AGREEMENT OF PURCHASE AND SALE OF STOCK
by and among
BTR DUNLOP, INC.
a Delaware Corporation
BTR, INC.
a Delaware corporation
HAWKER PACIFIC, INC.
a California corporation
and
AQHAWK, INC.
a California corporation
Effective as of November 1, 1996
INDEX
1. PURCHASE AND SALE OF SHARES...............................................1
1.1 SALE AND TRANSFER OF SHARES..........................................1
1.2 CONSIDERATION FROM BUYER AT CLOSING..................................1
2. REPRESENTATIONS AND WARRANTIES --.........................................1
2.1 ORGANIZATION.........................................................2
2.2 STOCK OF CORPORATION.................................................2
2.3 SUBSIDIARIES.........................................................2
2.4 FINANCIAL STATEMENTS.................................................2
2.5 ABSENCE OF SPECIFIED CHANGES.........................................3
2.6 ABSENCE OF UNDISCLOSED LIABILITIES...................................4
2.7 TAX RETURNS, AUDITS AND TAXES........................................4
2.8 ASSETS OF BUSINESS...................................................5
2.9 TITLE TO ASSETS......................................................6
2.10 CUSTOMERS AND SALES..................................................7
2.11 INSURANCE POLICIES...................................................7
2.12 OTHER CONTRACTS......................................................7
2.13 COMPLIANCE WITH LAWS.................................................7
2.14 LITIGATION...........................................................8
2.15 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION.........................9
2.16 AUTHORITY AND CONSENTS...............................................9
2.17 RELATED INTERESTS....................................................9
2.18 CORPORATE DOCUMENTS..................................................9
2.19 PERSONNEL...........................................................10
2.20 AUTHORITY...........................................................10
2.21 FULL DISCLOSURE.....................................................10
3. REPRESENTATIONS AND WARRANTIES - BUYER...................................11
3.1 ORGANIZATION........................................................11
3.2 CONSENTS............................................................11
3.3 INVESTMENT PURPOSES.................................................11
4. SELLING PARTIES' OBLIGATIONS BEFORE CLOSING..............................11
4.1 BUYER'S ACCESS......................................................11
4.2 CONDUCT OF BUSINESS.................................................11
4.3 CORPORATE MATTERS...................................................11
4.4 EMPLOYEES AND COMPENSATION..........................................12
4.5 NEW TRANSACTIONS....................................................12
4.6 DIVIDENDS, DISTRIBUTIONS, AND ACQUISITIONS..........................12
4.7 PAYMENT OF LIABILITIES AND WAIVER OF CLAIMS.........................12
4.8 EXISTING AGREEMENTS.................................................12
4.9 CONSENTS OF OTHERS..................................................12
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5. INFORMATION TO BE HELD IN CONFIDENCE.....................................13
6. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE..............................13
6.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES..........................13
6.2 PERFORMANCE BV SELLING PARTIES......................................13
6.3 NO MATERIAL ADVERSE CHANGE..........................................13
6.4 ABSENCE OF LITIGATION...............................................14
6.5 FINANCIAL POSITION .................................................14
6.6 SHAREHOLDER APPROVAL ...............................................14
6.7 CONSENTS............................................................14
6.8 APPROVAL OF DOCUMENTATION...........................................14
6.9 RESIGNATIONS........................................................14
6.10 DELIVERIES..........................................................14
7. CONDITIONS PRECEDENT TO SELLING PARTIES'.................................14
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES..........................15
7.2 BUYER'S PERFORMANCE.................................................15
7.3 BUYER'S CORPORATE APPROVAL..........................................15
7.4 ABSENCE OF LITIGATION...............................................15
7.5 DELIVERIES..........................................................15
8. THE CLOSING..............................................................15
8.1 TIME AND PLACE......................................................15
8.2 EFFECTIVE DATE......................................................15
8.3 SELLING PARTIES' OBLIGATIONS AT CLOSING.............................15
8.4 BUYER'S OBLIGATIONS AT CLOSING......................................16
9. OBLIGATIONS AFTER CLOSING................................................16
9.1 SELLER'S INDEMNITY..................................................16
9.2 INDEMNITY OF SHAREHOLDER............................................17
9.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS...............17
9.4 CLAIMS..............................................................17
9.5 LIMITATIONS.........................................................18
10. PUBLICITY................................................................19
11. COSTS....................................................................19
11.1 FINDER'S OR BROKER'S FEES...........................................19
11.2 EXPENSES............................................................19
12. REMEDIES.................................................................19
12.1 SPECIFIC PERFORMANCE AND WAIVER.....................................19
12.2 TERMINATION.........................................................19
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13. GENERAL PROVISIONS.......................................................20
13.1 NOTICES............................................................20
13.2 TIME...............................................................20
13.3 ENTIRE AGREEMENT...................................................20
13.4 SURVIVAL...........................................................20
13.5 APPLICABLE LAW.....................................................20
13.6 ATTORNEYS FEES.....................................................21
13.7 FURTHER ASSURANCES.................................................21
13.8 COUNTERPARTS.......................................................21
13.9 HEADINGS AND GENDER................................................22
13.10 SUCCESSORS.........................................................23
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TABLE OF DEFINED TERMS
Agreement.................................................................1
BTR.......................................................................1
Buyer.....................................................................1
Closing..................................................................15
Closing Date.............................................................15
Consents.................................................................12
Corporation...............................................................1
Effective Date...........................................................15
Indemnified Party........................................................17
Indemnifying Party.......................................................17
Indemnity................................................................16
Laws......................................................................8
Losses...................................................................16
Shareholder...............................................................1
Shares....................................................................1
Third Party Claim........................................................18
Trademarks................................................................6
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TABLE OF EXHIBITS
EXHIBIT DESCRIPTION PAGE NO.
--------------------------------------------------------------------------------
A-1 Hawker Financial Statements: 12/31/93, '94, '95 2
A-2 Hawker Financial Statements: 1/96 through 10/96 2
B Absence of Specified Changes 2
C Description of Real Property 4
D Tangible Personal Property 4
E Accounts Receivable Aging as of October 31, 1996 5
F Trade Names, Trademarks and Copyrights 5
F-1 Trademark License Agreement 5
G Title to Assets 5
G-1 Encumbered Assets 5
H Customers and Sales 5
I Insurance Policies 5
J Other Contracts (including Dunlop Agreements) 6
K Compliance with Laws 6
L Pending Litigation 7
M Breach or Violations, Required Consents 7
N Related Interests 7
O Employee Information 8
P Employment Contracts and Related Agreements 8
Q Severance Agreements 8
R Powers of Attorney, Bank Information 8
S Normal Compensation Increases 9
T Opinion from Xxxxx X. Xxxx, Esq. 12
U BTR Noncompetition Agreement 12
V Environmental Indemnity Agreement 12
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AGREEMENT OF PURCHASE AND SALE OF STOCK
THIS AGREEMENT OF PURCHASE AND SALE OF STOCK (the "Agreement") is
made and effective as of the 27th day of November, 1996 by and among BTR Dunlop,
Inc., a Delaware corporation ("BTR"), BTR, INC., a Delaware corporation
("Shareholder"), AQHAWK, INC., a California corporation ("Buyer"), and HAWKER
PACIFIC, INC., a California corporation ("Corporation"). Shareholder and
Corporation are sometimes collectively referred to in this Agreement as "Selling
Parties".
RECITALS
A. Shares
Shareholder holds one hundred percent (100%) of the issued and
outstanding stock (collectively, the "Shares") of Corporation.
B. Intentions
Pursuant to the terms and conditions hereof, Buyer desires to
purchase and acquire from Shareholder, and Shareholder desires to sell, assign,
transfer, convey and deliver to Buyer, the Shares.
NOW, THEREFORE, for good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged and agreed to, the parties hereto
agree as follows:
1. PURCHASE AND SALE OF SHARES
1.1 SALE AND TRANSFER OF SHARES. Pursuant to the terms and
conditions hereof, on the Closing Date (defined in Paragraph 8.1 hereof),
Shareholder shall sell, assign, transfer, convey and deliver the Shares to
Buyer, and Buyer shall purchase and acquire the Shares from Shareholder.
1.2 CONSIDERATION FROM BUYER AT CLOSING. As payment for the
transfer of the Shares by Shareholder to Buyer, Buyer shall deliver at the
Closing (defined in Paragraph 8.1 hereof) in accordance with the provisions of
Paragraph 8.3 hereof by wire transfer to an account designated by Shareholder
the sum of Twenty-Nine Million Eight Hundred Two Thousand Eight Hundred
Sixty-One Dollars ($29,802,861) as payment in full for the Shares.
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2. REPRESENTATIONS AND WARRANTIES -- SHAREHOLDER
As a material inducement to Buyer's entering into this Agreement
and consummating the transaction set forth herein, Shareholder represents and
warrants as of the date hereof that:
2.1 ORGANIZATION. Corporation is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
California, and has all necessary corporate powers to own its properties and to
operate its business as now owned and operated by it.
2.2 STOCK OF CORPORATION
a. CAPITAL STRUCTURE. The authorized capital stock of
Corporation consists of ten thousand (10,000) shares of common stock, with par
value of One Hundred Dollars ($100) per share, five thousand (5,000) of which
are issued and outstanding and comprise the Shares. All the Shares are validly
issued, fully paid, and nonassessable, and were issued in full compliance with
all federal and state securities laws. There are no outstanding subscriptions,
options, rights, warrants, convertible securities, preferred shares or other
agreements or commitments obligating Corporation to issue or to transfer from
treasury any additional shares of its capital stock of any class.
b. TITLE TO SHARES. Shareholder is the owner,
beneficially and of record, of the Shares free and clear of all liens,
encumbrances, security agreements, equities, options, claims, charges, and
restrictions. Shareholder has full power to transfer the Shares to Buyer without
obtaining the consent or approval of any other person, entity or governmental
authority.
2.3 SUBSIDIARIES. Corporation does not own, directly or
indirectly, any interest or investment (whether equity or debt) in any
corporation, partnership, business, trust, or other entity.
2.4 FINANCIAL STATEMENTS. Exhibit "A-1" to this Agreement
consists of the reviewed balance sheets of Corporation as of December 31, 1993,
1994 and 1995; and the related statements of income and retained earnings for
the three years ending on those dates. Exhibit "A-2" to this Agreement consists
of unaudited balance sheets of Corporation as of August 31, 1996, September 30,
1996 and October 31, 1996, together with related statements of income and
retained earnings for the one (1) month periods ending on those dates, which
unaudited statements accurately present Corporation's financial condition for
those periods and all information normally reported to Corporation's independent
public accountants for the preparation of Corporation's financial statements.
The financial statements in Exhibits "A-1" and "A-2" are collectively referred
to herein as the "Financial Statements". The Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently followed by Corporation throughout the periods indicated, and
accurately present the financial position of Corporation as of the respective
dates of the balance sheets included in the Financial Statements, and the
results of Corporation's operations for the respective periods to which the
Financial Statements apply; provided, however, that the parties
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hereto agree that the purchase price set forth in Paragraph 1.2 hereof accounts
for (i) slow and non-moving, surplus and obsolete inventory, (ii) the inclusion
of freight costs in inventory, (iii) work-in-progress overhead included in
inventory, (iv) prepaid insurance for which Buyer will not be able to realize
any benefit, (v) deferred learning costs, (vi) the market value of Corporation's
machinery and equipment, (vii) any liability relating to the discount granted to
Federal Express, (viii) a currency exchange adjustment and a tax liability
relating to Corporation's Dutch operations in the amounts of $35,000 and $55,000
respectively, and (ix) a doubtful account receivable from Tristar in the amount
of $166,000 and a claim in the amount of $188,000 from QAD, Inc. for royalty
payments pursuant to a license agreement and arrangement between Corporation and
QAD, Inc. Accordingly, Buyer shall have no claim under Paragraph 2.4 hereof or
any other provision of this Agreement, and the purchase price shall not be
subject to any adjustment, for the matters set forth in clauses (i) through (ix)
of this Paragraph 2.4.
