SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Act of 1934
Date of Report (Date of earliest event reported): September 16, 1997
HEICO CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 1-4604 65-0341002
------- ------ ----------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
3000 TAFT STREET, HOLLYWOOD, FLORIDA 33021
------------------------------------------
(Address of principal offices)
Registrant's telephone number, including area code: 954/987-6101
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to a Stock Purchase Agreement, dated July 25, 1997 (the "Stock Purchase
Agreement"), the Registrant, through a wholly-owned subsidiary, acquired on
September 16, 1997, effective as of September 1, 1997, all of the outstanding
capital stock of Northwings Accessories Corporation ("Northwings"), from all of
the shareholders of Northwings. In consideration of this acquisition, the
Registrant paid $6,956,502 in cash and 154,907 shares of the Registrant's common
stock, having an aggregate fair value of $3,543,498, which purchase price was
determined through arms-length negotiations. This acquisition is being accounted
for using the purchase method of accounting.
Northwings is a Federal Aviation Administration authorized overhaul and repair
facility servicing aircraft engine components and airframe accessories.
In connection with this acquisition, the Registrant entered into an employment
agreement with Mr. Ramon Portela, a former shareholder of Northwings.
The source of the cash portion of the purchase price was the proceeds of the
sale, by the Registrant, of a $10 million note receivable from US Diagnostic
Inc., which the Registrant received in connection with the sale of its medical
diagnostic imaging business in July 1996. The Registrant sold the note to a
third party for the $10 million par value of the note, plus accrued interest.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of businesses acquired
The financial statements of Northwings Accessories Corporation required
by Rule 3-05(b) of Regulation S-X are included as Exhibits 99.1 and
99.2.
(b) Pro forma financial information
The following unaudited pro forma consolidated condensed financial
information is furnished in accordance with Article 11 of Regulation
S-X:
Introductory note to unaudited pro forma consolidated condensed
financial statements (page 3).
Unaudited pro forma consolidated condensed balance sheet as of July 31,
1997 (page 4).
Unaudited pro forma consolidated condensed statement of operations for
the nine months ended July 31, 1997 (page 5).
Unaudited pro forma consolidated condensed statement of operations For
the year ended October 31, 1996 (page 6).
1
<PAGE>
(c) Exhibits
2. Stock Purchase Agreement dated July 25, 1997, among HEICO
Corporation, N.A.C. Acquisition Corporation, Northwings
Accessories Corporation, Ramon Portela and Otto Neuman (without
schedules).
10.1 Registration Rights Agreement dated September 16, 1997.
10.2 Employment and Non-compete Agreement dated September 16, 1997, by
and between Northwings Accessories Corporation and Ramon Portela.
10.3 Assignment of Promissory Note by and between HEICO Corporation and
Forum Capital Markets, L.P.
10.4 Second Amendment to the 6 1/2% Convertible Note, dated September
10, 1997, by and among US Diagnostic Inc., and HEICO Corporation.
99.1 Financial statements of Northwings Accessories Corporation for the
six months ended June 30, 1997.
99.2 Financial statements of Northwings Accessories Corporation for the
year ended December 31, 1996.
2
<PAGE>
HEICO CORPORATION AND SUBSIDIARIES
INTRODUCTORY NOTE TO UNAUDITED
PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated condensed balance sheet and
statements of operations utilize the historical financial condition and results
of operations of HEICO Corporation and subsidiaries as of July 31, 1997, and for
the nine months then ended and for the year ended October 31, 1996. The
unaudited pro forma consolidated condensed financial statements have been
prepared on the basis summarized below:
/Bullet/ The unaudited pro forma consolidated condensed balance sheet as of July
31, 1997, assumes that the Company's acquisition of all of the
outstanding capital stock of Northwings Accessories Corporation had
been consummated as of that date.
/Bullet/ The unaudited pro forma consolidated condensed statement of operations
for the nine months ended July 31, 1997, assumes that the Company's
acquisition of all of the outstanding capital stock of Northwings
Accessories Corporation had been consummated as of the beginning of the
nine-month period ended July 31, 1997.
/Bullet/ The unaudited pro forma consolidated condensed statement of operations
for the year ended October 31, 1996, assumes that the Company's
acquisition of all of the outstanding capital stock of Northwings
Accessories Corporation had been consummated as of the beginning of the
year ended October 31, 1996.
The unaudited pro forma consolidated condensed statements of operations are not
necessarily indicative of actual operating results had the acquisition been made
at the beginning of the periods presented or of future results of operations.
3
<PAGE>
HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
as of July 31, 1997
(unaudited)
<TABLE>
<CAPTION>
Northwings
HEICO Accessories Pro Forma Pro Forma
Corporation (1) Corporation (2) Adjustments Combined
--------------- --------------- --------------- --------
ASSETS
Current assets:
<S> <C> <C> <C> <C>
Cash and cash equivalents $ 10,330,000 $ 598,000 $2,643,000 (3) $ 13,571,000
Accounts receivable, net 8,374,000 1,702,000 (100,000) (4) 9,976,000
Inventories 17,282,000 441,000 100,000 (4) 17,823,000
Prepaid expenses and other current assets 1,582,000 14,000 -- 1,596,000
Deferred income taxes 2,062,000 -- 39,000 (4) 2,101,000
----------- ---------- ---------------- ------------
Total current assets 39,630,000 2,755,000 2,682,000 45,067,000
Note receivable 10,000,000 -- (10,000,000) (5) --
Property, plant and equipment, net 7,734,000 399,000 -- 8,133,000
Intangible assets, net 5,156,000 -- 8,904,000 (4) 14,060,000
Unexpended bond proceeds 5,361,000 -- -- 5,361,000
Other assets 2,939,000 3,000 -- 2,942,000
----------- ---------- ---------------- ------------
Total assets $70,820,000 $3,157,000 $1,586,000 $ 75,563,000
=========== ========== ================ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt $342,000 $55,000 -- $ 397,000
Trade accounts payable 3,780,000 168,000 -- 3,948,000
Accrued expenses and other
current liabilities 5,622,000 165,000 $ 50,000 (4) 5,837,000
Income taxes payable 132,000 445,000 -- 577,000
Deferred income taxes payable -- 98,000 -- 98,000
----------- ---------- ---------------- -------------
Total current liabilities 9,876,000 931,000 50,000 10,857,000
----------- ---------- ---------------- -------------
Long-term debt 10,546,000 169,000 -- 10,715,000
----------- ---------- ---------------- --------------
Deferred income taxes 796,000 -- -- 796,000
----------- ---------- ---------------- --------------
Other non-current liabilities 2,290,000 -- 50,000 (4) 2,340,000
----------- ---------- ---------------- --------------
Commitments and contingencies:
Shareholders' equity:
Preferred stock, none issued -- -- -- --
Common stock 54,000 125,000 (124,000) (6) 55,000
Capital in excess of par value 31,929,000 -- 3,542,000 (6) 35,471,000
Retained earnings 18,271,000 1,932,000 (1,932,000) (6) 18,271,000
----------- ---------- ---------------- --------------
50,254,000 2,057,000 1,486,000 53,797,000
Less: Note receivable from employee
savings and investment plan (2,942,000) -- -- (2,942,000)
----------- ---------- ---------------- ---------------
Total shareholders' equity 47,312,000 2,057,000 1,486,000 50,855,000
----------- ---------- ---------------- ---------------
Total liabilities and
shareholders' equity $70,820,000 $3,157,000 $1,586,000 $75,563,000
=========== ========== ================ ===============
</TABLE>
See accompanying notes to unaudited pro forma consolidated financial statements
4
<PAGE>
HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the nine months ended July 31, 1997
(unaudited)
<TABLE>
<CAPTION>
NORTHWINGS
HEICO ACCESSORIES PRO FORMA PRO FORMA
CORPORATION (1) CORPORATION (7) ADJUSTMENTS COMBINED
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 44,535,000 $ 6,410,000 -- $ 50,945,000
------------ ------------ ------------- ------------
Operating costs and expenses:
Cost of sales 30,389,000 3,321,000 * -- 33,710,000
Selling, general and administrative expenses 7,777,000 1,141,000 * $ 48,000 (8) 8,966,000
------------ ------------ ------------- ------------
Total operating costs and expenses 38,166,000 4,462,000 48,000 42,676,000
------------ ------------ ------------- ------------
Income from operations 6,369,000 1,948,000 (48,000) 8,269,000
Interest expense (319,000) (20,000) -- (339,000)
Interest and other income 1,300,000 28,000 (361,000)(9) 967,000
------------ ------------ ------------- ------------
Income before income taxes 7,350,000 1,956,000 (409,000) 8,897,000
Income tax expense (2,404,000) (749,000) 23,000 (10) (3,130,000)
------------ ------------ ------------- ------------
Net income $ 4,946,000 $ 1,207,000 ($ 386,000) $ 5,767,000
============ ============ ============= ============
Net income per share $ 0.78 -- -- $ 0.89
============ ============ ============= ============
Weighted average number of common and
common equivalent shares outstanding 6,343,216 -- 154,907 (11) 6,498,123
============ ============ ============ ============
See accompanying notes to unaudited pro forma consolidated financial statements
<FN>
* Amounts have been reclassified to conform to classifications within HEICO
Corporation's Consolidated Condensed Statement of Operations
</FN>
</TABLE>
5
<PAGE>
HEICO CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
For the year ended October 31, 1996
(unaudited)
<TABLE>
<CAPTION>
NORTHWINGS
HEICO ACCESSORIES PRO FORMA PRO FORMA
CORPORATION (12) CORPORATION (13) ADJUSTMENTS COMBINED
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $34,565,000 $4,707,000 -- $39,272,000
----------- ---------- --------- -----------
Operating costs and expenses:
Cost of sales 22,396,000 2,798,000 * -- 25,194,000
Selling, general and administrative expenses 7,657,000 1,137,000 * $ 37,000 (8) 8,831,000
----------- ---------- --------- -----------
Total operating costs and expenses 30,053,000 3,935,000 37,000 34,025,000
----------- ---------- --------- -----------
Income from operations 4,512,000 772,000 (37,000) 5,247,000
Interest expense (185,000) (26,000) -- (211,000)
Interest and other income 1,058,000 26,000 (400,000)(9) 684,000
----------- ---------- --------- -----------
Income from continuing operations
before taxes 5,385,000 772,000 (437,000) 5,720,000
Income tax expense (1,720,000) (288,000) (13,000)(10) (2,021,000)
----------- ---------- --------- -----------
Net income from continuing operations 3,665,000 484,000 (450,000) 3,699,000
Net income from discontinued operations 963,000 -- -- 963,000
Gain on sale of health care operations 5,264,000 -- -- 5,264,000
----------- ---------- --------- -----------
Net income $9,892,000 $ 484,000 ($450,000) $9,926,000
=========== ========== ========= =============
Net income per share:
From continuing operations $0.62 -- -- $0.61
From discontinued operations 0.17 -- -- 0.16
From gain on sale of health care operations 0.89 -- -- 0.87
----------- ---------- --------- -------------
Net income per share $1.68 -- -- $1.64
=========== ========== ========= =============
Weighted average number of common and
common equivalent shares outstanding 5,903,151 -- 154,907 (11) 6,058,058
=========== ========== ========= =============
See accompanying notes to unaudited pro forma consolidated financial statements
<FN>
* Amounts have been reclassified to conform to classifications within HEICO
Corporation's Consolidated Condensed Statement of Operations
</FN>
</TABLE>
6
<PAGE>
HEICO CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(1) As reported in the Company's Form 10-Q as of and for the nine-month period
ended July 31, 1997.
(2) Represents Northwings Accessories Corporation's balance sheet as of June
30, 1997.
(3) Represents the $2.6 million increase in cash resulting from the cash
proceeds from the sale of the $10 million note receivable (see note 5), net
of the cash portion of the purchase price, including acquisition costs.
(4) Represents the decrease in accounts receivable and increases in inventory,
deferred income taxes, current liabilities and non-current liabilities,
which are to record allowances and reserves utilizing the Company's
methodology, as well as their fair market values and the excess of cost
over the fair value of net assets acquired from the acquisition. The
origins of the purchase cost and its allocation to assets and liabilities
is as follows:
Purchase costs:
Cash paid $6,957,000
HEICO Corporation common stock issued (154,907 shares) 3,543,000
Estimated acquisition costs 400,000
-----------
Total purchase costs $10,900,000
===========
Allocation of purchase costs:
Cash and cash equivalents $598,000
Accounts receivable 1,602,000
Inventories 541,000
Other current assets 14,000
Deferred income taxes 39,000
Property, plant & equipment 399,000
Other assets 3,000
Liabilities assumed (1,200,000)
-----------
Subtotal 1,996,000
Excess of costs over the fair value of
net assets acquired 8,904,000
----------
Total allocation of purchase costs $10,900,000
===========
(5) Represents the sale of the $10 million note receivable from US Diagnostic
Inc., to a third party, the proceeds of which were partially used to fund
the acquisition.
(6) Represents the issuance of 154,907 additional HEICO Corporation common
shares as a portion of the purchase price, net of the elimination of
Northwings Accessories Corporation's common stock and retained earnings.
(7) Represents Northwings Accessories Corporation's statement of operations for
the nine months ended June 30, 1997, which includes the three months ended
December, 1996.
7
<PAGE>
(8) Represents the amortization of the excess of costs over the fair value of
net assets acquired over 20 years, net of the elimination of non-recurring
shareholder expenses as follows:
NINE MONTHS
ENDED YEAR ENDED
JULY 31, 1997 OCTOBER 31, 1996
------------- ----------------
Amortization of excess of costs
over the fair value of net assets
acquired $334,000 $445,000
Elimination of non-recurring
shareholder expenses (286,000) (408,000)
------------- ---------------
$ 48,000 $ 37,000
============= ===============
(9) Represents the elimination of investment income from the $7.4 million cash
used for the acquisition.
(10) Represents the incremental Federal and state income taxes associated with
the increase in pre-tax income from the acquisition.
(11) Represents increase in common shares outstanding as a result of shares
issued as part of the acquisition cost.
(12) As reported in the Company's Form 10-K for the fiscal year ended October
31, 1996.
(13) Represents Northwings Accessories Corporation's statement of operations for
the year ended December 31, 1996.
8
<PAGE>
SIGNATURE
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.
HEICO CORPORATION
Date: September 30, 1997 BY: /s/ THOMAS S. IRWIN
---------------------------------
Thomas S. Irwin
Executive Vice President
Chief Financial Officer
9
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
(c) Exhibits
2. Stock Purchase Agreement dated July 25, 1997, among HEICO
Corporation, N.A.C. Acquisition Corporation, Northwings Accessories
Corporation, Ramon Portela and Otto Neuman (without schedules).
10.1 Registration Rights Agreement dated September 16, 1997.
10.2 Employment and Non-compete Agreement dated September 16, 1997, by
and between Northwings Accessories Corporation and Ramon Portela.
10.3 Assignment of Promissory Note by and betweem HEICO Corporation and
Forum Capital Markets, L.P.
10.4 Second Amendment to the 6 1/2% Convertible Note, dated September
10, 1997, by and among US Diagnostic Inc., and HEICO Corporation.
99.1 Financial statements of Northwings Accessories Corporation for the
six months ended June 30, 1997.
99.2 Financial statements of Northwings Accessories Corporation for the
year ended December 31, 1996.
Exhibit 2
NORTHWINGS ACCESSORIES CORPORATION
STOCK PURCHASE AGREEMENT
JULY 25, 1997
among
HEICO CORPORATION,
N.A.C. ACQUISITION CORPORATION,
NORTHWINGS ACCESSORIES CORPORATION,
RAMON PORTELA,
and
OTTO NEUMAN.
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
PAGE
<S> <C>
EXHIBITS.................................................................................................................v
STOCK PURCHASE AGREEMENT.................................................................................................6
ARTICLE I - Definitions..................................................................................................6
ARTICLE II - Purchase of Shares; Consideration...........................................................................6
2.1 Shares to be Purchased.............................................................................6
2.3 Consideration......................................................................................6
ARTICLE III - Representations and Warranties of HEICO and the Buyer......................................................7
3.1 Organization.......................................................................................7
3.2 Authorization; Enforceability......................................................................7
3.3 No Violation or Conflict...........................................................................7
3.4 Brokers............................................................................................7
3.6 Consents and Approvals.............................................................................7
3.7 Validity of Exchange Shares........................................................................8
3.8 Exchange Act Reports...............................................................................8
3.9 Certain Securities Representations.................................................................8
ARTICLE IV - Representations and Warranties of the Company and the Sellers...............................................9
4.1 Ownership of Shares................................................................................9
4.2 Power and Authority: Enforceability................................................................9
4.3 Organization of the Company........................................................................9
4.4 Authorization; Enforceability......................................................................9
4.5 No Violation or Conflict...........................................................................9
4.6 Consents and Approvals............................................................................10
4.7 Brokers...........................................................................................10
4.8 Capitalization....................................................................................10
4.9 Financial Statements..............................................................................10
4.10 Absence of Undisclosed Liabilities................................................................10
4.11 Subsidiaries and Investments......................................................................10
4.12 Inventories.......................................................................................11
4.13 Accounts and Notes Receivable.....................................................................11
4.14 Conduct of Business...............................................................................11
4.15 Compliance with Laws..............................................................................12
4.16 Litigation........................................................................................12
4.17 Title to and Condition of Personal Property.......................................................13
4.18 Real Property.....................................................................................13
4.19 Intangible Property...............................................................................14
4.20 Governmental Authorizations.......................................................................14
4.21 Other Person Authorizations.......................................................................15
4.22 Insurance.........................................................................................15
4.23 Major Customers and Suppliers; Supplies...........................................................15
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
4.24 Personnel.........................................................................................16
4.25 Labor Relations...................................................................................16
4.26 Employment Agreements and Employee Benefit Plans..................................................16
4.27 Tax Matters.......................................................................................17
4.28 Material Agreements...............................................................................18
4.29 Related Parties...................................................................................20
4.30 Absence of Certain Business Practices.............................................................20
4.31 Products and Services.............................................................................20
4.32 Environmental Matters.............................................................................21
4.33 List of Accounts..................................................................................21
4.34 Certain Claims; Business Generally................................................................21
4.35 Restricted Securities.............................................................................22
4.36 Disclosure........................................................................................22
ARTICLE V - Certain Agreements..........................................................................................22
5.1 Preserve Accuracy of Representations and Warranties...............................................22
5.2 Consents of Third Parties; Governmental Approvals.................................................22
5.3 Operations Prior to the Closing Date..............................................................22
5.4 Acquisition Proposals.............................................................................24
5.5 Name..............................................................................................25
5.6 Access............................................................................................25
5.7 Investigation.....................................................................................25
5.8 Notification......................................................................................25
5.9 Reasonable Efforts................................................................................25
5.10 Publicity.........................................................................................26
ARTICLE VI - Additional Agreements......................................................................................26
6.1 Certain Tax Payments..............................................................................26
6.2 Guarantees........................................................................................26
6.3 Survival..........................................................................................26
6.4 Indemnification...................................................................................26
6.5 Noncompetition; Standstill........................................................................28
6.6 Confidentiality...................................................................................29
6.7 (Omitted).........................................................................................30
6.8 Voting Agreement and Proxy........................................................................30
6.9 Continuing Obligations............................................................................30
6.10 Portela and Aleman Employment Agreements..........................................................31
6.11 Registration Rights Agreement.....................................................................31
6.12 Delivery of Schedules and Exhibits................................................................31
ARTICLE VII - Closing; Conditions Precedent; Termination................................................................31
7.1 Closing...........................................................................................31
7.2 Conditions Precedent to the Obligations of the Buyer and HEICO....................................33
7.3 Conditions Precedent to the Obligations of the Company and the Sellers............................34
7.4 Termination.......................................................................................35
7.5 Notice of Termination.............................................................................36
7.6 Effect of Termination.............................................................................36
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
ARTICLE VIII - Miscellaneous............................................................................................36
8.1 Notices...........................................................................................36
8.2 Entire Agreement..................................................................................37
8.3 Assignment........................................................................................37
8.4 Waiver and Amendment..............................................................................37
8.5 No Third Party Beneficiary........................................................................37
8.6 Severability......................................................................................37
8.7 Expenses..........................................................................................37
8.8 Headings..........................................................................................38
8.9 Counterparts......................................................................................38
8.10 Litigation; Prevailing Party......................................................................38
8.11 Injunctive Relief.................................................................................38
8.12 Governing Law and Venue...........................................................................38
8.13 Risk of Loss......................................................................................38
8.14 Further Assurances................................................................................38
8.15 Remedies Cumulative...............................................................................39
8.16 Participation of Parties; Construction............................................................39
</TABLE>
<PAGE>
EXHIBITS
A Portela Employment Agreement
B Aleman Employment Agreement
C (Omitted)
D (Omitted)
E Registration Rights Agreement
F Division of Purchase Price Consideration
<PAGE>
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into in Dade County, Florida as of
July 25, 1997, among HEICO Corporation, a Florida corporation ("HEICO"), N.A.C.
Acquisition Corporation, a Florida corporation to be formed and to be an
indirect wholly-owned subsidiary of HEICO ("Buyer"), Northwings Accessories
Corporation, a Florida corporation (the "Company"), RAMON PORTELA ("Portela")
and OTTO NEUMAN ("Neuman") (Portela and Neuman are sometimes referred to in this
Agreement individually as a "Seller" and collectively as the "Sellers").
PRELIMINARY STATEMENTS
A. The Sellers collectively own in excess of 98% of all of the issued and
outstanding capital stock (the "Shares") of the Company and have agreed to use
their best efforts to cause the other Shares not owned by the Sellers to be sold
to Buyer on substantially the same price per share as Sellers are receiving.
A. The Buyer desires to acquire from the Sellers, and the Sellers desire to
sell to the Buyer all of the Shares of the Company on the terms and subject to
the conditions set forth in this Agreement.
AGREEMENT
In consideration of the preliminary statements and the respective covenants,
representations and warranties contained in this Agreement, the parties agree as
set forth below.
ARTICLE I
DEFINITIONS
Each term which is defined on SCHEDULE 1 to this Agreement shall have the
meaning ascribed thereto on SCHEDULE 1.
ARTICLE II
PURCHASE OF SHARES; CONSIDERATION
2.1 SHARES TO BE PURCHASED. On the terms and subject to the conditions set
forth herein, on the Closing Date, the Sellers shall sell, transfer, assign,
convey and deliver to the Buyer, all of Sellers' right, title and interest in
and to all of the Shares.
2.2 CONSIDERATION. The aggregate purchase price for all of the Shares shall
be Ten Million Five Hundred Thousand Dollars ($10,500,000). Such Purchase Price
consideration shall be payable in cash and shares of HEICO Corporation Common
Stock and shall be divided among each Seller in the manner set forth on Exhibit
"F" hereto.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF HEICO AND THE BUYER
In order to induce the Company and the Sellers to enter into this Agreement
and to consummate the transactions contemplated hereby, as of the date hereof
and as of the Closing Date, HEICO and the Buyer, jointly and severally, make the
representations and warranties set forth below to the Company and the Sellers.
3.1 ORGANIZATION. Each of HEICO and the Buyer (when formed) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida. Each of HEICO and the Buyer has all requisite right, power and
authority to execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby.
3.2 AUTHORIZATION; ENFORCEABILITY. Subject to the approval of the Board of
Directors of HEICO, the execution, delivery and performance of this Agreement by
HEICO and the Buyer and the consummation by HEICO and the Buyer of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of HEICO and the Buyer. Subject to the approval of
the Board of Directors of HEICO, this Agreement and all other documents to be
executed by HEICO or the Buyer pursuant to this Agreement have been and will be
duly authorized, executed and delivered by them, as applicable, and constitute,
and upon execution will constitute, the legal, valid and binding obligations of
HEICO and the Buyer, as applicable, enforceable against them, as applicable, in
accordance with their respective terms, except to the extent that their
enforcement is limited by bankruptcy, insolvency, reorganization or other laws
relating to or affecting the enforcement of creditors' rights generally and by
general principles of equity.
3.3 NO VIOLATION OR CONFLICT. The execution, delivery and performance of
this Agreement by HEICO and the Buyer and the consummation by HEICO and the
Buyer of the transactions contemplated hereby: do not and will not violate or
conflict with any provision of law or regulation, or any writ, order, judgment
or decree of any court or governmental or regulatory authority, or any provision
of HEICO's or the Buyer's Articles of Incorporation or Bylaws; and do not and
will not, with or without the passage of time or the giving of notice, result in
the breach of, or constitute a default, cause the acceleration of performance,
or require any consent under, or result in the creation of any lien, charge or
encumbrance upon any property or assets of HEICO or the Buyer pursuant to any
material instrument or agreement to which HEICO or the Buyer is a party or by
which HEICO or the Buyer or any of their respective properties may be bound or
affected.
3.4 BROKERS. Except for World Business Brokers, neither HEICO nor the Buyer
has employed any financial advisor, broker or finder and has not incurred and
will not incur any broker's, finder's, investment banking or similar fees,
commissions or expenses, in connection with the transactions contemplated by
this Agreement. The fees owed to World Business Brokers resulting from its
engagement by HEICO shall be the responsibility of HEICO.
3.5 CONSENTS AND APPROVALS. Except for appropriate filings under the
Exchange Act, no consent, approval, waiver or authorization of, or registration,
qualification or filing with or notice to any federal, state or local
governmental or regulatory authority is required to be made by HEICO or the
<PAGE>
Buyer in connection with the execution, delivery or performance of this
Agreement by HEICO or the Buyer or the consummation by them of the transactions
contemplated hereby.
3.7 VALIDITY OF EXCHANGE SHARES. When issued and delivered in accordance
with the terms of this Agreement, the Exchange Shares shall be duly and validly
authorized, issued and outstanding, fully paid and non-assessable, shall not
have been issued in violation of preemptive rights of any Person.
3.8 EXCHANGE ACT REPORTS. As of the respective dates they were filed with
the Commission, HEICO's most recent Form 10-K and each of its Exchange Act
filings with the Commission thereafter, complied in all material respects with
the rules and regulations of the Commission and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. There have been no
material adverse changes to HEICO required to be publicly disclosed by HEICO
that have not been publicly disclosed. To the best knowledge of HEICO, HEICO has
not been informed of any investigation of HEICO by the Securities and Exchange
Commission that could have a material adverse effect on HEICO. Sellers have
received all HEICO's filings with the Commission during the last twelve (12)
months (the "Disclosure Documents").
3.9 CERTAIN SECURITIES REPRESENTATIONS. Each Seller is acquiring the shares
of HEICO ("Securities") for its own account, for investment, and not with a view
to any "distribution" thereof within the meaning of the Securities Act of 1933
(the "Securities Act"), and each Seller has no present or presently contemplated
agreement, undertaking, arrangement, obligation, indebtedness or commitment
providing for the distribution thereof.
(a) Each Seller understands that because the Securities have not been
registered under the Securities Act, it cannot dispose of any or all of the
Securities unless the relevant shares are subsequently registered under the
Securities Act or exemptions from such registration are available. Each Seller
understands that each certificate representing the Securities will bear the
following legend or one substantially similar thereto:
The securities represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") and any other applicable
securities laws. These securities have been acquired for investment and
not with a view to distribution or resale, and may not be sold,
mortgaged, pledged, hypothecated or otherwise transferred without an
effective registration statement for such securities under the Act and
other applicable securities laws or an opinion of counsel satisfactory
to the Company is obtained to the effect that an exemption from such
registration requirements is available. There are certain other
limitations on the public sale of these securities.
(b) Each Seller is sufficiently knowledgeable and experienced in the
making of investments so as to be able to evaluate the risks and merits of its
investment in HEICO, and is able to bear the economic risk of loss of its
investment in HEICO. Each Seller has carefully reviewed the representations
concerning HEICO contained in this Agreement and the information contained in
the Disclosure Documents and has made detailed inquiry concerning HEICO, its
business and its personnel; and the officers of HEICO have made available to
each Seller any and all written information which it has requested and have
answered to such Seller's satisfaction all inquiries made by such Seller.
<PAGE>
(c) The Sellers has been advised that the Securities have not been and
are not presently being registered under the Securities Act or under the "blue
sky" laws of any jurisdiction and that the Company in issuing the Securities is
relying upon, among other things, the representations and warranties of each
Seller contained in this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLERS
In order to induce HEICO and the Buyer to enter into this Agreement and to
consummate the transactions contemplated hereby, as of the date hereof and as of
the Closing Date, the Company and each of the Sellers, jointly and severally,
make the representations and warranties set forth below to HEICO and the Buyer.
4.1 OWNERSHIP OF SHARES. Each Seller is the record and beneficial owner of
the Shares as set forth on Schedule 4.1, free and clear of any and all
Encumbrances.
4.2 POWER AND AUTHORITY: ENFORCEABILITY. The Sellers have all requisite
right, power and authority to enter into this Agreement and each Ancillary
Document to be entered into by them pursuant hereto and to sell, transfer and
deliver the Shares owned by them to the Buyer and perform their obligations
hereunder and thereunder, and this Agreement and each such Ancillary Document
constitutes or, will upon execution thereof constitute, the legal, valid and
binding obligation of the Sellers, enforceable against them in accordance with
its terms, except to the extent that their enforcement is limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally and by general principles of equity.
4.3 ORGANIZATION OF THE COMPANY. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Neither the ownership nor the leasing of the
Company's properties nor the conduct of its businesses requires the Company to
qualify to transact business as a foreign corporation in any jurisdiction. The
Company has all requisite right, power and authority to (a) own or lease and
operate its properties and assets, (b) conduct its business as presently
conducted, and (c) engage in and consummate the transactions contemplated
hereby.
4.4 AUTHORIZATION; ENFORCEABILITY. This Agreement and all other documents to
be executed and delivered by the Company or any of the Sellers pursuant to this
Agreement have been and will be duly authorized, executed and delivered by them,
as applicable, and constitute, and upon execution will constitute, the legal,
valid and binding obligations of the Company and each of the Sellers, as
applicable, enforceable against them, as applicable, in accordance with their
respective terms, except to the extent that their enforcement is limited by
bankruptcy, insolvency, reorganization or other laws relating to or affecting
the enforcement of creditors' rights generally and by general principles of
equity.
4.5 NO VIOLATION OR CONFLICT. The execution, delivery and performance of
this Agreement by the Company and the Sellers and the consummation by the
Company and the Sellers of the transactions contemplated hereby: (a) do not and
will not violate or conflict with any provision of law or regulation, or any
writ, order, judgment or decree of any court or governmental or regulatory
authority, or any provision of the Company's Articles or Certificate of
Incorporation or Bylaws, or other organizational documents or any license,
franchise or permit to which any Seller or the Company is a
<PAGE>
party or by which any of them is bound; and (b) do not and will not, with or
without the passage of time or the giving of notice, result in the breach of, or
constitute a default, cause the acceleration of performance or require any
consent under, or result in the creation of any lien, charge or encumbrance upon
any property or assets of any Seller or of the Company pursuant to any
instrument or agreement to which any of the Sellers or the Company is a party or
by which any of the Sellers or the Company or their respective properties or
assets may be bound or affected, other than instruments or agreements as to
which consent shall have been obtained at or prior to the Closing, each of which
instruments or agreements is listed on Schedule 4.3 hereto.
