Exhibit 10.51
EXECUTION COPY
NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREUNDER AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES OR BLUE SKY LAWS.
Dated: September 20, 2000
WARRANT
To Purchase Shares of Common Stock of
HAWKER PACIFIC AEROSPACE
Expiring September 19, 2001
THIS IS TO CERTIFY THAT, for value received, Lufthansa Technik AG or
its designated assigns (the "Holder") is entitled to purchase from Hawker
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Pacific Aerospace, a California corporation (with its successors, the
"Company"), at any time or from time to time between the Effective Date (as
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defined herein) and 5:00 p.m., Los Angeles, California time, on September 19,
2001 (the "Expiration Date"), at the place where the Warrant Agency (as defined
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herein) is located, at a price per share equal to the Exercise Price (as defined
herein), the number of shares of common stock of the Company, par value $0.01
per share (the "Common Stock") which is the Exercise Amount (as defined herein)
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shown above, all subject to adjustment and upon the terms and conditions
hereinafter provided, and is entitled also to exercise the other appurtenant
rights, powers and privileges hereinafter described.
This Warrant entitles the Holder to purchase, subject to shareholder
approval, the Exercise Amount, as adjusted pursuant to Article V. This Warrant
has been issued pursuant to that certain Loan Agreement by and between the
Company and the Holder dated September 20, 2000 (the "Loan Agreement"). The
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Company acknowledges that the Holder is further entitled to certain benefits as
set forth in the Shareholders Rights and Voting Agreement dated as of September
20, 2000 among the Company, the Holder, and shareholders set forth therein (as
amended from time to time, the "Shareholders Rights Agreement"). The Company
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shall keep a copy of the Shareholders
Rights Agreement, the Loan Agreement and any amendments thereto, at the Warrant
Agency and shall furnish, without charge, copies thereof to the Holder upon
request.
ARTICLE I
DEFINITIONS
The following terms, as used in this Warrant, have the following
meanings:
"Business Day" means a day other than (i) Saturday, (ii) Sunday, or
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(iii) any day on which banks located in New York, New York or Hamburg, Germany
are generally closed.
"Capital Reorganization" has the meaning set forth in Section 5.5.
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"Cashless Exercise" shall have the meaning set forth in Section
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2.1(b)(vi).
"Cashless Loan Exercise" shall have the meaning set forth in Section
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2.1(b)(ii).
"Cashless Principal Only Exercise" shall have the meaning set forth in
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Section 2.1(b)(iii).
"Cashless Interest Only Exercise" shall have the meaning set forth in
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Section 2.1(b)(iv).
"Closing Price" on any day means (a) if the Common Stock is listed or
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admitted for trading on a national securities exchange, the reported last sales
price regular way or, if no such reported sale occurs on such day, the average
of the closing bid and asked prices regular way on such day, in each case on the
principal national securities exchange on which Common Stock is listed or
admitted to trading, or (b) if Common Stock is not listed or admitted to trading
on any national securities exchange, the average of the closing bid and asked
prices in the over-the-counter market on such day as reported by NASDAQ or any
comparable system.
"Common Stock" has the meaning set forth in the first paragraph of
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this Warrant, subject to adjustment pursuant to Article V.
"Common Stock Distribution" has the meaning set forth in Section
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5.3(a).
"Common Stock Reorganization" has the meaning set forth in Section
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5.2.
"Company" has the meaning set forth in the first paragraph of this
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Warrant.
"Convertible Securities" has the meaning set forth in Section 5.3(b).
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"Effective Date" means the date hereof which is also date on which the
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Holder extends the loan to the Company as provided in the Loan Agreement.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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and any successor Federal statute, and the rules and regulations of the
Securities and Exchange Commission (or its successor) thereunder, all as the
same shall be in effect at the time.
"Exercise Amount" means 2,500,000 shares of Common Stock, assuming
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shareholder approval is obtained in accordance with Section 2.7.
"Exercise Price" means $4.25 per share of Common Stock, subject to
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adjustment pursuant to Article V.
"Expiration Date" has the meaning set forth in the first paragraph of
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this Warrant.
"Fair Market Value" means fair market value as determined in good
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faith by the Board of Directors of the Company after consultation with and
receipt of a written report thereon from an independent investment bank of
national standing selected by the Company and reasonably acceptable to the
Holder (which written report will be made available to the Holder prior to any
determination of fair market value).
"Fully Diluted Basis" means, with respect to any determination or
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calculation, that such determination or calculation is performed on a fully
diluted basis as determined in accordance with GAAP.
"GAAP" means U.S. generally accepted accounting principles as in
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effect from time to time.
"Holder" has the meaning set forth in the first paragraph of this
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Warrant.
"Holder Control" shall have the meaning set forth in Section 5.3 of
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this Warrant.
"Loan Agreement" has the meaning set forth in the second paragraph of
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this Warrant.
"Market Price" means, on any date, the unweighted average of the daily
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Closing Prices per share of Common Stock for the five consecutive Business Days
prior to such date; provided that for purposes of the application of Section 5.3
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to a Common Stock Distribution pursuant to a public offering registered under
the Securities Act, "Market Price" means the Closing Price per share of Common
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Stock on the Business Day immediately preceding the effective date of the
registration statement with respect to such public offering; and provided
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further that if the Common Stock is not listed or admitted to trading on any
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national securities exchange, nor reported on NASDAQ or any comparable system,
"Market Price" means the Fair Market Value of a share of Common
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Stock (determined without giving effect to any discount for (i) a minority
interest or (ii) any lack of liquidity of the Common Stock).
