GULFSTREAM INTERNATIONAL AIRLINES, INC. AMENDED AND RESTATED COMMON STOCK PURCHASE WARRANT March 14, 2006
Exhibit 10.31
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS. NO SALE, OFFER FOR SALE, DISPOSITION, MORTGAGE,
PLEDGE, HYPOTHECATION OR OTHER TRANSFER OF THIS WARRANT MAY BE MADE WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR THIS SECURITY UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR PURSUANT TO AN AVAILABLE EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS.
GULFSTREAM INTERNATIONAL AIRLINES, INC.
AMENDED AND RESTATED
COMMON STOCK
PURCHASE WARRANT
COMMON STOCK
PURCHASE WARRANT
March 14, 2006
THIS WARRANT to purchase shares of Common Stock, par value $0.001 per share (“Common Stock”),
of Gulfstream International Airlines, Inc., a Florida corporation (the “Company”), amends and
restates in its entirety the Common Stock Purchase Warrant dated August 8, 2003 issued by the
Company to Continental Airlines, Inc., a Delaware corporation (together with its successors and
registered assigns, the “Purchaser”), and evidences that, for valuable consideration, receipt and
sufficiency of which are hereby acknowledged, the Purchaser is entitled to purchase from the
Company the number of shares of Common Stock (the “Shares”), subject to adjustment as provided
herein, equal to the sum of:
| (1) | the product of (A) 10.00% multiplied by (B) the sum of (i) the aggregate number of shares of Common Stock of the Company that are issued and outstanding on the Effective Date (as defined below) (including any shares that are first issued on the Effective Date); (ii) the aggregate number of shares of Common Stock issuable upon conversion, exchange or exercise of any convertible or exchangeable securities (whether debt, equity or otherwise), options or warrants (collectively referred to as “Convertible Securities”) that are outstanding on the Effective Date (excluding this Warrant, but including any other Convertible Securities that are first issued on the Effective Date); and (iii) the aggregate number of shares of Common Stock issuable to the Purchaser pursuant to this Warrant as of the Effective Date (after giving effect to the issuance of any shares of Common Stock or Convertible Securities first issued on the Effective Date) (rounded up to the nearest whole number); and |
| (2) | the product of (A) 11.11% multiplied by (B) the sum of (i) the aggregate number of shares of Common Stock (excluding Exempt Common Stock (as defined below)) that are issued after the Effective Date and that are outstanding on the Exercise Date (as defined below); and (ii) the aggregate number of shares of Common Stock issuable upon conversion, exchange or exercise of any Convertible Securities (excluding Exempt Convertible Securities (as defined below)) that are issued after the Effective Date and that are outstanding on the Exercise Date (rounded up to the nearest whole number). |
In addition, upon exercise of this Warrant the Purchaser shall also receive any shares of Capital
Stock issuable to the Purchaser pursuant to Section 4.3 hereof.
The aggregate purchase price (the “Aggregate Exercise Price”) for the Shares to be purchased
hereunder is equal to the product of (A) $0.001 per Share (subject to adjustment as provided
herein) (the “Per Share Exercise Price”) multiplied by (B) the number of Shares to be purchased by
the Purchaser.
Upon the Purchaser’s request, the Company shall promptly (but not later than three (3) days
after such request) provide the Purchaser with a written calculation of the number of Shares
issuable upon exercise of this Warrant (calculated as of the date of such request).
As used in this Warrant, the following terms shall have the meanings set forth below:
“Exempt Common Stock” shall mean (i) shares of Common Stock issued in a Qualified Third Party
Financing (as defined below) or issued upon conversion, exchange or exercise of Convertible
Securities issued in a Qualified Third Party Financing; (ii) shares of Common Stock issued upon
conversion, exchange or exercise of Convertible Securities that are outstanding on the Effective
Date pursuant to the terms of such Convertible Securities as in existence on the Effective Date;
(iii) shares of Common Stock to be purchased by the Purchaser pursuant to this Warrant; and (iv)
shares of Capital Stock issued pursuant to Section 4.3 hereof.
“Exempt Convertible Securities” shall mean shares of Common Stock issuable upon conversion,
exchange or exercise of Convertible Securities issued in a Qualified Third Party Financing.
“Non-Affiliate” shall mean a person that is not an “affiliate” (within the meaning of Rule
12b-2 of the Securities Exchange Act of 1934, as amended), director, officer or employee of the
Company, and that does not receive any consideration from the Company in connection with investing
in the Company (other than the equity securities purchased in such Qualified Third Party
Financing).
