<PAGE>
As filed with the Securities and Exchange Commission on June 25, 1997
Registration No. 333-
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_____________________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_____________________
WESTERN PACIFIC AIRLINES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 86-0758778
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
2864 South Circle Drive
Colorado Springs, Colorado 80906
(719) 579-7737
(Address, including zip code and telephone number, including area code, of
Registrant's principal executive offices)
Robert A. Peiser
President and Chief Executive Officer
Western Pacific Airlines, Inc.
2864 South Circle Drive
Colorado Springs, Colorado 80906
(719) 579-7737
Fax: (719) 527-7481
(Name, Address, including zip code and telephone number,
including area code, of agent for service)
_____________________
with copies to:
Allan J. Reich, Esq.
D'Ancona & Pflaum
30 North LaSalle Street
Chicago, Illinois 60602
(312) 580-2000
Fax: (312) 580-0923
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount to be Offering Price Aggregate Offering Registration
Securities to be Registered Registered (1) per Share (2) Price (2) Fee (2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.001 per share (3) 4,825,568 shares $ 5.750 $27,747,016.00 $ 8,409.00
Common Stock, par
value $.001 per share (3)(4) 4,268,375 shares $ 5.750 $24,543,156.25 $ 7,438.00
--------- -------------- ----------
Total 9,093,943 shares $52,290,172.25 $15,847.00
==================================================================================================================
</TABLE>
(1) Based on an estimate of the maximum number of shares of Common Stock of the
Registrant issuable in connection with the exercise of the warrants,
convertible securities and purchase rights as described herein.
(2) Estimated pursuant to Rule 457(c) solely for the purpose of calculating the
registration fee, based on the average of the high and low sale prices of
the Registrant's Common Stock on June 23, 1997, as reported on the Nasdaq
National Market.
(3) In addition to the estimated number of shares set forth in the table, the
amount to be registered includes a presently indeterminate number of shares
issuable in connection with the exercise of the warrants, convertible
securities and purchase rights as described herein or otherwise in respect
of such securities as such number may be adjusted as a result of stock
splits, stock dividends and antidilution provisions (including floating
rate conversion prices) in accordance with Rule 416.
(4) For the purpose of estimating the number of shares of Common Stock
issuable upon the conversion of the Series C Preferred Stock, the
calculation of the number of shares being offered is based on an estimate
of 200% of the shares of Common Stock currently issuable at a conversion
price of $4.685625, which price is 80.0% of $5.85703125, the average
closing bid price on the Nasdaq National Market of the twenty consecutive
trading days preceding June 24, 1997. The actual number of shares of
Common Stock issuable upon conversion of the Series C Preferred Stock on
June 24, 1997 was 1,897,055.
______________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
===============================================================================
<PAGE>
PRELIMINARY PROSPECTUS DATED JUNE 25, 1997
SUBJECT TO COMPLETION
PROSPECTUS
5,435,542 SHARES OF COMMON STOCK
WESTERN PACIFIC AIRLINES, INC.
This prospectus ("Prospectus") relates to the following shares of Common
Stock, $0.001 par value (the "Common Stock"), of Western Pacific Airlines, Inc.,
a Delaware corporation ("Western Pacific"):
1. Up to 1,325,000 shares of Common Stock issuable to Hunt Petroleum of
Texas, Inc., a Delaware corporation ("Hunt") upon the exercise of
warrants (the "Hunt Warrants"), of which warrants to purchase 136,120
shares are currently vested and exercisable;
2. Up to 1,325,000 shares of Common Stock issuable to GFI Company, a Nevada
corporation ("GFI") upon the exercise of warrants (the "GFI Warrants"), of
which warrants to purchase 136,120 shares are currently vested and
exercisable;
3. 114,286 shares of Common Stock issued by Western Pacific to Perot
Systems Corporation ("Perot") pursuant to that certain Information
Technology Agreement, dated as of April 1, 1997 (the "Technology
Agreement");
4. Any additional shares of Common Stock issued by Western Pacific to Perot
pursuant to the terms of the Technology Agreement, up to an estimated
aggregate number of 650,000 shares of Common Stock;
5. Up to 250,000 shares of Common Stock issuable to Mercury Air Group, Inc.,
a New York corporation ("Mercury") upon the exercise of warrants (the
"Mercury Warrants"), of which warrants to purchase 200,000 shares are
currently exercisable;
6. Up to 4,268,375 shares of Common Stock issuable to the holders of Western
Pacific's Series C Convertible Preferred Stock, $0.001 par value (the
"Series C Preferred Stock") upon conversion thereof (which amount
represents an estimate of 200% of the maximum number of shares of Common
Stock issuable upon conversion of the Series C Preferred Stock, based
upon the average closing bid price for the twenty trading days preceding
June 24, 1997);
7. Up to 426,666 shares of Common Stock issuable to the holders of those
certain A-Warrants (the "A-Warrants") upon exercise thereof (which amount
represents 200% of the shares of Common Stock issuable upon exercise of
the A-Warrants as of the date of this Prospectus) of which 213,333 shares
of Common Stock are issuable upon complete exercise of the A-Warrants
as of the date of this Prospectus; and
8. Up to 734,616 shares of Common Stock issuable to the holders of those
certain B-Warrants (the "B-Warrants") upon exercise thereof (which amount
represents 200% of the shares of Common Stock issuable upon exercise of
the B-Warrants as of the date of this Prospectus) of which 367,308 shares
of Common Stock are issuable upon the complete exercise of the B-Warrants
as of the date of this Prospectus.
Hunt, GFI, Perot, Mercury, the holders of the Series C Preferred Stock, the
holders of A-Warrants and the holders of B-Warrants are sometimes referred to in
this Prospectus as the
<PAGE>
"Selling Stockholders," and the shares of Common Stock to be sold by the
Selling Stockholders pursuant to this Prospectus are sometimes referred to as
the "Shares." The Selling Stockholders have not advised Western Pacific of
any specific plans for the distribution of the Shares covered by this
Prospectus, but it is anticipated that the Shares will be sold from time to
time by the Selling Stockholders or by certain pledgees, donees, transferees,
or other successors in interest primarily in transactions (which may include
block transactions) on the Nasdaq National Market, or such other market on
which Western Pacific's securities may from time to time be trading at the
market price then prevailing, although sales may also be made in negotiated
transactions or otherwise. See "Plan of Distribution."
Western Pacific will receive the proceeds from the exercise of the Hunt
Warrants, the GFI Warrants, the Mercury Warrants, the A-Warrants and the
B-Warrants and will receive the benefit of services rendered by Perot under
the Technology Agreement, but will not receive any proceeds from the sale by
the Selling Stockholders of the Shares offered hereby. The Selling
Stockholders will not bear any of the expenses related to this registration.
All of such expenses, estimated to be approximately $33,000, will be borne by
Western Pacific.
The exact number of shares of Common Stock to be issued by Western
Pacific to the Selling Stockholders cannot be ascertained as of the date of
this Prospectus and will be stated in a supplement or supplements to this
Prospectus to be filed with the Securities and Exchange Commission promptly
after the determination of said number and prior to any resale of such
additional shares of Common Stock by any of the Selling Stockholders. See
"Description of Securities" below for a description of the warrants, purchase
rights and options referred to above.
Western Pacific's Common Stock is traded on the Nasdaq National Market
under the symbol "WPAC." On June 24, 1997, the last reported sale price of
Western Pacific's Common Stock on the Nasdaq National Market was $5.5625 per
share.
_________________________
SEE "RISK FACTORS" BEGINNING ON PAGE 8 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK
OFFERED HEREBY.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
________________________
The date of this Prospectus is ____________, 1997.
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO
3
<PAGE>
BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
4
<PAGE>
NO DEALER, SALESMAN OR ANY OTHER PERSON IS AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING
NOT CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION SHOULD NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY WESTERN PACIFIC OR ANY SELLING STOCKHOLDER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN
OFFER TO PURCHASE, ANY OF THE SECURITIES OFFERED BY THIS PROSPECTUS IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION OF AN
OFFER OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER
OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE OF THE
SECURITIES MADE UNDER THIS PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF WESTERN
PACIFIC SINCE THE DATE OF THIS PROSPECTUS OR THAT THE INFORMATION CONTAINED
HEREIN OR THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN ARE CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE.
Table of Contents
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Documents Incorporated by Reference. . . . . . . . . . . . . . . . . . . . 6
Western Pacific. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Certain Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Description of Securities. . . . . . . . . . . . . . . . . . . . . . . . . 16
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
5
<PAGE>
AVAILABLE INFORMATION
Western Pacific is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and certain other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information are available for
inspection and copying at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington,
D.C. 20549, and at the regional offices of the Commission located at 7 World
Trade Center, New York, New York 10048, and 500 West Madison Street, Suite
1400, Chicago, Illinois 60601. Copies of such materials can also be obtained
from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Judicial Plaza, Washington, D.C. 20549 at prescribed rates. The shares
of Western Pacific's Common Stock are listed on the Nasdaq National Market
and, as such, the periodic reports, proxy statements and other information
filed by Western Pacific should be available for inspection at the offices of
the National Association of Securities Dealers, Inc., 1935 K Street, N.W.,
Washington, D.C. 20006. In addition, electronic copies of the Registration
Statement and all related exhibits and schedules may be accessed on the World
Wide Web via the Commission's EDGAR database at its website
(http://www.sec.gov).
Western Pacific has filed this Registration Statement on Form S-3 with
the Commission under the Securities Act of 1933, as amended (the "Securities
Act"), with respect to the Shares to which this Prospectus relates. This
Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Any statements contained herein
or in any document incorporated by reference herein concerning the provisions
of any contract or other document are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement, each such statement being
qualified in its entirety by such reference. The Registration Statement (and
exhibits thereto) may be inspected without charge at the offices of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and copies
thereof may be obtained from the Commission at prescribed rates. The
Registration Statement and any amendments thereto, including exhibits filed
as a part thereof, are available for inspection and copying as set forth
above.
