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EXHIBIT 10.4
5/15/98
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MODIFIED AND RESTATED EMPLOYMENT AGREEMENT
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1.0 PARTIES AND DATE
1.1 Parties. The parties to this modified and restated employment
agreement (this "agreement") are Kitty Hawk, Inc. ("Kitty Hawk") and ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ ("▇▇▇▇▇▇").
1.2 Date. This agreement is dated and effective April 27, 1998.
2.0 RECITATIONS AND ACKNOWLEDGMENTS
2.1 Previous Employment Agreements. ▇▇▇▇▇▇ has been employed by
Kitty Hawk since on or about February 24, 1992 under written employment
agreements, the most recent of which, dated and effective October 27, 1994, was
amended by a modification agreement dated and effective December 31, 1995.
▇▇▇▇▇▇ is president of Kitty Hawk, a member of its board of directors, and its
chief operating officer. This agreement supersedes, modifies and restates all
previous employment agreements between ▇▇▇▇▇▇ and Kitty Hawk.
2.2 Previous Stock Option and Life Insurance Agreement. ▇▇▇▇▇▇ and
Kitty Hawk were also parties to a Stock Option and Life Insurance Agreement (the
"1995 option agreement") dated and effective December 31, 1995, under which
among other things Kitty Hawk granted stock options to ▇▇▇▇▇▇ and provided
certain life-insurance benefits to ▇▇▇▇▇▇ while the options were outstanding.
This agreement does not supersede the 1995 option agreement, but ▇▇▇▇▇▇
acknowledges that all of his stock options under the 1995 option agreement have
been exercised, and that Kitty Hawk has no further obligations to ▇▇▇▇▇▇ under
the 1995 option agreement.
3.0 TERMS OF EMPLOYMENT
3.1 Responsibilities. ▇▇▇▇▇▇ will be president of Kitty Hawk, and
president of its subsidiaries, Kitty Hawk Aircargo, Inc. ("Aircargo") and
American International Airways, Inc. ("AIA"), will report to M. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇▇▇"), ▇▇▇▇▇ ▇▇▇▇'▇ chief executive officer, and will be subject to
the direction of ▇▇▇▇▇ ▇▇▇▇'▇ board of directors, but he will have authority
commensurate with his responsibilities. ▇▇▇▇▇▇ will have primary responsibility
for the operational success of Aircargo and AIA, and is expected to continue to
be involved in all of ▇▇▇▇▇ ▇▇▇▇'▇ business, and to play a major role in the
success of the entire enterprise. Both ▇▇▇▇▇▇ and Kitty Hawk expect ▇▇▇▇▇▇'
responsibility, authority and compensation to be adjusted from time to time as
determined by ▇▇▇▇▇ ▇▇▇▇'▇ board of directors and the Compensation Committee of
the board of directors, but not to be less than the minimum basic annual
compensation under paragraph 3.2.
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3.2 Annual Compensation. ▇▇▇▇▇▇' basic annual compensation ("basic
annual compensation") at and after the effective date of this agreement shall
not be less than $400,000.00, payable in equal monthly installments. His basic
annual compensation may otherwise be adjusted from time to time. He will be
entitled to the benefits of ▇▇▇▇▇ ▇▇▇▇'▇ Annual Incentive Compensation Plan as
it is in effect from time to time, and he may be paid other bonus compensation
from time to time based upon his performance and the success of the Kitty Hawk
enterprise, all as determined by the Compensation Committee of the board of
directors.
3.3 Fringe Benefits. ▇▇▇▇▇▇ shall receive the employee fringe
benefits that are generally available to all Kitty Hawk employees, and such
other fringe benefits as may be determined from time to time by the Compensation
Committee of the board of directors.
3.4 Medical Insurance. During his employment under this agreement
and thereafter so long as he lives, Kitty Hawk will provide to ▇▇▇▇▇▇ at no cost
to ▇▇▇▇▇▇ medical and hospitalization insurance coverage at least substantially
equivalent to the coverage that is now provided to ▇▇▇▇▇▇ under ▇▇▇▇▇ ▇▇▇▇'▇
current employee medical plans.
3.5 Stock Options. In consideration of ▇▇▇▇▇'▇ promises and
employment under this agreement, and to supply additional incentives for his
continuing contributions to ▇▇▇▇▇ ▇▇▇▇'▇ success, Kitty Hawk grants to ▇▇▇▇▇▇
the special options for the purchase of Kitty Hawk shares, upon the terms and
conditions, and subject to the limitations of the option agreement (the "1998
option agreement") contained in Exhibit A, which is attached to this agreement
and incorporated as part of it.
