EXHIBIT 6
PURCHASE AGREEMENT
Whereas, Vanguard Airlines, Inc., a Delaware corporation (the
"Company"), and Vanguard Acquisition Company, a Delaware corporation, ("VAC"),
have executed a term sheet dated April 30, 2001, regarding an $8,000,000 Delayed
Disbursement Equity Facility (the "Term Sheet"), which was acknowledged and
agreed to by The Xxxxxxxxx 1980 Revocable Trust, Inc. ("HRT") and the X. X. Xxxx
Co., Inc., as nominee 1998-19 ("SheaCo");
Now, therefore, this Purchase Agreement (the "Agreement") is made
and entered into as of June 21, 2001 by and among the Company, VAC, HRT and
SheaCo. (VAC, HRT and SheaCo are referred to individually as an "Investor" and
collectively as the "Investors").
In consideration of the mutual promises and covenants made herein,
the parties hereby agree as follows:
1. SALE OF SHARES; INITIAL CLOSING; DELIVERY.
(a) PURCHASE AND SALE OF SHARES. Subject to the terms and
conditions hereof, the Company will issue and sell to each Investor, and each
Investor will purchase from the Company, at the Closing (as defined below) the
number of shares of Common Stock, $.01 par value (the "Common Stock"), set forth
opposite each Investor's name on EXHIBIT A at a purchase price equal to twenty
cents ($0.20) per share (together, the "Initial Shares.")
(b) INITIAL CLOSING. The closing of the purchase and sale of the
Initial Shares shall take place on or about July 9, 2001, or at such other date
and time as the Investors and the Company shall mutually agree (which date and
time are referred to as the "Initial Closing.")
(c) DELIVERY. Subject to the terms and conditions of this
Agreement, at the Initial Closing, the Company shall deliver to each Investor a
stock certificate representing the Common Stock to be purchased by such Investor
against payment of the purchase price therefore, which payment may be made by
cancellation of the principal amount of any indebtedness for borrowed money owed
to such Investor by the Company (including, at the election of the Investor,
accrued and unpaid interest on any such indebtedness), by check payable to the
order of the Company, or by wire transfer of immediately available funds to the
bank account of the Company. In the event that payment by an Investor is made,
in whole or in part, by cancellation of indebtedness, then such Investor shall
surrender to the Company for cancellation at the Closing any evidence of such
indebtedness or shall execute an instrument of cancellation in form and
substance acceptable to the Company. In the event accrued and unpaid interest on
any such indebtedness is not also applied to the purchase price, the Company
shall pay such interest at the Initial Closing or shall make other arrangements,
satisfactory to the Investor to whom such interest is owed, for payment of such
sum.
(d) SEABURY PURCHASE. Also at the Initial Closing, Seabury
Advisors LLC and Seabury Securities LLC (together, "Seabury") shall purchase
from the Company, and the Company will issue and sell to Seabury, the number of
shares of Common Stock set forth
opposite Seabury's name on EXHIBIT A, at a purchase price equal to twenty cents
($0.20) per share. Payment for such shares shall be by cancellation of fees
otherwise due Seabury from the Company, without interest thereon.
2. SUBSEQUENT CLOSINGS. At a time or times acceptable to each of
the Company and VAC or additional investors designated by the Investors and
acceptable to the Company, the Company shall sell to VAC, or to such additional
investors acceptable to the Company (the "Additional Investors"), up to
15,000,000 additional shares of Common Stock at a purchase price equal to twenty
cents ($0.20) per share, subject to termination as set forth below. Any
additional closing hereunder shall occur on or before July 15, 2001. In the
event any additional shares shall not have been purchased by July 15, 2001, the
Company shall not be required to sell such shares or any other additional shares
to additional investors or to the Investors.
At each additional closing (an "Additional Closing"), each
Additional Investor purchasing shares at such Additional Closing (which
Additional Investor may be VAC) and the Company shall execute an agreement
whereby the Company confirms to the Additional Investor all of the
representations, covenants and commitments made by the Company to the Investors
hereunder, and whereby each Additional Investor confirms to the Company (on its
own behalf as if it were making the representations, covenants and commitments
hereunder, taking into due regard such Additional Investor's capital structure)
all of the representations, covenants and commitments made by the Investors to
the Company hereunder.
The Initial Shares and the shares of Common Stock purchased at each
Additional Closing shall be referred to as the "Shares".
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to each Investor, that, except as set forth on
the Schedule of Exceptions attached hereto as EXHIBIT B (the "Schedule of
Exceptions"):
(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 has all necessary corporate power and authority
to own its assets and to carry on its business as now being conducted and as
currently proposed to be conducted. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
its ownership or leasing of assets, or the conduct of its business, makes such
qualification necessary, except where failure to do so would not have a material
adverse effect on the operations or financial condition of the Company.
