STANDSTILL AGREEMENT
This STANDSTILL AGREEMENT, dated as of November 14, 2005 (this
"AGREEMENT"), by and among Kitty Hawk, Inc., a Delaware corporation (the
"COMPANY") and the individuals and entities listed as Purchasers on the
signature page of this Agreement (each an "PURCHASER" and collectively, the
"PURCHASERS").
RECITALS
WHEREAS, the Purchasers and the Company have entered into a Securities
Purchase Agreement, dated as of the date hereof (the "PURCHASE AGREEMENT");
WHEREAS, as a condition to the consummation of the Purchase Agreement, the
Company desires that each Purchaser make certain representations, warranties,
covenants and agreements as set forth in this Agreement;
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and in the Purchase Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereby agree as follows:
ARTICLE I.
REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER
To induce the Company to enter into this Agreement, the Purchase Agreement
and the other documents contemplated hereby and thereby, and to consummate the
transactions contemplated hereby and thereby, each Purchaser represents and
warrants to the Company, separately and not jointly, as follows:
1.1 Binding Agreement.
The execution, delivery and performance of this Agreement by such Purchaser
and the consummation by such Purchaser of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate or partnership
action on the part of such Purchaser. This Agreement has been duly executed and
delivered by such Purchaser, and, assuming the valid authorization, execution
and delivery hereof by the Company, is a valid and binding obligation of such
Purchaser, enforceable against such Purchaser in accordance with its terms,
except as such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting or relating to the
enforcement of creditors' rights generally and by general principles of equity
(whether applied in a proceeding at law or in equity).
1.2 Execution; No Violations.
The execution and delivery of this Agreement by such Purchaser does not,
and the consummation by such Purchaser of the transactions contemplated hereby
will not: (a) violate or
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conflict with the organizational documents of such Purchaser or any agreement,
order, injunction, decree, or judgment to which such Purchaser is a party or by
which such Purchaser or any of its respective properties is bound; or (b)
violate any law, rule or regulation applicable to such Purchaser.
1.3 Governmental and Other Consents.
No consent, approval or authorization of, or designation, registration,
declaration or filing with, any governmental entity or third Person is required
on the part of such Purchaser in connection with the execution or delivery of
this Agreement or the consummation by it of the transactions contemplated
hereby, except such filings as may be necessary to disclose the acquisition of
additional securities of the Company by Purchasers that are required to report
their ownership and changes in such ownership under applicable securities laws,
or to disclose the existence of this Agreement.
1.4 Share Ownership.
Each Purchaser acknowledges that such Purchaser understands the terms and
conditions of that certain Rights Agreement, by and between the Company and
American Stock Transfer & Trust, dated January 21, 2004, and that certain
Amendment No. 1 to Rights Agreement to be effective contemporaneously with the
transactions contemplated by the Purchase Agreement (the Rights Agreement, as
amended by such Amendment No. 1 to Rights Agreement, the "RIGHTS AGREEMENT").
Schedule 1.4 lists, in each case without giving effect to the transactions
contemplated by the Purchase Agreement, (i) the name of each Purchaser, (ii) the
number shares of Common Stock (as defined in the Rights Agreement) which such
Purchaser, directly or indirectly, owns or has the right to acquire (whether
such right is exercisable immediately or only after the passage of time)
pursuant to any agreement, arrangement or understanding (whether or not in
writing) or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise, (iii) the name of each Affiliate (as defined
in the Rights Agreement) and each Associate (as defined in the Rights Agreement)
of such Purchaser, and (iv) the number of shares of Common Stock each such
Affiliate and Associate, directly or indirectly, owns or has the right to
acquire (whether such right is exercisable immediately or only after the passage
of time) pursuant to any agreement, arrangement or understanding (whether or not
in writing) or upon the exercise of conversion rights, exchange rights, rights,
warrants or options, or otherwise. Except as set forth on Schedule 1.4, such
Purchaser and its Affiliates and Associates does not own any voting securities
of Company, or any securities convertible into or exchangeable or exercisable
for any voting securities of the Company, or which, upon redemption thereof,
could result in such Purchaser or any of its Affiliates receiving any voting
securities, or options, warrants, contractual rights or other rights of any kind
to acquire or vote any voting securities of the Company (collectively, the
"VOTING SECURITIES"), except those voting securities acquired pursuant to the
Purchase Agreement, or issuable upon exchange, conversion or exercise (as
applicable) of the securities of the Company acquired pursuant to the Purchase
Agreement (the "COMPANY SECURITIES").
