CONFIDENTIAL TREATMENT HAS BEEN REQUESTED FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.
THE WARRANT ISSUED PURSUANT TO THIS PARTICIPATION WARRANT AGREEMENT HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES
LAWS. IT MAY NOT BE SOLD OR OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT
UNDER SAID ACT AND APPLICABLE STATE SECURITIES LAWS UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED TO EFFECTUATE SUCH TRANSACTION.
PARTICIPATION WARRANT AGREEMENT
To Purchase Shares of Common Stock
Dated as of November 15, 1999
▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED
a Delaware Corporation
Issue Date: November 15, 1999
THIS CERTIFIES THAT, United Air Lines, Inc. (the "Warrant Holder"), with a
place of business at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇, for value received, is entitled, upon the terms and subject to the
conditions of this Participation Warrant Agreement (this "Warrant
Agreement"), to subscribe for and purchase fully-paid and non-assessable
shares of common stock, par value $.008 per share (the "Common Stock"), of
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated, a Delaware corporation (the "Company").
1. Issuance of Warrants. On the Issue Date, the Company will issue
to the Warrant Holder warrants (the "Warrants") to acquire Five Million
Five Hundred Thousand (5,500,000) shares of the Common Stock (the
"Shares"), subject to adjustment as hereinafter provided pursuant to
Section 10 herein.
2. Exercise Price. The Warrants have an exercise price of $52.6250
per share (closing price as reported on NASDAQ on date of grant) of Common
Stock, as adjusted pursuant to the provisions of Section 10 of this Warrant
Agreement (the "Exercise Price").
3. Term. The Warrants are fully vested on the Issue Date. Except
as otherwise provided herein, the term of the Warrants and the right to
purchase Shares as granted herein shall be exercisable on the fifth (5th)
anniversary of the Issue Date; provided, further, that if any of the
Warrants first become exercisable on the fifth (5th) anniversary of the
Issue Date, the Warrant Holder will have an additional six months
thereafter to exercise its purchase rights in respect of those Warrants
(the end of such five year period and additional six months, if applicable,
being referred to herein as the "Termination Date").
4. Exercise Events.
(a) General. Unless otherwise exercisable at an earlier date,
in accordance with this Section 4, all of the Warrants shall be fully
exercisable commencing of the fifth anniversary of the Issue Date.
(b) Early Exercise Rights.
(i) The Warrant Holder will have the right at any time
during the first Measuring Period (as defined in
Section 4(c) below), to exercise Warrants, subject to
adjustment as provided in Section 10 hereof, equal to
[**]% or [**]% of the Shares, as applicable, provided
that, except as otherwise provided in Sections
4(b)(iii) and 4(b)(iv) hereof, (i) the right to
exercise Warrants for [**]% of the Shares shall not
accrue unless and until the Company has, on an
aggregated basis during the first Measuring Period,
received at least $[**] million of Net Revenues (as
also defined in Section 4(c) below) from tickets sold
during such Measuring Period for travel on the
Warrant Holder, its subsidiaries and/or on the
Warrant Holder's code share partners using Warrant
Holder's code (collectively, "Warrant Holder and its
Code Share Partners"), and (ii) the right to exercise
Warrants for [**]% of the Shares shall not accrue
unless and until the Company has, on an aggregated
basis during the first Measuring Period, received at
least $[**] million of Net Revenues from tickets sold
during such Measuring Period for travel on the
Warrant Holder and its Code Share Partners.
(ii) During the period which Warrant Holder is subject to a
first look disadvantage in the Company's airline
allocation system relative to Delta Air Lines, Inc., Net
Revenues, for the purpose of measurement toward early
exercise in the first Measuring Period, will be multiplied
by a factor of three (3). Additionally, in the event that
Warrant Holder remains subject to a first look
disadvantage relative to Delta Air Lines, Inc. on [**],
Warrant Holder will be entitled to exercise Warrants for
[**]% of the Shares beginning [**]. Any such early
exercise will be offset against the early exercise rights
for the first Measuring Period.
