-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Sky8mIDoRhrGKHfVwb1uva+sFUpVr7dCtmHLZUN36WbL5PhXrFhfNeNyKqQC+6j7 U6fDMOav90ky1E2LElF56Q== 0001144204-05-005660.txt : 20050222 0001144204-05-005660.hdr.sgml : 20050221 20050222115144 ACCESSION NUMBER: 0001144204-05-005660 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20050125 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050222 DATE AS OF CHANGE: 20050222 FILER: COMPANY DATA: COMPANY CONFORMED NAME: RCG COMPANIES INC CENTRAL INDEX KEY: 0000722839 STANDARD INDUSTRIAL CLASSIFICATION: LAND SUBDIVIDERS & DEVELOPERS (NO CEMETERIES) [6552] IRS NUMBER: 232265039 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-08662 FILM NUMBER: 05629935 BUSINESS ADDRESS: STREET 1: 6836 MORRISON BOULEVARD STREET 2: SUITE 200 CITY: CHARLOTTE STATE: NC ZIP: 28211 BUSINESS PHONE: 7043665054 MAIL ADDRESS: STREET 1: 6836 MORRISON BLVD STREET 2: SUITE 200 CITY: CHARLOTTE STATE: NC ZIP: 28211 FORMER COMPANY: FORMER CONFORMED NAME: ERESOURCE CAPITAL GROUP INC DATE OF NAME CHANGE: 20001113 FORMER COMPANY: FORMER CONFORMED NAME: FLIGHTSERV COM DATE OF NAME CHANGE: 19990716 FORMER COMPANY: FORMER CONFORMED NAME: PROACTIVE TECHNOLOGIES INC DATE OF NAME CHANGE: 19950921 8-K/A 1 v013374_8k-a.txt ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ---------- FORM 8-K/A ---------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) JANUARY 25, 2005 ---------- RCG COMPANIES INCORPORATED (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) ---------- DELAWARE 1-8662 23-2265039 (STATE OR OTHER JURISDICTION (COMMISSION FILE NUMBER) (IRS EMPLOYER OF INCORPORATION) IDENTIFICATION NO.) 6836 MORRISON BLVD., STE. 200, 28211 CHARLOTTE, NORTH CAROLINA (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (704) 366-5054 ---------- (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.) ================================================================================ Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) EXPLANATORY NOTE This amendment on Form 8-K/A amends the Registrant's Form 8-K filed on to January 31, 2004 to include the following exhibits: 4.1 Loan Agreement, dated January 25, 2005 4.2 Form of Secured Promissory Notes 4.3 Form of Warrant 4.4 Pledge Agreement dated January 25, 2005 ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES On January 25, 2005, RCG Companies Incorporated (the "Company") closed a private placement with 5 accredited investors, including the Company's Chief Executive Officer/President, and a Director (collectively the "Investors"). Pursuant to the terms of the Loan Agreement, the Company is to initially issue the following securities to the Investors in consideration for the Investors making payment to the Company in the total amount of $1,098,500: (i) Secured Promissory Notes in the total principal amount of $1,098,500, with interest accruing at the 7.0% per annum, payable in one lump sum of principal and interest on the date that is six (6) months after issuance (with an option to extend the term if the Company and the Investors mutually agree), secured by 100% of the issued and outstanding common stock of FS SunTours, d/b/a SunTrips; and (ii) Warrants to purchase 549,250 shares of common stock of the Company at an exercise price of $1.25 per share, exercisable until the date that is 3 years after the closing date. The transaction was approved by the Company's Board of Directors on January 25, 2005. The shares of Secured Promissory Notes and Warrants will be issued pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. ITEM 9.01. EXHIBITS 4.1 Loan Agreement, dated January 25, 2005 4.2 Form of Secured Promissory Notes 4.3 Form of Warrant 4.4 Pledge Agreement dated January 25, 2005 2 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: February 22, 2005 RCG COMPANIES INCORPORATED By: /s/ Michael Pruitt -------------------------- Michael Pruitt President 3 EX-4.1 2 v013374_ex4-1.txt EXHIBIT 4.1 THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED HEREIN. LOAN AGREEMENT THIS LOAN AGREEMENT, dated as of January 25, 2005, is entered into by and between RCG Companies Incorporated, a Delaware corporation (the "Company"), and each individual named on a signature page hereto (as used herein, each such signatory is referred to as the "Lender" or a "Lender") (each agreement with a Lender being deemed a separate and independent agreement between the Company and such Lender, except that each Lender acknowledges and consents to the rights granted to each other Lender each, an "Other Lender" under such agreement and the Transaction Agreements, as defined below, referred to therein). W I T N E S S E T H: WHEREAS, the Company and each of the Lenders are executing and delivering this Agreement in accordance with and in reliance upon the exemption from securities registration for offers and sales to accredited investors afforded by Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"); and WHEREAS, each Lender wishes to lend funds to the Company, subject to and upon the terms and conditions of this Agreement and acceptance of this Agreement by the Company, the repayment of which will be represented by Promissory Notes of the Company (each, a "Note"), on the terms and conditions referred to herein; and WHEREAS, in connection with the loan to be made by each Lender, the Company has agreed to issue the Warrants (as that term is defined below) to the Lender; and WHEREAS, the Company's obligations to repay the Notes will be secured, pursuant to a Pledge Agreement (the "Pledge Agreement") executed by Flightserv, Inc. a wholly owned subsidiary of the Company, by a pledge of certain shares of the common stock of FS SunTours, d/b/a/ SunTrips (the "Pledged Shares"), as to which Pledged Shares Flightserv, Inc. is the registered and beneficial owner. NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: AGREEMENT TO PURCHASE; PURCHASE PRICE. a. PURCHASE. (i) Subject to the terms and conditions of this Agreement and the other Transaction Agreements, each Lender hereby agrees to loan to the Company the principal amount specified on the Lender's signature page hereof (the "Loan Amount"). The aggregate Loan Amount of all Lenders shall be $1,098,500 (the "Aggregate Loan Amount"). (ii) The obligation to repay the loan from the Lender shall be evidenced by the Company's issuance of the Note, which shall be in the form of ANNEX I annexed hereto. The Note will be secured by the pledge of the Pledged Shares under the terms of the Pledge Agreement, which Pledge Agreement shall be substantially in the form of ANNEX II hereto (the "Pledge Agreement"). (iii) The loan to be made by the Lender and the issuance of the Note to the Lender and the other transactions contemplated hereby are sometimes referred to herein and in the other Transaction Agreements as the purchase and sale of the Securities (as defined below), and are referred to collectively as the "Transactions." b. CERTAIN DEFINITIONS. As used herein, each of the following terms has the meaning set forth below, unless the context otherwise requires: "Affiliate" means, with respect to a specific Person referred to in the relevant provision, another Person who or which controls or is controlled by or is under common control with such specified Person. "Certificates" means the Note each duly executed by the Company and issued on the Closing Date in the name of the Lender. "Closing Date" means the date of the closing of the Transactions, as provided