Document:

exv10w1

 

Exhibit 10.1

EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (“Agreement”), effective as of June 1, 2005 (“Effective Date”) is
entered by and between Robert Barron (“Executive”) and Kitty Hawk Aircargo, Inc. (“Company”). As
used in this Agreement, the term Company also includes its parent and affiliates.

     WHEREAS, the Company and Executive wish to enter into an Employment Agreement which replaces
and supercedes any existing contractual arrangement.

     WHEREAS, the Company desires to establish its right to the continued services of the
Executive, in the capacity described below, on the terms and conditions and subject to the rights
of termination hereinafter set forth, and the Executive is willing to accept such employment on
such terms and conditions.

     THEREFORE, in consideration of the mutual agreements hereinafter set forth, the Executive and
the Company have agreed and do hereby agree as follows:

     1.     EMPLOYMENT AS Vice President and Chief Operating Officer (COO) for Kitty Hawk Aircargo,
Inc., reporting to the President and Chief Executive Officer. The Company does hereby agree to
continue to employ Executive as Vice President and COO and the Executive does hereby agree to
accept continued employment with the Company as Vice President and COO on the terms and conditions
set forth herein. Executive shall have those powers and duties normally associated with the
position of Vice President and COO 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.

     2.     TERM OF AGREEMENT. The term of Executive’s employment under this Agreement shall commence
on June 1, 2005 (the “Commencement Date”) and shall continue for a period of two (2) years (the
“Term”); provided, that, on the second anniversary of the Commencement Date and on
each annual anniversary thereafter, the Term and Executive’s employment hereunder shall
automatically be extended for successive one (1) year periods unless either party gives written
notice not to extend the term of this Agreement ninety (90) days in advance of the expiration of
the Term or any extension thereof.

     3.     COMPENSATION.

             (a)     BASE SALARY. The Company shall pay the Executive, and the Executive agrees to accept from
the Company for payment of his services to the Company, a base salary at the rate of One Hundred
Fifty Thousand Dollars ($ 150,000.00) per year (“Base Salary”), during the initial Term,

 

 

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.

             (b)     PERFORMANCE BONUS. Pursuant to the terms of any plan then existing, Executive shall be
eligible to receive an annual cash performance bonus based on the achievement of annual performance
goals to be established by the Committee (the “Bonus”). Such Bonus, if any, shall be paid when
annual performance bonuses are customarily paid, but in no event later than 30 days following the
finalization of audited financial statements and filing of the Company’s 10k (the “Payment Date”).

             (c)     INCENTIVE COMPENSATION. To the extent that the Company maintains or establishes any
incentive compensation plans applicable to senior executive officers and that are adopted by the
Board of Directors, Executive shall participate in any such plans or programs pursuant to the terms
and conditions contained in such plans.

     4.     BENEFITS.

             (a)     FRINGE BENEFITS. Executive shall be entitled to participate in any benefit programs
adopted from time to time by the Company for the benefit of its executive officers, and Executive
shall be entitled to receive such other fringe benefits as may be granted to him from time to time
by the Company’s Board of Directors.

             (b)     BENEFIT PLANS. Executive shall be entitled to participate in any benefit plans relating to
stock options, stock purchases, pension, thrift, profit sharing, life and disability insurance,
medical coverage, executive medical coverage, education, or other retirement or employee benefits
available to other executive employees of the Company, subject to any and all terms and conditions
contained in such plans.

             (c)     VACATION. Executive shall be entitled to the number of weeks of paid vacation per year
that he was eligible for immediately prior to the date of this Agreement. Unused vacation may be
carried forward from year to year to the extent allowed by the Company’s regular vacation policy.

     5.     BUSINESS EXPENSES. The Company shall reimburse the Executive for any and all necessary,
customary, and usual business related expenses, properly documented in accordance with Company
policies.

     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.

