Exhibit 10.5
FORM OF
AVIATION GROUP, INC.
WARRANT AGREEMENT
Dated as of February 23, 2000
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WARRANT AGREEMENT
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This WARRANT AGREEMENT (the "Agreement") is dated as of February 23, 2000
between AVIATION GROUP, INC., a Texas corporation (the "Company"), and
__________, a __________ resident, his heirs, personal representatives, and
assigns (collectively, "__________").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company intends to enter into letters of intent to acquire
Global Leisure Travel, Inc., a Washington corporation, and xxxxxxxxxx.xxx Ltd.,
an Ontario corporation (the "Acquisitions");
WHEREAS, the Board of Directors of the Company desires to incentivize
__________ to use his reasonable best efforts to cause the Company to consummate
the Acquisitions;
WHEREAS, pursuant to rules of the Nasdaq Stock Market, Inc., this Agreement
requires the approval of the Company's shareholders because of the listing of
the Company's common stock, par value $0.01 per share (the "Common Stock"), on
the Nasdaq SmallCap Market;
NOW, THEREFORE, in consideration of the premises, the agreements set forth
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
1. Grant. Subject to the terms and conditions hereof, __________ is
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hereby granted the right to purchase, at any time prior to 5:00 p.m., Dallas,
Texas time on February 23, 2005, 50,000 shares of Common Stock (the "Shares").
One share of Common Stock is hereinafter referred to as a "Warranty Security"
and more than one collectively referred to as the "Warrant Securities". The
exercise price of each Warrant shall equal (subject to adjustment as provided in
Section 9) $1.50 per Warrant Security subject to the terms and conditions of
this Agreement.
2. Conditions. Notwithstanding any other provisions hereof, none of the
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Warrants may be exercised by __________ unless and until (i) the Acquisitions
are completed and (ii) the shareholders of the Company approve this Agreement.
3. Warrant Certificates. The warrant certificates (the "Warrant
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Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
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such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
4. Exercise of Warrant.
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4.1 Method of Exercise. The Warrants initially are exercisable at an
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aggregate initial exercise price (subject to adjustment as provided in Section 9
hereof) per Warrant Security set forth in Section 7 hereof payable by certified
or official bank check, subject to adjustment as provided in Section 9 hereof.
Upon surrender of a Warrant Certificate with the annexed Form of
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Election to Purchase duly executed, together with payment of the Exercise Price
(as hereinafter defined) for the Warrant Securities purchased at the Company's
principal offices (presently located at 000 Xxxxx Xxxxx, Xxxxx 0000, Xxxxxx,
Xxxxx 75201) the registered holder of a Warrant Certificate ("Holder" or
"Holders") shall be entitled to receive a certificate or certificates for the
shares of Common Stock so purchased. The purchase rights represented by each
Warrant Certificate are exercisable at the option of the Holders thereof, in
whole or part (but not as to fractional shares of the Common Stock). In the case
of the purchase of less than all Warrant Securities purchasable under any
Warrant Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the Warrant Securities purchasable thereunder.
4.2 Exercise by Surrender of Warrant. In addition to the method of
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payment set forth in Section 3.1 and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrants shall have the right at any time and
from time to time to exercise the Warrants in full or in part by surrendering
the Warrant Certificate in the manner specified in Section 4.1. The number of
shares of Common Stock to be issued pursuant to this Section 4.2 shall be equal
to the difference between (a) the number of shares of Common Stock in respect of
which the Warrants are exercised and (b) a fraction, the numerator of which
shall be the number of shares of Common Stock in respect of which the Warrants
are exercised multiplied by the Exercise Price (as hereinafter defined) and the
denominator of which shall be the Market Price (as defined in Section 4.3).