DOCUMENTS INCORPORATED BY REFERENCE
THIS PROSPECTUS INCORPORATES BY REFERENCE DOCUMENTS RELATING TO WESTERN
PACIFIC WHICH ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. DOCUMENTS
RELATING TO WESTERN PACIFIC (OTHER THAN EXHIBITS TO SUCH DOCUMENTS UNLESS
SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE) ARE AVAILABLE TO
ANY PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM THIS PROSPECTUS IS
DELIVERED, ON WRITTEN OR ORAL REQUEST, WITHOUT CHARGE, FROM THE PRINCIPAL
EXECUTIVE OFFICES OF WESTERN PACIFIC AIRLINES, INC., 2864 SOUTH CIRCLE DRIVE,
COLORADO SPRINGS, COLORADO 80906, TELEPHONE: (719) 579-7737;
TELECOPIER (719) 527-7481.
6
<PAGE>
The following documents relating to Western Pacific are incorporated by
reference herein:
1. Annual Report on Form 10-K for the year ended December 31, 1996.
2. Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1997.
3. Western Pacific's Current Report on Form 8-K for an event dated January 31,
1997.
4. Western Pacific's Current Report on Form 8-K for an event dated June 5,
1997.
5. The description of Western Pacific's Common Stock contained in the
registration statement on Form 8-A dated November 17, 1995, filed under
Section 12(g) of the Exchange Act, together with any amendments or reports
filed for the purpose of updating such description.
All documents filed by Western Pacific with the Commission pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date hereof
and prior to the termination of the offering made by this Prospectus shall be
deemed to be incorporated by reference herein and shall be a part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated by reference herein or contained in this Prospectus shall be
deemed to be modified or superseded for purposes hereof to the extent that a
statement contained herein (or in any other subsequently filed document which
also is incorporated by reference herein) or in a supplement hereto modifies
or supersedes such statement. Any statement so modified or superseded shall
not be deemed to constitute a part hereof except as so modified or superseded.
7
<PAGE>
WESTERN PACIFIC
Western Pacific operates a low-cost, low-fare airline from its hub at the
Colorado Springs Airport. Western Pacific commenced flight operations on
April 28, 1995, with two Boeing 737-300 aircraft and provided six daily round
trips between Colorado Springs and five cities. Currently, Western Pacific
operates up to 37 daily round trips between Colorado Springs and Seattle, San
Francisco, Portland, Los Angeles, San Diego, Phoenix, Houston, Dallas/Ft.
Worth, Oklahoma City, Tulsa, Kansas City, Atlanta, Indianapolis, Orlando,
Chicago-Midway, Washington-Dulles and Newark. On May 5, 1997, the Company
announced its plans to relocate a substantial portion of its operations to
Denver International Airport commencing on June 29, 1997. During 1996,
Western Pacific assisted in the start-up of an affiliated regional carrier,
Mountain Air Express, Inc. ("Mountain Air Express" or "MAX") to carry traffic
into and out of Colorado ski markets and other smaller travel markets that
cannot support frequent jet aircraft service. MAX, which commenced flight
operations on December 15, 1996, is a separate company from Western Pacific
with its own operating certificate and management. Western Pacific's present
ownership in MAX is approximately 57% of the outstanding voting stock. In
November 1996, Colorado Springs Car Rental, Inc., a Thrifty Rent-A-Car
franchise and a 100% owned subsidiary of Western Pacific, commenced
operations from its base in Colorado Springs. Western Pacific, MAX, and
Colorado Springs Car Rental, Inc. are referred to collectively as the
"Company."
RISK FACTORS
EXCEPT FOR HISTORICAL INFORMATION CONTAINED IN THIS PROSPECTUS, THE
MATTERS DISCUSSED HEREIN CONTAIN FORWARD-LOOKING STATEMENTS MADE PURSUANT TO
THE SAFE HARBOR PROVISIONS OF SECTION 27A OF THE SECURITIES ACT AND SECTION
21E OF THE EXCHANGE ACT, INCLUDING MANAGEMENT'S EXPECTATIONS REGARDING THE
COMPANY'S RESERVES, FUTURE PROFITABILITY, PLANNED DATES FOR COMMENCEMENT OF
OPERATIONS AT AIRPORTS, AND ANTICIPATED COSTS AND EXPENDITURES. SUCH
FORWARD-LOOKING STATEMENTS ARE INHERENTLY UNCERTAIN, AND INVESTORS MUST
RECOGNIZE THAT ACTUAL RESULTS MAY DIFFER FROM MANAGEMENT'S EXPECTATIONS.
KEY FACTORS IMPACTING CURRENT AND FUTURE OPERATIONS OF THE COMPANY INCLUDE
THE FACTORS DISCUSSED BELOW.
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS
AND THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS PRIOR TO MAKING AN
INVESTMENT DECISION.
HISTORIC OPERATING LOSSES. Western Pacific began scheduled flight
operations on April 28, 1995, and Mountain Air Express began scheduled flight
operations on December 15, 1996. During the period from the Company's
inception through May 31, 1997, the Company incurred net losses totaling
approximately $63.7 million. Given Western Pacific's limited operating
history, there can be no assurances that the Company will be profitable in
the future.
8
<PAGE>
AVAILABILITY OF WORKING CAPITAL AND FUTURE FINANCING SOURCES. Neither
Western Pacific nor Mountain Air Express have generated positive cash flow
consistently since inception. The Company had a deficit in consolidated
working capital at March 31, 1997 of $16.6 million. The airline industry is
extremely capital intensive, especially for a growing carrier, with payments
for new aircraft and extensive maintenance requirements for the existing
fleet. The Company is evaluating additional sources of working capital and
financing sources, but there is no assurance that additional sources of
working capital will be available at competitive rates and conditions.
Although management believes that the Company will be able to secure such
additional capital, if the Company is unable to do so, cash flow from
operations might not be sufficient to cover the Company's financial
obligations during 1997.
LOW MARGIN BUSINESS AND HIGH OPERATING LEVERAGE. The airline industry is
characterized by low gross profit margins and high fixed costs. The expenses
of each flight do not vary significantly with the number of passenger carried
and, therefore, a relatively small change in the number of passengers or in
the pricing or traffic mix could have a disproportionate effect on operating
and financial results. Accordingly, a minor shortfall from expected revenue
levels could have a material adverse effect on the Company's growth or its
financial performance.
ENTRY INTO DENVER MARKET. Western Pacific is based in Colorado Springs
as a result of the initial belief that it could function effectively as an
alternative airport to Denver International Airport ("DIA") for the
Denver/Colorado Springs market. However, with low fare service available out
of DIA offered by Frontier Airlines, Inc. ("Frontier"), the Company believes
that fewer Denver market passengers are willing to make the drive to Colorado
Springs Airport. In addition, United Airlines has begun to match the fare
offerings of Western Pacific and Frontier in selected markets, which further
reduced the incentive for passengers to make the drive from Denver to
Colorado Springs. At the same time, carriers who had served the Colorado
Springs market only on a limited basis prior to Western Pacific's
commencement of operations at Colorado Springs Airport, began to schedule
additional flights. All of these factors had a dampening effect on the
traffic available to Western Pacific at Colorado Springs Airport. Therefore,
as airport capacity increased, it became increasingly difficult to stimulate
additional traffic at acceptable fare levels. The traffic erosion occurred
in spite of the fact that average fares continued to decline on a year over
year basis. The combination of all these factors has led to management's
conclusion that given current capacity and traffic levels in Colorado
Springs, Western Pacific's prospects for significant growth in that market
could be significantly limited. With this in mind, management plans to move
a substantial portion of the Company's flight operations to DIA in late June,
1997. There can be no assurance, however, that once completed, any such
entry into the Denver market will allow management to operate the Company's
business on a profitable basis.
COST OF FUEL. Western Pacific's average cost per gallon of fuel
(inclusive of management fees and taxes) has increased from 73.13 cents for
the three months ended March 31, 1996 to 83.7 cents for the three months
ended March 31, 1997. At Western Pacific's current consumption rate, each
one cent increase in the price of fuel increases Western Pacific's monthly
fuel expense by approximately $40,000. In response to these increases, some
carriers have begun to assess a fuel surcharge to be added to their base
fares to cover these costs. Although Western Pacific has considered
implementing such surcharges, there can be no assurance that if such
9
<PAGE>
measures are implemented, Western Pacific would be able to successfully pass
along any increases in the price of fuel to its customers.
COMPETITION. The airline industry is highly competitive. Western Pacific
competes with other airlines which are larger and have substantially greater
name recognition and greater resources. Western Pacific may also face
competition from other airlines which may also begin serving the markets that
Western Pacific currently serves and markets it may serve in the future, and
from new low-cost airlines that may be formed to compete in the low-fare
market (including those formed by other major airlines) as well as from
ground transportation alternatives. In addition to traditional competition
among domestic carriers, the industry may be subject to new forms of
competition in the future such as video teleconferencing and other methods of
electronic communication that may add a new dimension of competition to the
industry as businesses seek lower cost substitutes for air travel. Since
Western Pacific commenced service, United Airlines ("United"), American
Airlines ("American"), Delta Air Lines ("Delta"), Continental Airlines
("Continental"), Northwest Airlines ("Northwest"), America West Airlines
("America West") and Reno Air, Inc. ("Reno") have inaugurated or increased
service between Colorado Springs and cities served by Western Pacific as well
as other cities that Western Pacific may serve in the future and, in some
cases, have substantially reduced fares to match or undercut the fares
charged by Western Pacific on those routes. Western Pacific continues to face
substantial competitive challenges from United and its low-cost subsidiary,
Shuttle by United, as well as other carriers such as American, Delta, and
Continental operating at DIA. Although management believes that it can
operate at a lower cost than larger air carriers, the resources of larger
carriers are vast in comparison to Western Pacific's resources. In the event
such carriers were to aggressively reduce fares on Western Pacific's routes
to levels at which Western Pacific could not sustain profitable operations,
and were to maintain such reduced fares for an extended period, such carriers
could withstand sustained losses for a longer period of time than Western
Pacific. Further, there can be no assurance that Western Pacific will be able
to withstand competitive pressure from United, other carriers, including
low-cost carriers, or from new carriers that may enter the Colorado Springs
and/or DIA market in the future.
