UNIT PURCHASE AGREEMENT

          This Unit Purchase Agreement (the "Agreement") is made
and entered into as of March 20, 1998 by and among Vanguard
Airlines, Inc., a Delaware corporation (the "Company"), and those
parties listed on the signature page hereof as "Investors" (who
are referred to individually as an "Investor" and collectively as
the "Investors").

          In consideration of the mutual promises and covenants
made herein, the parties hereby agree as follows:

1.   Sale of Units; Closing; Delivery.

     a.   Purchase and Sale of Units.  Subject to the terms and
          conditions hereof, the Company will issue and sell to
          each Investor, and each Investor will purchase from the
          Company, at the Closing (as defined below) the number
          of Units set forth opposite each Investor's name on
          Exhibit_A at a purchase price per Unit (the "Unit
          Purchase Price") equal to $10.00 up to an aggregate of
          450,000 Units.  A "Unit" shall be composed of one share
          (a "Share") of Series A Preferred Stock, $0.001 par
          value, of the Company (the "Preferred Stock"), and a
          warrant in the form attached hereto as Exhibit B (a
          "Warrant") to purchase forty (40) shares of Common
          Stock, $0.001 par value (the "Warrant Shares").  The
          exercise price of the Warrant shall be $0.55 per
          Warrant Share.  The Preferred Stock shall have the
          rights, preferences, privileges and restrictions set
          forth in the Certificate of Designation attached hereto
          as Exhibit C (the "Certificate of Designation").

     b.   Closing.  The closing of the purchase and sale of the
          Units shall take place at 2:00 p.m. on March_20, 1998,
          or at such other date and time as the Investors and the
          Company shall mutually agree upon (which date and time
          are designated as the "First Closing").  The date of
          the First Closing is hereinafter referred to as the
          "First Closing Date."

     c.   Subsequent Sale of Units.  Subject to the terms and
          conditions of this Agreement, the Company may sell any
          Units not purchased at the First Closing in one or more
          subsequent closings (the "Subsequent Closings") at a
          price not less than $10.00 per Unit, provided the
          agreement for sale is executed not later than ninety
          (90) days from the date hereof.  If the Company intends
          to sell any Units in Subsequent Closings it shall first
          offer the Investors the right to purchase their
          pro-rata share of any such Units to be offered.  An
          Investor's pro-rata share shall be equal to the number
          of Units being offered multiplied by a fraction the
          numerator of which is the number of Units held by the
          Investor and the denominator of which is the number of
          Units held by all Investors.  If the Investors elect to
          purchase less than all of the additional Units being
          offered, the Company shall have the right to offer such
          remaining Units to any other purchasers it selects.
          Any such purchaser shall <PAGE> become a party this Agreement
          and that certain Registration Rights Agreement dated
          the date hereof, by and among the Company, the
          Investors and the other parties named therein.  The
          First Closing and the Subsequent Closings are each
          referred to individually as a Closing and collectively
          as the Closings.

     d.   Delivery.  Subject to the terms and conditions of this
          Agreement, at a Closing, the Company shall deliver to
          each Investor (i) a stock certificate representing the
          Shares included in the Units to be purchased by such
          Investor and (ii) a Warrant reflecting the number of
          Units to be purchased against payment of the purchase
          price therefor by cancellation of indebtedness, a check
          payable to the order of the Company, or by wire
          transfer of immediately available funds to the bank
          account of the Company.   In the event that payment by
          an Investor is made, in whole or in part, by
          cancellation of indebtedness, then such Investor shall
          surrender to the Company for cancellation at the
          Closing any evidence of such indebtedness or shall
          execute an instrument of cancellation in form and
          substance acceptable to the Company.

2.   Representations and Warranties of the Company.  The Company
     hereby represents and warrants to each Investor, that,
     except as set forth on the Schedule of Exceptions attached
     hereto as Exhibit_D (the "Schedule of Exceptions"), with any
     disclosure thereon being deemed disclosure for all purposes
     and all relevant subsections hereof, which exceptions will
     be deemed to be representations and warranties as if made
     hereunder:

     a.   Organization and Good Standing.  The Company is a
          corporation duly organized, validly existing and in
          good standing under the laws of the State of Delaware.
          The Company has all necessary corporate power and
          authority to own its assets and to carry on its
          business as now being conducted and presently proposed
          to be conducted.  The Company is duly qualified to do
          business as a foreign corporation and is in good
          standing in each jurisdiction in which its ownership or
          leasing of assets, or the conduct of its business,
          makes such qualification necessary, except where
          failure to do so would not have a material adverse
          effect on the operations or financial condition of the
          Company.

     b.   Requisite Power and Authorization.  Subject to receipt
          of stockholder approval to increase the Company's share
          capital as provided in Section 5(a)(i) below (the
          "Stockholder Approval") and the filing of an amendment
          (the "Amendment") to the Company's Restated Certificate
          of Incorporation, as amended (the "Restated
          Certificate") to effect such increase, the Company will
          have all necessary corporate power and authority under
          the laws of the State of Delaware and all other
          applicable provisions of law to execute and deliver
          this Agreement, to issue the Shares, the shares of
          Common Stock issuable upon conversion of the Shares
          (the "Conversion Shares"), the Warrants and the Warrant
          Shares and to carry out the provisions of this
          Agreement and the Warrants.  All corporate action on
          the part of the Company required for the lawful
          execution and delivery of this Agreement, and issuance
          and delivery of the Shares, the Conversion Shares, the
          Warrants and the Warrant Shares has been duly and
          effectively taken, subject to receipt of the