4.3 Definition of Market Price. As used herein, the phrase "Market
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Price" at any date shall be deemed to be the last reported sale price, or, in
case no such reported sale takes place on such day, the average of the last
reported sale prices for the last three (3) trading days, in either case as
officially reported by the principal securities exchange on which the Common
Stock is listed or admitted to trading or by The Nasdaq Stock Market's National
Market or SmallCap Market ("Nasdaq"), or, if the Common Stock is not listed or
admitted to trading on any national securities exchange or quoted by Nasdaq, the
average closing bid price as furnished by the National Association of Securities
Dealers, Inc. ("NASD") through Nasdaq or similar organization if Nasdaq is no
longer reporting such information, or if the Common Stock is not quoted by the
NASD or such similar organization, the fair market value of a share of Common
Stock as determined in good faith by resolution of the Board of Directors of the
Company, based on the best information available to it. Notwithstanding the
foregoing, for purposes of Section 8, the Market Price of a share of Common
Stock shall be determined by reference to the relevant information set forth
above during the thirty (30) trading days immediately preceding the date of the
event requiring the determination of the Market Price (except that, in the event
of a public offering of shares of Common Stock, the Market Price of a share of
Common Stock shall be determined by reference to the trading day immediately
preceding the effective date of the public offering and not such thirty (30)
trading day period).
5. Issuance of Certificates. Upon the exercise of the Warrants, the
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issuance of certificates for shares of Common Stock and/or other securities,
properties or rights underlying such Warrants shall be made forthwith (and in
any event within five (5) business days thereafter) without charge to the Holder
thereof including, without limitation, any tax which may be payable in respect
of the issuance thereof, and such certificates shall (subject to the provisions
of Sections 6 and 8 hereof) be issued in the name of, or in such names as may be
directed by, the Holder thereof; provided, however, that the Company shall not
be required to pay any tax which may be payable in respect of any transfer
involved in the issuance and delivery of any such certificates in a name other
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than that of the Holder and the Company shall not be required to issue or
deliver such certificates unless or until the person or persons requesting the
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.
The Warrant Certificates and the certificates representing the Shares
(and/or other securities, property or rights issuable upon the exercise of the
Warrants) shall be executed on behalf of the Company by the manual or facsimile
signature of the then present Chairman or Vice Chairman of the Board of
Directors or President or Vice President of the Company under its corporate seal
reproduced thereon, attested to by the manual or facsimile signature of the then
present Secretary or Assistant Secretary of the Company. Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer.
6. Restriction On Transfer of Warrants. The Holder of a Warrant
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Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof. This Agreement is binding upon any Holder(s) of a Warrant Certificate
and their respective heirs, successors, and permitted assigns. The Holder may
assign interests granted by this Agreement, subject to the any other limitations
in the Agreement, provided that the transferee agrees to be bound by the terms
of this Agreement as if such transferee were a Holder and, provided further,
that the assignment is made pursuant to an effective registration statement
under the Securities Act or a valid exemption from registration under the
Securities Act of 1933, as amended (the "Securities Act"). If requested by the
Company, the Holder shall have furnished to the Company an opinion of counsel
reasonably satisfactory to the Company to such effect.
7. Exercise Price.
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7.1 Initial and Adjusted Exercise Price. Except as otherwise
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provided in Section 8 hereof, the initial exercise price of each Warrant shall
be $1.50 per Warrant Security. The adjusted exercise price shall be the price
which shall result from time to time from any and all adjustments of the initial
exercise price in accordance with the provisions of Section 8 hereof.
7.2 Exercise Price. The term "Exercise Price" herein shall mean the
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initial exercise price or the adjusted exercise price, depending upon the
context.
8. Registration Rights.
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8.1 Piggyback Registration.
