Document:

Exhibit
10.6

 

EMPLOYMENT AGREEMENT – RUBEN FRAGOSO

 

This EMPLOYEE
AGREEMENT (hereinafter, this “Agreement”), made and entered this 1st
day of August, 2005, by and between Utilicraft Aerospace Industries, Inc.,
a corporation duly organized and existing under the laws of the state of
Nevada, (the “Corporation”), and Ruben Fragoso, a resident of Albuquerque, New
Mexico (hereinafter, “Fragoso”).

 

W I T N E S S E T H:

 

1.               The
Corporation hereby employs Fragoso, and Fragoso agrees to work for the Corporation
as Vice President of Sales - Mexico, South and Central America of the
Corporation, reporting to the President and Chief Executive Officer.

 

2.               This
Agreement shall expire on December 10, 2007, unless sooner terminated as hereinafter
provided. In addition to the arrangements for termination hereinafter provided,
it is agreed between the parties that until the major start-up financing
(approximately 20,000,000) of the Corporation is achieved, this Agreement may
be summarily terminated, that is, without notice, in the sole discretion of the
President and Chief Executive Officer of the Corporation.

 

3.               Fragoso
agrees to devote his full time efforts to his duties as Vice President of Sales
- Mexico, South and Central America for the profit, benefit and advantage of the
business of the Corporation.

 

4.               (a) The
Corporation agrees to pay Fragoso a basic salary at the rate of Forty-Five Thousand
Dollars ($45,000) per annum, payable in semi-monthly installments for the first
five months (thru December 2005), and then Ninety-Five Thousand Dollars
($95,000) per annum, payable in semi-monthly installments beginning January 1st,
2006 for all the services to be rendered by Fragoso hereunder, including
service as a member of a committee, and any other duties related to his position
required of him by the President and Chief Executive Officer. The basic salary
above-stated is understood by the parties to this Agreement to be payable to
Fragoso during the period in which the Corporation is developing the FF-1080
aircraft and seeking its Federal Aviation Administration (hereinafter “FAA”)
aircraft type Certification.

 

(b)         When the FAA
certification is achieved, the basic salary payable to Fragoso will increase to
One Hundred Fifteen Thousand Dollars ($115,000.00) per annum, effective the
first (1st) day of the month in which the FAA issues the FF-1080 aircraft type
certificate to the Corporation.

 

(c)          The basic salary payable
to Fragoso will further increase to One Hundred Fifty Thousand ($150,000.00)
per annum effective the first (1st) day of the month in which the Corporation
delivers production aircraft number twenty-four (24).

 

(d)         Basic Salary payments to
Fragoso under this Agreement shall begin on August 15, 2005.

 

1

 

(e)          The basic salary
payments made to Fragoso under this paragraph shall be adjusted annually,
effective the first (1st) day of the thirteenth (13th) month after any such
payment under subparagraphs (a), (b) or (c) above begins, by the
percentage of the annual rate of change in the Consumer Price Index for the
twelve (12) months preceding the above effective date.

 

5.               The
Corporation agrees that it will pay Fragoso, as a bonus, an additional sum mounting
to one eighth of one percent (.0625%) of the basic delivered invoice price (not
including optional equipment) of an FF-1080 aircraft delivered to commercial
concerns in the Mexico, and South and Central Regions, (including commercial
air carriers when owned and/or operated by a foreign government) as, and only
as, responsibility for such sales may be assigned to Fragoso by the President
and Chef Executive Officer. Payments of the additional sum payable to Fragoso
under this paragraph shall be made on the first (1st) working day of the month following
the month in which aircraft deliveries are made and final payment on such
deliveries has been received by the Corporation regardless of whether or not
this Agreement is then in effect.

 

6.               The
Corporation and Fragoso agree that the geographical location at which Fragoso will
devote the major portion of his time and efforts to his duties as Vice
President of Sales - Mexico, South and Central America is at the office
facility of the Corporation.

 

7.               The
Corporation agrees to pay all reasonable expenses incurred by Fragoso in furtherance
of the business of the Corporation, including travel and entertainment
expenses. The Corporation agrees to reimburse Fragoso for any such expenses
paid out by him in the first instance, upon submission by him of a statement
itemizing such expenses.

 

8.               If
Fragoso shall, during the term of his employment under this Agreement, be
absent from work because of illness or other cause for a period, or aggregate
of periods, in excess of three (3) months in any one (1) year of the
term of employment, the Corporation shall have the right to terminate this
Agreement on ninety (90) days notice to Fragoso. In that event, the Corporation
shall pay Fragoso his compensation to the date of termination.

