SECURITIES PURCHASE AGREEMENT
This SECURITIES PURCHASE AGREEMENT (this "Agreement"), dated as of
September 29, 2003, is made by and among Midwest Express Holdings, Inc., a
Wisconsin corporation (the "Company"), with headquarters located at 0000 Xxxxx
Xxxxxx Xxxxxx, Xxx Xxxxx, XX 00000, and the investors named on the signature
pages hereto (each of whom is hereinafter referred to as the "Investor" and all
of whom collectively are hereinafter referred to as the "Investors").
Capitalized terms used herein and not otherwise defined have the meanings given
them in Article VIII.
RECITALS:
A. The Company and the Investors are executing and delivering this
Agreement in accordance with and in reliance upon the exemption from securities
registration afforded by Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"), and Rule 506 under Regulation D ("Regulation D") as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the Securities Act.
B. Contemporaneously with the execution and delivery of this Agreement, the
Company is entering into a Securities Purchase Agreement, dated September 29,
2003 (the "Note Purchase Agreement"), by and among the Company, Midwest
Airlines, Inc., a Wisconsin corporation and wholly-owned subsidiary of the
Company ("Midwest"), Skyway Airlines, Inc., a Delaware corporation and
wholly-owned subsidiary of Midwest, YX Properties, LLC, a Nebraska limited
liability company and an indirect subsidiary of the Company, and the investors
named on the signature pages to the Note Purchase Agreement (the "Note
Investors"), pursuant to which the Note Investors will purchase a new series of
convertible senior secured notes of the Company (together with any convertible
senior secured notes issued in replacement thereof in accordance with the terms
thereof, the "Notes").
C. The Notes shall be convertible into shares of the Company's common
stock, par value $.01 per share (the "Common Stock").
D. The Investors desire, upon the terms and conditions stated in this
Agreement, to purchase shares of Common Stock for an aggregate purchase price of
approximately $8,000,000. The purchase price per share of the Common Stock is
$4.25.
E. At the Closing (as defined herein), the parties will execute and deliver
a Registration Rights Agreement under which the Company will agree to provide to
the Investors certain rights with respect to registration of the Common Stock
(and the associated Rights (as defined herein)) under the Securities Act and
applicable state securities laws.
AGREEMENT:
In consideration of the premises and the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and the Investors hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SECURITIES
1.1. Purchase and Sale of Securities. At the Closing, subject to the terms
of this Agreement and the satisfaction or waiver of the conditions set forth in
Articles VI and VII, the Company will sell to each
Investor, and each Investor will (on a several and not a joint basis) purchase
from the Company, the number of Securities (as defined herein) set forth beneath
such Investor's name on the signature pages hereof.
1.2. Payment at Closing. On the Closing Date (as defined herein), each
Investor will pay the aggregate purchase price for the Securities as set forth
beneath its name on the signature pages hereof, by wire transfer of immediately
available funds in accordance with the written wire instructions set forth on
the signature page hereto of the Company, and the Company will deliver to each
Investor a certificate (bearing a restrictive legend as set forth in Section
2.8) representing the Securities so purchased by such Investor against delivery
of the purchase price therefor as described above.
1.3. Closing Date. Subject to the satisfaction or waiver of the conditions
set forth in Articles VI and VII, the Closing will take place at 10:00 a.m.
Central Time on a date within five (5) Business Days (as defined herein) after
receipt of the Shareholder Approval referred to in Section 4.13, or at another
date or time agreed upon by each of the parties to this Agreement (the "Closing
Date"). The Closing will be held at the offices of the Company or at such other
place as the parties agree.
1.4. Independent Nature. The rights and obligations of each Investor under
this Agreement are several and not joint with the rights and obligations of each
other Investor, and an Investor shall not be responsible in any way for the
performance of the obligations of any other Investor under this Agreement.
Nothing contained herein, and no action taken by any Investor pursuant hereto,
shall constitute the Investors as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Investors are in
any way acting as a "group" (within the meaning of Section 13(d) of the
Securities Exchange Act of 1934, as amended, the "Exchange Act") or in concert
with respect to such obligations or the transactions contemplated hereby. Each
Investor shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement, and it
shall not be necessary for the other Investors to be joined as an additional
party in any proceeding for such purposes.
ARTICLE II
INVESTOR'S REPRESENTATIONS AND WARRANTIES
Each Investor represents and warrants to the Company, severally and solely
with respect to itself and its purchase hereunder and not with respect to any
other Investor, that:
2.1. Investment Purpose. The Investor is purchasing the Securities for its
own account and not with a view to the distribution thereof; provided, however,
that by making the representation herein, the Investor reserves the right to
dispose of the Securities in accordance with or pursuant to an effective
registration statement or an exemption from registration under the Securities
Act. The Investor understands that the Investor may be required to bear the
economic risk of this investment indefinitely, unless the Securities are
registered pursuant to the Securities Act and any applicable state securities or
blue sky laws or an exemption from such registration is available. The Investor
further represents that it does not have any contract, undertaking, agreement or
arrangement with any person or entity to sell, transfer or grant participation
to any third person or entity with respect to any of the Securities; provided,
however, that by making the representations herein, the Investor does not agree
to hold any Securities for any minimum or other specific term and reserves the
right to dispose of the Securities at any time in accordance with or pursuant to
a registration statement or an exemption under the Securities Act.
2.2. Investor Status. The Investor is either: (i) a "qualified
institutional buyer" as defined in Rule 144A under the Securities Act; or (ii)
an institutional "accredited investor" as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D (referred to herein as an "institutional accredited
investor"). The Investor is not registered as a broker or dealer under Section
15(a) of the Exchange Act, or a member of the National Association of Securities
Dealers, Inc. If an Investor is subject to the Employee Retirement Income
Security Act of 1974, as amended, and is acquiring the Securities as a fiduciary
or agent for another investor's
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account, then the Investor will have sole investment and voting discretion with
respect to such account and will have full power to make the acknowledgments,
representations and agreements contained herein on behalf of such account.
2.3. Reliance on Exemptions. The Investor understands that the Securities
are being offered and sold to it in reliance upon specific exemptions from the
registration requirements of the United States federal and state securities laws
and that the Company is relying upon the truth and accuracy of, and the
Investor's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Investor set forth herein to determine
the availability of such exemptions and the eligibility of the Investor to
acquire the Securities.
2.4. Information. The Investor and its advisors, if any, have been
furnished with all materials relating to the business, finances and operations
of the Company and its subsidiaries, and materials relating to the offer and
sale of the Securities, that have been requested by the Investor or its
advisors, if any. The Investor and its advisors, if any, have been afforded
adequate opportunity to ask questions of, and receive answers from, the Company.
The Investor acknowledges and understands that its investment in the Securities
involves a significant degree of risk, including the risks reflected in the
Company's Confidential Information Memorandum, dated August 1, 2003, delivered
to each Investor (the "CIM"), and the SEC Documents (as defined herein). The
foregoing representations shall not in any way amend, limit or modify the
representations and warranties of the Company set forth in Article III or the
Registration Rights Agreement (as defined herein) nor in any way affect the
Investor's right to rely on such representations and warranties.
2.5. Experience. If the Investor made the investment decision relating to
the investment in the Securities on its own behalf, then the Investor has such
knowledge and experience in financial, business and investment matters,
including the airline industry and businesses and operations of companies that
operate in lines of business similar to the Company, that the Investor believes
it is capable of evaluating the terms and conditions, merits and risks of the
transactions described herein and the investment contemplated hereby, and the
Investor is familiar with the risks associated with such industry and businesses
and has the ability to bear the economic risks of the investment in the
Securities. If an advisor made the investment decision relating to the
investment in the Securities on behalf of the Investor, then the advisor has
such knowledge and experience in financial, business and investment matters,
including the airline industry and businesses and operations of companies that
operate in lines of business similar to the Company, that the advisor believes
it is capable of evaluating the terms and conditions, merits and risks of the
transactions described herein and the investment contemplated hereby, and the
advisor is familiar with the risks associated with such industry and businesses
and believes the Investor has the ability to bear the economic risks of the
investment in the Securities.
2.6. Governmental Review. The Investor understands that no United States
federal or state agency or any other government or governmental agency has
passed upon or made any recommendation or endorsement of the Securities or an
investment therein.
