WARRANT AGREEMENT
WARRANT AGREEMENT
This WARRANT AGREEMENT (the "Warrant Agreement") is made and
entered into as of the Initial Closing Date between VANGUARD
AIRLINES, INC., a Delaware corporation (the "Company"), and each
Warrant Holder (as hereinafter defined).
RECITALS
WHEREAS, pursuant to the terms of a Confidential Private
Placement Memorandum, dated as of August 16, 1996 (the "Placement
Memorandum"), the Company is issuing up to an aggregate of
$7,300,000 of units (each a "Unit" and, collectively, the
"Units"), each Unit consisting of one share (each a "Share" and,
collectively, the "Shares") of Common Stock, $0.001 par value of
the Company (the "Common Stock") and one Redeemable Common Stock
Purchase Warrant (each a "Warrant" and, collectively, the
"Warrants") exercisable, subject to certain adjustments, into one
share of Common Stock at an exercise price equal to the Unit
Price (as hereinafter defined) multiplied by 1.2; and
WHEREAS, the Warrant Holders are willing to have their
rights with respect to the ownership of the Warrants and the
Warrant Shares (as hereinafter defined) governed by the
provisions of this Agreement.
NOW, THEREFORE, in consideration of the above recitals, the
mutual promises contained herein and for other good and valuable
consideration, the parties hereto agree as follows:
1. DEFINITIONS. The following words and terms shall have
the following meanings:
1.1 "BUSINESS DAY" shall mean any day other than a
Saturday, a Sunday or a day on which commercial banks in Kansas
City, Missouri are required or authorized to be closed.
1.2 "CODE" shall mean the Internal Revenue Code of 1986, as
amended and supplemented from time to time, and shall include
temporary, interim and permanent regulations of the United States
Treasury Department applicable thereunder.
1.3 "COMPANY REDEMPTION" shall have the meaning ascribed to
such term in Section 10(a) hereof.
1.4 "EXERCISE PERIOD" shall have the meaning set forth in
Section 5.
1.5 "EXERCISE PRICE" shall mean the Unit Price multiplied
by 1.2.
1.6 "INITIAL CLOSING DATE" shall mean the first date upon
which the Company shall schedule a closing with respect to the
purchase of Units by subscribers for Units.
1.7 "QUALIFIED TRANSACTION" shall mean a public offering of
capital stock by the Company or sale by the Company of all or
substantially all of its stock or assets.
1.8 "REDEMPTION PRICE" shall mean $0.05 per Warrant.
1.9 "REGISTRATION RIGHTS AGREEMENT" shall mean that certain
Registration Right Agreement, dated as of the date hereof, among
the Company and the holders of Warrant Shares.
1.10 "UNIT PRICE" shall mean the closing bid price of the
Company's Common Stock on the Nasdaq SmallCap Market (or any
subsequent exchange or market on which the Company's Common Stock
is traded) on August 16, 1996.
1.11 "WARRANT HOLDER(S)" shall mean each subscriber of Units
whose subscription is accepted by the Company and each permitted
transferee of Warrants held by such subscriber.
1.12 "WARRANT SHARES" shall mean any shares of Common Stock
or other securities issuable upon exercise of the Warrants.
2. ISSUANCE OF WARRANTS; FORM OF WARRANT. The Company will
issue, sell and deliver a Warrant to each Warrant Holder upon
execution of the Omnibus Signature Page. The text of the Warrant
and the form of election to purchase shares to be attached
thereto shall be substantially as set forth in Exhibit A attached
hereto.
3. REGISTERED FORM. The Warrant shall be registered in a
Warrant Register as they are issued. The Company shall be
entitled to treat the registered holder of any Warrant on the
Warrant Register as the owner in fact thereof for all purposes
and shall not be bound to recognize any equitable or other claim
to or interest in such Warrant on the part of any other person.
4. TRANSFER OF WARRANTS. The Warrant and Warrant Shares
will not be transferable, in part or in whole, on the books of
the Company except upon delivery of such Warrant or Warrant
Shares duly endorsed by the Warrant Holder or by his duly
authorized attorney or representative and accompanied by proper
evidence of succession, assignment or authority to transfer. In
all cases of transfer by an attorney, the original power of
attorney, duly approved, or an official copy thereof, duly
certified, shall be deposited with the Company. In case of
transfer by executors, administrators, guardians or other legal
representatives, duly authenticated evidence of their authority
shall be produced, and may be required to be deposited with the
Company in its discretion. Upon any registration of transfer, the
Company shall deliver a new Warrant or Warrants to the persons
entitled thereto. The Warrants may be exchanged at the option of
the then Warrant Holder thereof, for another Warrant, or other
Warrant of different denominations, of like tenor and
representing in the aggregate the right to purchase a like number
of Warrant Shares upon surrender to the Company or its duly
authorized agent. Notwithstanding the foregoing, the Company
shall have no obligation to cause Warrants to be transferred on
its books to any person, unless the Warrant Holder or Warrant
Holders thereof shall furnish to the Company reasonably
satisfactory evidence of compliance with the Securities Act of
1933, as amended (the "Act"), in accordance with the provisions
of Section 12 of this Agreement.