"NASD" means The National Association of Securities Dealers, Inc.
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"NASDAQ" means The National Association of Securities Dealers, Inc.
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Automated Quotation System.
"Note" has the meaning set forth in Section 2.1(b)(ii).
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"Options" has the meaning set forth in Section 5.3(b).
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"Person" means any natural person, corporation, limited liability
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company, limited partnership, general partnership, limited liability
partnership, joint stock company, joint venture, association, company, trust,
bank, trust company, land trust, business trust or other organization, whether
or not a legal entity, and any government agency or political subdivision
thereof.
"Registration Rights Agreement" means that certain registration rights
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agreement of even date herewith by and between the Company and the Holder.
"Securities Act" means the Securities Act of 1933, or any similar
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Federal statute, and the rules and regulations of the Securities and Exchange
Commission (or its successor) thereunder, all as the same shall be in effect at
the time.
"Special Dividend" has the meaning set forth in Section 5.4.
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"Shareholders Rights Agreement" has the meaning set forth in the
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second paragraph of this Warrant.
"Warrant Agency" has the meaning set forth in Section 3.1.
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"Warrant Shares" means the shares of Common Stock issuable upon the
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exercise of this Warrant under the Exercise Amount.
"Warrant" shall mean this Warrant issued in accordance with Section
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3.1 of the Loan Agreement, as the same may be amended from time to time, and all
warrants issued upon transfer, division or combination of, or in substitution
for, this Warrant. All Warrants so issued shall at all times be identical as to
terms and conditions, except as to the number of shares of Common Stock for
which a Warrant may be exercised.
ARTICLE II
EXERCISE OF WARRANTS
SECTION 2.1. Method of Exercise.
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(a) To exercise this Warrant in whole or in part, the Holder shall
deliver on any Business Day to the Company, at the Warrant Agency:
(i) this Warrant;
(ii) a written notice of the Holder's election to exercise this
Warrant ("Election Notice"), which notice shall specify the number of
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shares of Common Stock to be purchased (which shall be a whole number of
shares if for less than all the shares then issuable hereunder), the
denominations of the share certificate or certificates desired and the name
or names in which such certificates are to be registered; and
(iii) payment of the Exercise Price with respect to such shares in
accordance with Section 2.1(b).
(b) Payment of the Exercise Price with respect to any shares may be
made, at the option of the Holder, by any of the following methods:
(i) by wire transfer of immediately available funds in U.S. Dollars
in an amount equal to (A) the Exercise Price times (B) the number of
Warrant Shares as to which this Warrant is being exercised,
(ii) presentment of the Company's Note dated September 20, 2000, or
as amended in accordance with Section 2.11 of the Loan Agreement (the
"Note") for cancellation, to the extent that any principal and accrued
interests remain unpaid under such Note as of the time of such presentment
and to the extent that such aggregate unpaid principal and interest equals
(x) the Exercise Price multiplied by (y) the number of Warrant Shares as to
which this Warrant is being exercised (the "Cashless Loan Exercise"),
(iii) presentment of the Note for partial cancellation of the
principal only to the extent such aggregate unpaid principal equals (A) the
Exercise Price multiplied by (B) the number of Warrant Shares as to which
this Warrant is being exercised (the "Cashless Principal Only Exercise");
(iv) presentment of the Note for partial cancellation of the accrued
but unpaid interest only to the extent such interest equals (A) the
Exercise Price multiplied by (B) the number of Warrant Shares as to which
this Warrant is being exercised (the "Cashless Interest Only Exercise");
(v) any combination of clauses (i) - (iv); or
(vi) the Holder may surrender this Warrant to the Company together
with a notice of cashless exercise, in which event the Company shall issue
to the Holder the number of Warrant Shares determined as follows (the
"Cashless Exercise"):
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X = Y (A-B)/A
Where:
X = the number of Warrant Shares to be issued to the Holder.
Y = the number of Warrant Shares with respect to which this Warrant is
being exercised.
A = the average of the closing trading prices of the Common Stock for the
ten (10) trading days immediately prior to (but not including) the Date of
Exercise.
B = the Exercise Price.
For purposes of Rule 144 promulgated under the Securities Act, it is intended,
understood and acknowledged that the Warrant Shares issued in a Cashless
Exercise transaction shall be deemed to have been acquired by the Holder, and
the holding period for the Warrant Shares shall be deemed to have commenced, on
the issue date.
(c) The Company shall, as promptly as practicable and in any event
within ten (10) Business Days after receipt of such notice and payment, execute
and deliver or cause to be executed and delivered, in accordance with such
notice, a certificate or certificates representing the aggregate number of
shares of Common Stock specified in the Election Notice together with cash in
lieu of any fractions of a share as provided in Section 2.3. The share
certificate or certificates so delivered shall be in such denominations as may
be specified in the Election Notice, and shall be issued in the name of the
Holder or such other name or names as shall be designated in the Election
Notice. This Warrant shall be deemed to have been exercised and such certificate
or certificates shall be issued, and the Holder or any other Person so
designated to be named therein shall be deemed for all purposes to have become a
holder of record of such shares of Common Stock, effective as of the date the
aforementioned notice and payment is received by the Company. If this Warrant
shall have been exercised only in part, the Company shall, at the time of
delivery of such certificate or certificates, deliver to the Holder a new
Warrant evidencing the rights to purchase the remaining shares of Common Stock
called for by this Warrant, which new Warrant shall in all other respects be
identical with this Warrant, or, at the request of the Holder, appropriate
notation may be made on this Warrant which shall then be returned to the Holder.
