AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 12, 1998
REGISTRATION NO.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
VANGUARD AIRLINES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 48-1149290
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7000 SQUIBB ROAD, THIRD FLOOR
MISSION, KANSAS 66202
(913) 789-1388
(Address of Principal Executive Offices)
VANGUARD AIRLINES, INC.
1994 STOCK OPTION PLAN
(Full title of the plan)
BRIAN S. GILLMAN, ESQ.
VICE PRESIDENT AND GENERAL COUNSEL
VANGUARD AIRLINES, INC.
7000 SQUIBB ROAD
THIRD FLOOR
MISSION, KANSAS 66202
(Name and address of agent for service)
(913) 789-1388
(Telephone number, including area code, of agent for service)
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<CAPTION>
CALCULATION OF REGISTRATION FEE
<C> <C> <C> <C> <C>
Proposed Proposed
Maximum Maximum Amount
Title of Securities Amount to be Offering Price Aggregate of
to be Registered Registered per Share (1) Offering Registration
Price Fee
Common Stock 8,300,000 $1.00 $8,300,000.00 $2,448.50
($0.001 par value)
</TABLE>
(1) Pursuant to Rule 457(h) of the Securities Act of 1933, and solely
for the purpose of calculating the amount of the registration fee, the
proposed maximum offering price per unit and proposed maximum aggregate
offering price is based on the average of the bid and asked price of the Common
Stock on May 28, 1998 in the over-the-counter market as quoted
on the OTC Bulletin Board.
(2) The provisions of Rule 416 shall apply to this Registration Statement
and the number of shares registered on this Registration Statement and the
number of shares registered on this Registration Statement automatically
shall increase or decrease as a result of future stock splits, stock
dividends or similar transactions.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 3. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.
Vanguard Airlines, Inc., a Delaware corporation (the "Registrant") hereby
incorporates by reference into this Registration Statement the following
documents: (i) the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1997; (ii) the Registrant's Quarterly Report for the
quarter ended March 31, 1998; and (iii) the description of the Common Stock
of the Registrant which is contained in the Registrant's Registration
Statement on Form 8-A (File No. 0-27034), including any amendments or
reports filed for the purpose of updating such description.
All documents filed by the Registrant pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Securities Exchange Act of 1934 subsequent to the date
of this Registration Statement and prior to the filing of a post-effective
amendment which indicates that all securities offered hereby have been sold
or which deregisters all securities offered hereby remaining unsold, shall
be deemed to be incorporated by reference herein and to be a part hereof
from the date of the filing of such reports and documents, except in no
event shall any information included in any such document in response to
Item 402(i), (k) or (l) of Regulation S-K be deemed to constitute part of
this Registration Statement.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained in any subsequent filed document which is deemed to be
incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL
The validity of the shares of the Common Stock of the
<PAGE>
Registrant registered pursuant to this Registration Statement
will be passed upon by the Company's Vice President and General Counsel,
Brian S. Gillman.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
(a) Section 145 of the General Corporation Law of the state of
Delaware (the "DGCL") gives Delaware corporations broad powers to
indemnify their present and former directors and officers and those
of affiliated corporations against expenses incurred in the defense
of any lawsuit to which they are made parties by reason of being or
having been such directors or officers, subject to specified conditions
and exclusions, gives a director or officer who successfully defends an
action the right to be so indemnified, and authorized the Registrant to
by directors' and officers' liability insurance. Such indemnification
is not exclusive of any other rights to which those indemnified may be
entitled under any by-laws, agreement, vote of stockholders or otherwise.
(b) The Company's Bylaws provide that the Company shall indemnify
officers and directors to the extent provided therein. The Bylaws also
permit the Board of Directors to authorize the Company to purchase and
maintain insurance against any liability asserted against any director,
officer, employee or agent of the Company arising out of his or her
capacity as such.
(c) In accordance with Section 102(b)(7) of the DGCL, the Registrant's
Certificate of Incorporation provides that directors shall not be
personally liable for monetary damages for breaches of their fiduciary
duty as directors except for (1) breaches of their duty of loyalty to
the Registrant or its stockholders, (2) acts or omissions not in good
faith or which involve intentional misconduct or knowing violations of law,
(3) under Section 174 of the DGCL (unlawful payment of dividends) or
(4) transactions from which a director derives a improper personal benefit.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
A list of exhibits included as part of this Registration Statement is
set forth in the exhibit Index that immediately precedes such exhibits and
is incorporated by reference herein.
<PAGE>
ITEM 9. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereto) which, individually or in the aggregate,
represent a fundamental change in the information set
forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
<PAGE>
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant, the Registrant has been advised that in
the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the
<PAGE>
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Mission, State of Kansas, on June 12, 1998.
VANGUARD AIRLINES, INC.
By: /S/ ROBERT J. SPANE
Robert J. Spane
Chairman, President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints Robert J. Spane and William A. Garrett the
true and lawful attorneys-in-fact and agents of the undersigned, with full
power of substitution and resubstitution, for and in the name, place and
stead of the undersigned, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration
Statement and all documents relating thereto, and to file the same, with
all exhibits thereto,
<PAGE>
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing necessary or
advisable to be done in and about the premises, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents, or his substitute or substitutes,
lawfully may do or cause to be done by virtue hereof.
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<C> <C> <C>
Signature Title Date
/S/ ROBERT J. SPANE Chairman, President June 12, 1998
Robert J. Spane and Chief Executive Officer
(Principal Executive Officer)
/S/ WILLIAM A. GARRETT Vice President June 12, 1998
William A. Garrett and Chief Financial Officer
(Principal Financial Officer)
/S/ LEE M. GAMMILL, JR. Director June 12, 1998
Lee M. Gammill, Jr.
/S/ DENIS T. RICE Director June 12, 1998
Denis T. Rice
</TABLE>
<PAGE>
EXHIBIT INDEX
4(a). Restated Certificate of Incorporation, as amended.
4(b). Bylaws of Registrant, as amended to date (filed as Exhibit 3.2
to Amendment No. 2 to the Registrant's Registration Statement
on Form S-1 (File No 33-96884), and incorporated herein by
reference).
4(c). Form of Stock Option Agreement (filed as an Exhibit to the
Registrant's Registration Statement on Form S-1
(File No. 33-96884), and incorporated herein by reference).
4(d). Vanguard Airlines, Inc. 1994 Stock Option Plan, as amended
to date.
5. Opinion of Brian S. Gillman with respect to the legality of
the Common Stock of the Registrant registered hereby.
23(a). Consent of Registrant's Independent Auditors.
23(b). Consent of Registrant's Counsel (contained in the Opinion
of Counsel filed as Exhibit 5.
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE RESTATED CERTIFICATE
OF INCORPORATION OF VANGUARD AIRLINES, INC.