5. TERM OF WARRANTS; EXERCISE OF WARRANTS. Each Warrant
entitles the Warrant Holder thereof to purchase one share of
Common Stock at the Exercise Price at any time after August 20,
1996 (the "Effective Date") and before 5:00 p.m., prevailing
Central Time, on August 19, 2001 (the "Expiration Date"). On the
Expiration Date, all rights evidenced by the Warrants shall cease
and the Warrants shall become void. The period from the Effective
Date to the Expiration Date is sometimes hereinafter referred to
as the "Exercise Period." The Exercise Price and the Warrant
Shares issuable upon exercise of the Warrants are subject to
adjustment upon the occurrence of certain events, pursuant to the
provisions of Section 9 of this Agreement. Subject to the
provisions of this Agreement, each Warrant Holder shall have the
right, which may be exercised as set forth in such Warrants to
purchase from the Company (and the Company shall issue and sell
to such Warrant Holder) the number of fully paid and
nonassessable shares of Common Stock specified in such Warrant,
upon surrender to the Company, or its duly authorized agent, of
such Warrants, with the form of election to purchase attached
thereto duly completed and signed, and upon payment to the
Company of the Exercise Price, as adjusted in accordance with the
provisions of Section 9 of this Agreement, for the number of
Warrant Shares in respect of which such Warrants are then
exercised. Payment of such Exercise Price may be made in cash or
by check payable to the order of the Company. Upon each
surrender of Warrants and payment of the Exercise Price as
aforesaid, the Company shall issue and cause to be delivered with
all reasonable dispatch to or upon the written order of the
Warrant Holder and (subject to receipt of evidence of compliance
with the Act in accordance with the provisions of Section 12 of
this Agreement) in such name or names as such Warrant Holder may
designate, a certificate or certificates for the number of full
Warrant Shares so purchased upon the exercise of such Warrants,
together with cash, as provided in Section 11 of this Agreement,
in respect of any fractional Warrant Shares otherwise issuable
upon such surrender. Such certificate or certificates shall be
deemed to have been issued and any person so designated to be
named therein shall be deemed to have become a holder of record
of such Warrant Shares as of the date of the surrender of
Warrants and payment of the Exercise Price as aforesaid;
provided, however, that if, at the date of surrender of such
Warrants and payment of such Exercise Price, the transfer books
for the Common Stock or other class of stock purchasable upon the
exercise of such Warrants shall be closed, the certificates for
the shares shall be issuable as of the next succeeding date on
which such books shall be opened and until such date the Company
shall be under no duty to deliver any certificate for such
Warrant Shares; provide, further, that the transfer books, unless
otherwise required by law, shall not be closed at any one time
for a period longer than 20 days.
6. PAYMENT OF TAXES. The Company will pay all documentary
stamp taxes, if any, attributable to the issuance of Warrant
Shares upon the exercise of Warrants; provided, however, that the
Company shall not be required to pay any tax or taxes which may
be payable in respect of any transfer involved in the issue or
delivery of any certificates for Warrant Shares in a name other
than that of the Warrant Holder.
7. MUTILATED OR MISSING WARRANTS. In case any of the
Warrants shall be mutilated, lost, stolen or destroyed, the
Company may, in its discretion, issue and deliver in exchange and
substitution for and upon cancellation of the mutilated Warrant,
or in lieu of and substitution for the Warrant lost, stolen or
destroyed, a new Warrant for the number of Warrants represented
by the Warrant so mutilated, lost, stolen or destroyed but only
upon receipt of evidence of such loss, theft or destruction of
such Warrant, and of the ownership thereof, and the indemnity, if
requested, all satisfactory to the Company. An applicant for such
substitute Warrants shall also comply with such other reasonable
regulations and pay such other reasonable charges incidental
thereto as the Company may prescribe.
8. RESERVATION OF WARRANT SHARES, ETC. The Company shall
at all times after the Effective Date keep reserved, out of the
authorized and unissued Common Stock, a number of shares of
Common Stock sufficient to provide for the exercise of the rights
of purchase represented by the outstanding Warrants. The Company
will keep a copy of this Warrant Agreement on file at its
principal offices. All Warrants surrendered in the exercise of
the rights thereby evidenced shall be cancelled, and such
cancelled Warrants shall constitute sufficient evidence of the
number of shares of Common Stock that have been issued upon the
exercise of such Warrants. No shares of Common Stock shall be
subject to reservation in respect of unexercised Warrants
subsequent to the Expiration Date.
9. ADJUSTMENTS OF EXERCISE PRICE AND NUMBER OF WARRANT
SHARES. The Exercise Price and the number and kind of securities
purchasable upon exercise of each Warrant shall be subject to
adjustment from time to time upon the happening of certain
events, as follows:
(a) In ease the Company shall (a) declare a dividend
on its Common Stock in shares of Common Stock or make a
distribution in shares of Common Stock, (b) subdivide its
outstanding shares of Common Stock into a greater number of
shares, (e) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock or (d) issue by
reclassification of its shares of Common Stock other securities
of the Company (including any such reclassification in connection
with a consolidation or merger in which the Company is the
continuing corporation), the number of Warrant Shares purchasable
upon exercise of each Warrant immediately prior thereto shall be
adjusted so that the Warrant Holder of each Warrant shall be
entitled to receive the kind and number of Warrant Shares or
other securities of the Company which he would have owned or have
been entitled to receive after the happening of any of the events
described above, had such Warrant been exercised immediately
prior to the happening of such event or any record date with
respect thereto. An adjustment made pursuant to this clause (i)
shall become effective immediately after the effective date of
such event retroactive to immediately after the record date, if
any, for such event.
(b) Whenever the number of Warrant Shares purchasable
upon the exercise of each Warrant is adjusted, as provided in
this Section 9, the Exercise Price shall be adjusted by
multiplying such Exercise Price immediately prior to such
adjustment by a fraction, of which the numerator shall be the
number of Warrant Shares purchasable upon the exercise of each
Warrant immediately prior to such adjustment, and of which the
denominator shall be the number of Warrant Shares so purchasable
immediately thereafter.
(c) No adjustment in the Exercise Price and/or the
number of Warrant Shares issuable upon exercise of the Warrants
if such adjustment would result in a change in the Exercise Price
of less than $0.05 per share (the "Adjustment Threshold Amount")
or a change in the number of subject shares of less than one
share. Any adjustment which is less than the Adjustment
Threshold Amount and not made shall be carried forward and shall
be made, together with any subsequent adjustments, at the time
when (a) the aggregate amount of all such adjustments is equal to
at least the Adjustment Threshold Amount or (b) the Warrant is
exercised.
