SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
Commission File Number 1-134
CURTISS-WRIGHT CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 13-0612970
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1200 Wall Street West
Lyndhurst, New Jersey 07071
(Address of principal executive offices) (Zip Code)
(201) 896-8400
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, par value $1.00 per share: 5,078,086 shares (as of April 30,
1996)
Page 1 of 45 <PAGE>
<PAGE> 2
CURTISS-WRIGHT CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Earnings 4
Consolidated Statements of Cash Flows 5
Consolidated Statements of Stockholders' Equity 6
Notes to Consolidated Financial Statements 7 - 9
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 10 - 13
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 14
Item 6 - Exhibits and Reports on Form 8-K 15
<PAGE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In Thousands)
March 31, December 31,
1996 1995
Assets: --------- -----------
Cash and cash equivalents $ 5,898 $ 8,865
Short-term investments 70,323 69,898
Receivables, net 36,664 36,277
Deferred tax asset 6,957 7,149
Inventories 34,188 29,111
Other current assets 2,671 2,325
--------- -----------
Total current assets 156,701 153,625
--------- -----------
Property, plant and equipment, at cost 198,691 198,051
Less, accumulated depreciation 142,792 141,782
--------- -----------
Property, plant and equipment, net 55,899 56,269
Prepaid pension costs 31,885 31,128
Other assets 4,984 5,179
--------- -----------
Total assets $249,469 $246,201
========= ===========
Liabilities:
Accounts payable and accrued expenses $ 17,400 $ 17,244
Dividends payable 1,269
Income taxes payable 3,388 2,000
Other current liabilities 12,987 13,810
--------- -----------
Total current liabilities 35,044 33,054
--------- -----------
Long-term debt 10,347 10,347
Deferred income taxes 7,448 7,447
Other liabilities 22,745 23,174
--------- -----------
Total liabilities 75,584 74,022
Stockholders' equity:
Common stock, $1 par value 10,000 10,000
Capital surplus 57,138 57,141
Retained earnings 290,755 288,710
Unearned portion of restricted stock (758) (780)
Equity adjustments from foreign
currency translation (1,699) (1,330)
--------- -----------
355,436 353,741
Less, cost of treasury stock 181,551 181,562
--------- -----------
Total stockholders' equity 173,885 172,179
Total liabilities and stockholders'
equity $249,469 $246,201
========= ===========
[FN] See notes to consolidated financial statements.<PAGE>
<PAGE> 4
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS of EARNINGS
(UNAUDITED)
(In thousands except per share data)
Three Months Ended
March 31,
----------------------
1996 1995
Revenues: -------- --------
Sales $36,316 $37,543
Rentals and gains (losses) on
sales of real estate and equipment, net 1,800 2,092
Interest, dividends & gains (losses) on
short-term investments, net 428 1,060
Other income, net 59 118
-------- --------
Total revenues 38,603 40,813
-------- --------
Costs and expenses:
Product and engineering 24,242 25,981
Selling and service 1,618 1,589
Administrative and general 7,603 7,037
Interest 97 128
-------- --------
Total costs and expenses 33,560 34,735
-------- --------
Earnings before income taxes 5,043 6,078
Provision for income taxes 1,728 2,066
-------- --------
Net earnings $ 3,315 $ 4,012
======== ========
Weighted avg number of common shares outstanding 5,078 5,061
Net earnings per common share $ .65 $ .79
======== ========
Dividends per common share $ .25 $ .25
======== ========
[FN] See notes to consolidated financial statements.<PAGE>
<PAGE> 5
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS of CASH FLOWS
(UNAUDITED)
(In thousands)
Three Months Ended
March 31
-------------------
1996 1995
Cash flows from operating activities: -------- --------
Net earnings $ 3,315 $ 4,012
Adj to reconcile net earnings to net cash provided -------- --------
by operating activities:
Depreciation and amortization 2,206 2,471
Net gains on short-term investments (227) (216)
Decrease in deferred taxes 192 695
Changes in operating assets and liabilities:
Proceeds from sales of trading securities 77,392 37,599
Purchases of trading securities (77,797) (36,848)
Increase in receivables (764) (1,275)
Increase in inventory (3,237) (2,622)
Decrease in progress payments (1,463) (718)
Inc in accounts payable and accrued expenses 156 156
Increase (decrease) in income taxes payable 1,388 (4)
Increase in other assets (907) (591)
Decrease in other liabilities (1,047) (957)
Other, net 17 299
-------- --------
Total adjustments (4,091) (2,011)
-------- --------
Net cash provided (used) by operating activities (776) 2,001
-------- --------
Cash flows from investing activities:
Proceeds from sales of real estate and equipment 75 379
Additions to property, plant and equipment (2,266) (1,489)
-------- --------
Net cash used by investing activities (2,191) (1,110)
-------- --------
Cash flows from financing activities:
Principal payments on long-term debt - (38)
-------- --------
Net cash used by financing activities - (38)
-------- --------
Net inc (dec) in cash and cash equivalents (2,967) 853
Cash and cash equivalents at beginning of period 8,865 4,245
-------- --------
Cash and cash equivalents at end of period $ 5,898 $ 5,098
======== ========
[FN] See notes to consolidated financial statements.<PAGE>
<PAGE> 6
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
CONSOLIDATED STATEMENTS of STOCKHOLDERS' EQUITY
(UNAUDITED)
(Dollars in thousands)
<TABLE>
<CAPTION>
Equity
Unearned Adjustments
Common Stock Portion of from Foreign
Shares Capital Retained Restricted Currency Treasury Stock
Issued Amount Surplus Earnings Stock Awards Translation Shares Amount
---------- ------- ------- -------- ------------ ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1994 10,000,000 $10,000 $57,139 $275,600 $(1,622) 4,939,257 $182,348
Net earnings 18,169
Common dividends (5,059)
Exchange of com-
mon shares for
the exercise of
stock options 1,513 71
Stock options
exercised (31) (2,346) (110)
Stock awards
issued 33 $(780) (16,247) (747)
Translation ad-
justments, net 292
---------- ------ ------ ------- ------- ------- ---------- --------
December 31, 1995 10,000,000 10,000 57,141 288,710 (780) (1,330) 4,922,177 181,562
Net earnings 3,315
Common dividends (1,270)
Amortization of
earned portion
of restricted
stock 22
Stock options
exercised, net (3) (173) (11)
Translation ad-
justment, net (369)
---------- ------- ------- -------- ------- -------- --------- --------
March 31, 1996 10,000,000 $10,000 $57,138 $290,755 $(758) $(1,699) 4,922,004 $181,551
========== ====== ====== ======= ======= ======== ========= ========
</TABLE>
[FN] See notes to consolidated financial statements.<PAGE>
<PAGE> 7
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
NOTES to CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
Curtiss-Wright Corporation is a diversified multi-national manufacturing
concern which produces and markets precision components and systems and
provides highly engineered services to Aerospace & Marine and Industrial
markets. Its principal operations include three domestic manufacturing
facilities and thirty-two Metal Improvement service facilities located in North
America and Europe, and an aircraft component overhaul facility in Denmark.
The information furnished in this report has been prepared in conformity
with generally accepted accounting principles and as such reflects all
adjustments, consisting primarily of normal recurring accruals, which are, in
the opinion of management, necessary for a fair statement of the results for
the interim periods presented. The unaudited consolidated financial statements
should be read in conjunction with the consolidated financial statements and
notes thereto included in the Corporation's 1995 Annual Report on Form 10-K.
The results of operations for these interim periods are not necessarily
indicative of the operating results for a full year.
2. RECEIVABLES
Receivables, at March 31, 1996 and December 31, 1995, include amounts
billed to customers and unbilled charges on long-term contracts consisting
of amounts recognized as sales but not billed at the dates presented.
Substantially all amounts of unbilled receivables are expected to be billed
and collected within a year. The composition of receivables for those
periods is as follows:
(In thousands)
--------------------------
March 31, December 31,
1996 1995
--------- ----------
Accounts receivable, billed $31,760 $32,236
Less: progress payments applied 4,339 4,339
--------- ----------
27,421 27,897
--------- ----------
Unbilled charges on long-term contracts 26,375 25,128
Less: progress payments applied 16,365 15,988
--------- ----------
10,010 9,140
--------- ----------
Allowance for doubtful accounts (767) (760)
--------- ----------
Receivables, net $36,664 $36,277
========= ==========
<PAGE>
<PAGE> 8
3. INVENTORIES
Inventories are valued at the lower of cost (principally average cost)
or market. The composition of inventories at March 31, 1996 and December
31, 1995 is as follows:
(In thousands)
-------------------------
March 31, December 31,
1996 1995
--------- ----------
Raw materials $ 4,085 $ 3,757
Work-in-process 14,940 14,489
Finished goods 5,800 4,353
Inventoried costs related to U. S. Gov't
and other long-term contracts 12,848 11,474
--------- ----------
Total inventories 37,673 34,073
Less: progress payments applied,
principally related to long-term contracts 3,485 4,962
--------- ----------
Net inventories $34,188 $29,111
========= ==========
4. ENVIRONMENTAL MATTERS
The Corporation establishes a reserve for a potential environmental
responsibility when it concludes that a determination of legal liability is
probable, based upon the advice of counsel. Such amounts, if quantified,
reflect the Corporation's estimate of the amount of that liability. If only a
range of potential liability can be estimated, a reserve will be established at
the low end of that range. Such reserves represent today's values of
anticipated remediation not recognizing any recovery from insurance carriers,
or third-party legal actions, and are not discounted.
The Corporation is joined with many other corporations and municipalities
as potentially responsible parties (PRPs) in a number of environmental cleanup
sites, which include the Sharkey Landfill Superfund Site, Parsippany, N. J.,
Caldwell Trucking Company Superfund Site, Fairfield, N. J., and Pfohl Brothers
Landfill Site, Cheektowaga, N. Y., identified to date as the most significant
sites. Other environmental sites in which the Corporation is involved include
but are not limited to Chemsol, Inc. Superfund Site, Piscataway, N. J., and PJP
Landfill, Jersey City, N. J.
The Corporation believes that the outcome of any of these matters would
not have a material adverse effect on the Corporation's results of operations
or financial condition.
5. CONSOLIDATED STATEMENTS OF CASH FLOWS
Interest payments of $32,000 and $141,000 were made primarily in
association with long-term debt in the first quarters of 1996 and 1995,
respectively. The Corporation received a refund for an overpayment of 1995
federal income taxes of $500,000 in the first quarter of 1996 and made an
estimated federal income tax payment of $412,000 for the first quarter of
1995, respectively.
6. EARNINGS PER SHARE
Earnings per share were computed by dividing the applicable amount of
earnings by the weighted average number of common shares outstanding during
each period shown in the accompanying Consolidated Statements of Earnings.
The assumed exercise of outstanding stock options had an immaterial dilutive
effect on earnings per share in each respective period.
<PAGE>
<PAGE> 9
CURTISS-WRIGHT CORPORATION and SUBSIDIARIES
MANAGEMENT'S DISCUSSION and ANALYSIS of
FINANCIAL CONDITION and RESULTS of OPERATIONS
RESULTS OF OPERATIONS:
Curtiss-Wright Corporation posted aggregate pre-tax operating earnings
for the first quarter of 1996 which were slightly higher than operating
earnings of the first quarter of 1995. Operating earnings from the
Corporation's two business segments totaled $5.39 million for the first
quarter of 1996, compared with $5.37 million for the same prior year
period.
Consolidated net earnings for the Corporation declined, however,
totaling $3.3 million, or $.65 per share, for the first quarter of 1996
compared with net earnings of $4.0 million, or $.79 per share, posted in
the first quarter of 1995. Net earnings were adversely affected in the
first quarter of 1996 by lower overall income from our portfolio of short-
term investments and losses associated with the write-offs of fixed assets.
Total sales reported for the first quarter of 1996 were $36.3 million,
compared with sales of $37.5 million for the first quarter of 1995. The
decline in sales for the first quarter of 1996 primarily reflects the
absence of contributions from the Corporation's Buffalo Extrusion division,
which was sold in June 1995. Excluding Buffalo s results from the first
quarter of 1995, sales for the 1996 period were 6% higher than in the prior
year while operating income improved 11% principally due to the
Corporation's foreign operations. New orders received by the Corporation
totaled $38.2 million for the first quarter of 1996, a 30% increase from
orders received in the first quarter of 1995, after excluding orders
received in 1995 for the Buffalo division. The improvement in new orders
is attributable to the growth of our component overhaul business, higher
levels of shot-peening and peen-forming services and an increase in
military valve orders. The backlog of unshipped orders totaled $105.4
million at March 31, 1996, a slight increase from the backlog of unshipped
orders at December 31, 1995 of $103.6 million.
Segment Performance:
The Corporation's Aerospace & Marine segment posted sales of $21.2
million for the first quarter of 1996, a slight increase when compared with
sales of $21.0 million for the first quarter of 1995. The improved sales
reflect an 80% increase in the component overhaul portion of the aerospace
business. Sales for the first quarter of 1996 also reflect a contribution
from our European overhaul facility which opened in May 1995 and improved
sales of shot-peening and peen-forming services in both domestic and
foreign markets. The segment results also benefited from higher F-16
production shipments in the first quarter of 1996 than those of the prior
year period in support of Lockheed Martin s foreign military sales program.
Improvements in these programs were generally offset by lower sales in
commercial actuation production programs largely due to Boeing s labor
disruption in late 1995. Sales of military valve products also declined
when comparing the first quarter of 1996 with the same prior year period
generally due to a slowdown in production caused by the unavailability of
key materials.
<PAGE>
<PAGE> 10
Despite improved sales, operating earnings for the Aerospace & Marine
segment declined slightly in 1996, when compared to the same period of 1995.