<PAGE>




          Stockholder Approval and the filing of the Amendment.
          Upon execution and delivery, this Agreement and the
          Warrants constitute valid and binding obligations of
          the Company enforceable in accordance with their
          respective terms, except as enforcement may be limited
          by insolvency and similar laws affecting the
          enforcement of creditors' rights generally and
          equitable remedies.  The Shares and the Warrants (and
          the Warrant Shares issuable upon exercise of the
          Warrants) when issued in compliance with the provisions
          of this Agreement or the Warrants, as the case may be,
          and the Conversion Shares when issued in accordance
          with the Restated Certificate, will, upon receipt of
          the Stockholder Approval and the filing of the
          Amendment, be duly authorized and validly issued, fully
          paid, non-assessable, and issued in compliance with
          federal securities laws and the securities laws of the
          State of California.  No stockholder of the Company or
          other person has any preemptive right of subscription
          or purchase or contractual right of first refusal or
          similar right with respect to the Shares, the
          Conversion Shares, the Warrants or the Warrant Shares.
          The Company has reserved, subject to receipt of the
          Stockholder Approval and the filing of the Amendment,
          such number of shares of its Common Stock necessary for
          issuance of the Warrant Shares and the Conversion
          Shares.

     c.   Consents.  No consent, approval, authorization or order
          of any court, governmental agency or third party is
          required for the execution and delivery by the Company
          of this Agreement or the performance by the Company of
          any of its obligations hereunder (including issuance of
          the Shares and the Warrant Shares) and under the
          Restated Certificate other than the Stockholder
          Approval.

     d.   SEC Documents.  The Company has timely filed all
          documents that the Company was required to file with
          the Securities and Exchange Commission (the "SEC")
          under Sections_13 or 14(a) of the Securities Exchange
          Act of 1934, as amended (the "Exchange Act"), since
          December 31_, 1996 (collectively, the "SEC Documents").
          As of their respective filing dates, or such later date
          on which such reports were amended, the SEC Documents
          complied in all material respects with the requirements
          of the Exchange Act or the Securities Act of 1933, as
          amended (the "1933 Act"), as applicable.  No SEC
          Documents as of their respective dates, or such later
          date on which such reports were amended, or press
          release, containing information material to the
          business as a whole, contained any untrue statement of
          a material fact or omitted to state a material fact
          required to be stated therein or necessary to make the
          statements made therein, in light of the circumstances
          under which they were made, not misleading.  The
          financial statements included in the SEC Documents (the
          "Financial Statements") comply as to form in all
          material respects with applicable accounting
          requirements and with the published rules and
          regulations of the SEC with respect thereto.  Except as
          may be indicated in the notes to the Financial
          Statements or, in the case of <PAGE> unaudited statements, as
          permitted by Form 10-Q of the SEC, the Financial
          Statements have been prepared in accordance with
          generally accepted accounting principles consistently
          applied and fairly present the consolidated financial
          position of the Company and any subsidiaries at the
          dates thereof and the consolidated results of their
          operations and consolidated cash flows for the periods
          then ended (subject, in the case of unaudited
          statements, to normal, recurring adjustments).

     e.   Capital Stock.  The authorized capital stock of the
          Company consists of 50,000,000 shares of Common Stock,
          $.001 par value, and 1,000,000 shares of Preferred
          Stock, $.001 par value, 600,000 of which have been
          designated Series A Preferred Stock.  As of January 31,
          1998, there were 45,683,045 shares of Common Stock
          issued and outstanding and no shares of Preferred Stock
          issued and outstanding.  All outstanding shares of
          Common Stock and Preferred Stock have been duly
          authorized and validly issued and are fully paid and
          non-assessable.  Except for (A) the conversion
          privileges of the Preferred Stock to be issued under
          this Agreement, (B) 20,430,044 shares of Common Stock
          issuable upon exercise of the Warrants and exercise of
          the Company's outstanding warrants, (C) 8,239,227
          shares of Common Stock issuable upon exercise of stock
          options granted to employees, consultants, officers or
          directors of the Company and (D) ___________ shares
          issuable upon conversion of the convertible promissory
          notes (the "New Notes") being issued pursuant to the
          Note Exchange Agreement of even date herewith (the
          "Note Exchange Agreement"), the Company has no
          outstanding securities convertible into or exchangeable
          for Common Stock and no contracts, rights, options or
          warrants to purchase or otherwise acquire Common Stock
          or securities convertible into or exchangeable for
          Common Stock.  Since January 31, 1998 the Company has
          not issued any shares of capital stock or any options,
          warrants or other rights with respect thereto except
          for shares issued upon exercise of options, warrants or
          rights, all as set forth on the Schedule of Exceptions.

     f.   Compliance with Other Agreements.  Subject to receipt
          of the Stockholder Approval and the filing of the
          Amendment, neither the execution and delivery of, nor
          the consummation of any transaction or execution of any
          instrument contemplated by, this Agreement, nor the
          issuance of the Shares, the Warrants and the Warrant
          Shares, has constituted or resulted in, or will
          constitute or result in, a default under or breach or
          violation of any term or provision of the Company's
          Bylaws, Restated Certificate, or contracts with third
          parties, state or federal laws, rules or regulations,
          writs, orders or judgments or decrees which are
          applicable to the Company or its properties.

     g.   No Material Adverse Change.  Since the date of the
          Company's most recent quarterly report on Form 10-Q or
          most recent periodic report on Form 8-K filed with the
          SEC, there has not been:

          i.   any changes in the assets, liabilities, financial
               condition or operations of the Company from that
               reflected in the Financial Statements except



<PAGE>




               changes resulting from ongoing operating losses
               during such period;

          ii.  any material change, except in the ordinary course
               of business, in the contingent obligations of the
               Company whether by way of guarantee, endorsement,
               indemnity, warranty or otherwise;

          iii. any damage, destruction or loss, whether or not
               covered by insurance, materially and adversely
               affecting the properties or business of the
               Company; or

          iv.  any declaration or payment of any dividend or
               other distribution of the assets of the Company.

     h.   Litigation.  There is no pending or, to the best
          knowledge of the Company, threatened action, suit,
          proceeding or investigation before any court,
          governmental agency or body, or arbitrator having
          jurisdiction over the Company or any of its affiliates
          that would materially adversely affect the execution by
          the Company of, or the performance by the Company of
          its obligations under, this Agreement.

