EXHIBIT 10.2
SEVERANCE AGREEMENT
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THIS SEVERANCE AGREEMENT (this "Agreement") is made and entered into
as of November 2, 1996, by and between Interactive Flight Technologies, Inc., a
Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxxxx ("EXECUTIVE"), with
reference to the following facts:
RECITALS
A. Executive has been employed as the Company's Vice President -
Business Development and is also a director of the Company. He is resigning
from all such positions, effective as of the date hereof (the "RESIGNATION
DATE").
B. The Company and Executive are parties to that certain Employment
Agreement dated as of August 27, 1996 (the "EMPLOYMENT AGREEMENT").
C. In connection with such resignation, the Company has agreed to
provide Executive with certain benefits and consulting compensation, as more
fully set forth herein.
D. Executive desires to continue to render certain consulting
services to the Company, and the Company desires that Executive render such
services, under the terms and conditions hereinafter set forth.
E. In consideration of such benefits and consulting arrangements,
Executive and the Company have each agreed to release the other from any and all
claims, known or unknown, that they may have or could have against each other
arising prior to the execution of this Agreement, including any claims
concerning any subject matter arising out of, related to or connected with
Executive's employment with the Company, all as more fully set forth herein.
NOW, THEREFORE, in consideration of the premises set forth above and
of the covenants, releases, representations and warranties contained herein, and
of other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto, intending to be legally bound,
agree as follows:
1. CERTAIN DEFINITIONS.
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"CLAIMS" means any and all claims, debts, liabilities, demands,
obligations, liens, promises, acts, agreements, costs, and expenses (including,
but not limited to, attorneys' fees), damages, actions, and causes of action, of
whatever kind or nature, including, without limitation, any statutory, civil, or
administrative claim, whether known or unknown, suspected or unsuspected, fixed
or contingent, apparent or concealed, except as provided herein.
"COMPANY GROUP" means the Company and its respective successors,
assigns, officers, directors, agents, employees, representatives, attorneys,
shareholders and persons providing, or planning to provide, financing for the
Company.
"CONSULTING TERM" means the period commencing on the date hereof and
ending on October 27, 1999.
"EXECUTIVE GROUP" means Executive and his heirs, assigns, attorneys,
representatives, agents, executors and administrators.
2. RESIGNATION. Executive hereby resigns, effective as of the Resignation
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Date, from his positions with the Company as a director and as Vice President -
Business Development, and all other director or officer positions held with any
member of the Company Group. The parties shall, concurrently herewith or
promptly hereafter, cancel the Amended and Restated Shareholders' Agreement
dated as of October 6, 1994 (the "SHAREHOLDERS AGREEMENT"), as to Executive,
effective upon the Resignation Date. Executive agrees that, upon execution of
the termination documents regarding the Shareholders' Agreement by the other
parties thereto, the Shareholders' Agreement shall be terminated in all respects
as to Executive without further signature by Executive.
3. CONSULTING SERVICES AND COMPENSATION PACKAGE. As consideration for
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Executive's past service and his resignation, release and promises set forth in
this Agreement, the Company agrees as follows:
3.1 On the next regular payday, the Company shall pay to Executive his
unpaid salary through the Resignation Date.
3.2 The Company hereby engages Executive to perform, and Executive
agrees to perform, consulting services for the benefit of the Company, as and to
the extent requested by the Company from time to time during the Consulting Term
(the "SERVICES"); provided, however, that the Services shall consist solely of
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consulting with the Company on a limited basis, not to exceed 5 hours per month,
for the purpose of answering questions on historical matters regarding the
Company.
3.3 As consideration for the Services, Executive shall receive a
consulting fee of Fifty-Five Thousand Dollars ($55,000) per year, payable in
monthly or bi-monthly installments, as the case may be, in accordance with the
Company's normal payroll practices. The foregoing payments are in settlement of
all salary, bonus, commissions and other compensation which are or may become
due under the Employment Agreement or otherwise as a result of Executive's
employment by the Company, and, in light of the foregoing, (i) Executive hereby
waives any right to receive severance payments or other additional compensation
from the Company, including without limitation any severance payments
contemplated by Section 5.2.2 of the Employment Agreement, and (ii) Executive
shall not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment, by self-employment or otherwise; and if
Executive obtains other employment or becomes self-
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employed any compensation earned by Executive during such period shall not be
applied to mitigate any payment made or to be made to Executive for such period.
3.4 Subject to the same types of contribution as made by Executive in
the past, the Company shall at its expense provide Executive with family medical
insurance benefits on the same terms and conditions as provided to the Company's
senior executives, until the end of the Consulting Term. Commencing at the end
of the Consulting Term, Executive shall be entitled to such benefits as required
under COBRA regulation.