     7.     CONFIDENTIAL INFORMATION.

             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 the Company hereby agrees to provide Executive and which may also be imparted
to

 

 

him from time to time in the course of the performance of his duties hereunder. 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 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.

             (a)     DEATH. If the Executive dies while employed by the Company, his employment shall
immediately terminate. Upon Executive’s death, the Company shall pay or provide to Executive’s
estate or his beneficiaries within thirty (30) business days following such death or such other
time set forth herein: (i) his earned, but unpaid Base Salary through the date of his termination
of employment, (ii) any earned, but unpaid Bonus for the year prior to the year of termination of
employment to be paid on the Payment Date with respect to that Bonus, (iii) his earned, but unused
vacation pay to the extent provided for under the Company’s vacation policy; (iv) properly
documented unreimbursed business expenses, and (v) any other benefits in accordance with the
Company’s retirement, insurance, and other applicable benefit programs and plans then in effect
(the “Accrued Benefits”). If Executive’s death occurs during a year, Executive’s beneficiaries or
estate shall also be paid on the Payment Date, a pro-rated Bonus, if any, for the year equal to the
product of (A) and (B) where (A) is the amount payable to Executive as a Bonus for such year had he
been employed through the last day of the year, and (B) is a fraction, the numerator of which is
the number of days the Executive was employed by the Company during such year and the denominator
is 365 (“Pro-Rated Bonus”).

             (b)     DISABILITY. If, as a result of Executive’s mental or physical incapacity, Executive shall
be substantially unable to perform the services for the Company contemplated by this Agreement for
sixty (60) consecutive days or ninety (90) days in any twelve (12) month period (“Disability”),
Executive’s employment may be terminated by the Company for Disability. During any period prior to
such termination during which Executive is absent from the full-time performance of his duties with
the Company due to Disability, the Company shall continue to pay Executive the amounts contemplated
under this Agreement; provided, that, such payments made to the Executive shall be reduced by
amounts received from disability insurance obtained or provided by the Company. Subsequent to the
termination provided for in this Section 8(b), the Company shall pay or provide Executive the
Accrued Benefits at the times set forth in Section 8(a) above and a Pro-Rated Bonus.

 

 

             (c)     TERMINATION BY EXECUTIVE WITHOUT GOOD REASON OR DUE TO EXECUTIVE NOT RENEWING THE TERM.
Executive may terminate his employment without Good Reason (as defined below) at any time prior to
expiration of the Term. For purposes of this clause (c), if Executive provides the notice not to
renew the Term, such termination shall be treated in the same fashion as a termination by Executive
without Good Reason. Upon such termination of employment, the Company shall pay Executive his
Accrued Benefits at the times set forth in 8(a) above; provided, however, the benefits described in
8(a)(ii) shall only be paid if such termination occurs after the finalization of the Company’s
audited financial statements for the year prior to the year of termination.

             (d)     TERMINATION BY THE COMPANY FOR CAUSE. The Company may terminate Executive’s employment
under this Agreement for “Cause.” For the purposes of this Agreement, the term “Cause” shall mean
Executive’s:

         (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.

             (e)     TERMINATION BY THE COMPANY WITHOUT CAUSE. The Company shall have the right to terminate
this Agreement prior to the expiration of the Term, at any time, without Cause. In the event the
Company shall so elect to terminate this Agreement, the Executive shall receive compensation
pursuant to the provisions of Section 10 or Section 14 of this Agreement, as the case may be.

             (f)     TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive shall have the right to
terminate this Agreement for Good Reason. In the event Executive so elects to terminate this
Agreement, the Executive shall receive compensation pursuant to the provisions of Section 10 or
Section 14 of this Agreement, as the case may be. For purposes of this Agreement, “Good Reason”
shall mean the occurrence, without the Executive’s prior written consent, of any one or more of the
following events:

         (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.

