Exhibit 10.12
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SALARY CONTINUATION AND SEVERANCE AGREEMENT
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1.0 PARTIES AND DATE
1.1 Parties. The parties to this salary continuation and consulting
agreement (this "agreement") are Kitty Hawk, Inc. ("Kitty Hawk"), with its
principal place of business located at 0000 X. 00xx Xxxxxx, P.O. Box 612787, XXX
Xxxxxxxxxxxxx Xxxxxxx, Xxxxx 00000, with a fax number of (000) 000-0000, and
Xxxxx X. Xxxxx ("Xxxxx"), who resides at 0000 Xxxxxxxx Xxxxx Xxxx, Xxxxxxxxxxx,
Xxxxx 00000.
1.2 Date. This agreement is dated and effective November 4, 2002.
2.0 RECITATIONS AND ACKNOWLEDGMENTS
2.1 Previous Employment. Xxxxx was the Vice President and General Counsel
of Kitty Hawk, and a member of its Board of Directors, and voluntarily resigned
all of his offices on November 4, 2002. Xxxxx has considerable knowledge and
experience related to the business of Kitty Hawk as a result of his prior
affiliation with Kitty Hawk as an employee; and Kitty Hawk desires to recognize
the valuable and meritorious services performed for Kitty Hawk by Xxxxx during
the many years in which he served Kitty Hawk. This agreement supersedes,
modifies and restates all previous agreements between Xxxxx and Kitty Hawk.
3.0 TERMS OF SALARY CONTINUATION
3.1 Compensation. As severance compensation, Kitty Hawk will pay Xxxxx six
(6) months worth of what was Craig's basic annual compensation at time of his
resignation, which was $225,000.00. This severance shall be payable in equal
semi-monthly installments, the first being payable November 15, 2002, and the
last being payable April 30, 2003, it being understood that Kitty Hawk shall
have the right to deduct therefrom, if required or deemed advisable, all taxes
which may be required to be deducted and withheld under any provision of
applicable law (including but not limited to social security payments, federal
income tax withholding and any other required deductions).
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3.2 Medical Insurance. For a period of six (6) months ending April 30,
2003, Kitty Hawk shall exert reasonable efforts to cause Xxxxx to be covered
under Xxxxx Xxxx'x medical and hospitalization insurance coverage, at no cost to
Xxxxx, and such coverage shall be at least substantially equivalent to the
coverage that is was provided to Xxxxx under Xxxxx Xxxx'x employee medical plans
at the time of his resignation. The insurance described in this paragraph shall
be provided only if coverage is permitted by the terms of Xxxxx Xxxx'x medical
and hospitalization insurance policy as in effect at any applicable time
hereunder. If it is determined that Xxxxx is not eligible to be covered by Xxxxx
Xxxx'x medical and hospitalization insurance policy, Kitty Hawk agrees to pay
Craig's COBRA premiums for as long as he otherwise would be entitled to the
insurance coverage provided in this P. 3.2.
3.3 Transitional Obligations and Office Access. Xxxxx agrees to use his
reasonable efforts to assist Kitty Hawk in a successful and smooth transition of
the oversight of the legal, human resources and security functions of Kitty Hawk
to those individuals as designated by Xxxxx Xxxx'x Chief Executive Officer.
Xxxxx shall be allowed to maintain his office at Kitty Hawk through December 3,
2002, and during such period shall have the same access to Xxxxx Xxxx'x systems,
information and files that was available to him before his resignation.
Thereafter, Xxxxx shall have, with the consent of Xxxxx Xxxx'x Chief Executive
Officer or such person as he shall designate (which shall not be unreasonably
withheld), access to Xxxxx Xxxx'x files, documents and other records, regardless
of format, that he determines to be reasonably related to (i) Craig's work done
on behalf of Kitty Hawk and (ii) the defense of the lawsuit filed against him by
M. Xxx Xxxxxxxxxxx.
3.4 Proprietary information.
X. Xxxxx shall diligently safeguard Xxxxx Xxxx'x proprietary information
and shall surrender to Kitty Hawk or destroy all written or recorded
evidence of Xxxxx Xxxx'x proprietary information, and shall return any
Kitty Hawk property in Craig's possession, once the Xxxxxxxxxxx
litigation has concluded.