(d) For the purpose of this Section 9, the term
"shares of Common Stock" shall mean (a) the class of stock
designated as the Common Stock of the Company at the date of this
Agreement or (b) any other class of stock resulting from
successive changes or reclassification of such shares 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 at
any time, as a result of an adjustment made pursuant to clause
(i) above, the Warrant Holders shall become entitled to purchase
any shares of capital stock of the Company other than shares of
Common Stock, thereafter the number of such other shares so
purchasable upon exercise of each Warrant and the Exercise Price
of such shares shall be subject to adjustment from time to time
in a manner and on terms as nearly equivalent as practicable to
the provisions with respect to the Warrant Shares contained in
clauses (i) and (ii), inclusive, above, and clauses (iv) through
(vii), inclusive, of this Section 9, and the provisions of
Sections 5, 6, 8 and 15, with respect to the Warrant Shares,
shall apply on like terms to any such other shares.
(e) The Company may at its option, at any time during
the term of the Warrants, reduce the then current Exercise Price
to any amount deemed appropriate by the Board of Directors of the
Company; provided, however, that in no event shall the Exercise
Price be adjusted below the par value per share of the Common
Stock.
(f) In case of any consolidation or merger of the
Company with or into another corporation or in case of any sale
or conveyance to another corporation of the property of the
Company as an entirety or substantially as an entirety, the
Company or such successor or purchasing corporation (or an
affiliate of such successor or purchasing corporation), as the
case may be, agrees that each Warrant Holder shall have the right
thereafter upon payment of the Exercise Price in effect
immediately prior to such action to purchase upon exercise of
each Warrant the kind and amount of shares and other securities
and property (including cash) which he would have owned or have
been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had such Warrant been
exercised immediately prior to such action. The provisions of
this clause (v) shall similarly apply to successive
consolidations, mergers, sales or conveyances.
(g) Notwithstanding any adjustments in the Exercise
Price or the number or kind of shares purchasable upon the
exercise of the Warrants pursuant to this Section 9 of Agreement,
certificates for Warrants issued prior or subsequent to such
adjustments may continue to express the same price and number and
kind of shares as are stated in the Warrants initially issuable
pursuant to this Agreement.
10. REDEMPTION OF WARRANTS.
(a) The Company, at its option, may redeem all of the
Warrants (a "Company Redemption") at the Redemption Price
commencing on the Effective Date and at any time thereafter on
forty-five (45) days prior notice to the Warrant Holders if the
average closing bid price of the Common Stock on the Nasdaq
SmallCap Market (or the last bid price on any subsequent exchange
or market on which the Common Stock is traded) equals or exceeds
the Exercise Price multiplied by two for any twenty (20) trading
days within a period of thirty (30) consecutive trading days
prior to notice of redemption.
(b) On a Company Redemption Date, the Warrant Holder
shall surrender the Warrant to the Company and the Company shall
deliver payment of the Redemption Price in full, in cash or
certified or cashier's check to the Warrant Holder.
11. FRACTIONAL INTERESTS. The Company shall not be required
to issue fractions of shares of Common Stock on the exercise of
Warrants. The Company shall, in lieu of issuing any fractional
share, pay the Holder entitled to such fraction a sum in cash
equal to the closing bid price of the Company's Common Stock as
quoted on the Nasdaq SmallCap Market (or any subsequent exchange
or market on which the Company's Common Stock is traded) on the
date of exercise.
12. RESTRICTIONS ON DISPOSITIONS. The Warrants and the
Warrant Shares have not been registered under the Securities Act
of 1933, as amended. The Warrant Holder represents and warrants
to the Company that it understands that neither the Warrants nor
the Warrant Shares may be transferred except pursuant to (i) an
effective Registration Statement under the Act, or (ii) any
available rule or exemption from registration under the Act
permitting such disposition of securities and an opinion of
counsel, reasonably satisfactory to counsel for the Company, that
an exemption from such registration is available.
13. CERTIFICATES TO BEAR LEGENDS. The Warrants shall be
subject to a stop-transfer order and the certificate or
certificates therefor shall bear the following legend:
NEITHER THE WARRANTS REPRESENTED HEREBY NOR THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT), OR CERTAIN STATE SECURITIES LAWS, AND MAY
NOT BE SOLD, OFFERED OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE
ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
AND THE COMPANY SHALL HAVE RECEIVED AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, THAT AN EXEMPTION FROM REGISTRATION UNDER THE
ACT IS AVAILABLE.
The Warrant Shares or other securities issued upon exercise
of the Warrants shall be subject to a stop-transfer order and the
certificate or certificates evidencing any such Warrant Shares or
securities shall bear a legend in substantially the following
form:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), OR CERTAIN STATE SECURITIES LAWS, AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE
ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
AND THE COMPANY SHALL HAVE RECEIVED AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY, THAT SUCH AN EXEMPTION FROM REGISTRATION UNDER
THE ACT IS AVAILABLE.
14. REGISTRATION RIGHTS AGREEMENT. Each Warrant Holder is
entitled to the benefits of the Registration Rights Agreement and
by purchases of the Units each Warrant Holder agrees to be bound
by the terms of the Registration Rights Agreement.
15. NOTICES TO WARRANT HOLDERS. Nothing contained in this
Agreement or in any of the Warrants shall be construed as
conferring upon the Warrant Holders thereof the right to vote or
to receive dividends or to consent or to receive notice as
stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter, or any
rights whatsoever as stockholders of the Company; provided,
however, that in the event that a meeting of stockholders shall
be called to consider and take action on a proposal for the
voluntary dissolution of the Company, then and in that event the
Company shall cause a notice thereof to be sent by first-class
mail, postage prepaid, at least 10 days prior to the date fixed
as a record date or the date of closing the transfer books in
relation to such meeting, to each registered Warrant Holder of
Warrants at such Warrant Holder's address appearing on the
Warrants at such Warrant Holder's address appearing on the
Warrant register; but failure to mail or to receive such notice
or any defect therein or in the mailing thereof shall not affect
the validity of any action taken in connection with such
voluntary dissolution. If such notice shall have been so given
and if such a voluntary dissolution shall be authorized at such
meeting or any adjournment thereof, then from and after the date
on which such voluntary dissolution shall have been duly
authorized by the stockholders, all other rights with respect
thereto shall cease and terminate.
