EXHIBIT 10.4
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT") is entered into as of October
2, 1996, between Interactive Flight Technologies, Inc., a Delaware corporation
(the "COMPANY"), and Xxxx Xxxxxxxx ("EXECUTIVE") with reference to the following
facts:
A. The Company has retained executive to act as its Chief Financial
Officer.
B. Executive and the Company wish to enter into an employment contract
providing for the employment of Executive on the terms and conditions set forth
herein.
NOW THEREFORE, based on the mutual covenants contained herein, the parties
agree as follows:
1. EMPLOYMENT AND DUTIES. The Company hereby agrees to employ Executive
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and Executive hereby accepts employment with the Company under the terms and
conditions set forth in this Agreement. Executive shall be employed as the
Chief Financial Officer, with the duties and responsibilities commensurate with
his position as may be assigned by the Company, including without limitation the
management of the overall financial operations of the Company. Executive shall
report directly to Xxxxxxx Xxxxx or, if Xxxxxxx Xxxxx shall no longer be
employed by the Company, then to his successor as Chief Executive Officer of the
Company. Executive shall devote his full time, attention and energies to
performing his duties for the Company on an exclusive basis, and shall perform
his duties faithfully and to the best of his abilities.
2. TERM OF EMPLOYMENT. Subject to earlier termination as provided in
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Section 5, Executive's employment under this Agreement shall commence on the
date first stated above and continue until three (3) years thereafter (the
"EMPLOYMENT TERM"; each year during the Employment Term, a "TERM YEAR"). In the
event that Executive continues to be employed by the Company following the
Employment Term, that employment shall be governed by this Agreement except that
it will be "at-will," without a fixed term, and may be terminated by the Company
or Executive at any time, with or without notice, for any reason or no reason
(and no reason need be given).
3. COMPENSATION. As compensation for the performance by Executive of all
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of his obligations under this Agreement, the Company shall pay to Executive the
following:
3.1 BASE SALARY. A base salary during the Employment Term, at a rate
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of Two Hundred Thousand Dollars ($200,000) per Term Year, payable in accordance
with the Company's normal practices for its senior executive officers (the "BASE
SALARY"). No additional compensation shall be payable to Executive by reason of
the number of hours worked or any hours worked on Saturdays, Sundays or
holidays, by
reason of special responsibilities assumed, special projects completed or
performance goals attained, or otherwise.
3.2 BONUSES. In respect of each Term Year during which Executive is
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employed under this Agreement, the Board of Directors of the Company or any
designated Committee thereof (in either case, the "BOARD") shall make a
determination, on a timetable consistent with its general evaluation of the
annual performance of the Company's senior executive officers, as to whether, in
the Board's sole and absolute discretion, Executive is entitled to receive a
bonus for the Term Year and, if so, the amount of the bonus; provided, however,
that the Board shall make such determination with the intent of paying a target
bonus of 20% of annual Base Salary if it determines in its discretion that
Executive has met the Board's performance criteria. The parties anticipate that
such bonus, if any, would be in cash.
4. BENEFITS.
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4.1 EXPENSES. The Company shall repay or reimburse Executive for
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ordinary and necessary business expenses to the extent compatible with, and
subject to the verification and substantiation documentation and procedures
applicable under, the Company's general policies for its senior executive
officers. Executive shall keep accurate and complete records of all such
expenses, including, but not limited to, proof of payment and purpose.
4.2 RELOCATION COSTS. The Company shall repay or reimburse Executive
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for the following costs associated with his relocation to Phoenix: (i) costs
incurred for a trip to Phoenix by Executive and his spouse, for up to five days,
to shop for a house, (ii) a reasonable temporary housing lease for six months
or, if earlier, until Executive purchases a residence and (iii) additional
actual and reasonable expenses incurred in connection with Executive's
relocation to Phoenix, in each case subject to the verification and
substantiation documentation and procedures applicable under the Company's
general policies for its senior executive officers. Executive shall keep
accurate and complete records of all such expenses, including, but not limited
to, proof of payment and purpose. If Executive voluntary resigns within twelve
months from the date hereof, Executive shall repay to the Company all amounts
paid under this Section 4.2.
