1
EXHIBIT 10.19
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
dated as of November 19, 1997
among
KITTY HAWK, INC.
as Borrower
and
KITTY HAWK AIRCARGO, INC.
AIRCRAFT LEASING, INC.
KITTY HAWK CHARTERS, INC.
SKYFREIGHTERS CORPORATION
AMERICAN INTERNATIONAL AIRWAYS, INC.
AMERICAN INTERNATIONAL TRAVEL, INC.
FLIGHT ONE LOGISTICS, INC.
KALITTA FLYING SERVICE, INC.
and
O. K. TURBINES, INC.
as Guarantors
and
XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION
as Agent
and
THE LENDERS NAMED HEREIN
$100,000,000 REVOLVING CREDIT LOANS FACILITY
and
$45,900,000 TERM LOANS FACILITY
2
TABLE OF CONTENTS
Page
----
ARTICLE 1 - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Other Definitional Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 1.3 Accounting Terms and Determinations. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 1.4 Financial Covenants and Reporting. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 2 - Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.1 Commitments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 2.2 The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.3 Repayment of Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.4 Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 2.5 Borrowing Procedure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 2.6 Optional Prepayments, Conversions and Continuations of Loans . . . . . . . . . . . . . . 38
Section 2.7 Mandatory Prepayments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 2.8 Minimum Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 2.9 Certain Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 2.10 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.11 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 2.12 Computations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 2.13 Termination or Reduction of Commitments. . . . . . . . . . . . . . . . . . . . . . . . 41
Section 2.14 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 3 - Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.1 Method of Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.2 Pro Rata Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 3.3 Sharing of Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 3.4 Non-Receipt of Funds by Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 3.5 Withholding Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 3.6 Withholding Tax Exemption. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 3.7 Reinstatement of Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 4 - Yield Protection and Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.1 Additional Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 4.2 Limitation on Types of Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 4.3 Illegality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.4 Treatment of Affected Loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.5 Compensation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 4.6 Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.7 Additional Interest on Eurodollar Loans. . . . . . . . . . . . . . . . . . . . . . . . 52
Section 4.8 Mitigation of Additional Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
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ARTICLE 5 - Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.1 Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 5.2 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.3 New AIA Aircraft Related Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.4 New Subsidiaries; New Issuances of Capital Stock. . . . . . . . . . . . . . . . . . . . . 54
Section 5.5 Release of Certain Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 5.6 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Section 5.7 Title Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 6 - Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.1 Initial Extension of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 6.2 All Extensions of Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.3 Closing Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE 7 - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 7.1 Corporate Existence. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.2 Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.3 Corporate Action; No Breach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.4 Operation of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.5 Litigation and Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.6 Rights in Properties; Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.7 Enforceability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.8 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.9 Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.11 Margin Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.12 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 7.13 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.14 Capitalization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.15 Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 7.16 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.17 Investment Company Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.18 Public Utility Holding Company Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.19 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 7.20 Labor Disputes and Acts of God. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 7.21 Material Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 7.22 Outstanding Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 7.23 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.24 Employee Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.25 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.26 Common Enterprise . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.27 Related Transactions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 7.28 Purchase Money Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
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ARTICLE 8 - Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.1 Reporting Requirements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.2 Maintenance of Existence; Conduct of Business. . . . . . . . . . . . . . . . . . . . . . 74
Section 8.3 Maintenance of Properties; Hush Kits. . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 8.4 Taxes and Claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 8.5 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 8.6 Inspection Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.7 Keeping Books and Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.8 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.9 Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.10 Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 8.11 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 8.12 Aircraft Registration, Maintenance, Operation, Insignia. . . . . . . . . . . . . . . . 79
Section 8.13 Replacement of Parts; Alterations, Modifications and Additions . . . . . . . . . . . . . 80
Section 8.14 Ownership of Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 8.15 Collateral Audit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 9 - Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.1 Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 9.2 Limitation on Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 9.3 Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 9.4 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 9.5 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
Section 9.6 Limitation on Issuance of Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . 84
Section 9.7 Transactions with Affiliates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 9.8 Disposition of Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.9 Lines of Business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.10 Environmental Protection. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.11 Certain Encumbrances or Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . 85
Section 9.12 Management Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 9.13 Modification of Other Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 9.14 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
Section 9.15 Territorial Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
Section 9.16 Sale and Leaseback. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
ARTICLE 10 - Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 10.1 Maximum Funded Debt to Adjusted EBITDA Ratio. . . . . . . . . . . . . . . . . . . . . . . 88
Section 10.2 Minimum Net Worth. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 10.3 Minimum Cash Flow Coverage Ratio. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
Section 10.4 Capital Expenditures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE 11 - Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
Section 11.2 Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
Section 11.3 Performance by Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
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Section 11.4 Cash Collateral. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ARTICLE 12 - Agency and Intercreditor Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 12.1 Appointment, Powers and Immunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 12.2 Rights of Agent as a Lender. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
Section 12.3 Defaults. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 12.4 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
Section 12.5 Independent Credit Decisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 12.6 Several Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 12.7 Successor Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95
Section 12.8 Beneficiaries of Article 12. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE 13 - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 13.1 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 13.2 INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96
Section 13.3 Limitation of Liability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
Section 13.4 No Duty. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 13.5 No Fiduciary Relationship. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 13.6 Equitable Relief. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 13.7 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 13.8 Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
Section 13.9 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 13.10 ENTIRE AGREEMENT; AMENDMENT AND RESTATEMENT;
WAIVER OF CLAIMS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
Section 13.11 Amendments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 13.12 Maximum Interest Rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
Section 13.13 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
Section 13.14 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SERVICE OF PROCESS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 13.15 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 13.16 Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 13.17 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 13.18 Construction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
Section 13.19 Independence of Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 13.20 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 13.21 Approvals and Consent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 13.22 Joint and Several Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
Section 13.23 AGREEMENT FOR BINDING ARBITRATION. . . . . . . . . . . . . . . . . . . . . . . . . . . 105
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INDEX TO EXHIBITS
Exhibit Description of Exhibit
------- ----------------------
A Assignment and Acceptance
B Borrowing Base Report
C Revolving Credit Loans Note
D Term Loans Note
E Notice of Borrowing, Conversion,
Continuation or Prepayment
F Arbitration Program
INDEX TO SCHEDULES
Schedule Description of Schedule
-------- -----------------------
1.1(a) AIA Aircraft Release Amounts
1.1(b) Approved Foreign Account Debtors
1.1(c) Existing Liens and Existing Debt
2.14 Existing Letters of Credit
6.1 Debt to be Paid at Closing
7.5 Litigation
7.9 Debt
7.10 Taxes
7.12 ERISA Matters
7.14 Capitalization
7.21 Material Contracts
7.24 Employee Matters
7.25 Insurance
9.5 Investments
9.12 Consulting Fees
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page v
7
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement"), dated
as of November 19, 1997, is among KITTY HAWK, INC., a Delaware corporation
("Kitty Hawk"), KITTY HAWK AIRCARGO, INC., a Texas corporation ("Aircargo"),
AIRCRAFT LEASING, INC., a Texas corporation ("Leasing"), KITTY HAWK CHARTERS,
INC., a Texas corporation ("Charters"), SKYFREIGHTERS CORPORATION, a Texas
corporation ("Skyfreighters"), 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"), XXXXX FARGO BANK (TEXAS),
NATIONAL ASSOCIATION, a national banking association ("Xxxxx Fargo"), and each
of the lending institutions which may from time to time become a party hereto
and any successor or assignee thereof (individually, a "Lender" and,
collectively, "Lenders"), and XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION, a
national banking association, as agent for itself and the other Lenders (in
such capacity, together with its successors and assigns in such capacity,
"Agent").
RECITALS:
A. Kitty Hawk, Aircargo, Leasing, Charters, Skyfreighters, Xxxxx
Fargo (individually and as agent) and Bank One are parties to that certain
Amended and Restated Credit Agreement dated as of August 14, 1996, as amended
by that certain (i) letter agreement dated as of August 14, 1996, (ii) letter
agreement dated as of June 1, 1997, and (iii) First Amendment (as amended, the
"Prior Credit Agreement"), which Prior Credit Agreement, among other things,
provided for a $60,900,000 revolving credit loans facility, a $12,744,000.45
term loans A facility, a $11,225,000 term loans B facility, and a $10,000,000
term loans C facility. The First Amendment provided for, among other things,
the AIA Fleet Advance (in the amount of $45,900,000) to Kitty Hawk under the
revolving credit loans facility provided under the Prior Credit Agreement to
finance Aircargo's purchase of 16 aircraft from AIA.
B. The credit facilities provided under the Prior Credit
Agreement are secured by Liens affecting various airframes and engines owned by
Aircargo and Leasing and other personal property of Kitty Hawk, Aircargo,
Leasing, Charters and Skyfreighters.
C. Kitty Hawk is, concurrently herewith, acquiring all of the
issued and outstanding Capital Stock of each of AIA, AIT, FOL, KFS and OK
pursuant to that certain Agreement and Plan of Merger dated as of September 22,
1997, among Kitty Hawk, Kitty Hawk - AIA, Inc., Kitty Hawk - AIT, Inc., Kitty
Hawk - FOL, Inc., Kitty Hawk - KFS, Inc., Kitty Hawk - OK, Inc., M. Xxx
Xxxxxxxxxxx, AIA, AIT, FOL, KFS, OK and Xxxxxx Xxxxxxx (as amended, the "Merger
Agreement").
D. Kitty Hawk is, concurrently herewith, issuing up to an
additional 3,000,000 shares of its common stock pursuant to a registered public
offering (the "Common Stock Offering").
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 1
8
E. Kitty Hawk is, concurrently herewith, issuing up to
$340,000,000 in principal amount of its 9.95% Senior Secured Notes Due 2004
(the "Senior Notes") pursuant to an offering that is not registered under the
Securities Act of 1933, as amended (the "Note Offering").
F. The Common Stock Offering and the Note Offering are
conditioned on (i) the concurrent consummation of the Merger and (ii) the
execution and delivery of this Agreement.
G. A portion of the proceeds of the Common Stock Offering and the
Note Offering are, concurrently herewith, being used (i) to pay the cash
portion of the purchase price payable by Kitty Hawk pursuant to the Merger
Agreement, (ii) to pay a portion of the indebtedness owed by Kitty Hawk,
Leasing and/or other Kitty Hawk Companies under the Prior Credit Agreement, and
(iii) to pay a portion of the indebtedness owed by the Kalitta Companies under
their outstanding credit facilities.
H. Bank One is, substantially concurrently herewith but
immediately prior hereto, assigning all of its interest in the outstanding
loans (including the AIA Fleet Advance) under the Prior Credit Agreement to
Xxxxx Fargo.
I. The parties hereto desire to amend and restate the Prior
Credit Agreement, among other things, (i) to reflect the payment of certain
indebtedness owed by Kitty Hawk, Leasing and/or other Kitty Hawk Companies
under the Prior Credit Agreement, (ii) to refinance the AIA Fleet Advance with
the Term Loans, and (iii) to provide for a $100,000,000 revolving credit
facility to refinance and replace the revolving credit facility provided under
the Prior Credit Agreement and to provide working capital for the Companies.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions. As used in this Agreement, the
following terms have the following meanings:
"ACMI Agreement" means a charter agreement pursuant to which Aircargo
or any other Company supplies aircraft, crew, maintenance and insurance and as
to which a Company (a) retains operational control of such aircraft and (b)
maintains such aircraft on its operations specifications. An ACMI Agreement is
not included within the term "lease" as such term is used in this Agreement.
"Additional Costs" has the meaning specified in Section 4.1.
"Adjusted EBITDA" means, for any period, without duplication, the sum
of the following for Kitty Hawk and its Subsidiaries for such period, each
determined on a consolidated basis in accordance with GAAP: (a) Net Income,
plus (b) Interest Expense, plus (c) income and franchise
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 2
9
taxes to the extent deducted in determining Net Income, plus (d) depreciation
and amortization, minus (e) extraordinary gains to the extent included in
determining Net Income, plus (f) extraordinary losses to the extent deducted in
determining Net Income (provided, however, that no more than $3,000,000 of
integration costs or expenses directly attributable to the Merger during each
of 1997 and 1998 shall be included for purposes of this clause (f)); provided,
however, that, for purposes of determining Adjusted EBITDA of the Kalitta
Companies prior to consummation of the Merger, such Adjusted EBITDA shall be
restated utilizing the accounting principles used in the calculation of
Adjusted EBITDA for Kitty Hawk and its Subsidiaries.
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of one percent determined by Agent (which determination shall
be conclusive in the absence of manifest error) to be equal to (a) the
Eurodollar Rate for such Eurodollar Loan for such Interest Period divided by
(b) one minus the Reserve Requirement for such Eurodollar Loan for such
Interest Period.
"Advance Rate" means a specific percentage for each of Eligible
Receivables and Eligible Parts, which percentage is to be determined by Agent
in its sole discretion in connection with the determination of the initial
Borrowing Base Report in accordance with Section 2.1(a), equal to (a) for
Eligible Receivables, a minimum of 65% and a maximum of 80% and (b) for
Eligible Parts, a minimum of 20% and a maximum of 40%. Once such specific
percentage has been determined by Agent for each of Eligible Receivables and
Eligible Parts, such percentage shall not thereafter be changed without the
agreement of Borrower, Agent and Required Lenders.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, such first Person, (b) that
directly or indirectly beneficially owns or holds five percent or more of any
class of voting Capital Stock of such first Person, or (c) five percent or more
of the voting Capital Stock of which is directly or indirectly beneficially
owned or held by such first Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract, or otherwise; provided, however, in no event shall
Agent or any Lender be deemed an Affiliate of Kitty Hawk or any its
Subsidiaries.
"Agent" has the meaning specified in the introductory paragraph of
this Agreement.