(iii) The Warrant Holder will have the right at any time
during the second Measuring Period and all remaining
Measuring Periods thereafter, to exercise Warrants,
subject to adjustment as provided in Section 10
hereof, equal to [**]% or [**]% of the Shares, as
applicable, or such lesser percentage of the Shares
as shall constitute all of the remaining Shares not
then exercisable; provided that (i) the right to
exercise Warrants for [**]% of such Shares shall not
accrue unless and until the Company has, on an
aggregated basis during the applicable Measuring
Period, received at least $[**] million of Net
Revenues from tickets sold during such Measuring
Period for travel on the Warrant Holder and its Code
Share Partners, and (ii) the right to exercise
Warrants for [**]% of such Shares shall not accrue
unless and until the Company has, on an aggregated
basis during the applicable Measuring Period,
received at least $[**] million of Net Revenues from
tickets sold during such Measuring Period for travel
on the Warrant Holder and its Code Share Partners.
(iv) Notwithstanding the Net Revenue benchmarks specified
in clauses (i) and (ii) of this Section 4(b) for the
early exercisability of Warrants, if, in any
Measuring Period, the Company fails to achieve the
minimum Net Revenues from ticket sales for travel on
Warrant Holder and its Code Share Partners necessary
to enable Warrant Holder to exercise Warrants for the
[**]% or [**]% portion of Shares that would otherwise
become exercisable if such benchmarks were achieved
during such Measuring Period, then, effective on the
last day of such Measuring Period and thereafter,
Warrant Holder (i) shall have the right to exercise
Warrants for the [**]% portion of Warrants that would
otherwise become exercisable upon achieving the
corresponding Net Revenue benchmark for such
Measuring Period, if Warrant Holders and its Code
Share Partners' percentage of the aggregate of all
ticket sale revenues (calculated using the same
methodology used to calculate Net Revenue hereunder)
received by the Company for U.S. originating O&D's
for such Measuring Period equals or exceeds [**]% of
Warrant Holder's Fair Share (as defined in Section
4(c) below)(the "[**]% Fair Share Threshold"), and (ii)
shall have the right to exercise Warrants for the [**]%
portion of Warrants that would otherwise become
exercisable upon achieving the corresponding Net
Revenue benchmark for such Measuring Period, if
Warrant Holder's and its Code Share Partners'
percentage of the aggregate of all ticket sale
revenues received by the Company for U.S. originating
O&D's for such Measuring Period equals or exceeds
[**]% of Warrant Holder's Fair Share (the "[**]% Fair
Share Threshold"). For purposes of determining
whether Warrant Holder achieves the [**]% Fair Share
Threshold and/or the [**]% Fair Share Threshold for
the first, and only the first, Measuring Period, the
parties shall calculate Warrant Holder's and its Code
Share Partners' percentage of the Company's ticket
sale revenues for U.S. originating O&D's for such
period based on either (i) their percentage of the
aggregate of all ticket sale revenues received by the
Company for ticket sales for U.S. originating O&D's
during the entire first Measuring Period, or (ii)
their percentage of the aggregate of all ticket sale
revenues received by the Company for ticket sales for
U.S. originating O&D's during the final six (6)
months of the First Measuring Period, whichever is
more favorable for the Warrant Holder.
(v) In the event that the Company does not achieve the
$[**] million Net Revenue benchmark specified in
clauses (i) of this Section 4(b) and Warrant Holder
does not achieve the [**]% Fair Share Threshold
specified in clause (iii) of this Section 4(b) for
the early exercisability of Warrants for the first
Measuring Period, Warrant Holder shall have the right
upon completion of the first Measuring Period and
thereafter to exercise Warrants for the [**]% portion
of Warrants that would otherwise become exercisable
upon the Company's achieving the $[**] million Net
Revenue benchmark or Warrant Holder's achieving the
[**]% Fair Share Threshold for such Measuring Period,
if, during the entire term of the first Measuring
Period, Warrant Holder does not voluntarily
participate in any name-your-price airline ticket
service other than the Company's and its affiliates'
airline ticket services.
