EMPLOYMENT AGREEMENT
THIS AGREEMENT is effective January 1, 1999, between INTERACTIVE FLIGHT
TECHNOLOGIES, INC. ("Company") and Xxxxx X. Xxx ("Executive").
W I T N E S S E T H:
Company wishes to employ Executive and Executive wishes to enter into the
employ of Company on the terms and conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the facts, mutual promises and
covenants contained herein and intending to be legally bound hereby, Company and
Executive agree as follows:
1. Employment. Company hereby employs Executive and Executive hereby
accepts employment by Company for the period and upon the terms and conditions
contained in this Agreement.
2. Office and Duties.
(a) The Executive is engaged hereunder as the Company's President and
Chief Operating Officer and agrees to perform the duties and services incident
to that position, and such other duties and services as may reasonably be
requested of him by the Chief Executive Officer or the Chairman of the Board of
Company. The Executive will report directly to the Chief Executive Officer and
shall report to the Board of Directors of Company on a regular basis.
(b) Throughout the term of this Agreement, Executive shall devote his
entire working time, energy, skill and best efforts to the performance of his
duties hereunder in a manner which will faithfully and diligently further the
business and interests of Company. The foregoing shall not be construed,
however, as preventing the Executive from investing his assets in such form or
manner as will not require services on the part of the Executive in the
operations of the business in which such investment is made and provided such
business is not in competition with the company or, if in competition, such
business has a class of securities registered under the Securities Exchange Act
of 1934 and the interest of Executive therein is solely that of an investor
owning not more than 5% of any class of the outstanding equity securities of
such business.
3. Term. This Agreement shall be for a term of twenty-four (24) months,
commencing on January 1, 1999, and ending on December 31, 2000, unless sooner
terminated as hereinafter provided. This Agreement shall terminate at the end of
the original term, provided, however, that the parties hereto shall, at least
sixty (60) days prior to the end of the term hereof, use their best efforts to
determine whether the Agreement will be renewed or negotiated.
4. Compensation.
(a) For all services to be rendered by Executive to Company, Executive
shall receive an annual base salary of Two Hundred and Twenty-Five Dollars
($225,000), payable in accordance with Company's regular payroll practices in
effect from time to time.
(b) In addition to Executive's base salary, Company shall pay to
Executive, on July 31 and January 31 for the preceding six-month periods ending
on June 30 and December 31 of each year during the term of this Agreement, such
bonuses or other additional compensation as the Board of Directors may determine
based upon the achievement of the goals assigned to Executive as set forth in a
Board-approved Business Plan or as may otherwise be determined or agreed to by
the Board. Subject to the achievement of the assigned goals, the total and
aggregate bonuses to be paid to Executive in any year during the term of this
Agreement should not be less than twenty percent (20%) of Executive's annual
salary.
(c) Throughout the term of this Agreement and as long as they are kept
in force by Company, Executive shall be entitled to participate in and receive
the benefits of any profit sharing or retirement plans and any health, life,
accident or disability insurance plans or programs made available to other
similarly situated executives of Company. Specifically, Executive shall be
provided family medical and dental coverage at Company's expense. Executive
shall be entitled to four (4) weeks paid vacation during each year of the term
of this Agreement. Company shall pay Executive for any unused vacation at
December 31st of each year.
(d) Company will provide Executive with an automobile allowance of $450
per month and Company will reimburse Executive for all reasonable expenses
incurred by Executive in connection with the performance of Executive's duties
hereunder, including car phone, cellular phone, and club memberships, upon
receipt of vouchers therefor and in accordance with Company's regular
reimbursement procedures and practices in effect from time to time.
(e) In addition to the stock options granted to Executive in November,
1998 in accordance with the terms of Executive's appointment as a Director of
the Company, pursuant to the Company's 1997 Plan, the Company shall grant to
Executive seventy thousand (70,000) options under the Interactive Flight
Technologies, Inc. Stock Option Plan. Such options shall vest as follows:
fourteen thousand (14,000) on January 1, 1999; fourteen thousand (14,000) on
January 1, 2000; fourteen thousand (14,000) on December 31, 2000; fourteen
thousand (14,000) on January 1, 2002; and fourteen thousand (14,000) on December
31, 2002. The options shall be for a term of ten (10) years from the date of the
grant of such options. If Company does not renew this Agreement or terminates
this Agreement without Cause, fifty percent (50%) of all options granted
hereunder will vest and become exercisable (to the extent not already vested and
exercisable). If Executive leaves Company or is terminated for Cause, Executive
shall be entitled to exercise such options that have vested as of the date of
such event, but no additional options shall vest or be exercisable. Upon a
Change of Control, or if Executive leaves the Company for Good Reason , as
hereinafter defined, all options granted hereunder shall vest as of immediately
prior to such Change of Control. In the event of Executive's disability or
death, Executive's estate shall be entitled to exercise such options that have
vested as of the date of disability or death.