 

9.               Fragoso
agrees that the Corporation may, from time to time, apply for, take out in its own
name and at its own expense, life, health, accident, or other insurance upon
Fragoso that the Corporation may deem necessary or advisable to protect its
interests hereunder; the total amount of such life insurance shall not exceed
One Million Dollars ($1,000,000.00) without the written consent of Fragoso.
Fragoso agrees to submit to any medical or other examination necessary for such
purpose and to assist and cooperate with the Corporation in procuring such
insurance; and Fragoso agrees that other than his rights as a shareholder he
shall have no right, title, or interest in or to such insurance.

 

10.         In the
event of the death of Fragoso during the term of this Agreement and after the major
start-up financing is in place, the Corporation agrees to pay Fragoso’s legal
representatives the sum of Five Thousand Dollars ($5,000.00).

 

11.         Fragoso
agrees that during the term of this Agreement he will not engage in any other
commercial activity, whether or not competitive with the business of the
Corporation, nor 

 

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be affiliated in any
other way as officer, director, or significant stockholder of another
corporation without the written consent of the President and Chief Executive
Officer of the Corporation.

 

12.         Fragoso
agrees that he shall exercise reasonable care to prevent disclosure of the Corporation’s
proprietary information to others and shall not, himself at any time during the
period of this Agreement and after its termination for any reason, disclose the
Corporation’s proprietary information to others and will not use such
information for any purpose except as contemplated by this Agreement. The term “proprietary
information” as used herein includes, in addition to information so designated
and labeled by the Corporation, all business, financial, technical and design
information related to the Corporation’s developmental and production programs
whether or not designated and labeled as proprietary information.

 

13.         Fragoso
agrees that, for a period of three (3) years after leaving the employment
of the Corporation for any reason, he will not engage in any way, directly or
indirectly, in any business competitive with the business of the Corporation.

 

14.         (a) After
the major start-up financing (approximately $20,000,000) of the Corporation
achieved, either party shall have the right to terminate this Agreement upon
one hundred eighty (180) days notice to the other. If Fragoso terminates this
Agreement, the Corporation shall pay Fragoso until the date of termination.
Except for any reason that would be considered for cause, if the Corporation
terminates the Agreement, it shall forthwith pay additional compensation to
Fragoso in the form of a lump sum payment of two (2) times the average amount
of the annual basic salary then payable under paragraphs 4 (a), (b) or (c) above.

 

(b)         For purposes of paragraph
(a) above, a reason that could be considered for cause, within the sole
discretion of the President and Chief Executive Officer, would be the failure
of the Corporation to have sold at least twenty-five (25) FF-1080 aircraft or
derivative aircraft during the first full calendar year (January 1 though December 31)
after the major start-up financing (approximately $20,000,000) of the Corporation
is achieved, and to sell at least twenty-five (25) FF-1080 or derivative
aircraft each calendar year thereafter.

 

15.         (a) For
protection of Fragoso against possible termination after a change of control
(defined below) of the Corporation and to induce Fragoso to continue to serve
in his capacity as Vice President of Sales - Mexico, South and Central America
or in such other capacity to which he may be elected or appointed, the
Corporation will provide severance benefits in the event Fragoso’s employment
is terminated after a change of control.

 

(b)         “Change of Control” shall
have occurred if, at any time after the Corporation has acquired its major
start-up financing, (a) any person (as used in Sections 13(d) and 14(d) of
the Securities Exchange Act (“SEA”) of 1934) becomes the beneficial owner (as
defined in Rule 13(d)-3 of the SEA) of a total to twenty percent (20%) or
more of the outstanding shares of the Corporation’s common stock, or (b) the
Board of Directors of the Corporation is composed of a majority of directors
who were not directors of the Corporation on the date of this Agreement, or (c) the
change is of the type that is required to be reported under Item 5(f) of
Schedule 14 Regulation 14A promulgated under the SEA.

 

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(c)          If a change of control
has occurred, Fragoso shall be entitled to severance benefits if his employment
is terminated by him due to:

 

(i) the
assignment to him of any duties not consistent with his present position, or a
change entitles or offices, or any failure to re-elect him to any positions
held on the date of the change of control;

 

(ii) a
reduction in salary or discontinuance of any bonus plans in effect on the date
of the change of control; or

 

(iii) a
change in geographical location of where his position is based in excess of
twenty (20) miles or required travel in excess of his usual business travel
schedule.

 

(d)         Fragoso shall be entitled
to severance benefits if his employment is terminated by the Corporation after
a change of control. Such termination must not be due to any reason that would
be considered for cause.

