<PAGE>
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
HAWKER PACIFIC AEROSPACE
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required.
/ / $125 per Exchange Act Rules 0-11(c)(l)(ii), 14a-6(i)(l), or 14a-6(j)(2) or
Item 22(a)(2) of Schedule 14A.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(Set forth the amount on which the filing fee is calculated and state
how it was determined.)
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
-----------------------------------------------
2) Form, Schedule or Registration Statement No.:
-------------------------
3) Filing Party:
---------------------------------------------------------
4) Date Filed:
-----------------------------------------------------------
<PAGE>
HAWKER PACIFIC AEROSPACE
11240 SHERMAN WAY
SUN VALLEY, CALIFORNIA 91352
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON WEDNESDAY, JULY 29, 1998
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Hawker Pacific Aerospace (the "Company") will be held at the
principal executive offices of the Company, located at 11240 Sherman Way, Sun
Valley, California 91352, on Wednesday, July 29, 1998 at 10:00 A.M., Pacific
Daylight Savings Time, for the following purposes, as more fully described in
the attached Proxy Statement:
(1) To elect seven directors of the Company to serve until the next
annual meeting of shareholders or until their successors are duly elected
and qualified; and
(2) To transact such other business as may properly be brought before
the Annual Meeting or any and all adjournments thereof.
The Board of Directors has fixed the close of business on Thursday, June
18, 1998 as the record date for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting. Only shareholders at the close of
business on the record date are entitled to vote at the Annual Meeting.
Accompanying this Notice are a Proxy and Proxy Statement. IF YOU WILL NOT
BE ABLE TO ATTEND THE ANNUAL MEETING TO VOTE IN PERSON, PLEASE COMPLETE, SIGN
AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED POSTAGE
PAID ENVELOPE. The Proxy may be revoked at any time prior to its exercise at
the Annual Meeting. The Proxy and Proxy Statement are first being mailed to
shareholders on or about June 29, 1998.
By Order of the Board of Directors,
/s/ Scott W. Hartman
Scott W. Hartman
CHAIRMAN OF THE BOARD
Sun Valley, California
June 29, 1998
<PAGE>
HAWKER PACIFIC AEROSPACE
11240 SHERMAN WAY
SUN VALLEY, CALIFORNIA 91352
ANNUAL MEETING OF SHAREHOLDERS
JULY 29, 1998
PROXY STATEMENT
INTRODUCTION
This Proxy Statement ("Proxy Statement") is furnished to the shareholders
of Hawker Pacific Aerospace, a California corporation (the "Company"), in
connection with the solicitation of proxies by and on behalf of the Board of
Directors of the Company. The proxies solicited hereby are to be voted at the
Annual Meeting of Shareholders of the Company to be held on Wednesday, July 29,
1998, and at any and all adjournments thereof (the "Annual Meeting").
PURPOSE OF ANNUAL MEETING
At the Annual Meeting, shareholders will be asked: (i) to elect seven
directors of the Company to serve until the next annual meeting of shareholders
or until their successors are duly elected and qualified; and (ii) to transact
such other business as may properly be brought before the Annual Meeting or any
and all adjournments thereof. The Board recommends a vote in favor of (i.e.,
"FOR") the election of the seven nominees for directors of the Company listed
below.
QUORUM AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting. Only shareholders of record at the close of business on
Thursday, June 18, 1998 (the "Record Date") will be entitled to notice of, and
to vote at, the Annual Meeting. As of the Record Date, there were 5,822,222
shares of Common Stock outstanding and entitled to vote. Holders of Common
Stock as of the Record Date are entitled to one vote for each share held.
All shares of Common Stock represented by properly executed proxies will,
unless the proxies have previously been revoked, be voted in accordance with the
instructions indicated in the proxies. If no instructions are indicated, the
shares will be voted in favor of (i.e., "FOR") the election of the seven
nominees for directors of the Company. With respect to any other item of
business that may come before the Annual Meeting, the proxy holders will vote
the proxy in accordance with their best judgment.
In the election of directors, the seven candidates receiving the highest
number of votes will be elected as directors. The other matters submitted for
shareholder approval at the Annual Meeting will be decided by the affirmative
vote of the majority of the shares represented in person or by proxy and
entitled to vote on each such matter. Abstentions with respect to any matter
are treated as shares present or represented and entitled to vote on that matter
and thus have the same effect as negative votes. If a broker which is the
record holder of certain shares indicates on a proxy that it does not have
discretionary authority to vote on a particular matter as to such shares, or if
shares are not voted in other circumstances in which proxy authority is
defective or has been withheld with respect to a particular matter, these
non-voted shares will be counted for quorum purposes but are not deemed to be
present or represented for purposes of determining whether shareholder approval
of that matter has been obtained. Any shareholder executing a proxy has the
power to revoke the proxy at any time prior to its exercise. A proxy may be
revoked prior to exercise by (a) filing
1.
<PAGE>
with the Company a written revocation of the proxy; (b) appearing at the Annual
Meeting and casting a vote contrary to that indicated on the proxy; or (c)
submitting a duly executed proxy bearing a later date.
Shareholders may cumulate their votes with respect to the election of
directors if one or more shareholder gives notice at the Annual Meeting, prior
to voting, of an intention to cumulate votes for a nominated director. A
shareholder may cumulate votes by casting for the election of one nominee a
number of votes equal to the number of directors to be elected multiplied by the
number of votes to which his shares are entitled or by distributing his votes on
the same principle among as many candidates as he sees fit. If a proxy is
marked "FOR" the election of directors, it may, at the discretion of the proxy
holders, be voted cumulatively in the election of directors.
The cost of preparing, printing, assembling and mailing this Proxy
Statement and other material furnished to shareholders in connection with the
solicitation of proxies will be borne by the Company. In addition to the
solicitation of proxies by use of the mails, officers, directors and regular
employees of the Company may solicit proxies by written communications, by
telephone, telegraph or personal call. These persons are to receive no special
compensation for any solicitation activities. The Company will reimburse banks,
brokers and other persons holding Common Stock in their names, or those of their
nominees, for their expenses in forwarding proxy solicitation materials to
beneficial owners of Common Stock.
This Proxy Statement and the accompanying form of proxy are first being
mailed to shareholders on or about June 29, 1998.
2.