(vi) In the event that the Company does not achieve the
$[**] million Net Revenue benchmark specified in
clause (ii) of this Section 4(b) and Warrant Holder
does not achieve the [**]% Fair Share Threshold
specified in clause (iii) of this Section 4(b) for
the early exercisability of Warrants for the second
Measuring Period, Warrant Holder shall have the right
upon completion of the second Measuring Period and
thereafter to exercise Warrants for [**]% of the [**]%
portion of the Warrants that would have otherwise
become exercisable upon the Company's achieving the
$[**] million Net Revenue benchmark or Warrant
Holder's achieving the [**]% Fair Share Threshold for
such Measuring Period, if, during the entire term of
the second Measuring Period, Warrant Holder does not
voluntarily participate in any name-your-price
airline ticket service other than the Company's and
its affiliates' airline ticket services.
(vii) In the event that the Company does not achieve the
$[**] million Net Revenue benchmark specified in
clause (ii) of this Section 4(b) and Warrant Holder
does not achieve the [**]% Fair Share Threshold
specified in clause (iii) of this Section 4(b) for
the early exercisability of Warrants for the third
Measuring Period, Warrant Holder shall have the right
upon completion of the third Measuring Period and
thereafter to exercise Warrants for [**]% of the [**]%
portion of the Warrants that would have otherwise
become exercisable upon the Company's achieving the
$[**] million Net Revenue benchmark or Warrant
Holder's achieving the [**]% Fair Share Threshold for
such Measuring Period, if, during the entire term of
the third Measuring Period, Warrant Holder does not
voluntarily participate in any name-your-price
airline ticket service other than the Company's and
its affiliates' airline ticket services.
(c) Measuring Periods and Net Revenue.
(i) As used in this Warrant Agreement, the term
"Measuring Period" shall mean a 12-month period, with
the first such Measuring Period commencing on the
Date the Warrant Holder first provides tickets for
sale by the Company (the "First Ticket Date").
Subsequent Measuring Periods will expire on the
second, third, fourth and fifth anniversary of the
First Ticket Date, respectively, except that the
fifth Measuring Period shall end on the fifth (5th)
anniversary of the Issue Date.
(ii) As used in this Warrant Agreement, the term "Net
Revenue" shall mean the total ticket revenue received
by the Company from tickets sold for travel on the
Warrant Holder and its Code Share Partners, net of
federal excise and segment taxes, passenger facility
charges and related fees. The parties acknowledge
that credit card processing fees, and any processing
fees or similar fees charged by the Company to the
consumer in connection with the sale of a ticket
shall not be included in the calculation of Net
Revenue.. Attached hereto as Exhibit D is an example
of the calculation of Net Revenue.
(iii) As used in this Warrant Agreement, the term "Fair
Share" shall mean Warrant Holder's domestic market
share calculated as a fraction, the numerator of
which shall be Warrant Holder's RPM's for U.S.
originating O&D's only, and the denominator of which
shall be the total RPM's for U.S. originating O&D's
only of all of the Company's participating airlines.
5. Exercise of Purchase Rights.
(a) Subject to the provisions of Section 4 of this Warrant
Agreement, the purchase rights represented by this Warrant Agreement are
exercisable by the Warrant Holder, in whole or in part, at any time, or
from time to time during the period set forth in Section 3 above, by
tendering to the Company at its principal office a duly completed and
executed notice of exercise in the form attached hereto as Exhibit A (the
"Notice of Exercise"), the Warrants and the Exercise Price. Upon receipt
of such items, the Company shall issue to the Warrant Holder a certificate
for the number of shares of Common Stock purchased. The Warrant Holder,
upon exercise of the Warrants, shall be deemed to have become the holder of
the Shares represented thereby (and such Shares shall be deemed to have
been issued) immediately prior to the close of business on the date or
dates upon which the Warrants are exercised. In the event of any exercise
of the rights represented by the Warrants, certificates for the Shares so
purchased shall be delivered to the Warrant Holder or its designee as soon
as practical and in any event within ten (10) business days after receipt
of such notice and, unless the Warrants have been fully exercised or
expired, new Warrants representing the remaining portion of the Warrants
and the underlying Shares, if any, with respect to which this Warrant
Agreement shall not then have been exercised shall also be issued to the
Warrant Holder as soon as possible and in any event within such ten-day
period.
