EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is
made and entered into effective as of the 15th day of
June, 1999 (the "Effective Date") by and between Vanguard Airlines, Inc.,
a Delaware corporation (the "Company") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual
("Employee").
R E C I T A L S:
A. The Company is engaged in the business of owning and
operating an air carrier certificated by the U.S. government to
engage in the provision of air transportation services in
the common carriage of persons, property and mail (the "Company
Business"). The Company is based in Kansas City, Missouri and
provides scheduled passenger service in the United States.
B. The Company hereby agrees to employ Employee and
Employee hereby agrees to accept such employment engagement with
the Company in accordance with the terms and conditions set forth
in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises
and covenants as contained herein, the parties hereto, intending
to be legally bound, agree as follows:
1. EMPLOYMENT.
Subject to the terms and conditions hereinafter set forth,
the Company hereby agrees to employ Employee, and Employee hereby
agrees to be employed by Company, during the two year period (the
"Employment Term") beginning on June 16, 1999 (the "Commencement
Date"), and ending on June 15, 2001. The Employment Term may be
terminated pursuant to the provisions of Section 4 or Section 5
hereof.
2. DUTIES.
Employee shall be employed in the capacity of Chairman of
the Board, President and Chief Executive Officer of the Company.
Employee shall have such duties as may reasonably be assigned to
him by the Board of Directors of the Company. Employee shall
perform such duties diligently and to the best of his ability,
and shall comply with the Company's business conduct policies as
in effect from time to time. Employee's responsibilities
include, but are not limited to, the following actions: (a)
supervise, operate, and manage the overall operations of the
Company Business, including by way of illustration but not
limitation, decisions regarding (i) airline schedules and routes;
(ii) regulation of the Company Business by governmental
authorities, (iii) aircraft and other equipment and real estate
acquisitions and/or leases, (iv) formulation, implementation, and
administration of strategies, policies, and practices, (v)
formulation, implementation, and administration of budgets,
business and financial plans, (vi) hiring, firing, and
supervising employees and consultants, and (vii) setting
compensation and benefit programs for employees. Except as
otherwise set forth herein, during the Employment Term, Employee
shall devote his entire working time, attention and energy to the
business of the Company, and shall not be engaged in any other
business activity that, in any significant way, conflicts with or
interferes with Employee's performance of his duties hereunder,
except as authorized by the Board of Directors of the Company.
3. COMPENSATION AND BENEFITS.
SALARY. During the Employment Term, the Company shall pay
Employee for his services hereunder a base salary at the
rate of $250,000.00 per annum for the first year of
employment and $300,000.00 per annum, for the second year of
employment subject further to upward adjustment in
accordance with the Company's salary review practices and
procedures in effect from time to time. Such salary shall
be payable semi-monthly in accordance with the regular
payroll policies of the Company in effect from time to time.
In addition, Employee shall participate in the following
bonus plan:
A Yearly Bonus of 100% of the base salary is available.
This Bonus will be paid at the end of each
calendar year, starting at Dec.31, 1999, for the
performance achieved in 1999.
The Bonus will be paid based on comparing the
yearly actual operating profit with the yearly
planned operating profit.
To receive 100% of the bonus the Company must
achieve its planned operating profit
For every 2% of actual operating profit achieved
above the planned operating profit, an additional
10% of the bonus will be paid. This extra bonus
will be capped at an additional 100% of the yearly
bonus.
If the actual operating profit does not at least
equal the planned operating profit, a partial
bonus will be paid as follows. The bonus will
begin to be applied if the actual operating profit
is at least 80% of the planned operating profit.
For every 2% increase in the actual operating
profit above 80%, 10% of the Basic Yearly Bonus
will be paid. For example, if 90% of the planned
operating profit is achieved, 50% of the Basic
Yearly Bonus will be paid.
(A) BENEFITS. During the Employment Term, Employee shall be
entitled to participate in, to the extent Employee is eligible
under the terms thereof, all benefit plans and programs that are
generally provided from time to time by the Company to its
executive personnel, including an incentive compensation plan, a
pension or profit sharing plan, a stock purchase plan, a bonus
plan, a group benefit plan and a medical plan. Subject to the
rights of Employee set forth in Sections 4 and 5 hereof, nothing
herein shall preclude the Company from terminating or amending
any employee benefit plan or program.
