Exhibit 10.42
SHAREHOLDERS AGREEMENT
AMONG
LSG LUFTHANSA SERVICE EUROPA/AFRIKA GMBH
TOP FLIGHT CATERING AB
AND
BALTIC INTERNATIONAL USA, INC.
December 2, 1997
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
TABLE OF CONTENTS
1. DEFINITIONS 2
2. COMPLIANCE 3
2.1. Compliance Actions 3
2.2. Conflict with Memorandum or Articles 4
3. CORPORATE ORGANIZATION AND PROCEDURES 4
3.1. General 4
3.2. Board of Directors 4
3.2.1. Number and Composition. 4
3.2.2. Removal and Replacement of Directors. 4
3.2.3. Meetings 5
3.2.4. Non-Voting Observers 5
3.3. Certain Shareholder Rights 5
4. COMPANY BUSINESS, MANAGEMENT AND OPERATIONS 6
4.1. Business of the Company 6
4.2. Shareholder Expertise 6
4.3. LSG Lufthansa Service/Sky Chefs Network 6
4.4. Management and Operation of the Company 7
4.5. BIUSA Assistance to Managing Director 7
4.6. Annual Budget 7
4.6.1. Preparation of Annual Budgets 7
4.6.2. Operations Consistent with Annual Budget 7
4.7. Accounting 8
4.8. Audits by Shareholders 8
4.9. Key Personnel 8
4.10. Dividends 8
5. CERTAIN CAPITAL CONTRIBUTIONS 9
5.1. Valuation of Riga Shares 9
5.2. Contribution of Riga Shares and Cash by Shareholders 9
6. NON-COMPETE 9
6.1. Existing Company Locations 9
6.2. Territory 10
7. LSG OPTION TO PURCHASE CERTAIN SHARES FROM BIUSA 10
7.1. Option 10
7.2. Option Exercise 11
7.3. BIUSA Actions 11
8. PRE-EMPTIVE RIGHTS; SHARE ISSUANCES 11
8.1. Rights Notice 11
8.2. Acceptance and Issuance of Shares to Shareholders 12
8.3. Issuance of Shares to Third Parties 12
9. RESTRICTIONS ON TRANSFER OF SHARES 12
9.1. General Prohibition on Transfer 12
9.2. Transfer to Affiliate 13
9.3. Transfer by Right of First Refusal 13
9.3.1. Third Party Offer 14
9.3.2. Offer Period 14
9.3.3. Acceptance 14
9.3.4. Third Party Sale 14
9.3.5. Good Title 15
9.4. Regulatory Compliance 15
9.5. Pledge of Shares 15
9.6. Insolvency and Involuntary Transfers 16
9.7. Specified Value 16
10. TERM 16
10.1. Effectiveness 16
10.2. Termination 17
10.3. Continuing Rights and Obligations 17
11. CONFIDENTIALITY 17
12. MISCELLANEOUS 18
12.1. Assignment 18
12.2. Entire Agreement; Amendment 18
12.3. Severability 18
12.4. Waiver 18
12.5. Time of Essence 19
12.6. Limitation on Benefit 19
12.7. Binding Effect 19
12.8. Governing Law 19
12.9. Arbitration 19
12.10. Notices 20
12.11. Headings; References 21
12.12. Execution in Counterparts 21
Annex A Initial Directors and Non-Voting Observers
Annex B 1998 Annual Budget
SHAREHOLDERS AGREEMENT
THIS SHAREHOLDERS AGREEMENT is entered into on the 2nd day of December,
1997 among:
LSG LUFTHANSA SERVICE EUROPA/AFRIKA GMBH, a private company
organized and existing under the laws of the Federal Republic of
Germany, with principal offices at Am ▇▇▇▇▇▇▇ ▇▇, ▇-▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Germany ("LSG");
BALTIC INTERNATIONAL USA, INC., a corporation organized and
existing under the laws of the State of Texas, USA, with principal
offices at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ("BIUSA");
and
TOP FLIGHT CATERING AB, a Swedish limited liability company
organised and existing under the laws of Sweden, with corporate
registration number 556457-7525, and with an address at ▇▇▇ ▇▇▇,
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 12, 103 87 ("TOPflight").
WHEREAS, LSG, BIUSA and TOPflight constitute all of the shareholders of
AIRO Catering Services, Ltd., an international business company organized
under the laws of the British Virgin Islands, having a registration number
175406 and a registered office at the offices of ATC Trustees (BVI)
Limited, 2nd Floor, ▇▇▇▇▇▇ Building, P.O. Box 933, Road Town, Tortola,
British Virgin Islands (the "Company");
WHEREAS, the Company has an authorized share capital of US$10,000,000
which is made up of one class and one series of shares divided into
1,000,000 shares of US$10.00 par value each (such shares, together with any
subsequently authorized shares of the Company, being referred to herein as
the "Shares"), of which 234,081 Shares are currently issued and outstanding
and held as follows:
BIUSA: 107,377 Shares
TOPflight: 115,000 Shares
LSG: 11,704 Shares
WHEREAS, LSG purchased its 11,704 Shares from BIUSA on the date hereof
pursuant to a Share Purchase Agreement between LSG and BIUSA dated the date
hereof;
WHEREAS, the parties hereto desire to enter into this Agreement to govern
certain aspects of the relationship of the Shareholders, to set certain
restrictions on the transfer and ownership of Shares and to provide for
certain other matters in respect of the Company and the Shares;
WHEREAS, the Shareholders desire that this Agreement supersede and replace the
Joint Venture Agreement entered into between BIUSA and TOPflight on February
5, 1996.
NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements hereinafter set forth, the parties hereto agree as follows:
1. DEFINITIONS
In this Agreement, the following words shall have the following meanings
except where the context otherwise requires:
"Affiliate" means (a) any entity which directly or indirectly, through
one or more intermediaries, Controls, is Controlled by, or is under
common Control with such entity; and (b) with respect to LSG: Sky Chefs,
Inc. and any of its Affiliates. For the avoidance of doubt, as of the
date hereof LSG does not Control, is not Controlled by and is not under
common Control with Sky Chefs, Inc.
"Annual Budget" means the consolidated budget and business plan for the
Company and its Subsidiaries as may be established and amended by the
Board from time to time in respect of a financial year of the Company
and the Subsidiaries.
"Articles" means the articles of association of the Company, as may be
amended from time to time.
"Board" means the board of directors of the Company.
"Control" means the possession, direct or indirect, of the power to
direct the management and policies of an entity, whether through the
ownership of voting securities, by agreement or otherwise.
"Directors" means duly elected directors of the Company.
"Key BIUSA Shareholders" means the following persons, who, on the date
hereof, hold the numbers of issued and outstanding shares of common
stock of BIUSA as are set out opposite their names:
Common Shares
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 610,854
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 515,369
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 153,271
"Memorandum" means the memorandum of association of the Company as may
be amended from time to time.
"Riga Catering Services" means Riga Catering Services Ltd., a company
organised under the laws of Latvia with a share capital of $US100,000
divided into 100,000 shares of $US 1.00 par value each, of which 37,820
are held by the Company, 20,680 are held by BIUSA, 20,750 are held by
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and 20,750 are held by ▇▇▇▇▇▇ Arkulinsky.
"Shareholder" means LSG, BIUSA and TOPflight (for so long as they are
shareholders of the Company) and, as applicable, such other shareholders
of the Company as may exist from time to time.
"Shares" means any and all authorized shares of the share capital of the
Company.
"Subsidiaries" means Riga Catering Services and such other companies in
which the Company directly or indirectly holds a majority equity
interest and through which the Company carries on its business.
"Territory" means the states of the former Soviet Union (including
Latvia, Lithuania and Estonia and the Commonwealth of Independent
States) and Albania, Bulgaria, Croatia, Poland, Romania, Serbia, the
Slovak Republic and Slovenia.
2. COMPLIANCE
2.1. Compliance Actions
The Shareholders shall take or cause to be taken all such actions
(including, but not limited to, voting shares, holding shareholder
general meetings and board of directors meetings, approving
resolutions, amending memoranda and articles of association, and
executing and filing documents, both in respect of the Company and
the Subsidiaries) as may be necessary or appropriate to implement
and ensure compliance with all provisions of this Agreement, and
to fully effectuate the purposes, terms and conditions of this
Agreement.
2.2. Conflict with Memorandum or Articles
In the event of any conflict between the provisions of this
Agreement and the Memorandum and Articles, then the provisions of
this Agreement shall control and the Shareholders shall cause the
Memorandum or Articles, as appropriate, to be amended to conform
to the provisions of this Agreement.
3. CORPORATE ORGANIZATION AND PROCEDURES
3.1. General
The corporate organization and procedures of the Company shall be
as set out in the Memorandum and Articles, as supplemented by the
provisions of this Agreement.
3.2. Board of Directors
3.2.1. Number and Composition.
The Board shall consist of five Directors, two of whom shall
be designated by BIUSA, two of whom shall be designated by
TOPflight, and one of whom shall be designated by LSG. The
initial Directors designated by the parties are as specified
in Annex A attached hereto.
3.2.2. Removal and Replacement of Directors.
Any Director designated by a Shareholder shall be removed
upon written request of the designating Shareholder. If a
Shareholder shall cease to be a shareholder of the Company,
such Shareholder shall cause the Director(s) designated by
it to resign concurrently with such Shareholder ceasing to
be a shareholder of the Company. If a Director designated
by a Shareholder shall cease to be a Director for any
reason, the remaining Directors or the Shareholders shall
fill the vacancy thereby created by electing as soon as
reasonably possible, an individual designated by such
Shareholder. The Shareholders shall use reasonable efforts
to prevent any action from being taken by the Board during
the pendency of any vacancy due to death, resignation or
removal of a Director unless the Shareholder entitled to
have an individual designated by it to fill such vacancy
shall have failed for a period of at least 10 days after
becoming aware of such vacancy to designate a replacement.
3.2.3. Meetings
The Board shall meet at least twice in each financial year
of the Company unless otherwise waived by all the Directors,
and special meetings may be held at the request of any
Director. Meetings may take place, in accordance with the
Articles, at such location, or by telephone facilities, as a
majority of the Directors shall determine.
