SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported): September 14, 2000
HEICO CORPORATION
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(Exact name of registrant as specified in its charter)
FLORIDA
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(State or other jurisdiction of incorporation)
001-04604 65-0341002
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(Commission File Number) (IRS Employer Identification No.)
3000 Taft Street
Hollywood, Florida 33021
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(Address of principal offices)
Registrant's telephone number, including area code: (954) 987-6101
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(Former name or former address, if changed since last report.)
Item 2. Acquisition or Disposition of Assets.
On September 14, 2000, HEICO Aviation Products Corp. ("HAPC"), a
Florida corporation and wholly-owned subsidiary of HEICO Corporation (the
"Registrant"), consummated the sale of all of the outstanding capital stock of
HAPC's wholly-owned subsidiary Trilectron Industries, Inc. ("Trilectron"), to
Hobart Brothers Company, an Ohio corporation and wholly-owned subsidiary of
Illinois Tool Works Inc. ("Hobart"), pursuant to a Stock Purchase Agreement,
dated August 1, 2000, as amended, (the "Stock Purchase Agreement"), between
HAPC and Hobart. In consideration of the sale of Trilectron's capital stock,
including its 40% investment in the outstanding capital stock of R. H. Phillips
and Sons Engineers, LTD., HAPC received $52,500,000 in cash, an unsecured
promissory note for $12,000,000 payable in three equal installments over the
next 90 days and retained property having a book value of approximately $1.5
million. The purchase price will be adjusted based on the net worth of
Trilectron as of the closing date. The proceeds from the sale will be used to
pay down the outstanding balance on the Registrant's $120 million revolving
credit facility.
Item 7. Financial Statements and Exhibits.
(a) Not applicable.
(b) Pro forma financial information.
The following unaudited pro forma consolidated condensed financial
information is furnished in accordance with Article 11 of
Regulation S-X:
Introductory note to unaudited pro forma consolidated condensed
financial statements (page 5).
Unaudited pro forma consolidated condensed balance sheet as of July
31, 2000 (page 6).
Unaudited pro forma consolidated condensed statement of operations
for the nine months ended July 31, 2000 (page 7).
Unaudited pro forma consolidated condensed statement of operations
for the year ended October 31, 1999 (page 8).
Notes to unaudited pro forma consolidated condensed financial
statements (page 9).
(c) Exhibits
2.1 Stock Purchase Agreement, dated August 1, 2000, by and
between HEICO Aviation Products Corp., and Hobart Brothers
Company. The Registrant hereby agrees to furnish the
Securities and Exchange Commission, supplementally, any
schedules or exhibits to such agreement which are not filed
herewith, upon the request of the Securities and Exchange
Commission.
2.2 First Amendment to Stock Purchase Agreement, effective as of
September 14, 2000, between HEICO Aviation Products Corp. and
Hobart Brothers Company.
99.1 Press Release of HEICO Corporation, dated August 14, 2000.
99.2 Press Release of HEICO Corporation, dated September 18, 2000.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
HEICO CORPORATION
By: /s/ Thomas S. Irwin
----------------------------------
Name: Thomas S. Irwin
Title: Executive Vice President and
Chief Financial Officer
Date: September 22, 2000
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FINANCIAL STATEMENT INDEX
Introductory note to unaudited pro forma consolidated condensed financial
statements (page 5).
Unaudited pro forma consolidated condensed balance sheet as of July 31, 2000
(page 6).
Unaudited pro forma consolidated condensed statement of operations for the nine
months ended July 31, 2000 (page 7).
Unaudited pro forma consolidated condensed statement of operations for the year
ended October 31, 1999 (page 8).
Notes to unaudited pro forma consolidated condensed financial statements (page
9).
-4-
HEICO CORPORATION AND SUBSIDIARIES
INTRODUCTORY NOTE TO UNAUDITED
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed balance sheet and
statements of operations utilize the historical financial condition and results
of operations of HEICO Corporation and subsidiaries (the "Company") as of July
31, 2000 and for the nine months then ended and for the year ended October 31,
1999. The unaudited pro forma consolidated condensed financial statements have
been prepared on the basis summarized below:
o The unaudited pro forma consolidated condensed balance sheet as of
July 31, 2000 assumes that the Company's sale of all of the
outstanding capital stock of its wholly-owned subsidiary, Trilectron
Industries, Inc. ("Trilectron") including its 40% investment in the
outstanding capital stock of R. H. Phillips and Sons Engineers, LTD.
("Phillips") had been consummated as of that date.
o The unaudited pro forma consolidated condensed statement of
operations for the nine months ended July 31, 2000 assumes that the
Company's sale of all of the outstanding capital stock of Trilectron
including its 40% investment in the outstanding capital stock of
Phillips had been consummated as of the beginning of the nine-month
period ended July 31, 2000.
o The unaudited pro forma consolidated condensed statements of
operations for the year ended October 31, 1999 assumes that the
Company's sale of all of the outstanding capital stock of Trilectron
including its 40% investment in the outstanding capital stock of
Phillips had been consummated as of the beginning of the year ended
October 31, 1999.
As a result of the sale, the Company will report a net gain of approximately
$10.6 million, after taxes, in the fourth quarter of fiscal 2000. This gain is
not reflected in the pro forma condensed statements of operations presented.
The unaudited pro forma consolidated condensed statements of operations are not
necessarily indicative of actual operating results had the sale been made at the
beginning of the periods presented or of future results of operations.
-5-
HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
as of July 31, 2000
(unaudited)
Historical
Historical Trilectron
HEICO Industries, Pro Forma
Corporation(1) Inc.(2) Adjustments Pro Forma
-------------- ------------- ------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $2,304,000 $332,000 -- $2,636,000
Accounts receivable, net 52,241,000 (21,459,000) -- 30,782,000
Receivable from Hobart -- -- $16,749,000(7) 16,749,000
Inventories 51,564,000 (17,805,000) -- 33,759,000
Prepaid expenses and other current assets 4,517,000 (185,000) -- 4,332,000
Deferred income taxes 1,594,000 (169,000) -- 1,425,000
------------ ------------ ------------ ------------
Total current assets 112,220,000 (39,286,000) 16,749,000 89,683,000
Property, plant and equipment, net 33,824,000 (6,890,000) -- 26,934,000
Intangible assets, net 157,533,000 (4,337,000) -- 153,196,000
Long-term investments 4,532,000 -- -- 4,532,000
Other assets 9,232,000 (3,945,000) 1,500,000(8) 6,787,000
------------ ------------ ------------ ------------
Total assets $317,341,000 ($54,458,000) $18,249,000 $281,132,000
============ ============= ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $483,000 ($144,000) -- $339,000
Trade accounts payable 10,312,000 (4,793,000) -- 5,519,000
Accrued expenses and other current liabilities 18,101,000 (2,813,000) -- 15,288,000
------------ ------------ ------------ ------------
Total current liabilities 28,896,000 (7,750,000) -- 21,146,000
Long-term debt, net of current maturities 96,274,000 (4,165,000) ($34,629,000)(9) 57,480,000
Other non-current liabilities 3,894,000 (265,000) -- 3,629,000
------------ ------------ ------------ ------------
Total liabilities 129,064,000 (12,180,000) (34,629,000) 82,255,000
------------ ------------ ------------ ------------
Minority interests in consolidated subsidiary 32,718,000 -- -- 32,718,000
------------ ------------ ------------ ------------
Commitments and contingencies
Shareholders' equity:
Preferred stock, none issued -- -- -- --
Common stock 85,000 -- -- 85,000
Class A common stock 89,000 -- -- 89,000
Capital in excess of par 110,449,000 -- -- 110,449,000
Investment in and advances to Trilectron by HEICO -- (42,278,000) 42,278,000(10) --
Accumulated other comprehensive loss (1,433,000) -- -- (1,433,000)
Retained earnings 47,820,000 -- 10,600,000(11) 58,420,000
------------ ------------ ------------ ------------
157,010,000 (42,278,000) 52,878,000 167,610,000
Less: Note receivable from employee savings
and investment plan (1,451,000) -- -- (1,451,000)
------------ ------------ ------------ ------------
Total shareholders' equity 155,559,000 (42,278,000) 52,878,000 166,159,000
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity $317,341,000 ($54,458,000) $18,249,000 $281,132,000
============ ============ ============ ============
See accompanying notes to unaudited pro forma consolidated
condensed financial statements
-6-
HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the nine months ended July 31, 2000
(unaudited)
Historical
Historical Trilectron
HEICO Industries, Pro Forma
Corporation(3) Inc.(4) Adjustments(16) Pro Forma
-------------- ------------- --------------- -----------
Net sales $155,400,000 ($44,255,000) -- $111,145,000
------------ ------------ ---------- ------------
Operating costs and expenses:
Cost of sales 98,184,000 (36,038,000) -- 62,146,000
Selling, general and administrative expenses 27,242,000 (4,903,000) -- 22,339,000
------------ ------------ ---------- ------------
Total operating costs and expenses 125,426,000 (40,941,000) -- 84,485,000
------------ ------------ ---------- ------------
Operating income 29,974,000 (3,314,000) -- 26,660,000
Interest expense (4,272,000) 180,000 $2,494,000(12) (1,598,000)
Intercompany interest expense -- 1,475,000 (1,475,000)(13) --
Interest and other income 609,000 (182,000) -- 427,000
------------ ------------ ---------- ------------
Income before income taxes and minority interest 26,311,000 (1,841,000) 1,019,000 25,489,000
Income tax expense 10,130,000 (711,000) 393,000(14) 9,812,000
------------ ------------ ---------- ------------
Income before minority interest 16,181,000 (1,130,000) 626,000 15,677,000
Minority interest 2,656,000 -- -- 2,656,000
------------ ------------ ---------- ------------
Net income $13,525,000 ($1,130,000) $626,000 $13,021,000
============ ============ ========== ============
Net income per share:
Basic $0.78 $0.75
============ ============
Diluted $0.68 $0.65
============ ============
Weighted average number of common shares outstanding:
Basic 17,351,608 17,351,608
============ ============
Diluted 19,904,387 19,904,387
============ ============
See accompanying notes to unaudited pro forma consolidated
condensed financial statements
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HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended October 31, 1999
(unaudited)
Historical
Historical Trilectron
HEICO Industries, Pro Forma
Corporation(5) Inc.(6) Adjustments(16) Pro Forma
-------------- ----------- --------------- ------------
Net sales $141,269,000 ($36,617,000) -- $104,652,000
------------ ------------ ---------- ------------
Operating costs and expenses:
Cost of sales 83,737,000 (29,368,000) -- 54,369,000
Selling, general and administrative expenses 24,717,000 (4,467,000) -- 20,250,000
------------ ------------ ---------- ------------
Total operating costs and expenses 108,454,000 (33,835,000) -- 74,619,000
------------ ------------ ---------- ------------
Operating income 32,815,000 (2,782,000) 30,033,000
Interest expense (2,173,000) 173,000 $1,628,000(12) (372,000)
Intercompany interest expense -- 621,000 (621,000)(13) --
Interest and other income 894,000 22,000 -- 916,000
------------ ------------ ---------- ------------
Income from continuing operations before
income taxes and minority interest 31,536,000 (1,966,000) 1,007,000 30,577,000
Income tax expense 11,606,000 (748,000) 389,000(14) 11,247,000
------------ ------------ ---------- ------------
Income before minority interest 19,930,000 (1,218,000) 618,000 19,330,000
Minority interest 3,593,000 -- -- 3,593,000
------------ ------------ ---------- ------------
Net income $16,337,000 $(1,218,000) $ 618,000 $15,737,000
============ ============ ========== ============
Net income per share:
Basic $1.00 $0.97
============ ============
Diluted $0.84 $0.81
============ ============
Weighted average number of common shares
outstanding:(15)
Basic 16,302,791 16,302,791
============ ============
Diluted 19,407,399 19,407,399
============ ============
See accompanying notes to unaudited pro forma consolidated
condensed financial statements
-8-
HEICO CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. As disclosed in the Company's Quarterly Report on Form 10-Q as of July
31, 2000.
2. Represents Trilectron Industries, Inc. condensed balance sheet as of
July 31, 2000.
3. As disclosed in the Company's Quarterly Report on Form 10-Q for the
nine months ended July 31, 2000.
4. Represents Trilectron Industries, Inc. condensed statement of
operations for the nine months ended July 31, 2000.
5. As disclosed in the Company's Annual Report on Form 10-K for the year
ended October 31, 1999.
6. Represents Trilectron Industries, Inc. condensed statement of
operations for the year ended October 31, 1999.
The pro forma adjustments give effect to:
7. Represents a $12 million short-term note receivable from Hobart as
additional sales proceeds, discounted at the Company's borrowing rate
and an estimated purchase price adjustment of $4.9 million based on
Trilectron's net book value as of July 31, 2000.
8. Represents assets of Trilectron retained by the Company.
9. Represents reduction of outstanding borrowings under the Credit
Facility from the $52.5 million cash proceeds at closing less estimated
cash required for expenses and related costs of approximately $12
million, and payment of estimated income taxes of approximately $7
million on the gain. Estimated expenses and related costs of $12
million include Board-approved management incentive bonuses, contract
indemnification costs and required reserves, and professional services
fees.