(B) OPTIONS. The Company hereby agrees to grant Employee
options to purchase 440,557 shares of Common Stock (2% of the
Company's fully diluted stock), par value $0.001 per share, of
the Company to Employee (the "Employee Options"). The terms of
the grant of the Employee Options to Employee shall be as
follows:
(i) The exercise price for the Employee Options shall
be the share price on Jun 16, 1999 (the "Exercise
Price");
(ii) Payment of the exercise price per share is due in
full upon exercise of all or any part of each
installment that has accrued
(iii) In the event this Agreement is terminated
before the end of the Employment Term for any of
the reasons set forth in Section 4(e), all
unvested options shall lapse and become void; and
(iv) The Employee Options shall vest as follows:
(A) in equal quarterly increments during the Employment Term
commencing with the commencement of employment of Employee
with the Company, with such vesting to be effective
upon the last day of each calendar quarter;
(B) one-half of any "unvested" Employee Options shall vest
upon the death or permanent disability of Employee;
(C) all of the unvested options shall vest upon the merger of
the Company into or with another person, unless
(X) the Company is the surviving entity and
(Y) this Agreement remains in full
force and effect; or
(D) all of the unvested options shall vest upon the sale of all
or substantially all of the assets or stock of the Company
to another person.
(E) The Term of all options is to be 10 years, including
previously vested stock options received for
employment from June 15, 1997 through June 16, 1999.
(d)EXPENSE REIMBURSEMENT. The Company shall reimburse
Employee or directly pay all of the reasonable expenses
incurred by Employee in connection with the scope of his
assignment as set forth in this Agreement, including by way
of illustration but not limited, as follows:
(i) all ordinary and necessary travel, lodging,
entertainment, and related expenses;
(ii) the cost of renting an apartment as a
temporary living expense in Kansas City,
Missouri and leasing or renting a car in Kansas City,
Missouri; and
(iii) the cost to move Employee's family and
household goods to the Kansas City area.
(iv) Regardless of how, when, or why Employee leaves
the Company, the expenses associated with
moving Employee and Employee's family including all
household goods to San Diego, California
shall be paid by the Company.
The foregoing terms regarding the Employee Options shall, if the
parties hereto mutually so agree, be set forth in a separate
agreement (the "Stock Option Agreement"). The Stock Option
Agreement shall contain all usual and customary provisions,
including the foregoing terms.
4. TERMINATION OF ENGAGEMENT.
This Agreement shall be terminated and the employment
relationship between the Company and Employee shall cease upon
the occurrence of any of the following events:
(a) by Employee for any reason, upon 30 days prior
written notice;
(b) by the Company for any reason, upon 30 days prior
written notice;
(c) by any party upon the expiration of the Employment
Term;
(d) by the Company upon the death or permanent
disability of Employee
(e) by the Company for "Cause," which for purposes of
this Section 4 shall mean any of the following: (i)
Employee's breach of or failure to comply with or observe
any of the material terms, conditions or agreements
contained in this Agreement, which breach or failure to
comply has not been cured within 30 days following written
notice by the Company to Employee setting forth in detail
the specific nature of such breach or failure to comply, or
if such breach or failure to comply cannot be cured within
such 30 day period, Employee has not, (A) within such 30 day
period, commenced actions to cure such breach or failure to
comply and diligently pursued such actions and (B) actually
cured such breach or failure to comply within 90 days
following such initial written notice by the Company to
Employee, (ii) Employee shall be adjudged by a court of
competent jurisdiction as guilty of (A) any willful or
grossly negligent act which causes material harm to the
Company, (B) any criminal act which causes material harm to
the Company, (C) any act involving moral turpitude which
causes material harm to the Company, or (D) any fraud upon
the Company, or (iii) Employee shall be guilty of habitual
absenteeism, chronic alcoholism or other form of chronic
addiction.
5. TERMINATION OBLIGATIONS OF THE COMPANY.
In the event of termination of this Agreement by
the Employee under Section 4(a) because of
Employee's desire for any reason, the Company
shall have the following obligations to Employee:
(a) One half of all unvested stock will immediately vest
(b) Employee will receive six month's salary
In the event of termination of this Agreement by
the Company under Section 4(b) because of the
Company's desire for any reason, the Company shall
have the following obligations to Employee:
(a) All unvested stock options immediately vest
(b) Employee will receive two year's salary
(c) Employee will be granted options on an additional 1%
of the Company's stock. Strike price to be the
price on the day of termination
(d) Employee will be offered a 5 year consulting
contract at $20,000.00 per month
(e) Employee will be offered a seat on the
Board of Directors
(f) Any unpaid portion of the Employee salary earned
through the date of termination shall be
paid by the Company to Employee
(g) Any unreimbursed expenses owed by the Company
to Employee for expenses incurred through the
date of termination shall be
paid by the Company to Employee
In the event of termination of this Agreement by
the Company under Sections 4(c), because of the
expiration of the Employment Term, The Company
shall have the following obligations to the
Employee:
(1) Any unpaid portion of the Employee's salary and
bonus earned
through the date of termination shall be paid by the
Company to
Employee;
(2) Any unreimbursed expenses owed by the Company to
Employee for expenses incurred through the date
of termination shall be
paid by the Company to Employee;
(3) Employee Options shall be fully vested
(4) Employee shall be offered full-time employment with the
Company upon mutually satisfactory terms
usual and customary in
the airline industry for companies of comparable
operations as
the Company; provided, however, that the Company
and Employee
shall enter into a written employment agreement
(the "▇▇▇▇▇
Employment Agreement") which shall, for
purposes of illustration
but not limitation, contain the following provisions:
(1) Employee shall have the officer
title of Chairman, Chief
Executive Officer, President, and member of
the Board of
Directors of the Company;
(2) He shall have duties at least as
expansive as the Services
set forth in Section 2 of this Agreement;
(3) He shall have an annual base salary
and annual bonus as
mutually agreed upon and usual and customary
in the airline
industry for companies of comparable operations
as the Company;
(4) A term and severance arrangement as
mutually agreed upon and
usual and customary in the airline
industry companies of
comparable operations as the Company.