herein. "Material Adverse Effect" means an event or combination of events, which individually or in the aggregate, would reasonably be expected to (w) materially and adversely affect the legality, validity or enforceability of the Securities or any of the Transaction Agreements, (x) have or result in a material adverse effect on the results of operations, assets or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole, (y) adversely impair the Company's ability to perform fully on a timely basis its material obligations under any of the Transaction Agreements or the transactions contemplated thereby, or (z) materially and adversely affect the value of the rights granted to the Lender in the Transaction Agreements. "Person" means any living person or any entity, such as, but not necessarily limited to, a corporation, partnership or trust. "Principal Trading Market" means the American Stock Exchange or such other market on which the Common Stock is principally traded at the relevant time. 2 "Securities" means the Note, the Shares, the Warrants, and the shares of common stock underlying the Warrants. "Shares" means the Pledged Shares. "State of Incorporation" means Delaware. "Trading Day" means any day during which the Principal Trading Market shall be open for business. "Transaction Agreements" means this Loan Agreement, the Note, the Warrants and the Pledge Agreement, and includes all ancillary documents referred to in those agreements. "Warrants" means warrants to purchase a total of 549,250 shares of common stock of the Company, exercisable for $1.25 per share for a period of three (3) years, to be issued pro rata to the Lenders based on their respective Loan Amount. c. FORM OF PAYMENT. The Lender shall pay the Loan Amount by delivering immediately available good funds in United States Dollars to the Company no later than the date prior to the Closing Date. 2. LENDER REPRESENTATIONS, WARRANTIES, COVENANTS; ACCESS TO INFORMATION; INDEPENDENT INVESTIGATION. The Lender represents and warrants to, and covenants and agrees with, the Company as follows: a. Without limiting Lender's right to sell the Securities pursuant to an effective registration statement or otherwise in compliance with the 1933 Act, the Lender is purchasing the Securities for its own account for investment only and not with a view towards the public sale or distribution thereof and not with a view to or for sale in connection with any distribution thereof. b. The Lender is (i) an "accredited investor" as that term is defined in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of Rule 501(a)(3), (ii) experienced in making investments of the kind described in this Agreement and the related documents, (iii) able, by reason of the business and financial experience of its officers (if an entity) and professional advisors (who are not affiliated with or compensated in any way by the Company or any of its Affiliates or selling agents), to protect its own interests in connection with the transactions described in this Agreement, and the related documents, and to evaluate the merits and risks of an investment in the Securities, and (iv) able to afford the entire loss of its investment in the Securities. c. All subsequent offers and sales of the Securities by the Lender shall be made pursuant to registration of the relevant Securities under the 1933 Act or pursuant to an exemption from registration. 3 d. The Lender understands that the Securities are being offered and sold to it in reliance on specific exemptions from the registration requirements of the 1933 Act and state securities laws and that the Company is relying upon the truth and accuracy of, and the Lender's compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Lender set forth herein in order to determine the availability of such exemptions and the eligibility of the Lender to acquire the Securities. e. The Lender and its advisors, if any, have been furnished with or have been given access to all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Lender, including those set forth in any annex attached hereto. The Lender and its advisors, if any, have been afforded the opportunity to ask questions of the Company and its management and have received complete and satisfactory answers to any such inquiries. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, THE LENDER HAS ALSO HAD THE OPPORTUNITY TO OBTAIN AND TO REVIEW THE COMPANY'S FILINGS ON EDGAR. f. The Lender understands that its investment in the Securities involves a high degree of risk. g. The Lender hereby represents that, in connection with its purchase of the Securities, it has not relied on any statement or representation by the Company or any of its officers, directors and employees or any of its attorneys or agents, except as specifically set forth herein. h. The Lender understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities. i. The Lender acknowledges that the Lender has relied solely upon Lender's own tax advisors with respect to all tax matters related to this investment. j. This Agreement and the other Transaction Agreements to which the Lender is a party, and the transactions contemplated thereby, have been duly and validly authorized, executed and delivered on behalf of the Lender and are valid and binding agreements of the Lender enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium and other similar laws affecting the enforcement of creditors' rights generally. 3. COMPANY REPRESENTATIONS. The Company represents and warrants to the Lender as of the date hereof and as of the Closing Date that, except as otherwise provided in the Company's SEC Documents: a. STATUS. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Incorporation and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in each jurisdiction where the nature of the business conducted or property owned by it makes such qualification necessary, other than those jurisdictions in which the failure to so qualify would not have or result in a Material Adverse Effect. The Company has registered its stock and is obligated to file reports pursuant to Section 12 or Section 15(d) of the Securities and Exchange Act of 1934, as amended (the "1934 Act"). The Common Stock is quoted on the Principal Trading Market. The Company has received no notice, either oral or written, with respect to the continued eligibility of the Common Stock for such quotation on the Principal Trading Market. 