16. NOTICES. Any notice pursuant to this Agreement to be
given or made by the Warrant Holder of any Warrant to or on the
Company shall be sufficiently given or made if sent by first-class
mail, postage prepaid, addressed as follows:
Vanguard Airlines, Inc.
00 X.X. Xxxx Xxxxxx
Mezzanine Level
Kansas City International Airport
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Notices or demands authorized by this Agreement to be given
or made by the Company to the Warrant Holder of any Warrants
and/or Warrant Shares shall be sufficiently given or made (except
as otherwise provided in this Agreement) if sent by first-class
mail, postage prepaid, addressed to such Warrant Holder at the
address of such Warrant Holder as shown on the Warrant Register.
Each such notice shall be effective if given by mail, three
(3) days after such communication is deposited in the mails with
first class postage prepaid, addressed as aforesaid.
17. AMENDMENT. This Agreement may be amended only if the
Company shall have obtained the prior written consent of the
Warrant Holders. Each Warrant Holder at the time or thereafter
outstanding shall be bound by any consent authorized by this
Section 17.
18. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed
to be an original; but such counterparts together shall
constitute but one and the same instrument.
19. GOVERNING LAW. THIS AGREEMENT AND EACH WARRANT ISSUED
HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE SUBSTANTIVE LAWS OF THE STATE OF MISSOURI.
20. SIGNATURE. THIS WARRANT AGREEMENT WILL BE DEEMED TO
HAVE BEEN EXECUTED FOR ALL PURPOSES WHEN THE SUBSCRIBER SIGNS AND
DATES THE OMNIBUS SIGNATURE PAGE.
(Form of Warrant Certificate)
NEITHER THE WARRANTS REPRESENTED BY THIS CERTIFICATE NOR THE
SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR CERTAIN STATE
SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE,
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS THEY ARE SO
REGISTERED OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
AND THIS COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL,
REASONABLY SATISFACTORY TO COUNSEL FOR THIS COMPANY, THAT SUCH AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
No. CW
VOID AFTER 5:00 P.M. CENTRAL TIME
On August 26, 2001
VANGUARD AIRLINES, INC.
Warrant Certificate
THIS CERTIFIES THAT for value received
_____________________, or registered assigns, is the registered
holder of ____________ Warrants, each of which entitles the owner
thereof to purchase any time after August 20, 1996 (the
"Effective Date") until 5:00 P.M. prevailing Central Time on
August 26, 2001 (the "Expiration Date"), one share of the common
stock, par value $0.001 per share (the "Common Stock"), of
Vanguard Airlines, Inc., a Delaware corporation (the "Company"),
multiplied by the number of warrants set forth above, at an
exercise price per share equal to the Unit Price, as defined in
the Warrant Agreement ("Warrant Agreement") between the Company,
the registered holder hereof and certain other holders of Warrant
Certificates, dated as of the date hereof, multiplied by 1.2 (the
"Exercise Price"), subject to certain adjustments, upon
presentation and surrender of this Warrant Certificate with the
Form of Election to Purchase duly executed. Upon the Expiration
Date, all rights evidenced by this Warrant shall cease and the
Warrants shall become void. The number of Warrants evidenced by
this Warrant Certificate (and the number of shares which may be
purchased upon exercise thereof) set forth above, and the
Exercise Price per share set forth above, are the number and
Exercise Price as of the date of original issuance of the
Warrants, based on the shares of Common Stock of the Company as
constituted at such date. As provided in the Warrant Agreement
referred to below, the Exercise Price and the number or kind of
shares which may be purchased upon the exercise of the Warrants
evidenced by this Warrant Certificate are, upon the happening of
certain events, subject to modification and adjustment.
This Warrant Certificate is subject to, and entitled to the
benefits of, all of the terms, provisions and conditions of the
Warrant Agreement which Warrant Agreement is hereby incorporated
herein by reference and made a part hereof and to which Warrant
Agreement reference is hereby made for a full description of the
rights, limitations of rights, duties and immunities hereunder of
the Company and the holders of the Warrant Certificates. Copies
of the Warrant Agreement are on file at the principal office of
the Company.
This Warrant Certificate, with or without other Warrant
Certificates, upon surrender at the principal office of the
Company, may be exchanged for another Warrant Certificate or
Warrant Certificates of like tenor and date evidencing Warrants
entitling the holder to purchase a like aggregate number of
shares of Common Stock as the Warrants evidenced by the Warrant
Certificate or Warrant Certificates surrendered entitled such
holder to purchase. If this Warrant Certificate shall be
exercised in part, the holder hereof shall be entitled to receive
upon surrender hereof another Warrant Certificate or Warrant
Certificates for the number of whole Warrants not exercised.
No fractional shares of Common Stock will be issued upon the
exercise of any Warrant or Warrants evidenced hereby, but in lieu
thereof a cash payment will be made as provided in the Warrant
Agreement.
No holder of this Warrant Certificate shall be entitled to
vote or receive dividends or be deemed the holder of Common Stock
or any other securities of the Company which may at any time be
issuable on the exercise hereof for any purpose, nor shall
anything contained in the Warrant Agreement herein be construed
to confer upon the holder hereof, as such, any of the rights of a
stockholder of the Company or any right to vote for the election
of directors or upon any matter submitted to stockholders at any
meeting thereof, or to give or withhold consent to any corporate
action (whether upon any recapitalization, issue of stock,
reclassification of stock, change of par value or change of stock
to no par value, consolidation, merger, conveyance, or otherwise)
or, except as provided in the Warrant Agreement, to receive
notice of meetings, or to receive dividends or subscription
rights or otherwise, until the Warrant or Warrants evidenced by
this Warrant Certificate shall have been exercised and the shares
of Common Stock shall have become deliverable as provided in the
Warrant Agreement.
