Exhibit 10.23
THIRD AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Third Amended and Restated Employment Agreement (hereinafter
referred to as the "Agreement"), between World Airways, Inc., a Delaware
corporation (hereinafter referred to as "World"), and Xxxxxx X. Xxxxxx, an
individual and resident of Georgia (hereinafter referred to as "Xxxxxx"), is
entered into as of the 1st day of June, 2002, and restates, amends, and replaces
in its entirety, without a break in continuity, the Second Amended and Restated
Employment Agreement dated June 1, 2000 between the parties.
WHEREAS, the parties wish to extend the term of Xxxxxx'x employment as
World's Chief Executive Officer and Chairman of the Board of Directors on the
terms and subject to the conditions set forth herein, and
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 May 1, 1999, through
December 31, 2004, 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
June 30, 2003, Xxxxxx shall initiate discussions with World's Board of Directors
(hereinafter "Board") 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 of the Executive Committee of the Board. If the
Board does not wish to renew this Agreement at its expiration, or wishes to
renew on different terms, the Board shall give written notice to Xxxxxx no later
than June 30, 2003.
3. Position and Duties. Xxxxxx shall continue to serve as Chief
Executive Officer and Chairman of the Board with the duties performed as of June
1, 1999, as those duties may be changed from time to time. The Board 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 Chief Executive Officer and Chairman of the
Board. 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
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comply with all policies, rules and regulations of World and will advance and
promote to the best of his ability the business and welfare of World. 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 Board pursuant to a resolution duly adopted by the
affirmative vote of a majority of the entire membership of the Board, excluding
the vote of Xxxxxx. 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 Atlanta, Georgia metropolitan area will require mutual agreement.
4. Compensation and Related Matters.
(a) Base Salary. Xxxxxx shall receive a minimum salary of
$350,000 per annum payable in accordance with the payroll procedures for World's
salaried employees in effect during the term of this Agreement.
(b) Performance Stock Options. Xxxxxx has been granted (i)
100,000 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 April 2, 1999 (the "Option Agreement No.1"), and (ii) 900,000
options to purchase World's Common Stock pursuant to the 1999 Chief Executive
Stock Option Plan (the "CEO Plan") as set forth in the Stock Option Agreement
between World and Xxxxxx dated April 2, 1999 (the two option grants together
referred to as the "Options"). In the event of a Change in Control as defined
below, all Options granted shall be immediately exercisable.
(c) Equity Ownership. The parties acknowledge that Xxxxxx'x
obligation to purchase $100,000.00 worth of common stock or debentures of World
has been satisfied and discharged.
(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. 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.
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(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 World'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 April 15, 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 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 Section 5(c)(ii) below, the Chairman of the Executive Committee of the
Board pursuant to a resolution duly adopted by the affirmative vote of a
majority of the entire
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membership of the Board, excluding the vote of Xxxxxx, at a meeting of the Board
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 Chairman of the Executive Committee of the Board
pursuant to a resolution duly adopted by the affirmative vote of a majority of
the entire membership of the Board, excluding the vote of Xxxxxx, (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 pursuant
to a resolution duly adopted by the affirmative vote of a majority of the entire
membership of the Board, excluding the vote of Xxxxxx, at a meeting of the Board
finding that, in the good faith opinion of the Board, Xxxxxx was guilty of
conduct set forth in Section 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 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 month's 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 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 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
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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'x consent: (i) World
relocates its general and administrative offices or Xxxxxx' place of employment
to an area other than the Washington, D.C. or Atlanta, Georgia 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; (iv) World fails, without Xxxxxx' 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, or 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) 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 six months,
terminate this Agreement without further obligation on the part of Xxxxxx or
World.
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(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 World, 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.
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(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) World Property. At the termination of Xxxxxx'x employment,
whether such termination is voluntary or involuntary, Xxxxxx shall return all
World 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, World 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
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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'x 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 overbroad 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
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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 state in which World maintains its principal executive offices.
(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 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
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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 in which World maintains its principal executive
offices.
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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.
WORLD AIRWAYS, INC.
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By: _________________________________
Chairman, Executive Committee
_________________________________
Xxxxxx X. Xxxxxx
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