If this Warrant shall have been exercised by in accordance with Section
2.1(b)(ii) of Section 2.1(b)(iii) 2.1(b)(iv) or 2.1(b)(v), in whole or in part,
and the payment of the Exercise Price is less than the outstanding principal and
accrued interest then owed under the Note such exercise of the Warrant shall act
as only a partial cancellation of the Note and the Company shall, upon the
issuance of the number of shares specified in the Election Notice, issue an
amended promissory note to the Holder for the amount of the outstanding
principal immediately following such exercise of the Warrant, assuming Company
does not pay in full the Remaining Balance (as defined in the Loan Agreement) on
the date of issuance of such Warrant Shares.
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(d) At any time during the period of the date of this Warrant to the
Expiration Date, the Holder shall be entitled to exercise this Warrant to
purchase up to either (A) the Initial Exercise Amount or (B) the Initial
Exercise Amount plus the Subsequent Exercise Amount at the Exercise Price, as
adjusted pursuant to Article V. The Holder's right to exercise this Warrant
under this section 2.1(c) shall expire at 5:00 p.m., Los Angeles, California
time, on September 19, 2001.
(e) This Warrant shall be exercisable, at the election of the Holder,
either in whole or in part from time to time.
(f) The Company shall pay all expenses, taxes and other charges
payable in connection with the preparation, issuance and delivery of share
certificates and new Warrants.
SECTION 2.2. Shares to be Fully Paid and Nonassessable; Listing of
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Additional Shares. All shares of Common Stock issued upon the exercise of this
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Warrant are duly authorized, validly issued and nonassessable, free and clear of
all claims, liens, pledges, options, preemptive rights and liens or encumbrances
of any kind and the Holder shall acquire complete and absolute legal, marketable
and equitable title to such Common Stock. All shares of Common Stock issued upon
the exercise of this Warrant shall be duly listed or quoted on the applicable
national securities exchange or NASDAQ, as the case may be.
SECTION 2.3. No Fractional Shares Required to be Issued. The Company
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shall not be required to issue any fractions of shares of Common Stock upon
exercise of this Warrant. If any fraction of a share would, but for this Section
2.3, be issuable upon final exercise of this Warrant, in lieu of such fractional
share the Company shall pay to the Holder, in cash, an amount equal to the same
fraction of the Market Price per share of Common Stock on the Business Day on
the date of such exercise.
SECTION 2.4. Share Legend. Each certificate for shares of Common
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Stock issued upon exercise of this Warrant, unless at the time of exercise such
shares are registered under the Securities Act, shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF IN VIOLATION OF APPLICABLE SECURITIES LAWS.
NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATED THERETO OTHER THAN PURSUANT TO AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
1933. THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A SHAREHOLDERS
RIGHTS AND VOTING AGREEMENT BY AND AMONG THE COMPANY, THE
SHAREHOLDERS NAMED THEREIN AND THE HOLDER (A COPY
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OF WHICH MAY BE OBTAINED FROM THE COMPANY), AND BY ACCEPTING ANY
INTEREST IN SUCH SHARES THE PERSON ACCEPTING SUCH INTEREST SHALL BE
DEEMED TO AGREE TO AND SHALL BECOME BOUND BY ALL THE PROVISIONS OF
SAID SHAREHOLDERS RIGHTS AND VOTING AGREEMENT."
Any certificate issued at any time in exchange or substitution for any
certificate bearing such legend (except a new certificate issued upon completion
of a public offering pursuant to a registration statement under the Securities
Act) shall also bear such legend unless, in the opinion of counsel selected by
the holder of such certificate (who may be an employee of such holder) and
reasonably acceptable to the Company, the securities represented thereby need no
longer be subject to restrictions on resale under the Securities Act.
SECTION 2.5. Reservation. The Company has duly reserved and will keep
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available for issuance upon exercise of the Warrants the total number of Warrant
Shares, as adjusted pursuant to Article V, deliverable from time to time upon
exercise of all Warrants from time to time outstanding. The Company will not
permit the par value of a share of Common Stock to be greater than the Exercise
Price per share without the consent of the Holder.
SECTION 2.6. Shareholders Rights. All shares of Common Stock issued
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upon the exercise of this Warrant shall be subject to and entitled to all rights
and benefits held by the Investor (as defined therein) under the Shareholders
Rights Agreement.
SECTION 2.7. Adjustment to Exercise Amount. Pursuant to Section 5.19
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of the Loan Agreement, the Company has undertaken to recommend and to seek the
approval of its shareholders for the issuance pursuant to the Warrant of the
Exercise Amount. Concurrent with, and conditioned upon, the Company's obtaining
such shareholder approval, the number of shares of Common Stock issuable upon
exercise of this Warrant shall be the Exercise Amount.
ARTICLE III
WARRANT AGENCY; TRANSFER; EXCHANGE AND
REPLACEMENT OF WARRANTS
SECTION 3.1. Warrant Agency. As long as any of the Warrants remain
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outstanding, the Company shall perform the obligations of and be the warrant
agency with respect to the Warrants (the "Warrant Agency") at its address set
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forth in the Section 6.1 or at such other address as the Company shall specify
by notice to the Holder.
