AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER
16, 1999
REGISTRATION NO. 333-_____
_________________________________________________________________
_________________________________________________________________
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.
incorporation or organization Employer
Identification
No.)
7000 SQUIBB ROAD, THIRD FLOOR
MISSION, KANSAS 66202
(Address, Principal Executive Offices) (Zip Code)
_________________________
EMPLOYMENT AGREEMENT, DATED NOVEMBER 3, 1997,
BETWEEN VANGUARD AIRLINES, INC. AND ROBERT J. SPANE
CONSULTING AGREEMENT, DATED JANUARY 1, 1999,
BETWEEN VANGUARD AIRLINES, INC. AND JOHN J. McCARTHY
(Full title of the plan)
Brian S. Gillman, 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)
______________________
<TABLE>
CALCULATION OF REGISTRATION FEE
<CAPTION>
________________________________________________________________________
<S> <C> <C> <C> <C>
TITLE OF AMOUNT PROPOSED PROPOSED AMOUNT OF
SECURITIES TO BE MAXIMUM OFFERING MAXIMUM REGISTRATION
TO BE REGISTERED PRICE PER SHARE AGGREGATE FEE
REGISTERED <F2> <F1> OFFERING
PRICE<F1>
________________________________________________________________________
Common Stock,
$.001 par 680,883 $2.50 $1,695,233.50 $471.27
value
________________________________________________________________________
<F1>
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 (i) the $2.50 price at which options
may be exercised with respect to 677,396 shares, and
(ii) the $0.50 price at which options may be exercised
with respect to 3,487 shares.
<F2>
The provisions of Rule 416 shall apply to 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.
</TABLE>
________________________________________________________________________
<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, 1998; (ii) the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 1999; (iii) the Registrant's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1999; and (iv) 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 subsequently 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
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 <PAGE> 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 authorizes the Registrant to buy
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 an improper
personal benefit.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
Not applicable.
ITEM 8. EXHIBITS.
A list of the exhibits included as part of this
Registration Statement is set forth in the Exhibit Index which
immediately precedes such exhibits and is incorporated by
reference herein.
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; <PAGE>
(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 the 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 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 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.
<PAGE>
SIGNATURES
Pursuant to the requirements 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 September 16, 1999.
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, 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.
Pursuant to the requirements of the Securities Act of
1933, this Registration Statement has been signed by the
following persons in the capacities and on the date indicated.
Signature Title Date
/s/ Robert J. Spane Chairman, President and Chief September 16, 1999
Robert J. Spane Executive Officer (Principal
Executive Officer)
/s/ William A. Garrett Vice President and Chief September 16, 1999
William A. Garrett Financial Officer (Principal
Financial and Accounting
Officer)
<PAGE>
/s/ Lee M. Gammill, Jr. Director September 16, 1999
Lee M. Gammill, Jr.
/s/ Denis T. Rice Director September 16, 1999
Denis T. Rice
/s/ Leighton W. Smith Director September 16, 1999
Leighton W. Smith
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
<C>
<C> <C> Page
Number Description No.
4(a) Restated Certificate of Incorporation, as *
amended (filed as Exhibit 4(a) to
Registrant's Registration Statement on Form
S-8 (File No. 333-57465) and incorporated
herein by reference).
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) Specimen Common Stock Certificate (filed as *
Exhibit 4.1 to Amendment No. 3 to the
Registrant's Registration Statement on Form
S-1 (File No. 33-96884) and incorporated
herein by reference).
4(d) Employment Agreement, dated as of *
November 3, 1997, between Vanguard Airlines,
Inc. and Robert J. Spane (filed as Exhibit
10.17 to Registrant's Annual Report on Form
10-K for the year ended December 31, 1997
(File No. 000-27034), and incorporated
herein by reference).
4(e) Nonstatutory Stock Option Agreement, dated __
May 18, 1999, between Vanguard Airlines,
Inc. and Robert J. Spane.
4(f) Consulting Agreement, dated January 1, 1999, __
between Vanguard Airlines, Inc. and John J.
McCarthy.
4(g) Nonstatutory Stock Option Agreement, dated __
May 18, 1999, between Vanguard Airlines,
Inc. and John J. McCarthy.