4.6 CONSENTS AND APPROVALS. No consent, approval, waiver or authorization
of, or registration, qualification or filing with or notice to any federal,
state or local governmental or regulatory authority, or any other Person, is
required to be made by any of the Sellers or the Company in connection with the
execution, delivery or performance of this Agreement by the Company or by the
Sellers or the consummation by the Company or the Sellers of the transactions
contemplated hereby, except for the consents of governmental authorities to the
assignment of the Material Agreements set forth on Schedule 4.4, all of which
will be received prior to the Closing.
4.7 BROKERS. None of the Sellers nor the Company has employed any financial
advisor, broker or finder, and none of them has incurred or will incur any
broker's, finder's, investment banking or similar fees, commissions or expenses
in connection with the transactions contemplated by this Agreement.
4.8 CAPITALIZATION. The issued and outstanding capital stock and securities
of the Company are owned as set forth in Schedule 4.8.
4.9 FINANCIAL STATEMENTS. The Company has previously delivered to the Buyer
a true and complete copy of (a) the balance sheets of the Company at December
31, 1996, and the statements of income and retained earnings of the Company for
the fiscal year ended on such date, the "Unaudited Financial Statements"), and
(b) the balance sheet at May 31, 1997 and statement of income and retained
earnings of the Company for the five-month period ended on such date, (the
"Unaudited Interim Financial Statements"). The Unaudited Financial Statements
and the Unaudited Interim Financial Statements: (a) have been prepared in
accordance with the books of account and records of the Company, which books and
records have been maintained in a consistent manner; (b) fairly present, and are
true, correct and complete statements in all material respects of the Company's
financial condition, assets, liabilities, equity and the results of its
operations and cash flows at the dates and for the periods specified in those
statements.
4.10 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on Schedule
4.10 hereto and except as and to the extent reflected in the unaudited Interim
Financial Statements, the Company has no liabilities, commitments or obligations
of any nature whatsoever, whether accrued, contingent or otherwise and whether
due or to become due (other than nonmaterial, both individually and in the
aggregate, liabilities, commitments or obligations incurred since May 31, 1997
in the ordinary course of business consistent with past practices to Persons
other than the Sellers or Affiliates of the Company or the Sellers) or any
unrealized or anticipated losses from any commitments of the Company, and there
is no basis for assertion against the Company of any such liability, commitment,
obligation or loss.
4.11 SUBSIDIARIES AND INVESTMENTS. The Company has no Investments. The
Company has no Subsidiaries.
<PAGE>
4.12 INVENTORIES. The Inventories of the Company shown on the balance sheets
included in the unaudited Financial Statements and the unaudited Interim
Financial Statements and the Inventories of the Company as of the Closing Date,
are stated and will be stated at not more than the lower of cost or market, are
fit for their particular use, do not and will not include any items below
standard quality, defective, damaged or spoiled, obsolete or of a quality or
quantity not usable or salable in the ordinary course of the business of the
Company as currently conducted (other than items in need of repair in the
ordinary course of business), the value of which has not been fully written down
or reserved against in the audited Financial Statements and the audited Interim
Financial Statements. The Company has and will continue to have adequate
quantities and types of inventory to enable it to conduct its businesses
consistent with past practices and anticipated operations.
4.13 ACCOUNTS AND NOTES RECEIVABLE. The Company shall deliver to HEICO a
list of the accounts and notes receivable showing the balance sheets in the
unaudited Financial Statements. All of such accounts and notes, together with
those as of June 30, 1997 contained in Schedule 4.13, are bona fide, valid and
binding claims arising in the ordinary course of the Company's business, subject
to no valid defenses, counterclaims or setoffs, and are believed to be
collectible in accordance with their terms.
4.14 CONDUCT OF BUSINESS. Except as disclosed on SCHEDULE 4.14 hereto, since
December 31, 1996, the Company has conducted its businesses only in the ordinary
and usual course consistent with past practices and there has not occurred any
material adverse change in its condition (financial or otherwise), results of
operations, properties, assets, liabilities, business or prospects. Without
limiting the generality of the foregoing, except as disclosed on SCHEDULE 4.14,
since December 31, 1996, the Company has not:
(a) declared or paid any dividends or other distribution (whether in
cash, stock or other property) with respect to its capital stock, or otherwise
transferred or agreed to transfer any assets to any of its shareholders or
Affiliates;
(b) suffered any material damage, destruction or loss, whether or not
covered by insurance, which has had or could have an adverse effect on any of
its properties, assets, business or prospects;
(c) voluntarily or involuntarily sold, transferred, surrendered,
abandoned or disposed of any of its assets or property rights (tangible or
intangible), other than inventory and minor amounts of personal property in the
ordinary course of business consistent with past practices at a price equal to
the greater of fair market value or book value;
(d) disclosed any proprietary or confidential information to any third
party;
(e) granted or made any mortgage or pledge or subjected itself or any of
its properties or assets to any Encumbrance, except Permitted Encumbrances;
(f) created, incurred or assumed any liability or indebtedness, for
borrowed money or entered into any capitalized lease obligations;
(g) made or committed to make any capital expenditures;
(h) applied any of its assets to the direct or indirect payment,
discharge, satisfaction or reduction of any amount payable directly or
indirectly to or for the benefit of any Seller or any Affiliate thereof or to
the
<PAGE>
prepayment of any such amounts, or otherwise entered into or modified any
arrangement with any Affiliate of the Company or any Seller;
(i) written off the value of any inventory or any accounts receivable or
increased the reserves for obsolete, damaged, spoiled or otherwise not usable
inventory or doubtful or uncollectible receivables;
(j) granted any increase in the compensation payable or to become
payable to directors, officers or employees (including, without limitation, any
such increase pursuant to any bonus, pension, profit-sharing or other plan or
commitment or otherwise), other than merit increases to officers and employees
(other than the Sellers and their Affiliates) in the ordinary course of business
and consistent with past practices;
(k) altered the manner of keeping its books, accounts or records, or
changed in any manner the accounting practices therein reflected;
(l) accelerated or delayed collection of notes or accounts receivable in
advance of or beyond their regular dates or the dates when the same could have
been collected in the ordinary course of business consistent with past
practices;
(m) allowed its levels of inventory to vary in any material respect from
the levels customarily maintained;
(n) experienced any other event or condition of any character which has
had or could have, individually or in the aggregate, a material adverse effect
on the condition (financial or otherwise), results of operations, assets,
liabilities, properties, business or prospects of the Company, or on employee,
customer or supplier relations;
(o) engaged in or agreed to engage in any of the transactions or
occurrences which would be prohibited prior to the Closing under SECTION 5.3(b);
or
(p) agreed, whether in writing or otherwise, to do any of the foregoing.
4.15 COMPLIANCE WITH LAWS. Except as set forth on Schedule 4.15, the Company
has conducted its business in compliance with all federal, state, local and
foreign laws, ordinances, regulations, judgments, rulings, orders and other
requirements applicable to it, including without limitation those relating to
(a) the development, testing, manufacture, packaging, distribution and marketing
of products, (b) employment, safety and health, and (c) environmental
protection, building, zoning and land use. No governmental authority has
asserted that the Company is not in compliance with any such laws, ordinances,
regulations, judgments, rulings, orders and other requirements. The Company is
not subject to any order, judgment or decree of any court or governmental
authority. The Buyer has been furnished with true and correct copies of all
reports of inspections of the Company's businesses and properties through the
date hereof under all applicable federal, state, foreign and local laws and
regulations. Except as set forth on Schedule 4.15, there has been no inspection
of the Company's businesses and properties conducted by insurance companies,
consultants, or any other Persons. All deficiencies noted in any such reports
have been corrected.
4.16 LITIGATION. Except as set forth on SCHEDULE 4.16, there are no actions,
suits, investigations, claims or proceedings pending or, to the knowledge of the
Company or any of the Sellers, threatened before any court, governmental or
regulatory authority or arbitrator: (a) affecting the Company (as plaintiff or
defendant) which: (i) could, individually or in the aggregate, have an adverse
effect on the condition (financial or otherwise), results of operations,
properties, assets, liabilities, business or prospects of the Company; or (ii)
without limiting the generality of the foregoing (A)
<PAGE>
threatens to revoke, vary, modify or terminate any of the Governmental
Authorizations or to declare any of them invalid in any respect; (B) involves
any of the Intangible Property; (C) involves any claim against the Company under
any warranty, whether express or implied, on products repaired, overhauls or
services sold by the Company; (D) involves any claim against the Company for
injury to persons, animals or property suffered as a result of the sale,
manufacture or distribution of any product or performance of any repairs,
overhauls or services by the Company including, but not limited to, claims
arising out of the defective or unsafe nature of its products or services; or
(E) involves a claim for specific performance, injunctive relief or other
equitable remedies; or (b) which questions the legality or propriety of the
transactions contemplated by this Agreement; and there exist no facts or
circumstances known to the Company or the Sellers creating a reasonable basis
for the institution of any such action, suit, investigation, claim or proceeding
described in clauses (a) or (b) above. No action, suit, investigation, claim or
proceeding of the kind described in clauses (a) and (b) above have been pending,
settled or adjudicated during the three years preceding the date of this
Agreement.
4.17 TITLE TO AND CONDITION OF PERSONAL PROPERTY. The Company has, and will
have at Closing, good, valid and marketable title to all of the assets of the
Company, including, without limitation, each item of equipment and other
personal property, tangible and intangible, included as an asset in the audited
Interim Financial Statements dated June 30, 1997 (other than inventory disposed
of in the ordinary course of business consistent with past practices since June
30, 1997 to Persons other than the Sellers or Affiliates of the Company or any
of or the Sellers) and to each item of equipment and other personal property,
tangible and intangible, acquired since June 30, 1997, free and clear of any
Encumbrances whatsoever except for Permitted Encumbrances. SCHEDULE 4.17
contains a detailed list as of June 30, 1997 of all machinery, equipment,
vehicles, furniture and other personal property owned by the Company or used by
the Company in the operation of its business, having an original cost of $2,000
or more. All tangible personal property owned by the Company or used by the
Company in the operation of its business is in good operating condition and in a
good state of maintenance and repair, ordinary wear and tear excepted, and is
adequate for the business conducted by the Company. Except for the licenses to
use certain Rights specifically identified on SCHEDULE 4.17, there are no
properties or assets, tangible or intangible, owned by any Person other than the
Company which are used in connection with the business of the Company.
4.18 REAL PROPERTY. SCHEDULE 4.18 sets forth the street address of each
parcel of real property owned by the Company (the "REAL PROPERTY") and a brief
description of the improvements located thereon (the "OWNED IMPROVEMENTS"). The
Sellers have previously delivered to the Buyer, with respect to each parcel of
Real Property: (a) a copy of the deed pursuant to which the Company acquired
such parcel of Real Property; and (b) a copy of an owner's title insurance
policy issued to the Company. The Real Property is not subject to any pending
or, to the Sellers' knowledge, threatened assessments for public improvements
nor is the Real Property subject to any pending, or, to the Sellers' knowledge,
threatened condemnation or eminent domain proceedings. There are no
encroachments onto the Real Property and the Owned Improvements do not encroach
onto any rights-of-way, easements or property of others. The Company possesses
good, marketable and insurable fee simple title to the Real Property, free and
clear of all Encumbrances other than Permitted Encumbrances and matters
reflected on the owner's title insurance policies previously delivered to the
Buyer, which matters, individually and in the aggregate, do not adversely impair
the marketability of the Real Property or the use of the Real Property as it is
now used by the Company. Each of the parcels of Real Property has available
adequate utilities, including electricity, water and sewer, and access for
ingress and egress to and from public roads adjoining all or a part of such
property, in each case which is adequate for use of such property as presently
used by the Company. SCHEDULE 4.18 sets forth the street address of each parcel
of real
<PAGE>
property leased by the Company (the "LEASED PROPERTY"), and a brief description
of the improvements located thereon (the "LEASED IMPROVEMENTS") (the Owned
Improvements and the Leased Improvements are collectively referred to as the
"IMPROVEMENTS"). The Company has previously delivered to the Buyer a true and
complete copy of all of the lease agreements, as amended to date (the "LEASES")
relating to the Leased Property. The Company enjoys peaceful and undisturbed
possession of the Leased Property. All Improvements are structurally sound, in a
state of good maintenance and repair and in a condition adequate and suitable
for the effective conduct therein of the business conducted and proposed to be
conducted by the Company. No Person other than the Company has any right to use
or occupy any part of the Leased Property. Neither any Seller nor the Company
has any knowledge that any Lease will not be renewed upon its expiration date on
terms and conditions substantially similar to the terms existing thereunder.
4.19 INTANGIBLE PROPERTY. Set forth on SCHEDULE 4.19 is a list and
description of all foreign and domestic patents, patent rights, trademarks,
service marks, trade names, brands and copyrights (whether or not registered
and, if applicable, including pending applications for registration) owned,
used, licensed or controlled by the Company and all goodwill associated
therewith (collectively, the "RIGHTS"). Except as set forth on SCHEDULE 4.19:
(a) the Company is the sole and exclusive owner of all right, title and interest
in and to all of the Rights and in and to each invention, formula, software,
trade secret, technology, product, composition, formula, know-how, method or
process used by the Company (together with the Rights, hereinafter collectively
referred to as "INTANGIBLE PROPERTY"), and has the exclusive right to use and
license the same, free and clear of any claim or conflict with the rights of
others; (b) no royalties, honorariums or fees are payable by the Company to any
Person by reason of the ownership or use of any of the Intangible Property; (c)
there have been no claims made against the Company asserting the invalidity,
abuse, misuse, or unenforceability of any of the Intangible Property, and to the
Company's and the Sellers' knowledge, no grounds for any such claims exist; (d)
the Company has not made any claim of any violation or infringement by others of
its rights in the Intangible Property, and to the Company's and the Sellers'
knowledge, no grounds for any such claims exist; (e) the Company has not
received any notice that it is in conflict with or infringing upon the asserted
rights of others in connection with the Intangible Property and neither the use
of the Intangible Property nor the operation of its businesses is infringing or
has infringed upon any rights of others; (f) the Intangible Property is
sufficient and includes all rights necessary for the Company to lawfully conduct
its businesses as presently being conducted; (g) no interest in any of the
Company's rights to any Intangible Property has been assigned, transferred,
licensed or sublicensed by the Company to any Person other than the Buyer
pursuant to this Agreement; (h) to the extent that any item constituting part of
the Intangible Property has been registered with, filed in or issued by, as the
case may be, any government or other regulatory authority, such registrations,
filings or issuances are listed on SCHEDULE 4.19 and were duly made and remain
in full force and effect; and (i) neither the Company nor any of the Sellers has
any knowledge of any act or failure to act by the Company or any of its
directors, officers, employees, attorneys or agents during the prosecution or
registration of, or any other proceeding relating to, any of the Intangible
Property or of any other fact which could render invalid or unenforceable, or
negate the right to issuance of any of the Intangible Property. To the extent
any of the Intangible Property constitutes proprietary or confidential
information, the Company has adequately safeguarded such information from
disclosure. Except as otherwise indicated on SCHEDULE 4.19, all of the
Intangible Property is assignable to the Buyer without alteration or impairment.
4.20 GOVERNMENTAL AUTHORIZATIONS. Set forth on SCHEDULE 4.20 is a list of
all authorizations, consents, approvals, franchises, licenses and permits
required under applicable law or regulation for the operation of the business of
the Company as presently operated (the "GOVERNMENTAL
<PAGE>
AUTHORIZATIONS"). All the Governmental Authorizations have been duly issued or
obtained and are in full force and effect, and the Company is in compliance with
the terms of all the Governmental Authorizations. Neither the Company nor any of
the Sellers have any knowledge of any facts which could be expected to cause
them to believe that the Governmental Authorizations will not be renewed by the
appropriate governmental authorities in the ordinary course. Each of the
Governmental Authorizations may be assigned and transferred to the Buyer in
accordance with this Agreement and will continue in full force and effect
thereafter, in each case without (i) the occurrence of any breach, default or
forfeiture of rights thereunder, or (ii) the consent, approval, or act of, or
the making of any filings with, any Person.
4.21 OTHER PERSON AUTHORIZATIONS. Set forth on SCHEDULE 4.21 is a list of
all authorizations, consents, approvals, franchises, licenses and permits
required by any Person for the operation of the business of the Company as
presently operated (the "OTHER PERSON AUTHORIZATIONS"). All of the Other Person
Authorizations have been duly issued or obtained and are in full force and
effect, and the Company is in compliance with the terms of all the Other Person
Authorizations. Neither the Company nor any of the Sellers have any knowledge of
any facts which could be expected to cause them to believe that the Other Person
Authorizations will not be renewed by the appropriate Person in the ordinary
course. Each of the Other Person Authorizations may be assigned and transferred
to the Buyer in accordance with this Agreement and will continue in full force
and effect thereafter, in each case without (i) the occurrence of any breach,
default or forfeiture of rights thereunder, or (ii) the consent, approval, or
act of, or the making of any filings with, any Person.
4.22 INSURANCE. Set forth on SCHEDULE 4.22 is a list of all insurance
policies providing insurance coverage of any nature to the Company. The Company
has previously delivered to the Buyer a true and complete copy of all of such
insurance policies as amended. Such policies are sufficient for compliance by
the Company with all requirements of law and all Material Agreements. All of
such policies are in full force and effect and are valid and enforceable in
accordance with their terms, and the Company has complied with all material
terms and conditions of such policies, including the payment of premium
payments. None of the insurance carriers has indicated to the Company an
intention to cancel any such policy. The Company has no claim pending or
anticipated against any of the insurance carriers under any of such policies and
there has been no actual or alleged occurrence of any kind which may give rise
to any such claim.
4.23 MAJOR CUSTOMERS AND SUPPLIERS; SUPPLIES. Set forth on SCHEDULE 4.23 is
a list of all customers of the Company and all suppliers of goods or services to
the Company during the fiscal years ended December 31, 1995 and 1996 and the
six-month period ending June 30, 1997, and with respect to each, the name and
address, dollar volume involved and nature of the relationship (including the
principal categories of products purchased or sold). Except as indicated on
SCHEDULE 4.23, all supplies and services necessary for the conduct of the
Company's businesses as presently conducted and as proposed to be conducted may
be readily obtained from alternate sources on comparable terms and conditions as
those presently available to the Company. No facts, circumstances or conditions
exist which create a reasonable basis for believing that the Company or the
Buyer after the Closing Date would be unable to continue to procure and provide
the supplies and services necessary to conduct its business on substantially the
same terms and conditions as such supplies and services are currently procured
and provided. No significant customer or supplier of the Company has terminated
its relationship with the Company or advised the Company or any of the Sellers
of its intention to terminate its relationship with the Company, decreased its
purchases from or sales to the Company, or changed the terms upon which it
purchases from or sells to the Company.
<PAGE>
4.24 PERSONNEL. SCHEDULE 4.24 contains the names, job descriptions and
annual salary rates (and the most recent date of any increase in salary rates)
and other compensation of all employees, officers, directors and consultants of
the Company (including compensation paid or payable by the Company under any
Plans), and a list of all employee policies (written or otherwise), employee
bonus or profit sharing plans, employee manuals or other written statements of
rules or policies concerning employment, including working conditions, paid time
off, vacation and sick leave, a complete copy of each of which (or a
description, if unwritten) has been delivered to the Buyer. Neither the Buyer
nor any of its Affiliates shall have any liability or obligations under or with
respect to the Workers Adjustment Retraining Notification Act in connection with
any of the transactions contemplated in connection herewith.
4.25 LABOR RELATIONS. None of the employees of the Company is a member of
any labor union, and the Company is not a party to, otherwise bound by or, to
the Company's or the Sellers' knowledge, threatened, with any labor or
collective bargaining agreement. None of the employees of the Company is known
to be engaged in organizing any labor union or other employee group that is
seeking recognition as a bargaining unit. Without limiting the generality of
SECTION 4.25, (i) no unfair labor practice complaints are pending or, to the
Company's or the Sellers' knowledge, threatened against the Company, and (ii) no
Person has made or threatened to make any claim, and to the Company's or the
Sellers' knowledge, no Person has made any claim and there is no basis for any
claim, against the Company under any statute, regulation or ordinance relating
to employees or employment practices, including without limitation those
relating to age, sex and racial discrimination, conditions of employment, and
wages and hours.
4.26 EMPLOYMENT AGREEMENTS AND EMPLOYEE BENEFIT PLANS.
(a) EMPLOYMENT AGREEMENTS. Except as set forth on SCHEDULE 4.26, there
are no employment, consulting, severance or indemnification arrangements,
agreements, or understandings between the Company and any officer, director,
consultant or employee ("EMPLOYMENT AGREEMENTS"). The Company has previously
delivered to the Buyer true and complete copies of all of the Employment
Agreements. No such Employment Agreement (i) will require any payment by the
Buyer, HEICO or any of its other Subsidiaries or, except as disclosed on
SCHEDULE 4.26, the Company, to any director, officer or employee of the Company,
or any other party, by reason of the transactions contemplated by this
Agreement, or (ii) provides for the acceleration or change in the award, grant,
vesting or determination of options, warrants, rights, severance payments, or
other contingent obligations of any nature whatsoever of the Company in favor of
any such parties. Except as set forth on SCHEDULE 4.26, the terms of employment
or engagement of all directors, officers, employees, agents, consultants and
professional advisers of the Company are such that their employment or
engagement may be terminated upon not more than two weeks notice given at any
time without liability for payment of compensation or damages and the Company
has not entered into any agreement or arrangement for the management of its
business or any part thereof other than with its directors or employees. The
Company has no unaccrued liability for any arrears of wages, bonuses or other
employee benefits (including, without limitation, termination or severance pay,
sick pay, personal days and holiday pay) for any of their employees.
(b) EMPLOYEE BENEFIT PLANS.
(i) The only employee benefit plan (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), stock
<PAGE>
purchase plan, stock option plan, fringe benefit plan, bonus plan or
any other deferred compensation agreement or plan or funding
arrangement or commitment, policy or practice (including a simplified
employee pension plan) sponsored, maintained or to which contributions
are made by the Company (a "PLAN") are described on SCHEDULE 4.26. The
Company has no "MULTIEMPLOYER PLAN," as such term is defined in ERISA.
With respect to each Plan, the Company has delivered or made available
to the Buyer current, accurate and complete copies of such Plan
(including all other instruments relating thereto).
(ii) With respect to each Plan, (A) there are no actions, suits,
proceedings, investigations or claims pending, or to the knowledge of
the Company or the Sellers, threatened, and neither the Company nor the
Sellers have any knowledge of any facts which could give rise to any
such actions, suits, proceedings, investigations or claims; (B) neither
the Company nor any employee or director thereof or any fiduciary of
any Plan has, with respect to any such Plan, engaged in a prohibited
transaction, as such term is defined in ERISA Section 406, which would
subject the Company to any penalties or other liabilities resulting
from prohibited transactions under ERISA Sections 409 or 502(i); (C) no
event has occurred and no condition exists that would subject the
Company to any penalty under ERISA Sections 502(c) or 502(l); (D) the
Plan and the Company have complied with all applicable requirements of
ERISA; and (E) all insurance premiums related to the Plan required to
be paid as of the Closing Date have been or will be paid at or prior to
the Closing Date.
(iii) With respect to any Plan which is an employee welfare benefit
plan (within the meaning of ERISA Section 3(1)), the Plan does not
prohibit the amendment or termination of the Plan, except that such
amendment or termination may be subject to the terms of any applicable
collective bargaining agreement.
(iv) No Plan has been: (A) terminated; (B) amended in any manner
which would directly or indirectly increase the benefits accrued, or
which may be accrued, by any participant thereunder; or (C) amended in
any manner which would increase the cost to the Company, the Buyer or
HEICO of maintaining such Plan.
4.27 TAX MATTERS.
(a) All federal, state, local and foreign Tax Returns and reports
required to be filed with respect to the Company or its businesses or assets,
including, without limitation, any consolidated federal income tax returns filed
on behalf of the affiliated group (as defined in Section 1504(a) of the Code) of
which the Company is a member, and any combined income tax return filed on
behalf of a group of corporations of which the Company is a member, have been
duly and timely filed as required, are true, correct and complete as filed, and
reflect accurately all liability for Taxes for the periods to which such returns
and documents relate, and all amounts showing as owing thereon have been paid.
All Taxes upon the Company or upon its properties, assets, income or franchises
which are due and payable, and all assessments and taxes upon any group of
corporations of which the Company is a member or upon such group's properties,
assets or income, through the Closing Date have been paid, except as reflected
by accruals on the Closing Date balance sheet.
<PAGE>
(b) All Taxes collectible or payable by the Company or relating to or
chargeable against any of its assets, revenues or income through December 31,
1996 were fully collected and paid by such date and all similar items
collectible or payable through the Closing Date will have been fully collected
and paid by that date. No taxation authority has audited the records of the
Company or given notice of its intention to audit the records of the Company. No
claims or deficiencies have been asserted against the Company with respect to
any Taxes which have not been paid or otherwise satisfied and there exists no
reasonable basis for the making of any such claims. The Company has not waived
any restrictions on assessment or collection of Taxes or consented to the
extension of any statute of limitations relating to taxation.
4.28 MATERIAL AGREEMENTS.
(a) SCHEDULE 4.28 sets forth a brief description of all material written
and oral contracts or agreements to which the Company is a party or by which the
Company or any of its assets or properties is bound or affected, including
without limitation any:
(i) contract resulting in a commitment for expenditure or other
obligation, or which provides for the receipt or potential receipt,
involving in excess of $15,000 in any instance, or series of related
contracts that in the aggregate give rise to rights or obligations
exceeding such amount;
(ii) indenture, mortgage, promissory note, loan agreement, guarantee
or other agreement or commitment for the borrowing or lending of money
or encumbrance of assets;
(iii) agreement which restricts the Company from engaging in any
line of business or from competing with any other Person;
(iv) agreement or arrangement for the sale or lease of any of the
assets, property or rights of the Company outside the ordinary course
of business or requiring the consent of any party to the transfer and
assignment of any assets, property and rights;
(v) agreement relating to any Intangible Property, including
confidentiality or secrecy agreements;
(vi) agreement relating to the development, manufacture,
distribution or sale of any products or products under development by
the Company;
(vii) warranties made with respect to products manufactured,
packaged, distributed or sold by the Company;
(viii) contract for the purchase or lease by the Company of goods,
equipment, supplies or capital assets or the performance by others of
services which the Company reasonably anticipates will involve the
payment by the Company of more than $10,000 after the date hereof or
which extends beyond August 31, 1997 or contract for the purchase by
the Company of raw materials which the Company reasonably anticipates
will involve the payment by the Company of more than $100,000 after the
date hereof or which extends beyond August 31, 1997;
<PAGE>
(ix) contract for the sale of products of the Company which the
Company reasonably anticipates will involve the payment of more than
$250,000 after the date hereof or which extends beyond August 31, 1997;
(x) consignment, distributor, dealer, manufacturers representative
or sales agency contract which the Company reasonably anticipates will
involve the payment of more than $10,000 after the date hereof or which
extends beyond August 31, 1997 or advertising representative,
advertising or public relations contract which the Company reasonably
anticipates will involve the payment of more than $25,000 after the
date hereof or which extends beyond August 31, 1997;
(xi) contract not made in the ordinary course of business consistent
with past practices;
(xii) agreement, contract or arrangement with any Affiliates of the
Company or either Seller; or
(xiii) any other contract, agreement, instrument, arrangement or
commitment that is material to the condition (financial or otherwise),
results of operations, assets, properties, liabilities, business or
prospects of the Company (collectively, and together with the
Employment Agreements, Plans and all other agreements required to be
disclosed on any Schedule to this Agreement, the "MATERIAL
AGREEMENTS"). The Company has previously furnished to the Buyer true,
complete and correct copies of all written agreements, as amended,
required to be listed on SCHEDULE 4.28.
(b) None of the Material Agreements was entered into outside the
ordinary course of business of the Company, contains any provisions that could
reasonably be expected to impair or adversely affect in any material way the
operations of the Company, or could reasonably be expected to be performed at a
material loss.
(c) The Material Agreements are each in full force and effect and are
the valid and legally binding obligations of the Company and, to the Company and
the Sellers' knowledge, the other parties thereto, enforceable in accordance
with their respective terms, subject only to bankruptcy, insolvency or similar
laws affecting the rights of creditors generally and to general equitable
principles. Neither the Company nor any of the Sellers have received notice of
default by the Company under any of the Material Agreements, and the Company is
not in default under any of the Material Agreements and no event has occurred
which, with the passage of time or the giving of notice or both, would
constitute a default by the Company thereunder. To the Company and the Sellers'
knowledge, none of the other parties to the Material Agreements is in default
thereunder, nor has an event occurred which, with the passage of time or the
giving of notice or both, would constitute a default by such other party
thereunder. Neither the Company nor any of the Sellers have received notice of
the pending or threatened cancellation, revocation or termination of any of the
Material Agreements, nor are any of them aware of any facts or circumstances
which could reasonably be expected to lead to any such cancellation, revocation
or termination.
(d) Except as otherwise indicated on SCHEDULE 4.28, each of the Material
Agreements may survive the transfer to the Buyer pursuant to this Agreement and
will continue in full force and effect under the current terms thereof, in each
case without breaching the terms thereof or resulting in the
<PAGE>
forfeiture or impairment of any right thereunder and without the consent,
approval or act of, or the making of any filing with any Person.
4.29 RELATED PARTIES. Except as disclosed on SCHEDULE 4.29, none of the
Sellers nor any current director, officer or employee of the Company
(individually a "RELATED PARTY" and collectively the "RELATED PARTIES") or any
Affiliate of any of the Sellers or any Related Party: (a) owns, directly or
indirectly, any interest in any Person which is a competitor, potential
competitor, supplier or customer of the Company; (b) owns, directly or
indirectly, in whole or in part, any property, asset or right, real, personal or
mixed, tangible or intangible (including, but not limited to, any of the
Intangible Property) which is utilized by or in connection with the business of
the Company; (c) is a customer or supplier of the Company; or (d) directly or
indirectly has an interest in or is a party to any contract, agreement, lease,
arrangement or understanding, whether or not in writing, pertaining or relating
to the Company, except for employment, consulting or other personal service
agreements which are listed on SCHEDULE 4.29 hereto.
4.30 ABSENCE OF CERTAIN BUSINESS PRACTICES. None of the Sellers, any Related
Party, any Affiliate of the Sellers or of any Related Party, any agent of the
Company, or any other Person acting on behalf of or associated with the Company,
acting alone or together, has: (a) received, directly or indirectly, any
rebates, payments, commissions, promotional allowances or any other economic
benefits, regardless of their nature or type, from any customer, supplier,
employee or agent of any customer or supplier, official or employee of any
government (domestic or foreign) or other Person; or (b) directly or indirectly,
given or agreed to give any money, gift or similar benefit to any customer,
supplier, employee or agent of any customer or supplier, official or employee of
any government (domestic or foreign), or any political party or candidate for
office (domestic or foreign) or other Person who was, is or may be in a position
to help or hinder the business of the Company (or assist the Company in
connection with any actual or proposed transaction) which (i) may subject the
Company to any damage or penalty in any civil, criminal or governmental
litigation or proceeding, (ii) if not given in the past, may have had an adverse
effect on the assets, business, operations or prospects of the Company or (iii)
if not continued in the future, may adversely affect the assets, business,
operations or prospects of the Company.
