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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 18, 2000
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flightserv.com
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(Exact name of registrant as specified in its charter)
Delaware 1-8662 23-2265039
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
3343 Peachtree Road, N.E., Suite 530, Atlanta, Georgia 30326
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (404) 869-2599
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Item 5. Other Events
As of January 18, 2000, flightserv.com (the "Company") entered into
common stock purchase agreements (the "Purchase Agreements") with Acqua
Wellington Value Fund, Ltd., a company organized under the laws of the Bahamas
("AWVF"), and Four Corners Capital, LLC, a Delaware limited liability company
("Four Corners" and, together with AWVF, the "Investors"), which provide for an
equity financing package consisting of the sale of restricted common stock and
warrants with total proceeds of up to $59.7 million, assuming the Investors
exercise all warrants.
Under the terms of the AWVF Purchase Agreement, AWVF agreed to purchase
from the Company, for an aggregate purchase price of $10 million, (i) 1,650,709
shares of restricted common stock; (ii) warrants (the "AWVF Fixed Warrants") to
purchase up to 1,155,497 shares of common stock at a purchase price equal to
$6.058 per share and (iii) warrants (the "AWVF Variable Warrants") to purchase
up to 2,104,654 shares of common stock at a purchase price equal to the lesser
of (x) $9.772 per share or (y) 90% of the volume weighted average price of the
common stock for the 5 trading days prior to the exercise of the warrants. The
AWVF Fixed Warrants and 866,623 of the AWVF Variable Warrants expire 18 months
after the date of issuance. The remaining AWVF Variable Warrants expire 5 years
after the date of issuance. Pursuant to the AWVF Purchase Agreement, the AWVF
transaction is to be completed in two equal tranches. The first tranche for $5
million closed simultaneously with the execution of the AWVF Purchase Agreement
and the second tranche is to close no later than February 29, 2000.
Under the terms of the Four Corners Purchase Agreement, Four Corners
agreed to purchase from the Company, for an aggregate purchase price of $1
million, (i) 165,070 shares of restricted common stock, (ii) warrants (the "Four
Corners Fixed Warrants") to purchase up to 1,485,638 shares of common stock at
an exercise price of $6.058 per share and (iii) warrants (the "Four Corners
Variable Warrants") to purchase up to 1,238,030 shares of common stock at a per
share exercise price equal to the lesser of (x) $9.772 or (y) 90% of the volume
weighted average price of the common stock for the 5 trading days prior to the
date of the exercise of the warrants. The Four Corners Fixed Warrants and
1,114,228 of the Four Corners Variable Warrants expire 18 months after the date
of issuance. The remaining Four Corners Variable Warrants expire 5 years after
the date of issuance. The exercise of the Four Corners Fixed Warrants and the
Four Corners Variable Warrants are limited to 660,976 shares and 495,732 shares,
respectively, unless and until the exercise of such warrants is approved by the
Company's stockholders.
In addition, the Company, AWVF and Four Corners entered into a
Registration Rights Agreement pursuant to which the Company provided certain
registration rights to AWVF and Four Corners with respect to both the restricted
common stock and the shares underlying the warrants issued to the Investors
under the Purchase Agreements as well as shares and shares underlying certain
options and warrants previously issued to Four Corners (collectively, the
"Registrable Securities"). Under
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the terms of the Registration Rights Agreement, the Company has agreed to use
its reasonable efforts to file a registration statement with respect to the
resale of the Registrable Securities by March 18, 2000. In the event that the
registration statement does not become effective within 120 days of January 18,
2000, the exercise price for the AVWF Variable Warrants and the Four Corners
Variable Warrants will be reduced by 10% and by an additional 10% for each 30
day period thereafter until the registration statement is declared effective.
Copies of the Purchase Agreements (which include the forms of warrants)
and the Registration Rights Agreement are filed herewith as exhibits and are
incorporated herein by reference.
On January 24, 2000, the Company issued a press release announcing the
equity financing, a copy of which is filed as an exhibit hereto and incorporated
herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
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2.1 Common Stock Purchase Agreement dated as of January 18, 2000
between flightserv.com and Acqua Wellington Value Fund, Ltd.
2.2 Common Stock Purchase Agreement dated as of January 18, 2000
between flightserv.com and Four Corners Capital, LLC
4.1 Registration Rights Agreement dated as of January 18, 2000
between flightserv.com and Acqua Wellington Value Fund, Ltd.
and Four Corners Capital, LLC
99.1 Press Release dated January 24, 2000
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FLIGHTSERV.COM
By: /s/ William L. Wortman
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Vice President & Chief Financial Officer
Dated: January 27, 2000
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EXHIBIT 2.1
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF JANUARY 18, 2000
BETWEEN
FLIGHTSERV.COM
AND
ACQUA WELLINGTON VALUE FUND, LTD.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
ARTICLE I Purchase and Sale of Common Stock...............................................................1
Section 1.1 Purchase and Sale of Stock...........................................................1
Section 1.2 The Warrants.........................................................................1
Section 1.3 Purchase Price and Closing...........................................................2
ARTICLE II Representations and Warranties..................................................................2
Section 2.1 Representation and Warranties of the Company.........................................2
Section 2.2 Representations and Warranties of the Purchaser.....................................10
ARTICLE III Covenants......................................................................................12
Section 3.1 Securities Compliance...............................................................13
Section 3.2 Registration and Listing............................................................13
Section 3.3 [Intentionally Omitted.]............................................................13
Section 3.4 [Intentionally Omitted.]............................................................13
Section 3.5 Reporting Requirements..............................................................13
Section 3.6 [Intentionally Omitted.]............................................................14
Section 3.7 Other Agreements....................................................................14
Section 3.8 Reservation of Shares...............................................................14
ARTICLE IV Conditions to Closing..........................................................................14
Section 4.1 Conditions Precedent to the Obligation of Each Party................................14
Section 4.2 Conditions Precedent to the Obligation of the Company...............................15
Section 4.3 Conditions Precedent to the Obligation of the Purchaser.............................15
ARTICLE V Termination....................................................................................17
Section 5.1 Termination by Mutual Consent.......................................................17
Section 5.2 Other Termination...................................................................17
Section 5.3 Effect of Termination...............................................................17
ARTICLE VI Indemnification................................................................................17
Section 6.1 General Indemnity...................................................................17
Section 6.2 Indemnification Procedure...........................................................18
Section 6.3 Exclusive Remedy....................................................................18
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VII Miscellaneous..................................................................................19
Section 7.1 Fees and Expenses...................................................................19
Section 7.2 Specific Enforcement, Consent to Jurisdiction.......................................19
Section 7.3 Entire Agreement; Amendment.........................................................19
Section 7.4 Notices.............................................................................20
Section 7.5 Waivers.............................................................................21
Section 7.6 Headings............................................................................21
Section 7.7 Successors and Assigns..............................................................21
Section 7.8 No Third Party Beneficiaries........................................................21
Section 7.9 Governing Law.......................................................................21
Section 7.10 Survival............................................................................21
Section 7.11 Counterparts........................................................................21
Section 7.12 Publicity...........................................................................21
Section 7.13 Severability........................................................................21
Section 7.14 Further Assurances..................................................................22
Section 7.15 Certain Definitions.................................................................22
</TABLE>
SCHEDULES
Schedule 2.1(c) Capitalization
Schedule 2.1(g) Subsidiaries
Schedule 2.1(i) No Undisclosed Liabilities
Schedule 2.1(k) Indebtedness
Schedule 2.1(l) Title to Assets
Schedule 2.1(m) Actions Pending
Schedule 2.1(o) Taxes
Schedule 2.1(x) Employees
Schedule 2.1(u) Material Agreements
Schedule 2.1(y) Absence of Certain Developments
EXHIBITS
Exhibit A Form of A Warrant
Exhibit B Form of B Warrant
Exhibit C Form of Escrow Agreement
Exhibit D Form of Registration Rights Agreement
Exhibit E Form of Opinion of Counsel
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COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is
dated as of January 18, 2000 between flightserv.com, a Delaware corporation (the
"Company"), and Acqua Wellington Value Fund, Ltd., a company organized under the
laws of the Bahamas (the "Purchaser").
WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company shall issue and sell to the
Purchaser and the Purchaser shall purchase the number of shares of the Company's
common stock, par value $.04 per share (the "Common Stock") and warrants to
purchase the number of shares of Common Stock set forth in Section 1.1 below;
and
WHEREAS, such purchase and sale will be made in reliance upon
the provisions of Section 4(2) and Rule 506 of Regulation D ("Regulation D") of
the United States Securities Act of 1933, as amended (the "Securities Act"), and
regulations promulgated thereunder or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the purchases of Common Stock and warrants to be made
hereunder.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK
Section 1.1 Purchase and Sale of Stock. Subject to the terms and
conditions of this Agreement, the Company hereby agrees to issue and sell to the
Purchaser and the Purchaser hereby agrees to purchase from the Company 1,650,709
shares of the Company's Common Stock, at a purchase price of $6.058 per share,
and Warrants (as defined below) to purchase up to 3,260,151 shares of Common
Stock. The aggregate purchase price of the Common Stock and the Warrants to be
purchased by the Purchaser under this Section 1.1 shall be $10,000,000, which
shall be funded in two $5,000,000 tranches.
Section 1.2 The Warrants. The Company agrees to issue to the
Purchaser (a) a warrant to purchase 1,238,031 shares of Common Stock, which
warrant shall expire on the fifth anniversary of the issuance date of such
warrant, in the form attached hereto as Exhibit A (the "A Warrant"), (b) a
warrant to purchase 1,155,497 shares of Common Stock, which warrant shall expire
eighteen months from the issuance date of such warrant, in the form attached
hereto as Exhibit B (the "B Warrant") and (iii) a warrant to purchase up to
866,623 shares of Common Stock, which warrant
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shall expire eighteen months from the date of issuance of such warrant, in the
form of the warrant attached hereto as Exhibit C (the "C Warrant" and together
with the A Warrant and the B Warrant, the "Warrants"). Any shares of Common
Stock issuable upon exercise of the Warrants (and such shares when issued) are
herein referred to as the "Warrant Shares". The Common Stock to be acquired by
the Purchaser from the Company under this Agreement and the Warrant Shares are
sometimes collectively referred to as the "Shares".
Section 1.3 Purchase Price and Closing. The closing of (i) the
purchase and sale of the first $5,000,000 tranche of Common Stock and a pro rata
portion of the Warrants (the "Tranche I Closing"), and (ii) the purchase and
sale of the second $5,000,000 tranche of Common Stock and a pro rata portion of
the Warrants (the "Tranche II Closing," each of the Tranche I Closing and
Tranche II Closing, a "Closing", and the date of each Closing, a "Closing
Date"), to be acquired by the Purchaser from the Company pursuant to Section 1.1
hereof shall take place at the offices of Parker Chapin Flattau & Klimpl, LLP,
1211 Avenue of the Americas, New York, New York 10036 at 10:00 a.m. E.S.T. on
(i) the date on which the last to be fulfilled or waived of the conditions set
forth in Article IV hereof and applicable to such Closing shall be fulfilled or
waived in accordance herewith or (ii) such other time and place or on such date
as the Purchaser and the Company may agree upon. Notwithstanding anything to the
contrary contained herein, the Tranche II Closing shall occur within thirty (30)
days after the date of the Tranche I Closing. On or before each Closing Date,
the Company shall deliver to the escrow agent (the Escrow Agent") identified in
the Escrow Agreement attached hereto as Exhibit C (the "Escrow Agreement") the
certificates representing the shares of Common Stock and Warrants, registered in
the Purchaser's name (or its nominee), and prior to each Closing Date the
Purchaser shall pay by wire transfer of immediately available funds into escrow
the purchase price to be paid on such Closing Date. At the Purchaser's request,
the Company shall deliver certificates representing the shares of Common Stock
issued on each Closing Date to the Depositary Trust Company ("DTC") on the
Purchaser's behalf. The Company and the Purchaser shall cause such shares to be
credited to the DTC account designated by the Purchaser upon receipt by the
Company of payment by wire transfer of immediately available funds for such
Common Stock by the Purchaser into an account designated by the Company. In
addition, each party shall deliver all documents, instruments and writings
required to be delivered by such party pursuant to this Agreement at or prior to
each Closing. Notwithstanding anything to the contrary set forth in this
Agreement, the aggregate number of shares of Common Stock to be sold hereunder
shall not exceed 3,260,151.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2.1 Representation and Warranties of the Company. The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) Organization, Good Standing and Power. The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has the requisite corporate power to
own, lease and operate its properties and assets
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and to conduct its business as it is now being conducted. Except as set forth on
Schedule 2.1(g), the Company does not have any subsidiaries (as defined in
Section 2.1(g)). The Company is duly qualified as a foreign corporation to do
business and is in good standing in every jurisdiction in which the nature of
the business conducted or property owned by it makes such qualification
necessary except for any jurisdiction in which the failure to be so qualified
will not have a Material Adverse Effect. For purposes of this Agreement,
"Material Adverse Effect" shall mean any event which has, or may reasonably be
expected to have, an effect on the business, results of operations, assets or
financial condition of the Company that is material and adverse to the Company
and its subsidiaries, taken as a whole, and/or any condition, circumstance or
situation that would prohibit or otherwise interfere with the ability of the
Company to enter into and perform any of its obligations under this Agreement or
the Registration Rights Agreement in the form attached hereto as Exhibit D (the
"Registration Rights Agreement") in any material respect; provided, however,
that a Material Adverse Effect shall not include any event, change in or effect
upon the consolidated financial condition or business of the Company, directly
or indirectly, arising out of, attributable to or as a consequence of
conditions, events or circumstances generally affecting the chartered flight
industry or the overall economy.
(b) Authorization; Enforcement. The Company has
the requisite corporate power and authority to enter into and perform this
Agreement, the Registration Rights Agreement, the Warrants and each other
agreement contemplated hereby to which it is a party (collectively, the
"Transaction Documents") and to issue and sell the Shares in accordance with the
terms hereof and of the Warrants. The execution, delivery and performance of
each of the Transaction Documents by the Company and the consummation by it of
the transactions contemplated thereby have been duly and validly authorized by
all necessary corporate action, and no further consent or authorization of the
Company or its Board of Directors or stockholders is required. This Agreement
has been duly executed and delivered by the Company. The Registration Rights
Agreement will be duly executed and delivered by the Company at or prior to the
Tranche I Closing. Each of the Transaction Documents constitutes, or shall
constitute when executed and delivered, a valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or similar laws relating to, or
affecting the enforcement of creditor's rights generally and fraudulent transfer
by general equitable principles (regardless of whether enforcement is sought in
equity or at law).
(c) Capitalization. The authorized capital stock
of the Company and the shares thereof issued and outstanding as of the date
hereof are set forth on Schedule 2.1(c) hereto. All of the outstanding shares of
the Company's Common Stock and preferred stock have been duly and validly
authorized. Except as set forth on Schedule 2.1(c), in this Agreement and the
Registration Rights Agreement, no shares of Common Stock are entitled to
preemptive rights or registration rights and there are no outstanding options,
warrants, scrip, rights to subscribe to, call or commitments of any character
whatsoever relating to, or securities or rights convertible into, any shares of
capital stock of the Company. Furthermore, except as set forth in this Agreement
and the Registration Rights Agreement and as set forth on Schedule 2.1(c), there
are no contracts, commitments, understandings, or arrangements by which the
Company is or may become bound to
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issue additional shares of the capital stock of the Company or options,
securities or rights convertible into shares of capital stock of the Company.
Except as provided on Schedule 2.1(c), the Company is not a party to any
agreement granting registration or anti-dilution rights to any person with
respect to any of its equity or debt securities. Except as provided on Schedule
2.1(c), the Company is not a party to, and it has no knowledge of, any agreement
restricting the voting or transfer of any shares of the capital stock of the
Company. The offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to each Closing
complied with all applicable Federal and state securities laws, and no
stockholder has a right of rescission or damages with respect thereto which
would have a Material Adverse Effect. The Company has furnished or made
available to the Purchaser true and correct copies of the Company's Certificate
of Incorporation as in effect on the date hereof (the "Articles") and the
Company's Bylaws as in effect on the date hereof (the "Bylaws").
(d) Issuance of Securities. The Common Stock and
Warrants to be issued under this Agreement have been duly authorized by all
necessary corporate action and, when issued and paid for in accordance with the
terms hereof, the Common Stock and Warrants shall be validly issued and
outstanding, fully paid and nonassessable, free and clear of all liens,
encumbrances, and rights of first refusal of any kind, other than resale
restrictions imposed by Federal and state securities laws. When the Warrant
Shares are issued in accordance with the terms of the Warrants, such shares will
be duly authorized by all necessary corporate action and validly issued and
outstanding, fully paid and nonassessable, and the Purchaser shall be entitled
to all rights accorded to a holder of Common Stock.
(e) No Conflicts. The execution, delivery and
performance of this Agreement, the Registration Rights Agreement and the other
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated herein and therein do not (i) violate any provision of
the Company's Articles or Bylaws, (ii) conflict with, or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, acceleration or cancellation
of, any material agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company is a
party or by which the Company or any of its assets are bound, (iii) create or
impose a lien, charge or encumbrance on any property of the Company under any
agreement or any commitment to which the Company is a party or by which the
Company is bound or by which any of its respective properties or assets are
bound, or (iv) result in a violation of any Federal, state, local or foreign
statute, rule, regulation, order, judgment or decree (including Federal and
state securities laws and regulations) applicable to the Company or any of its
subsidiaries or by which any property or asset of the Company or any of its
subsidiaries are bound or affected, except for (in the case of subsections (ii),
(iii) and (iv), above), such conflicts, defaults, terminations, acceleration,
cancellations and violations as would not, individually or in the aggregate,
have a Material Adverse Effect. The Company is not required under Federal, state
or local law, rule or regulation to obtain any consent, authorization or order
of, or make any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations under this
Agreement, the Registration Rights Agreement and the other Transaction
Documents, or issue and sell the Common Stock to be purchased by the Purchaser
hereunder, the Warrants and the
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Warrant Shares in accordance with the terms hereof and thereof (other than (x)
any filings which may be required to be made by the Company in connection with
or in compliance with the provisions of the Securities Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and applicable state
securities laws, or with the American Stock Exchange, (y) any registration
statement which may be filed pursuant hereto, or (z) pursuant to the Common
Stock Purchase Agreement between the Company and Four Corners Capital, LLC,
dated as of the date hereof (the "Four Corners Purchase Agreement"), or any of
the transactions contemplated thereunder); provided that, for purposes of the
representation made in this sentence, the Company is assuming and relying upon
the accuracy of the relevant representations and agreements of the Purchaser
herein.
(f) Commission Documents, Financial Statements.
The Common Stock of the Company is registered pursuant to Section 12(b) or 12(g)
of the Exchange Act, and, the Company has timely filed all reports, schedules,
forms, statements and other documents required to be filed by it with the
Commission pursuant to the reporting requirements of the Exchange Act, including
material filed pursuant to Section 13(a), 14 or 15(d) of the Exchange Act (all
of the foregoing including filings incorporated by reference therein being
referred to herein as the "Commission Documents"). The Company has delivered to
the Purchaser true and complete copies of the Commission Documents filed with
the Commission since December 31, 1998 and prior to each Closing Date. The
Company has not provided to the Purchaser any material non-public information
relating to the Company or information which, according to applicable law, rule
or regulation, should have been disclosed publicly by the Company but which has
not been so disclosed, other than with respect to the transactions contemplated
by this Agreement or as set forth in the Commission Documents. As of their
respective dates, the Form 10-K for the year ended June 30, 1999 and the Form
10-Q for the fiscal quarter ended September 30, 1999 filed on September 28, 1999
and November 15, 1999, respectively, complied in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission
promulgated thereunder and, as of their respective dates, none of the Form 10-K
and the Form 10-Q referred to above contained any untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the Commission Documents filed by the Company with the
Commission since December 31, 1998 have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except (i) as may be otherwise indicated in such
financial statements or the notes thereto or (ii) in the case of unaudited
interim statements, to the extent they may not include footnotes or may be
condensed or summary statements), and fairly present in all material respects
the financial position of the Company and the results of operations and cash
flows as of the dates thereof for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments).
(g) Subsidiaries. Each of the Company's
subsidiaries is set forth on Schedule 2.1(g) hereof. For the purposes of this
Agreement, "subsidiary" shall mean any corporation or other entity of which at
least a majority of the securities or other ownership interest having ordinary
voting power (absolutely or contingently) for the election of directors or other
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persons performing similar functions are at the time owned directly or
indirectly by the Company and/or any of its other subsidiaries.
(h) No Material Adverse Change. Since September
30, 1999, the date through which the most recent quarterly report of the Company
on Form 10-Q has been prepared and filed with the Commission, a copy of which is
included in the Commission Documents, the Company has not experienced or
suffered any change in its financial condition, results of operations or
business which has had any Material Adverse Effect.
(i) No Undisclosed Liabilities. Except as
disclosed in Scheduled 2.1(i) hereto, since September 30, 1999 the Company has
no liabilities, obligations, claims or losses (whether liquidated or
unliquidated, secured or unsecured, absolute, accrued, contingent or otherwise),
other than those reflected in the Form 10-Q for the quarter ended September 30,
1999, filed on November 15, 1999, or incurred in the ordinary course of the
Company's business and which, individually or in the aggregate, do not or could
not be reasonably expected to have a Material Adverse Effect.
(j) [Intentionally Omitted.]
(k) Indebtedness. Schedule 2.1(k) hereto sets
forth as of the date hereof all outstanding secured and unsecured Indebtedness
of the Company, or for which the Company has commitments. For the purposes of
this Agreement, "Indebtedness" shall mean (a) any liabilities for borrowed money
in excess of $25,000 (other than trade accounts payable incurred in the ordinary
course of business consistent with past practices), (b) all guaranties,
endorsements and other contingent obligations in respect of Indebtedness of
others, whether or not the same are or should be reflected in the Company's
balance sheet (or the notes thereto), except guaranties by endorsement of
negotiable instruments for deposit or collection or similar transactions in the
ordinary course of business; and (c) the present value of any lease payments in
excess of $25,000 due under leases required to be capitalized in accordance with
GAAP. The Company is not in material default with respect to any Indebtedness.
(l) Title to Assets. The Company has good and
marketable title to all of its real and personal property reflected in the
Commission Documents, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except as disclosed in Schedule 2.1(l) hereto
or such that could not reasonably be expected to have a Material Adverse Effect.
(m) Actions Pending. As of the date of this
Agreement, except as set forth in the Commission Documents or Schedule 2.1(m)
hereto, there is no action, suit, claim, investigation or proceeding pending or,
to the knowledge of the Company, threatened, against or involving the Company or
any of its properties or assets. To the knowledge of the Company, there are no
outstanding orders, judgments, injunctions, awards or decrees of any court,
arbitrator or governmental or regulatory body against the Company or any
officers or directors of the Company in their capacities as such.
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(n) Compliance with Law. The business of the
Company has been and is presently being conducted in accordance with all
applicable Federal, state and local governmental laws, rules, regulations and
ordinances, except as, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect. The Company has all franchises,
permits, licenses, consents and other governmental or regulatory authorizations
and approvals necessary for the conduct of its business as now being conducted
by it unless the failure to possess such franchises, permits, licenses, consents
and other governmental or regulatory authorizations and approvals, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(o) Taxes. Except as set forth on Schedule
2.1(o) hereto, the Company has accurately prepared and filed all federal, state
and other tax returns required by law to be filed by it, has paid or made
provisions for the payment of all taxes shown to be due and all additional
assessments, and adequate provisions have been and are reflected in the
financial statements of the Company for all current taxes and other charges to
which the Company is subject and which are not currently due and payable. Except
as disclosed on Schedule 2.1(o) hereto, none of the federal income tax returns
of the Company for the years subsequent to June 30, 1996 have been audited by
the Internal Revenue Service. The Company has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal or state)
pending or threatened against the Company for any period, nor of any basis for
any such assessment, adjustment or contingency.
(p) [Intentionally Omitted.]
(q) Disclosure. To the Company's knowledge,
neither this Agreement (including the Schedules hereto) nor any other documents,
certificates or instruments furnished to the Purchaser by or on behalf of the
Company in connection with the transactions contemplated by this Agreement
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made herein or therein, in the light
of the circumstances under which they were made herein or therein, not
misleading.
(r) Operation of Business. The Company owns or
possesses all patents, trademarks, service marks, trade names, copyrights,
licenses and authorizations as set forth in the Commission Documents
("Intellectual Property"), and all rights with respect to the foregoing, which
are necessary for the conduct of its business as now conducted without any
conflict with the rights of others, except to the extent that a Material Adverse
Effect could not reasonably be expected to result from such conflict.
(s) Environmental Compliance. The Company has
obtained all material approvals, authorization, certificates, consents,
licenses, orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any Environmental
Laws. "Environmental Laws" shall mean all applicable laws relating to the
protection of the environment including, without limitation, all requirements
pertaining to reporting, licensing, permitting, controlling, investigating or
remediating emissions, discharges, releases or threatened releases of hazardous
substances, chemical substances, pollutants, contaminants or toxic
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substances, materials or wastes, whether solid, liquid or gaseous in nature,
into the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of hazardous substances, chemical substances, pollutants,
contaminants or toxic substances, material or wastes, whether solid, liquid or
gaseous in nature. The Company has all necessary governmental approvals required
under all Environmental Laws and used in its business. The Company is also in
compliance with all other limitations, restrictions, conditions, standards,
requirements, schedules and timetables required or imposed under all
Environmental Laws. Except for such instances as would not individually or in
the aggregate have a Material Adverse Effect, there are no past or present
events, conditions, circumstances, incidents, actions or omissions relating to
or in any way affecting the Company that violate or could reasonably be expected
to violate any Environmental Law after each Closing or that could reasonably be
expected to give rise to any environmental liability, or otherwise form the
basis of any claim, action, demand, suit, proceeding, hearing, study or
investigation (i) under any Environmental Law, or (ii) based on or related to
the presence, manufacture, processing, distribution, use, treatment, storage
(including without limitation underground storage tanks), disposal, transport or
handling, or the emission, discharge, release or threatened release of any
hazardous substance.
(t) [Intentionally Omitted.]
(u) Material Agreements. Except as set forth in
Schedule 2.1(u), the Company is not a party to any written or oral contract,
instrument, agreement, commitment, obligation, plan or arrangement, a copy of
which would be required to be filed with the Commission as an exhibit to a
registration statement on Form S-3 or applicable form (collectively, "Material
Agreements") if the Company were registering securities under the Securities
Act. The Company has in all material respects performed all the obligations
required to be performed by it to date under the foregoing agreements, has
received no notice of default and, to the Company's knowledge is not in default
under any Material Agreement now in effect, the result of which could reasonably
be expected to cause a Material Adverse Effect.
(v) [Intentionally Omitted.]
(w) Securities Act of 1933. Neither the Company
nor any of its Affiliates (as defined below), nor any person acting on its or
their behalf, has engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Securities Act) in
connection with the offer or sale of the Shares and other securities hereunder.
(x) Employees. The Company has no collective
bargaining arrangements or agreements covering any of its employees. Except as
set forth in Schedule 2.1(x) or as otherwise disclosed in writing by the Company
to the Purchaser, the Company has no employment contract, agreement regarding
proprietary information, noncompetition agreement, nonsolicitation agreement,
confidentiality agreement, or any other similar contract or restrictive
covenant, relating to the right of any officer, employee or consultant to be
employed or engaged by the Company or obtain any rights in any assets of the
Company. Since September 30, 1999 no officer, consultant or
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key employee of the Company whose termination, either individually or in the
aggregate, could reasonably be expected to have a Material Adverse Effect, has
terminated or, to the knowledge of the Company, has any present intention of
terminating his or her employment or engagement with the Company.
(y) Absence of Certain Developments. Except as
provided on Schedule 2.1(y) hereto, since September 30, 1999, the Company has
not
(i) issued any stock, bonds or other
corporate securities or any rights, options or warrants with respect thereto;
(ii) declared or made any payment or
distribution of cash or other property to stockholders with respect to its
stock, or purchased or redeemed, or made any agreements so to purchase or
redeem, any shares of its capital stock;
(iii) sold, assigned or transferred any
other material tangible assets, or canceled any material debts or claims, except
in the ordinary course of business;
(iv) sold, assigned or transferred any
patent rights, trademarks, trade names, copyrights, trade secrets or other
intangible assets or intellectual property rights, or disclosed any proprietary
confidential information to any person except to customers in the ordinary
course of business or to the Purchaser or its representatives;
(v) made capital expenditures or
commitments therefor that aggregate in excess of $1,000,000;
(vi) suffered any material damage,
destruction or casualty loss, whether or not covered by insurance; or
(vii) entered into an agreement, written
or otherwise, to take any of the foregoing actions.
(z) Use of Proceeds. The proceeds from the sale
of the Common Stock and Warrants will be used by the Company for working capital
and general corporate purposes (which purposes may include engaging in strategic
corporate transactions, including investments in Kitty Hawk Holding Company
L.L.C.).
(aa) Public Utility Holding Company Act and
Investment Company Act Status. The Company is not a "holding company" or a
"public utility company" as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended. The Company is not, and as a result of and
immediately upon a Closing will not be, an "investment company" or a company
"controlled" by an "investment company," within the meaning of the Investment
Company Act of 1940, as amended.
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(bb) ERISA. No liability to the Pension Benefit
Guaranty Corporation has been incurred with respect to any Plan by the Company
which has had or could reasonably be expected to have a Material Adverse Effect
on the Company. The execution and delivery of this Agreement and the issue and
sale of the Shares will not involve any transaction which is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax could be
imposed pursuant to Section 4975 of the Internal Revenue Code of 1986, as
amended, provided that, if the Purchaser, or any person or entity that owns a
beneficial interest in the Purchaser, is an "employee pension benefit plan"
(within the meaning of Section 3(2) of ERISA) with respect to which the Company
is a "party in interest" (within the meaning of Section 3(14) of ERISA), the
requirements of Sections 407(d)(5) and 408(e) of ERISA, if applicable, are met.
As used in this Section 2.1(bb), the term "Plan" shall mean an "employee pension
benefit plan" (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been made, by
the Company or by any trade or business, whether or not incorporated, which,
together with the Company, is under common control, as described in Section
414(b) or (c) of the Code.
Section 2.2 Representations and Warranties of the Purchaser. The
Purchaser hereby makes the following representations and warranties to the
Company:
(a) Organization and Standing of the Purchaser.
The Purchaser is a company duly organized, validly existing and in good standing
under the laws of the jurisdiction of its formation.
(b) Authorization and Power The Purchaser has
the requisite power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and each other agreement contemplated hereby to
which it is a party and to purchase the Common Stock and Warrants in accordance
with the terms of this Agreement and the Warrants. The execution, delivery and
performance of this Agreement and the Registration Rights Agreement and each
other agreement contemplated hereby to which it is a party by the Purchaser and
the consummation by it of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action, and no further consent or
authorization of the Purchaser or its board of directors is required. This
Agreement has been duly executed and delivered by the Purchaser. The
Registration Rights Agreement will be duly executed and delivered by the
Purchaser at or prior to the Tranche I Closing. Each of this Agreement, the
Registration Rights Agreement and each other agreement contemplated hereby to
which it is a party constitutes, or shall constitute when executed and
delivered, a valid and binding obligation of the Purchaser enforceable against
the Purchaser in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or similar laws relating to, or affecting the enforcement of
creditor's rights generally and by general equitable principles (regardless of
whether enforcement is sought in equity or at law).
(c) No Conflicts The execution, delivery and
performance of this Agreement and the Registration Rights Agreement and the
consummation by the Purchaser of the transactions contemplated hereby and
thereby or relating hereto do not and will not (i) result in a violation of the
Purchaser's charter documents or bylaws, (ii) conflict with, or constitute a
default
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(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, acceleration or cancellation
of any agreement, indenture, instrument, mortgage, deed of trust, note, bond,
license, lease agreement or obligation to which the Purchaser is a party or by
which the Purchaser or any of its assets are bound, or (iii) result in a
violation of any Federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including Federal and state securities laws and
regulations) applicable to the Purchaser or its properties or by which the
Purchaser or any of its assets are bound, except for such conflicts, defaults,
violations, terminations, accelerations or cancellations as would not,
individually or in the aggregate, prohibit or otherwise interfere with the
ability of the Purchaser to enter into and perform its obligations under this
Agreement the Registration Rights Agreement and each other agreement
contemplated hereby to which it is a party in any material respect. The
Purchaser is not required under Federal, state or local law, rule or regulation
to obtain any consent, authorization or order of, or make any filing or
registration with, any court or governmental agency in order for it to execute,
deliver or perform any of its obligations under this Agreement, the Registration
Rights Agreement or any other agreement contemplated hereby to which it is a
party or to purchase the Common Stock and the Warrants in accordance with the
terms of this Agreement and the Warrants, provided that for purposes of the
representation made in this sentence, the Purchaser is assuming and relying upon
the accuracy of the relevant representations and agreements of the Company
herein. The Purchaser is purchasing the Common Stock to be acquired by the
Purchaser from the Company hereunder and the Warrants (and upon any exercise of
such Warrants, will be obtaining the Warrant Shares) "solely for the purpose of
investment", as defined in Section 801.1 of the Rules of the Federal Trade
Commission promulgated under the Hart-Scott-Rodino Act of 1976, as amended.
(d) Acquisition for Investment. The Purchaser is
purchasing the Common Stock to be acquired by the Purchaser from the Company
hereunder and the Warrants (and upon any exercise of such Warrants, will be
obtaining the Warrant Shares) solely for its own account for the purpose of
investment. The Purchaser does not have a present arrangement or intention to
effect any public distribution of the Common Stock to be acquired by the
Purchaser from the Company hereunder and Warrants to or through any person or
entity; provided, however, that by making the representations herein, the
Purchaser reserves the right to dispose of the Common Stock to be acquired by
the Purchaser from the Company hereunder, the Warrants or the Warrant Shares at
any time in accordance with Federal and state securities laws applicable to such
disposition. The Purchaser acknowledges that it is able to bear the financial
risks associated with an investment in the Common Stock to be acquired by the
Purchaser from the Company hereunder and the Warrants and that it has been given
full access to such records of the Company and its subsidiaries and to the
officers of the Company and its subsidiaries as it has deemed necessary or
appropriate to conduct its due diligence investigation. The Purchaser is capable
of evaluating the risks and merits of an investment in the Common Stock to be
acquired by the Purchaser from the Company hereunder and Warrants by virtue of
its experience as an investor and its knowledge, experience, and sophistication
in financial and business matters and the Purchaser is capable of bearing the
entire loss of its investment in such Common Stock and Warrants.
(e) Accredited Investor. The Purchaser is an
"accredited investor" as defined in Rule 501(a) promulgated as part of
Regulation D under the Securities Act.
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(f) Rule 144. The Purchaser understands that the
Common Stock to be acquired by the Purchaser from the Company hereunder, the
Warrants and Warrant Shares must be held indefinitely unless such Common Stock,
the Warrants and Warrant Shares are registered under the Securities Act or an
exemption from registration is available. The Purchaser acknowledges that such
person is familiar with Rule 144 of the rules and regulations of the Commission,
as amended, promulgated pursuant to the Securities Act ("Rule 144"), and that
such person has been advised that Rule 144 permits resales only under certain
circumstances. The Purchaser understands that to the extent that Rule 144 is not
available, such person will be unable to sell any shares of Common Stock to be
acquired by the Purchaser from the Company hereunder without either registration
under the Securities Act or the existence of another exemption from such
registration requirement.
(g) Information. The Purchaser and its advisors,
if any, have been furnished with all materials relating to the business,
finances and operations of the Company and materials relating to the offer and
sale of the Common Stock to be acquired by the Purchaser from the Company
hereunder and Warrants which have been requested by the Purchaser. The Purchaser
and its advisors, if any, have been afforded the opportunity to ask questions of
the Company. The Purchaser has sought such accounting, legal and tax advice as
it has considered necessary to make an informed investment decision with respect
to its acquisition of the Common Stock to be acquired by the Purchaser from the
Company hereunder and Warrants. The Purchaser understands that it (and not the
Company) shall be responsible for its own tax liabilities that may arise as a
result of this investment or the transactions contemplated by this Agreement. In
entering into this Agreement and the Registration Rights Agreement, the
Purchaser has relied solely upon its own investigation and analysis as well as
the representations and warranties contained herein and the Purchaser
acknowledges that except as set forth hereunder none of the Company, its
directors, officers, employees, affiliates, controlling persons, agents or
representatives makes or has made any representation or warranty, either express
or implied, as to the accuracy or completeness of any of the information
provided or made available to the Purchaser or its directors, officers,
employees, Affiliates, controlling persons, agents or representatives.
(h) General. The Purchaser understands that the
Common Stock to be acquired by the Purchaser from the Company hereunder and
Warrants are being offered and sold in reliance on a transactional exemption
from the registration requirement of Federal and state securities laws and the
Company is relying upon the truth and accuracy of the representations,
warranties, agreements, acknowledgments and understandings of the Purchaser set
forth herein in order to determine the applicability of such exemptions and the
suitability of the Purchaser to acquire such Common Stock and Warrants.
ARTICLE III
COVENANTS
The Company covenants with the Purchaser as follows, which
covenants are for the benefit of the Purchaser and its permitted assignees (as
defined herein).
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Section 3.1 Securities Compliance.
(a) The Company shall take all necessary action
and proceedings as may be required and permitted by applicable law, rule and
regulation (including, without limitation, any rule or regulation of the
American Stock Exchange), for the legal and valid issuance of the Common Stock
to be acquired by the Purchaser from the Company hereunder, the Warrants and the
Warrant Shares to the Purchaser or subsequent holders.
(b) The Company is relying upon the truth and
accuracy of the representations, warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in order to determine the
applicability of Federal and state securities laws exemptions and the
suitability of the Purchaser to acquire the Common Stock to be acquired by the
Purchaser from the Company hereunder and the Warrants.
Section 3.2 Registration and Listing. So long as the Purchaser is
the beneficial owner of the shares of Common Stock to be acquired by the
Purchaser from the Company hereunder or any of the Warrants remain outstanding;
the Company will take all action necessary to cause its Common Stock to continue
to be registered under Sections 12(b) or 12(g) of the Exchange Act, will comply
with its reporting and filing obligations under the Exchange Act, will comply
with all requirements related to any registration statement filed pursuant to
this Agreement, and will not take any action or file any document (whether or
not permitted by the Securities Act or the rules promulgated thereunder) to
terminate or suspend such registration or to terminate or suspend its reporting
and filing obligations under the Exchange Act or Securities Act, except as
permitted herein. So long as the Purchaser is the beneficial owner of the shares
of Common Stock to be acquired by the Purchaser from the Company hereunder or
any of the Warrants remain outstanding; the Company will take all action
necessary to continue the listing or trading of its Common Stock on the American
Stock Exchange or any relevant market or system, if applicable, and will comply
in all respects with the Company's reporting, filing and other obligations under
the bylaws or rules of American Stock Exchange.
Section 3.3 [Intentionally Omitted.]
Section 3.4 [Intentionally Omitted.]
Section 3.5 Reporting Requirements. Upon request, the Company
shall furnish the following to the Purchaser so long as the Purchaser is the
beneficial owner of Common Stock to be acquired by the Purchaser from the
Company hereunder or the Warrants:
(a) Quarterly Reports filed with the Commission
on Form 10-Q as soon as available, and in any event within 45 days after the end
of each of the first three fiscal quarters of the Company; and
(b) Annual Reports filed with the Commission on
Form 10-K as soon as available, and in any event within 90 days after the end of
each fiscal year of the Company.
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Section 3.6 [Intentionally Omitted.]
Section 3.7 Other Agreements. So long as the Purchaser is the
beneficial owner of shares of Common Stock to be acquired by the Purchaser from
the Company hereunder, the Warrants or Warrant Shares and prior to 120 days
following the effective date of the Registration Statement, the Company shall
not issue, without the prior consent of the Purchaser, any Common Stock or any
financial instruments convertible into shares of Common Stock, except (i) under
the terms of the existing stock option plans, employee stock purchase plans, or
in conjunction with strategic corporate transactions, (ii) as contemplated by
the Four Corners Purchase Agreement, (iii) under the terms of warrants and
options held as of the date hereof by Four Corners Capital, LLC or any of its
Affiliates to purchase shares of Common Stock, (iv) under the terms of warrants
and options authorized by the Company's Board of Directors for employees,
directors and third parties prior to the date hereof (which options and warrants
are set forth on Schedule 2.1(c); or (v) new options and warrants to advisory
board members and key employees, officers and new hires of the Company,
provided, however, that such new options or warrants shall not be exercisable
for more than an additional 2,000,000 shares of Common Stock, in the aggregate.
Notwithstanding anything to the contrary contained in subsection (v) of this
Section 3.4, the Company shall be permitted to issue options and warrants
exercisable for more than an additional 2,000,000 shares of Common Stock to
advisory board members and key employees, officers and new hires of the Company
if it obtains the consents of the Purchaser and of the Purchaser (as defined in
the Four Corners Purchase Agreement) under the Four Corners Purchase Agreement,
which consents shall not be unreasonably withheld.
Section 3.8 Reservation of Shares. So long as any of the Warrants
remain outstanding, the Company shall take all action necessary to at all times
have authorized, and reserved for the purpose of issuance, no less than 100% of
the aggregate number of shares of Common Stock needed to provide for the
issuance of the Warrant Shares.
ARTICLE IV
CONDITIONS TO CLOSING
Section 4.1 Conditions Precedent to the Obligation of Each Party.
The respective obligations of each party to effect the transactions contemplated
by this Agreement shall be subject to the fulfillment (or waiver by the Company
and the Purchaser) on or prior to the Closing Date of the following conditions:
(a) No United States or state authority or other
agency or commission or United States or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any statute, rule,
regulation, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and has the effect of prohibiting consummation of
the transactions contemplated by this Agreement or restricting the operation of
the business of the Company as conducted on the date hereof in a manner that
would have a Material Adverse Effect.
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(b) Any waiting period applicable to the
transactions contemplated by this Agreement, the Registration Agreement and each
other agreement contemplated hereby, including, without limitation, those
applicable to any filing in connection with or in compliance with the provisions
of the Securities Act, the Exchange Act and any applicable state securities laws
shall have expired or been terminated.
(c) All necessary waivers or consents to,
approvals of and notices or filings as may be required to be obtained in
connection with the performance of this Agreement or any of the transactions
contemplated hereby, the failure of which would prevent the lawful consummation
of the transactions contemplated hereby, shall have been obtained.
(d) Each of the Company and the Purchaser shall
have received a fully executed copy of the Registration Rights Agreement.
Section 4.2 Conditions Precedent to the Obligation of the
Company. The obligation hereunder of the Company is subject to the satisfaction
or waiver, at or before each Closing, of each of the conditions set forth below.
(a) Accuracy of Each of the Purchaser's
Representations and Warranties. The representations and warranties of the
Purchaser contained in this Agreement shall be true and correct in all material
respects as of the date when made and as of each Closing Date as though made at
that time, except for representations and warranties that are expressly made as
of a specified date, which shall be true and correct in all material respects as
of such date.
(b) Performance by the Purchaser. The Purchaser
shall have performed, satisfied and complied with in all material respects all
covenants, agreements, conditions and obligations contemplated by this Agreement
to be performed, satisfied or complied with by the Purchasers at or prior to
such Closing. The Company shall have received at the Closing a certificate
signed on behalf of the Purchaser by an executive officer of the Purchaser, to
the effect set forth in Sections 4.2(a) and (b).
(c) Payment of Purchase Price. The Purchaser
shall have delivered to the company the purchase price for Common Stock to be
acquired by the Purchaser from the Company hereunder and Warrants in accordance
with Section 1.1.
Section 4.3 Conditions Precedent to the Obligation of the
Purchaser. The obligation hereunder of the Purchaser to effect the transactions
contemplated by this Agreement is subject to the satisfaction or waiver, at or
before each Closing, of each of the conditions set forth below.
(a) No Material Adverse Effect. No Material
Adverse Effect shall have occurred.
(b) Performance by the Company. The Company
shall have performed, satisfied and complied with in all material respects all
covenants, agreements, conditions and obligations required by this Agreement to
be performed, satisfied or complied with by the Company
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at or prior to the Closing. The Purchaser shall have received at the Closing a
certificate signed on behalf of the Company by an executive officer of the
Company, to the effect set forth in Sections 4.3(a) and (b).
(c) No Suspension, Etc. From the date hereof to
each Closing Date, trading in the Company's Common Stock shall not have been
suspended by the Commission or the American Stock Exchange (except for any
suspension of trading of limited duration agreed to by the Company, which
suspension shall be terminated prior to such Closing), and, at any time prior to
such Closing, trading in securities generally as reported by the American Stock
Exchange shall not have been suspended or limited, or minimum prices shall not
have been established on securities whose trades are reported by the American
Stock Exchange, nor shall a banking moratorium have been declared either by the
United States or New York State authorities, nor shall there have occurred any
material adverse change in any financial market which, in each case, in the
judgment of the Purchaser, makes it impracticable or inadvisable to purchase the
Common Stock to be acquired by the Purchaser from the Company hereunder and the
Warrants.
(d) No Proceedings or Litigation. No action,
suit or proceeding before any arbitrator or any governmental authority shall
have been commenced, and no investigation by any governmental authority shall
have been threatened, against the Company, or any of the officers, directors or
affiliates of the Company seeking to restrain, prevent or change the
transactions contemplated by this Agreement, or seeking damages in connection
with such transactions.
(e) Opinion of Counsel, Etc. At each Closing,
the Purchaser shall have received an opinion of counsel to the Company, dated as
of the date of such Closing, in the form of Exhibit D hereto, and such other
certificates and documents as the Purchaser or its counsel shall reasonably
require incident to such Closing.
(f) Resolutions. The Board of Directors of the
Company shall have adopted resolutions consistent with Section 2.1(b) above in a
form reasonably acceptable to the Purchaser (the "Resolutions").
(g) Secretary's Certificate. The Company shall
have delivered to the Purchaser a secretary's certificate, dated as of each
Closing Date, as to (i) the Resolutions, (ii) the Articles and the Bylaws, each
as in effect at such Closing, and (iii) the authority and incumbency of the
officers of the Company executing this Agreement, the Registration Rights
Agreement and the Warrants and any other Transaction Documents.
(h) Certificates. At each Closing the Company
shall have executed and delivered to the Purchaser the Warrants and stock
certificates (in such denominations as the Purchaser shall request) representing
the shares of Common Stock being purchased by the Purchaser hereunder.
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ARTICLE V
TERMINATION
Section 5.1 Termination by Mutual Consent. This Agreement shall
terminate on February 29, 2000 if the Common Stock to be acquired by the
Purchaser from the Company hereunder and the Warrants have not been issued and
sold by the Company and purchased by the Purchaser. This Agreement may be
terminated by mutual written consent of the parties.
Section 5.2 Other Termination. This Agreement may be terminated:
(a) By any party hereto if any court of
governmental authority of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree or
ruling or other action shall have become final and nonappealable;
(b) By the Purchaser if any of the conditions
set forth in Section 4.1 and 4.3 shall have become incapable of fulfillment and
shall not have been waived by the Purchaser;
(c) By the Company if any of the conditions set
forth in Sections 4.1 and 4.2 shall have become incapable of fulfillment and
shall not have been waived by the Company.
Section 5.3 Effect of Termination. In the event of termination by
the Company or the Purchaser, written notice thereof shall forthwith be given to
the other party and the transactions contemplated by this Agreement shall be
terminated and the transactions contemplated hereby shall be abandoned without
further action by either party. If this Agreement is terminated, this Agreement
shall become void and of no further force and effect, except for the first
sentence of Section 7.1, 7.2(b), 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9 and 7.12,
which shall survive indefinitely.
ARTICLE VI
INDEMNIFICATION
Section 6.1 General Indemnity. The Company agrees to indemnify
and hold harmless the Purchaser (and its directors, officers, Affiliates,
agents, successors and assigns but excluding consequential damages) from and
against any and all actual losses, liabilities, deficiencies, costs, damages and
reasonable expenses (including, without limitation, reasonable attorney's fees,
charges and disbursements) incurred by the Purchaser as a result of any breach
of the covenants made by the Company herein. The Purchaser agrees to indemnify
and hold harmless the Company and its directors, officers, affiliates, agents,
successors and assigns from and against any and all actual losses, liabilities,
deficiencies, costs, damages and reasonable expenses (including, without
limitation, reasonable attorneys fees, charges and disbursements but excluding
consequential damages) incurred by the Company as result of any breach of the
covenants or the representations and warranties made by the Purchaser herein.
