EXHIBIT 99.5
THIS WARRANT AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR APPLICABLE STATE
SECURITIES LAWS. THEY MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE.
WORLD AIRWAYS, INC.
WARRANT TO PURCHASE COMMON STOCK
NO. D-1-1 DECEMBER 30, 2003
VOID AFTER DECEMBER 30, 2008
THIS CERTIFIES THAT, for value received, the Air
Transportation Stabilization Board, with its principal office at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, and/or its transferees and assigns
(individually or collectively, the "HOLDER"), is entitled to purchase at the
Exercise Price (defined below) from World Airways, Inc., a Delaware corporation,
with its principal office at The HLH Building, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇ (the "COMPANY"), 1,269,022 shares of common stock, $.001 par value per
share, of the Company (the "COMMON STOCK"), upon the terms and conditions as
provided herein.
1. DEFINITIONS. As used herein, the following terms shall have
the following respective meanings:
"AFFILIATE" shall mean, as to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control" when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise and
the terms "affiliated," "controlling" and "controlled" have meanings correlative
to the foregoing.
"APPLICABLE PRICE" shall mean:
(a) for purposes of any issuance of Additional Shares of
Common Stock (as defined below) under Section 5.4, the greater of (A) the Fair
Market Value of a share of Common Stock being issued (or, if being issued in an
underwritten offering, the Market Price on the day that such offering is being
priced), and (B) the then effective Exercise Price; and
(b) for purposes of any issuance under Section 5.1(b),
the greater of (A) the Market Price on the date of such issuance, and (B) the
then effective Exercise Price.
"BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday that is not a day on which banking institutions in New York,
New York are authorized or obligated by law or executive order to close.
"COMMON STOCK" shall mean the Common Stock of the Company, and
all other stock of any class or classes (however designated) of the Company from
time to time outstanding, the holders of which have the right, without
limitation as to amount, either to all or to a share of the balance of current
dividends or liquidating distributions after the payment of dividends and
distributions on any shares entitled to preference.
"EXCLUDED ISSUANCE" shall mean:
(a) shares of Common Stock issued upon exercise of this
Warrant or the other warrants issued concurrently to the Air Transportation
Stabilization Board (this Warrant and such other warrants, collectively, the
"WARRANTS");
(b) shares of Common Stock and/or options, warrants or
other Common Stock purchase rights issued and the Common Stock issued or
issuable pursuant to such options, warrants or other rights after the date
hereof to employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary pursuant to stock purchase or stock option plans or
other arrangements that are approved by the Board of Directors of the Company
(the "PLANS"); provided that such shares, options, warrants or other Common
Stock purchase rights and the Common Stock issued or issuable pursuant to such
options, warrants or other rights shall not be Excluded Issuances in any case
where the grantee acquires the shares, or the right to acquire shares pursuant
to such options, warrants or other rights to purchase Common Stock at a price
per share less than the Market Price on the date of such grant; and
(c) shares of Common Stock issued pursuant to the
exercise or conversion of the Existing Securities, or pursuant to the exercise
or conversion of rights, options, warrants or convertible securities outstanding
as of the date hereof.
"EXERCISE PERIOD" shall mean the time period commencing with
the date hereof and ending at 5:00 p.m. New York time on December 30, 2008.
"EXERCISE PRICE" shall mean Zero Dollars and Seventy-Eight
Cents ($0.78) per share, subject to adjustment pursuant to Section 5 below.
"EXERCISE SHARES" shall mean the shares of Common Stock
issuable upon exercise of this Warrant, subject to adjustment pursuant to the
terms herein, including but not limited to adjustment pursuant to Section 5
below and shall also mean any other shares, securities, assets or property
otherwise issuable upon exercise of this Warrant.
"EXISTING SECURITIES" shall mean the $25,545,000 aggregate
principal amount of 8% Convertible Senior Subordinated Debentures due 2009 of
the Company issued on the date hereof, Warrant Agreement, dated March 28, 2000,
from the Company to The Boeing Corporation in respect of 1,000,000 shares of
Common Stock, and Warrant Agreement, dated August 24, 1999, from the Company to
International Lease Finance Corporation in respect of 1,000,000 shares of Common
Stock.
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"FAIR MARKET VALUE" shall mean,
(a) with respect to a share of Common Stock, or any other
security of the Company or any other issuer:
(i) if such class of Common Stock or other security is
(A) traded on a national securities exchange or admitted to unlisted trading
privileges on such an exchange, or (B) is quoted on the National Market System
of the Nasdaq Stock Market (the "NATIONAL MARKET SYSTEM") or the Nasdaq Small
Cap Market (the "SMALL CAP MARKET"), or (C) is quoted or reported on Nasdaq's
Over-the-Counter Bulletin Board ("OTCBB") or by Pink Sheets LLC or a similar
organization or agency succeeding to its functions of reporting prices, the
average daily Market Price during the period of the most recent twenty (20)
Trading Days, ending on the last Trading Day before the date of determination of
Fair Market Value; or
(ii) if such class of Common Stock or other security is
not then so listed, admitted to trading or quoted, the Fair Market Value shall
be determined in accordance with the Valuation Procedure; or
(b) with respect to any assets or property other than
cash or Common Stock or other securities, the fair market value as determined in
accordance with the Valuation Procedure.
"MARKET PRICE" shall be, as of any specified date with respect
to any share of any class of Common Stock or any other security of the Company
or any other issuer, if such class of Common Stock or other security is traded
on a national securities exchange or admitted to unlisted trading privileges on
such an exchange, or is quoted on the National Market System or the Small Cap
Market, the last reported share or unit sale price of such class of Common Stock
or other security on such exchange or on the National Market System or the Small
Cap Market on such date or if no such sale is made on such day, the mean of the
closing bid and asked prices for such day on such exchange or on the National
Market System or the Small Cap Market; provided that if such class of Common
Stock or other security is not so listed or admitted to unlisted trading
privileges or quoted, the Market Price as of a specified date shall be the mean
of the last bid and ask prices reported on such date (x) by Nasdaq's OTCBB, or
(y) if reports are unavailable under clause (x) above by Pink Sheets LLC or a
similar organization or agency succeeding to its functions of reporting prices.
"PARTICIPATING SECURITIES" shall mean, (i) any equity security
(other than Common Stock) that entitles the holders thereof to participate in
liquidations or other distributions with the holders of Common Stock or
otherwise participate in the capital of the Company other than through a fixed
or floating rate of return on capital loaned or invested, and (ii) any stock
appreciation rights, phantom stock rights, or any other profit participation
rights with respect to any of the Company's capital stock or other equity
ownership interest, or any rights or options to acquire any such rights;
provided that any stock appreciation rights, phantom stock rights or any other
profit participation rights, or any rights or options to acquire such rights,
issued pursuant to any of the Plans shall not be deemed a Participating Security
if their grant or issuance would constitute an Excluded Issuance.
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"PERSON" shall mean any individual, corporation, limited
liability company, partnership, joint venture, association, joint-stock company,
trust, estate, unincorporated organization or government or any agency or
political subdivision thereof, or any entity whatsoever.
"RECORD DATE" shall mean, with respect to any dividend, other
distribution or issuance, the record date for the determination of stockholders
entitled to receive such dividend, distribution or issuance, or if no such
record date exists, the date of such dividend, distribution or issuance.
"TRADING DAY" shall mean, with respect to any class of Common
Stock or any other security of the Company or any other issuer a day (i) on
which the securities exchange or other trading platform applicable for purposes
of determining the Market Price of a share or unit of such class of Common Stock
or other security shall be open for business, or (ii) for which quotations from
such securities exchange or other trading platform of the character specified
for purposes of determining such Market Price shall be reported.
