EXECUTION COPY
Exhibit 10.49
________________________________________________________________________________
SHAREHOLDERS RIGHTS AND VOTING AGREEMENT
between
HAWKER PACIFIC AEROSPACE
As the Company
THE SHAREHOLDERS LISTED ON EXHIBIT A
As Shareholders
and
LUFTHANSA TECHNIK AG
As Investor
DATED SEPTEMBER 20, 2000
________________________________________________________________________________
HAWKER PACIFIC AEROSPACE
SHAREHOLDERS RIGHTS AND VOTING AGREEMENT
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This Shareholders Rights and Voting Agreement (the "Agreement") is made as
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of the 20th day of September 2000, by and among Hawker Pacific Aerospace, a
California corporation (the "Company"), the individuals listed on Exhibit A to
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this Agreement (each a "Shareholder" and collectively the "Shareholders"), and
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Lufthansa Technik AG, a company organized under the German law (the "Investor").
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RECITALS
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WHEREAS, the certain shareholders of the Company set forth on Exhibit B
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(collectively the "Sellers") and the Investor, have entered into a Stock
Purchase Agreement (the "Purchase Agreement") dated as of September 20, 2000
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pursuant to which the Sellers agreed to sell to such Investor and such Investor
has agreed to purchase from the Sellers' shares of the Company's common stock,
par value $0.01 (the "Common Stock") and such transaction has been consummated
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as of the date hereof;
WHEREAS, the Company and the Investor, have entered into a Loan Agreement
(the "Loan Agreement") of even date herewith pursuant to which the Investor has
agreed to loan to the Company $9,300,000 and the Company has agreed to issue to
the Investor a warrant as of the date hereof in an amount equal to the sum of
2,500,000 shares of Common Stock, effective and exercisable as of the date of,
and subject to, shareholders approval (the "Warrant");
WHEREAS, a condition to the closing of the transactions contemplated by the
Purchase Agreement and the Loan Agreement is that the Company, the Shareholders
and the Investor enter into this Agreement for the purpose of setting forth the
terms and conditions pursuant to which the Investor and the Shareholders shall
vote their shares of the Company's voting stock in favor of certain designees to
the Company's Board of Directors and other matters as set forth herein;
WHEREAS, as of the date hereof and effective upon the Closing of the
Purchase Agreement, Investor became the beneficial owner of record of the number
shares as set forth on Exhibit C;
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WHEREAS, each Shareholder is a record holder and the beneficial owner of,
and has the right to vote and dispose of the number of shares of Common Stock
which is set forth opposite such shareholders name on Exhibit A, and
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WHEREAS, the Company, the Investor and the Shareholders each desire to
facilitate the voting arrangements set forth in this Agreement, the sale and
purchase of shares of Common Stock pursuant to the Purchase Agreement, and
extension of credit under the Loan Agreement by agreeing to the terms and
conditions set forth herein which is an inducement and condition to
Investor consummating the transactions contemplated in the Purchase Agreement
and Loan Agreement.
NOW, THEREFORE, in consideration of the covenants and agreements
hereinafter contained, and intending to be legally bound, the parties hereby
agree as follows:
1. Voting Power.
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1.1. Number of Votes. All shares of the Company's capital stock entitled to
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vote beneficially owned by the Shareholders, now or hereafter
acquired, including any shares represented by options, warrants or
convertible securities, shall be bound by the terms of this Agreement
and shall be given the voting weight attributed to each such share in
accordance with its respective terms.
1.2. Means of Voting. Subject to the Article 8, the voting rights shall be
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exercised and meetings shall be called and held in accordance with the
Company's articles of incorporation, by-laws, or other agreement,
instrument or documents, individually or collectively, pursuant to
which the Company is established or organized, and that govern the
internal affairs of the Company or such documents as they may be
amended from time to time (the "Charter Documents").
2. Board Representation.
2.1. Board Seat.
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2.1.1. The Company hereby agrees to recommend to the Board of
Directors to take such actions as are necessary, and each of
the Shareholders and the Investor agrees to vote his, her or
its shares of the Company's Common Stock, (and any other
shares of the capital stock of the Company over which he,
she or it exercises voting control) and take such other
actions as are necessary, so as to elect and thereafter
continue in office as directors of the Company such
individuals who may be nominated by the Investor and the
Investor shall have the exclusive right to make three (3)
nominations of directorships and each director so designated
shall sit for an initial term equal to the remaining term of
the directors who resigned from the Board pursuant to
Section 8(e) of the Purchase Agreement and Investor's
designees shall sit until the next annual meeting of the
shareholders of the Company, except as provided in Section
2.1.2.
2.1.2. The Company hereby agrees to recommend to the Board of
Directors to take such actions as are necessary, and each of
the Shareholders and the Investor agrees to vote his, her or
its shares of the Company's Common Stock, (and any other
shares of the capital stock of the Company over which he,
she or it exercises voting control) and take such other
actions as are necessary, at a meeting of the shareholders
of the Company to occur within 120 days of the date hereof
(the "Special Meeting"):
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2.1.2.1. to elect and establish a board which, pursuant to Article IV
of the Articles of Incorporation of the Company, shall be
classified into two classes. Upon the increase of the board
to 9 directors pursuant to Section 2.4.1, Class I shall be
comprised of 5 directors and Class II shall be comprised of
4 directors. At the Special Meeting, the directors of Class
I shall be elected to hold office for a term expiring at the
next succeeding annual meeting of the shareholders following
the Special Meeting and the directors of Class II shall be
elected to hold office for a term expiring at the second
succeeding annual meeting of the shareholders following the
Special Meeting. At each subsequent annual meeting of the
shareholders of the Company, the successors to the class of
directors whose term shall then expire shall be elected to
hold office for a term expiring at the second succeeding
annual meeting of the shareholders of the Company.
