EMPLOYMENT AGREEMENT
This Employment Agreement between World Airways, Inc., a Delaware corporation
("World" or the "Company") and Xxxxxx Xxxxxxx Xxxxxx, Jr. ("Xxxxxx") is entered
into this 1st day of June, 1999.
WHEREAS, Xxxxxx has agreed to serve as World's President and Chief Operating
Officer as of June 1, 1999.
NOW, THEREFORE, World and Xxxxxx, in consideration of the foregoing and other
mutual covenants and promises contained herein, the sufficiency of which are
hereby acknowledged, hereby agree as follows:
1. ACCEPTANCE OF EMPLOYMENT. Subject to the terms and conditions set forth
below, World agrees to employ Xxxxxx and Xxxxxx accepts such employment.
2. TERM. The period of employment shall be from June 1, 1999, through May 31,
2002, unless further extended or sooner terminated as hereinafter set forth. In
the absence of notice, this Agreement shall be renewed on the same terms and
conditions for one year from the date of expiration. Not later than November 1,
2001, Xxxxxx shall initiate discussions with the Chairman of the Board
(hereinafter "Chairman") regarding the renewal of this Agreement. At that time,
if Xxxxxx wishes to renew this Agreement on different terms, Xxxxxx shall give
written notice to the Chairman. If the Chairman does not wish to renew this
Agreement at its expiration, or wishes to renew on different terms, the Chairman
shall give written notice to Xxxxxx no later than November 30, 2001.
3. POSITION AND DUTIES. Xxxxxx shall continue to serve as President and Chief
Operating Officer with the duties performed as of June 1, 1999, as those duties
may be changed from time to time. The Chairman will have reasonable latitude to
make changes in Xxxxxx'x responsibilities, except that Xxxxxx'x responsibilities
may not be modified in a way that would be inconsistent with the status of
President and Chief Operating Officer. Following a Change of Control (as
hereinafter defined), Xxxxxx'x responsibilities may not be changed without
mutual agreement. Xxxxxx agrees to render his services to the best of his
abilities and will comply with all policies, rules and regulations of the
company and will advance and promote to the best of his ability the business and
welfare of the Company. Xxxxxx shall devote all of his working time, attention,
knowledge and skills solely to the business and interests of World. Xxxxxx may
not accept any other engagement with or without compensation which would affect
his ability to devote all of his working time and attention to the business and
affairs of World without the prior written approval of the Chairman of the
Board. Xxxxxx agrees to accept assignments on behalf of World or affiliated
companies commensurate with his responsibilities hereunder, except that the
terms and conditions of assignments exceeding 60 consecutive days outside the
Washington, DC metropolitan area will require mutual agreement.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Xxxxxx shall receive a minimum salary of $225,000 per annum
payable in accordance with the payroll procedures for World's salaried employees
in effect during the term of this Agreement. Xxxxxx agrees to participate
equally, on a percentage basis, in any across the board salary reductions
approved by senior management.
(b) PERFORMANCE STOCK OPTIONS. Xxxxxx has been granted 500,000 options to
purchase World's Common Stock, par value $.001 per share ("World Airways Common
Stock") pursuant to the 1995 World Airways Stock Option Plan (the "Plan") as set
forth in the Stock Option Agreement between World and Xxxxxx dated June 1, 1999
(the "Option Agreement"). In the event of a Change in Control as defined below,
all options shall be immediately exercisable.
(c) BUSINESS EXPENSES. Xxxxxx shall be entitled to reimbursement of reasonable
business related expenses from time to time consistent with World's policies,
including, without limitation, submitting in a timely manner appropriate
documentation of such expenses.
(d) MOVING EXPENSES. Xxxxxx shall be entitled to moving expenses not to exceed
$30,000.
