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 17, 1999
▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED
a Delaware Corporation
Issue Date: November 17, 1999
THIS CERTIFIES THAT, Continental Airlines, 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 Hundred Thousand
(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 $59.93 per share
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 on the fifth anniversary of the Issue Date.
(b) Early Exercise Rights. Subject to the provisions of Section 4(d)
hereof, Warrant Holder shall have the following 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) and at any time thereafter until the
Termination Date, to exercise Warrants equal to
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[**]% or [**]% of the Shares, as applicable, subject to
adjustment as provided in Section 10 hereof, 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 Warrant Holder has, on an aggregated basis with
respect to the first Measuring Period, achieved at least
$[**] million of Net Revenue (as also defined in Section
4(c) below) from tickets sold by the Company 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 Warrant Holder has, on
an aggregated basis with respect to the first Measuring
Period, achieved at least $[**] million of Net Revenue
from tickets sold by the Company during such Measuring
Period for travel on the Warrant Holder and its Code
Share Partners.
(ii) The Warrant Holder will have the right at any time
during the second Measuring Period and all remaining
Measuring Periods thereafter and at any time after the
applicable Measuring Period until the Termination Date,
to exercise Warrants equal to [**]% or [**]% of the
Shares, as applicable, subject to adjustment as provided
in Section 10 hereof, 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 Warrant Holder has, on an
aggregated basis with respect to the applicable
Measuring Period, achieved at least $[**] million of Net
Revenue from tickets sold by the Company 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 Warrant Holder has, on an
aggregated basis with respect to the applicable
Measuring Period, achieved at least $[**] million of Net
Revenue from tickets sold during such Measuring Period
for travel on the Warrant Holder and its Code Share
Partners.
(iii) Notwithstanding the Net Revenue benchmarks specified in
clauses (i) and (ii) of this Section 4(b) for the early
exercisability of Warrants, if, with respect to any
Measuring Period, the Warrant Holder fails to achieve
the minimum Net Revenue from ticket sales by the Company
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 with respect to such Measuring Period, then,
effective on the last day of such Measuring Period and
thereafter at any time until the Termination Date,
Warrant Holder (i) shall have the right to exercise
Warrants for the [**]% portion of Warrants that would
have otherwise become exercisable upon achieving the
corresponding Net Revenue benchmark for such Measuring
Period, if Warrant Holder and its Code Share Partners'
Net Revenue, expressed
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2
as a percentage of the aggregate of all ticket sale net
revenues (calculated using the same methodology used to
calculate Net Revenue hereunder) achieved by all
airlines participating in the Company's "demand
collection system" (collectively, "participating
airlines") resulting from the Company's sale of airline
tickets for travel on such airlines solely 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") with respect to such Measuring Period, and
(ii) shall have the right to exercise Warrants for the
[**]% portion of Warrants that would have otherwise
become exercisable upon achieving the corresponding Net
Revenue benchmark for such Measuring Period, if Warrant
Holder and its Code Share Partners' Net Revenue,
expressed as a percentage of the aggregate of all ticket
sale net revenues (calculated using the same methodology
used to calculate Net Revenue hereunder) achieved by all
participating airlines resulting from the Company's sale
of airline tickets for travel on such airlines solely
for U.S. originating O&D's for such Measuring Period,
equals or exceeds [**]% of Warrant Holder's Fair Share
(the "[**]% Fair Share Threshold") with respect to such
Measuring Period.
(iv) Notwithstanding the foregoing, if the Warrant Holder
does not achieve the $[**] million Net Revenue benchmark
specified in clause (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
until the Termination Date to exercise Warrants for the
[**]% portion of Shares 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 "demand collection
system" (as defined in Section 4(b)) for Warrant
Holder's sale of airline tickets over the Internet other
than the Company's and its affiliates' leisure 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 December 1, 1999
(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 amount paid or payable by
the Company to Warrant Holder for airline tickets sold
by the Company for travel on the War-
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3
rant Holder and its Code Share Partners, net of federal
excise and segment taxes, passenger facility charges and
related fees (this is sometimes referred to herein as
the "Warrant Holder and its Code Share Partners' Net
Revenue"). 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.
(iii) As used in this Warrant Agreement, the term "Fair Share"
shall mean a fraction, expressed as a percentage, the
numerator of which shall be the domestic revenue
passenger miles of Warrant Holder as set forth in U.S.
