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EXHIBIT 10.5
AVIATION GROUP, INC.
AND
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WARRANT AGREEMENT
DATED AS OF ___________
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WARRANT AGREEMENT
This WARRANT AGREEMENT (the "AGREEMENT") is dated as of _______________
between AVIATION GROUP, INC., a Texas corporation (the "COMPANY"), and
____________________, a Texas resident, his heirs, personal representatives and
assigns (collectively, "________").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to _______ warrants ("WARRANTS")
to purchase up to an aggregate of _________ shares of Common Stock (as defined
in Section 8.5), $.01 par value, of the Company.
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. Effective herewith, _________ is hereby granted the right to
purchase, at any time prior to 5:00 p.m., Dallas, Texas time on _______________,
_________ 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 8) $______ per Warrant
Security subject to the terms and conditions of this Agreement.
2. 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.
3. Exercise of Warrant.
3.1 Method of Exercise. The Warrants initially are exercisable
at an aggregate initial exercise price (subject to adjustment as
provided in Section 8 hereof) per Warrant Security set forth in Section
6 hereof payable by certified or official bank check, subject to
adjustment as provided in Section 8 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
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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.
3.2 Exercise by Surrender of Warrant. In addition to the
method of payment set forth in Section 3.1 and in lieu of any cash
payment required thereunder, the Holder(s) of the Warrants shall have
the right at any time and from time to time to exercise the Warrants in
full or in part by surrendering the Warrant Certificate in the manner
specified in Section 3.1. The number of shares of Common Stock to be
issued pursuant to this Section 3.2 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 3.3).
3.3 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).
4. 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 5 and 7 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
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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.
5. 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.
6. Exercise Price.
6.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 8 hereof, the initial exercise price of each
Warrant shall be $______ 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.
6.2 Exercise Price. The term "EXERCISE PRICE" herein shall
mean the initial exercise price or the adjusted exercise price,
depending upon the context.
7. Registration Rights.
7.1 Piggyback Registration.
(a) If, at any time prior to the seventh anniversary
of the date of this Agreement, the Company proposes to
register any of its securities under the Securities Act of
1933, as amended (the "ACT"), either for its own account or
the account of any other security holder or holders of the
Company possessing registration rights ("OTHER STOCKHOLDERS")
(other than pursuant to Form S-4, Form S-8 or comparable
registration statement), it shall give written notice, at
least
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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 7.1(a)
hereof. The right of any such Holder(s) to registration
pursuant to this Section 7.1 shall be conditioned upon their
participation in such underwriting and the inclusion of their
Registrable Securities in the underwriting to the extent
hereinafter provided. All Holders proposing to distribute
their securities through such underwriting shall (together
with the Company and any officers, directors or Other
Stockholders distributing their securities through such
underwriting) enter into an underwriting agreement in
customary form with the representative of the underwriter or
underwriters selected by the Company. Notwithstanding any
other provision of this Section 7.1, if the representative of
the underwriter or underwriters advises the Company in writing
that marketing factors require a limitation or elimination of
the number of shares of Common Stock or other securities to be
underwritten, the representative may limit the number of
shares of Common Stock or other securities to be included in
the registration and underwriting. The Company shall so advise
all Holders of Registrable Securities requesting registration,
and the number of shares of Common Stock or other securities
that are entitled to be included in the registration and
underwriting shall be allocated among the Holders requesting
registration, in each case, in proportion, as nearly as
practicable, to the respective amounts of securities which
they had requested to be included in such registration at the
time of filing the registration statement.
(c) Notwithstanding the provisions of this Section
7.1, the Company shall have the right at any time after it
shall have given written notice pursuant to Section 7.1(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.
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7.2 Covenants of the Company with Respect to
Registration. In connection with any registration under Section 7.1
hereof, the Company covenants and agrees as follows:
(a) The Company shall use its best efforts to have
any registration statements declared effective at the earliest
practicable time and shall furnish each Holder desiring to
sell Registrable Securities such number of prospectuses as
shall reasonably be requested.
(b) The Company shall pay all costs, expenses and
fees (excluding fees and expenses of Holder(s)' counsel and
any underwriting or selling commissions), in connection with
all registration statements filed pursuant to Section 7.1
hereof including, without limitation, the Company's legal and
accounting fees, printing expenses, blue sky fees and
expenses. If the Company shall fail to comply with the
provisions of Section 7.2(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 15 of the Act or Section 20(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 7.2(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 15 of the Act or Section 20(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.