The decline in earnings is largely attributable to the slightly lower margins
associated with the current sales mix, as compared with sales of the same
prior year period. Curtiss-Wright also continues to make progress on its
fixed price engineering and development contracts associated with the
Lockheed Martin/Boeing F-22, the McDonnell Douglas F/A-18 E/F and the Bell
Boeing V-22 Osprey, but has experienced some delays in actual hardware
production which adversely impacted sales and profits in the current period.
New orders received by the Corporation's Aerospace & Marine segment
increased 38%, totaling $22.8 million for the first quarter of 1996,
compared to orders of $16.5 million received in the first quarter of 1995.
The increase is primarily attributable to the growth of our component
overhaul business and to military valve orders.
The Corporation's Industrial segment posted improved sales and
operating earnings for the first quarter of 1996, after excluding the
results of the former Buffalo Extrusion division from the first quarter of
1995. Sales for the Industrial segment of $15.1 million improved 13%,
while earnings of $3.2 million improved 32% for the 1996 period, after
excluding Buffalo from total 1995 results. Sales of industrial shot-
peening services showed a significant improvement in the 1996 period when
compared with the prior year quarter, reflecting increases throughout the
domestic and foreign industrial markets served. The Industrial segment
also reported improvements in the sales of commercial valve products for
the first quarter of 1996, as compared with the first quarter of 1995.
This improvement primarily reflects our Target Rock Corporation s support
of an emergency order from a utility in response to outages in February
1996.
New orders for the Industrial segment totaled $15.4 million for the
first quarter of 1996, an increase of 18% when excluding orders received in
1995 for the Corporation s former Buffalo division. The increase in new
orders is attributable to higher levels of shot-peening and peen-forming
services and the aforementioned emergency order for commercial valves.
Other Revenue and Costs:
Other revenue recorded by the Corporation in the first quarter of 1996
totaled $2.3 million, compared with $3.3 million reported for the same
period of 1995. The decline in other revenue was caused by lower overall
income from our portfolio of short-term investments and losses on write-
offs of fixed assets.
Operating costs, for the Corporation as a whole, declined 3% when
comparing total 1996 costs for the first quarter with those of the same
prior year period, generally reflecting the decline in sales, period to
period. Administrative expenses for the first quarter of both years were
reduced by accrued income generated from the Corporation s overfunded
pension plan. Net pension income varied slightly, totaling $.8 million for
the first quarter of 1996, compared with $.7 million for the first quarter
of 1995. <PAGE>
<PAGE> 11
CHANGES IN FINANCIAL CONDITION:
Liquidity and Capital Resources:
The Corporation's working capital was $121.7 million at March 31,
1996, a slight increase from working capital at December 31, 1995 of $120.6
million. The ratio of current assets to current liabilities was 4.47 to 1 at
March 31, 1996, compared with a current ratio of 4.65 to 1 at
December 31, 1995.
The change in working capital reflects a substantial increase in
inventory levels at March 31, 1996, as compared with their levels at
December 31, 1995. The increase in inventory was due to higher levels of
work-in-process associated with long-term development contracts and the new
commercial actuation production contracts received in 1995 from Boeing.
Partially offsetting the increase in working capital due to the higher
inventory levels was an increase in income taxes payable at March 31, 1996,
from December 31, 1995 and accrued dividends payable. The Corporation's
cash and short-term investments totaled $76.2 million at March 31, 1996, a
decline of $2.5 million from the prior year-end.
The Corporation continues to maintain its $22.5 million revolving
credit lending facility and its $22.5 million short term credit agreement,
which provide additional sources of capital to the Corporation. The
revolving credit agreement, of which $7.8 million remains unused at March
31, 1996, encompasses various letters of credit issued primarily in
connection with outstanding industrial revenue bonds. There were no cash
borrowings made on the short term credit agreement during the first quarter
of 1996 and there were no outstanding balances for borrowed funds under the
agreement at March 31, 1996.
During the first quarter of 1996, internally generated funds were
adequate to meet capital expenditures of $2.3 million, primarily for
machinery and equipment for use by the operating segments. The Corporation
has begun a $3.8 million building expansion of its Shelby, North Carolina
facility. This expansion is necessary to support the future production
levels resulting from new contract awards received on three major Boeing
commercial aircraft programs during 1995 and to support the growth
experienced in our component overhaul business. The Corporation s Metal
Improvement Company subsidiary is also in the process of expanding by
adding additional overseas facilities which are expected to be operational
in early 1997. Projected funds from operating sources and the
Corporation's short-term investments are expected to be more than adequate
to cover the cost of these projects as well as future cash requirements.
Capital expenditures of approximately $14.8 million are anticipated for the
balance of the year along with $4.5 million of anticipated expenditures
connected with environmental remediation programs. <PAGE>
<PAGE> 12
OTHER DEVELOPMENTS:
On April 25, 1996, the Corporation announced that an agreement had been
signed for the purchase of the Aviall Accessory Services unit of Aviall,
Inc. The closing is subject to regulatory approvals and other customary
closing conditions. Aviall Accessory Services, located in Miami, Florida,
is a provider of aircraft component repair and overhaul services with a
global customer base. This FAA-approved repair facility has the capability
of servicing more than 6,500 types of hydraulic, pneumatic, mechanical,
electro-mechanical, electrical and electronic aircraft components and has
annual sales of approximately $21 million. Upon completion of the
purchase, Aviall Accessory Services will be known as Curtiss-Wright
Accessory Services, a division of Curtiss-Wright Flight Systems, Inc., a
major producer of commercial and military aircraft actuation and control
systems and components.
Curtiss-Wright Flight Systems' existing overhaul business unit
provides aftermarket support primarily for components that it manufactures
for The Boeing Company and Lockheed Martin Corporation. The addition of
Aviall Accessory Services' capabilities to overhaul Boeing, McDonnell
Douglas and Airbus aircraft components will greatly increase the range of
services that Curtiss-Wright can offer to airlines and other aircraft
operators, positioning it as a nose-to-tail supplier of aircraft
component repairs. It also will expand Curtiss-Wright's global customer
base. To reduce costs and become more efficient without compromising
safety, airlines are increasingly establishing strategic alliances with
large independent maintenance service providers. This acquisition will
increase Curtiss-Wright Flight Systems' ability to participate in such
alliances and to take advantage of these developing opportunities.
The acquisition will be financed solely by the Corporation's available
cash equivalents and short-term investments and is expected to be completed
in late May, as soon as regulatory requirements are satisfied.
<PAGE>
<PAGE> 13
PART II - OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 12, 1996, the Registrant held its annual meeting of stock-
holders. The matters submitted to a vote by the stockholders were the
election of directors, the retention of independent accountants for the
Registrant, and the approval by the stockholders of the Registrant's 1996
Stock Plan for Non-Employee Directors.
The vote received by the director nominees was as follows:
For Withheld
--------- ----------
Thomas R. Berner 4,688,770 9,946
John S. Bull 4,687,122 11,594
James B. Busey IV 4,689,084 9,632
David Lasky 4,689,058 9,658
William B. Mitchell 4,688,986 9,730
John R. Myers 4,688,686 9,848
William W. Sihler 4,688,917 9,799
J. McLain Stewart 4,686,523 12,193
The foregoing represent all of the Registrant's directors.
There were no votes against or broker nonvotes.
The stockholders approved the retention of Price Waterhouse LLP,
independent accountants for the Registrant. The holders of 4,597,201
shares voted in favor; 95,487 voted against, and 6,028 abstained. There
were no broker nonvotes.
The final item voted on at the April 12, 1996 meeting was the
Registrant's 1996 Stock Plan for Non-Employee Directors, which plan had
previously been adopted subject to stockholder approval. The stockholders
approved the plan, the holders of 4,032,182 shares voting in favor and
272,819 voting against, there having been 393,714 abstentions.
<PAGE>
<PAGE> 14
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 10 - Material Contracts (Page 15)
(i) Asset Purchase Agreement between Curtiss-Wright Flight Systems,
Inc., a wholly-owned subsidiary of the Registrant, and Aviall, Inc. dated
April 25, 1996, and Guaranty Agreement by Curtiss-Wright Corporation dated
April 25, 1996.
Exhibit 27 - Financial Data Schedules (Page 45)
(b) Reports on Form 8-K
The Registrant did not file any report on Form 8-K during the
quarter ended March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
CURTISS-WRIGHT CORPORATION
(Registrant)
By:s/Robert A. Bosi
Robert A. Bosi,
Vice President-Finance
By:s/Kenneth P. Slezak
Kenneth P. Slezak,
Controller
Dated: May 13, 1996
<PAGE> 15
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated as of April 25, 1996
by and between Curtiss-Wright Flight Systems, Inc., a Delaware corporation
( Curtiss ), and Aviall, Inc., a Delaware corporation ("Aviall").
WHEREAS, Aviall, through its Accessory Services Business, located
primarily in Miami, Florida, is engaged in business that includes
repairing, overhauling and otherwise servicing certain aircraft components
(the "Operating Business"); and
WHEREAS, Aviall and Curtiss desire to enter in this Agreement pursuant
to which Aviall is selling to Curtiss and Curtiss is purchasing from Aviall
certain assets and properties;
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
in this Agreement, Aviall and Curtiss hereby agree as follows:
1. Purchase and Sale of the Assets.
1.1. Purchase and Sale. Upon the terms and conditions hereinafter
set forth, Aviall shall sell, convey, assign, transfer and deliver to
Curtiss, and Curtiss shall purchase, acquire and accept from Aviall and pay
for all of Aviall s right and interest in, the Acquired Assets (hereinafter
defined) wherever located, subject only to those liens, encumbrances and
restrictions as are reflected in Exhibit 1.1 to this Agreement.
1.2. Covered Assets. Except as provided in Section 1.3 hereof, the
term "Acquired Assets" as herein used shall mean all of Aviall's right,
title and interest as of the Closing Date in:
1.2.1. All tangible personal property owned or leased by Aviall and
used in or related to the Operating Business, said tangible personal property
including but not necessarily limited to that described in Exhibit 1.2.1
hereto;
1.2.2. All intangible personal property used in the Operating
Business, said intangible personal property including but not necessarily
limited to property described in Exhibit 1.2.2 hereto;
1.2.3. All of Aviall's interest in contracts, agreements,
leases, commitments, sales orders, and purchase orders ("Contracts")
relating to the Operating Business and in transferable licenses,
certificates, permits and privileges ("Transferable Privileges") relating
to the Operating Business;
1.2.4. All inventory (including raw materials, work-in-process
and finished goods, but excluding the Excluded Inventory, as defined in
Section 1.3 below), accounts receivable, notes receivable and other rights
to receive payment related to the Operating Business (excluding amounts
owed or payable to the Operating Business from Aviall or any other entity
that from and after the Closing Date is an affiliate of Aviall, which shall
be treated as provided in Section 4.9 hereof, and excluding the Excluded
Receivables, as defined in Section 1.3 below);
1.2.5. All plant and office supplies, and other miscellaneous
supplies of materials, used in the Operating Business;
<PAGE>
<PAGE> 16
1.2.6. All prepaid expenses and deposits (to the extent such
items may be assigned to and assumed by Curtiss at Closing), security
bonds, and all books and records of Aviall relating to the Operating
Business;
1.2.7. All customer lists, files, papers, drawings, manuals and
other technical data, computer programs and systems and business records
related to the Operating Business;
1.2.8. All of Aviall s interest in any Transferable Privileges
set forth in Exhibits 8 and 9.12 hereto free and clear of any claims,
charges, fines, penalties, violations or any like detriment pending against
the same other than as disclosed or set forth herein; and
1.2.9. All other assets, tangible, intangible, real, personal or
mixed used in or relating to the Operating Business, including good will
(but not with respect to the name "Aviall"), machinery, equipment, tools,
vehicles, furniture and fixtures, whether or not reflected in the Financial
Statements (hereinafter defined).
1.3. Excluded Assets. Notwithstanding anything to the contrary
contained herein, including the provisions of Section 1.2 hereof, all of
Aviall s right, title and interest in the following shall be excluded from
the Acquired Assets (the "Excluded Assets"): (i) any trademarks, service
marks or trade names incorporating the name Aviall , except that Curtiss
shall have the right to use business forms and other documents bearing the
name Aviall, suitably modified to reflect the new ownership of the
Operating Business in accordance with the terms and provisions of the
License Agreement attached hereto as Exhibit 1.3; (ii) any assets of
employee benefit plans of Aviall; (iii) all insurance policies held by
Aviall, and any claims thereunder (other than claims used to offset
operating liabilities of Aviall that are assumed by Curtiss as Assumed
Liabilities (hereinafter defined); (iv) any real property leases and
buildings specifically not dedicated to the operation in the ordinary
course of the Operating Business at locations other than its facilities in
Miami, Florida and through its sales office in Melville, New York; (v)
cash, securities, certificates of deposit and cash equivalents; (vi) all of
the inventory listed on a document prepared jointly by Aviall and Curtiss
as of the Closing Date reflecting certain items of inventory of the
Operating Business to be retained by Aviall, as determined pursuant to
Section 2.5 hereof, together with any reserves as of the Closing Date
relating thereto (the "Excluded Inventory") as well as copies of any and
all records of any kind relating thereto, including records of
traceability; it being understood that Curtiss shall either (a) deliver to
Aviall on the Closing Date all original records in the possession and
control of the Operating Business as of the Closing Date which are
necessary to establish the condition and traceability (back to manufacture)
of each item of Excluded Inventory in accordance with applicable
requirements of the United States Federal Aviation Administration ("FAA")
and customary practice in the aviation industry; or (b) continuously
maintain such original records in its possession and control and furnish to
Aviall upon request from time to time by, and at no charge to, Aviall
copies of such records and/or a certificate or certificates by Curtiss
complying with applicable FAA requirements and customary aviation industry
practice documenting the Excluded Inventory or items thereof; (vii) each of
the receivables listed on Exhibit 1.3.1 hereto, together with any reserves
and/or items of collateral or other rights relating thereto (the "Excluded
Receivables"); and (viii) any reserves or assets which are related to any
Retained Liabilities hereunder.