X. Xxxxx shall never disclose, disseminate or utilize Xxxxx Xxxx'x
proprietary information unless Xxxxx Xxxx'x chief executive officer
expressly authorizes the disclosure, dissemination or utilization in
writing, except to the extent reasonably necessary for his defense of
the Xxxxxxxxxxx litigation, and then only consistently with the
applicable rules of procedure governing the litigation and with the
Delaware General Corporation Law and Xxxxx Xxxx'x certificate of
incorporation.
C. For the purpose of this agreement, the term "proprietary information"
shall specifically not include: (a) information that is now in or
hereafter enters
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the public domain without a breach of this agreement by Xxxxx; (b)
information Xxxxx knew already prior to the time of his employment by
Kitty Hawk; (c) information that is obtained, after the date of
Craig's departure from Kitty Hawk, by Xxxxx from any third party that
is lawfully in possession of such information, but only if such
disclosure of information to Xxxxx does not violate any contractual or
legal obligation to Kitty Hawk on the part of such third party or does
not breach a confidential relationship of such third party to Kitty
Hawk; and (d) information required or requested to be disclosed by
court order, subpoena, data request or other legal process or by
applicable regulatory authorities; provided, however, that Xxxxx
provide Kitty Hawk with prompt written notice of any such request or
requirement so that Kitty Hawk may seek a protective order or other
appropriate remedy.
D. The covenants and agreements of Xxxxx set forth in this P. 3.4 are of
a continuing nature and shall survive the expiration, termination or
cancellation of this agreement regardless of the reason therefor.
E. Because of the unique nature of the Confidential Information, Xxxxx
acknowledges, understands and agrees that Kitty Hawk will suffer
immediate and irreparable harm if Xxxxx fails to comply with any of
his obligations under this P. 3.4 of this agreement, and that monetary
damages will be inadequate to compensate Kitty Hawk for such breach.
Accordingly, Xxxxx agrees that Kitty Hawk shall, in addition to any
other remedies available to it at law or in equity, be entitled to
temporary, preliminary, and permanent injunctive relief to enforce the
terms of P. 3.4 without the necessity of proving inadequacy of legal
remedies or irreparable harm.
4.0 RELEASES
A. IN CONSIDERATION OF THE COMPENSATION PROVIDED IN P. 3.1 ABOVE AND
OTHER GOOD AND VALUABLE CONSIDERATION, THE SUFFICIENCY OF WHICH IS
HEREBY ACKNOWLEDGED, XXXXX HEREBY RELEASES, TO THE GREATEST EXTENT
ALLOWABLE BY APPLICABLE LAW, ALL CLAIMS, KNOWN OR UNKNOWN, BASED UPON
ACTIONS, INACTIONS OR BREACHES THROUGH NOVEMBER 4, 2002 AGAINST KITTY
HAWK, ITS SUBSIDIARIES AND EACH OF THEIR RESPECTIVE OFFICERS,
DIRECTORS, EMPLOYEES AND AGENTS, RELATED TO HIS EMPLOYMENT AND HIS
RESIGNATION, EXCEPT FOR (I) ANY CLAIM OF WILLFUL BREACH, (II) CLAIMS
OF ANY KIND AGAINST M. XXX