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(f) For a period of ninety (90) days after the
effectiveness of any registration statement filed pursuant to
Section 7.1 hereof, the Company shall not permit any other
registration statement (other than (1) a registration
statement relating to the securities for which the Company has
made available to the Holder(s) of the Registrable Securities
piggyback registration rights hereunder and (2) a registration
statement filed on Forms S-4 or S-8 or a shelf registration on
Form S-3) to be or remain effective during the effectiveness
of a registration statement or a shelf registration on Form
S-3 filed pursuant to Section 7.1 hereof, without the prior
written consent of the Holders of the Registrable Securities
representing a majority of such securities.
(g) The Company shall furnish to each Holder
participating in the offering and to each underwriter, if any,
a signed counterpart, addressed to such Holder or underwriter,
of (i) an opinion of counsel to the Company, dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, an
opinion dated the date of the closing under the underwriting
agreement), and (ii) a "cold comfort" letter dated the
effective date of such registration statement (and, if such
registration includes an underwritten public offering, a
letter dated the date of the closing under the underwriting
agreement) signed by the independent public accountants who
have issued a report on the Company's financial statements
included in such registration statement, in each case 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 7.1 hereof, and in any event within
fifteen (15) months thereafter, make "generally available to
its security holders" (within the meaning of Rule 158 under
the Act) an earnings statement (which need not be audited)
complying with Section 11(a) of the act and covering a period
of at least twelve (12) consecutive months beginning after the
effective date of the registration statement.
(i) The Company shall deliver promptly to each Holder
participating in the offering requesting the correspondence
and memoranda described below and to the managing
underwriters, copies of all written correspondence between the
Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its
staff with respect to the registration statement and permit
each Holder and underwriters to do such investigation, upon
reasonable advance notice, with respect to information
contained in or omitted from the registration statement as it
deems reasonably necessary to comply with applicable
securities laws or rules of the NASD. Such investigation shall
include
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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.
7.3 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:
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. Adjustments to Exercise Price and Number of Securities.
8.1 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 8.7 hereof, (ii) shares of Common Stock
issued upon the exercise of any options, rights or warrants to
subscribe for shares of Common Stock, or (iii) shares of Common Stock
issued upon the direct or indirect conversion or exchange of securities
for shares of Common Stock), for a consideration per share less than
the Market Price in effect immediately prior to the issuance or sale of
such shares, or without consideration, then forthwith upon such
issuance or sale, the Exercise Price shall (until another such issuance
or sale) be reduced to the price (calculated to the nearest full cent)
equal to the quotient derived by dividing (i) an amount equal to the
sum of (a) the total number of shares of Common Stock outstanding
immediately prior to the issuance or sale of such shares, multiplied by
the Exercise Price in effect immediately prior to such issuance or
sale, and (b) the aggregate of the amount of all consideration, if any,
received by the Company upon such issuance or sale, by (ii) the total
number of shares of Common Stock outstanding immediately after such
issuance or sale; provided, however, that in no event shall the
Exercise Price be adjusted pursuant to this computation to an amount in
excess of the Exercise Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares
of Common Stock, as provided by Section 8.3 hereof.
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For the purposes of this Section 8 the term Exercise Price
shall mean the Exercise Price per share of Common Stock set forth in
Section 6 hereof, as adjusted from time to time pursuant to the
provisions of this Section 8.
For the purposes of any computation to be made in accordance
with this Section 8.1, 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
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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 8.1.
(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.
8.2 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 Market Price in effect immediately prior to the issuance
of such options, rights or warrants, or such convertible or
exchangeable securities, or without consideration, the Exercise Price
in effect immediately prior to the issuance of such options, rights or
warrants, or such convertible or exchangeable securities, as the case
may be, shall be reduced to a price determined by making a computation
in accordance with the provisions of Section 8.1 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 8.2, 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
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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.
8.3 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.
8.4 Adjustment in Number of Securities. Upon each adjustment
of the Exercise Price pursuant to the provisions of this Section 8, 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.
8.5 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.
8.6 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 8. The above provision of this
subsection shall similarly apply to successive consolidations or
mergers.