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1.4 Presumptions. Notwithstanding the foregoing, the parties hereto
agree that, any asset of the type listed in Exhibit 1.4 which is used both
in connection with the Operating Business and with another business or
activity of Aviall or any of its affiliates shall be deemed an Excluded
Asset. In connection with the foregoing, there shall be a rebuttable
presumption that, except for parts kept on consignment with Sun Country
Airlines and Aviation Sales Company, any tangible asset which is not
normally located at the Operating Business' facilities in Miami, Florida or
Melville, New York shall be deemed an Excluded Asset (it being understood
that items of Excluded Inventory kept on consignment shall also be deemed
Excluded Assets). It is further understood that there shall be a
rebuttable presumption that any tangible asset which is normally located at
the Operating Business' facilities in Miami, Florida or Melville, New York
shall be deemed an Acquired Asset.
2. Consideration for the Acquired Assets.
2.1. Purchase Price and Assumption of Liabilities.
2.1.1. In consideration of the assignment, transfer and delivery
of the Acquired Assets, Curtiss shall assume and agrees to pay, discharge
and perform the Assumed Liabilities (hereinafter defined) and shall pay
Aviall, as the "Purchase Price," the sum of:
(a) the book value of the Acquired Assets (exclusive of
inventory) minus the book value of the Assumed Liabilities, each as of the
Closing Date, as set forth in the Closing Date Net Assets Statement
(defined below);
(b) the book value of the inventory included in the Acquired
Assets (other than the Excluded Inventory), as of the Closing Date, as set
forth in the Closing Date Net Assets Statement and determined in accordance
with Section 2.5 below; and
(c) the amount of $4,905,000.
Of said Purchase Price, the amount of Six Hundred Twenty Five Thousand
Dollars ($625,000) (the "Holdback Amount") shall be subject to a holdback
pursuant to Section 2.4 below.
2.1.2. At Closing, Curtiss shall deliver to Aviall by wire
transfer of immediately available funds to an account designated by Aviall
an amount equal to the sum of:
(a) the book value of the Acquired Assets (exclusive of
inventory) minus the book value of the Assumed Liabilities, as set forth in
the Preliminary Net Assets Statement (defined below);
(b) the book value of the inventory included in the Acquired
Assets (other than the Excluded Inventory), as set forth in the Preliminary
Net Assets Statement and determined in accordance with Section 2.5 below;
and
(c) the amount of $4,280,000 (which amount represents the
$4,905,000 set forth in paragraph (c) of Section 2.1.1 minus the Holdback
Amount).
2.1.3. An adjustment (pursuant to Section 2.3 below) shall be
made to the amount paid by Curtiss to Aviall at Closing within ninety (90)
days following the Closing.
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<PAGE> 18
2.2 Closing Date Purchase Price. For purposes of determining the
amount to be paid by Curtiss to Aviall at Closing pursuant to Section
2.1.2, Aviall shall prepare a net assets statement (the Preliminary Net
Assets Statement ) reflecting (i) the book values of the Acquired Assets
(exclusive of inventory) and the Assumed Liabilities, and (ii) the book
value of the inventory included in the Acquired Assets as determined in
accordance with Section 2.5 below, each as of the last day of the month
immediately preceding the month in which the Closing Date shall occur, or
if the Closing Date shall fall within the first ten (10) days of a month,
dated as of the last day of that month which shall be two months
immediately prior to the Closing Date. The Preliminary Net Assets
Statement shall be prepared by Aviall in accordance with generally accepted
accounting principles ("GAAP"), subject to certain modifications set forth
on Exhibit 2.2 attached hereto. Aviall shall furnish a copy of the
Preliminary Net Assets Statement to Curtiss not less than five (5) business
days prior to Closing.
2.3. Final Purchase Price Adjustment. Following the Closing the
Purchase Price shall be further adjusted up or down by the amount by which
the book value of the Acquired Assets (including the inventory in the
Acquired Assets, as finally determined by the parties in accordance with
Section 2.5 below) minus the book value of the Assumed Liabilities exceeds
(up) or is less than (down) such amount as set forth in the Preliminary Net
Assets Statement, said book values to be as of the Closing Date and as
reflected in a net assets statement (the "Closing Date Net Assets
Statement") to be prepared by Aviall in accordance with GAAP (again,
subject to the modifications set forth on Exhibit 2.2) within ninety (90)
days after the Closing Date and audited by Price Waterhouse, LLP. If such
adjustment results in an increase in the Purchase Price, Curtiss shall pay
the amount of such increase to Aviall, and if such adjustment results in a
decrease in the Purchase Price, Aviall shall pay the amount of such
decrease to Curtiss. In either event, such payment shall be made promptly
following completion of the adjustment process described in this Section
2.3 by wire transfer of immediately available funds to an account
designated by the payee.
2.4. Purchase Price Holdback. The Six Hundred Twenty-Five Thousand
Dollars ($625,000) Holdback Amount referred to above in Section 2.1.1 above
shall be deposited by Curtiss on or before the Closing Date into an escrow
account to be established and maintained by NationsBank of Texas, N.A. (the
"Escrow Agent") as security against, and Aviall agrees to indemnify Curtiss
with respect to, any and all loss or additional expenses resulting from
any misrepresentation or breach of warranty or covenant made in this
Agreement, including the expense and any reasonable legal fees that might
be incurred because of any such misrepresentation or breach of warranty or
covenant. If any such loss or expense occurs, Curtiss shall have the
right, in addition to any other action permitted by law, to have the amount
of any such loss or expense offset against the Holdback Amount. This
indemnity and right of setoff shall be subject to Article 13 to the extent
to which the underlying covenant, warranty or representation is subject to
such Article. Curtiss's right of setoff against such Holdback Amount shall
not be deemed Curtiss's exclusive remedy for Aviall's breach of any
representations, warranties, or covenants set forth in this Agreement, all
of which shall survive the Closing Date and any setoffs made by Curtiss.
Promptly following the first anniversary of the Closing the Holdback Amount
(together with accrued interest thereon) shall be disbursed by the Escrow
Agent to the party entitled thereto, following delivery of written
authorization by each party hereto to the Escrow Agent and pursuant to the
provisions of the escrow agreement (the "Escrow Agreement") substantially
in the form attached hereto as Exhibit 2.4. The parties shall share
equally all fees and expenses charged by the Escrow Agent.
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<PAGE> 19
Curtiss agrees and acknowledges that Aviall may assign its rights
under the Escrow Agreement to its senior lenders as security for Aviall's
performance under its bank credit facility.
2.5 Certain Agreements Regarding Excluded Inventory. For purposes of
determining the inventory included among the Acquired Assets and the
Excluded Inventory contemplated hereunder, the parties hereby agree as
follows:
2.5.1. The Excluded Inventory shall be deemed to consist of
quantities of each line item of inventory held by the Operating Business as
of the Closing Date which are in excess of the actual usage amount (the
"Usage") for such line item of inventory over (i) the immediately preceding
26 months, or (ii) if the Closing Date does not occur on the first day of
the month, the 26 months immediately preceding the first day of the month
in which the Closing occurs.
In the event that any single line item of inventory includes
interchangeable units bearing different part numbers, or units in different
conditions (e.g. new, serviceable, etc.), then the units identified as
Excluded Inventory shall be proportionately representative of the total
composition of such line item prior to the identification of Excluded
Inventory. By way of example: a line item consists of a total of 10 units,
5 new and 5 serviceable; of those 10 units, a total of 4 units are deemed
to be Excluded Inventory pursuant to this Section 2.5; in such case, the
units identified as Excluded Inventory shall consist of 2 new and 2
serviceable units.
For purposes of valuing the items of inventory included in the
Acquired Assets and the Excluded Inventory pursuant to Sections 2.5.2 or
2.5.3 below, the parties agree and acknowledge that the value of all items
of inventory, as of the date of calculation thereof, shall be determined
based upon the average cost of all items within each line item of inventory
according to the regularly kept inventory records of the Operating
Business.
2.5.2. For purposes of determining the portion of the Purchase
Price payable by Curtiss to Aviall at Closing pursuant to Section 2.2
hereof, the parties agree that the Preliminary Net Assets Statement shall
reflect (i) the book value of all inventory included in the Operating
Business as of the date thereof, minus (ii) $3,612,000, which amount
represents the agreed value of the Excluded Inventory as of March 18, 1996.
2.5.3 At or immediately following Closing, the parties shall
jointly identify and physically separate the items of Excluded Inventory
from the inventory included in Acquired Assets. The parties agree that to
the extent that the methodologies set forth in Section 2.5.1 above cannot
be applied for any reason to the segregation of any particular items of
inventory, the authorized representatives of Curtiss and Aviall conducting
such segregation shall jointly determine an equitable manner to resolve
such matters.
Once the inventory has been physically separated, the parties
shall jointly determine the value of the inventory included in the Acquired
Assets in accordance with Section 2.5.1 above. Such amount shall
constitute the book value of the inventory included in the Acquired Assets
to be set forth in the Closing Date Net Assets Statement pursuant to
Section 2.3 hereof.
Notwithstanding the foregoing, following the Closing Date Aviall may
store any items of the Excluded Inventory at the Miami facility relating to
the Operating Business for a reasonable period of time, at no cost or
expense to Aviall.
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<PAGE> 20
3. Assumption of Liabilities
3.1. Assumed Liabilities. At the Closing, subject to the terms and
conditions set forth in this Agreement, Curtiss shall assume, pay, perform,
discharge and satisfy in accordance with their terms, and shall indemnify
and hold harmless Aviall and its affiliates, directors, officers, employees
and agents, and each of the heirs, executors, successors and assigns of the
foregoing (the "Aviall Indemnified Parties") from the following obligations
and liabilities (herein called collectively the "Assumed Liabilities") of
Operating Business:
3.1.1. All of the liabilities and obligations of the Operating
Business to be performed after the Closing Date arising under all
Contracts, (excluding amounts owed or payable by the Operating Business to
Aviall or any other entity that from and after the Closing Date is an
affiliate of Aviall, which shall be treated as provided in Section 4.9
hereof and excluding any liabilities and obligations that constitute
Retained Liabilities hereunder) and Transferrable Privileges relating to
the Operating Business and effectively assigned to Curtiss pursuant to
Section 4.5;
3.1.2. All liabilities and obligations related to accrued but
unpaid vacation entitlements of Article 5 Employees (as defined in Article
5 hereof) as of the Closing Date; and
3.1.3 All ordinary course of business liabilities and
obligations of the Operating Business as of the Closing of the type
reflected in the Closing Date Net Assets Statement.
3.2. Retained Liabilities. Notwithstanding the foregoing, Curtiss
shall not assume and shall not pay, perform or discharge any of the
following obligations and liabilities (herein called the "Retained
Liabilities"):
3.2.1. Liabilities or obligations of Aviall not incurred in
connection with the Operating Business;
3.2.2. Liabilities or obligations owed to Aviall or any of its
affiliates;
3.2.3. Liabilities and obligations relating to employee benefits
accrued or payable to Aviall Operating Business Employees prior to the
Closing Date except for accrued but unpaid vacation entitlements of Article
5 Employees as of the Closing Date;
3.2.4. Liabilities and obligations of Aviall under or with
respect to any transaction occurring after the Closing Date;
3.2.5. Liability for any and all claims presently asserted, or
which in the future could be asserted, against Aviall for product shipped
or work completed (with an Aviall tag attached thereto) prior to the
Closing, regardless of whether such claims are based on contract, tort,
products liability, or any other legal or equitable theory. With respect
to warranty claims for defective work completed (with an Aviall tag
attached) by the Operating Business prior to the Closing, Curtiss agrees
(i) to provide Aviall with clinical support; (ii) to provide rework or
replacement products or services at Aviall's expense payable monthly to
Curtiss at Curtiss's cost and on such other terms and conditions mutually
agreeable to Curtiss and to Aviall; and (iii) to provide Aviall and its
<PAGE>
<PAGE> 21
representatives with access to all files or other information maintained by
the Operating Business relating to the claim (including the right to make
copies thereof, at Aviall's expense). The parties further agree to consult
with each other as to the handling and processing of all such warranty claims
and to attempt in good faith jointly to resolve such matters in a manner
consistent with Aviall s past practices with respect to the Operating Business.
Subject to the foregoing, Aviall shall at all times retain the right to make
the final determination as to the handling and processing of all such warranty
claims and Curtiss shall not charge Aviall for any warranty-related work which
has not been authorized in writing by Aviall. To the extent that Aviall
determines to deny warranty coverage with respect to any warranty claim,
Curtiss shall have the right and option to accept such warranty claim and to
perform any related services, all at its own cost and expense.
3.2.6 Liabilities and obligations with respect to sales taxes
for periods ending prior to the Closing Date (whether or not assessed or
payable prior to subsequent thereto) imposed, levied, assessed or payable
by, against or on the Operating Business or Aviall; provided, however, that
paid or unpaid taxes for periods during which the Closing occurs shall be
prorated as set forth in Section 4.11 hereof.
3.2.7. Any other liabilities or obligations of Aviall not
specifically assumed by Curtiss.
3.2.8 Liabilities arising out of the breach by Aviall of any of
its representations and warranties or covenants set forth in this
Agreement.
3.3. Obligations. Nothing contained in this Article 3 shall relieve
Aviall or Curtiss from any obligations under covenants, warranties or
agreements contained in this Agreement.