2.5 ABSENCE OF SPECIFIED CHANGES. Except as set forth in
Exhibit "B" attached hereto, since August 31, 1996, there has not been any:
a. Transaction by Corporation except in the ordinary
course of business as conducted on that date;
b. Capital expenditure by Corporation exceeding
$100,000;
c. Material adverse change in the financial
condition, liabilities, assets, receivables, business, or prospects of
Corporation;
d. Destruction, damage to, or loss of any asset of
Corporation (whether or not covered by insurance) that adversely affects the
financial condition, business, or prospects of Corporation;
e. Change in accounting methods or practices
(including, without limitation, any change in depreciation or amortization
policies or rates) by Corporation;
f. Revaluation by Corporation of any of its assets;
g. Declaration, setting aside, or payment of a
dividend or other distribution relating to the capital stock of Corporation, or
any direct or indirect redemption, purchase, or other acquisition by Corporation
of any of its shares of capital stock;
h. Collection of receivables, or incurrence or
payment of trade payables by Corporation inconsistent with historical practices;
i. Increase in the salary or other compensation
payable or to become payable by Corporation to any of its officers, directors,
or employees, or the declaration, payment, or commitment or obligation of any
kind for the payment, by Corporation, of a bonus or other additional salary or
compensation to any such person;
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j. Sale or transfer of any asset of Corporation,
except in the ordinary course of business;
k. Amendment or termination of any contract,
agreement, or license to which Corporation is a party, except in the ordinary
course of business;
l. Loan by Corporation to any person or entity, or
guaranty by Corporation of any loan;
m. Mortgage, pledge, or other encumbrance of any
asset of Corporation;
n. Waiver or release of any right or claim of
Corporation, except in the ordinary course of business;
o. Commencement or notice or threat of commencement
of any civil litigation or any governmental proceeding against or investigation
of Corporation or its affairs;
p. Threat of strike, walkout or other labor action,
or claim of wrongful discharge or other unlawful labor practice or action
against Corporation;
q. Issuance or sale by Corporation of any shares of
its capital stock of any class, or of any other of its securities, or any right
to purchase any of same;
r. Agreement by Corporation to do any of the things
described in the preceding Paragraphs 2.5.a through 2.5.q; or
s. Any other event or condition of any nature, kind
or character that has, had or might have a material adverse effect on the
financial condition, business, assets, receivables, liabilities, and/or
prospects of Corporation.
2.6 ABSENCE OF UNDISCLOSED LIABILITIES. Corporation does
not have any debt, liability, or obligation of any nature, whether accrued,
absolute, contingent, or otherwise, and whether due or to become due, that is
not reflected or reserved against in Corporation's balance sheet dated as of
October 31, 1996, included in the Financial Statements, except for (i) those
that may have been incurred by Corporation after the date of said balance sheet
and, to the extent not incurred in the ordinary course of business, have been
disclosed to Buyer in writing, (ii) those that are not required by generally
accepted accounting principles to be included in a balance sheet, and which were
incurred in the ordinary course of Corporation's business and are usual and
normal in kind and amount both individually and in the aggregate, and (iii) the
matters described in the proviso to the penultimate sentence of Paragraph 2.4
hereof.
2.7 TAX RETURNS, AUDITS AND TAXES. Within the times and in
the manner prescribed by law, Corporation has filed all federal, state, and
local tax returns
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required by law and has paid all taxes, assessments, and penalties due and
payable. The federal income tax and California income and franchise tax returns
of Corporation have not been audited within ten (10) years from the date hereof.
Corporation has no present or pending disputes regarding taxes of any nature
with any taxing authority Corporation has never filed, and will not file on or
before the Closing Date, any consent under Section 341(f) of the Internal
Revenue Code. Corporation and Shareholder have paid any and all taxes due under
applicable federal, state and local laws, including all income and sales taxes,
for or in relation to Corporation's operations up to the Effective Date (defined
in Paragraph 8.2 hereof), except for employee related and sales taxes which
Corporation has paid through the Closing Date.
2.8 ASSETS OF BUSINESS
a. REAL PROPERTY
(1) DESCRIPTION. Exhibit "C" to this Agreement
contains a brief description (including address, lot size, number of buildings,
leased or owned, etc.), as of the Effective Date, of each location from which
Corporation conducts any of its operations, and/or in which any of Corporation's
assets are located. Exhibit "C" to this Agreement contains true and complete
copies of all leases, as amended to date, for said real properties. There does
not exist any default or event that, with notice or lapse of time or both, would
constitute a default under any said leases.
(2) ZONING. Corporation has received no notice of,
and Shareholder otherwise has no knowledge that, the zoning of each parcel of
real property described in Exhibit "C" does not in any way permit the presently
existing improvements and the continuation of the business presently being
conducted on such real property by Corporation.
b. INVENTORY. All items described as inventory on the
balance sheet of Corporation as of October 31, 1996 are located on the real
property described in Exhibit "C" hereof, except for sales made in the ordinary
course of business since the date of said balance sheet. For each said sale,
either the purchaser has made full payment or the purchaser's liability to make
payment is reflected in the books of Corporation. No items included in the
Inventories have been pledged as collateral or are held by Corporation on
consignment from others.
c. OTHER TANGIBLE PERSONAL PROPERTY. Exhibit "D" to
this Agreement is a complete and accurate schedule describing, and specifying
the location of, all trucks, automobiles, machinery, equipment, furniture,
supplies, tools, dies, rigs, molds, patterns, drawings, and all other tangible
personal property owned by, in the possession of, or used by Corporation in any
way valued in excess of $25,000, except for Corporation's inventories. The
property listed in Exhibit "D" constitutes all such tangible personal property
necessary for the conduct by Corporation of it business as now conducted. All
the motor vehicles listed in Exhibit "D", if any, are in operating condition and
repair and have current smog certifications. Except as stated in Exhibit "D", no
personal property used by Corporation in connection with its business is held
under any lease, security agreement,
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conditional sales contract, or other title retention or security arrangement, or
is located other than on or in the real property described in Exhibit "D"
hereto.
d. ACCOUNTS RECEIVABLE. Exhibit "E" to this Agreement
is a complete and accurate schedule of the accounts receivable of Corporation as
of October 31, 1996, reflected in the balance sheet as of that date, included in
the Financial Statements, together with an accurate aging thereof. Those
accounts receivable, and all accounts receivable of Corporation created after
that date, arose from valid sales in the ordinary course of business.
e. TRADE NAMES. TRADEMARKS. AND COPYRIGHTS. Exhibit
"F" to this Agreement is a list of all trade names, trademarks, service marks,
and copyrights (collectively, "Trademarks") and their registrations, if any,
owned or in any way used by Corporation, or in which Corporation has any rights
or licenses, together with a brief description of each. Corporation owns, or to
Selling Parties' knowledge, is entitled to use all Trademarks and, to Selling
Parties' knowledge, its use thereof does not, and will not, conflict with,
infringe on, or otherwise violate any rights of others. Selling Parties have no
knowledge of any infringement or alleged infringement by others of any
Trademarks. To Selling Parties' knowledge, Corporation has not infringed, and is
not now infringing, on any trade name, trademark, service xxxx, or copyright
belonging to any other person or entity. Except as set forth in Exhibit "F",
Corporation is not a party to any license, agreement, or arrangement, whether as
licensor, licensee, franchiser, franchisee, or otherwise, with respect to any
Trademarks, or applications therefor. Corporation's continued right to use the
Trademarks after the Closing shall be subject to a license agreement, in form
and substance as attached hereto as Exhibit "F-1"
f. PATENTS AND PATENT RIGHTS. Corporation holds no,
and, as applicable, is not a party to any (i) patents, (ii) rights, licenses,
covenants not to xxx or similar immunities from prosecution. To Selling Parties'
knowledge, no aspect of Corporation's operations infringes on any patent or
violates in any material way any other proprietary, protected or personal right
of any person or entity.
2.9 TITLE TO ASSETS. Except as set forth in Exhibit "G"
hereto which lists leased assets, financed assets and assets used in the
provision to Corporation of central services by BTR, Inc., a Delaware
corporation, Corporation has good and marketable title to all its assets and
interests in assets, whether real, personal, mixed, tangible, or intangible,
which constitute all the assets and interests in assets that are used or related
to the business or operations of Corporation. Except as listed on Exhibit "G-1",
all such assets are free and clear of (i) restrictions on or conditions to
transfer or assignment, and (ii) mortgages, liens, pledges, charges,
encumbrances, equities, claims, easements, rights of way, covenants, conditions,
or restrictions, except for (a) those disclosed in Corporation's balance sheet
dated as of October 31, 1996, included in the Financial Statements, and (b) the
lien of current taxes not yet due and payable. Corporation is not in default or
in arrears in any material respect under any lease. Taken as a whole, all real
property and tangible personal property of Corporation are in good operating
condition and repair, ordinary wear and tear excepted. Corporation occupies all
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premises leased to it from others. Neither Shareholder, nor any officer,
director, or employee of Corporation, nor any spouse, child, or other relative
of any of these persons, owns, or has any interest, directly or indirectly, in
any of the real or personal property owned by or leased to Corporation, or any
Trademarks or trade secrets licensed by Corporation or otherwise used by
Corporation in relation to its operations.
2.10 CUSTOMERS AND SALES. Exhibit "H" to this Agreement is a
correct and current list of the top one hundred (100) customers of Corporation
by 1995 sales, together with summaries of the sales made to each customer year
to date for Corporation's current fiscal year and its 1995 fiscal year. Except
as indicated in Exhibit "H", neither Corporation nor Shareholder has any
information, or is aware of any facts, indicating that any of these customers
intend to cease doing business with Corporation or materially decrease the
amount of business they are presently doing with Corporation.
2.11 INSURANCE POLICIES. Exhibit "I" to this Agreement is a
description of all insurance policies held by Corporation related to its
operations and properties. All said policies are in the respective coverage
amounts set forth in Exhibit "I". Corporation has maintained and now maintains
(i) insurance on all their assets and businesses of a type customarily insured,
covering property damage and loss of income by fire or other casualty, (ii)
insurance in a customary amount against all liabilities, claims, and risks
against which it is customary to insure and (iii) the appropriate amount of
workmen's compensation insurance. Corporation is not in default with respect to
payment of premiums on any such policy. Except as set forth in Exhibit "I", no
claim by Corporation is pending under any such policy. All such insurance is
provided to Corporation under blanket insurance policies obtained by BTR, plc,
and will terminate as of the Closing, unless otherwise agreed in writing by
Shareholder and Company.