     9.     TERMINATION PROCEDURE. Any termination of Executive’s employment by the Company or by
Executive during the Term (other than termination pursuant to Section 8(a)) shall be communicated
by written Notice of Termination to the other party hereto in accordance with Section 15. For
purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the
specific termination provision in this Agreement relied upon.

     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 12 equal semi-monthly installments, which in
the aggregate equals fifty percent (50%) 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 Long-Term 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 6
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)     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 6 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 6
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)     Executive shall be paid the Severance Payment in the manner set forth in Section 10(b)
above.

             (f)     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)     RIGHT TO COMPANY MATERIALS. Executive agrees that all styles, designs, lists, materials,
books, files, reports, correspondence, records, electronically stored data or software and other
documents and all Confidential Information (“Company Materials”) used, prepared, or made available
to Executive, shall be and shall remain the property of the Company. Upon the termination of
employment or the expiration of this Agreement, all Company Materials and all other property of the
Company shall be returned immediately to the Company, and Executive shall not make or retain any
copies of Company Materials or its property following his termination of employment.

 

 

             (b)     ANTI-SOLICITATION. Executive promises and agrees that during the Term and for the twelve
(12) month period commencing on the termination of his employment (the “Restricted Period”), he
will not influence or attempt to influence customers or suppliers of the Company or any of its
present or future subsidiaries or affiliates, either directly or indirectly, to divert their
business to any individual, partnership, firm, corporation or other entity then in competition with
the business of the Company, or any subsidiary or affiliate of the Company.

             (c)     NON-COMPETITION. Executive promises and agrees that during the Restricted Period, he will
not within the United States, without the prior written consent of the Company, directly or
indirectly, become interested in any capacity (whether as proprietor, director, partner, employee,
agent, independent contractor, consultant, trustee or in any other capacity) or be paid by or
otherwise receive compensation or consideration from any bulk air cargo or bulk air freight
business that is competitive with the specific products or services sold or maintained by the
Company. This shall not prevent Executive from owning securities in any such competitive business
(but without otherwise participating in the activities of such enterprise) if (i) such securities
are listed on any national or regional securities exchange or have been registered under Section
12(g) of the Securities Exchange Act of 1934, and (ii) the Executive does not beneficially own (as
defined by Rule 13d-3 promulgated under the Securities Exchange Act of 1934) in excess of 5% of the
outstanding capital stock of such enterprise.

             (d)     SOLICITING EMPLOYEES. During the Restricted Period commencing on the termination of his
employment, Executive promises and agrees that he will not directly or indirectly solicit or engage
in any of the Company’s employees or former employees who worked for the Company at any time during
the six (6) months preceding the termination of Executive’s employment, to work for any business,
individual, partnership, firm, corporation, or other entity then in competition with the Company or
any subsidiary or affiliate of the Company.

     13.     NON-DISPARAGEMENT. The Executive agrees that subsequent to Executive’s employment
hereunder, the Executive will refrain from initiating or engaging in any communication with any
then current or former employee, officer, director, shareholder, customer, vendor or competitor of
Company or any third party other than Executive’s spouse or legal counsel, which could reasonably
be interpreted as derogatory or disparaging to the reputation of the Company and its business
practices, employees, officers, directors and agents.

     14.     CHANGE IN CONTROL.

             (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 continue for the longer of (a)
the period remaining in the Term or (b) twelve months (such 12 month period, even if the remaining
Term is a longer period, shall be the “Change in Control Period”). Following the expiration of the
Term (as it may be extended pursuant to this paragraph so it is at least twelve (12) months upon a
Change in Control), 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 by the Company 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 times 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 6 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.

     15.     NOTICES. All notices and other communications under this Agreement shall be in writing and
shall be given by hand delivery, facsimile, first class mail, certified or registered with return
receipt requested, or express mail and shall be deemed to have been duly given three (3) days after

 

 

mailing or twenty-four (24) hours after transmission of a facsimile to the respective persons
named below:

	 	 	 
	If to Company:

	 	Kitty Hawk Aircargo, Inc.
	