10. Elimination of investment in and advances to Trilectron by the Company.
11. Estimated gain on sale of Trilectron, after applicable Federal and
state income taxes, as if consummated as of July 31, 2000.
12. Represents reduction of interest expense assuming the cash proceeds
from the sale were used to reduce the borrowings outstanding under the
Credit Facility.
13. Elimination of intercompany interest expense.
14. Additional income tax expense after elimination of Trilectron and
giving effect to the pro forma adjustments.
15. Weighted average number of common shares outstanding have been adjusted
from the originally reported amount to reflect a 10% stock dividend
paid July 21, 2000.
16. As a result of the sale, the Company will report a net gain of
approximately $10.6 million, after taxes, in the fourth quarter of
fiscal 2000. This gain is not reflected in the proforma condensed
statements of operations presented.
-9-
EXHIBIT INDEX
Exhibit Number Description
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2.1 Stock Purchase Agreement, dated August 1, 2000, by and
between HEICO Aviation Products Corp., and Hobart Brothers
Company. The Company hereby agrees to furnish the Securities
and Exchange Commission, supplementally, any schedules or
exhibits to such agreement which are not filed herewith, upon
the request of the Securities and Exchange Commission.
2.2 First Amendment to Stock Purchase Agreement, effective as
of September 14, 2000, between HEICO Aviation Products Corp.
and Hobart Brothers Company.
99.1 Press Release of HEICO Corporation, dated August 14, 2000.
99.2 Press Release of HEICO Corporation, dated September 18, 2000.
EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
between
HEICO AVIATION PRODUCTS CORP.
as Seller,
and
HOBART BROTHERS COMPANY
as Buyer
August 1 , 2000
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Defined Terms..............................................................1
1.2 Other Defined Terms........................................................3
ARTICLE II
PURCHASE AND SALE OF STOCK
2.1 Purchase and Sale of Stock.................................................4
2.2 Purchase Price.............................................................4
2.3 Closing Date Balance Sheet.................................................4
2.4 Disputes...................................................................4
2.5 Post Closing Purchase Price Adjustment.....................................5
2.6 Transfer Taxes.............................................................5
2.7 Returns....................................................................5
ARTICLE III
CLOSING
3.1 Closing....................................................................6
3.2 Conveyances at Closing.....................................................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
4.1 Organization of Seller.....................................................7
4.2 Organization of the Company................................................7
4.3 Authorization..............................................................7
4.4 Capitalization of the Company..............................................7
4.5 Subsidiaries...............................................................7
4.6 Ownership of the Stock.....................................................7
4.7 Financial Statements.......................................................8
4.8 Undisclosed Liabilities....................................................8
4.9 Conduct of Business in Normal Course.......................................8
4.10 Material Contracts........................................................9
4.11 No Defaults..............................................................10
4.12 No Conflict or Violation.................................................10
4.13 Consents and Approvals...................................................10
4.14 Compliance with Laws.....................................................10
4.15 No Brokers...............................................................11
i
4.16 No Other Agreements......................................................11
4.17 Insurance................................................................11
4.18 Trademarks and Patents...................................................11
4.19 Employee Benefit Plans...................................................12
4.20 Minute Books and Stock Ledgers...........................................13
4.21 Leases...................................................................13
4.22 Machinery and Equipment..................................................13
4.23 Title of Property........................................................13
4.24 Inventory................................................................14
4.25 Real Property............................................................14
4.26 Receivables..............................................................14
4.27 Bank Accounts and Powers.................................................14
4.28 Employees................................................................14
4.29 Environmental Matters....................................................15
4.30 Absence of Certain Business Practices....................................16
4.31 Customs Compliance.......................................................16
4.32 Omissions................................................................16
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Organization..............................................................16
5.2 Authorization.............................................................16
5.3 No Conflict or Violation..................................................16
5.4 Consents and Approvals....................................................17
5.5 No Litigation.............................................................17
5.6 No Brokers................................................................17
ARTICLE VI
COVENANTS OF SELLER AND BUYER
6.1 Maintenance of Business Prior to Closing..................................17
6.2 Company Employees.........................................................17
6.3 Certain Prohibited Transactions...........................................18
6.4 Notification of Certain Matters...........................................20
6.5 Access to Information.....................................................20
6.6 Reasonable Efforts; Cooperation; Further Assurances.......................20
6.7 Non-Competition...........................................................21
6.8 Tax Election..............................................................21
6.9 Board of Director Approvals...............................................21
ii
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF SELLER
7.1 Representations, Warranties, Covenants and Agreements.....................22
7.2 Consents; Release of Guarantees...........................................22
7.3 No Injunctions or Restraints; Illegality..................................22
7.4 Certificates..............................................................22
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BUYER
8.1 Representations, Warranties, Covenants and Agreements.....................22
8.2 Consents..................................................................23
8.3 No Injunctions or Restraints; Illegality..................................23
8.4 Certificates..............................................................23
8.5 Resignations..............................................................23
ARTICLE IX
ACTIONS BY SELLER
AND BUYER AFTER THE CLOSING
9.1 Books and Records.........................................................23
9.2 Survival of Representations, etc..........................................23
9.3 Indemnification...........................................................24
9.4 Further Assurances........................................................26
9.5 Name; Proprietary Information.............................................26
9.6 No Solicitation...........................................................26
ARTICLE X
DISPUTE RESOLUTION PROCEDURES
10.1 Dispute Resolution.......................................................27
10.2 Negotiation Between Executives...........................................27
10.3 Mediation................................................................27
10.4 Litigation...............................................................28
10.5 Provisional Remedies.....................................................28
10.6 Tolling Statute of Limitations...........................................28
10.7 Performance to Continue..................................................28
iii
ARTICLE XI
MISCELLANEOUS
11.1 Termination..............................................................28
11.2 Assignment...............................................................29
11.3 Notices..................................................................30
11.4 Governing Law; Venue.....................................................31
11.5 Entire Agreement; Amendments and Waivers.................................32
11.6 Multiple Counterparts....................................................32
11.7 Expenses.................................................................32
11.8 Invalidity...............................................................32
11.9 Titles...................................................................32
11.10 Publicity...............................................................32
11.11 Confidential Information................................................33
Interpretation................................................................33
11.13 Third Party Beneficiaries...............................................34
iv
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement, dated as of August 1, 2000, is between
HEICO Aviation Products Corp., a Florida corporation ("Seller"), and Hobart
Brothers Company, an Ohio corporation and a wholly owned subsidiary of Illinois
Tool Works Inc. ("Buyer").
RECITALS
A. Seller owns all of the issued and outstanding shares of common
stock, no par value (the "Stock"), of Trilectron Industries, Inc., a New York
corporation (the "Company").
B. Buyer desires to purchase the Stock from Seller, on the terms and
subject to the conditions hereinafter set forth.
C. Seller desires to sell, assign, convey, transfer and deliver the
Stock to Buyer, on the terms and subject to the conditions hereinafter set
forth.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
following meanings:
"Affiliate" shall mean, with respect to any Person, any other
Person controlling, controlled by or under common control with such Person. The
term "Control" as used in the preceding sentence means, with respect to a
corporation, the right to exercise, directly or indirectly, more than 50% of the
voting rights attributable to the shares of the controlled corporation and, with
respect to any Person other than a corporation, the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such person.
"Books and Records" shall mean all books, records and files,
whether in paper or electronic form, pertaining to the Business.
"Business" shall mean the design and manufacture of
electronically controlled ground support equipment for aircraft as conducted by
the Company as of the date hereof.
1
"Customer" shall mean any Person purchasing equipment or
services at any time during the two year period prior to the Closing Date from
the Company.
"Code" shall mean the Internal Revenue Code of 1986, as such
may be amended from time to time.
"Encumbrance" shall mean any claim, lien, mortgage, pledge,
option, charge, easement, security interest, right-of-way, encumbrance or other
right of third parties.
"GAAP" shall mean generally accepted accounting principles.
"Government Entity" shall mean any governmental, regulatory or
administrative body, agency, commission, board, arbitrator or authority, any
court or judicial authority, and any public, private or industry regulatory
authority, whether international, national, federal, state or local, and any
entity or official exercising executive, legislative, judicial, regulatory or
administrative functions.
"Knowledge" of any Person which is not an individual shall
mean the actual knowledge of such Person's executive officers and managerial
personnel having responsibility for the matter in question after having made
reasonable inquiry with respect to the matter and nothing having come to the
attention of such Person's executive officers or managerial personnel during the
course of such inquiry, which would cause him or her to believe otherwise.
"Legal Proceeding" means any action, claim, lawsuit,
litigation, demand, suit, inquiry, hearing, investigation, indictment,
information, notice of a violation, arbitration, appeal or other dispute or
legal proceeding, whether civil, criminal, administrative or otherwise.
"Legal Requirements," when described as being applicable to
any Person, shall mean any and all laws (statutory, judicial or otherwise),
ordinances, regulations, judgments, orders, directives, injunctions, writs,
decrees or awards of, and any Contracts with, any Governmental Authority, in
each case as and to the extent applicable to such Person or such Person's
business, operations or properties.
"Material Adverse Effect" or "Material Adverse Change" means
any change, effect, event, occurrence, or state of facts that is or is
reasonably expected to be, individually or in the aggregate, materially adverse
to the business or the income, assets, liabilities, financial condition, or
results of operations of the subject party and the terms "material" and
"materially" have correlative meanings; provided, however, that a Material
Adverse Effect or a Material Adverse Change with respect to a party shall not
include events or conditions generally affecting the aviation ground support
industry or effects resulting from general economic conditions (including
changes in interest rates), changes in GAAP required by the Financial Accounting
Standards Board or changes to laws, statutes, regulations or regulatory
policies, that do not have a materially more adverse effect on such party than
that experienced by similarly situated companies.
"Order" means any order, writ, judgment, arbitration award,
injunction, decree or ruling of or by a Government Entity.
2
"Person" shall mean an individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or other entity.
"Permits" shall mean all of the Business' licenses,
franchises, permits, approvals, exemptions and authorizations issued or required
by any Government Entity relating to the Business.
"Representative" shall mean any officer, director, principal,
attorney, agent, employee or other representative.
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments of whatever nature, including, without limitation, income,
withholding, excise, property, sales, gross receipts, use, license, transfer,
payroll, occupancy or franchise taxes imposed by any Government Entity, and
including any interest, assessments, penalties or additions thereto.
1.2 Other Defined Terms. The following terms shall have the meanings
defined for such terms in the Sections set forth below:
Term Section
---- -------
Buyer Material Breach 11.1
Closing 3.1
Closing Date 3.1
Closing Date Balance Sheet 2.3
Closing Net Worth 2.3
Company Name 9.5
Company Proprietary Property 9.5
Damages 9.3
Disclosure Schedule 4.0
Financial Statements 4.7
Hart-Scott-Rodino 4.15
Include 11.12
Includes 11.12
Including 11.12
Mass Layoff 6.2
Material Contracts 4.11
Plant Closing 6.2
Purchase Price 2.2
Seller Material Breach 11.1
WARN Act 6.2
Without Limitation 11.12
3
ARTICLE II
PURCHASE AND SALE OF STOCK
2.1 Purchase and Sale of Stock. On and effective as of the Closing
Date, Seller will sell, convey, transfer, assign and deliver to Buyer, and Buyer
will purchase and acquire from Seller, the Stock.
2.2 Purchase Price. On the Closing Date, in consideration of the sale,
transfer, assignment, conveyance and delivery of the Stock, Buyer shall pay to
Seller $52,500,000 (the "Purchase Price"). The amount required to be paid by
Buyer pursuant to the immediately preceding sentence shall be paid by wire
transfer of immediately available funds from Buyer to Seller or Seller's
designee on the Closing Date.
2.3 Closing Date Balance Sheet. As soon as practical (and in no event
later than 60 days after the Closing Date), Buyer shall cause to be prepared and
delivered to Seller (i) a balance sheet of the Company dated as of the close of
business on the date immediately prior to the Closing Date (the "Closing Date
Balance Sheet"), and (ii) a calculation of the Closing Net Worth (as hereinafter
defined), including such schedules and data as may be appropriate to support
such calculation. Seller and its accountants shall be entitled to review the
Closing Date Balance Sheet, Buyer's calculations of the Closing Net Worth, and
any working papers, source documents, trial balances and similar materials
relating to the Closing Date Balance Sheet prepared by Buyer or its accountants.
Buyer shall also provide Seller and its accountants with timely access, during
Buyer's normal business hours, to Buyer's and the Company's personnel,
properties, books and records to the extent related to the determination of the
Closing Net Worth. As used herein, "Closing Net Worth" shall mean the Company's
"shareholder's equity" as of the close of business on the date immediately prior
to the Closing Date computed in accordance with GAAP consistently applied with
the Company's prior practices, except that (a) any assets that are paid to the
Seller by the Company as a dividend or distribution prior to the Closing shall
be excluded from such calculation, (b) inventory shall be calculated consistent
with the valuations and calculation of inventory of the Company as set forth in
the Financial Statements, less $500,000, (c) a reserve in the amount of
$250,000, shall be established to cover product warranty claims, and (d) no
effect shall be given to any purchase accounting or other similar adjustments
resulting from the consummation of the transactions contemplated herein.