"VALUATION PROCEDURE" shall mean a determination made in good
faith by the Board of Directors of the Company (the "BOARD") that is set forth
in resolutions of the Board that are certified by the Secretary of the Company,
which certified resolutions (i) set forth the basis of the Board's
determination, which, in the case of a valuation in excess of $5.0 million,
shall include the Board's reliance on the valuation of a nationally recognized
investment banking or appraisal firm (which firm shall be subject to the
approval of the holders of Warrants exercisable for a majority of the securities
issuable upon exercise of the outstanding Warrants and which approval shall not
be unreasonably withheld), and (ii) are delivered to the Holder within ten (10)
Business Days following such determination. A Valuation Procedure with respect
to the value of any capital stock shall be based on the price that would be paid
for all of the capital stock of the issuer in an arm's-length transaction
between a willing buyer and a willing seller (neither acting under compulsion)
without any provision for a minority interest or similar discount.
2. EXERCISE OF WARRANT.
2.1. EXERCISE. This Warrant may be exercised in whole or
in part at any time during the Exercise Period, by delivery of the following to
the Company at its address set forth above (or at such other address as it may
designate by notice in writing to the Holder):
(a) an executed Notice of Exercise in the form attached
as Annex A hereto;
(b) payment of the Exercise Price (i) in cash or
immediately available funds, (ii) by cancellation of indebtedness, or (iii)
pursuant to Section 2.2 hereof; and
(c) this Warrant.
Upon the exercise of this Warrant, a certificate or
certificates for the Exercise Shares so purchased, registered in the name of the
Holder or such other Person as may be designated by the Holder (to the extent
such transfer is not validly restricted and upon payment of any transfer taxes
that are required to be paid by the Holder pursuant hereto), shall be issued
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and delivered by the Company to the Holder or such other Person as soon as
practicable (and in any event within five Business Days) after this Warrant
shall have been exercised. If this Warrant shall not have been exercised in
full, a new Warrant exercisable for the number of Exercise Shares remaining
shall be executed by the Company and delivered to the Holder or such other
Person at the same time as the certificate or certificates representing the
Exercise Shares purchased are delivered. Such new Warrant shall in all other
respects be identical to this Warrant.
The Person in whose name any certificate or certificates for
the Exercise Shares are to be issued upon exercise of this Warrant shall be
deemed to have become the holder of record of such shares on the date on which
this Warrant was surrendered and payment of the Exercise Price was made,
irrespective of the date of delivery of such certificate or certificates, except
that, if the date of such surrender and payment is a date when the stock
transfer books of the Company are closed, such Person shall be deemed to have
become the holder of such shares at the close of business on the next succeeding
date on which the stock transfer books are open (whether before or after the end
of the Exercise Period).
2.2. NET EXERCISE. Notwithstanding any provision herein to the
contrary, and so long as (i) the Exercise Shares are traded on a national
securities exchange or admitted to unlisted trading privileges on such an
exchange, or are quoted on the National Market System or the Small Cap Market,
and (ii) the Holder is the Air Transportation Stabilization Board or any
government agency or instrumentality (or the Bureau of Public Debt) of the
United States (each a "U.S. GOVERNMENT HOLDER"), then in lieu of exercising this
Warrant by payment of cash, check or cancellation of indebtedness, the U.S.
Government Holder may elect (the "CONVERSION RIGHT") to receive shares equal to
the value (as determined below) of this Warrant (or the portion thereof being
exercised) if the Market Price of one Exercise Share is greater than the
Exercise Price (at the date of calculation as set forth below), by surrender of
this Warrant at the principal office of the Company together with the properly
endorsed Notice of Exercise in which event the Company shall issue to the U.S.
Government Holder a number of Exercise Shares computed using the following
formula:
X = Y (A-B)
-------
A
Where X = the number of Exercise Shares to be issued
Y = the number of Exercise Shares purchasable under this
Warrant or, if only a portion of this Warrant is being exercised, the portion of
this Warrant being exercised (at the date of such calculation)
A = the Market Price of one Exercise Share (at the date of
such calculation)
B = the Exercise Price (as adjusted pursuant to Section 5
hereof to the date of such calculation)
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The Company shall pay all reasonable administrative costs
incurred by the U.S. Government Holder in connection with the exercise of the
Conversion Right by the U.S. Government Holder pursuant to this Section 2.2.
Unless indicated otherwise in writing by the U.S. Government Holder,
this Warrant shall automatically be exercised on December 30, 2008, by the U.S.
Government Holder hereof pursuant to this Section 2.2 hereof if the Fair Market
Value of one Exercise Share is greater than the Exercise Price per share on such
date. The Company shall take all actions and execute and deliver all documents
necessary to effect the foregoing, and the U.S. Government Holder shall be
entitled to receive Exercise Shares as if such U.S. Government Holder had
exercised this Warrant pursuant to this Section 2.2 for the full number of
Exercise Shares purchasable under this Warrant on such date.
3. COVENANTS AND REPRESENTATIONS OF THE COMPANY; SECURITIES
MATTERS.
3.1. COVENANTS AS TO EXERCISE SHARES.
(a) The Company covenants and agrees that all Exercise
Shares that may be issued upon the exercise of this Warrant will, upon issuance,
be validly authorized, issued and outstanding, fully paid and nonassessable,
free of preemptive rights and free from all taxes, liens and charges with
respect to the issuance thereof. If the Common Stock or the class of securities
of any other Exercise Shares is then listed or quoted on a national securities
exchange, the National Market System or the Small Cap Market, all such Exercise
Shares upon issuance shall also be so listed or quoted. The Company further
covenants and agrees that the Company will at all times during the Exercise
Period, have authorized and reserved solely for purposes of the exercise of this
Warrant, free from preemptive rights, a sufficient number of shares of its
Common Stock or the class of securities of any other Exercise Shares to provide
for the exercise in full of this Warrant (without taking into account any
possible exercise pursuant to Section 2.2 hereof). If at any time during the
Exercise Period the number of authorized but unissued shares of Common Stock or
the class of securities of any other Exercise Shares shall not be sufficient to
permit exercise in full of this Warrant (without taking into account any
possible exercise pursuant to Section 2.2 hereof), the Company will take such
corporate action as shall be necessary to increase its authorized but unissued
shares of Common Stock or the class of securities of any other Exercise Shares
to such number of shares as shall be sufficient for such purposes.
(b) In the event that at any time, including as a result
of any provision of Section 5, the Exercise Shares shall include any shares or
other securities other than shares of Common Stock, or any other property or
assets, the terms of this Warrant shall be modified or supplemented (in the
absence of express written documentation thereof, shall be deemed to be so
modified or supplemented), and the Company shall take all actions as may be
necessary to preserve, in a manner and on terms as nearly equivalent as
practicable to the provisions of this Warrant as they apply to the Common Stock,
the rights of the Holder hereunder (including, without limitation, the
provisions of Section 5 hereof), including any equitable replacements of the
term "Common Stock" with the term "Exercise Shares" and adjustments of any
formula included herein.
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(c) The Company shall provide to each Holder the
information contained in Section 5.1 of the Loan Agreement (as defined in
Section 3.4(l) below), in the manner and time periods required by such Section.
(d) Without prior written consent of the holders of
Warrants exercisable for a majority of the securities issuable upon exercise of
the outstanding Warrants, the Company shall not permit World Airways Parts
Company LLC or any other "significant subsidiary" (as defined by Rule 1-02(w) of
Regulation S-X under the Securities Act or any successor rule) to issue or grant
(i) any capital stock or equity ownership interest, including any Participating
Security; (ii) any rights, options, warrants or convertible security that is
exercisable for or convertible into any capital stock or other equity ownership
interest, including any Participating Security; or (iii) any stock appreciation
rights, phantom stock rights, or any other profit participation rights, or any
rights or options to acquire any such rights, in each case of clauses (i), (ii)
and (iii) above, to any Person other than the Company or its wholly-owned
subsidiaries.
