NEW AIR CORPORATION
6322 SOUTH 3000 EAST, SUITE L-201
SALT LAKE CITY, UTAH 84121
TELEPHONE: (801) 947-7880
FACSIMILE: (801) 944-4840
April 12, 1999
As I have discussed with you, we are extremely excited to have you join the
executive team at New Air. We know you will make a tremendous contribution to
the success of this unique start-up airline.
The purpose of this letter is present to you a written offer of employment with
New Air. The specific terms of our employment offer to you are as follows:
- Your salary will be $300,000 per year.
- You will also be entitled to participate in the company's profit
sharing plan, the details of which are still to be determined. (You
will play a major role in formulating New Air's profit sharing
- Your title will be Executive Vice President - People. You will serve
on New Air's five person Executive Planning Committee. (The other
members of this committee are Dave Barger, John Owen, Tom Kelly and
- In addition to your responsibility for human resource matters, you
have indicated that you would like to be responsible for the
airline's flight attendants. We feel very good about having you in
charge of this critical aspect of the company's operations. You have
also expressed an interest in having a major role in marketing
matters. Subject to the demands imposed by your other
responsibilities, we would welcome your active involvement in the
company's marketing efforts. This involvement may even take the form
of having Amy Curtis report directly to you. As we have discussed,
we can work out the details of your marketing role after you start
working at New Air and are in a better position to assess how much
time you will have available.
- As a very important part of your compensation package, you will
receive options to purchase 66,667 shares of New Air's common stock
at an exercise price per share of $3. (These figures are based on a
proposed stock split of the company's currently issued stock, which
we expect to complete in the near future. This stock split will
result in the company having about 10,000,000 outstanding and
reserved shares.) A portion of your options will come from the
option pool already set aside by the company, and a portion will
come from personal shares of mine that I will be selling back to the
company to enhance the option pool. All of your options will have
the same $3 exercise price.
Although no one can predict what, if anything, your stock options
will eventually be worth, the following details should be helpful to
you in assessing the potential value of your New Air options:
- The $3 exercise price assumes a current company
valuation of about $30,000,000. The recent preferred
financing was based on a valuation in excess of $150
million. The preferred shareholders paid about $15.82
per share, compared to your exercise price of only $3.
- We are hoping that within 3-4 years, New Air can have a
market value in the range of $1 billion. (It is worth
noting that at its peak, Valujet had a market value well
over $2 billion.) If New Air were to achieve a $1
billion market valuation, your options would be worth
over $5 million. (This estimate takes into account some
dilution in an IPO.)
- Almost all of the company's stock options will have a
vesting period of at least five years. Given your
special circumstances and the contribution you will make
to New Air, we are willing to have your options vest 33%
each year over three years.
- You will also have the option of participating in a 401(k) plan
with a company match of at least 50% of the employee's
- We anticipate that New Air will use your outside consulting firm in
a variety of ways. We believe this will be a significant benefit to
New Air. We also assume and hope it will be an additional form of
potential compensation for you.
- As an executive of New Air, you and your family will be entitled to
free, unlimited positive space travel on New Air.
We have also discussed in detail your desire to continue to live in Arizona. We
anticipate that for the first two years of your employment, you will be in New
York an average of about two to three weeks a month. I assume that some months
you may come for rather long blocks of time;
other months you may come to New York for several days each week. The company
will cover your travel expenses to and from New York, as well as your
accommodations. (We will work with you to help reduce the cost of air travel
through advance purchases, etc.) I can assure you that we will be flexible
regarding the details of your work schedule.
I believe this offer covers all of the items we have discussed. If there are any
other issues you would like included in this letter, please let me know. If this
offer is acceptable to you, please countersign this letter where indicated
I look forward to hearing from you.
/s/ David Neeleman
New Air Corporation
Agreed to this 26 day of April, 1999.
/s/ Ann Rhoades