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EXHIBIT 7.3
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of January 31, 1997, by and among
Western Pacific Airlines, Inc., a Delaware corporation (the "Company"), Xxxx
Petroleum of Texas, Inc., a Delaware corporation ("Xxxx"), and GFI Company, a
Nevada corporation ("GFI").
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1.
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Affiliate" means a Person that, directly or indirectly, through one or
more intermediaries, controls, or is controlled by, or is under common control
with, a specified Person.
"Agreement" means this Stock Purchase Agreement, as it may be amended,
supplemented or modified from time to time in accordance with the terms hereof.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York generally are authorized or required by law or other government
actions to close.
"Bylaws" means the Company's Bylaws, as amended from time to time.
"Certificate of Designation" means the Certificate of Designation
classifying and designating the Series B Preferred Stock of the Company,
substantially in the form of Exhibit A attached hereto.
"Charter" means the Company's Restated Certificate of Incorporation, as
amended from time to time.
"Closing" has the meaning provided therefor in Section 2.1(b) of this
Agreement.
"Closing Date" has the meaning provided therefor in Section 2.1(b) of
this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder as in effect on the date hereof.
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"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's common stock, par value $.001 per
share.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Governmental Entity" means any agency, bureau, commission, court,
department, official, political subdivision, tribunal or other instrumentality
of any government, whether federal, state or local, domestic or foreign.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976.
"Law" means any constitutional provision, statute or other law, rule,
regulation or interpretation of any thereof and any Order of any Governmental
Entity (including environmental laws).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in or on such asset or the
revenues or income thereon or therefrom.
"Material Adverse Effect" has the meaning given it in Section 3.1(a).
"Order" means any decree, injunction, judgment, order, ruling,
assessment or writ.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, limited liability company, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Purchase Documents" means this Agreement, the Warrants and any other
documents executed in connection herewith.
"Purchaser(s)" means Xxxx and GFI.
"Rule 144" means Rule 144 under the Securities Act, and any successor
rule thereto.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Series B Preferred Stock" means the Company's Series B Preferred Stock,
par value $.001 per share.
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"Shares" means the shares of Series B Preferred Stock purchased by the
Purchasers pursuant to this Agreement.
"Subsidiary" means, with respect to any Person, (a) a corporation, a
majority of whose capital stock with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such Person, by a Subsidiary of such Person or by such Person and a
Subsidiary thereof or (b) any other Person (other than a corporation) in which
such Person, a Subsidiary thereof or such Person and a Subsidiary thereof,
directly or indirectly, at the date of determination thereof has at least a
majority ownership interest.
"Underlying Shares" means the shares of Common Stock issuable upon
exercise of the Warrants.
"Warrants" means the non-transferable warrants to purchase shares of
Common Stock to be issued to Xxxx in the form attached hereto as Exhibit B, and
the non-transferable warrants to purchase shares of Common Stock to be issued
to GFI in the form attached hereto as Exhibit C.
ARTICLE 2.
PURCHASE OF PREFERRED STOCK
Section 2.1 Purchase of Shares; Closing.
(a) Subject to the terms and conditions herein set forth, the
Company will sell to each Purchaser, and each Purchaser will purchase from the
Company, one hundred thousand (100,000) shares of Series B Preferred Stock at a
purchase price of $100.00 per Share, payable as set forth in paragraph (c)
below.
(b) The purchase and sale of the Shares to be purchased by the
Purchasers hereunder will take place at a closing (the "Closing") to be held at
the offices of the Company, at 10:00 a.m. local time on such date as all of the
conditions to closing set forth in Article 4 of this Agreement have been
satisfied or waived, or at such other location, date and time as may be
mutually agreed upon by the parties hereto. The date and time at which the
Closing is to be concluded is the "Closing Date."
(c) Immediately upon the satisfaction of all of the conditions
to closing set forth in Article 4 hereof, (a)(i) that certain $10,000,000
Promissory Note dated January 31, 1997 executed by the Company in favor of Xxxx
and (ii) that certain $10,000,000 Promissory Note dated January 31, 1997
executed by the Company in favor of GFI (collectively, the "Notes"), shall be
deemed canceled and of no further force and effect as of such date; and (b) the
Company shall deliver to each of the Purchasers, against cancellation of the
Notes, a share certificate representing the total number of Shares to be
purchased by each such Purchaser hereunder. On the date hereof, the Company
shall
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issue to each of Xxxx and GFI, a check representing accrued and unpaid interest
on each of their respective notes dated as of December 18, 1996 which are being
canceled as of the date hereof.
(d) At the Closing, the Company shall issue and deliver to
Xxxx the Warrants to purchase shares of Common Stock in the form attached
hereto as Exhibit B, and to GFI the Warrants to purchase shares of Common Stock
in the form attached hereto as Exhibit C.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company. The Company
represents and warrants to Purchasers as of the date hereof as follows:
(a) Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. The Company is duly qualified or licensed and
in good standing as a foreign corporation and authorized to do business in each
jurisdiction in which the ownership or leasing of its properties or the
character of its operations makes such qualification necessary, except where
the failure to be so qualified, licensed or authorized, or to be in good
standing, would not, individually or in the aggregate, reasonably be expected
to have a material adverse effect upon the assets, financial condition,
earnings or operations of the Company (a "Material Adverse Effect"). The
Company has all requisite corporate power and authority to own its assets and
to carry on its business as presently conducted, except where a lack of such
corporate power or authority would not reasonably be expected to have a
Material Adverse Effect.
(b) Authorizations. (i) The Company has all requisite
corporate power and authority to execute, deliver and perform its obligations
under the Purchase Documents; (ii) the execution and delivery by the Company of
the Purchase Documents and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized by the Company and all
necessary stockholder action, if any; and (iii) the execution and filing of the
Certificate of Designation have been duly and validly authorized by the
Company.
(c) Capitalization. The total authorized capital stock of the
Company consists of (i) 20,000,000 shares of Common Stock, of which 13,362,068
are issued and outstanding as of January ___, 1997, and (ii) 3,047,000 shares
of preferred stock, par value $0.001 per share, of which no shares are issued
as of the date hereof, and of which 200,000 shares shall be issued and
outstanding upon the consummation of the transaction contemplated by this
Agreement. All of the outstanding shares of stock of the Company are duly and
validly issued, fully paid and non-assessable and not subject to any preemptive
rights of other shareholders. Except for the Warrants and options issued under
the Western Pacific Airlines, Inc. 1994 Stock Option Plan, there are
outstanding no securities or indebtedness convertible into, exchangeable for,
or carrying the right to acquire, Common Stock or other equity securities of
the Company, or subscriptions, warrants,
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options, rights, or other arrangements or commitments obligating the Company to
issue or dispose of any Common Stock or other equity securities or any
ownership therein. All of the Underlying Shares have been duly and validly
authorized and reserved for issuance upon exercise of the Warrants and, when
issued and delivered in accordance with the provisions of the Warrant and the
Charter (assuming issuance and delivery of the Shares pursuant to this
Agreement against payment of the consideration specified therefor), will be
duly and validly issued, fully paid and non-assessable (except for changes
affecting the Common Stock as a class after the Closing Date). Upon filing of
the Certificate of Designation with the Secretary of State of Delaware, the
Shares will conform to the description thereof contained in the Certificate of
Designation. The holders of outstanding stock of the Company are not entitled
to preemptive or other rights afforded by the Company to subscribe for the
Underlying Shares.
(d) Conflicting Agreements and Other Matters. Assuming
compliance with state and federal securities laws and assuming the accuracy of
the representations and warranties of, and the performance of the agreements
of, each of the Purchasers set forth herein, neither the execution and delivery
of the Purchase Documents nor fulfillment of nor compliance with the terms and
provisions thereof, nor the issuance of the Shares, the Warrants or the
Underlying Shares will (i) violate any provision of any Law presently in effect
having applicability to the Company, except such violations as would not have a
Material Adverse Effect, (ii) conflict with or result in a breach of or
constitute a default under the Charter or Bylaws, (iii) require any consent,
approval or notice under, or conflict with or result in a breach of, constitute
a default or accelerate any right under, any note, bond, mortgage, license,
indenture or loan or credit agreement, or any other agreement or instrument, to
which the Company is a party or by which any of its properties is bound, except
such consents, approvals, notices, conflicts, breaches or defaults as would not
have a Material Adverse Effect or (iv) result in, or require the creation or
imposition of, any Lien upon or with respect to any of the properties now owned
or hereafter acquired by the Company.
(e) Due Execution, etc. This Agreement constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights generally and to general principles
of equity.
(f) Litigation, Proceeding, etc. There is no action, suit,
notice of violation, proceeding or investigation pending or, to the best
knowledge of the Company, threatened against or affecting the Company or any of
its properties before or by any Governmental Entity which (i) challenges the
legality, validity or enforceability of any of the Purchase Documents, the
Warrants, the Shares or the Underlying Shares; (ii) would (individually or in
the aggregate) have a Material Adverse Effect; or (iii) would (individually or
in the aggregate) impair the ability of the Company to perform fully on a
timely basis any obligations which it has under any of the Purchase Documents.
(g) No Default or Violation. The Company is not (i) in
default under or in violation of any indenture, loan or credit agreement or any
other agreement or instrument to which
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it is a party or by which it or any of its properties is bound, except for such
defaults or violations as would not have a Material Adverse Effect or as may
otherwise have been disclosed to Purchasers in a separate letter dated January
31, 1997, (ii) in violation of any Order of any Governmental Entity, except for
such violations as would not have a Material Adverse Effect, or (iii) in
violation of any Law which would (A) adversely affect the legality, validity or
enforceability of the Purchase Documents; (B) have a Material Adverse Effect;
or (C) adversely impair the Company's ability or obligation to perform fully on
a timely basis any obligation which it has under the Purchase Documents.
(h) Status of Shares. The issuance and sale of the Shares and
the reservation and issuance of the Underlying Shares have been duly authorized
by all necessary corporate action and stockholder action, if any, on the part
of the Company and such Shares, when delivered to the Purchaser at the Closing
against payment therefor as provided herein, will be validly issued, fully paid
and non-assessable and the issuance and sale of the Shares and the issuance of
the Underlying Shares is not and will not be subject to preemptive rights of
any other shareholder of the Company.
(i) Governmental Consents, etc. Except as may be required by
any state or foreign securities or blue sky laws or the HSR Act, and assuming
the accuracy of the representations and warranties of, and the performance of
the agreements of, the Purchasers set forth herein, no authorization, consent,
approval, waiver, license, qualification or formal exemption from, nor any
filing, declaration, qualification or registration with, any Governmental
Entity, any securities exchange or the Nasdaq Stock Market is required in
connection with the execution, delivery or performance by the Company of this
Agreement, and the issuance, sale or delivery of the Shares or the issuance of
the Underlying Shares except for those that have been or by the Closing shall
be made or received by the Company.
(j) SEC Reports. The Company has delivered or made available
to Purchasers each registration statement, report, proxy statement or
information statement (as defined in Regulation 14C under the Exchange Act)
prepared by it since January 1, 1995, which reports constitute all of the
documents required to be filed by the Company with the SEC since January 1,
1995, each in the form (including exhibits and any amendments thereto) filed
with the SEC (collectively, the "Company Reports"). As of their respective
dates, the Company Reports and any Company Reports filed after the date hereof
and prior to the Closing Date (a) complied as to form in all material respects
with the applicable requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations thereunder; and (b) did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The Company has timely filed with the SEC all reports required to
be filed under Sections 13, 14 and 15(d) of the Exchange Act. Each of the
balance sheets of the Company included in or incorporated by reference into the
Company Reports (including the related notes and schedules) fairly present in
all material respects the consolidated financial position of the Company as of
its date (subject, in the case of unaudited statements, to normal year-end
audit adjustments which would not be material in amount or effect), and each of
the statements of income, retained earnings and cash flows of the Company
included in or incorporated by reference into the Company
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Reports (including any related notes and schedules) fairly present in all
material respects the results of operations, retained earnings or cash flows,
as the case may be, of the Company for the periods set forth therein (subject,
in the case of unaudited statements, to normal year-end audit adjustments which
would not be material in amount or effect). The financial statements of the
Company, including the notes thereto, included in or incorporated by reference
into the Company Reports comply as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, and have been prepared in accordance with
generally accepted accounting principles consistently applied (except as may be
indicated in the notes thereto). Since the date of the first Company Report,
there has been no material change in the Company's accounting methods or
principles except as described in the notes to such Company financial
statements.
(k) No Brokers or Finders. No agent, broker, finder or
investment or commercial banker, or other Person or firm engaged by or acting
on behalf of the Company in connection with the negotiation, execution or
performance of this Agreement is or will be entitled to any brokerage or
finder's or similar fee or other commission as a result of this Agreement other
than any such fees or commissions that have been disclosed to the Purchasers
and as to which the Company shall have full responsibility.
Section 3.2 Representations, Warranties and Covenants of the Purchasers.
(a) Investment Intent. Each Purchaser represents and warrants
to the Company that the Shares to be acquired by it hereunder and any
Underlying Shares to be acquired upon exercise of the Warrants are being
acquired for its own account for investment and with no intention of
distributing or reselling such Shares or Underlying Shares or any part thereof
or interest therein in any transaction which would be in violation of the
securities laws of the United States of America or any State or any foreign
country or jurisdiction.
(b) Transfer Restrictions. If any Purchaser should decide to
dispose of any of the Shares to be purchased by it or any Underlying Shares to
be issued to it upon the exercise of the Warrants, such Purchaser understands
and agrees that it may do so only pursuant to an effective registration
statement under the Securities Act or pursuant to an exemption from
registration under the Securities Act. Purchasers understand that the Company
intends to file a registration statement with the SEC to register the
Underlying Shares in accordance with Section 5.4 hereof. In connection with
any offer, resale, pledge or other transfer (individually and collectively, a
"Transfer") of any Shares or Underlying Shares other than pursuant to an
effective registration statement, the Company may require that the transferor
of such Shares or Underlying Shares provide to the Company an opinion of
counsel which opinion shall be reasonably satisfactory in form and substance to
the Company and its counsel, to the effect that such Transfer is being made
pursuant to an exemption from, or in a transaction not subject to, the
registration requirements of the Securities Act and any State or foreign
securities laws. Each Purchaser agrees to the imprinting, so long as
appropriate, of substantially the following legend on certificates representing
the Shares and any Underlying Shares:
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THE SHARES OF [SERIES B PREFERRED STOCK] OR [COMMON STOCK] (THE
"SHARES") EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY
NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE.
BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT IT WILL NOT OFFER,
RESELL, PLEDGE OR OTHERWISE TRANSFER (INDIVIDUALLY AND COLLECTIVELY, A
"TRANSFER") THE SHARES EVIDENCED HEREBY, EXCEPT (A) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (B)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT SUCH
AS THE EXEMPTION SET FORTH IN RULE 144 UNDER THE SECURITIES ACT (IF
AVAILABLE). IF THE PROPOSED TRANSFER IS TO BE MADE OTHER THAN PURSUANT
TO CLAUSE (A) ABOVE, THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO
THE COMPANY AND THE TRANSFER AGENT SUCH CERTIFICATIONS, LEGAL OPINIONS
OR OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT SUCH
TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OR ANY STATE OR FOREIGN SECURITIES LAW.
The legend set forth above may be removed if and when the Shares or
Underlying Shares, as the case may be, represented by such certificate are
disposed of pursuant to an effective registration statement under the
Securities Act or the opinion of counsel referred to above has been provided to
the Company. The share certificates shall also bear any additional legends
required by applicable federal, state or foreign securities Laws or necessary
under other applicable Laws, which legends may be removed when, in the opinion
of counsel to the Company, the same are no longer required under the Charter or
the applicable requirements of such securities or other applicable Laws. Each
Purchaser agrees that, in connection with any Transfer of Shares by it pursuant
to an effective registration statement under the Securities Act, such Purchaser
will comply with all prospectus delivery requirements of the Securities Act.
The Company makes no representation, warranty or agreement as to the
availability of any exemption from registration under the Securities Act with
respect to any resale of Shares or Underlying Shares.
(c) Stop Transfer Instruction. Each Purchaser agrees that the
Company shall be entitled to make a notation on its records and give
instructions to any transfer agent for the Shares or the Underlying Shares in
order to implement the restrictions on transfer set forth in this Agreement.
(d) Purchaser Status. Each Purchaser represents and warrants
to, and covenants and agrees with the Company that (i) at the time it was
offered the Shares, it had, (ii) at the date hereof, it has, (iii) at the
Closing Date, it will have such knowledge, sophistication and experience in
business and financial matters so as to be capable of evaluating the Company
and an investment in the Shares, and is able to bear the economic risk of such
investment, and (iv) it is an "accredited investor" as defined in Rule 501(a)
of Regulation D under the Securities Act.
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(e) Authority. Each Purchaser represents and warrants to the
Company that, assuming the accuracy of the representation of the Company in
Section 3.1(a) hereof, (i) the purchase of the Shares to be purchased by it has
been duly and properly authorized and this Agreement has been duly executed and
delivered by it or on its behalf and constitutes the valid and legally binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights generally and to general principles of equity; (ii) the
purchase of the Shares to be purchased by it does not conflict with or violate
(A) its organizational documents, charter or by-laws or (B) any Law applicable
to it in a manner that could materially hinder or impair the completion of the
transactions contemplated hereby; and (iii) the purchase of Shares to be
purchased by it does not impose any penalty or other onerous condition on such
Purchaser that could materially hinder or impact the completion of the
transactions contemplated hereby.
(f) Access to Information. Each Purchaser acknowledges that
it has been afforded (i) the opportunity to ask such questions as it has deemed
necessary of, and to receive answers from, representatives of the Company
concerning the terms and conditions of the offering of the Shares and the
merits and risks of investing in the Shares; (ii) access to information about
the Company, the Company's financial condition, pro forma results of
operations, business, properties, management and prospects sufficient to enable
it to evaluate its investment in the Shares, including, without limitation, all
information available to the directors of the Company; and (iii) the
opportunity to obtain such additional information which the Company possesses
or can acquire without unreasonable effort or expense.
(g) Reliance. Each Purchaser also understands and
acknowledges that (i) the Shares are being offered and sold without
registration under the Securities Act in a transaction that is exempt from the
registration provisions of the Securities Act and (ii) the availability of such
exemption depends in part on, and that the Company will rely upon, the accuracy
and truthfulness of the foregoing representations and each Purchaser hereby
consents to such reliance.
(h) No Brokers or Finders. No agent, broker, finder or
investment or commercial banker, or other Person or firm engaged by or acting
on behalf of any Purchaser in connection with the negotiation, execution or
performance of this Agreement is or will be entitled to any brokerage or
finder's or similar fee or other commission as a result of this Agreement other
than any such fees or commission that have been disclosed to the Company and as
to which the Purchasers shall have full responsibility.
SECTION 3.3 NO OTHER REPRESENTATIONS OR WARRANTIES. THE COMPANY MAKES NO
OTHER REPRESENTATIONS OR WARRANTIES OF ANY KIND OR NATURE WHATSOEVER TO
PURCHASERS, OTHER THAN THOSE SET FORTH IN SECTION 3.1.
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ARTICLE 4.
CONDITION PRECEDENT TO CLOSING
Section 4.1 Conditions Precedent to Obligations of the Purchasers. The
obligations of each Purchaser to purchase the Shares to be purchased hereunder
are subject, at the Closing Date, to the prior or simultaneous satisfaction or
waiver by it of the following conditions:
(a) If either Purchaser elects to make a filing under the HSR
Act within twenty (20) days after the date hereof to obtain clearance of the
exercise of the Warrants, the waiting period applicable to such filing under
the HSR Act shall have expired or been terminated.
(b) At the Closing Date, the Purchasers shall have received
certificates representing the Shares.
(c) At the Closing Date, the Company shall have executed and
delivered to Xxxx the Warrants in the form attached hereto as Exhibit B, and to
GFI the Warrants in the form attached hereto as Exhibit C.
(d) The representations and warranties made by the Company
herein shall be true and correct in all material respects on the date hereof
and on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date and
the Company shall have complied in all material respects with all agreements
required to be performed by it hereunder at or prior to the Closing Date.
(e) At the Closing Date, the Purchasers shall have received a
certificate, dated the Closing Date, signed by the Chief Executive Officer of
the Company in such capacity and not individually stating that the conditions
specified in this Section 4.1 have been satisfied at the Closing Date.
(f) At the Closing Date, the Purchasers shall have received a
certificate, dated the Closing Date, signed by the Secretary or an Assistant
Secretary of the Company in such capacity and not individually and certifying
(i) that attached thereto is a true, correct and complete copy of (A) the
Charter, (B) the Certificate of Designation, (C) Bylaws and (D) resolutions
duly adopted by the Board of Directors of the Company authorizing the execution
and delivery of the Purchase Documents, the issuance of the Warrants and all
other documents to be executed in connection therewith, the issuance and sale
of the Shares and the Underlying Shares, and the adoption, execution and filing
of the Certificate of Designation, (ii) the incumbency of officers executing
this Agreement, and (iii) that attached thereto is a specimen of the share
certificate for the Series B Preferred Stock.
(g) No Law or Order shall have been enacted, entered, issued,
promulgated or enforced by any Governmental Entity which prohibits or restricts
the transactions contemplated by
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this Agreement. No Governmental Entity shall have notified any party to this
Agreement that consummation of the transactions contemplated by this Agreement
would constitute a violation of any Law of any jurisdiction or that it intends
to commence proceedings to restrain or prohibit such transactions or force
divestiture or rescission, unless such Governmental Entity shall have withdrawn
such notice and abandoned any such proceedings prior to the time which
otherwise would have been the Closing Date.
(h) The Certificate of Designation shall have been duly
authorized and adopted by the Board of Directors of the Company and filed with
the Secretary of State of Delaware.
Section 4.2 Conditions, Precedent to Obligations of the Company. The
obligation of the Company to issue and sell the Shares hereunder is subject, at
the Closing Date, to the prior or simultaneous satisfaction or waiver by it of
the following conditions:
(a) If either Purchaser elects to make a filing under the HSR
Act within twenty (20) days after the date hereof to obtain clearance of the
exercise of the Warrants and the Company reasonably determines that it is
unable to consummate the sale of the Shares and the Warrants as contemplated
hereby until the waiting period under the HSR Act has expired or been
terminated, the waiting period applicable to such filing under the HSR Act
shall have expired or been terminated.
(b) On the Closing Date, the Company shall have received from
Purchasers payment of the Purchase Price by cancellation and delivery of the
Notes.
(c) The representations and warranties made by the Purchasers
herein shall be true and correct in all material respects on the date hereof
and on and as of the Closing Date with the same effect as though such
representations and warranties had been made on and as of the Closing Date and
each of the Purchasers shall have complied in all material respects with all
agreements required to be performed by it hereunder at or prior to the Closing
Date.
(d) No Law or Order shall have been enacted, entered, issued,
promulgated or enforced by any Governmental Entity which prohibits or restricts
the transactions contemplated by this Agreement. No Governmental Entity shall
have notified any party to this Agreement that consummation of the transactions
contemplated by this Agreement would constitute a violation of any Law of any
jurisdiction or that it intends to commence proceedings to restrain or prohibit
such transactions or force divestiture or rescission, unless such Governmental
Entity shall have withdrawn such notice and abandoned any such proceedings
prior to the time which otherwise would have been the Closing Date.
(e) At the Closing Date, the Company shall have received from
each Purchaser a certificate, dated the Closing Date, signed by its respective
Chief Executive Officer or such other duly authorized senior officer, in such
capacity and not individually, stating that the conditions specified in this
Section 4.1 have been satisfied at the Closing Date.
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ARTICLE 5.
COVENANTS
Section 5.1 Approvals. The Company and the Purchasers each agree to cooperate
and use their reasonable best efforts to obtain (and will immediately prepare
all registrations, filings and applications, requests and notices preliminary
to) all approvals that may be necessary or which may be reasonably requested by
the Company or the Purchasers to consummate the transactions contemplated by
this Agreement. The Company agrees that upon the request of either Purchaser,
which request may only be made one time by each Purchaser, the Company shall
pay on behalf of such requesting Purchaser the filing fee required under the
HSR Act. The Company also agrees that upon the request of either Purchaser, it
shall make any reasonably required filing under the HSR Act.
Section 5.2 Notification of Certain Matters. The Company shall give prompt
notice to each of the Purchasers, and each Purchaser shall give prompt notice
to the Company, of (a) the occurrence, or failure to occur, of any event that
causes any representation or warranty contained in any Purchase Documents to be
untrue or inaccurate at any time from the date of this Agreement to the Closing
Date and (b) any failure of the Company, on the one hand, or any Purchaser, on
the other hand, to comply with or satisfy, in any material respect, any
covenant, condition or agreement to be complied with or satisfied by it under
any Purchase Documents.
Section 5.3 Registration of Underlying Shares.
(a) The Company covenants that it will, at its sole expense,
(i) within 120 days following the issuance of the Preferred Stock, file a
registration statement (the "Registration Statement") with the SEC to register
under the Securities Act the Purchasers' resales of the Underlying Shares, (ii)
use its reasonable best efforts to cause such Registration Statement to become
effective within 180 days after the issuance of the Preferred Stock; and (iii)
maintain the effectiveness of such Registration Statement until April 30, 2001.
(b) Each of the Purchasers shall cooperate with the Company in
connection with a registration of the Underlying Shares and shall furnish (i)
such information as may be reasonably required by the Company or by the
Commission in connection therewith and (ii) such representations, undertakings
and agreements as may be reasonably required by the Commission in connection
therewith.
(c) In addition to the Registration Statement provided for in
paragraph (a) above, the Company agrees, if requested (the "Demand") by the
holders of 50% or more of the Registrable Securities (as defined below), to
file with the Commission, at the Company's sole expense (other than with
respect to underwriting discounts and commissions and fees and expenses of
legal counsel for selling holders, which expenses shall be paid by the holders
of Registrable Securities pro rata to the extent that such holders elect to
participate in the Demand), one registration statement under the Securities Act
(the "Demand Registration Statement") for an underwritten public offering of
Underlying Shares by any holder of Registrable Securities seeking to sell all
or a portion of its
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Underlying Shares in such offering. If any holder or any group of holders of
Registerable Securities makes a Demand, the Company shall deliver written
notice to each other holder of Registerable Securities of the Demand and, for a
period of ten (10) days after receipt of such notice, such holders may elect to
sell all or any portion of their Registerable Securities in such Demand
Registration Statement by delivering written notice of such desire to the
Company within such ten (10) day period. Such Demand shall be subject to
customary underwriting cutbacks (but in the event holders of Registerable
Securities are cutback, no securities other than Registerable Securities shall
be included in the Demand Registration Statement) and, upon the exercise of
such cutback, all holders of Registerable Securities who elected to participate
in the Demand shall be entitled to sell a pro rata portion of their
Registerable Securities that they elected to sell in such Demand. Selection of
the managing underwriters for such an underwritten public offering shall be
subject to the approval of the Company, which approval shall not be
unreasonably withheld. "Registrable Securities" shall mean all Underlying
Shares that, at the date of determination, have been issued upon exercise of
Warrants and all Underlying Shares for which Warrants are exercisable as of
such date. In connection with such underwriting, the Company agrees to execute
an Underwriting Agreement containing such representations, warranties and
covenants (including indemnities) as are customarily given by issuers in
similar underwritten offerings and to use its best efforts to cause its
independent auditors and counsel to deliver such comfort letters and opinions
as are customarily given in similar offerings. Notwithstanding the foregoing,
the Company shall not be required to file the Demand Registration Statement on
or before October 31, 1998. In addition, the Company will be permitted to
defer the filing of the Demand Registration Statement for up to 180 days (by
written notice to the selling holders delivered promptly after the Company's
receipt of the Demand) if the filing of such registration statement would, in
the good faith judgment of the Company's Board of Directors, substantially
interfere with a key Company initiative, such as a pending acquisition or
financing. A registration statement filed under this paragraph (c) shall be
the Demand Registration Statement if the Company shall have filed such
registration statement within a reasonable period following the Company's
receipt of the Demand and, in a diligent manner, satisfactorily resolved all
comments of the Commission staff with respect thereto to the point that the
staff is prepared (if requested) to accelerate the effectiveness of such
registration statement. If such registration statement is thereafter withdrawn
by the Company at the request of the selling holders or if such holders do not
request the Company to seek acceleration of the effectiveness of the such
registration statement within 60 days following the Commission's readiness to
accelerate the effectiveness thereof, such registration statement will
nonetheless be the one Demand Registration Statement required to be filed by
the Company hereunder.