If this Warrant Certificate shall be surrendered for
exercise within any period during which the transfer books for
the Company's Common Stock or other class of stock purchasable
upon the exercise of this Warrant are closed for any purpose, the
Company shall not be required to make delivery of certificates
for shares purchasable upon such exercise until the date of the
reopening of said transfer books.
This Warrant Certificate may be redeemed under the
circumstances described in the Warrant Agreement.
IN WITNESS WHEREOF, the Company has caused this Warrant to
be duly executed and delivered on the date first set forth above.
___________________________________
Xxxxxx X. XxXxxx
Chairman, President & Chief
Executive Officer
FORM OF ASSIGNMENT
(To be executed by the registered holder if such holder desires
to transfer the Warrant Certificates.)
FOR VALUE RECEIVED ________________________________ hereby sells,
assigns and transfers unto this Warrant Certificate, together
with all right, title and interest therein, and does hereby
irrevocably constitute and appoint ___________________________,
to transfer the within Warrant Certificate on the books of the
within-named Company, with full power of substitution.
Dated:_______________________, 199__ _________________________
Signature
NOTICE
The signature of the foregoing Assignment must correspond to
the name as written upon the face of this Warrant Certificate in
every particular, without alteration or enlargement or any change
whatsoever.
FORM OF
ELECTION TO PURCHASE
(To be executed if holder desires to exercise the Warrant
Certificate.)
TO VANGUARD AIRLINES, INC.:
The undersigned hereby irrevocably elects to exercise
_____________ Warrants represented by this Warrant Certificate to
purchase the shares of Common Stock issuable upon the exercise of
such ____________ Warrants and requests that certificates for
such shares be issued in the name of:
_______________________________________.
Please insert social security or other identifying number:
___________________________________
(Please print name and address)
___________________________________
Signature
(Signature must conform in all
respects to name of holder as
specified on the face of this
Warrant Certificate)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is
entered into as of the Initial Closing Date (as hereinafter
defined), by and among Vanguard Airlines, Inc., a Delaware
corporation (the "Company"), and the Holders (as hereinafter
defined).
RECITALS
WHEREAS, pursuant to the terms of a Confidential Private
Placement Memorandum, dated August 16, 1996 the Company is
issuing up to $7,000,000 of units (each a "Unit" and,
collectively, the "Units"), each consisting of one share (each a
"Share" and, collectively, the "Shares") of Common Stock, $0.001
par value, of the Company (the "Common Stock") and one Redeemable
Common Stock Purchase Warrant (each a "Redeemable Warrant" and,
collectively, the "Redeemable Warrants"), exercisable, subject to
certain adjustments, into one share of Common Stock (each a
"Warrant Share" and, collectively, the "Warrant Shares") at an
exercise price per share equal to the Unit Price (as hereinafter
defined) multiplied by 1.2; and
WHEREAS; as a condition to purchasing the Units, the Holders
have requested that the Company extend to them registration
rights as set forth below; and
WHEREAS; the Company desires to extend certain rights
herein, subject to the obligations provided for herein, in
accordance with the terms of this Agreement;
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants, and conditions set forth
in this Agreement, the Subscription Agreement and the Warrant
Agreement, each of even date herewith, entered into by the
Company and each of the Holders, the parties mutually agree as
follows:
1. GENERAL
1.1 DEFINITIONS. As used in this Agreement the following
terms shall have the following respective meanings:
"1934 ACT" means the Securities Exchange Act of 1934,
as amended.
"EQUITY SECURITIES" means (i) any stock or similar
security of the Company, (ii) any security convertible, with or
without consideration, into any stock or similar security
(including any option to purchase such a convertible security),
(iii) any security carrying any warrant or right to subscribe to
or purchase any stock or similar security or (iv) any such
warrant or right.
"FAMILY MEMBER" means a Holder's spouse, siblings,
children, stepchildren and grandchildren.
"FINAL PROSPECTUS" means an amended prospectus filed
with the SEC pursuant to SEC Rule 424(b) of the Securities Act.
"HOLDER" means any person owning of record Registrable
Securities.
"INITIAL CLOSING DATE" means the first date upon which
the Company shall schedule a closing with respect to the purchase
of Units.
"INITIATING HOLDERS" means the Holders of at least
forty percent (40%) of the Registrable Securities then
outstanding.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration
statement or document.
"REGISTRABLE SECURITIES" means (i) the Shares; (ii) the
Warrant Shares; and (iii) any Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in
replacement of, such above-described securities. Notwithstanding
the foregoing, Registrable Securities shall not include any
securities (i) sold by a person to the public either pursuant to
a an effective registration statement or pursuant to Rule 144 (or
any successor provision), (ii) sold in a private transaction in
which the transferror's rights under Article 2 of this Agreement
are not assigned or (iii) for which a disposition would not
require registration or qualification under the Securities Act or
any similar state law then in force, provided, however, that the
Company has delivered new certificates for such securities not
bearing a legend restricting further transfer. For the purposes
of determining the holders of Registrable Securities hereunder on
any date, the Redeemable Warrants shall be deemed to have been
exercised as of such date to acquire the number of shares of
Common Stock covered thereby.
"SECURITIES ACT" shall mean the Securities Act of 1933,
as amended.
"FORM S-3" means such form under the Securities Act as
in effect on the date hereof or any successor registration form
under the Securities Act subsequently adopted by the SEC which
permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
"SEC" or "COMMISSION" means the Securities and Exchange
Commission.
2. RESTRICTIONS ON TRANSFER; REGISTRATION
2.1 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of
all or any portion of the Registrable Securities unless and until
the transferee has agreed in writing for the benefit of the
Company to be bound by this Section 2.1, provided and to the
extent such Sections are then applicable and:
(i) There is then in effect a registration
statement under the Securities Act covering such proposed
disposition and such disposition is made in accordance with such
registration statement; or
(ii) Such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company
with a detailed statement of the circumstances surrounding the
proposed disposition, and if reasonably requested by the Company,
such Holder shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under
the Securities Act.