2.1.2.2. (a) two of the three directors nominated by Investor and
elected pursuant to Section 2.1.1 shall be elected and serve
in Class II and the remaining one director nominated by the
Investor and elected pursuant to Section 2.1.1 shall be
elected and serve in Class I, (b) the two directors
nominated by Investor pursuant to Section 2.4.1 and elected
upon the increase of the board size to 9, shall each be
elected and serve in Class II, and (c) the remaining
directors not nominated by the Investor shall be elected and
serve in Class I.
2.1.2.3. to ratify the actions taken by the Board of the Company
since the 1999 annual meeting of the shareholders of the
Company.
2.1.3. The Company hereby agrees to recommend to the Board of Directors to
take such actions as are necessary, and each of the Shareholders and
the Investor agrees to vote his, her or its shares of the Company's
Common Stock, (and any other shares of the capital stock of the
Company over which he, she or it exercises voting control) and take
such other actions as are necessary, at the next annual meeting of the
shareholders of the Company so that (a) those directors nominated by
the Investor and elected to Class I at the Special Meeting or such
other individuals nominated by Investor shall be nominated for
election at the next annual meeting of the shareholders of the Company
for a two year term expiring at the 2003 annual meeting of the
shareholders of the Company and (b) those directors nominated by the
Investor and elected to Class II at the Special Meeting or such other
individuals nominated by Investor shall be confirmed at the next
annual meeting of the shareholders of the Company for their then
current term expiring at the 2002 annual meeting of the shareholders
of the Company.
2.1.4. If, at the end of the initial term of the directors elected pursuant
to Section 2.1.1 above, the Investor beneficially owns (which
ownership shall include
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shares issuable under the Warrant) at least 40% of the total
issued and outstanding shares of Common Stock, such
individuals or such other individuals as Investor designates
shall then be nominated for a two-year term and the Company
shall recommend such nomination to the Board of Directors;
provided; however, if the Company fails to make such
recommendation Investor, as a shareholder, may nominate its
designees in accordance with the Charter Documents.
2.2. Removal and Substitution of Board Members. The Company hereby agrees
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to recommend to the Board of Directors to take such actions as are
necessary, and each of the Shareholders and the Investor agrees to
vote his, her or its shares of Common Stock (and any other shares of
the capital stock of the Company over which he, she or it exercises
voting control) and take such other actions as are necessary, for the
removal of any director upon the request of the party or parties
designating such director and for the election to the Board of
Directors of a substitute designated by such party.
2.3. Vacancies on Board of Directors. The Company hereby agrees to
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recommend to the Board of Directors take such actions as are
necessary, and each of the Shareholders and the Investor agrees to
vote his, her or its shares of Common Stock (and any other shares of
the capital stock of the Company over which he, she or it exercises
voting control) and take such other actions as are necessary, in such
manner as shall be necessary or appropriate to ensure that any vacancy
on the Board of Directors of the Company (occurring for any reason)
shall be filled by the election to the Board of Directors of a
replacement designated by the party or parties who designated the
director whose failure to continue to serve causes the applicable
vacancy.
2.4. Size of the Board of Directors.
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2.4.1. The Company shall recommend to the Board of Directors to
take such actions as are necessary so as to (i) increase the
number of the Board of Directors from seven (7) to nine (9)
directors in accordance with the Charter Documents, (ii)
elect and thereafter continue in office as directors of the
Company such individuals who may be nominated by the
Investor and the Investor shall have the exclusive right to
make two (2) nominations of directorships for the newly
created Board seats and each director so designated shall
sit in Class II which shall be established at the Special
Meeting and shall sit for a term expiring at the second
succeeding annual meeting of the shareholders of the Company
held following the Special Meeting. The Company shall use
its best efforts to ensure that within 120 days of the date
hereof all such actions are taken and that any actions are
proposed to the shareholders of the Company for their
approval, if required, by the expiration of such 120 day
period.
2.4.2. Immediately following modification to the Board size
pursuant to Section 2.4.1, the Company shall recommend to
the Board of Directors to propose
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an amendment to the Company Charter Documents such that the
Board size cannot thereafter be modified except by the vote
of at least 60% of the then outstanding shares Common Stock;
provided however, that the required percentage vote shall be
increased appropriately to counteract any future option
exercises, stock issuances, stock dividends or other events
that would have a dilutive effect on the shares held by
Investor at such time.
2.4.3. If, at the end of the initial term of the directors elected
pursuant to Section 2.4.1 above, the Lender beneficially
owns (which ownership shall include shares issuable under
the Warrant) at least 40% of the total issued and
outstanding shares of Common Stock, such individuals or such
other individuals as Investor designates shall then be
nominated for a two-year term and the Company shall
recommend such nomination to the Board of Directors;
provided; however, if the Company fails to make such
recommendation Investor, as a shareholder, may nominate its
designees in accordance with the Charter Documents.
2.5. Information. The Company acknowledges that the Investor will likely
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have, from time to time, information that may be of interest to the
Company ("Information") regarding a wide variety of matters including,
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by way of example only, (1) the Investor's technologies, plans and
services, and plans and strategies relating thereto; (2) current and
future investments the Investor has made, may make, may consider or
may become aware of with respect to other companies and other
technologies, products and services, including, without limitation,
technologies, products and services that may be competitive with the
Company's; and (3) developments with respect to the technologies,
products and services, and plans and strategies relating thereto, of
other companies, including, without limitation, companies that may be
competitive with the Company. The Company recognizes that a portion of
such Information may be of interest to the Company. Such Information
may or may not be known by the member of the Board of Directors
appointed by the Investor (the "Board Representative"). The Company,
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as a material part of the consideration for this Agreement, agrees
that the Investor and/or Board Representative shall have no duty to
disclose any Information, or to otherwise take advantage of any
opportunity that may be of interest to the Company if it were aware of
such Information, and hereby waives, to the extent permitted by law,
any claim based on the corporate opportunity doctrine or otherwise
that could limit the Investor's ability to pursue opportunities based
on such Information or that would require the Investor or its Board
Representative to disclose any such Information to the Company or
offer any opportunity relating thereto to the Company.