3.5 All of the employee or director stock options currently held by
Executive (the "STOCK OPTIONS") shall continue to vest and become exercisable
under the terms and vesting schedules set forth therein and shall continue to be
exercisable through the respective scheduled terms under such options; provided,
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however that (i) the second 100,000 of the 300,000 options granted on August 27,
1996 will be exercisable commencing on June 1, 1997, and the third 100,000 of
such 300,000 options granted on that date will be exercisable commencing on
November 2, 1997 and (ii) such continued vesting and exercisability of the Stock
Options shall not be effected by the termination of Executive's status as an
employee, officer and director of the Company as contemplated hereby.
3.6 The Company shall continue to indemnify Executive in accordance
with the standards, terms and limitations of (i) Article IV of the Company's
Bylaws as in effect on the date hereof to the same extent as if Executive had
remained a director and an officer of the Company, (ii) the Indemnification
Agreement dated March 7, 1995 between Company and Executive (the
"INDEMNIFICATION AGREEMENT"), (iii) existing Directors and Officers liability
insurance to the same extent as if Executive had remained a director and an
officer of the Company and (iv) Articles VII and VIII of the Company's Amended
and Restated Certificate of Incorporation.
4. NO STOCK SALES. Executive shall not, without the prior written consent of
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the Company, directly or indirectly, offer, sell, contract to sell, grant any
option to purchase or otherwise dispose of, any shares of capital stock of the
Company currently held or hereafter acquired by Executive (or any securities
convertible into or exercisable or exchangeable for, or warrants, options or
rights to purchase or acquire) such capital stock, or enter into any agreement
to do any of the foregoing, until January 31, 1997. The foregoing shall not
preclude a mere exercise of Stock Options so long as there is no subsequent sale
or disposition of the underlying shares until January 31, 1997. Executive
agrees that, so long as he holds any capital stock of the Company, he will vote
all of the shares of the capital stock of the Company held by him in favor or
against any matter (including the election of directors) submitted to the
shareholders of the Company in the same proportion as the aggregate vote of the
other shareholders of the Company who actually vote on such matter. Executive
agrees to execute any additional documents, including a proxy, which the Company
reasonably believes is desirable to effectuate this provision.
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5. RETURN OF COMPANY PROPERTY. Executive shall promptly return all Company
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property and documents in his possession, except for a laptop computer which he
may continue to use.
6. RELEASE OF CLAIMS.
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6.1 EXECUTIVE RELEASE. Except as provided herein, in consideration
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of the terms and provisions of this Agreement, Executive agrees that he shall
and does hereby forever relieve, release and discharge each person in the
Company Group from any and all Claims arising out of any act or omission
occurring before the execution of this Agreement.
6.2 COMPANY RELEASE. Except as provided herein, in consideration of
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the terms and provisions of this Agreement, the Company agrees that it shall and
does hereby forever relieve, release and discharge each person in the Executive
Group from any and all Claims arising out of any act or omission occurring
before the execution of this Agreement.
6.3 SCOPE. The releases set forth in this Section 6 include, but
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are not limited to, any and all Claims based on, arising out of, or related to
Executive's employment relationship with the Company (or any and all facts in
any manner arising out of, related to or connected with such employment
relationship) or the termination of Executive's employment with the Company
under the terms hereof (except that such releases shall not apply to any Claim
by either party that the other has breached this Agreement). Without limiting
the generality of the foregoing, Claims released by Executive and the Company
shall encompass and include, but are not limited to, any Claims arising from
rights under federal, state, or local laws relating to the prohibition of
discrimination on the basis of race, national origin, sex, religion, age,
marital status, handicap, ancestry, sexual orientation, or any other protected
classification, and any and all Claims arising under common law, including, but
not limited to, common law Claims for breach of contract, breach of the implied
covenant of good faith and fair dealing, wrongful termination, discrimination,
tortious interference with contract or with current or prospective economic
advantage, fraud, deceit, misrepresentation, violation of public policy, breach
of privacy, defamation, infliction of emotional distress, loss of consortium,
breach of fiduciary duty, Claims arising from any alleged breach of the
Employment Agreement, or any other common law Claim of any kind whatsoever.
7. ACKNOWLEDGEMENT AND EFFECT OF WAIVER. Executive understands and
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acknowledges that (a) this Agreement constitutes a voluntary waiver of any and
all Claims he has against the Company and each person in the Company Group as of
the date of his execution of this Agreement, including Claims under the Age
Discrimination in Employment Act of 1967, 29 U.S.C. (S) 621 et seq.; (b) he has
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waived any and all Claims pursuant to this Agreement and in exchange for
consideration, the value of which exceeds payments or remuneration to which he
was already entitled; (c) he has been, and is hereby, advised to consult with an
attorney concerning this Agreement before executing it; (d) he has been, and is
hereby, informed that he has a period of at least
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twenty-one (21) days to consider the terms of this Agreement; and (e) he may
revoke this Agreement at any time during the seven (7) days following the date
of his execution of this Agreement, and no provision of this Agreement shall
become effective or enforceable against Executive or the Company until such
revocation period has expired.