4. The Closing.
4.1. Closing Date. The consummation of the transactions contemplated by
this Agreement (the "Closing"), other than those which this Agreement
specifically states are to be consummated after the Closing Date, shall take
place at a mutually acceptable location in Broward or Dade County, Florida as
soon as reasonably practicable after each party hereto shall have indicated to
the other that it has satisfied or stands ready to satisfy all conditions of
Closing for which it is responsible, or at such other time and place as Aviall
and Curtiss shall mutually agree, but not later than May 31, 1996 (the "Closing
Date"). The parties agree to use reasonable efforts to effect the Closing on
May 20, 1996.
4.2. Aviall's Execution. At the Closing, Aviall will execute and
deliver to Curtiss proper instruments of assignment, conveyance and transfer,
in the form attached hereto as Exhibit 4.2, of all of Aviall's right, title and
interest in and to all of the Acquired Assets.
4.3. Curtiss's Execution. At the Closing, Curtiss will execute and
deliver to Aviall proper instruments, in the form attached hereto as
Exhibit 4.3, assuming the Assumed Liabilities.
4.4. Further Assurances. Aviall and Curtiss agree that they shall,
at any time and from time to time after the Closing, upon request of the other
party hereto, do, execute, acknowledge and deliver, or will cause to be done,
executed, acknowledged and delivered, all such further acts,deeds, assignments,
transfers, conveyances, powers of attorney and assurances as may be required to
carry out the purposes and intents of this Agreement. No action taken or
document executed pursuant to this section shall increase the liability of
Aviall or Curtiss beyond that contemplated by any other provision of this
Agreement.
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<PAGE> 22
4.5. Assignments. To the extent that the assignment or transfer of
any Contract or Transferable Privilege or right to be assigned or
transferred to Curtiss as provided herein shall require the consent of the
other party thereto, this Agreement shall not constitute an agreement to
assign or transfer the same if any attempted assignment would constitute a
breach thereof. Aviall agrees that it will use best efforts to obtain the
consent of the other parties to all such Contracts and Transferable
Privileges to the assignment or transfer thereof to Curtiss. Curtiss
agrees that it will cooperate with and assist Aviall in its efforts to
obtain any such consents. If any such consent is not obtained, Aviall will
cooperate with Curtiss in any reasonable arrangement acceptable to Curtiss
intended to provide for Curtiss the full benefits under any such Contracts
or Transferable Privileges.
4.6. Collection of Receivables.
4.6.1 Acquired Receivables. Curtiss shall have the right and
authority to collect, for the account of Curtiss, all Receivables (as
defined in Section 9.19 hereof) and other items which shall be transferred
to Curtiss as provided herein, and to endorse with the name of Aviall any
checks received on account of such Receivables or other items. Aviall
agrees that it will promptly transfer and deliver to Curtiss any cash or
other property that it may receive in respect of such Receivables or other
items.
Curtiss further covenants and agrees that any Receivables that remain
uncollected after the expiration of one (1) year following the Closing Date
for which Curtiss seeks indemnity from Aviall pursuant to Article 13 hereof
shall be promptly reassigned to Aviall, together with any related
collateral or reserve amounts existing on the Closing Date.
4.6.2 Excluded Receivables. Aviall shall have the right and
authority to collect, for the account of Aviall, all Excluded Receivables
which shall be retained by Aviall as provided herein, and to endorse with
the name of Curtiss any checks received on account of such Excluded
Receivables. Curtiss agrees that it will promptly transfer and deliver to
Aviall any cash or other property that it may receive in respect of such
Excluded Receivables.
To the extent requested by Aviall, Curtiss shall use reasonable
efforts to assist Aviall in its collection efforts relating to the Excluded
Receivables in a manner consistent with the past credit and collection
policies of the Operating Business. The parties agree and acknowledge that
to the extent a payment is received from a customer following the Closing
Date and such payment makes no reference to the invoice(s) being paid, (i)
Curtiss shall send a written notice to such customer (with a copy to
Aviall) requesting instructions as to which invoice(s) such payment should
be applied, and (ii) if such customer does not respond to such notice
within sixty (60) days, such payment shall be applied to any outstanding
undisputed receivables (including Excluded Receivables) in the order in
which such amounts were originally invoiced by the Operating Business
(i.e., with the earliest invoices being paid first).
4.6.3. Reserves Relating to Receivables. The parties agree and
acknowledge that the Preliminary Net Assets Statement and the Closing Date Net
Assets Statement shall reflect all reserves maintained by the Operating
Business with respect to accounts receivable as of the dates thereof, except
for any reserves relating specifically to Excluded Receivables. Further, the
parties acknowledge that a portion of such reserves is designated by Aviall as
a general reserve (the "General Receivable Reserves"), and does not relate
specifically to any particular account receivable.
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<PAGE> 23
Curtiss agrees that Aviall shall not be deemed to be in breach of
its representations and warranties in Section 9.19 hereof to the extent
that within one (1) year after the Closing Date Curtiss has collected the
amount of the Receivables reflected on the Closing Date Net Assets
Statement, net of all applicable reserves set forth in the Closing Date Net
Assets Statement, including the General Receivable Reserve (the "Net
Receivable Amount"). To the extent that within one (1) year after the
Closing Date Curtiss has collected an amount greater than the Net
Receivable Amount with respect to the Receivables, it shall promptly pay
such additional amount to Aviall by wire transfer of immediately available
funds to an account designated by Aviall.
4.7. Records Retention by Curtiss. Curtiss shall not dispose of or
destroy any books or records relating to the Acquired Assets or Aviall's
conduct of the Operating Business that are located or stored at the site of
the Operating Business as of the Closing Date without complying with
applicable guidelines promulgated by the Internal Revenue Service and
without first offering, by written notice at least 60 days before the date
of intended disposition or destruction, to turn over possession thereof to
Aviall. Curtiss shall allow Aviall access to such books and records, but
only to those books and records and only during the normal working hours of
the facility where they are located or stored, and Aviall shall have the
right at its own expense to make copies of such books and records,
provided, however, that any such access or copying shall be had or done in
such a manner as not to interfere with the normal conduct of Curtiss'
business.
4.8. Records Retention by Aviall. Aviall shall not dispose of or
destroy any books or records relating to the Acquired Assets or Aviall's
conduct of the Operating Business between December 31, 1994 and the Closing
Date without complying with applicable guidelines promulgated by the
Internal Revenue Service and without first offering, by written notice at
least 60 days before the date of intended disposition or destruction, to
turn over possession thereof to Curtiss. Aviall shall allow Curtiss access
to such books and records, but only to those books and records and only
during the normal working hours of the facility where they are located or
stored, and Curtiss shall have the right at its own expense to make copies
of such books and records, provided, however, that any such access or
copying shall be had or done in such a manner as not to interfere with the
normal conduct of Aviall s business.
4.9 Intracompany Accounts. Effective as of the Closing Date, all
amounts owed or payable by the Operating Business to, or to the Operating
Business by, Aviall or any other entity that from and after the Closing
Date is an affiliate of Aviall, shall be canceled with no payment made by
any party to this Agreement. All other obligations of the Operating
Business, to the extent that they are accrued by the Operating Business
after the Closing Date, are Assumed Liabilities pursuant to this Agreement
and shall be paid by Curtiss in the ordinary course.
4.10 Insurance. For a period of five years following the Closing
Date, Curtiss shall, at its own expense, maintain insurance policies for
aviation products liability and non-aviation general liability in amounts
and of types similar to those currently maintained by Curtiss, as set forth
on Exhibit 4.10 hereof. All such policies shall be endorsed as follows:
4.10.1 To name Aviall, its affiliates, and each of their
respective directors, officers, employees and agents, and each of their
heirs, executors, successors and assigns (collectively, the "Aviall Insured
Parties") as additional insureds or named insureds (with respect to claims
made policies) with respect to claims and actions arising out of or
relating to:
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<PAGE> 24
4.10.1.1 the conduct of the Operating Business by Curtiss
or any affiliate of Curtiss at any time after the Closing Date;
4.10.1.2 the "over-the-counter" sale or exchange of products
or the performance of services by the Operating Business at any time after the
Closing Date;
4.10.2 to provide a severability of interest clause protecting the
Aviall Insured Parties as though a separate policy had been issued to each but
without increasing the overall limit of liability or aggregate;
4.10.3 to provide that coverage is primary and without right of
contribution from any insurance that the Aviall Insured Parties may now
carry or choose to carry;
4.10.4 to provide that if at any time Curtiss fails to maintain
the insurance as stated herein, then the Aviall Insured Parties shall have the
right, but not the duty, to pay premiums in order to maintain in effect the
insurance required hereunder for the benefit of the Aviall Insured Parties;
provided, however, that in the event that the Aviall Insured Parties pay such
premiums as described above, Curtiss shall immediately reimburse the Aviall
Insured Parties by wire transfer of immediately available funds; and
4.10.5 to provide that the Aviall Insured Parties shall receive
sixty (60) days written notice of cancellation or material change in coverage
prior to such cancellation or material change being effective to the Aviall
Insured Parties;
provided, however, that if at the beginning of or at any time during said five
year period it should develop that Curtiss' compliance with any one or combin-
ation of its obligations under sub-parts 4.10.1, 4.10.2, 4.10.3, 4.10.4, or
4.10.5 of this Section causes a material increase in the cost of Curtiss
insurance over what it would otherwise be, (x) Curtiss shall notify Aviall of
such circumstance, whereupon (y) Aviall shall have the option of reimbursing
Curtiss for, or paying Curtiss to cover the cost of, such increase, and (z) if
Aviall shall fail to reimburse Curtiss for, or to pay Curtiss to cover the cost
of, such increase, the obligations placed upon Curtiss by this Section shall
forthwith lapse.
Curtiss shall provide, or shall cause to be provided, a certificate of
insurance issued to the Aviall Insured Parties prior to the Closing Date
and promptly upon each insurance renewal thereafter, evidencing that the
insurance has been endorsed to include the provisions as required herein.
4.11 Prorations. Any paid or unpaid taxes relating to the Acquired
Assets for the periods during which the Closing occurs which are not reflected
or otherwise included in the Closing Date Net Assets Statement (collectively,
the "Prorated Taxes"), shall not be deemed to be part of the Assumed Liabil-
ities or Acquired Assets to be acquired by Curtiss, but shall be prorated
between Aviall and Curtiss as provided in this Section 4.11. Any Prorated
Taxes shall be apportioned between Aviall and Curtiss as of the Closing Date,
with Curtiss bearing only that portion of such expense that the number of days
after the Closing Date bears to the total number of days in the applicable
period and Aviall bearing only that portion of such expense that the number of
days prior to the Closing Date bears to the total number of days in the
applicable period. Curtiss and Aviall shall each promptly pay to the other any
Prorated Taxes properly attributable to one party, but paid by the other and,
to the extent practicable, all taxes subject to proration hereunder shall be
adjusted in cash by the parties hereto at Closing. To the extent not adjusted
in cash at Closing, all requests for payment of taxes properly attributable to
one party that are received by the other will be promptly forwarded to the
other party, which shall promptly pay the same. In the event either party pays
any Prorated Taxes for which the other party is obligated in whole or in part,
such paying party shall deliver to the other party reasonable documentation
evidencing the applicable Prorated Tax.
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<PAGE> 25
4.12. FAA Authorization. Curtiss and Aviall shall act in
consultation with each other to obtain the appropriate FAA Air Agency
Certificate for Curtiss.
5. Employees and Benefit Plans.
5.1. Employees to be Hired. Except as expressly provided in the
following sentence and elsewhere in this Article 5, neither Curtiss nor any
of its affiliates shall have any obligation to offer employment to, or
employ, any past, present or future Aviall employees and neither Curtiss
nor any of its affiliates shall have any liability in respect of any
salary, severance, health, welfare, retirement, or any other benefits
relating to employment of such employees with Aviall or its predecessors.
Curtiss shall offer employment, effective immediately after the Closing
Date, to a minimum of one hundred forty (140) of the people who, as of
December 31, 1995, were Aviall employees and whose responsibilities then
related primarily to the conduct of the Operating Business or the use of
the Acquired Assets ("Aviall Operating Business Employees"), including
those located at Aviall facilities at 150 Broad Hollow Road, Suite 202, in
Melville, New York, said offers to be for employment with responsibilities,
salaries and benefits reasonably comparable to those of the same people
while at Aviall, provided, however, that the Curtiss obligation under this
sentence shall be reduced by one person for each such employee who shall
have ceased to be an Aviall employee prior to the Closing Date. Curtiss
may also offer employment, effective immediately after the Closing Date, to
Aviall Operating Business Employees who were not such on December 31, 1995,
except in the case of Mr. Gerry Bass, whose employment by Curtiss as a
consultant after the Closing Date is the subject to the agreement between
Curtiss and Aviall set forth in Exhibit 5.1 hereto. Aviall shall cooperate
with Curtiss in the latter s efforts to employ any Aviall Operating
Business Employee identified by Curtiss prior to the Closing Date; shall
advise any such Aviall Operating Business Employee that his employment by
Aviall shall be terminated no later than at the Closing Date; and shall in
fact terminate any such employee no later than at the Closing Date. Any
person who, immediately prior to the Closing Date, is an Aviall Operating
Business Employee, and who is hired by Curtiss effective immediately after
the Closing Date, is hereinafter referred to as an "Article 5 Employee."
Subject to the foregoing Article 5 Employees shall be hired with salary and
benefits that Curtiss considers competitive. For purposes of the Curtiss
vacation plan in which they participate, each Article 5 Employee shall
receive service credit for all service by such employee with Aviall or its
affiliates and their predecessors. For purposes of the Curtiss medical
plan in which Article 5 employees participate, Curtiss agrees to waive any
limitations regarding preexisting medical conditions as to such Article 5
Employees and as to other persons entitled to coverage under terms of the
Curtiss medical plan by virtue of their relationship to such Article 5
Employees.