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(a) If, at any time prior to the seventh anniversary of the
date of this Agreement, the Company proposes to register any of its
securities under the Securities Act of 1933, as amended (the "Act"),
either for its own account or the account of any other security holder
or holders of the Company possessing registration rights ("Other
Stockholders") (other than pursuant to Form S-4, Form S-8 or
comparable registration statement), it shall give written notice, at
least thirty (30) days prior to the filing of each such registration
statement, to any Holder(s) of Registrable Securities (as hereinafter
defined), of its intention to do so. If such
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Holder(s) notify the Company within twenty-one (21) days after the
receipt of any such notice of its or their desire to include any
Registrable Securities in such proposed registration statement, the
Company shall afford such Holder(s) of such Registrable Securities the
opportunity to have any such Registrable Securities registered for
resale by the Holder(s) under such registration statement. The term
"Registrable Securities" means (i) all shares of Common Stock owned by
a Holder as a result of the exercise of a Warrant, and (ii) all shares
of Common Stock which a Holder has an option to purchase under a
Warrant, until, in the case of any such security described by (i) or
(ii), (a) such security is disposed of in accordance with an effective
registration statement under the Securities Act, (b) such security is
saleable by the Holder pursuant to Rule 144(k), (c) such security is
saleable by the Holder pursuant to Rule 144 without regard to any
volume limitations, or (d) such security is distributed to the public
pursuant to Rule 144.
(b) If the registration of which the Company gives notice is
for a registered public offering involving an underwriting, the
Company shall so advise any Holder(s) as part of the written notice
given pursuant to Section 8.1(a) hereof. The right of any such
Holder(s) to registration pursuant to this Section 8.1 shall not be
conditioned upon their participation in such underwriting and the
inclusion of their Registrable Securities in the underwriting to the
extent hereinafter provided.
(c) Notwithstanding the provisions of this Section 8.1, the
Company shall have the right at any time after it shall have given
written notice pursuant to Section 8.1(a) hereof (irrespective of
whether a written request for inclusion of any such securities shall
have been made) to elect not to file any such proposed registration
statement, or to withdraw the same after the filing but prior to the
effective date thereof.
8.2 Covenants of the Company with Respect to Registration. In
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connection with any registration under Section 8.1 hereof, the Company covenants
and agrees as follows:
(a) The Company shall use its best efforts to have any
registration statements declared effective at the earliest practicable
time and shall furnish each Holder desiring to sell Registrable
Securities such number of prospectuses as shall reasonably be
requested.
(b) The Company shall pay all costs, expenses and fees
(excluding fees and expenses of Holder(s)' counsel and any
underwriting or selling commissions), in connection with all
registration statements filed pursuant to Section 8.1 hereof
including, without limitation, the Company's legal and accounting
fees, printing expenses, blue sky fees and expenses. If the Company
shall fail to comply with the provisions of Section 8.2(a), the
Company shall, in addition to any other equitable or other relief
available to the Holder(s), extend the exercise period of the Warrants
by such number of days as shall equal the delay caused by the
Company's failure.
(c) The Company will take all necessary action which may be
required in qualifying or registering the Registrable Securities
included in a registration
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statement for offering and sale under the securities or blue sky laws
of such states as reasonably are requested by the Holder(s); provided
that, the Company shall not be obligated to execute or file any
general consent to service of process or to qualify as a foreign
corporation to do business under the laws of any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the
Registrable Securities to be sold pursuant to any registration
statement and each person, if any, who controls such Holders within
the meaning of Section 16 of the Act or Section 21(a) of the
Securities Exchange Act of 1934, as amended ("Exchange Act"), against
all loss, claim, damage, expense or liability (including all expenses
reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under
the Act, the Exchange Act or otherwise, arising from such registration
statement except for matters for which the Company is indemnified
under subsection 8.2(e) hereof.
(e) The Holder(s) of the Registrable Securities to be sold
pursuant to a registration statement, and their successors and
assigns, shall severally, and not jointly, indemnify the Company, its
officers and directors and each person, if any, who controls the
Company within the meaning of Section 16 of the Act or Section 21(a)
of the Exchange Act, against all loss, claim, damage or expense or
liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to
which they may become subject under the Act, the Exchange Act or
otherwise, arising from information furnished by or on behalf of such
Holders, or their successors or assigns, for specific inclusion in
such registration statement.
