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EXHIBIT 10.6
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WARRANT AGREEMENT OF
NATIONAL AIRMOTIVE CORPORATION
283,849 SHARES
Dated as of June 1, 1995
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COMMON STOCK PURCHASE WARRANTS
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WARRANT AGREEMENT dated as of June 1, 1995 between NATIONAL AIRMOTIVE
CORPORATION, a California corporation (the "Company"), the Company as Warrant
Agent, and CANPARTNERS INVESTMENTS III, L.P. (the "Warrant Holder" or
"Holder").
The Company proposes to issue the Common Stock Purchase Warrants as
hereinafter described (the "Warrants") to purchase an aggregate of 283,849
shares of its Common Stock (the "Common Stock"), $0.01 par value per share (the
shares of Common Stock issuable on exercise of the Warrants being referred to
herein as the "Warrant Shares"), in favor of Warrant Holder.
In consideration of the benefits and services provided to the Company
by the Warrant Holder, including but not limited to that certain loan in the
amount of $3,000,000.00 (the "Loan") evidenced by a Loan and Security Agreement
of even date herewith (the "Loan Agreement"), and for the purpose of defining
the terms and provisions of the Warrants and the respective rights and
obligations thereunder of the Company and the Holders, the Company and the
Warrant Holder hereby agree as follows:
SECTION 1. TRANSFERABILITY AND FORM OF THE WARRANTS.
1.1 REGISTRATION. The Warrants shall be numbered and
shall be registered on the books of the Company maintained at the principal
office of the Company in Oakland, California (the "Warrant Register"). The
Company shall be entitled to treat the registered Holder of a Warrant as the
owner in fact thereof for all purposes and shall not be bound to recognize any
equitable or other claim to or interest in such Warrant on the part of any
other person, and shall not be liable for any Company registration or transfer
of a Warrant which is registered or to be registered in the name of a fiduciary
or the nominee of a fiduciary unless made with the actual knowledge that a
fiduciary or nominee is committing a breach of trust in requesting such
registration of transfer, or with such knowledge of such facts that its
participation therein amounts to bad faith.
1.2 TRANSFER GENERAL. Subject to the terms hereof and to
applicable securities laws, the Warrants shall be freely transferable by the
Holders thereof. A Warrant shall be transferable only on the books of the
Company maintained at its principal office upon delivery thereof duly endorsed
by the Holder or by his duly authorized attorney or representative, or
accompanied by proper evidence of succession, assignment or authority to
transfer. In all cases of transfer by an attorney, the original power of
attorney, duly approved, or a copy thereof, duly certified, shall be deposited
and remain with the Company. In case of transfer by executors, administrators,
guardians or other legal representatives, duly authenticated evidence of their
authority shall be produced, and may be required to be deposited and to remain
with the Company in its discretion. Upon any registration of transfer, the
Company shall countersign and deliver a new Warrant to the persons entitled
thereto. The Company or the Warrant Agent may require the payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any such transfer.
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1.3 FORM OF THE WARRANTS. The text of the Warrants and of
the form of election to purchase Warrant Shares (the "Purchase Form") shall be
substantially as set forth in Exhibit A attached hereto. Each Warrant shall be
executed on behalf of the Company by its Chairman of the Board, its Chief
Executive Officer, President or one of its Vice Presidents, under its corporate
seal reproduced thereon, and attested by its Secretary or an Assistant
Secretary.
A Warrant shall be dated as of the date of countersignature thereof by the
Company upon initial issuance.
SECTION 2. TERM OF THE WARRANTS; RESTRICTION ON EXERCISE AND
DEEMED EXERCISE; EXERCISE OF THE WARRANTS; WARRANT PRICE, ETC.
2.1 TERM OF THE WARRANTS. Subject to the terms of this
Agreement, the Holder shall have the right, which may be exercised at any time
and from time to time until a date ten years from the date hereof, to purchase
from the Company the number of fully paid and nonassessable Warrant Shares
which the Holder may at the time be entitled to purchase on exercise of such
Warrant. If the last day for the exercise of the Warrants shall not be a
business day, then the Warrants may be exercised on the next succeeding
business day.
