THIS WARRANT AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT") OR THE LAWS OF ANY STATE. THEY
MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR
OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE
144 UNDER SUCH ACT.
No. ▇▇-▇▇ ▇▇▇▇▇▇▇▇▇ ▇, ▇▇▇▇
▇▇▇▇▇▇▇ TO PURCHASE COMMON STOCK
OF
VANGUARD AIRLINES, INC.
VOID AFTER SEPTEMBER 8, 2007
This Warrant is issued to ▇.▇. ▇▇▇▇ Co., Inc., or its
registered assigns (the "Holder") by Vanguard Airlines, Inc., a
Delaware corporation (the "Company"), on September 8, 2000 (the
"Warrant Issue Date"). This Warrant is issued pursuant to the
terms of that certain Unit Purchase Agreement dated as of
September 8, 2000 (the "Purchase Agreement").
1. PURCHASE SHARES. Subject to the terms and conditions
hereinafter set forth and set forth in the Purchase Agreement,
the Holder is entitled, upon surrender of this Warrant at the
principal office of the Company (or at such other place as the
Company shall notify the holder hereof in writing), to purchase
from the Company up to one million one hundred seventy two
thousand and three hundred and twenty five (1,172,325), fully
paid and nonassessable shares of Common Stock of the Company, as
constituted on the Warrant Issue Date (the "Common Stock"). The
number of shares of Common Stock issuable pursuant to this
Section 1 (the "Shares") shall be subject to adjustment pursuant
to Section 8 hereof.
2. EXERCISE PRICE. The purchase price for the Shares
shall be $1.89 per share as adjusted from time to time pursuant
to Section 8 hereof (the "Exercise Price").
3. EXERCISE PERIOD. This Warrant shall be exercisable, in
whole or in part, during the term commencing on September 8, 2000
and ending at 5:00 p.m. on the seventh anniversary date of the
Warrant Issue Date (the "Exercise Period").
4. METHOD OF EXERCISE. While this Warrant remains
outstanding and exercisable in accordance with Section 3 above,
the Holder may exercise, in whole or in part, the purchase rights
evidenced hereby. Such exercise shall be effected by:
(a) the surrender of the Warrant, together with a duly
executed copy of the form of Notice of Election Exercise
attached hereto, to the Secretary of the Company at its
principal offices; and
(b) the payment to the Company of an amount equal to
the aggregate Exercise Price for the number of Shares being
purchased.
5. NET EXERCISE. In lieu of exercising this Warrant
pursuant to Section 4, the Holder may elect to receive, without
the payment by the Holder of any additional consideration, shares
of Common Stock equal to the value of this Warrant (or the
portion thereof being canceled) by surrender of this Warrant at
the principal office of the Company together with notice of such
election, in which event the Company shall issue to the holder
hereof a number of shares of Common Stock computed using the
following formula:
X = Y (A-B)
-------
A
Where: X = The number of shares of Common
Stock to be issued to the Holder pursuant to
this net exercise;
Y = The number of Shares in respect of which the
net issue election is made;
A = The fair market value of one share of the
Common Stock at the time the net issue
election is made;
B = The Exercise Price (as adjusted to the date
of the net issuance).
For purposes of this Section 5, the fair market value of one
share of Common Stock as of a particular date shall be determined
as follows: (i) if traded on a securities exchange or through the
Nasdaq National Market, the value shall be deemed to be the
average of the closing prices of the securities on such exchange
over the twenty (20) day period ending three (3) days prior to
the net exercise election; (ii) if actively traded over-the-
counter, the value shall be deemed to be the average of the
closing bid or sale prices (whichever is applicable) over the
twenty (20) day period ending three (3) days prior to the net
exercise; and (iii) if there is no active public market, the
value shall be the fair market value thereof, as determined in
good faith by the Board of Directors of the Company.
6. CERTIFICATES FOR SHARES. Upon the exercise of the
purchase rights evidenced by this Warrant, one or more
certificates for the number of Shares so purchased shall be
issued as soon as practicable thereafter (with appropriate
restrictive legends, if applicable), and in any event within five
(5) days of the delivery of the subscription notice.
