholder, (ii) any Common Stock issued or issuable with respect to the
securities referred to in (i) above by way of stock dividend or stock split or
in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization, and (iii) any other security issued by
Newco having voting rights which is controlled by any Shareholder.
"SHAREHOLDER" and "SHAREHOLDERS" have the meanings set forth in the
preamble.
"TAX" (and, with correlative meaning, "Taxes" and "Taxable") means
any net income, alternative, federal environmental taxes, or any other tax for
which a Hypothetical Separate Tax Liability (as such term is defined in the Tax
Allocation and Sharing Agreement) is computed together with any interest or any
penalty, addition to tax or additional amount imposed by any governmental
authority (hereinafter a "Taxing Authority") responsible for the imposition of
any such tax (domestic or foreign).
"TAXING AUTHORITY" shall have the meaning ascribed to such term
within the definition of the term "Tax," above.
"TAX RETURNS" shall mean all income (estimated income) excise,
sales, unemployment, employer and employee withholding, social security,
occupation, franchise, customs and other Tax returns or Tax reports with respect
to Taxes required by Federal, State, foreign or local law or regulation.
"TAX SHARING AND ALLOCATION AGREEMENT" means the Tax Allocation and
Sharing Agreement effected as of even date herewith between Parent and Newco.
"TRANSFER" means any sale, assignment, conveyance, donation,
bequeath, pledge, hypothecation, transfer or other disposition (whether
voluntary, involuntary or by operation of law or by merger), or any agreement to
transfer.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF SHAREHOLDERS.
Each Shareholder represents and warrants to each other that (i) such
Shareholder is the record owner of the number of Shares set forth opposite its
name on SCHEDULE 2.1 attached hereto, (ii) this Agreement has been duly
authorized, executed and delivered by such Shareholder and constitutes the valid
and binding obligation of such Shareholder, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles, and (iii) such Shareholder
has not granted and is not a party to any proxy,
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voting trust or other agreement with respect to the shares of Newco or its
subsidiaries which is inconsistent with, conflicts with or violates any
provision of this Agreement, or which is violated by this Agreement, and
expressly agrees not to grant any proxy or become party to any voting trust or
other agreement with respect to the shares of Newco or its subsidiaries which is
inconsistent with, conflicts with or violates any provision of this Agreement.
2.2 REPRESENTATIONS AND WARRANTIES OF NEWCO AND THE COMPANY.
Newco and the Company each represent and warrant to each Shareholder that
(i) each is a corporation duly organized, validly existing and in good standing
under the laws of Florida and is qualified to do business in every jurisdiction
in which its ownership of property or conduct of business requires it to
qualify, and (ii) this Agreement has been duly authorized, executed and
delivered by it and constitutes the valid and binding obligation of it
enforceable in accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors' rights and to general equity
principles.
ARTICLE 3
BOARDS OF DIRECTORS AND COMMITTEES
3.1 NEWCO BOARD.
From and after the Closing, and as long as LHT shall own at least ten
percent (10%) of the issued and outstanding Shares of Newco, each Shareholder
shall vote all of its Shares and the Shares over which such Shareholder has
voting control and shall take all other necessary or desirable actions within
its control (whether in its capacity as a shareholder, director, member of a
board committee or officer of Newco or otherwise, and including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
Newco shall take all necessary corporate action within its control (including,
without limitation, calling special board of directors and shareholder
meetings), so that:
(i) no less than (a) two directors, if the Newco Board consists of up to
eight directors, (b) three directors, if the Newco Board consists of
nine or ten directors, or (c) twenty percent (20%) of the directors,
rounded up to the next whole number, if the Newco Board consists of
more than ten directors, shall be representatives designated by LHT,
provided however, such designated representatives must be reasonably
acceptable to the other directors of the Newco Board (it being
agreed that any LHT officer who also serves as a member of upper
management of LHT shall be acceptable to such directors) (such
designated representatives shall be referred to herein individually
as a "LHT Director" and, collectively, as the "LHT Directors"), and
each LHT Director shall serve until his or her successor is elected
and qualified;
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(ii) the initial Newco Board shall consist of eight directors, two of
which shall be LHT Directors;
(iii) the removal, without cause, of any LHT Director from the Newco Board
shall be effected only upon the written request of LHT and under no
other circumstances;
(iv) in the event that any LHT Director ceases to serve as a member of
the Newco Board during his or her term of office, the resulting
vacancy on the Newco Board shall be filled within thirty (30) days
of such vacancy by another representative designated by LHT, as
provided hereunder;
(v) the removal, without cause, of any director designated by Parent, or
Parent's designee, from the Newco Board shall be effected only upon
the written request of Parent, or Parent's designee, and under no
other circumstances; and
(vi) in the event that any director designated by Parent, or Parent's
designee, ceases to serve as a member of the Newco Board during his
or her term of office, the resulting vacancy on the Newco Board
shall be filled within thirty (30) days of such vacancy by a
director designated by Parent or Parent's designee. The right to
increase or decrease the size of the Board of Directors shall remain
with Parent.
3.2 VISITATION RIGHTS OF LHT.
3.2.1. DESIGNATED REPRESENTATIVE AND ALTERNATE.
From and after the Closing and as long as LHT shall own at least ten
percent (10%) of the issued and outstanding Shares of Newco, LHT shall have the
right to designate one person (the "Designated Representative") to attend each
and every meeting of the boards of directors of Parent and the Company (the
"HEICO Boards"), and each and every meeting of any committee of such HEICO
Boards (the "HEICO Committees") either in person or by telephone (the
"Visitation Rights"). LHT acknowledges that the HEICO Boards and the HEICO
Committees may discuss matters regarding LHT and Newco, in which case such HEICO
Boards and HEICO Committees may request the Designated Representative or the
Alternate to not participate in such portion of the meetings, provided however,
that the HEICO Boards and the HEICO Committees conduct themselves in accordance
with applicable corporate law. In the event the Designated Representative is
unable to participate in any of the meetings of the HEICO Boards or the HEICO
Committees, an alternate (the "Alternate") shall be entitled to the Visitation
Rights, provided however, that the Alternate shall serve as a member of upper
management of LHT.
3.2.2. NOTICE TO DESIGNATED REPRESENTATIVE OR ALTERNATE.
Parent and Company shall provide LHT's Designated Representative or
Alternate with at least the same notice of meetings given to members of the
HEICO Boards and the HEICO
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Committees.