8. REPRESENTATIONS AND WARRANTIES. Each party represents and warrants to the
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other that (i) it has full power and authority to enter into this Agreement;
(ii) it is the owner of the Claims that it has released herein; and (iii) it has
not (nor has it purported to have) assigned, conveyed, encumbered, or in any
manner transferred any portion of the Claims released herein. Each party hereby
agrees to indemnify and hold each party released by it hereunder harmless from
any and all claims (including, but not limited to, all attorneys' fees actually
incurred) resulting from any breach of that releasing party's warranties and
representations herein.
9. PUBLIC ANNOUNCEMENTS.
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9.1 ANNOUNCEMENT OF RESIGNATION. Neither party shall make any public
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announcement regarding Executive's resignation other than (i) pursuant to a
mutually satisfactory press release which shall attribute Executive's
resignation hereunder to the restructuring of the Company's approach to sales or
(ii) as may be required pursuant to applicable securities laws and any rules and
regulations thereunder and then only after consultation with the other party to
the maximum extent possible in order to maintain goodwill for the other party.
9.2 THIRD PARTY CONTACTS. Each of the parties hereto agrees not to
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make disparaging or derogatory comments about any of the parties released by it
hereunder (whether to the press, the investment community, shareholders,
customers or potential customers or sales representatives of IFT or otherwise)
and not to take any positions with third parties which are inconsistent with the
above-described press release, except to the extent required by applicable law
and then only after consultation with the other party to the maximum extent
possible in order to maintain goodwill for the other party.
10. CONFIDENTIALITY; NON-INTERFERENCE.
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10.1 The provisions of Section 6.1 of the Employment Agreement shall
continue in full force and effect for the period specified therein; provided,
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however, that Executive may solicit any prospective clients on behalf of any
independent interactive advertising sales agency established by Xxxxx X.
Xxxxxxxx, which prospective clients may include airlines (including the
Company's customers) and any competitor of the Company.
10.2 In the event that Executive breaches any provisions of this
section or there is a threatened breach, then, in addition to any other rights
which the Company may have, the Company shall be entitled to seek injunctive
relief to enforce the restrictions contained herein. In the event that an
actual proceeding is brought in equity to enforce the provisions of this
paragraph, Executive shall not urge as a defense that there is an
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adequate remedy at law nor shall the Company be prevented from seeking any other
remedies which may be available.
10.3 The existence of any claim or cause of action by the Company
against Executive, whether predicated upon this Agreement or otherwise, shall
not constitute a defense to the enforcement by the Company of the foregoing
restrictive covenants but shall be litigated separately.
10.4 During the Consulting Term and thereafter, Executive agrees to
hold in strictest confidence, and not to use, except for the benefit of the
Company, or to disclose to any person, firm or corporation, without the prior
written authorization of the Company, any trade secrets, confidential knowledge,
data or other proprietary information of the Company. By way of illustration
and not limitation, such shall include information relating to products,
processes, know-how, designs, formulas, methods, developmental or experimental
work, improvements, discoveries, plans for research, new products, marketing or
selling, business plans, budgets, unpublished financial statements, licenses,
prices and costs, suppliers and customers, and information regarding the skills
and compensation of other employees of the Company.
11. MISCELLANEOUS.
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11.1 DISPUTED RIGHTS. This Agreement represents a settlement of
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disputed rights and claims and, by entering into this Agreement, no party admits
or acknowledges the existence of any liability or wrongdoing, all such liability
being expressly denied. No provision hereof, or of any related document, shall
be construed as any admission or concession of liability or of any wrongdoing.
11.2 AGREEMENT NEGOTIATED. This Agreement was the subject of careful
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negotiation between Executive (a sophisticated businessman represented by
counsel) and the Company. As a consequence, the parties do not believe that the
presumptions of any statutory or common law doctrine relating to the
interpretation of contracts against the drafter of any particular clause should
be applied in this case and therefore waive its effects.
11.3 INDEPENDENT ADVICE. Each of the parties hereto (i) has received
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independent legal advice from its attorneys with respect to the advisability of
executing this Agreement; (ii) has read this Agreement and the releases
contained herein carefully, knows and understands the contents hereof, and (iii)
has made such investigation of the facts pertaining to this Agreement and of all
matters pertaining hereto as it deems necessary or desirable. Except as
expressly set forth herein, none of the parties hereto has made any
representations or warranties in connection with this Agreement, and no party
has relied upon any oral or written representation or warranty of any other
party in entering into this Agreement.