2.12 OTHER CONTRACTS. Except for the agreements listed in
Exhibit "J" hereto, copies of which have been furnished or made available to
Buyer, Corporation is not a party to, nor is the property of Corporation bound
by, any distributor's or manufacturer's representative or agency agreement; any
output or requirements agreement; any agreement not entered into in the ordinary
course of business; any indenture, mortgage, deed of trust, or lease; or any
agreement that is not customary in nature, duration, or amount (including any
agreement requiring the performance by Corporation of any obligation for a
period of time extending beyond one year from Closing Date or calling for
consideration of more than $2,500). Except as set forth in Exhibit "J" to this
Agreement, there is no default or event that, with notice or lapse of time or
both, would constitute a default by Corporation, or to the best of Selling
Parties' knowledge, by any other party to any of said agreements. Corporation
has not received notice that any party to any of said agreements intends to
cancel or terminate any of said agreements or to exercise or not exercise any
options under any of said agreements. Corporation is not a party to, nor is
Corporation's property bound by, any agreement that is materially adverse to the
business, operations, properties, or financial condition of Corporation.
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2.13 COMPLIANCE WITH LAWS.
a. ENVIRONMENTAL. Except as set forth in Exhibit "K"
hereto, to the best of Selling Parties' knowledge, (i) there are no underground
storage tanks located on the real property described in Exhibit "D" in which any
Hazardous Substance (defined below) has been or is being stored, nor has there
been any spill, disposal, discharge, or release of any Hazardous Material into,
upon, from, or over any part of said real property or into or upon ground or
surface water on any part of said real property and (ii) there are no
asbestos-containing materials incorporated into the building or interior
improvements that are part of said real property, or into other assets of
Corporation, nor any electrical transformer or other equipment owned by
Corporation containing PCBs, in violation of any applicable federal, state or
local law, regulation, code or ordinance in effect on the date hereof
(collectively, the "Laws"). Except as set forth in Exhibit "K" hereto,
Corporation has complied in all respects with all environmental protection,
clean-up and/or control laws, and has not been cited at any time for any
violation thereof. There is no pending audit known to Selling Parties or any of
their officers by any federal, state, or local governmental authority with
respect to any groundwater, soil, or air monitoring; the storage, burial,
release, transportation, use or disposal of any Hazardous Substances; or the use
of underground storage tanks by Corporation or otherwise relating to the
facilities or operations of Corporation. Corporation has no agreement with any
third party or federal, state, or local governmental authority relating to any
such environmental matter or any environmental cleanup. For purposes of this
Agreement, a "Hazardous Substance" is any substance regulated, controlled,
defined as hazardous, or which otherwise falls within the scope of any
environmental Laws, or other Laws regarding the public health and safety.
b. OSHA. Corporation has complied in all respects
with all requirements of the Occupational Safety and Health Act and its
California equivalents, and all regulations promulgated under any such
legislation, the consequences of a violation of which could have a material
adverse effect on Corporation's operations, and with all orders, judgments, and
decrees of any tribunal under such legislation that apply to Corporation's
business, operations or facilities.
c. FOREIGN. Corporation is not in violation of any
provision of the Export Administration Amendments of 1977 or the Foreign Corrupt
Practices Act of 1977. Corporation has not directly or indirectly paid or
delivered any fee, commission, or other money or property, however
characterized, to any finder, agent, government official, or other party, in the
United States or any other country, that is in any manner related to the
business or operations of Corporation that Shareholder or Corporation knows or
has reason to believe to have been illegal or not accurately reflected on the
books and records of Corporation.
d. GENERAL. Corporation has complied in all material
respects with, and is not in violation of, any other laws (including any
applicable building, zoning, or health and safety laws).
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2.14 LITIGATION. Except as set forth in Exhibit "L", there
is not pending, or, to the best knowledge of Selling Parties, threatened, any
suit, action, arbitration, or legal, administrative, or other proceeding, or
governmental investigation against or affecting Corporation or any of its
business, assets, operations or financial condition. The matters set forth in
Exhibit "L", if decided adversely to Corporation, will not result in a material
adverse change in the business, assets, operations or financial condition of
Corporation. Selling Parties have furnished or made available to Buyer copies of
all relevant court papers and other documents relating to the matters set forth
in Exhibit "L". Corporation is not in default with respect to any order, writ,
injunction, or decree of any federal, state, local, or foreign court,
department, agency, or instrumentality. Except as set forth in Exhibit "L",
neither Corporation nor Shareholder presently is engaged in any legal action to
recover monies due to or damages sustained by Corporation.
2.15 AGREEMENT WILL NOT CAUSE BREACH OR VIOLATION. Except as
set forth in Exhibit "M" to this Agreement, the consummation of the transactions
contemplated by this Agreement will not result in or constitute: (i) a breach of
any term or provision of this Agreement; (ii) a default or an event that, with
notice or lapse of time or both, would be a default, breach, or violation of the
articles of incorporation or bylaws of Corporation or any lease, license,
promissory note, sales contract, conditional sales contract, commitment,
indenture, security agreement, mortgage, deed of trust, or other agreement,
instrument, or arrangement to which Shareholder or Corporation is a party or by
which either of them or the property of either of them is bound, (iii) an event
that would permit any party to terminate any agreement or to accelerate the
maturity of any indebtedness or other obligation of Corporation; or (iv) the
creation or imposition of any lien, charge, or encumbrance on any of
Corporation's properties or other assets.
2.16 AUTHORITY AND CONSENTS. Selling Parties have the right,
power, legal capacity, and authority to enter into, and perform their respective
obligations under, this Agreement. No approvals or consents of any persons other
than Selling Parties are necessary in connection therewith. The execution and
delivery of this Agreement by Corporation has been duly authorized by all
necessary corporate action.
2.17 RELATED INTERESTS. Except as set forth in Exhibit "N",
neither Shareholder, nor any officer, director, or employee of Shareholder or
Corporation, nor any spouse or child of any of them has any direct or indirect
interest in any competitor, supplier, or customer of Corporation, or in any
person from whom or to whom Corporation leases any real or personal property, or
in any other person with whom Corporation is doing business.
2.18 CORPORATE DOCUMENTS. Selling Parties have furnished to
Buyer for its examination (i) copies of the articles of incorporation and bylaws
of Corporation; (ii) the minute books of Corporation containing all records
required to be set forth of all proceedings, consents, actions, and meetings of
the shareholders and board of directors of Corporation; (iii) all permits,
orders, and consents issued by the California Commissioner of Corporations with
respect to Corporation, or any securities of Corporation, and all applications
for such permits,
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orders, and consents; and (iv) the stock transfer books of Corporation setting
forth all transfers of any capital stock and copies of all share certificates
representing shares currently issued and outstanding.
2.19 PERSONNEL.
a. IDENTIFICATION AND COMPENSATION. Exhibit "O" is a
list of the names and addresses of all officers, directors, key employees,
agents, and manufacturer's representatives of Corporation, stating the rates of
compensation payable to each and their respective benefit packages, if any.
b. EMPLOYMENT CONTRACTS AND BENEFITS. Exhibit "P" to
this Agreement is a list of all employment contracts and collective bargaining
agreements, and all pension, bonus, profit-sharing, stock option, or other
agreements or arrangements providing for employee remuneration or benefits to
which Corporation is a party or by which Corporation is bound. All said
contracts and arrangements are in full force and effect, and neither Corporation
nor any other party is in default under any of them. There have been no claims
of defaults and, to the best knowledge of Selling Parties, there are no facts or
conditions that if continued, or on delivery of notice, would result in a
default under said contracts or arrangements. There is no pending or, to Selling
Parties' knowledge, threatened labor dispute, strike, or work stoppage affecting
Corporation's business or operations. Corporation's employees are not unionized,
and to Selling Parties' knowledge, none of Corporation's employees are seeking
unionization. Corporation has complied with all applicable laws for each of
their respective employee benefit plans, including the provisions of the
Employee Retirement Income Security Act (ERISA) if and to the extent applicable.
There are no threatened or pending claims by or on behalf of any such benefit
plan, by or on behalf of any employee covered under any such plan, or otherwise
involving any such benefit plan, that allege a breach of fiduciary duties or
violation of other applicable state or federal law; nor is there, to Selling
Parties' knowledge, any basis for such a claim. Except as set forth in Exhibit
"Q", Corporation has not entered into any severance or similar arrangement in
respect of any present or former employee that will result in any obligation,
absolute or contingent, of Buyer or Corporation to make any payment to any
present or former employee following termination of employment.
2.20 AUTHORITY. Exhibit "R" lists (i) the names and
addresses of all persons holding a power of attorney on behalf of Corporation,
and (ii) the names and addresses of all banks or other financial institutions in
which Corporation has an account, deposit, or safe deposit box, along with the
names of all persons authorized to draw on said accounts or deposits or to have
access to said boxes.
2.21 FULL DISCLOSURE. None of the representations and
warranties made by Shareholder and/or Corporation, or made in any certificate or
memorandum furnished or to be furnished to Buyer by Shareholder and/or
Corporation pursuant to an express provision of this Agreement, contains or will
contain any untrue statement of a material fact, or omits or will omit any fact
or facts necessary to make the statements made, in light of the circumstances
under which they were made, not misleading.
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3. REPRESENTATIONS AND WARRANTIES - BUYER
As a material inducement to Selling Parties' entering into this
Agreement and consummating the transaction set forth herein, Buyer represents
and warrants that:
3.1 ORGANIZATION. Buyer is a corporation duly organized,
validly existing, and in good standing under the laws of the State of
California. The execution and delivery of this Agreement, and the consummation
of the transactions set forth herein, by Buyer have been duly authorized, and no
further corporate authorization is necessary on the part of Buyer.
3.2 CONSENTS. No consent, approval, or authorization of, or
declaration, filing, or registration with, any federal or state governmental or
regulatory authority is required to be made or obtained by Buyer in connection
with the execution, delivery, and performance of this Agreement and the
consummation of the transactions contemplated by this Agreement.
3.3 INVESTMENT PURPOSES. Buyer is purchasing the Shares for
investment purposes only, and not with any present intention of reselling or
distributing the Shares.
4. SELLING PARTIES' OBLIGATIONS BEFORE CLOSING
Selling Parties covenant that from the date of this Agreement
until the Closing:
4.1 BUYER'S ACCESS. Buyer and its counsel, accountants, and
other representatives shall have full access during normal business hours to all
properties, books, accounts, records, contracts, and documents of or relating to
Corporation. Selling Parties shall furnish or cause to be furnished to Buyer and
its representatives all data and information concerning the business, finances,
and properties of Corporation which may be requested by Buyer. Buyer reasonably
shall cooperate with Shareholder in its exercise of its rights under this
Paragraph 4.1 so as to minimize any interference with the operations of
Corporation.
4.2 CONDUCT OF BUSINESS. Selling Parties shall (i) carry on
Corporation's business and operations diligently and in the same manner as prior
to the date hereof, (ii) not make or institute any unusual or novel methods of
manufacture, purchase, sale, lease, management, accounting, bidding or operation
that vary from those historically used by Corporation, (iii) not collect any of
Corporation's receivables in a manner inconsistent with historical practices,
and (iv) preserve Corporation's relationships with suppliers, customers, and all
others with whom Corporation does business. Selling Parties shall continue to
act and perform as set forth in the prior sentence up to and through the Closing
Date.
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4.3 CORPORATE MATTERS. Corporation shall not (i) amend its
articles of incorporation or bylaws; (ii) issue any shares of its capital stock;
(iii) issue or create any warrants, obligations, subscriptions, options,
convertible securities, or other commitments under which any additional shares
of its capital stock of any class might be directly or indirectly authorized or
issued; or (iv) agree to do any of the acts listed above.
