As filed with the Securities and Exchange Commission on January 11, 1999.
Registration No.333 -__________
--------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------------------------------------
CARDINAL AIRLINES, INC.
(Name of registrant as specified in its charter)
Delaware 4512 59-3492127
(State or other jurisdiction of (Primary Standard Industrial (IRS
Employer
incorporation or organization) Classification Code Number) Identification No.)
1380 Sarno Road
Suite B
Melbourne, Florida 32935
(407) 757-7388
(Address including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Lawrence A. Watson
1380 Sarno Road
Suite B
Melbourne, Florida 32935
(407) 757-7388
(Name, address, including zip code, and telephone number of agent for service)
-----
Copy to:
Bruce Brashear
926 N.W. 13th Street
Gainesville, Florida 32601
(352) 336-0800
--------------------------------------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
=====================================================================
Title of Each Amount to be Proposed Max Proposed Max Amount of
Class of Registered Offering Aggregate Registration
Securities to Price Per Offering Fee
be Registered Unit (1) Price (1)
Units,
consisting
of 2,000,000 Units $7.50 $15,000,000 $4,305
(a) One Share
Voting
Common
Stock,
par value
$0.01 per
share
("Common
Stock") 2,000,000 Shares
(b) One Warrant
to purchase
one share of
Common Stock
at $11.00 per
share 2,000,000 Warrants
Voting Common Stock
purchasable pursuant
to Warrants 2,000,000 Shares $11.00 $22,000,000 $6,314
=====================================================================
(1)Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933, as amended.
-----------------------------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
Cardinal Airlines, Inc.
------
CROSS REFERENCE SHEET
Between Items in Part I of Form S-1 and the Prospectus
-------------
Form S-1 Item Nos. and Caption Prospectus Caption
1. Forepart of Registration
Statement and Outside
Front Cover of Prospectus Outside Front Cover Page
2. Inside Front and Outside Inside Front and Outside Back
Back Cover Pages of Prospectus Cover Pages
3. Summary Information, Risk Factors Prospectus Summary; Risk
and Ratio of Earnings to Factors
Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Plan of Distribution
6. Dilution Dilution
7. Selling Security-Holders Principal and Selling Shareholders
8. Plan of Distribution Outside Front Cover Page; Plan of
Distribution
9. Description of Securities Description of Securities
Eligible For Future Sale
10. Interest of Named Experts and
Counsel Not Applicable
Promoters and Control Persons Management
11. Information with Respect to Prospectus Summary;Summary Financial
the Registrant Data; Business; Financial Statements;
Management's Discussion and
Analysis of Financial Condition and
Results of Operations; Management
Security Ownership of Certain;
Beneficial Owners and Management;
Principal And Selling Shareholders;
Certain Transactions
12. Disclosure of Commission Position Description of Securities
on Indemnification for Securities
Act Liabilities
<PAGE>
As Filed with the Securities and Exchange Commission on January 11, 1999
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Preliminary Prospectus Dated January 11, 1999
2,000,000 Units
CARDINAL AIRLINES, INC.
---------------------------------------------------
Of the 2,000,000 Units of Common Stock offered hereby, 1,900,000 Units are
being sold by the Company and 100,000 Units are being sold by the Selling
Stockholders. Each Unit offered consists of one share of common stock and one
warrant to purchase one share of common stock for a price of $11.00 a share
until five years from the effective date of this offering. The Company will not
receive any of the proceeds from the sale of Units by the Selling Stockholders.
The Offering is being made directly by the Company. There is no minimum
number of Units to be sold in the Offering, and the first $14,250,000 of funds
received will be paid to the Company. See "Use of Proceeds." The Offering will
be terminated upon the earliest of: the sale of all Units, twelve months after
the date of this Prospectus (unless extended), or the date on which the Company
decides to close the Offering. A minimum purchase of 100 Units ($750) is
required. The Company reserves the right to reject any Unit Purchase Agreement
in full or in part. Units being offered by Selling Shareholders will only be
sold following the sale of all 1,900,000 Units offered by the Company. See "Plan
of Distribution."
Prior to the Offering, there has been no public market for the Company's
Common Stock; therefore, the public offering price has been determined solely by
the Company. After completion of this Offering, and dependent largely upon the
number of Units sold in the Offering, the Company's shares may be traded on a
stock exchange (no application has been made to any stock exchange) or in the
over-the-counter market, or no active trading market may develop or be
sustained. See "Risk Factors" and "Shares Eligible for Future Sale."
THE SECURITIES OFFERED ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
ONLY INVESTORS WHO CAN BEAR THE RISK OF LOSS OF THEIR ENTIRE INVESTMENT SHOULD
INVEST. FOR A DESCRIPTION OF CERTAIN RISKS OF AN INVESTMENT IN THE COMPANY AND
IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK FACTORS" AND "DILUTION".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES REGULATORY AUTHORITY NOR HAS THE
COMMISSION OR ANY STATE REGULATORY AUTHORITY PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
==============================================================================
Proceeds Proceeds
Price to Public Underwriting to to Selling
Discount(1) Company(2) Stockholders(3)
- ------------------------------------------------------------------------------
Per Unit $7.50 $0.75 $6.75 $6.75
Total $15,000,000.00 $1,500,000.00 $12,825,000.00 $675,000.00
==============================================================================
(1) The Company plans to sell the Units directly to investors through designated
executive officers who shall not receive any commission and has not retained any
underwriters, brokers, or placement agents in connection with the Offering.
However, the Company reserves the right to use brokers, dealers or placement
agents and could pay commissions not to exceed 10% of the purchase price of the
securities sold through such brokers, dealers or placement agents. See "Plan of
Distribution."
(2) Before deducting expenses related to this offering payable by the Company
estimated at $ 130,000.
(3) Certain individuals have elected to sell a portion of their holdings in this
offering. See PRINCIPAL AND SELLING SHAREHOLDERS.
--------------------------------------------------------
The date of this Prospectus is January __, 1999
This Prospectus is available in an electronic format at
http:\\www.flycardinal.com. The Company will also transmit promptly, without
charge, a paper copy of this Prospectus to any such resident upon receipt of a
request. Requests for Prospectuses should be made to the Company at 1380 Sarno
Road, Suite B, Melbourne, Florida 32935 (407) 757-7388.
<PAGE>
TABLE OF CONTENTS
Page
Available Information
Summary
Risk Factors
Use of Proceeds
Dilution
Dividend Policy
Capitalization
Special Note Regarding Forward-Looking Statements
Management's Discussion and Analysis
of Financial Conditions and Results of Operations
Business
Management
Certain Transactions
Principal and Selling Shareholders
Description of Securities
Securities Eligible for Future Sale
Plan of Distribution
Legal Matters
Experts
Unit Purchase Agreement
Financial Statements
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information contained elsewhere herein, including the financial statements and
related notes. Certain risks of an investment in the Common Stock offered hereby
are described under RISK FACTORS. Each prospective investor is urged to read
this Prospectus in its entirety.
The Company
Cardinal Airlines Inc. (The "Company") is a new Company planning to provide
scheduled airline service to primary markets in the Eastern United States from
Melbourne, Florida. Cardinal Airlines' strategy is to provide excellent service
by seating all passengers in large "first class" seats and offering superb
meals. The Company will offer full fare "one price per destination" tickets that
will approximate the advanced restricted "coach" fares of major airlines. The
Company plans to commence flight operations in mid 1999 with 2 MD-80 series
aircraft providing service of eight flights a day between Melbourne Florida and
the New York / Washington markets. The Company plans to eventually add
additional MD-80 series aircraft and expand service to other prominent markets.
The Company's executive officers and key employees have substantial
experience in the airline industry. Management has chosen the Eastern United
States as the Company's initial geographic market due to the concentration of
high yield destinations from the Melbourne / Orlando area.
The Company's strategy is based on the commitment to "Safety and Service"
for its customers. Management believes the Company can generate substantial
profits while providing a high level of service, reasonable fares and a "no
games" relationship with its passengers, by developing a highly loyal and
productive workforce and utilizing simple, user friendly cost effective
operational methods.
The Company's principle offices are located at Melbourne International
Airport and 1380 Sarno Road, Suite B, Melbourne, Florida 32935.
<PAGE>
The Offering
Securities Offered by the Company ..................1,900,000 Units, each Unit
consisting of one share of
common stock and one
warrant to purchase one
share of common stock for a
price of $11.00 a share
until five years from the
effective date of this
offering
Securities Offered by the Selling Stockholders .... 100,000 Units, each Unit
consisting of one share of
common stock and one
warrant to purchase one
share of common stock for
a price of $11.00 a share
until five years from the
effective date of this
offering
Total Common Stock Offered ...................2,000,000 shares
Common Stock Outstanding After the Offering .......3,581,400 shares
Use of Proceeds ...................................Working capital and general
corporate purposes,
including obtaining a FAA
121 aircarrier operating
certificate, acquisition
of aircraft and equipment,
and developing maintenance
and technical programs
Proposed NASDAQ/NMS Symbol ........................CARD
Risk Factors ......................................For a description of
certain risk inherent in
an investment in the
Common Stock, see RISK
FACTORS
------------------------------
Summary Financial Data
The Summary Financial Data presented below are derived from the
Consolidated Financial Statements of the Company and are qualified in their
entirety by, and should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Company's
Consolidated Financial Statements and the Notes thereto included elsewhere in
this Prospectus.
Abbreviated financial statements and footnotes.
Income Statement Data:
------------------------------------------
Six Months Ended Fiscal Year Ended April 1, 1997
December 31, 1998 June 30, 1998 (Inception) to June 30,
1998
--------------------- -----------------------
REVENUES $ - $ - $ -
--------------------- -----------------------
NET (LOSS) $ (58,981 ) $ (19,805) $ (21,788)
Net income
(loss) per
common
share $ (.039) $ (.016) $ (.018)
===================== =======================
Internally Prepared (Unaudited)
Balance Sheet Data:
------------------------------------------
Six Months Ended Fiscal Year Ended April 1, 1997
December 31, 1998 June 30, 1998 (Inception) to June
30, 1998
------------------- ---------------------
Total Assets $179,281 $122,612 $122,612
=================== =====================
Total Liabilities ---- ---- ----
Stockholders Equity $179,281 $122,612 $122,612
=================== =====================
Internally Prepared (Unaudited)
RISK FACTORS
An investment in the securities being offered by this Prospectus is highly
speculative, involves a high degree of risk, and should be considered only by
persons who can afford to lose the entire investment. In addition to the other
information contained in this Prospectus, prospective investors should carefully
consider the following risk factors before purchasing any of the Units.
Risks Related to the Company
No Operating History. The Company has not begun airline operations. There
is no assurance the Company will be able to successfully obtain an FAA 121 air
carrier certificate and begin flight operations. There is no assurance the
Company will be able to achieve sufficient revenues to make it viable or
profitable. The Company may be vulnerable to fare discounts, changes in industry
conditions, competitive reactions by existing or new competitors.
Although many of the Company's key personnel have substantial airline
industry experience, there is no assurance that they will be able to
successfully carry out the Company's business plan. The Company has conducted no
independent market studies and is relying on management's evaluation of
available market information and studies to estimate the market potential. See
MANAGEMENT. See Exhibits.
No Independent Feasibility Study. The Company's business plan for the
continuing implementation of its business strategy is based on the experience,
judgement and certain assumptions of management, and upon certain available
market information. The Company has not obtained a third party, independent
feasibility study relating to its plans to conduct this Offering or to enter
into the commercial airline business, nor does it plan to commission such a
study.
Competition and Competitive Reaction. The Airline Deregulation Act of 1978
(the "Deregulation Act") made the airline industry highly competitive. The
Deregulation Act substantially reduced government regulation of domestic routes
and fares, and increased the airlines ability to compete with respect to fares,
destinations, and flight frequencies. Although the Company would be the only
airline providing non-stop service from Melbourne International Airport to
Baltimore, the Company will compete with Delta Air Lines, Inc. (Delta), Spirit
Airlines (Spirit), and other airlines that currently provide service from the
Orlando International Airport to these markets. The Company may also face
competition from new airlines providing service to these markets and existing
airlines increasing service and/or lowering fares. There can be no assurance
that any of these actions by other competitors would not adversely affect the
Company's ability to maintain adequate load factors.
Practices of Unfair, Exclusionary Competition. While the Department of
Transportation is proposing rules to eliminate such exclusionary conduct engaged
in by other markets, major air carriers have attempted to exclude new entrant
air carriers through a number of tactics including drastic price cuts and
flooding the market with new low-fare capacity. There can be no assurance that
these proposed rules will be adopted and that a large air carrier will not
exercise these predatory actions to unfairly compete against the Company. This
could adversely affect the Company's business plan
The Company's strategy not to offer any frequent flyer programs or
participate in any of the established computerized reservation systems (CRS),
used extensively by other airlines and travel agents could become a competitive
disadvantage. See BUSINESS - Competition and Industry Considerations.
Other airlines may offer fares equal to those offered by the Company or
introduce new non-stop service between cities served by the Company's flights to
prevent the Company from attaining a share of the passenger traffic necessary to
maintain profitable operations. The Company's ability to meet price competition
depends on its ability to operate at costs equal to or lower than its
competitors or potential competitors. In addition, competitors with greater
financial resources than the Company may attempt to price their fares below the
Company's fares and/or increase their service, which could adversely affect the
Company's profitability. See BUSINESS - Competition and Industry Considerations.
(Predatory)
Melbourne International Airport and Market Dominance. While Delta has
announced it may reduce daily flights from Melbourne International Airport (MLB)
to Atlanta, a Delta hub, the Melbourne market is currently dominated by Delta
and other airlines operating out of the Orlando International Airport.
Dependence on Executive Officers. The Company is dependent on the active
participation of Lawrence A. Watson (President), Lawrence H. Mason, (VP
Finance), Vincent T. Paris (Director), and Ted A. Walker (Director). The loss of
their services could materially and adversely affect the business of the
Company. The Company has employment agreements with each of these officers, all
of which are terminable at any time by either party, subject to existing
restrictive covenant agreements with the Company. The Company plans to maintain
key man life insurance on certain officers and key members of the management
team upon completion of this offering. See Management.
Control by Management Group. After the completion of the sale of all the
Units offered herein, the Company's Executive Officers and Directors, a group of
four individuals, by virtue of their holdings of both Common Stock and Series A
Preferred Shares hold approximately 82% of all votes that could then be cast,
without taking into account the exercise of any warrants to purchase Common
Stock. As a result, the investors in this offering will not be able to exercise
any control over the management of the Company. See PRINCIPAL AND SELLING
STOCKHOLDERS.
Automation. The Company does not plan to employ an existing computerized
reservation system (CRS). This could have an adverse effect on the Company's
ability to compete. The Company plans to implement, purchase and operate its own
automated systems including ticketing and reservations. It is the desire of
management to implement a fully integrated system that is notably cost effective
and user friendly.
Aircraft Availability. The Company plans initially to lease or
lease/purchase 2 MD-80 series aircraft. The Company has identified sources and
availability of such aircraft, however, there can be no assurance that such
aircraft will be available on terms that meet its initial or future operational
requirements.
Employee Relations. The Company believes it can develop a productive and
loyal workforce and operate with lower personnel costs than many established
airlines. There can be no assurance that the Company will be able to achieve and
maintain these advantages for any extended period of time. Many airline industry
employees are represented by labor unions. If the Company is unable to maintain
a union free workforce, the Company's costs could significantly increase.
Dependence on Service Contractors. The Company will enter into agreements
with contractors to provide certain equipment, facilities and services required
for support operations, such as baggage and ground handling services,
maintenance, and personnel training. While the Company believes that such
contractual services are available from numerous sources, the Company's
dependence on others to provide essential services in a timely, efficient, and
cost effective manner could directly affect the Company's performance.
Limited Number of Aircraft. The Company plans to begin operations with two
(2) MD-80 series aircraft. The Company's ability to maintain revenues is
dependent on the availability of its aircraft. Commercial aircraft are extremely
complex machines and are subject to continued maintenance and testing. If any of
the Company's aircraft are out of service for an extended period of time or
lost, it would adversely effect the Company's operation until the aircraft was
replaced.
Airport Access. The Company has identified several destinations which it
considers suitable for the Company's operations. If the Company is delayed or
unable to secure access to any of these airports, it could have an adverse
effect on the Company's operations.
Risks Related to the Airline Industry Generally
Low Margin Business. The airline industry, historically has low gross
profit margins, with high fixed costs in comparison to revenues. The Company
believes it will be very cost effective and have lower fixed costs than other
airlines. However, if the Company is unable to operate at costs less than its
competitors and lower costs cannot be achieved, it could adversely affect the
Company's viability.
Cyclical Nature of Airline Industry. The airline industry has a cyclical
nature and is sensitive to overall economic conditions. Historically, downturns
in the economy have caused a reduction in leisure and business airline
passengers, any prolonged reduction in passenger traffic may adversely affect
the Company.
Fuel Cost and Availability. Typically fuel costs are the highest operating
expense for companies providing airline service. Fuel costs and availability can
be affected by political and economic conditions throughout the world, any
changes in the availability or cost of fuel could adversely affect the Company.
See BUSINESS - Fuel.
Federal Regulations. The Company must obtain the necessary authority from
several government agencies to commence flight operations, including a
Certificate of Public Convenience and Necessity from the Department of
Transportation (DOT) and an operating certificate from the Federal Aviation
Administration (FAA). Such authority is subject to compliance with applicable
statutes, rules and regulations pertaining to the airline industry, including
any new rules and regulations that may be adopted in the future. Management
believes start-up airlines will be subject to strict scrutiny by FAA officials,
making the Company susceptible to increased regulatory demands that can
negatively impact it's operations. There is no assurance that the Company will
be able to comply with all present and future rules and regulations with respect
to the cost of compliance and its effect on the profitability of the Company.
See Business - Government Regulations.
Risks Related to this Offering
No Assurance of Maintenance of Public Trading Market. Prior to this
offering, there has been no public trading market for the Company's securities.
Following the completion of this offering, the Common Stock may be included for
trading on NASDAQ. There is, however, no assurance of either the development or
continuance of any trading market in the Company's securities.
Direct Public Offering: No Underwriter. The Units offered herein are
offered directly by the Company. The Company has not retained any underwriters,
brokers, dealers or placement agents in connection with this offering. . None of
the Directors or Officers of the Company have any experience in making a direct
public stock offering. The absence of an underwriter could adversely affect the
Company's ability to sell the Units.
Expiration of Warrants. There can be no assurance that the Common Stock
(comprising one component of the Units offered hereby) shall maintain a daily
trading volume or price substantial enough to cause the Warrants (comprising the
other component of the Units offered hereby) to be exercisable at any time prior
to the Warrant expiration date.
Current Prospectus and State Blue Sky Laws Registration Required to
Exercise Warrants. Purchasers of Units will have the right to exercise the
Warrants included therein only if a current prospectus relating to the shares
underlying the warrants is then in effect and only if such shares are qualified
for sale under applicable securities laws of the states in which the various
holders of the Warrants reside. There is no assurance that the Company will be
able to maintain a current prospectus covering such shares or be able to
register or qualify such shares in the states where such warrant holders reside.
The Warrants will be derived of any value if a current prospectus covering such
shares issuable in exercise thereof is not kept effective or if such shares are
not registered in the states in which holders of the Warrants reside. (See
"Description of Securities -- Warrants."
No Dividends. The Company has never paid cash dividends on its stock and
has no plans to do so in the foreseeable future. The Company intends to retain
earnings, if any, for business use.
Immediate and Substantial Dilution. This Offering involves an immediate and
substantial dilution between the initial public offering price of $7.50 per Unit
and the pro forma net tangible book value per share of Common Stock after the
Offering. Such dilution will amount to $3.91 if all Units are sold; $4.20 if
75%of the Units are sold; $4.87 if 50% of the Units are sold; and $5.85 if 25%
of the Units are sold. See "Dilution."
Risks of Low-Priced Stocks. If the trading price, if any, of the Common
Stock were to fall below $5.00 per share, trading in the Common Stock would also
be subject to the requirements of certain rules promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which require additional
disclosure by broker-dealers in connection with any trades involving a stock
defined as a "penny stock" (generally, any non-NASDAQ equity security that has a
market price of less than $5.00 per share, subject to certain exceptions). Such
rules require the delivery, prior to any penny stock transaction, of a
disclosure schedule explaining the penny stock market and the risks associated
therewith, and impose various sales practice requirements on broker-dealers who
sell penny stocks to persons other than established customers and accredited
investors (generally defined as an investor with a net worth in excess of
$1,000,000 or annual income exceeding $200,000, $300,000 together with a
spouse). For these types of transactions, the broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. The broker-dealer also must
disclose the commissions payable to the broker-dealer, current bid and offer
quotations for the penny stock and, if the broker-dealer is the sole
market-maker, the broker-dealer must disclose this fact and the broker-dealer's
presumed control over the market. Such information must be provided to the
customer orally or in writing prior to effecting the transaction and in writing
before or with the customer confirmation. Monthly statements must be sent
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. The additional burdens
imposed upon broker-dealers by such requirements may discourage them from
effecting transactions in the Common Stock, which could severely limit the
liquidity of the Common Stock and the ability of purchasers in this offering to
sell the Common Stock in the secondary market.
Determination of Offering Price. The Company has unilaterally and
arbitrarily determined the offering price of the Units. Among the factors
considered in determining such price were the prices of airline common stock,
the Company's capital requirements, the percentage of ownership to be held by
investors following the Offering, and the prospects for the Company's business.
The offering price does not necessarily bear any relationship to the Company's
assets, book value, earnings history, or other investment criteria and should
not be considered an indication of the actual value of the Company's securities.
See "Plan of Distribution."
Possible Adverse Impact of Shares Available for Future Sale. Sales of
substantial amounts of Common Stock in the public market, if any, after this
Offering or the prospect of such sales could adversely affect any market price
of the Common Stock and may have a material adverse effect on the Company's
ability to raise any necessary capital to fund its future operations. Upon
completion of this Offering, assuming all Units are sold, the Company will have
3,459,400 shares of Common Stock outstanding. The 2,000,000 shares included in
the Units offered hereby will be freely tradable without restriction or further
registration under the Securities Act of 1933, as amended (the "Securities
Act"), except for any shares held by "affiliates" of the Company within the
meaning of the Securities Act which will be subject to the resale limitations of
Rule 144 promulgated under the Securities Act ("Rule 144"). The remaining
1,459,400 shares are "restricted" securities that may be sold only if registered
under the Securities Act, or sold in accordance with an applicable exemption
from registration, such as Rule 144. The officers and directors, who together
will hold 1,030,000 shares of Common Stock (assuming all Units offered herein
are sold). During 1999, 429,400 shares of Common Stock will be eligible for sale
in the public market, if any, subject to compliance with Rule 144 If such
holders cause a large number of shares to be sold in the public market, if any,
such sales or the perception that such sales could occur, could have a material
adverse effect on the market price of the Common Stock and the Company's ability
to raise additional capital.
No Minimum Amount for This Offering. Because there is no minimum amount of
Units required to be sold in the Offering, all the cash received will go
directly to the Company to be used as described in "Use of Proceeds." If only
13,200 or fewer Units are sold, the result would be that all the proceeds will
be used to pay the expenses of the Offering. The sale of fewer than 800,000
Units would materially and adversely effect the Company in that the Company
would be required to significantly limit its operational expenses, by curtailing
significantly or deferring the Company's planned airline sources. See "Use of
Proceeds."
Management's Broad Discretion in Application of Proceeds. The Company
intends to use the proceeds of the Offering to pay the costs of the Offering and
the balance will be added to the Company's working capital where it will be
available for general corporate purposes. As of the date of this Prospectus, the
Company cannot specify with certainty the particular uses for the net proceeds
to be added to its working capital. Accordingly, management of the Company will
have broad discretion as to the application of the net proceeds of the Offering.
See "Use of Proceeds."
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Units, after deduction
of estimated offering expenses (estimated to be approximately $130,000) and
the Company's anticipated use of proceeds is set forth below. There is no
minimum number of Units that must be sold in the Offering, and all funds will be
paid directly to the Company.
In the event all Units offered herein are sold, the Company would receive
$12,695,000 of net proceeds from this offering after deduction of possible fees
paid to qualified broker-dealers and expenses of this offering. The net proceeds
of this offering will be used for: (i) expenditures for deposits and down
payments on aircraft, and equipment and inventory; (ii) development of
maintenance and technical programs designed to comply with federal regulatory
requirements; (iii) Federal Certification expenses (iv) identification, hiring
and training of necessary labor force; and (v) working capital and general
corporate purposes. The amounts and timing of expenditures for each purpose is
subject to the broad discretion of the management and will depend on factors
such as the amount of net proceeds available to the Company and the effects of
competition, many of which are beyond the Company's control. In the event 40% of
the Units offered are sold, the Company anticipates the proceeds would be
sufficient to fund its operations indefinitely.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
1,900,000 1,500,000 1,000,000 500,000
Units Sold Units Sold Units Sold Units Sold
(100%) (75%) (50%) 25%)
Gross Proceeds from $14,250,000 $ 11,250,000 $ 7,500,000 $ 3,750,000
Offering
Less Offering Expenses $ 130,000 $ 130,000 $ 130,000 $ 130,000
Maximum Commissions $ 1,425,000 $ 1,125,000 $ 750,000 $ 375,000
Net Proceeds from Offering $12,695,000 $ 9,995,000 $ 6,620,000 $ 3,245,000
Use of Net Proceeds
Aircraft and Equipment
Aquisition $ 3,500,000 $ 2,600,000 $ 1,900,000 $ 800,000
Maintenance and $ 2,200,000 $ 1,500,000 $ 450,000 $ 200,000
Technical Programs
Certification Expense $ 350,000 $ 350,000 $ 350,000 $ 350,000
Salaries $ 3,753,000 $ 3,046,250 $ 2,400,000 $ 1,700,000
Working Capital $ 2,892,000 $ 2,498,750 $ 1,520,000 $ 195,000
</TABLE>
Until required for operations, the Company's policy is to invest its cash
reserves in bank deposits, certificates of deposit, commercial paper, corporate
notes, U.S. government instruments, and other investment-grade quality
instruments.
The Company will not receive any of the proceeds from the sale of shares of
Common Stock by the Selling Stockholders.
DILUTION
"Dilution" represents the difference between the initial public offering
per share of Common Stock and the pro forma net tangible book value per share of
Common Stock immediately after the completion of this Offering. "Pro forma net
tangible book value" is the amount that results from subtracting the total
liabilities of the Company from its total tangible assets after giving effect to
Common Stock sold in a private placement subsequent to December 31, 1998.
Dilution arises mainly from an arbitrary decision by the Company with respect to
the Offering price per share of Common Stock. In this Offering, the level of
dilution will be increased as a result of the Company's low net tangible book
value prior to this Offering.
The net tangible book value of the Company prior to this Offering based on
the December 31, 1998, financial statements was $179,281 or $.11 per share of
Common Stock (based on 1,681,400 Common Shares outstanding).
If the maximum shares offered herein are sold, the Company will have
3,581,400 shares issued and outstanding upon completion of the Offering. After
giving effect to the sale of the shares of Common Stock offered hereby by the
Company and the receipt and application of the estimated proceeds therefrom, net
of estimated commissions and Offering expenses of the Offering, the post
Offering pro forma net tangible book value of the Company will be $12,874,281 or
$3.59 per share or 48% from the Offering price of $7.50 per share. Net tangible
book value per share would increase to the benefit of present shareholders from
$.11 prior to the Offering to $3.59 after the Offering, or an increase of $3.48
per share attributable to the purchase of the Shares by investors in this
Offering.
The following table illustrates the estimated net tangible book value per
share after the Offering and the dilution to persons purchasing Shares based on
the foregoing Maximum Offering assumption:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1,900.000 Units 1,500,000 Units 1,000,000 Units 500,000 Units
Offering Price of Common 7.50 7.50 7.50 7.50
Stock (per share)
Net tangible book value .11 .11 .11 .11
per share before the
Offering
Increase per share 3.48 3.19 2.52 1.54
attributable to
payments by new
investors
Pro forma net tangible 3.59 3.30 2.63 1.65
book value per share
after the Offering
Dilution per share to new 3.91 4.20 4.87 5.85
investors
</TABLE>
Internally Prepared (Unaudited)
The following table set forth as of December 31, 1998, after giving effect
to the Offering, the number of shares of Common Stock purchased from the
Company, the total consideration paid and the average price per share paid by
existing shareholders and by new investors on an as adjusted basis:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Average
Shares Purchased Total Consideration Price Per
------------------ --------------------
Number Percentage Amount Percentage Shares (1)
---------- ------------ ------------- ------------ -----------
Investors in this Offering ....... 2,000,000 55.84% $15,000,000 98.3% $7.50
Current Stockholders (2) ......... 1,581,400 44.16% 260,050 1.7% $0.144
------------ ----------- ----------- ------------ -----------
Totals ........................... 3,581,400 100% $15,260,050 100% $4.26
</TABLE>
----------------------------
(1) The average price per share is calculated by dividing the total
consideration paid by the total number of shares purchased.
(2) Sales by the Selling Stockholders in this offering would cause the number of
shares held by existing stockholders, to be reduced to 1,581,400, or 44.16% of
the total number of shares of Common Stock to be outstanding after this
offering.
DIVIDEND POLICY
Since inception, the Company has not declared or paid any cash dividends on
its capital stock. The Company currently intends to retain any future earnings
for funding growth and, therefore, does not anticipate paying any cash dividends
in the foreseeable future.
CAPITALIZATION
The following table sets forth (i) the historical capitalization of the
Company as of December 31, 1998, and (ii) the capitalization of the Company, as
adjusted to reflect the issuance and sale of the Common Stock offered hereby at
an assumed offering price of $7.50 per share. This table should be read in
conjunction with the financial statements and related notes appearing elsewhere
herein.