2.4 Disputes. The following clauses (i) and (ii) set forth the
procedures for resolving disputes between the parties with respect to the
determination of the Closing Net Worth:
(a) Within 30 days after delivery to Seller of
Buyer's calculation of the Closing Net Worth pursuant to this
Article, Seller may deliver to Buyer a written report (a
"Seller's Report") prepared by the Seller's accountants (the
"Seller's Accountants") advising Buyer either that the
Seller's Accountants (A) agree with the Buyer's calculations
of the Closing Net Worth, or (B) deem that one or more
adjustments are required. The costs and expenses of the
services of the Seller's Accountants shall be borne by Seller.
If Buyer's accountants ("Buyer's Accountants") shall concur
with the adjustments proposed by the Seller's Accountants, or
if Buyer shall not object thereto in writing delivered to the
Seller within 30 days after Buyer's receipt of the Seller's
Report, the calculations of the Closing Net Worth set forth in
such Seller's Report shall become final and shall not be
subject to further review, challenge or adjustment. If Seller
does not submit a Seller's Report within the 30-day period
provided herein, then the
4
Closing Net Worth as calculated by Buyer shall become final
and shall not be subject to further review, challenge or
adjustment.
(b) In the event that Seller submits a Seller's
Report and Buyer's Accountants and Seller's Accountants are
unable to resolve the disagreements set forth in such report
within 15 days after the date of the Seller's Report, then
such disagreements shall be referred to a nationally
recognized firm of independent certified public accountants
experienced in auditing manufacturing companies and selected
by mutual agreement of the Buyer's Accountants and Seller's
Accountants (the "Settlement Accountants"), and the
determination of the Settlement Accountants shall be final and
shall not be subject to further review, challenge or
adjustment absent fraud. The Settlement Accountants shall use
their commercially reasonable efforts to reach a determination
not more than 45 days after such referral and shall act as an
arbitrator to determine, based solely on presentations by
Seller and Buyer and their respective accountants (and not by
independent review), only those matters which remain in
dispute. The costs and expenses of the services of the
Settlement Accountants shall be shared equally by Seller and
Buyer.
2.5 Post Closing Purchase Price Adjustment. Within five business days
after the Closing Net Worth is determined in accordance with Articles 2.3 and
2.4, if applicable, then the Purchase Price shall be adjusted as follows: if the
Closing Net Worth is greater than $22,127,000, then Buyer shall be obligated to
deliver to Seller an additional amount by wire transfer (to an account specified
by Seller in writing) in immediately available funds, an amount equal to the
amount by which the Closing Net Worth exceeds $22,127,000. If the amount of
Closing Net Worth is less than $22,127,000, then Seller shall refund to Buyer,
by wire transfer (to the account specified by Buyer in writing) in immediately
available funds, an amount equal to $22,127,000 less the amount of the Closing
Net Worth.
2.6 Transfer Taxes. Buyer or Seller, as the case may be, shall be
responsible for any documentary transfer taxes and any sales, use or other
transfer taxes imposed by reason of the transfer of the Stock from Seller to
Buyer assessed against such party and any deficiency, interest or penalty
asserted with respect thereto.
2.7 Returns. Seller will be responsible for preparing and filing all
Returns of the Company relating to any period ending on or prior to the close of
business on the date immediately prior to the Closing Date ("Pre-Closing Tax
Periods."). Buyer will be responsible for preparing and filing all Returns of
the Company relating to periods other than Pre-Closing Tax Periods. After the
Closing has occurred, Buyer will provide, or cause to be provided, to Seller,
without charge, any information that may reasonably be requested by the Seller
in connection with the preparation of any Returns relating to Pre-Closing Tax
Periods.
5
ARTICLE III
CLOSING
3.1 Closing. The closing of the transactions contemplated herein (the
"Closing") shall be held at 11:00 a.m. local time on August 25, 2000 at the
offices of Greenberg Traurig, P.A., 1221 Brickell Avenue, Miami, FL 33131,
unless the parties agree to another time, date or place. Notwithstanding the
foregoing, unless the Agreement has been previously terminated pursuant to the
provisions of Article 11.1, the Closing shall be delayed until five business
days after all of the conditions set forth in Article VII and Article VIII have
been satisfied. The term "Closing Date" shall mean the date on which the Closing
occurs.
3.2 Conveyances at Closing.
(a) By Seller. To effect the sale of the Stock referred to in
Article 2.1, Seller will on the Closing Date deliver to Buyer:
(i) a certificate representing the Stock and a duly
executed stock power relating thereto executed by a duly
authorized officer of Seller; and
(ii) such other instruments as shall be reasonably
requested by Buyer to vest in Buyer title in and to the Stock
and to consummate the transactions contemplated by the
provisions hereof.
(b) By Buyer. To effect the sale of the Stock referred to in
Article 2.1, Buyer will on the Closing Date deliver to Seller:
(i) the amount of the Purchase Price required to be
paid pursuant to Article 2.2; and
(iii) such other instruments as shall be reasonably
requested by Seller to consummate the transactions
contemplated by the provisions hereof.
(c) Form of Instruments. All of the foregoing instruments
listed in Article 3.2(a) and Article 3.2(b) shall be in form and
substance, and shall be executed and delivered in a manner, reasonably
satisfactory to Buyer and Seller. In addition, each of Buyer and Seller
shall deliver a certificate, dated as of the Closing Date, confirming
that all conditions set forth in Article VII or Article VIII, as the
case may be, have been satisfied.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Except as disclosed to Buyer in the confidential disclosure schedule
delivered by Seller simultaneously with the execution of this Agreement (the
"Disclosure Schedule") and except as expressly excepted in this Article IV,
Seller hereby represents and warrants to Buyer as follows:
6
4.1 Organization of Seller. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Florida,
and has full power and corporate authority to conduct its business as it is
presently being conducted and to own and lease its properties and assets.
4.2 Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has full corporate power and authority to conduct its business as
it is presently being conducted and to own and lease its properties and assets,
and is duly qualified and in good standing as a foreign corporation in each
jurisdiction where the location and character of its properties and the business
conducted by it require such qualification, except where the failure to be so
qualified or in good standing would not have a Material Adverse Effect. A list
of each such jurisdiction is attached hereto in the Disclosure Schedule. True
and correct copies of the Articles of Incorporation, including all amendments
thereto, and Bylaws of the Company in effect on the date hereof and as of the
Closing have been delivered to Buyer. A list of the name and title of each
officer and director of the Company is attached hereto in the Disclosure
Schedule.
4.3 Authorization. Seller has all necessary corporate power and
authority and has taken, or by Closing will have taken, all corporate action
necessary to enter into this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations hereunder. This Agreement has
been duly executed and delivered by Seller and is a legal, valid and binding
obligation of Seller, enforceable in accordance with its terms.
4.4 Capitalization of the Company. As of the date hereof, the
authorized capital stock of the Company consists of 200 shares of the Company's
common stock, no par value, of which 100 shares were issued and outstanding and
no shares were held as treasury shares as of the date hereof. All of the issued
and outstanding shares of Stock have been duly and validly authorized and
issued, and are fully paid and non-assessable. None of the outstanding shares of
Stock has been issued in violation of any preemptive rights of current or past
stockholders or is subject to any preemptive rights of the current or past
stockholders of the Company. There are no shares of capital stock or other
equity securities of the Company outstanding except for the shares of Stock, and
no outstanding options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into or exchangeable for, shares of the capital stock of the
Company, or contracts, commitments, understandings, or arrangements by which the
Company is or may be bound to issue additional shares of its capital stock or
options, warrants, or rights to purchase or acquire any additional share of its
capital stock.
4.5 Subsidiaries. Except as disclosed in the Disclosure Schedule, the
Company does not own directly or indirectly (or possess any options or other
rights to acquire) any subsidiaries or any direct or indirect ownership
interests in any other Person.
4.6 Ownership of the Stock. The Seller owns, beneficially and of
record, all of the Stock. As of the Closing, the Stock will be owned free and
clear of any Encumbrances, proxies, calls or commitments of any nature, and the
transfer and delivery of the Stock to Buyer at the Closing shall transfer good
and marketable title to the Stock to Buyer, free and clear of all Encumbrances,
proxies, calls or commitments of any nature.
7
4.7 Financial Statements. Seller has included in the Disclosure
Schedule true and complete copies of the following financial statements (the
"Financial Statements"): (a) a balance sheet of the Company as of October 31,
1999 and a statement of income of the Company for the year ended October 31,
1999, and (b) a balance sheet of the Company as of April 30, 2000 and a
statement of income of the Company for the six months ended April 30, 2000. The
Financial Statements have been prepared in conformity with GAAP applied on a
consistent basis and present fairly the financial position of the Company at the
dates shown and the results of its operations and changes in its financial
positions for the periods then ended, except for the omissions of footnotes to
such Financial Statements and except for the adjustments to the closing net
worth described in Article 2.3.
4.8 Undisclosed Liabilities. As of April 30, 2000, the Company did not
have, and since such date the Company has not incurred or suffered, any
liabilities, whether accrued, absolute, contingent or otherwise, existing or
arising out of any transaction or state of facts existing on or prior to the
date hereof except (a) as and to the extent disclosed, reflected or reserved
against in the Financial Statements, (b) as and to the extent arising under
contracts, commitments, transactions or circumstances identified in the
Disclosure Schedule, excluding any liabilities for breaches thereof, and (c) as
and to the extent incurred in the ordinary course of business after April 30,
2000.
4.9 Conduct of Business in Normal Course. Except as otherwise disclosed
in this Agreement or the Disclosure Schedule, the Company has, since April 30,
2000, conducted the Business in the ordinary and usual course consistent with
past practice and, to the Knowledge of Seller, no event or condition of any
character has occurred that could reasonably be expected to have a Material
Adverse Effect on the Company. Without limiting the generality of the foregoing,
except as set forth in the Disclosure Schedule, since April 30, 2000 there has
not been:
(a) any change in the business, operations, assets,
liabilities, financial condition or operating results of the Company,
which has had a Material Adverse Effect on the Company;
(b) any damage, destruction or loss, whether or not covered by
insurance to or of the assets of the Company which has had a Material
Adverse Effect on the Company;
(c) any forgiveness of or waiver by the Company of any rights
or of any debt, liability or obligation owed to it other than in the
ordinary course of business consistent with past practices;
(d) any satisfaction or discharge of any Encumbrance or
payment of any debt, liability or obligation by the Company, except in
the ordinary course of business consistent with past practice;
(e) any mortgage, pledge, transfer of an Encumbrance on the
Company's Assets, except Encumbrances for current Taxes not yet due or
payable;
8
(f) any direct or indirect loans or guarantees made by the
Company to or for the benefit of the Seller, employees, officers,
directors or consultants, or any members of their immediate families,
other than travel advances and other advances made in the ordinary
course of its business;
(g) any declaration, setting aside or payment of any dividend
or other distribution in respect of the Stock, except as permitted by
Article 6.3;
(h) any sale, transfer, lease to others or other disposition
of any of the Company's assets, cancelled or compromised any material
debt owed to the Company or material claim made by the Company; or
waived or released any right of substantial value, in each case except
in the ordinary course of its business;
(i) the receipt of any notice of termination of any contract,
lease or other agreement or any damage, destruction or loss which, in
any case has had a Material Adverse Effect on the Company;
(j) any labor union organizing activity, any actual or, to the
Knowledge of the Seller, any threatened employee strikes, work
stoppages, slow-downs or lock-outs, or any change in its relations with
its employees, agents, customers or suppliers or with any governmental
authorities or self-regulatory organizations, which in any case has had
a Material Adverse Effect on the Company;
(k) any capital expenditures, capital commitments, additions
or betterments which individually are in excess of $100,000;
(l) any Contract, agreement or commitment by the Company to do
any of the things described in this Article.
4.10 Material Contracts. Set forth on the Disclosure Schedule is a list
and brief description of each contract, agreement, commitment or arrangement
(whether written or oral) of a material nature to which the Company is a party
or under which the Company is obligated on the date hereof (the "Material
Contracts"). For purposes of this Article, Material Contracts shall include,
without limitation, (i) any contract relating to the employment, engagement,
compensation or termination of directors, officers, employees, consultants or
agents by the Company, (ii) any licensing or other agreement relating to
software used in the conduct of the Business (other than commercially available
software commonly run on personal computers), (iii) any loan, loan agreement,
note, letter of credit or other evidence of indebtedness where the Company is
the obligor or guarantor, (iv) any contract involving total future payments of
more than $50,000, other than contracts entered into in the ordinary course of
business, (v) any contract limiting the freedom of the Company to compete in any
line of business or with any Person and (vi) any outstanding offer, commitment
or obligation to enter into any Material Contract.