(b) REQUISITE POWER AND AUTHORIZATION. The Company will have all
necessary corporate power and authority under the laws of the State of Delaware
and all other applicable provisions of law to execute and deliver this
Agreement, to issue the shares of Common Stock to be issued hereunder (the
"Shares"), and to carry out the provisions of this Agreement and any related
agreement. All corporate action on the part of the Company required for the
lawful execution and delivery of this Agreement, and issuance and delivery of
the Shares, has been duly and effectively taken. This Agreement constitutes the
valid and binding
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obligations of the Company enforceable in accordance with their respective
terms, except as enforcement may be limited by insolvency and similar laws
affecting the enforcement of creditors' rights generally and equitable remedies.
The Shares, when issued in compliance with the provisions of this Agreement,
will be duly authorized and validly issued, fully paid, non-assessable and
issued in compliance with federal securities laws and the securities laws of the
State of California. No stockholder of the Company or other person has any
preemptive right of subscription or purchase or contractual right of first
refusal or similar right with respect to the Shares.
(c) CONSENTS. No consent, approval, authorization or order of
any court, governmental agency or third party is required for the execution and
delivery by the Company of this Agreement or the performance by the Company of
any of its obligations hereunder (including issuance of the Shares).
(d) SEC DOCUMENTS. The Company has timely filed all documents
that the Company was required to file with the Securities and Exchange
Commission (the "SEC") under Sections 13 or 14(a) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), since December 31, 1998 (collectively,
the "SEC Documents"). As of their respective filing dates, or such later date on
which such reports were amended, the SEC Documents complied in all material
respects with the requirements of the Exchange Act or the Securities Act of
1933, as amended (the "1933 Act"), as applicable. No SEC Documents as of their
respective dates, or such later date on which such reports were amended, or
press release, containing information material to the business as a whole,
contained any untrue statement of a material fact or omitted 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 financial statements included in the SEC Documents (the
"Financial Statements"), when filed, complied as to form in all material
respects with applicable accounting requirements and with the published rules
and regulations of the SEC with respect thereto. Except as may be indicated in
the notes to the Financial Statements or, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC, the Financial Statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the consolidated financial position of
the Company and any subsidiaries at the dates thereof and the consolidated
results of their operations and consolidated cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal, recurring
adjustments).
(e) CAPITAL STOCK. The authorized capital stock of the Company
consists of 100,000,000 shares of Common Stock, $.001 par value, and 2,000,000
shares of Preferred Stock, $.001 par value, 450,000 of which have been
designated Series A Preferred Stock, 100,000 of which have been designated
Series B Preferred Stock and 250,000 of which have been designated Series C
Preferred Stock. As of May 15, 2001, there were 20,572,737 shares of Common
Stock issued and outstanding; 302,362 shares of Series A Preferred Stock issued
and outstanding; 100,000 shares of Series B Preferred Stock issued and
outstanding and 187,500 shares of Series C Preferred Stock outstanding. All
outstanding shares of Common Stock and Preferred Stock have been duly authorized
and validly issued and are fully paid and non-assessable. Except for (A) the
Shares to be issued under this Agreement, (B) the 2,584,274
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shares of Common Stock issuable upon the conversion of the Series A Preferred
Stock, (C) the 6,410,256 shares of Common Stock issuable upon the conversion of
the Series B Preferred Stock, (D) 15,419,143 shares of Common Stock issuable
upon exercise of the Company's outstanding warrants, (E) 3,454,354 shares of
Common Stock issuable upon exercise of stock options granted to employees,
consultants, officers or directors of the Company, and (F) obligations of the
Company under the Engagement Agreement with Seabury dated May 31, 2000, as
amended, the Company has no outstanding securities convertible into or
exchangeable for Common Stock and no contracts, rights, options or warrants to
purchase or otherwise acquire Common Stock or securities convertible into or
exchangeable for Common Stock. Under the Engagement Agreement with Seabury dated
May 31, 2000, as amended, the Company is currently obligated to issue to Seabury
options to purchase 850,000 shares of Common Stock at per share prices ranging
from $0.20 to $1.17, and 474,063 shares of Common Stock, in each case in
consideration for services performed, and has committed to issue additional
shares and additional options in consideration for further services. Since March
31, 2001, the Company has not issued any shares of capital stock, except for the
Shares, shares issued pursuant to the exercise of outstanding warrants or stock
options, and the shares of Series C Preferred Stock noted above.
(f) COMPLIANCE WITH OTHER AGREEMENTS. Neither the execution and
delivery of, nor the consummation of any transaction or execution of any
instrument contemplated by, this Agreement, nor the issuance of the Shares, has
constituted or resulted in, or will constitute or result in, a default under or
breach or violation of any term or provision of the Company's Bylaws, Restated
Certificate, or contracts with third parties, state or federal laws, rules or
regulations, writs, orders or judgments or decrees which are applicable to the
Company or its properties.
