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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Vanguard Airlines, Inc.
-----------------------
(Name of Issuer)
Common Stock
------------------------------
(Title of Class of Securities)
922018-10-9
--------------
(CUSIP Number)
The Hambrecht 1980 Revocable Trust c/o William R. Hambrecht
550 Fifteenth Street, San Francisco, CA 94103
(415) 551-8600
-----------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
September 8, 2000
-------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. Seess.240.13d-7 for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act, but shall be subject to all other provisions of the Act (however, see
the Notes).
<PAGE>
------------------- ------------------------------
CUSIP No. 922018109 13D Page _______ of _______ Pages
------------------- ------------------------------
--------------------------------------------------------------------------------
1) Names of Reporting Persons, I.R.S. Identification Nos. of Above Persons
(entities only)
The Hambrecht 1980 Revocable Trust
--------------------------------------------------------------------------------
2) Check the Appropriate Box if a Member of a Group (See Instructions)
(a) [ ]
(b) [ ]
--------------------------------------------------------------------------------
3) SEC Use Only
--------------------------------------------------------------------------------
4) Source of Funds (See Instructions)
OO
--------------------------------------------------------------------------------
5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items
2(d) or 2(e) [ ]
--------------------------------------------------------------------------------
6) Citizenship or Place of Organization
California
--------------------------------------------------------------------------------
Number of Shares 7) Sole Voting Power - 8,061,610
----------------------------------------------------
Beneficially Owned 8) Shared Voting Power - None
----------------------------------------------------
by Each Reporting 9) Sole Dispositive Power - 8,061,610
----------------------------------------------------
Person with: 10) Shared Dispositive Power - 0 shares
--------------------------------------------------------------------------------
11) Aggregate Amount Beneficially Owned by Each Reporting Person
8,061,610 shares
--------------------------------------------------------------------------------
12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares [ ]
(See Instructions)
--------------------------------------------------------------------------------
13) Percent of Class Represented by Amount in Row (11)
37.1%
--------------------------------------------------------------------------------
14) Type of Reporting Person (See Instructions)
OO (trust)
--------------------------------------------------------------------------------
2
<PAGE>
ITEM 1 SECURITY AND ISSUER.
This Schedule 13D relates to the common stock, $0.001 par value (the
"Common Stock"), of Vanguard Airlines, Inc., a Delaware corporation
(the "Issuer"). The principal executive office and mailing address
of the Issuer is 700 Squibb Road, Third Floor, Mission, Kansas
66202.
ITEM 2 IDENTITY AND BACKGROUND.
(a) (b) and (c) This Schedule 13D is filed on behalf of The
Hambrecht 1980 Revocable Trust (the "Trust" or the "Reporting
Person")
The Hambrecht 1980 Revocable Trust is a California revocable trust.
The trustee of the trust is William R. Hambrecht, whose occupation is
investing in public and private companies. The address of the trust
is 550 Fifteenth Street, San Francisco, California 94103. The
Reporting Person is regularly engaged in the business of investing in
publicly-held and private companies.
(d) To the best knowledge of the Reporting Person, during the past
five years, none of the entities or individuals identified in
this Item 2 have been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).
(e) To the best knowledge of the Reporting Person, during the past
five years, none of the entities or individuals identified in
this Item 2 has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and
therefore was not and is not subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
On June 13, 2000 and July 12, 2000, the Trust paid the Issuer
$2,000,000 in aggregate for the purchase of Common Stock. In return,
the Issuer issued two demand notes to the Trust, each in the amount
of $1,000,000, to be cancelled upon completion and execution of
documents for the Trust's purchase of Common Stock and warrants to
purchase Common Stock (the "Purchase"). On September 8, 2000, the
Purchase closed and the Trust received 1,186,898 shares of Common
Stock and warrants to purchase 1,186,898 shares of Common Stock
pursuant to the cancellation of the demand note and accrued interest
in the aggregate amount of $2,038,260.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Person purchased the securities to increase its equity
interest in the Issuer. Depending upon market conditions and other
factors, the Reporting Person may acquire or dispose of additional
securities of the Issuer, in the open market, in privately negotiated
transactions or otherwise.
