Exhibit 10.8(b)
SECURITIES TRANSFER AGREEMENT
SECURITIES TRANSFER AGREEMENT (this "Agreement"), dated as of October
15, 1998 by and between APP INVESTMENTS, INC., a Pennsylvania corporation
("APP"), the ▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust, ▇▇▇▇ ▇. ▇▇▇▇▇▇ Trustee, a trust having a
mailing address at c/▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ("Lender"), and, solely with respect to
Paragraphs 3 and 5.i., Aviation Holdings Group, Inc., a Delaware corporation
("Borrower").
WHEREAS, to induce Lender to provide Borrower with a loan in the
principal amount of Fifty Thousand ($50,000) Dollars, as evidenced by that
promissory note executed by Borrower on October 15, 1998 (the "Note"), APP and
Borrower (solely with respect to Paragraphs 3 and 5.i. hereof) hereby agree as
follows:
1. TRANSFER OF SHARES OF COMMON STOCK.
a. If Borrower (i) has not repaid all principal and accrued interest
due under the Note by March 15, 1999 (the "Maturity Date") or (ii) experiences
or commits any "Event of Default" (as that term is defined in Paragraph 8 of the
Note), then within five days thereafter, APP shall transfer 5,000 shares of
Borrower's common stock owned by APP to Lender (the "Default Shares").
b. If Borrower exercises its Right to Extend the Maturity Date (as
defined in Paragraph 1 of the Note) or if Borrower's Right to Extend is deemed
exercised (as described in Paragraph 8(a) of the Note), then within five days
thereafter, APP shall transfer 2,000 shares of Borrower's common stock owned by
APP to Lender for each month that the Maturity Date is extended (the "Extension
Shares," collectively with the Default Shares, the "Transferred Shares"),
provided that, the Extension Shares shall be transferred by APP to Lender in
addition to the Default Shares.
2. RESTRICTIONS ON TRANSFERRED SHARES.
a. The Transferred Shares may not be sold or transferred unless (i)
they first shall have been registered under the Securities Act of 1933, as
amended (the "Securities Act") and applicable state securities laws, or (ii)
Borrower shall have been furnished with an opinion of legal counsel (in form,
substance and scope acceptable to Borrower) to the effect that such sale or
transfer is exempt from the registration requirements of the Securities Act.
Each certificate for Transferred Shares that have not been so registered and
that have not been sold pursuant to an exemption that permits removal of the
legend, shall bear a legend substantially in the following form, as appropriate:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE (THE
"SECURITIES") HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY OTHER
STATE SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR
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INVESTMENT PURPOSES ONLY AND MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OR A VALID EXEMPTION THEREFROM. ANY SUCH
SALE, ASSIGNMENT OR TRANSFER MUST ALSO COMPLY WITH
APPLICABLE STATE SECURITIES LAWS.
b. Pursuant to the Stock Pledge Agreement between Lender and APP
dated October 15, 1999, APP has pledged and will deliver certificates (the
"Certificates") in APP's name representing the Default Shares, the Extension
Shares and the shares of Borrower's common stock to be sold to Lender upon
exercise of the Stock Purchase Warrant dated October 15, 1998 (the "Warrant
Shares") to ▇▇▇▇▇▇▇ within twenty (20) days of the date hereof. Each of the
Certificates shall contain the following legend:
THE SECURITIES HAVE BEEN PLEDGED AS COLLATERAL PURSUANT TO A STOCK
PLEDGE AGREEMENT (THE "PLEDGE AGREEMENT") BETWEEN APP INVESTMENTS, INC.
AND ▇▇▇▇▇ ▇▇▇▇▇▇▇ DATED OCTOBER 15, 1998 AND MAY NOT BE OFFERED FOR
SALE, SOLD, TRANSFERRED OR ASSIGNED UNLESS THE PLEDGE HAS BEEN RELEASED
OR TERMINATED PURSUANT TO THE TERMS OF THE PLEDGE AGREEMENT.
Lender hereby agrees that if the Pledge is either released or terminated
pursuant to the terms of the Pledge Agreement, then Lender shall take all
appropriate actions to instruct Borrower's transfer agent to remove this legend
from each of the Certificates. APP hereby agrees that if Lender becomes entitled
to own the Default Shares, the Extension Shares or the Warrant Shares (or any
portion thereof), then APP shall take all appropriate actions to instruct
Borrower's transfer agent to remove this legend from each of the Certificates.