2.7. Transfer or Resale. The Investor understands that:
(a) the delivery of the Securities has not been registered under the
Securities Act or any applicable state securities laws, and consequently,
the Investor may have to bear the risk of owning the Securities for an
indefinite period of time because the Securities may not be transferred
unless:
(i) the resale of the Securities is registered pursuant to an
effective registration statement under the Securities Act and such
resale is made in accordance with said registration statement;
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(ii) the Securities are sold or transferred pursuant to Rule 144
promulgated under the Securities Act ("Rule 144") and the Investor has
delivered to the Company a statement certifying that the proposed sale
or transfer meets the requirements of Rule 144 (which certification
shall be in form and content reasonably acceptable to the Company),
and, if reasonably requested by the Company, a statement describing
the circumstances surrounding the proposed sale or transfer (the form
and content of which shall be reasonably acceptable to the Company)
and, if reasonably requested by the Company after receiving such
statement describing circumstances, an opinion of counsel (which
opinion shall be in form, substance and scope customary for opinions
of counsel in comparable transactions and which counsel, including
internal counsel of the Investor, if applicable, shall be reasonably
satisfactory to the Company) to the effect that the proposed sale or
transfer meets the requirements of Rule 144 (collectively, the "144
Documentation");
(iii) the Securities are sold or transferred to an affiliate (as
defined in Rule 144) of the Investor;
(iv) the Securities are sold or transferred in an "offshore
transaction" meeting the requirements of Rule 904 of Regulation S of
the Securities Act ("Rule 904") and in compliance with applicable
local laws and regulations, and the Investor has delivered to the
Company a statement certifying that the proposed sale or transfer
meets the requirements of Rule 904 and applicable local laws and
regulations (which certification shall be in form and content
reasonably acceptable to the Company), and, if reasonably requested by
the Company, a statement describing the circumstances surrounding the
proposed sale or transfer (the form and content of which shall be
reasonably acceptable to the Company) and, if reasonably requested by
the Company after receiving such statement describing circumstances,
an opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions and
which counsel, including internal counsel of the Investor, if
applicable, shall be reasonably satisfactory to the Company) to the
effect that the proposed sale or transfer meets the requirements of
Rule 904 and applicable local laws and regulations (collectively, the
"904 Documentation"); or
(v) in connection with a transfer other than in accordance with
clause (i), (ii), (iii), or (iv) herein, a statement certifying that
the proposed disposition may be made pursuant to an exemption from
registration, which exemption is specified (which certification shall
be in form and content reasonably acceptable to the Company), and, if
reasonably requested by the Company, the Investor has delivered to the
Company a statement describing the circumstances surrounding the
proposed disposition (the form and content of which shall be
reasonably acceptable to the Company), and, if reasonably requested by
the Company after receiving such statement describing circumstances,
an opinion of counsel (which opinion shall be in form, substance and
scope customary for opinions of counsel in comparable transactions and
which counsel, including internal counsel of the Investor, if
applicable, shall be reasonably satisfactory to the Company) to the
effect that the proposed disposition may be made pursuant to an
exemption from registration, which exemption is specified
(collectively, the "Other Exemption Documentation"); and
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(b) any sale of the Securities made in reliance on Rule 144 may be
made only in accordance with the terms of Rule 144 (including the holding
period requirement, the volume limitations and the manner of sale
restrictions, if applicable), and if Rule 144 is not applicable, then the
seller (or the person through whom the sale is made) might be deemed to be
an underwriter (as that term is defined in the Securities Act) under the
Securities Act or the rules and regulations of the SEC thereunder; and
(c) except as set forth in the Registration Rights Agreement, neither
the Company nor any other person is under any obligation to register the
Securities under the Securities Act or any state securities laws or to
comply with the terms and conditions of any exemption thereunder.
2.8. Legends. The Investor understands that the certificates representing
the Securities will bear a restrictive legend in substantially the form set
forth below (and a stop-transfer order may be placed against transfer of the
certificates for such Securities) until (a) the Securities are sold under an
effective registration statement filed under the Securities Act and such resale
is made in accordance with said registration statement; (b) the Securities may
be sold under Rule 144(k); (c) the Securities are sold or transferred under Rule
144 and the Investor delivers the 144 Documentation to the Company; (d) the
Securities are sold or transferred in a transaction that meets the requirements
of Rule 904 and complies with applicable local laws and regulations and the
Investor delivers the 904 Documentation to the Company; or (e) in connection
with a transfer other than in accordance with clauses (a), (b), (c) or (d), the
Investor delivers the Other Exemption Documentation to the Company.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN SOLD IN
RELIANCE UPON AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"). THE SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED OR ASSIGNED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN
ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
The legend set forth above will be removed, and the Company will issue a
certificate without the legend to the holder of any certificate upon which it is
stamped, in accordance with the terms of Article V.
2.9. Organization and Existence. To the extent indicated on the signature
pages hereto, each Investor is either (i) a limited partnership duly organized
and validly existing under the laws of its respective state of formation, (ii) a
limited liability company duly organized and validly existing under the laws of
its respective state of formation, (iii) a limited company duly organized and
validly existing under the laws of the British Virgin Islands, (iv) a
corporation duly organized and validly existing under the laws of its respective
state of incorporation, (v) a series of a registered investment company, (vi) a
trust fund whose trustee is a bank or trust company or (vii) an individual. Such
Investor represents that it was not organized solely for the purpose of making
an investment in the Company.
2.10. Authorization; Enforcement. This Agreement, the Registration Rights
Agreement and all other agreements, documents and instruments contemplated
hereby and thereby have been duly and validly authorized, executed and delivered
on behalf of the Investor and are valid and binding agreements of the Investor
enforceable against Investor in accordance with their respective terms, subject
to the effect of any applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of
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creditors generally and the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law), and except as the enforceability of the indemnification
agreements of the Investor in the Registration Rights Agreement may be limited
by federal or state securities law or public policy relating thereto.
2.11. No Conflicts; No Violation.
(a) The execution, delivery and performance of this Agreement by the
Investor will not (i) conflict with or result in a violation of any
provision of its charter documents or (ii) result in a violation of any
law, rule, regulation, order, judgment or decree applicable to the Investor
that would have material adverse effect on the Investor's ability to
perform its obligations under this Agreement or any other agreements,
documents or instruments contemplated by this Agreement to which the
Investor is a party.
(b) The Investor is not required to obtain any consent, authorization
or order of, or make any filing or registration with, any court or
governmental agency or any regulatory or self regulatory agency for it to
execute, deliver or perform any of its obligations under this Agreement
that the Investor has not obtained or filed or the failure of which to
obtain or file would not have a material adverse effect on the Investor's
ability to perform its obligations under this Agreement.
2.12. Acknowledgments Regarding Placement Agent. The Investor acknowledges
that Xxxxxx X. Xxxxx & Co. Incorporated is acting as placement agent (the
"Placement Agent") for the Securities being offered hereby and will be
compensated by the Company for acting in such capacity. The Investor further
acknowledges that the Placement Agent has acted solely as placement agent for
the Company in connection with the offering of the Securities by the Company,
that certain of the information and data provided to the Investor in connection
with the transactions contemplated hereby, including but not necessarily limited
to the information and data included in the CIM, have not been subjected to
independent verification by the Placement Agent, and that the Placement Agent
makes no representation or warranty with respect to the accuracy or completeness
of such information, data or other related disclosure material. The Investor
further acknowledges that the provisions of this Section 2.12 are also for the
benefit of, and may also be enforced by, the Placement Agent.
2.13. Representation. The Investor has had an opportunity to consult with
an attorney in connection with the Investor's investment in the Company and its
subsidiaries.
2.14. Certain Trading Activities. Except for those positions that the
Investor has disclosed to the Company in writing prior to the execution of this
Agreement, the Investor has not directly or indirectly, nor has any Person (as
defined herein) acting on behalf of or pursuant to any understanding with such
Investor, engaged in any Short Sales (as defined below) involving the Common
Stock during the thirty (30) calendar days prior to the date of this Agreement,
and no open position or Short Sale exists on the date hereof in the name or on
behalf of, or in conjunction with, such Investor. "Short Sales" include, without
limitation, all types of direct and indirect stock pledges, forward sale
contracts, options, puts, calls, short sales, swaps and similar arrangements
(including on a total return basis), and sales and other transactions through
non-U.S. broker-dealers or foreign regulated brokers having the effect of
hedging the Securities purchased or investment made under this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Subject to such matters as are disclosed in the Company's SEC Documents,
the Company represents and warrants to the Investors that:
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3.1. Organization and Qualification. The Company and its subsidiaries are
duly incorporated, validly existing and in good standing under the laws of the
jurisdictions in which they are incorporated, with full corporate power and
authority to own, lease, use and operate their properties and to carry on their
business as and where now owned, leased, used, operated and conducted. The
Company and its subsidiaries are duly qualified to do business and are in good
standing in every jurisdiction in which the nature of the business conducted by
it makes such qualification necessary, except where the failure to be so
qualified or in good standing in each such jurisdiction would not have a
Material Adverse Effect (as defined herein).