5.2. Notices of Layoff. To the extent applicable with respect to the
Operating Business conducted with the Acquired Assets, Aviall shall be
responsible for providing any notice of mass layoff or plant closing
required pursuant to the Federal Worker Adjustment and Retraining
Notification Act of 1988, any successor federal law, and any applicable
foreign, state or local plant closing notification statute, resulting from
a loss of employment by Aviall employees not offered employment by Curtiss
in connection with the transactions contemplated herein. Curtiss shall be
responsible for any such notice to the extent necessitated by any
terminations by Curtiss following the Closing Date.
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5.3. Medical Coverage. Aviall shall retain responsibility for and
continue to pay in accordance with its applicable employee plans all hospital,
medical, life insurance, disability and other employee welfare benefit plan
expenses and benefits for each Article 5 Employee to the extent of its
responsibility to terminated employees and their covered dependents (or the
applicable requirements under COBRA). Benefits with respect to claims by any
Article 5 Employee or his or her covered dependents shall be the respons-
ibility of Curtiss only to the extent contemplated by the terms of Curtiss'
employee benefit plans in which such employee is then a participant.
5.4. Indemnification. Subject to the provision of Article 13 hereof,
Aviall shall defend, indemnify and hold harmless Curtiss, its corporate
affiliates, and their respective directors, officers and employees, successors
and assigns against and in respect of: (i) any claim for wrongful discharge or
breach of any written employment contract or written plan or policy arising
from any termination of the employment of any employee by Aviall; (ii) subject
to the provisions of Section 5.1, any claim for severance benefits or termin-
ation pay or continued employment arising out of or resulting from any employee
s employment by Aviall, including, without limitation, any claims relating to
Curtiss' obligations as a successor (but excluding any claims against Curtiss
and its affiliates by Article 5 Employees terminated by Curtiss); (iii) any
notice of layoffs or plant closings prior to the Closing Date in accordance
with this Section; (iv) any fines, penalties or other amounts that may be
assessed or come due by reason of any failure or deficiency in the compliance
by Aviall with the Federal Worker Adjustment and Retraining Notification Act of
1988; (v) any claims relating to Curtiss' obligations as a "successor" to the
Operating Business and claims for withdrawal liability, each with respect to
any multi-employer pension plans; or (vi) any liability that may arise as a
result of Aviall or any of its subsidiaries being a member of a "controlled
group" or an "affiliated service group" within the meaning of Sections 414(b),
(c), (m) or (o) of the Internal Revenue Code of 1986), or being under common
control (within the meaning of section 4001 of ERISA).
5.5. Limited Effect. Nothing in this Section shall in any way enlarge
the rights of any Aviall employee or prevent Aviall from contesting any
claim by any employee in respect of the matters set forth in this Section.
6. Environmental Matters.
6.1. Definition. An "Environmental Matter" is any matter arising out of
or relating to pollution or protection of the environment, human and occupa-
tional safety or health, or sanitation, including any matter relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, or hazardous or toxic substances, materials or wastes into
ambient air, surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants or hazardous or toxic
substances, materials or wastes.
6.2. Indemnification. Subject to the provisions of Article 13, Aviall
shall indemnify Curtiss and its corporate affiliates and each of their
respective directors, officers, employees and agents, and each of the heirs,
executors, successors and assigns of the foregoing and hold each of them
harmless from and against any and all Environmental Liability (hereinafter
defined) incurred or suffered by Curtiss and its affiliates and their
respective officers, directors, employees, agents and representatives (its
"Indemnified Affiliates") arising out of, resulting from, or relating to any of
the following (the "Environmental Problems"):
6.2.1. the storage, handling, use, emission, release, discharge
or disposal prior to the Closing Date of any hazardous substance (including
petroleum products), used in connection with the Operating Business or any
predecessor business or any hazardous waste relating to any of the Acquired
Assets;
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6.2.2. any act or omission prior to the Closing Date or any
condition existing prior to the Closing Date relating to the Acquired
Assets which gives rise to any liability to pay for any cleanup costs, or
otherwise forms the basis of any claim, action, suit, proceeding, hearing
or investigation, based on or related to any Environmental Matter; and
6.2.3. any liability or obligation in respect of any
Environmental Matter arising out of, resulting from or relating to the
ownership or use of the Operating Business or any of the Acquired Assets
prior to the Closing Date.
As used herein, the term "Environmental Liability" means (i) all costs
and expenses arising out of or in connection with any cleanup, removal or
remediation to the extent required by any governmental authority in
connection with any Environmental Problem, (ii) all costs and expenses
arising out of or in connection with any investigation required by any
governmental authority or which is otherwise deemed appropriate by Aviall
with respect to any Environmental Problem, and (iii) all liability
resulting from or arising out of any final settlement or final judgment
entered into with respect to any Environmental Problem. "Environmental
Liability" shall not include any increased liability, costs or expenses
incurred with respect to any Environmental Problem to the extent such
increase is attributable to any act or omission of Curtiss and/or its
Indemnified Affiliates.
6.3. Access; Information; Remediation. In connection with any item for
which Curtiss shall be entitled to indemnification under this Article 6, Aviall
shall, at its option, upon receipt of notice from Curtiss of such item (i)
conduct such investigation, negotiation, contest, litigation, removal and
remediation as is necessary and appropriate to resolve the item, or (ii)
reimburse Curtiss for its investigation, negotiation, contest, litigation,
removal and/or remediation as is necessary and appropriate to resolve the item,
which reimbursement shall be made from time to time as such costs are incurred.
Curtiss shall permit Aviall and its representatives access, in a manner which
does not unreasonably interfere with the conduct of the Operating Business
(including the right to make copies, at Aviall's expense), to: (i) all non-
privileged reports and data concerning the condition at issue and its
investigation and/or remediation; (ii) all correspondence to or from
environmental agencies concerning the investigation and/or remediation or the
condition being remediated; and (iii) all real property used in connection with
the Operating Business, in order to permit Aviall and its representatives to
conduct such remediation and/or to obtain samples relevant to the investigation
and/or remediation.
6.4. Miami Property. In the event the environmental studies referred to
in Section 11.10 hereof disclose material environmental impairment of such
degree as would justify Curtiss in declining to proceed to Closing, and if
Curtiss nevertheless elects (by delivering a written notice to Aviall) to
proceed with the Closing, Curtiss shall be entitled to indemnification by
Aviall, subject to the limitations set forth elsewhere in this Article 6 and
subject to Article 13 hereof, of all reasonable costs of remediation of such
environmental impairment; provided, however, that in the event that Curtiss
elects to seek such indemnification and to proceed to Closing as set forth
above, Aviall shall thereupon have the right and option to terminate this
Agreement without any penalty or damages other than the obligation to reimburse
Curtiss' out of pocket expenses in connection with the transactions
contemplated hereby, up to a maximum of One Hundred Thousand Dollars
($100,000), incurred from and after January 29, 1996, said reimbursement
obligation not being subject to the limitations of Article 13, hereof.
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<PAGE> 28
7. Hart-Scott-Rodino.
Promptly after the execution hereof Aviall and Curtiss shall (to the
extent they shall not have already done so) make all required filings in
connection with the transactions contemplated hereby under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and
promptly respond to all requests for information from and make all required
submissions to the Federal Trade Commission (the "FTC") or the Antitrust
Division of the Department of Justice (the "Antitrust Division") thereunder, to
the fullest extent reasonably possible so to do. Except as may be required by
law, (a) the parties hereto shall consult with each other with respect to the
preparation of the Notification and Report Forms required to be filed pursuant
to the HSR Act by Aviall and Curtiss in connection with the transactions
contemplated hereby and shall incorporate each other's reasonable comments in
such Notification and Report Forms, and (b) the parties shall use their
reasonable efforts to cooperate and consult with each other with respect to any
written or oral responses to any requests for additional information or
documentary material by the FTC or the Antitrust Division in connection with
the transactions contemplated hereby. Notwithstanding the foregoing, neither
Aviall nor Curtiss shall not be obligated to contest any action or decision
taken by the FTC or the Antitrust Division or any other governmental or
administrative agency, authority or court challenging the consummation of the
transactions contemplated hereby, and nothing contained in this Agreement shall
require Aviall or Curtiss or any of their affiliates to agree to hold separate
or to divest any of their existing assets or any of the Acquired Assets or
otherwise agree to the imposition of any material restriction on the operations
of Aviall or Curtiss or any of their respective affiliates.
8. Required Permits, Licenses, Franchises, etc.
Promptly after the execution hereof Curtiss, with the cooperation and
assistance of Aviall (to the extent they shall not have already done so) (a)
shall make all such applications, filings and other submissions as may be
required or reasonably appropriate to equip Curtiss with all permits, licenses,
franchises, consents, approvals, waivers, authorizations, contract and
operating rights and privileges listed in Exhibit 8, to the extent reasonably
necessary for Curtiss to engage in the full and unrestricted operation of the
Operating Business from and after the Closing, substantially as conducted by
Aviall during the six (6) months prior to the Closing Date (b) shall promptly
respond to all pertinent responses and requests for information pertinent to
such applications, filing and other submissions to the fullest extent
reasonably possible so to do, and (c) shall otherwise use reasonable efforts to
obtain all such permits, licenses, franchises, consents, approvals, waivers,
authorizations, operating rights and privileges.
9. Representations and Warranties of Aviall. Aviall represents and
warrants to Curtiss as follows:
9.1. Organization and Qualification of Aviall. Aviall is a corpora-
tion duly incorporated, validly existing and in good standing under the laws of
the State of Delaware. Aviall has the corporate power and authority to carry
on the Operating Business and to own or lease properties in the places where
such business is now conducted and where such properties are now owned or
leased.
Except as set forth in Exhibit 9.1, Aviall is qualified as a foreign
corporation and is in good standing in the following jurisdictions: Florida;
New York. There are no other jurisdictions where the failure of Aviall to be
qualified as a foreign corporation would materially adversely affect the
Operating Business.
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<PAGE> 29
9.2. Subsidiaries. Aviall has no subsidiaries or affiliates, active
or inactive, that own or operate the Operating Business, or that own any of
the Acquired Assets or whose participation is required to consummate this
transaction.
9.3. Financial Statements. Attached hereto as Exhibit 9.3 are true,
complete and accurate copies of (i) a statement of the net assets of the
Operating Business as of December 31, 1995 (the "1995 Net Assets Statement") and
(ii) a statement of the operating income (reflecting earnings before interest
and taxes) of the Operating Business for the two year period ended December 31,
1995 (collectively, the "Financial Statements"). The Financial Statements have
been prepared from the books and records of Aviall relating to the Operating
Business and are in accordance with GAAP (subject to the modifications set
forth in Exhibit 2.2). The 1995 Net Assets Statement fairly presents all of
the assets and liabilities of the Operating Business as of the date thereof.
The Statement of Operating Income fairly presents the results of operation for
said period. The Financial Statements reflect and disclose all material
accounting changes adopted by Aviall during the period covered thereby.
9.4. Absence of Certain Changes. Since December 31, 1995 Aviall has
operated the Operating Business only in the ordinary course of business and
consistent with past practice and has not:
9.4.1. Incurred any material obligation or liability (absolute
or contingent), relating to the Operating Business, other than current
liabilities incurred, and obligations under contracts entered into, in the
ordinary course of business;
9.4.2. Discharged or satisfied any material lien or encumbrance
or paid any material obligation or liability relating to the Operating
Business (absolute or contingent) other than liabilities shown in the Net
Asset Statement, disclosed on the Exhibits hereto or current liabilities
incurred since the date thereof in the ordinary course of business;
9.4.3. Sold, assigned or transferred any of its material
Acquired Assets relating to the Operating Business or canceled any debts or
claims relating to the Operating Business other than in the ordinary course
of business;
9.4.4. Mortgaged, pledged or subjected to lien, charge or any
other encumbrance, any material Acquired Assets, tangible or intangible,
relating to the Operating Business, other than (i) in the ordinary course
of business; (ii) relating to any current state or local property taxes not
yet due and payable; (iii) in connection with Aviall s bank credit
facility; and (iv) any mechanics or other liens securing repair charges not
yet payable arising in the ordinary course of business.
9.4.5. Waived any rights of substantial value relating to the
Operating Business, whether or not in the ordinary course of business;
9.4.6. Declared or made any material payment or distribution
relating to the Operating Business to its shareholders or to any inter-
company accounts, other than normal inter-company transfers consistent with
past practices relating to the Operating Business;
9.4.7. Suffered any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the Acquired
Assets or the Operating Business;
9.4.8. Made or suffered, or agreed to make or suffer, any new
material contract or agreement or any amendment, modification or
termination of any existing material contract or agreement relating to the
Operating Business;
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<PAGE> 30
9.4.9. Received notice or had knowledge of any material employment
claim relating to the Operating Business, including but not limited to any
National Labor Relations Board matters, municipal, state and federal discrimin-
ation matters, Americans with Disabilities claims, OSHA or state OSHA claims,
ERISA, wage and hour or any other claim an employee may have against his
employer by reason of his employment, whether or not filed with any court or
government agency other than routine grievance matters, none of which is
material;
9.4.10. Entered into, or agreed to enter into, any material
transaction relating to the Operating Business other than in the ordinary
course of business;
9.4.11. Granted any increase in the wage rates or salaries of any of
the employees or agents of Aviall relating to the Operating Business (other
than merit, salary equalization or promotion increases in the ordinary course
of business and consistent with past policies or increases pursuant to any
agreement listed in the Exhibits hereto), or any bonus to any such employee or
agent (other than any bonuses and other incentive compensation pursuant to
existing programs and consistent with past practices), or, except in the
ordinary course of its business and consistent with past policies, entered into
any other contract or commitment relating to the Operating Business which would
increase in any amount the benefits or compensation of any such employee or
agent;
9.4.12. Sold or transferred or granted to any party or parties
any license, or granted an option to acquire a license, to engage in any of
the activities of the Operating Business; or
9.4.13. Suffered any other event or condition of any character
which materially adversely affected the business, operations, properties,
assets or condition, financial or otherwise, of the Operating Business.