(b) Notwithstanding the provisions of paragraphs (i)
and (ii) above, no such registration statement or opinion of
counsel shall be necessary for a transfer by a Holder which is
(A) a partnership, to its partners in accordance with partnership
interests, or (B) to the Holder's family member or trust for the
benefit of an individual Holder, provided the transferee will be
subject to the terms of this Section 2.1 to the same extent as if
he were an original Holder hereunder.
(c) Each Redeemable Warrant and each certificate
representing Registrable Securities shall (unless otherwise
permitted by the provisions of the Agreement) be stamped or
otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable
state securities laws or as provided elsewhere in the Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT") OR CERTAIN STATE SECURITIES LAWS, AND MAY
NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE
ACT OR AN EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE
AND THE COMPANY SHALL HAVE RECEIVED AN OPINION OF
COUNSEL, REASONABLY SATISFACTORY TO COUNSEL FOR THE
COMPANY THAT SUCH AN EXEMPTION FROM REGISTRATION UNDER
THE ACT IS AVAILABLE.
(d) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if
the holder shall have obtained an opinion of counsel (which
counsel may be counsel to the Company) reasonably acceptable to
the Company to the effect that the securities proposed to be
disposed of may lawfully be so disposed of without registration,
qualification or legend.
(e) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop-transfer
instructions with respect to such securities shall be removed
upon receipt by the Company of an order of the appropriate blue
sky authority authorizing such removal.
2.2 DEMAND REGISTRATION.
(a) Subject to the conditions of this Section 2.2, if
the Company shall receive at any time after April 1, 1998, a
written request from the Initiating Holders that the Company file
a registration statement under the Securities Act covering the
registration of Registrable Securities, then the Company shall,
within thirty (30) days of the receipt thereof, give written
notice of such request to all Holders, and subject to the
limitations of Section 2.2(b), effect, as soon as practicable,
the registration under the Securities Act of at least 25% of the
Registrable Securities held by such Initiating Holder on a pro
rata basis; provided, however, that the Company may register less
than 25% of such Registrable Securities if the anticipated
aggregate offering price, net of underwriting discounts and
commissions, exceeds $5,000,000.
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their
request made pursuant to this Section 2.2 and the Company shall
include such information in the written notice referred to in
Section 2.2(a). In such event, the right of any Holder to
include his Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in
interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their
securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in
interest of the Initiating Holders (which underwriter or
underwriters shall be reasonably acceptable to the Company).
Notwithstanding any other provision of this Section 2.2, if the
underwriter advises the Company in writing that marketing factors
require a limitation of the number of securities to be
underwritten (including Registrable Securities) then the Company
shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of
shares that may be included in the underwriting shall be
allocated to the holders of registrable securities on a pro rata
basis based on the number of registrable securities held by all
holders (including the Initiating Holders). Any Registrable
Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.
(c) The Company shall not be obligated to effect more
than two (2) registrations pursuant to this Section 2.2.
(d) Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting a registration statement
pursuant to this Section 2.2, a certificate signed by the
Chairman of the Board stating that in the good faith judgment of
the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such
registration statement to be filed and it is therefore essential
to defer the filing of such registration statement, the Company
shall have the right to defer such filing for a period of not
more than ninety (90) days after receipt of the request of the
Initiating Holders; provided that such right to delay a request
shall be exercised by the Company no more than once in any one-year
period.
(e) All expenses incurred in connection with a
registration pursuant to this Section 2.2 (excluding
underwriters' discounts and commissions, which shall be paid by
the selling Holders pro rata with respect to their included
shares), including without limitation all registration, filing,
qualification, printers' and accounting fees, fees and
disbursements of counsel for the Company, and the reasonable fees
and disbursements of a single counsel for the selling Holders,
shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 2.2 if the
registration request is subsequently withdrawn, unless the
withdrawal of the registration request results from either (a)
intentional actions by the Company outside the normal course of
business that materially reduce the feasibility of the
registration proceeding, or (b) the discovery of information
about the Company that was not known at the time of the
Initiating Holders' request made pursuant to Section 2.2(a), and
such information materially reduces the feasibility of the
registration proceeding. If the Company is required to pay the
registration expenses pursuant to this Section 2.2(e)(a) or (b),
then the Holders shall not forfeit their rights pursuant to this
Section 2.2 to a demand registration.
2.3 PIGGYBACK REGISTRATIONS.
(a) The Company shall notify all Holders in writing at
least thirty (30) days prior to the filing of any registration
statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited
to, registration statements relating to secondary offerings of
securities of the Company, but excluding registration statements
relating to employee benefit plans and corporate reorganizations)
and will afford each such Holder an opportunity to include in
such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include
in any such registration statement all or any part of the
Registrable Securities held by it shall, within twenty (20) days
after receipt of the above-described notice from the Company, so
notify the Company in writing. Such notice shall state the
intended method of disposition of the Registrable Securities by
such Holder. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter
filed by the Company, such Holder shall nevertheless continue to
have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as
may be filed by the Company with respect to offerings of its
securities, all upon the terms and conditions set forth herein.
Notwithstanding anything to the contrary, the foregoing shall not
apply to any registrations occurring on or after the fifth
anniversary of the Initial Closing Date.
(b) If the registration statement under which the
Company gives notice under this Section 2.3 is for an
underwritten offering, the Company shall so advise the Holders.
In such event, the right of any such Holder to be included in a
registration pursuant to this Section 2.3 shall be conditioned
upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders
proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for
such underwriting. Notwithstanding any other provision of the
Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to
be underwritten, the number of shares that may be included in the
underwriting shall be allocated, first, to the Company; second,
to the holders of registrable securities of the Company who are
parties to the Amended and Restated Investors' Rights Agreement,
dated August 24, 1994, on a pro rata basis based on the total
number of registrable securities held by the parties thereto; and
third, to the Holders on a pro rata basis based on the total
number of Registrable Securities held by the Holders. No such
reduction shall reduce the securities being offered by the
Company for its own account to be included in the registration
and underwriting, except that in no event shall the amount of
securities of the selling Holders included in the registration be
reduced below twenty percent (20%) of the total amount of
securities included in such registration.