December 31, 1998
As Adjusted
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
1,900,000 1,500,000 1,000,000 500,000
Actual Units Sold Units Sold Units Sold Units Sold
Long-term debt $ 0 $ 0 $ 0 $ 0 $ 0
Stockholder's Equity:
Common Stock, $0.01 par value
50,000,000 shares authorized, $ 15,814 $ 34,814 $ 30,814 $ 25,814 $ 20,814
1,511,400 shares issued and
outstanding;
Additional paid-in capital $13,050,236 $10,354,236 $6,984,236 $3,614,236
$244,236
Retained Earnings ($80,769) ($80,769) ($80,769)
($80,769) ($80,769)
Total Stockholder's equity $179,281 $13,004,281 $10,304,281 $6,929,281 $3,554,281
Total capitalization $179,281 $13,004,281 $10,304,281 $6,929,281 $3,554,281
</TABLE>
-------------------------------------
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements herein regarding the dates on which the Company anticipates
commencing operations. With respect to such dates, the Company's management team
has made certain assumptions regarding, among other things, the successful and
timely completion of the Offering, the approval of its FAA certification, the
availability of adequate funding, the absence of delays in acquiring necessary
equipment, and the availability of airport space available in an appropriate
destination. The Company's ability to commence operations on the dates
anticipated is subject to certain risks, including the risks discussed under
"Risk Factors.". Actual airline activities may vary significantly from the
current plans depending on numerous factors including changes in the costs of
such activities from current estimates, the timing of regulatory submissions,
the status of competitive services and the status of the economy in general.
All of the above estimates are based on the current expectations of the
Company's management team, which may change in the future due to a large number
of potential events, including unanticipated future developments.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
the Financial Statements and the related Notes thereto included elsewhere in
this Prospectus. This Prospectus contains forward-looking statements which
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in "Risk Factors" and in "Special Note Regarding Forward-Looking
Statements."
Overview
The Company is a development stage, airline company. The Company is
considered to be in the development stage because it is devoting substantially
all of its efforts to establishing its business and because its planned
principal operations have not commenced.
Since its inception in February of 1997, the Company's efforts have
principally been devoted to organization and development and raising capital.
The Company has not received any revenues from flight services, and does not
expect any of its flights to be commercially available until 800,000 Units are
sold. From inception through December 31, 1998, the Company has sustained
cumulative losses of $80,769. These losses have resulted primarily from
expenditures incurred in connection with general and administrative activities,
organization and development, trademark registration and offering costs.
The Company expects to continue to incur substantial organizational costs
in the future resulting from the purchase of aircraft and fuel, agreements with
baggage handlers and airports as well as aircraft maintenance, and marketing
expenses. Accordingly, the Company expects to incur increasing operating losses
for the foreseeable future. There can be no assurance that the Company will ever
achieve profitable operations.
To date, the Company has not marketed, or generated revenues from the
commercialization of, any service. The Company's current planned flights are not
expected to be commercially available until the successful completion of this
Offering.
The Company has only a limited operating history upon which an evaluation
of the Company and its prospects can be based. The risks, expenses and
difficulties encountered by companies at an early stage of development must be
considered when evaluating the Company's prospects. To address these risks, the
Company must, among other things, successfully develop and commercialize its
services, secure all necessary proprietary rights, respond to competitive
developments and continued government regulation, and continue to attract,
retain and motivate qualified persons. There can be no assurance that the
Company will be successful in addressing these risks. See "Risk Factors."
The operating expenses of the Company will depend on several factors,
including the level of aircraft maintenance and repair expenses. Development of
the Company's planned flights will depend upon economic factors, which the
Company cannot predict. Management may in some cases be able to control the
timing of development expenses in part by controlling growth. As a result of
these factors, the Company believes that period-to-period comparisons in the
future are not necessarily meaningful and should not be relied upon as an
indication of future performance. Due to all of the foregoing factors, it is
possible that the Company's operating results will be below the expectations of
market analysts, if any, and investors. In such event, the prevailing market
price, if any, of the Common Stock would likely be materially adversely
affected. See "Risk Factors."
Results of Operations
The Company has incurred negative cash flows from operations since its
inception, and has expended and expects to continue to expend in the future,
substantial funds to complete its planned service development efforts,
purchasing aircraft and fuel. The Company's future capital requirements and the
adequacy of available funds will depend on numerous factors, including the
successful commercialization of its planned flights, obtaining sufficient
funding to purchase aircraft and fuel, hiring maintenance personnel, keeping
pace with government regulation, obtaining adequate insurance and the
development of strategic alliances with baggage handlers, and airports. The
Company believes that its existing capital resources would be sufficient to meet
operating requirements at existing operating levels through December, 1999.
However, the Company requires the proceeds of this Offering and interest thereon
to meet its planned operating requirements (which will significantly increase
when compared to historical operating levels) through that date. In the event
the Company's plans change or its assumptions change or prove to be inaccurate
or the proceeds of the Offering prove to be insufficient to fund operations (due
to unanticipated expenses, delays, problems or otherwise), the Company could be
required to seek additional financing sooner than currently anticipated. In
addition, the Company will be required to obtain additional funds in any event
through equity or debt financing, strategic alliances with corporate partners
and others, or through other sources in order to bring its services through
regulatory approval to commercialization. The terms and prices of any equity or
debt financing may be significantly more favorable than those of the Units sold
in this offering. The Company does not have any material committed sources of
additional financing, and there can be no assurance that additional funding, if
necessary, will be available on acceptable terms, if at all. If adequate funds
are not available, the Company may be required to delay, scale-back, or
eliminate certain aspects of its operations. If adequate funds are not
available, the Company's business, financial condition, and results of
operations will be materially and adversely affected.
BUSINESS
History
The Company was organized as a Delaware corporation in February 1997. To
date, all activities have been organizational and developmental in nature. The
Company was formed to provide non-stop air service between Melbourne
International Airport and certain key high yield destinations. Initial service
is planned between Melbourne International Airport and Baltimore International
Airport, providing four peak departures and arrivals from each city daily. By
carefully selecting its markets, offering high levels of customer service,
controlling growth, and efficiently using its resources, the Company believes it
can profitably offer airline services from Melbourne, Florida.
Industry Conditions and Competition
The airline industry has experienced unprecedented growth and profits over
the last few years. Two basic reasons for this growth and profits are fuel costs
and an upturn in the economy. The cost of fuel greatly affects operating costs.
Demand for air service increases in a healthy economy.
The Company's business plan primarily focuses on the business passenger and
should not be adversely affected by seasonal leisure travelers.
According to The Boeing Company, Air travel continued to grow at a rate
above long-term trend. Airlines continue to accommodate robust traffic demand
with high load factors. This trend is particularly dramatic in Europe and the
United States, where airlines have sustained load factors at unprecedented
levels. The airlines ability to integrate scheduling, pricing, distribution, and
yield management strategies has allowed them to fill more off-peak seats. This
contributed significantly to the fifth consecutive year of record profits by the
worlds airlines, particularly those in Europe and the United States. In the
United States, airlines again posted record profits in 1997. This performance
benefited from moderating fuel prices and a two-month lapse of the 10% passenger
ticket tax at the start of the year. Air travel growth is driven primarily by
economic growth, and the long-term economic outlook for the world is healthy.
Worldwide air travel is projected to average 5% per year over the next 10 years.
The Airline Deregulation Act of 1978 (the "Deregulation Act") made the
airline industry highly competitive. It substantially reduced government
regulation of domestic routes and fares, and increased the airlines ability to
compete with respect to fares, destinations, and flight frequency's.
Most major airlines today have complex hub systems, with several different
type and sizes of aircraft and partner with commuter airlines to feed passengers
to their hubs and code share ticketing to the final destinations. The major
airlines smaller jet aircraft usually serve secondary cities with commuter
aircraft (usually nineteen passenger) serve the smaller cities and towns.
Flights between the hub and small towns, small cities and secondary cities are
usually operated on higher frequencies to coordinate service with connecting
flights to and from the hub to other destinations and hubs. This system allows
airlines to serve more destinations, (some of which would not otherwise have air
service) capture a greater share of the passenger market, and produce greater
revenues. Most major hub cities are dominated by a single large carrier, such as
Delta Air Lines in Atlanta.
Hub systems are complex and inherently require flights that are not
profitable to meet scheduling requirements. These flights may be scheduled for
inconvenient times, or use an aircraft which has a greater capacity than
required for the flight. These flights increase operating costs which must be
offset by the flights with high load factors and profits. In an attempt to
increase load factors on these flights, airlines operating hub systems have
contrived restrictive, conditional and complicated fares. Low fare tickets
encourage airline use for flights with low load factors. Additionally, having
multiple classes of service, such as First Class, Business Class, and Coach
creates a complex reservations system that can be very frustrating to
passengers.
Airlines that do not operate a hub system such as Southwest Airlines have
various operating strategies, most operate a "direct flight" system with usually
one class of minimal service, no frills, and aircraft configured with high
density seating. These airlines usually avoid highly serviced routes and
generally choose routes that fill a niche market.
To operate a profitable low fare airline, high load factors and low
operating costs must be maintained. Marketing substantially lower fares, direct
and consistent service can be very effective in maintaining high load factors.
Most low fare carriers, large and small, are very cost effective by focusing on
managing the airline, and outsourcing or contracting a majority of operations
and services.
Melbourne International Airport is presently serviced by two airlines,
Delta Air Lines, a major air carrier that operates a hub system and Spirit
Airlines, a small low fare air carrier. Delta Air Lines provides several daily
flights to Atlanta their major hub and flights from Atlanta to the Company's
planned destinations. Spirit provides two Daily non-stop flights to New York's
LaGuardia airport. Initially the Company does not plan to provide service to the
New York LaGuardia Airport, but does plan to provide non-stop service to one of
New York's key airports. There can be no assurance Delta, Spirit, or other
airlines will not provide additional service to Melbourne International Airport.
Company Strategy
The Company's strategy is to focus on the business traveler who usually
does not have the luxury to book flights well in advance or to comply with the
highly restrictive conditions of low priced tickets. Because of this, business
travelers are usually forced to purchase a high priced full fare coach ticket
which offers a low level of service, or an extremely high priced first class
ticket that offers excellent service. Some airlines on some flights offer a
limited number of "Business Class" seats that provide more comfortable seating
and a higher level of service than coach. This is a desirable choice for the
business traveler, but often unavailable.
The Company believes by developing a very low cost highly efficient airline
it will be able to offer its passengers excellent service at a reasonable price,
while producing substantial profits. The Company plans to have a "No Games"
relationship with its customers offering full fare "one price per destination"
tickets that will approximate the advanced restricted "coach" fares of major
airlines. Management wants Cardinal Airlines to be recognized as a company
dedicated to safety, that provides a high level of service and has a "No Games"
relationship with it's customers.
Management believes that by offering the highest levels of safety and
customer service, as well as non-stop flights to key destinations load factors
would be maximized. The Company will offer only one class of service which will
be equivalent to First Class service offered by other airlines. The Company will
configure its aircraft with large "First class seats" and specialized galleys to
facilitate serving excellent meals with complimentary champagne and wine. The
Company will offer a full fare ticket (one price per destination) that will
approximate the advanced restricted "coach" fares of major airlines.
Management recognizes the value of its employees. The Company will place
special importance on the selection of new employees. Management believes, by
hiring qualified employees, with a structured employment program that allows for
career advancement and job security; and providing proper training, necessary
resources, and a safe pleasant work environment, that it will be able to develop
and maintain a highly productive workforce. The Company intends to develop a
"cafeteria style" employee benefits program, that would add significant valuable
benefits to the employees, and meet individual needs without hindering the
Company's ability to maintain profit levels. This may include programs such as
excellent employee child care, insurance, retirement benefits, stock options,
and company sponsored clubs and organizations. The Company believes such
employee programs will promote loyalty and productivity.
The Company believes that a simplified corporate structure with limited
tier levels will promote excellent communications and interaction throughout the
entire workforce, allowing the Company to benefit from its employees'
experience.
The Company has identified a mature, fully integrated, automated, "turn
key" airline software system which provides for complete airline capabilities
and functions. The identified system is Year 2000 compliant. This is a unified
system that operates on readily available "generic" IBM compatible computers, is
designed to provide for growth and expansion, and is simple to learn and
operate. This system covers the entire spectrum of airline operations including
customer services, flight operations, ground operations, maintenance, inventory
control, and communications. As an example, it provides for automated
reservations and ticketing, with connectivity to Travel Agents and remote
operating sites. The Company believes that its ability to begin operations using
a simple, reliable, unified system will provide significant cost savings and a
competitive edge over other airlines using more complicated systems which have
evolved over a period of years. The Company will "outsource" services where it
is more cost effective or productive.
Geographic Market
The Company, based in Melbourne Florida, will initially provide service to
large key markets in the Eastern United States. Service between these prominent
markets and central Florida historically provides some of the highest passenger
and fare yields. Management believes that Melbourne International Airport is
strategically located to capitalize on the significant business markets of
Central Florida, with an additional advantage of the close proximity to many
notable tourist attractions, such as Kennedy Space Center, Port Canaveral,
Beaches, and major Orlando Theme Parks.
Fares, Route System, and Scheduling
The Company will offer a simple full fare, one class open ticket without
restrictive conditions (such as advance booking and Saturday night stay over)
and a single price per destination. Initially, all flights will be non-stop. The
Company plans to commence flight operations with non-stop service between
Melbourne International Airport and Baltimore Washington International Airport,
then add service to the New York market. The Company has begun negotiations with
Baltimore's Washington International Airport and believes that gate and
maintenance areas can be leased on favorable terms. One of the most common
mistakes by new carriers is uncontrolled growth. Maintaining a steady,
controlled growth, the Company would add additional service to other prominent
markets throughout the Eastern United States. Flights will be scheduled to
provide significant and convenient service to these markets.
Marketing
The Company plans to add additional safety equipment to its aircraft which
exceeds the mandated requirements of the FAA, such as fire and smoke detection
in all cargo and baggage compartments, and equipment designed for the flight
crew to deal with smoke in the aircraft's cockpit. Flight crews will be trained
in the proper use of certain emergency medical equipment that will be on all
Company aircraft. Management believes the Company's planned configuration of the
aircraft with fewer, more comfortable seats, is also inherently safer.
The Company plans to maximize the effectiveness of its marketing by:
concentrating on passenger potential areas surrounding destinations served by
the Company. The Company will use local cost effective media such as newspaper
advertisements, radio advertisements during the morning and afternoon commuter
rush hours, and billboards on prominent highways in Melbourne, Florida.
Additionally, by direct contact and promotions to area businesses, clubs, and
governmental agencies, the Company will nurture a "preferred airline
relationship."
Management believes, visibility and recognition are extremely important in
marketing, especially for a new airline. The Company believes by painting its
aircraft a vivid Cardinal red color they will be highly visible parked at the
gate, taxiing, and in flight. The Company's bright red aircraft will actually
act as a logo, and be identified even from a distance.
The ease of making reservations and ticketing is a crucial part of
capturing the largest possible market share. The Company believes an efficient
and reliable automated reservations system (such as the software selected by the
Company), with connectivity to travel agents and the Internet will increase
initial and repeat use of the Company's airline services. All reservations,
counter, and gate positions will be adequately staffed with competent, friendly,
and courteous personnel, programs will be developed with travel agents that
provides incentives to book customers with Cardinal Airlines. Management
believes customers should have as many viable means of booking a flight as
possible such as a National toll free number, the Internet and travel agents.
The Company will attempt to make purchasing a ticket as convenient and customer
friendly as possible as this is an important part of the travel experience.
Complete customer satisfaction will be a company objective. The Company believes
this can equate to the most effective advertising, "word of mouth."
Aircraft Acquisition
Management believes, to be cost effective, the Company should only operate
one type of aircraft. The Company believes that operating one type of aircraft
will significantly lower maintenance and crew training costs. The Company has
identified sources, general availability, and average cost to lease,
lease/purchase MD-80 series aircraft. The Company believes that 2 MD-80 series
aircraft can be located, acquired, and configured to the Company's
specifications to commence flight operations. There can be no assurance that
aircraft will be available on terms that meet the Company's initial or future
operational requirements, this could have an adverse material effect on
operations.
Maintenance and Repairs
The Company plans to operate MD-80 series aircraft which are modern
commercial airliners used extensively in the airline industry, with more than
1100 currently in service.
The Company will have maintenance operations managed and staffed by
seasoned airline personnel that will perform routine daily and turn-around
maintenance. Overhauls and heavy maintenance that require extensive maintenance
facilities will be outsourced to reputable, FAA approved companies certified to
perform maintenance on MD-80 series aircraft and engines. The Company will
maintain a presence of Quality Assurance personnel on site to insure all work
performed meets the requirements of Cardinal Airline's Maintenance Program. The
Company has not made any agreements with maintenance organizations that are
certified to perform maintenance on MD-80 series aircraft and engines.
The Company plans to maintain an inventory of spare parts to support its
maintenance operations and will also rely on FAA approved vendors and
manufactures for additional parts requirements. Management believes replacement
parts are available in sufficient quantities. There can be no assurance that
these industry conditions will continue.
Fuel
Aircraft fuel is expected to be the Company's largest operating expense.
Jet fuel costs and availability, being subject to world economic and political
conditions, cannot be predicted with any degree of certainty. The Company will
attempt to enter into agreements with fuel suppliers to stabilize fuel costs. An
increase in fuel prices or a diminished supply could have a material adverse
effect on the Company's operations.
Insurance
The Company plans to maintain insurance policies of type customary in the
industry in amounts adequate to meet DOT requirements and to protect the Company
against loss of property and life. The policies will provide coverage for public
liability, passenger liability, baggage and cargo liability, property damage,
including coverage for loss and damage to its flight equipment, and worker's
compensation insurance. There is no assurance, however, that the amount of
insurance carried by the Company will be sufficient to protect it from material
loss.
Government Regulations
Under United State Federal Statute, any one who wants to provide air
transportation service as an air carrier must first obtain two separate
authorizations from the Department of Transportation. The "safety" authority, in
the form of an Air Carrier Certificate and Operations Specifications from the
Federal Aviation Administration (FAA). The "economic" authority, from the Office
of the Secretary of Transportation (the Department), in the form of a
certificate for interstate passenger and/or cargo authority issued under the
Federal Statute. A certificate authorizing interstate air transportation may be
issued after a finding by the department that the applicant is "fit", willing,
and able" to perform the proposed service. (Certificate of Public Convenience
and Necessity).
"Air Transportation," as defined by Federal Statute, means the
transportation of passengers or property by aircraft as a common carrier for
compensation, or the transportation of mail by aircraft, in interstate air
transportation.
"Interstate air transportation," as defined by Federal Statute, means
operations between place in a state, territory, or possession of the United
States and another state, territory, or possession of the United States. The
Company plans to only provide air transportation services within the United
States, its territories or possessions.
Federal Statute defines a "citizen of the United States" as: (1) an
individual who is a citizen of the United States; (2) a partnership each of
whose partners is an individual who is a citizen of the United States; or (3) a
corporation or association organized under the laws of the United States or a
state, the District of Columbia, or a territory or possession of the United
States, of which the president and at least two-thirds of the board of directors
and other managing officers are citizens of the United States, and in which at
least 75 percent of the voting interest is owned or controlled by persons that
are citizens of the United States. The Company's President and Board of
Directors are U.S. citizens and management believes that a majority of the
public investors will be U.S. citizens.
The Company will be required to provide information to the Department to
assess the financial position and its understanding of the costs of starting its
operations. Prior to being granted an effective certificate, the Company must
provide independent, third-party verification, that it has available to it,
resources sufficient to cover all of its pre-operating costs. Plus, the
operating expenses that are reasonably projected for three months of "normal"
operations. In calculating available resources, projected revenues cannot be
included.
Once the Company has been found fit initially, it becomes subject to the
requirements of Federal Statute which require that the Company must remain fit
in order to continue to hold its authority to provide air transportation
services. The Department may require the Company to provide a "progress report"
twelve (12) months after it commences operations. This report would include
information on the Company's then current operations, a summary of how its
operations have changed during the year, a discussion of any changes it
anticipates during its second year of operations, its second year current
financial statements, and information on whether the Company had undergone any
changes in ownership or management.
The Company will submit application to the proper authorities for the
necessary certification to operate a domestic airline. Management believes the
Company will be able to obtain and maintain the proper certifications. If the
Company is delayed or unable to meet these requirements it would have an adverse
affect on the Company's business plan.
Miscellaneous
All air carriers are also subject to certain provisions of the
Communications Act of 1934, as amended, because of their extensive use of radio
and other communication facilities, and are required to obtain an aeronautical
radio license from the Federal Communications Commission ("FCC"). To the extent
the Company is subject to FCC requirements, it will take all necessary steps to
comply with those requirements.
The Company operations may become subject to additional federal
requirements in the future under certain circumstances. For example, The
Company's labor relations are covered under Title II of the Railway Labor Act of
1926, as amended, and are subject to the jurisdiction of the National Mediation
Board. During a period of past fuel scarcity, air carrier access to jet fuel was
subject to allocation regulations promulgated by the Department of Energy. The
Company is also subject to state and local laws and regulations at locations
where it will operate and the regulations of various local authorities that
operate airports it serves.
Properties
The Company leases approximately 2,200 square feet of office space at its
principal address for general corporate and operational use at a current monthly
rent of approximately $1,250.00 under a lease which expires July of 1999. The
Company is presently negotiating leases for counter, office, gate, maintenance
and hangar facilities at Melbourne and Baltimore International Airports. Some
facilities may be subleased from other airlines. The Company believes that
sufficient and adequate facilities exist at most airports currently under
consideration which can be leased on favorable terms.
Service Marks
The Company has filed "intent to use" service mark applications for
"Cardair," "Dedicated to Safety and Service" and "The Little Airline with the
Big Seats." There is no assurance that these service marks will be approved by
the U.S. Patent office.
Legal Proceedings
There are no legal proceedings pending in which the Company is a party or
of which any of its property is the subject of any legal proceeding.
Further Information
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act with
respect to the Common Stock offered hereby. This Prospectus, which constitutes a
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement or the exhibits and schedules thereto,
certain portions having been omitted as permitted by the rules and regulations
of the Commission. For further information with respect to the Company and the
Common Stock offered hereby reference is made to the Registration Statement,
including the exhibits and financial statement schedules thereto, which may be
inspected without charge at the public reference facility maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549. Copies
of such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at the prescribed
rates. With respect to each such document filed with the Commission as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the matter involved, and each such statement shall
be deemed qualified in its entirety by such reference.
MANAGEMENT
The following table contains the name, age and position with the Company of
each executive officer and director of the Company as of the date of this
Prospectus. Their respective backgrounds are described following the table.
Age Position
Lawrence A. Watson 51 Chairman of the Board, President, CEO
H. Lawrence Mason 45 Chief Financial Officer, Vice-President Finance,
Secretary, Treasurer
Vincent T. Paris 50 Vice-President Logistics Support, Director
Ted A. Walker 54 Vice-President Properties and Facilities, Director
Tom Vandervelde 63 Vice-President Safety & Regulatory Compliance
David A. Linsley 61 Vice-President Flight Operations
John J. Pertschi 52 Vice-President of Maintenance
Ronald J. Newbold 37 Vice-President Investor Relations
Karen Glover 35 Director of In-Flight Services
John Ryff 37 Director of Stores
Lawrence A. Watson has been Chairman of the Board and Chief Executive
Officer of the Company since its inception in February 1997, and President since
March of 1997. He is a multi-engine, instrument rated commercial pilot with
extensive experience in the aviation industry. Mr. Watson in 1990 was one of the
Founders of Allied Aviation Inc., a commercial aircraft parts company, where as
Vice President of Corporate Development he organized the management team,
directed two private placements, and researched and developed new business. He
has been a member of Allied's Board of Directors since 1990. Mr. Watson was a
F.A.A. Air Traffic Controller at the Miami Air Route Control Center from 1970 to
1976.
Dr. H. Lawrence Mason has been Secretary Treasurer, Director and Chief
Financial Officer of the Company since March of 1997. Dr. Mason has held a wide
variety of research, engineering, administrative, and executive level positions
in various corporate settings. He was Vice President of Finance from 1990 to
1996 for Allied Aviation, Inc. and currently holds a position on the Board of
Directors. Dr. Mason was President and C.E.O. of Florida Design Build Systems,
Inc. from 1985 to 1992. He was President and C.E.O. of F.D.C.S.I. from 1984 to
1989. Dr. Mason attended the University of Kentucky, the University of South
Florida, University of Louisville Graduate School and School of
Medicine/Dentistry.
Vincent T. Paris has been a member of the Company's Board of Directors
since March of 1997. Mr. Paris has been involved in the development as a
consultant since March of 1998 and will become the Vice President of Logistic
Support upon the completion of this offering. Mr. Paris began his aviation
career in 1964 with the United States Navy. Mr. Paris held numerous managerial
and executive positions in the throughout his career. Mr. Paris was employed by
Allied Aviation, Inc. from 1992 to 1998 he was the Vice President of Operations
from 1994 to 1998, and was also a member of the Board of Directors. From 1990 to
1992 he served as Director of Quality Assurance for Pan American Airways Surplus
Parts Subsidiary "Allmat International." Mr. Paris was involved with several
start up established operations in the past. He has a Bachelor of Science degree
in Technology from Florida International University.
Ted A. Walker has been a member of the Company's Board of Directors since
March of 1997 and will become the Vice-President of Properties and Facilities
upon the completion of this offering. Mr. Walker graduated from South Florida
Junior College with an Associate of Arts degree in Business in 1968. He was a
Staff Sergeant in the United States Army and after leaving the Army became an
FAA Air Traffic Controller from 1970 to 1981. Since 1981, Mr. Walker has been
President and C.E.O. of Add Fire Inc., which he founded in that year. He is also
very active in many trade organizations and Community projects.
Thomas L. Vandervelde is currently a consultant for the Company, assisting
the Company to obtain the 121 Air Carrier Certificate from the Federal Aviation
Administration (F.A.A.) and the Economic Authority from the Secretary of
Transportation (D.O.T.). After the Company obtains its Certifications Mr.
Vandervelde will become the Vice President of Regulatory Compliance & Safety.
Mr. Vandervelde was with the Federal Aviation Administration for 35 years, and
held various positions in the Flight Standards District Offices. Since his
retirement in 1991 from the Federal Aviation Administration, Mr. Vandervelde has
held various top level management positions with Tech.Ops. International,
Michael Goldfarb and Associates, and InterFlight Services. Mr. Vandervelde has
assisted in the Part 121 Certification process of several start-up airlines. He
has developed interactive database maintenance programs for commercial aircraft,
and has conducted numerous safety compliance audits and provided recommendations
to several large commercial aviation operators.
David A. Linsley will become the Vice-President of Flight Operations after
the completion of this offering. Mr. Linsley has over 40 years of flying
experience, including a distinguished career as military pilot in the United
States Marine Corp. from 1958 to 1967 where he flew more than 120 combat
missions over Vietnam. His career as a Commercial Airline Pilot began in 1967
with United Airlines. He retired as a Senior Captain in 1997 after 30 years of
service. Mr. Linsley has over 18,000 hours of accident and incident free flying
with over 5300 hours as Pilot in Command. Mr. Linsley Graduated from San Diego
State University with a B.A. in English. Mr. Linsley is the Founder and
President of the Pegasus Fear of Flying Foundation. He is also Editor and
publisher of Pegasus Magazine, a travel and entertainment magazine for airline
employees worldwide.
John J. Pertschi will become the Vice-President of Maintenance upon the
completion of this offering. Mr. Pertschi has more than 35 years of experience
in the aviation maintenance business. Mr. Pertschi was a jet mechanic in the
United States Air Force from 1963 to 1967. Mr. Pertschi has held several key
managerial positions with a major airline, start up airlines and maintenance
facilities. From 1968 to 1983 Mr. Pertschi worked for Continental Airlines and
was the Line Maintenance Supervisor from 1981 to 1983. Mr. Pertschi left
Continental to take a position as Manager of Technical Services for a new start
up airline; Frontier Horizon, Inc. Mr. Pertschi was also a manager of aircraft
maintenance for Evergreen Air Center, Inc., Director of Maintenance for Jetborne
Aircraft Leasing, Inc. from 1986 to 1989, and Director of Maintenance for
Carnival Airlines from 1989 to 1992. From 1993 to 1999, he was Assistant
Director of Maintenance and Production Control Operations Manager for Commodore
Aviation.
Ronald J. Newbold has worked as a consultant for the Company since October
1998, and was appointed Vice President of Investor Relations on December 1st
1998. Mr. Newbold has an extensive background in sales, marketing and business
management and has held numerous management positions. He has developed programs
for streamlining operational procedures. Mr. Newbold has designed several
database and network systems to track aircraft, inventory's, as well as sales
and marketing of products. He has also developed markets and accounts for new
and existing product lines. Mr. Newbold graduated from Wichita State University
with a Bachelor of Business Administration in Marketing. From September 1992
through March 1995, Mr. Newbold was employed at Dallas Aerospace engaging in
commercial aircraft parts and engine sales. Following that, Mr. Newbold worked
for thirteen months at AmTec as a Sales Manager. From April 1996 until April
1997, he was engaged in the same position for Kellstrom, Inc. He then worked for
Allied Aviation, Inc. as Marketing Manger for commercial aircraft parts.
Karen D. Glover will become the Director of In-Flight Services after the
effective date of this offering. Ms. Glover began her career as a Flight
Attendant with Ansett Australian Airlines in 1985 and was employed there until
1991. From 1991 to 1993 she was employed by Eva Airways as an Instructor. She is
qualified as a flight attendant on 7 aircraft types. While with Ansett, she was
a member of the Cabin Safety Committee. Ms Glover has held several positions in
all aspects of In-Flight Services, from assisting in developing an In-Flight
Department, Crew Scheduling, Training, Safety and Standards Compliance. She has
developed, written, and revised Flight Attendant Manuals, Training manuals, in
addition to developing Standards Programs.
John J. Ryff has worked as a consultant for the Company and will become
Director of Materiel upon the completion of this offering. Mr. Ryff served
Honorable for 13 years in the United States Marine Corps. and achieved the rank
of Sergeant. The last position he held was Maintenance Control Chief where his
duty was overseeing the units Material Support and Supply Division. Upon leaving
the Marine Corps in 1993. In December 1993, Mr. Ryff was employed by Allied
Aviation, a supplier of commercial aircraft parts. Mr. Ryff was initially
employed as the Inventory Control Manager, then appointed to the company's sales
department and later promoted to Sales Manager until June of 1998.