4.4 EMPLOYEES AND COMPENSATION. Corporation shall not do,
nor agree to do, any of the following acts: (i) change any compensation payable
or to become payable to any officer, employee, sales agent, or representative of
Corporation, except for compensation increases pursuant to Corporation's normal
schedules as set forth on Exhibit "S" hereto; (ii) make any change in benefits
payable to any officer, employee, sales agent, or representative under any
benefit, bonus or pension plan or other contract or commitment; or (iii) modify
any collective bargaining agreement to which Corporation is a party or by which
it may be bound.
4.5 NEW TRANSACTIONS. Corporation shall not do or agree to
do, without Buyer's prior written consent, any of the following acts:
(a) Enter into any contract, commitment, or
transaction not in the usual and ordinary course of its business, or which has a
duration in excess of six months, and which obligates Corporation to pay an
aggregate amount in excess of $25,000, or to produce its products at a margin
that is below the margin historically realized by Corporation for sales to the
same or similar customers for the same or similar products;
(b) Make any capital expenditures in excess of $10,000
for any single item or $50,000 in the aggregate, or enter into any leases of
capital equipment or property under which the annual lease charge is in excess
of $25,000; or
(c) Sell or dispose of any capital assets with a net
book value exceeding $5,000, individually, or $25,000 in the aggregate.
4.6 DIVIDENDS, DISTRIBUTIONS, AND ACQUISITIONS. Corporation
shall not: (i) declare, set aside, or pay any dividend or make any distribution
in respect of its capital stock; (ii) directly or indirectly purchase, redeem,
or otherwise acquire any shares of its capital stock; or (iii) enter into any
agreement obligating it to do any of the foregoing.
4.7 PAYMENT OF LIABILITIES AND WAIVER OF CLAIMS.
Corporation shall not do, or agree to do, any of the following: (i) pay any
obligation or liability, fixed or contingent, other than current liabilities,
(ii) waive or compromise any right or claim; or (iii) cancel, reduce or extend
the time for payment or performance of any note, loan, or other obligation owing
to Corporation.
4.8 EXISTING AGREEMENTS. Corporation shall not modify,
amend, cancel, or terminate any of its existing contracts or agreements, or
agree to do any of those acts.
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4.9 CONSENTS OF OTHERS. As soon as reasonably practical
after the execution and delivery of this Agreement, and in any event on or
before the Closing Date, Selling Parties shall obtain all consents
(collectively, the "Consents") required to consummate the transactions set forth
herein in compliance with all applicable laws, rules and regulations, this
Agreement and all other agreements, contracts and leases to which Corporation
and/or Shareholder is a party (including all change of control provisions).
Selling Parties will furnish to Buyer executed copies of the Consents. Buyer
shall use its best efforts promptly to execute and deliver any documents and
instruments that may be reasonably required in order to assist Selling Parties
in obtaining such consents; provided, however, that Buyer shall not be obligated
under this Paragraph 4.9 to execute any guaranty, assumption of liability, or
other document or instrument requiring it to assume obligations not contemplated
by this Agreement.
5. INFORMATION TO BE HELD IN CONFIDENCE
Buyer agrees that unless and until the Closing, Buyer and its
officers, directors, and other representatives will hold in strict confidence,
and will not use to the detriment of Shareholder or Corporation any confidential
information regarding Corporation or its operations obtained by Buyer in
connection with this Agreement or the transaction contemplated herein. If the
transactions contemplated herein are not ultimately consummated, Buyer will
return to Selling Parties all copies of information provided by Selling Parties
to Buyers, and will continue to hold all information derived therefrom in
confidence and refrain from using such information and knowledge to the
detriment of the Selling Parties.
6. CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Shares under this
Agreement are subject to the satisfaction, at or before the Closing, of all the
conditions set forth below in this Paragraph 6. Buyer may waive any or all of
these conditions in whole or in part without prior notice; provided, however,
that no such waiver of a condition shall constitute a waiver by Buyer of any of
its other rights or remedies, at law or in equity, if Shareholder or Corporation
shall be in default of any of their respective or joint representations,
warranties, or covenants under this Agreement.
6.l ACCURACY OF REPRESENTATIONS AND WARRANTIES. Except as
otherwise permitted by this Agreement, all representations and warranties by
each or both of Selling Parties in this Agreement, or in any written statement
that shall be delivered to Buyer by either of them under this Agreement, shall
be true on and as of the Closing Date.
6.2 PERFORMANCE BY SELLING PARTIES. Selling Parties each
shall have performed, satisfied, and complied with all covenants, agreements,
and conditions required by this Agreement to be performed or complied with by
either or both of them on or before the Closing Date.
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6.3 NO MATERIAL ADVERSE CHANGE. Since July 31, 1996, there
shall not have been any adverse change in the financial condition or the
operations of Corporation, and Corporation shall not have sustained any material
loss or damage to its business or assets, whether or not insured.
6.4 ABSENCE OF LITIGATION. No action, suit, or proceeding
before any court or any governmental body or authority, pertaining to this
Agreement and the transaction set forth herein, or to its consummation, or
against you, Corporation or any assets of Corporation shall have been instituted
or threatened on or before the Closing Date.
6.5 FINANCIAL POSITION. Corporation's financial position as
reflected on its balance sheet dated July 31, 1996, of the Financial Statements
shall not have suffered any material adverse change, or change outside of
Corporation's ordinary course of business, prior to the Closing Date.
6.6 SHAREHOLDER APPROVAL. The execution, delivery and
performance of this Agreement by Shareholder shall have been duly authorized by
all necessary corporate action, and Buyer shall have received copies of all
resolutions pertaining to that authorization, certified by the secretary of
Shareholder.
6.7 CONSENTS. Selling Parties shall have obtained the
Consents and delivered to Buyer copies thereof.
6.8 APPROVAL OF DOCUMENTATION. The form and substance of
all certificates, instruments, opinions, and other documents delivered to Buyer
under this Agreement shall be satisfactory to Buyer and its counsel.
6.9 RESIGNATIONS. Selling Parties shall have delivered to
Buyer written resignations of all officers and directors of Corporation
requested by Buyer, and shall have caused any other action to be taken with
respect to said resignations that Buyer reasonably may request.
6.10 DELIVERIES. Shareholder shall have made the deliveries
set forth in Paragraph 8.3 hereof.
7. CONDITIONS PRECEDENT TO SELLING PARTIES' PERFORMANCE
The obligations of Shareholder to sell and transfer the Shares,
and of Corporation to perform its obligations, under this Agreement are subject
to the satisfaction, at or before the Closing, of all the following conditions.
Shareholder may waive any or all of these conditions in whole or in part without
prior notice; provided, however, that no such waiver of a condition shall
constitute a waiver by Shareholder of any of its other rights or
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remedies, at law or in equity, if Buyer should be in default of any of its
representations, warranties, or covenants under this Agreement.
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties by Buyer contained in this Agreement or in any
written statement delivered by Buyer under this Agreement shall be true on and
as of the Closing Date as though such representations and warranties were made
on and as of that date.
7.2 BUYER'S PERFORMANCE. Buyer shall have performed and
complied with all of its covenants and agreements, and satisfied all of its
conditions, set forth in this Agreement that it is required by this Agreement to
perform, comply with, or satisfy on or before the Closing.
7.3 BUYER'S CORPORATE APPROVAL. The execution, delivery and
performance of this Agreement by Buyer shall have been duly authorized by all
necessary corporate action.
7.4 ABSENCE OF LITIGATION. No action, suit, or proceeding
before any court or any governmental body or authority, pertaining to this
Agreement or the transactions set forth herein or the consummation thereof,
shall have been instituted or threatened on or before the Closing Date.
7.5 DELIVERIES. Buyer shall have made the deliveries set
forth in Paragraph 8.4 hereof.
8. THE CLOSING
8.1 TIME AND PLACE. The transfer of the Shares by
Shareholder to Buyer, and of all other documents and monies required to be
transferred pursuant to the terms hereof (the "Closing"), shall take place at
Hawker Pacific's Sun Valley offices at 12:00 noon local time, on November 25,
1996, or at such other time and place as the parties may agree (the "Closing
Date").
8.2 EFFECTIVE DATE. Regardless of the Closing Date, the
Closing shall be effective as of November 1, 1996 (the "Effective Date"). Upon
the Closing, all of Corporations operations on and after the Effective Date
shall be considered for all purposes as though the transaction set forth herein
had been consummated at 12:01 a.m. on the Effective Date, except as specifically
stated to the contrary in this Agreement.
8.3 SELLING PARTIES' OBLIGATIONS AT CLOSING. At the
Closing, Shareholder shall deliver to Buyer the following instruments, in form
and substance satisfactory to Buyer and its counsel:
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(a) A certificate or certificates representing the
Shares, registered in the name of Shareholder, duly endorsed by Shareholder for
transfer or accompanied by an assignment of the Shares duly executed by
Shareholder. On submission of that certificate or certificates to Corporation
for transfer, Corporation shall issue to Buyer a certificate representing the
Shares, registered in Buyer's name;
(b) The stock books, stock ledgers, minute books, and
corporate seals of Corporation;
(c) An opinion of Selling Parties' counsel, Xxxxx X.
Xxxx, dated as of the Closing Date, in form and substance as attached hereto as
Exhibit "T";
(d) a noncompetition agreement executed by
Shareholder, in form and substance as attached hereto as Exhibit "U";
(e) The written resignations of all officers and
directors of Corporation pursuant to Paragraph 6.9 hereof;
(f) An Environmental Indemnity Agreement (the
"Indemnity") executed by BTR, in form and substance as attached hereto as
Exhibit "V", dated as of the Closing Date; and
(g) Certified resolutions of Shareholder's board of
directors, in form satisfactory to counsel for Buyer, authorizing the execution
and performance of this Agreement and all actions to be taken by Buyer under
this Agreement.
8.4 BUYER'S OBLIGATIONS AT CLOSING. At the Closing, Buyer
shall deliver to Shareholder the following:
(a) A wire transfer or transfers in the aggregate
amount of Twenty-Nine Million Two Thousand Eight Hundred Sixty-One Dollars and
00/100 ($29,002,861.00) to an account designated by Shareholder (Shareholder
hereby acknowledges receipt of Eight Hundred Thousand Dollars ($800,000)
previously disbursed to Shareholder by Buyer); and
(b) Certified resolutions of Buyer's board of
directors, in form satisfactory to counsel for Selling Parties, authorizing the
execution and performance of this Agreement and all actions to be taken by Buyer
under this Agreement.
9. OBLIGATIONS AFTER CLOSING
9.1 SELLER'S INDEMNITY. Subject to Paragraph 9.3 hereof,
Shareholder and BTR jointly and severally shall indemnify, defend, and hold
harmless Corporation and Buyer against and in relation to any and all claims,
demands, actions, causes of action, losses, costs, expenses, obligations,
liabilities, damages, recoveries, and deficiencies, including
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interest, penalties, and reasonable attorneys' fees and costs (collectively, the
"Losses"), that either or both may incur or suffer, which arise, result from, or
relate to (i) any breach by Shareholder of any of its representations or
warranties, and/or the failure of either or both of Selling Parties to perform
any of their respective covenants or agreements, set forth in this Agreement or
in any schedule, certificate, exhibit, or other instrument furnished or to be
furnished by Selling Parties under this Agreement, (ii) without in any way
limiting the foregoing, (a) any tax, employment or other governmental audit or
investigation of Corporation in relation to its activities and operations prior
to the Closing Date, and/or any non-payment or improper payment by either of
Selling Parties of any taxes or fees owed by Corporation or Shareholder prior to
the Closing Date, and/or (b) any litigation existing prior to the Closing Date,
or arising in relation to matters which occurred prior to the Closing Date. Any
amounts due Buyer pursuant to this Paragraph 9.3 promptly shall be paid by
Shareholder.