4.3 INSURANCE BENEFITS. During the Employment Term, the Company
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shall provide Executive with those insurance benefits generally available to its
senior executive officers, as such benefits may be modified from time to time in
the Company's sole and absolute discretion.
4.4 VACATION AND SICK LEAVE. During the Employment Term, Executive
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shall be entitled to a paid annual vacation of four (4) weeks, as well as
holidays and sick leave without reduction in Executive's Base Salary in
accordance with the policies for its senior executive officers as modified from
time to time by the Company in its sole and absolute discretion. Without the
Company's written consent,
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vacation must be taken in the year earned and Executive's vacation will be
scheduled at those times most convenient to the Company's business.
4.5 STOCK OPTIONS. Concurrently herewith, Executive shall be granted
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one hundred seventy-five thousand (175,000) stock options to purchase Class A
Common Stock of the Company, which shall vest in equal one-third portions on
each of the first three anniversaries of the date hereof so long as Executive is
then employed by the Company, and which shall have an exercise price equal to
the closing sales price of the Class A Common Stock on Nasdaq on the day prior
to the approval of the grant by the Board. Such options shall be non-qualified
stock options, shall have a term of ten (10) years following approval of the
grant by the Board, and shall be granted pursuant to the Company's current Stock
Option Plan and the Company's current standard form of Stock Option Agreement.
5. TERMINATION OF EMPLOYMENT.
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5.1 TERMINATION. The Company may terminate Executive's employment
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with the Company at any time with or without Cause by written notice to
Executive. "CAUSE" shall exist if any one or more of the following should
occur: Executive's (a) material failure to perform his duties under, or breach
of, this Agreement which remains uncured after a written warning (except in the
case of a willful failure to perform his duties or a willful breach, which shall
require no warning), (b) failure to comply with a reasonable direction of the
Board, which remains uncured after a written warning, (c) breach of his
fiduciary duty to the Company, (d) conviction by a court of competent
jurisdiction of a felony or other serious crime, (e) inability for any reason to
render full services as contemplated by this Agreement for a period of twenty-
six (26) consecutive weeks, or eight (8) months in any twelve month period, or
(f) commission of a wrongful act that would make the continuance of his
employment by the Company detrimental to the Company.
5.2 PAYMENT UPON TERMINATION.
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5.2.1 GENERALLY. Upon any termination, the Company shall pay to
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Executive (or, if applicable, to Executive's estate) all amounts accrued and
unpaid as of the date of termination in respect of (i) Executive's salary for
periods through such date, (ii) vacation pay to the extent consistent with the
Company's policies in effect from time to time during the Employment Term
regarding entitlement to payment in respect of accrued but unused vacation time,
and (iii) any reimbursement for expenses owing to Executive pursuant to Section
4.1.
5.2.2 TERMINATION WITHOUT CAUSE. If the Company terminates Executive
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other than for Cause, then in addition to amounts that Executive is entitled to
receive under Section 5.2.1, Executive shall be entitled to receive as a
severance payment the Base Salary for a period of six (6) months following the
date of termination (or, if such termination occurs within sixty (60) days of
the date hereof, then such period shall extend until one year from the date
hereof), payment of which shall be accelerated
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and paid in one lump sum as soon as practically possible, with an appropriate
discount to reflect such acceleration. Executive shall be obligated to use his
best efforts to obtain other suitable employment. The Company shall be entitled
to offset any earnings (such earnings to be determined without deductions for
any Federal, state, local or other taxes paid or to be paid) that Executive
receives during the remainder of the Employment Term as a result of obtaining
employment against the severance payment payable pursuant to this Section 5.2.2.
In the event that Executive dies during the Employment Term, this Agreement
shall terminate automatically.
5.3 EXCLUSIVITY OF REMEDIES. Executive agrees that the rights and
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entitlements set forth in this Section 5 are his exclusive rights and
entitlements from the Company and any affiliated entity upon the termination of
Executive's employment with the Company, and upon termination the Company shall
be released from other obligations hereunder.