(d) In the event of any registration of the Underlying Shares
under the Securities Act, the Company will indemnify and hold harmless each
Purchaser and each Affiliate of each Purchaser within the meaning of the
Securities Act (collectively, the "Indemnified Persons"), against any losses,
claims, damages or liabilities, joint or several, to which any Indemnified
Person may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in or incorporated by reference into such
Registration Statement or preliminary prospectus (if used prior to the
effective date of such Registration Statement) or final or summary prospectus
contained therein (if used during the period
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the Company is required to keep the Registration Statement effective), or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the Statements made therein not misleading, and
will promptly reimburse each Indemnified Person for any legal or any other
expenses reasonably incurred by it (from time to time as such expenses are
incurred) in connection with investigating or defending any such action or
claim (excluding any amounts paid in settlement of any litigation, commenced or
threatened, if such settlement is effected without the prior written consent of
the Company, which shall not be unreasonably withheld); provided, however, that
the Company will not be liable to a particular Indemnified Person in any such
case to the extent that any such loss, claim, damage, liability or expense
arises out of or is based upon (i) an untrue statement or omission or alleged
omission made in said Registration Statement, said preliminary prospectus or
said final or summary prospectus or any amendment or supplement thereto, in
reliance upon and in conformity with written information furnished to the
Company by that Indemnified Person or by Purchasers or an Affiliate of
Purchasers specifically for use in the preparation thereof; or (ii) any act or
action of the Indemnified Person other than as a selling shareholder under the
Registration Statement.
(e) In the event of any registration of the Underlying Shares
under the Securities Act pursuant to this Section, each Purchaser shall
indemnify and hold harmless the Company, each of the Company's directors and
officers, any underwriter and each other person, if any, who controls the
Company or any underwriter within the meaning of the Securities Act, against
any losses, claims, damages or liabilities, joint or several, to which the
Company or any such director, officer, underwriter or controlling person may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of, or
are based upon, any untrue statement or alleged untrue statement of any
material fact contained in such Registration Statement or preliminary
prospectus or final or summary prospectus contained therein, or any amendment
or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements made therein not misleading, and will
promptly reimburse the Company, each such director, officer, underwriter and
controlling person for any legal or other expenses reasonably incurred (from
time to time as such expenses are incurred) by them in connection with
investigating or defending any such action or claim (excluding any amounts paid
in settlement of any litigation, commenced or threatened, if such settlement is
effected without the prior written consent of Purchasers, which shall not be
unreasonably withheld); but in all such cases only if, and to the extent that,
any such loss, claim, damage, liability or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission therein made in reliance upon and in conformity with written
information furnished to the Company by such Purchaser or such Purchaser's
Affiliates specifically for use in the preparation thereof.
(f) Promptly after receipt by a party entitled to
indemnification hereunder of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing of the
commencement thereof. In case any such action is brought against the
indemnified party and it shall so notify the indemnifying party of the
commencement thereof, the indemnifying party shall
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be entitled to participate in and, to the extent that it so chooses, to assume
the defense thereof with counsel reasonably satisfactory to such indemnified
party, and, after notice from the indemnifying party that it so chooses, such
indemnifying party shall not be liable for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof; provided, however, that if the indemnifying party fails to take
reasonable steps necessary to diligently defend such claim within twenty (20)
days after receiving notice from the indemnified party that the indemnified
party believes the indemnifying party has failed to take such steps, the
indemnified party may assume its own defense and the indemnifying party shall
be liable for any expenses therefor. The indemnity agreements in this Section
shall be in addition to any liabilities which the indemnifying parties may have
pursuant to law or contract.
(g) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section is for
any reason held to be unenforceable although applicable in accordance with its
terms, the Company and the holders of the Underlying Shares being registered
shall contribute to the losses, claims, damages, liabilities and expenses for
which such indemnification or reimbursement is held unavailable in such
proportion as is appropriate to reflect the relative benefits to, and relative
faults of, the Company, on the one hand, and the Purchasers, on the other hand,
in connection with the transactions to which such indemnification or
reimbursement relates. As among themselves, the holders of the Underlying
Shares in such offering shall contribute to amounts payable by other selling
holders, if any, in such manner as shall give effect, to the extent permitted
by law, to the provisions of this Section. No Person guilty of "fraudulent
misrepresentation" (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
Section 5.4 Filings under the Securities Exchange Act of 1934. The Company
covenants and agrees to make all required filings, in a timely manner, under
the Securities Exchange Act of 1934, as amended, as may be necessary to remain
current with its reporting obligations.
ARTICLE 6.
MISCELLANEOUS
Section 6.1 Survival of Provisions. The representations, warranties and
covenants of the Company and the Purchasers made herein shall remain operative
and in full force and effect pursuant to their terms regardless of (a) any
investigation made by or on behalf of the Purchasers or the Company, as the
case may be, or (b) acceptance of any of the Shares and payment by the
Purchasers therefor.
Section 6.2 Termination. This Agreement and the transactions contemplated by
this Agreement may be terminated at any time prior to the Closing Date as
follows and in no other manner:
(a) By either the Company or a Purchaser if the Closing has
not occurred on or prior to April 30, 1997; provided, however, that the right
to terminate this Agreement under this
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Section 6.2(a) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the transactions contemplated hereby to occur on or before such
date;
(b) By mutual consent of the Purchasers and the Company; or
(c) By either a Purchaser, on the one hand, or the Company, on
the other hand, with written notice to the other parties if there has been a
material misrepresentation or breach on the part of the Company or a Purchaser,
respectively, in their respective representations, warranties and covenants set
forth herein, which breach shall not have been cured within thirty (30) days
after receipt of notice thereof from the non-breaching party.
In the event that this Agreement should be terminated pursuant to
Section 6.2, all further obligations of the parties under this Agreement shall
terminate, provided, however, that a termination under Section 6.2(c) shall not
relieve any party of any liability for a breach of, or any misrepresentation
under, this Agreement or be deemed to constitute a waiver of any available
remedy for any such breach or misrepresentation.
Section 6.3 Waiver, Modification in Writing. No failure or delay on the part
of the Company or a Purchaser in exercising any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies provided for herein are cumulative and are not exclusive of any
remedies that may be available to the Company or the Purchasers at law or in
equity. The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given without the written
consent of the Company, on the one hand, and, on the other hand, each of the
Purchasers (in connection with any such pre-closing actions) or a majority in
interest of the Series B Preferred Shares then outstanding (in connection with
any such post-closing action). Any amendment, supplement or modification of or
to any provision of this Agreement, or any waiver of any provision of this
Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on any party hereto in any
case shall entitle the other party to any other or further notice or demand in
similar or other circumstances.
Section 6.4 Communications. All notices and demands provided for hereunder
shall be in writing, and shall be given by registered or certified mail, return
receipt requested, telex, telegram, telecopy, courier service of personal
delivery, and addressed to the relevant party or parties at the following
address:
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(i) if to the Company:
Western Pacific Airlines, Inc.
0000 Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
X'Xxxxxx & Xxxxxx
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx, Esq.
(ii) if to Xxxx:
Xxxx Petroleum of Texas, Inc.
c/x Xxxx Petroleum Corporation
0000 Xxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xx. Xxxx Xxxxx, Xx., Vice Chairman
17
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with a copy to:
Xxxxxx & Xxxxxx
3700 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx XxXxxxx, Esq.
(ii) if to GFI:
GFI Company
Xxxxxx Center
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xx. Xxxxx X. Story
with a copy to:
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx Xxx, Esq.
or to such other address as a Purchaser or the Company, as the case may be, may
designate in writing to the other parties hereto, which notice shall be deemed
given when received.
Section 6.5 Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute one and the same agreement.
Section 6.6 Binding Effect; Assignment. The rights and obligations of the
parties under this Agreement may not be assigned to any other Person; provided,
however, that after the Closing the Company may assign its rights hereunder to
any successor entity to the Company, whether pursuant
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to a sale of substantially all of the Company's assets, or the merger or
consolidation of the Company, that agrees to be bound by the terms and
conditions hereof and the provisions of the Certificate of Designation or is so
bound by operation by law. Except as expressly provided in this Agreement,
this Agreement shall not be construed so as to confer any right or benefit upon
any Person other than the parties to this Agreement, and their respective
successors and permitted assigns. This Agreement shall be binding upon the
Company and the Purchasers, and their respective successors and permitted
assigns.
Section 6.7 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF DELAWARE, AND FOR ALL PURPOSES SHALL BE
CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS.
Section 6.8 Expenses. Each of the parties hereto shall pay its own respective
costs and expenses incurred in connection with the negotiation, execution and
performance of this Agreement.
Section 6.9 Severability of Provisions. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Section 6.10 Headings. The Article and Section headings used or contained in
this Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.
Section 6.11 Integration. This Agreement (including the exhibits hereto)
constitutes the entire agreement among the parties with respect to the purchase
and sale of the Shares and there are no promises or undertakings with respect
thereto relative to the subject matter hereof not expressly set forth or
referred to herein.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized officer as of the date first written
above.
WESTERN PACIFIC AIRLINES, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------------
Title: President
------------------------------
XXXX PETROLEUM OF TEXAS, INC.
By: /s/ Xxxx Xxxxx Xx.
---------------------------------
Name: Xxxx Xxxxx Xx.
-------------------------------
Title: Vice President
------------------------------
GFI COMPANY
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
-------------------------------
Title: President
------------------------------
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EXHIBIT A
CERTIFICATE OF DESIGNATION, PREFERENCES AND RIGHTS
OF
SERIES B PREFERRED STOCK
OF
WESTERN PACIFIC AIRLINES, INC.
------------------------
WESTERN PACIFIC AIRLINES, INC., a corporation organized and existing
under the laws of the State of Delaware (the "Corporation"), in accordance with
Section 151(g) of the Delaware General Corporation Law, DOES HEREBY CERTIFY:
1. The Restated Certificate of Incorporation of the Corporation (the
"Certificate of Incorporation") fixes the total number of shares of all classes
of capital stock which the Corporation shall have the authority to issue at
Twenty Three Million Forty Seven Thousand (23,047,000) shares, of which Three
Million Forty Seven Thousand (3,047,000) shares shall be shares of Preferred
Stock, $0.001 par value per share (herein referred to as "Preferred Stock"),
and Twenty Million (20,000,000) shares of which shall be shares of Common
Stock, $0.001 par value per share (herein referred to as "Common Stock").
2. The Certificate of Incorporation expressly grants to the Board of
Directors of the Corporation (the "Board of Directors") authority to provide
for the issuance of said Preferred Stock in one or more series, with such
voting powers, and with such designations, preferences and relative,
participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, as shall be stated and expressed in the
resolution or resolutions providing for the issue thereof adopted by the Board
of Directors and as are not stated and expressed in the Certificate of
Incorporation.
3. Pursuant to authority conferred upon the Board of Directors by
the Certificate of Incorporation, the Board of Directors, on January 31, 1997,
authorized and adopted the following resolutions providing for an issue of a
series of its Preferred Stock to be designated Series B Preferred Stock:
"RESOLVED, that the Board of Directors hereby establishes a
series of preferred stock to be designated Series B Preferred
Stock having the terms attached hereto as Exhibit A and the
officers of the Corporation are hereby authorized and directed to
file the Certificate of Designation, Preferences and Rights of
Series B Preferred Stock in the form attached hereto as Exhibit A
with the Secretary of State of Delaware and to issue on behalf of
the Corporation, 200,000 shares
22
of Preferred Stock having the terms and conditions set forth in
the Certificate of Designation."
A copy of said Exhibit is attached hereto and incorporated herein.
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by Xxxxxx X. Xxxxxx, its President, and acknowledged by
_________________ ________________________________, its secretary, this
___________ day of _____, 1997.
WESTERN PACIFIC AIRLINES, INC.
By:
------------------------------------
Xxxxxx X. Xxxxxx, President
23
ACKNOWLEDGMENT
STATE OF )
---------------)
) ss.
COUNTY OF )
---------------
I, __________________, hereby certify that I am the duly elected and
qualified Secretary of Western Pacific Airlines, Inc. (the "Corporation"), that
the foregoing instrument is the act and deed of the Corporation and that the
facts stated therein are true.
------------------------------------
Secretary
Subscribed and sworn to before the undersigned, a Notary Public in and
for said county and state.
------------------------------------
Notary Public
Dated: , 1997.
----------------------------
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EXHIBIT A
TERMS OF SERIES B PREFERRED STOCK
1. Definitions. For purposes of this Certificate of Designation,
the following terms shall have the meanings indicated:
"Affiliate" shall mean an affiliate of any person within the meaning of
Rule 144 of the rules and regulations promulgated under the Securities Act.
"Board of Directors" shall mean the Board of Directors of the
Corporation or committee authorized by such Board of Directors to perform any
of its responsibilities with respect to the Series B Preferred Shares.
"Business Day" shall mean any day other than a Saturday, Sunday or a day
on which state or federally chartered banking institutions in New York City,
New York are not required to be opened.