“Qualified Third Party Financing” shall mean the issuance and sale by the Company of equity
securities to one or more Non-Affiliates in one or more transactions (i) that result in net cash
proceeds to the Company of an aggregate amount that is not less than $5,500,000 (after the
deduction of underwriting discounts, commissions and similar fees); and (ii) at a “pre-money”
valuation of the Company immediately prior to such sale of securities (determined as the product of
(A) the number of shares of Common Stock outstanding immediately prior to the consummation of such
sale after giving effect to the conversion, exchange or exercise of
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Convertible Securities outstanding on the Effective Date multiplied by (B) the purchase price
per share of Common Stock or Convertible Securities sold in such financing (determined by dividing
(1) the total amount, if any, received or receivable by the Company as consideration for the
issuance of such Convertible Securities plus the amounts of consideration, if any, payable upon the
conversion or exchange thereof by (2) the total maximum number of shares of Common Stock issuable
upon the conversion, exchange or exercise of all such Convertible Securities)) equal to or more
than $20,000,000.
“Subsidiary” has the meaning set forth in Rule 1-02(x) of Regulation S-X promulgated by the
Securities and Exchange Commission, as such Rule is in effect on the Effective Date.
1. Term of Warrant. The purchase rights represented by this Warrant are exercisable
as to the Shares at any time during the term of this Warrant commencing on March 14, 2006 (the
“Effective Date”) and ending at 5:00 p.m. Houston, Texas time on December 31, 2015.
2. Method of Exercise and Payment.
2.1. Method of Exercise and Payment. The purchase rights represented by this Warrant
may be exercised by the surrender of this Warrant (with the Notice of Exercise form attached hereto
as Exhibit A duly executed) at the principal office of the Company and (i) by the payment to the
Company of the Aggregate Exercise Price in cash or by certified check or (ii) by a net issue
exercise in accordance with Section 2.2 hereof. In the event that the Purchaser does not know the
Aggregate Exercise Price at the time the Notice of Exercise is delivered, the Purchaser may deliver
cash or a certified check payable to the Company in an amount that the Purchaser estimates in good
faith is the Aggregate Exercise Price (the “Purchaser’s Estimate”) in which case the Company shall
promptly (i) calculate the number of Shares issuable upon exercise of this Warrant and the amount
of the Aggregate Exercise Price, (ii) provide the Purchaser with written notice of such number and
amount and (iii) refund to the Purchaser the amount by which the Purchaser’s Estimate exceeds the
Aggregate Exercise Price, if any. In the event that the Aggregate Exercise Price is more than the
Purchaser’s Estimate, the Purchaser shall, upon receipt of the notice referred to in the preceding
sentence, promptly deliver cash or a certified check payable to the Company in the amount by which
the Aggregate Exercise Price exceeds the Purchaser’s Estimate. In the event of any exercise of the
purchase rights represented by this Warrant, the Company shall deliver to the Purchaser within a
reasonable time, but not later than five business days after exercise, a certificate evidencing the
shares of Common Stock so purchased accompanied by a certificate signed by the Company’s chief
financial officer (or, if there is not a chief financial officer, another officer performing
similar functions) setting forth, in reasonable detail, the calculation of the number of shares
issuable upon exercise of this Warrant. This Warrant will be deemed to have been exercised
immediately prior to the close of business on the date of its surrender for exercise as provided
above (the “Exercise Date”), and the person entitled to receive the shares of Common Stock issuable
upon such exercise is treated for all purposes as a stockholder of the Company as of the close of
business on such date. This Warrant may only be exercised in whole and may not be exercised in
part.
2.2. Net Issue Exercise. Notwithstanding any provisions herein to the contrary, if
the Fair Market Value (as defined below) of one Share is greater than the Per Share Exercise Price
(at the date of calculation as set forth below), in lieu of exercising this Warrant for
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payment of the Aggregate Exercise Price in cash or by check, the Purchaser may elect to
receive a number of shares of Common Stock equal to the value (as determined below) of this Warrant
by surrender of this Warrant at the principal office of the Company together with the duly executed
Notice of Exercise in which event the Company shall issue to the Purchaser a number of shares of
Common Stock computed in accordance with the following formula:
X = Y ((A — B) / A)
WHERE:
X = the number of shares of Common Stock to be issued to the Purchaser pursuant to this
Section 2.2;
Y = the number of Shares (at the date of such calculation);
A = the Fair Market Value of one Share (at the date of such calculation); and
B = the Per Share Exercise Price (at the date of such calculation).
