EMPLOYMENT AGREEMENT
Exhibit 10.1
This EMPLOYMENT AGREEMENT (“Agreement”), effective as of December 14, 2004 (“Effective Date”) is entered by and between Xxxx X. Xxxxx (“Executive”) and Kitty Hawk, Inc. (“Company”).
WHEREAS, the Company and Executive wish to enter into an Employment Agreement which replaces and supercedes any existing contractual arrangement.
1. EMPLOYMENT AS Vice President and Chief Operating Officer (COO) for Kitty Hawk Cargo. Inc. The Company does hereby agree to continue to employ Executive as Vice President and the Executive does hereby agree to accept continued employment with the Company as Vice President on the terms and conditions set forth herein. Executive shall have those powers and duties normally associated with the position of Vice President of entities comparable to the Company and such other duties and responsibilities as may be assigned to Executive from time to time. The Executive shall use his best efforts and devote substantially all of his business time (other than absences due to illness or vacation) to the performance of his duties for the Company. Notwithstanding the above, Executive shall be permitted, to the extent that such activities do not interfere with performance of Executive’s duties and responsibilities hereunder, to: (i) manage Executive’s personal, financial and legal affairs, (ii) to serve on civic or charitable boards or committees, it being expressly understood and agreed Executive may continue serving on any such boards and/or committees on which Executive is serving or with which Executive is associated as of the Effective Date as set forth on Appendix 1 hereto, and (iii) to give lectures and be involved in speaking engagements associated with Executive’s community service or service to civic or charitable boards or committees.
(a) PLACE OF PERFORMANCE. Unless relocated, the principal place of employment of Executive shall be at the Company’s principle executive offices in the Dallas/Fort Worth, Texas metropolitan area.
of One Hundred Eighty Thousand Dollars ($180,000.00) per year (“Base Salary”), payable in equal semi-monthly installments or at such other time or times as the Executive and the Company shall agree. Thereafter, Executive’s Base Salary shall be reviewed on a calendar year basis by the Compensation Committee of the Board (the “Committee”), and may be increased as determined by the Committee and approved by the Board in its sole and absolute discretion. Such increased Base Salary shall be used for all purposes under this Agreement. Executive’s Base Salary shall not be decreased during the Term.
6. CORPORATE RELOCATION. Should the Company relocate its principal executive offices to a location outside of the Dallas/Fort Worth, Texas, metroplex area, and Executive is required to relocate to such area, the Company will reimburse the Executive for all of his reasonable and customary relocation expenses pursuant to the Company’s regular relocation policy then in effect.
Executive recognizes that by reason of his employment by and service to the Company he will occupy a position of trust with respect to the business and its employees and technical and other information of a secret or confidential nature (“Confidential Information”) which is the property of the Company which will be imparted to him from time to time in the course of the performance of his duties
hereunder. Company hereby agrees to provide Executive with Confidential Information. Executive acknowledges that such information is a valuable and unique asset of the Company and agrees that he shall not, during or after the Term of this Agreement, directly or indirectly use or disclose any Confidential Information of the Company to any person, except that Executive may use and disclose to authorized personnel of the Company such Confidential Information as is reasonably appropriate in the course of the performance of his duties hereunder. Confidential Information of the Company shall include all information and knowledge of any nature and in any form relating to the Company and its subsidiaries and its affiliates including but not limited to, business plans; development projects; computer software and related documentation and materials; designs, practices, processes, methods, know-how and other facts relating to the business of the Company and its subsidiaries and its affiliates; advertising, promotions, financial matters, sales and profit figures, employee hiring, training, evaluations and retention practices and customers or customer lists. Confidential Information shall not include any information that is or shall become publicly known through no fault of the Executive and any information received in good faith on a non-confidential basis from a third party who has the right to disclose such information and who has not received such information, either directly or indirectly, from the Company. If Executive is required to disclose Confidential Information by any court or governmental tribunal, Executive shall, to the extent practical under the circumstances, first give notice to the Company in order that it may have an opportunity to seek a protective order. The Company and Executive shall cooperate with each other, should either decide to seek a protective order with all costs and expenses being borne by the party seeking such order. Executive shall abide by the final order, judgment, or decree of any court of competent jurisdiction, administration or regulatory body regarding such application for a protective order.