(c) The Company shall bear all fees and expenses
incurred in connection with any registration under this Section
2.3 (excluding underwriters' discounts and commissions, which
shall be paid by the selling Holders pro rata with respect to
their included shares), including without limitation all
registration, filing, qualification, printers' and accounting
fees, fees and disbursements of counsel to the Company, and the
reasonable fees and disbursements of a single counsel to the
selling Holders (which counsel shall also be counsel to the
Company unless counsel to the Company has a conflict of interest
with respect to the representation of any selling Holder or the
underwriters object to the selling Holders representation by
Company counsel).
2.4 FORM S-3 REGISTRATION. In case the Company shall
receive from the Holders of at least ten percent (10%) of the
Registrable Securities a written request or requests that the
Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, the
Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all
other Holders of Registrable Securities; and
(b) as soon as practicable, effect such registration
and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder's or Holders'
Registrable Securities as are specified in such request, together
with all or such portion of the Registrable Securities of any
other Holder or Holders joining in such request as are specified
in a written request given within fifteen (15) days after receipt
of such written notice from the Company; provided, however, that
the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this
Section 2.4: (i) if Form S-3 is not available under the
Securities Act or rules or regulations promulgated thereunder for
such offering by the Holders, (ii) if the Holders, together with
the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate
price to the public of less than $500,000, (iii) if the Company
shall furnish to the Holders a certificate signed by the Chairman
of the Board of Directors of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would
be seriously detrimental to the Company and its stockholders for
such Form S-3 Registration to be effected at such time, in which
event the Company shall have the right to defer the filing of the
Form S-3 registration statement for a period of not more than
ninety (90) days after receipt of the request of the Holder or
Holders under this Section 2.4, provided that, such right to
defer the filing may be exercised by the Company no more than
once in any one-year period, (iv) if the Company has, within the
twelve (12) month period preceding the date of such request,
already effected two (2) registrations on Form S-3 for the
Holders pursuant to this Section 2.4, or (v) in any particular
jurisdiction in which the Company would be required to qualify to
do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
Form S-3 registration statement covering the Registrable
Securities and other securities so requested to be registered as
soon as practicable after receipt of the request or requests of
the Holders. All such expenses incurred in connection with
registrations requested pursuant to this Section 2.4 shall be
paid by the selling Holders pro rata with respect to their
included shares, including without limitation all registration,
filing, qualification, printers' and accounting fees, fees and
disbursements of counsel for the Company, and the reasonable fees
and disbursements of a single counsel for the selling Holder or
Holders.
2.5 OBLIGATIONS OF THE COMPANY. Whenever required to
effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become
effective, and, upon the request of the Holders of a majority of
the Registrable Securities registered thereunder, keep such
registration statement effective for up to ninety (90) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate
the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as shall
be reasonably requested by the Holders, provided that the Company
shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing
underwriter(s) of such offering. Each Holder participating in
such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which
the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances then existing.
(g) Furnish, at the request of a majority of the
Holders participating in the registration, on the date that such
Registrable Securities are delivered to the underwriters for
sale, if such securities are being sold through underwriters, or,
if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given
to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and
(ii) a letter dated as of such date, from the independent
certified public accountants of the Company, in form and
substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering
and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable
Securities.
2.6 FURNISH INFORMATION. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to
Sections 2.2, 2.3 or 2.4 that the selling Holders shall furnish
to the Company such information regarding themselves, the
Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
2.7 DELAY OF REGISTRATION. No Holder shall have any right
to obtain or seek an injunction restraining or otherwise delaying
any such registration as the result of any controversy that might
arise with respect to the interpretation or implementation of
this Article II.
2.8 INDEMNIFICATION. In the event any Registrable
Securities are included in a registration statement under
Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, officers
and directors of each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who
controls such Holder or underwriter within the meaning of the
Securities Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or
violations (collectively a "Violation") by the Company: (i) any
untrue statement or alleged untrue statement of a material fact
contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the
Company of the Securities Act, the 1934 Act, any state securities
law or any rule or regulation promulgated under the Securities
Act, the 1934 Act or any state securities law in connection with
the offering covered by such registration statement; and the
Company will reimburse each such Holder, partner, officer or
director, underwriter or controlling person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity
agreement contained in this Section 2.8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the
consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for
any such loss, claim, damage, liability or action to the extent
that it arises out of or is based upon a Violation which occurs
in reliance upon and in conformity with written information
furnished to the Company expressly for use in connection with
such registration by such Holder, partner, officer, director,
underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers, each person, if any, who
controls the Company within the meaning of the Securities Act,
any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's
partners, directors or officers or any person who controls such
Holder, against any losses, claims, damages or liabilities (joint
or several) to which the Company or any such director, officer,
controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder may
become subject under the Securities Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to
the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished to the Company by
such Holder expressly for use in connection with such
registration; and each such Holder will reimburse any legal or
other expenses reasonably incurred by the Company or any such
director, officer, controlling person, underwriter or other
Holder, or partner, officer, director or controlling person of
such other Holder in connection with investigating or defending
any such loss, claim, damage, liability or action if it is
judicially determined that there was such a Violation; provided,
however, that the indemnity agreement contained in this Section
2.8(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided further, that in no event
shall any indemnity under this Section 2.8 exceed the net
proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party
under this Section 2.8 of notice of the commencement of any
action (including any governmental action), such indemnified
party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 2.8, deliver to the
indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have
the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying
party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if
materially prejudicial to its ability to defend such action,
shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.8, but the omission so to
deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party
otherwise than under this Section 2.8.