	 	Attn: Chief Executive Officer
	

	 	With a copy to: General Counsel
	

	 	1515 W. 20th Street, P.O. Box 612787
	

	 	DFW International Airport, TX 75261
	 
	 	 
	With a copy to:

	 	Garrett DeVries, Esq.
	

	 	Haynes and Boone, LLP
	

	 	901 Main Street, Suite 3100
	

	 	Dallas, Texas 75202-3789
	 
	 	 
	If to Executive:

	 	Robert Barron
	

	 	4134 Harvestwood Dr.
	

	 	Grapevine, Texas 76051
	With
a copy to:

     Either party may change such party’s address for notices by written notice duly given pursuant
hereto.

     16.     TERMINATION OF PRIOR AGREEMENTS. Except as provided for herein, this Agreement terminates
and supersedes any and all prior agreements and understandings between the parties with respect to
employment or with respect to the compensation of the Executive by the Company from and after the
Effective Date.

     17.     ASSIGNMENT; SUCCESSORS. This Agreement is personal in its nature and neither of the
parties hereto shall, without the consent of the other, assign or transfer this Agreement or any
rights or obligations hereunder; provided that, in the event of the merger, consolidation, transfer
or sale of all or substantially all of the assets of the Company with or to any other individual or
entity, this Agreement shall, subject to the express provisions hereof, be binding upon and inure
to the benefit of Executive and such successor and such successor shall discharge and perform all
the promises, covenants, duties, and obligations of the Company hereunder.

     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. Executive hereby agrees to exclusive venue in the courts of Tarrant County, Texas.

     19.     RESOLUTION OF DIFFERENCES; BREACH OF AGREEMENT. The parties shall use good faith efforts
to resolve any controversy or claim arising out of, or relating to this Agreement or 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.

     20.     ENTIRE AGREEMENT; HEADINGS. This Agreement embodies the entire agreement of the parties
respecting the matters within its scope and may be modified only in writing. Section headings in
this Agreement are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.

     21.     WAIVER; MODIFICATION. Failure to insist upon strict compliance with any of the terms,
covenants, or conditions hereof shall not be deemed a waiver of such term, covenant, or condition,
nor shall any waiver or relinquishment of, or failure to insist upon strict compliance with, any
right or power hereunder at any one or more times be deemed a waiver or relinquishment of such
right or power at any other time or times. This Agreement shall not be modified in any respect
except by a writing executed by each party hereto.

     22.     SEVERABILITY. In the event that a court of competent jurisdiction determines that any
portion of this Agreement is in violation of any statute or public policy, only the portions of
this Agreement that violate such statute or public policy shall be stricken. All portions of this
Agreement that do not violate any statute or public policy shall continue in full force and effect.
Further, any court order striking any portion of is Agreement shall modify the stricken terms as
narrowly as possible to give as much effect as possible to the intentions of the parties under this
Agreement.

     23.     INDEMNIFICATION. The Company shall indemnify and hold Executive harmless to the maximum
extent permitted by law and consistent with the Company’s Articles of Incorporation and Bylaws of
the Company; provided however, that nothing herein shall prevent the Company from amending its
Articles of Incorporation or Bylaws; provided, however notwithstanding any such
amendment, Executive shall have the right to indemnification which is no less favorable than any
other comparable officer of the Company. The Company’s obligations under this Section 23 shall
survive the termination of this Agreement and Executive’s employment for the maximum period
permitted by law.

     24.     COUNTERPARTS. This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original but all of which together will constitute one and the same instrument.

     25.     MITIGATION. Executive shall not be required to mitigate amounts payable under this
Agreement by seeking other employment or otherwise, and, except as otherwise provided in Section
10, 11 and 14 of this Agreement, there shall be no offset against amounts or benefits due
Executive under this Agreement on account of subsequent employment and/or eligibility for
benefits.