(g) NO MATERIAL ADVERSE CHANGE. Since March 31, 2001, there has
not been:
(i) any changes in the assets, liabilities, financial
condition or operations of the Company from that reflected in the Financial
Statements except changes resulting from ongoing operating losses during such
period;
(ii) any material change, except in the ordinary course of
business, in the contingent obligations of the Company whether by way of
guarantee, endorsement, indemnity, warranty or otherwise;
(iii) any damage, destruction or loss, whether or not
covered by insurance, materially and adversely affecting the properties or
business of the Company; or
(iv) any declaration or payment of any dividend or other
distribution of the assets of the Company.
(h) LITIGATION. There is no pending or, to the best knowledge of
the Company, threatened action, suit, proceeding or investigation before any
court, governmental agency or body, or arbitrator having jurisdiction over the
Company or any of its affiliates that
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would materially adversely affect the execution by the Company of, or the
performance by the Company of its obligations under, this Agreement.
(i) NO MISREPRESENTATION. No representation or warranty by the
Company in this Agreement and no statements in the Company's Annual Report on
Form 10-K for the year ended December 31, 2000, Quarterly Report on Form 10-Q
for the quarter ended March 31, 2001, or Proxy Statement, dated April 16, 2001
for the Company's Annual Meeting of Stockholders held on May 17, 2001, contains
or shall contain any untrue statement of a material fact or omits or shall omit
to state a material fact necessary in order to make such statements, in light of
the circumstances under which they were made, not misleading.
(j) ERISA. The Company does not sponsor, and has never
sponsored, a defined benefit plan. The Company is current in its funding
obligations to its 401(k) plan.
(k) ENVIRONMENTAL LIABILITIES. The Company has not been notified
by the Environmental Protection Agency, or any comparable agency, nor has any
third party made any claim against the Company, that it has any outstanding
liability for the clean-up or remediation of any environmental contamination,
nor is the Company aware of any circumstances that could give rise to such a
claim, other than such claims as would not be material to its financial
condition.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASERS. Each Investor and
Seabury (together, and together with any Additional Investors, the "Purchasers")
represents and warrants, severally and not jointly, to the Company that:
(a) AUTHORIZATION. Such Purchaser has full power and authority
to enter into this Agreement, and this Agreement constitutes the valid and
legally binding obligation of such Purchaser, enforceable in accordance with its
terms, except as such enforcement may be limited by bankruptcy, insolvency and
similar laws affecting the enforcement of creditors' rights generally and
equitable remedies, and laws limiting the scope of indemnity provisions.
(b) PURCHASE FOR INVESTMENT. Such Purchaser is purchasing the
Shares for investment purposes only and not with a view to, or for sale in
connection with, a distribution of the Common Stock within the meaning of the
1933 Act. Such Purchaser has no present intention of selling or otherwise
disposing of all or any portion of the Shares.
(c) ACCESS TO INFORMATION. Such Purchaser has had an opportunity
to ask questions of the Company's representatives concerning the Company, its
present and prospective business, assets, liabilities and financial condition.
The foregoing, however, does not limit or modify the representations and
warranties of the Company in Section 3 of this Agreement or the rights of the
Purchasers to rely thereon.
(d) UNDERSTANDING OF RISKS. Such Purchaser is fully aware of:
(i) the highly speculative nature of the investment in the Common Stock; (ii)
the financial hazards involved; (iii) the risk of loss of the investment if the
Company is unable to finance its continuing operations; (iv) the lack of
liquidity of the Shares, and the restrictions on the
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transferability of the Shares or their use as collateral for loans; and (v) the
tax consequences of investment in the Shares. The foregoing, however, does not
limit or modify the representations and warranties of the Company in Section 3
of this Agreement and the rights of the Purchasers to rely thereon.
(e) PURCHASER'S QUALIFICATIONS. Such Purchaser is an
"accredited" investor as defined under Regulation D under the 1933 Act. Such
Purchaser is aware of the risks inherent in an investment in the Company and, by
reason of such Purchaser's business or financial experience, such Purchaser is
capable of evaluating the merits and risks of this investment and is financially
capable of bearing a total loss of this investment.
(f) COMPLIANCE WITH SECURITIES LAWS. Such Purchaser understands
and acknowledges that, in reliance upon the representations and warranties made
by such Purchaser herein, the Shares are not being registered with the SEC under
the 1933 Act or being qualified under the California Corporate Securities Law of
1968, as amended (the "Law") or any other state law, but instead are being
issued under an exemption or exemptions from the registration and qualification
requirements of the 1933 Act or the Law or other applicable state securities
laws which impose certain restrictions on such Purchaser's ability to transfer
the Shares.