7. ISSUANCE OF SHARES. The Company covenants that the
Shares, when issued pursuant to the exercise of this Warrant,
will be duly and validly issued, fully paid and nonassessable and
free from all taxes, liens, and charges with respect to the
issuance thereof.
8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES. The
number of and kind of securities purchasable upon exercise of
this Warrant and the Exercise Price shall be subject to
adjustment from time to time as follows:
(a) SUBDIVISIONS; COMBINATIONS AND OTHER ISSUANCES.
If the Company shall at any time prior to the expiration of
this Warrant subdivide its Common Stock, by split-up or
otherwise, or combine its Common Stock, or issue additional
shares of its Common Stock (or securities convertible into,
or otherwise entitling the holders thereof to receive,
Common Stock) as a dividend with respect to any shares of
its Common Stock, the number of Shares issuable on the
exercise of this Warrant shall forthwith be increased in the
case of a subdivision or stock dividend, or proportionately
decreased in the case of a combination. Appropriate
adjustments shall also be made to the Exercise Price payable
per share, but the aggregate Exercise Price payable for the
total number of Shares purchasable under this Warrant (as
adjusted) shall remain the same. Any adjustment under this
Section 8(a) shall become effective at the close of business
on the date the subdivision or combination becomes
effective, or as of the record date of such dividend, or in
the event that no record date is fixed, upon the making of
such dividend.
(b) RECLASSIFICATION, REORGANIZATION AND
CONSOLIDATION. In case of any reclassification, capital
reorganization, or change in the Common Stock of the Company
(other than as a result of a subdivision, combination, or
stock dividend provided for in Section 8(a) above), then, as
a condition of such reclassification, reorganization, or
change, lawful provision shall be made, and duly executed
documents evidencing the same from the Company or its
successor shall be delivered to the Holder, so that the
Holder shall have the right at any time prior to the
expiration of this Warrant to purchase, at a total price
equal to that payable upon the exercise of this Warrant, the
kind and amount of shares of stock and other securities and
property receivable in connection with such
reclassification, reorganization, or change by a holder of
the same number of shares of Common Stock as were
purchasable by the Holder immediately prior to such
reclassification, reorganization, or change. In any such
case appropriate provisions shall be made with respect to
the rights and interests of the Holder so that the
provisions hereof shall thereafter be applicable with
respect to any shares of stock or other securities and
property deliverable upon exercise hereof, and appropriate
adjustments shall be made to the Exercise Price per share
payable hereunder, provided the aggregate Exercise Price
shall remain the same.
(c) DILUTIVE ISSUANCES. The Exercise Price shall be
subject to adjustment from time to time as follows:
(i) (A) If the Company shall issue, after the
Warrant Issue Date, any Additional Stock (as defined below)
without consideration or for a consideration per share less than
the Unit Purchase Price (as defined in the Unit Purchase
Agreement) in effect immediately prior to the issuance of such
Additional Stock, the Exercise Price in effect immediately prior
to each such issuance shall forthwith (except as otherwise
provided in this clause (i)) be adjusted to a price equal to the
price paid per share for such Additional Stock [plus ten percent
(10%)]; provided, however that the Exercise Price shall not be
adjusted to a price below $0.10 (as adjusted for stock splits,
stock dividends, combinations, recapitalizations or like changes
in the Company's capital structure).
(B) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the
amount of cash paid therefor before deducting any reasonable
discounts, commissions or other expenses allowed, paid or
incurred by the Company for any underwriting or otherwise in
connection with the issuance and sale thereof.
(C) In the case of the issuance of Common
Stock for a consideration in whole or in part other than cash,
the consideration other than cash shall be deemed to be the fair
value thereof as determined by the Board of Directors
irrespective of any accounting treatment.
