EXHIBIT 10.14
PLEDGE AGREEMENT
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Dated as of June 11, 1999
In consideration of the loan contemporaneously granted to Aviation Group,
Inc., a Texas corporation ("Debtor"), by ▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇
("Secured Parties"), Aviation Group, Inc. ("Owner") hereby pledges and assigns
to Secured Parties, and grants a security interest to Secured Parties in, the
property described below belonging to (or an interest in which belongs to)
Owner:
1. The following stock is pledged as property ("Collateral")
a) Certificate No. 2, representing 1,000 shares and 100% ownership
of common stock of Aviation Exteriors Greenville, Inc., a
Mississippi corporation, formerly Pride Aviation Greenville, Inc.
b) Certificate No. 1, representing 1,000 shares and 100% ownership
of common stock of Aviation Exteriors Portland, Inc. an Oregon
corporation, formerly Pride Aviation Portland, Inc.
c) Certificate No. 2, representing 1,000 shares and 100% ownership
of common stock of Tri-Star Airline Services, Inc., a Texas
corporation.
d) Certificate No. 112, representing 133,165.3223 shares and 100%
ownership of common stock of Casper Air Service, a Wyoming
corporation.
e) 10,000 shares of Aviation Exteriors Louisiana, Inc., a Louisiana
corporation, formerly Pride Aviation, Inc. Secured Parties hereby
acknowledge and agree that all of his rights under this Pledge
Agreement with respect to these shares are subordinate to all
rights granted to certain holders of 10% Convertible Notes due
March 1, 2001, dated August 1, 1996.
2. All dividends, cash, options, warrants, rights and other property,
received, or proceeds from time to time received, or receivable in respect of,
in exchange for, or in connection with such property, and all proceeds from the
sale of such property.
All stock certificates, other than certificates pledged to the holders of
the 10% Convertible notes, are being delivered to ▇▇▇▇▇ ▇. ▇▇▇▇ ("Agent"), who
hereby agrees to hold the certificates as agent and bailee for each of the
Secured Parties therein. Owner shall also deliver executed blank stock powers
corresponding to such certificates to Agent. Any future instrument or stock
certificate representing any part of the Collateral that the Owner subsequently
receives and that requires taking possession to perfect a security interest
therein shall be promptly delivered by Owner to Agent for the benefit of the
Secured Parties. Agent is hereby authorized to act with respect to the
Collateral in his possession on behalf of and pursuant to the instructions of
the Secured Parties in connection with the foreclosure of the security interest
created hereby in the Collateral.
The security interests granted herein are to secure the following (all of
which is hereinafter called the "Obligations"):
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(a) All debts and obligations of Owner to Secured Parties evidenced by
those certain 9% Promissory Notes dated of even date made payable on or before
December 31, 1999, to the order of Secured Parties by Owner as more particularly
described on Exhibit "A" hereto, together with any and all renewals, extensions,
and refinancings of, and modifications and additions to, the foregoing (the
"Notes"); and
(b) All costs incurred by Secured Parties to obtain, preserve, perfect and
enforce the security interests herein granted, collect the Obligations, and
maintain, preserve, collect and enforce the Collateral, and including but not
limited to reasonable attorneys' fees and expenses of sale.
Any liquidating distributions and any additional securities or other
property issued or distributed with respect to any of the Collateral, including
all or any dividends, exchanges, or substitutions, shall be pledged as
additional collateral hereunder, shall be delivered to Secured Parties (or to
Agent on behalf of Secured Parties if the Collateral is an investment or stock
certificate, and shall constitute "Collateral" as that term is defined herein.
Without prior consent of the Secured Parties, no additional shares of these
subsidiaries will be issued.
Upon the occurrence of a default or event of default under any of the Notes
(after any notice and cure period specified therein), Secured Parties, without
limitation and without further notice except as expressly provided herein or in
the Notes, are entitled to foreclose on the Collateral and in such event Secured
Parties shall have:
(1) All remedies and rights available under the Texas Business and Commerce
Code and other applicable laws; and
(2) All remedies and rights under the Notes.
