1
EXHIBIT 2.1
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AGREEMENT AND PLAN OF MERGER
AMONG
KITTY HAWK, INC.
KITTY HAWK - AIA, INC.
KITTY HAWK - AIT, INC.
KITTY HAWK - FOL, INC.
KITTY HAWK - KFS, INC.
KITTY HAWK - OK, INC.
M. XXX XXXXXXXXXXX
AND
AMERICAN INTERNATIONAL AIRWAYS, INC.
AMERICAN INTERNATIONAL TRAVEL, INC.
FLIGHT ONE LOGISTICS, INC.
KALITTA FLYING SERVICE, INC.
O.K. TURBINES, INC.
XXXXXX XXXXXXX
Dated September 22, 1997
AN APPENDIX OF DEFINED TERMS BEGINS ON PAGE (VII)
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2
TABLE OF CONTENTS
Page
ARTICLE I
THE MERGERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 The Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time of the Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
THE CONSTITUENT AND SURVIVING CORPORATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.1 Constituent Corporations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.3 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Board of Directors and Officers of the Surviving Corporations . . . . . . . . . . . . . . . . 5
2.5 Effects of Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III
CONVERSION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.1 Consideration for Mergers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Surrender of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Conversion of Subs' Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.4 Shareholder to Have No Further Rights as to Kalitta Companies . . . . . . . . . . . . . . . . 9
3.5 Written Consent of Sole Shareholder of Subs . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.6 Written Consent of Sole Shareholder of each Kalitta Company . . . . . . . . . . . . . . . . . 9
3.7 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1 Representations and Warranties of Kalitta and
the Kalitta Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1.1 Corporate Existence and Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 9
4.1.2 Capitalization of the Kalitta Companies . . . . . . . . . . . . . . . . . . . . . . 10
4.1.3 Validity and Authorization; Corporate Power and Authority . . . . . . . . . . . . . 11
4.1.4 Execution; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1.5 Governmental and Other Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.1.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1.7 Absence of Certain Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1.8 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.1.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1.10 Disputes and Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.1.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.12 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.1.13 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.1.14 Real Property and Real Property Leases . . . . . . . . . . . . . . . . . . . . . . 20
4.1.15 Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.1.16 Intangible Personal Property . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(i)
3
4.1.17 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.1.18 Office Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.1.19 Indebtedness and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1.20 Debts to and from Related Parties . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1.21 Banking Arrangements and Powers of Attorney . . . . . . . . . . . . . . . . . . . . 23
4.1.22 Articles of Incorporation, Partnership Agreement
and Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.1.23 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.1.24 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.1.25 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.1.26 No Conflicts of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1.27 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1.28 Aviation Act; Aircraft; Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1.29 No Solicitation or Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.1.30 Information Supplied . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.2 Representations and Warranties of Kalitta . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 Representations and Warranties of Kitty Hawk . . . . . . . . . . . . . . . . . . . . . . . 30
4.3.1 Corporate Existence and Authority . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.3.2 Capitalization of Kitty Hawk and its Subsidiaries . . . . . . . . . . . . . . . . . 30
4.3.3 Validity and Authorization; Corporate Power and Authority . . . . . . . . . . . . . 31
4.3.4 Execution; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.3.5 Governmental and Other Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.3.6 Stock Merger Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.3.7 Acquisition of Kalitta Companies' Stock . . . . . . . . . . . . . . . . . . . . . . 32
4.3.8 SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.3.9 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.3.10 Controlling Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.3.11 Absence of Certain Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.3.12 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.3.13 Disputes and Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.3.14 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.3.15 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.3.16 Title to Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.3.17 Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
4.3.18 Indebtedness and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.3.19 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.3.20 Aviation Act; Aircraft; Assets . . . . . . . . . . . . . . . . . . . . . . . . . . 37
4.3.21 No Insolvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.3.22 Articles of Incorporation and Bylaws . . . . . . . . . . . . . . . . . . . . . . . 38
4.3.23 No Appraisal Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.3.24 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.4 Representations and Warranties as to Subs . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.4.1 Corporate Existence and Authority . . . . . . . . . . . . . . . . . . . . . . . . . 38
4.4.2 Capitalization of the Subs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.4.3 Validity and Authorization; Corporate Power and Authority . . . . . . . . . . . . . 39
4.4.4 Execution; No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.4.5 Governmental and Other Consents . . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.5 Disclosure Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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ARTICLE V
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.1 Mutual Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
5.1.1 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.1.2 Notices and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
5.1.3 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1.4 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
5.1.5 Repairs; FAA Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.6 Reports and Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.7 Assist in Obtaining Licenses, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.10 Preservation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
5.1.11 Tax Treatment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.1.12 Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.2 Kalitta and the Kalitta Companies Covenants . . . . . . . . . . . . . . . . . . . . . . . . 44
5.2.1 Information for Xxxxx Xxxx'x Statements, Reports,
Applications and SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
5.2.2 No Solicitation or Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.2.3 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
5.2.4 Payment of Indebtedness of Related Persons . . . . . . . . . . . . . . . . . . . . 45
5.2.5 Restriction on Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2.6 Exemptions from Sales Tax. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2.7 Office Lease. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2.8 Sale of Racing Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
5.2.9 Commercially Reasonable Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.2.10 Life Insurance Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.2.11 Assurances to Cooperate with SEC Filings . . . . . . . . . . . . . . . . . . . . . 47
5.2.12 Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.3 Kitty Hawk Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.3.1 Kitty Hawk Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
5.3.2 Assurances to Cooperate with SEC Filings . . . . . . . . . . . . . . . . . . . . . 48
5.3.3 GM Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.3.4 SEC Confirmation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4 Covenants of Xxxxxxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4.1 Restrictions on Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4.2 Repayment of Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4.3 Assurances to Cooperate with SEC Filings . . . . . . . . . . . . . . . . . . . . . 48
5.4.4 Other Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.5 Certain Covenants Relating to the Governance of Kitty Hawk
after the Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.5.1 Electing the Initial Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.5.2 Nominating Committees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
5.5.3 Deadlock Resolution at the Joint Nominating Committee . . . . . . . . . . . . . . . 50
5.5.4 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
5.5.5 Termination of Governance Obligations . . . . . . . . . . . . . . . . . . . . . . . 52
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ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.1 Conditions Precedent to Obligations of Xxxxxxxxxxx, Kitty Hawk
and the Subs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.1.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.1.2 Performance by Kalitta and the Kalitta Companies . . . . . . . . . . . . . . . . . 53
6.1.3 Regulatory Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . . 53
6.1.4 No Court Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.1.5 Certificates of the Kalitta Companies . . . . . . . . . . . . . . . . . . . . . . . 54
6.1.6 Opinions of Kalitta's Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.1.7 Satisfaction with Review of Kalitta Companies . . . . . . . . . . . . . . . . . . . 54
6.1.8 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.1.9 Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.1.10 Minimum Share Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.1.11 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
6.1.12 MEA 747 Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.1.13 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.1.14 SEC Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.1.15 Dissenter's Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.2 Conditions Precedent to Obligations of the Kalitta Companies . . . . . . . . . . . . . . . 55
6.2.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 55
6.2.2 Performance by Xxxxxxxxxxx and Kitty Hawk . . . . . . . . . . . . . . . . . . . . . 55
6.2.3 Regulatory Approvals and Consents . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.2.4 No Court Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.2.5 Certificate of Kitty Hawk and Subs . . . . . . . . . . . . . . . . . . . . . . . . 56
6.2.6 Opinions of Xxxxx Xxxx'x Counsel . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.2.7 Satisfaction with Review of Kitty Hawk . . . . . . . . . . . . . . . . . . . . . . 56
6.2.8 Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
6.2.9 Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.2.10 Minimum Share Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.2.11 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
6.2.12 Tax Opinions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.2.13 Release of Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
6.2.14 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
ARTICLE VII
CLOSING AND DELIVERY OF DOCUMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.1 Deliveries by Kalitta and the Kalitta Companies . . . . . . . . . . . . . . . . . . . . . . 58
7.2 Delivery by Kitty Hawk and the Subs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
7.3 Related Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE VIII
TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.1 Reasons for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.1.1 By Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.1.2 By Kitty Hawk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.1.3 By Kalitta and the Kalitta Companies . . . . . . . . . . . . . . . . . . . . . . . 60
8.1.4 Drop-Dead Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
8.2 Notice of Problems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
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6
8.3 Kitty Hawk Termination Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.4 Kalitta Termination Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
8.5 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
ARTICLE IX
POST-CLOSING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.1 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.2 Certain Transfer and Similar Taxes of the Kalitta Companies . . . . . . . . . . . . . . . . 62
9.3 Inspection of Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
9.4 Continuation of Existence and Business of Kalitta Companies . . . . . . . . . . . . . . . . 63
9.5 Indemnification of Directors and Officers of the
Kalitta Companies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
9.6 Office Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
9.7 Release and Indemnification for Kalitta Guaranties . . . . . . . . . . . . . . . . . . . . 64
ARTICLE X
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.1 Survival, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.1.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.1.2 No Effect on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.1.3 Commencing Arbitrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
10.2 Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2.1 Indemnification of Kitty Hawk . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.2.2 Indemnification of Kalitta . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
10.3 Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.4 Notice and Opportunity to Defend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.4.1 Notice, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.4.2 Defense Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.4.3 Third-Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.4.4 Indemnification Based Upon Net Losses . . . . . . . . . . . . . . . . . . . . . . . 73
10.5 EXCLUSIVE REMEDY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
10.6 No Other Representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.7 Delays or Omissions; Waiver; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.8 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
10.9 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.9.1 Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
10.9.2 Emergency Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE XI
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.1 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
11.3 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
11.5 Incorporated by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.6 Number and Gender of Words . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.7 Execution of Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.8 Finders' and Related Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.9 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(v)
7
11.10 No Third Party Beneficiary, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.11 Reformation; Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.12 Binding Effect and Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.13 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
11.14 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.15 Time of the Essence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.16 Specific Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.17 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
(vi)
8
APPENDIX OF
DEFINED TERMS
"AAA" shall mean the American Arbitration Association.
"ADJOINING LOTS" shall have the meaning ascribed to it in Section
4.1.18.
"AFFILIATE" shall mean, with respect to a specified Person, a Person
that directly, or indirectly through one or more intermediaries, controls or is
controlled by, or is under common control with, the Person specified.
"AGREEMENT" shall have the meaning ascribed to it in the preamble to
this Agreement.
"AIA" shall have the meaning ascribed to it in the preamble to this
Agreement.
"AIA CERTIFICATE" shall have the meaning ascribed to it in Section
3.1(a).
"AIA COMMON STOCK" shall have the meaning ascribed to it in Section
3.1(a).
"AIA MERGER" shall have the meaning ascribed to it in Section 1.2(a).
"AIA MERGER CONSIDERATION" shall have the meaning ascribed to it in
Section 3.1(a).
"AIA OPERATING AUTHORIZATIONS" shall have the meaning ascribed to it
in Section 4.1.28(a).
"AIA SHARE" shall have the meaning ascribed to it in Section 3.1(a).
"AIC" shall have the meaning ascribed to it in Section 4.1.1(b).
"AIC PARTNERSHIP AGREEMENT" shall have the meaning ascribed to it in
Section 4.1.1(b).
"AIT" shall have the meaning ascribed to it in the preamble to this
Agreement.
"AIT CERTIFICATE" shall have the meaning ascribed to it in Section
3.1(b).
"AIT COMMON STOCK" shall have the meaning ascribed to it in Section
3.1(b).
"AIT MERGER" shall have the meaning ascribed to it in Section 1.2(b).
"AIT MERGER CONSIDERATION" shall have the meaning ascribed to it in
Section 3.1(b).
"AIT SHARE" shall have the meaning ascribed to it in Section 3.1(b).
"ASSERTED LIABILITY" shall have the meaning ascribed to it in Section
10.4.1.
(vii)
9
"AVIATION ACT" shall mean Title 49 of the United States Code (formerly
the Federal Aviation Act of 1958, as amended).
"BOARD OF DIRECTORS" shall mean the board of directors of Kitty Hawk.
"BENEFICIALLY OWN" shall mean beneficial ownership within the meaning
of Rule 13d-3 promulgated under the Exchange Act.
"BREACH" shall mean, with respect to a party hereto, any
representation or warranty of such party under this Agreement (including in the
tax representation letters referred to in Section 5.1.11) being untrue when
made by such party or any breach of any of such party's covenants or agreements
under this Agreement (except that in the case of the indemnification
obligations of Kalitta after the Closing, Breach shall not include any Breach
by any Kalitta Company of any covenant or agreement to be performed after the
Closing).
"BUSINESS DAY" shall mean a day other than a Saturday or Sunday on
which trading occurs on the New York Stock Exchange.
"CAP" shall have the meaning ascribed to it in Section 10.3.2.
"CHIEF EXECUTIVE OFFICER" shall have the meaning ascribed to it in
Section 5.5.4.
"XXXXXXXXXXX" shall have the meaning ascribed to it in the preamble to
this Agreement.
"XXXXXXXXXXX DESIGNEES" shall mean Xxx Xxxxxxxxx, Xxx Xxxxxx and any
successors thereto selected by the Xxxxxxxxxxx Nominating Committee.
"XXXXXXXXXXX NOMINATING COMMITTEE" shall have the meaning ascribed to
it in Section 5.5.2.
"XXXXXXXXXXX STOCKHOLDER" shall mean Xxxxxxxxxxx and each Permitted
Transferee (as defined in the Stockholders' Agreement) who receives a Transfer
(as defined in the Stockholders' Agreement) of Kitty Hawk Common Stock from
Xxxxxxxxxxx or another Xxxxxxxxxxx Stockholder and each person who receives an
Exempt Transfer (as defined in the Stockholders' Agreement) of Kitty Hawk
Common Stock from Xxxxxxxxxxx or another Xxxxxxxxxxx Stockholder.
"CLOSING" shall mean the consummation of the Mergers and the closing
of the transactions contemplated by this Agreement.
"CLOSING DATE" shall have the meaning ascribed to it in Section 3.7.
"CLOSING DATE FINANCINGS" shall have the meaning ascribed to it in
Section 5.3.1.
"CODE" shall have the meaning ascribed to it in the Recitals.
"CONFIDENTIAL INFORMATION" shall have the meaning ascribed to it in
Section 11.14.
(viii)
10
"CONSTITUENT CORPORATIONS" shall have the meaning ascribed to it in
Section 2.1.
"CONTRACTS" shall have the meaning ascribed to it in Section 4.1.17.
"CORPORATE LIABILITY" shall have the meaning ascribed to it in Section
6.2.11.
"COSTS" shall have the meaning ascribed to it in Section 11.8.
"D&T" shall mean Deloitte & Touche, L.L.P.
"D&T CONSENT" shall have the meaning ascribed to it in Section 5.2.3.
"D&T FINANCIAL STATEMENTS" shall have the meaning ascribed to it in
Section 5.2.3.
"DEBT OFFERING DOCUMENTS" means the offering circular or memorandum
relating to the senior notes offered in the Closing Date Financings as amended
or supplemented.
"DEDUCTIBLE" shall have the meaning ascribed to it in Section 10.3.1.
"DEFENSE COSTS" shall have the meaning ascribed to it in Section
10.4.2.
"DISABILITY" shall mean with respect to an individual (a) a finding by
a court of competent jurisdiction that such individual is mentally incompetent
or (b) such individual's inability to function on his or her own or conduct his
or her own affairs due to mental or physical infirmity for six (6) consecutive
months. If any individual disputes that he or she is suffering from a
Disability, unless a court of competent jurisdiction has determined such
individual is mentally incompetent which determination shall be binding, such
dispute shall be submitted to a physician mutually satisfactory to such
individual and the Board of Directors (including for this purpose only the vote
of such individual). If such individual and the Board of Directors are unable
to mutually agree on a mutually satisfactory physician, then such individual
and the Board of Directors shall each select a reputable physician, who,
together, shall in turn select a third physician whose determination of such
individual's Disability shall be conclusive and binding on all parties hereto.
Evidence of such Disability, as so certified, shall be conclusive
notwithstanding that a disability policy, or clause in an insurance policy,
covering such individual shall contain a different definition of "disabled" or
"disability."
"DISCLOSING PARTY" shall have the meaning ascribed to it in Section
11.14.
"DISCLOSURE SCHEDULE" shall mean (a) in the case of the Kalitta
Companies and Kalitta, the Disclosure Schedule delivered by the Kalitta
Companies to Kitty Hawk at or prior to the date of this Agreement pursuant to
Section 4.1, and (b) in the case of Kitty Hawk and the Subs, the Disclosure
Schedule delivered by it to the Kalitta Companies and Kalitta pursuant to
Sections 4.3 and 4.4 hereof.
"DOT" shall mean the U.S. Department of Transportation.
"EFFECTIVE TIME" shall have the meaning ascribed to it in Section 1.3.
(ix)
11
"EMPLOYEE BENEFIT PLAN" shall have the meaning ascribed to it in
Section 4.1.24(a).
"ENVIRONMENTAL CLAIM" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, Liens, Proceedings or notices of non-compliance or violation (or to the
Knowledge of Kalitta Management, investigation) by any Person alleging
potential liability (including, without limitation, potential liability for
enforcement, investigatory costs, cleanup costs, governmental response costs,
removal costs, remedial costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (A)
the presence, or release or threatened release into the environment, of any
Hazardous Material at any location, whether owned, operated, leased or managed
by the Kalitta Companies or AIC (or in the case of Section 4.3.19, Kitty Hawk
or any of its Subsidiaries) with respect to their businesses; (B) circumstances
reasonably forming the basis of any violation, or alleged violation, of any
Environmental Law by the Kalitta Companies or AIC (or in the case of Section
4.3.19, Kitty Hawk or any of its Subsidiaries); or (C) any and all written
claims by any third party seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence or
release of any Hazardous Materials.
"ENVIRONMENTAL COUNSEL" shall have the meaning ascribed to it in
Section 10.2.1(b)(ii).
"ENVIRONMENTAL LAWS" shall mean all laws or orders relating to the
regulation or protection of human health, safety or the environment (including,
without limitation, ambient air, soil, surface water, ground water, wetlands,
land or subsurface strata), including, without limitation, laws and regulations
relating to releases or threatened releases of Hazardous Materials, or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, recycling or handling of Hazardous
Materials.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ESCROW AGENT" shall mean Xxxxx Fargo Bank N.A. or any other national
banking association designated by Kitty Hawk.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"FAA" shall mean the U.S. Federal Aviation Administration.
"FAIR MARKET VALUE" means an amount (expressed in dollars) equal to
the arithmetic average of the last reported sales price of a share of Kitty
Hawk Common Stock as quoted on the National Association of Securities Dealers
Automated Quotation System (or any national securities exchange on which the
Kitty Hawk Common Stock is listed, or if not so listed, its fair market value
as determined in good faith by the Board of Directors) for the twenty (20)
consecutive trading days ending on the immediately preceding trading day, as
adjusted to reflect any stock split, stock dividend, merger, consolidation,
reorganization, recapitalization or similar event occurring during such
valuation period.
(x)
12
"FAIRNESS OPINION" shall mean the fairness opinion dated on or about
September 22, 1997 from BT Alex. Xxxxx & Sons Incorporated, to the effect that
the consideration for the Mergers is fair to Kitty Hawk, from a financial point
of view.
"FAMILY MEMBER" shall mean with respect to an individual that
individual's spouse, natural or adopted sibling, ancestor or descendant of that
individual or any spouse or descendant of any such ancestor, descendant or
sibling.
"FINANCIAL STATEMENTS" shall have the meaning ascribed to it in
Section 4.1.6.
"FOL" shall have the meaning ascribed to it in the preamble to this
Agreement.
"FOL CERTIFICATE" shall have the meaning ascribed to it in Section
3.1(c).
"FOL COMMON STOCK" shall have the meaning ascribed to it in Section
3.1(c).
"FOL MERGER" shall have the meaning ascribed to it in Section 1.2(c).
"FOL MERGER CONSIDERATION" shall have the meaning ascribed to it in
Section 3.1(c).
"FOL SHARE" shall have the meaning ascribed to it in Section 3.1(c).
"FRAUDULENT CONVEYANCE ACT" shall mean any statute substantially
similar to the Uniform Fraudulent Conveyance Act.
"FRAUDULENT TRANSFER ACT" shall mean any statute substantially similar
to the Uniform Fraudulent Transfer Act.
"FRINGE BENEFITS" shall have the meaning ascribed to it in Section
4.1.25(a).
"GAAP" shall mean those generally accepted accounting principles and
practices which are used in the United States and recognized as such by the
American Institute of Certified Public Accountants acting through its
Accounting Principles Board or by the Financial Accounting Standards Board or
through other appropriate boards or committees thereof and which are
consistently applied for all periods so as to properly reflect the financial
position, results of operations and operating cash flow on a consolidated basis
of the party, except that any accounting principle or practice required to be
changed by the Accounting Principles Board or Financial Accounting Standards
Board (or other appropriate board or committee) in order to continue as a
generally accepted accounting principle or practice may be so changed.
"GENERAL INCREASE" shall have the meaning ascribed to it in Section
4.1.8(g).
"GM" shall mean the General Motors Corporation.
"GM WAIVER" shall have the meaning ascribed to it in Section 5.3.2.
"GOVERNANCE AMENDMENTS" shall have the meaning ascribed to it in the
Recitals.
(xi)
13
"GUARANTOR DOCUMENTS" shall have the meaning ascribed to it in Section
6.2.11.
"GUARANTY" shall have the meaning ascribed to it in Section 6.2.11.
"HAZARDOUS MATERIALS" shall mean any waste or other substance that is
listed, defined, designated or classified as, or otherwise determined to be,
hazardous, radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or solution thereof,
and specifically including petroleum and all derivatives thereof or synthetic
substitutes therefor and asbestos or asbestos-containing materials.
"HSR ACT" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"INDEMNIFIED LIABILITIES" shall have the meaning ascribed to it in
Section 9.5(a).
"INDEMNIFIED PARTY" shall have the meaning ascribed to it in Section
10.4.1.
"INDEMNIFYING PARTY" shall have the meaning ascribed to it in Section
10.4.1.
"INTELLECTUAL PROPERTY" shall have the meaning ascribed to it in
Section 4.1.16.
"JOINT DESIGNEE" shall mean Xxxxx Xxxxx and any successors thereto
selected by the Joint Nominating Committee.
"JOINT NOMINATING COMMITTEE" shall have the meaning ascribed to it in
Section 5.5.2.
"KALITTA" shall have the meaning ascribed to it in the preamble to
this Agreement.
"KALITTA COMPANIES" shall have the meaning ascribed to it in the
preamble to this Agreement.
"KALITTA COMPANIES INDEMNIFIED PARTIES" shall have the meaning
ascribed to it in Section 9.5(a).
"KALITTA COMPANIES PERMITTED TRANSACTIONS" shall mean (a) the
transactions contemplated by the 727 Purchase Agreement, (b) the purchase and
financing by AIA of the MEA 747s, (c) the repurchase by AIA of an L-1011 from
ACG Nevada Three LLC pursuant to that certain Purchase Option Agreement dated
April 12, 1996, between ACG Nevada Three LLC and AIA, (d) the sale by AIA of
one L-1011 aircraft, (e) the sale of aircraft N504MG and N705CA, (f) the
transactions contemplated by the Racing Entity Purchase Agreement, (g) to the
extent all conditions to the obligations of AIA are satisfied pursuant to that
letter agreement relating to the Ft. Xxxxx facility are satisfied, the
transactions contemplated thereby, (h) the borrowing of approximately
$7,750,000 and the granting of Liens on a DC-8-63F owned by AIA to secure such
borrowing, (i) up to $250,000 in miscellaneous financings of equipment, (j) the
sale by KFS to Kalitta or his Affiliate of the Hawker aircraft and the lease
back of such aircraft, in each case on terms no less favorable to KFS than
those
(xii)
14
that could be obtained in an arm's length transaction, (k) any debt refinancing
or restructuring transactions that are consented to by Kitty Hawk (which
consent shall not be unreasonably withheld), (l) the financing of insurance
premium deductibles consistent with past practice, (m) the distribution net of
prior distributions for such purpose, of up to $1,500,000 solely for the
payment by Kalitta of personal income Taxes attributable to earnings of the
Kalitta Companies from January 1997, net of prior distributions until the
Closing Date, (n) the transfer from Kalitta to Xxxx Xxxxxxx, Xxxxxx Xxxxxx and
Xxx Xxxxxxxxx of an aggregate of 885 shares of AIA (provided that no such
transfers shall be made until each such transferee has delivered to Kitty Hawk
a written waiver of any dissenter's rights related to the Mergers) and (o) any
transactions between Kalitta, AIC or any of the Kalitta Companies, on the one
hand, and Kitty Hawk or any Subsidiary, on the other hand.
"KALITTA COMPANIES SHARES" shall have the meaning ascribed to it in
Section 4.3.7.
"KALITTA CONSENTS" shall have the meaning ascribed to it in Section
4.1.5.
"KALITTA DESIGNEES" shall mean Xxxxxx Xxxxxx, Xxxx Xxxxxx and any
successors thereto selected by the Kalitta Nominating Committee.
"KALITTA NOMINATING COMMITTEE" shall have the meaning ascribed to it
in Section 5.5.2.
"KALITTA ESTABLISHED LOSS" shall have the meaning ascribed to it in
Section 10.2.3.
"KALITTA GROUP" shall have the meaning ascribed to it in Section
5.2.1.
"KALITTA INDEMNIFIED PARTIES" shall have the meaning ascribed to it in
Section 10.2.2.
"KALITTA MANAGEMENT" shall mean Xxxxx Xxxxx, Xxxxxxx Xxxx, Kalitta,
Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxxx Xxxxxxxxx, Xxxxx
Xxxxxxxxx, Beti Xxxx and Xxx Xxxxxx.
"KALITTA STOCKHOLDER" shall mean Kalitta and each Permitted Transferee
(as defined in the Stockholders' Agreement) who receives a Transfer (as defined
in the Stockholders' Agreement) of Kitty Hawk Common Stock from Kalitta or
another Kalitta Stockholder or a person who receives an Exempt Transfer (as
defined in the Stockholders' Agreement) of Kitty Hawk Common Stock from Kalitta
or another Kalitta Stockholder.
"KFS" shall have the meaning ascribed to it in the preamble to this
Agreement.
"KFS CASH MERGER CONSIDERATION" shall mean $20,000,000.
"KFS CERTIFICATE" shall have the meaning ascribed to it in Section
3.1(d).
"KFS COMMON STOCK" shall have the meaning ascribed to it in Section
3.1(d).
(xiii)
15
"KFS ENVIRONMENTAL CONDITION" shall have the meaning ascribed to it in
Section 10.2.1(e).
"KFS ENVIRONMENTAL OBLIGATION" shall have the meaning ascribed to it
in Section 10.2.1(e)(ii).
"KFS ESCROW AGREEMENT" shall mean an Escrow Agreement, effective as of
the Closing Date, among Kitty Hawk, Kalitta and the Escrow Agent, the form of
which is attached as Exhibit 7.3(d).
"KFS ESCROW AMOUNT" shall mean $3,000,000.
"KFS MERGER" shall have the meaning ascribed to it in Section 1.2(d).
"KFS OPERATING AUTHORIZATIONS" shall have the meaning ascribed to it
in Section 4.1.28(c).
"KFS PROPERTIES" shall mean any real property, leaseholds or other
realty interests currently or formerly owned or operated by KFS and any
buildings, plants or structures currently or formerly owned or operated by KFS.
"KFS SHARE" shall have the meaning ascribed to it in Section 3.1(d).
"KITTY HAWK" shall have the meaning ascribed to it in the preamble to
this Agreement.
"KITTY HAWK - AIA" shall have the meaning ascribed to it in the
preamble to this Agreement.
"KITTY HAWK - AIT" shall have the meaning ascribed to it in the
preamble to this Agreement.
"KITTY HAWK COMMON STOCK" shall have the meaning ascribed to it in
Section 3.1(f).
"KITTY HAWK CONSENTS" shall have the meaning ascribed to it in Section
4.3.5.
"KITTY HAWK CONTRACTS" shall have the meaning ascribed to it in
Section 4.3.17.
"KITTY HAWK ESTABLISHED KFS LOSS" shall have the meaning ascribed to
it in Section 10.2.1(f).
"KITTY HAWK ESTABLISHED LOSS" shall mean a Kitty Hawk Established KFS
Loss or a Kitty Hawk Established Non-KFS Loss.
"KITTY HAWK ESTABLISHED NON-KFS LOSS" shall have the meaning ascribed
to it in Section 10.2.1(c).
(xiv)
16
"KITTY HAWK - FOL" shall have the meaning ascribed to it in the
preamble to this Agreement.
"KITTY HAWK INDEMNIFIED PARTY" shall have the meaning ascribed to it
in Section 10.2.1(a).
"KITTY HAWK - KFS" shall have the meaning ascribed to it in the
preamble to this Agreement.
"KITTY HAWK - OK" shall have the meaning ascribed to it in the
preamble to this Agreement.
"KITTY HAWK OPERATING AUTHORIZATIONS" shall have the meaning ascribed
to it in Section 4.3.20(a).
"KITTY HAWK PERMITTED TRANSACTIONS" shall mean (a) the transactions
contemplated by the 727 Purchase Agreement, (b) the transactions contemplated
by this Agreement, including the Closing Date Financings, (c) the adoption of
the Governance Amendments, (d) the election of Xxxxxxxxxxx as Chairman of the
Board and Chief Executive Officer, (e) the issuance of contractual indemnity
agreements to each member of the Board of Directors (including, subject to
Closing, those prospective members of the Board of Directors set forth on
Exhibit 5.5.1) and (f) any transactions between Kalitta, AIC or any of the
Kalitta Companies, on the one hand, and Kitty Hawk or any Subsidiary, on the
other hand.
"KITTY HAWK PROPOSALS" shall have the meaning ascribed to it in the
Recitals.
"KNOWLEDGE OF KALITTA MANAGEMENT" shall mean the actual (rather than
imputed) knowledge of any individual member of the Kalitta Management and the
phrase "Known to Kalitta Management" and similar phrases shall have a
correlative meaning thereto.
"KNOWLEDGE OF KITTY HAWK" shall mean the actual (rather than imputed)
knowledge of Xxxxxxxxxxx, Xxx Xxxxxx or Xxxx Xxxxxxxxx and the phrase "Known to
Kitty Hawk" and similar phrases shall have a correlative meaning thereto.
"LANDLORD" shall mean Kalitta, L.L.C., a Michigan limited liability
company.
"LEASE-MODIFICATION PROPOSAL" shall have the meaning ascribed to it in
Section 5.2.7(b).
"LIEN" shall mean any mortgage, deed of trust, lien, pledge, adverse
claim, security interest or encumbrance of any nature whatsoever but shall
exclude ordinary utility and other similar easements of record that do not
materially interfere with the use of real property.
"LOSSES" shall have the meaning ascribed to it in Section 10.2.1(a).
(xv)
17
"MATERIAL ADVERSE EFFECT" shall mean (i) with respect to any of the
Kalitta Companies or AIC, a material adverse effect on (x) the business,
results of operations or financial condition of the Kalitta Companies in each
case taken as a whole, (y) on their ability to consummate the transactions
contemplated in this Agreement and in the Related Agreements or (z) the
enforceability of this Agreement or the Related Agreements identified in
Section 7.3(b) - (f) against Kalitta, or with respect to either the KFS Escrow
Agreement or the Non-KFS Escrow Agreement, the Escrow Agent and (ii) with
respect to Kitty Hawk or any of the Subsidiaries, a material adverse effect on
(x) the business, results of operations or financial condition in each case on
a consolidated basis of Kitty Hawk and its Subsidiaries, (y) on their ability
to consummate the transactions contemplated in this Agreement and in the
Related Agreements or (z) the enforceability of this Agreement or the Related
Agreements identified in Sections 7.3(b), (d) - (f) against Kitty Hawk, or with
respect to the Stockholders' Agreement, against Xxxxxxxxxxx.
"MBCA" shall have the meaning ascribed to it in the Recitals.
"MEA 747S" shall mean the three Boeing-747 aircraft the subject of
that certain Aircraft Purchase Agreement dated as of March 20, 1997, between
AIA and Middle East Airlines Airliban, X.X.X.
"MERGER PROPOSALS" shall have the meaning ascribed to it in the
Recitals.
"MERGERS" shall have the meaning ascribed to it in the Recitals.
"NON-KFS ENVIRONMENTAL CONDITION" shall have the meaning ascribed to
it in Section 10.2.1(b).
"NON-KFS ENVIRONMENTAL OBLIGATION" shall have the meaning ascribed to
it in Section 10.2.1(b)(i).
"NON-KFS ESCROW AGREEMENT" shall mean an Escrow Agreement effective as
of the Closing Date, among Kitty Hawk, Kalitta and the Escrow Agent, the form
of which is attached as Exhibit 7.3(d).
"NON-KFS ESCROW AMOUNT" shall mean 1,150,000 shares of Kitty Hawk
Common Stock.
"NON-KFS PROPERTIES" shall mean any real property, leaseholds, or
other realty interests currently or formerly owned or operated by any of AIA,
AIT, FOL or OK and any buildings, plants or structures currently or formerly
owned or operated by any of AIA, AIT, FOL or OK.
"NOTES" shall have the meaning ascribed to it in Section 6.2.11.
"OFFICE LEASE" shall mean that certain Corporate Office Lease dated as
of February 25, 1997 between AIA and the Landlord under which AIA occupies the
Office Premises.
(xvi)
18
"OFFICE MORTGAGE" shall have the meaning ascribed to it in Section
4.1.18.
"OFFICE PREMISES" shall mean the office building containing
approximately 18,399 square feet and associated parking lot and premises
located at 0000 X. Xxxxx Xxxxxx in Ypsilanti, Michigan.
"OK" shall have the meaning ascribed to it in the preamble to this
Agreement.
"OK CERTIFICATE" shall have the meaning ascribed to it in Section
3.1(e).
"OK COMMON STOCK" shall have the meaning ascribed to it in Section
3.1(e).
"OK MERGER" shall have the meaning ascribed to it in Section 1.2(e).
"OK MERGER CONSIDERATION" shall have the meaning ascribed to it in
Section 3.1(e).
"OK OPERATING AUTHORIZATIONS" shall have the meaning ascribed to it in
Section 4.1.28(e).
"OK SHARE" shall have the meaning ascribed to it in Section 3.1(e).
"PERMITTED LIEN" shall mean (a) any Lien for Taxes not yet due and
payable or contested in good faith by appropriate Proceedings, (b) any Lien
described as a "Permitted Lien" in a Disclosure Schedule, (c) any Lien as would
be shown by a current survey of the property (in the case of real property),
(d) any Lien of mechanics, materialmen, laborers, warehousemen, carriers and
other similar common law or statutory liens which are not yet due and payable
or are being contested in good faith, (e) zoning, entitlement, land use,
environmental and other regulation by governmental agencies, (f) any Liens that
may arise or be created after the date of this Agreement that are incidental to
the conduct of the business of the Kalitta Companies or AIC in the ordinary
course of the business of the Kalitta Companies or AIC, (g) any Lien granted to
any lenders prior to the date hereof for obligations set forth in the
Disclosure Schedule, (h) any Lien arising by virtue of this Agreement or any
Related Agreement or pursuant to a Kalitta Companies Permitted Transaction, (i)
any Lien granted in connection with the Closing Date Financings and (j) other
Liens and defects in title which do not, individually or in the aggregate,
materially interfere with the use of the properties or materially detract from
their value.
