EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT dated as of December 1, 1997 ("Agreement"),
is by and between World Airways, Inc., a Delaware corporation, its successors
and assigns (hereinafter "World") and Xxxxx X. Xxxxxxx ("Xxxxxxx").
WHEREAS, Xxxxxxx has agreed to serve as World's Executive Vice
President and Chief Financial Officer, as of the date hereof;
NOW, THEREFORE, World and Xxxxxxx, 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 Xxxxxxx and Xxxxxxx accepts such employment.
2. TERM. The period of employment shall be from the date first written
above through November 30, 1999, unless further extended or sooner terminated as
hereinafter set forth. 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 Xxxxxxx at least one year prior to the Agreement's expiration. If
Xxxxxxx does not wish to renew this Agreement at its expiration, or wishes to
renew on different terms, Xxxxxxx shall give written notice to World at least
six months prior to the Agreement's 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. Xxxxxxx shall continue to serve as Executive
Vice President and Chief Financial Officer with the duties performed as of the
date hereof, as those duties may be changed from time to time by mutual
agreement, except that Douglas's responsibilities may not be modified in a way
that would be inconsistent with the status of a senior executive. Following a
Change of Control (as hereinafter defined), Douglas's responsibilities may not
be changed without mutual agreement. Xxxxxxx 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. Xxxxxxx shall devote all of his
working time, attention, knowledge and skills solely to the business and
interest of World. Xxxxxxx 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 President. Xxxxxxx 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. Xxxxxxx shall receive a minimum salary of
$200,000 per annum payable in accordance with the payroll procedures for World's
salaried employees in effect during the term of this Agreement.
(b) ELIGIBILITY FOR BONUSES. Xxxxxxx shall be eligible to
receive an annual bonus pursuant to World's 1997 management incentive
compensation plan and successor plans, if any, as the Board of Directors may
adopt from time to time. A copy of the 1997 Plan is attached as EXHIBIT A
hereto.
(c) PERFORMANCE STOCK OPTIONS. Xxxxxxx 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 Xxxxxxx
dated December 1, 1997 (the "Option Agreement"), a copy of which is attached as
EXHIBIT B hereto.
(d) STOCK OWNERSHIP REQUIREMENTS. Xxxxxxx agrees to hold at
least the following number of shares in any combination of WorldCorp Common
Stock and/or World Airways Common Stock for the balance of the term of this
Agreement (and for any renewals thereof), from the EARLIER to occur of : (1)
Douglas's exercise of World Airways options in the amounts set forth below after
December 1, 1997; or (2) the dates indicated below. For purposes of this
Agreement, any shares of WorldCorp Common Stock and/or World Airways Common
Stock (i) allocated to Xx. Xxxxxxx'x ESSOP account, (ii) owned by members of
Douglas's immediate family (i.e., spouse, sons or daughters) or (iii) a
revocable grantor trust of which he is the grantor shall be counted toward
Douglas's stock ownership and holding requirements.
OPTIONS EXERCISED DATE REQUIRED COMMON STOCK HOLDINGS
----------------- ---- ------------------------------
...56,250 December 1, 1999 3,750
..75,000 December 1, 2000 5,625
..93,750 December 1, 2001 7,500
112,500 9,375
131,250 11,250
150,000 13,125
(e) BUSINESS EXPENSES. Xxxxxxx 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.
(f) FRINGE BENEFITS. Xxxxxxx shall be entitled to participate
in all employee benefit plans made available from time to time to all senior
executives of World in accordance with the terms of such plans. Xxxxxxx shall
receive a signing bonus of $25,000 and moving expenses, as set forth in the
attached letter dated November 21, 1997.
(g) PERSONNEL POLICIES, CONDITIONS AND BENEFITS. Except as
otherwise provided herein, Douglas's 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, Xxxxxxx shall be entitled to one (1) month of paid
vacation in each calendar year, and all paid holidays observed by World.
(h) INDEMNIFICATION; D&O INSURANCE. Subject to Section 6(f) of
this Agreement, World shall provide (or cause to be provided) to Xxxxxxx
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
Xxxxxxx 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 Xxxxxxx and World Airways, Inc. (the
"Indemnity Agreement").