For purposes of the above calculation, the “Fair Market Value” of one Share shall equal (i) the
average of the high and low reported sale prices of the Common Stock on a national securities
exchange or the Nasdaq National Market, as the case may be, on each trading day in the seven-day
period immediately prior to the Exercise Date or (ii) if the Company’s Common Stock is not then
traded on a national securities exchange or quoted on the Nasdaq National Market, the fair market
value of one Share determined by the Appraiser (as defined below). If the Company’s Common Stock
is not traded on a national securities exchange or quoted on the Nasdaq National Market on the
Exercise Date, the Company shall promptly engage a qualified, nationally recognized, independent
appraiser (the “Appraiser”) acceptable to the Purchaser (such approval not to be unreasonably
withheld or delayed) experienced in appraising companies similar to the Company, to determine the
Fair Market Value. The Company shall make available all information reasonably necessary to allow
the Appraiser to perform the appraisal and shall instruct the Appraiser to use commercially
reasonable efforts to complete the appraisal and to provide the Company and the Purchaser a written
determination of the Fair Market Value within twenty (20) days of the Exercise Date. All fees and
expenses of the Appraiser will be borne by the Company.
2.3. Automatic Exercise. Unless the Purchaser shall have delivered a Notice of
Exercise prior to such time, this Warrant will be deemed to have been exercised pursuant to Section
2.2 of this Warrant immediately upon the closing of a firm commitment underwritten public offering
pursuant to an effective registration statement under the Securities Act covering the offer and
sale of Common Stock for the account of the Company in which the net cash proceeds to the Company
(after the deduction of underwriting discounts, commissions and fees) are at least $7,500,000 and
at a “pre-money” valuation of the Company (determined as the product of (A) the number of shares of
Common Stock outstanding immediately prior to the public offering after giving effect to the
conversion of all Convertible Securities into Common Stock and (B) the initial public offering
price of Common Stock) of at least $25,000,000.
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3. Shares Fully Paid; Reservation of Shares. The Shares which may be issued upon the
exercise of the purchase rights represented by this Warrant will, upon issuance, be fully paid and
nonassessable, and free from all taxes, liens and charges with respect to the issue thereof, except
for liens and charges created by the Purchaser; provided, however, that the
Purchaser of this Warrant is responsible for any income taxes payable by the Purchaser with respect
to the issuance or exercise of this Warrant or the issuance of Shares pursuant thereto. During the
period within which the purchase rights represented by this Warrant may be exercised, the Company
will at all times have authorized, and reserved for the purpose of the issue upon exercise of the
purchase rights evidenced by this Warrant, a sufficient number of shares of Common Stock to provide
for the exercise of the rights represented by this Warrant. During the period within which the
purchase rights represented by this Warrant may be exercised, the Company will not take any action
that would cause the Per Share Exercise Price to be less than the par value of the Common Stock.
4. Events Affecting the Stockholder Interest. The number and kind of securities
purchasable upon the exercise of this Warrant and the Exercise Price are subject to adjustment from
time to time upon the happening of the events and in the manner described in this section.
4.1. Reclassification, Consolidation or Merger. If any capital reorganization or
reclassification of the Common Stock, or consolidation or merger of the Company with another
corporation, a partnership or any other entity, or the sale or lease of all or substantially all of
its assets to another entity is effected in a manner such that holders of Common Stock shall be
entitled to receive stock, securities or other assets or property, in each case, at any time after
the Effective Date, then, as a condition of such reorganization, reclassification, consolidation,
merger, sale or lease, the successor entity (if other than the Company) resulting from such
consolidation or merger or the entity purchasing or leasing such assets must assume this Warrant by
written instrument executed and mailed or delivered to the Purchaser, and lawful and adequate
provision (in form reasonably satisfactory to the Purchaser) must be made whereby the holder hereof
thereafter has the right to purchase and receive (in lieu of the Shares immediately theretofore
purchasable and receivable upon the exercise of the rights represented hereby), such shares of
stock, securities or other assets or property as the Purchaser would have been entitled to receive
upon the occurrence of such transaction if the Purchaser had been, immediately prior to the
transaction, the holder of the Shares then issuable upon exercise of this Warrant. In any such
case, appropriate provision must be made with respect to the rights and interests of the holder of
this Warrant to assure that the provisions hereof (including, without limitation, provisions for
adjustment of the number of Shares purchasable and receivable upon the exercise of this Warrant)
are thereafter applicable, as nearly as may be, in relation to any shares of stock, securities or
other assets or property thereafter deliverable upon the exercise hereof.