CYCLICAL NATURE OF AIRLINE INDUSTRY; SEASONALITY. The airline industry
is highly sensitive to general economic conditions. Because a substantial
portion of airline travel (business and personal) is discretionary, the
industry tends to experience severe adverse financial results during general
economic downturns. Any prolonged general reduction in airline passenger
traffic may adversely affect the Company. In addition, the airline industry
tends to be seasonal in nature. The Company expects that in its case, based
on the experience of certain other airlines, April and May and September and
October of each year are periods with lower load factors and yields.
CONSUMER CONCERN REGARDING OPERATING SAFETY. Western Pacific believes
that the highly publicized safety issues that led to the Federal Aviation
Administration ("FAA") grounding of ValuJet in June 1996, have caused some
consumers to question the operating safety of all start-up airlines. During
1996, Western Pacific passed a rigorous National Aeronautical Safety
Inspection audit conducted by the FAA and passed an independently
commissioned comprehensive safety audit conducted by the Flight Safety
Foundation. However, there can be no assurance that the FAA will not take
more restrictive actions against Western Pacific because of its start-up
status. Such actions by the FAA could increase operating costs or cause
Western
10
<PAGE>
Pacific to temporarily cease operations altogether and thereby have the
effect of reducing the future earnings potential of the Company.
UNIONIZATION OF EMPLOYEE GROUPS. Western Pacific's mechanics voted to
join the International Brotherhood of Teamsters union in May 1996. No other
work groups are currently represented by, or have voted to be represented by,
a union. While the mechanics' action has not altered Western Pacific's work
rules or increased Western Pacific's costs, there can be no assurance that
such action will not result in future changes or that other employee groups
will not vote for union representation, nor that labor costs for those groups
represented by a union will not increase.
DEPENDENCE ON MANAGEMENT. The Company is dependent on the active
participation of Robert A. Peiser, President and Chief Executive Officer, and
other senior executives of Western Pacific. There can be no assurance that
the loss of the services of any of Western Pacific's executive officers,
particularly Mr. Peiser, would not adversely affect the business of the
Company and its future prospect unless and until other suitable personnel
could be employed.
NO DIVIDENDS. Western Pacific presently intends to retain future earnings
for its operations and expansion of its business. Western Pacific has never
declared or paid any dividends on its Common Stock and has no plans to do so
in the foreseeable future. Any determination to pay cash dividends in the
future will be at the discretion of Western Pacific's Board of Directors and
will be dependent upon Western Pacific's results of operations, financial
condition and other factors deemed relevant at the time by the Board of
Directors. In addition, the holders of Western Pacific's Series B Preferred
Stock, $0.001 par value (the "Series B Preferred Stock") are entitled to
receive, when, as and if authorized by the Board of Directors, quarterly cash
dividends in an amount $2.50 per share. Such dividends cumulate whether or
not authorized by the Board of Directors and whether or not in any period
there are funds of Western Pacific legally available for the payment of such
dividends. The payment of dividends on the Series B Preferred Stock will
take priority over the payment of dividends to holders of Common Stock. On
April 18, 1997, the Board of Directors declared a dividend of $188,888.88 on
the Series B Preferred Stock, which was paid on April 28, 1997. Moreover,
the Certificate of Designations, Rights and Preferences for Series C
Preferred Stock provides that so long as any Series C Preferred Stock remains
outstanding, no dividends may be declared or paid upon the Common Stock (or
any other class or series of stock ranking, by its terms, junior to the
Series C Preferred Stock) unless at the time the Company declares or pays
such dividend, it shall have had annual net income in the previous fiscal
year of greater than $50.0 million. Finally, under the terms of the
Agreement Relating to Brokering of Guaranty between the Company and Mercury,
until such time as Mercury's promissory note to Compass Bank has been fully
paid, the Company may only pay dividends (i) to the holders of Series B
Preferred Stock in accordance with the Certificate of Designation,
Preferences and Rights of Series B Preferred Stock, and (ii) to any other
holders of preferred shares that may subsequently be issued by Western
Pacific prior to, or on a parity with, the Series B Preferred Stock at a rate
not to exceed 15% per annum, so long as such other preferred shares have been
fully paid for in cash or cash equivalents. See "Certain Transactions--The
Mercury Air Transaction."
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<PAGE>
ANTI-TAKEOVER PROVISIONS. Certain provisions of Delaware law, the
Certificate of Incorporation and Western Pacific's Bylaws, as amended, could
have the effect of making it more difficult for a third party to acquire, or
of discouraging a third party from attempting to acquire, control of Western
Pacific. Among other things, such provisions establish staggered terms for
members of the Board of Directors and require advance notice for director
nominations. In addition, the Certificate of Designations, Rights and
Preferences of the Series C Preferred Stock provides that in the event that
Robert A. Peiser shall, at any time prior to May 31, 1998, cease to be
employed on a full-time basis as the Chief Executive Officer of the Company,
the Company shall, within ten (10) business days of the date on which the
holders of 66 2/3% of the outstanding Series C Preferred Stock so request,
purchase the outstanding shares of Series C Preferred Stock for designated
amounts. These provisions and the prohibition against certain business
combinations contained in Section 203 of the Delaware General Corporation Law
("DGCL") could have the effect of delaying, deferring or preventing a change
in control or the removal of existing management of Western Pacific.
EFFECT OF OUTSTANDING WARRANTS AND SERIES C PREFERRED STOCK. As of the
date of this Prospectus, there are outstanding warrants to purchase an
aggregate of 3,506,932 shares of Western Pacific's Common Stock, and, as of
June 24, 1997, the Series C Preferred Stock is convertible into 1,897,055
shares of Common Stock , but this amount may prove to be significantly
greater in light of a variety of factors, including a decrease in the average
market price for the Common Stock. See "Description of Securities--Series C
Preferred Stock." Purchasers of Common Stock may therefore experience
substantial dilution of their investment in the event that the holders of the
Series C Preferred Stock elect to convert their holdings of such stock into
shares of Common Stock. For the life of such warrants and the Series C
Preferred Stock, the holders thereof have been given the opportunity to
profit from a rise in the market price of the Common Stock, with a resulting
dilution in the interest of holders of Common Stock. The terms on which the
Company will be able to obtain additional capital during the life of such
warrants and Series C Preferred Stock may be adversely affected by the terms
of such warrants and Series C Preferred Stock. In addition, holders of such
securities may have an incentive to exercise their rights at a time when the
Company would, in all likelihood, be better able to obtain any needed capital
by a new offering of securities on terms more favorable to the Company than
those provided in such warrants and the Series C Preferred Stock.
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<PAGE>
USE OF PROCEEDS
Western Pacific will not receive any of the proceeds from the sale by the
Selling Stockholders of the Shares offered hereby. Any proceeds received by
Western Pacific upon the exercise of the warrants and options described below
under the heading "Description of Securities" will be added to Western
Pacific's working capital.
CERTAIN TRANSACTIONS
THE HUNT/GFI TRANSACTION
On January 31, 1997, Western Pacific entered into a series of
transactions culminating in the sale of shares of Western Pacific's Series B
Preferred Stock, par value $0.001 per share (the "Series B Preferred Stock")
to Hunt and GFI (the "Hunt/GFI Transaction"). As the first step of the
Hunt/GFI Transaction (i) each of Hunt and GFI loaned to Western Pacific the
principal amount of $10,000,000 (which included $2,500,000 previously loaned
by each of Hunt and GFI to Western Pacific in December 1996) evidenced by two
promissory notes in the principal amount of $10,000,000 (the "Notes"), and
(ii) Western Pacific agreed to sell Hunt and GFI an aggregate of 100,000
shares of Series B Preferred Stock. At that time, Western Pacific's Board of
Directors authorized the creation of the Series B Preferred Stock.
At the closing of the Hunt/GFI Transaction, each of Hunt and GFI
purchased 100,000 shares of Western Pacific's Series B Preferred Stock at a
purchase price of $100 per share. In addition, Western Pacific issued to
each of Hunt and GFI warrants (the Hunt Warrants and GFI Warrants) to
purchase, subject to certain vesting conditions, an aggregate of 2,650,000
shares of Common Stock, at a price of $0.01 per share. Payment of the
purchase price for the Series B Preferred Stock was made by cancellation of
the Notes.
THE PEROT TRANSACTION
Effective April 1, 1997 (the "Effective Date"), Western Pacific entered
into the Technology Agreement with Perot. Under the terms of the Technology
Agreement, Perot is obligated to provide Western Pacific with integrated
technology related services over a five year period (the "Perot
Transaction"). These services are to include business process re-engineering,
call center infrastructure, data mining, networking, total system management
and the application of emerging technologies.