"PERMITTED TRANSACTIONS" shall mean, collectively, the Kalitta
Companies Permitted Transactions and the Kitty Hawk Permitted Transactions.
"PERSON" shall mean any individual, corporation, association,
partnership, proprietorship, joint venture or other entity.
"PROCEEDINGS" shall have the meaning ascribed to it in Section
4.1.10(a).
"RACING ENTITY" shall have the meaning ascribed to it in Section
5.2.8.
(xvii)
19
"RACING ENTITY PURCHASE AGREEMENT" shall have the meaning ascribed to
it in Section 5.2.8.
"RELATED AGREEMENTS" shall have the meaning ascribed to it in Section
7.3.
"RELATED PERSONS" shall have the meaning ascribed to it in Section
4.1.20.
"RELEASE" shall mean a Mutual Release, effective as of the Closing
Date, between Kalitta, each of the Kalitta Companies, Xxxxxxxxxxx, Kitty Hawk,
the Subs and the Subsidiaries, the form of which is attached as Exhibit 7.3(f).
"REPRESENTATIVES" shall have the meaning ascribed to it in Section
11.14.
"REQUISITE XXXXXXXXXXX STOCKHOLDERS" shall mean Xxxxxxxxxxx
Stockholders Beneficially Owning at least a majority of the Kitty Hawk Common
Stock Beneficially Owned by all Xxxxxxxxxxx Stockholders.
"REQUISITE KALITTA STOCKHOLDERS" shall mean Kalitta Stockholders
Beneficially Owning at least a majority of the Kitty Hawk Common Stock
Beneficially Owned by all Kalitta Stockholders.
"SEC" shall mean the Securities and Exchange Commission.
"SEC DOCUMENTS" shall have the meaning ascribed to it in Section
4.3.8.
"SEC FILINGS" shall have the meaning ascribed to it in Section 4.3.9.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"727 PURCHASE AGREEMENT" shall mean that certain Agreement for Sale
and Purchase of the AIA 727 Fleet, dated as of July 31, 1997, by and between
AIA, KFS, Kalitta and Kitty Hawk Aircargo, Inc., as amended.
"STOCKHOLDERS" shall mean Xxxxxxxxxxx and Kalitta.
"STOCKHOLDERS' AGREEMENT" shall mean the Stockholders' Agreement,
effective as of the Closing Date, between Xxxxxxxxxxx, Kalitta and Kitty Hawk,
the form of which is attached as Exhibit 7.3(b).
"STOCK MERGER CONSIDERATION" shall have the meaning ascribed to it in
Section 3.1(f).
"SUBS" shall have the meaning ascribed to it in the preamble to this
Agreement.
"SUBS CONSENTS" shall have the meaning ascribed to it in Section
4.4.5.
"SUBSEQUENT DISCLOSURE SCHEDULE" shall have the meaning ascribed to it
in Section 4.5.
(xviii)
20
"SUBSEQUENT EVENT" shall have the meaning ascribed to it in Section
4.5.
"SUBSIDIARIES" shall mean Kitty Hawk Aircargo, Inc., Aircraft Leasing,
Inc., Kitty Hawk Charters, Inc. and Skyfreighters, Inc.
"SURVIVING CORPORATIONS" shall have the meaning ascribed to it in
Section 1.2.
"TAXES" shall mean all federal, state, local, foreign and other
governmental or quasi-governmental net income, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, lease, service,
service use, withholding, payroll, employment, unemployment, excise, severance,
stamp, occupation, premium, property, windfall profits, customs, duties or
other taxes, fees and assessments or charges of any kind whatever in the nature
of taxes, together with any interest and any penalties, additions to tax or
additional amounts with respect thereto.
"TAX RETURNS" shall have the meaning ascribed to it in Section
4.1.9(b).
"TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT" and similar phrases
shall not include the Closing Date Financings.
(xix)
21
EXHIBITS
Exhibit 2.2(a) Form of Articles of Incorporation of the surviving AIA
Exhibit 2.2(b) Form of Articles of Incorporation of the surviving AIT
Exhibit 2.2(c) Form of Articles of Incorporation of the surviving FOL
Exhibit 2.2(d) Form of Articles of Incorporation of the surviving KFS
Exhibit 2.2(e) Form of Articles of Incorporation of the surviving OK
Exhibit 2.3(a) Form of Bylaws of the surviving AIA
Exhibit 2.3(b) Form of Bylaws of the surviving AIT
Exhibit 2.3(c) Form of Bylaws of the surviving FOL
Exhibit 2.3(d) Form of Bylaws of the surviving KFS
Exhibit 2.3(e) Form of Bylaws of the surviving OK
Exhibit 5.28 Form of Racing Entity Purchase Agreement
Exhibit 5.5.1 Members of the Board of Directors of Kitty Hawk at the Effective Time
Exhibit 6.1.6 Form of Opinions of Kalitta's Counsel
Exhibit 6.2.6 Form of Opinions of Xxxxx Xxxx'x Counsel
Exhibit 7.3(a) Form of Severance and Noncompetition Agreement
Exhibit 7.3(b) Form of Stockholders' Agreement
Exhibit 7.3(d) Form of KFS Escrow Agreement
Exhibit 7.3(e) Form of Non-KFS Escrow Agreement
Exhibit 7.3(f) Form of Release
(xx)
22
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "AGREEMENT"), dated as of
September 22, 1997, is entered into by and among Kitty Hawk, Inc., a Delaware
corporation ("KITTY HAWK"), Kitty Hawk - AIA, Inc., a Michigan corporation
("KITTY HAWK - AIA"), Kitty Hawk - AIT, Inc., a Michigan corporation ("KITTY
HAWK - AIT"), Kitty Hawk - FOL, Inc., a Michigan corporation ("KITTY HAWK -
FOL"), Kitty Hawk - KFS, Inc., a Michigan corporation ("KITTY HAWK - KFS"),
Kitty Hawk - OK, Inc., a Michigan corporation ("KITTY HAWK - OK"), M. Xxx
Xxxxxxxxxxx ("XXXXXXXXXXX"), American International Airways, Inc., a Michigan
corporation ("AIA"), American International Travel, Inc., a Michigan
corporation ("AIT"), Flight One Logistics, Inc., a Michigan corporation
("FOL"), Kalitta Flying Service, Inc., a Michigan corporation ("KFS"), O.K.
Turbines, Inc., a Michigan corporation ("OK"), and Xxxxxx Xxxxxxx ("KALITTA").
As used herein, Kitty Hawk - AIA, Kitty Hawk - AIT, Kitty Hawk - FOL, Kitty
Hawk - KFS, and Kitty Hawk - OK shall be collectively referred to as the
"SUBS," and AIA, AIT, FOL, KFS and OK shall be collectively referred to as the
"KALITTA COMPANIES."
RECITALS
The parties hereto desire to effect the following separate mergers
(collectively, the "MERGERS"), all with the effect that the Kalitta Companies,
as the surviving corporations of the Mergers, will become wholly-owned
subsidiaries of Kitty Hawk:
(a) Kitty Hawk - AIA with and into AIA;
(b) Kitty Hawk - AIT with and into AIT;
(c) Kitty Hawk - FOL with and into FOL;
(d) Kitty Hawk - KFS with and into KFS; and
(e) Kitty Hawk - OK with and into OK.
In connection with, and as a condition to the consummation of, the
Mergers, it is contemplated that Kitty Hawk will engage in certain financing
transactions more fully described herein, the proceeds of which will be used to
pay the KFS Cash Merger Consideration and the balance of which will be used to
refinance certain indebtedness of Kitty Hawk and the Kalitta Companies and for
working capital of Kitty Hawk.
The Boards of Directors of each of the Kalitta Companies (a) have
determined it advisable and in the best interests of the Kalitta Companies' and
its sole shareholder to consummate the Mergers, upon the terms and subject to
the conditions set forth herein and in accordance with the applicable
provisions of the Michigan Business Corporation Act ("MBCA"), (b) have adopted
and approved this Agreement and the transactions contemplated hereby and (c)
have recommended approval of the Mergers and this Agreement to their sole
shareholder.
23
The Board of Directors of Kitty Hawk has determined it advisable and
in the best interests of Kitty Hawk and of its stockholders to adopt and
approve, and have approved and adopted, (a) this Agreement, the Mergers and the
other transactions contemplated hereby including, without limitation, the
issuance of the Stock Merger Consideration (the "MERGER PROPOSALS") and (b)
amendments to the Bylaws of Kitty Hawk, to be effective upon Closing, with
respect to each of the governance matters described in Section 5.5 hereof (the
"GOVERNANCE AMENDMENTS," and, together with the Merger Proposals, the "KITTY
HAWK PROPOSALS").
The Boards of Directors of each of the Subs (a) have determined it
advisable and in the best interests of the Subs' sole shareholder to consummate
the Mergers, upon the terms and subject to the conditions set forth herein and
in accordance with the MBCA, (b) have adopted and approved this Agreement and
the transactions contemplated hereby, and (c) have recommended approval of the
Mergers and this Agreement to their respective shareholder.
Kitty Hawk, the Kalitta Companies, the Subs and the Subsidiaries
desire to operate their respective businesses both before and after the Closing
Date in accordance with the highest standards of business ethics.
The parties intend that for Federal income tax purposes each of the
AIA Merger, the AIT Merger, the FOL Merger and the OK Merger (all as
hereinafter defined) shall qualify as a reorganization under the provisions of
Section 368 of the Internal Revenue Code of 1986, as amended (the "CODE") but
that the KFS Merger will not so qualify.
The parties are entering into this Agreement to set forth the "plans
of merger" with respect to the Mergers in accordance with the MBCA, to make
certain representations, warranties and agreements as to the Mergers, and to
prescribe various conditions as to the Mergers.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
ARTICLE I
THE MERGERS
1.1 Definitions. Capitalized terms used herein but not
otherwise defined shall have the meanings ascribed thereto in the Definition
Appendix attached hereto beginning on page (vii).
1.2 The Mergers. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the MBCA, at the
Effective Time:
(a) Kitty Hawk - AIA shall be merged with and
into AIA (the "AIA MERGER") with AIA being the surviving corporation
of the AIA Merger;
2
24
(b) Kitty Hawk - AIT shall be merged with and
into AIT (the "AIT MERGER") with AIT being the surviving corporation
of the AIT Merger;
(c) Kitty Hawk - FOL shall be merged with and
into FOL (the "FOL MERGER") with FOL being the surviving corporation
of the FOL Merger;
(d) Kitty Hawk - KFS shall be merged with and
into KFS (the "KFS MERGER") with KFS being the surviving corporation
of the KFS Merger; and
(e) Kitty Hawk - OK shall be merged with and into
OK (the "OK MERGER") with OK being the surviving corporation of the OK
Merger.
Upon consummation of each of the Mergers, the separate corporate existence of
each of the Subs shall thereupon cease, and each of the Kalitta Companies, as
the surviving corporations in the Mergers (the "SURVIVING CORPORATIONS"), shall
by virtue of its respective Merger continue its corporate existence in
accordance with the MBCA.
1.3 Effective Time of the Mergers. The Mergers shall
become effective at the date and time (the "EFFECTIVE TIME") when properly
executed certificates of merger, in such form as is required by and executed in
accordance with the MBCA, are duly filed with the Department of Consumer and
Industry Services of the State of Michigan or at such later time as the parties
hereto shall have provided in such certificates. The parties hereto shall
cause such filings to occur as soon as practicable on or after the Closing
Date.
ARTICLE II
THE CONSTITUENT AND SURVIVING CORPORATIONS
2.1 Constituent Corporations. The names and designations
and number of outstanding shares of each class of shares of capital stock of
each of the constituent corporations (the "CONSTITUENT CORPORATIONS") entitled
to vote are as follows:
Constituent Shares Entitled
Merger Corporations Outstanding Shares to Vote
------ ------------ ------------------ ---------------
AIA Merger AIA 25,000 shares of common stock common stock
Kitty Hawk - AIA 1,000 shares of common stock common stock
AIT Merger AIT 1,000 shares of common stock common stock
Kitty Hawk - AIT 1,000 shares of common stock common stock
FOL Merger FOL 1,000 shares of common stock common stock
Kitty Hawk - FOL 1,000 shares of common stock common stock
KFS Merger KFS 25,000 shares of common stock common stock
Kitty Hawk - KFS 1,000 shares of common stock common stock
OK Merger OK 1,000 shares of common stock common stock
Kitty Hawk - OK 1,000 shares of common stock common stock
3
25
The number of outstanding shares of each of the Constituent
Corporations are not subject to change before the Effective Time within the
meaning of Section 701(2)(b) of the MBCA.
2.2 Articles of Incorporation.
(a) At the Effective Time, the Articles of Incorporation
of AIA, as they are in effect immediately prior to the Effective Time,
shall be amended and restated to read as set forth in Exhibit 2.2(a)
hereto, and such Articles of Incorporation, as so amended and
restated, shall be the Articles of Incorporation of the Surviving
Corporation resulting from the AIA Merger until thereafter amended as
provided by law.
(b) At the Effective Time, the Articles of Incorporation
of AIT, as they are in effect immediately prior to the Effective Time,
shall be amended and restated to read as set forth in Exhibit 2.2(b)
hereto, and such Articles of Incorporation, as so amended and
restated, shall be the Articles of Incorporation of the Surviving
Corporation resulting from the AIT Merger until thereafter amended as
provided by law.
(c) At the Effective Time, the Articles of Incorporation
of FOL, as they are in effect immediately prior to the Effective Time,
shall be amended and restated to read as set forth in Exhibit 2.2(c)
hereto, and such Articles of Incorporation, as so amended and
restated, shall be the Articles of Incorporation of the Surviving
Corporation resulting from the FOL Merger until thereafter amended as
provided by law.
(d) At the Effective Time, the Articles of Incorporation
of KFS, as they are in effect immediately prior to the Effective Time,
shall be amended and restated to read as set forth in Exhibit 2.2(d)
hereto, and such Articles of Incorporation, as so amended and
restated, shall be the Articles of Incorporation of the Surviving
Corporation resulting from the KFS Merger until thereafter amended as
provided by law.
(e) At the Effective Time, the Articles of Incorporation
of OK, as they are in effect immediately prior to the Effective Time,
shall be amended and restated to read as set forth in Exhibit 2.2(e)
hereto, and such Articles of Incorporation, as so amended and
restated, shall be the Articles of Incorporation of the Surviving
Corporation resulting from the OK Merger until thereafter amended as
provided by law.
2.3 Bylaws.
(a) At the Effective Time, the Bylaws of AIA, as they are
in effect immediately prior to the Effective Time, shall be amended
and restated to read as set forth in Exhibit 2.3(a) hereto, and such
Bylaws, as so amended and restated, shall be the Bylaws of the
Surviving Corporation resulting from the AIA Merger until thereafter
amended as provided by law. Kitty Hawk, as the sole shareholder of
such Surviving Corporation, shall so amend and restate such Bylaws at
the Effective Time.
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(b) At the Effective Time, the Bylaws of AIT, as they are
in effect immediately prior to the Effective Time, shall be amended
and restated to read as set forth in Exhibit 2.3(b) hereto, and such
Bylaws, as so amended and restated, shall be the Bylaws of the
Surviving Corporation resulting from the AIT Merger until thereafter
amended as provided by law. Kitty Hawk, as the sole shareholder of
such Surviving Corporation, shall so amend and restate such Bylaws at
the Effective Time.
(c) At the Effective Time, the Bylaws of FOL, as they are
in effect immediately prior to the Effective Time, shall be amended
and restated to read as set forth in Exhibit 2.3(c) hereto, and such
Bylaws, as so amended and restated, shall be the Bylaws of the
Surviving Corporation resulting from the FOL Merger until thereafter
amended as provided by law. Kitty Hawk, as the sole shareholder of
such Surviving Corporation, shall so amend and restate such Bylaws at
the Effective Time.
(d) At the Effective Time, the Bylaws of KFS, as they are
in effect immediately prior to the Effective Time, shall be amended
and restated to read as set forth in Exhibit 2.3(d) hereto, and such
Bylaws, as so amended and restated, shall be the Bylaws of the
Surviving Corporation resulting from the KFS Merger until thereafter
amended as provided by law. Kitty Hawk, as the sole shareholder of
such Surviving Corporation, shall so amend and restate such Bylaws at
the Effective Time.
(e) At the Effective Time, the Bylaws of OK, as they are
in effect immediately prior to the Effective Time, shall be amended
and restated to read as set forth in Exhibit 2.3(e) hereto, and such
Bylaws, as so amended and restated, shall be the Bylaws of the
Surviving Corporation resulting from the OK Merger until thereafter
amended as provided by law. Kitty Hawk, as the sole shareholder of
such Surviving Corporation, shall so amend and restate such Bylaws at
the Effective Time.
2.4 Board of Directors and Officers of the Surviving Corporations.
At the Effective Time, the directors and officers of each Kalitta Company shall
remain the directors and officers of the respective Surviving Corporation until
their respective successors shall be duly elected or appointed and qualified,
or until their earlier death, resignation or removal.
2.5 Effects of Mergers. The Mergers shall have the effects set
forth in Section 724(l) and any other applicable provisions of the MBCA.
Without limiting the foregoing, the corporate existence of each of the Kalitta
Companies, with all their purposes, powers and objects, shall continue
unaffected and unimpaired by the Mergers and, as the Surviving Corporation of
the respective Merger, each such Kalitta Company shall be governed by the laws
of the State of Michigan and shall succeed to all rights, assets, liabilities,
properties, privileges, powers, franchises and obligations of the respective
Sub in accordance with the laws of the State of Michigan. As of the Effective
Time, each of the Surviving Corporations shall be a wholly-owned subsidiary of
Kitty Hawk.
5
27
ARTICLE III
CONVERSION OF SECURITIES
3.1 Consideration for Mergers.
(a) At the Effective Time, by virtue of the AIA Merger of
Kitty Hawk - AIA with and into AIA and without any action on the part
of Kitty Hawk - AIA, AIA, Kitty Hawk or their respective shareholders
or stockholders (other than the filing of the certificate of merger
referred to in Section 1.3 hereof), (i) each share (an "AIA SHARE") of
AIA's common stock, par value $1.00 per share ("AIA COMMON STOCK"),
issued and outstanding immediately prior to the Effective Time (other
than shares of AIA Common Stock held in the treasury of AIA) shall be
canceled and extinguished and be converted automatically into the
right to receive 169.2532 shares of Kitty Hawk Common Stock (the "AIA
MERGER CONSIDERATION") payable, less any required withholding Taxes,
as provided in Section 3.2 upon surrender of the certificate formerly
representing such AIA Share (an "AIA CERTIFICATE"), and (ii) each AIA
Share then held in the treasury of AIA shall be canceled and retired
without conversion thereof and without payment of any consideration
and shall cease to exist.
(b) At the Effective Time, by virtue of the AIT Merger of
Kitty Hawk - AIT with and into AIT and without any action on the part
of Kitty Hawk - AIT, AIT, Kitty Hawk or their respective shareholders
or stockholders (other than the filing of the certificate of merger
referred to in Section 1.3 hereof), (i) each share (an "AIT SHARE") of
AIT's common stock, par value $1.00 per share ("AIT COMMON STOCK")
issued and outstanding immediately prior to the Effective Time (other
than shares of AIT Common Stock held in the treasury of AIT) shall be
canceled and extinguished and be converted automatically into the
right to receive 5.672 shares of Kitty Hawk Common Stock (the "AIT
MERGER CONSIDERATION") payable, less any required withholding Taxes,
as provided in Section 3.2 upon surrender of the certificate formerly
representing such AIT Share (an "AIT CERTIFICATE") and (ii) each AIT
Share then held in the treasury of AIT shall be canceled and retired
without conversion thereof and without payment of any consideration
and shall cease to exist.
(c) At the Effective Time, by virtue of the FOL Merger of
Kitty Hawk - FOL with and into FOL and without any action on the part
of Kitty Hawk - FOL, FOL, Kitty Hawk or their respective shareholders
or stockholders (other than the filing of the certificate of merger
referred to in Section 1.3 hereof), (i) each share (a "FOL SHARE") of
FOL's common stock, par value $1.00 per share ("FOL COMMON STOCK")
issued and outstanding immediately prior to the Effective Time (other
than shares of FOL Common Stock held in the treasury of FOL) shall be
canceled and extinguished and be converted automatically into the
right to receive 323.305 shares of Kitty Hawk Common Stock (the "FOL
MERGER CONSIDERATION") payable, less any required withholding Taxes,
as provided in Section 3.2 upon surrender of the certificate formerly
representing such FOL Share (a "FOL CERTIFICATE") and (ii) each FOL
Share then held in the treasury of FOL shall be canceled and retired
without conversion thereof and without payment of any consideration
and shall cease to exist.
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(d) At the Effective Time, by virtue of the KFS Merger of
Kitty Hawk - KFS with and into KFS and without any action on the part
of Kitty Hawk - KFS, KFS, Kitty Hawk or their respective shareholders
or stockholders (other than the filing of the certificate of merger
referred to in Section 1.3 hereof), (i) each share (a "KFS SHARE") of
KFS' common stock, par value $1.00 per share ("KFS COMMON STOCK"),
issued and outstanding immediately prior to the Effective Time (other
than shares of KFS Common Stock held in the treasury of KFS) shall be
canceled and extinguished and be converted automatically into the
right to receive without interest $800 payable, less any required
withholding Taxes, as provided in Section 3.2 upon surrender of the
certificate formerly representing such KFS Share (a "KFS CERTIFICATE")
and (ii) each KFS Share then held in the treasury of KFS shall be
canceled and retired without conversion thereof and without payment of
any consideration and shall cease to exist.
(e) At the Effective Time, by virtue of the OK Merger of
Kitty Hawk - OK with and into OK and without any action on the part of
Kitty Hawk - OK, OK, Kitty Hawk or their respective shareholders or
stockholders (other than the filing of the certificate of merger
referred to in Section 1.3 hereof), (i) each share (an "OK SHARE") of
OK's common stock, par value $1.00 per share ("OK COMMON STOCK")
issued and outstanding immediately prior to the Effective Time (other
than shares of OK Common Stock held in the treasury of OK) shall be
canceled and extinguished and be converted automatically into the
right to receive 538.843 shares of Kitty Hawk Common Stock (the "OK
MERGER CONSIDERATION") payable, less any required withholding Taxes,
as provided in Section 3.2 upon surrender of the certificate formerly
representing such OK Share (an "OK CERTIFICATE") and (ii) each OK
Share then held in the treasury of OK shall be canceled and retired
without conversion thereof and without payment of any consideration
and shall cease to exist.
(f) As used herein, "STOCK MERGER CONSIDERATION" shall
mean 5,099,150 duly authorized, validly issued, fully paid and
nonassessable shares of Kitty Hawk common stock, par value $0.01 per
share ("KITTY HAWK COMMON STOCK") issuable as the total number of
shares in the AIA Merger, the AIT Merger, the FOL Merger and the OK
Merger. In the event that, subsequent to the date of this Agreement
but prior to the Effective Time, the outstanding shares of Kitty Hawk
Common Stock, AIA Common Stock, AIT Common Stock, FOL Common Stock,
KFS Common Stock or OK Common Stock shall have been increased,
decreased, changed into or exchanged for a different number or kind of
shares or securities through a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or
other similar change in capitalization, or there shall have been
proposed any such change with a record date prior to the Effective
Time, then an appropriate and proportionate adjustment shall be made
in the Stock Merger Consideration, the Non-KFS Escrow Amount and, if
applicable, the KFS Cash Merger Consideration and the KFS Escrow
Amount.
3.2 Surrender of Certificates. At Closing, Kalitta shall
surrender all AIA Certificates, AIT Certificates, FOL Certificates, KFS
Certificates and OK Certificates, and Kitty Hawk shall pay and deliver the
Stock Merger Consideration payable as a result of the AIA Merger, the AIT
Merger, the FOL Merger and the OK Merger and the KFS Cash Merger Consideration
payable as a result of the KFS Merger in exchange for such certificates as
follows:
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(a) a portion of the AIA Merger Consideration equal to
1,150,000 shares of Kitty Hawk Common Stock shall, pursuant to the
irrevocable direction of Kalitta, be deposited at Closing with the
Escrow Agent to be held and administered in accordance with the
Non-KFS Escrow Agreement;
(b) a portion of the KFS Cash Merger Consideration equal
to $3,000,000, shall, pursuant to the irrevocable direction of
Kalitta, be deposited at Closing with the Escrow Agent to be held and
administered in accordance with the KFS Escrow Agreement; and
(c) the balance of the AIA Merger Consideration, the AIT
Merger Consideration, the FOL Merger Consideration, the OK Merger
Consideration and the KFS Cash Merger Consideration shall be paid and
delivered to Kalitta at Closing.
3.3 Conversion of Subs' Securities.
(a) At the Effective Time, each share of common stock of
Kitty Hawk - AIA issued and outstanding immediately prior to the
Effective Time shall be converted, by virtue of the AIA Merger and
without any action on the part of the holder thereof, into one fully
paid and nonassessable share of common stock of AIA as the Surviving
Corporation of the AIA Merger.
(b) At the Effective Time, each share of common stock of
Kitty Hawk - AIT issued and outstanding immediately prior to the
Effective Time shall be converted, by virtue of the AIT Merger and
without any action on the part of the holder thereof, into one fully
paid and nonassessable share of common stock of AIT as the Surviving
Corporation of the AIT Merger.
(c) At the Effective Time, each share of common stock of
Kitty Hawk - FOL issued and outstanding immediately prior to the
Effective Time shall be converted, by virtue of the FOL Merger and
without any action on the part of the holder thereof, into one fully
paid and nonassessable share of common stock of FOL as the Surviving
Corporation of the FOL Merger.
(d) At the Effective Time, each share of common stock of
Kitty Hawk - KFS issued and outstanding immediately prior to the
Effective Time shall be converted, by virtue of the KFS Merger and
without any action on the part of the holder thereof, into one fully
paid and nonassessable share of common stock of KFS as the Surviving
Corporation of the KFS Merger.
(e) At the Effective Time, each share of common stock of
Kitty Hawk - OK issued and outstanding immediately prior to the
Effective Time shall be converted, by virtue of the OK Merger and
without any action on the part of the holder thereof, into one fully
paid and nonassessable share of common stock of OK as the Surviving
Corporation of the OK Merger.
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3.4 Shareholder to Have No Further Rights as to Kalitta Companies.
At and after the Effective Time, Kalitta shall cease to have any rights as a
shareholder of AIA, AIT, FOL, KFS and OK, other than indirectly as a
stockholder of Kitty Hawk.
3.5 Written Consent of Sole Shareholder of Subs. Concurrent with
the execution of this Agreement, Kitty Hawk, as the sole shareholder of the
Subs, shall duly adopt and approve this Agreement and the Related Agreements,
the Mergers and the transactions contemplated by this Agreement and the Related
Agreements by written consent. Kitty Hawk, as the sole shareholder of each
Sub, shall not amend, rescind or withdraw its adoption and approval of this
Agreement and the Related Agreements, the Mergers and the transactions
contemplated by this Agreement and the Related Agreements.
3.6 Written Consent of Sole Shareholder of each Kalitta Company.
Concurrent with the execution of this Agreement, Kalitta, as the sole
shareholder of the Kalitta Companies, shall duly adopt and approve this
Agreement, the Related Agreements to which the Kalitta Companies are parties or
signatories, the Mergers and the transactions contemplated by this Agreement
and such Related Agreements. Kalitta shall not as the sole shareholder of the
Kalitta Companies amend, rescind or withdraw his adoption and approval of the
Agreement and the Mergers and the transactions contemplated by this Agreement
and the Related Agreements.
3.7 Closing. Unless this Agreement is terminated and the
transactions contemplated herein abandoned pursuant to Article VIII and subject
to the satisfaction or, if permissible, waiver of the conditions set forth in
Article VI, the consummation of the Closing shall take place (a) at the offices
of Xxxxxx and Xxxxx, LLP, Dallas, Texas, at 11:00 A.M. local time on a date to
be specified by Kitty Hawk and Kalitta, but as soon as practicable (and in any
event within two Business Days) after the day on which the last of the
conditions set forth in Article VI is fulfilled (other than deliveries of
instruments to be made at Closing) or, if permissible, waived by the relevant
party or (b) at such other date, time and place as Kitty Hawk and Kalitta shall
agree upon in writing. The date on which the Closing occurs is referred to
herein as the "CLOSING DATE."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Kalitta and the Kalitta
Companies. To induce Kitty Hawk and the Subs to enter into this Agreement and
to consummate the transactions contemplated hereby, each of the Kalitta
Companies severally and solely as to representations and warranties concerning
itself and not with respect to any other Kalitta Company and Kalitta represents
and warrants to Kitty Hawk and the Subs as follows (each such representation
and warranty being qualified in its entirety by the disclosures set forth in
the Disclosure Schedule of the Kalitta Companies):
4.1.1 Corporate Existence and Authority.
(a) Each of the Kalitta Companies is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Michigan. Each of the Kalitta Companies has all requisite
corporate power and authority to own its properties and assets and to
carry on its business as it has been and is being
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conducted. Each of the Kalitta Companies is qualified to do business
as a foreign corporation and is in good standing in each state, nation
or other jurisdiction listed on the Disclosure Schedule, being each
state, nation or other jurisdiction wherein the character of the
properties owned or held under lease by it or the nature of the
business transacted by it makes such qualification necessary, except
for any state, nation or other jurisdiction where the failure to be so
qualified would not reasonably be expected to have a Material Adverse
Effect on the Kalitta Companies.
(b) American International Cargo ("AIC") is a
co-partnership organized pursuant to and presently existing under the
laws of the State of Michigan under a revised and restated partnership
agreement (the "AIC PARTNERSHIP AGREEMENT") dated September 29, 1994.
AIC has the partnership power to carry on its business as it has been
and is now being conducted. The only co-partners of AIC are AIA and
Pacific Aviation Logistics, Inc., a California corporation,
wholly-owned by Beti Xxxx. AIA owns a 60% interest in AIC's net
income, in its capital accounts, and in the partnership shares or
interests of AIC for purposes of determining management decisions
under Section 5.1 of the AIC Partnership Agreement. AIC is qualified
to do business and is in good standing in each state, nation or other
jurisdiction listed on the Disclosure Schedule, being each state,
nation or other jurisdiction wherein the character of the properties
owned or held under lease by it or the nature of the business
transacted by it makes such qualification necessary, except for any
state, nation or other jurisdiction where the failure to be so
qualified would not reasonably be expected to have a Material Adverse
Effect on the Kalitta Companies. The AIC Partnership Agreement has
not been amended, and remains in full force and effect without uncured
default by either co-partner. The Kalitta Companies have previously
provided a true and correct copy of the AIC Partnership Agreement to
Kitty Hawk.
4.1.2 Capitalization of the Kalitta Companies.
(a) The authorized capital stock of AIA consists solely
of 25,000 shares of AIA Common Stock of which 25,000 shares are issued
and outstanding.
(b) The authorized capital stock of AIT consists of
50,000 shares of AIT Common Stock of which 1,000 shares are issued and
outstanding.
(c) The authorized capital stock of FOL consists of
50,000 shares of FOL Common Stock of which 1,000 shares are issued and
outstanding.
(d) The authorized capital stock of KFS consists of
100,000 shares of KFS Common Stock of which 25,000 shares are issued
and outstanding.
(e) The authorized capital stock of OK consists of 50,000
shares of OK Common Stock of which 1,000 shares are issued and
outstanding.
(f) No other shares of capital stock of the Kalitta
Companies are issued and outstanding. On the date hereof, all the
issued and outstanding shares of capital stock of the Kalitta
Companies are held solely by Kalitta free and clear of any Lien and
Kalitta is the record and beneficial owner of such shares. The co-
partnership interest of AIA in AIC is held solely by AIA free and
clear of any Lien except
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Permitted Liens, if any. All of the issued and outstanding shares of
capital stock of the Kalitta Companies have been duly authorized and
validly issued in accordance and compliance with all applicable laws,
rules and regulations and are fully paid and nonassessable. There are
no securities, options, warrants, rights, calls, commitments, plans,
contracts or other agreements of any character granted or issued by
any of the Kalitta Companies which provide for the purchase, issuance
or transfer of any shares of the capital stock of any of the Kalitta
Companies, nor are there any outstanding securities granted or issued
by any of the Kalitta Companies that are convertible into or
exchangeable for any shares of the capital stock of any of the Kalitta
Companies, and none are authorized. There are no securities, options,
warrants, rights, calls, commitments, plans, contracts or other
agreements of any character granted or issued by AIC which provide for
the purchase, issuance or transfer of any of the co-partnership
interests in AIC, nor are there any outstanding obligations or
securities granted or issued by AIC that are convertible into or
exchangeable for any co-partnership interests of AIC, and none are
authorized. None of the Kalitta Companies are obligated or committed
to purchase, redeem or otherwise acquire any of their capital stock.
AIC is not obligated or committed to purchase, redeem or otherwise
acquire any of its co-partnership interests. All presently
exercisable voting rights in the Kalitta Companies are vested
exclusively in their respective outstanding shares of common stock,
each share of which is entitled to one vote on every matter to come
before such corporations' sole shareholder. There are no voting
trusts or other voting arrangements with respect to any of the Kalitta
Companies' capital stock or the co-partnership interests of AIC. None
of the Kalitta Companies have any subsidiaries.
4.1.3 Validity and Authorization; Corporate Power and
Authority. Each of the Kalitta Companies has full corporate power and
authority to execute, deliver and perform this Agreement, the Related
Agreements and the other instruments called for by this Agreement to which it
is or is to be a party. This Agreement has been duly authorized, executed and
delivered by each of the Kalitta Companies and constitutes the legal, valid and
binding obligation of each of the Kalitta Companies, enforceable against the
Kalitta Companies in accordance with its terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting enforcement of creditors' rights generally and by
general principles of equity (whether applied in a proceeding at law or in
equity).
When the Related Agreements and the other instruments called for by
this Agreement to which any of the Kalitta Companies is a party are executed
and delivered at the Closing, such Related Agreements and instruments will have
been duly authorized, executed and delivered by each such Kalitta Company,
enforceable against each such Kalitta Company in accordance with their terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or other similar laws affecting enforcement of
creditors' rights generally and by general principles of equity (whether
applied in a proceeding at law or in equity).
Kalitta has full requisite power and authority to execute, deliver and
perform this Agreement, the Related Agreements and the other instruments called
for by this Agreement to which he is a party and this Agreement has been duly
authorized, executed and delivered by Kalitta and constitutes the legal, valid
and binding obligation of Kalitta, enforceable against Kalitta in accordance
with its terms, except as such enforcement may be limited by
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bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting enforcement of creditors' rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity).