9.2 INDEMNITY OF SHAREHOLDER. Buyer and Corporation jointly and
severally shall indemnify, defend, and hold harmless Shareholder against and in
relation to any and all Losses that Shareholder may incur as a result of (i)
Corporation's operations after the Closing, (ii) Buyer's failure to perform any
covenant or agreement set forth herein, (iii) Corporation's failure to pay after
the Closing Date any liabilities included in Corporation's balance sheet dated
as of October 31, 1996, or any other liabilities of Corporation existing on or
after the Closing date, unless specifically agreed to be paid by Shareholder
pursuant to this Agreement, the Indemnity or any other agreement referenced
herein or (iv) Buyer's breach of its representations and warranties set forth
herein. Any Losses arising in relation to Shareholder's negligence or willful
misconduct are excluded from Shareholder's indemnity coverage under this
Paragraph 9.4.
9.3 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
Except for Shareholder's representations and warranties in Paragraph 2.13.a.
hereof, each of the representations and warranties made by Shareholder and Buyer
in this Agreement shall survive for a period of three (3) years after the
Closing Date, on which date they shall terminate. Notwithstanding anything in
this Agreement to the contrary, no action of any type for indemnification or
otherwise with respect to breach of any representation or warranty may be
brought, and the party making such representation or warranty shall have no
obligation with respect thereto, unless written notice thereof specifying with
reasonable particularity the claimed breach shall have been delivered to the
indemnifying party on or before the expiration of the above specified survival
period.
9.4 CLAIMS
a. Either party hereto shall request indemnification for
any particular claim (with respect to such claim, the "Indemnified Party") by
giving the party from whom indemnification is requested (with respect to such
claim, the "Indemnifying Party") written notice within thirty (30) days after
the Indemnified party received notice or knowledge of the matter that gives or
could give rise to a right of indemnification under this Agreement. Such notice
shall state the amount of Losses, if known, and the method of computation
thereof, all with reasonable particularity, and shall contain a reference to the
provisions of this Agreement pursuant to which indemnification is claimed.
Failure of the Indemnified Party to
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give notice within said thirty (30) day period shall not be deemed a waiver of
its rights hereunder except to the extent such failure shall have actually
prejudiced the Indemnifying Party or caused it to incur additional costs,
expenses or liabilities; provided, however, that nothing herein shall extend the
limitations period set forth in Paragraph 9.3 hereof.
b. With respect to any Losses arising from any third party
claim (a "Third Party Claim"), the Indemnified Party shall give the Indemnifying
Party written notice thereof within thirty (30) days after receiving notice of
any Third Party Claim. The Indemnifying Party shall be permitted, at its option,
to participate with counsel of its own choosing and at its expense in the
defense of any such Third Party Claim conducted by the Indemnified Party. If,
however, the Indemnifying Party acknowledges in writing its obligation to
indemnify the Indemnified Party against any Losses that may result from any
Third Party Claim, then the Indemnifying Party shall be entitled, at its option,
to assume and control the defense of such Third Party Claim at its expense and
through counsel of its choice upon giving the Indemnified Party written notice
of its intention to do so, and so long as (i) the Indemnifying Party defends the
Third Party Claim in a continuous, diligent and reasonable manner in light of
the potential consequences thereof on the indemnified party, and (ii) the
Indemnified Party and its operations will not be impacted adversely thereby,
except to the extent necessary to implement a commercially reasonable settlement
with respect to a Third Party Claim (and if said impact is in excess of $5,000,
it shall be considered a part of Losses). If the Indemnifying Party exercises
said right, the Indemnified Party shall make available to the Indemnifying Party
all pertinent records, materials and information in its possession or under its
control as reasonably requested by the Indemnifying Party. Similarly, if the
Indemnified Party is, directly or indirectly, conducting the defense of any
Third Party Claim, the Indemnifying party shall cooperate with the Indemnified
Party and make available to it all such records, materials and information in
the Indemnifying Party's possession or under its control as reasonably requested
by the Indemnified Party. No Third Party Claim may be settled by the
Indemnifying Party without the written consent of the Indemnified Party, not to
be unreasonably withheld; provided, however, that if such settlement involves
the payment of money only and the Indemnified Party is totally indemnified for
such payment and will not suffer any precedential or other adverse effects
therefrom, and the Indemnified Party refuses to consent thereto, the
Indemnifying Party shall cease to be obligated with respect to such Third Party
Claim. The Indemnified Party shall not settle any Third Party Claim which is
being defended in good faith by the Indemnifying Party.
9.5 LIMITATIONS.
9.5.1 DEDUCTIBLE; CEILING. Notwithstanding anything
contained in Sections 9.1 and 9.2 to the contrary, the Indemnified Party shall
not be entitled to bring a claim for any Losses until such time that the Losses,
either individually or in the aggregate, equal or exceed Two Hundred Thousand
Dollars ($200,000). Said limitation shall not apply to (a) Buyer's indemnity
obligation pursuant to clause (iii) of Paragraph 9.2 hereof, or (b)
Shareholder's and BTR's indemnity obligation pursuant to clause (i) of Paragraph
9.1 hereof in relation to the representation and warranty in 2.13.a. hereof. In
no event shall the Indemnifying Party have an obligation to indemnify the
Indemnified Party for any Losses by the Indemnified Party in excess of the
purchase price set forth in Paragraph 1.2 hereof.
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9.5.2 CALCULATION OF LOSSES. The parties shall account
for tax benefits in determining the amount of Losses for purposes of this
Paragraph 9, but not for the purposes of determining whether the threshold has
been met pursuant to Paragraph 9.5.1 hereof.
10. PUBLICITY
All notices and announcements (both written and verbal) to third
parties, including to customers and vendors of Corporation, and all other
publicity concerning the transactions set forth in this Agreement, shall be
jointly planned and mutually agreed to by Buyer and Selling Parties. No party
shall unreasonably withhold its consent to any such notices or announcements.
11. COSTS
11.1 FINDER'S OR BROKER'S FEES. Each party represents that
it has dealt with no broker or finder in connection with this Agreement or the
transactions set forth herein, and no broker or other person is entitled to any
commission or finder's fee in connection with any of these transactions. Selling
Parties and Buyer each shall indemnify, hold harmless and defend the other
against any loss, liabilities, damages, costs, claim, actions, causes of actions
or other expenses incurred by reason of any brokerage, commission, or finder's
fee alleged to be payable because of any act, omission, or statement of the
indemnifying party.
11.2 EXPENSES. Except as set forth in this Agreement to the
contrary, each party hereto shall pay all costs and expenses incurred or to be
incurred by it in negotiating and preparing this Agreement and in negotiating
and consummating the transactions set forth herein.
12. REMEDIES
12.1 SPECIFIC PERFORMANCE AND WAIVER. Each party's
obligation under this Agreement is unique. If any party should default in its
obligations under this Agreement, the parties each acknowledge that it would be
extremely impracticable to measure the resulting damages; accordingly, the
nondefaulting party or parties, in addition to any other available rights or
remedies, may xxx in equity for specific performance, and the parties each
expressly waive the defense that a remedy in damages will be adequate.
12.2 TERMINATION. If either Buyer or Selling Parties
default in the due and timely performance of any of its or their
representations, warranties, covenants, or agreements set forth in this
Agreement, the nondefaulting party or parties may on the Closing
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Date give notice of termination of this Agreement, in the manner provided in
Paragraph 13.1 hereof. Said notice shall specify with particularity the default
or defaults on which the notice is based. Such termination shall be effective
upon receipt thereof by the defaulting party or parties.
13. GENERAL PROVISIONS
13.1 NOTICES. All notices and other communications
pertaining hereto shall be in writing and shall be deemed to have been given
when delivered personally, or one day after being sent by facsimile machine,
with printed receipt of confirmation, or two days after being sent overnight
courier, postage prepaid, to the following addresses or to such other address or
addresses as any of the parties hereto may from to time in writing designate
hereunder:
To Shareholder:
BTR, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
To Buyer:
c/o Unique Investment Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
13.2 TIME. Time is the essence in this Agreement with
respect to every provision in which time is a factor.
13.3 ENTIRE AGREEMENT. This Agreement contains the entire
agreement of the parties hereto pertaining to the subject matter hereof, fully
supersedes all prior agreements, understandings or discussions between the
parties hereto pertaining to the subject matter hereof, and no change in,
modification of or addition, amendment or supplement hereto shall be valid
unless set forth in writing signed and dated by each of the parties hereto
following the signing of this Agreement. None of the parties hereto has executed
this Agreement in reliance upon any promise, representation, warranty, covenant
or agreement not expressly set forth in this Agreement.
13.4 SURVIVAL. All statements contained in this Agreement;
exhibits to this Agreement; instruments, certificates and opinion provided in
relation to this Agreement; shall be deemed incorporated into this Agreement
and, as applicable, to be representations and warranties under this Agreement.
All representations and warranties made in relation to this
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Agreement shall be true and correct as of the Effective Date and Closing Date,
and shall survive the Closing. All indemnity obligations and other covenants and
agreements of the parties hereto shall survive the Closing and shall be
continuing, valid and enforceable obligations after the Closing.
13.5 APPLICABLE LAW. The existence, validity, construction
and operational effect of this Agreement, and the respective rights and
obligations of each of the parties hereto, shall be determined in accordance
with the laws of the State of California. In addition:
a. INVALIDITY. In the event any provision of this
Agreement is found to be prohibited by law or is otherwise held invalid, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and shall not invalidate or otherwise render ineffective any or all
of the remaining provisions of this Agreement.
b. EQUAL DRAFTING. This Agreement shall be construed
as if equally drafted by each of the parties hereto.
c. NO PARTNERSHIP RELATIONSHIPS. Neither this
Agreement nor any other document shall be construed as creating a partnership
relationship between or among the parties hereto.
d. NO IMPLIED WAIVERS. The failure of any of the
parties hereto to insist at any time upon the strict performance of any
provision of this Agreement or to act upon or exercise any right or remedy
available or possibly available to such party or parties, whether hereunder,
under any other document, at law or in equity, shall not be interpreted as a
waiver or a relinquishment of any such provision, right or remedy unless
specifically expressed in writing signed by such party or parties and no payment
hereunder or otherwise shall constitute any such writing.
e. PARTIES. Nothing in this Agreement, whether
express or implied, is intended to confer any rights or remedies under or by
reason of this Agreement on any persons other than the parties hereto and their
respective successors and assigns, nor is anything in this Agreement intended to
relieve or discharge the obligation or liability of any third persons to any
party to this Agreement, nor shall any provision hereof give any third persons
any right of subrogation or action over or against any party to this Agreement.
