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EXHIBIT 10.6
NON-QUALIFIED STOCK OPTION AGREEMENT
This NON-QUALIFIED STOCK OPTION AGREEMENT (this "AGREEMENT") dated as
of February 24, 1999, is entered into by and among Xxxxxx X. Xxxxxx
("OPTIONEE"), Kitty Hawk, Inc., a Delaware corporation (the "COMPANY"), and M.
Xxx Xxxxxxxxxxx ("XXXXXXXXXXX").
RECITALS
A. This Agreement is entered into pursuant to the Kitty Hawk, Inc. 1999
Executive Stock Option Plan (the "PLAN"), dated as of February 24,
1999.
B. Optionee is currently the Company's President and Chief Operating
Officer and is a member of the Company's Board of Directors.
C. The Company desires to grant Optionee a Non-Qualified Stock Option (the
"OPTION") to purchase 400,000 shares of the Company's Common Stock, par
value $.01 per share, (the "OPTIONED SHARES").
D. Optionee and the Company desire that this Option replace and supersede
the option (the "PRIOR OPTION") granted by that certain Stock Option
Agreement (the "PRIOR OPTION AGREEMENT"), dated April 27, 1998, by and
between Optionee and the Company, and/or that certain Modified and
Restated Employment Agreement (the "MODIFIED EMPLOYMENT AGREEMENT"),
dated April 27, 1998, by and between Optionee and the Company, and that
upon execution of this Agreement, the Prior Option shall be superseded
hereby pursuant to Section 17 hereof.
E. Optionee and the Company desire to set forth herein the terms and
conditions of the Option.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged and
confessed by each of the parties hereto, the parties hereto agree as follows:
1. Grant of Option. The Company hereby grants to Optionee until 11:59
p.m., Dallas, Texas time, on February 24, 2009 (the "EXPIRATION DATE") the right
and option to purchase the Optioned Shares from the Company at a price of $16.75
per Optioned Share (the "EXERCISE PRICE").
2. Subject to Plan; Stockholder Vote.
(a) This Option is issued pursuant to the Plan, and the
obligations of the Company and the rights of the Optionee are
subject to all applicable laws,
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rules, and regulations and provisions of the Plan. This Option
and its exercise are subject to the terms of the Plan.
Capitalized terms used herein, but not defined herein, shall
have the meanings assigned to such terms in the Plan.
(b) This Option is granted subject to approval of the Plan by the
Company's stockholders. In that regard, Xxxxxxxxxxx hereby
irrevocably agrees to vote all shares of the Company's Common
Stock, par value $0.01 per share ("COMMON STOCK"), that
Xxxxxxxxxxx is entitled to vote (including specifically those
shares of Common Stock owned by Xxxxxx X. Kalitta which
Xxxxxxxxxxx is entitled to vote) in favor of approving the
Plan.
3. Exercise of Option. Subject to Sections 4 and 5 below, Optionee may
exercise this Option, in whole or from time to time in part, at any time before
the Expiration Date, by sending written notice thereof to the Company in
accordance with the provisions of this Agreement. This Option may be exercised
only with respect to full shares in increments of not less than 20,000 shares at
a time, and no fractional shares of stock shall be issued.
4. Vesting; Time of Exercise. Except as specifically provided in
Sections 5 and 6 of this Agreement, this Option shall be vested and exercisable
in the following cumulative installments:
(a) First installment. Up to one-half of the total Optioned Shares
at any time following the date hereof.
(b) Second installment. Up to an additional one-quarter of the
total Optioned Shares at any time following April 1, 2000.
(c) Third installment. Up to the remaining one-quarter of the
total Optioned Shares at any time following April 1, 2001.
Notwithstanding the foregoing, in the event of:
(i) any liquidation or dissolution of the Company, any
reorganization, merger or consolidation pursuant to which the Company
is not the surviving or resulting corporation, or any proposed sale of
substantially all of the assets of the Company, all unvested rights to
acquire Optioned Shares shall immediately vest and become exercisable;
(ii) termination of Optionee's employment by the Company
without cause, or because of Optionee's death or disability, all
unvested rights to acquire Optioned Shares shall immediately vest and
become exercisable; and
(iii) a Change of Control, all unvested rights to acquire
Optioned Shares shall immediately vest and become exercisable.
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5. Forfeiture. Subject to earlier termination under Section 6
hereof, this Option, and all unissued Optioned Shares granted to Optionee
hereunder, will terminate and be forfeited on the day and at the time of the
first of the following to occur:
(a) the Expiration Date;
(b) 5 p.m. on the date which is twelve (12) months following the
Optionee's termination of service as an employee of the
Company due to death;
(c) immediately upon termination of Optionee's employment by
Optionee's voluntary resignation or retirement before Optionee
reaches age 65 (other than as a result of death or
disability); and
(d) immediately upon termination of Optionee's employment for
cause.