     26.     SURVIVAL. The representations, warranties, agreements, covenants, obligations and other
provisions in paragraphs 7, 12, 13, and 15 through 25 shall survive any termination of this
Agreement or the employment of Executive with Company, in each case, according to their intended
terms and temporal limitations, if any.

 

 

     IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly
authorized representative, and the Executive has hereunto signed this Agreement, as of the date
first above written.

	 	 	 	 	 
	Kitty Hawk Aircargo, Inc.

 	 	 	 	 
	By:  	/s/ ROBERT W. ZOLLER, JR.
 	 	 
	 	 	Robert W. Zoller, Jr. 	 
	 	 	President and Chief Executive Officer 	 
	 

Executive

 

	 	 	 
	/s/ ROBERT BARRON

	 	June 9, 2005
	 

	 	 
	Robert Barron

	 	Dateexv10w1

 

 EXHIBIT 10.1

FORM OF NON-EMPLOYEE DIRECTOR NONQUALIFIED STOCK OPTION

AGREEMENT UNDER THE ALLIANCE DATA SYSTEMS

CORPORATION 2003 LONG-TERM INCENTIVE PLAN

     THIS AGREEMENT, made as of [Date], by and between Alliance Data Systems Corporation
(the “Company”) and ___, (the “Participant”) who is a non-employee director of the
Company or one of its Affiliates.

W I T N E S S E T H:

     WHEREAS, pursuant to the Company’s 2003 Long-Term Incentive Plan (the “Plan”), the Company
desires to afford the Participant the opportunity to acquire, or enlarge, his ownership of the
Company’s common stock, $0.01 par value per share (“Stock”), so that he may have a direct
proprietary interest in the Company’s success.

     WHEREAS, the Company desires to have Participant continue to serve on the Company Board of
Directors and to provide Participant with an incentive.
NOW, THEREFORE, in consideration of the covenants and agreements herein contained, the parties
hereto hereby agree as follows:

     1. Grant of Option. Subject to the terms and conditions set forth herein and in the Plan,
the terms of which are attached as Exhibit A, the Company hereby grants to the Participant, during
the period commencing on the date of this Agreement and ending on the close of business on the day
of the tenth anniversary of the date hereof (the “Option Term”), the right and option (the
“Option”) to purchase from the Company, at a price of $  per share (the “Option Price”), an
aggregate of [ ] shares of Stock (the “Option Shares”).

     2. Limitation on Exercise of Option. Subject to the terms and conditions set forth herein
and in the Plan, the Option shall vest in the amount and on the date(s) set forth below
provided, that, the Participant continues to serve the Company or an Affiliate as a
non-employee director during the vesting period.

	 	 	 	 	 	 	 	 	 
	 	 	Percent of	 	 	Number of	 
	 	 	Options	 	 	Options	 
	 	 	Vesting &	 	 	Vesting &	 
	Date	 	Exercisable	 	 	Exercisable	 
	 
	 
	 	 	 	 	 	 	 	 

     3. Termination of Service. Upon termination of service, the Option shall remain
exercisable as follows:

          (a) Upon termination of the Participant’s service with the Company and its
Affiliates for any reason other than death, Disability, termination of service by the Company or an
Affiliate for Cause, the Participant may exercise the Option, but only to the extent the Option

 

 

was
exercisable immediately prior to such termination of service, until the earlier of the last day of
the Option Term or the last day of the twelve (12) month period following such termination of
service.

          (b) Upon termination of the Participant’s service with the Company and its Affiliates due
to death or Disability, the Participant may exercise the Option, but only to the extent the Option
was exercisable immediately prior to termination of service, until the earlier of the last day of
the Option Term or of the last day of the twelve (12) month period following termination of
service.

          (c) Upon termination of a Participant’s service with the Company and its Affiliates due to
Cause, the entire Option shall immediately be forfeited.