"Call Date" shall mean the date of the notice to holders required under
subsection 5(c).
"Change of Control" shall mean (i) any merger or consolidation of, or
any sale, transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of, the Corporation, in one transaction or a
series of related transactions, if, immediately after giving effect to such
transaction, any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), whether or not applicable), other than the Initial
Investors or any of their Affiliates, is or becomes the "beneficial owner,"
directly or indirectly, of more than 50% of the aggregate voting power normally
entitled to vote in the election of directors of the transferee; (ii) the time
that any "person" or "group" (as such terms are used for purposes of Sections
13(d) and 14(d) of the Exchange Act, whether or not applicable), other than the
Initial Investors or any of their Affiliates, is or becomes the "beneficial
owner," directly or indirectly, of more than 50% of the aggregate voting power
of all classes of capital stock then outstanding of the Corporation normally
entitled to vote in elections of directors; or (iii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of
any such 12-month period constituted the Board of Directors of the Corporation
(together with any new directors whose election by such Board or whose
nomination for election by the shareholders of the Corporation was approved by
a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved), cease for any reason to constitute a
majority of the Board of Directors of the Corporation then in office, excluding
the directors, if any, appointed by the holders of Series B Preferred Shares
pursuant to the provisions herein; provided, however, that a Change of Control
shall not be deemed to have occurred if the Board of Directors of the
Corporation authorizes the issuance of additional capital stock of the
Corporation to any "person" or "group" (as such terms are used for purposes of
Sections 13(d) and 14(d) of the Exchange Act, whether or not applicable).
25
"Common Stock" shall mean the Common Stock of the Corporation, par value
$0.001 per share.
"Dividend Payment Date" shall mean a date fixed by the Board of
Directors which date shall not be more than 15 days following the end of the
applicable Dividend Period; provided, however, that if any Dividend Payment
Date falls on any day other than a Business Day, the dividend payment due on
such Dividend Payment Date shall be paid on the Business Day immediately
following such Dividend Payment Date.
"Dividend Periods" shall mean quarterly dividend periods commencing on
January 1, April 1, July 1 and October 1 of each year and ending on and
including March 31, June 30, September 30 and December 31 of such year,
respectively (other than the initial Dividend Period, which shall commence on
the Issue Date and end on and include March 31, 1997).
"Exchange Right" shall have the meaning set forth in subsection 4(a).
"Exchange Notes" shall mean a promissory note issued by the Corporation
in favor of a holder of Series B Preferred Shares in the form attached hereto
as Exhibit A, which note shall (a) be an unsecured obligation of the
Corporation; (b) bear interest, payable quarterly, at a rate equal to ten
percent (10%) per annum; and (c) be due and payable three (3) years after the
issue date of such Exchange Note.
"Follow on Preferred Shares" shall mean any Parity Shares or Junior
Shares issued in a Permitted Private Placement.
"Fully Junior Shares" shall mean the Common Stock and any other class or
series of stock of the Corporation now or hereafter issued and outstanding over
which the Series B Preferred Shares have preference or priority in both (a) the
payment of dividends and (b) the distribution of assets on any liquidation,
dissolution or winding up of the Corporation.
"Initial Investors" shall mean Xxxx Petroleum of Texas, Inc. and GFI
Company.
"Issue Date" shall mean the first date on which the Series B Preferred
Shares are issued and sold.
"Issue Price" shall mean One Hundred Dollars ($100) per Series B
Preferred Share.
"Junior Shares" shall mean the Common Stock, the Fully Junior Shares and
any other class or series of stock of the Corporation now or hereafter issued
and outstanding over which the Series B Preferred Shares have preference or
priority in the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.
"Liquidation Preference" shall have the meaning set forth in subsection
3(a).
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"Parity Shares" shall have the meaning set forth in subsection 8(b).
"Permitted Private Placements" shall mean one or more private placements
of one or more series of preferred stock of the Corporation ranking pari passu
or junior to the Series B Preferred Shares in respect of the payment of
dividends or the distribution of assets on any liquidation, dissolution or
winding up of the Corporation in an amount not to exceed $50,000,000 in the
aggregate.
"Person" shall mean any individual, firm, partnership, corporation or
other entity, and shall include any successor (by merger or otherwise) of such
entity.
"Redemption Notice" shall have the meaning set forth in subsection 6(b).
"Redemption Period" shall have the meaning set forth in subsection 6(a).
"Redemption Price" shall have the meaning set forth in subsection 5(a).
"Redemption Right" shall have the meaning set forth in subsection 6(a).
"Registration Default" shall mean the failure by the Corporation to (a)
file a Registration Statement with the Securities and Exchange Commission under
the Securities Act within 120 days after the Issue Date to register the resale
of Common Stock issuable upon the exercise of the Warrant; (b) to have such
Registration Statement declared effective by the Securities and Exchange
Commission within 180 days after the Issue Date; or (c) maintain the
effectiveness of such Registration Statement until April 30, 2001.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Series B Preferred Shares" shall mean shares of Series B Preferred
Stock of the Corporation, $0.001 par value per share.
"Set apart for payment" shall be deemed to include, without any action
by the Corporation other than the following, the recording by the Corporation
in its accounting ledgers of any accounting or bookkeeping entry which
indicates, pursuant to an authorization of dividends or other distribution by
the Board of Directors, the allocation of funds to be so paid on any series or
class of stock of the Corporation; provided, however, that if any funds for any
class or series of Junior Shares or any class or series of stock ranking on a
parity with the Series B Preferred Shares as to the payment of dividends are
placed in a separate account of the Corporation or delivered to a disbursing,
paying or other similar agent, then "set apart for payment" with respect to the
Series B Preferred Shares shall mean placing such funds in a separate account
or delivering such funds to a disbursing, paying or other similar agent.
"Stock Purchase Agreement" shall mean that certain Stock Purchase
Agreement dated as of January 31, 1997 among the Corporation and each of the
Initial Investors.
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"Subsidiary" shall mean (i) a corporation, a majority of whose stock
with voting power, under ordinary circumstances, to elect directors is at the
time, directly or indirectly, owned by the Corporation, by a Subsidiary of the
Corporation or by the Corporation and another Subsidiary or (ii) any other
Person (other than a corporation) in which the Corporation, a Subsidiary or the
Corporation and a Subsidiary, directly or indirectly, at the date of
determination thereof has at least a majority ownership interest.
"Transfer Agent" means Continental Stock Transfer & Trust Company, New
York, New York, or such other agent or agents of the Corporation as may be
designated by the Board of Directors or their designee as the transfer agent
for the Series B Preferred Shares.
"Warrant" shall mean the Warrants to be issued by the Corporation in
favor of the Initial Investors pursuant to the terms of the Stock Purchase
Agreement.
2. Dividends.
a. The holders of Series B Preferred Shares shall be entitled to
receive, when, as and if authorized by the Board of Directors out of funds
legally available for that purpose, quarterly cash dividends in an amount per
share equal to $2.50 per full Dividend Period; provided, however, that during
the period of any Registration Default, per share quarterly cash dividends
shall be increased to $2.5625 per full Dividend Period. The calculation of any
such quarterly dividend shall be made to the nearest cent (with $.005 being
rounded upward). Such dividends shall begin to accumulate and shall be fully
cumulative from the Issue Date, whether or not authorized by the Board of
Directors and whether or not in any Dividend Period or Periods there shall be
funds of the Corporation legally available for the payment of such dividends,
and shall be payable quarterly in immediately available funds, when, as and if
authorized by the Board of Directors, in arrears on Dividend Payment Dates or
such other dates as provided herein, commencing on the first Dividend Payment
Date after the Issue Date. Each such dividend shall be payable in arrears to
the holders of record of Series B Preferred Shares, as they appear on the stock
records of the Corporation at the close of business on the last day of such
Dividend Period. Accumulated and unpaid dividends for any past Dividend
Periods may be authorized and paid at any time and for such interim periods,
without reference to any regular Dividend Payment Date, to holders of record on
such date, not more than 15 days preceding the payment date thereof, as may be
fixed by the Board of Directors. The Company shall give each holder of Series
B Preferred Shares at least ten (10) days prior written notice of any record
date for the payment of any accumulated and unpaid dividends for any past
Dividend Periods.
b. The amount of dividends payable for the initial Dividend Period,
or any other period shorter or longer than a full Dividend Period, on the
Series B Preferred Shares shall be computed on the basis of twelve 30-day
months and a 360-day year. Holders of Series B Preferred Shares shall not be
entitled to any dividends, whether payable in cash, property or stock, in
excess of cumulative dividends, as herein provided, on the Series B Preferred
Shares. No interest, or sum of money in lieu of interest, shall be payable in
respect of any dividend payment or payments on the Series B Preferred Shares
that may be in arrears.
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c. So long as any Series B Preferred Shares are outstanding, no
dividends shall be authorized or paid or set apart for payment on any class or
series of Parity Shares for any period unless a sum sufficient for the payment
of dividends covering an equal number of Dividend Periods on the Series B
Preferred Shares is paid or set apart for payment.
d. So long as any Series B Preferred Shares are outstanding, no
dividends (other than dividends or distributions paid solely in shares of, or
options, warrants or rights to subscribe for or purchase shares of, Fully
Junior Shares) shall be authorized or paid or set apart for payment or other
distribution authorized or made upon Junior Shares, nor shall any Junior Shares
be redeemed, purchased or otherwise acquired (other than a redemption, purchase
or other acquisition of Common Stock made for purposes of an employee incentive
or benefit plan of the Corporation or any Subsidiary) for any consideration (or
any moneys be paid to or made available for a sinking fund for the redemption
of any shares of any such stock) by the Corporation, directly or indirectly
(except by conversion into or exchange for Fully Junior Shares), unless (i) the
full cumulative dividends on all outstanding Series B Preferred Shares and any
other Parity Shares shall have been paid or authorized and set apart for
payment for all past Dividend Periods with respect to the Series B Preferred
Shares and all past dividend periods with respect to such Parity Shares and
(ii) sufficient funds shall have been paid or authorized and set apart for the
payment of the dividend for the current Dividend Period with respect to the
Series B Preferred Shares and the current dividend period with respect to such
Parity Shares.
3. Liquidation Preference.
a. In the event of any liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, before any payment or
distribution of the assets of the Corporation shall be made to or set apart for
the holders of shares ranking junior to the Series B Preferred Shares with
respect to payment upon liquidation, dissolution or winding up, the holders of
the Series B Preferred Shares shall be entitled to receive in immediately
available funds an amount equal to the Issue Price per Series B Preferred
Share, plus all dividends (whether or not authorized) accumulated and unpaid
thereon to the date of final distribution (including any partial Dividend
Period) to such holders (the "Liquidation Preference"); but such holders shall
not be entitled to any further payment. If, upon any liquidation, dissolution
or winding up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable among the holders of the Series B Preferred Shares shall
be insufficient to pay in full the Liquidation Preference and liquidating
payments on any other shares of any class or series of stock ranking on parity
with the Series B Preferred Shares upon liquidation, dissolution and winding
up, then such assets, or the proceeds thereof, shall be distributed among the
holders of Series B Preferred Shares and any such other shares ratably in
accordance with the respective amounts that would be payable on such Series B
Preferred Shares and any such other shares if all amounts payable thereon were
paid in full. For the purposes of this Section 3, (i) a consolidation or
merger of the Corporation with one or more entities, (ii) a sale or transfer of
all or substantially all of the Corporation's assets, or (iii) a statutory
share exchange shall not be deemed to be a liquidation, dissolution or winding
up, voluntary or involuntary, of the Corporation.
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b. Subject to the rights of the holders of shares of any series or
class or classes of stock ranking on parity with or prior to the Series B
Preferred Shares, upon liquidation, dissolution or winding up of the
Corporation, after payment shall have been made in full to the holders of the
Series B Preferred Shares, as provided in this Section 3, any other series or
class or classes of Fully Junior Shares and Junior Shares (if such shares rank
junior to the Series B Preferred Shares as to payments upon liquidation,
dissolution and winding up) shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed, and the holders of the Series B Preferred
Shares shall not be entitled to share therein.
4. Exchange. Series B Preferred Shares shall be subject to exchange
into Exchange Notes as follows:
a. Subject to and upon compliance with the provisions of this
Section 4, at any time after the three (3) year anniversary of the Issue Date,
a holder of Series B Preferred Shares shall have the right (the "Exchange
Right"), at his or her option, to convert all or any portion of such Series B
Preferred Shares into an Exchange Note in the principal amount equal to, for
each Series B Preferred Share so converted, the Issue Price plus an amount
representing a ten percent (10%) per annum return (compounded annually) on the
Issue Price from the Issue Date (treating any dividends paid on the Series B
Preferred Shares pursuant to Section 2 hereof as a reduction in the Issue Price
effected on the date such dividend was paid). The principal amount of the
Exchange Notes shall be calculated to the nearest whole cent (with $0.005 being
rounded upward).
b. In order to exercise the Exchange Right, the holder of each
Series B Preferred Share to be exchanged shall surrender the certificate
representing such share, duly endorsed or assigned to the Corporation or in
blank, at the office of the Transfer Agent, accompanied by written notice to
the Corporation that the holder thereof elects to exchange such Series B
Preferred Shares into Exchange Notes. Unless the Exchange Note issuable upon
exercise of a holder's Exchange Right is to be issued in the same name as the
name in which such Series B Preferred Share is registered, the shares
surrendered for exchange shall be accompanied by instruments of transfer, in
form satisfactory to the Corporation, duly executed by the holder or such
holder's duly authorized attorney together with an amount sufficient to pay any
transfer or similar tax (or evidence reasonably satisfactory to the Corporation
demonstrating that such taxes have been paid).
c. Upon the exercise of the Exchange Right, a holder of Series B
Preferred Shares shall forfeit his or her right to receive all cumulated and
unpaid dividends on Series B Preferred Shares surrendered for exchange pursuant
to the provisions of this Section 4; provided, that such cumulated and unpaid
dividends shall not be factored into the calculation of the principal amount of
the Exchange Notes so issued upon exchange.
d. As promptly as practicable after the surrender of certificates
for Series B Preferred Shares as aforesaid, the Corporation shall issue and
deliver at the office of the holder, or on his or her written order, such other
location, the Exchange Note, all in accordance with the provisions of this
Section 4. Each exchange shall be deemed to have been effected immediately
prior to the close
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of business on the date on which the certificates for Series B Preferred Shares
shall have been surrendered and such notice has been received by the
Corporation as aforesaid.
e. Upon the Corporation's receipt of a notice from a holder of
Series B Preferred Shares electing to exercise his or her Exchange Right,
dividends with respect to such shares shall cease to accumulate, such shares
shall no longer be deemed outstanding, the holders thereof shall cease to be
stockholders of the Corporation, and all rights whatsoever with respect to the
shares elected to be exchanged (except the right of the holders to receive the
Exchange Notes upon surrender of their certificates therefor) shall terminate.
f. If less than all the Series B Preferred Shares represented by any
such surrendered certificate are exchanged, a new certificate shall be issued
representing the unexchanged shares.