(g) RESTRICTIONS ON TRANSFER. Such Purchaser understands that
such Purchaser may not transfer any of the Shares unless such Shares are
registered under the 1933 Act or pursuant to an exemption from such registration
and qualification requirements. Such Purchaser understands that only the Company
may file a registration statement with the SEC. Such Purchaser has also been
advised that exemptions from registration and qualification may not be available
or may not permit such Purchaser to transfer all or any of the Shares in the
amounts or at the times proposed by such Purchaser.
(h) RULE 144. In addition, such Purchaser has been advised that
SEC Rule 144 ("Rule 144") promulgated under the 1933 Act, which permits certain
limited sales of unregistered Shares, is not presently available with respect to
the Shares solely due to the holding periods required thereunder and, in any
event, requires that the Shares be held for a minimum of one year, and in
certain cases two years, after they have been purchased and paid for (within the
meaning of Rule 144), before they may be resold under Rule 144. Such Purchaser
understands that Rule 144 may indefinitely restrict transfer of the Shares if
such Purchaser is an "affiliate" of the Company and "current public information"
about the Company (as defined in Rule 144) is not publicly available.
(i) LEGENDS AND STOP-TRANSFER ORDERS. Such Purchaser understands
that certificates or other instruments representing any of the Shares acquired
by such Purchaser may bear legends substantially similar to the following, in
addition to any other legends required by federal or state laws:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR THE LAWS OF ANY STATE.
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THEY MAY NOT BE SOLD, OFFERED FOR SALE,
PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY THAT REGISTRATION IS NOT REQUIRED
UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO
RULE 144 UNDER SUCH ACT.
In order to ensure and enforce compliance with the restrictions
imposed by applicable law and those referred to in the foregoing legend, or
elsewhere herein, the Company may issue appropriate "stop transfer" instructions
to its transfer agent, if any, with respect to any certificate or other
instrument representing the Shares, or if the Company transfers its own Shares,
it may make appropriate notations to the same effect in the Company's records.
Any legend endorsed on a certificate pursuant to this Subsection (i) and the
related stop transfer instructions with respect to such Shares shall be removed,
and the Company shall issue a certificate or warrant without such legend to the
holder thereof, if such Shares are registered under the 1933 Act and a
prospectus meeting the requirements of Section 10 of the 1933 Act is available,
if such legend may be properly removed under the terms of Rule 144 promulgated
under the 1933 Act or if such holder provides the Company with an opinion of
counsel for such holder, reasonably satisfactory to legal counsel for the
Company, to the effect that a sale, transfer or assignment of such Shares may be
made without registration.
5. COVENANTS. The Company covenants and agrees that:
(a) EXCHANGE ACT FILINGS. The Company shall continue to file
with the SEC all reports and other filings required under the rules of the SEC
and such documents shall comply in all material respects with the requirements
of the Exchange Act or the 1933 Act, as applicable, as long as the Company
continues to be subject to reporting requirements under Sections 13 or 15(d) of
the Exchange Act.
(b) ACCESS TO INFORMATION. Provided an Investor holds capital
stock representing 10% or more of the Company's outstanding equity interests or
voting interests, the Company shall provide such Investor, on request, such
information concerning the Company reasonably requested by the Investor and
available to the Company without significant expense. Such information shall
include a monthly variance report tracking the Company's adherence to the budget
referenced in Section 6(c) below. By its receipt of such information, each
Investor agrees to maintain the confidentiality of such information and not to
use such information in a manner adverse to the interests of the Company.
(c) APPROVAL OF OFFICERS AND DIRECTORS. Until August 29, 2001
(or, if the final closing under this Agreement, shall have been extended by the
Company beyond July 1, 2001, such date as is sixty (60) days after such final
closing date), the Company shall provide VAC advance notice of any officer or
member of the Board of Directors to be appointed or nominated to a position with
the Company and, in the event VAC reasonably objects to such appointment or
nomination, the Company shall not appoint or nominate such person.
7
(d) USE OF PROCEEDS. The Company shall use the proceeds from the
sales of Shares hereunder for the Company's working capital needs and shall not
be expended for capital items or changes in the Company's route structure or
method of operation unless such capital item or change shall have been submitted
to VAC in writing and VAC shall not have objected to such change in writing
within fifteen calendar days after being first advised of it. For purposes of
this section, a proposed capital item or change shall be deemed to have been
submitted to VAC at the time it is submitted in writing to either Xxxx Xxxxxxx,
Xxxxx Xxxxx or Xxxx Xxxxx, or such persons as shall have been substituted for
any of the above by VAC in writing to the Company.
6. CONDITIONS TO OBLIGATIONS OF THE INVESTORS. The obligation of
each Investor to purchase Shares at the Closing and each Additional Closing is
subject to the fulfillment on or prior to the Closing of the following
conditions, any of which may be waived by such Investor:
(a) REPRESENTATIONS AND WARRANTIES CORRECT; PERFORMANCE OF
OBLIGATIONS. The representations and warranties made by the Company in Section 2
hereof shall be true and correct when made, and shall be true and correct on the
Closing with the same force and effect as if they had been made on and as of
said date, except for representations and warranties made as of a specific date,
which shall be true and correct as of such date; and the Company shall have
performed all obligations and conditions herein required to be performed or
observed by it under this Agreement on or prior to the Closing.