(f) For a period of ninety (90) days after the effectiveness
of any registration statement filed pursuant to Section 8.1 hereof,
the Company shall not permit any other registration statement (other
than (1) a registration statement relating to the securities for which
the Company has made available to the Holder(s) of the Registrable
Securities piggyback registration rights hereunder and (2) a
registration statement filed on Forms S-4 or S-8 or a shelf
registration on Form S-3) to be or remain effective during the
effectiveness of a registration statement or a shelf registration on
Form S-3 filed pursuant to Section 8.1 hereof, without the prior
written consent of the Holders of the Registrable Securities
representing a majority of such securities.
(g) The Company shall furnish to each Holder participating in
the offering and to each underwriter, if any, a signed counterpart,
addressed to such Holder or underwriter, of (i) an opinion of counsel
to the Company, dated the effective date of such registration
statement (and, if such registration includes an underwritten public
offering, an opinion dated the date of the closing under the
underwriting agreement), and (ii) a "cold comfort" letter dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, a letter dated
the date of the closing under the underwriting agreement) signed by
the independent public accountants who have issued a report on the
Company's financial statements included in such registration
statement, in each case
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covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in
the case of such accountants' letter, with respect to events
subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in
accountants' letters delivered to underwriters in underwritten public
offerings of securities.
(h) The Company shall as soon as practicable after the
effective date of any registration statement filed pursuant to Section
8.1 hereof, and in any event within fifteen (15) months thereafter,
make "generally available to its security holders" (within the meaning
of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the act and covering a period
of at least twelve (12) consecutive months beginning after the
effective date of the registration statement.
(i) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence and
memoranda described below and to the managing underwriters, copies of
all written correspondence between the Commission and the Company, its
counsel or auditors and all memoranda relating to discussions with the
Commission or its staff with respect to the registration statement and
permit each Holder and underwriters to do such investigation, upon
reasonable advance notice, with respect to information contained in or
omitted from the registration statement as it deems reasonably
necessary to comply with applicable securities laws or rules of the
NASD. Such investigation shall include access to books, records and
properties and opportunities to discuss the business of the Company
with its officers and independent auditors, all to such reasonable
extent and at such reasonable times and as often as any such Holder or
underwriter shall reasonably request.
(j) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness
thereof.
8.3 Restrictive Legends. The Warrant Certificates, any certificates
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representing the Shares underlying the Warrants and any of the other securities
issuable upon exercise of the Warrants shall bear the following restrictive
legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended ("Act"), and
may not be offered or sold except pursuant to (i) an effective
registration statement under the Act, (ii) to the extent applicable,
Rule 144 under the Act (or any similar rule under such Act relating to
the disposition of securities), or (iii) an opinion of counsel, if
such opinion shall be reasonably satisfactory to counsel to the
issuer, that an exemption from registration under such Act is
available.
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9. Adjustments to Exercise Price and Number of Securities.
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9.1 Computation of Adjusted Exercise Price. Except as hereinafter
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provided, in the event the Company shall at any time after the date hereof issue
or sell any shares of Common Stock including shares held in the Company's
treasury (other than (i) the issuances or sales referred to in Section 9.7
hereof, (ii) shares of Common Stock issued upon the exercise of any options,
rights or warrants to subscribe for shares of Common Stock, or (iii) shares of
Common Stock issued upon the direct or indirect conversion or exchange of
securities for shares of Common Stock), for a consideration per share less than
the Market Price in effect immediately prior to the issuance or sale of such
shares, or without consideration, then forthwith upon such issuance or sale, the
Exercise Price shall (until another such issuance or sale) be reduced to the
price (calculated to the nearest full cent) equal to the quotient derived by
dividing (i) an amount equal to the sum of (a) the total number of shares of
Common Stock outstanding immediately prior to the issuance or sale of such
shares, multiplied by the Exercise Price in effect immediately prior to such
issuance or sale, and (b) the aggregate of the amount of all consideration, if
any, received by the Company upon such issuance or sale, by (ii) the total
number of shares of Common Stock outstanding immediately after such issuance or
sale; provided, however, that in no event shall the Exercise Price be adjusted
pursuant to this computation to an amount in excess of the Exercise Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock, as provided by Section 9.3
hereof.
