The Following policy is explained to all new employees and is a part of the Team Member Guide.

As a Team Member, you’re expected to maintain certain standards of conduct in your job and your interaction with other Team Members, customers, business contacts and the public at large. You’re also expected not to engage in any off-duty misconduct that could adversely affect workplace safety, your fitness for duty or the Company’s corporate image.

As provided in our Code of Business Ethics and Conduct Policy, you should not place yourself in a position where your actions may be, or appear to be, in conflict with the interests of the Company. At Kitty Hawk, we consider a conflict of interest to be any business activity or relationship with another company or individual that, in Kitty Hawk’s judgment, may result in or give the appearance of resulting in questionable business ethics or a compromise in the Team Member’s loyalty to the Company.

• Some of the Company’s ethical requirements include the following:
• You should comply with all federal, state and local laws;
• Avoid situations that might involve a conflict between your personal interests and the interests of Kitty Hawk, and those situations that create the appearance of such conflict;
• Protect confidential and proprietary information – do not engage in activities (including providing consulting or other services) outside Kitty Hawk, that use any Kitty Hawk proprietary or trade secret information;
• Do not accept inappropriate gifts or engage in outside business or financial activities that may create benefits for you or your family or friends because of their employment with Kitty Hawk;
• Avoid conduct on or off the job that may harm Kitty Hawk’s reputation in the community, including but not limited to criminal conduct.

When circumstances and situations raise ethical considerations or in cases of doubt, you should contact Kitty Hawk’s Legal Department at (972) 456-2328 or The Network (800) 241-5689.

1. STATEMENT OF POLICY

Kitty Hawk is committed to conducting its business in accordance with the highest ethical standards and it has adopted the principles set forth in this Guide as corporate policy. A Team Member’s failure to comply with the Company’s standards may lead to disciplinary action, up to and including discharge.

As a general statement of policy, no Team Member should place himself or herself in a position where his or her actions may be, or appear to be, in conflict with the interests of the Company. This means that all Team Members must, at all times:

• Avoid situations that might involve a conflict between your personal interests and the interests of Kitty Hawk, and those situations that create the appearance of such conflict;
• Protect confidential and proprietary information – do not engage in activities (including providing consulting or other services) outside Kitty Hawk, that use any Kitty Hawk proprietary or trade secret information;
• Do not accept inappropriate gifts or engage in outside business or financial activities that may create benefits for you or your family or friends because of their employment with Kitty Hawk;
• Avoid conduct on or off the job that may harm Kitty Hawk’s reputation in the community, including but not limited to criminal conduct;
• Comply with all laws and the highest standards of business ethics and conduct in every location in which the Company conducts business;
• Protect confidential and proprietary information held by the Company or entrusted to it.

In the course of Kitty Hawk’s business relationships with customers, vendors, suppliers and others, it is the Company’s policy to avoid giving or accepting gifts or hospitality that tend to influence or appear to influence the judgment of the recipient.

This policy cannot cover all of the possible circumstances and situations that may raise ethical considerations and, in cases of doubt, a Team Member should seek legal and other advice, which the Company is prepared to make available. Questions relating to this Code of Business Ethics and Conduct policy may be referred to the Legal Department.

2. APPLICABILITY

This policy applies to all Kitty Hawk Team Members at all locations.

All Team Members of Kitty Hawk must execute the ethics statement attached as Appendix A and must abide by the provisions of this policy.

3. DEFINITIONS

“Confidential or proprietary information” means any information, created or obtained by Kitty Hawk or its Team Members in the course of their employment, that has actual or potential economic value to the Company or that may provide economic value to the Company’s competitors if released. Examples include pricing information, client information, and Team Member information.

A gift or hospitality that “appears to influence” is one that might cause a disinterested, reasonable observer to question whether the gift or hospitality was a reward for a business decision or was given to gain an improper business advantage.

The terms “gifts” and “hospitality” do not include political contributions on behalf of the Company or made with Company funds. Such political contributions are strictly prohibited.

The term “family” is defined as a Team Member’s spouse, parent, child, brother, sister, grandparent, grandchild, aunt, uncle, niece, nephew, parents-in-law, son-in-law, daughter-in-law, brother / sister in-law and domestic partner or any of these in a step relationship, legal guardian, legal ward, and an estate or trust of which the Team Member or one of the foregoing is a beneficiary, personal representative, or trustee.