2.2 RESTRICTION ON EXERCISE AND DEEMED EXERCISE. For the
four years immediately following the date of this Agreement, there shall be a
restriction on the exercise of the Warrants unless any of the following shall
occur:
(a) there is any transfer of shares of Preferred
Stock or Common Stock of the Company by First Aviation
Services, Inc. (the "Principal Holder") to someone other than
(i) any corporation or partnership all of the outstanding
securities and other interests of which are owned by the
Principal Holder, (ii) any individual or corporation who owns
directly or indirectly all of the outstanding securities and
other interests of the Principal Holder, or (iii) any other
corporation or entity that is controlled by or under common
control with the Principal Holder and investors in the
Principal Holder or such affiliates (such entities and persons,
a "PH Affiliate"),
(b) the Company issues any shares of its Preferred
Stock or Common Stock, or any rights, options, or warrants
containing the right to subscribe for or purchase shares of its
Preferred Stock or Common Stock or securities convertible into
shares of the Company's Preferred Stock or Common Stock, other
than (i) shares of Series A Preferred Stock issued as dividends
on the Company's outstanding Series A Preferred Stock, (ii) the
issuance to officers of the Company and other key employees of
the Company of shares of Common Stock or rights, options or
warrants containing the right to subscribe for or purchase
shares of Common Stock, representing, in the aggregate, no more
than ten percent (10%) of the common equity that would be
outstanding on the date of this Agreement assuming all of the
Warrants had been
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exercised, if the number of shares subject to the Warrants is
reduced pursuant to Section 8, (iii) the issuance of shares of
preferred stock of the Company in one or more series, provided
any such series of preferred stock contains a prohibition on
the redemption of such shares of preferred stock for so long as
a Warrant is outstanding, has a liquidation preference no more
favorable than the Series A Preferred Stock, and is entitled to
receive dividends at a rate and on terms no more favorable than
the Series A Preferred Stock, or (iv) the issuance of shares of
non-voting Common Stock of the Company to the Principal Holder
in exchange or in cancellation of, on a one-for-one basis,
shares of voting Common Stock of the Company.
(c) the Company files a federal income tax return
for any tax year following the date of this Agreement that does
not reflect it as part of a consolidated group including First
Aviation Services, Inc., or
(d) the sale, lease, exchange or other transfer (in
one or a series of related transactions) of all or
substantially all of the assets of the Company.
Each of the preceding shall be referred to as a "Deemed Exercise Event." In the
event a Deemed Exercise Event shall occur, the restriction on exercise of the
Warrants shall be eliminated and each Warrant Holder shall be deemed to
exercise the Warrants held by such Warrant Holder (a "Deemed Exercise"). The
Deemed Exercise shall be effective with respect to each Warrant Holder upon the
occurrence of the applicable Deemed Exercise Event unless (i) the Warrant
Holder shall notify the Company in writing within 30 days of the date such
Warrant Holder receives written notice from the Company of the occurrence of
such Deemed Exercise Event that such Warrant Holder elects not to exercise its
Warrants or (ii) the Warrant Holder shall fail to comply with the requirements
for exercise of the Warrants set forth in Section 2.3 within 30 days following
the receipt of written notice from the Company of the occurrence of a Deemed
Exercise Event. The Warrants shall, if not exercised prior thereto, be deemed
exercised in full concurrent with the consummation of an initial public
offering of the Common Stock of the Company pursuant to a registration
statement filed in accordance with the Securities Act that yields $10.0 million
or more in net proceeds to the Company.
2.3 EXERCISE OF THE WARRANTS. The Warrants may be
exercised upon surrender to the Company, at its principal office, of the
certificate evidencing the Warrants to be exercised, together with the Purchase
Form on the reverse thereof duly filled in and signed, and upon payment to the
Company, of the Warrant Price (as defined in and determined in accordance with
the provisions of Section 2 hereof), for the number of Warrant Shares in
respect of which such Warrants are then exercised. Upon partial exercise, a
Warrant Certificate for the unexercised portion shall be delivered to the
Holder. Payment of the aggregate Warrant Price shall be made in cash, by
certified or official bank check.
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Subject to Section 3 hereof, upon such surrender of the
Warrants and payment of the Warrant Price as aforesaid, the Company shall issue
and cause to be delivered with all reasonable dispatch to or upon the written
order of the Holder and in such name or names as the Holder may designate, a
certificate or certificates for the number of full Warrant Shares so purchased
upon the exercise of such Warrants. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be named therein
shall be deemed to have become a holder of record of such Warrant Shares as of
the date of the surrender of such Warrants and payment of the Warrant Price, as
aforesaid, or, in the case of a Deemed Exercise, as of the date of the Deemed
Exercise; provided, however, that if, at the applicable date, the transfer books
for the Warrant Shares or other class of stock purchasable upon the exercise of
such Warrants shall be closed, the certificates for the Warrant Shares in
respect of which such Warrants are then exercised shall be issuable as of the
date on which such books shall next be opened (whether before or after the
Expiration Date) and until such date the Company shall be under no duty to
deliver any certificate for such Warrant Shares; provided, further, that the
transfer books of record, unless otherwise required by law, shall not be closed
at any one time for a period longer than 20 calendar days.
2.4 COMPLIANCE WITH GOVERNMENT REGULATIONS. Holder
acknowledges that none of the Warrants or Warrant Shares has been registered
under the Securities Act, and may be sold or disposed of in the absence of such
registration only pursuant to an exemption from such registration and in
accordance with this Agreement. The Warrants and the Warrant Shares will bear
a legend to the following effect:
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO SALE OR
OTHER DISPOSITION OR PLEDGE OF THESE SECURITIES OR THE SECURITIES
UNDERLYING THESE SECURITIES CAN BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY OR A NO ACTION LETTER OR INTERPRETIVE
OPINION OF THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT."