(b) CONSENTS AND WAIVERS. The Company shall have obtained any
and all consents (including all governmental or regulatory consents, approvals
or authorizations required in connection with the valid execution and delivery
of this Agreement), permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement. The Company
shall have obtained written agreements from the holders of the equity
instruments referenced in Exhibit D hereto, modifying such agreements in the
manner provided by Exhibit D hereto, and shall have forwarded for filing any
such amendments required to be filed with the Delaware Secretary of State.
(c) APPROVAL OF BUDGET. VAC, HRT and SheaCo shall have been
provided a copy of the Company's most recent budget for the year 2001 (the
"Budget") and the Budget shall be reasonably satisfactory to VAC.
(d) COMPLIANCE CERTIFICATE. The Company shall have delivered to
the Investors a certificate, executed by the Chairman of the Board and Chief
Executive Officer of the Company, dated the Closing Date, certifying to the
fulfillment of the conditions specified in subsections (a) and (b) of this
Section 6.
(e) OPINION OF COMPANY'S COUNSEL. Investors shall have received
from counsel to the Company, an opinion addressed to the Investors, dated the
Closing Date in substantially the form attached hereto as EXHIBIT C.
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(f) PEGASUS AGREEMENT. The Company shall have entered into an
agreement with Pegasus Aviation, Inc., a California corporation ("Pegasus"), in
compliance with its obligations under the Term Sheet to provide Pegasus final
approval rights and preferential leasing rights with respect to the Company's
aircraft additions.
(g) EXTENSION OF LEASES. The Company shall have entered into
agreements extending, each for a period of twelve months, the Company's existing
leases set forth in Exhibit E hereto. The Company's commitments to lease an
additional two (2) aircraft are hereby modified to provide for lease terms of 72
months, rather than 60 months as set forth in the existing commitments.
(h) NO DEFAULT. No default or event of default shall have
occurred and be continuing under any lease of aircraft from Pegasus or an
affiliate of Pegasus.
(i) MINIMUM PURCHASE. With respect to the obligations of HRT and
SheaCo to purchase 5,000,000 shares, VAC shall have advanced funds to purchase
at Closing at least 7,500,000 Initial Shares.
7. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the
Company to sell and issue the Shares to each Investor at the Closing and each
Subsequent Closing is subject to the prior fulfillment of the following
conditions, any of which may be waived by the Company:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by such Investor in Section 3 hereof (or in such other document,
executed by an Additional Investor, set forth or incorporating such
representations and warranties) shall be true and correct when made, and at such
closing with the same force and effect as if they had been made on and as of
such closing.
(b) CONSENTS AND WAIVERS. The Company shall have obtained any
and all consents (including all governmental or regulatory consents, approvals
or authorizations required in connection with the valid execution and delivery
of this Agreement), permits and waivers necessary or appropriate for
consummation of the transactions contemplated by this Agreement. NASDAQ shall
have provided the Company an exception from NASDAQ rule 4350, allowing the
Company to perform its obligations hereunder with submitting this transaction
for the approval of its stockholders, or such approval shall have been obtained
and the conditions to such approval shall have been satisfied.
(c) MODIFICATIONS TO EXISTING EQUITY AGREEMENTS. At or prior to
the Initial Closing, the Investors shall have executed modifications to the
equity agreements listed on Exhibit D hereto, in form and substance complying
with the provisions of the Term Sheet and otherwise in form and substance
acceptable to the Investors. With regard to the series of preferred stock noted
on Exhibit D, such modifications shall be made by filing restated certificates
of designations for such series of preferred stock. With regard to the September
8, 2000, Purchase Agreement, such modifications shall be made by a waiver to
such agreement.
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With regard to the warrants noted on Exhibit D, such modifications shall be made
by cancellation of the outstanding warrants and the reissuance of such warrants.
8. REGISTRATION RIGHTS. The provisions of this section shall apply
in lieu of all other registration rights currently granted to and held by the
Investors. To the extent inconsistent with the provisions set forth below, all
other registration rights currently granted to and held by the Investors are
hereby amended as follows:
(a) DEFINITIONS. For purposes of this Section 8:
(i) "Register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the 1933 Act, and the declaration or ordering of effectiveness
of such registration statement.
(ii) "Holder" means any person owning of record Shares that
have not been sold to the public, and any Investor holding shares of Common
Stock with respect to which such Investor currently has registration rights
granted by the Company. Such Shares and other shares are hereby referred to as
"Registrable Shares".