The consideration payable to Perot under the Technology Agreement
consists of monthly service fees described below and the issuance of Common
Stock. In particular, Western Pacific is obligated to issue to Perot shares
of its Common Stock as additional consideration as follows: $800,000 within
thirty days of the Effective Date (for which 114,284 shares were issued on
May 6, 1997), $600,000 on the first anniversary of the Effective Date and
$400,000 on the second anniversary of the Effective Date. The base monthly
service fees payable to Perot under the Technology Agreement equal
(i) $317,000 per month in the first year of the Technology Agreement,
(ii) $461,600 per month in the second year of the Technology Agreement,
(iii) $981,800 per month in the third year of the Technology Agreement,
(iv) $975,500 per month in
13
<PAGE>
the fourth year of the Technology Agreement and (v) $934,400 per month in the
fifth year of the Technology Agreement.
For the first six months of the term of the Technology Agreement, Western
Pacific has the right, at its option, to issue shares of Common Stock in lieu
of cash payments for up to three months of base monthly service fees and
pass-through expenses. The amount of such stock issuances may not exceed
$2.0 million in the aggregate.
THE MERCURY AIR TRANSACTION
On April 25, 1997, Western Pacific entered into a revised Aviation Fuel
Management Agreement (the "Fuel Management Agreement") with Mercury whereby
Mercury has agreed to provide certain fuel supply services to Western
Pacific. Western Pacific also executed a promissory note in favor of Compass
Bank in the principal sum of $6,000,000 (the "Compass Note"). The Compass
Note provides that Western Pacific may borrow funds from Compass Bank in
order to pay amounts due and owing under the Fuel Management Agreement.
Payment of all amounts due and owing from Western Pacific to Compass Bank
under the Compass Note is guaranteed by Mercury. In consideration of
Mercury's entering into the Fuel Management Agreement and its agreement to
guarantee the obligations of Western Pacific arising pursuant to the Compass
Note, on April 25, 1997 Western Pacific issued the Mercury Warrants granting
Mercury the right to purchase 200,000 shares of Common Stock at an exercise
price of $6.875 per share. The Mercury Warrants became exercisable upon
issuance and expire on April 25, 2000.
With respect to Mercury Warrants that remain unexercised on July 28,
1998, Western Pacific may become obligated to issue additional shares of
Common Stock to Mercury (or make cash payments to Mercury) to the extent that
the highest average trading price of Western Pacific's Common Stock (as
reported on the Nasdaq National Market during any 20 consecutive trading days
during the three month period ending July 28, 1998) does not meet at least a
20% target return level, as set forth in the Mercury Warrants.
THE SERIES C PREFERRED PRIVATE PLACEMENT
On June 5, 1997, Western Pacific completed a private placement with a
group of institutional investors (the "Private Placement") whereby Western
Pacific sold (i) 10,000 shares of its Series C Preferred Stock,
(ii) A-Warrants to purchase an aggregate of 213,333 shares of Western Pacific's
Common Stock at an exercise price of $11.25 per share, and (iii) B-Warrants
to purchase an aggregate of 111,110 shares of Common Stock at an exercise
price of $6.80625 per share for an aggregate purchase price of $10 million.
The institutional investor group consisted of Lionhart Global Appreciation
Fund, a company organized under the laws of the British Virgin Islands
("Lionhart"), RGC International Investors, LDC, a company organized under the
laws of the Cayman Islands ("RGC") and CC Investments, LDC, a company
organized under the laws of the Cayman Islands ("CC Investments"). In
addition, in connection with the Private Placement Western Pacific issued an
additional 256,198 B-Warrants to GEM Management, Limited and paid cash in the
amount of $350,000 to GEM Advisors, Ltd. as a placement fee.
14
<PAGE>
The Certificate of Designations for the Series C Preferred Stock provides
that certain redemption provisions regarding the Series C Preferred are
subject to that certain Agreement Among Preferred Stockholders, entered into
among the Company, the Series C Preferred investors and the holders of the
Company's Series B Preferred Stock (the "Agreement Among Preferred
Stockholders"). Pursuant to the Agreement Among Preferred Stockholders, the
parties mutually agreed that if the Company redeems one series of preferred
stock due to certain mandatory or optional redemption provisions and a
similar provision does not apply to the other series of preferred stock, the
holders of the other series of preferred stock will, under certain
circumstances, be entitled to participate in such redemption.
In connection with the sale of the Series C Preferred Stock, the
A-Warrants and the B-Warrants, Western Pacific agreed to file a registration
statement with the Commission within 45 days to register the Common Stock
issuable upon conversion or exercise of such securities.
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<PAGE>
DESCRIPTION OF SECURITIES
HUNT WARRANTS AND GFI WARRANTS
In connection with the Hunt/GFI Transaction, Western Pacific issued the
Hunt Warrants and the GFI Warrants (collectively, the "Hunt/GFI Warrants"),
each of which entitles the holder to purchase 1,325,000 shares of Common
Stock, subject to the vesting restrictions described below. Upon the vesting
and exercise of the Hunt/GFI Warrants, as described below, each warrant
entitles Hunt or GFI, as the case may be, to receive from Western Pacific one
share of fully paid, nonassessable Common Stock of Western Pacific for an
exercise price of $0.01 per share.
The Hunt/GFI Warrants vest over a period of three years. Each Hunt/GFI
Warrant provides that 272,239 warrants (the "Year One Warrants") vest and
become exercisable as follows: (i) 50% of the Year One Warrants vested and
became exercisable on February 27, 1997; and (ii) if any of the shares of
Series B Preferred Stock originally purchased by the holder remain
outstanding on December 1, 1997, the following percentage of the Year One
Warrants shall vest and become exercisable: 50% of the Year One Warrants
multiplied by a fraction, the numerator of which is equal to the number of
shares of Series B Preferred Stock originally purchased by the holder, which
remain outstanding on December 1, 1997, and the denominator of which is equal
to 100,000. Any Year One Warrants which have not vested as of December 1,
1997 pursuant to the foregoing formula will be forfeited and of no further
force and effect.
Each Hunt/GFI Warrant provides that during each day during the period
from May 1, 1998 through April 30, 1999, that 453,757 warrants (the "Year Two
Warrants") will vest and become exercisable as follows: (x) 453,757,
multiplied by (y) a fraction, the numerator of which is equal to the number
of shares of Series B Preferred Stock originally purchased by the holder
which remain outstanding on such day, and the denominator of which is equal
to 100,000, divided by (z) 365. Any Year Two Warrants which have not vested
as of April 30, 1999 pursuant to the foregoing formula will be forfeited and
be of no further force and effect. Further, on the date of exercise during
the period from May 1, 1999 though April 30, 2000, each Hunt/GFI Warrant
provides that 599,004 warrants (the "Year Three Warrants") will vest and
become exercisable as follows: (x) 599,004, multiplied by (y) a fraction, the
numerator of which is equal to the number of shares of Series B Preferred
Stock originally purchased by the holder which continue to be outstanding on
such day, and the denominator of which is equal to 100,000, divided by
(z) 365. Any Year Three Warrants which have not vested as of April 30, 2000
pursuant to the foregoing formula shall be forfeited and be of no further
force and effect.
Any portion of the Hunt/GFI Warrants which fails to vest and become
exercisable pursuant to the foregoing vesting provisions will terminate as of
the date of such failure. In addition, any portion of the Hunt/GFI Warrants
which vests and becomes exercisable shall terminate if such portion of the
Hunt/GFI Warrants has not been exercised by the holder prior to April 30,
2003.
16
<PAGE>
Pursuant to the Hunt/GFI Transaction, Western Pacific agreed to file a
registration statement with the Commission to register under the Securities
Act resales of the shares of Common Stock underlying the Hunt/GFI Warrants,
and to maintain the effectiveness of such registration statement until April
30, 2001. In addition, the Company has agreed that, if requested by the
holders of 50% or more of Common Stock issuable upon exercise of the Hunt/GFI
Warrants, to file with the Commission, at the Company's sole expense (other
than with respect to underwriting discounts and commissions and fees and
expenses of legal counsel for selling holders), one registration statement
under the Securities Act for an underwritten public offering covering such
shares.
THE PEROT PURCHASE RIGHTS
MANDATORY PAYMENTS TO PEROT IN COMMON STOCK. As additional consideration
for the services to be provided by Perot under the Technology Agreement,
Western Pacific agreed to pay Perot, in the form of shares of Common Stock,
$800,000 within 30 days after April 1, 1997, $600,000 on the first
anniversary of the Effective Date, and $400,000 on the second anniversary of
the Effective Date. In connection with this agreement to issue shares,
Western Pacific issued to Perot 114,286 shares of Common Stock on May 6,
1997. The number of shares of Common Stock to be delivered to Perot is
determined by dividing the applicable dollar amount payable by the average
closing bid price for the Common Stock for the five trading days ending two
days before the shares are delivered. Western Pacific has the option, which
may be exercised at any time prior to the termination or expiration of the
Technology Agreement, to repurchase any shares of Common Stock issued to
Perot, which have not been otherwise sold by Perot prior to the exercise of
such option, at a price of $15.00 per share
OPTIONAL ISSUANCE OF COMMON STOCK FOR SERVICES. For the period beginning
on April 1, 1997 and ending September 30, 1997, Western Pacific may pay the
base monthly service fee for up to three months of services under the
Technology Agreement by delivering to Perot shares of Common Stock. The
amount of such fees to be paid for in Common Stock may not exceed, in the
aggregate, $2.0 million. In addition, Western Pacific is obligated to
register for sale under the Securities Act, and all other applicable laws,
rules and regulations, all shares of Common Stock delivered to Perot in lieu
of cash payments and to list such shares for sale on the Nasdaq National
Market prior to the date such shares are delivered to Perot.