3.2.3. CONFIDENTIAL INFORMATION.
LHT's Designated Representative or Alternate shall have the right to
access information presented in advance of, at, or following such meetings, and
to participate in the meetings, each to the same extent as other members of
HEICO Boards or HEICO Committees; provided however, LHT's Designated
Representative's or Alternate's access and participation shall be subject to
applicable United States law as to military and security issues and the right to
withhold information if a potential conflict of interest exists with LHT or
Newco provided the HEICO Boards and HEICO Committees conduct themselves in
accordance with applicable corporate law. LHT's Designated Representative or
Alternate shall have no voting rights at such meetings.
LHT agrees to use the same means it uses to protect its own
confidential or proprietary information, but in any event not less than
reasonable means, to prevent the disclosure and to protect the confidentiality
of (i) written information received by LHT's Designated Representative or
Alternate from Parent or Company, and (ii) oral or visual information identified
as confidential at the time of disclosure. The term "Confidential Information"
shall mean (i) and (ii) in the preceding sentence. Confidential Information will
not include information which belongs to LHT or is (i) already known by LHT
without an obligation of confidentiality other than under this Agreement, (ii)
publicly known or becomes publicly known through no unauthorized act of LHT,
(iii) rightfully received from a third party, (iv) independently developed by
LHT without use of Parent's or Company's confidential information, (v) disclosed
without similar restrictions to a third party by Parent and/or Company, (vi)
approved by Parent and/or Company for disclosure or (vii) required to be
disclosed pursuant to a requirement of a governmental agency or law of the
United States of America or a state thereof, or any governmental or political
subdivision thereof, so long as LHT provides Parent and/or Company, as may be
applicable, with prior reasonable notice of such requirement.
This provision shall survive the termination of this Agreement for
three (3) years.
LHT's Designated Representative or Alternate may disclose such
confidential and proprietary information of the Board of Directors of Parent or
Company only to members of upper management of LHT in connection with LHT's
interests in Newco and its subsidiaries.
3.3 APPLICATION TO OTHER RIGHTS.
In the event LHT exercises any right granted under this Agreement to
acquire its pro rata share of stock or other equity interest in any subsidiary
or other Affiliate of Parent that is or will be involved in the Aerospace and
Aviation Industry, including without limitation pursuant to Article 5 hereof,
LHT shall have the same right and in the same proportion (subject to owning at
least its Pro Rata Interest as hereinafter defined) to elect directors or their
equivalent to the boards of directors or equivalent governing body of each such
subsidiary or other Affiliate as set forth above in Article 3.1, and to have
either LHT's Designated Representative or Alternate
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attend the meetings of each such subsidiary or other Affiliate of Parent as set
forth in Article 3.2.1 above, and have access to information presented in
connection with such meetings, as set forth in Article 3.2.3 above. Any
information provided pursuant to this Section shall be subject to the same
confidentiality requirements as are set forth in Section 3.2.3.
ARTICLE 4
STRATEGIC COMMITTEE
4.1 COMPOSITION OF THE STRATEGIC COMMITTEE.
Not later than November 15, 1997, Newco shall create a committee of the
Newco Board (the "Strategic Committee") which shall consist of five (5) members.
The Shareholders shall have the right to designate the members of the Strategic
Committee, subject to the terms set out below, in proportion to their respective
ownership of Shares, except that LHT shall have the right at all times while it
owns at least ten percent (10%) of the issued and outstanding Shares of Newco,
to designate at least one member of the Strategic Committee. The initial members
of the Strategic Committee shall be: (i) the President of Newco, (ii) the
Chairman of the Board of Parent, (iii) one other member from the Newco Board
designated by Parent, (iv) one other member from Parent's Board of Directors
designated by Parent in Parent's sole and absolute discretion, and (v) LHT's
designee, it being agreed that such designee shall serve as a member of upper
management of LHT.
4.2 PURPOSE OF STRATEGIC COMMITTEE.
The purpose of the Strategic Committee shall be to consider, make
recommendations and provide for the implementation of strategic planning in the
Aerospace and Aviation Industry, including future investments, changes in the
scope of Newco's and the Company's business, and governmental, regulatory and
political issues involving the Aerospace and Aviation Industry. The Strategic
Committee shall be the only body performing the aforesaid functions for Newco
and its subsidiaries, recognizing that with respect to Parent, it shall be an
advisory body to the Board of Directors of Parent. In addition, the Strategic
Committee shall be the only body performing the aforesaid functions for any new
subsidiary or other entity of Parent which directly or indirectly owns any stock
or other interest in Newco or the Company.
ARTICLE 5
AEROSPACE AND AVIATION INDUSTRY INVESTMENTS
5.1 FUTURE INVESTMENTS.
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5.1.1. RIGHT OF PARTICIPATION.
With respect to any future Investments in the Aerospace and Aviation
Industry, such Investments shall be made in Newco if (i) Newco has the
reasonable financial capability to undertake such Investment and (ii) LHT
approves the making of such Investment within 45 days of receiving a request to
approve such Investment. If LHT fails to approve such Investment within such
period, Parent will have the right to pursue such Investment without LHT having
any further involvement in such Investment.
5.1.2. RIGHT TO PARTICIPATE WITH PARENT.
In the event that Newco is not financially capable of undertaking an
Investment in the Aerospace and Aviation Industry and if Parent or Affiliates of
Parent wish to proceed with such Investment, LHT shall have the right to
participate in such Investment on similar terms as offered to Parent, or
Affiliates of Parent in an amount equal to the same percentage of Shares then
owned by LHT in Newco (the "Pro Rata Interest").
In the event that Newco is financially capable but LHT and Newco
mutually agree to seek participation of a third party in such an Investment, LHT
shall have the right to participate in such Investment on similar terms as
offered to Parent or Affiliates of Parent in an amount equal to the Pro Rata
Interest.
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5.1.3. PROCEDURE RELATING TO SECTION 5.1.2.