4.31 PRODUCTS AND SERVICES.
(a) SCHEDULE 4.31 lists each product repair process or service under
development, developed, manufactured, licensed, distributed or sold by the
Company and any other products in which the Company has any proprietary rights
or beneficial interest (the "PRODUCTS"). Each Product manufactured, repaired or
serviced by the Company has been manufactured, repaired or serviced in
accordance with (i) the specifications under which the Product is normally and
has normally been manufactured, and (ii) without limiting the generality of
SECTION 4.31, the provisions of all applicable laws, policies, guidelines and
any other governmental requirements.
(b) SCHEDULE 4.31 sets forth (i) a list of all Products which at any
time have been recalled, withdrawn or suspended by the Company, whether
voluntarily or otherwise, including the date recalled, withdrawn or suspended
and a brief description of the reasons therefor, and (ii) without limiting the
generality of SECTION 4.31, a brief description of all completed or pending
proceedings seeking the recall, withdrawal, suspension or seizure of any
Product, and (iii) a list of all regulatory letters received by the Company or
any of its agents relating to the Company or any of the Products or the
Company's establishments.
<PAGE>
(c) Except as set forth on SCHEDULE 4.31, there exist no set of facts
which could furnish a basis for the recall, withdrawal or suspension of any
product registration, product license, repair or overhaul license, manufacturing
license, wholesale dealers license, export license or other license, approval or
consent of any governmental or regulatory authority with respect to the Company
or any of the Products.
(d) The Company has previously delivered to the Buyer true and complete
copies of all correspondence received or sent by or on behalf of the Company
from or to any federal or state governmental or regulatory authority.
4.32 ENVIRONMENTAL MATTERS. Except as otherwise set forth in SCHEDULE 4.32,
no property owned, leased, used or occupied by the Company currently or in the
past has been used by the Company or any other Person to manufacture, treat,
store, or dispose of any hazardous substance or any other regulated material,
and such property is free of all such substances and materials. Without limiting
the generality of SECTION 4.32, the Sellers and the Company, and any other
Person for whose conduct either it or they are or may be responsible, are in
compliance with all laws, regulations and other federal, state or local
governmental requirements, and all applicable judgments, orders, writs, notices,
decrees, permits, licenses, approvals, consents or injunctions relating to the
generation, management, handling, transportation, treatment, disposal, storage,
delivery, discharge, release or emission of any waste, pollutant or toxic,
hazardous or other regulated substance (including, without limitation, asbestos,
radioactive material and pesticides and the keeping and posting of all Material
Safety Data Sheets and waste manifests) or to any other actions, omissions or
conditions affecting the environment (the "ENVIRONMENTAL LAWS"). Without
limiting the generality of SECTION 4.32, neither the Company nor any other
Person for whose conduct it may be responsible has received any complaint,
notice, order, or citation of any actual or alleged noncompliance with any
Environmental Law, and there is no proceeding, suit or investigation pending or,
to the Company's and the Sellers' knowledge, threatened against the Company or
any such Person with respect to any violation or alleged violation of the
Environmental Laws, and there is no reasonable basis for the institution of any
such proceeding, suit or investigation.
4.33 LIST OF ACCOUNTS. Set forth on SCHEDULE 4.33 is: (a) the name and
address of each bank or other institution in which the Company maintains an
account (cash, securities or other) or safe deposit box; (b) the name and phone
number of the Company's contact person at such bank or institution; (c) the
account number of the relevant account and a description of the type of account;
and (d) the persons authorized to transact business in such accounts.
4.34 CERTAIN CLAIMS; BUSINESS GENERALLY.
(a) There are no claims existing or, to the best of the Company's and
the Sellers' knowledge, threatened under or pursuant to any warranty, whether
express or implied, on products or services sold by the Company. There are no
claims existing and there is no basis for any claim against the Company for
injury to persons, animals or property as a result of the sale, distribution or
manufacture of any product or performance of any service by the Company
including, but not limited to claims arising out of the defective or unsafe
nature of its products or services.
(b) Since May 31, 1997, there has been no event, transaction or
information which has come to the attention of the Company or the Sellers which
could reasonably be expected to have an adverse effect on the business,
operations or prospects of the Company.
<PAGE>
4.35 RESTRICTED SECURITIES. The Sellers are aware of the extent and nature
of certain restrictions on resale of HEICO Common Stock that will or may exist
even if such registration occurs. The Sellers are acquiring the HEICO Common
Stock for their own account and not with a view to their distribution within the
meaning of Section 2(11) of the Securities Act. All of the Sellers are
"ACCREDITED INVESTORS," as defined in the rules promulgated under the Securities
Act. No transfers or gifts of the shares of HEICO may be made except in
compliance with applicable securities laws.
4.36 DISCLOSURE. No representation or warranty of the Company or the Sellers
contained in this Agreement, and no statement, notice, certificate or other
document furnished by or on behalf of the Sellers or the Company to HEICO, the
Buyer or their agents pursuant hereto or in connection with the transactions
contemplated hereby, contains or will contain any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading or omits or will omit to state a
material fact necessary in order to provide a prospective purchaser of the
shares of the Company with full and proper information as to the business,
assets, prospects, financial condition or results of operations of the Company.
ARTICLE V
CERTAIN AGREEMENTS
5.1 PRESERVE ACCURACY OF REPRESENTATIONS AND WARRANTIES. Each of the parties
hereto shall refrain from taking any action which would render any
representation or warranty contained in this Agreement inaccurate as of the
Closing Date.
5.2 CONSENTS OF THIRD PARTIES; GOVERNMENTAL APPROVALS.
(a) The Company, HEICO, the Buyer and the Sellers will act diligently
and reasonably to secure, before the Closing Date, the consent, approval or
waiver, in form and substance reasonably satisfactory to the Buyer and HEICO,
from any party to any Material Agreement required to be obtained to satisfy the
conditions set forth in SECTION 7.2(d); PROVIDED that the Company shall not make
any agreement or understanding affecting the Company as a condition for
obtaining any such consent or waivers except with the prior written consent of
the Buyer (which consent shall not be unreasonably withheld). The Company and
the Sellers shall cause Portela to enter into the Portela Employment Agreement
and the Company and the Sellers shall use their best efforts to cause Aleman to
enter into the Aleman Employment Agreement.
(b) During the period prior to the Closing Date, the parties shall act
diligently and reasonably, and shall cooperate with each other, to secure any
consents and approvals of any Person required to be obtained by them in order to
permit the consummation of the transactions contemplated by this Agreement, or
to otherwise satisfy the conditions set forth in SECTION 7.2(g); PROVIDED that
the Company shall not make any agreement or understanding affecting the Company
as a condition for obtaining any such consents or approvals except with the
prior written consent of the Buyer (which consent shall not be unreasonably
withheld).
5.3 OPERATIONS PRIOR TO THE CLOSING DATE.
<PAGE>
(a) Until the Closing, the Company shall operate and carry on its
business only in the ordinary course and substantially as presently operated.
Consistent with the foregoing, the Company shall (i) keep and maintain the
Company's assets in good operating condition and repair, (ii) use its reasonable
efforts consistent with good business practice to preserve the goodwill of the
suppliers, contractors, licensors, employees, customers, distributors and others
having business relations with it and (iii) continuously maintain insurance
coverage substantially equivalent to that presently maintained by the Company.
The Sellers shall use all reasonable efforts, consistent with past practices, to
promote the Company's business and to maintain the reputation associated with
the Company's business, and shall not take or omit to take any action which
causes, or which is likely to cause, any deterioration of the Company's present
business or relationships with suppliers or customers.
(b) Notwithstanding SECTION 5.3(a ), except as expressly contemplated by
this Agreement, or except with the express written approval of the Buyer the
Company shall not:
(i) enter into or modify any contract, agreement, undertaking or
commitment which would have been required to be set forth on SCHEDULES
4.24, 4.25, 4.26 or 4.28, if in effect on the date hereof or enter into
any contract which cannot be assigned to the Buyer or a permitted
assignee of the Buyer under SECTION 8.3;
(ii) sell, lease (as lessor), transfer or otherwise dispose of
(including any transfers to any Seller or any of its or their
Affiliates), or mortgage or pledge, or impose or suffer to be imposed
any Encumbrance (except Permitted Encumbrances) on, any of the
Company's Assets, other than inventory and minor amounts of personal
property sold or otherwise disposed of in the ordinary course of
business consistent with past practices;
(iii) accelerate or delay collection of any notes or accounts
receivable in advance of or beyond their regular due dates or the dates
when the same would have been collected in the ordinary course of
business, consistent with pat practices;
(iv) delay or accelerate payment of any account payable or other
liability beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of business
consistent with past practices;
(v) make, or agree to make, any distribution of assets (other than
cash) to any Seller or any of its or their Affiliates;
(vi) make any change in the compensation of its employees, other
than changes made in accordance with normal compensation practices and
consistent with past compensation practices;
(vii) allow its levels of inventory to vary in any material respect
from the levels customarily maintained;
(viii) permit to lapse any of its rights to the Intangible Property
listed on SCHEDULE 4.19;
(ix) issue, sell or authorize for issuance or sale any securities or
enter into any commitment with respect to the foregoing;
<PAGE>
(x) redeem, purchase or otherwise acquire, directly or indirectly,
any shares of its capital stock or any option, warrant or other right
to purchase or acquire any such shares;
(xi) declare or pay any dividend or other distribution (whether in
cash, stock or other property) with respect to its capital stock;
(xii) create, incur or assume any liability or indebtedness for
borrowed money, except in the ordinary course of business consistent
with past practices but in no event in an aggregate amount exceeding
$20,000;
(xiii) make or commit to make any capital expenditures in excess of
$20,000 in the aggregate;
(xiv) cancel or waive any material debts, claims or rights or write
off the value of any inventory or accounts receivable or increase the
reserve for uncollectible receivables or obsolete, damaged or otherwise
unsalable inventory, except as required by generally accepted
accounting principles or by law;
(xv) make any loans, advances or capital contributions to any
Person, except routine advances to employees in the ordinary course of
their business in non-material amounts or enter into any termination or
severance arrangement with any employee or consultant;
(xvi) take any action which could reasonably be expected to have a
material adverse affect on the business, assets, operations or
prospects of the Company or the Assets of the Company;
(xvii) apply any of its assets to the direct or indirect payment,
prepayment, discharge, satisfaction or reduction of any amount payable,
directly or indirectly, to or for the benefit of any Affiliate of any
Seller or the Company (except for salary and benefits as currently in
effect and except in accordance with existing agreements and
arrangements which have been disclosed to the other parties hereto in
writing);
(xviii) guaranty any obligation of any Person or enter into or
modify any arrangement with any Affiliate of any Seller or the Company;
(xix) agree, whether in writing or otherwise, to do any of the
foregoing;
(xx) take any action that could cause the representations and
warranties of the Company or the Sellers set forth herein not to be
true and correct at and as of the Closing Date as if made at as of each
such time; or
5.4 ACQUISITION PROPOSALS. Except for the transactions contemplated by this
Agreement, unless and until this Agreement shall have been terminated, neither
the Sellers nor the Company shall, directly or indirectly (i) solicit,
encourage, initiate or participate in any negotiations or discussions with
respect to any offer or proposal to acquire all or substantially all of the
business and properties of the Company, whether by merger, purchase of assets or
otherwise, or (ii) except as required by law, disclose any information not
customarily disclosed to any Person concerning the business and properties
<PAGE>
of the Company, afford to any Person (other than the Buyer and HEICO and their
designees) access to the properties, books or records of the Company or
otherwise assist or encourage any Person, in connection with any of the
foregoing. Without limiting the generality of the foregoing obligations of the
Company and the Sellers, in the event the Company or any Seller shall receive
any offer or proposal of the type referred to in clause (i) above, the Company
shall promptly provide the Buyer with a reasonably detailed description of the
terms and conditions thereof.
5.5 NAME. The Company and each of the Sellers hereby represent, warrant and
covenant to the Buyer and HEICO that the corporate name of the Company is as set
forth on the signature page hereof and further agree and acknowledge that such
name is included with the assets of the Company.
5.6 ACCESS. The Company shall: (i) afford to the other parties hereto and
their agents and representatives reasonable access to the properties, books,
records and other information of the Company, PROVIDED that such access shall be
granted upon reasonable notice and at reasonable times during normal business
hours in such a manner as not to unreasonably interfere with normal business
operations; (ii) use its reasonable efforts to cause its personnel to assist the
other parties hereto in their investigation of the Company; and (iii) furnish
promptly to the other parties all information and documents concerning the
business, assets, liabilities, properties and personnel of the Company as may be
reasonably requested from time to time. In addition, from the date of this
Agreement until the Closing Date, the Company shall cause one or more of its
officers to confer on a regular basis with officers of the Buyer and HEICO and
to report on the general status of its ongoing operations.
5.7 INVESTIGATION. The representations, warranties and covenants set forth
in this Agreement shall not be affected or diminished in any way by any
investigation (or failure to investigate) at any time by or on behalf of the
party for whose benefit such representations, warranties and covenants were
made. All statements contained herein or in any schedule, certificate, exhibit,
list or other document delivered pursuant hereto shall be deemed to be
representations and warranties for purposes of this Agreement. No
representation, warranty, covenant or agreement of any party shall limit the
generality of any other representation, warranty, covenant or agreement of such
party.
5.8 NOTIFICATION. Each party to this Agreement shall promptly notify the
other parties in writing of the occurrence, or threatened occurrence, of (i) any
event that, with the lapse of time or notice or both, would constitute a breach
of this Agreement by such party; (ii) any event that would cause any
representation or warranty made by such party in this Agreement to be false or
misleading in any respect; and (iii) any event which would have been required to
be disclosed herein had such event occurred on or prior to the date of this
Agreement. Each party shall promptly notify the other of any action, suit or
proceeding that is instituted or threatened against such party to restrain,
prohibit or otherwise challenge the legality of any transaction contemplated by
this Agreement. The Company and the Sellers shall promptly notify the Buyer and
HEICO of any lawsuit, claim, proceeding or investigation that may be threatened,
brought, asserted or commenced against the Company or which should have been
listed in any Schedule hereto if such lawsuit, claim, proceeding or
investigation had arisen prior to the date hereof. The updating of any schedule
pursuant to this SECTION 5.8 shall not be deemed to release any party for the
breach of any representation, warranty or covenant hereunder or of any other
liability arising hereunder.
5.9 REASONABLE EFFORTS. Subject to the terms and conditions of this
Agreement, each of the parties shall use its diligent and reasonable efforts in
good faith to take or cause to be taken as promptly as practicable all
reasonable actions that are within its control to cause to be fulfilled: (i)
those
<PAGE>
conditions precedent to its obligations to consummate the transactions
contemplated hereby; and (ii) those actions upon which the conditions precedent
to the other party's obligations to consummate this Agreement are dependent.
5.10 PUBLICITY. The parties agree to reasonably cooperate in issuing any
press release or other public announcement or making any governmental filing
concerning this Agreement or the transactions contemplated hereby. Nothing
contained herein shall prevent any party from at any time furnishing any
information to any governmental authority which it is by law or otherwise so
obligated to disclose or from making any disclosure which its counsel deems
necessary or advisable in order to fulfill such party's disclosure obligations
under applicable law. Nothing contained herein shall prevent HEICO from at any
time furnishing any information to the AMEX or publicly which it is required to
disclose under the applicable rules of the AMEX or the applicable securities
laws.
ARTICLE V
ADDITIONAL AGREEMENTS
6.1 CERTAIN TAX PAYMENTS. The Sellers shall be liable for and shall pay all
Taxes applicable to the sale of the Shares to the Buyer.
6.2 GUARANTEES. Effective as of the Closing, the Buyer shall use its best
efforts to cause the Sellers to be released, as of the Closing, from their
personal guarantees of certain obligations of the Company as listed on SCHEDULE
6.2.
6.3 SURVIVAL. The representations and warranties of the parties hereto
contained in this Agreement or in any exhibit or schedule to this Agreement
shall survive the Closing Date.
6.4 INDEMNIFICATION.
(a) BY THE SELLERS. Subject to the limitations set forth in SECTION
6.4(D), Portela and Neuman agree, jointly and severally, to indemnify and hold
harmless the Buyer and HEICO and their respective directors, officers, employees
and agents from, against and in respect of, the full amount of any and all
liabilities, damages, claims, deficiencies, fines, assessments, losses, taxes,
penalties, interest, costs and expenses, including, without limitation,
reasonable fees and disbursements of counsel (collectively, the "LOSSES"),
arising from, relating to, caused from (whether in whole or in part), in
connection with, or incident to:
(i) any breach, inaccuracy or violation of any of the
representations, warranties, covenants or agreements of the Company or
any of the Sellers contained in this Agreement, in any schedule or
exhibit to this Agreement or in any document or certificate delivered
by any of them at or prior to the Closing;
(ii) any and all loss or liability, including the costs and expenses
of prosecution or defense incurred by the Buyer or HEICO as a
consequence of or relating to any claims and/or litigation currently
pending or threatened (A) against the Company, (B) relating to the
Company or (C) relating to the Shares; and
<PAGE>
(iii) any and all actions, suits, proceedings, demands, assessments
or judgments, costs and expenses incidental to any of the foregoing.
(b) BY THE BUYER. Subject to the limitations set forth in SECTION
6.4(D), the Buyer agrees to indemnify and hold harmless the Company (and its
directors, officers, employees and agents) and the Sellers from, against and in
respect of, the full amount of any and all Losses arising from, in connection
with, or incident to:
(i) any breach, inaccuracy or violation of any of the
representations, warranties, covenants or agreements of the Buyer or
HEICO contained in this Agreement, in any schedule or exhibit to this
Agreement or in any document or certificate delivered by the Buyer or
HEICO at or prior to the Closing;
(ii) with respect to any Seller, any and all payments made by such
Seller under any of the guarantees listed on SCHEDULE 6.2; and
(iii) any and all actions, suits, proceedings, demands, assessments
or judgments, costs and expenses incidental to any of the foregoing.
(c) INDEMNITY PROCEDURE. A party or parties responsible for indemnifying
another party against any matter pursuant to this Agreement is referred to
herein as the "INDEMNIFYING PARTY," and a party or parties entitled to indemnity
is referred to as the "INDEMNIFIED PARTY."
An Indemnified Party under this Agreement shall, with respect to claims
asserted against such party by any third party, give written notice to each
Indemnifying Party of any liability which might give rise to a claim for
indemnity under this Agreement within 60 business days of the receipt of any
written claim from any such third party, and with respect to other matters for
which the Indemnified Party may seek indemnification, give prompt written notice
to each Indemnifying Party of any liability which might give rise to a claim for
indemnity; PROVIDED, HOWEVER, that any failure to give such notice will not
waive any rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are materially prejudiced.
As to any claim, action, suit or proceeding by a third party, the
Indemnifying Party shall be entitled, together with the Indemnified Party, to
participate in the defense, compromise or settlement of any such matter through
the Indemnifying Party's own attorneys and at its own expense. At the
Indemnifying Party's expense, the Indemnified Party shall provide such
cooperation and such access to its books, records and properties as the
Indemnifying Party shall reasonably request with respect to such matter; and the
parties hereto agree to cooperate with each other in order to ensure the proper
and adequate defense thereof; it being understood that the Indemnified Party
shall control any such defense, all at the Indemnifying Party's expense.
An Indemnifying Party shall not make any settlement of any claims without
the written consent of the Indemnified Party, which consent shall not be
unreasonably withheld. Without limiting the generality of the foregoing, it
shall not be deemed unreasonable to withhold consent to a settlement involving
injunctive or other equitable relief against the Indemnified Party or its
assets, employees or business.
With regard to claims of third parties for which indemnification is payable
hereunder, such indemnification shall be paid by the Indemnifying Party upon the
earliest to occur of: (i) the entry of a judgment against the Indemnified Party
and the expiration of any applicable appeal period, or if earlier, five days
prior to the date that the judgment creditor has the right to execute the
judgment or if earlier the date that the Indemnified Party must post any bond
with respect to any judgment or other judicial ruling; (ii) the entry of an
unappealable judgment or final appellate decision against the Indemnified Party;
(iii) a settlement of the claim; or (iv) with
<PAGE>
respect to indemnities for Tax liabilities, upon the issuance of any resolution
by a taxation authority. Notwithstanding the foregoing, expenses of counsel to
the Indemnified Party shall be reimbursed on a current basis by the Indemnifying
Party. With regard to other claims for which indemnification is payable
hereunder, such indemnification shall be paid promptly by the Indemnifying Party
upon demand by the Indemnified Party.
(d) LIMITATIONS. No party shall have any obligation under the
indemnification provisions set forth in SECTIONS 6.5(a) or 6.5(b) until the
aggregate of all claims for which such party is responsible under such
indemnification provisions with respect to any breach of a representation or
warranty exceeds $50,000 (it being understood that such limitation shall be
inapplicable with respect to any breach or violation of any covenant or
agreement); PROVIDED, HOWEVER, that if any party is responsible for
indemnification hereunder for any amount in excess of such amount, then such
amount shall not be deemed applicable and such party shall be responsible to
fully indemnify the other party for all such claims. None of the limitations of
this SECTION 6.4(d) shall apply with respect to indemnification obligations of a
party arising in connection with the breach of any representation, warranty or
covenant set forth in SECTIONS 2.1, 3.2, 3.3, 3.4, 3.5, 4.2, 4.3, 4.4, 4.5,
4.15, 4.16, 4.27 or 4.29 of this Agreement, and none of the limitations of this
SECTION 6.4(d) shall apply with respect to any action based upon intentional or
fraudulent actions, misrepresentations or breaches of any party.
(e) INDEMNIFICATION PAYMENTS NET OF TAXES. All sums payable by an
Indemnifying Party as indemnification under this SECTION 6.5 shall be paid free
and clear of all deductions or withholdings (including any taxes or governmental
charges of any nature) unless the deduction or withholding is required by law,
in which event or in the event the Indemnified Party shall incur any liability
for tax chargeable or assessable in respect of any such payment, the
Indemnifying Party shall pay such additional amounts as shall be required to
cause the net amount received by the Indemnified Party to equal the full amount
which would otherwise have been received by it had no such deduction or
withholding been made or no such liability for taxes been incurred.
(f) SET-OFF. The Buyer and HEICO shall be entitled, at their discretion
and in addition to any other rights and remedies they may have in law and in
equity, to set off at any time and from time to time, the amount of any Losses
against any obligations of HEICO or the Buyer to the Company or any Seller under
this Agreement or under any of the agreements entered into pursuant hereto,
including, without limitation, the Shares.
6.5 NONCOMPETITION; STANDSTILL.
(a) Each of the Sellers and the Company acknowledges that in furtherance
of the sale of the Shares to the Buyer and in order to assure the Buyer and
HEICO that the Buyer and HEICO will retain the value and goodwill of the Shares
and the business so sold, each of the Company and the Sellers agree not to
utilize their special knowledge of the business of the Company and their
relationships with customers, suppliers and others to compete with the Buyer or
HEICO in any business which is the same as the business (the "PROHIBITED
BUSINESS") as conducted by the Company, HEICO or the Buyer, including, without
limitation, the repair and overhaul of aviation parts, including any repairs and
overhauls normally done at FAA repair stations. For a period of three years
beginning on the Closing Date, neither the Company, nor any Seller shall,
directly or indirectly, assist in the creation or development of, engage or have
an interest, anywhere in the United States of America or any other geographic
area where the Company or HEICO does business or in which its Products are
marketed, alone or in association with others, as principal, officer, agent,
employee, director, partner or stockholder (except as an employee or consultant
of the Buyer or HEICO or any of their Affiliates), or through the investment of
capital, lending of money or property, rendering of services or advice or
<PAGE>
otherwise, in any business competitive with or similar to the Prohibited
Business. During the same period, neither the Company nor any Seller shall, nor
shall they permit any of their employees, agents or others under any of their
control to, directly or indirectly, on behalf of the Company or any Seller or
any other Person, (i) call upon, accept business from, or solicit the business
of any Person who is, or who had been at any time during the preceding two
years, a customer of the Company or otherwise divert or attempt to divert any
business from the Buyer or HEICO; or (ii) recruit or otherwise solicit or induce
any person who was an employee of, or otherwise engaged by, the Buyer, HEICO or
the Company at any time after January 1, 1997 to terminate his or her employment
or other relationship with the Company or the Buyer or HEICO, or hire any person
who has left the employ of the Company or the Buyer or HEICO during the
preceding two years. Neither the Company nor any Seller shall at any time,
directly or indirectly, use or purport to authorize any Person to use any name,
mark, logo, trade dress or other identifying words or images which are the same
as or similar to those used currently or in the past by the Company in
connection with any product or service, whether or not such use would be in a
business competitive with that of the Buyer. The ownership or control of up to
five percent of the outstanding voting securities or securities of any class of
a company with a class of securities registered under the Exchange Act shall not
be deemed to be a violation of the provisions of this SECTION 6.5(a). Provided,
however, if Portela's employment under the Portela Employment Agreement is
terminated for a reason other than "cause" (as defined in the Portela Employment
Agreement), the non-compete and non-solicitation period of the Portela
Employment Agreement shall apply to this Section 6.5(a).
(b) Each of the Sellers and the Company hereby agrees that for a period
ending on the date which is ten years from the Closing neither any Seller nor
the Company nor any Affiliate, successor or assign of any of them (regardless of
whether such Person is an Affiliate on the date hereof) will (a) acquire, offer
to acquire, or agree to acquire, directly or indirectly, by purchase or
otherwise, control of HEICO, (b) make, or in any way participate, directly or
indirectly, as advisor or otherwise, in any "solicitation" of "proxies" or
consents to vote (as such terms are used in the proxy rules of the Commission),
or seek to advise or influence any Person with respect to the voting of any
voting securities of HEICO, in opposition to any proposed actions of the Board
of Directors of HEICO or in opposition to any nominees for Directors of HEICO
which nominees have been nominated by HEICO, its management or its Board of
Directors, (c) seek or assist any other party in seeking representation on the
Board of Directors of HEICO through the election to the Board of Directors of
individuals(s) not nominated and supported by HEICO, its management and Board of
Directors, (d) pursue or publicly announce an interest in pursuing an
acquisition of control of HEICO or an alteration of the composition of HEICO's
Board of Directors or (e) advise or otherwise act, alone or in concert with
others, directly or indirectly, to seek to control or influence the management,
Board of Directors or policies of HEICO.
6.6 CONFIDENTIALITY. The Company and the Sellers acknowledge that the
Intangible Property and all other confidential or proprietary information with
respect to the business and operations of the Company are valuable, special and
unique assets included within the Assets of the Company. The Company and the
Sellers shall not, and shall cause their respective Affiliates to not, at any
time, disclose, directly or indirectly, to any Person, or use or authorize or
purport to authorize any Person to use any confidential or proprietary
information with respect to the Company, HEICO or the Buyer, whether or not for
the Company's or any Seller's own benefit, without the prior written consent of
the Buyer and HEICO, including without limitation, information as to the
financial condition, results of operations, customers, suppliers, products,
products under development, inventions, sources, leads or methods of obtaining
new products or business, Intangible Property, pricing methods or formulas, cost
of supplies, marketing strategies or any other information relating to the
Company, HEICO or the Buyer which could reasonably be regarded as confidential,
but not including information which is or
<PAGE>
shall become generally available to the public other than as a result of
disclosure by the Company or a Seller or any of their agents, Affiliates or
representatives or a person to whom any of them has provided such information.
6.7 (OMITTED).
6.8 VOTING AGREEMENT AND PROXY. The Sellers hereby grant to Laurans A.
Mendelson, Chairman of The Board of the Buyer, an irrevocable proxy (the
"Proxy") to vote the shares received pursuant to this Agreement, and any other
HEICO Common Stock owned, directly or indirectly, by Sellers or any Affiliate to
Sellers in the election of the Directors of the Company and in any vote of
stockholders, including, but not limited to, proposed changes of control,
mergers and other similar extraordinary transactions. The Proxy will be voted at
the direction of the majority of the Board of Directors of the Buyer and the
Board of Directors of the Buyer may designate an individual who it selects to be
granted the Proxy in the event that Laurans A. Mendelson should be unable to
vote the Proxy. To enable compliance with this Section, Sellers agree to
identify for Buyer any HEICO Common Stock held by Sellers or Affiliates of
Sellers in brokerage, nominee, custodial or other accounts. This proxy shall
terminate upon the public sale of the specific shares of HEICO as to which this
proxy applies.
6.9 CONTINUING OBLIGATIONS. The restrictions set forth in SECTIONS 6.5, 6.6
and 6.8 are considered by the parties to be reasonable for the purposes of
protecting the value of the business and goodwill of the Company and the Buyer
and HEICO. The parties hereto acknowledge that the Buyer and HEICO would be
irreparably harmed and that monetary damages would not provide an adequate
remedy to the Buyer and HEICO in the event the covenants contained in SECTIONS
6.5, 6.6 and 6.8 were not complied with in accordance with their terms.
Accordingly, the Company and the Sellers agree that any breach or threatened
breach by any of them of any provision of SECTIONS 6.5, 6.6 and 6.8 shall
entitle the Buyer and HEICO to injunctive and other equitable relief without the
posting of any bond or security to secure the enforcement of these provisions,
in addition to any other remedies which may be available to the Buyer and HEICO,
and that the Buyer and HEICO shall be entitled to receive from the Company and
the Sellers reimbursement for all attorneys' fees and expenses incurred by the
Buyer and HEICO in enforcing these provisions. In addition to its other rights
and remedies, the Buyer and HEICO shall have the right to require the Company
and any Seller who breaches any of the covenants contained in SECTIONS 6.5, 6.6
and 6.8 to account for and pay over to the Buyer and HEICO, as the case may be,
all compensation, profits, money, accruals and other benefits derived or
received, directly or indirectly, by the Company or such Seller from the action
constituting such breach. If the Company or any Seller breaches the covenant set
forth in SECTION 6.5, the running of the noncompete period described therein
shall be tolled with respect to the Company or such Seller for so long as such
breach continues. It is the desire and intent of the parties that the provisions
of SECTIONS 6.5, 6.6 and 6.8 be enforced to the fullest extent permissible under
the laws and public policies of each jurisdiction in which enforcement is
sought. If any provisions of SECTIONS 6.5, 6.6 or 6.8 relating to the time
period, scope of activities or geographic area of restrictions are declared by a
court of competent jurisdiction to exceed the maximum permissible time period,
scope of activities or geographic area, the maximum time period, scope of
activities or geographic area, as the case may be, shall be reduced to the
maximum which such court deems enforceable. If any provisions of SECTIONS 6.5,
6.6 or 6.8 other than those described in the preceding sentence are adjudicated
to be invalid or unenforceable, the invalid or unenforceable provisions shall be
deemed amended (with respect only to the jurisdiction in which such adjudication
is made) in such manner as to render them enforceable and to effectuate as
nearly as possible the original intentions and agreement of the parties.