3. REGISTRATION RIGHTS.
a. Demand Registration. In connection with the contemplated public
offering of Borrower's common stock, Lender shall be entitled to require
Borrower to register for resale all of the Transferred Shares and the Warrant
Shares pursuant to the Securities Act. In connection therewith, Borrower will
use its best efforts to cause the Transferred Shares and the Warrant Shares to
be registered under the Securities Act in such contemplated public offering.
Borrower shall not be required to affect more than one registration pursuant to
this Paragraph 3.a.
b. Piggyback Registrations. If at any time subsequent to the
consummation of the contemplated public offering of Borrower's common stock,
Borrower shall file with the Securities and Exchange Commission a registration
statement relating to an offering for its own account or the account of others
under the Securities Act of any of its equity securities and Lender's
registration rights have not been discharged in accordance with Paragraph 3(a)
hereof, Borrower shall send to Lender written notice of such determination and,
if within fifteen (15) days from the date of such notice, Lender shall so
request in writing, Borrower shall include in such registration statement all or
any part of the Transferred Shares and Warrant Shares that Lender requests to be
registered, except that if, in connection with any underwritten public offering,
the managing underwriter(s) shall impose a limitation on the number of shares of
common stock which may be
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included in the registration statement because, in such underwriter(s)'
judgment, marketing or other factors dictate such limitation is necessary to
facilitate the distribution, then Borrower shall be obligated to include in such
registration statement only such limited portion of the Transferred Shares and
Warrant Shares with respect to which Lender has requested inclusion hereunder as
the underwriter shall permit.
4. ANTIDILUTION PROVISIONS. At any time prior to their transfer to
Lender, the number of Extension Shares and Default Shares shall be subject to
adjustment from time to time as provided in this Section 4. APP shall be
responsible for all rights and obligations provided in this Section 4.
a. Subdivision or Combination of Common Stock. If Borrower at any
time subdivides (by any stock split, stock dividend, recapitalization,
reorganization, reclassification or otherwise) the Common Stock into a greater
number of shares, then, after the record date for effecting such subdivision,
the number of Extension Shares and Default Shares shall be proportionately
increased. If Borrower at any time combines (by reverse stock split,
recapitalization, reorganization, reclassification or otherwise) its common
stock into a smaller number of shares, then, after the record date for effecting
such combination, the number of Extension Shares and Default Shares shall be
proportionately decreased.
b. Consolidation, Merger or Sale. In case Borrower after the date
hereof (a) shall consolidate with or merge into any other entity and shall not
be the continuing or surviving corporation of such consolidation or merger, (b)
shall permit any other entity to consolidate with or merge into Borrower and
Borrower shall be the continuing or surviving entity but, in connection with
such consolidation or merger, Borrower's common stock shall be changed into or
exchanged for stock or other securities of any other entity or cash or any other
property, (c) shall transfer all or substantially all of its properties or
assets to any other person or entity, or (d) shall effect a capital
reorganization or reclassification of its common stock, then, and in the case of
each such transaction, proper provision shall be made so that, upon the basis
and the terms and in the manner provided in this Agreement, Lender, at any time
after the consummation of such transaction, shall be entitled to receive, in
lieu of the common stock transferable immediately prior to such consummation,
the highest amount of securities, cash or other property to which Lender would
have been entitled as a shareholder upon such consummation if Lender had
received the Extension Shares or the Default Shares immediately prior thereto,
subject to adjustments (subsequent to such consummation) as nearly equivalent as
possible to the adjustments provided for in this Section 4. Borrower shall not
effect any such consolidation, merger, or sale of assets, or capital
reorganization or reclassification unless prior to the consummation thereof, APP
assumes by written instrument the obligations under this Section 4 and the
obligations to deliver to Lender such securities, cash or other property as, in
accordance with the foregoing provisions, Lender may be entitled to acquire.
c. Distribution of Assets. In case Borrower shall declare or make
any distribution of its assets to holders of its common stock as a partial
liquidating dividend, by way of return of capital or otherwise, other than a
dividend payable in shares of its common stock or in cash
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out of earnings of Borrower, Lender shall be entitled to receive the amount of
cash, securities or other property that would have been payable to Lender had
Lender been the holder of such shares of Borrower's common stock on the record
date for the determination of stockholders entitled to such distribution.
