TRUST AGREEMENT
THIS TRUST AGREEMENT (this "Agreement") is made as of November 17,
1997, by and among Xxxxxx Xxxxxx (the "Shareholder"), Aviation Distributors,
Inc., a Delaware corporation (the "Company"), and Xxxx X. Xxxxxxxx, as trustee
(the "Trustee").
RECITALS:
A. The Shareholder is an owner and holder of record of beneficial
interests in and to 1,435,000 shares of common stock, no par value, of the
Company, which shares in the aggregate constitute sixty percent (60%) of the
issued and outstanding capital stock of the Company as of the date of this
Agreement.
B. The Shareholder and the Company each believes it is in the best
interest of the Company to assign to the Trustee the power to vote the
Shareholder's interest in the Company to the extent provided herein.
C. The Shareholder has pledged 350,000 of his Shares ("Pledged
Shares") in the Company as security for a loan from City National Bank
("Lender"), and has entered into an agreement with Lender regarding the
Shareholder's and Lender's duties and obligation regarding the Pledged Shares
(the "Pledge Agreement"). Pursuant to the Pledge Agreement, Shareholder has
transferred custody of the Pledged Shares to Lender. Because the Pledge
Agreement prevents transferring, mortgaging, or otherwise disposing of any
rights of the Pledged Shares, Shareholder and Company desire to withhold the
Pledged Shares from this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, it is
agreed as follows:
AGREEMENT
FIRST: The Shareholder hereby assigns, transfers, grants in trust and
delivers to the Trustee all shares, except for the Pledged Shares, currently
owned by the Shareholder (the "Shares"), duly endorsed for transfer, such Shares
to be held and disposed of by the Trustee under and pursuant to the terms and
conditions of this Agreement. Shareholder is not obligated to deliver the
Pledged Shares, so long as the Pledged Shares are held by a third party pursuant
to the Pledge Agreement. Should any Pledged Shares be released from custody
under the Pledge Agreement for any reason, Shareholder agrees to assign,
transfer, and deliver such Pledged Shares to Trustee pursuant to this Agreement.
SECOND: The Trustee hereby promises and agrees with the Shareholder
that the Trustee shall issue, or cause to be issued, to the Shareholder in
exchange for the Shares assigned, transferred and delivered by such Shareholder
to the Trustee, a trust certificate or certificates representing units of
beneficial interest in the trust created hereby (individually, a "Unit" and,
collectively, "Units"), which Units are equal in amount to the number of Shares
delivered by the Shareholder to the Trustee. All Units are transferable, and
all Units transferred will remain subject to this Agreement. Each owner of a
Unit will be entitled, on a pro rata basis, to all benefits enumerated in this
Agreement.
THIRD: In the event that during the term of this Agreement the
Shareholder shall acquire any additional shares or any other securities of the
Company having the general characteristics of Shares in any capacity whatsoever,
including, but not limited to, shares issued as a result of the exercise of
stock options and stock issued to such Shareholder for compensatory or non-
compensatory reasons such as stock dividends, whether such shares are owned of
record or beneficially owned as trustee, personal representative, custodian,
guardian or agent, then the Shareholder shall, immediately after such
acquisition, assign, transfer, grant in trust and deliver such Shares or such
other securities to the Trustee in exchange for an appropriate trust
certificate, in the form described in the Article SECOND hereof.
This trust shall continue with respect to any securities of the
Company having in general characteristics similar to the Shares received by the
Trustee in substitution or exchange for, or as a distribution on, the Shares
deposited hereunder. In case the Trustee shall so receive and retain securities
of the Company having in general characteristics similar to the Shares, the
Trustee shall hold such securities and the certificates representing the same
likewise subject to the terms hereof, and shall issue trust certificates
representing such securities to the Shareholder, in the form described in
Article SECOND hereof.
For the purpose of this Agreement, unless the context indicates
otherwise, the term "Shares" shall be deemed to include any other securities
that are deposited or required to be deposited with the Trustee hereunder.
FOURTH: The Trustee shall cause all Shares deposited with him or her
hereunder to be transferred on the books of the Company into his or her name as
Trustee under this Agreement. Certificates of stock transferred to the Trustee
hereunder, or otherwise, if any, shall be surrendered to the Company, and the
Trustee shall request that the Company issue new certificates therefor to the
Trustee. The certificates of stock issued to the Trustee for the Shares shall
state that such certificates of
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stock are issued pursuant to this Agreement. The Trustee shall direct the
Company to make, or cause to be made, a notation in the Company's stock ledger
that the certificates of stock relating to the Shares issued to the Trustee are
issued pursuant to this Agreement.
FIFTH: During the term of this Agreement the Trustee shall possess
and be entitled to exercise all the rights of the Shareholder arising from the
Shares of every name and nature.