4 b. TRANSACTION AGREEMENTS. This Agreement and each of the other Transaction Agreements, and the transactions contemplated thereby, have been duly and validly authorized by the Company, this Agreement has been duly executed and delivered by the Company and this Agreement is, and the Notes, the Warrants and each of the other Transaction Agreements, when executed and delivered by the Company, will be, valid and binding agreements of the Company enforceable in accordance with their respective terms, subject as to enforceability to general principles of equity and to bankruptcy, insolvency, moratorium, and other similar laws affecting the enforcement of creditors' rights generally. c. NON-CONTRAVENTION. The execution and delivery of this Agreement and each of the other Transaction Agreements by the Company, the issuance of the Securities, and the consummation by the Company of the other transactions contemplated by this Agreement, the Notes, the Warrants and the other Transaction Agreements do not and will not conflict with or result in a breach by the Company of any of the terms or provisions of, or constitute a default under (i) the certificate of incorporation or by-laws of the Company, each as currently in effect, (ii) any indenture, mortgage, deed of trust, or other material agreement or instrument to which the Company is a party or by which it or any of its properties or assets are bound, or (iii) to its knowledge, any existing applicable law, rule, or regulation or any applicable decree, judgment, or order of any court, United States federal or state regulatory body, administrative agency, or other governmental body having jurisdiction over the Company or any of its properties or assets; except where such conflict, breach or default which would not have or result in a Material Adverse Effect. d. FILINGS. To the Company's knowledge, none of the Company's SEC Documents contained, at the time they were filed, any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements made therein in light of the circumstances under which they were made, not misleading. e. NO BROKERS. There are no broker, finder or investment banker fees or commissions owed or to be owed by or on behalf of the Company or any Lender in connection with the transactions contemplated by this Agreement. 4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS. a. TRANSFER RESTRICTIONS. The Lender acknowledges that (1) the Securities have not been and are not being registered under the provisions of the 1933 Act and, the Shares have not been and are not being registered under the 1933 Act, and may not be transferred unless (A) subsequently registered thereunder or (B) the Lender shall have delivered to the Company an opinion of counsel, reasonably satisfactory in form, scope and substance to the Company, to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration; (2) any sale of the Securities made in reliance on Rule 144 promulgated under the 1933 Act may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any resale of such Securities under circumstances in which the seller, or the Person through whom the sale is made, may be deemed to be an underwriter, as that term is used in the 1933 Act, may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (3) neither the Company nor any other Person is under any obligation to register the Securities under the 1933 Act or to comply with the terms and conditions of any exemption thereunder. 5 b. RESTRICTIVE LEGEND. The Lender acknowledges and agrees that, until such time as the relevant Shares have been registered under the 1933 Act, and sold in accordance with an effective registration statement, the certificates and other instruments representing any of the Securities shall bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of any such Securities): THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. c. FILINGS. Each of the parties hereby consents to the inclusion of the text of the Transaction Agreements in filings made with the SEC as well as any descriptive text accompanying or part of such filing which is accurate and reasonably determined by the Company's counsel to be legally required. The Company will, after the Closing Date, promptly file a Current Report on Form 8-K or, if appropriate, a quarterly or annual report on the appropriate form, referring to the transactions contemplated by the Transaction Agreements. d. INDEPENDENT NATURE OF LENDERS' OBLIGATIONS AND RIGHTS. The obligations of each Lender under the Transaction Agreements are several and not joint with the obligations of any Other Lender, and no Lender shall be responsible in any way for the performance of the obligations of any Other Lender under any one or more of the Transaction Agreements. The decision of each Lender or Other Lender to purchase Securities pursuant to the Transaction Agreements has been made by such Lender independently of any Other Lender. Nothing contained herein or in any Transaction Agreement, and no action taken by any Lender pursuant thereto, shall be deemed to constitute any two or more Lenders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Lenders are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Agreements. Each Lender acknowledges that no Other Lender has acted as agent for such Lender in connection with making its investment hereunder and that no Lender will be acting as agent of such Other Lender in connection with monitoring its investment in the Securities or enforcing its rights under the Transaction Agreements. Each Lender shall be entitled to independently protect and enforce its rights, including, without limitation, the rights arising out of this Agreement or out of the other Transaction Agreements, and it shall not be necessary for any Other Lender to be joined as an additional party in any proceeding for such purpose. 6 e. INDEPENDENT INVESTMENT DECISION. No Lender has agreed to act with any Other Lender for the purpose of acquiring, holding, voting or disposing of the Securities purchased hereunder for purposes of Section 13(d) under the 1934 Act, and each Lender is acting independently with respect to its investment in the Securities. The decision of each Lender to purchase Securities pursuant to this Agreement has been made by such Lender independently of any other purchase and independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company or its subsidiaries which may have made or given by any Other Lender or by any agent or employee of any Other Lender, and no Lender or any of its agents or employees shall have any liability to any Other Lender (or any other person) relating to or arising from any such information, materials, statements or opinions. 5. CLOSING DATE. a. The Closing Date shall occur on the date which is the first Trading Day after each of the conditions contemplated by Sections 6 and 7 hereof shall have either been satisfied or been waived by the party in whose favor such conditions run. b. The closing of the Transactions shall occur on the Closing Date at the offices of Adorno & Yoss, LLP and shall take place no later than 3:00 P.M., New York time, on such day or such other time, place or manner as is mutually agreed upon by the Company and the Lender. 6. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL. The Lender understands that the Company's obligation to sell the Notes, the Shares and the Warrants to the Lender pursuant to this Agreement on the Closing Date is conditioned upon: a. The execution and delivery of this Agreement by the Lender; b. Delivery by the Lender good funds as payment in full of an amount equal to the Loan Amount in accordance with this Agreement; c. The accuracy on such Closing Date of the representations and warranties of the Lender contained in this Agreement, each as if made on such date, and the performance by the Lender on or before such date of all covenants and agreements of the Lender required to be performed on or before such date; and d. There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval, which shall not have been obtained. 