5. Redemption at the Option of the Corporation.
a. At any time after the Issue Date, the Series B Preferred Shares
may be redeemed by the Corporation, at its option on any date set by the Board
of Directors, in whole or in part at any time (provided that no such partial
redemption shall be in an amount less than $1 million), subject to the
limitations, if any, imposed by the Delaware General Corporation Law, for an
amount payable in immediately available funds equal to the Liquidation
Preference on the date fixed for redemption (the "Redemption Price").
b. In case of the redemption of less than all of the then
outstanding Series B Preferred Shares, the Corporation shall effect such
redemption pro rata.
c. Not more than 60 nor less than 20 days prior to the date fixed
for redemption by the Board of Directors, notice thereof by first class mail,
postage prepaid, shall be given to the holders of record of the Series B
Preferred Shares to be redeemed, addressed to such holders at their last
address as shown upon the stock transfer books of the Corporation. The date of
such notice is referred to herein as the "Call Date." Each such notice of
redemption shall specify the date fixed for redemption, the Redemption Price,
the place or places that payment will be made upon presentation and surrender
of certificates representing the Series B Preferred Shares and that after the
date fixed for redemption dividends will cease to accumulate on such shares.
d. Any notice that is mailed as herein provided shall be
conclusively presumed to have been duly given, whether or not the holder of
Series B Preferred Shares receives such notice; and failure to give such notice
by mail, or any defect in such notice, to the holders of any shares designated
for redemption shall not affect the validity of the proceedings for the
redemption of any other Series B Preferred Shares. On or after the date fixed
for redemption as stated in such notice, each holder of the shares called for
redemption shall surrender the certificate representing such shares to the
Corporation at the place designated in such notice and shall thereupon be
entitled to receive payment of the Redemption Price. If less than all the
shares represented by any such surrendered certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares.
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e. No fractional Series B Preferred Shares shall be issued upon
redemption of less than all Series B Preferred Shares. If more than one
certificate representing Series B Preferred Shares shall be held at one time by
the same holder, the number of full shares issuable upon redemption of less
that all of such Series B Preferred Shares shall be computed on the basis of
the aggregate number of Series B Preferred Shares so held. Instead of any
fractional share of Series B Preferred Shares that would otherwise be issuable
to a holder upon redemption of less than all Series B Preferred Shares, the
Corporation shall pay a cash adjustment in respect of such fractional share in
an amount equal to such fractional share multiplied by the Redemption Price.
f. Notice having been given as aforesaid, if, on the date fixed for
redemption, funds necessary for the redemption shall be available therefor and
shall have been deposited with a bank or trust company with irrevocable
instructions and authority to pay the Redemption Price to the holders of the
Series B Preferred Shares, then, notwithstanding that the certificates
representing any shares so called for redemption shall not have been
surrendered, dividends with respect to the shares so called shall cease to
accumulate after the date fixed for redemption, such shares shall no longer be
deemed outstanding, the holders thereof shall cease to be stockholders of the
Corporation, and all rights whatsoever with respect to the shares so called for
redemption (except the right of the holders to receive the Redemption Price
without interest upon surrender of their certificates therefor) shall
terminate. If funds legally available for such purpose are not sufficient for
redemption of the Series B Preferred Shares which were to be redeemed, then
Section 10 shall apply and the certificates representing shares not redeemed
which certificates shall be deemed not to be surrendered, such shares shall
remain outstanding, the right of the holder to receive payment of the
Redemption Price for such shares shall terminate, and the rights of holders of
Series B Preferred Shares thereafter shall continue to be only those of a
holder of shares of the Series B Preferred Shares.
g. The Series B Preferred Shares shall not be subject to the
operation of any mandatory purchase, retirement or sinking fund.
6. Redemption at the Option of the Holder.
a. Subject to and upon compliance with the provisions of this
Section 6, (i) for a period of thirty (30) days following a holder of Series B
Preferred Shares' receipt of written notice from the Corporation of a Change of
Control; or (ii) at any time after the three (3) year anniversary of the Issue
Date (the "Redemption Period"), such holder of Series B Preferred Shares shall
have the right (the "Redemption Right"), at his or her option, to cause the
Corporation to redeem all or any part (provided that no such partial redemption
shall be in an amount less than $1 million) of such Series B Preferred Shares,
subject to the limitations, if any, imposed by the Delaware General Corporation
Law, for an amount per share payable in immediately available funds equal to
the Redemption Price.
b. In order to exercise the Redemption Right, at any time during the
Redemption Period, the holder of each Series B Preferred Share to be redeemed
shall surrender the certificate representing such share, duly endorsed or
assigned to the Corporation or in blank, at the office of the Transfer Agent,
accompanied by written notice to the Corporation that the holder thereof elects
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to exercise his or her Redemption Right (the "Redemption Notice"). Unless cash
payable to such holder upon his or her election of the Redemption Right is to
be paid to the same person as the person in which such Series B Preferred Share
is registered, each share surrendered for redemption shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the holder or such holders duly authorized attorney, together with an amount
sufficient to pay any transfer or similar tax (or evidence reasonably
satisfactory to the Corporation demonstrating that such taxes have been paid).
c. In case of the redemption of less than all of the then Series B
Preferred Shares represented by a certificate surrendered for redemption, the
Corporation shall issue a new certificate to such holder for the number of
Series B Preferred Shares represented by the certificate surrendered not so
redeemed.
d. Not more than five (5) days after the occurrence of a Change of
Control, the Corporation shall deliver written notice of such Change of Control
to all holders of record of Series B Preferred Shares by first class mail,
postage prepaid, addressed to such holders at their last address as shown upon
the stock transfer books of the Corporation.
e. No notice shall be deemed to have been given by a holder of
Series B Preferred Shares to the Corporation pursuant to this Section 6 unless
the Corporation shall have actually received such notice. Any notice that is
mailed as herein provided to the holders of Series B Preferred Shares shall be
conclusively presumed to have been duly given, whether or not the holder of
Series B Preferred Shares receives such notice.
f. Upon the payment of the Redemption Price by the Corporation to a
holder of Series B Preferred Shares which are to be redeemed, dividends with
respect to such shares shall cease to accumulate after the redemption date,
such shares shall no longer be deemed outstanding, the holders thereof shall
cease to be stockholders of the Corporation, and all rights whatsoever with
respect to the shares so called for redemption (except the right of the holders
to receive the Redemption Price without interest upon surrender of their
certificates therefor) shall terminate. If funds legally available for such
purpose are not sufficient for redemption of the Series B Preferred Shares
which were to be redeemed, then all shares tendered for redemption during the
Redemption Period shall be redeemed pro rata to the extent the Corporation has
funds legally available to redeem any such shares and the certificates
representing shares not redeemed shall be deemed not to be surrendered, such
shares shall remain outstanding, the right of the holder to receive payment of
the Redemption Price for such shares shall terminate, the right of holders of
Series B Preferred Shares thereafter shall continue to be only those of a
holder of Series B Preferred Shares, and the Redemption Period upon a Change of
Control shall be extended until thirty (30) days after the holder of such
shares receives written notice from the Corporation stating that the
Corporation currently has sufficient funds available to redeem such holder's
shares.
7. Shares to Be Retired. All Series B Preferred Shares which shall
have been issued and reacquired in any manner by the Corporation shall be
restored to the status of authorized but unissued shares of Preferred Stock of
the Corporation, without designation as to class or series.
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8. Ranking. Any class or series of stock of the Corporation shall
be deemed to rank:
a. prior to the Series B Preferred Shares, as to the payment of
dividends or as to distribution of assets upon liquidation, dissolution or
winding up, if the holders of such class or series shall be entitled to the
receipt of dividends or of amounts distributable upon liquidation, dissolution
or winding up, as the case may be, in preference or priority to the holders of
Series B Preferred Shares;
b. on a parity with the Series B Preferred Shares, as to the payment
of dividends and as to distribution of assets upon liquidation, dissolution or
winding up, whether or not the dividend rates, dividend payment dates or
redemption or liquidation prices per share thereof be different from those of
the Series B Preferred Shares, if the holders of such class of stock or series
and the Series B Preferred Shares shall be entitled to the receipt of dividends
and of amounts distributable upon liquidation, dissolution or winding up in
proportion to their respective amounts of accumulated and unpaid dividends per
share or Liquidation Preferences, without preference or priority one over the
other ("Parity Shares");
c. junior to the Series B Preferred Shares, as to the payment of
dividends or as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Junior Shares; and
d. junior to the Series B Preferred Shares, as to the payment of
dividends and as to the distribution of assets upon liquidation, dissolution or
winding up, if such stock or series shall be Fully Junior Shares.
9. Voting.
a. Except as otherwise provided in this Section 9 or pursuant to
applicable law, Series B Preferred Shares shall have no voting rights.
b. For so long as at least twenty-five percent (25%) of the
originally issued Series B Preferred Shares remain outstanding, if and whenever
four quarterly dividends (whether or not consecutive) payable on the Series B
Preferred Shares shall be in arrears (which shall, with respect to any such
quarterly dividend, mean that any such dividend has not been paid in full),
whether or not authorized, the number of directors then constituting the Board
of Directors shall be increased by two and the holders of a majority of Series
B Preferred Shares, voting as a single class, shall be entitled to elect the
additional two (2) directors to serve on the Board of Directors at any annual
meeting of stockholders or special meeting held in place thereof, or at a
special meeting of the holders of the Series B Preferred Shares called as
hereinafter provided. Whenever all arrearages in dividends on the Series B
Preferred Shares then outstanding shall have been paid, then the right of the
holders of the Series B Preferred Shares to elect such additional directors
shall cease (but subject always to the same provision for the vesting of such
voting rights in the case of any similar future arrearages in four quarterly
dividends), and the terms of office of all persons elected as directors by
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the holders of the Series B Preferred Shares shall forthwith terminate and the
number of the Board of Directors shall be reduced accordingly.
c. A majority of the holders of the Series B Preferred Shares shall
be entitled to remove any director appointed by such class then in office for
any reason whatsoever at any time. If a vacancy shall occur with respect to
any directorship appointed by the holders of the Series B Preferred Shares, a
successor designated by the holders of a majority of the then outstanding
Series B Preferred Shares voting as a single class shall be elected to the
Board of Directors. If, at any time (i) a vacancy occurs with respect to a
directorship appointed by the holders of the Series B Preferred Shares, and
(ii) the holders of the Series B Preferred Shares shall fail to designate a
successor within 90 days after receipt of written notice of such vacancy from
the Corporation, (x) the rights granted under this subsection 9(b) with respect
to the designation, appointment and election of such undesignated director by
the holders of the Series B Preferred Shares shall terminate; and (y) the size
of the Board of Directors shall be appropriately reduced.
d. At any time the power to elect one or more directors as
representatives of the holders of the Series B Preferred Shares shall have been
vested in the holders of Series B Preferred Shares as provided in subsection
9(b), the Secretary of the Corporation may, and upon the written request of a
holder or holders of Series B Preferred Shares representing at least 10% of the
then outstanding Series B Preferred Shares (addressed to the Secretary at the
principal office of the Corporation) shall, call a special meeting of the
holders of the Series B Preferred Shares for the election of the director or
directors to be elected by them as herein provided, such call to be made by
notice similar to that provided in the Bylaws of the Corporation for a special
meeting of the stockholders or as required by law. If any such special meeting
required to be called as above provided shall not be called by the Secretary
within 10 days after receipt of any such request, then any holder of Series B
Preferred Shares may call such meeting, upon the notice above provided, and for
that purpose shall have access to the stock records of the Corporation.
e. At any time the power to elect one or more directors as
representatives of the holders of the Series B Preferred Shares shall have been
vested in the holders of Series B Preferred Shares as provided in subsection
9(b), to the extent permissible under applicable law and the rules of any
securities exchange or the Nasdaq Stock Market, if applicable, upon which any
securities issued by the Corporation are listed, the election of such directors
may be accomplished without a special meeting if a consent in writing
designating the individual(s) to serve on the board of directors shall be
signed by the holders of a majority of the Series B Preferred Shares and
delivered to the Secretary of the Corporation. The directors elected at any
such special meeting or by written consent shall hold office for the remaining
term of the class of directors to which such director has been elected unless
(i) such director is removed prior to the expiration of such term pursuant to
the terms hereof or the terms of the Corporation's Certificate of Incorporation
or by-laws; or (ii) such office shall not have previously terminated as above
provided.
f. If at any time while the Series B Preferred Shares remain
outstanding the number of directors then constituting the Board of Directors
shall be increased to more than seven (7) directors, except if such increase is
made pursuant to Section 9(b) hereof, the holders of a majority of the
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Series B Preferred Shares, voting together as a single class, shall be entitled
to elect one-half (1/2) of the number of additional directors to serve on the
Board of Directors. In addition to the foregoing rights, if the number of
additional directors is increased by an odd number, the holders of the Series B
Preferred Shares shall also be entitled to elect the odd numbered director. The
holders of a majority of Series B Preferred Shares may waive the foregoing
rights.