3.2. Authorization; Enforcement. (a) The Company has all requisite
corporate power and authority (other than the Shareholder Approval that the
Company must receive to enable it to perform its obligations at the Closing) to
enter into and to perform its obligations under this Agreement, the Registration
Rights Agreement and all other agreements, documents and instruments
contemplated hereby and thereby, to consummate the transactions contemplated
hereby and thereby and to deliver the Securities in accordance with the terms
hereof; (b) the execution, delivery and performance of this Agreement, the
Registration Rights Agreement and all other agreements, documents and
instruments contemplated hereby and thereby by the Company and the consummation
by it of the transactions contemplated hereby and thereby including without
limitation the delivery of the Securities have been duly authorized by the
Company's Board of Directors and no further consent or authorization of the
Company, its Board of Directors or its shareholders is required (other than the
Shareholder Approval that the Company must receive to enable it to perform its
obligations at the Closing); (c) this Agreement, the Registration Rights
Agreement and all other agreements, documents and instruments contemplated
hereby and thereby have been or will be duly executed by the Company; and (d)
each of this Agreement, the Registration Rights Agreement and all other
agreements, documents and instruments contemplated hereby and thereby
constitutes or will upon execution constitute a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization, or moratorium or similar laws affecting the rights of creditors
generally and the application of general principles of equity, and except as the
enforceability of the indemnification agreements of the Company in the
Registration Rights Agreement may be limited by federal or state securities laws
or public policy relating thereto.
3.3. Capitalization. The capitalization of the Company is as described in
the Company's SEC Documents as of the respective dates set forth therein. Other
than pursuant to this Agreement and as contemplated by employee benefit plans or
director plans disclosed in the Company's SEC Documents (the "Plans"), and
except as disclosed in the Company's SEC Documents, the Company has not issued
any capital stock since December 31, 2002. The authorized capital stock of the
Company consists of (i) 25,000,000 shares of the Common Stock, of which
15,517,411 shares were issued and outstanding as of September 24, 2003 and (ii)
5,000,000 shares of preferred stock, without par value, none of which are issued
and outstanding. All of such outstanding shares of Common Stock are duly
authorized, validly issued, fully paid and nonassessable (except as otherwise
provided by Section 180.0622(2)(b) of the Wisconsin Business Corporation Law).
Assuming receipt of the Shareholder Approval, the Common Stock to be sold
pursuant to this Agreement has been duly authorized, and when delivered and paid
for in accordance with the terms of this Agreement, will be validly issued,
fully paid and nonassessable (except as otherwise provided by Section
180.0622(2)(b) of the Wisconsin Business Corporation Law), free from all taxes,
liens, claims, encumbrances and charges with respect to the delivery thereof
(other than those imposed through acts or omissions of an Investor). Each share
of Common Stock to be sold pursuant to this Agreement will be accompanied by
four-ninths of a Right, and such Rights will be validly issued in accordance
with the terms of the Rights Agreement (as defined herein). Other than pursuant
to this Agreement and the Rights and as contemplated by the Plans, the Note
Purchase Agreement, the Company's employee equity plan being submitted for
Shareholder Approval, and the warrants issued by the Company in August 2003, and
except as disclosed in the Company's SEC Documents: (i) no shares of the
Company's capital stock are subject to preemptive rights or any other similar
rights or any liens or encumbrances suffered or permitted by the Company; (ii)
there are no outstanding options, warrants, scrip, rights to subscribe to, calls
or commitments
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of any character whatsoever relating to, or securities or rights convertible
into, or exercisable or exchangeable for, any shares of capital stock of the
Company, or contracts, commitments, understandings or arrangements by which the
Company is or may become bound to issue additional shares of capital stock of
the Company or options, warrants, scrip, rights to subscribe to, calls or
commitments of any character whatsoever relating to, or securities or rights
convertible into, or exercisable or exchangeable for, any shares of capital
stock of the Company; (iii) there are no agreements or arrangements under which
the Company is obligated to register the sale of its securities under the
Securities Act (except the Registration Rights Agreement); (iv) there are no
outstanding securities or instruments of the Company that contain any redemption
or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company is or may become bound to redeem a security
of the Company; (v) there are no securities or instruments containing
anti-dilution or similar provisions that will be triggered by the issuance of
the Notes; (vi) the Company does not have any stock appreciation rights or
"phantom stock" plans or agreements or any similar plan or agreement; and (vii)
the Company has no liabilities or obligations required to be disclosed in the
SEC Documents that have not been so disclosed in the SEC Documents, other than
those incurred in the ordinary course of the Company's respective businesses and
which, individually or in the aggregate, do not or would not have a Material
Adverse Effect. The Company has furnished or made available to the Investors
true, correct and complete copies of the Company's Articles of Incorporation, as
amended and as in effect on the date hereof (the "Articles of Incorporation"),
and the Company's Bylaws, as amended and as in effect on the date hereof (the
"Bylaws"), and the terms of all securities convertible into, or exercisable or
exchangeable for, Common Stock and the material rights of the holders thereof in
respect thereto.
3.4. No Conflicts; No Violation.
(a) The execution, delivery and performance of this Agreement, the
Registration Rights Agreement and all other agreements, documents and
instruments contemplated hereby and thereby by the Company and the
consummation by the Company of the transactions contemplated hereby and
thereby including, without limitation, the delivery of the Securities will
not (i) assuming receipt of Shareholder Approval, conflict with or result
in a violation of any provision of the Organizational Documents (as defined
herein) of the Company or any of its subsidiaries or (ii) violate or
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which with notice or lapse of time or both could
become a default) under, or give to others any rights of termination,
amendment (including without limitation, the triggering of any
anti-dilution provision), acceleration or cancellation of, any agreement,
indenture, patent, patent license or instrument to which the Company or any
of its subsidiaries is a party, or (iii) assuming the accuracy of the
representations of the Investors, result in a violation of any law, rule,
regulation, order, judgment or decree (including United States federal and
state securities laws and regulations and regulations of any
self-regulatory organizations to which the Company or any of its
subsidiaries or their respective securities are subject), applicable to the
Company or any of its subsidiaries or by which any property or asset of the
Company or any of its subsidiaries is bound or affected, except in the case
of clause (ii) for such conflicts, breaches, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect.
(b) Neither the Company nor any of its subsidiaries is in violation of
its Organizational Documents except for any violations as would not,
individually or in the aggregate, have a Material Adverse Effect. Neither
Company nor any of its subsidiaries is in violation of any law, rule,
ordinance, regulation, order, decree or judgment of any court or
governmental entity which violation, individually or in the aggregate would
result in a Material Adverse Effect. Neither the Company nor any of its
subsidiaries is in default (and no event has occurred which with notice or
lapse of time or both could put the Company or any of its subsidiaries in
default) under any agreement, indenture or instrument to which the Company
is a party or by which any property or
8
assets of the Company is bound or affected, except for such defaults as
would not, individually or in the aggregate, have a Material Adverse
Effect.
3.5. Approvals. Assuming the accuracy of the representations of the
Investors, except as specifically contemplated by this Agreement and as required
under the Securities Act and any applicable state securities laws and any
listing agreement with any securities exchange or automated quotation system,
neither the Company nor any of its subsidiaries is required to obtain any
consent, authorization or order of, or make any filing or registration with, any
court or governmental agency or any regulatory or self regulatory agency for the
Company to execute, deliver or perform any of its obligations under this
Agreement or the Registration Rights Agreement, in each case in accordance with
the terms hereof or thereof, or sell the Securities in accordance with the terms
hereof (other than the Shareholder Approval that the Company must receive to
enable it to perform its obligations at the Closing). All consents,
authorizations, orders, filings and registrations that the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof (other than the Shareholder Approval that the
Company must receive to enable it to perform its obligations at the Closing).