"Agent's Letter" means that certain letter agreement dated November 5,
1997 between Xxxxx Fargo and Kitty Hawk, accepted and agreed to by Kitty Hawk
as of November 6, 1997, relating to certain fees payable by Kitty Hawk in
connection with this Agreement.
"Aggregate Loan Percentage" means, as to any Lender, the percentage
equivalent of a fraction, (a) the numerator of which is the sum of (i) the
outstanding Revolving Credit Loans Commitment (or, if such Commitment has
terminated or expired, the aggregate outstanding principal amount of the
Revolving Credit Loans and Letter of Credit Liabilities) of such Lender, plus
(ii) the outstanding Term Loans of such Lender, and (b) the denominator of
which is the sum of (i) the outstanding Revolving Credit Loans Commitments (or,
if such Commitments have terminated or
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 3
10
expired, the aggregate outstanding principal amount of the Revolving Credit
Loans and Letter of Credit Liabilities) of all Lenders, plus (ii) the
outstanding Term Loans of all Lenders.
"Agreement" means this Agreement and any and all amendments,
modifications, supplements, renewals, extensions, restatements or replacements
hereof.
"AIA" means as specified in the introductory paragraph of this
Agreement.
"AIC" means American International Cargo, a Michigan copartnership.
"AIA Acquisition Agreement" means that certain Agreement for Sale and
Purchase of AIA 727 Fleet dated as of July 31, 1997, among AIA, KFS, Xxxxxx
Xxxxxxx, Aircargo and Kitty Hawk.
"AIA Aircraft" means Aircraft O, Aircraft P, Aircraft Q, Aircraft R,
Aircraft S, Aircraft T, Aircraft U, Aircraft V, Aircraft W, Aircraft X,
Aircraft Y, Aircraft Z, Aircraft AA, Aircraft AB, Aircraft AC and Aircraft AD.
The term "AIA Aircraft" shall also mean and refer to any replacement aircraft
which is required or permitted, under this Agreement or an Aircraft Mortgage,
to replace an AIA Aircraft as Collateral and with respect to which the
Companies comply with each of the applicable requirements contained in this
Agreement and the applicable Aircraft Mortgage.
"AIA Aircraft Release Amount" means, with respect to each particular
AIA Aircraft as of the date of determination, an amount determined by Agent in
good faith equal to (a) the amount for such AIA Aircraft set forth under the
heading "Initial AIA Aircraft Release Amount" on Schedule 1.1 hereto, minus (b)
the product of (i) the aggregate amount of principal of the Term Loans repaid
subsequent to the Closing Date multiplied by (ii) the percentage for such AIA
Aircraft set forth under the heading "Percentage Allocation" on Schedule 1.1.
"AIA Fleet Advance" means the loans in the aggregate amount of
$45,900,000 made, on or about September 17, 1997, by the Prior Lenders to Kitty
Hawk under the Prior Credit Agreement to finance the purchase by Aircargo of
the AIA Aircraft pursuant to the AIA Acquisition Agreement.
"Aircargo" means as specified in the introductory paragraph of this
Agreement.
"Aircraft O" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N719CK (formerly N6806),
Manufacturer's Serial No. 19481, together with any and all parts, appliances,
components, instruments, accessories, accessions, equipment, and avionics
installed in or appurtenant to such airframe, (ii) one Xxxxx & Xxxxxxx JT8D-9A
Engine, Manufacturer's Serial No. 649038, (iii) one Xxxxx & Whitney JT8D-9A
Engine, Manufacturer's Serial No. 654584, and (iv) one Xxxxx & Xxxxxxx JT8D-9A
Engine, Manufacturer's Serial No. 665195.
"Aircraft P means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N255US, Manufacturer's Serial No.
19974, together with any and all parts, appliances, components, instruments,
accessories, accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 4
11
No. 665401, (iii) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial No.
649240, and (iv) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial No.
665357.
"Aircraft Q" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N856AA, Manufacturer's Serial No.
20997, together with any and all parts, appliances, components, instruments,
accessories, accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial
No. 653766, (iii) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial No.
665228, and (iv) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial No.
666119.
"Aircraft R" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N858AA, Manufacturer's Serial No.
21085, together with any and all parts, appliances, components, instruments,
accessories, accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial
No. 666095, (iii) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial No.
666098, and (iv) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial No.
666059.
"Aircraft S" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N6831, Manufacturer's Serial No.
20184, together with any and all parts, appliances, components, instruments,
accessories, accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial
No. 666253, (iii) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial No.
665419, and (iv) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial No.
654979.
"Aircraft T" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N6834, Manufacturer's Serial No.
20187, together with any and all parts, appliances, components, instruments,
accessories, accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial
No. 666123, (iii) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial No.
666354, and (iv) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial Xx.
000000.
"Xxxxxxxx X" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N6808, Manufacturer's Serial No.
19483, together with any and all parts, appliances, components, instruments,
accessories, accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial
No. 666034, (iii) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial No.
665214, and (iv) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial Xx.
000000.
"Xxxxxxxx X" xxxxx, xxxxxxxxxxxx, (x) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N6811, Manufacturer's Serial No.
19486, together with any and all parts, appliances, components, instruments,
accessories, accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial
No. 666031, (iii) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial No.
666125, and (iv) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial No.
654009.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 5
00
"Xxxxxxxx X" xxxxx, xxxxxxxxxxxx, (x) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N6816, Manufacturer's Serial No.
19491, together with any and all parts, appliances, components, instruments,
accessories, accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial
No. 665188, (iii) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial No.
665232, and (iv) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial No.
665190.
"Aircraft X" means, collectively, (i) one Xxxxxx 000-00 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N1908, Manufacturer's Serial No.
19183, together with any and all parts, appliances, components, instruments,
accessories, accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT8D-7B Engine, Manufacturer's Serial
No. 654427, (iii) one Xxxxx & Xxxxxxx JT8D-7B Engine, Manufacturer's Serial No.
654417, and (iv) one Xxxxx & Whitney JT8D-7B Engine, Manufacturer's Serial No.
654365.
"Aircraft Y" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N729CK (formerly N6807),
Manufacturer's Serial No. 19482, together with any and all parts, appliances,
components, instruments, accessories, accessions, equipment, and avionics
installed in or appurtenant to such airframe, (ii) one Xxxxx & Xxxxxxx JT8D-9A
Engine, Manufacturer's Serial No. 649269, (iii) one Xxxxx & Whitney JT8D-9A
Engine, Manufacturer's Serial No. 665955, and (iv) one Xxxxx & Xxxxxxx JT8D-9A
Engine, Manufacturer's Serial No. 665452.
"Aircraft Z" means, collectively, (i) one Xxxxxx 000-00X xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N727CK, Manufacturer's Serial No.
19195, together with any and all parts, appliances, components, instruments,
accessories, accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial
No. 666035, (iii) one Xxxxx & Xxxxxxx JT8D-9A Engine, Manufacturer's Serial No.
666109, and (iv) one Xxxxx & Whitney JT8D-9A Engine, Manufacturer's Serial No.
654884.
"Aircraft AA" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N720CK (formerly N6812),
Manufacturer's Serial No. 19487, together with any and all parts, appliances,
components, instruments, accessories, accessions, equipment, and avionics
installed in or appurtenant to such airframe, (ii) one Xxxxx & Xxxxxxx JT8D-9A
Engine, Manufacturer's Serial No. 665365, (iii) one Xxxxx & Whitney JT8D-9A
Engine, Manufacturer's Serial No. 665248, and (iv) one Xxxxx & Xxxxxxx JT8D-9A
Engine, Manufacturer's Serial No. 666137.
"Aircraft AB" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N722CK (formerly N6810),
Manufacturer's Serial No. 19485, together with any and all parts, appliances,
components, instruments, accessories, accessions, equipment, and avionics
installed in or appurtenant to such airframe, (ii) one Xxxxx & Whitney JT8D-9A
Engine, Manufacturer's Serial No. 665466, (iii) one Xxxxx & Xxxxxxx JT8D-9A
Engine, Manufacturer's Serial No. 649124, and (iv) one Xxxxx & Whitney JT8D-9A
Engine, Manufacturer's Serial No. 665160.
"Aircraft AC" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N723CK (formerly N6838),
Manufacturer's Serial No. 20191, together with any and all parts, appliances,
components, instruments, accessories, accessions, equipment, and
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 6
13
avionics installed in or appurtenant to such airframe, (ii) one Xxxxx & Xxxxxxx
JT8D-9A Engine, Manufacturer's Serial No. 665348, (iii) one Xxxxx & Whitney
JT8D-9A Engine, Manufacturer's Serial No. 665395, and (iv) one Xxxxx & Xxxxxxx
JT8D-9A Engine, Manufacturer's Serial No. 665464.
"Aircraft AD" means, collectively, (i) one Xxxxxx 000-000 xxxxxxxx,
Xxxxxx Xxxxxx Aircraft Registration Number N706CA (formerly N6821),
Manufacturer's Serial No. 19496, together with any and all parts, appliances,
components, instruments, accessories, accessions, equipment, and avionics
installed in or appurtenant to such airframe, (ii) one Xxxxx & Whitney JT8D-9A
Engine, Manufacturer's Serial No. 666153, (iii) one Xxxxx & Xxxxxxx JT8D-9A
Engine, Manufacturer's Serial No. 666346, and (iv) one Xxxxx & Whitney JT8D-9A
Engine, Manufacturer's Serial No. 666196.
"Aircraft Mortgages" means (a) the Amended and Restated Aircraft
Chattel Mortgage, Security Agreement and Assignment of Rents executed by
Aircargo dated the Closing Date, (b) any Aircraft Chattel Mortgage, Security
Agreement and Assignment of Rents at any time executed pursuant to Article 5
hereof, evidencing or creating a Lien as security for the Obligations in form
and substance reasonably satisfactory to Agent, and (c) any and all amendments,
modifications, supplements, renewals, extensions, restatements or replacements
thereof.
"Airframes" means those certain airframes identified in the
definitions of Aircraft O, Aircraft P, Aircraft Q, Aircraft R, Aircraft S,
Aircraft T, Aircraft U, Aircraft V, Aircraft W, Aircraft X, Aircraft Y,
Aircraft Z, Aircraft AA, Aircraft AB, Aircraft AC and Aircraft AD, together
with any and all parts, appliances, components, instruments, accessories,
accessions, attachments, equipment or avionics (including, without limitation,
communications, radar, navigation systems or other electronic equipment)
installed in, appurtenant to or delivered with or in respect of such airframes.
The term "Airframes" shall also mean and refer to any replacement airframe
which is required or permitted, under this Agreement or an Aircraft Mortgage,
to replace an Airframe as Collateral and with respect to which the Companies
comply with each of the applicable requirements contained in this Agreement and
the applicable Aircraft Mortgage.
"AIT" means as specified in the introductory paragraph of this
Agreement.
"Applicable Base Rate Margin" means, for the period commencing with
the Closing Date and thereafter, the rate per annum set forth in the table
below that corresponds to the ratio of Funded Debt to Adjusted EBITDA for the
four fiscal quarters of Kitty Hawk and its Subsidiaries on a consolidated basis
then most recently ended:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 7
14
--------------------------------------------------------------------------------
Applicable
Funded Debt to Adjusted EBITDA Ratio Base Rate Margin
--------------------------------------------------------------------------------
Greater than 4.25 to 1.00 1.25%
--------------------------------------------------------------------------------
Greater than 4.00 to 1.00,
but equal to or less than 4.25 to 1.00 1.00%
--------------------------------------------------------------------------------
Greater than 3.50 to 1.00,
but equal to or less than 4.00 to 1.00 0.75%
--------------------------------------------------------------------------------
Greater than 3.00 to 1.00,
but equal to or less than 3.50 to 1.00 0.50%
--------------------------------------------------------------------------------
Greater than 2.50 to 1.00,
but equal to or less than 3.00 to 1.00 0.25%
--------------------------------------------------------------------------------
Greater than 2.00 to 1.00,
but equal to or less than 2.50 to 1.00 0.00%
--------------------------------------------------------------------------------
Equal to or less than 2.00 to 1.00 0.00%
--------------------------------------------------------------------------------
For purposes hereof and notwithstanding the preceding sentence, the Applicable
Base Rate Margin for the period from the Closing Date to May 19, 1998 shall be
deemed to be 1.25% for Revolving Credit Loans and 1.50% for Term Loans and
shall thereafter be calculated on each Calculation Date based upon the
preceding table and the financial statements delivered by Kitty Hawk pursuant
to Section 8.1(b) and the certificate delivered by Kitty Hawk pursuant to
Section 8.1(c); provided, that if Kitty Hawk fails to deliver to Agent such
financial statements or certificate at least five Business Days before the
relevant Calculation Date, the Applicable Base Rate Margin shall be deemed to
be 1.25% for Revolving Credit Loans and 1.50% for Term Loans until five
Business Days after such statements and certificate are delivered by Kitty Hawk
to Agent, after which the Applicable Base Rate Margin shall be determined as
otherwise provided herein.