In addition, if during or after the termination of Optionee's
employment with the Company, Optionee directly or indirectly engages in
competition with the Company or discloses any proprietary and confidential
business information of the Company or its affiliates in breach or violation of
any agreement with or implied obligation to the Company, the Company may
immediately by delivery of notice to Optionee, terminate Optionee's vested and
unexercised and unvested rights under this Option. The parties hereto agree that
any termination of such rights pursuant to the foregoing sentence is not
intended nor to be construed as a waiver or relinquishment by the Company of any
other claim or remedy against Optionee for any such breach or violation.
6. Changes in Capitalization.
(a) The existence of this Option shall not affect in any way the
right or power of the Company or its stockholders to make or
authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of
the Company, or any issue of bonds, debentures, preferred or
prior preference stocks ranking prior to or otherwise
affecting the Common Stock or the rights thereof (or any
rights, options or warrants to purchase same), or the
dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar
character or otherwise.
(b) In the event of any liquidation or dissolution of the Company,
any reorganization, merger or consolidation pursuant to which
the Company is not the surviving or resulting corporation, or
of any proposed sale of substantially all of the assets of the
Company, there shall be substituted for each share of Common
Stock subject to the unexercised portion of the Option that
number of shares of each class of stock or other securities or
that amount of cash, property or assets that the Optionee
would have
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received on a per share basis had this Option been exercised
in full prior to such event. Notwithstanding the foregoing,
however, the Board, in its sole discretion, may cancel this
Option at least thirty (30) days prior to the effective date
of any such liquidation or dissolution of the company, any
reorganization, merger or consolidation, or of any such
proposed sale of substantially all of the assets of the
Company, and give notice to Optionee of its intention to
cancel the Option and permit the purchase during the thirty
(30) day period following the delivery of such notice of any
or all of the shares subject to the Option, including shares
as to which such Option would not otherwise be exercisable.
(c) If before the termination hereof, Common Stock is changed
into, or exchanged for a different number or kind of shares or
securities of the Company through reorganization, merger,
recapitalization, reclassification, stock split, stock
dividend, or similar transaction, the description of the
undelivered Optioned Shares will be deemed modified so that
the undelivered Optioned Shares shall be of the same class and
character as the holder the Optioned Shares would have been
entitled to receive had such undelivered Optioned Shares been
delivered and outstanding before the change was effected.
7. Who May Exercise. Subject to the terms and conditions set forth in
Sections 3, 4 and 5 above, during the lifetime of the Optionee, this Option may
be exercised only by the Optionee, or by the Optionee's guardian. If the
Optionee's service as an employee of the Company terminates as a result of death
or disability prior to the Expiration Date, and the Optionee has not exercised
this Option in full as to the maximum percentage of Optioned Shares set forth in
Section 4 hereof as of the date of death or disability, the following persons
may exercise the remaining exercisable portion of this Option on behalf of the
Optionee: (i) if the Optionee is disabled, the guardian of the Optionee; or (ii)
if the Optionee dies, the personal representative of his estate, or the person
who acquired the right to exercise this Option by bequest or inheritance or by
reason of the death of the Optionee; provided that this Option shall remain
subject to the other terms of this Agreement, the Plan, and applicable laws,
rules, and regulations.
8. Manner of Exercise; Taxes. This Option may be exercised by the
delivery of written notice to the Committee setting forth the Optionee's
intention to exercise the Option and the date of exercise thereof (the "EXERCISE
DATE") which shall be at least three (3) business days after giving such notice,
unless an earlier date shall have been mutually agreed upon. On the Exercise
Date, the Optionee shall deliver to the Company consideration with a value equal
to the Exercise Price multiplied by the number of Optioned Shares being
acquired. The aggregate Exercise Price must be tendered in cash with the notice
of exercise, or if Optionee elects in the notice of exercise, may be paid by
deducting from the shares to be delivered the number of such shares whose value
would equal the Exercise Price at their Fair Market Value. As used herein, "FAIR
MARKET VALUE" shall mean the average last trade value of the Common Stock on the
principal
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securities exchange on which the Common Stock is traded for the last five (5)
trading days preceding the date or event in question.
Upon payment of all amounts due from the Optionee, the Company shall
cause certificates for the Optioned Shares then being purchased to be delivered
to the Optionee at the address specified under Section 24 within ten (10)
business days after the Exercise Date. The obligation of the Company to deliver
the Optioned Shares shall, however, be subject to the condition that if at any
time the Committee shall determine, in its sole discretion, that the listing,
registration, or qualification of the Option or the Optioned Shares upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the Option or the issuance or purchase of
shares thereunder, the Option may not be exercised unless such listing,
registration, qualification, consent, or approval shall have been effected or
obtained free of any conditions not acceptable to the Committee.