(b) SHELF REGISTRATION. The Company shall
(i) prior to the first anniversary of the Initial Closing,
file both a registration statement under the 1933 Act, [and all such
qualifications and registrations as may be required under state securities laws]
as are necessary to permit the sale and distribution of all of the Holders'
Registrable Shares and thereafter shall use its best efforts to secure the
effectiveness of such registration statement;
(ii) pay all expenses incurred in connection with any
registration qualification and compliance requested hereunder, (excluding
underwriters' or brokers' discounts and commissions), including without
limitation all filing, registration and qualification, printers' and accounting
fees and counsel for the Company (each Holder shall pay its own legal and
accounting fees and any other expenses incurred by it except such expenses that
are specifically reimbursed hereunder); and
(iii) use its best efforts to cause the registration
statement to remain effective until the earlier of (A) the date ending three (3)
years after the Initial Closing, or (B) with respect to each Holder, the date on
which such Holder is able to sell all of such Holder's Registrable Shares in any
single three (3) month period without registration under the 1933 Act pursuant
to Rule 144, PROVIDED that if the Company elects to terminate the effectiveness
of the registration statement under (B), the Company shall prior to such
termination provide each Holder an opinion of counsel, based on factual
representations of the Holders, that such Holder is able to sell all of the
Registrable Shares held by such Holder and its affiliates in any single three
(3) month period without registration under the 1933 Act pursuant to Rule 144.
(c) OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of Registrable Shares under this Agreement, the Company will, as
expeditiously as reasonably possible:
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(i) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable
Shares covered by such registration statement; (ii) furnish to the Holders such
number of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the 1933 Act, and such other documents as
they may reasonably request in order to facilitate the disposition of the
Registrable Shares owned by them that are included in such registration;
(iii) use its best efforts to register and qualify the
Registrable Shares covered by such registration statement under such other
securities or "blue sky" laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company will not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;
(iv) in the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering, provided,
that the fact of such underwriting shall not increase the Company's obligations
hereunder or under such offering of Registrable Shares;
(v) cause all such Registrable Shares registered pursuant
hereunder to be listed on each securities exchange on which similar shares
issued by the Company are then listed; and
(vi) notwithstanding anything else in this Section 4, if, at
any time during which a prospectus is required to be delivered in connection
with the sale of any Registrable Shares, the Company determines in good faith
and in its reasonable judgment that such sale would require public disclosure by
the Company of material non-public information that the Company deems it
advisable not to disclose, or that a development has occurred or a condition
exists as a result of which the registration statement or the prospectus filed
as a part thereof contains a material misstatement or omission, the Company will
immediately notify each Holder thereof by telephone and in writing. Upon receipt
of such notification, Holder and its affiliates will immediately suspend all
offers and sales of any Registrable Shares pursuant to the registration
statement. In such event, the Company will amend or supplement the registration
statement as promptly as practicable and will take such other steps as may be
required to permit sales of the Registrable Shares thereunder by Holder and its
affiliates in accordance with applicable federal and state securities laws. The
Company will promptly notify Holder after it has determined in good faith that
such sales have become permissible in such manner and will promptly deliver
copies of the registration statement and the prospectus (as so amended or
supplemented). Notwithstanding the foregoing, (A) under no circumstances shall
the Company be entitled to exercise its right to suspend sales of any
Registrable Shares pursuant to the registration statement more than two (2)
times in any twelve-month period, (B) the period during which such sales may be
suspended (each a "Blackout Period") shall not exceed thirty (30) calendar days
and (C) no Blackout Period may commence less than sixty (60) calendar days after
the end of the preceding Blackout Period.
11
(d) HOLDERS TO FURNISH INFORMATION. As a condition precedent to
the obligations of the Company to take any action pursuant to Section 8 hereof,
the selling Holders furnish to the Company such information regarding
themselves, the Registrable Shares held by them, and the intended method of
disposition of such Registrable Shares as will be required to effect the
registration of their Registrable Shares.
(e) DELAY OF REGISTRATION. No Holder will have any right to
obtain or seek an injunction restraining or otherwise delaying any registration
as the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 8.
(f) INDEMNIFICATION. In the event any Registrable Shares are
included in a registration statement under Section 8 hereof:
(i) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, the partners, shareholders, officers,
directors, employees and agents of each Holder, any underwriter (as defined in
the 0000 Xxx) for such Holder and each person, if any, who controls such Holder
or underwriter within the meaning of the 1933 Act or the Exchange Act against
any losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the 1933 Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively, a "Violation"):
(A) any untrue statement or alleged untrue statement of
a material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto;
(B) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading; or
(C) any violation or alleged violation by the Company of
the 1933 Act, the Exchange Act, any federal or state Shares law or any rule or
regulation promulgated under the 1933 Act, the Exchange Act or any federal or
state Shares law in connection with the offering covered by such registration
statement;
and the Company will reimburse each such Holder, partner, shareholder, officer,
director, employee, agent, underwriter or controlling person for any legal or
other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this Section 8(f)(i)
will not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent will not be unreasonably withheld), nor will the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished
12
expressly for use in connection with such registration by such Holder, partner,
shareholder, officer, director, underwriter or controlling person of such
Holder.