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Section 6.2 Indemnification Procedure. Any party entitled to
indemnification under this Article VI (an "indemnified party") will give written
notice to the indemnifying party of any matters giving rise to a claim for
indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VI except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to assume upon written notice delivered to
the indemnified party within thirty (30) days of receipt of any indemnification
notice the defense thereof with counsel reasonably satisfactory to the
indemnified party. The indemnified party may not settle or otherwise compromise
or pay such action or claim, without the consent of the indemnifying party. In
any event, unless and until the indemnifying party elects in writing to assume
and does so assume the defense of any such claim, proceeding or action, the
indemnified party's costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the indemnified party which
relates to such action or claim. The indemnifying party shall at all times use
reasonable efforts to keep the indemnified party reasonably apprised as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent. Notwithstanding anything in this Article VI to the
contrary, the indemnifying party shall not, without the indemnified party's
prior written consent (which consent shall not be unreasonably withheld), settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the indemnified party or which does not
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect of
such claim. The indemnification required by this Article VI shall be made by
periodic payments of the amount thereof during the course of investigation or
defense, as and when bills are received or expense, loss, damage or liability is
incurred, so long as the indemnified party irrevocably agrees to refund such
moneys if it is ultimately determined by a court of competent jurisdiction that
such party was not entitled to indemnification. The indemnity agreements
contained herein shall be in addition to (a) any cause of action or similar
rights of the indemnified party against the indemnifying party or others, and
(b) any liabilities the indemnifying party may be subject to pursuant to the
law.
Section 6.3 Exclusive Remedy. From and after a Closing, the
parties' exclusive remedy for breaches of this Agreement shall be pursuant to
this Article VI. The amount collectible pursuant to this Article VI shall not
exceed the amount actually paid by the Purchaser to the Company pursuant to
Article I.
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<PAGE> 22
ARTICLE VII
MISCELLANEOUS
Section 7.1 Fees and Expenses. Except as otherwise set forth in
this Agreement and the Registration Rights Agreement, the Company shall pay all
reasonable fees and expenses related to the transactions contemplated by this
Agreement; provided, that the Company shall pay, all reasonable attorneys fees
and expenses (exclusive of disbursements and out-of-pocket expenses) incurred by
the Purchaser in an amount not to exceed $50,000 in connection with the
preparation, negotiation, execution and delivery of this Agreement. In addition,
the Company shall pay all reasonable fees and expenses incurred by the Purchaser
in connection with any amendments, modifications or waivers of this Agreement or
the Registration Rights Agreement or incurred in connection with the enforcement
of this Agreement and the Registration Rights Agreement, including, without
limitation, all reasonable attorneys fees and expenses. The Company shall pay
all stamp or other similar taxes and duties levied in connection with issuance
of the Common Stock to be purchased by the Purchaser from the Company hereunder
and the Warrants to this Agreement.
Section 7.2 Specific Enforcement, Consent to Jurisdiction
(a) The Company and the Purchaser acknowledge
and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement or the Registration Rights Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to specific performance
of the provisions of this Agreement or the Registration Rights Agreement in
addition to any other remedy to which any of them may be entitled at law or in
equity.
(b) Each of the Company and the Purchaser (i)
hereby irrevocably submits to the jurisdiction of the United States District
Court and other courts of the United States sitting in the Southern District of
New York, and if the jurisdiction of such federal courts is not available, the
state courts of New York, for the purposes of any suit, action or proceeding
arising out of or relating to this Agreement or the Registration Rights
Agreement and (ii) hereby waives, and agrees not to assert in any such suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of such court, that the suit, action or proceeding is brought in an
inconvenient forum or that the venue of the suit, action or proceeding is
improper. Each of the Company and the Purchaser consents to process being served
in any such suit, action or proceeding by mailing a copy thereof to such party
at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 7.2 shall affect or limit any right to serve
process in any other manner permitted by law.
Section 7.3 Entire Agreement; Amendment. This Agreement
(including all schedules and exhibits hereto) contains the entire understanding
of the parties with respect to the matters covered hereby, supersedes all prior
agreements with respect to the subject matter hereof. This Agreement may be
amended only by written agreement between the parties hereto.
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<PAGE> 23
Section 7.4 Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be deemed to have been given or made (a) upon hand delivery, by telex
(with correct answer back received), telecopy or facsimile at the address or
number designated below (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur. The addresses for such communications shall be:
If to the Company: FLIGHTSERV.COM
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attn: C. Beverly Lance
Fax No.: (404) 240-4101
with copies to:
Rogers & Hardin LLP
2700 International Tower, Peachtree Center
Atlanta, Georgia 30303
Attn: Edward J. Hardin
Fax No.: (404) 525-2224
If to the Purchaser: Acqua Wellington Value Fund, Ltd.
c/o Mees Pierson Fund Services (Bahamas) Ltd.
Montague Sterling Centre
East Bay Street, P.O. Box 55-6238
Nassau, Bahamas
Telephone No.:
Fax: No.:
Attn: Anthony L.M. Inder Rieden
with copies to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Telephone No.:(212) 704-6000
Fax No.: (212) 704-6288
Attn: Christopher S. Auguste, Esq.
Any party hereto may from time to time change its address for
notices by giving at least ten (10) days written notice of such changed address
to the other party hereto.
20
<PAGE> 24
Section 7.5 Waivers. No waiver by either party of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
Section 7.6 Headings The article, section and subsection headings
in this Agreement are for convenience only and shall not constitute a part of
this Agreement for any other purpose and shall not be deemed to limit or affect
any of the provisions hereof.
Section 7.7 Successors and Assigns. The Purchaser may not assign
this Agreement to any person (other than to an Affiliate of the Purchaser)
without the prior written consent of the Company, which consent will not be
unreasonably withheld. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. After a
Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this Agreement.
Section 7.8 No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
Section 7.9 Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York.
Section 7.10 Survival. The representations and warranties of the
Company and the Purchaser contained in Article II shall survive the execution
and delivery hereof and each Closing until the date two years from such Closing
Date, and the agreements and covenants set forth in Articles I, III, VI and VII
of this Agreement shall survive the execution and delivery hereof and each
Closing hereunder.
Section 7.11 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and shall become effective when counterparts have been signed by
each party and delivered to the other parties hereto, it being understood that
all parties need not sign the same counterpart.
Section 7.12 Publicity. The Company and the Purchaser will agree
upon the language of any press release or other written public statements with
respect to the transactions contemplated by this Agreement, and shall not issue
any such press release or make any such written public statement prior to such
agreement, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange.
Section 7.13 Severability. The provisions of this Agreement are
severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect
21
<PAGE> 25
any other provision or part of a provision of this Agreement, and this Agreement
shall be construed as if such invalid or illegal or unenforceable provision, or
part of such provision, had never been contained herein, so that such provisions
would be valid, legal and enforceable to the maximum extent possible.
Section 7.14 Further Assurances. From and after the date of this
Agreement, upon the request of the Purchaser or the Company, each of the Company
and the Purchaser shall execute and deliver such instrument, documents and other
writings as may be reasonably necessary or desirable to confirm and carry out
and to effectuate fully the intent and purposes of this Agreement and the
Registration Rights Agreement.
Section 7.15 Certain Definitions. For purposes of this Agreement,
"Affiliate" means, with respect to any Person (as defined below), any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control", when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled' have
meanings correlative to the foregoing. "Person" means an individual or a
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or political subdivision thereof) or other entity of any kind.
22
<PAGE> 26
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officer as of the date first above
written.
FLIGHTSERV.COM
By: /s/ C.B. Lance
-----------------------------------
Name: C.B. Lance
Title: President
ACQUA WELLINGTON VALUE FUND, LTD.
By:
-----------------------------------
Name:
Title:
23
<PAGE> 27
FORM OF "A" WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR FLIGHTSERV.COM SHALL HAVE RECEIVED AN
OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
FLIGHTSERV.COM
Expires January 18, 2005
No.: W-__ Number of Shares: 1,238,031
Date of Issuance: January 18, 2000
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, flightserv.com, a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that Acqua Wellington
Value Fund, Ltd. or its registered assigns is entitled to subscribe for and
purchase, during the period specified in this Warrant, up to 1,238,031 shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price per share equal to the Warrant Price then in effect, subject, however, to
the provisions and upon the terms and conditions hereinafter set forth.
Capitalized terms used in this Warrant and not otherwise defined herein shall
have the respective meanings specified in Section 7 hereof.
<PAGE> 28
1. Term. The right to subscribe for and purchase shares of
Warrant Stock represented hereby shall commence on the date of issuance of this
Warrant and shall expire at 5:00 p.m., eastern time, on January 18, 2005 (such
period being the "Term").
2. Method of Exercise Payment: Issuance of New Warrant: Transfer
and Exchange.
(a) Time of Exercise. The purchase rights represented by this
Warrant may be exercised in whole or in part at any time and from time to time
during the Term.
(b) Method of Exercise. The Holder hereof may exercise this
Warrant, in whole or in part, by the surrender of this Warrant (with the
exercise form attached hereto duly executed) at the principal office of the
Issuer, and by the payment to the Issuer of an amount of consideration therefor
equal to the Warrant Price in effect on the date of such exercise multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election (i) by certified or official
bank check or wire transfer of immediately available funds or (ii) by surrender
to the Issuer for cancellation of a portion of this Warrant representing that
number of unissued shares of Warrant Stock which is equal to the quotient
obtained by dividing (A) the product obtained by multiplying the Warrant Price
by the number of shares of Warrant Stock being purchased upon such exercise by
(B) the difference obtained by subtracting the Warrant Price from the Per Share
Market Value as of the date of such exercise, or (iii) by a combination of the
foregoing methods of payment selected by the Holder of this Warrant. In any case
where the consideration payable upon such exercise is being paid in whole or in
part pursuant to the provisions of clause (ii) of this subsection (b), such
exercise shall be accompanied by written notice from the Holder of this Warrant
specifying the manner of payment thereof and containing a calculation showing
the number of shares of Warrant Stock with respect to which rights are being
surrendered thereunder and the net number of shares to be issued after giving
effect to such surrender.
(c) Issuance of Stock Certificates. In the event of any exercise
of the rights represented by this Warrant in accordance with and subject to the
terms and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three Trading Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.
(d) Transferability of Warrant. Subject to Section 2(e), this
Warrant may be transferred by a Purchaser without the consent of the Company. If
transferred pursuant to this paragraph and subject to the provisions of
subsection (e) of this Section 2, this Warrant may be transferred on the books
of the Issuer by the Holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant at the principal office of the Issuer, properly
endorsed
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<PAGE> 29
(by the Holder executing an assignment in the form attached hereto) and upon
payment of any necessary transfer tax or other governmental charge imposed upon
such transfer. This Warrant is exchangeable at the principal office of the
Issuer for Warrants for the purchase of the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase such number
of shares of Warrant Stock as the Holder hereof shall designate at the time of
such exchange. All Warrants issued on transfers or exchanges shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant hereto.
(e) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this
Warrant and all certificates representing shares of Warrant Stock
issued upon exercise hereof shall be stamped or imprinted with a legend
in substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR
FLIGHTSERV.COM SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
(iii) The restrictions imposed by this subsection (e) upon
the transfer of this Warrant and the shares of Warrant Stock to be
purchased upon exercise hereof shall terminate (A) when such securities
shall have been effectively registered under the Securities Act, (B)
upon the Issuer's receipt of an opinion of counsel, in form and
substance reasonably satisfactory to the Issuer, addressed to the
Issuer to the effect that such restrictions are no longer required to
ensure compliance with the Securities Act and state securities laws or
(C) upon the Issuer's receipt of other evidence reasonably satisfactory
to the Issuer that such registration and qualification under state
securities
-3-
<PAGE> 30
laws is not required. Whenever such restrictions shall cease and
terminate as to any such securities, the Holder thereof shall be
entitled to receive from the Issuer (or its transfer agent and
registrar), without expense (other than applicable transfer taxes, if
any), new Warrants (or, in the case of shares of Warrant Stock, new
stock certificates) of like tenor not bearing the applicable legend
required by paragraph (ii) above relating to the Securities Act and
state securities laws.
(f) Continuing Rights of Holder. The Issuer will, at the time of
or at any time after each exercise of this Warrant, upon the request of the
Holder hereof, acknowledge in writing the extent, if any, of its continuing
obligation to afford to such Holder all rights to which such Holder shall
continue to be entitled after such exercise in accordance with the terms of this
Warrant, provided that if any such Holder shall fail to make any such request,
the failure shall not affect the continuing obligation of the Issuer to afford
such rights to such Holder.
3. Stock Fully Paid: Reservation and Listing of Shares:
Covenants.
(a) Stock Fully Paid. The Issuer represents, warrants, covenants
and agrees that all shares of Warrant Stock which may be issued upon the
exercise of this Warrant or otherwise hereunder will, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges created by or through Issuer. The Issuer further
covenants and agrees that during the period within which this Warrant may be
exercised, the Issuer will at all times have authorized and reserved for the
purpose of the issue upon exercise of this Warrant a sufficient number of shares
of Common Stock to provide for the exercise of this Warrant.
(b) Reservation. If any shares of Common Stock required to be
reserved for issuance upon exercise of this Warrant or as otherwise provided
hereunder require registration or qualification with any governmental authority
under any federal or state law before such shares may be so issued, the Issuer
will in good faith use its best efforts as expeditiously as possible at its
expense to cause such shares to be duly registered or qualified. If the Issuer
shall list any shares of Common Stock on any securities exchange or market it
will, at its expense, list thereon, maintain and increase when necessary such
listing, of, all shares of Warrant Stock from time to time issued upon exercise
of this Warrant or as otherwise provided hereunder, and, to the extent
permissible under the applicable securities exchange rules, all unissued shares
of Warrant Stock which are at any time issuable hereunder, so long as any shares
of Common Stock shall be so listed. The Issuer will also so list on each
securities exchange or market, and will maintain such listing of, any other
securities which the Holder of this Warrant shall be entitled to receive upon
the exercise of this Warrant if at the time any securities of the same class
shall be listed on such securities exchange or market by the Issuer.
(c) Covenants. The Issuer shall not by any action including,
without limitation, amending the Certificate of Incorporation or the by-laws of
the Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the
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<PAGE> 31
taking of all such actions as may be necessary or appropriate to protect the
rights of the Holder hereof against dilution (to the extent specifically
provided herein) or impairment. Without limiting the generality of the
foregoing, the Issuer will (i) not permit the par value, if any, of its Common
Stock to exceed the then effective Warrant Price, (ii) not amend or modify any
provision of the Certificate of Incorporation or by-laws of the Issuer in any
manner that would adversely affect in any way the powers, preferences or
relative participating, optional or other special rights of the Common Stock or
which would adversely affect the rights of the Holders of the Warrants, (iii)
take all such action as may be reasonably necessary in order that the Issuer may
validly and legally issue fully paid and nonassessable shares of Common Stock,
free and clear of any liens, claims, encumbrances and restrictions (other than
as provided herein) upon the exercise of this Warrant, and (iv) use its best
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.
(d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
(e) Rights and Obligations under the Registration Rights
Agreement. The shares of Warrant Stock are entitled to the benefits and subject
to the terms of the Registration Rights Agreement dated as of even date herewith
between the Issuer and the Holders listed on the signature pages thereof (as
amended from time to time, the "Registration Rights Agreement"). The Issuer
shall keep or cause to be kept a copy of the Registration Rights Agreement, and
any amendments thereto, at its chief executive office and shall furnish, without
charge, copies thereof to the Holder upon request.
4. Adjustment of Warrant Price and Warrant Share Number. The
number and kind of Securities purchasable upon the exercise of this Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(a) Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale.
(i) In case the Issuer after the Original Issue Date
shall do any of the following (each, a "Triggering Event"): (a)
consolidate with or merge into any other Person and the Issuer shall
not be the continuing or surviving corporation of such consolidation or
merger, or (b) permit any other Person to consolidate with or merge
into the Issuer and the Issuer shall be the continuing or surviving
Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged for
Securities of any other Person or cash or any other property, or (c)
transfer all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, then, and in the case of
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<PAGE> 32
each such Triggering Event, proper provision shall be made so that,
upon the basis and the terms and in the manner provided in this
Warrant, the Holder of this Warrant shall be entitled (x) upon the
exercise hereof at any time after the consummation of such Triggering
Event, to the extent this Warrant is not exercised prior to such
Triggering Event, or is redeemed in connection with such Triggering
Event, to receive at the Warrant Price in effect at the time
immediately prior to the consummation of such Triggering Event in lieu
of the Common Stock issuable upon such exercise of this Warrant prior
to such Triggering Event, the Securities, cash and property to which
such Holder would have been entitled upon the consummation of such
Triggering Event if such Holder had exercised the rights represented by
this Warrant immediately prior thereto, subject to adjustments and
increases (subsequent to such corporate action) as nearly equivalent as
possible to the adjustments provided for in Section 4 hereof or (y) to
sell this Warrant (or, at such Holder's election, a portion hereof)
concurrently with the Triggering Event to the Person continuing after
or surviving such Triggering Event, or to the Issuer (if Issuer is the
continuing or surviving Person) at a sales price equal to the amount of
cash, property and/or Securities to which a holder of the number of
shares of Common Stock which would otherwise have been delivered upon
the exercise of this Warrant would have been entitled upon the
effective date or closing of any such Triggering Event (the "Event
Consideration"), less the amount or portion of such Event Consideration
having a fair value equal to the aggregate Warrant Price applicable to
this Warrant or the portion hereof so sold.
(ii) Notwithstanding anything contained in this Warrant to
the contrary, the Issuer will not effect any Triggering Event unless,
prior to the consummation thereof, each Person (other than the Issuer)
which may be required to deliver any Securities, cash or property upon
the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the
Holder of this Warrant, (A) the obligations of the Issuer under this
Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall
not release the Issuer from, any continuing obligations of the Issuer
under this Warrant) and (B) the obligation to deliver to such Holder
such shares of Securities, cash or property as, in accordance with the
foregoing provisions of this subsection (a), such Holder shall be
entitled to receive, and such Person shall have similarly delivered to
such Holder an opinion of counsel for such Person, which counsel shall
be reasonably satisfactory to such Holder, stating that this Warrant
shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this
subsection (a)) shall be applicable to the Securities, cash or property
which such Person may be required to deliver upon any exercise of this
Warrant or the exercise of any rights pursuant hereto.
(iii) If with respect to any Triggering Event, the Holder
of this Warrant has exercised its right as provided in clause (y) of
subparagraph (i) of this subsection (a) to sell this Warrant or a
portion thereof, the Issuer agrees that as a condition to the
consummation of any such Triggering Event the Issuer shall secure such
right of Holder
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<PAGE> 33
to sell this Warrant to the Person continuing after or surviving such
Triggering Event and the Issuer shall not effect any such Triggering
Event unless upon or prior to the consummation thereof the amounts of
cash, property and/or Securities required under such clause (y) are
delivered to the Holder of this Warrant. The obligation of the Issuer
to secure such right of the Holder to sell this Warrant shall be
subject to such Holder's cooperation with the Issuer, including,
without limitation, the giving of customary representations and
warranties to the purchaser in connection with any such sale. Prior
notice of any Triggering Event shall be given to the Holder of this
Warrant in accordance with Section 11 hereof.
(b) Subdivision or Combination of Shares. If the Issuer, at any
time while this Warrant is outstanding, shall subdivide or combine any shares of
Common Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of Holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision, or (ii) in the case of a combination of shares, the
Warrant Price shall be proportionately increased (as at the effective date of
such combination or, if the Issuer shall take a record of Holders of its Common
Stock for the purpose of so combining, as at the applicable record date,
whichever is earlier) to reflect the reduction in the total number of shares of
Common Stock outstanding as a result of such combination.
(c) Certain Dividends and Distributions. If the Issuer, at any
time while this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend in, or make any other
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the
date the Issuer shall take a record of the Holders of the Issuer's
Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying
the Warrant Price in effect immediately prior to such record date (or
if no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event that
the Issuer paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Issuer issued
fractional shares in connection with said dividends); or
(ii) Other Dividends. Pay a dividend on, or make any
distribution of its assets upon or with respect to (including, but not
limited to, a distribution of its property as a dividend in liquidation
or partial liquidation or by way of return of capital), the Common
Stock (other than as described in clause (i) of this subsection (c)),
or in the event that the
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Company shall offer options or rights to subscribe for shares of Common
Stock, or issue any Common Stock Equivalents, to all of its holders of
Common Stock, then on the record date for such payment, distribution or
offer or, in the absence of a record date, on the date of such payment,
distribution or offer, the Holder shall receive what the Holder would
have received had it exercised this Warrant in full immediately prior
to the record date of such payment, distribution or offer or, in the
absence of a record date, immediately prior to the date of such
payment, distribution or offer. Notwithstanding the foregoing set forth
in clause (ii) of this subsection (c) to the contrary, if the Company
gives the Holder at least five Business Days prior written notice of
the record date for such non-cash dividend, then the Warrant Price
shall not be adjusted and the Holder shall have the option to exercise
this Warrant prior to the record date and if the Holder does not
exercise this Warrant prior to such record date, then the Holder shall
not be entitled to received such payment, distribution or offer.
(d) Issuance of Additional Shares of Common Stock. If the Issuer,
at any time while this Warrant is outstanding, shall issue any Additional Shares
of Common Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share less than the Warrant Price
then in effect or without consideration, then the Warrant Price upon each such
issuance shall be adjusted to that price (rounded to the nearest cent)
determined by multiplying the Warrant Price then in effect by a fraction:
(i) the numerator of which shall be equal to the sum of
(A) the number of shares of Common Stock outstanding immediately prior
to the issuance of such Additional Shares of Common Stock plus (B) the
number of shares of Common Stock (rounded to the nearest whole share)
which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at a price
per share equal to the Warrant Price then in effect, and
(ii) the denominator of which shall be equal to the number
of shares of Common Stock outstanding immediately after the issuance of
such Additional Shares of Common Stock.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (Y) no adjustment was required pursuant to
subsection (e) of this Section 4. No adjustment of the Warrant Price shall be
made under this subsection (d) in an amount less than $.01 per share, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment, if any, which together with
any adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Warrant Price as a result of any
dividend or distribution payable in Common Stock or Convertible Securities or
the reclassification,
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subdivision or combination of Common Stock into a greater or smaller number of
shares, the foregoing figure of $.01 per share (or such figure as last adjusted)
shall be adjusted (to the nearest one-half cent) in proportion to the adjustment
in the Warrant Price.
(e) Issuance of Common Stock Equivalents. If the Issuer, at any
time while this Warrant is outstanding, shall issue any Common Stock Equivalent
and the price per share for which Additional Shares of Common Stock may be
issuable thereafter pursuant to such Common Stock Equivalent shall be less than
the Warrant Price then in effect, or if, after any such issuance of Common Stock
Equivalents, the price per share for which Additional Shares of Common Stock may
be issuable thereafter is amended or adjusted, and such price as so amended
shall be less than the Warrant Price in effect at the time of such amendment,
then the Warrant Price upon each such issuance or amendment shall be adjusted as
provided in the first sentence of subsection (d) of this Section 4 on the basis
that (1) the maximum number of Additional Shares of Common Stock issuable
pursuant to all such Common Stock Equivalents shall be deemed to have been
issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable in whole or in part) as of the earlier
of (A) the date on which the Issuer shall enter into a firm contract for the
issuance of such Common Stock Equivalent, or (B) the date of actual issuance of
such Common Stock Equivalent, and (2) the aggregate consideration for such
maximum number of Additional Shares of Common Stock shall be deemed to be the
minimum consideration received or receivable by the Issuer for the issuance of
such Additional Shares of Common Stock pursuant to such Common Stock Equivalent.
No adjustment of the Warrant Price shall be made under this subsection (e) upon
the issuance of any Convertible Security which is issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any adjustment shall previously have been made in the Warrant Price then in
effect upon the issuance of such warrants or other rights pursuant to this
subsection (e).
(f) Purchase of Common Stock by the Issuer. If the Issuer at any
time while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value then
in effect, then the Warrant Price upon each such purchase, redemption or
acquisition shall be adjusted to that price determined by multiplying such
Warrant Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Per Share Market Value;
and (ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subsection (f), the date as of which the Per Share Market Value
shall be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock. For the purposes of this subsection (f), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis
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of the full exercise, conversion or exchange of such Common Stock Equivalent on
the date as of which such computation is required hereby to be made, whether or
not such Common Stock Equivalent is actually exercisable, convertible or
exchangeable on such date.
(g) Other Provisions Applicable to Adjustments Under this Section
4. The following provisions shall be applicable to the making of adjustments in
the Warrant Price hereinbefore provided in Section 4:
(i) Computation of Consideration. The consideration
received by the Issuer shall be deemed to be the following: to the
extent that any Additional Shares of Common Stock or any Common Stock
Equivalents shall be issued for a cash consideration, the consideration
received by the Issuer therefor, or if such Additional Shares of Common
Stock or Common Stock Equivalents are offered by the Issuer for
subscription, the subscription price, or, if such Additional Shares of
Common Stock or Common Stock Equivalents are sold to underwriters or
dealers for public offering without a subscription offering, the public
offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without
deduction of any compensation, discounts, commissions, or expenses paid
or incurred by the Issuer for or in connection with the underwriting
thereof or otherwise in connection with the issue thereof; to the
extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the fair market
value of such consideration at the, time of such issuance as determined
in good faith by the Board. The consideration for any Additional Shares
of Common Stock issuable pursuant to any Common Stock Equivalents shall
be the consideration received by the Issuer for issuing such Common
Stock Equivalents, plus the additional consideration payable to the
Issuer upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of any Additional
Shares of Common Stock or Common Stock Equivalents in payment or
satisfaction of any dividend upon any class of Capital Stock of the
Issuer other than Common Stock, the Issuer shall be deemed to have
received for such Additional Shares of Common Stock or Common Stock
Equivalents a consideration equal to the amount of such dividend so
paid or satisfied. In any case in which the consideration to be
received or paid shall be other than cash, the Board shall notify the
Holder of this Warrant of its determination of the fair market value of
such consideration prior to payment or accepting receipt thereof. If,
within thirty days after receipt of said notice, the Majority Holders
shall notify the Board in writing of their objection to such
determination, a determination of the fair market value of such
consideration shall be made by an Independent Appraiser selected by the
Majority Holders with the approval of the Board (which approval shall
not be unreasonably withheld), whose fees and expenses shall be paid by
the Issuer.
(ii) Readjustment of Warrant Price. Upon the expiration or
termination of the right to convert, exchange or exercise any Common
Stock Equivalent the issuance of which effected an adjustment in the
Warrant Price, if such Common Stock Equivalent shall not have been
converted, exercised or exchanged in its entirety, the number of
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shares of Common Stock deemed to be issued and outstanding by reason of
the fact that they were issuable upon conversion, exchange or exercise
of any such Common Stock Equivalent shall no longer be computed as set
forth above, and the Warrant Price shall forthwith be readjusted and
thereafter be the price which it would have been (but reflecting any
other adjustments in the Warrant Price made pursuant to the provisions
of this Section 4 after the issuance of such Common Stock Equivalent)
had the adjustment of the Warrant Price been made in accordance with
the issuance or sale of the number of Additional Shares of Common Stock
actually issued upon conversion, exchange or issuance of such Common
Stock Equivalent and thereupon only the number of Additional Shares of
Common Stock actually so issued shall be deemed to have been issued and
only the consideration actually received by the Issuer (computed as in
clause (i) of this subsection (g)) shall be deemed to have been
received by the Issuer.
(iii) Outstanding Common Stock. The number of shares of
Common Stock at any time outstanding shall (A) not include any shares
thereof then directly or indirectly owned or held by or for the account
of the Issuer or any of its Subsidiaries, and (B) be deemed to include
all shares of Common Stock then issuable upon conversion, exercise or
exchange of any then outstanding Common Stock Equivalents or any other
evidences of Indebtedness, shares of Capital Stock or other Securities
which are or may be at any time convertible into or exchangeable for
shares of Common Stock or Other Common Stock.
(h) Other Action Affecting Common Stock. In case after the
Original Issue Date the Issuer shall take any action affecting its Common Stock,
other than an action described in any of the foregoing subsections (a) through
(g) of this Section 4, inclusive, and the failure to make any adjustment would
not fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principle of this Section 4, then the Warrant
Price shall be adjusted in such manner and at such time as the Board may in good
faith determine to be equitable in the circumstances.
(i) Adjustment of Warrant Share Number. Upon each adjustment in
the Warrant Price pursuant to any of the foregoing provisions of this Section 4,
the Warrant Share Number shall be adjusted, to the nearest one hundredth of a
whole share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under any provision contained in Section 3 of this Warrant so that
shares issued at the Warrant Price adjusted in accordance with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing sentence shall nonetheless be made and the Holder of this
Warrant shall be entitled to purchase such greater number of shares at the
lowest price at which such shares may then be validly issued under applicable
law. Such exercise shall not constitute a waiver of any claim arising against
the Issuer by reason of its default under Section 3 of this Warrant.
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<PAGE> 38
(j) Form of Warrant after Adjustments. The form of this Warrant
need not be changed because of any adjustments in the Warrant Price or the
number and kind of Securities purchasable upon the exercise of this Warrant.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant
Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of
this Section 5, each an "adjustment"), the Issuer shall cause its Chief
Financial Officer to prepare and execute a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to the
Holder of this Warrant promptly after each adjustment. Any dispute between the
Issuer and the Holder of this Warrant with respect to the matters set forth in
such certificate may at the option of the Holder of this Warrant be submitted to
one of the national accounting firms currently known as the "big five" selected
by the Holder, provided that the Issuer shall have ten days after receipt of
notice from such Holder of its selection of such firm to object thereto, in
which case such Holder shall select another such firm and the Issuer shall have
no such right of objection. The firm selected by the Holder of this Warrant as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty days
after submission to it of such dispute. Such opinion shall be final and binding
on the parties hereto. The fees and expenses of such accounting firm shall be
paid by the Issuer.
6. Fractional Shares. No fractional shares of Warrant Stock will
be issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.
7. Definitions. For the purposes of this Warrant, the following
terms have the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Original Issue Date, and all
shares of Other Common, if any, issued by the Issuer after the Original
Issue Date, except the Warrant Stock, Common Stock reserved for
issuance upon exercise of existing stock options issued under any
employee incentive stock option, any qualified stock option plan and/or
stock purchase plan adopted by the Issuer, Common Stock issued in
conjunction with strategic corporate transactions and Common Stock
issued upon exercise of options and warrants authorized by the Board
prior to the Closing Date.
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests
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(whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests
in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date,
and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and thereof and pursuant
to applicable law.
"Closing Date" means the date of execution of the Purchase
Agreement.
"Closing Price" means the VWAP of the Common Stock on the
Trading Day immediately preceding the Closing Date.
"Common Stock" means the Common Stock, $.04 par value, of the
Issuer and any other Capital Stock into which such stock may hereafter
be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority,
commission, board, agency or instrumentality, whether federal, state or
local, and whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified
public accountants of recognized standing (which may be the firm that
regularly examines the financial statements of the Issuer) that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means flightserv.com, a Delaware corporation, and its
successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
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"Original Issue Date" means January 19, 2000.
"Other Common" means any other Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"OTC Bulletin Board" means the over-the-counter electronic
bulletin board.
"Person" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated
organization, joint venture, Governmental Authority or other entity of
whatever nature.
"Per Share Market Value" means on any particular date (a) the
last sales price per share of the Common Stock on such date on the
American Stock Exchange or other registered national stock exchange on
which the Common Stock is then listed or if there is no such price on
such date, then the closing bid price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common
Stock is not listed then on the American Stock Exchange or any
registered national stock exchange, the closing bid price for a share
of Common Stock in the over-the-counter market, as reported by the OTC
Bulletin Board or in the National Quotation Bureau Incorporated or
similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or the National
Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of
the "Pink Sheet" quotes for the relevant conversion period, as
determined in good faith by the holder, or (d) if the Common Stock is
not then publicly traded the fair market value of a share of Common
Stock as determined by an Independent Appraiser selected in good faith
by the Majority Holders; provided, however, that the Issuer, after
receipt of the determination by such Independent Appraiser, shall have
the right to select an additional Independent Appraiser, in which case,
the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser; and provided,
further that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The Issuer shall pay all costs
and expenses of each Independent Appraiser. The determination of fair
market value by an Independent Appraiser shall be based upon the fair
market value of the Issuer determined on a going concern basis as
between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and
binding on all parties. In determining the fair market value of any
shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or
any limitations on, voting rights.
"Purchase Agreement" means the Common Stock Purchase Agreement
dated as of January 19, 2000 among the Issuer and the investors a party
thereto.
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"Registration Rights Agreement" has the meaning specified in
Section 3(e) hereof.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security. "Security"
means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by
the Issuer and one or more of its Subsidiaries.
"Trading Day" means (a) a day on which the Common Stock is
traded on the American Stock Exchange as reported by Bloomberg L.P., or
(b) if the Common Stock is not listed on the American Stock Exchange, a
day on which the Common Stock is traded on any other registered
national stock exchange, or (c) if the Common Stock is not quoted on
the OTC Bulletin Board, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in
(a), (b) and (c) hereof, then Trading Day shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the State of New York are authorized or
required by law or other government action to close.
"Term" has the meaning specified in Section 1 hereof.
"Voting Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a majority
of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by
reason of the happening of a contingency.
"VWAP" means the volume weighted average price of the Common
Stock (based on a Trading Day from 9:00 a.m to 4:00 p.m.) on the
American Stock Exchange as reported by Bloomberg Financial using the
AQR function.
"Warrants" means the Warrants issued and sold pursuant to the
Purchase Agreement, including, without limitation, this Warrant, and
any other warrants of like tenor issued in substitution or exchange for
any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)
hereof or of any of such other Warrants.
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"Warrant Price" means the lesser of (i) $110% of the Closing
Price (the "Fixed Warrant Price") and (ii) 90% of the VWAP for the five
(5) Trading Days immediately preceding the notice to exercise, as such
price may be adjusted from time to time as shall result from the
adjustments specified in Section 4 hereof, provided, however, that if
the Registration Statement (as defined in the Registration Rights
Agreement) is not declared effective within one hundred twenty (120)
days after the Closing Date, the Fixed Warrant Price shall be reduced
by 10% and by an additional 10% for each thirty day period thereafter
until the Registration Statement has been declared effective, which
shall be pro rated for such periods less than thirty (30) days.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
and increases to such number made or required to be made under the
terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants or otherwise issuable pursuant to any Warrant
or Warrants.
8. Other Notices. In case at any time:
(A) the Issuer shall make any distributions to
the holders of Common Stock; or
(B) the Issuer shall authorize the granting to
all holders of its Common Stock of rights to
subscribe for or purchase any shares of
Capital Stock of any class or of any Common
Stock Equivalents or Convertible Securities
or other rights; or
(C) there shall be any reclassification of the
Capital Stock of the Issuer; or
(D) there shall be any capital reorganization by
the Issuer; or
(E) there shall be any (i) consolidation or
merger involving the Issuer or (ii) sale,
transfer or other disposition of all or
substantially all of the Issuer's property,
assets or business (except a merger or other
reorganization in which the Issuer shall be
the surviving corporation and its shares of
Capital Stock shall continue to be
outstanding and unchanged and except a
consolidation, merger, sale, transfer or
other disposition involving a wholly-owned
Subsidiary); or
(F) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of
the Issuer or any partial
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liquidation of the Issuer or distribution to
holders of Common Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
days prior to the action in question and not less than twenty days prior to the
record date or the date on which the Issuer's transfer books are closed in
respect thereto. The Issuer shall give to the Holder notice of all meetings and
actions by written consent of its stockholders, at the same time in the same
manner as notice of any meetings of stockholders is required to be given to
stockholders who do not waive such notice (or, if such requires no notice, then
two Trading Days written notice thereof describing the matters upon which action
is to be taken). The Holder shall have the right to send two representatives
selected by it to each meeting, who shall be permitted to attend, but not vote
at, such meeting and any adjournments thereof. This Warrant entitles the Holder
to receive copies of all financial and other information distributed or required
to be distributed to the holders of the Common Stock.
9. Amendment and Waiver. Any term, covenant, agreement or
condition in this Warrant may be amended, or compliance therewith may be waived
(either generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
11. Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., eastern
standard time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., pacific
standard time, on any date and earlier than 11:59 p.m., eastern standard time,
on such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service or (iv) actual receipt by the
party to whom
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such notice is required to be given. The addresses for such communications shall
be with respect to the Holder of this Warrant or of Warrant Stock issued
pursuant hereto, addressed to such Holder at its last known address or facsimile
number appearing on the books of the Issuer maintained for such purposes, or
with respect to the Issuer, addressed to:
flightserv.com
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attn: C. Beverly Lance
Telephone Number: (404) 869-2599
Fax: (404) 240-4101
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Issuer shall be sent to Rogers & Hardin
LLP, 2700 International Tower, Peachtree Center, 229 Peachtree Street, N.E.,
Atlanta, Georgia 30303, Attn: Edward J. Hardin, Facsimile no.: (404) 525-2224.
Copies of notices to the Holder shall be sent to Parker Chapin Flattau & Klimpl,
LLP, 1211 Avenue of the Americas, New York, New York 10036, Attention:
Christopher S. Auguste, Esq., Facsimile no.: (212) 704-6288.
12. Warrant Agent. The Issuer may, by written notice to each
Holder of this Warrant, appoint an agent having an office in New York, New York
for the purpose of issuing shares of Warrant Stock on the exercise of this
Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant
pursuant to subsection (d) of Section 2 hereof or replacing this Warrant
pursuant to subsection (d) of Section 3 hereof, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
13. Remedies. The Issuer stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Issuer in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.
15. Modification and Severability. If, in any action before any
court or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the
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<PAGE> 45
preceding sentence, the unenforceability of such provision shall not affect the
other provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
16. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day
and year first above written.
FLIGHTSERV.COM
By:
------------------------
Name:
Title:
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<PAGE> 46
EXERCISE FORM
[NAME OF ISSUER]
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of
___________________ covered by the within Warrant.
Dated:________________________ Signature _________________________
Address _________________________
_________________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated:________________________ Signature _________________________
Address _________________________
_________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated:________________________ Signature _________________________
Address _________________________
_________________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-_____ cancelled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
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<PAGE> 47
FORM OF "B" WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR FLIGHTSERV.COM SHALL HAVE RECEIVED AN
OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
FLIGHTSERV.COM
Expires July 18, 2001
No.: W-__ Number of Shares: 1,155,497
Date of Issuance: January 18, 2000
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, flightserv.com, a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that Acqua Wellington
Value Fund, Ltd. or its registered assigns is entitled to subscribe for and
purchase, during the period specified in this Warrant, up to 1,155,497 shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price per share equal to the Warrant Price then in effect, subject, however, to
the provisions and upon the terms and conditions hereinafter set forth.
Capitalized terms used in this Warrant and not otherwise defined herein shall
have the respective meanings specified in Section 7 hereof.
<PAGE> 48
1. Term. The right to subscribe for and purchase shares of
Warrant Stock represented hereby shall commence on the date of issuance of this
Warrant and shall expire at 5:00 p.m., eastern time, on July 18, 2001 (such
period being the "Term").
2. Method of Exercise Payment: Issuance of New Warrant: Transfer
and Exchange.
(a) Time of Exercise. The purchase rights represented by this
Warrant may be exercised in whole or in part at any time and from time to time
during the Term.
(b) Method of Exercise. The Holder hereof may exercise this
Warrant, in whole or in part, by the surrender of this Warrant (with the
exercise form attached hereto duly executed) at the principal office of the
Issuer, and by the payment to the Issuer of an amount of consideration therefor
equal to the Warrant Price in effect on the date of such exercise multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election by certified or official bank
check or wire transfer of immediately available funds.
(c) Issuance of Stock Certificates. In the event of any exercise
of the rights represented by this Warrant in accordance with and subject to the
terms and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three Trading Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.
(d) Transferability of Warrant. Subject to Section 2(e), this
Warrant may be transferred by a Purchaser without the consent of the Company. If
transferred pursuant to this paragraph and subject to the provisions of
subsection (e) of this Section 2, this Warrant may be transferred on the books
of the Issuer by the Holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant at the principal office of the Issuer, properly
endorsed (by the Holder executing an assignment in the form attached hereto) and
upon payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. This Warrant is exchangeable at the principal office of the
Issuer for Warrants for the purchase of the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase such number
of shares of Warrant Stock as the Holder hereof shall designate at the time of
such exchange. All Warrants issued on transfers or exchanges shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant hereto.
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<PAGE> 49
(e) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this
Warrant and all certificates representing shares of Warrant Stock
issued upon exercise hereof shall be stamped or imprinted with a legend
in substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR
FLIGHTSERV.COM SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
(iii) The restrictions imposed by this subsection (e) upon
the transfer of this Warrant and the shares of Warrant Stock to be
purchased upon exercise hereof shall terminate (A) when such securities
shall have been effectively registered under the Securities Act, (B)
upon the Issuer's receipt of an opinion of counsel, in form and
substance reasonably satisfactory to the Issuer, addressed to the
Issuer to the effect that such restrictions are no longer required to
ensure compliance with the Securities Act and state securities laws or
(C) upon the Issuer's receipt of other evidence reasonably satisfactory
to the Issuer that such registration and qualification under state
securities laws is not required. Whenever such restrictions shall cease
and terminate as to any such securities, the Holder thereof shall be
entitled to receive from the Issuer (or its transfer agent and
registrar), without expense (other than applicable transfer taxes, if
any), new Warrants (or, in the case of shares of Warrant Stock, new
stock certificates) of like tenor not bearing the applicable legend
required by paragraph (ii) above relating to the Securities Act and
state securities laws.
(f) Continuing Rights of Holder. The Issuer will, at the time of
or at any time after each exercise of this Warrant, upon the request of the
Holder hereof, acknowledge in writing the
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<PAGE> 50
extent, if any, of its continuing obligation to afford to such Holder all rights
to which such Holder shall continue to be entitled after such exercise in
accordance with the terms of this Warrant, provided that if any such Holder
shall fail to make any such request, the failure shall not affect the continuing
obligation of the Issuer to afford such rights to such Holder.
3. Stock Fully Paid: Reservation and Listing of Shares:
Covenants.
(a) Stock Fully Paid. The Issuer represents, warrants, covenants
and agrees that all shares of Warrant Stock which may be issued upon the
exercise of this Warrant or otherwise hereunder will, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges created by or through Issuer. The Issuer further
covenants and agrees that during the period within which this Warrant may be
exercised, the Issuer will at all times have authorized and reserved for the
purpose of the issue upon exercise of this Warrant a sufficient number of shares
of Common Stock to provide for the exercise of this Warrant.
(b) Reservation. If any shares of Common Stock required to be
reserved for issuance upon exercise of this Warrant or as otherwise provided
hereunder require registration or qualification with any governmental authority
under any federal or state law before such shares may be so issued, the Issuer
will in good faith use its best efforts as expeditiously as possible at its
expense to cause such shares to be duly registered or qualified. If the Issuer
shall list any shares of Common Stock on any securities exchange or market it
will, at its expense, list thereon, maintain and increase when necessary such
listing, of, all shares of Warrant Stock from time to time issued upon exercise
of this Warrant or as otherwise provided hereunder, and, to the extent
permissible under the applicable securities exchange rules, all unissued shares
of Warrant Stock which are at any time issuable hereunder, so long as any shares
of Common Stock shall be so listed. The Issuer will also so list on each
securities exchange or market, and will maintain such listing of, any other
securities which the Holder of this Warrant shall be entitled to receive upon
the exercise of this Warrant if at the time any securities of the same class
shall be listed on such securities exchange or market by the Issuer.
(c) Covenants. The Issuer shall not by any action including,
without limitation, amending the Certificate of Incorporation or the by-laws of
the Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the Certificate of Incorporation or by-laws of the
Issuer in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer
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<PAGE> 51
may validly and legally issue fully paid and nonassessable shares of Common
Stock, free and clear of any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant, and (iv) use its
best efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.
(d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
(e) Rights and Obligations under the Registration Rights
Agreement. The shares of Warrant Stock are entitled to the benefits and subject
to the terms of the Registration Rights Agreement dated as of even date herewith
between the Issuer and the Holders listed on the signature pages thereof (as
amended from time to time, the "Registration Rights Agreement"). The Issuer
shall keep or cause to be kept a copy of the Registration Rights Agreement, and
any amendments thereto, at its chief executive office and shall furnish, without
charge, copies thereof to the Holder upon request.
4. Adjustment of Warrant Price and Warrant Share Number. The
number and kind of Securities purchasable upon the exercise of this Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(a) Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale.
(i) In case the Issuer after the Original Issue Date
shall do any of the following (each, a "Triggering Event"): (a)
consolidate with or merge into any other Person and the Issuer shall
not be the continuing or surviving corporation of such consolidation or
merger, or (b) permit any other Person to consolidate with or merge
into the Issuer and the Issuer shall be the continuing or surviving
Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged for
Securities of any other Person or cash or any other property, or (c)
transfer all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, then, and in the case of each
such Triggering Event, proper provision shall be made so that, upon the
basis and the terms and in the manner provided in this Warrant, the
Holder of this Warrant shall be entitled (x) upon the exercise hereof
at any time after the consummation of such Triggering Event, to the
extent this Warrant is not exercised prior to such Triggering Event, or
is redeemed in connection with such Triggering Event, to receive at the
Warrant Price in effect at the time immediately prior to the
consummation of such Triggering Event in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such Triggering
Event, the Securities, cash and property to which such Holder would
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<PAGE> 52
have been entitled upon the consummation of such Triggering Event if
such Holder had exercised the rights represented by this Warrant
immediately prior thereto, subject to adjustments and increases
(subsequent to such corporate action) as nearly equivalent as possible
to the adjustments provided for in Section 4 hereof or (y) to sell this
Warrant (or, at such Holder's election, a portion hereof) concurrently
with the Triggering Event to the Person continuing after or surviving
such Triggering Event, or to the Issuer (if Issuer is the continuing or
surviving Person) at a sales price equal to the amount of cash,
property and/or Securities to which a holder of the number of shares of
Common Stock which would otherwise have been delivered upon the
exercise of this Warrant would have been entitled upon the effective
date or closing of any such Triggering Event (the "Event
Consideration"), less the amount or portion of such Event Consideration
having a fair value equal to the aggregate Warrant Price applicable to
this Warrant or the portion hereof so sold.
(ii) Notwithstanding anything contained in this Warrant to
the contrary, the Issuer will not effect any Triggering Event unless,
prior to the consummation thereof, each Person (other than the Issuer)
which may be required to deliver any Securities, cash or property upon
the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the
Holder of this Warrant, (A) the obligations of the Issuer under this
Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall
not release the Issuer from, any continuing obligations of the Issuer
under this Warrant) and (B) the obligation to deliver to such Holder
such shares of Securities, cash or property as, in accordance with the
foregoing provisions of this subsection (a), such Holder shall be
entitled to receive, and such Person shall have similarly delivered to
such Holder an opinion of counsel for such Person, which counsel shall
be reasonably satisfactory to such Holder, stating that this Warrant
shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this
subsection (a)) shall be applicable to the Securities, cash or property
which such Person may be required to deliver upon any exercise of this
Warrant or the exercise of any rights pursuant hereto.
(iii) If with respect to any Triggering Event, the Holder
of this Warrant has exercised its right as provided in clause (y) of
subparagraph (i) of this subsection (a) to sell this Warrant or a
portion thereof, the Issuer agrees that as a condition to the
consummation of any such Triggering Event the Issuer shall secure such
right of Holder to sell this Warrant to the Person continuing after or
surviving such Triggering Event and the Issuer shall not effect any
such Triggering Event unless upon or prior to the consummation thereof
the amounts of cash, property and/or Securities required under such
clause (y) are delivered to the Holder of this Warrant. The obligation
of the Issuer to secure such right of the Holder to sell this Warrant
shall be subject to such Holder's cooperation with the Issuer,
including, without limitation, the giving of customary representations
and warranties to the purchaser in connection with any such sale. Prior
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<PAGE> 53
notice of any Triggering Event shall be given to the Holder of this
Warrant in accordance with Section 11 hereof.
(b) Subdivision or Combination of Shares. If the Issuer, at any
time while this Warrant is outstanding, shall subdivide or combine any shares of
Common Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of Holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision, or (ii) in the case of a combination of shares, the
Warrant Price shall be proportionately increased (as at the effective date of
such combination or, if the Issuer shall take a record of Holders of its Common
Stock for the purpose of so combining, as at the applicable record date,
whichever is earlier) to reflect the reduction in the total number of shares of
Common Stock outstanding as a result of such combination.
(c) Certain Dividends and Distributions. If the Issuer, at any
time while this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend in, or make any other
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the
date the Issuer shall take a record of the Holders of the Issuer's
Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying
the Warrant Price in effect immediately prior to such record date (or
if no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event that
the Issuer paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Issuer issued
fractional shares in connection with said dividends); or
(ii) Other Dividends. Pay a dividend on, or make any
distribution of its assets upon or with respect to (including, but not
limited to, a distribution of its property as a dividend in liquidation
or partial liquidation or by way of return of capital), the Common
Stock (other than as described in clause (i) of this subsection (c)),
or in the event that the Company shall offer options or rights to
subscribe for shares of Common Stock, or issue any Common Stock
Equivalents, to all of its holders of Common Stock, then on the record
date for such payment, distribution or offer or, in the absence of a
record date, on the date of such payment, distribution or offer, the
Holder shall receive what the Holder would have received had it
exercised this Warrant in full immediately prior to the record date of
such payment, distribution or offer or, in the absence of a record
date, immediately prior to the date of such payment, distribution or
offer. Notwithstanding the
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<PAGE> 54
foregoing set forth in clauses (ii) of this subsection (c) to the
contrary, if the Company gives the Holder at least five Business Days
prior written notice of the record date for such non-cash dividend,
then the Warrant Price shall not be adjusted and the Holder shall have
the option to exercise this Warrant prior to the record date and if the
Holder does not exercise this Warrant prior to such record date, then
the Holder shall not be entitled to received such payment, distribution
or offer.