3. Restrictions on Transfer
3.1. Right of First Refusal.
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In addition to the other limitations and restrictions set forth in this
Agreement, no Shareholder shall transfer all or any portion of its Common Stock
(the "Offered Shares") unless such Shareholder (the "Offeror") first offers to
sell the Offered Shares pursuant to the terms of this Section 3.1.
3.1.1. Limitation on Transfers. Subject to Section 3.1.2, no
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Transfer may be made unless the Offeror has received a bona
fide written or oral, evidenced by the terms set forth in
the Firm Offer, offer (the "Purchase Offer") from a Person
(the "Purchaser") to purchase the Offered Shares for a
purchase price (the "Offer Price") denominated and payable
in United States dollars at closing or according to
specified terms, with or without interest, which offer shall
be in writing signed by the Purchaser and shall be
irrevocable for a period ending no sooner than the Business
Day following the end of the Offer Period (as defined
below).
3.1.2. Offer by Offeror. In accordance with Section 3.1.3, Offeror
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may at any time, in the absence of a Purchase Offer, present
an independent offer to Investor to purchase the Offered
Shares for a purchase price equal to Market Price (the
"Independent Price").
3.1.3. Offer Notice. Prior to making any Transfer that is subject
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to the terms of this Section 3.1, the Offeror shall give to
the Investor written notice (the "Offer Notice") which shall
include a copy of the Purchase Offer, if pursuant to Section
3.1.1, and an offer (the "Firm Offer"), substantially in the
form attached hereto as Exhibit E to sell the Offered Shares
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to Investor (the "Offeree") for the either (i) the Offer
Price, (ii) Market Price or (iii) the Independent Price,
payable according to the same terms as (or more favorable
terms than) those contained in the Purchase Offer or the
offer is made pursuant to Section 3.1.2 then in accordance
with commercially reasonable terms set forth in the Firm
Offer; provided that Offeror may, in its sole discretion,
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substitute the Market Price for the Offer Price in the Firm
Offer and, in the case of an offer pursuant to Section
3.1.2, the Independent Price shall equal the Market Price.
3.1.4. Offer Period. The Firm Offer shall be irrevocable for a
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period (the "Offer Period") ending at 11:59 p.m., Los
Angeles, California time, on the 3rd Business Day following
the date of delivery of the Offer Notice.
3.1.5. Acceptance of First Offer. At any time during the Offer
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Period, the Offeree may accept the Firm Offer as to all of
the Offered Shares, by giving written notice of such
acceptance to the Offeror, which notice shall indicate the
maximum number of Common Stock that the Offeree is willing
to purchase. If the Offeree does not accept the Firm Offer
as to all of the Offered Shares during the Offer Period, the
Firm Offer shall be deemed to be rejected in its entirety.
With respect to Offered Shares offered pursuant to Section
3.1.1, if after the Offeree rejects the Firm Offer, the
Offeror transfers the Offered Shares to Purchaser, the
Offered
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Shares so transferred shall remain subject to this Agreement
as stated in the legend in Section 9 hereof.
3.1.6. Closing of Purchase Pursuant to Firm Offer. In the event
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that the Firm Offer is accepted, the closing of the sale of
the Offered Shares shall take place within 5 Business Days
after the Firm Offer is accepted or, if later, the date of
closing set forth in the Purchase Offer. The Offeror and the
Offeree shall execute such documents and instruments as may
be necessary or appropriate to effect the sale of the
Offered Shares pursuant to the terms of the Firm Offer and
this Section 3.1.
3.1.7. "Market Price" shall mean the average closing price of the
prior ten (10) consecutive trading days of the Company
Common Stock.
3.2. Future Issuance and Preemptive Rights
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From the Effective Date until such time as the Investor (i) obtains at
least 51% of the seats of the Company's Board of Directors and (ii) owns
beneficially at least 51% of the total issued and outstanding shares of the
capital stock of the Company on a Fully Diluted Basis, the Investor shall be
entitled to the rights in this Section 3.2; provided however, if at any time
after clauses (i) and (ii) have become effective, Investor (x) does not hold 51%
of the seats of the Company's Board of Directors and (y) owns beneficially more
than 40% but less than 51% of the total issued and outstanding capital stock of
the Company on a Fully Diluted Basis, then the Investor shall be entitled to the
rights set forth in this Section 3.2.
3.2.1. Offering Notice. If the Company wishes to issue to any
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Person any Common Stock or any other securities convertible
into or exchangeable for membership interests of the Company
(collectively, "New Securities") to any Person (the "Subject
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Purchaser"), then the Company shall offer the Proportionate
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Percentage (as hereinafter defined) of such New Securities
simultaneously to the Investor by sending written notice
(the "New Issuance Notice") to the Investor, which New
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Issuance Notice shall state (a) the number of New Securities
proposed to be issued, (b) the proposed purchase price per
security of the New Securities (the "Proposed Price") and
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(c) and the location of the closing of the sale of the New
Securities. Upon delivery of the New Issuance Notice, such
offer shall be irrevocable unless and until the rights
provided for in Section 3.2.2 shall have been waived or
shall have expired.