6. COVENANTS.
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6.1 NONCOMPETITION AND NONSOLICITATION COVENANT. During the term of
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Executive's employment with the Company and for a period of six (6) months
following termination of such Employment for any reason, Executive shall not,
directly, indirectly or as an agent on behalf of or in conjunction with any
person, firm, partnership, corporation or other entity, (a) engage or
participate in the business of owning, operating or managing in-flight
entertainment systems, in any area, except that Executive may purchase up to
five percent of the outstanding capital stock of any publicly-traded
corporation, (b) hire, solicit or encourage the resignation of person who is
then, or within the prior six months has been, an employee of the Company in an
executive, managerial, engineering, sales, administrative or professional
capacity or who possesses Confidential Information (as defined below), to leave
the employment of the Company or (c) solicit or service any person or entity
with whom the Company has a business relationship or who is or was during the
Employment Term, a customer or client of the Company.
6.2 EMPLOYMENT EXCLUSIVE. Executive shall not, during the Employment
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Term, own any interest (other than up to 1% of the voting securities of a
publicly traded corporation) in, render financial assistance to, or offer
personal services (for payment or otherwise), to any entity or individual that
competes with the Company in Company Business (as defined below) or that is a
material supplier of the Company. In addition, Executive shall not engage in
any activity which would interfere with the performance of Executive's services
to the Company. "COMPANY BUSINESS" means the Company's business as it is
currently conducted and any other business activity in which the Company is
engaged at any time during Executive's employment with the Company.
6.3 CONFIDENTIAL INFORMATION. Executive occupies a position of
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trust and confidence with respect to the Company's affairs and business.
Executive has had and will have access to Confidential Information, which he
acknowledges is proprietary to the Company and highly sensitive in nature.
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6.3.1 DEFINITION OF CONFIDENTIAL INFORMATION. "CONFIDENTIAL
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INFORMATION" means information disclosed to Executive or known to Executive as a
consequence of or through his employment by the Company, whether or not related
to his duties, and includes trade secrets or any other like information relating
to the business and/or field of interest of the Company or any business and/or
field of interest seriously considered by the Company during Executive's
employment by the Company, including, but not limited to, information relating
to Inventions (as defined below), disclosures, processes, systems, methods,
formulas, patents, patent applications, machinery, materials, research
activities and plans, costs of production, contract forms, prices, volume of
sales, marketing methods and plans, promotional methods, and lists of names or
classes of customers. Information shall for purposes of this Agreement be
considered to be confidential if not known by the trade generally, even though
such information may have been disclosed to one or more third parties pursuant
to consulting agreements, joint research agreements, or other agreements entered
into by the Company.
6.3.2 NO DISCLOSURE. During and after Executive's employment with
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the Company, Executive shall not (a) use, disclose or otherwise permit any
person or entity access to any of the Confidential Information other than as
required in the good faith performance of Executive's duties with the Company,
or (b) sell, license or otherwise exploit any products or services which embody
in whole or in part any Confidential Information. During and after Executive's
engagement with the Company, Executive shall take all reasonable precautions to
prevent disclosure by Executive of the Confidential Information to unauthorized
persons or entities.
6.3.3 RETURN ALL MATERIALS. Upon termination of Executive's
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employment with the Company, Executive shall deliver to the Company all tangible
materials in any way embodying the Confidential Information, including any
documentation, records, listings, notes, data, sketches, drawings, memoranda,
models, videos, accounts, reference materials, samples, machine-readable media
and equipment, and wire frame models. Executive shall not retain any copies of
any of the above materials.
6.4 ASSIGNMENT OF INVENTIONS.
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6.4.1 DEFINITION OF INVENTIONS. "INVENTIONS" mean discoveries,
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developments, concepts, ideas, methods, designs, improvements, inventions,
formulas, processes, techniques, programs, know-how and data, whether or not
patentable or registerable under copyright or similar statutes, except any such
that (a) is not related to the business of the Company, or the Company's actual
or demonstrable research or development, (b) does not involve the use of any
equipment, supplies, facility or trade secret information of the Company, (c)
was developed entirely on Executive's own time, and (d) does not result from any
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work performed by Executive for the Company.