g. So long as the Series B Preferred Shares remain outstanding, in
addition to any other vote or consent of stockholders required by law or by the
Charter, the affirmative vote of at least 50% of the votes entitled to be cast
by the holders of the Series B Preferred Shares, at the time outstanding, given
in person or by proxy, either in writing without a meeting or by vote at any
meeting called for the purpose, shall be necessary for effecting or validating:
i. Any amendment, alteration or repeal of any of the
provisions of this Certificate of Designation that adversely affects the voting
powers, rights or preferences of the holders of the Series B Preferred Shares;
or
ii. Any consolidation with or merger of the Corporation into
another entity, or a consolidation with or merger of another entity into the
Corporation or a direct or indirect subsidiary of the Corporation, any sale of
all or substantially all of the assets of the Corporation, or any liquidation
or dissolution of the Corporation, unless pursuant to the express terms of such
transaction, the holders of the Series B Preferred Shares outstanding
immediately prior thereto shall receive upon consummation thereof, in exchange
for each Series B Preferred Share, an amount in cash equal to at least the full
Liquidation Preference on each Series B Preferred Share; or
iii. The authorization or creation of, or the increase in the
authorized amount of, (A) any shares of any class or any security convertible
into shares of any class ranking prior to the Series B Preferred Shares in the
distribution of assets on any liquidation, dissolution or winding up of the
Corporation or in the payment of dividends, (B) any class of Parity Shares or
(C) any class of Junior Shares, other than any class or series of Follow on
Preferred Shares to be issued in a Permitted Private Placement and other than
Fully Junior Shares;
provided, however, that no such vote of the holders of Series B Preferred
Shares shall be required if, at or prior to the time when such amendment,
alteration or repeal is to take effect, or when the issuance of any such shares
or convertible security is to be made, as the case may be, provision is made
for the redemption of all Series B Preferred Shares at the time outstanding in
accordance with the terms hereof.
h. Except as otherwise required by applicable law or as set forth
herein, the consent of the holders of the Series B Preferred Shares shall not
be required for the taking of any corporate action.
10. Partial Payments. Upon an optional redemption by the
Corporation, if at any time the Corporation does not pay amounts sufficient to
redeem all Series B Preferred Shares, then such funds which are paid shall be
applied to redeem such Series B Preferred Shares pro rata.
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11. Record Holders. The Corporation and the Transfer Agent may deem
and treat the record holder of any Series B Preferred Shares as the true and
lawful owner thereof for all purposes, and neither the Corporation nor the
Transfer Agent shall be affected by any notice to the contrary.
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EXHIBIT B
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE MAY NOT BE SOLD, ASSIGNED
OR TRANSFERRED. AT THE TIME OF ISSUANCE OF THIS WARRANT CERTIFICATE, NEITHER
THE RIGHTS REPRESENTED BY THIS WARRANT CERTIFICATE NOR THE SHARES ISSUABLE UPON
THE EXERCISE HEREOF HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THE ISSUER OF THIS WARRANT CERTIFICATE INTENDS TO
REGISTER THE SHARES ISSUABLE UPON THE EXERCISE HEREOF WITH THE SECURITIES AND
EXCHANGE COMMISSION. UPON THE EFFECTIVENESS OF SUCH REGISTRATION, THE ISSUER
SHALL ISSUE TO THE HOLDER NAMED BELOW A REPLACEMENT WARRANT CERTIFICATE FREE OF
THIS LEGEND WITH RESPECT TO THE SHARES ISSUABLE UPON THE EXERCISE HEREOF.
UNTIL SUCH REGISTRATION STATEMENT HAS BEEN DECLARED EFFECTIVE, SUCH SHARES MAY
NOT BE SOLD OR OFFERED FOR SALE IN WHOLE OR IN PART EXCEPT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933, AS AMENDED.
WESTERN PACIFIC AIRLINES, INC.
Warrant to Purchase Common Stock
This Warrant Certificate certifies that Xxxx Petroleum of Texas, Inc., a
Delaware corporation ("Xxxx") is the registered holder of 1,325,000 warrants
(the "Warrants") to purchase shares of Common Stock, $0.001 par value per share
(the "Shares"), of WESTERN PACIFIC AIRLINES, INC., a Delaware corporation (the
"Company"), on the terms and subject to the conditions set forth below. Upon
the vesting of such Warrant pursuant to the terms hereof, and subject to
adjustment as provided herein, each Warrant entitles Xxxx, upon exercise, to
receive from the Company one share (the "Conversion Ratio") of fully paid,
nonassessable Common Stock of the Company for $0.01 per share (the "Warrant
Exercise Price"). The Warrants represented by this Warrant Certificate are
issued to Xxxx pursuant to that certain Stock Purchase Agreement (the
"Agreement") dated as of January 31, 1997 among the Company, Xxxx and GFI
Company, a Nevada corporation, providing for the purchase by Xxxx of shares of
the Company's Series B Preferred Stock, par value $0.001 per share (the
"Preferred Stock").
DEFINITIONS
SECTION 1. Definitions. The following words and terms as used in
this Warrant Certificate shall have the following meanings:
"Affiliate" means, with respect to a Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such first Person.
"Board" means the Board of Directors of the Company.
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"Business Day" means a day other than a Saturday, a Sunday or a day on
which banking institutions in the City of New York are authorized or obligated
by law or required by executive order to be closed.
"Common Stock", when used with reference to stock of the Company, means
all shares now or hereafter authorized of any class of the common stock of the
Company.
"Convertible Securities" shall mean any securities issued by the Company
after the date hereof which are convertible into, or exchangeable for, directly
or indirectly, shares of Common Stock.
"Person" means a domestic or foreign individual or corporation,
partnership, limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"Registration Statement" means a registration statement filed or to be
filed by the Company under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as the same may be
amended from time to time, and the regulations thereunder.
"Trading Day" shall mean any day on which NASDAQ is open for trading on
a regular basis.
"Year One Warrants" shall have the meaning set forth in Section 2(a)
hereof.
"Year Two Warrants" shall have the meaning set forth in Section 2(b)
hereof.
"Year Three Warrants" shall have the meaning set forth in Section 3(b)
hereof.
SECTION 2. Vesting of Warrants.
a. Year One Warrants. 272,239 of the Warrants (the "Year One
Warrants") shall vest and become exercisable as follows: (i) fifty percent
(50%) of the Year One Warrants shall vest and be exercisable immediately on the
date hereof; and (ii) if any of the shares of Preferred Stock originally
purchased by Xxxx remain outstanding on December 1, 1997, the following
percentage of the Year One Warrants shall vest and become exercisable: fifty
percent (50%) of the Year One Warrants multiplied by a fraction, the numerator
of which is equal to the number of shares of Preferred Stock originally
purchased by Xxxx pursuant to the terms of the Agreement which continue to be
outstanding on December 1, 1997, and the denominator of which is equal to
100,000. Any Year One Warrants which do not vest as of December 1, 1997
pursuant to the foregoing formula shall be forfeited and be of no further force
and effect.
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39
b. Year Two Warrants. Each day during the period from May 1,
1998 through April 30, 1999, the following amount of 453,757 of the Warrants
(the "Year Two Warrants") shall vest and become exercisable: (x) 453,757,
multiplied by (y) a fraction, the numerator of which is equal to the number of
shares of Preferred Stock originally purchased by Xxxx pursuant to the terms of
the Agreement which continue to be outstanding on such day, and the denominator
of which is equal to 100,000, divided by (z) 365. Any Year Two Warrants which
do not vest as of April 30, 1999 pursuant to the foregoing formula shall be
forfeited and be of no further force and effect.
c. Year Three Warrants. Each day during the period from May
1, 1999 though April 30, 2000, the following amount of 599,004 of the Warrants
(the "Year Three Warrants") shall vest and become exercisable: (x) 599,004,
multiplied by (x) a fraction, the numerator of which is equal to the number of
shares of Preferred Stock originally purchased by Xxxx pursuant to the terms of
the Agreement which continue to be outstanding on such day, and the denominator
of which is equal to 100,000, divided by (iii) 365. Any Year Three Warrants
which do not vest as of April 30, 2000 pursuant to the foregoing formula shall
be forfeited and be of no further force and effect.
SECTION 3. Termination of Warrant. Except as otherwise provided
herein, (a) any portion of the Warrants which fails to vest and become
exercisable pursuant to Section 2 hereof shall terminate as of the date of such
failure; and (b) any portion of the Warrants which vests and becomes
exercisable shall terminate if such portion of the Warrants has not been
exercised by Xxxx prior to April 30, 2003.
SECTION 4. Exercise of Warrant. Subject to the terms and conditions
hereof, including, without limitation, the vesting terms set forth above, any
vested portion of the Warrants may be exercised in whole or in part at any time
during the Company's normal business hours; provided, however, that if the
Company reasonably believes that a filing under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976 is required prior to the exercise of such Warrants,
the Company shall not be required to honor any exercise of the Warrants until
such filing has been made and the waiting period thereunder has expired or been
terminated. Subject to the terms and conditions hereof, the vested portion of
the Warrants may be exercised by Xxxx by (i) delivery of a written notice, in
the form of the Subscription Notice attached as Exhibit A hereto, (ii) payment
by Xxxx to the Company of an amount equal to the Warrant Exercise Price times
the number of Warrants so exercised (plus any applicable issue or transfer
taxes) in cash or by certified or official bank check in immediately available
funds, provided however, that Xxxx may not exercise any portion of the vested
Warrants more than once in any calendar month without the prior written consent
of the Chief Executive Officer of the Company, (iii) the surrender of this
Warrant Certificate, properly endorsed, at the principal office of the Company
(or at such other agency or office of the Company as the Company may designate
by notice to Xxxx) and (iv) delivery to the Company by Xxxx of a letter in the
form of Exhibit B hereto. If, at the time of exercise, Xxxx has not elected to
exercise all Warrants that have vested or that could vest in the future
pursuant to the terms of this Warrant Certificate, upon the Company's receipt
of each of the documents referred to in this Section 4, in addition to the
issuance of a stock certificate representing the Shares issuable upon exercise
of the Warrants, the Company shall issue a new Warrant Certificate to Xxxx, on
the same terms as set forth herein, representing the remaining number of
Warrants which have vested
3
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and not expired pursuant to the terms of this Warrant Certificate or may vest
in the future pursuant to terms of this Warrant Certificate, together with a
schedule setting forth the number of such remaining Warrants. Fractional
shares of Common Stock shall not be issued upon the exercise of the Warrants.
In lieu thereof, the Company shall pay Xxxx cash in an amount equal to such
fractional share interest multiplied by the closing price of a share of Common
Stock as of the date of exercise.
SECTION 5. Covenants as to Common Stock. The Company covenants and
agrees that all Shares which may be issued upon the exercise of the vested
portion of the rights represented by this Warrant Certificate will, upon
issuance and payment of the Warrant Exercise Price applicable to such Shares,
be validly issued, fully paid and nonassessable. The Company further covenants
and agrees that during the period within which the vested portion of this
Warrant Certificate may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to
provide for the exercise of the vested portion of this Warrant Certificate and
that the par value of said shares will at all times be less than or equal to
the applicable Warrant Exercise Price.
SECTION 6. Reorganization, Reclassification, Issuance of Additional
Shares of Common Stock, Etc. (a) In case of any capital reorganization, or of
any reclassification of the capital stock, of the Company (other than a change
in par value or from par value to no par value or from no par value to par
value or as a result of a split-up or combination) or in case of the
consolidation or merger of the Company with or into any other corporation or
entity (other than a consolidation or merger in which the Company is the
surviving corporation and which does not result in the Common Stock being
changed into or exchanged for stock or other securities or property of any
other person), or of the sale of the properties and assets of the Company as,
or substantially as, an entirety to any other corporation, this Warrant
Certificate shall, after such capital reorganization, reclassification of
capital stock, consolidation, merger or sale, entitle Xxxx to purchase the kind
and number of shares of stock or other securities or property of the Company,
or of the corporation or entity resulting from such consolidation or surviving
such merger or to which such sale shall be made, as the case may be, to which
the holder hereof would have been entitled if it had held the Common Stock
issuable upon the exercise hereof immediately prior to such capital
reorganization, reclassification of capital stock, consolidation, merger or
sale, and in any such case appropriate provision shall be made with respect to
the rights and interests of Xxxx hereunder to the end that the provisions
hereof (including, without limitation, provisions for adjustment of the number
or class of shares purchasable upon the exercise of this Warrant Certificate)
shall thereafter be applicable, as nearly as may be in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise of the
rights represented hereby. The Company shall not effect any such
consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof the successor corporation or entity (if other than the
Company) resulting from such consolidation or merger or the corporation or
entity purchasing such assets shall assume by written instrument executed and
mailed or delivered to Xxxx at the address of Xxxx appearing on the books of
the Company, the obligation to deliver to Xxxx such shares of stock, securities
or assets as, in accordance with the foregoing provisions, Xxxx may be entitled
to purchase.
4
41
SECTION 7. Antidilution Provisions.
a. The Conversion Ratio shall be subject to adjustment from
time to time as provided in this Section 7. For purposes of this Section 7,
the term "Common Stock" includes the Shares and any other class of equity
interest in the Company having no preference over the Shares as to
distributions which may be authorized in the future by an amendment to the
Company's Charter.
b. In case the Company shall, at any time after the date this
Warrant Certificate was first issued, with respect to all of the holders of its
outstanding Common Stock (i) declare a dividend on the outstanding Common Stock
payable in shares or rights to acquire shares of its Common Stock, (ii)
subdivide the outstanding Common Stock, (iii) combine the outstanding Common
Stock into a smaller number of shares, or (iv) issue any shares of its capital
stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation but excluding the events set forth in
Section 6 hereof or the issuance of shares of Common Stock by the Company in
connection with a merger when the Company is the surviving corporation of the
Merger and no such reclassification of the Common Stock has occurred), then, in
each case, the Conversion Ratio and the number of Shares issuable upon exercise
of this Warrant Certificate in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination, or
reclassification, shall be proportionately adjusted so that Xxxx after such
time shall be entitled to receive the aggregate number and kind of Shares
which, if this Warrant Certificate had been exercised immediately prior to such
time, it would have owned upon such exercise and been entitled to receive by
virtue of such dividend, sub-division, combination, or reclassification. Such
adjustment shall be made successively whenever any event listed above shall
occur.
c. Irrespective of any adjustments in the Conversion Ratio,
the Warrants theretofore or thereafter issued may continue to express the same
price and number and kind of shares as are stated in this Warrant Certificate.