Vanguard Airlines Inc., a corporation organized and existing under and by
virtue of the Corporation Law of the State of Delaware, DOES HEREBY CERTIFY:
1. The name of the corporation is Vanguard Airlines, Inc.
2. The date on which the Restated Certificate of Incorporation of the
corporation was filed with the Secretary of State of the State of
Delaware is November 2, 1995.
3. The Board of Directors of the corporation, acting in accordance with
the provisions of Sections 141(f) and 242 of the General Corporation
Law of the State of Delaware, adopted resolutions to amend Article IV,
Section (a) in its entirety to read as follows:
4. (a) The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is two hundred two
million (202,000,000) shares, of which (i) two hundred million
(200,000,000) shares, of the par value of $0.001 per share, shall
be denominated "Common Stock" and (ii) two million (2,000,000)
shares, of the par value of $0.001 per share, shall be denominated
"Preferred Stock."
5. Thereafter, pursuant to a resolution of the Board of Directors,
this Certificate of Amendment was submitted to the stockholders of
the corporation for their approval in accordance with the provisions
of Sections 228 and 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, VANGUARD AIRLINES, INC. has caused this certificate to be
executed, signed and acknowledged by Robert J. Spane, its Chairman, Chief
Executive Officer and President, and attested by Brian S. Gillman, its
Secretary, as of the eighteenth day of May, 1998.
VANGUARD AIRLINES, INC.
/S/ ROBERT J. SPANE
Robert J. Spane
Chairman of the Board, Chief Executive Officer and President
ATTEST:
/S/ BRIAN S. GILLMAN
Brian S. Gillman
Secretary
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION OF
VANGUARD AIRLINES, INC.
The undersigned, Vanguard Airlines, Inc., a Delaware corporation
(the "Corporation"), for the purpose of restating the Certificate of
Incorporation of the Corporation, in accordance with the General Corporation
Law of Delaware, does hereby make and execute this Restated Certificate of
Incorporation and does hereby certify that:
I. The name of the Corporation is Vanguard Airlines, Inc.,
and the name under which it was originally incorporated
was TSP, Inc. Its original Certificate of
Incorporation was filed with the Secretary of State of
Delaware on April 25, 1994.
II. Resolutions setting forth the Restated Certificate of
Incorporation of the Corporation were duly adopted at a
special meeting of the Board of Directors of the
Corporation duly called and held on August 30, 1995,
at which a quorum of the directors was at all times
present.
III. The Restated Certificate of Incorporation of the
Corporation approved by a resolution of the Board of
Directors read as follows:
FIRST. The name of the Corporation is:
Vanguard Airlines, Inc.
SECOND. The address of its registered office in the
State of Delaware is 32 Loockerman Square,
Suite L-100, City of Dover, County of Kent, Delaware.
The name of its registered agent at such address is
The Prentice-Hall Corporation System, Inc.
THIRD. The nature of the business or purposes to be
conducted or promoted by the Corporation is to
engage in any lawful act or activity for which
corporations may be organized under the General
Corporation Law of Delaware.
In addition to the powers and privileges conferred upon the
Corporation by law and those incidental thereto, the
Corporation shall possess and may exercise all the powers and
privileges which are necessary or convenient to the conduct,
promotion or attainment of the business or
<PAGE>
purposes of the Corporation.
FOURTH.
(a) The total number of shares of all classes of
stock which the Corporation shall have authority to
issue is sixteen million (16,000,000), of which
(i) fifteen million (15,000,000) shares, of the par
value of $.001 per share, shall be denominated
"Common Stock," and (ii) one million (1,000,000)
shares, of the par value of $.001 per share, shall
be denominated "Preferred Stock."
(b) The Board of Directors is authorized to provide
by resolution or resolutions for the issuance
of shares of stock of any class or of any series
of any class at any time and from time to time
and, by filing a Certificate of Designations in
the manner prescribed under the laws of the
State of Delaware, to fix and amend the voting
powers, full or limited, or no voting powers,
and the designations, preferences and relative,
participating, optional or other special
rights, if any, and qualifications, limitations
or restrictions thereof. Unless otherwise
provided in any such resolution or resolutions,
the number of shares of stock of any such
series to which such resolution or resolutions
apply may be increased (but not above the total
number of authorized shares of the class) or
decreased (but not below the number of shares
thereof then outstanding) by filing a
Certificate of Designations in the manner
prescribed under the laws of the State of
Delaware.
(c) Shares of Common Stock and Preferred Stock
may be issued from time to time as the Board
of Directors of the Corporation shall
determine and on such terms and for such
consideration as shall be fixed by the Board
of Directors.
(d) No holder of any shares of stock of the
Corporation of any class shall be entitled as
such, as a matter of right, to subscribe for or
purchase any shares of
stock of the Corporation of any class, whether
now or hereafter authorized or whether issued
for cash, property or services or as a dividend
or otherwise, or to subscribe for or purchase
any obligations, bonds, notes, debentures, other
securities or stock convertible into shares of
stock of the Corporation of any class or
carrying or evidencing any right to purchase
shares of stock of any class.
<PAGE>
(e) Except as may be required by law, each holder
of Common Stock shall have one vote in respect
of each share of Common Stock held by such
person on all matters voted upon by the
stockholders.
FIFTH.
(a) Except as may be otherwise specifically
provided by statute, as from time to time
amended, all powers of management, direction
and control of the Corporation shall be, and
hereby are, vested in the Board of Directors.
(b) A majority of the whole Board of Directors
shall constitute a quorum for the transaction
of business, and, except as otherwise provided
in this Restated Certificate of Incorporation
or the Bylaws, the vote of a majority of the
directors present at a meeting at which a
quorum is then present shall be the act of
the Board. As used in this Restated
Certificate of Incorporation, the terms
"whole Board" and "whole Board of Directors"
are hereby exclusively defined and limited
to mean the total number of directors which
the Corporation would have if the Board had
no vacancies.
(c) The number of directors shall be fixed by,
or in the manner provided in, the Bylaws.
(d) The directors of the Corporation other than
those who may be elected by the holders of
any Preferred Stock or series thereof, shall
be divided into three classes (to be
designated as Class I, Class II and Class III),
as nearly equal in number as the then total
number of Directors constituting the whole
Board of Directors permits, with the terms of
office of one class expiring each year.
Messrs. Hambrecht and Shea are hereby
named as Class I Directors to hold office
for a term expiring at the annual meeting of
stockholders in 1996 and until their
respective successors are duly elected and
qualified or until their respective earlier
resignation or removal; Messrs. Golden and
Meyer are hereby named as Class II Directors to
hold office for a term expiring at the annual
meeting of stockholders in 1997 and until their
respective successors are duly elected and
qualified or until their respective earlier
resignation or removal; and Messrs. McAdoo,
Wagnon and Pearson are hereby named as
Class III Directors to hold office for a
term expiring at the annual meeting of
stockholders in
<PAGE>
1998 and until their respective successors are
duly elected and qualified or until their
respective earlier resignation or removal.