4.2 Cash Dividends and Distributions. The Company covenants and agrees that it will
not declare, make or pay any cash dividend or other cash distribution with respect to the shares of
its Capital Stock (“Capital Stock” is defined as Common Stock or any other capital stock of the
Company authorized from time to time, or any other shares, options, interests, participations, or
other equivalents (however designated) of or in the Company, whether voting or nonvoting,
including, without limitation, common stock, options, warrants, preferred stock, phantom stock,
stock appreciation rights, convertible notes or debentures, stock purchase rights, and all
agreements, instruments, documents, and securities convertible,
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exercisable, or exchangeable, in whole or in part, into any one or more of the foregoing),
except that cash dividends will be permitted so long as (i) such dividends are not prohibited by
any contractual obligation of the Company, and (ii) at the time of such dividend the Company pays
the Purchaser an amount of cash equal to the cash dividend the Purchaser would have been entitled
to receive if the Purchaser had been, immediately prior to the record date for such dividend, the
holder of the Shares then issuable upon exercise of this Warrant. During the term of this Warrant,
the Company shall not, without the prior written consent of the Purchaser (which consent shall not
be unreasonably withheld or delayed), issue any Capital Stock other than (i) shares of Common
Stock, (ii) options to purchase shares of Common Stock issued pursuant to a stock option plan
approved by the Board of Directors of the Company, and, if required by law, the Company’s
stockholders, to employees of, consultants to, contractors with, or members of the Board of
Directors, of the Company, in connection with or as compensation for the performance of services to
the Company and (iii) shares of preferred stock (A) having an aggregate original issue price of not
more than $2,000,000 and entitling the holders thereof to an aggregate preference on the
liquidation, dissolution or winding up of the Company of not more than $2,000,000 and (B) entitling
the holders thereof to cash dividends at a rate of not more than 9% of the per share original issue
price or, if less than the per share original issue price, the per share preference on the
liquidation, dissolution or winding up of the Company, per annum on each outstanding share of such
preferred stock.
4.3 Distribution of Capital Stock. In case the Company at any time and from time to
time after the Effective Date: (a) issues shares of Capital Stock or any right to acquire Capital
Stock as a dividend or distribution on its shares of Common Stock, (b) subdivides or reclassifies
the outstanding shares of Common Stock into a greater number of shares or (c) combines or
reclassifies its outstanding shares of Common Stock into a smaller number of shares or otherwise
effects a reverse split, then (i) the number of Shares issuable pursuant to this Warrant at the
time of the record date for such dividend or distribution or of the effective date of such
subdivision, combination or reclassification shall be proportionately adjusted so that the holder
of this Warrant when exercised after such date will be entitled to receive the aggregate number and
kind of shares and rights which, if this Warrant had been exercised immediately prior to such time,
the holder would have owned upon such exercise and been entitled to receive upon such dividend,
subdivision, combination or reclassification and (ii) the Per Share Exercise Price in effect at the
opening of business on the day following the day upon which such dividend, distribution,
subdivision, combination or reclassification becomes effective shall be proportionately adjusted,
as appropriate, to become effective immediately upon the opening of business on the day following
the day upon which such dividend, distribution, subdivision, combination or reclassification
becomes effective. Such adjustment shall be made successively whenever any event listed in this
section occurs.
4.4 Distribution of Property. Except for distributions of Capital Stock, in case the
Company at any time and from time to time after the Effective Date distributes non-cash assets to
any holder of Capital Stock as a dividend or distribution on such shares of Capital Stock, the
holders of this Warrant, to the extent permitted by law, shall be entitled to receive at the time
of such dividend or distribution the non-cash assets the Purchaser would have been entitled to
receive if the Purchaser had been, immediately prior to the date for determining those stockholders
entitled to such distribution, the holder of the Shares then issuable upon exercise of this
Warrant. The Company shall not declare or pay any non-cash dividend or distribution in
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respect of its Capital Stock if the Company is not permitted by law to provide the holder of
this Warrant with the non-cash assets the Purchaser would have been entitled to receive if the
Purchaser had been, immediately prior to the date for determining those stockholders entitled to
such distribution, the holder of the Shares then issuable upon exercise of this Warrant.
4.5 Impairment: Adjustments. The Company will not, by amendment of its Articles of
Incorporation or through any reorganization, reclassification, consolidation, merger, sale, lease
or transfer of assets, dissolution, liquidation, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any of the terms to be observed or
performed hereunder by the Company, but will at all times in good faith assist in carrying out all
the provisions of this Warrant (including, without limitation, this Section 4) and in the taking of
all such action as may be necessary or appropriate in order to protect the purchase rights of the
holder of this Warrant against impairment. In the case any event occurs as to which the failure to
make an adjustment in the terms of this Warrant would not fairly protect the purchase rights
represented by the Warrant in accordance with the essential intent and principles of this Warrant,
then, in each such case, the Purchaser may appoint an independent investment bank or firm of
independent public accountants which is not and has not been affiliated with either Purchaser or
the Company (in each case, acceptable to the Company, such approval not to be unreasonably withheld
or delayed), which will give its opinion as to the adjustment, if any, on a basis consistent with
the essential intent and principles established in this Warrant, necessary to preserve the purchase
rights represented by this Warrant. Upon receipt of such opinion, the Company will promptly
deliver a copy of such opinion to the Purchaser and will make the adjustments described in such
opinion. The fees and expenses of such investment bank or independent public accountants will be
borne by the Company.