(b) Net Issue Exercise. Notwithstanding any provisions herein
to the contrary, if the fair market value of one share of the Company's
Common Stock is greater than the Exercise Price (at the date of calculation
as set forth below), in lieu of exercising the Warrants for cash, the
Warrant Holder may elect to receive shares equal to the value (as
determined below) of the Warrants (or portion thereof being canceled) by
surrender of the Warrants at the principal office of the Company together
with the duly executed Notice of Exercise in which event the Company shall
issue to the Warrant Holder 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 Warrant Holder; Y= the number of shares of
the Common Stock purchasable under the Warrants or, if only a portion of
the Warrants is being exercised, the portion of the Warrants being canceled
(at the date of such calculation); A= the fair market value of one share of
the Company's Common Stock (at the date of such calculation); and B=
Exercise Price (at the date of such calculation). For purposes of the
above calculation, fair market value of one share of the Common Stock shall
be equal to the closing trading price of the Company's Common Stock on the
day immediately prior to the date the Notice of Exercise is tendered to the
Company.
6. Reservation of Shares. The Company will at all times have
authorized and reserved a sufficient number of shares of Common Stock to
provide for the exercise of the rights to purchase the Shares as provided
in this Warrant Agreement. All of the Shares shall be duly authorized and,
when issued upon such exercise, shall be validly issued, fully paid and
nonassessable, and free and clear of all preemptive rights.
7. No Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of the Warrant Holder's
rights to purchase the Shares.
8. No Rights as Shareholder. This Warrant Agreement does not
entitle the Warrant Holder to any voting rights or other rights as a
shareholder of the Company prior to the exercise of the Warrant Holder's
rights to purchase the Shares as provided for herein.
9. Redemption. The Warrants represented by this Warrant Agreement
are not redeemable by the Company.
10. Adjustment Rights. The Exercise Price and the number of shares
of Common Stock purchasable hereunder are subject to adjustment from time
to time, as follows:
(a) Merger. If at any time there shall be a merger or
consolidation of the Company with or into another corporation when the
Company is not the surviving corporation, then, as part of such merger or
consolidation, lawful provision shall be made so that the holder of the
Warrants evidenced hereby shall thereafter be entitled to receive upon
exercise of rights herein granted, during the period specified herein and
upon payment of the aggregate Exercise Price, the number of shares of stock
or other securities or property of the successor corporation resulting from
such merger or consolidation, to which a holder of the stock deliverable
upon exercise of the rights granted in this Warrant Agreement would have
been entitled in such merger or consolidation if such rights had been
exercised immediately before such merger or consolidation. In any such
case, appropriate adjustment shall be made in the application of the
provisions of this Warrant Agreement with respect to the rights and
interests of the holder after the merger or consolidation. The Company
will not effect any such merger or consolidation unless, prior to the
consummation thereof, the successor corporation shall assume, by written
instrument reasonably satisfactory in form and substance to the Warrant
Holder, the obligations of the Company under the Warrants.
(b) Reclassification, Etc. If the Company at any time shall, by
subdivision, combination or reclassification of securities or otherwise,
change any of the securities as to which purchase rights under this Warrant
Agreement exist into the same or a different number of securities of any
other class or classes, this Warrant Agreement shall thereafter represent
the right to acquire such number and kind of securities as would have been
issuable as the result of such change with respect to the securities which
were subject to the purchase rights under this Warrant Agreement
immediately prior to such subdivision, combination, reclassification or
other change.
(c) Split, Subdivision or Combination of Shares. If the Company
at any time shall split or subdivide its Common Stock, the Exercise Price
shall be proportionately decreased and the number of Shares issuable
pursuant to this Warrant Agreement shall be proportionately increased. If
the Company at any time shall combine or reverse split its Common Stock,
the Exercise Price shall be proportionately increased and the number of
Shares issuable pursuant to this Warrant Agreement shall be proportionately
decreased.
(d) Stock Dividends. If the Company at any time shall pay a
dividend payable in Common Stock, then the Exercise Price shall be
adjusted, from and after the date of determination of stockholders entitled
to receive such dividend, to that price determined by multiplying the
Exercise Price in effect immediately prior to such date of determination by
a fraction (i) the numerator of which shall be the total number of shares
of Common Stock outstanding immediately prior to such dividend and (ii) the
denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such dividend. The Warrant Holder shall
thereafter be entitled to purchase, at the Exercise Price resulting from
such adjustment, the number of shares of Common Stock (calculated to the
nearest whole share) obtained by multiplying (i) the Exercise Price in
effect immediately prior to such adjustment by (ii) the number of shares of
Common Stock issuable upon the exercise hereof immediately prior to such
adjustment and dividing the product thereof by the Exercise Price resulting
from such adjustment.