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6.4.2 ASSIGNMENT. Executive agrees to and hereby does assign to the
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Company all his right, title and interest in any and all Inventions he may make
during the term hereof.
6.4.3 DUTY TO DISCLOSE AND ASSIST. Executive agrees to promptly
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disclose in writing all Inventions to the Company, and to provide all assistance
reasonably requested by the Company in the preservation of the Company's
interests in the Inventions including obtaining patents in any country
throughout the world. Such services will be without additional compensation if
Executive is then employed by the Company and for reasonable compensation and
subjected to his reasonable availability if he is not. If cannot, after
reasonable effort, secure Executive's signature on any document or documents
needed to apply for or prosecute any patent, copyright, or other right or
protection relating to an Invention, whether because of his physical or mental
incapacity or for any other reason whatsoever, Executive hereby irrevocably
designates and appoints the Company and its duly authorized officers and agents
as his agent and attorney-in-fact, to act for and in his behalf and in his name
and xxxxx for the purpose of executing and filing any such application or
applications and taking all other lawfully permitted actions to further the
prosecution and issuance of patents, copyrights, or similar protections thereon,
with the same legal force and effect as if executed by him.
6.5 OWNERSHIP OF COPYRIGHTS. Executive agrees that any work prepared
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for the Company which is eligible for United States copyright protection or
protection under the Universal Copyright Convention, the Berne Copyright
Convention and/or the Buenos Aires Copyright Convention shall be a work made for
hire and ownership of all copyrights (including all renewals and extensions)
therein shall vest in the Company. If any such work is deemed not to be a work
made for hire for any reason, Executive hereby grants, transfers and assigns all
right, title and interest in such work and all copyrights in such work and all
renewals and extensions thereof to the Company, and agrees to provide all
assistance reasonably requested by the Company in the establishment,
preservation and enforcement of the Company's copyright in such work, such
assistance to be provided at the Company's expense but without any additional
compensation to Executive. Executive hereby agrees to and does hereby waive the
enforcement of all moral rights with respect to the work developed or produced
hereunder, including without limitation any and all rights of identification of
authorship and any and all rights of approval, restriction or limitation on use
or subsequent modifications.
6.6 LITIGATION. Executive agrees to render assistance, advice and
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counsel to the Company at its request regarding any matter, dispute or
controversy with which the Company may become involved and of which Executive
has or may have reason to have knowledge, information or expertise. Such
services will be without additional compensation if Executive is then employed
by the Company and for reasonable compensation and subjected to his reasonable
availability if he is not.
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7. ARBITRATION AS THE EXCLUSIVE REMEDY.
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7.1 ARBITRATION AS THE EXCLUSIVE REMEDY. Except for actions seeking
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injunctive relief (which may be brought before any court having jurisdiction
under this Agreement), any controversy or claim (whether against the Company or
any parent, subsidiary or affiliate thereof, or any officer, director, employee
or agent of any of the foregoing) arising out of or relating to this Agreement,
including, but not limited to, any claim relating to its validity,
interpretation, enforceability or breach, and/or any other claim or controversy
arising out of the employment relationship or the commencement or termination of
that relationship, including, but not limited to, claims which are brought
against any of the Company's directors, officers, employees and agents and
claims for breach of covenant, for breach of an implied covenant, for
intentional infliction of emotional distress, or under any applicable statute
(including, without limitation, claims for age or sex discrimination) which are
not settled by agreement between the parties, shall be submitted to arbitration
in Phoenix, Arizona before an arbitrator to be mutually agreed upon by the
parties. In consideration of each party's agreement to submit to arbitration
all disputes with regard to this Agreement and/or with regard to any alleged
contract or tort or other claim arising out of the employment relationship or
the commencement or termination of that employment relationship, and in
consideration of the anticipated expedition and the minimizing of expense of
this arbitration remedy, each agrees that the arbitration provisions of this
Agreement shall provide it with its exclusive remedy against the other party
(including its officers, directors, employees and agents) and each party
expressly waives any right it might have to seek redress in any other forum
except as provided herein.