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XXXXXXXXXXX UPON WHICH XXXXXXXXXXX IS NOT ACTUALLY INDEMNIFIED BY
KITTY HAWK AS POST-PETITION CLAIMS, AND (III) THE INDEMNIFICATION
OBLIGATIONS FOR COSTS OF DEFENSE THAT MAY ARISE AS A RESULT OF ANY
CLAIMS OF ANY KIND ASSERTED BY M. XXX XXXXXXXXXXX AGAINST XXXXX FOR
ACTIONS TAKEN IN CRAIG'S NORMAL COURSE AND SCOPE OF HIS EMPLOYMENT
WITH KITTY HAWK. SUBJECT TO THE PRECEDING SENTENCE, THIS FULL, FINAL
AND UNCONDITIONAL RELEASE SHALL INCLUDE, BUT IS NOT LIMITED TO, ANY
AND ALL CLAIMS AND CAUSES OF ACTION WHATSOEVER, WHETHER FOUNDED ON
CONTRACT (EXCEPT FOR THIS AGREEMENT), TORT, STATUTE, REGULATION
(FEDERAL, STATE OR LOCAL), COMMON LAW, OR ANY OTHER THEORY OR GROUNDS,
INCLUDING BUT NOT LIMITED TO, ANY ADMINSTRATIVE CLAIMS, AND CLAIMS
UNDER THE OCCUPATIONAL SAFETY AND HEALTH ACT, THE AMERICANS WITH
DISABILITIES ACT, TITLE VII OF THE CIVIL RIGHTS ACT OF 1964 AND ANY
SUBSEQUENT YEARS (INCLUDING, BUT NOT LIMITED TO, THE CIVIL RIGHTS ACT
OF 1991), THE OLDER WORKERS BENEFIT PROTECTION ACT, THE FEDERAL AGE
DISCRIMINATION IN EMPLOYMENT ACT, AND ANY DISCRIMINATION ON THE BASIS
OF NATIONAL ORIGIN, SEX, RACE, AGE, HANDICAP, OR MARITAL STATUS,
BREACH OF CONTRACT, BREACH OF ANY OTHER EMPLOYMENT AGREEMENT OR
CONTRACT, PROMISSORY ESTOPPEL, HOSTILE WORK ENVIRONMENT, WRONGFUL
DISCHARGE, SEXUAL HARASSMENT, BREACH OF COVENANT OF GOOD FAITH AND
FAIR DEALING, HARASSMENT AND OR DISCRIMINATION OF ANY TYPE,
INTENTIONAL OR NEGLIGENT INFLICTION OF EMOTIONAL DISTRESS, WRONGFUL
TERMINATION, FRAUD, MISREPRESENTATION, DEFAMATION, INTERFERENCE WITH
PROSPECIVE ECONOMIC ADVANTAGE, FAILURE TO PAY WAGES OR OTHER MONIES
OWED. ADDITIONALLY, XXXXX HEREBY RELEASES AND WAIVES ANY CLAIM FOR
INDEMNIFICATION AGAINST KITTY HAWK OF ANY DAMAGES AWARDED TO M. XXX
XXXXXXXXXXX IN A FINAL, NON-APPEALABLE JUDGEMENT ARISING OUT OF THAT
CERTAIN ADVERSARIAL PROCEEDING NO. 0204164, STYLED M. XXX XXXXXXXXXXX
V. XXXXX X. XXXXX, PENDING IN THE UNITED STATES BANKRUPTCY COURT FOR
THE NORTHERN DISTRICT OF TEXAS, FORT WORTH DIVISION, IN XXXXX XXXX'X
CHAPTER 11
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PROCEEDING BEING JOINTLY ADMINISTERED UNDER CASE NO. 400-42141-BJH-11.
B. KITTY HAWK HEREBY RELEASES XXXXX OF ALL CLAIMS, KNOWN OR UNKNOWN,
BASED UPON ACTIONS, INACTIONS OR BREACHES THROUGH NOVEMBER 4, 2002,
AGAINST XXXXX IN CONNECTION WITH HIS OBLIGATIONS ARISING OUT OF OR IN
CONNECTION WITH THIS HIS EMPLOYMENT BY KITTY HAWK, EXCEPT SUCH RELEASE
SHALL NOT APPLY TO CLAIMS THAT ARE THE RESULT OF CRAIG'S WILLFUL
MISCONDUCT, INCLUDING BUT NOT LIMITED TO UNDISCOVERED INTENTIONAL
BREACHES OF PROHIBITIONS AGAINST THE DISCLOSURE OF THE CONFIDENTIAL
INFORMATION OF KITTY HAWK OR EITHER OF ITS AFFILIATES, OR A COMMITMENT
MADE TO BIND KITTY HAWK OR EITHER OF ITS AFFILIATES WITHOUT APPARENT
OR REAL AUTHORITY. NOTHING HEREIN SHALL BE DEEMED A MODIFICATION OF
THE INDEMNICATION PROVISIONS OF XXXXX XXXX'X CERTIFICATE OF
INCORPORATION, AND IF A CONFLICT ARISES BETWEEN THIS AGREEMENT AND THE
CERTIFICATE OF INCORPORATION, THE CERTIFICATE OF INCORPORATION SHALL
GOVERN.