(e) Other Changes. If any change in the outstanding Common
Stock of the Company or any other event occurs as to which the other
provisions of this Section 10 are not strictly applicable or if strictly
applicable, would not fairly protect the purchase rights of the Warrant
Holder in accordance with such provisions, then the Board of Directors of
the Company shall make an adjustment in the number of and class of shares
available under the Warrants, the Exercise Price or the application of such
provisions, so as to protect the purchase rights of the Warrant Holder.
The adjustment shall be such as will give the Warrant Holder upon exercise
for the same aggregate Exercise Price the total number, class and kind of
shares or other property as the Warrant Holder would have owned had the
Warrants been exercised prior to the event and had the Warrant Holder
continued to hold such shares until after the event requiring adjustment.
(f) Notice of Adjustments; Notices. Whenever the Exercise Price
or number of shares purchasable hereunder shall be adjusted pursuant to
Section 10 hereof, the Company shall issue a certificate signed by its
Chief Executive Officer or Chief Financial Officer setting forth, in
reasonable detail, the event requiring the adjustment, the amount of the
adjustment, the method by which such adjustment was calculated and the
Exercise Price and number of shares purchasable hereunder after giving
effect to such adjustment, and shall cause a copy of such certificate to be
mailed (by first class mail, postage prepaid) to the holder of this
Warrant. The Company shall give written notice to the Warrant Holder at
least 10 days prior to the date on which the Company closes its books or
takes a record for determining rights to receive any dividends or
distributions. The Company shall also give written notice to the Warrant
Holder at least 30 business days prior to the date on which a merger or
consolidation of the Company with or into another corporation when the
Company is not the surviving corporation shall take place.
(g) No Change of Warrant Necessary. Irrespective of any
adjustment in the Exercise Price or in the number or kind of securities
issuable upon exercise of the Warrant, unless the Warrant Holder otherwise
requests, this Warrant Agreement may continue to express the same price and
number and kind of shares of Common Stock as are stated in this Warrant
Agreement as initially executed.
11. Representations and Warranties of the Warrant Holder.
The Warrant Holder hereby represents and warrants to the Company as
follows:
(a) Existence and Power. The Warrant Holder is a (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and (ii) has the corporate
power and authority to execute, deliver and perform its obligations under
this Warrant Agreement.
(b) Authorization; No Contravention. The execution, delivery
and performance by the Warrant Holder of this Warrant Agreement and the
transactions contemplated hereby (i) have been duly authorized by all
necessary corporate action of the Warrant Holder and (ii) do not contravene
the terms of the Certificate of Incorporation or By-laws of the Warrant
Holder, each as amended as of and through the Issue Date.
(c) Governmental Authorization; Third Party Consents. No
approval, consent, compliance, exemption or authorization of any
governmental authority or agency, or of any other person or entity, is
necessary or required in connection with the execution, delivery or
performance by, or enforcement against, the Warrant Holder of this Warrant
Agreement or the transactions contemplated hereby.
(d) Binding Effect. This Warrant Agreement has been duly
executed and delivered by the Warrant Holder and constitutes the valid and
binding obligations of the Warrant Holder, enforceable against it in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance or
transfer, moratorium or similar laws affecting the enforcement of
creditors' rights generally or by equitable principles relating to
enforceability (regardless of whether considered in a proceeding at law or
in equity).
(e) Purchase for Own Account. The Warrants issued to the
Warrant Holder pursuant to this Warrant Agreement, and the Shares to be
issued upon vesting and exercise thereof, are being or will be acquired for
the Warrant Holder's own account and with no intention of distributing or
reselling such securities or any part thereof in any transaction that would
be in violation of the securities laws of the United States of America, or
any state.