<PAGE>
ELECTION OF DIRECTORS
NOMINEES
At the Annual Meeting, seven directors, who will constitute the entire
Board of Directors, are to be elected to serve until the next Annual Meeting of
Shareholders and until their successors shall be elected and shall qualify. All
nominees have consented to being named herein and have agreed to serve if
elected. The names of such nominees are as follows:
Scott W. Hartman
David L. Lokken
Daniel J. Lubeck
John G. Makoff
Joel F. McIntyre
Daniel C. Toomey, Jr.
Mellon C. Baird
Management proxies will be voted FOR the election of all of the above named
nominees unless the shareholder indicates that the proxy shall not be voted for
all or any one of the nominees. If cumulative voting is utilized, the proxy
holders intend to distribute the votes represented by each proxy, unless such
authority is withheld, among the seven nominees named, in such proportion as
they see fit. Nominees receiving the highest number of affirmative votes cast,
up to the number of directors to be elected, will be elected as directors.
Abstentions, broker non-votes, and instructions on the accompanying proxy card
to withhold authority to vote for one or more of the nominees will result in the
respective nominees receiving fewer votes. If for any reason any nominee
should, prior to the Annual Meeting, become unavailable for election as a
Director, an event not now anticipated, the proxies will be voted for such
substitute nominee, if any, as may be recommended by management. In no event,
however, shall the proxies be voted for a greater number of persons than the
number of nominees named.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE SEVEN
PERSONS NOMINATED FOR DIRECTOR HEREIN.
3.
<PAGE>
EXECUTIVE OFFICERS AND DIRECTORS
Set forth below is certain information with respect to the directors,
director-nominees and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITIONS
- - ----------------------- ----- ------------------------------------------------
<S> <C> <C>
Scott W. Hartman . . 35 Chairman of the Board(1)(2)(4)
David L. Lokken . . . 51 President, Chief Executive Officer and
Director(2)(4)
Brian S. Aune . . . . 42 Vice President and Chief Financial Officer
Brian S. Carr . . . . 41 Managing Director of Sun Valley Operations
Richard Adey . . . . 39 Managing Director of United Kingdom Operations
Michael A. Riley . . 52 Vice President-Hydromechanical Business Unit
Daniel J. Lubeck . . 36 Secretary and Director(2)
John G. Makoff . . . 35 Director
Joel F. McIntyre . . 59 Director(1)(3)
Daniel C. Toomey, Jr. 34 Director(1)(3)
Mellon C. Baird . . . 67 Director(3)(4)
</TABLE>
_________________
(1) Member of Compensation Committee
(2) Member of Nominating Committee
(3) Member of Audit Committee
(4) Member of Executive Committee
SCOTT W. HARTMAN became a director of the Company in December 1996 and
became Chairman of the Board of the Company in March 1997. Since March 1995,
Mr. Hartman has served as Chief Operating Officer of Unique Investment
Corporation ("Unique"). From December 1993 until he joined Unique, Mr. Hartman
served as Chief Executive Officer of Nucor World Industries, a private holding
company. From December 1991 until December 1993, Mr. Hartman served as a Vice
President of Business Development for City National Bank, and from May 1983
until he joined City National Bank, he held various management positions with
Emerson Electric Company. Mr. Hartman earned a B.S. from Indiana University.
DAVID L. LOKKEN joined the Company in May 1989 as Executive Vice President
and Chief Operating Officer and has served as President and Chief Executive
Officer of the Company since June 1993. From November 1985 until he joined the
Company, Mr. Lokken served as Vice President and General Manager of Cleveland
Pneumatic's Product Service Division. Mr. Lokken holds a B.S. in Electrical
Engineering from North Dakota State University and an M.B.A. from Arizona State
University.
BRIAN S. AUNE joined the Company as Vice President of Finance and
Administration in 1992 and has served as Vice President and Chief Financial
Officer of the Company since August 1994. Before joining the Company, Mr. Aune
held various finance and management positions with Dunlop Aviation, BEI Motion
Systems Electronics and Eastman Kodak. Mr. Aune has a B.A. in Accounting from
Eastern Washington University and an M.B.A. from the University of San Diego.
4.
<PAGE>
BRIAN S. CARR became Managing Director of Sun Valley Operations in November
1997 after having served as Vice President--Landing Gear Business Unit since he
joined the Company in January 1993. From 1980 until he joined the Company,
Mr. Carr held various engineering, technical sales and management positions with
Cleveland Pneumatic's Product Service Division and Dowty Aerospace. Mr. Carr
holds a B.S. in Aerospace Engineering Technology from Kent State University.
RICHARD ADEY became the Company's Managing Director of United Kingdom
Operations following the acquisition of substantially all of the assets of the
landing gear repair and overhaul operations of British Airways plc. in February
1998. Since March 1996, Mr. Adey has been a Senior Manager for British Airways
Engineering, in charge of overhauling landing gear, flap tracks and flap
carriages on British Airways' aircraft. From 1994 until he joined British
Airways Engineering, Mr. Adey served as Operations Director for Woodhead
Manufacturing Ltd. From 1984 through 1993, Mr. Adey served as a Senior
Consultant with Coopers & Lybrand, specializing in operations management and
process improvement within commercial organizations. Mr. Adey holds a BSc in
Production Engineering and Engineering Management from the University of
Nottingham and an MSc in Manufacturing Technology and Business Management from
Cranfield Institute.
MICHAEL A. RILEY joined the Company's predecessor as Vice President of
Marketing in October 1989 and has served as Vice President--Hydromechanical
Business Unit since January 1994. From 1982 until he joined the Company,
Mr. Riley held various positions in the aerospace/aircraft industry with Abex
Aerospace and Dunlop Aviation. Mr. Riley served as a helicopter pilot in the
United States Navy and received a B.S. in Engineering from the United States
Naval Academy, Annapolis, Maryland.
DANIEL J. LUBECK joined the Company as Secretary and a director in December
1996. Since July 1996, Mr. Lubeck has served as President of Unique. From
March 1993 until he joined Unique, Mr. Lubeck was an attorney with McIntyre,
Borges & Burns LLP, a multi-service law firm, after having worked as an attorney
with Paul, Hastings, Janofsky & Walker from 1987 until 1992 and with Manatt,
Phelps & Philips, LLP from 1992 until 1993. Mr. Lubeck earned a J.D. from
University of Southern California and holds a B.A. from University of
California, San Diego.
JOHN G. MAKOFF became a director of the Company in December 1996.
Mr. Makoff founded Unique in June 1993 and currently serves as its Chief
Executive Officer. From June 1991 until he founded Unique, Mr. Makoff served as
Manager for Computerland of Pasadena, Inc., a computer reseller. Mr. Makoff
holds a B.A. from Lewis & Clark University.