(D) In the case of the issuance of options
to purchase or rights to subscribe for Common Stock, securities
by their terms convertible into or exchangeable for Common Stock
or options to purchase or rights to subscribe for such
convertible or exchangeable securities, the following provisions
shall apply for all purposes of this subsection 8(c)(i) and
subsection 8(c)(ii):
(1) The number of shares of Common
Stock deliverable upon exercise (to the extent then exercisable)
of such options to purchase or rights to subscribe for Common
Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to
the consideration (determined in the manner provided in
subsections 8(c)(i)(B) and 8(c)(i)(C)), if any, received by the
Company upon the issuance of such options or rights plus the
minimum exercise price provided in such options or rights for the
Common Stock covered thereby.
(2) The number of shares of Common
Stock deliverable upon conversion of, or in exchange (to the
extent then convertible or exchangeable) for, any such
convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible
or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such
securities were issued or such options or rights were issued and
for a consideration equal to the consideration, if any, received
by the Company for any such securities and related options or
rights (excluding any cash received on account of accrued
interest or accrued dividends), plus the minimum additional
consideration, if any, to be received by the Company upon the
conversion or exchange of such securities or the exercise of any
related options or rights (the consideration in each case to be
determined in the manner provided in subsections 8(c)(i)(B) and
(c)(i)(C)).
(3) In the event of any change in the
consideration payable to the Company upon exercise of such
options or rights or upon conversion of or in exchange for such
convertible or exchangeable securities, including, but not
limited to, a change resulting from the antidilution provisions
thereof, the Exercise Price, to the extent in any way affected by
such options, rights or securities, shall be recomputed to
reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such
consideration upon the exercise of any such options or rights or
the conversion or exchange of such securities.
(4) Upon the expiration of any such
options or rights, the termination of any such rights to convert
or exchange or the expiration of any options or rights related to
such convertible or exchangeable securities, without the
exercise, conversion or exchange of any foregoing into Common
Stock, the Exercise Price shall be recomputed to reflect the
assumption that none of such options, rights or convertible or
exchangeable securities had ever been issued.
(5) The Common Stock deemed issued and
the consideration deemed paid therefor pursuant to subsections
8(c)(i)(D)( 1) and (2) shall be appropriately adjusted to reflect
any change, termination or expiration of the type described in
either subsection 8(c)(i)(D)(3) or (4).
(ii) "Additional Stock" shall mean any shares of
Common Stock issued (or deemed to have been issued pursuant to
subsection 8(c)(i)(D)) by the Company after the date hereof other
than:
(A) Common Stock issued pursuant to a
transaction described in subsection 8(a) or (b) hereof; or
(B) Shares of Common Stock issuable or
issued to employees, consultants, directors or vendors (if in
transactions with primarily non-financing purposes) of the
Company directly or pursuant to a stock option plan, employee
stock purchase plan or other plan or agreement approved by the
Board of Directors of the Company.
(d) NOTICE OF ADJUSTMENT. When any adjustment is
required to be made in the number or kind of shares purchasable
upon exercise of the Warrant, or in the Exercise Price, the
Company shall promptly notify the holder of such event and of the
number of shares of Common Stock or other securities or property
thereafter purchasable upon exercise of this Warrant.
9. NO FRACTIONAL SHARES OR SCRIP. No fractional shares or
scrip representing fractional shares shall be issued upon the
exercise of this Warrant, but in lieu of such fractional shares
the Company shall make a cash payment therefor on the basis of
the Exercise Price then in effect.
10. NO STOCKHOLDER RIGHTS. Prior to exercise of this
Warrant, the Holder shall not be entitled to any rights of a
stockholder with respect to the Shares, including (without
limitation) the right to vote such Shares, receive dividends or
other distributions thereon, exercise preemptive rights or be
notified of stockholder meetings, and such holder shall not be
entitled to any notice or other communication concerning the
business or affairs of the Company. However, nothing in this
Section 10 shall limit the right of the Holder to be provided the
Notices required under this Warrant or the Purchase Agreement.
11. TRANSFER RESTRICTIONS. This Warrant may not be
exercised and neither this Warrant nor any of the Common Stock
issuable upon exercise of the Warrant (collectively, the
"Securities"), nor any interest in either, may be sold, assigned,
pledged, hypothecated, encumbered or in any other manner
transferred or disposed of, in whole or in part, except in
compliance with applicable United States federal and state
securities or Blue Sky laws and the terms and conditions herein
and in the Registration Rights Agreement dated March 18, 1998
among the Company and various holders of the Company's
securities. Purchase Agreement.