(e) FRINGE BENEFITS. Xxxxxx shall be entitled to participate in all employee
benefit plans made available from time to time to all executives of World in
accordance with the terms of such plans. In the event this Agreement is
terminated by either party for any reason other than death or for cause, Xxxxxx
may participate in World's health and other benefit programs for a period of one
year from the date of Xxxxxx'x termination, or until Xxxxxx obtains comparable
coverage, whichever is earlier.
(f) PERSONNEL POLICIES, CONDITIONS AND BENEFITS. Except as otherwise provided
herein, Xxxxxx'x employment shall be subject to the personnel policies and
benefits plans which apply generally to World's employees as the same may be
interpreted, adopted, revised or deleted from time to time, during the term of
this Agreement, by World in its sole discretion. While this Agreement is in
effect, Xxxxxx shall accrue vacation at the rate of one month per year and such
vacation shall be taken in accordance with the Company's procedures.
(g) INDEMNIFICATION; D&O INSURANCE. Subject to Section 6(f) of this Agreement,
World shall provide (or cause to be provided) to Xxxxxx indemnification against
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlements in connection with any threatened, pending or completed action, suit
or proceeding, whether civil, criminal, administrative or investigative
(including an action by or in the right of World) by reason of his being or
having been an officer, director or employee of World or any affiliated entity,
advance expenses (including attorneys' fees) incurred by Xxxxxx in defending any
such civil, criminal, administrative or investigative action, suit or proceeding
and maintain directors' and officers' liability insurance coverage (including
coverage for securities-related claims) upon substantially the same terms and
conditions as set forth in the Indemnification Agreement dated June 1, 1999,
between Xxxxxx and World Airways, Inc. (the "Indemnity Agreement").
5. TERMINATION OF EMPLOYMENT.
(a) DEATH. Xxxxxx'x employment hereunder shall terminate upon his
death, in which event World shall have no further obligation to Xxxxxx or his
estate with respect to compensation, other than the disposition of life
insurance and related benefits and accrued and unpaid base salary and incentive
compensation, if any, for periods prior to the date of termination pursuant to
the terms of the respective employee benefits and incentive compensation plans
then in effect.
(b) BY WORLD FOR DISABILITY. If Xxxxxx is unable, or fails, to perform
services pursuant to this agreement through illness or physical or mental
disability and such failure or disability shall exist for twelve (12)
consecutive months, then World may terminate this Agreement upon written notice
to Xxxxxx, in which event World shall have no obligation to Xxxxxx with respect
to compensation under Section 4(a) of this Agreement. If Xxxxxx becomes entitled
to Social Security benefits payable on account of disability, he will be deemed
conclusively to be disabled for purposes of this Agreement.
(c) BY WORLD FOR CAUSE.
(i) Except under the circumstances set forth in 5(c)(ii)
below, the Chairman of the Board may terminate this Agreement
for Cause. "Cause" shall be defined as (A) gross misconduct,
including significant acts or omissions constituting
dishonesty, intentional wrongdoing or malfeasance, whether or
not relating to the business of World, or (B) commission of a
felony or any crime involving fraud or dishonesty.
(ii) In the event of a Change of Control, as defined below,
Xxxxxx may only be terminated for Cause pursuant to a
resolution duly adopted by the affirmative vote of a majority
of the entire membership of the Board, at a meeting of the
Board finding that, in the good faith opinion of the Board,
Xxxxxx was guilty of conduct set forth in 5(c)(i)(A), or (B),
provided, however, that Xxxxxx may not be terminated for Cause
hereunder unless: (1) Xxxxxx receives prior written notice of
World's intention to terminate this Agreement for Cause and
the specific reasons therefore; and (2) Xxxxxx has an
opportunity to be heard by World's Board and be given, if the
acts are correctable, a reasonable opportunity to correct the
act or acts (or non-action) giving rise to such written
notice. If the Board, by resolution duly adopted by the
affirmative vote of a majority of the entire membership of the
Board, finds that Xxxxxx fails to make such correction after
reasonable opportunity to do so, this Agreement may be
terminated for Cause.