4.6 Notice of Special Events. In case at any time:
(a) the Company declares any distribution upon any of its Capital Stock or makes any
special distribution to its stockholders or the Company or any of its subsidiaries
repurchases or exchanges or offers to repurchase or exchange any Capital Stock;
(b) the Company offers for subscription pro rata to its stockholders any additional
equity interests or other rights;
(c) there is a capital reorganization or reclassification of the equity of the Company,
or consolidation or merger of the Company with, or sale or lease of all or substantially all
of its assets to, another entity;
(d) the Company amends, alters or repeals any provision of the Articles of
Incorporation of the Company (including any filing of any Articles of Amendment or similar
document) or Bylaws of the Company; or
(e) there is a voluntary or involuntary dissolution, liquidation or winding up of the
Company;
then, the Company shall give the Purchaser (i) at least 25 days prior written notice of the date on
which the books of the Company close or a record is taken for such distribution or subscription
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rights or repurchase or exchange or for determining rights to vote in respect of any such
reorganization, reclassification, consolidation, merger, sale, lease, amendment, alteration,
repeal, dissolution, liquidation or winding up, and (ii) in the case of any such repurchase,
exchange, reorganization, reclassification, consolidation, merger, sale, lease, amendment,
alteration, repeal, dissolution, liquidation or winding up, at least 25 days prior written notice
of the date when the same will take place. Notice in accordance with the foregoing clause (i) must
also specify, in the case of any distribution or subscription rights, the date on which the
stockholders shall be entitled thereto and notice in accordance with the foregoing clause (ii) must
also specify the date on which the stockholders shall be entitled to exchange their shares of
Common Stock for other securities or other property deliverable upon such repurchase, exchange,
reorganization, reclassification, consolidation, merger, sale, lease, dissolution, liquidation or
winding up, as the case may be. The Company shall also provide the Purchaser with notice of the
filing of any registration statement by the Company with the Securities and Exchange Commission
(such notices shall be delivered promptly, but in any event not less than three days after any such
filing, and shall include a complete copy of the filing).
4.7 Events Involving G-Air Holdings Corp. or Other Parent Companies. (a) The
Purchaser shall be provided with notice at least 30 days prior to the occurrence of any of the
following events (each, a “G-Air Event”) with respect to G-Air Holdings Corp., a Florida
corporation (“G-Air”):
(1) the closing of a firm commitment underwritten public offering of shares of common
stock of G-Air pursuant to an effective registration statement under the Securities Act; or
(2) the closing of any other issuance or sale of equity securities of G-Air or any
merger, consolidation, recapitalization, reorganization or other transaction, in each case
as a result of which Gulfstream Acquisition Group, Inc., a Delaware corporation (“Gulfstream
Acquisition”), ceases to own beneficially capital stock of G-Air representing more than 50%
of the voting and economic rights of the outstanding capital stock of G-Air.
At any time beginning on the date of such notice, Purchaser may, at its option, by notice to the
Company and G-Air, elect to convert all (but not less than all) of this Warrant into a warrant to
purchase shares of common stock of G-Air (a “G-Air Warrant”), effective at such time as the
Purchaser may specify in such notice. Any G-Air Warrant shall be substantially identical to this
Warrant (including having registration rights with respect to G-Air substantially identical to
those under the Registration Rights Agreement referred to in Section 7.1 below) and shall entitle
the Purchaser to purchase a number of shares of common stock of G-Air calculated on the basis set
forth in the first paragraph of this Warrant (with references to the “Company” being to G-Air and
references to the “Effective Date” being to the effective date of the conversion of this Warrant to
a G-Air Warrant), subject to adjustment as provided herein. The exercise price per share of any
G-Air Warrant shall be equal to the greater of (i) the Per Share Exercise Price specified herein,
subject to adjustment as provided herein, and (ii) the lowest price per share at which shares of
Common Stock of G-Air may be issued under applicable law. On the effective date of the conversion
of this Warrant to a G-Air Warrant (or as soon as practicable thereafter), G-Air shall deliver a
G-Air Warrant to Purchaser duly executed by G-Air.