A “conflict of interest” is generally defined as a business activity or relationship with another company or individual that, in the Company’s judgment, may result in questionable business ethics or a compromise in the Team Member’s loyalty to the Company.

4. LOANS

Team Members will not loan or borrow from individuals or concerns that do business with or compete with Kitty Hawk, except for transactions with banks and other financial institutions in accordance with normal business practices.

5. PURCHASES OR SALE OF GOODS AND SERVICES

Team Members are prohibited from receiving any financial benefit in connection with any purchase or sale by Kitty Hawk of goods or services.

Team Members may not derive any financial benefit from transactions involving Kitty Hawk, including sales commissions, except when that transaction has been fully disclosed to and approved by the Legal Department.

6. DIRECT OR INDIRECT BUSINESS INTERESTS

Team Members may not have a direct or indirect financial interest in any enterprise doing business with or competing with Kitty Hawk.

Ownership of or interest in publicly traded securities that are not in excess of one percent (1%) of the securities of that enterprise or interests that have been fully disclosed to and approved by the General Counsel are not in violation of this policy.

7. OUTSIDE SERVICE AND INCOME

No Team Member shall serve as an officer, director, team member, partner, trustee or consultant of, or receive a salary, fees, dividends or other income or financial compensation (except dividends and interest from publicly traded securities or other similar investments) from, any enterprise other than Kitty Hawk, unless that relationship has been fully disclosed to and approved by the Legal Department. This does not apply to officer and directorships of charitable organizations for which you do not receive a salary.
 
Team Members shall not accept compensation from outsiders for services or overtime for which Kitty Hawk pays them.

8. CONFIDENTIAL OR PROPRIETARY INFORMATION

The Company believes its confidential proprietary information is an important asset in the operation of its business and prohibits the unauthorized use or disclosure of this information. The Company respects the property rights of other companies to their proprietary information and requires its Team Members to fully comply with both the spirit and the letter of U.S. and foreign laws and regulations protecting such rights. The Company’s success is dependent upon the strict adherence by Team Members to this policy and all applicable standards and procedures.

Disclosure of Company’s Confidential Information

Information is the lifeblood of any business. Open and effective dissemination of this information is critical to our success. However, much of the information concerning the Company’s business activities is confidential. The disclosure of this information outside the Company would seriously damage the Company’s interests.

• To protect this information, it is Company policy that:
• Confidential information of the Company should be disclosed within the Company only on a need-to-know basis.
• Confidential information of the Company (paper or electronic) should be marked with additional handling instructions designated by the Legal Department.
• Confidential information of the company should be disclosed outside the Company only when required by law or when necessary to further the Company’s business activities and in accordance with the Company’s disclosure guidelines

Under no circumstances are Team Members to provide confidential Company documents to any third party, without express consent of the General Counsel. This includes but is not limited to any confidential Company documents relating to customers, competitors or suppliers of the Company.

Team Members are prohibited from using or revealing outside of the Company any confidential or proprietary information, except as reasonably required in the course of performing their job responsibilities or with the express written authorization from the General Counsel.

Examples of confidential or proprietary information follow. This list is not all-inclusive; if you are unsure about whether information you possess is confidential or proprietary, talk with Team Resources or the General Counsel.

Business Information:

• Corporate plans
• Market studies and strategies
• Financial studies and data
• Sales programs and price strategies
• Shareholder information
• Customer information
• Vendor information
• Information from other companies or governmental agencies used in the course of our business that we have agreed to keep secret

Team Member Information:

• Personnel records
• Home address or phone number
• Dependent information
• Medical records
• Telephone directories
• Salary information (other than your own)
  

Technical Information:

• Product specifications
• Company practices or instruction
• Computer programs and data base information
• Computer passwords
• Computer telephone access numbers
• Patent applications

Protective Information:

• Building access codes and security procedures
• Locations of sensitive equipment, plans or records

Information created by Team Members in the course of their employment with Kitty Hawk is the property of Kitty Hawk.

Team Members should contact either their Team Resources or the General Counsel if they are unsure how to handle information that may be confidential or proprietary.