ARTICLE II.
STANDSTILL ARRANGEMENTS
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2.1 Prohibited Actions.
Each Purchaser hereby agrees that prior to the Termination Date, neither
such Purchaser nor any of its Affiliates will, directly or indirectly, solicit,
request, advise, assist or encourage others to, take any of the following
actions:
(a) form, join in or in any other way participate in a "partnership,
limited partnership, syndicate or other group" within the meaning of Section
13(d)(3) of the Exchange Act with respect to Voting Securities or deposit any
Voting Securities in a voting trust or similar arrangement or subject any Voting
Securities to any voting agreement or pooling arrangement with respect to the
Company Securities, other than (i) with one or more Affiliates of such
Purchaser, or (ii) with respect to matters presented to the Board of Directors
in accordance with Section 2.1(b);
(b) seek to call, or request the call of, a special meeting of the
stockholders of the Company or seek to make, or make, a stockholder proposal at
any meeting of the stockholders of the Company that has not first been presented
to the Board of Directors at least 60 days, but not more than 120 days, prior to
such meeting;
(c) commence, or announce any intention to commence, any tender offer
for any Voting Securities, except following an announcement by any unaffiliated
third party of an intention to make, or the commencement of, such a tender
offer;
(d) except as approved in advance by the Board of Directors, make,
announce any intention or desire to make, or facilitate the making public or
public disclosure of, any proposal or bid with respect to (i) the acquisition of
any substantial portion of the assets of the Company or of the assets or stock
of any of its subsidiaries or of all or any portion of the outstanding Voting
Securities, or (ii) any merger, consolidation, other business combination,
restructuring, recapitalization, liquidation or other extraordinary transaction
involving the Company or any of its subsidiaries, provided, however, that if a
Purchaser supports, agrees to vote in favor of or to tender securities into, or
announces support for a bona fide third party proposal not solicited or arranged
by such Purchaser after the proposal has been publicly announced, such actions
shall not constitute "facilitating" such proposal for purposes of this Section
2.1(d);
(e) amend or repeal, or seek to amend or repeal, any anti-takeover
provisions adopted by the Company, including the Rights Agreement, dated January
21, 2004, between the Company and American Stock Transfer & Trust Company (as
amended in accordance with its terms), provided that voting in favor of such a
repeal, if proposed by persons not affiliated with any of the Purchasers, shall
not violate this Section 2.1(e), and all Purchasers shall be free to vote any
Voting Securities held by them as they see fit with respect to any such
proposal;
(f) arrange, or in any way participate in, any financing for any
transaction referred to in Section 2.1(a) through 2.1(e); or
(g) make any request to the Board of Directors for, or otherwise seek
(in any fashion that would require public disclosure by the Company, such
Purchaser or their respective
3
Affiliates) to obtain from the Company, any waiver or amendment of any provision
of this Agreement prior to November 14, 2006.
2.2 Prohibitions on Voting Incremental Shares.
Except as approved in advance by the Board of Directors, each Purchaser
hereby agrees that prior to the Termination Date, neither such Purchaser nor any
of its Affiliates will, directly or indirectly, vote any Incremental Shares in
connection with, or otherwise permit any Incremental Shares to participate in,
any "solicitation" of any "proxy" to vote any Voting Shares (other than
conducted by the Company), or in any election contest with respect to the
Company (as such terms are defined or used in Rules 14a-1 and 14a-11 under the
Exchange Act). As used herein, "INCREMENTAL SHARES" means the Voting Securities
beneficially owned (as such term is defined in Rule 13d-3 under the Exchange
Act) by such Purchaser or any of its Affiliates, in aggregate, in excess of
14.99% of the outstanding Voting Securities.