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).
24 Power of Attorney (included on signature
page hereto).
* Incorporated by reference.
</TABLE>
VANGUARD AIRLINES, INC.
NONSTATUTORY STOCK OPTION
ROBERT J. SPANE, Optionee:
Vanguard Airlines, Inc. (the "Company") has granted you an
option to purchase shares of the common stock of the Company
("Common Stock") under that certain Employment Agreement, dated
November 3, 1997, by and between the Company and Robert J. Spane
(the "Agreement"). This option is not intended to qualify as and
will not be treated as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The
total number of shares of Common Stock subject to this option is
Six Hundred Seventy-Seven Thousand Three Ninety-Six (677,396).
Subject to the limitations contained herein, this option shall be
exercisable in whole or in part only after the option has vested.
This option shall vest as follows:
(a) in equal quarterly increments during the term of
your employment under the Agreement commencing with the
commencement of your employment with the Company, with such
vesting to be effective upon the last day of each calendar
quarter;
(b) one-half of any unvested option granted under the
Agreement will vest upon your death or permanent disability;
(c) all of the unvested options granted under the
Agreement will vest upon the merger of the Company into or
with another person, unless the Company is the surviving
entity and the Agreement remains in full force and effect
following such merger; and
(d) all of the unvested options granted under the
Agreement will vest upon the sale of all of the assets or
stock of the Company to another person.
2. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option
is $2.50 per share, which is not less than 85% of the fair
market value of the Common Stock on the date this option was
granted to you.
<PAGE>
(b) METHOD OF PAYMENT. Payment of the exercise price
per share is due in full upon exercise of all or any part of
this option. You may elect, to the extent permitted by
applicable statutes and regulations, to make payment of the
exercise price under one of the following alternatives:
(i) Payment of the exercise price per share
in cash (including check) at the time of exercise;
(ii) Payment pursuant to a program developed
under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash
(or check) by the Company prior to the issuance of
Common Stock;
(iii) Provided that at the time of
exercise the Company's Common Stock is publicly
traded and quoted regularly in the Wall Street
Journal, payment by delivery of already owned
shares of Common Stock, held for the period
required to avoid a charge to the Company's
reported earnings, and owned free and clear of any
liens, claims, encumbrances or security interests,
which Common Stock shall be valued at its fair
market value on the date of exercise; or
(iv) Payment by a combination of the methods
of payment permitted by subparagraph_3(b)(i)
through 3(b)(iii) above.
3. WHOLE SHARES. You may exercise this option only for
whole shares and the Company shall be under no obligation to
issue any fractional shares of Common Stock to you.
4. SECURITIES LAW COMPLIANCE. Notwithstanding anything to
the contrary contained in this option, this option may not be
exercised unless the shares issuable upon exercise of this option
are then registered under the Securities Act of 1933, as amended
(the "Act") or, if the shares are not registered at that time,
the Company has determined that the exercise and issuance would
be exempt from the registration requirements of the Act.
5. TERM OF OPTION. The term of this option begins on the
date you were granted this option and, unless it ends sooner for
the reason described below, terminates on November 3, 2007 (the
"Expiration Date") (which date shall be no more than ten (10)
years from the date this option was granted). You may not, under
any circumstances, exercise this option on or after the
Expiration Date.
This option will also terminate prior to the end of its term
subject to the following terms and conditions:
<PAGE>
(a) TERMINATION OF EMPLOYMENT OR RELATIONSHIP. If you
cease to be employed or engaged as a director of or
consultant to the Company or any of its affiliates because
(i) you terminate the Agreement for any reason upon 30 days
prior written notice, or (ii) the Company terminates the
Agreement for Cause (as defined in the Agreement), then all
unvested options granted to you under the Agreement will
terminate on the date on which either you terminate the
Agreement for any reason or the Company terminated the
Agreement for Cause.
(b) DISABILITY. If you cease to be employed or
engaged as a director of or consultant to the Company or any
of its affiliates under the Agreement as a result of your
permanent disability, all unvested options granted to you
under the Agreement will terminate on the date on which you
cease to be so employed or engaged. All vested options
granted under the Agreement shall remain in full force and
effect after your permanent disability.
