EXHIBIT 10.17
AGREEMENT
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THIS AGREEMENT (this "AGREEMENT") is made and entered into as of May 10,
1996, by and between Interactive Flight Technologies, Inc., a Delaware
corporation (the "COMPANY"), and Xxxxxx X. Xxxxxxx ("EXECUTIVE"), with reference
to the following facts:
RECITALS
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A. Executive has been employed as President, and is 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 an employment agreement dated
as of October 31, 1994 (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 and legal
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 and
shareholders.
"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 President, and all
other director or officer positions held with any member of the Company Group.
The parties shall cancel the Amended and Restated Stockholders Agreement dated
as of October 6, 1994, only as to Executive and effective upon the Resignation
Date.
3. COMPENSATION PACKAGE. As consideration for Executive's past service and
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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 Commencing on the day after the Resignation Date the Company shall pay
Executive, at the rate of $150,000 per year, payable on a biweekly basis through
and including the date which is fifteen (15) months after the Resignation Date
(the "Consulting Term"). Any amount due for the period between the day after
the Resignation Date and the Company's next regular biweekly payment date shall
be paid with the first biweekly payment after the Resignation Date. 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-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.
3.3 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. The participation in any benefits during the Consulting
Term shall not be deemed benefits received under COBRA regulation.
3.4 Executive currently holds the following options to purchase Common
Stock of the Company (collectively, the "STOCK OPTIONS"):
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Exercisable
through the
Date No. of Exercise date specified
Granted Shares Price Type Vesting below
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11/1/94 10,000 $ 4.40 ISO Vested 90 days after Resignation Date
2/20/96 15,910 $11.00 NQSO Vesting 2/20/97 2/19/06
2/20/96 9,090 $11.00 ISO Vesting 2/20/97 2/19/06
3.5 Executive may continue to exercise the option granted on November 1, 1994
within 90 days after the Resignation Date. The ISO granted on February 20, 1996
is hereby amended to be non-qualified in its entirety. The options granted on
February 20, 1996 shall continue to vest and be exercisable through February 19,
2006.
3.6 Executive and Xxxxxxx Xxxxx and Xxxxxx Xxxxxxxx have in the past received
options pursuant to Section 3(a)(ii) of their Employment Agreements at the rate
of 10,000, 15,000 and 30,000 shares respectively. In the event that either or
both of Messrs. Itkis and Xxxxxxxx receive compensatory options during the
remainder of the period expiring on or before the last day of the Consulting
Term, then an option for 10,000 shares shall be granted to Executive. The
option given to Executive will have the same terms and conditions except as may
be necessary to reflect his consulting rather than employee status (i.e., he may
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not receive any ISO's but shall receive NQSO's and the fact that Executive is a
consultant shall not affect vesting, excercisability or otherwise so that such
option shall vest at the same date that the Itkis or Xxxxxxxx options vest and
shall be exercisable through the end of the term of the option). Nothing herein
shall be deemed to provide Executive with any right to receive options if
Messrs. Itkis or Xxxxxxxx receive special bonus options.
3.7 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 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 officer of the Company and (iv)
Articles VII and VIII of the Company's Amended and Restated Certificate of
Incorporation.
4. RETURN OF COMPANY PROPERTY. Executive shall promptly return all Company
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property and documents in his possession other than a fax machine which the
Company hereby transfers and assigns to Executive.
5. RELEASE OF CLAIMS.
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5.1 EXECUTIVE RELEASE. Except as provided herein, in consideration of the
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terms and provisions of this Agreement, Executive agrees that he shall and does
hereby
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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.
5.2 COMPANY RELEASE. Except as provided herein, in consideration of the
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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.
5.3 SCOPE. The releases set forth in this Section 5 include, but are not
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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. 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.
6. 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 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.
7. 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
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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.
8. PUBLIC ANNOUNCEMENTS.
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8.1 ANNOUNCEMENT OF RESIGNATION. Neither party shall make any public
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announcement regarding Executive's resignation other than that made heretofore
and set forth in Exhibit A hereto and except 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.
8.2 THIRD PARTY CONTACTS. Each of the parties hereto agrees not to make
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disparaging or derogatory comments about any of the parties released by it
hereunder, (whether to the press, the investment community, Shareholders or
otherwise and not to take any positions with third parties which are
inconsistent with the press release attached as Exhibit A hereto, except to the
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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.
9. CONFIDENTIALITY; NON-COMPETITION.
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9.1 For a period of three (3) years from the Resignation Date, Executive
agrees that he will not, without the prior written consent of the Company,
directly or indirectly, for his own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor (except that Executive
may purchase up to five percent of the outstanding capital stock of any
publicly-traded corporation) or otherwise (i) engage or participate in the
business of owning, operating or managing in-flight entertainment systems, in
any area; (ii) interfere with, disrupt, or attempt to disrupt, any past, present
or prospective relationship, contractual or otherwise, between the Company and
any customer, vendor, supplier or employee of the Company; or (iii) employ or
solicit the employment or engagement by others of any employee of the Company
who was an employee as of the Resignation Date or within six months prior
thereto.
9.2 Executive will not disclose or use or enable anyone else to use any
information or data which was obtained by him or available to him during the
term of employment whether or not such information or data will be considered
proprietary or secret.
9.3 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.
9.4 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.
9.5 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.
10. CONSULTING SERVICES. Executive hereby agrees to cooperate with and
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render such consulting, legal and other services to the Company, consistent with
his experience and background and subject to his other business commitments, as
may be reasonably requested from time to time by the Company's then President or
Chief Executive Officer during the Consulting Term. Executive shall devote a
maximum of 5 hours per month (if requested) to the performance of his services
for the Company without additional compensation. Executive shall not be
required to perform more than 5 hours of services for the Company in any month
unless prior thereto Executive and the Company mutually agree on the services to
be performed and the compensation to be paid to Executive therefor.
11. MISCELLANEOUS.
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11.1 DISPUTED RIGHTS. This Agreement represents a settlement of disputed
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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 and lawyer) 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.
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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 Company or to
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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
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. This Agreement, together with all documents referred
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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 shall be
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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 the
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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 or the
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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
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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 10 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 3.4 are
fulfilled by the Successor.
11.9 ARBITRATION OF DISPUTES. If Executive and the Company cannot resolve a
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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 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 any
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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 Executive
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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 pay
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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, any setoff, counterclaim, recoupment, defense or
other right which the Company may have against Executive or anyone else. All
amounts payable by the Company hereunder shall be paid without notice or demand.
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11.13 NO RESCISSION. Except as expressly provided herein, each party waives
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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:____________________________ ________________________________
Xxxxxx X. Xxxxxxx
Its:____________________________
Date:__________________________ Date:___________________________
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