2.5 WARRANT PRICE. The price per share at which Warrant
Shares shall be purchasable upon exercise of the Warrants (the "Warrant Price")
shall be $0.35.
SECTION 3. PAYMENT OF TAXES. The Company will pay all
documentary stamp taxes, if any, attributable to the initial issuance of
Warrants and Warrant Shares upon the exercise of Warrants; provided, however,
that the Company shall not be required to pay any tax or taxes which may be
payable in respect of any transfer involved in the issue or delivery
of the Warrants or certificates for Warrant Shares in a name other
than that of the Holder of such Warrants.
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SECTION 4. MUTILATED OR MISSING WARRANTS. In case any Warrant
shall be mutilated, lost, stolen or destroyed, the Company shall issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
Warrant, or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant certificate of like tenor and representing an
equivalent right or interest; but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction of such Warrant
certificate and indemnity or bond, if requested, also reasonably satisfactory to
them. An applicant for such substitute Warrant certificate shall also comply
with such other reasonable regulations and pay such other reasonable charges as
the Company may prescribe.
SECTION 5. RESERVATION OF WARRANT SHARES.
5.1 RESERVATION OF WARRANT SHARES. There have been
reserved, and the Company shall at all times keep reserved, out of its
authorized but unissued shares of Common Stock, a number of shares of Common
Stock sufficient to provide for the exercise of the rights of purchase
represented by the outstanding Warrants. The transfer agent for the Common
Stock ("Transfer Agent"), and every subsequent transfer agent for any shares of
the Company's capital stock issuable upon the exercise of any of the rights of
purchase aforesaid will be and are hereby irrevocably authorized and directed
at all times until the Expiration Date to reserve such number of authorized but
unissued shares as shall be requisite for such purpose. The Company will keep
a copy of this Agreement on file with the Transfer Agent and with every
subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants. The Company covenants that all Warrant Shares which may be issued
upon exercise of the Warrants will, upon issue, be fully paid, nonassessable,
free of preemptive rights and free from all taxes, liens, charges and security
interests with respect to the issue thereof. The Company will supply such
Transfer Agent and any subsequent transfer agent with duly executed stock
certificates for such purpose. The Warrants surrendered in the exercise of the
rights thereby evidenced shall be cancelled by the Company.
5.2 CANCELLATION OF THE WARRANTS. In the event the
Company shall purchase or otherwise acquire the Warrants, the same shall be
cancelled and retired.
SECTION 6. RESTRICTIONS ON CORPORATE ACTIONS AND ADJUSTMENTS TO
WARRANT SHARES AND WARRANT PRICE.
6.1 PRESERVATION OF RIGHTS UPON MERGER, CONSOLIDATION,
ETC. In case of any consolidation of the Company with or merger of the Company
into another corporation or in case of any sale, transfer or lease to another
corporation of all or substantially all the property of the Company, the
Company or such successor or purchasing corporation, as the case may be, shall
execute an amendment to this Agreement that each Holder shall have the
right thereafter upon payment of the Warrant Price in effect immediately prior
to such action to purchase upon exercise of the Warrants the kind and amount of
shares and/or other securities and/or property which he would have owned or have
been entitled to receive upon the happening of such consolidation, merger, sale,
transfer or lease had such Warrants been exercised immediately prior to such
action and that upon such consolidation, merger, sale, transfer or lease, each
Warrant Holder shall thereafter receive the pro rata amount of dividends,
interest or other income on or from such shares or other securities and property
during the term of a Warrant. The provisions of this Section 6.1 shall similarly
apply to successive consolidations, mergers, sales, transfers or leases.
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6.2 RESTRICTIONS ON CORPORATE ACTIONS. For so long as a
Warrant remains outstanding, the Company shall not issue any capital stock in a
reclassification of the Common Stock (other than in any such reclassification
in connection with a consolidation or merger in which the Company is the
continuing entity and to which the provisions of Section 6.1 shall apply).
6.3 ADJUSTMENT OF WARRANT PRICE AND NUMBER OF WARRANT
SHARES FOR SUBDIVISION OR COMBINATION. In case the Company shall at any time
after the date of this Agreement (i) subdivide its outstanding shares of Common
Stock or (ii) combine its outstanding shares of Common Stock into a smaller
number of shares of Common Stock, the number of Warrant Shares purchasable upon
exercise of the Warrant immediately prior thereto shall be adjusted so that the
Holder of the Warrant shall be entitled to receive the kind and number of
Warrant Shares or other securities of the Company that he would have owned or
have been entitled to receive after the subdivision or combination, had such
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. Any adjustment made pursuant to this
paragraph shall become effective immediately after the effective date of such
event retroactive to the record date, if any, for such event. Such adjustment
shall be made successively whenever any subdivision or combination shall occur.