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(b) In the event that a transaction is proposed relating to any entity, other than G-Air, of
which the Company is a Subsidiary and which is a Subsidiary of Gulfstream Acquisition (in each case
before giving effect to such transaction) which transaction, if consummated by or related to G-Air,
would constitute a G-Air Event, Gulfstream Acquisition, G-Air and the Company shall cause such
entity to agree in writing to be bound by the terms of this Section 4.7 to the same extent as G-Air
(i.e., that this Warrant shall be convertible into a warrant to purchase shares of such entity on
the terms set forth in this Section 4.7). The parties hereto acknowledge that (i) this Section 4.7
is intended to ensure the liquidity of the Purchaser’s interests in the Company upon the occurrence
of a liquidity event relating to the Company and (ii) this Section 4.7 is not intended to apply to
events related to (A) Gulfstream Training Academy, Inc., provided that such entity does not own,
directly or indirectly, any interest in the Company (other than shares of Common Stock representing
not more than 10% of the outstanding Common Stock) or (B) Gulfstream Acquisition.
5. Restriction on Transfers.
5.1 Securities Law Matters. (a) Neither the sale of this Warrant nor the issuance of
any of the Shares upon exercise of this Warrant have been registered under the Securities Act or
under applicable state securities laws. This Warrant and the Shares issued upon exercise of the
Warrant shall not be sold or transferred unless either (i) they first shall have been registered
under applicable federal and state securities laws, or (ii) such sale or transfer is exempt from
the registration requirements of such laws. Each certificate representing this Warrant shall bear
the legend set out on page 1 hereof. Each certificate, if any, representing any Shares shall bear
a legend substantially in the following form, as appropriate:
THE SHARES EVIDENCED HEREBY HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A
VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH
SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO UNDER APPLICABLE FEDERAL AND STATE SECURITIES LAWS
OR PURSUANT TO AN EXEMPTION AVAILABLE UNDER APPLICABLE FEDERAL AND STATE
SECURITIES LAWS.
(b) Prior to recognizing any transfer, the Company will be entitled to request and, if
requested, receive a written legal opinion of experienced securities counsel reasonably acceptable
to the Company (who may be an employee of the transferor) concerning compliance with federal and
state securities laws. The expense of such legal opinion shall be borne by the transferor.
5.2 Representations of Purchaser. By accepting this Warrant, the Purchaser represents
and warrants that it is acquiring this Warrant and, upon exercise of this Warrant, the Shares, for
its own account, for investment and not with a view to, or for sale in connection with, any
distribution thereof or any part thereof. Purchaser represents and warrants that it is (a)
experienced in the evaluation of businesses similar to the Company, (b) has such knowledge and
experience in financial and business matters as to be capable of evaluating the merits and risks of
9
an investment in the Company, (c) has the ability to bear the economic risks of an investment
in the Company, (d) is an “accredited investor” within the meaning of Regulation D of the
Securities Act and (e) has been afforded the opportunity to ask questions of and to receive answers
from the officers of the Company and to obtain any additional information necessary to make an
informed investment decision with respect to an investment in the Company.
5.3 [RESERVED]
5.4 Right of First Offer. If at any time the Purchaser shall desire to sell all or
any part of this Warrant or the Shares issued upon exercise of this Warrant (the “Offered
Securities”) and such sale is otherwise permitted under Sections 5.1 and 5.3 hereof, the Purchaser
shall provide a written notice to the Company (the “Offer Notice”) setting forth the material terms
and conditions of the proposed sale of the Offered Securities and which shall, at a minimum,
identify one or more persons to whom the Purchaser proposes to offer to sell the Offered Securities
and shall specify the price, form of consideration and payment schedule. The Company shall have
the right at any time prior to the 30th day after receipt of the Offer Notice (the “Offer
Expiration Date”) in which to elect to purchase all, but not less than all, of the Offered
Securities upon the terms and conditions set forth in the Offer Notice, which right may be
exercised by the Company by giving written notice to that effect (the “Offer Acceptance Notice”) to
the Purchaser delivered at any time prior to the Offer Expiration Date. Upon delivery of the Offer
Acceptance Notice, the same shall constitute a binding contract between the Purchaser and the
Company for the purchase and sale of the Offered Securities upon the terms and conditions set forth
in the Offer Notice, which shall be consummated within 20 days after the delivery of the Offer
Acceptance Notice or, if such 20th day is not a business day, the first business day thereafter.