9.5. Real Property. Attached hereto as Exhibit 9.5 is a true,
complete and accurate description of all interests in real property used by
or leased to Aviall insofar as they relate to the Operating Business.
Aviall does not own any real property used in the Operating Business.
Aviall has valid leases, not in default, as to such real property leased by
it, all free and clear of all liens, mortgages, charges or encumbrances of
any nature whatsoever, except:
9.5.1. Those described in Exhibit 9.5.1;
9.5.2. Any liens for current state and local property taxes or
general or special assessments not in default; and
9.5.3. Such liens, encumbrances, easements, rights of way,
building and use restrictions, exceptions, reservations and limitations as
do not in any material respect detract from the value of the property
subject thereto or interfere with or impair the present and continued use
thereof in the usual and normal conduct of the Operating Business.
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<PAGE> 31
9.6. Tangible Personal Property. Aviall owns all material tangible
personal property included in the Acquired Assets, free and clear of all
liens, claims, charges, encumbrances and security interests of any kind or
nature, except as stated in Exhibit 9.6. Except as otherwise set forth in
Exhibit 9.6, such tangible personal property is adequate for the conduct of
the Operating Business as presently conducted. At Closing, Curtiss will
receive all such tangible personal property free and clear of all liens,
claims, charges, encumbrances and security interests of any kind or nature,
except as set forth in Exhibit 1.1. To the best of Aviall's knowledge, such
tangible personal property owned or leased by Aviall and regularly utilized
in the Operating Business, and described in Exhibit 1.2.1, is in good
operating condition and repair (ordinary wear and tear excluded), is usable
in the Operating Business of Aviall as presently conducted and has been
maintained and repaired in accordance with customary industry practices,
except as may otherwise be noted on Exhibit 9.6.
9.7. Intangible Personal Property. Attached hereto as Exhibit 9.7 is
a schedule that contains a true, complete and accurate list of all
intangible personal property of Aviall as related to the Operating
Business, including all patents, patent applications, trademarks, trademark
applications and registrations therefor, options to purchase property of
others and any licenses (including but not limited to software licenses as
licensee) and other agreements or arrangements providing for the right to
use the property of others in the conduct of the Operating Business.
Aviall is not a licensor in respect of any patents, trade secrets,
technical data, inventions, know-how, trademarks, trade names, copyrights
or applications therefor relating to the Operating Business, except as
stated in Exhibit 9.7. Except as disclosed in Exhibit 9.7, Aviall owns or
possesses adequate licenses or other rights to use all patents, trade
secrets, technical data, trademarks, trade names or copyrights necessary to
conduct the Operating Business as now operated, and has not received notice
that its use of such patents, trade secrets, technical data, trademarks,
trade names or copyrights infringes the rights of others. Except as set
forth in Exhibit 9.7, there are no adverse claims, liens, encumbrances, or
security interests upon or affecting the items of intangible property
described therein and, except to the extent set forth therein, Aviall is
the owner of all right, title and interest in and to such intangible
property.
9.8. Vendor Data and Equipment. Except as set forth on Exhibit 9.8
hereto, Aviall owns or has the right to use and has in its possession and
control all technical data and test equipment required by the U.S. Federal
Aviation Administration and necessary to conduct the Operating Business in
the ordinary course.
9.9. Contracts and Agreements. Except as set forth in Exhibit 9.9
attached hereto, Aviall is not a party to any material written or oral,
express or implied:
9.9.1. Contract or commitment for the employment of any officer
or employee relating to the Operating Business that is not terminable on,
at most, 30 days' prior notice;
9.9.2. Contract or commitment to any labor union relating to the
Operating Business;
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<PAGE> 32
9.9.3. Lease to it as lessee of personal property relating to
the Operating Business;
9.9.4. Contract, excluding purchase orders in the ordinary
course of business, for the supply of materials, supplies, equipment or
services relating to the Operating Business by it in excess of $50,000 in
the aggregate, or which requires more than 30 days for cancellation;
9.9.5. Continuing contract or commitment for the future purchase
of materials, supplies, equipment or services relating to the Operating
Business in excess of the requirements of the Operating Business as
conducted during the past six (6) months and in excess of $50,000 in the
aggregate;
9.9.6. Contract with an original equipment manufacturer ("OEM")
whose parts or components Aviall services or overhauls in connection with
the Operating Business;
9.9.7. Lease of real or personal property relating to the
Operating Business under which it is lessor with an annual base obligation
of more than $50,000 or a total remaining rental obligation of more than
$50,000;
9.9.8. Bonus, pension, profit-sharing, retirement, stock
purchase or stock option plan or any hospitalization, insurance or similar
plan or practice, formal or informal, in effect with respect to employees
of Aviall relating to the Operating Business;
9.9.9. Advertising contract or commitment relating to the
Operating Business;
9.9.10. Insurance policy relating to the Operating Business
other than listed in Exhibit 9.14; or
9.9.11. Material contract or commitment relating to the
Operating Business not made in the ordinary course of business.
Exhibit 9.9 is a true, complete and accurate list of all material
Contracts relating to the Operating Business (except for Contracts listed
in other Exhibits hereto) to which Aviall is, as of the date of this
Agreement, a party or by which it is bound. All of the contracts and
commitments listed in Exhibit 9.9 are valid and binding obligations of
Aviall and, to the best of Aviall's knowledge, of the other parties thereto
in accordance with their respective terms and conditions. To the best of
Aviall's knowledge and belief, all of the contracts and agreements listed
in Exhibit 9.9 and the other Exhibits hereto are in full force and effect
and except as indicated therein are assignable to Curtiss without the
consent of the other parties thereto. Aviall is not and, to the best of
Aviall's knowledge, no other party to any such contract or agreement is in
material breach thereunder. To the best of Aviall's knowledge, no event
has occurred which, with the lapse of time or giving of notice, or both,
would constitute a material breach or a default or waiver of right
thereunder. True and correct copies of all documents described in any
Exhibit attached hereto have been made available or delivered to Curtiss.
9.10. Original Equipment Manufacturers Parts and Components. Aviall
has written agreements in full force and effect with each of the
manufacturers of parts and components which it services or overhauls listed
on Exhibit 9.10 hereto pursuant to which Aviall has the rights to purchase
parts and components as set forth therein.
9.11. Required Services. Exhibit 9.11 contains an accurate and
complete description of all material services provided to the Operating
Business from and after January 1, 1994 by any unit or portion of Aviall or
any of its affiliates other than the Operating Business.
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<PAGE> 33
9.12. Required Permits, Licenses, Franchises, etc. Exhibit 9.12
contains a listing of all material permits, licenses, franchises, consents,
approvals, waivers, authorizations, operating rights and privileges held by
Aviall that are required or have been used in connection with the full and
unrestricted operation of the Operating Business during the past 12 months.
Except as disclosed on Exhibit 9.12, Aviall has at all times since January
1, 1994 held all material licenses, permits and authorizations necessary for
the lawful conduct of the Operating Business, and has complied in all material
respects with, and Aviall is not in default in any material respects under any
such material licenses, permits and authorizations. Aviall is not in default in
any material respect under any of the applicable statutes, laws, ordinances,
rules and regulations of all Federal, state, local and foreign governmental
bodies, agencies and subdivisions having, asserting or claiming jurisdiction
over it or over any part of its operations that may have an effect on the
Operating Business.
9.13. Litigation. Except as listed in Exhibit 9.13, there are no claims,
actions, suits or proceedings pending or, to the best of Aviall's knowledge,
threatened against or involving Aviall, at law or in equity or by any govern-
mental department, commission, board, bureau, agency or instrumentality or
other person which relate to and which would reasonably be expected to have a
material adverse effect on the Operating Business or the Acquired Assets or
would seek to restrain, delay or prevent, or change the terms of the trans-
actions contemplated hereby or seek damages or other relief in connection
therewith. Aviall is not operating under, nor subject to, nor in default with
respect to, any material order, writ, injunction or decree of any court or
governmental agency or body that has or would reasonably be expected to have a
material adverse effect upon the Operating Business or the Acquired Assets. As
of the date of this Agreement, Aviall is not engaged in any material litigation
initiated by it to recover claims for money due to, or any damages sustained
by, any of its properties, real or personal, relating to the Operating
Business.
9.14. Insurance. Exhibit 9.14 is a true, complete and accurate list
of all material insurance policies and other insurance coverage currently
in force with respect to the Operating Business and the Acquired Assets.
Except as described in Exhibit 9.14, the business, properties and assets of
Aviall relating to the Operating Business that are of an insurable nature
are covered by insurance of the nature and in the amounts reasonable and
customary within the industry for such businesses, properties and assets,
and such insurance will be kept in full force and effect until the Closing
Date.
9.15. No Conflict. Except as disclosed in any Exhibit hereto or as
provided in the HSR Act, the execution, delivery and performance of this
Agreement and compliance with the terms hereof by Aviall will not (i)
conflict with, or result in the breach of, any of the terms, conditions or
provisions of, or constitute a default under, or result in the creation of
any material lien, charge or encumbrance upon any of the Acquired Assets
pursuant to Aviall s certificate of incorporation or bylaws, or pursuant to
any relevant indenture, loan agreement, mortgage, material lease, material
agreement or other material instrument to which Aviall is a party or by
which it is bound, or (ii) require the consent, approval or authorization
of any governmental authority.
9.16. Execution. The Board of Directors of Aviall has duly and
validly approved the execution of this Agreement and has authorized the
performance by Aviall of all the acts and transactions contemplated hereby.
Except as set forth in Exhibit 9.16, no other approval or authorization of
this Agreement or the acts and transactions contemplated hereby is required
by law or otherwise in order to make this Agreement binding upon Aviall.
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<PAGE> 34
9.17. Compliance with Applicable Laws. Except as set forth on Exhibit
9.17 hereto, as related to the Operating Business, Aviall is not in
material default or violation of the Foreign Corrupt Practices Act ("FCPA")
or any other United States federal, state or local statutes, laws or
regulations, or any foreign statutes, laws or regulations applicable to any
of the Acquired Assets or the Operating Business, has not received any
notice alleging any such defaults or violations or potential defaults or
violations, and has not paid commissions to its sales agents that (i)
exceed the normal and customary range of commissions paid to agents within
the geographic areas and industries in which such agents operate except to
the extent that any excess is commensurate with the lawful responsibilities
of and/or expenses incurred by, such agents; and (ii) have been or will be
determined to relate to a violation of the FCPA by Aviall in connection
with the Operating Business.
9.18. Taxes and Tax Returns. Aviall has duly filed all Federal, state
and local tax returns required to be filed by it and has duly paid or made
provisions for the payment of all taxes (including, but not limited to,
withholding, social security and unemployment taxes) which have been
incurred or are due and payable pursuant to such returns or pursuant to any
assessment with respect to taxes in such jurisdictions, whether or not in
connection with such returns, the failure to pay of which could,
individually or in the aggregate, have a material adverse effect upon the
Acquired Assets or the Operating Business.
9.19. Receivables. Set forth on Exhibit 9.19 is a true, complete and
accurate list showing all of the receivables of Aviall relating to the
Operating Business as of December 31, 1995, together with the aging
thereof. Except as set forth in Exhibit 9.19 and except for the Excluded
Receivables, the receivables set forth on Exhibit 9.19 and those accruing
since December 31, 1995 (collectively, the "Receivables") are collectible
in the ordinary course of business, or have been collected, in an amount
equal to the Net Receivable Amount (as defined in Section 4.6.3), were
derived from sales in the ordinary course of business, are not subject to
off-set or counterclaim, and are free of all liens and restrictions,
including, but not limited to, supplier's liens, whether voluntary or
statutory. Except as set forth on Exhibit 9.19, and except for the
Excluded Receivables, the reserves to the Receivables are adequate and
consistent with past practices. To the extent not covered by said
reserves, all Receivables constituting Acquired Assets will be good and
collectable before the expiration of one (1) year of the Closing Date and
are not subject to any claims or offsets.
9.20. Inventories. Except as stated in Exhibit 9.20, the items of
inventory being sold under this Agreement (excluding the Excluded
Inventory) exist in fact, are current, were purchased in the ordinary
course of business, are properly traceable to authorized sources of the
items; are in the aggregate valued at the lesser of cost or fair market
value, and were manufactured by either (a) the OEM of such items or an
authorized supplier to the OEM of such items in accordance with all
applicable requirements, or (b) the holder of a Federal Aviation
Administration Parts Manufacturing Authorization (or corresponding foreign
authorization) for such items.
9.21. Representations. This Agreement, the Exhibits and all of the
other material and information supplied to Curtiss by Aviall or its agents
or representatives relating to Aviall are free of any untrue statements of
material fact and do not omit to state a material fact necessary to make
the statements herein contained not misleading. To the best of Aviall's
knowledge, there is nothing which has not been set forth or disclosed
herein which currently materially adversely affects the Operating Business
or the Acquired Assets.
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<PAGE> 35
9.22. Construction of Certain Provisions. It is understood and
agreed that neither the specification of any dollar amount in the
representations and warranties contained in this Agreement nor the
inclusion of any specific item in the Exhibits is intended to imply that
such amounts or higher or lower amounts, or the items so included or other
items, are or are not material, and neither party shall use the fact of the
setting of such amounts or the fact of the inclusion of any such item in
the Exhibits in any dispute or controversy between the parties as to
whether any obligation, item or matter is or is not material for purposes
hereof; provided, however, that the representations and warranties which
are specifically included in this Agreement and which expressly are made
with respect to matters which are material to the Operating Business shall
not be affected by the foregoing.