5.0 GENERAL PROVISIONS
5.1 Entire Agreement and Amendments. This agreement is the entire agreement
between Kitty Hawk and Xxxxx with respect to the subject matter set forth in
this agreement and it merges and supersedes all former agreements, promises or
representations, whether oral or written, express or implied, that relate to
Craig's employment with Kitty Hawk, except that it is not intended to modify any
obligation of M. Xxx Xxxxxxxxxxx to Xxxxx under or with respect to any such
agreement. To amend this agreement, Kitty Hawk and Xxxxx must sign a written
amendment that identifies by paragraph number the provision that it purports to
amend. No noncomplying course of dealing or waiver shall be construed to amend
this agreement.
5.2 Construction. This agreement has been executed and delivered in Texas,
whose substantive law (excluding conflict of laws rules that might apply the
substantive law of another jurisdiction) shall govern its effect and
construction, except that Delaware corporate law shall govern the internal
affairs of Kitty Hawk and other corporate matters where applicable. No rule of
construction resolving ambiguity against a drafting party shall apply. This
agreement binds and benefits the parties and their respective heirs, personal
representatives, successors and assigns. Xxxxx agrees that his obligations under
this agreement to protect Xxxxx Xxxx'x proprietary information are in addition
to Craig's
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implied obligations under Texas law, and that all of those obligations may be
enforced by equitable remedies, such as injunction, as well as by damages
resulting from their breach. If any provision of this agreement is invalid or
unenforceable, the remaining provisions shall nevertheless be enforceable.
5.3 Notices. All notices hereunder must be in writing. Notices may be given
by mail, fax or other delivery to a party at its notice address, which is that
party's address in P. 1.0 unless that party has designated another notice
address by notice hereunder. A notice given by Federal Express or U.S. Express
Mail, fee prepaid, return receipt requested, addressed to the intended recipient
at its notice address, will be deemed given three business days after deposit
with Federal Express or the U.S. Postal Service. Any notice given by other means
will be effective only when received by the addressee.
5.4 Breach, Notice and Time to Cure. In the event that either party
breaches this agreement, the non-breaching party shall give the breaching party
written notice of such breach and the breaching party shall have the opportunity
for five (5) business days from the date of receipt of such notice to cure the
breach.
5.5 Binding Agreement to Arbitrate Disputes. Any controversy or claim
arising out of or relating to this agreement, performance under it, or the
arbitrability of any claim between the parties, must be settled exclusively by
arbitration under the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"); except that (i) P. 5.2 must govern applicable law and
construction, (ii) no arbitration demand or action upon a claim arising out of
or relating to this agreement or its performance may be commenced more than two
years after the cause of action accrues, (iii) the locale of any arbitration
must be Dallas, Texas, (iv) the arbitration shall be conducted by a single
arbitrator, (v) the language of the arbitration must be English, (vi) any award
must state the arbitrator's material findings of fact and conclusions of law,
(vii) a party may seek preliminary injunctive or other equitable relief from any
court of competent jurisdiction only to preserve the status quo pending
selection of the arbitrator, (viii) the arbitrator may by interim or final award
grant declarative and injunctive and other equitable relief; and (ix) a
prevailing party in litigation to require arbitration or to obtain preliminary
relief pending selection of an arbitrator, in arbitration, or in litigation to
confirm or enforce an arbitration award will be entitled to recover its
reasonable attorneys' fees and costs. Any suit to require arbitration under this
agreement, or to enforce judgment upon an arbitration award, may be brought in
any court of competent jurisdiction.
/S/ XXXXX X. XXXXX
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XXXXX X. XXXXX
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KITTY HAWK, INC.
By: /S/ XXXXXX X. XXXXXX, XX.
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Xxxxxx X. Xxxxxx, Xx.,
President and Chief Executive Officer
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