Notwithstanding the foregoing, and except as
otherwise required by law, whenever the
holders of any one or more series of
Preferred Stock shall have the right, voting
separately as a class, to elect one or more
Directors of the Corporation, the terms of
the Director or Directors elected by such
holders shall expire at the next succeeding
annual meeting of stockholders. Subject to the
foregoing, at each annual meeting of
stockholders the successors to the class of
directors whose term shall then expire shall
be elected to hold office for a term expiring
at the third succeeding annual meeting.
The foregoing notwithstanding, each director
shall serve until his successor shall have
been duly elected and qualified, unless he
or she shall resign, become disqualified,
disabled or shall otherwise be removed.
(e) Except for directorships created pursuant to
Article FOURTH of this Restated Certificate of
Incorporation relating to the rights of holders
of Preferred Stock, or any series thereof, and
except for vacancies in such directorships,
any vacancies in the Board of Directors for
any reason, and any newly created
directorships resulting from any increase in
the number of directors, may be filled only
by the Board of Directors, acting by a
majority of the directors then in office,
although less than a quorum, and any directors
so chosen shall hold office until the next
election and until their successors shall be
elected and qualified or until their respective
earlier resignation, removal or death. No
decrease in the number of directors shall
shorten the term of any incumbent director.
(f) Notwithstanding any other provision of this
Restated Certificate of Incorporation or the
Bylaws, and notwithstanding the fact that some
lesser percentage may be specified by law,
this Restated Certificate of Incorporation
or the Bylaws, any director or the whole
Board of Directors of the Corporation may
be removed at any time, but only for cause
and only upon the affirmative vote of the
holders of seventy-five percent (75%) or
more of the Total Voting Power of the then
outstanding shares of Voting Stock, considered
for this purpose as one class (for the purposes
of this Article FIFTH, section (f), each share
of the Voting Stock shall have the number of
votes granted to it pursuant to Article FOURTH
of this Restated Certificate of Incorporation).
For the purposes of this Article FIFTH,
section (f): (i) the term "Total Voting Power"
shall mean the
<PAGE>
aggregate of all votes of all outstanding
shares of Voting Stock; and (ii) the term
"Voting Stock" shall mean the shares of all
classes of capital stock of the Corporation
entitled to vote on removal of any director
or the entire Board of Directors in the manner
provided in this Article FIFTH, section (f)
(except that if the next succeeding sentence
is operative, then the outstanding shares of
Preferred Stock shall not be considered
"Voting Stock" for purposes of this Article
FIFTH, section (f)). Notwithstanding the
foregoing, and except as otherwise required
by law, whenever the holders of any one or
more series of Preferred Stock shall have the
right, voting separately as a class, to elect
one or more directors of the Corporation, the
provisions of this Section (f) shall not
apply with respect to the directors elected by
such holders of Preferred Stock.
(g) As used in this Restated Certificate of
Incorporation, the term "for cause" is hereby
exclusively defined and limited to mean
commission of a felony or a finding by a court
of competent jurisdiction of liability for
negligence, or misconduct, in the performance
of the director's duty to the Corporation in a
matter of substantial importance to the
Corporation, where such adjudication is no
longer subject to direct appeal.
(h) There shall be no qualifications for election
as directors of the Corporation, except that
no person shall be eligible to stand for
election as a director if such person has
been convicted of a felony by a court of
competent jurisdiction where such conviction
is no longer subject to direct appeal.
(i) Except as provided in this Article FIFTH,
no director of the Corporation shall be
removed from his office as a director by vote
or other action of stockholders or otherwise
except for cause.
(j) Advance notice of nominations for the election
of directors other than nominations by the
Board of Directors or a committee thereof
shall be given to the Corporation in the
manner provided in the Bylaws.
<PAGE>
(k) Except as may be otherwise specifically
provided in this Article FIFTH, the term
of office and voting power of each director
of the Corporation shall be neither greater
than nor less than that of any other director
or class of directors of the Corporation.
(l) Elections of directors need not be by ballot
unless the Bylaws of the Corporation shall
so provide.
SIXTH. The original Bylaws of the Corporation shall be adopted
in any manner provided by law. In furtherance, and not in limitation
of, the powers conferred by statute, the Board of Directors is
expressly authorized to make, adopt, alter, amend or repeal the
Bylaws of the Corporation. Notwithstanding any other provisions in
this Restated Certificate of Incorporation or the Bylaws of the
Corporation, and notwithstanding the fact that some lesser percentage
may be specified by law, the stockholders of the Corporation shall
have the power to make, adopt, alter, amend or repeal the Bylaws of
the Corporation only upon the affirmative vote of seventy-five
percent (75%) or more of the Total Voting Power of the then
outstanding shares of Voting Stock, considered for this purpose
as one class (for purposes of this Article SIXTH, each share of
the Voting Stock shall have the number of votes granted to it
pursuant to Article FOURTH of this Restated Certificate of
Incorporation). For purposes of this Article SIXTH: (i) the
term "Total Voting Power" shall mean the aggregate of all votes of
all outstanding shares of Voting Stock; and (ii) the term "Voting
Stock" shall mean the shares of all classes of capital stock of the
Corporation entitled to vote on making, adopting, altering,
amending or repealing the Bylaws of the Corporation.
SEVENTH. The Corporation may agree to the terms and
conditions upon which any director, officer, employee or agent
accepts his office or position and in its Bylaws, by contract or
in any other manner may agree to indemnify and protect any director,
officer, employee or agent of the Corporation, or any person who
serves at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise, to the fullest
extent permitted by the laws (including, without limitation, the
statutes, case law and principles of equity) of the State of Delaware.
If the laws (including, without limitation, the statutes, case law
or principles of equity, as the case may be)
<PAGE>
of the State of Delaware are amended or changed to permit or
authorize broader rights of indemnification to any of the persons
referred to in the immediately preceding sentence, then the
Corporation shall be automatically authorized to agree to indemnify
such respective persons to the fullest extent permitted or authorized
by such law, as so amended or changed, without the need for amendment
or modification of this Article SEVENTH and without further action by
the directors or stockholders of the Corporation.
Without limiting the generality of the foregoing provisions
of this Article SEVENTH, to the fullest extent permitted or authorized
by the laws of Delaware as now in effect and as the same may from
time to time hereafter be amended, including without limitation
the provisions of subsection (b)(7) of Section 102 of the General
Corporation Law of Delaware, no director of the Corporation shall
be personally liable to the Corporation or to its stockholders for
monetary damages for breach of fiduciary duty as a director.