Other than the exercise of reasonable care to assure the safe custody of
any Collateral in Secured Parties' possession from time to time, Secured Parties
do not have any obligation, duty or responsibility with respect to the
Collateral. Without limiting the generality of the foregoing, Secured Parties
shall not have any obligation, duty or responsibility to do any of the
following: (a) ascertain any maturities, calls, conversions, exchanges, offers,
tenders or similar matters relating to the Collateral or informing Debtor with
respect to any such matters; (b) fix, preserve or exercise any right, privilege
or option (whether conversion, redemption or otherwise) with respect to the
Collateral unless (i) Debtor makes written demand to Secured Parties to do so,
(ii) such written demand is received by Secured Parties in sufficient time to
permit Secured Parties to take the action demanded in the ordinary course of
their business, and (iii) Debtor provides additional collateral, acceptable to
Secured Parties in their sole discretion; (c) collect any amounts payable in
respect of the Collateral (Secured Parties being liable to account to Debtor
only for what Secured Parties may actually receive or collect thereon); (d) sell
all or any portion of the Collateral to avoid market loss; (e) sell all or any
portion of the Collateral unless and until (i) Debtor makes written demand upon
Secured Parties to sell the Collateral, and (ii) Debtor provides additional
collateral, acceptable to Secured Parties in their sole discretion; or (f) hold
the Collateral for or on behalf of any Parties other than Debtor.
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Debtor hereby represents and warrants the following to Secured Parties:
(a) Due Authorization. The execution, delivery and performance of
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this Agreement, the Note and the Warrant dated of even date herewith, executed
by Debtor in favor of Secured Parties (collectively, the "Documents") have been
duly authorized by all necessary corporate action of Debtor.
(b) Enforceability. This Agreement and the other Documents constitute
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legal, valid and binding Obligations of Debtor, enforceable in accordance with
their respective terms, except as limited by bankruptcy, insolvency or similar
laws of general application relating to the enforcement of creditors' rights and
except to the extent specific remedies may generally be limited by equitable
principles.
(c) Ownership and Liens. Except as otherwise expressly set forth
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herein, Debtor has good and marketable title to the Collateral free and clear of
all liens, security interests, encumbrances or adverse claims, except for the
security interest created by this Agreement. No dispute, right of setoff,
counterclaim or defense exists with respect to all or any part of the
Collateral. Except as otherwise expressly set forth herein, Debtor has not
executed any other security agreement currently affecting the Collateral and no
financing statement or other instrument similar in effect covering all or any
part of the Collateral is on file in any recording office except as may have
been executed or filed in favor of Secured Parties. The capital stock that
constitutes the Collateral represents the percentage of the issued and
outstanding capital stock of the respective issuer as set forth in Section 1
above.
(d) No Conflicts or Consents. Neither the ownership, the intended use
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of the Collateral by Debtor, the grant of the security interest by Debtor to
Secured Parties herein nor the exercise by Secured Parties of their rights or
remedies hereunder, will (i) conflict with any provision of (A) any domestic or
foreign law, statute, rule or regulation, (B) the articles of incorporation or
bylaws of Debtor, or (C) except as disclosed by Debtor to Secured Parties in
writing prior to the date of this Agreement, any agreement, judgment, license,
order or permit applicable to or binding upon Debtor or otherwise affecting the
Collateral, or (ii) result in or require the creation of any lien, charge or
encumbrance upon any assets or properties of Debtor or of any person. No
consent, approval, authorization or order of, and no notice to or filing with,
any court, governmental authority or third party is required in connection with
the grant by Debtor of the security interest herein or the exercise by Secured
Parties of its rights and remedies hereunder.
(e) Security Interest. Debtor has and will have at all times full
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right, power and authority to grant a security interest in the Collateral to
Secured Parties in the manner provided herein, free and clear of any lien,
security interest or other charge or encumbrance (except as otherwise expressly
set forth herein). This Agreement creates a legal, valid and binding security
interest in favor of Secured Parties in the Collateral.
(f) Solvency of Debtor. As of the date hereof, and after giving
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effect to this Agreement and the completion of all other transactions
contemplated by Debtor at the time of the execution of this Agreement, (i)
Debtor is and will be solvent, (ii) the fair saleable value of Debtor's assets
exceeds and will continue to exceed Debtor's liabilities (both fixed and
contingent), (iii) Debtor is paying and will continue to be able to pay its
debts as they mature,
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and (iv) if Debtor is not an individual, Debtor has and will have sufficient
capital to carry on Debtor's businesses and all businesses in which Debtor is
about to engage.