5. Disability. If Executive becomes unable to perform his duties hereunder
due to partial or total disability or incapacity resulting from a mental or
physical illness, injury or any other cause, Company will continue the payment
of Executive's base salary at its then current rate for a
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period of twelve (12) weeks following the date Executive is first unable to
perform his duties due to such disability or incapacity. Thereafter, Company
shall have no obligation for base salary or other compensation payments to
Executive during the continuance of such disability or incapacity, except as
provided in the Company's disability policy, if any.
6. Death. If Executive dies, all payments hereunder shall cease at the end
of the month in which Executive's death shall occur and Company shall have no
further obligations or liabilities hereunder to Executive's estate or legal
representative or otherwise.
7. Termination of Company's Business. If (i) Company shall discontinue the
business operation in which Executive is employed, Company may immediately
terminate Executive's employment upon written notice, or (ii) there is a change
of control ("Change in Control", as defined herein), and as a result of such
Change in Control, the Executive is terminated without Cause (as defined in
Paragraph 8 below), then, on the occurrence of either event, Company shall have
no further obligations or liabilities hereunder to Executive, except Company
shall (i) pay Executive an amount equal to two times the remaining base salary
due the Executive for the then current term, but in no event shall Executive
receive less than his base salary for one year, to be paid in accordance with
the regular payroll practices of Company; and (ii) continue to provide Executive
with family medical and dental coverage for a period of 12 months.
(a) Change in Control. The term "Change in Control" shall mean a change
in control of a nature that would be required to be reported in response to Item
6(e) of Schedule 14A of Regulation 14A issued under the Securities Exchange Act
of 1934, as amended (the "Exchange Act") as in effect as of the date hereof, or
if Item 6(e) is no longer in effect, any subsequent regulation issued under the
Exchange Act for a similar purpose, whether or not the Company is subject to
such reporting requirements; provided, that without limitation, such a change in
control shall be deemed to have occurred if:
(i) any "person" is or becomes the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 30% or more of the combined voting power of the Company's
then outstanding securities.
(ii) during any period of two consecutive years (not including any
period prior to the date of the Agreement), individuals who at the beginning of
such period constitute the Board of Directors, and any new director, whose
election by the Board or nomination or election by the Company's stockholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election or nomination for elections was previously approved, cease for any
reason to constitute a majority of the Board; or
(iii) the business of the Company is disposed of by the Company
pursuant to a liquidation, sale of assets of the Company, or otherwise.
(b) Good Reason. "Good Reason" shall mean the occurrence after a Change
in Control of any of the following events without the Executive's express
written consent:
(i) any change in the Executive's title, authorities,
responsibilities (including reporting responsibilities), which represent a
demotion from his status, title, position or
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responsibilities (including reporting responsibilities) as in effect immediately
prior to the Change in Control; the assignment to him of any duty or work
responsibilities which, in his reasonable judgment, are inconsistent with such
status, title, position or work responsibilities; or any removal of the
Executive from or failure to appoint or reelect him to any of such positions,
except in connection with the termination of his employment for Disability,
Retirement or Cause as a result of the Executive's death or by him other than
for Good Reason;
(ii) a reduction by the Company in the Executive's annual base
salary as in effect on the date hereof or as the same may be increased from time
to time;
(iii) the failure of the Company to obtain a satisfactory agreement
from any successor or assign of the Company to assume and agree to perform this
Agreement.
8. Termination For Cause. Company may discharge the Executive and thereby
terminate his employment hereunder for the following reasons (for "Cause"):
(a) habitual intoxication;
(b) habitual illegal drug use or drug addition;
(c) conviction of a felony, materially adversely affecting Company where
such conviction significantly impairs the Executive's ability to perform his
duties hereunder;
(d) while acting in his capacity as Executive of Company, knowingly
engaging in any unlawful activity which could materially adversely affect the
Company;
(e) gross insubordination, gross negligence, or willful and knowing
violation of any expressed direction or regulation established by Company which
is materially injurious to the business or reputation of Company;
(f) misappropriation of corporate funds or other acts of dishonesty;
(g) the Executive's material breach of this Agreement in any other
respect.
In the event that Company discharges the executive for Cause, Company
shall pay to Executive the portion, if any, of the Executive's base salary for
the period up to the date of termination which remains unpaid. The Company shall
have no further obligation or liability under this Agreement.
9. Termination Without Cause. In the event Company terminates this
Agreement without Cause at any time, the Company's sole liability for
compensation to Executive shall be to pay the Executive two times the remaining
balance of the base salary due the Executive for the remainder of the then
current term to be paid in accordance with the regular payroll practices of
Company and provide Executive with family medical and dental coverage for the
same period.