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8.7 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.
8.8 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 8.8.
8.9 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.
9. 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
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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.
10. 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 3.3 hereof.
11. Reservation and Listing of Securities. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants, such
number of shares of Common Stock or other securities, properties or rights as
shall be issuable upon the exercise thereof. The Company covenants and agrees
that, upon exercise of the Warrants and payment of the Exercise Price therefor,
all shares of Common Stock and other Securities issuable upon such exercise
shall be duly and validly issued, fully paid, non-assessable and not subject to
the preemptive rights of any stockholder.
12. 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;
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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.
13. 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 3 hereof or to such other address as the Company may designate
by notice to the Holders.
14. Supplements and Amendments. The Company and _________ may from
time to time supplement or amend this Agreement without the approval of any
Holders of the Warrant Certificates in order to cure any ambiguity, to correct
or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and _________
may deem necessary or desirable and which the Company and _________ deem shall
not adversely affect the interests of the Holders of the Warrant Certificates.
If _________ no longer owns any Warrants, then this Agreement may be amended by
the Company and the Holders of a majority of the then outstanding Warrants.
15. 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.
16. Governing Law; Submission to Jurisdiction. This Agreement and
each Warrant Certificate issued hereunder shall be deemed to be a contract made
under the laws of the State of Texas and for all purposes shall be construed in
accordance with the laws of such State without giving effect to the rules of
such State governing the conflicts of laws.
The Company, _________ and any other registered Holders hereby agree
that any action, proceeding or claim against it arising out of, or relating in
any way to, this Agreement shall be brought and enforced in the courts of the
State of Texas or of the United States of America for the Northern District of
Texas, and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, _________ and any other registered Holders hereby
irrevocably waive any objection to such exclusive jurisdiction or inconvenient
forum. Any such process or
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summons to be served upon any of the Company, _________ and the Holders (at the
option of the party bringing such action, proceeding or claim) may be served by
transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
13 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim. The
Company, _________ and any other registered Holders agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.
17. 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.
18. 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.
19. 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.
20. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and
_________ and any other registered Holder(s) of the Warrant Certificates or
Warrants Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole benefit of the Company and
_________ and any other registered Holders of Warrant Certificates or Warrant
Securities.
21. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed, as of the day and year first above written.
AVIATION GROUP, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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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, ________________
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 initially, at any time from _______________ until 5:00 p.m. Dallas,
Texas time on ________________ ("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 $______ 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 _______________ between the Company and _________ (the
"Warrant Agreement"). Payment of the Exercise Price shall be made by certified
or official bank check payable to the order of the Company or by surrender of
this Warrant Certificate.
No Warrant may be exercised after 5:00 p.m., Dallas, Texas time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, hereby shall thereafter be void.
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
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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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WARRANT GRANTS TO
EXECUTIVE OFFICERS AND DIRECTORS
The following described warrants were granted to executive officers or
directors on April 28, 1998 and issued in substantially the same form as the
attached form of Warrant Agreement and Warrant Certificate attached thereto. In
some cases, as indicated below, the warrants were replacements for previously
issued warrants or stock options that had higher exercise prices.
No. of Shares
Name of Executive Purchasable Exercise Expiration Replacement of Prior
Officer/Director Under Warrants Price Date Warrant/Option
----------------- -------------- -------- ---------- --------------------
Xxxxxxx X. Xxxxxx 15,000 $3.50 8/22/04 Yes
Xxxxxx X Xxxxxxxxx 10,000 3.50 8/27/04 Yes
Xxxxxx Xxxxxxxx 10,000 3.50 2/25/04 Yes
Xxxxxxx X. Xxxx 15,000 3.50 8/22/04 Yes
Xxx Xxxxxxx 200,000 3.50 4/28/03 No
Xxxxxx Xxxxxxxx 5,000 3.50 4/28/03 No
Xxxxxxx Xxxxxx 100,000 3.50 4/28/03 No
Xxxxxxx X. Xxxx 5,000 3.50 4/28/03 No
Xxxxxx X. Xxxxxxxxx 5,000 3.50 4/28/03 No
RAS Securities Corp.(1) 20,000 3.50 4/28/03 No
-------------------
(1) Affiliate of Xx. Xxxxxxxxx at the time of issuance of the Warrant.