9.23. Knowledge Regarding Representations. To Aviall's knowledge,
there is no inaccuracy or misstatement in, or breach of, any representation
or warranty of Curtiss contained herein.
9.24. No Implied Representation. EXCEPT TO THE EXTENT SET FORTH
HEREIN, IT IS THE EXPLICIT INTENT OF EACH PARTY HERETO THAT AVIALL IS NOT
MAKING ANY REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED,
BEYOND THOSE EXPRESSLY GIVEN IN THIS AGREEMENT, INCLUDING, BUT NOT LIMITED
TO, ANY IMPLIED WARRANTY OR REPRESENTATION AS TO CONDITION,
MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO ANY
OF THE ACQUIRED ASSETS AND IT IS UNDERSTOOD THAT CURTISS TAKES ALL OF SUCH
PROPERTIES AND ACQUIRED ASSETS ON AN "AS IS" AND "WHERE IS" BASIS. It is
understood that any cost estimates, projections or other predictions
contained or referred to in the Exhibits hereto and any cost estimates,
projections or predictions or any other information contained or referred
to in other materials that have been or shall hereafter be provided to
Curtiss or any of its affiliates, agents or representatives are not and
shall not be deemed to be representations or warranties of Aviall.
9.25 Location of Inventory. Aviall represents that, except as to
items that may be out for service or repair and parts kept on consignment
with Sun Country Airlines and Aviation Sales Company, all tangible personal
property normally used by the Operating Business is located in Miami,
Florida or Melville, New York.
10. Representations and Warranties of Curtiss.
Curtiss hereby represents, warrants and agrees as follows:
10.1 Organization, Qualification and Capitalization. Curtiss is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Delaware. Curtiss has the corporate power and
authority to carry on its business and to own or lease its properties in
the places where such business is now conducted and where such properties
are now owned or leased.
10.2 Litigation. Except as listed in Exhibit 10.2, there are no
actions, suits or proceedings pending or, to the best of Curtiss's
knowledge, threatened against or involving Curtiss, at law or in equity or
by any governmental department, commission, board, bureau, agency or
instrumentality or other person that might have material adverse affect on
the property, assets or business of Curtiss or would seek to restrain,
delay or prevent, or change the terms of the transactions contemplated
hereby or seek damages or other relief in connection therewith. Curtiss is
not operating under, nor is it subject to, nor in default with respect to,
any material order, writ, injunction or decree of any court or governmental
agency or body that would have any material effect on the transaction
contemplated hereby.
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<PAGE> 36
10.3. No Conflict. Except as disclosed in any Exhibit hereto or as
provided in the HSR Act, the execution and delivery of this Agreement and
compliance with the terms hereof by Curtiss will not conflict with, or result
in the breach of, any of the terms, conditions or provisions of, or constitute
a default under, or result in the creation of any lien, charge or encumbrance
upon any of the properties or assets of Curtiss pursuant to any corporate
charter, by-law, indenture, mortgage, lease, agreement or other instrument to
which Curtiss is a party or by which it is bound, or require the consent,
approval or authorization of any governmental authority or any other person.
10.4. Execution. The Boards of Directors of Curtiss and of Curtiss-
Wright Corporation have duly and validly approved this Agreement and have
authorized the performance by Curtiss of all the acts and transactions
contemplated hereby. No other approval or authorization of this Agreement
or the acts and transactions contemplated hereby is required by law or
otherwise in order to make this Agreement binding upon Curtiss.
10.5. Representations. This Agreement does not contain any untrue
statements of material fact by Curtiss or omissions by Curtiss to state a
material fact necessary to make the statements herein contained not
misleading.
10.6. Knowledge Regarding Representations. To Curtiss's knowledge,
there is no inaccuracy or misstatement in, or breach of, any representation
or warranty of Aviall contained herein.
11. Conditions Precedent to Obligations of Curtiss.
Each and every obligation of Curtiss under this Agreement that has to
be performed on or after the date hereof shall be subject to the
satisfaction or waiver by Curtiss on or before the Closing Date of the
following conditions:
11.1. Performance. All of the terms, covenants and conditions of
this Agreement to be complied with or performed by Aviall on or before the
Closing Date shall have been fully complied with or performed in all
material respects or waived by Curtiss. Aviall shall have delivered to
Curtiss a certificate to that effect dated the Closing Date and signed on
behalf of Aviall by an officer thereof.
11.2. Representations. The representations and warranties made by
Aviall herein shall be correct in all material respects on and as of the
Closing Date, with the same force and effect as though such representations
and warranties had been made on the Closing Date. Aviall shall have
delivered to Curtiss a certificate to that effect dated the Closing Date
and signed on behalf of Aviall by an officer thereof.
11.3. HSR Act Waiting Periods. (i) All waiting periods applicable to
transactions contemplated by this Agreement under the HSR Act shall have
expired or terminated or been granted early termination; (ii) all other govern-
mental or regulatory approvals the absence of which would have a material
adverse effect upon the conduct of the Operating Business by Curtiss or Curtiss
s ownership or control of the Acquired Assets or the Operating Business shall
have been obtained and (iii) (x) no suit, action or proceeding by any United
States federal or state governmental, regulatory or administrative agency or
authority (a "Governmental Authority") shall be pending and (y) Curtiss shall
not have been advised in writing by any Governmental Authority that such
Governmental Authority intends to file or commence any suit, action or
proceeding, which, in either case, seeks to enjoin, restrain or prohibit the
consummation of the transactions contemplated hereby or to impose limitations
on the ability of Curtiss to exercise full rights of ownership of the Acquired
Assets or require the divestiture by Curtiss of any Acquired Assets. Curtiss
shall deliver to Aviall copies or any writing described in clause (ii) of the
preceding sentence promptly upon receipt.
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<PAGE> 37
11.4. Required Permits, Licenses, Franchises, etc. Curtiss shall have
received (i) its own counterparts of, or effective assignment of, or
temporary or interim authority to operate pending the issuance of, all permits,
licenses, franchises, consents, approvals, waivers, authorizations, contract
and operating rights and privileges listed in Exhibit 8, and (ii) all
required consents to assignment to Curtiss of all Contracts referred to in
Exhibit 9.9 to this Agreement (except for any novations of government
contracts, which shall be obtained promptly following the Closing), in such
form so as thereby to enable Curtiss to conduct the Operating Business from
and after the Closing substantially as conducted by Aviall during the six (6)
months prior to the Closing .
11.5. Proceedings. Prior to the Closing Date no material litigation
shall have been initiated by any United States governmental or public body
or department or agency thereof or any other person questioning the
legality of the transactions contemplated by this Agreement which, in the
reasonable opinion of counsel to Curtiss, makes it undesirable to proceed
with such transactions.
11.6. Material Adverse Changes. Between December 31, 1995 and the Closing
Date no materially adverse changes to or developments concerning the Operating
Business, including but not limited to its financial condition or operations as
they existed on December 31, 1995, shall have occurred.
11.7. Opinion of Counsel to Aviall. Curtiss shall have received the
written opinion of Haynes and Boone, L.L.P., counsel to Aviall, dated the
Closing Date, to the effect that:
11.7.1. Aviall is a corporation duly incorporated, validly
existing and in good standing, under the laws of the State of Delaware.
Aviall is in good standing as a foreign corporation in the State of
Florida;
11.7.2. Aviall has full corporate power to transfer the
Operating Business and the Acquired Assets as provided herein;
11.7.3. All corporate and other proceedings required to be taken
by or on the part of Aviall to authorize the carrying out of this Agreement
and the delivery of the Acquired Assets to Curtiss in accordance with the
terms hereof have been duly and properly taken; and
11.7.4. This Agreement has been duly executed by Aviall and is a
legal, valid and binding obligation of Aviall enforceable in accordance
with its terms (subject to bankruptcy and equitable remedies exceptions)
and does not (i) violate the certificate of incorporation or bylaws of
Aviall, or (ii) breach, or result in a default under any of the contracts
listed on Exhibit 11.7.4.
11.8. Stockholder Approval. Curtiss shall have received the written
opinion of Morris, Nichols, Arsht & Tunnell, Delaware counsel to Aviall,
dated the Closing Date, to the effect that no Aviall stockholder approval
of the transactions contemplated by this Agreement is required.
11.9. Non-Competition Agreement. Curtiss shall have received, in the
form attached hereto as Exhibit 11.9, a fully executed, binding agreement
by Aviall not to engage in certain acts or conduct of a competitive nature
as related to the Operating Business.
11.10. Environmental Reports. Curtiss shall have received the
results of environmental studies commissioned or to be commissioned by it
of the two principal Miami properties where the Operating Business is
conducted, said results indicating to the reasonable satisfaction of
Curtiss that the two said properties are free of material environmental
impairment.
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<PAGE> 38
11.11. Access. Between the date of this Agreement and the Closing Date,
Aviall shall have given to Curtiss and its authorized representatives
reasonable access upon reasonable notice during reasonable business hours and
in such manner as not unduly to disrupt their respective normal business
activities, to any and all premises, properties, contracts, commitments, books,
records and affairs of the Operating Business and shall have caused its
respective officers and employees to furnish to Curtiss any and all financial,
technical and operating data and other information pertaining to the Operating
Business as Curtiss may from time to time reasonably request; provided,
however, that such access shall not include access to any item or property not
related specifically to the Operating Business. Curtiss agrees that prior to
the Closing Date it will keep confidential all non-public information regarding
Aviall furnished to it by Aviall, provided, however, that Curtiss may disclose
such information to such representatives, attorneys, accountants, bankers and
other persons retained by Curtiss in connection with the transactions contem-
plated herein who similarly agree to keep such information confidential; and
provided further, that Curtiss shall also have the right, in connection with
the assignment of contracts, licenses, certificates, leases, commitments or
other rights to be assigned or transferred to Curtiss as provided herein, and
upon the giving of reasonable notice to Aviall, to disclose and discuss matters
related to the rights to be assigned or transferred hereunder directly with the
parties having the power to assign or transfer such rights, regardless of
whether or not the information is considered nonpublic.
11.12. FAA Air Agency Certificate. Nothing shall have come to the
attention of Curtiss that causes it to have reasonable grounds to believe
that the FAA will not issue the FAA Air Agency Certificate to Curtiss
promptly after Closing.
12. Conditions Precedent to Obligations of Aviall.
Each and every obligation of Aviall under this Agreement to be
performed on or after the date hereof shall be subject to the satisfaction
or waiver by Aviall on or before the Closing Date of the following
conditions:
12.1. Performance. All the terms, covenants and conditions of this
Agreement to be complied with or performed by Curtiss on or before the
Closing Date shall have been complied with or performed in all material
respects or waived by Aviall. Curtiss shall have delivered to Aviall a
certificate to that effect dated the Closing Date and signed by an officer
of Curtiss.
12.2. Representations. The representations and warranties made by
Curtiss herein shall be correct in all material respects on and as of the
Closing Date, with the same force and effect as though such representations
and warranties had been made on the Closing Date. Curtiss shall have
delivered to Aviall a certificate to that effect dated the Closing Date and
signed by an officer of Curtiss.
12.3. HSR Act Waiting Periods. (i) All waiting periods applicable to
the transactions contemplated by this Agreement under the HSR Act shall
have expired or terminated or been granted early termination and (ii) all
other governmental or regulatory approvals the absence of which would have
a material adverse effect upon the ability of Aviall to consummate the
transactions contemplated hereby shall have been obtained.
12.4 Stockholder Approval. Aviall shall have received the written
opinion of Morris, Nichols, Arsht & Tunnell, Delaware counsel to Aviall,
dated the Closing Date, to the effect that no Aviall stockholder approval
of the transactions contemplated by this Agreement is required.
<PAGE>
<PAGE> 39
12.5. Opinion of Counsel to Curtiss. Aviall shall have received an
opinion of counsel to Curtiss, dated the Closing Date, to the effect that:
12.5.1 Curtiss is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware;
12.5.2. Curtiss has full corporate power to complete the
transactions contemplated under this Agreement;
12.5.3. All corporate and other proceedings required to be taken
by or on the part of Curtiss to carry out this Agreement in accordance with
the terms hereof have been duly and properly taken; and
12.5.4. This Agreement has been duly executed by Curtiss and is
the legal, valid and binding obligation of Curtiss, enforceable in
accordance with its terms (subject to bankruptcy and equitable remedies
exception).
12.6. Certain Consents. Prior to Closing, Aviall shall have received
the consent of (i) its senior lenders; and (ii) the landlords of the leased
real property relating to the Operating Business located in Miami, Florida,
to the consummation of the transactions contemplated by this Agreement. In
this regard, Aviall represents and warrants to Curtiss that Aviall is
required to obtain each such consent pursuant to written agreements with
such third parties, and that its credit agreement with its senior lenders
requires that the sale of the Operating Business by Aviall be "on terms
satisfactory to the Managing Agents" (consisting of NationsBank of Texas,
N.A., Canadian Imperial Bank of Commerce, New York Agency, The First
National Bank of Boston and Morgan Guaranty Trust Company of New York).
13. Survival of Representations and Warranties; Indemnification.
13.1. Survival. The representations, warranties and agreements made
herein and in the Exhibits hereto by Curtiss and Aviall shall remain
operative and in full force and effect for one (1) year from and after the
Closing Date regardless of any investigation made by or on behalf of either
such party, except that representations, warranties and agreements based
upon Environmental Matters or tax claims or litigation shall survive for
their respective statutes of limitation periods except for the provisions
of Sections 3.1, 3.2 and 13.1, which shall survive forever, and the
provisions of Sections 4.4, 4.7, 4.8, 4.9, 4.10, and 4.11, which shall
survive for a period of five years from the Closing Date.