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10. Company Property. All advertising, sales, manufacturers' and other
materials or articles or information, including without limitation data
processing reports, customer sales analyses, invoices, price lists or
information, samples, budgets, business plans, strategic plans, financing
applications, reports, memoranda, correspondence, financial statements, and any
other materials or data of any kind furnished to Executive by Company or
developed by Executive on behalf of Company or at Company's direction or for
Company's use or otherwise in connection with Executive's employment hereunder,
are and shall remain the sole and confidential property of Company; if Company
requests the return of any such materials at any time during or at or after the
termination of Executive's employment, Executive shall immediately deliver the
same to Company.
11. Noncompetition, Trade Secrets, Etc.
(a) During the term of this Agreement and for a period of one (1) year
after the termination of his employment with Company for any reason whatsoever,
Executive shall not directly or indirectly induce or attempt to influence any
executive of Company to terminate his or her employment with Company and shall
not engage in (as a principal, partner, director, officer, agent, executive,
consultant or otherwise) or be financially interested in any business operating
within the geographical area described in Exhibit "A", attached hereto, which is
involved in business activities which are the same as, similar to, or in
competition with business activities carried on by Company, or being definitely
planned by Company, at the time of the termination of Executive's employment.
However, nothing contained in this Paragraph 13 shall prevent Executive from
holding for investment no more than five percent (5%) of any class of equity
securities of a company whose securities are traded on a national securities
exchange or on the NASDAQ System.
(b) During the term of this Agreement and at all times thereafter,
Executive shall not use for his personal benefit, or disclose, communicate or
divulge to, or use for the direct or indirect benefit of any person, firm,
association or company other than the Company, any material referred to in
Paragraph 10 above or any information regarding the business methods, business
policies, procedures, techniques, research or development projects or results,
trade secrets, or other knowledge or processes of or developed by the Company or
any names and addresses of customers or clients, any data on or relating to
past, present or prospective customers or clients, or any other confidential
information relating to or dealing with the business operations or activities of
Company, made known to Executive or learned or acquired by Executive while in
the employ of Company.
(c) Any and all reports, plans, budgets, writings, inventions,
improvements, processes, procedures and/or techniques which Executive may make,
conceive, discover or develop, either solely or jointly with any other person or
persons, at any time during the term of this Agreement, whether during working
hours or at any other time and whether at the request or upon the suggestion of
the Company or otherwise, which relate to or are useful in connection with any
business now or hereafter carried on or contemplated by the Company, including
developments or expansions of its present fields of operations, shall be the
sole and exclusive property of Company. Executive shall make full disclosure to
Company of all such reports, plans, budgets, writings, inventions, improvements,
processes, procedures and techniques, and shall do everything reasonably
necessary or desirable to vest the absolute title thereto in Company. Executive
shall write and prepare all specifications and procedures regarding such
inventions, improvements, processes, procedures and techniques and otherwise aid
and assist Company so that Company can prepare and
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present applications for copyright or Letters Patent therefor and can secure
such copyright or Letters Patent wherever possible, as well as reissues,
renewals, and extensions thereof, and can obtain the record title to such
copyright or patents so that Company shall be the sole and absolute owner
thereof in all countries in which it may desire to have copyright or patent
protection. Executive shall not be entitled to any additional or special
compensation or reimbursement regarding any and all such writings, inventions,
improvements, processes, procedures and techniques.
(d) Executive acknowledges that the restrictions contained in the
foregoing subparagraphs (a), (b) and (c), in view of the nature of the business
in which Company is engaged, are reasonable and necessary in order to protect
the legitimate interests of Company, and that any violation thereof would result
in irreparable injuries to Company, and Executive therefore acknowledges that,
in the event of his violation of any of these restrictions, Company shall be
entitled to obtain from any court of competent jurisdiction preliminary and
permanent injunctive relief as well as damages and an equitable accounting of
all earnings, profits and other benefits arising from such violation, which
rights shall be cumulative and in addition to any other rights or remedies to
which Company may be entitled.
(e) If the period of time or the area specified in subparagraph (a)
above should be adjudged unreasonable in any proceeding, then the period of time
shall be reduced by such number of months or the area shall be reduced by the
elimination of such portion thereof or both so that such restrictions may be
enforced in such area and for such time as is adjudged to be reasonable. If
Executive violates any of the restrictions contained in such subparagraph (a),
the restrictive period shall not run in favor of Executive from the time of the
commencement of any such violation until such time as such violation shall be
cured by Executive to the satisfaction of Company.
12. Prior Agreements. Executive represents to Company (a) that there are no
restrictions, agreements or understandings whatsoever to which Executive is a
party which would prevent or make unlawful his execution of this Agreement or
his employment hereunder, (b) that his execution of this Agreement and his
employment hereunder shall not constitute a breach of any contract, agreement or
understanding, oral or written, to which he is a party or by which he is bound
and (c) that he is free and able to execute this Agreement and to enter into
employment by Company.