(d) Issuance of Additional Shares of Common Stock. If the Issuer,
at any time while this Warrant is outstanding, shall issue any Additional Shares
of Common Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share less than the Warrant Price
then in effect or without consideration, then the Warrant Price upon each such
issuance shall be adjusted to that price (rounded to the nearest cent)
determined by multiplying the Warrant Price then in effect by a fraction:
(i) the numerator of which shall be equal to the sum of
(A) the number of shares of Common Stock outstanding immediately prior
to the issuance of such Additional Shares of Common Stock plus (B) the
number of shares of Common Stock (rounded to the nearest whole share)
which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at a price
per share equal to the Warrant Price then in effect, and
(ii) the denominator of which shall be equal to the number
of shares of Common Stock outstanding immediately after the issuance of
such Additional Shares of Common Stock.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (Y) no adjustment was required pursuant to
subsection (e) of this Section 4. No adjustment of the Warrant Price shall be
made under this subsection (d) in an amount less than $.01 per share, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment, if any, which together with
any adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Warrant Price as a result of any
dividend or distribution payable in Common Stock or Convertible Securities or
the reclassification, subdivision or combination of Common Stock into a greater
or smaller number of shares, the foregoing figure of $.01 per share (or such
figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
proportion to the adjustment in the Warrant Price.
(e) Issuance of Common Stock Equivalents. If the Issuer, at any
time while this Warrant is outstanding, shall issue any Common Stock Equivalent
and the price per share for which Additional Shares of Common Stock may be
issuable thereafter pursuant to such Common Stock Equivalent shall be less than
the Warrant Price then in effect, or if, after any such issuance
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<PAGE> 55
of Common Stock Equivalents, the price per share for which Additional Shares of
Common Stock may be issuable thereafter is amended or adjusted, and such price
as so amended shall be less than the Warrant Price in effect at the time of such
amendment, then the Warrant Price upon each such issuance or amendment shall be
adjusted as provided in the first sentence of subsection (d) of this Section 4
on the basis that (1) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable in whole or in part) as of the earlier
of (A) the date on which the Issuer shall enter into a firm contract for the
issuance of such Common Stock Equivalent, or (B) the date of actual issuance of
such Common Stock Equivalent, and (2) the aggregate consideration for such
maximum number of Additional Shares of Common Stock shall be deemed to be the
minimum consideration received or receivable by the Issuer for the issuance of
such Additional Shares of Common Stock pursuant to such Common Stock Equivalent.
No adjustment of the Warrant Price shall be made under this subsection (e) upon
the issuance of any Convertible Security which is issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any adjustment shall previously have been made in the Warrant Price then in
effect upon the issuance of such warrants or other rights pursuant to this
subsection (e).
(f) Purchase of Common Stock by the Issuer. If the Issuer at any
time while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value then
in effect, then the Warrant Price upon each such purchase, redemption or
acquisition shall be adjusted to that price determined by multiplying such
Warrant Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Per Share Market Value;
and (ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subsection (f), the date as of which the Per Share Market Value
shall be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock. For the purposes of this subsection (f), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.
(g) Other Provisions Applicable to Adjustments Under this Section
4. The following provisions shall be applicable to the making of adjustments in
the Warrant Price hereinbefore provided in Section 4:
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<PAGE> 56
(i) Computation of Consideration. The consideration
received by the Issuer shall be deemed to be the following: to the
extent that any Additional Shares of Common Stock or any Common Stock
Equivalents shall be issued for a cash consideration, the consideration
received by the Issuer therefor, or if such Additional Shares of Common
Stock or Common Stock Equivalents are offered by the Issuer for
subscription, the subscription price, or, if such Additional Shares of
Common Stock or Common Stock Equivalents are sold to underwriters or
dealers for public offering without a subscription offering, the public
offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without
deduction of any compensation, discounts, commissions, or expenses paid
or incurred by the Issuer for or in connection with the underwriting
thereof or otherwise in connection with the issue thereof; to the
extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the fair market
value of such consideration at the, time of such issuance as determined
in good faith by the Board. The consideration for any Additional Shares
of Common Stock issuable pursuant to any Common Stock Equivalents shall
be the consideration received by the Issuer for issuing such Common
Stock Equivalents, plus the additional consideration payable to the
Issuer upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of any Additional
Shares of Common Stock or Common Stock Equivalents in payment or
satisfaction of any dividend upon any class of Capital Stock of the
Issuer other than Common Stock, the Issuer shall be deemed to have
received for such Additional Shares of Common Stock or Common Stock
Equivalents a consideration equal to the amount of such dividend so
paid or satisfied. In any case in which the consideration to be
received or paid shall be other than cash, the Board shall notify the
Holder of this Warrant of its determination of the fair market value of
such consideration prior to payment or accepting receipt thereof. If,
within thirty days after receipt of said notice, the Majority Holders
shall notify the Board in writing of their objection to such
determination, a determination of the fair market value of such
consideration shall be made by an Independent Appraiser selected by the
Majority Holders with the approval of the Board (which approval shall
not be unreasonably withheld), whose fees and expenses shall be paid by
the Issuer.
(ii) Readjustment of Warrant Price. Upon the expiration or
termination of the right to convert, exchange or exercise any Common
Stock Equivalent the issuance of which effected an adjustment in the
Warrant Price, if such Common Stock Equivalent shall not have been
converted, exercised or exchanged in its entirety, the number of shares
of Common Stock deemed to be issued and outstanding by reason of the
fact that they were issuable upon conversion, exchange or exercise of
any such Common Stock Equivalent shall no longer be computed as set
forth above, and the Warrant Price shall forthwith be readjusted and
thereafter be the price which it would have been (but reflecting any
other adjustments in the Warrant Price made pursuant to the provisions
of this Section 4 after the issuance of such Common Stock Equivalent)
had the adjustment of the Warrant Price been made in accordance with
the issuance or sale of the number of Additional Shares of Common Stock
actually issued upon conversion, exchange or
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<PAGE> 57
issuance of such Common Stock Equivalent and thereupon only the number
of Additional Shares of Common Stock actually so issued shall be deemed
to have been issued and only the consideration actually received by the
Issuer (computed as in clause (i) of this subsection (g)) shall be
deemed to have been received by the Issuer.
(iii) Outstanding Common Stock. The number of shares of
Common Stock at any time outstanding shall (A) not include any shares
thereof then directly or indirectly owned or held by or for the account
of the Issuer or any of its Subsidiaries, and (B) be deemed to include
all shares of Common Stock then issuable upon conversion, exercise or
exchange of any then outstanding Common Stock Equivalents or any other
evidences of Indebtedness, shares of Capital Stock or other Securities
which are or may be at any time convertible into or exchangeable for
shares of Common Stock or Other Common Stock.
(h) Other Action Affecting Common Stock. In case after the
Original Issue Date the Issuer shall take any action affecting its Common Stock,
other than an action described in any of the foregoing subsections (a) through
(g) of this Section 4, inclusive, and the failure to make any adjustment would
not fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principle of this Section 4, then the Warrant
Price shall be adjusted in such manner and at such time as the Board may in good
faith determine to be equitable in the circumstances.
(i) Adjustment of Warrant Share Number. Upon each adjustment in
the Warrant Price pursuant to any of the foregoing provisions of this Section 4,
the Warrant Share Number shall be adjusted, to the nearest one hundredth of a
whole share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under any provision contained in Section 3 of this Warrant so that
shares issued at the Warrant Price adjusted in accordance with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing sentence shall nonetheless be made and the Holder of this
Warrant shall be entitled to purchase such greater number of shares at the
lowest price at which such shares may then be validly issued under applicable
law. Such exercise shall not constitute a waiver of any claim arising against
the Issuer by reason of its default under Section 3 of this Warrant.
(j) Form of Warrant after Adjustments. The form of this Warrant
need not be changed because of any adjustments in the Warrant Price or the
number and kind of Securities purchasable upon the exercise of this Warrant.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant
Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of
this Section 5, each an "adjustment"), the Issuer shall cause its Chief
Financial Officer to prepare and execute a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of
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<PAGE> 58
the adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to the
Holder of this Warrant promptly after each adjustment. Any dispute between the
Issuer and the Holder of this Warrant with respect to the matters set forth in
such certificate may at the option of the Holder of this Warrant be submitted to
one of the national accounting firms currently known as the "big five" selected
by the Holder, provided that the Issuer shall have ten days after receipt of
notice from such Holder of its selection of such firm to object thereto, in
which case such Holder shall select another such firm and the Issuer shall have
no such right of objection. The firm selected by the Holder of this Warrant as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty days
after submission to it of such dispute. Such opinion shall be final and binding
on the parties hereto. The fees and expenses of such accounting firm shall be
paid by the Issuer.
6. Fractional Shares. No fractional shares of Warrant Stock will
be issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.
7. Definitions. For the purposes of this Warrant, the following
terms have the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Original Issue Date, and all
shares of Other Common, if any, issued by the Issuer after the Original
Issue Date, except the Warrant Stock, Common Stock reserved for
issuance upon exercise of existing stock options issued under any
employee incentive stock option, any qualified stock option plan and/or
stock purchase plan adopted by the Issuer, Common Stock issued in
conjunction with strategic corporate transactions and Common Stock
issued upon exercise of options and warrants authorized by the Board
prior to the Closing Date.
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests
(whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests
in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date,
and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and thereof and pursuant
to applicable law.
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"Closing Date" means the date of execution of the Purchase
Agreement.
"Closing Price" means the VWAP of the Common Stock on the
Trading Day immediately preceding the Closing Date.
"Common Stock" means the Common Stock, $.04 par value, of the
Issuer and any other Capital Stock into which such stock may hereafter
be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority,
commission, board, agency or instrumentality, whether federal, state or
local, and whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified
public accountants of recognized standing (which may be the firm that
regularly examines the financial statements of the Issuer) that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means flightserv.com, a Delaware corporation, and its
successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"Original Issue Date" means January 19, 2000.
"Other Common" means any other Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"OTC Bulletin Board" means the over-the-counter electronic
bulletin board.
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<PAGE> 60
"Person" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated
organization, joint venture, Governmental Authority or other entity of
whatever nature.
"Per Share Market Value" means on any particular date (a) the
last sales price per share of the Common Stock on such date on the
American Stock Exchange or other registered national stock exchange on
which the Common Stock is then listed or if there is no such price on
such date, then the closing bid price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common
Stock is not listed then on the American Stock Exchange or any
registered national stock exchange, the closing bid price for a share
of Common Stock in the over-the-counter market, as reported by the OTC
Bulletin Board or in the National Quotation Bureau Incorporated or
similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or the National
Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of
the "Pink Sheet" quotes for the relevant conversion period, as
determined in good faith by the holder, or (d) if the Common Stock is
not then publicly traded the fair market value of a share of Common
Stock as determined by an Independent Appraiser selected in good faith
by the Majority Holders; provided, however, that the Issuer, after
receipt of the determination by such Independent Appraiser, shall have
the right to select an additional Independent Appraiser, in which case,
the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser; and provided,
further that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The Issuer shall pay all costs
and expenses of each Independent Appraiser. The determination of fair
market value by an Independent Appraiser shall be based upon the fair
market value of the Issuer determined on a going concern basis as
between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and
binding on all parties. In determining the fair market value of any
shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or
any limitations on, voting rights.
"Purchase Agreement" means the Common Stock Purchase Agreement
dated as of January 19, 2000 among the Issuer and the investors a party
thereto.
"Registration Rights Agreement" has the meaning specified in
Section 3(e) hereof.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security. "Security"
means one of the Securities.
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<PAGE> 61
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by
the Issuer and one or more of its Subsidiaries.
"Trading Day" means (a) a day on which the Common Stock is
traded on the American Stock Exchange as reported by Bloomberg L.P., or
(b) if the Common Stock is not listed on the American Stock Exchange, a
day on which the Common Stock is traded on any other registered
national stock exchange, or (c) if the Common Stock is not quoted on
the OTC Bulletin Board, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in
(a), (b) and (c) hereof, then Trading Day shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the State of New York are authorized or
required by law or other government action to close.
"Term" has the meaning specified in Section 1 hereof.
"Voting Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a majority
of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by
reason of the happening of a contingency.
"Warrants" means the Warrants issued and sold pursuant to the
Purchase Agreement, including, without limitation, this Warrant, and
any other warrants of like tenor issued in substitution or exchange for
any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)
hereof or of any of such other Warrants.
"Warrant Price" means $6.058, as such price may be adjusted
from time to time as shall result from adjustments specified in Section
4 hereof.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
and increases to such number made or required to be made under the
terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants or otherwise issuable pursuant to any Warrant
or Warrants.
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<PAGE> 62
8. Other Notices. In case at any time:
(A) the Issuer shall make any distributions to
the holders of Common Stock; or
(B) the Issuer shall authorize the granting to
all holders of its Common Stock of rights to
subscribe for or purchase any shares of
Capital Stock of any class or of any Common
Stock Equivalents or Convertible Securities
or other rights; or
(C) there shall be any reclassification of the
Capital Stock of the Issuer; or
(D) there shall be any capital reorganization by
the Issuer; or
(E) there shall be any (i) consolidation or
merger involving the Issuer or (ii) sale,
transfer or other disposition of all or
substantially all of the Issuer's property,
assets or business (except a merger or other
reorganization in which the Issuer shall be
the surviving corporation and its shares of
Capital Stock shall continue to be
outstanding and unchanged and except a
consolidation, merger, sale, transfer or
other disposition involving a wholly-owned
Subsidiary); or
(F) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of
the Issuer or any partial liquidation of the
Issuer or distribution to holders of Common
Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
days prior to the action in question and not less than twenty days prior to the
record date or the date on which the Issuer's transfer books are closed in
respect thereto. The Issuer shall give to the Holder notice of all meetings and
actions by written consent of its stockholders, at the same time in the same
manner as notice of any meetings of stockholders is required to be given to
stockholders who do not waive such notice (or, if such requires no notice, then
two Trading Days written notice thereof describing the matters upon which action
is to be taken). The Holder shall have the right
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<PAGE> 63
to send two representatives selected by it to each meeting, who shall be
permitted to attend, but not vote at, such meeting and any adjournments thereof.
This Warrant entitles the Holder to receive copies of all financial and other
information distributed or required to be distributed to the holders of the
Common Stock.
9. Amendment and Waiver. Any term, covenant, agreement or
condition in this Warrant may be amended, or compliance therewith may be waived
(either generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
11. Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., eastern
standard time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., pacific
standard time, on any date and earlier than 11:59 p.m., eastern standard time,
on such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service or (iv) actual receipt by the
party to whom such notice is required to be given. The addresses for such
communications shall be with respect to the Holder of this Warrant or of Warrant
Stock issued pursuant hereto, addressed to such Holder at its last known address
or facsimile number appearing on the books of the Issuer maintained for such
purposes, or with respect to the Issuer, addressed to:
flightserv.com
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attn: C. Beverly Lance
Telephone Number: (404) 869-2599
Fax: (404) 240-4101
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Issuer shall be sent to Rogers & Hardin
LLP, 2700 International Tower, Peachtree Street, N.E., Atlanta, Georgia 30303,
Attn: Edward J. Hardin, Facsimile no.: (404) 525-2224. Copies of notices to the
Holder shall be sent to Parker Chapin Flattau & Klimpl, LLP, 1211
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<PAGE> 64
Avenue of the Americas, New York, New York 10036, Attention: Christopher S.
Auguste, Esq., Facsimile no.: (212) 704-6288.
12. Warrant Agent. The Issuer may, by written notice to each
Holder of this Warrant, appoint an agent having an office in New York, New York
for the purpose of issuing shares of Warrant Stock on the exercise of this
Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant
pursuant to subsection (d) of Section 2 hereof or replacing this Warrant
pursuant to subsection (d) of Section 3 hereof, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
13. Remedies. The Issuer stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Issuer in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.
15. Modification and Severability. If, in any action before any
court or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
16. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day
and year first above written.
FLIGHTSERV.COM
By:
----------------------------
Name:
Title:
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<PAGE> 65
EXERCISE FORM
[NAME OF ISSUER]
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of
___________________ covered by the within Warrant.
Dated:___________________ Signature ______________________
Address ______________________
______________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated:___________________ Signature ______________________
Address ______________________
______________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated:___________________ Signature ______________________
Address ______________________
______________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-_____ cancelled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
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<PAGE> 66
FORM OF "C" WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR FLIGHTSERV.COM SHALL HAVE RECEIVED AN
OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
FLIGHTSERV.COM
Expires January 18, 2001
No.: W-__ Number of Shares: 866,623
Date of Issuance: January 18, 2000
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, Flightserv.com, a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that Acqua Wellington
Value Fund, Ltd. or its registered assigns is entitled to subscribe for and
purchase, during the period specified in this Warrant, up to 866,623 shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price per share equal to the Warrant Price then in effect, subject, however, to
the provisions and upon the terms and conditions hereinafter set forth.
Capitalized terms used in this Warrant and not otherwise defined herein shall
have the respective meanings specified in Section 7 hereof.
<PAGE> 67
1. Term. The right to subscribe for and purchase shares of
Warrant Stock represented hereby shall commence on the date of issuance of this
Warrant and shall expire at 5:00 p.m., eastern time, on July 18, 2001 (such
period being the "Term").
2. Method of Exercise Payment: Issuance of New Warrant: Transfer
and Exchange.
(a) Time of Exercise. The purchase rights represented by this
Warrant may be exercised in whole or in part at any time and from time to time
during the Term.
(b) Method of Exercise. The Holder hereof may exercise this
Warrant, in whole or in part, by the surrender of this Warrant (with the
exercise form attached hereto duly executed) at the principal office of the
Issuer, and by the payment to the Issuer of an amount of consideration therefor
equal to the Warrant Price in effect on the date of such exercise multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election by certified or official bank
check or wire transfer of immediately available funds.
(c) Issuance of Stock Certificates. In the event of any exercise
of the rights represented by this Warrant in accordance with and subject to the
terms and conditions hereof, (i) certificates for the shares of Warrant Stock so
purchased shall be dated the date of such exercise and delivered to the Holder
hereof within a reasonable time, not exceeding three Trading Days after such
exercise, and the Holder hereof shall be deemed for all purposes to be the
Holder of the shares of Warrant Stock so purchased as of the date of such
exercise, and (ii) unless this Warrant has expired, a new Warrant representing
the number of shares of Warrant Stock, if any, with respect to which this
Warrant shall not then have been exercised (less any amount thereof which shall
have been canceled in payment or partial payment of the Warrant Price as
hereinabove provided) shall also be issued to the Holder hereof at the Issuer's
expense within such time.
(d) Transferability of Warrant. Subject to Section 2(e), this
Warrant may be transferred by a Purchaser without the consent of the Company. If
transferred pursuant to this paragraph and subject to the provisions of
subsection (e) of this Section 2, this Warrant may be transferred on the books
of the Issuer by the Holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant at the principal office of the Issuer, properly
endorsed (by the Holder executing an assignment in the form attached hereto) and
upon payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. This Warrant is exchangeable at the principal office of the
Issuer for Warrants for the purchase of the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase such number
of shares of Warrant Stock as the Holder hereof shall designate at the time of
such exchange. All Warrants issued on transfers or exchanges shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant hereto.
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<PAGE> 68
(e) Compliance with Securities Laws.
(i) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(ii) Except as provided in paragraph (iii) below, this
Warrant and all certificates representing shares of Warrant Stock
issued upon exercise hereof shall be stamped or imprinted with a legend
in substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR
FLIGHTSERV.COM SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
(iii) The restrictions imposed by this subsection (e) upon
the transfer of this Warrant and the shares of Warrant Stock to be
purchased upon exercise hereof shall terminate (A) when such securities
shall have been effectively registered under the Securities Act, (B)
upon the Issuer's receipt of an opinion of counsel, in form and
substance reasonably satisfactory to the Issuer, addressed to the
Issuer to the effect that such restrictions are no longer required to
ensure compliance with the Securities Act and state securities laws or
(C) upon the Issuer's receipt of other evidence reasonably satisfactory
to the Issuer that such registration and qualification under state
securities laws is not required. Whenever such restrictions shall cease
and terminate as to any such securities, the Holder thereof shall be
entitled to receive from the Issuer (or its transfer agent and
registrar), without expense (other than applicable transfer taxes, if
any), new Warrants (or, in the case of shares of Warrant Stock, new
stock certificates) of like tenor not bearing the applicable legend
required by paragraph (ii) above relating to the Securities Act and
state securities laws.
(f) Continuing Rights of Holder. The Issuer will, at the time of
or at any time after each exercise of this Warrant, upon the request of the
Holder hereof, acknowledge in writing the
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extent, if any, of its continuing obligation to afford to such Holder all rights
to which such Holder shall continue to be entitled after such exercise in
accordance with the terms of this Warrant, provided that if any such Holder
shall fail to make any such request, the failure shall not affect the continuing
obligation of the Issuer to afford such rights to such Holder.
3. Stock Fully Paid: Reservation and Listing of Shares:
Covenants.
(a) Stock Fully Paid. The Issuer represents, warrants, covenants
and agrees that all shares of Warrant Stock which may be issued upon the
exercise of this Warrant or otherwise hereunder will, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges created by or through Issuer. The Issuer further
covenants and agrees that during the period within which this Warrant may be
exercised, the Issuer will at all times have authorized and reserved for the
purpose of the issue upon exercise of this Warrant a sufficient number of shares
of Common Stock to provide for the exercise of this Warrant.
(b) Reservation. If any shares of Common Stock required to be
reserved for issuance upon exercise of this Warrant or as otherwise provided
hereunder require registration or qualification with any governmental authority
under any federal or state law before such shares may be so issued, the Issuer
will in good faith use its best efforts as expeditiously as possible at its
expense to cause such shares to be duly registered or qualified. If the Issuer
shall list any shares of Common Stock on any securities exchange or market it
will, at its expense, list thereon, maintain and increase when necessary such
listing, of, all shares of Warrant Stock from time to time issued upon exercise
of this Warrant or as otherwise provided hereunder, and, to the extent
permissible under the applicable securities exchange rules, all unissued shares
of Warrant Stock which are at any time issuable hereunder, so long as any shares
of Common Stock shall be so listed. The Issuer will also so list on each
securities exchange or market, and will maintain such listing of, any other
securities which the Holder of this Warrant shall be entitled to receive upon
the exercise of this Warrant if at the time any securities of the same class
shall be listed on such securities exchange or market by the Issuer.
(c) Covenants. The Issuer shall not by any action including,
without limitation, amending the Certificate of Incorporation or the by-laws of
the Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the Certificate of Incorporation or by-laws of the
Issuer in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer
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may validly and legally issue fully paid and nonassessable shares of Common
Stock, free and clear of any liens, claims, encumbrances and restrictions (other
than as provided herein) upon the exercise of this Warrant, and (iv) use its
best efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be reasonably
necessary to enable the Issuer to perform its obligations under this Warrant.
(d) Loss, Theft, Destruction of Warrants. Upon receipt of evidence
satisfactory to the Issuer of the ownership of and the loss, theft, destruction
or mutilation of any Warrant and, in the case of any such loss, theft or
destruction, upon receipt of indemnity or security satisfactory to the Issuer
or, in the case of any such mutilation, upon surrender and cancellation of such
Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
(e) Rights and Obligations under the Registration Rights
Agreement. The shares of Warrant Stock are entitled to the benefits and subject
to the terms of the Registration Rights Agreement dated as of even date herewith
between the Issuer and the Holders listed on the signature pages thereof (as
amended from time to time, the "Registration Rights Agreement"). The Issuer
shall keep or cause to be kept a copy of the Registration Rights Agreement, and
any amendments thereto, at its chief executive office and shall furnish, without
charge, copies thereof to the Holder upon request.
4. Adjustment of Warrant Price and Warrant Share Number. The
number and kind of Securities purchasable upon the exercise of this Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(a) Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale.
(i) In case the Issuer after the Original Issue Date
shall do any of the following (each, a "Triggering Event"): (a)
consolidate with or merge into any other Person and the Issuer shall
not be the continuing or surviving corporation of such consolidation or
merger, or (b) permit any other Person to consolidate with or merge
into the Issuer and the Issuer shall be the continuing or surviving
Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged for
Securities of any other Person or cash or any other property, or (c)
transfer all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, then, and in the case of each
such Triggering Event, proper provision shall be made so that, upon the
basis and the terms and in the manner provided in this Warrant, the
Holder of this Warrant shall be entitled (x) upon the exercise hereof
at any time after the consummation of such Triggering Event, to the
extent this Warrant is not exercised prior to such Triggering Event, or
is redeemed in connection with such Triggering Event, to receive at the
Warrant Price in effect at the time immediately prior to the
consummation of such Triggering Event in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such Triggering
Event, the Securities, cash and property to which such Holder would
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have been entitled upon the consummation of such Triggering Event if
such Holder had exercised the rights represented by this Warrant
immediately prior thereto, subject to adjustments and increases
(subsequent to such corporate action) as nearly equivalent as possible
to the adjustments provided for in Section 4 hereof or (y) to sell this
Warrant (or, at such Holder's election, a portion hereof) concurrently
with the Triggering Event to the Person continuing after or surviving
such Triggering Event, or to the Issuer (if Issuer is the continuing or
surviving Person) at a sales price equal to the amount of cash,
property and/or Securities to which a holder of the number of shares of
Common Stock which would otherwise have been delivered upon the
exercise of this Warrant would have been entitled upon the effective
date or closing of any such Triggering Event (the "Event
Consideration"), less the amount or portion of such Event Consideration
having a fair value equal to the aggregate Warrant Price applicable to
this Warrant or the portion hereof so sold.
(ii) Notwithstanding anything contained in this Warrant to
the contrary, the Issuer will not effect any Triggering Event unless,
prior to the consummation thereof, each Person (other than the Issuer)
which may be required to deliver any Securities, cash or property upon
the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the
Holder of this Warrant, (A) the obligations of the Issuer under this
Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall
not release the Issuer from, any continuing obligations of the Issuer
under this Warrant) and (B) the obligation to deliver to such Holder
such shares of Securities, cash or property as, in accordance with the
foregoing provisions of this subsection (a), such Holder shall be
entitled to receive, and such Person shall have similarly delivered to
such Holder an opinion of counsel for such Person, which counsel shall
be reasonably satisfactory to such Holder, stating that this Warrant
shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this
subsection (a)) shall be applicable to the Securities, cash or property
which such Person may be required to deliver upon any exercise of this
Warrant or the exercise of any rights pursuant hereto.
(iii) If with respect to any Triggering Event, the Holder
of this Warrant has exercised its right as provided in clause (y) of
subparagraph (i) of this subsection (a) to sell this Warrant or a
portion thereof, the Issuer agrees that as a condition to the
consummation of any such Triggering Event the Issuer shall secure such
right of Holder to sell this Warrant to the Person continuing after or
surviving such Triggering Event and the Issuer shall not effect any
such Triggering Event unless upon or prior to the consummation thereof
the amounts of cash, property and/or Securities required under such
clause (y) are delivered to the Holder of this Warrant. The obligation
of the Issuer to secure such right of the Holder to sell this Warrant
shall be subject to such Holder's cooperation with the Issuer,
including, without limitation, the giving of customary representations
and warranties to the purchaser in connection with any such sale. Prior
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notice of any Triggering Event shall be given to the Holder of this
Warrant in accordance with Section 11 hereof.
(b) Subdivision or Combination of Shares. If the Issuer, at any
time while this Warrant is outstanding, shall subdivide or combine any shares of
Common Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of Holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the increase in the total number of shares of Common Stock outstanding as a
result of such subdivision, or (ii) in the case of a combination of shares, the
Warrant Price shall be proportionately increased (as at the effective date of
such combination or, if the Issuer shall take a record of Holders of its Common
Stock for the purpose of so combining, as at the applicable record date,
whichever is earlier) to reflect the reduction in the total number of shares of
Common Stock outstanding as a result of such combination.
(c) Certain Dividends and Distributions. If the Issuer, at any
time while this Warrant is outstanding, shall:
(i) Stock Dividends. Pay a dividend in, or make any other
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the
date the Issuer shall take a record of the Holders of the Issuer's
Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying
the Warrant Price in effect immediately prior to such record date (or
if no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event that
the Issuer paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Issuer issued
fractional shares in connection with said dividends); or
(ii) Other Dividends. Pay a dividend on, or make any
distribution of its assets upon or with respect to (including, but not
limited to, a distribution of its property as a dividend in liquidation
or partial liquidation or by way of return of capital), the Common
Stock (other than as described in clause (i) of this subsection (c)),
or in the event that the Company shall offer options or rights to
subscribe for shares of Common Stock, or issue any Common Stock
Equivalents, to all of its holders of Common Stock, then on the record
date for such payment, distribution or offer or, in the absence of a
record date, on the date of such payment, distribution or offer, the
Holder shall receive what the Holder would have received had it
exercised this Warrant in full immediately prior to the record date of
such payment, distribution or offer or, in the absence of a record
date, immediately prior to the date of such payment, distribution or
offer. Notwithstanding the
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foregoing set forth in clauses (ii) of this subsection (c) to the
contrary, if the Company gives the Holder at least five Business Days
prior written notice of the record date for such non-cash dividend,
then the Warrant Price shall not be adjusted and the Holder shall have
the option to exercise this Warrant prior to the record date and if the
Holder does not exercise this Warrant prior to such record date, then
the Holder shall not be entitled to received such payment, distribution
or offer.
(d) Issuance of Additional Shares of Common Stock. If the Issuer,
at any time while this Warrant is outstanding, shall issue any Additional Shares
of Common Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share less than the Warrant Price
then in effect or without consideration, then the Warrant Price upon each such
issuance shall be adjusted to that price (rounded to the nearest cent)
determined by multiplying the Warrant Price then in effect by a fraction:
(i) the numerator of which shall be equal to the sum of
(A) the number of shares of Common Stock outstanding immediately prior
to the issuance of such Additional Shares of Common Stock plus (B) the
number of shares of Common Stock (rounded to the nearest whole share)
which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at a price
per share equal to the Warrant Price then in effect, and
(ii) the denominator of which shall be equal to the number
of shares of Common Stock outstanding immediately after the issuance of
such Additional Shares of Common Stock.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (Y) no adjustment was required pursuant to
subsection (e) of this Section 4. No adjustment of the Warrant Price shall be
made under this subsection (d) in an amount less than $.01 per share, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment, if any, which together with
any adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Warrant Price as a result of any
dividend or distribution payable in Common Stock or Convertible Securities or
the reclassification, subdivision or combination of Common Stock into a greater
or smaller number of shares, the foregoing figure of $.01 per share (or such
figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
proportion to the adjustment in the Warrant Price.
(e) Issuance of Common Stock Equivalents. If the Issuer, at any
time while this Warrant is outstanding, shall issue any Common Stock Equivalent
and the price per share for which Additional Shares of Common Stock may be
issuable thereafter pursuant to such Common Stock Equivalent shall be less than
the Warrant Price then in effect, or if, after any such issuance
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of Common Stock Equivalents, the price per share for which Additional Shares of
Common Stock may be issuable thereafter is amended or adjusted, and such price
as so amended shall be less than the Warrant Price in effect at the time of such
amendment, then the Warrant Price upon each such issuance or amendment shall be
adjusted as provided in the first sentence of subsection (d) of this Section 4
on the basis that (1) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable in whole or in part) as of the earlier
of (A) the date on which the Issuer shall enter into a firm contract for the
issuance of such Common Stock Equivalent, or (B) the date of actual issuance of
such Common Stock Equivalent, and (2) the aggregate consideration for such
maximum number of Additional Shares of Common Stock shall be deemed to be the
minimum consideration received or receivable by the Issuer for the issuance of
such Additional Shares of Common Stock pursuant to such Common Stock Equivalent.
No adjustment of the Warrant Price shall be made under this subsection (e) upon
the issuance of any Convertible Security which is issued pursuant to the
exercise of any warrants or other subscription or purchase rights therefor, if
any adjustment shall previously have been made in the Warrant Price then in
effect upon the issuance of such warrants or other rights pursuant to this
subsection (e).
(f) Purchase of Common Stock by the Issuer. If the Issuer at any
time while this Warrant is outstanding shall, directly or indirectly through a
Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value then
in effect, then the Warrant Price upon each such purchase, redemption or
acquisition shall be adjusted to that price determined by multiplying such
Warrant Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Per Share Market Value;
and (ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subsection (f), the date as of which the Per Share Market Value
shall be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock. For the purposes of this subsection (f), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.
(g) Other Provisions Applicable to Adjustments Under this Section
4. The following provisions shall be applicable to the making of adjustments in
the Warrant Price hereinbefore provided in Section 4:
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(i) Computation of Consideration. The consideration
received by the Issuer shall be deemed to be the following: to the
extent that any Additional Shares of Common Stock or any Common Stock
Equivalents shall be issued for a cash consideration, the consideration
received by the Issuer therefor, or if such Additional Shares of Common
Stock or Common Stock Equivalents are offered by the Issuer for
subscription, the subscription price, or, if such Additional Shares of
Common Stock or Common Stock Equivalents are sold to underwriters or
dealers for public offering without a subscription offering, the public
offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without
deduction of any compensation, discounts, commissions, or expenses paid
or incurred by the Issuer for or in connection with the underwriting
thereof or otherwise in connection with the issue thereof; to the
extent that such issuance shall be for a consideration other than cash,
then, except as herein otherwise expressly provided, the fair market
value of such consideration at the, time of such issuance as determined
in good faith by the Board. The consideration for any Additional Shares
of Common Stock issuable pursuant to any Common Stock Equivalents shall
be the consideration received by the Issuer for issuing such Common
Stock Equivalents, plus the additional consideration payable to the
Issuer upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of any Additional
Shares of Common Stock or Common Stock Equivalents in payment or
satisfaction of any dividend upon any class of Capital Stock of the
Issuer other than Common Stock, the Issuer shall be deemed to have
received for such Additional Shares of Common Stock or Common Stock
Equivalents a consideration equal to the amount of such dividend so
paid or satisfied. In any case in which the consideration to be
received or paid shall be other than cash, the Board shall notify the
Holder of this Warrant of its determination of the fair market value of
such consideration prior to payment or accepting receipt thereof. If,
within thirty days after receipt of said notice, the Majority Holders
shall notify the Board in writing of their objection to such
determination, a determination of the fair market value of such
consideration shall be made by an Independent Appraiser selected by the
Majority Holders with the approval of the Board (which approval shall
not be unreasonably withheld), whose fees and expenses shall be paid by
the Issuer.
(ii) Readjustment of Warrant Price. Upon the expiration or
termination of the right to convert, exchange or exercise any Common
Stock Equivalent the issuance of which effected an adjustment in the
Warrant Price, if such Common Stock Equivalent shall not have been
converted, exercised or exchanged in its entirety, the number of shares
of Common Stock deemed to be issued and outstanding by reason of the
fact that they were issuable upon conversion, exchange or exercise of
any such Common Stock Equivalent shall no longer be computed as set
forth above, and the Warrant Price shall forthwith be readjusted and
thereafter be the price which it would have been (but reflecting any
other adjustments in the Warrant Price made pursuant to the provisions
of this Section 4 after the issuance of such Common Stock Equivalent)
had the adjustment of the Warrant Price been made in accordance with
the issuance or sale of the number of Additional Shares of Common Stock
actually issued upon conversion, exchange or
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issuance of such Common Stock Equivalent and thereupon only the number
of Additional Shares of Common Stock actually so issued shall be deemed
to have been issued and only the consideration actually received by the
Issuer (computed as in clause (i) of this subsection (g)) shall be
deemed to have been received by the Issuer.
(iii) Outstanding Common Stock. The number of shares of
Common Stock at any time outstanding shall (A) not include any shares
thereof then directly or indirectly owned or held by or for the account
of the Issuer or any of its Subsidiaries, and (B) be deemed to include
all shares of Common Stock then issuable upon conversion, exercise or
exchange of any then outstanding Common Stock Equivalents or any other
evidences of Indebtedness, shares of Capital Stock or other Securities
which are or may be at any time convertible into or exchangeable for
shares of Common Stock or Other Common Stock.
(h) Other Action Affecting Common Stock. In case after the
Original Issue Date the Issuer shall take any action affecting its Common Stock,
other than an action described in any of the foregoing subsections (a) through
(g) of this Section 4, inclusive, and the failure to make any adjustment would
not fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principle of this Section 4, then the Warrant
Price shall be adjusted in such manner and at such time as the Board may in good
faith determine to be equitable in the circumstances.
(i) Adjustment of Warrant Share Number. Upon each adjustment in
the Warrant Price pursuant to any of the foregoing provisions of this Section 4,
the Warrant Share Number shall be adjusted, to the nearest one hundredth of a
whole share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under any provision contained in Section 3 of this Warrant so that
shares issued at the Warrant Price adjusted in accordance with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing sentence shall nonetheless be made and the Holder of this
Warrant shall be entitled to purchase such greater number of shares at the
lowest price at which such shares may then be validly issued under applicable
law. Such exercise shall not constitute a waiver of any claim arising against
the Issuer by reason of its default under Section 3 of this Warrant.
(j) Form of Warrant after Adjustments. The form of this Warrant
need not be changed because of any adjustments in the Warrant Price or the
number and kind of Securities purchasable upon the exercise of this Warrant.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant
Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of
this Section 5, each an "adjustment"), the Issuer shall cause its Chief
Financial Officer to prepare and execute a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of
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the adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to the
Holder of this Warrant promptly after each adjustment. Any dispute between the
Issuer and the Holder of this Warrant with respect to the matters set forth in
such certificate may at the option of the Holder of this Warrant be submitted to
one of the national accounting firms currently known as the "big five" selected
by the Holder, provided that the Issuer shall have ten days after receipt of
notice from such Holder of its selection of such firm to object thereto, in
which case such Holder shall select another such firm and the Issuer shall have
no such right of objection. The firm selected by the Holder of this Warrant as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty days
after submission to it of such dispute. Such opinion shall be final and binding
on the parties hereto. The fees and expenses of such accounting firm shall be
paid by the Issuer.
6. Fractional Shares. No fractional shares of Warrant Stock will
be issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.
7. Definitions. For the purposes of this Warrant, the following
terms have the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Original Issue Date, and all
shares of Other Common, if any, issued by the Issuer after the Original
Issue Date, except the Warrant Stock, Common Stock reserved for
issuance upon exercise of existing stock options issued under any
employee incentive stock option, any qualified stock option plan and/or
stock purchase plan adopted by the Issuer, Common Stock issued in
conjunction with strategic corporate transactions and Common Stock
issued upon exercise of options and warrants authorized by the Board
prior to the Closing Date.
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests
(whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests
in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date,
and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and thereof and pursuant
to applicable law.
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"Closing Date" means the date of execution of the Purchase
Agreement.
"Closing Price" means the VWAP of the Common Stock on the
Trading Day immediately preceding the Closing Date.
"Common Stock" means the Common Stock, $.04 par value, of the
Issuer and any other Capital Stock into which such stock may hereafter
be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority,
commission, board, agency or instrumentality, whether federal, state or
local, and whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified
public accountants of recognized standing (which may be the firm that
regularly examines the financial statements of the Issuer) that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means flightserv.com, a Delaware corporation, and its
successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"Original Issue Date" means January 19, 2000.
"Other Common" means any other Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"OTC Bulletin Board" means the over-the-counter electronic
bulletin board.
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"Person" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated
organization, joint venture, Governmental Authority or other entity of
whatever nature.
"Per Share Market Value" means on any particular date (a) the
last sales price per share of the Common Stock on such date on the
American Stock Exchange or other registered national stock exchange on
which the Common Stock is then listed or if there is no such price on
such date, then the closing bid price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common
Stock is not listed then on the American Stock Exchange or any
registered national stock exchange, the closing bid price for a share
of Common Stock in the over-the-counter market, as reported by the OTC
Bulletin Board or in the National Quotation Bureau Incorporated or
similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or the National
Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of
the "Pink Sheet" quotes for the relevant conversion period, as
determined in good faith by the holder, or (d) if the Common Stock is
not then publicly traded the fair market value of a share of Common
Stock as determined by an Independent Appraiser selected in good faith
by the Majority Holders; provided, however, that the Issuer, after
receipt of the determination by such Independent Appraiser, shall have
the right to select an additional Independent Appraiser, in which case,
the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser; and provided,
further that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The Issuer shall pay all costs
and expenses of each Independent Appraiser. The determination of fair
market value by an Independent Appraiser shall be based upon the fair
market value of the Issuer determined on a going concern basis as
between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and
binding on all parties. In determining the fair market value of any
shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or
any limitations on, voting rights.
"Purchase Agreement" means the Common Stock Purchase Agreement
dated as of January 19, 2000 among the Issuer and the investors a party
thereto.
"Registration Rights Agreement" has the meaning specified in
Section 3(e) hereof.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security. "Security"
means one of the Securities.
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<PAGE> 80
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by
the Issuer and one or more of its Subsidiaries.
"Trading Day" means (a) a day on which the Common Stock is
traded on the American Stock Exchange as reported by Bloomberg L.P., or
(b) if the Common Stock is not listed on the American Stock Exchange, a
day on which the Common Stock is traded on any other registered
national stock exchange, or (c) if the Common Stock is not quoted on
the OTC Bulletin Board, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in
(a), (b) and (c) hereof, then Trading Day shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the State of New York are authorized or
required by law or other government action to close.
"Term" has the meaning specified in Section 1 hereof.
"Voting Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a majority
of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by
reason of the happening of a contingency.
"VWAP" means the volume weighted average price of the Common
Stock (based on a Trading Day from 9:00 a.m to 4:00 p.m.) on the
American Stock Exchange as reported by Bloomberg Financial using the
AQR function.
"Warrants" means the Warrants issued and sold pursuant to the
Purchase Agreement, including, without limitation, this Warrant, and
any other warrants of like tenor issued in substitution or exchange for
any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)
hereof or of any of such other Warrants.
"Warrant Price" means the lesser of (i) 110% of the Closing
Price] (the "Fixed Warrant Price") and (ii) 90% of the VWAP for the
five (5) Trading Days immediately preceding the notice to exercise, as
such price may be adjusted from time to time as shall result from the
adjustments specified in Section 4 hereof, provided, however, that if
the Registration Statement (as defined in the Registration Rights
Agreement) is not declared effective within one hundred twenty (120)
days after the Closing Date, the Fixed Warrant Price shall be reduced
by 10% and by an additional 10% for each thirty day period
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<PAGE> 81
thereafter until the Registration Statement has been declared
effective, which shall be pro rated for such periods less than thirty
(30) days.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
and increases to such number made or required to be made under the
terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants or otherwise issuable pursuant to any Warrant
or Warrants.
8. Other Notices. In case at any time:
(A) the Issuer shall make any distributions to
the holders of Common Stock; or
(B) the Issuer shall authorize the granting to
all holders of its Common Stock of rights to
subscribe for or purchase any shares of
Capital Stock of any class or of any Common
Stock Equivalents or Convertible Securities
or other rights; or
(C) there shall be any reclassification of the
Capital Stock of the Issuer; or
(D) there shall be any capital reorganization by
the Issuer; or
(E) there shall be any (i) consolidation or
merger involving the Issuer or (ii) sale,
transfer or other disposition of all or
substantially all of the Issuer's property,
assets or business (except a merger or other
reorganization in which the Issuer shall be
the surviving corporation and its shares of
Capital Stock shall continue to be
outstanding and unchanged and except a
consolidation, merger, sale, transfer or
other disposition involving a wholly-owned
Subsidiary); or
(F) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of
the Issuer or any partial liquidation of the
Issuer or distribution to holders of Common
Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also
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<PAGE> 82
shall specify the date as of which the holders of Common Stock of record shall
participate in such dividend, distribution or subscription rights, or shall be
entitled to exchange their certificates for Common Stock for securities or other
property deliverable upon such reorganization, reclassification, consolidation,
merger, disposition, dissolution, liquidation or winding-up, as the case may be.
Such notice shall be given at least twenty days prior to the action in question
and not less than twenty days prior to the record date or the date on which the
Issuer's transfer books are closed in respect thereto. The Issuer shall give to
the Holder notice of all meetings and actions by written consent of its
stockholders, at the same time in the same manner as notice of any meetings of
stockholders is required to be given to stockholders who do not waive such
notice (or, if such requires no notice, then two Trading Days written notice
thereof describing the matters upon which action is to be taken). The Holder
shall have the right to send two representatives selected by it to each meeting,
who shall be permitted to attend, but not vote at, such meeting and any
adjournments thereof. This Warrant entitles the Holder to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Common Stock.
9. Amendment and Waiver. Any term, covenant, agreement or
condition in this Warrant may be amended, or compliance therewith may be waived
(either generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
11. Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., eastern
standard time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., pacific
standard time, on any date and earlier than 11:59 p.m., eastern standard time,
on such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service or (iv) actual receipt by the
party to whom such notice is required to be given. The addresses for such
communications shall be with respect to the Holder of this Warrant or of Warrant
Stock issued pursuant hereto, addressed to such Holder at its last known address
or facsimile number appearing on the books of the Issuer maintained for such
purposes, or with respect to the Issuer, addressed to:
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<PAGE> 83
flightserv.com
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attn: C. Beverly Lance
Telephone Number: (404) 869-2599
Fax: (404) 240-4101
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Issuer shall be sent to Rogers & Hardin
LLP, 2700 International Tower, Peachtree Street, N.E., Atlanta, Georgia 30303,
Attn: Edward J. Hardin, Facsimile no.: (404) 525-2224. Copies of notices to the
Holder shall be sent to Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the
Americas, New York, New York 10036, Attention: Christopher S. Auguste, Esq.,
Facsimile no.: (212) 704-6288.
12. Warrant Agent. The Issuer may, by written notice to each
Holder of this Warrant, appoint an agent having an office in New York, New York
for the purpose of issuing shares of Warrant Stock on the exercise of this
Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant
pursuant to subsection (d) of Section 2 hereof or replacing this Warrant
pursuant to subsection (d) of Section 3 hereof, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
13. Remedies. The Issuer stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Issuer in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock
15. Modification and Severability. If, in any action before any
court or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
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<PAGE> 84
16. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day
and year first above written.
FLIGHTSERV.COM
By:
--------------------------
Name:
Title:
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<PAGE> 85
EXERCISE FORM
[NAME OF ISSUER]
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of
___________________ covered by the within Warrant.
Dated:_______________________ Signature ________________________
Address ________________________
________________________
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated:_______________________ Signature ________________________
Address ________________________
________________________
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated:_______________________ Signature ________________________
Address ________________________
________________________
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-_____ cancelled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
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<PAGE> 86
EXHIBIT 2.1
ESCROW AGREEMENT
ESCROW AGREEMENT (the "Escrow Agreement") made as of the 19th day of
January, 2000, by and among flightserv.com, a Delaware corporation, with
offices at 3343 Peachtree Rd., Suite 530, Atlanta, Georgia 30326 (the
"Company"), Acqua Wellington Value Fund, Ltd., a company organized under the
laws of the Bahamas (the "Purchaser") and Parker Chapin Flattau and Klimpl,
LLP, a New York limited liability partnership with offices at 1211 Avenue of
the Americas, New York, New York 10027, as escrow agent (the "Escrow Agent").
WITNESSETH:
WHEREAS, the Company desires to raise capital in order to finance the
growth of its business operations and for other general corporate purposes;
WHEREAS, the Company and the Purchaser have agreed that, in order to
raise capital, the Company shall issue and sell to the Purchaser in the
aggregate 1,650,709 shares of the Company's common stock, $0.04 par value per
share (the "Common Stock"), and Warrants to purchase up to 2,888,740 shares of
Common Stock (the "Warrants") for an aggregate purchase price of $10,000,000
payable in two tranches of $5,000,000 each (the "Sale");
WHEREAS, pursuant to the Sale, the Company will enter into a Common
Stock Purchase Agreement dated as of January 19, 2000 (the "Purchase
Agreement") with the Purchaser; and
WHEREAS, the Purchase Agreement contemplates that all funds shall be
paid into escrow and certificate(s) representing the shares of Common Stock and
Warrants purchased by the Purchaser (the "Certificates") shall be held in
escrow prior to each Closing Date (as defined in the Purchase Agreement) and
the Escrow Agent has agreed to receive, hold and pay such funds and to receive
such Certificates, upon the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Escrow
Agreement hereby agree as follows:
1. Defined Terms. Capitalized terms used and not otherwise
defined herein shall have the meanings respectively assigned to them in the
Purchase Agreement.
2. Escrow of Funds. On or prior to each Closing Date, the
following shall occur: (a) Purchaser shall remit by wire transfer $5,000,000 to
the Escrow Agent pursuant to this
<PAGE> 87
Escrow Agreement as payment in full for 825,354.5 shares of Common Stock and
the applicable Warrants (the "Escrow Amount"); and (b) the Company shall
deliver or cause to be delivered to Escrow Agent the applicable Certificates
(in such denominations as Purchaser shall request), registered in the name of
Purchaser (or any nominee designated by Purchaser), free and clear of all
liens, claims, charges and encumbrances. The Escrow Agent shall hold the Escrow
Amount and the Certificates and shall deliver them or redeliver them to the
Company or to the Purchaser, as applicable, only in accordance with the terms
and conditions of this Escrow Agreement.