3
<PAGE>
In connection with its investments, the Reporting Person analyzes the
operations, capital structure and markets of the companies in which
it invests, including the Issuer. As a result of these analytical
activities, Reporting Person may suggest or take a position with
respect to potential changes in the strategic direction, operations,
management or capital structure of such companies as a means of
enhancing shareholder value. Such communications may take place with
Issuer's management, members of the Board of Directors, other
shareholders, security analysts or others. In particular, the
Reporting Person believes that it would be desirable for the Issuer
to explore various strategic, operating and/or financial
relationships with others, including possible business combinations.
Although the Reporting Person reserves the right to develop plans or
proposals in the future with respect to the following items, except
as set forth above at the present time it has no plans or proposals
that relate to or would result in any of the following:
(a) the acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any
of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the
number or term of directors or to fill any existing vacancies
on the board;
(e) any material change in the present capitalization or dividend
policy of the Issuer;
(f) any other material change in the Issuer's business or corpo-
rate structure;
(g) changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the
acquisition of control of the Issuer by any person;
(h) causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of
a registered national securities association;
(i) a class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4)
of the Securities Exchange Act of 1934; or
(j) any action similar to any of those enumerated in (a) through
(i) above.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
4
<PAGE>
(a), (b) According to information furnished by the Issuer on its
most recent Form 10Q, there were 17,109,921 shares of Common
Stock issued and outstanding as of June 30, 2000. Based on
such information, after taking into account the transactions
described herein, the Reporting Person reports the following
direct and derivative holdings in the Common Stock:
<TABLE>
<CAPTION>
COMMON STOCK
COMMON STOCK FROM DERIVATIVE
NAME OWNED DIRECTLY SECURITIES TOTAL
<S> <C> <C> <C>
The Hambrecht 1980
Revocable Trust 4,644,685 3,416,925* 8,061,610**
</TABLE>
* Represents currently exercisable warrants to purchase 2,536,694
shares of Common Stock and 880,231 shares of Common Stock issuable
upon conversion of 151,160 shares of the Issuer's Series A Preferred
Stock.
** Represents 37.1% of the Issuer's issued and outstanding Common
Stock (computed in accordance with Rule 13d-3(d)(1)(i) of the
Securities Exchange Act of 1934, as amended). The Reporting Person
has sole voting and dispositive power over all shares reported.
(c) The Reporting Person did not effect any transactions other
than those set forth in Items 3 and 4 above.
(d) William R. Hambrecht is trustee of the Trust and is a benefi-
cial owner as defined in Rule 13d-3.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
The Reporting Person holds 151,160 shares of the Issuer's Series A
Preferred Stock, immediately convertible into 880,231 shares of
Common Stock, which was purchased pursuant to the Series A Preferred
Stock Purchase Agreement dated March 20, 1998, by and among the
Issuer, the Reporting Person and other purchasers. The Reporting
Person also holds warrants to purchase 2,536,694 shares of Common
Stock, which are immediately exercisable, which the reporting person
acquired in the transaction referred to above.
[Remainder of page intentionally left blank]
5
<PAGE>
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
The following material is filed as an Exhibit to this Schedule 13D:
1. Unit Purchase Agreement, dated September 8, 2000, between the
Issuer, the Trust and J.F. Shea Co., Inc.
SIGNATURE.
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true,
complete and correct.
(Date)
/s/ WILLIAM R. HAMBRECHT
--------------------
William R. Hambrecht, trustee for the Hambrecht 1980 Revocable Trust
--------------------------------------------------------------------
(Name/Title)
6
<PAGE>
EXHIBIT A
UNIT PURCHASE AGREEMENT
This Unit Purchase Agreement (the "Agreement") is made and
entered into as of September 8, 2000 by and among Vanguard Airlines, Inc., a
Delaware corporation (the "Company"), and those parties listed on the signature
page hereof as "Investors" (who 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 UNITS; CLOSING; DELIVERY.