The Warrant Price payable upon exercise of the Warrant shall be adjusted by
multiplying the Warrant Price immediately prior to such adjustment by a
fraction, the numerator of which shall be the number of Warrant Shares
purchasable upon the exercise of the Warrant immediately prior to such
adjustment, and the denominator of which shall be the number of Warrant Shares
purchasable immediately thereafter.
6.4 NOTICE OF ADJUSTMENT. Whenever the number of Warrant
Shares purchasable upon the exercise of the Warrant or the Warrant Price of
such Warrant Shares is adjusted, as herein provided, the Company shall mail by
first class, postage prepaid, to each Holder notice of such adjustment or
adjustments and shall deliver to the Holder a copy of a certificate of either
the Board of Directors of the Company or of a firm of independent public
accountants selected by the Board of Directors of the Company (who may be the
regular accountants employed by the Company) setting forth the number of
Warrant Shares purchasable upon the exercise of the Warrant and the Warrant
Price of such Warrant Shares after such adjustment, setting forth a brief
statement of the facts requiring such adjustment and setting forth the
computation by which such adjustment was made.
6.5 STATEMENT ON THE WARRANT. Irrespective of any
adjustments in the Warrant Price or the number of shares of Common Stock
purchasable upon the exercise of the Warrant, the Warrant theretofore or
thereafter issued may continue to express the same price and number of shares
as are stated in the Warrant initially issuable pursuant to this Agreement,
subject to any transfers previously registered.
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SECTION 7. REGISTRATION RIGHTS.
7.1 CERTAIN DEFINITIONS.
As used in this Warrant Agreement, the following terms shall
have the following respective meanings:
(a) COMMISSION means the Securities and Exchange
Commission.
(b) EXCHANGE ACT means the Securities Exchange
Act of 1934, as amended, or any successor act, and the rules and regulations of
the Commission promulgated thereunder, all as the same shall be in effect at
the time.
(c) REGISTRABLE SECURITIES means the Shares
issued or issuable upon exercise of the Warrants. As to any particular
Registrable Security, once issued, such security shall cease to be one of the
Registrable Securities when (x) such security shall have been transferred to
any person pursuant to an effective registration statement, (y) such security
shall have been transferred to any person that is not an Affiliate (as defined
in the Exchange Act) of the initial Warrant Holder pursuant to Rule 144 (or any
successor provision) under the Securities Act and the shares thereupon become
freely tradeable, subject to any restrictions pursuant to the Shareholders
Agreement dated May __, 1995 by and among the Company, the Warrant Holder, the
Principal Holder and the holders of common stock and warrants of the Company,
or (z) such security shall have ceased to be outstanding.
(d) REGISTRATION EXPENSES means all expenses
incident to the Company's performance of or compliance with the registration
rights herein, including, without limitation, all registration, filing, listing
and NASD fees, all fees and expenses of complying with securities or blue sky
laws, all word processing, duplicating and printing expenses, messenger and
delivery expenses, fees and expenses of Company's counsel and independent
public accountants, including the expenses of any special audits or "cold
comfort" letters required by or incident to such performance and compliance,
and any fees and disbursements of underwriters customarily paid by issuers and
sellers of securities; provided, however, that Registration Expenses shall not
include fees and expenses of counsel for the holders of Registrable Securities
nor shall it include underwriting discounts, commissions and transfer taxes, if
any, relating to the offer and sale of Registrable Securities, all of which
shall be borne by such holders.
(e) SECURITIES ACT means the Securities Act of
1933, as amended, or any successor act thereto, and the rules and regulations
of the Commission promulgated thereunder, all as the same shall be in effect at
the time.
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7.2 REGISTRATION.
(a) COMPANY REGISTRATION. If (without any
obligation to do so) the Company proposes to register (including for this
purpose any registration effected by the Company for holders other than the
holders of Registrable Securities) any of its Common Stock or other securities
under the Securities Act in connection with the public offering of such
securities solely for cash (other than a registration on Forms S-4 or S-8 or
equivalent successor forms), then the Company shall, at such time, promptly
give all holders of Registrable Securities written notice of such registration.
Any such registration effected by the Company is referred to herein as a
"Company Registration." Upon the written request of such holders given within
twenty (20) days after the giving of such notice by the Company, the Company
shall, subject to the provisions of Section 7.2(c) below, cause to be included
in such registration statement and registered under the Securities Act all of
the Registrable Securities that each such Participating Holder has requested to
be registered.
(b) EXPENSES. The Company shall pay all
Registration Expenses incurred in connection with the registration of
Registrable Securities pursuant to Section 7.2(a).