Any repeal or modification of the immediately preceding sentence
shall not adversely affect any right or protection of a director
of the Corporation existing hereunder with respect to any act or
omission occurring prior to or at the time of such repeal or
modification.
EIGHTH. Whenever a compromise or arrangement is proposed
between this Corporation and its creditors or any class of them
and/or between this Corporation and its stockholders or any class
of them, any court of equitable jurisdiction within the State of
Delaware may, on the application in a summary way of this Corporation
or of any creditor or stockholder thereof or on the application of
any receiver or receivers appointed for this Corporation under
the provisions of Section 291 of Title 8 of the Delaware Code or
on the application of trustees in dissolution or of any receiver
or receivers appointed for this Corporation under the provisions of
Section 279 of Title 8 of the Delaware Code order a meeting of the
creditors or class of creditors, and/or of the stockholders or class
of stockholders of this Corporation, as the case may be, to be
summoned in such manner as the said court directs. If a majority
in number representing three-fourths in value of the creditors
or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any
compromise or arrangement and to any reorganization of this
Corporation as consequence of such compromise or arrangement,
the said compromise or arrangement and the said reorganization shall,
<PAGE>
if sanctioned by the court to which the said application has been
made, be binding on all the creditors or class of creditors, or on
all the stockholders or class of stockholders, of this Corporation,
as the case may be, and also on this Corporation.
NINTH. Except as may be otherwise provided by statute, the
Corporation shall be entitled to treat the registered holder of any
shares of the Corporation as the owner of such shares and of all
rights derived from such shares for all purposes, and the Corporation
shall not be obligated to recognize any equitable or other claim to
or interest in such shares or rights on the part of any other person,
including, but without limiting the generality of the term "person"
to, a purchaser, pledgee, assignee or transferee of such shares or
rights, unless and until such person becomes the registered holder of
such shares. The foregoing shall apply whether or not the
Corporation shall have either actual or constructive notice of the
claim by or the interest of such person.
TENTH. The books of the Corporation may be kept (subject to
any provisions contained in the statutes of the State of Delaware)
outside the State of Delaware at such place or places as may be
designated from time to time by the Board of Directors or in the
Bylaws of the Corporation.
ELEVENTH. Any action required or permitted to be taken by
the stockholders of the Corporation must be effected at a duly called
annual or special meeting of such holders and may not be effected by
any consent in writing by such holders; provided, however, that the
foregoing shall not derogate from the authority of all the directors
and all of the stockholders of the Corporation eligible to vote, to
adopt an amendment to the Certificate of Incorporation by signing a
written statement manifesting their intention that an amendment to
the Certificate of Incorporation be adopted pursuant to Section 242
of the General Corporation Law of Delaware.
TWELFTH. Except as otherwise required by law and subject to
the rights, if any, of the holders of Preferred Stock or any series
thereof, special meetings of the stockholders of the Corporation may
be called only by the Chairman of the Board of Directors, the
President of the Corporation or the Board pursuant to a resolution
adopted by the a majority of the whole Board.
<PAGE>
THIRTEENTH. The Corporation reserves the right to amend,
alter, change or repeal any provision contained in this Restated
Certificate of Incorporation in the manner now or hereafter
prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
FOURTEENTH. The duration of the Corporation is perpetual.
FIFTEENTH. None of the provisions of Articles FIFTH, SIXTH
or this Article FIFTEENTH may be amended, altered, changed or
repealed except upon the affirmative vote at any annual or special
meeting of the stockholders, of the holders of at least seventy-five
percent (75%) or more of the Total Voting Power of the then
outstanding shares of Voting Stock, considered for this purpose as
one class (for the purpose of this Article FIFTEENTH, each share
of Voting Stock shall have the number of votes granted to it
pursuant to Article FOURTH of this Restated Certificate of
Incorporation), this nor shall new provisions to this Restated
Certificate of Incorporation be adopted or existing provisions to
this Restated Certificate of Incorporation be amended, altered
or repealed which in either instance are in conflict or
inconsistent with Articles FIFTH, SIXTH or this Article FIFTEENTH
except upon the affirmative vote at any annual or special meeting
of the stockholders of the holders of at least seventy-five percent
(75%) or more of the Total Voting Power of the then outstanding
shares of Voting Stock, considered for this purpose as one class.
Any inconsistency between the provisions of a Bylaw and any
provisions of this Restated Certificate of Incorporation shall be
controlled by this Restated Certificate of Incorporation.
For the purposes of this Article FIFTEENTH: (i) the term "Total
Voting Power" shall mean the aggregate of all votes of all
outstanding shares of Voting Stock; and (ii) the term "Voting Stock"
shall mean the shares of all classes of capital stock of the
Corporation entitled to vote on the issue in question.
IV. The Restated Certificate of Incorporation restates and
integrates and does not further amend the provisions of the
Corporation's Certificate of Incorporation as theretofore amended
or supplemented, and there is no discrepancy between those
provisions and the provisions of the restated certificate of
incorporation.
<PAGE>
V. This Restated Certificate of Incorporation has been
duly adopted in accordance with the provisions of Sections 242 and
245 of the Delaware Corporation Law, as amended.
IN WITNESS WHEREOF, this Restated Certificate of Incorporation
has been executed on behalf of the Corporation by its President and
attested by its Secretary as of November 2, 1995, and each of them
does hereby affirm and acknowledge that this Restated Certificate
of Incorporation is the act and deed of the Corporation and that
the facts stated herein are true.
VANGUARD AIRLINES, INC.
By: /S/ ROBERT J MCADOO
Robert J. McAdoo
President
(CORPORATE SEAL)
ATTEST:
/S/ FRED L. DELEEUW
Fred L. deLeeuw
Secretary
<PAGE>
VANGUARD AIRLINES, INC.
1994 STOCK OPTION PLAN
ADOPTED MAY 2, 1994
AS AMENDED BY THE BOARD AND
APPROVED BY THE STOCKHOLDERS ON
JUNE 23, 1995 AND MAY 15, 1998
1. PURPOSES.
(a) The purpose of the Plan is to provide a means by which
selected Employees and Directors of and Consultants to the
Company, and its Affiliates, may be given an opportunity to
purchase stock of the Company.
(b) The Company, by means of the Plan, seeks to retain the
services of persons who are now Employees or Directors of
or Consultants to the Company or its Affiliates, to secure
and retain the services of new Employees, Directors and
Consultants, and to provide incentives for such persons to
exert maximum efforts for the success of the Company and its
Affiliates.
(c) The Company intends that the Options issued under the Plan
shall, in the discretion of the Board or any Committee to
which responsibility for administration of the Plan has
been delegated pursuant to subsection 3(c), be either
Incentive Stock Options or Nonstatutory Stock Options.