13. Indemnification. Company shall maintain a Directors and Officers Errors
and Omission Policy with a minimum coverage of Fifteen Million Dollars
($15,000,000). Any deductible and all other costs and expenses which may be
incurred by Executive as a result of his acting in his capacity as an Officer of
the Company shall be paid by Company.
14. Miscellaneous.
(a) Indulgences, Etc. Neither the failure nor any delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, power or privilege preclude any other or further
exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any
occurrence be construed as a waiver of such right, remedy, power or privilege
with respect to any other occurrence. No waiver
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shall be effective unless it is in writing and is signed by the party asserted
to have granted such waiver.
(b) Controlling Law. This Agreement and all questions relating to its
validity, interpretation, performance and enforcement (including, without
limitation, provisions concerning limitations of actions), shall be governed by
and construed in accordance with the laws of the State of Delaware,
notwithstanding any conflict-of-laws doctrines of any jurisdiction to the
contrary, and without the aid of any canon, custom or rule of law requiring
construction against the draftsman.
(c) Notices. All notices, requests, demands and other communications
required or permitted under this Agreement shall be in writing and shall be
deemed to have been duly given, made and received only when delivered
(personally, by courier service such FedEx or by other messenger) against
receipt or upon actual receipt of registered or certified mail, postage prepaid,
return receipt requested, addressed as set forth below:
(i) If to Company:
Xxxxx X. Xxxxx, Chairman and CEO
Interactive Flight Technologies, Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
with a copy, given in the manner prescribed above, to:
Xxxxxxx X. Xxxxx, Esquire
Mesirov Xxxxxx Xxxxx Xxxxxx & Xxxxxxxx, LLP
0000 Xxxxxx Xxxxxx - 00xx Xxxxx
Xxxxxxxxxxxx, XX 00000-0000
(ii) If to Executive:
Xxxxx X. Xxx
00 Xxxxxxxx Xxxx
Xxx Xxxxxx, XX 00000
with a copy, given in the manner prescribed above, to:
Xxxxxxx Xxxxxxxxx, Esquire
Xxxxxxxx & Xxxxxxxx
Four Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxxxx, XX 00000-0000
In addition, notice by mail shall be by air mail if posted outside of the
continental United States. Either party may alter the address to which
communications or copies are to be sent by giving notice
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of such change of address in conformity with the provisions of this subparagraph
for the giving of notice.
(d) Exhibits. All Exhibits attached hereto are hereby incorporated by
reference into, and made a part of, this Agreement.
(e) Binding Nature of Agreement; No Assignment. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, personal representatives, successors and assigns, except that no party
may assign or transfer its rights nor delegate its obligations under this
Agreement without the prior written consent of the other parties hereto.
(f) Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original as
against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories.
(g) Provisions Separable. The provisions of this Agreement are
independent of and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any reason
any other or others of them may be invalid or unenforceable in whole or in part.
(h) Entire Agreement. This Agreement contains the entire understanding
between the parties hereto with respect to the subject matter hereof, and
supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained. The express terms hereof control and supersede any course of
performance and/or usage of the trade inconsistent with any of the terms hereof.
This Agreement may not be modified or amended other than by an agreement in
writing.
(i) Paragraph Headings. The Paragraph and subparagraph headings in this
Agreement have been inserted for convenience of reference only; they form no
part of this Agreement and shall not affect its interpretation.
(j) Gender, Etc. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number,
singular or plural, and any other gender, masculine, feminine or neuter, as the
context indicates is appropriate.
(k) Number of Days. In computing the number of days for purposes of this
Agreement, all days shall be counted, including Saturdays, Sundays and Holidays;
provided, however, that if the final day of any time period falls on a Saturday,
Sunday or Holiday, then the final day shall be deemed to be the next day which
is not a Saturday, Sunday or Holiday. For purposes of this Agreement, the term
"Holiday" shall mean a day, other than a Saturday or Sunday, on which national
banks with branches in the Commonwealth of Pennsylvania are or may elect to be
closed.
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(l) Expenses of the Parties. Company shall be responsible for up to
$4,000 in legal expenses incurred in the negotiation and preparation of this
Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered in Philadelphia, Pennsylvania, as of the date first above written.
INTERACTIVE FLIGHT TECHNOLOGIES, INC.
By:
---------------------------------
XXXXX X. XXXXX, Chairman and CEO
EXECUTIVE:
-------------------------------------
XXXXX X. XXX
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EXHIBIT "A"
Under Paragraph 11, Noncompetition, Trade Secrets, Etc., the geographic
area shall be as follows:
Continental United States
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