13.6 ATTORNEYS FEES. In the event of any dispute or
disagreement between the parties hereto concerning the subject matter hereof,
including the interpretation of any provision or term hereof and the
determination of whether a dispute exists hereunder, any and all expenses,
including attorneys' and accountants' fees and costs, reasonably incurred by the
prevailing party in relation to such dispute or disagreement shall be paid by
the nonprevailing party.
13.7 FURTHER ASSURANCES. Except as otherwise expressly
provided hereunder, each of the parties hereto, without further consideration,
does hereby covenant and
-21-
13.10 SUCCESSORS. This Agreement shall be binding upon and
shall inure to the benefit of the successors and assigns of the parties hereto.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it on
the 27th day of November, 1996.
BTR DUNLOP, INC.
a Delaware corporation
By: illegible
-----------------------------------------------
Name:
----------------------------------------
Its:
--------------------------------------
BTR, INC.
a Delaware corporation
By: illegible
-----------------------------------------------
Name:
----------------------------------------
Its:
--------------------------------------
HAWKER PACIFIC, INC.
a California corporation
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Xxxxx X. Xxxxxx
President
AQHAWK, INC.
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxx X. Xxxxxx
President
-23-
ENVIRONMENTAL INDEMNITY AGREEMENT
THIS ENVIRONMENTAL INDEMNITY AGREEMENT (the "Agreement") is made
and effective as of this 27 day of November, 1996 by and among BTR DUNLOP, INC.,
a Delaware corporation ("Indemnitor"), AQHAWK, INC., a California corporation
("Indemnitee"), and HAWKER PACIFIC, INC. a California corporation ("Company").
RECITALS
WHEREAS, pursuant to that certain Agreement for the Purchase and
Sale of Stock (the "Purchase Agreement") dated as of the date hereof by and
among the parties hereto, Indemnitee purchased one hundred percent (100%) of the
issued and outstanding stock of Company. Said stock purchase was effective as of
12:01 a.m. November 1, 1996 (the "Effective Date").
WHEREAS, as a material part of the consideration and value
delivered by Indemnitor in said stock purchase, and as a material inducement to
Indemnitee to enter into the Purchase Agreement and consummate said stock
purchase, Indemnitor desires to indemnify, defend and hold harmless Indemnitee
and Company as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged and agreed to, the parties hereto
agree as follows:
1. Indemnity
Indemnitor shall indemnify, defend, and hold harmless Indemnitee
and Company, and their respective officers, directors, shareholders, employees
and agents from, against and in relation to any and all claims, demands,
actions, causes of action, losses of any type or nature, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies, including
interest, penalties and reasonable attorneys', accountants' and other
professionals' fees and costs, (collectively, the "Losses") that either or both
may suffer or incur which arise, result from, or relate in any way to any third
party Claim (as defined below) arising, resulting from or in any way relating to
the existence, manufacture, processing, distribution, use, treatment, storage
(whether in underground storage tanks or otherwise), disposal, transport,
handling, emission, discharge, or release of any Hazardous Materials (as defined
below) on, around, in or originating in whole or part from any property upon
which any of Company's operations are or at any time were located, or for which
Company or Indemnitee otherwise could be found liable or responsible in any way.
As used herein, the term "Hazardous Materials" shall mean any substance or
material (i) the presence of which requires investigation or remediation under
any applicable law; (ii) that is defined as a "hazardous waste" or "hazardous
substance" under any applicable law; (iii) that is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous, or registered as such by any applicable authority; (iv) the presence
of which causes a nuisance to adjacent properties or poses a threat to the
health or safety of others; (v) the presence of which on adjacent properties
constitutes a trespass; and/or (vi) that is or contains gasoline, diesel fuel or
other petroleum hydrocarbons, polychlorinated biphenols or asbestos.
Indemnitor's obligations pursuant to this Paragraph 1 shall be limited to Losses
arising, resulting from or in
any way relating to Hazardous Materials which, as they existed on or prior to
the Effective Date, could give rise to a Claim. For purposes of this Agreement,
"Claim" shall mean any private, public, governmental, regulatory or
administrative claim, action, suit, investigation and/or other proceeding
initiated by any entity not affiliated with Indemnitee or Company or their
predecessors in interest.
2. San Xxxxxxxx Valley Basin Actions
The parties hereto acknowledge and agree that there currently are
various actions (collectively, the "SFVB Actions") relating to contamination
located in the San Xxxxxxxx Valley Basin; including actions filed in or about
October 1993 by the United States of America and the State of California naming
Company and other defendants. Indemnitor acknowledges and agrees that the SFVB
Actions and all matters related thereto are fully covered within the scope of
Paragraph 1 hereof. Without otherwise limiting in any way Indemnitor's
obligations under Paragraph 1 hereof, Company agrees to pay those certain
existing and known settlement payments for SFVB Actions described in Exhibit "A"
hereto (collectively, the "Settlements") in an aggregate amount not to exceed
Six Hundred Fifty-Seven Thousand Dollars ($657,000), plus an additional One
Hundred Seventy-Four Thousand Five Hundred Dollars ($174,500). Should Company's
payment obligations in relation to the Settlements exceed said maximum amount,
Indemnitor shall be responsible for such excess. Except for Company's payment of
the Settlements, nothing in this Paragraph 2 is intended to nor shall be
interpreted as limiting any other obligations of Indemnitor in relation to the
Settlements, the SFVB Actions or otherwise, including the ongoing timely payment
of attorneys' fees and costs pursuant to Paragraph 3 below.
3. Thresholds
Indemnitee and/or Company may assert claims of any size under
Paragraph 1 hereof in relation to any matters known to have existed on or prior
to the Effective Date, including the SFVB Actions. Any other claims asserted by
Indemnitee or Company hereunder must be in an amount not less than Ten Thousand
Dollars ($10,000), but may be comprised of two or more claims which individually
are less than said amount. Notwithstanding the foregoing, to the extent any
claim asserted under Paragraph 1 hereof will require the retention and ongoing
use of attorneys and/or other professionals, then Indemnitor promptly shall
retain and timely shall pay the invoices of said attorneys and/or other
professionals regardless of whether any invoice thereof meets the minimum amount
required under this Paragraph 3.
4. Mechanics
a. If either of the indemnified parties hereunder receives
notice of any threatened or pending Claim which may give rise to a claim for
indemnification hereunder then the indemnified party promptly shall notify
Indemnitor thereof in writing; provided, however, that no delay on the part
of the indemnified party in so notifying shall relieve Indemnitor from
-2-
any obligation hereunder unless, and solely to the extent that, Indemnitor is
prejudiced by such delay.
b. Indemnitor shall have the right to chose counsel for and
manage the defense of any Claim so long as (I) Indemnitor notifies the
indemnified party or parties in writing, within fifteen (15) days after
Indemnitor's receipt of notice of the Claim, that Indemnitor fully will
indemnify the indemnified party pursuant to the terms hereof, and (ii)
Indemnitor manages defense of the Claim actively, diligently and in a reasonable
manner in light of the potential consequences thereof on the indemnified party.
c. So long as Indemnitor is conducting the defense of any Claim
in accordance with Paragraph 4.b. above, neither Indemnitor nor the indemnified
party shall consent to the entry of any judgment nor enter into any settlement
with respect to any Claim without the prior written consent of the other, not to
be unreasonably withheld or delayed.
d. In the event Indemnitor fails to satisfy any of the conditions
set forth in Paragraph 4.b. above, then the indemnified party may defend against
the subject Claim with counsel of its choice, and consent to the entry of any
judgment or enter into any settlement with respect to said Claim as it
reasonably may deem appropriate.
e. Indemnitor timely shall pay all obligations hereunder,
including attorneys' and other professionals' fees and costs, on an ongoing
basis consistent with Paragraph 3 above. To the extent Indemnitor fails timely
to pay any amounts required hereunder, either indemnified party, at its option,
shall have the right to pay the amounts on behalf of Indemnitor. In such event,
the amounts so advanced shall be obligations of Indemnitor hereunder to the
paying indemnified party, and shall bear interest at a rate equal to the lesser
of fifteen percent (15%) per annum or the highest rate allowed by law.
f. The indemnified parties reasonably will cooperate with
Indemnitor in the defense of any Claim and in connection with any settlement or
other action that might be required in relation thereto.
5. Insurance Coverage
Indemnitor shall have the first right to seek and collect
reimbursement under any applicable insurance in relation to any Claim. Said
right of Indemnitor shall include payment for amounts paid by Company pursuant
to Paragraph 2 hereof; provided, however, that (i) in the event Indemnitor
elects in writing not to pursue any such reimbursement or coverage and
Indemnitor shall not be prejudiced thereby, either of the indemnified parties
shall have the right to do so at its own expense, and to retain any proceeds
collected therefrom, and (ii) in the event (x) Indemnitor is fully reimbursed
for all losses incurred in connection with the SFVB Actions, or is fully
reimbursed except for an amount not in excess of $174,500, and (y) Company has
paid more than $657,000 in connection with the SFVB Actions, then Indemnitor
shall pay Company the lesser of (A) $174,500, (B) $174,500 minus the amount for
which Indemnitor was not reimbursed, or (C) the amount in excess of $657,000
paid by Company. Company and Indemnitor covenant and agree reasonably to assist
each other in relation to
3
collecting under any insurance policy, including providing any information the
other may have and assigning the subject claim if assignable and deemed
necessary or helpful.
6. Miscellaneous
6.1 NOTICES. All notices and other communications pertaining
hereto shall be in writing and shall be deemed to have been given when delivered
personally, or one day after being sent by facsimile machine, with printed
receipt of confirmation, or two days after being sent overnight courier, postage
prepaid, to the following addresses or to such other address or addresses as any
of the parties hereto may from to time in writing designate hereunder:
To Company:
00000 Xxxxxxx Xxx
Xxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxx, President
To Indemnitee:
c/o Unique Investment Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx, President
To Indemnitor:
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
with a copy to:
BTR Aerospace Group
000-0000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX Xxxxxx X0X 0X0
Facsimile: (000) 000-0000
Attention: Xxxxxx Hamaberg
6.2 TIME. Time is the essence in this Agreement with respect to
every provision in which time is a factor.
6.3 ENTIRE AGREEMENT. This Agreement contains the entire
agreement of the parties hereto pertaining to the subject matter hereof, fully
supersedes all prior
-4-
agreements, understandings or discussions between the parties hereto pertaining
to the subject matter hereof, and no change in, modification of or addition,
amendment or supplement hereto shall be valid unless set forth in writing signed
and dated by each of the parties hereto following the signing of this Agreement.
None of the parties hereto has executed this Agreement in reliance upon any
promise, representation, warranty, covenant or agreement not expressly set forth
in this Agreement.
6.4 SURVIVAL. The obligations of Indemnitor herein shall survive
and continue indefinitely.
6.5 SEPARATE OBLIGATION. Indemnitor acknowledges and agrees (I)
that this Agreement is wholly separate from the Purchase Agreement and (ii) that
Indemnitor cannot in any way use or assert any event or breach of any type under
or related to the Purchase Agreement as a defense to performing its obligations
hereunder, and if such a right does exist, that it hereby is wholly waived by
Indemnitor.
6.6 CONSIDERATION/ASSETS
6.6.1 CONSIDERATION. Indemnitor acknowledges and agrees that
it has received full and adequate consideration for its commitment and
performance hereunder regardless of the amount that Indemnitor ultimately may be
required to pay hereunder, and that under no circumstances can Indemnitor use or
assert inadequate consideration as a defense to preforming its obligations
hereunder.