All Options shall be separately designated Incentive
Stock Options or Nonstatutory Stock Options at the time
of grant, and in such form as issued pursuant to Section 6,
and a separate certificate or certificates will be issued for
shares purchased on exercise of each type of Option.
2. DEFINITIONS.
(a) "AFFILIATE" means any parent corporation or subsidiary
corporation, whether now or hereafter existing, as those
terms are defined in Sections 424(e) and (f) respectively,
of the Code.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMITTEE" means a Committee appointed by the Board in
accordance with subsection 3(c) of the Plan.
(e) "COMPANY" means Vanguard Airlines, Inc., a Delaware
corporation.
(f) "CONSULTANT" means any person, including an advisor,
engaged by the Company or an Affiliate to render consulting
services and who is compensated for such services, provided
that the term
<PAGE>
"Consultant" shall not include Directors who are paid only
a director's fee by the Company or who are not compensated
by the Company for their services as Directors.
(g) "CONTINUOUS STATUS AS AN EMPLOYEE, DIRECTOR OR CONSULTANT"
means the employment or relationship as a Director or
Consultant is not interrupted or terminated. The Board,
in its sole discretion, may determine whether Continuous
Status as an Employee, Director or Consultant shall be
considered interrupted in the case of: (i) any leave of
absence approved by the Board, including sick leave,
military leave, or any other personal leave; or
(ii) transfers between locations of the Company or
between the Company, Affiliates or their successors.
(h) "COVERED EMPLOYEE" means the Chief Executive Officer and
the four (4) other highest compensated officers of the
Company.
(i) "DIRECTOR" means a member of the Board.
(j) "DISINTERESTED PERSON" means a Director who either
(i) was not during the one year prior to service as an
administrator of the Plan granted or awarded equity
securities pursuant to the Plan or any other plan of the
Company or any of its affiliates entitling the participants
therein to acquire equity securities of the Company or any
of its affiliates except as permitted by Rule 16b-3(c)(2)(i);
or (ii) is otherwise considered to be a "disinterested person"
in accordance with Rule 16b-3(c)(2)(i), or any other
applicable rules, regulations or interpretations of the
Securities and Exchange Commission.
(k) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Affiliate of the
Company. Neither service as a Director nor payment of a
director's fee by the Company shall be sufficient to
constitute "employment" by the Company.
(l) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.
(m) "FAIR MARKET VALUE" means, as of any date, the value of
the common stock of the Company determined as follows and
in each case in a manner consistent with Section 260.140.50
of Title 10 of the California Code of Regulations:
(1) If the common stock is listed on any established
stock exchange or a national market system,
including without limitation the National Market
System of the National Association of Securities
Dealers, Inc. Automated Quotation ("NASDAQ") System,
the Fair Market Value of a share of common stock shall
be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on
such system or exchange (or the
<PAGE>
exchange with the greatest volume of trading in
common stock) on the last market trading day prior
to the day of determination, as reported in the
Wall Street Journal or such other source as the
Board deems reliable;
(2) If the common stock is quoted on the NASDAQ System
(but not on the National Market System thereof) or
is regularly quoted by a recognized securities
dealer but selling prices are not reported, the
Fair Market Value of a share of common stock shall
be the mean between the bid and asked prices for
the common stock on the last market trading day
prior to the day of determination, as reported in
the Wall Street Journal or such other source as
the Board deems reliable;
(3) In the absence of an established market for the
common stock, the Fair Market Value shall be
determined in good faith by the Board.
(n) "INCENTIVE STOCK OPTION" means an Option intended to qualify
as an incentive stock option within the meaning of
Section 422 of the Code and the regulations promulgated
thereunder.
(o) "NONSTATUTORY STOCK OPTION" means an Option not intended to
qualify as an Incentive Stock Option.
(p) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and
the rules and regulations promulgated thereunder.
(q) "OPTION" means a stock option granted pursuant to the Plan.
(r) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions
of an individual Option grant. Each Option Agreement
shall be subject to the terms and conditions of the Plan.
(s) "OPTIONEE" means an Employee, Director or Consultant who
holds an outstanding Option.
(t) "OUTSIDE DIRECTOR" means a Director who either (i) is not
a current employee of the Company or an "affiliated
corporation" (as defined in the Treasury regulations
promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an affiliated
corporation receiving compensation for prior services
(other than benefits under a tax qualified pension plan),
was not an officer of the Company or an affiliated
corporation at any time, and is not currently receiving
compensation for personal services in any capacity other
than as a Director, or (ii) is otherwise considered an
"outside director" for purposes of Section 162(m) of
the Code.
<PAGE>
(u) "PLAN" means this Vanguard Airlines, Inc. 1994 Stock
Option Plan.
(v) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is
being exercised with respect to the Plan.
3. ADMINISTRATION.
(a) The Plan shall be administered by the Board unless and
until the Board delegates administration to a Committee,
as provided in subsection 3(c).
(b) The Board shall have the power, subject to, and within
the limitations of, the express provisions of the Plan:
(1) To determine from time to time which of the persons
eligible under the Plan shall be granted Options; when
and how each Option shall be granted; whether an
Option will be an Incentive Stock Option or a
Nonstatutory Stock Option; the provisions of each
Option granted (which need not be identical),
including the time or times such Option may be
exercised in whole or in part; and the number of
shares for which an Option shall be granted to each
such person.
(2) To construe and interpret the Plan and Options granted
under it, and to establish, amend and revoke rules and
regulations for its administration. The Board, in the
exercise of this power, may correct any defect,
omission or inconsistency in the Plan or in any Option
Agreement, in a manner and to the extent it shall deem
necessary or expedient to make the Plan fully
effective.
(3) To amend the Plan as provided in Section 11.
(c) The Board may delegate administration of the Plan to a
committee composed of not fewer than two (2) members
(the "Committee"), all of the members of which Committee
shall be Disinterested Persons and may also be, in the
discretion of the Board, Outside Directors. If
administration is delegated to a Committee, the Committee
shall have, in connection with the administration of the
Plan, the powers theretofore possessed by the Board
(and references in this Plan to the Board shall thereafter
be to the Committee), subject, however, to such resolutions,
not inconsistent with the provisions of the Plan, as may
be adopted from time to time by the Board. The Board may
abolish the Committee at any time and revest in the Board
the administration of the Plan. Additionally, prior to
the date of the first registration of an equity security
of the Company under Section 12 of the Exchange Act, and
notwithstanding anything to the contrary contained herein,
the Board may delegate administration of the Plan to any
person or persons
<PAGE>
and the term "Committee" shall apply to any person or
persons to whom such authority has been delegated.
Notwithstanding anything in this Section 3 to the contrary,
the Board or the Committee may delegate to a committee of
one or more members of the Board the authority to grant
Options to eligible persons who (1) are not then subject
to Section 16 of the Exchange Act and/or (2) are either
(i) not then Covered Employees and are not expected to
be Covered Employees at the time of recognition of income
resulting from such Option, or (ii) not persons with
respect to whom the Company wishes to comply with
Section 162(m) of the Code.