(a) 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 units set forth opposite each
Investor's name on EXHIBIT A. The purchase price per Unit (the "Unit Purchase
Price") shall be $1.7173, subject to adjustment as provided for in Section 8 of
this Agreement. A "Unit" shall be composed of one share (a "Share") of Common
Stock, $0.001 par value, of the Company (the "Common Stock"), and a warrant in
the form attached hereto as EXHIBIT B (a "Warrant") to purchase one share of
Common Stock, $0.001 par value (the "Warrant Shares"). The exercise price of the
Warrant shall be equal to the Unit Purchase Price plus ten percent (10%) per
Warrant Share.
(b) CLOSING. The closing ("Closing") shall take place on the date hereof and
the Investors shall purchase on the date hereof the number of Units indicated
for each Investor on EXHIBIT A. The date of each Closing is hereinafter referred
to as the "Closing Date."
(c) DELIVERY. Subject to the terms and conditions of this Agreement, at a
Closing, the Company shall deliver to each Investor (i) a stock certificate
representing the Common Stock included in the Units to be PURCHASED by such
Investor and (ii) a Warrant reflecting the number of Warrant Shares to be
purchased, against payment of the purchase price therefor by cancellation of
indebtedness, including any interest thereon, a check payable to the order of
the Company, or by wire transfer of immediately available funds to the bank
account of the Company.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Investor.
(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 presently
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 has all necessary
corporate power and authority under the laws of the State of Delaware and all
other applicable provisions of law to
<PAGE>
execute and deliver this Agreement, to issue the Common Stock, the Warrants and
the Warrant Shares and to carry out the provisions of this Agreement and the
Warrants. 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 Common Stock the Warrants and the Warrant Shares has been duly and
effectively taken. Upon execution and delivery, this Agreement and the Warrants,
when issued, constitute valid and binding 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 Common Stock and the Warrants (and the
Warrant Shares issuable upon exercise of the Warrants) 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, the Warrants or the Warrant Shares. The Company has
reserved such number of shares of its Common Stock necessary for issuance of the
Warrant Shares and the Common Stock
(c) CONSENTS. No consent, approval, authorization or order of any court,
governmental agency or third parry 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, the Warrants and the
Warrant Shares) and under the Company's Certificate of Incorporation, as amended
and restated (the "Restated Certificate").
(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 , 1996 (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") 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. 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, 600,000 of which have been designated Series A
Preferred Stock. As of August 1, 2000,
2
<PAGE>
there were 17,109,921 shares of Common Stock, 302,362 shares of Series A
Preferred Stock issued and outstanding. All outstanding shares of Common Stock
and Preferred Stock have been duly authorized and validly issued and are fully
paid and nonassessable. Except for (A) 2,793,713 shares of Common Stock issuable
upon exercise of the Warrants and exercise of the Company's outstanding
warrants, (B) 4,649,726 shares of Common Stock issuable upon exercise of stock
options granted to employees, consultants, offcers or directors of the Company
and (C) 1,209,448 shares issuable upon conversion of the Series A Preferred
Stock, 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. Since June 1, 2000 the Company has not issued any
shares of capital stock or any options, warrants or other rights with respect
thereto except for shares issued upon exercise of options, warrants or rights,
all as set forth on the Schedule of Exceptions.
(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 Common Stock, the
Warrants and the Warrant 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 the date of the Company's most
recent quarterly report on Form 10-Q or most recent periodic report on Form 8-K
filed with the SEC, 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 would materially adversely affect the execution by
the Company of, or the performance by the Company of its obligations under, this
Agreement.
(i) REGISTRATION RIGHTS. Except as set forth in the Registration Rights
Agreement dated March 20, 1998 (the "Registration Rights Agreement"), the
Company has not granted or agreed
3
<PAGE>
to grant any registration rights, including piggyback rights, to any person or
entity. None of the registration rights contained in the Registration Rights
Agreement are senior to the registration rights provided for in this Agreement.