LHT shall confirm its desire to participate with Parent or
Affiliates of Parent within ninety (90) days of notice of a proposed Investment
in the Aerospace and Aviation Industry, or if such Investment is proposed to be
consummated within a shorter period than ninety (90) days, then at least
forty-five (45) days prior to the proposed date of consummation of the
Investment. Parent or any Affiliates of Parent shall have the right to proceed
with any proposed Investment prior to receiving LHT's decision as long as LHT
shall have received notice at least thirty (30) days prior to the consummation
of such Investment. In the event Parent or any Affiliates of Parent decides to
proceed with such Investment prior to receiving LHT's decision and LHT later
decides (but within the above referenced 90 or 45 day periods) to participate,
LHT agrees (i), in the event the party making the Investment uses outside
financing, to pay interest to Parent, or to such other Affiliate of Parent as is
appropriate under the circumstances, at the prime rate of Parent's principal
lender for the period beginning on the date of the Investment and ending on the
date in which LHT makes its decision and Investment or (ii), in the event the
party making the Investment finances the Investment itself, to pay the actual
carrying interest for the period beginning on the date of the Investment and
ending on the date in which LHT makes its decision and Investment. If LHT elects
not to participate in the Investment in the Aerospace and Aviation Industry or
does not provide its notice of election within the time periods provided, the
Investment by Parent or any of its Affiliates, may proceed without LHT outside
the corporate chain of Newco and its subsidiaries, or may be offered to a third
party on terms no more favorable than offered to LHT.
5.1.4. MUTUAL BUSINESS INTERESTS
The parties to this Agreement are aware of their mutual business
interests and mutual benefits in relation to their common ownership in Newco.
The parties are also aware that each has or may have additional business
interests which might interfere with the mutual business interests of the
parties in relation to their ownership in Newco or which might interfere with
additional business interests of the other parties to this Agreement. It is the
mutual intention of the parties to avoid such interferences and to jointly seek
amicable solutions in situations where such interferences may arise.
LHT and Newco will try to include each other as a participant in any
investment in an entity which engages in designing, procuring, manufacturing or
selling PMA aircraft engine parts; provided, however, that such inclusion is in
accordance with the rights and business intentions of such parties under this
Shareholders Agreement and the Research and Development Cooperation Agreement.
With respect to future aircraft engine PMA parts which are not produced in
accordance with Article 2.3 of the Research and Development Cooperation
Agreement, LHT and Newco shall discuss the possibilities to have such future
aircraft engine PMA parts developed, procured and/or manufactured by Newco. If
either party comes to the conclusion, in its sole discretion, that the
development, procurement and/or manufacturing of such parts by Newco would not
be in accordance with its needs and requirements, such party shall be free to
pursue such other alternative as it deems appropriate in its sole discretion.
Neither LHT nor Newco shall be
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restricted in any way from purchasing PMA aircraft parts from any other source
at the lowest price in the market if delivery and quality are comparable to
Newco's parts.
The provisions of Section 5.1.4 are intended only as an expression of the
parties' present intentions and are not intended as legal obligations or legally
binding commitment on any party to this Agreement.
5.2 LHT'S RIGHT TO PARTICIPATE IN DEBT FINANCING FOR NORTHWINGS
ACQUISITION.
LHT shall have the right to participate in up to twenty percent (20%) of
the debt financing provided by Parent to Newco in connection with Newco's recent
acquisition of Northwings Accessories Corp., a Florida corporation
("Northwings") on terms acceptable to LHT and no less favorable than those
agreed to by Parent or its Affiliates. The amount to be financed shall be
reduced by earnings of Northwings from the date of acquisition. The interest
rate for any debt financing provided by the Shareholders of Newco shall be the
same for each Shareholder. In the event LHT does not elect to contribute any
amount up to twenty percent (20%) of any shareholder loan financing in
connection with the acquisition of Northwings, Parent shall have the right to
finance the acquisition with any other party or to maintain the financing
itself.
ARTICLE 6
LIAISON OFFICER AND EXCHANGE OF EXPERTS
6.1 LIAISON OFFICER.
From and after Closing, LHT may provide a liaison officer to Newco on a
part time basis, designated and paid by LHT, who may coordinate sales,
marketing, engineering and business support relating to aircraft engine parts
with Newco. Moreover, Newco or its subsidiaries may provide a liaison officer to
LHT on a part time basis, designated and paid by Newco, who may coordinate
sales, marketing, engineering and business support relating to aircraft engine
parts with LHT.
6.2 EXCHANGE OF EXPERTS.
The Company and LHT may develop an exchange program whereby personnel from
each having expertise in engineering and aircraft engines may be exchanged on a
part-time basis on mutually agreeable schedules, with the costs of each such
exchange to be borne by the party employing such personnel and making the
exchange. Each party participating in the exchange agrees to make reasonable
office space, furnishings and telephone and telecopy facilities available to
personnel exchanged by the other party during the term of the exchange. In
addition, the Company and LHT hereby agree to be bound by the same
confidentiality obligations agreed to by LHT in Article 3.2.3 hereof with
respect to any confidential information exchanged between the parties under this
Article 6.2.
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ARTICLE 7
PREEMPTIVE RIGHTS
7.1 PREEMPTIVE RIGHTS.
On and after the Closing, and so long as LHT owns at least ten percent
(10%) of the issued and outstanding shares of Newco, the Articles of
Incorporation of Newco shall provide for preemptive rights such that if Newco
authorizes the issuance or sale of additional Newco securities (other than as a
dividend on the outstanding Common Stock), Newco shall first offer to sell LHT a
percentage of such additional securities equal to LHT's proportionate interest
in Newco at the then most favorable price and other terms offered to any other
Person in connection with such offering. The Articles of Incorporation or their
equivalent of any subsidiary or Affiliate of Parent involved in the Aerospace
and Aviation Industry in which LHT acquires stock or other equity interest shall
provide for the preemptive rights as set forth in this Article in form and
substance acceptable to LHT and effective upon acquisition by LHT of the stock
or other equity interest therein.
7.2 PROCEDURE.
LHT shall exercise its preemptive right by delivering a written notice to
Newco setting forth the number or amount of securities to be purchased by LHT
within ninety (90) days, or such shorter period of time if the Newco Board
determines in good faith that there exists a bona fide business emergency for
such shorter period of time which in no event shall be less than forty five (45)
days, of receipt of Newco's written notice describing in reasonable detail the
stock or securities being offered, the purchase price thereof, the payment terms
and LHT's percentage allotment. During such ninety (90) day period, LHT may
elect to either purchase all or any portion of the securities offered by Newco
under this Article. LHT agrees to use its reasonable best efforts to secure an
exercise decision in a shorter period of time in such an emergency.