(e) Without prior written consent of the holders of
Warrants exercisable for a majority of the securities issuable upon exercise of
the outstanding Warrants, the Company shall not make grants of shares of
restricted Common Stock or options, warrants or other rights to purchase Common
Stock or other stock-based awards to employees, officers or directors of, or
consultants or advisors to, the Company pursuant to the Plans from the date
hereof through December 31, 2004 covering shares in excess of 1,000,000 shares.
Without prior written consent of the holders of Warrants exercisable for a
majority of the securities issuable upon exercise of the outstanding Warrants,
the Company shall not reprice any of the options outstanding as of the date
hereof, other than as a result of a stock split, consolidation or other
recapitalization or reorganization.
(f) Until the later of (i) the date as of which the
Holder may sell all of the Exercise Shares without restriction pursuant to Rule
144(k) under the Securities Act, or any successor rule, and (ii) the last date
on which any of the Warrants remain outstanding, the Company shall timely file
all reports required to be filed with the Securities and Exchange Commission
("SEC") pursuant to the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and the Company shall not terminate its status as an issuer
required to file reports under the Exchange Act, other than as a result of a
merger or consolidation of the Company where (i) the Company is not the
surviving entity, or (ii) the Company is the surviving entity but its Common
Stock is exchanged in its entirety for cash or securities of another Person.
3.2. NO IMPAIRMENT. Except and to the extent as waived or
consented to in writing by the Holder, the Company will not, by amendment of its
Certificate of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed hereunder by the Company, but will at all
times in good faith assist in the carrying out of all the provisions of this
Warrant and in the taking of all such action as may be necessary or appropriate
in order to protect the exercise rights of the Holder against impairment
consistent with the intent and principles expressed in Section 5.9 below.
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3.3. NOTICES OF RECORD DATE. In the event (i) the Company
takes a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, (ii) the Company authorizes the granting to the holders of
Common Stock (or holders of the class of securities of any other Exercise
Shares) of rights to subscribe to or purchase any shares of capital stock of any
class or securities convertible into any shares of capital stock or of any other
right, (iii) the Company authorizes any reclassification of, or any
recapitalization involving, any class of Common Stock or any consolidation or
merger to which the Company is a party and for which approval of the
stockholders of the Company is required, or of the sale or transfer of all or
substantially all of the assets of the Company, (iv) the Company authorizes or
consents to or otherwise commences the voluntary or involuntary dissolution,
liquidation or winding up of the Company or (v) the Company authorizes or takes
any other action that would trigger an adjustment in the Exercise Price or the
number or amount of shares of Common Stock or other Exercise Shares subject to
this Warrant (other than a stock split or combination), the Company shall
deliver to the Holder, at least ten (10) days prior to the earlier of the record
date for any such action or stockholder vote and the date of such action, a
notice specifying (a) which action is to be taken and the date on which any such
record is to be taken for the purpose of any such action, (b) the date that any
such action is to take place and (c) the amount and character of any stock,
other securities or property and amounts, or rights or options with respect
thereto, proposed to be issued, granted or delivered to each holder of Common
Stock (or holders of the class of securities of any other Exercise Shares).
3.4. REPRESENTATIONS AND WARRANTIES. The Company hereby
represents and warrants to the Holder, as of the date hereof, that:
(a) The Company: (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware;
(ii) is duly qualified to do business and is in good standing in every
jurisdiction where the nature of its business requires it to be so qualified
(except where the failure to so qualify could not reasonably be expected to have
a material adverse effect, individually or in the aggregate, on its business,
financial condition or operations of the Company and its subsidiaries taken as a
whole or on its ability to pay or perform its obligations under this Warrant and
the Registration Rights Agreement (as defined below) (collectively, the "WARRANT
DOCUMENTS")); (iii) has received all permits necessary to conduct the businesses
now operated by it and has not received notice of proceedings relating to the
revocation or modification of any permit that, if adversely determined, would
reasonably be expected to have, individually or in the aggregate, a material
adverse effect on its business, financial condition or operations of the Company
and its subsidiaries taken as a whole, or on its ability to pay or perform its
obligations under the Warrant Documents; (iv) has all requisite power and
authority to own its properties and to carry on its business as now conducted
and as proposed to be conducted, and to execute and deliver the Warrant
Documents to which it is a party and to perform its obligations thereunder; and
(v) is in compliance in all material respects with all applicable law, rules,
regulations and orders;
(b) The execution, delivery and performance by the
Company of the Warrant Documents and the consummation of the transactions
contemplated therein: (i) are within its powers and have been duly authorized by
all necessary corporate and stockholder action; (ii) do not contravene its
charter documents or any law, rule, regulation or administrative or court order
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binding on or affecting the Company or its property; and (iii) do not conflict
with or constitute a breach of, or default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company pursuant to any material contract, indenture, mortgage, loan agreement,
note or other instrument to which it is a party, by which it may be bound or to
which its assets may be subject;
(c) Each of the Warrant Documents has been duly
authorized, executed, delivered and constitutes a valid and binding obligation
of the Company, enforceable against it in accordance with its terms, except as
the enforceability thereof may be subject to or limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors generally and general equitable
principles (whether applied in an action at law or a suit in equity);
(d) There is no action, suit or proceeding affecting the
Company pending or, to its knowledge, threatened before any court, arbitrator,
or governmental authority, domestic or foreign, which would reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
its ability to pay or perform its obligations under the Warrant Documents or on
the business, financial condition or operations of the Company and its
subsidiaries taken as a whole;
(e) The authorized capital stock of the Company consists
of 100,000,000 shares of Common Stock, $.001 par value per share, and 5,000,000
shares of Preferred Stock, $.001 par value per share (the "PREFERRED STOCK"), of
which (i) 11,421,198 shares of Common Stock are outstanding, and (ii) no shares
of Preferred Stock are outstanding. All of the outstanding shares of Common
Stock of the Company have been duly authorized and validly issued, and are fully
paid and nonassessable and are free of any preemptive rights and the shares of
Common Stock deliverable upon exercise of this Warrant have been, and at all
times will be, duly authorized and reserved for issuance upon such exercise,
and, when delivered upon such exercise, will be validly issued, fully paid and
nonassessable and free of any preemptive rights;
(f) Except as set forth in Section 3.4(e) or on SCHEDULE
3.4(f) and other than the Company's direct or indirect ownership interests in
its subsidiaries, there are not outstanding nor are there any understandings,
commitments or obligations to issue or grant (i) any shares of capital stock or
securities, rights, options, warrants or subscriptions giving any Person the
right to acquire from the Company, or requiring that the Company or any of its
subsidiaries issue any capital stock or other equity interest in the Company or
any of its subsidiaries; (ii) any stock appreciation rights, phantom stock
rights, or any other profit participation rights with respect to any capital
stock or other equity ownership interest in the Company or any of its
subsidiaries, or any rights or options to acquire any such rights; or (iii) any
contracts, agreements, arrangements or understandings to which the Company or
any of its subsidiaries is party or by which any of them is bound, giving any
Person any rights of exchange, preemptive rights (statutory or contractual),
anti-dilution rights, rights of first refusal, rights of first offer or
registration rights with respect to any capital stock of the Company or any of
its subsidiaries;
(g) Assuming the veracity of, and compliance with, the
representations, statements and agreements set forth in Section 4 hereof, the
offer and issuance by the Company
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of this Warrant are, and the issuance of the Common Stock upon exercise of this
Warrant will be, exempt from the registration requirements under the Securities
Act;
(h) No authorization, approval, consent or order of any
court or governmental authority or agency or any other Person is required in
connection with the issuance by the Company of this Warrant, or the consummation
by the Company of any of the transactions contemplated by the Warrant Documents
(other than such approvals, authorizations or consents contemplated by the
Registration Rights Agreement);
(i) The Company has filed all forms, reports and
documents required to be filed by the Company with the SEC since January 1,
2000. All such required forms, reports and documents are referred to herein as
the "SEC REPORTS". As of their respective dates, the SEC Reports (i) were
prepared in all materials respects in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such SEC Reports, and (ii) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading except to the extent corrected by a subsequently filed SEC Report.