(d) Any requirement that an administrator of the Plan be a
Disinterested Person shall not apply (i) prior to the date
of the first registration of an equity security of the
Company under Section 12 of the Exchange Act, or (ii) if
the Board or the Committee expressly declares that such
requirement shall not apply. Any Disinterested Person
shall otherwise comply with the requirements of Rule 16b-3.
4. SHARES SUBJECT TO THE PLAN.
(a) Subject to the provisions of Section 10 relating to
adjustments upon changes in stock, the stock that may be
sold pursuant to Options shall not exceed in the aggregate
ten million (10,000,000) shares of the Company's common
stock. If any Option shall for any reason expire or
otherwise terminate, in whole or in part, without having
been exercised in full, the stock not purchased under
such Option shall revert to and again become available for
issuance under the Plan.
(b) The stock subject to the Plan may be unissued shares or
reacquired shares, bought on the market or otherwise.
5. ELIGIBILITY.
(a) Incentive Stock Options may be granted only to
Employees. Nonstatutory Stock Options may be granted
only to Employees, Directors or Consultants.
(b) A Director shall in no event be eligible for the benefits
of the Plan unless at the time discretion is exercised in
the selection of the Director as a person to whom Options
may be granted, or in the determination of the number of
shares which may be covered by Options granted to the
Director: (i) the Board has delegated its discretionary
authority over the Plan to a Committee which consists
solely of Disinterested Persons; or (ii) the Plan
otherwise complies with the requirements of Rule 16b-3.
The Board shall otherwise comply with the requirements of
Rule 16b-3. This subsection 5(b) shall not apply
(i) prior to the date of the first registration of an
equity security of the Company under
<PAGE>
Section 12 of the Exchange Act, or (ii) if the Board
or Committee expressly declares that it shall not apply.
(c) No person shall be eligible for the grant of an Option
if, at the time of grant, such person owns (or is deemed
to own pursuant to Section 424(d) of the Code) stock
possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of the Company or
of any of its Affiliates unless the exercise price of
such Option is at least one hundred ten percent (110%) of
the Fair Market Value of such stock at the date of grant
and the Option is not exercisable after the expiration
of five (5) years from the date of grant.
(d) No person shall be eligible to be granted Options covering
more than one million (1,000,000) shares of the Company's
common stock in any calendar year.
6. OPTION PROVISIONS.
Each Option shall be in such form and shall contain such terms
and conditions as the Board shall deem appropriate. The provisions
of separate Options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference
in the Option or otherwise) the substance of each of the following
provisions:
(a) TERM. No Option shall be exercisable after the expiration
of ten (10) years from the date it was granted.
(b) PRICE. The exercise price of each Incentive Stock Option
shall be not less than one hundred percent (100%) of the
Fair Market Value of the stock subject to the Option on
the date the Option is granted. The exercise price of
each Nonstatutory Stock Option shall be not less than
eighty-five percent (85%) of the Fair Market Value of
the stock subject to the Option on the date the Option
is granted.
(c) CONSIDERATION. The purchase price of stock acquired pursuant
to an Option shall be paid, to the extent permitted by
applicable statutes and regulations, either (i) in cash
at the time the Option is exercised, or (ii) at the
discretion of the Board or the Committee, either at the
time of the grant or exercise of the Option, (A) by
delivery to the Company of other common stock of the Company,
(B) according to a deferred payment or other arrangement
(which may include, without limiting the generality of
the foregoing, the use of other common stock of the Company)
with the person to whom the Option is granted or to whom
the Option is transferred pursuant to subsection 6(d),
or (C) in any other form of legal consideration that
may be acceptable to the Board.
<PAGE>
In the case of any deferred payment arrangement, interest shall
be payable at least annually and shall be charged at the minimum
rate of interest necessary to avoid the treatment as interest, under
any applicable provisions of the Code, of any amounts other than
amounts stated to be interest under the deferred payment arrangement.
(d) TRANSFERABILITY. An Incentive Stock Option shall not be
transferable except by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime
of the person to whom the Incentive Stock Option is granted
only by such person. A Nonstatutory Stock Option shall not
be transferable except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations
order satisfying the requirements of Rule 16b-3 and the rules
thereunder (a "QDRO"), and shall be exercisable during the
lifetime of the person to whom the Nonstatutory Stock Option
is granted only by such person or any transferee pursuant
to a QDRO. The person to whom the Option is granted may,
by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who,
in the event of the death of the Optionee, shall thereafter
be entitled to exercise the Option.
(e) VESTING. The total number of shares of stock subject to
an Option may, but need not, be allotted in periodic
installments (which may, but need not, be equal). The
Option Agreement may provide that from time to time during
each of such installment periods, the Option may become
exercisable ("vest") with respect to some or all of the
shares allotted to that period, and may be exercised with
respect to some or all of the shares allotted to such period
and/or any prior period as to which the Option became vested
but was not fully exercised. The Option may be subject
to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance
or other criteria) as the Board may deem appropriate.
The vesting provisions of individual Options may vary but
in each case will provide for vesting of at least twenty
percent (20%) per year of the total number of shares
subject to the Option. The provisions of this
subsection 6(e) are subject to any Option provisions
governing the minimum number of shares as to which an
Option may be exercised.
(f) SECURITIES LAW COMPLIANCE. The Company may require any
Optionee, or any person to whom an Option is transferred
under subsection 6(d), as a condition of exercising any
such Option, (1) to give written assurances satisfactory
to the Company as to the Optionee's knowledge and
experience in financial and business matters and/or
to employ a purchaser representative reasonably satisfactory
to the Company who is knowledgeable and experienced in
<PAGE>
financial and business matters, and that he or she is
capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the
Option; and (2) to give written assurances satisfactory
to the Company stating that such person is acquiring the
stock subject to the Option for such person's own account
and not with any present intention of selling or otherwise
distributing the stock. The foregoing requirements, and
any assurances given pursuant to such requirements,
shall be inoperative if (i) the issuance of the shares
upon the exercise of the Option has been registered under a
then currently effective registration statement under the
Securities Act of 1933, as amended (the "Securities Act"),
or (ii) as to any particular requirement, a determination
is made by counsel for the Company that such requirement
need not be met in the circumstances under the then
applicable securities laws. The Company may, upon advice
of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems
necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends
restricting the transfer of the stock.