8. TERMINATION OF EXECUTIVE’S EMPLOYMENT.
(i) conviction by a court of competent jurisdiction of a felony or serious misdemeanor involving moral turpitude;
(ii) willful disregard of any written directive of the Company, provided the written directive is not inconsistent with the Certificate of Incorporation or Bylaws of the Company or applicable law;
(iii) breach of his or her fiduciary duty or duty of loyalty under circumstances that involve personal profit;
(iv) breach of a material term of this Employment Agreement; or
(v) neglect of his duties that has a material adverse effect on the Company.
In the event of termination for Cause, the Company shall pay Executive his Accrued Benefits excluding benefits described in Section 8(a)(ii) at the times set forth in 8(a) above.
(i) The Company’s material breach of any of the provisions of this Agreement; or
(ii) A reduction in Executive’s Base Salary; or
(iii) The relocation of the Company’s principal executive offices to a location outside of the Dallas/Fort Worth metropolitan area without providing the Executive with relocation expenses in accordance with Section 6 of this Agreement; or
(iv) The failure of the Company to provide in all material respects the indemnification set forth in this Agreement and the Company’s by-laws.
The Executive agrees to provide the Company thirty (30) days’ prior written notice of any termination for Good Reason, during which 30-day period the Company shall have the right to cure, if curable, the circumstances giving rise to the Good Reason stated in such notice.
(g) Following a termination governed by this Section 8, except as specifically provided in this Agreement, the Executive shall not be entitled to any other compensation or benefits, except as may be separately negotiated by the parties and approved by the Board of Directors of the Company in writing.
10. COMPENSATION UPON TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE OR BY THE EXECUTIVE FOR GOOD REASON. If the Executive’s employment shall be terminated (i) by act of the Company other than for Cause, or (ii) by the Executive for Good Reason, the Executive shall be entitled to the following benefits:
(a) the Accrued Benefits which shall be paid at the times set forth in Section 8(a) above and the Pro-Rated Bonus.
(b) Executive shall be paid a severance amount in 18 equal semi-monthly installments, which in the aggregate equals seventy-five percent (75%) of Executive’s annual rate of Base Salary in effect on the date of termination (not taking into account any reductions in Base Salary not agreed to by Executive in writing) (the “Severance Payment”).
(c) Notwithstanding the terms and conditions of the 2003 Equity Incentive Plan or any agreements entered into thereunder and any other plan or program which may be in effect from time to time (and for the purpose of this Agreement any such plans and agreements will be deemed to be amended to reflect the foregoing), with respect to Executive’s initial Incentive Stock Option Agreement, under the 2003 Equity Incentive Plan, Executive’s service with the Company will be deemed to continue for 12 months following his separation date for purposes of vesting such that the portion of the option that would have vested during such 12-month period will become immediately vested and exercisable as of the separation date. With respect to any other equity based awards granted to Executive from time to time, including, without limitation, stock options, restricted stock, performance awards and stock appreciation rights, (“Awards”), all such Awards, if any, will become immediately 100% vested and, if applicable, exercisable upon Executive’s separation.
(d) The Company shall continue to provide the Executive with life and disability insurance, medical, vision and dental coverage, executive medical and other health and welfare benefits for 9 months following Executive’s separation of service or until Executive becomes an eligible participant in substantially similar or better heath and welfare plans which do not exclude pre-existing conditions which were covered by the Company’s plans, whichever is earlier.
(e) If, after 9 months following Executive’s termination other than for Cause or by Executive for Good Reason, Executive demonstrates that he has used his best efforts to obtain alternative employment but has not secured alternative employment, the time period for payments and benefits set forth in paragraphs 10(b) and (d) may be extended, so long as Executive remains unemployed, for a period not to exceed three (3) months. Any payments made during the period of continued unemployment, shall be paid in equal semi-monthly installments and each installment shall equal 1/24th of Executive’s annual rate of Base Salary in effect on the date of termination.