Summary of Cash and Certain Other Compensation
Annual Compensation Long-Term
Compensation Awards
Restricted Securities
Deferred Cash All Other Stock Underlying
Name Year Salary Salary Compensation Awards Options/SARs
Lawrence A Watson 1997 --- --- ---- ---- ----
1998 --- --- ---- ---- ----
H. Lawrence Mason 1997 --- --- ---- ---- ----
1998 --- --- ---- ---- ----
David A. Linsley 1998 --- --- ---- ---- ----
Tom Vandervelde 1998 --- --- ---- ---- ----
Vincent T. Paris 1997 --- --- ---- ---- ----
1998 --- $27,600 ---- ---- ----
Ted A. Walker 1997 --- --- ---- ---- ----
1998 --- --- ---- ---- ----
Ronald J. Newbold 1998 --- $8,000 ---- ---- ----
John J. Ryff 1998 --- $11,600 ---- ---- ----
Internally Prepared (Unaudited)
On July 1, 1998, the Company entered into a five-year employment agreement
with Mr. Watson, providing for an annual salary of $110,000 per year to be
increased to $130,000 per year "upon the Company reaching break-even load factor
and maintaining that level for 30 consecutive days." The term of the employment
agreement will commence on the earlier of the date agreed to by employee and the
Company or the successful completion of this Offering. The agreement may be
terminated for cause upon Mr. Watson's disability for nine consecutive months or
nine months out of a 12-month period. The agreement may be terminated without
cause on 60 days' notice upon one-half of Mr. Watson's base salary for the
remaining term of the contract. Mr. Watson's employment agreement is renewable
annually for five-year terms unless either party gives written notice of
termination at least 60 days before the then current term.
On July 1, 1998, the Company entered into a three-year employment agreement
with Mr. Mason, providing for an annual salary of $100,000 per year to be
increased to $110,000 per year "upon the Company reaching break-even load factor
and maintaining that level for 30 consecutive days." The term of the employment
agreement will commence on the earlier of the date agreed to by employee and the
Company or the successful completion of this Offering. The agreement may be
terminated for cause upon Mr. Mason's disability for nine consecutive months or
nine months out of a 12-month period. The agreement may be terminated without
cause on 60 days' notice. Upon such termination, Mr. Mason will receive one-half
of his base salary for the remaining term of the contract. Mr. Mason's
employment agreement is renewable annually for three-year terms unless either
party gives written notice of termination at least 60 days before the then
current term.
On July 1, 1998, the Company entered into a three-year employment agreement
with Mr. Paris, providing for an annual salary of $90,000 per year to be
increased to $100,000 per year "upon the Company reaching break-even load factor
and maintaining that level for 30 consecutive days." The term of the employment
agreement will commence on the earlier of the date agreed to by employee and the
Company or the successful completion of this Offering. The agreement may be
terminated for cause upon Mr. Paris's disability for nine consecutive months or
nine months out of a 12-month period. The agreement may be terminated without
cause on 60 days' notice. Upon such termination, Mr. Paris will receive one-half
of his base salary for the remaining term of the contract. Mr. Paris's
employment agreement is renewable annually for three-year terms unless either
party gives written notice of termination at least 60 days before the then
current term.
On July 1, 1998, the Company entered into a three-year employment agreement
with Mr. Walker, providing for an annual salary of $90,000 per year to be
increased to $100,000 per year "upon the Company reaching break-even load factor
and maintaining that level for 30 consecutive days." The term of the employment
agreement will commence on the earlier of the date agreed to by employee and the
Company or the successful completion of this Offering. The agreement may be
terminated for cause upon Mr. Walker's disability for nine consecutive months or
nine months out of a 12-month period. The agreement may be terminated without
cause on 60 days' notice. Upon such termination, Mr. Walker will receive
one-half of his base salary for the remaining term of the contract. Mr. Walker's
employment agreement is renewable annually for three-year terms unless either
party gives written notice of termination at least 60 days before the then
current term.
On November 5, 1998 the Company entered into a one-year employment
agreement with Mr. Vandervelde, providing for an annual salary of $90,000 per
year to be increased to $100,000 per year "upon the Company reaching break-even
load factor and maintaining that level for 30 consecutive days." The term of the
employment agreement will commence on the date the Company receives it's 121 Air
Carrier certificate from the FAA and Economic authority from the office of the
Secretary of Transportation. The agreement may be terminated for cause upon Mr.
Vandervelde's disability for nine consecutive months or nine months out of a
12-month period. The agreement may be terminated without cause on 60 days'
notice. Upon such termination, Mr. Vandervelde will receive one-half of his base
salary for the remaining term of the contract. Mr. Vandervelde's employment
agreement is renewable annually for one-year terms unless either party gives
written notice of termination at least 60 days before the then current term.
On November 5, 1998, the Company entered into a one-year employment
agreement with Mr. Linsley, providing for an annual salary of $90,000 per year
to be increased to $100,000 per year "upon the Company reaching break-even load
factor and maintaining that level for 30 consecutive days." The term of the
employment agreement will commence on the earlier of the date agreed to by
employee and the Company or the successful completion of this Offering. The
agreement may be terminated for cause upon Mr. Linsley's disability for nine
consecutive months or nine months out of a 12-month period. The agreement may be
terminated without cause on 60 days' notice. Upon such termination, Mr. Linsley
will receive one-half of his base salary for the remaining term of the contract.
Mr. Linsley's employment agreement is renewable annually for one-year terms
unless either party gives written notice of termination at least 60 days before
the then current term.
On December 10, 1998, the Company entered into a one-year employment
agreement with Mr. Pertschi, providing for an annual salary of $90,000 per year
to be increased to $100,000 per year "upon the Company reaching break-even load
factor and maintaining that level for 30 consecutive days." The term of the
employment agreement will commence on the earlier of the date agreed to by
employee and the Company or the successful completion of this Offering. The
agreement may be terminated for cause upon Mr. Pertschi's disability for nine
consecutive months or nine months out of a 12-month period. The agreement may be
terminated without cause on 60 days' notice. Upon such termination, Mr. Pertschi
will receive one-half of his base salary for the remaining term of the contract.
Mr. Pertschi's employment agreement is renewable annually for one-year terms
unless either party gives written notice of termination at least 60 days before
the then current term.
On October 2, 1998, the Company entered into a one-year employment
agreement with Mr. Newbold, providing for an annual salary of $90,000 per year
to be increased to $100,000 per year "upon the Company reaching break-even load
factor and maintaining that level for 30 consecutive days." The term of the
employment agreement will commence on the earlier of the date agreed to by
employee and the Company or the successful completion of this Offering. The
agreement may be terminated for cause upon Mr. Newbold's disability for nine
consecutive months or nine months out of a 12-month period. The agreement may be
terminated without cause on 60 days' notice. Upon such termination, Mr. Newbold
will receive one-half of his base salary for the remaining term of the contract.
Mr. Newbold's employment agreement is renewable annually for one-year terms
unless either party gives written notice of termination at least 60 days before
the then current term.
On December 10, 1998, the Company entered into a one-year employment
agreement with Ms. Glover, providing for an annual salary of $70,000 per year to
be increased to $80,000 per year "upon the Company reaching break-even load
factor and maintaining that level for 30 consecutive days." The term of the
employment agreement will commence on the earlier of the date agreed to by
employee and the Company or the successful completion of this Offering. The
agreement may be terminated for cause upon Ms. Glover's disability for nine
consecutive months or nine months out of a 12-month period. The agreement may be
terminated without cause on 60 days' notice. Upon such termination, Ms. Glover
will receive one-half of her base salary for the remaining term of the contract.
Ms. Glover's employment agreement is renewable annually for one-year terms
unless either party gives written notice of termination at least 60 days before
the then current term.
On October 2, 1998, the Company entered into a one-year employment
agreement with Mr. Ryff, providing for an annual salary of $70,000 per year to
be increased to $80,000 per year "upon the Company reaching break-even load
factor and maintaining that level for 30 consecutive days." The term of the
employment agreement will commence on the earlier of the date agreed to by
employee and the Company or the successful completion of this Offering. The
agreement may be terminated for cause upon Mr. Ryff's disability for nine
consecutive months or nine months out of a 12-month period. The agreement may be
terminated without cause on 60 days' notice. Upon such termination, Mr. Ryff
will receive one-half of his base salary for the remaining term of the contract.
Mr. Ryff's employment agreement is renewable annually for five-year terms unless
either party gives written notice of termination at least 60 days before the
then current term.
CERTAIN TRANSACTIONS
The following is a summary of certain transactions among the Company and
related persons.
On March 1, 1997, the Company issued a total of 890,000 shares to its
directors for $.01 per share (230,000 shares were purchased by Mr. Watson;
220,000 shares were purchased by Mr. Mason; 220,000 shares were purchased by Mr.
Paris; and 220,00 shares were purchased by TAWCOT, a trust controlled by Mr.
Walker).
On July 1, 1997, the Company issued a total of 240,00 shares to its
directors for $.50 per share (60,000 shares each were purchased by Mr. Watson,
Mr. Mason, Mr. Paris and the TAWCOT trust, a trust controlled by Mr. Walker).
The purchase price was payable in cash or by the execution of a promissory note
bearing interest at 8% payable in full on or before June 30, 2003. In connection
with these purchases, Mr. Watson executed a promissory note in the original
pre-paid amount of $17,123.00; Mr. Walker executed a promissory note for
$27,971.00; Mr. Paris for $26,183.00; and Mr. Mason executed a promissory note
for $25,394.00.
On October 16, 1998, the Company sold each to Mr. Watson, Mr. Mason, Mr.
Walker and Mr. Paris 250,000 Series A Preferred Shares (totaling 100,000 Series
A Preferred Shares) for a purchase price of $.01 per share.
On January 11, 1999, the Company authorized the issuance of a total of
100,000 Warrants to the Selling Shareholders on the basis of one Warrant for
each share offered. (See "Selling Shareholders")
The Company entered into a consulting contract with Maviation, LLC which is
owned by key employee, Thomas Vandervelde. Pursuant to the terms of the
contract, Maviation will pursue a Part 121 Certification at a rate of $800.00
per day for the Company.
The Company believes that the terms of the above described transactions are
at least as fair to the Company as could have been obtained from unaffiliated
third parties.
PRINCIPAL AND SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of December 15, 1998, and as adjusted
to give effect to the sale of the Units offered hereby, by (i) each person (or
group or affiliated persons) known to the Company to be the beneficial owners of
more that 5% of the Company's Common Stock, (ii) each director of the Company,
(iii) each of the Company's executive officers, (iv) the Selling Stockholders,
and (v) all of the Company's directors and officers as a group.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Common Shares
Beneficially Owned (1) Number of Common Shares Beneficially
Prior to Offering Common Shares Owned After Offering (2)
Stockholder Name and Address
Number Percent Offered Number Percent
- --------------------------------------- ------------- ---------------- ---------------------- -------------------- -----------
Thomas S. Berkley 30,000 1.92% 3,000 27,000 0.76%
8505 Sheridan Road
Melbourne, FL 32904
INDEGO Trust 20,000 1.28% 2,000 18,000 0.51%
1010 U.S. 27 South M.S.C. 172
Avon Park, FL 33825
Darin K. Newbold 10,000 0.64% 1,000 9,000 0.25%
4141 Horizon N. Parkway Apt. 1333
Dallas, TX 75
Terry L. Kee 15,400 0.99% 1,540 13,860 0.39%
78 Box 2872 APO
AP 96326-2872
Dennis Riles 20,000 1.28% 2,000 18,000 0.51%
1823 Van Pelt Road
Sebring FL 33870
Derrick V. Shores 10,000 0.64% 1,000 9,000 0.25%
and Faith L. Shores 458 Manzanita St.N.W.
Palm Bay, FL 32907
Bruce D. Greenwood and Mayra S. 16,000 1.03% 1,600 14,400 0.40%
Greenwood
1321 Mallard Court
Ft. Pierce FL 34982
Eugene J. Couch Jr. 5,000 0.32% 500 4,500 0.13%
3561 Sparrow Lane
Melbourne, FL 32935
Christine A. Waters 17,000 1.09% 1,500 15,500 0.44%
1453 Park Garden Lane
Reston, VA 22091
Alfred M. & Maryann 20,000 1.28% 2,000 18,000 0.51%
Beauchesne 297 HWY A1A #315
Satellite Beach, FL 32937
Raymond A. Simoncelli 20,000 1.28% 2,000 18,000 0.51%
25461 Nottingham CT
Laguna Hills, CA 92653
Michael A. Serrao 26,000 1.67% 2,600 23,400 0.66%
218 Nemo Circle N.E.
Palm Bay, FL 32907
L. Dianne Mason 20,000 1.28% 2,000 18,000 0.51%
5415 Collins Ave., #602
Miami Beach, FL 33140
William R. Rackley Jr. 50,000 3.21% 5,000 45,000 1.26%
1000 Eastwood Rd Apt J-7
Hilliard, FL 32046
John J. Ryff Jr. 50,000 3.21% 5,000 45,000 1.26%
365 Needle Blvd
Merritt Island, FL 32953
Ronald J. Newbold 50,000 3.21% 5,000 45,000 1.26%
600 Dinner Street
Palm Bay, FL 32907
Tom Vandervelde 50,000 3.21% 2,500 47,500 1.33%
128 Albacore Lane
Foster City, CA 94404
Lawrence A. Watson 290,000 18.60% 14,080 275,920 7.75%
1564 Raymore St. N.W.
Palm Bay, FL 32907
H. Lawrence Mason 280,000 17.96% 16,600 263,400 7.40%
432 St. Johns Drive
Satellite Beach, FL 32937
Vincent T. Paris 280,000 17.96% 14,080 265,920 7.47%
855 Hawser Street, N.E.
Palm Bay, FL 32907
TAWCOT Trust (3) 280,000 17.96% 15,000 265,000 7.45%
528 N.W. 66th St.
Miami, FL 33166
</TABLE>
(1) The information presented in this label with respect to beneficial ownership
reflects "beneficial ownership" as defined in Rule 13d-3 under the Exchange Act.
All information with respect to the beneficial ownership of any shareholder and,
except as otherwise indicated, each shareholder has sole voting and investment
power with respect shares listed as beneficially owned by such shareholder.
Pursuant to the rules of the Commission, in calculating percentage ownership,
each persons deemed to beneficially own shares subject to options or warrants
exercisable within 60 days of the date of this Prospectus.
(2) Assumes the sale of all of the Units offered herein.
(3) Controlled by Ted A. Walker.
DESCRIPTION OF SECURITIES
The Company's Articles of Incorporation, as amended, authorize the Company
to issue 50,000,000 shares of common stock, $0.01 par value per share and
1,000,000 shares of Preferred Stock, par value $.01. As of the date of this
Prospectus, 1,681,400 shares of the Common Stock were outstanding and 100,000
Series A Preferred Shares were outstanding. The description in this Prospectus
of the capital stock of the Company is qualified by and subject to the Delaware
General Corporation Law and the Company's Articles of Incorporation and By-laws,
copies of which Articles and By-laws have been filed as exhibits to the
Registration statement of which this Prospectus is a part and to which reference
is made for the provisions thereof which are summarized below.
Units
Each Unit offered hereby consisting of one (1) share of Common Stock and
one Warrant to purchase one share of common stock for a price of $11.00 a share
until Five years from the effective date of this offering. The Warrants hereby
are immediately transferable separately from the Common Stock and issued with
such Warrants as part of the Units. The Warrants are subject to the terms of a
Warrant resolution by the Company's Board of Directors which defines the terms
under which the Warrants may be exercised, called and transferred.
Common Stock
The holders of Common Stock are entitled to one vote per share on all
matters to be voted upon by the shareholders and have no cumulative voting
rights. Holders of Common Stock are entitled to receive ratably such dividends,
if any, as may be declared from time to time by the Board of Directors out of
funds legally available therefor. See "Dividend Policy." In the event of
liquidation, dissolution, or winding up of the Company, the holders of Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities. The Common Stock has no preemptive or conversion rights or other
subscription rights. There are no redemption or sinking fund provisions
applicable to the Common Stock. All outstanding shares of Common Stock are fully
paid and nonassessable, and the shares of Common Stock offered hereby will also
be fully paid and nonassessable.
Warrants
The holder of each warrant is entitled, upon payment of the exercise price
of $11.00 to purchase one (1) share of Common Stock. Unless previously redeemed,
the Warrants are exercisable at any time until five years from the effective
date of this offering, provided that at such time a current prospectus relating
to the underlying Common Stock is in effect and the underlying Common Stock is
qualified for sale or exempt from qualification under applicable state
securities laws. The Warrants included in the Units offered hereby are
immediately transferable separately from the Common Stock and issued with such
Warrants as part of the Units. The Warrants are subject to redemption, as
described below.
Redemption. Commencing on the date of this Prospectus, the Warrants are
subject to redemption by the Company, on not more than sixty (60) nor less than
thirty (30) days' written notice, at a price of $.05 per Warrant, if the average
closing bid price of the Common Stock for any 30 consecutive business days
ending within 15 days of the date on which the notice of redemption is given
exceeds $15.00 per share. In the event the Company elects to redeem the
Warrants, any remaining restrictions on transfer or exercise will expire.
Holders of Warrants will automatically forfeit their rights to purchase the
shares of Common Stock issuable upon exercise of such Warrants unless the
Warrants are exercised before the close of business on the date immediately
prior to the date set for redemption. The notice of redemption shall be made by
first class mail, postage prepaid, not less than 15 days prior to the date of
redemption, and shall specify the redemption price, the date fixed for
redemption, the place where the Warrant certificates shall be delivered and the
redemption price to be paid, and that the right to exercise the Warrants shall
terminate at 5:00 PM EST on the business day immediately preceding the date
fixed for redemption. The Company may without notice to warrant holders extend
the time in which the warrants may be exercised or reduce the exercise price.
The Warrants may be exercised upon surrender of the certificate(s) therefor
on or prior to the earlier of their expiration of the redemption date (as
explained above) at the offices of the Company's warrant agent (the "Warrant
Agent") with the form of "Subscription Agreement" on the reverse side of the
certificate(s) filled out and executed as indicated, accompanied by payment (in
the form of certified or cashier's check payable to the order of the Company) of
the full exercise price for the number of Warrants being exercised.
The Warrants contain provisions that protect the holders thereof against
dilution by adjustment of the exercise price in certain events, such as stock
dividends, stock splits, mergers, certain issuance of Common Stock below fair
market value, sale of substantially all of the Company's assets, and for other
extraordinary events in order to enable the holders of the Warrants to obtain
the same or equivalent rights which they would have obtained if the Warrants had
been exercised prior to the event.
The Company is not required to issue fractional shares of Common Stock, and
in lieu thereof will make a cash payment based upon the current market value of
such fractional shares. The holder of a Warrant will not possess any rights as a
stockholder of the Company unless and until the person exercises the Warrant.
Preferred Shares
The Company has issued 100,000 Series A Preferred Shares of the 1,000,000
Preferred Shares authorized. The rights and preferences of preferred shares
issued in the future, if any, will be determined by the Company's Board of
Directors. Holders of Series A preferred Shares have no right to receive
dividends, but shall be entitled to a preference in the amount of $.01 per share
in the event of dissolution of the Company. Holders of Series A preferred shares
are entitled to vote with the holders of common shares on any matter upon which
common share holders are entitled to vote, including without limitation the
election of directors, at a rate of 100 votes for every share held. As a result,
the holders of the 100,000 preferred shares, Mr. Watson, Dr. Mason, Mr. Paris
and Mr. Walker possess 10,000,000 votes and will control the affairs of the
Company. Preferred shares are non-transferable.
Undesignated Preferred Stock
The authorized but unissued Preferred Stock (900,000 shares) may be issued
in series, and shares of each series will have such rights and preferences as
are fixed by the Board of Directors in the resolutions authorizing the issuance
of that particular series. In designating any series of Preferred Stock, the
Board of Directors may, without further action by the holders of Common Stock,
fix the number of shares constituting that series and fix the dividends rights,
dividend rate, conversion rights, voting rights (which may be greater or lesser
than the voting rights of the Common Stock), rights and terms of redemption
(including any sinking fund provisions), and the liquidation preferences of the
series of Undesignated Preferred Stock. The holders of any series of Preferred
Stock, when and if issued, are expected to have priority claims to dividends and
to any distribution upon liquidation of the Company, and they may have other
preferences over the holders of the Common Stock.
The Board of Directors may issue series of Preferred Stock without action
by the stockholders of the Company. Accordingly, the issuance of Preferred Stock
may adversely affect the rights of the holders of the Common Stock. In addition,
the issuance of Preferred Stock may be used as an "anti-takeover" device without
further action on the part of the stockholders. Issuance of Preferred Stock may
dilute the voting power of holders of Common Stock (such as by issuing Preferred
Stock with super-voting rights) and may render more difficult the removal of
current management, even if such removal may be in the stockholders' best
interest. The Company has no current plans to issue any additional Preferred
Stock.
Transfer Agent - Warrant Agent
The transfer agent, registrar for the Common stock and warrant agent is
First Union National Bank of North Carolina.
Limitation of Liability and Indemnification of Directors.
The right of the stockholders to sue any director for misconduct in
conducting the affairs of the Company is limited by the Company's Articles of
Incorporation and Delaware statutory law to cases for damages resulting from
breaches of fiduciary duties involving acts or omissions involving intentional
misconduct, fraud, knowing violations of the law or the unlawful payment of
dividends. Ordinary negligence is not a ground for such a suit. The statute does
not limit the liability of directors or officers for monetary damages under the
Federal Securities laws.
The Company also has the obligation, pursuant to the Company's By-laws, to
indemnify any director or officer of the Company for all expenses incurred by
them in connection with any legal action brought or threatened against such
person for or on account of any action or omission alleged to have been
committed while acting in the course and scope of the person's duties, if the
person acted in good faith and in a manner which the person reasonably believed
to be in or not opposed to the best interests of the Company, and with respect
to criminal actions, had no reasonable cause to believe the person's conduct was
unlawful, provided that such indemnification is made pursuant to then existing
provisions of Delaware General Corporation Law at the time of any such
indemnification.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in such Act and is
therefore unenforceable.
SHARES ELIGIBLE FOR FUTURE SALE
At the completion of this Offering, there will be 3,581,400 shares of
Common Stock outstanding if all Units are sold. There will be 2,000,000shares of
Common Stock issuable upon the exercise of outstanding warrants. There is no
current market for the Company's securities, and no market may exist at the
conclusion of this Offering. In the event a market for the Company's stock
develops, the Company cannot predict the effect, if any, that market sales of
restricted shares of Common Stock (described below) or the availability of such
shares for sale will have on the market prices prevailing from time to time.
Nevertheless, the possibility that substantial amounts of Common Stock may be
sold in the public market would likely adversely affect any prevailing market
price for the Common Stock and could impair the Company's ability to raise
capital through the sale of its equity securities.
Sales of Restricted Securities
Assuming all Units offered herein are sold, 1,581,400 shares of Common
Stock outstanding prior to the Offering, were or will be issued and sold by the
Company in private transactions not involving a public offering in reliance upon
exemptions under the Securities Act. These securities are treated as "restricted
securities" and may not be resold except in compliance with the registration
requirements of the Securities Act or pursuant to an exemption therefrom. No
outstanding shares are subject to registration rights.
PLAN OF DISTRIBUTION
Of the 2,000,000 Units of Common Stock offered hereby, 1,900,000 Units are
being sold by the Company and 100,000 Units are being sold by the Selling
Stockholders. Each Unit offered consists of one share of common stock and one
warrant to purchase one share of common stock for a price of $11.00 a share
until Five years from the effective date of this offering. The Company will not
receive any of the proceeds from the sale of Units by the Selling Stockholders.
There is no minimum number of Units to be sold in the Offering, and all funds
received will go immediately to the Company. The Offering will be terminated
upon the earliest of: the sale of all Units, twelve months after the date of
this Prospectus (unless extended), or the date on which the Company decides to
close the Offering. A minimum purchase of 100 Units ($750) is required. The
Company reserves the right to reject any Unit Purchase Agreement in full or in
part. Units being offered by Selling Shareholders will only be sold following
the sale of all 1,900,000 Units offered by the Company.
The Company plans to offer and sell the Units directly to investors and has
not retained any underwriters, brokers, dealers, or placement agents in
connection with the Offering. However, the Company reserves the right to use
brokers, dealers, or placement agents and could pay commissions equal to as much
as 10 percent of the gross proceeds. The Company will effect offers and sales of
Units through printed copies of this Prospectus delivered by mail and
electronically, by contacting prospective investors by publicizing the Offering
through a posting on the Company's World Wide Web site www.flycardinal.com,
through newspaper advertisements, and by contacting additional potential
investors by direct e-mail and regular mail solicitation. Any voice or other
communications will be conducted in certain states through the Company's
executive officers, and in other states, where required, through a designated
sales agent, licensed in those states.
Residents of Virginia purchasing Units must have a net worth of at least
$225,000 or a net worth of at least $60,000 and an annual income of at least
$60,000. Net worth in all cases is calculated exclusive of home, furnishings and
automobiles. Virginia residents may not invest more than 10%of their readily
marketable assets in the offering.
LEGAL
Certain legal matters in connection with validity of the Units offered
hereby will be passed upon for the Company by Bruce Brashear, Esq., Gainesville,
Florida.
EXPERTS
The financial statements of the Company for the period from April 1, 1997
(inception) to June 30, 1998, appearing in this Prospectus and Registration
Statement have been audited by Rosenfield & Company, P.A., independent auditors,
as set forth in their reports thereon appearing elsewhere herein and in the
Registration Statement, and are included in reliance upon such reports given
upon the authority of such firm as experts in accounting and auditing.
UNIT PURCHASE AGREEMENT
[To purchase any of the Units, you must be a resident of a state where the sale
of Units is permitted under the state's securities laws.]
To: Cardinal Airlines, Inc., 1380 Sarno Road, Suite B, Melbourne, FL 32935 USA;
Phone: (407) 757-7388 -Fax: (407) 757-7390- - - E-mail: [email protected]
I have received and had an opportunity to read the Prospectus by which the Units
are offered.
Enclosed is payment for____________ Units (minimum 100), at $7.50 per unit,
totaling $____________.
Make check payable to Cardinal Airlines, Inc.
Signature(s)______________________ Date_______________
Register the Units in the following name(s) and amount(s):
Name(s)__________________________________ Number of Units ____________
As (check one):
Individual _______ Joint Tenants _______ Trust _______ IRA _____
Tenants in Common _______ Corporation _______ Keogh _______ Other _____
For the person(s) who will be registered owner(s):
Mailing
Address:__________________________________________________________________
City, State & Zip Code: _______________________________________________________
Business Phone: (_____)________________ Home Phone: (_____)_________________
Social Security or Taxpayer ID Number: _________________________________________
(Please attach any special mailing instructions other than shown above)
NO UNIT PURCHASE AGREEMENT IS EFFECTIVE UNTIL ACCEPTANCE
(You will be mailed a signed copy of this Agreement to retain for your
records.)
Subscription accepted by Cardinal Airlines, Inc.
- ----------------------------- --------
Lawrence A. Watson, President Date
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Cardinal Airlines, Inc.
Melbourne, Florida
We have audited the accompanying balance sheets of Cardinal Airlines, Inc. (a
Delaware corporation in the development stage) as of June 30, 1998, and the
related statements of income, stockholder' equity, and cash flows for the
fiscal year ended June 30, 1998 and from April 1, 1997 (inception), to June 30,
1998. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Cardinal Airlines, Inc. as of
June 30, 1998, and the results of its operations and its cash flows for the
fiscal year ended June 30, 1998 and from April 1, 1997 (inception), to June 30,
1998, in conformity with generally accepted accounting principles.
Rosenfield & Company, P.A.
September 30, 1998
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
FINANCIAL STATEMENTS
TABLE OF CONTENTS
BALANCE SHEET................................................................1
STATEMENTS OF INCOME.........................................................2
STATEMENT OF STOCKHOLDERS' EQUITY............................................3
STATEMENTS OF CASH FLOWS.................................................4 - 5
NOTES TO FINANCIAL STATEMENTS............................................6 - 9
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
BALANCE SHEET
JUNE 30, 1998
ASSETS
CURRENT ASSETS $ 14,169
Notes Receivable Related Parties 96,671
-----------------
TOTAL CURRENT ASSETS 110,840
Property and Equipment, net 8,091
Other Assets 3,681
-----------------
TOTAL ASSETS $ 122,612
=================
COMMITMENTS
STOCKHOLDERS' EQUITY, including deficit
accumulated during the development stage
of $21,788 $ 122,612
=================
The accompanying notes are an integral part of these financial statements.
- 2 -
<PAGE>
CARDINAL AIRLINES, INC.
(A Development Stage Company)
STATEMENTS OF INCOME
Fiscal Year Ended June 30, 1998 and
April 1, 1997 (Inception ) to June 30 1998
Fiscal Year Ended April 1, 1997
June 30, 1998 (Inception) to
June 30, 1998
------------------- --------------------
REVENUES $ $
- -
-------------------- --------------------
EXPENSES
Rent 11,920 13,515
Supplies 2,942 3,006
Utilities 2,870 3,194
Depreciation 2,023 2,023
Taxes 50 50
------------------- -------------------
19,805 21,788
------------------- -------------------
NET (LOSS) $ (19,805) $ (21,788)
=================== ====================
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
CARDINAL AIRLINES, INC
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY
April 1, 1997 (Inception) to June 30, 1998
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Additional Total
Number of Common Paid-In Accumulated Stockholders'
Shares Stock Capital Deficit Equity
--------- ------ ---------- ----------- ------------
Issuance of shares of
common stock
April 1, 1997 940,000 $ 9,400 $ - $ -
$ 9,400
July 1, 1997 240,000 2,400 117,600 -
120,000
June 10, 1998 30,000 300 14,700 -
15,000
----------- --------------- -------------- ------------ --------------
1,210,000 12,100 132,300 - 144,400
Net (loss) - - - (21,788)
---------------- --------------- -------------- ------------- --------------
Balance June 30, 1998 1,210,000 $ 12,100 $ 132,300 $ (21,788)
$ 122,612
================ =============== ============== ============= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal Year Ended April 1, 1997
June 30, 1998 (Inception) to
June 30, 1998
-------------------- --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash paid to suppliers $ (17,782) $(19,765)
-------------------- --------------------
NET CASH USED IN OPERATING ACTIVITIES (17,782) (19,765)
-------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (10,114) (10,114)
Capitalized organization costs (756) (1,941)
Increase in security deposits - (1,740)
-------------------- --------------------
NET CASH USED IN INVESTING ACTIVITIES (10,870) (13,795)
-------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 42,821 47,729
-------------------- --------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 42,821 47,729
-------------------- --------------------
NET INCREASE IN CASH 14,169 14,169
CASH AT BEGINNING OF PERIOD - -
-------------------- --------------------
CASH AT END OF PERIOD $ 14,169 $ 14,169
=================== ====================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Fiscal Year Ended April 1, 1997
June 30, 1998 (Inception) to June
30, 1998
-------------------- ---------------------
RECONCILIATION OF NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Net loss $ (19,805) $ (21,788)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 2,023 2,023
------------------- --------------------
NET CASH USED IN OPERATING ACTIVITIES $ (17,782) $ (19,765)
==================== =====================
SUPPLEMENTAL SCHEDULE OF NONCASH FINANCING ACTIVITIES:
Issuance of common stock in exchange for notes receivable $ 92,179 $ 96,671
================== ====================
</TABLE>
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A) NATURE OF OPERATIONS
The principal business activity of Cardinal Airlines, Inc. ("Company") is
to provide commercial airline service to and from major airports throughout
the eastern United States. The Company's operations are based in Melbourne,
Florida.
B) CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company considers all
highly liquid debt instruments purchased with an original maturity of three
months or less to be cash and/or cash equivalents.
C) PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the assets' expected useful lives.
D) MANAGEMENT ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported assets and liabilities. Actual results
could differ from these estimates.
E) INCOME TAXES
Deferred income taxes arise from the expected tax consequence of temporary
differences between the carrying amounts and the tax basis of certain
assets and liabilities. The differences result primarily from different
depreciation methods.
F) ORGANIZATION COSTS
Organization costs consist of expenses related to the start-up of the
Company. These costs are amortized using the straight-line method over
sixty months. However, as of June 30, 1998, the Company is still in its
development stage and, as such, these costs have not been amortized.
<PAGE>
NOTE 2 - DEVELOPMENT STAGE OPERATIONS
The Company was formed Feburary 10, 1997 but did not begin actual
operations until April 1, 1997. Through June 30, 1998, operations have been
devoted primarily to raising capital, negotiating leasing of airplanes,
related equipment, and related facilities as well as the performance of
general administrative functions. As of June 30,1998, the Company has five
shareholders.
NOTE 3 - PROPERTY AND EQUIPMENT
Computers and equipment $ 9,955
Furniture and fixtures 159
--------------
10,11
Less accumulated depreciation (2,023)
--------------
$ 8,091
==============
Depreciation expense was $ 2,023 and $ 2,023 for the fiscal year ended June
30, 1998 and April 1, 1997 (inception) to June 30, 1998, respectively.
NOTE 4 - OTHER ASSETS
Security Deposits $ 1,740
Organization Costs 1,941
--------------
$ 3,681
==============
NOTE 5 - RELATED PARTIES
The Company has made loans to four of its shareholders in exchange for
issuance of shares of common stock (NOTE 8). The loans are unsecured, have
no fixed repayment terms and are non-interest bearing. Notes receivable due
from related parties were $96,671 as of June 30, 1998. A summary of notes
receivable issued in exchange for shares of common stock is as follows:
Fiscal year end June 30, 1998 $92,179
From April 1, 1997 to June 30, 1997 4,492
--------------
$96,671
==============
NOTE 6 - COMMITMENTS
The Company leases its facilities from an unrelated third party under an
operating lease expiring July, 1999. Rent expense was $11,920 and $13,515
for the fiscal year ended June 30, 1998 and April 1, 1997 (inception) to
June 30, 1998, respectively.
Future minimum lease payments are as follows:
Fiscal year ending June 30,
1999 $ 9,540
2000 795
-------------
$10,335
=============
NOTE 7 - INCOME TAXES
The Company's effective tax rate differs from the expected federal income
tax rate as follows:
Income tax benefit at statutory rate $(7,408)
Increase in valuation allowance 7,408
---------------
Actual income taxes $ -
===============
The components of the deferred tax assets and liabilities are as follows:
Deferred tax assets
Net operating loss carryforwards $ 7,408
---------------
Total deferred tax assets 7,408
Less valuation allowance (7,408)
----------------
Deferred tax assets, net of valuation allowance
-
Deferred tax liabilities
-
---------------
Net deferred tax asset (liability) $ -
===============
As of June 30, 1998, the Company is still in its development stage. As
such, all income and deductions for tax purposes are deferred until the
Company's planned principal operations have commenced.
NOTE 8 - STOCKHOLDERS' EQUITY
A summary of issuance of common stock involving noncash consideration is as
follows:
On April 1, 1997, the Company issued 449,200 shares of stock in
consideration for notes receivable due from related parties (NOTE 5)
of $4,492. The shares were sold at $ .01 per share.
On July 1, 1997, the Company issued 184,358 shares of stock in
consideration for notes receivable due from related parties (NOTE 5)
of $92,179. The shares were sold at $.50 per share.
As of June 30, 1998 the Company's common stock had a par value $.01 per
share with 50,000,000 shares authorized and 1,210,000 shares issued and
outstanding.
<PAGE>
BALANCE SHEET................................................................1
STATEMENT OF INCOME..........................................................2
STATEMENT OF STOCKHOLDERS EQUITY.............................................3
STATEMENT OF CASH FLOWS..................................................4 - 5
Internally Prepared (Unaudited)
-1-
<PAGE>
ASSETS
CURRENT ASSETS
Cash and Cash Equivalents
$ 40,340
Petty Cash 41
Notes Receivable Related Parties
91,672
-----------------
TOTAL CURRENT ASSETS
132,053
Property and Equipment, net 9,136
Other Assets
38,092
-----------------
TOTAL ASSETS
$ 179,281
=================
COMMITMENTS
STOCKHOLDERS' EQUITY, including deficit
accumulated during the development stage of $ 80,769 $ 179,281
=================
Internally Prepared (Unaudited)
-2-
<PAGE>
REVENUES $ -
-------------------------------------
EXPENSES:
Management fees 33,500
Legal 12,380
Rent 7,590
Miscellaneous 2,098
Utilities 1,433
Supplies 729
Depreciation 505
Advertising 392
Insurance 354
-------------------------------------
$ 58,981
-------------------------------------
Net (loss) $ 58,981
=====================================
=====================================
Internally Prepared (Unaudited)
-3-
<PAGE>
<TABLE>
<CAPTION>
<S> .......................... <C> <C> <C> <C> <C> <C>
Additional Total
Numbers of Common Paid-In Accumulated Stockholders'
Shares Stock Capital Deficit Equity
---------- ------ ---------- ----------- ------------
Balance June 30, 1998 1,210,000 $ 12,100 $ 132,300 $ (21,788) $ 122,612
Issuance of common stock 471,400 4,714 110,936 - 56,669
Net (loss) - - - 58,981 -
-------------- ----------- ------------ ------------ --------------
Balance December 31, 1998 1,681,400 16,814 243,236 80,769 179,281
============== =========== ============ ============ ==============
</TABLE>
<PAGE>
CASH FLOWS FROM OPERATING ACTIVITIES:
Cash paid for operating expenses $ (87,887)
--------------------
NET CASH USED IN OPERATING ACTIVITIES (87,887)
--------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (1,550)
--------------------
NET CASH USED IN INVESTING ACTIVITIES (1,550)
--------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 115,650
--------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 115,650
--------------------
NET INCREASE IN CASH 26,212
CASH AT BEGINNING OF PERIOD 14,169
--------------------
CASH AT END OF PERIOD $ 40,381
====================
<PAGE>
RECONCILIATION OF NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES:
Net loss $ (58,981)
Decrease in Notes Receivable 5000
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation 505
Increase in other assets (34,411)
=====================
NET CASH USED IN OPERATING ACTIVITIES $ (87,887)
=====================
<PAGE>
======================
No dealer, salesman or any other person has been authorized by the Company to
give any information or to make any representations other than those contained
in this Prospectus in connection with the offering made hereby, and if given or
made, such information or representations may not be relied upon. The Prospectus
does not constitute an offer to sell or the solicitation of an offer to buy any
securities other than those specifically offered hereby or an offer to sell, or
a solicitation of an offer to buy, to any person in any jurisdiction in which
such offer or sale would be unlawful. Neither the delivery of this Prospectus
nor any sale made hereunder shall under any circumstances create any implication
that there has been no change in the affairs of the Company since any of the
dates as of which information is furnished or since the date of this Prospectus.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION
SUMMARY
RISK FACTORS
USE OF PROCEEDS
DILUTION
DIVIDEND POLICY
CAPITALIZATION
SPWCIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
BUSINESS
MANAGEMENT
CERTAIN TRANSACTIONS
PRINCIPAL SHAREHOLDERS
DESCRIPTION OF SECURITIES
SHARES ELIGIBLE FOR FUTURE SALE
PLAN OF DISTRIBUTION
LEGAL MATTERS
EXPERTS
UNIT PURCHASE AGREEMENT
FINANCIAL STATEMENTS
Until ________, 1999 (90 days after the date of this Prospectus) all
dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a Prospectus.
==================================
2,000,000 Units
CARDINAL AIRLINES, INC.
Common Stock
-------------------------------
PROSPECTUS
-------------------------------
January ____, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The fees and expenses to be paid by the Company in connection with this
offering are as follows:
SEC filing fee ...................................................$10,619
NASD filing .........................................................4,000
Blue Sky qualification fees and expenses* .........................10,000
Accounting fees and expenses* .....................................30,000
Legal fees and expenses* ..........................................40,000
Transfer Agent and Registrar Fees* .................................5,000
Printing Costs* ...................................................20,000
Miscellaneous* ....................................................10,381
Total .......................................................$130,000
- ----------------------------
* Estimated
Item 14. Indemnification of Directors and Officers.
The Registrant's Certificate of Incorporation provide that directors of the
Registrant will not be personally liable for monetary damages to the Registrant
for certain breaches of their fiduciary duty as directors to the fullest extent
allowable by Delaware law. Under current Delaware law, directors would remain
liable for: (i) acts or omissions which involve intentional misconduct, fraud or
a knowing violation of law, and (ii) approval of certain illegal dividends or
redemption's. In appropriate circumstances, equitable remedies or nonmonetary
relief, such as an injunction, will remain available to a stockholder seeking
redress from any such violation. In addition, the provision applies only to
claims against a director arising out of his role as a director and not in any
other capacity (such as an officer or employee of the Registrant).
The Registrant also has the obligation, pursuant to the Registrant's
By-laws, to indemnify any director or officer of the Registrant for all expenses
incurred by them in conjunction with any legal action brought or threatened
against such person for or on account of any action or omission alleged to have
been committed while acting in the course and scope of the person's duties, if
the person acted in good faith and in a manner which the person reasonably
believed to be in or not opposed to the best interests of the Registrant, and
with respect to criminal actions, had no reasonable cause to believe the
person's conduct was unlawful, provided that such indemnification is made
pursuant to then existing provisions of Delaware General Corporation Law at the
time of any such indemnification.
<PAGE>
Item 15. Recent Sales of Unregistered Securities.
Since its inception, the Company has made the following sales of
unregistered securities:
Stockholder Name
Date (Name on Subscription
Type of Stock Purchased Agreement) Shares Owned Consideration
- ------------- ---------- --------------------- ------------ -------------
Common 6/10/98 Thomas S. Berkley 30,000 $.50/share
Common 8/10/98 INDEGO (trust managed
by Litton Walker) 20,000 $.50/share
Common 8/20/98 Darin K. Newbold 10,000 $.50/share
Common 8/31/98 Terry L. Kee 15,400 $.50/share
Common 8/31/98 Dennis Riles 20,000 $.50/share
Common 9/10/98 Derrick V. Shores & 10,000 $.50/share
Faith L. Shores
Common 9/30/98 Bruce D. Greenwood 16,000 $.50/share
Mayra S. Greenwood
Common 10/5/98 Eugene J. Couch Jr. 5,000 $.50/share
Common 10/3/98 Christine A. Waters 17,000 $.50/share
Common 11/16/98 Alfred M. & Maryann
Beauchesne 20,000 $.50/share
Common 11/30/98 Raymond A. Simoncelli 20,000 $.50/share
Common 11/30/98 Michael A. Serrao 26,000 $.50/share
Common 11/28/98 L. Dianne Mason 20,000 $.50/share
Common 3/1/97 William R. Rackley Jr. 50,000 $.01/share
Common 10/2/98 John J. Ryff Jr. 50,000 $.01/share
Common 10/2/98 Ronald J. Newbold 50,000 $.01/share
Common 12/28/98 Marie D. Ellis 7,000 $.50/share
Common 11/5/98 David A. Linsley 40,000 $.01/share
Common 12/10/98 John J. Pertschi 40,000 $.01/share
Common 12/29/98 Todd Vandervelde 10,000 $.50/share
Common 10/2/98 Charles K. Waters 15,000 $.01/share
Common 12/9/98 James Wheeler 10,000 $.50/share
Common 11/5/98 Tom Vandervelde 50,000 $.01/share
Common 3/1/97 Lawrence A. Watson 230,000 $.01/share
Common 3/1/97 H. Lawrence Mason 220,000 $.01/share
Common 3/1/97 Vincent T. Paris 220,000 $.01/share
Common 3/1/97 TAWCOT (trust managed
by Ted A. Walker) 220,000 $.01/share
Common 7/1/97 Lawrence A. Watson 60,000 $.50/share
Common 7/1/97 H. Lawrence Mason 60,000 $.50/share
Common 7/1/97 Vincent T. Paris 60,000 $.50/share
Common 7/1/97 TAWCOT (trust managed
by Ted A. Walker) 60,000 $.50/share
Series A
Preferred 10/16/98 Lawrence A. Watson 25,000 $.01/share
Series A
Preferred 10/16/98 H. Lawrence Mason 25,000 $.01/share
Series A
Preferred 10/16/98 Vincent T. Paris 25,000 $.01/share
Series A
Preferred 10/16/98 Ted A. Walker 25,000 $.01/share
All issuances of securities described above were made in reliance on the
exemption from registration provided by Section 4(2) of the Securities Act of
1933 as transactions by an issuer not involving public offering. In each
instance, the purchaser was either a founder of the Company or other Company
insider as a result of his relationship with the Company, the offers and sales
were made without any public solicitation, the stock certificates bear
restrictive legends and appropriate stop transfer instructions have been or will
be given to the transfer agent. No underwriter was involved in the transactions
and no commissions were paid.
Exhibit
Number Description
3.1 Restated Articles to the Certificate of Incorporation
3.2 Bylaws of Registrant, as amended and restated
4.1 Form of Registrant's Common Stock Certificate
4.2 Form of Warrant to Purchase Common Stock
4.3 Warrant Resolution
5.1 Opinion of Bruce Brashear, Esq. regarding legality*
10.1 Employment Agreement dated July 1, 1998, between Registrant and Lawrence A.
Watson.
10.2 Employment Agreement dated July 1, 1998, between Registrant and H. Lawrence
Mason
10.3 Employment Agreement dated July 1, 1998, between Registrant and Vincent T.
Paris
10.4 Employment Agreement dated October 2, 1998, between Registrant and John
Ryff
10.5 Employment Agreement dated October 2, 1998, between Registrant and Ronald
Newbold
10.6 Employment Agreement dated July 1, 1998, between Registrant and Ted A.
Walker
10.7 Employment Agreement dated December 10, 1998, between Registrant and Karen
D. Glover
10.8 Employment Agreement dated November 5, 1998, between Registrant and David
A. Linsley
10.9 Employment Agreement dated December 10, 1998, between Registrant and John
J. Pertschi
10.10 Employment Agreement dated November 5, 1998, between Registrant and Thomas
L. Vandervelde
10.11 Promissory Note dated July 1, 1997 between Registrant and H. Lawrence
Mason
10.12 Promissory Note dated July 1, 1997 between Registrant and Vincent T. Paris
10.13 Promissory Note dated July 1, 1997 between Registrant and Ted A. Walker
10.14 Promissory Note dated July 1, 1997 between Registrant and Lawrence A.
Watson
10.15 Consulting Contract dated December 10, 1998 between Registrant and
Maviation, Inc.
11.1 Statement regarding computation of earnings per share
24.1 Consent of Independent Accountants
24.2 Consent of Bruce Brashear, Esq. (included in Exhibit 5.1)*
25. Power of Attorney (included with the signature page to the registration
statement)
27. Financial Data Schedule*
*To be supplied by Amendment
Item 17. Undertakings.
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, 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 Securities 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
had 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 Securities Act and will be governed by the final
adjudication of such issue.
(b) The Registrant hereby undertakes that for purposes of determining
any liability under the Securities Act, (i) the information omitted from the
form of prospectus filed as part of this Registration Statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the Registrant pursuant
to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to
be part of this Registration Statement as of the time it was declared effective,
and (ii) each post-effective amendment that contains a form of prospectus 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) The undersigned Registrant hereby undertakes 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 the registration statement (or the most
recent post-effective amendment thereof) 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.
SIGNATURES
SIGNATURES
In accordance with 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-1 and authorized this registration
statement to be signed on its behalf by the undersigned, in the city of
Melbourne, State of Florida, on the 8th day of January, 1999.
CARDINAL AIRLINES, INC.
/S/
By:_______________________________________
Lawrence A. Watson,
Chairman of the Board and Chief
Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities on January, 1999.
SIGNATURE TITLE
/S/
________________________________ Chairman of the Board, President
Lawrence A. Watson and Director
/S/
_________________________________ * Secretary and Treasurer Director
H. Lawrence Mason
/S/
__________________________________ * Director
Vincent T. Paris
/S/
__________________________________ * Director
Ted A. Walker
/S/
- -----------------------------------
Lawrence A. Watson, Attorney in Fact
RESTATED ARTICLES TO THE CERTIFICATE OF
INCORPORATION OF CARDINAL AIRLINES, INC.
FIRST. The name of this corporation shall be:
CARDINAL AIRLINES, INC.
SECOND. Its registered office in the State of Delaware is to be located at
1013 Centre Road, in the City of Wilmington, County of New Castle, 19805, and
its registered agent at such address is CORPORATE AGENTS, INC.
THIRD. The purpose or purposes of the corporation shall be:
To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.
FOURTH. The total number of shares of capital stock which may be issued by
the corporation is 51,000,000 of which 50,000,000 shares shall be common stock
of the par value of $.01 per share, and One Million (1,000,000) shares shall be
preferred stock (here referred to as the "preferred stock") of the par value of
$.01 per share.
The designations and the powers, preferences and rights, and the
qualifications, limitations or restrictions of the shares of each class of stock
are as follows:
Preferred Stock
I. The preferred stock may be issued from time to time in one or more
series, each of the series to have super voting powers, full or limited
voting powers, or without voting powers, the designation, preferences and
relative, participating, optional or other special rights and
qualifications, limitations or restrictions as are stated and expressed
here, or in a resolution or resolutions providing for the issue of the
series adopted by the board of directors as provided here.
II. Authority is expressly granted to the board of directors, subject to
the provisions of this Article Fourth, to authorize one or more series of
preferred stock and, with respect to each series (except the series
designated here as Series A preferred stock), to fix by resolution or
resolutions providing for the issue of the series:
(a) the number of shares to constitute the series and the distinctive
designation;
(b) the dividend rate on the shares of the series, dividend payment
dates, whether the dividends shall be cumulative, and, if cumulative, the
date or dates from which dividends shall accumulate;
(c) whether or not the shares of the series shall be redeemable, and,
if redeemable, the redemption prices which the shares of the series shall
be entitled to receive on the redemption of the shares;
(d) whether or not the shares of the series shall be subject to the
operation of retirement or sinking funds to be applied to the purchase or
redemption of the shares for retirement and, if the retirement or sinking
fund or funds is established, the annual amount and the terms and
provisions relative to the operation of the fund or funds;
(e) whether or not the shares of the series shall be convertible into,
or exchangeable for, shares of any other class or classes or of any other
series of the same or any other class or classes of stock of the
corporation and the conversion price or prices or ratio or ratios or the
rate or rates at which the exchange may be made, with adjustments, if any,
as shall be stated and expressed or provided in the resolution or
resolutions;
(f) the preferences, if any, and the amounts, which the shares of the
series shall be entitled to receive on the voluntary and involuntary
dissolution of, or on any distribution of the assets of, the corporation;
(g) the voting power, if any, of the shares of the series; and
(h) any other special rights and protective provisions as to the board
of directors may seem advisable.
Notwithstanding the fixing of the number of shares constituting a
particular series (including the Series A preferred stock) on the issuance
of the shares, the board of directors, may at any time authorize the
issuance of additional shares of the same series. Both the authorization of
any series of preferred stock and the authorization of the issuance of
additional shares of any series of preferred stock require unanimous
consent by the board of directors.
III.Holders of preferred stock shall be entitled to receive, when and as
declared by the board of directors, out of funds legally available for the
payment of dividends, dividends at the annual rates fixed by the board of
directors for the respective series and no more, payable on the dates in
each year as the board of directors shall fix for the respective series as
provided in subdivision (b) of section II of this Article Fourth (here
referred to as "dividend dates"), in preference to dividends on any other
class of stock of the corporation, so that unless all accrued dividends on
all series of preferred stock entitled to cumulative dividends shall have
been declared and set apart for payment through the last preceding dividend
date set for all series and dividends on all other series of preferred
stock shall have been declared and set apart for payment at the rate to
which the other series of preferred stock are entitled for the period
commencing the second preceding dividend date and ending on the last
preceding dividend date set for the series, no cash payment or distribution
shall be made to holders of the common stock of the corporation. No
dividend shall be declared and set apart for payment on any series of
preferred stock in respect of any dividend period unless there shall
likewise be or have been declared and set apart for payment on all shares
of preferred stock of each series entitled to cumulative dividends at the
time outstanding dividends ratably in accordance with the sums which would
be payable on the shares through the last preceding dividend date if all
dividends were declared and paid in full. Nothing contained here shall be
deemed to limit the right of the corporation to purchase or otherwise
acquire at any time any shares of its capital stock; provided that no
shares of capital stock shall be repurchased at any time when accrued
dividends on any series of preferred stock entitled to cumulative dividends
remain unpaid for any period to and including the last preceding dividend
date.
For the purposes of this Article Fourth, and of any certificate fixing the
terms of any series of preferred stock, the amount of dividends "accrued"
on any share of preferred stock of any series entitled to cumulative
dividends as at any dividend date shall be deemed to be the amount of any
unpaid dividends accumulated to and including the dividend date, whether or
not earned or declared, and the amount of dividends "accrued" on any share
of preferred stock of any series entitled to cumulative dividends as at any
date other than a dividend date shall be calculated as the amount of any
unpaid dividends accumulated to and including the last preceding dividend
date, whether or not earned or declared, plus an amount computed, on the
basis of 360 days per year, for the period after the last preceding
dividend date to and including the date as of which the calculation is made
at the annual dividend rate fixed for the shares of the series or class.
IV. In the event that the preferred stock of any series shall be entitled
to a preference on the dissolution of, or on any distribution of the assets
of, the corporation, then on any such dissolution of, or distribution of
the assets of, the corporation, before any payment or distribution of the
assets of the corporation (whether capital or surplus) shall be made to or
set apart for any other series or class or classes of stock, the holders of
the series of preferred stock shall be entitled to payment of the amount of
the preference, if any, payable upon the dissolution of, or distribution of
the assets of the corporation as may be fixed by the board of directors for
the shares of the respective series as provided in subdivision (f) of
section II of this Article Fourth before any further payment or
distribution shall be made on any other class or series of capital stock.
If, on any dissolution, or distribution, the assets of the corporation
distributable among the holders of any series of the preferred stock
entitled to a preference shall be insufficient to pay in full the
preferential amount, then the assets, or the proceeds, shall be distributed
among the holders of each series of the preferred stock ratably in
accordance with the sums which would be payable on the distribution if all
sums payable were discharged in full. The voluntary sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property and assets of
the corporation, the merger or consolidation of the corporation into or
with any other corporation, or the merger of any other corporation into it,
shall not be deemed to be a dissolution of, or a distribution of the assets
of, the corporation, for the purpose of this section IV.
V. In the event that the preferred stock of any series shall be redeemable,
then, at the option of the board of directors, the corporation at any time
or from time to time may redeem all, or any number less than all, of the
outstanding shares of the series at the redemption price fixed by the board
of directors as provided in subdivision (c) of section II of this Article
Fourth (the sum so payable on any redemption of preferred stock being
referred to here as the " redemption price"); provided, that not less than
thirty (30) days previous to the date fixed for redemption a notice of the
time and place shall be mailed to each holder of record of the shares so to
be redeemed at the holder's address as shown by the records of the
corporation; and provided further, that in case of redemption of less than
all of the outstanding shares of any series of preferred stock the shares
to be redeemed shall be chosen by lot in any equitable manner as may be
prescribed by the board of directors. At any time after notice of
redemption shall have been mailed as above provided to the holders of the
stock so to be redeemed, the corporation may deposit the aggregate
redemption price, in trust, with a bank or trust company named in the
notice, for payment, on or before the date fixed for redemption, of the
redemption price for the shares called for redemption. Upon the making of
the deposit, or if no deposit is made then on the redemption date (unless
the corporation shall default in making payment of the redemption price),
holders of the shares of preferred stock called for redemption shall cease
to be stockholders with respect to the shares notwithstanding that any
certificate for the shares are not surrendered, and thereafter the shares
shall no longer be transferable on the books of the corporation and the
holders shall have no interest in or claim against the corporation with
respect to the shares, except the right (a) to receive payment of the
redemption price on surrender of their certificates, or (b) to exercise on
or before the date fixed for redemption the rights, if any, not up to that
time expiring, to convert the shares so called for redemption into, or to
exchange the shares for, shares of stock of any other class or classes or
of any other series of the same class or any other class or classes of
stock of the corporation. Any funds deposited in trust which shall not be
required for the redemption, because of the exercise of any right of
conversion or otherwise subsequent to the date of the deposit, shall be
returned to the corporation immediately. The corporation shall be entitled
to receive from any bank or trust company the interest, if any, allowed on
any moneys deposited as provided in this section, and the holders of any
shares so redeemed shall have no claim to any interest. Any funds so
deposited by the corporation and unclaimed at the end of five years from
the date fixed for the redemption shall be repaid to the corporation on its
request, after which repayment the holders of the shares who shall not have
made claim against the moneys prior to the repayment shall be deemed to be
unsecured creditors of the corporation, but only for a period of two years
from the date of the repayment (after which all rights of the holders of
the shares as unsecured creditors or otherwise shall cease), for an amount
equivalent to the amount deposited as stated above for the redemption of
the shares and so repaid to the corporation, but shall in no event be
entitled to any interest.
In order to facilitate the redemption of any shares of preferred stock, the
board of directors is authorized to cause the transfer books of the
corporation to be closed as to the shares to be redeemed.
VI. Any shares of preferred stock which shall at any time have been
redeemed, or which shall at any time have been surrendered for conversion
or exchange or for cancellation pursuant to any retirement or sinking fund
provisions with respect to any series of preferred stock, shall be retired
and shall have the status of authorized and unissued shares of preferred
stock undesignated as to series.
VII. There is authorized an initial series of the preferred stock having
the following voting powers, designation, preferences and relative,
participating, optional or other special rights and qualifications,
limitations or restrictions:
(a) The number of shares to constitute the series shall be 100,000 and
the distinctive designation shall be "Series A preferred stock".
(b) No dividends shall be paid on the Series A preferred stock.
(c) The shares of the series shall be redeemable at the redemption
price of $.01 per share. Upon redemption, shares of the series shall have
the status of authorized and unissued shares of preferred stock
undesignated as to series.
(d) The shares of the series shall not be subject to the operation of
any sinking fund to be applied to the purchase or redemption of the shares
for retirement.
(e) The holder of shares of this series shall not sell or transfer
shares of this series to any person or entity without prior express written
and unanimous consent of the Board of Directors.
(f) The shares of the series shall be entitled to receive in preference
to shares of the common stock of the corporation on any dissolution of, or
distribution of the assets of, the corporation (i) the amount of $.01 per
share in the event of any voluntary liquidation, dissolution or winding up
of the corporation and (ii) the amount of $.01 in the event of any
involuntary liquidation, dissolution or winding up of the corporation,
plus, in either case, an amount equal to all accrued but unpaid dividends
to the date of the liquidation, dissolution or winding up.
(g) The shares of the series shall have super voting rights. The shares
of the series shall be entitled to vote with the shares of common stock at
any annual or special meeting of stockholders for the election of directors
and on any other matter coming before the meeting at the multiple of one
hundred (100) votes per share of Series A preferred stock..
(h) The shares of the series shall not have any other special rights or
provisions.
Common Stock
Each share of common stock shall be equal in all respects to every other
share of the common stock of the corporation, including specifically the right
to vote and the right to receive dividends.
FIFTH. The name and mailing address of the incorporator is as follows:
Cheryl A. Lewis
Corporate Agents, Inc.
1013 Centre Road
Wilmington, DE 19805
SIXTH. The Board of Directors shall have the power to adopt, amend or
repeal the by-laws.
SEVENTH. The personal liability of the directors of the corporation is
hereby eliminated to the fullest extent permitted by the provisions of paragraph
(7) of subsection (b) of ss. 102 of the General Corporation Law of the State of
Delaware, as the same may be amended and supplemented.
EIGHTH. The corporation shall, to the fullest extent permitted by the
provisions of ss. 145 of the General Corporation Law of the State of Delaware,
as the same may be amended and supplemented, indemnify any and all persons whom
it shall have power to indemnify under said section from and against any and all
of the expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any Bylaw, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
IN WITNESS WHEREOF, the undersigned, being the President and Secretary of
Cardinal Airlines, Inc., have executed , signed and acknowledged this reinstated
certificate of incorporation this ___ day of January, 1999.
CARDINAL AIRLINES, INC.
/S/
By:_________________________
President
/S/
Attest:______________________
Secretary
BYLAWS
OF
CARDINAL AIRLINES, INC.
(a Delaware Corporation)
ARTICLE 1 OFFICES
1. The Corporation shall establish and maintain a Registered Office and a
Registered Agent in the State of Delaware.
2. The corporation may also have offices at such other places both within
and without the State of Delaware as the Board of Directors may from time to
time determine or the business of the Corporation may require.
ARTICLE II STOCKHOLDERS
1. CERTIFICATES REPRESENTING STOCK. Certificates representing stock in the
corporation shall be signed by, the corporation by the Chairman or Vice Chairman
of the Board of Directors, if any, or by the President or a Vice President and
by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant
Secretary of the Corporation. Any and all signatures on any such certificate may
be facsimiles. In case any officer, transfer agent, or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be such officer, transfer agent, or registrar before such certificate
is issued, it may be issued by the corporation with the same effect as if he
were such officer, transfer agent, or registrar at the date of issue.