3.6. SEC Documents; Financial Statements. Since December 31, 2002, the
Company has timely filed all reports, schedules, forms, statements and other
documents required to be filed by it with the SEC pursuant to the reporting
requirements of the Exchange Act (all of the foregoing filed after December 31,
2002 and prior to the date hereof and all exhibits included therein and
financial statements and schedules thereto and documents (including all exhibits
available on the SEC's XXXXX system) incorporated by reference therein being
hereinafter referred to herein as the "SEC Documents"). The Company has
delivered to each Investor, or each Investor has had access to, true and
complete copies of the SEC Documents. As of their respective dates, the SEC
Documents complied in all material respects with the requirements of the
Exchange Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they
were filed with the SEC (except as disclosed in the SEC Documents), contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the SEC
Documents have been prepared in accordance with United States generally accepted
accounting principles, consistently applied, during the periods involved (except
(i) as may be otherwise indicated in such financial statements or the notes
thereto or (ii) in the case of unaudited interim statements, to the extent they
may not include footnotes or may be condensed or summary statements) and fairly
present in all material respects the financial position of the Company as of the
dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments). There are no unconsolidated special-purpose entities related
to the Company that should be consolidated on the Company's financial statements
under United States generally accepted accounting principles. Except as set
forth in the financial statements included in the SEC Documents, the Company has
no liabilities, contingent or otherwise, other than (A) liabilities incurred in
the ordinary course of business subsequent to June 30, 2003 that would not,
individually or in the aggregate, have a Material Adverse Effect, (B)
liabilities of which the Company has no Knowledge (as defined herein) so long as
the Company would not have acquired Knowledge thereof through the exercise of
reasonable diligence or (C) other liabilities that would not, individually or in
the aggregate, have a Material Adverse Effect.
3.7. Absence of Certain Changes. Except as disclosed in the SEC Documents
or as set forth on Schedule 3.7, since December 31, 2002, there has been no
material adverse change in the assets, liabilities, business, properties,
operations, financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
3.8. Absence of Litigation. Except as disclosed in the SEC Documents, there
is no action, suit, claim, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the Knowledge of the Company, threatened against or
9
affecting the Company, any of its subsidiaries or any of their respective
officers or directors acting as such that is reasonably likely to, individually
or in the aggregate, have a Material Adverse Effect.
3.9. Intellectual Property Rights. The Company owns or possesses the
licenses or rights to use all patents, patent applications, patent rights,
inventions, know-how, trade secrets, trademarks, trademark applications, service
marks, service names, trade names and copyrights necessary to enable it to
conduct its business as now operated (the "Intellectual Property"), except where
the failure to possess such licenses or rights to use would not have,
individually or in the aggregate, a Material Adverse Effect. There is no claim
or action or proceeding pending or, to the Company's Knowledge, threatened that
challenges the right of the Company with respect to any Intellectual Property.
3.10. Tax Status. The Company and, where applicable, its subsidiaries have
made or filed all federal, state and foreign income and all other tax returns,
reports and declarations required by any jurisdiction to which they are subject
(unless and only to the extent that the Company and, where applicable, its
subsidiaries have set aside on their respective books provisions reasonably
adequate for the payment of all unpaid and unreported taxes) and have paid all
taxes and other governmental assessments and charges that are material in
amount, shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith. To the Knowledge of the Company,
there are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction.
3.11. No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales of any security or solicited any offers to
buy any security under circumstances within the prior six months that would
require registration under the Securities Act of the delivery of the Securities
to the Investors.
3.12. No Brokers. The Company will pay all brokerage commissions, finder's
fees or similar payments relating to this Agreement or the transactions
contemplated hereby where the obligation to make such payments arises due solely
and directly to action taken by the Company, and such payments will not exceed
6% of the gross proceeds to the Company from the transactions contemplated by
this Agreement.
3.13. Insurance. The Company and its subsidiaries maintain insurance of the
types and in such amounts as their respective officers believe to be prudent and
customary in the businesses in which the Company and its subsidiaries are
engaged.
3.14. Environmental Laws. The Company and its subsidiaries (i) are in
compliance with all applicable foreign, federal, state and local laws,
regulations, orders or judgments relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes, pollutants
or contaminants ("Environmental Laws"), (ii) have received all permits, licenses
or other approvals required of it under applicable Environmental Laws to conduct
its business as presently conducted and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where, in each of
the three foregoing clauses, the failure to so comply would not have,
individually or in the aggregate, a Material Adverse Effect.
3.15. Employment Matters. The Company and its subsidiaries are in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours, except where failure to be in compliance would
not, individually or in the aggregate, have a Material Adverse Effect. To the
Knowledge of the Company, there are no pending investigations involving the
Company or any of its subsidiaries by the U.S. Department of Labor or any other
governmental agency responsible for the enforcement of such federal, state,
local or foreign laws and regulations. There is no unfair labor practice charge
or complaint against the Company or any of its subsidiaries pending before the
National Labor Relations Board or any strike, picketing, boycott, dispute,
slowdown or stoppage pending or threatened against the Company or any of its
subsidiaries. No
10
representation question exists respecting the employees of the Company or any of
its subsidiaries, and no collective bargaining agreement or modification thereof
is currently being negotiated by the Company or any of its subsidiaries. There
are no outstanding wage claims of, or other debts owing to, employees of the
Company for services performed.
3.16. No General Solicitation. Neither the Company nor, to the Knowledge of
the Company, any person acting for the Company has conducted any "general
solicitation" (as such term is defined in Regulation D) with respect to any of
the Common Stock being offered hereby. The Company will not distribute any
offering material in connection with the sale of the Common Stock prior to the
Closing Date, other than the CIM, this Agreement, the Registration Rights
Agreement, the NYSE (as defined herein) Supplemental Listing Application, and
the SEC Documents.
3.17. NYSE Compliance. The Company has not, in the 12 months preceding the
date hereof, received notice from the NYSE that the Company is not in compliance
with the listing or maintenance requirements of the NYSE. The Company is in
compliance with all such listing and maintenance requirements. Assuming the
truth of the representations and warranties of each Investor and assuming
receipt of the Shareholder Approval, the issuance and sale of the Securities
hereunder does not contravene the rules and regulations of the NYSE. The Company
has taken no action designed to effect the de-listing of the Common Stock from
the NYSE.
3.18. Compliance with the Xxxxxxxx-Xxxxx Act. The Company is in material
compliance with the applicable provisions of the Xxxxxxxx-Xxxxx Act of 2002 and
the rules and regulations promulgated in connection therewith (the
"Xxxxxxxx-Xxxxx Act") that are effective and is actively taking steps to ensure
that it will be in material compliance with other applicable provisions of the
Xxxxxxxx-Xxxxx Act upon the effectiveness of such provisions.
3.19. Licenses and Permits. The Company and its subsidiaries have all
licenses, permits, approvals, authorizations and consents necessary to own,
lease, and operate their properties and to conduct their respective businesses
as currently being conducted (collectively, the "Company Permits"), except where
the failure to have such permits would not have, individually or in the
aggregate, a Material Adverse Effect. There is no action pending or, to the
Knowledge of the Company, threatened regarding the suspension or cancellation of
any of the Company Permits the suspension or cancellation of which would have a
Material Adverse Effect. Neither the Company nor any of its subsidiaries is in
conflict with, or in default or violation of, any of the Company Permits, except
where such violation would not in the aggregate have a Material Adverse Effect.
3.20. Investment Company Status. The Company is not and upon consummation
of the sale of the Securities will not be an "investment company," a company
controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
ARTICLE IV
COVENANTS
4.1. Best Efforts. Each party will use its best efforts to satisfy in a
timely fashion each of the conditions to be satisfied by it under Articles VI
and VII of this Agreement.
4.2. Form D; Blue Sky Laws. The Company will file a Notice of Sale of
Securities on Form D with respect to the Securities, if required under
Regulation D, and provide a copy thereof to each Investor promptly after such
filing. The Company will take such action as it reasonably determines to be
necessary, if any, to qualify the Securities for sale to the Investors under
this Agreement under applicable securities (or "blue sky") laws of the states of
the United States (or to obtain an exemption from such
11
qualification), and will provide evidence of any such action so taken to the
Investors on or prior to the date of the Closing. The Company will file with the
SEC a Current Report on Form 8-K disclosing this Agreement and the transactions
contemplated hereby within two (2) Business Days after the Closing Date.
4.3. Reporting Status. The Common Stock and Rights are registered under
Section 12 of the Exchange Act. Throughout the Registration Period (as defined
in the Registration Rights Agreement), the Company will use its best efforts to
timely file all reports, schedules, exhibits, forms, statements and other
documents required to be filed by it with the SEC under the reporting
requirements of the Exchange Act, and the Company will not terminate its status
as an issuer required to file reports under the Exchange Act even if the
Exchange Act or the rules and regulations thereunder would permit such
termination.
4.4. Expenses. The Company and each Investor is liable for, and will pay,
its own expenses incurred in connection with the negotiation, preparation,
execution and delivery of this Agreement and the other agreements to be executed
in connection herewith, including, without limitation, attorneys' and
consultants' fees and expenses. In accordance with, and subject to, Section
3.12, the Company will pay all brokerage commissions, finder's fees or similar
payments relating to this Agreement or the transactions contemplated herein.
4.5. Financial Information. Throughout the Registration Period, the
financial statements of the Company filed with the SEC will be prepared in
accordance with United States generally accepted accounting principles and will
fairly present in all material respects the consolidated financial position of
the Company and results of its operations and cash flows as of, and for the
periods covered by, such financial statements (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
4.6. Listing. Throughout the Registration Period, but only so long as an
Investor owns any of the Securities, the Company will use its reasonable best
efforts to obtain and to maintain the listing and trading of its Common Stock
(including the Securities) on the NYSE or the market or trading system, if any,
on which shares of Common Stock are then listed or traded.
4.7. Compliance with Law. Throughout the Registration Period, but only so
long as an Investor owns any of the Securities, the Company will use its
reasonable best efforts to conduct the business of the Company and its
subsidiaries in compliance with laws, ordinances and regulations of any
governmental entity except for violations that would not result, either
individually or in the aggregate, in a Material Adverse Effect.
4.8. No Integration. The Company will not make any offers or sales of any
security (other than the Securities and the Notes) under circumstances that
would cause the offering of the Securities to be integrated with any other
offering of securities by the Company for purposes of any registration
requirement under the Securities Act.
4.9. Sales by Investors. Each Investor will sell any Securities sold by it
in compliance with applicable prospectus delivery requirements, if any, or
otherwise in compliance with the requirements for an exemption from registration
under the Securities Act and the rules and regulations promulgated thereunder.
No Investor will make any sale, transfer or other disposition of the Securities
in violation of federal or state securities laws.
4.10. Use of Proceeds. The Company will use the proceeds from the sale of
the Securities to repay indebtedness or for general corporate and working
capital purposes. The Company will not use the proceeds from the sale of the
Securities for any loan to or investment in any other corporation, partnership,
enterprise or other person (except in connection with its direct or indirect
subsidiaries) or for the repurchase, redemption or retirement of any of its
capital stock.
12
4.11. Press Release. In connection with the Closing, the Company will issue
within one (1) Business Day after the Closing a press release that discloses in
accordance with applicable law the material terms of the transactions
contemplated hereby.
4.12. Non-Public Information. The Company acknowledges that as of, and
following, the Closing Date, the Company will have an obligation respecting the
Investors (as with any other person) under applicable laws, rules and
regulations not to selectively disclose any material, non-public information in
violation of any such applicable law, rule or regulation.
4.13. Proxy Statement. The Company shall provide each shareholder entitled
to vote at the next meeting of shareholders of the Company, which shall not be
later than November 30, 2003, a proxy statement soliciting each such
shareholder's affirmative vote at such shareholder meeting for approval of (i)
the increase in the authorized Common Stock to 50 million shares, (ii) the
issuance of Common Stock upon the conversion of the Notes to be sold pursuant to
the Note Purchase Agreement at the Second Closing (as defined in the Note
Purchase Agreement), (iii) the issuance of certain options to employees and (iv)
the transaction contemplated by this Agreement, in each case in accordance with
the Articles of Incorporation and Bylaws and applicable law and the rules and
regulations of the NYSE (such affirmative approval of each of the foregoing
being referred to herein as the "Shareholder Approval"), and the Company shall
use its best efforts to solicit its shareholders' approval of such matters and
to cause the Board of Directors of the Company to recommend to the shareholders
that they approve such matters. From and after the date hereof and prior to
receipt of the Shareholder Approval, the Company shall not issue any securities
(other than pursuant to contractual arrangements under which the Company is
obligated as of the date hereof or convertible or exchangeable securities
outstanding as of the date hereof, in each case in accordance with the terms in
place on the date hereof).
ARTICLE V
TRANSFER AGENT INSTRUCTIONS; REMOVAL OF LEGENDS
5.1. Issuance of Certificates. The Company will instruct its transfer agent
to issue a certificate, registered in the name of each Investor or its nominee,
for the respective Securities. All such certificates at issuance will bear the
restrictive legend described in Section 2.8, except as otherwise specified in
this Article V. In addition, the Company will issue irrevocable Transfer Agent
Instructions (as defined herein) to the transfer agent in the form of Exhibit A
hereto. The Company will not give to its transfer agent any instruction with
respect to the Securities other than as contemplated by Article V and stop
transfer instructions to give effect to Section 2.8 (prior to registration of
the Securities under the Securities Act). Nothing in this Section will affect in
any way the Investors' obligations and agreements set forth in Section 4.9 to
comply with all applicable prospectus delivery requirements, if any, upon resale
of the Securities.
5.2. Unrestricted Securities. If, unless otherwise required by applicable
state securities laws, (a) the Securities are sold under an effective
registration statement filed under the Securities Act and such resale is made in
accordance with said registration statement; (b) the Securities may be sold
under Rule 144(k); (c) the Securities are sold or transferred under Rule 144 and
the Investor delivers the 144 Documentation to the Company; (d) the Securities
are sold or transferred in a transaction that meets the requirements of Rule 904
and complies with applicable local laws and regulations and the Investor
delivers the 904 Documentation to the Company; or (e) in connection with a
transfer other than in accordance with clauses (a), (b), (c) or (d), the
Investor delivers the Other Exemption Documentation to the Company, then the
Company will permit the transfer of the Securities, and the transfer agent will
issue one or more certificates, free from any restrictive legend, in such name
and in such denominations as specified by such holder in accordance with the
Transfer Agent Instructions. Notwithstanding anything herein to the contrary,
(i) the Securities may be pledged as collateral in connection with a bona fide
margin account or other lending arrangement; provided that such pledge will not
alter the provisions of this Article V with respect to the removal of
restrictive legends, and (ii) any Investor that is a registered investment
company may transfer
13
shares to any other fund or account advised by such Investor's investment
manager or its affiliates if the transferee is a qualified institutional buyer
(as defined in Rule 144A under the Securities Act) and agrees in writing to be
bound by the terms hereof and the terms of the Registration Rights Agreement.
5.3. Enforcement of Provision. The Company acknowledges that a breach by it
of its obligations hereunder will cause irreparable harm to the Investor by
invalidating the intent and purpose of the transaction contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its
obligations under this Article V will be inadequate and agrees, in the event of
a breach or threatened breach by the Company of the provisions of this Article
that the Investor will be entitled, in addition to all other available remedies,
to an injunction restraining any breach and requiring immediate transfer,
without the necessity of showing economic loss and without any bond or other
security being required.
ARTICLE VI
CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL
The obligation of the Company under Article I of this Agreement is subject
to the fulfillment at or before the Closing of each of the following conditions.
These conditions are for the Company's benefit and may be waived by the Company
in whole or in part at any time in its sole discretion. Without limitation, the
Company may in its sole discretion proceed with the Closing with respect to each
Investor as to whom each condition has been satisfied whether or not conditions
have been satisfied as to other Investors:
6.1. The Investors will have executed the Registration Rights Agreement and
will have delivered such Registration Rights Agreement to the Company on or
immediately prior to the Closing Date.
6.2. The Investors will have delivered the purchase price for the
Securities to the Company in accordance with this Agreement on the Closing Date.
6.3. The representations and warranties of the Investors are true and
correct in all material respects (except for representations and warranties that
by their terms are qualified by materiality, which shall be true and correct in
all respects) as of the Closing Date as though made at that time (except for
representations and warranties that speak as of a specific date, which
representations and warranties must be correct as of such date), and the
Investors will have performed and complied in all material respects with the
covenants and conditions required by this Agreement to be performed or complied
with by the Investors at or prior to the Closing.
6.4. No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction has been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
6.5. The aggregate purchase price of the Notes purchased at the first
closing contemplated by the Note Purchase Agreement shall have been paid to the
Company pursuant to the Escrow Agreement (as defined herein).
6.6. The Shareholder Approval shall have been received with respect to each
proposal other than the proposal respecting the approval of the issuance of
certain options to the Company's employees.
6.7. The Investors will have confirmed in writing to the Company that, as
of the Closing Date and after giving effect to the consummation of the
transactions contemplated herein, no Investor
14
beneficially owns 10% or more of the outstanding shares of the Common Stock as
determined in accordance with Section 13(d) of the Exchange Act and the rules
and regulations promulgated thereunder.