"Applicable Commitment Fee Rate" means, for the period commencing with
the Closing Date and thereafter, the rate per annum set forth in the table
below that corresponds to the ratio of Funded Debt to Adjusted EBITDA for the
four fiscal quarters of Kitty Hawk and its Subsidiaries on a consolidated basis
then most recently ended:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 8
15
--------------------------------------------------------------------------------
Applicable
Funded Debt to Adjusted EBITDA Ratio Commitment
Fee Rate
--------------------------------------------------------------------------------
Greater than 4.25 to 1.00 0.50%
--------------------------------------------------------------------------------
Greater than 4.00 to 1.00,
but equal to or less than 4.25 to 1.00 0.50%
--------------------------------------------------------------------------------
Greater than 3.50 to 1.00,
but equal to or less than 4.00 to 1.00 0.50%
--------------------------------------------------------------------------------
Greater than 3.00 to 1.00,
but equal to or less than 3.50 to 1.00 0.375%
--------------------------------------------------------------------------------
Greater than 2.50 to 1.00,
but equal to or less than 3.00 to 1.00 0.375%
--------------------------------------------------------------------------------
Greater than 2.00 to 1.00,
but equal to or less than 2.50 to 1.00 0.375%
--------------------------------------------------------------------------------
Equal to or less than 2.00 to 1.00 0.250%
--------------------------------------------------------------------------------
For purposes hereof and notwithstanding the preceding sentence, the Applicable
Commitment Fee Rate for the period from the Closing Date to May 19, 1998 shall
be deemed to be 0.50% and shall thereafter be calculated on each Calculation
Date based upon the preceding table and the financial statements delivered by
Kitty Hawk pursuant to Section 8.1(b) and the certificate delivered by Kitty
Hawk pursuant to Section 8.1(c); provided, that if Kitty Hawk fails to deliver
to Agent such financial statements or certificate at least five Business Days
before the relevant Calculation Date, the Applicable Commitment Fee Rate shall
be deemed to be 0.50% until five Business Days after such statements and
certificate are delivered by Kitty Hawk to Agent, after which the Applicable
Commitment Fee Rate shall be determined as otherwise provided herein.
"Applicable Eurodollar Margin" means, for the period commencing with
the Closing Date and thereafter, the rate per annum set forth in the table
below that corresponds to the ratio of Funded Debt to Adjusted EBITDA for the
four fiscal quarters of Kitty Hawk and its Subsidiaries on a consolidated basis
then most recently ended:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 9
16
--------------------------------------------------------------------------------
Applicable
Funded Debt to Adjusted EBITDA Ratio Eurodollar Margin
--------------------------------------------------------------------------------
Greater than 4.25 to 1.00 2.75%
--------------------------------------------------------------------------------
Greater than 4.00 to 1.00,
but equal to or less than 4.25 to 1.00 2.50%
--------------------------------------------------------------------------------
Greater than 3.50 to 1.00,
but equal to or less than 4.00 to 1.00 2.25%
--------------------------------------------------------------------------------
Greater than 3.00 to 1.00,
but equal to or less than 3.50 to 1.00 2.00%
--------------------------------------------------------------------------------
Greater than 2.50 to 1.00,
but equal to or less than 3.00 to 1.00 1.75%
--------------------------------------------------------------------------------
Greater than 2.00 to 1.00,
but equal to or less than 2.50 to 1.00 1.50%
--------------------------------------------------------------------------------
Equal to or less than 2.00 to 1.00 1.25%
--------------------------------------------------------------------------------
For purposes hereof and notwithstanding the preceding sentence, the Applicable
Eurodollar Margin for the period from the Closing Date to May 19, 1998 shall be
deemed to be 2.75% for Revolving Credit Loans and 3.00% for Term Loans and
shall thereafter be calculated on each Calculation Date based upon the
preceding table and the financial statements delivered by Kitty Hawk pursuant
to Section 8.1(b) and the certificate delivered by Kitty Hawk pursuant to
Section 8.1(c); provided, that if Kitty Hawk fails to deliver to Agent such
financial statements or certificate at least five Business Days before the
relevant Calculation Date, the Applicable Eurodollar Margin shall be deemed to
be 2.75% for Revolving Credit Loans and 3.00% for Term Loans until five
Business Days after such statements and certificate are delivered by Kitty Hawk
to Agent, after which the Applicable Eurodollar Margin shall be determined as
otherwise provided herein.
"Applicable Lending Office" means for each Lender and each Type of
Loan, the lending office of such Lender (or of an Affiliate of such Lender)
designated for such Type of Loan below its name on the signature pages hereof
(or, with respect to a Lender that becomes a party to this Agreement pursuant
to an assignment made in accordance with Section 13.8, in the Assignment and
Acceptance executed by it) or such other office of such Lender (or an Affiliate
of such Lender) as such Lender may from time to time specify to Agent as the
office by which its Loans of such Type are to be made and maintained.
"Applicable Rate" means: (a) during the period that any Loan is a
Base Rate Loan, the Base Rate plus the Applicable Base Rate Margin; and (b)
during the period that any Loan is a Eurodollar Loan, the Eurodollar Rate plus
the Applicable Eurodollar Margin.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 10
17
"Asset Disposition" means the disposition of any or all of the
Property (other than the grant of a Lien as security) of any Company, whether
by sale, lease, transfer, assignment, condemnation or otherwise, but excluding
(a) any involuntary disposition resulting from casualty damage to Property, (b)
any disposition of Parts, any disposition of engines which do not constitute
Collateral and any disposition of other equipment which does not constitute
Collateral, in each case in the ordinary course of business, and (c) any
disposition of Property which constitutes collateral securing, and permitted to
secure in accordance with this Agreement, the Debt evidenced by the Senior
Notes.
"Assignee" has the meaning specified in Section 13.8(b).
"Assigning Lender" has the meaning specified in Section 13.8(b).
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and its Assignee and accepted by Agent pursuant to Section
13.8(e), in substantially the form of Exhibit A hereto.
"Bank One" means Bank One, Texas, N.A., a national banking
association.
"Bank One Interest Rate Protection Agreement" means that certain ISDA
Master Agreement dated as of December 19, 1995, between Bank One and Leasing,
as it may be amended, modified, supplemented or restated at any time and from
time to time, and all Confirmations (as defined therein) issued pursuant
thereto, including, without limitation, the two Confirmations dated December
18, 1995.
"Bankruptcy Code" has the meaning specified in Section 11.1(e).
"Base Rate" means, at any time, the higher of (a) the Prime Rate then
in effect or (b) the sum of (i) the Federal Funds Rate then in effect plus (ii)
one-half of one percent (0.50%).
"Base Rate Loans" means any Loans that bear interest at rates based
upon the Base Rate.
"Basle Accord" means the proposals for risk-based capital framework
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, supplemented
and otherwise modified and in effect from time to time, or any replacement
thereof.
"Borrowing Base" means, (a) prior to the earlier to occur of the date
of delivery of the initial Borrowing Base Report in accordance with Section
2.1(a) or January 19, 1998, 65% of Eligible Receivables and (b) at any date of
determination thereafter (commencing with the earlier to occur of the date of
delivery of the initial Borrowing Base Report in accordance with Section 2.1(a)
or January 19, 1998) an amount equal to the sum of (i) the Advance Rate of
Eligible Receivables plus (ii) the lesser of the Advance Rate of Eligible Parts
or $20,000,000.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 11
18
"Borrowing Base Report" means a report in substantially the form of
Exhibit B attached hereto and completed and certified by a Responsible Officer
of Kitty Hawk certifying as to the Borrowing Base.
"Business Day" means (a) any day on which commercial banks are not
authorized or required to close in Dallas, Texas, or San Francisco, California,
and (b) with respect to all borrowings, payments, Conversions, Continuations,
Interest Periods and notices in connection with Eurodollar Loans, any day which
is a Business Day described in clause (a) above and which is also a day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Calculation Date" means the date occurring each quarter during the
term of this Agreement which is 15 days after the date on which quarterly
financial statements of Kitty Hawk and its Subsidiaries are required by Section
8.1(b) to be delivered to Agent.
"Capital Expenditures" means, for any period, expenditures (including
Capital Lease Obligations incurred) made by Kitty Hawk and its Subsidiaries to
acquire or construct fixed assets, plant or equipment (including renewals,
improvements or replacements, but excluding repairs) during such period and
which, in accordance with GAAP, are classified as capital expenditures.
"Capital Lease Obligations" means, as to any Person, the obligations
of such Person to pay rent or other amounts under a lease of (or other
agreement conveying the right to use) real and/or personal Property, which
obligations are required to be classified or accounted for as a capital lease
on a balance sheet of such Person under GAAP. For purposes of this Agreement,
the amount of such Capital Lease Obligations shall be the capitalized amount
thereof, determined in accordance with GAAP.
"Capital Stock" means corporate stock and any and all shares,
partnership interests, limited partnership interests, limited liability company
interests, membership interests, equity interests, participations, rights or
other equivalents (however designated) of corporate stock or any of the
foregoing issued by any entity (whether a corporation, a partnership or another
entity).
"Change of Control" means any of the following events: (a) Kitty Hawk
shall at any time fail to own, legally and beneficially, 100% of the
outstanding Capital Stock of any of the Operating Subsidiaries other than AIC;
(b) M. Xxx Xxxxxxxxxxx or a successor reasonably acceptable to Required Lenders
shall at any time fail to own, legally and beneficially, at least ten percent
(10%) of the outstanding voting Capital Stock of Kitty Hawk; (c) after the
consummation of a Public Offering, any Person or two or more Persons (other
than the Permitted Holders) acting as a group (as defined in Section 13d-3 of
the Securities Exchange Act of 1934) shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 25% or more of the outstanding
shares of voting Capital Stock of Kitty Hawk; (d) individuals who, as of the
Closing Date, constitute the Board of Directors of Kitty Hawk (the "Kitty Hawk
Incumbent Board") cease for any reason to constitute at least a majority of the
Board of Directors of Kitty Hawk, provided, however, that any individual
becoming a director of Kitty Hawk subsequent to the Closing Date whose election
or nomination for election by Xxxxx Xxxx'x shareholders was approved by a vote
of at least a majority of the directors then comprising
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 12
19
the Kitty Hawk Incumbent Board shall be considered as though such individual
were a member of the Kitty Hawk Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange
Act of 1934) or other actual or threatened solicitation of proxies or contest
by or on behalf of a Person other than the Board of Directors of Kitty Hawk; or
(e) M. Xxx Xxxxxxxxxxx or a successor reasonably acceptable to Required Lenders
shall at any time cease to be chief executive officer of Kitty Hawk.
"Charters" means as specified in the introductory paragraph of this
Agreement.
"Closing Date" means November 19, 1997, the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" means all Property of any nature whatsoever upon which a
Lien is created or purported to be created as security for the Obligations or
any portion thereof.
"Commitment Percentage" means, as to any Lender and as to any of its
Commitments (as may be applicable based upon the context in which such term is
used), the percentage equivalent of a fraction, the numerator of which is the
amount of the applicable outstanding Commitment of such Lender (or, if such
Commitment has terminated or expired, the aggregate outstanding principal
amount of the Loans and Letter of Credit Liabilities (with respect to the
Revolving Credit Loans Commitment) of such Lender made or issued, respectively,
pursuant to such Commitment) and the denominator of which is the aggregate
amount of such applicable outstanding Commitments of all Lenders (or, if such
Commitments have terminated or expired, the aggregate outstanding principal
amount of the Loans and Letter of Credit Liabilities (with respect to the
Revolving Credit Loans Commitments) of all Lenders made or issued,
respectively, pursuant to such Commitments), as adjusted from time to time in
accordance with Section 13.8.
"Commitments" means the Revolving Credit Loans Commitments and the
Term Loans Commitments.
"Common Stock Offering" means as specified in Recital D.
"Company" means any Kitty Hawk Company and any Kalitta Company, and
"Companies" means any one or more of such Persons.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.6 of any Eurodollar Loan as a Eurodollar
Loan from one Interest Period to the next Interest Period.
"Contract Rate" has the meaning specified in Section 13.12(a).
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 13
20
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.6 or Article 4 of one Type of Loan into another Type of
Loan.
"Current Date" means a date occurring no more than 30 days prior to
the Closing Date or such earlier date which is reasonably acceptable to Agent.
"Debt" means as to any Person at any time (without duplication): (a)
all indebtedness, liabilities and obligations of such Person for borrowed
money; (b) all indebtedness, liabilities and obligations of such Person
evidenced by bonds, notes, debentures or other similar instruments; (c) all
indebtedness, liabilities and obligations of such Person to pay the deferred
purchase price of Property or performed services, except trade accounts payable
of such Person arising in the ordinary course of business that are not past due
by more than 90 days; (d) all Capital Lease Obligations of such Person; (e) all
Debt of others Guaranteed by such Person; (f) all indebtedness, liabilities and
obligations secured by a Lien existing on Property owned by such Person,
whether or not the indebtedness, liabilities or obligations secured thereby
have been assumed by such Person or are non-recourse to such Person (exclusive
of operating leases as to which such Person is lessee); (g) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, bankers' acceptances, surety or other bonds and similar
instruments; (h) all indebtedness, liabilities and obligations of such Person
to redeem or retire shares of Capital Stock of such Person; (i) all liabilities
and obligations (exclusive of liabilities and obligations which are not yet
due) of such Person in connection with any interest rate swap, cap or collar
agreement or similar arrangement between such Person and one or more
counterparties providing for the transfer or mitigation of interest rate risks
either generally or under specified contingencies; and (j) all indebtedness,
liabilities and obligations of such Person in respect of unfunded vested
benefits under any Plan.
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan, any
Reimbursement Obligation or any other amount payable by Kitty Hawk or any other
Company under this Agreement or any other Loan Document which is not paid when
due (whether at stated maturity, by acceleration or otherwise), a rate per
annum during the period commencing on the due date until such amount is paid in
full equal to the sum of two percent plus the Applicable Rate as in effect from
time to time.
"Deposit Account" means a deposit account maintained by Kitty Hawk
with a bank selected by Kitty Hawk and reasonably acceptable to Agent.
"Dollars" and "$" mean lawful money of the U. S.