9
4.11 No Defaults. The Company has fulfilled and taken all action
reasonably necessary to date to enable it to fulfill, when due, all material
obligations under all Material Contracts to which it is a party, and there are
no defaults and no events have occurred that, with the lapse of time or election
of any other party, will become defaults by it under any Material Contract. To
the Knowledge of Seller, no breach or default by any other party under any
Material Contract has occurred or is threatened that will impair or could impair
the ability of the Company to enforce any of its rights thereunder in any
material respect.
4.12 No Conflict or Violation. Except as disclosed on the Disclosure
Schedule, the execution, delivery, and performance of this Agreement by Seller
and the consummation of the transactions contemplated hereby shall not (i)
subject to the government filings and other matters referred to in Article 4.15,
violate any law, statute, rule, regulation, ordinance, code, Order or award
applicable to the Company or its properties, (ii) violate or conflict with, or
permit the cancellation of, any Material Contract or any other contract,
agreement, indebtedness, lease, Encumbrance, commitment, Permit or concession to
which the Company is a party, or by which it or any of its properties are bound,
(iii) permit the acceleration of the maturity of any indebtedness of, or
indebtedness secured by the property of the Company, (iv) result in an
imposition of any Encumbrance, restriction or charge on the Business or the
Company, or (v) violate or conflict with any provision of the Certificate of
Incorporation, By-laws or any other governing document or agreement of the
Company.
4.13 Consents and Approvals. Except for (i) consents, authorizations,
approvals, filings, exemptions, registration and waivers in connection with
compliance with the applicable provisions of federal, state and foreign laws,
(ii) the expiration of any applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended ("Hart-Scott-Rodino"), (iii)
contracts with Customers or vendors that require consent of the Customer or
vendor in the event of a change in control of the Company; (iv) the approval of
HEICO Corp.'s Board of Directors, and (v) such additional consents and approvals
set forth in the Disclosure Schedule, no consent, authorization, approval,
filing, exemption, waiver or registration with, any Government Entity or any
third Person is required to be made or obtained by the Company or Seller in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
4.14 Compliance with Laws. The Company is and has been in compliance in
all respects with any and all Legal Requirements applicable to the Company,
other than failures to so comply that would not have a Material Adverse Effect.
The Company (x) has not received or entered into any citations, complaints,
consent orders, compliance schedules, or other similar enforcement orders or
received any written notice from any Governmental Authority or any other written
notice that would indicate that there is not currently compliance with all such
Legal Requirements, except for failures to so comply that would not have a
Material Adverse Effect, and (y) is not in default under, and no condition
exists (whether covered by insurance or not) that with or without notice or
lapse of time or both would constitute a material default under, or material
breach or violation of, any Legal Requirement or Permit applicable to the
Company. Without limiting the generality of the foregoing, the Company has not
received notice of and, to the Knowledge of Seller, there is no basis for, any
claim, action, suit, investigation or proceeding that might result in a finding
that the Company is not or has not been in substantial compliance with Legal
Requirements relating to (a) the development, testing, manufacture, packaging,
10
distribution and marketing of products, (b) employment, safety and health, and
(c) environmental protection, building, zoning and land use.
4.15 No Brokers. Except for its agreement with ING Barings LLC (for
which the Seller and not the Company shall be responsible for the payment of all
fees) neither the Company nor Seller has entered into or will enter into any
contract, agreement, arrangement or understanding with any Person which will
result in the obligation of Buyer or the Company to pay any finder's fee,
brokerage commission or similar payment in connection with the transactions
contemplated hereby.
4.16 No Other Agreements. Neither the Company nor Seller has any legal
obligation, absolute or contingent, to any other Person to sell the Stock or all
or substantially all the assets of the Company or to effect any merger or
consolidation of the Company.
4.17 Insurance. The Company has disclosed on the Disclosure Schedule a
list of all insurance policies maintained by the Company on its properties,
assets, business and personnel (specifying the insurer, the amount and duration
of the coverage, the type of insurance including, but not limited to whether
each such policy is based on claims made or occurrence, premium allocation, the
policy number and any pending claims thereunder). True and complete copies of
each such policy have been delivered to Buyer. The Disclosure Schedule also
contains all claims for insurance losses in excess of $50,000 per occurrence,
filed by the Company during the three year period immediately prior to the date
hereof, including, but not limited to Worker's Compensation, automobile, general
and product liability. The Company has not received written notice it is in
default with respect to any provision contained in any insurance policy, nor has
it failed to pay any premiums thereunder or to give any notice or present any
claim thereunder in due and timely fashion and, to the Seller's Knowledge, the
Company is not in default with respect to any such policies. The Seller knows of
no occurrence potentially giving rise to a claim in excess of $50,000 against or
by the Company with respect to which such claim has not been asserted. Adequate
reserves have been provided in the Financial Statements with respect to any self
insured claims pending and any such claims which may be reasonable expected
based upon the Company's prior experience.
4.18 Trademarks and Patents. The Company has disclosed on the
Disclosure Schedule a list of all United States and foreign registered patents,
trademarks, domain names, copyrights and applications therefor and all material
state registered trade names and trademarks and applications therefor. The
Company owns (or possesses adequate and enforceable royalty-free licenses or
other rights to use) all trademarks, trade names, patents, copyrights, service
marks, service names, software, inventions, trade secrets, know-how, domain
names, formulas and processes and other proprietary rights and corresponding
foreign counterparts necessary to the conduct of its business and such use does
not materially conflict with the rights of others.
Except as disclosed on the Disclosure Schedule, no proceedings are
pending, or, to the Seller's Knowledge, have been instituted or threatened which
challenge the validity of the ownership by the Company to such trademarks, trade
names, domain names, patents, copyrights and applications. The Company has not
entered into any patent or trademark license, technology transfer, or
non-competition agreement relating to its business, except as set forth on the
Disclosure Schedule. The Company is not infringing upon or otherwise acting
adversely to any
11
copyrights, trademarks, trademark rights, service marks, service names, trade
names, domain names, patents, patent rights, licenses, trade secrets, software
or know-how of any third party to the extent such possible infringement would
have a Material Adverse Effect on the Company. To the Seller's Knowledge, no
employee of the Company has disclosed or made available to any third party any
trade secrets of the Company under circumstances constituting a breach of
confidentiality that has had a Material Adverse Effect on the Company. Except as
set forth on the Disclosure Schedule, there are no existing or, to the Company's
Knowledge, threatened patent, trademark, software, infringement, opposition,
interference or other intellectual property related lawsuits by, or against, the
Company, nor are there any outstanding notices, to the Company or by the
Company, regarding possible patent infringement of either a patent owned by the
Company or the licensed patent of a third party.
4.19 Employee Benefit Plans:
4.19.1 Set forth on the Disclosure Schedule is a list of all
pension, profit sharing, bonus, disability, welfare or group insurance,
deferred compensation, stock option, paid vacation and all other
presently effective employee benefit plans, agreements or commitments,
written or oral (if any), of the Company ("Employee Benefit Plans").
4.19.2 A copy of each Employee Benefit Plan, as amended to the
date hereof, has been delivered to Buyer, together with audited
financial statements and actuarial reports, if any, and Form 5500, if
required, for the most recent fiscal year of each such plan and a copy
of each Internal Revenue Service determination letter with respect to
any such plan. Except as set forth on the Disclosure Schedule each
employee pension, stock bonus and profit sharing plan, if any, is
qualified under ss.401 (a) of the Internal Revenue Code and each
related trust is exempt from taxation pursuant to ss.501 (a) of such
Code.
4.19.3 Except as set forth as a part of the Disclosure
Schedule, all Employee Benefit Plans are administered and operated in
material compliance with the terms of the applicable plan documents
and, if applicable, the provisions of the Employee Retirement Income
Security Act of 1974 ("ERISA"), and have materially complied with the
reporting and disclosure requirements of applicable federal and state
laws and regulations.
4.19.4 Except as set forth as a part of the Disclosure
Schedule, (i) no Employee Benefit Plan or related trust has had a
"reportable event" as such term is defined in ERISA nor has any such
plan or any "fiduciary" or "party-in-interest" or "disqualified person"
entered into any non-exempt "prohibited transaction" as such terms are
defined in ERISA or the Internal Revenue Code; (ii) no partial or
complete termination, or permanent discontinuance of contributions has
occurred; (iii) no amendments have been made to any Employee Benefit
Plan intended to be qualified under ss.401(a) of the Code which were
not the subject of a favorable IRS determination letter; (iv) all
reports, together with all supporting statements, opinions,
certifications and schedules, required pursuant to ERISA or the Code
have been filed with the
12
appropriate governmental agencies; and (v) all notices required to be
provided to participants and beneficiaries by the Companies pursuant to
ERISA or the Code have been timely provided.
4.19.5 Except as set forth on the Disclosure Schedule there
are no third party contract, agreements or arrangements with respect to
any Employee Benefit Plan which may not be canceled or liquidated with
no more than 60 days advance notice or which, upon liquidation assesses
a surrender charge, penalty, back-end load or market value adjustment.
4.19.6 The Company has no liability, jointly or otherwise, for
any withdrawal liability demanded or yet to be demanded under Title IV
of ERISA by any multi-employer plan for a complete or partial
withdrawal from such plan by any member of a control group of employers
(within the meaning of ss.4001(b) of ERISA) of which the Company is a
member.
4.20 Minute Books and Stock Ledgers. The minute books of the Company
are true and correct in all material respects. The stock ledgers of the Company
are complete.
4.21 Leases. There is set forth in the Disclosure Schedule a brief
description of every lease or agreement under which the Company is a lessee of,
or holds or operates any real property owned by any third party, including the
Seller. Accurate and complete copies of each such leases have been delivered to
Buyer. Except as specifically set forth on the Disclosure Schedule, each such
lease or agreement is in full force and effect and constitutes the legal, valid
and binding obligation of the respective parties thereto.
4.22 Machinery and Equipment. The machinery and equipment regularly
being used by the Company in its business is in good working order and repair
(reasonable wear and tear excepted); and, the machinery and equipment are either
owned by the Company free and clear of all Encumbrances, except for Permitted
Encumbrances (hereinafter defined), mortgages or security interest shown on the
Financial Statements as securing specific liabilities or obligations or are
leased under valid leases which will not be affected by the consummation of the
transactions contemplated by this Agreement.
4.23 Title of Property. Except as set forth on the Disclosure Schedule,
the Company owns all of its personal property (the "Personal Property") and the
Personal Property constitutes all of the tangible personal property required or
necessary to conduct the business of the Company. Except as disclosed on the
Disclosure Schedule, none of the Personal Property is subject to any
Encumbrance, except, (i) mortgages or security interests shown on the Financial
Statements as securing specific liabilities or obligations; or (ii) liens for
current taxes and assessments not yet due or payable or taxes the validity of
which are being contested in good faith by appropriate proceedings; or (iii)
those restrictions, easements and imperfections of title and encumbrances, if
any, which, individually or in the aggregate; (a) are not substantial in
character, amount or extent and do not detract materially from the value of the
properties subject thereto in their current use in the business of the Company;
and (b) do not materially interfere with either the present and continued use of
such property or the conduct of the Company's normal operations; in each case in
the same manner as the business of the Company is currently
13
conducted (the aforementioned exceptions collectively referred to as "Permitted
Encumbrances"). The Personal Property owned, leased or used by the Company is in
good operating condition and repair, ordinary wear and tear excepted.
4.24 Inventory. Except as reserved on the Financial Statements and
except for the inventory adjustment contained in the calculation of the Closing
Net Worth, the Company's inventory and related supplies (including raw
materials, tool room supplies, work-in-process and finished goods) are valued at
the lower of cost or market in accordance with GAAP as consistently applied by
the Company.
4.25 Real Property. There is set forth on the Disclosure Schedule a
description of all real property, including buildings and other improvements
thereon owned by the Company (the "Real Property"). The Real Property, together
with the real property leased and listed on the Disclosure Schedule, constitutes
all the real property required to conduct the business of the Company as
currently conducted and except as disclosed on the Disclosure Schedule there are
no Encumbrances which would have a Material Adverse Effect on the Company. There
are no claims made or, to the Knowledge of the Seller, threatened by any
federal, state or municipal or other authorities in connection with the Real
Property for any violation of any applicable law, ordinance or regulation which
would have a Material Adverse Effect on the Company. All buildings and
structures included in the Real Property are in good operating condition, normal
wear and tear excepted.
4.26 Receivables. All receivables of the Company (including accounts
receivable, loans receivable and advances) which are reflected on the Closing
Date Balance shall have arisen only from bona fide transactions in the ordinary
course of the Company's operation of its business and shall be fully collectable
when due, or in the case of each account receivable within 180 days after it
became due, without resort to litigation, in the aggregate face amounts thereof,
as reduced by the amount of any reserve set forth on Closing Date Balance Sheet.
4.27 Bank Accounts and Powers. The Disclosure Schedule lists, (i) all
accounts, safe deposit boxes and current receivable collection boxes maintained
by the Company at any bank or other financial institution and the names of the
persons currently authorized to effect transactions in such accounts and
pursuant to such resolutions or with access to such boxes; and (ii) the names of
all persons, firms, associations, corporations or business organizations holding
general or special powers of attorney from the Company and a brief description
of the terms thereof.