Taken as a whole, the SEC Reports do not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. None of Company's
subsidiaries is required to file any forms, reports or other documents with the
SEC. Each of the SEC Reports included, as exhibits thereto, all documents
required to be filed as exhibits to such SEC Report under the rules and
regulations of the SEC, except to the extent filed prior to the date of this
Warrant in an amendment to such SEC Report, or in a subsequently filed SEC
Report.
(j) Neither the Company nor any Affiliate of the Company
has directly, or though any agent, (i) sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of any security (as defined in the
Securities Act) which is or will be integrated with the issuance of this
Warrant, or the Exercise Shares issuable upon exercise of this Warrant, in a
manner that would require the registration under the Securities Act of this
Warrant or the Exercise Shares, or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering of this
Warrant or the Exercise Shares (as those terms are used in Regulation D under
the Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act;
(k) (i) To the extent the initial Holder is not an
"accredited investor" as defined in Rule 501(a) under the Securities Act, the
Company has heretofore delivered to the initial Holder, at a reasonable time
prior to the issuance hereof, the information required to be delivered to such
Holder pursuant to Rule 502(b)(2)(ii) under the Securities Act; and (ii) the
Company has heretofore delivered to the initial Holder, the following financial
statements and information: (A) the audited consolidated balance sheets of the
Company as at December 31, 2002, and the related consolidated statements of
income, stockholders' equity and cash flows for the fiscal year then ended, and
(B) the unaudited consolidated balance sheet of the Company as at September 30,
2003 and the related unaudited statements of income, stockholders' equity and
cash flows for the nine months then ended. All such consolidated statements were
prepared in
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conformity with United States generally accepted accounting principles and
fairly present the consolidated financial position of the Company as at the
respective dates thereof and the consolidated results of operations and cash
flows of the Company for each of the periods then ended subject, in the case of
the unaudited consolidated statements, to year-end audit and other normally
recurring adjustments; except as disclosed in writing to the initial Holder
prior to the date of this Warrant, neither the Company nor any of its
subsidiaries has any material contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment that is not reflected
in the foregoing consolidated financial statements or the notes thereto and
which in any such case is material in relation to the business, operations,
properties, assets or condition (financial or otherwise) of the Company;
(l) The representations and warranties made by the
Company in that certain Loan Agreement, dated as of December 30, 2003 (the "LOAN
AGREEMENT") are true and correct as of the date hereof;
(m) The rights granted to the Holder in this Warrant do
not in any way conflict with and are not inconsistent with the rights granted to
the holders of the Company's other issued and outstanding securities under any
other agreements.
(n) One hundred percent (100%) of the issued and
outstanding limited liability company interests of World Airways Parts Company
LLC is owned beneficially and of record by the Company.
4. REPRESENTATIONS OF HOLDER.
4.1. ACCREDITED INVESTOR; ACQUISITION OF WARRANT FOR
PERSONAL ACCOUNT. The Holder is an "accredited investor" as defined in Rule
501(a) of the Securities Act, or alternatively, the Holder has received the
information specified in Section 3(k)(i) above. The Holder represents and
warrants that it is acquiring this Warrant and, to the extent this Warrant is
exercised, the Exercise Shares solely for its account for investment and not
with a view to or for sale or distribution of said Warrant or Exercise Shares or
any part thereof, other than potential transfers between Affiliates (including
affiliated funds) or transfers pursuant to an effective registration statement
under, or an exemption from the registration requirements of, the Securities
Act.
4.2. SECURITIES ARE NOT REGISTERED.
(a) The Holder understands that this Warrant and the
Exercise Shares have not been registered under the Securities Act, on the basis
that no distribution or public offering is being effected. The Holder realizes
that the basis for the exemption may not be present if, notwithstanding its
representations, the Holder has a present intention of acquiring the securities
for a fixed or determinable period in the future, selling (in connection with a
distribution or otherwise), granting any participation in, or otherwise
distributing the securities. The Holder has no such present intention, other
than potential transfers between Affiliates (including affiliated funds) or
transfers pursuant to an effective registration statement under, or an exemption
from the registration requirements of, the Securities Act.
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(b) The Holder recognizes that this Warrant and the
Exercise Shares may not be sold unless they are subsequently registered under
the Securities Act or an exemption from such registration is available.
4.3. DISPOSITION OF WARRANT AND EXERCISE SHARES.
(a) The Holder agrees not to make any disposition of all
or any part of this Warrant or Exercise Shares unless:
(i) The Company shall have received a letter obtained by
the Holder from the SEC staff stating that no action will be recommended to the
SEC with respect to the proposed disposition;
(ii) There is then in effect a registration statement
under the Securities Act covering such proposed disposition and such disposition
is made in accordance with said registration statement;
(iii) Pursuant to Rule 144; or
(iv) The Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a statement of
the circumstances surrounding the proposed disposition and, if reasonably
requested by the Company, the Holder shall have furnished the Company with an
opinion of counsel for the Holder, reasonably satisfactory to the Company, to
the effect that such disposition will not require registration of such Warrant
or Exercise Shares under the Securities Act or any applicable state securities
laws.
(b) The Holder is aware that neither this Warrant nor the
Exercise Shares may be sold pursuant to Rule 144 adopted under the Securities
Act unless the applicable conditions thereof are met, including, among other
things, the Company having filed reports with the SEC, the required holding
period under Rule 144 and the number of shares being sold during any three month
period not exceeding specified limitations.
(c) The Holder understands and agrees that all
certificates evidencing the Exercise Shares may bear the following legend
(unless such shares have been disposed of in accordance with clause (a)(ii) or
(iii) or such legend is no longer required to comply with applicable securities
laws):
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR APPLICABLE STATE
SECURITIES LAWS. THEY MAY NOT BE TRANSFERRED, SOLD, OFFERED FOR SALE, PLEDGED,
HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO SUCH SECURITIES UNDER THE SECURITIES ACT AND
APPLICABLE STATE SECURITIES LAWS, UNLESS AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE."
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5. ADJUSTMENT OF EXERCISE PRICE, SHARES OF COMMON STOCK
PURCHASABLE AND NUMBER OF WARRANTS
5.1. ADJUSTMENT OF EXERCISE PRICE. The Exercise Price as
defined in Section 1 shall be subject to adjustment from time to time as
follows:
(a) If the Company after the date hereof shall (i) pay a
dividend or make a distribution to holders of any class of capital stock in
shares of Common Stock, (ii) split or otherwise subdivide the outstanding shares
of Common Stock, or (iii) combine the outstanding shares of Common Stock into a
smaller number of shares, then in any such case the Exercise Price in effect
immediately prior thereto shall be adjusted to a price obtained by multiplying
such Exercise Price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding prior to such action and the denominator
shall be the number of shares of Common Stock outstanding after giving effect to
such action. An adjustment made pursuant to clause (i) of this subsection (a)
shall become effective retroactively immediately after the Record Date for such
dividend or distribution, and an adjustment made pursuant to clause (ii) or
(iii) of this subsection (a) shall become effective immediately after the
effective date of such subdivision or combination.