3. Investment of Funds. The Escrow Agent shall invest the
monies in the Escrow Amount in an interest bearing bank account with, or
certificates of deposit or time deposits with maturities of no more than thirty
(30) days issued by, a domestic commercial bank or such other bank or other
financial institution as it normally holds such funds.
4. Release of Funds. (a) The Escrow Agent shall release
the Escrow Amount and the Certificates upon receipt, at any time, of joint
written instructions from the Company and the Purchaser directing the manner in
which the return or other distribution of the funds in the Escrow Amount and
the Certificate is to be made.
(b) Immediately following notification to the Escrow Agent
in writing by the Company and the Purchaser that a Closing has occurred, the
Company shall be paid the Escrow Amount and the Purchaser shall receive the
Certificates.
(c) If no Closing occurs prior to 11:59 p.m. pacific time
on January 30, 2000 and the Escrow Agent does not receive joint written
instructions of the Company and the Purchaser regarding an extension of such
date to a date no later than January 30, 2000, the Escrow Agent shall return
the Escrow Amount to the Purchaser and the Certificate to the Company.
(d) Any interest earned on the Escrow Amount shall be paid
to the party receiving the Escrow Amount.
5. Further Assurances. The Company and the Purchaser agree
to do such further acts and to execute and deliver such statements,
assignments, agreements, instruments and other documents as the Escrow Agent
from time to time reasonably may request in connection with the administration,
maintenance, enforcement or adjudication of this Escrow Agreement in order (a)
to give the Escrow Agent confirmation and assurance of the Escrow Agent's
rights, powers, privileges, remedies and interests under this Escrow Agreement
and applicable law, (b) to better enable the Escrow Agent to exercise any such
right, power, privilege, remedy or interest, or (c) to otherwise effectuate the
purpose and the terms and provisions of this Escrow Agreement, each in such
form and substance as may be reasonably acceptable to the Escrow Agent.
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<PAGE> 88
6. Conflicting Demands. If conflicting or adverse claims
or demands are made or notices served upon the Escrow Agent with respect to the
escrow provided for herein, the Company and the Purchaser agree that the Escrow
Agent shall refuse to comply with any such claim or demand and withhold and
stop all further performance of this escrow so long as such disagreement shall
continue. In so doing, the Escrow Agent shall not be or become liable for
damages, losses, costs, expenses or interest to any or any other person for its
failure to comply with such conflicting or adverse demands. The Escrow Agent
shall be entitled to continue to so refrain and refuse to so act until such
conflicting claims or demands shall have been finally determined by a court or
arbitrator of competent jurisdiction or shall have been settled by agreement of
the parties to such controversy, in which case the Escrow Agent shall be
notified thereof in a notice signed by such parties. The Escrow Agent may also
elect to commence an interpleader or other action for declaratory judgment for
the purpose of having the respective rights of the claimants adjudicated, and
may deposit with the court all funds held hereunder pursuant to this Escrow
Agreement; and if it so commences and deposits, the Escrow Agent shall be
relieved and discharged from any further duties and obligations under this
Escrow Agreement.
7. Disputes. Each of the parties hereto hereby covenants
and agrees that the Federal or state courts located in the Borough of
Manhattan, State of New York shall have jurisdiction over any dispute with the
Escrow Agent or relating to this Escrow Agreement.
8. Expenses of the Escrow Agent. The Company agrees to pay
any and all out-of-pocket costs and expenses incurred by the Escrow Agent in
connection with all waivers, releases, discharges, satisfactions, modifications
and amendments of this Escrow Agreement, the administration and holding of the
Escrow Amount and the investment of such funds, and the enforcement, protection
and adjudication of the Escrow Agent's rights hereunder by the Escrow Agent,
including, without limitation, the out-of-pocket disbursements of the Escrow
Agent itself and expenses and costs of other attorneys it may retain, if any.
The Company shall be liable to the Escrow Agent for any expenses payable by the
Escrow Agent.
9. Reliance on Documents and Experts. The Escrow Agent
shall be entitled to rely upon any notice, consent, certificate, affidavit,
statement, paper, document, writing or communication (which to the extent
permitted hereunder may be by telegram, cable, telex, telecopier, or telephone)
reasonably believed by it to be genuine and to have been signed, sent or made
by the proper person or persons, and upon opinions and advice of legal counsel
(including itself or counsel for any party hereto), independent public
accountants and other experts selected by the Escrow Agent and mutually
acceptable to each of the Company and the Purchaser. The Escrow Agent shall not
be responsible to review the Certificate other than to confirm that it has been
signed or to determine the clearance of checks received for the Escrow Amount.
10. Status of the Escrow Agent, Etc. The Escrow Agent is
acting under this Escrow Agreement as a stakeholder only. No term or provision
of this Escrow Agreement is intended to create, nor shall any such term or
provision be deemed to have created, any joint ven-
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<PAGE> 89
ture, partnership or attorney-client relationship between or among the Escrow
Agent and the Company or the Purchaser. This Escrow Agreement shall not be
deemed to prohibit or in any way restrict the Escrow Agent's representation of
the Purchaser, who may be advised by the Escrow Agent on any and all matters
pertaining to this Escrow Agreement. To the extent the Purchaser has been
represented by the Escrow Agent, the hereby waives any conflict of interest and
irrevocably authorizes and directs the Escrow Agent to carry out the terms and
provisions of this Escrow Agreement fairly as to all parties, without regard to
any such representation and irrespective of the impact upon the. The Escrow
Agent's only duties are those expressly set forth in this Escrow Agreement, and
each of the Company and the Purchaser authorizes the Escrow Agent to perform
those duties in accordance with its usual practices in holding funds of its own
or those of other escrows. The Escrow Agent may exercise or otherwise enforce
any of its rights, powers, privileges, remedies and interests under this Escrow
Agreement and applicable law or perform any of its duties under this Escrow
Agreement by or through its partners, employees, attorneys, agents or
designees.
11. Exculpation. The Escrow Agent and its designees, and
their respective partners, employees, attorneys and agents, shall not incur any
liability whatsoever for the investment or disposition of funds or the taking
of any other action in accordance with the terms and provisions of this Escrow
Agreement, for any mistake or error in judgment, for compliance with any
applicable law or any attachment, order or other directive of any court or
other authority (irrespective of any conflicting term or provision of this
Escrow Agreement), or for any act or omission of any other person selected with
reasonable care and engaged by the Escrow Agent in connection with this Escrow
Agreement (other than for such Escrow Agent's or such person's own acts or
omissions breaching a duty owed to the claimant under this Escrow Agreement and
amounting to gross negligence or willful misconduct as finally determined
pursuant to applicable law by a governmental authority having jurisdiction);
and each of the Company and the Purchaser hereby waives any and all claims and
actions whatsoever against the Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, arising out of or related
directly or indirectly to any and all of the foregoing acts, omissions and
circumstances. Furthermore, the Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, shall not incur any
liability (other than for a person's own acts or omissions breaching a duty
owed to the claimant under this Escrow Agreement and amounting to willful
misconduct as finally determined pursuant to applicable law by a governmental
authority having jurisdiction) for other acts and omissions arising out of or
related directly or indirectly to this Escrow Agreement or the Escrow Amount;
and each of the Company and the Purchaser hereby expressly waives any and all
claims and actions (other than those attributable to a person's own acts or
omissions breaching a duty owed to the claimant and amounting to gross
negligence or willful misconduct as finally determined pursuant to applicable
law by a governmental authority having jurisdiction) against the Escrow Agent
and its designees, and their respective partners, employees, attorneys and
agents, arising out of or related directly or indirectly to any and all of the
foregoing acts, omissions and circumstances. The Escrow Agent's designees
excludes the Purchaser for purposes hereof.
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<PAGE> 90
12. Indemnification. The Escrow Agent and its designees
(excluding the Purchaser), and their respective partners, employees, attorneys
and agents, shall be indemnified, reimbursed, held harmless and, at the request
of the Escrow Agent, defended, by the Company from and against any and all
claims, liabilities, losses and expenses (including, without imitation, the
reasonable disbursements, expenses and fees of their respective attorneys) that
may be imposed upon, incurred by, or asserted against any of them, arising out
of or related directly or indirectly to this Escrow Agreement or the Escrow
Amount, except such as are occasioned by the indemnified person's own acts and
omissions breaching a duty owed to the claimant under this Escrow Agreement and
amounting to willful misconduct as finally determined pursuant to applicable
law by a governmental authority having jurisdiction.
13. Notices. Any notice, request, demand or other
communication permitted or required to be given hereunder shall be in writing,
shall be sent by one of the following means to the addressee at the address set
forth below (or at such other address as shall be designated hereunder by
notice to the other parties and persons receiving copies, effective upon actual
receipt) and shall be deemed conclusively to have been given: (a) on the first
business day following the day timely deposited with Federal Express (or other
equivalent national overnight courier) or United States Express Mail, with the
cost of delivery prepaid; (b) on the fifth business day following the day duly
sent by certified or registered United States mail, postage prepaid and return
receipt requested; or (c) when otherwise actually delivered to the addressee.
<TABLE>
<S> <C>
If to the Company: FLIGHTSERV.COM
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attn: Beverly Lance
Fax No.: (404) 240-4101
with a copy to: Rogers & Hardin LLP
2700 International Tower
Peachtree Center
Atlanta, Georgia 30303
Attn: Edward J. Hardin
Fax No.: (404) 525-2224
If to the Purchaser: Acqua Wellington Value Fund, Ltd.
c/o Mees Pierson Fund Services
(Bahamas) Ltd.
Montague Sterling Centre
East Bay Street, P.O. Box 55-6238
Nassau, Bahamas
</TABLE>
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<PAGE> 91
with copies to: Christopher S. Auguste, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Telephone Number: (212) 704-6000
Fax: (212) 704-6288
14. Section and Other Headings. The section and other
headings contained in this Escrow Agreement are for convenience only, shall not
be deemed a part of this Escrow Agreement and shall not affect the meaning or
interpretation of this Escrow Agreement.
15. Governing Law. This Escrow Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York, without regard to principles of conflicts of law. Each of the Company and
the Purchaser (i) hereby irrevocably submits to the jurisdiction of the United
States District Court sitting in the Southern District of New York for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement or the Purchase Agreement and (ii) hereby waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Purchaser
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this Section 15
shall affect or limit any right to serve process in any other manner permitted
by law.
16. Counterparts. This Escrow Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original but all such counterparts shall together
constitute one and the same agreement.
17. Resignation of Escrow Agent. The Escrow Agent may, at
any time, at its option, elect to resign its duties as Escrow Agent under this
Escrow Agreement by providing notice thereof to each of the Company and the
Purchaser. In such event, the Escrow Agent shall deposit the Escrow Amount with
a successor independent escrow agent to be appointed by (a) the Company and the
Purchaser within thirty (30) days following the receipt of notice of
resignation from the Escrow Agent, or (b) the Escrow Agent if the Company and
the Purchaser shall have not agreed on a successor escrow agent within the
aforesaid 30-day period, upon which appointment and delivery of the Escrow
Amount the Escrow Agent shall be released of and from all liability under this
Escrow Agreement.
18. Successors and Assigns; Assignment. Whenever in this
Escrow Agreement reference is made to any party, such reference shall be deemed
to include the
-6-
<PAGE> 92
successors, assigns and legal representatives of such party, and, without
limiting the generality of the foregoing, all representations, warranties,
covenants and other agreements made by or on behalf of each of the Company and
the Purchaser in this Escrow Agreement shall inure to the benefit of any
successor escrow agent hereunder; provided, however, that nothing herein shall
be deemed to authorize or permit the Company or the Purchaser to assign any of
its rights or obligations hereunder to any other person (whether or not an
affiliate of the Company or the Purchaser) without the written consent of each
of the other parties nor to authorize or permit the Escrow Agent to assign any
of its duties or obligations hereunder except as provided in Section 17 hereof.
19. No Third Party Rights. The representations, warranties
and other terms and provisions of this Escrow Agreement are for the exclusive
benefit of the parties hereto, and no other person, including the creditors of
the Company or the Purchaser, shall have any right or claim against any party
by reason of any of those terms and provisions or be entitled to enforce any of
those terms and provisions against any party.
20. No Waiver by Action, Etc. Any waiver or consent
respecting any representation, warranty, covenant or other term or provision of
this Escrow Agreement shall be effective only in the specific instance and for
the specific purpose for which given and shall not be deemed, regardless of
frequency given, to be a further or continuing waiver or consent. The failure
or delay of a party at any time or times to require performance of, or to
exercise its rights with respect to, any representation, warranty, covenant or
other term or provision of this Escrow Agreement in no manner (except as
otherwise expressly provided herein) shall affect its right at a later time to
enforce any such term or provision. No notice to or demand on either the
Company or the Purchaser in any case shall entitle such party to any other or
further notice or demand in the same, similar or other circumstances. All
rights, powers, privileges, remedies and interests of the parties under this
Escrow Agreement are cumulative and not alternatives, and they are in addition
to and shall not limit (except as otherwise expressly provided herein) any
other right, power, privilege, remedy or interest of the parties under this
Escrow Agreement or applicable law.
21. Modification, Amendment, Etc. Each and every
modification and amendment of this Escrow Agreement shall be in writing and
signed by all of the parties hereto, and each and every waiver of, or consent
to any departure from, any covenant, representation, warranty or other
provision of this Escrow Agreement shall be in writing and signed by the party
granting such waiver or consent.
22. Entire Agreement. This Escrow Agreement contains the
entire agreement of the parties with respect to the matters contained herein
and supersedes all prior representations, agreements and understandings, oral
or otherwise, among the parties with respect to the matters contained herein.
-7-
<PAGE> 93
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.
FLIGHTSERV.COM
By: /s/ C.B. Lance
---------------------------------
Name: C.B. Lance
Title: President
PARKER CHAPIN FLATTAU & KLIMPL,
LLP, as escrow agent
By
----------------------------------
ACQUA WELLINGTON VALUE FUND,
LTD.
By:
---------------------------------
Name
Title:
-8-
<PAGE> 94
January 20, 2000
Four Corners Capital, LLC
10 Burton Hills, Blvd., Suite 120
Nashville, TN 37215
Attn: Michael Devlin
Ladies and Gentlemen:
We have acted as counsel to flightserv.com, a Delaware corporation
(the "Company"), in connection with the Common Stock Purchase Agreement (the
"Stock Purchase Agreement") dated as of January 18, 2000 between the Company
and Acqua Wellington Value Fund, Ltd. This opinion letter is being delivered to
you pursuant to Section 4.3(e) of the Stock Purchase Agreement. Capitalized
terms not otherwise defined in this opinion letter have the meaning given to
them in the Stock Purchase Agreement.
In connection with the opinions expressed herein, we have made such
examination of matters of law and of fact as we considered appropriate or
advisable for purposes hereof. As to matters of fact material to the opinions
expressed herein, we have relied upon the representations and warranties as to
factual matters contained in and made by the Company pursuant to the Stock
Purchase Agreement and upon certificates and statements of government officials
and officers of the Company. We have also examined originals or copies of such
corporate documents or records of the Company as we have considered appropriate
for the opinions expressed herein. We have assumed for the purposes of this
opinion letter the genuineness of all signatures other than those of the
officers of the Company, the legal capacity of natural persons, the
authenticity of the documents submitted to us as originals, the conformity to
the original documents of all documents submitted to us as certified, facsimile
or photostatic copies and the authenticity of the originals of such copies.
<PAGE> 95
Four Corners Capital, LLC
January 20, 2000
Page 2
In rendering this opinion letter we have also assumed: (A) that the
Stock Purchase Agreement and the Registration Rights Agreement (collectively
the "Transaction Agreements") have been duly and validly executed and delivered
by you or on your behalf, that you have the power to enter into and perform all
of your obligations thereunder, and that the Transaction Agreements constitute
valid, legal, binding and enforceable obligations upon you; (B) that the
representations and warranties made in the Stock Purchase Agreement by you are
true and correct; and (C) that any wire transfers, drafts or checks tendered by
you will be honored. We have assumed that notwithstanding the designation of
New York law as governing law with respect to the Transaction Agreements and
Warrants that for purposes of all opinions expressed below the Transaction
Agreements and Warrants will be deemed governed by the substantive laws
(without regard to conflicts law) of the State of Georgia. We are members of
the Bar of the State of Georgia and we express no opinion as to the laws of any
jurisdiction other than the laws of the State of Georgia, the federal laws of
the United States of America and the Delaware General Corporation Law (the
"DGCL").
We have made no independent inquiry with respect to any factual
matters or as to the matters to which we express opinions herein "to our
knowledge" or with other similar qualifications. Whenever any opinion or
confirmation of fact herein is qualified by the words "to our knowledge", or
other words of similar meaning, the quoted words mean the current awareness by
lawyers in the primary lawyer group of factual matters such lawyers recognize
as being relevant to the opinion or confirmation so qualified. "Primary lawyer
group" means the lawyer who signs this opinion letter and, solely as to
information relevant to an opinion, any lawyer in this firm who is primarily
responsible for providing the response concerning the particular issue and any
lawyer who participated in the preparation and negotiation of the Transaction
Agreements.
Based upon our examination of and reliance upon the foregoing and
subject to the limitations, exceptions, qualifications and assumptions set
forth below and except as set forth in the Transaction Agreement or the
Disclosure Schedules to the Stock Purchase Agreement (the "Disclosure
Schedules"), we are of the opinion that as of the date hereof
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and the
Company has the requisite corporate power and corporate authority to own its
properties and to conduct its business as, to our knowledge, it is presently
conducted. The Company is qualified to do business as a foreign corporation in
Georgia and in every jurisdiction in which the nature of the business presently
<PAGE> 96
Four Corners Capital, LLC
January 20, 2000
Page 3
conducted, or property owned, by it makes such qualification necessary except
for jurisdictions in which the failure to be so qualified would not have a
Material Adverse Effect.
2. The Company has the requisite corporate power and
corporate authority to execute, deliver and perform the Transaction Agreements.
Each of the Transaction Agreements has been duly and validly authorized by the
Company, duly executed and delivered by an authorized officer of the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable by you against the Company in accordance with its terms.
3. The shares of the Company's common stock, $.04 par
value per share (the "Common Stock"), to be issued under the terms of the Stock
Purchase Agreement have been duly authorized and, when issued in accordance
with the Stock Purchase Agreement, will be duly issued, fully paid and
nonassessable. The Warrants to be issued under the terms of the Stock Purchase
Agreement have been duly authorized by the Board of Directors of the Company
and, when issued in accordance with the terms of the Stock Purchase Agreement,
will constitute legal, valid and binding obligations of the Company,
enforceable by you against the Company in accordance with their terms. The
Common Stock issuable upon exercise of the Warrants has been duly and validly
reserved for issuance and, when and if issued upon such exercise in accordance
with the terms of the Warrants, will be validly issued, fully paid and
nonassessable.
4. The Company's execution and delivery of, and its
performance and compliance as of the date hereof with the terms of, the
Transaction Agreements do not (i) violate any provision of any federal, Georgia
law or DGCL, rule or regulation applicable to the Company or any provision of
the Company's Restated Certificate of Incorporation, as amended, or Bylaws;
(ii) to our knowledge, do not conflict with or constitute a default under the
provisions of any judgment, writ, decree or order; (iii) to our knowledge, do
not conflict with or constitute a default under the material provisions of any
material agreement specifically identified in the Disclosure Schedules; and
(iv) to our knowledge, will not result in the creation or imposition of any
lien on any of the Company's property, assets or revenues pursuant to the
provisions of any such material agreement.
5. To our knowledge, there is no action, proceeding or
governmental investigation pending, or threatened in writing, against the
Company which questions the validity of the Transaction Agreements or the right
of the Company to enter into the Transaction Agreements.
<PAGE> 97
Four Corners Capital, LLC
January 20, 2000
Page 4
We have not considered and have expressed no opinion with respect to
any of the following: (i) the enforceability of any provisions of the
Transaction Agreements or Warrants that purport to confess judgment, consent to
services of process or to jurisdiction in any manner that is not in accordance
with applicable law or that waive rights to assert claims or defenses; (ii) the
effect of bankruptcy, insolvency, moratorium or other similar laws affecting
the rights or remedies of creditors generally, and the effect of general
principles of equity, including principles of commercial reasonableness,
estoppel, good faith and fair dealing, whether considered in a proceeding at
law or in equity, upon the enforceability of the Transaction Agreements and the
Warrants and the availability of equitable relief; (iii) the enforceability of
provisions contained in the Transaction Agreements or the Warrants requiring
indemnification to the extent otherwise contrary to the public policy of state
or federal law; (iv) the provisions of any state, federal or other anti-fraud
or anti-trust laws; and (vi) the effect on any opinion expressed herein of any
future event except as specifically addressed herein.
Further, we express no opinion that the enforcement of any particular
provision of the Transaction Documents or Warrants will not be limited by
defenses such as estoppel or waiver arising subsequent to the date hereof, or
by certain constitutional guarantees and rights of the parties, nor do we
express any opinion with respect to the enforceability of any particular
provision of the Transaction Documents or Warrants by a decree of specific
performance, nor do we express any opinion as to the enforceability under
certain circumstances of provisions to the effect that rights or remedies are
not exclusive, that every right or remedy is cumulative and may be exercised in
addition to or with any other right or remedy, that election of a particular
remedy or remedies does not preclude recourse to one or more remedies, that
rights or remedies may be exercised without notice, or that failure to exercise
or delay in exercising rights or remedies will not operate as a waiver of any
such right or remedy.
<PAGE> 1
EXHIBIT 2.2
COMMON STOCK PURCHASE AGREEMENT
DATED AS OF JANUARY 18, 2000
BETWEEN
FLIGHTSERV.COM
AND
FOUR CORNERS CAPITAL, LLC
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
ARTICLE I Purchase and Sale of Common Stock.................................... 4
Section 1.1 Purchase and Sale of Stock................................ 4
Section 1.2 The Warrants.............................................. 4
Section 1.3 Closing................................................... 5
ARTICLE II Representations and Warranties...................................... 5
Section 2.1 Representation and Warranties of the Company............. 5
Section 2.2 Representations and Warranties of the Purchaser.......... 13
ARTICLE III Covenants.......................................................... 15
Section 3.1 Securities Compliance.................................... 15
Section 3.2 Registration and Listing................................. 16
Section 3.3 Reporting Requirements................................... 16
Section 3.4 Other Agreements......................................... 16
Section 3.5 Reservation of Shares.................................... 17
ARTICLE IV Conditions to Closing............................................... 17
Section 4.1 Conditions Precedent to the Obligation of Each Party..... 17
Section 4.2 Conditions Precedent to the Obligation of the Company.... 18
Section 4.3 Conditions Precedent to the Obligation of the Purchaser... 18
ARTICLE V Termination.......................................................... 19
Section 5.1 Termination by Mutual Consent............................ 19
Section 5.2 Other Termination........................................ 19
Section 5.3 Effect of Termination.................................... 20
ARTICLE VI Indemnification..................................................... 20
Section 6.1 General Indemnity........................................ 20
Section 6.2 Indemnification Procedure................................ 20
ARTICLE VII Miscellaneous...................................................... 21
Section 7.1 Fees and Expenses........................................ 21
Section 7.2 Specific Enforcement, Consent to Jurisdiction............ 22
Section 7.3 Entire Agreement; Amendment.............................. 22
Section 7.4 Notices.................................................. 22
Section 7.5 Waivers.................................................. 23
Section 7.6 Headings................................................. 23
Section 7.7 Successors and Assigns................................... 23
Section 7.8 No Third Party Beneficiaries............................. 24
Section 7.9 Governing Law............................................ 24
Section 7.10 Survival................................................ 24
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
<S> <C> <C>
Section 7.11 Counterparts............................................ 24
Section 7.12 Publicity............................................... 24
Section 7.13 Severability............................................ 24
Section 7.14 Further Assurances...................................... 24
Section 7.15 Certain Definitions..................................... 24
</TABLE>
SCHEDULES
Schedule 2.1(c) Capitalization
Schedule 2.1(g) Subsidiaries
Schedule 2.1(i) No Undisclosed Liabilities
Schedule 2.1(j) Indebtedness
Schedule 2.1(k) Title to Assets
Schedule 2.1(l) Actions Pending
Schedule 2.1(n) Taxes
Schedule 2.1(r) Material Agreements
Schedule 2.1(t) Employees
Schedule 2.1(u) Absence of Certain Developments
<PAGE> 4
EXHIBITS
Exhibit A Form of A Warrant
Exhibit B Form of B Warrant
Exhibit C Form of C Warrant
Exhibit D Form of Escrow Agreement
Exhibit E Form of Registration Rights Agreement
Exhibit F Form of Opinion of Counsel
<PAGE> 5
COMMON STOCK PURCHASE AGREEMENT
This COMMON STOCK PURCHASE AGREEMENT (this "Agreement") is
dated as of January 18, 2000 between flightserv.com, a Delaware corporation (the
"Company"), and Four Corners Capital, LLC, a Delaware limited liability company
(the "Purchaser").
WHEREAS, the parties desire that, upon the terms and subject
to the conditions contained herein, the Company shall issue and sell to the
Purchaser and the Purchaser shall purchase the number of shares of the Company's
common stock, par value $0.04 per share (the "Common Stock"), and warrants to
purchase the number of shares of the Common Stock set forth in Section 1.1
below; and
WHEREAS, such purchase and sale will be made in reliance upon
the provisions of Section 4(2) and Rule 506 of Regulation D ("Regulation D") of
the United States Securities Act of 1933, as amended (the "Securities Act"), and
regulations promulgated thereunder, or upon such other exemption from the
registration requirements of the Securities Act as may be available with respect
to any or all of the purchases of Common Stock and warrants to be made
hereunder.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions
contained herein, the sufficiency of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF COMMON STOCK
Section I.1 Purchase and Sale of Stock. Subject to the terms
and conditions of this Agreement, the Company hereby agrees to issue and sell to
the Purchaser and the Purchaser hereby agrees to purchase from the Company (i)
165,070 shares of Common Stock, at a purchase price of $6.058 per share, and
Warrants (as defined below) to purchase up to 2,723,668 shares of Common Stock.
The aggregate purchase price of the Common Stock and the Warrants to be
purchased by the Purchaser hereunder shall be $1,000,000.
Section I.2 The Warrants. The Company agrees to issue to the
Purchaser (i) a warrant to purchase up to 123,802 shares of Common Stock, which
warrant shall expire on the fifth anniversary of the issuance of such warrant,
in the form of the warrant attached hereto as Exhibit A (the "A Warrant"), (ii)
a warrant to purchase up to 1,485,638 shares of Common Stock, which warrant
shall expire eighteen months from the date of issuance of such warrant, in the
form of the warrant attached hereto as Exhibit B (the "B Warrant") and (iii) a
warrant to purchase up to 1,114,228 shares of Common Stock, which warrant shall
expire eighteen months
<PAGE> 6
from the date of issuance of such warrant, in the form of the warrant attached
hereto as Exhibit C (the "C Warrant" and, together with the A Warrant and B
Warrant, the "Warrants"). Any shares of Common Stock issuable upon exercise of
the Warrants (and such shares when issued) are herein referred to as the
"Warrant Shares". The Common Stock to be acquired by the Purchaser from the
Company under this Agreement and the Warrant Shares are sometimes collectively
referred to as the "Shares".
Section I.3 Closing. The closing of the purchase and sale of
the Common Stock and Warrants (the "Closing") to be acquired by the Purchaser
from the Company pursuant to Section 1.1 hereof shall take place at the offices
of Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the Americas, New York,
New York 10036 at 10:00 a.m. E.S.T. on (i) the date on which the last to be
fulfilled or waived of the conditions set forth in Article IV hereof shall be
fulfilled or waived in accordance herewith or (ii) such other time and place or
on such date as the Purchaser and the Company may agree upon (the date of the
Closing, the "Closing Date"). On or before the Closing Date, the Company shall
deliver to the escrow agent (the Escrow Agent") identified in the Escrow
Agreement attached hereto as Exhibit D (the "Escrow Agreement") the certificates
representing the shares of Common Stock and Warrants to be acquired by the
Purchaser from the Company under Section 1.1 hereof, registered in the
Purchaser's name (or its nominee), and on or prior to the Closing Date the
Purchaser shall pay by wire transfer of immediately available funds into escrow
the purchase price to be paid on the Closing Date pursuant to Section 1.1
hereof. At the Purchaser's request, the Company shall deliver certificates
representing the shares of Common Stock issued on the Closing Date to the
Depositary Trust Company ("DTC") on the Purchaser's behalf. The Company and the
Purchaser shall cause such shares to be credited t the DTC account designated by
the Purchaser upon receipt by the Company of payment by wire transfer of
immediately available funds for such Common Stock by the Purchaser into an
account designated by the Company. In addition, each party shall deliver all
documents, instruments and writings required to be delivered by such party
pursuant to this Agreement at or prior to the Closing. Notwithstanding anything
to the contrary set forth in this Agreement, the aggregate number of shares of
Common Stock to be sold hereunder shall not exceed 2,888,738.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section II.1 Representation and Warranties of the Company. The
Company hereby makes the following representations and warranties to the
Purchaser:
(a) Organization, Good Standing and Power. The Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has the requisite corporate power
to own, lease and operate its properties and assets and to conduct its
business as it is now being conducted. Except as set forth on Schedule
2.1(g), the Company does not have any subsidiaries (as defined in
Section 2.1(g)). The Company is duly qualified as a foreign corporation
to do business and is in
5
<PAGE> 7
good standing in every jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary
except for any jurisdiction in which the failure to be so qualified
will not have a Material Adverse Effect. For purposes of this
Agreement, "Material Adverse Effect" shall mean any event which has, or
may reasonably be expected to have, an effect on the business, results
of operations, assets or financial condition of the Company that is
material and adverse to the Company and its subsidiaries, taken as a
whole, and/or any condition, circumstance or situation that would
prohibit or otherwise interfere with the ability of the Company to
enter into and perform any of its obligations under this Agreement or
the Registration Rights Agreement in the form attached hereto as
Exhibit E (the "Registration Rights Agreement") in any material
respect; provided, however, that a Material Adverse Effect shall not
include any event, change in or effect upon the consolidated financial
condition or business of the Company, directly or indirectly, arising
out of, attributable to or as a consequence of conditions, events or
circumstances generally affecting the chartered flight industry or the
overall economy.
(b) Authorization; Enforcement. The Company has the requisite
corporate power and authority to enter into and perform this Agreement,
the Registration Rights Agreement, the Warrants and each other
agreement contemplated hereby to which it is a party (collectively, the
"Transaction Documents") and to issue and sell the Shares in accordance
with the terms hereof and of the Warrants. The execution, delivery and
performance of each of the Transaction Documents by the Company and the
consummation by it of the transactions contemplated thereby have been
duly and validly authorized by all necessary corporate action, and no
further consent or authorization of the Company or its Board of
Directors or stockholders is required. This Agreement has been duly
executed and delivered by the Company. The Registration Rights
Agreement will be duly executed and delivered by the Company at or
prior to the Closing. Each of the Transaction Documents constitutes, or
shall constitute when executed and delivered, a valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer or similar laws relating to, or affecting the
enforcement of creditor's rights generally and fraudulent transfer by
general equitable principles (regardless of whether enforcement is
sought in equity or at law).
(c) Capitalization. The authorized capital stock of the
Company and the shares thereof issued and outstanding as of the date
hereof are set forth on Schedule 2.1(c) hereto. All of the outstanding
shares of the Company's Common Stock and preferred stock have been duly
and validly authorized. Except as set forth on Schedule 2.1(c), in this
Agreement and the Registration Rights Agreement, no shares of Common
Stock are entitled to preemptive rights or registration rights and
there ar no outstanding options, warrants, scrip, rights to subscribe
to, call or commitments of any character whatsoever relating to, or
securities or rights convertible into, any shares of capital stock of
the Company. Furthermore, except as set forth in this Agreement and the
Registration Rights Agreement and as set forth on Schedule 2.1(c),
there are no contracts, commitments, understandings, or arrangements by
which the Company is or may become
6
<PAGE> 8
bound to issue additional shares of the capital stock of the Company or
options, securities or rights convertible into shares of capital stock
of the Company. Except as provided on Schedule 2.1(c), the Company is
not a party to any agreement granting registration or anti-dilution
rights to any person with respect to any of its equity or debt
securities. Except as provided on Schedule 2.1(c), the Company is not a
party to, and it has no knowledge of, any agreement restricting the
voting or transfer of any shares of the capital stock of the Company.
The offer and sale of all capital stock, convertible securities,
rights, warrants, or options of the Company issued prior to the Closing
complied with all applicable Federal and state securities laws, and no
stockholder has a right of rescission or damages with respect thereto
which would have a Material Adverse Effect. The Company has furnished
or made available to the Purchaser true and correct copies of the
Company's Certificate of Incorporation as in effect on the date hereof
(the "Articles" and the Company's Bylaws as in effect on the date
hereof (the "Bylaws").
(d) Issuance of Securities. The Common Stock and Warrants to
be issued under this Agreement have been duly authorized by all
necessary corporate action and, when issued and paid for in accordance
with the terms hereof, the Common Stock and Warrants shall be validly
issued and outstanding, fully paid and nonassessable, free and clear of
all liens, encumbrances, and rights of first refusal of any kind, other
than resale restrictions imposed by Federal and state securities laws.
When the Warrant Shares are issued in accordance with the terms of the
Warrants, such shares will be duly authorized by all necessary
corporate action and validly issued and outstanding, fully paid and
nonassessable, and the Purchaser shall be entitled to all rights
accorded to a holder of Common Stock.
(e) No Conflicts. The execution, delivery and performance of
this Agreement, the Registration Rights Agreement and the other
Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated herein and therein do not (i)
violate any provision of the Company's Articles or Bylaws, (ii)
conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) under, or give to
others any rights of termination, acceleration or cancellation of, any
material agreement, mortgage, deed of trust, indenture, note, bond,
license, lease agreement, instrument or obligation to which the Company
is a party or by which the Company or any of its assets are bound,
(iii) create or impose a lien, charge or encumbrance on any property of
the Company under any agreement or any commitment to which the Company
is a party or by which the Company is bound or by which any of its
respective properties or assets ar bound, or (iv) result in a violation
of any Federal, state, local or foreign statute, rule, regulation,
order, judgment or decree (including Federal and state securities laws
and regulations) applicable to the Company or any of its subsidiaries
or by which any property or asset of the Company or any of its
subsidiaries are bound or affected, except for (in the case of
subsections (ii), (iii) and (iv), above), such conflicts, defaults,
terminations, acceleration, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect. The
Company is not required under Federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make
any filing or registration with, any court or governmental agency in
order for it to execute, deliver or
7
<PAGE> 9
perform any of its obligations under this Agreement, the Registration
Rights Agreement and the other Transaction Documents, or issue and sell
the Common Stock to be purchased by the Purchaser hereunder, the
Warrants and the Warrant Shares in accordance with the terms hereof and
thereof (other than (i) any filings which may be required to be made by
the Company in connection with or in compliance with the provisions of
the Securities Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and applicable state securities laws, or with the
American Stock Exchange, (ii) any registration statement which may be
filed pursuant hereto, or (iii) pursuant to the Common Stock Purchase
Agreement between the Company and Acqua Wellington Value Fund, Ltd.,
dated as of the date hereof (the "AWVF Purchase Agreement"), or any of
the transactions contemplated thereunder); provided that, for purposes
of the representation made in this sentence, the Company is assuming
and relying upon the accuracy of the relevant representations and
agreements of the Purchaser herein.
(f) Commission Documents, Financial Statements. The Common
Stock of the Company is registered pursuant to Section 12(b) or 12(g)
of the Exchange Act, and, the Company has timely filed all reports,
schedules, forms, statements and other documents required to be filed
by it with the Commission pursuant to the reporting requirements of the
Exchange Act, including material filed pursuant to Section 13(a), 14 or
15(d) of the Exchange Act (all of the foregoing including filings
incorporated by reference therein being referred to herein as the
"Commission Documents"). The Company has delivered to the Purchaser
true and complete copies of the Commission Documents filed with the
Commission since December 31, 1998 and prior to the Closing Date. As of
their respective dates, the Form 10-K for the year ended June 30, 1999
and the Form 10-Q for the fiscal quarter ended September 30, 1999 filed
on September 28, 1999 and November 15, 1999, respectively, complied in
all materia respects with the requirements of the Exchange Act and the
rules and regulations of the Commission promulgated thereunder and, as
of their respective dates, none of the Form 10-K and the Form 10-Q
referred to above contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the Commission Documents filed by
the Company with the Commission since December 31, 1998 have been
prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis during the periods involved
(except (i) as may be otherwise indicated in such financial statements
or the notes thereto or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be
condensed or summary statements), and fairly present in all material
respects the financial position of the Company and the results of
operations and cash flows as of the dates thereof for the periods then
ended (subject, in the case of unaudited statements, to normal year-end
audit adjustments).
(g) Subsidiaries. Each of the Company's subsidiaries is set
forth on Schedule 2.1(g) hereof. For the purposes of this Agreement,
"subsidiary" shall mean any corporation or other entity of which at
least a majority of the securities or other
8
<PAGE> 10
ownership interest having ordinary voting power (absolutely or
contingently) for the election of directors or other persons performing
similar functions are at the time owned directly or indirectly by the
Company and/or any of its other subsidiaries.
(h) No Material Adverse Change. Since September 30, 1999, the
date through which the most recent quarterly report of the Company on
Form 10-Q has been prepared and filed with the Commission, a copy of
which is included in the Commission Documents, the Company has not
experienced or suffered any change in its financial condition, results
of operations or business which has had any Material Adverse Effect.
(i) No Undisclosed Liabilities. Except as disclosed in
Schedule 2.1(i) hereto, since September 30, 1999 the Company has no
liabilities, obligations, claims or losses (whether liquidated or
unliquidated, secured or unsecured, absolute, accrued, contingent or
otherwise), other than those reflected in the Form 10-Q for the quarter
ended September 30, 1999, filed on November 15, 1999, or incurred in
the ordinary course of the Company's business and which, individually
or in the aggregate, do not or could not be reasonably expected to have
a Material Adverse Effect.
(j) Indebtedness. Schedule 2.1(j) hereto sets forth as of the
date hereof all outstanding secured and unsecured Indebtedness of the
Company, or for which the Company has commitments. For the purposes of
this Agreement, "Indebtedness" shall mean (a) any liabilities for
borrowed money in excess of $25,000 (other than trade accounts payable
incurred in the ordinary course of business consistent with past
practices), (b) all guaranties, endorsements and other contingent
obligations in respect of Indebtedness of others, whether or not the
same are or should be reflected in the Company's balance sheet (or the
notes thereto), except guaranties by endorsement of negotiable
instruments for deposit or collection or similar transactions in the
ordinary course of business; and (c) the present value of any lease
payments in excess of $25,000 due under leases required to be
capitalized in accordance with GAAP. The Company is not in material
default with respect to any Indebtedness.
(k) Title to Assets. The Company has good and marketable title
to all of its real and personal property reflected in the Commission
Documents, free of any mortgages, pledges, charges, liens, security
interests or other encumbrances, except as disclosed in Schedule 2.1(k)
hereto or such that could not reasonably be expected to have a Material
Adverse Effect.
(l) Actions Pending. As of the date of this Agreement, except
as set forth in the Commission Documents or Schedule 2.1(l) hereto,
there is no action, suit, claim, investigation or proceeding pending
or, to the knowledge of the Company, threatened, against or involving
the Company or any of its properties or assets that would, if adversely
determined, have a Material Adverse Effect. To the knowledge of the
Company, there are no outstanding orders, judgments, injunctions,
awards or decrees of any court, arbitrator or governmental or
regulatory body against the Company or any officers or directors of the
Company in their capacities as such.
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(m) Compliance with Law. The business of the Company has been
and is presently being conducted in accordance with all applicable
Federal, state and local governmental laws, rules, regulations and
ordinances, except as, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect. The Company
has all franchises, permits, licenses, consents and other governmental
or regulatory authorizations and approvals necessary for the conduct of
its business as now being conducted by it unless the failure to possess
such franchises, permits, licenses, consents and other governmental or
regulatory authorizations and approvals, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(n) Taxes. Except as set forth on Schedule 2.1(n) hereto, the
Company has accurately prepared and filed all federal, state and other
tax returns required by law to be filed by it, has paid or made
provisions for the payment of all taxes shown to be due and all
additional assessments, and adequate provisions have been and are
reflected in the financial statements of the Company for all current
taxes and other charges to which the Company is subject and which are
not currently due an payable. Except as disclosed on Schedule 2.1(n)
hereto, none of the federal income tax returns of the Company for the
years subsequent to June 30, 1996 have been audited by the Internal
Revenue Service. The Company has no knowledge of any additional
assessments, adjustments or contingent tax liability (whether federal
or state) pending or threatened against the Company for any period, nor
of any basis for any such assessment, adjustment or contingency.
(o) Disclosure. To the Company's knowledge, none of the
Commission Documents contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
made herein or therein, in the light of the circumstances under which
they were made herein or therein, not misleading.
(p) Operation of Business. The Company owns or possesses all
patents, trademarks, service marks, trade names, copyrights, licenses
and authorizations as set forth in the Commission Documents
("Intellectual Property"), and all rights with respect to the
foregoing, which are necessary for the conduct of its business as now
conducted without, to the knowledge of the Company, any conflict with
the rights of others, except to the extent that a Material Adverse
Effect could not reasonably be expected to result from such conflict.
(q) Environmental Compliance. The Company has obtained all
material approvals, authorization, certificates, consents, licenses,
orders and permits or other similar authorizations of all governmental
authorities, or from any other person, that are required under any
Environmental Laws. "Environmental Laws" shall mean all applicable laws
relating to the protection of the environment including, without
limitation, all requirements pertaining to reporting, licensing,
permitting, controlling, investigating or remediating emissions,
discharges, releases or threatened releases of hazardous substances,
chemical substances, pollutants, contaminants or toxic substances,
materials or wastes, whether solid, liquid or gaseous in nature, into
the air, surface water, groundwater or land, or relating to the
manufacture, processing, distribution, use,
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treatment, storage, disposal, transport or handling of hazardous
substances, chemical substances, pollutants, contaminants or toxic
substances, material or wastes, whether solid, liquid or gaseous in
nature. The Company has all necessary governmental approvals required
under all Environmental Laws and used in its business. The Company is
also in compliance with all other limitations, restrictions,
conditions, standards, requirements, schedules and timetables required
or imposed under all Environmental Laws. Except for such instances as
would not individually or in the aggregate have a Material Adverse
Effect, there are no past or present events, conditions, circumstances,
incidents, actions or omissions relating to or in any way affecting the
Company that violate or could reasonably be expected to violate any
Environmental Law after the Closing or that could reasonably be
expected to give rise to any environmental liability, or otherwise form
the basis of any claim, action, demand, suit, proceeding, hearing,
study or investigation (i) under any Environmental Law, or (ii) based
on or related to the presence, manufacture, processing, distribution,
use, treatment, storage (including without limitation underground
storage tanks), disposal, transport or handling, or the emission,
discharge, release or threatened release of any hazardous substance.
(r) Material Agreements. Except as set forth in Schedule
2.1(r), the Company is not a party to any written or oral contract,
instrument, agreement, commitment, obligation, plan or arrangement, a
copy of which would be required to be filed with the Commission as an
exhibit to a registration statement on Form S-3 or applicable form
(collectively, "Material Agreements") if the Company were registering
securities under the Securities Act. The Company has in all material
respects performed all the obligations required to be performed by it
to date under the foregoing agreements, has received no notice of
default and, to the Company's knowledge is not in default under any
Material Agreement now in effect, the result of which could reasonably
be expected to cause a Material Adverse Effect.
(s) Securities Act of 1933. Neither the Company nor any of its
Affiliates, nor any person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the
meaning of Regulation D under the Securities Act) in connection with
the offer or sale of the Shares and other securities hereunder.
(t) Employees. The Company has no collective bargaining
arrangements or agreements covering any of its employees. Except as set
forth in Schedule 2.1(t) or as otherwise disclosed in writing by the
Company to the Purchaser, the Company has no employment contract,
agreement regarding proprietary information, noncompetition agreement,
nonsolicitation agreement, confidentiality agreement, or any other
similar contract or restrictive covenant, relating to the right of any
officer, employee or consultant to be employed or engaged by the
Company or obtain any rights in any assets of the Company. Since
September 30, 1999 no officer, consultant or key employee of the
Company whose termination, either individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect, has
terminated or, to the knowledge of the Company, has any present
intention of terminating his or her employment or engagement with the
Company.
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(u) Absence of Certain Developments. Except as provided on
Schedule 2.1(u) hereto, since September 30, 1999, the Company has not
(i) issued any stock, bonds or other corporate securities
or any rights, options or warrants with respect
thereto;
(ii) declared or made any payment or distribution of cash
or other property to stockholders with respect to its
stock, or purchased or redeemed, or made any
agreements so to purchase or redeem, any shares of
its capital stock;
(iii) sold, assigned or transferred any other material
tangible assets, or canceled any material debts or
claims, except in the ordinary course of business;
(iv) sold, assigned or transferred any patent rights,
trademarks, trade names, copyrights, trade secrets or
other intangible assets or intellectual property
rights, or disclosed any proprietary confidential
information to any person except to customers in the
ordinary course of business or to the Purchaser or
its representatives;
(v) made capital expenditures or commitments therefor
that aggregate in excess of $1,000,000;
(vi) suffered any material damage, destruction or casualty
loss, whether or not covered by insurance; or
(vii) entered into an agreement, written or otherwise, to
take any of the foregoing actions.
(v) Use of Proceeds. The proceeds from the sale of the Common
Stock and Warrants will be used by the Company for working capital and
general corporate purposes (which purposes may include engaging in
strategic corporate transactions, including investments in Kitty Hawk
Holding Company L.L.C.).
(w) Public Utility Holding Company Act and Investment Company
Act Status. The Company is not a "holding company" or a "public utility
company" as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended. The Company is not, and as a result of
and immediately upon the Closing will not be, an "investment company"
or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
(x) ERISA. No liability to the Pension Benefit Guaranty
Corporation has been incurred with respect to any Plan by the Company
which has had or could reasonably be expected to have a Material
Adverse Effect on the Company. The execution and delivery of this
Agreement and the issue and sale of the Shares will not
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<PAGE> 14
involve any transaction which is subject to the prohibitions of Section
406 of ERISA or in connection with which a tax could be imposed
pursuant to Section 4975 of the Internal Revenue Code of 1986, as
amended, provided that, if the Purchaser, or any person or entity that
owns a beneficial interest in the Purchaser, is an "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA) with
respect to which the Company is a "party in interest" (within the
meaning of Section 3(14) of ERISA), the requirements of Sections
407(d)(5) and 408(e) of ERISA, if applicable, are met. As used in this
Section 2.1(x), the term "Plan" shall mean an "employee pension benefit
plan" (as defined in Section 3 of ERISA) which is or has been
established or maintained, or to which contributions are or have been
made, by the Company or by any trade or business, whether or not
incorporated, which, together with the Company, is under common
control, as described in Section 414(b) or (c) of the Code.
Section II.2 Representations and Warranties of the Purchaser.
The Purchaser hereby makes the following representations and warranties to the
Company:
(a) Organization and Standing of the Purchaser. The Purchaser
is a limited liability company duly organized, validly existing and in
good standing under the laws of the jurisdiction of its formation.
(b) Authorization and Power The Purchaser has the requisite
power and authority to enter into and perform this Agreement, the
Registration Rights Agreement and each other agreement contemplated
hereby to which it is a party and to purchase the Common Stock and
Warrants in accordance with the terms of this Agreement and the
Warrants. The execution, delivery and performance of this Agreement and
the Registration Rights Agreement and each other agreement contemplated
hereby to which it is a party by the Purchaser and the consummation by
it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action, and no further consent or
authorization of the Purchaser or its managing members is required.
This Agreement has been duly executed and delivered by the Purchaser.
The Registration Rights Agreement will be duly executed and delivered
by the Purchaser at or prior to the Closing. Each of this Agreement,
the Registration Rights Agreement and each other agreement contemplated
hereby to which it is a party constitutes, or shall constitute when
executed and delivered, a valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms, except
as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent transfer or similar
laws relating to, or affecting the enforcement of creditor's rights
generally and by general equitable principles (regardless of whether
enforcement is sought in equity or at law).