     i.   Registration Rights.  Except as set forth in the
          Registration Rights Agreement (the "Registration Rights
          Agreement") attached hereto as Exhibit E, the Company
          has not granted or agreed to grant any registration
          rights, including piggyback rights, to any person or
          entity.  None of the registration rights contained in
          the Registration Rights Agreement are senior to the
          registration rights provided for in this Agreement.

     j.   No Misrepresentation.  No representation or warranty by
          the Company in this Agreement and no statements in the
          SEC Documents, as amended, nor any other document,
          statement, certificate or schedule furnished or to be
          furnished by or on behalf of the Company pursuant to
          this Agreement, when taken together with the foregoing,
          contains or shall contain any untrue statement of a
          material fact or omits or shall omit to state a
          material fact necessary in order to make such
          statements, in light of the circumstances under which
          they were made, not misleading.  The Company has
          delivered true and complete copies of all documents
          requested by the Investors.

     k.   Non-Exercise of Options and/or Warrants.  The Company
          has received, or by the Closing Date will have
          received, fully executed and enforceable Agreements Not
          to Exercise Options and/or Warrants (in the form
          attached hereto as Exhibit_F) from each director and
          officer of the Company.

3.   Representations and Warranties of Investors.  Each Investor
     represents and warrants, severally and not jointly, to the
     Company that:

     a.   Authorization.  Such Investor has full power and
          authority to enter into this Agreement, and this
          Agreement constitutes the valid and legally binding
          obligation of such Investor, enforceable in accordance
          with its terms, except as such enforcement may be
          limited by bankruptcy, insolvency and similar laws
          affecting the enforcement of creditors' rights
          generally and equitable remedies, and except as



<PAGE>




          indemnity provisions in the enforcement of Section_4 of
          this Agreement (relating to registration rights) may be
          limited by law.

     b.   Purchase for Investment.  Such Investor is purchasing
          the Units for investment purposes only and not with a
          view to, or for sale in connection with, a distribution
          of the Units within the meaning of the 1933 Act.  Such
          Investor has no present intention of selling or
          otherwise disposing of all or any portion of the Units.

     c.   Access to Information.  Such Investor has had an
          opportunity to ask questions of the Company's
          representatives concerning the Company, its present and
          prospective business, assets, liabilities and financial
          condition that such Investor has deemed necessary and
          appropriate as a prudent and knowledgeable investor in
          evaluating the risks of purchasing the Units.  The
          foregoing, however, does not limit or modify the
          representations and warranties of the Company in
          Section_3 of this Agreement or the rights of the
          Investors to rely thereon.

     d.   Understanding of Risks.  Such Investor is fully aware
          of:  (i)_the highly speculative nature of the
          investment in the Units; (ii)_the financial hazards
          involved; (iii) the risk of loss of the investment if
          the Company is unable to finance its continuing
          operations; (iv)_the lack of liquidity of the Shares,
          the shares of Common Stock issuable upon conversion of
          the Shares, the Warrants and the Warrant Shares
          (collectively, the "Securities") and the restrictions
          on the transferability of the Securities (e.g., that
          such Investor may not be able to sell or dispose of the
          Securities or use them as collateral for loans); and
          (v)_the tax consequences of investment in the Units.
          The foregoing, however, does not limit or modify the
          representations and warranties of the Company in
          Section 3 of this Agreement and the rights of the
          Investors to rely thereon.

     e.   Investor's Qualifications.  Such Investor is an
          "accredited" investor as defined under Regulation_D
          under the 1933 Act.  Such Investor is aware of the
          general business and financial circumstances of the
          Company and, by reason of such Investor's business or
          financial experience, such Investor is capable of
          evaluating the merits and risks of this investment and
          is financially capable of bearing a total loss of this
          investment.

     f.   Compliance with Securities Laws.  Such Investor
          understands and acknowledges that, in reliance upon the
          representations and warranties made by such Investor
          herein, the Securities are not being registered with
          the SEC under the 1933 Act or being qualified under the
          California Corporate Securities Law of 1968, as amended
          (the "Law"), but instead are being issued under an
          exemption or exemptions from the registration and
          qualification requirements of the 1933 Act or the Law
          or other applicable state securities laws which impose
          certain restrictions on such Investor's ability to
          transfer the Shares and the Warrant Shares.

     g.   Restrictions on Transfer.  Such Investor understands
          that such Investor may not transfer any of the
          Securities unless such Securities are registered under
          the 1933 Act or pursuant to an exemption from such
          registration and qualification requirements.  Such
          Investor understands that only the Company may file a
          registration statement with the SEC.  Such Investor has
          also been advised that <PAGE> exemptions from registration and
          qualification may not be available or may not permit
          such Investor to transfer all or any of the Securities
          in the amounts or at the times proposed by such
          Investor.

     h.   Rule 144.  In addition, such Investor has been advised
          that SEC Rule 144 ("Rule 144") promulgated under the
          1933 Act, which permits certain limited sales of
          unregistered securities, is not presently available
          with respect to the Securities solely due to the
          holding periods required thereunder and, in any event,
          requires that the Securities be held for a minimum of
          one year, and in certain cases two years, after they
          have been purchased and paid for (within the meaning of
          Rule 144), before they may be resold under Rule 144.
          Such Investor understands that Rule_144 may
          indefinitely restrict transfer of the Securities if
          such Investor is an "affiliate" of the Company and
          "current public information" about the Company (as
          defined in Rule 144) is not publicly available.

     i.   Legends and Stop-Transfer Orders.  Such Investor
          understands that certificates or other instruments
          representing any of the Securities acquired by such
          Investor may bear legends substantially similar to the
          following, in addition to any other legends required by
          federal or state laws:

          THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
          REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
          (THE "ACT"), OR THE LAWS OF ANY STATE.  THEY MAY NOT BE
          SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR
          OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
          REGISTRATION STATEMENT UNDER THE ACT, OR AN OPINION OF
          COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION
          IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT
          TO RULE 144 UNDER SUCH ACT.