4.28 Employees. The Company has delivered to Buyer an accurate and
complete list setting forth the current annual salary bonus or other incentive
payment for each employee of the Company currently earning in excess of $100,000
per year in total compensation along with copies of any employment agreements
for such employees. All employees of the Company have been properly classified
and no person is treated as an independent contractor or third party agency
employee who should be treated as an employee under the laws of the country in
which such individual performs services. Leased employees of the Company in the
United States within the meaning of ss.414 (n) of the Code have had their
service as leased employees recognized for purposes of applicable Employee
Benefit Plans in accordance with the terms of such plans and ss.414(n) of the
Code.
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4.29 Environmental Matters. Except as disclosed on the Disclosure
Schedule, the Company has not deposited or caused to be deposited, on, under or
about any production or any other facility, including without limitation into
the ambient air, surface water, groundwater, land surface or subsurface strata,
any solvents, pollutants, chemicals, flammables, contaminants, gasoline,
petroleum products, crude oil, explosives, radioactive materials, hazardous
materials, hazardous wastes, industrial or other toxic waste or substances,
polychlorinated biphenyls or related or similar materials, asbestos or any
material containing asbestos, any underground storage tanks, any air, soil or
water contamination or any other substance or material (collectively, the
"Hazardous Substances") in violation of or in a manner which creates liability
under any applicable federal, state or local governmental law, rule, regulation
or ordinance, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C.ss.9601,
et seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C.ss.1801, et seq.), the Resource Conservation and Recovery Act, as amended
(42 U.S.C.ss.6901 et seq.), the Federal Water Pollution Control Act (33
U.S.C.ss.1251 et seq.), the Clean Air Act (42 U.S.C.ss.7401 et seq.); the Toxic
Substances Control Act as amended (15 U.S.C.ss.2601 et. seq.), the Clean Water
Act, as amended (33 U.S.C.ss.1251 et. seq.) (collectively, "all such laws, rules
ordinances or regulations shall be referred to herein as the Environmental
Laws"), other than violations that would not have a Material Adverse Effect on
the Company.
4.29.1 The Company has not used any production or any other
facility owned or leased by it to generate, manufacture, refine,
transport, treat, store, handle, dispose, transfer, produce, process or
in any manner deal with Hazardous Substances, except in compliance with
applicable Environmental Laws;
4.29.2 There are no Hazardous Substances located off any
production or any other facility which originated from the Company's
owned or leased production facilities which were not disposed of in
compliance with applicable Environmental Laws;
4.29.3 The Company, (a) holds all required registrations,
permits, licenses, variances, exemptions approvals and other
authorizations which are required for each of them under federal, state
and local laws and regulations relating to pollution or protection of
the environment, including, but not limited to, all Environmental Laws
and including all laws relating to emissions, discharges, releases, or
threatened release of Hazardous Substances or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Substances, which are
legally required for the operation of the business of the Company as
presently conducted or the ownership of the properties and assets of
the Company as of the date hereof (collectively the "Environmental
Permits"); and (b) are in full compliance with the terms of all
Environmental Permits.
Except as disclosed on the Disclosure Schedule, there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, notice or demand letter pending, or to the
Knowledge of the Seller, threatened against the
15
Company relating to, (i) the Environmental Laws; or (ii) relating to the release
into the environment by the Company of any Hazardous Substances.
4.30 Absence of Certain Business Practices. Neither the Company nor, to
the Knowledge of Seller, any officer, employee or agent of the Company, has
given any gift or similar benefit to any customer, supplier, governmental
employee or other person who is in a position to help or hinder the business of
the Company (or assist in connection with any actual or proposed transaction)
which, (a) would subject the Company to any material damage or penalty in any
civil, criminal or governmental litigation or proceeding; (b) if not given in
the past, would have had a Material Adverse Effect on the Company; or (c) if not
continued in the future, would have a Material Adverse Effect on the Company or
which would subject the Company to a suit or penalty in any Legal Proceeding,
which would have a Material Adverse Effect on the Company.
4.31 Customs Compliance. The Company has paid or has made provisions in
the Financial Statements for the payment of all duty, tariffs, customs,
penalties, merchandise processing fee or other payment required to be paid by
them or any of them with respect to the importation or exportation of any
merchandise by such Company and is in compliance with United States and foreign
laws and regulations governing the importation or exportation of merchandise.
4.32 Omissions. No representation or warranty made by the Seller or the
Company pursuant to this Agreement and no certificate or document furnished or
to be furnished by or on behalf of the Seller or the Company to Buyer pursuant
to this Agreement omits or will omit to state a material fact necessary to make
the statements contained therein not misleading.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and has
full power and corporate authority to conduct its business as it is presently
being conducted and to own and lease its properties and assets.
5.2 Authorization. Buyer has all necessary corporate power and
authority and has taken, or by Closing will have taken, all corporate action
necessary to enter into this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations hereunder. This Agreement has
been duly executed and delivered by Buyer and is a legal, valid and binding
obligation of Buyer, enforceable in accordance with its terms.
5.3 No Conflict or Violation. The execution, delivery, and performance
of this Agreement by Buyer and the consummation of the transactions contemplated
hereby shall not (i) subject to the government filings and other matters
referred to in Article 5.4, violate any law,
16
statute, rule, regulation, ordinance, code, Order or award applicable to Buyer
or its properties, (ii) violate or conflict with, or permit the cancellation of,
any contract, agreement, indebtedness, lease, Encumbrance, commitment, Permit or
concession to which Buyer is a party, or by which Buyer or any of its properties
are bound, or (iii) violate or conflict with any provision of the Articles of
Incorporation, By-laws or any other governing document or agreement of Buyer.
5.4 Consents and Approvals. Except for (i) consents, authorizations,
approvals, filings, exemptions, registration and waivers in connection with
compliance with the applicable provisions of federal, state and foreign laws,
(ii) the expiration of any applicable waiting period under Hart-Scott-Rodino,
and (iii) the approval of Illinois Tool Works Inc.'s Board of Directors, no
consent, authorization, approval, filing, exemption, waiver or registration
with, any Government Entity or any third Person is required to be made or
obtained by the Buyer in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby.
5.5 No Litigation. No action, suit, inquiry, investigation or other
proceeding is pending or, to the Knowledge of Buyer, threatened in or before any
Government Entity that in any way (i) challenges the validity, legality or
enforceability of this Agreement or the transactions contemplated hereby, (ii)
is likely to have a material adverse effect upon Buyer's ability to perform its
obligations under this Agreement, (iii) contests or affects the validity or
enforceability of this Agreement, or (iv) contests in any way the power or
authority of Buyer with respect to this Agreement.
5.6 No Brokers. Buyer has not entered into and will not enter into any
contract, agreement, arrangement or understanding with any Person which will
result in the obligation of Seller or the Company to pay any finder's fee,
brokerage commission or similar payment in connection with the transactions
contemplated hereby.
ARTICLE VI
COVENANTS OF SELLER AND BUYER
Seller, on the one hand, and Buyer, on the other hand, covenant as
follows:
6.1 Maintenance of Business Prior to Closing. Prior to the Closing, and
in furtherance of the transactions contemplated hereby, Seller shall use its
commercially reasonable efforts to continue to carry on the Business in the
ordinary course and substantially in accordance with past practice and will not
take any action inconsistent therewith or with the consummation of the Closing
or with the performance of the obligations of Seller hereunder. Seller shall not
permit the Company to engage in any new line of business or enter into any new
Material Contract, transaction or activity or make any commitment, except in the
ordinary course of business consistent with past practice. Seller shall cause
the Company to use its commercially reasonable efforts to preserve intact its
business organization, to keep available the services of its current officers,
employees and consultants, and to preserve its present relationships with
Customers, suppliers and other Persons with which they have business relations.
17
6.2 Company Employees.
(a) Buyer agrees not to take any action with respect to
employees of the Company, from the date of this Agreement through 60
days after the Closing Date, that could be construed as a "plant
closing" or a "mass layoff", as those terms are defined in the Worker
Adjustment Retraining and Notification Act, 29 U.S.C. ss.ss. 2101-2109
(the "WARN Act"). In the event of an employment action by Buyer upon or
following the Closing for which notice is required under the WARN Act,
Buyer agrees to indemnify and hold harmless Seller and its Affiliates
with respect to any failure, or alleged failure, by Buyer or Seller to
provide notice as may be required under the WARN Act.
(b) Seller agrees to use its reasonable good faith efforts to
create mirror-image Employee Benefit Plans for the HEICO 401k Savings
Plans and the HEICO group health, disability and life insurance plans
described in Disclosure Schedule 4.19.1 for the benefit of Company
employees. Such plans shall be effective as of the Closing Date and
Buyer agrees to maintain such plans on or after such date and shall
indemnify and hold harmless Seller from any and all expenses, costs or
liabilities related to such plans and their operation and maintenance.
6.3 Certain Prohibited Transactions. Prior to the Closing, Seller shall
not, without the prior written consent of Buyer, cause or permit the Company to:
(a) incur any indebtedness for borrowed money,
assume, guarantee, endorse or otherwise become responsible for
obligations of any other individual, partnership, firm or
corporation, or make any loans or advances to any individual,
partnership, firm or corporation, except in the ordinary
course of business and consistent with past practice;
(b) pay or incur any obligation to pay any dividend
on the Stock or make or incur any obligation to make any
distribution or redemption with respect to the Stock;
(c) make any change to the Articles of Incorporation
or By-laws of the Company or institute any action or
proceeding to dissolve the Company;
(d) mortgage, pledge or otherwise encumber any of the
properties or assets of the Company or sell, transfer or
otherwise dispose of any of the properties or assets of the
Company or cancel, release or assign any indebtedness owed to
the Company or any claims held by any of such companies,
except in the ordinary course of business and consistent with
past practice;
(e) make any investment of a capital nature either by
purchase of stock or securities, contribution to capital,
loan, property transfer or otherwise, or by the purchase of
any property or assets of any other individual, partnership,
firm or corporation, except in the ordinary course of business
and consistent with past practice;
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(f) enter into or terminate any Material Contract, or
make any material change in any of its Material Contracts;
(g) except for those actions taken in the ordinary
course of business, consistent with past practices, (i) except
as disclosed in the Disclosure Schedule, increase the
compensation payable or to become payable to the officers,
directors or employees of the Company; (ii) change the
employment conditions of any employee of the Company; (iii)
grant any severance or termination pay to, or enter into any
employment or severance agreement with, any of the directors,
officers or employees of the Company; or (v) establish, adopt,
enter into or amend any bonus, profit sharing, trust,
compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any directors, officers or
employees of the Company or take any action to accelerate any
rights or benefits thereunder;
(h) change any accounting policies or procedures of
the Company or make any change in any accounting methods or
systems of internal accounting controls, except as may be
appropriate to conform to changes in GAAP; or (ii) make any
Tax election, other than in the ordinary course of business
consistent with past practice;
(i) increase or decrease prices charged to the
Customers of the Company, other than in the ordinary course of
business consistent with past practice, or fail to use
commercially reasonable efforts to enforce any Material
Contract or other agreement with any customer or supplier,
collect its accounts receivable, or pay its accounts payable,
in each case in the ordinary course of business consistent
with past practice;
(j) enter into any agreement or transaction with any
directors or officers of the Company or any entity in which
any such director or officer has a direct or indirect
interest, not in the ordinary course of business;
(k) acquire by merging or consolidating with, or
agreeing to merge or consolidate with, or purchase
substantially all the assets of, or otherwise acquire any
business or any company, corporation, partnership, association
or other business organization or division thereof;
(l) sell, lease or otherwise dispose of any of its
assets, except in the ordinary course of business and except
for the transfer of assets which would not have a Material
Adverse Effect on the Company;
(m) issue or sell any shares of its capital stock of
any class or any options, warrants, conversion or other rights
to purchase any such shares or any securities convertible into
or exchangeable for such shares; or
19
(n) agree, in writing or otherwise, to take or
authorize any of the foregoing actions or any action which
would cause any representation, warranty, covenant or
agreement of Seller in this Agreement to be or to become
untrue.
Notwithstanding anything in this Agreement to the contrary, the Company shall
have the right to pay the Seller (i) a cash dividend or distribution equal to
the amount of cash and cash equivalents of the Company as of the Closing, (ii) a
dividend or distribution in kind in the form of all accounts receivable owned by
the Company as of the Closing, (iii) a dividend or distribution of all of the
capital stock of Radiant Power Corp. owned by the Company, and (iv) a dividend
or distribution of the real property owned by the Company located at 101 Lummis
Road, Suffolk, Virginia 23434 but the Closing Date Balance Sheet shall not
include any cash, accounts receivable, capital stock or real property paid by
the Company as a dividend or distribution as permitted by the terms of this
paragraph.
6.4 Notification of Certain Matters. Seller shall give prompt notice to
Buyer, and Buyer shall give prompt notice to Seller, of (i) the occurrence, or
failure to occur, of any event known to such party, which occurrence or failure
would be likely to cause any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect from the date
hereof to the Closing Date, and (ii) any material failure of Seller or Buyer, as
the case may be, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder. Each party shall use
commercially reasonable efforts to remedy any failure on its part to comply with
or satisfy any covenant, condition or agreement to be complied with or satisfied
by it hereunder.