(f) Restricted Securities. The Warrant Holder understands that
the Warrants and the Shares issuable upon vesting and exercise of the
Warrants, will not be registered at the time of their issuance under the
Securities Act for the reason that the sale provided for in this Agreement
is exempt pursuant to Section 4(2) of the Securities Act and that reliance
of the Company on such exemption is predicated in part on such Warrant
Holder's representations set forth herein. The Warrant Holder represents
that it is experienced in evaluating companies such as the Company, has
such knowledge and experience in financial and business matters as to be
capable of evaluating the merits and risks of its investment and has the
ability to suffer the total loss of the investment. The Warrant Holder
further represents that it has had the opportunity to ask questions of and
receive answers from the Company concerning the terms and conditions of the
Warrants, the business of the Company, and to obtain additional information
to such Warrant Holder's satisfaction.
(g) Accredited Investor. The Warrant Holder is an "Accredited
Investor" within the meaning of Rule 501 of Regulation D under the
Securities Act, as presently in effect.
12. Compliance with Securities Act; Transferability of Warrant or
Shares of Common Stock.
(a) Compliance with Securities Act. The Warrant Holder, by
acceptance hereof, agrees that the Warrants, and the shares of Common Stock
to be issued upon exercise of the Warrants, are being acquired for
investment and that such Warrant Holder will not offer, sell or otherwise
dispose of the Warrants, or any shares of Common Stock to be issued upon
exercise of the Warrants except under circumstances which will not result
in a violation of the Securities Act of 1933, as amended (the "Securities
Act"), or any applicable state securities laws. The Warrants and all
shares of Common Stock issued upon exercise of the Warrants (unless
registered under) the Securities Act and any applicable state securities
laws) shall be stamped or imprinted with a legend in substantially the
following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAW. THEY MAY NOT BE SOLD OR
OFFERED FOR SALE, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO UNDER SAID
ACT AND APPLICABLE STATE SECURITIES LAWS OR UNLESS THE COMPANY HAS RECEIVED
AN OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED TO EFFECTUATE
SUCH TRANSACTION."
(b) Exchange, Transfer, Assignment. The Warrants cannot be
exchanged, transferred or assigned otherwise than in accordance with
applicable law. Upon compliance with applicable law and surrender of the
Warrants to the Company with the Assignment Form annexed hereto as Exhibit
B duly executed, and funds sufficient to pay any transfer tax, the Company
shall, without charge, execute and deliver a new Warrant Agreement in the
name of the heir, devisee or assignee named in such instrument of
assignment and this Warrant Agreement shall promptly be canceled. Subject
to the terms hereof, the Warrants may be assigned in whole or in part.
13. Restricted Securities. The Warrant Holder understands that the
Warrants and the Shares issuable upon vesting and exercise of the Warrants,
will not be registered at the time of their issuance under the Securities
Act for the reason that the sale provided for in this Agreement is exempt
pursuant to Section 4(2) of the Securities Act based on the representations
of the warrant Holder set forth herein. The Warrant Holder represents that
it is experienced in evaluating companies such as the Company, has such
knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risks of its investment and has the ability to
suffer the total loss of the investment. The Warrant Holder further
represents that it has had the opportunity to ask questions of and receive
answers from the Company concerning the terms and conditions of the
Warrants, the business of the Company, and to obtain additional information
to such Warrant Holder's satisfaction. The Warrant Holder is an
"Accredited Investor" within the meaning of Rule 501 of Regulation D under
the Securities Act, as presently in effect.
14. Registration Rights. Upon the parties' execution of this Warrant
Agreement and the Acknowledgment and Agreement to the Amended and Restated
Registration Rights Agreement attached hereto as Exhibit C, Warrant Holder
shall be made a party to that certain Amended and Restated Registration
Rights Agreement, dated as of December 8, 1998, by and among the Company,
the stockholders of the Company named therein and such other stockholders
and warrant holders of the Company made a party thereto. In addition,
within 30 days of the execution of this Warrant Agreement, the Company
agrees to enter into an agreement with Warrant Holder, in form and
substance reasonably satisfactory to Warrant Holder, which shall grant
Warrant Holder the right to transfer its registration rights pursuant to
such Amended and Restated Registration Rights Agreement dated as of
December 8, 1998 to any assignee or assignees of all or any part of this
Warrant or the Shares issuable upon exercise hereof, which assignees, upon
their execution and delivery of an Acknowledgment and Agreement to the
Amended and Restated Registration Rights Agreement substantially in the
form of Exhibit C hereto (with appropriate changes therein) shall each have
all the rights and obligations of a Demand Stockholder (as defined in such
Agreement) under such Agreement; provided that no registration statement
with respect to less than a minimum of 250,000 Shares shall be required to
be effected by the Company thereunder for the benefit of any such assignee.