The number of shares of Common Stock to be delivered to Perot will be
determined by dividing the amount of the base monthly fee payable by the
average closing bid price for the Common Stock for the five trading days
ending two days before the shares are delivered. If Perot sells the shares
of Common Stock received in lieu of cash payment within 30 calendar days
after receiving such shares, or is unable to sell such shares due to
restrictions on trading activities imposed by Western Pacific's insider
trading policy or applicable law or the absence of adequate market trading
volume, Perot will, within five days after such 30 day period, notify
Western Pacific of such circumstance and Western Pacific will pay Perot, in
cash within 10 days after the end of the applicable 30 day period, an amount
equal to the excess of the applicable base service monthly fee over the
actual proceeds received by Perot from such sale, if any, and Perot will
transfer to Western Pacific any unsold shares.
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<PAGE>
If Perot elects, in its sole discretion, not to sell the Common Stock
within the 30 day period referred to above, Western Pacific will have no
further obligation in relation to the monthly fees to which the Common Stock
was issued.
Pursuant to the terms of the Technology Agreement, Perot has the right to
require that all shares of Common Stock delivered to Perot as consideration
under the Technology Agreement be registered for sale under the Securities
Act and listed on the Nasdaq National Market prior to the date of such shares
are delivered to Perot.
THE MERCURY WARRANTS
Each Mercury Warrant entitles Mercury, upon exercise, to receive from
Western Pacific one share of fully paid, nonassessable Common Stock of
Western Pacific at a price equal to $6.875 per share. The Mercury Warrants
may be exercised by Mercury, in whole or in part, at any time during Western
Pacific's normal business hours. The Mercury Warrants expire at 5:00 p.m. on
April 25, 2000. Any warrants not exercised by such time will, without
further action by Western Pacific or Mercury, immediately terminate and be of
no further force or effect. With respect to Mercury Warrants that remain
unexercised on July 28, 1998, Western Pacific may become obligated to issue
additional shares of Common Stock to Mercury (or make cash payments to
Mercury) to the extent that the highest average trading price of Western
Pacific's Common Stock (as reported on the Nasdaq National Market during any
20 consecutive trading days during the three month period ending July 28,
1998) does not meet at least a 20% target return level, as set forth in the
Mercury Warrants.
Under the terms of the Mercury Warrants, Mercury has been granted certain
piggyback registration rights. If such registration involve an underwriting
agreement, such underwriting agreement must include, among other things,
customary indemnification and contribution obligations on the part of Western
Pacific.
THE SERIES C CONVERTIBLE PREFERRED STOCK
In connection with the Private Placement, Western Pacific filed a
Certificate of Designations, Preferences and Rights of the Series C Preferred
Stock with the Secretary of State of Delaware on June 5, 1997 (the
"Certificate of Designations"), and a Certificate of Correction with respect
to the Certificate of Designations on June 9, 1997. The Series C Preferred
Stock has a stated value of $1,000 per share, with a premium amount accruing
on such stated value at a rate of 8% per annum (the "Premium Accrual"). The
Series C Preferred Stock is nonvoting and ranks pari passu with Western
Pacific's Series B Preferred Stock. The Series C Preferred Stock is subject
to voluntary conversion at the option of the holders during its three-year
term, and will automatically convert into Common Stock on June 5, 2000. The
conversion price ("Conversion Price") will be the lower of (i) a fixed price
(the "Fixed Price") of $6.1875 (110% of the closing bid price of Western
Pacific's Common Stock on June 4, 1997), subject to equitable adjustments
for stock splits, stock dividends, rights offerings, combinations,
recapitalization, reclassifications and similar events, or (ii) an amount
which will initially equal a 10% discount (declining over ten months to 20%)
of the average of the closing bid prices of the Common Stock for the 20
consecutive trading days preceding a notice of conversion.
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<PAGE>
The Conversion Price of the Series C Preferred Stock is subject to
possible upward and downward performance adjustments. If, at the time of
conversion, the closing bid price of the Common Stock has increased by more
than 45% over the original Fixed Price (the "Upward Adjustment Threshold"),
the Fixed Price shall automatically increase so that the holder of the Series
C Preferred Stock being converted relinquishes 60% of the increase in value
of the Common Stock over the Upward Adjustment Threshold. Following
September 3, 1997, if at any date the closing bid price of the Common Stock
falls below 50% of the Fixed Price for a period of 20 consecutive trading
days, the holders of a majority in interest of the Series C Preferred Stock
may request, within three days of such date, that Western Pacific reset the
Fixed Price to equal such 20 day average. If Western Pacific declines to
reset the Fixed Price, then the annual Premium Accrual on the Series C
Preferred Stock will increase from 8% to 11%, to be applied on a retroactive
basis.
Pursuant to the Private Placement, the Company agreed that, within
forty-five (45) days of June 5, 1997, it would file with the Commission a
registration statement covering the resale of the shares of Common Stock
issuable upon the conversion of the Series C Preferred Stock and the
exercise of the A-Warrants and B-Warrants. In addition, the Company granted
the investors in the Private Placement certain piggyback registration rights.
If such registration involves an underwriting agreement, such underwriting
agreement must include, among other things, customary indemnification and
contribution obligations on the part of Western Pacific.
THE A-WARRANTS AND B-WARRANTS
In connection with the Private Placement, Western Pacific issued the
A-Warrants and the B-Warrants to Lionhart, RGC, CC Investments and GEM
Management, Limited (which received only B-Warrants). The A-Warrants are
convertible into 213,333 shares of Common Stock at a price of $11.25 per
share (subject to certain adjustments), and expire on June 5, 2002. The
B-Warrants are convertible into 367,308 shares of Common Stock at a price of
$6.80625 per share (subject to certain adjustments), and expire on June 5,
2000. The exercise price of the B-Warrants is subject to an upward
performance adjustment providing that if at the time of exercise the closing
bid price of the Common Stock has increased by more than 45% over $6.8025
(the "Warrant Threshold Level"), the exercise price shall automatically
increase so that the holder of the B-Warrant being exercised relinquishes 60%
of the increase in value of the Common Stock over the Warrant Threshold Level.
The holders of A-Warrants and B-Warrants have been granted certain
registration rights, as described under the caption "Series C Preferred
Stock" above.
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<PAGE>
SELLING STOCKHOLDERS
The table below sets forth certain information regarding the beneficial
ownership of shares of Western Pacific's Common Stock as of June 24, 1997, by
each of the Selling Stockholders, the Shares offered hereby, and the beneficial
ownership of shares of Common Stock after the completion of the offering.
With respect to the shares of Common Stock issuable upon conversion of the
Series C Preferred Stock, the number of shares included in the registration
statement on file with the Commission of which this Prospectus is a part (i) is
based, in part, upon an estimate of the number of shares issuable under the
Series C Preferred Stock utilizing a hypothetical Conversion Price of
$5.271328125 (as of June 24, 1997), (ii) is subject to adjustment and (iii)
could be materially less or more than such estimated amount depending on factors
which cannot be predicted by Western Pacific at this time, including, among
others, the future market price of the Common Stock. The use of such
hypothetical price is for illustration only, and is not intended, and should in
no way be construed, to constitute a prediction as to the future market price
of the Common Stock.
<TABLE>
<CAPTION>
NAME OF SELLING SHARES BENEFICIALLY OWNED SHARES BEING SHARES BENEFICIALLY OWNED
STOCKHOLDER PRIOR TO OFFERING OFFERED AFTER OFFERING
NUMBER NUMBER PERCENT*
<S> <C> <C> <C> <C>
GFI Company 1,798,620(1) 136,120(2) 1,662,500 8.8%
Hunt Petroleum of Texas, Inc. 1,606,120(3) 136,120(4) 1,580,000 8.3%
Perot Systems 114,286(5) 114,286(5) 0 --
Corporation
Mercury Air Group, Inc. 200,000(6) 200,000(6) 0 --
RGC International Investors, LDC 1,837,127(7)(8)(9) 1,837,127(7)(8)(9) 0 --
CC Investments, LC 1,837,127(7)(8)(10) 1,837,127(7)(8)(10) 0 --
Lionhart Global Appreciation Fund 918,564(7)(8)(11) 918,564(7)(8)(11) 0 --
GEM Management, Limited 256,198(12) 256,198(12) 0 --
</TABLE>
__________________________________
* Assumes the maximum number of shares being offered have been issued.
20
<PAGE>
(1) Includes 1,225,000 shares of Common Stock owned of record by GFI, and
437,500 shares of Common Stock owned of record by the Broadmoor Hotel, Inc.
GFI may be deemed a controlling stockholder of the Broadmoor Hotel, Inc.
Also includes currently exercisable warrants to purchase 136,120 shares of
Common Stock held by GFI. GFI disclaims beneficial ownership of shares of
Common Stock not owned of record by GFI.
Mr. Edward L. Gaylord, a major stockholder of Western Pacific, individually
and through certain trusts, may be deemed a controlling person of GFI and
GFI may be deemed a controlling stockholder of the Broadmoor Hotel, Inc.
As a result, Mr. Gaylord may be deemed to be the beneficial owner of the
shares of Common Stock owned of record by GFI and the Broadmoor Hotel, Inc.
In addition, Mr. Gaylord directly owns 467,500 shares of Common Stock. Mr.
Gaylord disclaims beneficial ownership of shares of Common Stock not owned
of record by him.
Two individuals serving on Western Pacific's seven person Board of
Directors are affiliated with GFI. Glenn M. Stinchcomb, a member of
Western Pacific's Board of Directors since 1995, also serves as a director
of Gaylord Entertainment Company ("GEC"), an affiliate of GFI and Mr.
Gaylord. Mr. Stinchcomb was Chief Financial Officer and Treasurer of GEC
from 1974 to 1991, and he was Vice President of GEC from 1986 to 1991. In
addition Clayton I. Bennett, who was elected to the Board of Directors of
Western Pacific in 1995, is the son-in-law of Mr. Gaylord.