3.2.2. Preemptive Rights; Exercise.
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3.2.2.1. For a period of 15 Business Days after the giving
of the New Issuance Notice pursuant to Section
3.2.1, the Investor shall have the right to
purchase its Proportionate Percentage (as
hereinafter defined) of the New Securities at a
purchase price equal to the Proposed Price and
upon the same terms and conditions set forth in
the New Issuance Notice. Investor shall have the
right to
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purchase that percentage of the New Securities
determined by dividing (a) the total number of
shares then owned by Investor on an as-if
converted to Common Stock basis, by (b) the total
number of shares then outstanding on an as-if
converted to Common Stock basis (the
"Proportionate Percentage").
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3.2.2.2. The right of Investor to purchase the New
Securities under subsection 3.2.2 above shall be
exercisable by delivering written notice of the
exercise thereof, prior to the expiration of the
15 Business Day period referred to in subsection
(i) above, to the Company, which notice shall
state the amount of New Securities that Investor
elects to purchase pursuant to Section 3.2. The
failure of Investor to respond within such 15
Business Day period shall be deemed to be a waiver
of Investor's rights under Section 3.2.2.2;
provided that each Investor may waive its rights
under Section 3.2.2.2 prior to the expiration of
such 15 Business Day period by giving written
notice to the Company.
3.2.3. Closing. The closing of the purchase of New Securities
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subscribed for by the Investor under Section 3.2.2 shall be
held at the place designated by the Company in the New
Issuance Notice at 10:00 a.m., local time, on (a) the date
of the closing of the sale to the Subject Purchaser or (b)
at such other time and place as the parties to the
transaction may agree. At such closing, the Company shall
deliver certificates representing the New Securities, and
such New Securities shall be issued free and clear of all
liens and the Company shall so represent and warrant, and
further represent and warrant that such New Securities shall
be, upon issuance thereof to the Investors and after payment
therefor, duly authorized, validly issued, fully paid and
non-assessable. Investor shall deliver at the closing
payment in full in immediately available funds for the New
Securities purchased by him or it. At such closing, all of
the parties to the transaction shall execute such additional
documents as are otherwise necessary or appropriate.
3.3. Investor acknowledges that the Shareholders set forth on Schedule 3.3
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have as of the date hereof pledged their respective Common Stock in
the number of shares listed opposite such Shareholder's name to the
Person listed opposite such Shareholder's name. Each Shareholder
listed on Schedule 3.3 hereby represents and warrants to Investor that
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(i) such pledge of Common Stock does not restrict the Shareholder's
ability to perform its obligations under this Agreement, including
without limitation with respect to Article 2 and Article 8 or conflict
with Investor's rights under Section 3.1 and (ii) prior to the
Effective Date, such Shareholder has obtained, and delivered a copy to
Investor, a written waiver and consent by Morgan Stanley Dean Witter
to the Shareholders Rights Agreement with respect to shares owned by
such Shareholder. Each Shareholder hereby agrees that it shall not
pledge any Common Stock or enter into any agreement or take other
action on or after the Effective Date in any manner that would
restrict
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the Shareholder's ability to perform its obligations under this
Agreement, including without limitation with respect to Article 2 and
Article 8 or conflict with Investor's rights under Section 3.1.
4. Rights Plan.
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4.1. From the Effective Date, the Company shall not propose any amendment
to the Rights Agreement dated as of March 10, 1999, as filed with the
Securities and Exchange Commission (the "SEC") on March 23, 1999, as
amended and filed with the SEC on April 7, 1999 and as amended on
August 15, 2000 (the "Rights Plan"), that would prevent, discourage or
hinder the Investor or its Affiliates from acquiring beneficial
ownership of any securities of the Company of at least 51% of the then
outstanding Common Stock. The Company acknowledges that the August 15,
2000 amendment expressly waived the application of the Rights Plan to
Investor or its Affiliates.
5. Covenants of the Company.
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5.1. The Company agrees to use its best efforts to ensure that the rights
granted hereunder are effective and that the parties hereto enjoy the
benefits thereof. Such actions include, without limitation, the use
of the Company's best efforts to cause the nomination and election of
the directors as provided in Section 2; the Company shall use its best
efforts to make such nominations to the Board on the first Business
Day following the Closing of the transactions contemplated in the
Purchase Agreement and Loan Agreement. The Company will not, by any
voluntary action, avoid or seek to avoid the observance or performance
of any of the terms to be performed hereunder by the Company, but will
at all times in good faith assist in the carrying out of all of the
provisions of this Agreement and in the taking of all such actions as
may be necessary or in order to protect the rights of the parties
hereunder against impairment.
5.2. The Company covenants that it (i) will file any reports required to be
filed by it under the Securities Act and the Exchange Act, including
without limitation Section 13 and 15(d), (ii) shall provide Investor
and the Shareholders and prospective purchasers of their respective
shares with the information specified in Rule 144(A), and (iii) will
take such further action as the Shareholders or the Investor may
reasonably request to the extent required from time to time to enable
the Shareholders or the Investor to sell the Common Stock (and any
other shares convertible into Common Stock) beneficially owned by it
without registration under the Securities Act within the limitation of
the exemptions provided by Rule 144 under the Securities Act, as such
Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the Commission. Upon the request of
any Shareholder or the Investor, the Company will deliver to such
holder a written statement as to whether it has complied with such
reporting requirements.
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5.3. After the requirement for the restrictive legend described in Section
9 hereof and Section 2.4 of the Warrant is no longer applicable
because such Common Stock held by Investor or Shareholder are freely
transferable under the Securities Act, the Company shall remove such
legend upon the request of the holder of such Common Stock, if outside
counsel for such holder reasonably determines that the transfer of
such Common Stock is no longer restricted by the Securities Act and
outside counsel for the Company reasonably concurs in such
determination.
5.4. The Charter Documents of the Company shall at all times provide for
the exculpation and indemnification of the Board of Directors to the
fullest extent permitted by the law of the jurisdiction in which the
Company is organized.