(j) NO MISREPRESENTATION. No representation or warranty by the Company in
this Agreement and no statements in the SEC Documents, as amended, nor any other
document, statement, certificate or schedule furnished or to be furnished by or
on behalf of the Company pursuant to this Agreement, when taken together with
the foregoing, 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. The Company has delivered true and complete copies of all documents
requested by the Investors.
3. REPRESENTATIONS AND WARRANTIES OF INVESTORS. Each Investor represents
and warrants, severally and not jointly, to the Company that:
(a) AUTHORIZATION. Such Investor has full power and authority to enter into
this Agreement, and this Agreement constitutes the valid and legally binding
obligation of such Investor, 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 except as indemnity provisions in the enforcement of Section 4 of this
Agreement (relating to registration rights) may be limited by law.
(b) PURCHASE FOR INVESTMENT. Such Investor is purchasing the Units for
investment purposes only and not with a view to, or for sale in connection with,
a distribution of the Units within the meaning of the 1933 Act. Such Investor
has no present intention of selling or otherwise disposing of all or any portion
of the Units.
(c) ACCESS TO INFORMATION. Such Investor 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 that such
Investor has deemed necessary and appropriate as a prudent and knowledgeable
investor in evaluating the risks of purchasing the Units. 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 Investors to rely
thereon.
(d) UNDERSTANDING OF RISKS. Such Investor is fully aware of (i) the
highly speculative nature of the investment in the Units; (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
of Common Stock, the Warrants and the Warrant Shares (collectively, the
"Securities") and the restrictions on the transferability of the Securities
(e.g., that such Investor may not be able to sell or dispose of the Securities
or use them as collateral for loans); and (v) the tax consequences of investment
in the Units. 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 Investors to rely thereon.
(e) INVESTOR'S QUALIFICATIONS. Such Investor is an "accredited" investor as
defined under Regulation D under the 1933 Act. Such Investor is aware of the
general business and financial
4
<PAGE>
circumstances of the Company and, by reason of such Investor's business or
financial experience, such Investor 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 Investor understands and
acknowledges that, in reliance upon the representations and warranties made by
such Investor herein. the Securities 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"). 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 Investors ability to transfer the Common Stock and the
Warrant Shares.
(g) RESTRICTIONS ON TRANSFER. Such Investor understands that such Investor
may not transfer any of the Securities unless such Securities are registered
under the 1933 Act or pursuant to an exemption from such registration and
qualification requirements. Such Investor understands that only the Company may
file a registration statement with the SEC. Such Investor has also been advised
that exemptions from registration and qualification may not be available or may
not permit such Investor to transfer all or any of the Securities in the amounts
or at the times proposed by such Investor.
(h) RULE 144. In addition, such Investor has been advised that SEC Rule 144
("Rule 144") promulgated under the 1933 Act, which permits certain limited sales
of unregistered securities, is not presently available with respect to the
Securities solely due to the holding periods required thereunder and, in any
event, requires that the Securities 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 Investor
understands that Rule 144 may indefinitely restrict transfer of the Securities
if such Investor 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 Investor understands that
certificates or other instruments representing any of the Securities acquired by
such Investor may bear legends substantially similar to the following, in
addition to any other legends required by federal or state laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR THE LAWS OF
ANY STATE. 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.
5
<PAGE>
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 Securities, or if the Company transfers its own
securities, 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
Securities shall be removed, and the Company shall issue a certificate or
warrant without such legend to the holder thereof, if such Securities 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 securities may be made without registration.
4. REGISTRATION RIGHTS.
(a) DEFINITIONS. For purposes of this Section 4:
(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) "Registrable Securities" means (A) all shares of Common Stock hereunder,
(B) all shares of Common Stock issued or issuable pursuant to the exercise of
the Warrants, and (C) any Common Stock of the Company issued (or issuable upon
the conversion or exercise of any warrant, right or other security that is
issued) as a dividend or other distribution with respect to, or in exchange for,
or in replacement of the shares referenced in (A), (B) or (C) above.