Notwithstanding, in the event LHT takes longer than forty-five (45) days to
exercise its preemptive right, LHT agrees to pay interest to Parent, or such
other Affiliate of Parent as is appropriate under the circumstances, at the
prime rate of Parent's principal lender on the purchase price of the additional
Shares offered to LHT for the period beginning forty-five (45) days after notice
and ending on the date in which LHT makes its exercise decision. Upon expiration
of the offering period, Newco may within ninety (90) days sell the additional
securities which LHT has not elected to purchase, on terms no more favorable
than offered to LHT, to any third party including Parent or any Affiliate
thereof. Any stock or securities offered or sold by Newco after such ninety (90)
day period must be re-offered to LHT pursuant to the terms of this Article.
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ARTICLE 8
RESTRICTIONS ON AND RIGHTS OF LHT WITH RESPECT TO PARENT
8.1 RESTRICTION ON ACQUIRING SECURITIES OF PARENT.
Except in the event of a bona fide tender offer for Parent by any Person
not Affiliated with LHT, LHT shall not, directly or indirectly, acquire, enter
into an agreement to acquire, or participate in any way in connection with the
solicitation of proxies or consents for, the voting securities of Parent, or aid
or encourage any other Person from so doing. The exclusive remedy of Parent
under this Article 8.1 will be to seek injunctive relief in a court of competent
jurisdiction in the United States to stop LHT from acquiring any of the voting
securities of Parent, provided that any voting securities acquired in violation
of this Section 8.1 shall not be voted by LHT or by anyone holding LHT's proxy.
8.2 RIGHTS OF LHT WITH RESPECT TO SALE OF OR TENDER OFFER FOR PARENT.
In the event that the Board of Directors of Parent wishes to sell over
fifty percent (50%) of the voting securities or assets (other than in the
ordinary course of business) of Parent or if someone commences a tender offer to
acquire, or acquires, sufficient shares of the common stock of Parent to trigger
its existing shareholders rights plan, then, to the extent the Board of
Directors of Parent desires to proceed with a sale of Parent , LHT shall have
the right, on the same basis as any other bidder, to participate in the bidding
for whatever shares or assets Parent wishes to ultimately sell to a potential
bidder. Parent agrees not to consummate any such sale until at least thirty (30)
days have expired from the time that Parent has communicated to LHT (or LHT
senior management has become aware) of the commencement of such a sale or a
hostile offer for Parent. During this period, and subject to LHT agreeing to a
confidentiality agreement in substantially the same form as that required of
other bidders in any such sale or hostile takeover attempt, Parent will give LHT
the same access to confidential information that it gives to other potential
bidders. The Board of Directors of Parent shall retain the right to select the
bidder based on the exercise of its fiduciary duties. The rights of LHT under
this Article 8.2 shall not be applicable to a merger (other than a merger in
which cash consideration is in excess of fifty percent (50%) of the total
consideration received in the merger) in which fifty percent (50%) or more of
the directors of Parent continue in office immediately after the merger. The
exclusive remedy of LHT under this Article 8.2 will be to seek injunctive relief
in a court of competent jurisdiction in the United States to permit it to bid
for the shares or assets of Parent on the same basis as any other bidder as
provided in this Article. The rights of LHT pursuant to this Section 8.2 are
subject to the fiduciary duties of the directors of Parent and the rights of the
shareholders of Parent.
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ARTICLE 9
RIGHTS OF FIRST REFUSAL
9.1 PARENT'S RIGHT OF FIRST REFUSAL.
If LHT desires to transfer, directly or indirectly, all or any portion of
the Acquired Shares or other equity interests acquired in other entities
pursuant to the provisions of this Agreement ("Equity Interests") to a bona fide
third party purchaser, (excluding any wholly owned subsidiaries of LHT, and
shall not be a direct or indirect competitor of Parent, Newco or the Company),
LHT must provide Parent with a first right of refusal, and give notice to Parent
and Newco of the proposed transfer including (i) the name of the proposed
transferee(s), (ii) the number of shares or other Equity Interests desired to be
transferred (the "Offered Shares"), (iii) the price per share or other Equity
Interest and other material terms of the offer, and (iv) an offer to sell the
Shares to Parent on the same terms. Any such transfer by LHT shall include all
other interests that LHT has acquired pursuant to the rights granted under this
Agreement if the transfer is of ten percent (10%) or more of the Acquired
Shares. Parent shall have an irrevocable right to purchase all or a portion of
the Offered Shares upon the terms of LHT's notice, and shall be required to
provide notice of its intent to purchase the Offered Shares within ninety (90)
days after delivery of LHT's notice (the "Initial Period"). If Parent elects to
purchase all or any portion of the Offered Shares, it must pay the purchase
price within the ninety (90) day period following the Initial Period upon
delivery of the share certificates representing the Offered Shares, properly
endorsed for transfer. If fewer than all of the Offered Shares are elected to be
purchased by Parent, LHT may then transfer, subject to compliance with all
applicable state and federal securities laws, the remaining Offered Shares to a
third party at any time within the ninety (90) days after the Initial Period on
terms no more favorable than in LHT's notice. The rights of Parent under this
right of first refusal shall be exercisable by any direct or indirect Affiliate
of Parent.
9.2 LHT'S RIGHT OF FIRST REFUSAL.
If Parent desires to transfer, directly or indirectly, all or any portion
of its Shares in Newco, any other Equity Interests, or of any Newco subsidiary
or substantially all of Newco's assets or substantially all of the assets of any
of Newco's subsidiaries or any of the Equity Interests to a bona fide third
party, (excluding any wholly owned subsidiaries of Parent), Parent must give
notice to LHT and to Newco of the proposed transfer including (i) the name of
the proposed transferee(s), (ii) the number of Shares for other Equity Interests
or assets desired to be transferred (collectively, the "Offered Shares or
Assets," or individually the "Offered Shares" and the "Offered Assets"), (iii)
the price per Share, other Equity Interest or for the Assets and other material
terms of the offer, and (iv) an offer to sell the Offered Shares or Assets to
LHT on the same terms. LHT shall have an irrevocable right to purchase all or a
portion of the Offered Shares or Assets upon the terms of Parent's notice, and
shall be required to provide notice of its intent to purchase the Offered Shares
or Assets of Newco or Newco's subsidiaries within ninety (90) days after
delivery of Parent's notice (the "Initial Period"). If LHT elects to purchase
all or any portion of the Offered Shares or Assets, it must pay the purchase
price upon delivery of the share certificates representing the Offered Shares,
properly endorsed for transfer, or the Offered Assets within the Initial Period.
