AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement (hereinafter referred to as the
"Agreement", between World Airways, Inc., a Delaware corporation (hereinafter
referred to as "World" or "the Company") and Xxxxxx X. Xxxxxx hereinafter
referred to as ("Xxxxxx") is entered into this 8th day of July, 1999, and
restates, amends and replaces in its entirety without a break in continuity, the
Employment Agreement in effect between the parties dated May 1, 1999.
WHEREAS, Xxxxxx is serving as World's Chief Executive Officer and Chairman of
the Board of Directors, and
WHEREAS, Xxxxxx relinquished the position of President to Xx. Xxxxxx X. Xxxxxx
effective June 1, 1999, and
WHEREAS, Xxxxxx and the Company wish to correct the provision relating to
exercisability of options in the event of a Change in Control (as defined
herein).
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, 2001, 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,
2000, Xxxxxx shall initiate discussions with the World Airways 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, 2000.
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' responsibilities, except that Xxxxxx'
responsibilities may not be modified in a way that would be inconsistent with
the status of President, Chief Executive Officer and Chairman of the Board.
Following a Change of Control (as hereinafter defined), Xxxxxx' 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 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
Washington, DC 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. Xxxxxx agrees to purchase $100,000.00 worth of
common stock or debentures of the Company.
(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' termination,
or until Xxxxxx obtains comparable coverage, whichever is earlier.
(f) PERSONNEL POLICIES, CONDITIONS AND BENEFITS. Except as otherwise
provided herein, Xxxxxx' 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 April 15, 1999, between Xxxxxx and World
Airways, Inc. (the "Indemnity Agreement").
5. TERMINATION OF EMPLOYMENT.
(a) DEATH. Xxxxxx' 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 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 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 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 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 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 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' 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; (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' 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' 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'
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' 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.
(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' 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' 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' 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' 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' 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.
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, Xx.
Chairman, Executive Committee
___________________________________
Xxxxxx X. Xxxxxx