(iii) "Holder" means any person owning of record Registrable Securities that
have not been sold to the public or any assignee of record of such Registrable
Securities to whom rights under this Section 4 (and/or, with respect to the
rights of the Investors set forth in Section 5, under such Section 5) have been
assigned in accordance with this Agreement.
(b) SHELF REGISTRATION. The Company shall
(i) prior to August 31, 2001, both file a registration
statement under the 1933 Act for and all such qualifications and registrations
as may be so required and as would permit the sale and distribution of all of
the Holders' Registrable Securities 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 the reasonable fees and disbursements of one
6
<PAGE>
counsel for the selling Holder or Holders and counsel for the Company; 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
effective date of the registration statement filed pursuant to this Section
4(b), or (B) the date on which each Holder of Registrable Securities is able to
sell all of such Holder's Registrable Securities 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 Securities 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 Securities under this Agreement, the Company will, as
expeditiously as reasonably possible:
(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 ail securities 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 Securities owned by them that are included in
such registration;
(iii) use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or "blue sky" laws of
such jurisdictions as shall be reasonably requested by the Holders, provided
that the Company 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;
(v) cause all such Registrable Securities registered pursuant hereunder to
be listed on the Nasdaq Stock Market or each other securities exchange on which
similar securities issued by the Company are then listed;
(vi) provide a transfer agent and registrar for all Registrable Securities
registered pursuant hereunder and a CUSIP number for all such Registrable
Securities, in each case not later than the effective date of such registration;
and
(vii) 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 Securities, 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
7
<PAGE>
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 Securities 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 Securities 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 Securities 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.
Upon the commencement of a Blackout Period pursuant to this
Section 4, Holder will immediately notify the Company of any contracts to sell
any Registrable Securities (each a "Sales Contract") that Holder or any of its
affiliates has entered into prior to notification of the commencement of such
Blackout Period and that would require delivery of such Registrable Securities
during such Blackout Period, which notice will contain the aggregate sale price
and volume of Registrable Securities pursuant to such Sales Contract. Upon
receipt of such notice, the Company will immediately notify Holder of its
election either (i) to terminate the Blackout Period and, as promptly as
practicable, amend or supplement the registration statement or the prospectus
filed as a part thereof in order to correct the material misstatement or
omission and deliver to Holder copies of such amended or supplemented
registration statement and prospectus or (ii) to continue the Blackout Period in
accordance with this paragraph. If the Company elects to continue the Blackout
Period, and Holder or any of its affiliates is therefore unable to consummate
the sale of Registrable Securities pursuant to the Sales Contract (such unsold
Registrable Securities being hereinafter referred to herein as the "Unsold
Securities"), the Company will promptly indemnify each Holder against any loss,
claim or damage that each Holder may incur arising out of or in connection with
Holder's breach or alleged breach of any such Sales Contract, and the Company
shall reimburse each Holder for any reasonable costs or expenses (including
reasonable legal fees) incurred by such party in investigating or defending any
such proceeding (collectively, the "Indemnification Amount"); provided, however,
that each Holder shall take all actions reasonably necessary or appropriate to
mitigate such Indemnification Amount; and provided further, however, that as
long as a current prospectus is delivered to such Holder within one trading day
of the end of the Blackout Period, the Indemnification Amount shall be reduced
by an amount equal to the number of Unsold Securities multiplied by the
difference between (x) the actual per share price received by Holder or any of
its affliates upon the sale of the Unsold Securities (if such sale occurs within
three (3) trading days of the end of the Blackout Period) or the closing sale
price of the Common Stock on the Nasdaq Stock Market or other national
securities exchange on which the Common Stock is then listed on the third
trading day after the end of the Blackout Period (if the Unsold Securities are
not sold by Investor or any of its affiliates within three (3) trading days of
the end of the
8
<PAGE>
Blackout Period), and (y) the per share sale price for the Unsold Securities
provided in the Sales Contract.
