Management Change/Compensation (Form 8-K)

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Appointment of Michael A. Tapp as Chief Operating Officer

Effective as of September 1, 2025, the compensation committee (the "Compensation Committee") of the board of directors (the "Board") of XTI Aerospace, Inc. (the "Company") appointed Michael A. Tapp as the Company's Chief Operating Officer. In connection therewith, the Company entered into an employment agreement with Mr. Tapp on September 5, 2025, effective as of September 1, 2025 (the "Employment Agreement").

Michael A. Tapp, 55, has served, since September 2024, as chairman of the Company's Corporate Advisory Board, which is assisting the Company in evaluating strategic opportunities. Mr. Tapp is an operating partner for Palingen Capital and has served in a similar role for HBC Investments, a private equity firm, after almost a decade of leadership roles at Interstate Battery where he was an officer on the senior executive team, the President of Interstate's multi-unit franchise system, and the President of Interstate's industrial power management business. He also has contributed to the Investment Committee of the SBoTX Foundation as well as to the boards of directors and corporate advisory boards of several growth stage companies with international footprints. Before joining Interstate, Michael held senior executive roles at both operating and private equity organizations while serving on the Executive Committee of the Center for New Ventures and Entrepreneurship at Texas A&M University's Mays School of Business.

Pursuant to the terms of the Employment Agreement, Mr. Tapp is entitled to receive an annualized base salary of $600,000, payable according to the Company's payroll policies for senior officer employees, and which base salary is subject to an annual review between Mr. Tapp and the Company's Chief Executive Officer in light of annual target objectives to be approved by the Board on an annual basis. Such base salary will not be reduced or offset without Mr. Tapp's written consent. Mr. Tapp is also entitled to receive quarterly performance bonuses subject to the achievement of quarterly milestones to be agreed upon between Mr. Tapp and the Company's Chief Executive Officer that are within parameters to be approved by the Board, in an amount to be determined by the Company's Chief Executive Officer in his sole discretion that is up to 100% of his then current annualized base salary, with the sum of all calendar quarterly performance bonuses not to exceed 100% of his then current annualized base salary. In addition, if the Company closes an investment in or acquisition of another company through the purchase of either some or all of such target company's equity or all or substantially all of such target company's assets that are used in or useful to the business of such target company, with total transaction consideration paid by the Company or its subsidiary equal to or in excess of $10 million, Mr. Tapp is entitled to a bonus equal to 25% of his base salary then in effect.

Pursuant to the Employment Agreement, Mr. Tapp is eligible to receive incentive awards of Company securities and he received an initial stock option grant as described below. In addition, Mr. Tapp is entitled to 30 paid vacation days ("PTO Days") during each twelve-month period during his employment. Any unused PTO Days in any year will rollover to the next year. In the event of termination, Mr. Tapp will be compensated for all accrued vacation at his base salary rate then in effect. Mr. Tapp is entitled to participate in all Company benefit plans, and he is also entitled to the reimbursement of all reasonable business expenses incurred by him in connection with the performance of his duties and reasonable relocation expenses if the Company relocates its headquarters to any location outside the Dallas-Fort Worth metroplex area that is within a radius (the "Executive Office Area") of not more than 17 miles from the intersection of Preston Rd and the George Bush Turnpike, in accordance with the terms of the Employment Agreement and the Company's officer expense policy.

The Employment Agreement provides for an initial term of three years from the effective date, with automatic renewals for additional successive one-year periods thereafter, unless either the Company or Mr. Tapp provides notice of termination at least 90 days prior to the end of the initial term or the then applicable renewal term.