(g) TERMINATION OF EMPLOYMENT OR RELATIONSHIP AS A DIRECTOR
OR CONSULTANT. In the event an Optionee's Continuous Status
as an Employee, Director or Consultant terminates (other
than upon the Optionee's death or disability), the Optionee
may exercise his or her Option (to the extent that the
Optionee was entitled to exercise it at the date of
termination) but only within such period of time ending
on the earlier of (i) the date three (3) months after
the termination of the Optionee's Continuous Status as an
Employee, Director or Consultant (or such longer or
shorter period, which in no event shall be less than
thirty (30) days, specified in the Option Agreement),
or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination,
the Optionee does not exercise his or her Option within
the time specified in the Option Agreement, the Option
shall terminate, and the shares covered by such Option
shall revert to and again become available for issuance
under the Plan.
(h) DISABILITY OF OPTIONEE. In the event an Optionee's
Continuous Status as an Employee, Director or Consultant
terminates as a result of the Optionee's disability, the
Optionee may exercise his or her Option (to the extent
that the Optionee was entitled to exercise it at the date
of termination), but only within such period of time ending
on the earlier of (i) the date twelve (12) months following
such termination (or such longer or shorter period, which in no
<PAGE>
event shall be less than six (6) months, specified in the
Option Agreement), or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, at the
date of termination, the Optionee is not entitled to
exercise his or her entire Option, the shares covered by
the unexercisable portion of the Option shall revert to
and again become available for issuance under the Plan.
If, after termination, the Optionee does not exercise his
or her Option within the time specified herein, the
Option shall terminate, and the shares covered by such
Option shall revert to and again become available for
issuance under the Plan.
(i) DEATH OF OPTIONEE. In the event of the death of an Optionee
during, or within a period specified in the Option after
the termination of, the Optionee's Continuous Status as an
Employee, Director or Consultant, the Option may be exercised
(to the extent the Optionee was entitled to exercise the
Option at the date of death) by the Optionee's estate, by a
person who acquired the right to exercise the Option by
bequest or inheritance or by a person designated to exercise
the option upon the Optionee's death pursuant to subsection
6(d), but only within the period ending on the earlier of
(i) the date eighteen (18) months following the date of
death (or such longer or shorter period, which in no event
shall be less than six (6) months, specified in the Option
Agreement), or (ii) the expiration of the term of such Option
as set forth in the Option Agreement. If, at the time of
death, the Optionee was not entitled to exercise his or her
entire Option, the shares covered by the unexercisable
portion of the Option shall revert to and again become
available for issuance under the Plan. If, after death,
the Option is not exercised within the time specified
herein, the Option shall terminate, and the shares covered
by such Option shall revert to and again become available
for issuance under the Plan.
(j) EARLY EXERCISE. The Option may, but need not, include a
provision whereby the Optionee may elect at any time while
an Employee, Director or Consultant to exercise the Option
as to any part or all of the shares subject to the Option
prior to the full vesting of the Option. Any unvested
shares so purchased shall be subject to a repurchase right
in favor of the Company, with the repurchase price to be
equal to the original purchase price of the stock, or to any
other restriction the Board determines to be appropriate;
PROVIDED, HOWEVER, that (i) the right to repurchase at the
original purchase price shall lapse at a minimum rate of
twenty percent (20%) per year over five (5) years from the
date the Option was granted, and (ii) such right shall be
exercisable only (A) within the ninety (90) day
<PAGE>
period following the termination of employment or the
relationship as a Director or Consultant or (B) such longer
period as may be agreed to by the Company and the Optionee
(for example, for purposes of satisfying the requirements
of Section 1202(c)(3) of the Code (regarding "qualified
small business stock")), and (iii) such right shall be
exercisable only for cash or cancellation of purchase
money indebtedness for the shares. Should the right of
repurchase be assigned by the Company, the assignee
shall pay the Company cash equal to the difference
between the original purchase price and the stock's
Fair Market Value if the original purchase price is
less than the stock's Fair Market Value.
(k) WITHHOLDING. To the extent provided by the terms of an
Option Agreement, the Optionee may satisfy any federal,
state or local tax withholding obligation relating to
the exercise of such Option by any of the following
means or by a combination of such means: (1) tendering
a cash payment; (2) authorizing the Company to withhold
shares from the shares of the common stock otherwise
issuable to the participant as a result of the exercise
of the Option; or (3) delivering to the Company owned
and unencumbered shares of the common stock of the Company.
7. COVENANTS OF THE COMPANY.
(a) During the terms of the Options, the Company shall keep
available at all times the number of shares of stock
required to satisfy such Options.
(b) The Company shall seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan
such authority as may be required to issue and sell shares
of stock upon exercise of the Options; PROVIDED, HOWEVER,
that this undertaking shall not require the Company to
register under the Securities Act either the Plan, any
Option or any stock issued or issuable pursuant to any
such Option. If, after reasonable efforts, the Company
is unable to obtain from any such regulatory commission
or agency the authority which counsel for the Company
deems necessary for the lawful issuance and sale of
stock under the Plan, the Company shall be relieved from
any liability for failure to issue and sell stock upon
exercise of such Options unless and until such authority
is obtained.
8. USE OF PROCEEDS FROM STOCK.
Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.
<PAGE>
9. MISCELLANEOUS.
(a) Neither an Optionee nor any person to whom an Option is
transferred under subsection 6(d) shall be deemed to be
the holder of, or to have any of the rights of a holder
with respect to, any shares subject to such Option unless
and until such person has satisfied all requirements for
exercise of the Option pursuant to its terms.
(b) Throughout the term of any Option, the Company shall
deliver to the holder of such Option, not later than one
hundred twenty (120) days after the close of each of the
Company's fiscal years during the Option term, a balance
sheet and an income statement. This section shall not
apply when issuance is limited to key employees whose
duties in connection with the Company assure them access
to equivalent information.
(c) Nothing in the Plan or any instrument executed or Option
granted pursuant thereto shall confer upon any Employee,
Director, Consultant or Optionee any right to continue in
the employ of the Company or any Affiliate (or to continue
acting as a Director or Consultant) or shall affect the
right of the Company or any Affiliate to terminate the
employment or relationship as a Director or Consultant
of any Employee, Director, Consultant or Optionee with
or without cause.
(d) To the extent that the aggregate Fair Market Value
(determined at the time of grant) of stock with respect
to which Incentive Stock Options granted after 1986 are
exercisable for the first time by any Optionee during
any calendar year under all plans of the Company and
its Affiliates exceeds one hundred thousand dollars
($100,000), the Options or portions thereof which exceed
such limit (according to the order in which they were
granted) shall be treated as Nonstatutory Stock Options.
(e)(1) The Board or the Committee shall have the
authority to effect, at any time and from time
to time (i) the repricing of any outstanding
Options under the Plan and/or (ii) with the consent
of the affected holders of Options, the cancellation
of any outstanding Options and the grant in
substitution therefor of new Options under the
Plan covering the same or different numbers of
shares of Common Stock, but having an exercise
price per share not less than eighty-five
percent (85%) of the Fair Market Value (one hundred
percent (100%) of the Fair Market Value in the case
of an Incentive Stock Option or, in the case of a
ten percent (10%) stockholder (as defined in
subsection 5(c)), not less than one hundred and
ten percent (110%) of the Fair Market Value)
per share of Common Stock on the new grant date.