<PAGE>
6.10 PORTELA AND ALEMAN EMPLOYMENT AGREEMENTS. At the Closing, (i) the Buyer
shall, and the Company and the Sellers shall cause Portela to, enter into the
Employment and Non-Competition Agreement attached hereto as EXHIBIT A (the
"PORTELA EMPLOYMENT AGREEMENT"), and (ii) the Buyer shall, and the Company and
the Sellers shall use its best efforts to, cause Humberto Aleman to enter into
the Employment and Non-Competition Agreement attached hereto as EXHIBIT B (the
"ALEMAN EMPLOYMENT AGREEMENT").
6.11 REGISTRATION RIGHTS AGREEMENT. At the closing, the Sellers and Buyer
shall enter into the Registration Rights Agreement attached hereto as Exhibit
"E".
6.12 DELIVERY OF SCHEDULES AND EXHIBITS. Within ten (10) days from the date
of this Agreement, Sellers and the Company shall deliver to Buyer a complete set
of the Schedules and Exhibits called for by this Agreement prepared in good
faith and containing all the required information. The Schedules and Exhibits
must be in form and substance satisfactory to Buyer and HEICO in their sole
discretion.
ARTICLE VII
CLOSING; CONDITIONS PRECEDENT; TERMINATION
7.1 CLOSING. The consummation of the sale and purchase and the transfers and
deliveries to be made pursuant to this Agreement (the "CLOSING") shall take
place at 10:00 a.m. local time (but shall be deemed to have occurred at 12:01
a.m. local time) at the offices of Greenberg Traurig P.A., five business days
after all the closing conditions have been met (the "CLOSING DATE"), or at such
other place, time or date as may be agreed to by the parties. All proceedings to
be taken and all documents to be executed at the Closing shall be deemed to have
been taken, delivered and executed simultaneously, and no proceeding shall be
deemed taken nor documents deemed executed or delivered until all have been
taken, delivered and executed.
(a) At the Closing, the Company and the Sellers shall deliver to the
Buyer:
(i) A Copy of the Articles or Certificate of Incorporation of the
Company certified as of a recent date by the Secretary of State of
Florida and a copy of the by-laws of the Company certified on the
Closing Date by the secretary or an assistant secretary of the Company;
(ii) Certificate of good standing of the Company issued as of a
recent date by the Secretary of State of Florida;
(iii) Incumbency certificates, duly executed and dated the Closing
Date, with respect to the officers of the Company executing this
Agreement;
(iv) Copies of the resolutions of the Board of Directors of the
Company authorizing the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, certified by the
secretary or an assistant secretary of the Company as of the Closing
Date;
<PAGE>
(v) Opinion of counsel to the Company and the Sellers, duly executed
by them and substantially in the form and substance reasonably
satisfactory to counsel for Buyer.
(vi) Duly executed certificates of title (or like documents) with
respect to any vehicles or other equipment included in the Assets of
the Company for which a certificate of title is required in order to
transfer title;
(vii) All consents, waivers or approvals obtained by the Company
with respect to the Assets of the Company or the consummation of the
transactions contemplated by this Agreement; and in particular, the
Company shall have obtained each of the consents to the assignment or
transfer of Material Agreements contemplated by SECTIONS 4.4 and 5.2(a)
hereof;
(viii) The certificate contemplated by SECTION 7.2(f), duly executed
by the Sellers and duly authorized officers of the Company;
(ix) A comfort letter, dated not more than two days prior to the
Closing Date, from the Company's independent public accountants, in
form and substance acceptable to Buyer and HEICO;
(x) The Portela Employment Agreement, duly executed by Portela, and
the Aleman Employment Agreement, duly executed by Aleman substantially
in the forms of EXHIBITS A and B;
(xi) The Registration Rights Agreement (the "REGISTRATION RIGHTS
AGREEMENT"), duly executed by each of the parties thereto other than
HEICO, substantially in the form of EXHIBIT E; and
(xii) Such other bills of sale, assignments and other instruments of
transfer or conveyance as the Buyer and HEICO may reasonably request or
as may be otherwise necessary to evidence and effect the sale,
assignment, transfer, conveyance and delivery of the Assets of the
Company to the Buyer.
In addition to the above deliveries, the Company and the Sellers shall take all
steps and actions as the Buyer may reasonably request or as may otherwise be
necessary to put the Buyer in actual possession or control of the Shares.
(b) At the Closing, the Buyer shall deliver to the Company and/or the
Sellers:
(i) The cash portion (by wire transfer or cashier's check) of the
purchase price and the Shares;
(ii) Copies of the Articles of Incorporation of the Buyer certified
as of a recent date by the Secretary of State of the State of Florida
and copies of the by-laws of the Buyer, certified on the Closing Date
by the secretary or an assistant secretary of the Buyer;
<PAGE>
(iii) Certificates of good standing of the Buyer and HEICO issued as
of a recent date by the Secretary of State of the State of Florida;
(iv) Incumbency certificates, duly executed and dated the Closing
Date, with respect to the officers of HEICO and the Buyer executing
this Agreement;
(v) Copies of the resolutions of Boards of Directors of the Buyer
and HEICO authorizing the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, certified by the
secretary or an assistant secretary of the Buyer, as of the Closing
Date;
(vi) Opinion of counsel to the Buyer and HEICO, duly executed by
Greenberg Traurig, et al. and reasonably acceptable to Buyer;
(vii) The certificate contemplated in SECTION 7.3(c), duly executed
by the duly authorized officers of the Buyer and HEICO;
(viii) The Registration Rights Agreement, executed by HEICO
substantially in the form of EXHIBIT E; and
(ix) The Portela Employment Agreement and the Aleman Employment
Agreement all executed by HEICO or the Buyer, as applicable,
substantially in the forms of EXHIBITS A and B.
7.2 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE BUYER AND HEICO. The
obligations of the Buyer and HEICO to consummate the transactions contemplated
by this Agreement are subject to the satisfaction at or prior to the Closing of
the following conditions.
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Company and the Sellers contained in this Agreement and in any
certificate or other document delivered pursuant to this Agreement shall be true
and correct in all material respects (except for representations and warranties
which are by their terms qualified by materiality, which shall be true and
correct in all respects) as of the Closing Date with the same force and effect
as though made on and as of such date.
(b) COVENANTS PERFORMED. All of the terms, covenants and conditions of
this Agreement to be performed or complied with by the Company or the Sellers on
or prior to the Closing Date shall have been duly performed or complied with in
all respects.
(c) NO MATERIAL ADVERSE CHANGE. There shall not have occurred any event
or condition of any character which has adversely affected or may adversely
affect in any material respect the Buyer's ability to operate the business of
the Company as such business is currently being operated, and no event or
condition shall have occurred which has adversely affected or may adversely
affect in any material respect the Assets of the Company or the condition
(financial or otherwise) of the Company or the Company's assets, liabilities,
earnings, book value, business, operations or prospects.
(d) CONSENTS. The Company shall have obtained all authorizations
consents and approvals of Persons reasonably necessary or desirable to
consummate the transactions contemplated by this Agreement, each of which shall
have been obtained without the imposition of any adverse terms or condition.
<PAGE>
(e) DUE DILIGENCE. The Buyer's due diligence review with respect to the
Company and the assets and prospects of the Company shall be satisfactory to the
Buyer in its sole discretion.
(f) COMPANY'S AND SELLERS' CERTIFICATE. The Company and the Sellers
shall have delivered to the Buyer and HEICO a certificate executed by the
President of the Company and each Seller, dated the Closing Date, certifying in
such detail as the Buyer and HEICO may reasonably request, that the conditions
specified in SECTIONS 7.2(a), (b) and (c) above have been fulfilled and as to
such other matters as the Buyer and HEICO may reasonably request.
(g) GOVERNMENTAL CONSENTS. All consents and approvals required by
governmental authorities for the consummation of the transactions contemplated
by this Agreement shall have been obtained. All of such consents and approvals
shall have been obtained without the imposition of any conditions which would
adversely affect the Buyer or the Company.
(h) NO LITIGATION. No litigation, arbitration or other proceeding shall
be pending or, to the knowledge of the parties, threatened by or before any
court, arbitration panel or governmental authority; no law or regulation shall
have been enacted after the date of this Agreement; and no judicial or
administrative decision shall have been rendered; in each case, which enjoins,
prohibits or materially restricts, or seeks to enjoin, prohibit or materially
restrict, the consummation of the transactions contemplated by this Agreement.
(i) ENVIRONMENTAL AUDIT. The results of the environmental audit
performed on behalf of the Buyer shall be satisfactory to the Buyer in all
respects.
(j) DELIVERIES. Each of the items specified in SECTION 7.1(a) shall have
been executed and/or delivered, as applicable, to the Buyer.
(k) Approval of the Board of Directors of HEICO Corporation, in their
sole discretion.
(l) The Sellers shall deliver to the Buyer a true and complete copy of
(a) the balance sheets of the Company at December 31, 1996, and the statements
of income, cash flows and retained earnings of the Company for the fiscal year
ended on such date, including any related notes, certified by the Company's
independent public accountant, De La Osa and Associates, pursuant to their audit
of the financial records of the Company (collectively the "AUDITED FINANCIAL
STATEMENTS"), and (b) the balance sheet at June 30, 1997 and statement of
income, cash flows and retained earnings of the Company for the six-month period
ended on such date, (the "AUDITED INTERIM FINANCIAL STATEMENTS"). The Audited
Financial Statements and the Audited Interim Financial Statements: (a) shall be
prepared in accordance with the books of account and records of the Company,
which books and records have been maintained in a consistent manner; (b) shall
fairly present, and are true, correct and complete statements in all material
respects of the Company's financial condition, assets, liabilities, equity and
the results of its operations and cash flows at the dates and for the periods
specified in those statements and (c) shall be prepared in accordance with
generally accepted accounting principles consistently applied with prior
periods.
7.3 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AND THE SELLERS.
The obligations of each of the Company and the Sellers to consummate the
transactions contemplated by this Agreement are subject to the satisfaction at
or prior to the Closing of the following conditions.
<PAGE>
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Buyer and HEICO contained in this Agreement or in any
certificate or other document delivered pursuant to this Agreement shall be true
and correct in all material respects (except for representations and warranties
which are by their terms qualified by materiality, which shall be true and
correct in all respects) as of the Closing Date with the same force and effect
as though made on and as of such date.
(b) COVENANTS PERFORMED. The terms, covenants and conditions of this
Agreement to be performed or complied with by the Buyer or HEICO on or prior to
the Closing Date shall have been duly performed or complied with in all
respects.
(c) THE BUYER'S AND HEICO'S CERTIFICATE. The Buyer and HEICO shall have
delivered to the Company a certificate executed by their President, dated the
Closing Date, certifying in such detail as the Company may reasonably request,
that the conditions specified in SECTIONS 7.3(a) and (b) above have been
fulfilled.
(d) NO LITIGATION. No litigation, arbitration or other proceeding shall
be pending or, to the knowledge of the parties, threatened by or before any
court, arbitration panel or governmental authority; no law or regulation shall
have been enacted after the date of this Agreement; and no judicial or
administrative decision shall have been rendered; in each case, which enjoins,
prohibits or materially restricts, or seeks to enjoin, prohibit or materially
restrict, the consummation of the transactions contemplated by this Agreement.
(e) DELIVERIES. Each of the items specified in SECTION 7.1(b) shall have
been executed and/or delivered, as applicable, to the Company and/or the
Sellers.
7.4 TERMINATION. Anything contained in this Agreement to the contrary
notwithstanding, this Agreement may be terminated at any time prior to the
Closing Date:
(a) by the mutual consent of the Board of Directors of the Buyer and the
Board of Directors of the Company;
(b) by the Buyer or the Sellers if the Closing shall not have occurred
on or before October 1, 1997 (or such later date as may be mutually agreed to by
the Buyer and the Company), PROVIDED that the failure of the Closing to occur by
such date is not the result of the failure of the party (or any of its
Affiliates) seeking to terminate this Agreement to perform or fulfill its
obligations hereunder;
(c) by the Buyer in the event of any material breach by the Company or
any Seller of any of their respective agreements, representations or warranties
contained herein and the failure of the Company or any Seller to cure such
breach within 14 days after receipt of notice from the Buyer requesting such
breach to be cured;
(d) by the Company in the event of any material breach by the Buyer or
HEICO of any of the Buyer's or HEICO's agreements, representations or warranties
contained herein and the failure of the Buyer and HEICO to cure such breach
within 14 days after receipt of notice from the Company requesting such breach
to be cured; or
(e) by the Buyer or the Sellers if any court of competent jurisdiction
in the United States or any other United States governmental authority or
regulatory body shall have issued an order, decree or
<PAGE>
ruling or taken any other action permanently restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby.
7.5 NOTICE OF TERMINATION. Any party desiring to terminate this Agreement
pursuant to SECTION 7.4 shall give notice of such termination to the other
parties to this Agreement.
7.6 EFFECT OF TERMINATION. In the event that this Agreement shall be
terminated pursuant to SECTION 7.4, all further obligations of the parties under
this Agreement shall be terminated without further liability of any party to the
other, PROVIDED that nothing herein shall relieve any party from liability for
its breach or violation of this Agreement. Without limiting the generality of
any other provision herein, the terms of SECTIONS 8.10 through 8.12 and 8.16
hereof shall survive any such termination. Furthermore, in the event of any
termination the obligations of the parties pursuant to the Confidentiality
Agreement entered into by, among others, HEICO, East Corporation, and the
Company and dated on or about November of 1996.
ARTICLE VIII
MISCELLANEOUS
8.1 NOTICES. Any notice, request, demand or other communication required or
permitted under this Agreement shall be in writing and shall be delivered
personally or sent by prepaid overnight courier for next business day delivery
to the parties at the addresses set forth below their names below (or at such
other addresses as shall be specified by the parties by like notice).
IF TO THE COMPANY OR ANY SELLER:
c/o Northwings Accessories Corporation
6990 N.W. 35 Avenue
Miami, Florida 33147
Attn: President
WITH A COPY TO:
Robert A. Freeman, Esq.
Suite 1250
2601 S. Bayshore Drive
Miami, Florida 33133
IF TO THE BUYER OR HEICO:
c/o HEICO Corporation
825 Brickell Bay Drive
Suite 1644
Miami, Florida 33131
Attn: President
WITH A COPY TO:
Greenberg Traurig P.A.
1221 Brickell Avenue
<PAGE>
Miami, Florida 33131
Attn: Cesar L. Alvarez, Esq.
Such notices, demands, claims and other communications shall be deemed given
when actually received or in the case of delivery by overnight service with
guaranteed next business day delivery, the next business day or the day
designated for delivery.
8.2 ENTIRE AGREEMENT. This Agreement and the exhibits and schedules to this
Agreement contain every obligation and understanding among the parties relating
to the subject matter hereof and merge all prior discussions, negotiations and
agreements, if any, among them, and none of the parties shall be bound by any
representations, warranties, covenants, or other understandings, other than as
expressly provided or referred to herein.
8.3 ASSIGNMENT. This Agreement may not be assigned by any party without the
written consent of each other party. Subject to the preceding sentence, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors, heirs, personal representatives, legal
representatives, and permitted assigns.
8.4 WAIVER AND AMENDMENT. Any representation, warranty, covenant, term or
condition of this Agreement which may legally be waived, may be waived, or the
time of performance thereof extended, at any time by the party hereto entitled
to the benefit thereof, and any term, condition or covenant hereof may be
amended by the parties hereto at any time. Any such waiver, extension or
amendment shall be evidenced by an instrument in writing executed on behalf of
the appropriate party by a person who has been authorized by such party to
execute waivers, extensions or amendments on its behalf. No waiver by any party
hereto, whether express or implied, of its rights under any provision of this
Agreement shall constitute a waiver of such party's rights under such provisions
at any other time or a waiver of such party's rights under any other provision
of this Agreement. No failure by any party hereto to take any action against any
breach of this Agreement or default by another party shall constitute a waiver
of the former party's right to enforce any provision of this Agreement or to
take action against such breach or default or any subsequent breach or default
by such other party.
8.5 NO THIRD PARTY BENEFICIARY. Except with respect to the officers,
directors, employees and agents expressly referenced in SECTION 6.5, nothing
expressed or implied in this Agreement is intended, or shall be construed, to
confer upon or give any Person other than the parties hereto and their
respective heirs, personal representatives, legal representatives, successors
and permitted assigns, any rights or remedies under or by reason of this
Agreement.
8.6 SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement shall be declared invalid, void or unenforceable,
the remainder of the provisions of this Agreement shall remain in full force and
effect, and such invalid, void or unenforceable provision shall be interpreted
as closely as possible to the manner in which it was written.
8.7 EXPENSES. Each party agrees to pay, without right of reimbursement from
any other party, the costs incurred by it incident to the performance of its
obligations under this Agreement and the consummation of the transactions
contemplated hereby, including, without limitation, costs incident to the
preparation of this Agreement, and the fees and disbursements of counsel,
accountants and consultants employed by such party in connection herewith;
PROVIDED, HOWEVER, that the Buyer or HEICO shall pay all fees and costs of World
Business Brokers incurred in connection herewith.
<PAGE>
8.8 HEADINGS. Article titles and headings to sections herein are inserted
for convenience of reference only and are not intended to be a part of or to
affect the meaning or interpretation of this Agreement. The schedules and
exhibits referred to herein shall be construed with and as an integral part of
this Agreement to the same extent as if they were set forth verbatim herein. The
specification of any dollar amount in the representations or warranties
contained in this Agreement or the inclusion of any specific item in any
schedule hereto is not 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 inclusion
of any such item in any dispute or controversy between the parties as to whether
any obligation, item or matter not described herein or included in a Schedule is
or is not material for purposes of this Agreement.
8.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Any facsimile copy of a
manually executed original shall be deemed a manually executed original.
8.10 LITIGATION; PREVAILING PARTY. In the event of any litigation with
regard to this Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party and the non-prevailing party shall pay upon demand all
reasonable fees and expenses of counsel for the prevailing party.
8.11 INJUNCTIVE RELIEF. It is possible that remedies at law may be
inadequate and, therefore, the parties hereto shall be entitled to equitable
relief including, without limitation, injunctive relief, specific performance or
other equitable remedies in addition to all other remedies provided hereunder or
available to the parties hereto at law or in equity.
8.12 GOVERNING LAW AND VENUE. This Agreement has been entered into and shall
be construed and enforced in accordance with the laws of the State of Florida
without reference to the choice of law principles thereof. This Agreement shall
be subject to the exclusive jurisdiction of the courts of the State of Florida
located in Dade County, Florida or the United States District Court for the
Southern District of Florida. The parties to this Agreement agree that any
breach of any term or condition of this Agreement shall be deemed to be a breach
occurring in the State of Florida by virtue of a failure to perform an act
required to be performed in the State of Florida and irrevocably and expressly
agree to submit to the jurisdiction of the courts of the State of Florida for
the purpose of resolving any disputes among the parties relating to this
Agreement or the transactions contemplated hereby. The parties irrevocably
waive, to the fullest extent permitted by law, any objection which they may now
or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement, or any judgment entered by any
court in respect hereof brought in Dade County, Florida, and further irrevocably
waive any claim that any suit, action or proceeding brought in Dade County,
Florida has been brought in an inconvenient forum.
8.13 RISK OF LOSS. Prior to the Closing, the risk of loss or damage to, or
destruction of any or all of the Company's property and assets, including,
without limitation, all the assets of the Company, shall remain with the
Company.
8.14 FURTHER ASSURANCES. On the Closing Date, the Company shall (i) deliver
to the Buyer such other bills of sale, deeds, endorsements, assignments and
other good and sufficient instruments of conveyance and transfer, in form
reasonably satisfactory to the Buyer and its counsel, as the Buyer may
reasonably request or as may be otherwise reasonably necessary to vest in the
Buyer all the right, title
<PAGE>
and interest of the Company in, to or under any or all of the Assets of the
Company, and (ii) take all steps as may be reasonably necessary to put the Buyer
in actual possession and control of all the Assets of the Company. From time to
time following the Closing, the Company and the Sellers shall execute and
deliver, or cause to be executed and delivered, to the Buyer such other
instruments of conveyance and transfer as the Buyer may reasonably request or as
may be otherwise necessary to more effectively convey and transfer to, and vest
in, the Buyer and to put the Buyer in possession of, any part of the Assets of
the Company, and, in the case of licenses, certificates, approvals,
authorizations, agreements, contracts, leases, easements and other commitments
included in the Assets of the Company which cannot be transferred or assigned
effectively without the consent of third parties which consent has not been
obtained prior to the Closing, to cooperate with the Buyer at its request in
endeavoring to obtain such consent promptly.
8.15 REMEDIES CUMULATIVE. No remedy made available by any of the provisions
of this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity.
8.16 PARTICIPATION OF PARTIES; CONSTRUCTION. The parties hereto acknowledge
that this Agreement and all matters contemplated herein, have been negotiated
among all parties hereto and their respective legal counsel and that all such
parties have participated in the drafting and preparation of this Agreement from
the commencement of negotiations at all times through the execution hereof. This
Agreement shall be construed and interpreted without regard to any presumption
or other rule or interpretation against the party who may have had primary
responsibility for drafting this Agreement.
THE BALANCE OF THIS PAGE LEFT BLANK INTENTIONALLY
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each executed and delivered this
Agreement as of the day and year first above written.
HEICO CORPORATION, A FLORIDA CORPORATION
By: /s/LAURANS A. MENDELSON
-----------------------------------------
Name: LAURANS A. MENDELSON
Title: CHAIRMAN OF THE BOARD, PRESIDENT AND
CEO
N.A.C. ACQUISITION CORPORATION, A FLORIDA
CORPORATION
By: /s/THOMAS S. IRWIN
-----------------------------------------
Name: THOMAS S. IRWIN
Title: TREASURER
NORTHWINGS ACCESSORIES CORPORATION, A FLORIDA
CORPORATION
By: /s/ RAMON PORTELA
------------------------------------------
Name: RAMON PORTELA
Title: PRESIDENT
<PAGE>
IN WITNESS WHEREOF, the parties hereto have each executed and delivered this
Agreement as of the day and year first above written.
RAMON PORTELA
/s/ RAMON PORTELA
OTTO NEUMAN
/s/ OTTO NEUMAN
<PAGE>
SCHEDULE 1
DEFINITIONS
In addition to terms defined elsewhere in this Agreement, the following
terms when used in this Agreement shall have the meanings indicated below:
"ACCREDITED INVESTORS" has the meaning specified in SECTION 4.35.
"AFFILIATE" has the meaning specified in Rule 144 promulgated by the
Commission under the Securities Act.
"AGREEMENT" means this Asset Purchase Agreement together with all exhibits
and schedules referred to herein.
"ALEMAN EMPLOYMENT AGREEMENT" has the meaning specified in SECTION 6.10.
"AMEX" means the American Stock Exchange.
"CLOSING" has the meaning specified in SECTION 7.1.
"CLOSING DATE" has the meaning specified in SECTION 7.1.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMISSION" means the Securities and Exchange Commission.
"EMPLOYMENT AGREEMENTS" has the meaning specified in SECTION 4.26.
"ENCUMBRANCE" means any lien, claim, charge, security interest, mortgage,
pledge, easement, conditional sale or other title retention agreement, defect in
title, covenant or other encumbrance or restriction of any kind.
"ENVIRONMENTAL LAWS" has the meaning specified in SECTION 4.32.
"ERISA" has the meaning specified in SECTION 4.26(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FINANCIAL STATEMENTS" has the meaning specified in SECTION 4.9.
"GOVERNMENTAL AUTHORIZATIONS" has the meaning specified in SECTION 4.20.
"HEICO COMMON STOCK" means the common stock, par value $.01 per share, of
HEICO.
"IMPROVEMENTS" has the meaning specified in SECTION 4.18.
"INDEMNIFIED PARTY" has the meaning specified in SECTION 6.4(c).
"INDEMNIFYING PARTY" has the meaning specified in SECTION 6.4(c).
"INTANGIBLE PROPERTY" has the meaning specified in SECTION 4.19.
<PAGE>
"INTERIM FINANCIAL STATEMENTS" has the meaning specified in SECTION 4.9.
"INVESTMENT" means, with respect to any Person, any advances, loans or
extensions of credit to any other Person, any purchases or commitments to
purchase any stock, bonds, notes, debentures or other securities of any other
Person, and any other investment in any other Person, including partnerships,
joint ventures or other similar arrangement with any Person.
"KNOWLEDGE" or "KNOWN" means, with respect to any representation or warranty
or other statement in this Agreement qualified by the knowledge of any party,
that such party has made a due and diligent investigation as to the matters that
are the subject of such representation, warranty or other statement. Where
reference is made to the knowledge of the Sellers or the Company, such reference
shall be deemed to include the directors, officers and managerial employees of
the Company, all of whom shall be deemed to have conducted the investigation
required by this definition.
"LEASED IMPROVEMENTS" has the meaning specified in SECTION 4.18.
"LEASED PROPERTY" has the meaning specified in SECTION 4.18.
"LEASES" has the meaning specified in SECTION 4.18.
"LOSSES" has the meaning specified in SECTION 6.4(a).
"MATERIAL AGREEMENTS" has the meaning specified in SECTION 4.28.
"MULTIEMPLOYER PLAN" has the meaning specified in SECTION 4.26.
"OWNED IMPROVEMENTS" has the meaning specified in SECTION 4.18.
"PERMITTED ENCUMBRANCES" means liens for taxes which are not yet due and
payable.
"PERSON" means any natural person, corporation, unincorporated organization,
partnership, association, joint stock company, joint venture, trust or
government, or any agency or political subdivision of any government, or any
other entity.
"PLAN" has the meaning specified in SECTION 4.26.
"PORTELA EMPLOYMENT AGREEMENT" has the meaning specified in SECTION 6.10.
"PRODUCTS" has the meaning specified in SECTION 4.31.
"PROHIBITED BUSINESS" has the meaning specified in SECTION 6.5.
"REAL PROPERTY" has the meaning specified in SECTION 4.18.
"REGISTRATION RIGHTS AGREEMENTS" has the meaning specified in SECTION 6.11.
"RELATED PARTY" has the meaning specified in SECTION 4.29.
"RIGHTS" has the meaning specified in SECTION 4.19.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SHARES" has the meaning specified in Preliminary Statement "A".
<PAGE>
"SUBSIDIARY" of any Person means any Person, whether or not capitalized, in
which such Person owns, directly or indirectly, an equity interest of 50% or
more, or any Person which may be controlled, directly or indirectly, by such
Person, whether through the ownership of voting securities, by contract, or
otherwise.
"TAX" means any federal, state, local or foreign income, gross receipts,
property, sales, use, transfer, gains, license, excise, employment, payroll,
withholding or minimum tax, or any other tax custom, duty, governmental fee or
other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
foreign, federal, state, local or other governmental authority or regulatory
body.
"TAX RETURN" means any return, report or similar statement required to be
filed with respect to any Taxes (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.
<PAGE>
EXHIBIT A
EMPLOYMENT AND NONCOMPETITION AGREEMENT
AGREEMENT, dated as of the______________ of _____________ , 1997, by and
between NORTHWINGS ACCESSORIES CORPORATION, a Florida corporation (the
"EMPLOYER"), and RAMON PORTELA (the "EMPLOYEE").
WITNESSETH:
WHEREAS, the Employee desires to continue to be employed by the Employer,
and the Employer desires to continue to employ the Employee, upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Employee represents that he is not a party to any agreement
which would prohibit him from entering into this Agreement or his performing the
services required hereunder.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, receipt of which is hereby acknowledged, the Employer and the
Employee agree as follows:
SECTION 1. EMPLOYMENT OF EMPLOYEE
(a) TERM. The Employee's employment hereunder will commence on the date of
the closing of the Stock Purchase Agreement, dated as of July 25,1997, between
HEICO Corporation, Ramon Portela and Otto Neuman, from the Employee, and will
expire on October 31, 1999 (the "TERM"). Notwithstanding the foregoing, the
Employee's employment hereunder may be terminated prior to the expiration of the
Term as provided in SECTION 2.
(b) DUTIES AND RESPONSIBILITIES. The Employee shall serve as President of
the Employer. The Employee agrees to use his best efforts, entire productive
time, attention, and energies to the business of the Employer and shall assume
and competently perform such reasonable responsibilities and duties as may be
assigned to him from time to time by the Employer through its duly authorized
management personnel. To the extent that the Employer shall have any parent,
subsidiaries, affiliated corporations, partnerships, or joint ventures
(collectively "RELATED ENTITIES"), Employee shall perform such duties to promote
these entities and their respective interests to the same extent as the
interests of the Employer and without additional compensation. At all times, the
Employee agrees to abide by any employee handbook, policy, or practice that the
Employer has or hereafter adopts with respect to its employees generally.
<PAGE>
(c) COMPENSATION. As full compensation for his services hereunder and in
consideration for the Employee's covenants contained in this Agreement, the
Employer shall pay the Employee a salary at the per annum rate of $300,000
payable in accordance with the customary payroll practices of the Employer.
(d) EXPENSES; FRINGE BENEFITS AND VACATION POLICY. The Employer agrees to
pay or reimburse the Employee for all reasonable vouchered business expenses
incurred during his employment which have been submitted in accordance with any
expense reimbursement policy or practice of the Employer as in effect from time
to time. The Employer will provide to the Employee a leased automobile of
comparable quality to the automobile currently under lease for the Employee and
such pension benefits, holidays, four (4) weeks of paid vacation per annum and
other employee benefits (including automobile insurance and health care
coverage) which the Employer provides to similarly situated employees, subject
to the provisions of the various benefit plans, programs, or policies in effect
from time to time. Unused vacation shall not accrue from one year until the
following year and shall not be paid in the form of cash in lieu of unused
vacation. Except for vacation time, the Employer reserves the right to change or
eliminate these benefits at any time.
The Employee shall also be entitled to an annual incentive bonus at the
discretion of the Board of Directors of Northwings Accessory Corp.
(e) LIFE INSURANCE. The Employee agrees that the Employer shall have the
right to obtain life insurance on the Employee's life, at the Employer's sole
expense and with the Employer as the sole beneficiary thereof, but no
representation is made by the Employee as to his insurability. The Employee
shall (i) cooperate fully with the Employer in obtaining such life insurance,
(ii) sign any necessary consents, applications and other related forms or
documents, and (iii) take any required medical examinations.