For the purposes of this Section 9 the term Exercise Price shall mean the
Exercise Price per share of Common Stock set forth in Section 7 hereof, as
adjusted from time to time pursuant to the provisions of this Section 9.
For the purposes of any computation to be made in accordance with this
Section 9.1, the following provisions shall be applicable:
(a) In case of the issuance or sale of shares of Common Stock
for a consideration part or all of which shall be cash, the amount of
the cash consideration therefor shall be deemed to be the amount of
cash received by the Company for such shares (or, if shares of Common
Stock are offered by the Company for subscription, the subscription
price, or, if either of such securities shall be sold to underwriters
or dealers for public offering without a subscription offering, the
initial public offering price) before deducting therefrom any
compensation paid or discount allowed in the sale, underwriting or
purchase thereof by underwriters or dealers or others performing
similar services, or any expenses incurred in connection therewith.
(b) In case of the issuance or sale (other than as a dividend
or other distribution on any stock of the Company) of shares of Common
Stock for a consideration part or all of which shall be other than
cash, the amount of the consideration therefor other than cash shall
be deemed to be the value of such consideration as determined in good
faith by the Board of Directors of the Company and shall include any
amounts payable to security holders or any affiliates thereof
including, without limitation, pursuant to any employment agreement,
royalty, consulting agreement, covenant not to compete, earnout or
contingent payment right or similar arrangement, agreement or
understanding, whether oral or written; all such
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amounts being valued for the purposes hereof at the aggregate amount
payable thereunder, whether such payments are absolute or contingent,
and irrespective of the period or uncertainty of payment, the rate of
interest, if any, or the contingent nature thereof; provided, however,
that if any Holder(s) does not agree with such evaluation, a mutually
acceptable independent appraiser shall make such evaluation, the cost
of which shall be borne by the Company.
(c) Shares of Common Stock issuable by way of dividend or
other distribution on any stock of the Company shall be deemed to have
been issued immediately after the opening of business on the day
following the record date for the determination of stockholders
entitled to receive such dividend or other distribution and shall be
deemed to have been issued without consideration.
(d) The reclassification of securities of the Company other
than shares of Common Stock into securities including shares of Common
Stock shall be deemed to involve the issuance of such shares of Common
Stock for a consideration other than cash immediately prior to the
close of business on the date fixed for the determination of security
holders entitled to receive such shares, and the value of the
consideration allocable to such shares of Common Stock shall be
determined as provided in subsection (ii) of this Section 9.1.
(e) The number of shares of Common Stock at any one time
outstanding shall include the aggregate number of shares issued or
issuable (subject to readjustment upon the actual issuance thereof)
upon the exercise of options, rights, warrants and upon the conversion
or exchange of convertible or exchangeable securities.
9.2 Options, Rights, Warrants and Convertible and Exchangeable
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Securities. In case the Company shall at any time after the date hereof issue
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options, rights or warrants to subscribe for shares of Common Stock, or issue
any securities convertible into or exchangeable for shares of Common Stock, for
a consideration per share less than the Market Price in effect immediately prior
to the issuance of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration, the Exercise Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making a computation in accordance with the provisions of
Section 9.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as
the case may be, issuable under such options, rights or warrants shall
be deemed to be issued and outstanding at the time such options,
rights or warrants were issued, and for a consideration equal to the
minimum purchase price per share provided for in such options, rights
or warrants at the time of issuance, plus the consideration
(determined in the same manner as consideration received on the issue
or sale of shares in accordance with the terms of the Warrants), if
any, received by the Company for such options, rights or warrants.