15. Miscellaneous.
(a) No Consequential Damages. No party hereto shall be entitled
to consequential damages as a result of any breach of a covenant,
representation or warranty contained herein.
(b) Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be
by registered or certified first-class mail, return receipt requested,
telecopier, courier service or personal delivery:
(i) if to the Company, to:
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Chuff, Esq.
(ii) if to the Warrant Holder, to:
United Air Lines, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Vice President Revenue Management
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
and to:
United Air Lines, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone:▇▇▇-▇▇▇-▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
General Counsel
(c) All such notices and communications shall be deemed to have
been duly given when delivered by hand, if personally delivered; when
delivered by courier, if delivered by commercial courier service; five (5)
business days after being deposited in the mail, postage prepaid, if
mailed; and when receipt is mechanically acknowledged, if telecopied.
(d) Successors and Assigns; Third Party Beneficiaries. This
Agreement shall inure to the benefit of and be binding upon the successors
and permitted assigns of the parties hereto. No person, other than the
parties hereto and their successors and permitted assigns, is intended to
be a beneficiary of this Agreement.
(e) Amendment and Waiver.
(i) No failure or delay on the part of the Company, or
the Warrant Holder in exercising any right, power or
remedy hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such
right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right,
power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that
may be available to the Company and the Warrant
Holder at law, in equity or otherwise.
(ii) Any amendment, supplement or modification of or to
any provision of this Warrant Agreement, any waiver
of any provision of this Warrant Agreement, and any
consent to any departure by the Company or the
Warrant Holder from the terms of any provision of
this Agreement, shall be effective only if it is made
or given in writing and signed by the Company and the
Warrant Holder.
(f) Counterparts. This Warrant Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Warrant Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) GOVERNING LAW. THIS WARRANT AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW OF ANY JURISDICTION.
(i) Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way
impaired, unless the provisions held invalid, illegal or unenforceable
shall substantially impair the benefits of the remaining provisions hereof.
(j) Entire Agreement. This Warrant Agreement, together with the
exhibits hereto is intended by the parties as a final expression of their
agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Warrant Agreement, together with the
exhibits hereto, supersedes all prior agreements and understandings between
the parties with respect to such subject matter.
(k) Publicity. Except as may be required by law, none of the
parties hereto shall issue a publicity release or public announcement or
otherwise make any disclosure concerning this Warrant Agreement or the
transactions contemplated hereby, without prior approval by the other party
(which approval shall not be unreasonably withheld); provided, however,
that nothing in this Warrant Agreement shall restrict the Warrant Holder
from disclosing information (a)that is already publicly available and (b)
to its attorneys, accountants, consultants and other advisors to the extent
necessary to obtain their services in connection with the Warrant Holder's
investment or participation in the Company. If any announcement is
required by law to be made by any party hereto concerning this Warrant
Agreement or the transactions contemplated hereby, prior to making such
announcement such party will deliver a draft of such announcement to the
other parties and shall give the other parties an opportunity to comment
thereon.
(l) Charges; Taxes and Expenses. Issuance of certificates for
shares upon the exercise of the Warrants shall be made without charge to
the Warrant Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such certificates, all of which taxes
and expenses shall be paid by the Company.
(m) Saturdays, Sundays, Holidays, Etc. If the last or appointed
day for the taking of any action or the expiration of any right required or
granted herein shall be a Saturday, Sunday or a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding
day not a Saturday, Sunday or a legal holiday.
(n) Lost Warrants. The Company covenants to the Warrant Holder
that, upon receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction or mutilation of this Warrant Agreement and,
in the case of any such loss, theft or destruction, upon receipt of an
indemnity reasonably satisfactory to the Company, or in the case of any
such mutilation, upon surrender and cancellation of this Warrant Agreement,
the Company will make and deliver a new Warrant Agreement of like tenor, in
lieu of the lost, stolen, destroyed or mutilated document.