SECTION 2. TERMINATION OF EMPLOYMENT
(a) TERMINATION BY THE EMPLOYER. The Employer may terminate the employment
of the Employee at any time with or without Cause (as defined below) and with or
without notice. Following termination of employment of the Employee for cause,
the Employer shall have no further obligations under this Agreement, including
payment obligations. If the employment of the Employee is terminated by the
Employer without Cause, the Employee shall continue to be entitled to receive
the compensation payable to him pursuant to SECTION 1(c) but thereafter shall
not be entitled to any of the expense reimbursement or benefits referred to in
SECTION 1(d) except to the extent such right to reimbursement or benefits were
vested at the date of such termination. As used in this Agreement, "CAUSE" shall
mean the following: (1) the Employee's failure or refusal to
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<PAGE>
perform his duties, as contemplated by this Agreement, in a satisfactory manner;
after notice and a reasonable opportunity to cure, (2) dishonesty or other acts
that adversely affect the Employer; (3) a violation of the Employer's written
policies or practices which justifies immediate termination, as defined by the
Employer; (4) arrest for or conviction of a felony or of any crime involving
moral turpitude, fraud, dishonesty or misrepresentation; (5) the commission by
the Employee of any act which could reasonably be expected to injure the
reputation, business, or business relationships of the Employer or Related
Entities; (6) the Employee's inability to perform an essential function of his
position, which inability continues for 90 consecutive days or for periods
aggregating 90 days in any 180-day period; or (7) any material breach by
Employee of this Agreement or the Stock Purchase Agreement.
(b) TERMINATION BY EMPLOYEE. The Employee agrees to provide the Employer
with at least twenty (20) business days' written notice of his intent to
terminate employment voluntarily ("TERMINATION NOTICE PERIOD"). Failure to
provide such notice terminates the Employee's entitlement to payment for
accrued, unused benefits, such as vacation. The Employer reserves the right to
terminate the Employee before the end of the Termination Notice Period provided
that the Employer pays the Employee the salary that he would have received from
the date of the last payroll payment to the end of the Termination Notice
Period. During the Termination Notice Period, the Employee agrees to make a good
faith effort to perform the duties described hereunder. If the Employee
terminates his employment with the Employer for any reason, the Employer's
obligations, including payment obligations, under this Agreement shall forthwith
cease except as provided in this subparagraph.
SECTION 3. NON-COMPETITION; STANDSTILL; PROTECTION OF CONFIDENTIAL
INFORMATION; ETC.
(a) RATIONALE FOR RESTRICTIONS. The Employee acknowledges that his services
hereunder are of a special, unique, extraordinary and intellectual character,
and his position with the Employer places him in a position of confidence and
trust with the customers, suppliers and employees of the Employer and/or Related
Entities. The Employee also acknowledges that the Employer and Related Entities
repairs, overhauls and services certain aircraft equipment (collectively
"PRODUCTS") throughout the world and that the Employer competes with many
companies, including, but not limited to,______________________________________.
The Employee further acknowledges that the rendering of services under this
Agreement necessarily requires the disclosure to the Employee of Confidential
Information of the Employer and/or Related Entities. The Employee and the
Employer agree that both prior to and during the course of employment with the
Employer and Northwings, the Employee had, has, and will continue to develop a
personal relationship with the Employer's customers, and a knowledge of these
customers'
-3-
<PAGE>
affairs and requirements which may constitute the Employer's primary and only
contact with such customers. The Employee acknowledges that the Employer's
relationships with its established clientele may therefore be placed in the
Employee's hands in confidence and trust. The Employee consequently agrees that
it is reasonable and necessary for the protection of the goodwill and legitimate
business interests of the Employer and the Related Entities that the Employee
make the covenants contained herein, that the covenants are a material
inducement for the Employer to employ the Employee and to enter into this
Agreement, and that the covenants are given as an integral part of and incident
to this Agreement.
(b) NON-COMPETITION IN RELATED BUSINESS. As used herein, the term
"RESTRICTIVE PERIOD" means the period commencing on the date of this Agreement
and ending two (2) years following the later of (i) the expiration of the Term
or (ii) the termination of the employment of the Employee with the Employer,
irrespective of the reason for such termination and even though such termination
occurs after the expiration of the Term. During the Restrictive Period, the
Employee agrees not to utilize his special knowledge of the business of the
Employer and his relationships with customers, suppliers and others to compete
with the Employer or any of the Related Entities or any of the Related Entities
in any business which is the same as or similar to the business (the "PROHIBITED
BUSINESS") conducted by the Employer or any of the Related Entities at any time
during the Restrictive Period. During the Restrictive Period, the Employee shall
not, directly or indirectly, assist in the creation or development of, engage or
have an interest, anywhere in the United States of America or any other
geographic area where the Employer or any Related Entity does business or in
which its Products are marketed, alone or in association with others, as
principal, officer, agent, employee, director, partner or stockholder (except as
an employee or consultant of the Employer or any of the Related Entities), or
through the investment of capital, lending of money or property, rendering of
services or advice or otherwise, in any business competitive with or similar to
the Prohibited Business. During the Restrictive Period, the Employee shall not,
nor shall he permit any of his employees, agents or others under his control to,
directly or indirectly, on behalf of the any entity or person, (i) call upon,
accept business from, or solicit the business of any person or entity which is,
or who had been at any time during the preceding two years, a customer of
Northwings, the Employer or any Related Entity otherwise divert or attempt to
divert any business from the Employer or any of the Related Entities; or (ii)
recruit or otherwise solicit or induce any person who was an employee of, or
otherwise engaged by, the Employer or any of the Related Entities at any time
during the Restrictive Period to terminate his or her employment or other
relationship with the Employer or any of the Related Entities, or hire any
person who has left the employ of the Employer or any of the Related Entities
during the Restrictive Period. The Employee shall not at any time, directly or
indirectly, use or purport to authorize any person to use any name, mark, logo,
trade dress or other identifying words
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<PAGE>
or images which are the same as or similar to those used currently, in the past,
or during the Employee's employment by Northwings or the Employer in connection
with any Product or service, whether or not such use would be in a Prohibited
Business. The ownership or control of up to five percent of the outstanding
voting securities or securities of any class of a company with a class of
securities registered under the Securities Exchange Act of 1934, as amended,
shall not be deemed to be a violation of the provisions of this SECTION 3(b).
(c) STANDSTILL. The Employee agrees that for a period commencing on the date
hereof and ending on the date which is ten years from the date hereof, he will
not (i) acquire, offer or agree to acquire, directly or indirectly, by purchase
or otherwise, control of the Employer or any of the Related Entities, (ii) make,
or in any way participate, directly or indirectly, as advisor or otherwise, in
any "solicitation" of "proxies" or consents to vote (as such terms are used in
the Proxy Rules of the United States Securities and Exchange Commission), or
seek to advise or influence any person or entity with respect to the voting of
any voting securities of the Employer or any of the Related Entities, in
opposition to any proposed actions of the Board of Directors of the Employer or
any of the Related Entities or in opposition to any nominees for Directors of
the Employer or any of the Related Entities which nominees have been nominated
by the Employer or any of the Related Entities, their management or their Board
of Directors, (iii) seek or assist any other party in seeking representation on
the Board of Directors of the Employer or any of the Related Entities through
the election to the Board of Directors of individuals(s) not nominated and
supported by the Employer or any of the Related Entities, their management or
their Board of Directors, (iv) pursue or publicly announce an interest in
pursuing an acquisition of control of the Employer or any of the Related
Entities or an alteration of the composition of the Employer's or any of the
Related Entities' Boards of Directors, or (v) advise or otherwise act, alone or
in concert with others, directly or indirectly, to seek to control or influence
the management, Board of Directors or policies of the Employer or any of the
Related Entities.
(d) DISCLOSURE OF CONFIDENTIAL INFORMATION. The Employee acknowledges that
the Products and the inventions, formulas, software, trade secrets, technology,
compositions, know-how, methods and processes of manufacturing, assembling or
fabricating (collectively, the "INTANGIBLE PROPERTY") and all other confidential
or proprietary information with respect to the business and operations of the
Employer are valuable, special and unique assets of the Employer. The Employee
shall not, at any time during or after the Restrictive Period, disclose,
directly or indirectly, to any person or entity, or use or authorize or purport
to authorize any person or entity to use any confidential or proprietary
information with respect to the Employer or any of the Related Entities without
the prior written consent of the Employer, including without limitation,
information as to the financial condition, results of operations, customers,
suppliers,
-5-
<PAGE>
Products, Products under development, Intangible Property, sources, leads or
methods of obtaining new products or business, pricing methods or formulas, cost
of supplies, marketing strategies or any other information relating to the
Employer or any of the Related Entities which could reasonably be regarded as
confidential, but not including information which is or shall become generally
available to the public other than as a result of disclosure by the Employer or
any of the Related Entities or any of their agents, affiliates or
representatives or a person to whom any of them has provided such information.
(e) RIGHTS TO INTELLECTUAL PROPERTY. While employed by the Employer, the
Employee will disclose to the Employer any ideas, inventions, or business plans
("INTELLECTUAL PROPERTY") developed by him which relate directly or indirectly
to the business or a similar business of the Employer or any of the Related
Entities, including without limitation, any process, operation, product or
improvement which may be patentable or copyrightable. The Employee agrees that
the Intellectual Property is or will be the property of the Employer and that he
will, at the Employer's request and cost, do whatever is necessary to obtain the
rights thereto, by patent, copyright or otherwise, for the Employer. The
Employee further agrees that, whether or not he is in the employ of the
Employer, he will cooperate in good faith to the extent and in the manner
requested by the Employer in the prosecution or defense of any patent or
copyright claims or any litigation or other proceedings involving any
Intellectual Property. The Employer will pay for all expenses associated with
the Employee's compliance with this provision.
(f) ANTI-DISPARAGEMENT. The Employee covenants and agrees that, both during
and after the Restrictive Period, he shall not make any comments which could be
construed as negative concerning the Employer or any of the Related Entities to
any individual or entity, including but not limited to, clients, customers,
employees, or financial or credit institutions.
(g) REMEDIES FOR BREACH OF THE AGREEMENT. The restrictions set forth in
SECTIONS 3 (b), (c), (d), (e) AND (f) are considered by the parties to be
reasonable for the purposes of protecting the legitimate business interests of
the Employer and the Related Entities and the value of the business and goodwill
of the Employer and the Related Entities. The parties hereto acknowledge that
the Employer and the Related Entities would be irreparably harmed, and that
monetary damages would not provide an adequate remedy to the Employer and the
Related Entities, in the event the covenants contained in SECTIONS 3 (b), (c),
(d), (e) AND (f) were not complied with in accordance with their terms.
Accordingly, the Employee agrees that any breach or threatened breach by him of
any provision of SECTIONS 3 (b), (c), (d), (e) AND (f) shall entitle the
Employer and the Related Entities to injunctive and other equitable relief,
without the posting of any bond or security, to secure the enforcement of such
provisions, in addition to any other rights and
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<PAGE>
remedies which may be available to the Employer and the Related Entities, and
that the Employer and the Related Entities shall be entitled to receive from the
Employee reimbursement for all attorneys' fees and expenses incurred by the
Employer and the Related Entities in enforcing such provisions. In addition to
its other rights and remedies, the Employer and the Related Entities shall have
the right to require the Employee to account for and pay over to the Employer or
the Related Entities, as the case may be, all compensation, profits, money,
accruals and other benefits derived or received, directly or indirectly, by the
Employee from the action constituting such breach. If the Employee breaches the
covenant set forth in SECTION 3(b), the running of the noncompete period
described therein shall be tolled with respect to the Employer or any of the
Related Entities for so long as such breach continues. It is the desire and
intent of the parties that the provisions of SECTIONS 3 (b), (c), (d), (e) AND
(f), be enforced to the fullest extent permissible under the laws and public
policies of each jurisdiction in which enforcement is sought. If any provisions
of SECTIONS 3 (b), (c), (d), (e) OR (f), relating to the time period, scope of
activities or geographic area of restrictions are declared by a court of
competent jurisdiction to exceed the maximum permissible time period, scope of
activities or geographic area, the maximum time period, scope of activities or
geographic area, as the case may be, shall be reduced to the maximum which such
court deems enforceable. If any provisions of SECTIONS 3 (b), (c), (d), (e) OR
(f) other than those described in the preceding sentence are adjudicated to be
invalid or unenforceable, the invalid or unenforceable provisions shall be
deemed amended (with respect only to the jurisdiction in which such adjudication
is made) in such manner as to render them enforceable and to effectuate as
nearly as possible the original intentions and agreement of the parties.
(h) SURVIVAL. The provisions of this SECTION 3 shall survive the termination
of this Agreement or the Employee's employment irrespective of the reason for
such termination. The provisions of this SECTION 3 shall continue in full force
and effect after the expiration of the Term even if the Employee continues to be
employed by the Employer without renewing this Agreement.
SECTION 4. RETURN OF EMPLOYER PROPERTY ON TERMINATION
The Employee agrees to promptly return the Employer's property to the
Employer's Florida headquarters upon termination of his employment with the
Employer. The Employer reserves the right to take appropriate legal action
against the Employee in the event of a breach of this provision.
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<PAGE>
SECTION 5. VERIFICATION OF COMPLIANCE
Upon termination of employment, the Employee shall, at the request of the
Employer, verify in writing and under oath, in the form attached hereto as
Exhibit A, his compliance with the provisions of this Agreement relating to
Intellectual Property and Confidential Information. This provision shall not
give rise to any independent claim by the Employee for severance pay or other
payments upon the Employee's termination.
SECTION 6. MISCELLANEOUS PROVISIONS
(a) NOTICES. Any notice, request, demand or other communication required or
permitted under this Agreement shall be in writing and shall be delivered
personally or sent by prepaid overnight courier for next business day delivery
to the parties at the addresses set forth below their names below (or at such
other addresses as shall be specified by the parties by like notice).
IF TO THE EMPLOYEE:
Ramon Portela
IF TO THE EMPLOYER OR ANY OF THE RELATED ENTITIES:
c/o HEICO Corporation
825 Brickell Bay Drive
Suite 1644
Miami, Florida 33131
Attn: President
WITH A COPY TO:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Cesar L. Alvarez, Esq.
Such notices, demands, claims and other communications shall be deemed given
when actually received or in the case of delivery by overnight service with
guaranteed next business day delivery, the next business day or the day
designated for delivery.
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<PAGE>
(b) ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties hereto relating to the subject matter hereof and merges all
prior discussions, negotiations and agreements, if any, between them, and
neither of the parties hereto shall be bound by any representations, warranties,
covenants, or other understandings relating to the subject matter hereof, other
than as expressly provided or referred to herein.
(c) ASSIGNMENT. This Agreement may not be assigned by the Employee without
the written consent of the Employer but shall be freely assignable by the
Employer in connection with any sale by the Employer of the Prohibited Business
or any substantial part thereof. Subject to the preceding sentence, this
Agreement shall be binding upon, and inure to, the benefit of the parties hereto
and their respective successors, heirs, personal representatives, legal
representatives, and permitted assigns.
(d) WAIVER AND AMENDMENT. Any representation, warranty, covenant, term or
condition of this Agreement which may legally be waived, may be waived, or the
time of performance thereof extended, at any time by the party hereto entitled
to the benefit thereof, and any term, condition or covenant hereof may be
amended by the parties hereto at any time. Any such waiver, extension or
amendment shall be evidenced by an instrument in writing executed by or on
behalf of each such party. No waiver by any party hereto, whether express or
implied, of its rights under any provision of this Agreement shall constitute a
waiver of such party's rights under such provisions at any other time or a
waiver of such party's rights under any other provision of this Agreement. No
failure by any party hereto to take any action against any breach of this
Agreement or default by another party shall constitute a waiver of the former
party's right to enforce any provision of this Agreement or to take action
against such breach or default or any subsequent breach or default by such other
party.
(e) NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto, the Related Parties and their respective heirs,
personal representatives, legal representatives, successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
(f) SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement shall be declared invalid, void or unenforceable,
the remainder of the provisions of this Agreement shall remain in full force and
effect, and such invalid, void or unenforceable provision shall be interpreted
as closely as possible to the manner in which it was written.
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<PAGE>
(g) HEADINGS. Section headings herein are inserted for convenience of
reference only and are not intended to be a part of, or to affect the meaning or
interpretation of, this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) LITIGATION; PREVAILING PARTY. In the event of any litigation with regard
to this Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party, and the non-prevailing party shall pay upon demand, all
reasonable fees and expenses of counsel for the prevailing party in connection
with such litigation.
(j) GOVERNING LAW AND VENUE. This Agreement has been entered into and shall
be construed and enforced in accordance with the laws of the State of Florida
without reference to the choice of law principles thereof. This Agreement shall
be subject to the exclusive jurisdiction of the courts of the State of Florida
located in Dade or Broward Counties, Florida or the United States District Court
for the Southern District of Florida. The parties irrevocably waive, to the
fullest extent permitted by law, any objection which they may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement, or any judgment entered by any court in respect
hereof brought in Dade or Broward Counties, Florida, and further irrevocably
waive any claim that any suit, action or proceeding brought in Dade or Broward
Counties, Florida has been brought in an inconvenient forum.
(k) REMEDIES CUMULATIVE. No remedy made available by any of the provisions
of this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity.
(l) PARTICIPATION OF PARTIES; CONSTRUCTION. The parties hereto acknowledge
that this Agreement and all matters contemplated herein, have been negotiated
between the parties hereto and their respective legal counsel and that all such
parties have participated in the drafting and preparation of this Agreement from
the commencement of negotiations at all times through the execution hereof. This
Agreement shall be construed and interpreted without regard to any presumption
or other rule or interpretation against the party who may have had primary
responsibility for drafting this Agreement.
IN WITNESS WHEREOF, the parties hereto have each executed and delivered this
Agreement as of the day and year first above written.
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<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
By:
----------------------------------
Name:
Title:
----------------------------------
RAMON PORTELA
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<PAGE>
EXHIBIT A
My employment by Employer is terminated. I have read and understood my
Employment and Non-Competition Agreement with Employer dated September 16, 1996
(the "AGREEMENT"), and particularly the provisions relating to Intellectual
Property and Confidential Information. I hereby swear, UNDER OATH, that:
1. I have complied with all provisions of the Agreement, including those
relating to Intellectual Property and Confidential Information.
2. I have fully disclosed all items of Intellectual Property to Employer. I
have given Employer all documents and other materials referred to in the
Agreement, or if I have not done so, the withheld documents and materials are:
__________________________. If I discover any documents and other materials
covered by this Agreement in my possession in the future, I will immediately
return them to the Employer after discovery.
3. I understand that the misappropriation of confidential information and
documents may be considered a crime under the laws of the State of Florida.
_____________________________________
RAMON PORTELA
STATE OF FLORIDA )
)SS:
COUNTY OF )
The foregoing instrument was acknowledged before me this __ day of ________,
199__ by Ramon Portela.
Personally Known ______ OR Produced Identification _____
Type of Identification Produced ________________________
_____________________________________
Print or Stamp Name:
Notary Public, State of Florida at
Large
Commission No.:
My Commission Expires:
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<PAGE>
EXHIBIT B
AGREEMENT, dated as of the day of ____ 1997, ____ by and between NORTHWINGS
ACCESSORIES CORP., a Florida Corporation (the "Employer"), a wholly-owned
subsidiary of HEICO Aviation Products Corp., and Humberto Aleman (the
"Employee") in Dade County, FL.
W I T N E S S E T H :
WHEREAS, Employee desires to continue to be employed by the Employer and to
expand his responsibilities with the Employer, and the Employer desires to
continue to employ and to expand Employee's responsibilities with Employer in
such capacity upon the terms and conditions hereinafter set forth.
WHEREAS, Employee represents that he has not entered into any agreement
which would prohibit his performing the services required in this Agreement to
Employer; and
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, receipt of which is hereby acknowledged, the Employee and the
Employer agree as follows:
SECTION 1. EMPLOYMENT OF EMPLOYEE
(a) TERM. Employee's employment hereunder will begin effective on
_____________, 1997 and will expire on October 31, 1999 (the "Initial Term").
Employment of Employee will be extended automatically for successive one-year
periods each (a "Renewal Term") thereafter unless either party gives at least
thirty (30) days' written notice to the other prior to the end of the Initial
Term or any Renewal Term, as the case may be. During such notice period, the
Employee agrees to continue to provide services under this Agreement using his
best efforts. The Employee's employment hereunder may be terminated sooner than
the expiration of the Initial Term or any Renewal Term pursuant to the terms and
conditions described below in Section 2.
(b) DUTIES AND RESPONSIBILITIES. Employee shall serve as Vice President of
Sales of the Employer. Employee agrees to apply his best efforts, entire
productive time, attention, and energies to the business of Employer and shall
assume and perform such reasonable responsibilities and duties as may be
assigned to him from time to time by Employer through its duly authorized
management personnel. To the extent that the Employer shall have any parent,
subsidiaries, affiliated corporations, partnerships, or joint ventures
(collectively "Related Entities"), Employee shall perform such duties to promote
these entities and their respective interests to the same extent as the
interests of the Employer and without additional compensation. At all times,
Employee agrees to abide by any employee handbook, policy, or practice that the
Employer has with respect to its employees.
(c) COMPENSATION. As full compensation for his services hereunder and in
consideration
<PAGE>
for the Employee's covenants contained in this Agreement, the Employer shall pay
the Employee a salary at the per annum rate of $100,000, payable in accordance
with the customary payroll practices of the Employer. Employee is entitled to
receive an incentive bonus (the "Incentive Bonus") as set forth in Exhibit "B"
hereto. Employee may be eligible for future salary adjustments depending on
various factors, such as the Employee's performance and Employee's satisfactory
job performance. Employee acknowledges that any adjustments to his salary, or
the timing of same are within the sole discretion of the Employer and no promise
or representation has been made by the Employer to Employee with respect
thereto. Provided, however, in the event that Employer reduces Employees
compensation then it shall be deemed to be a termination by Employer without
cause.
(d) EXPENSES; FRINGE BENEFITS AND VACATION POLICY. Employer agrees to pay or
reimburse Employee for all reasonable vouchered business expenses incurred
during his employment which have been submitted in accordance with any expense
reimbursement policy or practice of the Employer. Employer will provide to the
Employee any benefit, including without limitation, pension benefits, holidays,
vacation, etc., which Employer provides to similarly situated employees, subject
to the provisions of the various benefit plans, programs, or policies in effect
from time to time. Employer reserves the right to change or eliminate these
benefits at any time.
(e) LIFE INSURANCE. Employee agrees that the Employer shall have the right
to obtain life insurance on Employee's life, at the Employer's sole expense and
with the Employer as the sole beneficiary thereof. Employee shall (i) cooperate
fully with the Employer in obtaining such life insurance, (ii) sign any
necessary consents, applications and other related forms or documents, and (iii)
take any required medical examinations.
SECTION 2. TERMINATION OF EMPLOYMENT
(a) TERMINATION BY THE EMPLOYER. The Employer may terminate the employment
of Employee at any time with or without cause and with or without notice. If the
Employee is terminated for any reason other than for Cause (defined below),
Employee will not be subject to the restrictions contained in paragraphs (a),
(b) and (c) of Section 3 after his employment ceases; however, all other
restrictions in paragraph 3 survive. If the Employee is terminated for Cause,
all of the restrictions contained in Section 3 survive the expiration or
termination of employment. Following termination of employment of the Employee
for any reason, the Employer shall have no further obligations under this
Agreement, including payment.
"Cause" shall be limited to the following: 1) Employee's failure or refusal
to perform his duties, as contemplated by this Agreement, in a satisfactory
manner; 2) dishonesty or other acts that adversely affect the Employer; 3) a
violation of the Employer's policies or practices which justifies immediate
termination; 4) arrest or conviction of a felony or of any crime involving moral
turpitude, fraud or misrepresentation; 5) the commission by Employee of any act
which could reasonably be expected to injure the reputation, business, or
business relationships of the Employer or Related Entities; or 6) any material
breach of this Agreement.
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<PAGE>
(b) TERMINATION BY EMPLOYEE. Employee agrees to provide Employer with at
least ten (10) business days' written notice of his intent to terminate
employment ("Termination Notice Period"). Failure to provide such notice
terminates Employee's entitlement to payment for accrued, unused benefits, such
as vacation. Employer reserves the right to terminate Employee before the end of
the Termination Notice Period provided that Employer pays the Employee the
salary that he would have received from the date of the last payroll payment to
the end of the Termination Notice Period. During the Termination Notice Period,
the Employee agrees to make a good faith effort to perform the duties described
hereunder. If Employee terminates his employment with the Employer for any
reason, all of the restrictions contained in Section 3 survive the expiration or
termination of employment, but Employer's obligations under this Agreement
immediately cease except as contained in this subparagraph.
SECTION 3. NON-COMPETITION; PROTECTION OF CONFIDENTIAL INFORMATION; ETC.
(a) RATIONALE FOR RESTRICTIONS. Employee agrees that his services hereunder
are of a special, unique, extraordinary and intellectual character, and his
position with the Employer places him in a position of confidence and trust with
the customers, suppliers and employees of the Employer and/or Related Entities.
Employee also acknowledges that the Employer and Related Entities repair and
overhaul aircraft accessories and systems (collectively "Products") throughout
the world and that the Employer competes with many companies, including but not
limited to, CARIBE and NORTEK. Employee further acknowledges that the rendering
of services under this Agreement necessarily requires the disclosure to Employee
of Confidential Information (defined below) of the Employer and/or Related
Entities. Employee and the Employer agree that in the course of employment
hereunder, Employee has and will continue to develop a personal relationship
with the Employer's customers, and a knowledge of these customers' affairs and
requirements which may constitute the Employer's primary and only contact with
such customers. Employee acknowledges that the Employer's relationships with its
established clientele may therefore be placed in Employee's hands in confidence
and trust. Employee consequently agrees that it is reasonable and necessary for
the protection of the goodwill and business of the Employer and/or the Related
Entities that Employee make the covenants contained herein, that the covenants
are a material inducement for the Employer to employ or continue to employ
Employee and to enter into this Agreement, and that the covenants are given as
an integral part of and incident to this Agreement.
(b) NON-COMPETITION IN RELATED BUSINESS. While employed by Employer and for
a period of twelve (12) months thereafter, Employee shall not, directly or
indirectly enter into the employment of, render any services to, create,
develop, engage, manage, operate, join, or own, lend money or otherwise offer
other assistance to or participate in or be connected with, as an officer,
director, employee, principal, agent, creditor, proprietor, representative,
stockholder, partner, associate, consultant or otherwise, any person or entity
that, at any time during the Employee's employment with the Employer, directly
or indirectly designs, manufactures, services (as a line of business) or sells
any product or services which Employer designs, manufactures, services or sells
during the term of this Agreement or is in any substantially similar business
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<PAGE>
activity to that of the Employer or any of the Related Entities. The geographic
scope of this covenant is limited to any location in which the Employer or any
of the Related Entities conducted business or contemplated conducting business
while the Employee was employed by the Employer.
(c) SOLICITATION OF EMPLOYEES AND CUSTOMERS. While employed by the Employer
and for a period of one (1) year thereafter, Employee shall not, whether for his
own account or for the account of any person or entity solicit, attempt to
solicit, endeavor to entice away from the Employer or any of the Related
Entities, with any person (including, but not limited to, any independent
contractor or representative).
(d) DISCLOSURE OF CONFIDENTIAL INFORMATION. Employee recognizes and
acknowledges that he has access to Confidential Information (as defined below).
Accordingly, Employee agrees that he will not, during or after his employment,
except as required in the course of his employment, disclose any Confidential
Information to any individual or entity. Employee further agrees that he will
not permit any person to examine or make copies of any documents which contain
or are derived from Confidential Information, without the prior written
permission of Employer. The provisions of this subparagraph shall not apply to
information which is generally known to the public (except by reason of
Employee's breach of his obligations hereunder) and information which Employee
is required to disclose by order of a court of competent jurisdiction (but only
to the extent specifically ordered by such court and, when reasonably possible,
after Employee has given Employer or Related Entities prior notice of such
intended disclosure so that it or they have the opportunity to seek a protective
order if deemed appropriate). Employee also will not disclose to the Employer or
Related Entities any trade secrets belonging to a former employer.
As used in this Agreement, "Confidential Information" shall mean studies,
plans, reports, surveys, analyses, sketches, drawings, specifications, notes,
records, memoranda, computer-generated data, or documents, and all other
nonpublic information relating to the business activities of the Employer and/or
the Related Entities, including, without limitation, all methods, processes,
formulas, techniques, equipment, research data, experiments, marketing and sales
information, personnel data, customer lists, employee lists, supplier lists,
financial data, trade secrets, and the like which presently or, in the future,
are in the possession of Employer and/or Related Entities. Said Confidential
Information may be in either human or computer readable form, including, but not
limited to, software, source code, hex code, or any other form.
(e) RIGHTS TO INTELLECTUAL PROPERTY. While employed by the Employer,
Employee will disclose to the Employer any ideas, inventions, or business plans
("Intellectual Property") developed by him which relate directly or indirectly
to the business or a similar business of Employer or Related Entities, including
without limitation, any process, operation, product or improvement which may be
patentable or copyrightable. Employee agrees that the Intellectual Property is
or will be the property of the Employer and that he will, at the Employer's
request and cost, do whatever is necessary to obtain the rights thereto, by
patent, copyright or otherwise, for the Employer. Employee further agrees that,
whether or not he is in the employ of Employer, he
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<PAGE>
will cooperate in good faith to the extent and in the manner requested by
Employer in the prosecution or defense of any patent or copyright claims or any
litigation or other proceedings involving any Intellectual Property. The
Employer will pay for all expenses associated with Employee's compliance with
this provision.
(f) ANTI-DISPARAGEMENT. Employee covenants and agrees, both during and after
the termination of employment, that he shall not make any comments which could
be construed as negative concerning Employer or any of the Related Entities to
any individual or entity, including but not limited to, clients, customers,
employees, or financial or credit institutions.
(g) EMPLOYEE'S PURCHASE OF STOCK DURING EMPLOYMENT. Notwithstanding the
foregoing, and while employed by the Employer, and for a period of one (1) year
thereafter, Employee may acquire, solely as an investment, shares of capital
stock or other equity securities of any company which are traded on any national
securities exchange or are regularly quoted in the over-the-counter market, so
long as Employee does not control, acquire a controlling interest in or become a
member of a group which exercises direct or indirect control of, more than one
percent of any class of capital stock of such corporation. The Employee agrees
to inform the Employer's General Counsel prior to the acquisition of any stock
of Employer or Related Entities, including, but not limited to, HEICO
Corporation.
(h) SCOPE OF COVENANT. If any covenant contained in Section 3 is
unenforceable because of the duration or geographic scope of such provision, the
parties agree that the court making such determination shall have the power to
reduce the duration and/or geographic scope to the maximum enforceable by law
and, in its reduced form, such provision shall be enforceable.
(i) REMEDIES FOR BREACH OF THE AGREEMENT. Employee consents and agrees that
if he violates any covenants contained in this Agreement, Employer and/or
Related Entities would sustain irreparable harm and, therefore, in addition to
any other remedies which may be available to it, Employer and/or Related
Entities shall be entitled to an injunction restraining Employee from committing
or continuing any such violation of this Agreement. Employee also agrees and
acknowledges that his use of trade secrets, client lists or Confidential
Information, or the direct solicitation of existing clients of the Employer
and/or Related Entities in a manner contrary to this Agreement will give rise to
irreparable injury which may specifically be enjoined. Nothing in this Agreement
shall be construed as prohibiting Employer and/or Related Entities from pursuing
any other remedy or remedies including, without limitation, recovery of damages.