11.4 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
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xxxxxxxxx xxxxx xx xxxxxxxx, xxx (xx) 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 telecopy
or certified mail, postage prepaid, return receipt requested, addressed to the
other party as aforesaid, and the date of delivery, mailing or telecopying shall
be the date of the giving of such notice.
11.5 ENTIRE AGREEMENT. Except as set forth in Section 10.1 above,
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this Agreement, together with all documents referred to herein, sets forth the
entire understanding of the parties with respect to Executive's employment
relationship with the Company and the termination thereof, and supersedes any
and all prior agreements or understandings between the parties relating to such
subject matter (including without limitation the Employment Agreement, which is
hereby terminated). 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 this Agreement, and this Agreement has not been
executed in reliance on any promise or representation not set forth herein.
11.6 MODIFICATION AND WAIVER. None of the terms or provisions hereof
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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 or right is waived for a period of time or in one
instance shall not be considered to be a continuing waiver.
11.7 GOVERNING LAW. All questions with respect to this Agreement and
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the rights and liabilities of the parties shall be governed by the laws of
Delaware, regardless of the choice of laws provisions of Delaware or any other
jurisdiction.
11.8 ASSIGNMENT. This Agreement shall not be assignable by Executive
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or the Company, 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 (a
"SUCCESSOR"). The terms and conditions of this Agreement shall inure to the
benefit of and be binding upon any Successor that has so assumed this Agreement.
Furthermore, in the event that such an assignment to a Successor is deemed
ineffective with respect to Section 3.2 hereof by virtue of the personal
services contemplated thereby, the remaining provisions hereof shall nonetheless
inure to the benefit of such Successor; provided that the compensation payable
to Executive as set forth in Section 3.2 and the Stock Option commitments set
forth in Section 3.5 are fulfilled by the Successor.
11.9 ARBITRATION OF DISPUTES. If Executive and the Company cannot
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resolve a dispute (whether arising in contract or tort or any other legal
theory, whether based on federal, state or local statute or common law and
regardless of the identities of any other
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defendants) that in any way relates to or arises out of this Agreement, the
termination of Executive's employment relationship with the Company, or (without
limiting the generality of any other Section herein) Executive's past employment
relationship with the Company, or termination of any of the agreements referred
to herein, then such dispute shall be settled by arbitration in New York, New
York, in accordance with the Commercial Arbitration Rules of the American
Arbitration Association.
11.10 ATTORNEYS' FEES. In the event that either party should bring
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any action, suit or other proceeding against the other party hereunder
concerning any matter released herein, or contesting the validity of this
Agreement or any provision hereof, or attempting to rescind, negate, modify or
reform this Agreement or any of the terms or provisions thereof, or in the event
that any action, suit, or other proceeding is instituted to remedy, prevent, or
obtain relief from a breach of this Agreement, or arising out of a breach of
this Agreement, the prevailing party shall be entitled to recover all of such
party's costs and expenses, including reasonable attorneys' fees and
disbursements, incurred in each and every such action, suit, or other
proceeding, including any and all appeals or petitions therefrom.
11.11 INDEPENDENT CONTRACTOR. The Company and Executive agree that
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Executive will act as an independent contractor in the performance of his duties
under this Agreement. Accordingly, Executive shall be responsible for payment
of all taxes including Federal, State and local taxes arising out of Executive's
activities in accordance with this Agreement, including, by way of illustration
but not limitation, Federal and State income tax, Social Security tax,
Unemployment Insurance taxes and any other taxes or business license fees as
required.
11.12 OBLIGATION TO PAY COMPENSATION. The Company's obligation to
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pay Executive the compensation and to provide the benefits provided herein shall
be absolute and unconditional and shall not be affected by any circumstance,
including without limitation (i) the termination by the Company of Executive's
consulting obligations hereunder and (ii) any setoff, counterclaim, recoupment,
defense or other right which the Company may have against Executive (including
without limitation as a result of breaches of Section 9.2) or anyone else. All
amounts payable by the Company hereunder shall be paid without notice or demand.
11.13 COUNTERPARTS. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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11.14 NO RESCISSION. Except as expressly provided herein, each party
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waives all rights it may now have or may hereafter have conferred upon him or
it, by statute or otherwise, to terminate, cancel or rescind this Agreement in
whole or in part.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement on the date and year set forth below.
"Company" "Executive"
Interactive Flight Technologies, Inc.
By:____________________________ ________________________________
Xxxxxxx Xxxxx Xxxxxx X. Xxxxxxxx
Chief Executive Officer
Date:__________________________ Date:___________________________
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