13.2. Indemnification. Aviall on the one hand and Curtiss on the
other each, as an indemnifying party, agrees to defend, indemnify and hold
the other and each of such other s affiliates, directors, officers,
employees and agents, and each of the heirs, executors, successors and
assigns of the foregoing, harmless from and against any damages,
liabilities, losses and expenses (including reasonable attorneys' fees) of
any kind or nature whatsoever that may be sustained or suffered by the
other based upon a breach by such indemnifying party of any obligation with
respect to the purchase price or of any representation, warranty or
covenant made in this Agreement or in any Exhibit hereto, or by reason of
any claim, action or proceeding asserted or instituted growing out of any
matter or thing covered by such representations, warranties, or covenants.
<PAGE>
<PAGE> 40
13.3. Claim Threshold. Notwithstanding any provision to the contrary
contained in this Agreement, Curtiss shall not make any claim against Aviall
pursuant to this Article 13 (or any indemnification provision herein that is
subject to this Article 13), other than (i) claims under Article 2 hereof
related to adjustments to the purchase price, (ii) claims under 3.2.5 relating
to warranty work done by Curtiss for Aviall, (iii) claims under Section 4.11
relating to proration items, and (iv) claims under Section 6.4 relating to the
remediation of material environmental impairment identified prior to Closing,
until the dollar amount of all such loss to Curtiss for such claims, shall
exceed in the aggregate the amount of $175,000, and, if such amount is
exceeded, Aviall shall be required to pay only the amount by which such
aggregate loss to Curtiss for all such breaches exceeds $175,000; provided,
however, that Aviall s obligation and liability for any and all breaches of the
representations, warranties, covenants and agreements set forth in this
Agreement shall not exceed in the aggregate the amount of the Purchase Price.
Notwithstanding any provision to the contrary contained in this Agreement,
Aviall shall not make any claim against Curtiss pursuant to this Article 13
other than (i) claims under Article 2 hereof related to adjustments to the
purchase price, (ii) claims under 3.2.5 relating to warranty work done by
Curtiss for Aviall, and (iii) claims under Section 4.11 relating to proration
items, until the dollar amount of all such loss to Aviall for such claims shall
exceed in the aggregate the amount of $175,000, and, if such amount is
exceeded, Curtiss shall be required to pay only the amount by which such
aggregate loss to Aviall for all such breaches exceeds $175,000; provided,
however, that Curtiss obligation and liability for any and all breaches of
the representations, warranties, covenants and agreements set forth in this
Agreement shall not exceed in the aggregate the amount of the Purchase
Price.
13.4. Mechanics. The party seeking indemnification hereunder (the
"Indemnified Party") shall give written notice to the indemnifying party
(the "Indemnifying Party") of its indemnification claims hereunder,
specifying the amount and nature of the claim, and giving the Indemnifying
Party the right to contest any such claim. As related solely to claims by
third parties, to the extent that the Indemnifying Party undertakes the
defense of any such claim in good faith by proceeding diligently at its
expense, and without materially impairing the financial conditions or
operations of the Indemnified Party, the Indemnified Party shall be
entitled to indemnity hereunder only if, and to the extent that, such
defense is unsuccessful as determined by a final judgment of a court of
competent jurisdiction or is settled with the consent of the Indemnifying
Party.
13.5. Sole Remedy. Except as may otherwise be provided herein and
except for any action based upon fraud, this Article 13 is intended to set
forth the exclusive and entire remedy of the Indemnified Party against the
Indemnifying Party in respect of any monetary damages, liabilities, losses
and expenses that are the subject of indemnification under Section 13.2
hereof.
14. Termination.
14.1. General. Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the
Closing Date:
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<PAGE> 40
14.1.1. By mutual written consent of Aviall and Curtiss;
14.1.2. By Curtiss or Aviall, if the Closing Date shall not have
occurred on or prior to May 31, 1996 (or such later date as shall have been
approved by the parties hereto), unless such failure of such occurrence
shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe the covenants, agreements and conditions
hereof to be performed or observed by such party at or before the Closing
Date;
14.1.3. By Curtiss or Aviall, if any court of competent
jurisdiction or other governmental body shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement and such order,
decree, ruling or other action shall not have been withdrawn within thirty
(30) days after the date on which such order, decree, ruling or other
action was first issued or taken, or by reason of any litigation or
proceeding pending or threatened to be instituted by any person or
governmental body, which, in either case in the good faith judgment of its
Board of Directors, will in all likelihood result in an order, decree or
ruling enjoining or otherwise prohibiting the transactions contemplated by
this Agreement; or
14.1.4. By Curtiss or Aviall, if any representation or warranty
given or made in this Agreement or any Exhibit hereto by the other was
untrue in any material respect as of the date given or made or as of the
Closing Date, or if any covenant given or made in this Agreement or
pursuant hereto by the other was breached or not performed.
14.2. Effect. In the event of termination or abandonment by
reason of Section 14.1of this Section 14, this Agreement shall forthwith
become void and there shall be no liability of one party hereto to the
other by reason of this Agreement unless the reason for termination or
abandonment was caused by the action, the failure to act, the
misrepresentation, omission or breach by the party to be charged with such
liability.
15. Expenses; Finders' Fees.
Each party shall pay its own expenses in connection with this
Agreement and the transactions contemplated hereby. Aviall shall indemnify
Curtiss against any claims of third parties for brokerage commissions or
finders' fees in connection with the transactions contemplated hereby
insofar as such claims are alleged to be based on arrangements made by
Aviall or any stockholder or authorized agent of Aviall. Aviall represents
that the only such arrangement made by Aviall is with Salomon Brothers and
Merrill Lynch, as to whose fees Aviall shall be solely responsible.
Curtiss shall indemnify Aviall against any such claim insofar as they are
alleged to be based on arrangements made by Curtiss.
16. Publicity.
Aviall and Curtiss each agrees that, without the written consent of
the other, it will not issue a press release or otherwise publicly disclose
the transactions contemplated herein except as may be required by law.
<PAGE>
<PAGE> 41
17. Miscellaneous.
17.1. Notices. All notices and other communications hereunder shall
be sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery service or, to
the extent receipt is confirmed, telecopy, telefax or other electronic
transmission service to the appropriate address or number as set forth
below. Notices to Aviall shall be addressed to:
Aviall, Inc.
2055 Diplomat Drive
Dallas, Texas 75234
Attention: Jeffrey J. Murphy
Senior Vice President & General Counsel
Telecopy Number: (214) 406-2271
with a copy to:
Haynes and Boone, L.L.P.
901 Main Street
Suite 3100
Dallas, Texas 75202
Attention: Janice V. Sharry, Esq.
Telecopy Number: (214) 651-5940
or at such other address and to the attention of such other Person as
Aviall may designate by written notice to Curtiss. Notices to Curtiss
shall be addressed to:
Curtiss-Wright Flight Systems Shelby, Inc.
201 Old Boiling Springs Road
Shelby, North Carolina 28152
Attention: George J. Yohrling,
Senior Vice President/General Manager
Telecopy Number 704-481-2257
with a copy to
Curtiss-Wright Corporation
1200 Wall Street West, Suite 501
Lyndhurst, NJ 07071
Attention: Dana M. Taylor, Jr.,
General Counsel and Secretary
Telecopy Number 201-438-5680
or at such other address and to the attention of such other Person as
Curtiss may designate by written notice to Aviall.
17.2. Entire Agreement. This Agreement and the Exhibits hereto and
made a part hereof contain the entire agreement between the parties hereto
with respect to the transactions contemplated herein and supersede any and
all other agreements, oral or written, in respect of the subject matter of
this Agreement.
17.3. Amendments. Curtiss and Aviall, by mutual consent of their
respective authorized officers, may amend, modify and supplement this
Agreement in such manner as may be agreed upon by them in writing, but this
Agreement shall not be otherwise amended, modified or supplemented.
17.4. Governing Law, Jurisdiction and Venue.
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<PAGE> 42
17.4.1. This Agreement and all related documents (except to the
extent, if any, otherwise expressly stated in such other documents) shall
be governed by, construed and enforced in accordance with the laws of the
State of Delaware, without regard to choice of law principles.
17.4.2. EACH OF THE PARTIES HEREBY IRREVOCABLY AND
UNCONDITIONALLY: (I) AGREES THAT ANY ACTION, SUIT OR PROCEEDING BY ANY
PERSON ARISING FROM OR RELATING TO THIS AGREEMENT OR ANY RELATED DOCUMENT
OR ANY STATEMENT, COURSE OF CONDUCT, ACT, OMISSION, OR EVENT OCCURRING IN
CONNECTION HEREWITH OR THEREWITH (COLLECTIVELY, "RELATED LITIGATION") MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION SITTING
IN THE STATE OF DELAWARE, SUBMITS TO THE JURISDICTION OF SUCH COURTS, AND
TO THE FULLEST EXTENT PERMITTED BY LAW AGREES THAT IT WILL NOT BRING ANY
RELATED LITIGATION IN ANY OTHER FORUM; (II) WAIVES ANY OBJECTION WHICH IT
MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY RELATED LITIGATION
BROUGHT IN ANY SUCH COURT, WAIVES ANY CLAIM THAT ANY SUCH RELATED
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, AND WAIVES ANY RIGHT
TO OBJECT, WITH RESPECT TO ANY RELATED LITIGATION BROUGHT IN ANY SUCH
COURT, THAT SUCH COURT DOES NOT HAVE JURISDICTION; AND (III) CONSENTS AND
AGREES TO SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER LEGAL PROCESS IN ANY
RELATED LITIGATION BY REGISTERED OR CERTIFIED U.S. MAIL, POSTAGE PREPAID,
AT THE ADDRESS FOR NOTICES DESCRIBED IN SECTION 17.1 HEREOF, AND CONSENTS
AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE IN EVERY RESPECT VALID AND
EFFECTIVE SERVICE (BUT NOTHING HEREIN SHALL AFFECT THE VALIDITY OR
EFFECTIVENESS OF PROCESS SERVED IN ANY OTHER MANNER PERMITTED BY LAW).
17.5. Captions. The captions of Sections and Subsections of this
Agreement are for convenience and reference only, and are not to be
considered in construing this Agreement.
17.6. Successors, etc. This Agreement and all of the provisions
hereof shall be binding upon and inure to the benefit of Curtiss and Aviall
and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by either of the parties hereto without the prior written consent
of the other party hereto; except that (i) Curtiss may assign this
Agreement to Curtiss-Wright Corporation or to any wholly owned subsidiary
or sub-subsidiary of itself or of Curtiss-Wright Corporation; and (ii)
Aviall may assign its rights under this Agreement, including, without
limitation, its rights to the Holdback Amount, to its senior lenders as
security for Aviall's performance under its bank credit facility.
17.7. Waiver. Either party hereto shall have the right to waive any
one or more conditions precedent to Closing and to proceed with the
transactions contemplated by this Agreement, without, however, releasing
the other of its obligations from any liability for loss or damage
sustained by reason of any such breach of any representation, warranty or
covenant.
17.8. Counterparts. This Agreement may be executed in counterparts,
each of which shall consist of an original but all of which taken together
shall constitute one and the same instrument.
* * * * * <PAGE>
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed and delivered in their respective corporate names as of the
date of and year first above written.
AVIALL, INC.
By: s/Jeffrey Murphy
Name: Jeffrey Murphy
Title: Senior Vice President
CURTISS-WRIGHT FLIGHT SYSTEMS, INC.
By: s/David Lasky
Name: David Lasky
Title: Chairman
<PAGE>
<PAGE> 44
Guaranty by Curtiss-Wright Corporation
This Guaranty made this 25th day of April 1996 by and between
Curtiss-Wright Corporation (hereinafter, "CWC"), a Delaware corporation with
its principal offices located in Lyndhurst, New Jersey, and Aviall, Inc.
(hereinafter, "Aviall"), a Delaware corporation with its principal offices
located in Dallas, Texas.
WHEREAS, CWC is the sole shareholder of Curtiss-Wright Flight Systems,
Inc. (hereinafter, "Curtiss"), a Delaware corporation with its principal
offices located in Fairfield, New Jersey; and.
WHEREAS, Curtiss is prepared to enter into an Asset Purchase Agreement
of even date herewith with Aviall, that provides, subject to certain
conditions, for the sale by Aviall to Curtiss and the purchase by Curtiss from
Aviall of all of the assets of a certain business (the "Operating Business")
presently owned by Aviall, and for the assumption by Curtiss of certain
liabilities associated with that Operating Business; and
WHEREAS, Aviall would be unwilling to enter into the said Asset Purchase
Agreement but for having the performance obligations to be assumed by Curtiss
thereunder guaranteed by CWC.
NOW, THEREFORE, in consideration of the matters described above and in
consideration of the execution of the Asset Purchase Agreement, CWC makes the
following irrevocable, unconditional guaranty to Aviall.
CWC guarantees the performance by Curtiss of each and every obligation
undertaken and agreement made by Curtiss in the Asset Purchase Agreement.
CWC agrees that Aviall may from time to time extend the time for
performance or otherwise modify, alter or change the Asset Purchase Agreement,
may extend the time for payment of all sums guaranteed, and may receive and
accept notes, checks and other instruments for the payment of money made by
Curtiss, and extensions or renewals of such instruments without in any way
releasing or discharging CWC from its obligations under this Guaranty. This
Guaranty shall not be released, extinguished or modified or in any way affected
by the failure on the part of Aviall or its assigns to enforce all the rights
or remedies available to it under this Guaranty.
This Guaranty shall be construed and interpreted in accordance with the
laws of the State of Delaware.
In Witness Whereof each party to this Guaranty has caused it to be
executed on the date indicated below.
CURTISS-WRIGHT CORPORATION
By: s/ David Lasky
Name: David Lasky
Title: Chairman and President
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