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(b) The aggregate maximum number of shares of Common Stock
issuable upon conversion or exchange of any convertible or
exchangeable securities shall be deemed to be issued and outstanding
at the time of issuance of such securities, and for a consideration
equal to the consideration (determined in the same manner as
consideration received on the issue or sale of shares of Common Stock
in accordance with the terms of the Warrants) received by the Company
for such securities, plus the minimum consideration, if any,
receivable by the Company upon the conversion or exchange thereof.
(c) If any change shall occur in the price per share provided
for in any of the options, rights or warrants referred to in
subsection (a) of this Section 9.2, or in the price per share at which
the securities referred to in subsection (b) of this Section 8.2 are
convertible or exchangeable, such options, rights or warrants or
conversion or exchange rights, as the case may be, shall be deemed to
have expired or terminated on the date when such price change became
effective in respect of shares not theretofore issued pursuant to the
exercise or conversion or exchange thereof, and the Company shall be
deemed to have issued upon such date new options, rights or warrants
or convertible or exchangeable securities at the new price in respect
of the number of shares issuable upon the exercise of such options,
rights or warrants or the conversion or exchange of such convertible
or exchangeable securities.
9.3 Subdivision and Combination. In case the Company shall at any
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time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
9.4 Adjustment in Number of Securities. Upon each adjustment of the
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Exercise Price pursuant to the provisions of this Section 9, the number of
Warrant Securities issuable upon the exercise at the adjusted exercise price of
each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Securities issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
9.5 Definition of Common Stock. For the purpose of this Agreement,
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the term "Common Stock" shall mean (i) the class of stock designated as Common
Stock in the Articles of Incorporation of the Company as amended as of the date
hereof, or (ii) any other class of stock resulting from successive changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value. In
the event that the Company shall after the date hereof issue securities with
greater or superior voting rights than the shares of Common Stock outstanding as
of the date hereof, the Holder, at its option, may receive upon exercise of any
Warrant either shares of Common Stock or a like number of such securities with
greater or superior voting rights.
9.6 Merger or Consolidation. In case of any consolidation of the
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Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the holder of each
Warrant then
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outstanding or to be outstanding shall have the right thereafter (until the
expiration of such Warrant) to receive, upon exercise of such Warrant, the kind
and amount of shares of stock and other securities and property receivable upon
such consolidation or merger, by a holder of the number of shares of Common
Stock of the Company for which such Warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 9. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
9.7 No Adjustment of Exercise Price in Certain Cases. No adjustment
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of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the shares of
Common Stock issuable upon the exercise of the Warrants; or
(b) If the amount of such adjustment shall be less than two
cents ($.02) per Warrant Security, provided, however, that in such
case any adjustment that would otherwise be required then to be made
shall be carried forward and shall be made at the time of and together
with the next subsequent adjustment which, together with any
adjustment so carried forward, shall amount to at least two cents
($.02) per Warrant Security; or
(c) If the Exercise Price would be less than the par value per
share of Common Stock.
9.8 Dividends and Other Distributions. In the event that the Company
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shall at any time prior to the exercise of all Warrants declare a dividend
(other than a dividend consisting solely of shares of Common Stock) or otherwise
distribute to its stockholders any assets, property, rights, evidences of
indebtedness, securities (other than shares of Common Stock), whether issued by
the Company or by another, or any other thing of value, the Holders of the
unexercised Warrants shall thereafter be entitled, in addition to the shares of
Common Stock or other securities and property receivable upon the exercise
thereof, to receive, upon the exercise of such Warrants, the same property,
assets, rights, evidences of indebtedness, securities or any other thing of
value that they would have been entitled to receive at the time of such dividend
or distribution as if the Warrants had been exercised immediately prior to such
dividend or distribution. At the time of any such dividend or distribution, the
Company shall make appropriate reserves to ensure the timely performance of the
provisions of this Section 9.8.