JOEL F. MCINTYRE became a director of the Company in February 1998. From
1963 through 1993, Mr. McIntyre was an attorney with the law firm of Paul,
Hastings, Janofsky and Walker. In 1993, Mr. McIntyre founded the law firm of
McIntyre, Borges & Burns LLP and currently serves as its Managing Partner. Mr.
McIntyre currently serves on the Board of Directors of International Aluminum
Corporation, a publicly-held company. Mr. McIntyre received a B.A. from
Stanford University in 1960 and a J.D. from University of California, Los
Angeles in 1963.
DANIEL C. TOOMEY, JR. became a director of the Company in February 1998.
Since January 1998, Mr. Toomey has served as the President and Chief Executive
Officer of Nomadix, LLC. Mr. Toomey served as Vice President and Chief
Financial Officer of Eltron International, Inc., a publicly-held company
("Eltron"), from October 1992 until December 1997. From 1987 until he joined
Eltron, Mr. Toomey was employed with Arthur Andersen LLP, where he served as
Manager in the Enterprise Division of its Woodland Hills, California office.
Mr. Toomey received a B.A. from the University of California, Los Angeles in
1986.
MELLON C. BAIRD became a director of the Company in March 1998. Mr. Baird
has served as Chairman, President and Chief Executive Officer of Delfin Systems
since 1990. From 1987 to 1989, Mr. Baird served as President and Chief
Executive Officer of Tracor, Inc., a privately-held company ("Tracor"). From
1986
5.
<PAGE>
until 1987, Mr. Baird served as President, Chief Operating Officer and a
director of Tracor, a publicly-held company. Mr. Baird currently serves on the
Board of Directors of Software Spectrum, Inc. and EDO Corporation, which are
both publicly-held companies. Mr. Baird received a B.B.A. and an M.B.A. from
University of North Texas in 1956 and 1961, respectively.
The Company's executive officers are appointed by, and serve at the
discretion of, the Board of Directors of the Company. See "Compensation of
Directors and Executive Officers--Employment Arrangements." The Company's
Directors serve until the next annual meeting of shareholders or until
successors are elected and qualified. There are no family relationships among
the officers or directors of the Company.
MEETINGS; ATTENDANCE; COMMITTEES
During the fiscal year ended December 31, 1997, the Board of Directors of
the Company did not meet and took action four times by unanimous written
consent. In November 1997, the Board of Directors established an Audit
Committee, a Compensation Committee and a Nominating Committee. The committees
did not meet during the last fiscal year. In February 1998, the Board of
Directors established an Executive Committee. The Company consummated the
initial public offering of its Common Stock in February 1998.
The Audit Committee is composed of Messrs. McIntyre, Toomey and Baird. The
functions of the Audit Committee include recommending to the Board of Directors
the selection and retention of independent auditors, reviewing the scope of the
annual audit undertaken by the Company's independent auditors and the progress
and results of their work and reviewing the financial statements of the Company
and its internal accounting and auditing procedures. The Compensation Committee
is composed of Messrs. Hartman, McIntyre and Toomey. The functions of the
Compensation Committee include establishing the compensation of the Chief
Executive Officer, reviewing and approving executive compensation policies and
practices, reviewing salaries and bonuses for certain executive officers of the
Company, administering the Company's employee stock option plans and considering
such other matters as may from time to time be delegated to the Compensation
Committee by the Board of Directors. The function of the Nominating Committee,
which consists of Messrs. Hartman, Lokken and Lubeck, is to select the slate of
directors to be presented to the shareholders for election at the annual meeting
of the shareholders of the Company. The Board of Directors has also established
an Executive Committee to advise the Company on strategic planning matters. The
Executive Committee is composed of Messrs. Hartman, Lokken and Baird. The
Company has no other committees of its Board of Directors. The Nominating
Committee may consider director nominees recommended by the Company's
shareholders if recommendations are submitted to the Company in the manner
provided under "Submission of Shareholder Proposals."
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, as well as persons who own more than ten
percent of the Company's Common Stock, to file with the Securities and Exchange
Commission ("SEC") initial reports of beneficial ownership and reports of
changes in beneficial ownership of the Common Stock. Directors, executive
officers and greater-than-ten-percent shareholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file. Based solely on a review of copies of reports filed with the SEC and
submitted to the Company, the Company believes that all of the Company's
directors, executive officers and greater-than-ten-percent shareholders filed
all required reports on a timely basis upon and after the consummation of the
initial public offering of the Company's Common Stock in February 1998 (the
"Offering").
6.
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
EXECUTIVE COMPENSATION
The following table sets forth certain compensation earned or accrued
during the years ended December 31, 1995, 1996 and 1997 by the Company's Chief
Executive Officer and the Company's three other most highly compensated
executive officers whose total salary and bonus during the year ended December
31, 1997 exceeded $100,000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) OTHER
- - ---------------------------------------------------------------------- ------ --------- ---------- -----------
<S> <C> <C> <C> <C>
David L. Lokken . . . . . . . . . . . . . . . . . . . . . . . . . . . 1997 $233,147 $44,358 -
Chief Executive Officer 1996 192,566 67,125 $173,220(2)
1995 184,256 -- -
Brian S. Aune . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1997 $117,302 $21,097 -
Chief Financial Officer 1996 98,440 28,763 -
1995 100,509 -- -
Brian S. Carr . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1997 $125,156 $21,097 -
Managing Director of Sun Valley Operations 1996 111,258 26,910 -
1995 104,785 -- -
Michael A. Riley . . . . . . . . . . . . . . . . . . . . . . . . . . 1997 $113,430 $18,663 -
Vice President--Hydromechanical Business Unit 1996 95,584 23,550 -
1995 93,335 -- -
</TABLE>
___________
(1) Bonus amounts are shown in the year accrued.
(2) Nonrecurring payment made for services rendered in connection with BTR
Dunlop, Inc.'s sale of the Company, of which 31% was paid in 1996 and 69%
was paid in 1997.
