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Exhibit 10.42
AVIATION GROUP, INC.
AND
SW PELHAM FUND, L.P.
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AMENDED AND RESTATED
WARRANT AGREEMENT
Dated as of November 2, 2000
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AMENDED AND RESTATED WARRANT AGREEMENT
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This AMENDED AND RESTATED WARRANT AGREEMENT (the "Agreement") is dated as
of November 2, 2000 between AVIATION GROUP, INC., a Texas corporation (the
"Company"), and SW PELHAM 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 dated as of
May 4, 2000 with Pelham and travelbyus.com Ltd., an Ontario corporation (the
"Purchase Agreement");
WHEREAS, Pelham made a US$3,000,000 loan to the Company under the
Purchase Agreement as evidenced by a Promissory Note dated as of May 9, 2000
(the "Note"), and the Company issued warrants (the "Old Warrants") to purchase
shares of the Company's common stock, par value $0.01 per share (the "Common
Stock"), at an exercise price of US$2.125 per share, under and pursuant to the
terms of that certain Warrant Agreement dated as of May 9, 2000 between the
Company and Pelham (the "Old Warrant Agreement").
WHEREAS, the Company has requested Pelham to waive certain events that
have occurred or failed to occur in accordance with the Purchase Agreement and
the Note, and Pelham is willing to do so if the Company reduces the exercise
price of the Old Warrants, issues 25,000 additional warrants to Pelham,
eliminates the condition on exercisability of the Old Warrants requiring
shareholder approval, and covenants as to certain matters, all as set forth in a
Waiver and Amendment Agreement dated of even date herewith between the Company,
Pelham and travelbyus.com ltd.;
WHEREAS, the Company and Pelham desire to amend and restate the Old
Warrant Agreement by execution and delivery of this Agreement.
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 9, 2005, 250,000 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 right to purchase (a "Warrant") shall equal (subject to adjustment as
provided in Section 9) US$1.50 per Warrant Security subject to the terms and
conditions of this Agreement.
2. [Intentionally deleted]
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
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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 700 North Pearl, Suite 2170, Dallas, Texas 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
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Market Price (except that, in the event of a public offering of shares of
Common Stock, the Market Price of a share of Common Stock shall be
determined by reference to the trading day immediately preceding the
effective date of the public offering and not such thirty (30) trading day
period).
5. Issuance of Certificates. Upon the exercise of the Warrants, the
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.
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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$1.50 per Warrant Security. The adjusted exercise price shall
be the price which shall result from time to time from any and all
adjustments of the initial exercise price in accordance with the provisions
of Section 9 hereof.
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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.
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8.1 Piggyback Registration.
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(a) If, at any time prior to the May 9, 2005, 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:
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(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.
(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.
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(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 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
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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:
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, travelbyus.com
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.
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9. Adjustments to Exercise Price and Number of Securities.
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9.1 Computation of Adjusted Exercise Price. Except as hereinafter
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.
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,
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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.
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
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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.
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.
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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.
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
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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, 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
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(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 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.
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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.
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.
23. Replacement of Old Warrant Agreement. This Agreement is executed to
amend, restate and replace in its entirety the Old Warrant Agreement, which
shall be deemed superceded by this Agreement. Pelham shall surrender to the
Company the original Old Warrants, and the Company shall execute and issue to
Pelham new Warrants to purchase 250,000 shares Common Stock to replace the Old
Warrants.
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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/ Richard L. Morgan
--------------------------------
Name: Richard L. Morgan
Title: CFO and Executive Vice President
SW PELHAM FUND, L.P.
By: /s/ Venita E. Fields
--------------------------------
Name: Venita E. Fields
Title: Senior Managing Director
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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, MAY 9, 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 9, 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$1.50 per share of Common Stock upon
surrender of this Warrant Certificate and payment of the Exercise Price at an
office or agency of the Company, but subject to the conditions set forth herein
and in the Amended and Restated Warrant Agreement dated as of November ___, 2000
between the Company and SW Pelham 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.
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
------------------------.
AVIATION GROUP, INC.
[SEAL] By:
-------------------------------
Name:
-----------------------------
Attest: Title:
----------------------------
Name:
--------------------------
Title:
-------------------------
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