7 7. CONDITIONS TO THE LENDER'S OBLIGATION TO PURCHASE. The Company understands that the Lender's obligation to purchase the Notes and the Warrants on the Closing Date is conditioned upon: a. The execution and delivery of this Agreement and the other Transaction Agreements by the Company; b. The execution and delivery of the Pledge Agreement; c. The accuracy in all material respects on the Closing Date of the representations and warranties of the Company contained in this Agreement, each as if made on such date, and the performance by the Company on or before such date of all covenants and agreements of the Company required to be performed on or before such date; and d. There shall not be in effect any law, rule or regulation prohibiting or restricting the transactions contemplated hereby, or requiring any consent or approval, which shall not have been obtained. 8. JURY TRIAL WAIVER. The Company and the Lender hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the Parties hereto against the other in respect of any matter arising out or in connection with the Transaction Agreements. 9. GOVERNING LAW: MISCELLANEOUS. a. This Agreement shall be governed by and interpreted in accordance with the laws of the State of Delaware for contracts to be wholly performed in such state and without giving effect to the principles thereof regarding the conflict of laws. b. Failure of any party to exercise any right or remedy under this Agreement or otherwise, or delay by a party in exercising such right or remedy, shall not operate as a waiver thereof. c. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties hereto. d. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. e. A facsimile transmission of this signed Agreement shall be legal and binding on all parties hereto. f. This Agreement may be signed in one or more counterparts, each of which shall be deemed an original. 8 g. The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. h. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement or the validity or enforceability of this Agreement in any other jurisdiction. i. This Agreement may be amended only by an instrument in writing signed by the party to be charged with enforcement thereof. j. This Agreement supersedes all prior agreements and understandings among the parties hereto with respect to the subject matter hereof. 10. NOTICES. Any notice required or permitted hereunder shall be given in writing (unless otherwise specified herein) and shall be deemed effectively given on the earliest of a. the date delivered, if delivered by personal delivery as against written receipt therefor or by confirmed facsimile transmission, b. the third Trading Day after mailing by receipted overnight courier, with delivery costs and fees prepaid, in each case, addressed to each of the other parties thereunto entitled at the following addresses (or at such other addresses as such party may designate by ten (10) days' advance written notice similarly given to each of the other parties hereto): COMPANY: RCG Companies Incorporated 6836 Morrison Blvd., Suite 200 Charlotte, North Carolina 28211 Attention: President Telephone No.: (704) 366-5054 Telecopier No.: (704) 366-5056 with a copy to: Adorno & Yoss, LLP 350 East Las Olas Boulevard, Suite 1700 Fort Lauderdale, Florida 33301 Attention: Joel D. Mayersohn, Esq. Telephone No.: (954) 763-1200 Telecopier No.: (954) 766-7800 LENDER: At the address set forth on the signature page of this Agreement. 9 11. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The Company's and the Lender's representations and warranties herein shall survive the execution and delivery of this Agreement and the delivery of the Certificates and the payment of the Loan Amount, and shall inure to the benefit of the Lender and the Company and their respective successors and assigns. [REMIANDER OF PAGE INTENTIOANALLY LEFT BLANK] 10 IN WITNESS WHEREOF, with respect to the Loan Amount specified below, this Agreement has been duly executed by the Lender and the Company as of the date set first above written. LOAN AMOUNT: $______________ LENDER Printed Name of Lender Telephone No. _______________________ By: _________________________________ Telecopier No._______________________ (Signature of Authorized Person) _____________________________________ __________________________________ Jurisdiction of Incorporation Printed Name and Title or Organization COMPANY RCG COMPANIES INCORPORATED By: ________________________________ (Signature of Authorized Person) ____________________________________ Printed Name and Title ANNEX I FORM OF NOTE ANNEX II PLEDGE AGREEMENT EX-4.2 3 v013374_ex4-2.txt EXHIBIT 4.2 THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES OR AN OPINION OF COUNSEL OR OTHER EVIDENCE ACCEPTABLE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED. US $________________ RCG COMPANIES INCORPORATED 7% SECURED PROMISSORY NOTE DUE _______________, 2005 FOR VALUE RECEIVED, RCG COMPANIES INCORPORATED, a corporation organized and existing under the laws of the State of Delaware (the "COMPANY"), promises to pay to __________________________ the registered holder hereof (the "HOLDER"), the principal sum of ____________ and 00/100 Dollars (US $_____) on the Maturity Date (as defined below) and to pay interest on the principal sum outstanding from time to time at the rate of 7% per annum (computed on the basis of the actual number of days elapsed and a year of 365 days), accruing from ______________, 2005, the date of initial issuance of this Note (the "ISSUE DATE"), to the date of payment. Such interest shall be payable on the date which is the earlier of (i) the Maturity Date, or (ii) the date of any prepayment of principal permitted hereunder. Accrual of interest shall commence on the Issue Date and shall continue to accrue on a daily basis until payment in full of the principal sum has been made or duly provided for (whether before or after the Maturity Date). This Note is being issued pursuant to the terms of the Loan Agreement, dated as of ________________, 2005 (the "LOAN AGREEMENT"). This is one of a series of notes in the aggregate principal amount of $1,098,500, to which the Company and the Holder (or the Holder's predecessor in interest) are parties. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Loan Agreement. This Note is subject to the following additional provisions: 1. The term "MATURITY DATE" means ___________, 2005. 2. (i) This Note may be prepaid in whole or in part at any time prior to the Maturity Date, without penalty. Any payment shall be applied as provided in Section 3. (ii) The Company shall be in default hereunder if any payment is not made in a timely manner after any applicable grace or cure period. 3. Any payment made on account of the Note shall be applied in the following order of priority: (i) first, to any amounts due hereunder other than principal and accrued interest, (ii) then, to accrued interest through and including the date of payment, and (iii) then, to principal of this Note. 4. All payments contemplated hereby to be made "in cash" shall be made in immediately available good funds of United States of America currency by wire transfer to an account designated in writing by the Holder to the Company (which account may be changed by notice similarly given). For purposes of this Note, the phrase "date of payment" means the date good funds are received in the account designated by the notice which is then currently effective. 5. Subject to the terms of the Loan Agreement, no provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the coin or currency, as herein prescribed. This Note is a direct obligation of the Company. 6. The obligations of the Company under this Note are secured under the terms of the Pledge Agreement, to which the Holder and FlightServ, Inc., a Delaware corporation are parties, the terms of which are incorporated herein by reference, by a pledge of all the shares of the Common Stock of FS SunTours, Inc., of which FlightServ, Inc. is the record and beneficial owner. 