Employee acknowledges that Related Entities have rights under this Agreement and
that they may enforce these rights as third party beneficiaries.
(j) SURVIVAL. The provisions of Section 3 shall survive the termination of
this Agreement or Employee's employment irrespective of the reason for such
termination except as otherwise provided by Section 2. The provisions of Section
3 shall survive after the Agreement's expiration or termination of Employee's
employment even if Employee continues to work without renewing this Agreement.
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<PAGE>
SECTION 4. RETURN OF EMPLOYER PROPERTY ON TERMINATION
Employee agrees to promptly return the Employer's property to the Employer's
Florida headquarters upon termination of his employment with Employer. Failure
to comply with this provision will result in the immediate forfeiture of any
payment then due and owing to the Employee. The Employer reserves the right to
take appropriate legal action against the Employee in the event of a breach of
this provision.
SECTION 5. VERIFICATION OF COMPLIANCE
Upon termination of employment, Employee shall, at the request of Employer,
verify in writing and under oath, in the form attached hereto as Exhibit A, his
compliance with the provisions of this Agreement relating to Intellectual
Property and Confidential Information. This provision shall not give rise to any
independent claim by Employee for severance pay or other payments upon
Employee's termination.
SECTION 6. MISCELLANEOUS PROVISIONS
(a) INTEGRATION, WAIVER AND SEVERABILITY. This Agreement sets forth the
entire agreement between the parties with respect to the matters covered herein
and supersedes all prior agreements, whether oral or written. No waiver or
modification of this Agreement or of any part contained herein shall be valid
unless in writing and duly executed by the Employee and approved by the
President of HEICO AVIATION PRODUCTS CORP., the parent of the Employer. This
waiver by Employer of any breach of a provision of this Agreement shall not be
construed as a waiver of any succeeding breach or a waiver of any breach of any
other provision. No evidence of any waiver or modification shall be offered or
received in evidence of any proceeding or litigation between the parties hereto
arising out of or affecting this Agreement, or the rights or obligations of the
parties hereunder, unless such waiver or modification is in writing, duly
executed as aforesaid. The failure of either party at any time to require
performance by the other party of any provision hereunder shall in no way affect
the right of that party thereafter to enforce the same, or to enforce any of the
other provisions in this Agreement; nor shall the waiver by either party of the
breach of any provision hereof be taken or held to be a waiver of any subsequent
breach of such provision or as a waiver of the provision itself. All agreements
and covenants contained herein are severable and in the event any of them shall
be held to be invalid by a court of competent jurisdiction, this Agreement shall
be interpreted as if such invalid terms or covenants were not contained herein.
(b) BENEFIT AND ASSIGNABILITY. This Agreement shall bind the Employee, his
heirs and successors, and the Employer, its successors and assigns. This
Agreement requires the personal services of the Employee and cannot be assigned
by the Employee. The Employee agrees not to delegate his obligations or duties
hereunder or any portion thereof. The Employer may, without recourse, assign all
its rights and obligations to any entity which acquires or succeeds to the
business of the Employer by merger, sale of assets, consolidation, operation of
law, or otherwise.
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(c) NOTICE. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by certified mail,
return receipt requested, to his residence set forth on the signature page
hereof, unless otherwise changed by a party through written notice, in the case
of the Employee, or to its principal office in the case of the Employer set
forth on the signature page hereof, unless otherwise changed by a party by
providing written notice to the other party.
(d) SECTION HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) PREVAILING PARTY. The prevailing party to an action to enforce or defend
this Agreement is entitled to attorney's fees and reasonable costs incurred in
connection therewith, including, but not limited to, those incurred at the
pre-litigation, pre-trial, trial, and appellate levels.
(f) REFERENCES. Whenever the masculine pronoun is used, it includes the
feminine pronoun, and the singular includes the plural, and vice versa, where
the context requires.
(g) COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one of the same instrument.
(h) APPLICABLE LAW; JURISDICTION; VENUE; WAIVER OF JURY TRIAL. THIS
AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
FLORIDA, WHETHER SUBSTANTIVE OR PROCEDURAL. THE CONVENIENT, SOLE AND EXCLUSIVE
JURISDICTION AND VENUE FOR ANY LEGAL ACTION ARISING OUT OF THIS AGREEMENT SHALL
BE IN THE CIRCUIT COURT IN AND FOR DADE OR BROWARD COUNTIES, FLORIDA. EACH OF
THE PARTIES HERETO HEREBY WAIVES ITS RIGHT TO TRIAL BY JURY IN ANY ACTION
ARISING UNDER THIS AGREEMENT OR REGARDING THE EMPLOYMENT OF EMPLOYEE BY EMPLOYER
DURING OR AFTER THE TERM OF THIS AGREEMENT. THIS PROVISION IS A MATERIAL
INDUCEMENT TO EMPLOYER ENTERING INTO THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
7
<PAGE>
___________________________________________
Humberto Aleman
Address:
NORTHWINGS ACCESSORIES CORP.
By:________________________________________
Name: RAMON PORTELA
Title: PRESIDENT
Address: 6990 N.W.35 AVENUE
MIAMI, FLORIDA 33147
8
<PAGE>
EXHIBIT A
My employment by Employer is terminated. I have read and understood my
agreement with Employer dated _______________, 19 __ (the "Agreement"), and
particularly the provisions relating to Intellectual Property and Confidential
Information. I hereby swear, UNDER OATH, that:
1. I have complied with all provisions of the Agreement, including those
relating to Intellectual Property and Confidential Information.
2. I have fully disclosed all items of Intellectual Property to Employer. I
have given Employer all documents and other materials referred to in the
Agreement, or if I have not done so, the withheld documents and materials are:
_________________________. If I discover any documents and other materials
covered by this Agreement in my possession in the future, I will immediately
return them to the Employer after discovery.
3. I understand that the misappropriation of confidential information and
documents may be considered a crime under the laws of the State of Florida.
_______________________
(Name)
STATE OF FLORIDA )
)SS:
COUNTY OF _______ )
The foregoing instrument was acknowledged before me this _____
day of _______________, 19______ by _________________________________________.
Personally Known __________ OR Produced Identification ________________________
Type of Identification Produced _______________________________________________
_________________________________________________
Print or Stamp Name:
Notary Public, State of Florida at Large
Commission No.:
My Commission Expires:
9
<PAGE>
EXHIBIT B
NORTHWINGS
V.P Sales - H. Aleman
Compensation Schedule
BASE SALARY $100,000/yr.
Bonus paid on a monthly
basis depending on sales
volume as follows:
MONTHLY SALES VOLUME BONUS %
0 to $150,000 0%
$150,001 to $500,000 5.0%
$500,001 to $1,000,000 2.5%
over $1.0 million 1.0%
Bonus example with sales
for month of $1,200,000.
5% of $350,000 $17,500
2.5% of $500,000 12,500
1.0% of $200,000 2,000
-------
Total bonus for month $32,000
=======
<PAGE>
EXHIBIT C
(INTENTIONALLY OMITTED)
<PAGE>
EXHIBIT D
(INTENTIONALLY OMITTED)
<PAGE>
EXHIBIT E
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into in Dade County, Florida as of the ___ day of ________, 1997 by and between
HEICO Corporation, a Florida corporation (the "Company"), Ramon Portela and Otto
Neuman (collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Stock Purchase Agreement, dated July 25,
1997 (the "Acquisition Agreement"), to which the Company and the Stockholders
are parties, the Stockholders acquired ___________ shares of common stock, par
value $.01 per share, of the Company (the "Common Stock"); and
WHEREAS, pursuant to the Acquisition Agreement and as a condition
precedent to the Stockholders' obligations under the Acquisition Agreement, the
Company has agreed to grant the Stockholders certain registration rights with
respect to the Common Stock received by the Stockholders pursuant to the
Acquisition Agreement, all upon the terms and subject to the conditions set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the Company and the Stockholders agree as follows:
1. REGISTRATION RIGHTS.
(a) INCIDENTAL (PIGGYBACK) REGISTRATION. Subject to the limitations
set forth in this Agreement, if the Company proposes to register any of its
Common Stock under the Securities Act of 1933, as amended (the "Act"), for
public offering and sale by it solely for cash (other than registrations with
regard to acquisitions, conversions of any of the Company's securities or
employee stock options, employee purchase plans or other employee benefit
plans), the Company shall use its best efforts to give notice to the
Stockholders of its intention to effect such a registration at least 10 days
prior to the filing with the Securities and Exchange Commission (the
"Commission") of such registration statement. Upon written request of any
Stockholder, given within 10 days after receipt from the Company of such notice,
the Company shall, subject to the limitations set forth in this Agreement, use
its best efforts to cause the number of such Stockholder's Registerable
Securities (as hereinafter defined) then held by such Stockholder and referred
to in such request to be included in such registration statement; provided,
however, that in the event the offering pursuant to such registration statement
shall be underwritten and the managing underwriter or managing underwriters
advise the Company that in its or their opinion the number of securities
requested to be included in such registration pursuant to this Section 1(a) and
pursuant to any other rights granted by the Company to holders of its securities
to request inclusion of any such securities in such registration exceeds the
number of securities which can be sold in the offering without adversely
affecting the offering price or the marketing of the securities to be offered
for the account of the Company, the Company may so advise the Stockholders and
the Stockholders shall accept a reduction (including a total elimination) in the
number of shares included in such registration in an amount which such
underwriter or underwriters, in its or their sole discretion, deem advisable so
as not to adversely affect the offering price or marketing of the securities to
be offered for the account of the Company. Nothing in this Section 1(a) shall
limit the Company's ability to withdraw or delay a registration statement it has
filed either before or after effectiveness. Notwithstanding anything to the
contrary set forth herein, the Company shall not be obligated to effect or take
any action to effect any such registration for the account of any Stockholder
with respect to less than an aggregate of 25,000 shares of Registerable
Securities or such lower amount as the managing underwriter may agree. The
registration rights
<PAGE>
granted under this Section 1(a) shall pertain only to registrations with respect
to which a registration statement is initially filed with the Commission after
the Initial Date and within three years from the date hereof. Notwithstanding
anything to the contrary set forth herein, the Company shall not be obligated to
effect or take any action to effect any such registration of Registerable
Securities under a particular registration statement if the Stockholders were
previously given the opportunity to register all of the Registerable Securities
hereunder or otherwise under a separate registration statement initially filed
within the previous one-year period; provided that such opportunity shall be
counted only if (A) the separate registration statement has become effective
under the Act, and (B) the public offering has been consummated on the terms and
conditions specified therein.
(b) REQUESTED REGISTRATION.
(i) Subject to the limitations set forth in this Agreement, at
any time after the date which is 90 days after the date of Closing of the
Acquisition Agreement ("Initial Date") and prior to three years from the date
hereof, the Stockholders may together request the Company to register under the
Act, all or any portion (but not less than 25,000 shares) of the Registerable
Securities for sale on terms and conditions comparable to those normally
applicable to offerings of equity securities in similar circumstances as
determined by the Company on Form S-3 or such other form as the Company deems
appropriate; provided, however, that the request for registration must be for a
continuous or "shelf" registration statement made pursuant to Rule 415
promulgated under the Act or any similar or successor rule ("Shelf
Registration").
The Company may, in its sole discretion, and on only one occasion,
terminate any Shelf Registration by giving ten (10) days written notice to the
Stockholders. In such an event, the Company shall grant the Stockholders another
registration statement pursuant to this Section 1(b). No such request may be
made until at least sixty (60) days have passed from the date of such
termination. In any event, any registration statement pursuant to this Section
need not remain in effect after any date that is beyond three years from the
date hereof.
(ii) Following receipt of any notice under Section 1(b), the
Company shall, subject to the limitations set forth in this Agreement, use its
best efforts to register under the Act, for public sale in accordance with the
method of disposition specified in the Stockholders' notice, the Registerable
Securities specified in the Stockholders' notice; provided, however, that if the
Board of Directors of the Company determines that such registration would be
detrimental to the Company and the Board of Directors of the Company concludes,
as a result, that it is in the best interests of the Company to defer the filing
of such registration statement at such time, and the Company furnishes to the
Stockholder a certificate signed by an executive officer of the Company that the
Board of Directors of the Company has made such determination and that it is,
therefore, necessary to defer the filing of such registration statement, then
the Company shall have the right only once to defer such filing for the period
during which such registration would be detrimental, provided (except as
otherwise provided in this Section 1(b)(ii)) that the Company may not defer the
filing for a period of more than 180 days after receipt of the request of the
Stockholders ("Deferred Filing"). The Company shall be obligated to register the
Registerable Securities pursuant to this Section 1(b) on one occasion only
(except as otherwise provided in Section 1(b)(i); provided that such a
registration shall be counted only if (A) the corresponding registration
statement has become effective under the Act, and (B) the public offering has
been consummated on the terms and conditions specified therein or if not
consummated, such failure was not attributable to an action taken by the
Company. Notwithstanding anything herein to the contrary, the Company shall not
be obligated to effect, or take any action to effect, any such registration
pursuant to this Section 1(b)(i) during the period starting with the date 90
days prior to the Company's estimate of the date of filing of, and ending on a
date 270 days after the filing of, a Company initiated registration ("Delayed
Registration Statement"). The Company may not causse a Delayed Registration
Statement during the first year after the Initial Date (which year shall be
-2-
<PAGE>
increased by any delay caused by a Deferred Filing) unless the Company agrees to
include in such Company initiated registration all the Registered Securities of
the Stockholders.
(iii)The Company shall be entitled to include in any
registration statement filed pursuant to this Section 1(b) (A) securities of the
Company held by any other shareholder of the Company, and (B) in an underwritten
public offering, Common Stock of the Company to be sold by the Company for its
own account.
(iv) If and whenever the Company is required by the provisions
of Section 1(b) hereof to use its best efforts to effect the registration of any
of the Registerable Securities under the Act, the Company will, subject to the
limitations set forth in this Agreement, as expeditiously as reasonably
practicable:
(A) prepare and file with the Commission a registration
statement with respect to such securities and use its best
efforts to cause such registration statement to become and
remain effective for a period of the distribution contemplated
thereby (determined pursuant to Section 1(b)(iv)(G) below);
(B) prepare and file with the Commission such amendments
and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective for the period
specified in Section 1(b)(iv)(G) below and as may be necessary
to comply with the provisions of the Act with respect to the
disposition of all Registerable Securities covered by such
registration statement in accordance with the Stockholders'
intended method of disposition set forth in such registration
statement for such period;
(C) furnish to the Stockholders and to each underwriter
such number of copies of the registration statement and the
prospectus included therein (including each preliminary
prospectus and each document incorporated by reference therein
to the extent then required by the rules and regulations of the
Commission) as such persons may reasonably request in order to
facilitate the public sale or other disposition of the
Registerable Securities covered by such registration statement;
(D) use its best efforts to register or qualify the
Registerable Securities covered by such registration statement
under the securities or blue sky laws of such jurisdictions as
the Stockholder or, in the case of an underwritten public
offering, the managing underwriter(s), shall reasonably request
and to take all necessary action to keep such registration or
qualification effective as required by this Section 1(b) as to a
registration statement filed with the Commission; provided that
the Company shall not be required to qualify to transact
business as a foreign corporation in any jurisdiction in which
it would not otherwise be required to be so qualified or to take
any action which would subject it to general service of process
in any such jurisdictions which it is not then so subject;
(E) promptly notify in writing each Stockholder and each
underwriter of the happening of any event as a result of which
the prospectus contained in such registration statement, as then
in effect, includes an untrue statement of a material fact or
omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in
the
-3-
<PAGE>
light of the circumstances then existing (in which case, the
Company shall promptly provide the Stockholders with revised or
supplemental prospectuses and if so requested by the Company in
writing, the Stockholders shall promptly take action to cease
making any offers of the Registerable Securities until receipt
and distribution of such revised or supplemental prospectuses);
(F) make available for inspection during normal business
hours to a representative of the Stockholders, any underwriter
reasonably acceptable to the Company participating in any
distribution pursuant to such registration statement, and any
attorney, accountant or other agent retained by any
representative of any Stockholder or underwriter, all pertinent
financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries which may
reasonably be required in order to effectuate the distribution,
and cause the Company's officers, directors and employees to
supply all information reasonably requested by any such
representative of any such Stockholder, underwriter, attorney,
accountant or agent in connection with such registration
statement; provided, however, that the Stockholders and each
such representative of any such Stockholder, underwriter,
attorney, accountant or agent must execute and deliver to the
Company a confidentiality agreement in form and substance
acceptable to the Company agreeing to keep any such information
and records concerning the Company confidential;
(G) use its best efforts to keep effective and maintain any
registration, qualification, approval or listing obtained to
cover the Registerable Securities as may be necessary for the
Stockholders to dispose of the Registerable Securities during
the period of distribution and shall from time to time amend or
supplement any prospectus used in connection therewith to the
extent necessary in order to comply with applicable law.
Notwithstanding the foregoing, the Company shall not be required
to file or to keep effective and maintain any such registration,
qualification, approval or listing for such period that would
require it to cause an audit of the Company to be performed
other than as is required by the rules and regulations of the
Commission with respect to reports required to be filed under
the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
2. INDEMNIFICATION. In the event that the Company shall register under the
Act any of Stockholder's Registerable Securities:
(a) COMPANY'S INDEMNIFICATION. The Company will indemnify and hold
harmless each Stockholder against any losses, claims, expenses, damages or
liabilities (including reasonable attorneys' fees), joint or several, to which
such Stockholder becomes subject under the Act, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Registerable
Securities were registered under the Act pursuant to Section 1 hereof, any
prospectus contained therein which is utilized, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (subject to Section 2(c)) will
reimburse such Stockholder for any legal or other expenses reasonably incurred
by it in connection with investigating or defending any such loss, claim,
expense, damage, liability or action; provided, however, that the Company will
not be liable in any such case if and to the extent that any such loss, claim,
expense, damage or liability arises out of or is based upon
-4-
<PAGE>
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished to the Company by any
Stockholder.
(b) STOCKHOLDERS' INDEMNIFICATION. The Stockholders will, jointly and
severally, indemnify and hold harmless the Company and each underwriter of the
Company's securities under Section 1 and each person who controls the Company or
such underwriters within the meaning of the Act and the Exchange Act, each
officer of the Company who signs the registration statement and each director of
the Company, against all losses, claims, expenses, damages or liabilities
(including reasonable attorneys' fees), joint or several, to which the Company,
such underwriter or such officer or director or controlling person become
subject under the Act, insofar as such losses, claims, expenses, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registerable Securities were
registered under the Act pursuant to Section 1 hereof, any prospectus contained
therein which is utilized, or any amendment or supplement thereof, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will (subject to Section 2(c)) reimburse the
Company, each such underwriter and each such officer and director and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, expense,
damage, liability or action; provided, however, that the Stockholders will be
liable hereunder in any such case if and only to the extent that any such loss,
claim, expense, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
conformity with information furnished to the Company by or on behalf of any
Stockholder or any controlling person or affiliate of any Stockholder.
(c) NOTIFICATION. Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing thereof; provided,
however, that any failure to give such notice will not waive any rights of the
indemnified party except to the extent the rights of the indemnified party are
materially prejudiced. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to the parties hereto and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 2 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof;
provided, however, that if the indemnifying party has failed to assume the
defense and employ counsel, then the indemnified party shall have the right to
select separate counsel and to assume such legal defense and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in this Section
2 is unavailable or insufficient to hold harmless an indemnified party in
respect of any losses, claims, expenses, damages or liabilities or actions in
respect thereof, then each indemnifying party shall in lieu of indemnifying such
indemnified party contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, expenses, damages, liabilities or
actions in such proportion as is appropriate to reflect the relative fault of
the Company, on the one hand, and the Stockholders, on the other, in connection
with the statements or omissions which resulted in such losses, claims,
expenses, damages, liabilities or actions as well as any other relevant
equitable considerations, including the failure to give any required notice. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
-5-
<PAGE>
omission or alleged omission to state a material fact relates to information
supplied by the Company or any affiliate thereof, on the one hand, or any
Stockholder or any affiliate thereof, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or present
such statement or omission. The Company and the Stockholders agree that it would
not be just and equitable if contribution pursuant to this Section 2(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 2(d). The amount paid or payable by an indemnified party as a result of
the losses, claims, expenses, damages, liabilities or actions in respect thereof
referred to above in this Section 2(d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
3. EXPENSES. If any Stockholder's Registerable Securities are included in
any registration statement pursuant to Section 1 of this Agreement, the Company
shall pay the costs and expenses incurred in connection with the preparation and
filing of such registration statement covering such shares, including, but not
limited to, the fees and expenses of counsel, accountants and other experts for
the Company, printing costs (other than fees and expenses arising in connection
with the printing and distribution of prospectuses or registration statements in
connection with a registration effected pursuant to Section 1(b) hereof in
excess of 200 registration statements and prospectuses, which shall be paid for
by the Stockholders whose shares are being registered thereunder), registration
and filing fees and blue sky fees and expenses (other than the incremental
portion of the federal and state registration and filing fees attributable to
any Stockholder's Registerable Securities, which shall be paid by the
Stockholders whose shares are being registered thereunder), commissions and
expenses of underwriters (other than fees and expenses of underwriters
attributable to any Stockholder's Registerable Securities, which shall be paid
by the Stockholders whose shares are being registered thereunder) and all other
direct and indirect costs and expenses in connection with the registration and
public offering of such Stockholder's Registerable Securities. Notwithstanding
anything contained herein to the contrary, the Company shall not be required to
pay the fees and expenses of counsel, accountants, advisors, consultants, agents
or experts of any Stockholder.
4. REGISTERABLE SECURITIES. For purposes of this Agreement, the term
"Registerable Securities" shall mean (i) any shares of Common Stock owned by any
Stockholder and issued pursuant to the Acquisition Agreement and (ii) any shares
of Common Stock issued or issuable with respect to the shares of Common Stock
described in (i) above, by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganizations.
5. INFORMATION FOR REGISTRATION STATEMENT; CERTAIN LIMITATIONS. The
Company's obligations under Section 1 with respect to a Stockholders are
expressly conditioned upon (i) that Stockholder's furnishing to the Company in
writing such information concerning such Stockholder and the terms of such
Stockholder's proposed offering of shares of the Registerable Securities as the
Company shall request for inclusion in the registration statement; and (ii)
there not having occurred a materail breach by such Stockholder or any affiliate
of such Stockholder of any agreement, covenant, representation or warranty
contained in the Acquisition Agreement or any other agreement between such
Stockholder or any affiliate thereof and the Company or any affiliate thereof.
It shall be a condition to the Company's obligations hereunder that each
Stockholder accepts the terms and conditions of any registration statement and
underwriting (if any) in connection with which such Stockholder may register
Registerable Securities hereunder and joins in the underwriting agreement in
connection therewith (on substantially the same terms and conditions as each
other selling shareholder in such underwriting, if any).
-6-
<PAGE>
6. RULE 144 COVENANTS. The Company agrees, for a period of three years
from the date of this Agreement, to use its best efforts to (i) file with the
Commission, in a timely manner, all reports required to be filed by the Company
under the Exchange Act and (ii) to provide the Stockholder, upon request,
information regarding the number of shares of Common Stock outstanding as shown
by the most recent report or statement published by the Company.
7. SETOFF. It is expressly understood by the parties hereto that the
Company shall be entitled, but not required, to offset any claim for
indemnification or payment from any Stockholder (or any affiliate thereof)
pursuant to Section 2(b) hereof against any amounts payable to any Stockholder
by the Company or its affiliates; provided, that this remedy shall be in
addition to any other remedies the Company may have available to it against the
Stockholders, at law or in equity.
8. RE-SALE LIMITATIONS. The Stockholders shall not sell, in the aggregate
of all of the Stockholders and for all of the Registerable Securities, in excess
of three hundred thousand dollars ($300,000) of the Registerable Securities
during any calendar month following acquisition of the Registerable Securities.
A legend designated by the Company setting forth the re-sale limitations and any
other restrictions contained in this Agreement or the Acquisition Agreement
shall be placed upon all certificates for any shares of Common Stock
representing the Registerable Securities.
9. MISCELLANEOUS.
(a) NOTICES. Any notice, request, demand or other communication
required or permitted under this Agreement shall be in writing and shall be
delivered personally or sent by prepaid overnight courier for next business day
delivery to the parties at the addresses set forth below their names below (or
at such other addresses as shall be specified by the parties by like notice).
IF TO STOCKHOLDERS:
Ramon Portela
Northwings Accessories Corporation
6990 N.W. 35 Avenue
Miami, Florida 33147
Robert A. Freeman, Esq.
Suite 1250
2601 S. Bayshore Drive
Miami, Florida 33133
IF TO THE COMPANY:
HEICO Corporation
3000 Taft Street
Hollywood, Florida 33021
Attn: President
WITH A COPY TO:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Cesar L. Alvarez, Esq.
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<PAGE>
Such notices, demands, claims and other communications shall be deemed
given when actually received or in the case of delivery by overnight service
with guaranteed next business day delivery, the next business day or the day
designated for delivery.
(b) ENTIRE AGREEMENT. This Agreement contains every obligation and
understanding between the parties relating to the subject matter hereof and
merges all prior discussions, negotiations and agreements, if any, between them,
and neither of the parties shall be bound by any representations, warranties,
covenants, or other understandings, other than as expressly provided or referred
to herein.
(c) ASSIGNMENT. This Agreement may not be assigned by either party
without the written consent of the other party. Subject to the preceding
sentence, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, heirs, personal representatives,
legal representatives, and permitted assigns.
(d) NO THIRD PARTY BENEFICIARY. Except with respect to the
controlling persons, underwriters, affiliates, officers and directors expressly
referenced in Section 2, nothing expressed or implied in this Agreement is
intended, or shall be construed, to confer upon or give any person other than
the parties hereto and their respective heirs, personal representatives, legal
representatives, successors and permitted assigns, any rights or remedies under
or by reason of this Agreement.
(e) SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement shall be declared invalid, void or unenforceable,
the remainder of the provisions of this Agreement shall remain in full force and
effect, and such invalid, void or unenforceable provision shall be interpreted
as closely as possible to the manner in which it was written.
(f) HEADINGS. Headings to sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Any facsimile copy of a
manually executed original shall be deemed a manually executed original.
(h) LITIGATION; PREVAILING PARTY. In the event of any litigation with
regard to this Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party and the non-prevailing party shall pay upon demand all
reasonable fees and expenses of counsel for the prevailing party.
(i) GOVERNING LAW AND VENUE. This Agreement has been entered into and
shall be construed and enforced in accordance with the laws of the State of
Florida without reference to the choice of law principles thereof. This
Agreement shall be subject to the exclusive jurisdiction of the courts of the
State of Florida located in Dade County, Florida or the United States District
Court for the Southern District of Florida. The parties to this Agreement agree
that this Agreement was entered into in Dade County, Florida and that any breach
of any term or condition of this Agreement shall be deemed to be a breach
occurring in Dade County, Florida by virtue of a failure to perform an act
required to be performed in Dade County, Florida and irrevocably and expressly
agree to submit to the jurisdiction of such courts for the purpose of resolving
any disputes between the parties relating to this Agreement or the transactions
contemplated hereby. The parties irrevocably waive, to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement, or any judgment entered by
-8-
<PAGE>
any court in respect hereof brought in Dade County, Florida, and further
irrevocably waive any claim that any suit, action or proceeding brought in Dade
County, Florida has been brought in an inconvenient forum.
(j) PARTICIPATION OF PARTIES; CONSTRUCTION. The parties hereto
acknowledge that this Agreement and all matters contemplated herein, have been
negotiated between all parties hereto and their respective legal counsel and
that all such parties have participated in the drafting and preparation of this
Agreement from the commencement of negotiations at all times through the
execution hereof. This Agreement shall be construed and interpreted without
regard to any presumption or other rule or interpretation against the party who
may have had primary responsibility for drafting this Agreement.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
HEICO CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
STOCKHOLDERS:
________________________________
Ramon Portela
________________________________
Otto Neuman
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<PAGE>
EXHIBIT F
DIVISION OF PURCHASE PRICE CONSIDERATION
SHARES OF
HEICO
COMMON
CASH STOCK*
---------------------------------------------------
(DOLLARS IN THOUSANDS)
---------------------------------------------------
Humberto Aleman $180.0 $420.0
---------------------------------------------------
Eusebio Rey 40.0 90.0
---------------------------------------------------
Alan Goolsby 40.0 90.0
---------------------------------------------------
Wyatt Allen 40.0 90.0
---------------------------------------------------
Otto Neuman 3,693.2 1,612.5
---------------------------------------------------
Ramon Portela 2,824.7 1,241.0
---------------------------------------------------
Elvira Puerta 138.6 --
===================================================
$6,956.5 $3,543.5
---------------------------------------------------
TOTAL $10,500.0
---------------------------------------------------
* Number of Shares to be based on the lower of $22 7/8 or the closing price
the day before the transaction is closed.
EXHIBIT 10.1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and entered
into in Dade County, Florida as of the 16th day of September, 1997 by and
between HEICO Corporation, a Florida corporation (the "Company"), Ramon Portela
and Otto Neuman (collectively, the "Stockholders").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Stock Purchase Agreement, dated July 25,
1997 (the "Acquisition Agreement"), to which the Company and the Stockholders
are parties, the Stockholders acquired 128,241 shares of common stock, par value
$.01 per share, of the Company (the "Common Stock"); and
WHEREAS, pursuant to the Acquisition Agreement and as a condition precedent
to the Stockholders' obligations under the Acquisition Agreement, the Company
has agreed to grant the Stockholders certain registration rights with respect to
the Common Stock received by the Stockholders pursuant to the Acquisition
Agreement, all upon the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements
hereinafter set forth, the Company and the Stockholders agree as follows:
1. REGISTRATION RIGHTS.
(a) INCIDENTAL (PIGGYBACK) REGISTRATION. Subject to the limitations set
forth in this Agreement, if the Company proposes to register any of its Common
Stock under the Securities Act of 1933, as amended (the "Act"), for public
offering and sale by it solely for cash (other than registrations with regard to
acquisitions, conversions of any of the Company's securities or employee stock
options, employee purchase plans or other employee benefit plans), the Company
shall use its best efforts to give notice to the Stockholders of its intention
to effect such a registration at least 10 days prior to the filing with the
Securities and Exchange Commission (the "Commission") of such registration
statement. Upon written request of any Stockholder, given within 10 days after
receipt from the Company of such notice, the Company shall, subject to the
limitations set forth in this Agreement, use its best efforts to cause the
number of such Stockholder's Registerable Securities (as hereinafter defined)
then held by such Stockholder and referred to in such request to be included in
such registration statement; provided, however, that in the event the offering
pursuant to such registration statement shall be underwritten and the managing
underwriter or managing underwriters advise the Company that in its or their
opinion the number of securities requested to be included in such registration
pursuant to this Section 1(a) and pursuant to any other rights granted by the
Company to holders of its securities to request inclusion of any such securities
in such registration exceeds the number of securities which can be sold in the
offering without adversely affecting the offering price or the marketing of the
securities to be offered for the account of the Company, the Company may so
advise the Stockholders and the Stockholders shall accept a reduction (including
a total elimination) in the number of shares included in such registration in an
amount which such underwriter or underwriters, in its or their sole discretion,
deem advisable so as not to adversely affect the offering price or marketing of
the securities to be offered for the account of the Company. Nothing in this
Section 1(a) shall limit the Company's ability to withdraw or delay a
registration statement it has filed either before or after effectiveness.