The Purchaser agrees to execute and deliver such stock powers and similar documentation and
instruments reasonably requested by the Company to properly effect the transfer of the Offered
Securities pursuant to this Section 5.4. If no Offer Acceptance Notice is received by Purchaser
prior to the Offer Expiration Date, the Purchaser shall be free to sell the Offered Securities, but
shall be required to complete such sale within the 135-day period commencing on the first date
after the Offer Expiration Date (or such longer period as is necessary to comply with any
applicable regulatory waiting period or obtain any applicable regulatory approval), on terms not
more favorable to the buyer than those specified in the Offer Notice. No such sale shall be made
on terms more favorable to the buyer within such 135-day period or after 135 days following the
Offer Expiration Date, without the Purchaser having again given the Company an Offer Notice in full
compliance with the terms of this Section 5.4. The buyer(s) of the Offered Securities shall
acquire such Offered Securities free and clear of subsequent rights of first offer under this
Section 5.4.
5.5 Certain Limitations. The following transactions shall not constitute a transfer
of this Warrant or the Shares for purposes of Sections 5.1, 5.3 and 5.4 hereof: (i) the transfer,
sale or assignment, with or without consideration, of this Warrant or the Shares by the holder
thereof to any person or entity controlling, controlled by or under common control with such
holder; (ii) the merger, consolidation or acquisition of the holder of this Warrant or the Shares
or the purchase of all or substantially all of such holder’s assets; and (iii) the merger,
consolidation or acquisition of the Company. The restrictions on transfer set forth in Sections
5.3 and 5.4 shall expire and be of no further force or effect upon the closing of an underwritten
10
public offering of the Common Stock pursuant to an effective registration statement under the
Securities Act.
6. Call Right of the Company. On or after the Effective Date but prior to the earlier
of (i) the fifth anniversary of the Effective Date and (ii) the Exercise Date, the Company shall
have the option (the “Call Option”) to repurchase this Warrant at an aggregate purchase price equal
to the Call Option Price (as defined below). The “Call Option Price” shall equal (i) $5,500,000 if
the Call Option is exercised during the period commencing on the Effective Date and ending on the
third anniversary of the Effective Date; (ii) $6,000,000 if the Call Option is exercised during the
period commencing on the first day following the third anniversary of the Effective Date and ending
on the fourth anniversary of the Effective Date; and (ii) $7,500,000 if the Call Option is
exercised at any time after the fourth anniversary of the Effective Date. The Call Option may be
exercised only in whole and not in part. The Company may exercise the Call Option and, thereby,
repurchase this Warrant by providing the Purchaser written notice (“Repurchase Notice”) of the
Company’s exercise of the Call Option. Delivery of the Repurchase Notice shall constitute the
Company’s irrevocable and binding commitment to repurchase this Warrant. Payment of the purchase
price for this Warrant shall be made to the Purchaser by wire transfer in immediately available
funds, against delivery of this Warrant to the principal office of the Company, at the time of the
scheduled closing therefor, which time shall be specified by the Company in the Repurchase Notice
and shall be no later than 30 days after the Purchaser’s receipt of the Repurchase Notice. The
Purchaser may not exercise this Warrant after the delivery of a Repurchase Notice in accordance
with this Section 6 unless the Company fails to consummate the repurchase of this Warrant in
accordance with this Section 6. The Call Option shall terminate upon the delivery of a Notice of
Exercise (together with payment of the Aggregate Exercise Price (or, if applicable, the Purchaser’s
Estimate) in accordance with Section 2.1, unless the Warrant is exercised pursuant to Section 2.2)
and shall not entitle the Company to purchase any Shares issued upon exercise of this Warrant.
7. Shareholder Matters.
7.1 Shareholder Agreements. The Company shall (a) promptly, and in any event no later
than 30 days after the Effective Date, provide the Company with true, correct and complete copies
of all existing shareholder agreements, registration rights agreements and any other agreements,
documents, or instruments which affect the rights of a stockholder of the Company and to which the
Company is a party (“Stockholder Agreements”); and (b) at least 30 days prior to becoming party to
a new Stockholder Agreement or amending an existing Stockholder Agreement, give the Purchaser
notice of such event and a copy of the documents evidencing such event. The Company agrees that
the holder of the Shares issued upon the exercise of this Warrant shall have the right, but not the
obligation, to become party to any or all of such Stockholder Agreements to which any holder of
Common Stock or capital stock that is convertible into Common Stock is a party, whether such
Stockholder Agreements are existing on the Effective Date or is entered into subsequent to the
Effective Date. The Company agrees that any Stockholder Agreements to which the holder of the
Shares becomes a party shall provide such holder with rights and benefits that are as favorable to
such holder as the rights and benefits provided in such Stockholder Agreement to any other party
thereto (it being understood that by electing to become a party to such Stockholder Agreement such
holder must become subject to the same obligations that are imposed on all of the other
stockholders that are a party to such
11
Stockholder Agreement). The Company and the Purchaser have entered into an Amended and
Restated Registration Rights Agreement dated as of March 14, 2006, and the Company, G-Air,
Gulfstream Acquisition and the Purchaser agree that the term “Continental Warrant” as used in such
Registration Rights Agreement shall be deemed to include this Warrant and any warrant into which
this Warrant is converted pursuant to Section 4.7 hereof.