ARTICLE VII
CONDITIONS TO EACH INVESTOR'S OBLIGATION TO PURCHASE
The obligation of each Investor hereunder to purchase the Securities from
the Company at the Closing is subject to the fulfillment at or before the
Closing of each of the following conditions. These conditions are for each
Investor's respective benefit and may be waived by such Investor at any time in
its sole discretion:
7.1. The Company will have executed the Registration Rights Agreement and
will have delivered such Agreement to the Investor on or immediately prior to
the Closing Date.
7.2. The Company will have delivered to such Investor a duly executed
certificate, against payment therefor, representing the Securities as specified
in Section 1.1 on the Closing Date.
7.3. The representations and warranties of the Company are true and correct
in all material respects (except for representations and warranties that by
their terms are qualified by materiality, which shall be true and correct in all
respects) as of the date of this Agreement (except for representations and
warranties that speak as of a specific date, which representations and
warranties must be true and correct as of such date), and the Company must have
performed and complied in all material respects with the covenants and
conditions required by this Agreement to be performed or complied with by the
Company at or prior to the Closing.
7.4. No litigation, statute, rule, regulation, executive order, decree,
ruling or injunction has been enacted, entered, promulgated or endorsed by or in
any court or governmental authority of competent jurisdiction or any
self-regulatory organization having authority over the matters contemplated
hereby which prohibits the consummation of any of the transactions contemplated
by this Agreement.
7.5. Such Investor will have received an opinion of the Company's counsel,
dated as of the Closing Date in form reasonably satisfactory to the Investors,
addressing the matters set forth in Exhibit B hereto.
7.6. The Company has delivered evidence reasonably satisfactory to the
Investors of the Shareholder Approval of each proposal other than the proposal
respecting the approval of the issuance of certain options to the Company's
employees.
7.7. The Notes purchased at the first closing contemplated by the Note
Purchase Agreement have been delivered to the Note Investors pursuant to the
Escrow Agreement.
7.8. The irrevocable Transfer Agent Instructions, in substantially the form
attached hereto as Exhibit A will have been delivered to the Company's transfer
agent and acknowledged in writing by such transfer agent.
ARTICLE VIII
DEFINITIONS
8.1. "Agreement" has the meaning set forth in the introduction to this
Agreement.
8.2. "Articles of Incorporation" has the meaning set forth in Section 3.3.
15
8.3. "Bylaws" has the meaning set forth in Section 3.3.
8.4. "Business Day" means any day other than Saturday, Sunday or other day
on which commercial banks in the City of New York are authorized or required by
law to remain closed.
8.5. "CIM" has the meaning set forth in Section 2.4.
8.6. "Claims" or "Claim" has the meaning set forth in Section 9.1.
8.7. "Closing" means the closing of the purchase and sale of the Securities
under this Agreement.
8.8. "Closing Date" has the meaning set forth in Section 1.3.
8.9. "Common Stock" has the meaning set forth in the Recitals.
8.10. "Company" has the meaning set forth in the introduction to this
Agreement.
8.11. "Company Indemnified Person" has the meaning set forth in Section
9.2.
8.12. "Company Permits" has the meaning set forth in Section 3.19.
8.13. "Environmental Laws" has the meaning set forth in Section 3.14.
8.14. "Escrow Agreement" means that certain Escrow Agreement, dated
September 29, 2003, by and among the Company, Midwest Airlines, Inc., a
Wisconsin corporation and wholly-owned subsidiary of the Company, Skyway
Airlines, Inc., a Delaware corporation and wholly-owned subsidiary of Midwest,
YX Properties, LLC, a Nebraska limited liability company and an indirect
subsidiary of the Company, and the Note Investors.
8.15. "Exchange Act" has the meaning set forth in Section 1.4.
8.16. "Fund" has the meaning set forth in Section 10.12.
8.17. "Indemnified Person" has the meaning set forth in Section 9.3.
8.18. "Intellectual Property" has the meaning set forth in Section 3.9.
8.19. "Investor Indemnified Persons" or "Investor Indemnified Person" has
the meaning set forth in Section 9.1.
8.20. "Investors" or "Investor" has the meaning set forth in the
introduction to this Agreement.
8.21. "Knowledge" means the actual knowledge of the executive officers of
the Company, without independent investigation.
8.22. "Material Adverse Effect" means (a) a material adverse effect on the
assets, liabilities, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole or (b) any adverse effect on the ability
of the Company to perform its obligations pursuant to the transactions
contemplated by this Agreement or under the agreements or instruments to be
entered into or filed in connection herewith.
16
8.23. "Midwest" has the meaning set forth in the Recitals.
8.24. "904 Documentation" has the meaning set forth in Section 2.7.
8.25. "Note Investors" has the meaning set forth in the Recitals.
8.26. "Note Purchase Agreement" has the meaning set forth in the Recitals.
8.27. "Notes" has the meaning set forth in the Recitals.
8.28. "NYSE" means the New York Stock Exchange.
8.29. "144 Documentation" has the meaning set forth in Section 2.7.
8.30. "Other Exemption Documentation" has the meaning set forth in Section
2.7.
8.31. "Organizational Documents" means, with respect to a corporation, its
charter as filed with the applicable state regulatory authority, including any
amendment filed with respect thereto through the date hereof, and its by-laws,
as the same may have been amended through the date hereof, and with respect to a
limited liability company, its organizational filing made with the applicable
state regulatory authority, as the same may have been amended through the date
hereof, and its limited liability company agreement, operating agreement or
other similar agreement, as the same may be amended through the date hereof.
8.32. "Person" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
8.33. "Placement Agent" has the meaning set forth in Section 2.12.
8.34. "Plans" has the meaning set forth in Section 3.3.
8.35. "Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Closing Date, by and among the Company and the
Investors, in the form attached hereto as Exhibit C.
8.36. "Regulation D" is defined in the Recitals.
8.37. "Rights" means the Preferred Share Purchase Rights issued pursuant to
the Rights Agreement.
8.38. "Rights Agreement" means the Rights Agreement, dated February 14,
1996, as amended, between the Company and American Stock Transfer & Trust
Company.
8.39. "Rule 144" has the meaning set forth in Section 2.7.
8.40. "Rule 904" has the meaning set forth in Section 2.7.
8.41. "SEC" is defined in the Recitals.
8.42. "SEC Documents" has the meaning set forth in Section 3.6.
8.43. "Securities" means the Common Stock (including the associated Rights)
sold pursuant to this Agreement.
17
8.44. "Securities Act" is defined in the Recitals.
8.45. "Shareholder Approval" has the meaning set forth in Section 4.13.
8.46. "Short Sales" has the meaning set forth in Section 2.14.
8.47. "Transfer Agent Instructions" means the transfer agent instructions
as defined in Exhibit A.
8.48. "Trust" has the meaning set forth in Section 10.12.
ARTICLE IX
INDEMNIFICATION
9.1. Indemnification of the Investors. In consideration of each Investor's
execution and delivery of this Agreement and its acquisition of the Securities
hereunder, the Company will indemnify and hold harmless each Investor, any
directors or officers of such Investor and any person who controls such Investor
within the meaning of the Securities Act or the Exchange Act or acts as such
Investor's investment advisor (each, an "Investor Indemnified Person" and,
collectively, "Investor Indemnified Persons") against any losses, claims,
damages, expenses or liabilities (joint or several) (collectively, and together
with actions, proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened in respect thereof, "Claims" and
each a "Claim") to which any of them become subject insofar as such Claims arise
out of or are based upon (a) any breach of any representation or warranty made
by the Company herein or (b) any breach of any covenant, agreement or obligation
of the Company contained herein. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 9.1
does not apply to amounts paid in settlement of any Claim if such settlement is
made without the prior written consent of the Company, which consent will not be
unreasonably withheld or delayed, and the Company will not be liable under this
Agreement (including this Section 9.1) for any amount with respect to any Claim
after the aggregate amount the Company has paid pursuant to this Section 9.1
with respect to all Claims equals an amount equal to the product of three (3)
multiplied by the original aggregate purchase price of the Securities purchased
on the Closing Date. This indemnity obligation will remain in full force and
effect regardless of any investigation made by or on behalf of the Investor
Indemnified Persons.