6.5 Access to Information. From the date hereof through the Closing
Date, Seller shall, and shall cause the Company to, give Buyer and its
Representatives full and reasonable access to further information with respect
to the Business, its business records and activities, during normal business
hours for the purpose of completing its business and financial review of the
Business, and Buyer will maintain the confidentiality of any such information in
accordance with Article 10.11.
6.6 Reasonable Efforts; Cooperation; Further Assurances. Each of the
parties hereto shall use commercially reasonable efforts to take, or cause to be
taken, all appropriate actions, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated herein, including,
without limitation, (i) cooperating with the other in the preparation and filing
of all forms, notifications, reports and information, if any, required or
reasonably deemed advisable pursuant to any law, statute, rule or regulation,
including, but not limited to, notice and filings pursuant to Hart-Scott-Rodino;
(ii) using commercially reasonable efforts to obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of any Government
Entity or other Persons (including parties to Contracts with the Company as are
necessary for the consummation of the transactions contemplated hereby), (iii)
making on a prompt and timely basis all governmental or regulatory notifications
and filings required to be made by it for the consummation of the transactions
contemplated hereby, including, but not limited to, making the initial notice
and filings pursuant to Hart-Scott-Rodino within five business days of the date
of this Agreement, (iv) using commercially reasonable efforts to obtain releases
of all guarantees issued by the Seller or any of its Affiliates (other than the
Company) guaranteeing any
20
obligations of the Company, (v) defending such Legal Proceedings as the parties
mutually agree challenging this Agreement or the consummation of the
transactions contemplated hereby and taking appropriate legal actions mutually
agreed upon to lift or rescind any injunction or restraining Order or other
Order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, and (vi) executing and delivering such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby.
6.7 Non-Competition. In consideration of the payment of the Purchase
Price, and in order to induce Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, Seller hereby covenants and
agrees that Seller, without the prior written consent of Buyer, shall not for a
period of three years from and after the Closing Date directly or indirectly
acquire or own in any manner any interest in any Person which engages or plans
to engage in the manufacture, sale or servicing of aircraft ground power units,
aircraft ground pre-conditioned air units, aircraft engine air start units or
any combination thereof or the sale of related spare or replacement parts,
anywhere in the world (the "Competitive Businesses"). The ownership or control
of up to three percent of the outstanding voting securities or securities of any
class of a Person with a class of securities registered under the Securities
Exchange Act of 1934, as amended, shall not be deemed a violation of this
Article. In addition, the purchase or acquisition of any Person which derived
during the most recent calendar year five percent or less of its total revenues
from the Competitive Businesses shall also not be deemed a violation of this
Article. In the event that Seller purchases or acquires any Person which derived
during the most recent calendar year more than five percent of its total
revenues from the Competitive Businesses, Seller shall have six months from the
effective date of such purchase or acquisition to dispose of such Competitive
Businesses and Seller shall grant to Buyer a right of first refusal to acquire
such Competitive Businesses.
6.8 Tax Election. The parties agree to elect to treat the sale of the
stock as a sale of assets as provided in Internal Revenue Code Section
338(h)(10). The Purchase Price shall be allocated among the acquired assets in
accordance with a mutually acceptable allocation schedule which will be prepared
subsequent to Closing and, which schedule will be prepared in accordance with
ss.1060 of the Internal Revenue Code. In connection with the determination of
the foregoing allocation schedule, the parties shall cooperate with each other
and provide such information as any of them shall reasonably request. The
parties will report the federal, state and local and other tax consequences of
the purchase and sale contemplated hereby (including the filing of Internal
Revenue Service Form 8594) in a manner consistent with such allocation.
6.9 Board of Director Approvals. Buyer and its executive officers and
management involved in the transactions contemplated by this Agreement shall
recommend to the board of directors of Illinois Tool Works Inc. that such board
shall approve and consent to the terms and conditions of this Agreement. Seller
and its executive officers and management involved in the transactions
contemplated by this Agreement shall recommend to the board of directors of
HEICO Corp. that such board shall approve and consent to the terms and
conditions of this Agreement.
21
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligation of Seller to consummate the transactions provided for
hereby is subject, in the reasonable discretion of Seller, to the satisfaction,
on or prior to the Closing Date, of each of the following conditions:
7.1 Representations, Warranties, Covenants and Agreements. All
representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects at and as of the Closing Date, except
as and to the extent that the facts and conditions upon which such
representations and warranties are based are expressly required or permitted to
be changed by the terms hereof. Buyer shall have performed all agreements and
covenants required hereby to be performed by it prior to or at the Closing Date.
7.2 Consents; Release of Guarantees. Seller shall have received (i) all
consents, authorizations, approvals, filings, exemptions and waivers from
Government Entities and all material consents, authorizations, approvals,
filings, exemptions and waivers other Persons necessary to permit Seller to
consummate the transactions contemplated hereby and (ii) releases of all
guarantees issued by the Seller or any of its Affiliates (other than the
Company) guaranteeing any obligations of the Company.
7.3 No Injunctions or Restraints; Illegality. No Order issued by any
Government Entity preventing the consummation of the transactions contemplated
by this Agreement shall be in effect. No law, statute, rule, regulation or Order
shall have been enacted, entered, promulgated or enforced by any Government
Entity which prohibits or materially restricts the consummation of the
transactions contemplated hereby.
7.4 Certificates. Buyer will furnish Seller with such certificates of
its officers and others to evidence compliance with the conditions set forth in
this Article as may be reasonably requested by Seller.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligation of Buyer to consummate the transactions provided for
hereby is subject, in the reasonable discretion of Buyer, to the satisfaction,
on or prior to the Closing Date, of each of the following conditions:
8.1 Representations, Warranties, Covenants and Agreements. All
representations and warranties of Seller contained in this Agreement, including
the Disclosure Schedules, shall be true and correct in all material respects at
and as of the Closing Date, except as and to the extent that the facts and
conditions upon which such representations and warranties are based are
expressly required or permitted to be changed by the terms hereof. Seller shall
have performed
22
all agreements and covenants required hereby to be performed by it prior to or
at the Closing Date.
8.2 Consents. Buyer shall have received all consents, authorizations,
approvals, filings, exemptions and waivers from Government Entities and all
material consents, authorizations, approvals, filings, exemptions and waivers
other Persons necessary to permit Buyer to consummate the transactions
contemplated hereby.
8.3 No Injunctions or Restraints; Illegality. No Order issued by any
Government Entity preventing the consummation of the transactions contemplated
by this Agreement shall be in effect. No law, statute, rule, regulation or Order
shall have been enacted, entered, promulgated or enforced by any Government
Entity which prohibits or materially restricts the consummation of the
transactions contemplated hereby.
8.4 Certificates. Seller will furnish Buyer with such certificates of
its officers and others to evidence compliance with the conditions set forth in
this Article as may be reasonably requested by Buyer.
8.5 Resignations. At the request of the Buyer, Seller shall cause any
officer and director of the Company to tender his or her resignation to Buyer
effective as of the Closing.
ARTICLE IX
ACTIONS BY SELLER
AND BUYER AFTER THE CLOSING
9.1 Books and Records. Each of Seller and Buyer agrees that it will
cooperate with and make available to the other, during normal business hours,
all Books and Records, information and employees (without substantial disruption
of employment) retained and remaining in existence after the Closing Date which
are necessary or useful in connection with any Tax audit, investigation or
dispute, any litigation or investigation of any other matter requiring any such
Books and Records, information or employees for any reasonable business purpose.
Each party agrees to use its commercially reasonable efforts to retain in a
reasonably secure and accessible location all Books and Records until the
expiration of the later of (i) the period under which indemnification is
available pursuant to Article 9.3 and (ii) three years from the Closing Date.
The party requesting any such Books and Records, information or employees shall
bear all of the out-of-pocket costs and expenses (including without limitation,
attorneys' fees) reasonably incurred in connection with providing such Books and
Records, information or employees. Seller may require certain financial
information for periods prior to the Closing Date for the purpose of filing
Returns and other governmental reports, and Buyer agrees to furnish such
information to Seller at Seller's request and Seller shall reimburse Buyer for
all reasonable out-of-pocket expenses relating thereto.
9.2 Survival of Representations, etc. The representations and
warranties set forth in this Agreement or in any instrument delivered pursuant
to this Agreement shall survive the Closing for a period of 18 months; provided,
however, that any representation, warranty, covenant or agreement relating to
Taxes or Environmental Laws shall survive until the expiration
23
of the applicable statute of limitations. The other covenants and agreements set
forth in this Agreement or in any instrument delivered pursuant to this
Agreement which by their terms apply in whole or in part after the Closing or a
termination of this Agreement shall survive after the Closing Date or a
termination, as applicable, for the period specifically provided by their
respective terms, or, if no such period is specified, until the expiration of
the applicable statute of limitations.
9.3 Indemnification.
(a) By Seller. Seller shall indemnify, save and hold harmless
Buyer and its Affiliates (including, from and after the Closing, the
Company and the Insurance Subsidiaries), and their respective
Representatives, from and against any and all costs, losses,
liabilities, damages, lawsuits, deficiencies, claims and expenses,
including without limitation, interest, penalties, reasonable
attorneys' fees and expenses (including reasonable fees and expenses of
in-house legal counsel) and all amounts paid in investigation, defense
or settlement of any of the foregoing (herein, the "Damages"), incurred
in connection with or arising out of or resulting from (i) any breach
of any covenant or agreement, or the inaccuracy of any representation
or warranty, made by Seller in or pursuant to this Agreement (but
solely for purposes of this Article 9.3, such representations and
warranties shall not be qualified by any materiality exceptions), (ii)
Taxes of the Business or any other corporation with which the Business
may have joined in the filing of a consolidated or combined Return for
all taxable years (or other taxable periods) during which the Business
shall have been or shall be in existence; provided, however, that such
indemnity shall exclude the liability for Taxes relating to any period
beginning on or after the Closing Date; or (iii) third party claims
arising from the manufacture of the Company's products prior to the
Closing Date.
(b) By Buyer. Buyer shall indemnify, save and hold harmless
Seller and its Affiliates, and their respective Representatives from
and against any and all Damages incurred in connection with or arising
out of or resulting from (i) any breach of any covenant or warranty, or
the inaccuracy of any representation, made by Buyer in or pursuant to
this Agreement, (ii) Taxes of the Business excluded from the indemnity
of Seller in Article 9.3(a).
(c) Claims. If a claim for Damages is to be made by a party
entitled to indemnification hereunder against the indemnifying party,
the party entitled to such indemnification shall give written notice to
the indemnifying party as soon as practical after the party entitled to
indemnification becomes aware of any fact, condition or event which may
give rise to Damages for which indemnification may be sought under this
Article 9.3. Neither Buyer nor Seller will have any indemnification
obligation under this Agreement unless notice is given of any claim for
indemnification prior to the end of the period during which
representations, warranties, covenants and agreements survive as
provided in Article 9.2. If any claim, lawsuit, proceeding or action is
filed against any party entitled to the benefit of indemnity hereunder,
written notice thereof shall be given to the indemnifying party as
promptly as practicable (and in any event
24
within 15 days after the service of the citation or summons); provided,
that the failure of any indemnified party to give the notice required
by the preceding clause shall not affect rights to indemnification
hereunder except to the extent that the indemnifying party demonstrates
actual damage caused by such failure. After such notice, if the
indemnifying party shall acknowledge in writing to the indemnified
party that the indemnifying party shall be obligated under the terms of
its indemnity hereunder in connection with such lawsuit or action,
then, except as provided below, the indemnifying party shall be
entitled, if it so elects, to take control of the defense and
investigation of such lawsuit or action and to employ and engage
attorneys of its own choice to handle and defend the same, at the
indemnifying party's cost, risk and expense provided that the
indemnifying party and its counsel shall proceed with diligence and in
good faith with respect thereto. The indemnified party shall cooperate
(at the indemnifying party's expense) in all reasonable respects with
the indemnifying party and such attorneys in the investigation, trial
and defense of such lawsuit or action and any appeal arising therefrom;
provided, however, that the indemnified party may, at its own cost,
participate in the investigation, trial and defense of such lawsuit or
action and any appeal arising therefrom and provided, further, that if
the indemnifying party shall not have employed counsel to direct the
defense of any such action or if any such indemnified party or parties
shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to those available to
the indemnifying party (in which case the indemnifying party shall not
have the right to direct the defense of such action on behalf of the
indemnified party or parties), legal and other expenses thereafter
reasonably incurred by the indemnified party shall be borne by the
indemnifying party. An indemnified party shall not be entitled to any
payment under an indemnity hereunder with respect to any action or
portion of an action until such action or portion shall have been
settled or determined in accordance with Article 10. No indemnifying
party shall be required to pay indemnification hereunder as a result of
a settlement or compromise unless the indemnified party shall have
given its prior written consent to such settlement or compromise, which
consent shall not be unreasonably withheld.