6.6.2 ASSETS. Indemnitor covenants and agrees that it shall
not engage in or be the subject of any reorganization or transaction that
results in the disposition of a substantial portion of its assets not in the
ordinary course of business, unless Indemnitor shall, upon documentation
reasonably acceptable to the indemnified parties and their counsel, substitute
one of its affiliates as Indemnitor hereunder; provided, however, that such
substituted affiliate shall have a tangible net worth not less than that of
Indemnitor immediately prior to such reorganization or transaction.
6.7 APPLICABLE LAW. The existence, validity, construction and
operational effect of this Agreement, and the respective rights and obligations
of each of the parties hereto, shall be determined in accordance with the laws
of the State of California. In addition:
(a) INVALIDITY. In the event any provision of this
Agreement is found to be prohibited by law or is otherwise held invalid, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and shall not invalidate or otherwise render ineffective any or all
of the remaining provisions of this Agreement.
(b) EQUAL DRAFTING. This Agreement shall be construed as if
equally drafted by each of the parties hereto.
-5-
(c) NO PARTNERSHIP RELATIONSHIPS. Neither this Agreement
nor any other document shall be construed as creating a partnership relationship
between or among the parties hereto.
(d) NO IMPLIED WAIVERS. The failure of any of the parties
hereto to insist at any time upon the strict performance of any provision of
this Agreement or to act upon or exercise any right or remedy available or
possibly available to such party or parties, whether hereunder, under any other
document, at law or in equity, shall not be interpreted as a waiver or a
relinquishment of any such provision, right or remedy unless specifically
expressed in writing signed by such party or parties and no payment hereunder or
otherwise shall constitute any such writing.
(e) PARTIES. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any persons other than the parties hereto and their respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision hereof give any third persons any right of
subrogation or action over or against any party to this Agreement.
6.8 ATTORNEYS FEES\JURISDICTION. In the event of any dispute or
disagreement between the parties hereto concerning the subject matter hereof,
including the interpretation of any provision or term hereof, any and all
expenses, including attorneys' and accountants' fees and costs, reasonably
incurred by the prevailing party in relation to such dispute or disagreement
shall be paid by the nonprevailing party. Any such dispute shall be resolved in
Los Angeles, California regardless of the forum.
6.9 FURTHER ASSURANCES. Except as otherwise expressly provided
hereunder, each of the parties hereto, without further consideration, does
hereby covenant and agree to execute such documents, and to take such further
action, as may be necessary to further the purposes of this Agreement and to
otherwise act in good faith and deal fairly hereunder.
6.10 COUNTERPARTS. This Agreement may be executed in several
counterparts and all such executed counterparts together shall constitute one
(1) agreement binding on all of the parties.
6.11 HEADINGS AND GENDER. The section headings used in this
Agreement are intended solely for reference and shall not in any way or manner
amplify, limit, modify or otherwise be used in the interpretation of any of the
provisions hereof. The masculine, feminine and neuter gender, and the singular
or plural number, shall be deemed to include the others whenever the context so
indicates or requires. The term "knowledge" as it applies to a Corporation shall
mean the knowledge of the corporation's officers, directors and key employees.
The term "including" shall be deemed to mean "including, without limitation".
-6-
6.12 ASSIGNMENT. Indemnitee and Company shall have the right to
assign or otherwise transfer their right, title and interests under this
Agreement. Indemnitor shall not have the right to assign or otherwise transfer
its obligations under this Agreement without the prior written consent of
Indemnitee and Company, which consent shall not be unreasonably withheld or
delayed.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
BTR DUNLOP, INC.
a Delaware corporation
By: /s/ X. X. Xxxxxxxx
-------------------------------------
Name: X. X. Xxxxxxxx
------------------------------
Title: President
---------------------------
HAWKER PACIFIC, INC.
a California corporation
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------
Xxxxx X. Xxxxxx
President
AQHAWK, INC.
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------
Xxxxxx X. Xxxxxx
President
-7-
TRADEMARK LICENSE AGREEMENT
This Agreement is dated as of November 27, 1996 between BTR, Inc., a
Delaware corporation ("Licensor"), Aqhawk, Inc., a California corporation
("Aqhawk"), and Hawker Pacific, Inc., a California corporation ("the Company").
WHEREAS, Licensor is the owner, or is an affiliate of the owner, of the
trademark and tradename set forth on SCHEDULE A, as well as various common law
rights in those marks (hereinafter "the Marks"); and
WHEREAS, Licensor and Aqhawk are parties to an Agreement of Purchase and
Sale of Stock of even date herewith (the "Stock Purchase Agreement") whereby
Licensor sold, transferred and assigned to Licensee, and Licensee purchased and
acquired from Licensor all of the issued and outstanding common stock of the
Company; and.
WHEREAS, in accordance with the Stock Purchase Agreement, Licensor desires
to grant to Aqhawk and the Company (collectively the "Licensee"), and Licensee
desires to acquire from Licensor, the sole right and license to use the Marks in
connection with the sale of the products and services identified in SCHEDULE B
hereto (hereinafter the "Covered Products").
NOW, THEREFORE, and in consideration of the mutual promises and covenants
hereinafter contained, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, Licensor and Licensee hereby
agree as follows:
X. XXXXX OF LICENSE
A. Licensor grants to Licensee, subject to the limitations set forth in
this Agreement, the sole and exclusive, royalty free right and license to use
the Marks in connection with the Covered Products and the non-exclusive right
and license to use the Marks in connection with all other operations of Company.
Licensor and its affiliates retain the non-exclusive right to use the Marks for
all other purposes and to the extent being used on the date hereof other than by
the Company in connection with the Covered Products.
II. USE OF THE XXXX
X. Licensee shall use the Hawker name only in conjunction with the word
Pacific (i.e. "Hawker Pacific") and will seek on that basis to distinguish the
products and services sold by Licensee from products and services sold by
Licensor's affiliate Hawker Pacific PTY Limited.
B. Licensee acknowledges that Licensor or its affiliates own the Marks,
agrees that it will do nothing inconsistent with such ownership and agrees to
reasonably assist Licensor in recording this Agreement with appropriate
government authorities. Licensee agrees that nothing in this License shall give
Licensee any right, title or interest in the Marks other than the right to use
the Marks in accordance with this License and Licensee agrees that it will not
attack the title of Licensor to the Marks or attack the validity of this
License.
C. Licensee shall comply with all applicable laws and regulations and
obtain all appropriate government approvals pertaining to the sale, distribution
and advertising of the Covered Products. Licensee agrees to cooperate with
Licensor in assuring such goods shall conform to such standards.
III. DURATION AND GEOGRAPHIC SCOPE OF LICENSE
A. This License shall be effective as of the date first written above,
(the "Commencement Date"), and shall remain in effect until the date Licensee is
terminated in accordance with this Section III.
B. Should Licensee ever discontinue the use of any Xxxx with the intent
not to resume such use, this License may be terminated by Licensor upon ninety
(90) days written notice with respect to such Xxxx, if Licensee shall not have
resumed use of the Xxxx within such ninety day period. Such intent not to resume
use shall be presumed if the Xxxx is not used by Licensee for a period of at
least twelve (12) months.
C. Licensor shall have the right to terminate this License with respect
to any Xxxx upon sixty days written notice to Licensee in the event of any
breach of any provisions of this Agreement with respect to such Xxxx by
Licensee, if such breach shall be continuing at the end of such sixty day
period.
D. Upon the termination of this Agreement with respect to a Xxxx or the
termination of this Agreement, Licensee agrees to immediately discontinue all
use of such Xxxx or Marks, as the case may be, provided however, that in the
event of a termination other than due to a default by Licensee, Licensee may
continue to use the Marks on existing inventory and, to the extent already
marked, on work in progress.
E. The geographic scope of the license granted herein shall be worldwide.
IV. INDEMNIFICATION AND PROTECTION OF THE XXXX
X. At the request of Licensee, Licensor shall apply to register any
unregistered marks in the name of Licensor for the Covered Products. Licensor
shall use reasonable commercial efforts to obtain registrations thereof, and
shall maintain such registrations in full force and effect. Licensee shall
cooperate with Licensor to obtain and maintain said registrations. The cost of
obtaining and maintaining said registrations made at Licensee's
2
request shall be borne by Licensee. Licensor shall only be required to make such
applications if Marks, when used with respect to the Covered Products, are not
adequately protected, as reasonably determined by Licensor, by existing
registrations of Marks. In no event shall Licensee attempt to register any Xxxx
as used in conjunction with its own name.
B. Licensee shall promptly notify Licensor of any and all infringements,
imitations, simulations or other illegal use or misuse of the Marks which come
to Licensee's attention. As sole owner of the Marks, Licensor shall determine
whether to take any action in the courts, administrative agencies or otherwise
to prevent the infringement, imitation, simulation or other illegal use or
misuse of the Marks; provided that if Licensor elects not to take such action
with respect to the Marks, Licensee shall have the right to take such action at
its expense. In this event, Licensor shall cooperate in such action with
Licensee, at Licensee's expense, and Licensee shall be entitled to any money
damages awarded in connection therewith or, to the extent practicable, the
benefit of any other remedy awarded in connection therewith.
C. Licensee shall, upon request, reasonably assist Licensor in connection
with any matter pertaining to the protection of Marks licensed to Licensee
whether in the courts, administrative or quasi-judicial agencies, or otherwise.
V. REPRESENTATIONS OF LICENSOR
Licensor represents as follows:
A. To its actual knowledge, the Marks do not infringe any rights owned or
possessed by any third party nor, to its actual knowledge, is any third party
infringing the rights of Licensor with respect to the Marks.
B. It has not previously granted rights in the Marks inconsistent with
this Agreement.
C. It has the right and authority to license the use of the Marks as set
forth herein.
VI. AMENDMENT OF AGREEMENT
No Modifications, changes, or additions to this Agreement shall be
effective except by Written amendment executed by both parties hereto.
VII. FORCE MAJEURE
Neither party hereto shall be liable to perform any duty or obligation that
either may have under this Agreement where such failure has resulted from any
act of God, fire, labor dispute or any other cause outside the reasonable
control of the party who had the duty to perform.
3
VIII. SEVERABILITY
The invalidity of any provision of this Agreement shall not affect the
enforceability of any other provisions of this Agreement. The invalidity of any
provision of this Agreement shall merely render such invalid provision
ineffective.
IX JOINT AND SEVERAL LIABILITY
The Company and Aqhawk shall be jointly and severally liable for the
obligations of Licensee hereunder.
X CERTAIN TRANSITIONAL AND OTHER RIGHTS.
Licensor recognizes that certain inventory and labels and containers
therefor, as well as promotional material relating to such inventory owned by
the Company on the date hereof will bear the trademarks "BTR" and "Hawker
Siddeley" and their respective logos, which are not being licensed to the
Licensee after the date hereof (the "Excluded Marks"). Licensor agrees that
Licensee will be permitted to use such inventory and such labels, containers and
promotional material for a reasonable period not to exceed eighteen (l8) months
after the Closing. Except for the limited right to use the Excluded Marks as
provided herein, Licensee shall have no right to use such marks. Licensee shall
have no rights whatsoever to use the trademark and tradename Dunlop, the Dunlop
logo or any derivations thereof except in connection with and as expressly
provided pursuant to the Repair, Overhaul, Exchange, Warranty and Distribution
Agreement between Dunlop Limited, Aviation Division and Hawker Pacific, Inc.
dated November 1, 1996 or otherwise agreed to in writing by the appropriate
Dunlop entity.