(2) Consists of the 136,120 shares of Common Stock currently issuable upon
exercise of the GFI Warrants. Following December 1, 1997, the number of
warrants issuable upon the exercise of the GFI Warrants may increase
pursuant to the vesting schedule contained in the GFI Warrant. See
"Description of Securities--Hunt Warrants and GFI Warrants." If the
number of shares issuable under the GFI Warrants is increased, the exact
number of such additional shares will be stated in a supplement to this
Prospectus to be transmitted to the Commission promptly after the
determination of the number of such additional warrants.
(3) The shares held of record by Hunt may be deemed beneficially owned by its
sole stockholder, Hunt Petroleum Corporation. Also includes currently
exercisable warrants to purchase 136,120 shares of Common Stock under the
Hunt Warrants. Two individuals serving on Western Pacific's Board of
Directors are affiliated with Hunt. Ivan Irwin, Jr., a member of Western
Pacific's Board of Directors since 1995, has served since 1994 as Vice
President of Hunt, and Vice Chairman and Executive Vice President of Hunt
Petroleum Corporation. In addition, James R. Wikert, who was elected to
the Board of Directors of Western Pacific in 1995, is the son-in-law of a
controlling shareholder of Hunt.
(4) Consists of the 136,120 shares of Common Stock currently issuable upon
exercise of the Hunt Warrants. Following December 1, 1997, the number of
warrants issuable upon the exercise of the Hunt Warrants may increase
pursuant to the vesting schedule contained in the Hunt Warrant. See
"Description of Securities--Hunt Warrants and GFI Warrants." If the
number of shares issuable under the Hunt Warrant is increased, the exact
number of such additional shares will be stated in a supplement to this
Prospectus to be transmitted to the Commission promptly after the
determination of the number of such additional warrants.
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<PAGE>
(5) Consists of 114,286 shares of Common Stock issued to Perot on May 6, 1997
in a private placement of Western Pacific's Common Stock pursuant to the
terms of the Technology Agreement. Following the additional scheduled
issuances of Common Stock to Perot, and any optional issuances, these
figures will be stated in a supplement to this Prospectus to be transmitted
to the Commission promptly after the determination of the number of such
shares of Common Stock. Perot provides certain technology management
services to Western Pacific pursuant to the Technology Agreement. See
"Certain Transactions--The Perot Transaction."
(6) Consists of 200,000 shares of Common Stock issuable upon the exercise of
the Mercury Warrants. Following July 28, 1998, the number of warrants
issuable upon the exercise of the Mercury Warrants may increase pursuant to
certain adjustment provisions contained in the Mercury Warrants. See
"Description of Securities--The Mercury Warrants." If the number of
shares issuable under the Mercury Warrants is increased, the exact number
of such additional shares will be stated in a supplement to this Prospectus
to be transmitted to the Commission promptly after the determination of the
number of such additional warrants. Mercury provides certain fuel
management services to Western Pacific pursuant to a Fuel Management
Agreement. See "Certain Transactions--The Mercury Air Transaction."
(7) With respect to shares of Common Stock issuable upon the conversion of the
Series C Preferred Stock, the calculation of the number of shares being
offered is based on an estimate of 200% of the shares currently issuable at
a conversion price of $4.685625, which price is 80.0% of the average of the
closing bid price for the Common Stock on the Nasdaq National Market (as
reported by IDD Information Services) for the twenty consecutive trading
days preceding June 24, 1997 (which was $5.85703125). Therefore, the
assumed Conversion Price results in ownership of Common Stock that may
differ from what actual ownership of Common Stock will be on the actual
date of the conversion of the Series C Preferred Stock.
In addition, with respect to shares of Common Stock issuable upon the
exercise of the A-Warrants or the B-Warrants, the number of shares being
offered is based upon the number of shares issuable upon the complete
exercise of the A-Warrants and the B-Warrants as of the date of this
Prospectus. In the event of certain dilutive issuances of securities by
Western Pacific, or in the event of equitable adjustments for stock splits,
stock dividends, rights offerings, combinations, recapitalization,
reclassifications and similar events, the number of shares issuable upon
exercise of such warrants could increase. If the number of shares issuable
upon exercise of either the A-Warrants or the B-Warrants is increased or
decreased, the exact number of such shares will be stated in a supplement
to this Prospectus to be transmitted to the Commission promptly after the
exercise of such A-Warrants or the B-Warrants, as the case may be.
In addition, pursuant to the terms of the Certificate of Designations of
the Series C Preferred Stock, the Series C Preferred Stock is convertible
by the holders thereof only to the extent that the number of shares of
Common Stock thereby issuable, together with the number of shares of
Common Stock then held by such holder and its affiliates would not exceed
4.9% of the then outstanding Common Stock as determined in accordance with
Section 13(d) of the Exchange Act, unless such holders, upon giving 61 days
notice to Western Pacific, waive such limitation. Accordingly, the number
of shares of Common Stock set forth above exceeds the actual number of
shares of Common Stock that the RGC or CC Investments, as the case may be,
could own beneficially at any given time through their ownership of the
Series C Preferred Stock.
22
<PAGE>
In that regard, beneficial ownership set forth in the table is not
determined in accordance with Rule 13d-3 under the Exchange Act.
(8) Except as set forth in footnote 7 above, ownership is determined in
accordance with Rule 13d-3 under the Exchange Act. Subject to the
provisions of footnote 7 above, the actual number of Shares beneficially
owned and offered for sale by holders of Series C Preferred Stock
hereunder is subject to adjustment and could be materially less or more
than the estimated amount indicated depending upon factors which
cannot be predicted by Western Pacific at this time, including, among
others, the average of the closing bid price of the Common Stock during
the twenty consecutive trading days ending one trading day prior to the
actual date of the conversion of any Series C Preferred Stock.
(9) Includes 1,707,350 Shares issuable upon conversion of 4,000 shares of
Series C Preferred Stock, assuming 200% of the shares issuable based on
a conversion price of $4.685625, which price is 80.0% of $5.85703125 (the
average closing bid price of the twenty consecutive trading days
preceding June 24, 1997) have been issued; based on the Conversion Price
on June 24, 1997, 758,822 Shares would be issuable; 85,333 shares issuable
upon exercise of an A-Warrant; and 44,444 Shares issuable upon exercise
of a B-Warrant. Except for the ownership of 4,000 shares of Series C
Preferred Stock, A-Warrants to purchase 85,333 shares of Common Stock
and B-Warrants to purchase 44,444 shares of Common Stock, RGC
International Investors, LDC has not had any material relationship with
Western Pacific or any of its affiliates within the past three years.
(10) Includes 1,707,350 Shares issuable upon conversion of 4,000 shares of
Series C Preferred Stock, assuming 200% of the shares issuable based on
a conversion price of $4.685625, which price is 80.0% of $5.85703125 (the
average closing bid price of the twenty consecutive trading days
preceding June 24, 1997) have been issued; based on the Conversion Price
on June 24, 1997, 758,822 Shares would be issuable; 85,333 Shares issuable
upon exercise of an A-Warrant; and 44,444 Shares issuable upon exercise
of a B-Warrant. Except for the ownership of 4,000 shares of Series C
Preferred Stock, A-Warrants to purchase 85,333 shares of Common Stock and
B-Warrants to purchase 44,444 shares of Common Stock, CC Investments, LDC
has not had any material relationship with Western Pacific or any of its
affiliates within the past three years.
(11) Includes 853,675 Shares issuable upon conversion of 2,000 shares of
Series C Preferred Stock, assuming 200% of the shares issuable based on
a conversion price of $4.685625, which price is 80.0% of $5.85703125 (the
average closing bid price of the twenty consecutive trading days
preceding June 24, 1997) have been issued; based on the Conversion Price
on June 24, 1997, 379,411 Shares would be issuable; 42,667 Shares issuable
upon exercise of an A-Warrant; and 22,222 Shares issuable upon exercise
of a B-Warrant. Except for the ownership of 2,000 shares of Series C
Preferred Stock, A-Warrants to purchase 42,667 shares of Common Stock
and B-Warrants to purchase 22,222 shares of Common Stock, Lionhart Global
Appreciation Fund has not had any material relationship with Western
Pacific or any of its affiliates within the past three years. Lionhart
Global Appreciation Fund is an affiliate of GEM Management, Limited.
See Note (12) below.
(12) Includes 256,198 Shares issuable upon exercise of a B-Warrant. GEM
Management, Limited received the B-Warrants and GEM Advisors, Ltd.
received a cash payment of $350,000 as a placement fee for the Private
Placement. See "Certain Transactions."
See "Description of Securities" above for (i) a description of the above
warrants, rights, and convertible securities and (ii) the nature of the
relationship which each of the Selling Stockholders has had with Western
Pacific within the past three years.
23
<PAGE>
PLAN OF DISTRIBUTION
Western Pacific has been advised by the Selling Stockholders that
distribution of the Shares by the Selling Stockholders or by certain
pledgees, donees, transferees or other successors in interest, may be
effected from time to time in one or more transactions (which may involve
block transactions) in the over-the-counter market or on the Nasdaq National
Market (or any exchange on which the Common Stock may then be listed), in
negotiated transactions, through the writing of options (whether such options
are listed on an options exchange or otherwise), through short sales, or a
combination of such methods of sale, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Stockholders may effect such transactions by selling
Shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of underwriting discounts, concessions or
commissions from the Seller Stockholders and/or purchasers of Shares for whom
they may act as agent. The Selling Stockholders may also sell such Shares
pursuant to Rule 144 promulgated under the Securities Act, or may pledge
shares as collateral for margin accounts and such shares could be resold
pursuant to the terms of such accounts. The Selling Stockholders and any
broker-dealers that act in connection with the sale of the Common Stock might
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act and any commission received by them and any profit on the
resale of the shares of Common Stock as principal might be deemed to be
underwriting discounts and commission under the Securities Act. The Selling
Stockholders may agree to indemnify any agent, dealer or broker-dealer that
participates in transactions involving sales of the Common Stock against
certain liabilities, including liabilities arising under the Securities Act.