3.2.4. Non-Voting Observers
LSG and TOPflight shall have the right to designate, in the
aggregate, from time to time, up to three non-voting
observers to the Board who will have the same rights as the
Directors, other than the right to vote on matters to be
decided by the Board, including but not limited to the right
to receive notice of all meetings of the Board and the right
to receive the same information and documentation as is
provided to the Directors. The initial non-voting
observers designated by LSG and TOPflight are as specified
in Annex A attached hereto.
3.3. Certain Shareholder Rights
The following actions shall not be taken without the prior written
consent of all the Shareholders:
(a) amendment of the Memorandum or Articles of Association;
(b) dissolution or liquidation of the Company, except as may be
required by applicable law;
(c) merger of the Company with another company;
(d) sale or other disposition of all or substantially all of the
business or assets of the Company or of any of the
Subsidiaries;
(e) acquisition or commencement by the Company of a new line of
business that is not related to food service or food
products; and
(f) amendment of this Agreement.
4. COMPANY BUSINESS, MANAGEMENT AND OPERATIONS
4.1. Business of the Company
The business of the Company shall be the provision of in-flight
catering services at such locations within the Territory as the
Board may agree from time to time, including Riga, Latvia; Kiev,
Ukraine; and Talinn, Estonia. The Company shall provide such
services directly or, as may be determined by the Board,
indirectly through Subsidiaries, including Subsidiaries formed
under the national law of the countries in which such services are
provided.
4.2. Shareholder Expertise
The Company has been founded on the basis that each Shareholder
will contribute to the success of the Company by making available
its expertise to the business of the Company.
4.3. LSG Lufthansa Service/Sky Chefs Network
For so long as LSG is a shareholder of the Company, the Company
shall be part of the worldwide network of providers of inflight
catering services that are affiliated with LSG and that currently
operate under the tradename of LSG Lufthansa Service/Sky Chefs.
As part of such network, the Company shall be guided by, and seek
to adhere to, the standards and policies of such network in the
operation of the Company's business -- including, but not limited
to, quality control standards (as they may relate to, among other
things, hygiene, sanitation and food service), financial and
operational reporting procedures, and use of the tradename and
logo of LSG Lufthansa Service/Sky Chefs -- as any of such policies
and standards may be revised from time to time. LSG shall keep
the Company timely informed of the foregoing standards and
policies and any revisions thereof. For the avoidance of doubt,
in the event LSG ceases to be a shareholder of the Company, the
Company shall forthwith cease to use the tradename and logo of LSG
Lufthansa Service/Sky Chefs or any similar name or logo, unless
LSG otherwise consents to such use. Further, in the event LSG
determines that certain locations at which the Company provides
services do not meet LSG's standards, for whatever reason, LSG
shall have the absolute right to require that such location cease
to use the tradename and logo of LSG Lufthansa Service/Sky Chefs
or any similar name or logo.
4.4. Management and Operation of the Company
The Board shall manage the business and affairs of the Company in
accordance with this Agreement. A Managing Director of the Company, who
shall be employed by the Company, shall be proposed by BIUSA and shall
be subject to the Board's approval. The Managing Director shall be
responsible for operation of the day-to-day business of the Company in
accordance with the Annual Budget and such policies as may be
established by the Board. The Managing Director shall report to the
Board all material development in respect of the Company's business on a
monthly basis, or more frequently as appropriate. The Current Managing
Director is as specified Annex A. To the extent the Board requests the
significant services of one or more Shareholders in respect of the
operations of the Company, such Shareholders shall be compensated by the
Company for such services on a fair market value basis.
4.5. BIUSA Assistance to Managing Director
BIUSA undertakes to advise the Managing Director in the
negotiations and development of new inflight catering facilities
in the Territory and in the oversight of the planned expansion and
development of the Company, including in the identification of
third party financing and the financial management of the Company.
4.6. Annual Budget
4.6.1. Preparation of Annual Budgets
Prior to the beginning of each financial year of the
Company, the Board shall cause to be prepared an Annual
Budget with respect to such financial year for review and
approval by the Board. In the event that the Board shall
have failed, for whatever reason, to have approved the
Annual Budget for a particular financial year by the
commencement of such financial year, then the business of
the Company shall be carried out in accordance with the
Annual Budget applicable to the last preceding year,
excluding for such purpose, however, expenditures,
borrowings and other transactions reflected therein not in
the ordinary course of business. The 1998 Annual Budget is
attached hereto as Annex B.
4.6.2. Operations Consistent with Annual Budget
The Company shall carry out its business in a manner
consistent with the terms of the applicable Annual Budget.
The Board shall review the Annual Budget at each regular
meeting of the Board and may amend the Annual Budget at any
such meeting if and to the extent agreed by the Board.
4.7. Accounting
The Company shall maintain complete and accurate accounting
records which shall be audited annually and prepared on a
consistent basis in accordance with generally accepted accounting
principles. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall be the Company's auditor for
the year ending 31 December 1997.
4.8. Audits by Shareholders
Each Shareholder shall have the right to conduct, at its own
expense, its own audits of the Company's records, finances and
operations and the Company shall provide all reasonable assistance
to the Shareholders for such purpose.
4.9. Key Personnel
Employment by the Company of key personnel shall be subject to the
prior approval of the Board.