SECTION 8. Taxes. The Company shall not be required to pay any tax
or taxes attributable to the initial issuance of shares of Common Stock upon
any exercise, in whole or part, of this Warrant Certificate.
SECTION 9. Warrant Holder Not Deemed a Shareholder. No holder, as
such, of this Warrant Certificate shall be entitled to vote or receive
dividends or be deemed the holder of shares of the Company for any purpose, nor
shall anything contained in this Warrant Certificate be construed to confer
upon the holder hereof, as such, any of the rights of a shareholder of the
Company or any right to vote, give or withhold consent to any corporate action
(whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance
of record to the holder of this Warrant Certificate of the Shares which he is
then entitled to receive upon the due exercise of this Warrant Certificate.
5
42
SECTION 10. No Limitation on Corporate Action. No provisions of this
Warrant and no right or option granted or conferred hereunder shall in any way
limit, affect or abridge the exercise by the Company of any of its corporate
rights or powers to recapitalize, amend its Articles of Incorporation,
reorganize, consolidate or merge with or into another corporation, or to
transfer, all or any part of its property or assets, or the exercise or any
other of its corporate rights and powers.
SECTION 11. Not Transferable. This Warrant Certificate and the Warrants
represented hereby are not transferable to any other person.
SECTION 12. Lost, Stolen, Mutilated or Destroyed Warrant Certificate.
If this Warrant Certificate is lost, stolen, mutilated or destroyed, the
Company shall, on such term as to indemnity or otherwise as it may in its
discretion impose (which shall, in the case of a mutilated Warrant Certificate,
include the surrender thereof), issue a new Warrant Certificate of like
denomination and tenor as the Warrant Certificate so lost, stolen, mutilated or
destroyed. Any such new Warrant Certificate shall constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
SECTION 13. Notices. All notices and other communications under this
Warrant Certificate shall (a) be in writing, (b) be sent by (i) registered or
certified mail, postage prepaid, return receipt requested, (ii) telecopier, or
(iii) delivered by hand, (c) be given at the following respective addresses and
telecopier and telephone number and to the attention of the following persons:
6
43
(i) if to the Company, to it at:
Western Pacific Airlines, Inc.
0000 Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Chief Executive Officer.
with a copy to:
X'Xxxxxx & Xxxxxx
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx
(ii) if to Xxxx:
Xxxx Petroleum of Texas, Inc.
c/x Xxxx Petroleum Corporation
0000 Xxx, 00xx Xxxxx
Xxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xx. Xxxx Xxxxx, Xx., Vice Chairman
7
44
with a copy to:
Xxxxxx & Xxxxxx
3700 Xxxxxxxx Xxxx Center
0000 Xxxx Xxxxxx
Xxxxxx, XX 00000-0000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx XxXxxxx, Esq.
or at such other address or telecopier or telephone number or to the attention
of such other person as the party to whom such information pertains may
hereafter specify for the purpose in a notice to the other specifically
captioned "Notice of Change of Address", and (d) be effective or deemed
delivered or furnished (i) if given by mail, on the third Business Day after
such communication is deposited in the mail, addressed as above provided, (ii)
if given by telecopier, when such communication is transmitted to the
appropriate number determined as above provided in this Section 13, (iii) if
given by hand delivery, when left at the address of the addressee addressed as
above provided, except that notices of a change of address, telecopier or
telephone number, shall not be deemed furnished until received. The Company
shall provide Xxxx with at least ten (10) days prior written notice of any
record date relating to the declaration of dividends on shares of Common Stock.
SECTION 14. Judicial Proceedings. Any judicial proceeding brought
against the Company with respect to this Warrant Certificate may be brought in
any court of competent jurisdiction in the State of Delaware, and, by execution
and delivery of this Warrant Certificate, the Company (a) accepts, generally
and unconditionally, the nonexclusive jurisdiction of such courts and any
related appellate court, and irrevocably agrees to the bound by any final and
nonappealable judgment rendered thereby in connection with this Warrant
Certificate and (b) irrevocably waives any objection it may now or hereafter
have as to the venue of any such suit, action or proceeding brought in such a
court or that such court is an inconvenient forum. The Company hereby waives
personal service of process and consents that service of process upon it may be
made by certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of Section 13, and
service so made shall be deemed completed on the third Business Day after such
service is deposited in the mail. Nothing herein shall affect the right of the
holder to serve process in any other manner permitted by law or shall limit the
right of the holder to bring proceedings against the Company in the courts of
any other jurisdiction. Any judicial proceeding by the Company against the
holder involving, directly or indirectly, any matter in any way arising out of,
related to, or connected with the holder shall be brought only in a court
located in the State of Delaware. The Company and the holder hereby waive
trial by jury in any judicial proceeding to which the Company and the holder
are both parties involving, directly or indirectly, any matter in any way
arising out of, related to, or connected with this Warrant Certificate.
8
45
SECTION 15. Miscellaneous. (a) This Warrant Certificate and any term
hereof may be changed, waived, discharged, or terminated only by an instrument
in writing signed by the party or holder hereof against which enforcement of
such change, waiver, discharge or termination is sought.
(b) The headings in this Warrant Certificate are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be executed by its duly authorized officers as of the _____ day of
____________________, 1997.
WESTERN PACIFIC AIRLINES, INC.
By:
---------------------------------
Name:
------------------------
Title:
-----------------------
ATTEST:
BY:
--------------------------------
Secretary
9
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EXHIBIT A
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IF HE DESIRES
TO EXERCISE THIS WARRANT
The undersigned hereby exercises the right to purchase _______________of
the Shares covered by this Warrant Certificate according to the conditions
thereof and herewith makes payment of the Warrant Exercise Price of such
Shares, in full.
[HOLDER]
By:
-----------------------------------
Title:
-----------------------
[Address]
Dated: , 19
---------------------- ----
10
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EXHIBIT B
Western Pacific Airlines, Inc.
0000 Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention:_______________________
Re: Exercise of Warrant Certificate, dated
---------------
Ladies & Gentlemen:
In connection with the undersigned's purchase of Common Stock of Western
Pacific Airlines, Inc. upon exercise of a Warrant Certificate therefor, the
undersigned confirms and agrees as follows:
1. The undersigned has sufficient knowledge and
experience in financial and business matters that it is capable of
evaluating the merits and risks of its prospective investment in the
shares of Common Stock.
2. The undersigned understands that it is purchasing
the shares of Common Stock pursuant to an exemption from the
registration requirements of the Securities Act of 1933, as amended (the
"Act"), or any state securities or Blue Sky laws.
3. The undersigned is an "accredited investor" as
defined in Rule 501(a) of Regulation D under the Act.
4. The undersigned agrees that it will not offer,
sell, transfer or exchange such shares of Common Stock, except in
accordance with the registration requirements under the Act or pursuant
to an available exemption therefrom.
If administrative or legal proceedings are commenced or threatened in
connection with which this notice is or would be relevant, the undersigned
irrevocably authorizes Western Pacific Airlines, Inc. to produce this notice or
a copy thereof to any interested party in such proceedings.
Date:
[PURCHASER]
By:
---------------------------------
Title:
-------------------------
11
48
EXHIBIT C
THE WARRANTS REPRESENTED BY THIS WARRANT CERTIFICATE MAY NOT BE SOLD, ASSIGNED
OR TRANSFERRED. AT THE TIME OF ISSUANCE OF THIS WARRANT CERTIFICATE, NEITHER
THE RIGHTS REPRESENTED BY THIS WARRANT CERTIFICATE NOR THE SHARES ISSUABLE UPON
THE EXERCISE HEREOF HAVE BEEN REGISTERED FOR OFFER OR SALE UNDER THE SECURITIES
ACT OF 1933, AS AMENDED. THE ISSUER OF THIS WARRANT CERTIFICATE INTENDS TO
REGISTER THE SHARES ISSUABLE UPON THE EXERCISE HEREOF WITH THE SECURITIES AND
EXCHANGE COMMISSION. UPON THE EFFECTIVENESS OF SUCH REGISTRATION, THE ISSUER
SHALL ISSUE TO THE HOLDER NAMED BELOW A REPLACEMENT WARRANT CERTIFICATE FREE OF
THIS LEGEND WITH RESPECT TO THE SHARES ISSUABLE UPON THE EXERCISE HEREOF.
UNTIL SUCH REGISTRATION STATEMENT HAS BEEN DECLARED EFFECTIVE, SUCH SHARES MAY
NOT BE SOLD OR OFFERED FOR SALE IN WHOLE OR IN PART EXCEPT PURSUANT TO AN
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933, AS AMENDED.
WESTERN PACIFIC AIRLINES, INC.
Warrant to Purchase Common Stock
This Warrant Certificate certifies that GFI Company, a Nevada
corporation ("GFI") is the registered holder of 1,325,000 warrants (the
"Warrants") to purchase shares of Common Stock, $0.001 par value per share (the
"Shares"), of WESTERN PACIFIC AIRLINES, INC., a Delaware corporation (the
"Company"), on the terms and subject to the conditions set forth below. Upon
the vesting of such Warrant pursuant to the terms hereof, and subject to
adjustment as provided herein, each Warrant entitles GFI, upon exercise, to
receive from the Company one share (the "Conversion Ratio") of fully paid,
nonassessable Common Stock of the Company for $0.01 per share (the "Warrant
Exercise Price"). The Warrants represented by this Warrant Certificate are
issued to GFI pursuant to that certain Stock Purchase Agreement (the
"Agreement") dated as of January 31, 1997 among the Company, Xxxx Petroleum of
Texas, Inc., a Delaware corporation, and GFI, providing for the purchase by GFI
of shares of the Company's Series B Preferred Stock, par value $0.001 per share
(the "Preferred Stock").
DEFINITIONS
SECTION 1. Definitions. The following words and terms as used
in this Warrant Certificate shall have the following meanings:
"Affiliate" means, with respect to a Person, any other Person
that, directly or indirectly through one or more intermediaries, controls, or
is controlled by, or is under common control with, such first Person.
"Board" means the Board of Directors of the Company.
49
"Business Day" means a day other than a Saturday, a Sunday or a
day on which banking institutions in the City of New York are authorized or
obligated by law or required by executive order to be closed.
"Common Stock", when used with reference to stock of the
Company, means all shares now or hereafter authorized of any class of the
common stock of the Company.
"Convertible Securities" shall mean any securities issued by the
Company after the date hereof which are convertible into, or exchangeable for,
directly or indirectly, shares of Common Stock.
"Person" means a domestic or foreign individual or corporation,
partnership, limited liability company, trust, incorporated or unincorporated
association, joint venture, joint stock company, government (or an agency or
political subdivision thereof) or other entity of any kind.
"Registration Statement" means a registration statement filed or
to be filed by the Company under the Securities Act.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as the same
may be amended from time to time, and the regulations thereunder.
"Trading Day" shall mean any day on which NASDAQ is open for
trading on a regular basis.
"Year One Warrants" shall have the meaning set forth in Section
2(a) hereof.
"Year Two Warrants" shall have the meaning set forth in Section
2(b) hereof.
"Year Three Warrants" shall have the meaning set forth in
Section 3(b) hereof.
SECTION 2. Vesting of Warrants.
a. Year One Warrants. 272,239 of the Warrants (the "Year
One Warrants") shall vest and become exercisable as follows: (i) fifty percent
(50%) of the Year One Warrants shall vest and be exercisable immediately on the
date hereof; and (ii) if any of the shares of Preferred Stock originally
purchased by GFI remain outstanding on December 1, 1997, the following
percentage of the Year One Warrants shall vest and become exercisable: fifty
percent (50%) of the Year One Warrants multiplied by a fraction, the numerator
of which is equal to the number of shares of Preferred Stock originally
purchased by GFI pursuant to the terms of the Agreement which continue to be
outstanding on December 1, 1997, and the denominator of which is equal to
100,000. Any Year One Warrants which do not vest as of December 1, 1997
pursuant to the foregoing formula shall be forfeited and be of no further force
and effect.
2
50
b. Year Two Warrants. Each day during the period from
May 1, 1998 through April 30, 1999, the following amount of 453,757 of the
Warrants (the "Year Two Warrants") shall vest and become exercisable: (x)
453,757, multiplied by (y) a fraction, the numerator of which is equal to the
number of shares of Preferred Stock originally purchased by GFI pursuant to the
terms of the Agreement which continue to be outstanding on such day, and the
denominator of which is equal to 100,000, divided by (z) 365. Any Year Two
Warrants which do not vest as of April 30, 1999 pursuant to the foregoing
formula shall be forfeited and be of no further force and effect.
c. Year Three Warrants. Each day during the period from
May 1, 1999 though April 30, 2000, the following amount of 599,004 of the
Warrants (the "Year Three Warrants") shall vest and become exercisable: (x)
599,004, multiplied by (x) a fraction, the numerator of which is equal to the
number of shares of Preferred Stock originally purchased by GFI pursuant to the
terms of the Agreement which continue to be outstanding on such day, and the
denominator of which is equal to 100,000, divided by (iii) 365. Any Year Three
Warrants which do not vest as of April 30, 2000 pursuant to the foregoing
formula shall be forfeited and be of no further force and effect.