Because the Selling Stockholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the Selling Stockholders
will be subject to prospectus delivery requirements under the Securities Act.
Furthermore, in the event of a "distribution" of the Shares, such Selling
Stockholders, any selling broker or dealer and any "affiliated purchasers" may
be subject to Regulation M under the Exchange Act, which Regulation would
prohibit, with certain exceptions, any such person from bidding for or
purchasing any security which is the subject of such distribution until his
participation in that distribution is completed. In addition, Regulation M
prohibits any stabilizing bid or stabilizing purchase for the purpose of
pegging, fixing or stabilizing the price of Common Stock in connection with
this offering.
LEGAL MATTERS
The validity of the issuance of Western Pacific's Common Stock being
offered hereby will be passed upon for Western Pacific by D'Ancona & Pflaum,
Chicago, Illinois.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-K of Western Pacific Airlines, Inc. as of December
31, 1995 and 1996 and for each of the three years in the period ended December
31, 1996 have been audited by Arthur Andersen LLP, independent public
accountants as indicated in their report with respect thereto,
24
<PAGE>
and as incorporated herein in reliance upon the authority of said firm as
experts in auditing and accounting in giving said report.
25
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with this
transaction. All of the amounts shown are estimates except the Securities and
Exchange Commission registration fee. All such expenses will be paid by the
Registrant. None of these expenses will be paid by the Selling Stockholders.
Registration fee (Securities and Exchange Commission)..... $15,847
Printing expenses......................................... $ 5,000
Accounting fees and expenses.............................. $ 1,000
Legal fees and expenses .................................. $10,000
Miscellaneous............................................. $ 1,153
-------
Total..................................................... $33,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Generally, Section 145 of the General Corporation Law of the State of
Delaware (the "Delaware Corporation Law") permits a corporation to indemnify
certain persons made a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that such
person is or was a director or officer of the corporation or is or was serving
at the request of the corporation as a director or officer of another
corporation or enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonable incurred
by him in connection with any such action, suit or proceeding if he acted in
good faith and in a manner that he reasonable believed to be in or not opposed
to the best interests of the corporation, and, with respect to any criminal
action or proceeding, if he had no reasonable cause to believe that his conduct
was unlawful. If, however, any threatened, pending or completed action, suit or
proceeding is by or in the right of the corporation, the director or officer is
not permitted to be indemnified in respect of any claim, issue or matter as to
which he is adjudged to be liable to the corporation unless the Delaware Court
of Chancery determines otherwise.
Section 102(b)(7) of the Delaware Corporation Law enables a Delaware
corporation to include a provision in its certificate of incorporation limiting
the personal liability of a director to the corporation or its stockholders for
monetary damages for breaches of fiduciary duty as a director, except that such
provision may not eliminate or limit the liability of a director for (1) any
breach of the director's duty of loyalty to the corporation or its stockholders,
(2) for acts or omissions that are not in good faith or which involve
intentional misconduct or a knowing violation of the law, (3) under Section 174
of the Delaware Corporation Law or (4) for any transaction from which the
director derived an improper personal benefit.
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<PAGE>
Paragraph 6 of the Registrant's Restated Certificate of Incorporation
provides for the elimination of director liability (pursuant to Section
102(b)(7) of the Delaware Corporation Law) and indemnification of its
directors and officers to the fullest extent permitted by law. In addition,
Article IX of the Bylaws of the Registrant, a copy of which is filed as
Exhibit 3.3 to this Registration Statement, provides for indemnification of
its directors and officers to the fullest extent permitted by the Delaware
Corporation Law and by the Restated Certificate of Incorporation, upon a
determination by a majority vote of a quorum consisting of the disinterested
directors of the Board of Directors or if a quorum is not obtainable, or even
if obtainable if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion or by vote of the stockholders
that indemnification is proper in the circumstances because the applicable
standards of conduct set forth in the Delaware Corporation Law have been met.
Article IX of the Registrant's Amended Bylaws provides that the
Registrant will indemnify any person who was or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative by reason of the
fact that he is or was a Director, officer, employee or agent of the
Registrant, or is or was serving at the request of the Registrant as a
Director, officer, employee or agent of another company, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or
proceeding, to the fullest extent and under any and all circumstances
permitted by the Delaware Corporation Law the Certificate of Incorporation of
the Registrant, as amended. Such indemnification (unless ordered by a court)
shall be made as authorized in a specific case upon a determination that
indemnification of the Director, officer, employee or agent is proper in the
circumstances because he has met the applicable standards of conduct set
forth in the Delaware Corporation Law. Such determination shall be made (1)
by the Board of Directors by a majority vote of a quorum consisting of
Directors who were not parties to such action, suit or proceeding, or (2) if
such quorum is not obtainable, or even if obtainable if a quorum of
disinterested Directors so directs, by independent legal counsel in a written
opinion, or (3) by the stockholders.
In addition, Article IX of the Amended Bylaws provides that expenses
(including attorney's fees) incurred by a Director, officer, employee or
agent of the Company in defending a civil, criminal, administrative or
investigative action, suit or proceeding shall be paid by the Registrant in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of the Director, officer, employee
or agent to repay such amount if it shall ultimately be determined that he is
not entitled to be indemnified by the Registrant as set forth above.
Notwithstanding the foregoing sentence, the foregoing advancement of expenses
(including attorneys' fees) is not mandatory, but instead is at the
discretion of the Company's Board of Directors.
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<PAGE>
ITEM 16. EXHIBITS.
3.1 Restated Certificate of Incorporation of Western Pacific
(incorporated by reference to Exhibit 3.1 to Western Pacific's
registration statement on Form S-1 (Registration No. 33-97862)).
3.2 Certificate of Amendment to Certificate of Incorporation of Western
Pacific, dated June 19, 1997.
3.3 Restated By-laws of Western Pacific (incorporated by reference to
Exhibit 3.3 to Western Pacific's annual report on Form 10-K for the
fiscal year ended December 31, 1996, File No. 0-27238).
4.1 Restated Certificate of Incorporation of Western Pacific (Included
in Exhibit 3.1 above).
4.2 Restated Bylaws of Western Pacific (Included in Exhibit 3.3 above).
4.3 Stock Purchase Agreement dated as of January 31, 1997, by and among
Western Pacific, Hunt Petroleum of Texas, Inc. and GFI Company .
(Incorporated by reference to Exhibit 10.70 to Western Pacific's
8-K for an event dated January 31,1997, File No. 0-27238).
4.4 Warrant Certificate issued to Hunt Petroleum of Texas, Inc.
(Incorporated by reference to Exhibit 10.71 to Western Pacific's
8-K for an event dated January 31,1997, File No. 0-27238).
4.5 Warrant Certificate issued to GFI Company (Incorporated by
reference to Exhibit 10.72 to Western Pacific's 8-K for an event
dated January 31,1997, File No. 0-27238).
4.6 Information Technology Services Agreement dated April 1, 1997
between Western Pacific and Perot Systems Corporation
(Incorporated by reference to Exhibit 10.76 to Western Pacific's
10-K filed for the year ended December 31, 1996, File No. 0-27238).
4.7 Warrant Certificate issued to Mercury Air Group (Incorporated by
reference to Exhibit 4.10 to Western Pacific's 10-Q filed for the
quarter ended March 31, 1997, File No. 0-27238).
4.8 Securities Purchase Agreement, dated June 5, 1997, by and among
Western Pacific, Western Pacific, RGC International Investors, LDC,
CC Investors, LDC and Lionhart Global Appreciation Fund.
(Incorporated by reference to Exhibit 99.1 to Western Pacific's
8-K for an event dated June 5,1997, File No. 0-27238).
II-3
<PAGE>
4.9 Certificate of Designation, Preferences and Rights of Series C
Preferred Stock. (Incorporated by reference to Exhibit 99.2 to
Western Pacific's 8-K for an event dated June 5, 1997, File
No. 0-27238).
4.10 Certificate of Correction to Certificate of Designation, Preferences
and Rights of Series C Preferred Stock. (Incorporated by reference
to Exhibit 99.3 to Western Pacific's 8-K for an event dated
June 5, 1997, File No. 0-27238).
4.11 Form of A-Warrant. (Incorporated by reference to Exhibit 99.4 to
Western Pacific's 8-K for an event dated June 5,1997, File
No. 0-27238).
4.12 Form of B-Warrant. (Incorporated by reference to Exhibit 99.5 to
Western Pacific's 8-K for an event dated June 5,1997, File
No. 0-27238).
4.13 Agreement Among Preferred Stockholders, dated June 5, 1997, by and
among the Company, RGC, CC Investors, Lionhart, Hunt Petroleum of
Texas, Inc. and GFI Company. (Incorporated by reference to
Exhibit 99.6 to Western Pacific's 8-K for an event dated
June 5, 1997, File No. 0-27238).
4.14 Registration Rights Agreement, dated June 5, 1997, by and among the
Company, RGC, CC Investors and Lionhart. (Incorporated by
reference to Exhibit 99.7 Western Pacific's 8-K for an event dated
June 5, 1997, File No. 0-27238).
5.1 Opinion of D'Ancona & Pflaum regarding certain legal matters.
23.1 Consent of D'Ancona & Pflaum (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (Included on the signature pages of the
registration statement).