Notwithstanding anything in this Agreement to the contrary,
Seller shall have no obligation to indemnify Buyer pursuant to this
Article 9.3, unless and until the amount of all Damages (other than
Damages relating to the willful or intentional breach of any
representation, warranty, covenant or agreement) for which Buyer is
entitled to receive indemnification from the Seller pursuant to this
Article 9.3 shall exceed $500,000 and, in that event, Buyer shall have
the right to recover from Seller all Damages in excess of $500,000 but
not to exceed $20,000,000 in the aggregate; provided, however, Seller
shall be obligated to indemnify Buyer for all Damages incurred in
connection with or arising out of or resulting from the litigation
described in the Disclosure Schedule.
(d ) No Consequential Damages. Notwithstanding any provision
of this Agreement to the contrary, NEITHER BUYER NOR SELLER SHALL BE
LIABLE TO ANY INDEMNIFIED PARTY FOR ANY CONSEQUENTIAL DAMAGES SUFFERED
BY SAID PERSON, EVEN IF BUYER OR SELLER
25
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES EXCEPT TO THE
EXTENT SUCH CONSEQUENTIAL DAMAGES ARE ACTUALLY RECOVERED BY A THIRD
PARTY AGAINST BUYER OR SELLER.
9.4 Further Assurances. Both before and after the Closing Date, each
party will cooperate in good faith with the other party and will take all
appropriate action and execute any documents, instruments or conveyances of any
kind which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder. Furthermore, without limiting the
generality of the foregoing, each party will cooperate (and the Buyer shall
cause the Company to cooperate) in good faith with the other party with respect
any notices required to be made to any Government Entity or other Person
regarding the transfer of the capital stock of Radiant Power Corp. from the
Company to Seller and with respect to providing Seller access to all data,
information and reports (including, without limitation, any employees of Buyer
or the Company in possession of such data, information and reports) relating to
the Radiant Power Corp. Furthermore, without limiting the generality of the
foregoing, from and after the Closing, Buyer shall, and shall cause the Company,
to transfer or deliver to Seller, promptly after the receipt thereof (but in no
event more than five business days after the receipt thereof), any cash or other
property which Seller or the Company receives in respect of any accounts
receivable of the Company that were distributed or paid to Seller as a dividend
on or prior to the Closing as permitted by Article 6.3 or any cash or other
property which Buyer or the Company receives after the Closing Date in respect
of any claims, contracts, licenses, leases, commitments, sales orders, purchase
orders, receivables of any character or any other items of Radiant Power Corp.
9.5 Name; Proprietary Information. Seller acknowledges and agrees that
it shall not retain after the Closing any right or interest in or to or license
to use the name "Trilectron" (the "Company Name"); any logo, symbol, service
mark, trademark, domain name, tradestyle, slogan or similar intellectual
property used in the Business, other than the name "HEICO" (the "Company
Marks"); or any proprietary information, marketing materials, software,
documents, signage, or Customer lists of the Business (the "Company Proprietary
Property"). "Company Proprietary Property" shall not include information with
respect to Customers who are also customers of Seller or its Affiliates (other
than the Company) or marketing materials of the Company relating to non-Company
products of Seller or its Affiliates. From and after the Closing Date, (a)
neither Seller nor its Affiliates shall use the Company Name, Company Marks or
Company Proprietary Property in any manner in connection with the operation of
their respective businesses and (b) neither the Company nor the Buyer shall use
the name "HEICO" in connection with the operation of their respective
businesses.
9.6 No Solicitation.
(a) Seller covenants and agrees that, without Buyer's prior
written consent, for a period of five years after the Closing Date,
Seller will not directly or indirectly solicit for employment any
Person who was employed by the Company as of the Closing Date, except
for employees involved with the operations of Radiant Power Corp.
26
(b) Buyer covenants and agrees that, without Seller's prior
written consent, for a period of five years after the Closing Date,
Buyer will not directly or indirectly solicit for employment, the
employees of Seller or any of its Affiliates, any employees involved
with the operations of Radiant Power Corp.
(c) The purpose of sub-articles (a) and (b) above, the term
"Solicitation" shall not include the hiring of any employee who (i)
initially contacts Buyer or Seller, as the case may be, in response to
an advertisement placed in a publication of general circulation; or
(ii) has terminated his or her employment relationship prior to the
commencement of any employment discussions with Buyer or Seller, as the
case may be.
ARTICLE X
DISPUTE RESOLUTION PROCEDURES
10.1 Dispute Resolution. Any dispute arising out of or relating to this
Agreement, including, but not limited to, claims for indemnification pursuant to
Article IX shall be resolved in accordance with the procedures specified in this
Article X, which shall be sole and exclusive procedures for the resolution of
any such disputes. Notwithstanding the foregoing, any dispute regarding the
Closing Date Balance Sheet shall be resolved by the resort to the provisions of
Article 2.4.
10.2 Negotiation Between Executives. The parties shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiation between the appointed representative of the Seller and
executives of Buyer who, if possible, are at a higher level of management than
the persons with direct responsibility for administration of this Agreement. Any
party may give the other party written notice of any dispute not resolved in the
normal course of business. Within 15 days after delivery of the notice, the
receiving party shall submit to the other a written response. The notice and
response shall include, (a) a statement of each party's position, and (b) the
name and title of the executive who will accompany the representative. Within 30
days after delivery of the disputing party's notice, the representatives of
Seller and Buyer shall meet at a mutually acceptable time and place, and
thereafter as often as they reasonably deem necessary to attempt to resolve the
dispute. All reasonable requests for information made by one party to the other
will be honored.
10.2.1 If the matter has not been resolved by these persons
within 60 days of the disputing party's notice, or if the parties fail
to meet within 30 days, either party may initiate mediation as provided
hereinafter.
10.2.2 All negotiations pursuant to this clause are
confidential and shall be treated as compromise and settlement
negotiations for purposes of any applicable federal or state rules of
evidence.
27
10.3 Mediation. If the dispute has not been resolved by negotiation as
provided herein, the parties shall endeavor to settle the dispute by mediation
under the then current Center for Public Resources ("CPR") Model procedure for
Mediation of Business Disputes. The neutral third party will be selected from
the CPR Panels of Neutrals, with the assistance of CPR, unless the parties agree
otherwise.
10.4 Litigation. If the dispute has not been resolved by non-binding
means as provided herein within 75 days of the initiation of such procedure,
either party may initiate litigation (upon 15 days written notice to the other
party); provided, however, that if one party has requested the other to
participate in a non-binding procedure and the other has failed to participate,
the requesting party may initiate litigation before expiration of the above
period.
10.5 Provisional Remedies. The procedures specified in this Article
shall be the sole and exclusive procedures for the resolution of disputes
between the parties arising out of or relating to this Agreement; provided,
however, that either party, without prejudice to the above procedures, may file
a complaint (for statute of limitations or venue reasons) or to seek preliminary
injunction or other provisional judicial relief, if in its sole judgment such
action is necessary or desirable. Despite such action the parties will continue
to participate in good faith in the procedures specified in this Article.
10.6 Tolling Statute of Limitations. All applicable statutes of
limitation and defenses based upon the passage of time shall be tolled while the
procedures specified in this Article are pending. The parties will take such
action, if any required to effectuate such tolling.
10.7 Performance to Continue. Each party is required to continue to
perform its obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement.
ARTICLE XI
MISCELLANEOUS
11.1 Termination. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of Buyer and Seller; or
(b) by either Buyer or Seller:
(i) if the Closing shall not have occurred within 90
days of the date of this Agreement; provided, however, that
the right to terminate the Agreement under this subsection
shall not be available to any party whose failure to fulfill
any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing to occur on or before
the date;
(ii) if (A) there shall be a final nonappealable
Order of a Government Entity restraining or prohibiting the
consummation of the transactions contemplated by this
Agreement, or (B) there shall be a law, statute, rule,
regulation or Order decree enacted, entered, promulgated or
28
enforced by any Government Entity which prohibits or
materially restricts the consummation of the transactions
contemplated hereby; or
(c) by Seller, if Buyer shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach
or failure to perform (i) would give rise to the failure of a condition
set forth in Article 7.1, and (ii) cannot be or has not been cured
within 45 days after the giving of written notice to Buyer of such
breach (a "Buyer Material Breach") (provided that Seller is not then in
Seller Material Breach (as defined in Article 11.1(d)) of any
representation, warranty, covenant or other agreement contained in this
Agreement); or
(d) by Buyer, if Seller shall have breached or failed to
perform in any material respect any of its representations, warranties,
covenants or other agreements contained in this Agreement, which breach
or failure to perform (A) would give rise to the failure of a condition
set forth in Article 8.1, and (B) cannot be or has not been cured
within 45 days after the giving of written notice to Seller of such
breach (a "Seller Material Breach") (provided that Buyer is not then in
Buyer Material Breach of any representation, warranty, covenant or
other agreement contained in this Agreement); or
(e) by Seller, if the board of directors of Illinois Tool
Works Inc. shall have failed to approve and consent to the terms and
conditions of this Agreement by August 11, 2000; or
(f) by Buyer, if the board of directors of HEICO Corp. shall
have failed to approve and consent to the terms and conditions of this
Agreement by August 11, 2000.
In the event of termination of this Agreement by Seller or Buyer pursuant to
this Article, written notice thereof shall promptly be given to the other party
hereto, and upon such notice this Agreement shall terminate. Except for Articles
11.4, 11.7 and 11.11 or as provided elsewhere herein, in the event of the
termination of this Agreement pursuant to this Article, this Agreement shall
forthwith become void and of no further force and effect, there shall be no
liability on the part of Seller or Buyer or any of their respective
Representatives to the other, all rights and obligations of any party hereto
shall cease and the parties shall be released from any and all obligations.
Notwithstanding the foregoing, nothing contained in this Agreement shall relieve
any party from liability for damages resulting from the breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
11.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior written
consent of the other party. Subject to the foregoing, this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, and no other Person shall have any right, benefit or
obligation hereunder. Notwithstanding the foregoing, Buyer may assign all of its
rights, but not its obligations, under this Agreement to any wholly owned
subsidiary of Buyer without the prior written consent of the Seller.
29
11.3 Notices. Unless otherwise provided herein, any notice, request,
instruction or other document to be given hereunder by either party to the other
shall be in writing and delivered personally, by facsimile transmission or
mailed by certified mail, postage prepaid, return receipt requested, as follows:
30
If to Buyer, addressed to:
Hobart Brothers Company
400 Trade Square East
Troy, Ohio 45373
Attention: Executive Vice President and General Manager
Facsimile: (937) 332-4000
with a copy to:
Illinois Tool Works Inc.
3600 West Lake Avenue
Glenview, IL 60025-5811
Attention: Corporate Secretary
Facsimile: (847) 657-4392
If to Seller, addressed to:
HEICO Aviation Products Corp.
825 Brickell Bay Drive, Suite 1644
Miami, FL 33131
Attention: Victor H. Mendelson, President and Chief Executive Officer
Facsimile: (305) 859-8113
with a copy to:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Phillip J. Kushner
Facsimile: (305) 579-0717
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others. Notice shall be effective on the
date received by the party (or the date of refusal of delivery).
11.4 Governing Law; Venue. The provisions of this Agreement and the
documents delivered pursuant hereto shall be governed by and construed in
accordance with the laws of the State of Florida (excluding any conflict of law
rule or principle that would refer to the laws of another jurisdiction). Each
party hereto irrevocably submits to the jurisdiction of the Circuit Court of the
State of Florida, Miami-Dade County, in any action or proceeding arising out of
or relating to this Agreement or the transactions contemplated hereby, and each
party hereby irrevocably agrees that all claims in respect of any such action or
proceeding must be brought and/or defended in such court; provided, however,
that matters which are under the [^] jurisdiction of the Federal courts shall be
brought in the Federal District Court for the Southern District of Florida. Each
party hereto consents to service of process by any means authorized by the
applicable law of the forum in any action brought under or arising out of this
Agreement or
31
the transactions contemplated hereby, and each party irrevocably waives, to the
fullest extent each may effectively do so, the defense of an inconvenient forum
to the maintenance of such action or proceeding in any such court. EACH PARTY
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT IT
MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY JURY IN ANY SUIT, ACTION OR
PROCEEDING ARISING HEREUNDER.
11.5 Entire Agreement; Amendments and Waivers. This Agreement, together
with the Disclosure Schedule and that certain confidentiality agreement entered
into between Seller and Buyer, constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No supplement, modification or waiver of this Agreement
shall be binding unless executed in writing by the party to be bound thereby. No
waiver of any of the provisions of this Agreement shall be deemed or shall
constitute a waiver of any other provision hereof (whether or not similar), nor
shall such waiver constitute a continuing waiver unless otherwise expressly
provided.
11.6 Multiple Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.7 Expenses. Except as set forth below or as otherwise specified
herein, each party hereto shall pay its own legal, accounting, out-of-pocket and
other expenses incident to this Agreement and to any action taken by such party
in preparation for carrying this Agreement into effect. All costs of applying
for new Permits and obtaining the transfer of existing Permits which may be
lawfully transferred shall be borne by Buyer. The filing fee required to be paid
in connection with the premerger notification and report forms to be made under
Hart-Scott-Rodino shall be borne by Buyer.