          In order to ensure and enforce compliance with the
restrictions imposed by applicable law and those referred to in
the foregoing legend, or elsewhere herein, the Company may issue
appropriate "stop transfer" instructions to its transfer agent,
if any, with respect to any certificate or other instrument
representing the Securities, or if the Company transfers its own
securities, it may make appropriate notations to the same effect
in the Company's records.  Any legend endorsed on a certificate
pursuant to this Subsection (i) and the related stop transfer
instructions with respect to such Securities shall be removed,
and the Company shall issue a certificate or warrant without such
legend to the holder thereof, if such Securities are registered
under the 1933 Act and a prospectus meeting the requirements of
Section 10 of the 1933 Act is available, if such legend may be
properly removed under the terms of Rule 144 promulgated under
the 1933 Act or if such holder provides the Company with an
opinion of counsel for such holder, reasonably satisfactory to
legal counsel for the Company, to the effect that a sale,
transfer or assignment of such securities may be made without
registration.




<PAGE>




4.   Registration Rights.

     a.   Definitions.  For purposes of this Section 4:

          i.   "Register," "registered" and "registration" refer to
               a registration effected by preparing and filing a
               registration statement in compliance with the 1933
               Act, and the declaration or ordering of
               effectiveness of such registration statement.

          ii.  "Registrable Securities" means (A) all shares of
               Common Stock issued or issuable upon conversion of
               the Preferred Stock (B) all shares of Common Stock
               issued or issuable pursuant to the exercise of the
               Warrants, (C) all shares of Common Stock issued to
               the Investors and their affiliates in January 1998
               pursuant to the Company's rights offering, (D) all
               shares of Common Stock issued to the Investors
               upon the conversion of the New Notes and (E) any
               Common Stock of the Company issued (or issuable
               upon the conversion or exercise of any warrant,
               right or other security that is issued) as a
               dividend or other distribution with respect to, or
               in exchange for, or in replacement of, the shares
               referenced in (A), (B), (C) or (D) above.

          iii. "Holder" means any person owning of record
               Registrable Securities that have not been sold to
               the public or any assignee of record of such
               Registrable Securities to whom rights under this
               Section 4 (and/or, with respect to the rights of
               the Investors set forth in Section 5, under such
               Section 5) have been assigned in accordance with
               this Agreement.

     b.   Shelf Registration.  If the Company shall receive at
          any time during the period commencing on the date
          hereof and ending at 5:00 p.m. on March 18, 2001 from
          the Holders of at least twenty percent (20%) of the
          Registrable Securities a written request that the
          Company effect a registration with respect to the
          Registrable Securities owned by such Holder or Holders,
          the Company shall:

          i.   within thirty (30) days of receipt of such written
               request, file a registration statement under the
               1933 Act for and all such qualifications and
               registrations as may be so required and as would
               permit the sale and distribution of all of the
               Holders' Registrable Securities and thereafter
               shall use its best efforts to secure the
               effectiveness of such registration statement
               within sixty (60) days of such filing;

          ii.  pay all expenses incurred in connection with any
               registration qualification and compliance
               requested hereunder, (excluding underwriters' or
               brokers' discounts and commissions), including
               without limitation all filing, registration and
               qualification, printers' and accounting fees and
               the reasonable fees and disbursements of one
               counsel for the selling Holder or Holders and
               counsel for the Company; and




<PAGE>




          iii. use its best efforts to cause the registration
               statement to remain effective until the earlier of
               (A) the date ending three (3) years after the
               effective date of the registration statement filed
               pursuant to this Section 4(b), or (B) the date on
               which each Holder of Registrable Securities is
               able to sell all of such Holder's Registrable
               Securities in any single three (3) month period
               without registration under the 1933 Act pursuant
               to Rule 144, provided that if the Company elects
               to terminate the effectiveness of the registration
               statement under (B), the Company shall prior to
               such termination provide each Holder an opinion of
               counsel, based on factual representations of the
               Holders, that such Holder is able to sell all of
               the Registrable Securities held by such Holder and
               its affiliates in any single three (3) month
               period without registration under the 1933 Act
               pursuant to Rule 144.

     c.   Obligations of the Company.  Whenever required to
          effect the registration of Registrable Securities under
          this Agreement, the Company will, as expeditiously as
          reasonably possible:

          i.   prepare and file with the SEC a registration
               statement with respect to such Registrable
               Securities and use its best efforts to cause such
               registration statement to become effective;

          ii.  prepare and file with the SEC such amendments and
               supplements to such registration statement and the
               prospectus used in connection with such
               registration statement as may be necessary to
               comply with the provisions of the 1933 Act with
               respect to the disposition of all securities
               covered by such registration statement;

          iii. furnish to the Holders such number of copies of a
               prospectus, including a preliminary prospectus, in
               conformity with the requirements of the 1933 Act,
               and such other documents as they may reasonably
               request in order to facilitate the disposition of
               the Registrable Securities owned by them that are
               included in such registration;

          iv.  use its best efforts to register and qualify the
               securities covered by such registration statement
               under such other securities or "blue sky" laws of
               such jurisdictions as shall be reasonably
               requested by the Holders, provided that the
               Company will not be required in connection
               therewith or as a condition thereto to qualify to
               do business or to file a general consent to
               service of process in any such states or
               jurisdictions;

          v.   in the event of any underwritten public offering,
               enter into and perform its obligations under an
               underwriting agreement, in usual and customary
               form, with the managing underwriter(s) of such
               offering;

          vi.  cause all such Registrable Securities registered
               pursuant hereunder to be listed on each securities
               exchange on which similar securities issued by the
               Company are then listed;