Whenever the corporation shall be authorized to issue more than one class of
stock or more than one series of any class of stock, and whenever the
corporation shall issue any shares of its stock as partly paid stock, the
certificates representing shares of any such class or series or any such partly
paid stock, shall set forth thereon the statements prescribed by the General
Corporation Law. Any restrictions on the transfer or registration of transfer of
any shares of stock of any class or series shall be noted conspicuously on the
certificate representing such shares.
The corporation may issue a new certificate of stock or uncertificated shares in
place of any certificate therefore issued by it, alleged to have been lost,
stolen, or destroyed, and the Board of Directors may require the owner of any
lost, stolen, or destroyed certificate, or the owner's legal representative, to
give the corporation a bond sufficient to indemnify the corporation against any
claim that may be made against it on account of the alleged loss, theft, or
destruction of any such certificate or the issuance of any such new certificate
or uncertificated shares.
2. FRACTIONAL SHARE INTERESTS. The corporation may, but shall not be required
to, issue fractions of a share. If the corporation does not issue fractions of a
share, it shall (1) arrange for the disposition of fractional interests by those
entitled thereto, (2) pay in cash the fair value of fractions of a share as of
the time when those entitled to receive such fractions are determined, or (3)
issue script or warrants in registered form (either represented by a certificate
or uncertificated) or bearer form (represented by a certificate) which shall
entitle the holder to receive a certificate for a full share upon the surrender
of such script or warrants aggregating a full share. A certificate for a
fractional share or an uncertificated fractional share shall, but script or
warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation. The Board of
Directors may cause script or warrants to be issued subject to the conditions
that they shall become void if not exchanged for certificates representing full
shares or uncertificated full shares before a specified date, or subject to the
conditions that the shares for which script or warrants are exchangeable may be
sold by the corporation and the proceeds thereof distributed to the holders of
script or warrants, or subject to any other conditions which the Board of
Directors may impose.
3. STOCK TRANSFERS. Upon compliance with provisions restricting the transfer or
registration of transfer of shares of stock, if any, transfers or registration
of transfers of shares of stock of the corporation shall be made only on the
stock ledger of the corporation by the registered holder thereof, or by such
holder's attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the corporation or with a transfer agent or a
registrar, if any, and, in the case in the shares represented by certificates,
on surrender of the certificate or certificates for such shares of stock
properly endorsed and the payment of all taxes due thereon.
4. RECORD DATE FOR STOCKHOLDERS. In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the Board of Directors may fix a record date, which
record date shall not proceed the date upon which the resolution fixing the
record date is adopted by the Board of Directors, and which record date shall
not be more than sixty nor less then ten days before the date of such meeting.
If no record date is fixed by the Board of Directors, the record date for
determining stockholders entitled to notice of or to vote at a meeting of
stockholders shall be at the close of business on the day next preceding the day
on which notice is given, or, if notice is waived, at the close of business on
the day next preceding the day on which the meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholder shall apply to any adjournment of the meeting; provided, however,
that the Board of Directors may fix a new record date for the adjourned meeting.
In order that the corporation may determine the stockholders entitled to consent
to corporate action in writing without a meeting, the Board of Directors may fix
a record date, which record date shall not proceed the date upon which the
resolution fixing the record date is adopted by the Board of Directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the Board of Directors. If no
record date has been fixed by the Board of Directors, the record date for
determining the stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the Board of Directors is required by
the General Corporation Law, shall be the first date on which a signed written
consent setting forth the action taken or proposed to be taken is delivered to
the corporation by delivery to it's registered office in the state of Delaware,
it's principle place of business, or an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the corporations registered office shall be by hand
or by certified or registered mail, return receipt requested. If no record date
has been fixed by the Board of Directors and prior action by the Board of
Directors is required by the General Corporation Law, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
Board of Directors adopts the resolution taking such prior action. In order that
the corporation may determine the stockholders entitled to receive payment of
any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion, or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix a record date, which record date shall be precede
the date upon which the resolution fixing the record date is adopted, and which
record date shall be not more than sixty days prior to such action. If no record
date is fixed, the record date for determining stockholders for any such purpose
shall be at the close of business on the day on which the Board of Directors
adopts the resolution relating thereto.
5. MEANING OF CERTAIN TERMS. As used herein in respect of the right to notice of
a meeting of stockholders or a waiver thereof or to participate or vote thereat
or to consent or dissent in writing in lieu of a meeting, as the case may be,
the term "share" or "shares" or "share of stock" or "shares of stock" or
"stockholder" or "stockholders" refers to an outstanding share or shares of
stock and to a holder or holders of record of outstanding shares of stock when
the corporation is authorized to issue only one class of shares of stock, and
said reference is also intended to include any outstanding share or shares of
stock and any holder or holders of record of outstanding shares of stock of any
class upon which or upon whom the certificate of incorporation confers such
rights where there are two or more classes or series of shares of stock or which
or upon whom the General Corporation Law confers such rights notwithstanding
that the certificate of incorporation may provide for more than one class or
series of shares of stock, one or more of which are limited or denied such
rights thereunder; provided, however, that no such right shall vest in the event
of an increase or a decrease in the authorized number of shares of stock of any
class or series which is otherwise denied voting rights under the provisions of
the certificate of incorporation, except as any provision of law may otherwise
require.
6. STOCKHOLDER MEETINGS.
TIME. The annual meeting shall be held on the date and at the time fixed, from
time to time, by the directors, provided, that the first annual meeting shall be
held on a date within thirteen months after the organization of the corporation,
and each successive annual meeting shall be held on a date within thirteen
months after the date of the preceding annual meeting. A special meeting shall
be held on the date and at the time fixed by the directors.
PLACE. Annual meetings and special meetings shall be held at such place, within
or without the State of Delaware, as the directors may, from time to time, fix.
Whenever the directors shall fail to fix such place, the meeting shall be held
at the registered office of the corporation in the State of Delaware.
CALL. Annual meetings and special meetings may be called by the directors or by
any officer instructed by the directors to call the meeting.
NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be given,
stating the place, date, and hour of the meeting and stating the place within
the city or other municipality or community at which the list of stockholders of
the corporation may be examined. The notice of an annual meeting shall state
that the meeting is called for the election of directors and for the transaction
of other business which may properly come before the meeting, and shall, (if any
other action which could be taken at a special meeting is to be taken at such
annual meeting) state the purpose or purposes. The notice of a special meeting
shall in all instances state the purpose or purposes for which the meeting is
called. The notice of any meeting shall also include, or be accompanied by, any
additional statements, information, or documents prescribed by the General
Corporation Law. Except as otherwise provided by the General Corporation Law, a
copy of the notice of any meeting shall be given, personally or by mail, not
less than ten days nor more than sixty days before the date of the meeting,
unless the lapse of the prescribed period of time shall have been waived, and
directed to each stockholder at the stockholder's record address or at such
other address which the stockholder may have furnished by request in writing to
the Secretary of the corporation. Notice by mail shall be deemed to be given
when deposited, with postage thereon prepaid, in the United States Mail. If a
meeting is adjourned to another time, not more than thirty days hence, and/or to
another place, and if an announcement of the adjourned time and/or place is made
at the meeting, it shall not be necessary to give notice of the adjourned
meeting unless the directors, after adjournment, fix a new record date for the
adjourned meeting. Notice need not be given to any stockholder who submits a
written waiver of notice signed by such stockholder before or after the time
stated therein. Attendance of a stockholder at a meeting of stockholders shall
constitute a waiver of notice of such meeting, except when the stockholder
attends the meeting for the express purpose of objecting, at the beginning of
the meeting, to the transaction of any business because the meeting is not
lawfully called or convened. Neither the business to be transacted at, nor the
purpose of, any regular or special meeting of the stockholders need be specified
in any written waiver of notice.
STOCKHOLDER LIST. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders, arranged in alphabetical
order, and showing the address of each stockholder and the number of shares
registered in the name of each stockholder. Such list shall be open to the
examination of any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior to the meeting,
either at a place within the city or other municipality or community where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present. The stock ledger shall be the only evidence as to who are the
stockholders entitled to examine the stock ledger, the list required by this
section or the books of the corporation, or to vote at any meeting of
stockholders.
CONDUCT OF MEETING. Meetings of the stockholders shall be presided over by one
of the following officers in the order of seniority and if present and acting
the Chairman of the Board, if any, the Vice Chairman of the Board, if any, the
President, a Vice President, or, if none of the foregoing is in office and
present and acting, by a chairman to be chosen by the stockholders. The
Secretary of the corporation, or in the Secretary's absence, an Assistant
Secretary, shall act as secretary of every meeting, but if neither the Secretary
nor an Assistant Secretary is present the Chairman of the meeting shall appoint
a secretary of the meeting.
PROXY REPRESENTATION. Every stockholder may authorize another person or persons
to act for such stockholder by proxy in all matters in which a stockholder is
entitled to participate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent without a meeting.
Every proxy must be signed by the stockholder or by the stockholder's attorney
in fact. No proxy shall be voted or acted upon after three years from its date
unless such proxy provides for a longer period. A duly executed proxy shall be
irrevocable if it states that it is irrevocable and, if, and only as long as, it
is coupled with an interest sufficient in law to support an irrevocable power. A
proxy may be made irrevocable regardless of whether the interest with which it
is coupled is an interest in the stock itself or an interest in the corporation
generally.
INSPECTORS. The directors, in advance of any meeting, may, but need not, appoint
one or more inspectors of election to act at the meeting or any adjournment
thereof. If an inspector or inspectors are not appointed, the person presiding
at the meeting may, but need not, appoint one or more inspectors. In case any
person who may be appointed as an inspector fails to appear or act, the vacancy
may be filled by appointment made by the directors in advance of the meeting or
at the meeting by the person presiding thereat. Each inspector, if any, before
entering upon the discharge of his or her duties shall take and sign an oath
faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his or her ability. The inspector or
inspectors if any, shall determine the number of shares of stock outstanding and
the voting power of each, the shares of stock represented at the meeting, the
existence of a quorum, the validity and effect of proxies, and shall receive
votes, ballots or consents, hear and determine all challenges and questions
arising in connection with the right to vote, count and tabulate all votes,
ballots or consents, determine the results, and do such acts as are proper to
conduct the election or vote with fairness to all stockholders. On request of
the person presiding at the meeting, the inspector or inspectors, if any, shall
make a report in writing of any challenge, question or matter determined by such
inspector or inspectors and execute a certificate of any fact found by the
inspector(s). Except as otherwise required by subsection (e) of section 231 of
the General Corporation Law, the provisions of that section shall not apply to
the corporation.
QUORUM. The holders of a majority of the outstanding shares of stock shall
constitute a quorum at a meeting of stockholders for the transaction of any
business. The stockholders present may adjourn the meeting despite the absence
of quorum.
VOTING. Each share of stock shall entitle the holder thereof to one vote.
Directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote on the
election of directors. Any other action shall be authorized by a majority of the
votes cast except where the General Corporation Law prescribes a different
percentage of votes and/or a different exercise of voting power, and except as
may be otherwise prescribed by the provisions of the certificate of
incorporation and these ByLaws. In the election of directors, and for any other
action, voting need not be by ballot.
8. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the General
Corporation Law to be taken at any annual or special meeting of stockholders, or
any action which may be taken at any annual or special meeting of stockholders,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.
Action taken pursuant to this paragraph shall be subject to the provisions of
section 228 of the General Corporation Law.
ARTICLE III DIRECTORS
FUNCTIONS AND DEFINITION. The business of affairs of the corporation shall be
managed by or under the direction of the Board of Directors of the corporation.
The Board of Directors shall have the authority to fix the compensation of the
embers thereof. The use of the phrase "whole board" herein refers to the total
number of directors which the corporation could have if there were no vacancies.
A director shall perform his duties as a Director, including his duties as a
member of any committee of the Board upon which he may serve, in good faith, in
a manner he reasonably believes to be in the best 1nterests of the Corporation,
and with such care as an ordinarily prudent person in a like position would use
under similar circumstances. In performing his duties, a Director shall be
entitled to rely on information, opinions reports or statements, including
financial data, in each case prepared or presented by:
(a) One or more officers or employees of the Corporation whom the Director
reasonably believes to be reliable and competent in the matters presented;
(b) Counsel, public accountants or other persons as to matters which the
Director reasonably believes to be within such person's professional or expert
competence; or
(c) A committee of the Board upon which he does not serve, duly designated
in accordance with a provision of the articles of Incorporation or these ByLaws,
as to matters within its designated authority, which committee the Director
reasonably believes to merit confidence.A Director shall not be considered to be
acting in good faith if he has knowledge concerning the matter in question that
would cause such reliance described above to be unwarranted. A person who
performs his duties in compliance with this action shall have no liability by
reasons of being or having been a Director of the Corporation.
QUALIFICATION AND NUMBER. A director need not be a stockholder, a citizen of the
United States, or a resident of the State of Delaware. The initial Board of
Directors shall consist of four persons. Thereafter, the number of directors
constituting the whole board shall be at least one. Subject to the foregoing
limitation and except for the first Board of Directors, such number may be fixed
from time to time by action of the stockholders or of the directors, or, if the
number is not fixed, the number shall be four. The number of directors may be
increased or decreased by action of the stockholders or of the directors.
ELECTION AND TERM. The first Board of Directors, unless the members thereof
shall have been named in the certificate of incorporation, shall be elected by
the incorporator or incorporators and shall hold office until the first annual
meeting of stockholders and until their successors are elected and qualified or
until their earlier resignation or removal. Any director may resign at any time
upon written notice to the corporation. Thereafter, directors who are elected at
an annual meeting of stockholders, and directors who are elected in the interim
to fill vacancies and newly created directorships, shall hold office until the
next annual meeting of stockholders and until their successors are elected and
qualified or until their earlier resignation or removal. Except as the General
Corporation Law may otherwise require, in the interim between annual meetings of
stockholders or of special meetings of stockholders called for the election of
directors and/or for the removal of one or more directors and for the filling of
any vacancy in that connection, newly created directorships and any vacancies in
the Board of Directors, including unfilled vacancies resulting from the removal
of directors for cause or without cause, may be filled by the vote of a majority
of the remaining directors then in office, although less then a quorum, or by
the sole remaining director.
MEETINGS
TIME. Meetings shall be held at such time as the Board shall fix, except
that the first meeting of a newly elected Board shall be held as soon after
its election as the directors may conveniently assemble.
PLACE. Meetings shall be held at such place within or without the State of
Delaware as shall be fixed by the Board.
CALL. No call shall be required for regular meetings for which the time and
place have been fixed. Special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, or the resident, or of a majority of the directors in
office.
NOTICE OF ACTUAL OR CONSTRUCTIVE WAIVER. No notice shall be required for
regular meetings for which the time and place have been fixed. Written,
oral, or any other mode of notice of the time and place shall be given for
special meetings in sufficient time for the convenient assembly of the
directors thereat. Notice need not be given to any director or to any
member of a committee of directors who submits a written waiver of notice
signed by him before or after the time stated herein. Attendance of any
such person at a meeting shall constitute a waiver of notice of such
meeting, except when he attends a meeting for the express purpose of
objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither
the business to be transacted at, nor the purpose of, any regular or
special meeting of the directors need be specified in any written waiver of
notice.
FORUM AND ACTION. A majority of the whole Board shall constitute a quorum
except when a vacancy or vacancies prevents such majority, whereupon a
majority of the directors in office shall constitute a quorum, provided,
that such majority shall constitute at least one-third of the whole Board.
A majority of the directors present, whether or not a quorum is present,
ray adjourn a meeting to another time and place. Except as herein otherwise
provided, and except as otherwise provided by he General Corporation Law,
the vote of the majority of the directors present at a meeting at which
quorum is present shall be the act of the board. The quorum and voting
provisions herein stated shall not be construed as conflicting with any
provisions of the General Corporation Law and these ByLaws which govern a
meeting of directors held to fill vacancies and newly created directorships
in the Board or action of disinterested directors. Any member or members
of the Board of Directors or of any committee designated by the Board, may
participate in a meeting of the Board, or any such committee, as the case
may be, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can
hear each other.
CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if present
and acting, shall preside at all meetings. Otherwise, the Vice-Chairman of
the Board, if any and if present and acting, or the President, if present
and acting, or any other director chosen by the Board, shall preside.
REMOVAL OF DIRECTORS. Except as may otherwise be provided by the General
Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares
then entitled to vote in an election of directors.
COMMITTEES. The Board of Directors may, by resolution passed by a majority
of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the corporation. The Board may
designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the
committee. In the absence or disqualification of any member of any such
committee or committees, the member or members hereof present at any
meeting and not disqualified from voting, whether or not the member or
members constitute a quorum, may unanimously appoint another member of the
Board of Directors to act at the meeting in the place of any such absent or
disqualified member. Any such committee, to the extent provided in the
resolution of the Board, shall have and may exercise the powers and
authority of the Board of Directors in the management of the business and
affairs of the corporation with the exception of any authority the
delegation of which is prohibited by Section 141 of the General Corporation
Law, and may authorize the seal of the corporation to be affixed to all
papers which may require it.
WRITTEN ACTION. Any action required or permitted to be taken at any meeting
of the Board of Directors or any committee thereof may be taken without a
meeting if all members of the Board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the Board or committee.
ARTICLE IV OFFICERS
The officers of the corporation shall consist of a President, a Secretary,
a Treasurer, and, if deemed necessary, expedient, or desirable by the Board
of Directors, a Chairman of the Board, a Vice Chairman of the Board, an
Executive Vice President, one or more other Vice Presidents, one or more
Assistant Secretaries, one or more Assistant Treasurers, and such other
officers with such titles as the resolution of the Board of Directors
choosing them shall designate. Except as may otherwise e provided in the
resolution of the Board of Directors choosing him or her, no officer other
than the Chairman or Vice Chairman of the Board, if any, need be a
director. Any number of offices may be held by the same person, as the
directors may determine, except that no person may hold the offices of
President and Secretary simultaneously. Unless otherwise provided in the
resolution choosing him or her, each officer shall be chosen for a term
which shall continue until the meeting of the Board of Directors following
the next annual meeting of stockholders and until his or her successor
shall have been chosen and qualified. All officers of the corporation
shall have such authority and perform such duties in the management and
operation of the corporation as shall be prescribed in the resolutions of
the Board of Directors designating and choosing such officers and
describing their authority and duties, and shall have such additional
authority and duties as are incident to their office except to the extent
that such resolutions may be inconsistent therewith. The Secretary or an
Assistant Secretary of the corporation shall record all of the proceedings
of all meetings and actions in writing of stockholders, directors, and
committees of directors, and shall exercise such additional authority and
perform such additional duties as the Board shall assign to him or her. Any
officer may be removed with or without cause, by the Board of Directors.
Any vacancy in any office pay be filled by the Board of Directors. The
Chairman of the Board of the Corporation shall preside at all meetings of
the stockholders and the Board of Directors, shall have general and active
management of the business of the corporation and shall see that all orders
and resolutions of the Board of Directors are carried into effect. The
Chairman of the Board or the President, along with the secretary attesting
and signing under the seal of the corporation, may execute bonds,
mortgages, deeds, notes, contracts, and other instruments and papers in the
name of the corporation and on its behalf, except where required by law to
be otherwise signed and executed, and except where the signing and
execution thereof shall be expressly delegated by the Board of Directors to
some other officer or agent of the corporation.
ARTICLE V - CORPORATE SEAL
The seal of this Corporation shall be circular and shall have inscribed
thereon the name of the Corporation and such other words and figures and in such
design as may be prescribed by the Board of Directors, and may be facsimile,
engraved, printed or an impression or other type seal.
ARTICLE VI - FISCAL YEAR
The fiscal year of the corporation shall be fixed, and shall be subject to
change, by the Board of Directors.
ARTICLE VII CONTROL OVER BYLAWS
Subject to the provisions of the certificate of incorporation and the
provisions of the General Corporation Law, the power to amend, alter or repeal
these ByLaws and to adopt new ByLaws may be exercised by the Board of Directors
or by the stockholders.
HEREBY CERTIFY that the foregoing is a full, true, and correct copy of the
ByLaws of Cardinal Airlines, Inc., a Delaware Corporation, as in effect on the
date hereof. WITNESS my hand and the seal of the corporation.
/S/
Dated: __________________
/S/
Secretary: _____________________________
(SEAL)
NUMBER Incorporated Under the Laws of
SHARES the State of Delaware
__***0***__
CARDINAL AIRLINES, INC.
AUTHORIZED CAPITAL STOCK 50,000,000 COMMON SHARES
WITH A PAR VALUE OF 0.01 PER SHARE
THIS CERTIFIES THAT_________________________________________________________
is the owner of________________________________________________fully paid and
non-assessable Shares of the Capital Stock of the above named Corporation
transferable only on the books of the Corporation by the holder hereof in
person or by duly authorized Attorney upon surrender of this Certificate
properly endorsed.
IN WITNESS WHEREOF, the said Corporation has caused this Certificate to be
signed by its duly authorized officers and its Corporate Seal to be hereunto
affixed this _________ day of ________________________ A.D. 19__________.
--------------------------- ---------------------------
SECRETARY PRESIDENT
CORPORATE
SEAL
No. ____ (One Warrant for ___ Share(s) of Common Stock)
CARDINAL AIRLINES, INC.
Incorporated Under the Laws of the State of Delaware
WARRANT CERTIFICATE
Unless extended by the Company, void five (5) years after date hereof
This is to certify that
----------------------------------
for value received, the registered holder or registered assigns of this Warrant
Certificate is the owner of the number of Warrants set forth in the upper right
hand corner hereof and is entitled to purchase, subject to the terms and
conditions hereof and of the Warrant Resolution hereinafter referred to
____________ shares of the Common Stock of CARDINAL AIRLINES, INC. (the
"Company") for every Warrant exercised at the Exercise Price and to receive a
certificate for the Common Stock so purchased. The exercise price and number of
shares purchasable upon exercise are subject to certain adjustments as set forth
in the Warrant Resolution.
The registered holder hereof may exercise the Warrants evidenced hereby
on or after the date hereof and on or before the sooner of five (5) years after
the date hereof upon presentation and surrender to the Company at 1380 Sarno
Road, Suite B, Melbourne, FL 32935, or any Warrant Agent later approved by the
Company. The Exercise Price shall be $11.00 per share. Such exercise must be
made by payment in full of the purchase price of each share purchased either in
cash or by certified or bank cashier's check payable to the order of Cardinal
Airlines, Inc. with the subscription form on the reverse of this Warrant duly
completed and signed.
Subject to prior exercise, this Warrant is redeemable by the Company at
a price of $.05 per Warrant, if the average closing bid price of the Common
Stock for any 30 consecutive business days ending within 15 days of the date on
which the notice of redemption is given exceeds $15.00 per share.
Unless redeemed or exercised prior to the close of the Exercise Period,
this Warrant will become void and the subscription right will terminate. The
Company will not issue fractional shares nor will it make cash payments in lieu
thereof. The Company may, upon notice to registered Warrant Holders and subject
to the terms of the Warrant Resolution, reduce the Exercise Price of the
Warrants or extend the Exercise Period.
This Warrant is one of a duly authorized issue of Warrants and is
subject to the terms and provisions contained in the Warrant Resolution dated
January 11, 1999. A copy of the Warrant Resolution dated January 11, 1999, may
be obtained for inspection upon request by the registered holder hereof from the
Company or the Warrant Agent. The registered holder of this Warrant Certificate
hereby consents to the terms and provisions of the Warrant Resolution dated June
20, 1996, by his or her acceptance hereof.
In witness whereof, the Company has caused this Warrant to be executed
by the signatures of its duly authorized officers and the corporate seal
hereunto affixed.
Dated: __________
CARDINAL AIRLINES, INC.
By:___________________
President
Attest:________________
Treasurer/Secretary
(See Reverse for Subscription and Assignment Form)
<PAGE>
SUBSCRIPTION FORM
To be Executed by the Registered Holder in Order to Exercise Warrant
TO: Cardinal Airlines, Inc.
1380 Sarno Road, Suite B
Melbourne, FL 32935
The undersigned Registered Holder hereby irrevocably elects to exercise
__________ Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities and the Warrants shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
- ------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Please Print or Type Name and Address)
- -----------------------------------------------------------------------------
and be delivered to
- -----------------------------------------------------------------------------
(Please Print or Type Name and Address)
- -----------------------------------------------------------------------------
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
Dated: _____________________ X_______________________________
Signature
PLEASE INSERT SOCIAL SECURITY
OR TAXPAYER IDENTIFICATION NUMBER
- --------------------------------- ---------------------------------
Address
- ------------------------------- ---------------------------------
Signature Guaranteed
- ---------------------------------
ASSIGNMENT
To be Executed by the Registered Holder in Order to Assign Warrants
For value received, __________ hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
- ------------------------------------
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
(Please Print or Type Name and Address)
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
represented by this Warrant Certificate, and hereby irrevocably constitutes and
appoints
- ------------------------------------------------------------------------------
to transfer this Warrant Certificate on the books of the Company, with full
power of substitution in the premises.
Dated: _____________________ X____________________________
Signature
Signature Guaranteed
- ----------------------------
the signature to the assignment or the subscription form must correspond to the
name as written upon the face of this warrant certificate in every particular,
without alteration or enlargement or any change whatsoever and must be
guaranteed by a commercial bank or trust company or a member firm of the
amercian stock exchange, new york stock exchange, pacific stock exchange or
midwest stock exchange.
WARRANT RESOLUTION
Whereas, Cardinal Airlines, Inc. (the "Company") is making a public
offering of 2,000,000 Units, each Unit being comprised one (1) share of the
Company's Common Stock, $.01 par value (the "Common Stock") and one (1) Common
Stock Purchase Warrant (the "Warrant") to purchase one (1) share of Voting
Common Stock at a purchase price of $11.00 if exercised within five years from
the effective date of the Offering, and
Whereas, the Company desires to provide for the form and provisions of
the Warrants, the terms upon which they shall be issued and exercised, and the
respective rights, limitations of rights, and immunities of the Company and the
holders of the Warrants; and
Whereas, the Company desires to make the Warrants, when executed on
behalf of the Company, the valid, binding, and legal obligations of the Company.
Now, therefore, it is hereby resolved as follows:
ARTICLE 1
ISSUANCE OF WARRANTS
Section 1.01. Issuance of Warrants. The Company shall, in accordance
with applicable state and federal securities laws, issue and sell one (1)
Warrant for each Unit sold in accordance with the Company's Registration
Statement filed on Form S-1 (2,000,000 Warrants) evidencing the right of the
holders thereof to subscribe to a share of Common Stock.
Section 1.02. Execution and Delivery of Warrants. Each Warrant,
whenever executed, shall be dated on the date the Unit is purchased (the
"Warrant Date"), and shall be signed on behalf of the Company by the facsimile
signature of the President. The Company may adopt and use the facsimile
signature of any person who is President of the Company at the time such Warrant
is executed, or of any person now or hereafter holding such office,
notwithstanding the fact that at the time the Warrant was issued he or she had
ceased to be such officer of the Company. Prior to the delivery of any Warrant,
it shall be manually countersigned by the Warrant Agent (see Section 6.01). No
Warrant shall be valid unless so countersigned.
ARTICLE 2
DURATION AND EXERCISE OF WARRANTS
Section 2.01. Duration of Warrants. The Warrants entitle the holder to
purchase one (1) share of Voting Common Stock at a purchase price of $11.00 (the
"Exercise Price") if exercised within five years of the effective date of the
Offering. The Warrants will be detachable or separately transferable from the
Common Stock immediately on purchase. Any Warrant not so exercised shall become
void and all rights thereunder and under this Resolution shall cease.
Section 2.02. Terms of Exercise. Each Warrant shall entitle the holder
thereof to purchase the number of shares stated therein, as such shares are
constituted on the date of purchase, at the subscription price ("Subscription
Price") of $11.00 per share. The period during which the Warrants may be
exercised may be extended by the Company's board of directors. The Company's
Board of Directors may reduce the price at which the Warrants may be exercised.
Section 2.03. Exercise of Warrants. A Warrant may be exercised by
surrendering it, together with a subscription in the form annexed as Exhibit B,
duly executed, accompanied by the tender of funds for the applicable
Subscription Price. Warrants may be surrendered only at the office of the
Warrant Agent. The Warrants may be exercised from time to time and at any time
(prior to termination as provided herein), in whole or in part. As soon as
practicable after any Warrant has been so exercised, the Company shall issue and
deliver to, or upon the order of, the holder of such Warrant, in such name or
names as may be directed by him or her, a certificate or certificates for the
number of full shares to which he or she is entitled. All Warrants so
surrendered shall be canceled by the Company. Warrants may only be exercised in
those states in which such exercise and the issuance of the shares shall not
violate applicable securities laws. The Company shall not be required to issue
shares if such exercise is prohibited by applicable state securities law.
Section 2.04. Shares Issued upon Exercise of Warrants. All shares issued
upon the exercise of Warrants shall be validly issued and outstanding.
Section 2.05. Record Date of Shares. Each person in whose name any
certificate or certificates for shares issued upon the exercise of Warrants
shall be deemed to have become the holder of record of those shares on the date
on which the Warrants were surrendered in connection with the subscription
therefor and payment of the Subscription Price was tendered. No surrender of
Warrants on any date when the transfer books of the Company are closed shall be
effective until the next succeeding date on which the transfer books are opened.
Each person holding any shares received upon exercise of Warrants shall be
entitled to receive only dividends or distributions which are payable to holders
of record on or after the date on which such person shall be deemed to have
become the holder of record of such shares.
Section 2.06. Call. Prior to the expiration of the Warrants, the
Company may redeem the Warrants in whole but not in part, on not more than sixty
(60) but not less than thirty (30) days written notice, at a price of $.05 per
Warrant, if the average closing bid price of the Common Stock for any 30
consecutive business days ending within 15 days of the date on which the notice
of redemption is given exceeds $15.00 per share. The Warrants may be exercised
any time prior to the expiration of the 30-day period. The Company may redeem
the Warrants thirty (30) days following mailing of written notice to the Warrant
holders of record ten days prior to the mailing of such notice demanding tender
of the Warrants for purchase by the Company ("Notice of Call"). The Company's
right to purchase the Warrants shall be void if the Warrant holder so notified
then exercises the Warrant within thirty (30) calendar days following the date
which the Notice of Call is mailed by U.S. Mail. Following purchase by the
Company pursuant to this Section 2.06, the Warrants purchased shall become null
and void. Warrants not tendered by Warrant holders within thirty (30) days
following the date of mailing Notice of Call shall be null and void.