When the Related Agreements and the other instruments called for by
this Agreement to which Kalitta is a party are executed and delivered at the
Closing, such Related Agreements and instruments will have been duly
authorized, executed and delivered by Kalitta pursuant to full requisite power
and authority to execute, deliver and perform such Related Agreements and the
other instruments called for by this Agreement and will constitute the legal,
valid and binding obligations of Kalitta, enforceable against Kalitta in
accordance with their terms, except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting enforcement of creditors' rights generally and by general principles
of equity (whether applied in a proceeding at law or in equity).
4.1.4 Execution; No Violations. The execution and delivery
of this Agreement and each of the Related Agreements by Kalitta and each of the
Kalitta Companies does not, and the consummation by Kalitta and each of the
Kalitta Companies of the transactions contemplated hereby and thereby will not:
(a) violate, conflict with, modify, result in the incurrence of any prepayment
penalties or cause any default under or acceleration of (or give any party any
right to declare any default or acceleration upon notice or passage of time or
both), in whole or in part, any articles of incorporation, bylaw, Lien,
indenture, lease, agreement, instrument, order, injunction, decree, or judgment
to which Kalitta or any of the Kalitta Companies are a party or by which any of
them or any of their properties are bound; (b) result in the creation of any
Lien on any property or asset (whether real, personal, mixed, tangible or
intangible) of Kalitta or any of the Kalitta Companies; (c) violate any law,
rule or regulation applicable to Kalitta or any of the Kalitta Companies; or
(d) permit any federal or state regulatory agency to impose any restrictions or
limitations of any nature on Kalitta or any of the Kalitta Companies or any of
their respective activities, except in each case as would not reasonably be
expected to have a Material Adverse Effect on the Kalitta Companies.
4.1.5 Governmental and Other Consents. Except for filings
under the HSR Act, approval by the DOT of the deemed "de facto" transfer of the
foreign air transportation authority issued to AIA and KFS and the filing of
the certificates of merger contemplated by Section 1.3, no consent, approval or
authorization of, or designation, declaration or filing with, any governmental
authority is required on the part of Kalitta or any Kalitta Company in
connection with the execution or delivery of this Agreement, the Related
Agreements or the consummation by them of the transactions contemplated hereby
and thereby, except as would not reasonably be expected to have a Material
Adverse Effect on the Kalitta Companies.
The Disclosure Schedule lists all consents, approvals or
authorizations of third Persons, required in connection with Kalitta's and each
of the Kalitta Companies' valid execution, delivery or performance of this
Agreement and the Related Agreements to which they are a party or the
consummation of any of the transactions contemplated hereby or thereby on the
part of any of them (collectively, the "KALITTA CONSENTS"), including but not
limited to the consents required under the Contracts, except, in each case, as
would not reasonably be expected to have a Material Adverse Effect on the
Kalitta Companies.
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4.1.6 Financial Statements. The Disclosure Schedule
contains true and correct copies of (i) the audited combined balance sheets for
the Kalitta Companies and AIC at December 31, 1996, 1995 and 1994 and the
related statements of profit and loss and cash flows for each of the one-year
periods then ended, (ii) the unaudited, combined balance sheets for AIC and the
Kalitta Companies and AIC at June 30, 1996 and 1997 and the related statements
of profit and loss and cash flows for each of the six-month periods then ended,
and (iii) when delivered pursuant to this Agreement, similar financial
statements for each additional month ending more than thirty (30) Business Days
before the Closing (collectively, the "FINANCIAL STATEMENTS").
The Financial Statements present fairly the financial position of the
Kalitta Companies as of the dates thereof and the results of the Kalitta
Companies' and AIC's operations and cash flows for the periods then ended, in
accordance with GAAP, except that in the case of the Financial Statements
described in clauses (ii) and (iii) above are also subject to recurring year
end adjustments, if any, that are normal in nature and amount. The Kalitta
Companies and AIC maintain a system of accounting, including without limitation
a system of internal controls, which permits them to prepare financial
statements that present fairly their respective financial positions and results
of operations.
4.1.7 Absence of Certain Liabilities. Other than
liabilities and obligations covered by another representation and warranty of
the Kalitta Companies in Section 4.1 (such as Taxes, Environmental Matters and
Compliance with Laws), it being the intention of the parties that any such
liabilities and obligations shall be governed, if at all, by such other
representations and warranties, (a) as of December 31, 1996, none of the
Kalitta Companies had any material liabilities or obligations of any nature
(whether absolute, accrued, contingent, due or to become due) except as and to
the extent reflected and fully reserved against in the Financial Statements
(including general reserves) and (b) since December 31, 1996, the Kalitta
Companies have not incurred any such liabilities or obligations of any nature
other than those reflected or reserved against in the Financial Statements
(including general reserves) or incurred in the ordinary course of business
since the date thereof.
4.1.8 Absence of Changes. Except as expressly provided in
this Agreement or as disclosed on the Disclosure Schedules in alphabetical
order corresponding to the following subsections, since December 31, 1996 there
has not been:
(a) Any change or aggregate of changes in the condition
(financial or otherwise), business, assets, or liabilities of any of
the Kalitta Companies or AIC that would reasonably be expected to
result in a Material Adverse Effect in the Kalitta Companies;
(b) Any change in the capitalization of the Kalitta
Companies or AIC, including, without limitation, the issuance by any
of the Kalitta Companies or AIC of any shares of stock of any class,
any subscriptions, options, warrants, convertible securities, rights,
calls, agreements, commitments or rights affecting or relating in any
manner whatsoever to any equitable interests in the Kalitta Companies
or AIC;
(c) Any purchase, redemption or other acquisition by the
Kalitta Companies or AIC, or any commitment, plan or agreement by any
of the Kalitta Companies or AIC to purchase, redeem or otherwise
acquire any shares of their capital stock or other equitable
interests;
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(d) Any merger or consolidation or agreement to merge or
consolidate by any of the Kalitta Companies or AIC with another
Person, or any purchase of or investment in or agreement to purchase
or invest by any of the Kalitta Companies or AIC in the business of
another Person;
(e) Any declaration, payment or setting aside by any of
the Kalitta Companies of any dividends or other distributions of any
assets of any kind whatsoever to their shareholders or other equitable
owners, except for ordinary salary payments for services actually
rendered and except for a distribution of up to $1,500,000 solely for
the payment by Kalitta of Taxes attributable to earnings of the
Kalitta Companies since January 1, 1997;
(f) Any amendment to the articles of incorporation or
bylaws of any of the Kalitta Companies or the co-partnership agreement
of AIC;
(g) Any increase in the compensation or rate of
compensation or commission payable or to become payable by any of the
Kalitta Companies or AIC to any of their directors, officers, salaried
employees earning more than $75,000 per annum, salesmen or agents, or
any General Increase in the compensation or rate of compensation
payable or to become payable to any of their hourly employees or
salaried employees earning $75,000 per annum or less ("GENERAL
INCREASE" for purposes hereof shall mean any increase applicable to a
class or group of employees and does not include increases granted to
individual employees for merit, length of service, change in position
or responsibility or other reasons applicable to specific employees
and not generally to a class or group thereof), or any aggregate
increase in compensation to any directors, officers or salaried
employees, of more than $20,000, or any hiring of any employee at a
salary in excess of $75,000 per annum, or any termination of any key
employee or any employee whose compensation was in excess of $75,000
per annum;
(h) Any material change in any existing, or adoption of
or entering into any new, benefit plan or arrangement (whether written
or oral) affecting any of the officers, directors, employees, salesmen
or agents of any of the Kalitta Companies or AIC, including, without
limitation, any bonus, profit-sharing, pension, deferred compensation,
severance or termination pay benefit, stock option, group life or
health insurance or other similar plans, agreements or arrangements;
(i) Any release, cancellation, modification or waiver of
any obligation, indebtedness, liability or Lien held by any of the
Kalitta Companies or AIC, unless such obligation, indebtedness,
liability or Lien has been paid in full at the time of release;
(j) Any waivers, compromises or settlements by any of the
Kalitta Companies of any right or claim of any of the Kalitta
Companies or AIC in excess of $500,000 in the aggregate; or any
institution or settlement of, or agreement to settle,
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any litigation, action or proceeding before any court or governmental
body relating to any of the Kalitta Companies or AIC or any of their
properties;
(k) Any mortgage, pledge or other subjection to any Lien
or option of any property, asset, right or business of any of the
Kalitta Companies or AIC, other than Permitted Liens and those
incurred in the ordinary course of business;
(l) Any assumptions or guarantees (except endorsements of
negotiable instruments in the ordinary course of business) by any of
the Kalitta Companies or AIC of the obligations of any Person, except
in the ordinary course of business and consistent with past practice,
but in no event in excess of $50,000 when all such assumptions,
guarantees and endorsements are aggregated;
(m) Any payment or satisfaction by any of the Kalitta
Companies or AIC of any material liability, obligation or
indebtedness, other than those reflected on the Financial Statements
and those incurred in the ordinary course of business and consistent
with past practice;
(n) Any loan or advance, any commitment to loan or
advance, or any renewal, refunding or extension of any existing loan,
made by any of the Kalitta Companies to any Person, except in the
ordinary course of business and consistent with past practice, but in
no event any loan or advance, any commitment to loan or advance, or
any renewal, refunding or extension of any existing loan, by any of
the Kalitta Companies or AIC to Kalitta or any of their officers or
directors or to any Affiliate of Kalitta or any such officer or
director;
(o) Any actions taken or transactions entered into by any
of the Kalitta Companies or AIC involving more than $100,000 in the
aggregate, other than the Kalitta Companies Permitted Transactions or
in the ordinary course of business and consistent with past practice,
or any capital expenditures or commitments therefor in excess of
$100,000 in the aggregate, other than in the ordinary course of
business;
(p) Any creations, renewals, material changes or
terminations, or any notice of any proposed renewal, material change
or termination of any contract, agreement, commitment, obligation,
lease or license involving more than $100,000 in the aggregate or
extending beyond six (6) months from the date of this Agreement, to
which any of the Kalitta Companies or AIC is a party or by which any
of the Kalitta Companies or AIC or their property is bound, other than
in the ordinary course of business;
(q) Any sale, assignment, lease, abandonment or other
disposition by any of the Kalitta Companies or AIC of any real
property, or any sale, assignment, transfer, license, lapse, or other
disposition by any of the Kalitta Companies or AIC of any material
trademark, trade name, copyright (or pending application for any
material trademark or copyright), or other intangible asset;
(r) Any sale, assignment or transfer of any contract,
agreement, lease, or asset by any of the Kalitta Companies or AIC,
except the Kalitta Companies Permitted Transactions or in the ordinary
course of business and consistent with past practice;
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(s) Any general labor dispute, or threat of a general
labor dispute, or any attempt or threat of any attempt by a union to
organize any employees of any of the Kalitta Companies or AIC who are
not now covered under an existing union or collective bargaining
agreement;
(t) Any lapse of any material insurance policy or
coverage of any of the Kalitta Companies or AIC, except for normal
renewals and/or replacements;
(u) Any failure by any of the Kalitta Companies or AIC to
replenish inventories and supplies in a normal and customary manner
consistent with prior practice; any purchase commitment by any of the
Kalitta Companies or AIC in excess of the normal, ordinary and usual
requirements of business or at any price in excess of the then current
market price or upon terms and conditions more onerous than those
usual and customary in the Kalitta Companies' or AIC's business;
(v) Any material damage, destruction or loss to the
business or properties of any of the Kalitta Companies or AIC, whether
or not covered by insurance, including, without limitation, any
damage, destruction or loss as a result of fire, explosion, accident,
earthquake, lightning, aircraft, vehicle, smoke, hail, flood, drought,
storm, strike, work stoppage, lockout, sabotage, embargo,
condemnation, riot, civil disturbance, vandalism or act of God or
public enemy the result of which is a Material Adverse Effect on the
Kalitta Companies;
(w) Any granting of powers of attorney by any of the
Kalitta Companies or AIC; any material change in their banking or safe
deposit arrangements; any material writing up or writing down of the
carrying value of any of their assets; any material change in their
depreciation or amortization policies or rates heretofore adopted; or
any material change in any basic policy or practice by any of the
Kalitta Companies or AIC with respect to liquidity management and cash
flow planning, lending, budgeting, pricing, profit and tax planning,
personnel practices and accounting practices; or
(x) Any other material action taken or transaction
entered into by any of the Kalitta Companies or AIC other than in the
ordinary course of business.
4.1.9 Taxes.
(a) Each of the Kalitta Companies (and any predecessor of
each) has elected to be treated as a Subchapter S corporation under
the Code. Each such Subchapter S corporation election is valid,
currently effective and has not been violated or terminated. To the
extent required, each of the Kalitta Companies has made an election
equivalent to a Subchapter S election under analogous laws of the
states where such companies are qualified or are otherwise doing
business and such elections are valid, currently effective and have
not been violated or terminated;
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(b) The Kalitta Companies and AIC have duly and timely
filed all required federal, state, local and other tax returns,
information returns, notices and reports (including, without
limitation, income, property, sales, use, franchise, capital stock,
excise, value added, employees' income withholding, social security
and unemployment tax returns, notices and reports) (collectively, "TAX
RETURNS") related to the Kalitta Companies heretofore due, and all
such Tax Returns are correct, accurate and complete in all material
respects;
(c) All deposits required to be made by the Kalitta
Companies or AIC with respect to any Tax (including, without
limitation, estimated income, franchise and employee withholding
Taxes) have been duly and timely made;
(d) There has not been during the past five (5) years any
audits or examinations of any tax returns filed by any of the Kalitta
Companies or AIC, no audits or examinations of any tax returns of any
of the Kalitta Companies or AIC are in progress, and none of the
Kalitta Companies nor AIC have been notified by any tax authority that
any such audits or examinations are contemplated or pending;
(e) All Taxes with respect to each of the Kalitta
Companies and AIC that have become due and payable on or before June
30, 1997 have been timely paid in full or adequately reserved against
on the Financial Statements, and all Taxes which have become due and
payable subsequent to June 30, 1997 have been paid in full or
adequately reserved against on their books of account and the amounts
reflected on the Financial Statements and such books are sufficient
for the payment of all unpaid Taxes with respect to the periods then
ended and for all periods prior thereto. There are no Liens on any of
the assets of any of the Kalitta Companies or AIC that arose in
connection with any failure (or alleged failure) to pay any Tax,
except those that are not yet due and payable or are being contested
in good faith by appropriate proceedings;
(f) There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the
assessment or collection of any Tax against any of the Kalitta
Companies or AIC, nor are there any actions, suits, proceedings,
investigations or claims now pending against any of the Kalitta
Companies or AIC in respect of any Tax, or any matters under
discussion with any federal, state, local or foreign authority, or any
claims for refund by the Kalitta Companies or AIC for overpaid Taxes
relating to any Taxes, or any claims for additional Taxes asserted by
any such authority, and there is no basis for the assertion of any
additional Taxes against any of the Kalitta Companies or AIC;
(g) None of the Kalitta Companies, Kalitta or AIC has
ever filed a consent pursuant to Section 341(f) of the Code. None of
Kalitta, the Kalitta Companies or AIC has entered into a closing
agreement pursuant to Section 7121 of the Code. None of Kalitta, the
Kalitta Companies or AIC are parties to any tax sharing or similar
agreement;
(h) To the Knowledge of Kalitta Management, the
consummation of the transactions contemplated by this Agreement will
not result in the imposition of any
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additional Taxes on any of the Kalitta Companies or AIC, except for
Taxes relating to the consummation of the Kalitta Companies Permitted
Transactions;
(i) None of the Kalitta Companies or AIC has made any
payments, is obligated to make any payments, or is a party to any
agreement that under certain circumstances could obligate it to make
any payments that will not be deductible under Section 280G of the
Code;
(j) Each of the Kalitta Companies and AIC has withheld
and paid all Taxes required to have been withheld and paid in
connection with amounts paid or owing to any employee, creditor,
independent contractor or other third party;
(k) None of the assets of any of the Kalitta Companies or
AIC constitutes tax-exempt bond financed property or tax-exempt use
property within the meaning of Section 168 of the Code;
(l) None of the Kalitta Companies or AIC is a party to
any "safe harbor lease" that is subject to the provisions of Section
168(f)(8) of the Code as in effect prior to the Tax Reform Act of
1986, or to any "long-term contract" within the meaning of Section 460
of the Code;
(m) There are no accounting method changes or proposed or
threatened accounting method changes of any of the Kalitta Companies
or AIC that could give rise to an adjustment under Section 481 of the
Code for periods after the Closing Date;
(n) Each of the Kalitta Companies and AIC has disclosed
(in accordance with Section 6662(d)(2)(B)(ii) of the Code) on its
federal income tax returns all positions taken therein could give rise
to a substantial understatement of federal income tax within the
meaning of Section 6662(d) of the Code; and
(o) For purposes of this Agreement, all references to
sections of the Code shall include any predecessor provisions to such
sections and any similar provisions of state, local or foreign law.
4.1.10 Disputes and Litigation. (a) There is no suit,
arbitration, action, litigation, proceeding, investigation, claim, complaint or
accusation pending (the "PROCEEDINGS") of which any of the Kalitta Companies
have received written notice or, to the Knowledge of Kalitta Management,
threatened against or affecting any of the Kalitta Companies, AIC or Kalitta or
any of their properties, assets or business or to which any of the Kalitta
Companies, AIC or Kalitta is a party, in any court or before any arbitrator of
any kind or before or by any governmental agency (including, without
limitation, any federal, state, local, foreign or other governmental
department, commission, board, bureau, agency or instrumentality), and no facts
are Known by Kalitta Management which are reasonably likely to give rise to any
such Proceeding, the result of which would reasonably be expected to result in
a Material Adverse Effect on the Kalitta Companies; (b) to the Knowledge of
Kalitta Management, there is no pending or threatened change in any
environmental, zoning or building laws, regulations or ordinances the result of
which would reasonably be expected to result in a Material Adverse Effect on
the Kalitta Companies; and (c) there is no
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outstanding order, writ, injunction, decree, judgment or award by any court,
arbitrator or governmental body against or affecting any of the Kalitta
Companies or any of their properties, assets or business. None of the items
nor aggregate of items listed in the Disclosure Schedule would, if adversely
determined, reasonably be expected to have a Material Adverse Effect on the
Kalitta Companies. To the Knowledge of Kalitta Management, there is no
Proceeding, formal or informal, pending or threatened which would give rise to
any right of indemnification on the part of any director or officer of any of
the Kalitta Companies or any such person's heirs, executors or administrators
as against any of the Kalitta Companies or AIC.
4.1.11 Compliance with Laws. Except for any noncompliance
to be covered by any other representation and warranty of Kalitta or the
Kalitta Companies contained in Section 4.1 (for example, Taxes or Employees),
it being the intention of the parties that such noncompliance shall be
governed, if at all, by such other representations and warranties, the Kalitta
Companies and AIC presently are and have at all times been since September 1,
1994 and to the Knowledge of Kalitta Management have at all times during the
period preceding September 1, 1994, been in full compliance with any applicable
federal, state, local, foreign and other laws, rules and regulations other than
those where noncompliance would not reasonably be expected to have a Material
Adverse Effect on the Kalitta Companies, and neither the Kalitta Companies nor
AIC has received any written or, to the Knowledge of Kalitta Management, oral
notice of any claimed violation of any such law, rule or regulation which would
reasonably be expected to have a Material Adverse Effect on the Kalitta
Companies. The Kalitta Companies and AIC have filed all returns, reports and
other documents and furnished all information required or requested by any
federal, state, local or foreign governmental or quasi- governmental agency and
all such returns, reports, documents and information are true and complete in
all respects except where such failure to file or inaccuracies would not be
reasonably expected to result in a Material Adverse Effect on the Kalitta
Companies. All permits, licenses, orders, franchises and approvals of all
federal, state, local and foreign governmental or quasi-governmental or
regulatory bodies required of the Kalitta Companies and AIC for the conduct of
their businesses have been obtained, other than those where noncompliance would
not reasonably be expected to have a Material Adverse Effect on the Kalitta
Companies, no violations are or have been recorded in respect of any such
permits, licenses, orders, franchises and approvals, and there is no
Proceeding, formal or informal, pending or, to the Knowledge of Kalitta
Management, threatened, which may revoke, limit, or question the validity,
sufficiency or continuance of any such permit, license, order, franchise or
approval, except in each case where the same would not reasonably be expected
to have a Material Adverse Effect on the Kalitta Companies. Such permits,
licenses, orders, franchises and approvals are valid and sufficient for all
activities presently carried on by the Kalitta Companies and AIC, except in
each case where the same would not reasonably be expected to have a Material
Adverse Effect on the Kalitta Companies. Neither the Kalitta Companies, nor
any officer, director, employee, shareholder or agent of the Kalitta Companies
has made any offer, payment, promise to pay, or authorization of the payment of
any money, offer, gift, promise to give, or authorization of anything of value
to any Person named or identified in Section 30A of the Exchange Act for any
unlawful purpose described in Section 30A of the Exchange Act.
4.1.12 Insurance. The Disclosure Schedule sets forth a true
and complete list of all insurance policies (including the policy number, the
name of the insurer, the amounts of coverage, the premium rate, the cash value,
if any, the expiration date and the risks and
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losses insured against) maintained by any of the Kalitta Companies or AIC on
their properties, assets, products, businesses and personnel, and the Kalitta
Companies and AIC shall deliver copies of all such policies, agreements,
studies and analyses to Kitty Hawk not later than fourteen (14) days after the
date of this Agreement. All of the foregoing insurance policies are in full
force and effect and are fully paid as to all premiums heretofore due. None of
the Kalitta Companies or AIC has failed to give any notice or present any
material claim under such insurance policies in timely fashion, nor has the
Kalitta Companies or AIC received any written notification of the cancellation
of any of such policies or that any of them will not be renewed.
4.1.13 Title to Properties. The properties and assets of
each of the Kalitta Companies consist of (a) all of the properties and assets
reflected on the Financial Statements as owned by it and (b) all other material
properties and assets presently carried on the Kalitta Companies' books as
owned by it or used in their businesses at any time since December 31, 1996,
except, in each case, properties and assets licensed, leased or as to which a
Kalitta Company otherwise has the right to use and assets subsequently disposed
of, or are disposed of pursuant to the Kalitta Companies Permitted
Transactions. Neither Kalitta nor any Affiliate of Kalitta owns any
properties or assets used in or related to, the aviation, transportation or
travel services industries. Except as set forth in the Disclosure Schedule, the
Kalitta Companies and AIC have good and marketable title to all of their
respective properties and assets (whether real, personal, mixed, tangible or
intangible) owned by them free and clear of all Liens, except Permitted Liens,
if any.
4.1.14 Real Property and Real Property Leases. The
Disclosure Schedule contains a true and complete list of (a) all real property
owned by the Kalitta Companies or AIC, (b) all real estate leases to which any
of the Kalitta Companies or AIC is a party, and (c) all other material
interests, if any, in real property owned or claimed by the Kalitta Companies
or AIC. To the Knowledge of Kalitta Management, the Kalitta Companies and AIC
have all material easements and rights, including parking rights and easements
for power lines, water lines, roadways and other access, necessary to conduct
the businesses they now conduct and enjoy peaceful and undisturbed possession
of all properties occupied by them. To the Knowledge of Kalitta Management,
neither the whole nor any portion of any real property owned, occupied or
leased to or by the Kalitta Companies and AIC has been rezoned or condemned or
otherwise taken by any public authority and, to the Knowledge of Kalitta
Management, no such rezoning, condemnation or other taking is threatened or
contemplated. None of the real properties owned, occupied or leased to or by
the Kalitta Companies and AIC, or the occupancy or operation thereof,
constitutes a nuisance or violation of any law or any building, zoning or other
ordinance, code or regulation or any private or public covenant or restriction,
and no written notice from any governmental body or other Person has been
served upon the Kalitta Companies and AIC claiming any outstanding violation of
any such law, ordinance, code, regulation, covenant or restriction, or
requiring or calling attention to the need for any material amount of work,
repairs, construction, alterations or installations on or in connection with
any of such properties which has not been complied with. All leases of real
property to which any of the Kalitta Companies or AIC is a party are valid,
binding and in full force and effect, and, there exists no material default
thereunder by the Kalitta Companies or, to the Knowledge of Kalitta Management,
any other party thereto, nor any events which, with notice or lapse of time, or
both, would constitute a material default by the Kalitta Companies thereunder,
and all rents heretofore payable under such leases have been paid in full. The
Kalitta Companies shall deliver to Kitty Hawk
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not later than fourteen (14) days after the date of this Agreement, true,
correct and complete copies of all deeds to the real property listed on the
Disclosure Schedule and true, correct and complete copies of all real estate
leases listed on the Disclosure Schedule, including all amendments,
modifications, letter agreements and assignments relating thereto.
4.1.15 Equipment. The Disclosure Schedule contains a true
and complete list of engines and airframes of the Kalitta Companies or AIC
having a cost in excess of $25,000 and used by the Kalitta Companies in their
businesses except for engines and airplanes used for spare parts, and (b) all
equipment (including, but not limited to, trade fixtures and motor vehicles)
leased by the Kalitta Companies or AIC with annual lease payments of $20,000 or
more, including the name and address of each lessor and lessee, the expiration
date of each lease, the monthly rent and any additional rent payable under each
such lease. None of the Kalitta Companies are in material default under any
such lease and to the Knowledge of Kalitta Management, each such lease is
valid, binding and in full force and effect. The Kalitta Companies shall
deliver to Kitty Hawk not later than fourteen (14) days after the date of this
Agreement, true, correct and complete copies of all such leases, including all
amendments, modifications, letter agreements and assignments relating thereto.
4.1.16 Intangible Personal Property. The Disclosure
Schedule contains a true and complete list of all material trademarks, service
marks, trade names (including the name "Kalitta" and all derivations thereof
used by the Kalitta Companies), and copyrights and applications for the
foregoing ("INTELLECTUAL PROPERTY") owned by the Kalitta Companies and AIC, all
material licenses to which any of the Kalitta Companies is a licensor or
licensee, and all non- competition covenants of the Kalitta Companies or AIC.
Each of the Kalitta Companies and AIC is the sole and exclusive owner of the
Intellectual Properties indicated on the Disclosure Schedule to be owned by it
free and clear of all Liens, except Permitted Liens, if any, and has the right
to use said properties, having not granted or entered into any agreement,
covenant, license or sublicense with respect thereto.
No written claims or demands have been asserted against the Kalitta
Companies or AIC with respect to any of the Intellectual Property, and no
proceedings have been instituted, are pending or, to the Knowledge of Kalitta
Management, threatened against the Kalitta Companies which challenge the rights
of the Kalitta Companies or AIC with respect to any of such assets. To the
Knowledge of Kalitta Management, the businesses and operations of the Kalitta
Companies and AIC, and the use or publication by them of their material
trademarks, trade names, and advertising literature do not involve infringement
or claimed infringement of any United States trademark, trade name, or
copyright.
No director, officer or shareholder, or, to the Knowledge of Kalitta
Management, employee, consultant, distributor, representative, advisor,
salesman or agent of the Kalitta Companies or AIC owns, directly or indirectly,
in whole or in part, any trademarks, trade names, or copyrights, or
applications for the foregoing, or other material tangible personal property
which any of the Kalitta Companies is presently using or the use of which is
necessary for the business of any of the Kalitta Companies or AIC as now
conducted. None of the directors, officers or shareholders of the Kalitta
Companies or AIC has entered into any agreement regarding know-how, trade
secrets, or prohibition or restriction of competition, or solicitation of
customers or any other similar restrictive agreement or covenant, whether
written or oral, with any Persons other than the Kalitta Companies or AIC.
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4.1.17 Agreements. The Disclosure Schedule contains a true
and complete list of all (i) oral contracts and licenses the breach of which
would result in a Material Adverse Effect on the Kalitta Companies and (ii) all
written contracts and licenses, including the AIC Partnership Agreement
(collectively, the "CONTRACTS") in each case to which any of the Kalitta
Companies or AIC is a party or by which any of them or their properties may be
bound and which (a) involve obligations by any party thereto in excess of
$500,000, (b) extend beyond six months from the date of this Agreement and are
not terminable on thirty (30) days' notice or less without any liability or
continuing obligation on the part of the Kalitta Companies (including any
management, consulting or retainer agreement) or AIC and which involve
obligations by any party thereto in excess of $75,000; (c) require the consent
of any party thereto to the consummation of the transactions contemplated by
this Agreement or the Related Agreements; (d) contain covenants limiting the
freedom of the Kalitta Companies or AIC to compete in any line of business or
with any Person or in any geographical area; (e) contain any provision or
option relating to the acquisition by the Kalitta Companies or AIC of any
business or relating to the sale by the Kalitta Companies or AIC of any
business; (f) contain an agreement or commitment by the Kalitta Companies or
AIC for a material capital expenditure, other than the Kalitta Companies
Permitted Transactions; or (g) are contracts or agreements to which the United
States government is a party; provided, that notwithstanding the foregoing
provisions of this Section 4.1.17, the Disclosure Schedule need not list, and
the term "Contracts" shall not include: (i) agreements the obligations of the
parties thereto have been fulfilled, (ii) agreements that, to the Knowledge of
Kalitta Management, will not result in contingent liability to the Kalitta
Companies or (iii) (A) aircraft sales, purchase and lease agreements, (B)
aircraft engine sales, purchase and (C) real property and lending agreements
unless, to the Knowledge of Kalitta Management, such agreements will result in
contingent liability to the Kalitta Companies. All of the Contracts were
entered into by the Kalitta Companies or AIC (as applicable) in the ordinary
course of business, are valid and binding and in full force and effect as
against the Kalitta Companies that are parties thereto, and there exists no
material breach or default by any of the Kalitta Companies, or any event which,
with notice or lapse of time or both, would constitute a material breach or
default by any of the Kalitta Companies or AIC, or to the Knowledge of Kalitta
Management, by any other party thereto. The Kalitta Companies shall deliver to
Kitty Hawk not later than fourteen (14) days after the date of this Agreement,
true and complete copies, including all amendments, modifications, letter
agreements and assignments relating thereto, of all of the aforesaid written
agreements and true and correct summaries of all such oral agreements.
4.1.18 Office Lease. Kalitta has the authority to cause the
Landlord to perform the actions and transactions contemplated by Section 5.2.7.
The Landlord has good and marketable fee simple title to the Office Premises
and unimproved lots nos. 1 and 3 (the "ADJOINING LOTS") that adjoin the Office
Premises, with all related rights and appurtenances, subject to no Lien except
a mortgage lien (the "OFFICE MORTGAGE") securing a loan to a federally-insured
lending institution for a portion of the purchase price paid by the Landlord to
The Environmental Quality Company, Inc. for the Office Premises and the
Adjoining Lots. The term of the Office Lease commenced in May 1997 and ends in
May 2007. The aggregate amount of rent (payable on a "triple-net" basis) for
the first year under the Office Lease is $712,800 and for each subsequent year
will increase to reflect increases in the Consumer Price Index applicable to
Ypsilanti, Michigan. The Office Lease is unmodified and effective and without
uncured default by either party. The aggregate amount of rent and all other
payments by AIA under the Office Lease are properly reflected in AIA's books of
account.
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4.1.19 Indebtedness and Guaranties. The Disclosure Schedule
sets forth a true and complete list of all promissory notes, loan agreements,
security agreements and guarantees relating to indebtedness for borrowed money
or money loaned to others to which any of the Kalitta Companies or AIC is a
party or obligor. None of the Kalitta Companies nor AIC have guaranteed any
dividend, obligation or indebtedness of any Person (except for the endorsement
of negotiable instruments in the ordinary course of business). All of the
aforesaid items were entered into in the ordinary course of business, are valid
and binding and in full force and effect as against the Kalitta Companies or
AIC (as applicable) and there exists no material breach or default by the
Kalitta Companies, or any event which with notice or lapse of time or both,
would constitute a material breach or default by the Kalitta Companies or AIC
or, to the Knowledge of Kalitta Management, any other parties thereto.
4.1.20 Debts to and from Related Parties. Except as set
forth on the Disclosure Schedule, there presently is no indebtedness owing to
any of the Kalitta Companies or AIC by, or any contractual agreements between
the Kalitta Companies or AIC and any shareholder, director, partner, or officer
of the Kalitta Companies or AIC, any Family Member of their respective
families, or to the Knowledge of Kalitta Management, any Affiliate or Associate
(as such term is defined in Rule 405 of the Securities Act) of any of the
foregoing individuals (collectively, "RELATED PERSONS"), and none of the
foregoing individuals or any Affiliate or Associate of them owns any material
property or rights, tangible or intangible (other than an equitable interest),
used in the Kalitta Companies' or AIC's business. Except as set forth on the
Financial Statements, none of the Kalitta Companies nor AIC is indebted to any
shareholder, officer, director, partner or employee of the Kalitta Companies,
AIC or any co-partner of AIC, or to any member of their respective families or
the families of the shareholders of the co-partners of AIC, or, to the
Knowledge of Kalitta Management, to any Affiliate or Associate of any of the
foregoing individuals, in any amount whatsoever, other than, to the Knowledge
of Kalitta Management, for payment of salaries, normal Fringe Benefits and
compensation for services actually rendered to the Kalitta Companies or AIC in
the ordinary course of their businesses. Neither Kalitta nor any Related
Person has any material claim or right against the Kalitta Companies or AIC.
AIA has no claim or obligation under Section 2.3 of the AIC Partnership
Agreement which is attributable to any extension of credit by or for an AIC
partner for an additional capital contribution.
4.1.21 Banking Arrangements and Powers of Attorney. The
Disclosure Schedule sets forth a true and complete list of the name of each
bank in or with which any of the Kalitta Companies or AIC has an account,
credit line or safety deposit box, and a brief description of each such
account, credit line or safety deposit box, including the names of all persons
authorized to draw thereon or having access thereto; and the names of all
persons, if any, now holding powers of attorney from the Kalitta Companies or
AIC and a summary statement of the terms thereof.
4.1.22 Articles of Incorporation, Partnership Agreement and
Bylaws. Not later than fourteen (14) days after the date of this Agreement,
the Kalitta Companies shall deliver to Kitty Hawk true and complete copies of
their articles of incorporation and bylaws and a true and complete copy of the
AIC partnership agreement. All such articles of incorporation and bylaws were
duly adopted and are in full force and effect, and there are no amendments or
modifications thereto except as included in said articles of incorporation and
bylaws.
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4.1.23 Books and Records. The minute books of each of the
Kalitta Companies contain accurate records of all material actions taken by the
shareholders and directors of the Kalitta Companies. The books, records and
accounts of the Kalitta Companies, all of which have been made available to
Kitty Hawk, have been maintained in accordance with the requirements of Section
13(b)(2) of the Exchange Act (regardless of the fact that the Kalitta Companies
are not currently subject to that Section), including the maintenance of an
adequate system of internal controls. The stock certificate books and stock
transfer ledgers of each of the Kalitta Companies are correct and complete and
reflect accurately the number of shares of stock held by its shareholder.