(c) PRIORITY IN REQUESTED REGISTRATIONS. If the
Company Registration pursuant to Section 7.2(a) involves an underwritten
offering, and the managing underwriter shall advise the Company in writing,
with a copy to the Participating Holders that, in its opinion, the number of
securities requested to be included in such registration (including securities
of the Company which are not Registrable Securities) exceeds the number which
can be sold in such offering; the Company will include in such registration
statement to the extent of the number of securities which the Company is so
advised can be sold in such offering (i) first, the securities to be sold for
the account of the Company to be included in the Company Registration, and (ii)
second, the Registrable Securities and other securities of the Company entitled
to similar registration rights, if any, pro rata, in proportion to the number
of Registrable Securities and other securities requested to be included in such
registration statement.
7.3 REGISTRATION PROCEDURES.
(a) If and whenever the Company is required to
use its best efforts to effect the registration of any Registrable Securities
under the Securities Act as provided in Section 7.2, the Company, as
expeditiously as possible and subject to the terms and conditions of Section
7.2, will:
(i) prepare and file with the Commission
the requisite registration statement to effect such registration and use its
best efforts to cause such registration to become effective;
(ii) prepare and file with the Commission
such amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to keep such
registration statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by
such registration statement until the earlier of such time as all of such
securities have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof set forth in such registration
statement or the expiration of 90 days after such registration statement
becomes effective;
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(iii) furnish to each Participating Holder
such number of conformed copies of such registration statement and of each such
amendment and supplement thereto, such number of copies of the prospectus
contained in such registration statement (including each preliminary prospectus
and any summary prospectus) and any other prospectus filed under Rule 424 under
the Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as each Participating Holder may reasonably request;
(iv) use its best efforts to register or
qualify all Registrable Securities covered by such registration statement under
such other United States state securities or blue sky laws of such
jurisdictions as each Participating Holder shall reasonably request, to keep
such registration statement qualification in effect for the period referred to
in Section 7.3(a)(ii) hereof, and take any other action which may be reasonably
necessary or advisable to enable each Participating Holder to consummate the
disposition in such jurisdictions of the securities owned by each Participating
Holder, except that the Company shall not for any such purpose be required to
(a) qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not but for the requirements of this subdivision
(iv) be obligated to be so qualified, (b) subject itself to taxation in any
such jurisdiction or (c) consent to general service of process in any such
jurisdiction;
(v) use its best efforts to cause all
Registrable Securities covered by such registration statement to be registered
with or approved by such other United States state governmental agencies or
authorities as may be necessary to enable each Participating Holder to
consummate the disposition of such Registrable Securities;
(vi) use its best efforts to furnish to
any underwriter for Participating Holders a signed counterpart, addressed to
such underwriter, if any, of
(1) an opinion of counsel for the
Company, dated the effective date of such registration statement (and,
if such registration includes an underwritten public offering, dated
the date of the closing under the underwriting agreement),
satisfactory to such underwriter in its reasonable judgment, and
(2) a "comfort" letter, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, dated the date
of the closing under the underwriting agreement), signed by the
independent public accountants who have certified the Company's
financial statements included in such registration statement,
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of the
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 the underwriters in
underwritten public offerings of securities and, in the case of the
accountants' letter, such other financial matters as such underwriters, if any,
may reasonably request;
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(vii) immediately notify the Participating
Holders at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading and at the request of the Participating Holders promptly prepare and
furnish to the Participating Holders a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading;
(viii) otherwise use its best efforts to
comply with all applicable rules and regulations of the Commission, and make
available to its security holders, as soon as reasonably practicable, an
earning statement covering the period of at least twelve months, but not more
than eighteen months, beginning with the first full calendar month after the
effective date of such registration statement, which earning statement shall
satisfy the provisions of Section 11(a) of the Securities Act, and not file any
amendment or supplement to such registration statement or prospectus to which a
majority of the Participating Holders shall have reasonably objected in writing
on the grounds that such amendment or supplement does not comply in all
material respects with the requirements of the Securities Act or of the rules
or regulations thereunder, having been furnished with a copy thereof (other
than with respect to a pricing amendment or a prospectus filed pursuant to Rule
424(b)(1) under the Securities Act) at least two business days prior to the
filing thereof;
(ix) provide a transfer agent and
registrar for all Registrable Securities covered by such registration statement
not later than the effective date of such registration statement; and
(x) use its best efforts to list all
Registrable Securities covered by such registration statement on the securities
exchange, if any, on which the Common Stock is then listed.
(b) The Company may require each Participating
Holder to furnish the Company with such information and undertakings as it may
reasonably request regarding the holders requesting registration and the
distribution of such securities as the Company may from time to time reasonably
request in writing, including the agreement not to sell any Registrable
Security not included in the registration statement in a market transaction for
a reasonable period following the consummation of an underwritten initial
public offering of the Common Stock of the Company pursuant to a registration
statement filed in accordance with the Securities Act that yields $10.0 million
or more in net proceeds to the Company, provided that such period shall not
exceed 180 days and any such restriction on sales shall apply to all holders,
either directly or indirectly, of more than 5% of the Common Stock of the
Company.