ARTICLE 3
ADJUSTMENT IN SHARES
Section 3.01. Adjustment in Shares. Wherever this agreement specifies a
number of shares or a subscription price per share, the specified number of
shares or the specified price shall be changed to reflect adjustments required
by this Article. If, prior to the expiration or exercise of the Warrants, there
shall be any change in the capital structure of the Company, the shares covered
by the Warrants and the Subscription Price payable therefor shall be adjusted as
provided in this Article 3. As long as any Warrants remain outstanding, shares
to be issued upon the exercise of Warrants will be protected against dilution in
the event of one or more stock splits, readjustments or reclassifications.
Section 3.02. Split. If an increase has been effected in the number of
outstanding shares of the Common Stock of the Company by reason of a split of
such shares, the number of shares which may thereafter be purchased shall be
increased by the number of shares which could have been received by the
registered holder on such split had he or she been the owner of record only of
the number of shares which have been Warranted to him or her but not exercised
at the effective date of the split. In such event, the price per share under the
Warrants shall be proportionately reduced.
Section 3.03. Reverse Stock Split. If a decrease has been effected in
the number of outstanding shares of the Common Stock of the Company by reason of
a reverse stock split, the number of shares which may thereafter be purchased
shall be changed to the number of shares which would have been owned by the
registered holder after said reverse stock split had he or she been the owner
only of the number of shares which have been Warranted to him or her but not
exercised at the effective date of the reverse stock split. In such event, the
price per share shall be increased by multiplying the price by a factor equal to
the number of shares outstanding immediately prior to the reverse stock split
divided by the number of shares outstanding immediately after the reverse stock
split, and before any issuance of new shares or redemption and/or cancellation
of outstanding shares.
Section 3.04. Stock Dividends. If a stock dividend is declared on the
common stock (the "Common Stock") of the Company, there shall be added to the
shares underlying the Warrants the number of shares ("total additional shares")
which would have been issuable to the registered holder had he or she been the
owner of record of the number of shares which have been Warranted to him or her
but not exercised at the stock dividend record date. Such additional shares
resulting from such stock dividend shall be delivered without additional cost,
upon the exercise of each Warrant.
Section 3.05. Reorganizations and Reclassifications. If there is any
capital reorganization or reclassification of the Common Stock of the Company,
adequate provision shall be made by the Company so that there shall remain and
be substituted under this agreement, the shares which would have been issuable
or payable in respect of or in exchange for the shares then remaining under the
Warrants and not theretofore purchased and issued hereunder, as if the
registered holder had been the owner of such shares on the applicable record
date. Any shares so substituted under this Resolution shall be subject to
adjustment as provided in this Section in the same manner and to the same effect
as the shares covered by this Resolution.
Section 3.06. Fractional Shares. The Company shall not be required to
issue fractional shares upon the exercise of Warrants, nor shall the Company be
required to pay to the registered holders of any Warrant the cash value of, or
any other consideration for, any fractional interest.
Section 3.07. Dividends. No registered holder of any Warrant shall,
upon the exercise thereof, be entitled to any dividends or distributions of any
type that may have accrued with respect to the Common Stock of the Company prior
to the date of his or her becoming the registered owner thereof other than as
specifically provided in this Article 3.
Section 3.08. Notice of Adjustments in Shares. Whenever the number of
shares issuable upon exercise of any Warrant is adjusted pursuant to this
Article, the Company shall promptly file with the Transfer Agent for the Common
Stock and with the Warrant Agent a certificate executed by the Treasurer of the
Company setting forth in reasonable detail the facts requiring the change and
the nature thereof and specifying the effective date of such change. The Company
shall also mail to each registered holder of Warrants at the address registered
with the Company a notice setting forth each adjustment as made. Failure to file
such statement or to publish such notice, or any defect in such statement or
notice, shall not affect the legality or validity of the change or adjustment as
made.
Section 3.09. Liquidation of the Company. In the event of liquidation,
dissolution, or winding up of the Company, a notice thereof shall be filed by
the Company with the Transfer Agent for the shares and with the Warrant Agent,
at least 30 days before the record date (which date shall be specified in such
notice) for determining holders of the shares entitled to receive any
distribution upon such liquidation, dissolution, or winding up. Such notice
shall also specify the date on which the right to exercise Warrants shall
expire, as provided in Section 2.01. A copy of such notice shall be mailed to
each holder of Warrants at the address registered with the Company not more than
30 days nor less than 20 days before such record date. Failure to give such
notice, or any defect therein, shall not affect the legality or validity of the
liquidation, dissolution, or winding up, or of any distribution in connection
therewith.
Section 3.10. Consolidation of Company. In case of any consolidation or
merger of the Company with or into another corporation (other than a
consolidation or merger in which the Company is the surviving corporation and
which does not result in any reclassification or change of outstanding shares of
the class or classes of shares issuable upon exercise of the Warrants), or in
case of any sale or transfer to another corporation of the assets of the Company
as an entirety or substantially as an entirety, the holders of each Warrant then
outstanding shall have the right to exercise such Warrants only for a period of
twenty (20) days following mailing of written notice to Warrant holders of
record determined as of a date ten (10) days prior to such notice. Said notice
shall advise Warrant holders that such merger or consolidation has been approved
by the directors and shareholders of the Company and that the Warrants will
expire in a period of twenty (20) days from the date of such notice; thereafter
such Warrants shall be null and void.
Section 3.11. Form of Warrant. The form of Warrant need not be changed
because of any change in the shares pursuant to this Article. However, the
Company may at any time in its sole discretion (which shall be conclusive)
change the form of Warrant, provided such change in form does not affect the
substance thereof except as permitted herein; and any Warrant thereafter issued
or countersigned, whether in exchange or substitution for an outstanding Warrant
or otherwise, may be in the form as so changed.
ARTICLE 4
TRANSFER AND OWNERSHIP OF WARRANTS
Section 4.01. Negotiability and Ownership. Warrants issued hereunder shall
be transferable of record only by the Warrant Agent.
Section 4.02. Exchange of Warrant Certificates. On and after the
Warrant Date and so long as the Warrants may be exercised in accordance with
this Resolution, one or more Warrant Certificates may be surrendered at the
office of the Warrant Agent hereinafter referred to for exchange, and, upon
cancellation thereof, one or more new Warrant Certificates shall be issued as
requested by the registered holder of the canceled Warrant Certificate or
Certificates, for the same aggregate number of Warrants as were evidenced by the
Warrant Certificate or Certificates so canceled. The Company shall give notice
to the registered holders of the Warrants of any change in the address of, or in
the designation of, its Warrant Agent.
ARTICLE 5
Other Provisions Relating to Warrant holders
Section 5.01. Reservation of Shares. The Company shall at all times
reserve and keep available out of its authorized but unissued Common Stock, such
number of shares thereof as shall from time to time be sufficient to permit the
exercise of all outstanding Warrants and the issuance of shares as hereinabove
provided, and, if at any time the number of authorized but unissued shares shall
not be sufficient for such purposes, the Company will take such corporate action
as may, in the opinion of its counsel, be necessary to increase its authorized
but unissued shares to such number of shares as shall be sufficient for such
purpose. The Warrants, and the shares issuable upon the exercise thereof, are
being registered under the Securities Act of 1933, as amended, so as to permit
the public offering and sale of Warrants and shares in compliance with such Act.
The Company will take all action necessary to keep such registration current and
effective for such period after the issuance of the Warrants so as to permit a
public offering and sale of the Warrants and shares by the registered owners
thereof, through the facilities of the over-the-counter market.
Section 5.02. No Rights as Stockholder Conferred. The Warrants shall not
entitle the registered holders thereof to any of the rights of a stockholder of
the Company.
Section 5.03. Lost, Stolen, Mutilated or Destroyed Warrant
Certificates. If any Warrant Certificate becomes lost, stolen, mutilated, or
destroyed, the Company may, on such terms as to indemnify or otherwise as it may
in its discretion impose, issue a new Warrant Certificate of like denomination,
tenor, and date as the Warrant Certificate so lost, stolen, mutilated, or
destroyed. Any such new Warrant Certificate shall constitute an original
contractual obligation of the Company.
Section 5.04. Enforcement of Warrant Rights. All rights of action are
vested in the respective registered holders of the Warrants; and any registered
holder of any Warrant may only in his or her own behalf and only for his or her
own benefit enforce, and may institute and maintain any suit, action, or
proceeding against the Company suitable to enforce, or otherwise in respect of,
his or her right to exercise his or her Warrant for the purchase of shares in
the manner provided in the Warrant in this Resolution.
ARTICLE 6
MISCELLANEOUS PROVISIONS
Section 6.01. Warrant Agent. The Warrant Agent shall be First Union
National Bank, 1525 West W.T. Harris Boulevard, Charlotte, N.C. 28288-1153, or
such other Warrant agent as the Company shall appoint from time to time. The
terms of agreement with the Warrant Agent will at any and all times be in
conformity with this Resolution.
Section 6.02. Applicable Law. The validity, interpretation, and performance
of this Resolution and of the Warrants shall be governed by the laws of the
State of Delaware.
Section 6.03. Examination of Resolution. Certified copies of this
Resolution shall be available at all reasonable times at the office of the
Warrant Agent and at the office of the Transfer Agent for the shares, for
examination by the holder of any Warrant. Any such holder may be required to
submit his or her Warrant for inspection before being entitled to make such
examination.
ARTICLE 7
EFFECTIVE DATE
Section 7.01. Date. This Warrant Resolution shall be effective January 11,
1999.
CERTIFICATE OF SECRETARY
I, the undersigned, hereby certify that the foregoing is a true copy of
the Warrant Resolution adopted by the Board of Directors of Cardinal Airlines,
Inc. at a meeting of the said Board held on January 11, 1999, and entered upon
the regular minute book of the said corporation, and now in full force and
effect, and that the Board of directors of the corporation has, and at the time
of the adoption of the said resolutions had, full power and lawful authority to
adopt the said resolutions and to confer the powers thereby ranted to the
officers therein named, who have full power and lawful authority to exercise the
same.
/S/
----------------------------
Secretary
[Corporate Seal]
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CARDINAL AIRLINES, INC.
EMPLOYMENT AGREEMENT
This Agreement made, effective as of July 1, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Company"), and
Lawrence A. Watson, residing at 1564 Raymore St. N.W. Palm Bay, FL hereinafter
referred to as ("Employee").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Company and Employee agree as follows:
1. EMPLOYMENT
1.1 Employment and Acceptance. Company hereby employs, engages, and hires
Employee as President and Chief Executive Officer, and Employee hereby accepts
and agrees to such hiring, engagement, and employment
1.2 Description of Employee's Duties. Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
business or enterprises of the same or similar nature as that engaged in by
employer. Employee shall additionally render such other and unrelated services
and duties as may be assigned to him from time to time by employer.
1.3 Best Efforts. Employee shall at all times faithfully, industriously, and to
the best of his ability, experience, and talents, perform all of the duties that
may be required of and from him pursuant to the express and implicit terms
hereof, to the reasonable satisfaction of employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
employer shall in good faith require or as the interests, needs, business, and
opportunities of employer shall require or make advisable.
2. TERM OF EMPLOYMENT
2.1 Term of Employment. The term of employment shall be for a period of five (5)
years, beginning on the date Company completes a successful Initial Public Stock
Offering, subject to the provisions set forth in paragraph 2.2 below.
2.2 Date of Employment Effectivity The date of employment shall be used as the
date that Employee is placed on the Company payroll. The date of employment may
occur prior to the completion of the registered Initial Public Stock Offering if
agreed to by both Company and Employee.
2.3 Continuance of Employment. Employment shall be considered continued for
regular periods of five (5) years, provided neither party submits a notice of
termination or resignation within 60 days of the expiration date, succeeding
expiration dates or by termination as set forth in this agreement.
3. COMPENSATION OF EMPLOYEE
3.1 Base Salary. During the term of employment and commencing on the date of
employment effectivity, Company shall pay Employee an annual base salary of
$110,000.00. However, Employee base salary will increase to $130,000.00 upon
Company reaching break even load factor and maintaining that level for thirty
(30) consecutive days. The break even load factor will be calculated using the
higher base salary. Employee base salary may be increased or decreased at the
sole discretion of the Board of Directors.
4. TERMINATION
4.1 Termination Due to Discontinuance of Business. In the event that Company
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Company ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
4.2 Termination upon Death. If Employee shall die during the term of this
Agreement, the agreement shall terminate, except that Employee's dependants
shall be entitled to receive Employee's base salary for a period of twelve
months following the month in which his death occurs and, such dependants shall
be entitled to receive the amount of incentive or other bonuses, if any, that
would otherwise have been payable to employee under Section 3. and which have
accrued through the end of the twelve month period in which his death occurs.
4.3 Termination upon Disability. If during the term Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of nine
consecutive months, or (ii) for shorter periods aggregating nine months during
any twelve month period, Company may at any time after the last day of the nine
consecutive months of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of nine months, by written notice to
Employee, terminate the term of Employee's employment hereunder. Notwithstanding
such disability Company shall continue to pay Employee's base salary up to and
including the date of such termination, and receive the amount of incentive or
other bonuses, if any, that would otherwise have been payable to Employee under
section 3 and which have accrued through nine month period in which such
termination occurs.
4.4 Termination by Company for Cause. Company may at any time during the term of
this agreement, by 30 days written notice to Employee, terminate for cause (as
hereafter defined), Employee's employment hereunder, in which event Employee
shall only be entitled to receive his Base Salary accrued through the effective
date of such termination. Company may not require Employee to render any further
services to Company, Employee shall have no right to receive any other
compensation or benefit hereunder after the effective date of such termination;
provided, however, that the foregoing shall not affect Employee's right to
receive any compensation or benefit under any other agreement accrued to the
date of such termination in accordance with the terms thereof. As used herein
the term for "Cause" shall be deemed to mean and include with respect to
Employee (i) conduct of Employee, at anytime, which has involved criminal
dishonesty, conviction of Employee of any felony, or of any lesser crime or
offense involving the property of Company or any of its subsidiaries or
affiliates, significant conflicts of interest, serious impropriety, or breach of
corporate duty, misappropriation of any money or other assets or properties of
Company or its Subsidiaries, (ii) willful violation of specific and lawful
directions from the Board of Directors of Company, failure or refusal to perform
the services customarily performed by a senior executive officer (and such
failure or refusal continues after a written direction from the Board of
Directors) or expressly required by the terms of this Agreement, or willful
misconduct or gross negligence by Employee in connection with the performance of
his duties hereunder, (iii) chronic alcoholism or drug addiction and (iv) any
other acts or conduct inconsistent with the standards of loyalty, integrity or
care reasonably required by Company of its Employees.
4.5 Termination by Company Without Cause. Company may terminate this agreement
without cause with 60 days written notice to Employee. If Employee is terminated
(other than upon death, disability, voluntary resignation or by Company for
cause), Company may not require Employee to render any further services to
Company, further Company will pay to Employee the following amounts:
(i) Employees base salary through the 60 day notice and additionally
(ii) an amount equal to one half (1/2) of Employees base salary for the
remainder of the agreement.
This will constitute the total amount of Company's obligations to Employee under
this agreement. This does not limit Employee to other benefits to which he may
be entitled under law.
5. CONFIDENTIAL INFORMATION
5.1 Other Employment. Employee shall devote time, attention, knowledge, and
skills to the business and interest of Company, and Company shall be entitled to
all of the benefits, profits, or other issues arising from or incident to all
work, services, and advice of Employee, and Employee shall not, during the term
of this agreement, be interested directly or indirectly, in any manner, as
partner, officer, director, shareholder, advisor, Employee, or in any other
capacity in any other business similar to Company's business unless express
written consent is obtained from the board of directors.
5.2 ` Trade Secrets. Employee shall not at any time or in any manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Company, including without
limitation, any of its customers, its products, or any other information
concerning the business of Company, its manner of operation, its plans,
processes, or other data without regard to whether all of the above stated
matters will be deemed confidential, material, or important, Company and
Employee specifically and expressly stipulating that as between them, such
matters are important, material, confidential and gravely affect the effective
and successful conduct of the business of Company, and Company's good will, and
that any breach of the terms of this section shall be a breach of this
agreement.
5.3 Employee's Inability to Contract for Company. In spite of anything contained
in this agreement to the contrary, Employee shall not have the right to make any
contracts or commitments for or on behalf of Company without proper
authorization.
6. AGREEMENTS
6.1 Modification of Agreement. Any modification of this agreement or additional
obligation assumed by either party in connection with this agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. GENERAL
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall be responsible to pay for all his or her own sums
and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of) this agreement.
7.5 Assignability; Successors. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
______________________________ _____________________________
H. Lawrence Mason Lawrence A. Watson Secretary/Treasurer
Employee
Date: _______________ Date: _______________
/S/
Witness: __________________________
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CARDINAL AIRLINES, INC.
EMPLOYMENT AGREEMENT
This Agreement made, effective as of July 1, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Company"), and
H. Lawrence Mason, residing at 432 St. Johns Dr., Satellite Beach, FL 32937,
hereinafter referred to as ("Employee").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Company and Employee agree as follows:
1. EMPLOYMENT
1.1 Employment and Acceptance. Company hereby employs, engages, and hires
Employee as Vice President of Finance and Administration, and Employee hereby
accepts and agrees to such hiring, engagement, and employment
1.2 Description of Employee's Duties. Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
business or enterprises of the same or similar nature as that engaged in by
employer. Employee shall additionally render such other and unrelated services
and duties as may be assigned to him from time to time by employer.
1.3 Best Efforts. Employee shall at all times faithfully, industriously, and to
the best of his ability, experience, and talents, perform all of the duties that
may be required of and from him pursuant to the express and implicit terms
hereof, to the reasonable satisfaction of employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
employer shall in good faith require or as the interests, needs, business, and
opportunities of employer shall require or make advisable.
2. TERM OF EMPLOYMENT
2.1 Term of Employment. The term of employment shall be for a period of three
(3) consecutive years, beginning on the date Company completes a successful
Initial Public Stock Offering, subject to the provisions set forth in paragraph
2.2 below.
2.2 Date of Employment Effectivity The date of employment shall be used as the
date that Employee is placed on the Company payroll. The date of employment may
occur prior to the completion of the registered Initial Public Stock Offering if
agreed to by both Company and Employee.
2.2 Continuance of Employment. Employment shall be considered continued for
regular periods of three (3) years, provided neither party submits a notice of
termination or resignation within 60 days of the expiration date, succeeding
expiration dates or by termination as set forth in this agreement.
3. COMPENSATION OF EMPLOYEE
3.1 Base Salary. During the term of employment and commencing on the date of
employment effectivity, Company shall pay Employee an annual base salary of
$100,000.00. However, Employee base salary will increase to $110,000.00 upon
Company reaching break even load factor and maintaining that level for thirty
(30) consecutive days. The break even load factor will be calculated using the
higher base salary. Employee base salary may be increased or decreased at the
sole discretion of the Board of Directors.
4. TERMINATION
4.1 Termination Due to Discontinuance of Business. In the event that Company
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Company ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
4.2 Termination upon Death. If Employee shall die during the term of this
Agreement, the agreement shall terminate, except that Employee's dependants
shall be entitled to receive Employee's base salary for a period of twelve
months following the month in which his death occurs and, such dependants shall
be entitled to receive the amount of incentive or other bonuses, if any, that
would otherwise have been payable to employee under Section 3. and which have
accrued through the end of the twelve month period in which his death occurs.
4.3 Termination upon Disability. If during the term Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of nine
consecutive months, or (ii) for shorter periods aggregating nine months during
any twelve month period, Company may at any time after the last day of the nine
consecutive months of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of nine months, by written notice to
Employee, terminate the term of Employee's employment hereunder. Notwithstanding
such disability Company shall continue to pay Employee's base salary up to and
including the date of such termination, and receive the amount of incentive or
other bonuses, if any, that would otherwise have been payable to Employee under
section 3 and which have accrued through nine month period in which such
termination occurs.
4.4 Termination by Company for Cause. Company may at any time during the term of
this agreement, by 30 days written notice to Employee, terminate for cause (as
hereafter defined), Employee's employment hereunder, in which event Employee
shall only be entitled to receive his Base Salary accrued through the effective
date of such termination. Company may not require Employee to render any further
services to Company, Employee shall have no right to receive any other
compensation or benefit hereunder after the effective date of such termination;
provided, however, that the foregoing shall not affect Employee's right to
receive any compensation or benefit under any other agreement accrued to the
date of such termination in accordance with the terms thereof. As used herein
the term for "Cause" shall be deemed to mean and include with respect to
Employee (i) conduct of Employee, at anytime, which has involved criminal
dishonesty, conviction of Employee of any felony, or of any lesser crime or
offense involving the property of Company or any of its subsidiaries or
affiliates, significant conflicts of interest, serious impropriety, or breach of
corporate duty, misappropriation of any money or other assets or properties of
Company or its Subsidiaries, (ii) willful violation of specific and lawful
directions from the Board of Directors of Company, failure or refusal to perform
the services customarily performed by a senior executive officer (and such
failure or refusal continues after a written direction from the Board of
Directors) or expressly required by the terms of this Agreement, or willful
misconduct or gross negligence by Employee in connection with the performance of
his duties hereunder, (iii) chronic alcoholism or drug addiction and (iv) any
other acts or conduct inconsistent with the standards of loyalty, integrity or
care reasonably required by Company of its Employees.
4.5 Termination by Company Without Cause. Company may terminate this agreement
without cause with 60 days written notice to Employee. If Employee is terminated
(other than upon death, disability, voluntary resignation or by Company for
cause), Company may not require Employee to render any further services to
Company, further Company will pay to Employee the following amounts:
(i) Employees base salary through the 60 day notice and additionally
(ii) an amount equal to one half (1/2) of Employees base salary for the
remainder of the agreement.
This will constitute the total amount of Company's obligations to Employee under
this agreement. This does not limit Employee to other benefits to which he may
be entitled under law.
5. CONFIDENTIAL INFORMATION
5.1 Other Employment. Employee shall devote time, attention, knowledge, and
skills to the business and interest of Company, and Company shall be entitled to
all of the benefits, profits, or other issues arising from or incident to all
work, services, and advice of Employee, and Employee shall not, during the term
of this agreement, be interested directly or indirectly, in any manner, as
partner, officer, director, shareholder, advisor, Employee, or in any other
capacity in any other business similar to Company's business unless express
written consent is obtained from the board of directors.
5.2 ` Trade Secrets. Employee shall not at any time or in any manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Company, including without
limitation, any of its customers, its products, or any other information
concerning the business of Company, its manner of operation, its plans,
processes, or other data without regard to whether all of the above stated
matters will be deemed confidential, material, or important, Company and
Employee specifically and expressly stipulating that as between them, such
matters are important, material, confidential and gravely affect the effective
and successful conduct of the business of Company, and Company's good will, and
that any breach of the terms of this section shall be a breach of this
agreement.
5.3 Employee's Inability to Contract for Company. In spite of anything contained
in this agreement to the contrary, Employee shall not have the right to make any
contracts or commitments for or on behalf of Company without proper
authorization.
6. AGREEMENTS
6.1 Modification of Agreement. Any modification of this agreement or additional
obligation assumed by either party in connection with this agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. GENERAL
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall be responsible to pay for all his or her own sums
and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of) this agreement.
7.5 Assignability; Successors. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
______________________________ _____________________________
Lawrence A. Watson H. Lawrence Mason
President Employee
Date: _______________ Date: _______________
/S/
Witness: __________________________
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CARDINAL AIRLINES, INC.
EMPLOYMENT AGREEMENT
This Agreement made, effective as of July 1, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Company"), and
Vincent T. Paris II, residing at 855 Hawser St N.E. Palm Bay, FL hereinafter
referred to as ("Employee").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Company and Employee agree as follows:
1. EMPLOYMENT
1.1 Employment and Acceptance. Company hereby employs, engages, and hires
Employee as Vice President of Materiel, and Employee hereby accepts and agrees
to such hiring, engagement, and employment
1.2 Description of Employee's Duties. Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
business or enterprises of the same or similar nature as that engaged in by
employer. Employee shall additionally render such other and unrelated services
and duties as may be assigned to him from time to time by employer.
1.3 Best Efforts. Employee shall at all times faithfully, industriously, and to
the best of his ability, experience, and talents, perform all of the duties that
may be required of and from him pursuant to the express and implicit terms
hereof, to the reasonable satisfaction of employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
employer shall in good faith require or as the interests, needs, business, and
opportunities of employer shall require or make advisable.
2. TERM OF EMPLOYMENT
2.1 Term of Employment. The term of employment shall be for a period of three
(3) years, beginning on the date Company completes a successful Initial Public
Stock Offering, subject to the provisions set forth in paragraph 2.2 below.
2.2 Date of Employment Effectivity The date of employment shall be used as the
date that Employee is placed on the Company payroll. The date of employment may
occur prior to the completion of the registered Initial Public Stock Offering if
agreed to by both Company and Employee.
2.3 Continuance of Employment. Employment shall be considered continued for
regular periods of three (3) years, provided neither party submits a notice of
termination or resignation within 60 days of the expiration date, succeeding
expiration dates or by termination as set forth in this agreement.
3. COMPENSATION OF EMPLOYEE
3.1 Base Salary. During the term of employment and commencing on the date of
employment effectivity, Company shall pay Employee an annual base salary of
$90,000.00. However, Employee base salary will increase to $100,000.00 upon
Company reaching break even load factor and maintaining that level for thirty
(30) consecutive days. The break even load factor will be calculated using the
higher base salary. Employee base salary may be increased or decreased at the
sole discretion of the Board of Directors.
4. TERMINATION
4.1 Termination Due to Discontinuance of Business. In the event that Company
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Company ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
4.2 Termination upon Death. If Employee shall die during the term of this
Agreement, the agreement shall terminate, except that Employee's dependants
shall be entitled to receive Employee's base salary for a period of twelve
months following the month in which his death occurs and, such dependants shall
be entitled to receive the amount of incentive or other bonuses, if any, that
would otherwise have been payable to employee under Section 3. and which have
accrued through the end of the twelve month period in which his death occurs.
4.3 Termination upon Disability. If during the term Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of nine
consecutive months, or (ii) for shorter periods aggregating nine months during
any twelve month period, Company may at any time after the last day of the nine
consecutive months of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of nine months, by written notice to
Employee, terminate the term of Employee's employment hereunder. Notwithstanding
such disability Company shall continue to pay Employee's base salary up to and
including the date of such termination, and receive the amount of incentive or
other bonuses, if any, that would otherwise have been payable to Employee under
section 3 and which have accrued through nine month period in which such
termination occurs.
4.4 Termination by Company for Cause. Company may at any time during the term of
this agreement, by 30 days written notice to Employee, terminate for cause (as
hereafter defined), Employee's employment hereunder, in which event Employee
shall only be entitled to receive his Base Salary accrued through the effective
date of such termination. Company may not require Employee to render any further
services to Company, Employee shall have no right to receive any other
compensation or benefit hereunder after the effective date of such termination;
provided, however, that the foregoing shall not affect Employee's right to
receive any compensation or benefit under any other agreement accrued to the
date of such termination in accordance with the terms thereof. As used herein
the term for "Cause" shall be deemed to mean and include with respect to
Employee (i) conduct of Employee, at anytime, which has involved criminal
dishonesty, conviction of Employee of any felony, or of any lesser crime or
offense involving the property of Company or any of its subsidiaries or
affiliates, significant conflicts of interest, serious impropriety, or breach of
corporate duty, misappropriation of any money or other assets or properties of
Company or its Subsidiaries, (ii) willful violation of specific and lawful
directions from the Board of Directors of Company, failure or refusal to perform
the services customarily performed by a senior executive officer (and such
failure or refusal continues after a written direction from the Board of
Directors) or expressly required by the terms of this Agreement, or willful
misconduct or gross negligence by Employee in connection with the performance of
his duties hereunder, (iii) chronic alcoholism or drug addiction and (iv) any
other acts or conduct inconsistent with the standards of loyalty, integrity or
care reasonably required by Company of its Employees.
4.5 Termination by Company Without Cause. Company may terminate this agreement
without cause with 60 days written notice to Employee. If Employee is terminated
(other than upon death, disability, voluntary resignation or by Company for
cause), Company may not require Employee to render any further services to
Company, further Company will pay to Employee the following amounts:
(i) Employees base salary through the 60 day notice and additionally
(ii) an amount equal to one half (1/2) of Employees base salary for the
remainder of the agreement.
This will constitute the total amount of Company's obligations to Employee under
this agreement. This does not limit Employee to other benefits to which he may
be entitled under law.
5. CONFIDENTIAL INFORMATION
5.1 Other Employment. Employee shall devote time, attention, knowledge, and
skills to the business and interest of Company, and Company shall be entitled to
all of the benefits, profits, or other issues arising from or incident to all
work, services, and advice of Employee, and Employee shall not, during the term
of this agreement, be interested directly or indirectly, in any manner, as
partner, officer, director, shareholder, advisor, Employee, or in any other
capacity in any other business similar to Company's business unless express
written consent is obtained from the board of directors.
5.2 ` Trade Secrets. Employee shall not at any time or in any manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Company, including without
limitation, any of its customers, its products, or any other information
concerning the business of Company, its manner of operation, its plans,
processes, or other data without regard to whether all of the above stated
matters will be deemed confidential, material, or important, Company and
Employee specifically and expressly stipulating that as between them, such
matters are important, material, confidential and gravely affect the effective
and successful conduct of the business of Company, and Company's good will, and
that any breach of the terms of this section shall be a breach of this
agreement.
5.3 Employee's Inability to Contract for Company. In spite of anything contained
in this agreement to the contrary, Employee shall not have the right to make any
contracts or commitments for or on behalf of Company without proper
authorization.
6. AGREEMENTS
6.1 Modification of Agreement. Any modification of this agreement or additional
obligation assumed by either party in connection with this agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. GENERAL
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall be responsible to pay for all his or her own sums
and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of) this agreement.
7.5 Assignability; Successors. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
______________________________ _____________________________
Lawrence A. Watson Vincent T. Paris II
President Employee
Date: _______________ Date: _______________
/S/
Witness: __________________________
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CARDINAL AIRLINES, INC.