9.2. Indemnification of the Company. In consideration of the Company's
execution and delivery of this Agreement and its sale of the Securities
hereunder, each Investor will indemnify and hold harmless, severally and not
jointly, to the same extent and in the same manner set forth in Section 9.1
above, the Company, each of its directors, each of its officers and each person,
if any, who controls the Company within the meaning of the Securities Act or the
Exchange Act (each a "Company Indemnified Person") against any Claim to which
any of them may become subject insofar as such Claim arises out of or is based
upon (a) any breach of any representation or warranty made by such Investor
herein or (b) any breach of any covenant, agreement or obligation of such
Investor contained herein. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 9.2 does not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent will not be
unreasonably withheld, and no Investor will be liable under this Agreement
(including this Section 9.2) for the amount of any Claim that exceeds the net
proceeds actually received by such Investor as a result of the sale of such
Investor's Registrable Securities. This indemnity will remain in full force and
effect regardless of any investigation made by or on behalf of a Company
Indemnified Person.
9.3. Notification and Other Indemnification Procedures. Promptly after
receipt by an Investor Indemnified Person or a Company Indemnified Person, as
the case may be (each an "Indemnified Person") under this Article IX of notice
of the commencement of any action (including any governmental
18
action) by any person other than an Indemnified Person, such Indemnified Person
will, if a Claim in respect thereof is to be made against any indemnifying party
under this Article IX, deliver to the indemnifying party a written notice of the
commencement thereof. The indemnifying party may participate in and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly given notice, assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying parties and the Indemnified Person. In
that case, the indemnifying party will diligently pursue such defense. If, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person and the indemnifying
party would be inappropriate due to actual or potential conflicts of interest
between the Indemnified Person and any other party represented by such counsel
in such proceeding or the actual or potential defendants in, or targets of, any
such action including the Indemnified Person and such Indemnified Person
reasonably determines that there may be legal defenses available to such
Indemnified Person that are different from or in addition to those available to
the indemnifying party, then the Indemnified Person is entitled to assume such
defense and may retain its own counsel, with the reasonable fees and expenses to
be paid by the indemnifying party (subject to the restrictions on settlement
under Section 9.1 or 9.2, as applicable). However, the Company will pay for only
one separate legal counsel for the Investors collectively, and such legal
counsel will be selected in accordance with Section 11.12 of the Registration
Rights Agreement. The failure to deliver written notice to the indemnifying
party within a reasonable time of the commencement of any such action does not
relieve an indemnifying party of any liability to an Indemnified Person under
this Article IX, except to the extent that the indemnifying party is prejudiced
in its ability to defend such action.
ARTICLE X
GOVERNING LAW; MISCELLANEOUS
10.1. Governing Law; Jurisdiction. This Agreement will be governed by and
interpreted in accordance with the laws of the State of Wisconsin without regard
to the principles of conflict of laws.
10.2. Counterparts; Signatures by Facsimile. This Agreement may be executed
in two or more counterparts, all of which are considered one and the same
agreement and will become effective when counterparts have been signed by each
party and delivered to the other parties. This Agreement, once executed by a
party, may be delivered to the other parties hereto by facsimile transmission of
a copy of this Agreement bearing the signature of the party so delivering this
Agreement.
10.3. Headings. The headings of this Agreement are for convenience of
reference only, are not part of this Agreement and do not affect its
interpretation.
10.4. Severability. If any provision of this Agreement is invalid or
unenforceable under any applicable statute or rule of law, then such provision
will be deemed modified to conform with such statute or rule of law. Any
provision hereof that may prove invalid or unenforceable under any law will not
affect the validity or enforceability of any other provision hereof.
10.5. Entire Agreement; Amendments. This Agreement and the Registration
Rights Agreement (including all schedules and exhibits thereto) constitute the
entire agreement among the parties hereto with respect to the subject matter
hereof and thereof. There are no restrictions, promises, representations,
warranties or undertakings, other than those set forth or referred to herein or
therein. This Agreement supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof. No provision of
this Agreement may be waived or amended other than by an instrument in writing
signed by the party to be charged with enforcement.
10.6. Notices. Any notices required or permitted to be given under the
terms of this Agreement must be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
overnight delivery service) or by facsimile and will be effective five days
19
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by facsimile, in each case addressed to a
party. Any notice sent by courier (including a recognized overnight delivery
service) will be deemed received one (1) Business Day after being sent. The
addresses for such communications are:
If to the Company: Midwest Express Holdings, Inc.
0000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
With a copy to:
Xxxxx & Xxxxxxx
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Quick, Esq.
Fax: (000) 000-0000
If to an Investor: To the address set forth immediately below such Investor's
name on the signature pages hereto, with copies to the person(s) designated by
such Investor on the Investor's signature page, if any.
Each party will provide written notice to the other parties of any change in its
address.
10.7. Successors and Assigns. This Agreement is binding upon and inures to
the benefit of the parties and their successors and permitted assigns. The
Company will not assign this Agreement or any rights or obligations hereunder
without the prior written consent of the Investors, and no Investor may assign
this Agreement or any rights or obligations hereunder without the prior written
consent of the Company. Notwithstanding the foregoing, an Investor may assign
all or part of its rights and obligations hereunder to any of its "affiliates,"
as that term is defined under the Securities Act, without the consent of the
Company so long as the affiliate is a "qualified institutional buyer" or an
"institutional accredited investor" as defined in Section 2.2 and agrees in
writing to be bound by this Agreement. This provision does not limit the
Investor's right to transfer the Securities pursuant to the terms of this
Agreement or to assign the Investor's rights hereunder to any such affiliate
transferee pursuant to the terms of this Agreement. Notwithstanding the
foregoing, any transferee who purchases the Securities in a public sale shall
not have any rights under this Agreement.
10.8. Third Party Beneficiaries. This Agreement is intended for the benefit
of the parties hereto and their respective permitted successors and assigns, and
is not for the benefit of, nor may any provision hereof be enforced by, any
other person or entity (except as specifically contemplated in Article IX);
provided, however, that the provisions in Section 2.12 relating to
acknowledgments regarding the Placement Agent are intended for the benefit of
the Placement Agent.
10.9. Survival. The representations and warranties of the Company set forth
herein will survive for two (2) years following the Closing hereunder except
that (a) if the obligation of the Company to maintain the effectiveness of the
registration statement and keep current a prospectus thereunder extends beyond
this two-year period, then such representations and warranties shall survive as
long as such obligation exists and (b) the representations and warranties set
forth in Sections 3.1, 3.2, 3.3, 3.4(a), 3.10, 3.16 and 3.19 shall survive
indefinitely. The Company makes no representations or warranties in any oral or
written information provided to Investors, other than the representations and
warranties included herein.
20
10.10. Further Assurances. Each party will do and perform, or cause to be
done and performed, all such further acts and things, and will execute and
deliver all other agreements, certificates, instruments and documents, as
another party may reasonably request to carry out the intent and accomplish the
purposes of this Agreement and the consummation of the transactions contemplated
hereby.
10.11. No Strict Construction. The language used in this Agreement is
deemed to be the language chosen by the parties to express their mutual intent,
and no rules of strict construction will be applied against any party.
10.12. Mutual Fund. Certain Investors are registered investment companies
entering into this Agreement solely on behalf of one or more of their mutual
fund series (each, a "Fund"). With respect to all obligations of a Fund arising
out of this Agreement, the Company will look for payment or satisfaction of any
claim solely to the assets and property of the applicable Fund.
* * * * *
21
IN WITNESS WHEREOF, the undersigned Investors and the Company have caused
this Agreement to be duly executed as of the date first above written.
COMPANY:
MIDWEST EXPRESS HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Financial Officer
WIRE TRANSFER INSTRUCTIONS:
Bank Name: U.S. Bank, N.A.
ABA Number: 000000000
Account Number: 121727847
Account Name: Midwest Express Airlines, Inc.
[INVESTORS' SIGNATURE PAGES OMITTED]
OMNIBUS SIGNATURE PAGE TO
MIDWEST EXPRESS HOLDINGS, INC.
SECURITIES PURCHASE AGREEMENT
The undersigned hereby executes and delivers the Securities Purchase
Agreement to which this Signature Page is attached, which, together with all
counterparts of the Agreement and Signature Pages of the other Investors and the
Company to said Agreement, shall constitute one and the same document in
accordance with the terms of the Agreement.
[NAME OF INVESTOR]
Sign Name:
-----------------------------------
Print Name:
-----------------------------------
Title:
-----------------------------------
Address:
-----------------------------------
-----------------------------------
Telephone:
-----------------------------------
Facsimile:
-----------------------------------
Number of Shares:
Name in which Shares Are to Be Held
(please print):
--------------------------------------
Aggregate Purchase Price:
SOCIAL SECURITY OR TAX ID NUMBER:
----------------------
EXHIBIT A
TRANSFER AGENT INSTRUCTIONS
MIDWEST EXPRESS HOLDINGS, INC.