9.9 Statement on Warrant Certificate. Irrespective of any
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adjustments in the Exercise Price or the number or kind of shares purchasable
upon the exercise of the Warrants, the Warrant Certificate or certificates
theretofore or thereafter issued may continue to express the same price and
number and kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
10. Exchange and Replacement of Warrant Certificates. Each Warrant
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Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing
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in the aggregate the right to purchase the same number of Warrant Securities in
such denominations as shall be designed by the Holder thereof at the time of
such surrender.
Upon receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of any Warrant Certificate, and, in
case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
11. Elimination of Fractional Interests. The Company shall not be
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required to issue fractional shares of Common Stock upon the exercise of
Warrants. Warrants may only be exercised in such multiples as are required to
permit the issuance by the Company of one or more whole shares of Common Stock.
If one or more Warrants shall be presented for exercise in full at the same time
by the same Holder, the number of whole shares of Common Stock which shall be
issuable upon such exercise thereof shall be computed on the basis of the
aggregate number of shares of Common Stock purchasable on exercise of the
Warrants so presented. If any fraction of a share of Common Stock would, except
for the provisions provided herein, be issuable on the exercise of any Warrant
(or specified portion thereof), the Company shall pay an amount in cash equal to
such fraction multiplied by the then current Market Price of a share of Common
Stock, determined in accordance with Section 4.3 hereof.
12. Reservation and Listing of Securities. The Company shall at all times
-------------------------------------
reserve and keep available out of its authorized shares of Common Stock, solely
for the purpose of issuance upon the exercise of the Warrants, such number of
shares of Common Stock or other securities, properties or rights as shall be
issuable upon the exercise thereof. The Company covenants and agrees that, upon
exercise of the Warrants and payment of the Exercise Price therefor, all shares
of Common Stock and other Securities issuable upon such exercise shall be duly
and validly issued, fully paid, non-assessable and not subject to the preemptive
rights of any stockholder.
13. Notices to Warrant Holders. Nothing contained in this Agreement shall
--------------------------
be construed as conferring upon the Holders the right to vote or to consent or
to receive notice as a stockholder in respect of any meetings of stockholders
for the election of directors or any other matter, or as having any rights
whatsoever as a stockholder of the Company. If, however, at any time prior to
the expiration of the Warrants and their exercise, any of the following events
shall occur:
(a) the Company shall take a record of the holders of its shares of
Common Stock for the purpose of entitling them to receive a dividend or
distribution payable other than in cash, or a cash dividend or distribution
payable other than out of current or retained earnings, as indicated by the
accounting treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its Common Stock
any additional shares of capital stock of the Company or securities
convertible into or exchangeable for shares of capital stock of the
Company, or any option, right or warrant to subscribe therefor; or
12
(c) a dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business as an entirety shall
be proposed;
then, in any one or more of such events, the Company shall give written notice
of such event to the Holders at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer book, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.
14. Notices. All notices, requests, consents and other communications
-------
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:
(a) If to the registered Holder of the Warrants, to the address of
such Holder as shown on the books of the Company; or
(b) If to the Company, to the address set forth in Section 4 hereof
or to such other address as the Company may designate by notice to the
Holders.
15. Supplements and Amendments. The Company and __________ may from time
--------------------------
to time supplement or amend this Agreement without the approval of any Holders
of the Warrant Certificates in order to cure any ambiguity, to correct or
supplement any provision contained herein which may be defective or inconsistent
with any provisions herein, or to make any other provisions in regard to matters
or questions arising hereunder which the Company and __________ may deem
necessary or desirable and which the Company and __________ deem shall not
adversely affect the interests of the Holders of the Warrant Certificates. If
__________ no longer owns any Warrants, then this Agreement may be amended by
the Company and the Holders of a majority of the then outstanding Warrants.
16. Successors. All the covenants and provisions of this Agreement shall
----------
be binding upon and inure to the benefit of the Company, the Holders and their
respective successors and assigns hereunder.
17. Governing Law; Submission to Jurisdiction. This Agreement and each
-----------------------------------------
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of Texas and for all purposes shall be construed in
accordance with the laws of such State without giving effect to the rules of
such State governing the conflicts of laws.