SECTION 3.2. Ownership of Warrant. The Company may deem and treat the
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person in whose name this Warrant is registered as the holder and owner hereof
(notwithstanding any notations of ownership or writing hereon made by any person
other than the Company) for all purposes and shall not be affected by any notice
to the
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contrary, until due presentment of this Warrant for registration of transfer as
provided in this Article III.
SECTION 3.3. Transfer to Comply with the Securities Act. This
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Warrant has not been registered under the Securities Act, and has been issued to
the Holder for investment and not with a view to the distribution of either the
Warrant or the Warrant Shares. Neither this Warrant nor any of the Warrant
Shares or any other security issued or upon exercise of this Warrant may be
sold, transferred, pledged or hypothecated in the absence of an effective
registration statement under the Act relating to such security or an opinion of
counsel satisfactory to the Company that registration is not required under the
Act. Each certificate for the Warrant, the Warrant Shares and any other security
issued or issuable upon exercise of this Warrant shall contain a legend in form
set forth in Section 2.4 hereof which sets forth the restrictions on transfer
contained in this Section.
SECTION 3.4. Transfer of Warrant. Subject to compliance with Section
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3.3, this Warrant shall be transferable and assignable by the Holder hereof in
whole or in part from time to time to any other Person, without the prior
consent of the Company. The Company agrees to maintain at the Warrant Agency
books for the registration of transfers of the Warrant, and transfer of this
Warrant and all rights hereunder shall be registered, in whole or in part, on
such books, upon surrender of this Warrant at the Warrant Agency, together with
a written assignment of this Warrant duly executed by the Holder or its duly
authorized agent or attorney, with signatures guaranteed by a bank or trust
company or a broker or dealer registered with the NASD, and funds sufficient to
pay any transfer taxes payable upon such transfer, unless such transfer is to an
Affiliate of the Holder in which case Company shall pay the transfer taxes. Upon
surrender and, if required, such payment and compliance with the requirements of
any legend set forth thereon, the Company shall execute and deliver a new
Warrant or Warrants in the name of the assignee or assignees and in the
denominations specified in the instrument of assignment (which shall be whole
numbers of shares only) and shall issue to the assignor a new Warrant evidencing
the portion of this Warrant not so assigned, and this Warrant shall promptly be
canceled.
SECTION 3.5. Division or Combination of Warrants. This Warrant may
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be divided or combined with other Warrants upon presentment of this Warrant and
of any other Warrants with which this Warrant is to be combined at the Warrant
Agency, together with a written notice specifying the names and denominations
(which shall be whole numbers of shares only) in which the new Warrant or
Warrants are to be issued, signed by the holders hereof and thereof or their
respective duly authorized agents or attorneys. Subject to compliance with
Section 3.4 as to any transfer or assignment which may be involved in the
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
SECTION 3.6. Loss, Theft, Destruction or Mutilation of Warrant
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Certificates. Upon receipt of evidence satisfactory to the Company of the
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ownership of and the loss, theft, destruction or mutilation of any Warrant and,
in the case of any such loss, theft or destruction, upon receipt of indemnity or
security satisfactory to the
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Company or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Company will make and deliver, in lieu of such lost,
stolen, destroyed or mutilated Warrant, a new Warrant of like tenor and
representing the right to purchase the same aggregate number of shares of Common
Stock.
SECTION 3.7. Expenses of Delivery of Warrants. The Company shall
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pay all expenses, taxes and other charges payable in connection with the
preparation, issuance and delivery of Warrants hereunder; provided however, the
Company shall not pay the transfer taxes involved in the transfer of Warrant
Shares or this Warrant in a name other than the Holder or an Affiliate of the
Holder.
ARTICLE IV
CERTAIN RIGHTS
SECTION 4.1. Rights and Obligations under the Shareholders Rights
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Agreement. This Warrant is entitled to the benefits and subject to the terms of
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the Shareholders Rights Agreement. The Company shall keep or cause to be kept a
copy of the Shareholders Rights Agreement, and any amendments thereto, at the
Warrant Agency and shall furnish, without charge, copies thereof to the Holder
upon request. Upon the exercise of this Warrant, in whole or in part, shares
issued to the Holder upon such exercise shall be deemed subject to the
Shareholders Rights Agreement and entitled to the full benefits afforded the
Investor (as defined therein) under such Shareholders Rights Agreement.
SECTION 4.2. Financial Statements and Other Information. The Company
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will, and will cause its subsidiaries to, maintain a system of accounting
established and administered in accordance with sound business practices to
permit preparation of financial statements in accordance with GAAP, and will
deliver to each of the Holder:
(a) promptly upon the mailing thereof to the shareholders of the
Company generally, copies of all financial statements, reports and proxy
statements so mailed; and
(b) with reasonable promptness, such other information and data with
respect to the Company or any of its subsidiaries as from time to time may be
reasonably requested by the Holder.
SECTION 4.3. The Company agrees to use its best efforts to ensure
that the rights granted hereunder are effective and that the Holder enjoys the
benefits thereof. 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 Warrant and in the taking of all
such actions as may be necessary or in order to protect the rights of the Holder
hereunder against impairment.