(c) DEATH. In the event you die while you are an
employee, director of or consultant to the Company or any of
its affiliates under the Agreement, all unvested options
granted to you under the Agreement will terminate on the
date of your death. All vested options granted under the
Agreement shall remain in full force and effect after your
death.
6. EXERCISE OF OPTION.
(a) You may exercise this option to the extent
specified above by delivering the Notice of Exercise
attached to this option as an exhibit together with the
exercise price to the Secretary of the Company, or another
person designated by the Company, during regular business
hours, together with any additional documents required in
the Notice of Exercise.
(b) By exercising this option you agree that:
(i) the Company may require you to pay to the
Company any tax withholding obligation of the Company
arising from (1) your exercise of this option; (2) the
lapse of any substantial risk of forfeiture to which
the shares are subject at the time of exercise; or
(3) the disposition of the shares of Common Stock you
acquired upon the exercise of this option; and
(ii) in connection with an underwritten
registration of the offering of <PAGE> any securities of the
Company under the Act, the Company (or a representative
of the underwriters) may require that you not sell or
otherwise transfer or dispose of any shares of Common
Stock or other securities of the Company during a
period not to exceed one hundred eighty (180) days
following the effective date (the "Effective Date") of
the registration statement of the Company filed under
the Act. For purposes of this restriction you will be
considered to own securities which (i) you own directly
or indirectly, including securities held for your
benefit by nominees, custodians, brokers or pledgees;
(ii) you may acquire within sixty (60) days of the
Effective Date; (iii) are owned directly or indirectly,
by or for your brothers or sisters (whether by whole or
half blood), spouse, ancestors and lineal descendants;
or (iv) are owned, directly or indirectly, by or for a
corporation, partnership, estate or trust of which you
are a shareholder, partner or beneficiary, but only to
the extent of your proportionate interest in the
corporation, partnership, estate or trust as a
shareholder, partner or beneficiary. You further agree
that the Company may impose stop-transfer instructions
on the securities subject to these restrictions until
the end of the period.
7. OPTION NOT TRANSFERABLE. This option may not be
transferred, except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order
as defined in the Code or Title I of the Employee Retirement
Income Security Act (a "QDRO"), and is exercisable during your
life only by you or a transferee pursuant to a QDRO. By
delivering written notice to the Company, in a form satisfactory
to the Company, you may designate a third party who, in the event
of your death, shall thereafter be entitled to exercise this
option.
8. DILUTION OR ENLARGEMENT. In the event that there is
any change in the capital structure of the Company, including but
not limited to a change resulting from a stock dividend, stock
split, reorganization, merger, consolidation, liquidation or any
combination or exchange of shares of Common Stock, the number of
shares of Common Stock subject to this option which remain
unexercised will be subject to increase or decrease in order to
prevent dilution or enlargement. The option exercise price also
will be adjusted upon the occurrence of any of such events so
that there will be no change in the aggregate option exercise
price payable upon the exercise of this option.
9. OPTION NOT AN EMPLOYMENT CONTRACT. This option is not
an employment contract and nothing in this option creates in any
way whatsoever any obligation on your part to continue in the
employ of the Company, or of the Company to continue your
employment with the Company. In the event this option is granted
to you in connection with the performance of services as a
director or consultant, references to employment, employee and
similar terms shall <PAGE> be deemed to include the performance of
services as a director or consultant; provided, however, that no
rights as an employee shall arise by reason of the use of such
terms.
10. NOTICES. Any notices provided for in this option will
be given in writing and will be considered to have been given
upon receipt or, in the case of notices delivered by the Company
to you, three (3) days after deposit in the United States mail,
postage prepaid, addressed to you at the address specified below
or at such other address as you later designate in writing to the
Company.
<PAGE>
11. GOVERNING DOCUMENT. This option is subject to all the
provisions of the Agreement, which is attached as an exhibit to
this option. All provisions of the Agreement are hereby made a
part of this option. This option is further subject to all
interpretations and amendments that may from time to time be set
forth and adopted under the Agreement. In the event of any
conflict between the provisions of this option and those of the
Agreement, the provisions of the Agreement shall control.
