WARRANT PURCHASE AGREEMENT
This WARRANT PURCHASE AGREEMENT ("Agreement"), dated as of
August 12, 1996 by and among VANGUARD AIRLINES, INC., a Delaware
corporation ("the "Company"), and the persons and entities named
on the Schedule I attached hereto and their permitted successors
and assigns (individually, a "Purchaser" and, collectively, the
"Purchasers").
SECTION 1. AMOUNT AND TERMS OF THE GUARANTEE; PURCHASE AND
SALE OF WARRANTS
1.1 THE GUARANTEE. Subject to the terms of this Agreement,
the Purchasers shall guarantee and promise to pay to Bank IV,
N.A. ("Lender") or its order, the indebtedness of the Company to
the Lender in the amount of, and on the terms and conditions set
forth in that certain Amendment to Guaranty Agreement, dated
August 12, 1996, executed by each of the Purchasers (the
"Guaranty"). A copy of the Guaranty is attached hereto as
Exhibit A.
1.2 ISSUANCE OF WARRANTS. In consideration of the
Guaranty, the Company will issue to each of the Purchasers a
warrant to purchase shares of the Common Stock in the form
attached hereto as Exhibit B (individually, a "Warrant" and,
collectively, the "Warrants"), which Warrants will be exercisable
into the number of shares of Common Stock set forth opposite such
Purchaser's name on Schedule I at a purchase price to be
determined by the average of the closing sales prices of the
Company's Common Stock for the five trading days prior to the
Closing Date (as hereinafter defined), as quoted on the Nasdaq
SmallCap Market (the "Exercise Price"). The number of the shares
of Common Stock (or other capital stock) issuable upon exercise
of the Warrants (collectively, the "Warrant Shares") and Exercise
Prices are subject to adjustment as provided in the Warrants.
1.3 EXERCISE OF WARRANT. Each Purchaser may exercise his
or its Warrant at any time or from time to time on any business
day during the Exercise Period (as defined in the respective
Warrant) of such Warrant.
SECTION 2. THE CLOSINGS
2.1 CLOSING DATE. The closing (the "Closing") of the
issuance of the Warrants shall be held on August 12, 1996 at
10:00 a.m. at the offices of the Company, or at such other time
or place as the Company and Purchasers shall agree (the "Closing
Date").
2.2 DELIVERY. At the Closing, the Company shall deliver to
each Purchaser a Warrant, and the Purchasers shall deliver to the
Company the Guaranty executed by the Purchasers.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser
as follows:
3.1 ORGANIZATION, GOOD STANDING, QUALIFICATION. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware. The
Company has full power and authority to own and operate its
properties and assets, and to carry on its business as currently
conducted and as currently proposed to be conducted. The Company
is duly qualified and is authorized to do business and is in good
standing as a foreign corporation in all jurisdictions in which
the nature of its activities and of its properties (both owned
and leased) makes such qualification necessary, except for those
jurisdictions in which failure to do so would not have a material
adverse effect on the Company or its business.
3.2 AUTHORIZATION. All corporate action on the part of the
Company, its directors and its shareholders necessary for the
authorization, execution, delivery and performance of this
Agreement by the Company and the performance of the Company's
obligations hereunder, including the issuance and delivery of the
Warrants has been taken or will be taken prior to the Closing.
This Agreement and the Warrants, when executed and delivered by
the Company, shall constitute valid and binding obligations of
the Company enforceable in accordance with their terms, except as
rights to indemnity may be limited by applicable laws and except
as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other
similar laws affecting creditors' rights and subject to general
equity principles and to limitations on availability of equitable
relief, including specific performance. The Common Stock
issuable upon exercise of the Warrants has been duly and validly
reserved and, when issued in compliance with the provisions of
this Agreement, the Warrants and the Amended and Restated
Certificate of Incorporation of the Company (as the same may
hereinafter be amended, the "Certificate of Incorporation"), will
be validly issued, fully paid and nonassessable and free of any
liens or encumbrances.
3.3 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not
in violation of any term of its Certificate of Incorporation,
By-Laws or any statute, rule or regulation applicable to the
Company. The execution, delivery and performance of this
Agreement, the issuance of the shares of Common Stock pursuant to
an exercise of the Warrants in accordance with the Certificate of
Incorporation will not result in any such violation, or be in
conflict with or constitute a default under any such term, or
result in the creation of any mortgage, pledge, lien,
encumbrance, or charge upon any of the properties or assets of
the Company or contravene any provision of, or constitute a
default under, any indenture, mortgage, contract or other
instrument to which it is a party or by which it is bound.
3.4 GOVERNMENT CONSENTS. All consents, approvals, orders,
or authorizations of, or registrations, qualifications,
designations, declarations, or filings with, any government
authority, required on the part of the Company in accordance with
the valid execution and delivery of this Agreement, the offer,
sale or issuance of the Warrants and the capital stock issuable
upon exercise of the Warrants, or the consummation of any other
transaction contemplated have been obtained, except for the
filing of notices pursuant to Regulation D under the Securities
Exchange Act of 1933, as amended (the "Securities Act"), and any
filing required under applicable state securities laws which will
be effective by the time required thereby.
3.5 LITIGATION. There are no actions, suits, audits,
investigations or proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company in any court
or before any governmental commission, board or authority which,
if adversely determined, will have a material adverse effect on
business, financial condition or prospects of the Company or the
ability of the Company to perform its obligations under this
Agreement.