(g) Securities. Any certificates evidencing securities pledged as
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Collateral are valid and genuine and have not been altered. All securities
pledged as Collateral have been duly authorized and validly issued, are fully
paid and non-assessable, and were not issued in violation of the preemptive
rights of any Parties or of any agreement by which Debtor or the issuer thereof
is bound. No restrictions or conditions exist with respect to the transfer or
voting of any securities pledged as Collateral, except as has been disclosed to
Secured Parties in writing. To the best of Debtor's knowledge, no issuer of such
securities (other than securities of a class which are publicly traded) has any
outstanding stock rights, rights to subscribe, options, warrants or convertible
securities outstanding or any other rights outstanding entitling any Parties to
have issued to such Parties capital stock of such issuer, except as has been
disclosed to Secured Parties in writing.
Debtor will comply with the covenants contained herein at all times during
the period of time this Agreement is effective unless Secured Parties shall
otherwise consent in writing.
(a) Ownership and Liens. Debtor will maintain good and marketable
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title to all Collateral free and clear of all liens, security interests,
encumbrances or adverse claims, except for the security interest created by this
Agreement and the security interests and other encumbrances expressly specified
herein.
(b) Adverse Claim. Debtor covenants and agrees to promptly notify
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Secured Parties of any claim, action or proceeding affecting title to the
Collateral, or any part thereof, or the security interest created hereunder and,
at Debtor's expense, defend Secured Parties' security interest in the Collateral
against the claims of any third Parties. Debtor also covenants and agrees to
promptly deliver to Secured Parties a copy of all written notices received by
Debtor with respect to the Collateral, including without limitation, notices
received from the issuer of any securities pledged hereunder as Collateral.
(c) Delivery of Instruments and/or Certificates. Contemporaneously
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herewith, Debtor covenants and agrees to deliver to Secured Parties any
certificates, documents or instruments representing or evidencing the
Collateral, with Debtor's endorsement thereon and/or accompanied by proper
instruments of transfer and assignment duly executed in blank with, if requested
by Secured Parties, signatures guaranteed by a member or member organization in
good standing of an authorized Securities Transfer Agents Medallion Program, all
in form and substance satisfactory to Secured Parties.
(d) Further Assurances. Debtor will contemporaneously with the
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execution hereof and from time to time thereafter at its expense promptly
execute and deliver all further instruments and documents and take all further
action necessary or appropriate or that Secured Parties may request in order (i)
to perfect and protect the security interest created or purported to be created
hereby and the first priority of such security interest, (ii) to enable Secured
Parties to exercise and enforce its rights and remedies hereunder in respect of
the Collateral, and (iii) to otherwise effect the purposes of this Agreement,
including without limitation: (A) obtaining written confirmation from the issuer
of any securities pledged as Collateral of the pledge of such securities, in
form and substance satisfactory to Secured Parties; (C) cooperating with Secured
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Parties in registering the pledge of any securities pledged as Collateral with
the issuer of such securities; (D) delivering notice of Secured Parties'
security interest in any securities pledged as Collateral to any securities or
financial intermediary, clearing corporation or other Parties required by
Secured Parties, in form and substance satisfactory to Secured Parties; and (E)
obtaining written confirmation of the pledge of any securities constituting
Collateral from any securities or financial intermediary, clearing corporation
or other Parties required by Secured Parties, in form and substance satisfactory
to Secured Parties. When applicable law provides more than one method of
perfection of Secured Parties' security interest in the Collateral, Secured
Parties may choose the method(s) to be used.
(e) Transfer or Encumbrance. Debtor will not (i) sell, assign (by
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operation of law or otherwise) or transfer Debtor's rights in any of the
Collateral, (ii) ▇▇▇▇▇ ▇ ▇▇▇▇ or security interest in the Collateral to any
Parties other than Secured Parties, or (iii) deliver actual or constructive
possession of any certificate, instrument or document evidencing and/or
representing any of the Collateral to any Parties other than Secured Parties.
(f) Dilution of Ownership. As to any securities pledged as Collateral
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(other than securities of a class which are publicly traded), Debtor will not
consent to or approve of the issuance of (i) any additional shares of any class
of securities of such issuer (unless immediately upon issuance additional
securities are pledged and delivered to Secured Parties pursuant to the terms
hereof to the extent necessary to give Secured Parties a security interest after
such issuance in at least the same percentage of such issuer's outstanding
securities as Secured Parties had before such issuance), (ii) any instrument
convertible voluntarily by the holder thereof or automatically upon the
occurrence or non-occurrence of any event or condition into, or exchangeable
for, any such securities, or (iii) any warrants, options, contracts or other
commitments entitling any third Parties to purchase or otherwise acquire any
such securities.