Dated the 18th day of May, 1999.
Very truly yours,
VANGUARD AIRLINES, INC.
By: /s/ Brian S. Gillman
Duly authorized on behalf
of the Board of Directors
Printed Name: Brian S. Gillman
Title: Vice President and General Counsel
ATTACHMENTS:
Employment Agreement, dated November 3, 1997, between
Vanguard Airlines, Inc. and Robert J. Spane
Notice of Exercise
<PAGE>
(a) I acknowledge that I have received the foregoing option
and the attachments referenced in it and I understand that all
rights and liabilities with respect to this option are set forth
in the option and the Agreement; and
(b) I acknowledge that this Agreement has been provided to
me by the Company in connection with the Company's one-for-five
reverse stock split and I understand that this Agreement is not
an additional stock grant. I further acknowledge that all rights
granted with corresponding agreement(s) prior to the reverse
stock split on May 18, 1999 are null and void.
(c) I acknowledge that as of the date of grant of this
option, this option and its exhibits set forth the entire
understanding between myself and the Company and its affiliates
regarding the acquisition of stock in the Company and supersedes
all prior oral and written agreements on that subject with the
exception of the following agreements only:
NONE __________
OTHER _________
OPTIONEE: ROBERT J. SPANE
Signature: /s/ Robert J. Spane
Address: __________________________
__________________________
Social Security Number: ___________
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (this "Agreement") is entered
into as of January 1, 1999, by and between Vanguard Airlines,
Inc., a Delaware corporation (the "Company"), and John J. McCarthy
(the "Consultant").
WHEREAS, the Company desires to retain the Consultant
from time to time to provide the Company with the Consultant's
expertise, and the Consultant desires to render such services to
the Company, all upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants
and agreements contained herein, the parties hereto agree as
follows:
1. RETAINER OF CONSULTANT. The Company may retain the
Consultant from time to time to render services to the Company as
requested by the Company, and the Consultant agrees that each such
retainer shall be subject to the terms and conditions of this
Agreement.
2. DUTIES OF CONSULTANT. The Consultant's duties under
this Agreement shall be as agreed upon from time to time by the
Consultant and the Company.
3. TERM. The term of this Agreement shall be for a
period of two years commencing on the date hereof, subject to the
provisions of Section 10 of this Agreement.
4. COMPENSATION.
a. QUARTERLY BILLING RATE. The Company shall pay the
Consultant based on a quarterly billing rate, payable
quarterly in cash or, at the election of the Consultant,
in options to purchase shares of common stock of the
Company (each, an "Option") with a substantially
equivalent value (as reasonably determined by the Board
of Directors of the Company), within 15 days after the
end of each calendar quarter. The quarterly billing rate
shall initially be at the agreed upon rate, and will
remain at that amount until agreed otherwise in writing.
Each Option granted under this Agreement shall be granted
in an amount and at an exercise price as shall be
determined by the Company. Furthermore, each such Option
shall be subject to the terms and conditions of a
Nonstatutory Stock Option Agreement in the form of
Exhibit A attached hereto.
b. EXPENSES. The Company will reimburse the Consultant for
reasonable outofpocket expenses incurred in connection
with services rendered to the Company pursuant to this
Agreement, including but not limited to any travel,
lodging, meals, gratuities, transportation, courier
service, photocopying, telecopying, telephone and similar
expenses.
<PAGE>
c. INVOICES; PAYMENT. The Consultant shall furnish the
Company with a detailed invoice (including an itemization
of expenses incurred) in a form acceptable to the Company
at the end of each month during which the Consultant
performs services for the Company pursuant to this
Agreement or upon the termination of this Agreement. The
Company shall pay the amount owed within 30 days after
its receipt of the invoice.
5. INDEPENDENT CONTRACTOR. The parties intend that the
Consultant shall be an independent contractor, and not an employee
of the Company and, as a result, the Consultant is not eligible for
any of the benefits normally provided to employees of the Company.
The Consultant acknowledges that the Company has no control over or
with respect to the performance of the Consultant's duties under
this Agreement.