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SECTION 4.4. 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 the Holder
and prospective purchasers of its respective shares or assigns of this Warrant
with the information specified in Rule 144(A), and (iii) will take such further
action as the Holder may reasonably request to the extent required from time to
time to enable the Holder 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 the Holder, the Company will deliver to such holder a
written statement as to whether it has complied with such reporting
requirements.
SECTION 4.5. After the requirement for the restrictive legend
described in Section 2.4 hereof is no longer applicable because such Common
Stock held by the Holder 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.
SECTION 4.6. Registration Rights. Upon the exercise of this Warrant,
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in whole or in part, the Holder shall be entitled to the rights and benefits and
subject to the limitations as set forth in the Registration Rights Agreement
with respect to the registration of any Warrant Shares and any other capital
stock of the Company beneficially owned by the Holder.
ARTICLE V
ANTIDILUTION PROVISIONS
SECTION 5.1. Adjustment Generally. The Exercise Price and the Initial
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Exercise Amount and the Subsequent Exercise Amount (or other securities or
property) issuable upon exercise of this Warrant shall be subject to adjustment
from time to time upon the occurrence of certain events as provided in this
Article V; provided that notwithstanding anything to the contrary contained
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herein, the Exercise Price shall not be less than the par value of the Common
Stock.
SECTION 5.2. Common Stock Reorganization. If the Company shall
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subdivide its outstanding shares of Common Stock (or any class thereof) into a
greater number of shares or consolidate its outstanding shares of Common Stock
(or any class thereof) into a smaller number of shares (any such event being
called a "Common Stock Reorganization"), then (a) the Exercise Price shall be
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adjusted, effective immediately after the effective date of such Common Stock
Reorganization, to a price determined by multiplying the Exercise Price in
effect immediately prior to such effective date by a fraction, the numerator of
which shall be the number of shares of Common Stock
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outstanding on such effective date before giving effect to such Common Stock
Reorganization and the denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such Common Stock
Reorganization, and (b) the number of shares of Common Stock subject to purchase
upon exercise of this Warrant shall be adjusted, effective at such time, to a
number determined by multiplying the number of shares of Common Stock subject to
purchase immediately before such Common Stock Reorganization by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
after giving effect to such Common Stock Reorganization and the denominator of
which shall be the number of shares of Common Stock outstanding immediately
before such Common Stock Reorganization.
SECTION 5.3. Common Stock Distribution.
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From the Effective Date until the earlier of the time the Holder (i)
obtains at least 51% of the seats of the Company's Board of Directors or (ii)
owns beneficially 51% or more of the total issued and outstanding shares of
capital stock of the Company on a Fully Diluted Basis, the Holder shall be
entitled to the rights set forth in this Section 5.3; provided, however, if at
any time after either clause (i) or clause (ii) has become effective, the Holder
(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
Holder shall be entitled to the rights set forth in this Section 5.3.
(a) If the Company shall issue, sell or otherwise distribute any
shares of Common Stock, other than pursuant to a Common Stock Reorganization
(which shall be governed by Section 5.2 hereof) (any such event, including any
event described in Section 5.3(b) or Section 5.3(c) below, being herein called a
"Common Stock Distribution"), for a consideration per share that is less than
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85% of the Market Price per share of Common Stock on the date of such Common
Stock Distribution, then, effective upon such Common Stock Distribution, the
Exercise Price shall be reduced to the lowest of the prices (calculated to the
nearest one-thousandth of one cent) determined as provided in clauses (i), (ii)
and (iii) below:
(i) if the Company shall receive any consideration for the Common
Stock issued, sold or distributed in such Common Stock Distribution, the
consideration per share of Common Stock received by the Company upon such
issue, sale or distribution;
(ii) by dividing (A) an amount equal to the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such Common Stock
Distribution multiplied by the then existing Exercise Price, plus (2) the
consideration, if any, received by the Company upon such Common Stock
Distribution by (B) the total number of shares of Common Stock outstanding
immediately after such Common Stock Distribution; and
(iii) by multiplying the Exercise Price on the Business Day
immediately prior to such Common Stock Distribution by a fraction, the
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numerator of which shall be the sum of (A) the number of shares of Common
Stock outstanding immediately prior to such Common Stock Distribution
multiplied by such Market Price per share on the date of such Common Stock
Distribution, plus (B) the consideration, if any, received by the Company
upon such Common Stock Distribution, and the denominator of which shall be
the product of (1) the total number of shares of Common Stock outstanding
immediately after such Common Stock Distribution multiplied by (2) the
Market Price per share on the date of such Common Stock Distribution.
If any Common Stock Distribution shall require an adjustment to the
Exercise Price pursuant to the foregoing provisions of this Section 5.3(a),
including by operation of Section 5.3(b) or 5.3(c) below, then, effective at the
time such adjustment is made, the number of shares of Common Stock subject to
purchase upon exercise of this Warrant shall be increased to a number determined
by multiplying the number of shares of Common Stock subject to purchase
immediately before such Common Stock Distribution by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
after giving effect to such Common Stock Distribution and the denominator of
which shall be the sum of the number of shares outstanding immediately before
giving effect to such Common Stock Distribution (both calculated on a Fully
Diluted Basis) plus the number of shares of Common Stock which the aggregate
consideration received by the Company with respect to such Common Stock
Distribution would purchase at the Market Price per share of Common Stock on the
date of such Common Stock Distribution. In computing adjustments under this
paragraph, fractional interests in Common Stock shall be taken into account to
the nearest one-thousandth of a share.