The Company, __________ and any other registered Holders hereby agree that
any action, proceeding or claim against it arising out of, or relating in any
way to, this Agreement shall be brought and enforced in the courts of the State
of Texas or of the United States of America for the Northern District of Texas,
and irrevocably submits to such jurisdiction, which jurisdiction shall be
13
exclusive. The Company, __________ and any other registered Holders hereby
irrevocably waive any objection to such exclusive jurisdiction or inconvenient
forum. Any such process or summons to be served upon any of the Company,
__________ and the Holders (at the option of the party bringing such action,
proceeding or claim) may be served by transmitting a copy thereof, by registered
or certified mail, return receipt requested, postage prepaid, addressed to it at
the address set forth in Section 14 hereof. Such mailing shall be deemed
personal service and shall be legal and binding upon the party so served in any
action, proceeding or claim. The Company, __________ and any other registered
Holders agree that the prevailing party(ies) in any such action or proceeding
shall be entitled to recover from the other party(ies) all of its/their
reasonable legal costs and expenses relating to such action or proceeding and/or
incurred in connection with the preparation therefor.
18. Entire Agreement; Modification. This Agreement contains the entire
------------------------------
understanding between the parties hereto with respect to the subject matter
hereof and may not be modified or amended except by a writing duly signed by the
party against whom enforcement of the modification or amendment is sought.
19. Severability. If any provision of this Agreement shall be held to be
------------
invalid or unenforceable, such invalidity or unenforceability shall not affect
any other provision of this Agreement.
20. Captions. The caption headings of the Sections of this Agreement are
--------
for convenience of reference only and are not intended, nor shall they be
construed as, a part of this Agreement and shall be given no substantive effect.
21. Benefits of this Agreement. Nothing in this Agreement shall be
--------------------------
construed to give to any person or corporation other than the Company and
__________ and any other registered Holder(s) of the Warrant Certificates or
Warrants Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole benefit of the Company and
__________ and any other registered Holders of Warrant Certificates or Warrant
Securities.
22. Counterparts. This Agreement may be executed in any number of
------------
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
14
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
AVIATION GROUP, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title:
---------------------------------------
---------------------------------------------
Warrant Holder
15
EXHIBIT A
---------
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:00 P.M., DALLAS, TEXAS TIME, FEBRUARY 23, 2005
No. W- Warrants to Purchase
-------- Shares of Common Stock
--------
WARRANT CERTIFICATE
-------------------
This Warrant Certificate certifies that ______________________, or
registered assigns, is the registered holder of _______________ Warrants to
purchase, until 5:00 p.m. Dallas, Texas time on February 23, 2005 ("Expiration
Date"), up to _______________ fully-paid and non-assessable shares of common
stock, $.01 par value ("Common Stock") of AVIATION GROUP, INC., a Texas
corporation (the "Company"), at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $1.50 per share of
Common Stock upon surrender of this Warrant Certificate and payment of the
Exercise Price at an office or agency of the Company, but subject to the
conditions set forth herein and in the Warrant Agreement dated as of February
23, 2000 between the Company and __________ (the "Warrant Agreement"). Payment
of the Exercise Price shall be made by certified or official bank check payable
to the order of the Company or by surrender of this Warrant Certificate.
No Warrant may be exercised after 5:00 p.m., Dallas, Texas time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
Notwithstanding any other provisions hereof, this Warrant may not be
exercised to purchase any shares of Common Stock unless and until (i) the
Acquisitions are completed and (ii) the shareholders of the Company approve this
Agreement.
16
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain events
the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair, the rights of the
holder as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such numbered unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the Warrant
Agreement shall have the meanings assigned to them in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be
duly executed under its corporate seal.
Dated as of .
------------------------
AVIATION GROUP, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
[SEAL]
17
Attest:
------------------------------------
Name:
-------------------------------
Title:
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18