(d) BY WORLD FOR OTHER THAN CAUSE. In the event the Board terminates this
Agreement for reasons other than Cause or Disability as defined in sub-paragraph
(c) above, World will pay to Xxxxxx within ten (10) days of notice of
termination (or, in the case of incentive bonus compensation, if any, within ten
(10) days of determination of amounts payable under the applicable bonus plan)
twenty-four months base salary, in each case including deferred salary and/or
bonus compensation, if any, payable under this Agreement. In addition, all
granted but unvested stock options under the Option Agreements shall become
immediately exercisable. In the event that any payment to Xxxxxx under this
paragraph is subject to any federal or state excise tax, World shall pay to
Xxxxxx an additional amount equal to the excise tax imposed including additional
federal and state income and excise taxes as a result of the payments under this
paragraph, and such payment will be made when the excise tax and income taxes
are due; provided, however, that Xxxxxx agrees to assist World Airways by using
his best efforts to structure matters so that any payment to Xxxxxx under this
paragraph is not subject to any federal or state excise tax. Whether an excise
tax is payable, and the amount of the excise tax and additional income taxes
payable, shall be determined by World's accountants and World shall hold Xxxxxx
harmless from any and all taxes, penalties, and interest that may become due as
a result of the failure to properly determine that an excise tax is payable or
the correct amount of the excise tax and additional income taxes, together with
all legal and accounting fees reasonably incurred by Xxxxxx in connection with
any dispute with any taxing authority with respect to such determinations and/or
payments.
(e) BY XXXXXX FOR GOOD REASON. Xxxxxx may terminate his employment hereunder
(for purposes of this Agreement "Good Reason") after giving at least 30 days
notice in the event that, without Xxxxxx'x consent, (i) World relocates its
general and administrative offices or Xxxxxx'x place of employment to an area
other than the Washington, D.C. Standard Metropolitan Statistical Area, (ii) he
is assigned any duties substantially inconsistent with Section 3 hereof, (iii)
World reduces his annual base salary as in effect on the date hereof or as the
same may be increased from time to time, except as provided in Section 4(a)
above; (iv) World fails, without Xxxxxx'x consent, to pay Xxxxxx any portion of
his current compensation, or to pay him any portion of an installment of
deferred compensation under any deferred compensation program of World, within
seven (7) days of the date such compensation is due; (v) World fails to continue
in effect any compensation plan in which Xxxxxx participates which is material
to Xxxxxx=s total compensation, unless an equitable arrangement (embodied in an
ongoing substitute or alternative plan) has been made with respect to such plan,
or to continue Xxxxxx=s participation therein (or in such substitute or
alternative Plan) on a basis not materially less favorable, both in terms of the
amount of benefits provided and the level of Xxxxxx'x participation relative to
other participants; (vi) World fails to continue to provide Xxxxxx with benefits
substantially similar to those enjoyed by Xxxxxx under any of World's pension,
life insurance, medical, health and accident, or disability plans in which
Xxxxxx was participating, World takes any action which would directly or
indirectly materially reduce any of such benefits or deprive Xxxxxx of any
material fringe benefit enjoyed by Xxxxxx; (vii) World terminates, or proposes
to terminate, Xxxxxx'x employment hereunder contrary to the requirements of
Section 5(c) hereof (for purposes of this Agreement, no such termination or
purported termination shall be effective); or (viii) the Board approves the
liquidation or dissolution of World prior to the end of this Agreement. In the
event that Xxxxxx decides to terminate this Agreement and his employment with
World or any successor in interest in accordance with the provisions of this
Section 5(e), World shall have the same obligations as set forth in Section 5(d)
hereof. Any other payments due or actions required under this paragraph shall be
made as lump sums or taken within 10 days of termination of the Agreement.
(f) BY XXXXXX FOR OTHER THAN GOOD REASON. Notwithstanding the above,
Xxxxxx may upon giving reasonable notice, not to be less than six months,
terminate this Agreement without further obligation on the part of Xxxxxx or
World.
(g) CHANGES OF CONTROL. For purposes of this Agreement, a "Change of
Control" includes the occurrence of any one or more of the following events:
(i) any Person, other than the Company, is or becomes the Beneficial
Owner (as defined in Rule 13d-3 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), directly or indirectly, of
securities of World representing more than 50% of the combined voting
power of World's then outstanding securities; or
(ii) during any period of two (2) consecutive years (not including any
period prior to the execution of this Agreement), individuals who at
the beginning of such period constitute the Board of World and any new
director (other than a director designated by a Person who has entered
into an agreement with World to effect a transaction described in
clause (i), (iii) or (iv) or this Section 5 (f)) whose election by the
Board of World or nomination for election by the stockholders of World
was approved by a vote of at least two-thirds (2/3) of the directors
then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof; or
(iii) the shareholders of World approve a merger or consolidation of
World with any other corporation, other than (A) a merger or
consolidation which would result in the voting securities of World
outstanding immediately prior thereto continuing to represent (either
by remaining outstanding or being converted into voting securities of
the surviving entity), in combination with the ownership of any trustee
or other fiduciary holding securities under an employee benefit plan of
World or any of its affiliates, at least 50% of the combined voting
power of the voting securities of World or such surviving entity
outstanding immediately after such merger or consolidation, or (B) a
merger or consolidation effected to implement a recapitalization of
World (or similar transaction) in which no Person acquires more than
50% of the combined voting power of World's then outstanding
securities; or
(iv) the shareholders of World approve a plan of complete liquidation
of World or an agreement for the sale or disposition by World of all or
substantially all of World's assets.
(h) "PERSON" DEFINED. For purposes of this Section, "Person" shall have
the meaning given in Section (3)(a)(9) of the Exchange Act, as modified and used
in Sections 13(d) and 14(d) thereof; however, a Person shall not include (i)
World or WorldCorp, Inc. or any of their subsidiaries or affiliates; (ii) a
trustee or other fiduciary holding securities under an employee benefit plan of
World or WorldCorp, Inc. or any of their subsidiaries; (iii) an underwriter
temporarily holding securities pursuant to an offering of such securities; or
(iv) a corporation owned, directly or indirectly, by the stockholders of World
or WorldCorp, Inc. in substantially the same proportions as their ownership of
stock of World or WorldCorp, Inc.
(i) NOTICE OF TERMINATION. Termination of this Agreement by World or
termination of this Agreement by Xxxxxx shall be communicated by written notice
to the other party hereto, specifically indicating the termination provision
relied upon.
(j) COMPANY PROPERTY. At the termination of Xxxxxx'x employment,
whether voluntary or involuntary, Xxxxxx shall return all company property,
including without limitation all electronic and paper files and documents and
all copies thereof.
6.CONFIDENTIALITY.
(a) Xxxxxx recognizes and acknowledges that he will acquire during his
employment with World information that is confidential to World and that
represents valuable, special and unique assets of World ("Confidential
Information"). Such Confidential Information (whether or not reduced to tangible
form) includes, but is not limited to: trade secrets; financing documents and
information; financial data; new product information; copyrights; information
relating to schedules and locations; cost and pricing information; performance
features; business techniques; business methods; business and marketing plans or
strategies; business dealings and arrangements; business objectives; customer
information; sales information; acquisition, merger or business development
plans or strategies; research and development projects; legal documents and
information; personnel information; and any and all other information concerning
World's business and business practices that is not generally known or made
available to the public or to World's competitors or is not readily
ascertainable by other means, which, if misused or disclosed, could adversely
affect the business of World. Xxxxxx agrees that he will not, during employment
with World and for a period of two (2) years following termination of employment
for any reason, whether voluntary or involuntary, with or without Cause,
directly or indirectly:
(i) disclose any Confidential Information to any person, company or
other entity (other than authorized persons employed by or affiliated
with World who, in the interest of World, have a business need to know
such information), or
(ii) use any Confidential Information in any way, except as required by
his duties to World or by law, unless he obtains World's prior written
approval of such disclosure or use. World's rights under this Section
shall be cumulative to, and shall not limit, World's rights under the
Virginia Uniform Trade Secrets Act or any other state or federal trade
secret or unfair competition statute or law. The parties hereto
stipulate that as between them, the foregoing matters are important,
material, and confidential and gravely affect the successful conduct of
the business of World, and World's good will, and that any breach of
the terms of this paragraph shall be a material breach of this
Agreement.
(b) Section 4(f) of this Agreement and any other indemnity agreements
between Xxxxxx and World shall not apply to actions, suits or proceedings to
enforce World's rights under, or that otherwise relate to, this Agreement,
including without limitation, this Section 6.
(c) References in this Section 6 to "World" include World Airways, Inc.
and any and all of its current or future parents, subsidiaries, affiliated
companies, and divisions.
7. BENEFICIARY. The Beneficiary of any payment due and payable at the time of
Xxxxxx'x death, or otherwise due upon his death, shall be such person or persons
as Xxxxxx shall designate in writing to World. If no such beneficiary shall
survive Xxxxxx, any such payments shall be made to his estate.
8. INTELLECTUAL PROPERTY.
(a) Any improvements, new techniques, processes, inventions, works,
discoveries, products or copyrightable or patentable materials made or conceived
by Xxxxxx, either solely or jointly with other person(s), (1) during Xxxxxx'x
period of employment by World, during working hours; (2) during the period after
termination of his employment during which he is retained by World as a
consultant; or (3) with use of World's intellectual property or Confidential
Information, shall be the sole and exclusive property of World without royalty
or other consideration to Xxxxxx.
(b) Xxxxxx agrees to inform World promptly and in full of such
intellectual property by a full written report setting forth in detail the
procedures used and the results achieved.
(c) Xxxxxx shall at World's request and expense execute any and all
applications, assignments, or other instruments which World shall deem necessary
to apply for, register, and/or obtain copyrights or Letters Patent of the United
States or of any foreign country, or to otherwise protect World's interests in
such intellectual property.
(d) Xxxxxx shall assign and does hereby assign to World all interests
and rights, including but not limited to copyrights, in any such intellectual
property.
9. NO WAIVER. The failure of either party at any time to enforce any provisions
of this Agreement or to exercise any remedy, option, right, power or privilege
provided for herein, or to require the performance by the other party of any of
the provisions hereof, shall in no way be deemed a waiver of such provision at
the same or at any prior or subsequent time.
10. GOVERNING LAW. All questions concerning the construction, validity,
application and interpretation of this Agreement shall be governed by and
construed in accordance with the laws of the State of Virginia without giving
effect to any choice of law or conflict of law provision or rule (whether of
Virginia or any other jurisdiction) that would cause the application of the law
of any jurisdiction other than Virginia. Xxxxxx agrees to submit to personal
jurisdiction in the State of Virginia.
11. VALIDITY. The invalidity or unenforceability of any provision or provisions
of this Agreement shall not be deemed to affect the validity or enforceability
of any other provision of this Agreement, which shall remain in full force and
effect.
12. SUCCESSORS. This Agreement shall inure to the benefit of and be binding upon
World, its successors and assigns, including any corporation or other business
entity which may acquire all or substantially all of World's assets or business,
or within which World may be consolidated or merged, or any surviving
corporation in a merger involving World.
13. WAIVER OF MODIFICATION OF AGREEMENT. No waiver or modification of this
Agreement shall be valid unless in writing and duly executed by both parties.
14. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which together will constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
WORLD AIRWAYS, INC.
By:____________________________
Xxxxxx X. Xxxxxx
Chairman and CEO
_______________________________
Xxxxxx Xxxxxxx Xxxxxx, Jr.