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(c) Each Participating Holder agrees (A) that
upon receipt of any notice from the Company of the happening of any event of
the kind described in Section 7.3(a)(vii), such holder will forthwith
discontinue its disposition of Registrable Securities pursuant to the
registration statement relating to such Registrable Securities until receipt by
such Participating Holder of the copies of the supplemented or amended
prospectus contemplated by subdivision (a)(vii) of this Section 7.3 and, if so
directed by the Company, will deliver to the Company all copies, other than
permanent file copies, then in such holder's possession of the prospectus
relating to such Registrable Securities at the time of receipt of such notice
and (b) that it will immediately notify the Company, at any time when a
prospectus relating to the registration of such Registrable Securities is
required to be delivered under the Securities Act, of the happening of any
event as a result of which information previously furnished by such
Participating Holder to the Company in writing for inclusion in such prospectus
contains an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
In the event the Company or any Participating Holder shall give any such
notice, the period referred to in Section 7.3(a)(ii) shall be extended by a
number of days equal to the number of days during the period from and including
the giving of notice pursuant to Section 7.3(a)(vii) to and including the date
when such holder shall have received the copies of the supplemented or amended
prospectus contemplated by Section 7.3(a)(vii).
(d) Nothing in this Agreement to the contrary,
the Company will not be required to file such a registration statement with
respect to, or include in any registration statement, any Registrable
Securities if the Company obtains an opinion (in form and substance
satisfactory to the holder requesting registration) of counsel acceptable to
the holder of such Registrable Securities to the effect that the sale of the
Registrable Securities in the manner contemplated by such holder may be
effected without registration regardless of the identity or status of the
buyer(s) of such Registrable Securities and that such securities are freely
tradeable.
7.4 INDEMNIFICATION.
(a) INDEMNIFICATION BY THE COMPANY. In the event of any
registration under the Securities Act pursuant to Section 7 hereof of any
Registrable Securities covered by such registration, the Company will, and
hereby does, indemnify and hold harmless the Participating Holders, their
directors and officers, each other person who participates as an underwriter in
the offering or sale of such securities (if so required by such underwriter as
a condition to including the Participating Holders' Registrable Securities in
such registration) and each other person, if any, who controls the
Participating Holders or any such underwriter within the meaning of the
Securities Act, to the fullest extent lawful, from and against any and all
losses, claims, damages, liabilities and expenses (including, without
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limitation and as incurred, reasonable costs of investigating, preparing or
defending, or if not a party, of responding as a witness or as custodian of
documents or in any manner related thereto, and reasonable attorneys' fees and
expenses incurred in connection therewith), joint or several, to which the
Participating Holders or any such director or officer or underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions,
proceedings or investigations, whether commenced or threatened, in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which such securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein or any
document incorporated therein by reference, or any amendment or supplement
thereto, or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and the Company will reimburse the Participating Holders and each
such director, officer, underwriter and controlling person for any legal or any
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, liability, action or proceeding; provided that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Participating Holder either
specifically for inclusion therein or which the Company has informed the
Participating Holder will be used for such purposes; provided further that the
Company shall not be liable to any person who participates as an underwriter in
the offering or sale of Registrable Securities or any other person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of such person's failure
to send or give a copy of the final prospectus to the person claiming an
untrue statement or alleged untrue statement or omission or alleged omission
at or prior to the written confirmation of the sale of Registrable Securities
to such person if such statement or omission was corrected in such final
prospectus.
(b) INDEMNIFICATION BY THE PARTICIPATING HOLDERS. The
Company may require, as a condition to including any Registrable Securities of
the Participating Holders in any registration statement filed pursuant to
Section 7, that the Company shall have received an undertaking satisfactory to
it from the Participating Holders to indemnify and hold harmless (in the same
manner and to the same extent as set forth in subdivision (a) of this Section
7.4) the Company, each director of the Company, each officer of the Company and
each other person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by the Participating Holders
either specifically for inclusion therein or which the Company has informed the
Participating Holders will be used for such purposes.
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(c) NOTICES OF CLAIMS, ETC. Promptly after receipt by an
indemnified party of notice of the commencement of any action or proceeding
involving a claim referred to in the preceding subdivisions of this Section
7.4, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party, give written notice to the latter of the
commencement of such action, provided that the failure of any indemnified party
to give notice as provided herein shall not relieve the indemnifying party of
its obligations under the preceding subdivisions of this Section 7.4, except to
the extent that the indemnifying party is actually prejudiced by such failure
to give notice. In case any such action is brought against an indemnified
party, unless in such indemnified party's reasonable judgment a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, the indemnifying party shall be entitled to participate in and
to assume the defense thereof, jointly with any other indemnifying party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such indemnified party, and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such indemnified party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall consent to entry of any judgment or
enter into any settlement without the consent of the indemnified party which
does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
(d) OTHER INDEMNIFICATION. Indemnification similar to
that specified in the preceding subdivisions of this Section 7.4 (with
appropriate modifications) shall be given by the Company and the Participating
Holders with respect to any required registration or other qualification of
securities under any Federal or state law or regulation of any governmental
authority, other than the Securities Act.