The provisions of this Section 5.3(a), including by operation of
Section 5.3(b) or 5.3(c) below, shall not operate to increase the Exercise Price
or reduce the number of shares of Common Stock subject to purchase upon exercise
of this Warrant.
(b) If after the date hereof the Company shall issue, sell,
distribute or otherwise grant in any manner (including by assumption) any rights
to subscribe for or to purchase, or any warrants or options for the purchase of
Common Stock or any stock or securities convertible into or exchangeable for
Common Stock (such rights, warrants or options being herein called "Options"
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and such convertible or exchangeable stock or securities being herein called
"Convertible Securities"), whether or not such Options or the rights to convert
----------------------
or exchange any such Convertible Securities in respect of such Options are
immediately exercisable, and the price per share for which Common Stock is
issuable upon the exercise of such Options or upon conversion or exchange of
such Convertible Securities in respect of such Options (determined by dividing
(i) the aggregate amount, if any, received or receivable by the Company as
consideration for the granting of such Options, plus the minimum aggregate
amount of additional consideration payable to the Company upon the exercise of
all such Options, plus, in the case of Options to acquire Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable upon the issuance or sale of such Convertible Securities and upon the
conversion or exchange thereof, by (ii) the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon
13
the conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options) shall be less than the Market Price per share of
Common Stock on the date of granting such Options, then, for purposes of Section
5.3(a) above, the total maximum number of shares of Common Stock issuable upon
the exercise of such Options or upon conversion or exchange of the total maximum
amount of such Convertible Securities issuable upon the exercise of such Options
shall be deemed to have been issued as of the date of granting of such Options
and thereafter shall be deemed to be outstanding and the Company shall be deemed
to have received as consideration of such price per share, determined as
provided above, therefor. Except as otherwise provided in this Warrant
(including Sections 5.3(d) and 5.3(f) below), no additional adjustment of the
Exercise Price shall be made upon the actual exercise of any Options or upon
conversion or exchange of any Convertible Securities, notwithstanding any change
in the Market Price between the date of issuance, sale, distribution or grant
and the date of exercise, conversion or exchange.
(c) If the Company shall issue, sell or otherwise distribute
(including by assumption) any Convertible Securities, whether or not the rights
to exchange or convert thereunder are immediately exercisable, and the price per
share for which Common Stock is issuable upon such conversion or exchange
(determined by dividing (i) the aggregate amount received or receivable by the
Company as consideration for the issuance, sale or distribution of such
Convertible Securities, plus the minimum aggregate amount of additional
consideration, if any, payable to the Company upon the conversion or exchange
thereof, by (ii) the total maximum number of shares of Common Stock issuable
upon the conversion or exchange of all such Convertible Securities) shall be
less than the Market Price per share of Common Stock on the date of such
issuance, sale or distribution, then, for purposes of Section 5.3(a) above, the
total maximum number of shares of Common Stock issuable upon conversion or
exchange of all such Convertible Securities shall be deemed to have been issued
as of the date of the issuance, sale or distribution of such Convertible
Securities and thereafter shall be deemed to be outstanding and the Company
shall be deemed to have received as consideration such price per share,
determined as provided above, therefor. Except as otherwise provided in this
Warrant (including Sections 5.3(d) and 5.3(f) below), no additional adjustment
of the Exercise Price shall be made upon the actual conversion or exchange of
any Convertible Securities, notwithstanding any change in the Market Price
between the date of issuance, sale or distribution and the date of conversion or
exchange.
(d) If (i) the purchase price provided for in any Option referred to
in Section 5.3(b) above or the additional consideration, if any, payable upon
the conversion or exchange of any Convertible Securities referred to in Section
5.3(b) or 5.3(c) above or the rate at which any Convertible Securities referred
to in Section 5.3(b) or 5.3(c) above are convertible into or exchangeable for
Common Stock shall change at any time (other than under or by reason of
provisions designed to protect against dilution upon an event which results in a
related adjustment pursuant to this Article V, in accordance with 5.6(b)), or
(ii) any of such Options or Convertible Securities shall have terminated, lapsed
or expired, the Exercise Price then in effect shall forthwith be readjusted
(effective only with respect to any exercise of this Warrant after such
readjustment) to the Exercise Price which would then be in effect had the
adjustment made upon the issuance, sale,
14
distribution or grant of such Options or Convertible Securities been made based
upon such changed purchase price, additional consideration or conversion rate,
as the case may be (in the case of any event referred to in clause (i) of this
Section 5.3(d)) or had such adjustment not been made (in the case of any event
referred to in clause (ii) of this Section 5.3(d)).
(e) If the Company shall pay a dividend or make any other
distribution upon any capital stock of the Company payable in Common Stock,
Options or Convertible Securities, then, for purposes of Section 5.3(a) above,
such Common Stock, Options or Convertible Securities shall be deemed to have
been issued or sold without consideration.