EMPLOYMENT ARRANGEMENTS
In November 1996, the Company entered into an employment agreement with
David L. Lokken pursuant to which Mr. Lokken agreed to serve as the Company's
President and Chief Executive Officer. The employment agreement is for an
initial term of five years and as amended in 1997 provides for an annual base
salary of $205,000, a performance bonus to be awarded in accordance with the
terms and conditions of a separate Management Incentive Compensation Plan, and a
monthly automobile allowance of $1,500. Pursuant to the employment agreement,
the Company may terminate Mr. Lokken's employment with or without cause at any
time before its term expires upon providing written notice. In the event the
Company terminates Mr. Lokken's employment without cause, Mr. Lokken would be
entitled to receive a severance amount equal to his annual base salary for the
greater of two years or the balance of the term of his employment agreement and
a bonus for the year of termination. In the event of a termination by reason of
Mr. Lokken's death or permanent disability, his legal representative will be
entitled to receive his annual base salary for the remaining term of his
employment agreement.
In November 1996, the Company also entered into employment agreements with
each of Brian S. Aune, the Company's Vice President and Chief Financial Officer,
Brian S. Carr, the Company's Managing Director of Sun Valley Operations, and
Michael A. Riley, the Company's Vice President--Hydromechanical Business Unit.
The employment agreements are each for an initial term of three years and as
amended in
7.
<PAGE>
1997 provide for annual base salaries of $130,000, $130,000 and $115,000,
respectively, performance bonuses to be awarded in accordance with the terms and
conditions of a separate Management Incentive Compensation Plan, and monthly
automobile allowances of $750. In the event the Company terminates their
employment without cause, Messrs. Aune, Carr and Riley would each be entitled to
receive a severance amount equal to his respective annual base salary for the
greater of one year or the balance of the term of his employment agreement and a
bonus for the year of termination. In the event of a termination by reason of
Messrs. Aune's, Carr's or Riley's death or permanent disability, his legal
representative will be entitled to receive his annual base salary for the
remaining term of his employment agreement.
In addition, pursuant to each of their amended employment agreements, in
the event of, or termination following, a change in control of the Company, as
defined in the agreements, Mr. Lokken and each of Messrs. Aune, Carr and Riley
would be entitled to receive 18 and 12 months' salary, respectively, based on
the total annual salary then in effect paid according to a schedule to be
determined at the time such event occurs.
DIRECTOR COMPENSATION
Each non-employee director receives a cash fee of $1,500 per regular and
special Board meeting attended in person and $1,000 per telephonic Board meeting
and an additional $500 per month for being a member of one or more committees of
the Board. Each non-employee director is expected to receive, as additional
director compensation, such number of options as determined by the Board to
purchase shares of Common Stock per year at an exercise price equal to the fair
market value of the Common Stock on the date of grant. In January 1998, Daniel
C. Toomey, Jr. and Joel F. McIntyre were each granted five-year options to
purchase up to 14,861 shares, exercisable at $8.00 per share, vesting 33 1 3%
per year beginning on the first anniversary of the effective date of the
Offering. In March 1998, the Company granted Mellon C. Baird five-year options
to purchase up to 14,861 shares, exercisable at the then market price, vesting
33 1/3% per year beginning on the first anniversary of the date of grant. The
directors are also reimbursed for expenses incurred in connection with the
performance of services as directors.
8.
<PAGE>
STOCK OPTIONS
The following table sets forth certain information with respect to stock
options granted by the Company to the Named Executive Officers during the fiscal
year ended December 31, 1997:
<TABLE>
<CAPTION>
OPTION GRANT TABLE
OPTION GRANTS DURING THE FISCAL YEAR ENDED DECEMBER31,1997
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION
FOR
INDIVIDUAL GRANTS OPTION TERM
------------------------------------------------------------------------------- ---------------------
NUMBER OF
SHARES OF % OF TOTAL
COMMON STOCK OPTIONS
UNDERLYING GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH)(3) DATE 5% 10%
---- ------------- -------------- ---------- --------------------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
David L. Lokken 187,471(1) 50.0% $8.00 72,105 on November 14, 2002 605,682 634,524
115,366 November 14, 2003 969,074 1,015,220
Brian S. Aune 43,261(2) 11.5% $8.00 14,420 on November 14, 2002 121,128 126,896
28,841 on November 14, 2003 242,264 253,800
Brian S. Carr 43,261(2) 11.5% $8.00 14,420 on November 14, 2002 121,128 126,896
28,841 on November 14, 2003 242,264 253,800
Michael A. Riley 43,261(2) 11.5% $8.00 14,420 on November 14, 2002 121,128 126,896
28,841 on November 14, 2003 242,264 253,800
</TABLE>
________________
(1) 72,105 of these options were fully vested and exercisable on the date of
grant and are for a term of five years. 115,366 of these options are for a
term of six years, subject to earlier termination in certain events related
to termination of employment, and vest at the rate of 5% every three months
after the grant date so that all of the options will be fully vested and
exercisable on the fifth anniversary of the grant date.
(2) 14,420 of these options were fully vested and exercisable on the date of
grant and are for a term of five years. 28,841 of these options are for a
term of six years, subject to earlier termination in certain events related
to termination of employment, and vest at the rate of 5% every three months
after the grant date so that all of the options will be fully vested and
exercisable on the fifth anniversary of the grant date.
(3) The exercise price and tax withholding related to exercise may be paid by
delivery of already owned shares or by offset of the underlying shares,
subject to certain conditions. With respect to options granted under the
Company's 1997 Stock Option Plan, the stock option committee retains
discretion, subject to plan limits, to modify the terms of outstanding
options and to reprice the options.
9.
<PAGE>
The following table sets forth certain information with respect to stock
option exercises by the Named Executive Officers during fiscal year 1997 and
held by them as of December 31, 1997:
OPTION EXERCISES AND YEAR-END VALUE TABLE
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON STOCK VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
SHARES AT YEAR-END AT YEAR-END(1)
ACQUIRED ------------------- -------------------
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE REALIZED UNEXERCISABLE UNEXERCISABLE
---- ------------- -------------- ------------------- -------------------
<S> <C> <C> <C> <C>
David L. Lokken - - 72,105/115,366 0/0
Brian S. Aune - - 14,420/28,841 0/0
Brian S. Carr - - 14,420/28,841 0/0
Michael A. Riley - - 14,420/28,841 0/0
</TABLE>
_________________
(1) Amounts are shown as the positive spread between the exercise price and the
fair market value (based on the initial public offering price of $8.00 per
share). At year-end the Company's Common Stock was not traded on an
established public trading market.
MANAGEMENT STOCK OPTIONS
In November 1997, the Board of Directors granted five-year management stock
options to purchase an aggregate of 115,365 shares of Common Stock to David L.