SIXTH: By entering into this Agreement, the Company agrees not to
issue any common stock or any other securities that may convert to common stock
or in any way dilute the Shareholder's interest in the Company without first
obtaining the written consent of the Shareholder.
SEVENTH: All cash or property dividends or distributions received by
the Trustee with respect to the Shares shall be held by the Trustee in trust for
the Shareholder. The Trustee shall promptly pay or cause to be paid to
Shareholder the total amounts of any such cash or property dividends or
distributions collected by the Trustee, except that securities of the Company so
distributed shall be retained by the Trustee to the extent required by Article
THIRD.
From time to time the Trustee shall execute and deliver or cause to be
delivered to the Company, or its dividend disbursing agent, proper dividend
orders authorizing and directing the Company, or its agent, to pay as aforesaid
any and all dividends that may from time to time become due and payable upon the
Shares deposited hereunder and in respect of which trust certificates shall be
issued and outstanding, to or upon the order of the registered holders
respectively of such trust certificates entitled to receive the same. Upon the
delivery by the Trustee to the Company, or its agent, of any dividend order as
aforesaid, all further obligation or duty of the Trustee with respect to
dividends referred to in such order shall terminate.
EIGHTH: The Trustee shall serve without compensation.
Notwithstanding the foregoing, the Trustee shall be entitled to reimbursement by
the Company for out-of-pocket expenses actually and reasonably incurred by the
Trustee in the performance of his or her duties under this Agreement, or for
legal expenses incurred by the Trustee in connection with any question, dispute
or legal proceedings arising out of or with respect to this Agreement. Such
reimbursement shall be due by the Company within ten (10) days of written notice
from the Trustee to the Company.
NINTH: In case any stock of the Company shall be offered by the
Company for subscription, and the Shareholder has agreed to allow the Company to
issue new shares or other securities that may dilute the Shareholder's interest
in the Company, immediate notice of such offer shall be given by the
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Trustee to the Shareholder, and in such case, upon receiving from the
Shareholder, prior to the time limited by the Company for subscription and
payment, a written request to subscribe on the Shareholder's behalf and the
money required to pay for a stated amount of such stock, the Trustee shall make
subscription (in his or her own name as Trustee) and payments, and upon
receiving from the Company certificates for the stock so subscribed, shall
promptly issue trust certificates in respect thereof to the Shareholder.
TENTH: Subject to Article FIFTH, in voting the Shares hereunder from
time to time, the Trustee shall use his or her best judgment to the end that the
affairs of the Company shall be properly managed and the interests of the
Shareholder safeguarded. Subject to Article FIFTH, it is expressly understood
and agreed that the Trustee shall not incur any personal liability or
responsibility by reason of any error of judgment or of law with respect to any
matter or thing done, permitted to be done or omitted to be done under this
Agreement or otherwise, or because the Trustee is interested as a shareholder as
well as Trustee hereunder, except for the Trustee's own individual malfeasance.
The Company shall indemnify and hold harmless the Trustee for any liability,
including attorneys fees, that may arise out of the Trustee's duties expressed
herein.
ELEVENTH: This Agreement shall terminate no later than January 1,
2000. Upon termination of this Agreement in its entirety, the Trustee, or his
or her successors as Trustee hereunder, in exchange for and upon surrender of
the trust certificates then outstanding and issued hereunder, shall, in
accordance with the terms hereof, deliver or cause to be delivered to the
Shareholder stock certificates representing shares of stock of the Company of
the kind and in the amount represented by the certificates, and all cash and
property which shall have accrued thereon and be in the hands of the Trustee.
This Agreement shall terminate if the Shareholder no longer owns any Units or
otherwise no longer has a beneficial interest in any Shares.
This Agreement will also be reviewed by the Company one year from the
date of execution of the Agreement. If the Company determines that the
Agreement is no longer necessary, the Agreement will terminate.
The Shareholder, at his discretion, may sell his entire interest in
the Company. If the Shareholder sells his entire interest in the Company to any
purchaser not in the Shareholder's immediate family, this Agreement will
terminate, and the Trustee, upon written notice from the Shareholder of the
sale, will cause the Shares to be timely transferred to the purchaser.
TWELFTH: The Trustee may act as a director or officer
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of the Company and, subject to Article FIFTH and TENTH, the Trustee may vote for
himself or herself as such; the Trustee, or any firm of which he or she may be a
member or any corporation of which he or she may be a shareholder, director or
officer, may contract with the Company to be or become pecuniarily interested in
any matters or transactions to which the Company may be a party, or in which it
may be in any way concerned, as fully as though the person were not a Trustee.