(d) FURNISH INFORMATION. It will be a condition precedent to the obligations
of the Company to take any action pursuant to Section 4 hereof that the selling
Holders will furnish to the Company such information regarding themselves, the
Registrable Securities held by them, and the intended method of disposition of
such securities as will be required to effect the registration of their
Registrable Securities.
(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 4.
(f) INDEMNIFICATION. In the event any Registrable Securities are included in
a registration statement under Section 4 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 1933 Act) 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 securities law or any rule or regulation
promulgated under the 1933 Act, the Exchange Act or any federal or state
securities 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 4(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 expressly for
use in connection with such registration by such Holder, partner, shareholder,
officer, director, underwriter or controlling person of such Holder.
9
<PAGE>
(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
securities 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, offcer, 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 4(f)(ii) in respect of any Violation
will not exceed the lesser of (A) the aggregate proceeds (net of discounts)
received by such Holder upon the sale of the Shares or Warrant Shares and (B)
that proportion of aggregate losses, claims, damages, liabilities or expenses
indemnified against which equals the proportion which the number of Registrable
Securities being sold by such Holder bears to the total number of Securities
being sold by the Company and all Holders.
(iii) Promptly after receipt by an indemnified party under this Section 4(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 4(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.
(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 shares, if a copy of the
prospectus (as then amended or supplemented if the Company shall have
10
<PAGE>
furnished any amendments or supplements thereto) provided by the Company was
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 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 4(f(i)or 4(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 11(f) of
the 1933 Act) 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 4(f) will
survive the completion of any offering of Registrable Securities 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 Securities 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
(iii) so long as a Holder owns any Registrable Securities, 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
11
<PAGE>
securities without registration (at any time the Company is subject to the
reporting requirements of the Exchange Act).
5. COVENANTS.
(a) AFFIRMATIVE COVENANTS. The Company covenants and agrees that unless the
Holders of a majority of Registrable Securities shall otherwise give their prior
consent in writing (which consent any such Holder may at its sole discretion
withhold):
(i) RESERVED SHARES. The Company shall from and at all times after the
Closing maintain a reserve of authorized shares sufficient exercise in full of
the outstanding Warrants until the expiration or earlier exercise of the
Warrants, respectively.
(ii) 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.
6. CONDITIONS TO OBLIGATIONS OF THE INVESTORS. The obligation of each
Investor to purchase the Units at each Closing is subject to the fulfillment on
or prior to the applicable Closing Date 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 applicable
Closing Date 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 applicable Closing Date.
(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.
(c) OFFICER'S CERTIFICATE. The Company shall have delivered to the
Investors a certificate executed by the Chief Executive officer of the Company,
dated the Closing Date, certifying to the fulfillment of the conditions
specified in subsections (al) and (b) of this Section 6.
(d) OPINION OF COMPANY'S COUNSEL. Investors shall have received from Brian
Gillman, General Counsel to the Company, an opinion addressed to the Investors,
dated the Closing Date in substantially the form attached hereto as EXHIBIT C
dated as of the date hereof.
7. CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligation of the Company
to sell and issue the Shares to each Investor at the Closing is subject to the
fulfillment on or prior to the Closing Date of the following conditions, any of
which may be waived by the Company:
12
<PAGE>
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties made
by such Investor in Section 3 hereof shall be true and correct when made, and
shall be true and correct on the applicable Closing Date with the same force and
effect as if they had been made on and as of said date.
(b) CONSENTS AND WAIVERS. The conditions set forth in subsection(b) of
Section 6 hereof shall have been fulfilled.