"Eligible Assignee" means (a) any Affiliate of a Lender or (b) any
commercial bank, savings and loan association, savings bank, finance company,
insurance company, pension fund, mutual fund or other financial institution
(whether a corporation, partnership or other entity) approved by Agent and,
prior to the occurrence and continuation of a Default, approved by Kitty Hawk,
which approval by Kitty Hawk shall not be unreasonably withheld, conditioned or
delayed; provided, however, that, prior to the occurrence and continuation of a
Default, Kitty Hawk shall not be obligated to approve,
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 14
21
as an Eligible Assignee, any potential Lender which would be entitled to
receive additional payments from Kitty Hawk in accordance with Section 3.5(a)
or indemnification from Kitty Hawk in accordance with Section 3.5(b).
"Eligible Parts" means, at any date of determination, the value of all
Parts then owned by, and in the possession of, Aircargo, Leasing, AIA, KFS or
OK and held for use in the ordinary course of business, in which Agent has a
perfected, first priority Lien pursuant to the Security Documents as security
for payment and performance of the Obligations, valued at an amount determined
by Agent in good faith not to exceed fair market value. Eligible Parts shall
not include (i) Parts with respect to which a claim exists disputing any such
Company's title to or right to possession of such Parts, (ii) Parts that are
not in good condition or do not comply with any Governmental Requirement with
respect to manufacture, use or sale, (iii) Parts that are located outside of
the U.S., (iv) Parts produced in violation of the Fair Labor Standards Act, (v)
Parts that are evidenced by a negotiable or non-negotiable document of title,
and (vi) Parts that have become obsolete or have been damaged or are not usable
in their present state for the use for which they were manufactured or
purchased.
"Eligible Receivables" means, at any date of determination, without
duplication, the aggregate of each Receivable of any Company created in the
ordinary course of business which satisfies each of the following requirements
or conditions:
(a) Such Receivable complies with all applicable
Governmental Requirements, including, without limitation, usury laws,
the Federal Truth in Lending Act and Regulation Z of the Board of
Governors of the Federal Reserve System;
(b) Such Receivable, at the date of issuance of its
invoice, was payable not more than 30 days after the original date of
issuance of the invoice therefor;
(c) Such Receivable has not been outstanding for more
than 30 days past the date upon which the invoice is payable;
(d) Such Receivable was created in connection with the
performance of services by such Company in the ordinary course of
business and such services have been completed;
(e) Such Receivable represents a legal, valid and binding
payment obligation of the account debtor enforceable in accordance
with its terms and arising from an enforceable contract, the
performance of which contract, insofar as it relates to such
Receivable, has been completed by such Company;
(f) Such Company has good and indefeasible title to such
Receivable, Agent holds a perfected first priority Lien on such
Receivable pursuant to the Security Documents as security for payment
and performance of the Obligations;
(g) Such Receivable does not arise out of a contract
with, or an order from, an account debtor that, by its terms (other
than terms which are invalid under applicable law),
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22
prohibits or makes void or unenforceable the grant of a security
interest to Agent in and to such Receivable;
(h) The amount of such Receivable included in Eligible
Receivables is not subject to any setoff, counterclaim, defense,
dispute, recoupment or adjustment other than normal discounts for
prompt payment; provided, however, that only the portion of such
Receivable affected by such setoff, counterclaim, defense, dispute,
recoupment or adjustment shall be excluded by virtue of this clause
(h);
(i) The account debtor with respect to such Receivable is
not insolvent or the subject of any bankruptcy or insolvency
proceeding and has not made an assignment for the benefit of
creditors, suspended normal business operations, dissolved,
liquidated, terminated its existence, ceased to pay its debts as they
become due or suffered a receiver or trustee to be appointed for any
of its assets or affairs; provided, however, that this exclusion shall
not apply to the extent that such Receivable is the subject of a valid
order, in form and substance satisfactory to Agent in its sole
discretion, issued by a bankruptcy court with jurisdiction over the
account debtor's assets which provides adequate protection for the
payment of such Receivable or Agent is otherwise satisfied as to such
adequate protection with respect to such Receivable;
(j) Such Receivable is not evidenced by chattel paper or
instruments (including, without limitation, leases of aircraft
securing the Debt evidenced by the Senior Notes) unless the Lien on
such chattel paper or instrument is a perfected first priority Lien on
such chattel paper or instrument in favor of Agent pursuant to the
Security Documents;
(k) The account debtor has not notified such Company of
any dispute concerning, or claimed nonconformity of, any of the
services relating to such Receivable; provided, however, that only the
portion of such Receivable affected by such dispute or nonconformity
shall be excluded by virtue of this clause (k);
(l) Such Receivable is not owed by an Affiliate of such
Company;
(m) Such Receivable is payable in Dollars by the account
debtor;
(n) The account debtor with respect to such Receivable is
not domiciled in or organized under the laws of any country other than
the U.S., unless such Receivable has been approved by Agent for
inclusion in the Borrowing Base (subject to the other requirements
contained in this definition); for purposes of this clause (n),
Receivables owed by any Person identified on Schedule 1.1(b) are
approved by Agent for such inclusion;
(o) Such Receivable is not owed by an account debtor as
to which more than twenty percent (20%) of the aggregate balances then
outstanding on Receivables owed by such account debtor thereon and/or
its Affiliates to any one or more of the Companies are more than 30
days past due from the date upon which such invoice is payable;
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 16
23
(p) The account debtor with respect to such Receivable is
not the U.S. or any department, agency or instrumentality thereof,
unless, with respect to the Lien on such Receivable in favor of the
Lender, the Federal Assignment of Claims Act of 1940, as amended,
shall have been complied with;
(q) The account debtor with respect to such Receivable is
not located in New Jersey, Minnesota, West Virginia or any other state
denying creditors access to its courts in the absence of a notice of
business activities report or other similar filing, unless such
Company has either qualified as a foreign corporation authorized to
transact business in such state or has filed a notice of business
activities report or similar appropriate filing with the applicable
state agency for the then current year; and
(r) Such Receivable is not owed by an account debtor as
to which the aggregate of all Receivables owing by such account debtor
or an Affiliate of such account debtor exceeds twenty-five percent
(25%) of the aggregate of all Receivables at such date, provided that
an amount of Receivables owing by such account debtor that do not
exceed twenty-five percent (25%) of the aggregate of all Receivables
at such date shall not be excluded pursuant to this clause (r).
The amount of the Eligible Receivables owed by an account debtor to each
Company shall be net of, and shall be reduced by (if and to the extent not
already so reduced by virtue of the preceding clauses of this definition), the
amount of all contra accounts, reserves, credits, rebates and (subject to the
proviso below) other indebtedness or obligations owed by such Company to such
account debtor; provided, however, that the existence of any such other
indebtedness or obligations owed by such Company to such account debtor shall
not, in and of itself, reduce the amount of Eligible Receivables owed by such
account debtor by the amount of such other indebtedness or obligations (for
purposes of this sentence or clause (i) preceding of this definition) except to
the extent that such other indebtedness or obligations are then due.
"Engines" means those certain aircraft engines identified in the
definitions of Aircraft A, Aircraft O, Aircraft P, Aircraft Q, Aircraft R,
Aircraft S, Aircraft T, Aircraft U, Aircraft V, Aircraft W, Aircraft X,
Aircraft Y, Aircraft Z, Aircraft AA, Aircraft AB, Aircraft AC and Aircraft AD,
together with any and all parts, appliances, components, accessories,
accessions, attachments or equipment (collectively, "such equipment") installed
on, appurtenant to, or delivered with or in respect of such engines prior to
the time when such equipment is replaced by replacement equipment in accordance
with this Agreement. The term "Engines" shall also mean and refer to any
replacement aircraft engine which is required or permitted, under this
Agreement or an Aircraft Mortgage, to be installed upon the Airframes and with
respect to which the Companies comply with each of the applicable requirements
contained in this Agreement and the applicable Aircraft Mortgage.
"Environmental Law" means any federal, state, local or foreign law,
statute, code or ordinance, principle of common law, rule or regulation, as
well as any Permit, order, decree, judgment or injunction issued, promulgated,
approved or entered thereunder, relating to pollution or the protection,
cleanup or restoration of the environment or natural resources, or to the
public health or
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 17
24
safety, or otherwise governing the generation, use, handling, collection,
treatment, storage, transportation, recovery, recycling, discharge or disposal
of Hazardous Materials, including, without limitation as to U.S. laws, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Section 9601 et seq., the Superfund Amendment and Reauthorization
Act of 1986, 99-499, 100 Stat. 1613, the Resource Conservation and Recovery Act
of 1976, 42 U. S. C. Section 6901 et seq., the Occupational Safety and Health
Act, 29 U S.C. Section 651 et seq., the Clean Air Act, 42 U.S.C. Section 7401
et seq., the Clean Water Act, 33 U. S. C. Section 1251 et seq., the Emergency
Planning and Community Right to Know Act, 42 U. S. C. Section 11001 et seq.,
the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Section 136
et seq., and the Toxic Substances Control Act, 15 U.S.C. Section 2601 et seq.,
and any state or local counterparts.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability or criminal, penal or civil statute, including,
without limitation, any Environmental Law, Permit, order or agreement with any
Governmental Authority or other Person, arising from environmental, health or
safety conditions or the Release or threatened Release of a Hazardous Material
into the environment.
"Equity Issuance" means any issuance by Kitty Hawk of any Capital
Stock of Kitty Hawk.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is
a member of a group of entities, organizations or employers of which Kitty Hawk
or any of its Subsidiaries is also a member and which is treated as a single
employer within the meaning of Sections 414(b), (c), (m) or (o) of the Code.
"Eurodollar Loans" means Loans the interest rate of which are
determined on the basis of the rates referred to in the definition of
"Eurodollar Rate" and "Adjusted Eurodollar Rate" in this Section 1.1.
"Eurodollar Rate" means, for any Eurodollar Loan, for any Interest
Period therefor, the average rate per annum (rounded upwards, if necessary, to
the nearest 1/100 of 1%) at which Dollar deposits are offered to the Reference
Lender at approximately 11:00 a.m. London time (or as soon thereafter as
practicable) two Business Days prior to the first day of such Interest Period
by two or more (as the Reference Lender may determine) leading banks in the
London interbank market in immediately available funds, which deposits have a
term comparable to such Interest Period and are in an amount comparable to the
principal amount of the Eurodollar Loan made by the Reference Lender to which
such Interest Period relates, and which rate shall be determined by the
Reference Lender in good faith based upon its standard procedures therefor in
effect from time to time. Subject to the proviso contained in the immediately
preceding sentence, if the Reference Lender is not
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25
participating in any Eurodollar Loans during any Interest Period therefor
(whether as a result of Section 4.4 or for any other reason), the Eurodollar
Rate and the Adjusted Eurodollar Rate for such Loans for such Interest Period
shall be determined by reference to the amount of the Loans which the Reference
Lender would have made had it been participating in such Loans.
"Event of Default" has the meaning specified in Section 11.1.
"Excess Insurance Proceeds" means any and all proceeds of any
Insurance Recovery which Kitty Hawk or any of its Subsidiaries (as applicable)
(a) has elected to not apply to the repair, construction or replacement of the
Collateral affected or to the purchase of other, similar Property for use in
its business or (b) has not both (i) elected to apply to the repair,
construction or replacement of the Collateral affected or to the purchase of
other, similar Property for use in its business within 90 days of the event
giving rise to the Insurance Recovery and (ii) actually applied to such repair,
construction, replacement or purchase commencing within 180 days after the
receipt of such proceeds by Kitty Hawk or any of its Subsidiaries or Agent and
continuing in a reasonably prompt and diligent fashion thereafter.
"FAA" means the United States Federal Aviation Administration (or any
successor or replacement Governmental Authority having the same or similar
authority and responsibilities).
"Federal Aviation Act" means the Federal Aviation Act of 1958, now
primarily codified in Title 49 of the United States Code, as amended.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest one- sixteenth of one percent 1/16 of
1%)) equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day provided, that (a) if the day for
which such rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day and (b) if
such rate is not so published on such next succeeding Business Day, the Federal
Funds Rate for any day shall be the average rate charged to the Reference
Lender on such day on such transactions as determined by Agent.
"First Amendment" means that certain First Amendment to Credit
Agreement dated as of September 17, 1997, among Kitty Hawk, Leasing, Aircargo,
Charters, Skyfreighters, Xxxxx Fargo, Bank One and Agent.
"FOL" means as specified in the introductory paragraph of this
Agreement.
"Foreign Subsidiary" means any Subsidiary of Kitty Hawk which is
organized and existing under the laws of a foreign country (or political
subdivision thereof).
"Free Cash Flow" means the remainder of (a) Adjusted EBITDA, minus (b)
the sum of (i) Capital Expenditures, plus (ii) income, franchise and other
taxes paid or payable in cash or cash
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 19
26
equivalents, plus (iii) dividends and other distributions with respect to any
form of Capital Stock paid or payable, plus (iv) the amount paid or payable for
purchases of Capital Stock as treasury shares or interests; provided, however,
that, for purposes of determining Free Cash Flow as such term is used in
Section 10.3 for each fiscal quarter ending during fiscal year 1998 only,
Capital Expenditures shall be calculated by subtracting therefrom the aggregate
cash balances of Kitty Hawk and its Subsidiaries as of December 31, 1997 not to
exceed the amount of such Capital Expenditures.
"Funded Debt" means, at any particular time without duplication, (a)
all Debt of Kitty Hawk and its Subsidiaries which matures by its terms, or is
renewable at the option of Kitty Hawk or any of its Subsidiaries, to a date
more than one year after the original creation of such Debt, (b) all other Debt
which would be classified as "funded indebtedness" or "long-term indebtedness"
on a consolidated balance sheet of Kitty Hawk and its Subsidiaries as of such
date in accordance with GAAP, (c) all Debt of Kitty Hawk and its Subsidiaries
for borrowed money (including, without limitation, the Loans, the Senior Notes
and the Subordinated Debt), (d) all Capital Lease Obligations of Kitty Hawk and
its Subsidiaries, and (e) the sum of the aggregate undrawn face amount of all
outstanding letters of credit (including, without limitation, the Letters of
Credit) and all unreimbursed drawings thereunder for which Kitty Hawk or any of
its Subsidiaries is an account party or otherwise liable.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board
of the American Institute of Certified Public Accountants and/or in statements
of the Financial Accounting Standards Board and/or their respective successors
and which are applicable in the circumstances as of the date in question.