(g) Restrictions on Securities. Debtor will not enter into any
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agreement creating, or otherwise permit to exist, any restriction or condition
upon the transfer, voting or control of any securities pledged as Collateral,
except as consented to in writing by Secured Parties.
Each of the following constitutes an "Event of Default" under this
Agreement:
(a) Default Under Documents. The occurrence of any Event of Default
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under any of the Documents; or
(b) Execution on Collateral. The Collateral or any portion thereof is
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taken on execution or other process of law in any action against Debtor; or
(c) Action by Other Lienholder. The holder of any lien or security
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interest on any of the assets of Debtor, including without limitation, the
Collateral (without hereby implying the consent of Secured Parties to the
existence or creation of such lien or security interest on the Collateral),
declares a default thereunder or institutes foreclosure or other proceedings for
the enforcement of its remedies thereunder; or
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(d) Dilution of Ownership. The issuer of any securities (other than
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securities of a class which are publicly traded) constituting Collateral
hereafter issues any shares of any class of capital stock (unless immediately
upon issuance, additional securities are pledged and delivered to Secured
Parties pursuant to the terms hereof to the extent necessary to give Secured
Parties a security interest after such issuance in at least the same percentage
of such issuer's outstanding securities as Secured Parties had before such
issuance) or any options, warrants or other rights to purchase any such capital
stock; or
(e) Bankruptcy of Issuer. (i) The issuer of any securities
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constituting Collateral files a petition for relief under any Applicable
Bankruptcy Law, (ii) an involuntary petition for relief is filed against any
such issuer under any Applicable Bankruptcy Law and such involuntary petition is
not dismissed within thirty (30) days after the filing thereof, or (iii) an
order for relief naming any such issuer is entered under any Applicable
Bankruptcy Law.
If an Event of Default shall have occurred, and without limiting any other
rights and remedies provided herein, under any of the other Documents or
otherwise available to Secured Parties, Secured Parties may exercise any right
or remedy available to any of them under applicable law.
Unless the property pledged hereunder threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Secured Parties
will give Owner reasonable notice of the time and place of any public sale
thereof or of the time after which any private sale or any other intended
disposition thereof is to be made. The requirements of reasonable notice shall
be met if such notice is mailed, postage prepaid, to the address of Owner shown
at the end of this Agreement at least ten (10) days before the time of the sale
or disposition. The proceeds of any such sale shall be applied, first, to the
payment of all costs and expenses of collection, storage, custody, and the sale
and delivery of the Collateral, including reasonable attorneys' fees and
expenses of Secured Parties in connection therewith, and next to the payment of
such of the Obligations and in such order of application as Secured Parties may
from time to time select. Any remaining surplus may be retained by Secured
Parties as security hereunder until all the Obligations shall have terminated.
If, in the opinion of Secured Parties, there is any question that a public
or semi-public sale or distribution of any Collateral will violate any state or
federal securities law, Secured Parties in their discretion (a) may offer and
sell securities privately to purchasers who will agree to take them for
investment purposes and not with a view to distribution and who will agree to
imposition of restrictive legends on the certificates representing the security,
or (b) may sell such securities in an intrastate offering under Section 3(a)(l1)
of the Securities Act of 1933, as amended, and no sale so made in good faith by
Secured Parties shall be deemed to be not "commercially reasonable" because so
made. Owner shall cooperate fully with Secured Parties in all respects in
selling or realizing upon all or any part of the Collateral.
No delay on the part of Secured Parties in the exercise of any right or
remedy shall operate as waiver thereof, and no single or partial exercise of
Secured Parties of any right or remedy shall preclude other or further exercise
thereof or the exercise of any other right or remedy. No action of Secured
Parties permitted hereunder shall impair or affect the rights of Secured Parties
in and to the Collateral. This agreement shall inure to the benefit of Secured
Parties and their successors and assigns.
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This Agreement shall be governed by the laws of the State of Texas,
including the version of the uniform Commercial Code adopted in such state.
OWNER:
Address: AVIATION GROUP, INC.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ --------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: CFO
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SECURED PARTIES:
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇
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EXHIBIT "A"
Description of Notes
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Original Principal Amount
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Payee Name of Note
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▇▇▇▇▇ ▇. ▇▇▇▇ $500,000
▇▇▇▇ ▇▇▇▇▇▇▇ $100,000