4.10. Dividends
The Board shall determine the extent to which the Company and the
Subsidiaries will declare and pay dividends out of earnings
available for such purpose; provided, however:
(i) any Shareholder shall have the right, by written notice to
the other Shareholders, to request that the Company declare a
dividend of at least 50% of the net after tax earnings of the
Company then available for such purpose (or that the
Shareholders take such action as may be appropriate to cause
one or more Subsidiaries to declare such a dividend in respect
of such Subsidiaries), and if the Board determines that
sufficient cash is available and that such earnings and cash
are not otherwise required to meet the expected near term
business needs of the Company or the Subsidiaries, as the case
may be (including, without limitation, needs for operations,
capital expenditures or expansion), then the Company shall
declare such a dividend (or the Shareholders shall take such
appropriate action in respect of the declaration by the
Subsidiaries of such dividends) within 30 days of the
Shareholder notice; and
(ii) Until February 28, 1998, the Shareholders shall take such
action as may be appropriate to cause Riga Catering Services to
declare a dividend of 100% of its net after tax earnings
available for such purpose.
5. CERTAIN CAPITAL CONTRIBUTIONS
5.1. Valuation of Riga Shares
Promptly following execution of this Agreement, the Shareholders
shall attempt collectively to determine a value for all of the
shares held by BIUSA in Riga Catering Services (the "Riga
Shares").
5.2. Contribution of Riga Shares and Cash by Shareholders
Following determination of such value for the Riga Shares (the
"Riga Share Value"), and subject to the following sentence, the
Shareholders intend that BIUSA contribute the Riga Shares to the
Company as a capital contribution in an amount equal to the Riga
Share Value and that, concurrently with such capital contribution
by BIUSA, LSG and TOPflight make capital contributions to the
Company in cash, based on their percentage shareholdings in the
Company, in an amount sufficient to retain such percentage
shareholdings following such contributions by the Shareholders.
The obligation of LSG and TOPflight to make such capital
contributions is subject to the approval of the Boards of
Directors of LSG and TOPflight and to their ability to obtain
necessary financing for such contributions, and BIUSA's obligation
to contribute the Riga Shares is subject to LSG and TOPflight
concurrently making the foregoing cash contributions.
6. NON-COMPETE
6.1. Existing Company Locations
No Shareholder, nor any Affiliate thereof, shall compete, directly
or indirectly, with the Company's business of providing inflight
catering services at those locations where the Company is then
conducting such business; provided, however, that (i) Sky Chefs,
Inc. and its Affiliates are excepted from the foregoing
restriction (although LSG shall vote against any proposed actions
of Sky Chefs, Inc. to enter into competition with the Company at
such locations, to the extent that LSG is in a position to do so)
and, (ii) without limiting the generality of the foregoing, the
Moscow inflight catering facility currently owned by an Affiliate
of Sky Chefs, Inc. is excepted from the foregoing restriction.
For the avoidance of doubt, the foregoing restriction shall not
apply to a former Shareholder that no longer holds any Shares.
6.2. Territory
For a period of four years from the date hereof, no Shareholder
nor any Affiliate thereof, shall provide inflight catering
services in the Territory except through the Company; provided,
however, that (i) Sky Chefs, Inc. and its Affiliates are excepted
from the foregoing restriction (although LSG shall vote against
any proposed actions of Sky Chefs, Inc. to compete with the
Company in the Territory, to the extent that LSG is in a position
to do so) and (ii) without limiting the generality of the
foregoing, the Moscow inflight catering facility currently owned
by an Affiliate of Sky Chefs, Inc. is excepted from the foregoing
restriction. For the avoidance of doubt, the foregoing
restriction shall not apply to a former Shareholder that no longer
holds any Shares. In the event that any of the Key BIUSA
Shareholders Transfers (as such term is defined in Clause 8.1) in
excess of 50% of his shares of common stock in BIUSA (as set out
in Clause 1), then neither LSG nor TOPflight shall be bound by the
foregoing restriction. In the event that any of the Shareholders
are unable or otherwise unwilling to provide the capital
contributions or other financing to the Company that the Board
determines is required for the Company to commence inflight
catering operations in a particular location, then the other
Shareholders shall not be bound by the foregoing restriction in
respect of such particular location. Prior to the expiration of
such four year period, the Shareholders shall consider whether the
foregoing restriction should be extended for an additional four
year period.
7. LSG OPTION TO PURCHASE CERTAIN SHARES FROM BIUSA
7.1. Option
In the event the Shareholders agree in writing to extend the non-
compete restrictions set out in Clause 6.2 for an additional four-
year period pursuant to the last sentence of Clause 6.2, then LSG
shall have the right, but not the obligation (the "Option"), to
purchase from BIUSA 6% of the total issued and outstanding Shares
of the Company at the date of such Shareholders' agreement (the
"Option Shares") for a total purchase price equal to the product
of (a) five times the Company's annualized, pre-tax earnings and
pre-intercompany charges, excluding non-recurring and unusual
items, as based on the financial quarter of the Company
immediately preceding LSG's exercise of the Option, multiplied by
(b) 6%.