(b) If the Company after the date hereof shall issue
rights, options or warrants to holders of any class of capital stock to
subscribe for or purchase shares of Common Stock or securities convertible into
Common Stock at a price per share less than the Applicable Price per share on
the issuance date thereof, the Exercise Price in effect immediately prior
thereto shall be adjusted to a price obtained by multiplying such Exercise Price
by a fraction of which (i) the numerator shall be the number of shares of Common
Stock outstanding on the date of issuance of such rights, options or warrants
plus the number of shares of the class of Common Stock subject to such rights,
options or warrants, which the aggregate consideration for the total number of
shares to be so offered would purchase at the Applicable Price of a share of the
class of Common Stock subject to such rights, options or warrants, and (ii) the
denominator shall be the number of shares of Common Stock outstanding on the
date of issuance of such rights, options or warrants plus the number of
additional shares of Common Stock to be offered for subscription or purchase;
provided, however, that no adjustment shall be made if the Company issues or
distributes to the Holder the rights, options or warrants which the Holder would
have been entitled to receive had this Warrant been exercised prior to the
Record Date (and, if applicable, had this Warrant been exercisable for the class
of Common Stock receiving such issuance or distribution). Any such adjustments
shall be made whenever such rights, options or warrants are issued and shall
become effective retroactively immediately after the Record Date for the
determination of stockholders entitled to receive such rights, options or
warrants, unless such rights, options or warrants are not immediately
exercisable, in which case any such adjustments shall be made at such time such
rights, options or warrants become exercisable. Upon expiration of the period
during which any such rights, options or warrants may be exercised, any
adjustment previously made pursuant to the foregoing provisions shall be
recalculated to take into consideration only those rights, options or warrants
actually exercised during the applicable period for exercise and notice of any
such further adjustment to the Exercise Price shall be given to Holder as herein
provided.
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(c) If the Company after the date hereof shall issue or
distribute to holders of any class of Common Stock or any class of capital stock
that is convertible into Common Stock evidences of its indebtedness, cash or
other assets, shares of capital stock of any class or any other securities
(other than the Common Stock) or rights to subscribe therefor (excluding those
referred to in subsection (b) above), in each such case the Exercise Price in
effect immediately prior thereto shall be adjusted to a price obtained by
multiplying such Exercise Price by a fraction of which (i) the numerator shall
be the sum of the amount, for each class of Common Stock then outstanding, of
the Fair Market Value per share of such class of Common Stock, multiplied by the
number of outstanding shares of such class of Common Stock, in each case on the
Record Date, less the Fair Market Value of the assets, cash or evidences of
indebtedness so distributed, or shares of capital stock or other securities or
rights to subscribe therefor so issued, and (ii) the denominator shall be the
sum of the amount, for each class of Common Stock then outstanding, of the Fair
Market Value per share of such class of Common Stock, multiplied by the number
of outstanding shares of such class of Common Stock, in each case on the Record
Date; provided, however, that no adjustment shall be made if the Company issues
or distributes to the Holder the evidence of indebtedness, cash, other assets,
capital stock or other securities or subscription rights referred to above in
this subsection (c) that the Holder would have been entitled to receive had this
Warrant been exercised in full prior to the Record Date (and, if applicable, had
this Warrant been exercisable for the class of capital stock receiving such
issuance or distribution). The Company shall provide the Holder, upon receipt of
a written request therefor, with copies of any indenture or other instruments
defining the rights of the holders of any indebtedness, assets, capital stock or
other securities or subscription rights referred to in this subsection 5.1(c).
Any such adjustment shall be made whenever any such distribution is made, and
shall become effective retroactively immediately after the Record Date. Upon
expiration of the period during which any subscription rights granted pursuant
to this subsection (c) may be exercised, any adjustment previously made pursuant
to the foregoing provisions shall be recalculated to take into consideration
only those subscription rights actually exercised during the applicable period
for exercise and notice of any such further adjustment to the Exercise Price
shall be given to the Holder as herein provided.
(d) For purposes of Sections 5.1(a), 5.1(b) and 5.1(c),
any dividend or distribution to which Section 5.1(c) is applicable that also
includes shares of Common Stock, a subdivision of Common Stock or a combination
of Common Stock to which Section 5.1(a) applies, or rights or warrants to
subscribe for or purchase shares of Common Stock to which Section 5.1(b) applies
(or any combination thereof), shall be deemed instead to be:
(i) a dividend or distribution of the evidences
of indebtedness, cash, other assets, shares of capital stock,
other securities or subscription rights, other than such
shares of Common Stock, such subdivision or combination or
such rights, options or warrants to which Sections 5.1(a) and
5.1(b) apply, respectively (and any Exercise Price reduction
required by Section 5.1(c) with respect to such dividend or
distribution shall then be made), immediately followed by
(ii) a dividend or distribution of such shares of
Common Stock, such subdivision or combination or such rights,
options or warrants to which Sections 5.1(a) and 5.1(b) apply
(and any further Exercise Price reduction required by Sections
5.1(a) and (b) with respect to such actions shall then be
made).
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(e) In case a tender or exchange offer (other than an odd
lot offer) by the Company for any Common Stock is consummated at a price in
excess of the Market Price of the Common Stock subject to such tender or
exchange offer at the expiration of such tender or exchange offer, the Exercise
Price in effect immediately prior thereto shall be adjusted to a price obtained
by multiplying such Exercise Price by a fraction of which (i) the numerator
shall be such Market Price, less the amount of the excess of the value of the
tender or exchange offer price over the Market Price, and (ii) the denominator
shall be the Market Price, such adjustment to become effective immediately prior
the opening of business on the day following such date of expiration.
5.2. ADJUSTMENT OF EXERCISE SHARES.
Upon each adjustment of the Exercise Price pursuant to Section
5.1 or 5.4 hereof the number of Exercise Shares purchasable upon exercise of
this Warrant shall be adjusted to the number of Exercise Shares, calculated to
the nearest one-hundredth of a share, obtained by (i) multiplying the number of
Exercise Shares purchasable immediately prior to such adjustment by the Exercise
Price in effect prior to such adjustment, and (ii) dividing the product so
obtained by the Exercise Price in effect after such adjustment of the Exercise
Price.
5.3. RIGHTS UPON CONSOLIDATION, MERGER, SALE, TRANSFER,
RECLASSIFICATION OR RECAPITALIZATION.
(a) In case of any consolidation or merger of the Company
with another Person (other than a merger or consolidation in which the Company
is the continuing Person and the Common Stock is not exchanged for securities,
property or assets issued, delivered or paid by another Person), or in case of
any lease, sale or conveyance to another Person of all or substantially all of
the property or assets of the Company, this Warrant shall thereafter (until the
end of the Exercise Period) evidence the right to receive, upon its exercise, in
lieu of the shares of Common Stock deliverable upon such exercise immediately
prior to such consolidation merger, lease, sale or conveyance the kind and
amount of shares and/or other securities and/or property and assets and/or cash
that the Holder would have been entitled to receive upon such consolidation
merger, lease, sale or conveyance had the Holder exercised this Warrant
immediately prior to such consolidation merger, lease, sale or conveyance.
(b) In case of any reclassification or change of, or
recapitalization involving, the Common Stock issuable upon exercise of this
Warrant (other than a change in par value, or from no par value to par value, or
as a result of a subdivision or combination), including any such
reclassification, change or recapitalization effected in connection with a
consolidation or merger of the Company with another Person in which the Company
is the continuing Person and the holders of Common Stock receive shares and/or
other securities and/or property or assets and/or cash issued, delivered or paid
by the Company in exchange for such shares of Common Stock (including for this
purpose shares reflecting a change in par value or from no par value to par
value or as a result of a subdivision or combination of the shares of Common
Stock), this Warrant shall thereafter (until the end of the Exercise Period)
evidence the right to receive, upon its exercise, in lieu of the shares of
Common Stock deliverable upon such exercise immediately prior to such
reclassification, change or recapitalization, the kind and amount of shares
and/or other securities and/or property and assets and/or cash that the Holder
would have been entitled
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to receive upon such reclassification, change, consolidation or merger had the
Holder exercised this Warrant immediately prior to such reclassification,
change, consolidation or merger.
(c) The Company shall not consummate any transaction that
effects or permits any such event or occurrence unless each Person whose shares
of stock, securities or assets will be issued, delivered or paid to the holders
of the Common Stock (including the Company with respect to clause (ii) below),
prior to or simultaneously with the consummation of the transaction, (i) is a
corporation organized and existing under the laws of the United States of
America or any State or the District of Columbia, and (ii) expressly assumes, or
in the case of the Company, acknowledges, by a Warrant supplement or other
document in a form substantially similar hereto, executed and delivered to the
Holder hereof, the obligation to deliver to such Holder such shares of stock,
securities or assets as, in accordance with the foregoing provisions of this
Section 5.3, such Holder is entitled to purchase, and all other obligations and
liabilities under this Warrant, including obligations and liabilities in respect
of subsequent adjustments that are required under this Warrant and the
registration rights under Section 7 hereof.