     4. Time and Method of Exercising Option. The Option, may be exercised, in whole or in
part, by giving written notice of exercise to the Company specifying the number of whole shares of
Stock to be purchased. Such notice shall be accompanied by the payment in full of the Option
Price. Such payment shall be made either: (i) in cash at the time of purchase; (ii) with shares of
Stock held by the Participant at least six (6) months prior to the exercise; (iii) through such
“cashless exercise” procedure that is acceptable to the Committee in its full discretion, to the
extent such procedure does not violate the Sarbanes-Oxley Act of 2002 or any other applicable law;
or (iv) subject to applicable law, in any other form of legal consideration that may be acceptable
to the Committee in its discretion.

     5. Issuance of Shares. Except as otherwise provided in the Plan, and subject to applicable
law, as promptly as practical after receipt of such written notification of exercise and full
payment of the Option Price and any required income tax withholding, the Company shall issue or
transfer to the Participant the number of
Option Shares with respect to which Options have been so exercised (less shares withheld in
satisfaction of tax withholding obligations, if any), and shall deliver to the Participant a
certificate or certificates therefor, registered in the Participant’s name.

     6. Company; Participant.

          (a) The term “Company” as used in this Agreement with reference to employment shall
include the Company and its Affiliates, as appropriate.

          (b) Whenever the word “Participant” is used in any provision of this Agreement under
circumstances where the provision should logically be construed to apply to the beneficiaries, the
executors, the administrators, or the person or persons to whom the Options may be transferred by
will or by the laws of descent and distribution, the word “Participant” shall be deemed to include
such person or persons.

     7. Non-Transferability. The Option shall not be transferable by the Participant other
than by will or by the laws of descent and distribution, and the Option shall be exercisable during
the lifetime of the Participant only by the Participant or his guardian or legal representative.
The terms of the Option shall be final, binding and conclusive upon the beneficiaries, executors,
administrators, heirs and successors of the Participant. Until the Option has vested, shares
subject to the Option shall not be sold, transferred or otherwise disposed of,

2

 

shall not be pledged
or otherwise hypothecated, and shall not be subject to the claims of creditors.

     8. Adjustments; Change in Control. In the event that the Committee determines that any
dividend or other distribution (whether in the form of cash, Stock or other property),
recapitalization, forward or reverse split, reorganization, merger, consolidation, spin-off,
combination, repurchase or exchange of Stock or other securities, liquidation, dissolution, or
other similar corporate transaction or event, affects the Stock such that an adjustment is
appropriate in order to prevent dilution or enlargement of the rights of Participants under the
Plan, then the Committee shall, in such manner as it may deem equitable, adjust any or all of (i)
the number and kind of shares of Stock reserved and available for awards under the Plan, including
shares reserved for the ISOs and Restricted Stock, (ii) the number and kind of shares of Stock
specified in the Annual Per-Participant Limitations under the Plan, (iii) the number and kind of
shares of outstanding Restricted Stock or other outstanding Award in connection with which shares
have been issued, (iv) the number and kind of shares that may be issued in respect of other
outstanding Awards and (v) the exercise price or purchase price relating to any Award (or, if
deemed appropriate, the Committee may make provision for a cash payment with respect to any
outstanding Award). In addition, the Committee is authorized to make adjustments in the terms and
conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, events described in the preceding sentence) affecting the
Company or any Affiliate or the financial statements of the Company or any Affiliate or in response
to changes in applicable laws, regulations, or accounting principles.

     9. Rights as Shareholder. The Participant or a transferee of the Options shall have
no rights as shareholder with respect to any Option Shares until he shall have become the holder of
record of such share, and no adjustment shall be made for dividends or distributions or other
rights in respect of such Option Shares for which the record date is prior to the date upon which
he shall become the holder of record thereof.