7. No recourse shall be had for the payment of the principal of, or the interest on, this Note, or for any claim based hereon, or otherwise in respect hereof, against any incorporator, shareholder, officer or director, as such, past, present or future, of the Company or Pledgor or any successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issue hereof, expressly waived and released. 8. The Holder of the Note, by acceptance hereof, agrees that this Note is being acquired for investment and that such Holder will not offer, sell or otherwise dispose of this Note except under circumstances which will not result in a violation of the Securities Act of 1933, as amended, or any applicable state Blue Sky or foreign laws or similar laws relating to the sale of securities. 9. Any notice given by any party to the other with respect to this Note shall be given in the manner contemplated by the Loan Agreement in the section entitled "Notices". 10. This Note shall be governed by and construed in accordance with the laws of the State of Delaware. 11. JURY TRIAL WAIVER. The Company and the Holder hereby waive a trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other in respect of any matter arising out of or in connection with this Note. 2 12. The following shall constitute an "EVENT OF DEFAULT": a. The Company shall default in the payment of principal or interest on this Note after ten (10) days of the date such payment is then due; or b. Any of the representations or warranties made by the Company herein, in the Loan Agreement or any of the other Transaction Agreements shall be false or misleading in any material respect at the time made and shall have a material adverse effect on the Company; or c. The Company shall make an assignment for the benefit of creditors or commence proceedings for its dissolution; or d. A trustee, liquidator or receiver shall be appointed for the Company without its consent, and such appointment shall remain undismissed for a period of 60 days of appointment; or e. Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the the Company, which custody or control shall remain undismissed for a period of 60 days of appointment; or f. Bankruptcy, reorganization, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Company, which, if instituted against the Company, shall remain undismissed for a period of 60 days of such filing. If an Event of Default shall have occurred, then, or at any time thereafter, and in each and every such case, unless such Event of Default shall have been waived by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable (and the Maturity Date shall be accelerated accordingly), without presentment, demand, protest or notice of any kinds, all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and interest shall accrue on the total amount due (the "DEFAULT AMOUNT") on the date of the Event of Default (the "DEFAULT DATE") at the rate of 12% per annum or the maximum rate allowed by law, whichever is lower, from the Default Date until the date payment is made, and the Holder may immediately enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. 3 13. In the event for any reason, any payment by or act of the Company or the Holder shall result in payment of interest which would exceed the limit authorized by or be in violation of the law of the jurisdiction applicable to this Note, then ipso facto the obligation of the Company to pay interest or perform such act or requirement shall be reduced to the limit authorized under such law, so that in no event shall the Company be obligated to pay any such interest, perform any such act or be bound by any requirement which would result in the payment of interest in excess of the limit so authorized. In the event any payment by or act of the Company shall result in the extraction of a rate of interest in excess of a sum which is lawfully collectible as interest, then such amount (to the extent of such excess not returned to the Company) shall, without further agreement or notice between or by the Company or the Holder, be deemed applied to the payment of principal, if any, hereunder immediately upon receipt of such excess funds by the Holder, with the same force and effect as though the Company had specifically designated such sums to be so applied to principal and the Holder had agreed to accept such sums as an interest-free prepayment of this Note. If any part of such excess remains after the principal has been paid in full, whether by the provisions of the preceding sentences of this Section or otherwise, such excess shall be deemed to be an interest-free loan from the Company to the Holder, which loan shall be payable immediately upon demand by the Company. The provisions of this Section shall control every other provision of this Note. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 4 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed by an officer thereunto duly authorized this ____ day of _____________, 2005. RCG COMPANIES INCORPORATED By:_______________________________________ __________________________________________ (Print Name) __________________________________________ (Title) 5 EX-4.3 4 v013374_ex4-3.txt EXHIBIT 4.3 NEITHER THESE SECURITIES NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR REASONABLY ACCEPTABLE TO THE COMPANY TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY. COMMON STOCK PURCHASE WARRANT To Purchase Shares of Common Stock of RCG COMPANIES INCORPORATED THIS COMMON STOCK PURCHASE WARRANT (the "Warrant") certifies that, for value received, (the "Holder"), is entitled, upon the terms and subject to the limitations on exercise and the conditions hereinafter set forth, at any time on or after January 25, 2005 (the "Initial Exercise Date") and on or prior to the close of business on the three (3) year anniversary of the Initial Exercise Date (the "Termination Date") but not thereafter, to subscribe for and purchase from RCG Companies Incorporated, a Delaware corporation (the "Company"), up to ______ shares (the "Warrant Shares") of Common Stock, par value $0.04 per share, of the Company (the "Common Stock"). The purchase price of one share of Common Stock under this Warrant shall be equal to the Exercise Price, as defined under Section 1(b). Section 1. Exercise. a) Exercise of Warrant. Exercise of the purchase rights represented by this Warrant may be made at any time or times on or after the Initial Exercise Date and on or before the Termination Date by delivery to the Company of a duly executed facsimile copy of the Notice of Exercise Form annexed hereto (or such other office or agency of the Company as it may designate by notice in writing to the registered Holder at the address of such Holder appearing on the books of the Company); provided, however, within 5 Trading Days of the date said Notice of Exercise is delivered to the Company, the Holder shall have surrendered this Warrant to the Company and the Company shall have received payment of the aggregate Exercise Price of the shares thereby purchased by wire transfer or cashier's check drawn on a United States bank. b) Exercise Price. The exercise price of each share of Common Stock under this Warrant shall be $1.25, subject to adjustment hereunder (the "Exercise Price"). c) Mechanics of Exercise. i. Authorization of Warrant Shares. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges in respect of the issue thereof (other than taxes in respect of any transfer occurring contemporaneously with such issue). The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. ii. Delivery of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted to the Holder after delivery to the Company of the Notice of Exercise Form, surrender of this Warrant and payment of the aggregate Exercise Price as set forth above ("Warrant Share Delivery Date"). This Warrant shall be deemed to have been exercised on the date the Exercise Price is received by the Company. iii. Delivery of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant. iv. No Fractional Shares or Scrip. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. v. Closing of Books. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant, pursuant to the terms hereof. Section 3. Certain Adjustments. a) Stock Splits. If the Company, at any time while this Warrant is outstanding: (A) subdivides outstanding shares of Common Stock into a larger number of shares, (B) combines (including by way of reverse stock split) outstanding shares of Common Stock into a smaller number of shares, or (C) issues by reclassification of shares of the Common Stock any shares of capital stock of the Company, then in each case the Exercise Price shall be multiplied by a fraction of which the numerator shall be the number of shares of Common Stock (excluding treasury shares, if any) outstanding before such event and of which the denominator shall be the number of shares of Common Stock outstanding after such event and the number of Warrant Shares issuable upon exercise of this Warrant shall be proportionately adjusted. Any adjustment made pursuant to this Section 3(a) shall become effective immediately. 2 b) Calculations. All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be. For purposes of this Section 3, the number of shares of Common Stock outstanding as of a given date shall be the sum of the number of shares of Common Stock (excluding treasury shares, if any) outstanding. c) Notice to Holders for Adjustment to Exercise Price. Whenever the Exercise Price is adjusted pursuant to this Section 3, the Company shall promptly mail to each Holder a notice setting forth the Exercise Price after such adjustment and setting forth a brief statement of the facts requiring such adjustment. Section 4. Transfer of Warrant/Warrant Register. The Company shall register this Warrant, upon records to be maintained by the Company for that purpose (the "Warrant Register"), in the name of the record Holder hereof from time to time. The Company may deem and treat the registered Holder of this Warrant as the absolute owner hereof for the purpose of any exercise hereof or any distribution to the Holder, and for all other purposes, absent actual notice to the contrary. Section 5. Miscellaneous. a) No Rights as Shareholder Until Exercise. This Warrant does not entitle the Holder to any voting rights or other rights as a shareholder of the Company prior to the exercise hereof. Upon the surrender of this Warrant and the payment of the aggregate Exercise Price, the Warrant Shares so purchased shall be and be deemed to be issued to such Holder as the record owner of such shares as of the close of business on the later of the date of such surrender or payment. b) Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and upon surrender and cancellation of such Warrant or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of such cancellation, in lieu of such Warrant or stock certificate. c) 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 legal holiday. 3 d) Authorized Shares. The Company covenants that during the period the Warrant is outstanding, it will reserve from its authorized and unissued Common Stock a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under this Warrant. e) Jurisdiction. All questions concerning the construction, validity, enforcement and interpretation of this Warrant shall be governed by and construed and enforced in accordance with internal laws of the State of Delaware, without regard to principles of conflicts of law thereof. f) Restrictions. The Holder acknowledges that the Warrant Shares acquired upon the exercise of this Warrant, if not registered, will have restrictions upon resale imposed by state and federal securities laws and will bear a restrictive legend. g) Nonwaiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies; provided, however, all rights hereunder terminate on the Termination Date. h) Notices. All notices, requests, consents, instructions and other communications required or permitted to be given hereunder shall be in writing and sent by nationally recognized next day delivery service or mailed by certified or registered mail, return receipt requested, postage prepaid, addressed as set forth below or by facsimile transmission confirmed in writing, by next day delivery service. Receipt shall be deemed to occur on the date of actual receipt of delivery by overnight, registered or certified mail or the time of receipted transmission if sent by facsimile. To the Company at: RCG Companies Incorporated 6836 Morrison Blvd Ste 200 Charlotte, NC 28211-2668 Attn: Chief Financial Officer 4 To Holder: To the address set forth such Person's name on the signature page to the Loan Agreement. or such other address or persons as the parties from time to time designate in writing in the manner provided in this section. i) Successors and Assigns. Subject to applicable securities laws, this Warrant and the rights and obligations evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the heirs, successors and permitted assigns of Holder. j) Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder. k) Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions of this Warrant. l) Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. ******************** 5 IN WITNESS WHEREOF, the Company has caused this Warrant to be executed by its officer thereunto duly authorized. Dated: January 25, 2005 RCG COMPANIES INCORPORATED By: -------------------------- Name: Michael D. Pruitt Title: President 6 EXHIBIT 4.3 NOTICE OF EXERCISE TO: RCG COMPANIES INCORPORATED (1)_____The undersigned hereby elects to purchase Warrant Shares of the Company pursuant to the terms of the attached Warrant (only if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes, if any. (2)_____Payment shall take the form of cash in lawful money of the United States. (3)_____Please issue a certificate or certificates representing said Warrant Shares in the name of the undersigned. The Warrant Shares shall be delivered to the following: __________________________________________ __________________________________________ __________________________________________ (4) Accredited Investor. The undersigned is an "accredited investor" as defined in Regulation D promulgated under the Securities Act of 1933, as amended. [PURCHASER] By: ------------------------------------ Name: Title: Dated: --------------------------------- EX-4.4 5 v013374_ex4-4.txt EXHIBIT 4.4 PLEDGE AGREEMENT THIS PLEDGE AGREEMENT ("PLEDGE AGREEMENT"), is dated as of January 25, 2005, by and between the persons set forth on Schedule 1 (the "SECURED PARTY" and collectively, the "SECURED PARTIES") and FLIGHTSERV, INC. (the "PLEDGOR"). RECITALS A. Reference is made to (i) that certain Loan Agreement of even date herewith (the "LOAN AGREEMENT") to which RCG COMPANIES INCORPORATED (the "COMPANY" or the "DEBTOR") and the Secured Parties are parties, and (ii) the Transaction Agreements (as that term is defined in the Loan Agreement), including, without limitation, the Notes. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the relevant Transaction Agreements. B. Pursuant to the Transaction Agreements, the Debtor has certain obligations to the Secured Parties, including, but not limited to, obligations to pay principal and interest of the Notes on the Maturity Date. C. To secure the obligations under the Note (the "OBLIGATIONS"), the Pledgor has agreed to pledge all the shares of Common Stock of FS SunTours, Inc. ("SUNTRIPS") held by the Pledgor to the Secured Parties as security for the performance of the Obligations. D. The Pledgor is a wholly owned subsidiary of the Debtor and has determined that it is in the Pledgor's best interests to provide the pledge referred to herein. E. The Secured Parties are willing to enter into the Loan Agreement and the other Transaction Agreements upon receiving Pledgor's pledge of the Common Stock of SunTrips, as set forth in this Pledge Agreement. NOW, THEREFORE, in consideration of the premises, the mutual covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Grant of Security Interest. (a) To secure the Obligations of Debtor, the Pledgor hereby pledges to the Secured Parties (and to each of them based on the "Lender's Allocable Share" (as defined in the Loan Agreement) of such Secured Party), all of the shares of Common Stock of Suntrips (the "PLEDGED SHARES"). The Pledgor is the beneficial and record owner of all the Pledged Shares. Such Pledged Shares, together with any substitutes therefor, or proceeds thereof, are hereinafter referred to collectively as the "COLLATERAL." (b) Pledgor represents and warrants to the Secured Parties that the Pledged Shares are duly authorized, validly issued, fully paid and non-assessable and that it will not permit the transfer of the Pledged Shares except in accordance with this Pledge Agreement while the same is in effect. 2. Obligations Secured. During the term hereof, the Collateral shall secure the performance by the Company of the Obligations. 3. Perfection of Security Interests. Upon execution of this Pledge Agreement by the Debtor and the Pledgor: (a) The Pledgor shall deliver and transfer possession of the stock certificates identified opposite such Pledgor's name on Schedule 1 of this Agreement (the "PLEDGED CERTIFICATES"), together with stock transfer powers duly executed in blank by Pledgor ("STOCK POWERS"), to G. David Gordon & Associates, P.C. as escrow agent (the "ESCROW AGENT"). (b) The Collateral will be held by the Secured Parties, to perfect the security interest of the Secured Parties, until the earlier of (i) the termination of this Agreement, or (ii) foreclosure of Secured Party's security interests as provided herein. 4. Pledgor's Warranty. The Pledgor represents and warrants hereby to the Secured Parties as follows with respect to the Pledged Shares: (a) that upon transfer by Pledgor of the Pledged Certificates and Stock Powers to Secured Parties pursuant to this Agreement at such time, if any, as contemplated hereby upon the occurrence of an Event of Default, the purchaser of the Pledged Shares or the Secured Party, as contemplated herein, as the case may be, will have good title (both record and beneficial) to the relevant Pledged Shares; (b) that there are no restrictions upon transfer and pledge of the Pledged Shares pursuant to the provisions of this Agreement except restrictions imposed under applicable securities laws; (c) that the Pledged Shares are free and clear of any encumbrances of every nature whatsoever, Pledgor is the sole owner of the Pledged Shares, and such shares are duly authorized, validly issued, fully paid and non-assessable; (d) that Pledgor agrees not to grant or create, any security interest, claim, lien, pledge or other encumbrance with respect to Pledged Shares until the Obligations have been paid in full or this Agreement has terminated; and (e) that this Pledge Agreement constitutes a legal, valid and binding obligation of Pledgor enforceable in accordance with its terms (except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and similar laws, now or hereafter in effect). 5. Collection of Dividends and Interest. During the term of this Pledge Agreement and so long as the Debtor is not default under the Obligations, Pledgor is authorized to collect all dividends, distributions, interest payments, and other amounts that may be, or may become, due on the Collateral. 6. Voting Rights. During the term of this Pledge Agreement and until such time as this Pledge Agreement has terminated or Secured Party has exercised its rights under this Pledge Agreement to foreclose its security interest in the Collateral, Pledgor shall have the right to exercise any voting rights evidenced by, or relating to, the Collateral. 7. Warrants and Options. In the event that, during the term of this Pledge Agreement, subscription, warrants, dividends, or any other rights or options shall be issued in connection with the Collateral, such warrants, dividends, rights and options shall be immediately delivered to the Escrow Agent to be held under the terms hereof in the same manner as the Collateral. 8. Preservation of the Value of the Collateral and Reimbursement of Secured Party. Pledgor shall pay all taxes, charges, and assessments against the Collateral. On failure of Pledgor so to do, Secured Party may make such payments on account thereof as (in Secured Party's reasonable discretion) is deemed desirable, and Pledgor shall reimburse Secured Party promptly on demand for any and all such payments expended by Secured Party in enforcing, collecting, and exercising its remedies hereunder. 9. Default and Remedies. (a) For purposes of this Agreement, "EVENT OF DEFAULT" shall mean (i) the occurrence and continuance of an Event of Default under the Note and (ii) a material breach by a Pledgor of any of Pledgor's material representations, warranties, covenants or agreements in this Pledge Agreement. (b) The Secured Parties shall notify the Company and Pledgor in writing of the occurrence of any Event of Default, which notification shall include a summary of the material facts relating to such Event of Default and shall specify the date on which such Event of Default occurred. The Company and Pledgor shall have ten (10) business days to cure any such Event of Default. (c) During the term of this Pledge Agreement, the Secured Party shall have the following rights after any Event of Default and for so long as the Obligations are not satisfied in full, after any applicable notice and cure periods: (i) the rights and remedies provided by the Uniform Commercial Code as adopted by the State of Delaware (as said law may at any time be amended), except that the Secured Party waives any right to a deficiency pursuant to Section 9-608 thereof or otherwise; (ii) the right to receive and retain all dividends, payments and other distributions of any kind upon any or all of the Pledged Shares as additional Collateral; (iii) to the extent of the Lender's Allocable Share of the Secured Party, the right to cause any or all of the Pledged Shares and all additional Collateral to be transferred to its own name and have such transfer recorded