EMPLOYMENT AGREEMENT
This Agreement made, effective as of October 2, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Company"), and
John J. Ryff, residing at 365 Needle Blvd., Merritt Island, FL. 32953
hereinafter referred to as ("Employee").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Company and Employee agree as follows:
1. EMPLOYMENT
1.1 Employment and Acceptance. Company hereby employs, engages, and hires
Employee as Director of Stores, and Employee hereby accepts and agrees to such
hiring, engagement, and employment
1.2 Description of Employee's Duties. Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
business or enterprises of the same or similar nature as that engaged in by
employer. Employee shall additionally render such other and unrelated services
and duties as may be assigned to him from time to time by employer.
1.3 Best Efforts. Employee shall at all times faithfully, industriously, and to
the best of his ability, experience, and talents, perform all of the duties that
may be required of and from him pursuant to the express and implicit terms
hereof, to the reasonable satisfaction of employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
employer shall in good faith require or as the interests, needs, business, and
opportunities of employer shall require or make advisable.
2. TERM OF EMPLOYMENT
2.1 Term of Employment. The term of employment shall be for a period of one (1)
year, beginning on the date Company completes a successful Initial Public Stock,
subject to the provisions set forth in paragraph 2.2 below.
2.2 Date of Employment Effectivity The date of employment shall be used as the
date that Employee is placed on the Company payroll. The date of employment may
occur prior to the completion of the registered Initial Public Stock Offering if
agreed to by both Company and Employee.
2.3 Continuance of Employment. Employment shall be considered continued for
regular periods of one (1) year, provided neither party submits a notice of
termination or resignation within 60 days of the expiration date, succeeding
expiration dates or by termination as set forth in this agreement.
3. COMPENSATION OF EMPLOYEE
3.1 Base Salary. During the term of employment and commencing on the date of
employment effectivity, Company shall pay Employee an annual base salary of
$70,000.00. However, Employee base salary will increase to $80,000.00 upon
Company reaching break even load factor and maintaining that level for thirty
(30) consecutive days. The break even load factor will be calculated using the
higher base salary. Employee base salary may be increased or decreased at the
sole discretion of the Board of Directors.
4. TERMINATION
4.1 Termination Due to Discontinuance of Business. In the event that Company
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Company ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
4.2 Termination upon Death. If Employee shall die during the term of this
Agreement, the agreement shall terminate, except that Employee's dependants
shall be entitled to receive Employee's base salary for a period of twelve
months following the month in which his death occurs and, such dependants shall
be entitled to receive the amount of incentive or other bonuses, if any, that
would otherwise have been payable to employee under Section 3. and which have
accrued through the end of the twelve month period in which his death occurs.
4.3 Termination upon Disability. If during the term Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of nine
consecutive months, or (ii) for shorter periods aggregating nine months during
any twelve month period, Company may at any time after the last day of the nine
consecutive months of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of nine months, by written notice to
Employee, terminate the term of Employee's employment hereunder. Notwithstanding
such disability Company shall continue to pay Employee's base salary up to and
including the date of such termination, and receive the amount of incentive or
other bonuses, if any, that would otherwise have been payable to Employee under
section 3 and which have accrued through nine month period in which such
termination occurs.
4.4 Termination by Company for Cause. Company may at any time during the term of
this agreement, by 30 days written notice to Employee, terminate for cause (as
hereafter defined), Employee's employment hereunder, in which event Employee
shall only be entitled to receive his Base Salary accrued through the effective
date of such termination. Company may not require Employee to render any further
services to Company, Employee shall have no right to receive any other
compensation or benefit hereunder after the effective date of such termination;
provided, however, that the foregoing shall not affect Employee's right to
receive any compensation or benefit under any other agreement accrued to the
date of such termination in accordance with the terms thereof. As used herein
the term for "Cause" shall be deemed to mean and include with respect to
Employee (i) conduct of Employee, at anytime, which has involved criminal
dishonesty, conviction of Employee of any felony, or of any lesser crime or
offense involving the property of Company or any of its subsidiaries or
affiliates, significant conflicts of interest, serious impropriety, or breach of
corporate duty, misappropriation of any money or other assets or properties of
Company or its Subsidiaries, (ii) willful violation of specific and lawful
directions from the Board of Directors of Company, failure or refusal to perform
the services customarily performed by a senior executive officer (and such
failure or refusal continues after a written direction from the Board of
Directors) or expressly required by the terms of this Agreement, or willful
misconduct or gross negligence by Employee in connection with the performance of
his duties hereunder, (iii) chronic alcoholism or drug addiction and (iv) any
other acts or conduct inconsistent with the standards of loyalty, integrity or
care reasonably required by Company of its Employees.
4.5 Termination by Company Without Cause. Company may terminate this agreement
without cause with 60 days written notice to Employee. If Employee is terminated
(other than upon death, disability, voluntary resignation or by Company for
cause), Company may not require Employee to render any further services to
Company, further Company will pay to Employee the following amounts:
(i) Employees base salary through the 60 day notice and additionally
(ii) an amount equal to one half (1/2) of Employees base salary for the
remainder of the agreement.
This will constitute the total amount of Company's obligations to Employee under
this agreement. This does not limit Employee to other benefits to which he may
be entitled under law.
5. CONFIDENTIAL INFORMATION
5.1 Other Employment. Employee shall devote time, attention, knowledge, and
skills to the business and interest of Company, and Company shall be entitled to
all of the benefits, profits, or other issues arising from or incident to all
work, services, and advice of Employee, and Employee shall not, during the term
of this agreement, be interested directly or indirectly, in any manner, as
partner, officer, director, shareholder, advisor, Employee, or in any other
capacity in any other business similar to Company's business unless express
written consent is obtained from the board of directors.
5.2 ` Trade Secrets. Employee shall not at any time or in any manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Company, including without
limitation, any of its customers, its products, or any other information
concerning the business of Company, its manner of operation, its plans,
processes, or other data without regard to whether all of the above stated
matters will be deemed confidential, material, or important, Company and
Employee specifically and expressly stipulating that as between them, such
matters are important, material, confidential and gravely affect the effective
and successful conduct of the business of Company, and Company's good will, and
that any breach of the terms of this section shall be a breach of this
agreement.
5.3 Employee's Inability to Contract for Company. In spite of anything contained
in this agreement to the contrary, Employee shall not have the right to make any
contracts or commitments for or on behalf of Company without proper
authorization.
6. AGREEMENTS
6.1 Modification of Agreement. Any modification of this agreement or additional
obligation assumed by either party in connection with this agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. GENERAL
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall be responsible to pay for all his or her own sums
and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of) this agreement.
7.5 Assignability; Successors. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
______________________________ _____________________________
Lawrence A. Watson John J. Ryff
President Employee
Date: _______________ Date: _______________
/S/
Witness: __________________________
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CARDINAL AIRLINES, INC.
EMPLOYMENT AGREEMENT
This Agreement made, effective as of October 2, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Company"), and
Ronald J. Newbold, residing at 600 Dinner St. N.E., Palm Bay, FL. hereinafter
referred to as ("Employee").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Company and Employee agree as follows:
1. EMPLOYMENT
1.1 Employment and Acceptance. Company hereby employs, engages, and hires
Employee as Vice President of Investor Relations, and Employee hereby accepts
and agrees to such hiring, engagement, and employment.
1.2 Description of Employee's Duties. Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
business or enterprises of the same or similar nature as that engaged in by
employer. Employee shall additionally render such other and unrelated services
and duties as may be assigned to him from time to time by employer.
1.3 Best Efforts. Employee shall at all times faithfully, industriously, and to
the best of his ability, experience, and talents, perform all of the duties that
may be required of and from him pursuant to the express and implicit terms
hereof, to the reasonable satisfaction of employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
employer shall in good faith require or as the interests, needs, business, and
opportunities of employer shall require or make advisable.
2. TERM OF EMPLOYMENT
2.1 Term of Employment. The term of employment shall be for a period of one (1)
year, beginning on the date Company completes a successful Initial Public Stock
Offering, subject to the provisions set forth in paragraph 2.2 below.
2.2 Date of Employment Effectivity The date of employment shall be used as the
date that Employee is placed on the Company payroll. The date of employment may
occur prior to the completion of the registered Initial Public Stock Offering if
agreed to by both Company and Employee.
2.3 Continuance of Employment. Employment shall be considered continued for
regular periods of one (1) year, provided neither party submits a notice of
termination or resignation within 60 days of the expiration date, succeeding
expiration dates or by termination as set forth in this agreement.
3. COMPENSATION OF EMPLOYEE
3.1 Base Salary. During the term of employment and commencing on the date of
employment effectivity, Company shall pay Employee an annual base salary of
$90,000.00. However, Employee base salary will increase to $100,000.00 upon
Company reaching break even load factor and maintaining that level for thirty
(30) consecutive days. The break even load factor will be calculated using the
higher base salary. Employee base salary may be increased or decreased at the
sole discretion of the Board of Directors.
4. TERMINATION
4.1 Termination Due to Discontinuance of Business. In the event that Company
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Company ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
4.2 Termination upon Death. If Employee shall die during the term of this
Agreement, the agreement shall terminate, except that Employee's dependants
shall be entitled to receive Employee's base salary for a period of twelve
months following the month in which his death occurs and, such dependants shall
be entitled to receive the amount of incentive or other bonuses, if any, that
would otherwise have been payable to employee under Section 3. and which have
accrued through the end of the twelve month period in which his death occurs.
4.3 Termination upon Disability. If during the term Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of nine
consecutive months, or (ii) for shorter periods aggregating nine months during
any twelve month period, Company may at any time after the last day of the nine
consecutive months of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of nine months, by written notice to
Employee, terminate the term of Employee's employment hereunder. Notwithstanding
such disability Company shall continue to pay Employee's base salary up to and
including the date of such termination, and receive the amount of incentive or
other bonuses, if any, that would otherwise have been payable to Employee under
section 3 and which have accrued through nine month period in which such
termination occurs.
4.4 Termination by Company for Cause. Company may at any time during the term of
this agreement, by 30 days written notice to Employee, terminate for cause (as
hereafter defined), Employee's employment hereunder, in which event Employee
shall only be entitled to receive his Base Salary accrued through the effective
date of such termination. Company may not require Employee to render any further
services to Company, Employee shall have no right to receive any other
compensation or benefit hereunder after the effective date of such termination;
provided, however, that the foregoing shall not affect Employee's right to
receive any compensation or benefit under any other agreement accrued to the
date of such termination in accordance with the terms thereof. As used herein
the term for "Cause" shall be deemed to mean and include with respect to
Employee (i) conduct of Employee, at anytime, which has involved criminal
dishonesty, conviction of Employee of any felony, or of any lesser crime or
offense involving the property of Company or any of its subsidiaries or
affiliates, significant conflicts of interest, serious impropriety, or breach of
corporate duty, misappropriation of any money or other assets or properties of
Company or its Subsidiaries, (ii) willful violation of specific and lawful
directions from the Board of Directors of Company, failure or refusal to perform
the services customarily performed by a senior executive officer (and such
failure or refusal continues after a written direction from the Board of
Directors) or expressly required by the terms of this Agreement, or willful
misconduct or gross negligence by Employee in connection with the performance of
his duties hereunder, (iii) chronic alcoholism or drug addiction and (iv) any
other acts or conduct inconsistent with the standards of loyalty, integrity or
care reasonably required by Company of its Employees.
4.5 Termination by Company Without Cause. Company may terminate this agreement
without cause with 60 days written notice to Employee. If Employee is terminated
(other than upon death, disability, voluntary resignation or by Company for
cause), Company may not require Employee to render any further services to
Company, further Company will pay to Employee the following amounts:
(i) Employees base salary through the 60 day notice and additionally
(ii) an amount equal to one half (1/2) of Employees base salary for the
remainder of the agreement.
This will constitute the total amount of Company's obligations to Employee under
this agreement. This does not limit Employee to other benefits to which he may
be entitled under law.
5. CONFIDENTIAL INFORMATION
5.1 Other Employment. Employee shall devote time, attention, knowledge, and
skills to the business and interest of Company, and Company shall be entitled to
all of the benefits, profits, or other issues arising from or incident to all
work, services, and advice of Employee, and Employee shall not, during the term
of this agreement, be interested directly or indirectly, in any manner, as
partner, officer, director, shareholder, advisor, Employee, or in any other
capacity in any other business similar to Company's business unless express
written consent is obtained from the board of directors.
5.2 ` Trade Secrets. Employee shall not at any time or in any manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Company, including without
limitation, any of its customers, its products, or any other information
concerning the business of Company, its manner of operation, its plans,
processes, or other data without regard to whether all of the above stated
matters will be deemed confidential, material, or important, Company and
Employee specifically and expressly stipulating that as between them, such
matters are important, material, confidential and gravely affect the effective
and successful conduct of the business of Company, and Company's good will, and
that any breach of the terms of this section shall be a breach of this
agreement.
5.3 Employee's Inability to Contract for Company. In spite of anything contained
in this agreement to the contrary, Employee shall not have the right to make any
contracts or commitments for or on behalf of Company without proper
authorization.
6. AGREEMENTS
6.1 Modification of Agreement. Any modification of this agreement or additional
obligation assumed by either party in connection with this agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. GENERAL
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall be responsible to pay for all his or her own sums
and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of) this agreement.
7.5 Assignability; Successors. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
______________________________ _____________________________
Lawrence A. Watson Ronald J. Newbold
President Employee
Date: _______________ Date: _______________
/S/
Witness: __________________________
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CARDINAL AIRLINES, INC.
EMPLOYMENT AGREEMENT
This Agreement made, effective as of July 1, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Company"), and
Ted A. Walker , residing at 11370 N.E. 8th Ave., Biscayne Park, FL. 33161,
hereinafter referred to as ("Employee").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Company and Employee agree as follows:
1. EMPLOYMENT
1.1 Employment and Acceptance. Company hereby employs, engages, and hires
Employee as Vice President of Properties and Facilities, and Employee hereby
accepts and agrees to such hiring, engagement, and employment
1.2 Description of Employee's Duties. Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
business or enterprises of the same or similar nature as that engaged in by
employer. Employee shall additionally render such other and unrelated services
and duties as may be assigned to him from time to time by employer.
1.3 Best Efforts. Employee shall at all times faithfully, industriously, and to
the best of his ability, experience, and talents, perform all of the duties that
may be required of and from him pursuant to the express and implicit terms
hereof, to the reasonable satisfaction of employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
employer shall in good faith require or as the interests, needs, business, and
opportunities of employer shall require or make advisable.
2. TERM OF EMPLOYMENT
2.1 Term of Employment. The term of employment shall be for a period of three
(3) years, beginning on the date Company completes a successful Initial Public
Stock Offering, subject to the provisions set forth in paragraph 2.2 below.
2.2 Date of Employment Effectivity The date of employment shall be used as the
date that Employee is placed on the Company payroll. The date of employment may
occur prior to the completion of the registered Initial Public Stock Offering if
agreed to by both Company and Employee.
2.3 Continuance of Employment. Employment shall be considered continued for
regular periods of three (3) years, provided neither party submits a notice of
termination or resignation within 60 days of the expiration date, succeeding
expiration dates or by termination as set forth in this agreement.
3. COMPENSATION OF EMPLOYEE
3.1 Base Salary. During the term of employment and commencing on the date of
employment effectivity, Company shall pay Employee an annual base salary of
$90,000.00. However, Employee base salary will increase to $100,000.00 upon
Company reaching break even load factor and maintaining that level for thirty
(30) consecutive days. The break even load factor will be calculated using the
higher base salary. Employee base salary may be increased or decreased at the
sole discretion of the Board of Directors.
4. TERMINATION
4.1 Termination Due to Discontinuance of Business. In the event that Company
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Company ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
4.2 Termination upon Death. If Employee shall die during the term of this
Agreement, the agreement shall terminate, except that Employee's dependants
shall be entitled to receive Employee's base salary for a period of twelve
months following the month in which his death occurs and, such dependants shall
be entitled to receive the amount of incentive or other bonuses, if any, that
would otherwise have been payable to employee under Section 3. and which have
accrued through the end of the twelve month period in which his death occurs.
4.3 Termination upon Disability. If during the term Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of nine
consecutive months, or (ii) for shorter periods aggregating nine months during
any twelve month period, Company may at any time after the last day of the nine
consecutive months of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of nine months, by written notice to
Employee, terminate the term of Employee's employment hereunder. Notwithstanding
such disability Company shall continue to pay Employee's base salary up to and
including the date of such termination, and receive the amount of incentive or
other bonuses, if any, that would otherwise have been payable to Employee under
section 3 and which have accrued through nine month period in which such
termination occurs.
4.4 Termination by Company for Cause. Company may at any time during the term of
this agreement, by 30 days written notice to Employee, terminate for cause (as
hereafter defined), Employee's employment hereunder, in which event Employee
shall only be entitled to receive his Base Salary accrued through the effective
date of such termination. Company may not require Employee to render any further
services to Company, Employee shall have no right to receive any other
compensation or benefit hereunder after the effective date of such termination;
provided, however, that the foregoing shall not affect Employee's right to
receive any compensation or benefit under any other agreement accrued to the
date of such termination in accordance with the terms thereof. As used herein
the term for "Cause" shall be deemed to mean and include with respect to
Employee (i) conduct of Employee, at anytime, which has involved criminal
dishonesty, conviction of Employee of any felony, or of any lesser crime or
offense involving the property of Company or any of its subsidiaries or
affiliates, significant conflicts of interest, serious impropriety, or breach of
corporate duty, misappropriation of any money or other assets or properties of
Company or its Subsidiaries, (ii) willful violation of specific and lawful
directions from the Board of Directors of Company, failure or refusal to perform
the services customarily performed by a senior executive officer (and such
failure or refusal continues after a written direction from the Board of
Directors) or expressly required by the terms of this Agreement, or willful
misconduct or gross negligence by Employee in connection with the performance of
his duties hereunder, (iii) chronic alcoholism or drug addiction and (iv) any
other acts or conduct inconsistent with the standards of loyalty, integrity or
care reasonably required by Company of its Employees.
4.5 Termination by Company Without Cause. Company may terminate this agreement
without cause with 60 days written notice to Employee. If Employee is terminated
(other than upon death, disability, voluntary resignation or by Company for
cause), Company may not require Employee to render any further services to
Company, further Company will pay to Employee the following amounts:
(i) Employees base salary through the 60 day notice and additionally
(ii) an amount equal to one half (1/2) of Employees base salary for the
remainder of the agreement.
This will constitute the total amount of Company's obligations to Employee under
this agreement. This does not limit Employee to other benefits to which he may
be entitled under law.
5. CONFIDENTIAL INFORMATION
5.1 Other Employment. Employee shall devote time, attention, knowledge, and
skills to the business and interest of Company, and Company shall be entitled to
all of the benefits, profits, or other issues arising from or incident to all
work, services, and advice of Employee, and Employee shall not, during the term
of this agreement, be interested directly or indirectly, in any manner, as
partner, officer, director, shareholder, advisor, Employee, or in any other
capacity in any other business similar to Company's business unless express
written consent is obtained from the board of directors.
5.2 ` Trade Secrets. Employee shall not at any time or in any manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Company, including without
limitation, any of its customers, its products, or any other information
concerning the business of Company, its manner of operation, its plans,
processes, or other data without regard to whether all of the above stated
matters will be deemed confidential, material, or important, Company and
Employee specifically and expressly stipulating that as between them, such
matters are important, material, confidential and gravely affect the effective
and successful conduct of the business of Company, and Company's good will, and
that any breach of the terms of this section shall be a breach of this
agreement.
5.3 Employee's Inability to Contract for Company. In spite of anything contained
in this agreement to the contrary, Employee shall not have the right to make any
contracts or commitments for or on behalf of Company without proper
authorization.
6. AGREEMENTS
6.1 Modification of Agreement. Any modification of this agreement or additional
obligation assumed by either party in connection with this agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. GENERAL
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall be responsible to pay for all his or her own sums
and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of) this agreement.
7.5 Assignability; Successors. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
_________________________ __________________________
Lawrence A. Watson Ted A. Walker
President Employee
Date: _______________ Date: _______________
/S/
Witness:_________________________
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CARDINAL AIRLINES, INC.
EMPLOYMENT AGREEMENT
This Agreement made, effective as of December 10, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Company"), and
Karen D. Glover, residing at 2455 Summer Brook St. Melbourne, FL 32940
hereinafter referred to as ("Employee").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Company and Employee agree as follows:
1. EMPLOYMENT
1.1 Employment and Acceptance. Company hereby employs, engages, and hires
Employee as Director In-Flight Services and Chief Flight Attendant, and Employee
hereby accepts and agrees to such hiring, engagement, and employment.
1.2 Description of Employee's Duties. Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
business or enterprises of the same or similar nature as that engaged in by
employer. Employee shall insure that the highest level of safety is maintained
by the airlines. Employee shall additionally render such other and unrelated
services and duties as may be assigned to him from time to time by employer.
1.3 Best Efforts. Employee shall at all times faithfully, industriously, and to
the best of his ability, experience, and talents, perform all of the duties that
may be required of and from him pursuant to the express and implicit terms
hereof, to the reasonable satisfaction of employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
employer shall in good faith require or as the interests, needs, business, and
opportunities of employer shall require or make advisable.
2. TERM OF EMPLOYMENT
2.1 Term of Employment. The term of employment shall be for a period of one (1)
year, beginning on the date Company completes a successful Initial Public Stock
Offering, subject to the provisions set forth in paragraph 2.2 below.
2.2 Date of Employment Effectivity The date of employment shall be used as the
date that Employee is placed on the Company payroll. The date of employment may
occur prior to the completion of the registered Initial Public Stock Offering if
agreed to by both Company and Employee.
2.3 Continuance of Employment. Employment shall be considered continued for
regular periods one (1) year, provided neither party submits a notice of
termination or resignation within 60 days of the expiration date, succeeding
expiration dates or by termination as set forth in this agreement.
3. COMPENSATION OF EMPLOYEE
3.1 Base Salary. During the term of employment and commencing on the date of
employment effectivity, Company shall pay Employee an annual base salary of
$70,000.00. However, Employee base salary will increase to $80,000.00 upon
Company reaching break even load factor and maintaining that level for thirty
(30) consecutive days. The break even load factor will be calculated using the
higher base salary. Employee base salary may be increased at the sole discretion
of the Board of Directors. If circumstances arise whereas Company must decrease
salaries of its employees employee's salary will be decreased.
3.2 Stock. As an essential consideration of this agreement and immediately upon
the execution thereof, the Company agrees to sell and the Employee will be
eligible to purchase 30,000 shares of the Common Stock of the Company at a
purchase price of $.01 per share, the terms and conditions of such purchase
being set forth in the Stockholders Subscription Agreement which shall be
attached to and shall be made an integral part of this agreement.
3.3 Expense Approval. Prior to incurring any expenses, Employee is required to
obtain authorization from Company in regard to said expenses. Employee will be
required to provide appropriate vouchers and receipts for such expenses to
Company prior to reimbursement consideration. Company maintains the right to
deny reimbursement of any unauthorized expenses.
3.4 Participation in Employee Benefit Plans. Employee will be eligible to
participate in each group life, hospitalization or disability insurance plan,
health program, pension plan or similar benefit plan and any stock option plan
of Company, which is available to other employees and executives of Company for
which he qualifies. As of the date first written above, Company has no employee
benefit plan or program in effect.
4. TERMINATION
4.1 Termination Due to Discontinuance of Business. In the event that Company
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Company ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
4.2 Termination upon Death. If Employee shall die during the term of this
Agreement, the agreement shall terminate, except that Employee's dependants
shall be entitled to receive Employee's base salary for a period of twelve
months following the month in which his death occurs and, such dependants shall
be entitled to receive the amount of incentive or other bonuses, if any, that
would otherwise have been payable to employee under Section 3. and which have
accrued through the end of the twelve month period in which his death occurs.
4.3 Termination upon Disability. If during the term Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of nine
consecutive months, or (ii) for shorter periods aggregating nine months during
any twelve month period, Company may at any time after the last day of the nine
consecutive months of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of nine months, by written notice to
Employee, terminate the term of Employee's employment hereunder. Notwithstanding
such disability Company shall continue to pay Employee's base salary up to and
including the date of such termination, and receive the amount of incentive or
other bonuses, if any, that would otherwise have been payable to Employee under
section 3 and which have accrued through nine month period in which such
termination occurs.
4.4 Termination by Company for Cause. Company may at any time during the term of
this agreement, by 30 days written notice to Employee, terminate for cause (as
hereafter defined), Employee's employment hereunder, in which event Employee
shall only be entitled to receive his/her Base Salary accrued through the
effective date of such termination. Company may not require Employee to render
any further services to Company, Employee shall have no right to receive any
other compensation or benefit hereunder after the effective date of such
termination; provided, however, that the foregoing shall not affect Employee's
right to receive any compensation or benefit under any other agreement accrued
to the date of such termination in accordance with the terms thereof. As used
herein the term for "Cause" shall be deemed to mean and include with respect to
Employee (i) conduct of Employee, at anytime, which has involved criminal
dishonesty, conviction of Employee of any felony, or of any lesser crime or
offense involving the property of Company or any of its subsidiaries or
affiliates, significant conflicts of interest, serious impropriety, or breach of
corporate duty, misappropriation of any money or other assets or properties of
Company or its Subsidiaries, (ii) willful violation of specific and lawful
directions from the Board of Directors or the Chief Executive Officer of
Company, failure or refusal to perform the services customarily performed by a
senior executive officer (and such failure or refusal continues after a written
direction from the Board of Directors) or expressly required by the terms of
this Agreement, or willful misconduct or gross negligence by Employee in
connection with the performance of his duties hereunder, (iii) chronic
alcoholism or drug addiction and (iv) any other acts or conduct inconsistent
with the standards of loyalty, integrity or care reasonably required by Company
of its Employees.
4.5 Termination by Company Without Cause. Company may terminate this agreement
without cause with 60 days written notice to Employee. If Employee is terminated
(other than upon death, disability, voluntary resignation or by Company for
cause), Company may not require Employee to render any further services to
Company, further Company will pay to Employee the following amounts:
(i) Employees base salary through the 60 day notice and additionally
(ii) an amount equal to one half (1/2) of Employees base salary for the
remainder of the agreement.
This will constitute the total amount of Company's obligations to Employee under
this agreement. This does not limit Employee to other benefits to which he may
be entitled under law.
4.6 Failure to Pay Employee. The failure of Company to pay Employee his salary
as provided in Section 3 may, in Employee's sole discretion be deemed a breach
of this agreement, and unless such breach is cured within sixty (60) days after
written notice to Company, this employment agreement shall terminate.
5. CONFIDENTIAL INFORMATION
5.1 Other Employment. Employee shall devote time, attention, knowledge, and
skills to the business and interest of Company, and Company shall be entitled to
all of the benefits, profits, or other issues arising from or incident to all
work, services, and advice of Employee, and Employee shall not, during the term
of this agreement, be interested directly or indirectly, in any manner, as
partner, officer, director, shareholder, advisor, Employee, or in any other
capacity in any other business similar to Company's business unless express
written consent is obtained from Employer.
5.2 Trade Secrets. Employee shall not at any time or in any manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Company, including without
limitation, any of its customers, its products, or any other information
concerning the business of Company, its manner of operation, its plans,
processes, or other data without regard to whether all of the above stated
matters will be deemed confidential, material, or important, Company and
Employee specifically and expressly stipulating that as between them, such
matters are important, material, confidential and gravely affect the effective
and successful conduct of the business of Company, and Company's good will, and
that any breach of the terms of this section shall be a breach of this
agreement.
5.3 Employee's Inability to Contract for Company. In spite of anything contained
in this agreement to the contrary, Employee shall not have the right to make any
contracts or commitments for or on behalf of Company without first obtaining
proper authority from the Employer.
6. AGREEMENTS
6.1 Modification of Agreement. Any modification of this agreement or additional
obligation assumed by either party in connection with this agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. GENERAL
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall be responsible to pay for all his or her own sums
and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of) this agreement.
7.5 Assignability; Successors. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
_____________________________ _____________________________
Lawrence A. Watson Karen D. Glover
President Employee
Date: _______________ Date: _______________
/S/
Witness: __________________________
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CARDINAL AIRLINES, INC.
EMPLOYMENT AGREEMENT
This Agreement made, effective as of November 5, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Company"), and
David A. Linsley, residing at 6483 Fox Run Circle Jupiter, FL 33458-1875
hereinafter referred to as ("Employee").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Company and Employee agree as follows:
1. EMPLOYMENT
1.1 Employment and Acceptance. Company hereby employs, engages, and hires
Employee as Vice President of Flight Operations, and Employee hereby accepts and
agrees to such hiring, engagement, and employment
1.2 Description of Employee's Duties. Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
business or enterprises of the same or similar nature as that engaged in by
employer. Employee shall insure that the highest level of safety is maintained
by the airlines. Employee shall additionally render such other and unrelated
services and duties as may be assigned to him from time to time by employer.
1.3 Best Efforts. Employee shall at all times faithfully, industriously, and to
the best of his ability, experience, and talents, perform all of the duties that
may be required of and from him pursuant to the express and implicit terms
hereof, to the reasonable satisfaction of employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
employer shall in good faith require or as the interests, needs, business, and
opportunities of employer shall require or make advisable.
2. TERM OF EMPLOYMENT
2.1 Term of Employment. The term of employment shall be for a period of one (1)
year, beginning on the date Company completes a successful Initial Public Stock
Offering, subject to the provisions set forth in paragraph 2.2 below.
2.2 Date of Employment Effectivity The date of employment shall be used as the
date that Employee is placed on the Company payroll. The date of employment may
occur prior to the completion of the registered Initial Public Stock Offering if
agreed to by both Company and Employee.
2.3 Continuance of Employment. Employment shall be considered continued for
regular periods one (1) year, provided neither party submits a notice of
termination or resignation within 60 days of the expiration date, succeeding
expiration dates or by termination as set forth in this agreement.
3. COMPENSATION OF EMPLOYEE
3.1 Base Salary. During the term of employment and commencing on the date of
employment effectivity, Company shall pay Employee an annual base salary of
$90,000.00. However, Employee base salary will increase to $100,000.00 upon
Company reaching break even load factor and maintaining that level for thirty
(30) consecutive days. The break even load factor will be calculated using the
higher base salary. Employee base salary may be increased at the sole discretion
of the Board of Directors. If circumstances arise whereas Company must decrease
salaries of its employees employee's salary will be decreased.