5.5. Except for options or warrants grated prior to the date hereof, the
Company shall not issue any capital stock of the Company, options or
warrants or other securities convertible into capital stock of the
Company to any senior management, including any (i) executive officer
or (ii) as determined by the Board of Directors, other key personnel,
or member of the Board of Directors who is not a party to this
Agreement as of the Effective Date, without such Person simultaneously
agreeing to be bound by this Agreement in the same manner as the
Shareholders and executing and delivering to the Company, the Investor
and the Shareholders such agreement and delivering an irrevocable
proxy to Investor in accordance with Article 8.
6. The Warrants.
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Each Shareholder hereby agrees to (i) vote, or cause the vote of, his
Shares and any shares such Shareholder may receive upon exercise or conversion
of any options in favor of the Warrants issued to Investor in an aggregate
amount of 2,500,000 shares of Common Stock at the next meeting of the
shareholders of the Company and any adjournment or postponement thereof, to the
extent that such Shares have not been voted by proxy pursuant to Section 8
hereof and (ii) take such other action necessary to effectuate the foregoing
clause (i).
7. Charter Documents and Other Actions.
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7.1. At any Company Shareholders' meeting or at any adjournment thereof or
in any other circumstances upon which their vote, consent or other
approval is sought, Shareholder shall vote (or cause to be voted) such
Shareholder's Shares against any amendment of Company's Charter
Documents or other proposal or transaction involving Company or any of
its subsidiaries which amendment or other proposal or transaction
would in any manner impede, frustrate, prevent or nullify any of the
transactions contemplated in the Other Transaction Documents.
8. Grant of Proxy.
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8.1. This Agreement be construed to constitute the granting of proxies to
the Investor, to secure Investor's performance as a creditor of the
Company, such proxies shall be deemed coupled with an interest and are
irrevocable for the term of this
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Agreement. The Parties acknowledge that the proxy from each
Shareholder is given in consideration for the extension of credit by
Investor to the Company. Such irrevocable proxy is executed, and
intended to be irrevocable in accordance with the applicable
provisions of the California Corporations Code.
8.2. Each of the Shareholders hereby indefinitely and irrevocably appoints
Investor as his true and lawful attorney in fact, agent and proxy,
and attorney-in-fact, with full power of substitution, to vote all of
the Common Stock beneficially owned by him, now or hereafter
acquired, as his proxy at any meetings of the shareholders of the
Company for the term of this Agreement, with full power and authority
to act for him and in his name at any meeting of shareholders or by
written action by shareholders or in the transaction of such business
as may come before a meeting of the shareholders, including matters
set forth in Sections 2, 6 and 7 hereof, such grant of proxy shall be
deemed coupled with an interest.
8.3. Each Shareholder represents that there are no other proxies (other
than as set forth in this Section 8) heretofore given in respect of
such Shareholder's shares that will continue in effect as of the date
hereof.
9. Legends.
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9.1. In addition to any other legends required by law or agreements
between or among the parties, each certificate representing
Shareholders' or Investor's shares of Common Stock shall be endorsed
by the Company with a legend reading as follows:
"THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A SHAREHOLDERS RIGHTS AND
VOTING AGREEMENT BY AND AMONG THE SHAREHOLDER, HAWKER PACIFIC
AEROSPACE, AND LUFTHANSA TECHNIK AG (A COPY OF WHICH MAY BE OBTAINED
FROM HAWKER PACIFIC AEROSPACE). BY ACCEPTING ANY INTEREST IN SUCH
SHARES, THE PERSON ACCEPTING THIS INTEREST SHALL BE DEEMED TO AGREE
TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF SAID SHAREHOLDERS
RIGHTS AND VOTING AGREEMENT."
10. No Heightened Duty.
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10.1. Each party hereby acknowledges and agrees that no additional
fiduciary duty, duty of care, duty of loyalty or other heightened
duty will be created or imposed upon any party to any other party,
the Company or any other Shareholder of the Company, by reason of
this Agreement and/or any right or obligation hereunder; provided,
however, that a Shareholder who is also a current member of the
Company's Board of Directors may engage in activities to the extent
necessary to satisfying fiduciary duty obligations to the Company and
its shareholders. Investor and each Shareholder signs solely in his
capacity as the record holder and beneficial owner of such
Shareholder's Shares and options or warrants and
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nothing herein shall limit or affect any actions taken by a
Investor's designees or such to the Board or Shareholder in its
capacity as director of the Company.
11. Dispute Resolution.
11.1. Disputes. Within fifteen (15) days of the written request of either
--------
Party, the Parties shall meet to negotiate in good faith a
resolution of any dispute, claim, controversy or claim arising out
of or relating to this Agreement or the subject matter of this
Agreement, or the breach, termination or invalidity thereof (a
"Dispute").
-------
11.2. Arbitration. Any Dispute which cannot be resolved pursuant to
------------
Section 11.1 above within twenty (20) days of the written request
provided pursuant to Section 11.1, will be finally settled by
arbitration before a sole arbitrator in accordance with the
Commercial Rules of Arbitration of the American Arbitration
Association in effect on the date of this Agreement. The arbitrator
shall be appointed in accordance with the applicable rules of
arbitration. The arbitrator shall be an individual with significant
experience in investment banking or venture capital.
11.3. Timing and Location of Arbitration. The Parties agree that any
----------------------------------
arbitration process related to this Agreement shall be structured to
the fullest extent possible in accordance with the applicable
arbitration rules in such a way as to enable a decision to be
rendered by the arbitrators within ninety (90) days of the date of
the commencement of such arbitration. The place of arbitration will
be Salt Lake City, Utah. By this agreement to arbitrate, the Parties
waive their right to any form of appeal or recourse to a court of
law or other judicial authority, to the fullest extent permitted by
law, provided that any judgment upon an award rendered by the
--------
arbitrator may be entered in any court having jurisdiction therefor.