DOT Form 41 T-1 Early data (or its successor) with
respect to the applicable Measuring Period, and the
denominator of which shall be the aggregate revenue
passenger miles of all participating airlines (i.e.
airlines which have executed airline participation or
similar supply agreements with the Company) as set forth
in U.S. DOT Form 41 T-1 Early data (or its successor)
with respect to the applicable Measuring Period. The
Chief Executive Officer or Chief Financial Officer of
the Company shall certify in writing to Warrant Holder,
on a quarterly basis (as promptly as practicable after
the end of each quarter contained in a Measuring
Period), or as otherwise reasonably requested by Warrant
Holder (or, if the Warrant Holder has achieved any early
exercise right described in Section 4(b), promptly after
Warrant Holder has achieved such early exercise right),
the calculation of Net Revenue, Fair Share and any other
measurement necessary to determine whether Warrant
Holder has achieved the early exercise rights described
in Section 4(b). Additionally, following the sixth (6th)
month of any Measuring Period, the Company will provide
Warrant Holder with monthly reports of its Measuring
Period year- to-date Net Revenue and Fair Share
measurements.
(d) Warrant Holder's right to early exercise under Section 4(b) is
contingent upon Warrant Holder's participating exclusively in the Company's
leisure airline ticket service as the only "demand collection system" for
Warrant Holder's sale of airline tickets over the Internet. For purposes of this
Section 4(d), "demand collection system" is narrowly defined as an airline
ticket service that (i) enables a consumer to name the price the consumer is
willing to pay for one or more airline tickets (ii) enables the seller to bind
the consumer to the consumer's offer price upon the seller's acceptance of the
consumer's offer, and (iii) does not permit the consumer to specify the exact
airline on which the consumer is willing to fly. In order for Warrant Holder to
be entitled to the early exercise rights specified in Section 4(b), Warrant
Holder must not at any time between the date hereof and the date Warrant Holder
exercises the Warrants pursuant to an early exercise of Warrants in accordance
with Section 4(b), participate in any "demand collection system" other than the
Company's for the sale of airline tickets over the Internet for carriage on one
or more airlines including Warrant Holder and/or any of its subsidiaries. For
example, if in the first Measuring Period, the Company achieves Net Revenue that
would entitle the Warrant Holder to exercise Warrants for 25% of the Shares, the
Warrant Holder will be entitled to exercise such Warrants at all times
thereafter until the Termination Date so long as the Warrant Holder at all times
from the date hereof though the date of such exercise has not participated in
another "demand collection system" for the sale of airline tickets over the
Internet for carriage on one or more airlines including Warrant Holder and/or
any of its subsidiaries. If at any time from the date hereof though to the fifth
5th anniversary of the Issue Date, the Warrant Holder participates in another
"demand collection system" for the sale of airline tickets over the Internet for
carriage on one or more airlines including Warrant Holder and/or any of its
subsidiaries, the Warrant Holder's early exercise rights will terminate
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4
and be of no further force or effect, and such Warrants will become exercisable
on the fifth 5th anniversary of the Issue Date (but no such participation after
an exercise shall invalidate or otherwise have any effect on such exercise, the
Shares issued in connection therewith or any other rights of Warrant Holder
other than early exercise rights).
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.
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5
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.
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6
(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.
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(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
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8
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, concurrently
with 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:
▇▇▇▇▇▇▇▇▇.▇▇▇ Incorporated
Five ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
and to:
Skadden, Arps, Slate, Meagher, & ▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Chuff, Esq.
(ii) if to the Warrant Holder, to:
Continental Airlines, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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Attention: ▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President -- Pricing and
Revenue Management
Phone:
Fax: ▇▇▇-▇▇▇-▇▇▇▇
and to:
Continental Airlines, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇. HQS-EO
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.
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(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. For the avoidance of doubt, this Warrant
Agreement and its Exhibits shall not in any way affect that certain
Participation Warrant Agreement dated July 16, 1999, as amended by First
Amendment to Participation Warrant Agreement dated as of November 17, 1999,
between the Company and Warrant Holder.
(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
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11
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.
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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:
CONTINENTAL AIRLINES, INC.
By: ________________________________
Name:
Title:
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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.
CONTINENTAL AIRLINES, INC.
By: _______________________________
___________________________________
(Print Name of Signatory)
___________________________________
(Title of Signatory)
Date: __________________
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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.
CONTINENTAL AIRLINES, INC.
By: _______________________________
___________________________________
(Print Name of Signatory)
___________________________________
(Title of Signatory)
Date: __________________
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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 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 17th day of November, 1999.
Acknowledged and agreed:
▇▇▇▇▇▇▇▇▇.▇▇▇ INCORPORATED CONTINENTAL AIRLINES, INC.
By: _____________________________ By: ___________________________
Name: Name:
Title: Title:
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