Accounting principles are applied on a "consistent basis" when the accounting
principles applied in a current period are comparable in all material respects
to those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state or
political subdivision thereof and any entity exercising executive, legislative,
judicial, regulatory, or administrative functions of or pertaining to
government.
"Governmental Requirement" means any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, Permit,
certificate, license, authorization or other directive or requirement of any
federal, state, county, municipal, parish, or other Governmental Authority or
any department, commission, board, court, agency or any other instrumentality
of any of them.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any indebtedness, liability or obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Debt or other obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (b) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other indebtedness, liability or obligation as to the payment thereof or to
protect the obligee against loss in respect thereof (in whole
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 20
27
or in part), provided that the term Guarantee shall not include endorsements
for collection or deposit in the ordinary course of business. The term
"Guarantee" used as a verb has a corresponding meaning. The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the primary obligation in respect of which such Guarantee is made or,
if not stated or determinable, the maximum anticipated liability in respect
thereof (assuming such Person is required to perform thereunder).
"Guaranties" means the guaranty agreements executed by the Companies
(other than Kitty Hawk) or any Subsidiary of Kitty Hawk, dated the Closing Date
(or such other date as any Company or such Subsidiary may execute such guaranty
agreement), guaranteeing payment and performance of the Obligations in form and
substance reasonably satisfactory to Agent, and any other guaranty agreement at
any time executed pursuant to Article 5 hereof, and any and all amendments,
modifications, supplements, renewals, extensions or restatements thereof.
"Guarantor" means any Person which executes a Guaranty.
"Hazardous Material" means any substance, product, liquid, waste,
pollutant, chemical, contaminant, insecticide, pesticide, gaseous or solid
matter, organic or inorganic matter, fuel, micro-organisms, ray, odor,
radiation, energy, vector, plasma, constituent or material which (a) is or
becomes listed, regulated or addressed under any Environmental Law or (b) is,
or is deemed to be, alone or in any combination, hazardous, hazardous waste,
toxic, a pollutant, a deleterious substance, a contaminant or a source of
pollution or contamination under any Environmental Law, including, without
limitation, asbestos, petroleum, underground storage tanks (whether empty or
containing any substance) and polychlorinated biphenyls.
"Hush Kit" means a Stage 3 noise reduction kit for installation on the
engine of any aircraft.
"Indenture" means that certain Indenture, dated as of November 15,
1997, among Kitty Hawk, each Subsidiary of Kitty Hawk other than AIC and Bank
One, NA, as Trustee (as amended from time to time except as may be otherwise
stated herein) relating to the Senior Notes.
"Insurance Recovery" means, with respect to any Collateral and any
single occurrence or related occurrences with respect thereto, the receipt or
constructive receipt by any Company, or the payment by an insurance company to
Agent, of proceeds of any such Collateral or casualty insurance.
"Interest Expense" means, for any period, and in accordance with GAAP,
all interest on Debt of the Companies (or other applicable Person) paid or
accrued during such period, including the interest portion of payments under
Capital Lease Obligations.
"Interest Period" means, with respect to any Eurodollar Loan, each
period commencing on the date such Loan is made or Converted from a Base Rate
Loan or, in the case of each subsequent, successive Interest Period applicable
to a Eurodollar Loan, the last day of the next preceding Interest Period with
respect to such Loan, and ending on the numerically corresponding day in the
first, second, third or sixth calendar month thereafter, as Kitty Hawk may
select as provided in Section 2.9, except that each such Interest Period which
commences on the last Business Day of a calendar month
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 21
28
(or on any day for which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall end on the last Business Day of
the appropriate subsequent calendar month. Notwithstanding the foregoing: (a)
each Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day or, if such succeeding
Business Day falls in the next succeeding calendar month, on the next preceding
Business Day; (b) any Interest Period which would otherwise extend beyond an
applicable Maturity Date shall end on such Maturity Date; (c) no more than five
Interest Periods for Eurodollar Loans shall be in effect at the same time for
the Revolving Credit Loans and no more than two Interest Periods for Eurodollar
Loans shall be in effect at the same time for the Term Loans; (d) no Interest
Period for any Eurodollar Loan shall have a duration of less than one month
and, if the Interest Period for any Eurodollar Loans would otherwise be a
shorter period, such Loans shall not be available hereunder; and (e) no
Interest Period for the Term Loans may commence before and end after any
principal repayment date unless, after giving effect thereto, the aggregate
principal amount of the Eurodollar Loans having Interest Periods that end after
such principal payment date shall be equal to or less than the amount of the
Term Loans scheduled to be outstanding hereunder after such principal payment
date.
"Investments" has the meaning specified in Section 9.5.
"Issuing Bank" means Xxxxx Fargo or such other Lender which is a
commercial bank as Kitty Hawk and Agent may mutually designate from time to
time which agrees to be the issuer of a Letter of Credit.
"Kalitta Companies" means AIA, AIT, FOL, KFS and OK, and "Kalitta
Company" means any of such corporations.
"KFS" means as specified in the introductory paragraph of this
Agreement.
"Kitty Hawk" means as specified in the introductory paragraph of this
Agreement.
"Kitty Hawk Aircraft" means, collectively, AIA Aircraft and
Non-Collateral Aircraft.
"Kitty Hawk Companies" means, collectively, Kitty Hawk, Aircargo,
Charters, Leasing and Skyfreighters, and "Kitty Hawk Company" means any of such
corporations.
"Leasing" means as specified in the introductory paragraph of this
Agreement.
"Lender" and "Lenders" means as specified in the introductory
paragraph of this Agreement, and includes, without limitation unless otherwise
provided herein, any Lender in its status as an Issuing Bank.
"Letter of Credit" means any standby letter of credit issued by the
Issuing Bank for the account of Kitty Hawk pursuant to this Agreement.
"Letter of Credit Agreement" means, with respect to each Letter of
Credit to be issued by the Issuing Bank therefor, the letter of credit
application and reimbursement agreement which such
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 22
29
Issuing Bank requires to be executed by Kitty Hawk in connection with the
issuance of such Letter of Credit.
"Letter of Credit Liabilities" means, at any time, the aggregate
undrawn face amounts of all outstanding Letters of Credit and all unreimbursed
drawings under Letters of Credit.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment, preference,
priority or other encumbrance of any kind or nature whatsoever (including,
without limitation, any conditional sale or title retention agreement), whether
arising by contract, operation of law or otherwise.
"Loans" means the Revolving Credit Loans and the Term Loans, and
"Loan" means any of the Revolving Credit Loans or the Term Loans.
"Loan Documents" means this Agreement, the Notes, the Security
Documents, the Letters of Credit, the Letter of Credit Agreements and any and
all other promissory notes, chattel mortgages, deeds of trust, security
agreements, assignments, financing statements, guaranties and other agreements,
documents, instruments and certificates now or hereafter executed and/or
delivered pursuant to or in connection with any of the foregoing and any and
all amendments, modifications, supplements, renewals, extensions or
restatements thereof.
"Material Adverse Effect" means the occurrence of any event or the
existence of any condition that has materially and adversely affected, or is
reasonably expected (given the totality of circumstances then existing) to have
a material adverse effect on: (a) the Properties, business, operations,
financial condition or performance, cash flow, liabilities or capitalization of
Kitty Hawk or any of its Subsidiaries; (b) the ability of Kitty Hawk or any of
its Subsidiaries to pay and perform when due its Obligations under any Loan
Document to which it is a party; (c) the value or condition of the AIA Aircraft
taken as a whole; or (d) the validity or enforceability of (i) any of the Loan
Documents, (ii) any Lien created or purported to be created by any of the Loan
Documents or the required priority of any such Lien, or (iii) the rights and
remedies of Agent or Lenders under any of the Loan Documents.
"Material Contracts" means, as to any Person, any supply, purchase,
service, employment, tax, indemnity, shareholder or other agreement or contract
which is deemed to be a material contract of such Person as provided in
Regulation S-K promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended, and any and all amendments, modifications,
supplements, renewals or restatements thereof.
"Maturity Date" means the Revolving Credit Loans Maturity Date or the
Term Loans Maturity Date, as the case may be.
"Maximum Rate" means, with respect to any Lender, the maximum
non-usurious interest rate, if any, that any time or from time to time may be
contracted for, taken, reserved, charged or received with respect to the
particular Obligations as to which such rate is to be determined, payable to
such Lender pursuant to this Agreement or any other Loan Document, under laws
applicable to such
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 23
30
Lender which are presently in effect or, to the extent allowed by law, under
such applicable laws which may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than applicable laws now allow. The Maximum
Rate shall be calculated in a manner that takes into account any and all fees,
payments and other charges in respect of the Loan Documents that constitute
interest under applicable law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the Maximum Rate
shall take effect without notice to Kitty Hawk or any other Company at the time
of such change in the Maximum Rate. For purposes of determining the Maximum
Rate under Texas law, the applicable rate ceiling shall be the weekly ceiling
described in, and computed in accordance with, Article 5069, Vernon's Texas
Civil Statutes, as amended and in effect from time to time, or any successor or
replacement statute; provided, however, that, to the extent permitted by
applicable law, Agent shall have the right to change the applicable rate
ceiling from time to time in accordance with applicable law.
"Merger" means the mergers of Wholly-Owned Subsidiaries of Kitty Hawk
with and into AIA, AIT, FOL, KFS and OK in accordance with the Merger Agreement
and pursuant to which AIA, AIT, FOL, KFS and OK are the surviving entities.
"Merger Agreement" means as specified in Recital C.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by or are required
from any Company or any ERISA Affiliate since 1974 and which is covered by
Title IV of ERISA.
"Net Income" means, for any period, the net income (or loss) of the
Companies (or other applicable Person) for such period, determined on a
consolidated basis in accordance with GAAP.
"Net Proceeds" means, with respect to any Asset Disposition, (a) the
gross amount of cash received by Kitty Hawk or any of its Subsidiaries from
such Asset Disposition, minus (b) the amount, if any, of all taxes paid or
payable by Kitty Hawk or any of its Subsidiaries directly resulting from such
Asset Disposition (including the amount, if any, estimated by Kitty Hawk in
good faith at the time of such Asset Disposition for taxes payable by Kitty
Hawk or any of its Subsidiaries on or measured by net income or gain resulting
from such Asset Disposition), minus (c) the reasonable out-of-pocket costs and
expenses incurred by Kitty Hawk or such Subsidiary in connection with such
Asset Disposition (including reasonable brokerage fees paid to a Person other
than an Affiliate of Kitty Hawk) excluding any fees or expenses paid to an
Affiliate of Kitty Hawk, minus (d) amounts applied to the repayment of Debt
(other than the Obligations) secured by any Permitted Lien (if any) on the
Property subject to the Asset Disposition. "Net Proceeds" with respect to any
Asset Disposition shall also include proceeds (after deducting any amounts
specified in clauses (b), (c) and (d) of the preceding sentence) of insurance
with respect to any actual or constructive loss of Property, an agreed or
compromised loss of Property or the taking of any Property under the power of
eminent domain and condemnation awards and awards in lieu of condemnation for
the taking of Property under the power of eminent domain, except such proceeds
and awards as are released to and used by Kitty Hawk or any of its Subsidiaries
in accordance with Section 8.5. "Net Proceeds" means, with respect to any
Equity Issuance, (i) the gross amount of cash or cash equivalents plus the
gross value of all other consideration received from such Equity Issuance,
exclusive of the proceeds of sales of
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 24
31
Capital Stock of Kitty Hawk to employees or directors of Kitty Hawk or its
Subsidiaries in connection with the provision of compensation or benefits to
such employees or directors for their activities as such, minus (ii) the
out-of-pocket costs and expenses incurred by Kitty Hawk in connection with such
Equity Issuance (including any underwriting fees paid to a Person) excluding
any fees or expenses paid to an Affiliate of Kitty Hawk which are in excess of
those that would be paid or payable in connection with an arms' length
transaction with a Person who is not an Affiliate of Kitty Hawk.
"Net Worth" means, at any particular time, all amounts which, in
conformity with GAAP, would be included as stockholders' equity on a
consolidated balance sheet of Kitty Hawk and its Subsidiaries; provided,
however, there shall be excluded therefrom any amount at which shares of
Capital Stock of Kitty Hawk appear as an asset on Xxxxx Xxxx'x balance sheet.
"Non-Collateral Aircraft" means (a) any and all aircraft, engines,
propellers, appliances and Parts hereafter owned by Kitty Hawk or any of its
Subsidiaries that (i) are not subject to any Lien in favor of Agent securing
any Obligation and (ii) are not required to be subject to such a Lien in
accordance with this Agreement or any other Loan Document, and (b) all products
and proceeds thereof other than accounts (including, without limitation,
Receivables), chattel paper, general intangibles and other personal property
referred to in Section 5.1.
"Note Offering" means as specified in Recital E.
"Notes" means the Revolving Credit Loans Notes and the Term Loans
Notes and any and all amendments, modifications, supplements, renewals,
extensions, restatements or replacements thereof and all substitutions therefor
(including promissory notes issued by Kitty Hawk pursuant to Section 13.8), and
"Note" means any one of such promissory notes.