11.4. Confidentiality; Expenses.
-------------------------
11.4.1. The Parties shall keep the arbitration confidential and
shall not disclose to any Person, other than those necessary
to the proceedings, the existence of the arbitration, any
document submitted or exchanged in connection with it, any
oral submissions or testimony, transcripts, or any award
unless disclosure is required by law or is necessary to
challenge, recognize or enforce an award. The arbitrators
and any experts shall be required to agree to comply with
this confidentiality provision before accepting appointment.
11.4.2. All expenses of the arbitration procedure and tribunal will
be borne equally by the Parties, or as otherwise prescribed
by the applicable arbitration rules. Each Party's expenses
with respect to the conduct of the arbitration, including
the fees of attorneys, accountants, or other experts used in
connection with the arbitration, will be borne by the
unsuccessful
12
party in the arbitration, in whole or in part as determined
by the arbitration tribunal.
12. Specific Performance.
--------------------
12.1. The parties hereby acknowledge that it is impossible to measure in
money the damages that will accrue to a party hereto or to its
heirs, personal representatives, or assignees, by reason of a
party's failure to perform its obligations under this Agreement and
therefore agree that, in addition to and without limiting any
remedies available at law, each of the parties hereto will have full
equitable remedies available to such party.
13. Confidentiality.
---------------
13.1. Disclosure of Terms. The terms and conditions of this Agreement (the
-------------------
"Terms"), including its existence, shall be considered confidential
-----
information and shall not be disclosed by any party hereto to any
third party except in accordance with the provisions set forth
below.
13.2. Press Releases, Etc. Within sixty (60) days of the date of the
-------------------
Purchase Agreement, the Company may issue a press release, in a form
approved in advance by Investor, disclosing that the Investor has
purchased an interest in the Company. The Investor's name and the
fact that the Investor is an investor in the Company can be included
in a reusable press release boilerplate statement, so long as the
Investor has given the Company its initial approval of such
boilerplate statement and the boilerplate statement is reproduced in
exactly the form in which it was approved. No other announcements
regarding the Investor in a press release, conference,
advertisement, announcement, professional or trade publication, mass
marketing materials or otherwise to the general public may be made
without such Investor's prior written consent, which consent could
be withheld at the Investor's sole discretion.
13.3. Permitted Disclosures. Notwithstanding the foregoing, any party may
---------------------
disclose any of the Terms to its current or bona fide prospective
investors, employees, investment bankers, lenders, accountants and
attorneys, in each case only where such persons or entities are
under appropriate nondisclosure obligations.
13.3.1. Legally Compelled Disclosure. In the event that any party
----------------------------
is requested or becomes legally compelled (including
without limitation, pursuant to securities laws and
regulations) to disclose the existence of this Agreement or
the Purchase Agreement, Loan Agreement, Warrant,
Registration Rights Agreement between the Company and
Investor of even date herewith, or the Deephaven Purchase
Agreement (collectively the "Other Transaction Documents")
or any of the Terms hereof in contravention of the
provisions of this Section 13, such party (the "Disclosing
----------
Party") shall provide the other parties (the "Non-
----- ---
Disclosing Parties") with prompt written notice of that
------------------
fact so that the appropriate party may seek (with the
13
cooperation and reasonable efforts of the other parties) a
protective order, confidential treatment or other appropriate
remedy. In such event, the Disclosing Party shall furnish only
that portion of the information which is legally required or
which has been previously released in a public filing and shall
exercise reasonable efforts to obtain reliable assurance that
confidential treatment will be accorded such information to the
extent reasonably requested by any Non-Disclosing Party.
Notwithstanding the preceding, each Party acknowledges that the
other Party may be required to make certain filings with SEC with
respect to this Agreement or the Other Transaction Documents;
each Disclosing Party shall provide the Non-Disclosing Party with
prior notice of any such filings, and no such filing shall be
made without the prior written approval of the Non-Disclosing
Party to the applicable disclosures.
14. Termination.
-----------
14.1. Events of Termination. This Agreement shall terminate in its
---------------------
entirety on the earlier of (a) consummation of a transaction in
which the Company shall sell, convey, or otherwise dispose of all or
substantially all of its property or business, or merge into or
consolidate with any other corporation (other than a wholly-owned
subsidiary corporation), or effect any other transaction or series
of related transactions in which at least 50% of the voting power of
the Company is disposed of, or (b) mutual agreement in writing by
all of the parties hereto; provided that this Agreement shall not be
--------
terminated following a merger effected solely for the purpose of
changing the domicile of the Company; provided, further, the
-------- -------
agreement may be terminated with respect to a Shareholder in
accordance with Section 14.2 or as Investor, in its sole discretion,
may otherwise agree in writing with such Shareholder or (c) if
Shareholder ceases to be employed by the Company for any reason, (i)
the proxy granted in Section 8 shall continue for six months
following the termination of such employment provided the
shareholders of the Company have not approved the Warrant as of the
date of termination of such employment and (ii) Investor shall be
granted the right of first refusal set forth in Section 3 as of the
date of termination if Shareholder desires to sell its Shareholder
Shares at that time.
14.2. Release of a Shareholder or Investor. In the event a Shareholder
------------------------------------
or the Investor bound by this Agreement ceases to hold any Company
Common Stock, such party shall cease to be Shareholder or Investor
and all rights and obligations as a party hereto shall cease;
provided however, that (a) the obligations of such party set forth
in Article 13, Article 11 and Article 14 shall survive and continue
in full force and effect, (b) the representations and warranties of
such party shall survive and continue in full force and effect for
the longer of one year from the date Shareholder or Investor ceases
to be a shareholder or the time periods allowed under applicable
law, and (c) such party shall not be released from any liabilities
or obligations under this Agreement accruing prior to the time such
party ceases to hold any Company Common Stock.