XI. Attorneys Fees
In the event of any dispute or disagreement between the parties hereto
concerning the subject matter hereof, including the interpretation of any
provision or term hereof and the determination of whether a dispute exists
hereunder, any and all expenses, including attorneys' and accountants' fee and
costs, reasonably incurred by the prevailing party in relation to such dispute
or disagreement shall be paid by the nonprevailing party.
XII. Indemnity
Licensor shall indemnify, defend and hold harmless Licensee from, against
and in relation to any and all claims, demands, actions, causes of action,
losses of any type or nature, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies, including interest, penalties and
reasonable attorneys', accountants' and other professionals' fees and costs,
(collectively, the "Losses") that Licensee may suffer or incur in relation to
any breach of Licensor hereunder.
4
SCHEDULE A
----------
1. Hawker Pacific
2.
[LOGO]
HAWKER PACIFIC INC.
6
SCHEDULE B
----------
Repair and overhaul of aircraft landing gear.
7
IN WITNESS WHEREOF, the parties have executed this agreement as of the date
first above written.
LICENSOR: LICENSEE:
BTR, INC. AQHAWK, INC.
By: [ILLEGIBLE] By: /s/ XXXXXX XXXXXX
---------------------- --------------------------
Its: President Its: President
---------------------- --------------------------
5
AGREEMENT NOT TO COMPETE
THIS AGREEMENT NOT TO COMPETE (the "Agreement") is made and effective
as of the 27th day of November, 1996 by and between BTR, INC., a Delaware
corporation ("Seller"), BTR DUNLOP, INC., a Delaware corporation ("BTR
Dunlop"), on behalf of AQHAWK, INC., a California corporation ("Buyer").
RECITALS
A. Pursuant to the terms of that certain Agreement of Purchase and
Sale of Stock (the "Stock Agreement") of even date herewith by and among Seller,
BTR Dunlop, Buyer, and Hawker Pacific, Inc., a California corporation
("Company"), Buyer is buying from Seller one hundred percent of the issued and
outstanding stock of Company. All capitalized terms used herein shall be defined
as set forth in the Stock Agreement unless specifically defined herein.
B. It is a condition to the consummation, and a material part, of
the transactions set forth in the Stock Agreement that Seller and BTR Dunlop
(collectively, "BTR") enter into this Agreement and be bound by its terms.
C. BTR desires to accept such consideration and to execute and be
bound by the terms hereof.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged and agreed to, BTR and Buyer hereby
agree as follows:
1. Covenant Not To Compete.
BTR hereby covenants and agrees that neither entity nor any affiliate,
parent, subsidiary thereof (collectively, the "BTR Parties") shall directly or
indirectly, acting alone, as a member of a partnership or other business entity
or as a holder of any security or any class of securities issued by a
corporation or other business entity or as a consultant, agent or representative
of any corporation, partnership or any other business entity:
a. Engage now or in the future in any business, trade or any
other enterprise substantially similar to, or directly or indirectly in
competition with Company's repair and overhaul of aircraft landing gear business
(the "Core Business") as conducted on the date hereof; or extend or assist in
arranging credit to establish or conduct any such business or permit its or
their name(s), reputation or affiliations to be used in connection with any such
business; or
b. Request, induce or attempt to influence any current, future
or prospective customer or supplier of Company regarding its Core Business to
limit, curtail, cancel or otherwise affect any of its business with Company.
c. Notwithstanding the foregoing, the BTR Parties shall not be
in violation of this Agreement solely by reason of investing in stock, bonds or
other securities of any business that otherwise would be a violation hereof (but
without otherwise participating in such company) so long as (i) such stock bonds
or other securities are listed on any national securities exchange or have been
registered under Section 12(g) of the Securities Exchange Act of 1934, and (ii)
such investment does not exceed, in the case of any class of the capital stock
of any one issuer, 5% of the issued and outstanding shares of such capital
stock, or, in the case of bonds or other securities, 5% of the aggregate
principal amount thereof issued and outstanding. In addition, any BTR Party may
acquire an interest in any entity which carries on the Core Business provided
that (1) the Core Business is not a principal business of the entity acquired,
and (2) the applicable BTR Party sells or disposes of such Core Business as soon
as reasonably practicable (having regard to relevant market factors and the
interests of the group of companies of which BTR is a part), but in any event
within one (1) year after its acquisition. Nothing herein shall require BTR to
divest an existing BTR Party.
2. Term
The term of this Agreement shall be three (3) years commencing on the
date hereof; provided, however, that said term shall be extended by any period
of time during which a breach exists hereunder.
3. Remedy For Breach
BTR acknowledges and agrees that Paragraphs l.a and b and hereof are
separate and distinct commitments independent of each other; that said
Paragraphs are reasonable and necessary to protect the legitimate interests of
Buyer; and that Buyer has no adequate remedy at law for any breach or threatened
or attempted breach by BTR thereof. Accordingly, BTR agrees that Buyer may, in
addition to any and all other remedies that may be available to Buyer hereunder
or at law, commence proceedings in equity for an injunction temporarily or
permanently enjoining any BTR Party from breaching or threatening or attempting
any breach hereunder, and to command specific performance by said breaching
party. For purposes of any such proceeding in equity, it shall be presumed and
it is hereby agreed by the parties hereto that the remedies at law available to
Buyer would be inadequate, and that Buyer would suffer immediate and irreparable
harm as a result of the violation of any provision hereof.
4. Legal Fees.
In the event of any dispute or disagreement between the parties hereto
regarding or arising in relation to this Agreement or the enforcement hereof,
the prevailing party or parties
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in any such dispute or disagreement, including any proceeding in equity pursuant
to Paragraph 2 hereof, shall be entitled to recover from the nonprevailing party
or parties, in addition to any other award to which such party or parties may be
entitled, all fees, costs and expenses (including all attorney fees and costs)
incurred by the prevailing party or parties in connection with such dispute or
proceeding and any appeals therefrom.
5. Consent to Partial Enforcement; Severability
The Parties hereto intend that the provisions of Paragraph 1 hereof
shall be enforced to the fullest extent permitted in each jurisdiction in which
enforcement is sought. If any of the provisions set forth in Paragraph 1 hereof
are deemed by any court, or other authority with jurisdiction, to be invalid,
unenforceable or overly broad, said court or other authority may reduce, amend
or reform such provisions to a scope which it deems reasonable under the
circumstances. If any one or more provisions hereof are held to be invalid or
unenforceable, the validity and enforceability of the remaining provisions and
portions hereof shall not be affected thereby. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of California,
exclusive of the laws concerning conflicts of laws.
6. Independent of Other Agreements
No course of dealing among Buyer and any BTR Party, and no delay by
Buyer in exercising any right, power or remedy hereunder, in equity or at law,
shall constitute a waiver of, or otherwise prejudice, any such right, power or
remedy of Buyer.
7. Knowledge; Advise of Counsel
BTR represents and warrants to Buyer that each has read and
understands each of the provisions of this Agreement, and that each has sought
and obtained legal counsel before agreeing to be bound by the terms hereof. BTR
acknowledges and agrees that Buyer would not have entered into the Stock
Agreement or paid the consideration called for therein or herein but for the
execution, delivery and performance by BTR of this Agreement.
8. Adequate Consideration
BTR acknowledges and agrees that it has received full and adequate
consideration for its commitment and performance hereunder, and that under no
circumstances can Indemnitor use or assert inadequate consideration as a defense
to preforming its obligations hereunder.
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9. Miscellaneous.
This Agreement constitutes the entire Agreement and supersedes all
prior and contemporaneous agreements and understandings, written and oral, among
the parties hereto regarding the subject matter hereof. This Agreement is not
intended to confer upon any person or entity any rights or remedies hereunder or
with respect to the subject matter hereof except as expressly set forth herein
and shall inure to the benefit of and be enforceable by the successors, assigns
and designees of Buyer. In the event Buyer merges into and becomes part of
Company, all benefits of Buyer hereunder shall be fully assigned to and
transferred to Company.
IN WITNESS WHEREOF, this Agreement is executed by the parties hereto
as of the date first above written.
BTR DUNLOP, INC.
a Delaware corporation
By:
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Name:
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Title:
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BTR, INC.
a Delaware corporation
By:
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Name:
-----------------------------
Title:
-----------------------------
AQHAWK, INC.
a California corporation
By:
------------------------------------------
Xxxxxx X. Xxxxxx
President
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PROMISSORY NOTE
DATED AS OF: NOVEMBER 27,1996
PRINCIPAL AMOUNT: $19,178,841.00
FOR VALUE RECEIVED, the undersigned, AQHAWK, INC., a California
corporation ("Maker"), promises to pay to the order of HAWKER PACIFIC, INC., a
California corporation ("Lender") the Principal Amount set forth above together
with interest accrued thereon from the date hereof, until this Promissory Note.
1. MATURITY. This Promissory Note is payable on demand by the holder, and
in any event on December 31, 2003.
2. INTEREST. Maker promises to pay interest on the unpaid Principal Amount
of this Promissory Note from the date first written above, until all amounts due
hereunder are paid in full, at the lower of the following (such rate being the
"Interest Rate"):
(i) the blended rate of interest paid or payable by Lender to Bank of
America National Trust and Savings Association pursuant to the Business
Loan Agreement referred to below; or
(ii) the maximum rate of interest permitted by applicable law.
It is the intention of the Maker that the obligations hereunder
strictly comply with all applicable usury laws and, accordingly, any amount of
interest paid hereunder which is in excess of that permitted by applicable laws
shall be applied first to principal and, if all principal has been repaid,
remitted to the Maker upon demand.
Reference is made to the Business Loan Agreement of even date herewith
between Lender and Bank of America National Trust and Savings Association. This
Promissory Note is the Intercompany Note referred to therein.
3. DEFAULT INTEREST. If any amount payable under this Promissory Note is
not paid in full when due then, subject to the limitation set forth in Section
2, Maker agrees to pay interest on demand on the unpaid amount at the per annum
interest rate equal to the Interest Rate plus 3%, from the date such amount was
due until payment of such amount in full.
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4. PREPAYMENT. Maker may, at its option and without premium or penalty,
prepay the Principal Amount, either in whole or in part, in such amount as it
shall determine, together with interest on the amount prepaid.
5. METHOD OF PAYMENT.
a. All sums payable to the Lender under this Promissory Note shall be
payable in United States Dollars in same day funds not later than 10:00 a.m.
Los Angeles time on the day in question to the account of the Lender as
specified by the Lender to Maker.
b. All payments by Maker hereunder shall be made without set-off or
counterclaim and free and clear of and without deduction for any and all
taxes, levies, imposts, deductions or withholdings whatsoever.
6. COSTS AND EXPENSES. Maker agrees to pay on demand all losses, costs and
expenses (including counsel fees, disbursements and expenses) incurred in
connection with the enforcement of this Promissory Note, including losses, costs
and expenses sustained by the Lender as a result of a default hereunder.
7. GOVERNING LAW. This Promissory Note shall be governed by and interpreted
in accordance with the laws of the State of California
AQHAWK, INC.,
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, President
PAY TO THE ORDER OF
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HAWKER PACIFIC, INC.
By: /s/ Xxxxxx X. Xxxxxx
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Title: President/CEO
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