     10. Compliance with Law. Notwithstanding any of the provisions hereof, the
Participant hereby agrees that he will not exercise the Option, and that the Company will not be
obligated to
issue or transfer any shares to the Participant hereunder, if the exercise hereof or the
issuance or transfer of such shares shall constitute a violation by the Participant or the Company
of any provisions of any law or regulation of any governmental authority. Any determination in
this connection by the Committee shall be final, binding and conclusive. The Company shall in no
event be obliged to register any securities pursuant to the Securities Act of 1933 (as now in
effect or as hereafter amended) or to take any other affirmative action in order to cause the
exercise of the Options or the issuance or transfer of shares pursuant thereto to comply with any
law or regulation of any governmental authority.

     11. No Right to Re-election or Continued Service. Nothing in this Agreement or in the
Plan shall confer upon the Participant any right to continue in the service of the Company as a
non-employee director nor shall the Agreement be deemed to create any obligation of the Board to
nominate any of its members for reelection by the Company stockholders nor confer on the
Participant the right to remain a member of the Board for any period of time or any particular rate
of compensation. This Agreement shall not interfere with or restrict in any way the rights of the
Company, which are hereby expressly reserved, to discharge the Participant at any time for

3

 

any
reason whatsoever, with or without Cause. Participant acknowledges and agrees that the continued
vesting of the Options granted hereunder is premised upon his provision of future services with the
Company and such Option shall not accelerate upon his termination of service for any reason unless
specifically provided for herein.

     12. Taxes. The Company shall have the right to deduct from any distribution of cash
to the Participant an amount equal to the federal, state and local income taxes and other amounts
as may be required by law to be withheld (the “Withholding Taxes”) with respect to the Option. If
the Participant is entitled to receive Shares upon exercise of the Option, the Participant shall
pay the Withholding Taxes to the Company in cash prior to the issuance of such Shares. In
satisfaction of the Withholding Taxes, the Participant may make a written election (the “Tax
Election”) to have withheld a portion of the Shares issuable to him or her upon exercise of the
Option, having an aggregate Fair Market Value, on the date preceding the date of such issuance,
equal to the Withholding Taxes.

     13. Notice. Every notice or other communication relating to this Agreement shall be
in writing, and shall be mailed to or delivered to the party for whom it is intended at such
address as may from time to time be designated by it in a notice mailed or delivered to the other
party as herein provided; provided, that, unless and until some other address be so
designated, all notices or communications by the Participant to the Company shall be mailed or
delivered to the Company at its principal executive office, and all notices or communications by
the Company to the Participant may be given to the Participant personally or may be mailed to him
at his address as recorded in the records of the Company. Notwithstanding the foregoing, at such
time as the Company institutes a policy for delivery of notice by e-mail, notice may be given in
accordance with such policy.

     14. Nonqualified Stock Option. The Option granted hereunder is not intended to be an
“incentive stock option” within the meaning of Section 422 of the Code (“ISO”).

     15. Binding Effect. Subject to Section 7 hereof, this Agreement shall be binding upon
the heirs, executors, administrators and successors of the parties hereto.

     16. Governing Law. This Agreement shall be construed and interpreted in accordance
with the laws of the State of Delaware without regard to its conflict of law principles.

     17. Plan. The terms and provisions of the Plan are incorporated herein by reference,
and the Participant hereby acknowledges receiving a copy of the Plan. In the event of a conflict
or inconsistency between the terms and provisions of the Plan and the provisions of this Agreement,
the Plan shall govern and control. All capitalized terms not defined herein shall have the meaning
ascribed to them as set forth in the Plan.

* * * * * *

4

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first
above written.

	 	 	 
	

	 	ALLIANCE DATA SYSTEMS
	

	 	CORPORATION
	 
	 	 
	

	 	By:
	 
	 	 
	

	 	/s/ Dwayne H. Tucker
	

	 	 
	

	 	Dwayne H. Tucker
	

	 	Executive Vice President
	 
	 	 
	

	 	PARTICIPANT
	 
	 	 
	

	 	 
	

	 	NAME
	

	 	Non-Employee Director

5

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