EXHIBIT 10.42
AVIATION GROUP, INC.
AND
XX XXXXXX FUND, L.P.
-----------
WARRANT AGREEMENT
Dated as of May 9, 2000
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WARRANT AGREEMENT
This WARRANT AGREEMENT (the "Agreement") is dated as of May 9, 2000
between AVIATION GROUP, INC., a Texas corporation (the "Company"), and XX XXXXXX
FUND, L.P., a Delaware limited partnership, its successors and assigns
(collectively, "Pelham").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Company has entered into a Purchase Agreement of even date
herewith with Pelham and xxxxxxxxxx.xxx Ltd., an Ontario corporation (the
"Purchase Agreement");
WHEREAS, Pelham is making a US$3,000,000 loan to the Company under the
Purchase Agreement, and the Company is obligated to issue the warrants (the
"Warrants") to purchase shares of the Company's common stock, par value $0.01
per share (the "Common Stock") under and pursuant to the terms of this
Agreement.
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 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, Pelham is
hereby granted the right to purchase, at any time prior to 5:00 p.m., Dallas,
Texas time on May 8, 2005, 225,000 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) US$2.125 per Warrant Security subject to the terms and conditions of this
Agreement.
2. Conditions. Notwithstanding any other provisions hereof, none of
the Warrants may be exercised by Pelham unless and until the shareholders of the
Company approve this Agreement. The Company covenants and agrees to use its best
efforts to obtain the approval of this Agreement by its shareholders as soon as
practical, but in any event no later than September 30, 2000. The Company will
provide Pelham with prompt written notice of the approval of this Agreement by
its shareholders of this Agreement.
3. Warrant Certificates. The warrant certificates (the "Warrant
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
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 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 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 payment set forth in Section 4.1 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 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).
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5. Issuance of Certificates. Upon the exercise of the Warrants, the
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
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
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; provided that no such
opinion of counsel shall be required in connection with a transfer or assignment
of interests granted by this Agreement to an affiliate of Pelham.
7. Exercise Price.
7.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 9 hereof, the initial exercise price of each Warrant
shall be US$2.125 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 initial exercise price or the adjusted exercise price,
depending upon the context.
8. Registration Rights.
8.1 Piggyback Registration; Immediate Registration.
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(a) If, at any time prior to the fifth 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 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 connection with any registration under Section 8.1 or 8.4 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 (i) shall furnish each Holder desiring to
sell Registrable Securities such number of prospectuses as shall
reasonably be requested, and (ii) shall prepare and file 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 Act.
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(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 or 8.4
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 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; provided, however, that the obligation
of any Holder hereunder shall be limited to an amount equal to
the proceeds received by such Holder upon the sale of
Registrable Securities sold in the offering covered by such
registration.
(f) For a period of ninety (90) days after the
effectiveness of any registration statement filed pursuant to
Section 8.1 or 8.4 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 or 8.4 hereof, without the prior
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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 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 or 8.4 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 representing the Shares underlying the Warrants and any of
the other securities issuable upon exercise of the Warrants shall bear
the following restrictive legend:
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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.
8.4 Immediate Resale Registration. The Company agrees to use
its best efforts to cause (a) the Warrant Securities to be registered
for resale by Pelham under the Act promptly following the registration
of the securities to be issued in connection with the arrangement under
Canadian laws provided for in the Arrangement Agreement dated May 3,
2000 among the Company, xxxxxxxxxx.xxx Ltd. and Aviation Group Canada
Ltd., and (b) such resale registration statement to remain effective and
current until the earlier of the date that (i) all of such Warranty
Securities have been sold pursuant to the registration statement, or
(ii) the second anniversary of the effective date of such registration
statement.
9. Adjustments to Exercise Price and Number of Securities.
9.1 Computation of Adjusted Exercise Price. Except as
hereinafter 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 greater of
the Market Price or the Exercise 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.
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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 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.
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9.2 Options, Rights, Warrants and Convertible and
Exchangeable Securities. In case the Company shall at any time after the
date hereof issue 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
greater of the Market Price or the Exercise 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.
(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 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.
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9.4 Adjustment in Number of Securities. Upon each adjustment
of the 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, 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 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 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 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.
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9.8 Dividends and Other Distributions. In the event that the
Company 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
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
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 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
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,
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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
(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 Pelham 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
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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 Pelham may deem necessary or desirable and which the Company and Pelham deem
shall not adversely affect the interests of the Holders of the Warrant
Certificates. If Pelham 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, Pelham 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
exclusive. The Company, Pelham 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, Pelham
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, Pelham 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 Pelham
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 Pelham and
any other registered Holders of Warrant Certificates or Warrant Securities.
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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.
15
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: /s/ XXXXXXX X. XXXXXX
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
XX XXXXXX FUND, L.P.
By: /s/ XXXXXX X. XXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxx
Title: Managing Director
16
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, MAY 8, 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 May ___, 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 US$2.125 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 May 8, 2000
between the Company and XX Xxxxxx Fund, L.P. (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 the
shareholders of the Company approve the Agreement pursuant to which this Warrant
is issued.
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
17
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.
[SEAL] By:
----------------------------------
Name:
--------------------------------
Attest: Title:
-------------------------------
Name:
--------------------------
Title:
-------------------------
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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, MAY 8, 2005
No. W-55
------
Warrants to Purchase
225,000 Shares of Common Stock
WARRANT CERTIFICATE
This Warrant Certificate certifies that XX XXXXXX FUND, L.P., or its
registered assigns, is the registered holder of 225,000 Warrants to purchase,
until 5:00 p.m. Dallas, Texas time on May 9, 2005 ("Expiration Date"), up to
225,000 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 US$2.125 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 May 8, 2000 between the Company and XX Xxxxxx Fund, L.P.
(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 shares of Common Stock unless and until the shareholders
of the Company approve the Agreement pursuant to which this Warrant is issued.
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.
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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 May 8 2000
AVIATION GROUP, INC.
[SEAL] By: /s/ XXXX XXXXX
------------------------------
Name: Xxxx Xxxxx
Attest: /s/ XXXXXXX XXXXXX Title: Chief Executive Officer
------------------------
Name: Xxxxxxx Xxxxxx
Title: Secretary
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