6. COMPANY PROPERTY. The Consultant (a) agrees that
all memoranda, notes, research, strategic plans, records, drawings,
artwork, or other creative material or documentation, whether made
or compiled by the Consultant alone or with others, or made
available to the Consultant, while working with the Company, shall
be and remain the property of the Company, (b) hereby grants and
assigns to the Company all right, title and interest in any and all
of the foregoing, and all goodwill of the Company's business with
respect thereto, to the Company, and (c) agrees to execute and
promptly deliver to the Company such written instruments or
documents, and to do such other acts, as the Company may request to
patent, copyright or otherwise protect any and all of the foregoing
and to vest all rights, title and interest therein in the Company.
All such items shall be considered work made for hire and prepared
by the Consultant within the scope of the Consultant's duties for
the Company.
7. CONFIDENTIAL INFORMATION. During the term of this
Agreement and thereafter, the Consultant agrees to maintain in
strictest confidence, and shall not, without the prior written
consent of the Company, directly or indirectly use, disclose or
disseminate to any other person, firm, organization or employee, or
otherwise employ, any trade secrets, confidential information or
confidential customer information made or compiled by the
Consultant, or made available to the Consultant, while working for
the Company. This obligation shall not apply to any trade secret
or confidential information (i) that shall have become generally
known to competitors of the Company (in the case of trade secrets)
or to the public (in the case of confidential information) through
no act or omission of the Consultant, or (ii) that shall have been
disclosed to the Consultant by a person or entity unaffiliated with
the Company that has legitimate possession thereof in its entirety,
and possesses the unrestricted right to make such disclosure. The
Consultant acknowledges that the Company may be bound by contract
with the Company's customers not to disclose any confidential
customer information.
8. RETURN OF MATERIAL TO COMPANY. The Consultant will
deliver to the Company, upon termination of this Agreement, and at
any other time upon the Company's request, all memoranda, notes,
research, strategic plans, records, drawings, artwork or other
creative material or documentation, whether made or compiled by the
Consultant alone or with others or made available to the Consultant
while working with the Company, pertaining to confidential customer <PAGE>
information, trade secrets, confidential information or other
inventions and works of the Company, and all confidential customer
information, trade secrets, confidential information and other
inventions and works of the Company in the Consultant's possession.
9. INJUNCTIVE RELIEF. The parties recognize that
irreparable damage will result to the Company from any violation of
this Agreement by the Consultant. The parties expressly agree
that, in addition to any and all other remedies available to the
Company for any such violation, the Company shall have the remedies
of restraining order and injunction, and any such other equitable
relief as may be declared or issued by a court to enforce the
provisions of Sections 6 through 8 above, without posting any bond
that might otherwise be required.
10. TERMINATION. In addition to termination upon the
expiration of the term of this Agreement pursuant to Section 3
hereof, the parties agree that either party can terminate this
Agreement at any time by giving 30 days' written notice of such
termination. The respective rights and obligations of the Company
and the Consultant pursuant to Sections 5 through 11 hereof shall
survive any termination of this Agreement. The Company shall also
be obligated to pay the Consultant pursuant to Section 4 hereof for
services rendered and expenses incurred prior to the effective date
of termination.
11. MISCELLANEOUS PROVISIONS. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the
parties hereto and their respective heirs, personal
representatives, successors and permitted assigns. This Agreement
shall be governed by the laws of the State of Missouri. This
Agreement represents the entire agreement of the parties hereto and
supersedes all prior agreements, negotiations, discussions and
preliminary agreements. This Agreement shall not be amended except
by written agreement signed by all of the parties hereto. In the
event one or more of the provisions contained in this Agreement or
any application thereof shall be deemed invalid, illegal or
unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions of this Agreement or any
other application thereof shall not in any way be affected or
impaired thereby. The application of any provision of this
Agreement may be waived by the person or persons entitled to the
benefit thereof, provided, that no delay or failure on the part of
any person in exercising any right hereunder, and any partial or
single exercise thereof, shall constitute a waiver of any other
rights hereunder. Paragraph headings herein have no legal
significance. This Agreement shall not be assignable by either
party without the prior written consent of the other party, except
for an assignment by the Company to any entity to which the Company
may transfer substantially all of its assets.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
on the day and year first above written.