_______ ___, 2003
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Re: Private Placement of 1,882,353 Shares of Common Stock
-----------------------------------------------------
Ladies and Gentlemen:
The Board of Directors of Midwest Express Holdings, Inc., a Wisconsin
corporation (the "Company"), has authorized the issuance of 1,882,353 shares of
the Company's common stock, par value $.01 per share (the "Shares"), to the
parties set forth on the attached Exhibit I (the "Investors"), pursuant to that
certain Securities Purchase Agreement, dated as of September 29, 2003 (the
"Securities Purchase Agreement"), by and among the Company and the Investors.
The Company's hereby authorizes and instructs you (provided that you are
the transfer agent of the Company at such time) to issue (from authorized but
unissued shares), countersign and register certificates representing the Shares
in such names and in such share amounts as specified on the attached Exhibit I,
and to cause such certificates to be delivered to the addresses specified on the
attached Exhibit I. The closing of the purchase of the Shares will occur on
_______ ___, 2003, and accordingly, the certificates should be dated as of such
date. The certificates representing the Shares shall bear the legend set forth
below:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS ("BLUE SKY LAWS"). THE
HOLDER OF THIS CERTIFICATE MAY NOT TRANSFER THESE SECURITIES WITHOUT
SUCH REGISTRATION OR AN EXEMPTION FROM SUCH REGISTRATION UNDER THE
SECURITIES ACT AND ANY APPLICABLE BLUE SKY LAWS. NOTWITHSTANDING THE
FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA
FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY
THE SECURITIES."
The Company further instructs you not to acknowledge or record the transfer
of any Shares in the shareholder records of the Company or to issue certificates
representing any Shares to any person or entity other than the transferor
thereof unless the requirements set forth below are satisfied with respect to
such Shares, in which case such Shares are to be transferred free from any
restrictive legend (unless otherwise required by applicable state securities
laws or the laws of any applicable foreign jurisdiction) and registered in such
name and in such denominations as specified by the Investor in question:
You receive written notice from the Company that a registration
statement covering resales of the Shares has been declared effective by the
Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Securities Act"), in the form attached hereto as Exhibit II,
and written confirmation from the Investor in question that the resale of
such Shares was made pursuant to such effective registration statement; or
You receive written notice from the Company, accompanied by an opinion
of counsel, that the sale of such Shares may be effected under Rule 144(k)
of the Securities Act; or
You receive written notice from the Company that the Company has
received the 144 Documentation, the 904 Documentation or the Other
Exemption Documentation (each as defined in the Securities Purchase
Agreement) respecting the sale of such Shares.
You are further instructed to notify the Secretary of the Company in
writing of any request that you receive pertaining to the proposed transfer of
any of the Shares.
These instructions may not be rescinded or revoked other than by means of a
communication signed by the Company and the Investor in whose name the Shares in
question are registered.
Please execute this letter in the space indicated to acknowledge your
agreement to act in accordance with these instructions. Should you have any
questions concerning this matter, please contact me at (000) 000-0000 or Xxxxxxx
Quick of Xxxxx & Xxxxxxx, our outside legal counsel, at (000) 000-0000.
Very truly yours,
MIDWEST EXPRESS HOLDINGS, INC.
By:
----------------------------------------
Xxxxxx X. Xxxxxxx, Senior Vice President
and Chief Financial Officer
THE FOREGOING INSTRUCTIONS ARE
ACKNOWLEDGED AND AGREED TO
this ___ day of _______, 2003
American Stock Transfer & Trust Company
By:_______________________________
Name:__________________________
Title: __________________________
Enclosures
EXHIBIT I
---------
LIST OF INVESTORS AND SHARES TO BE ISSUED
[LIST OF INVESTORS OMITTED]
EXHIBIT II
----------
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
American Stock Transfer & Trust Company
00 Xxxxxx Xxxx
Xxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: _____________________
Re: Midwest Express Holdings, Inc.
Ladies and Gentlemen:
We are counsel to Midwest Express Holdings, Inc., a Wisconsin corporation
(the "Company"), and have represented the Company in connection with the Company
negotiating and executing that certain Securities Purchase Agreement, dated as
of September 29, 2003, by and among the investors named on the signature pages
thereto (the "Investors") and the Company (the "Purchase Agreement"). Upon the
terms and subject to the conditions of the Purchase Agreement, the Company has
agreed to sell to the Investors 1,882,353 shares of the Company's common stock,
par value $.01 per share (and, together with any associated Rights (as defined
in the Purchase Agreement), the "Securities"). Pursuant to the Purchase
Agreement, the Company entered into a Registration Rights Agreement with the
Investors, dated as of September 29, 2003 (the "Registration Rights Agreement"),
pursuant to which the Company agreed, among other things, to register the
Securities under the Securities Act of 1933, as amended (the "Securities Act").
In connection with the Company's obligations under the Registration Rights
Agreement, on _______ ___, 2003, the Company filed the Registration Statement on
Form S-1 (File No. 333-_________) (the "Registration Statement") with the
Securities and Exchange Commission (the "SEC"). The Registration Statement
registers the Securities for resale under the Securities Act and names each of
the Investors as a selling shareholder thereunder.
In connection with the Registration Statement, we advise you that a member
of the SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the Securities Act at
[ENTER TIME OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS], and we have no
knowledge, after telephonic inquiry of a member of the SEC's staff, that any
stop order suspending its effectiveness has been issued or that any proceedings
for that purpose are pending before, or threatened by, the SEC and the
Registrable Securities are available for resale under the Securities Act
pursuant to the Registration Statement.
Very truly yours,
[COMPANY'S COUNSEL]
By:_____________________
CC: [LIST NAMES OF INVESTORS]
6
EXHIBIT B
Matters to be Covered in Opinion of Counsel to the Company
1. Based solely on a certificate of the Wisconsin Department of Financial
Institutions dated _______ ___, 2003, the Company is a corporation validly
existing under the laws of the State of Wisconsin and has filed its most
recent required annual report, and has not filed articles of dissolution
with the Wisconsin Department of Financial Institutions.
2. The Company has all requisite corporate power and authority to execute and
deliver the Transaction Documents and perform its obligations thereunder.
The Transaction Documents have been duly authorized by all necessary
corporate action on the part of the Company and have been duly executed and
delivered by the Company.
3. Each of the Transaction Documents constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with their respective terms subject to applicable bankruptcy, fraudulent
conveyance or transfer, insolvency and similar laws affecting creditors'
rights generally, and subject, as to enforceability, to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), except as enforceability of rights under the Transaction
Documents to indemnity and contribution may be limited by law and except
that we express no opinion as to the enforceability of such rights under
the federal securities laws.
4. The execution and delivery of, and performance by the Company of its
obligations under, the Transaction Documents do not (i) constitute a breach
or violation of the organizational documents of the Company; (ii) to our
knowledge, constitute a default under, or give to others any rights of
termination, amendment, acceleration or cancellation of, any agreement,
indenture or other written instrument of the Company currently in effect
that is attached as an exhibit to the SEC Documents; or (iii) to our
knowledge, result in any violation of any order, judgment, injunction,
decree or other restriction of any court or governmental authority which
order, judgment, injunction, decree or other restriction is specifically
applicable to the Company.
5. The Shares to be issued to the Investors pursuant to the Purchase Agreement
have been duly authorized and, when issued and paid for in accordance with
the terms of the Purchase Agreement, will be validly issued, fully paid and
nonassessable (except as otherwise provided by Section 180.0622(2)(b) of
the Wisconsin Business Corporation Law).
6. The issuance and sale of the Shares under the circumstances contemplated by
the Purchase Agreement is exempt from the registration requirements of the
Securities Act of 1933, as amended, pursuant Section 4(2) of the Securities
Act.
EXHIBIT C
Registration Rights Agreement
See attached Exhibit 4.8 to this Current Report on Form 8-K.
Schedule 3.7
------------
On September 25, 2003, the Milwaukee Journal Sentinel published a news
article, titled "Midwest Airlines won't fly with Eagle: Shared ticket agreement
to lapse," reporting that Midwest's codeshare agreement with American Eagle will
terminate in February 2004. The Company plans to file a press release to
acknowledge that the codeshare agreement with American Eagle will terminate and
indicate that the Company believes this arrangement will generate revenue in
fiscal 2003 that constitutes less than 1/2 of 1% of the Company's consolidated
2002 revenue.