7.2 PROCEDURES. The party filing a claim must present it in writing
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to the other party in Phoenix within six months of the date the party filing the
claim knew or should have known of it or the date of the termination, whichever
is earlier. Any claim not brought within the required time period will be
waived forever. In the proceedings (i) all testimony of witnesses shall be
taken under oath, and (ii) upon conclusion of any proceedings hereunder, the
arbitrator shall render findings of fact and conclusions of law in a written
opinion setting forth the basis and reasons for any decision reached and deliver
such documents to each party to this Agreement along with a signed copy of the
award in accordance with the applicable sections of the Arizona code of civil
procedure. Each party hereby agrees that the prevailing party shall be entitled
to recover all costs incurred in preparation for and as a result of any such
arbitration, including, without limitation, filing fees, attorneys' fees, the
compensation to be paid to the arbitrator in any such arbitration and costs of
transcripts. The arbitrator shall not have power or competence to allocate
between the parties in their award costs incurred in preparation for and as a
result of any such arbitration, including, without limitation, filing fees,
attorneys' fees, the compensation to be paid to the arbitrator in any such
arbitration and costs of transcripts.
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8. MISCELLANEOUS.
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8.1 AGREEMENT AUTHORIZED. Executive hereby represents and warrants
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that he is free to enter into this Agreement and to render his services pursuant
to this Agreement, that he holds no offices with any other entities, and that he
is not subject to any obligation or restriction that would prevent him from
discharging his duties under this Agreement, and agrees to indemnify and hold
harmless the Company from and with respect to any liability, damages or costs,
including attorneys' fees, arising out of any breach by Executive of this
representation and warranty. The Company hereby represents and warrants that
any required authorization of this Agreement by its Board of Directors has been
obtained.
8.2 NOTICES. Any notice required or desired to be given to the
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Company or to Executive shall be given in writing, and shall be addressed (i) to
the Company at its principal place of business, and (ii) to Executive at his
most recent home address in the records of the Company, or to such other address
as that party may hereafter designate in writing, and shall be sufficiently
given by actual delivery thereof to the Company or Executive, as the case may
be, or by telegraph or registered mail, postage prepaid, return receipt
requested, addressed to the other party as aforesaid, and the date of delivery,
mailing or telegraphing shall be the date of the giving of such notice.
8.3 PAYMENT OF TAXES. To the extent that any taxes become payable by
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Executive by virtue of any payments made or benefits conferred by the Company,
the Company shall not be liable to pay or obligated to reimburse Executive for
any such taxes or to make any adjustment under this Agreement. Any payments
otherwise due under this Agreement to Executive, including, but not limited to,
the Base Salary and any bonus, shall be reduced by any required withholding for
Federal, State and/or local taxes and other appropriate payroll deductions. The
Company shall be entitled to offset any payment obligations to Executive under
this Agreement against any amounts it alleges in good faith that Executive owes
to the Company.
8.4 INSURANCE. The Company may, from time to time, apply for and
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take out, in its own name and at its own expense, life, health, accident,
disability or other insurance on Executive in any sum or sums that it may deem
necessary to protect its interests, and Executive shall aid and cooperate in all
reasonable respects with the Company in procuring any and all such insurance,
including, without limitation, submitting to the usual and customary medical
examinations, and by filling out, executing and delivering such applications and
other instruments in writing as may be reasonably required by an insurance
company or companies to which an application or applications for such insurance
may be made by or for the Company. In order to induce the Company to enter into
this Agreement, Executive represents and warrants to the Company that, to the
best of his knowledge, Executive is insurable at standard (non-rated) premiums.
