VANGUARD AIRLINES, INC.
NONSTATUTORY STOCK OPTION
XXXXXX X. XXXXX, Optionee:
Vanguard Airlines, Inc. (the "Company") has granted you an
option to purchase shares of the common stock of the Company
("Common Stock") under that certain Employment Agreement, dated
November 3, 1997, by and between the Company and Xxxxxx X. Xxxxx
(the "Agreement"). This option is not intended to qualify as and
will not be treated as an "incentive stock option" within the
meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code").
The details of your option are as follows:
1. TOTAL NUMBER OF SHARES SUBJECT TO THIS OPTION. The
total number of shares of Common Stock subject to this option is
Six Hundred Seventy-Seven Thousand Three Ninety-Six (677,396).
Subject to the limitations contained herein, this option shall be
exercisable in whole or in part only after the option has vested.
This option shall vest as follows:
(a) in equal quarterly increments during the term of
your employment under the Agreement commencing with the
commencement of your employment with the Company, with such
vesting to be effective upon the last day of each calendar
quarter;
(b) one-half of any unvested option granted under the
Agreement will vest upon your death or permanent disability;
(c) all of the unvested options granted under the
Agreement will vest upon the merger of the Company into or
with another person, unless the Company is the surviving
entity and the Agreement remains in full force and effect
following such merger; and
(d) all of the unvested options granted under the
Agreement will vest upon the sale of all of the assets or
stock of the Company to another person.
2. EXERCISE PRICE AND METHOD OF PAYMENT.
(a) EXERCISE PRICE. The exercise price of this option
is $2.50 per share, which is not less than 85% of the fair
market value of the Common Stock on the date this option was
granted to you.
(b) METHOD OF PAYMENT. Payment of the exercise price
per share is due in full upon exercise of all or any part of
this option. You may elect, to the extent permitted by
applicable statutes and regulations, to make payment of the
exercise price under one of the following alternatives:
(i) Payment of the exercise price per share
in cash (including check) at the time of exercise;
(ii) Payment pursuant to a program developed
under Regulation T as promulgated by the Federal
Reserve Board which results in the receipt of cash
(or check) by the Company prior to the issuance of
Common Stock;
(iii) Provided that at the time of
exercise the Company's Common Stock is publicly
traded and quoted regularly in the Wall Street
Journal, payment by delivery of already owned
shares of Common Stock, held for the period
required to avoid a charge to the Company's
reported earnings, and owned free and clear of any
liens, claims, encumbrances or security interests,
which Common Stock shall be valued at its fair
market value on the date of exercise; or
(iv) Payment by a combination of the methods
of payment permitted by subparagraph_3(b)(i)
through 3(b)(iii) above.
3. WHOLE SHARES. You may exercise this option only for
whole shares and the Company shall be under no obligation to
issue any fractional shares of Common Stock to you.
4. SECURITIES LAW COMPLIANCE. Notwithstanding anything to
the contrary contained in this option, this option may not be
exercised unless the shares issuable upon exercise of this option
are then registered under the Securities Act of 1933, as amended
(the "Act") or, if the shares are not registered at that time,
the Company has determined that the exercise and issuance would
be exempt from the registration requirements of the Act.
5. TERM OF OPTION. The term of this option begins on the
date you were granted this option and, unless it ends sooner for
the reason described below, terminates on November 3, 2007 (the
"Expiration Date") (which date shall be no more than ten (10)
years from the date this option was granted). You may not, under
any circumstances, exercise this option on or after the
Expiration Date.
This option will also terminate prior to the end of its term
subject to the following terms and conditions:
(a) TERMINATION OF EMPLOYMENT OR RELATIONSHIP. If you
cease to be employed or engaged as a director of or
consultant to the Company or any of its affiliates because
(i) you terminate the Agreement for any reason upon 30 days
prior written notice, or (ii) the Company terminates the
Agreement for Cause (as defined in the Agreement), then all
unvested options granted to you under the Agreement will
terminate on the date on which either you terminate the
Agreement for any reason or the Company terminated the
Agreement for Cause.
(b) DISABILITY. If you cease to be employed or
engaged as a director of or consultant to the Company or any
of its affiliates under the Agreement as a result of your
permanent disability, all unvested options granted to you
under the Agreement will terminate on the date on which you
cease to be so employed or engaged. All vested options
granted under the Agreement shall remain in full force and
effect after your permanent disability.
(c) DEATH. In the event you die while you are an
employee, director of or consultant to the Company or any of
its affiliates under the Agreement, all unvested options
granted to you under the Agreement will terminate on the
date of your death. All vested options granted under the
Agreement shall remain in full force and effect after your
death.
6. EXERCISE OF OPTION.
(a) You may exercise this option to the extent
specified above by delivering the Notice of Exercise
attached to this option as an exhibit together with the
exercise price to the Secretary of the Company, or another
person designated by the Company, during regular business
hours, together with any additional documents required in
the Notice of Exercise.