If fewer than all of the Offered Shares or Assets are elected to be
13
purchased by LHT, Parent may then transfer, subject to compliance with all
applicable state and federal securities laws, the remaining Offered Shares or
Assets to a third party at any time within the ninety (90) days after the
Initial Period on terms no more favorable than in Parent's notice.
ARTICLE 10
RIGHTS OF LHT AND TRANSFEREE IN EVENT OF
PARTIAL TRANSFER OF SHARES BY LHT
In the event LHT transfers Acquired Shares pursuant to any Article of this
Agreement, LHT's transferee shall not retain any of LHT's rights granted under
Articles 3, 4, 5, 6, 7, 8, 9.2, 12, 13 and 15 of this Agreement but will remain
subject to all its obligations under this Agreement, including its obligations
under such Articles, provided however, if LHT maintains ownership of at least
ten percent (10%) of the issued and outstanding Shares of Newco, LHT may retain
or grant to any transferee, together with the respective Shares transferred, the
right to appoint one of its LHT Directors to the Newco Board. Notwithstanding
the foregoing, Parent reserves the right to approve or reject any individual
candidate designated by LHT's transferee based on the candidate's fitness and/or
personality. If LHT owns less than ten percent (10%) of the Shares of Newco, LHT
shall lose its rights under the following sections of this Agreement: Articles
3, 4, 5, 6, 7, 8, 9.2, 12, 13 and 15 but will remain subject to all its
obligations under this Agreement, including its obligations under such Articles.
ARTICLE 11
BUY AND SELL OF NEWCO SHARES
11.1 RESTRICTION ON TRANSFER DURING HOLDING PERIOD.
Unless it occurs indirectly as a result of the acquisition or merger of
LHT or Parent, during the first three (3) years of this Agreement, neither LHT
nor Parent shall transfer all or any portion of their Shares of Newco.
11.2 CHANGE IN CONTROL OF LHT.
In the event of a change in control of LHT, Parent shall have the right to
purchase and LHT shall be obligated to sell all of LHT's Shares in Newco to
Parent upon mutually agreeable terms. In the event LHT and Parent cannot
mutually agree to a purchase price within the forty-five (45) day period
subsequent to LHT's notice to Parent of such change in control, the price of
LHT's Newco Shares shall be determined by a mutually agreeable independent
investment banking firm or independent accounting firm having experience in the
Aerospace and Aviation Industry. If the parties cannot agree upon an independent
investment banking firm or accounting firm within thirty (30) days from the
expiration of the prior forty five (45) day period, the parties shall request
the American Arbitration Association to select an independent investment banking
or
14
accounting firm. For purposes of this Article, a change in control of LHT shall
mean (i) the acquisition by any person of beneficial ownership of more than
fifty percent (50%) of either the then outstanding shares of common stock of LHT
or the combined voting power of LHT's then outstanding voting securities or (ii)
LHT is not Affiliated with an entity operating a major international airline
having at least 150 major commercial aircraft.
11.3 RESTRICTION ON SALE BY LHT TO COMPETITOR.
Notwithstanding any provision contained in this Agreement, LHT shall not
authorize the transfer of any of its Newco Shares to any third party who is, or,
to LHT's knowledge, intends to become, a direct or indirect competitor of Newco,
the Company or Parent or any of their Affiliates without the prior consent of
Parent.
ARTICLE 12
CERTAIN COVENANTS
12.1 REVIEW OF INCOME TAX RETURNS AND COMPUTATION OF HYPOTHETICAL
SEPARATE TAX LIABILITY OF SUB.
Parent shall provide any and all Income Tax Returns of Parent to LHT after
such Tax Return has been filed. Parent may redact such information that is not
applicable to Newco.
Parent shall compute the Hypothetical Separate Tax Liability of Sub (as
that term is defined in the Tax Sharing and Allocation Agreement) in a manner
Parent believes to be in the best interests of Newco. LHT shall have the right
at its expense to review all work papers, procedures and any other relevant
information used to prepare such Income Tax Returns as is necessary to determine
the Hypothetical Separate Tax Liability of Sub. If LHT, after delivery of the
Income Tax Return, notifies Parent in writing that LHT requests additional
information reasonably relating to the determination of the Hypothetical
Separate Tax Liability of Sub (as that term is defined in the Tax Sharing and
Allocation Agreement), then Parent shall provide any such information within a
reasonable period of time. Parent, and if necessary, their representatives,
shall discuss and resolve all inquiries and disputes that LHT may have to the
Parent's determination of the Hypothetical Separate Tax Liability of Sub. In the
event Parent and LHT are unable to reach an agreement as to one or more disputed
items, Parent shall determine the Hypothetical Separate Tax Liability of Sub in
a manner that it believes to be in the best interests of Newco. To the extent
that the correct amount of the Hypothetical Separate Tax Liability exceeds the
amount that was previously paid by Newco, the Parent Group shall promptly refund
such amount to Newco. To the extent that the correct amount of the Hypothetical
Separate Tax Liability of Sub is less than the amount that was previously paid
by Newco, Newco shall promptly pay such amount to Parent.
LHT shall reimburse Parent for any out of pocket expenses attributable to
the foregoing, including but not limited to, any reasonable fees incurred by
Parent's accounting firm in
15
connection with providing the requested information, and in participating in
discussions with LHT's representatives; provided, however, if any inquiry
results in a refund to Newco of part or all of the Hypothetical Separate Tax
Liability of Sub that was previously paid by Newco to Parent, then LHT and
Parent shall each pay fifty percent (50%) of Parent's out of pocket expenses
that are attributable to such inquiry.
12.2 LHT'S RIGHTS IN CONNECTION WITH TAX CONTROVERSIES.
Parent shall notify LHT promptly in writing if Parent or Newco receives
any material inquiry relating to Newco (including without limitation any
communication, notice of proposed audit, revenue agent's report or notice of
proposed adjustment) from the Taxing Authority concerning any taxable year for
which Parent or Newco filed a Tax Return. Upon request, Parent shall promptly
provide to LHT copies of any and all written communications to or from any
Taxing Authority relating to Newco. Parent, and if necessary, their
representatives, shall discuss and answer all inquiries that LHT may have
regarding communications with the Taxing Authority relating to Sub. Parent shall
act in a manner that it believes to be in the best interests of Newco when
resolving any inquiry by a Taxing Authority relating to Newco.