Patents, Copyrights, Trademarks and Proprietary Information

Protection of the Company’s intellectual property - including its patents, copyrights, trademarks, scientific and technical knowledge, know-how and the experience developed in the course of the Company’s activities - is essential to maintaining the Company’s competitive advantage. This information should be protected by all Team Members and should not be disclosed to outsiders.

Much of the information the Company develops in research, production, marketing, sales, legal and finance is original in nature and its protection is essential to our continued success. Such information should be safeguarded. Proprietary/confidential information and trade secrets may consist of any formula, pattern, device or compilation of information maintained in secrecy which is used in business, and which gives that business an opportunity to obtain an advantage over competitors who do not know about it or use it. This information should be protected by all Company Team Members and not disclosed to outsiders. Its loss through inadvertent or improper disclosure could be harmful to the Company.

No Inadvertent Disclosures

Team Members should be especially mindful in the use of the telephone, fax, telex, electronic mail, and other electronic means of storing and transmitting information.

Team Members should take every practicable step to preserve the Company’s confidential information. For example, Team Members should not discuss material information in elevators, hallways, restrooms, restaurants, airplanes, taxicabs or any place where they can be overheard; not read confidential documents in public places or discard them where they can be retrieved by others; not leave confidential documents in unattended conference rooms; not leave confidential documents behind when the conference is over. Also, Team Members should be aware of the carrying quality of conversations conducted on speaker telephones in offices, and of the potential for eavesdropping on conversations conducted on mobile, car or airplane telephones, and other unsecured means of communication.

Many Team Members are required to sign agreements reminding them of their obligation not to disclose the Company’s proprietary confidential information, both while they are employed and after they leave the Company. The loyalty, integrity and sound judgment of the Company’s Team Members both on and off the job are essential to the protection of such information.

Competitive Information

Collecting information on our competitors from legitimate sources to evaluate the relative merit of their products, services and marketing methods is proper and often necessary. However, there are limits to the way information should be acquired. Practices such as industrial espionage and stealing are obviously wrong. But so is seeking confidential information from a new Team Member who recently worked for a competitor, or misrepresenting your identity in the hopes of getting confidential information from a competitor. Any form of questionable intelligence gathering is strictly against Company policy.

Questions Team Members Should Ask Themselves

• If the president of the competitor knew I was using this means of obtaining information about his/her company, would he/she believe it was proper?
• If I changed jobs and went to a competitor, would it be appropriate for me to disclose to the competitor the Company confidential information?
  

9. USE OF COMPANY MATERIALS OR EQUIPMENT

Team Members shall not use or permit others to use Company material, equipment or other Company property for personal purposes.

Electronic Communications

The Company’s electronic mail (e-mail) system should be restricted primarily to Company business. Highly confidential information should be handled appropriately. The Company reserves the right at any time to monitor and inspect, without notice, all electronic communications data and information transmitted on the network and electronic files located on personal computers owned by the Company or computers on the premises used in Company business. The use of the Company’s Internet services should be restricted primarily to Company business.

Third Party Software

Third Party Software is provided as a productivity tool for Team Members to perform their job functions. Please note that, just because third party product or utility software is located on a corporate utility server, it does not necessarily mean that it is licensed for use as a standalone software product. “Software” includes programs, routines, and procedures that cause a computer system to perform a predetermined function or functions, as well as the supporting documentation. Team Members and Company representatives have an obligation to protect and manage our software. Software must be identified, accounted for, controlled, documented, priced and classified for security purposes by the IT Department that develops or acquires the software. All software use must be in compliance with applicable laws and contractual obligations assumed by the Company, including copyright laws and necessary licensing. No Company Team Member or Senior Leader may use unlicensed software or create or use unauthorized copies of software. Team Members may be liable as individuals for illegal software use.

Internal Software Development

To the extent permitted under applicable law, Team Members, contractors and temporary Team Members shall assign to the Company any invention, work of authorship, composition or other form of intellectual property created during the period of employment.

Questions Team Members Should Ask Themselves

• Would the e-mail I am thinking about drafting embarrass the Company or me if it became public? Does the e-mail I am sending relate to the business of the Company?
• Do I safeguard the assets of the Company entrusted to me?
• Did I receive the software package I am installing from the IT Department?
• Do I know the procedures for obtaining a licensed copy of the software I desire to copy? Have I consulted the IT Department?