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8.5 ASSIGNMENT. This Agreement is a personal contract, and the
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rights, interests and obligations of Executive under this Agreement may not be
sold, transferred, assigned, pledged or hypothecated, except that this Agreement
may be assigned by the Company to any corporation or other business entity which
succeeds to all or substantially all of the business of the Company through
merger, consolidation, corporate reorganization or by acquisition of all or
substantially all of the assets of the Company and which assumes the Company's
obligations under this Agreement. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon any successor to the business
of the Company.
8.6 ENTIRE AGREEMENT. This Agreement sets forth the entire
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understanding of the parties with respect to the employment relationship,
including the commencement and termination of the employment relationship, and
supersedes any and all prior agreements or understandings between the parties
relating to such subject matter. No person has any authority to make any
representation or promise on behalf of any of the parties which is inconsistent
with the representations set forth in the Agreement and the Agreement has not
been executed in reliance on any promise or representation not set forth in the
Agreement. The employment term under the Old Agreement is hereby terminated,
effective as the date hereof.
8.7 MODIFICATION, WAIVER AND AMENDMENT. None of the terms or
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provisions of this Agreement shall be modified or waived, and this Agreement may
not be amended or terminated, except by a written instrument signed by the party
against which any modification, waiver, amendment or termination is to be
enforced. No waiver of any one provision shall be considered a waiver of any
other provision, and the fact that an obligation is waived for a period of time
or in one instance shall not be considered to be a continuing waiver.
8.8 COOPERATION. Each party hereto agrees to execute any and all
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further documents and writings and perform such other reasonable actions which
may be or become necessary or expedient to effectuate and carry out the
provisions hereof.
8.9 GOVERNING LAW. This Agreement has been negotiated and entered
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into in the State of Arizona and concerns an Arizona business and resident. All
questions with respect to this Agreement and the rights and liabilities of the
parties shall be governed by the laws of that state, regardless of the choice of
law provisions of Arizona or any other jurisdiction.
8.10 EQUITY. The parties hereto agree that the services to be
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rendered under the terms of this Agreement, and the rights and privileges
granted to the Company by Executive under its terms, are of a special, unique,
unusual, extraordinary and intellectual character involving skill of the highest
order which gives them a peculiar value. In the event of the breach by
Executive of any of the provisions of this Agreement, the Company, in addition
and as a supplement to such other rights and remedies as may exist in its favor,
may apply to any court of law or equity having
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jurisdiction to enforce this Agreement, and/or may apply for injunctive relief
against any act which would violate any of the provisions of this Agreement.
8.10.1 INJUNCTIVE RELIEF; PROFITS. Executive understands that
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monetary damages will not be sufficient to avoid or compensate for a breach of
any of the covenants contained in Section 6 and that injunctive relief would be
appropriate to prevent any such actual or threatened breach. Such right to
obtain injunctive relief may be exercised, at the option of the Company,
concurrently with, prior to, after, or in lieu of, the exercise of any other
rights or remedies which the Company may have as a result of any such breach or
threatened breach. Executive shall account for and pay over to the Company all
compensation, profits and other benefits, after taxes, inuring to Executive's
benefit which are derived or received by Executive or any other person or
business entity controlled by Executive resulting from any action or transaction
constituting a breach of any covenant contained in Section 6.
8.11 RULES OF CONSTRUCTION.
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8.11.1 HEADINGS. The Section headings in this Agreement are
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inserted only as a matter of convenience, and in no way define, limit, or extend
or interpret the scope of this Agreement or of any particular Section.
8.11.2 TENSE AND CASE. Throughout this Agreement, as the
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context may require, references to any word used in one tense or case shall
include all other appropriate tenses or cases.
8.11.3 SEVERABILITY. Nothing contained in this Agreement shall
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be construed so as to require the commission of any act contrary to law and
whenever there is any conflict between any provision of this Agreement and any
statute, law, ordinance, order or regulation, contrary to which the parties have
no right to contract, the latter shall prevail, but in such event any provision
of this Agreement so affected shall be curtailed and limited only to the extent
necessary to bring it within legal requirements.