(e) CONTRIBUTION. If the indemnification provided for in
this Section 7.4 from the indemnifying party is unavailable to an indemnified
party hereunder in respect of any losses, claims, damages, liabilities or
expenses referred to herein, then the indemnifying party, to the extent such
indemnification is unavailable, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative fault of the indemnifying
party and indemnified parties in connection with the actions that resulted in
such losses, claims, damages, liabilities or expenses. The relative fault of
such indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such indemnifying party or indemnified parties, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred by
such party in connection with any investigation or proceeding.
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The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7.4(e) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. No person guilty of fraudulent misrepresentation (within
the meaning of Section 10(f) of the Securities Act) shall be entitled to
contribution from any person.
If indemnification is available under this Section 7.4, the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in Sections 7.4(a) and 7.4(b) without regard to the relative fault of
said indemnifying parties or indemnified party or any other equitable
consideration provided for in this Section 7.4(e).
7.5 INCORPORATION OF CERTAIN RIGHTS UNDER SHAREHOLDERS
AGREEMENT. The rights and obligations of the Warrant Holder pursuant to
Articles III, IV, V and VI of the Shareholders Agreement related to "Tag-Along
Rights," "Drag-Along Rights," "Repurchase of Shares by the Company," and "Call
and Put Options" are incorporated in this Agreement as though set forth herein.
SECTION 8. CANCELLATION UPON EARLY PAYMENT OF LOAN. If the Loan
is repaid in full prior to July 5, 1996, the number of shares of Common Stock
purchasable upon exercise of the Warrants shall be reduced by 83,485, as such
number may be adjusted pursuant to the provisions of Section 6.3 of this
Agreement.
SECTION 9. FRACTIONAL INTERESTS. The Company shall not be
required to issue fractional Warrant Shares on the exercise of the Warrants.
If any fraction of a Warrant Share would, except for the provisions of this
Section 9, be issuable on the exercise of the Warrants (or specified portion
thereof), the Company shall issue one full share in lieu of such fractional
share.
SECTION 10. NO RIGHTS TO VOTE OR TO STOCKHOLDER NOTICES FOR
HOLDER. Nothing contained in this Agreement or in the Warrants shall be
construed as conferring upon a Holder or any transferees the right to vote or
to consent to or receive notice as a stockholder in respect of any meeting of
stockholders for the election of directors of the Company or any other matter.
SECTION 11. INSPECTION OF WARRANT AGREEMENT. The Company shall
keep copies of this Agreement and any notices given or received hereunder
available for inspection by a Holder during normal business hours at its
principal office.
SECTION 12. IDENTITY OF TRANSFER AND WARRANT AGENT. Forthwith
upon the appointment of any subsequent transfer agent for the Common Stock or
Warrant Agent, or any other shares of the Company's capital stock issuable upon
the exercise of the Warrants, the Company will notify the Warrant Holders of
the name and address of such subsequent transfer agent.
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SECTION 13. NOTICES. Any notice pursuant to this Agreement by any
Holder to the Company, shall be in writing and shall be mailed first class,
postage prepaid, or delivered to the Company at its office at 0000 Xxxxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxxxx 00000-0000, Attention: Chief Executive Officer,
with a copy to First Equity Development, 0 Xxxxx Xxxx Xxxxxx, Xxx 0000,
Xxxxxxxx, Xxxxxxxxxxx 00000, attention: Xxxxx X. Xxxxxxxxx.
Each party hereto may from time to time change the address to
which notices to it are to be delivered or mailed hereunder by notice in
writing to the other party. Any notice mailed pursuant to this Agreement by
the Company or the Warrant Agent to any Holder shall be in writing and shall be
mailed first class, postage prepaid, or delivered to the Holder at his address
on the books of the Warrant Agent.
SECTION 14. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
giving effect to principles of conflict of laws. The parties hereto agree to
submit to the jurisdiction of the Courts of the State of California in any
action or proceeding arising out of or relating to this Agreement.
SECTION 15. SUCCESSORS. All the covenants and provisions of this
Agreement shall bind and inure to the benefit of the parties' respective
successors and assigns hereunder, including transferees of the Warrant Holders.
SECTION 16. MERGER OR CONSOLIDATION OF THE COMPANY. So long as
any Warrant remains outstanding, the Company will not merge or consolidate with
or into, or sell, transfer or lease all or substantially all of its property
to, any other corporation unless the successor or purchasing corporation, as
the case may be (if not the Company), shall expressly assume, by supplemental
agreement, the due and punctual performance and observance of each and every
covenant and condition of this Agreement to be performed and observed by the
Company.