ARTICLE 13
CERTAIN GUIDELINES
13.1 DIVIDENDS.
Within sixty (60) days of Closing, Newco shall adopt general dividend
payout targets providing for the declaration of dividends at least annually in
the amount of eighty percent (80%) of available cash flow to the Shareholders.
Notwithstanding, the declaration and payment of dividends by Newco (as well as
its related determination of available cash flow, to the extent not inconsistent
with the debt to equity ratio guideline below) shall be subject to the sole
discretion of the Newco Board.
13.2 DEBT TO EQUITY RATIO.
Newco shall use its reasonable best efforts to maintain at all times a
maximum debt to equity ratio of 3:1 (i.e. 75% of debt and 25% of equity) on a
consolidated basis. Notwithstanding, the decision to incur any indebtedness by
Newco above such 3:1 ratio shall be subject to the sole discretion of the Newco
Board, provided such action is taken pursuant to specific resolution adopted by
the Newco Board.
16
ARTICLE 14
ALLOCATION OF OVERHEAD
Subject to the provisions of the Tax Allocation and Sharing Agreement of
even date, Parent agrees that there shall be no allocation of intercompany
charges to Newco and its subsidiaries for expenses of Parent and/or any other
Affiliate of Parent, except for charges that would otherwise be incurred by
Newco or its subsidiaries on a separate company basis in the ordinary course of
business. The allocable costs shall also include (i) the fair value of stock
options in Parent, as determined in accordance with FASB 123, which will be
issued to employees or consultants of Newco after Closing, and to a senior
consultant of Newco agreed to in writing by LHT, and (ii) the fair value of
contributions to Parent's 401K Plan, or subsequent equivalent plan, for
employees of Newco after Closing which are made in shares of common stock of
Parent in lieu of cash or other contributions. Charges incurred on a separate
company basis in the ordinary course of business do not include any management
fees or general corporate or administrative overhead related to Parent or its
Affiliates outside of Newco, except as agreed to in writing by LHT.
ARTICLE 15
APPROVAL OF CERTAIN TRANSACTIONS
15.1 APPROVAL OF LHT DIRECTORS.
From and after the Closing, Newco and/or its subsidiaries shall not take,
without the affirmative vote of each of the LHT Directors, any action to cause
Newco and/or any of its subsidiaries to:
(i) alter, amend or repeal their Articles of Incorporation in a manner
that would violate LHT's rights under this Agreement;
(ii) alter, amend or repeal their Bylaws in any way that would violate
LHT's rights under this Agreement;
(iii) liquidate or dissolve Newco and/or any of its subsidiaries;
(iv) materially change the organizational form of Newco or any of its
subsidiaries or effect a material recapitalization or material
reorganization of Newco or any of its subsidiaries engaged in a
business in the Aerospace and Aviation Industry;
(v) engage in any other business activities other than the research,
development, production, commercialization and servicing of
equipment, products, parts and systems related to the Aerospace and
Aviation Industry;
(vi) engage in any business transaction with Parent or its Affiliates on
terms materially
17
less favorable to Newco and/or its subsidiaries than Newco and/or
its subsidiaries could otherwise obtain from unaffiliated parties;
and
(vii) directly, or indirectly, merge, consolidate, enter into a business
combination, joint venture or other type of Investment with any
other Person.
Parent hereby agrees not to cause Newco and its subsidiaries to breach any
of their obligations under this Section 15.1.
15.2 GOOD FAITH CONSULTATION REQUIREMENT.
Newco agrees to consult in good faith with LHT and/or the LHT Directors
before Newco: (i) incurs any indebtedness, loans or guarantees or makes any
capital expenditures for a project at any time in excess of $1,000,000 which is
outside the ordinary course of business of Newco; or (ii) grants stock options
or similar stock based interests of Parent per annum in excess of five percent
(5%) of Parent's then issued and outstanding shares of common stock to Newco and
its subsidiaries employees and consultants. After such good faith consultation,
Newco shall have the right to make the final decision.
ARTICLE 16
LEGEND
Each certificate evidencing Shares and each certificate issued in exchange
for or upon the transfer of any Shares shall bear the following legend:
"NEITHER THESE SHARES, NOR ANY PORTION THEREOF OR INTEREST THEREIN,
MAY BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR
OTHERWISE DISPOSED OF (EACH SUCH ACTION, A "TRANSFER") UNLESS SUCH
TRANSFER COMPLIES WITH THE PROVISIONS OF THE SHAREHOLDERS AGREEMENT
DATED AS OF OCTOBER 30, 1997 AMONG THE ISSUER OF SUCH SECURITIES AND
CERTAIN OF THE ISSUER'S SHAREHOLDERS, AS AMENDED AND MODIFIED FROM
TIME TO TIME, A COPY OF WHICH IS ON FILE AT THE OFFICES OF THE
ISSUER AND WILL BE FURNISHED TO ANY SHAREHOLDER ON REQUEST. BY
ACCEPTANCE OF THIS CERTIFICATE, EACH HOLDER HEREOF AGREES TO BE
BOUND BY THE PROVISIONS OF THE SHAREHOLDERS AGREEMENT. THESE SHARES
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER
ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE SECURITIES
ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR (2) AT HOLDER'S
EXPENSE, AN OPINION (SATISFACTORY TO THE ISSUER) OF
18
COUNSEL (SATISFACTORY TO THE ISSUER) THAT REGISTRATION IS NOT
REQUIRED."
Newco shall imprint such legends on certificates evidencing Shares held by
the Shareholders. Newco agrees that it shall not issue any new securities either
in exchange for or upon the transfer of any Shares unless the certificates
evidencing such securities (to the extent such new securities are Shares and
subject to this Agreement after such transfer) are imprinted with the legend set
forth above. The legend set forth above shall be removed from the certificates
evidencing any securities which cease to be Shares.
ARTICLE 17
TRANSFERS
17.1 TRANSFERS.
Prior to transferring any Shares to any Person, the transferring
Shareholder shall cause the prospective transferee to be bound by all the
provisions of this Agreement and to execute and deliver to Newco and the other
Shareholders a counterpart of this Agreement.
17.2 TRANSFERS IN VIOLATION OF THIS AGREEMENT.
Any transfer or attempted transfer of any Shares in violation of any
provision of this Agreement shall be void, and Newco shall not record such
transfer on its books or treat any purported transferee of such Shares as the
owner of such Shares for any purpose.