d. Notice of Adjustment. Upon the occurrence of any event that
requires any adjustment of the number of Extension Shares or Default Shares,
Borrower shall give notice thereof to APP who shall give notice thereof to
Lender, which notice shall state the increase or decrease, if any, in the number
of Extension Shares and Default Shares, setting forth in reasonable detail the
method of calculation and the facts upon which such calculation is based.
e. No Fractional Shares. No fractional shares of Borrower's common
stock shall be transferred to Lender, but upon any transfer of the Extension
Shares or the Default Shares, APP shall pay a cash adjustment in respect of any
fractional share that would otherwise be transferable in an amount equal to the
fractional share multiplied by the market price of a share of Borrower's common
stock on the date of such transfer.
f. Other Notices. In case at any time:
i. Borrower shall declare any dividend upon its common stock
payable in shares of stock of any class or make any other distribution (other
than dividends or distributions payable in cash out of retained earnings) to the
holders of its common stock;
ii. Borrower shall offer for subscription pro rata to the holders
of its common stock any additional shares of stock of any class or other rights;
iii. There shall be any capital reorganization of Borrower, or
reclassification of its common stock, or consolidation or merger of Borrower
with or into, or sale of all or substantially all its assets to, another entity;
or
iv. There shall be a voluntary or involuntary dissolution,
liquidation or winding-up of Borrower;
then, in each such case, Borrower shall give notice to Lender of (a) the date on
which the books of Borrower shall close or a record shall be taken for
determining the holders of its common stock entitled to receive any such
dividend, distribution or subscription rights, or for determining the holders of
its common stock entitled to vote in respect of any such transaction, and (b)
the date (or, if not then known, a reasonable approximation thereof by Borrower)
when such transaction shall occur. Such notice shall also specify the date on
which the holders of Borrower's common stock shall be entitled to receive such
dividend, distribution or subscription rights or to exchange their common stock
for stock or other securities or property deliverable upon consummation of such
transaction. Such notice shall be given at least 30 days prior to the record
date or the date on which Borrower's books are closed in respect thereto.
Failure to give any such notice or any defect therein shall not affect the
validity of any action referred to in clauses (i), (ii), (iii) and (iv) above.
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g. Certain Events. In case any event shall occur as to which paragraphs
(a), (b) or (c) of this Section 4 are not strictly applicable but the failure to
make any adjustment would not fairly protect the rights represented by this
Warrant in accordance with the essential intent of such provisions, the Company
shall give APP notice of such event, who shall in turn give notice thereof to
Lender as provided in Section 4(d) and shall make an appropriate adjustment in
the number of Extension Shares and Default Shares to preserve, without dilution,
the rights represented by this Agreement.
5. MISCELLANEOUS.
a. Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of Delaware without regard
to the principles of conflict of laws.
b. Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party.
c. Headings. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement.
d. Severability. If any provision of this Agreement shall be invalid
or unenforceable in any jurisdiction, such invalidity or unenforceability shall
not affect the validity or enforceability of the remainder of this Agreement or
the validity or enforceability of this Agreement in any other jurisdiction.
e. Entire Agreement; Amendments. This Agreement and the Note
referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein. No provision of this Agreement may be
waived or amended other than by an instrument in writing signed by the party to
be charged with enforcement.
f. Notices. Any notices required or permitted to be given under the
terms of this Agreement shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier and shall be effective
three days after being placed in the mail, if mailed, or upon receipt or refusal
of receipt, if delivered personally or by courier, in each case addressed to a
party. The addresses for such communications shall be:
If to Borrower:
Aviation Holdings Group, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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If to Lender:
▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee of the ▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust
c/▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to APP:
APP Investments, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Each party shall provide notice to the other party of any change in
address.
g. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
party shall assign this Agreement or any rights or obligations hereunder without
the prior written consent of the other.
h. Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.
i. Further Assurances. Borrower hereby agrees to take all
appropriate actions reasonably requested by Lender or APP and necessary to
complete the transactions contemplated by the Pledge Agreement and this
Agreement, including but not limited to, issuing the appropriate instructions to
Borrower's transfer agent.
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IN WITNESS WHEREOF, the parties have caused this Agreements to be duly
executed as of the date first above written.
APP INVESTMENTS, INC.
_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Solely With Respect to Paragraphs 3
and 5.i. hereof:
AVIATION HOLDINGS GROUP, INC.
_____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
AGREED TO AND ACCEPTED:
________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee of the
▇▇▇▇ ▇. ▇▇▇▇▇▇ Trust
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