"Obligations" means any and all (a) indebtedness, liabilities and
obligations of Kitty Hawk and its Subsidiaries, or any of them, to Agent, the
Issuing Bank and Lenders, or any of them, evidenced by and/or arising pursuant
to any of the Loan Documents (including, without limitation, the Guaranties),
now existing or hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint
and several, including, without limitation, (i) the obligations of Kitty Hawk
and its Subsidiaries, or any of them, to repay the Loans and the Reimbursement
Obligations, to pay interest on the Loans and the Reimbursement Obligations
(including, without limitation, interest accruing after any, if any,
bankruptcy, insolvency, reorganization or similar filing) and to pay all fees,
indemnities, costs and expenses (including attorneys' fees and expenses)
provided for in the Loan Documents and (ii) the indebtedness constituting the
Loans, the Reimbursement Obligations and interest accrued thereon and such
fees, indemnities, costs and expenses, and (b) liabilities and obligations of
Kitty Hawk and its Subsidiaries, or any of them, under any interest rate swap,
cap or collar agreement or similar arrangement between Kitty Hawk or any of its
Subsidiaries and another Person providing for the transfer or mitigation of
interest rate risks approved by Agent and Required Lenders as being a part of
the "Obligations" hereunder.
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32
"Offering Memorandum" means that certain Offering Memorandum issued
November 19, 1997, by Kitty Hawk relating to the Senior Notes.
"OK" means as specified in the introductory paragraph of this
Agreement.
"Operating Lease" means, with respect to any Person, any lease, rental
or other agreement for the use by that Person of any Property which is not a
Capital Lease Obligation.
"Operating Lease Expense" means, with respect to any Person, means all
payments of such Person with respect to any Operating Lease.
"Operating Subsidiaries" means, collectively, Aircargo, Leasing,
Charters, AIA, AIT, FOL, KFS, OK, AIC and any other Subsidiary of Kitty Hawk
that is an operating company, and "Operating Subsidiary" means any of such
corporations.
"Outstanding Revolving Credit" means, at any particular time, the sum
of (a) the aggregate outstanding principal amount of the Revolving Credit
Loans, plus (b) all Letter of Credit Liabilities.
"Parts" means all parts, appliances (including, without limitation,
communication equipment and other equipment capable of being used, or intended
to be used, in operating or controlling aircraft in flight), components,
instruments, appurtenances, accessories, furnishings, instruments and other
equipment of whatever nature (other than completed engines) which may be from
time to time, or are suitable for, attachment to, installation in or other
incorporation in an airframe or engine, in each case prior to the time of such
attachment, installation or other incorporation.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Payor" means as specified in Section 3.4.
"Pension Plan" means an employee pension benefit plan as defined in
Section 3(2) of ERISA (including a Multiemployer Plan) which is subject to the
funding requirements under Section 302 of ERISA or Section 412 of the Code, in
whole or in part, and which is maintained or contributed to currently or at any
time within the six years immediately preceding the Closing Date or, in the
case of a Multiemployer Plan, at any time since September 2, 1974, by Kitty
Hawk or any of its Subsidiaries or ERISA Affiliates for employees of Kitty Hawk
or any of its Subsidiaries or ERISA Affiliates.
"Peril" means as specified in Section 8.5(a).
"Permit" means any permit, certificate, approval, order, license or
other authorization.
"Permitted Holders" means (a) the officers and directors of the
Companies as of the Closing Date, (b) all other individuals who own Capital
Stock of Kitty Hawk on the Closing Date, and (c) any spouse, parent, sibling,
child or grandchild of any of the aforesaid individuals (in each case, whether
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 26
33
such relationship arises from birth, adoption or through marriage) or any trust
established for the benefit of any such individuals or any spouse, parent,
sibling, child or grandchild of any such individuals (in each case whether such
relationship arises from birth, adoption or through marriage).
"Permitted Liens" means:
(a) Liens in favor of Agent (for the benefit of Agent and
Lenders) securing the Obligations pursuant to the Loan Documents;
(b) Liens in favor of the Trustee securing the Debt
evidenced by the Senior Notes, which Liens are required to be granted
in accordance with the Indenture (including Section 15.05 of the
Indenture), as the Indenture is in effect as of the Closing Date (or
may thereafter be amended with the prior written consent of Agent and
Required Lenders, which consent of Agent and Required Lenders shall
not be deemed given by Section 9.13);
(c) Liens for taxes, assessments or other governmental
charges which (i) are not delinquent or (ii) are being contested in
good faith by appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the Property subject to
such Liens, and for which adequate reserves have been established in
accordance with GAAP;
(d) Eurocontrol Liens, landing fee Liens, Liens of
mechanics, materialmen and artisans and other similar statutory
Liens, which Liens (in each case) secure obligations incurred in the
ordinary course of business, which (i) are not yet due or (ii) are
being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of
the Property subject to such Liens, and for which adequate reserves
have been established in accordance with GAAP;
(e) Purchase-money Liens on any Property hereafter
acquired or the assumption after the Closing Date of any Lien on
Property existing at the time of such acquisition (and not created in
contemplation of such acquisition), or a Lien incurred after the
Closing Date in connection with any conditional sale or other title
retention agreement or Capital Lease Obligation; provided that:
(i) any Property subject to the foregoing is
acquired by Kitty Hawk or any of its Subsidiaries in the
ordinary course of its respective business and the Lien on the
Property attaches concurrently or within 90 days after the
acquisition thereof;
(ii) the Debt secured by any Lien so created,
assumed or existing shall not exceed the lesser of the cost or
fair market value at the time of acquisition of the Property
covered thereby;
(iii) each such Lien shall attach only to the
Property so acquired and the proceeds thereof; and
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34
(iv) the Debt secured by all such Liens shall not
exceed $75,000,000 at any time outstanding in the aggregate;
(f) Liens existing as of the Closing Date and identified
on Schedule 1.1(c); and
(g) Any extension, renewal or replacement of any of the
foregoing, provided that Liens permitted hereunder shall not be
extended or spread to cover any additional indebtedness or Property;
provided, however, that (i) none of the Liens referred to in clauses (b) or (f)
preceding may attach or relate to any Collateral, (ii) none of the Liens
referred to in clause (e) preceding may attach or relate to any AIA Aircraft,
Receivables or Parts, (iii) none of the Permitted Liens that attach or relate
to any Collateral may have a priority equal to or greater than the priority of
the Permitted Liens referred to in clause (a) preceding, and (iv) none of the
Permitted Liens, except those referred to in clause (a) preceding, may attach
or relate to any Capital Stock issued by any Subsidiary of Kitty Hawk.
"Person" means any individual, corporation, trust, association,
company, partnership, joint venture, limited liability company, Governmental
Authority, or other entity.
"Plan" means any employee benefit plan as defined in Section 3(3) of
ERISA established or maintained or contributed to by any Company or any ERISA
Affiliate, including any Pension Plan.
"Prime Rate" means, at any time, the rate of interest per annum then
most recently announced within Xxxxx Fargo, at the principal office of its
affiliated bank in San Francisco, California, as its highest commercial prime
rate then in effect, which rate (a) is one of its base rates and serves as the
basis upon which effective rates of interest are calculated for loans making
reference thereto, (b) may not be the lowest rate of interest charged by Xxxxx
Fargo to its commercial borrowers, and (c) is evidenced by the recording
thereof after such announcement in such internal publication or publications as
Xxxxx Fargo may designate from time to time. Each change in any interest rate
provided for herein based upon the Prime Rate resulting from a change in the
Prime Rate shall take effect at the time such change is announced within Xxxxx
Fargo and without notice to Kitty Hawk or any of its Subsidiaries at the time
of such change in the Prime Rate.
"Principal Office" means the principal office of Agent in Dallas,
Texas, presently located at 0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000.
"Prior Credit Agreement" means as specified in Recital A.
"Prior Lenders" means Xxxxx Fargo and Bank One in their capacities as
lenders under the Prior Credit Agreement.
"Prohibited Transaction" means any transaction set forth in Section
406 of ERISA or Section 4975 of the Code.
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35
"Pro Forma Balance Sheet" means the pro forma balance sheet of Kitty
Hawk and its consolidated Subsidiaries dated as of September 30, 1997 after
giving effect to the initial Loans under this Agreement and the Related
Transactions.
"Projections" means the financial projections of Kitty Hawk and its
Subsidiaries dated as of the Closing Date and delivered to Agent.
"Property" means, unless the context otherwise requires, property of
all kinds, real, personal or mixed, tangible or intangible (including, without
limitation, all rights relating thereto), whether owned or acquired on or after
the Closing Date.
"Public Offering" means a public offering of any Capital Stock of
Kitty Hawk.
"Quarterly Payment Date" means the last day of each March, June,
September and December of each year, commencing December 31, 1997.
"Receivables" means, as at any date of determination thereof, each and
every "account" as such term is defined in the UCC and includes, without
limitation, the unpaid portion of the obligation, as stated on the respective
invoice, or, if there is no invoice, other writing, of a customer of any
Company in respect of goods sold and shipped or services rendered by a Company.
"Reference Lender" means Xxxxx Fargo.
"Register" has the meaning specified in Section 13.8(d).
"Registration Statement" means that certain Amendment No. 3 to Form
S-1, Registration No. 333-36125, filed with the SEC on November 12, 1997,
relating to the Common Stock Offering.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Lender, any change
after the Closing Date in any U.S. federal or state, or any foreign, laws or
regulations (including Regulation D) or the adoption or making after such date
of any interpretations, directives or requests applying to a class of lenders
including such Lender of or under any U.S. federal or state, or any foreign,
laws or regulations (whether or not having the force of law) by any
Governmental Authority charged with the interpretation or administration
thereof.
"Reimbursement Obligations" means the obligation of Kitty Hawk to
reimburse the Issuing Bank for any drawing under a Letter of Credit.
"Related Transactions" means, collectively, (a) the Merger, (b) the
Common Stock Offering, (c) the Note Offering, and (d) the execution, delivery
and performance of the Related Transactions Documents.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 29
36
"Related Transactions Documents" means, collectively, (a) the Merger
Agreement, (b) the Registration Statement, (c) the Offering Memorandum, (d) the
Indenture, and (e) all other agreements, documents, instruments and
certificates executed and/or delivered pursuant to or in connection with the
Related Transactions.
"Release" means, as to any Person, any release, spill, emission,
leaking, pumping, injection, deposit, discharge, disposal, disbursement,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment or into or out of Property owned by such Person, including, without
limitation, the movement of Hazardous Materials through or in the air, soil,
surface water or ground water.
"Remedial Action" means all actions required to (a) clean up, remove,
respond to, treat or otherwise address Hazardous Materials in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release of Hazardous Materials so that they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) perform studies and investigations on the extent and
nature of any actual or suspected contamination, the remedy or remedies to be
used or health effects or risks of such contamination, or (d) perform
post-remedial monitoring, care or remedy of a contaminated site.
"Reportable Event" means any of the events set forth in Section 4043
of ERISA.
"Required Lenders" means, at any date of determination, Lenders having
in the aggregate at least 66 2/3% (in Dollar amount as to any one or more of
the following) of the sum of (a) the aggregate outstanding Revolving Credit
Loans Commitments (or, if such Revolving Credit Loans Commitments have
terminated or expired, the aggregate outstanding principal amount of the
Revolving Credit Loans and Letter of Credit Liabilities), plus (b) the
aggregate outstanding principal amount of the Term Loans.
"Required Payment" means as specified in Section 3.4.
"Reserve Requirement" means, for any Eurodollar Loan of any Lender for
any Interest Period therefor, the maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under any regulations of the Board of Governors of
the Federal Reserve System (or any successor) by such Lender for deposits
exceeding $1,000,000 against "Eurocurrency Liabilities" as such term is used in
Regulation D. Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
Lenders by reason of any Regulatory Change against (a) any category of
liabilities which includes deposits by reference to which the Eurodollar Rate
or the Adjusted Eurodollar Rate is to be determined or (b) any category of
extensions of credit or other assets which include Eurodollar Loans.
"Responsible Officer" means, as to Kitty Hawk or any of its
Subsidiaries, the chief financial officer, chief operating officer or chief
executive officer of such Person.
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37
"Restricted Payment" means (a) any dividend or other distribution
(whether in cash, Property or obligations), direct or indirect, on account of
(or the setting apart of money for a sinking or other analogous fund for) any
shares of any class of Capital Stock of Kitty Hawk or any of its Subsidiaries
now or hereafter outstanding, except a dividend payable solely in shares of
that class of stock to the holders of that class; (b) any redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
Capital Stock of Kitty Hawk or any of its Subsidiaries now or hereafter
outstanding; (c) any payment or prepayment of principal of, premium, if any, or
interest on, or any redemption, conversion, exchange, purchase, retirement or
defeasance of, or payment with respect to, any Subordinated Debt; (d) any loan,
advance or payment to any officer, director or shareholder of Kitty Hawk or any
of its Subsidiaries (other than as may be made in the ordinary course of
business to Kitty Hawk as a shareholder), exclusive of reasonable compensation
paid to officers or directors paid in the ordinary course of business; and (e)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of Kitty Hawk or any of its Subsidiaries now or hereafter outstanding.
"Revolving Credit Loans" means as specified in Section 2.1(a).
"Revolving Credit Loans Commitment" means, as to any Lender, the
obligation of such Lender, in accordance with this Agreement, to make or
continue Revolving Credit Loans and to incur or participate in Letter of Credit
Liabilities hereunder in an aggregate principal amount at any one time
outstanding up to but not exceeding the amount set forth opposite the name of
such Lender on the signature pages hereto under the heading "Revolving Credit
Loans Commitment" or, if such Lender is a party to an Assignment and
Acceptance, the amount of the "Revolving Credit Loans Commitment" set forth in
the most recent Assignment and Acceptance of such Lender, as the same may be
reduced or terminated pursuant to Section 2.13 or 11.2, and "Revolving Credit
Loans Commitments" means such obligations of all Lenders. As of the Closing
Date, the aggregate principal amount of the Revolving Credit Loans Commitments
is $100,000,000.