7.2. Option Exercise
LSG may exercise the Option by delivering written notice of
exercise to BIUSA within 30 days after the agreement referred
to in the first sentence of Clause 7.1. Within 10 days
following BIUSA's receipt of such notice, BIUSA shall deliver
to LSG certificates representing the Option Shares and
concurrently with LSG's receipt of the Option Shares, LSG shall
deliver to BIUSA by cheque or wire transfer the amount of the
purchase price for the Option Shares. BIUSA's delivery of the
Option Shares to LSG shall constitute a representation and
warranty by the BIUSA to LSG that BIUSA has good and marketable
title to the Option Shares, free and clear of any lien, charge,
pledge, encumbrance, security interest or adverse claim, except
for restrictions pursuant to this Agreement. In addition,
BIUSA shall deliver to LSG all documents, instruments and
releases and shall do all acts and things as LSG may reasonably
request, whether before or after closing of the purchase of the
Option Shares, to vest title to the Option Shares in LSG at the
closing of such purchase.
7.3. BIUSA Actions
BIUSA shall at all times continue to hold sufficient Shares to
enable LSG to fully exercise the Option and shall take all such
actions as may be necessary or appropriate to enable LSG to
acquire the Option Shares and otherwise to preserve LSG's rights
pursuant to the Option. BIUSA shall not take any actions that are
inconsistent with LSG's rights pursuant to the Option.
8. PRE-EMPTIVE RIGHTS; SHARE ISSUANCES
Except as otherwise provided in Clause 5.2, the Company shall not issue
any additional Shares unless such additional Shares shall have first
been offered to all the Shareholders pro rata in accordance with their
respective holdings of Shares (a "Rights Offer") in accordance with the
following procedures:
8.1. Rights Notice
To effect a Rights Offer, the Board shall cause to be delivered to
the Shareholders a notice (the "Rights Notice") specifying the
total number of Shares being offered, the number of Shares being
offered to each Shareholder, the subscription price for each Share
and the date by which such offer, if not accepted, will be deemed
to have been declined (such date to be not less than six months
from the date the notice is given)(the "Acceptance Period").
8.2. Acceptance and Issuance of Shares to Shareholders
In order to accept the offer to subscribe for Shares pursuant to
the Rights Notice, a Shareholder shall give notice to the Board
before expiration of the Acceptance Period, specifying the number
of Shares for which it subscribes pursuant to the offer made to it
in the Rights Notice. A Shareholder that fails to give such
notice to the Company within the Acceptance Period shall be deemed
to have declined the offer to subscribe for Shares. If any of the
Shareholders has failed within the Acceptance Period to accept
subscriptions for all of the Shares offered to it, then the
Company shall offer such remaining Shares to the other
Shareholders pro rata in accordance with their respective holdings
of Shares, which offer shall remain open for acceptance for a
period of 30 days. Thereafter, the Company shall issue to the
accepting Shareholders, in consideration of their payment of the
subscription price, the number of Shares for which such
Shareholders have agreed to subscribe.
8.3. Issuance of Shares to Third Parties
If fewer than all of the Shares offered to the Shareholders
pursuant to the Rights Offer are purchased by the Shareholders,
then during the four months following the earlier of (a)
expiration of the Acceptance Period and (b) the acceptance or
rejection by all of the Shareholders of all of the Shares subject
to the Rights Offer, the Company shall be entitled to issue to
persons other than the Shareholders any Shares for which the
Shareholders did not subscribe, provided that such Shares shall be
issued on economic terms no less favourable to the Company than
those upon which such Shares were offered to the Shareholders in
accordance with the Rights Offer. If the Company does not issue
such Shares within such four month period, the foregoing pre-
emptive rights shall again apply in respect of unissued Shares.
Except as provided for in this Clause 8, no Shareholder shall be
entitled as of right to subscribe for, purchase or receive any
part of any issue of Shares or securities of the Company now or
hereafter authorized. The provisions of this Clause 8 shall
apply, mutatis mutandis, to securities that by their terms or by
agreement are convertible into, exchangeable for or carry the
right to purchase Shares.
9. RESTRICTIONS ON TRANSFER OF SHARES
9.1. General Prohibition on Transfer
No Shareholder shall, without the prior written consent of the
other Shareholders, Transfer any Shares (or any interest therein)
now or hereafter held or acquired by such Shareholder, to any
person except as provided by this Agreement. For purposes of this
Clause 9, a "Transfer" shall mean any direct or indirect sale,
gift, mortgage, pledge or other creation of a security interest or
encumbrance, exchange, assignment or other disposition, including
a disposition under judicial order, legal process, execution,
attachment, enforcement of an encumbrance, or transfer to a
trustee in bankruptcy, and shall include the effective
accomplishment of any of the foregoing through a series of related
transactions (including an indirect Transfer through the sale of
an Affiliate that is a Shareholder) the primary intention of which
is to avoid the restrictions in this Clause 9.1. A purported
Transfer of any Shares or any interest therein in violation of
this Agreement shall not be valid and the Company shall not
register any such Shares on the share register of the Company, nor
shall any voting rights attaching to or relating to such Shares be
exercised by the purported transferee, nor shall any purported
exercise of such voting rights by the purported transferee be
valid or effective, nor shall any dividend or distribution be paid
or made on such Shares.