(d) The above provisions of this Section 5.3 shall
similarly apply to successive reclassifications and changes of Exercise Shares
and to successive consolidations mergers, leases, sales or conveyances, mutatis
mutandis.
(e) Without limiting the applicability of the provisions
of this Section 5.3, it is expressly agreed that these provisions shall apply to
a restructuring of the Company, directly or indirectly, as a holding company,
with the Company surviving either as a parent or a subsidiary.
5.4. SALE OF SHARES BELOW APPLICABLE PRICE.
(a) If at any time or from time to time after the date
hereof, the Company issues or sells, or is deemed by the express provisions of
this Section 5.4 to have issued or sold, Additional Shares of Common Stock (as
defined below), other than as provided in Sections 5.1, 5.2 or 5.3 above, for an
Effective Price (as defined below) less than the Applicable Price (such issue, a
"QUALIFYING DILUTIVE ISSUANCE"), then and in each such case, the then effective
Exercise Price shall be reduced, effective as of the opening of business on the
date of such issue or sale (or if earlier, the date on which a binding agreement
providing for such issue or sale was entered into), to a price determined by
multiplying the Exercise Price in effect immediately prior to such issuance or
sale by a fraction:
(i) the numerator of which shall be (A) the
number of shares of Common Stock outstanding immediately prior
to such issue or sale, plus (B) the number of shares of the
class of Common Stock being issued or sold or deemed to be
issued or sold which the aggregate consideration received by
the Company for the total number of Additional Shares of
Common Stock so issued or deemed to be so issued would
purchase at the Applicable Price, and
(ii) the denominator of which shall be the number
of shares of Common Stock outstanding immediately prior to
such issue or sale plus the total number of Additional Shares
of Common Stock so issued or deemed to be so issued.
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(b) For the purpose of the adjustment required under this
Section 5.4, if the Company issues or sells (x) stock or other securities
convertible into shares of Common Stock (such convertible stock or securities
being herein referred to as "CONVERTIBLE SECURITIES"), or (y) rights, options or
warrants for the purchase of shares of Common Stock or Convertible Securities,
and if the Effective Price of such shares of Common Stock is less than the
Applicable Price, in each case the Company shall be deemed to have issued at the
time of the issuance of such rights, options or warrants or Convertible
Securities the maximum number of Additional Shares of Common Stock issuable upon
exercise or conversion thereof and to have received as aggregate consideration
for the issuance of such shares an amount equal to the total amount of the
consideration, if any, received by the Company for the issuance or sale of such
rights, options or warrants or Convertible Securities plus the minimum amounts
of consideration, if any, payable to the Company upon the exercise or conversion
of such rights, options or warrants or Convertible Securities (other than by
cancellation of liabilities or obligations evidenced by such Convertible
Securities); provided that
(i) subject to paragraph (d) below, if the
minimum amounts of such consideration cannot be ascertained,
but are a function of antidilution or similar protective
clauses, the Company shall be deemed to have received the
minimum amounts of consideration without reference to such
clauses; and
(ii) if the minimum amount of consideration
payable to the Company upon the exercise or conversion of such
rights, options, warrants or Convertible Securities is reduced
over time or on the occurrence or non-occurrence of specified
events other than by reason of antidilution adjustments, the
Effective Price shall be recalculated using the figure to
which such minimum amount of consideration is reduced;
provided further, that if the minimum amount of consideration
payable to the Company upon the exercise or conversion of such
rights, options, warrants or Convertible Securities is
subsequently increased, the Effective Price shall be again
recalculated using the increased minimum amount of
consideration payable to the Company upon the exercise or
conversion of such rights, options, warrants or Convertible
Securities.
No further adjustment of the Exercise Price, as adjusted upon
the issuance of such rights, options, warrants or Convertible Securities, shall
be made as a result of the actual issuance of shares of Common Stock upon the
exercise of any such rights, options or warrants or the conversion of any such
Convertible Securities. If any such rights, options or warrants or the
conversion privilege represented by any such Convertible Securities shall expire
without having been exercised, the Exercise Price as adjusted upon the issuance
of such rights, options, or warrants or Convertible Securities shall be
readjusted to the Exercise Price which would have been in effect had an
adjustment been made on the basis of only the shares of Common Stock, if any,
actually issued or sold on the exercise or conversion of such rights, options,
warrants or Convertible Securities, and on the basis that such shares of Common
Stock, if any, were issued or sold for the consideration actually received by
the Company upon such exercise or conversion (other than by cancellation of
liabilities or obligations evidenced by such Convertible Securities), plus the
consideration, if any, actually received by the Company for the issue or sale of
all such rights, options, warrants and Convertible Securities, whether or not
exercised, provided that such readjustment shall not apply to prior exercises of
this Warrant.
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(c) For the purpose of making any adjustment to the
Exercise Price of the Exercise Shares required under this Section 5.4,
"ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common Stock issued
by the Company or deemed to be issued pursuant to this Section 5.4 (including
shares of Common Stock subsequently reacquired or retired by the Company), other
than any Excluded Issuance.
The "EFFECTIVE PRICE" of Additional Shares of Common Stock
shall mean the quotient determined by dividing the total number of Additional
Shares of Common Stock issued or sold, or deemed to have been issued or sold by
the Company under this Section 5.4, into the aggregate consideration received,
or deemed to have been received by the Company for such issue under this Section
5.4, for such Additional Shares of Common Stock.
(d) In the event that the Company issues or sells, or is
deemed to have issued or sold, Additional Shares of Common Stock in a Qualifying
Dilutive Issuance (the "FIRST DILUTIVE ISSUANCE"), then in the event that the
Company issues or sells, or is deemed to have issued or sold, Additional Shares
of Common Stock in a Qualifying Dilutive Issuance other than the First Dilutive
Issuance (a "SUBSEQUENT DILUTIVE ISSUANCE") pursuant to the same instruments as
the First Dilutive Issuance, then and in each such case upon a Subsequent
Dilutive Issuance the Exercise Price shall be reduced to the Exercise Price that
would have been in effect had the First Dilutive Issuance and each Subsequent
Dilutive Issuance all occurred on the closing date of the First Dilutive
Issuance.
5.5. ADDITIONAL ADJUSTMENTS TO EXERCISE PRICE.
Notwithstanding anything to the contrary contained in this Section 5, but
subject to Section 5.7, the Company shall be entitled, but not required, to make
such reductions in the Exercise Price, in addition to those required by Section
5.1, 5.3 or 5.4, as it, in its sole discretion, shall determine to be advisable,
including, without limitation, in order that any dividend in or distribution of
shares of Common Stock or shares of capital stock of any class other than Common
Stock, subdivision, reclassification or combination of shares of Common Stock,
issuance of rights, options, or warrants, or any other transaction having a
similar effect, shall not be treated as a distribution of property by the
Company to its stockholders under Section 305 of the Internal Revenue Code of
1986, as amended, or any successor provision and shall not be taxable to them.
5.6. DE MINIMIS ADJUSTMENTS. No adjustment pursuant to
Section 5.1, 5.3 or 5.4 hereof shall be required unless such adjustment would
require an increase or decrease of at least 1% of the Exercise Price then
subject to adjustment; provided, however, that any adjustments that are not made
by reason of this Section 5.6 shall be carried forward and taken into account in
any subsequent adjustment. All calculations under this Section 5 shall be made
to the nearest thousandth of a cent.
5.7. CONDITION PRECEDENT TO REDUCTION OF EXERCISE PRICE
BELOW PAR VALUE OF SHARES OF COMMON STOCK OR INCREASE IN PAR VALUE TO ABOVE
EXERCISE PRICE.