(f) Following a termination governed by this Section 10, except as specifically provided in this Agreement, the Executive shall not be entitled to any other compensation or benefits, except as may be separately negotiated by the parties and approved by the Board of Directors of the Company in writing.
11. COMPENSATION UPON THE COMPANY’S NOT RENEWING THE AGREEMENT PURSUANT TO PARAGRAPH 2. If, pursuant to Section 2, the Executive’s employment is terminated as a result of the Company’s providing written notice of intent not to renew, the Executive shall be entitled to the following benefits:
(a) The Accrued Benefits which shall be paid at the time set forth in Section 8(a) above and the Pro-Rated Bonus.
(b) The Severance Payment; provided, that, such Severance Payment shall be offset and reduced by remuneration earned by Executive during such 9 month Severance Payment period whether as an employee, consultant, advisor, contractor, partner, agent or in another similar capacity.
(c) Notwithstanding the terms and conditions of the Company’s 2003 Equity Incentive Plan or any agreements entered into thereunder and any other plan or program which may be in effect from time to time (and for purposes of this Agreement any such plans and agreements will be deemed to be amended to reflect the foregoing), for purposes of vesting of any Awards, Executive’s service with the Company will be deemed to continue for 12 months following his separation date such that upon such separation date, all Awards that would have vested during such 12-month period shall immediately vest as of the separation date. Exercise of any vested Awards will be pursuant to terms of such plans upon termination of service, provided, however, if within 90 days following the termination of service, Executive is restricted from exercising any Awards as a result of any Company or Securities Exchange Commission imposed black-out periods, the number of days in the black-out period shall be added to the exercise period.
(d) The Company shall continue to provide the Executive with life and disability insurance, medical, vision and dental coverage, executive medical and other health and welfare benefits for 9 months following Executive’s separation from service or until Executive becomes an eligible participant in substantially similar or better heath and welfare plans which do not exclude pre-existing conditions which were covered by the Company’s plans, whichever is earlier.
(e) Following a termination governed by this Section 11, except as specifically provided in this Agreement, the Executive shall not be entitled to any other compensation or benefits, except as may be separately negotiated by the parties and approved by the Board of Directors of the Company in writing.
12. NON-COMPETITION PROVISIONS.
(a) For purposes of this Agreement, “Change in Control” shall mean: (i) the consummation of a merger, consolidation, share exchange or any other corporate transaction involving the Company, as a result of which, the members of the Board, elected by the shareholders of the Company immediately prior to such transaction fail to constitute at least a majority of the Board of Directors of the surviving entity resulting from such transaction, or (ii) a sale of all or substantially all of
the assets of the Company to another corporation, individual or entity, as a result of which, the members of the Board, elected by the shareholders of the Company immediately prior to such transaction fail to constitute at least a majority of the Board of Directors of the entity purchasing the assets of the Company; or (iii) any “person” (as such term is defined in Section 3(a)(9) of the Securities Exchange Act of 1934 (the “Exchange Act”) and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or becomes, after the Commencement Date a “beneficial owner” (as defined in Rule 13d3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40% or more (a “40% Shareholder”) of the combined voting power of the Company’s then outstanding securities eligible to vote for the election of the Board (the “Company Voting Securities”); provided, however, that an event described in this paragraph (iii) shall not be deemed to be a Change in Control if any of following becomes such a beneficial owner: (A) the Company or any majority-owned subsidiary (provided, that this exclusion applies solely to the ownership levels of the Company or the majority-owned subsidiary), (B) any employee benefit plan of the Company or any of its majority-owned subsidiaries, (C) any entity holding voting securities of the Company for or pursuant to the terms of any such plan or (D) Everest Capital, Resurgence Asset Management LLC or Stockton LLC or any of their affiliates.
(b) Upon a Change in Control, the Term of this Agreement shall automatically renew for twelve additional months (the “Change in Control Period”). Following the Change in Control Period, the Agreement shall renew in accordance with Section 2 of the Agreement unless either party gives written notice not to extend pursuant to Section 2.