If the Optionee fails to pay for any of the Optioned Shares specified
in such notice or fails to accept delivery thereof, the Optionee's right to
purchase any Optioned Shares may be terminated by the Company.
If the Company is required or entitled by applicable law to withhold
taxes in connection with the delivery of any shares hereunder, at the time and
as a condition of the delivery of such shares Optionee shall either (i) tender
to the Company the amount of such withholding in cash, or (ii) if then permitted
by applicable law and with the Company's consent (which the Company may not
withhold unreasonably), authorize the Company to deduct from the number of
shares to be delivered a number of shares of a value, determined by their then
fair market value, equal to the amount of such withholding. Any shares deducted
for withholding shall be deemed issued and delivered in determining the number
of Optioned Shares that have been delivered hereunder.
9. Non-Assignability. This Option is not assignable or transferable by
the Optionee, except by will or by the laws of descent and distribution.
10. Rights as Stockholder. The Optionee will have no rights as a
stockholder with respect to any shares covered by this Option until the issuance
of a certificate or certificates to the Optionee for the Optioned Shares.
11. Optionee's Representations. Notwithstanding any of the provisions
hereof, the Optionee hereby agrees that the Optionee will not exercise the
Option granted hereby, and that the Company will not be obligated to issue any
Optioned Shares to the Optionee hereunder, if the exercise thereof or the
issuance of such Optioned Shares shall constitute a violation by the Optionee or
the Company of any provision of any law or regulation of any governmental
authority. Any determination in this connection by the Committee shall be final,
binding, and conclusive.
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In addition, Optionee represents and warrants to the Company that as a
principal executive officer and member of the board of directors of the Company
and its air-carrier subsidiary, Optionee has had full access to all material
information relating to the business and affairs of the Company, and has
received all information and data with respect to the Company and the Optioned
Shares that he has requested and has deemed relevant in connection with his
receipt of his rights hereunder. Optionee does not rely upon any representation
or warranty by any person or entity with respect to the future value of, or
income from, the Optioned Shares, but rather relies upon his own independent
examination and judgment as to the Company's prospects.
12. Investment Representation. Unless the Common Stock is issued to him
in a transaction registered under applicable federal and state securities laws,
by his execution hereof, the Optionee represents and warrants to the Company
that all Common Stock which may be purchased hereunder will be acquired by the
Optionee for investment purposes for his or her own account and not with any
intent for resale or distribution in violation of federal or state securities
laws. Unless the Common Stock is issued to him in a transaction registered under
the applicable federal and state securities laws, all certificates issued with
respect to the Common Stock shall bear an appropriate restrictive investment
legend.
13. Optionee's Acknowledgments. The Optionee acknowledges, represents
and warrants receipt of a copy of the Plan, which is annexed hereto, and
represents that he is familiar with the terms and provisions thereof, and hereby
accepts this Option subject to all the terms and provisions thereof. The Plan is
a separate legal document that contains the general terms and conditions
applicable to this Option.
14. Law Governing. This Agreement shall be governed by, construed, and
enforced in accordance with the laws of the State of Texas (excluding any
conflicts of law rule or principle of Texas law that might refer the governance,
construction, or interpretation of this Agreement to the laws of another state).
15. Legal Construction. In the event that any one or more of the terms,
provisions, or agreements that are contained in this Agreement shall be held by
a court of competent jurisdiction to be invalid, illegal, or unenforceable in
any respect for any reason, the invalid, illegal, or unenforceable term,
provision, or agreement shall not affect any other term, provision or agreement
that is contained in this Agreement and this Agreement shall be construed in all
respects as if the invalid, illegal, or unenforceable term, provision, or
agreement had never been contained herein.
16. Covenants and Agreements as Independent Agreements. Each of the
covenants and agreements that is set forth in this Agreement shall be construed
as a covenant and agreement independent of any other provision of this
Agreement. The existence of any claim or cause of action of the Optionee against
the Company, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the
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enforcement by the Company of the covenants and agreements that are set forth in
this Agreement.
17. Entire Agreement. This Agreement and the Plan supersede any and all
other prior understandings and agreements, either oral or in writing, between
the parties with respect to the subject matter hereof, including specifically
the Prior Option Agreement and the Modified Employment Agreement, and constitute
the sole and only agreements between the parties with respect to the said
subject matter. All prior negotiations and agreements between the parties with
respect to the subject matter hereof are merged into this Agreement and the
Plan. Each party to this Agreement acknowledges that no representations,
inducements, promises, or agreements, orally or otherwise, have been made by any
party or by anyone acting on behalf of any party, which are not embodied in this
Agreement or the Plan and that any agreement, statement or promise that is not
contained in this Agreement or the Plan shall not be valid or binding or of any
force or effect.