12. RESERVATION OF SHARES. The Company will at all times
following receipt of the Stockholder Approval (as defined in the
Purchase Agreement) reserve for issuance and delivery upon
exercise of this Warrant all Shares and other shares of capital
stock of the Company from time to time receivable upon exercise
of this Warrant.
13. SUCCESSORS AND ASSIGNS. The terms and provisions of
this Warrant and the Purchase Agreement shall inure to the
benefit of, and be binding upon, the Company and the Holders
hereof and their respective successors and assigns.
14. AMENDMENTS AND WAIVERS. Any term of this Warrant may
be amended and the observance of any term of this Warrant may be
waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and the Holder.
15. ASSUMPTION OF WARRANT. If at any time, while this
Warrant, or any portion thereof, is outstanding and unexpired
there shall be (i) an acquisition of the Company by another
entity by means of a merger, consolidation, or other transaction
or series of related transactions resulting in the exchange o2f
the outstanding shares of the Company's Capital Stock or (ii) a
sale or transfer of all or substantially all of the Company's
assets to any other person, then, as a part of such acquisition,
sale or transfer, lawful provision shall be made so that the
Holder shall thereafter be entitled to receive upon exercise of
this Warrant, during the period specified herein and upon payment
of the Exercise Price then in effect, the number of shares of
stock or other securities or property of the successor
corporation resulting from such acquisition, sale or transfer
which a holder of the shares deliverable upon exercise of this
Warrant would have been entitled to receive in such acquisition,
sale or transfer if this Warrant had been exercised immediately
before such acquisition, sale or transfer, all subject to further
adjustment as provided in this Section 15; and, in any such case,
appropriate adjustment (as determined by the Company's Board of
Directors) shall be made in the application of the provisions
herein set forth with respect to the rights and interests
thereafter of the Holder to the end that the provisions set forth
herein (including provisions with respect to changes in and other
adjustments of the number of Warrant Shares of the Holder is
entitled to purchase) shall thereafter be applicable, as nearly
as possible, in relation to any shares of Common Stock or other
securities or other property thereafter deliverable upon the
exercise of this Warrant.
16. NOTICES. All notices required under this Warrant shall
be deemed to have been given or made for all purposes (i) upon
personal delivery, (ii) upon confirmation receipt that the
communication was successfully sent to the applicable number if
sent by facsimile; (iii) one day after being sent, when sent by
professional overnight courier service, or (iv) five (5) days
after posting when sent by registered or certified mail. Notices
to the Company shall be sent to the principal office of the
Company (or at such other place as the Company shall notify the
Holder hereof in writing). Notices to the Holder shall be sent
to the address of the Holder on the books of the Company (or at
such other place as the Holder shall notify the Company hereof in
writing).
17. CAPTIONS. The section and subsection headings of this
Warrant are inserted for convenience only and shall not
constitute a part of this Warrant in construing or interpreting
any provision hereof.
18. GOVERNING LAW. This Warrant shall be governed by the
laws of the State of California as applied to agreements among
California residents made and to be performed entirely within the
State of California.
VANGUARD AIRLINES, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: CEO and President
UMB Bank na
Warrant Agent
By: _____________________________
Date: ____________________________
NOTICE OF EXERCISE
To: Vanguard Airlines, Inc.
The undersigned hereby elects to [check applicable
subsection]:
________ (a) Purchase _________shares of Common Stock of
Vanguard Airlines, Inc., pursuant to the terms of
the attached Warrant and payment of the Exercise
Price per share required under such Warrant
accompanies this notice;
OR
________ (b) Surrender [all of the shares] [_____________
of the shares] [cross out inapplicable phrase]
purchasable under the Warrant pursuant to the net
exercise provisions of Section 5 of such Warrant.
WARRANTHOLDER:
____________________________________
By:_________________________________
Name: _________________________
Title: _______________________
Address: _____________________
_____________________
Date:_________________________
Name in which shares should be registered:
___________________________________