(f) If any shares of Common Stock, Options or Convertible Securities
shall be issued, sold or distributed for cash, the consideration received
therefor shall be deemed to be the amount received by the Company therefor. If
any shares of Common Stock, Options or Convertible Securities shall be issued,
sold or distributed for a consideration other than cash, the amount of the
consideration other than cash received by the Company shall be deemed to be the
Fair Market Value of such consideration, after deduction of any expenses
incurred in connection therewith. If any shares of Common Stock, Options or
Convertible Securities shall be issued in connection with any merger in which
the Company is the surviving corporation, the amount of consideration therefor
shall be deemed to be the Fair Market Value of such portion of the assets and
business of the non-surviving corporation as shall be attributable to such
Common Stock, Options or Convertible Securities, as the case may be. If any
Options shall be issued in connection with the issuance and sale of other
securities of the Company, together comprising one integral transaction, then
such Options shall be deemed to have been issued (i) for such consideration as
shall be allocated to such Options by the parties thereto, or (ii) in the
absence of such an allocation by the parties thereto, by a reasonable
determination made in good faith by the Board of Directors of the Company, or
(iii) in the absence of such an allocation by the parties thereto and such a
determination by the Board of Directors, without consideration.
SECTION 5.4. Special Dividends. If the Company shall issue or
-----------------
distribute to any holder or holders of shares of Common Stock evidences of
indebtedness, any other securities of the Company or any cash, property or other
assets (excluding a Common Stock Reorganization or a Common Stock Distribution),
whether or not accompanied by a purchase, redemption or other acquisition of
shares of Common Stock (any such nonexcluded event being herein called a
"Special Dividend"), (a) the Exercise Price shall be decreased, effective
----------------
immediately after the effective date of such Special Dividend, to a price
determined by multiplying the Exercise Price then in effect by a fraction, the
numerator of which shall be the Market Price per share of Common Stock as of
such effective date less any cash and the then fair market value of any
evidences of indebtedness, securities or property or other assets issued or
distributed in such Special Dividend with respect to one share of Common Stock,
and the denominator of which shall be such Market Price per share and (b) the
number of shares of Common Stock subject to purchase upon exercise of this
Warrant shall be increased to a number determined by multiplying the number of
shares of Common Stock subject to purchase
15
immediately before such Special Dividend by a fraction, the numerator of which
shall be the Exercise Price in effect immediately before such Special Dividend
and the denominator of which shall be the Exercise Price in effect immediately
after such Special Dividend. A reclassification of Common Stock (other than a
change in par value, or from par value to no par value or from no par value to
par value) into shares of Common Stock and shares of any other class of stock
shall be deemed a distribution by the Company to the holders of such Common
Stock of such shares of such other class of stock and, if the outstanding shares
of Common Stock shall be changed into a larger or smaller number of shares of
Common Stock as part of such reclassification, a Common Stock Reorganization.
SECTION 5.5. Capital Reorganizations. If there shall be any
-----------------------
consolidation or merger to which the Company is a party, other than a
consolidation or a merger of which the Company is the continuing corporation and
which does not result in any reclassification of, or change (other than a Common
Stock Reorganization) in, outstanding shares of Common Stock, or any sale or
conveyance of the property of the Company as an entirety or substantially as an
entirety, or any recapitalization of the Company (any such event being called a
"Capital Reorganization"), then, effective upon the effective date of such
----------------------
Capital Reorganization, the Holder shall no longer have the right to purchase
Common Stock, but shall have instead the right to purchase, upon exercise of
this Warrant, the kind and amount of shares of stock and other securities and
property (including cash) which the Holder would have owned or have been
entitled to receive pursuant to such Capital Reorganization if this Warrant had
been exercised immediately prior to the effective date of such Capital
Reorganization. As a condition to effecting any Capital Reorganization, the
Company or the successor or surviving corporation, as the case may be, shall
execute and deliver to the Holder and to the Warrant Agency an agreement as to
the Holder's rights in accordance with this Section 5.5, providing, to the
extent of any right to purchase equity securities hereunder, for subsequent
adjustments as nearly equivalent as may be practicable to the adjustments
provided for in this Article V. The provisions of this Section 5.5 shall
similarly apply to successive Capital Reorganizations.
SECTION 5.6. Adjustment Rules. Any adjustments pursuant to this
----------------
Article V shall be made successively whenever an event referred to herein shall
occur, except that, notwithstanding any other provision of this Article V:
(a) no adjustment shall be made to the number of shares of Common
Stock to be delivered to the Holder (or to the Exercise Price) if such
adjustment represents less than 1% of the number of shares previously required
to be so delivered, but any lesser adjustment shall be carried forward and shall
be made at the time and together with the next subsequent adjustment which
together with any adjustments so carried forward shall amount to 1% or more of
the number of shares to be so delivered; and
(b) no adjustment shall be made pursuant to this Article V in respect
of the issuance from time to time of shares of Common Stock upon the exercise of
the Warrant.
16
If the Company shall take a record of the holders of its Common Stock for any
purpose referred to in this Article V, then (i) such record date shall be deemed
to be the date of the issuance, sale, distribution or grant in question and (ii)
if the Company shall legally abandon such action prior to effecting such action,
no adjustment shall be made pursuant to this Article V in respect of such
action.
SECTION 5.7. Proceedings Prior to Any Action Requiring Adjustment.
----------------------------------------------------
As a condition precedent to the taking of any action which would require an
adjustment pursuant to this Article V, the Company shall take any action which
may be necessary, including obtaining regulatory approvals or exemptions, in
order that the Company may thereafter validly and legally issue as fully paid
and nonassessable all shares of Common Stock which the Holder is entitled to
receive upon exercise thereof.