Lokken, Brian S. Aune, Brian S. Carr, and Michael A. Riley. These options are in
addition to those granted under the 1997 Stock Option Plan described below. All
of these options are vested and are exercisable at $8.00 per share.
STOCK OPTION PLAN
In November 1997, the Board of Directors adopted the Company's 1997 Stock
Option Plan (the "1997 Plan"). The 1997 Plan, which was approved by the
Company's shareholders in November 1997, provides for the grant of options to
directors, officers, other employees and consultants of the Company to purchase
up to an aggregate of 634,514 shares of Common Stock. The purpose of the 1997
Plan is to provide participants with incentives that will encourage them to
acquire a proprietary interest in, and continue to provide services to, the
Company. The 1997 Plan is to be administered by the Board of Directors, or a
committee of the Board, which has discretion to select optionees and to
establish the terms and conditions of each option, subject to the provisions of
the 1997 Plan. Options granted under the 1997 Plan may be "incentive stock
options" as defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), or nonqualified options.
The exercise price of incentive stock options may not be less than the fair
market value of Common Stock as of the date of grant (110% of the fair market
value if the grant is to an employee who owns more than 10% of the total
combined voting power of all classes of capital stock of the Company). The Code
currently limits to $100,000 the aggregate value of Common Stock that may be
acquired in any one year pursuant to incentive stock options under the 1997 Plan
or any other option plan adopted by the Company. Nonqualified options may be
granted under the 1997 Plan at an exercise price of not less than 85% of the
fair market value of the Common Stock on the date of grant. Nonqualified options
may be granted without regard
10.
<PAGE>
to any restriction on the amount of Common Stock that may be acquired pursuant
to such options in any one year. Options may not be exercised more than ten
years after the date of grant (five years after the date of grant if the grant
is an incentive stock option to an employee who owns more than 10% of the total
combined voting power of all classes of capital stock of the Company). Options
granted under the 1997 Plan generally are nontransferable, but transfers may be
permitted under certain circumstances in the discretion of the administrator.
Shares subject to options that expire unexercised under the 1997 Plan will once
again become available for future grant under the 1997 Plan. The number of
options outstanding and the exercise price thereof are subject to adjustment in
the case of certain transactions such as mergers, recapitalizations, stock
splits or stock dividends. The 1997 Plan is effective for ten years, unless
sooner terminated or suspended.
In November 1997, the Board of Directors of the Company granted six-year
options to purchase an aggregate of 259,572 shares of Common Stock under the
1997 Plan, of which 230,730 were granted to David L. Lokken, Brian S. Aune,
Brian S. Carr, Michael A. Riley and Richard Adey. All of these options are
exercisable at $8.00 per share. The options generally will be subject to vesting
and will become exercisable at a rate of 5% every three months from the date of
grant, subject to the optionee's continuing employment with the Company. Each
of the option agreements for Messrs. Lokken, Aune, Carr, Riley and Adey provides
that all options will become fully vested and exercisable upon a change in
control of the Company, as defined in the agreements.
In general, upon termination of employment of an optionee, all options
granted to such person which are not exercisable on the date of such termination
will immediately terminate, and any options that are exercisable will terminate
not less than three months (six months in the case of termination by reason of
death or disability) following termination of employment.
To the extent nonqualified options are granted under the 1997 Plan, the
Company intends to issue such options with an exercise price of not less than
the market price of the Common Stock on the date of grant.
EMPLOYEE DEFINED BENEFIT PLAN
GENERAL. On January 1, 1997 the Board of Directors adopted the Employee
Defined Benefit Pension Plan (the "Pension Plan") for the benefit of the
eligible employees of the Company. The primary purpose of the Pension Plan is to
provide a retirement benefit for participating employees. All employees of the
Company are eligible to participate in the Pension Plan on the January 1st next
following their date of hire. Employees who are covered by collective bargaining
units and whose retirement benefits are the subject of good faith bargaining,
however, are not eligible to participate in the Pension Plan.
ADMINISTRATION. The Pension Plan is administered by a committee (the "Plan
Committee") whose members are appointed by the Board of Directors of the
Company. The Plan Committee oversees the day-to-day administration of the
Pension Plan and has the authority to take action and make rules and regulations
necessary to carry out the purposes of the Pension Plan.
NORMAL RETIREMENT BENEFITS AND VESTING. The Pension Plan provides for
employer contributions only. Each year, the Company makes a contribution to the
pension plan equal to the minimum funding requirement sufficient to fund for the
benefits being accrued under the Pension Plan for the year. The Pension Plan
provides for a normal retirement benefit payable on a monthly basis for the
lifetime of the participant. The normal retirement benefit is equal to the
participant's credited benefit service (up to a maximum of 35 years) times the
sum of 0.75% of the participant's final average monthly compensation plus 0.65%
of such compensation in excess of the participant's average monthly wage.
However, the benefit actually payable from the Pension Plan will be reduced for
any benefits payable (or paid) with respect to service credited from the Defined
Benefit Pension Plan of the Company's predecessor.
11.
<PAGE>
For purposes of calculating a participant's normal retirement benefits,
average monthly compensation is defined in the Pension Plan as average monthly
compensation during the five consecutive plan years of the participant's
employment which yields the highest average compensation.
No maximum monthly benefit payable under the Pension Plan is to exceed the
applicable Internal Revenue Code Section 415 limit ($10,416.67 for 1997)
adjusted actuarially to reflect a participant's retirement age if the retirement
age is other than the social security retirement age. The monthly retirement
benefit payable by the Pension Plan is a benefit payable in the form of a
straight life annuity with no ancillary benefits. For a participant who is to
receive benefits other than in the form of a straight life annuity, the monthly
retirement benefit will be adjusted to an equivalent benefit in the form of a
straight life annuity on an actuarial equivalent basis.
A participant becomes fully vested in his accrued benefits under the
Pension Plan upon attainment of normal retirement age (age 65), permanent
disability, death or the termination of the Pension Plan. If a participant
terminates employment with the Company prior to retirement, death or disability,
the vested interest he has in accrued benefits under the Pension Plan is based
on years of service, with 0% vesting for less than five years of service and
100% vesting after five or more years of service.
PENSION PLAN INVESTMENTS. The Plan Committee selects vehicles for the
investment of plan assets. The Plan Committee then directs the trustee to invest
employer contributions in the investment option selected by the Plan Committee
under the Pension Plan.
PENSION PLAN AMENDMENT OR TERMINATION. Under the terms of the Pension
Plan, the Company reserves the right to amend or terminate the Pension Plan at
any time and in any manner. No amendment or termination, however, may deprive a
participant of any benefit accrued under the Pension Plan prior to the effective
date of the amendment or termination.