(c) No Conflicts The execution, delivery and performance of
this Agreement and the Registration Rights Agreement and the
consummation by the Purchaser of the transactions contemplated hereby
and thereby or relating hereto do not and will not (i) result in a
violation of the Purchaser's charter documents or bylaws, (ii) conflict
with, or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any
rights of termination, acceleration or cancellation
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<PAGE> 15
of any agreement, indenture, instrument, mortgage, deed of trust, note,
bond, license, lease agreement or obligation to which the Purchaser is
a party or by which the Purchaser or any of its assets are bound, or
(iii) result in a violation of any Federal, state, local or foreign
statute, rule, regulation, order, judgment or decree (including Federal
and state securities laws and regulations) applicable to the Purchaser
or its properties or by which the Purchaser or any of its assets are
bound, except for such conflicts, defaults, violations, terminations,
accelerations or cancellations as would not, individually or in the
aggregate, prohibit or otherwise interfere with the ability of the
Purchaser to enter into and perform its obligations under this
Agreement the Registration Rights Agreement and each other agreement
contemplated hereby to which it is a party in any material respect. The
Purchaser is not required under Federal, state or local law, rule or
regulation to obtain any consent, authorization or order of, or make
any filing or registration with, any court or governmental agency in
order for it to execute, deliver or perform any of its obligations
under this Agreement, the Registration Rights Agreement or any other
agreement contemplated hereby to which it is a party or to purchase the
Common Stock and the Warrants in accordance with the terms of this
Agreement and the Warrants, provided that for purposes of the
representation made in this sentence, the Purchaser is assuming and
relying upon the accuracy of the relevant representations and
agreements of the Company herein. The Purchaser is purchasing the
Common Stock to be acquired by the Purchaser from the Company hereunder
and the Warrants (and upon any exercise of such Warrants, will be
obtaining the Warrant Shares) "solely for the purpose of investment",
as defined in Section 801.1 of the Rules of the Federal Trade
Commission promulgated under the Hart-Scott-Rodino Act of 1976, as
amended.
(d) Acquisition for Investment. The Purchaser is purchasing
the Common Stock to be acquired by the Purchaser from the Company
hereunder and the Warrants (and upon any exercise of such Warrants,
will be obtaining the Warrant Shares) solely for its own account for
the purpose of investment. The Purchaser does not have a present
arrangement or intention to effect any public distribution of the
Common Stock to be acquired by the Purchaser from the Company hereunder
and Warrants to or through any person or entity; provided, however,
that by making the representations herein, the Purchaser reserves the
right to dispose of the Common Stock to be purchased by the Purchaser
from the Company hereunder, the Warrants or the Warrant Shares at any
time in accordance with Federal and state securities laws applicable to
such disposition. The Purchaser acknowledges that it is able to bear
the financial risks associated with an investment in the Common Stock
to be purchased by the Purchaser from the Company hereunder and the
Warrants and that it has been given full access to such records of the
Company and its subsidiaries and to the officers of the Company and its
subsidiaries as it has deemed necessary or appropriate to conduct its
due diligence investigation. The Purchaser is capable of evaluating the
risks and merits of an investment in the Common Stock to be purchased
by the Purchaser from the Company hereunder and the Warrants by virtue
of its experience as an investor and its knowledge, experience, and
sophistication in financial and business matters and the Purchaser is
capable of bearing the entire loss of its investment in such Common
Stock and Warrants.
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<PAGE> 16
(e) Accredited Investor. The Purchaser is an "accredited
investor" as defined in Rule 501(a) promulgated as part of Regulation D
under the Securities Act.
(f) Rule 144. The Purchaser understands that the Common Stock
to be purchased by the Purchaser from the Company hereunder, the
Warrants and Warrant Shares must be held indefinitely unless such
Common Stock, the Warrants and Warrant Shares are registered under the
Securities Act or an exemption from registration is available. The
Purchaser acknowledges that such person is familiar with Rule 144 of
the rules and regulations of the Commission, as amended, promulgated
pursuant to the Securities Act ("Rule 144"), and that such person has
been advised that Rule 144 permits resales only under certain
circumstances. The Purchaser understands that to the extent that Rule
144 is not available, such person will be unable to sell any shares of
Common Stock to be purchased by the Purchaser from the Company
hereunder without either registration under the Securities Act or the
existence of another exemption from such registration requirement.
(g) Information. The Purchaser and its advisors, if any, have
been furnished with all materials relating to the business, finances
and operations of the Company and materials relating to the offer and
sale of the Common Stock to be purchased by the Purchaser from the
Company hereunder and the Warrants which have been requested by the
Purchaser. The Purchaser and its advisors, if any, have been afforded
the opportunity to ask questions of the Company. The Purchaser has
sought such accounting, legal and tax advice as it has considered
necessary to make an informed investment decision with respect to its
acquisition of the Common Stock to be purchased by the Purchaser from
the Company hereunder and the Warrants. The Purchaser understands that
it (and not the Company) shall be responsible for its own tax
liabilities that may arise as a result of this investment or the
transactions contemplated by this Agreement. In entering into this
Agreement and the Registration Rights Agreement, the Purchaser has
relied solely upon its own investigation and analysis as well as the
representations and warranties contained herein, and the Purchaser
acknowledges that, except as set forth herein, none of the Company, its
directors, officers, employees, Affiliates, controlling persons, agents
or representatives makes or has made any representation or warranty,
either express or implied, as to the accuracy or completeness of any of
the information provided or made available to the Purchaser or its
directors, officers, employees, Affiliates, controlling persons, agents
or representatives.
(h) General. The Purchaser understands that the Common Stock
to be purchased by the Purchaser from the Company hereunder and the
Warrants are being offered and sold in reliance on a transactional
exemption from the registration requirement of Federal and state
securities laws and the Company is relying upon the truth and accuracy
of the representations, warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in order to determine
the applicability of such exemptions and the suitability of the
Purchaser to acquire such Common Stock and Warrants.
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ARTICLE III
COVENANTS
The Company covenants with the Purchaser as follows, which
covenants are for the benefit of the Purchaser and its permitted assignees (as
defined herein).
Section III.1 Securities Compliance.
(a) The Company shall take all necessary action and
proceedings as may be required and permitted by applicable law, rule
and regulation (including, without limitation, any rule or regulation
of the American Stock Exchange), for the legal and valid issuance of
the Common Stock to be purchased by the Purchaser from the Company
hereunder, the Warrants and the Warrant Shares to the Purchaser or
subsequent holders.
(b) The Company is relying upon the truth and accuracy of the
representations, warranties, agreements, acknowledgments and
understandings of the Purchaser set forth herein in order to determine
the applicability of Federal and state securities laws exemptions and
the suitability of the Purchaser to acquire the Common Stock to be
purchased by the Purchaser from the Company hereunder and the Warrants.
Section III.2 Registration and Listing. So long as the
Purchaser is the beneficial owner of the shares of Common Stock to be acquired
by the Purchaser from the Company hereunder or the Warrants or any of the
Warrants remain outstanding, the Company will take all action necessary to cause
its Common Stock to continue to be registered under Sections 12(b) or 12(g) of
the Exchange Act, will comply with its reporting and filing obligations under
the Exchange Act, will comply with all requirements related to any registration
statement filed pursuant to this Agreement, and will not take any action or file
any document (whether or not permitted by the Securities Act or the rules
promulgated thereunder) to terminate or suspend such registration or to
terminate or suspend its reporting and filing obligations under the Exchange Act
or Securities Act, except as permitted herein. So long as the Purchaser is the
beneficial owner of the shares of Common Stock to be acquired by the Purchaser
from the Company hereunder or the Warrants or any of the Warrants remain
outstanding, the Company will take all action necessary to continue the listing
or trading of its Common Stock on the American Stock Exchange or any relevant
market or system, if applicable, and will comply in all respects with the
Company's reporting, filing and other obligations under the bylaws or rules of
American Stock Exchange.
Section III.3 Reporting Requirements. Upon request, the
Company shall furnish the following to the Purchaser so long as the Purchaser is
the beneficial owner of Common Stock to be purchased by the Purchaser from the
Company hereunder or the Warrants:
(a) Quarterly Reports filed with the Commission on Form 10-Q
as soon as available, and in any event within 45 days after the end of
each of the first three fiscal quarters of the Company; and
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(b) Annual Reports filed with the Commission on Form 10-K as
soon as available, and in any event within 90 days after the end of
each fiscal year of the Company.
Section III.4 Other Agreements. So long as the Purchaser is
the beneficial owner of shares of Common Stock to be acquired by the Purchaser
from the Company hereunder, the Warrants or Warrant Shares and prior to 120 days
following the effective date of the Registration Statement, the Company shall
not issue, without the prior consent of the Purchaser, any Common Stock or any
financial instruments convertible into shares of Common Stock, except (i) under
the terms of the existing stock option plans, employee stock purchase plans, or
in conjunction with strategic corporate transactions; (ii) as contemplated by
the AWVF Purchase Agreement; (iii) under the terms of warrants and options held
as of the date hereof by the Purchaser or any of its Affiliates to purchase
shares of Common Stock; or (iv) under the terms of warrants and options
authorized by the Company's Board of Directors for employees, directors and
third parties prior to the date hereof (which options and warrants are set forth
on Schedule 2.1(c); or (v) new options and warrants to advisory board members
and key employees, officers and new hires of the Company, provided, however,
that such new options or warrants shall not be exercisable for more than an
additional 2,000,000 shares of Common Stock, in the aggregate. Notwithstanding
anything to the contrary contained in subsection (v) of this Section 3.4, the
Company shall be permitted to issue options and warrants exercisable for more
than an additional 2,000,000 shares of Common Stock to advisory board members
and key employees, officers and new hires of the Company if it obtains the
consents of the Purchaser and of the Purchaser (as defined in the AWVF Purchase
Agreement) under the AWVF Purchase Agreement, which consents shall not be
unreasonably withheld.
Section III.5 Reservation of Shares. So long as any of the
Warrants remain outstanding, the Company shall take all action necessary to at
all times have authorized, and reserved for the purpose of issuance, no less
than 100% of the aggregate number of shares of Common Stock needed to provide
for the issuance of the Warrant Shares.
ARTICLE IV
CONDITIONS TO CLOSING
Section IV.1 Conditions Precedent to the Obligation of Each
Party. The respective obligations of each party to effect the transactions
contemplated by this Agreement shall be subject to the fulfillment (or waiver by
the Company and the Purchaser) on or prior to the Closing Date of the following
conditions:
(a) No United States or state authority or other agency or
commission or United States or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or entered any
statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and has the
effect of prohibiting consummation of the transactions contemplated by
this Agreement or
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restricting the operation of the business of the Company as conducted
on th date hereof in a manner that would have a Material Adverse
Effect.
(b) Any waiting period applicable to the transactions
contemplated by this Agreement, the Registration Agreement and each
other agreement contemplated hereby, including, without limitation,
those applicable to any filing in connection with or in compliance with
the provisions of the Securities Act, the Exchange Act and any
applicable state securities laws shall have expired or been terminated.
(c) All necessary waivers or consents to, approvals of and
notices or filings as may be required to be obtained in connection with
the performance of this Agreement or any of the transactions
contemplated hereby, the failure of which would prevent the lawful
consummation of the transactions contemplated hereby, shall have been
obtained.
(d) Each of the Company and the Purchaser shall have received
a fully executed copy of the Registration Rights Agreement.
Section IV.2 Conditions Precedent to the Obligation of the
Company. The obligation hereunder of the Company is subject to the satisfaction
or waiver, at or before the Closing, of each of the conditions set forth below.
(a) Accuracy of Each of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser
contained in this Agreement shall be true and correct in all material
respects as of the date when made and as of the Closing Date as though
made at that time, except for representations and warranties that are
expressly made as of a specified date, which shall be true and correct
in all material respects as of such date.
(b) Performance by the Purchaser. The Purchaser shall have
performed, satisfied and complied with in all material respects all
covenants, agreements, conditions and obligations contemplated by this
Agreement to be performed, satisfied or complied with by the Purchaser
at or prior to the Closing. The Company shall have received at the
Closing a certificate signed on behalf of the Purchaser by an executive
officer of the Purchaser, to the effect set forth in Sections 4.2(a)
and (b).
(c) Payment of Purchase Price. The Purchaser shall have
delivered to the Company the purchase price for Common Stock to be
acquired by the Purchaser from the Company hereunder and the Warrants
pursuant to Section 1.1 hereof.
Section IV.3 Conditions Precedent to the Obligation of the
Purchaser. The obligation hereunder of the Purchaser to effect the transactions
contemplated by this Agreement is subject to the satisfaction or waiver, at or
before the Closing, of each of the conditions set forth below.
(a) Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company shall be true and
correct in all material
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respects as of the date when made and as of the Closing Date as though
made at that time except for representations and warranties that are
expressly made as of a specified date, which shall be true and correct
in all material respects as of such date.
(b) Performance by the Company. The Company shall have
performed, satisfied and complied with in all material respects all
covenants, agreements, conditions and obligations required by this
Agreement to be performed, satisfied or complied with by the Company at
or prior to the Closing. The Purchaser shall have received at the
Closing a certificate signed on behalf of the Company by an executive
officer of the Company, to the effect set forth in Sections 4.3(a) and
(b).
(c) No Suspension, Etc. From the date hereof to the Closing
Date, trading in the Company's Common Stock shall not have been
suspended by the Commission or the American Stock Exchange (except for
any suspension of trading of limited duration agreed to by the Company,
which suspension shall be terminated prior to the Closing), and, at any
time prior to the Closing, trading in securities generally as reported
by the American Stock Exchange shall not have been suspended or
limited, or minimum prices shall not have been established on
securities whose trades are reported by the American Stock Exchange,
nor shall a banking moratorium have been declared either by the United
States or New York State authorities, nor shall there have occurred any
material adverse change in any financial market which, in each case, in
the judgment of the Purchaser, makes it impracticable or inadvisable to
purchase the Common Stock to be acquired by the Purchaser from the
Company hereunder and the Warrants.
(d) No Proceedings or Litigation. No action, suit or
proceeding before any arbitrator or any governmental authority shall
have been commenced, and no investigation by any governmental authority
shall have been threatened, against the Company, or any of the
officers, directors or affiliates of the Company seeking to restrain,
prevent or change the transactions contemplated by this Agreement, or
seeking damages in connection with such transactions.
(e) Opinion of Counsel, Etc. At the Closing, the Purchaser
shall have received an opinion of counsel to the Company, dated as of
the Closing Date, in the form of Exhibit F hereto, and such other
certificates and documents as the Purchaser or its counsel shall
reasonably require incident to the Closing.
(f) Resolutions. The Board of Directors of the Company shall
have adopted resolutions consistent with Section 2.1(b) above in a form
reasonably acceptable to the Purchaser (the "Resolutions").
(g) Secretary's Certificate. The Company shall have delivered
to the Purchaser a secretary's certificate, dated as of the Closing
Date, as to (i) the Resolutions, (ii) the Articles and the Bylaws, each
as in effect at the Closing, and (iii) the authority and incumbency of
the officers of the Company executing this Agreement, the Registration
Rights Agreement and the Warrants and any other Transaction Documents.
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<PAGE> 21
(h) Certificates. At the Closing the Company shall have
executed and delivered to the Purchaser the Warrants and stock
certificates (in such denominations as the Purchaser shall request)
representing the shares of Common Stock being purchased by the
Purchaser under Section 1.1 hereof.
ARTICLE V
TERMINATION
Section V.1 Termination by Mutual Consent. This Agreement
shall terminate on February 29, 2000 if the Common Stock to be acquired by the
Purchaser from the Company hereunder and the Warrants have not been issued and
sold by the Company and purchased by the Purchaser. This Agreement may be
terminated by mutual written consent of the parties.
Section V.2 Other Termination. This Agreement may be
terminated:
(a) By any party hereto if any court of governmental authority
of competent jurisdiction shall have issued an order, decree or ruling
or taken any other action restraining, enjoining or otherwise
prohibiting the transactions contemplated hereby and such order, decree
or ruling or other action shall have become final and nonappealable;
(b) By the Purchaser (i) if any of the conditions set forth in
Section 4.1 and 4.3 shall have become incapable of fulfillment and
shall not have been waived by the Purchaser; or
(c) By the Company if any of the conditions set forth in
Sections 4.1 and 4.2 shall have become incapable of fulfillment and
shall not have been waived by the Company.
Section V.3 Effect of Termination. In the event of termination
by the Company or the Purchaser, written notice thereof shall forthwith be given
to the other party and the transactions contemplated by this Agreement shall be
terminated and the transactions contemplated hereby shall be abandoned without
further action by either party. If this Agreement is terminated, this Agreement
shall become void and of no further force and effect, except for the first
sentence of Section 7.1, 7.2(b), 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9 and 7.12,
which shall survive indefinitely.
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<PAGE> 22
ARTICLE VI
INDEMNIFICATION
Section VI.1 General Indemnity. The Company agrees to
indemnify and hold harmless the Purchaser (and its directors, officers,
Affiliates, agents, successors and assigns but excluding consequential damages)
from and against any and all actual losses, liabilities, deficiencies, costs,
damages and reasonable expenses (including, without limitation, reasonable
attorney's fees, charges and disbursements) incurred by the Purchaser as a
result of any breach of the covenants made by the Company herein. The Purchaser
agrees to indemnify and hold harmless the Company and its directors, officers,
Affiliates, agents, successors and assigns from and against any and all actual
losses, liabilities, deficiencies, costs, damages and reasonable expenses
(including, without limitation, reasonable attorneys fees, charges and
disbursements but excluding consequential damages) incurred by the Company as
result of any breach of the covenants or the representations and warranties made
by the Purchaser herein.
Section VI.2 Indemnification Procedure. Any party entitled to
indemnification under this Article VI (an "indemnified party") will give written
notice to the indemnifying party of any matters giving rise to a claim for
indemnification; provided, that the failure of any party entitled to
indemnification hereunder to give notice as provided herein shall not relieve
the indemnifying party of its obligations under this Article VI except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice. In case any action, proceeding or claim is brought against an
indemnified party in respect of which indemnification is sought hereunder, the
indemnifying party shall be entitled to assume upon written notice delivered to
the indemnified party within thirty (30) days of receipt of any indemnification
notice the defense thereof with counsel reasonably satisfactory to the
indemnified party. The indemnified party may not settle or otherwise compromise
or pay such action or claim without the consent of the indemnifying party. In
any event, unless and until the indemnifying party elects in writing to assume
and does so assume the defense of any such claim, proceeding or action, the
indemnified party's costs and expenses arising out of the defense, settlement or
compromise of any such action, claim or proceeding shall be losses subject to
indemnification hereunder. The indemnified party shall cooperate fully with the
indemnifying party in connection with any negotiation or defense of any such
action or claim by the indemnifying party and shall furnish to the indemnifying
party all information reasonably available to the indemnified party which
relates to such action or claim. The indemnifying party shall at all times use
reasonable efforts to keep the indemnified party reasonably apprised as to the
status of the defense or any settlement negotiations with respect thereto. If
the indemnifying party elects to defend any such action or claim, then the
indemnified party shall be entitled to participate in such defense with counsel
of its choice at its sole cost and expense. The indemnifying party shall not be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent. Notwithstanding anything in this Article VI to the
contrary, the indemnifying party shall not, without the indemnified party's
prior written consent (which consent shall not be unreasonably withheld), settle
or compromise any claim or consent to entry of any judgment in respect thereof
which imposes any future obligation on the indemnified party or which does not
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<PAGE> 23
include, as an unconditional term thereof, the giving by the claimant or the
plaintiff to the indemnified party of a release from all liability in respect of
such claim. The indemnification required by this Article VI shall be made by
periodic payments of the amount thereof during the course of investigation or
defense, as and when bills are received or expense, loss, damage or liability is
incurred, so long as the indemnified party irrevocably agrees to refund such
moneys if it is ultimately determined by a court of competent jurisdiction that
such party was not entitled to indemnification. The indemnity agreements
contained herein shall be in addition to (a) any cause of action or similar
rights of the indemnified party against the indemnifying party or others, and
(b) any liabilities the indemnifying party may be subject to pursuant to the
law.
Section 6.3 Exclusive Remedy. From and after the Closing, the
parties' exclusive remedy for breaches of this Agreement shall be pursuant to
this Article VI. The amount collectible pursuant to this Article VI shall not
exceed the amount actually paid by the Purchaser to the Company pursuant to
Article I.
ARTICLE VII
MISCELLANEOUS
Section VII.1 Fees and Expenses. Except as otherwise set forth
in this Agreement and the Registration Rights Agreement, the Company shall pay
all reasonable fees and expenses related to the transactions contemplated by
this Agreement; provided, that the Company shall pay, all reasonable attorneys
fees and expenses (exclusive of disbursements and out-of-pocket expenses)
incurred by the Purchaser in an amount not to exceed $50,000 in connection with
the preparation, negotiation, execution and delivery of this Agreement. In
addition, the Company shall pay all reasonable fees and expenses incurred by the
Purchaser in connection with any amendments, modifications or waivers of this
Agreement or the Registration Rights Agreement or incurred in connection with
the enforcement of this Agreement and the Registration Rights Agreement,
including, without limitation, all reasonable attorneys fees and expenses. The
Company shall pay all stamp or other similar taxes and duties levied in
connection with issuance of the Common Stock to be purchased by the Purchaser
from the Company hereunder and the Warrants pursuant to this Agreement.
Section VII.2 Specific Enforcement, Consent to Jurisdiction.
(a) The Company and the Purchaser acknowledge and agree that
irreparable damage would occur in the event that any of the provisions
of this Agreement or the Registration Rights Agreement were not
performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled
to specific performance of the provisions of this Agreement or the
Registration Rights Agreement in addition to any other remedy to which
any of them may be entitled at law or in equity.
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<PAGE> 24
(b) Each of the Company and the Purchaser (i) hereby
irrevocably submits to the jurisdiction of the state or federal courts
of New York for the purposes of any suit, action or proceeding arising
out of or relating to this Agreement or the Registration Rights
Agreement and (ii) hereby waives, and agrees not to assert in any such
suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such court, that the suit, action or proceeding
is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Purchaser
consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for
notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof.
Nothing in this Section 7.2 shall affect or limit any right to serve
process in any other manner permitted by law.
Section VII.3 Entire Agreement; Amendment. This Agreement
(including all schedules and exhibits hereto) contains the entire understanding
of the parties with respect to the matters covered hereby, supersedes all prior
agreements with respect to the subject matter hereof. This Agreement may be
amended only by written agreement between the parties hereto.
Section VII.4 Notices. Any notice, demand, request, waiver or
other communication required or permitted to be given hereunder shall be in
writing and shall be deemed to have been given or made (a) upon hand delivery,
by telex (with correct answer back received), telecopy or facsimile at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
If to the Company: FLIGHTSERV.COM
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attn: C. Beverly Lance
Fax No.: (404) 240-4101
with copies to:
Rogers & Hardin LLP
2700 International Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Edward J. Hardin
Fax No.: (404) 525-2224
If to the Purchaser: Four Corners Capital, LLC
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<PAGE> 25
10 Burton Hills Boulevard, Suite 120
Nashville, Tennessee 37215
Telephone Number: (615) 263-0224
Fax: (615) 263-0234
Attn: Michael Devlin
with copies to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Telephone Number: (212) 455-2000
Fax: (212) 455-2502
Attention: Gary I. Horowitz, Esq.
Any party hereto may from time to time change its address for
notices by giving at least ten (10) days written notice of such changed address
to the other party hereto.
Section VII.5 Waivers. No waiver by either party of any
default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of
any other provisions, condition or requirement hereof, nor shall any delay or
omission of any party to exercise any right hereunder in any manner impair the
exercise of any such right accruing to it thereafter.
Section VII.6 Headings. The article, section and subsection
headings in this Agreement are for convenience only and shall not constitute a
part of this Agreement for any other purpose and shall not be deemed to limit or
affect any of the provisions hereof.
Section VII.7 Successors and Assigns. The Purchaser may not
assign this Agreement to any person (other than to an Affiliate of the
Purchaser) without the prior written consent of the Company, which consent will
not be unreasonably withheld. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns. After the
Closing, the assignment by a party to this Agreement of any rights hereunder
shall not affect the obligations of such party under this Agreement.
Section VII.8 No Third Party Beneficiaries. This Agreement is
intended for the benefit of the parties hereto and their respective successors
and permitted assigns and is not for the benefit of, nor may any provision
hereof be enforced by, any other person.
Section VII.9 Governing Law. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of New York.
Section VII.10 Survival. The representations and warranties of
the Company and the Purchaser contained in Article II shall survive the
execution and delivery hereof and the Closing until the date two years from the
Closing Date, and the agreements and covenants set
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<PAGE> 26
forth in Articles I, III, VI and VII of this Agreement shall survive the
execution and delivery hereof and the Closing hereunder.
Section VII.11 Counterparts. This Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one and
the same instrument and shall become effective when counterparts have been
signed by each party and delivered to the other parties hereto, it being
understood that all parties need not sign the same counterpart.
Section VII.12 Publicity. The Company and the Purchaser will
agree upon the language of any press release or other written public statements
with respect to the transactions contemplated by this Agreement, and shall not
issue any such press release or make any such written public statement prior to
such agreement, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange.
Section VII.13 Severability. The provisions of this Agreement
are severable and, in the event that any court of competent jurisdiction shall
determine that any one or more of the provisions or part of the provisions
contained in this Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision or part of a provision of
this Agreement, and this Agreement shall be construed as if such invalid or
illegal or unenforceable provision, or part of such provision, had never been
contained herein, so that such provisions would be valid, legal and enforceable
to the maximum extent possible.
Section VII.14 Further Assurances. From and after the date of
this Agreement, upon the request of the Purchaser or the Company, each of the
Company and the Purchaser shall execute and deliver such instrument, documents
and other writings as may be reasonably necessary or desirable to confirm and
carry out and to effectuate fully the intent and purposes of this Agreement and
the Registration Rights Agreement.
Section VII.15 Certain Definitions. For purposes of this
Agreement, "Affiliate" means, with respect to any Person (as defined below), any
other Person that directly or indirectly controls or is controlled by or under
common control with such Person. For the purposes of this definition, "control,"
when used with respect to any Person, means the possession, direct or indirect,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing. "Person" means an individual or a
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or political subdivision thereof) or other entity of any kind.
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<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective authorized officer as of the
date first above written.
FLIGHTSERV.COM
By: /s/ C.B. Lance
------------------------------------
Name: C.B. Lance
Title: President
FOUR CORNERS CAPITAL, LLC
By:
------------------------------------
Name:
Title:
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<PAGE> 28
FORM OF "A" WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR FLIGHTSERV.COM SHALL HAVE RECEIVED AN
OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
FLIGHTSERV.COM
Expires January 18, 2005
No.: W-__ Number of Shares: 123,802
Date of Issuance: January 18, 2000
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, flightserv.com, a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that Four Corners, LLC
or its registered assigns is entitled to subscribe for and purchase, during the
period specified in this Warrant, up to 123,802 shares (subject to adjustment as
hereinafter provided) of the duly authorized, validly issued, fully paid and
non-assessable Common Stock of the Issuer, at an exercise price per share equal
to the Warrant Price then in effect, subject, however, to the provisions and
upon the terms and conditions hereinafter set forth. Capitalized terms used in
this Warrant and not otherwise defined herein shall have the respective meanings
specified in Section 7 hereof.
1. Term. The right to subscribe for and purchase shares of
Warrant Stock represented hereby shall commence on the date of issuance of this
Warrant and shall expire at 5:00 p.m., eastern time, on January 18, 2005 (such
period being the "Term").
2. Method of Exercise Payment: Issuance of New Warrant: Transfer
and Exchange.
(1) Time of Exercise. The purchase rights represented by this
Warrant may be exercised in whole or in part at any time and from time to time
during the Term.
<PAGE> 29
(2) Method of Exercise. The Holder hereof may exercise this
Warrant, in whole or in part, by the surrender of this Warrant (with the
exercise form attached hereto duly executed) at the principal office of the
Issuer, and by the payment to the Issuer of an amount of consideration therefor
equal to the Warrant Price in effect on the date of such exercise multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election (i) by certified or official
bank check or wire transfer of immediately available funds or (ii) by surrender
to the Issuer for cancellation of a portion of this Warrant representing that
number of unissued shares of Warrant Stock which is equal to the quotient
obtained by dividing (A) the product obtained by multiplying the Warrant Price
by the number of shares of Warrant Stock being purchased upon such exercise by
(B) the difference obtained by subtracting the Warrant Price from the Per Share
Market Value as of the date of such exercise, or (iii) by a combination of the
foregoing methods of payment selected by the Holder of this Warrant. In any case
where the consideration payable upon such exercise is being paid in whole or in
part pursuant to the provisions of clause (ii) of this subsection (b), such
exercise shall be accompanied by written notice from the Holder of this Warrant
specifying the manner of payment thereof and containing a calculation showing
the number of shares of Warrant Stock with respect to which rights are being
surrendered thereunder and the net number of shares to be issued after giving
effect to such surrender.
(3) Issuance of Stock Certificates. In the event of any
exercise of the rights represented by this Warrant in accordance with and
subject to the terms and conditions hereof, (i) certificates for the shares of
Warrant Stock so purchased shall be dated the date of such exercise and
delivered to the Holder hereof within a reasonable time, not exceeding three
Trading Days after such exercise, and the Holder hereof shall be deemed for all
purposes to be the Holder of the shares of Warrant Stock so purchased as of the
date of such exercise, and (ii) unless this Warrant has expired, a new Warrant
representing the number of shares of Warrant Stock, if any, with respect to
which this Warrant shall not then have been exercised (less any amount thereof
which shall have been canceled in payment or partial payment of the Warrant
Price as hereinabove provided) shall also be issued to the Holder hereof at the
Issuer's expense within such time.
(4) Transferability of Warrant. Subject to Section 2(e), this
Warrant may be transferred by a Purchaser without the consent of the Company. If
transferred pursuant to this paragraph and subject to the provisions of
subsection (e) of this Section 2, this Warrant may be transferred on the books
of the Issuer by the Holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant at the principal office of the Issuer, properly
endorsed (by the Holder executing an assignment in the form attached hereto) and
upon payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. This Warrant is exchangeable at the principal office of the
Issuer for Warrants for the purchase of the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase such number
of shares of Warrant Stock as the Holder hereof shall designate at the time of
such exchange. All Warrants issued on transfers or exchanges shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant hereto.
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<PAGE> 30
(5) Compliance with Securities Laws.
(1) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(2) Except as provided in paragraph (iii) below, this Warrant
and all certificates representing shares of Warrant Stock issued upon
exercise hereof shall be stamped or imprinted with a legend in
substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR
FLIGHTSERV.COM SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
(3) The restrictions imposed by this subsection (e) upon the
transfer of this Warrant and the shares of Warrant Stock to be
purchased upon exercise hereof shall terminate (A) when such securities
shall have been effectively registered under the Securities Act, (B)
upon the Issuer's receipt of an opinion of counsel, in form and
substance reasonably satisfactory to the Issuer, addressed to the
Issuer to the effect that such restrictions are no longer required to
ensure compliance with the Securities Act and state securities laws or
(C) upon the Issuer's receipt of other evidence reasonably satisfactory
to the Issuer that such registration and qualification under state
securities laws is not required. Whenever such restrictions shall cease
and terminate as to any such securities, the Holder thereof shall be
entitled to receive from the Issuer (or its transfer agent and
registrar), without expense (other than applicable transfer taxes, if
any), new Warrants (or, in the case of shares of Warrant Stock, new
stock certificates) of like tenor not bearing the applicable legend
required by paragraph (ii) above relating to the Securities Act and
state securities laws.
(f) Continuing Rights of Holder. The Issuer will, at the time
of or at any time after each exercise of this Warrant, upon the request of the
Holder hereof, acknowledge in writing
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<PAGE> 31
the extent, if any, of its continuing obligation to afford to such Holder all
rights to which such Holder shall continue to be entitled after such exercise in
accordance with the terms of this Warrant, provided that if any such Holder
shall fail to make any such request, the failure shall not affect the continuing
obligation of the Issuer to afford such rights to such Holder.
3. Stock Fully Paid: Reservation and Listing of Shares:
Covenants.
(1) Stock Fully Paid. The Issuer represents, warrants,
covenants and agrees that all shares of Warrant Stock which may be
issued upon the exercise of this Warrant or otherwise hereunder will,
upon issuance, be duly authorized, validly issued, fully paid and
non-assessable and free from all taxes, liens and charges created by or
through Issuer. The Issuer further covenants and agrees that during the
period within which this Warrant may be exercised, the Issuer will at
all times have authorized and reserved for the purpose of the issue
upon exercise of this Warrant a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant.
(2) Reservation. If any shares of Common Stock required to be
reserved for issuance upon exercise of this Warrant or as otherwise
provided hereunder require registration or qualification with any
governmental authority under any federal or state law before such
shares may be so issued, the Issuer will in good faith use its best
efforts as expeditiously as possible at its expense to cause such
shares to be duly registered or qualified. If the Issuer shall list any
shares of Common Stock on any securities exchange or market it will, at
its expense, list thereon, maintain and increase when necessary such
listing, of, all shares of Warrant Stock from time to time issued upon
exercise of this Warrant or as otherwise provided hereunder, and, to
the extent permissible under the applicable securities exchange rules,
all unissued shares of Warrant Stock which are at any time issuable
hereunder, so long as any shares of Common Stock shall be so listed.
The Issuer will also so list on each securities exchange or market, and
will maintain such listing of, any other securities which the Holder of
this Warrant shall be entitled to receive upon the exercise of this
Warrant if at the time any securities of the same class shall be listed
on such securities exchange or market by the Issuer.
(3) Covenants. The Issuer shall not by any action including,
without limitation, amending the Certificate of Incorporation or the
by-laws of the Issuer, or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities
or any other action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, but will at all times
in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the
generality of the foregoing, the Issuer will (i) not permit the par
value, if any, of its Common Stock to exceed the then effective Warrant
Price, (ii) not amend or modify any provision of the Certificate of
Incorporation or by-laws of the Issuer in any manner that would
adversely affect in any way the powers, preferences or relative
participating, optional or other special rights of the Common Stock or
which would adversely affect the rights of the Holders of the Warrants,
(iii) take all such action as may be reasonably necessary in order that
the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims,
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<PAGE> 32
encumbrances and restrictions (other than as provided herein) upon the exercise
of this Warrant, and (iv) use its best efforts to obtain all such
authorizations, exemptions or consents from any public regulatory body having
jurisdiction thereof as may be reasonably necessary to enable the Issuer to
perform its obligations under this Warrant.
(4) Loss, Theft, Destruction of Warrants. Upon receipt of
evidence satisfactory to the Issuer of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security satisfactory to the
Issuer or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
(5) Rights and Obligations under the Registration Rights
Agreement. The shares of Warrant Stock are entitled to the benefits and subject
to the terms of the Registration Rights Agreement dated as of even date herewith
between the Issuer and the Holders listed on the signature pages thereof (as
amended from time to time, the "Registration Rights Agreement"). The Issuer
shall keep or cause to be kept a copy of the Registration Rights Agreement, and
any amendments thereto, at its chief executive office and shall furnish, without
charge, copies thereof to the Holder upon request.
4. Adjustment of Warrant Price and Warrant Share Number. The
number and kind of Securities purchasable upon the exercise of this Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(1) Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale.
(i) In case the Issuer after the Original Issue Date
shall do any of the following (each, a "Triggering Event"): (a)
consolidate with or merge into any other Person and the Issuer shall
not be the continuing or surviving corporation of such consolidation or
merger, or (b) permit any other Person to consolidate with or merge
into the Issuer and the Issuer shall be the continuing or surviving
Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged for
Securities of any other Person or cash or any other property, or (c)
transfer all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, then, and in the case of each
such Triggering Event, proper provision shall be made so that, upon the
basis and the terms and in the manner provided in this Warrant, the
Holder of this Warrant shall be entitled (x) upon the exercise hereof
at any time after the consummation of such Triggering Event, to the
extent this Warrant is not exercised prior to such Triggering Event, or
is redeemed in connection with such Triggering Event, to receive at the
Warrant Price in effect at the time immediately prior to the
consummation of such Triggering Event in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such Triggering
Event, the Securities, cash and
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<PAGE> 33
property to which such Holder would have been entitled upon the
consummation of such Triggering Event if such Holder had exercised the
rights represented by this Warrant immediately prior thereto, subject
to adjustments and increases (subsequent to such corporate action) as
nearly equivalent as possible to the adjustments provided for in
Section 4 hereof or (y) to sell this Warrant (or, at such Holder's
election, a portion hereof) concurrently with the Triggering Event to
the Person continuing after or surviving such Triggering Event, or to
the Issuer (if Issuer is the continuing or surviving Person) at a sales
price equal to the amount of cash, property and/or Securities to which
a holder of the number of shares of Common Stock which would otherwise
have been delivered upon the exercise of this Warrant would have been
entitled upon the effective date or closing of any such Triggering
Event (the "Event Consideration"), less the amount or portion of such
Event Consideration having a fair value equal to the aggregate Warrant
Price applicable to this Warrant or the portion hereof so sold.
(2) Notwithstanding anything contained in this Warrant to the
contrary, the Issuer will not effect any Triggering Event unless, prior
to the consummation thereof, each Person (other than the Issuer) which
may be required to deliver any Securities, cash or property upon the
exercise of this Warrant as provided herein shall assume, by written
instrument delivered to, and reasonably satisfactory to, the Holder of
this Warrant, (A) the obligations of the Issuer under this Warrant (and
if the Issuer shall survive the consummation of such Triggering Event,
such assumption shall be in addition to, and shall not release the
Issuer from, any continuing obligations of the Issuer under this
Warrant) and (B) the obligation to deliver to such Holder such shares
of Securities, cash or property as, in accordance with the foregoing
provisions of this subsection (a), such Holder shall be entitled to
receive, and such Person shall have similarly delivered to such Holder
an opinion of counsel for such Person, which counsel shall be
reasonably satisfactory to such Holder, stating that this Warrant shall
thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this
subsection (a)) shall be applicable to the Securities, cash or property
which such Person may be required to deliver upon any exercise of this
Warrant or the exercise of any rights pursuant hereto.
(3) If with respect to any Triggering Event, the Holder of
this Warrant has exercised its right as provided in clause (y) of
subparagraph (i) of this subsection (a) to sell this Warrant or a
portion thereof, the Issuer agrees that as a condition to the
consummation of any such Triggering Event the Issuer shall secure such
right of Holder to sell this Warrant to the Person continuing after or
surviving such Triggering Event and the Issuer shall not effect any
such Triggering Event unless upon or prior to the consummation thereof
the amounts of cash, property and/or Securities required under such
clause (y) are delivered to the Holder of this Warrant. The obligation
of the Issuer to secure such right of the Holder to sell this Warrant
shall be subject to such Holder's cooperation with the Issuer,
including, without limitation, the giving of customary representations
and warranties to the purchaser in connection with any such sale. Prior
notice of any Triggering Event shall be given to the Holder of this
Warrant in accordance with Section 11 hereof.
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(2) Subdivision or Combination of Shares. If the Issuer, at
any time while this Warrant is outstanding, shall subdivide or combine any
shares of Common Stock, (i) in case of subdivision of shares, the Warrant Price
shall be proportionately reduced (as at the effective date of such subdivision
or, if the Issuer shall take a record of Holders of its Common Stock for the
purpose of so subdividing, as at the applicable record date, whichever is
earlier) to reflect the increase in the total number of shares of Common Stock
outstanding as a result of such subdivision, or (ii) in the case of a
combination of shares, the Warrant Price shall be proportionately increased (as
at the effective date of such combination or, if the Issuer shall take a record
of Holders of its Common Stock for the purpose of so combining, as at the
applicable record date, whichever is earlier) to reflect the reduction in the
total number of shares of Common Stock outstanding as a result of such
combination.
(3) Certain Dividends and Distributions. If the Issuer, at any
time while this Warrant is outstanding, shall:
(1) Stock Dividends. Pay a dividend in, or make any other
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the
date the Issuer shall take a record of the Holders of the Issuer's
Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying
the Warrant Price in effect immediately prior to such record date (or
if no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event that
the Issuer paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Issuer issued
fractional shares in connection with said dividends); or
(2) Other Dividends. Pay a dividend on, or make any
distribution of its assets upon or with respect to (including, but not
limited to, a distribution of its property as a dividend in liquidation
or partial liquidation or by way of return of capital), the Common
Stock (other than as described in clause (i) of this subsection (c)),
or in the event that the Company shall offer options or rights to
subscribe for shares of Common Stock, or issue any Common Stock
Equivalents, to all of its holders of Common Stock, then on the record
date for such payment, distribution or offer or, in the absence of a
record date, on the date of such payment, distribution or offer, the
Holder shall receive what the Holder would have received had it
exercised this Warrant in full immediately prior to the record date of
such payment, distribution or offer or, in the absence of a record
date, immediately prior to the date of such payment, distribution or
offer. Notwithstanding the foregoing set forth in clause (ii) of this
subsection (c) to the contrary, if the Company gives the Holder at
least five Business Days prior written notice of the record date for
such non-cash dividend, then the Warrant Price shall not be adjusted
and the Holder shall have the option to exercise this Warrant prior to
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<PAGE> 35
the record date, and if the Holder does not exercise this Warrant prior
to such record date, then the Holder shall not be entitled to receive
such payment, distribution or offer.
(4) Issuance of Additional Shares of Common Stock. If the
Issuer, at any time while this Warrant is outstanding, shall issue any
Additional Shares of Common Stock (otherwise than as provided in the foregoing
subsections (a) through (c) of this Section 4), at a price per share less than
the Warrant Price then in effect or without consideration, then the Warrant
Price upon each such issuance shall be adjusted to that price (rounded to the
nearest cent) determined by multiplying the Warrant Price then in effect by a
fraction:
(1) the numerator of which shall be equal to the sum of (A)
the number of shares of Common Stock outstanding immediately prior to
the issuance of such Additional Shares of Common Stock plus (B) the
number of shares of Common Stock (rounded to the nearest whole share)
which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at a price
per share equal to the Warrant Price then in effect, and
(2) the denominator of which shall be equal to the number of
shares of Common Stock outstanding immediately after the issuance of
such Additional Shares of Common Stock.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (Y) no adjustment was required pursuant to
subsection (e) of this Section 4. No adjustment of the Warrant Price shall be
made under this subsection (d) in an amount less than $.01 per share, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment, if any, which together with
any adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Warrant Price as a result of any
dividend or distribution payable in Common Stock or Convertible Securities or
the reclassification, subdivision or combination of Common Stock into a greater
or smaller number of shares, the foregoing figure of $.01 per share (or such
figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
proportion to the adjustment in the Warrant Price.
(5) Issuance of Common Stock Equivalents. If the Issuer, at
any time while this Warrant is outstanding, shall issue any Common Stock
Equivalent and the price per share for which Additional Shares of Common Stock
may be issuable thereafter pursuant to such Common Stock Equivalent shall be
less than the Warrant Price then in effect, or if, after any such issuance of
Common Stock Equivalents, the price per share for which Additional Shares of
Common Stock may be issuable thereafter is amended or adjusted, and such price
as so amended shall be less than the Warrant Price in effect at the time of such
amendment, then the Warrant Price upon each such issuance or amendment shall be
adjusted as provided in the first sentence of subsection (d) of this
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<PAGE> 36
Section 4 on the basis that (1) the maximum number of Additional Shares of
Common Stock issuable pursuant to all such Common Stock Equivalents shall be
deemed to have been issued (whether or not such Common Stock Equivalents are
actually then exercisable, convertible or exchangeable in whole or in part) as
of the earlier of (A) the date on which the Issuer shall enter into a firm
contract for the issuance of such Common Stock Equivalent, or (B) the date of
actual issuance of such Common Stock Equivalent, and (2) the aggregate
consideration for such maximum number of Additional Shares of Common Stock shall
be deemed to be the minimum consideration received or receivable by the Issuer
for the issuance of such Additional Shares of Common Stock pursuant to such
Common Stock Equivalent. No adjustment of the Warrant Price shall be made under
this subsection (e) upon the issuance of any Convertible Security which is
issued pursuant to the exercise of any warrants or other subscription or
purchase rights therefor, if any adjustment shall previously have been made in
the Warrant Price then in effect upon the issuance of such warrants or other
rights pursuant to this subsection (e).
(6) Purchase of Common Stock by the Issuer. If the Issuer at
any time while this Warrant is outstanding shall, directly or indirectly through
a Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value then
in effect, then the Warrant Price upon each such purchase, redemption or
acquisition shall be adjusted to that price determined by multiplying such
Warrant Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Per Share Market Value;
and (ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subsection (f), the date as of which the Per Share Market Value
shall be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock. For the purposes of this subsection (f), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.
(7) Other Provisions Applicable to Adjustments Under this
Section 4. The following provisions shall be applicable to the making of
adjustments in the Warrant Price hereinbefore provided in Section 4:
(1) Computation of Consideration. The consideration received
by the Issuer shall be deemed to be the following: to the extent that
any Additional Shares of Common Stock or any Common Stock Equivalents
shall be issued for a cash consideration, the consideration received by
the Issuer therefor, or if such Additional Shares of Common Stock or
Common Stock Equivalents are offered by the Issuer for subscription,
the subscription
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price, or, if such Additional Shares of Common Stock or Common Stock
Equivalents are sold to underwriters or dealers for public offering
without a subscription offering, the public offering price, in any such
case excluding any amounts paid or receivable for accrued interest or
accrued dividends and without deduction of any compensation, discounts,
commissions, or expenses paid or incurred by the Issuer for or in
connection with the underwriting thereof or otherwise in connection
with the issue thereof; to the extent that such issuance shall be for a
consideration other than cash, then, except as herein otherwise
expressly provided, the fair market value of such consideration at the,
time of such issuance as determined in good faith by the Board. The
consideration for any Additional Shares of Common Stock issuable
pursuant to any Common Stock Equivalents shall be the consideration
received by the Issuer for issuing such Common Stock Equivalents, plus
the additional consideration payable to the Issuer upon the exercise,
conversion or exchange of such Common Stock Equivalents. In case of the
issuance at any time of any Additional Shares of Common Stock or Common
Stock Equivalents in payment or satisfaction of any dividend upon any
class of Capital Stock of the Issuer other than Common Stock, the
Issuer shall be deemed to have received for such Additional Shares of
Common Stock or Common Stock Equivalents a consideration equal to the
amount of such dividend so paid or satisfied. In any case in which the
consideration to be received or paid shall be other than cash, the
Board shall notify the Holder of this Warrant of its determination of
the fair market value of such consideration prior to payment or
accepting receipt thereof. If, within thirty days after receipt of said
notice, the Majority Holders shall notify the Board in writing of their
objection to such determination, a determination of the fair market
value of such consideration shall be made by an Independent Appraiser
selected by the Majority Holders with the approval of the Board (which
approval shall not be unreasonably withheld), whose fees and expenses
shall be paid by the Issuer.
(2) Readjustment of Warrant Price. Upon the expiration or
termination of the right to convert, exchange or exercise any Common
Stock Equivalent the issuance of which effected an adjustment in the
Warrant Price, if such Common Stock Equivalent shall not have been
converted, exercised or exchanged in its entirety, the number of shares
of Common Stock deemed to be issued and outstanding by reason of the
fact that they were issuable upon conversion, exchange or exercise of
any such Common Stock Equivalent shall no longer be computed as set
forth above, and the Warrant Price shall forthwith be readjusted and
thereafter be the price which it would have been (but reflecting any
other adjustments in the Warrant Price made pursuant to the provisions
of this Section 4 after the issuance of such Common Stock Equivalent)
had the adjustment of the Warrant Price been made in accordance with
the issuance or sale of the number of Additional Shares of Common Stock
actually issued upon conversion, exchange or issuance of such Common
Stock Equivalent and thereupon only the number of Additional Shares of
Common Stock actually so issued shall be deemed to have been issued and
only the consideration actually received by the Issuer (computed as in
clause (i) of this subsection (g)) shall be deemed to have been
received by the Issuer.
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(3) Outstanding Common Stock. The number of shares of Common
Stock at any time outstanding shall (A) not include any shares thereof
then directly or indirectly owned or held by or for the account of the
Issuer or any of its Subsidiaries, and (B) be deemed to include all
shares of Common Stock then issuable upon conversion, exercise or
exchange of any then outstanding Common Stock Equivalents or any other
evidences of Indebtedness, shares of Capital Stock or other Securities
which are or may be at any time convertible into or exchangeable for
shares of Common Stock or Other Common Stock.
(8) Other Action Affecting Common Stock. In case after the
Original Issue Date the Issuer shall take any action affecting its Common Stock,
other than an action described in any of the foregoing subsections (a) through
(g) of this Section 4, inclusive, and the failure to make any adjustment would
not fairly protect the purchase rights represented by this Warrant in accordance
with the essential intent and principle of this Section 4, then the Warrant
Price shall be adjusted in such manner and at such time as the Board may in good
faith determine to be equitable in the circumstances.
(9) Adjustment of Warrant Share Number. Upon each adjustment
in the Warrant Price pursuant to any of the foregoing provisions of this Section
4, the Warrant Share Number shall be adjusted, to the nearest one hundredth of a
whole share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under any provision contained in Section 3 of this Warrant so that
shares issued at the Warrant Price adjusted in accordance with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing sentence shall nonetheless be made and the Holder of this
Warrant shall be entitled to purchase such greater number of shares at the
lowest price at which such shares may then be validly issued under applicable
law. Such exercise shall not constitute a waiver of any claim arising against
the Issuer by reason of its default under Section 3 of this Warrant.