 

(e)          Severance benefits after
a change of control has occurred shall be:

 

(i)             a
lump sum payment of ten (10) times the amount of the annual basic salary
then payable under paragraphs 4 (a), (b) or (c) above.

 

(ii)          allowance
of surrender of all outstanding stock options, with the price to be determined
by taking the difference between the option price and the price of the stock on
the date of the change of control or the date of termination, whichever is
higher; and

 

(iii)       all
employee benefits in effect and applicable to Fragoso on the date of the change
of control will be retained and paid by the Corporation for Fragoso for a
period of two (2) years. These benefits shall include all health,
accident, and disability plans as well as any life insurance plans provided by
or through the corporation.

 

(f)            Fragoso shall not be
required to mitigate the amount of any payment provided under these severance
benefits by seeking other employment and none of these payments may be reduced
by any future salary he may earn.

 

(g)         In the event of a change
of control, the Corporation is aware that the Board of Directors or a
shareholder or shareholders of the Corporation may cause the Corporation to refine
to comply with its obligations under this paragraph, or may cause the
Corporation to institute litigation seeking to have this paragraph declared
enforceable, or may take other action to deny Fragoso the benefits intended to
be provided under this paragraph. It is the intent of the Corporation that
Fragoso not be required to incur expenses in enforcing his rights under this paragraph
by litigation or other legal action because the costs and expenses thereof
would substantially detract from the benefits intended to be extended to
Fragoso under this paragraph.

 

4

 

(h)         If, following a change of
control, Fragoso determines that the Corporation has failed to comply with any
of its obligations under this paragraph or in the event the Corporation or any
other person takes action to declare this paragraph void or enforceable, or
institutes any litigation or other legal action designed to deny Fragoso the
benefits intended to be extended under this paragraph, the Corporation
authorizes Fragoso to retain counsel of his choice at the Corporation’s expense
to represent Fragoso in connection with the initiation or defense by Fragoso of
any litigation or legal action, whether by or against the Corporation, any
director, officer, shareholder, or any other person affiliated with the
Corporation, in any jurisdiction.

 

(i)             Despite any
previously existing attorney-client relationship between the Corporation and
counsel retained by Fragoso, the Corporation hereby provides that Fragoso may
enter into an attorney-client relationship with such counsel. The Corporation
and Fragoso agree that a confidential relationship will exist between Fragoso
and such counsel.

 

(j)             The Corporation
hereby authorizes that the reasonable fees and expenses of counsel retained by
Fragoso shall be paid or reimbursed to Fragoso by the Corporation on a regular,
periodic basis upon Fragoso’s presentation of a statement or statements,
prepared by counsel in accordance with its customary practices, up to a maximum
aggregate amount of Two Hundred Fifty Thousand Dollars ($250,000.00).

 

16.         The
Corporation shall have the right, with the consent of Fragoso, to assign this Agreement
to its successors or assigns and all covenants and agreements hereunder shall
inure to the benefit of and be enforceable by or against its said successors or
assigns. The terms “successor” and “assign” shall include any corporation which
buys all or substantially all of the Corporation’s assets, or all of its stock,
or with which, it merges or consolidates.

 

17.         The
Corporation shall indemnify Fragoso and hold him harmless against any claims or
legal action of any type brought against Fragoso with respect to his activities
as Vice President of Sales - Mexico, South and Central America of the
Corporation and in such other capacity to which he may be appointed or elected
and with respect to his services as a member of a committee and other duties
related to his position, whether such claims or actions be rightfully or wrongfully
brought or filed, and against all costs incurred by Fragoso therein. In the
event an action should be filed with respect to the subject of this indemnity
and hold harmless agreement, the Corporation agrees that Fragoso may employ an
attorney of Fragoso’s own selection to appear and defend the action, on behalf
of Fragoso, at the expense of the Corporation. Fragoso, at his option, shall
have the sole authority for the direction of the defense, and shall be the sole
judge of the acceptability of any compromise or settlement of any claims or
actions against Fragoso.

 

18.         Any
dispute concerning any questions of law or fact arising out of the
circumstances of employment under this Agreement shall be determined by
arbitration. The controversy shall be submitted to the American Arbitration
Association for final determination.

 

19.         Any
waiver by either party of a breach of any provision of this Agreement shall not
operate as or be construed as a waiver of any subsequent breach thereof.