8.13 COUNTERPARTS. This Agreement may be executed in two
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counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
EXECUTIVE ACKNOWLEDGES HAVING CAREFULLY READ, UNDERSTOOD ALL OF THE
PROVISIONS IN THIS AGREEMENT AND HAVING NEGOTIATED SUCH PROVISIONS. EXECUTIVE
KNOWS THAT HE
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CANNOT RELY ON ANY STATEMENT OUTSIDE OF (i) THIS AGREEMENT OR (ii) A FORMAL
WRITTEN AMENDMENT OF THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
"EXECUTIVE"
_______________________________
Xxxx Xxxxxxxx
"THE COMPANY"
Interactive Flight Technologies, Inc.
By: _______________________________
Xxxxxxx Xxxxx
Chief Executive Officer
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EXHIBIT A
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Stock Option Agreement
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Optionee: Xxxx Xxxxxxxx No. of Option Shares:175,000
Incentive Stock Option?: No
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INTERACTIVE FLIGHT TECHNOLOGIES, INC.
1994 STOCK OPTION PLAN
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of ________, 1996, by and between
Interactive Flight Technologies, Inc., a Delaware corporation (the "Company"),
and Xxxx Xxxxxxxx (the "Optionee").
The Company has adopted the 1994 Incentive and Non-Statutory Stock
Option Plan (the "Plan"), and desires to provide an incentive to the Optionee to
exercise his/her best efforts on the Company's behalf by granting to the
Optionee the options provided for herein, all subject to the terms and
conditions of the Plan. Capitalized terms used herein and not defined have the
same meanings as set forth in the Plan.
IT IS AGREED as follows:
1. GRANT OF OPTION. The Company hereby grants to the Optionee on the
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date hereof the right and option (the "Option") to purchase (subject to
adjustment pursuant to Section 15 of the Plan) an aggregate of One Hundred
Seventy-Five Thousand (175,000) of its shares of Class A Common Stock ("Shares")
at an exercise price per share of $_______ (the "Exercise Price"). This Option
is intended by the Company and Optionee to be a non-qualified option and not an
incentive Stock Option as defined in Section 422 of the Internal Revenue Code of
1986, as amended.
2. OPTION PERIOD. The Option granted hereby shall expire on _______,
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2006 (the "Expiration Date") subject to earlier termination as provided in the
Plan.
3. EXERCISE OF OPTION.
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A. The Option may be exercised at any time prior to the Expiration
Date with respect to the number of shares as to which it is then vested. One-
third of the Option shall be immediately vested on the date hereof, and the
remaining two thirds of this option shall vest in equal installments on each of
the first two anniversary dates of this Agreement, so that 100% of this Option
shall vest by August 27, 1998. The right of exercise shall be cumulative so
that if the Option is not exercised to the maximum extent permissible during any
exercise period, it shall be exercisable, in whole or in part, with respect to
all shares not so purchased at any time prior to the Expiration Date
or the earlier termination of this Option. This Option may not be exercised at
any time on or after the Expiration Date.
B. The Optionee may exercise the Option (to the extent then
exercisable) by delivering to the Company a written notice duly signed by the
Optionee in the form attached hereto as Exhibit A stating the number of Shares
that the Optionee has elected to purchase, and accompanied by payment (in cash
or by certified check) of an amount equal to the full purchase price for the
Shares to be purchased. The notice must also contain a statement (if required
and in a form acceptable to the Company) that the Optionee is acquiring the
Shares for investment and not with a view toward their distribution or resale.
Following receipt by the Company of such notice and payment, the Company shall
issue, as soon as possible, the Shares in the name of the Optionee and deliver
certificate therefor to the Optionee. No Shares will be issued until full
payment therefor has been made and until the Company has complied with all
requirements of the Securities Act of 1933, the Securities Exchange Act of 1934,
and securities exchange on which the Company's stock may be listed and all
applicable state laws in connection with the issuance of the Shares or the
listing of the Shares on said securities exchange. All Shares purchased upon
exercise of the Option in accordance with this Section shall be fully paid and
non assessable.