(10) Form of Warrant after Adjustments. The form of this
Warrant need not be changed because of any adjustments in the Warrant Price or
the number and kind of Securities purchasable upon the exercise of this Warrant.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant
Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of
this Section 5, each an "adjustment"), the Issuer shall cause its Chief
Financial Officer to prepare and execute a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to the
Holder of this Warrant promptly after each adjustment. Any dispute between the
Issuer and the Holder of this Warrant with respect to the matters set forth in
such certificate may at the option of the Holder of this Warrant be submitted to
one of the national accounting firms currently known as the "big five"
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selected by the Holder, provided that the Issuer shall have ten days after
receipt of notice from such Holder of its selection of such firm to object
thereto, in which case such Holder shall select another such firm and the Issuer
shall have no such right of objection. The firm selected by the Holder of this
Warrant as provided in the preceding sentence shall be instructed to deliver a
written opinion as to such matters to the Issuer and such Holder within thirty
days after submission to it of such dispute. Such opinion shall be final and
binding on the parties hereto. The fees and expenses of such accounting firm
shall be paid by the Issuer.
6. Fractional Shares. No fractional shares of Warrant Stock will
be issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.
7. Definitions. For the purposes of this Warrant, the following
terms have the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Original Issue Date, and all
shares of Other Common, if any, issued by the Issuer after the Original
Issue Date, except the Warrant Stock, Common Stock reserved for
issuance upon exercise of existing stock options issued under any
employee incentive stock option, any qualified stock option plan and/or
stock purchase plan adopted by the Issuer, Common Stock issued in
conjunction with strategic corporate partnering transactions and Common
Stock issued upon exercise of options and warrants authorized by the
Board prior to the Closing Date.
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests
(whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests
in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date,
and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and thereof and pursuant
to applicable law.
"Closing Date" means the date of execution of the Purchase
Agreement.
"Closing Price" means the VWAP of the Common Stock on the
Trading Day immediately preceding the Closing Date.
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"Common Stock" means the Common Stock, $.04 par value, of the
Issuer and any other Capital Stock into which such stock may hereafter
be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority,
commission, board, agency or instrumentality, whether federal, state or
local, and whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified
public accountants of recognized standing (which may be the firm that
regularly examines the financial statements of the Issuer) that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means flightserv.com, a Delaware corporation, and its
successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"Original Issue Date" means January 18, 2000.
"Other Common" means any other Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"OTC Bulletin Board" means the over-the-counter electronic
bulletin board.
"Person" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated
organization, joint venture, Governmental Authority or other entity of
whatever nature.
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"Per Share Market Value" means on any particular date (a) the
last sales price per share of the Common Stock on such date on the
American Stock Exchange or other registered national stock exchange on
which the Common Stock is then listed or if there is no such price on
such date, then the closing bid price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common
Stock is not listed then on the American Stock Exchange or any
registered national stock exchange, the closing bid price for a share
of Common Stock in the over-the-counter market, as reported by the OTC
Bulletin Board or in the National Quotation Bureau Incorporated or
similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or the National
Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of
the "Pink Sheet" quotes for the relevant conversion period, as
determined in good faith by the holder, or (d) if the Common Stock is
not then publicly traded the fair market value of a share of Common
Stock as determined by an Independent Appraiser selected in good faith
by the Majority Holders; provided, however, that the Issuer, after
receipt of the determination by such Independent Appraiser, shall have
the right to select an additional Independent Appraiser, in which case,
the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser; and provided,
further that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The Issuer shall pay all costs
and expenses of each Independent Appraiser. The determination of fair
market value by an Independent Appraiser shall be based upon the fair
market value of the Issuer determined on a going concern basis as
between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and
binding on all parties. In determining the fair market value of any
shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or
any limitations on, voting rights.
"Purchase Agreement" means the Common Stock Purchase Agreement
dated as of January 18, 2000 between the Issuer and Four Corners
Capital, LLC, a Delaware limited liability company.
"Registration Rights Agreement" has the meaning specified in
Section 3(e) hereof.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security. "Security"
means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
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"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by
the Issuer and one or more of its Subsidiaries.
"Trading Day" means (a) a day on which the Common Stock is
traded on the American Stock Exchange as reported by Bloomberg L.P., or
(b) if the Common Stock is not listed on the American Stock Exchange, a
day on which the Common Stock is traded on any other registered
national stock exchange, or (c) if the Common Stock is not quoted on
the OTC Bulletin Board, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in
(a), (b) and (c) hereof, then Trading Day shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the State of New York are authorized or
required by law or other government action to close.
"Term" has the meaning specified in Section 1 hereof.
"Voting Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a majority
of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by
reason of the happening of a contingency.
"VWAP" means the volume weighted average price of the Common
Stock (based on a Trading Day from 9:00 a.m to 4:00 p.m.) on the
American Stock Exchange as reported by Bloomberg Financial using the
AQR function.
"Warrants" means the Warrants issued and sold pursuant to the
Purchase Agreement, including, without limitation, this Warrant, and
any other warrants of like tenor issued in substitution or exchange for
any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)
hereof or of any of such other Warrants.
"Warrant Price" means the lesser of (i) $110% of the Closing
Price (the "Fixed Warrant Price") and (ii) 90% of the VWAP for the five
(5) Trading Days immediately preceding the notice to exercise, as such
price may be adjusted from time to time as shall result from the
adjustments specified in Section 4 hereof, provided, however, that if
the Registration Statement (as defined in the Registration Rights
Agreement) is not declared effective within one hundred twenty (120)
days after the Closing Date, the Fixed Warrant Price shall be reduced
by 10% and by an additional 10% for each thirty day period thereafter
until the Registration Statement has been declared effective, which
shall be pro rated for such periods less than thirty (30) days.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after
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giving effect to all prior adjustments and increases to such number
made or required to be made under the terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants or otherwise issuable pursuant to any Warrant
or Warrants.
8. Other Notices. In case at any time:
(1) the Issuer shall make any distributions to the
holders of Common Stock; or
(2) the Issuer shall authorize the granting to all
holders of its Common Stock of rights to subscribe for or
purchase any shares of Capital Stock of any class or of any
Common Stock Equivalents or Convertible Securities or other
rights; or
(3) there shall be any reclassification of the Capital
Stock of the Issuer; or
(4) there shall be any capital reorganization by the
Issuer; or
(5) there shall be any (i) consolidation or merger
involving the Issuer or (ii) sale, transfer or other
disposition of all or substantially all of the Issuer's
property, assets or business (except a merger or other
reorganization in which the Issuer shall be the surviving
corporation and its shares of Capital Stock shall continue to
be outstanding and unchanged and except a consolidation,
merger, sale, transfer or other disposition involving a
wholly-owned Subsidiary); or
(6) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Issuer or any
partial liquidation of the Issuer or distribution to holders
of Common Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
days prior to the action in question and not less than twenty days prior to the
record date or the date on which the Issuer's transfer books are closed in
respect thereto. The Issuer shall give to the Holder notice of all meetings and
actions by written consent of its stockholders, at the same time in the same
manner as notice of any meetings of stockholders is required to be given to
stockholders who do not waive such notice (or, if such
16
<PAGE> 44
requires no notice, then two Trading Days written notice thereof describing the
matters upon which action is to be taken). The Holder shall have the right to
send two representatives selected by it to each meeting, who shall be permitted
to attend, but not vote at, such meeting and any adjournments thereof. This
Warrant entitles the Holder to receive copies of all financial and other
information distributed or required to be distributed to the holders of the
Common Stock.
9. Amendment and Waiver. Any term, covenant, agreement or
condition in this Warrant may be amended, or compliance therewith may be waived
(either generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
11. Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., eastern
standard time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., pacific
standard time, on any date and earlier than 11:59 p.m., eastern standard time,
on such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service or (iv) actual receipt by the
party to whom such notice is required to be given. The addresses for such
communications shall be with respect to the Holder of this Warrant or of Warrant
Stock issued pursuant hereto, addressed to such Holder at its last known address
or facsimile number appearing on the books of the Issuer maintained for such
purposes, or with respect to the Issuer, addressed to:
flightserv.com
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attn: C. Beverly Lance
Telephone Number: (404) 869-2599
Fax: (404) 240-4101
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Issuer shall be sent to Rogers & Hardin
LLP, 2700 International Tower, Peachtree Center, 229 Peachtree Street, N.E.,
Atlanta, Georgia 30303, Attn: Edward J. Hardin, Facsimile no.: (404)
17
<PAGE> 45
525-2224. Copies of notices to the Holder shall be sent to Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017, Attention: Gary I.
Horowitz, Esq., Facsimile no.: (212) 455-2502.
12. Warrant Agent. The Issuer may, by written notice to each
Holder of this Warrant, appoint an agent having an office in New York, New York
for the purpose of issuing shares of Warrant Stock on the exercise of this
Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant
pursuant to subsection (d) of Section 2 hereof or replacing this Warrant
pursuant to subsection (d) of Section 3 hereof, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
13. Remedies. The Issuer stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Issuer in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.
15. Modification and Severability. If, in any action before any
court or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
16. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
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<PAGE> 46
IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
first above written.
FLIGHTSERV.COM
By:
----------------------------
Name:
Title:
19
<PAGE> 47
EXERCISE FORM
[NAME OF ISSUER]
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of
___________________ covered by the within Warrant.
Dated: Signature
Address
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: Signature
Address
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: Signature
Address
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-_____ cancelled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
<PAGE> 48
FORM OF "B" WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR FLIGHTSERV.COM SHALL HAVE RECEIVED AN
OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
FLIGHTSERV.COM
Expires July 18, 2001
No.: W-__ Number of Shares: 1,485,638
Date of Issuance: January 18, 2000
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, flightserv.com, a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that Four Corners
Capital, LLC or its registered assigns is entitled to subscribe for and
purchase, during the period specified in this Warrant, up to 1,485,638 shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price per share equal to the Warrant Price then in effect, subject, however, to
the provisions and upon the terms and conditions hereinafter set forth.
Capitalized terms used in this Warrant and not otherwise defined herein shall
have the respective meanings specified in Section 7 hereof.
1. Term. The right to subscribe for and purchase shares of
Warrant Stock represented hereby shall commence on the date of issuance of this
Warrant and shall expire at 5:00 p.m., eastern time, on July 18, 2001 (such
period being the "Term").
2. Method of Exercise Payment: Issuance of New Warrant: Transfer
and Exchange.
(1) Time of Exercise. The purchase rights represented by this
Warrant may be exercised in whole or in part at any time and from time to time
during the Term; provided, however,
<PAGE> 49
that the approval of the stockholders of the Company shall be required for the
exercise of this Warrant for more than 660,976 shares of Common Stock.
(2) Method of Exercise. The Holder hereof may exercise this
Warrant, in whole or in part, by the surrender of this Warrant (with the
exercise form attached hereto duly executed) at the principal office of the
Issuer, and by the payment to the Issuer of an amount of consideration therefor
equal to the Warrant Price in effect on the date of such exercise multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election by certified or official bank
check or wire transfer of immediately available funds.
(3) Issuance of Stock Certificates. In the event of any
exercise of the rights represented by this Warrant in accordance with and
subject to the terms and conditions hereof, (i) certificates for the shares of
Warrant Stock so purchased shall be dated the date of such exercise and
delivered to the Holder hereof within a reasonable time, not exceeding three
Trading Days after such exercise, and the Holder hereof shall be deemed for all
purposes to be the Holder of the shares of Warrant Stock so purchased as of the
date of such exercise, and (ii) unless this Warrant has expired, a new Warrant
representing the number of shares of Warrant Stock, if any, with respect to
which this Warrant shall not then have been exercised (less any amount thereof
which shall have been canceled in payment or partial payment of the Warrant
Price as hereinabove provided) shall also be issued to the Holder hereof at the
Issuer's expense within such time.
(4) Transferability of Warrant. Subject to Section 2(e), this
Warrant may be transferred by a Purchaser without the consent of the Company. If
transferred pursuant to this paragraph and subject to the provisions of
subsection (e) of this Section 2, this Warrant may be transferred on the books
of the Issuer by the Holder hereof in person or by duly authorized attorney,
upon surrender of this Warrant at the principal office of the Issuer, properly
endorsed (by the Holder executing an assignment in the form attached hereto) and
upon payment of any necessary transfer tax or other governmental charge imposed
upon such transfer. This Warrant is exchangeable at the principal office of the
Issuer for Warrants for the purchase of the same aggregate number of shares of
Warrant Stock, each new Warrant to represent the right to purchase such number
of shares of Warrant Stock as the Holder hereof shall designate at the time of
such exchange. All Warrants issued on transfers or exchanges shall be dated the
Original Issue Date and shall be identical with this Warrant except as to the
number of shares of Warrant Stock issuable pursuant hereto.
(5) Compliance with Securities Laws.
(1) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
2
<PAGE> 50
(2) Except as provided in paragraph (iii) below, this
Warrant and all certificates representing shares of Warrant Stock
issued upon exercise hereof shall be stamped or imprinted with a legend
in substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR
FLIGHTSERV.COM SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
(3) The restrictions imposed by this subsection (e) upon the
transfer of this Warrant and the shares of Warrant Stock to be
purchased upon exercise hereof shall terminate (A) when such securities
shall have been effectively registered under the Securities Act, (B)
upon the Issuer's receipt of an opinion of counsel, in form and
substance reasonably satisfactory to the Issuer, addressed to the
Issuer to the effect that such restrictions are no longer required to
ensure compliance with the Securities Act and state securities laws or
(C) upon the Issuer's receipt of other evidence reasonably satisfactory
to the Issuer that such registration and qualification under state
securities laws is not required. Whenever such restrictions shall cease
and terminate as to any such securities, the Holder thereof shall be
entitled to receive from the Issuer (or its transfer agent and
registrar), without expense (other than applicable transfer taxes, if
any), new Warrants (or, in the case of shares of Warrant Stock, new
stock certificates) of like tenor not bearing the applicable legend
required by paragraph (ii) above relating to the Securities Act and
state securities laws.
(6) Continuing Rights of Holder. The Issuer will, at the time
of or at any time after each exercise of this Warrant, upon the request of the
Holder hereof, acknowledge in writing the extent, if any, of its continuing
obligation to afford to such Holder all rights to which such Holder shall
continue to be entitled after such exercise in accordance with the terms of this
Warrant, provided that if any such Holder shall fail to make any such request,
the failure shall not affect the continuing obligation of the Issuer to afford
such rights to such Holder.
3. Stock Fully Paid: Reservation and Listing of Shares:
Covenants.
(1) Stock Fully Paid. The Issuer represents, warrants,
covenants and agrees that all shares of Warrant Stock which may be issued upon
the exercise of this Warrant or otherwise hereunder will, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and
3
<PAGE> 51
free from all taxes, liens and charges created by or through Issuer. The Issuer
further covenants and agrees that during the period within which this Warrant
may be exercised, the Issuer will at all times have authorized and reserved for
the purpose of the issue upon exercise of this Warrant a sufficient number of
shares of Common Stock to provide for the exercise of this Warrant.
(2) Reservation. If any shares of Common Stock required to be
reserved for issuance upon exercise of this Warrant or as otherwise provided
hereunder require registration or qualification with any governmental authority
under any federal or state law before such shares may be so issued, the Issuer
will in good faith use its best efforts as expeditiously as possible at its
expense to cause such shares to be duly registered or qualified. If the Issuer
shall list any shares of Common Stock on any securities exchange or market it
will, at its expense, list thereon, maintain and increase when necessary such
listing, of, all shares of Warrant Stock from time to time issued upon exercise
of this Warrant or as otherwise provided hereunder, and, to the extent
permissible under the applicable securities exchange rules, all unissued shares
of Warrant Stock which are at any time issuable hereunder, so long as any shares
of Common Stock shall be so listed. The Issuer will also so list on each
securities exchange or market, and will maintain such listing of, any other
securities which the Holder of this Warrant shall be entitled to receive upon
the exercise of this Warrant if at the time any securities of the same class
shall be listed on such securities exchange or market by the Issuer.
(3) Covenants. The Issuer shall not by any action including,
without limitation, amending the Certificate of Incorporation or the by-laws of
the Issuer, or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other action, avoid or
seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms
and in the taking of all such actions as may be necessary or appropriate to
protect the rights of the Holder hereof against dilution (to the extent
specifically provided herein) or impairment. Without limiting the generality of
the foregoing, the Issuer will (i) not permit the par value, if any, of its
Common Stock to exceed the then effective Warrant Price, (ii) not amend or
modify any provision of the Certificate of Incorporation or by-laws of the
Issuer in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this Warrant,
and (iv) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.
(4) Loss, Theft, Destruction of Warrants. Upon receipt of
evidence satisfactory to the Issuer of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security satisfactory to the
Issuer or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new
4
<PAGE> 52
Warrant of like tenor and representing the right to purchase the same number of
shares of Common Stock.
(5) Rights and Obligations under the Registration Rights
Agreement. The shares of Warrant Stock are entitled to the benefits and subject
to the terms of the Registration Rights Agreement dated as of even date herewith
between the Issuer and the Holders listed on the signature pages thereof (as
amended from time to time, the "Registration Rights Agreement"). The Issuer
shall keep or cause to be kept a copy of the Registration Rights Agreement, and
any amendments thereto, at its chief executive office and shall furnish, without
charge, copies thereof to the Holder upon request.
4. Adjustment of Warrant Price and Warrant Share Number. The
number and kind of Securities purchasable upon the exercise of this Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(1) Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale.
(1) In case the Issuer after the Original Issue Date shall do
any of the following (each, a "Triggering Event"): (a) consolidate with
or merge into any other Person and the Issuer shall not be the
continuing or surviving corporation of such consolidation or merger, or
(b) permit any other Person to consolidate with or merge into the
Issuer and the Issuer shall be the continuing or surviving Person but,
in connection with such consolidation or merger, any Capital Stock of
the Issuer shall be changed into or exchanged for Securities of any
other Person or cash or any other property, or (c) transfer all or
substantially all of its properties or assets to any other Person, or
(d) effect a capital reorganization or reclassification of its Capital
Stock, then, and in the case of each such Triggering Event, proper
provision shall be made so that, upon the basis and the terms and in
the manner provided in this Warrant, the Holder of this Warrant shall
be entitled (x) upon the exercise hereof at any time after the
consummation of such Triggering Event, to the extent this Warrant is
not exercised prior to such Triggering Event, or is redeemed in
connection with such Triggering Event, to receive at the Warrant Price
in effect at the time immediately prior to the consummation of such
Triggering Event in lieu of the Common Stock issuable upon such
exercise of this Warrant prior to such Triggering Event, the
Securities, cash and property to which such Holder would have been
entitled upon the consummation of such Triggering Event if such Holder
had exercised the rights represented by this Warrant immediately prior
thereto, subject to adjustments and increases (subsequent to such
corporate action) as nearly equivalent as possible to the adjustments
provided for in Section 4 hereof or (y) to sell this Warrant (or, at
such Holder's election, a portion hereof) concurrently with the
Triggering Event to the Person continuing after or surviving such
Triggering Event, or to the Issuer (if Issuer is the continuing or
surviving Person) at a sales price equal to the amount of cash,
property and/or Securities to which a holder of the number of shares of
Common Stock which would otherwise have been delivered upon the
exercise of this Warrant would have been entitled upon the effective
date or closing of any
5
<PAGE> 53
such Triggering Event (the "Event Consideration"), less the amount or
portion of such Event Consideration having a fair value equal to the
aggregate Warrant Price applicable to this Warrant or the portion
hereof so sold.
(2) Notwithstanding anything contained in this Warrant to
the contrary, the Issuer will not effect any Triggering Event unless,
prior to the consummation thereof, each Person (other than the Issuer)
which may be required to deliver any Securities, cash or property upon
the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the
Holder of this Warrant, (A) the obligations of the Issuer under this
Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall
not release the Issuer from, any continuing obligations of the Issuer
under this Warrant) and (B) the obligation to deliver to such Holder
such shares of Securities, cash or property as, in accordance with the
foregoing provisions of this subsection (a), such Holder shall be
entitled to receive, and such Person shall have similarly delivered to
such Holder an opinion of counsel for such Person, which counsel shall
be reasonably satisfactory to such Holder, stating that this Warrant
shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this
subsection (a)) shall be applicable to the Securities, cash or property
which such Person may be required to deliver upon any exercise of this
Warrant or the exercise of any rights pursuant hereto.
(3) If with respect to any Triggering Event, the Holder of
this Warrant has exercised its right as provided in clause (y) of
subparagraph (i) of this subsection (a) to sell this Warrant or a
portion thereof, the Issuer agrees that as a condition to the
consummation of any such Triggering Event the Issuer shall secure such
right of Holder to sell this Warrant to the Person continuing after or
surviving such Triggering Event and the Issuer shall not effect any
such Triggering Event unless upon or prior to the consummation thereof
the amounts of cash, property and/or Securities required under such
clause (y) are delivered to the Holder of this Warrant. The obligation
of the Issuer to secure such right of the Holder to sell this Warrant
shall be subject to such Holder's cooperation with the Issuer,
including, without limitation, the giving of customary representations
and warranties to the purchaser in connection with any such sale. Prior
notice of any Triggering Event shall be given to the Holder of this
Warrant in accordance with Section 11 hereof.
(2) Subdivision or Combination of Shares. If the Issuer, at
any time while this Warrant is outstanding, shall subdivide or combine any
shares of Common Stock, (i) in case of subdivision of shares, the Warrant Price
shall be proportionately reduced (as at the effective date of such subdivision
or, if the Issuer shall take a record of Holders of its Common Stock for the
purpose of so subdividing, as at the applicable record date, whichever is
earlier) to reflect the increase in the total number of shares of Common Stock
outstanding as a result of such subdivision, or (ii) in the case of a
combination of shares, the Warrant Price shall be proportionately increased (as
at the effective date of such combination or, if the Issuer shall take a record
of Holders of its Common Stock for the purpose of so combining, as at the
applicable record date, whichever is
6
<PAGE> 54
earlier) to reflect the reduction in the total number of shares of Common Stock
outstanding as a result of such combination.
(3) Certain Dividends and Distributions. If the Issuer, at
any time while this Warrant is outstanding, shall:
(1) Stock Dividends. Pay a dividend in, or make any other
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the
date the Issuer shall take a record of the Holders of the Issuer's
Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying
the Warrant Price in effect immediately prior to such record date (or
if no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event that
the Issuer paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Issuer issued
fractional shares in connection with said dividends); or
(2) Other Dividends. Pay a dividend on, or make any
distribution of its assets upon or with respect to (including, but not
limited to, a distribution of its property as a dividend in liquidation
or partial liquidation or by way of return of capital), the Common
Stock (other than as described in clause (i) of this subsection (c)),
or in the event that the Company shall offer options or rights to
subscribe for shares of Common Stock, or issue any Common Stock
Equivalents, to all of its holders of Common Stock, then on the record
date for such payment, distribution or offer or, in the absence of a
record date, on the date of such payment, distribution or offer, the
Holder shall receive what the Holder would have received had it
exercised this Warrant in full immediately prior to the record date of
such payment, distribution or offer or, in the absence of a record
date, immediately prior to the date of such payment, distribution or
offer. Notwithstanding the foregoing set forth in clause (ii) of this
subsection (c) to the contrary, if the Company gives the Holder at
least five Business Days prior written notice of the record date for
such non-cash dividend, then the Warrant Price shall not be adjusted
and the Holder shall have the option to exercise this Warrant prior to
the record date, and if the Holder does not exercise this Warrant prior
to such record date, then the Holder shall not be entitled to receive
such payment, distribution or offer.
(4) Issuance of Additional Shares of Common Stock. If the
Issuer, at any time while this Warrant is outstanding, shall issue any
Additional Shares of Common Stock (otherwise than as provided in the foregoing
subsections (a) through (c) of this Section 4), at a price per share less than
the Warrant Price then in effect or without consideration, then the Warrant
Price upon each such issuance shall be adjusted to that price (rounded to the
nearest cent) determined by multiplying the Warrant Price then in effect by a
fraction:
7
<PAGE> 55
(1) the numerator of which shall be equal to the sum of (A)
the number of shares of Common Stock outstanding immediately prior to
the issuance of such Additional Shares of Common Stock plus (B) the
number of shares of Common Stock (rounded to the nearest whole share)
which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at a price
per share equal to the Warrant Price then in effect, and
(2) the denominator of which shall be equal to the number of
shares of Common Stock outstanding immediately after the issuance of
such Additional Shares of Common Stock.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (Y) no adjustment was required pursuant to
subsection (e) of this Section 4. No adjustment of the Warrant Price shall be
made under this subsection (d) in an amount less than $.01 per share, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment, if any, which together with
any adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Warrant Price as a result of any
dividend or distribution payable in Common Stock or Convertible Securities or
the reclassification, subdivision or combination of Common Stock into a greater
or smaller number of shares, the foregoing figure of $.01 per share (or such
figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
proportion to the adjustment in the Warrant Price.
(5) Issuance of Common Stock Equivalents. If the Issuer, at
any time while this Warrant is outstanding, shall issue any Common Stock
Equivalent and the price per share for which Additional Shares of Common Stock
may be issuable thereafter pursuant to such Common Stock Equivalent shall be
less than the Warrant Price then in effect, or if, after any such issuance of
Common Stock Equivalents, the price per share for which Additional Shares of
Common Stock may be issuable thereafter is amended or adjusted, and such price
as so amended shall be less than the Warrant Price in effect at the time of such
amendment, then the Warrant Price upon each such issuance or amendment shall be
adjusted as provided in the first sentence of subsection (d) of this Section 4
on the basis that (1) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable in whole or in part) as of the earlier
of (A) the date on which the Issuer shall enter into a firm contract for the
issuance of such Common Stock Equivalent, or (B) the date of actual issuance of
such Common Stock Equivalent, and (2) the aggregate consideration for such
maximum number of Additional Shares of Common Stock shall be deemed to be the
minimum consideration received or receivable by the Issuer for the issuance of
such Additional Shares of Common Stock pursuant to such Common Stock Equivalent.
No adjustment of the Warrant Price shall be made under this subsection (e) upon
the issuance of any Convertible Security which is issued pursuant to the
exercise
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<PAGE> 56
of any warrants or other subscription or purchase rights therefor, if any
adjustment shall previously have been made in the Warrant Price then in effect
upon the issuance of such warrants or other rights pursuant to this subsection
(e).
(6) Purchase of Common Stock by the Issuer. If the Issuer at
any time while this Warrant is outstanding shall, directly or indirectly through
a Subsidiary or otherwise, purchase, redeem or otherwise acquire any shares of
Common Stock at a price per share greater than the Per Share Market Value then
in effect, then the Warrant Price upon each such purchase, redemption or
acquisition shall be adjusted to that price determined by multiplying such
Warrant Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Per Share Market Value;
and (ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subsection (f), the date as of which the Per Share Market Value
shall be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock. For the purposes of this subsection (f), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.
(7) Other Provisions Applicable to Adjustments Under this
Section 4. The following provisions shall be applicable to the making of
adjustments in the Warrant Price hereinbefore provided in Section 4:
(1) Computation of Consideration. The consideration received
by the Issuer shall be deemed to be the following: to the extent that
any Additional Shares of Common Stock or any Common Stock Equivalents
shall be issued for a cash consideration, the consideration received by
the Issuer therefor, or if such Additional Shares of Common Stock or
Common Stock Equivalents are offered by the Issuer for subscription,
the subscription price, or, if such Additional Shares of Common Stock
or Common Stock Equivalents are sold to underwriters or dealers for
public offering without a subscription offering, the public offering
price, in any such case excluding any amounts paid or receivable for
accrued interest or accrued dividends and without deduction of any
compensation, discounts, commissions, or expenses paid or incurred by
the Issuer for or in connection with the underwriting thereof or
otherwise in connection with the issue thereof; to the extent that such
issuance shall be for a consideration other than cash, then, except as
herein otherwise expressly provided, the fair market value of such
consideration at the, time of such issuance as determined in good faith
by the Board. The consideration for any Additional Shares of Common
Stock issuable pursuant to any Common Stock Equivalents shall be the
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<PAGE> 57
consideration received by the Issuer for issuing such Common Stock
Equivalents, plus the additional consideration payable to the Issuer
upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of any Additional
Shares of Common Stock or Common Stock Equivalents in payment or
satisfaction of any dividend upon any class of Capital Stock of the
Issuer other than Common Stock, the Issuer shall be deemed to have
received for such Additional Shares of Common Stock or Common Stock
Equivalents a consideration equal to the amount of such dividend so
paid or satisfied. In any case in which the consideration to be
received or paid shall be other than cash, the Board shall notify the
Holder of this Warrant of its determination of the fair market value of
such consideration prior to payment or accepting receipt thereof. If,
within thirty days after receipt of said notice, the Majority Holders
shall notify the Board in writing of their objection to such
determination, a determination of the fair market value of such
consideration shall be made by an Independent Appraiser selected by the
Majority Holders with the approval of the Board (which approval shall
not be unreasonably withheld), whose fees and expenses shall be paid by
the Issuer.
(2) Readjustment of Warrant Price. Upon the expiration or
termination of the right to convert, exchange or exercise any Common
Stock Equivalent the issuance of which effected an adjustment in the
Warrant Price, if such Common Stock Equivalent shall not have been
converted, exercised or exchanged in its entirety, the number of shares
of Common Stock deemed to be issued and outstanding by reason of the
fact that they were issuable upon conversion, exchange or exercise of
any such Common Stock Equivalent shall no longer be computed as set
forth above, and the Warrant Price shall forthwith be readjusted and
thereafter be the price which it would have been (but reflecting any
other adjustments in the Warrant Price made pursuant to the provisions
of this Section 4 after the issuance of such Common Stock Equivalent)
had the adjustment of the Warrant Price been made in accordance with
the issuance or sale of the number of Additional Shares of Common Stock
actually issued upon conversion, exchange or issuance of such Common
Stock Equivalent and thereupon only the number of Additional Shares of
Common Stock actually so issued shall be deemed to have been issued and
only the consideration actually received by the Issuer (computed as in
clause (i) of this subsection (g)) shall be deemed to have been
received by the Issuer.
(3) Outstanding Common Stock. The number of shares of Common
Stock at any time outstanding shall (A) not include any shares thereof
then directly or indirectly owned or held by or for the account of the
Issuer or any of its Subsidiaries, and (B) be deemed to include all
shares of Common Stock then issuable upon conversion, exercise or
exchange of any then outstanding Common Stock Equivalents or any other
evidences of Indebtedness, shares of Capital Stock or other Securities
which are or may be at any time convertible into or exchangeable for
shares of Common Stock or Other Common Stock.
(8) Other Action Affecting Common Stock. In case after the
Original Issue Date the Issuer shall take any action affecting its Common Stock,
other than an action described in any of the foregoing subsections (a) through
(g) of this Section 4, inclusive, and the failure to make any
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<PAGE> 58
adjustment would not fairly protect the purchase rights represented by this
Warrant in accordance with the essential intent and principle of this Section 4,
then the Warrant Price shall be adjusted in such manner and at such time as the
Board may in good faith determine to be equitable in the circumstances.
(9) Adjustment of Warrant Share Number. Upon each adjustment
in the Warrant Price pursuant to any of the foregoing provisions of this Section
4, the Warrant Share Number shall be adjusted, to the nearest one hundredth of a
whole share, to the product obtained by multiplying the Warrant Share Number
immediately prior to such adjustment in the Warrant Price by a fraction, the
numerator of which shall be the Warrant Price immediately before giving effect
to such adjustment and the denominator of which shall be the Warrant Price
immediately after giving effect to such adjustment. If the Issuer shall be in
default under any provision contained in Section 3 of this Warrant so that
shares issued at the Warrant Price adjusted in accordance with this Section 4
would not be validly issued, the adjustment of the Warrant Share Number provided
for in the foregoing sentence shall nonetheless be made and the Holder of this
Warrant shall be entitled to purchase such greater number of shares at the
lowest price at which such shares may then be validly issued under applicable
law. Such exercise shall not constitute a waiver of any claim arising against
the Issuer by reason of its default under Section 3 of this Warrant.
(10) Form of Warrant after Adjustments. The form of this
Warrant need not be changed because of any adjustments in the Warrant Price or
the number and kind of Securities purchasable upon the exercise of this Warrant.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant
Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of
this Section 5, each an "adjustment"), the Issuer shall cause its Chief
Financial Officer to prepare and execute a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to the
Holder of this Warrant promptly after each adjustment. Any dispute between the
Issuer and the Holder of this Warrant with respect to the matters set forth in
such certificate may at the option of the Holder of this Warrant be submitted to
one of the national accounting firms currently known as the "big five" selected
by the Holder, provided that the Issuer shall have ten days after receipt of
notice from such Holder of its selection of such firm to object thereto, in
which case such Holder shall select another such firm and the Issuer shall have
no such right of objection. The firm selected by the Holder of this Warrant as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty days
after submission to it of such dispute. Such opinion shall be final and binding
on the parties hereto. The fees and expenses of such accounting firm shall be
paid by the Issuer.
6. Fractional Shares. No fractional shares of Warrant Stock will
be issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a
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<PAGE> 59
cash payment therefor equal in amount to the product of the applicable fraction
multiplied by the Per Share Market Value then in effect.
7. Definitions. For the purposes of this Warrant, the following
terms have the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Original Issue Date, and all
shares of Other Common, if any, issued by the Issuer after the Original
Issue Date, except the Warrant Stock, Common Stock reserved for
issuance upon exercise of existing stock options issued under any
employee incentive stock option, any qualified stock option plan and/or
stock purchase plan adopted by the Issuer, Common Stock issued in
conjunction with strategic corporate partnering transactions and Common
Stock issued upon exercise of options and warrants authorized by the
Board prior to the Closing Date.
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests
(whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests
in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date,
and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and thereof and pursuant
to applicable law.
"Closing Date" means the date of execution of the Purchase
Agreement.
"Common Stock" means the Common Stock, $.04 par value, of the
Issuer and any other Capital Stock into which such stock may hereafter
be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security.
"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
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"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority,
commission, board, agency or instrumentality, whether federal, state or
local, and whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified
public accountants of recognized standing (which may be the firm that
regularly examines the financial statements of the Issuer) that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means flightserv.com, a Delaware corporation, and its
successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"Original Issue Date" means January 18, 2000.
"Other Common" means any other Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"OTC Bulletin Board" means the over-the-counter electronic
bulletin board.
"Person" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated
organization, joint venture, Governmental Authority or other entity of
whatever nature.
"Per Share Market Value" means on any particular date (a) the
last sales price per share of the Common Stock on such date on the
American Stock Exchange or other registered national stock exchange on
which the Common Stock is then listed or if there is no such price on
such date, then the closing bid price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common
Stock is not listed then on the American Stock Exchange or any
registered national stock exchange, the closing bid price for a share
of Common Stock in the over-the-counter market, as reported by the OTC
Bulletin Board or in the National Quotation Bureau Incorporated or
similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or the National
Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of
the "Pink Sheet" quotes for the relevant conversion
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<PAGE> 61
period, as determined in good faith by the holder, or (d) if the Common
Stock is not then publicly traded the fair market value of a share of
Common Stock as determined by an Independent Appraiser selected in good
faith by the Majority Holders; provided, however, that the Issuer,
after receipt of the determination by such Independent Appraiser, shall
have the right to select an additional Independent Appraiser, in which
case, the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser; and provided,
further that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The Issuer shall pay all costs
and expenses of each Independent Appraiser. The determination of fair
market value by an Independent Appraiser shall be based upon the fair
market value of the Issuer determined on a going concern basis as
between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and
binding on all parties. In determining the fair market value of any
shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or
any limitations on, voting rights.
"Purchase Agreement" means the Common Stock Purchase Agreement
dated as of January 18, 2000 between the Issuer and Four Corners
Capital, LLC, a Delaware limited liability company.
"Registration Rights Agreement" has the meaning specified in
Section 3(e) hereof.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security. "Security"
means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by
the Issuer and one or more of its Subsidiaries.
"Trading Day" means (a) a day on which the Common Stock is
traded on the American Stock Exchange as reported by Bloomberg L.P., or
(b) if the Common Stock is not listed on the American Stock Exchange, a
day on which the Common Stock is traded on any other registered
national stock exchange, or (c) if the Common Stock is not quoted on
the OTC Bulletin Board, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in
(a), (b) and (c) hereof, then Trading Day shall mean any day except
Saturday, Sunday and any
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<PAGE> 62
day which shall be a legal holiday or a day on which banking
institutions in the State of New York are authorized or required by law
or other government action to close.
"Term" has the meaning specified in Section 1 hereof.
"Voting Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a majority
of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by
reason of the happening of a contingency.
"Warrants" means the Warrants issued and sold pursuant to the
Purchase Agreement, including, without limitation, this Warrant, and
any other warrants of like tenor issued in substitution or exchange for
any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)
hereof or of any of such other Warrants.
"Warrant Price" means $6.058, as such price may be adjusted
from time to time as shall result from the adjustments specified in
Section 4 hereof.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
and increases to such number made or required to be made under the
terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants or otherwise issuable pursuant to any Warrant
or Warrants.
8. Other Notices. In case at any time:
(1) the Issuer shall make any distributions to the holders of
Common Stock; or
(2) the Issuer shall authorize the granting to all holders of
its Common Stock of rights to subscribe for or purchase any shares of
Capital Stock of any class or of any Common Stock Equivalents or
Convertible Securities or other rights; or
(3) there shall be any reclassification of the Capital Stock
of the Issuer; or
(4) there shall be any capital reorganization by the Issuer;
or
(5) there shall be any (i) consolidation or merger involving
the Issuer or (ii) sale, transfer or other disposition of all or
substantially all of the Issuer's property, assets or business (except
a merger or other reorganization in which the Issuer shall be the
surviving corporation and its shares of Capital Stock shall
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<PAGE> 63
continue to be outstanding and unchanged and except a consolidation,
merger, sale, transfer or other disposition involving a wholly-owned
Subsidiary); or
(6) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Issuer or any partial liquidation of
the Issuer or distribution to holders of Common Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
days prior to the action in question and not less than twenty days prior to the
record date or the date on which the Issuer's transfer books are closed in
respect thereto. The Issuer shall give to the Holder notice of all meetings and
actions by written consent of its stockholders, at the same time in the same
manner as notice of any meetings of stockholders is required to be given to
stockholders who do not waive such notice (or, if such requires no notice, then
two Trading Days written notice thereof describing the matters upon which action
is to be taken). The Holder shall have the right to send two representatives
selected by it to each meeting, who shall be permitted to attend, but not vote
at, such meeting and any adjournments thereof. This Warrant entitles the Holder
to receive copies of all financial and other information distributed or required
to be distributed to the holders of the Common Stock.
9. Amendment and Waiver. Any term, covenant, agreement or
condition in this Warrant may be amended, or compliance therewith may be waived
(either generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
11. Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., eastern
standard time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m.,
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<PAGE> 64
pacific standard time, on any date and earlier than 11:59 p.m., eastern standard
time, on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service or (iv) actual receipt
by the party to whom such notice is required to be given. The addresses for such
communications shall be with respect to the Holder of this Warrant or of Warrant
Stock issued pursuant hereto, addressed to such Holder at its last known address
or facsimile number appearing on the books of the Issuer maintained for such
purposes, or with respect to the Issuer, addressed to:
flightserv.com
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attn: C. Beverly Lance
Telephone Number: (404) 869-2599
Fax: (404) 240-4101
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Issuer shall be sent to Rogers & Hardin
LLP, 2700 International Tower, Peachtree Center, 229 Peachtree Street, N.E.,
Atlanta, Georgia 30303, Attn: Edward J. Hardin, Facsimile no.: (404) 525-2224.
Copies of notices to the Holder shall be sent to Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, Attention: Gary I. Horowitz, Esq.,
Facsimile no.: (212) 455-2502.
12. Warrant Agent. The Issuer may, by written notice to each
Holder of this Warrant, appoint an agent having an office in New York, New York
for the purpose of issuing shares of Warrant Stock on the exercise of this
Warrant pursuant to subsection (b) of Section 2 hereof, exchanging this Warrant
pursuant to subsection (d) of Section 2 hereof or replacing this Warrant
pursuant to subsection (d) of Section 3 hereof, or any of the foregoing, and
thereafter any such issuance, exchange or replacement, as the case may be, shall
be made at such office by such agent.
13. Remedies. The Issuer stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Issuer in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.
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15. Modification and Severability. If, in any action before any
court or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
16. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
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IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
first above written.
FLIGHTSERV.COM
By:
Name:
Title:
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<PAGE> 67
EXERCISE FORM
[NAME OF ISSUER]
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of
___________________ covered by the within Warrant.
Dated: Signature
Address
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: Signature
Address
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: Signature
Address
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-_____ cancelled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
<PAGE> 68
FORM OF "C" WARRANT
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT AND UNDER
APPLICABLE STATE SECURITIES LAWS OR FLIGHTSERV.COM SHALL HAVE RECEIVED AN
OPINION OF ITS COUNSEL THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES
ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS NOT
REQUIRED.
WARRANT TO PURCHASE
SHARES OF COMMON STOCK
OF
FLIGHTSERV.COM
Expires July 18, 2001
No.: W-__ Number of Shares: 1,114,228
Date of Issuance: January 18, 2000
FOR VALUE RECEIVED, subject to the provisions hereinafter set forth,
the undersigned, Flightserv.com, a Delaware corporation (together with its
successors and assigns, the "Issuer"), hereby certifies that Four Corners
Capital, LLC or its registered assigns is entitled to subscribe for and
purchase, during the period specified in this Warrant, up to 1,114,228 shares
(subject to adjustment as hereinafter provided) of the duly authorized, validly
issued, fully paid and non-assessable Common Stock of the Issuer, at an exercise
price per share equal to the Warrant Price then in effect, subject, however, to
the provisions and upon the terms and conditions hereinafter set forth.
Capitalized terms used in this Warrant and not otherwise defined herein shall
have the respective meanings specified in Section 7 hereof.
1. Term. The right to subscribe for and purchase shares of
Warrant Stock represented hereby shall commence on the date of issuance of this
Warrant and shall expire at 5:00 p.m., eastern time, on July 18, 2001 (such
period being the "Term").
<PAGE> 69
2. Method of Exercise Payment: Issuance of New Warrant: Transfer
and Exchange.
(1) Time of Exercise. The purchase rights represented by
this Warrant may be exercised in whole or in part at any time and from time to
time during the Term; provided, however, that the approval of the stockholders
of the Company shall be required for the exercise of this Warrant for more than
495,732 shares of Common Stock.
(2) Method of Exercise. The Holder hereof may exercise
this Warrant, in whole or in part, by the surrender of this Warrant (with the
exercise form attached hereto duly executed) at the principal office of the
Issuer, and by the payment to the Issuer of an amount of consideration therefor
equal to the Warrant Price in effect on the date of such exercise multiplied by
the number of shares of Warrant Stock with respect to which this Warrant is then
being exercised, payable at such Holder's election by certified or official bank
check or wire transfer of immediately available funds.
(3) Issuance of Stock Certificates. In the event of any
exercise of the rights represented by this Warrant in accordance with and
subject to the terms and conditions hereof, (i) certificates for the shares of
Warrant Stock so purchased shall be dated the date of such exercise and
delivered to the Holder hereof within a reasonable time, not exceeding three
Trading Days after such exercise, and the Holder hereof shall be deemed for all
purposes to be the Holder of the shares of Warrant Stock so purchased as of the
date of such exercise, and (ii) unless this Warrant has expired, a new Warrant
representing the number of shares of Warrant Stock, if any, with respect to
which this Warrant shall not then have been exercised (less any amount thereof
which shall have been canceled in payment or partial payment of the Warrant
Price as hereinabove provided) shall also be issued to the Holder hereof at the
Issuer's expense within such time.
(4) Transferability of Warrant. Subject to Section 2(e),
this Warrant may be transferred by a Purchaser without the consent of the
Company. If transferred pursuant to this paragraph and subject to the provisions
of subsection (e) of this Section 2, this Warrant may be transferred on the
books of the Issuer by the Holder hereof in person or by duly authorized
attorney, upon surrender of this Warrant at the principal office of the Issuer,
properly endorsed (by the Holder executing an assignment in the form attached
hereto) and upon payment of any necessary transfer tax or other governmental
charge imposed upon such transfer. This Warrant is exchangeable at the principal
office of the Issuer for Warrants for the purchase of the same aggregate number
of shares of Warrant Stock, each new Warrant to represent the right to purchase
such number of shares of Warrant Stock as the Holder hereof shall designate at
the time of such exchange. All Warrants issued on transfers or exchanges shall
be dated the Original Issue Date and shall be identical with this Warrant except
as to the number of shares of Warrant Stock issuable pursuant hereto.
(5) Compliance with Securities Laws.
(1) The Holder of this Warrant, by acceptance hereof,
acknowledges that this Warrant or the shares of Warrant Stock to be
issued upon exercise hereof are being acquired solely for the Holder's
own account and not as a nominee for any other party, and for
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investment, and that the Holder will not offer, sell or otherwise
dispose of this Warrant or any shares of Warrant Stock to be issued
upon exercise hereof except pursuant to an effective registration
statement, or an exemption from registration, under the Securities Act
and any applicable state securities laws.
(2) Except as provided in paragraph (iii) below, this
Warrant and all certificates representing shares of Warrant Stock
issued upon exercise hereof shall be stamped or imprinted with a legend
in substantially the following form:
THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR
ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED OR
OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES
ACT AND UNDER APPLICABLE STATE SECURITIES LAWS OR
FLIGHTSERV.COM SHALL HAVE RECEIVED AN OPINION OF ITS COUNSEL
THAT REGISTRATION OF SUCH SECURITIES UNDER THE SECURITIES ACT
AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS
IS NOT REQUIRED.
(3) The restrictions imposed by this subsection (e) upon
the transfer of this Warrant and the shares of Warrant Stock to be
purchased upon exercise hereof shall terminate (A) when such securities
shall have been effectively registered under the Securities Act, (B)
upon the Issuer's receipt of an opinion of counsel, in form and
substance reasonably satisfactory to the Issuer, addressed to the
Issuer to the effect that such restrictions are no longer required to
ensure compliance with the Securities Act and state securities laws or
(C) upon the Issuer's receipt of other evidence reasonably satisfactory
to the Issuer that such registration and qualification under state
securities laws is not required. Whenever such restrictions shall cease
and terminate as to any such securities, the Holder thereof shall be
entitled to receive from the Issuer (or its transfer agent and
registrar), without expense (other than applicable transfer taxes, if
any), new Warrants (or, in the case of shares of Warrant Stock, new
stock certificates) of like tenor not bearing the applicable legend
required by paragraph (ii) above relating to the Securities Act and
state securities laws.
(6) Continuing Rights of Holder. The Issuer will, at the
time of or at any time after each exercise of this Warrant, upon the request of
the Holder hereof, acknowledge in writing the extent, if any, of its continuing
obligation to afford to such Holder all rights to which such Holder shall
continue to be entitled after such exercise in accordance with the terms of this
Warrant, provided that if any such Holder shall fail to make any such request,
the failure shall not affect the continuing obligation of the Issuer to afford
such rights to such Holder.
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3. Stock Fully Paid: Reservation and Listing of Shares:
Covenants.
(1) Stock Fully Paid. The Issuer represents, warrants,
covenants and agrees that all shares of Warrant Stock which may be issued upon
the exercise of this Warrant or otherwise hereunder will, upon issuance, be duly
authorized, validly issued, fully paid and non-assessable and free from all
taxes, liens and charges created by or through Issuer. The Issuer further
covenants and agrees that during the period within which this Warrant may be
exercised, the Issuer will at all times have authorized and reserved for the
purpose of the issue upon exercise of this Warrant a sufficient number of shares
of Common Stock to provide for the exercise of this Warrant.
(2) Reservation. If any shares of Common Stock required
to be reserved for issuance upon exercise of this Warrant or as otherwise
provided hereunder require registration or qualification with any governmental
authority under any federal or state law before such shares may be so issued,
the Issuer will in good faith use its best efforts as expeditiously as possible
at its expense to cause such shares to be duly registered or qualified. If the
Issuer shall list any shares of Common Stock on any securities exchange or
market it will, at its expense, list thereon, maintain and increase when
necessary such listing, of, all shares of Warrant Stock from time to time issued
upon exercise of this Warrant or as otherwise provided hereunder, and, to the
extent permissible under the applicable securities exchange rules, all unissued
shares of Warrant Stock which are at any time issuable hereunder, so long as any
shares of Common Stock shall be so listed. The Issuer will also so list on each
securities exchange or market, and will maintain such listing of, any other
securities which the Holder of this Warrant shall be entitled to receive upon
the exercise of this Warrant if at the time any securities of the same class
shall be listed on such securities exchange or market by the Issuer.
(3) Covenants. The Issuer shall not by any action
including, without limitation, amending the Certificate of Incorporation or the
by-laws of the Issuer, or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant, but will at all times in good faith assist in the carrying out
of all such terms and in the taking of all such actions as may be necessary or
appropriate to protect the rights of the Holder hereof against dilution (to the
extent specifically provided herein) or impairment. Without limiting the
generality of the foregoing, the Issuer will (i) not permit the par value, if
any, of its Common Stock to exceed the then effective Warrant Price, (ii) not
amend or modify any provision of the Certificate of Incorporation or by-laws of
the Issuer in any manner that would adversely affect in any way the powers,
preferences or relative participating, optional or other special rights of the
Common Stock or which would adversely affect the rights of the Holders of the
Warrants, (iii) take all such action as may be reasonably necessary in order
that the Issuer may validly and legally issue fully paid and nonassessable
shares of Common Stock, free and clear of any liens, claims, encumbrances and
restrictions (other than as provided herein) upon the exercise of this Warrant,
and (iv) use its best efforts to obtain all such authorizations, exemptions or
consents from any public regulatory body having jurisdiction thereof as may be
reasonably necessary to enable the Issuer to perform its obligations under this
Warrant.