14
15. Miscellaneous.
-------------
15.1. Amendments and Waivers. Any term hereof may be amended or waived
-----------------------
with the written consent of the Company, the Investor, and holders
of a majority in interest of the Common Stock held by the
Shareholders (or their respective successors and assigns); provided,
--------
however, that any such amendment or waiver cannot be effected in
-------
accordance with this Section 15.1 if it adversely affects the rights
of any Shareholder or the Investor hereunder or increases the
obligations of any Shareholder or the Investor hereunder unless the
affected party expressly consents, in writing, to such amendment or
waiver. Any amendment or waiver effected in accordance with this
Section 15.1 shall be binding upon the Company, the Investor and any
holder of the Common Stock held by the Shareholders, and each of
their respective successors and assigns.
15.2. Notices. Any notice required or permitted by this Agreement shall
-------
be in writing and shall be deemed sufficient on the date of
delivery, when delivered personally or by overnight courier or sent
by telegram or fax, or forty-eight (48) hours after being deposited
in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party's
address as set forth below or on Exhibit D hereto.
---------
15.3. Severability. Any provision of this Agreement which is invalid or
------------
unenforceable shall be ineffective to the extent of such invalidity
or unenforceability, provided that such invalidity or
--------
unenforceability does not deny any party the material benefits of
the transactions for which it has bargained and such invalidity or
unenforceability shall not affect in any way the remaining
provisions hereof.
15.4. Governing Law. This Agreement and all acts and transactions
-------------
pursuant hereto and the rights and obligations of the parties hereto
shall be governed, construed and interpreted in accordance with the
laws of the State of California, without giving effect to principles
of conflicts of law.
15.5. Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of
which together shall constitute one instrument.
15.6. Successors and Assigns; No Third Party Beneficiaries. The terms and
-----------------------------------------------------
conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties.
Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.
15.7. Entire Agreement. This Agreement constitutes the entire agreement
----------------
and any and all other written or oral agreements relating to the
subject matter hereof existing between the parties hereto are
expressly canceled.
15
15.8. Captions; Interpretation. The section and other headings contained
------------------------
in this Agreement are for reference purposes only and shall not
affect the meaning or interpretation of this Agreement. Terms used
with initial capital letters will have the meanings specified,
applicable to both singular and plural forms, for all purposes of
this Agreement. The words "include" and "exclude" and derivatives of
those words are used in this Agreement in an illustrative sense
rather than limiting sense.
15.9. No Investor Affiliate Liability. Each of the following is herein
--------------------------------
referred to as an "Investor Affiliate:" (a) any direct or indirect
holder of any equity interests or securities of the Investor
(whether such holder is a limited or general partner, member,
Shareholder or otherwise), (b) any Affiliate of the Investor, or (c)
any director, officer, employee, representative or agent of (i)
Investor, (ii) any Affiliate of Investor or (iii) any such holder of
equity interests or securities referred to in clause (a) above. No
Investor Affiliate shall have any liability or obligation of any
nature whatsoever in connection with or under this Agreement or any
of the Other Transaction Documents or the transactions contemplated
hereby or thereby (whether or not such Investor Affiliate has called
or received capital for contribution to Investor), and the
Shareholders and the Company hereby waive and release all claims
related to any such liability or obligation.
15.10. Survival. The representations, warranties and covenants of the
--------
Shareholders, Investor and the Company contained in or made pursuant
to this Agreement shall survive the execution and delivery of this
Agreement and, except as otherwise specifically provided in this
Agreement, shall remain operative and in full force and effect for
the longer of one (1) year following the termination of the
Agreement or time periods allowed under applicable law, except (i)
as otherwise provided in Article 14 and (ii) as to any matters with
respect to which a bona fide written claim shall have been made or
an action at law or in equity shall have commenced before such date,
in which event survival shall continue (but only with respect to,
and to the extent of, such claim) until the final resolution of such
claim, including all applicable periods for appeal.
15.11. Authority. If the Shareholder is married and the Shareholder's
---------
Shares or options in the Company constitute community property, this
Agreement has been duly authorized, executed and delivered by
Shareholder, and constitutes a valid and binding agreement of the
Shareholder's spouse, enforceable against such person in accordance
with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws
affecting creditors' rights generally or by principles governing the
availability of equitable remedies).
[Signature Pages Follow]
16
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
COMPANY:
HAWKER PACIFIC AEROSPACE
By: /s/ David L. Lokken
Name: David L. Lokken
Title: CEO
INVESTOR:
LUFTHANSA TECHNIK AG
By: /s/ Bernhard Langlotz
Name: Bernhard Langlotz
Title: General Counsel
[Signatures Continue on Next Page]
SHAREHOLDERS:
/s/ David L. Lokken
David Lokken
/s/ Brian Carr
Brian Carr
/s/ Michael Riley
Michael Riley
/s/ Dennis Biety
Dennis Biety
Exhibits:
Exhibit A - Schedule of Shareholders
Exhibit B - Schedule of Sellers
Exhibit C - Schedule of Investors
Exhibit D - Addresses
Exhibit E - Form of Firm Offer
Schedules:
Schedule 3.3: Pledge Agreements
EXHIBIT A
---------
SCHEDULE OF SHAREHOLDERS
- --------------------------------------------------------------------
Number of
Shareholder Number of Shares Options
- --------------------------------------------------------------------
David Lokken 138,930 72,105
- --------------------------------------------------------------------
Brian Carr 28,706 14,420
- --------------------------------------------------------------------
Michael Riley 28,706 14,420
- --------------------------------------------------------------------
Dennis Biety 0 28,841
- --------------------------------------------------------------------
TOTAL: 196,342 129,786
- --------------------------------------------------------------------
A-1
EXHIBIT B
Schedule of Sellers
- ------------------------------------------------------------------
Name Number of Shares
- ------------------------------------------------------------------
Melanie Bastian 961,252
- ------------------------------------------------------------------
John Makoff 444,943
- ------------------------------------------------------------------
Sidney Makoff 287,060
- ------------------------------------------------------------------
Daniel Lubeck 324,120
- ------------------------------------------------------------------
Scott Hartman 319,120
- ------------------------------------------------------------------
TOTAL: 2,336,495
- ------------------------------------------------------------------
B-1
EXHIBIT C
---------
SCHEDULE OF INVESTOR'S INTEREST
------------------------------------------------------------------------
Number of
Investor Number of Shares Warrants
- ------------------------------------------------------------------------
Lufthansa Technik AG 2,336,495 2,500,000/1/
- ------------------------------------------------------------------------
_________________
/1/ The number of warrant shares are subject to shareholder approval in
accordance with the Warrant.