SECTION 17. CAPTIONS. The captions of the Sections of this
Agreement have been inserted for convenience only and shall have no substantive
effect.
SECTION 18. COUNTERPARTS. This Agreement may be executed in any
number of counterparts each of which so executed shall be deemed to be an
original; but such counterparts together shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly
executed as of the day, month and year first above written.
THE COMPANY:
NATIONAL AIRMOTIVE CORPORATION,
a California corporation
By:
--------------------------------
Title:
--------------------------------
THE WARRANT AGENT:
NATIONAL AIRMOTIVE CORPORATION,
a California corporation
By:
--------------------------------
Title:
--------------------------------
THE WARRANT HOLDER:
CANPARTNERS INVESTMENTS III, L.P.,
a California limited partnership,
By: Canyon Capital Management, L.P.
its general partner
By: Canpartners Incorporated,
its general partner
By:
--------------------------------
Title:
--------------------------------
Address:
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
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EXHIBIT A
Warrant Certificate
No. [ ] [ ] Shares
COMMON STOCK PURCHASE WARRANT
Void After 5:00 P.M.
Pacific Time on June 1, 2005
THIS CERTIFIES THAT, for value received, [__________________________],
the registered holder of these Common Stock Purchase Warrant (the "Warrant") or
assigns (the "Holder"), is entitled to purchase from National Airmotive
Corporation, a California corporation (the "Company"), at any time until 5:00
p.m. Pacific Time on June 1, 2005 (the "Expiration Date"), at the purchase
price of $0.001 per share (the "Warrant Price"), the number of shares of Common
Stock of the Company (the "Common Stock") which is equal to the number of
Shares set forth above.
This Warrant is issued under and in accordance with a Warrant
Agreement dated as of June 1, 1995, between the Company and the Warrant Holder
and is subject to the terms and provisions contained in the Warrant Agreement,
to all of which the Holder of this Warrant by acceptance hereof consents. A
copy of the Warrant Agreement may be obtained for inspection by the Holder
hereof upon written request to the Company.
This Warrant may be exercised in whole or in part by presentation of
this Warrant with the Purchase Form attached hereto duly executed and
simultaneous payment of the Warrant Price at the principal office of the
Company in Oakland, California. Payment of such price shall be made at the
option of the Holder hereof in cash or by certified or official bank check.
Terms relating to exercise of the Warrant are set forth more fully in the
Warrant Agreement.
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This Warrant may be exercised in whole or in part. Upon partial
exercise, a Warrant Certificate for the unexercised portion shall be delivered
to the Holder. No fractional shares will be issued upon the exercise of this
Warrant but one whole share shall be issued in lieu of any fraction upon the
exercise of the Warrant. This Warrant is transferable as described in this
Warrant Agreement at the office of the Company in Oakland, California, in the
manner and subject to the limitations set forth in the Warrant Agreement.
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). NO SALE OR
OTHER DISPOSITION OR PLEDGE OF THESE SECURITIES OR THE SECURITIES
UNDERLYING THESE SECURITIES CAN BE EFFECTED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT RELATING THERETO OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY OR A NO ACTION LETTER OR INTERPRETIVE
OPINION OF THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION THAT
SUCH REGISTRATION IS NOT REQUIRED UNDER THE ACT."
The Holder hereof may be treated by the Company and all other persons
dealing with this Warrant as the absolute owner hereof for any purpose and as
the person entitled to exercise the rights represented hereby, or to the
transfer hereof on the books of the Company. Any notice to the contrary
notwithstanding, and until such transfer on which books, the Company may treat
the Holder hereof as the owner for all purposes.
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This Warrant shall not be valid or obligatory for any purpose until it
shall have been countersigned by the Company.
NATIONAL AIRMOTIVE CORPORATION
By: /s/ [SIGNATURE]
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
Attest /s/ [SIGNATURE]
-----------------------------
Name:
-----------------------
Title:
-----------------------
DATED: June 1, 1995
X-0
00
XXXXXXXX FORM
Mailing Address
------------------------------------ ---------------------------------------
------------------------------------ ---------------------------------------
------------------------------------ ---------------------------------------
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant for, and to purchase thereunder,
_______________ shares of the stock provided for therein, and tenders herewith
payment of the purchase price in full in the form of cash or by cashier's check
in the amount of $______________.
The undersigned requests that certificates for such shares be issued
in the name of:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Please Print Name, Address and Social Security No.)
DATED:
-------------------------------
Name of Warrant Holder or Assignee:
--------------------------------------------------------------------------------
Address:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Signature:
---------------------------------------------------------------------
Signature Guaranteed: Note: The above signature must correspond with the
name as written upon the face of this Warrant
Certificate in every particular, without
alteration or enlargement or any change
whatever, unless this Warrant has been assigned.