VANGUARD AIRLINES, INC.
By: /s/ Brian S. Gillman
Name: Brian S. Gillman
Title: VP and General Counsel
/s/ John J. McCarthy
John J. McCarthy
Address: 157 NW Pointe Drive
Gladstone, MO 64116
VANGUARD AIRLINES, INC.
NONSTATUTORY STOCK OPTION
JOHN J. MCCARTHY, Optionee:
Vanguard Airlines, Inc. (the "Company") has granted you an
option to purchase shares of the common stock of the Company
("Common Stock") under that certain Consulting Agreement, dated
January 1, 1999, by and between the Company and John J. McCarthy
(the "Agreement"). This option is not intended to qualify as and
will not be treated as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The
total number of shares of Common Stock subject to this option is
Three Thousand Four Hundred Eighty-Seven (3,487). Subject to the
limitations contained herein, this option shall be exercisable
immediately.
2. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option
is $0.50 per share, which is not less than 85% of the fair
market value of the Common Stock on the date this option was
granted to you.
(b) METHOD OF PAYMENT. Payment of the exercise price
per share is due in full upon exercise of all or any part of
this option. You may elect, to the extent permitted by
applicable statutes and regulations, to make payment of the
exercise price under one of the following alternatives:
(i) Payment of the exercise price per share in
cash (including check) at the time of exercise;
(ii) Payment pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve
Board which results in the receipt of cash (or check)
by the Company prior to the issuance of Common Stock;
(iii) Provided that at the time of exercise
the Company's Common Stock is publicly traded and
quoted regularly in the Wall Street Journal, payment by
delivery of already owned shares of Common Stock, held
for the period required to avoid a charge to the
Company's reported earnings, and owned free and clear
of any liens, claims, encumbrances or security
interests, which Common Stock shall be valued at its
fair market value on the date of exercise; or
<PAGE>
(iv) Payment by a combination of the methods of
payment permitted by subparagraph 3(b)(i) through
3(b)(iii) above.
3. WHOLE SHARES. You may exercise this option only for
whole shares and the Company shall be under no obligation to
issue any fractional shares of Common Stock to you.
4. SECURITIES LAW COMPLIANCE. Notwithstanding anything to
the contrary contained in this option, this option may not be
exercised unless the shares issuable upon exercise of this option
are then registered under the Securities Act of 1933, as amended
(the "Act") or, if the shares are not registered at that time,
the Company has determined that the exercise and issuance would
be exempt from the registration requirements of the Act.
5. TERM OF OPTION. The term of this option begins on the
date you were granted this option and terminates on January 4,
2009 (the "Expiration Date") (which date shall be no more than
ten (10) years from the date this option was granted). You may
not, under any circumstances, exercise this option on or after
the Expiration Date.
6. EXERCISE OF OPTION.
(a) You may exercise this option to the extent
specified above by delivering the Notice of Exercise
attached to this option as an exhibit together with the
exercise price to the Secretary of the Company, or another
person designated by the Company, during regular business
hours, together with any additional documents required in
the Notice of Exercise.
(b) By exercising this option you agree that the
Company may require you to pay to the Company any tax
withholding obligation of the Company arising from (1) your
exercise of this option; (2) the lapse of any substantial
risk of forfeiture to which the shares are subject at the
time of exercise; or (3) the disposition of the shares of
Common Stock you acquired upon the exercise of this option.
7. OPTION NOT TRANSFERABLE. This option may not be
transferred, except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order
as defined in the Code or Title I of the Employee Retirement
Income Security Act (a "QDRO"), and is exercisable during your
life only by you or a transferee pursuant to a QDRO. By
delivering written notice to the Company, in a form satisfactory
to the Company, you may designate a third party who, in the event
of your death, shall thereafter be entitled to exercise this
option.
8. DILUTION OR ENLARGEMENT. In the event that there is
any change in the capital structure of the Company, including but
not limited to a change resulting from a stock dividend, stock
split, reorganization, merger, consolidation, liquidation or any
combination or exchange of shares of Common Stock, the number of
shares of Common Stock subject to this option which remain
unexercised will be subject to increase or decrease in order to
prevent dilution or <PAGE> enlargement. The option exercise price also
will be adjusted upon the occurrence of any of such events so
that there will be no change in the aggregate option exercise
price payable upon the exercise of this option.