(o) Further Assurances. Each of the parties shall execute such
documents and perform such further acts (including, without limitation,
obtaining any consents, exemptions, authorizations or other actions by, or
giving any notices to, or making any filings with, any governmental
authority or any other person, and otherwise fulfilling, or causing the
fulfillment of, the various obligations made herein), as may be reasonably
required or desirable to carry out or to perform the provisions of this
Warrant Agreement and to consummate and make effective as promptly as
possible the transactions contemplated by this Warrant Agreement.
IN WITNESS WHEREOF, this Warrant Agreement has been duly executed and
delivered by the authorized officers of each of the undersigned.
▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED
By: _____________________________
Name:
Title:
UNITED AIR LINES, INC.
By: _____________________________
Name:
Title:
EXHIBIT A
NOTICE OF EXERCISE
To: ▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
1. ___ The undersigned hereby elects to purchase __________
shares of the Common Stock of ▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated pursuant to the
terms of the Participation Warrant Agreement, dated as of __________, 1999,
by and between ▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated and the undersigned (the
"Warrant Agreement"), and tenders herewith payment of the purchase price
of such shares in full.
___ The undersigned hereby elects to convert ___________
percent (____%) of the value of the Warrants pursuant to the provisions of
Section 5(b) of the Warrant Agreement.
2. Please issue a certificate or certificates representing said
shares in the name of the undersigned.
UNITED AIR LINES, INC.
By: _____________________________
_________________________________
(Print Name of Signatory)
_________________________________
(Title of Signatory)
Date: ________________
EXHIBIT B
ASSIGNMENT FORM
TO: ▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
The undersigned hereby assigns and transfers unto ________________________
of _______________________________________________________________________
(Please typewrite or print in block letters)
the right to purchase ____________ shares of the common stock of
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated subject to the Participation Warrant Agreement,
dated as of ________________, 1999, by and between ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated and the undersigned (the "Warrant Agreement").
This assignment complies with the provisions of Section 12(b) of the
Warrant Agreement and is accompanied by funds sufficient to pay all
applicable transfer taxes.
UNITED AIR LINES, INC.
By: _____________________________
_________________________________
(Print Name of Signatory)
_________________________________
(Title of Signatory)
Date: ________________
EXHIBIT C
ACKNOWLEDGMENT AND AGREEMENT
TO THE AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
WHEREAS, pursuant to a Participation Warrant Agreement, the
undersigned received a warrant to purchase 5,500,000 shares of common
stock, par value $.008 per share (the "Shares"), of ▇▇▇▇▇▇▇▇▇.▇▇▇
Incorporated, a Delaware corporation (the "Company"); and
WHEREAS, the undersigned wishes to receive certain registration rights
with respect to such Shares; and
WHEREAS, the undersigned has reviewed a copy of that certain Amended
and Restated Registration Rights Agreement, dated as of December 8, 1998
(the "Agreement"), among the Company, General Atlantic Partners 48, L.P.,
GAP Coinvestment Partners, L.P., General Atlantic Partners 50, L.P. and the
stockholders named therein and has been given a copy of the Agreement and
afforded ample opportunity to read and to have counsel review it, and the
undersigned is thoroughly familiar with its terms.
NOW, THEREFORE, in consideration of the mutual premises contained
herein and in the Agreement and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the
undersigned hereby acknowledges and agrees that (i) the undersigned has
been given a copy of the Agreement and afforded ample opportunity to read
and to have counsel review it, and the undersigned is thoroughly familiar
with its terms, (ii) the Shares are subject to terms and conditions set
forth in the Agreement, (iii) the undersigned does hereby agree fully to be
bound by the Agreement as a "Demand Stockholder" (as therein defined), and
upon the execution and delivery of this Acknowledgment and Agreement by the
Company, the undersigned shall have all the rights and obligations under
the Agreement as a Demand Stockholder, and (iv) the undersigned does hereby
name _________________to serve as their representative under the Agreement.
This 15th day of November, 1999.
Acknowledged and agreed:
▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED UNITED AIR LINES, INC.
By: ___________________________ By: __________________________
Name: Name:
Title: Title:
[**]=Confidential Treatment requested for redacted portion