SECTION 5.8. Notice of Adjustment. Not less than 10 nor more than 30
--------------------
days prior to the record date or effective date, as the case may be, of any
action which requires or might require an adjustment or readjustment pursuant to
this Article V, the Company shall give notice to the Holder of such event,
describing such event in reasonable detail and specifying the record date or
effective date, as the case may be, and, if determinable, the required
adjustment and the computation thereof. If the required adjustment is not
determinable at the time of such notice, the Company shall give notice to the
Holder of such adjustment and computation promptly after such adjustment becomes
determinable.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. 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 by certified or registered U.S. mail, and addressed to the party to
be notified at such party's address as follows:
If to the Holder:
Lufthansa Technik AG
Weg beim Jager 193
D-22335 Hamburg, GERMANY
Attention: HAM-TB/B
Fax: 011 49 40 5070 5366
with a copy to:
Wilmer, Cutler & Pickering
2445 M Street, N.W.
Washington, D.C. 20037
17
Attention: Stephen P. Doyle, Esq.
Fax: 202 663 6363
If to the Company to:
Hawker Pacific Aerospace
11240 Sherman Way
Sun Valley, California, 91352
Attention: Chief Financial Officer
Fax: 818 765 2416
SECTION 6.2. Amendment. This Agreement may not be modified or
---------
amended except by written agreement specifically referring to this Agreement and
executed and delivered by the parties hereto.
SECTION 6.3. Waivers. No waiver of a breach or default hereunder
-------
shall be considered valid unless in writing and signed by the party giving such
waiver, and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
SECTION 6.4. Governing Law. This Warrant shall be construed in
-------------
accordance with and governed by the laws of the State of California (without
regard to principles of conflicts of law).
SECTION 6.5. Binding Effect. All covenants, stipulations, promises
--------------
and agreements in this Warrant contained by and on behalf of the Company or the
Holder shall bind its successors and assigns, whether so expressed or not.
SECTION 6.6. Severability. In case any one or more of the provisions
------------
contained in this Warrant shall be invalid, illegal or unenforceable in an
respect, the validity, legality and enforceability of the remaining provisions
contain herein shall not in any way be affected or impaired thereby. The parties
shall endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 6.7. Section Headings. The section headings used herein are
----------------
for convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant. All references to sections, articles, Exhibits or Schedules shall mean
the sections, articles, Exhibits or Schedules of this Agreement. Terms used with
initial capital letters will have the meaning 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 a limiting sense.
SECTION 6.8. Specific Performance. The Company hereby acknowledge
--------------------
and agree that the failure of the Company to perform its obligations under
18
this Warrant, the Shareholders Rights Agreement or the Loan Agreement in
accordance with their specific terms or to otherwise comply with such
obligations will cause irreparable injury to the Holder for which damages, even
if available, will not be adequate remedy. Accordingly, the Company hereby
consent to the issuance of injunctive relief to prevent breaches, and to the
granting by any such court of the remedy of specific performance of the terms
and provisions of this Warrant, the Shareholders Rights Agreement and the Loan
Agreement.
[signature on following page]
19
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
in its corporate name by one of its officers thereunto duly authorized, all as
of the day and year first above written.
HAWKER PACIFIC AEROSPACE
By: /s/ David L. Lokken
Name: David L. Lokken
Title: CEO
ASSIGNMENT
(TO BE EXECUTED BY THE REGISTERED HOLDER IF IT DESIRES
AND IS PERMITTED TO TRANSFER THE WARRANT OF
HAWKER PACIFIC AEROSPACE)
FOR VALUE RECEIVED _______________________________ hereby sells,
assigns and transfers unto _____________________ the right to purchase shares of
Common Stock evidenced by the within Warrant, and does hereby irrevocably
constitute and appoint__________________________________________________
Attorney to transfer the said Warrant on the books of the Company (as defined in
said Warrant) with full power and substitution.
The undersigned represents and warrants to the Company that this
assignment has been effected in compliance with all applicable provisions of
said Warrant.
Signature: ________________________(SEAL)
Address: ______________________________
______________________________
Dated: _______________
In the presence of
______________________________ ______________________________________
(Witness) (Signature of Witness)
NOTICE: The signature to the foregoing Assignment must correspond to the name
as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
PURCHASE FORM
(TO BE EXECUTED ONLY UPON EXERCISE OF WARRANT)
The undersigned registered owner of this Warrant irrevocably exercises this
Warrant for and purchases Shares of Common Stock of HAWKER PACIFIC AEROSPACE
purchasable with this Warrant, and herewith makes payment therefore: (circle the
following as applicable)
1. By cash in the amount of $________.
2. By bank cashier's check in the amount of $___________.
3. By certified check in the amount of $_____________.
4. By request for partial satisfaction of the Loan Agreement, dated
September 20, 2000, between the Company and the Holder as defined
herein.
all at the price and on the terms and conditions specified in this Warrant and
requests that certificates for the shares of Common Stock hereby purchased (and
any securities or property issuable upon such exercise) be issued in the name of
and delivered to _____________________, whose address is _______________________
and, if such shares shall not include all of the shares issuable as provided in
this Warrant that a new Warrant of like tenor and date for the balance of the
shares of Common Stock issuable thereunder be delivered to the undersigned.
Dated:
________________________________
(Signature of Registered Owner)
________________________________
(Street Address)
_________________________________
(City) (State) (Zip Code)