AIC's partnership books and records contain complete and accurate records of
the ownership of all partnership interests in AIC and all material actions of
the co-partners of AIC.
4.1.24 ERISA.
(a) Except as set forth on the Disclosure Schedule,
neither the Kalitta Companies nor AIC maintains, administers, or
contributes to or has maintained, administered, or contributed to (or
had an obligation to maintain, administer or contribute to) any
"qualified" plans within the meaning of the Code in the last six
years. Except as set forth on the Disclosure Schedule, neither
Kalitta Companies nor AIC maintains, administers, or contributes to
(or had an obligation to maintain, administer or contribute to) any
"EMPLOYEE BENEFIT PLAN," as defined in Section 3(3) of ERISA), which
is subject to any provisions of ERISA and which covers any employee,
whether active or retired, of the Kalitta Companies or AIC. No
"qualified" plan that the Kalitta Companies or AIC maintains,
administers, or contributes to or has maintained, administered, or
contributed to is subject to the requirements of Title IV of ERISA.
(b) Neither the Kalitta Companies nor AIC has any
withdrawal liability, under the terms of the applicable plan, any
collective bargaining agreement or any other labor agreement or
otherwise, with respect to any "multi-employer" plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) to which it
contributes; nor has any event occurred or does any circumstance exist
that presents a risk of the occurrence of any withdrawal liability
with respect to any such multi-employer plan.
(c) Other than the Kalitta Companies and AIC, there are
no other corporations or trades or business controlled by,
controlling, or under common control with the Kalitta Companies and
AIC (within the meaning of Section 414 of the Code or Section
4001(a)(14) or 4001(b) of ERISA).
4.1.25 Employees.
(a) The Disclosure Schedule sets forth a true and
complete list of: (i) all collective bargaining agreements to which
any of the Kalitta Companies or AIC is a party; (ii) all material
employment, profit-sharing, deferred compensation, bonus, stock
option, stock purchase, pension, retainer, consultant, retirement,
welfare and incentive plans, agreements or contracts, written or, to
the Knowledge of Kalitta Management, oral, to which any of the Kalitta
Companies or AIC is a party; (iii) all material written and, to the
Knowledge of Kalitta Management, oral agreements and
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plans to which any of the Kalitta Companies or AIC is a party and
which constitute "FRINGE BENEFITS" to their employees or salesmen,
including, without limitation, group life and health insurance,
vacation plans or programs, sick leave plans or programs, termination
or severance pay programs and employee discounts; and (iv) the name
and current annual compensation of each director and each officer of
the Kalitta Companies, and of each employee thereof whose current
annual salary and/or estimated current annual commission is $75,000 or
more, together with such person's job title and amounts and forms of
compensation and Fringe Benefits. The Kalitta Companies and AIC shall
deliver to Kitty Hawk not later than fourteen (14) days after the date
of this Agreement, true and complete copies of all written, and
correct summaries of all oral, contracts, agreements, plans and
programs set forth in the Disclosure Schedule.
(b) To the Knowledge of Kalitta Management, all of the
aforesaid contracts, agreements, plans and programs are in full
compliance with all applicable federal, state and local laws, and the
Kalitta Companies and AIC are in full compliance with all federal,
state and local laws respecting employment, wages and hours in each
case except to the extent as would not reasonably be expected to have
a Material Adverse Effect on the Kalitta Companies. To the Knowledge
of Kalitta Management, the Kalitta Companies and AIC are in full
compliance with all applicable federal and state laws and regulations
respecting occupational safety and health standards other than those
where noncompliance would not reasonably be expected to have a
Material Adverse Effect on the Kalitta Companies and the Kalitta
Companies and AIC have received no written complaints from any federal
or state agency or regulatory body alleging outstanding violations of
any such laws and regulations.
(c) The Kalitta Companies and AIC are in full compliance
in all material respects with the terms of all contracts, agreements,
plans and programs described above. To the Knowledge of Kalitta
Management, the employment of all persons and officers employed by the
Kalitta Companies and AIC is terminable at will, without any penalty
or severance obligation of any kind on the part of the employer, and
the consummation of the transactions contemplated by this Agreement
will not by themselves trigger any payments to any officers, directors
or employees of the Kalitta Companies or AIC. All material sums due
for employee compensation and benefits and all vacation time owing to
any employees have been duly and adequately accrued on the books of
the Kalitta Companies or AIC pursuant to past practice. To the
Knowledge of Kalitta Management, all employees of the Kalitta
Companies and AIC located in the United States are either United
States citizens or are authorized to be employed in the United States
in accordance with all applicable laws. To the Knowledge of Kalitta
Management, the Kalitta Companies have not been informed that any key
employee or material consultant, distributor, representative, advisor,
salesman, agent, customer or supplier of the Kalitta Companies or AIC
will terminate his or her employment or cease to do business with the
Kalitta Companies or AIC after the Mergers.
(d) None of the Kalitta Companies nor AIC has experienced
since December 31, 1996, any general labor troubles or strife, work
stoppages, slowdowns by their employees. To the Knowledge of Kalitta
Management, none of the Kalitta Companies nor AIC has experienced
since December 31, 1996 any union or collective bargaining
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organization efforts or negotiations, or requests for negotiations,
for any representation or any labor contract relating to any employees
of the Kalitta Companies or AIC not covered by a union or collective
bargaining agreement as of December 31, 1996.
(e) The Kalitta Companies with employees in the State of
Michigan and AIC subscribe to, or are otherwise insured under, the
worker's compensation or similar statute in the State of Michigan with
respect to such employees. The Disclosure Schedule describes all
claims filed by employees of the Kalitta Companies and AIC in respect
of employment-related injury or illness from January 1, 1995 through
June 30, 1997. None of the Kalitta Companies nor AIC has received any
report or notice from the Occupational Safety and Health
Administration.
4.1.26 No Conflicts of Interest. The Disclosure Schedule
sets forth a list of all agreements which the Kalitta Companies and AIC have
with their directors, officers, employees, consultants, distributors,
representatives, advisors, salesmen and agents that prohibit or restrain such
individuals from competing with the Kalitta Companies or AIC in their
respective businesses. None of the Kalitta Companies or Kalitta, nor any
Family Member of Kalitta, owns, directly or indirectly, a controlling interest
in, or is an employee of, any Person which is a customer, supplier, competitor
or potential competitor of the Kalitta Companies or AIC; neither does Kalitta,
any Family Members of Kalitta, nor to the Knowledge of Kalitta Management, any
of the aforesaid individuals control the management or policies of any Person
which is a customer, supplier, competitor or potential competitor of the
Kalitta Companies or AIC by means of a management contract or otherwise.
4.1.27 Environmental Matters.
(a) To the Knowledge of Kalitta Management, the Kalitta
Companies and AIC are in compliance with all applicable Environmental
Laws and none of the Kalitta Companies nor AIC have received any
written communication from any Person that alleges that any of the
Kalitta Companies or AIC are not in compliance with applicable
Environmental Laws.
(b) There is no Environmental Claim pending or, to the
Knowledge of Kalitta Management, overtly threatened (i) against the
Kalitta Companies or AIC, (ii) against any Person whose liability for
any Environmental Claim the Kalitta Companies or AIC have retained or
assumed either contractually or, to the Knowledge of Kalitta
Management, by operation of law, or (iii) against any real or personal
property or operations which are now or, to the Knowledge of Kalitta
Management, have been previously owned, leased, operated or managed,
in whole or in part, based on activities conducted by the Kalitta
Companies or AIC.
4.1.28 Aviation Act; Aircraft; Assets.
(a) AIA is an air carrier operating under one or more
Certificates of Public Convenience and Necessity issued by the DOT
under the Aviation Act, and holding an air carrier operating
certificate and operations specifications issued pursuant to Part 119
(formerly Part 121) of the Federal Aviation Regulations issued by the
FAA under the Aviation Act and all other DOT and FAA authorizations
and permits
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necessary or required to conduct its business as it is currently being
conducted (collectively such certificates are called the "AIA
OPERATING AUTHORIZATIONS"), which AIA Operating Authorizations are in
full force and effect, and AIA is operating in compliance with all
rules and regulations of the FAA, the DOT, the AIA Operating
Authorizations and of any foreign government or quasi-government
entity, except where the failure to maintain such AIA Operating
Authorizations or comply with such rules and regulations would not
reasonably be expected to have a Material Adverse Effect on the
Kalitta Companies. AIA does not operate under any orders pursuant to
the Essential Air Service Program for the DOT. AIA and its Affiliates
have complied in all respects with Consent Order and Settlement
Agreements (as modified orally by AIA and the FAA) to which AIA and
the FAA are parties, including without limitation that Consent Order
and Settlement Agreement signed by AIA on January 8, 1997.
(b) All aircraft operated or "dry" leased by AIA are in
sound operating condition and are being maintained in all material
respects, where applicable, according to FAA regulatory standards,
AIA's FAA-authorized maintenance program and all other applicable
laws, except where the failure to maintain such AIA Operating
Authorizations or comply with such rules, regulations and laws would
not have a Material Adverse Effect on the Kalitta Companies. A list
of all aircraft now owned, leased or in the possession and control of
AIA is set forth on the Disclosure Schedule.
(c) KFS is an air carrier operating under one or more
Certificates of Public Convenience and Necessity issued by the DOT
under the Aviation Act and holding an air carrier operating
certificate and operations specifications issued pursuant to Part 135
of the Federal Aviation Regulations issued by the FAA under the
Aviation Act and all other DOT and FAA authorizations and permits
necessary or required to conduct its business as it is currently being
conducted (collectively such certificates are called the "KFS
OPERATING AUTHORIZATIONS"), which KFS Operating Authorizations are in
full force and effect, and KFS is operating in compliance with all
rules and regulations of the FAA, the DOT, the KFS Operating
Authorizations and of any foreign government or quasi-government
entity, except where the failure to maintain such KFS Operating
Authorizations or comply with such rules and regulations would not
have a Material Adverse Effect on KFS or its business. KFS does not
operate under any orders pursuant to the Essential Air Service Program
for the DOT.
(d) All aircraft set forth on the Disclosure Schedule
operated or "dry" leased by KFS, are in sound operating condition and
are being maintained in all material respects, where applicable,
according to FAA regulatory standards, KFS' FAA-authorized maintenance
program and all other applicable laws, except where the failure to
maintain or comply with such rules, regulations and laws would not
have a Material Adverse Effect on the Kalitta Companies. A list of
all operating aircraft now owned, leased or in the possession and
control of KFS is set forth on the Disclosure Schedule.
(e) OK is an air carrier operating under Certificates of
Public Convenience and Necessity issued by the DOT under the Aviation
Act and holding an air carrier operating certificate and operations
specifications issued pursuant to Part 135 of the
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Federal Aviation Regulations issued by the FAA under the Aviation Act
and all other DOT and FAA authorizations and permits necessary or
required to conduct its business as it is currently being conducted
(collectively such certificates are called the "OK OPERATING
AUTHORIZATIONS"), which OK Operating Authorizations are in full force
and effect, and OK is operating in compliance with all rules and
regulations of the FAA, the DOT, the OK Operating Authorizations and
of any foreign government or quasi-government entity, except where the
failure to maintain such OK Operating Authorizations or comply with
such rules and regulations would not have a Material Adverse Effect on
OK or its business. OK does not operate under any orders pursuant to
the Essential Air Service Program for the DOT.
(f) All aircraft set forth on the Disclosure Schedule
operated or "dry" leased by OK, are in sound operating condition and
are being maintained in all material respects, where applicable,
according to FAA regulatory standards, OK's FAA-authorized maintenance
program and all other applicable laws, except where the failure to
maintain or comply with such rules, regulations and laws would not
have a Material Adverse Effect on the Kalitta Companies. A list of
all operating aircraft now owned, leased or in the possession and
control of OK is set forth on the Disclosure Schedule.
4.1.29 No Solicitation or Negotiation. None of Kalitta, the
Kalitta Companies nor AIC have made any agreement to sell the stock, business
or any material asset of any of the Kalitta Companies or AIC to another Person,
or to merge, consolidate or combine assets or business of any of the Kalitta
Companies or AIC with another Person, except for the Kalitta Companies
Permitted Transactions, and none of Kalitta, the Kalitta Companies nor AIC are
currently engaged in negotiations or discussions concerning any other sale of
the stock, or the sale, merger or combination of any material asset or business
of any of the Kalitta Companies or AIC to or with another (except for the
Kalitta Companies Permitted Transactions).
4.1.30 Information Supplied. None of the information
supplied by the Kalitta Companies to Kitty Hawk expressly for inclusion in the
Debt Offering Documents or the SEC Filings (as identified pursuant to Section
5.2.1) will, at the time of the consummation of the Closing Date Financings or
the date such SEC Filing is declared effective by the SEC, respectively,
contain any untrue statement of material fact or omit a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstance under which they were made, not misleading.
4.1.31 Letter from Tax Advisor. The Kalitta Companies have
received a letter from D&T dated September 18, 1997 to the effect that, as of
such date, the AIA Merger, the AIT Merger, the FOL Merger and the OK Merger
should qualify as reorganizations under Section 368 of the Code. A copy of
such letter has been delivered to Kitty Hawk.
4.1.32 Receivables. To the Knowledge of Kalitta Management,
all notes and accounts receivable in amounts in excess of $25,000 of the
Kalitta Companies and AIC reflected in the Financial Statements and all those
arising since December 31, 1996 have arisen in the ordinary course of business
and are, or shall be, fully collectible, net of applicable reserves, when due
after collection efforts in the aggregate face amounts thereof.
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4.2 Representations and Warranties of Kalitta. To induce Kitty
Hawk and the Subs to enter into this Agreement and to consummate the
transactions contemplated hereby, Kalitta represents and warrants to Kitty Hawk
and the Subs as follows:
(a) Kalitta is acquiring the Stock Merger Consideration
for investment for his own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof in
violation of the Securities Act. Kalitta does not have any present
intention of selling, granting any participation in, or otherwise
distributing the Stock Merger Consideration otherwise than pursuant to
an effective registration statement under the Securities Act or in a
transaction exempt from the registration requirements under the
Securities Act and applicable state securities laws. Except as set
forth in the Registration Rights Agreement, Kalitta does not have any
contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third
person, with respect to any of the Stock Merger Consideration.
(b) Kalitta acknowledges that the issuance of the Stock
Merger Consideration will not be registered under the Securities Act
or any state securities laws on the basis of a claimed exemption by
Kitty Hawk that the issuance of the Stock Merger Consideration as
provided for herein is exempt from registration under the Securities
Act and such state laws. Kalitta acknowledges that the availability
of such exemptions is predicated in part on Kalitta's representations
set forth in this Section and that Kitty Hawk and the Subs are relying
on such representations.
(c) Kalitta has received all the information he considers
necessary or appropriate for deciding whether to accept the Stock
Merger Consideration. Kalitta has had an opportunity to ask questions
and to receive answers from Kitty Hawk regarding the terms and
conditions of the issuance of the Stock Merger Consideration and the
business properties, and financial condition of Kitty Hawk and to
obtain additional information (to the extent Kitty Hawk possessed such
information or could acquire it without unreasonable effort or
expense) necessary to verify the accuracy of any information furnished
to Kalitta or to which Kalitta had access.
(d) Kalitta acknowledges that he is able to bear the
economic risk of the investment in the Stock Merger Consideration, and
has such knowledge and experience in financial and business matters
that he is capable of evaluating the permits and risks of the
investment in the Stock Merger Consideration.
(e) Kalitta is an Accredited Investor as defined in Rule
501(a) of Regulation D promulgated under the Securities Act.
(f) Kalitta acknowledges that the Stock Merger
Consideration may not be sold, transferred or otherwise disposed of
without registration under the Securities Act or an applicable
exemption therefrom and that in the absence of an effective
registration statement covering the Stock Merger Consideration or an
available exemption from registration under the Securities Act, the
Stock Merger Consideration must be held indefinitely. Kalitta further
acknowledges that the Stock Merger Consideration may not be sold
pursuant to Rule 144 promulgated under the Securities Act unless all
of the conditions of that rule are met.
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(g) Kalitta acknowledges that each certificate
representing any shares Stock Merger Consideration will be endorsed
with a legend substantially similar to the following:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE
SOLD OR TRANSFERRED UNLESS SO REGISTERED OR UNLESS
THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR
OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE
COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS
NOT REQUIRED.
4.3 Representations and Warranties of Kitty Hawk. To induce
Kalitta and the Kalitta Companies to enter into this Agreement and to
consummate the transactions contemplated hereby, Kitty Hawk represents and
warrants to Kalitta and the Kalitta Companies as of the date hereof as follows
(each such representation and warranty being qualified in its entirety by the
disclosures set forth (a) in the Disclosure Schedule of Kitty Hawk or (b) in
the SEC Documents filed with the SEC on or prior to the date of the Agreement:
4.3.1 Corporate Existence and Authority. Kitty Hawk is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas. Kitty Hawk and each of its Subsidiaries has all requisite corporate
power and authority to own its properties and assets and to carry on its
business as it has been and is being conducted. Kitty Hawk and each of its
Subsidiaries is qualified to do business as a foreign corporation and is in
good standing in each state, nation or other jurisdiction listed in the
Disclosure Schedule, being each state, nation or other jurisdiction wherein the
character of the properties owned or held under lease by it or the nature of
the business transacted by it makes such qualification necessary, except for
any state, nation or other jurisdiction where the failure to be so qualified
would not reasonably be expected to have a Material Adverse Effect on Kitty
Hawk.
4.3.2 Capitalization of Kitty Hawk and its Subsidiaries.
(a) As of the date of this Agreement, the authorized
capital stock of Kitty Hawk consists of (i) 25,000,000 shares of Kitty
Hawk Common Stock, of which 10,451,807 shares are issued and
outstanding; and (ii) 1,000,000 shares of preferred stock, par value
$1.00 per share, of which no shares are issued and outstanding. As of
the date of this Agreement, no other shares of capital stock of Kitty
Hawk are issued and outstanding other than those issued under employee
benefit plans of Kitty Hawk. All of the issued and outstanding shares
have been duly and validly issued in accordance and compliance with
all applicable laws, rules and regulations and are fully paid and
nonassessable. There are no securities, options, warrants, rights,
calls, commitments, plans, contracts or other agreements of any
character granted or issued by Kitty Hawk which provide for the
purchase, issuance or transfer of any shares of the capital stock of
Kitty Hawk, nor are there any outstanding securities granted or
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issued by Kitty Hawk that are convertible into or exchangeable for any
shares of the capital stock of Kitty Hawk, and none are authorized,
except pursuant to this Agreement and employee benefit plans of Kitty
Hawk as disclosed in the SEC Documents. Kitty Hawk is not obligated
or committed to purchase, redeem or otherwise acquire any of its
capital stock. All presently exercisable voting rights in Kitty Hawk
are vested exclusively in its outstanding shares of common stock, each
share of which is entitled to one vote on every matter to come before
such corporation's stockholders. There are no voting trusts or other
voting arrangements with respect to Xxxxx Xxxx'x capital stock, except
as contemplated hereby.
(b) All the issued and outstanding shares of capital
stock of the Subsidiaries are held solely by Kitty Hawk, free and
clear of any Lien. All of the issued and outstanding shares have been
duly and validly issued in accordance and compliance with all
applicable laws, rules and regulations and are fully paid and
nonassessable. There are no securities, options, warrants, rights,
calls, commitments, plans, contracts or other agreements of any
character granted or issued by any of the Subsidiaries which provide
for the purchase, issuance or transfer of the capital stock of any of
the Subsidiaries, nor are there any outstanding securities granted or
issued by any of the Subsidiaries that are convertible into or
exchangeable for any shares of the capital stock of any of the
Subsidiaries, and none are authorized. None of the Subsidiaries is
obligated or committed to purchase, redeem or otherwise acquire any of
its capital stock. All presently exercisable voting rights in the
Subsidiaries are vested exclusively in their outstanding capital
stock. There are no voting trusts or other voting arrangements with
respect to the capital stock of any of the Subsidiaries.
4.3.3 Validity and Authorization; Corporate Power and
Authority. Kitty Hawk has full corporate power and authority to execute,
deliver and perform this Agreement, the Related Agreements and the other
instruments called for by this Agreement to which it is or is to be a party.
This Agreement has been duly authorized, executed and delivered by Kitty Hawk
and constitutes the legal, valid and binding obligation of Kitty Hawk,
enforceable against Kitty Hawk in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity). When the Related Agreements and the other instruments
called for by this Agreement to which Kitty Hawk is a party are executed and
delivered at the Closing, such Related Agreements and instruments will have
been duly authorized, executed and delivered by Kitty Hawk and will constitute
the legal, valid and binding obligations of Kitty Hawk, enforceable against
Kitty Hawk in accordance with their terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting enforcement of creditor's rights generally, and by general
principles of equity (whether applied in a proceeding at law or in equity).
4.3.4 Execution; No Violations. The execution and delivery
of this Agreement by Kitty Hawk does not, and the consummation by Kitty Hawk of
the transactions contemplated hereby will not: (a) violate, conflict with,
modify or cause any default under or acceleration of (or give any party any
right to declare any default or acceleration upon notice or passage of time or
both), in whole or in part, any certificate of incorporation, bylaw, Lien,
indenture, lease, agreement, instrument, order, injunction, decree or judgment
to which Kitty Hawk or any of its Subsidiaries is a party or by which any of
them or any of their properties
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is bound; (b) result in the creation of any Lien on any property or asset
(whether real, personal, mixed, tangible or intangible) of Kitty Hawk or any of
its Subsidiaries; (c) violate any law, rule or regulation applicable to Kitty
Hawk or any of its Subsidiaries; or (d) permit any federal or state regulatory
agency to impose any restrictions or limitations of any nature on Kitty Hawk or
any of its Subsidiaries or any of their activities, except in each case as
would not reasonably be expected to have a Material Adverse Effect on Kitty
Hawk.
4.3.5 Governmental and Other Consents. Except for filings
under the HSR Act, approval by the DOT of the deemed "de facto" transfer of the
foreign air transportation authority issued to AIA and KFS, and the filing of
certificates of merger as contemplated by Section 1.3 hereof, no consent,
approval or authorization of, or designation, declaration or filing with, any
governmental authority is required on the part of Kitty Hawk or any of its
Subsidiaries in connection with the execution or delivery of this Agreement,
the Related Agreements or the consummation by Kitty Hawk of the transactions
contemplated hereby and thereby, except as would not reasonably be expected to
have a Material Adverse Effect on Kitty Hawk.
The Disclosure Schedule lists all material consents, approvals or
authorizations of third Persons, required in connection with Xxxxx Xxxx'x valid
execution, delivery or performance of this Agreement and the Related Agreements
to which it is a party or the consummation of any of the transactions
contemplated hereby or thereby on the part of any of them (collectively, the
"KITTY HAWK CONSENTS"), including, but not limited to, the consents required
under the Kitty Hawk Contracts, except, in each case, as would not reasonably
be expected to have a Material Adverse Effect on Kitty Hawk.
4.3.6 Stock Merger Consideration. The Stock Merger
Consideration, when issued and delivered in accordance with the terms hereof
will be duly authorized and validly issued, fully paid and nonassessable and
free and clear of any preemptive rights or Liens through Kitty Hawk.
4.3.7 Acquisition of Kalitta Companies' Stock. Kitty Hawk
is acquiring the shares of common stock of AIA, AIT, FOL, KFS and OK
(collectively, the "KALITTA COMPANIES SHARES") to be issued to it upon
conversion of the shares of common stock of the Subs held by it pursuant to
Section 3.3 for investment for its own account, not as a nominee or agent, and
not with a view to the resale or present distribution of any part thereof in
violation of the Securities Act. Kitty Hawk has no present intention of
selling, granting any participation in or otherwise distributing any of the
Kalitta Companies Shares and Kitty Hawk has no contract, undertaking, agreement
or arrangement with any Person to sell, transfer, grant participations to such
person or to any third Person, with respect to any of the Kalitta Companies
Shares.
4.3.8 SEC Documents. Kitty Hawk has heretofore delivered
or made available to Kalitta and the Kalitta Companies true and complete copies
of all registration statements filed under the Securities Act and reports,
statements (including definitive proxy statements) and other filings filed
under Sections 13(a), 14(a), 14(c) and 15(d) of the Exchange Act with the SEC
(the "SEC DOCUMENTS") which are all the documents (other than preliminary
material and reports required pursuant to Section 13(d) or 13(g) of the
Exchange Act) that Kitty Hawk was required to file with the SEC. As of their
respective dates, each of the SEC Documents complied in all material respects
with all applicable requirements of the
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Securities Act and the Exchange Act, as the case may be, and the rules and
regulations of the SEC thereunder applicable to such SEC Documents, and none of
the SEC Documents contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The financial statements of Kitty Hawk included in the SEC
Documents comply in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP during the periods
involved (except as may be indicated in the notes thereto or, in the case of
the unaudited statements, as permitted by the SEC) and fairly present (subject,
in the case of the unaudited statements, to recurring audit adjustments normal
in nature and amount) the consolidated financial position of Kitty Hawk as at
the dates thereof and the consolidated results of its operations and cash flows
or changes in financial position for the periods then ended.
4.3.9 SEC Filings. At the time it becomes effective under
the Securities Act, any registration statement or registration statements filed
by Kitty Hawk with the SEC related to the Closing Date Financings (and any
final prospectus contained therein or filed pursuant to Rule 430A under the
Securities Act) (the "SEC FILINGS") will comply in all material respects as to
form with the provisions of the Securities Act and the rules and regulations
thereunder. The Debt Offering Documents will not, at the time of the
consummation of the Closing Date Financings, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The SEC Filings will
not, at the time they become effective under the Securities Act, contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading;
provided, that notwithstanding anything in this Agreement to the contrary, no
representation or warranty is made in this Agreement by Kitty Hawk with respect
to information provided by, or portions of the SEC Filings based upon or
derived from information provided by, the Kalitta Companies or Kalitta
expressly for use in the SEC Filings.
4.3.10 Controlling Person. Xxxxxxxxxxx is a "controlling
person" of Kitty Hawk as such term is defined in Sections 15 and 20 for
purposes of the Securities Act and the Exchange Act respectively.
4.3.11 Absence of Certain Liabilities. Other than
liabilities and obligations covered by another representation and warranty of
Kitty Hawk in Section 4.3 (such as Taxes, Environmental Matters and Compliance
with Laws), it being the intention of the parties that any such liabilities and
obligations shall be governed, if at all, by such other representations and
warranties, (a) as of August 31, 1996, neither Kitty Hawk nor any of its
Subsidiaries had any material liabilities or obligations of any nature (whether
absolute, accrued, contingent, due or to become due) except as and to the
extent reflected and fully reserved against in the financial statements
(including general reserves) contained or incorporated by reference in Xxxxx
Xxxx'x Form 10-K for the fiscal year ended August 31, 1996 and (b) since August
31, 1996, neither Kitty Hawk nor any of its Subsidiaries have incurred any such
liabilities or obligations of any nature other than those reflected or reserved
against in Xxxxx Xxxx'x financial statements or incurred in the ordinary course
of business since the date thereof.
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4.3.12 Absence of Changes. Except as expressly provided in
this Agreement, since June 30, 1997 there has not been with respect to Kitty
Hawk or any of its Subsidiaries:
(a) Any change or aggregate of changes constituting a
Material Adverse Effect on Kitty Hawk;
(b) Any change in the capitalization of Kitty Hawk or any
of its Subsidiaries, including, without limitation, the issuance by
any of them of any shares of stock of any class, any subscriptions,
options, warrants, convertible securities, rights, calls, agreements,
commitments or rights affecting or relating in any manner whatsoever
to any equitable interests in Kitty Hawk or any of its Subsidiaries
other than pursuant to employee benefit plans of Kitty Hawk.
(c) Any purchase, redemption or other acquisition by
Kitty Hawk or any of its Subsidiaries, or any commitment, plan or
agreement by Kitty Hawk or any of its Subsidiaries to purchase, redeem
or otherwise acquire any shares of their capital stock or other
equitable interests;
(d) Any merger or agreement to merge by Kitty Hawk or any
of its Subsidiaries with another Person, or any purchase of or
investment in or agreement to purchase or invest by Kitty Hawk or any
of its Subsidiaries in the business of another Person;
(e) Any declaration, payment or setting aside by Kitty
Hawk or any of its Subsidiaries of any dividends or other
distributions of any assets of any kind whatsoever to their
stockholders or other equitable owners, except for ordinary salary
payments for services actually rendered and except for distributions
by a Subsidiary of Kitty Hawk to Kitty Hawk;
(f) Any amendment to the certificate of incorporation,
articles of incorporation or bylaws of Kitty Hawk or any of its
Subsidiaries;
(g) Any waivers, compromises or settlements by Kitty Hawk
or any of its Subsidiaries of any right or claim in excess of $500,000
in the aggregate; or any institution or settlement of, or agreement to
settle, any litigation, action or proceeding before any court or
governmental body relating to Kitty Hawk or any of its Subsidiaries or
any of their properties in excess of $500,000;
(h) Any assumptions or guarantees (except endorsements of
negotiable instruments in the ordinary course of business) by Kitty
Hawk or any of its Subsidiaries of the obligations of any Person,
except in the ordinary course of business;
(i) Any payment or satisfaction by Kitty Hawk or any of
the Subsidiaries of any material liability, obligation or indebtedness
except pursuant to the terms thereof or otherwise in the ordinary
course of business;
(j) Any loan or advance, any commitment to loan or
advance, or any renewal, refunding or extension of any existing loan,
made by Kitty Hawk or any of
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its Subsidiaries to any Person, except in the ordinary course of
business, but in no event any loan or advance, any commitment to loan
or advance, or any renewal, refunding or extension of any existing
loan, by Kitty Hawk or any of its Subsidiaries to any of their
officers or directors or to any Affiliate of Kitty Hawk or any such
officer or director;
(k) Any actions taken or transactions entered into by
Kitty Hawk or any of its Subsidiaries involving more than $500,000 in
the aggregate, other than the Kitty Hawk Permitted Transactions or in
the ordinary course of business, or any capital expenditures or
commitments therefor in excess of $500,000 in the aggregate other than
in the ordinary course of business;
(l) Any sale, assignment, lease, abandonment or other
disposition by Kitty Hawk or any of its Subsidiaries of any real
property, or any sale, assignment, transfer, license, lapse, or other
disposition by Kitty Hawk or any of its Subsidiaries of any material
trademark, trade name, copyright (or pending application for any
material trademark or copyright) or other intangible asset;
(m) Any material damage, destruction or loss to the
business or properties of Kitty Hawk or any of its Subsidiaries, not
adequately covered by insurance, including, without limitation, any
damage, destruction or loss as a result of fire, explosion, accident,
earthquake, lightning, aircraft, vehicle, smoke, hail, flood, drought,
storm, strike, work stoppage, lockout, sabotage, embargo,
condemnation, riot, civil disturbance, vandalism or act of God or
public enemy the result of which has been a Material Adverse Effect on
Kitty Hawk and its Subsidiaries;
(n) Any other material transaction entered into by Kitty
Hawk or any of its Subsidiaries other than in the ordinary course of
business; or
(o) Any sale, assignment or transfer of any material
asset by Kitty Hawk, except the sale for leaseback of three Boeing 727
aircraft or in the ordinary course of business and consistent with
past practice.
4.3.13 Disputes and Litigation.
(a) There is no Proceeding pending of which Kitty Hawk or
one of the Subsidiaries have received written notice or, to the
Knowledge of Kitty Hawk, threatened against Kitty Hawk or any of its
Subsidiaries or any of their properties, assets or business or to
which Kitty Hawk or any of its Subsidiaries is a party, in any court
or before any arbitrator of any kind or before or by any governmental
agency (including, without limitation, any federal, state, local,
foreign or other governmental department, commission, board, bureau,
agency or instrumentality).
(b) There is no outstanding order, writ, injunction,
decree, judgment or award by any court, arbitrator or governmental
body against or affecting Kitty Hawk or any of its Subsidiaries or any
of their properties, assets or business.
4.3.14 Compliance with Laws. Except for any noncompliance
to be covered by any other representation and warranty of Kitty Hawk contained
in Section 4.3 (for example,
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Taxes), it being the intention of the parties that such noncompliance shall be
governed, if at all, by such other representations and warranties, to the
Knowledge of Kitty Hawk, Kitty Hawk and its Subsidiaries presently are and have
at all times been in full compliance with all applicable federal, state, local,
foreign and other laws, rules and regulations other than those where
noncompliance would not reasonably be expected to have a Material Adverse
Effect on Kitty Hawk, and neither Kitty Hawk nor any of its Subsidiaries have
received written notice, or to the Knowledge of Kitty Hawk, oral notice of any
such claimed violation of any such law, rule or regulation which would
reasonably be expected to have a Material Adverse Effect on Kitty Hawk. Kitty
Hawk and each of its Subsidiaries have filed all material returns, reports and
other documents and furnished all information required or requested by any
federal, state, local or foreign governmental or quasi-governmental agency and
all such returns, reports, documents and information are true and complete in
all material respects, except where such failure to file or inaccuracies would
not be reasonably expected to result in a Material Adverse Effect on Kitty
Hawk. All permits, licenses, orders, franchises and approvals of all federal,
state, local and foreign governmental or quasi-governmental or regulatory
bodies required of Kitty Hawk and each of its Subsidiaries for the conduct of
their businesses have been obtained, except for any the failure to have
obtained would not reasonably be expected to have a Material Adverse Effect on
Kitty Hawk. No written notice of any outstanding violations have been received
by Kitty Hawk or any of its Subsidiaries in respect of any such permits,
licenses, orders, franchises and approvals. Such permits, licenses, orders,
franchises and approvals are valid and sufficient for all activities presently
carried on by Kitty Hawk and any of its Subsidiaries, except where they would
not be reasonably expected to have a Material Adverse Effect on Kitty Hawk.
Neither Kitty Hawk, nor any officer, director, employee, shareholder or agent
of Kitty Hawk has made any offer, payment, promise to pay, or authorization of
the payment of any money, offer, gift, promise to give, or authorization of
anything of value to any Person named or identified in Section 30A of the
Exchange Act for any unlawful purpose described in Section 30A of the Exchange
Act.
4.3.15 Insurance. Kitty Hawk has insurance coverage as
required by any contract to which it is party, by any rule or regulation
applicable to Kitty Hawk and as is customary for businesses of similar nature
to that of Kitty Hawk, and Kitty Hawk shall deliver copies of all such
policies, agreements, studies and analyses to the Kalitta Companies upon
request of the Kalitta Companies. All of the insurance policies are in full
force and effect and are fully paid as to all premiums heretofore due. None of
Kitty Hawk or any of its Subsidiaries has failed to give any notice or present
any material claim under such insurance policies in timely fashion, nor has
Kitty Hawk or any of its Subsidiaries received any written notification of the
cancellation of any of such policies or that any of them will not be renewed.
4.3.16 Title to Properties. The properties and assets of
Kitty Hawk and each of its Subsidiaries consist of all of the material
properties and assets presently carried on Xxxxx Xxxx'x books as owned by them.