ARTICLE 18
ENCUMBRANCE OF NEWCO'S ASSETS BY PARENT
Newco may grant a security interest in Newco's assets in connection with a
financing in which the proceeds will be used by the Parent, but only for the
limited purpose of securing a credit facility with any financial institution,
provided however, that such financial institution agrees to remit to LHT,
subject to the rights of the creditors of Newco, an amount equal to the
percentage of the Shares of Newco then owned by LHT multiplied by any amount
recovered by such financial institution upon the sale of any of Newco's assets
in the event of a foreclosure.
ARTICLE 19
MISCELLANEOUS
19
19.1 AFTER-ACQUIRED SHARES.
All of the provisions of this Agreement shall apply to all of the Shares
now owned by or which may be issued or transferred hereafter to any of the
parties hereto or any Persons who are required hereby to become parties hereto
in consequence of any additional issuance, purchase, exchange, conversion or
reclassification of Shares, corporate reorganization, or any form of
recapitalization, consolidation, merger, share split, share dividend or
distribution, or transfer or which are acquired by such Person in any manner
whatsoever.
19.2 AMENDMENT AND WAIVER.
Except as otherwise provided herein, no modification, amendment or waiver
of any provision of this Agreement shall be effective against the parties hereto
unless such modification, amendment or waiver is approved in writing by each
party hereto. The failure of any party to enforce any of the provisions of this
Agreement shall in no way be construed as a waiver of such provisions and shall
not affect the right of such party thereafter to enforce each and every
provision of this Agreement in accordance with its terms. The parties hereto
agree that the addition of new parties to this Agreement (including pursuant to
Article 17.1) shall not constitute a modification, amendment or waiver of this
Agreement.
19.3 SEVERABILITY.
Whenever possible, each provision of this Agreement shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect the validity,
legality or enforceability of any other provision of this Agreement in such
jurisdiction or affect the validity, legality or enforceability of any provision
in any other jurisdiction, but this Agreement shall be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
19.4 ENTIRE AGREEMENT.
This Agreement constitutes the entire agreement of the parties hereto and
supersedes all prior or contemporaneous negotiations, understandings,
agreements, representations, proposals, discussions, and communications, whether
oral or in writing with respect to the transactions contemplated hereby except
for (i) the Stock Purchase Agreement, dated as of October 30, 1997, by and
between HEICO, Newco and LHT; (ii) the Research and Development Cooperation
Agreement, dated as of October 30, 1997, by and between Newco and LHT; (iii) the
Tax Sharing Agreement, dated as of October 30, 1997 by and between HEICO and
Newco and (iv) existing purchase orders entered into in the normal course of
business. This Agreement may not be changed or terminated orally but may only be
modified by an agreement only in writing signed by a duly authorized officer of
the party against whom enforcement of any such waiver, change, modification,
extension, discharge or termination is sought to be bound.
20
19.5 SUCCESSORS AND ASSIGNS.
Except as otherwise provided herein, this Agreement shall bind and inure
to the benefit of and be enforceable by the Shareholders and their successors
and assigns.
19.6 COUNTERPARTS.
This Agreement may be executed in multiple counterparts, each of which
shall be an original and all of which taken together shall constitute one and
the same agreement.
19.7 CURE PERIOD.
It is hereby agreed and acknowledged by each Shareholder, Newco, and the
Company that a violation or default by any of the parties of any or all of the
covenants and/or obligations contained in this Agreement shall not be deemed a
breach unless such a violation or default is not cured within thirty (30) days
from written notice to the defaulting party by any other party.
19.8 FURTHER ASSURANCES.
The Shareholders hereby covenant and agree that if at any time after the
date hereof any further action is necessary or desirable to carry out the
purpose of this Agreement, they shall execute and deliver any further
instruments or documents and take all such necessary action that may reasonably
be requested by the other party.
19.9 ATTORNEYS' FEES.
If any action is taken to enforce or interpret the provisions of this
Agreement, the prevailing party shall be entitled to its reasonable costs and
expenses, including attorneys' fees from the non-prevailing party in addition to
any other relief to which that party may be entitled.
19.10 NOTICES.
All notices, consents, waivers, and other communications under this
Agreement must be in writing and will be deemed to have been duly given when (a)
delivered by hand (with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by the
addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below and to any other recipient at the address and telecopier
numbers indicated on Schedule 2.1 attached hereto and to any subsequent
Shareholder subject to this Agreement at such address and telecopier numbers as
indicated by Newco's records, or at such address or to the attention of such
other Person as the recipient party has specified by prior written notice to the
sending party.
21
Newco's address is:
HEICO Aerospace Holdings Corporation
3000 Taft Street
Hollywood, Florida 33021
Attention: Eric Mendelson
Facsimile No.: (954) 987-8228
Company's address is:
HEICO Aerospace Corporation
825 Brickell Bay Drive, Suite 1644
Miami, Florida 33131
Attn: Victor Mendelson
Fax No.: (305) 374-6742
19.11 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida.
19.12 JURISDICTION; SERVICE OF PROCESS.
Any action or proceeding seeking to enforce any provision of, or based on
any right arising out of, this Agreement shall be brought against any of the
parties exclusively in the courts of the State of Florida, County of Dade, or,
if it has or can acquire jurisdiction, in the United States District Court for
the Southern District of Florida, and each of the parties consents to the
jurisdiction of such courts (and of the appropriate appellate courts) in any
such action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding sentence may be
served on any party anywhere in the world pursuant to the rules of the court
under which the action is filed in Dade County, Florida.
19.13 DESCRIPTIVE HEADINGS.
The descriptive headings of this Agreement are inserted for convenience
only and do not constitute a part of this Agreement.
19.14 CONSTRUCTION.
The parties hereby acknowledge that this Agreement was initially prepared
by LHT solely as a convenience and that all parties and their counsel have read
and fully negotiated all the language used in this Agreement. The parties
acknowledge and agree that because all parties and their counsel participated in
negotiating and drafting this Agreement, no rule of construction shall apply to
this Agreement which construes any language, whether ambiguous, unclear or
otherwise,
22
in favor of, or against any party by reason of that party's role in drafting
this Agreement.
19.15 FAILURE OF NEWCO TO RECEIVE PAYMENT UNDER THE RESEARCH AND
DEVELOPMENT COOPERATION AGREEMENT.