ARTICLE III.
TERMINATION
3.1 Notification of the Company.
Each Purchaser hereby covenants and agrees that such Purchaser will
promptly notify the Company when and if such Purchaser receives or learns of (i)
any oral or written request to such Purchaser or any of its Affiliates to
participate in any of the transactions or actions referred to in Sections 2.1(a)
through 2.1(g), or (ii) any oral or written communication from or by any Person
(other than the Company) with respect to any of the transactions or actions
referred to in Sections 2.1(a) through 2.1(g) if such Person could reasonably be
deemed to be capable of effecting, participating in or materially assisting in
such an action or transaction (through one or more Affiliates or otherwise) and
such oral or written communication was of a nature that could reasonably be
deemed to indicate a serious interest in effecting, participating in or
materially assisting in such an action or transaction.
3.2 Termination.
This Agreement shall terminate with respect to a particular Purchaser on
the date that such Purchaser and its Affiliates no longer beneficially own (as
such term is defined in Rule 13d-3 under the Exchange Act) Voting Securities
representing at least 5% of the outstanding Voting Securities of the Company
(the "TERMINATION DATE").
3.3 Injunctive Relief.
The parties hereto acknowledge and agree that irreparable damage would
occur in the event any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of the provisions of this Agreement to enforce
specifically the provisions of this Agreement, in any court of the United States
or any state thereof having jurisdiction, without the need to post a bond or
other security, in addition to any other remedy to which the parties may be
entitled under this Agreement or at
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law or in equity.
ARTICLE IV.
MISCELLANEOUS
4.1 Definitions.
Capitalized terms used herein but not otherwise defined herein shall have
the meaning ascribed thereto in the Purchase Agreement.
4.2 Assignment.
Neither this Agreement nor any of the rights or obligations hereunder may
be assigned by the Company without the prior written consent of the Purchasers
or by any Purchaser, without the consent of the Company, except in the case of
transfers by a Purchaser to its affiliates. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, and no other Person shall have any
right, benefit or obligation hereunder.
4.3 Notices.
Unless otherwise provided herein, any notice, request, instruction or other
document to be given hereunder by any party to the other shall be in writing and
delivered by hand-delivery, registered first-class mail, telex, telecopier, or
air courier guaranteeing overnight delivery, as follows:
If to the Company:
Kitty Hawk, Inc.
0000 Xxxx 00xx Xxxxxx
P. O. Box 612787
XXX Xxxxxxxxxxxxx Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
With a copy to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxxxx X. XxXxxxx
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If to any Purchaser, to the address for such Purchaser on the signature
page of the Purchase Agreement.
With a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx, 00xx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxxxxx
or to such other place and with such other copies as either party may designate
as to itself by written notice to the other.
All such notices, requests, instructions or other documents shall be deemed
to have been duly given; at the time delivered by hand, if personally delivered;
four Business Days after being deposited in the mail, postage prepaid, if
mailed; when answered back, if telexed; when receipt acknowledged by addressee,
if by telecopier transmission; and on the next business day if timely delivered
to an air courier guaranteeing overnight delivery.
4.4 Choice of Law.
This Agreement shall be construed, interpreted and the rights of the
parties determined in accordance with the internal laws of the State of Texas,
without regard to the conflict of law principles thereof, except with respect to
matters of law concerning the internal corporate affairs of any corporate entity
which is a party to or the subject of this Agreement, and as to those matters
the law of the jurisdiction under which the respective entity derives its powers
shall govern.
4.5 Entire Agreement; Amendments and Waivers.
This Agreement, the Confidentiality Agreement between each Purchaser and
the Company, the Purchase Agreement, the Registration Rights Agreement, the
Preferred Stock Certificate of Designations and the Warrants, constitute the
entire agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, of the parties, including the written summary of
proposed terms between the Company and the Purchasers.
4.6 Counterparts.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
4.7 Invalidity.
In the event that any one or more of the provisions contained in this
Agreement or in any other instrument referred to herein, shall, for any reason,
be held to be invalid, illegal or
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unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement or any other such
instrument.