4.3.17 Agreements. All of the contracts listed or required
to be listed in Item 10 of Xxxxx Xxxx'x SEC Documents, other than those
contracts which have been terminated or which have expired (collectively, the
"KITTY HAWK CONTRACTS"), are valid and binding and in full force and effect
against Kitty Hawk or any of its Subsidiaries that are parties thereto, and
there exists no material breach or default by Kitty Hawk or any of its
Subsidiaries, or any event which, with notice or lapse of time or both, would
constitute a material breach or default by Kitty Hawk or any of its
Subsidiaries thereunder.
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4.3.18 Indebtedness and Guaranties. The Disclosure Schedule
sets forth a true and complete list of all promissory notes, security
agreements and guarantees relating to indebtedness for borrowed money or money
loaned to others to which Kitty Hawk or any of its Subsidiaries is a party or
obligor. None of Kitty Hawk nor any of its Subsidiaries have guaranteed any
dividend, obligation or indebtedness of any third Person. All of the items of
indebtedness set forth in the Disclosure Schedule or on the financial
statements contained in the Quarterly Report of Kitty Hawk on Form 10-Q for the
quarter ended June 30, 1997 are valid and binding and in full force and effect
as against Kitty Hawk and any of its Subsidiaries (as applicable) and there
exists no material breach or default by Kitty Hawk or any of its Subsidiaries,
or any event which with notice or lapse of time or both, would constitute a
breach or default by Kitty Hawk and each of its Subsidiaries.
4.3.19 Environmental Matters.
(a) To the Knowledge of Kitty Hawk, Kitty Hawk and each
of its Subsidiaries are in compliance with all applicable
Environmental Laws and none of Kitty Hawk nor any of its Subsidiaries
have received any written communication from any Person that alleges
that Kitty Hawk or any of its Subsidiaries are not in compliance with
applicable Environmental Laws, in each case except as would not
reasonably be expected to have a Material Adverse Effect on Kitty
Hawk.
(b) There is no Environmental Claim pending or, to the
Knowledge of Kitty Hawk, overtly threatened (i) against Kitty Hawk or
any of its Subsidiaries, (ii) against any Person whose liability for
any Environmental Claim Kitty Hawk or any of its Subsidiaries have
retained or assumed either contractually or, to the Knowledge of Kitty
Hawk, by operation of law, or (iii) against any real or personal
property or operations which are now or, to the Knowledge of Kitty
Hawk, have been previously owned, leased, operated or managed, in
whole or in part, based on activities conducted by Kitty Hawk or any
of its Subsidiaries.
4.3.20 Aviation Act; Aircraft; Assets.
(a) Xxxxx Xxxx'x wholly owned subsidiary Kitty Hawk
Aircargo, Inc. is an air carrier operating under one or more
Certificate of Public Convenience and Necessity issued by the DOT
under the Aviation Act and holding an air carrier operating
certificate and operations specifications issued pursuant to Part 119
(formerly 121) of the Federal Aviation Regulations issued by the FAA
under the Aviation Act (collectively such certificates are called the
"KITTY HAWK OPERATING AUTHORIZATIONS"), which Kitty Hawk Operating
Authorizations are in full force and effect, and Kitty Hawk is
operating in compliance with all rules and regulations of the FAA, the
DOT, the Kitty Hawk Operating Authorizations and of any foreign
government or quasi-government entity, except where the failure to
maintain such Kitty Hawk Operating Authorizations or comply with such
rules and regulations would not reasonably be expected to have a
Material Adverse Effect on Kitty Hawk and its Subsidiaries on a
combined basis. Kitty Hawk does not operate under any orders pursuant
to the Essential Air Service Program for the DOT.
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(b) All aircraft owned or "dry" leased by Kitty Hawk are
in sound operating condition and are being maintained in all material
respects, where applicable, according to FAA regulatory standards,
Xxxxx Xxxx'x FAA-authorized maintenance program and all other
applicable laws, except where the failure to maintain such Kitty Hawk
Operating Authorizations or comply with such rules and regulations
would not have a Material Adverse Effect on Kitty Hawk. A list of all
aircraft now owned, leased or in the possession and control of Kitty
Hawk is set forth on the Disclosure Schedule.
4.3.21 No Insolvency. Neither Kitty Hawk nor any of its
Subsidiaries is "insolvent" (as defined in the United States Bankruptcy Code,
11 U.S.C. Section 101 et seq.); Kitty Hawk and each of its Subsidiaries is
able to pay its debts as they come due and has capital sufficient to carry on
its business.
4.3.22 Articles of Incorporation and Bylaws. Not later than
fourteen (14) days after the date to this Agreement, Kitty Hawk shall deliver
to Kalitta and the Kalitta Companies true and complete copies of its
certificate of incorporation and bylaws. Such certificate of incorporation
and bylaws were duly adopted and are in full force and effect, and there are no
amendments or modifications thereto except as included in said certificate of
incorporation and bylaws.
4.3.23 No Appraisal Rights. The stockholders of Kitty Hawk
will not be entitled to exercise appraisal rights in connection with, or as a
result of, any of the transactions contemplated in this Agreement.
4.3.24 Taxes. Kitty Hawk has duly and timely filed all Tax
Returns related to Kitty Hawk heretofore due, and all such Tax Returns are
correct, accurate and complete in all material respects. Kitty Hawk has paid
all Taxes that have become due pursuant to those Tax Returns.
4.4 Representations and Warranties as to Subs. To induce Kalitta
and the Kalitta Companies to enter into this Agreement and to consummate the
transactions contemplated hereby, Kitty Hawk and the Subs, jointly and
severally, represent and warrant to Kalitta and the Kalitta Companies as of the
date hereof as follows (each such representation and warranty being qualified
in its entirety by the disclosures set forth (a) in the Disclosures Schedule of
Kitty Hawk or (b) in the SEC Documents filed with the SEC on or prior to the
date of this Agreement):
4.4.1 Corporate Existence and Authority. Each Sub is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Michigan. Each of the Subs has all requisite corporate
power and authority to own its properties and assets and to carry on its
business as it has been and is being conducted. Each of the Subs is qualified
to do business as a foreign corporation and is in good standing in each state,
nation or other jurisdiction listed in the Disclosure Schedule, being each
state, nation or other jurisdiction wherein the character of the properties
owned or held under lease by it or the nature of the business transacted by it
makes such qualification necessary, except for any state, nation or other
jurisdiction where the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect on Kitty Hawk.
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4.4.2 Capitalization of the Subs. The authorized capital
stock of each Sub consists solely of 60,000 shares of common stock, of which
1,000 shares are issued and outstanding. No other shares of capital stock of
the Subs are issued and outstanding. On the date hereof all the issued and
outstanding shares of capital stock of the Subs are held solely by Kitty Hawk,
free and clear of any Lien. All of the issued and outstanding shares have been
duly and validly issued in accordance and compliance with all applicable laws,
rules and regulations and are fully paid and nonassessable. There are no
securities, options, warrants, rights, calls, commitments, plans, contracts or
other agreements of any character granted or issued by any of the Subs which
provide for the purchase, issuance or transfer of any shares of the capital
stock of any of the Subs, nor are there any outstanding securities granted or
issued by any of the Subs that are convertible into or exchangeable for any
shares of the capital stock of any of the Subs, and none are authorized.
4.4.3 Validity and Authorization; Corporate Power and
Authority. The Subs have full corporate power and authority to execute,
deliver and perform this Agreement, the Related Agreements and the other
instruments called for by this Agreement to which they are or are to be a
party. This Agreement has been duly authorized, executed and delivered by each
of the Subs and constitutes the legal, valid and binding obligation of each of
the Subs, enforceable against the Subs in accordance with its terms, except as
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium, or other similar laws affecting enforcement of creditors' rights
generally and by general principles of equity (whether applied in a proceeding
at law or in equity). When the Related Agreements and the other instruments
called for by this Agreement to which any of the Subs are a party are executed
and delivered at the Closing, such Related Agreements and instruments will have
been duly authorized, executed and delivered by the Sub, and will constitute
the legal, valid and binding obligations of the Subs, enforceable against the
respective Sub in accordance with their terms, except as such enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting enforcement of creditor's rights generally, and by
general principles of equity (whether applied in a proceeding at law or in
equity).
4.4.4 Execution; No Violations. The execution and delivery
of this Agreement by each of the Subs does not, and the consummation by each of
the Subs of the transactions contemplated hereby will not: (a) violate,
conflict with, modify or cause any default under or acceleration of (or give
any party any right to declare any default or acceleration upon notice or
passage of time or both), in whole or in part, any article of incorporation,
bylaw, Lien, indenture, lease, agreement, instrument, order, injunction, decree
or judgment, to which any of the Subs are a party or by which any of them or
any of their properties is bound; (b) result in the creation of any Lien on any
property or asset (whether real, personal, mixed, tangible or intangible), of
any of the Subs; (c) violate any law, rule or regulation applicable to any of
the Subs; or (d) permit any federal or state regulatory agency to impose any
restrictions or limitations of any nature on any of the Subs or any of their
respective activities, except in each case as would not reasonably be expected
to have a Material Adverse Effect on Kitty Hawk.
4.4.5 Governmental and Other Consents. Except for filings
under the HSR Act, approval by the DOT of the deemed "de facto" transfer of the
foreign air transportation authority issued to AIA and KFS and the filing of
certificates of merger as contemplated by
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Section 1.3 hereof, no consent, approval or authorization of, or designation,
declaration or filing with, any governmental authority is required on the part
of Subs in connection with the execution or delivery of this Agreement, the
Related Agreements or the consummation by the Subs of the transactions
contemplated hereby and thereby, except as would not reasonably be expected to
have a Material Adverse Effect on Kitty Hawk.
The Disclosure Schedule lists all material consents, approvals or
authorizations of third Persons, required in connection with each Subs' valid
execution, delivery or performance of this Agreement and the Related Agreements
or the consummation of any of the transactions contemplated hereby or thereby
on the part of any of them (collectively, the "SUBS CONSENTS"), except in each
case, as would not reasonably be expected to have a Material Adverse Effect on
Kitty Hawk.
4.5 Disclosure Schedules. If, subsequent to the date of this
Agreement and prior to the date of Closing, an event occurs that renders untrue
any representation or warranty of a party made herein (a "SUBSEQUENT EVENT"),
such party shall promptly deliver to the other parties an amended or
supplemental disclosure schedule (a "SUBSEQUENT DISCLOSURE SCHEDULE") which
will contain a description of the Subsequent Event. The existence of a
Subsequent Event which is disclosed on a Subsequent Disclosure Schedule shall
not constitute a Breach by such party of any of its representations or
warranties hereunder or be taken into account in determining whether the
condition precedents set forth in Section 6.1.1 or 6.2.1 has been satisfied or
form a basis for any indemnification or other claim by the other parties
hereunder; provided, however, that all matters therein disclosed, together with
all other events, circumstances and occurrences (including Subsequent Events,
if any), may be taken into account by the other parties in determining whether
the condition set forth in Section 6.1.7 or 6.2.7 has been satisfied; and
provided, further, that this Section is not intended to permit a party to alter
or amend its representations and warranties as made herein as of the date of
this Agreement, including any Disclosure Schedule, and any Subsequent
Disclosure Schedule provided by any party pursuant to this Section shall not
cure the inaccuracy thereof as of the date of this Agreement for any purpose
under this Agreement.
Disclosure of any fact or item in any Disclosure Schedule or
Subsequent Disclosure Schedule referred by a particular Section shall, should
the existence of the fact or item or its contents be relevant to any other
Section, be deemed to be disclosed with respect to such other Section(s)
whether or not an explicit cross reference appears and whether or not the
Section(s) make reference to any Schedule. The disclosure of any particular
fact or item in any Disclosure Schedule or Subsequent Disclosure Schedule shall
not be deemed any admission as to whether the fact or item is "material" or
would constitute a "Material Adverse Effect".
ARTICLE V
COVENANTS
5.1 Mutual Covenants. To induce the other parties to enter into
this Agreement and to consummate the transactions contemplated hereby, and
without limiting any covenant, agreement, representation or warranty made
elsewhere in this Agreement, each of the Kalitta Companies agree, as to itself
and, in the case of AIA, as to AIC, and each of Kitty Hawk and the Subs agrees
as to itself and, in the case of Kitty Hawk, as to its Subsidiaries and the
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Subs, that between the date of this Agreement and the earlier of the Effective
Time or the termination of this Agreement pursuant to Article VIII, except as
may be consented to by the other parties or as otherwise contemplated by this
Agreement (including the Permitted Transactions), as follows:
5.1.1 Access and Information. Each party will, and AIA
will cause AIC, and Kitty Hawk will cause the Subsidiaries, to (a) provide the
other parties and their Representatives, during normal business hours, or
otherwise if another party reasonably requests, and upon reasonable advance
notice, access to all of the properties, assets, agreements, commitments,
books, records, accounts, Tax Returns, correspondence and documents of such
party and permit them to make copies thereof; (b) furnish the other parties and
their Representatives with all information concerning the business, properties
and affairs of such party, and, in the case of AIA, AIC or, in the case of
Kitty Hawk, the Subsidiaries, as the other parties reasonably request; (c) use
commercially reasonable efforts to cause its accountants to make available to
the other parties and their representatives all financial information relating
to such party, and, in the case of AIA, AIC or, in the case of Kitty Hawk, the
Subsidiaries, including all working papers pertaining to audits and reviews
made heretofore by such auditors; (d) furnish the other parties true and
complete copies of all financial and operating statements of such party, and,
in the case of AIA, AIC, or, in the case of Kitty Hawk, the Subsidiaries; (e)
permit access to customers and suppliers for consultation or verification of
any information; and (f) cause its employees, and use commercially reasonable
efforts to cause its accountants, to cooperate fully with any audit, review,
investigation or examination made by the other party and its representatives,
including, without limitation, with respect to:
(i) The books and records of such party, and, in
the case of AIA, AIC, or, in the case of Kitty Hawk, the
Subsidiaries;
(ii) The reports of state and federal regulatory
examinations;
(iii) Leases, contracts and commitments between
such party, and, in the case of AIA, AIC, or, in the case of
Kitty Hawk, the Subsidiaries, on the one hand, and any other
Person, on the other hand;
(iv) Physical examination of any real properties
owned by, or leased to or by such party, and, in the case of
AIA, AIC, or, in the case of Kitty Hawk, the Subsidiaries; and
(v) Physical examination of any furniture,
fixtures, equipment (including aircraft and engines) or other
personal property owned by or leased to or by such party, and,
in the case of AIA, AIC, or, in the case of Kitty Hawk, the
Subsidiaries.
5.1.2 Notices and Approvals. Each party agrees: (a) to
give all notices to third parties which may be necessary in connection with
this Agreement, the Related Agreements and the consummation of the transactions
contemplated hereby and thereby; (b) to use such party's commercially
reasonable efforts to obtain all federal, state and foreign governmental and
quasi-governmental approvals, consents, permits, authorizations and orders
necessary in connection with this Agreement, the Related Agreements and the
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consummation of the transactions contemplated hereby and thereby; and (c) to
use such party's commercially reasonable efforts to obtain all consents and
authorizations of any governmental or quasi-governmental authorities or other
Persons necessary in connection with this Agreement, the Related Agreements and
the consummation of the transactions contemplated hereby and thereby. At least
five (5) Business Days prior to the submission of any application with respect
to any of the foregoing approvals, consents, permits, authorizations and
orders, such party shall deliver a copy thereof to the other party. In the
event the other party shall reasonably request any change or modification in
the form or content of any such application, such submitting party shall make
such change or modification and submit the application as modified or changed.
5.1.3 Conduct of Business. Unless otherwise expressly
contemplated hereby (including the Permitted Transactions) or approved in
writing by the other party, each party agrees that the businesses and
operations of such party, and, in the case of AIA, AIC, or, in the case of
Kitty Hawk, the Subsidiaries, shall be conducted only in, and such party shall
not take any material action except in, the ordinary course of business and
consistent with past practice (which both parties acknowledge includes the
purchase, sale or lease of aircraft engines and parts consistent with past
practice). Without limitation, each party, and, in the case of AIA, AIC, or,
in the case of Kitty Hawk, the Subsidiaries, shall not take, nor enter into any
agreements to take, any of the following actions except in each such case in
connection with this Agreement (including the Permitted Transactions) or, in
the case of actions described in clauses (a) - (c) of this Section 5.1.3, in
the ordinary course of business: (a) dispose of, or acquire, any material
assets, other than the Permitted Transactions, (b) incur any indebtedness for
borrowed money, (c) pay any discretionary bonuses (other than bonuses already
accrued on the date hereof) to, or alter the compensation or benefit of, any
director, officer or employee, (d) enter into any transaction or agreement with
any Affiliate, Associate (as defined in Rule 405 under the Securities Act) or,
with respect to Kalitta, a Family Member of such party, (e) institute any
reduction in force, (f) close any office, base or station, (g) take any action
not in the ordinary course of business that will knowingly cause any of such
party's representations or warranties to be untrue or incorrect in any material
respect, (h) omit any commercially reasonable action that such party would take
in the ordinary course of business, which omission will knowingly cause any of
such party's representations or warranties to be untrue or incorrect in any
material respect, (i) declare or pay any dividends on, or make any distribution
or payment with respect to, or redeem or repurchase, any shares of capital
stock of any of such party or take any other actions which would have a similar
effect or (j) issue any shares of capital stock of such party or subsidiaries
(other than pursuant to Xxxxx Xxxx'x existing employee benefit plans) or any
securities, options, warrants, rights, calls, commitments, plans, contracts or
other agreements of any character whatsoever which provide for the purchase,
issuance or transfer of any shares of capital stock, or any securities that are
convertible into or exchangeable for any shares of capital stock or increase or
decrease, change into or exchange any such shares for a different number or
kind of shares or securities through a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar change in capitalization. Notwithstanding the foregoing, AIC shall be
permitted to make distributions of gross profit to its co-partners in
accordance with the AIC Partnership Agreement in amounts consistent with past
practice.
5.1.4 Proceedings. Each party shall promptly notify the
other party of any material Proceedings that are threatened in writing or
commenced against such party, and,
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in the case of AIA, AIC, or, in the case of Kitty Hawk, any of the
Subsidiaries, or their employees, consultants, officers or directors which may
relate to, or affect, the business, assets or liabilities of such party, and,
in the case of AIA, AIC, or, in the case of Kitty Hawk, any the Subsidiaries.
Such party shall not and, in the case of AIA, shall not permit AIC, or, in the
case of Kitty Hawk, the Subsidiaries, to knowingly fail to comply in any
material respect with any laws, regulations, ordinances, orders, injunctions
and decrees applicable to them, their properties, and the conduct of their
respective businesses.
5.1.5 Repairs; FAA Compliance. Each party shall maintain,
preserve and protect the operating aircraft and engines used in the conduct of
the business of such party, or, in the case of AIA, AIC or, in the case of
Kitty Hawk, any of the Subsidiaries, and keep the same in compliance in all
material respects with applicable FAA airworthiness directives, rules,
regulations and orders and such party's FAA-approved maintenance program except
as determined in the good faith exercise of such party's business judgment.
Each party shall comply with any Consent Order and Settlement Agreement to
which it and the FAA are parties.
5.1.6 Reports and Returns. Each party shall and, in the
case of AIA, shall cause AIC or, in the case of Kitty Hawk, shall cause the
Subsidiaries to, duly and timely file all reports and returns required to be
filed with federal, state, local and other authorities prior to Closing,
including without limitation any Tax Returns, which reports and returns shall
be prepared in accordance with all regulatory requirements in all material
respects. Each party shall promptly pay all Taxes and other quasi-governmental
charges levied or assessed upon such party, and, in the case of AIA, AIC, or,
in the case of Kitty Hawk, any of the Subsidiaries, or their respective
properties prior to the date on which penalties attach thereto and all lawful
claims which, if unpaid when due and payable, might become a Lien upon property
of such party, and, in the case of AIA, AIC, or, in the case of Kitty Hawk, the
Subsidiaries, except Permitted Liens. Each party shall duly and timely make
all deposits required of such party, and, in the case of AIA, AIC, or, in the
case of Kitty Hawk, the Subsidiaries, with respect to any Taxes (including,
without limitation, employee withholding Taxes).
5.1.7 Assist in Obtaining Licenses, Etc. Each party shall
reasonably assist the other party in obtaining all permits, licenses and
authorizations necessary for the continued operation of the Kalitta Companies
at and after the Effective Time.
5.1.8 Consents. The Kalitta Companies shall use their
commercially reasonable efforts to obtain the Kalitta Consents, and Kitty Hawk
shall use its commercially reasonable efforts to obtain the Kitty Hawk
Consents.
5.1.9 Insurance. The Kalitta Companies and Kitty Hawk
shall continue in force all existing insurance now carried by such party.
5.1.10 Preservation of Business. Each party shall use its
commercially reasonable efforts to preserve and keep intact its business and
the business of, in the case of AIA, AIC, or, in the case of Kitty Hawk, the
Subsidiaries, to retain its officers, and to preserve the goodwill of its key
employees, and material customers, suppliers and other Persons having business
relations with such party.
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5.1.11 Tax Treatment. Each of Kalitta and Kitty Hawk will
use his or its commercially reasonable efforts to cause the AIA Merger, the AIT
Merger, the FOL Merger and the OK Merger to qualify as reorganizations under
the provisions of Section 368 of the Code and to deliver, in connection with
the opinions referred to in Section 6.2.12, letters of representation
reasonable under the circumstances as to his or its intentions and knowledge.
5.1.12 Other Covenants. Each party shall use its
commercially reasonable efforts to satisfy the conditions to the obligations of
the parties hereunder within such party's reasonable control, and to consummate
and make effective as promptly as practicable the transactions provided for
herein including but not limited to the following:
(a) Defending the Agreement. Defending Proceedings
challenging this Agreement or any Related Agreement or the
consummation of the transactions provided for in this Agreement or any
Related Agreement;
(b) Lifting Injunctions. Using commercially reasonable
efforts to lift or rescind any injunction, restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions provided for in this Agreement or any Related Agreement;
and
(c) Other Actions. Taking such other reasonable actions
that are necessary, appropriate or advisable.
5.2 Kalitta and the Kalitta Companies Covenants. To induce the
other parties to enter into this Agreement and to consummate the transactions
contemplated hereby, and without limiting any covenant, agreement,
representation or warranty made elsewhere in this Agreement, Kalitta and each
of the Kalitta Companies (as to itself) agree that between the date of this
Agreement and the earlier of the Effective Time or termination of this
Agreement pursuant to Article VIII, except as may be consented to by the other
parties or as otherwise contemplated by this Agreement, as follows:
5.2.1 Information for Xxxxx Xxxx'x Statements, Reports,
Applications and SEC Filings. Kalitta and the Kalitta Companies will, and the
Kalitta Companies shall use commercially reasonable efforts to cause AIC and
the employees, accountants and attorneys of any of AIC or the Kalitta Companies
(collectively, the "KALITTA GROUP") to cooperate fully with Kitty Hawk and its
employees, accountants and attorneys in the preparation of (i) any statements,
reports and applications, (ii) the SEC Filings and (iii) the Debt Offering
Documents, in each case, made by Kitty Hawk and, in the case of (i) and (ii),
filed with any federal, state or foreign governmental regulatory agency or
quasi- governmental authority in connection with this Agreement, the Related
Agreements, the Closing Date Financings and the transactions contemplated
hereby and thereby and furnish Kitty Hawk with all information concerning the
Kalitta Companies and AIC necessary or reasonably deemed desirable by Kitty
Hawk for inclusion in such statements, reports, applications, SEC Filings, and
Debt Offering Documents, including, without limitation, all requisite financial
statements and schedules. At the time any such statement, report, application
or SEC Filing is filed or, with respect to the Debt Offering Documents or the
SEC Filings, the consummation of the Closing Date Financings, or the SEC
Filings are declared effective by the SEC, respectively, the Kalitta Companies
and AIC shall provide Kitty Hawk with a certificate executed by Kalitta (a)
confirming the accuracy in all material respects of the information concerning
the
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Kalitta Companies or AIC that is contained in such statement, report, or
application, (b) acknowledging that such information is supplied by the Kalitta
Companies or AIC to Kitty Hawk expressly for inclusion in such statement,
report, application and (c) in the case of the SEC Filings or the Debt Offering
Document, identifying the information expressly provided for inclusion in the
SEC Filings or the Debt Offering Document, as described in Sections 4.1.30 or
4.3.9. In furtherance thereof, the Kalitta Group shall actively participate at
the expense of the Kalitta Companies in the drafting of all sections of the
Debt Offering Documents and the SEC Filings, and all amendments thereto,
relating to the business, financial condition, management and all related
disclosures concerning Kalitta, the Kalitta Companies and AIC, as shall be
required pursuant to all rules and regulations, including, without limitation,
Regulation C and Regulation S-X, as promulgated under the Securities Act, or as
may be requested by the SEC in any comment letters received by Kitty Hawk (one
copy of which shall be promptly furnished by Kitty Hawk to the Kalitta
Companies).
5.2.2 No Solicitation or Negotiation.
(a) Except for the Kalitta Companies Permitted
Transactions, none of Kalitta, the Kalitta Companies nor AIC will
solicit, discuss, negotiate or agree to (i) the sale of any stock or
other equity interest in any of the Kalitta Companies or AIC, except
to Kitty Hawk, (ii) a merger, consolidation or combination of any
material asset or business, or any share exchange, of any of the
Kalitta Companies or AIC, except to Kitty Hawk, or (iii) a sale or
disposition of any of the business or operating aircraft assets of any
of the Kalitta Companies or AIC.
(b) The Kalitta Companies will give prompt notice to
Kitty Hawk if any of them receives any communication from any Person
not a party to this Agreement that proposes any discussion,
negotiation or agreement prohibited under Section 5.2.2(a).
(c) Except for Kitty Hawk Permitted Transactions, until
December 31, 1997, Kitty Hawk will not agree (i) to any merger,
consolidation or combination of any material asset or business or any
share exchange, of Kitty Hawk or (ii) to any acquisition of any
material equity interest in any business entity or any operating
segment of any business entity.
5.2.3 Financial Statements. The Kalitta Companies will
exert their commercially reasonable efforts to obtain from D&T and deliver to
Kitty Hawk such audited and unaudited balance sheets, statements of income,
statements of shareholder's equity and statements of cash flows as Kitty Hawk
may be required to file with the SEC in connection with the SEC Filings (the
"D&T FINANCIAL STATEMENTS") and D&T's consent (the "D&T CONSENT") to Xxxxx
Xxxx'x use of the D&T opinions accompanying such audited statements in the SEC
Filings. In addition, the Kalitta Companies shall deliver to Kitty Hawk not
later than the 45th day after the end of each month, financial statements of
the kind described in Section 4.1.6 (Financial Statements) for the month ended
July 31, 1997 and each subsequent month before the Closing.
5.2.4 Payment of Indebtedness of Related Persons. Kalitta
will repay in full prior to Closing all indebtedness, if any, that Kalitta owes
to the Kalitta Companies or AIC, and the Kalitta Companies and AIC will repay
in full prior to Closing all indebtedness, if any, that the Kalitta Companies
or AIC owe to Xxxxxxx.
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5.2.5 Restriction on Transfers. Kalitta shall not, nor
shall Kalitta enter into any agreement to, sell, transfer, pledge, hypothecate,
or dispose of any of the Kalitta Companies Shares other than pursuant to the
Kalitta Companies Permitted Transactions described in clause (n) of the
definition thereof.
5.2.6 Exemptions from Sales Tax. The Kalitta Companies
shall file with appropriate state, local and foreign taxing authorities such
documents, forms and/or requests for exemption that are reasonably requested by
Kitty Hawk as necessary or appropriate to cause the transactions contemplated
hereby to be exempt from sales Tax.
5.2.7 Office Lease.
(a) Until the Effective Time, Kalitta shall cause the
Landlord to (i) not amend the Office Lease or sell or lease the Office
Premises or the Adjoining Lots, (ii) comply timely with all its
obligations under and not modify, or consent to a modification of, the
Office Mortgage and (iii) not grant, modify or restrict or consent to
any grant, modification or restriction of, any rights of the Landlord
in the Office Premises or Adjoining Lots.
(b) Prior to October 31, 0000, Xxxxx Xxxx will obtain an
appraisal of the fair market rental value of the Office Premises from
a certified real estate appraiser selected by Kitty Hawk with the
consent of Kalitta (which consent shall not be unreasonably withheld)
and will by notice to Kalitta and AIA propose a modification to the
Office Lease (a "LEASE-MODIFICATION PROPOSAL") to reflect the fair
market value rental rate as set forth in such appraisal.
(c) If Kitty Hawk makes a timely Lease-Modification
Proposal, Kalitta shall use commercially reasonable efforts to cause
the Landlord to either (i) accept the Lease-Modification Proposal by
written notice to Kitty Hawk and AIA no later than the Effective Time,
in which case the Office Lease will ipso facto be modified in
accordance with the Lease-Modification Proposal or (ii) terminate the
Office Lease to be effective thirty (30) days after the Effective Time
without termination penalty or damages, or further rent, indemnity or
other tenancy obligations thereunder by AIA or any Person; provided,
the Office Lease will automatically terminate thirty (30) days after
the Effective Time without termination penalty or damages, or further
rent, indemnity or other tenancy obligations thereunder by AIA or any
Person if the Landlord fails to take either of the actions set forth
in clause (i) or clause (ii).
5.2.8 Sale of Racing Assets. On or before the Effective
Time, Kalitta and the Kalitta Companies shall cause all of the personal
property assets of the Kalitta Companies used exclusively in their promotional
drag racing activities, including, without limitation, racing vehicles,
transport vehicles, testing equipment, supplies, tools, insurance policies and
materials to be purchased by an existing or newly formed entity that is not
Affiliated (other than through Kalitta) with the Kalitta Companies (the "RACING
ENTITY"), for a price of $350,000 pursuant to an asset purchase agreement
between the Kalitta Companies and the Racing Entity, the form of which is
attached as Exhibit 5.2.8 (the "RACING ENTITY PURCHASE AGREEMENT"). The
Kalitta Companies shall terminate all of the employees of the Kalitta Companies
employed exclusively in the operation of such drag racing activities as of the
date
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of such asset sale without cost (other than accrued salaries and wages payable
consistent with past practice) to the Kalitta Companies. The Kalitta Companies
shall terminate without cost to them any existing, and shall not enter into
any, contracts with the Racing Entity other than the Racing Entity Purchase
Agreement.
5.2.9 Commercially Reasonable Efforts. The Kalitta
Companies shall use their commercially reasonable efforts to obtain (a) the D&T
Consent, (b) the purchase contracts related to two (2) the MEA 747s and the MEA
747 described in Section 6.1.13, and (c) the tax opinions described in Section
6.2.12.
5.2.10 Life Insurance Policy. AIA shall change, at no cost
to AIA, the beneficiary of three existing life insurance policies on the life
of Kalitta and ownership to a designee of Kalitta and Kalitta shall reimburse
AIA the amount of the unearned premium relating to such life insurance policy.
5.2.11 Assurances to Cooperate with SEC Filings. Each of
the Kalitta Companies and, except for the covenants in Section 5.2.11(a),
Kalitta shall (a) execute and deliver to the representatives of the several
underwriters, such indemnification agreements as may be reasonably required by
the representative of the several underwriters (as are traditional in
securities offerings) in connection with disclosures contained in SEC Filings,
as amended, relating to them; (b) use their commercially reasonable efforts to
cause the Kalitta Companies' auditors to deliver such "cold comfort" and
related letters as the representatives of the several underwriters may require
in the underwriting agreement concerning financial and other numerical
disclosures contained in the SEC Filings and all exhibits and schedules
thereto; and (c) furnish all documents and other agreements which counsel for
Kitty Hawk may reasonably require or request to be filed as exhibits to the SEC
Filings, as amended from time to time, or supplemental information provided to
the SEC.
5.2.12 Other Covenants. Kalitta shall use his commercially
reasonable efforts to satisfy the conditions to the obligations of the parties
hereunder within his reasonable control, and to consummate and make effective
as promptly as practicable the transactions provided for herein. Kalitta shall
use his commercially reasonable efforts to obtain the Kalitta Consents.
5.3 Kitty Hawk Covenants. To induce the other parties to enter
into this Agreement and to consummate the transactions contemplated hereby, and
without limiting any covenant, agreement, representation or warranty made
elsewhere in this Agreement, Kitty Hawk agrees that between the date of this
Agreement and the earlier of the Effective Time or termination of this
Agreement pursuant to Article VIII, except as may be consented to by the other
parties or as otherwise contemplated by this Agreement, as follows:
5.3.1 Kitty Hawk Financing. Kitty Hawk intends to engage
certain nationally recognized investment banking firms to act as co-managing
underwriters in connection with a contemplated securities offering of debt
securities and Kitty Hawk Common Stock (including Kitty Hawk Common Stock for
the account of Xxxxxxxxxxx) (the "CLOSING DATE FINANCINGS"). The proceeds of
such Closing Date Financings, if consummated, shall be used to pay Kalitta the
KFS Cash Merger Consideration (which KFS Cash Merger Consideration shall be
payable solely from the sale of Kitty Hawk Common Stock) and to repay
outstanding indebtedness of Kitty Hawk and the Kalitta Companies on the Closing
Date, other than any
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indebtedness under certain existing credit facilities with Xxxxx Fargo Bank
(Texas) N.A. and Bank One Texas N.A. to be described in the SEC Filings. Kitty
Hawk shall use its commercially reasonable efforts to consummate the Closing
Date Financings as promptly as practicable.
5.3.2 Assurances to Cooperate with SEC Filings. Kitty Hawk
shall (a) execute and deliver to the representatives of the several
underwriters, such indemnification agreements as may be reasonably required by
the representative of the several underwriters (as are traditional in
securities offerings) in connection with disclosures contained in SEC Filings,
as amended, relating to it and (b) use its commercially reasonable efforts to
cause Xxxxx Xxxx'x auditors to deliver such "cold comfort" and related letters
as the representatives of the several underwriters may require underwriting
agreement concerning financial and other numerical disclosures contained in the
SEC Filings and all exhibits and schedules thereto.
5.3.3 GM Waiver. Kitty Hawk shall use its commercially
reasonable efforts to obtain the waiver (the "GM WAIVER") of GM to Paragraph 4
of the Agreement between GM and Kitty Hawk Aircargo, Inc. dated June 4, 1990
and as amended by letter between GM and Kitty Hawk Aircargo, Inc. dated October
26, 1994.
5.3.4 SEC Confirmation. Kitty Hawk shall use its
commercially reasonable efforts to obtain as soon as practicable the
confirmation from the SEC as may be necessary to satisfy the condition set
forth in Section 6.1.16.