8. ADJUSTMENT FOR DILUTIVE ISSUANCES. Additional shares of Common Stock
shall be issued to the Investors from time to time as follows:
(a) If the Company shall issue, at any time and from
time to time after the Closing Date to and including
September _ 2003, any Dilutive Stock (as defined below)
without consideration or for a consideration per share less
than the Unit Price then on each such occasion the Company
shall issue additional shares of Common Stock to each
Investor as follows:
NAS=(1.7173-PPSDS) X SCS
---------------------
PPSDS
Where NAS means the number of additional shares of
Common Stock to be issued to each Investor, SCS means the
Shares of Common Stock issued to such Investor hereunder
(without counting any Warrant shares), and PPDS means the
price per share of the Dilutive Stock.
(b) (i) In the case of the issuance of Common Stock
for cash the consideration shall be deemed to be the amount
of cash paid therefor before deducting any discounts,
commissions or other expenses allowed, paid or incurred by
this Company for any underwriting or otherwise in connection
with the issuance and sale thereof.
(ii) In the case of the issuance of the Common Stock
for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair
value thereof as determined by the Board of Directors
irrespective of any accounting treatment.
(iii) In the case of the issuance of options to
purchase or rights to subscribe for Common Stock, securities
by their terns convertible into or exchangeable for Common
Stock or options to purchase or rights to subscribe for such
convertible or exchangeable securities, the following
provisions shall apply for all purposes of this subsection:
13
<PAGE>
(1) The shares of Common Stock deliverable upon
exercise (to the extent then exercisable) of such options to purchase or rights
to subscribe for Common Stock shall be deemed to have been issued at the time
such options or rights were issued and for a consideration equal to the
consideration (determined in the manner provided in subsections 8(b)(i) and
(b)(ii), if any, received by the Company upon the issuance of such options or
rights plus the minimum exercise price provided in such options or rights for
the Common Stock covered thereby.
(2) The shares of Common Stock deliverable upon
conversion of, or in exchange (to the extent then convertible or exchangeable)
for, any such convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be deemed to have
been issued at the time such securities were issued or such options or rights
were issued and for a consideration equal to the consideration, if any, received
by the Company for any such securities and related options or rights (excluding
any cash received on account of accrued interest or accrued dividends), plus the
minimum additional consideration, if any, to be received by the Company upon the
conversion or exchange of such securities or the exercise of any related options
or rights (the consideration in each case to be determined in the manner
provided in subsections 8(b)(i) and (b)(ii)).
(3) In the event of any change in the consideration
payable to the Company upon exercise of such options or rights or upon
conversion of or in exchange for such convertible or exchangeable securities,
including, but not limited to, a change resulting from the antidilution
provisions thereof; the PPSDS, to the extent in any way affected by such
options, rights or securities, shall be recomputed to reflect such change, but
no further adjustment shall be made for the actual issuance of Common Stock or
any payment of such consideration upon the exercise of any such options or
rights or the conversion or exchange of such securities.
(4) The shares of Common Stock deemed issued and the
consideration deemed paid therefor pursuant to subsections 8(b)(iii)(1) and (2)
shall be appropriately adjusted to reflect any change, termination or expiration
of the type described in either subsection 8(b)(iii)(3) or (4).
(c) "Dilutive Stock" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to subsection 8(b)(iii)) by this Company
after the Closing Date other than:
(i) Common Stock issued pursuant to a transaction described
in subsections 8 (d) or (e)hereof; or
(ii) Shares of Common Stock issuable or issued to employees,
consultants, directors or vendors (if in transactions with primarily
14
<PAGE>
non-financing purposes) of this Company directly or pursuant to a stock option
plan, employee stock purchase plan or other plan or agreement approved by the
Board of Directors of the Company.
(d) STOCK SPLITS AND DIVIDENDS. In the event the Company should at any time
or from time to time after the Closing Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
by such holder for the additional shares of Common Stock or the Common Stock
Equivalents (including the additional shares of Common Stock issuable upon
conversion or exercise thereof), then, as of such record date (or the date of
such dividend distribution, split or subdivision if no record date is fixed),
the Unit Price, solely for purposes of adjustment in this Section, shall be
appropriately decreased.