<PAGE>




          vii. provide a transfer agent and registrar for all
               Registrable Securities registered pursuant
               hereunder and a CUSIP number for all such
               Registrable Securities, in each case not later
               than the effective date of such registration; and

        viii.  notwithstanding anything else in this Section_4,
               if, at any time during which a prospectus is
               required to be delivered in connection with the
               sale of any Registrable Securities, the Company
               determines in good faith and in its reasonable
               judgment that such sale would require public
               disclosure by the Company of material non-public
               information that the Company deems it advisable
               not to disclose, or that a development has
               occurred or a condition exists as a result of
               which the registration statement or the prospectus
               filed as a part thereof contains a material
               misstatement or omission, the Company will
               immediately notify each Holder thereof by
               telephone and in writing.  Upon receipt of such
               notification, Holder and its affiliates will
               immediately suspend all offers and sales of any
               Registrable Securities pursuant to the
               registration statement.  In such event, the
               Company will amend or supplement the registration
               statement as promptly as practicable and will take
               such other steps as may be required to permit
               sales of the Registrable Securities thereunder by
               Holder and its affiliates in accordance with
               applicable federal and state securities laws.  The
               Company will promptly notify Holder after it has
               determined in good faith that such sales have
               become permissible in such manner and will
               promptly deliver copies of the registration
               statement and the prospectus (as so amended or
               supplemented).  Notwithstanding the foregoing,
               (A)_under no circumstances shall the Company be
               entitled to exercise its right to suspend sales of
               any Registrable Securities pursuant to the
               registration statement more than two (2) times in
               any twelve-month period, (B)_the period during
               which such sales may be suspended (each a
               "Blackout Period") shall not exceed thirty (30)
               calendar days and (C)_no Blackout Period may
               commence less than sixty (60) calendar days after
               the end of the preceding Blackout Period.

          Upon the commencement of a Blackout Period pursuant to
this Section_4, Holder will immediately notify the Company of any
contracts to sell any Registrable Securities (each a "Sales
Contract") that Holder or any of its affiliates has entered into
prior to notification of the commencement of such Blackout Period
and that would require delivery of such Registrable Securities
during such Blackout Period, which notice will contain the
aggregate sale price and volume of Registrable Securities
pursuant to such Sales Contract.  Upon receipt of such notice,
the Company will immediately notify Holder of its election either
(i)_to terminate the Blackout Period and, as promptly as
practicable, amend or supplement the registration statement or
the prospectus filed as a part thereof in order to correct the
material misstatement or omission and deliver to Holder copies of
such amended or supplemented registration statement and
prospectus or (ii)_to continue the Blackout Period in accordance
with this paragraph.  If the Company elects to continue the
Blackout <PAGE> Period, and Holder or any of its affiliates is therefore
unable to consummate the sale of Registrable Securities pursuant
to the Sales Contract (such unsold Registrable Securities being
hereinafter referred to herein as the "Unsold Securities"), the
Company will promptly indemnify each Holder against any loss,
claim or damage that each Holder may incur arising out of or in
connection with Holder's breach or alleged breach of any such
Sales Contract, and the Company shall reimburse each Holder for
any reasonable costs or expenses (including reasonable legal
fees) incurred by such party in investigating or defending any
such proceeding (collectively, the "Indemnification Amount");
provided, however, that each Holder shall take all actions
reasonably necessary or appropriate to mitigate such
Indemnification Amount; and provided further, however, that the
Indemnification Amount shall be reduced by an amount equal to the
number of Unsold Securities multiplied by the difference between
(x)_the actual per share price received by Holder or any of its
affiliates upon the sale of the Unsold Securities (if such sale
occurs within three (3) trading days of the end of the Blackout
Period) or the closing sale price of the Common Stock on the
NASDAQ or other national securities exchange on which the Common
Stock is then listed on the third trading day after the end of
the Blackout Period (if the Unsold Securities are not sold by
Investor or any of its affiliates within three (3) trading days
of the end of the Blackout Period), and (y)_the per share sale
price for the Unsold Securities provided in the Sales Contract.

     d.   Furnish Information.  It will be a condition precedent
          to the obligations of the Company to take any action
          pursuant to Section 4 hereof that the selling Holders
          will furnish to the Company such information regarding
          themselves, the Registrable Securities held by them,
          and the intended method of disposition of such
          securities as will be required to effect the
          registration of their Registrable Securities.

     e.   Delay of Registration.  No Holder will have any right
          to obtain or seek an injunction restraining or
          otherwise delaying any registration as the result of
          any controversy that might arise with respect to the
          interpretation or implementation of this Section_4.

     f.   Indemnification.  In the event any Registrable
          Securities are included in a registration statement
          under Section 4 hereof:

          i.   To the extent permitted by law, the Company will
               indemnify and hold harmless each Holder, the
               partners, shareholders, officers, directors,
               employees and agents of each Holder, any
               underwriter (as defined in the 1933 Act) for such
               Holder and each person, if any, who controls such
               Holder or underwriter within the meaning of the
               1933 Act or the Exchange Act against any losses,
               claims, damages, or liabilities (joint or several)
               to which they may become subject under the 1933
               Act, the Exchange Act or other federal or state
               law, insofar as such losses, claims, damages, or
               liabilities (or actions in respect thereof) arise
               out of or are based upon any of the following
               statements, omissions or violations (collectively,
               a "Violation"):




<PAGE>




               (1)  any untrue statement or alleged untrue
                    statement of a material fact contained in
                    such registration statement, including any
                    preliminary prospectus or final prospectus
                    contained therein or any amendments or
                    supplements thereto;

               (2)  the omission or alleged omission to state
                    therein a material fact required to be stated
                    therein, or necessary to make the statements
                    therein not misleading; or

               (3)  any violation or alleged violation by the
                    Company of the 1933 Act, the Exchange Act,
                    any federal or state securities law or any
                    rule or regulation promulgated under the 1933
                    Act, the Exchange Act or any federal or state
                    securities law in connection with the
                    offering covered by such registration
                    statement;

and the Company will reimburse each such Holder, partner,
shareholder, officer, director, employee, agent, underwriter or
controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this
Section_4(f)(i) will not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which
consent will not be unreasonably withheld), nor will the Company
be liable in any such case for any such loss, claim, damage,
liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use
in connection with such registration by such Holder, partner,
shareholder, officer, director, underwriter or controlling person
of such Holder.