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(4) Loss, Theft, Destruction of Warrants. Upon receipt
of evidence satisfactory to the Issuer of the ownership of and the loss, theft,
destruction or mutilation of any Warrant and, in the case of any such loss,
theft or destruction, upon receipt of indemnity or security satisfactory to the
Issuer or, in the case of any such mutilation, upon surrender and cancellation
of such Warrant, the Issuer will make and deliver, in lieu of such lost, stolen,
destroyed or mutilated Warrant, a new Warrant of like tenor and representing the
right to purchase the same number of shares of Common Stock.
(5) Rights and Obligations under the Registration Rights
Agreement. The shares of Warrant Stock are entitled to the benefits and subject
to the terms of the Registration Rights Agreement dated as of even date herewith
between the Issuer and the Holders listed on the signature pages thereof (as
amended from time to time, the "Registration Rights Agreement"). The Issuer
shall keep or cause to be kept a copy of the Registration Rights Agreement, and
any amendments thereto, at its chief executive office and shall furnish, without
charge, copies thereof to the Holder upon request.
4. Adjustment of Warrant Price and Warrant Share Number. The
number and kind of Securities purchasable upon the exercise of this Warrant and
the Warrant Price shall be subject to adjustment from time to time upon the
happening of certain events as follows:
(1) Recapitalization, Reorganization, Reclassification,
Consolidation, Merger or Sale.
(1) In case the Issuer after the Original Issue Date
shall do any of the following (each, a "Triggering Event"): (a)
consolidate with or merge into any other Person and the Issuer shall
not be the continuing or surviving corporation of such consolidation or
merger, or (b) permit any other Person to consolidate with or merge
into the Issuer and the Issuer shall be the continuing or surviving
Person but, in connection with such consolidation or merger, any
Capital Stock of the Issuer shall be changed into or exchanged for
Securities of any other Person or cash or any other property, or (c)
transfer all or substantially all of its properties or assets to any
other Person, or (d) effect a capital reorganization or
reclassification of its Capital Stock, then, and in the case of each
such Triggering Event, proper provision shall be made so that, upon the
basis and the terms and in the manner provided in this Warrant, the
Holder of this Warrant shall be entitled (x) upon the exercise hereof
at any time after the consummation of such Triggering Event, to the
extent this Warrant is not exercised prior to such Triggering Event, or
is redeemed in connection with such Triggering Event, to receive at the
Warrant Price in effect at the time immediately prior to the
consummation of such Triggering Event in lieu of the Common Stock
issuable upon such exercise of this Warrant prior to such Triggering
Event, the Securities, cash and property to which such Holder would
have been entitled upon the consummation of such Triggering Event if
such Holder had exercised the rights represented by this Warrant
immediately prior thereto, subject to adjustments and increases
(subsequent to such corporate action) as nearly equivalent as possible
to the adjustments provided for in Section 4 hereof or (y) to sell this
Warrant (or, at such Holder's election, a portion hereof)
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concurrently with the Triggering Event to the Person continuing after
or surviving such Triggering Event, or to the Issuer (if Issuer is the
continuing or surviving Person) at a sales price equal to the amount of
cash, property and/or Securities to which a holder of the number of
shares of Common Stock which would otherwise have been delivered upon
the exercise of this Warrant would have been entitled upon the
effective date or closing of any such Triggering Event (the "Event
Consideration"), less the amount or portion of such Event Consideration
having a fair value equal to the aggregate Warrant Price applicable to
this Warrant or the portion hereof so sold.
(2) Notwithstanding anything contained in this Warrant to
the contrary, the Issuer will not effect any Triggering Event unless,
prior to the consummation thereof, each Person (other than the Issuer)
which may be required to deliver any Securities, cash or property upon
the exercise of this Warrant as provided herein shall assume, by
written instrument delivered to, and reasonably satisfactory to, the
Holder of this Warrant, (A) the obligations of the Issuer under this
Warrant (and if the Issuer shall survive the consummation of such
Triggering Event, such assumption shall be in addition to, and shall
not release the Issuer from, any continuing obligations of the Issuer
under this Warrant) and (B) the obligation to deliver to such Holder
such shares of Securities, cash or property as, in accordance with the
foregoing provisions of this subsection (a), such Holder shall be
entitled to receive, and such Person shall have similarly delivered to
such Holder an opinion of counsel for such Person, which counsel shall
be reasonably satisfactory to such Holder, stating that this Warrant
shall thereafter continue in full force and effect and the terms hereof
(including, without limitation, all of the provisions of this
subsection (a)) shall be applicable to the Securities, cash or property
which such Person may be required to deliver upon any exercise of this
Warrant or the exercise of any rights pursuant hereto.
(3) If with respect to any Triggering Event, the Holder
of this Warrant has exercised its right as provided in clause (y) of
subparagraph (i) of this subsection (a) to sell this Warrant or a
portion thereof, the Issuer agrees that as a condition to the
consummation of any such Triggering Event the Issuer shall secure such
right of Holder to sell this Warrant to the Person continuing after or
surviving such Triggering Event and the Issuer shall not effect any
such Triggering Event unless upon or prior to the consummation thereof
the amounts of cash, property and/or Securities required under such
clause (y) are delivered to the Holder of this Warrant. The obligation
of the Issuer to secure such right of the Holder to sell this Warrant
shall be subject to such Holder's cooperation with the Issuer,
including, without limitation, the giving of customary representations
and warranties to the purchaser in connection with any such sale. Prior
notice of any Triggering Event shall be given to the Holder of this
Warrant in accordance with Section 11 hereof.
(2) Subdivision or Combination of Shares. If the Issuer, at any
time while this Warrant is outstanding, shall subdivide or combine any shares of
Common Stock, (i) in case of subdivision of shares, the Warrant Price shall be
proportionately reduced (as at the effective date of such subdivision or, if the
Issuer shall take a record of Holders of its Common Stock for the purpose of so
subdividing, as at the applicable record date, whichever is earlier) to reflect
the
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increase in the total number of shares of Common Stock outstanding as a result
of such subdivision, or (ii) in the case of a combination of shares, the Warrant
Price shall be proportionately increased (as at the effective date of such
combination or, if the Issuer shall take a record of Holders of its Common Stock
for the purpose of so combining, as at the applicable record date, whichever is
earlier) to reflect the reduction in the total number of shares of Common Stock
outstanding as a result of such combination.
(3) Certain Dividends and Distributions. If the Issuer,
at any time while this Warrant is outstanding, shall:
(1) Stock Dividends. Pay a dividend in, or make any other
distribution to its stockholders (without consideration therefor) of,
shares of Common Stock, the Warrant Price shall be adjusted, as at the
date the Issuer shall take a record of the Holders of the Issuer's
Capital Stock for the purpose of receiving such dividend or other
distribution (or if no such record is taken, as at the date of such
payment or other distribution), to that price determined by multiplying
the Warrant Price in effect immediately prior to such record date (or
if no such record is taken, then immediately prior to such payment or
other distribution), by a fraction (1) the numerator of which shall be
the total number of shares of Common Stock outstanding immediately
prior to such dividend or distribution, and (2) the denominator of
which shall be the total number of shares of Common Stock outstanding
immediately after such dividend or distribution (plus in the event that
the Issuer paid cash for fractional shares, the number of additional
shares which would have been outstanding had the Issuer issued
fractional shares in connection with said dividends); or
(2) Other Dividends. Pay a dividend on, or make any
distribution of its assets upon or with respect to (including, but not
limited to, a distribution of its property as a dividend in liquidation
or partial liquidation or by way of return of capital), the Common
Stock (other than as described in clause (i) of this subsection (c)),
or in the event that the Company shall offer options or rights to
subscribe for shares of Common Stock, or issue any Common Stock
Equivalents, to all of its holders of Common Stock, then on the record
date for such payment, distribution or offer or, in the absence of a
record date, on the date of such payment, distribution or offer, the
Holder shall receive what the Holder would have received had it
exercised this Warrant in full immediately prior to the record date of
such payment, distribution or offer or, in the absence of a record
date, immediately prior to the date of such payment, distribution or
offer. Notwithstanding the foregoing set forth in clause (ii) of this
subsection (c) to the contrary, if the Company gives the Holder at
least five Business Days prior written notice of the record date for
such non-cash dividend, then the Warrant Price shall not be adjusted
and the Holder shall have the option to exercise this Warrant prior to
the record date, and if the Holder does not exercise this Warrant prior
to such record date, then the Holder shall not be entitled to receive
such payment, distribution or offer.
(4) Issuance of Additional Shares of Common Stock. If the Issuer,
at any time while this Warrant is outstanding, shall issue any Additional Shares
of Common Stock (otherwise than as provided in the foregoing subsections (a)
through (c) of this Section 4), at a price per share
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less than the Warrant Price then in effect or without consideration, then the
Warrant Price upon each such issuance shall be adjusted to that price (rounded
to the nearest cent) determined by multiplying the Warrant Price then in effect
by a fraction:
(1) the numerator of which shall be equal to the sum of
(A) the number of shares of Common Stock outstanding immediately prior
to the issuance of such Additional Shares of Common Stock plus (B) the
number of shares of Common Stock (rounded to the nearest whole share)
which the aggregate consideration for the total number of such
Additional Shares of Common Stock so issued would purchase at a price
per share equal to the Warrant Price then in effect, and
(2) the denominator of which shall be equal to the number
of shares of Common Stock outstanding immediately after the issuance of
such Additional Shares of Common Stock.
The provisions of this subsection (d) shall not apply under any of the
circumstances for which an adjustment is provided in subsections (a), (b) or (c)
of this Section 4. No adjustment of the Warrant Price shall be made under this
subsection (d) upon the issuance of any Additional Shares of Common Stock which
are issued pursuant to any Common Stock Equivalent if upon the issuance of such
Common Stock Equivalent (x) any adjustment shall have been made pursuant to
subsection (e) of this Section 4 or (Y) no adjustment was required pursuant to
subsection (e) of this Section 4. No adjustment of the Warrant Price shall be
made under this subsection (d) in an amount less than $.01 per share, but any
such lesser adjustment shall be carried forward and shall be made at the time
and together with the next subsequent adjustment, if any, which together with
any adjustments so carried forward shall amount to $.01 per share or more,
provided that upon any adjustment of the Warrant Price as a result of any
dividend or distribution payable in Common Stock or Convertible Securities or
the reclassification, subdivision or combination of Common Stock into a greater
or smaller number of shares, the foregoing figure of $.01 per share (or such
figure as last adjusted) shall be adjusted (to the nearest one-half cent) in
proportion to the adjustment in the Warrant Price.
(5) Issuance of Common Stock Equivalents. If the Issuer,
at any time while this Warrant is outstanding, shall issue any Common Stock
Equivalent and the price per share for which Additional Shares of Common Stock
may be issuable thereafter pursuant to such Common Stock Equivalent shall be
less than the Warrant Price then in effect, or if, after any such issuance of
Common Stock Equivalents, the price per share for which Additional Shares of
Common Stock may be issuable thereafter is amended or adjusted, and such price
as so amended shall be less than the Warrant Price in effect at the time of such
amendment, then the Warrant Price upon each such issuance or amendment shall be
adjusted as provided in the first sentence of subsection (d) of this Section 4
on the basis that (1) the maximum number of Additional Shares of Common Stock
issuable pursuant to all such Common Stock Equivalents shall be deemed to have
been issued (whether or not such Common Stock Equivalents are actually then
exercisable, convertible or exchangeable in whole or in part) as of the earlier
of (A) the date on which the Issuer shall enter into a firm contract for the
issuance of such Common Stock Equivalent, or (B) the date of actual issuance of
such Common Stock Equivalent, and (2) the aggregate consideration for such
maximum number
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of Additional Shares of Common Stock shall be deemed to be the minimum
consideration received or receivable by the Issuer for the issuance of such
Additional Shares of Common Stock pursuant to such Common Stock Equivalent. No
adjustment of the Warrant Price shall be made under this subsection (e) upon the
issuance of any Convertible Security which is issued pursuant to the exercise of
any warrants or other subscription or purchase rights therefor, if any
adjustment shall previously have been made in the Warrant Price then in effect
upon the issuance of such warrants or other rights pursuant to this subsection
(e).
(6) Purchase of Common Stock by the Issuer. If the Issuer
at any time while this Warrant is outstanding shall, directly or indirectly
through a Subsidiary or otherwise, purchase, redeem or otherwise acquire any
shares of Common Stock at a price per share greater than the Per Share Market
Value then in effect, then the Warrant Price upon each such purchase, redemption
or acquisition shall be adjusted to that price determined by multiplying such
Warrant Price by a fraction (i) the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such purchase,
redemption or acquisition minus the number of shares of Common Stock which the
aggregate consideration for the total number of such shares of Common Stock so
purchased, redeemed or acquired would purchase at the Per Share Market Value;
and (ii) the denominator of which shall be the number of shares of Common Stock
outstanding immediately after such purchase, redemption or acquisition. For the
purposes of this subsection (f), the date as of which the Per Share Market Value
shall be computed shall be the earlier of (x) the date on which the Issuer shall
enter into a firm contract for the purchase, redemption or acquisition of such
Common Stock, or (y) the date of actual purchase, redemption or acquisition of
such Common Stock. For the purposes of this subsection (f), a purchase,
redemption or acquisition of a Common Stock Equivalent shall be deemed to be a
purchase of the underlying Common Stock, and the computation herein required
shall be made on the basis of the full exercise, conversion or exchange of such
Common Stock Equivalent on the date as of which such computation is required
hereby to be made, whether or not such Common Stock Equivalent is actually
exercisable, convertible or exchangeable on such date.
(7) Other Provisions Applicable to Adjustments Under this
Section 4. The following provisions shall be applicable to the making of
adjustments in the Warrant Price hereinbefore provided in Section 4:
(1) Computation of Consideration. The consideration
received by the Issuer shall be deemed to be the following: to the
extent that any Additional Shares of Common Stock or any Common Stock
Equivalents shall be issued for a cash consideration, the consideration
received by the Issuer therefor, or if such Additional Shares of Common
Stock or Common Stock Equivalents are offered by the Issuer for
subscription, the subscription price, or, if such Additional Shares of
Common Stock or Common Stock Equivalents are sold to underwriters or
dealers for public offering without a subscription offering, the public
offering price, in any such case excluding any amounts paid or
receivable for accrued interest or accrued dividends and without
deduction of any compensation, discounts, commissions, or expenses paid
or incurred by the Issuer for or in connection with the underwriting
thereof or otherwise in connection with the issue thereof; to the
extent that such
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issuance shall be for a consideration other than cash, then, except as
herein otherwise expressly provided, the fair market value of such
consideration at the, time of such issuance as determined in good faith
by the Board. The consideration for any Additional Shares of Common
Stock issuable pursuant to any Common Stock Equivalents shall be the
consideration received by the Issuer for issuing such Common Stock
Equivalents, plus the additional consideration payable to the Issuer
upon the exercise, conversion or exchange of such Common Stock
Equivalents. In case of the issuance at any time of any Additional
Shares of Common Stock or Common Stock Equivalents in payment or
satisfaction of any dividend upon any class of Capital Stock of the
Issuer other than Common Stock, the Issuer shall be deemed to have
received for such Additional Shares of Common Stock or Common Stock
Equivalents a consideration equal to the amount of such dividend so
paid or satisfied. In any case in which the consideration to be
received or paid shall be other than cash, the Board shall notify the
Holder of this Warrant of its determination of the fair market value of
such consideration prior to payment or accepting receipt thereof. If,
within thirty days after receipt of said notice, the Majority Holders
shall notify the Board in writing of their objection to such
determination, a determination of the fair market value of such
consideration shall be made by an Independent Appraiser selected by the
Majority Holders with the approval of the Board (which approval shall
not be unreasonably withheld), whose fees and expenses shall be paid by
the Issuer.
(2) Readjustment of Warrant Price. Upon the expiration or
termination of the right to convert, exchange or exercise any Common
Stock Equivalent the issuance of which effected an adjustment in the
Warrant Price, if such Common Stock Equivalent shall not have been
converted, exercised or exchanged in its entirety, the number of shares
of Common Stock deemed to be issued and outstanding by reason of the
fact that they were issuable upon conversion, exchange or exercise of
any such Common Stock Equivalent shall no longer be computed as set
forth above, and the Warrant Price shall forthwith be readjusted and
thereafter be the price which it would have been (but reflecting any
other adjustments in the Warrant Price made pursuant to the provisions
of this Section 4 after the issuance of such Common Stock Equivalent)
had the adjustment of the Warrant Price been made in accordance with
the issuance or sale of the number of Additional Shares of Common Stock
actually issued upon conversion, exchange or issuance of such Common
Stock Equivalent and thereupon only the number of Additional Shares of
Common Stock actually so issued shall be deemed to have been issued and
only the consideration actually received by the Issuer (computed as in
clause (i) of this subsection (g)) shall be deemed to have been
received by the Issuer.
(3) Outstanding Common Stock. The number of shares of
Common Stock at any time outstanding shall (A) not include any shares
thereof then directly or indirectly owned or held by or for the account
of the Issuer or any of its Subsidiaries, and (B) be deemed to include
all shares of Common Stock then issuable upon conversion, exercise or
exchange of any then outstanding Common Stock Equivalents or any other
evidences of Indebtedness, shares of Capital Stock or other Securities
which are or may be at any time convertible into or exchangeable for
shares of Common Stock or Other Common Stock.
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(8) Other Action Affecting Common Stock. In case after
the Original Issue Date the Issuer shall take any action affecting its Common
Stock, other than an action described in any of the foregoing subsections (a)
through (g) of this Section 4, inclusive, and the failure to make any adjustment
would not fairly protect the purchase rights represented by this Warrant in
accordance with the essential intent and principle of this Section 4, then the
Warrant Price shall be adjusted in such manner and at such time as the Board may
in good faith determine to be equitable in the circumstances.
(9) Adjustment of Warrant Share Number. Upon each
adjustment in the Warrant Price pursuant to any of the foregoing provisions of
this Section 4, the Warrant Share Number shall be adjusted, to the nearest one
hundredth of a whole share, to the product obtained by multiplying the Warrant
Share Number immediately prior to such adjustment in the Warrant Price by a
fraction, the numerator of which shall be the Warrant Price immediately before
giving effect to such adjustment and the denominator of which shall be the
Warrant Price immediately after giving effect to such adjustment. If the Issuer
shall be in default under any provision contained in Section 3 of this Warrant
so that shares issued at the Warrant Price adjusted in accordance with this
Section 4 would not be validly issued, the adjustment of the Warrant Share
Number provided for in the foregoing sentence shall nonetheless be made and the
Holder of this Warrant shall be entitled to purchase such greater number of
shares at the lowest price at which such shares may then be validly issued under
applicable law. Such exercise shall not constitute a waiver of any claim arising
against the Issuer by reason of its default under Section 3 of this Warrant.
(10) Form of Warrant after Adjustments. The form of this
Warrant need not be changed because of any adjustments in the Warrant Price or
the number and kind of Securities purchasable upon the exercise of this Warrant.
5. Notice of Adjustments. Whenever the Warrant Price or Warrant
Share Number shall be adjusted pursuant to Section 4 hereof (for purposes of
this Section 5, each an "adjustment"), the Issuer shall cause its Chief
Financial Officer to prepare and execute a certificate setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated (including a
description of the basis on which the Board made any determination hereunder),
and the Warrant Price and Warrant Share Number after giving effect to such
adjustment, and shall cause copies of such certificate to be delivered to the
Holder of this Warrant promptly after each adjustment. Any dispute between the
Issuer and the Holder of this Warrant with respect to the matters set forth in
such certificate may at the option of the Holder of this Warrant be submitted to
one of the national accounting firms currently known as the "big five" selected
by the Holder, provided that the Issuer shall have ten days after receipt of
notice from such Holder of its selection of such firm to object thereto, in
which case such Holder shall select another such firm and the Issuer shall have
no such right of objection. The firm selected by the Holder of this Warrant as
provided in the preceding sentence shall be instructed to deliver a written
opinion as to such matters to the Issuer and such Holder within thirty days
after submission to it of such dispute. Such opinion shall be final and binding
on the parties hereto. The fees and expenses of such accounting firm shall be
paid by the Issuer.
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6. Fractional Shares. No fractional shares of Warrant Stock will
be issued in connection with and exercise hereof, but in lieu of such fractional
shares, the Issuer shall make a cash payment therefor equal in amount to the
product of the applicable fraction multiplied by the Per Share Market Value then
in effect.
7. Definitions. For the purposes of this Warrant, the following
terms have the following meanings:
"Additional Shares of Common Stock" means all shares of Common
Stock issued by the Issuer after the Original Issue Date, and all
shares of Other Common, if any, issued by the Issuer after the Original
Issue Date, except the Warrant Stock, Common Stock reserved for
issuance upon exercise of existing stock options issued under any
employee incentive stock option, any qualified stock option plan and/or
stock purchase plan adopted by the Issuer, Common Stock issued in
conjunction with strategic corporate partnering transactions and Common
Stock issued upon exercise of options and warrants authorized by the
Board prior to the Closing Date.
"Board" shall mean the Board of Directors of the Issuer.
"Capital Stock" means and includes (i) any and all shares,
interests, participations or other equivalents of or interests in
(however designated) corporate stock, including, without limitation,
shares of preferred or preference stock, (ii) all partnership interests
(whether general or limited) in any Person which is a partnership,
(iii) all membership interests or limited liability company interests
in any limited liability company, and (iv) all equity or ownership
interests in any Person of any other type.
"Certificate of Incorporation" means the Certificate of
Incorporation of the Issuer as in effect on the Original Issue Date,
and as hereafter from time to time amended, modified, supplemented or
restated in accordance with the terms hereof and thereof and pursuant
to applicable law.
"Closing Date" means the date of execution of the Purchase
Agreement.
"Closing Price" means the VWAP of the Common Stock on the
Trading Day immediately preceding the Closing Date.
"Common Stock" means the Common Stock, $.04 par value, of the
Issuer and any other Capital Stock into which such stock may hereafter
be changed.
"Common Stock Equivalent" means any Convertible Security or
warrant, option or other right to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Security.
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"Convertible Securities" means evidences of Indebtedness,
shares of Capital Stock or other Securities which are or may be at any
time convertible into or exchangeable for Additional Shares of Common
Stock. The term "Convertible Security" means one of the Convertible
Securities.
"Governmental Authority" means any governmental, regulatory or
self-regulatory entity, department, body, official, authority,
commission, board, agency or instrumentality, whether federal, state or
local, and whether domestic or foreign.
"Holders" mean the Persons who shall from time to time own any
Warrant. The term "Holder" means one of the Holders.
"Independent Appraiser" means a nationally recognized or major
regional investment banking firm or firm of independent certified
public accountants of recognized standing (which may be the firm that
regularly examines the financial statements of the Issuer) that is
regularly engaged in the business of appraising the Capital Stock or
assets of corporations or other entities as going concerns, and which
is not affiliated with either the Issuer or the Holder of any Warrant.
"Issuer" means Flightserv.com, a Delaware corporation, and its
successors.
"Majority Holders" means at any time the Holders of Warrants
exercisable for a majority of the shares of Warrant Stock issuable
under the Warrants at the time outstanding.
"Original Issue Date" means January 18, 2000.
"Other Common" means any other Capital Stock of the Issuer of
any class which shall be authorized at any time after the date of this
Warrant (other than Common Stock) and which shall have the right to
participate in the distribution of earnings and assets of the Issuer
without limitation as to amount.
"OTC Bulletin Board" means the over-the-counter electronic
bulletin board.
"Person" means an individual, corporation, limited liability
company, partnership, joint stock company, trust, unincorporated
organization, joint venture, Governmental Authority or other entity of
whatever nature.
"Per Share Market Value" means on any particular date (a) the
last sales price per share of the Common Stock on such date on the
American Stock Exchange or other registered national stock exchange on
which the Common Stock is then listed or if there is no such price on
such date, then the closing bid price on such exchange or quotation
system on the date nearest preceding such date, or (b) if the Common
Stock is not listed then on the American Stock Exchange or any
registered national stock exchange, the closing bid price for a share
of Common Stock in the over-the-counter market, as reported by the OTC
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<PAGE> 81
Bulletin Board or in the National Quotation Bureau Incorporated or
similar organization or agency succeeding to its functions of reporting
prices) at the close of business on such date, or (c) if the Common
Stock is not then reported by the OTC Bulletin Board or the National
Quotation Bureau Incorporated (or similar organization or agency
succeeding to its functions of reporting prices), then the average of
the "Pink Sheet" quotes for the relevant conversion period, as
determined in good faith by the holder, or (d) if the Common Stock is
not then publicly traded the fair market value of a share of Common
Stock as determined by an Independent Appraiser selected in good faith
by the Majority Holders; provided, however, that the Issuer, after
receipt of the determination by such Independent Appraiser, shall have
the right to select an additional Independent Appraiser, in which case,
the fair market value shall be equal to the average of the
determinations by each such Independent Appraiser; and provided,
further that all determinations of the Per Share Market Value shall be
appropriately adjusted for any stock dividends, stock splits or other
similar transactions during such period. The Issuer shall pay all costs
and expenses of each Independent Appraiser. The determination of fair
market value by an Independent Appraiser shall be based upon the fair
market value of the Issuer determined on a going concern basis as
between a willing buyer and a willing seller and taking into account
all relevant factors determinative of value, and shall be final and
binding on all parties. In determining the fair market value of any
shares of Common Stock, no consideration shall be given to any
restrictions on transfer of the Common Stock imposed by agreement or by
federal or state securities laws, or to the existence or absence of, or
any limitations on, voting rights.
"Purchase Agreement" means the Common Stock Purchase Agreement
dated as of January 18, 2000 between the Issuer and Four Corners
Capital, LLC, a Delaware limited liability company.
"Registration Rights Agreement" has the meaning specified in
Section 3(e) hereof.
"Securities" means any debt or equity securities of the
Issuer, whether now or hereafter authorized, any instrument convertible
into or exchangeable for Securities or a Security, and any option,
warrant or other right to purchase or acquire any Security. "Security"
means one of the Securities.
"Securities Act" means the Securities Act of 1933, as amended,
or any similar federal statute then in effect.
"Subsidiary" means any corporation at least 50% of whose
outstanding Voting Stock shall at the time be owned directly or
indirectly by the Issuer or by one or more of its Subsidiaries, or by
the Issuer and one or more of its Subsidiaries.
"Trading Day" means (a) a day on which the Common Stock is
traded on the American Stock Exchange as reported by Bloomberg L.P., or
(b) if the Common Stock is not listed on the American Stock Exchange, a
day on which the Common Stock is traded on any other registered
national stock exchange, or (c) if the Common Stock is not quoted on
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<PAGE> 82
the OTC Bulletin Board, a day on which the Common Stock is quoted in
the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding
its functions of reporting prices); provided, however, that in the
event that the Common Stock is not listed or quoted as set forth in
(a), (b) and (c) hereof, then Trading Day shall mean any day except
Saturday, Sunday and any day which shall be a legal holiday or a day on
which banking institutions in the State of New York are authorized or
required by law or other government action to close.
"Term" has the meaning specified in Section 1 hereof.
"Voting Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however
designated) having ordinary voting power for the election of a majority
of the members of the Board of Directors (or other governing body) of
such corporation, other than Capital Stock having such power only by
reason of the happening of a contingency.
"VWAP" means the volume weighted average price of the Common
Stock (based on a Trading Day from 9:00 a.m to 4:00 p.m.) on the
American Stock Exchange as reported by Bloomberg Financial using the
AQR function.
"Warrants" means the Warrants issued and sold pursuant to the
Purchase Agreement, including, without limitation, this Warrant, and
any other warrants of like tenor issued in substitution or exchange for
any thereof pursuant to the provisions of Section 2(c), 2(d) or 2(e)
hereof or of any of such other Warrants.
"Warrant Price" means the lesser of (i) 110% of the Closing
Price (the "Fixed Warrant Price") and (ii) 90% of the VWAP for the five
(5) Trading Days immediately preceding the notice to exercise, as such
price may be adjusted from time to time as shall result from the
adjustments specified in Section 4 hereof, provided, however, that if
the Registration Statement (as defined in the Registration Rights
Agreement) is not declared effective within one hundred twenty (120)
days after the Closing Date, the Fixed Warrant Price shall be reduced
by 10% and by an additional 10% for each thirty day period thereafter
until the Registration Statement has been declared effective, which
shall be pro rated for such periods less than thirty (30) days.
"Warrant Share Number" means at any time the aggregate number
of shares of Warrant Stock which may at such time be purchased upon
exercise of this Warrant, after giving effect to all prior adjustments
and increases to such number made or required to be made under the
terms hereof.
"Warrant Stock" means Common Stock issuable upon exercise of
any Warrant or Warrants or otherwise issuable pursuant to any Warrant
or Warrants.
8. Other Notices. In case at any time:
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(1) the Issuer shall make any distributions to
the holders of Common Stock; or
(2) the Issuer shall authorize the granting to
all holders of its Common Stock of rights to subscribe for or
purchase any shares of Capital Stock of any class or of any
Common Stock Equivalents or Convertible Securities or other
rights; or
(3) there shall be any reclassification of the
Capital Stock of the Issuer; or
(4) there shall be any capital reorganization by
the Issuer; or
(5) there shall be any (i) consolidation or
merger involving the Issuer or (ii) sale, transfer or other
disposition of all or substantially all of the Issuer's
property, assets or business (except a merger or other
reorganization in which the Issuer shall be the surviving
corporation and its shares of Capital Stock shall continue to
be outstanding and unchanged and except a consolidation,
merger, sale, transfer or other disposition involving a
wholly-owned Subsidiary); or
(6) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Issuer or any
partial liquidation of the Issuer or distribution to holders
of Common Stock;
then, in each of such cases, the Issuer shall give written notice to the Holder
of the date on which (i) the books of the Issuer shall close or a record shall
be taken for such dividend, distribution or subscription rights or (ii) such
reorganization, reclassification, consolidation, merger, disposition,
dissolution, liquidation or winding-up, as the case may be, shall take place.
Such notice also shall specify the date as of which the holders of Common Stock
of record shall participate in such dividend, distribution or subscription
rights, or shall be entitled to exchange their certificates for Common Stock for
securities or other property deliverable upon such reorganization,
reclassification, consolidation, merger, disposition, dissolution, liquidation
or winding-up, as the case may be. Such notice shall be given at least twenty
days prior to the action in question and not less than twenty days prior to the
record date or the date on which the Issuer's transfer books are closed in
respect thereto. The Issuer shall give to the Holder notice of all meetings and
actions by written consent of its stockholders, at the same time in the same
manner as notice of any meetings of stockholders is required to be given to
stockholders who do not waive such notice (or, if such requires no notice, then
two Trading Days written notice thereof describing the matters upon which action
is to be taken). The Holder shall have the right to send two representatives
selected by it to each meeting, who shall be permitted to attend, but not vote
at, such meeting and any adjournments thereof. This Warrant entitles the Holder
to receive copies of all financial and other information distributed or required
to be distributed to the holders of the Common Stock.
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<PAGE> 84
9. Amendment and Waiver. Any term, covenant, agreement or
condition in this Warrant may be amended, or compliance therewith may be waived
(either generally or in a particular instance and either retroactively or
prospectively), by a written instrument or written instruments executed by the
Issuer and the Majority Holders; provided, however, that no such amendment or
waiver shall reduce the Warrant Share Number, increase the Warrant Price,
shorten the period during which this Warrant may be exercised or modify any
provision of this Section 9 without the consent of the Holder of this Warrant.
10. Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO
PRINCIPLES OF CONFLICTS OF LAW.
11. Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earlier of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice prior to 5:00 p.m., eastern
standard time, on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified for notice later than 5:00 p.m., pacific
standard time, on any date and earlier than 11:59 p.m., eastern standard time,
on such date, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service or (iv) actual receipt by the
party to whom such notice is required to be given. The addresses for such
communications shall be with respect to the Holder of this Warrant or of Warrant
Stock issued pursuant hereto, addressed to such Holder at its last known address
or facsimile number appearing on the books of the Issuer maintained for such
purposes, or with respect to the Issuer, addressed to:
flightserv.com
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attn: C. Beverly Lance
Telephone Number: (404) 869-2599
Fax: (404) 240-4101
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Issuer shall be sent to Rogers & Hardin
LLP, 2700 International Tower, Peachtree Center, 229 Peachtree Street, N.E.,
Atlanta, Georgia 30303, Attn: Edward J. Hardin, Facsimile no.: (404) 525-2224.
Copies of notices to the Holder shall be sent to Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, Attention: Gary I. Horowitz, Esq.,
Facsimile no.: (212) 455-2502.
12. Warrant Agent. The Issuer may, by written notice to each
Holder of this Warrant, appoint an agent having an office in New York, New York
for the purpose of issuing shares of
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<PAGE> 85
Warrant Stock on the exercise of this Warrant pursuant to subsection (b) of
Section 2 hereof, exchanging this Warrant pursuant to subsection (d) of Section
2 hereof or replacing this Warrant pursuant to subsection (d) of Section 3
hereof, or any of the foregoing, and thereafter any such issuance, exchange or
replacement, as the case may be, shall be made at such office by such agent.
13. Remedies. The Issuer stipulates that the remedies at law of
the Holder of this Warrant in the event of any default or threatened default by
the Issuer in the performance of or compliance with any of the terms of this
Warrant are not and will not be adequate and that, to the fullest extent
permitted by law, such terms may be specifically enforced by a decree for the
specific performance of any agreement contained herein or by an injunction
against a violation of any of the terms hereof or otherwise.
14. Successors and Assigns. This Warrant and the rights evidenced
hereby shall inure to the benefit of and be binding upon the successors and
assigns of the Issuer, the Holder hereof and (to the extent provided herein) the
Holders of Warrant Stock issued pursuant hereto, and shall be enforceable by any
such Holder or Holder of Warrant Stock.
15. Modification and Severability. If, in any action before any
court or agency legally empowered to enforce any provision contained herein, any
provision hereof is found to be unenforceable, then such provision shall be
deemed modified to the extent necessary to make it enforceable by such court or
agency. If any such provision is not enforceable as set forth in the preceding
sentence, the unenforceability of such provision shall not affect the other
provisions of this Warrant, but this Warrant shall be construed as if such
unenforceable provision had never been contained herein.
16. Headings. The headings of the Sections of this Warrant are for
convenience of reference only and shall not, for any purpose, be deemed a part
of this Warrant.
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IN WITNESS WHEREOF, the Issuer has executed this Warrant as of the day and year
first above written.
FLIGHTSERV.COM
By:
Name:
Title:
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<PAGE> 87
EXERCISE FORM
[NAME OF ISSUER]
The undersigned _______________, pursuant to the provisions of the within
Warrant, hereby elects to purchase _____ shares of Common Stock of
___________________ covered by the within Warrant.
Dated: Signature
Address
ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the within Warrant and all rights evidenced thereby and does
irrevocably constitute and appoint _____________, attorney, to transfer the said
Warrant on the books of the within named corporation.
Dated: Signature
Address
PARTIAL ASSIGNMENT
FOR VALUE RECEIVED, _________________ hereby sells, assigns and transfers unto
__________________ the right to purchase _________ shares of Warrant Stock
evidenced by the within Warrant together with all rights therein, and does
irrevocably constitute and appoint ___________________, attorney, to transfer
that part of the said Warrant on the books of the within named corporation.
Dated: Signature
Address
FOR USE BY THE ISSUER ONLY:
This Warrant No. W-_____ cancelled (or transferred or exchanged) this _____ day
of ___________, _____, shares of Common Stock issued therefor in the name of
_______________, Warrant No. W-_____ issued for ____ shares of Common Stock in
the name of _______________.
<PAGE> 88
EXHIBIT 2.2
ESCROW AGREEMENT
ESCROW AGREEMENT (the "Escrow Agreement") made as of the 19th day of
January, 2000, by and among flightserv.com, a Delaware corporation, with
offices at 3343 Peachtree Rd., Suite 530, Atlanta, Georgia 30326 (the
"Company"), Acqua Wellington Value Fund, Ltd., a company organized under the
laws of the Bahamas (the "Purchaser") and Parker Chapin Flattau and Klimpl,
LLP, a New York limited liability partnership with offices at 1211 Avenue of
the Americas, New York, New York 10027, as escrow agent (the "Escrow Agent").
WITNESSETH:
WHEREAS, the Company desires to raise capital in order to finance the
growth of its business operations and for other general corporate purposes;
WHEREAS, the Company and the Purchaser have agreed that, in order to
raise capital, the Company shall issue and sell to the Purchaser in the
aggregate 1,650,709 shares of the Company's common stock, $0.04 par value per
share (the "Common Stock"), and Warrants to purchase up to 2,888,740 shares of
Common Stock (the "Warrants") for an aggregate purchase price of $10,000,000
payable in two tranches of $5,000,000 each (the "Sale");
WHEREAS, pursuant to the Sale, the Company will enter into a Common
Stock Purchase Agreement dated as of January 19, 2000 (the "Purchase
Agreement") with the Purchaser; and
WHEREAS, the Purchase Agreement contemplates that all funds shall be
paid into escrow and certificate(s) representing the shares of Common Stock and
Warrants purchased by the Purchaser (the "Certificates") shall be held in
escrow prior to each Closing Date (as defined in the Purchase Agreement) and
the Escrow Agent has agreed to receive, hold and pay such funds and to receive
such Certificates, upon the terms and subject to the conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties to this Escrow
Agreement hereby agree as follows:
1. Defined Terms. Capitalized terms used and not otherwise
defined herein shall have the meanings respectively assigned to them in the
Purchase Agreement.
2. Escrow of Funds. On or prior to each Closing Date, the
following shall occur: (a) Purchaser shall remit by wire transfer $5,000,000 to
the Escrow Agent pursuant to this
<PAGE> 89
Escrow Agreement as payment in full for 825,354.5 shares of Common Stock and
the applicable Warrants (the "Escrow Amount"); and (b) the Company shall
deliver or cause to be delivered to Escrow Agent the applicable Certificates
(in such denominations as Purchaser shall request), registered in the name of
Purchaser (or any nominee designated by Purchaser), free and clear of all
liens, claims, charges and encumbrances. The Escrow Agent shall hold the Escrow
Amount and the Certificates and shall deliver them or redeliver them to the
Company or to the Purchaser, as applicable, only in accordance with the terms
and conditions of this Escrow Agreement.
3. Investment of Funds. The Escrow Agent shall invest the
monies in the Escrow Amount in an interest bearing bank account with, or
certificates of deposit or time deposits with maturities of no more than thirty
(30) days issued by, a domestic commercial bank or such other bank or other
financial institution as it normally holds such finds.
4. Release of Funds. (a) The Escrow Agent shall release
the Escrow Amount and the Certificates upon receipt, at any time, of joint
written instructions from the Company and the Purchaser directing the manner in
which the return or other distribution of the funds in the Escrow Amount and
the Certificate is to be made.
(b) Immediately following notification to the Escrow Agent
in writing by the Company and the Purchaser that a Closing has occurred, the
Company shall be paid the Escrow Amount and the Purchaser shall receive the
Certificates.
(c) If no Closing occurs prior to 11:59 p.m. Pacific time
on January 30, 2000 and the Escrow Agent does not receive joint written
instructions of the Company and the Purchaser regarding an extension of such
date to a date no later than January 30, 2000, the Escrow Agent shall return
the Escrow Amount to the Purchaser and the Certificate to the Company.
(d) Any interest earned on the Escrow Amount shall be paid
to the party receiving the Escrow Amount.
5. Further Assurances. The Company and the Purchaser agree
to do such further acts and to execute and deliver such statements,
assignments, agreements, instruments and other documents as the Escrow Agent
from time to time reasonably may request in connection with the administration,
maintenance, enforcement or adjudication of this Escrow Agreement in order (a)
to give the Escrow Agent confirmation and assurance of the Escrow Agent's
rights, powers, privileges, remedies and interests under this Escrow Agreement
and applicable law, (b) to better enable the Escrow Agent to exercise any such
right, power, privilege, remedy or interest, or (c) to otherwise effectuate the
purpose and the terms and provisions of this Escrow Agreement, each in such
form and substance as may be reasonably acceptable to the Escrow Agent.
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6. Conflicting Demands. If conflicting or adverse claims
or demands are made or notices served upon the Escrow Agent with respect to the
escrow provided for herein, the Company and the Purchaser agree that the Escrow
Agent shall refuse to comply with any such claim or demand and withhold and
stop all further performance of this escrow so long as such disagreement shall
continue. In so doing, the Escrow Agent shall not be or become liable for
damages, losses, costs, expenses or interest to any or any other person for its
failure to comply with such conflicting or adverse demands. The Escrow Agent
shall be entitled to continue to so refrain and refuse to so act until such
conflicting claims or demands shall have been finally determined by a court or
arbitrator of competent jurisdiction or shall have been settled by agreement of
the parties to such controversy, in which case the Escrow Agent shall be
notified thereof in a notice signed by such parties. The Escrow Agent may also
elect to commence an interpleader or other action for declaratory judgment for
the purpose of having the respective rights of the claimants adjudicated, and
may deposit with the court all funds held hereunder pursuant to this Escrow
Agreement; and if it so commences and deposits, the Escrow Agent shall be
relieved and discharged from any further duties and obligations under this
Escrow Agreement.
7. Disputes. Each of the parties hereto hereby covenants
and agrees that the Federal or state courts located in the Borough of
Manhattan, State of New York shall have jurisdiction over any dispute with the
Escrow Agent or relating to this Escrow Agreement.
8. Expenses of the Escrow Agent. The Company agrees to pay
any and all out-of-pocket costs and expenses incurred by the Escrow Agent in
connection with all waivers, releases, discharges, satisfactions, modifications
and amendments of this Escrow Agreement, the administration and holding of the
Escrow Amount and the investment of such funds, and the enforcement, protection
and adjudication of the Escrow Agent's rights hereunder by the Escrow Agent,
including, without limitation, the out-of-pocket disbursements of the Escrow
Agent itself and expenses and costs of other attorneys it may retain, if any.
The Company shall be liable to the Escrow Agent for any expenses payable by the
Escrow Agent
9. Reliance on Documents and Experts. The Escrow Agent
shall be entitled to rely upon any notice, consent, certificate, affidavit,
statement, paper, document, writing or communication (which to the extent
permitted hereunder may be by telegram, cable, telex, telecopier, or telephone)
reasonably believed by it to be genuine and to have been signed, sent or made
by the proper person or persons, and upon opinions and advice of legal counsel
(including itself or counsel for any party hereto), independent public
accountants and other experts selected by the Escrow Agent and mutually
acceptable to each of the Company and the Purchaser. The Escrow Agent shall not
be responsible to review the Certificate other than to confirm that it has been
signed or to determine the clearance of checks received for the Escrow Amount.
10. Status of the Escrow Agent, Etc. The Escrow Agent is
acting under this Escrow Agreement as a stakeholder only. No term or provision
of this Escrow Agreement is intended to create, nor shall any such term or
provision be deemed to have created, any joint ven-
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<PAGE> 91
ture, partnership or attorney-client relationship between or among the Escrow
Agent and the Company or the Purchaser. This Escrow Agreement shall not be
deemed to prohibit or in any way restrict the Escrow Agent's representation of
the Purchaser, who may be advised by the Escrow Agent on any and all matters
pertaining to this Escrow Agreement. To the extent the Purchaser has been
represented by the Escrow Agent, the hereby waives any conflict of interest and
irrevocably authorizes and directs the Escrow Agent to carry out the terms and
provisions of this Escrow Agreement fairly as to all parties, without regard to
any such representation and irrespective of the impact upon the. The Escrow
Agent's only duties are those expressly set forth in this Escrow Agreement, and
each of the Company and the Purchaser authorizes the Escrow Agent to perform
those duties in accordance with its usual practices in holding funds of its own
or those of other escrows. The Escrow Agent may exercise or otherwise enforce
any of its rights, powers, privileges, remedies and interests under this Escrow
Agreement and applicable law or perform any of its duties under this Escrow
Agreement by or through its partners, employees, attorneys, agents or
designees.
11. Exculpation. The Escrow Agent and its designees, and
their respective partners, employees, attorneys and agents, shall not incur any
liability whatsoever for the investment or disposition of funds or the taking
of any other action in accordance with the terms and provisions of this Escrow
Agreement, for any mistake or error in judgment, for compliance with any
applicable law or any attachment, order or other directive of any court or
other authority (irrespective of any conflicting term or provision of this
Escrow Agreement), or for any act or omission of any other person selected with
reasonable care and engaged by the Escrow Agent in connection with this Escrow
Agreement (other than for such Escrow Agent's or such person's own acts or
omissions breaching a duty owed to the claimant under this Escrow Agreement and
amounting to gross negligence or willful misconduct as finally determined
pursuant to applicable law by a governmental authority having jurisdiction);
and each of the Company and the Purchaser hereby waives any and all claims and
actions whatsoever against the Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, arising out of or related
directly or indirectly to any and all of the foregoing acts, omissions and
circumstances. Furthermore, the Escrow Agent and its designees, and their
respective partners, employees, attorneys and agents, shall not incur any
liability (other than for a person's own acts or omissions breaching a duty
owed to the claimant under this Escrow Agreement and amounting to willful
misconduct as finally determined pursuant to applicable law by a governmental
authority having jurisdiction) for other acts and omissions arising out of or
related directly or indirectly to this Escrow Agreement or the Escrow Amount;
and each of the Company and the Purchaser hereby expressly waives any and all
claims and actions (other than those attributable to a person's own acts or
omissions breaching a duty owed to the claimant and amounting to gross
negligence or willful misconduct as finally determined pursuant to applicable
law by a governmental authority having jurisdiction) against the Escrow Agent
and its designees, and their respective partners, employees, attorneys and
agents, arising out of or related directly or indirectly to any and all of the
foregoing acts, omissions and circumstances. The Escrow Agents designees
excludes the Purchaser for purposes hereof.
-4-
<PAGE> 92
12. Indemnification. The Escrow Agent and its designees
(excluding the Purchaser), and their respective partners, employees, attorneys
and agents, shall be indemnified, reimbursed, held harmless and, at the request
of the Escrow Agent, defended, by the Company from and against any and all
claims, liabilities, losses and expenses (including, without imitation, the
reasonable disbursements, expenses and fees of their respective attorneys) that
may be imposed upon, incurred by, or asserted against any of them, arising out
of or related directly or indirectly to this Escrow Agreement or the Escrow
Amount, except such as are occasioned by the indemnified person's own acts and
omissions breaching a duty owed to the claimant under this Escrow Agreement and
amounting to willful misconduct as finally determined pursuant to applicable
law by a governmental authority having jurisdiction.
13. Notices. Any notice, request, demand or other
communication permitted or required to be given hereunder shall be in writing,
shall be sent by one of the following means to the addressee at the address set
forth below (or at such other address as shall be designated hereunder by
notice to the other parties and persons receiving copies, effective upon actual
receipt) and shall be deemed conclusively to have been given: (a) on the first
business day following the day timely deposited with Federal Express (or other
equivalent national overnight courier) or United States Express Mail, with the
cost of delivery prepaid; (b) on the fifth business day following the day duly
sent by certified or registered United States mail, postage prepaid and return
receipt requested; or (c) when otherwise actually delivered to the addressee.
<TABLE>
<S> <C>
If to the Company: FLIGHTSERV.COM
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attn: Beverly Lance
Fax No.: (404) 240-4101
with a copy to: Rogers & Hardin LLP
2700 International Tower
Peachtree Center
Atlanta, Georgia 30303
Attn: Edward J. Hardin
Fax No.: (404) 525-2224
If to the Purchaser: Acqua Wellington Value Fund, Ltd.
c/o Mees Pierson Fund Services
(Bahamas) Ltd.
Montague Sterling Centre
East Bay Street, P.O. Box 55-6238
Nassau, Bahamas
</TABLE>
-5-
<PAGE> 93
with copies to: Christopher S. Auguste, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Telephone Number: (212) 704-6000
Fax: (212) 704-6288
14. Section and Other Headings. The section and other
headings contained in this Escrow Agreement are for convenience only, shall not
be deemed a part of this Escrow Agreement and shall not affect the meaning or
interpretation of this Escrow Agreement.
15. Governing Law. This Escrow Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of New
York, without regard to principles of conflicts of law. Each of the Company and
the Purchaser (i) hereby irrevocably submits to the jurisdiction of the United
States District Court sitting in the Southern District of New York for the
purposes of any suit, action or proceeding arising out of or relating to this
Agreement or the Purchase Agreement and (ii) hereby waives, and agrees not to
assert in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such court, that the suit, action or
proceeding is brought in an inconvenient forum or that the venue of the suit,
action or proceeding is improper. Each of the Company and the Purchaser
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address in effect for notices to it
under this Agreement and agrees that such service shall constitute good and
sufficient service of process and notice thereof. Nothing in this Section 15
shall affect or limit any right to serve process in any other manner permitted
by law.