3.2 Stock. As an essential consideration of this agreement and immediately upon
the execution thereof, the Company agrees to sell and the Employee will be
eligible to purchase 40,000 shares of the Common Stock of the Company at a
purchase price of $.01 per share, the terms and conditions of such purchase
being set forth in the Stockholders Subscription Agreement which shall be
attached to and shall be made an integral part of this agreement.
3.3 Temporary Housing Allotment. Employee will be reimbursed for usual,
reasonable, customary living expenses. The expenses will be for a period of one
(1) year beginning from the date of employment. Expenses may be revoked
immediately by Company due to termination. Employee may elect to discontinue
receiving the expense at his discretion during the expense period.
3.4 Expense Approval. Prior to incurring any additional expenses other than as
described in section3.3 above, Employee is required to obtain authorization from
Company in regard to said expenses. Employee will be required to provide
appropriate vouchers and receipts for such expenses to Company prior to
reimbursement consideration. Company maintains the right to deny reimbursement
of any unauthorized expenses.
3.5 Participation in Employee Benefit Plans. Employee will be eligible to
participate in each group life, hospitalization or disability insurance plan,
health program, pension plan or similar benefit plan and any stock option plan
of Company, which is available to other employees and executives of Company for
which he qualifies. As of the date first written above, Company has no employee
benefit plan or program in effect.
4. TERMINATION
4.1 Termination Due to Discontinuance of Business. In the event that Company
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Company ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
4.2 Termination upon Death. If Employee shall die during the term of this
Agreement, the agreement shall terminate, except that Employee's dependants
shall be entitled to receive Employee's base salary for a period of twelve
months following the month in which his death occurs and, such dependants shall
be entitled to receive the amount of incentive or other bonuses, if any, that
would otherwise have been payable to employee under Section 3. and which have
accrued through the end of the twelve month period in which his death occurs.
4.3 Termination upon Disability. If during the term Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of nine
consecutive months, or (ii) for shorter periods aggregating nine months during
any twelve month period, Company may at any time after the last day of the nine
consecutive months of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of nine months, by written notice to
Employee, terminate the term of Employee's employment hereunder. Notwithstanding
such disability Company shall continue to pay Employee's base salary up to and
including the date of such termination, and receive the amount of incentive or
other bonuses, if any, that would otherwise have been payable to Employee under
section 3 and which have accrued through nine month period in which such
termination occurs.
4.4 Termination by Company for Cause. Company may at any time during the term of
this agreement, by 30 days written notice to Employee, terminate for cause (as
hereafter defined), Employee's employment hereunder, in which event Employee
shall only be entitled to receive his/her Base Salary accrued through the
effective date of such termination. Company may not require Employee to render
any further services to Company, Employee shall have no right to receive any
other compensation or benefit hereunder after the effective date of such
termination; provided, however, that the foregoing shall not affect Employee's
right to receive any compensation or benefit under any other agreement accrued
to the date of such termination in accordance with the terms thereof. As used
herein the term for "Cause" shall be deemed to mean and include with respect to
Employee (i) conduct of Employee, at anytime, which has involved criminal
dishonesty, conviction of Employee of any felony, or of any lesser crime or
offense involving the property of Company or any of its subsidiaries or
affiliates, significant conflicts of interest, serious impropriety, or breach of
corporate duty, misappropriation of any money or other assets or properties of
Company or its Subsidiaries, (ii) willful violation of specific and lawful
directions from the Board of Directors or the Chief Executive Officer of
Company, failure or refusal to perform the services customarily performed by a
senior executive officer (and such failure or refusal continues after a written
direction from the Board of Directors) or expressly required by the terms of
this Agreement, or willful misconduct or gross negligence by Employee in
connection with the performance of his duties hereunder, (iii) chronic
alcoholism or drug addiction and (iv) any other acts or conduct inconsistent
with the standards of loyalty, integrity or care reasonably required by Company
of its Employees.
4.5 Termination by Company Without Cause. Company may terminate this agreement
without cause with 60 days written notice to Employee. If Employee is terminated
(other than upon death, disability, voluntary resignation or by Company for
cause), Company may not require Employee to render any further services to
Company, further Company will pay to Employee the following amounts:
(i) Employees base salary through the 60 day notice and additionally
(ii) an amount equal to one half (1/2) of Employees base salary for the
remainder of the agreement.
This will constitute the total amount of Company's obligations to Employee under
this agreement. This does not limit Employee to other benefits to which he may
be entitled under law.
4.6 Failure to Pay Employee. The failure of Company to pay Employee his salary
as provided in Section 3 may, in Employee's sole discretion be deemed a breach
of this agreement, and unless such breach is cured within sixty (60) days after
written notice to Company, this employment agreement shall terminate.
5. CONFIDENTIAL INFORMATION
5.1 Other Employment. Employee shall devote time, attention, knowledge, and
skills to the business and interest of Company, and Company shall be entitled to
all of the benefits, profits, or other issues arising from or incident to all
work, services, and advice of Employee, and Employee shall not, during the term
of this agreement, be interested directly or indirectly, in any manner, as
partner, officer, director, shareholder, advisor, Employee, or in any other
capacity in any other business similar to Company's business unless express
written consent is obtained from Employer.
5.2 Trade Secrets. Employee shall not at any time or in any manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Company, including without
limitation, any of its customers, its products, or any other information
concerning the business of Company, its manner of operation, its plans,
processes, or other data without regard to whether all of the above stated
matters will be deemed confidential, material, or important, Company and
Employee specifically and expressly stipulating that as between them, such
matters are important, material, confidential and gravely affect the effective
and successful conduct of the business of Company, and Company's good will, and
that any breach of the terms of this section shall be a breach of this
agreement.
5.3 Employee's Inability to Contract for Company. In spite of anything contained
in this agreement to the contrary, Employee shall not have the right to make any
contracts or commitments for or on behalf of Company without first obtaining
proper authority from the Employer.
6. AGREEMENTS
6.1 Modification of Agreement. Any modification of this agreement or additional
obligation assumed by either party in connection with this agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. GENERAL
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall be responsible to pay for all his or her own sums
and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of) this agreement.
7.5 Assignability; Successors. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
_____________________________ _____________________________
Lawrence A. Watson David A. Linsley
President Employee
Date: _______________ Date: _______________
/S/
Witness: __________________________
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CARDINAL AIRLINES, INC.
EMPLOYMENT AGREEMENT
This Agreement made, effective as of December 10, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Company"), and
John J. Pertschi, residing at 5280 S.W. 4th St Plantation, FL 33761 hereinafter
referred to as ("Employee").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Company and Employee agree as follows:
1. EMPLOYMENT
1.1 Employment and Acceptance. Company hereby employs, engages, and hires
Employee as Vice President Maintenance, and Employee hereby accepts and agrees
to such hiring, engagement, and employment
1.2 Description of Employee's Duties. Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
business or enterprises of the same or similar nature as that engaged in by
employer. Employee shall insure that the highest level of safety is maintained
by the airlines. Employee shall additionally render such other and unrelated
services and duties as may be assigned to him from time to time by employer.
1.3 Best Efforts. Employee shall at all times faithfully, industriously, and to
the best of his ability, experience, and talents, perform all of the duties that
may be required of and from him pursuant to the express and implicit terms
hereof, to the reasonable satisfaction of employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
employer shall in good faith require or as the interests, needs, business, and
opportunities of employer shall require or make advisable.
2. TERM OF EMPLOYMENT
2.1 Term of Employment. The term of employment shall be for a period of one (1)
year, beginning on the date Company completes a successful Initial Public Stock
Offering, subject to the provisions set forth in paragraph 2.2 below.
2.2 Date of Employment Effectivity The date of employment shall be used as the
date that Employee is placed on the Company payroll. The date of employment may
occur prior to the completion of the registered Initial Public Stock Offering if
agreed to by both Company and Employee.
2.3 Continuance of Employment. Employment shall be considered continued for
regular periods one (1) year, provided neither party submits a notice of
termination or resignation within 60 days of the expiration date, succeeding
expiration dates or by termination as set forth in this agreement.
3. COMPENSATION OF EMPLOYEE
3.1 Base Salary. During the term of employment and commencing on the date of
employment effectivity, Company shall pay Employee an annual base salary of
$90,000.00. However, Employee base salary will increase to $100,000.00 upon
Company reaching break even load factor and maintaining that level for thirty
(30) consecutive days. The break even load factor will be calculated using the
higher base salary. Employee base salary may be increased at the sole discretion
of the Board of Directors. If circumstances arise whereas Company must decrease
salaries of its employees employee's salary will be decreased.
3.2 Stock. As an essential consideration of this agreement and immediately upon
the execution thereof, the Company agrees to sell and the Employee will be
eligible to purchase 40,000 shares of the Common Stock of the Company at a
purchase price of $.01 per share, the terms and conditions of such purchase
being set forth in the Stockholders Subscription Agreement which shall be
attached to and shall be made an integral part of this agreement.
3.3 Temporary Housing Allotment. Employee will be reimbursed for usual,
reasonable, customary living expenses. The expenses will be for a period of one
(1) year beginning from the date of employment. Expenses may be revoked
immediately by Company due to termination. Employee may elect to discontinue
receiving the expense at his discretion during the expense period.
3.4 Expense Approval. Prior to incurring any additional expenses other than as
described in section3.3 above, Employee is required to obtain authorization from
Company in regard to said expenses. Employee will be required to provide
appropriate vouchers and receipts for such expenses to Company prior to
reimbursement consideration. Company maintains the right to deny reimbursement
of any unauthorized expenses.
3.5 Participation in Employee Benefit Plans. Employee will be eligible to
participate in each group life, hospitalization or disability insurance plan,
health program, pension plan or similar benefit plan and any stock option plan
of Company, which is available to other employees and executives of Company for
which he qualifies. As of the date first written above, Company has no employee
benefit plan or program in effect.
4. TERMINATION
4.1 Termination Due to Discontinuance of Business. In the event that Company
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Company ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
4.2 Termination upon Death. If Employee shall die during the term of this
Agreement, the agreement shall terminate, except that Employee's dependants
shall be entitled to receive Employee's base salary for a period of twelve
months following the month in which his death occurs and, such dependants shall
be entitled to receive the amount of incentive or other bonuses, if any, that
would otherwise have been payable to employee under Section 3. and which have
accrued through the end of the twelve month period in which his death occurs.
4.3 Termination upon Disability. If during the term Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of nine
consecutive months, or (ii) for shorter periods aggregating nine months during
any twelve month period, Company may at any time after the last day of the nine
consecutive months of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of nine months, by written notice to
Employee, terminate the term of Employee's employment hereunder. Notwithstanding
such disability Company shall continue to pay Employee's base salary up to and
including the date of such termination, and receive the amount of incentive or
other bonuses, if any, that would otherwise have been payable to Employee under
section 3 and which have accrued through nine month period in which such
termination occurs.
4.4 Termination by Company for Cause. Company may at any time during the term of
this agreement, by 30 days written notice to Employee, terminate for cause (as
hereafter defined), Employee's employment hereunder, in which event Employee
shall only be entitled to receive his/her Base Salary accrued through the
effective date of such termination. Company may not require Employee to render
any further services to Company, Employee shall have no right to receive any
other compensation or benefit hereunder after the effective date of such
termination; provided, however, that the foregoing shall not affect Employee's
right to receive any compensation or benefit under any other agreement accrued
to the date of such termination in accordance with the terms thereof. As used
herein the term for "Cause" shall be deemed to mean and include with respect to
Employee (i) conduct of Employee, at anytime, which has involved criminal
dishonesty, conviction of Employee of any felony, or of any lesser crime or
offense involving the property of Company or any of its subsidiaries or
affiliates, significant conflicts of interest, serious impropriety, or breach of
corporate duty, misappropriation of any money or other assets or properties of
Company or its Subsidiaries, (ii) willful violation of specific and lawful
directions from the Board of Directors or the Chief Executive Officer of
Company, failure or refusal to perform the services customarily performed by a
senior executive officer (and such failure or refusal continues after a written
direction from the Board of Directors) or expressly required by the terms of
this Agreement, or willful misconduct or gross negligence by Employee in
connection with the performance of his duties hereunder, (iii) chronic
alcoholism or drug addiction and (iv) any other acts or conduct inconsistent
with the standards of loyalty, integrity or care reasonably required by Company
of its Employees.
4.5 Termination by Company Without Cause. Company may terminate this agreement
without cause with 60 days written notice to Employee. If Employee is terminated
(other than upon death, disability, voluntary resignation or by Company for
cause), Company may not require Employee to render any further services to
Company, further Company will pay to Employee the following amounts:
(i) Employees base salary through the 60 day notice and additionally
(ii) an amount equal to one half (1/2) of Employees base salary for the
remainder of the agreement.
This will constitute the total amount of Company's obligations to Employee under
this agreement. This does not limit Employee to other benefits to which he may
be entitled under law.
4.6 Failure to Pay Employee. The failure of Company to pay Employee his salary
as provided in Section 3 may, in Employee's sole discretion be deemed a breach
of this agreement, and unless such breach is cured within sixty (60) days after
written notice to Company, this employment agreement shall terminate.
5. CONFIDENTIAL INFORMATION
5.1 Other Employment. Employee shall devote time, attention, knowledge, and
skills to the business and interest of Company, and Company shall be entitled to
all of the benefits, profits, or other issues arising from or incident to all
work, services, and advice of Employee, and Employee shall not, during the term
of this agreement, be interested directly or indirectly, in any manner, as
partner, officer, director, shareholder, advisor, Employee, or in any other
capacity in any other business similar to Company's business unless express
written consent is obtained from Employer.
5.2 Trade Secrets. Employee shall not at any time or in any manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Company, including without
limitation, any of its customers, its products, or any other information
concerning the business of Company, its manner of operation, its plans,
processes, or other data without regard to whether all of the above stated
matters will be deemed confidential, material, or important, Company and
Employee specifically and expressly stipulating that as between them, such
matters are important, material, confidential and gravely affect the effective
and successful conduct of the business of Company, and Company's good will, and
that any breach of the terms of this section shall be a breach of this
agreement.
5.3 Employee's Inability to Contract for Company. In spite of anything contained
in this agreement to the contrary, Employee shall not have the right to make any
contracts or commitments for or on behalf of Company without first obtaining
proper authority from the Employer.
6. AGREEMENTS
6.1 Modification of Agreement. Any modification of this agreement or
additional obligation assumed by either party in connection with this agreement
shall be binding only if evidenced in writing signed by each party or an
authorized representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. GENERAL
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall
be responsible to pay for all his or her own sums and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of) this agreement.
7.5 Assignability; Successors. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
_____________________________ _____________________________
Lawrence A. Watson John J. Pertschi
President Employee
Date: _______________ Date: _______________
/S/
Witness: __________________________
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CARDINAL AIRLINES, INC.
EMPLOYMENT AGREEMENT
This Agreement made, effective as of November 5, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Company"), and
Thomas L. Vandervelde, residing at 128 Albacore Lane, Foster City, CA 94404
hereinafter referred to as ("Employee").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Company and Employee agree as follows:
1. EMPLOYMENT
1.1 Employment and Acceptance. Company hereby employs, engages, and hires
Employee as Vice President of Regulatory Compliance, and Employee hereby accepts
and agrees to such hiring, engagement, and employment
1.2 Description of Employee's Duties. Subject to the supervision and pursuant to
the orders, advice, and direction of employer, employee shall perform such
duties as are customarily performed by one holding such position in other
business or enterprises of the same or similar nature as that engaged in by
employer. Employee shall insure that the highest level of safety is maintained
by the airlines. Employee shall additionally render such other and unrelated
services and duties as may be assigned to him from time to time by employer.
1.3 Best Efforts. Employee shall at all times faithfully, industriously, and to
the best of his ability, experience, and talents, perform all of the duties that
may be required of and from him pursuant to the express and implicit terms
hereof, to the reasonable satisfaction of employer. Such duties shall be
rendered at the above mentioned premises and at such other place or places as
employer shall in good faith require or as the interests, needs, business, and
opportunities of employer shall require or make advisable.
2. TERM OF EMPLOYMENT
2.1 Term of Employment. The term of employment shall be for a period of one (1)
year, beginning on the date Company receives its 121 Air Carrier Certificate
from the FAA and Economic Authority from the Office of the Secretary of
Transportation, subject to the provisions set forth in paragraph 2.2 below.
2.2 Date of Employment Effectivity The date of employment shall be used as the
date that Employee is placed on the Company payroll. The date of employment may
occur prior to the completion of the 121 Air Carrier Certificate from the FAA
and the Economic Authority from the Secretary of Transportation if agreed to by
both Company and Employee.
2.3 Continuance of Employment. Employment shall be considered continued for
regular periods one (1) years, provided neither party submits a notice of
termination or resignation within 60 days of the expiration date, succeeding
expiration dates or by termination as set forth in this agreement.
3. COMPENSATION OF EMPLOYEE
3.1 Base Salary. During the term of employment and commencing on the date of
employment effectivity, Company shall pay Employee an annual base salary of
$90,000.00. However, Employee base salary will increase to $100,000.00 upon
Company reaching break even load factor and maintaining that level for thirty
(30) consecutive days. The break even load factor will be calculated using the
higher base salary. Employee base salary may be increased at the sole discretion
of the Board of Directors. If circumstances arise whereas Company must decrease
salaries of its Employees employee's salary will be decreased.
3.2 Stock. As an essential consideration of this agreement and immediately upon
the execution thereof, Company agrees to sell and Employee will be eligible to
purchase 50,000 shares of the Common Stock of Company at a purchase price of
$.01 per share, the terms and conditions of such purchase being set forth in the
Stockholders Subscription Agreement which shall be attached to and shall be made
an integral part of this agreement.
3.3 Temporary Housing Allotment. Employee will be reimbursed for usual,
reasonable, customary out-of-pocket expenses, including travel and lodging. Due
to the great distance to Employee residence, 24 trips will be authorized to and
from Employee residence, any additional trips must be authorized by the Company.
The expenses will be for a period of one (1) year beginning from the date of
employment. Expenses may be revoked immediately by Company due to termination,
or Employee may elect to discontinue receiving the expense at his discretion
during the expense period.
3.4 Expense Approval. Prior to incurring any additional expenses other than as
described in section3.3 above, Employee is required to obtain authorization from
Company in regard to said expenses. Employee will be required to provide
appropriate vouchers and receipts for such expenses to Company prior to
reimbursement consideration. Company maintains the right to deny reimbursement
of any unauthorized expenses.
3.5 Participation in Employee Benefit Plans. Employee will be eligible to
participate in each group life, hospitalization or disability insurance plan,
health program, pension plan or similar benefit plan and any stock option plan
of Company, which is available to other employees and executives of Company for
which he qualifies. As of the date first written above, Company has no employee
benefit plan or program in effect.
4. TERMINATION
4.1 Termination Due to Discontinuance of Business. In the event that Company
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Company ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
4.2 Termination upon Death. If Employee shall die during the term of this
Agreement, the agreement shall terminate, except that Employee's dependants
shall be entitled to receive Employee's base salary for a period of twelve
months following the month in which his death occurs and, such dependants shall
be entitled to receive the amount of incentive or other bonuses, if any, that
would otherwise have been payable to employee under Section 3. and which have
accrued through the end of the twelve month period in which his death occurs.
4.3 Termination upon Disability. If during the term Employee shall become
physically or mentally disabled, whether totally or partially, so that he is
unable substantially to perform his services hereunder for (i) a period of nine
consecutive months, or (ii) for shorter periods aggregating nine months during
any twelve month period, Company may at any time after the last day of the nine
consecutive months of disability or the day on which the shorter periods of
disability shall have equaled an aggregate of nine months, by written notice to
Employee, terminate the term of Employee's employment hereunder. Notwithstanding
such disability Company shall continue to pay Employee's base salary up to and
including the date of such termination, and receive the amount of incentive or
other bonuses, if any, that would otherwise have been payable to Employee under
section 3 and which have accrued through nine month period in which such
termination occurs.
4.4 Termination by Company for Cause. Company may at any time during the term
of this agreement, by 30 days written notice to Employee, terminate for cause
(as hereafter defined), Employee's employment hereunder, in which event Employee
shall only be entitled to receive his/her Base Salary accrued through the
effective date of such termination. Company may not require Employee to render
any further services to Company, Employee shall have no right to receive any
other compensation or benefit hereunder after the effective date of such
termination; provided, however, that the foregoing shall not affect Employee's
right to receive any compensation or benefit under any other agreement accrued
to the date of such termination in accordance with the terms thereof. As used
herein the term for "Cause" shall be deemed to mean and include with respect to
Employee (i) conduct of Employee, at anytime, which has involved criminal
dishonesty, conviction of Employee of any felony, or of any lesser crime or
offense involving the property of Company or any of its subsidiaries or
affiliates, significant conflicts of interest, serious impropriety, or breach of
corporate duty, misappropriation of any money or other assets or properties of
Company or its Subsidiaries, (ii) willful violation of specific and lawful
directions from the Board of Directors or the Chief Executive Officer of
Company, failure or refusal to perform the services customarily performed by a
senior executive officer (and such failure or refusal continues after a written
direction from the Board of Directors) or expressly required by the terms of
this Agreement, or willful misconduct or gross negligence by Employee in
connection with the performance of his duties hereunder, (iii) chronic
alcoholism or drug addiction and (iv) any other acts or conduct inconsistent
with the standards of loyalty, integrity or care reasonably required by Company
of its Employees.
4.5 Termination by Company Without Cause. Company may terminate this agreement
without cause with 60 days written notice to Employee. If Employee is terminated
(other than upon death, disability, voluntary resignation or by Company for
cause), Company may not require Employee to render any further services to
Company, further Company will pay to Employee the following amounts:
(i) Employees base salary through the 60 day notice and
additionally
(ii) an amount equal to one half (1/2) of Employees base
salary for the remainder of the agreement.
This will constitute the total amount of Company's obligations to Employee under
this agreement. This does not limit Employee to other benefits to which he may
be entitled under law.
4.6 Failure to Pay Employee. The failure of Company to pay Employee his salary
as provided in Section 3 may, in Employee's sole discretion be deemed a breach
of this agreement, and unless such breach is cured within sixty (60) days after
written notice to Company, this employment agreement shall terminate.
5. CONFIDENTIAL INFORMATION
5.1 Other Employment. Employee shall devote time, attention, knowledge, and
skills to the business and interest of Company, and Company shall be entitled to
all of the benefits, profits, or other issues arising from or incident to all
work, services, and advice of Employee, and Employee shall not, during the term
of this agreement, be interested directly or indirectly, in any manner, as
partner, officer, director, shareholder, advisor, Employee, or in any other
capacity in any other business similar to Company's business unless express
written consent is obtained from Employer.
5.2 ` Trade Secrets. Employee shall not at any time or in any manner, either
directly or indirectly, divulge, disclose or communicate to any person, firm,
corporation, or other entity in any manner whatsoever any information concerning
any matters affecting or relating to the business of Company, including without
limitation, any of its customers, its products, or any other information
concerning the business of Company, its manner of operation, its plans,
processes, or other data without regard to whether all of the above stated
matters will be deemed confidential, material, or important, Company and
Employee specifically and expressly stipulating that as between them, such
matters are important, material, confidential and gravely affect the effective
and successful conduct of the business of Company, and Company's good will, and
that any breach of the terms of this section shall be a breach of this
agreement.
5.3 Employee's Inability to Contract for Company. In spite of anything contained
in this agreement to the contrary, Employee shall not have the right to make any
contracts or commitments for or on behalf of Company without first obtaining
proper authority from the Employer.
6. AGREEMENTS
6.1 Modification of Agreement. Any modification of this agreement or additional
obligation assumed by either party in connection with this agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. GENERAL
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall be responsible to pay for all his or her own sums
and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of) this agreement.
7.5 Assignability; Successors. This Agreement, and Employee's rights and
obligations hereunder, may not be assigned by Employee. Company may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Company hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
__________________________ _____________________________
Lawrence A. Watson Thomas L. Vandervelde
Employer Employee
Date: _______________ Date: _______________
/S/
Witness ___________________
Employer Initial:__________ Employee Initial:__________
Date:__________ Date:__________
CONTRACT BETWEEN
CARDINAL AIRLINES, INC. and Maviation, LLC.
This Agreement made, effective as of October 14, 1998, by and between Cardinal
Airlines, Inc., a corporation duly organized and existing under the laws of the
State of Delaware, having its principal place of business at 1380 Sarno Road
Suite "B", Melbourne, Florida 32935 hereinafter referred to as ("Cardinal"), and
Maviation, LLC. having its principal place of business at 3232 Mission St., San
Francisco, CA 94110 hereinafter referred to as ("Maviation").
For the reasons in consideration of the mutual promises and agreements set forth
in this agreement, Cardinal and Maviation agree as follows:
1. Objective and Scope
1.1 Contract and Acceptance. Cardinal hereby employs, engages, and hires
Maviation to provide expertise to direct, monitor and oversee Cardinal's initial
Part 121 Certification process and Maviation hereby accepts and agrees to such
hiring and engagement.
1.2 Work Scope. The scope of work for this project will be to act as the single
point of contact and liaison between the FAA and Cardinal. The specific work
task would be to direct and monitor the overall certification process for
Cardinal. One of the most difficult parts of this task is the development of the
complete set of required manuals. Maviation has a set of manuals that may be
modified to agree with the Cardinal's organization and operating philosophies
and procedures.
1.3 Deliverables. Maviation will provide Cardinal with an effective strategic
plan and cost efficient Part 121 Certification process that will result in
receiving their operating Certificate in the shortest period of time, which is
expected to be six months.
2. Term of Contract
2.1 Term of Contract. The contract term shall begin on the date that Cardinal
completes its planned Initial Public Offering, or prior to that date if agreed
to by both parties. This contract will remain in effect until such time as the
Air Carrier Certificate is issued by the FAA.
3. Professional Fees and Terms
3.1 Expenses. Maviation's daily rate is $800.00 per day. In addition to the
daily rate, usual, reasonable and customary out of pocket expenses incurred by
Maviation in connection with the project, including travel and lodging, shall be
reimbursed to Maviation.
3.2 Expense Approval. Prior to incurring any expenses other than normal expenses
as outlined in 3.1 above, Maviation is required to obtain authorization from
Cardinal in regard to said expense. Maviation will be required to provide
appropriate vouchers and receipts for such expenses to Cardinal prior to such
reimbursement considerations. Cardinal maintains the right to deny reimbursement
of any unauthorized expense.
3.3 Invoice and Payment. Maviation will Invoice Cardinal on a bi-monthly basis,
and invoices become due and payable upon receipt.
4. Termination
4.1 Termination Due to Discontinuance of Business. In the event that Cardinal
shall discontinue operating its business, then this agreement shall terminate as
of the day in which Cardinal ceases operations with the same force and effect as
if such were originally set as the expiration date of this agreement.
5. Confidential Information
5.1 Confidentiality & Trade Secrets. It is the intent of Cardinal to have
Maviation assist in the development of operational projections and to engage
Maviation in the procurement of its FAA 121 Commercial Airline Operators
Certificate. During the course of this Contract, Maviation will receive
information from Cardinal, which is considered to be private and proprietary to
Cardinal. This proprietary, confidential information including but not limited
to, Business plans, fundraising methods and strategies, operational strategies,
including conditions and situations pertaining to Melbourne International
Airport and proposed route structures shall not be divulged. Maviation shall not
disclose, divulge or reveal any of the aforementioned confidential information
to any person, firm, corporation or other entity in any manner without the
specific, prior written authorization by an officer of Cardinal, and that any
breach of the terms of this section shall be a breach of this agreement.
5.2 Maviation's Inability to Contract for Cardinal. In spite of anything
contained in this contract to the contrary, Maviation shall not have the right
to make any contracts or commitments for or on behalf of Cardinal without proper
authorization.
6. Agreements
6.1 Modification of Agreement. Any modification of this agreement or additional
obligation assumed by either party in connection with this agreement shall be
binding only if evidenced in writing signed by each party or an authorized
representative of each party.
6.2 Effect of Partial Invalidity. The invalidity of any portion of this
agreement will not and shall not be deemed to affect the validity of any other
provision, in the event that any provision of this agreement is held to be
invalid, the parties agree that the remaining provisions shall be deemed to be
in full force and effect as if they had been executed by both parties subsequent
to the expungement of the invalid provision.
6.3 Entire Agreement. This agreement shall constitute the entire agreement
between the parties and any prior understanding or representation of any kind
preceding the date of this agreement shall not be binding upon either party
except to the extent incorporated in this agreement.
7. General
7.1 Governing Law. It is agreed that this agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of Florida.
7.2 No Waiver. The failure of either party to this agreement to insist upon the
performance of any of the terms and conditions of this agreement, or the waiver
of any breach of any of the terms and conditions of this agreement, shall not be
construed as thereafter waiving any such terms and conditions, but the same
shall continue and remain in full force and effect as if no such forbearance or
waiver had occurred.
7.3 Attorney Fees. In the event that any action is filed in relation to this
agreement, each party shall be responsible to pay for all his or her own sums
and attorney's fees.
7.4 Notices. Any notice provided for or concerning this agreement shall be in
writing and shall be deemed sufficiently given when sent by certified or
registered mail if sent to the respective address of each party as set forth at
the beginning of this agreement.
7.5 Assignability; Successors. Maviation hereunder, may not assign this Contract
Agreement, and Maviation's rights and obligations. Cardinal may assign its
rights, together with its obligations, hereunder in connection with any sale,
transfer or other disposition of all or substantially all of its business or
assets; in any event the obligations of Cardinal hereunder shall be binding on
its successors or assigns, whether by merger, consolidation or acquisition of
all or substantially all of its business or assets.
In witness whereof, each party to this agreement has caused it to be executed at
1380 Sarno Road Suite "B", Melbourne, FL 32935 on the date indicated below.
/S/ /S/
__________________________ _________________________
Cardinal Airlines Inc. Maviation, LLC.
Lawrence A. Watson Thomas L. Vandervelde
President and C.E.O. President
Date: _______________ Date: _______________
/S/
Witness: ___________________
We consent to the use of our Audit report of Cardinal Airlines, Inc. for the
period ended June 30, 1998 dated September 30, 1998 to be included in this
registration statement.
/S/
____________________________
Rosenfield & Company, P.A.
January 11, 1999