10. BUSINESS INVESTMENT OPPORTUNITIES

Team Members are prohibited from taking direct or indirect advantage of any business opportunity, which is received by reason of their relationship with Kitty Hawk and in which Kitty Hawk may be interested, unless such opportunity has been presented for consideration by Kitty Hawk and has been rejected.

11. ILLEGAL OR UNETHICAL PAYMENTS, GIFTS, BRIBES OR GRATUITIES

Permissible Payments

Team Members may receive payment of normal discounts and allowances, commissions, fees, sales promotion activity, entertainment and the extension of services and other customary courtesies in the ordinary course of business so long as they have been authorized and properly recorded. If a customer, supplier, vendor or government agency has adopted a more stringent policy than the Company’s regarding gifts and gratuities, then the Company’s representative must comply with that more stringent policy when dealing with that person or entity.

Bribes

The company’s objective is to compete in the marketplace on the basis of superior services and competitive prices. No payment in any form (whether funds or assets) shall be made directly or indirectly to anyone for the purpose of obtaining or retaining business or to obtain any other favorable action. It is imperative that each and every person who does business with the Company understands that we will not, under any circumstances, give or accept bribes or kickbacks. A violation of this policy will subject the Team Member to disciplinary action as well as potential criminal prosecution.

Government Representatives

What is acceptable practice in the commercial business environment may be against the law or the policies of federal, state or local governments. Therefore, no gifts or business entertainment of any kind may be given to any government employee without the prior approval of the General Counsel, except for items of nominal value (i.e., pens, coffee mugs, etc.).

In addition, a U.S. law, the Foreign Corrupt Practices Act (FCPA) prohibits the Company or anyone acting on behalf of the Company from making a payment or giving a gift to a non-U.S. government official for purposes of obtaining or retaining business. The FCPA applies to the Company everywhere in the world where we do business and even applies to you if you are not a U.S. citizen.

Facilitating Payments

The law prohibits the Company and its Team Members and agents from making payments to foreign officials for the purpose of obtaining or keeping business. However, the law also recognizes that in a number of countries, tips and gratuities of a minor nature are customarily required by lower level governmental representatives performing ministerial or clerical duties to secure the timely and efficient execution of their responsibilities (e.g., customers clearances, visa application, installation of telephones, and exchange transactions). If you encounter a situation where an expediting or facilitating payment is requested in order to expedite or advance a routine performance of legitimate duties, then you need to contact the General Counsel for their analysis under the FCPA.

Third Party Agents

The Company’s business may involve the use of agents, consultants, brokers or representatives in connection with its dealing with governmental entities, departments, officials and employees. Such arrangements may not be employed to do anything prohibited by this Policy. The commissions or fees payable to such a third party must be reasonable in amount for the services rendered in accordance with local business practices.

Questions Team Members Should Ask Themselves

• Has a third party working on behalf of the Company told you not to worry because he or she will take care of the demands of the local culture?
• If this payment were disclosed to the public, would it embarrass the Company?

Team Members are prohibited from giving, offering or accepting anything that can be construed as a bribe, kickback or an illegal or unethical payment in connection with Kitty Hawk and its business.

Team Members are prohibited from accepting gratuities in connection with performing the duties of their position.

Any Team Member who receives an offer of a bribe, kickback or an illegal or unethical payment must report the offer immediately to the General Counsel.

12. IMPROPER BUSINESS PRACTICE

All Team Members, including officers, directors and Team Members are required to report, or cause to be reported, and will assist in any investigation by any regulatory or law enforcement agency, elected government official or others who have responsibility for such matters. Examples include:

• Any improper financial and accounting conduct, including fraud against shareholders;
• Wire fraud and bank fraud;
• Questionable accounting practices, internal controls and auditing practices;
• Violations of Security and Exchange Commission (SEC) rules;
• Violations of State and Federal laws;
• Business conduct that is dishonest and unethical;
• Improper conflicts of interest including improper company loans to officers and directors;
• Disclosures in SEC reports and other public disclosures that are not full, fair, accurate, timely and understandable;
• Violations of this Code of Business Ethics and Conduct

A Team Member may not maintain Kitty Hawk’s accounting or other records, or cause them to be maintained, in such a way that they do not reflect the true nature of transactions, account balances, etc. with clarity and completeness.

A Team Member may not establish for any purpose an unauthorized, undisclosed or unrecorded fund or asset account involving Kitty Hawk monies or assets.