7.2 No Rights as a Stockholder. Except as otherwise provided herein, this Warrant
does not entitle the Purchaser to any voting rights or other rights as a shareholder of the Company
prior to exercise of this Warrant and the payment for the Shares so purchased.
8. Governing Law. This Warrant must be construed and interpreted in accordance with
and is governed in all respects by the laws of the State of Florida applicable to agreements
executed and to be performed wholly within such State.
9. Notices. Except as otherwise provided herein, whenever it is provided herein that
any notice, demand, request, consent, approval, declaration or other communication shall or may be
given to or served upon either of the parties by the other party, or whenever either of the parties
desires to give or serve upon the other party any communication with respect to this Warrant, each
such notice, demand, request, consent, approval, declaration or other communication shall be in
writing and shall be deemed to have been validly served, given or delivered (a) upon the earlier of
actual receipt and three days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon transmission, when sent by
telecopy or other similar facsimile transmission (with such telecopy or facsimile promptly
confirmed by delivery of a copy by personal delivery or United States Mail as otherwise provided in
this section), (c) one business day after deposit with a reputable overnight courier with all
charges prepaid or (d) when delivered, if hand-delivered by messenger, all of which shall be
addressed to the party to be notified and sent to the address or facsimile number indicated below
or to such other address (or facsimile number) as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in writing by the party
entitled to receive such notice. Failure or delay in delivering copies of any notice, demand,
request, consent, approval, declaration or other communication to any Person (other than the
Company or the Purchaser) designated below to receive copies shall in no way adversely affect the
effectiveness of such notice, demand, request, consent, approval, declaration or other
communication.
| (i) | If to the Purchaser, at: | |||
| Continental Airlines, Inc. | ||||
| Attention: Senior Vice President – Corporate Development | ||||
| ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ | ||||
| ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ | ||||
| Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ |
12
| (ii) | If to the Company, G-Air or Gulfstream Acquisition at: | |||
| Gulfstream International Airlines, Inc. | ||||
| Attention: General Counsel | ||||
| ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ | ||||
| ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇ |
10. Representations of the Company, G-Air and Gulfstream Acquisition. The Company,
G-Air and Gulfstream Acquisition represent and warrant to Purchaser that, at the Effective Date and
after giving effect to the transactions contemplated by the Stock Purchase Agreement relating to
Gulfstream International Airlines dated March 4, 2006:
(a) The authorized capital stock of the Company consists of 100,000,000 shares of Common
Stock, and the issued and outstanding capital stock of the Company consists of 19,575,357 shares of
Common Stock, all of which are owned of record and/or beneficially by G-Air or Gulfstream
Acquisition;
(b) The authorized capital stock of G-Air consists of 40,000,000 shares of common stock, par
value $.001 per share and 5,000,000 shares of preferred stock, par value $.001 per share, and the
issued and outstanding capital stock of G-Air consists of 13,611,179 shares of such common stock,
11,821,258 of which are owned of record and beneficially by Gulfstream Acquisition;
(c) Neither G-Air nor the Company has any outstanding Convertible Securities (other than this
Warrant);
(d) None of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, his affiliates and his family members owns beneficially or of
record any equity interest in the Company, G-Air or Gulfstream Acquisition; and
(e) The Company has at least $2,000,000 in cash.
(f)
[REMAINDER OF PAGE INTENTIONALLY BLANK]
13
IN WITNESS WHEREOF, the undersigned has caused this Warrant to be executed by its officers
duly authorized as the date first written above.
| GULFSTREAM INTERNATIONAL AIRLINES, INC. | ||||
| By: | /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | |||
| Title: | President | |||
| G-AIR HOLDINGS CORP. (for purposes of Sections 4.7, | ||||
| 7.1 and 10 hereof) | ||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| Title: | President | |||
| GULFSTREAM ACQUISITION GROUP, INC. (for | ||||
| purposes of Sections 4.7, 7.1 and 10 hereof) | ||||
| By: | /s/ ▇▇▇ ▇▇▇▇▇▇ | |||
| Name: | ▇▇▇ ▇▇▇▇▇▇ | |||
| Title: | Chairman | |||
14
EXHIBIT A
CONTINENTAL AIRLINES, INC.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel