AMENDMENT NUMBER 1
TO
EMPLOYMENT AGREEMENT
This Amendment Number 1 to the Employment Agreement dated August 1, 1998,
between World Airways, Inc., a Delaware corporation and Xxxxxxxx Xxxxxx
(hereinafter referred to as the "Agreement") is entered into this 22nd day of
January 1999.
WHEREAS, the parties desire to continue Xx. Xxxxxx'x employment, and to renew
the Agreement on different terms to modify Xx. Xxxxxx'x position, compensation
and protections in the event of a change of control.
NOW, THEREFORE, in consideration of the foregoing and other mutual
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree to amend the Agreement in its entirety as follows.
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AGREEMENT dated as of January 22, 1999,
(the "Restated Agreement"), is by and between World Airways, Inc., a Delaware
corporation, its successors and assigns (hereinafter "World") and Xxxxxxxx X.
Xxxxxx, Xx. ("Xxxxxx").
WHEREAS, Xxxxxx has agreed to serve as World's Chief Financial Officer, as of
the date hereof;
NOW, THEREFORE, World and Xxxxxx, in consideration of the mutual covenants and
promises contained herein, do 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 the date first written above
through December 1, 1999, unless further extended or sooner terminated as
hereinafter set forth. No later than May 15st of each year, Xxxxxx shall
initiate discussions with the President and CEO regarding the renewal of the
Agreement. If World does not wish to renew this Agreement at its expiration, or
wishes to renew on different terms, World shall give written notice to Xxxxxx by
June 1st of each year. If Xxxxxx wishes to renew this Agreement on different
terms, Xxxxxx shall give written notice to World not later than 6 months prior
to its expiration. In the absence of notice, this Agreement shall be renewed on
the same terms and conditions for successive terms of one year from the date of
expiration
3. POSITION AND DUTIES. Xxxxxx shall continue to serve as Chief Financial
Officer with the duties performed as of the date hereof. The President and CEO
will have reasonable latitude to made changes to Xxxxxx'x responsibilities,
except that Xxxxxx'x responsibilities may not be modified in a way that would be
inconsistent with the status of a company executive. 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 interest 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 Chief Executive
Officer. 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, D.C. metropolitan area will require mutual agreement.
4. COMPENSATION AND RELATED MATTERS.
(a) BASE SALARY. Xxxxxx shall receive a minimum salary of $185,000 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) ELIGIBILITY FOR BONUSES. Xxxxxx shall be eligible to receive an
annual bonus pursuant to World's 1998 management incentive compensation
plan and successor plans, if any, as the Board of Directors may adopt
from time to time. A copy of the 1998 Plan is attached as Exhibit A
hereto.
(c) PERFORMANCE STOCK OPTIONS. Xxxxxx has been granted 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 August 1, 1998 (the "Option Agreement")
(d) 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.
(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. The
Company shall pay Xxxxxx'x expenses for moving his personal household
effects and one car, as well as reasonable expenses for housing in
Northern Virginia, including a rental car, for three months or until he
establishes a residence in the Northern Virginia area, whichever is
sooner.
(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 be entitled
to one (1) month of paid vacation in each calendar year, and all paid
holidays observed by World.
(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 of even date herewith 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 for periods prior to the date of
termination, if any, pursuant to the terms of the respective employee
benefits and incentive compensation plans then in effect.
(b) BY WORLD FOR DISABILITY. If Xxxxxx incurs a disability and such
disability continues for a period of 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. The term
"disability" means a physical or mental illness that will prevent
Xxxxxx from performing the essential functions of his job for at least
twelve (12) months or is likely to result in death. 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 Chief Executive Officer of World may terminate this
Agreement, subject to Section 6(f) and those provisions that
survive this Agreement, for Cause. "Cause" shall be defined as
(A) sustained performance deficiencies which are communicated
to Xxxxxx in written performance appraisals and/or other
written communications (including, but not limited to memos
and/or letters) by the Chief Executive Officer of World, (B)
gross misconduct, including significant acts or omissions
constituting dishonesty, intentional wrongdoing or
malfeasance, whether or not relating to the business of World,
(C) commission of a felony or any crime involving fraud or
dishonesty, or (D) a material breach of this Agreement.
(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), (B), (C)
or (D) 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 therefor; and (2) Xxxxxx has an
opportunity to be heard by World's Board of Directors 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 of Directors
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, within ten (10) days of determination of amounts payable
under the applicable bonus plan) the greater of eighteen month's base
salary, or the undiscounted remainder of his base salary, in each case
including deferred salary and/or bonus compensation, payable under this
Agreement. In addition, all granted but unvested stock options under
the Option Agreement 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 for 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. In the event of a disagreement
between World and Xxxxxx as to whether the termination was for Cause,
that issue shall be submitted by Xxxxxx within twenty (20) days of the
notice of termination to binding arbitration, or any objection to
World's determination that termination is for Cause shall be waived.
(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' 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 his responsibilities as described by
Section 3 hereof or a substantial adverse alteration is made to the
nature or status of such responsibilities, (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)
herein; (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'x 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'x 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, or World fails to
provide Xxxxxx with the number of paid vacation days to which Xxxxxx is
entitled hereunder; (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) and Xxxxxx has submitted the
matter to arbitration, as set forth in Section 5(d); 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 30 days,
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 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' 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/RESTRICTIVE COVENANT.
(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 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) While employed by World and for a period of two (2) years following
termination of employment for any reason, whether voluntary or
involuntary, with or without Cause, Xxxxxx agrees that he will not,
directly or indirectly, either as principal, agent, employee, employer,
owner, stockholder (owning more than 5% of a corporation's shares),
partner, contractor, consultant or in any other individual or
representative capacity:
(i) Request, induce or attempt to induce any customer of
World: (A) to terminate or curtail any business relationship
with World or (B) to establish or attempt to establish a
similar business relationship with a person or entity other
than World;
(ii) Solicit, cause, encourage or in any way assist any person
or entity to solicit, any aviation business from any person or
entity who at such time is, or within the preceding twelve
(12) months, had been a customer of World, unless such
customer of World was also already a customer of such other
person or entity on the date of Xxxxxx' termination;
(iii) Induce or attempt to induce any of World's officers,
directors, or employees to terminate their employment or
relationship with World, or induce or attempt to induce any
such persons to provide aviation-related services or services
similar to those they provide for World for any other person,
firm or organization.
(c) Xxxxxx agrees that the restrictions set forth in this Agreement are
reasonable, proper, and necessitated by legitimate business interests
of World and do not constitute an unlawful or unreasonable restraint
upon Xxxxxx'x ability to earn a livelihood. The parties agree that in
the event any of the restrictions in this Agreement are found to be
over broad or unreasonable by a tribunal or court of competent
jurisdiction, the parties agree that this Agreement should be enforced
to the maximum extent allowed by applicable law, and the parties
authorize and request such court or tribunal to determine the maximum
time, geographic area, activity and other applicable limitations
allowable by law and to reform the applicable provisions to such
maximum limitations.
(d) Xxxxxx acknowledges that it may be impossible to assess the
monetary damages incurred by his violation of this Agreement, or any of
its terms, and that any threatened or actual violation or breach of
this Agreement, or any of its terms, will constitute immediate and
irreparable injury to World. Therefore, Xxxxxx expressly agrees that,
in addition to any and all monetary damages and other remedies and
relief available to World as a result of Xxxxxx'x violation or breach
of this Agreement, World shall be entitled to an injunction restraining
Xxxxxx from violating or breaching this Agreement, or any of its terms
(and no bond or other security will be required in connection
therewith); World will be entitled to specific performance of this
Agreement; and World will be entitled to recover its reasonable
attorneys' fees and costs incurred to enforce, or prosecute or defend
any action relating to, this Agreement. In the event World enforces
this Agreement through court order or other decree, Xxxxxx agrees that
the restrictions contained in this Agreement shall remain in effect for
a period of twenty four (24) consecutive months from the effective date
of such order or decree enforcing the Agreement.
(e) Section 9 of this Agreement, relating to arbitration, shall not
apply to this Section 6. The parties agree that any dispute between
them relating to or involving this Section 6, including without
limitation, any question concerning the construction, validity,
application, interpretation or alleged breach or threatened breach of
this Section 6, shall be litigated in a court in the Commonwealth of
Virginia.
(f) Section 4(h) 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.
(g) 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 his wife, or such
other 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. ARBITRATION. Except as described in Section 6, above, any dispute or
controversy arising under or in connection with this Agreement shall be settled
exclusively by arbitration, under the commercial arbitration rules of the
American Arbitration Association. The prevailing party in any such arbitration,
or any court action to enforce or vacate an arbitration award, shall be entitled
to its costs and reasonable attorneys fees from the other party.
10. 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.
11. 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.
12. 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.
13. 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.
14. WAIVER OF MODIFICATION OF AGREEMENT. No waiver or modification of this
Agreement shall be valid unless in writing and duly executed by both parties.
15. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
each of which together will constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
WORLD AIRWAYS, INC.
By: ________________________________
Xxxxxxx X. Xxx
President and CEO
________________________________
Xxxxxxxx X.Xxxxxx, Xx.