(b) By exercising this option you agree that:
(i) the Company may require you to pay to the
Company any tax withholding obligation of the Company
arising from (1) your exercise of this option; (2) the
lapse of any substantial risk of forfeiture to which
the shares are subject at the time of exercise; or
(3) the disposition of the shares of Common Stock you
acquired upon the exercise of this option; and
(ii) in connection with an underwritten
registration of the offering of any securities of the
Company under the Act, the Company (or a representative
of the underwriters) may require that you not sell or
otherwise transfer or dispose of any shares of Common
Stock or other securities of the Company during a
period not to exceed one hundred eighty (180) days
following the effective date (the "Effective Date") of
the registration statement of the Company filed under
the Act. For purposes of this restriction you will be
considered to own securities which (i) you own directly
or indirectly, including securities held for your
benefit by nominees, custodians, brokers or pledgees;
(ii) you may acquire within sixty (60) days of the
Effective Date; (iii) are owned directly or indirectly,
by or for your brothers or sisters (whether by whole or
half blood), spouse, ancestors and lineal descendants;
or (iv) are owned, directly or indirectly, by or for a
corporation, partnership, estate or trust of which you
are a shareholder, partner or beneficiary, but only to
the extent of your proportionate interest in the
corporation, partnership, estate or trust as a
shareholder, partner or beneficiary. You further agree
that the Company may impose stop-transfer instructions
on the securities subject to these restrictions until
the end of the period.
7. OPTION NOT TRANSFERABLE. This option may not be
transferred, except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order
as defined in the Code or Title I of the Employee Retirement
Income Security Act (a "QDRO"), and is exercisable during your
life only by you or a transferee pursuant to a QDRO. By
delivering written notice to the Company, in a form satisfactory
to the Company, you may designate a third party who, in the event
of your death, shall thereafter be entitled to exercise this
option.
8. DILUTION OR ENLARGEMENT. In the event that there is
any change in the capital structure of the Company, including but
not limited to a change resulting from a stock dividend, stock
split, reorganization, merger, consolidation, liquidation or any
combination or exchange of shares of Common Stock, the number of
shares of Common Stock subject to this option which remain
unexercised will be subject to increase or decrease in order to
prevent dilution or enlargement. The option exercise price also
will be adjusted upon the occurrence of any of such events so
that there will be no change in the aggregate option exercise
price payable upon the exercise of this option.
9. OPTION NOT AN EMPLOYMENT CONTRACT. This option is not
an employment contract and nothing in this option creates in any
way whatsoever any obligation on your part to continue in the
employ of the Company, or of the Company to continue your
employment with the Company. In the event this option is granted
to you in connection with the performance of services as a
director or consultant, references to employment, employee and
similar terms shall be deemed to include the performance of
services as a director or consultant; provided, however, that no
rights as an employee shall arise by reason of the use of such
terms.
10. NOTICES. Any notices provided for in this option will
be given in writing and will be considered to have been given
upon receipt or, in the case of notices delivered by the Company
to you, three (3) days after deposit in the United States mail,
postage prepaid, addressed to you at the address specified below
or at such other address as you later designate in writing to the
Company.
11. GOVERNING DOCUMENT. This option is subject to all the
provisions of the Agreement, which is attached as an exhibit to
this option. All provisions of the Agreement are hereby made a
part of this option. This option is further subject to all
interpretations and amendments that may from time to time be set
forth and adopted under the Agreement. In the event of any
conflict between the provisions of this option and those of the
Agreement, the provisions of the Agreement shall control.
Dated the 18th day of May, 1999.
Very truly yours,
VANGUARD AIRLINES, INC.
By: /s/ Xxxxx X. Xxxxxxx
Xxxx authorized on behalf
of the Board of Directors
Printed Name: Xxxxx X. Xxxxxxx
Title: Vice President and General Counsel
ATTACHMENTS:
Employment Agreement, dated November 3, 1997, between
Vanguard Airlines, Inc. and Xxxxxx X. Xxxxx
Notice of Exercise
(a) I acknowledge that I have received the foregoing option
and the attachments referenced in it and I understand that all
rights and liabilities with respect to this option are set forth
in the option and the Agreement; and
(b) I acknowledge that this Agreement has been provided to
me by the Company in connection with the Company's one-for-five
reverse stock split and I understand that this Agreement is not
an additional stock grant. I further acknowledge that all rights
granted with corresponding agreement(s) prior to the reverse
stock split on May 18, 1999 are null and void.
(c) I acknowledge that as of the date of grant of this
option, this option and its exhibits set forth the entire
understanding between myself and the Company and its affiliates
regarding the acquisition of stock in the Company and supersedes
all prior oral and written agreements on that subject with the
exception of the following agreements only:
NONE __________
OTHER _________
OPTIONEE: XXXXXX X. XXXXX
Signature: /s/ Xxxxxx X. Xxxxx
Address: __________________________
__________________________
Social Security Number: ___________