(ii) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the registration statement, each person, if any, who
controls the Company within the meaning of the 1933 Act, any underwriter and any
other Holder selling Registrable Shares under such registration statement or any
of such other Holder's partners, directors or officers or shareholders or any
person who controls such Holder within the meaning of the 1933 Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which the Company or any such director, officer, controlling person,
underwriter or other such Holder, partner or director, officer, shareholder or
controlling person of such other Holder may become subject under the 1933 Act,
the Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are based
upon any Violation that arises solely as a result of written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any legal or other expenses reasonably
incurred by the Company or any such director, officer, controlling person,
underwriter or other Holder, partner, officer, director, shareholder or
controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the indemnity agreement contained in this Section 4(f)(ii) will not apply
to amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of the Holder, which
consent will not be unreasonably withheld; and provided further, that the total
amounts payable in indemnity by a Holder under this Section 8(f)(ii) in respect
of any Violation will not exceed the aggregate proceeds (net of discounts)
received by such Holder upon the sale of the Registrable Shares and (B) that
proportion of aggregate losses, claims, damages, liabilities or expenses
indemnified against which equals the proportion which the number of Registrable
Shares being sold by such Holder bears to the total number of Registrable Shares
being sold by the Company and all Holders.
(iii) Promptly after receipt by an indemnified party under
this Section 8(f) of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 8(f), deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party will have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party will
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if the indemnifying party is materially
prejudiced thereby, will relieve such indemnifying party of liability, but only
to the extent that such indemnifying party is prejudiced with respect to a
specific claim.
13
(iv) The foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any Holder or
underwriter, or any person controlling such Holder or underwriter, from whom the
person asserting any losses, claims, damages or liabilities purchased
Registrable Shares, if a copy of the prospectus (as then amended or supplemented
if the Company shall have furnished any amendments or supplements thereto)
provided by the Company was not sent or given by or on behalf of such Holder or
underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the purchased Registrable
Shares to such person, and if the prospectus (as so amended or supplemented)
would have cured the defect giving rise to such loss, claim, damage or
liability.
(v) If the indemnification provided for in Sections 8(f)(i)
or 8(f)(ii) hereof shall be unavailable to hold harmless an indemnified party in
respect of any liability under the 1933 Act, then, and in each such case, the
indemnifying party, in lieu of indemnifying such indemnified party hereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such loss, liability, claim, damage or expense in such proportion as
is appropriate to reflect the relative fault of the indemnifying party on the
one hand and of the indemnified party on the other in connection with the
statement or omissions that resulted in such loss, liability, claim, damage or
expense as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission; provided that in no event
shall any contribution under this subsection (v) by any Holder exceed the gross
proceeds from the offering received by such indemnifying party. No person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
II(f) of the 0000 Xxx) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
(vi) The obligations of the Company and Holders under this
Section 8(f) will survive the completion of any offering of Registrable Shares
in a registration statement, and otherwise.
(g) RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the SEC which may at any time
permit the sale of the Registrable Shares to the public without registration,
while a public market exists for the Common Stock of the Company, the Company
will:
(i) make and keep public information available, as those
terms are understood and defined in Rule 144 under the 1933 Act, at all times
while the Company is reporting under the Exchange Act;
(ii) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the 1933
Act and the Exchange Act (at any time it is subject to such reporting
requirements); and
14
(iii) so long as a Holder owns any Registrable Shares,
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of Rule 144, and of the
1933 Act and the Exchange Act (at any time it is subject to the reporting
requirements of the Exchange Act), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company as a
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing a Holder to sell any such Registrable Shares without
registration (at any time the Company is subject to the reporting requirements
of the Exchange Act).
9. MISCELLANEOUS.
(a) GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the internal laws of the State of California
applicable to contracts made among residents of, and wholly to be performed
within, the State of California, without regard to principles of conflict of
laws or choice of laws.
(b) FURTHER INSTRUMENTS. From time to time, each party hereto
will execute and deliver such instruments and documents as may be reasonably
necessary to carry out the purposes and intent of this Agreement.
(c) SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Registrable Shares of Registrable Shares). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
(d) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument. This Agreement will be
effective following the parties signatory hereto upon such counterpart signature
by all initial parties hereto.
(e) ENTIRE AGREEMENT. This Agreement, including and
incorporating the Schedule of Exceptions, all Exhibits attached hereto, and all
agreements and other documents referred to herein, constitutes and contains the
entire agreement and understanding of the parties regarding the subject matter
of this Agreement and supersedes in its entirety any and all prior negotiations,
correspondence, understandings and agreements among the parties respecting the
subject matter hereof, including the Term Sheet.