The Trustee may as an individual or as a Trustee for another or others, be
interested in the purchase or sale of the shares of the Company, or of trust
certificates issued under this Agreement, or of any property owned by the
Company. The Trustee may appoint and employ such agents and attorneys as in his
or her discretion may be convenient and advisable in the administration of any
of his or her powers and duties hereunder and may remove them in his or her sole
discretion. The Trustee may delegate to a proxy or proxies the right to vote
and act for him or her at any meeting of shareholders of the Company.
THIRTEENTH: The Trustee shall keep an accurate and complete ledger
specifying the interests of the Shareholder. Such ledger shall be made
available to the Shareholder upon request, during normal business hours, at the
location set forth for notice to the Trustee hereunder.
FOURTEENTH: In the event of the resignation, death or inability to
act by the Trustee as a Trustee hereunder, the successor Trustee shall be
appointed. Such successor Trustee shall exercise all of the rights and powers
of the Trustee hereunder. The successor Trustee is Xxxxx X. Xxxxxxx. If Xxxxx
X. Xxxxxxx, for any reason, does not serve as the Trustee, the Board of
Directors of the Company and the Shareholder shall select a successor Trustee.
FIFTEENTH: Any notice hereunder to the Shareholder shall be
sufficient if mailed to him at his address as it appears on the books of the
Trustee or, with respect to the Trustee, if mailed to him or her at the address
appearing on the signature page hereof, unless the Trustee shall advise the
Shareholder of a different address for the delivery of such notice. Notices
given hereunder shall be deemed effective immediately upon personal delivery
thereof, or one (1) business day following deposit with a reputable overnight
courier service, or two (2) business days after being deposited in the United
States mail, postage prepaid.
SIXTEENTH: An original of this Agreement shall be kept on file with
the Trustee and a counterpart hereof shall be deposited with the Company at its
registered office in the State of Delaware and such counterpart shall be subject
to examination by any shareholder of the Company or any holder of a trust
certificate hereunder, daily, during business hours.
SEVENTEENTH: This Agreement shall be binding upon and
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inure to the benefit of the parties and their heirs, successors or assigns.
EIGHTEENTH: This Agreement is made pursuant to, and shall be governed
by, the laws of the State of Delaware. The parties acknowledge and stipulate
that this Agreement does not create a business trust as defined under Section
3801(a) of the Delaware Business Trust Act.
NINETEENTH: No Trustee hereunder shall be required, in any
jurisdiction, to furnish any bond or other security, or to obtain the approval
of any court before applying, distributing, selling, or otherwise dealing with
property.
TWENTIETH: Should any dispute arise out of this Agreement; the
Shareholder, Trustee, and Company agree that the dispute will first be submitted
to a mediator agreed upon by all parties to the dispute. Should the dispute not
be resolved by the mediation, the parties to the dispute will submit the dispute
to binding arbitration. The arbitration proceedings shall be conducted by a
single arbitrator in accordance with the provisions of Section 1280, et seq. of
the California Code of Civil Procedure, as amended or replaced by any successor
statutes. The parties to the dispute shall agree to the selection of an
arbitrator (the "Arbitrator"). If the parties cannot agree upon the selection
of the Arbitrator after fifteen (15) days, any party may apply to the Los
Angeles Superior Court for the appointment of the Arbitrator. The Arbitrator
shall be required to determine all issues in accordance with existing case law
and the statutory laws of the United States and the State of California.
Neither party shall have the right to conduct discovery in connection with the
arbitration proceeding unless authorized by the Arbitrator.
TWENTY-FIRST: This Agreement may be executed in one or more
counterparts, which together shall constitute a single instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
Trustee /s/ Xxxx X. Xxxxxxxx
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Xxxx X. Xxxxxxxx
Address 0000 Xxxx Xxxxxx, Xxxxx 000
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Xxxxxx, XX 00000
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Shareholder /s/ Xxxxxx Xxxxxx
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Xxxxxx Xxxxxx
Address 28841 Glenridge
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Mission Viego, CA
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Company /s/ Xxxxx X. Xxxxxxx
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Secretary
for Aviation Distributors, Inc.
Address One Wrigley Drive
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Xxxxxx, XX 00000
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SPOUSE'S CONSENT TO AGREEMENT
I acknowledge that I have read the Trust Agreement dated November 17,
1997, (the "Agreement"), executed by Xxxxxx Xxxxxx; Aviation Distributors, Inc.;
and Xxxx X. Xxxxxxxx, as Trustee, and that I know the contents thereof. I am
aware that, by the provisions of the Agreement, my spouse has agreed to assign
his rights in and to shares of capital stock of the Corporation held by him,
which agreement also applies to any community interests I may have in such
shares. I hereby consent to the provisions of the Agreement, and agree that I
will abide by, and not oppose, all of the terms of the Agreement.
Dated: 11/8/97
/s/ Xxxxxxx X. Xxxxxx
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Signature of Spouse
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