9.2. Transfer to Affiliate
A Shareholder may Transfer all or any part of its interest in its
Shares to an Affiliate, provided that
(a) such Shareholder gives the other Shareholders and the
Company at least 10 days prior written notice of such
Transfer; and
(b) the transferee Affiliate agrees to be bound by the
provisions of this Agreement and executes a counterpart of
this Agreement assuming the rights and obligations of a
Shareholder hereunder. In the event that LSG Transfers
less than all of its interests in its Shares to an
Affiliate, then LSG and the transferee Affiliate each shall
hold the rights and obligations of a Shareholder hereunder
except that LSG shall retain its right to nominate
Directors;
(c) the transferring Shareholder guarantees the obligations of
the Affiliate transferee hereunder, except in the case of a
transfer by LSG of up to 50% of its Shares to Sky Chefs,
Inc. or an Affiliate of Sky Chefs, Inc.
9.3. Transfer by Right of First Refusal
A Shareholder may Transfer all (but not less than all) of its
interest in all (but not less than all) of its Shares in
accordance with the following procedures:
9.3.1. Third Party Offer
If a Shareholder (the "Transferor") has received a bona fide
offer from a third party (a "Third Party Offer") for the
purchase of the Transferor's Shares for cash consideration
and the Transferor desires to accept the Third Party Offer,
the Transferor shall, prior to transferring its Shares to
such third party, make to the other Shareholders (the
"Offerees") an offer in writing to sell to the Offerees, pro
rata based on their respective holdings of Shares, the
Shares proposed to be transferred by the Transferor (the
"Offer"). Attached to the Offer shall be a statement of the
Transferor's intention to transfer the Shares to the third
party, subject to the Offerees' right of first refusal, and
all particulars of the proposed transfer including a copy of
the Third Party Offer.
9.3.2. Offer Period
The Offerees shall have 30 days after delivery of the Offer
(the "Offer Period") to notify the Transferor whether or not
they intend to purchase all the Transferor's Shares. If one
of the Offerees does not accept the Offer within the Offer
Period, the Offer Period shall be deemed extended by 10 days
and the other Offeree shall be entitled to purchase the
Transferor's Shares that had been offered to the non-
accepting Offeree by giving notice to the Transferor within
such 10 day period.
9.3.3. Acceptance
If the Offerees accept the Offer in full, the Transferor
shall sell, and the Offerees shall purchase, the
Transferor's Shares at the price and on the terms set forth
in the Third Party Offer, and such sale and purchase shall
be completed within 20 days after the end of the Offer
Period.
9.3.4. Third Party Sale
If the Offerees have not accepted the Offer pursuant to
Clause 9.3.2 within the Offer Period, the Transferor shall
be entitled, any time within 60 days after the expiration of
such Offer Period to sell in a bona fide sale and on the
terms and conditions contained in the Third Party Offer all
(but not less than all) of the Transferor's interest in all
(but not less than all) of the Transferor's Shares to the
third party that made the Third Party Offer.
9.3.5. Good Title
The acceptance by the Transferor of payment from the
Offerees for the Transferor's Shares shall constitute a
representation and warranty by the Transferor that the
Transferor has good and marketable title to the Transferor's
Shares, free and clear of any lien, charge, pledge,
encumbrance, security interest or adverse claim, except for
restrictions pursuant to this Agreement. In addition, the
Transferor shall deliver to the Offerees all documents,
instruments and releases and shall do all acts and things as
the Offerees may reasonably request, whether before or after
closing of the Transfer, to vest title to the Transferor's
Shares in the Offerees at the closing of such transfer.
9.4. Regulatory Compliance
Notwithstanding any other provision of this Agreement, it shall be
a condition precedent to the closing of any Transfer of Shares
pursuant to this Agreement that such Transfer shall comply in all
respects with all applicable laws and that all consents or
approvals of governmental, airport, licensing or other regulatory
authorities with jurisdiction over the Company, its Shares, its
assets or its business reasonably necessary to effect the Transfer
of Shares and to permit the effective operation of the Company's
business in the ordinary course following such Transfer shall have
been received. If, in the reasonable opinion of the Board, such a
consent or approval is required to effect such Transfer, then the
closing of such Transfer shall be postponed until such consent is
obtained, subject to a maximum postponement of 90 days. The
transferring Shareholder shall be responsible for obtaining all
necessary consents or approvals and the Company and the
transferring Shareholder shall cooperate with the transferee of
the Shares in such endeavour. If such consent or approval cannot
be obtained within such 90 day period, than the agreement to
effect the Transfer shall be null and void and no party thereto
will have any further rights or obligations thereunder.
9.5. Pledge of Shares
A Shareholder may pledge up to 50% of the Shares it holds on the
condition that the pledge agreement in respect of such pledge
provides that (a) in the event the pledgee is entitled to
foreclose on the pledged Shares, such pledgee shall give the other
Shareholders a right to acquire each of such pledged Shares for
the Specified Value, as defined in Clause 9.7 and (b) the Company
consents to such pledge agreement, which consent shall not be
unreasonably withheld or delayed. In addition, if the
Shareholders unanimously agree, all the Shareholders may pledge
their Shares for the purpose of obtaining third party financing
for the Company.