"Revolving Credit Loans Lender" means, as of any date of
determination, each Lender which has a Revolving Credit Loans Commitment or (if
such Commitment has terminated or expired) which is the holder of (or is owed
by Kitty Hawk any Debt evidenced by) any of the Revolving Credit Loans Notes.
"Revolving Credit Loans Maturity Date" means November 19, 2002.
"Revolving Credit Loans Notes" means the promissory notes, in the form
of Exhibit C hereto, made by Kitty Hawk evidencing the Revolving Credit Loans.
"SEC" means the Securities and Exchange Commission, or any successor
agency thereto.
"Securities" means any and all securities and other equity rights or
ownership interests of any type or character in any Person which is not a
natural Person, including, without limitation, (a) Capital Stock or other
equity rights, bonds, notes or other instruments convertible into Capital Stock
or other
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 31
38
equity interests, (b) options, warrants or other rights to acquire Capital
Stock or other equity interests, and (c) partnership and joint venture
interests.
"Security Agreements" means (a) security agreements, pledge agreements
and other agreements, documents or instruments executed by the Companies and
any Subsidiaries of Kitty Hawk dated the Closing Date (or such other date as
any Company or such Subsidiary may execute such Security Agreement), (b) any
such agreement, document or instrument at any time executed pursuant to Article
5 hereof, evidencing or creating a Lien on the Collateral as security for the
Obligations and in form and substance reasonably satisfactory to Agent, and (c)
any and all amendments, modifications, supplements, renewals, extensions,
restatements or replacements thereof.
"Security Documents" means the Guaranties, Aircraft Mortgages and the
Security Agreements, as they may be amended, modified, supplemented, renewed,
extended, restated or replaced from time to time, and any and all other
agreements, deeds of trust, mortgages, chattel mortgages, security agreements,
pledges, guaranties, assignments of proceeds, assignments of income,
assignments of contract rights, assignments of partnership interests,
assignments of royalty interests, assignments of performance or other
collateral assignments, completion or surety bonds, standby agreements,
subordination agreements, undertakings and other agreements, documents,
instruments and financing statements now or hereafter executed and/or delivered
by Kitty Hawk or any of its Subsidiaries in connection with or as security or
assurance for the payment or performance of the Obligations or any part
thereof.
"Senior Notes" means as specified in Recital E.
"Skyfreighters" means as specified in the introductory paragraph of
this Agreement.
"Solvent" means, with respect to any Person as of the date of any
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not intend to,
and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (e) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's Property would constitute
unreasonably small capital after giving due consideration to current and
anticipated future capital requirements and current and anticipated future
business conduct and the prevailing practice in the industry in which such
Person is engaged. In computing the amount of contingent liabilities at any
time, such liabilities shall be computed at the amount which, in light of the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Subordinated Debt" means any and all Debt of Kitty Hawk or any of its
Subsidiaries which is subordinate in right of payment to the payment of the
Obligations or any portion thereof.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 32
39
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which at least a majority of the outstanding shares of stock or
other ownership interests having by the terms thereof ordinary voting power to
elect a majority of the board of directors (or Persons performing similar
functions) of such corporation or entity (irrespective of whether or not at the
time, in the case of a corporation, stock of any other class or classes of such
corporation shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned or controlled by
such Person or one or more of its Subsidiaries or by such Person and one or
more of its Subsidiaries.
"Term Loans" means as specified in Section 2.1(b).
"Term Loans Commitment" means, as to any Lender, the obligation of
such Lender to make or continue Term Loans hereunder in an aggregate principal
amount up to but not exceeding the amount set forth opposite the name of such
Lender on the signature pages hereto under the heading "Term Loans Commitment",
as the same may be terminated pursuant to Section 11.2, and "Term Loans
Commitments" means such obligations of all Lenders. As of the Closing Date,
the aggregate principal amount of the Term Loans Commitments is $45,900,000.
"Term Loans Lenders" means, as of any date of determination, each
Lender which has a Term Loans Commitment or (if such Commitment has terminated
or expired) which is the holder of (or is owed by Kitty Hawk any Debt evidenced
by) any of the Term Loans Notes.
"Term Loans Maturity Date" means November 19, 2002.
"Term Loans Notes" means the promissory notes made by Kitty Hawk
evidencing the Term Loans, in the form of Exhibit D hereto.
"Title Company" means Federal Aviation Title and Guaranty Company,
Oklahoma City, Oklahoma.
"Trustee" means Bank One, NA, as Trustee under the Indenture, and any
successor trustee thereunder.
"Type" means any type of Loan (i.e., Base Rate Loan or Eurodollar
Loan).
"UCC" means the Uniform Commercial Code as in effect in the State of
Texas and/or any other jurisdiction, the laws of which may be applicable to or
in connection with the creation, perfection or priority of any Lien on any
Property created pursuant to any Security Document.
"U.S." means the United States of America.
"Xxxxx Fargo" means as specified in the introductory paragraph of this
Agreement.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 33
40
"Wholly-Owned Subsidiary" means, with respect to any Person, a
Subsidiary of such Person all of whose outstanding Capital Stock is owned by
such Person and/or one or more of its Wholly-Owned Subsidiaries.
Section 1.2 Other Definitional Provisions. All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. The words "hereof", "herein" and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as
a whole and not to any particular provision of this Agreement. Unless
otherwise specified, all Article, Section and Recital references pertain to
this Agreement. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
Section 1.3 Accounting Terms and Determinations.
(a) All accounting terms not specifically defined herein
shall be construed in accordance with GAAP (subject to year end
adjustments, if applicable) consistent with such accounting principles
applied in the preparation of the audited financial statements
referred to in Section 7.2(a). All financial information delivered to
Agent pursuant to Section 8.1 shall be prepared in accordance with
GAAP (subject to year end adjustments, if applicable) applied on a
basis consistent with such accounting principles applied in the
preparation of the audited financial statements referred to in Section
7.2(a) or in accordance with Section 8.7.
(b) Kitty Hawk shall deliver to Agent and Lenders, at the
same time as the delivery of any annual or quarterly financial
statement under Section 8.1, (i) a description, in reasonable detail,
of any material variation between the application of GAAP employed in
the preparation of the next preceding annual or quarterly financial
statements as to which no objection has been made in accordance with
the last sentence of subsection (a) preceding and (ii) reasonable
estimates of the difference between such statements arising as a
consequence thereof.
(c) To enable the ready and consistent determination of
compliance with the covenants set forth in this Agreement (including
Article 10 hereof), neither Kitty Hawk nor any of its Subsidiaries
will change the last day of its fiscal year from December 31st or the
last days of its first three fiscal quarters from March 31st, June
30th and September 30th, respectively.
Section 1.4 Financial Covenants and Reporting. The financial
covenants contained in Article 10 shall be calculated on a consolidated basis
for Kitty Hawk and its Subsidiaries.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 34
41
ARTICLE 2
Loans
Section 2.1 Commitments.
(a) Revolving Credit Loans. Subject to the terms and
conditions of this Agreement (including, without limitation, Section
2.13), each Revolving Credit Loans Lender severally agrees to make one
or more revolving credit loans to Kitty Hawk from time to time from
and including the Closing Date to but excluding the Revolving Credit
Loans Maturity Date in an aggregate principal amount outstanding not
to exceed the positive remainder of (i) the amount of such Lender's
Revolving Credit Loans Commitment as then in effect, minus (ii) such
Lender's Commitment Percentage of the Letter of Credit Liabilities
then outstanding (such revolving credit loans referred to in this
Section 2.1(a) now or hereafter made by Lenders to Kitty Hawk from and
including and after the Closing Date are hereinafter collectively
called the "Revolving Credit Loans"); provided, however, that the
Outstanding Revolving Credit shall not at any time exceed the
Borrowing Base then most recently determined. Subject to the
foregoing limitations and the other terms and conditions of this
Agreement, Kitty Hawk may borrow, repay and reborrow the Revolving
Credit Loans hereunder prior to the Revolving Credit Loans Maturity
Date. The Borrowing Base shall be determined in good faith by Agent
as of the Closing Date and shall be redetermined in good faith by
Agent monthly thereafter within five Business Days after the delivery,
or the required date of delivery, of the Borrowing Base Report to be
delivered in accordance with Section 8.1(e), subject to Agent's right
to redetermine the Borrowing Base in accordance with the immediately
succeeding sentence; provided, however, that, until the earlier to
occur of delivery of the initial Borrowing Base Report in accordance
with Section 8.1(e) or January 19, 1998, the Borrowing Base shall be
deemed to be 65% of Eligible Receivables (as determined in good faith
by Agent) and the Borrowing Base thereafter shall be calculated based
upon the applicable Advance Rate for Eligible Receivables and Eligible
Parts. In addition, the Borrowing Base may be redetermined at any
time and from time to time by Agent in good faith upon the occurrence
and during the continuation of a Default.
(b) Term Loans. Subject to the terms and conditions of
this Agreement, each Term Loans Lender severally agrees to make a
term loan to Kitty Hawk in a single disbursement on the Closing Date
in an amount equal to such Lender's Term Loans Commitment (such term
loans referred to in this Section 2.1(b) made by the Term Loans
Lenders to Kitty Hawk are hereinafter collectively called the "Term
Loans"). The Term Loans Commitments shall terminate upon the making
of the Term Loans. Kitty Hawk agrees to borrow the Term Loans on the
Closing Date for the purpose of refinancing the AIA Fleet Advance as
specified in the first sentence of Section 2.10(b).
(c) Continuation and Conversion of Loans. Subject to the
terms of this Agreement, Kitty Hawk may borrow the Loans as Base Rate
Loans or Eurodollar Loans and, until the respective Maturity Date
thereof, Kitty Hawk may Continue Eurodollar Loans or Convert Loans of
one Type into Loans of the other Type.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 35
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(d) Lending Offices. Loans of each Type made by each
Lender shall be made and maintained at such Lender's Applicable
Lending Office for Loans of such Type.
Section 2.2 The Notes. The Revolving Credit Loans made by each
Revolving Credit Loans Lender shall be evidenced by a single promissory note of
Kitty Hawk in substantially the form of Exhibit C hereto, dated the Closing
Date, payable to the order of such Lender in a principal amount equal to its
Revolving Credit Loans Commitment as originally in effect, and otherwise duly
completed. The Term Loans made by each Term Loans Lender shall be evidenced by
a single promissory note of Kitty Hawk in substantially the form of Exhibit D
hereto, dated the Closing Date, payable to the order of such Lender in a
principal amount equal to its Term Loans Commitment as originally in effect,
and otherwise duly completed. Each Lender is hereby authorized by Kitty Hawk
to endorse on the schedule (or a continuation thereof) attached to each Note of
such Lender, to the extent applicable, the date, amount and Type of and the
Interest Period for each Loan made by such Lender to Kitty Hawk and the amount
of each payment or prepayment of principal of such Loan received by such
Lender, provided that any failure by such Lender to make any such endorsement
shall not affect the obligations of Kitty Hawk or any other Company under such
Note or this Agreement in respect of such Loan.
Section 2.3 Repayment of Loans.
(a) Kitty Hawk shall pay to Agent for the account of the
Revolving Credit Loans Lenders the entire outstanding principal of the
Revolving Credit Loans (and the entire outstanding principal of the
Revolving Credit Loans shall be due and payable in full) on the
Revolving Credit Loans Maturity Date.
(b) Kitty Hawk shall pay to Agent for the account of the
Term Loans Lenders the entire outstanding principal of the Term Loans
(and the entire outstanding principal of the Term Loans shall be due
and payable in full) in 16 installments, commencing on March 31, 1999
and continuing on each Quarterly Payment Date thereafter through and
including September 30, 2002 and ending on the Term Loans Maturity
Date, each of which installments, other than the final installment due
on the Term Loans Maturity Date, shall be in the amount of $2,250,000
and the final of which installments (due on the Term Loans Maturity
Date) shall be in the amount equal to the then unpaid principal amount
of the Term Loans.
Section 2.4 Interest.
(a) Interest Rate. Kitty Hawk shall pay to Agent for the
account of each applicable Lender interest on the unpaid principal
amount of each Loan made by such Lender to Kitty Hawk for the period
commencing on the date of such Loan to but excluding the date such
Loan shall be paid in full, at the following rates per annum:
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 36
43
(i) during the periods any such Loan is a Base
Rate Loan, the lesser of (A) the Base Rate plus the Applicable
Base Rate Margin or (B) the Maximum Rate; and
(ii) during the periods any such Loan is a
Eurodollar Loan, the lesser of (A) the Eurodollar Rate plus
the Applicable Eurodollar Margin or (B) the Maximum Rate.
(b) Payment Dates. Accrued interest on the Loans shall
be due and payable as follows:
(i) in the case of Base Rate Loans, on each
Quarterly Payment Date;
(ii) in the case of each Eurodollar Loan, on the
last day of the Interest Period with respect thereto and, in
the case of an Interest Period greater than three months, at
three-month intervals after the first day of such Interest
Period;
(iii) upon the payment or prepayment (whether
mandatory or optional) of any Loan or the Conversion of any
Loan to a Loan of the other Type (but only on the principal
amount so paid, prepaid or Converted); and
(iv) on the Maturity Date for such Loan.