(e) COMBINATIONS. If the number of shares of Common Stock outstanding at
any time after the Closing Date is decreased by a combination of the outstanding
shares of Common Stock, then, following the record date of such combination, the
Unit Price shall be appropriately increased solely for purposes of calculating
adjustments under this Section in proportion to such decrease in outstanding
shares,
(f) NO IMPAIRMENT. The Company will not, by amendment of its Restated
Certificate or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Company, but it will at all times in good
faith assist in the carrying out of all of the provisions of this Section 8 and
in the taking of all such action as may be necessary or appropriate in order to
protect the holders of the Common Stock against impairment.
(g) CERTIFICATE AS TO ADJUSTMENTS. Upon the occurrence of any event covered
by this Section 8; the Company, at its expense, shall promptly make all
computations relating to such event in accordance with the terms hereof and
prepare and furnish to each Investor a certificate setting forth such
computation and showing in detail the facts upon which such computations are
based as well as an originally issued stock certificate respresenting the number
of shares to be issued in connection therewith, investor
(h) NOTICES. Any notice required by the provisions of this Section 8 to be
given to the Investors shall be deemed given if deposited in the United States
mail, postage prepaid, and addressed to each Investor at his or her address
appearing on the books of this Company
15
<PAGE>
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 shares of Registrable Securities). 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 and all Exhibits attached hereto and 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 arid all prior negotiations, correspondence, understandings and agreements
among the parties respecting the subject matter hereof.
(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 (ii) 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 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 described in this section. 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
16
<PAGE>
defending against such liability or asserted liability) for which such party or
any of its officers. partners, employees or representatives is responsible.
(h) AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and
the observance of any term of the Agreement may be waived (either generally or
in a particular instance and either retroactively or prospectively), only with
the written consent of the Company and by Investors holding at least a majority
of the Registrable Securities. Any amendment or waiver effected in accordance
with this Section 8(h) will be binding upon the Company, each Investor, and
their permitted transferees and assignees.
(i) 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.
(j) AGGREGATION OF STOCK. All Securities 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.
(k) EXPENSES. The Company shall pay all of the costs and expenses that
it incurs, and will pay the reasonable fees and expenses of McCutchen, Doyle,
Brown & Enersen, LLP counsel to the Investors, with respect to the negotiation,
execution, delivery and performance of this Agreement. The Company shall at its
own expense prepare and file all filings required to be made by the Investors
under the Exchange Act as a result of their purchase of the Units or shall
reimburse each Investor for its expenses (including filing fees) incurred in
preparing and filing such filings if the Company chooses not to do so.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date and year first above written.
COMPANY
VANGUARD AIRLINES, INC.
By:/s/JEFF S. POTTER
------------------
Jeff S. Potter
Name:
------------------------------
Title:
------------------------------
Address:
------------------------------
------------------------------
INVESTOR:
J.F. SHEA CO., INC., as nominee 1998-19
By:/s/EDMUND H. SHEA, JR.
----------------------
Edmund H. Shea, Jr.
Name: Edmund H. Shea, Jr.
-------------------
Title: Vice President
-------------------
Address: 655 Brea Canyon Road
Walnut, CA 91788-0489
THE HAMBRECHT 1980 REVOCABLE TRUST
By:/s/WILLIAM R. HAMBRECHT
-----------------------
William R. Hambrecht, Trustee
Address: 550 15th Street
San Francisco, CA 94103
18
<PAGE>
EXHIBIT A
<TABLE>
<CAPTION>
INVESTORS
Pro Rata
Share Investment
-------- ----------
<S> <C> <C>
J. F. Shea Co., Inc., As nominee 1998-19 1,172,325 $2,013,233
The Hambrecht 1980 Revocable Trust 1,186,898 $2,038,260
</TABLE>
19
<PAGE>
EXHIBIT B
WARRANT TO PURCHASE COMMON STOCK
20
<PAGE>
EXHIBIT C
FORM OF OPINION OF COMPANY'S COUNSEL
21