C. In lieu of delivering the Exercise Price in cash or check, the
Optionee may elect to receive shares equal to the value of the Option or portion
thereof being exercised (the "Net Issue Exercise"). If the Optionee wished to
elect the Net Issue Exercise, the Optionee shall notify the Company of its
election in writing at the time the Optionee delivers to the Company the notice
of exercise. In the event the Optionee shall elect the Net Issue Exercise, the
Optionee shall receive the number of shares of Class A Common Stock equal to the
product of (i) the number of shares of Class A Common Stock purchasable under
the Option, or portion thereof being exercised, and (ii) the current market
value, as defined below, of one share of Class A Common Stock minus the Exercise
Price, divided by (iii) the current market value, as defined below, of one share
of Class A Common Stock. Current market value of a share shall be determined as
follows:
(i) If the Class A Common Stock is listed on a national
securities exchange or listed for trading on the NASDAQ system, the current
market value shall be the last reported sale price of the Class A Common Stock
on such exchange or system on the last business day prior to the date of
exercise of this Option or if no such sale is made on such day, the average
closing bid and asked prices for such day on such exchange or system; or
(ii) If the Class A Common Stock is not so listed the current
market value shall be the mean of the last reported bid and asked prices
reported by the National Quotation Bureau, Inc. on the last business day prior
to the date of the exercise of this Option; or
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(iii) If the Class A Common Stock is not so listed and bid and asked
prices are not so reported, the current market value shall be an amount, not
less that book value thereof as at the end of the most recent fiscal year of the
Company ending prior to the date of the exercise of the Option, determined in
such reasonable manner as may be described by the Board of Director of the
Corporation.
4. EMPLOYMENT. Nothing contained in this Stock Option Agreement shall
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confer upon the Optionee any right to be employed by the Company nor prevent the
Company from terminating its current relationship with the Optionee at any time,
with or without cause. If the Optionee's current relationship with the Company
is terminated for any reason, the Option shall be exercisable only as to those
shares immediately purchasable by the Optionee at the date of termination and,
subject to Section 2 hereof, thereafter as provided by the Plan.
5. DEATH. If the Optionee dies while employed by the Company, that
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portion of this Option which was exercisable by the Optionee at the time of
death shall be exercisable by his legal representatives or beneficiaries at any
time within twelve (12) months after the Optionee's death.
6. NON-TRANSFERABILITY OF OPTION. This Option shall not be transferable
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other than by will or by the laws of descent and distribution, and may be
exercised during the Optionee's lifetime only by the Optionee.
7. INCORPORATION OF PLAN. The Option granted hereby is subject to, and
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governed by, all the terms and conditions of the Plan, which are hereby
incorporated by reference. This Agreement, including the Plan incorporated by
reference herein, is the entire agreement among the parties hereto with respect
to the subject matter hereof and supersedes all prior agreements and
understandings. In the case of any conflict between the terms of this agreement
and the Plan, the provisions of the Plan shall control.
8. PURCHASE FOR INVESTMENT. As a condition to the exercise in whole or
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in part of the Option hereby granted, each written notice of election shall
include a representation by the Optionee that the shares are being purchased for
investment and not for distribution or resale.
9. NOTICES. Any notice given by the Optionee hereunder shall be sent to
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the Company at its principal executive offices, and any notice from the Company
to the Optionee shall be sent to the Optionee at his address set forth below;
all such notices shall be in writing and shall be delivered in person or by
registered or certified mail. Either party may change the address to which
notices are to be sent by notice in writing given to the other in accordance
with the terms hereof.
10. GOVERNING LAW. The parties hereto hereby acknowledge and agree that
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the Option hereby is granted in the State of Arizona and any shares issued upon
exercise of the Option will be issued in the State of Arizona. This Agreement,
as well as the grant of such option and issuance of such Shares, is and shall be
governed by and
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construed in accordance with the laws of the State of Arizona applicable to the
agreements made and to be performed entirely within such State.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
INTERACTIVE FLIGHT OPTIONEE
TECHNOLOGIES, INC.
By:_________________________ _________________________
Its:________________________
Address:
_________________________________
_________________________________
_________________________________
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