A Team Member may not allow transactions with a vendor, agent, customer, etc. to be structured or recorded in a way that is not consistent with normal business practices. An example of this might be an arrangement to bill a Company client at an excessive price and, upon receipt of the customer’s remittance, to remit the excess to an addressee or bank account not clearly identified as being related to the customer.

Team Members should seek the advice of the General Counsel where needed or in any case where unusual and/or questionable arrangements are proposed by vendors, clients or consultants.

Team Members may not take advantage of any information gained in the course of their employment with Kitty Hawk that is not available to the general public for the purpose of investing or divesting in any security, including the securities of Kitty Hawk.

Compliance with Antitrust Laws

All Team Members are expected to comply with both the letter and spirit of applicable federal, state and foreign antitrust laws. All mergers, acquisitions, strategic alliances, and other types of extraordinary business combinations that raise concerns of market domination or abuse, should receive timely legal review to assure that we compete aggressively but not unlawfully. When any doubt exists as to the legality of any action or arrangement, the matter should be discussed with the General Counsel. Regardless of the setting, never misrepresent our products and services.

Agreements with Competitors

Formal or informal agreements with competitors that seek to limit or restrict competition in some way are often illegal. Unlawful agreements include those which seek to fix or control prices; allocate products, markets or territories; or boycott certain customers or suppliers. To ensure compliance with antitrust law, discussions with competitors regarding any of these potential agreements is a violation of Company policy and will subject the Team Member to disciplinary action as well as the potential for criminal prosecution.

Agreements with Customers

Certain understandings between the Company and a customer are also considered anti-competitive and illegal. These include agreements that fix resale prices or that result in discriminatory pricing between customers for the same product. These types of restrictive understandings must not be discussed or agreed to with a customer.

Trade Association Activity

Contact with competitors at trade shows or trade association meetings are unavoidable. However, these contacts are not immune from antitrust law. Consequently, contact with competitors necessitated by these meetings should be as limited as possible and kept strictly to the subjects on the agenda for the meeting. In addition, Team Member participants in trade associations should consult with the General Counsel regarding any proposed association activity that would have a potential effect on competition, such as the development of product standards or industry code of practice.

Trading Stock & Securities

Federal law and Company policy prohibit Team Members, directly or indirectly through their families or others, from purchasing or selling Company stock while in the possession of material, non-public information concerning the Company. This same prohibition applies to trading in the stock of other publicly held companies on the basis of material, non-public information. To avoid even the appearance of impropriety, Company policy also prohibits Team Members from trading options on the open market in Company Stock under any circumstances.

Material, non-public information is any information which could reasonably be expected to affect their price of a stock. If a Team Member is considering buying or selling a stock because of inside information they possess, they should assume that such information is material. It is also important for the Team Member to keep in mind that if any trade they make becomes the subject of an investigation by the government, the trade will be viewed after-the-fact with the benefit of hindsight. Consequently, Team Members should always carefully consider how their trades would look from this perspective.

Tipping

If a Team Member’s family or friends ask for advice about buying or selling Company stock, the Team Member should not provide it. Federal law and Company policy also prohibit the Team Member from “tipping” family or friends regarding material, non-public information that the Team Member learns about the Company or any other publicly traded Company in the course of employment. The same penalties apply, regardless of whether the Team Member derives any benefit from the trade. The SEC vigorously
prosecutes insider-trading violations by institutions and individuals even for violations resulting in relatively small profits.

Questions Team Members Should Ask Themselves

• Does information I have learned about the Company make me want to buy stock?
• If the newspaper published what I know, would it make the Company’s stock rise or fall?
• How would the trade I am considering look to government prosecutors if it became the subject of an investigation?

13. DISCLOSURE OF IMPROPER BUSINESS PRACTICE

Every Team Member, including officers and directors has an affirmative duty to report improper business practices. Disclosure of improper business practices may be made to your Team Leader either in person or anonymously, your Team Leader must report your disclosure. You also have the option to report improper business practices anonymously to the Audit Committee of the Board of Directors or The Network (800) 241-5689.

Disclosure of improper business practices to the Audit Committee can be made by contacting The Network at 800-241-5689. In order to avoid potential conflicts and to insure that your disclosure is fully investigated, Kitty Hawk has retained The Network as an independent and unbiased third party who will report your disclosure directly to the Audit Committee.