          ii.  To the extent permitted by law, each selling
               Holder will indemnify and hold harmless the
               Company, each of its directors, each of its
               officers who have signed the registration
               statement, each person, if any, who controls the
               Company within the meaning of the 1933 Act, any
               underwriter and any other Holder selling
               securities under such registration statement or
               any of such other Holder's partners, directors or
               officers or shareholders or any person who
               controls such Holder within the meaning of the
               1933 Act or the Exchange Act, against any losses,
               claims, damages or liabilities (joint or several)
               to which the Company or any such director,
               officer, controlling person, underwriter or other
               such Holder, partner or director, officer,
               shareholder or controlling person of such other
               Holder may become subject under the 1933 Act, the
               Exchange Act or other federal or state law,
               insofar as such losses, claims, damages or
               liabilities (or actions in respect thereto) arise
               out of or are based upon any Violation that arises
               solely as a result of written information
               furnished by such Holder expressly for use in
               connection with such registration; and each such
               Holder will reimburse any legal or other expenses
               reasonably incurred by the Company or any such



<PAGE>




               director, officer, controlling person, underwriter
               or other Holder, partner, officer, director,
               shareholder or controlling person of such other
               Holder in connection with investigating or
               defending any such loss, claim, damage, liability
               or action: provided, however, that the indemnity
               agreement contained in this Section_4(f)(ii) will
               not apply to amounts paid in settlement of any
               such loss, claim, damage, liability or action if
               such settlement is effected without the consent of
               the Holder, which consent will not be unreasonably
               withheld; and provided further, that the total
               amounts payable in indemnity by a Holder under
               this Section_4(f)(ii) in respect of any Violation
               will not exceed the lesser of (A)_the aggregate
               proceeds (net of discounts) received by such
               Holder upon the sale of the Shares or Warrant
               Shares and (B)_that proportion of aggregate
               losses, claims, damages, liabilities or expenses
               indemnified against which equals the proportion
               which the number of Registrable Securities being
               sold by such Holder bears to the total number of
               Securities being sold by the Company and all
               Holders.

          iii. Promptly after receipt by an indemnified party
               under this Section_4(f) of notice of the
               commencement of any action (including any
               governmental action), such indemnified party will,
               if a claim in respect thereof is to be made
               against any indemnifying party under this
               Section_4(f), deliver to the indemnifying party a
               written notice of the commencement thereof and the
               indemnifying party will have the right to
               participate in, and, to the extent the
               indemnifying party so desires, jointly with any
               other indemnifying party similarly noticed, to
               assume the defense thereof with counsel mutually
               satisfactory to the parties; provided, however,
               that an indemnified party will have the right to
               retain its own counsel, with the fees and expenses
               to be paid by the indemnifying party, if
               representation of such indemnified party by the
               counsel retained by the indemnifying party would
               be inappropriate due to actual or potential
               differing interests between such indemnified party
               and any other party represented by such counsel in
               such proceeding.  The failure to deliver written
               notice to the indemnifying party within a
               reasonable time of the commencement of any such
               action, if the indemnifying party is materially
               prejudiced thereby, will relieve such indemnifying
               party of liability, but only to the extent that
               such indemnifying party is prejudiced with respect
               to a specific claim.

          iv.  The foregoing indemnity agreement with respect to
               any preliminary prospectus shall not inure to the
               benefit of any Holder or underwriter, or any
               person controlling such Holder or underwriter,
               from whom the person asserting any losses, claims,
               damages or liabilities purchased shares, if a copy
               of the prospectus (as then amended or supplemented
               if the Company <PAGE> shall have furnished any amendments
               or supplements thereto) provided by the Company
               was not sent or given by or on behalf of such
               Holder or underwriter to such person, if required
               by law so to have been delivered, at or prior to
               the written confirmation of the sale of the
               purchased shares to such person, and if the
               prospectus (as so amended or supplemented) would
               have cured the defect giving rise to such loss,
               claim, damage or liability.

          v.   If the indemnification provided for in
               Sections_4(f)(i) or 4(f)(ii) hereof shall be
               unavailable to hold harmless an indemnified party
               in respect of any liability under the 1933 Act,
               then, and in each such case, the indemnifying
               party, in lieu of indemnifying such indemnified
               party hereunder, shall contribute to the amount
               paid or payable by such indemnified party as a
               result of such loss, liability, claim, damage or
               expense in such proportion as is appropriate to
               reflect the relative fault of the indemnifying
               party on the one hand and of the indemnified party
               on the other in connection with the statement or
               omissions that resulted in such loss, liability,
               claim, damage or expense as well as any other
               relevant equitable considerations.  The relative
               fault of the indemnifying party and of the
               indemnified party shall be determined by reference
               to, among other things, whether the untrue or
               alleged untrue statement of a material fact or the
               omission to state a material fact relates to
               information supplied by the indemnifying party or
               by the indemnified party and the parties' relative
               intent, knowledge, access to information and
               opportunity to correct or prevent such statement
               or omission; provided that in no event shall any
               contribution under this subsection (v) by any
               Holder exceed the gross proceeds from the offering
               received by such indemnifying party.  No person or
               entity guilty of fraudulent misrepresentation
               (within the meaning of Section_II(f) of the 1933
               Act) will be entitled to contribution from any
               person or entity who was not guilty of such
               fraudulent misrepresentation.

          vi.  The obligations of the Company and Holders under
               this Section_4(f) will survive the completion of
               any offering of Registrable Securities in a
               registration statement, and otherwise.

     g.   Rule 144 Reporting.  With a view to making available
          the benefits of certain rules and regulations of the
          SEC which may at any time permit the sale of the
          Registrable Securities to the public without
          registration, while a public market exists for the
          Common Stock of the Company, the Company will:

          i.   make and keep public information available, as
               those terms are understood and defined in Rule 144
               under the 1933 Act, at all times while the Company
               is reporting under the Exchange Act;

          ii.  use its best efforts to file with the SEC in a
               timely manner all reports and other documents
               required of the Company under the 1933 Act and the
               Exchange Act (at any time it is subject to such
               reporting requirements); and