5.4 Covenants of Xxxxxxxxxxx. To induce the other parties to
enter into this Agreement and to consummate the transactions contemplated
hereby, and without limiting any covenant, agreement, representation or
warranty made elsewhere in this Agreement, Xxxxxxxxxxx agrees that between the
date of this Agreement and the earlier of the Effective Time or the termination
of this Agreement pursuant to Article VII, except as may be consented to by the
other parties or as otherwise contemplated by this Agreement, as follows:
5.4.1 Restrictions on Transfer. Xxxxxxxxxxx shall not, nor
shall Xxxxxxxxxxx enter into any agreement to, sell, transfer, pledge,
hypothecate, or dispose of any Kitty Hawk Common Stock except as contemplated
in connection with the Closing Date Financings.
5.4.2 Repayment of Indebtedness. Xxxxxxxxxxx will repay in
full prior to Closing all indebtedness, if any, that Xxxxxxxxxxx owes to Kitty
Hawk or any Subsidiary, and Kitty Hawk and any Subsidiary will repay in full
prior to Closing all indebtedness, if any, that Kitty Hawk owes to Xxxxxxxxxxx.
5.4.3 Assurances to Cooperate with SEC Filings.
Xxxxxxxxxxx shall execute and deliver to the representatives of the several
underwriters, such indemnification agreement as may be reasonably required by
the representative of the several underwriters (as are traditional in
securities offerings) in connection with disclosures contained in SEC Filings
relating to Xxxxxxxxxxx.
5.4.4 Other Covenants. Xxxxxxxxxxx shall use his
commercially reasonable efforts to satisfy the conditions to the obligations of
the parties hereunder within his reasonable control, and to consummate and make
effective as promptly as practicable the transactions provided for herein.
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5.5 Certain Covenants Relating to the Governance of Kitty Hawk after
the Effective Time. To induce the other parties to enter into this Agreement
and to consummate the transactions contemplated hereby, and without limiting
any covenant, agreement, representation or warranty made elsewhere in this
Agreement, Xxxxxxxxxxx, Kalitta and Kitty Hawk agree as follows:
5.5.1 Electing the Initial Board. At or prior to the Effective
Time, Xxxxxxxxxxx and Kitty Hawk shall use commercially reasonable efforts to
cause (a) Xxxxx Xxxx'x Bylaws to be amended on or prior to the Effective Time
to provide that the number of directors comprising the full Board of Directors
of Kitty Hawk at the Effective Time will be seven (7) and shall be comprised of
Xxxxxxxxxxx and two (2) Xxxxxxxxxxx Designees, Kalitta and two (2) Kalitta
Designees and a Joint Designee, and (b) if such persons (other than existing
members of the Board of Directors and Kalitta, who shall be deemed to so
consent by his execution of this Agreement) have consented in writing to serve
as members of the Board of Directors and to being named as a director in the
SEC Filings and any other filings to be made with the SEC, the persons named in
Exhibit 5.5.1 to be elected to the Board of Directors at the Effective Time to
serve in the classes as indicated in Exhibit 5.5.1 and (c) the Bylaws of Kitty
Hawk to be amended on or prior to the Effective Time to provide that the Bylaw
provisions concerning the number and classification of directors may be amended
or repealed prior to the end of the 36-month period commencing with the
Effective Time only by the affirmative vote of 70% of the members of the entire
Board of Directors or the holders of 75% of the outstanding Kitty Hawk Common
Stock. If prior to the Effective Time, any of the persons named in Exhibit
5.5.1 declines or is unable to serve as a director of Kitty Hawk, his
substitute shall be chosen before the Effective Time using the procedure set
forth in Sections 5.5.2 and Section 5.5.3, with Xxxxxxxxxxx and Kalitta acting
as the Joint Nominating Committee, if applicable.
5.5.2 Nominating Committees. At or prior to the Effective Time,
Kitty Hawk shall amend its Bylaws to provide that (a) a joint nominating
committee, a Xxxxxxxxxxx nominating committee and a Kalitta nominating
committee of the Board of Directors of Kitty Hawk shall be created for a
36-month period commencing with the Effective Time, (b) such Joint Nominating
Committee (the "JOINT NOMINATING COMMITTEE") shall consist of Xxxxxxxxxxx and
Kalitta for so long as each is a director of Kitty Hawk, (c) the Xxxxxxxxxxx
nominating committee (the "XXXXXXXXXXX NOMINATING COMMITTEE") shall consist of
Xxxxxxxxxxx for so long as he is a director of Kitty Hawk, (d) the Kalitta
nominating committee (the "KALITTA NOMINATING COMMITTEE") shall consist of
Kalitta for so long as he is a director of Kitty Hawk and (e) each such
Nominating Committee shall have the powers and duties described in, and be
subject to the applicable provisions concerning notice, quorum, membership and
resolution of deadlock and related provisions of, Sections 5.5.2 and 5.5.3. The
Bylaws shall be further amended at or prior to the Effective Time to provide
that such Joint Nominating Committee shall have the exclusive power on behalf
of the Board of Directors to nominate persons for election as directors of
Kitty Hawk as a Joint Designee and to fill any vacancy of the Joint Designee on
the Board of Directors. The Xxxxxxxxxxx Nominating Committee shall have the
exclusive power on behalf of the Board of Directors of Kitty Hawk to nominate
Xxxxxxxxxxx and persons for election as directors of Kitty Hawk as Xxxxxxxxxxx
Designees and to fill vacancies on the Board of Directors vacated by
Xxxxxxxxxxx
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Designees, and the Kalitta Nominating Committee shall have the exclusive power
on behalf of the Board of Directors to nominate Kalitta and persons for
election as directors of Kitty Hawk as Kalitta Designees and to fill vacancies
on the Board of Directors vacated by the Kalitta Designees. The Bylaws shall be
amended prior to the Effective Time to provide that the Bylaw provisions
described in this Section 5.5 may be amended or repealed only by the
affirmative vote of 70% of the members of the entire Board of Directors or the
holders of 75% of the outstanding Kitty Hawk Common Stock.
During the 36-month period commencing with the Effective Time, but
subject to Section 5.5.5, and except as otherwise agreed in writing by the
Requisite Xxxxxxxxxxx Stockholders and the Requisite Kalitta Stockholders, each
of the Stockholders shall, and shall cause each of such Stockholder's
Affiliates to, (i) vote (or act by written consent with respect to ) any shares
of Kitty Hawk Common Stock and other Kitty Hawk voting securities each
Beneficially Owns (x) for the nominee of the Joint Nominating Committee for
election as a director of Kitty Hawk as a Joint Designee (or the nominee as a
Joint Designee of the entire Board of Directors in accordance with the Bylaws
if the Joint Nominating Committee cannot agree within ten (10) days as
contemplated in Section 5.5.3 below) and against removal except for cause, (v)
for Xxxxxxxxxxx and the nominees of the Xxxxxxxxxxx Nominating Committee for
election as a director of Kitty Hawk as a Xxxxxxxxxxx Designee and against
removal except for cause and (z) for Kalitta and the nominees of the Kalitta
Nominating Committee for election as a director of Kitty Hawk as a Kalitta
Designee and against removal except for cause and (ii) not vote (or act by
written consent with respect to) any shares of Kitty Hawk Common Stock or other
Kitty Hawk voting securities each Beneficially Owns in favor of any person to
serve as a director of Kitty Hawk unless such person has been so nominated.
The Joint Nominating Committee, the Xxxxxxxxxxx Nominating
Committee and the Kalitta Nominating Committee shall nominate the persons named
on Exhibit 5.5.1 for re-election when their terms expire unless such person is
unable or unwilling to serve or if such person has been removed for cause. For
the purposes of this Section 5.5.2, "cause" shall have the meaning set forth in
the Certificate of Incorporation of Kitty Hawk.
In the case of the Joint Nominating Committee, the presence,
either telephonically or in person, of both members of the Joint Nominating
Committee shall constitute a quorum for the transaction of business and
meetings may be called on two (2) days' written notice given in accordance with
the Bylaws of Kitty Hawk by either member.
5.5.3 Deadlock Resolution at the Joint Nominating Committee. The
Bylaws of Kitty Hawk shall be amended at or prior to the Effective Time to
provide that if the Joint Nominating Committee does not agree on the selection
of (a) a nominee to serve as a member of the Board of Directors as a Joint
Designee to be elected at a meeting of the stockholders of Kitty Hawk or (b) an
individual to fill a vacancy on the Board of Directors as a Joint Designee,
then either member of the Joint Nominating Committee may by written notice to
the other member require such nominee or vacancy to be selected or filled,
respectively, at a meeting of the Board of Directors called by such member in
accordance with the Bylaws of Kitty Hawk at any time after the tenth day
following the receipt of notice of the first meeting of the Joint Nominating
Committee called for the express purpose of selecting such nominee or filling
such vacancy. Any individual selected by the Board of Directors to serve as a
member of the Board of Directors as a Joint Designee, if the Joint Nominating
Committee
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is unable to agree upon a nominee or a person to fill a vacancy, must (a) not
be a Family Member of either Xxxxxxxxxxx or Kalitta, (b) not be a former or
current employee of any Kalitta Company or AIA, Kitty Hawk, the Subs or the
Subsidiaries, (c) have within the preceding sixty (60) months been a director,
chief financial officer, or chief executive officer of a company listed on the
New York Stock Exchange or the American Stock Exchange or quoted on the NASDAQ
Stock Market's National Market System and (d) be a citizen of the United
States. If the person so chosen by the Board of Directors declines or is unable
to serve, then either member of the Joint Nominating Committee may call a
meeting of the Nominating Committee to choose another person to serve as a
director of Kitty Hawk (in which case all of the provisions of this Section
5.5.3 shall again apply).
5.5.4 Officers. (a) The Bylaws of Kitty Hawk shall be amended at
or prior to the Effective Time to provide (i) that, until the first anniversary
of the Effective Time, the Chairman of the Board and Chief Executive Officer
(the "CHIEF EXECUTIVE OFFICER") shall be elected exclusively by the
stockholders and shall serve as the chief executive officer of Kitty Hawk and,
subject to the supervision of the Board of Directors, shall have the general
management and control of Kitty Hawk and its subsidiaries (including the right
to vote (except as provided in clause (b) below solely for the one year period
commencing with the Effective Time) the voting securities of the subsidiaries
of Kitty Hawk held by Kitty Hawk on its behalf) and (ii) for the additional
office of Vice Chairman who, until the first anniversary of the Effective Time,
shall be elected exclusively by the stockholders and shall serve as an officer
of Kitty Hawk and shall have the right to vote the voting securities of AIA
until the first anniversary of the Effective Time solely for the purpose of
electing the President of AIA and against his removal except for cause. Until
the first anniversary of the Effective Time, Xxxxxxxxxxx and Kalitta hereby
agree to vote, and to cause each of his respective Affiliates to vote, all
shares of Kitty Hawk Common Stock and other Kitty Hawk voting securities
Beneficially Owned by him and his respective Affiliates in favor of Xxxxxxxxxxx
as Chairman of the Board and Chief Executive Officer of Kitty Hawk and Kalitta
as Vice Chairman of Kitty Hawk and against their removal except for cause.
Kitty Hawk hereby agrees to vote, and to cause each of its Affiliates to vote,
all shares of common stock of AIA and any other AIA voting securities
Beneficially Owned by Kitty Hawk and its Affiliates until the first anniversary
of the Effective Time for Kalitta as President of AIA and against his removal
except for cause. The Bylaws of Kitty Hawk shall be amended at or prior to the
Effective Time to provide that the provisions of such Bylaws described in this
Section 5.5.4 may be amended or repealed only by the affirmative vote of 70% of
the members of the entire Board of Directors or holders of 75% of the
outstanding Kitty Hawk Common Stock.
(b) The Amended and Restated Articles of Incorporation and Bylaws of
AIA to be in effect at the Effective Time will provide (i) that, until the
first anniversary of the Effective Time, the person serving as the President of
AIA shall serve as the chief executive officer of AIA and shall have the
general management and control of AIA subject only to supervision of the Chief
Executive Officer of Kitty Hawk. Until the first anniversary of the Effective
Time, Kitty Hawk hereby agrees to vote and to cause each of its Affiliates to
vote (or act by written consent), all shares of common stock of AIA and any
other AIA voting securities Beneficially Owned by Kitty Hawk and its
Affiliates, and Xxxxxxxxxxx, agrees to vote such shares and voting securities
as Chief Executive Officer of Kitty Hawk for Kalitta as President of AIA and
against any removal of Kalitta as President of AIA except for cause (as defined
in the Articles of Incorporation of AIA) and to refrain from changing any
provisions of the Articles of Incorporation or Bylaws of AIA described in this
Section 5.5.4. The Bylaws of
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Kitty Hawk shall be amended at or prior to the Effective Time to provide that
the President of AIA is to report only to the Chief Executive Officer and that
such provision may be amended or repealed only by the affirmative vote of 70%
of the members of the entire Board of Directors or holders of 75% of the
outstanding Kitty Hawk Common Stock.
5.5.5 Termination of Governance Obligations. The rights and
obligations of the parties set forth in this Section 5.5 shall terminate upon
the earlier of (a) the 36-month anniversary of the Effective Time, (b) the
death, Disability or voluntary resignation as a director of Kitty Hawk of,
either Xxxxxxxxxxx or Kalitta or (c) the sale of all shares Beneficially Owned
by both Xxxxxxxxxxx and Kalitta; provided, that in the event of the voluntary
resignation of Kalitta as a director, Kalitta shall remain subject to all of
his obligations to vote shares of Kitty Hawk Common Stock and other voting
securities of Kitty Hawk as provided in this Article V; and, provided further,
that in the event of the voluntary resignation of Xxxxxxxxxxx as a director,
Xxxxxxxxxxx and Kitty Hawk shall remain subject to all of its obligations to
vote shares of AIA Common Stock and other voting securities of AIA as provided
in this Article V and Xxxxxxxxxxx shall remain subject to all of his
obligations to vote shares of Kitty Hawk Common Stock and other voting
securities of Kitty Hawk as provided in this Article V.
5.5.6 General. During the 36-month period commencing with the
Effective Time, but subject to Section 5.5.5, and in each case except as may be
agreed in writing by the Requisite Kalitta Stockholders and the Requisite
Xxxxxxxxxxx Stockholders, each of Xxxxxxxxxxx and Kalitta agree to, and to
cause each of their Affiliates to, vote (or act by written consent with respect
to) all shares of Kitty Hawk Common Stock and all other Kitty Hawk voting
securities Beneficially Owned by such Stockholder and such Affiliates, and
otherwise take such action as may be appropriate:
(a) to implement the agreements set forth in this Section 5.5
with respect to the nomination, election and filling of vacancies of
directors of Kitty Hawk, and the election of the Chairman of the Board
and Chief Executive Officer and Vice Chairman of Kitty Hawk and the
President of AIA;
(b) to not amend or repeal any of the provisions of the
Bylaws of Kitty Hawk described in this Section 5.5;
(c) to not change the Certificate of Incorporation of Kitty
Hawk in any respect that would have the effect of conflicting with any
of the provisions of the Bylaws of Kitty Hawk described in this
Section 5.5 or that would amend or repeal the current provisions of
the Certificate of Incorporation of Kitty Hawk as to permit the
removal of directors without cause as defined therein;
(d) for the nomination and election as directors of Kitty
Hawk of the Xxxxxxxxxxx Designees, the Kalitta Designees and the Joint
Designees and against their removal except for cause as defined in the
Certificate of Incorporation of Kitty Hawk;
(e) during the period ending on the first anniversary of the
Effective Time only, for the election of Xxxxxxxxxxx as Chairman of
the Board and Chief Executive Officer of Kitty Hawk and for the
election of Kalitta as the Vice Chairman of Kitty
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Hawk and the President of AIA and against their removal from such
offices except for cause (as defined in the Certificate of
Incorporation of Kitty Hawk or the Articles of Incorporation of AIA,
as applicable); and
(f) during the period ending on the first anniversary of the
Effective Time, against any change in the Articles of Incorporation or
Bylaws of AIA that would have the effect of changing the governance
provisions described in this Section 5.5.
ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent to Obligations of Xxxxxxxxxxx, Kitty Hawk
and the Subs. The obligations of Xxxxxxxxxxx, Kitty Hawk and the Subs under
this Agreement shall be subject to the fulfillment of each and all of the
following conditions at or before the Closing (unless an earlier time is
specified in this Agreement, in which case on or before such earlier time),
each of which is individually hereby deemed material, and any one or more of
which may be waived in writing by Kitty Hawk:
6.1.1 Representations and Warranties. Each of the representations
and warranties made by Kalitta and the Kalitta Companies contained in this
Agreement shall be true and correct as of the date when made and (except for
changes contemplated by this Agreement and except to the extent any such
representation and warranty that speaks of an earlier date, in which case such
representation or warranty shall have been true and correct as of such date)
shall be true and correct on and as of the Closing to the same extent and with
the same effect as if made on and as of the Closing; provided, that this
condition shall be deemed to be satisfied notwithstanding that any
representation or warranty may not be true and correct so long as the same
shall not reasonably be expected to have a Material Adverse Effect on the
Kalitta Companies.
6.1.2 Performance by Kalitta and the Kalitta Companies. Kalitta
and each of the Kalitta Companies shall have fully performed and complied with
all covenants, agreements and conditions required by this Agreement to be
performed or complied with by him or it on or before the Closing (unless an
earlier time is specified in this Agreement, in which case on or before such
earlier time), including, without limitation, the execution and delivery by
them of all documents and instruments required under the terms of Article VII
of this Agreement; provided, that this condition shall be deemed to be
satisfied notwithstanding that any such obligation (other than the delivery of
the documents under Article VII) shall not have been so performed or complied
with so long as the same shall not reasonably be expected to have a Material
Adverse Effect on the Kalitta Companies.
6.1.3 Regulatory Approvals and Consents. There shall have been
duly and validly obtained all consents, approvals, authorizations, permits and
orders of all federal, state, foreign and other governmental regulatory
agencies required in connection with this Agreement and the consummation of the
transactions contemplated hereby (including under the HSR Act, the Kalitta
Consents, the Kitty Hawk Consents, the Subs Consents and the approval by the
DOT of the "de facto" transfer of the foreign air transportation authority
issued to AIA and KFS), and all such consents, approvals, authorizations,
permits and orders shall be in full force and effect as of the Closing, except
in each case for any the failure to
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have been obtained would not reasonably be expected to have a Material Adverse
Effect on Kitty Hawk.
6.1.4 No Court Orders. On the Closing Date, there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by any court or governmental regulatory agency of competent
jurisdiction directing that the transactions contemplated herein or any of them
not be consummated as herein provided, or awarding damages or any other remedy
to any Person with respect to any of the transactions contemplated hereby.
6.1.5 Certificates of the Kalitta Companies. Each of the Kalitta
Companies shall have provided to Kitty Hawk a certificate, dated the Closing
Date, executed by such Kalitta Company confirming that the conditions in
Section 6.1.1 and Section 6.1.2 as to such Kalitta Company have been satisfied.
Kalitta shall have provided to Kitty Hawk a certificate, dated the Closing
Date, executed by Kalitta confirming that the conditions in Section 6.1.1 and
Section 6.1.2 as to Kalitta have been satisfied.
6.1.6 Opinions of Kalitta's Counsel. The Kalitta Companies shall
have delivered to Kitty Hawk at the Closing the opinions of the Kalitta
Companies' counsel, Miller, Canfield, Paddock and Stone, P.L.C. and Kelsey Law
Offices, P.C., which opinions shall be dated the Closing Date and addressed to
Kitty Hawk substantially in the forms attached hereto as Exhibit 6.1.6(a) and
Exhibit 6.1.6(b), respectively.
6.1.7 Satisfaction with Review of Kalitta Companies. After the
date of this Agreement, there shall have been no change or changes in the
Kalitta Companies' business, labor relations, financial condition, properties,
assets, liabilities or results of operations (or the occurrence of any events
which might reasonably be expected to result in any such change or changes),
which in the judgment of Kitty Hawk, made in good faith, has had or would
reasonably be expected to have a Material Adverse Effect on the Kalitta
Companies other than as disclosed in the Disclosure Schedule delivered on the
date of this Agreement.
6.1.8 Good Standing. Each of the Kalitta Companies shall have
furnished to Kitty Hawk at the Closing certificates of the appropriate
governmental officials, dated within thirty (30) days of the Closing Date,
confirming that such Kalitta Company is in good standing and is duly qualified
to transact business in the State of Michigan and in each jurisdiction listed
on the Disclosure Schedule.
6.1.9 Related Agreements. The parties to the Related Agreements
(other than Kitty Hawk, the Subs and the Subsidiaries and employees, in their
respective individual capacities, of the Kalitta Companies or AIC) shall have
executed and delivered the Related Agreements to which each is a party.
6.1.10 Minimum Share Price. The last reported sale price of a
share of Kitty Hawk Common Stock on the Nasdaq National Market on the last
trading day immediately preceding the Closing Date and its Fair Market Value
shall be at least $12.00.
6.1.11 Financing. Kitty Hawk shall have received (a) net proceeds
of at least $40,000,000 from the sale of Kitty Hawk Common Stock and (b) net
proceeds from the sale of Kitty Hawk senior notes in a principal amount greater
than or equal to $340,000,000.
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6.1.12 MEA 747 Purchase Agreement. AIA shall have (a) with respect
to two (2) of the MEA 747s, obtained a legally binding contract by October 20,
1997 to purchase such MEA 747s after November 30, 1997 but before January 15,
1998 and (b) with respect to the third MEA 747, consummated the purchase of
such MEA 747 by October 20, 1997.
6.1.13 Fairness Opinion. The Fairness Opinion shall not have been
withdrawn or materially and adversely modified.
6.1.14 SEC Filings. No stop order suspending the effectiveness of
any SEC Filing shall have been issued by the SEC and no Proceedings for that
purpose shall have been initiated or, to the Knowledge of Kitty Hawk,
threatened by the SEC.
6.1.15 Dissenter's Rights. No shareholder of AIA shall seek
dissenter's rights in connection with the AIA Merger.
6.1.16 SEC Confirmation. Kitty Hawk shall have obtained
confirmation from the SEC, in form and substance reasonably satisfactory to
Kitty Hawk, (i) that the Guaranty of the Notes by each of the Kalitta Companies
and the exclusion of AIC as a guarantor of such Notes, as described in Section
6.2.12, does not create any requirement that separate audited financial
statements of any of the Kalitta Companies or AIC be included in the offering
documents relating to the Closing Date Financings or subsequently included in
Kitty Hawk filings with the SEC and (ii) that summarized capsulized footnote
disclosure of the financial information of each such Kalitta Company is
acceptable in the offering documents relating to the Closing Date Financings
and in filings with the SEC following the Merger.
6.2 Conditions Precedent to Obligations of the Kalitta Companies. The
obligations of Kalitta and each of the Kalitta Companies under this Agreement
shall be subject to the fulfillment of each and all of the following conditions
at or before the Closing (unless an earlier time is specified in this
Agreement, in which case on or before such specified time), each of which is
individually hereby deemed material, and any one or more of which may be waived
in writing by the Kalitta Companies:
6.2.1 Representations and Warranties. Each of the representations
and warranties made by Kitty Hawk and the Subs contained in this Agreement
shall be true and correct as of the date when made and (except for changes
contemplated by this Agreement and except to the extent that any such
representation and warranty that speaks of an earlier date, in which case such
representation or warranty shall have been true and correct as of such date)
shall be true and correct on and as of the Closing to the same extent and with
the same effect as if made on and as of the Closing; provided, that this
condition shall be deemed to be satisfied notwithstanding that any
representation or warranty may not be true and correct so long as the same
shall not reasonably be expected to have a Material Adverse Effect on Kitty
Hawk.
6.2.2 Performance by Xxxxxxxxxxx and Kitty Hawk. Xxxxxxxxxxx and
Kitty Hawk shall have fully performed and complied with all covenants,
agreements and conditions required by this Agreement to be performed or
complied with by them on or before the Closing (unless an earlier time is
specified in this Agreement, in which case on or before such earlier time),
including without limitation, the execution and delivery by them of all
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documents and instruments required under the terms of Article VII of this
Agreement; provided, that this condition shall be deemed to be satisfied
notwithstanding that any such obligation (other than the delivery of the
documents under Article VII) shall not have been so performed or complied with
so long as the same shall not reasonably be expected to have a Material Adverse
Effect on Kitty Hawk.
6.2.3 Regulatory Approvals and Consents. There shall have been
duly and validly obtained all consents, approvals, authorizations, permits and
orders of all federal, state, foreign and other governmental regulatory
agencies required in connection with this Agreement and the consummation of the
transactions contemplated hereby (including under the HSR Act, the Kalitta
Consents, the Kitty Hawk Consents, the Subs Consents and the approval by the
DOT of the "de facto" transfer of the foreign air transportation authority
issued to AIA and KFS), and all such consents, approvals, authorizations,
permits and orders shall be in full force and effect as of the Closing, except
in each case for any the failure to have been obtained would not reasonably be
expected to have a Material Adverse Effect on the Kalitta Companies or Kitty
Hawk.
6.2.4 No Court Orders. On the Closing Date, there shall be no
effective injunction, writ, preliminary restraining order or any order of any
nature issued by any court or governmental regulatory agency of competent
jurisdiction directing that the transactions contemplated herein or any of them
not be consummated as herein provided, or awarding damages or any other remedy
to any Person with respect to any of the transactions contemplated hereby.
6.2.5 Certificate of Kitty Hawk and Subs. Kitty Hawk, the
Subsidiaries and each of the Subs shall have furnished to the Kalitta Companies
a certificate, dated the Closing Date, executed by Kitty Hawk, the Subsidiaries
and each of the Subs confirming that the conditions in Section 6.2.1 and
Section 6.2.2 have been satisfied.
6.2.6 Opinions of Xxxxx Xxxx'x Counsel. Kitty Hawk shall have
delivered to Kalitta at the Closing the opinions of Xxxxx Xxxx'x counsel,
Xxxxxx and Xxxxx, LLP, Xxxxx, Xxxxxx & Xxxxxxx, P.C. and Dickinson, Wright,
Moon, Van Dusen & Xxxxxxx which opinions shall be dated the Closing Date and
addressed to Kalitta, substantially in the forms attached hereto as Exhibit
6.2.6(a), Exhibit 6.2.6(b) and Exhibit 6.2.6(c), respectively.
6.2.7 Satisfaction with Review of Kitty Hawk. After the date of
this Agreement, there shall have been no change or changes in Xxxxx Xxxx'x
business, labor relations, financial condition, properties, assets, liabilities
or results of operations (or the occurrence of any events which might
reasonably be expected to result in any such change or changes), which in the
judgment of Kalitta, made in good faith, has had or would reasonably be
expected to have a Material Adverse Effect on Kitty Hawk other than as
disclosed in the Disclosure Schedule delivered on the date of this Agreement or
the SEC Documents filed with the SEC on or prior to the date of this Agreement.
6.2.8 Good Standing. Kitty Hawk shall have furnished to the
Kalitta Companies at the Closing certificates of the appropriate governmental
officials, dated within fifteen (15) days of the Closing Date, confirming that
Kitty Hawk is in good standing and duly qualified to transact business in the
State of Delaware, that each of the Subs is in good standing in the State of
Michigan, that each of the Subsidiaries is in good
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standing in the State of Texas, and, as applicable, in each jurisdiction listed
on in the Disclosure Schedule.
6.2.9 Related Agreements. The parties to the Related Agreements
(other than Kalitta, the Kalitta Companies, AIC and, in their respective
individual capacities, the employees of any of the foregoing) shall have
executed and delivered the Related Agreements to which each is a party.
6.2.10 Minimum Share Price. The last reported sale price of a
share of Kitty Hawk Common Stock on the Nasdaq National Market on the last
trading day immediately preceding the Closing Date and its Fair Market Value
shall be at least $12.00.
6.2.11 Financing. AIC shall not be obligated to guaranty, pledge
any of its assets or otherwise secure all or any portion of the obligations of
Kitty Hawk with respect to the notes to be sold by Kitty Hawk pursuant to the
Closing Date Financings (the "NOTES"). Each (i) guaranty ("GUARANTY") given by
any of the Kalitta Companies, (ii) document pursuant to which any of the
Kalitta Companies shall grant a security interest, or otherwise pledge or
mortgage any of its assets, to secure all or any portion of the indebtedness
evidenced by the Notes or its Guaranty, (iii) any other document pursuant to
which any Kalitta Company shall secure in any form all or any portion of the
obligations of Kitty Hawk with respect to the Notes or any indenture pursuant
to which the Notes are or may be issued and its Guaranty and (iv) any other
document executed and delivered by any such Kalitta Company in connection with
the foregoing documents (the documents described in the foregoing clauses (i)
through (iv) shall be collectively referred to herein as the "GUARANTOR
DOCUMENTS") shall provide that the maximum liability of each of the Kalitta
Companies under all of the Guarantor Documents applicable to such Kalitta
Company, shall not be greater than one dollar ($1.00) less than the lesser of
(a) the amount which would cause the Guarantor Documents applicable to such
Kalitta Company or the obligations evidenced thereby to be rendered voidable as
to such Kalitta Company under Section 548 or under Section 544(b) of the United
States Bankruptcy Code, as amended, (b) the amount which would permit a
creditor of such Kalitta Company (including, without limitation, any holder of
such Notes or any trustee acting on behalf of the holders of the Notes) to
avoid the Guarantor Documents applicable to such Kalitta Company or the
obligations evidenced thereby in whole or in part, under an applicable
Fraudulent Transfer Act or similar law, (c) the amount which would permit a
creditor of the such Kalitta Company (including, without limitation, any holder
of such Notes or any trustee acting on behalf of the holders of the Notes) to
have the Guarantor Documents applicable to such Kalitta Company set aside or
the obligations thereunder annulled, in each case whether in whole or in part,
under any applicable Fraudulent Conveyance Act or similar law. In addition, if
the execution and delivery of and/or incurrence of obligation evidenced by, the
Guarantor Documents applicable to such Kalitta Company constitutes a
"distribution" under the MBCA, as amended, the maximum liability of, and value
of the transferences from, such Kalitta Company under the Guarantor Documents
applicable to such Kalitta Company (collectively, the "CORPORATE LIABILITY")
shall be limited to one dollar ($1.00) less than the maximum amount of the
Corporate Liability which such Kalitta Company is permitted to incur under the
Guarantor Documents applicable to such Kalitta Company in compliance with
Section 345 of the MBCA.
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6.2.12 Tax Opinions. Kalitta shall have received opinions of D&T
dated the Closing Date to the effect that each of the AIA Merger, the AIT
Merger, the FOL Merger and the OK Merger should qualify as reorganizations
under Section 368 of the Code, and such opinions shall be in form and substance
reasonably acceptable to Kalitta.
6.2.13 Release of Guaranties. All guaranties by Kalitta of the
indebtedness to be repaid at Closing of any of the Kalitta Companies shall have
been released as a result of the refinancing of all of such indebtedness of the
Kalitta Companies and such releases are not separately bargained for
consideration.
6.2.14 Financing. Kitty Hawk shall have received (a) net proceeds
of at least $40,000,000 from the sale of Kitty Hawk Common Stock and (b) net
proceeds from the sale of Kitty Hawk senior notes in a principal amount greater
than or equal to $340,000,000.
ARTICLE VII
CLOSING AND DELIVERY OF DOCUMENTS
At the Closing, the following shall occur as a single integrated
transaction:
7.1 Deliveries by Kalitta and the Kalitta Companies. At Closing,
Kalitta and each of the Kalitta Companies shall use commercially reasonable
efforts to deliver or cause to be delivered to Kitty Hawk the following items:
(a) The AIA Certificates, the AIT Certificates, the FOL
Certificates, the KFS Certificates and the OK Certificates;
(b) The opinion of the Kalitta Companies' counsel described in
Section 6.1.6;
(c) Copies of the Kalitta Consents;
(d) The certificates identified in Section 6.1.5 hereof;
(e) The good standing certificates identified in Section 6.1.8
hereof;
(f) Copies, certified or otherwise identified to Xxxxx Xxxx'x
satisfaction, of all corporate documents that Kitty Hawk shall
reasonably request, including resolutions of the boards of directors
of each of the Kalitta Companies and resolutions of the sole
shareholder of each of the Kalitta Companies, dated on or before the
date hereof to authorize this Agreement, the Related Agreements and
the transactions and other acts contemplated either by this Agreement
or the Related Agreements; and
(g) the MEA 747 purchase agreements not previously consummated as
described in Section 6.1.14.
7.2 Delivery by Kitty Hawk and the Subs. At Closing, Kitty Hawk
shall deliver or cause to be delivered to Kalitta the following items:
(a) The Stock Merger Consideration and the KFS Cash Merger
Consideration in accordance with Section 3.2;
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(b) The opinions of Xxxxx Xxxx'x counsel described in Section
6.2.6;
(c) Copies of the Kitty Hawk Consents and the Subs Consents;
(d) The certificate identified in Section 6.2.5 hereof;
(e) The good standing certificates identified in Section 6.2.8
hereof;
(f) Copies, certified or otherwise identified to Kalitta's
satisfaction, of all corporate documents that Kalitta shall reasonably
request, including resolutions of the board of directors (or written
consents in lieu thereof) of Kitty Hawk and each Sub and a written
consent of the sole shareholder of the Subs, dated on or before the
date hereof to authorize this Agreement, the Merger Proposals, the
Governance Amendments, the Related Agreements and the transactions and
other acts contemplated either by this Agreement or the Related
Agreements; and
(g) the release of guaranties described in Section 6.2.14.
7.3 Related Agreements. At Closing, the parties, as appropriate, shall
execute and deliver at Closing the following documents (the "RELATED
AGREEMENTS"):
(a) Separate severance and noncompetition agreements, effective as
of the Closing Date, shall have been offered by AIA to each of Xxxxx
Xxxxx, Xxxxxxx Xxxx, Xxxxxxx Xxxxxxx, X. Xxxxxxxxx, Kalitta, Xxxxxxx
Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxx, X. Xxxxxxx, Xxxxx
Xxxxxx and Xxxxxx Xxxxxxxxx, in substantially the form attached as
Exhibit 7.3(a).
(b) A Stockholders' Agreement, effective as of the Closing Date,
between Xxxxxxxxxxx, Kalitta and Kitty Hawk, the form of which is
attached as Exhibit 7.3(b).
(c) Intentionally omitted.
(d) An Escrow Agreement relating to the AIA Merger, the AIT
Merger, the FOL Merger and the OK Merger, effective as of the Closing
Date, between Kitty Hawk, Kalitta and the Escrow Agent, the form of
which is attached as Exhibit 7.3(d) with such changes as are
reasonably requested by the Escrow Agent affecting its duties and
liabilities and permissible investments (as long as such investments
are comparable with respect to risk) thereunder.
(e) An Escrow Agreement relating to the KFS Merger, effective as
of the Closing Date, between Kitty Hawk, Kalitta and the Escrow Agent,
the form of which is attached as Exhibit 7.3(e) with such changes as
are reasonably requested by the Escrow Agent affecting its duties and
liabilities and permissible investments (as long as such investments
are comparable with respect to risk) thereunder.
(f) A Mutual Release, effective as of the Closing Date, between
Kitty Hawk and Kalitta, the form of which is attached as Exhibit
7.3(f).