5. TERMINATION OF EMPLOYMENT.
(a) DEATH. Douglas's employment hereunder shall terminate upon
his death, in which event World shall have no further obligation to Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx, in which
event World shall have no obligation to Xxxxxxx with respect to compensation
under Section 4(a) of this Agreement. The term "disability" means a physical or
mental illness that will prevent Xxxxxxx from performing the essential functions
of his job for at least twelve (12) months or is likely to result in death. If
Xxxxxxx 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 President and 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 Xxxxxxx in written performance appraisals
and/or other written communications (including, but not limited to memos and/or
letters) by the President and 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, Xxxxxxx 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, Xxxxxxx was guilty of conduct set forth in 5(c)(i)(A), (B), (C) or (D)
provided, however, that Xxxxxxx may not be terminated for Cause hereunder
unless: (1) Xxxxxxx receives prior written notice of World's intention to
terminate this Agreement for Cause and the specific reasons therefor; and (2)
Xxxxxxx 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 Xxxxxxx 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 Xxxxxxx 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 one year'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 Xxxxxxx under this paragraph is
subject to any federal or state excise tax, World shall pay to Xxxxxxx 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 Xxxxxxx agrees to assist World Airways by using
his best efforts to structure matters so that any payment to Xxxxxxx 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 Xxxxxxx
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 Xxxxxxx 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 Xxxxxxx as to whether
the termination was for Cause, that issue shall be submitted by Xxxxxxx 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 XXXXXXX. Xxxxxxx may terminate his employment hereunder
for purposes of this Agreement "Good Reason") after giving at least 30 days
notice in the event that, without Xxxxxxx' consent: (i) World relocates its
general and administrative offices or Douglas's 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; (iv) World fails, without Douglas's consent, to pay Xxxxxxx 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 Xxxxxxx participates which is material
to Douglas'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 Douglas'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 Douglas's participation relative to
other participants; (vi) World fails to continue to provide Xxxxxxx with
benefits substantially similar to those enjoyed by Xxxxxxx under any of World's
pension, life insurance, medical, health and accident, or disability plans in
which Xxxxxxx was participating, World takes any action which would directly or
indirectly materially reduce any of such benefits or deprive Xxxxxxx of any
material fringe benefit enjoyed by Xxxxxxx, or World fails to provide Xxxxxxx
with the number of paid vacation days to which Xxxxxxx is entitled hereunder;
(vii) World terminates, or proposes to terminate, Douglas's 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
Xxxxxxx 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 Xxxxxxx 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) 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.
(g) "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.
(h) NOTICE OF TERMINATION. Termination of this Agreement by
World or termination of this Agreement by Xxxxxxx shall be communicated by
written notice to the other party hereto, specifically indicating the
termination provision relied upon.
(i) COMPANY PROPERTY. At the termination of Xxxxxxx'
employment, whether voluntary or involuntary, Xxxxxxx shall return all company
property, including without limitation all electronic and paper files and
documents and all copies thereof.
6. CONFIDENTIALITY/RESTRICTIVE COVENANT.
(a) Xxxxxxx recognizes and acknowledges that he acquired and
will continue to 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.
Xxxxxxx 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, Xxxxxxx 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, or 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 Xxxxxxx' 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) Xxxxxxx 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 Douglas's 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) Xxxxxxx 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, Xxxxxxx expressly agrees that, in addition to any and all monetary
damages and other remedies and relief available to World as a result of
Douglas's violation or breach of this Agreement, World shall be entitled to an
injunction restraining Xxxxxxx 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, Xxxxxxx 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 Xxxxxxx 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 Douglas's death, or otherwise due upon his death, shall be his wife, or
such other person or persons as Xxxxxxx shall designate in writing to World. If
no such beneficiary shall survive Xxxxxxx, 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 Xxxxxxx, either solely or jointly with other person(s), (1) during
Douglas's 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 Xxxxxxx.
(b) Xxxxxxx 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) Xxxxxxx 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) Xxxxxxx 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. Xxxxxxx 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.
President and CEO
__________________________________
Xxxxx X. Xxxxxxx