Notwithstanding anything to the contrary set forth herein, the Company shall not
be obligated to effect or take any action to effect any such registration for
the account of any Stockholder with respect to less than an aggregate of 25,000
shares of Registerable Securities or such lower amount as the managing
underwriter may agree. The registration rights
1
<PAGE>
granted under this Section 1(a) shall pertain only to registrations with respect
to which a registration statement is initially filed with the Commission after
the Initial Date and within three years from the date hereof. Notwithstanding
anything to the contrary set forth herein, the Company shall not be obligated to
effect or take any action to effect any such registration of Registerable
Securities under a particular registration statement if the Stockholders were
previously given the opportunity to register all of the Registerable Securities
hereunder or otherwise under a separate registration statement initially filed
within the previous one-year period; provided that such opportunity shall be
counted only if (A) the separate registration statement has become effective
under the Act, and (B) the public offering has been consummated on the terms and
conditions specified therein.
(b) REQUESTED REGISTRATION.
(i) Subject to the limitations set forth in this Agreement, at any time
after the date which is 90 days after the date of Closing of the Acquisition
Agreement ("Initial Date") and prior to three years from the date hereof, the
Stockholders may together request the Company to register under the Act, all or
any portion (but not less than 25,000 shares) of the Registerable Securities for
sale on terms and conditions comparable to those normally applicable to
offerings of equity securities in similar circumstances as determined by the
Company on Form S-3 or such other form as the Company deems appropriate;
provided, however, that the request for registration must be for a continuous or
"shelf" registration statement made pursuant to Rule 415 promulgated under the
Act or any similar or successor rule ("Shelf Registration").
The Company may, in its sole discretion, and on only one occasion, terminate
any Shelf Registration by giving ten (10) days written notice to the
Stockholders. In such an event, the Company shall grant the Stockholders another
registration statement pursuant to this Section 1(b). No such request may be
made until at least sixty (60) days have passed from the date of such
termination. In any event, any registration statement pursuant to this Section
need not remain in effect after any date that is beyond three years from the
date hereof.
(ii) Following receipt of any notice under Section 1(b), the Company
shall, subject to the limitations set forth in this Agreement, use its best
efforts to register under the Act, for public sale in accordance with the method
of disposition specified in the Stockholders' notice, the Registerable
Securities specified in the Stockholders' notice; provided, however, that if the
Board of Directors of the Company determines that such registration would be
detrimental to the Company and the Board of Directors of the Company concludes,
as a result, that it is in the best interests of the Company to defer the filing
of such registration statement at such time, and the Company furnishes to the
Stockholder a certificate signed by an executive officer of the Company that the
Board of Directors of the Company has made such determination and that it is,
therefore, necessary to defer the filing of such registration statement, then
the Company shall have the right only once to defer such filing for the period
during which such registration would be detrimental, provided (except as
otherwise provided in this Section 1(b)(ii)) that the Company may not defer the
filing for a period of more than 180 days after receipt of the request of the
Stockholders ("Deferred Filing"). The Company shall be obligated to register the
Registerable Securities pursuant to this Section 1(b) on one occasion only
(except as otherwise provided in Section 1(b)(i); provided that such a
registration shall be counted only if (A) the corresponding registration
statement has become effective under the Act, and (B) the public offering has
been consummated on the terms and conditions specified therein or if not
consummated, such failure was not attributable to an action taken by the
Company. Notwithstanding anything herein to the contrary, the Company shall not
be obligated to effect, or take any action to effect, any such registration
pursuant to this Section 1(b)(i) during the period starting with the date 90
days prior to the Company's estimate of the date of filing of, and ending on a
date 270 days after the filing of, a Company initiated registration ("Delayed
Registration Statement"). The Company may not causse a Delayed Registration
Statement during the first year after the Initial Date (which year shall be
2
<PAGE>
increased by any delay caused by a Deferred Filing) unless the Company agrees to
include in such Company initiated registration all the Registered Securities of
the Stockholders.
(iii) The Company shall be entitled to include in any registration
statement filed pursuant to this Section 1(b) (A) securities of the Company held
by any other shareholder of the Company, and (B) in an underwritten public
offering, Common Stock of the Company to be sold by the Company for its own
account.
(iv) If and whenever the Company is required by the provisions of
Section 1(b) hereof to use its best efforts to effect the registration of any of
the Registerable Securities under the Act, the Company will, subject to the
limitations set forth in this Agreement, as expeditiously as reasonably
practicable:
(A) prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for a period of
the distribution contemplated thereby (determined pursuant to Section
1(b)(iv)(G) below);
(B) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for the period specified in Section 1(b)(iv)(G)
below and as may be necessary to comply with the provisions of the Act
with respect to the disposition of all Registerable Securities covered
by such registration statement in accordance with the Stockholders'
intended method of disposition set forth in such registration statement
for such period;
(C) furnish to the Stockholders and to each underwriter such number
of copies of the registration statement and the prospectus included
therein (including each preliminary prospectus and each document
incorporated by reference therein to the extent then required by the
rules and regulations of the Commission) as such persons may reasonably
request in order to facilitate the public sale or other disposition of
the Registerable Securities covered by such registration statement;
(D) use its best efforts to register or qualify the Registerable
Securities covered by such registration statement under the securities
or blue sky laws of such jurisdictions as the Stockholder or, in the
case of an underwritten public offering, the managing underwriter(s),
shall reasonably request and to take all necessary action to keep such
registration or qualification effective as required by this Section
1(b) as to a registration statement filed with the Commission; provided
that the Company shall not be required to qualify to transact business
as a foreign corporation in any jurisdiction in which it would not
otherwise be required to be so qualified or to take any action which
would subject it to general service of process in any such
jurisdictions which it is not then so subject;
(E) promptly notify in writing each Stockholder and each
underwriter of the happening of any event as a result of which the
prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading in the
3
<PAGE>
light of the circumstances then existing (in which case, the
Company shall promptly provide the Stockholders with revised or
supplemental prospectuses and if so requested by the Company in
writing, the Stockholders shall promptly take action to cease making
any offers of the Registerable Securities until receipt and
distribution of such revised or supplemental prospectuses);
(F) make available for inspection during normal business hours to a
representative of the Stockholders, any underwriter reasonably
acceptable to the Company participating in any distribution pursuant to
such registration statement, and any attorney, accountant or other
agent retained by any representative of any Stockholder or underwriter,
all pertinent financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries which may
reasonably be required in order to effectuate the distribution, and
cause the Company's officers, directors and employees to supply all
information reasonably requested by any such representative of any such
Stockholder, underwriter, attorney, accountant or agent in connection
with such registration statement; provided, however, that the
Stockholders and each such representative of any such Stockholder,
underwriter, attorney, accountant or agent must execute and deliver to
the Company a confidentiality agreement in form and substance
acceptable to the Company agreeing to keep any such information and
records concerning the Company confidential;
(G) use its best efforts to keep effective and maintain any
registration, qualification, approval or listing obtained to cover the
Registerable Securities as may be necessary for the Stockholders to
dispose of the Registerable Securities during the period of
distribution and shall from time to time amend or supplement any
prospectus used in connection therewith to the extent necessary in
order to comply with applicable law. Notwithstanding the foregoing, the
Company shall not be required to file or to keep effective and maintain
any such registration, qualification, approval or listing for such
period that would require it to cause an audit of the Company to be
performed other than as is required by the rules and regulations of the
Commission with respect to reports required to be filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
2. INDEMNIFICATION. In the event that the Company shall register under the
Act any of Stockholder's Registerable Securities:
(a) COMPANY'S INDEMNIFICATION. The Company will indemnify and hold
harmless each Stockholder against any losses, claims, expenses, damages or
liabilities (including reasonable attorneys' fees), joint or several, to which
such Stockholder becomes subject under the Act, insofar as such losses, claims,
expenses, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the registration statement under which such Registerable
Securities were registered under the Act pursuant to Section 1 hereof, any
prospectus contained therein which is utilized, or any amendment or supplement
thereof, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (subject to Section 2(c)) will
reimburse such Stockholder for any legal or other expenses reasonably incurred
by it in connection with investigating or defending any such loss, claim,
expense, damage, liability or action; provided, however, that the Company will
not be liable in any such case if and to the extent that any such loss, claim,
expense, damage or liability arises out of or is based upon
4
<PAGE>
an untrue statement or alleged untrue statement or omission or alleged omission
so made in conformity with information furnished to the Company by any
Stockholder.
(b) STOCKHOLDERS' INDEMNIFICATION. The Stockholders will, jointly and
severally, indemnify and hold harmless the Company and each underwriter of the
Company's securities under Section 1 and each person who controls the Company or
such underwriters within the meaning of the Act and the Exchange Act, each
officer of the Company who signs the registration statement and each director of
the Company, against all losses, claims, expenses, damages or liabilities
(including reasonable attorneys' fees), joint or several, to which the Company,
such underwriter or such officer or director or controlling person become
subject under the Act, insofar as such losses, claims, expenses, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Registerable Securities were
registered under the Act pursuant to Section 1 hereof, any prospectus contained
therein which is utilized, or any amendment or supplement thereof, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and will (subject to Section 2(c)) reimburse the
Company, each such underwriter and each such officer and director and each such
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, expense,
damage, liability or action; provided, however, that the Stockholders will be
liable hereunder in any such case if and only to the extent that any such loss,
claim, expense, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
conformity with information furnished to the Company by or on behalf of any
Stockholder or any controlling person or affiliate of any Stockholder.
(c) NOTIFICATION. Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing thereof; provided,
however, that any failure to give such notice will not waive any rights of the
indemnified party except to the extent the rights of the indemnified party are
materially prejudiced. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in and, to the
extent it shall wish, to assume and undertake the defense thereof with counsel
reasonably satisfactory to the parties hereto and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 2 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof;
provided, however, that if the indemnifying party has failed to assume the
defense and employ counsel, then the indemnified party shall have the right to
select separate counsel and to assume such legal defense and otherwise to
participate in the defense of such action, with the expenses and fees of such
separate counsel and other expenses related to such participation to be
reimbursed by the indemnifying party.
(d) CONTRIBUTION. If the indemnification provided for in this Section 2
is unavailable or insufficient to hold harmless an indemnified party in respect
of any losses, claims, expenses, damages or liabilities or actions in respect
thereof, then each indemnifying party shall in lieu of indemnifying such
indemnified party contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, expenses, damages, liabilities or
actions in such proportion as is appropriate to reflect the relative fault of
the Company, on the one hand, and the Stockholders, on the other, in connection
with the statements or omissions which resulted in such losses, claims,
expenses, damages, liabilities or actions as well as any other relevant
equitable considerations, including the failure to give any required notice. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
5
<PAGE>
omission or alleged omission to state a material fact relates to information
supplied by the Company or any affiliate thereof, on the one hand, or any
Stockholder or any affiliate thereof, on the other, and the parties' relative
intent, knowledge, access to information and opportunity to correct or present
such statement or omission. The Company and the Stockholders agree that it would
not be just and equitable if contribution pursuant to this Section 2(d) were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 2(d). The amount paid or payable by an indemnified party as a result of
the losses, claims, expenses, damages, liabilities or actions in respect thereof
referred to above in this Section 2(d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
3. EXPENSES. If any Stockholder's Registerable Securities are included in
any registration statement pursuant to Section 1 of this Agreement, the Company
shall pay the costs and expenses incurred in connection with the preparation and
filing of such registration statement covering such shares, including, but not
limited to, the fees and expenses of counsel, accountants and other experts for
the Company, printing costs (other than fees and expenses arising in connection
with the printing and distribution of prospectuses or registration statements in
connection with a registration effected pursuant to Section 1(b) hereof in
excess of 200 registration statements and prospectuses, which shall be paid for
by the Stockholders whose shares are being registered thereunder), registration
and filing fees and blue sky fees and expenses (other than the incremental
portion of the federal and state registration and filing fees attributable to
any Stockholder's Registerable Securities, which shall be paid by the
Stockholders whose shares are being registered thereunder), commissions and
expenses of underwriters (other than fees and expenses of underwriters
attributable to any Stockholder's Registerable Securities, which shall be paid
by the Stockholders whose shares are being registered thereunder) and all other
direct and indirect costs and expenses in connection with the registration and
public offering of such Stockholder's Registerable Securities. Notwithstanding
anything contained herein to the contrary, the Company shall not be required to
pay the fees and expenses of counsel, accountants, advisors, consultants, agents
or experts of any Stockholder.
4. REGISTERABLE SECURITIES. For purposes of this Agreement, the term
"Registerable Securities" shall mean (i) any shares of Common Stock owned by any
Stockholder and issued pursuant to the Acquisition Agreement and (ii) any shares
of Common Stock issued or issuable with respect to the shares of Common Stock
described in (i) above, by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganizations.
5. INFORMATION FOR REGISTRATION STATEMENT; CERTAIN LIMITATIONS. The
Company's obligations under Section 1 with respect to a Stockholders are
expressly conditioned upon (i) that Stockholder's furnishing to the Company in
writing such information concerning such Stockholder and the terms of such
Stockholder's proposed offering of shares of the Registerable Securities as the
Company shall request for inclusion in the registration statement; and (ii)
there not having occurred a materail breach by such Stockholder or any affiliate
of such Stockholder of any agreement, covenant, representation or warranty
contained in the Acquisition Agreement or any other agreement between such
Stockholder or any affiliate thereof and the Company or any affiliate thereof.
It shall be a condition to the Company's obligations hereunder that each
Stockholder accepts the terms and conditions of any registration statement and
underwriting (if any) in connection with which such Stockholder may register
Registerable Securities hereunder and joins in the underwriting agreement in
connection therewith (on substantially the same terms and conditions as each
other selling shareholder in such underwriting, if any).
6
<PAGE>
6. RULE 144 COVENANTS. The Company agrees, for a period of three years from
the date of this Agreement, to use its best efforts to (i) file with the
Commission, in a timely manner, all reports required to be filed by the Company
under the Exchange Act and (ii) to provide the Stockholder, upon request,
information regarding the number of shares of Common Stock outstanding as shown
by the most recent report or statement published by the Company.
7. SETOFF. It is expressly understood by the parties hereto that the Company
shall be entitled, but not required, to offset any claim for indemnification or
payment from any Stockholder (or any affiliate thereof) pursuant to Section 2(b)
hereof against any amounts payable to any Stockholder by the Company or its
affiliates; provided, that this remedy shall be in addition to any other
remedies the Company may have available to it against the Stockholders, at law
or in equity.
8. RE-SALE LIMITATIONS. The Stockholders shall not sell, in the aggregate of
all of the Stockholders and for all of the Registerable Securities, in excess of
three hundred thousand dollars ($300,000) of the Registerable Securities during
any calendar month following acquisition of the Registerable Securities. A
legend designated by the Company setting forth the re-sale limitations and any
other restrictions contained in this Agreement or the Acquisition Agreement
shall be placed upon all certificates for any shares of Common Stock
representing the Registerable Securities.
9. MISCELLANEOUS.
(a) NOTICES. Any notice, request, demand or other communication required
or permitted under this Agreement shall be in writing and shall be delivered
personally or sent by prepaid overnight courier for next business day delivery
to the parties at the addresses set forth below their names below (or at such
other addresses as shall be specified by the parties by like notice).
IF TO STOCKHOLDERS:
Ramon Portela
Northwings Accessories Corporation
6990 N.W. 35 Avenue
Miami, Florida 33147
Robert A. Freeman, Esq.
Suite 1250
2601 S. Bayshore Drive
Miami, Florida 33133
IF TO THE COMPANY:
HEICO Corporation
3000 Taft Street
Hollywood, Florida 33021
Attn: President
WITH A COPY TO:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Cesar L. Alvarez, Esq.
7
<PAGE>
Such notices, demands, claims and other communications shall be deemed
given when actually received or in the case of delivery by overnight service
with guaranteed next business day delivery, the next business day or the day
designated for delivery.
(b) ENTIRE AGREEMENT. This Agreement contains every obligation and
understanding between the parties relating to the subject matter hereof and
merges all prior discussions, negotiations and agreements, if any, between them,
and neither of the parties shall be bound by any representations, warranties,
covenants, or other understandings, other than as expressly provided or referred
to herein.
(c) ASSIGNMENT. This Agreement may not be assigned by either party
without the written consent of the other party. Subject to the preceding
sentence, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors, heirs, personal representatives,
legal representatives, and permitted assigns.
(d) NO THIRD PARTY BENEFICIARY. Except with respect to the controlling
persons, underwriters, affiliates, officers and directors expressly referenced
in Section 2, nothing expressed or implied in this Agreement is intended, or
shall be construed, to confer upon or give any person other than the parties
hereto and their respective heirs, personal representatives, legal
representatives, successors and permitted assigns, any rights or remedies under
or by reason of this Agreement.
(e) SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement shall be declared invalid, void or unenforceable,
the remainder of the provisions of this Agreement shall remain in full force and
effect, and such invalid, void or unenforceable provision shall be interpreted
as closely as possible to the manner in which it was written.
(f) HEADINGS. Headings to sections herein are inserted for convenience
of reference only and are not intended to be a part of or to affect the meaning
or interpretation of this Agreement.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Any facsimile copy of a
manually executed original shall be deemed a manually executed original.
(h) LITIGATION; PREVAILING PARTY. In the event of any litigation with
regard to this Agreement, the prevailing party shall be entitled to receive from
the non-prevailing party and the non-prevailing party shall pay upon demand all
reasonable fees and expenses of counsel for the prevailing party.
(i) GOVERNING LAW AND VENUE. This Agreement has been entered into and
shall be construed and enforced in accordance with the laws of the State of
Florida without reference to the choice of law principles thereof. This
Agreement shall be subject to the exclusive jurisdiction of the courts of the
State of Florida located in Dade County, Florida or the United States District
Court for the Southern District of Florida. The parties to this Agreement agree
that this Agreement was entered into in Dade County, Florida and that any breach
of any term or condition of this Agreement shall be deemed to be a breach
occurring in Dade County, Florida by virtue of a failure to perform an act
required to be performed in Dade County, Florida and irrevocably and expressly
agree to submit to the jurisdiction of such courts for the purpose of resolving
any disputes between the parties relating to this Agreement or the transactions
contemplated hereby. The parties irrevocably waive, to the fullest extent
permitted by law, any objection which they may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to
this Agreement, or any judgment entered by
8
<PAGE>
any court in respect hereof brought in Dade County, Florida, and further
irrevocably waive any claim that any suit, action or proceeding brought in Dade
County, Florida has been brought in an inconvenient forum.
(j) PARTICIPATION OF PARTIES; CONSTRUCTION. The parties hereto
acknowledge that this Agreement and all matters contemplated herein, have been
negotiated between all parties hereto and their respective legal counsel and
that all such parties have participated in the drafting and preparation of this
Agreement from the commencement of negotiations at all times through the
execution hereof. This Agreement shall be construed and interpreted without
regard to any presumption or other rule or interpretation against the party who
may have had primary responsibility for drafting this Agreement.
9
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
HEICO CORPORATION
By: /s/ VICTOR H. MENDELSON
---------------------------------------
Name: VICTOR H. MENDELSON
Title: VICE PRESIDENT & GENERAL COUNSEL
STOCKHOLDERS:
/s/ RAMON PORTELA
-------------------------------------------
Ramon Portela
/s/ OTTO NEUMAN
-------------------------------------------
Otto Neuman
10
EXHIBIT 10.2
EMPLOYMENT AND NONCOMPETITION AGREEMENT
AGREEMENT, dated as of the 16TH of SEPTEMBER , 1997, by and between
NORTHWINGS ACCESSORIES CORPORATION, a Florida corporation (the "EMPLOYER"), and
RAMON PORTELA (the "EMPLOYEE").
WITNESSETH:
WHEREAS, the Employee desires to continue to be employed by the Employer,
and the Employer desires to continue to employ the Employee, upon the terms and
conditions hereinafter set forth; and
WHEREAS, the Employee represents that he is not a party to any agreement
which would prohibit him from entering into this Agreement or his performing the
services required hereunder.
NOW, THEREFORE, in consideration of the premises and other good and valuable
consideration, receipt of which is hereby acknowledged, the Employer and the
Employee agree as follows:
SECTION 1. EMPLOYMENT OF EMPLOYEE
(a) TERM. The Employee's employment hereunder will commence on the date of
the closing of the Stock Purchase Agreement, dated as of July 25,1997, between
HEICO Corporation, Ramon Portela and Otto Neuman, from the Employee, and will
expire on October 31, 1999 (the "TERM"). Notwithstanding the foregoing, the
Employee's employment hereunder may be terminated prior to the expiration of the
Term as provided in SECTION 2.
(b) DUTIES AND RESPONSIBILITIES. The Employee shall serve as President of
the Employer. The Employee agrees to use his best efforts, entire productive
time, attention, and energies to the business of the Employer and shall assume
and competently perform such reasonable responsibilities and duties as may be
assigned to him from time to time by the Employer through its duly authorized
management personnel. To the extent that the Employer shall have any parent,
subsidiaries, affiliated corporations, partnerships, or joint ventures
(collectively "RELATED ENTITIES"), Employee shall perform such duties to promote
these entities and their respective interests to the same extent as the
interests of the Employer and without additional compensation. At all times, the
Employee agrees to abide by any employee handbook, policy, or practice that the
Employer has or hereafter adopts with respect to its employees generally.
<PAGE>
(c) COMPENSATION. As full compensation for his services hereunder and in
consideration for the Employee's covenants contained in this Agreement, the
Employer shall pay the Employee a salary at the per annum rate of $300,000
payable in accordance with the customary payroll practices of the Employer.
(d) EXPENSES; FRINGE BENEFITS AND VACATION POLICY. The Employer agrees to
pay or reimburse the Employee for all reasonable vouchered business expenses
incurred during his employment which have been submitted in accordance with any
expense reimbursement policy or practice of the Employer as in effect from time
to time. The Employer will provide to the Employee a leased automobile of
comparable quality to the automobile currently under lease for the Employee and
such pension benefits, holidays, four (4) weeks of paid vacation per annum and
other employee benefits (including automobile insurance and health care
coverage) which the Employer provides to similarly situated employees, subject
to the provisions of the various benefit plans, programs, or policies in effect
from time to time. Unused vacation shall not accrue from one year until the
following year and shall not be paid in the form of cash in lieu of unused
vacation. Except for vacation time, the Employer reserves the right to change or
eliminate these benefits at any time.
The Employee shall also be entitled to an annual incentive bonus at
the discretion of the Board of Directors of Northwings Accessory Corp.
(e) LIFE INSURANCE. The Employee agrees that the Employer shall have the
right to obtain life insurance on the Employee's life, at the Employer's sole
expense and with the Employer as the sole beneficiary thereof, but no
representation is made by the Employee as to his insurability. The Employee
shall (i) cooperate fully with the Employer in obtaining such life insurance,
(ii) sign any necessary consents, applications and other related forms or
documents, and (iii) take any required medical examinations.
SECTION 2. TERMINATION OF EMPLOYMENT
(a) TERMINATION BY THE EMPLOYER. The Employer may terminate the employment
of the Employee at any time with or without Cause (as defined below) and with or
without notice. Following termination of employment of the Employee for cause,
the Employer shall have no further obligations under this Agreement, including
payment obligations. If the employment of the Employee is terminated by the
Employer without Cause, the Employee shall continue to be entitled to receive
the compensation payable to him pursuant to SECTION 1(C) but thereafter shall
not be entitled to any of the expense reimbursement or benefits referred to in
SECTION 1(D) except to the extent such right to reimbursement or benefits were
vested at the date of such termination. As used in this
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<PAGE>
Agreement, "CAUSE" shall mean the following: (1) the Employee's failure or
refusal to perform his duties, as contemplated by this Agreement, in a
satisfactory manner; after notice and a reasonable opportunity to cure, (2)
dishonesty or other acts that adversely affect the Employer; (3) a violation of
the Employer's written policies or practices which justifies immediate
termination, as defined by the Employer; (4) arrest for or conviction of a
felony or of any crime involving moral turpitude, fraud, dishonesty or
misrepresentation; (5) the commission by the Employee of any act which could
reasonably be expected to injure the reputation, business, or business
relationships of the Employer or Related Entities; (6) the Employee's inability
to perform an essential function of his position, which inability continues for
90 consecutive days or for periods aggregating 90 days in any 180-day period; or
(7) any material breach by Employee of this Agreement or the Stock Purchase
Agreement.
(b) TERMINATION BY EMPLOYEE. The Employee agrees to provide the Employer
with at least twenty (20) business days' written notice of his intent to
terminate employment voluntarily ("TERMINATION NOTICE PERIOD"). Failure to
provide such notice terminates the Employee's entitlement to payment for
accrued, unused benefits, such as vacation. The Employer reserves the right to
terminate the Employee before the end of the Termination Notice Period provided
that the Employer pays the Employee the salary that he would have received from
the date of the last payroll payment to the end of the Termination Notice
Period. During the Termination Notice Period, the Employee agrees to make a good
faith effort to perform the duties described hereunder. If the Employee
terminates his employment with the Employer for any reason, the Employer's
obligations, including payment obligations, under this Agreement shall forthwith
cease except as provided in this subparagraph.
SECTION 3. NON-COMPETITION; STANDSTILL; PROTECTION OF CONFIDENTIAL
INFORMATION; ETC.
(a) RATIONALE FOR RESTRICTIONS. The Employee acknowledges that his services
hereunder are of a special, unique, extraordinary and intellectual character,
and his position with the Employer places him in a position of confidence and
trust with the customers, suppliers and employees of the Employer and/or Related
Entities. The Employee also acknowledges that the Employer and Related Entities
repairs, overhauls and services certain aircraft equipment (collectively
"PRODUCTS") throughout the world and that the Employer competes with many
companies, including, but not limited to,_____________________________________.
The Employee further acknowledges that the rendering of services under this
Agreement necessarily requires the disclosure to the Employee of Confidential
Information of the Employer and/or Related Entities. The Employee and the
Employer agree that both prior to and during the course of employment with the
Employer and Northwings, the Employee had, has, and will continue to develop a
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<PAGE>
personal relationship with the Employer's customers, and a knowledge of these
customers' affairs and requirements which may constitute the Employer's primary
and only contact with such customers. The Employee acknowledges that the
Employer's relationships with its established clientele may therefore be placed
in the Employee's hands in confidence and trust. The Employee consequently
agrees that it is reasonable and necessary for the protection of the goodwill
and legitimate business interests of the Employer and the Related Entities that
the Employee make the covenants contained herein, that the covenants are a
material inducement for the Employer to employ the Employee and to enter into
this Agreement, and that the covenants are given as an integral part of and
incident to this Agreement.
(b) NON-COMPETITION IN RELATED BUSINESS. As used herein, the term
"RESTRICTIVE PERIOD" means the period commencing on the date of this Agreement
and ending two (2) years following the later of (i) the expiration of the Term
or (ii) the termination of the employment of the Employee with the Employer,
irrespective of the reason for such termination and even though such termination
occurs after the expiration of the Term. During the Restrictive Period, the
Employee agrees not to utilize his special knowledge of the business of the
Employer and his relationships with customers, suppliers and others to compete
with the Employer or any of the Related Entities or any of the Related Entities
in any business which is the same as or similar to the business (the "PROHIBITED
BUSINESS") conducted by the Employer or any of the Related Entities at any time
during the Restrictive Period. During the Restrictive Period, the Employee shall
not, directly or indirectly, assist in the creation or development of, engage or
have an interest, anywhere in the United States of America or any other
geographic area where the Employer or any Related Entity does business or in
which its Products are marketed, alone or in association with others, as
principal, officer, agent, employee, director, partner or stockholder (except as
an employee or consultant of the Employer or any of the Related Entities), or
through the investment of capital, lending of money or property, rendering of
services or advice or otherwise, in any business competitive with or similar to
the Prohibited Business. During the Restrictive Period, the Employee shall not,
nor shall he permit any of his employees, agents or others under his control to,
directly or indirectly, on behalf of the any entity or person, (i) call upon,
accept business from, or solicit the business of any person or entity which is,
or who had been at any time during the preceding two years, a customer of
Northwings, the Employer or any Related Entity otherwise divert or attempt to
divert any business from the Employer or any of the Related Entities; or (ii)
recruit or otherwise solicit or induce any person who was an employee of, or
otherwise engaged by, the Employer or any of the Related Entities at any time
during the Restrictive Period to terminate his or her employment or other
relationship with the Employer or any of the Related Entities, or hire any
person who has left the employ of the Employer or any of the Related Entities
during the Restrictive Period. The Employee shall not at any time, directly or
indirectly, use or purport to
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<PAGE>
authorize any person to use any name, mark, logo, trade dress or other
identifying words or images which are the same as or similar to those used
currently, in the past, or during the Employee's employment by Northwings or the
Employer in connection with any Product or service, whether or not such use
would be in a Prohibited Business. The ownership or control of up to five
percent of the outstanding voting securities or securities of any class of a
company with a class of securities registered under the Securities Exchange Act
of 1934, as amended, shall not be deemed to be a violation of the provisions of
this SECTION 3(b).
(c) STANDSTILL. The Employee agrees that for a period commencing on the date
hereof and ending on the date which is ten years from the date hereof, he will
not (i) acquire, offer or agree to acquire, directly or indirectly, by purchase
or otherwise, control of the Employer or any of the Related Entities, (ii) make,
or in any way participate, directly or indirectly, as advisor or otherwise, in
any "solicitation" of "proxies" or consents to vote (as such terms are used in
the Proxy Rules of the United States Securities and Exchange Commission), or
seek to advise or influence any person or entity with respect to the voting of
any voting securities of the Employer or any of the Related Entities, in
opposition to any proposed actions of the Board of Directors of the Employer or
any of the Related Entities or in opposition to any nominees for Directors of
the Employer or any of the Related Entities which nominees have been nominated
by the Employer or any of the Related Entities, their management or their Board
of Directors, (iii) seek or assist any other party in seeking representation on
the Board of Directors of the Employer or any of the Related Entities through
the election to the Board of Directors of individuals(s) not nominated and
supported by the Employer or any of the Related Entities, their management or
their Board of Directors, (iv) pursue or publicly announce an interest in
pursuing an acquisition of control of the Employer or any of the Related
Entities or an alteration of the composition of the Employer's or any of the
Related Entities' Boards of Directors, or (v) advise or otherwise act, alone or
in concert with others, directly or indirectly, to seek to control or influence
the management, Board of Directors or policies of the Employer or any of the
Related Entities.