C-1
EXHIBIT D
ADDRESSES
Company:
Hawker Pacific Aerospace
1120 Sherman Way
Sun Valley, California 91352
Attn.: Chief Financial Officer
Fax No.: 818 765 2416
Shareholders:
David Lokken
Brian Carr
Michael Riley
Dennis Biety
c/o Hawker Pacific Aerospace
1120 Sherman Way
Sun Valley, CA 91352
Fax No.: 818-765-2416
Investor:
Lufthansa Technik AG
Weg beim Jager 193
D-22335 Hamburg, GERMANY
Attn.: Bernhard Langlotz
Fax No.: 011 49 40 5070 4909
With a copy to:
Wilmer, Cutler & Pickering
2445 M Street, NW
Washington, DC 20037
Attn: Stephen P. Doyle
Fax No.: (202) 663 - 6363
D-1
EXHIBIT E
FIRM OFFER
[Seller]
[Address]
[Phone and Fax]
_________, 2000
Lufthansa Technik AG
Weg beim Jager 193
D-22335 Hamburg, GERMANY
Re: Firm Offer
Dear Sir:
The undersigned, hereby makes an irrevocable offer to sell shares of Common
Stock ("Common Stock") of Hawker Pacific Aerospace ,a California corporation
(the "Corporation") to Lufthansa Technick AG, a corporation organized under the
laws of the Germany ("Offeree") pursuant to the terms and conditions set forth
in this Firm Offer ("Firm Offer"):
1. Number of Shares: The undersigned (the "Seller") certifies to the
----------------
Offeree that they are a registered holder and beneficial owner of ______shares
of the Corporation's Common Stock and desires to sell those shares ("Offered
Shares") to Offeree for [Offer Price] [Market Price] as set forth in paragraph
2 below, payable according to the same terms as [or more favorable terms than]
those contained in the Purchase offer (attached hereto), provided that Seller
may in its sole discretion substitute the Market Price for the Offer Price.
(i) prior ten
(10) consecutive trading days of the Company Common Stock from the date hereof.
(ii) Price" shall mean offer a Seller received by oral or written
notice to purchase the Offered Shares for a purchase price.
(iii) Purchase Offer" shall mean the bona fide offer Seller has received
from a third party purchaser for the offered shares.
2. Purchase Price : Seller, hereby agrees to irrevocably sell the
----------------
Offered Shares to the Offeree at a purchase price ______ per share based on
[Offer Price] [Market Price].
E-2
3. [Other Terms of the Purchase]
4. Offer Period. This Firm Offer shall be irrevocable for a period (the
------------
"Offer Period") ending at 11:59 p.m., Los Angeles, California time, on the 3rd
Business Day following the date of delivery of this Firm Offer to Offeree.
5. Acceptance of First Offer. At any time during the Offer Period, the
-------------------------
Offeree may accept the Firm Offer as to all of the Offered Shares, by giving
written notice of such acceptance to the Seller, which notice shall indicate the
maximum number of Common Stock that the Offeree is willing to purchase at the
[Offer Price] [Market Price]. If the Offeree does not accept the Firm Offer as
to all of the Offered Shares by the expiration of the Offer Period, the Firm
Offer shall be deemed to be rejected in its entirety.
6. Closing of Purchase Pursuant to Firm Offer. In the event that the Firm
------------------------------------------
Offer is accepted, the closing of the sale of the Offered Shares shall take
place within 5 Business Days after the Firm Offer is accepted by Offeree or, if
later, the date of closing set forth in the Purchase Offer. The Seller and the
Offeree shall execute such documents and instruments as may be necessary or
appropriate to effect the sale of the Offered Shares pursuant to the terms of
this Firm Offer.
7. Offer Irrevocable; Acceptance Procedure: Execution and delivery of
---------------------------------------
this Firm Offer by Seller and countersignature by Offeree below shall constitute
an irrevocable offer and acceptance of this Firm shares of Common Stock, and
Seller shall be bound to transfer and sell to Offeree the Offered Shares and
Offeree shall be bound to purchase the Offered Shares from Seller in accordance
with the terms of this Firm Offer.
Sincerely,
_________________________________
Name:
Acknowledged and Agreed to by:
LUFTHANSA TECHNIK AG
OFFEREE
By:______________________________
Name:
Title:
E-2
SCHEDULE 3.3
Pledge Agreements
The following Shareholders have pledged their respective Common Stock in Margin
Client Agreements with Morgan Stanley Dean Witter.
Dave Lokken 138,930 shares
Brian Carr 28,706 shares
Mike Riley 28,706 shares