14. GIVING OR ACCEPTING CORPORATE GIFTS AND HOSPITALITY

Giving and/or receiving cash gifts is prohibited.

No gifts (including unsolicited advertising, promotional material or travel expenses) totaling more than $50.00 in value may be given per calendar year to any one current or potential customer, vendor, supplier or their agents.

No gift (including unsolicited advertising, promotional material or travel expenses) worth more than $50.00 in value may be accepted per calendar year from a current or potential customer, vendor, supplier or their agents.

The prohibitions against giving and receiving gifts do not apply to reasonable gifts for birthdays, anniversaries, retirement, funerals or other similar occasions.

Hospitality at meals, business meetings and social events should not exceed the hospitality that can be returned in the normal course of business entertainment.

Any gifts received must be reported to the recipient’s Team Leader.

If a Team Member is unsure whether it is appropriate to accept a particular gift, the Team Member should check with his or her Team Leader before accepting the gift.

15. ACTUAL OR POTENTIAL CONFLICTS OF INTEREST

Team Members may not serve as partners, directors or officers of, have a substantial investment in, or have a personal relationship with a competitor or supplier, if such service, investment or relationship is, in the estimation of the Company, likely to create an actual or potential conflict of interest.

Team Members may not be employed by, or perform services for, any competitor or supplier of Kitty Hawk without first disclosing the employment to his/her Team Leader and receiving prior authorization by the Managing Director Team Resources.

Team Members may not perform services, which may jeopardize the interest of Kitty Hawk, interfere with its work schedules, or adversely affect the productivity of its Team Members.

16. FAMILY MEMBERS

This Code of Business Ethics and Conduct shall be applicable to conduct of Team Members’ family members to the extent that such conduct creates an actual or potential conflict of interest, results in direct or indirect financial gain to the Team Member, or otherwise implicates this code.

17. DISCLOSURE OF CONFLICTS OF INTEREST

Team Members shall investigate their own affairs and are required to discover and disclose all types of actual or potential conflicts of interest.

Any Team Member who believes he/she may have a potential conflict of interest as outlined in Section 15 above, is responsible for describing the situation in a written memorandum to Team Resources.

Upon receipt of the memorandum, Team Resources will review the case with appropriate management to determine if an actual or potential conflict of interest has arisen. Kitty Hawk may disapprove the relationship and require the Team Member to sever the conflicting relationship. Failure to resolve conflicts may result in disciplinary action, including discharge. Kitty Hawk may take such other action, as it deems necessary.

18. REPORTING VIOLATIONS OF COMPANY POLICIES

There are no easy answers to many ethical issues we face in our daily business activities. In some cases the right thing to do will be obvious, but in other more complex situations, it may be difficult for a Team Member to decide what to do. When a Team Member is faced with a tough ethical decision or whenever they have any doubts as to the right thing to do, they should talk to someone else such as their Team Leader, Team Resources, or the General Counsel. The Company has also established a system for reporting violations of any of the Company policies, as well as any suspected misconduct by any Team Member or representative of the Company. This may be done anonymously by calling The Network at (800) 241-5689 or by writing to:

Kitty Hawk General Counsel
P.O. Box 612787
DFW International Airport, TX 75261

The Company will not permit any form of retribution against any person, who, in good faith, reports known or suspected violations of Company policy. It is a violation of this Code for anyone to be discriminated against or harassed for contacting The Network, his or her Team Leader, Team Resources or the General Counsel with a good faith report of a suspected violation of law or policy. If you feel that you are being retaliated against in violation of this policy, please follow the procedures for reporting violations.

19. VIOLATIONS OF THE CODE

Uphold and Promote the Principles of this Code

The future of the Company depends on both technical and ethical excellence. Not only is it important for each Team Member to adhere to the principles expressed in this Code, each Team Member should encourage and support adherence by other Team Members.

Action for Violation of this Code

A violation of this Code will subject the Team Member to disciplinary action. A meeting with the Team Member’s Team Leader may be set up to review the alleged violation, allow the Team Member an opportunity to respond, and to discuss the violation. The Team Member’s Team Leader, along with either Team Resources or the General Counsel will then determine the appropriate disciplinary action, if any, to be taken.

20. EXCEPTIONS

None.