ESTIMATED MONTHLY BENEFITS. The following table sets forth the estimated
monthly benefits under the Pension Plan, without regard to any offsetting
benefit which may be payable from the Defined Benefit Pension Plans of the
Company's predecessors for service prior to January 1, 1997, based on the
current benefit structure and assuming the participant's current age is 50.
PENSION PLAN TABLE
<TABLE>
<CAPTION>
15 20 25 30 35
------- ------- ------ ------ ------
REMUNERATION YEARS OF SERVICE
- - --------------------------------- -------------------------------------------
<S> <C> <C> <C> <C> <C>
$125,000 . . . . . . . . . . $1,743 $2,323 $2,904 $3,485 $4,066
150,000 . . . . . . . . . . 2,180 2,907 3,633 4,360 5,087
175,000 . . . . . . . . . . 2,355 3,140 3,925 4,710 5,495
200,000 . . . . . . . . . . 2,355 3,140 3,925 4,710 5,495
225,000 . . . . . . . . . . 2,355 3,140 3,925 4,710 5,495
250,000 . . . . . . . . . . 2,355 3,140 3,925 4,710 5,495
300,000 . . . . . . . . . . 2,355 3,140 3,925 4,710 5,495
400,000 . . . . . . . . . . 2,355 3,140 3,925 4,710 5,495
450,000 . . . . . . . . . . 2,355 3,140 3,925 4,710 5,495
500,000 . . . . . . . . . . 2,355 3,140 3,925 4,710 5,495
</TABLE>
The compensation covered by the Pension Plan includes basic salary or
wages, overtime payments, bonuses, commissions and all other direct current
compensation but does not include contributions by the Company to Social
Security, benefits from stock options (whether qualified or not), contributions
to this or any other retirement plans or programs or the value of any other
fringe benefits provided at the expense of
12.
<PAGE>
the Company. For benefit calculation purposes, a "highest five-year" average of
compensation is used. Benefits are paid as straight-life annuities with no
subsidies or effects. The compensation covered by the Pension Plan for all of
the Named Executive Officers was limited to $160,000 in accordance with
Section 401(a)(17) of the Code.
The years of credited service for each Named Executive Officer who
participates in the Pension Plan are as follows:
<TABLE>
<CAPTION>
NAME YEARS
--------------------------------------------------------------- -------
<S> <C>
David L. Lokken . . . . . . . . . . . . . . . . . . . . . . . 9 years
Brian S. Aune . . . . . . . . . . . . . . . . . . . . . . . . 6 years
Brian S. Carr . . . . . . . . . . . . . . . . . . . . . . . . 5 years
Michael A. Riley . . . . . . . . . . . . . . . . . . . . . . . 8 years
</TABLE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
In November 1997, Joel F. McIntyre, Scott W. Hartman and Daniel C. Toomey,
Jr. were appointed to serve on the Compensation Committee of the Company's Board
of Directors. Mr. McIntyre, who is a Director of the Company and also a member
of its Audit Committee is a member of the law firm of McIntyre, Borges & Burns
LLP ("McIntyre, Borges & Burns"). During the 12 months ended December 31, 1997,
the Company paid McIntyre, Borges & Burns approximately $4,700 for legal
services rendered. Mr. Hartman, who is Chairman of the Company's Board of
Directors is a principal of Unique Investment Corporation. During the 12 months
ended December 31, 1997, the Company paid Unique $330,000 in management fees and
reimbursable expenses.
REPORT OF THE COMPENSATION COMMITTEE
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is a standing
committee comprised of three outside directors. One of the Compensation
Committee's functions is to recommend to the Board of Directors base salary,
incentive compensation and stock option awards for the executive officers of the
Company. Each of the principal executive officers of the Company is presently
employed pursuant to a written Employment Agreement. The Employment Agreement
with Mr. Lokken provides for a term ending on October 31, 2001. The Employment
Agreements with Messrs. Aune, Carr and Riley are each for a term ending on
October 31, 1999. The Employment Agreement with Richard Adey provides for a
term ending on February 3, 2001. Each Employment Agreement provides for the
payment of a base salary and participation by the executive officer in the
Company's Management Incentive Compensation Plan pursuant to a Management
Incentive Compensation Agreement executed by the Company and the executive
officer. Stock option awards are made pursuant to the Company's 1997 Stock
Option Plan. No member of the Compensation Committee is eligible to participate
in any of the plans or programs which it administers.
COMPENSATION PHILOSOPHY. The Compensation Committee's primary objective is
to craft a compensation package for the Company's executive officers so as to
align the interest of management with the long-term interests of the Company's
shareholders by tying major portions of executive compensation to attaining
individual and the Company's performance objectives which are directed at
enhancing shareholder value. A second goal of the Compensation Committee is to
implement a compensation philosophy that will both attract and retain the
experienced and talented individuals who are essential to the Company's
long-term success. The Committee intends to regularly review publicly available
information regarding compensation
13.
<PAGE>
programs and philosophies of the Company's competitors and other entities of a
comparable size with the Company, with the objective of ensuring that the
Company's compensation philosophy and programs remain competitive and
appropriate.
Each executive officer's compensation package is comprised of three
principal components: (i) base salary; (ii) annual incentive compensation; and
(iii) stock options.
BASE SALARY. The current base salary of each of the Company's principal
executive officers is set forth in the Employment Agreement between the Company
and such executive officer. As a general principle, the Compensation Committee
will attempt to establish and maintain base salaries within the range of
salaries for companies of a size and engaged in a business comparable to the
Company. Among the specific factors which are considered in establishing base
salary levels for the Company's principal executive officers are (i) the
executive officer's recent and long-term performance; (ii) identifiable
contribution by the executive officer to the Company meeting its performance
objectives; (iii) level of responsibility; and (iv) years of service with the
Company. Performance goals for each principal executive officer are established
prior to the beginning of each fiscal year. These goals are established by the
Chief Executive Officer with respect to other officers and by the Compensation
Committee with respect to the Chief Executive Officer.