(d) If the indemnification provided for in this
Section 2.8 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any losses,
claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such indemnified
party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that
resulted in such loss, claim, damage or liability, as well as any
other relevant equitable considerations. The relative fault of
the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement
or omission; provided that, in no event shall any contribution by
a Holder hereunder exceed the net proceeds from the offering
received by such Holder.
(e) The foregoing indemnity agreements of the Company
and Holders are subject to the condition that, insofar as they
relate to any Violation made in a preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the
SEC at the time the registration statement in question becomes
effective or the Final Prospectus, such indemnity agreement shall
not inure to the benefit of any person obligated under the
Securities Act to furnish to the person asserting the loss,
liability, claim or damage a copy of the Final Prospectus if a
copy of the Final Prospectus was furnished to the indemnified
party and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is
required by the Securities Act.
(f) The obligations of the Company and Holders under
this Section 2.9 shall survive the completion of any offering of
Registrable Securities pursuant to a registration statement, or
otherwise.
2.9 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
the Company to register Registrable Securities pursuant to this
Article II may be assigned by a Holder to a transferee or
assignee of Registrable Securities; provided, however, that no
such transferee or assignee shall be entitled to registration
rights under Sections 2.2, 2.3 or 2.4 hereof unless such
transferee or assignee: (i) is a Holder; (ii) holds after such
transfer or assignment at least one hundred thousand (100,000)
shares of Registrable Securities (as adjusted for stock
dividends, splits and combinations); or (iii) is a Family Member
or a subsidiary, parent, general partner, or limited partner of a
Holder. In each such case, the Company shall, within twenty (20)
days after such transfer, be furnished with written notice of the
name and address of such transferee or assignee and the
securities with respect to which such registration rights are
being assigned.
2.10 AMENDMENT OF REGISTRATION RIGHTS. Any provision of
this Article II may be amended and the observance thereof may be
waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and the Holders of more than fifty percent (50%) of
the Registrable Securities. Any amendment or waiver effected in
accordance with this Section 2.10 shall be binding upon each
Holder and the Company. By acceptance of any benefits under this
Article II, Holders hereby agree to be bound by the provisions
hereunder.
2.11 "MARKET STAND-OFF" AGREEMENT. If requested by the
Company and an underwriter of Common Stock (or other securities)
of the Company, a Purchaser shall not sell or otherwise transfer
or dispose of any Common Stock (or other securities) of the
Company held by such Stockholder (other than those included in
the registration) for a period specified by the underwriters not
to exceed one hundred eighty (180) days following the effective
date of a registration statement of the Company filed under the
Securities Act, provided, that all officers and directors of the
Company and holders of at least ten percent (10%) of the
Company's voting securities enter into similar agreements. The
obligations described in this Section 2.11 shall not apply to a
registration relating solely to employee benefit plans on Form S-1
or Form S-8 or similar forms that may be promulgated in the
future, or a registration relating solely to a Commission Rule
145 transaction on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer
instructions with respect to the shares (or securities) subject
to the foregoing restriction until the end of said one hundred
eighty (180) day period.
3. MISCELLANEOUS.
3.1 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Missouri as applied to
agreements among Missouri residents entered into and to be
performed entirely within Missouri.
3.2 SURVIVAL. The representations, warranties, covenants,
and agreements made herein shall survive any investigation made
by any Holder and the closing of the transactions contemplated
hereby. All statements as to factual matters contained in any
certificate or other instrument delivered by or on behalf of the
Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and
warranties by the Company hereunder solely as of the date of such
certificate or instrument.
3.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit
of, and be binding upon, the successors, assigns, heirs,
executors, and administrators of the parties hereto and shall
inure to the benefit of and be enforceable by each person who
shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of
adequate written notice of the transfer of any Registrable
Securities specifying the full name and address of the
transferee, the Company may deem and treat the person listed as
the holder of such shares in its records as the absolute owner
and holder of such shares for all purposes, including the payment
of dividends or any redemption price.
3.4 SEPARABILITY. In case any provision of the Agreement
shall be invalid, illegal, or unenforceable, the validity,
legality, and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
3.5 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided, this
Agreement may be amended or modified only upon the written
consent of the Company and the holders of more than fifty percent
(50%) of the Registrable Securities.
(b) Except as otherwise expressly provided, the
obligations of the Company and the rights of the Holders under
this Agreement may be waived only with the written consent of the
holders of more than fifty percent (50%) of the Registrable
Securities.
3.6 DELAYS OR OMISSIONS. It is agreed that no delay or
omission to exercise any right, power, or remedy accruing to any
Holder, upon any breach, default or noncompliance of the Company
under this Agreement shall impair any such right, power, or
remedy, nor shall it be construed to be a waiver of any such
breach, default or noncompliance, or any acquiescence therein, or
of any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit,
consent, or approval of any kind or character on any Holder's
part of any breach, default or noncompliance under the Agreement
or any waiver on such Holder's part of any provisions or
conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, by law, or
otherwise afforded to Holders, shall be cumulative and not
alternative.
3.7 NOTICES. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (i)
upon personal delivery to the party to be notified, (ii) when
sent by confirmed telex or facsimile, (iii) five (5) days after
having been sent by registered or certified mail, return receipt
requested, postage prepaid, or (iv) one (1) day after deposit
with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All
communications shall be sent to the party to be notified at the
address as set forth on the signature page hereof or at such
other address as such party may designate by ten (10) days
advance written notice to the other parties hereto.
3.8 ATTORNEYS' FEES. If legal action is brought to enforce
or interpret this Agreement, the prevailing party shall be
entitled to recover its reasonable attorneys' fees and legal
costs in connection therewith.
3.9 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference
only and are not to be considered in construing this Agreement.
3.10 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument.
3.11 SIGNATURES. THIS REGISTRATION RIGHTS AGREEMENT WILL BE
DEEMED TO HAVE BEEN EXECUTED FOR ALL PURPOSES WHEN THE SUBSCRIBER
SIGNS AND DATES THE OMNIBUS SIGNATURE PAGE.