16. Counterparts. This Escrow Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original but all such counterparts shall together
constitute one and the same agreement.
17. Resignation of Escrow Agent. The Escrow Agent may, at
any time, at its option, elect to resign its duties as Escrow Agent under this
Escrow Agreement by providing notice thereof to each of the Company and the
Purchaser. In such event, the Escrow Agent shall deposit the Escrow Amount with
a successor independent escrow agent to be appointed by (a) the Company and the
Purchaser within thirty (30) days following the receipt of notice of
resignation from the Escrow Agent, or (b) the Escrow Agent if the Company and
the Purchaser shall have not agreed on a successor escrow agent within the
aforesaid 30-day period, upon which appointment and delivery of the Escrow
Amount the Escrow Agent shall be released of and from all liability under this
Escrow Agreement.
18. Successors and Assigns; Assignment. Whenever in this
Escrow Agreement reference is made to any party, such reference shall be deemed
to include the
-6-
<PAGE> 94
successors, assigns and legal representatives of such party, and, without
limiting the generality of the foregoing, all representations, warranties,
covenants and other agreements made by or on behalf of each of the Company and
the Purchaser in this Escrow Agreement shall inure to the benefit of any
successor escrow agent hereunder; provided, however, that nothing herein shall
be deemed to authorize or permit the Company or the Purchaser to assign any of
its rights or obligations hereunder to any other person (whether or not an
affiliate of the Company or the Purchaser) without the written consent of each
of the other parties nor to authorize or permit the Escrow Agent to assign any
of its duties or obligations hereunder except as provided in Section 17 hereof.
19. No Third Party Rights. The representations, warranties
and other terms and provisions of this Escrow Agreement are for the exclusive
benefit of the parties hereto, and no other person, including the creditors of
the Company or the Purchaser, shall have any right or claim against any party
by reason of any of those terms and provisions or be entitled to enforce any of
those terms and provisions against any party.
20. No Waiver by Action, Etc. Any waiver or consent
respecting any representation, warranty, covenant or other term or provision of
this Escrow Agreement shall be effective only in the specific instance and for
the specific purpose for which given and shall not be deemed, regardless of
frequency given, to be a further or continuing waiver or consent. The failure
or delay of a party at any time or times to require performance of, or to
exercise its rights with respect to, any representation, warranty, covenant or
other term or provision of this Escrow Agreement in no manner (except as
otherwise expressly provided herein) shall affect its right at a later time to
enforce any such term or provision. No notice to or demand on either the
Company or the Purchaser in any case shall entitle such party to any other or
further notice or demand in the same, similar or other circumstances. All
rights, powers, privileges, remedies and interests of the parties under this
Escrow Agreement are cumulative and not alternatives, and they are in addition
to and shall not limit (except as otherwise expressly provided herein) any
other right, power, privilege, remedy or interest of the parties under this
Escrow Agreement or applicable law.
21. Modification, Amendment, Etc. Each and every
modification and amendment of this Escrow Agreement shall be in writing and
signed by all of the parties hereto, and each and every waiver of, or consent
to any departure from, any covenant, representation, warranty or other
provision of this Escrow Agreement shall be in writing and signed by the party
granting such waiver or consent.
22. Entire Agreement. This Escrow Agreement contains the
entire agreement of the parties with respect to the matters contained herein
and supersedes all prior representations, agreements and understandings, oral
or otherwise, among the parties with respect to the matters contained herein.
-7-
<PAGE> 95
IN WITNESS WHEREOF, the parties hereto have executed this Escrow
Agreement on the date first written above.
FLIGHTSERV.COM
By: /s/ C.B. Lance
---------------------------------
Name: C.B. Lance
Title: President
PARKER CHAPIN FLATTAU & KLIMPL,
LLP, as escrow agent
By:
---------------------------------
ACQUA WELLINGTON VALUE FUND,
LTD.
By:
---------------------------------
Name:
Title:
-8-
<PAGE> 96
January 20, 2000
Acqua Wellington Value Fund, Ltd.
c/o Mees Pierson Fund Services (Bahama) Ltd.
Montague Sterling Centre
East Bay Street, P.O. Box 55-6238
Nassau, Bahamas
ATTN: ANTHONY L.M. INDOR RIEDEN
Ladies and Gentlemen:
We have acted as counsel to flightserv.com, a Delaware corporation
(the "Company"), in connection with the Common Stock Purchase Agreement (the
"Stock Purchase Agreement") dated as of January 18, 2000 between the Company
and Acqua Wellington Value Fund, Ltd. This opinion letter is being delivered to
you pursuant to Section 4.3(e) of the Stock Purchase Agreement. Capitalized
terms not otherwise defined in this opinion letter have the meaning given to
them in the Stock Purchase Agreement.
In connection with the opinions expressed herein, we have made such
examination of matters of law and of fact as we considered appropriate or
advisable for purposes hereof. As to matters of fact material to the opinions
expressed herein, we have relied upon the representations and warranties as to
factual matters contained in and made by the Company pursuant to the Stock
Purchase Agreement and upon certificates and statements of government officials
and officers of the Company. We have also examined originals or copies of such
corporate documents or records of the Company as we have considered appropriate
for the opinions expressed herein. We have assumed for the purposes of this
opinion letter the genuineness of all signatures other than those of the
officers of the Company, the legal capacity of natural persons, the
authenticity of the documents submitted to us as originals, the conformity to
the original documents of all documents submitted to us as certified, facsimile
or photostatic copies and the authenticity of the originals of such copies.
<PAGE> 97
Acqua Wellington Value Fund, Ltd.
c/o Mees Peirson Fund Services (Bahamas) Ltd.
January 20, 2000
Page 2
In rendering this opinion letter we have also assumed: (A) that the
Stock Purchase Agreement and the Registration Rights Agreement (collectively
the "Transaction Agreements") have been duly and validly executed and delivered
by you or on your behalf, that you have the power to enter into and perform all
of your obligations thereunder, and that the Transaction Agreements constitute
valid, legal, binding and enforceable obligations upon you; (B) that the
representations and warranties made in the Stock Purchase Agreement by you are
true and correct; and (C) that any wire transfers, drafts or checks tendered by
you will be honored. We have assumed that notwithstanding the designation of
New York law as governing law with respect to the Transaction Agreements and
Warrants that for purposes of all opinions expressed below the Transaction
Agreements and Warrants will be deemed governed by the substantive laws
(without regard to conflicts law) of the State of Georgia. We are members of
the Bar of the State of Georgia and we express no opinion as to the laws of any
jurisdiction other than the laws of the State of Georgia, the federal laws of
the United States of America and the Delaware General Corporation Law (the
"DGCL").
We have made no independent inquiry with respect to any factual
matters or as to the matters to which we express opinions herein "to our
knowledge" or with other similar qualifications. Whenever any opinion or
confirmation of fact herein is qualified by the words "to our knowledge", or
other words of similar meaning, the quoted words mean the current awareness by
lawyers in the primary lawyer group of factual matters such lawyers recognize
as being relevant to the opinion or confirmation so qualified. "Primary lawyer
group" means the lawyer who signs this opinion letter and, solely as to
information relevant to an opinion, any lawyer in this firm who is primarily
responsible for providing the response concerning the particular issue and any
lawyer who participated in the preparation and negotiation of the Transaction
Agreements.
Based upon our examination of and reliance upon the foregoing and
subject to the limitations, exceptions, qualifications and assumptions set
forth below and except as set forth in the Transaction Agreement or the
Disclosure Schedules to the Stock Purchase Agreement (the "Disclosure
Schedules"), we are of the opinion that as of the date hereof:
1. The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware, and the
Company has the requisite corporate power and corporate authority to own its
properties and to conduct its business as, to our knowledge, it is presently
conducted. The Company is qualified to do business as a foreign corporation in
Georgia and in every jurisdiction in which the nature of the business presently
<PAGE> 98
Acqua Wellington Value Fund, Ltd.
c/o Mees Peirson Fund Services (Bahamas) Ltd.
January 20, 2000
Page 3
conducted, or property owned, by it makes such qualification necessary except
for jurisdictions in which the failure to be so qualified would not have a
Material Adverse Effect.
2. The Company has the requisite corporate power and
corporate authority to execute, deliver and perform the Transaction Agreements.
Each of the Transaction Agreements has been duly and validly authorized by the
Company, duly executed and delivered by an authorized officer of the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable by you against the Company in accordance with its terms.
3. The shares of the Company's common stock, $.04 par
value per share (the "Common Stock"), to be issued under the terms of the Stock
Purchase Agreement have been duly authorized and, when issued in accordance
with the Stock Purchase Agreement, will be duly issued, fully paid and
nonassessable. The Warrants to be issued under the terms of the Stock Purchase
Agreement have been duly authorized by the Board of Directors of the Company
and, when issued in accordance with the terms of the Stock Purchase Agreement,
will constitute legal, valid and binding obligations of the Company,
enforceable by you against the Company in accordance with their terms. The
Common Stock issuable upon exercise of the Warrants has been duly and validly
reserved for issuance and, when and if issued upon such exercise in accordance
with the terms of the Warrants, will be validly issued, fully paid and
nonassessable.
4. The Company's execution and delivery of, and its
performance and compliance as of the date hereof with the terms of, the
Transaction Agreements do not (i) violate any provision of any federal, Georgia
law or DGCL, rule or regulation applicable to the Company or any provision of
the Company's Restated Certificate of Incorporation, as amended, or Bylaws;
(ii) to our knowledge, do not conflict with or constitute a default under the
provisions of any judgment, writ, decree or order; (iii) to our knowledge, do
not conflict with or constitute a default under the material provisions of any
material agreement specifically identified in the Disclosure Schedules; and
(iv) to our knowledge, will not result in the creation or imposition of any
lien on any of the Company's property, assets or revenues pursuant to the
provisions of any such material agreement.
5. To our knowledge, there is no action, proceeding or
governmental investigation pending, or threatened in writing, against the
Company which questions the validity of the Transaction Agreements or the right
of the Company to enter into the Transaction Agreements.
<PAGE> 99
Acqua Wellington Value Fund, Ltd.
c/o Mees Peirson Fund Services (Bahamas) Ltd.
January 20, 2000
Page 4
We have not considered and have expressed no opinion with respect to
any of the following: (i) the enforceability of any provisions of the
Transaction Agreements or Warrants that purport to confess judgment, consent to
services of process or to jurisdiction in any manner that is not in accordance
with applicable law or that waive rights to assert claims or defenses; (ii) the
effect of bankruptcy, insolvency, moratorium or other similar laws affecting
the rights or remedies of creditors generally, and the effect of general
principles of equity, including principles of commercial reasonableness,
estoppel, good faith and fair dealing, whether considered in a proceeding at
law or in equity, upon the enforceability of the Transaction Agreements and the
Warrants and the availability of equitable relief; (iii) the enforceability of
provisions contained in the Transaction Agreements or the Warrants requiring
indemnification to the extent otherwise contrary to the public policy of state
or federal law; (iv) the provisions of any state, federal or other anti-fraud
or anti-trust laws; and (vi) the effect on any opinion expressed herein of any
future event except as specifically addressed herein.
Further, we express no opinion that the enforcement of any particular
provision of the Transaction Documents or Warrants will not be limited by
defenses such as estoppel or waiver arising subsequent to the date hereof, or
by certain constitutional guarantees and rights of the parties, nor do we
express any opinion with respect to the enforceability of any particular
provision of the Transaction Documents or Warrants by a decree of specific
performance, nor do we express any opinion as to the enforceability under
certain circumstances of provisions to the effect that rights or remedies are
not exclusive, that every right or remedy is cumulative and may be exercised in
addition to or with any other right or remedy, that election of a particular
remedy or remedies does not preclude recourse to one or more remedies, that
rights or remedies may be exercised without notice, or that failure to exercise
or delay in exercising rights or remedies will not operate as a waiver of any
such right or remedy.
<PAGE> 1
EXHIBIT 4.1
[PCF&K DRAFT OF 01/18/00]
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made
and entered into as of January 18, 2000, among flightserv.com, a Delaware
corporation (the "Company"), Acqua Wellington Value Fund, Ltd., a company
organized under the laws of the Bahamas ("AWVF"), and Four Corners Capital, LLC,
a Delaware limited liability company ("Four Corners" and, together with AWVF,
the "Purchasers").
WHEREAS, the Company is issuing and selling to AWVF and AWVF
is purchasing from the Company, pursuant to a Common Stock Purchase Agreement,
dated as of the date hereof (the "AWVF Purchase Agreement"), between the Company
and AWVF, for an aggregate purchase price of $10,000,000, 1,650,709 shares of
the Company's Common Stock (as defined below), a warrant (the "AWVF A Warrant")
to purchase up to 1,238,031 shares of Common Stock, a warrant (the "AWVF B
Warrant") to purchase up to 1,155,497 shares of Common Stock, and a warrant (the
"AWVF C Warrant" and, together with the AWVF A Warrant and the AWVF B Warrant,
the "Warrants") to purchase up to 866,623 shares of Common Stock.
WHEREAS, the Company is issuing and selling to Four Corners
and Four Corners is purchasing from the Company, pursuant to a Common Stock
Purchase Agreement, dated as of the date hereof (the "Four Corners Purchase
Agreement"), between the Company and Four Corners for an aggregate purchase
price of $1,000,000, 165,070 shares of Common Stock, a warrant (the "Four
Corners A Warrant") to purchase up to 123,802 shares of Common Stock, a warrant
(the "Four Corners B Warrant") to purchase up to 1,485,658 shares of Common
Stock, and a warrant (the "Four Corners C Warrant" and together with the Four
Corners A Warrant and the Four Corners B Warrant, the "Four Corners Warrants")
to purchase up to 1,114,228 shares of Common Stock (the Four Corners Warrants,
together with the AWVF Warrants are referred to as the "Warrants");
WHEREAS, the Company desires to grant to AWVF registration
rights as set forth herein with respect to the shares of Common Stock being
purchased under the AWVF Purchase Agreement and the shares of Common Stock
issuable upon exercise of the AWVF warrants; and
WHEREAS, the Company desires to grant to Four Corners
registration rights as set forth herein with respect to (i) the shares of Common
Stock being purchased under the Four Corners Purchase Agreement, (ii) the shares
of Common Stock issuable upon exercise of the Four Corners Warrants and (iii)
(x) the shares of Common Stock issuable upon exercise of warrants and options to
purchase shares of Common Stock (the "Outstanding Warrants and
<PAGE> 2
Options") held as of the date hereby by Four Corners and/or its Affiliates (as
defined below), as set forth on Schedule A hereto and (y) the shares of Common
Stock (the "Outstanding Shares") held as of the date hereof by Four Corners
and/or its Affiliates, as set forth on Schedule A hereto.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants, agreements and conditions
contained herein, the sufficiency of which is hereby acknowledged, the Company
and the Purchaser hereby agree as follows:
1. Definitions.
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the AWVF Purchase Agreement or the Four
Corners Purchase Agreement, as applicable. As used in this Agreement, the
following terms shall have the following meanings:
"Advice" shall have the meaning set forth in Section 3(o).
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," "controlling" and "controlled" have
meanings correlative to the foregoing.
"Blackout Period" shall have the meaning set forth in Section
3(n).
"Board" shall have the meaning set forth in Section 3(n).
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
state of New York generally are authorized or required by law or other
government actions to close.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value
$.04 per share.
"Effectiveness Date" means the 120th day following the date of
the Tranche I Closing.
"Effectiveness Period" shall have the meaning set forth in
Section 2(a).
"Event " shall have the meaning set forth in Section 7(e).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
-2-
<PAGE> 3
"Filing Date" means the 60th day following the date of the
Tranche I Closing.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"Indemnified Party" shall have the meaning set forth in
Section 5(c).
"Indemnifying Party" shall have the meaning set forth in
Section 5(c).
"Losses" shall have the meaning set forth in Section 5(a).
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Registrable Securities" means (i) the Common Stock issued and
the shares of Common Stock issuable upon exercise of the AWVF Warrants to AWVF
pursuant to the AWVF Purchase Agreement (the "AWVF Warrant Shares"), (ii) the
Common Stock issued and issuable and the shares of Common Stock issuable upon
exercise of the Four Corners Warrants to Four Corners pursuant to the Four
Corners Purchase Agreement (the "Four Corners Warrant Shares" and, together with
the AWVF Warrant Shares, the "Warrant Shares"), (iii) the shares of Common Stock
issuable to Four Corners upon exercise of the Outstanding Warrants and Options,
(iv) the Outstanding Shares and (v) any other dividend or other distribution
with respect to, conversion or exchange of, or in replacement of, the foregoing
(i), (ii), (iii), (iv). Notwithstanding anything contained herein to the
contrary, if the actual number of shares of Common Stock issuable upon exercise
of the Warrants exceeds 100% of the number of shares of Common Stock issuable
upon exercise of the Warrants based upon a computation as at each Closing Date
(as that term is defined in the AWVF Purchase Agreement or the Four Corners
Purchase Agreement, as applicable) or the Filing Date, the term "Registrable
Securities" shall be deemed to include such additional shares of Common Stock.
-3-
<PAGE> 4
"Registration Statement" means the registration statements and
any additional registration statements contemplated by Section 2, including (in
each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all
exhibits thereto, and all material incorporated by reference in such
registration statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means any special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to Section 4.
"Tranche I Closing" shall have the meaning set forth in
Section 1.3 of the AWVF Purchase Agreement.
2. Registration Rights.
The Company shall use its reasonable efforts to prepare and
file, within ten (10) business days of the Tranche I Closing, and in any event
on or prior to the Filing Date, with the Commission a "shelf" registration
statement covering all Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415. Such shelf registration statement shall
be on Form S-3 (except if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3, in which case such registration
shall be on another appropriate form in accordance herewith).
The Company shall (i) not permit any securities other than the
Registrable Securities to be included in the Registration Statement and (ii) use
its best efforts to cause the Registration Statement to be declared effective
under the Securities Act as promptly as possible after the filing thereof, but
in any event prior to the Effectiveness Date, and to keep such Registration
Statement continuously effective under the Securities Act until such date as is
the earlier of (x) the date when all Registrable Securities covered by such
Registration Statement have been sold or (y) the date on which the Registrable
Securities may be sold without any restriction pursuant to Rule 144(k) or any
successor provision as determined by the counsel to the Company pursuant to a
written opinion letter, addressed to the Company's transfer agent to
-4-
<PAGE> 5
such effect (the "Effectiveness Period"). If the Company is notified orally or
in writing by the Commission that the Commission has no comments with respect to
the Registration Statement (the "Commission Notice"), the Company shall use its
best efforts to cause the Registration Statement to be declared effective no
later than five (5) business days after receipt of the Commission Notice. If an
additional Registration Statement is required to be filed because the actual
number of shares of Common Stock into which the Warrants are exercisable exceeds
the number of shares of Common Stock initially registered in respect of the
Warrant Shares based upon the computation on the Closing Date or the Filing
Date, the Company shall have twenty (20) Business Days to file such additional
Registration Statement, and the Company shall use its best efforts to cause such
additional Registration Statement to be declared effective by the Commission as
soon as possible, but in no event later than thirty (30) days after filing.
If, during the Effectiveness Period, any of the Registrable
Securities have not been sold pursuant to the shelf registration statement
contemplated in the two preceding paragraphs and such Registrable Securities may
not be sold without any restriction pursuant to the Securities Act or the rules
and regulations promulgated thereunder, then a Holder of such Registrable
Securities may exercise demand registration rights with respect thereto by
delivering to the Company a written notice (a "Demand Registration Notice")
informing the Company of such exercise and specifying the number of Registrable
Securities to be offered by such Holder. Upon receipt of a Demand Registration
Notice, the Company will cause to be filed with the Commission as soon as
reasonably practicable after receiving the Demand Registration Notice a new
registration statement and related prospectus (a "New Registration Statement")
that complies as to form in all material respects with applicable Commission
rules providing for the sale by the exercising Holder of the Registrable
Securities, and agrees to use its best efforts to cause such new Registration
Statement to be declared effective by the Commission as soon as practicable.
3. Registration Procedures.
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Prepare and file with the Commission on or prior to
the Filing Date, a Registration Statement on Form S-3 (or if the Company is not
then eligible to register for resale the Registrable Securities on Form S-3 such
registration shall be on another appropriate form in accordance herewith) in
accordance with the method or methods of distribution set forth in such
Registration Statement and use its best efforts to cause the Registration
Statement to become effective and remain effective as provided herein; provided,
however, that not less than five (5) Business Days prior to the filing of the
Registration Statement or any related Prospectus or any amendment or supplement
thereto (including any document that would be incorporated therein by
reference), the Company shall (i) furnish to the Holders and any Special
Counsel, copies of all such documents proposed to be filed and shall use its
reasonable best efforts to reflect in each such document, when so filed with the
Commission, such comments as any Holder may reasonably propose and (ii) at the
request of any Holder cause its officers and directors, counsel
-5-
<PAGE> 6
and independent certified public accountants to respond to such inquiries as
shall be necessary, in the reasonable opinion of counsel to such Holders, to
conduct a reasonable investigation within the meaning of the Securities Act. The
Company shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the Holders of the Registrable
Securities or any Special Counsel shall reasonably object in writing within
three (3) Business Days of their receipt thereof.
(b) (i) Prepare and file with the Commission such
amendments, including post-effective amendments, to the Registration Statement
as may be necessary to keep the Registration Statement continuously effective as
to the applicable Registrable Securities for the Effectiveness Period and
prepare and file with the Commission such amendments in order to register for
resale under the Securities Act all of the Registrable Securities; (ii) cause
the related Prospectus to be amended or supplemented by any required Prospectus
supplement, and as so supplemented or amended to be filed pursuant to Rule 424
(or any similar provisions then in force) promulgated under the Securities Act;
(iii) respond as promptly as possible to any comments received from the
Commission with respect to the Registration Statement or any amendment thereto
and as promptly as possible provide the Holders and Special Counsel true and
complete copies of all correspondence from and to the Commission relating to the
Registration Statement; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all Registrable Securities covered by the Registration Statement
during the applicable period in accordance with the intended methods of
disposition by the Holders thereof set forth in the Registration Statement as so
amended or in such Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be
sold and any Special Counsel as promptly as possible (and, in the case of (i)(A)
below, not less than five (5) Business Days prior to such filing) and (if
requested by any such Person) confirm such notice in writing no later than one
(1) Business Day following the day (i)(A) when a Prospectus or any Prospectus
supplement or post-effective amendment to the Registration Statement is proposed
to be filed; (B) when the Commission notifies the Company whether there will be
a "review" of such Registration Statement and whenever the Commission comments
in writing on such Registration Statement and (C) with respect to the
Registration Statement or any post-effective amendment thereto, when the same
has become effective; (ii) of any request by the Commission or any other Federal
or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (v) of the occurrence of any event that requires any revisions to
the Registration Statement, Prospectus or other documents so that, in the case
of the Registration Statement or the Prospectus, as the case may be, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be
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<PAGE> 7
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of, (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) If requested by the Holders of the Registrable
Securities, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as the
Company reasonably agrees should be included therein and (ii) make all required
filings of such Prospectus supplement or such post-effective amendment as soon
as practicable after the Company has received notification of the matters to be
incorporated in such Prospectus supplement or post-effective amendment.
(f) Furnish to each Holder and any Special Counsel,
without charge, at least one conformed copy of each Registration Statement and
each amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference, and
all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such
documents with the Commission.
(g) Promptly deliver to each Holder and any Special
Counsel, without charge, as many copies of the Prospectus or Prospectuses
(including each form of prospectus) and each amendment or supplement thereto as
such Persons may reasonably request; and the Company hereby consents to the use
of such Prospectus and each amendment or supplement thereto by each of the
selling Holders in connection with the offering and sale of the Registrable
Securities covered by such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable
Securities, use its reasonable best efforts to register or qualify or cooperate
with the selling Holders and any Special Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder requests in writing, to keep each such registration or qualification
(or exemption therefrom) effective during the Effectiveness Period and to do any
and all other acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Securities covered by a Registration
Statement; provided, however, that the Company shall not be required to qualify
generally to do business in any jurisdiction where it is not then so qualified
or to take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or subject the Company to any
material tax in any such jurisdiction where it is not then so subject.
(i) Cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates shall be free
of all restrictive legends, and to enable such
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<PAGE> 8
Registrable Securities to be in such denominations and registered in such names
as any Holder may request at least two (2) Business Days prior to any sale of
Registrable Securities.
(j) Upon the occurrence of any event contemplated by
Section 3(c)(v), as promptly as possible, (i) prepare a supplement or amendment,
including a post-effective amendment, to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, and file any other required document so
that, as thereafter delivered, neither the Registration Statement nor such
Prospectus will contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and (ii) advise the Holders as to when they may resume
distribution of the Shares.
(k) Use its best efforts to cause all Registrable
Securities relating to such Registration Statement to be listed on the American
Stock Exchange and any other securities exchange, quotation system, market or
over-the-counter bulletin board, if any, on which similar securities issued by
the Company are then listed as and when required pursuant to the Purchase
Agreement.
(l) Comply in all material respects with all applicable
rules and regulations of the Commission and make generally available to its
security holders earning statements satisfying the provisions of Section 11(a)
of the Securities Act and Rule 158 not later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if such period
is a fiscal year) commencing on the first day of the first fiscal quarter of the
Company after the effective date of the Registration Statement, which statement
shall conform to the requirements of Rule 158.
(m) Request each selling Holder to furnish to the Company
information regarding such Holder and the distribution of such Registrable
Securities as is required by law to be disclosed in the Registration Statement,
and the Company may exclude from such registration the Registrable Securities of
any such Holder who fails to furnish such information within a reasonable time
after receiving such request.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v) or 3(n), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
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<PAGE> 9
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed.
(n) If (i) there is material non-public information
regarding the Company which the Company's Board of Directors (the "Board")
reasonably determines not to be in the Company's best interest to disclose and
which the Company is not otherwise required to disclose, or (ii) there is a
significant business opportunity (including, but not limited to, the acquisition
or disposition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other similar transaction) available to
the Company which the Board reasonably determines not to be in the Company's
best interest to disclose and which the Company would be required to disclose
under the Registration Statement, then the Company may postpone or suspend
filing or effectiveness of a registration statement for a period not to exceed
twenty (20) consecutive days, provided that the Company may not postpone or
suspend its obligation under this Section 3(n) for more than forty-five (45)
days in the aggregate during any 12 month period (each, a "Blackout Period");
provided, however, that no such postponement or suspension shall be permitted
for consecutive twenty (20) day periods, arising out of the same set of facts,
circumstances or transactions; and provided further, that if the Company decides
to postpone or suspend its obligation pursuant to this sentence, it shall give
written notice of such postment or suspension to the Holders to that effect. If
the Company shall give notice of the occurrence of any event of the kind
described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv) and 3(c)(v) or of the
postponement or suspension of the Registration Statement pursuant to this
Section 3(n), then the Effectiveness Period shall be extended by the number of
days during such period from and including the date of the giving of such notice
to and including the date when each Holder shall have received (i) the copies of
the supplement or amendment to the Registration Statement contemplated by
Section 3(j) (if an amended or supplemental prospectus is required) or (ii) the
Advice (if no supplement or amendment to the Registration Statement is
required).
4. Registration Expenses
All fees and expenses incident to the performance of or
compliance with this Agreement by the Company shall be borne by the Company
whether or not the Registration Statement is filed or becomes effective and
whether or not any Registrable Securities are sold pursuant to the Registration
Statement. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with the American Stock Exchange and each other securities exchange or
market on which Registrable Securities are required hereunder to be listed, (B)
with respect to filings required to be made with the Commission, (C) with
respect to filings required to be made under the NASD and the NASD Regulation,
Inc. and (D) in compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel for the Holders
in connection with Blue Sky qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions as the Holders of a majority of Registrable
Securities may designate)), (ii) printing expenses (including, without
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<PAGE> 10
limitation, expenses of printing certificates for Registrable Securities and of
printing prospectuses if the printing of prospectuses is requested by the
holders of a majority of the Registrable Securities included in the Registration
Statement), (iii) messenger, telephone and delivery expenses, (iv) fees and
disbursements of counsel for the Company and Special Counsel for the Holders, in
the case of the Special Counsel, to a maximum amount of $25,000, (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the transactions contemplated by this Agreement, including,
without limitation, the Company's independent public accountants (including the
expenses of any comfort letters or costs associated with the delivery by
independent public accountants of a comfort letter or comfort letters). In
addition, the Company shall be responsible for all of its internal expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any annual audit, and the fees and expenses incurred in connection with the
listing of the Registrable Securities on any securities exchange as required
hereunder.
5. Underwritten Registrations.
If any of the Registrable Securities covered by a Registration
Statement are to be sold in an underwritten offering, the investment banker or
investment bankers and manager or managers that will administer the offering
will be selected by the Holders, of a majority in aggregate principal amount of
such Registrable Securities included in such offering, subject to the consent of
the Company (which shall not be unreasonably withheld or delayed);
notwithstanding anything else herein to the contrary, such holders shall be
responsible for all underwriting commissions and discounts in connection
therewith. The Company shall comply in all material respects with the terms of
any underwriting agreements approved by the Holders.
No Holder may participate in any underwritten registration
hereunder unless such person (i) agrees to sell its Registrable Securities on
the basis reasonably provided in any underwriting arrangements agreed to by
Holders of a majority in aggregate principal amount of the Registrable
Securities included in such offering and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents agreed to by Holders of a majority in aggregate principal amount
of the Registrable Securities included in such offering and reasonably required
under the terms of such underwriting arrangements.
6. Indemnification
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents and employees of each of them, each
Person who controls (within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act) any such Holder and the officers, directors,
agents and employees of each such controlling Person, to the fullest extent
permitted by applicable law, from and against any and all losses, claims,
damages, liabilities,
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costs (including, without limitation, reasonable costs of preparation and
reasonable attorneys' fees) and expenses (collectively, "Losses"), as incurred,
arising out of or relating to any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or any
form of prospectus or in any amendment or supplement thereto or in any
preliminary prospectus, or arising out of or relating to any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in the light of the circumstances under which they were
made) not misleading, except to the extent, but only to the extent, that such
untrue statements or omissions are based solely upon information regarding such
Holder furnished in writing to the Company by such Holder expressly for use
therein, which information was reasonably relied on by the Company for use
therein or to the extent that such information relates to such Holder or such
Holder's proposed method of distribution of Registrable Securities and was
reviewed and expressly approved in writing by such Holder expressly for use in
the Registration Statement, such Prospectus or such form of Prospectus or in any
amendment or supplement thereto. Such indemnity shall remain in full force and
effect regardless of any investigation made by or on behalf of an Indemnified
Party and shall survive the transfer of the Registrable Securities by the
Holders.
(b) Indemnification by Holders. Each Holder shall,
severally and not jointly, indemnify and hold harmless the Company, the
directors, officers, agents and employees, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and
against all Losses, as incurred, arising solely out of or based solely upon any
untrue statement of a material fact contained in the Registration Statement, any
Prospectus, or any form of prospectus, or arising solely out of or based solely
upon any omission of a material fact required to be stated therein or necessary
to make the statements therein (in the case of any Prospectus or form of
prospectus or supplement thereto, in the light of the circumstances under which
they were made) not misleading, to the extent, but only to the extent, that such
untrue statement or omission is contained in any information so furnished in
writing by such Holder to the Company specifically for inclusion in the
Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus or such form of prospectus or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus. Notwithstanding anything to the contrary
contained herein, a Holder shall be liable under this Section 6(b) for only that
amount as does not exceed the net proceeds to such Holder as a result of the
sale of Registrable Securities pursuant to such Registration Statement.
(c) Conduct of Indemnification Proceedings. If any
Proceeding shall be brought or asserted against any Person entitled to indemnity
hereunder (an "Indemnified Party"), such Indemnified Party promptly shall notify
the Person from whom indemnity is sought (the "Indemnifying Party") in writing,
and the Indemnifying Party may assume the defense thereof,
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<PAGE> 12
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to give
such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except to the extent that such failure
shall have proximately and materially adversely prejudiced the Indemnifying
Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, if such Indemnified Party notifies
the Indemnifying Party in writing that it elects to employ separate counsel at
the expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
(d) Contribution. If a claim for indemnification under
Section 6(a) or 6(b) is unavailable or insufficient to an Indemnified Party,
then each Indemnifying Party, in lieu of indemnifying such Indemnified Party,
shall contribute to the amount paid or payable by such Indemnified Party as a
result of such Losses, in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party and Indemnified Party in connection
with the actions, statements or omissions that resulted in such Losses as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission of a
material fact, has been taken or made by, or relates to information supplied by,
such Indemnifying, Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
reasonably incurred by such party in connection with any Proceeding to the
extent such party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms. Notwithstanding anything to the contrary contained
herein, the Holders shall be liable or required to contribute
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under this Section 6(c) for only that amount as does not exceed the net proceeds
to such Holder as a result of the sale of Registrable Securities pursuant to
such Registration Statement. No party shall be liable for contribution with
respect to any action or claim settled without its written consent; provided
however, that such written consent was not unreasonably withheld.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 6(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
7. Rule 144.
As long as any Holder owns Common Stock, Warrants, Warrant
Shares, Outstanding Warrants or Outstanding Shares, the Company shall timely
file (or obtain extensions in respect thereof and file within the applicable
grace period) all reports required to be filed by, if requested in writing by
any Holders, the Company after the date hereof pursuant to Section 13(a) or
15(d) of the Exchange Act and to promptly furnish such Holders with true and
complete copies of all such filings. As long as any Holder owns Common Stock,
Warrants, Warrant Shares, Outstanding Warrants or Outstanding Shares, if the
Company is not required to file reports pursuant to Section 13(a) or 15(d) of
the Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
shall take such further action as any Holder may reasonably request, all to the
extent required from time to time to enable such Person to sell Common Stock and
Warrant Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including providing any legal opinions referred to in the
Purchase Agreement. Upon the written request of any Holder, the Company shall
deliver to such Holder a written certification of a duly authorized officer as
to whether it has complied with such requirements.
8. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or
by a Holder, of any of their obligations under this Agreement, each Holder or
the Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this
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Agreement. The Company and each Holder agree that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Agreement and hereby further agrees that, in
the event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. The Company has not, as
of the date hereof entered into any agreement that is currently in effect, nor
shall the Company, on or after the date of this Agreement, enter into any
agreement with respect to its securities that is inconsistent with the rights
granted to the Holders in this Agreement or otherwise conflicts with the
provisions hereof, except that the Company has entered into registration rights
agreements with certain holders of the Company's common stock (the "Existing
Agreements") which provide for demand and/or piggyback registration rights. With
respect to each of the Existing Agreements either (i) the agreement by its terms
does not provide the holder thereunder with any right to include shares in any
registration statement filed pursuant to this Agreement or (ii) the Company has
obtained a written waiver from the holders thereunder of any rights such holders
have to include shares in any registration statement filed pursuant to this
Agreement. Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.
(c) No Piggyback on Registrations. Neither the Company
nor any of its security holders (other than the Holders of Registrable
Securities) may include securities of the Company in the Registration Statement,
and the Company shall not after the date hereof enter into any agreement
providing such right to any of its security holders, unless the right so granted
is subject in all respects to the prior rights in full of the Holders set forth
herein, and is not otherwise in conflict with the provisions of this Agreement.
(d) Piggy-Back Registrations. If at any time when there
is not an effective Registration Statement covering (i) shares of Common Stock
or (ii) Warrant Shares, the Company shall determine to prepare and file with the
Commission a registration statement relating to an offering for its own account
or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the
Securities Act) or its then equivalents relating to equity securities to be
issued solely in connection with any acquisition of any entity or business or
equity securities issuable in connection with stock option or other employee
benefit plans, the Company shall send to each Holder of Registrable Securities
written notice of such determination and, if within thirty (30) days after
receipt of such notice, any such Holder shall so request in writing (which
request shall specify the Registrable Securities intended to be disposed of by
the Purchasers), the Company will use its best efforts to cause the registration
under the Securities Act of all Registrable Securities which the Company has
been so requested to register by the Holder, to the extent necessary to permit
the disposition of the Registrable Securities so to be registered, provided that
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if at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 8(d) for the same period as the delay in
registering such other securities. The Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered; provided, however, that the Company shall not
be required to register any Registrable Securities pursuant to this Section 8(d)
that are eligible for sale pursuant to Rule 144(k) of the Securities Act. In the
case of an underwritten public offering, if the managing underwriter should
reasonably object to the inclusion of the Registrable Securities in such
registration statement, then if the Company after consultation with the managing
underwriter should reasonably determine that the inclusion of such Registrable
Securities, would materially adversely affect the offering contemplated in such
registration statement, and based on such determination recommends inclusion in
such registration statement of fewer or none of the Registrable Securities of
the Holders, then (x) the number of Registrable Securities of the Holders
included in such registration statement shall be reduced pro-rata among such
Holders (based upon the number of Registrable Securities requested to be
included in the registration), if the Company after consultation with the
underwriter(s) recommends the inclusion of fewer Registrable Securities, or (y)
none of the Registrable Securities of the Holders shall be included in such
registration statement, if the Company after consultation with the
underwriter(s) recommends the inclusion of none of such Registrable Securities;
provided, however, that if securities are being offered for the account of other
persons or entities as well as the Company, such reduction shall not represent a
greater fraction of the number of Registrable Securities intended to be offered
by the Holders than the fraction of similar reductions imposed on such other
persons or entities (other than the Company).
(e) Failure to File Registration Statement. The Company
and the Purchasers agree that the Holders will suffer damages if the
Registration Statement is not filed on or prior to the Filing Date and not
declared effective by the Commission on or prior to the Effectiveness Date and
maintained in the manner contemplated herein during the Effectiveness Period or
if certain other events occur. The Company and the Holders further agree that it
would not be feasible to ascertain the extent of such damages with precision.
Accordingly, if (i) the Registration Statement is not filed on or prior to the
Filing Date, or is not declared effective by the Commission on or prior to the
Effectiveness Date (or in the event an additional Registration Statement is
filed because the actual number of shares of Common Stock into which the
Warrants are exercisable exceeds the number of shares of Common Stock initially
registered and is not filed and declared effective within the time periods set
forth in Section 2), or (ii) the Company fails to file with the Commission a
request for acceleration in accordance with Rule 12dl-2 promulgated under the
Exchange Act within five (5) Business Days of the date that the
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Company is notified (orally or in writing, whichever is earlier) by the
Commission that a Registration Statement will not be "reviewed," or not subject
to further review, or (iii) the Registration Statement is filed with and
declared effective by the Commission but thereafter ceases to be effective as to
all Registrable Securities at any time prior to the expiration of the
Effectiveness Period, without being succeeded within thirty (30) days by a
subsequent Registration Statement filed with and declared effective by the
Commission, or (iv) trading in the Common Stock shall be suspended or if the
Common Stock is delisted from the American Stock Exchange for any reason for
more than three (3) Business Days in the aggregate, or (v) the Company breaches
in a material respect any covenant or other material term or condition to this
Agreement, the Purchase Agreement (other than a representation or warranty
contained therein) or any other agreement, document, certificate or other
instrument delivered in connection with the transactions contemplated hereby and
thereby, and such breach continues for a period of thirty (30) days after
written notice thereof to the Company, or (vii) the Company has breached Section
3(n) of this Agreement (any such failure or breach being referred to as an
"Event"), the Company shall pay in cash as liquidated damages for such failure
and not as a penalty to each Holder an amount equal to 2% of such Holder's pro
rata share of the purchase price paid by all Holders for all shares of Common
Stock and Warrants purchased and then outstanding pursuant to the AWVF Purchase
Agreement and the Four Corners Purchase Agreement, as applicable (the
"Liquidated Damages Amount"). Payments to be made pursuant to this Section 8(e)
shall be due and payable in cash immediately upon demand. The parties agree that
the Liquidated Damages Amount represents a reasonable estimate on the part of
the parties, as of the date of this Agreement, of the amount of damages that may
be incurred by the Holders if the Registration Statement is not filed on or
prior to the Filing Date or has not been declared effective by the Commission on
or prior to the Effectiveness Date.
(f) Specific Enforcement, Consent to Jurisdiction.
(i) The Company and the Purchasers acknowledge
and agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to specific performance of the provisions of this
Agreement in addition to any other remedy to which any of them may be entitled
at law or in equity.
(ii) Each of the Company and the Purchaser (i)
hereby irrevocably submits to the jurisdiction of the United States District
Court sitting in the Southern District of New York and if jurisdiction of such
federal courts is not available, the state courts of New York, for the purposes
of any suit, action or proceeding arising out of or relating to this Agreement
or the Purchase Agreement and (ii) hereby waives, and agrees not to assert in
any such suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of such court, that the suit, action or proceeding is
brought in an inconvenient forum or that the venue of the suit, action or
proceeding is improper. Each of the Company and the Purchasers consents to
process being served in any such suit, action or proceeding by mailing a copy
thereof to such party at the address in effect for notices to it under this
Agreement and agrees that such
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<PAGE> 17
service shall constitute good and sufficient service of process and notice
thereof. Nothing in this Section 8(f) shall affect or limit any right to serve
process in any other manner permitted by law.
(g) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the same shall be in writing and
signed by the Company and each of the Holders. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders and that does not directly or
indirectly affect the rights of any other Holders may be given by Holders to
which such waiver or consent relates; provided, however, that the provisions of
this sentence may not be amended, modified, or supplemented except in accordance
with the provisions of the immediately preceding sentence.
(h) Notices. Any and all notices or other communications
or deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed to have been given on (i) the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice prior to 5:00 p.m., eastern standard time, on a
Business Day, (ii) the Business Day after the date of transmission, if such
notice or communication is delivered via facsimile at the facsimile telephone
number specified for notice later than 5:00 p.m., eastern standard time, on any
date and earlier than 11:59 p.m., eastern standard time, on such date, (iii) the
second Business Day following the date of mailing, if sent by nationally
recognized overnight courier service or (iv) actual receipt by the party to whom
such notice is required to be given, whichever shall first occur. The addresses
for such communications shall be with respect to each Holder at its address set
forth under its name on Schedule B attached hereto, or with respect to the
Company, addressed to:
flightserv.com
3343 Peachtree Road, N.E.
Suite 530
Atlanta, Georgia 30326
Attention: C. Beverly Lance
Facsimile No.: (402) 240-4101
or to such other address or addresses or facsimile number or numbers as any such
party may most recently have designated in writing to the other parties hereto
by such notice. Copies of notices to the Company shall be sent to Rogers &
Hardin LLP, 2700 International Tower, Peachtree Center, Atlanta, Georgia 30303,
Attention: Edward J. Hardin, Facsimile No.: (404) 525-2224. Copies of notices to
any Holder shall be sent to (i) Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue
of the Americas, New York, New York 10036, Attention: Christopher S. Auguste,
Esq., Facsimile No.: (212) 704-6288 and (ii) Simpson Thacher & Bartlett, 425
Lexington Avenue, New York, New York 10017, Attention: Gary I. Horowitz, Esq.,
Facsimile No.: (212) 455-2502.
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<PAGE> 18
(i) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties and their successors and
permitted assigns and shall inure to the benefit of each Holder and its
successors and assigns. The Company may not assign this Agreement or any of its
rights or obligations hereunder without the prior written consent of each
Holder. Each Purchaser may assign its rights hereunder in the manner and to the
Persons as permitted hereunder and under the Purchase Agreement.
(j) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder to any transferee of such Holder of all
or a portion of the shares of Common Stock or the Registrable Securities if: (i)
the Holder agrees in writing with the transferee or assignee to assign such
rights, and a copy of such agreement is furnished to the Company as promptly as
possible after such assignment, (ii) the Company is, as promptly as possible
after such transfer or assignment, furnished with written notice of (a) the name
and address of such transferee or assignee, and (b) the securities with respect
to which such registration rights are being transferred or assigned, (iii)
following such transfer or assignment the further disposition of such securities
by the transferee or assignees is restricted under the Securities Act and
applicable state securities laws, (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this Section, the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions of this Agreement. In addition, each Holder shall have the right
to assign its rights hereunder to any other Person with the prior written
consent of the Company, which consent shall not be unreasonably withheld.
Additionally, each Holder shall have the right to assign its rights hereunder to
any Affiliate of such Holder without the consent to the Company. The rights to
assignment shall apply to the Holders (and to subsequent) successors and
assigns.
(k) Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(l) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
(m) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(n) Severability. If any term, provision, covenant or
restriction of this Agreement is held to be invalid, illegal, void or
unenforceable in any respect, the remainder of the terms, provisions, covenants
and restrictions set forth herein shall remain in full force and effect and
shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their reasonable efforts to find and employ an alternative means to
achieve the same or
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<PAGE> 19
substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(o) Headings. The headings herein are for convenience
only, do not constitute a part of this Agreement and shall not be deemed to
limit or affect any of the provisions hereof.
(p) Within two (2) business days after any Registration
Statement which includes the Registrable Securities is ordered effective by the
Commission, the Company shall deliver, or shall cause legal counsel for the
Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Holders whose Registrable Securities are included in such
Registration Statement) confirmation that such Registration Statement has been
declared effective by the Commission in the form attached hereto as Exhibit A.
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<PAGE> 20
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be duly executed by their respective authorized
persons as of the date first indicated above.
FLIGHTSERV.COM
By:
------------------------------------
Name:
Title:
ACQUA WELLINGTON VALUE FUND, LTD.
By:
------------------------------------
Name:
Title:
FOUR CORNERS CAPITAL, LLC
By:
------------------------------------
Name:
Title:
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<PAGE> 21
EXHIBIT A
FORM OF NOTICE OF EFFECTIVENESS
OF REGISTRATION STATEMENT
[TRANSFER AGENT]
ATTN:_____________
RE: FLIGHTSERV.COM
Ladies and Gentlemen:
We are counsel to flightserv.com, a Delaware corporation (the
"COMPANY"), and have represented the Company in connection with that certain
Common Stock Purchase Agreement (the "PURCHASE AGREEMENT") entered into by and
among the Company and the entity a party thereto (the "HOLDER") pursuant to
which the Company issued to the Holder shares of its common stock, par value
$.01 per share (the "COMMON STOCK"), and warrants to purchase shares of the
Common Stock (the "WARRANTS"). Pursuant to the Purchase Agreement, the Company
has also entered into a Registration Rights Agreement with the Holder (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Company agreed, among
other things, to register the Registrable Securities (as defined in the
Registration Rights Agreement), including the shares of Common Stock issuable
upon exercise of the Warrants, under the Securities Act of 1933, as amended (the
"1933 ACT"). In connection with the Company's obligations under the Registration
Rights Agreement, on ____________ ___, 2000, the Company filed a Registration
Statement on Form (File No. 333-_____________) (the "REGISTRATION STATEMENT")
with the Securities and Exchange Commission (the "SEC") relating to the
Registrable Securities which names each of the Holders as a selling stockholder
thereunder.
In connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an order
declaring the Registration Statement effective under the 1933 Act at [ENTER TIME
OF EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge,
after telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.
Very truly yours,
[COMPANY'S COUNSEL]
cc: [LIST NAMES OF HOLDERS]
<PAGE> 1
EXHIBIT 99.1
flightserv.com ANNOUNCES $59.7 MILLION EQUITY FINANCING
ATLANTA, Jan. 24 /PRNewswire/-- flightserv.com(TM) (Amex: FSW-news), announced
today that is has closed the sale of an equity financing package of restricted
common stock and warrants with total proceeds of $59.7 million, assuming the
institutional investors exercise all their warrants. The transaction provides
for an initial investment of $11 million. Funds from the private equity
placements will be used to expand the Company's Internet-powered private jet
aviation travel services business.
The lead institutional investor for the financing is Acqua Wellington Asset
Management, LLC, a global family of funds targeted at high growth investment
opportunities in mid and small cap companies in domestic and global markets.
Acqua Wellington is affiliated with one of the world's largest financial
services companies.
In making the announcement, C. Beverly Lance, the Company's President & CEO
remarked: "This equity financing provides flightserv.com(TM) with a solid
foundation from which we will continue to build our Internet-powered business.
These proceeds should allow the Company to be established as the leading
provider of private jet aviation travel services in cyberspace and to begin
rolling out our unique and proprietary customer-focused services."
flightserv.com(TM) is building a premier brand focused on providing Internet
access to private jet flight and related travel services. According to reports
published by Forrester Research and PhoCus Wright, an estimated $550 billion is
spent each year on travel in the United States with the online segment
currently estimated at only $5 billion. The online travel market is expected to
grow to $38 billion by 2003. The National Business Aviation Association, an
industry trade group, estimates that private aviation carried more than 145
million passengers and accounted for more than $51 billion in total economic
activity in 1998.
This release contains forward-looking statements within the meaning of Section
21A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Although the Company believes the expectations reflected in the
forward-looking statements and assumptions upon which forward-looking
statements are based are reasonable it can give no assurance that such
expectations and assumptions will prove to have been correct. See the Company's
Annual Report on Form 10-KSB for additional statements concerning important
factors, such as demand for products, manufacturing costs and competition, that
could cause actual results to differ materially from the Company's expectations.
SOURCE: flightserv.com