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement; and
II-4
<PAGE>
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement; Provided, however, that paragraphs (1)(i)
and (1)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to section
13(a) or section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the Registration Statement shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions (see Item 15 above), or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Colorado Springs, State of Colorado, on this 24th
day of June, 1997.
WESTERN PACIFIC AIRLINES, INC.
(Registrant)
By: /s/Robert A. Peiser
______________________________
Robert A. Peiser
President and Chief Executive
Officer
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<PAGE>
POWER OF ATTORNEY
Each person whose signature appears below this Registration Statement
hereby severally constitutes and appoints Robert A. Peiser, George Leonard
and Stacy Mihalsky, and each of them acting singly, our true and lawful
attorneys-in-fact and agent, with full power of substitution, for and in
the name, place and stead of the undersigned, to sign and file with the
Commission under the Securities Act any and all amendments (including
post-effective amendments) and exhibits to this Registration Statement
and any and all registration statements, applications and other documents
to be filed with the Securities and Exchange Commission pertaining to the
registration of the securities covered hereby (including any
registration for additional securities as permitted under Rule 462(b) of
the Securities Act), with full power and authority to do and perform any and
all acts and things whatsoever requisite and necessary or desirable,
hereby ratifying and confirming all that said attorneys-in-fact, or his or
her substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement or amendment thereto has been signed below by the
following persons in the capacities and on the date indicated below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Robert A. Peiser President and Chief Executive Officer (Principal June 24, 1997
Robert A. Peiser Executive Officer), Director
/s/ George Leonard Vice President Finance and June 24, 1997
George Leonard Chief Financial Officer (Principal Financial
Officer)
/s/ Stacy A. Mihalsky Controller (Chief Accounting Officer) June 24, 1997
Stacy A. Mihalsky
/s/ Edward R. Beauvais Chairman of the Board June 24, 1997
Edward R. Beauvais
/s/ Clayton I. Bennett Director June 24, 1997
Clayton I. Bennett
/s/ Glenn M. Stinchcomb Director June 24, 1997
Glenn M. Stinchcomb
/s/ Ivan Irwin, Jr. Director June 24, 1997
Ivan Irwin, Jr.
/s/ James R. Wikert Director June 24, 1997
James R. Wikert
</TABLE>
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<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
3.1 Restated Certificate of Incorporation of Western Pacific
(incorporated by reference to Exhibit 3.1 to Western Pacific's
registration statement on Form S-1 (Registration No. 33-97862)).
3.2 Certificate of Amendment to Certificate of Incorporation of Western
Pacific, dated June 19, 1997.
3.3 Restated By-laws of Western Pacific (incorporated by reference to
Exhibit 3.3 to Western Pacific's annual report on Form 10-K for the
fiscal year ended December 31, 1996, File No. 0-27238)
4.1 Restated Certificate of Incorporation of Western Pacific (Included in
Exhibit 3.1 above).
4.2 Restated Bylaws of Western Pacific (Included in Exhibit 3.3 above).
4.3 Stock Purchase Agreement dated as of January 31, 1997, by and among
Western Pacific, Hunt Petroleum of Texas, Inc. and GFI Company .
(Incorporated by reference to Exhibit 10.70 to Western Pacific's 8-K
for an event dated January 31,1997, File No. 0-27238).
4.4 Warrant Certificate issued to Hunt Petroleum of Texas, Inc.
(Incorporated by reference to Exhibit 10.71 to Western Pacific's 8-K
for an event dated January 31,1997, File No. 0-27238).
4.5 Warrant Certificate issued to GFI Company (Incorporated by reference
to Exhibit 10.72 to Western Pacific's 8-K for an event dated
January 31,1997, File No. 0-27238).
4.6 Information Technology Services Agreement dated April 1, 1997 between
Western Pacific and Perot Systems Corporation (Incorporated by
reference to Exhibit 10.76 to Western Pacific's 10-K filed for the
year ended December 31, 1996, File No. 0-27238).
4.7 Warrant Certificate issued to Mercury Air Group (Incorporated by
reference to Exhibit 4.10 to Western Pacific's 10-Q filed for the
quarter ended March 31, 1997, File No. 0-27238).
4.8 Securities Purchase Agreement, dated June 5, 1997, by and among
Western Pacific, Western Pacific, RGC International Investors, LDC,
CC Investors, LDC and Lionhart Global Appreciation Fund.
(Incorporated by reference to Exhibit 99.1 to Western Pacific's 8-K
for an event dated June 5,1997, File No. 0-27238).
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<PAGE>
4.9 Certificate of Designation, Preferences and Rights of Series C
Preferred Stock. (Incorporated by reference to Exhibit 99.2 to
Western Pacific's 8-K for an event dated June 5, 1997, File
No. 0-27238).
4.10 Certificate of Correction to Certificate of Designation, Preferences
and Rights of Series C Preferred Stock. (Incorporated by reference
to Exhibit 99.3 to Western Pacific's 8-K for an event dated
June 5, 1997, File No. 0-27238).
4.11 Form of A-Warrant. (Incorporated by reference to Exhibit 99.4 to
Western Pacific's 8-K for an event dated June 5,1997, File
No. 0-27238).
4.12 Form of B-Warrant. (Incorporated by reference to Exhibit 99.5 to
Western Pacific's 8-K for an event dated June 5,1997, File
No. 0-27238).
4.13 Agreement Among Preferred Stockholders, dated June 5, 1997, by and
among the Company, RGC, CC Investors, Lionhart, Hunt Petroleum of
Texas, Inc. and GFI Company. (Incorporated by reference to
Exhibit 99.6 to Western Pacific's 8-K for an event dated June 5, 1997,
File No. 0-27238).
4.14 Registration Rights Agreement, dated June 5, 1997, by and among the
Company, RGC, CC Investors and Lionhart. (Incorporated by reference
to Exhibit 99.7 Western Pacific's 8-K for an event dated June 5, 1997,
File No. 0-27238).
5.1 Opinion of D'Ancona & Pflaum regarding certain legal matters.
23.1 Consent of D'Ancona & Pflaum (included in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP.
24.1 Power of Attorney (Included on the signature pages of the
registration statement).
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<PAGE>
EXHIBIT 3.2
CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE OF INCORPORATION
* * * * * * * *
Western Pacific Airlines, Inc., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation at a meeting held
on April 18, 1997, duly adopted a resolution proposing and declaring
advisable the following amendment to the Restated Certificate of
Incorporation of said corporation:
RESOLVED, that the first sentence of Article 4 of the Corporation's
Restated Certificate of Incorporation is hereby amended to read as follows:
The total number of shares of all classes of stock which this
Corporation shall have the authority to issue is forty-three million
forty-seven thousand (43,047,000), of which forty million
(40,000,000) shall be common stock, par value $0.001 per share, and
three million forty-seven thousand (3,047,000) shall be preferred
stock, par value $0.001 per share.
SECOND: That at the annual meeting of stockholders of the Corporation held
June 19, 1997, a majority of the holders of the Corporation's outstanding stock
entitled to vote at such meeting voted to approve said amendment in accordance
with the provisions of Section 216 of the General Corporation Law of the State
of Delaware.
THIRD: That said amendment was duly adopted in accordance with the
applicable provisions of Sections 216 and 242 of the General Corporation Law of
the State of Delaware.
FOURTH: That the capital of said corporation will not be reduced under or
by reason of said amendment.
IN WITNESS WHEREOF, said Corporation has caused this certificate to be
signed by Robert A. Peiser, its President and attested by Nina Ortega, its
Secretary this 19th day of June, 1997.
By: /s/ Robert A. Peiser
-------------------------------------
Robert A. Peiser, President
ATTEST:
/s/ Nina Ortega
- -------------------------------------------
Nina Ortega, Secretary
<PAGE>
EXHIBIT 5.1
D'ANCONA & PFLAUM
30 North LaSalle Street
Suite 2900
Chicago, Illinois 60602
Telephone (312)580-2000
Telecopier (312)580-0923
TWX: 910-221-2554
Cable: "DANCONA"
June 24, 1997
Western Pacific Airlines, Inc.
2864 South Circle Drive
Colorado Springs, Colorado 80906
Gentlemen:
In connection with the proposed registration under the Securities Act of
1933, as amended, by Western Pacific Airlines, Inc., a Delaware corporation
("Western Pacific") of 9,093,943 shares of Common Stock of Western Pacific (the
"Shares") described in Western Pacific's registration statement on Form S-3, to
be filed on or shortly after the date hereof (the "Registration Statement"), we
hereby advise you that as counsel for Western Pacific we have examined the
original or certified copies of the Restated Certificate of Incorporation of
Western Pacific and all amendments thereto, the Bylaws of Western Pacific, the
minute books of Western Pacific and such other documents and records as we have
deemed necessary for the purposes of this opinion.
Based upon such examination, it is our opinion that the Shares of Western
Pacific are duly authorized and, when issued pursuant to the terms of the
agreements, warrant certificates and certificates of designations, rights and
preferences to be included as exhibits to the Registration Statement, will be
legally issued, fully paid and nonassessable.
We hereby consent to the references to our firm under the heading "Legal
Matters" in the prospectus included in the Registration Statement, and to the
filing of this opinion as an exhibit to the Registration Statement, and any and
all amendments thereto (including pre-effective and post-effective amendments).
Very truly yours,
D'ANCONA & PFLAUM
By /s/ Allan J. Reich
--------------------------------
Allan J. Reich, a Partner
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated April 4, 1997
included in Western Pacific's Form 10-K for the year ended December 31, 1996
and to all references to our Firm included in this registration statement.
/S/ ARTHUR ANDERSEN LLP
Phoenix, Arizona
June 20, 1997