(5) If the Employee declines full time
employment, Employee will
be offered a 5 year consulting contract
at $20,000.00 per month
and a seat on the Board of Directors.
In the event of termination of this Agreement by
the Company under Section 4(d), death or permanent
disability of the Employee, the Company shall have
the following obligations to Employee:
(i) Any unpaid portion of the Employee's salary
earned through
the date of death or permanent disability shall
be paid by the
Company to Employee or his survivors;
(ii) Any unreimbursed expenses owed by the
Company to Employee
for expenses incurred through the date
of death or permanent
disability shall be paid by the Company
to Employee or his
survivors.
(iii) One-half of those shares of the
Employee Options that
have not vested as of the date of termination
shall lapse and
become void and the remaining one-half of
the Employee Options
shall fully vest
In the event of termination of this Agreement by
the Company under Section 4(e), by the Company for
"Cause," the Company shall have the following
obligations to Employee:
(1) Any unpaid portion of the Employee's salary earned through
the date of termination shall be paid by the Company
to Employee
(2) Any unreimbursed expenses owed by the Company to Employee
for expenses incurred through the date of termination shall be
paid by the Company to Employee
(3) Employee options that have not vested at the date of
termination shall lapse and become void
Regardless of how, when, or why Employee leaves the Company,
Employee and his immediate family will receive unlimited life
time confirmed travel on Vanguard Airlines or the Successor
Company
6. REGISTRATION RIGHTS.
Employee shall, with respect to the shares received upon
exercise of the Employee Options be granted unlimited piggy-back
registrations, with any cut-backs of shares to be registered
pursuant to the applicable registration statement to be done on a
pro-rata basis among all of the Sellers of Common Stock of the
Company pursuant to the applicable registration statement. A
specific Registration Rights Agreement containing all usual and
customary provisions shall be entered into among Employee and the
Company.
7. INDEMNIFICATION.
Neither the Company or Employee shall be liable for any of
the debts, liabilities or obligations of the other. Accordingly,
the Company will indemnify Employee and Employee will indemnify
the Company, and each will hold the other harmless from and
against any and all loss, cost, damage injury or expense
(including court costs and reasonable attorneys' fees) whatsoever
and howsoever arising which Employee or the Company (as the case
may be) or any of their respective agents, successors or assigns
incurs as a proximate result of (a) Employee or the Company (as
the case may be) being held liable for any debt, liability or
obligation of the Company or Employee (as the case may be) or (b)
any breach of this Agreement by the Company or Employee (as the
case may be).
In Employee's rendering of the Services hereunder and in his
capacity as officer, director, employee of the Company, the
Company shall, as and to the extent permitted by the General
Corporation Law of Delaware, indemnify Employee and hold Employee
harmless from and against any and all loss, cost, damage, injury
or expense (including court costs and reasonable attorneys' fees)
whatsoever and howsoever arising which Employee incurs relating
to his action under this Agreement and the status of Employee as
officer, director, employee of the Company. In addition, the
Company shall include Employee as beneficiary and covered person
in the Company's insurance policy to protect Employee relating to
his status as officer, director, employee, independent
contractor, and/or agent of the Company.
8. NOTICE.
All notices, requests, demands and other communications
hereunder shall be deemed duly given if delivered by hand or if
mailed by certified or registered mail with postage prepaid as
follows:
If to the Company:
Vanguard Airlines, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Secretary
If to the Employee:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇. # ▇▇▇
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or to any other address as either party may provide to the other
in writing.
10. ASSIGNMENT.
This Agreement is personal and not assignable by the
Employee but it may be assigned by the Company without notice to
or consent of the Employee to, and shall thereafter be binding
upon enforceable by any other person which shall acquire or
succeed to substantially all of the business or assets of the
Company (and such person shall be deemed included in the
definition of the "Company" for all purposes of this Agreement)
but it is not otherwise assignable by the Company.
IN WITNESS WHEREOF, the Company and Employee have each
caused this Agreement to be duly executed in duplicate by its
respective duly authorized officer and each of the parties hereto
has executed this Agreement on the date and year first above
written.
WITNESS/ATTEST:
COMPANY:
VANGUARD AIRLINES,INC.
On Behalf of the Board of Directors,
By:
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Name:
EMPLOYEE:
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