9.6. Insolvency and Involuntary Transfers
If a Shareholder should enter into liquidation, either voluntary
or compulsory, or become insolvent, or enter into corporate
reorganization proceedings or receivership or bankruptcy, or
otherwise face an involuntary Transfer of such Shareholder's
Shares, then such Shareholder shall send written notice thereof to
the Company and the other Shareholders disclosing in full to them
the nature and details of such involuntary Transfer. Such notice
shall constitute an Offer and the provisions of Clause 9.3 shall
govern to the extent applicable, except that the Acceptance Period
shall run for a period of 90 days from the later of such
involuntary Transfer or the sending of such notice, and the
purchase price for each of such shares shall be an amount equal to
the Specified Value as defined in Clause 9.7 and shall be payable
in cash.
9.7. Specified Value
The term "Specified Value" as used in Clauses 9.5 and 9.6 shall
mean an amount equal to the adjusted book value of one Share,
determined by the Company's accountants as follows: the book
value of one Share shall be determined in accordance with
generally accepted accounting principles using the accrual method
of accounting applied on a basis consistent with the preceding
period, including, but not limited to, accounts receivable, less
an allowance for uncollectable items. The adjusted book value
shall be an amount equal to such book value increased by the
excess, or decreased by the deficit, of the fair market value of
the inventory, leasehold and leasehold improvements and real
property, if any, of the Company over, or below in the case of a
deficit, the book value (i.e., cost less accumulated depreciation
and amortization) of such assets; provided, however, that goodwill
shall not be taken into account. The determination of the
Specified Value shall be made as of the date of the pledge
foreclosure (under Clause 9.6) or other involuntary Transfer
(under Clause 9.7), unless such event is within two months before
or after the end of a financial year of the Company, in which case
the determination shall be made as of the last day of such
financial year.
10. TERM
10.1. Effectiveness
This Agreement shall come into force and effect as of the date
hereof as set forth on the first page of this Agreement and shall
supersede the Joint Venture Agreement dated February 6, 1996
between BIUSA and TOPflight, which agreement shall be deemed
terminated as of the date hereof.
10.2. Termination
All rights and obligations of a Shareholder arising under this
Agreement shall terminate (except as otherwise specified herein)
on the earliest of:
(a) the date on which such Shareholder ceases to be the holder
of any Shares;
(b) the date on which this Agreement is terminated by written
agreement of all the Shareholders;
(c) the date on which the Company is dissolved in accordance
with applicable law.
10.3. Continuing Rights and Obligations
A termination of this Agreement shall not affect or prejudice any
rights or obligations which have accrued or arisen under this
Agreement prior to the time of termination and such rights and
obligations shall survive termination of this Agreement.
11. CONFIDENTIALITY
The parties hereto shall at all times keep confidential the contents of
this Agreement and the transactions contemplated hereby. Each party
hereto shall also keep confidential, and procure that any person
Controlling, Controlled by or under common Control with such party,
shall keep confidential, all trade secrets and other confidential
information of any other party hereto made available to it in connection
with this Agreement or otherwise in connection with the business of the
Company, and shall not use or disclose any such trade secrets or other
confidential information except if and to the extent that such use or
disclosure is necessary for the conduct of the Company's business. The
restrictions of this Clause 11 shall not apply to information (a) that
is or becomes generally available to the public other than as a result
of unauthorized disclosure; (b) that was available to the receiving
party on a nonconfidential basis prior to receipt from the providing
party or is received thereafter from a third party without restriction
and without breach of obligation; or (c) that is disclosed pursuant to
the requirement of a court or government agency with applicable
jurisdiction (including, as applicable, the U.S. Securities and Exchange
Commission), provided that, if reasonably possible, the disclosing party
gives the providing party 10 days prior written notice of such
disclosure. The obligations of this Clause 11 shall survive termination
of this Agreement.
12. MISCELLANEOUS
12.1. Assignment
No party hereto shall assign this Agreement, in whole or in
part, whether by operation of law or otherwise, unless such
party shall have obtained the prior written consent of all the
other parties, except to the extent such assignment arises out
of the transfer by a Shareholder to an Affiliate of such
Shareholder in accordance with Clause 9.2.
12.2. Entire Agreement; Amendment
This Agreement, including the Annexes hereto and other writings
referred to herein or delivered pursuant hereto, constitutes the
entire agreement among the parties hereto with respect to the
transactions contemplated herein, and it supersedes all prior oral
or written agreements, commitments or understandings with respect
to the matters provided for herein (including, without limitation,
the Joint Venture Agreement between BIUSA and TOPflight (under the
name "TOPflight AB") dated February 5, 1996 and the Memorandum of
Understanding between LSG and BIUSA dated July 16, 1997). No
amendment, modification or discharge of this Agreement shall be
valid or binding unless set forth in writing and duly executed by
the party against whom enforcement of the amendment, modification,
or discharge is sought.
12.3. Severability
If any part of any provision of this Agreement or any other
agreement or document given pursuant to or in connection with this
Agreement shall be invalid or unenforceable in any respect, such
part shall be ineffective to the extent of such invalidity or
unenforceability only, without in any way affecting the remaining
parts of such provision or the remaining provisions of this
Agreement.
12.4. Waiver
No delay or failure on the part of any party hereto in exercising
any right, power or privilege under this Agreement or under any
other instruments given in connection with or pursuant to this
Agreement shall impair any such right, power or privilege or be
construed as a waiver of any default or any acquiescence therein.