4.8 Headings.
The headings of the Articles and Sections herein are inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement.
* * * * *
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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/ Xxxxxx X. Xxxxxx, Xx.
--------------------------------------
Name: Xxxxxx X. Xxxxxx, Xx.
Title: President and Chief Executive
Officer
[Signature Page to the Standstill Agreement]
IN WITNESS WHEREOF, the undersigned Purchasers have caused this Standstill
Agreement to be duly executed as of the date and year first above written and to
be bound hereby.
XXXXX X. XXXXXX, III
/s/ Xxxxx X. Xxxxxx, III
------------------------------------------
Xxxxx X. Xxxxxx, III
MILFAM II L.P.,
a Georgia limited partnership
By: Milfam LLC, an Ohio limited liability
company, as general partner
By: /s/ Xxxxx X. Xxxxxx, III
--------------------------------------
Xxxxx X. Xxxxxx, III, Managing Member
[Signature Page to the Standstill Agreement]
IN WITNESS WHEREOF, the undersigned Purchasers have caused this Standstill
Agreement to be duly executed as of the date and year first above written and to
be bound hereby.
BONANZA MASTER FUND, LTD.
By: Bonanza Capital, Ltd., a Texas limited
partnership, as its general partner
By: Bonanza Fund Management, Inc., a Texas
corporation, as its general partner
By: /s/ Bernay Box
--------------------------------------
Bernay Box, President
[Signature Page to the Standstill Agreement]
IN WITNESS WHEREOF, the undersigned Purchasers have caused this Standstill
Agreement to be duly executed as of the date and year first above written and to
be bound hereby.
POTOMAC CAPITAL PARTNERS, L.P.,
a Delaware limited partnership
By: Potomac Capital Management,
General Partner
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Xxxx X. Xxxxx, Managing Member
PLEIADES INVESTMENT PARTNERS-R, LP,
a Delaware limited partnership
By: Potomac Capital Management,
General Partner
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Xxxx X. Xxxxx, Managing Member
POTOMAC CAPITAL INTERNATIONAL LTD.,
a British Virgin Islands corporation
By: /s/ Xxxx X. Xxxxx
--------------------------------------
Xxxx X. Xxxxx, Managing Member
[Signature Page to the Standstill Agreement]
IN WITNESS WHEREOF, the undersigned Purchasers have caused this Standstill
Agreement to be duly executed as of the date and year first above written and to
be bound hereby.
SACC PARTNERS, L.P.,
a Delaware limited partnership
By: /s/ Xxxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx, Managing Partner
By: Xxxxx Investment Management, Inc.,
Investment Advisor
By: /s/ Xxxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx, President
X. XXXXX & CO. RETIREMENT TRUST
DATED 1/1/99
By: /s/ Xxxxxx Xxxxx
------------------------------------
Xxxxxx Xxxxx, Trustee
[Signature Page to the Standstill Agreement]
IN WITNESS WHEREOF, the undersigned Purchasers have caused this Standstill
Agreement to be duly executed as of the date and year first above written and to
be bound hereby.
XXXXX AND XXXX XXXXXXX FAMILY L.P.,
a Delaware limited partnership
By: Xxxxxxx Xxxxxxx, as general partner
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------
Xxxxxxx Xxxxxxx
XXXXXXX XXXXXXX
/s/ Xxxxxxx Xxxxxxx
----------------------------------------
Xxxxxxx Xxxxxxx
XXXXXX X. XXXXXXX
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
[Signature Page to the Standstill Agreement]
IN WITNESS WHEREOF, the undersigned Purchasers have caused this Standstill
Agreement to be duly executed as of the date and year first above written and to
be bound hereby.
BLUEGRASS GROWTH FUND, L.P.
a Delaware limited partnership
By: Bluegrass Growth Fund Partners, LLC
General Partner
By: /s/ Xxxxx Xxxxx
------------------------------------
Xxxxx Xxxxx, Managing Member
[Signature Page to the Standstill Agreement]