<PAGE>




          iii. so long as a Holder owns any Registrable
               Securities, furnish to the Holder forthwith upon
               request a written statement by the Company as to
               its compliance with the reporting requirements of
               Rule_144, and of the 1933 Act and the Exchange Act
               (at any time it is subject to the reporting
               requirements of the Exchange Act), a copy of the
               most recent annual or quarterly report of the
               Company, and such other reports and documents of
               the Company as a Holder may reasonably request in
               availing itself of any rule or regulation of the
               SEC allowing a Holder to sell any such securities
               without registration (at any time the Company is
               subject to the reporting requirements of the
               Exchange Act).
5.   Covenants.

     a.   Affirmative Covenants.  The Company covenants and
          agrees that unless the Holders of a majority of
          Registrable Securities shall otherwise give their prior
          consent in writing (which consent any such Holder may
          at its sole discretion withhold):

          i.   Authorized Shares.  The Company's Board of
               Directors shall use its best efforts to obtain
               stockholder approval to increase the Company's
               authorized shares of Common Stock in a sufficient
               number at its next annual stockholder meeting to
               cover the issuance of the Warrant Shares and the
               Conversion Shares, the issuance of the Common
               Stock issuable upon the conversion of the New
               Notes, any issuances of shares of Common Stock
               upon the exercise, conversion or exchange of any
               options, warrants, securities or rights
               convertible or exchangeable for shares of Common
               Stock, any issuances of shares of Common Stock
               pursuant to any other rights, commitments or
               agreements of the Company and any shares reserved
               for issuance under the Company's stock plans as
               set forth on the Schedule of Exceptions.  The
               Company shall, from and at all times after the
               Closing maintain a reserve of authorized shares
               sufficient to cover the conversion of the
               Preferred Stock and the exercise in full of the
               outstanding Warrants until the conversion of the
               Preferred Stock and the expiration or earlier
               exercise of the Warrants, respectively.

          ii.  Exchange Act Filings.  The Company shall continue
               to file with the SEC all reports and other filings
               required under the rules of the SEC and such
               documents shall comply in all material respects
               with the requirements of the Exchange Act or the
               1933 Act, as applicable, as long as the Company
               continues to be subject to reporting requirements
               under Sections 13 or 15(d) of the Exchange Act.

          iii. Negative Covenants.  The Company covenants and
               agrees that unless the Holders of a majority of
               the Registrable Securities shall otherwise give
               their prior consent in writing (which consent any
               such Holder may at its sole discretion withhold),
               the Company will not issue shares of Common <PAGE> Stock
               pursuant to the exercise of an option and/or
               warrant subject to an Agreement Not to Exercise
               Options and/or Warrants so long as such agreement
               is in effect.

6.   Conditions to Obligations of the Investors.  The obligation
     of each Investor to purchase the Units at the Closing is
     subject to the fulfillment on or prior to the Closing Date
     of the following conditions, any of which may be waived by
     such Investor:

     a.   Representations and Warranties Correct; Performance of
          Obligations.  The representations and warranties made
          by the Company in Section 2 hereof shall be true and
          correct when made, and shall be true and correct on the
          Closing Date with the same force and effect as if they
          had been made on and as of said date, except for
          representations and warranties made as of a specific
          date which shall be true and correct as of such date;
          and the Company shall have performed all obligations
          and conditions herein required to be performed or
          observed by it under this Agreement on or prior to the
          Closing Date.

     b.   Consents and Waivers.  The Company shall have obtained
          any and all consents (including all governmental or
          regulatory consents, approvals or authorizations
          required in connection with the valid execution and
          delivery of this Agreement), permits and waivers, other
          then the Stockholder Approval, necessary or appropriate
          for consummation of the transactions contemplated by
          this Agreement.

     c.   Compliance Certificate.  The Company shall have
          delivered to the Investors a certificate, executed by
          the Chairman of the Board and Chief Executive Officer
          of the Company, dated the Closing Date, certifying to
          the fulfillment of the conditions specified in
          subsections (a), (b), (g) and (h) of this Section 6.

     d.   Opinion of Company's Counsel.  Investors shall have
          received from Brian Gillman, General Counsel to the
          Company, an opinion addressed to the Investors, dated
          the Closing Date  in substantially the form attached
          hereto as Exhibit G.

     e.   Agreement Not to Exercise Options and/or Warrants.
          Each director and officer of the Company shall have
          executed the Agreement Not to Exercise Options and/or
          Warrants, in the form attached hereto as Exhibit_F.

     f.   Registration Rights Agreement.  The Company and each
          Investor shall have entered into the Registration
          Rights Agreement in the form attached hereto as Exhibit
          E.

     g.   Fairness Opinion.  The Company shall have received from
          an independent third party satisfactory to the
          Investors an opinion stating that the transactions
          contemplated by this Agreement are fair to the
          stockholders of the Company.

     h.   Amendment of Restated Certificate.  The Board of
          Directors of the Company shall have approved an
          increase in the authorized Common Stock of the Company
          to 200,000,000 shares of Common Stock.

     i.   Certificate of Designation.  The Company shall have
          filed with the Secretary of State of the State of
          Delaware the Certificate of Designation in the form
          attached hereto as Exhibit C.




<PAGE>




     j.   Note Exchange Agreement.  The Company and the Investors
          shall have entered into the Note Exchange Agreement in
          substantially the form attached hereto as Exhibit H.

