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EXHIBIT 10.14
EXCHANGE AGREEMENT
THIS EXCHANGE AGREEMENT is made and entered into this 1st day of
March, 1996, by and among Aviation Group, Inc., a Texas corporation (the
"Company"), and Louisiana Economic Development Corporation ("LEDC").
W I T N E S S E T H:
WHEREAS, LEDC has loaned $407,689.77 to Pride Aviation, Inc., an
Oklahoma corporation ("Pride"), as evidenced by that certain Amended and
Restated Promissory Note (the "Note") of even date herewith made by Pride and
payable to the order of LEDC in the original principal amount of $407,689.77;
and
WHEREAS, the Company desires to grant to LEDC the right to exchange
the indebtedness represented by the Note for shares of Common Stock, $0.01 par
value per share, of the Company (the "Stock"); and
WHEREAS, LEDC and the Company are entering into this Exchange
Agreement for the purpose of setting forth the terms and conditions upon which
LEDC may exchange the indebtedness evidenced by the Note for the Stock;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, the parties hereto do hereby agree as follows:
1. Exchange Rights.
a. Terms. The holder of the Note ("Holder")
shall have the right from time to time to exchange any or all of the unpaid
indebtedness thereof (including accrued but unpaid interest) for shares of the
Stock at an exchange rate of Four and 50/100 Dollars ($4.50) of indebtedness
per share of the Stock. Such exchange right may be exercised at any time prior
to the maturity date of the Note. To effect such exchange, Holder must tender
the Note to the Company at its offices in Dallas, Texas, together with a
written notice of exercise of such exchange right stating the amount thereof
being exchanged. Upon the giving of the notice of exchange and receipt of the
Note by the Company as hereinabove provided, no further interest shall accrue
upon the exchanged indebtedness thereof, the amount of the exchanged
indebtedness shall be deemed canceled, and the Company shall issue to Holder a
certificate evidencing the shares of the Stock to which Holder is entitled in
proper form. The Company will pay any documentary stamp taxes attributable to
the initial issuance of shares of the Stock upon the exchange of any debt
represented by the Note.
b. Adjustments. In the event of any stock dividend,
split, combination or reclassification directly affecting the then outstanding
shares of the Stock, the then effective
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exchange rate at which the indebtedness of the Note may be exchanged for shares
of the Stock shall be proportionately adjusted, upward or downward, to prevent
dilution or enlargement of the rights of Holder, effective at the close of
business on the date of such dividend, split, combination or reclassification.
In the event the Stock shall be changed into another kind of capital stock or
debt (otherwise then through a stock dividend, split, combination or
reclassification) or shall represent the right to receive some other security
or property, as a result of any capital reorganization or any merger or
consolidation with another corporation in which the Company is not the
surviving corporation, or any sale of all or substantially all of the assets of
the Company to another corporation, such debt shall (subject to further
adjustment in the exchange price as herein provided) thereafter entitle Holder
to acquire upon exchange thereof the kind and number of shares of stock or
other securities or property to which Holder would have been entitled if it had
the Stock issuable upon the exchange of the debt evidenced by the Note
immediately prior to such capital reorganization, merger, consolidation or sale
of assets.
c. Securities Laws and Transfers. Holder acknowledges
that the Company has no obligation to register the shares of Stock to be issued
upon exchange of the Note under applicable securities laws or to provide a
prospectus for any offer or transfer thereof by Holder. The shares of the
Stock to be issued upon exchange of the Note shall not be registered pursuant
to the Securities Act of 1933 or any state securities law or regulation. The
certificates evidencing such shares shall bear an appropriate legend to the
effect that such shares have not been registered under the Securities Act of
1933 nor under the securities laws of any state and that such shares may not be
sold within the United States of America unless so registered or unless the
Company shall receive an opinion of counsel satisfactory to it that such
registration is unnecessary.
d. No Fractional Shares. No fractional shares of the
Stock shall be issued upon exchange of the Note. Instead of any fractional
share which would otherwise be issuable upon such exchange, the Company will
pay a cash adjustment with respect to such fractional share in an amount equal
to the same fraction of the then effective exchange rate.
e. Rules of Procedure. The Board of Directors of the
Company, or a committee established by it, shall have the right from time to
time to adopt specific rules of procedure to carry out the full intent of the
exchange provisions of this Exchange Agreement and to do all reasonable acts
therefor; provided that such rules and acts shall not violate the specific
terms of this Exchange Agreement or the Note.
2. Recognition of Holder. Prior to receiving notice of any
transfer of the Note, the Company may treat the then current Holder, as
reflected on the records of the Company, as the person exclusively entitled to
receive notices and otherwise to exercise rights hereunder.
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3. Miscellaneous.
a. The Company shall at all times reserve and hold
available sufficient shares of the Stock to satisfy all exchange rights of this
Exchange Agreement and the Note. Shares deliverable upon the exchange of the
Note shall, at delivery, be fully paid and nonassessable, free from all taxes,
liens and charges arising out of their issuance. In the case of the exchange of
less than all of the indebtedness of the Note, the Company shall cause Pride to
cancel the Note and execute and deliver a new promissory note of like tenor and
date for the balance of the unpaid and unexchanged indebtedness.
b. This Exchange Agreement does not entitle Holder to
any voting rights or other rights as a shareholder of the Company, or to any
other rights whatsoever except the rights herein expressed. No dividends are
payable or will accrue on the shares of the Stock into which the principal
amount thereof may be exchanged until, and except to the extent that, the
exchange right granted in this Exchange Agreement is exercised.
c. The Note is not subject to redemption. No
provisions of this Exchange Agreement or the Note restrict any declaration of
dividends by the Company, require the maintenance by the Company of any
reserves or any minimum financial condition, or restrict the incurrence of
additional debt or the issuance of additional securities by the Company.
d. This Exchange Agreement shall inure to the benefit
of and be binding upon the parties hereto and their respective successors and
assigns. No provision hereof shall be construed to create any right in any
person not a party hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Exchange
Agreement on the day and year first above written.
WITNESSES: AVIATION GROUP, INC., a Texas
corporation
/s/ XXX XXXXXX By: /s/ XXX XXXXXXX
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Name: Xxx Xxxxxxx
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/s/ X X XXXXXXX Title: President
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LOUISIANA ECONOMIC DEVELOPMENT
CORPORATION
/s/ XXXXX X. XXXXXX By: /s/ XXXXX X. XXXXXX, XX.
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Name: Xxxxx X. Xxxxxx, Xx.
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/s/ [ILLEGIBLE] Title: President
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Louisiana Economic Development
Corporation
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