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ARTICLE VIII
TERMINATION
8.1 Reasons for Termination. This Agreement may be terminated and the
Mergers abandoned before the Closing as follows:
8.1.1 By Mutual Consent. By the mutual consent of the parties.
8.1.2 By Kitty Hawk. By Kitty Hawk after compliance with the
procedure set forth in this Article, if (i) any of Kalitta's or the Kalitta
Companies representations or warranties contained herein is untrue or incorrect
and the basis for such untruth or incorrectness has caused, or is reasonably
likely to cause, any of the Kalitta Companies to suffer a Material Adverse
Effect, (ii) Kalitta or any of the Kalitta Companies fails to perform any of
his or its covenants or agreements contained herein and such Breach has caused,
or is reasonably likely to cause, Kitty Hawk or the Kalitta Companies to suffer
a Material Adverse Effect, (iii) Kitty Hawk in its sole and absolute discretion
elects prior to October 3, 1997 to not proceed with the transactions
contemplated by this Agreement following its review of the Disclosure Schedule
proffered on the date hereby by the Kalitta Companies or (iv) any of the
conditions to the consummation by Xxxxxxxxxxx, Kitty Hawk and the Subs of the
transactions provided for herein shall have become impossible to satisfy;
provided, that a wilful material Breach of this Agreement shall be deemed to
cause such conditions to be incapable of being satisfied for purposes of this
Section 8.1.2.
8.1.3 By Kalitta and the Kalitta Companies. By Kalitta, after
compliance with the procedure set forth in this Article, if (i) any of Xxxxx
Xxxx'x or the Subs' representations or warranties contained herein is untrue or
incorrect and the basis for such untruth or incorrectness has caused, or is
reasonably likely to cause, Kitty Hawk to suffer a Material Adverse Effect,
(ii) Xxxxxxxxxxx, Kitty Hawk or any of the Subs fails to perform any of his or
its covenants or agreements contained herein and such Breach has caused, or is
reasonably likely to cause, Kitty Hawk or the Kalitta Companies to suffer a
Material Adverse Effect or (iii) any of the conditions to the consummation by
Kalitta or the Kalitta Companies of the transactions provided for herein shall
become impossible to satisfy; provided, that a wilful material Breach of this
Agreement shall be deemed to cause such conditions to be incapable of being
satisfied for purposes of this Section 8.1.3.
8.1.4 Drop-Dead Date. By Kalitta or Kitty Hawk if the Closing
shall not have occurred by March 31, 1998, provided, such date shall be
extended by the number of days, if any, to cure any matter that is the subject
of a notice under Section 8.3 (Kitty Hawk Termination Procedure) or Section 8.4
(Kalitta Termination Procedure).
8.2 Notice of Problems. Each party will promptly give written notice
to the other parties when any of them becomes aware of the occurrence or
failure to occur, or the impending or threatened occurrence or failure to
occur, of any fact or event that would cause or constitute, or would be likely
to cause or constitute (a) any of its representations or warranties contained
herein being untrue or incorrect and the basis for such untruth or
incorrectness has caused or is reasonably likely to cause, it to suffer a
Material Adverse Effect, (b) its failure to perform any of its covenants or
agreements contained herein and such Breach has caused or is reasonably likely
to cause it to suffer a Material Adverse Effect or
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(c) any of the conditions to Closing set forth in Article VI it must satisfy
being or becoming impossible to satisfy. No such notice shall affect the
representations, warranties, covenants, agreements or conditions of the parties
hereunder or their liability therefor, or prevent any party from relying on the
representations and warranties contained herein.
8.3 Kitty Hawk Termination Procedure. If Kitty Hawk discovers, by
reason of a notice given pursuant to this Agreement or otherwise, that (a) any
of Kalitta's or the Kalitta Companies' representations or warranties is untrue
or incorrect when made and the basis for such untruth or incorrectness has
caused, or is reasonably likely to cause, the Kalitta Companies to suffer a
Material Adverse Effect, (b) Kalitta or any of the Kalitta Companies has failed
to perform any of his or its covenants or agreements contained herein in any
material respect, and such Breach has caused, or is reasonably likely to cause,
the Kalitta Companies to suffer a Material Adverse Effect, (c) any of the
conditions to Christopher's, Xxxxx Xxxx'x and the Subs' obligations to
consummate the transactions provided for herein has become impossible to
satisfy or (d) Kitty Hawk is not satisfied in its sole and absolute discretion
with its review of the Disclosure Schedule of Kalitta and the Kalitta
Companies, then Kitty Hawk may deliver a notice to Kalitta of such event,
specifying the factual basis therefor in reasonable detail (which notice, in
the case of clause (d) must be delivered on or prior to October 3, 1997).
Kalitta and the Kalitta Companies shall have the right to cure any matter
referred to in clause (a) or (b) of this Section within fifteen (15) Business
Days following the date of delivery of such notice. Upon such notice and, in
the case of clause (a) or (b), upon Kalitta's or the Kalitta Companies' failure
to cure, Kitty Hawk may terminate this Agreement by giving a notice of
termination to Kalitta.
8.4 Kalitta Termination Procedure. If Kalitta discovers, by reason of
a notice given pursuant to this Agreement or otherwise, that (a) any of Xxxxx
Xxxx'x representations or warranties is untrue or incorrect when made and the
basis for such untruth or incorrectness has caused, or is reasonably likely to
cause, Kitty Hawk to suffer a Material Adverse Effect, (b) Xxxxxxxxxxx, Kitty
Hawk or any of the Subs has failed to perform any of his or its covenants or
agreements contained herein in any material respect or (c) any of the
conditions to Kalitta's and the Kalitta Companies' obligations to consummate
the transactions provided for herein has become impossible to satisfy, then
Kalitta may deliver a notice to Kitty Hawk of such event, specifying the
factual basis therefor in reasonable detail. Xxxxxxxxxxx, Kitty Hawk and the
Subs shall have the right to cure any matter referred to in clause (a) or (b)
of this Section within fifteen (15) Business Days following the date of
delivery of such notice. Upon such notice and, in the case of clause (a) or
(b), upon Xxxxx Xxxx'x failure to cure, Kalitta may terminate this Agreement by
giving a notice of termination to Kitty Hawk.
8.5 Effect of Termination. Upon termination of this Agreement pursuant
to this Article, no party shall have any liability or continuing obligation to
another party arising out of this Agreement, or out of actions taken in
connection with this Agreement, except that this Section 8.5 and Article XI
shall survive termination of this Agreement. Notwithstanding the foregoing,
termination of this Agreement shall not relieve any party from its liability
for the Breach, prior to termination, of (a) its covenants or agreements or (b)
the representations or warranties.
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ARTICLE IX
POST-CLOSING AGREEMENTS
After the Closing, Kalitta and Kitty Hawk covenant and agree as
follows:
9.1 Cooperation.
(a) Kalitta shall at the reasonable request and sole cost of
Kitty Hawk use commercially reasonable efforts to aid Kitty Hawk in
establishing itself as the new owner and operator of the Kalitta
Companies and, in connection therewith, shall use commercially
reasonable efforts to maintain the Kalitta Companies' goodwill and
reputation with material suppliers, customers, distributors, creditors
and others having business relations with the Kalitta Companies and in
the business community generally.
(b) Kitty Hawk, the Kalitta Companies and Kalitta shall
cooperate fully, as and to the extent reasonably requested by the
other, in connection with the filing of Tax Returns by either such
party after the Closing Date and any audit or other Proceeding with
respect to Taxes for periods ending prior to the first anniversary of
the Closing Date. Such cooperation shall include the retention and
(upon the other's request) the provision of records and information
which are reasonably relevant to any such audit or other Proceeding.
The Kalitta Companies agree (1) to retain all books and records with
respect to Tax matters pertinent to the Kalitta Companies or Kalitta
relating to any taxable period beginning before the Closing Date until
the expiration of the statute of limitations (and, to the extent
notified by Kitty Hawk, any extensions thereof) of the respective
taxable periods, and to abide by all record retention agreements
entered into with any Taxing authority, and (2) to give Kalitta
reasonable written notice prior to destroying or discarding any such
books and records and, if Kalitta so requests, the Kalitta Companies
shall allow Kalitta to take possession of such books and records if
the Kalitta Companies determine to destroy or discard such books and
records.
(c) Kitty Hawk and Kalitta each further agree, upon request by
the other, to use their commercially reasonable efforts to obtain any
certificate or other document from any governmental authority or any
other Person as may be necessary to mitigate, reduce or eliminate any
Tax that could be imposed (including, but not limited to, with respect
to the transactions contemplated by this Agreement).
9.2 Certain Transfer and Similar Taxes of the Kalitta Companies. All
transfer, documentary, sales, use, stamp, and registration Taxes incurred in
connection with this Agreement (excluding any shareholder and/or
corporate-level gains Tax triggered by the Mergers), shall be paid by Kitty
Hawk when due, and Kitty Hawk will, at its own expense, file all such necessary
Tax Returns and other documentation with respect to all such transfer,
documentary, sales, use, stamp, registration Taxes, and, if required by
applicable law, the Kalitta Companies and Kalitta will join in the execution of
any such Tax Returns and other documentation.
9.3 Inspection of Records. The Kalitta Companies shall each retain and
make their respective books and records (including work papers in the
possession of their respective
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accountants) available for inspection and copying by Kalitta and his
Representatives, for reasonable business purposes at all reasonable times
during normal business hours, for a ten-year period after the Closing Date,
with respect to all transactions of the Kalitta Companies occurring prior to
and those relating to the Closing, and the historical financial condition,
assets, liabilities, operations, Taxes and cash flows of the Kalitta Companies
for such periods.
9.4 Continuation of Existence and Business of Kalitta Companies.
After the Effective Time, Kitty Hawk shall (i) continue the separate corporate
existence of each of the Kalitta Companies (as subsidiaries of Kitty Hawk), and
shall continue the use of the current names of each of the Kalitta Companies in
the conduct of their businesses and (ii) preserve and continue without material
change the nature of the businesses of each of the Kalitta Companies,
including, without limitation, the business and operations of the American
International Freight Division of AIA, the Central and South American
operations of AIA and the Oscoda maintenance operation of AIA, subject, in the
case of (i) and (ii), to the evaluation and modification by the Board of
Directors from time to time.
9.5 Indemnification of Directors and Officers of the Kalitta
Companies.
(a) From and after the Effective Time, Kitty Hawk shall
indemnify, defend vigorously and in good faith and hold harmless each
person who is now, or has been at any time prior to the date hereof or
who becomes prior to the Effective Time, an officer, director,
employee or agent of any of the Kalitta Companies (the "KALITTA
COMPANIES INDEMNIFIED PARTIES") against all Losses, including amounts
that are paid in settlement (which settlement shall require the
approval of Kitty Hawk, which approval shall not be unreasonably
withheld) of or in connection with any Proceeding based in whole or in
part on or arising in whole or in part out of the fact that such
person is or was a director, officer, employee or agent of any of the
Kalitta Companies or is or was serving at the request of any of the
Kalitta Companies as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprises,
if such Proceeding pertains to any matter or fact arising, existing or
occurring at or prior to the Effective Time, regardless of whether
such Proceeding is asserted or claimed prior to, or at or after, the
Effective Time (the "INDEMNIFIED LIABILITIES") to the full extent
permitted under Delaware law (and Kitty Hawk shall promptly pay
expenses in advance of the final disposition of any such Proceeding to
each Kalitta Companies Indemnified Party to the full extent permitted
by Delaware law upon receipt of any undertaking required by applicable
Delaware law).
(b) Kitty Hawk and the Kalitta Companies each agree to (i) cause
the Surviving Corporations to honor the indemnification and expense
payment or reimbursement obligations of the Kalitta Companies in their
respective bylaws in accordance with the terms in effect on the date
hereof and under applicable Michigan law as the same shall apply to
current and former directors, officers, employees and agents and (ii)
maintain the elimination and limitation of liability provisions
contained in the Articles of Incorporation of the Surviving
Corporations.
(c) If Kitty Hawk, any of the Kalitta Companies or any of their
respective successors or assigns (i) shall consolidate with or merge
into any other Person prior to the seventh anniversary of the
Effective Time and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or (ii) shall
transfer all
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or substantially all of its properties and assets to any other Person
prior to the seventh anniversary of the Effective Time, then and in
each such case, proper provision shall be made so that such other
Person and the successors and assigns of Kitty Hawk and the Kalitta
Companies shall assume the obligations set forth in this Section.
(d) The provisions of this Section are intended to be for the
benefit of, and shall be enforceable by, each Kalitta Companies
Indemnified Party, his heirs, executors, administrators, personal
representatives and his Representatives. Kitty Hawk shall make or
cause to be made all determinations required under Delaware or
Michigan law (as applicable) concerning its indemnification and
expense reimbursement obligations under this Section 9.5 as promptly
as practical.
9.6 Office Lease. Kalitta shall use commercially reasonable efforts
to cause the Landlord not to develop or sell the Adjoining Lots during the term
of the Office Lease.
9.7 Release and Indemnification for Kalitta Guaranties. To the extent
that Kalitta shall have personally guaranteed any indebtedness of any one or
more of the Kalitta Companies and any of such guaranties are not released at
Closing as a consequence of the satisfaction of such indebtedness with the net
proceeds of the Closing Date Financings, Kitty Hawk shall promptly make all
commercially reasonable efforts to cause any such remaining guaranties to be
released and to fully acquit and relieve Kalitta from any liability, cost or
other obligation whatsoever with respect to the related indebtedness. In
addition, to the extent that Kitty Hawk shall fail to cause such release of any
such guaranty, Kitty Hawk shall defend, indemnify and hold Kalitta harmless
from and against, and promptly reimburse Kalitta for, any Losses that Kalitta
actually incurs or to which Kalitta becomes subject, which Losses arise either
directly or indirectly, out of the enforcement of, or payment or performance by
Kalitta under, any such guaranty.
ARTICLE X
INDEMNIFICATION
10.1 Survival, Etc.
10.1.1 Survival. Subject to the provisions of Section 10.1.3
below, the representations, warranties and covenants (other than the covenants
set forth in Sections 5.1, 5.2, 5.3 and 5.4) of Kitty Hawk, Kalitta and the
Kalitta Companies made in this Agreement shall survive the Closing.
10.1.2 No Effect on Liability. None of (a) the consummation
of the transactions contemplated by this Agreement or the Related Agreements,
(b) except as provided in Section 10.1.3, the delay or omission of any party to
exercise any of its rights under this Agreement or any Related Agreement or (c)
any investigation or disclosure that any party makes, any notice that any party
gives, or any knowledge that any party obtains as a result thereof, or
otherwise shall (i) affect the liability of the parties to one another for any
Breach of this Agreement or any Related Agreement or (ii) prevent any party
from relying on the representations or warranties contained in this Agreement
or any Related Agreement.
10.1.3 Commencing Arbitrations.
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(a) No party shall have any liability for any Breach of this
Agreement or for any claims for indemnification hereunder unless a
demand for arbitration is made (or Kitty Hawk and Kalitta agree in
writing that Kalitta shall have liability for a Kitty Hawk Established
Loss or Kitty Hawk shall have liability for a Kalitta Established
Loss) as provided in Section 10.9 related to such Breach prior to the
thirty (30) month anniversary of the Effective Time and any such
liability shall be deemed waived, and no Person shall have any remedy
for any such Breaches; it being the intention of the parties that all
claims relating to a Breach of the Agreement shall thereafter be
forever barred. Any demand for arbitration seeking indemnification
hereunder made during such thirty (30) month period shall remain valid
and the representations, warranties, covenants and agreements relating
thereto shall remain in effect for purposes of such indemnification
notwithstanding that the amount or validity of such claim may not be
established or resolved within such thirty (30) month period.
(b) Notwithstanding the provisions of 10.1.3(a), Kalitta shall
have liability under Section 10.2.1(b) and Section 10.2.1(e) for
Losses that relate to, or result from, a demand for arbitration made
(or Kitty Hawk and Kalitta agree in writing that Kalitta shall have
liability for a Kitty Hawk Established Loss) as provided in Section
10.9 prior to the forty-two (42) month anniversary of the Effective
Time, and unless brought (or so agreed to) before such forty-two (42)
month anniversary, such liability shall be deemed waived and shall
thereafter be forever barred. Any demand for arbitration seeking
indemnification hereunder pursuant to Section 10.2.1(b) and Section
10.2.1(e) made during such forty-two (42) month period shall remain
valid and the covenants and agreements relating thereto shall remain
in effect for purposes of such indemnification notwithstanding that
the amount or validity of such claim may not be established or
resolved within such forty-two (42) month period.
10.2 Indemnities.
10.2.1 Indemnification of Kitty Hawk.
(a) Indemnification for Breaches or Alleged Breaches by AIA,
AIT, FOL or OK. Subject to the other provisions of this Article,
Kalitta shall defend, indemnify and hold Kitty Hawk, its Subs, its
Subsidiaries, the Surviving Corporations, and their respective
officers, directors, employees, agents and controlling persons (each a
"KITTY HAWK INDEMNIFIED PARTY") harmless from and against, and
promptly reimburse such Kitty Hawk Indemnified Party for, any loss,
damage, deficiency, liability, judgment, claim or expense, including
reasonable investigative costs, costs of defense, settlement costs
(subject to approval as provided below), costs of cleanup, containment
or other remediation and including reasonable attorneys' and
accountants' fees, whether or not involving a third-party claim
(collectively, "LOSSES"), that any Kitty Hawk Indemnified Party
actually incurs or to which such Kitty Hawk Indemnified Party becomes
subject, which Losses arise, either directly or indirectly, out of (i)
any Breach by Kalitta or any of the Kalitta Companies (other than KFS)
of this Agreement or (ii) any claim asserted by any third party that,
assuming the truth thereof, would constitute a Breach by Kalitta or
any of the Kalitta Companies (other than KFS) of this Agreement.
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(b) Indemnification for Non-KFS Environmental Obligations. In
addition to the provisions of Section 10.2.1(a), and subject to the
provisions of this Article, Kalitta shall defend, indemnify and hold
the Kitty Hawk Indemnified Parties harmless from and against, and
promptly reimburse such Kitty Hawk Indemnified Parties for, any Losses
that any Kitty Hawk Indemnified Party actually incurs or to which such
Kitty Hawk Indemnified Party becomes subject, which Losses arise
either directly or indirectly, out of (i) any Hazardous Materials or
other contaminants that were present on any of the Non-KFS Properties
at any time prior to the Closing Date, (ii) the emanation from any of
the Non-KFS Properties of any Hazardous Material or other contaminant
that was present or stored on, or transported from, any of the Non-KFS
Properties on or before the Closing Date, or (iii) any release by any
of the Kalitta Companies (other than KFS) on any of the Non-KFS
Properties of any Hazardous Material or other contaminant on or before
the Closing Date (the conditions and events described in the foregoing
clauses (i) through (iii) shall each, without distinction, be
hereinafter referred to as a "NON-KFS ENVIRONMENTAL CONDITION");
provided, however, that Kalitta shall have no obligation of indemnity
or other liability under this Section 10.2.1(b) to any one or more of
the Kitty Hawk Indemnified Parties for a discrete item of Loss unless
the following conditions shall have been satisfied with respect to
such discrete item of Loss:
(i) such discrete item of Loss results from (A) the
imposition by the United States Environmental Protection Agency,
the Michigan Department of Environmental Quality or any other
governmental entity of competent jurisdiction on any of such
Kitty Hawk Indemnified Parties of an obligation to (x) remediate
or otherwise mitigate any Non-KFS Environmental Condition, or
(y) pay clean-up costs or civil penalties in connection with
such Non-KFS Environmental Condition (resulting, in the case of
the foregoing clause (y), either from a Proceeding or a
settlement made by such Kitty Hawk Indemnified Parties on the
advice of Environmental Counsel (as hereinafter defined) and
subject to the requirements relating to approval of settlements
set forth in Section 10.4), (B) an affirmative obligation of any
of the Kitty Hawk Indemnified Parties under applicable
Environmental Laws (which shall, for purposes of this Section,
be deemed to include laws relating to health and safety in the
work place) to remediate or otherwise mitigate any Non-KFS
Environmental Condition which is discovered other than by reason
of a voluntary investigation, test or survey conducted by any of
such Kitty Hawk Indemnified Parties solely for environmental
purposes and which is not required by applicable Environmental
Laws, as determined by an opinion of Environmental Counsel which
the Kitty Hawk Indemnified Parties shall have obtained and
provided to Kalitta and which may be qualified by reasonable and
appropriate assumptions, qualifications and exceptions, or (C) a
Proceeding initiated against any of the Kitty Hawk Indemnified
Parties by a third party pursuant to a claimed private right of
action under Environmental Laws which results in an obligation
of any of the Kitty Hawk Indemnified Parties to either (x)
remediate or otherwise mitigate a Non-KFS Environmental
Condition, or (y) pay damages to such third party as a
consequence of a judgement or settlement of such Proceeding by
such Kitty Hawk Indemnified Parties upon advice of Environmental
Counsel and subject to the requirements relating to
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approval of settlements set forth in Section 10.4) (each of the
matters referred to in the foregoing sub-clauses (A) through (C)
shall be referred to herein, without distinction, as a "NON-KFS
ENVIRONMENTAL OBLIGATION");
(ii) before incurring such discrete item of Loss in
connection with any Non-KFS Environmental Obligation, the
affected Kitty Hawk Indemnified Parties first seek, obtain and
provide to Kalitta the opinion of either Xxxxxx Xxxxxxx or
Warner, Norcross and Xxxx (or other recognized environmental
counsel reasonably acceptable to the affected Kitty Hawk
Indemnified Parties and Kalitta) ("ENVIRONMENTAL COUNSEL") to
the effect that the Non-KFS Environmental Condition resulting in
such Non-KFS Environmental Obligation violates applicable
Environmental Laws, which opinion may be subject to reasonable
and appropriate assumptions, qualifications and exceptions);
provided, however, that the affected Kitty Hawk Indemnified
Parties may incur such discrete item of Loss in connection with
(x) the order of any court of competent jurisdiction without the
obligation to deliver such opinion, or (y) any "due care"
obligations under M.C.L.A. Section 324.20107 with respect to a
Non-KFS Environmental Condition prior to delivering such opinion
to Kalitta so long as in the case of this clause (y), Kalitta
receives a copy thereof as soon thereafter as is practicable;
(iii) the affected Kitty Hawk Indemnified Parties provide
Kalitta written notice (or if time does not reasonably permit,
oral notice) of, and the invitation to attend, or, if possible
and available to Kalitta, to participate in, any Proceeding
relating to such Non-KFS Environmental Obligation of which the
Kitty Hawk Indemnified Parties have knowledge and are themselves
entitled to attend and/or participate, unless the failure to
give such notice is attributable to an action or omission of any
employee of, or attorney for, any of the Surviving Corporations
during any time when Kalitta is the president of AIT.
In addition, Kalitta shall have no obligation of indemnity or other
liability under this Section 10.2.1(b) to any one or more of the Kitty Hawk
Indemnified Parties with respect to any discrete item of Loss resulting from
either or both of (x) the failure of the Kitty Hawk Indemnified Parties to
prudently exercise "due care" obligations under M.C.L.A. Section 324.20107a, or
(y) the cost or expense relating to any remediation or mitigation of any
Non-KFS Environmental Condition in excess of the level of remediation or
mitigation required by the violated Environmental Laws, as determined by a
written statement which the Kitty Hawk Indemnified Parties shall obtain from
Environmental Counsel (which statement may be supported by the report on the
Non-KFS Environmental Condition by either of NTH Consultants or SME, or such
other recognized independent engineering or environmental testing firm
reasonably acceptable to the affected Kitty Hawk Indemnified Parties and
Kalitta) as to the nature and scope of any such remediation or mitigation
required to comply with the violated Environmental Laws; provided, however,
that nothing contained in this clause (y) shall prevent Kitty Hawk from
additionally remediating or mitigating such Non-KFS Environmental Condition at
its own expense and without obligation to Kalitta. The Kitty Hawk Indemnified
Parties shall promptly provide Kalitta with copies of such statement and any
supporting report they obtain pursuant to the foregoing clause (y).
Notwithstanding the foregoing and the provisions of Section 10.4 hereof, Kitty
Hawk will be
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entitled to control any remediation or mitigation of any such Non-KFS
Environmental Condition, any relating Proceeding, and, except as provided in
the following sentence, any other Proceeding with respect to which indemnity
may be sought under this Section 10.2.1(b). The procedure described in Section
10.4 hereof will apply to any claim solely for monetary damages relating to a
matter covered by this Section 10.2.1(b).
(c) Non-KFS Escrow Agreement. If the Closing shall occur and
subject to the further provisions of this Article (including, but not
limited to, Sections 10.1.3 and 10.3), any Kitty Hawk Indemnified
Party shall be promptly reimbursed for any Kitty Hawk
Established Non-KFS Loss solely from the Non-KFS Escrow Amount under
the Non-KFS Escrow Agreement (as provided in the Non-KFS Escrow
Agreement) for the amount of all Losses after the amount of any such
Loss and Kalitta's and the Kalitta Companies' (other than KFS)
liability therefor is established by (i) agreement in writing between
Kitty Hawk and Kalitta or (ii) arbitration pursuant to Section 10.9
(any Loss so determined is referred to herein as a "KITTY HAWK
ESTABLISHED NON-KFS LOSS"); provided, that a demand for arbitration
relating to a Kitty Hawk Established Non-KFS Loss arising after the
thirty (30) month anniversary of the Effective Time but prior to the
forty-two (42) month anniversary of the Effective Time under Section
10.2.1(b), subject to Section 10.3.2 shall be payable by Kalitta
personally and not from the Non-KFS Escrow Amount to the extent that
such Kitty Hawk Established Non-KFS Loss is not recoverable from the
Non-KFS Escrow Amount. Kalitta may, at his sole option, pay any Kitty
Hawk Established Non-KFS Loss in cash or by the delivery of shares of
Kitty Hawk Common Stock directly to the Kitty Hawk Indemnified Party
in lieu of from the Non-KFS Escrow Amount. If such Kitty Hawk
Established Loss is satisfied in shares of Kitty Hawk Common Stock,
the value of such Kitty Hawk Common Stock shall be determined by its
Fair Market Value at the date any claim becomes a Kitty Hawk
Established Non-KFS Loss.
(d) Indemnification for Breaches or Alleged Breaches by KFS.
Subject to the other provisions of this Article, Kalitta shall defend,
indemnify and hold each Kitty Hawk Indemnified Party harmless from and
against, and promptly reimburse such Kitty Hawk Indemnified Party for,
any Losses that any Kitty Hawk Indemnified Party actually incurs or to
which such Kitty Hawk Indemnified Party becomes subject, which Losses
arise, either directly or indirectly, out of (i) any Breach by Kalitta
or KFS of this Agreement or (ii) any claim asserted by any third party
that, assuming the truth thereof, would constitute a Breach by Kalitta
or KFS of this Agreement.
(e) Indemnification for KFS Environmental Obligations. In
addition to the provisions of Section 10.2.1(d), and subject to the
provisions of this Article, Kalitta shall defend, indemnify and hold
the Kitty Hawk Indemnified Parties harmless from and against, and
promptly reimburse such Kitty Hawk Indemnified Parties for, any Losses
that any Kitty Hawk Indemnified Party actually incurs or to which such
Kitty Hawk Indemnified Party becomes subject, which Losses arise
either directly or indirectly, out of (i) any Hazardous Materials or
other contaminants that were present on any of the KFS Properties at
any time prior to the Closing Date, (ii) the emanation from any of the
KFS Properties of any Hazardous Material or other contaminant that was
present or stored on, or transported from, any of the KFS Properties
on or before the Closing Date, or (iii) any release by KFS on any of
the KFS Properties of any Hazardous Material or other contaminant on
or before the Closing Date (the
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conditions and events described in the foregoing clauses (i) through
(iii) shall each, without distinction, be hereinafter referred to as
a "KFS ENVIRONMENTAL CONDITION"); provided, however, that Kalitta
shall have no obligation of indemnity or other liability under this
Section 10.2.1(e) to any one or more of the Kitty Hawk Indemnified
Parties for a discrete item of Loss unless the following conditions
shall have been satisfied with respect to such discrete item of Loss:
(i) such discrete item of Loss results from (A) the
imposition by the United States Environmental Protection Agency,
the Michigan Department of Environmental Quality or any other
governmental entity of competent jurisdiction on any of such
Kitty Hawk Indemnified Parties of an obligation to (x) remediate
or otherwise mitigate any KFS Environmental Condition, or (y)
pay clean-up costs or civil penalties in connection with such
KFS Environmental Condition (resulting, in the case of the
foregoing clause (y), either from a Proceeding or a settlement
made by such Kitty Hawk Indemnified Parties on the advice of
Environmental Counsel (as hereinafter defined) and subject to
the requirements relating to approval of settlements set forth
in Section 10.4), (B) an affirmative obligation of any of the
Kitty Hawk Indemnified Parties under applicable Environmental
Laws (which shall, for purposes of this Section, be deemed to
include laws relating to health and safety in the work place) to
remediate or otherwise mitigate any KFS Environmental Condition
which is discovered other than by reason of a voluntary
investigation, test or survey conducted by any of such Kitty
Hawk Indemnified Parties solely for environmental purposes and
which is not required by applicable Environmental Laws, as
determined by an opinion of Environmental Counsel which the
Kitty Hawk Indemnified Parties shall have obtained and provided
to Kalitta and which may be qualified by reasonable and
appropriate assumptions, qualifications and exceptions, or (C) a
Proceeding initiated against any of the Kitty Hawk Indemnified
Parties by a third party pursuant to a claimed private right of
action under Environmental Laws which results in an obligation
of any of the Kitty Hawk Indemnified Parties to either (x)
remediate or otherwise mitigate a KFS Environmental Condition,
or (y) pay damages to such third party as a consequence of a
judgement or settlement of such Proceeding by such Kitty Hawk
Indemnified Parties upon advice of Environmental Counsel and
subject to the requirements relating to approval of settlements
set forth in Section 10.4) (each of the matters referred to in
the foregoing sub-clauses (A) through (C) shall be referred to
herein, without distinction, as a "KFS ENVIRONMENTAL
OBLIGATION");
(ii) before incurring such discrete item of Loss in
connection with any KFS Environmental Obligation, the affected
Kitty Hawk Indemnified Parties first seek, obtain and provide to
Kalitta the opinion of either Xxxxxx Xxxxxxx or Xxxxxx, Xxxxxxxx
and Xxxx (or other recognized environmental counsel reasonably
acceptable to the affected Kitty Hawk Indemnified Parties and
Kalitta) ("ENVIRONMENTAL COUNSEL") to the effect that the KFS
Environmental Condition resulting in such KFS Environmental
Obligation violates applicable Environmental Laws, which opinion
may be subject to reasonable and appropriate assumptions,
qualifications and exceptions); provided, however, that the
affected Kitty Hawk Indemnified Parties may incur
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such discrete item of Loss in connection with (x) the order of
any court of competent jurisdiction without the obligation to
deliver such opinion, or (y) any "due care" obligations under
M.C.L.A. Section 324.20107 with respect to a KFS Environmental
Condition prior to delivering such opinion to Kalitta so long as
in the case of this clause (y), Kalitta receives a copy thereof
as soon thereafter as is practicable;
(iii) the affected Kitty Hawk Indemnified Parties provide
Kalitta written notice (or if time does not reasonably permit,
oral notice) of, and the invitation to attend, or, if possible
and available to Kalitta, to participate in, any Proceeding
relating to such KFS Environmental Obligation of which the Kitty
Hawk Indemnified Parties have knowledge and are themselves
entitled to attend and/or participate, unless the failure to
give such notice is attributable to an action or omission of any
employee of, or attorney for, any of the Surviving Corporations
during any time when Kalitta is the president of AIT.
In addition, Kalitta shall have no obligation of indemnity or other
liability under this Section 10.2.1(e) to any one or more of the Kitty Hawk
Indemnified Parties with respect to any discrete item of Loss resulting from
either or both of (x) the failure of the Kitty Hawk Indemnified Parties to
prudently exercise "due care" obligations under M.C.L.A. Section 324.20107a, or
(y) the cost or expense relating to any remediation or mitigation of any KFS
Environmental Condition in excess of the level of remediation or mitigation
required by the violated Environmental Laws, as determined by a written
statement which the Kitty Hawk Indemnified Parties shall obtain from
Environmental Counsel (which statement may be supported by the report on the
KFS Environmental Condition by either of NTH Consultants or SME, or such other
recognized independent engineering or environmental testing firm reasonably
acceptable to the affected Kitty Hawk Indemnified Parties and Kalitta) as to
the nature and scope of any such remediation or mitigation required to comply
with the violated Environmental Laws; provided, however, that nothing contained
in this clause (y) shall prevent Kitty Hawk from additionally remediating or
mitigating such KFS Environmental Condition at its own expense and without
obligation to Kalitta. The Kitty Hawk Indemnified Parties shall promptly
provide Kalitta with copies of such statement and any supporting report they
obtain pursuant to the foregoing clause (y). Notwithstanding the foregoing and
the provisions of Section 10.4 hereof, Kitty Hawk will be entitled to control
any remediation or mitigation of any such KFS Environmental Condition, any
relating Proceeding, and, except as provided in the following sentence, any
other Proceeding with respect to which indemnity may be sought under this
Section 10.2.1(e). The procedure described in Section 10.4 hereof will apply to
any claim solely for monetary damages relating to a matter covered by this
Section 10.2.1(e).
(f) KFS Escrow Agreement. If the Closing shall occur and subject
to the further provisions of this Article (including, but not limited
to, Section 10.3), any Kitty Hawk Indemnified Party shall be promptly
reimbursed for any Kitty Hawk Established KFS Loss solely from the KFS
Escrow Amount under the KFS Escrow Agreement (as provided in the KFS
Escrow Agreement) for the amount of all Losses after the amount of any
such Loss and Kalitta's and KFS' liability therefor is established by
(i) agreement in writing between Kitty Hawk and Kalitta or (ii)
arbitration pursuant to Section 10.9 (any Loss so determined is
referred to herein
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as a "KITTY HAWK ESTABLISHED KFS LOSS"); provided, that a demand for
arbitration relating to a Kitty Hawk Established KFS Loss arising
after the thirty (30) month anniversary of the Effective Time but
prior to the forty-second (42) month anniversary of the Effective
Time under Section 10.2.1(e) or, subject to Section 10.3.2, which
exceeds any then remaining KFS Escrow Amount shall be payable by
Kalitta personally and not from the KFS Escrow Account. Kalitta may,
at his sole option, pay any Kitty Hawk Established Loss directly to
the Kitty Hawk Indemnified Party in lieu of from the KFS Escrow
Amount.
(g) Exclusive Benefit. The parties hereto acknowledge and agree
that Kalitta's and the Kalitta Companies' indemnification obligations
under this Section 10.2.1 are for the exclusive benefit of Kitty Hawk
and the Kitty Hawk Indemnified Parties and enforceable only by Kitty
Hawk and the other Kitty Hawk Indemnified Parties and no other Person
shall have any claim in respect thereto under any theory whatsoever
whether by assignment, subrogation or otherwise.