18. No Right to Continue Employment. Nothing herein shall be construed
to confer upon the Optionee the right to continue in the employment of the
Company or any Subsidiary or interfere with or restrict in any way the right of
the Company or any Subsidiary to discharge the Optionee at any time (subject to
any contract rights of the Optionee).
19. Parties Bound. The terms, provisions, representations, warranties,
covenants, and agreements that are contained in this Agreement shall apply to,
be binding upon, and inure to the benefit of the parties and their respective
heirs, executors, administrators, legal representatives, and permitted
successors and assigns.
20. Modification. No change or modification of this Agreement shall be
valid or binding upon the parties unless the change or modification is in
writing and signed by the parties. Notwithstanding the preceding sentence, the
Company may amend or revoke this Option to the extent permitted in the Agreement
or the Plan.
21. Headings. The headings that are used in this Agreement are used for
reference and convenience purposes only and do not constitute substantive
matters to be considered in construing the terms and provisions of this
Agreement.
22. Gender and Number. Words of any gender used in this Agreement shall
be held and construed to include any other gender, and words in the singular
number shall be held to include the plural, and vice versa, unless the context
requires otherwise.
23. Notice. Any notice required or permitted to be delivered hereunder
shall be deemed to be delivered only when actually received by the Company or
the Optionee, as the case may be, at the addresses set forth below, or at such
other addresses as they have theretofore specified by written notice delivered
in accordance herewith:
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(a) Notice to the Company shall be addressed and delivered as
follows:
Kitty Hawk, Inc.
0000 Xxxx 00xx Xxxxxx
P.O. Box 612787
Xxxxxx/Xxxx Xxxxx, Xxxxx 00000
Attn: Chief Executive Officer
(b) Notice to the Optionee shall be addressed and delivered as
follows:
Xxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxx, Xxxxx 00000
24. Optionee Covenants. Optionee acknowledges, covenants and agrees
with the Company that:
(a) Neither this Agreement nor the Optioned Shares are registered
under any federal or state law relating to the registration of
securities for sale, and this Agreement is, and the Optioned
Shares will be, issued and delivered in reliance on exemptions
from registration under such laws.
(b) Optionee shall not offer for sale, sell or transfer shares
acquired upon exercise hereof ("DELIVERED SHARES") except in
accordance with applicable securities laws and with the
provisions hereof.
(c) Except as provided in Section 25 hereof, the Company shall
have no obligation to register delivered shares or to comply
with any exemption available for Optionee's sale of delivered
shares without registration, and the Company shall have no
obligation to act in any manner so as to make Rule 144 under
the Securities Act of 1933, as amended (the "1933 ACT"),
available with respect to the sale of delivered shares by
Optionee.
(e) Optionee's exercise of this Option as to any Optioned Shares,
and acceptance of delivery of any delivered shares shall
constitute Optionee's confirmation that all of his
representations, warranties and covenants contained herein are
true, correct and effective as of such time.
25. Registration. If at any time the Company registers any material
portion of its Common Stock under the 1933 Act or obtains exemption from the
1933 Act for the public offer or sale of such material portion of Common Stock,
the Company shall include in such registration or exempt transaction Optionee's
delivered shares in at least the same ratio as Common Stock then held by or for
Xxxxxxxxxxx are included in such registration or exempt transaction.
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26. Binding Agreement to Arbitrate Disputes. All disputes under or
relating to this Agreement must be resolved exclusively by binding arbitration
under the Commercial Arbitration Rules of the American Arbitration Association
(the "AAA") in effect at the time the arbitration proceeding commences; except
that (a) the locale of any arbitration shall be Dallas, Texas, (b) the
arbitrator or arbitrators shall with any final award supply written findings of
fact and conclusions of law, and (c) any party may seek from a court of
competent jurisdiction any provisional remedy that may be necessary to protect
its rights or assets pending the commencement of the arbitration or its
determination of the merits of the controversy. The arbitration award shall be
final and binding on all parties, and judgment upon such arbitration award may
be entered in any court having jurisdiction. A prevailing party in arbitration
or litigation about this Agreement shall be entitled to recover its reasonable
attorneys' fees and costs.
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IN WITNESS WHEREOF, the undersigned have signed this Agreement as of
the date first listed above.
KITTY HAWK, INC.
By:
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Name: M. Xxx Xxxxxxxxxxx
Title: Chief Executive Officer
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M. Xxx Xxxxxxxxxxx
OPTIONEE
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Xxxxxx X. Xxxxxx
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