(d) DISCLOSURE OF CONFIDENTIAL INFORMATION. The Employee acknowledges that
the Products and the inventions, formulas, software, trade secrets, technology,
compositions, know-how, methods and processes of manufacturing, assembling or
fabricating (collectively, the "INTANGIBLE PROPERTY") and all other confidential
or proprietary information with respect to the business and operations of the
Employer are valuable, special and unique assets of the Employer. The Employee
shall not, at any time during or after the Restrictive Period, disclose,
directly or indirectly, to any person or entity, or use or authorize or purport
to authorize any person or entity to use any confidential or proprietary
information with respect to the Employer or any of the Related Entities without
the prior written consent of the Employer, including without limitation,
-5-
<PAGE>
information as to the financial condition, results of operations, customers,
suppliers, Products, Products under development, Intangible Property, sources,
leads or methods of obtaining new products or business, pricing methods or
formulas, cost of supplies, marketing strategies or any other information
relating to the Employer or any of the Related Entities which could reasonably
be regarded as confidential, but not including information which is or shall
become generally available to the public other than as a result of disclosure by
the Employer or any of the Related Entities or any of their agents, affiliates
or representatives or a person to whom any of them has provided such
information.
(e) RIGHTS TO INTELLECTUAL PROPERTY. While employed by the Employer, the
Employee will disclose to the Employer any ideas, inventions, or business plans
("INTELLECTUAL PROPERTY") developed by him which relate directly or indirectly
to the business or a similar business of the Employer or any of the Related
Entities, including without limitation, any process, operation, product or
improvement which may be patentable or copyrightable. The Employee agrees that
the Intellectual Property is or will be the property of the Employer and that he
will, at the Employer's request and cost, do whatever is necessary to obtain the
rights thereto, by patent, copyright or otherwise, for the Employer. The
Employee further agrees that, whether or not he is in the employ of the
Employer, he will cooperate in good faith to the extent and in the manner
requested by the Employer in the prosecution or defense of any patent or
copyright claims or any litigation or other proceedings involving any
Intellectual Property. The Employer will pay for all expenses associated with
the Employee's compliance with this provision.
(f) ANTI-DISPARAGEMENT. The Employee covenants and agrees that, both during
and after the Restrictive Period, he shall not make any comments which could be
construed as negative concerning the Employer or any of the Related Entities to
any individual or entity, including but not limited to, clients, customers,
employees, or financial or credit institutions.
(g) REMEDIES FOR BREACH OF THE AGREEMENT. The restrictions set forth in
SECTIONS 3 (b), (c), (d), (e) AND (f) are considered by the parties to be
reasonable for the purposes of protecting the legitimate business interests of
the Employer and the Related Entities and the value of the business and goodwill
of the Employer and the Related Entities. The parties hereto acknowledge that
the Employer and the Related Entities would be irreparably harmed, and that
monetary damages would not provide an adequate remedy to the Employer and the
Related Entities, in the event the covenants contained in SECTIONS 3 (b), (c),
(d), (e) AND (f) were not complied with in accordance with their terms.
Accordingly, the Employee agrees that any breach or threatened breach by him of
any provision of SECTIONS 3 (b), (c), (d), (e) AND (f) shall entitle the
Employer and the Related Entities to injunctive and other equitable relief,
without the posting of any bond or
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<PAGE>
security, to secure the enforcement of such provisions, in addition to any other
rights and remedies which may be available to the Employer and the Related
Entities, and that the Employer and the Related Entities shall be entitled to
receive from the Employee reimbursement for all attorneys' fees and expenses
incurred by the Employer and the Related Entities in enforcing such provisions.
In addition to its other rights and remedies, the Employer and the Related
Entities shall have the right to require the Employee to account for and pay
over to the Employer or the Related Entities, as the case may be, all
compensation, profits, money, accruals and other benefits derived or received,
directly or indirectly, by the Employee from the action constituting such
breach. If the Employee breaches the covenant set forth in SECTION 3(b), the
running of the noncompete period described therein shall be tolled with respect
to the Employer or any of the Related Entities for so long as such breach
continues. It is the desire and intent of the parties that the provisions of
SECTIONS 3 (b), (c), (d), (e) AND (f), be enforced to the fullest extent
permissible under the laws and public policies of each jurisdiction in which
enforcement is sought. If any provisions of SECTIONS 3 (b), (c), (d), (e) OR
(f), relating to the time period, scope of activities or geographic area of
restrictions are declared by a court of competent jurisdiction to exceed the
maximum permissible time period, scope of activities or geographic area, the
maximum time period, scope of activities or geographic area, as the case may be,
shall be reduced to the maximum which such court deems enforceable. If any
provisions of SECTIONS 3 (b), (c), (d), (e) OR (f) other than those described in
the preceding sentence are adjudicated to be invalid or unenforceable, the
invalid or unenforceable provisions shall be deemed amended (with respect only
to the jurisdiction in which such adjudication is made) in such manner as to
render them enforceable and to effectuate as nearly as possible the original
intentions and agreement of the parties.
(h) SURVIVAL. The provisions of this SECTION 3 shall survive the termination
of this Agreement or the Employee's employment irrespective of the reason for
such termination. The provisions of this SECTION 3 shall continue in full force
and effect after the expiration of the Term even if the Employee continues to be
employed by the Employer without renewing this Agreement.
SECTION 4. RETURN OF EMPLOYER PROPERTY ON TERMINATION
The Employee agrees to promptly return the Employer's property to the
Employer's Florida headquarters upon termination of his employment with the
Employer. The Employer reserves the right to take appropriate legal action
against the Employee in the event of a breach of this provision.
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<PAGE>
SECTION 5. VERIFICATION OF COMPLIANCE
Upon termination of employment, the Employee shall, at the request of the
Employer, verify in writing and under oath, in the form attached hereto as
Exhibit A, his compliance with the provisions of this Agreement relating to
Intellectual Property and Confidential Information. This provision shall not
give rise to any independent claim by the Employee for severance pay or other
payments upon the Employee's termination.
SECTION 6. MISCELLANEOUS PROVISIONS
(a) NOTICES. Any notice, request, demand or other communication required or
permitted under this Agreement shall be in writing and shall be delivered
personally or sent by prepaid overnight courier for next business day delivery
to the parties at the addresses set forth below their names below (or at such
other addresses as shall be specified by the parties by like notice).
IF TO THE EMPLOYEE:
Ramon Portela
IF TO THE EMPLOYER OR ANY OF THE RELATED ENTITIES:
c/o HEICO Corporation
825 Brickell Bay Drive
Suite 1644
Miami, Florida 33131
Attn: President
WITH A COPY TO:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Cesar L. Alvarez, Esq.
Such notices, demands, claims and other communications shall be deemed given
when actually received or in the case of delivery by overnight service with
guaranteed next business day delivery, the next business day or the day
designated for delivery.
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<PAGE>
(b) ENTIRE AGREEMENT. This Agreement contains the entire understanding
between the parties hereto relating to the subject matter hereof and merges all
prior discussions, negotiations and agreements, if any, between them, and
neither of the parties hereto shall be bound by any representations, warranties,
covenants, or other understandings relating to the subject matter hereof, other
than as expressly provided or referred to herein.
(c) ASSIGNMENT. This Agreement may not be assigned by the Employee without
the written consent of the Employer but shall be freely assignable by the
Employer in connection with any sale by the Employer of the Prohibited Business
or any substantial part thereof. Subject to the preceding sentence, this
Agreement shall be binding upon, and inure to, the benefit of the parties hereto
and their respective successors, heirs, personal representatives, legal
representatives, and permitted assigns.
(d) WAIVER AND AMENDMENT. Any representation, warranty, covenant, term or
condition of this Agreement which may legally be waived, may be waived, or the
time of performance thereof extended, at any time by the party hereto entitled
to the benefit thereof, and any term, condition or covenant hereof may be
amended by the parties hereto at any time. Any such waiver, extension or
amendment shall be evidenced by an instrument in writing executed by or on
behalf of each such party. No waiver by any party hereto, whether express or
implied, of its rights under any provision of this Agreement shall constitute a
waiver of such party's rights under such provisions at any other time or a
waiver of such party's rights under any other provision of this Agreement. No
failure by any party hereto to take any action against any breach of this
Agreement or default by another party shall constitute a waiver of the former
party's right to enforce any provision of this Agreement or to take action
against such breach or default or any subsequent breach or default by such other
party.
(e) NO THIRD PARTY BENEFICIARY. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any person
other than the parties hereto, the Related Parties and their respective heirs,
personal representatives, legal representatives, successors and permitted
assigns, any rights or remedies under or by reason of this Agreement.
(f) SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement shall be declared invalid, void or unenforceable,
the remainder of the provisions of this Agreement shall remain in full force and
effect, and such invalid, void or unenforceable provision shall be interpreted
as closely as possible to the manner in which it was written.
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<PAGE>
(g) HEADINGS. Section headings herein are inserted for convenience of
reference only and are not intended to be a part of, or to affect the meaning or
interpretation of, this Agreement.
(h) COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
(i) LITIGATION; PREVAILING PARTY. In the event of any litigation with regard
to this Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party, and the non-prevailing party shall pay upon demand, all
reasonable fees and expenses of counsel for the prevailing party in connection
with such litigation.
(j) GOVERNING LAW AND VENUE. This Agreement has been entered into and shall
be construed and enforced in accordance with the laws of the State of Florida
without reference to the choice of law principles thereof. This Agreement shall
be subject to the exclusive jurisdiction of the courts of the State of Florida
located in Dade or Broward Counties, Florida or the United States District Court
for the Southern District of Florida. The parties irrevocably waive, to the
fullest extent permitted by law, any objection which they may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of or
relating to this Agreement, or any judgment entered by any court in respect
hereof brought in Dade or Broward Counties, Florida, and further irrevocably
waive any claim that any suit, action or proceeding brought in Dade or Broward
Counties, Florida has been brought in an inconvenient forum.
(k) REMEDIES CUMULATIVE. No remedy made available by any of the provisions
of this Agreement is intended to be exclusive of any other remedy, and each and
every remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity.
(l) PARTICIPATION OF PARTIES; CONSTRUCTION. The parties hereto acknowledge
that this Agreement and all matters contemplated herein, have been negotiated
between the parties hereto and their respective legal counsel and that all such
parties have participated in the drafting and preparation of this Agreement from
the commencement of negotiations at all times through the execution hereof. This
Agreement shall be construed and interpreted without regard to any presumption
or other rule or interpretation against the party who may have had primary
responsibility for drafting this Agreement.
IN WITNESS WHEREOF, the parties hereto have each executed and delivered this
Agreement as of the day and year first above written.
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<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
By:/s/ VICTOR H. MENDELSON
------------------------------------
Name: Victor H. Mendelson
Title: V.P. & Gen. Counsel
/s/ RAMON PORTELA
------------------------------------
RAMON PORTELA
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EXHIBIT 10.3
ASSIGNMENT OF PROMISSORY NOTE
FOR VALUE RECEIVED, HEICO Corporation, a Florida corporation ("HEICO"),
hereby assigns, endorses, conveys and transfers unto Forum Capital Markets L.P.,
a Delaware limited partnership, all right, title and interest of HEICO in and to
the 6 1/2% Convertible Negotiable Note due June 30, 2001 issued by U.S.
Diagnostic Labs Inc., a Delaware corporation the name of which has been changed
to U.S. Diagnostic Inc., as such Note was amended on December 24, 1996 and
September 16, 1997 (as so amended, the "Note"). The original executed copy of
the Note and copies of each of such amendments are attached hereto.
This Assignment is with all accrued and unpaid interest on the Note to the
date of this Assignment.
HEICO represents and warrants that it has good title to, and is the sole
owner of, the Note. This Assignment is absolute and unconditional and, except as
set forth in the immediately preceding sentence, is without representation or
warranty by, or recourse to, HEICO.
Dated: September 16, 1997
HEICO CORPORATION
By: /s/ LAURANS A. MENDELSON
------------------------
Laurans A. Mendelson,
Chairman of the Board and
Chief Executive Officer
WITNESS:
/s/ WILLIAM S. HARLOW
- -----------------------------
Print Name: WILLIAM S. HARLOW
EXHIBIT 10.4
SECOND AMENDMENT TO THE SIX AND ONE-HALF PERCENT
CONVERTIBLE NEGOTIABLE NOTE DUE JUNE 30, 2001
This Second Amendment (the "Second Amendment") to the Six and One-Half Percent
Convertible Negotiable Note Due on June 30, 2001 (the "Note") is made on
September 10, 1997 by and among US Diagnostic Inc., a Delaware corporation
("USD") and HEICO Corporation ("Payee" or "Holder of Note").
RECITALS
WHEREAS, the Company issued the Note to the Payee, which Note is dated July 1,
1996 and is a portion of the consideration for the purchase of MediTek Health
Corporation from the Payee;
WHEREAS, the Note was modified as of December 24, 1996 in an amendment to Six
and One-Half Percent Convertible Negotiable Note Due June 30, 2001 (the "First
Amendment");
WHEREAS, both the Company and Payee desire to alter the conversion rate and
certain demand and other features of the Note;
NOW, THEREFORE, in consideration of the foregoing and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Company and the Payee hereby agree as follows:
1. CONVERSION RATE. Section 2(a) of the Note is amended to delete the phrase
"conversion price of $9.25 per share" and inserted in its place, the phrase
"conversion price of $8.50 per share."
2. REQUIRED CONVERSION. Section 3 of the Note, as modified in the First
Amendment, shall be deleted and the following language inserted in its place:
3. REQUIRED CONVERSION. At any time commencing on the later of
January 1, 1999 or the date that the shares of common stock into
which this Note are convertible are registered for resale by the
holder under the Securities Act of 1933 as amended (such time being
herein called the "required conversion date"), if the last sale
price of the common stock averages at least $9.25 per share for the
ten (10) trading days immediately preceding the required conversion
date, then upon written notice from the Company given within fifteen
(15) days following the required conversion date, the Payee shall
convert this Note at the then applicable conversion rate, provided
however, that in the event of such Notice being given by the
Company, the Payee may provide Notice to
<PAGE>
the Company of its election to receive payment in cash of the full
principal balance of the Note together with any accrued but unpaid
interest, in lieu of consenting to the conversion.
3. PRE-PAYMENT. Section 4 of the Note, as previously modified in the First
Amendment, is amended to substitute in place of the date December 31, 1997, the
date January 1, 1999.
4. REDEMPTION AT THE OPTION OF HOLDER. Section 5 of the Note is deleted and the
following language shall be inserted in its place:
5. REDEMPTION AT THE OPTION OF HOLDER. If the shares of the Common
Stock into which this Note are convertible are not registered for
resale by the Holder under the Securities Act of 1933 as amended,
prior to January 1, 1999, Holder shall thereafter have the right to
require the Company to redeem this Note for cash upon ten (10) days
written Notice by Holder to the Company at any time prior to the
date such Registration Statement becomes effective.
5. NO OTHER CHANGES. With the exception of the foregoing, all of the other terms
and provisions of the Note and First Amendment shall remain unchanged. Any
defined terms set forth in this Second Amendment which are not defined herein,
but are defined in the Note, shall have the definitions set forth therein.
Further, all of the miscellaneous provisions contained in Section 8 of the Note
shall apply equally to this Second Amendment.
IN WITNESS WHEREOF, This Second Amendment has been executed and delivered on
the date first specified above by the duly authorized representatives of the
Company and Holder.
US DIAGNOSTIC INC.
BY:/s/ JOSEPH A. PAUL
-------------------------
Joseph A. Paul
President & Chief
Executive Officer
HEICO CORPORATION
BY:/s/ LAURANS A. MENDELSON
------------------------
Laurans A. Mendelson
Chairman, President and
Chief Executive Officer
EXHIBIT 99.1
NORTHWINGS ACCESSORIES CORPORATION
FINANCIAL STATEMENTS
JUNE 30, 1997
<PAGE>
I N D E X
PAGE
----
Accountant's Report .............................. 1
Balance Sheet .................................... 2-3
Statement of Income and Retained Earnings ........ 4
Statement of Cash Flows .......................... 5
Notes to Financial Statements .................... 6-8
Schedule of Cost of Sales ........................ 9
Schedule of Operating Expenses ................... 10
<PAGE>
To the Board of Directors
NORTHWINGS ACCESSORIES CORPORATION
6990 N.W. 35th Avenue
Miami, FL 33147
We have examined the accompanying balance sheet of NORTHWINGS ACCESSORIES
CORPORATION, as of June 30, 1997 and the related statements of income and
retained earnings, cash flows and schedule of operating expenses for the six
months then ended. Our examination was made in accordance with generally
accepted auditing standards and, accordingly included such tests of the
accounting records and such other auditing procedures as we considered necessary
in the circumstances.
In our opinion, the aforementioned financial statements present fairly the
financial position of NORTHWINGS ACCESSORIES CORPORATION at June 30, 1997, the
results of its operations and the changes in its financial position for the six
months then ended, in conformity with generally accepted accounting principles
applied on a consistent basis.
/S/ DE LA OSA & ASSOCIATES
- ----------------------------
DE LA OSA & ASSOCIATES, P.A.
Certified Public Accountants
August 28, 1997
1
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
BALANCE SHEET
JUNE 30, 1997
ASSETS
CURRENT ASSETS
Cash $ 598,351
Accounts Receivable 1,700,438
Accounts Receivable-Others 2,025
Inventory (Note 1b) 440,466
Prepaid Expenses 13,514
----------
Total Current Assets $ 2,754,794
PROPERTY AND EQUIPMENT -
AT COST (Note 1c) 676,025
Less Accumulated Depreciation 276,959
---------
Total Property and
Equipment 399,066
OTHER ASSETS
Deposits 3,000
------------
TOTAL ASSETS $ 3,156,860
===========
See accountant's report and notes to financial statements.
2
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
BALANCE SHEET
JUNE 30, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term
Debt (Note 4) $ 54,640
Accounts Payable - Trade 168,322
Taxes Payable (Note 2) 445,179
Deferred Taxes Payable (Note 3) 98,174
Other Current Liabilities 164,596
---------
Total Current Liabilities $ 930,911
LONG-TERM DEBT (Note 4) 168,750
STOCKHOLDERS' EQUITY
Common Stock: 2500 Shares of
$50.00 par value authorized,
issued and outstanding 125,000
Retained Earnings 1,932,199
---------
Total Stockholders'
Equity 2,057,199
-----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 3,156,860
===========
See accountant's report and notes to financial statements.
3
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
SALES $4,877,316
COST OF SALES 1,580,271
----------
GROSS MARGIN 3,297,045
OPERATING EXPENSES 1,489,661
----------
INCOME FROM OPERATIONS 1,807,384
OTHER INCOME 27,776
----------
INCOME BEFORE INCOME TAXES 1,835,160
PROVISION FOR INCOME TAXES 698,746
----------
NET INCOME 1,136,414
RETAINED EARNINGS - BEGINNING OF YEAR 795,785
----------
RETAINED EARNINGS - END OF YEAR $1,932,199
==========
See accountant's report and notes to financial statements.
4
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
STATEMENT OF CASH FLOWS
JUNE 30, 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 1,136,414
Depreciation $ 36,830
Increase in Accounts Receivable (822,323)
Increase in Inventory (200,008)
Increase in Prepaids and
Other Receivables (2,870)
Increase in Accounts Payable and
Other Liabilities 434,679
---------
$ (553,692)
-----------
Net cash provided by
Operating Activities 582,722
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Purchase of Equipment (194,153)
Decrease in Other Assets 8,500
---------
Net Cash Used in
Investing Activities (185,653)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in Long-Term Debt (25,500)
----------
Net Cash Used in
Financing Activities (25,500)
-----------
NET INCREASE IN CASH 371,569
CASH - BEGINNING OF YEAR 226,782
-----------
CASH END OF YEAR $ 598,351
===========
See accountant's report and notes to financial statements.
5
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) GENERAL
The Company was incorporated on November 26, 1991 under the laws of the
state of Florida for the purpose of repairing aircraft equipment parts.
Sales are recognized upon shipment of the merchandise to the customer.
b) INVENTORY
Inventory is valued at average cost and is composed of:
RAW MATERIALS $ 170,972
WORK IN PROCESS 269,494
---------
TOTAL $ 440,466
=========
c) PROPERTY AND ACCUMULATED DEPRECIATION
Property is valued at cost. The cost and accumulated depreciation, with
respect to assets, retired or otherwise disposed of, are eliminated
from the asset and related reserve accounts and profits or losses, if
any, are reflected in earnings. Depreciation is provided over the
estimated useful lives of the assets by use of the straight-line method
of depreciation. Expense for the six months ended June 30, 1997 was $
36,830.
6
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
NOTE 2 - PROVISIONS FOR INCOME TAXES
The provision for income taxes for the six months ended June 30, 1997
consists of the following:
FEDERAL $ 589,753
STATE 100,663
---------
690,416
LESS ESTIMATED
PAYMENTS 200,000
LESS DEFERRED
TAXES PAYABLE 45,237
---------
TAXES PAYABLE 445,179
=========
NOTE 3 - DEFERRED TAXES PAYABLE
Deferred taxes payable relate to timing differences for the recognition
of expenses related to work in process inventory, the net deferred
taxes of the six months was $45,237.
7
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 1997
NOTE 4 - LONG-TERM DEBT
Long-Term Debt at June 30, 1997 is comprised of the following:
Note Payable - First Union, interest
payable at 9.50%, principal payments of
$ 4,250. (collateralized by
equipment) 199,750
Note Payable - First Union, interest
payable at 9.50% monthly (demand note) 2,652
Note Payable - Ramon Portela Sr.,
interest payable at 12.00% monthly.
(uncollateralized) 20,000
Note Payable - Elvira Puerta, interest
payable at 10.00%, principal and interest
payments of $ 650. (uncollateralized) 3,640
----------
Total 226,042
Less: Current Portion of
Debt 57,292
----------
Long-Term Portion of Debt $ 168,750
==========
8
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
SCHEDULE OF COST OF SALES
FOR THE SIX MONTHS ENDED JUNE 30, 1997
COST OF SALES
Purchases $ 1,199,412
Subcontracts 143,587
Commission 235,441
Other Costs 1,831
-----------
Total Cost of Sales $ 1,580,271
===========
See accountant's report and notes to financial statements.
9
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
SCHEDULE OF OPERATING EXPENSES
FOR THE SIX MONTHS ENDED JUNE 30, 1997
OPERATING EXPENSES
Advertising $ 5,039
Alarm Service 5,535
Auto Lease 9,761
Amortization 10,751
Calibration 6,938
Casual Labor 248
Closing Costs 1,350
Computer Service 4,967
Depreciation 36,830
Dues and Subscriptions 1,435
Entertainment 16,801
Engineering Services 8,100
Insurance 22,145
Interest and Bank Charges 14,985
Licenses and Permits 7,195
Machine Shop Expenses 5,141
Miscellaneous 16,480
Maintenance 1,203
Office Supplies 14,876
Officers Salaries 337,973
Payroll 666,748
Postage and Courier 16,397
Professional Fees 27,597
Rent 36,367
Rental Equipment 23,281
Repairs and Maintenance 29,287
Supplies 41,205
Taxes Payroll 78,351
Telephone 10,686
Travel 13,055
Uniforms 2,660
Utilities 12,297
Waste 3,977
----------
Total Operating Expenses $1,489,661
==========
See accountant's report and notes to financial statements.
10
EXHIBIT 99.2
NORTHWINGS ACCESSORIES CORPORATION
FINANCIAL STATEMENTS
DECEMBER 31, 1996
<PAGE>
INDEX
PAGE
----
Accountant's Report ........................... 1
Balance Sheet ................................. 2-3
Statement of Income and Retained Earnings ..... 4
Statement of Cash Flows ....................... 5
Notes to Financial Statements ................. 6-8
Schedule of Cost of Sales ..................... 9
Schedule of Operating Expenses ................ 10
<PAGE>
To the Board of Directors
Northwings Accessories Corporation
6990 N.W. 35th Avenue
Miami, FL 33147
We have examined the accompanying balance sheet of Northwings Accessories
Corporation, as of December 31, 1996 and the related statements of income and
retained earnings, cash flows and schedules of operating expenses for the year
then ended. Our examination was made in accordance with generally accepted
auditing standards and, accordingly included such tests of the accounting
records and such other auditing procedures as we considered necessary in the
circumstances.
In our opinion, the aforementioned financial statements present fairly the
financial position of Northwings Accessories Corporation at December 31, 1996,
the results of its operations and the changes in its financial position for the
year then ended, in conformity with generally accepted accounting principles
applied on a consistent basis.
/s/ DE LA OSA & ASSOCIATES
- --------------------------
DE LA OSA & ASSOCIATES, P.A.
Certified Public Accountants
August 28, 1997
1
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
BALANCE SHEET
DECEMBER 31, 1996
ASSETS
CURRENT ASSETS
Cash $ 226,782
Accounts Receivable 878,115
Accounts Receivable-Other 3,523
Inventory (Note 1b) 240,458
Prepaid Expenses 9,146
----------
Total Current Assets $1,358,024
PROPERTY AND EQUIPMENT -
AT COST (Note 1c) 471,121
Less Accumulated Depreciation 229,378
----------
Total Property and
Equipment 241,743
OTHER ASSETS
Deposits 11,500
----------
TOTAL ASSETS $1,611,267
==========
See accountant's report and notes to financial statements.
2
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
BALANCE SHEET
DECEMBER 31, 1996
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current Portion of Long-Term
Debt (Note 4) $ 69,904
Accounts Payable - Trade 81,027
Taxes Payable (Note 2) 45,131
Deferred Taxes Payable (Note 3) 52,937
Other Current Liabilities 256,232
----------
Total Current Liabilities $ 496,231
LONG-TERM DEBT (Note 4) 194,250
STOCKHOLDERS' EQUITY
Common Stock: 2500 Shares of
$50.00 par value authorized,
issued and outstanding 125,000
Retained Earnings 795,786
----------
Total Stockholders'
Equity 920,786
----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $1,611,267
==========
See accountant's report and notes to financial statements.
3
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED DECEMBER 31, 1996
SALES $4,707,370
COST OF SALES (Schedule) 1,863,390
----------
GROSS MARGIN 2,843,980
OPERATING EXPENSES (Schedule) 2,097,898
----------
INCOME FROM OPERATIONS 746,082
OTHER INCOME 25,793
----------
INCOME BEFORE INCOME TAXES 771,875
PROVISION FOR INCOME TAXES 288,068
----------
NET INCOME 483,807
RETAINED EARNINGS - BEGINNING OF YEAR 311,979
----------
RETAINED EARNINGS - END OF YEAR 795,786
==========
EARNINGS PER COMMON SHARE $ 193.52
=============
See accountant's report and notes to financial statements.
4
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
STATEMENT OF CASH FLOWS
DECEMBER 31, 1996
CASH FLOWS FROM OPERATING ACTIVITIES;
Net Income $ 483,807
Depreciation $ 77,582
Increase in Accounts Receivable (299,439)
Increase in Inventory (218,078)
Increase in Prepaids and
Other Receivables (11,924)
Increase in Accounts Payable and
Other Liabilities 265,952
---------
(185,907)
---------
Net cash provided by
Operating Activities 297,900
CASH FLOWS FROM INVESTING ACTIVITIES:
Net Purchase of Equipment (125,329)
Decrease in Other Assets 2,352
---------
Net Cash Used in
Investing Activities (122,977)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase Long-Term Debt 18,626
---------
Net Cash Provided by
Financing Activities 18,626
--------
NET CASH INCREASE IN CASH 193,549
CASH - BEGINNING OF YEAR 33,233
---------
CASH END OF YEAR $ 226,782
=========
See accountant's report and notes to financial statements.
5
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) GENERAL
The Company was incorporated on November 26, 1991 under the laws of the
state of Florida for the purpose of repairing aircraft equipment parts.
Sales are recognized upon shipment of the merchandise to the customer.
b) INVENTORY
Inventory is valued at average cost and is composed of:
RAW MATERIALS $ 85,486
WORK IN PROCESS 154,972
--------
TOTAL 240,458
========
c) PROPERTY AND ACCUMULATED DEPRECIATION
Property is valued at cost. The cost and accumulated depreciation, with
respect to assets, retired or otherwise disposed of, are eliminated
from the asset and related reserve accounts and profits or losses, if
any, are reflected in earnings. Depreciation is provided over the
estimated useful lives of the assets by use of the straight-line method
of depreciation. Expense for the year ended December 31, 1996 was
$77,582.
6
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
NOTE 2 - TAXES PAYABLE
The provision for income taxes for the year ended December 31, 1996
consists of the following:
FEDERAL $ 256,926
STATE 31,142
---------
288,068
LESS ESTIMATED
PAYMENTS 190,000
LESS DEFERRED
TAXES PAYABLE 52,937
---------
TAXES PAYABLE 45,131
=========
NOTE 3 - DEFERRED TAXES PAYABLE
Deferred taxes payable relate to timing differences from the
recognition of expense related to work in process inventory, the net
deferred taxes for the year was $52,937.
7
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
NOTES TO FINANCIAL STATEMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
NOTE 4 - LONG TERM DEBT
Long-Term Debt at December 31, 1996 is comprised of the following:
Note Payable - First Union, interest
payable at 9.50%, principal payments of
$4,250. (collateralized by
equipment) $225,250
Note Payable - First Union, interest
payable at 9.50% monthly (demand note) 2,652
Note Payable - Ramon Portela Sr.,
interest payable at 12.00% monthly
(uncollateralized) 20,000
Note Payable - Elvira Puerta, interest
payable at 10.00%, principal and interest
payment of $650. (uncollateralized) 7,252
--------
Total 255,154
Less:Current Portion of
Debt 60,904
--------
Long-Term Portion of Debt $194,250
========
8
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
SCHEDULE OF COST OF SALES
FOR THE YEAR ENDED DECEMBER 31, 1996
COST OF SALES
Purchases $ 1,117,065
Freight-D/C 931
Commissions 557,797
Outside Services 187,597
-----------
Total Cost of Sales 1,863,390
===========
See accountant's report and notes to financial statements.
9
<PAGE>
NORTHWINGS ACCESSORIES CORPORATION
SCHEDULE OF OPERATING EXPENSES
FOR THE YEAR ENDED DECEMBER 31, 1996
OPERATING EXPENSES
Advertising $ 17,517
Alarm Service 11,032
Bonuses Administration 92,000
Computer Expenses 7,645
Depreciation 77,582
Dues and Subscriptions 1,397
Delivery Service 25,580
Entertainment 29,861
Freight Out 9,593
Insurance 40,043
Interest 26,287
Legal and Accounting 12,500
Licenses and Permits 7,795
Miscellaneous 44,210
Office Expenses 18,054
Payroll - Officers 282,640
Payroll - Others 995,785
Professional Fees 49,829
Postage 5,431
Rent 47,301
Repairs and Maintenance 48,216
Rental Equipment 23,956
Supplies 66,586
Property Taxes - Real 8,858
Taxes Payroll 80,429
Telephone 13,473
Travel 34,566
Utilities 19,732
----------
Total Operating Expenses $2,097,898
==========
See accountant's report and notes to financial statements.
10