3.6 OFFERING. Assuming the accuracy of the representations
and warranties of the Purchasers contained in Section 4 hereto,
the offer, issue, and sale of the Warrants are and will be exempt
from the registration and prospectus delivery requirements of the
Securities Act, and have been registered or qualified (or are
exempt from registration and qualifications) under the
registration, permit, or qualification requirements of all
applicable state securities laws.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
4.1 REQUISITE POWER AND AUTHORITY. Each Purchaser has all
necessary power and authority under all applicable provisions of
law to execute and deliver this Agreement and to carry out its
provisions. All actions on each Purchaser's part required for
the lawful execution and delivery of this Agreement has been or
will be effectively taken prior to the Closing. Upon execution
and delivery of this Agreement, this Agreement will be a valid
and binding obligation of each Purchaser, enforceable in
accordance with its terms, except (i) as limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws
of general application affecting enforcement of creditors' rights
and (ii) general principles of equity that restrict the
availability of equitable remedies.
4.2 PURCHASE FOR OWN ACCOUNT. Each Purchaser represents
that it is acquiring the Warrants and the capital stock issuable
upon exercise of the Warrants (collectively, the "Securities")
solely for its own account and beneficial interest for investment
and not for sale or with a view to distribution of the Securities
or any part thereof, has no present intention of selling (in
connection with a distribution or otherwise), granting any
participation in, or otherwise distributing the same, and does
not currently have reason to anticipate a change in such
intention.
4.3 INFORMATION AND SOPHISTICATION. Each Purchaser
acknowledges having received all the information such Purchaser
has requested from the Company and considers necessary or
appropriate for deciding whether to acquire the Warrants. Each
Purchaser represents that such Purchaser has had an opportunity
to ask questions and receive answers from the Company regarding
the terms and conditions of the offering of the Warrants and to
obtain any additional information necessary to verify the
accuracy of the information given the Purchaser. Each Purchaser
further represents that such Purchaser has sufficient knowledge
and experience in financial and business matters so as to be
capable of evaluating the merits and risk of this investment.
4.4 ABILITY TO BEAR ECONOMIC RISK. Each Purchaser
acknowledges that investment in the Warrants involves a high
degree of risk, and represents that such Purchaser is able,
without material impairment of financial condition, to hold the
Securities for an indefinite period of time and to suffer a
complete loss of its investment.
4.5 FURTHER LIMITATIONS ON DISPOSITION. Without any way
limiting the representations set forth above, each Purchaser
further agrees not to make any disposition of all or any portion
of the Securities unless and until;
(a) There is then in effect a Registration Statement
under the Securities Act covering such proposed disposition and
such disposition is made in accordance with such Registration
Statement; or
(b) (i) The Purchaser shall have notified the Company
of the proposed disposition and shall have furnished the Company
with a detailed statement of the circumstances surrounding the
proposed disposition, and (ii) if reasonably requested by the
Company, such Purchaser shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration under the
Securities Act.
(c) Notwithstanding the provisions of paragraphs (a)
and (b) above, no such registration statement or opinion of
counsel shall be necessary for a transfer by such Purchaser to a
stockholder or partner (or retired partner) or "affiliate" (as
defined under the Securities Exchange Act of 1934) of such
Purchaser, or transfers by gift, will or interstate succession to
any spouse or lineal descendants or ancestors, if all transferees
agree in writing to be subject to the terms hereof to the same
extent as if they were Purchasers hereunder.
4.6 EXPERIENCE. Each Purchaser is an "accredited investor"
as such term is defined in Rule 501 promulgated under the
Securities Act.
SECTION 5. MISCELLANEOUS
5.1 REGISTRATION RIGHTS. The Purchasers and the Company
agree that all Securities issuable upon exercise of the Warrants
shall be subject to the terms and conditions of that certain
Amended and Restated Investor Rights Agreement, dated August 24,
1994 (as the same may hereinafter be amended, the "Investors'
Rights Agreement"), by and among the Company and those certain
parties identified therein.
5.2 BINDING AGREEMENT. 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. Nothing in
this Agreement, express or implied, is intended to confer upon
any third party any rights, remedies, obligations, or liabilities
under or by reason of this Agreement, except as expressly
provided in this Agreement.
5.3 GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of Delaware as applied to
agreements made and to be performed entirely within the State of
Delaware.
5.4 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same
instrument.
5.5 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not to be
considered in construing or interpreting this Agreement.
5.6 NOTICES. Any notice required or permitted under this
Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery or upon deposit with the
United States Post Office, postage prepaid, addressed to the
Company at 00 XX Xxxx Xxxxxx, Xxxxxxxx X, Xxxxxx Xxxx
International Airport, Mezzanine, Xxxxxx Xxxx, XX 00000 or to a
Purchaser at its address shown on Schedule I, or at such other
address as such party may designate by ten (10) days advance
written notice to the other party.
5.7 MODIFICATION; WAIVER. No modification or waiver of any
provision of this Agreement or consent to departure therefrom
shall be effective unless in writing and approved by the Company
and the holders of more than fifty percent (50%) of the
outstanding Warrants.
IN WITNESS WHEREOF, the parties have executed this Agreement
as to the date first written above.
VANGUARD AIRLINES, INC.
By:___________________________
Name: Xxxxx X. Xxxxxxx
Title: Vice President
and General Counsel
PURCHASER
______________________________
Name:
Title:
VANGUARD AIRLINES, INC.
____________________________________________
WARRANT PURCHASE AGREEMENT
____________________________________________
As of August 12, 1996