10.2.2 Indemnification of Kalitta. Subject to the other
provisions of this Article, Kitty Hawk shall defend, indemnify and hold
Kalitta, the Kalitta Companies and their respective officers, directors,
employees, agents and controlling persons (each a "KALITTA INDEMNIFIED PARTY")
harmless from and against, and promptly reimburse each Kalitta Indemnified
Party for, any Losses that any Kalitta Indemnified Party actually incurs or to
which such Kalitta Indemnified Party becomes subject, which Losses, whether or
not involving a third-party claim, arise, either directly or indirectly, out of
any (a) Breach by Xxxxxxxxxxx, Kitty Hawk or the Subs of this Agreement or
Breach by any of the Kalitta Companies of any agreements or covenants for the
benefit of Kalitta to be performed after Closing, (b) any claim asserted by any
third party that, assuming the truth thereof, would constitute a Breach by
Xxxxxxxxxxx, Kitty Hawk or the Subs of this Agreement.
Subject to the further provisions of this Article (including,
but not limited to, Section 10.3), Kitty Hawk shall promptly pay to any Kalitta
Indemnified Party the amount of all Losses after the amount of any such Loss
and Xxxxx Xxxx'x liability therefor is established by (a) agreement in writing
between Kalitta and Kitty Hawk, or (b) arbitration pursuant to Section 10.9
(any Loss so determined is referred to herein as an "KALITTA ESTABLISHED
LOSS"). If Kalitta receives an opinion from D&T (or any successor thereto) to
the effect that a cash payment of a Kalitta Established Loss must be paid in
Kitty Hawk Common Stock in order to avoid jeopardizing the status of the AIA
Merger, the AIT Merger, the FOL Merger or the OK Merger as tax free
reorganizations under Section 368 of the Code, the payment of the Kalitta
Established Loss shall be in shares of Kitty Hawk Common Stock having a Fair
Market Value equal to the Kalitta Established Loss in lieu of cash; provided
Kitty Hawk shall be given a reasonable time to register such Kitty Hawk Common
Stock under the Securities Act if Kitty Hawk so determines such registration is
necessary or appropriate. The parties hereto acknowledge and agree that Xxxxx
Xxxx'x indemnification obligations under this Section 10.2.2 are for the
exclusive benefit of Kalitta and the Kalitta Indemnified Parties and
enforceable only by Kalitta and the Kalitta Indemnified Parties.
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10.3 Limitations.
10.3.1 Deductibles. Neither Kalitta nor Kitty Hawk shall be
liable for, and neither Kalitta pursuant to Section 10.2.1 nor Kitty Hawk
pursuant to Section 10.2.2 shall be obligated to pay, any amount until the
party to be indemnified has incurred aggregate Kitty Hawk Established Losses or
Kalitta Established Losses, as applicable, in excess of $1,000,000 (the
"DEDUCTIBLE"). At such time as the aggregate Kitty Hawk Established Losses or
Kalitta Established Losses, as applicable, incurred by the party to be
indemnified shall exceed the Deductible, the claimant shall be entitled to the
full amount of such Losses in excess of the Deductible; subject, however, to
the further provisions of this Article.
10.3.2 Cap. Neither Kalitta nor Kitty Hawk shall be liable for,
and neither Kalitta pursuant to Section 10.2.1 nor Kitty Hawk pursuant to
Section 10.2.2 shall be obligated to pay, an amount in excess of the applicable
Cap (as defined below). For purposes hereof, the applicable "CAP" (a) if the
Closing shall occur, in the case of Kalitta for all Kitty Hawk Established
Non-KFS Losses shall be the Fair Market Value from time to time of 1,150,000
shares of Kitty Hawk Common Stock, (b) if the Closing shall occur, in the case
of Kalitta for all Kitty Hawk Established KFS Losses shall be $6,000,000, (c)
if the Closing shall not occur, in the case of Kalitta $10,000,000 in the
aggregate for all Kitty Hawk Established Losses and (d) whether or not the
Closing shall occur, in the case of Kitty Hawk shall mean an amount equal to
$10,000,000 for all Kalitta Established Losses.
10.3.3 Duty to Mitigate. Each Kitty Hawk Indemnified Party and
Kalitta Indemnified Party shall be required to use commercially reasonable
efforts to mitigate any Loss as a condition to recovery hereunder.
10.3.4 Exceptions. Notwithstanding the foregoing, Sections
10.1.3, 10.3.1 and 10.3.2 shall not apply to any Breach of Section 4.1.2,
Section 4.3.6, Section 5.1.3(i), Section 5.1.3(j), Section 9.5 as to Kalitta
Companies Indemnified Parties and the heirs, executors, administrators,
personal representatives and Representatives (other than Kalitta) or Section
11.1 nor to Xxxxx Xxxx'x failure to deliver the Stock Merger Consideration and
the KFS Cash Merger Consideration in accordance with Section 3.2 hereof.
Notwithstanding the foregoing, Sections 10.1.3 and 10.3.1 shall not apply to
any Breach of Section 9.7
10.4 Notice and Opportunity to Defend.
10.4.1 Notice, Etc. Whenever a claim shall arise for which any
party (the "INDEMNIFIED PARTY") shall be entitled to indemnification hereunder,
including receipt of notice of any third-party claim or commencement of any
third-party Proceeding (an "ASSERTED LIABILITY") and any other party (an
"INDEMNIFYING PARTY") is obligated to provide indemnification pursuant to
Section 10.2.1 or Section 10.2.2, the Indemnified Party shall promptly give all
Indemnifying Parties notice thereof. The Indemnified Party's failure so to
notify an Indemnifying Party shall not cause the Indemnified Party to lose its
right to indemnification under this Article, except to the extent that such
failure materially prejudices the Indemnifying Party's ability to defend
against an Asserted Liability that such Indemnified Party has the right to
defend against hereunder (and except as otherwise set forth in this Article).
Such notice shall describe the Asserted Liability in reasonable detail, and if
practicable shall indicate the amount (which may be estimated) of the Losses
that have been or may be asserted by the Indemnified Party. Notwithstanding
anything in this
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Article X to the contrary, each of the Indemnifying Parties may defend against
an Asserted Liability on behalf of the Indemnified Party utilizing counsel
reasonably acceptable to the Indemnified Party, unless (a) the Indemnified
Party reasonably objects to such assumption on the grounds that counsel for
such Indemnifying Parties cannot represent both the Indemnified Party and the
Indemnifying Parties because such representation would be reasonably likely to
result in a conflict of interest or because there may be defenses available to
the Indemnified Party that are not available to such Indemnifying Parties, (b)
the Indemnifying Party is not capable (by reason of Disability, death,
insufficient financial capacity, bankruptcy, receivership, liquidation,
managerial deadlock, managerial neglect or similar events) of maintaining a
reasonable defense of such action or proceeding, or (c) the action or
proceeding seeks injunctive or other equitable relief against the Indemnified
Party.
10.4.2 Defense Costs. If any Indemnifying Party defends an
Asserted Liability, it shall do so vigorously and in good faith at its own
expense and shall not be responsible for the costs of defense, investigative
costs, attorney's fees or other expenses incurred to defend the Asserted
Liability (collectively, "DEFENSE COSTS") of the Indemnified Party (which may
continue to defend, at its own expense). If the Indemnified Party assumes the
defense of an Asserted Liability by reason of clauses (a), (b) or (c) of
Section 10.4.1, or because the Indemnifying Party has not elected to assume the
defense, then it shall do so vigorously and in good faith and such Indemnifying
Party shall indemnify the Indemnified Party for its Defense Costs; provided,
the Indemnifying Parties shall not be liable for the costs of more than one
counsel for all Indemnified Parties in any one jurisdiction. An Indemnifying
Party and Indemnified Party may settle any Asserted Liability only with the
consent of the other, which consent shall not be unreasonably withheld.
10.4.3 Third-Party Claims. The parties shall cooperate with
each other with respect to the defense of any claims or litigation made or
commenced by third-parties subsequent to the Closing Date with respect to which
indemnification is not available (for any reason) under this Article; provided,
that the party requesting cooperation shall reimburse the other party for the
other party's reasonable out-of-pocket costs and expenses of furnishing such
cooperation.
10.4.4 Indemnification Based Upon Net Losses. The duty and
obligation of the Indemnifying Party to provide indemnification hereunder shall
be limited to the net amount of any Losses actually sustained or paid. In
determining the net amount of Losses, the actual amount of Losses shall be the
amount in excess of any insurance coverage and shall be reduced by the
aggregate value of any assets, properties and rights, including, without
limitation, proceeds of insurance, claims, cross-claims, counterclaims and the
like which are received or reasonably expected to be received by the
Indemnified Party and the Tax benefits realized or reasonably expected to be
realized by such party as a direct result of the Loss. The Kalitta Companies of
Kitty Hawk shall use their commercially reasonable efforts to cause their
insurers to waive subrogation against Kalitta. In such connection, an
Indemnified Party shall use its commercially reasonable efforts to pursue, and
shall fully cooperate with the Indemnifying Party in pursuing by all
appropriate action, all amounts which commercially reasonably may be available
from third persons. In addition, in determining the net amount of such Losses
for which indemnification is required, the amount of indemnification shall be
increased to include any Tax liability incurred or reasonably expected to be
incurred by a party as a direct result of such indemnification. If any Tax
benefit expected to be realized is in fact not realized, or any Tax liability
expected to be
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incurred is not in fact incurred, then an adjustment shall be made promptly to
compensate the other party.
10.5 EXCLUSIVE REMEDY.
10.5.1 THE INDEMNIFICATION PROVISIONS AS PROVIDED IN THIS
AGREEMENT SHALL BE THE SOLE AND EXCLUSIVE REMEDY AND RECOURSE FOR ANY BREACH OF
THIS AGREEMENT BY KALITTA OR ANY KALITTA COMPANY OR ANY OTHER CLAIM BY
XXXXXXXXXXX, KITTY HAWK OR THE SUBS UNDER OR WITH RESPECT TO THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND XXXXXXXXXXX, KITTY HAWK OR THE
SUBS SHALL HAVE NO OTHER ENTITLEMENT, REMEDY OR RECOURSE, WHETHER IN CONTRACT,
TORT OR OTHERWISE, AGAINST KALITTA, ANY KALITTA COMPANY, OR THEIR RESPECTIVE
AFFILIATES UNDER OR WITH RESPECT TO THIS AGREEMENT, ALL OF SUCH ENTITLEMENTS,
REMEDIES AND RECOURSE BEING HEREBY EXPRESSLY WAIVED BY XXXXXXXXXXX, KITTY HAWK
AND THE SUBS TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW. IN ADDITION,
THE AMOUNT OF THE CAPS APPLICABLE TO KALITTA OR ANY KALITTA COMPANY SET FORTH
IN SECTION 10.3.2 SHALL BE THE MAXIMUM AMOUNT OF THE INDEMNIFICATION
OBLIGATIONS OF KALITTA HEREUNDER, SUBJECT TO THE EXCLUSIONS OF SECTION 10.3.4,
AND NEITHER KALITTA, ANY KALITTA COMPANY, NOR THEIR RESPECTIVE AFFILIATES SHALL
HAVE FURTHER PERSONAL LIABILITY THEREFOR. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, NEITHER XXXXXXXXXXX, KITTY HAWK NOR THE SUBS SHALL BE ENTITLED TO A
RESCISSION OF THIS AGREEMENT OR TO ANY FURTHER INDEMNIFICATION RIGHTS OR CLAIMS
OF ANY NATURE WHATSOEVER HEREUNDER, ALL OF WHICH KITTY HAWK, SUBS AND
XXXXXXXXXXX HEREBY WAIVE TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW.
10.5.2 THE INDEMNIFICATION PROVIDED IN THIS AGREEMENT SHALL BE
THE SOLE AND EXCLUSIVE REMEDY AND RECOURSE FOR ANY BREACH OF THIS AGREEMENT BY
XXXXXXXXXXX, KITTY HAWK OR THE SUBS OR ANY OTHER CLAIM BY KALITTA OR ANY
KALITTA COMPANY UNDER OR WITH RESPECT TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY AND KALITTA AND EACH KALITTA COMPANY SHALL
HAVE NO OTHER ENTITLEMENT, REMEDY OR RECOURSE, WHETHER IN CONTRACT, TORT OR
OTHERWISE, AGAINST XXXXXXXXXXX, KITTY HAWK, THE SUBS, OR THEIR RESPECTIVE
AFFILIATES UNDER OR WITH RESPECT TO THIS AGREEMENT, ALL OF SUCH ENTITLEMENTS,
REMEDIES AND RECOURSE BEING EXPRESSLY WAIVED BY KALITTA AND EACH KALITTA
COMPANY TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW. IN ADDITION, THE
AMOUNT OF THE CAP APPLICABLE TO KITTY HAWK SET FORTH IN SECTION 10.3.2 SHALL BE
THE MAXIMUM AMOUNT OF THE INDEMNIFICATION OBLIGATIONS OF KITTY HAWK HEREUNDER
SUBJECT TO THE EXCLUSIONS OF SECTION 10.3.4. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, NEITHER KALITTA NOR ANY KALITTA COMPANY SHALL BE ENTITLED TO A
RESCISSION OF THIS AGREEMENT OR TO ANY FURTHER INDEMNIFICATION
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RIGHTS OR CLAIMS OF ANY NATURE WHATSOEVER HEREUNDER, ALL OF WHICH KALITTA AND
EACH KALITTA COMPANY HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW.
10.5.3 NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE
CONTRARY, (1) THE RIGHTS AND OBLIGATIONS OF CERTAIN OF THE PARTIES HERETO UNDER
THE 727 PURCHASE AGREEMENT, INCLUDING RIGHTS AND OBLIGATIONS WITH RESPECT TO
INDEMNIFICATION AND SECTION 4.18 THEREOF, SHALL REMAIN UNAFFECTED BY THE
EXECUTION OF THIS AGREEMENT OR THE RELATED AGREEMENTS AND (2) NOTHING HEREIN
SHALL BE CONSTRUED OR INTERPRETED AS LIMITING OR IMPAIRING THE RIGHTS OR
REMEDIES THAT THE PARTIES HERETO MAY HAVE (A) AT EQUITY FOR INJUNCTIVE RELIEF
OR SPECIFIC PERFORMANCE, (B) RIGHTS UNDER APPLICABLE LAW FOR CONTRIBUTION,
INDEMNITY AND SIMILAR RIGHTS IN RESPECT OF CLAIMS BY THIRD PARTIES UNDER OR
RELATING TO THE CLOSING DATE FINANCINGS, (C) UNDER ANY RELATED AGREEMENTS (D)
THE SETTLEMENT AGREEMENT EXECUTED IN AUGUST 1994 RELATED TO THE U.S. POSTAL
SERVICE'S ANET 93-01 SOLICITATION, AND (E) ANY AIRCRAFT CHARTER OR MAINTENANCE
AGREEMENTS BETWEEN THE PARTIES.
10.6 No Other Representation.
(a) Notwithstanding anything to the contrary contained in this
Agreement, Kitty Hawk and the Subs acknowledge and agree that except
for the representations and warranties made by Kalitta and the
Kalitta Companies in Section 4.1 hereof and Kalitta in Section 4.2,
that neither Kalitta nor the Kalitta Companies have made any other
representations or warranties of any kind (including any
representation or warranty with respect to any projections, forecasts
or forward looking statements relating to the Kalitta Companies, or
any other information that may have been provided to Kitty Hawk and
the Subs in connection with the transactions contemplated hereby and
neither Kitty Hawk nor the Subs have relied upon any projections,
forecasts or other information). Kitty Hawk further acknowledges and
agrees that Kalitta has not made any representations or warranties of
any kind to Kitty Hawk or the Subs under this Agreement or otherwise
in connection with the transactions set forth herein except as set
forth above or in any of the Related Agreements to which he is a
party.
(b) The limitations on Xxxxx Xxxx'x and the Subs' claims,
rights, and remedies set forth in this Agreement are a material
consideration for Kalitta and the Kalitta Companies' willingness to
enter into this Agreement and the Related Agreements and to consummate
the transactions contemplated hereby and thereby.
(c) Notwithstanding anything to the contrary contained in this
Agreement, Kalitta and the Kalitta Companies acknowledge and agree
that except for the representations and warranties made by Kitty Hawk
in Section 4.3 and the Subs in Section 4.4 hereof and the
representations and warranties made in the tax representation letter
referred to in Section 5.1.11, that neither Kitty Hawk nor any
Affiliate thereof has made any other representations or warranties of
any kind
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(including any representation or warranty with respect to any
projections, forecasts or forward looking statements relating to the
Kitty Hawk or its Affiliates, or any other information that may have
been provided to Kalitta and the Kalitta Companies in connection with
the transactions contemplated hereby and neither Kalitta nor the
Kalitta Companies have relied upon any projections, forecasts or other
information).
(d) The limitations on Kalitta's and the Kalitta Companies'
claims, rights, and remedies set forth in this Agreement are a
material consideration for Xxxxx Xxxx'x and the Subs' willingness to
enter into this Agreement and to consummate the transactions
contemplated hereby and the Related Agreements to which it is a party.
(e) Whether or not the Closing shall occur, no incorporator,
director, officer, employee of the Kalitta Companies or Kitty Hawk or
its Affiliates (in each case solely in their capacities as such) shall
have any liability to any Person under the terms of this Agreement or
as a result of the transactions contemplated hereby, and no recourse
of any kind shall be had by the parties hereto against any such
incorporator, director, officer, employee of the Kalitta Companies or
Kitty Hawk or its Affiliates (in each case solely in their capacities
as such) whether by virtue of any constitutional provision or statute
or rule of law, or by enforcement of any assessment or penalty or in
any other manner, all such liability being expressly waived and
released by the parties hereto to the fullest extent permitted by law
as part of the consideration in entering into this Agreement;
provided, that the parties expressly agree that nothing in this
Section 10.6(e) shall affect any liability of any person for any
contribution, indemnity and similar rights in respect of claims by
third parties under or relating to the Closing Date Financings.
10.7 Delays or Omissions; Waiver; Amendment. Except as provided in
Section 10.1.3 and Section 10.4.1, no delay or omission to exercise any right,
power or remedy inuring to any party upon any Breach or default of any party
under this Agreement or any Related Agreement shall impair any such right,
power or remedy of such party nor shall it be construed to be a waiver of any
such Breach or default, or an acquiescence therein, or of or in any similar
Breach or default thereafter occurring; nor shall any waiver of any single
Breach or default be deemed a waiver of any other Breach or default theretofore
or thereafter occurring. Neither the exercise of nor the failure to exercise
any remedy under this Agreement or any Related Agreement will constitute an
election of remedies or limit in any manner enforcement of any remedies. Any
term, provision, covenant, representation, warranty or condition of this
Agreement may be waived, but only by a written instrument signed by the party
entitled to the benefits thereof. No modification or amendment of this
Agreement shall be valid and binding unless it be in writing and signed by all
the parties hereto.
10.8 Governing Law. This Agreement and the Related Agreements shall be
governed by, construed, interpreted and applied in accordance with the laws of
the State of Texas, without giving effect to any conflict of laws rules that
would refer the matter to the laws of another jurisdiction except to the extent
expressly provided herein and or in any Related Agreement and except to the
extent Michigan law is mandatorily applicable to the Mergers and the rights of
the shareholders of the Subs and the Kalitta Companies thereunder and, to the
extent Delaware law is mandatorily applicable to the provisions of Section 5.5
and 9.5, and except as provided in Section 9.5.
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Subject to Section 10.9, each party hereto hereby irrevocably submits
to the jurisdiction of the United States District Court for the Northern
District of Texas and, if such court does not have jurisdiction, of the courts
of the State of Texas in Dallas County, for the purposes of any action arising
out of this Agreement or any of the Related Agreements, or the subject matter
hereof or thereof, brought by any other party.
Subject to Section 10.9, to the extent permitted by applicable law,
each party hereby waives and agrees not to assert, by way of motion, as a
defense or otherwise in any such action, any claim (i) that it is not subject
to the jurisdiction of the above-named courts, (ii) that the action is brought
in an inconvenient forum, (iii) that it is immune from any legal process with
respect to itself or its property, (iv) that the venue of the suit, action or
proceeding is improper or (v) that this Agreement or any of the Related
Agreements or the subject matter hereof or thereof may not be enforced in or by
such courts.
10.9 Dispute Resolution.
10.9.1 Arbitration. All disputes and controversies of every kind
and nature between the parties hereto arising out of or in connection with this
Agreement (including without limitation this Article X) or any of the Related
Agreements shall be submitted to arbitration pursuant to the following
procedures:
(i) Except as modified hereby, the arbitration shall be
governed by the Commercial Arbitration Rules of the AAA
including the Supplementary Procedures for Large Complex
Disputes. After a dispute or controversy arises, any party may,
in a written notice delivered to the other party, demand such
arbitration. Such notice shall designate the name of the
arbitrator (who shall be an impartial person) appointed by such
party demanding arbitration, together with a statement of the
matter in controversy in reasonable detail.
(ii) Within thirty (30) days after receipt of such
demand, the other party shall, in a written notice delivered to
the other party, name such party's arbitrator (who shall be an
impartial person). If such party fails to name an arbitrator,
then the second arbitrator shall be named by the AAA. The two
arbitrators so selected shall name a third arbitrator (who shall
be an impartial person) within thirty (30) days, or in lieu of
such agreement on a third arbitrator by the two arbitrators so
appointed, the third arbitrator shall be appointed by the AAA.
If any arbitrator appointed hereunder shall die, resign, refuse,
or become unable to act before an arbitration decision is
rendered, then the vacancy shall be filled by the methods set
forth in this Section for the original appointment of such
arbitrator.
(iii) Except as provided in Section 10.9.2, each party
shall bear its own arbitration costs and expenses. The
arbitration hearing shall be held in Dallas, Texas at a location
designated by a majority of the arbitrators. The substantive
laws of the State of Texas (excluding conflict of laws
provisions) and the Federal Arbitration Act shall apply.
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(iv) An award rendered by a majority of the arbitrators
appointed pursuant hereto shall be final and binding on all
parties to the Proceeding, shall resolve the question of costs
of the arbitrators, legal fees and expenses and all related
matters, and judgment on such award may be entered and enforced
by either party in any court of competent jurisdiction.
(v) The arbitrators may by an interim or final award
grant injunctive relief.
(vi) Except as provided in Section 10.9.2, the parties
stipulate that the provisions of this Section shall be a
complete defense to any Proceeding instituted in any federal,
state or local court or before any administrative tribunal with
respect to any controversy or dispute arising out of this
Agreement. The arbitration provisions hereof shall, with respect
to such controversy or dispute, survive the termination or
expiration of this Agreement.
The parties hereto and the arbitrators may not disclose the
existence or results of any arbitration hereunder without the prior written
consent of the other party; nor will any party hereto disclose to any third
party any confidential information disclosed by any other party hereto in the
course of an arbitration hereunder without the prior written consent of such
other party. Notwithstanding the foregoing, a party may disclose the existence
or results of an arbitration hereunder, as well as information otherwise
required to be disclosed by deposition, subpoena or other court or governmental
action, in connection with their respective obligations under the Exchange Act
and the rules and regulations promulgated thereunder, in connection with
registration of offerings of securities under the Securities Act and the rules
and regulations promulgated thereunder, or otherwise required to be disclosed
under applicable law.
10.9.2 Emergency Relief. Notwithstanding anything in this
Section 10.9 to the contrary and subject to the provisions of Section 10.8, any
party may seek from a court any provisional remedy or injunctive relief that
may be necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of
the controversy. The prevailing party in any Proceeding based upon this
Agreement shall be entitled to reasonable attorney's fees and arbitral and
court costs, in addition to any other recoveries allowed by law.
ARTICLE XI
MISCELLANEOUS
11.1 Expenses. Except as otherwise specifically provided for
herein, whether or not the transactions contemplated hereby are consummated,
each of the parties hereto shall bear all fees and expenses relating to or
arising from his or its compliance with the various provisions of this
Agreement and such party's covenants to be performed hereunder, and except as
otherwise specifically provided for herein, each of the parties hereto agrees
to pay all of its own expenses (including, without limitation, attorneys and
accountants' fees and printing expenses) incurred in connection with this
Agreement, the transactions contemplated hereby, the negotiations leading to
the same and the preparations made for carrying the same into effect, and, to
the extent practical, all such fees and expenses of the parties hereto
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shall be paid prior to Closing. For purposes of clarification, it is agreed by
the parties that all fees and expenses that may be incurred by Kalitta shall be
paid and/or reimbursed by the Kalitta Companies.
11.2 Notices. Any notice, request, instruction or other document
required by the terms of this Agreement, or deemed by any of the parties hereto
to be desirable, to be given to any other party hereto shall be in writing and
shall be given by prepaid telex or telecopy or delivered or mailed by certified
mail, postage prepaid, with return receipt requested, to the following
addresses:
If to Kalitta: Xxxxxx Xxxxxxx
0000 X. X-00 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Kelsey Law Offices, P.C.
0000 X. Xxxxx Xxxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
If to AIA, AIT, FOL, 000 Xxxxxx Xxx Xxxxxxx
XXX xx XX: Xxxxxxxxx, Xxxxxxxx 00000
Attn: President
Telecopy: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx, Esq.
Kelsey Law Offices, P.C.
0000 X. Xxxxx Xxxxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
With a copy after Closing to: M. Xxx Xxxxxxxxxxx
Chairman of the Board and
Chief Executive Officer
0000 Xxxx 00xx Xxxxxx
XXX Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
Xxxx X. Xxxxxx, Esq.
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
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If to Kitty Hawk M. Xxx Xxxxxxxxxxx
or the Subs: Chairman of the Board and
Chief Executive Officer
0000 Xxxx 00xx Xxxxxx
XXX Xxxxxxx, Xxxxx 00000
Telecopy: (000) 000-0000
With a copy to: Xxxx X. Xxxxxx, Esq.
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Telecopy: (000) 000-0000
The persons and addresses set forth above may be changed from time to
time by a notice sent as aforesaid. If notice is given by delivery in
accordance with the provisions of this Section, said notice shall be
conclusively deemed given at the time of such delivery. If notice is given by
mail in accordance with the provisions of this Section, such notice shall be
conclusively deemed given upon the second Business Day following deposit
thereof in the United States mail. If notice is given by telex or telecopy in
accordance with the provisions of this Section, such notice shall be
conclusively deemed given upon receipt.
11.3 Entire Agreement. This Agreement (together with the schedules and
exhibits hereto), the Related Agreements, the other documents delivered
pursuant hereto and referenced herein and the 727 Purchase Agreement set forth
the entire agreement and understanding of the parties hereto with respect to
the transactions contemplated hereby, and supersede all other prior agreements,
arrangements and understandings related to the subject matter hereof. This
Agreement supersedes in its entirety (a) that certain Letter of Intent dated
July 15, 1997 among certain of the parties hereto, as amended, and (b) that
certain Confidentiality Agreement between AIA and Kitty Hawk effective June 26,
1997, as amended. No understanding, promise, inducement, statement of
intention, representation, warranty, covenant or condition, written or oral,
express or implied, whether by statute or otherwise, has been made by any party
hereto with respect to the subject matter hereof which is not embodied in this
Agreement and the tax representation letters referred to in Section 5.1.11
delivered pursuant hereto or in connection with the transactions contemplated
hereby, and no party hereto shall be bound by or liable for any alleged
understanding, promise, inducement, statement, representation, warranty,
covenant or condition not so set forth with respect to the subject matter
hereof. This Agreement in no way affects or amends any obligation of any party
under or in connection with (i) the Settlement Agreement executed in August
1994 related to the U.S. Postal Service's ANET 93-01 solicitation, (ii) any
aircraft charter or maintenance agreements between the parties or (iii) the 727
Purchase Agreement.
11.4 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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11.5 Incorporated by Reference. The Disclosure Schedules, Subsequent
Disclosure Schedules and tax representation letter referred to in Section
5.1.11 are incorporated as a part of this Agreement by reference.
11.6 Number and Gender of Words. When the context so requires in this
Agreement, words of any gender shall include either or both of the other
genders and the singular number shall include the plural.
11.7 Execution of Additional Documents. Each party hereto shall make,
execute, acknowledge and deliver such other instruments and documents, and take
all such other actions as may be reasonably required in order to effectuate the
purposes of this Agreement and to consummate the transactions contemplated
hereby.
11.8 Finders' and Related Fees. Each of the parties hereto is
responsible for, and shall indemnify the other parties against, any claim by
any third party to a fee, commission, bonus or other remuneration arising by
reason of any services alleged to have been rendered to or at the instance of
said party to this Agreement with respect to this Agreement or to any of the
transactions contemplated hereby. For purposes of clarification, it is agreed
by the parties that all fees and expenses relating to the Mergers that may be
incurred by Kalitta prior to the Closing Date shall be paid and/or reimbursed
by the Kalitta Companies.
11.9 Interpretation. References to "Sections" herein are references to
sections of this Agreement. The words "herein," "hereof," "hereto" and
"hereunder" and other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other subdivision.
11.10 No Third Party Beneficiary, Etc. Except as otherwise expressly
provided for herein, there shall be no third party beneficiary of this
Agreement and this Agreement shall not inure to the benefit of, be enforceable
by, or create any right or cause of action in any Person other than the parties
hereto and their heirs, executors, administrators, legal representatives,
successors and permitted assigns. Neither the availability of, nor any limit
on, any remedy hereunder shall limit the remedies of any party hereto against
third parties except as provided in Article X.
11.11 Reformation; Severability. In case any provision hereof shall be
invalid, illegal or unenforceable, such provision shall be reformed to best
effectuate the intent of the parties and permit enforcement thereof, and the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby. If such provision is not capable of
reformation, it shall be severed from this Agreement and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
11.12 Binding Effect and Assignment. This Agreement shall inure to the
benefit of, and be binding upon, the parties hereto and their respective heirs,
executors, administrators, legal representatives and permitted assigns. This
Agreement, and the rights and obligations created hereunder, may not be
transferred or assigned by any party without the prior consent of the other
parties.
11.13 Public Announcements. Any public announcement or similar
publicity with respect to this Agreement will be issued, if at all, at such
time and in such manner as Kitty
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Hawk determines; provided, that the Kalitta Companies will be given a copy in
advance of such proposed press release. Unless consented to by Kitty Hawk in
advance or required by legal requirements, prior to the Closing, Kalitta and
the Kalitta Companies shall keep this Agreement strictly confidential and may
not make any disclosure of this Agreement to any Person.
11.14 Confidentiality. Between the date of this Agreement and for the
five (5) year period following (i) termination of this Agreement pursuant to
Article VIII or (ii) Closing, Kitty Hawk, Kalitta and the Kalitta Companies
will maintain in confidence, and will cause their respective directors,
officers, employees, agents, and advisors (the "REPRESENTATIVES") to maintain
in confidence, any written, oral, electronic, or other information of every
kind (including all analyses, compilations, forecasts, studies or other
documents prepared by a receiving party that contain or in any way reflect
Confidential Information) that has been or may be furnished by either party or
its Representatives obtained in confidence (the "CONFIDENTIAL INFORMATION")
from another party to this Agreement (the "DISCLOSING PARTY"), and will not
use, and will cause their respective Representatives not to use, any such
information except for the purpose of this Agreement or in connection with any
Proceedings between any of the parties, unless (a) such information is already
known to such party and such party is not bound by a duty of confidentiality or
such information becomes publicly available through no fault of such party, (b)
the use of such information is necessary in making any release, report, filing
(including filings with the SEC or, if required by applicable law, release
required by the NASDAQ Stock Market) or obtaining any consent or approval
required for the consummation of the transactions contemplated by the
Agreement, or (c) the furnishing or use of such information is required by
Proceedings. Each party shall only reveal Confidential Information of the
Disclosing Party to the receiving party's Representatives (a) who reasonably
need to have the Confidential Information for purposes of evaluating the
potential Mergers and (b) who are aware of the confidential nature of the
Confidential Information and of this Section 11.4. Each party shall cause its
Representatives to observe the restrictions of this Section 11.14 and shall be
responsible for any Breach of this Section 11.14 by its Representatives. If
this Agreement is terminated for any reason, each party must promptly return to
the Disclosing Party all Confidential Information obtained from the Disclosing
Party that is by nature returnable, and each receiving party will thereafter
continue to comply with its obligations under this Section 11.14.
11.15 Time of the Essence. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
11.16 Specific Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
11.17 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
as of the date first written hereinabove.
KITTY HAWK, INC.
By: /s/ M. XXX XXXXXXXXXXX
---------------------------------
Name: M. Xxx Xxxxxxxxxxx
-------------------------------
Title: CEO
------------------------------
KITTY HAWK - AIA, INC.
By: /s/ M. XXX XXXXXXXXXXX
---------------------------------
Name: M. Xxx Xxxxxxxxxxx
-------------------------------
Title: President
------------------------------
KITTY HAWK - AIT, INC.
By: /s/ M. XXX XXXXXXXXXXX
---------------------------------
Name: M. Xxx Xxxxxxxxxxx
-------------------------------
Title: President
------------------------------
KITTY HAWK - FOL, INC.
By: /s/ M. XXX XXXXXXXXXXX
---------------------------------
Name: M. Xxx Xxxxxxxxxxx
-------------------------------
Title: President
------------------------------
KITTY HAWK - KFS, INC.
By: /s/ M. XXX XXXXXXXXXXX
---------------------------------
Name: M. Xxx Xxxxxxxxxxx
-------------------------------
Title: President
------------------------------
KITTY HAWK - OK, INC.
By: /s/ M. XXX XXXXXXXXXXX
---------------------------------
Name: M. Xxx Xxxxxxxxxxx
-------------------------------
Title: President
------------------------------
/s/ M. XXX XXXXXXXXXXX
------------------------------------
M. Xxx Xxxxxxxxxxx
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AMERICAN INTERNATIONAL AIRWAYS, INC.
By: /s/ XXXXXX XXXXXXX
---------------------------------
Name: Xxxxxx Xxxxxxx
-------------------------------
Title:
------------------------------
AMERICAN INTERNATIONAL TRAVEL, INC.
By: /s/ XXXX XXXXXXX
---------------------------------
Name: Xxxx Xxxxxxx
-------------------------------
Title:
------------------------------
FLIGHT ONE LOGISTICS, INC.
By: /s/ XXXX XXXXXXX
---------------------------------
Name: Xxxx Xxxxxxx
-------------------------------
Title:
------------------------------
KALITTA FLYING SERVICES, INC.
By: /s/ XXXXXX XXXXXXXXX
---------------------------------
Name: Xxxxxx Xxxxxxxxx
-------------------------------
Title:
------------------------------
O.K. TURBINES, INC.
By: /s/ XXXX XXXXXXX
---------------------------------
Name: Xxxx Xxxxxxx
-------------------------------
Title:
------------------------------
/s/ XXXXXX XXXXXXX
------------------------------------
Xxxxxx Xxxxxxx
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