MANAGEMENT INCENTIVE COMPENSATION PLAN. Certain employees of the Company
(including the Company's principal executive officers) are participants in the
Company's Management Incentive Compensation Plan (the "Plan") pursuant to which
they are entitled to receive performance based bonuses. Under the Plan, bonuses
are based on the Company's actual percentage achievement (versus forecast) with
respect to revenue, net income and return on net assets (calculated based upon
Company operating income and average net assets). Under the Plan, the President
and Vice Presidents have the potential of receiving bonuses equal to forty
percent (40%) and thirty percent (30%) of their base salaries for the fiscal
year, respectively, which can be doubled if the Company achieves between one
hundred percent (100%) and one hundred twenty percent (120%) of forecast net
income and at least one hundred percent (100%) of forecast revenues and return
on net assets.
STOCK OPTIONS. Stock options are granted to principal executive officers
under the Company's 1997 Stock Option Plan. The purpose of the 1997 Plan is to
encourage and facilitate stock ownership by participants and to provide
incentives to participants to remain in the employ of the Company and contribute
to enhancing shareholder value over the long-term. The 1997 Plan is
administered by the Board of Directors which has the discretion to select
optionees and the terms and conditions of each option, subject to the provisions
of the 1997 Plan. Options granted under the 1997 Plan may be "incentive stock
options" as defined in Section 422 of the Code or nonqualified options.
The foregoing report on executive compensation is provided by the following
members of the Compensation Committee of the Board of Directors:
Joel F. McIntyre, Chairman of the Compensation Committee
Scott W. Hartman
Daniel C. Toomey, Jr.
14.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the beneficial ownership of Common Stock as
of June 18, 1998 by: (i) each person known by the Company to beneficially own 5%
or more of the outstanding shares of Common Stock, (ii) each director of the
Company, (iii) each Named Executive Officer of the Company, and (iv) all
directors and executive officers of the Company as a group.
<TABLE>
<CAPTION>
Number of Shares of Percentage of
Name and Address(1) Common Stock(2) Outstanding(2)
- - ----------------------------------------- ------------------- ---------------
<S> <C> <C>
Melanie L. Bastian . . . . . . . . . . . 961,252 16.5%
John G. Makoff . . . . . . . . . . . . . 444,943 7.6
Daniel J. Lubeck . . . . . . . . . . . . 330,120 5.7
Scott W. Hartman . . . . . . . . . . . . 330,120 5.7
David L. Lokken(3) . . . . . . . . . . . 232,940 3.9
Brian S. Aune(4) . . . . . . . . . . . . 47,452 *
Brian S. Carr(4) . . . . . . . . . . . . 47,452 *
Michael A. Riley(4) . . . . . . . . . . . 47,452 *
Daniel C. Toomey, Jr. . . . . . . . . . . 2,000 *
Joel F. McIntyre(5) . . . . . . . . . . . 2,000 *
Mellon C. Baird . . . . . . . . . . . . . 2,000 *
All directors and executive
officers as a group (11 persons) . . . . 1,489,363 24.9
</TABLE>
___________
* Less than 1%.
(1) The address for all persons is c/o the Company at 11240 Sherman Way, Sun
Valley, California 91352.
(2) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to the securities. Shares of Common Stock
subject to options currently exercisable, or exercisable within 60 days of
June 18, 1998, are deemed outstanding for computing the percentage of the
person holding such options but are not deemed outstanding for computing
the percentage of any other person. Except as indicated by footnote and
subject to community property laws where applicable, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them.
(3) Includes 89,410 shares issuable upon exercise of vested options to purchase
common stock and 143,530 shares held by the David L. Lokken and Susan M.
Lokken Revocable Trust Dated 3-20-98, of which Mr. Lokken is a co-trustee.
(4) Includes 18,746 shares issuable upon exercise of vested options to purchase
common stock.
(5) Consists of 2,000 shares held by Paul, Hastings, Janofsky & Walker for the
benefit of Joel F. McIntyre as a self-directed retirement account.
15.
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Effective November 1, 1996, Aqhawk, an entity wholly-owned by the
shareholders of Unique Investment Corporation and the Company's executive
officers ("Aqhawk"), purchased all of the outstanding capital stock of the
Company from BTR Dunlop, Inc. (the "BTR Transaction"). The purchase price
Aqhawk paid was $29,802,861, consisting of (i) $18,828,841 obtained through debt
financing provided by Bank of America National Trust and Savings Association
("Bank of America") to the Company (the "Bank of America Loan"), which then
loaned such amount to Aqhawk, (ii) $6,500,000 obtained through a subordinated
note (the "Subordinated Note") provided by Melanie Bastian, a principal
shareholder and the former Chairman of the Company, to Unique which then loaned
such amount to Aqhawk, (iii) $2,000,000 obtained in return for the issuance to
Ms. Bastian of 400 shares of Preferred Stock of Aqhawk, and (iv) the remaining
amount obtained through cash provided by the Company. In December 1996, Aqhawk
was merged with the Company. In the merger, each two shares of common stock of
Aqhawk were converted into one share of common stock of the Company, and each
share of preferred stock was converted into one share of preferred stock of the
Company.
In connection with the BTR Transaction, BTR Dunlop, Inc. ("BTR") entered
into an Environmental Indemnity Agreement pursuant to which it agreed to
indemnify Aqhawk and the Company against losses arising from any finding that
the Company or Aqhawk is liable for the handling, storage and disposal of
hazardous substances on, around or originating from the Company's facilities
that existed on or before November 1, 1996, including any future amounts for
which the Company may be responsible in connection with certain lawsuits filed
regarding the groundwater in the San Fernando Valley Basin. BTR and its
subsidiary also agreed not to compete against the Company in the repair and
overhaul of aircraft landing gear for a period of three years following the BTR
Transaction. In addition, BTR granted the Company an exclusive, worldwide,
royalty-free license to use the Hawker Pacific logo and name, for as long as the
Company continues to use such marks, in connection with the repair and overhaul
of aircraft landing gear and a non-exclusive right to use the logo and name for
the same period in connection with all other operations of the Company.
To obtain a portion of the purchase price paid for the Company in
connection with the BTR Transaction, in November 1996, the Company issued the
Subordinated Note in the aggregate principal amount of $6.5 million. The
Subordinated Note bears interest at the rate of 11.8% per annum paid monthly and
matures January 1, 2001. The Company has agreed to use $1.5 million of the
funds provided by the Amended and Restated Business Loan Agreement, dated
January 23, 1998 (the "Amended Loan Agreement"), with Bank of America to repay a
portion of the $6.5 million Subordinated Note. The remaining balance of the
Subordinated Note has been replaced by a new $5 million promissory note. The
new note bears interest at a fixed rate of 11.8% per annum, requires the Company
to make monthly payments of interest only, and matures on the earlier of
June 30, 2005 or 180 days after the termination of the Amended Loan Agreement.