3.6 Proprietary information.
▇. ▇▇▇▇▇▇ has had and will have extensive access to and use of,
and has played and will play a material role in developing,
the confidential business and proprietary information of Kitty
Hawk and its customers, and ▇▇▇▇▇ ▇▇▇▇'▇ confidential business
practices and procedures (collectively, "▇▇▇▇▇ ▇▇▇▇'▇
proprietary information"). ▇▇▇▇▇ ▇▇▇▇'▇ proprietary
information includes but is not limited to ▇▇▇▇▇ ▇▇▇▇'▇
dynamic data base concerning air cargo aircraft in charter
service and suppliers of ground handling and delivery
services, customer lists and agreements, vendor lists,
employee data, competitor data, price and tariffs lists, bids
and quotations, aircraft use and maintenance scheduling
procedures, phone lists, computer programs, documents,
letters, memoranda, financial information, commission
arrangements, and other specialized and confidential business
arrangements and practices. Kitty Hawk relies upon its
proprietary information for competitive advantage in its
markets. Unauthorized disclosure, copying, destruction or
removal of ▇▇▇▇▇ ▇▇▇▇'▇ proprietary information, or its use
for the benefit of ▇▇▇▇▇ ▇▇▇▇'▇ competitors, could severely
and irreparably damage Kitty Hawk.
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▇. ▇▇▇▇▇▇ shall while in ▇▇▇▇▇ ▇▇▇▇'▇ employ diligently safeguard
▇▇▇▇▇ ▇▇▇▇'▇ proprietary information; and when leaving ▇▇▇▇▇
▇▇▇▇'▇ employment for whatever reason, shall surrender to
Kitty Hawk all written or recorded evidence of ▇▇▇▇▇ ▇▇▇▇'▇
proprietary information in ▇▇▇▇▇▇'▇ possession.
C. After leaving ▇▇▇▇▇ ▇▇▇▇'▇ employment for whatever reason,
▇▇▇▇▇▇ shall never disclose ▇▇▇▇▇ ▇▇▇▇'▇ proprietary
information unless ▇▇▇▇▇ ▇▇▇▇'▇ chief executive officer
expressly authorizes the disclosure in writing.
3.7 Covenant Not to Compete. To further protect ▇▇▇▇▇ ▇▇▇▇'▇
proprietary information, ▇▇▇▇▇▇ agrees that upon termination of ▇▇▇▇▇▇'
employment with Kitty Hawk for whatever reason, ▇▇▇▇▇▇ shall not engage in the
air cargo charter-management, or charter brokerage business, or in the business
of ad hoc or scheduled carriage of air freight under FAA Part 121 or Part 135
certificate, within the United States for three years following such
termination, either directly or indirectly, whether as an employee, agent,
consultant, broker, partner, principal, director or otherwise. ▇▇▇▇▇▇ further
waives and releases any future claim against Kitty Hawk for attempting to
enforce ▇▇▇▇▇▇'▇ covenant not to compete if Kitty Hawk does so in the good faith
belief that the covenant is enforceable and that ▇▇▇▇▇▇ has breached or
contemplates breaching it.
3.8 Termination. Both Kitty Hawk and ▇▇▇▇▇▇ shall have the right
to terminate this employment agreement with or without cause.
A. If ▇▇▇▇▇▇ terminates the agreement without material breach by
Kitty Hawk, ▇▇▇▇▇▇ shall waive all rights to any compensation
under this agreement that would otherwise have been payable
after the termination.
B. If Kitty Hawk terminates his employment without material
breach by ▇▇▇▇▇▇, ▇▇▇▇▇▇ shall be entitled as his exclusive
remedies to (i) 100% of the basic annual compensation he would
have received through the fifth anniversary of this agreement,
payable when it would have been paid in the absence of
termination, (ii) the medical insurance benefits provided
under P. 3.4, and (iii) his rights under the 1998 option
agreement.
C. If because of disability ▇▇▇▇▇▇ becomes unable to perform his
duties under his employment, or if ▇▇▇▇▇▇ dies during his
employment under this agreement, his annual compensation shall
cease.
4.0 GENERAL PROVISIONS
4.1 Amendments. To amend this agreement, Kitty Hawk and ▇▇▇▇▇▇
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.
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4.2 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. ▇▇▇▇▇▇ agrees that his obligations
under this agreement to protect ▇▇▇▇▇ ▇▇▇▇'▇ proprietary information are in
addition to ▇▇▇▇▇▇'▇ 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.
4.3 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 (i) the locale of any arbitration shall be Dallas, Texas, (ii) the
arbitrator or arbitrators shall with any final award supply written findings of
fact and conclusions of law, and (iii) 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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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
KITTY HAWK, INC.
By:
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M. ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
Chairman of the Board and
Chief Executive Officer