(f) NOTICES. All notices required to be given or delivered to
the Company under the terms of this Agreement shall be deemed to have been given
or made for all purposes (i) upon personal delivery, or (ii) upon confirmation
receipt that the communication was successfully sent to the applicable number if
sent by facsimile, or (iii) one day after being sent, when sent by professional
overnight courier service, or (iv) five (5) days after posting when sent by
registered or certified mail. Notices to the Company shall be sent to the
principal office
15
of the Company (or at such other place as the Company shall notify the Investor
of in writing). Notices to the Investor shall be sent to the address of the
Investor on the books of the Company (or at such other place as the Investor
shall notify the Company of in writing).
(g) FINDERS' FEE. Each party represents that it neither is nor
will be obligated for any finders' fee or commission in connection with this
transaction other than the fees of the Company payable to Seabury as described
in Section 3(e). Each party agrees to indemnify and to hold the other parties
hereto harmless from any liability for any commission or compensation in the
nature of a finders' fee (and the costs and expenses of defending against such
liability or asserted liability) for which such party or any of its officers,
partners, employees or representatives is responsible.
(h) EXPENSES. Each party shall pay its own expenses, including
counsel fees and investment banker fees, incurred in connection with this
agreement, provided, however, that the Company shall pay for the reasonable
attorneys fees of HRT and SheaCo.
(i) AMENDMENTS. Any term of this Agreement may be amended only
with the written consent of the Company and all of the Investors Any amendment
or waiver shall be binding upon the Company, each Purchaser, and their
transferees and assignees.
(j) SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provisions will be
excluded from this Agreement to the extent unenforceable and the balance of such
provisions, and of this Agreement, will be interpreted as if such provision or
part hereof were so excluded and will be enforceable in accordance with its
terms.
(k) AGGREGATION OF STOCK. All Shares held or acquired by
affiliated entities or persons will be aggregated together for the purpose of
determining the availability of any rights under this Agreement.
16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
COMPANY:
VANGUARD AIRLINES, INC.
By:
-------------------------------------------------
Title:
----------------------------------------------
Address: 000 Xxxxxx Xxxx Xxxxxx
Xxxxxx Xxxx, XX 00000
INVESTORS:
VANGUARD ACQUISITION COMPANY
By:
-------------------------------------------------
Title:
----------------------------------------------
Address: c/o Pegasus Aviation, Inc.
Four Xxxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
THE XXXXXXXXX 1980 REVOCABLE TRUST
By: _________________________________
Title: ________________________________
Address:
X.X. XXXX CO., INC., as Nominee 1998-19
By: _________________________________
Title: ________________________________
Address:
Additional PURCHASERS:
SEABURY ADVISORS, LLC
By: _________________________________
Title: ________________________________
Address:
SEABURY SECURITIES, LLC
By: _________________________________
Title: ________________________________
Address:
EXHIBIT A
SCHEDULE OF INVESTORS
INVESTOR NUMBER OF SHARES
-------- ----------------
Vanguard Acquisition Company 17,500,000
The Xxxxxxxxx 1980 Revocable Trust 2,500,000
X. X. Xxxx Co., Inc., as Nominee 1998-19 2,500,000
Seabury 2,500,000
EXHIBIT B
EXCEPTIONS
[Nasdaq issue...3(f)]
The Company continues to negotiate the terms of lease deferral agreements with
its aircraft lessors.
EXHIBIT C
FORM OF OPINION
[provided separately]
EXHIBIT D
MODIFICATIONS TO EQUITY AGREEMENTS
________________________________________________________________________________
EQUITY INSTRUMENT REQUIRED MODIFICATIONS
________________________________________________________________________________
Series A Preferred Stock Create parity with Series B and C
Waive anti-dilution provisions
________________________________________________________________________________
Series B Preferred Stock Create parity with Series A and C
Waive anti-dilution provisions
________________________________________________________________________________
Series C Preferred Stock Create parity with Series A and B
________________________________________________________________________________
9-8-00 Purchase Agreement Waive anti-dilution provisions as to
this transaction
________________________________________________________________________________
1-18-99 Warrants (PB-81 and Set exercise price at $0.50 per
PB-82) share. Delete section 3(b).
________________________________________________________________________________
9-8-00 Warrants (PB-83 and PB-84) Set exercise price at $0.50 per share
Delete section 8(c).
________________________________________________________________________________
12-15-00 Warrants (PB-85 and Set exercise price at $0.50 per
PB-86) share. Delete section 8(c).
________________________________________________________________________________
2-13-01 Warrants (PB-87 and Set exercise price at $0.50 per
PB-88) share. Delete section 3(b).
________________________________________________________________________________
EXHIBIT E
CERTAIN AIRCRAFT LEASES
[to come from Pegasus]