in any place or places deemed appropriate by Secured Party; and (iv) the right to sell, at a public or private sale, to the extent of the Lender's Allocable Share of the Secured Party, the Collateral or any part thereof for cash, upon credit or for future delivery, and at such price or prices in accordance with the Uniform Commercial Code (as such law may be amended from time to time); it being understood that one or more of the Secured Parties may, but shall not be required to, take such actions jointly. Upon any such sale, Secured Party shall have the right to deliver, assign and transfer to the purchaser thereof the Collateral so sold. Secured Party shall give the Pledgor not less than ten (10) days' written notice of its intention to make any such sale, which notice shall contain a written offer to sell such shares to the Pledgor or the Company at the same price per share and upon the same terms of payment for which the intended sale is to be made, which offer shall remain open for ten (10) days from the date allowed. Any sale by Secured Party shall be held at such time or times during ordinary business hours and at such place or places as Secured Party may fix in the notice of such sale. Secured Party may adjourn or cancel any sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or any part of the Collateral upon terms calling for payments in the future, any Collateral so sold may be retained by Secured Party until the selling price is paid by the purchaser thereof, but Secured Party shall incur no liability in the case of the failure of such purchaser to take up and pay for the Collateral so sold and, in the case of such failure, such Collateral may again be sold upon like notice. Secured Party, however, instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the security interest and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction, the Pledgor having been given due notice of all such action. Secured Party shall incur no liability as a result of a sale of the Collateral or any part thereof. The balance of the sale proceeds, if any after payment of principal, interest and reasonable costs, shall be paid to the Company. (d) Notwithstanding anything contained herein to the contrary, Secured Party acknowledges and agrees that any obligations of the Company and the Pledgor set forth in this Agreement shall be nonrecourse as to the Company and the Pledgor and any of their respective assets or properties other than the Pledged Stock. 10. Secured Party's Covenants. Except as permitted by Section 9(c)(iv) hereof, Secured Party covenants that it will not sell, exchange, hypothecate, pledge, convey, mortgage or abandon any Pledged Stock without the prior written consent of the Pledgor and the Company. 10. Waiver. Each of the Debtor and the Pledgor waives any right that it may have to require Secured Party to proceed against any other person, or proceed against or exhaust any other security, or pursue any other remedy Secured Party may have. 11. Term of Agreement. This Pledge Agreement shall continue in full force and effect until the earlier of the payment in full of the Notes. If the Notes are paid in full, the security interests in the relevant Collateral shall be deemed released, and any portion of the Collateral not transferred to or sold by any one or more Secured Parties shall be returned to the Pledgor. Upon termination of this Pledge Agreement, the relevant Collateral shall be returned within five (5) Trading Days to Debtor or to the Pledgor, as contemplated above. 12. General Provisions: (a) Binding Agreement; No Assignment; No Modification of Transaction Agreements. This Pledge Agreement shall be binding upon and shall inure to the benefit of the successors, heirs and permitted assigns of the respective parties hereto. This Pledge Agreement may not be assigned without the prior written consent of the other party hereto. Except to the extent specifically provided herein, nothing in this Pledge Agreement shall limit or modify any provision of any of the Transaction Agreements. (b) Captions. The headings used in this Pledge Agreement are inserted for reference purposes only and shall not be deemed to define, limit, extend, describe, or affect in any way the meaning, scope or interpretation of any of the terms or provisions of this Pledge Agreement or the intent hereof. (c) Counterparts/Facsimile Signatures. This Pledge Agreement may be signed in any number of counterparts with the same effect as if the signatures upon any counterpart were upon the same instrument. All signed counterparts shall be deemed to be one original. A facsimile transmission of this signed Pledge Agreement shall be legal and binding on all parties hereto. (d) Further Assurances. The parties hereto agree that, from time to time upon the written request of any party hereto, they will execute and deliver such further documents and do such other acts and things as such party may reasonably request in order fully to effect the purposes of this Pledge Agreement. (e) Waiver of Breach. Any waiver by either party of any breach of any kind or character whatsoever by the other, whether such be direct or implied, shall not be construed as a continuing waiver of or consent to any subsequent breach of this Pledge Agreement. (f) Cumulative Remedies. The rights and remedies of the parties hereto shall be construed cumulatively, and none of such rights and remedies shall be exclusive of, or in lieu or limitation of any other right, remedy, or priority allowed by applicable law. (g) Amendment. This Pledge Agreement may be modified only in a written document that refers to this Pledge Agreement and is executed by Secured Party, the Pledgor and the Debtor. (h) Interpretation. This Pledge Agreement shall be interpreted, construed, and enforced according to the substantive laws of the State of Delaware. (i) Governing Law. This Pledge Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. (j) Waiver of Jury Trial. The parties to this Pledge Agreement hereby waive a trial by jury in any action, proceeding or counterclaim brought by any of them against any other in respect of any matter arising out or in connection with this Pledge Agreement. (k) Notice. Any notice or other communication required or permitted to be given hereunder shall be effective upon receipt. Such notices may be sent (i) in the United States mail, postage prepaid and certified, (ii) by express courier with receipt, (iii) by facsimile transmission, with a copy subsequently delivered as in (i) or (ii) above. Any such notice shall be addressed or transmitted as follows: If to the Pledgor, to: Flightserv, Inc. 6836 Morrison Boulevard, Suite 200 Charlotte, North Carolina 28211 Attn: Michael D. Pruitt, President Telephone No.: (704) 366-5054 Telecopier No.: (704) 366-5056 If to any Secured Party, to the addresses of the relevant Secured Party, respectively, as provided by the Loan Agreement. Any party may change its address by notice similarly given to the other parties (except that a Secured Party need not give notice to other Secured Parties). [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] IN WITNESS WHEREOF, the Parties have executed this Agreement as of the day, month and year first above written. SECURED PARTY (NAMED IN SCHEDULE 1): - ----------------------------------- PLEDGOR: FLIGHTSERV, INC. By: ------------------------------- Its: ------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----