In the event that Newco properly draws under the letter of credit provided
by LHT pursuant to Article 4 of the Research and Development Cooperation
Agreement and for any
23
reason the issuing bank refuses to make payment under such letter of credit,
even if prevented to do so by a restraining order or injunction issued by a
court of competent jurisdiction, Newco shall give LHT 30 days written notice of
such event. In the event that LHT fails to pay or cause the payment of such
letter of credit within such 30 day period, then, until such time as Newco
receives full payment under the letter of credit or otherwise, including any
other amounts owed by LHT pursuant to Article 4 of the Research and Development
Cooperation Agreement, all the rights of LHT, but not the obligations, under
Articles 3, 4, 5, 6, 7, 8, 9.2, 12, 13, and 15 of this Agreement and the right
to select PMA's under Section 2.3 of the Research and Development Cooperation
Agreement, shall be suspended. This suspension of rights shall be in addition to
any and all remedies available to Newco for breach of such payment obligations
under Article 4 of the Research and Development Cooperation Agreement.
24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
HEICO Aerospace Holdings Corp. HEICO Aerospace Corporation
By:__________________________ By:________________________
Name:________________________ Name:______________________
Title:_______________________ Title:_____________________
Lufthansa Technik AG HEICO Corporation
By:__________________________ By:________________________
Name:________________________ Name:______________________
Title:_______________________ Title:_____________________
By:__________________________
Name:________________________
Title:_______________________
25
SCHEDULE 2.1
SHAREHOLDERS NUMBER OF SHARES OWNERSHIP PERCENTAGE
- ------------ ---------------- --------------------
HEICO Corporation 800 80%
3000 Taft Street
Hollywood, Florida 33021-4499
Attn: Eric Mendelson
Facsimile No.: (954)987-8228
LUFTHANSA TECHNIK AG 200 20%
Dept. HAM TV/J
P.O. Box 63 03 00
D-22313 Hamburg, Germany
Attn: Bernhard Langlotz
Facsimile No: (49-40)5707-4909
EXHIBIT 11
HEICO CORPORATION AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
Following are details of the computation of earnings per share:
YEAR ENDED OCTOBER 31,
---------------------------------------------------------------------------------------
1997 1996 1995
--------------------- ----------------------------- -----------------------------
FULLY FULLY FULLY
PRIMARY DILUTED PRIMARY DILUTED PRIMARY DILUTED
--------- --------- ------------- ------------- ------------- -------------
Weighted average number of
common shares outstanding 8,026,906 8,026,906 7,786,389 7,786,389 7,538,238 7,538,238
Common stock equivalents arising
from dilutive stock options (1) 1,585,299 1,865,007 1,068,337 1,100,692 415,317 526,539
--------- --------- ------------- ------------- ------------- -------------
9,612,205 9,891,973 8,854,726 8,887,081 7,953,555 8,064,777
========= ========= ============= ============= ============= =============
Net income:
From continuing operations
before cumulative effect
of change in accounting
principle $ .73 $ .71 $ .41 $ .41 $ .18 $ .18
From discontinued operations -- -- $ .11 $ .11 $ .16 $ .15
From gain on sale of dis-
continued operations -- -- $ .59 $ .59 -- --
From cumulative effect
of change in
accounting principle -- -- -- -- -- --
--------- --------- ------------- ------------- ------------- -------------
Net income per share $ .73 $ .71 $ 1.11 $ 1.11 $ .34 $ .33
========= ========= ============= ============= ============= =============
YEAR ENDED OCTOBER 31,
--------------------------------------------------------------
1994 1993
----------------------------- -----------------------------
FULLY
PRIMARY DILUTED PRIMARY DILUTED
------------- ------------- ------------- -------------
Weighted average number of
common shares outstanding 7,472,748 7,472,748 7,667,281 7,667,281
Common stock equivalents arising
from dilutive stock options (1) 94,696 94,696 118,013 190,521
------------- ------------- ------------- -------------
7,567,444 7,567,444 7,785,294 7,857,802
============= ============= ============= =============
Net income:
From continuing operations
before cumulative effect
of change in accounting
principle $ .09 $ .09 $ .09 $ .09
From discontinued operations $ .11 $ .11 $ .03 $ .03
From gain on sale of dis-
continued operations -- -- -- --
From cumulative effect
of change in
accounting principle $ .05 $ .05 -- --
------------- ------------- ------------- -------------
Net income per share $ .25 $ .25 $ .12 $ .12
============= ============= ============= =============
(1) Computed under the "treasury stock" method using the average market
price for the primary computation and using the higher of average or
ending market prices for the fully diluted computation.
EXHIBIT 21
HEICO CORPORATION AND SUBSIDIARIES
SUBSIDIARIES OF COMPANY
NAME STATE OF INCORPORATION
- ---- ----------------------
HEICO Aerospace Holdings Corp. Florida
HEICO Aerospace Corporation Florida
Jet Avion Corporation Florida
LPI Industries Corporation Florida
Aircraft Technology, Inc. Florida
ATI Heat Treat Corporation Florida
Jet Avion Heat Treat Corporation (Inactive) Florida
N.A.C. Acquisition Corporation Florida
Northwings Accessories Corporation Florida
HEICO Aviation Products Corp. Florida
Trilectron Industries, Inc. New York
HEICO International Corporation U.S. Virgin Islands
HEICO East Corporation Florida
HEICO-NEWCO, Inc. (Inactive) Florida
HEICO Engineering Corp. (Inactive) Florida
HEICO--Jet Corp. (Inactive) Florida
HEICO Bearings Corp. (Inactive) Florida
Subsidiaries of the Company, all of which are directly or indirectly
wholly-owned (except for HEICO Aerospace Holdings Corp. and its subsidiaries,
which are 80%-owned), are included in the Company's consolidated financial
statements.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statements Nos.
33-4945, 33-62156, 333-8063, 333-19667 and 333-26059 of HEICO Corporation on
Forms S-8 of our report dated December 24, 1997, appearing in this Annual Report
on Form 10-K of HEICO Corporation for the year ended October 31, 1997.
DELOITTE & TOUCHE LLP
Certified Public Accountants
Miami, Florida
January 26, 1998
5
YEAR
OCT-31-1997
OCT-31-1997
24,199,000
0
12,922,000
(362,000)
18,359,000
57,716,000
23,363,000
(14,820,000)
88,639,000
12,585,000
10,458,000
0
0
83,000
59,363,000
88,639,000
63,674,000
63,674,000
45,045,000
43,045,000
11,515,000
0
477,000
10,359,000
3,340,000
7,019,000
0
0
0
7,019,000
.73
.71