(a) Before taking any action that would cause an
adjustment reducing the Exercise Price to below the then par value of any of the
shares of Common Stock issuable upon exercise of this Warrant, the Company will
take any corporate action that may, in the opinion of
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its counsel, be necessary in order that the Company may validly and legally
issue fully paid and non-assessable shares of such Common Stock at such adjusted
Exercise Price.
(b) Before taking any action that would increase the par
value of the Common Stock issuable upon exercise of this Warrant to an amount
that is greater than the then effective Exercise Price, the Company will take
such corporate action that is necessary in order that the Company may validly
and legally issue fully paid and non-assessable shares of such Common Stock at
such then effective Exercise Price.
5.8. CERTIFICATE OF ADJUSTMENT. In each case of an
adjustment or readjustment of the Exercise Price, the Company, at its sole
expense, shall compute such adjustment or readjustment in accordance with the
provisions hereof and prepare a certificate showing such adjustment or
readjustment, and shall mail such certificate, by first class mail, postage
prepaid, to the Holder at the Holder's address as shown in the Company's books
no later than five (5) Business Days following the effective date of such
adjustment or readjustment. The certificate shall set forth such adjustment or
readjustment, showing in detail the facts upon which such adjustment or
readjustment is based, including a statement of (i) the number of Additional
Shares of Common Stock issued or sold or deemed to have been issued or sold;
(ii) the consideration received or deemed to be received by the Company for any
Additional Shares of Common Stock issued or sold or deemed to have been issued
or sold, (iii) the Exercise Price at the time in effect, and (iv) the type and
amount, if any, of other property which would be received upon exercise of this
Warrant.
5.9. OTHER DILUTIVE EVENTS. If any event or occurrence
shall occur as to which the provisions of this Section 5 are not strictly
applicable but as to which the failure to make any adjustment to the Exercise
Price and/or the number of shares or other assets or property subject to this
Warrant would adversely affect the purchase rights or value represented by this
Warrant in accordance with the essential intent and principles of this Section
5, including any issuance of Participating Securities, then, in each such case,
the Company shall determine the adjustment, if any, on a basis consistent with
the essential intent and principles established in this Section 5, necessary to
preserve, without dilution, the purchase rights represented by this Warrant. If
such determination involves or is based on a determination of the fair market
value of any securities or other assets or property, such determination shall be
made in accordance with the Valuation Procedure.
5.10. GENERAL ADJUSTMENT PROVISIONS.
(a) Notwithstanding anything to the contrary contained in
this Warrant, no adjustments to the Exercise Price or the number of shares of
Common Stock purchasable upon exercise of this Warrant shall be made solely as a
result of any Excluded Issuance.
(b) In any case in which this Section 5 shall require
that an adjustment be made retroactively immediately following a Record Date,
the Company may elect to defer (but only until five (5) Business Days following
the mailing by the Company to the Holder of the certificate as required by
Section 5.8) issuing to the Holder, in the event of any exercise of this Warrant
after such Record Date, the shares of the Common Stock issuable upon such
exercise in
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excess of the shares of Common Stock issuable upon such exercise prior to such
adjustment, if any.
(c) The provisions and adjustments provided for in this
Section 5 shall apply to successive events or occurrences of the types described
in this Section 5.
(d) For the purpose of making any adjustment required
under this Section 5 that requires a determination of the aggregate
consideration received by the Company for any sale, issue or distribution of
securities, the aggregate consideration received by the Company shall equal the
sum of: (i) to the extent it consists of cash, the net amount of cash received
by the Company after deduction of any underwriting or similar commissions,
compensation or concessions paid or allowed by the Company in connection with
such issue or sale but without deduction of any expenses payable by the Company,
and (ii) to the extent it consists of property or assets other than cash, the
Fair Market Value of the property or assets.
6. FRACTIONAL SHARES. No fractional shares shall be issued upon
the exercise of this Warrant as a consequence of any adjustment pursuant hereto.
All Exercise Shares (including fractions) issuable upon exercise of this Warrant
may be aggregated for purposes of determining whether the exercise would result
in the issuance of any fractional share. If, after aggregation, the exercise
would result in the issuance of a fractional share, the Company shall, in lieu
of issuance of any fractional share, pay the Holder otherwise entitled to such
fraction a sum in cash equal to the product resulting from multiplying such
fractional amount by the Fair Market Value of one share of Common Stock.
7. REGISTRATION RIGHTS. The Holder shall have the registration
rights with respect to the Common Stock as set forth in that certain
Registration Rights Agreement, dated as of December 30, 2003 (the "REGISTRATION
RIGHTS AGREEMENT") between the Company and the Air Transportation Stabilization
Board. To the extent that this Warrant becomes exercisable for Exercise Shares
other than the Common Stock, the Company agrees to grant the Holder hereof the
same registration rights with respect to such Exercise Shares as are currently
granted to the Holder in respect of the Common Stock pursuant to the
Registration Rights Agreement. If permissible under the Securities Act, the
Company shall provide the Holder with the same registration rights with respect
to the resale of the Warrant and the issuance of the Exercise Shares upon
exercise of the Warrant by Holders other than the initial Holder, as are
currently granted to Holder pursuant to the Registration Rights Agreement;
provided that this provision does not entitle the Holder to any additional
requests to those granted pursuant to Section 2 of the Registration Rights
Agreement. In addition, the Company shall use its reasonable best efforts, upon
the reasonable request of the Holder, to cause the Warrant to be listed or
quoted on a national securities exchange, the National Market System or the
Small Cap Market.
8. NO STOCKHOLDER RIGHTS OR LIABILITIES. This Warrant in and of
itself shall not entitle the Holder to any voting rights or other rights as a
stockholder of the Company (subject to the provisions of Section 5 above). No
provision of this Warrant, in the absence of affirmative action by the Holder to
exercise this Warrant in exchange for shares of Common Stock, and no mere
enumeration herein of the rights or privileges of the Holder, shall give rise to
any liability of the Holder for the Exercise Price or as a stockholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
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9. TRANSFER OF WARRANT. Subject to the restriction on transfers
set forth in the legend on the first page of this Warrant and in Section 4.3 and
applicable laws, this Warrant and all rights hereunder, in whole or in part, are
transferable, by the Holder in person or by duly authorized attorney, upon
delivery of this Warrant and the form of assignment attached as Annex B hereto
to any transferee designated by Holder.
10. PAYMENT OF TAXES ON STOCK CERTIFICATE ISSUED UPON EXERCISE.
The initial issuance of certificates of Common Stock upon any exercise of this
Warrant shall be made without charge to the exercising Holder for any transfer,
stamp or similar tax or for any other governmental charges that may be imposed
in respect of the issuance of such stock certificates, and such stock
certificates shall be issued in the respective names of, or in such names as may
be directed by, the Holder; provided, however, that the Company shall not be
required to pay any tax or such other charges that may be payable in respect of
any transfer involved in the issuance and delivery of any such stock
certificate, any new Warrants or other securities in a name other than that of
the Holder upon exercise of this Warrant (other than to an Affiliate), and the
Company shall not be required to issue or deliver such certificates or other
securities unless and until the Person or Persons requesting the issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.
11. LOST, STOLEN, MUTILATED OR DESTROYED WARRANT. If this Warrant
is lost, stolen, mutilated or destroyed, the Company may, on such terms as to
indemnity or otherwise as it may reasonably impose (which shall, in the case of
a mutilated Warrant, include the surrender thereof), issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.
Any such new Warrant shall constitute an original contractual obligation of the
Company, whether or not the allegedly lost, stolen, mutilated or destroyed
Warrant shall be at any time enforceable by anyone.
12. EXCHANGE OF WARRANT; DIVISIBILITY OF WARRANT. Subject to
compliance with Section 4.3 hereof, this Warrant is exchangeable, without charge
to any Holder, upon the surrender hereof by the Holder at the office or agency
of the Company, for one or more new Warrants of the tenor representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock which may be subscribed for and purchased hereunder, each of such new
Warrants to represent the right to subscribe for and purchase such number of
shares as shall be designated by said Holder at the time of such surrender.