 

5

 

20.         If any
provision of this Agreement is declared invalid by any Tribunal, then such provision
shall be deemed automatically adjusted to conform to the requirements for
validity as declared at such time and, as so adjusted, shall be deemed a
provision of this Agreement as though originally included herein. In the event
that the provision invalidated is of such a nature that it cannot be so
adjusted, the provisions shall be deemed deleted from this Agreement as though
the provision had never been included herein. In either case, the remaining
provisions of this Agreement shall remain in effect.

 

21.         This
Agreement may be extended or modified by mutual agreement in wiring in the form
of a numbered amendment hereto.

 

22.         This Agreement
shall be construed in accordance with the laws of the State of Nevada.

 

23.         This
Agreement consists of six (6) pages.

 

IN WITNESS
WHEREOF, the Corporation has hereunto signed its name by its President and
Chief Executive Officer, and the other party hereto has signed his name, all as
of the day and year first above written.

 

 

UTILICRAFT AEROSPACE
INDUSTRIES, INC.

 

 

	
  By:

  	
   

  	
   

  
	
   

  	
  John J. Dupont

  
	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Ruben Fragoso

  

 

6Exhibit 10.7

 

ASSIGNMENT

 

WHEREAS,
I, JOHN J. DUPONT, a citizen of the United States, residing
at Lawrenceville, Georgia, am the inventor of an invention in AUTOMATIC FLAT
RATE SETTING SYSTEM FOR FREIGHT FEEDER AIRCRAFT AND METHOD OF SETTING OF ENGINE
FLAT RATE for which I have
executed an application for Letters Patent of the United States on May, 24, 2000;
and

 

WHEREAS,
UTILICRAFT AEROSPACE INDUSTRIES, INC., a Nevada corporation (“Utilicraft”),
is desirous of obtaining the entire right, title and interest in, to and under
the said invention and the said application;

 

NOW,
THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged and in fulfillment of my
pre-existing obligation of assignment contained in and subject to the
revocation provisions of my employment agreement with Utilicraft, dated December 10,
2004. (the “Employment  Agreement”), I, the said John J. Dupont
have sold, assigned, transferred and set over, and by these presents do hereby
sell, assign, transfer and set over, subject to the right of revocation as set
forth in the Employment Agreement, unto the said Utilicraft, its successors,
legal representatives and assignees, the entire right, title and interest in,
to and under the said invention, and the said application and all divisions,
renewals and continuations thereof, and all Letters Patent of the United States
which may be granted thereon and all reissues and extensions thereof, and all
applications for Letters Patent which may hereafter be filed for said invention
in any country or countries foreign to the United States, and all Letters
patent which may be granted for said invention in any county or countries foreign to the United States and all
extensions, renewals and releases thereof and all rights of priority in any
such country or countries based upon the filing of said application for Letters
Patent of the United States which are created by any law, treaty or
international convention; and I hereby authorize and request the Commissioner of
Patents of the United States, and any Official of any country or countries
foreign to the United States, whose duty it is to issue patents on applications
as aforesaid, to issue all Letters Patent for said invention to the said
Utilicraft, its successors, legal representatives and assigns, in accordance
with the terms of this instrument.

 

AND
I HEREBY covenant that I have full right to convey the entire
interest herein assigned, and that I have not executed, and will not execute,
any agreement in conflict herewith.

 

AND
I HEREBY further covenant and agree that I will communicate
to said Utilicraft, its successors, legal representatives and assigns, any
facts known to me respecting said invention, and testify in any legal
proceeding, sign all lawful papers, execute all divisional, continuing and
reissue applications, make all rightful oaths and generally do everything
possible to aid the said Utilicraft, its successors, legal representatives and
assigns, to obtain and enforce proper patent protection for said invention in
all countries.

 

1

 

IN
TESTIMONY WHEREOF,  I hereunto set my
hand and seal this 10th day of December, 2004.

 

 

	
   

  	
  /s/ John J. Dupont

  	
   

  
	
   

  	
  John
  J. Dupont

  

 

 

	
  State of
  Georgia

  	
  §

  	
   

  
	
   

  	
  §

  	
   

  
	
  County of Gwinnett

  	
  §

  	
   

  

 

I, a Notary Public in and
for the jurisdiction aforesaid, do hereby certify that the above signed
personally appeared before me in said jurisdiction, personally known to be the
individual described in, and who executed the foregoing instrument and
acknowledge that he executed the same of his own free will and for the purposes
therein set forth. 

 

 

	
   

  	
  Subscribed and sworn to
  before me on this 10th day of

  
	
   

  	
  December, 2004

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  Notary Public

  
	
   

  	
   

  
	
   

  	
  My Commission Expires: 

  	
  2/15/2008

  	
   

  
				

[Notarial Seal]

 

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