9. OPTION NOT AN EMPLOYMENT CONTRACT. This option is not
an employment contract and nothing in this option creates in any
way whatsoever any obligation on your part to continue in the
employ of the Company, or of the Company to continue your
employment with the Company. In the event this option is granted
to you in connection with the performance of services as a
director or consultant, references to employment, employee and
similar terms shall be deemed to include the performance of
services as a director or consultant; provided, however, that no
rights as an employee shall arise by reason of the use of such
terms.
10. NOTICES. Any notices provided for in this option will
be given in writing and will be considered to have been given
upon receipt or, in the case of notices delivered by the Company
to you, three (3) days after deposit in the United States mail,
postage prepaid, addressed to you at the address specified below
or at such other address as you later designate in writing to the
Company.
11. GOVERNING DOCUMENT. This option is subject to all the
provisions of the Agreement, which is attached as an exhibit to
this option. All provisions of the Agreement are hereby made a
part of this option. This option is further subject to all
interpretations and amendments that may from time to time be set
forth and adopted under the Agreement. In the event of any
conflict between the provisions of this option and those of the
Agreement, the provisions of the Agreement shall control.
Dated the _____ day of ____________, _______.
Very truly yours,
VANGUARD AIRLINES, INC.
By: /s/ Brian S. Gillman
Duly authorized on behalf
of the Board of Directors
Printed Name: Brian S. Gillman
Title: Vice President and General
Counsel
ATTACHMENTS:
Consulting Agreement, dated January 1, 1999, by and between
Vanguard Airlines, Inc.
<PAGE>
and John J. McCarthy
Notice of Exercise
(a) I acknowledge that I have received the foregoing option
and the attachments referenced in it and I understand that all
rights and liabilities with respect to this option are set forth
in the option and the Agreement; and
(b) I acknowledge that as of the date of grant of this
option, this option and its exhibits set forth the entire
understanding between myself and the Company and its affiliates
regarding the acquisition of stock in the Company and supersedes
all prior oral and written agreements on that subject with the
exception of the following agreements only:
NONE _________
OTHER ________
OPTIONEE: John J. McCarthy
Signature: /s/ John J. McCarthy
Address: 157 NW Pointe Drive
Gladstone, MO 64116
Social Security Number: xxx-xx-xxxx
September 16, 1999
Vanguard Airlines, Inc.
7000 Squibb Road, Third Floor
Mission, KS 66202
Ladies and Gentlemen:
I refer to the Registration Statement on Form S-8 of
Vanguard Airlines, Inc., a Delaware corporation (the "Company"),
to be filed with the Securities and Exchange Commission on or
about September 16, 1999 for the purpose of registering under the
Securities Act of 1933, as amended, 680,883 shares of Common
Stock, par value $.001 per share ("Common Stock"), of the
Company. These shares of Common Stock are proposed to be issued
upon the exercise of stock options granted pursuant to the
Employment Agreement, dated as of November 3, 1998, between the
Company and Robert J. Spane (the "Employment Agreement") and the
Consulting Agreement, dated January 1, 1999, between the Company
and John A. McCarthy (the "Consulting Agreement").
I have examined the Company's 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 680,883 shares of
Common Stock and all such shares of Common Stock as shall be
issued and paid for as described in the Employment Agreement
or Consulting Agreement, as applicable, shall be, when so
issued, legally issued, fully paid and nonassessable.
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 this
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 persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and
regulations thereunder.
Very truly yours,
/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. 33-___________) pertaining to Vanguard Airlines, Inc.
November 3, 1997 Employment Agreement with Robert J. Spane and their
January 1, 1999 Consulting Agreement with John A. McCarthy, of our report
dated February 22, 1999 with respect to the financial statements and schedule
of Vanguard Airlines, Inc. included in its Annual Report (Form 10-K) for
the year ended December 31, 1998, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Ernst & Young LLP
Kansas City, Missouri
September 16, 1999