Pursuant to a Limited Guaranty dated as of November 27, 1996 by Melanie L.
Bastian in favor of Bank of America, in connection with the Bank of America
Loan, Ms. Bastian guaranteed the Company's payment obligations, and the
shareholders of the Company pledged as collateral for the loan all of their
capital stock of the Company. Ms. Bastian's guarantee and the pledges were
released upon the consummation of the Offering.
As of September 30, 1997, all of the Company's issued and outstanding
shares of preferred stock were held by Ms. Bastian. Upon the closing of the
Offering all of the outstanding shares of preferred stock were converted into
250,000 shares of Common Stock.
In September and October 1997, Ms. Bastian purchased an aggregate of
101,619 shares of Common Stock for $1,000,000 ($9.84 per share).
16.
<PAGE>
The Company and Unique entered into a management agreement dated March 1,
1997 (the "Old Management Agreement"), pursuant to which the Company paid Unique
management fees and reimbursable expenses totalling approximately $330,000
during the year ended December 31, 1997. In November 1997, the Company and
Unique entered into a new management services agreement (the "Management
Services Agreement") pursuant to which, upon the consummation of the Offering,
the Old Management Agreement was terminated, and Unique became entitled to
receive $150,000 per year payable monthly commencing in January 1999 for certain
management services to be rendered to the Company. The Management Services
Agreement will terminate upon the Company's completing an additional
underwritten public offering in which selling shareholders offer 25% or more of
the aggregate amount of securities offered in such offering.
The Company also entered into a mergers and acquisitions agreement dated as
of September 2, 1997 with Unique pursuant to which Unique received $300,000 upon
the closing of the acquisition of substantially all of the assets of the landing
gear repair and overhaul operations of British Airways plc, for services
provided in connection with the acquisition. Amounts paid under the Old
Management Agreement during 1998 were credited against this $300,000.
During the 12 months ended December 31, 1997, the Company paid McIntyre,
Borges & Burns approximately $4,700 for legal services rendered. Joel F.
McIntyre is a director of the Company and is a member of the law firm of
McIntyre, Borges & Burns.
INDEPENDENT AUDITORS
The Company's independent auditors for the fiscal year ended December 31,
1997 were Ernst & Young LLP, and the Board of Directors has selected Ernst &
Young LLP as the Company's independent auditors for the fiscal year ending
December 31, 1998. A representative of Ernst & Young LLP will be available at
the Annual Meeting to respond to appropriate questions or make any other
statements as such representative deems appropriate.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
The Company will furnish without charge a copy of the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997 as filed with
the Securities and Exchange Commission to any shareholder desiring a copy.
Shareholders may request a copy by writing to the Company at:
Brian S. Aune
Chief Financial Officer
Hawker Pacific Aerospace
11240 Sherman Way
Sun Valley, California 91352
SUBMISSION OF SHAREHOLDER PROPOSALS
Shareholders are advised that any shareholder proposal, including
nominations to the Board of Directors, intended for consideration at the 1999
Annual Shareholders Meeting must be received by the Company no later than
February 15, 1999 to be included in the proxy material for the 1999 Annual
Meeting. It is recommended that shareholders submitting proposals direct them
to Brian S. Aune, Chief Financial Officer of the Company, and utilize certified
mail, return-receipt requested in order to ensure timely delivery.
17.
<PAGE>
OTHER MATTERS
The Board of Directors knows of no matter to come before the Annual Meeting
other than as specified herein. If other business should, however, be properly
brought before the Annual Meeting, the persons voting the proxies will vote them
in accordance with their best judgment.
THE SHAREHOLDERS ARE URGED TO COMPLETE, SIGN, AND RETURN PROMPTLY THE
ACCOMPANYING PROXY IN THE ENCLOSED ENVELOPE.
By Order of the Board of Directors
/s/ Scott W. Hartman
Scott W. Hartman
CHAIRMAN OF THE BOARD
June 29, 1998
<PAGE>
HAWKER PACIFIC AEROSPACE
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS, WEDNESDAY, JULY 29, 1998
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
The undersigned hereby appoints Scott W. Hartman and David L. Lokken, and
each or either of them, as proxy holders with power to appoint his substitute
and hereby authorizes the proxy holders to represent and vote, as designated
below, all the shares of Hawker Pacific Aerospace (the "Company") held of record
by the undersigned on June 18, 1998 at the Annual Meeting of Shareholders to be
held on Wednesday, July 29, 1998 at 10:00 A.M. or any and all adjournments
thereof.
<TABLE>
<S> <C> <C>
ELECTION OF FOR all nominees listed below WITHHOLD AUTHORITY
DIRECTORS: (except as marked to the contrary to vote for all nominees listed
below). / / below. / /
</TABLE>
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, DRAW A LINE THROUGH
SUCH NOMINEE'S NAME.)
Scott W. Hartman David L. Lokken Daniel J. Lubeck John G. Makoff Joel F.
McIntyre Daniel C. Toomey, Jr. Mellon C. Baird
In their discretion, the proxy holders are authorized to vote upon such
other business as may properly be brought before the Annual Meeting or any and
all adjournments thereof.
(CONTINUED ON REVERSE SIDE)
<PAGE>
THIS PROXY WILL BE VOTED AS SPECIFIED OR, IF NO CHOICE IS SPECIFIED, FOR THE
ELECTION OF THE NOMINEES, AND AS SAID PROXIES DEEM ADVISABLE ON SUCH OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE MEETING AND ANY AND ALL ADJOURNMENTS
THEREOF. IN THE EVENT ANY OF THE NOMINEES IS UNAVAILABLE FOR ELECTION OR UNABLE
TO SERVE, THE SHARES REPRESENTED BY THIS PROXY MAY BE VOTED FOR A SUBSTITUTE
NOMINEE SELECTED BY THE BOARD OF DIRECTORS.
Dated: _____________________, 1998
__________________________________
Signature
__________________________________
(Signature, if held jointly)
Please sign exactly as your name
appears hereon. When shares are
held by joint tenants, both should
sign. When signing as attorney,
executor, administrator, trustee
or guardian, please give full
title as such. If a corporation,
please sign in full corporate name
by the President or other
authorized officer. If a
partnership, please sign in
partnership name by an authorized
partner.
PLEASE PROMPTLY MARK, SIGN, DATE, AND RETURN THIS PROXY USING THE ENCLOSED
ENVELOPE.