13. CLOSING OF BOOKS. The Company will at no time close its
transfer books against the transfer of any Warrant or of any shares of Common
Stock issued or issuable upon the exercise or conversion of any Warrant in any
manner which interferes with the timely exercise or conversion of this Warrant.
14. NOTICES, ETC. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified, (b) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient or if not, then
on the next Business Day, (c) five (5) days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (d) one (1)
Business Day after deposit with a nationally recognized overnight courier,
specifying next Business Day
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delivery, with written verification of receipt. All notices and other
communications shall be sent to the Company at the address listed on the
signature page and to Holder at the address set forth below or at such other
address as the Company or Holder may designate by ten (10) days advance written
notice to the other parties hereto:
Air Transportation Stabilization Board
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: Executive Director
with a copy to: United States Department of the Treasury
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: Deputy Assistant Secretary
(Government Financial Policy)
15. ACCEPTANCE. Receipt of this Warrant by the Holder shall
constitute acceptance of and agreement to all of the terms and conditions
contained herein.
16. BINDING EFFECT ON SUCCESSORS. This Warrant shall be binding
upon any Person succeeding the Company by merger or consolidation or acquisition
of all or substantially all of the Company's assets (to the extent provided in
Section 5), and all of the obligations of the Company relating to the Exercise
Shares shall survive the exercise of this Warrant and all of the covenants and
agreements of the Company shall inure to the benefit of the successors and
assigns of the Holder. The covenants and agreements of the Holder of this
Warrant and the Exercise Shares shall be binding upon the Holder's successors
and assigns.
17. WAIVERS; AMENDMENTS. With the written consent of the Holder,
any covenant, agreement or condition contained herein may be waived (either
generally or in a particular instance and either retroactively or
prospectively), or such Holder and the Company may from time to time enter into
agreements for the purpose of amending any covenant, agreement or condition
hereof or changing in any manner the rights of the Holder. Any such amendment or
waiver shall be binding upon each future Holder and upon the Company. In the
event of a waiver or amendment and upon the request of the Company, the Holder
hereof shall submit this Warrant to the Company so that this Warrant be marked
to indicate such amendment or waiver, and any Warrant issued thereafter shall
bear a similar notation referring to any such amendment or continuing waiver.
18. SEVERABILITY. In case any one or more of the provisions
contained in this Warrant shall be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby. The parties shall endeavor in good faith negotiations to replace the
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
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19. SECTION HEADINGS. The section headings used herein are for
convenience of reference only, are not part of this Warrant and are not to
affect the construction of or be taken into consideration in interpreting this
Warrant.
20. NONWAIVER. No course of dealing or any delay or failure to
exercise any right hereunder on the part of the Holder shall operate as a waiver
of such right or otherwise prejudice the Holder's rights, powers or remedies.
21. GOVERNING LAW. This Warrant and all rights, obligations and
liabilities hereunder shall be governed and construed in accordance with Federal
law, if and to the extent such Federal law is applicable, and otherwise in
accordance with the law of the State of New York.
22. SPECIFIC PERFORMANCE. Each Holder of this Warrant and Exercise
Shares, in addition to being entitled to exercise all rights granted by law,
including recovery of damages, will be entitled to specific performance of its
rights under this Warrant. The Company agrees that monetary damages would not be
adequate compensation for any loss incurred by reason of a breach by it of the
provisions of this Warrant and hereby agrees to waive the defense in any action
for specific performance that a remedy at law would be adequate.
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IN WITNESS WHEREOF, the Company has caused this Warrant to be
executed by its duly authorized officer as of December 30, 2003.
WORLD AIRWAYS, INC.
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Chief Financial Officer
Address: The HLH Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
IN WITNESS WHEREOF, the Holder has caused this Warrant to be
executed by its duly authorized officer as of December 30, 2003.
Holder: AIR TRANSPORTATION
STABILIZATION BOARD
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Chief Administrative Officer
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: Executive Director
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:(▇▇▇) ▇▇▇-▇▇▇▇
Copy to: United States Department of
the Treasury
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention:Deputy Assistant Secretary
(Government Financial Policy)
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:(▇▇▇) ▇▇▇-▇▇▇▇
ANNEX A
NOTICE OF EXERCISE
TO: WORLD AIRWAYS, INC.
(1) [ ] The undersigned hereby elects to purchase __________
shares of the Common Stock of World Airways, Inc. pursuant to the terms of the
attached Warrant, and tenders herewith or is delivering by wire transfer to
account number __________ at _____________________ (bank) payment of the
exercise price in full.
[ ] The undersigned hereby elects to purchase __________
shares of the Common Stock of World Airways, Inc. pursuant to the terms of the
attached Warrant, with the payment of the full exercise price to be made by
cancellation of indebtedness under ___________________________ (describe
agreement or other instrument evidencing the applicable indebtedness).
[ ] The undersigned hereby elects to purchase __________
shares of the Common Stock of World Airways, Inc. pursuant to the net exercise
provisions set forth in Section 2.2 of the attached Warrant.
(2) Please issue a certificate or certificates representing
said shares of Common Stock in the name of the undersigned or in such other name
as is specified below:
___________________________
(Name)
___________________________
___________________________
(Address)
______________________ _______________________________
(Date) (Signature)
_______________________________
(Print name)
ANNEX B
ASSIGNMENT FORM
(To assign the foregoing Warrant, execute this form and supply required
information. Do not use this form to purchase shares.)
FOR VALUE RECEIVED, the right to purchase __________ shares of
Common Stock pursuant to the foregoing Warrant and all other rights evidenced
thereby are hereby assigned to:
Name:___________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
(Please Print)
Dated:__________________________________
Holder's Signature:_____________________
NOTE: The signature to this Assignment Form must correspond with the name as it
appears on the face of this Warrant, without alteration or enlargement or any
change whatever. Officers of corporations and those acting in a fiduciary or
other representative capacity should file proper evidence of authority to assign
the foregoing Warrant.
SCHEDULE 3.4(f)
EXERCISE OR
OPTIONS, WARRANTS AND NUMBER OF CONVERSION PRICE
CONVERTIBLE SECURITIES SHARES TERM PER SHARE
--------------------- ------ ---- ---------
Employee Stock Options 3,819,400 2003 - 2013 $ 0.51 to $ 8.625
International Lease Finance
Corporation Warrants 1,000,000 03/29/05 $ 2.50
The Boeing Corporation Warrants 1,000,000 08/23/04 $ 2.50
8% Convertible Senior Subordinated 4,555,618 08/26/04 $ 8.90
Debentures due 2004
8% Convertible Senior 7,982,813 Six years $ 3.20
Subordinated Debentures
due 2009*
---------------------------
* Being issued concurrently with the issuance of the Warrants.
REGISTRATION RIGHTS
Stock Registration Rights Agreement, dated as of October 30, 1993, by
and between World Airways, Inc. and Malaysian Helicopter Services Berhad
(Exhibit 10.2 to the Current Report on Form 8-K of WorldCorp, Inc., Commission
File No. 1-9591, filed March 14, 1994).
Warrant Agreement, dated as of March 28, 2000, by and between World
Airways, Inc. and The Boeing Corporation (Exhibit 4.5 to the Registration
Statement on Form S-4 of World Airways, Inc., Commission File No. 333-107275,
filed July 23, 2003).
Warrant Agreement, dated as of August 24, 1999, by and between World
Airways, Inc. and International Lease Finance Corporation (Exhibit 4.6 to the
Registration Statement on Form S-4 of World Airways, Inc., Commission File No.
333-107275, filed July 23, 2003).
Registration Rights Agreements dated as of the date of original
issuance of the Warrants between World Airways, Inc. and the holders of its 8%
Convertible Senior Subordinated Debentures due 2009.