11.8 Invalidity. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect. Upon such determination that any term or
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible to the fullest extent
permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
11.9 Titles. The titles, captions or headings of the Articles and
Sections herein are inserted for convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
11.10 Publicity. The parties hereto shall issue a mutually acceptable
press release as soon as practicable after the execution and delivery of this
Agreement. Prior to the Closing, no party shall issue any other press release,
without the prior approval of the other party, provided that the Buyer and
Seller, after consultation with one another, may make such disclosures
concerning the transactions provided for herein as Buyer or Seller believes are
required by the
32
Securities Exchange Act of 1934, as amended, or any applicable stock exchange
rule or regulation.
11.11 Confidential Information. In connection with the negotiation of
this Agreement and the preparation for the consummation of the transactions
contemplated hereby, each party acknowledges that it has had and will have
access to confidential information relating to the other parties. Each party
shall treat such information as confidential, shall preserve the confidentiality
thereof, shall not duplicate or use such information other than for the purpose
of consummating the transactions contemplated by this Agreement, and shall not
furnish such information to any Person (other than to Representatives who have a
need to know such information in connection with the transactions contemplated
hereby), except to the extent that such disclosure is required by judicial
process or governmental or regulatory authorities, in which case each party
shall give prompt notice to the other party so that such party may seek to
obtain a protective order. In the event of the termination of this Agreement for
any reason whatsoever, each party shall return or destroy all documents, work
papers and other material (including all copies thereof) obtained in connection
with the transactions contemplated hereby and will use all reasonable efforts,
including instructing its employees and others who have had access to such
information, to keep such information confidential and not to use any such
information. Confidential information shall not include information which (i) is
or becomes publicly available without a breach of this Agreement or this
Article; (ii) is obtained from a third party not known to be under an obligation
of confidentiality to Buyer or Seller, as the case may be, and (iii) is
independently developed without resort to the other party's information. The
representations and agreements contained in this Article shall survive the
termination of this Agreement or the Closing Date for a period of three years
after such termination or the Closing Date, as applicable.
11.12 Interpretation.
(a) When a reference is made in this Agreement to an article,
section, paragraph, clause, schedule or exhibit, such reference shall
be deemed to be to this Agreement unless otherwise indicated. Whenever
the words "include," "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation."
(b) Whenever required by the context, and is used in this
Agreement, the singular number shall include the plural and pronouns
and any variations thereof shall be deemed to refer to the masculine,
feminine, neuter, singular or plural, as the identification the person
may require. References to monetary amounts, specific named statutes
and generally accepted accounting principles are intended to be and
shall be construed as references to United States dollars, statutes of
the United States of the stated name and United States generally
accepted accounting principles, respectively, unless the context
otherwise requires.
(c) The provisions of this Agreement shall be construed
according to their fair meaning and neither for nor against any party
hereto irrespective of which party caused such provisions to be
drafted. Each of the parties
33
acknowledge that it has been represented by an attorney in connection
with the preparation and execution of this Agreement.
11.13 Third Party Beneficiaries. No Person not a party to this
Agreement shall be deemed to be a third-party beneficiary hereunder or entitled
to any rights hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their respective behalf, by their respective officers thereunto
duly authorized, all as of the day and year first above written.
HOBART BROTHERS COMPANY HEICO AVIATION PRODUCTS CORP.
By: By:
----------------------------------- ------------------------------------
Dennis J. Martin Victor H. Mendelson,
President President and Chief Executive Officer
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged and as a material inducement for HEICO Aviation Products
Corp. to enter into the foregoing stock purchase agreement, the undersigned, the
sole stockholder of Hobart Brothers Company, represents and warrants to HEICO
Aviation Products Corp., that Hobart Brothers Company has sufficient financial
resources to perform its obligations under the foregoing stock purchase
agreement and knows of no circumstances or conditions that will prevent the
availability of such financial resources as of the closing of the transactions
contemplated by the foregoing stock purchase agreement.
ILLINOIS TOOL WORKS INC.
By:
------------------------------------
David J. Martin
Executive Vice President
34
EXHIBIT 2.2
FIRST AMENDMENT TO
STOCK PURCHASE AGREEMENT
This First Amendment to Stock Purchase Agreement (the "First
Amendment") is effective as of the 14th day of September, 2000 between HEICO
Aviation Products Corp., a Florida corporation ("Seller"), and Hobart Brothers
Company, an Ohio corporation and a wholly owned subsidiary of Illinois Tool
Works Inc. ("Buyer").
WHEREAS, Buyer and Seller have entered into a Stock Purchase Agreement
dated as of August 1, 2000 (the "Purchase Agreement"), pursuant to which Seller
has agreed to sell and Buyer has agreed to buy all of the issued and outstanding
shares of common stock, no par value (the "Stock"), of Trilectron Industries,
Inc., a New York corporation (the "Company") (all terms not otherwise defined
herein shall have the meanings ascribed thereto in the Purchase Agreement); and
WHEREAS, Buyer and Seller desire to amend certain provisions of the
Purchase Agreement as more fully set forth herein;
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
1. Amendment to the Purchase Agreement. The Purchase Agreement is
hereby amended as follows:
1.1 Section 2.2 of the Purchase Agreement is hereby amended by deleting
the same in its entirety and inserting in lieu thereof the following:
"2.2 Purchase Price. In consideration of the sale, transfer,
assignment, conveyance and delivery of the Stock, Buyer shall (a) pay
to Seller $52,500,000 by wire transfer of immediately available funds
from Buyer to Seller or Seller's designee on the Closing Date, and (b)
deliver an unsecured promissory note for an additional $12,000,000 the
terms of which are reasonably agreeable to the Buyer (collectively, (a)
and (b), shall be the "Purchase Price").
1.2 Section 2.5 of the Purchase Agreement is hereby amended by deleting
the same in its entirety and inserting in lieu thereof the following:
"2.5 Post Closing Purchase Price Adjustment. Within five
business days after the Closing Net Worth is determined in accordance with
Articles 2.3 and 2.4, if applicable, then the Purchase Price shall be adjusted
as follows: if the Closing Net Worth is greater than $34,127,000, then Buyer
shall be obligated to deliver to Seller an additional amount by wire transfer
(to an account specified by Seller in writing) in immediately
available funds, an amount equal to the amount by which the Closing Net Worth
exceeds $34,127,000. If the amount of Closing Net Worth is less than
$34,127,000, then Seller shall refund to Buyer, by wire transfer (to the account
specified by Buyer in writing) in immediately available funds, an amount equal
to $34,127,000 less the amount of the Closing Net Worth."
2. References. All references in the Purchase Agreement to "this
Agreement" shall hereafter refer to the Purchase Agreement as amended hereby.
3. Counterparts. This First Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4. Full Force and Effect. The Purchase Agreement, as amended by this
First Amendment, is now and remains hereafter in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment
to be executed on their behalf, by their respective officers, thereunto duly
authorized, as of the date first above written.
HOBART BROTHERS COMPANY HEICO AVIATION PRODUCTS CORP.
By: By:
----------------------------------- ------------------------------------
James Wooten Victor H. Mendelson,
Vice President Chief Executive Officer
For good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged and as a material inducement for HEICO Aviation Products
Corp. to enter into the foregoing stock purchase agreement, the undersigned, the
sole stockholder of Hobart Brothers Company, represents and warrants to HEICO
Aviation Products Corp., that Hobart Brothers Company has sufficient financial
resources to perform its obligations under the foregoing stock purchase
agreement and knows of no circumstances or conditions that will prevent the
availability of such financial resources as of the closing of the transactions
contemplated by the foregoing stock purchase agreement.
ILLINOIS TOOL WORKS INC.
By:
------------------------------------
Name:
Title:
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
AUGUST 14, 2000
(954) 987-4000 or (305) 374-1745
Thomas S. Irwin ext. 7560
Victor H. Mendelson ext. 7590
HEICO CORPORATION AGREES TO SELL TRILECTRON SUBSIDIARY
Miami, FL and Palmetto, FL-HEICO Corporation (NYSE: HEI and HEI.A) today
announced that it has entered into a definitive agreement to sell its Trilectron
Industries, Inc. subsidiary to a subsidiary of Illinois Tool Works Inc., a $9.3
billion (sales) diversified manufacturing company headquartered in Glenview, IL,
for $52,500,000 in cash payable at closing plus assumption of approximately $4.3
million of long-term debt. The transaction, which is subject to approval under
the Hart-Scott-Rodino Antitrust Improvements Act and customary closing
conditions, is expected to be completed within 90 days.
HEICO, which acquired Palmetto, FL-based Trilectron in 1996, stated that it
anticipates that it will report a net gain of $9 to $11 million after taxes in
the fourth quarter of fiscal 2000 from the transaction. Laurans A. Mendelson,
HEICO's Chairman, President and Chief Executive Officer noted, "HEICO's
management has again demonstrated its ability to apply its highly successful
management techniques to significantly grow an acquired business and then
redeploy the investment, realizing a substantial benefit to HEICO shareholders."
Mr. Mendelson also stated, "We believe Trilectron's sale will sharpen HEICO's
aircraft aftermarket focus and will allow us to emphasize our traditional higher
profit margin activities and to allocate our financial resources to these
areas."
Following the transaction, HEICO stated it plans to change the name of its
Electronics and Ground Support Group to the Electronic Technologies Group and
that it expects to relocate that group's Radiant Power Corp. subsidiary to a new
facility in nearby Sarasota, FL. Radiant, which was acquired as a product line
in 1999, was located at Trilectron's facilities in Palmetto, FL. Radiant expects
that it will continue to manufacture, service and sell its current entire
product line and that it will not experience significant employee turnover as a
result of the move.
-more-
Finally, Mr. Mendelson stated, "While we continue to foresee weakness in the
next several months in the aviation aftermarket industry, we remain confident
that our intermediate and long term growth prospects are strong in that market
segment, and we believe that the remaining businesses within our Electronic
Technologies Group present strong growth potential. In addition, HEICO will
continue to pursue strategic acquisitions and, with the combination of the
proceeds from Trilectron's sale and the Company's increased capital base and
borrowing capabilities, we are confident that we have the financial ability to
continue making these acquisitions."
Investment banking firm ING Barings acted as HEICO's financial advisor, and the
law firm of Greenberg Traurig acted as HEICO's legal advisor in connection with
the transaction.
HEICO Corporation is engaged in certain niche segments of the aerospace,
aviation and defense industries through its Hollywood, FL-based HEICO Aerospace
Holdings Corp. subsidiary and its Miami, FL-based HEICO Aviation Products Corp.
subsidiary. HEICO's customers include a majority of the world's airlines and
airmotives as well as numerous defense contractors and military agencies
worldwide, including the United States Air Force, Navy and NASA. HEICO has
developed and successfully employs programs which enhance its manufacturing
operations and has followed highly focused marketing and product development
programs to greatly expand product offerings and marketing reach following
acquisitions. For more information concerning HEICO, please see our World Wide
Web site at: http://www.heico.com/
Certain matters discussed in this press release include forward-looking
statements which involve risks and uncertainties. HEICO's actual experience may
differ materially from that discussed as a result of factors, including, but not
limited to, lower commercial air travel, product specification costs and
requirements, governmental and regulatory, demands, competition on military
programs, product pricing levels, HEICO's ability to make acquisitions and
achieve operating synergies from such acquisitions, interest rates and economic
conditions within and outside of the aerospace, aviation and defense industries.
Parties receiving this material are encouraged to review all of HEICO's filings
with the Securities and Exchange Commission, including, but not limited to
filings on Forms 10-K, Forms 10-Q and Forms 8-K.
EXHIBIT 99.2
FOR IMMEDIATE RELEASE
September 18, 2000
Thomas S. Irwin (954) 987-4000 ext. 7560
Victor H. Mendelson (305) 374-1745 ext. 7590
HEICO CORPORATION COMPLETES SALE OF TRILECTRON SUBSIDIARY
Miami, FL, and Palmetto, FL --HEICO Corporation (NYSE: HEI and HEI.A) today
announced that it has completed the previously announced sale of its Palmetto,
FL-based Trilectron Industries, Inc. subsidiary to Hobart Brothers Company, a
subsidiary of Illinois Tool Works Inc.
In connection with the transaction, HEICO has renamed its Electronics & Ground
Support Group to be the Electronic Technologies Group. In addition, the
Electronic Technologies Group reported that it is moving forward with its
previously announced plans to relocate its Radiant Power Corp. subsidiary out of
Trilectron's principal facility in Palmetto, Florida.
HEICO Corporation is engaged in certain niche segments of the aerospace,
aviation and defense industries through its Hollywood, FL-based HEICO Aerospace
Holdings Corp. subsidiary and its Miami, FL-based HEICO Aviation Products Corp.
subsidiary. HEICO's customers include a majority of the world's airlines and
airmotives as well as numerous defense contractors and military agencies
worldwide, including the United States Air Force and Navy. HEICO has developed
and successfully employs programs which emphasize principles to enhance its
manufacturing operations and has followed highly focused marketing and product
development programs to greatly expand product offerings and marketing reach
following acquisitions. For more information concerning HEICO, please see our
World Wide Web site at: http://www.heico.com/