(c) (i) If Executive terminates his employment for Good Reason during the Change in Control Period; (ii) if Executive’s employment is terminated without Cause during the Change in Control Period or (iii) if (A) Executive’s employment is terminated by the Company without Cause 90 days prior to a definitive purchase agreement that results in a Change in Control and (B) Executive reasonably demonstrates that such termination was at the request of a third party who had taken steps reasonably calculated to effect a Change in Control and (C) a Change in Control involving such third party (or a party competing with such third party to effectuate a Change in Control) does occur, then Executive shall be entitled to the following benefits:
(i) the Accrued Benefits and the Pro-Rated Bonus at the items set forth in 8(a) above.
(ii) A lump sum cash payment equal to two (2) times the Severance Payment.
(iii) The Company shall continue to provide the Executive with life and disability insurance, medical, vision and dental coverage, executive medical and other health and welfare benefits for 9 months following his separation from employment or until Executive becomes an eligible participant in substantially similar or better heath and welfare plans which do not exclude pre-existing conditions which were covered by the Company’s plans, whichever is earlier.
(iv) Following a termination governed by this Section 14, except as specifically provided in this Agreement, the Executive shall not be entitled to any other compensation or benefits, except as may be separately negotiated by the parties and approved by the Board of Directors of the Company in writing.
(v) Notwithstanding the terms and conditions of the Company’s 2003 Equity Incentive Plan or any agreements entered into thereunder and any other plan or program which may be in effect from time to time (and for the purposes of this Agreement any such plans and
agreements will be deemed to be amended to reflect the foregoing), all Awards, if any, will become immediately 100% vested and, if applicable, exercisable upon such separation. Executive will have one year from his separation date in which to exercise vested Awards.
If to Company: | Kitty Hawk, Inc. | |||||
Attn: Chief Executive Officer | ||||||
With a copy to: General Counsel | ||||||
0000 X. 00xx Xxxxxx, P.O. Box 612787 | ||||||
XXX Xxxxxxxxxxxxx Xxxxxxx, XX 00000 | ||||||
With a copy to: | Xxxxxxx XxXxxxx, Esq. | |||||
Xxxxxx and Xxxxx, LLP | ||||||
000 Xxxx Xxxxxx, Xxxxx 0000 | ||||||
Xxxxxx, Xxxxx 00000-0000 | ||||||
If to Executive: | Xxxx X. Xxxxx | |||||
102 Monday Haus | ||||||
Xxxxxxxx Xxxxxxx, Xxxxx 00000 | ||||||
With a copy to: | ||||||
Either party may change such party’s address for notices by written notice duly given pursuant hereto.
18. GOVERNING LAW. This Agreement and the legal relations thus created between the parties hereto shall be governed by and construed under and in accordance with the laws of the State of Texas.
the breach thereof, first in accordance with the Company’s internal review procedures. If despite their good faith efforts, the parties are unable to resolve such controversy or claim through the Company’s internal review procedures, then such controversy or claim shall be resolved by binding arbitration in Dallas, Texas in accordance with the rules and procedures of the Employment Dispute Resolution Rules of the American Arbitration Association then in effect. The decision of the arbitrator shall be final and binding on both parties, and any court of competent jurisdiction may enter judgment upon the award. The prevailing party in such action shall be entitled to recoup their costs and attorneys fees from the opposing party. This paragraph shall apply to all controversies, disputes or claims arising out of or relating to this Agreement, with the sole exception of controversies, disputes or claims under paragraphs 7, 12 and 13, whereby the Company or Executive, in addition to and not in lieu of any remedies either may have, may seek equitable and legal relief from any court of competent jurisdiction for any breach of said paragraphs.
the employment of Executive with Company, in each case, according to their intended terms and temporal limitations, if any.
Kitty Hawk, Inc.
By:
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/s/ XXXXXX X. XXXXXX, XX. | |||
Xxxxxx X. Xxxxxx, Xx. | ||||
President and Chief Executive Officer |
Executive
/s/ XXXX X. XXXXX
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Xxxx X. Xxxxx |