7.   Conditions to Obligations of the Company.  The obligation of
     the Company to sell and issue the Shares to each Investor at
     the Closing is subject to the fulfillment on or prior to the
     Closing Date of the following conditions, any of which may
     be waived by the Company:

     a.   Representations and Warranties.  The representations
          and warranties made by such Investor in Section 3
          hereof shall be true and correct when made, and shall
          be true and correct on the Closing Date with the same
          force and effect as if they had been made on and as of
          said date.

     b.   Consents and Waivers.  The conditions set forth in
          subsections (b) and (g) of Section_6 hereof shall have
          been fulfilled.

     c.   Note Exchange Agreement.  The Company and the Investors
          shall have entered into the Note Exchange Agreement in
          substantially the form attached hereto as Exhibit H.

8.   Miscellaneous.

     a.   Governing Law.  This Agreement will be governed by and
          construed in accordance with the internal laws of the
          State of California applicable to contracts made among
          residents of, and wholly to be performed within, the
          State of California, without regard to principles of
          conflict of laws or choice of laws.

     b.   Further Instruments.  From time to time, each party
          hereto will execute and deliver such instruments and
          documents as may be reasonably necessary to carry out
          the purposes and intent of this Agreement.

     c.   Successors and Assigns.  Except as otherwise provided
          herein, the terms and conditions of this Agreement
          shall inure to the benefit of and be binding upon the
          respective successors and assigns of the parties
          (including transferees of any shares of Registrable
          Securities).  Nothing in this Agreement, express or
          implied, is intended to confer upon any party other
          than the parties hereto or their respective successors
          and assigns any rights, remedies, obligations, or
          liabilities under or by reason of this Agreement,
          except as expressly provided in this Agreement.

     d.   Counterparts.  This Agreement may be executed in two or
          more counterparts, each of which will be deemed an
          original, but all of which together will constitute one
          and the same instrument.  This Agreement will be
          effective following the parties signatory hereto upon
          such counterpart signature by all initial parties
          hereto.

     e.   Entire Agreement.  This Agreement, including and
          incorporating the Schedule of Exceptions and all
          Exhibits attached hereto and referred to herein,
          constitutes and contains the entire agreement and
          understanding of the parties regarding the subject
          matter of this Agreement and supersedes in its entirety
          any and all prior negotiations, correspondence,
          understandings and agreements among the parties
          respecting the subject matter hereof.




<PAGE>




     f.   Notices.  All notices required to be given or delivered
          to the Company under the terms of this Agreement shall
          be deemed to have been given or made for all purposes
          (i) upon personal delivery, or (ii) upon confirmation
          receipt that the communication was successfully sent to
          the applicable number if sent by facsimile, or (iii)
          one day after being sent, when sent by professional
          overnight courier service, or (iv) five (5) days after
          posting when sent by registered or certified mail.
          Notices to the Company shall be sent to the principal
          office of the Company (or at such other place as the
          Company shall notify the Investor of in writing).
          Notices to the Investor shall be sent to the address of
          the Investor on the books of the Company (or at such
          other place as the Investor shall notify the Company of
          in writing).

     g.   Finders' Fee.  Each party represents that it neither is
          nor will be obligated for any finders' fee or
          commission in connection with this transaction other
          than described in this section.  Each party agrees to
          indemnify and to hold the other parties hereto harmless
          from any liability for any commission or compensation
          in the nature of a finders' fee (and the costs and
          expenses of defending against such liability or
          asserted liability) for which such party or any of its
          officers, partners, employees or representatives is
          responsible.

     h.   Amendments and Waivers.  Any term of this Agreement may
          be amended and the observance of any term of the
          Agreement may be waived (either generally or in a
          particular instance and either retroactively or
          prospectively), only with the written consent of the
          Company and by Investors holding at least a majority of
          the Registrable Securities.  Any amendment or waiver
          effected in accordance with this Section_8(h) will be
          binding upon the Company, each Investor, and their
          permitted transferees and assignees.

     i.   Severability.  If one or more provisions of this
          Agreement are held to be unenforceable under applicable
          law, such provisions will be excluded from this
          Agreement to the extent unenforceable and the balance
          of such provisions, and of this Agreement, will be
          interpreted as if such provision or part hereof were so
          excluded and will be enforceable in accordance with its
          terms.

     j.   Aggregation of Stock.  All Securities held or acquired
          by affiliated entities or persons will be aggregated
          together for the purpose of determining the
          availability of any rights under this Agreement.

     k.   Expenses.  The Company shall pay all of the costs and
          expenses that it incurs, and will pay the reasonable fees and
          expenses of Gunderson Dettmer Stough Villeneuve Franklin &
          Hachigian, LLP, counsel to the Investors, with respect to the
          negotiation, execution, delivery and performance of this
          Agreement, not to exceed $15,000.





<PAGE>




          IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the date and year first above written.


COMPANY

VANGUARD AIRLINES, INC.


By:
Title:
Address:


INVESTOR:

J.F. SHEA CO., INC., as nominee 1998-19


By:
Title:
Address:  655 Brea Canyon Road
Walnut, CA  91788-0489



THE HAMBRECHT 1980 REVOCABLE TRUST

By:
William Hambrecht
Address:  550 15th Street
          San Francisco, CA  94103


<PAGE>


                                EXHIBIT A

                           SCHEDULE OF INVESTORS

Investor                      Number of Units     Purchase Price


J.F. Shea Co., Inc.,              151,200         $1,512,000.00
 as nominee 1998-19


The Hambrecht 1980                151,162         $1,511,620.00
  Revocable Trust



<PAGE>

                            EXHIBIT B

                         FORM OF WARRANT

<PAGE>


                            EXHIBIT C

                    CERTIFICATE OF DESIGNATION


<PAGE>

                            EXHIBIT D

                      SCHEDULE OF EXCEPTIONS


<PAGE>
                            EXHIBIT E

                  REGISTRATION RIGHTS AGREEMENT



<PAGE>
                            EXHIBIT F

        AGREEMENT NOT TO EXERCISE OPTIONS AND/OR WARRANTS


<PAGE>

                            EXHIBIT G

                         FORM OF OPINION


<PAGE>

                            EXHIBIT H

                     NOTE EXCHANGE AGREEMENT