<PAGE>
(2) Shares subject to an Option canceled under this
subsection 9(e) shall continue to be counted against
the maximum award of Options permitted to be granted
pursuant to subsection 5(d) of the Plan. The
repricing of an Option under this subsection 9(e),
resulting in a reduction of the exercise price,
shall be deemed to be a cancellation of the original
Option and the grant of a substitute Option; in the
event of such repricing, both the original and
the substituted Options shall be counted against
the maximum awards of Options permitted to be
granted pursuant to subsection 5(d) of the Plan.
The provisions of this subsection 9(e) shall
be applicable only to the extent required by
Section 162(m) of the Code.
10. ADJUSTMENTS UPON CHANGES IN STOCK.
(a) If any change is made in the stock subject to the Plan, or
subject to any Option (through merger, consolidation,
reorganization, recapitalization, stock dividend, dividend
in property other than cash, stock split, liquidating
dividend, combination of shares, exchange of shares, change
in corporate structure or otherwise), the Plan and
outstanding Options will be appropriately adjusted in the
class(es) and maximum number of shares subject to the
Plan and the class(es) and number of shares and price
per share of stock subject to outstanding Options.
(b) In the event of:
(1) a merger or consolidation in which the Company is not
the surviving corporation or (2) a reverse merger in which
the Company is the surviving corporation but the shares of
the Company's common stock outstanding immediately preceding
the merger are converted by virtue of the merger into other
property, whether in the form of securities, cash or
otherwise then to the extent permitted by applicable law:
(i) any surviving corporation shall assume any Options
outstanding under the Plan or shall substitute similar
Options for those outstanding under the Plan, or (ii) such
Options shall continue in full force and effect. In the
event any surviving corporation refuses to assume or continue
such Options, or to substitute similar options for those
outstanding under the Plan, then such Options shall be
terminated if not exercised prior to such event. In the event
of a dissolution or liquidation of the Company, any Options
outstanding under the Plan shall terminate if not exercised
prior to such event.
11. AMENDMENT OF THE PLAN.
(a) The Board at any time, and from time to time, may amend the
Plan. However, except as provided in Section 10 relating to
adjustments upon changes in stock, no amendment shall be
effective unless approved by the stockholders of the Company
within twelve (12) months before or after the adoption of the
amendment, where the amendment will:
<PAGE>
(1) Increase the number of shares reserved for Options
under the Plan;
(2) Modify the requirements as to eligibility for
participation in the Plan (to the extent such
modification requires stockholder approval in order
for the Plan to satisfy the requirements of
Section 422 of the Code); or,
(3) Modify the Plan in any other way if such modification
requires stockholder approval in order for the Plan
to satisfy the requirements of Section 422 of the
Code or to comply with the requirements of Rule 16b-3.
(b) The Board may in its sole discretion submit any other
amendment to the Plan for stockholder approval, including,
but not limited to, amendments to the Plan intended to
satisfy the requirements of Section 162(m) of the Code and
the regulations promulgated thereunder regarding the exclusion
of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive
officers.
(c) It is expressly contemplated that the Board may amend the
Plan in any respect the Board deems necessary or advisable
to provide Optionees with the maximum benefits provided or
to be provided under the provisions of the Code and the
regulations promulgated thereunder relating to Incentive
Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.
(d) Rights and obligations under any Option granted before
amendment of the Plan shall not be altered or impaired by
any amendment of the Plan unless (i) the Company requests
the consent of the person to whom the Option was granted
and (ii) such person consents in writing.
12. TERMINATION OR SUSPENSION OF THE PLAN.
(a) The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on
May 1, 2004 which shall be within ten (10) years from the
date the Plan is adopted by the Board or approved by the
stockholders of the Company, whichever is earlier.
(b) Rights and obligations under any Option granted while the
Plan is in effect shall not be altered or impaired by
suspension or termination of the Plan, except with the
consent of the person to whom the Option was granted.
13. EFFECTIVE DATE OF PLAN.
The Plan shall become effective as determined by the Board, but no
Options granted under the Plan shall be exercised unless and until
the Plan has been approved by the
<PAGE>
stockholders of the Company, which approval shall be within twelve (12)
months before or after the date the Plan is adopted by the Board, and,
if required, an appropriate permit has been issued by the Commissioner
of Corporations of the State of California.
Brian S. Gillman
Vice President - General Counsel
June 12, 1998
Vanguard Airlines, Inc.
7000 Squibb Road, Third Floor
Mission, KS 66202
Ladies and Gentlemen:
I refer to the Registration Statement on Form S-8 (the "Registration
Statement") of Vanguard Airlines, Inc., a Delaware corporation
(the "Company"), to be filed with the Securities and Exchange Commission
on or about June 5, 1998 for the purpose of registering under the Securities
Act of 1933, as amended, 8,300,000 shares of Common Stock, par value
$0.001 per share ("Common Stock"), of the Company. These shares of Common
Stock are proposed to be issued upon the exercise of stock options pursuant
to the Vanguard Airlines, Inc. 1994 Stock Option Plan (the "Plan").
I have examined the Restated Certificate of Incorporation, as amended,
the Bylaws of the Company, as currently in effect, minutes of the applicable
meetings of the Board of Directors and Stockholders of the Company, together
with such other corporate records, certificates of public officials and other
documents as I have deemed relevant to this opinion.
Based upon the foregoing, it is my opinion that:
1. The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
2. All necessary corporate action has been taken to authorize the
issuance of the aforesaid 8,300,000 shares of Common Stock and
all such shares of Common Stock as shall be issued and paid for as
described in the Plan shall be, when so issued, legally issued,
fully paid and nonassessable.
<PAGE>
I hereby consent to the reference to myself under the heading "Interests
of Named Experts and Counsel" in the Registration Statement. I also consent
to the inclusion of my opinion in the Registration Statement as an exhibit
thereto. In giving this consent, I do not thereby admit that I am within
the category of person whose consent is required under Section 7 of the
Securities Act of 1933, as amended, or the rules and regulations thereunder.
Sincerely,
/s/ Brian S. Gillman
Brian S. Gillman
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
(Form S-8 No. 333- ) pertaining to the Vanguard Airlines, Inc. 1994
Stock Option Plan of our report dated February 27, 1998 (except for Note
12, as to which the date is March 20, 1998) with respect to the financial
statements and schedule of Vanguard Airlines, Inc. included in the Annual
Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Ernst & Young LLP
Kansas City, Missouri
June 12, 1998