SECTION 3. Termination of Warrant. Except as otherwise
provided herein, (a) any portion of the Warrants which fails to vest and
become exercisable pursuant to Section 2 hereof shall terminate as of the date
of such failure; and (b) any portion of the Warrants which vests and becomes
exercisable shall terminate if such portion of the Warrants has not been
exercised by GFI prior to April 30, 2003.
SECTION 4. Exercise of Warrant. Subject to the terms
and conditions hereof, including, without limitation, the vesting terms set
forth above, any vested portion of the Warrants may be exercised in whole or in
part at any time during the Company's normal business hours; provided, however,
that if the Company reasonably believes that a filing under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 is required prior to the
exercise of such Warrants, the Company shall not be required to honor any
exercise of the Warrants until such filing has been made and the waiting period
thereunder has expired or been terminated. Subject to the terms and conditions
hereof, the vested portion of the Warrants may be exercised by GFI by (i)
delivery of a written notice, in the form of the Subscription Notice attached
as Exhibit A hereto, (ii) payment by GFI to the Company of an amount equal to
the Warrant Exercise Price times the number of Warrants so exercised (plus any
applicable issue or transfer taxes) in cash or by certified or official bank
check in immediately available funds, provided however, that GFI may not
exercise any portion of the vested Warrants more than once in any calendar
month without the prior written consent of the Chief Executive Officer of the
Company, (iii) the surrender of this Warrant Certificate, properly endorsed, at
the principal office of the Company (or at such other agency or office of the
Company as the Company may designate by notice to GFI) and (iv) delivery to the
Company by GFI of a letter in the form of Exhibit B hereto. If, at the time of
exercise, GFI has not elected to exercise all Warrants that have vested or that
could vest in the future pursuant to the terms of this Warrant Certificate,
upon the Company's receipt of each of the documents referred to in this Section
4, in addition to the issuance of a stock certificate representing the Shares
issuable upon exercise of the Warrants, the Company shall issue a new Warrant
Certificate to GFI, on the same terms as set forth herein, representing the
remaining number of Warrants which have vested and not expired pursuant to the
terms of this Warrant Certificate or may vest in the future pursuant
3
51
to terms of this Warrant Certificate, together with a schedule setting forth
the number of such remaining Warrants. Fractional shares of Common Stock shall
not be issued upon the exercise of the Warrants. In lieu thereof, the Company
shall pay GFI cash in an amount equal to such fractional share interest
multiplied by the closing price of a share of Common Stock as of the date of
exercise.
SECTION 5. Covenants as to Common Stock. The Company
covenants and agrees that all Shares which may be issued upon the exercise of
the vested portion of the rights represented by this Warrant Certificate will,
upon issuance and payment of the Warrant Exercise Price applicable to such
Shares, be validly issued, fully paid and nonassessable. The Company further
covenants and agrees that during the period within which the vested portion of
this Warrant Certificate may be exercised, the Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to
provide for the exercise of the vested portion of this Warrant Certificate and
that the par value of said shares will at all times be less than or equal to
the applicable Warrant Exercise Price.
SECTION 6. Reorganization, Reclassification, Issuance of
Additional Shares of Common Stock, Etc. (a) In case of any capital
reorganization, or of any reclassification of the capital stock, of the Company
(other than a change in par value or from par value to no par value or from no
par value to par value or as a result of a split-up or combination) or in case
of the consolidation or merger of the Company with or into any other
corporation or entity (other than a consolidation or merger in which the
Company is the surviving corporation and which does not result in the Common
Stock being changed into or exchanged for stock or other securities or property
of any other person), or of the sale of the properties and assets of the
Company as, or substantially as, an entirety to any other corporation, this
Warrant Certificate shall, after such capital reorganization, reclassification
of capital stock, consolidation, merger or sale, entitle GFI to purchase the
kind and number of shares of stock or other securities or property of the
Company, or of the corporation or entity resulting from such consolidation or
surviving such merger or to which such sale shall be made, as the case may be,
to which the holder hereof would have been entitled if it had held the Common
Stock issuable upon the exercise hereof immediately prior to such capital
reorganization, reclassification of capital stock, consolidation, merger or
sale, and in any such case appropriate provision shall be made with respect to
the rights and interests of GFI hereunder to the end that the provisions hereof
(including, without limitation, provisions for adjustment of the number or
class of shares purchasable upon the exercise of this Warrant Certificate)
shall thereafter be applicable, as nearly as may be in relation to any shares
of stock, securities or assets thereafter deliverable upon the exercise of the
rights represented hereby. The Company shall not effect any such
consolidation, merger or sale, unless prior to or simultaneously with the
consummation thereof the successor corporation or entity (if other than the
Company) resulting from such consolidation or merger or the corporation or
entity purchasing such assets shall assume by written instrument executed and
mailed or delivered to GFI at the address of GFI appearing on the books of the
Company, the obligation to deliver to GFI such shares of stock, securities or
assets as, in accordance with the foregoing provisions, GFI may be entitled to
purchase.
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SECTION 7. Antidilution Provisions.
a. The Conversion Ratio shall be subject to adjustment
from time to time as provided in this Section 7. For purposes of this Section
7, the term "Common Stock" includes the Shares and any other class of equity
interest in the Company having no preference over the Shares as to
distributions which may be authorized in the future by an amendment to the
Company's Charter.
b. In case the Company shall, at any time after the date
this Warrant Certificate was first issued, with respect to all of the holders
of its outstanding Common Stock (i) declare a dividend on the outstanding
Common Stock payable in shares or rights to acquire shares of its Common Stock,
(ii) subdivide the outstanding Common Stock, (iii) combine the outstanding
Common Stock into a smaller number of shares, or (iv) issue any shares of its
capital stock by reclassification of the Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Company is the continuing corporation but excluding the events set forth in
Section 6 hereof or the issuance of shares of Common Stock by the Company in
connection with a merger when the Company is the surviving corporation of the
Merger and no such reclassification of the Common Stock has occurred), then, in
each case, the Conversion Ratio and the number of Shares issuable upon exercise
of this Warrant Certificate in effect at the time of the record date for such
dividend or of the effective date of such subdivision, combination, or
reclassification, shall be proportionately adjusted so that GFI after such time
shall be entitled to receive the aggregate number and kind of Shares which, if
this Warrant Certificate had been exercised immediately prior to such time, it
would have owned upon such exercise and been entitled to receive by virtue of
such dividend, sub-division, combination, or reclassification. Such adjustment
shall be made successively whenever any event listed above shall occur.
c. Irrespective of any adjustments in the Conversion
Ratio, the Warrants theretofore or thereafter issued may continue to express
the same price and number and kind of shares as are stated in this Warrant
Certificate.
SECTION 8. Taxes. The Company shall not be required to
pay any tax or taxes attributable to the initial issuance of shares of Common
Stock upon any exercise, in whole or part, of this Warrant Certificate.
SECTION 9. Warrant Holder Not Deemed a Shareholder. No
holder, as such, of this Warrant Certificate shall be entitled to vote or
receive dividends or be deemed the holder of shares of the Company for any
purpose, nor shall anything contained in this Warrant Certificate be construed
to confer upon the holder hereof, as such, any of the rights of a shareholder
of the Company or any right to vote, give or withhold consent to any corporate
action (whether any reorganization, issue of stock, reclassification of stock,
consolidation, merger, conveyance or otherwise), receive notice of meetings,
receive dividends or subscription rights, or otherwise, prior to the issuance
of record to the holder of this Warrant Certificate of the Shares which he is
then entitled to receive upon the due exercise of this Warrant Certificate.
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SECTION 10. No Limitation on Corporate Action. No provisions
of this Warrant and no right or option granted or conferred hereunder shall in
any way limit, affect or abridge the exercise by the Company of any of its
corporate rights or powers to recapitalize, amend its Articles of
Incorporation, reorganize, consolidate or merge with or into another
corporation, or to transfer, all or any part of its property or assets, or the
exercise or any other of its corporate rights and powers.
SECTION 11. Not Transferable. This Warrant Certificate and the
Warrants represented hereby are not transferable to any other person.
SECTION 12. Lost, Stolen, Mutilated or Destroyed Warrant
Certificate. If this Warrant Certificate is lost, stolen, mutilated or
destroyed, the Company shall, on such term as to indemnity or otherwise as it
may in its discretion impose (which shall, in the case of a mutilated Warrant
Certificate, include the surrender thereof), issue a new Warrant Certificate of
like denomination and tenor as the Warrant Certificate so lost, stolen,
mutilated or destroyed. Any such new Warrant Certificate shall constitute an
original contractual obligation of the Company, whether or not the allegedly
lost, stolen, mutilated or destroyed Warrant Certificate shall be at any time
enforceable by anyone.
SECTION 13. Notices. All notices and other communications
under this Warrant Certificate shall (a) be in writing, (b) be sent by (i)
registered or certified mail, postage prepaid, return receipt requested, (ii)
telecopier, or (iii) delivered by hand, (c) be given at the following
respective addresses and telecopier and telephone number and to the attention
of the following persons:
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(i) if to the Company, to it at:
Western Pacific Airlines, Inc.
0000 Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Chief Executive Officer.
with a copy to:
X'Xxxxxx & Xxxxxx
00 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx X. Xxxxx
(ii) if to GFI:
GFI Company
Xxxxxx Center
0000 Xxxxxx Xxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xx. Xxxxx X. Story
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with a copy to:
Xxxxxx & Xxxxx
000 Xxxx Xxxxxx
0000 Xxxxxxx Xxxx Xxxxx
Xxxxxx, XX 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxxx Xxx, Esq.
or at such other address or telecopier or telephone number or to the attention
of such other person as the party to whom such information pertains may
hereafter specify for the purpose in a notice to the other specifically
captioned "Notice of Change of Address", and (d) be effective or deemed
delivered or furnished (i) if given by mail, on the third Business Day after
such communication is deposited in the mail, addressed as above provided, (ii)
if given by telecopier, when such communication is transmitted to the
appropriate number determined as above provided in this Section 13, (iii) if
given by hand delivery, when left at the address of the addressee addressed as
above provided, except that notices of a change of address, telecopier or
telephone number, shall not be deemed furnished until received. The Company
shall provide GFI with at least ten (10) days prior written notice of any
record date relating to the declaration of dividends on shares of Common Stock.
SECTION 14. Judicial Proceedings. Any judicial proceeding
brought against the Company with respect to this Warrant Certificate may be
brought in any court of competent jurisdiction in the State of Delaware, and,
by execution and delivery of this Warrant Certificate, the Company (a) accepts,
generally and unconditionally, the nonexclusive jurisdiction of such courts and
any related appellate court, and irrevocably agrees to the bound by any final
and nonappealable judgment rendered thereby in connection with this Warrant
Certificate and (b) irrevocably waives any objection it may now or hereafter
have as to the venue of any such suit, action or proceeding brought in such a
court or that such court is an inconvenient forum. The Company hereby waives
personal service of process and consents that service of process upon it may be
made by certified or registered mail, return receipt requested, at its address
specified or determined in accordance with the provisions of Section 13, and
service so made shall be deemed completed on the third Business Day after such
service is deposited in the mail. Nothing herein shall affect the right of the
holder to serve process in any other manner permitted by law or shall limit the
right of the holder to bring proceedings against the Company in the courts of
any other jurisdiction. Any judicial proceeding by the Company against the
holder involving, directly or indirectly, any matter in any way arising out of,
related to, or connected with the holder shall be brought only in a court
located in the State of Delaware. The Company and the holder hereby waive
trial by jury in any judicial proceeding to which the Company and the holder
are both parties involving, directly or indirectly, any matter in any way
arising out of, related to, or connected with this Warrant Certificate.
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SECTION 15. Miscellaneous. (a) This Warrant Certificate and
any term hereof may be changed, waived, discharged, or terminated only by an
instrument in writing signed by the party or holder hereof against which
enforcement of such change, waiver, discharge or termination is sought.
(b) The headings in this Warrant Certificate are for
purposes of reference only and shall not limit or otherwise affect the meaning
hereof
IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be executed by its duly authorized officers as of the _____ day
of ________________________________, 1997.
WESTERN PACIFIC AIRLINES, INC.
By:
------------------------------------
Name:
----------------------
Title:
----------------------
ATTEST:
BY:
-----------------------------
Secretary
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EXHIBIT A
SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER IF HE DESIRES
TO EXERCISE THIS WARRANT
The undersigned hereby exercises the right to purchase _______
of the Shares covered by this Warrant Certificate according to the conditions
thereof and herewith makes payment of the Warrant Exercise Price of such
Shares, in full.
[HOLDER]
By:
-----------------------------------------
Title:
-----------------------------------
[Address]
Dated: 19
-------------------- -----
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EXHIBIT B
Western Pacific Airlines, Inc.
0000 Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention:
--------------------------------
Re: Exercise of Warrant Certificate, dated
Ladies & Gentlemen:
In connection with the undersigned's purchase of Common Stock of
Western Pacific Airlines, Inc. upon exercise of a Warrant Certificate therefor,
the undersigned confirms and agrees as follows:
1. The undersigned has sufficient knowledge and
experience in financial and business matters that it is capable
of evaluating the merits and risks of its prospective investment
in the shares of Common Stock.
2. The undersigned understands that it is
purchasing the shares of Common Stock pursuant to an exemption
from the registration requirements of the Securities Act of
1933, as amended (the "Act"), or any state securities or Blue
Sky laws.
3. The undersigned is an "accredited investor"
as defined in Rule 501(a) of Regulation D under the Act.
4. The undersigned agrees that it will not
offer, sell, transfer or exchange such shares of Common Stock,
except in accordance with the registration requirements under
the Act or pursuant to an available exemption therefrom.
If administrative or legal proceedings are commenced or
threatened in connection with which this notice is or would be relevant, the
undersigned irrevocably authorizes Western Pacific Airlines, Inc. to produce
this notice or a copy thereof to any interested party in such proceedings.
Date:
--------------------------
[PURCHASER]
By:
------------------------------------
Title:
-------------------------------
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