No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power
or privilege, or the exercise of any other right, power or
privilege. No waiver shall be valid against any party hereto
unless made in writing and signed by the party against whom
enforcement of such waiver is sought and then only to the extent
expressly specified therein.
12.5. Time of Essence
Time is of the essence in this Agreement.
12.6. Limitation on Benefit
It is the explicit intention of the parties hereto that no person
or entity other than the parties hereto is or shall be entitled to
bring any action to enforce any provision of this Agreement
against any of the parties hereto, and the covenants, undertakings
and agreements set forth in this Agreement shall be solely for the
benefit of, and shall be enforceable only by, the parties hereto
or their respective successors, administrators, legal
representatives and permitted assigns.
12.7. Binding Effect
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors,
administrators, legal representatives and permitted assigns.
12.8. Governing Law
This Agreement, the rights and obligations of the parties hereto,
and any claims or disputes relating thereto, shall be governed by
and construed in accordance with the laws of the British Virgin
Islands.
12.9. Arbitration
The parties hereto shall attempt to settle promptly and amicably
by negotiation and consultation any disputes, controversies and
claims between or among them or the Company arising hereunder.
However, in the event the parties hereto are unable to reach a
satisfactory resolution thereof, any such dispute, controversy or
claim shall be referred to and finally resolved by arbitration
under the Rules of the Arbitration Institute of the Stockholm
Chamber of Commerce. The arbitration tribunal shall consist of
three arbitrators who are nationals of member states of the
European Union (other than Denmark and Sweden) to be selected in
accordance with such Rules. The place of arbitration shall be
Stockholm, Sweden. The language of the arbitration shall be
English.
12.10. Notices
All notices, demands, requests, or other communications which may
be or are required to be given, served, or sent by any party to
any other party pursuant to this Agreement shall be in writing and
shall be hand-delivered, sent by overnight courier, or mailed by
first-class registered or certified post, return receipt
requested, postage prepaid, or transmitted by telegram, fax or
telex, addressed as follows:
(i) If to LSG:
LSG Lufthansa Service Europe/Afrika GmbH
Am ▇▇▇▇▇▇▇ ▇▇
▇-▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of Germany
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇
Fax: ▇▇ ▇▇▇ ▇▇▇-▇▇▇▇
(ii) If to BIUSA:
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
Attention:
Fax: ▇ ▇▇▇ ▇▇▇ ▇▇▇▇
with a copy (which shall not constitute notice) to:
(iii) If to TOPflight:
TOP Flight Catering AB
▇▇▇ ▇▇▇
▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: ▇▇ ▇ ▇▇▇ ▇▇▇▇
with a copy (which shall not constitute notice) to:
Each party may designate by notice in writing a new address to
which any notice, demand, request or communication may thereafter
be so given, served or sent. Each notice, demand, request, or
communication which shall be transmitted in the manner described
above, shall be deemed sufficiently given, served, sent, received
or delivered for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, or
the answerback being deemed conclusive, but not exclusive,
evidence of such delivery) or at such time as delivery is refused
by the addressee upon presentation.
12.11. Headings; References
The headings contained in this Agreement are inserted for
convenience of reference only, shall not be deemed to be a part of
this Agreement for any purpose, and shall not in any way define or
affect the meaning, construction or scope of any of the provisions
hereof. All references to Clauses and Annexes in this Agreement
shall, unless otherwise specified, be references to Clauses and
Annexes of this Agreement.
12.12. Execution in Counterparts
To facilitate execution, this Agreement may be executed in as many
counterparts as may be required; and it shall not be necessary
that the signatures of, or on behalf of, each party, or that the
signatures of all persons required to bind any party, appear on
each counterpart; but it shall be sufficient that the signature
of, or on behalf of, each party, or that the signatures of the
persons required to bind any party, appear on one or more of the
counterparts. All counterparts shall collectively constitute a
single agreement. It shall not be necessary in making proof of
this Agreement to produce or account for more than a number of
counterparts containing the respective signatures of, or on behalf
of, all of the parties hereto.
IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly
executed on their behalf, on the day and year first hereinabove set forth.
LSG LUFTHANSA SERVICE
EUROPA/AFRIKA GMBH
By /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
BALTIC INTERNATIONAL USA, INC.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------
TOP FLIGHT CATERING AB
By /s/ Morten Andreasen_______
----------------------------------
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
ANNEX A
INITIAL DIRECTORS and NON-VOTING OBSERVERS
Directors Designated by BIUSA
1. Jonas ▇▇ ▇▇▇▇▇▇▇▇
2. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Directors Designated by TOPflight
1. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
2. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Director Designated by LSG
1. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Non-Voting Observers Designated by LSG and TOPflight
1. ▇▇▇▇ ▇▇▇▇▇
2. ▇▇ ▇▇▇▇▇▇
ANNEX B
1998 ANNUAL BUDGET
AIRO Catering Services Inc.
Budget 1998 (1000 USD)
Lufthansa 560
Other National and International Airlines 6344
Other revenues 242
Net sales 7146
Cost of sales 2458
Outside services 16
Airport fee 140
Gross profit 4532
Labor cost 1422
Building cost/rental 161
Maintenance 45
Services 64
Misc., supplies/utilities 362
Other controllables 203
Management fee 161
Gross operating profit 2114
Depreciation 168
Interest 174
Net profit 1772