(c) Default Interest. Notwithstanding the foregoing,
Kitty Hawk shall pay to Agent for the account of each applicable
Lender interest at the applicable Default Rate (i) at all times during
which any Event of Default has occurred and is continuing, on any
principal of any Loan or Reimbursement Obligation outstanding and (ii)
on any principal of any Loan or any Reimbursement Obligation
outstanding and (to the fullest extent permitted by law) any other
amount payable by Kitty Hawk or any other Company under this Agreement
or any other Loan Document to or for the account of such Lender, which
is not paid in full when due (whether at stated maturity, by
acceleration or otherwise), for the period from and including the due
date thereof to but excluding the date the same is paid in full.
Interest payable at the Default Rate shall be payable from time to
time on demand by Agent.
Section 2.5 Borrowing Procedure. Kitty Hawk shall give Agent
notice of each borrowing of Loans hereunder in accordance with Section 2.9.
Not later than 10:00 a.m. (San Francisco, California time) on the date
specified for each borrowing hereunder, each Lender will make available the
amount of the Loan to be made by it on such date to Agent, at the Applicable
Lending Office of Agent, in immediately available funds, for the account of
Kitty Hawk. The amount so received by Agent shall, subject to the terms and
conditions of this Agreement, be made available to Kitty Hawk promptly by wire
transfer of immediately available funds to the applicable Deposit Account;
provided, however, that the Term Loans shall be automatically applied by Agent
to refinance the existing indebtedness referred to in Section 2.10(b); and
provided, further, however, that the Term Loans shall be deemed to have been
automatically advanced under this Agreement for and on behalf of Kitty Hawk in
accordance with this Agreement if and when Agent determines that all conditions
precedent
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 37
44
set forth in Section 6.1 have been complied with to the satisfaction of Agent
and/or have been waived by Agent and, upon execution of this Agreement by Kitty
Hawk, Agent's determination regarding such automatic advancement shall be
deemed conclusive.
Section 2.6 Optional Prepayments, Conversions and Continuations
of Loans. Subject to Section 2.7, Kitty Hawk shall have the right from time to
time to prepay the principal of the Loans, to Convert all or part of a Loan of
one Type into a Loan of another Type or to Continue Eurodollar Loans; provided
that: (a) Kitty Hawk shall give Agent notice of each such prepayment,
Conversion or Continuation as provided in Section 2.9, (b) Eurodollar Loans may
only be Converted on the last day of the Interest Period, (c) except for
Conversions of Eurodollar Loans into Base Rate Loans, no Conversions or
Continuations shall be made while a Default has occurred and is continuing, and
(d) optional prepayments of the Term Loans shall be applied pro rata to the
then remaining installments of principal of the Term Loans.
Section 2.7 Mandatory Prepayments.
(a) Insurance Recovery. Kitty Hawk shall, within two
Business Days after any Insurance Recovery results in any Excess
Insurance Proceeds, pay (or cause to be paid) to Agent an aggregate
amount equal to such Excess Insurance Proceeds. The proceeds of any
Excess Insurance Proceeds shall be applied first to the Term Loans
and, after the Term Loans are paid in full, then to the Revolving
Credit Loans.
(b) Asset Dispositions. Kitty Hawk shall (i)
concurrently with any Asset Disposition of any Collateral, pay to
Agent an aggregate amount equal to 100% of the Net Proceeds resulting
from such Asset Disposition of such Collateral and (ii) concurrently
with any Asset Disposition of any other Property, pay to Agent an
aggregate amount equal to 100% of the Net Proceeds resulting from such
Asset Disposition of other Property if and to the extent the aggregate
of Net Proceeds from Asset Dispositions of all such other Property
exceeds $15,000,000 during the fiscal year in which such Asset
Disposition occurs. The proceeds of each such Asset Disposition
referred to in this Section 2.7(b) shall be applied first to the Term
Loans and, after the Term Loans are paid in full, then to the
Revolving Credit Loans. Nothing contained in this Section 2.7 shall
be construed to authorize or permit the sale or other disposition of
any Collateral other than in compliance with Section 9.8(a).
(c) Equity Issuances. Kitty Hawk shall, concurrently
with the consummation of each Equity Issuance after the Closing Date,
pay to Agent an aggregate amount equal to 50% of the Net Proceeds of
such Equity Issuance; provided, however, that Net Proceeds of any such
Equity Issuance which are, substantially concurrently with such Equity
Issuance, used by Kitty Hawk to pay all or any portion of the purchase
price payable with respect to any asset acquisition or stock
acquisition permitted in accordance with Section 9.3 shall be excluded
for purposes of this Section 2.7(c).
(d) Revolving Credit Loans. If at any time the
Outstanding Revolving Credit exceeds an amount equal to the lesser of
the Revolving Credit Loans Commitments then in effect or the Borrowing
Base then most recently determined or redetermined, within one
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 38
45
Business Day after the occurrence thereof Kitty Hawk shall pay to
Agent the amount of such excess as a prepayment of the Revolving
Credit Loans.
(e) Application of Mandatory Prepayments. All
prepayments pursuant to subsections (a), (b) and (c) preceding, if and
to the extent the same are required to be applied to the Term Loans in
accordance with such subsections, shall be applied pro rata to the
then remaining installments of principal of the Term Loans.
Section 2.8 Minimum Amounts. Except for Conversions pursuant to
Article 4, each borrowing and each Conversion of principal of the Revolving
Credit Loans shall be in an amount at least equal to (a) $5,000,000 or an
integral multiple of $1,000,000 in excess thereof with respect to Eurodollar
Loans or (b) $500,000 or an integral multiple of $100,000 in excess thereof
with respect to Base Rate Loans (borrowings, prepayments or Conversions of or
into Loans of different Types or, in the case of Eurodollar Loans, having
different Interest Periods at the same time hereunder shall be deemed separate
borrowings, prepayments and Conversions for purposes of the foregoing, one for
each Type or Interest Period). Furthermore, all optional prepayments of
principal of the Term Loans shall be in an amount equal to $5,000,000 or an
integral multiple of $1,000,000 in excess thereof.
Section 2.9 Certain Notices. Notices by Kitty Hawk to Agent of
terminations or reductions of Commitments, of borrowings, Conversions,
Continuations and prepayments of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by Agent not later
than 8:00 a.m. (San Francisco, California time) on the Business Day prior to
the date of the relevant termination, reduction, borrowing, Conversion,
Continuation or prepayment or the first day of such Interest Period specified
below:
--------------------------------------------------------------------------------
Number of
Notice Business Days
Prior
--------------------------------------------------------------------------------
Terminations or Reductions of Commitments 5
--------------------------------------------------------------------------------
Borrowings of Revolving Credit Loans as Base Rate Loans 1
--------------------------------------------------------------------------------
Borrowings of Revolving Credit Loans as Eurodollar Loans 3
--------------------------------------------------------------------------------
Conversions or Continuations of Loans 3
--------------------------------------------------------------------------------
Prepayments of Revolving Credit Loans which are Base Rate Loans 1
--------------------------------------------------------------------------------
Prepayments of Revolving Credit Loans which are Eurodollar Loans 3
--------------------------------------------------------------------------------
Prepayments of Term Loans 3
--------------------------------------------------------------------------------
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or prepayment shall specify the Loans to be borrowed,
Converted, Continued or prepaid and the amount (subject to Section 2.8 hereof)
and Type of the Loans to be borrowed, Converted, Continued or prepaid (and,
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 39
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in the case of a Conversion, the Type of Loans to result from such Conversion)
and the date of borrowing, Conversion, Continuation or prepayment (which shall
be a Business Day). Notices of borrowings, Conversions, Continuations or
prepayments shall be in the form of Exhibit E hereto, appropriately completed
as applicable. Each such notice of the duration of an Interest Period shall
specify the Loans to which such Interest Period is to relate. Agent shall
promptly notify Lenders of the contents of each such notice. In the event that
Kitty Hawk fails to select the Type of Loan, or the duration of any Interest
Period for any Eurodollar Loan, within the time period and otherwise as
provided in this Section 2.9, such Loan (if outstanding as Eurodollar Loan)
will be automatically Converted into a Base Rate Loan on the last day of the
preceding Interest Period for such Loan or (if outstanding as a Base Rate Loan)
will remain as, or (if not then outstanding) will be made as, a Base Rate Loan.
Kitty Hawk may not borrow any Eurodollar Loans, Convert any Loans into
Eurodollar Loans or Continue any Loans as Eurodollar Loans if the interest rate
for such Eurodollar Loans would exceed the Maximum Rate.
Section 2.10 Use of Proceeds.
(a) Kitty Hawk agrees with Agent and Lenders that (i) the
proceeds of the Revolving Credit Loans to be made on and after the
Closing Date shall be used by Kitty Hawk and its Wholly-Owned
Subsidiaries which are Guarantors and Operating Subsidiaries for
working capital and general corporate purposes and (ii) the Letters of
Credit requested to be issued pursuant to this Agreement shall be used
for insurance and contract performance by Kitty Hawk and its
Wholly-Owned Subsidiaries which are Guarantors and Operating
Subsidiaries and for other purposes approved by Agent.
(b) Kitty Hawk and Aircargo agree with Agent and Lenders
that the proceeds of the Term Loans shall be used by Kitty Hawk to pay
in full $45,900,000 of existing Debt representing the AIA Fleet
Advance owed by Kitty Hawk to Xxxxx Fargo under the Prior Credit
Agreement, and Kitty Hawk and Aircargo hereby irrevocably request that
Agent deliver all of such proceeds to Xxxxx Fargo (as agent under the
Prior Credit Agreement) to pay such indebtedness (and Xxxxx Fargo
agrees to apply such proceeds to pay such indebtedness). Kitty Hawk,
Aircargo, Agent and Lenders agree that, as of the Closing Date, the
aggregate outstanding principal amount of the Debt representing the
AIA Fleet Advance under the Prior Credit Agreement is $45,900,000.
(c) None of the proceeds of any Loan have been or will be
used to acquire any security in any transaction that is subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended,
or to purchase or carry any margin stock (within the meaning of
Regulations G, T, U or X of the Board of Governors of the Federal
Reserve System).
Section 2.11 Fees.
(a) Kitty Hawk agrees to pay to Agent for the account of
each Revolving Credit Loans Lender a commitment fee in the amount
equal to the product of (i) the daily average unused or unfunded
amount of such Lender's Revolving Credit Loans Commitment, for the
period from and including the Closing Date to and including the
Revolving Credit Loans
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 40
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Maturity Date, multiplied by (ii) the Applicable Commitment Fee Rate
per annum based on a 360 day year and the actual number of days
elapsed, which accrued commitment fees shall be payable in arrears on
each Quarterly Payment Date and on the Revolving Credit Loans Maturity
Date.
(b) Kitty Hawk agrees to pay to Agent for the account of
Xxxxx Fargo an up-front fee in the amount set forth in the Agent's
Letter, which fee shall be payable in such amounts and on such dates
as are specified therein (or, if the date for payment of any amount
thereof is not specified therein, on the Closing Date).
(c) Kitty Hawk agrees to pay to Agent, for its own
account, an annual agency fee in the amount set forth in the Agent's
Letter, which fee shall be payable in such amounts and on such dates
as specified therein.
Section 2.12 Computations. Interest and fees payable by Kitty
Hawk hereunder and under the other Loan Documents on all Loans shall be
computed on the basis of a year of 360 days (with respect to Eurodollar Loans)
or 365 or 366 days, as the case may be (with respect to Base Rate Loans) and
the actual number of days elapsed (including the first day but excluding the
last day) occurring in the period for which payable unless, in the case of
interest, such calculation would result in a usurious rate, in which case
interest shall be calculated on the basis of a year of 365 or 366 days, as the
case may be.
Section 2.13 Termination or Reduction of Commitments.
(a) Notwithstanding anything to the contrary contained in
this Agreement, the Revolving Credit Loans Commitments shall
automatically terminate at 8:00 a.m. (San Francisco, California time)
on the Revolving Loans Commitments Maturity Date and the Term Loans
Commitments shall automatically terminate upon the making of the Term
Loans on the Closing Date.
(b) Kitty Hawk shall have the right to terminate or
reduce in part the unused portion of the Revolving Credit Loans
Commitments at any time and from time to time, provided that (i) it
shall give notice of each such termination or reduction as provided in
Section 2.9 and (ii) each partial reduction shall be in an aggregate
amount at least equal to $5,000,000 or an integral multiple of
$100,000 in excess thereof. The Revolving Credit Loans Commitments
may not be reinstated after they have been terminated or increased
after they have been reduced.
Section 2.14 Letters of Credit.
(a) Subject to the terms and conditions of this
Agreement, Kitty Hawk may utilize the Revolving Credit Loans
Commitments by requesting that the Issuing Bank issue Letters of
Credit; provided, that the aggregate amount of outstanding Letter of
Credit Liabilities shall not at any time exceed $20,000,000 and no
Letter of Credit shall be issued if, after giving effect to the
issuance thereof, the Outstanding Revolving Credit would exceed the
Borrowing
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 41
48
Base then most recently determined. Upon the date of issue of each
Letter of Credit, the Issuing Bank shall be deemed, without further
action by any party hereto, to have sold to each Revolving Credit
Loans Lender, and each Revolving Credit Loans Lender shall be deemed,
without further action by any party hereto, to have purchased from the
Issuing Bank, a participation to the extent of such Revolving Credit
Loans Lender's Commitment Percentage of the Revolving Credit Loans
Commitments.
(b) Kitty Hawk shall give the Issuing Bank (with a copy
to Agent) at least five Business Days prior notice (effective upon
receipt and irrevocable unless appropriately revoked sufficiently
prior to issuance of the Letter of Credit) specifying the date of each
Letter of Credit and the nature of the transactions to be supported
thereby. Upon receipt of such notice and confirmation by the Issuing
Bank with Agent that such Letter of Credit may be issued in compliance
with this Agreement, the Issuing Bank shall promptly notify Agent of
the contents thereof and of each such Lender's Commitment Percentage
of the amount of the proposed Letter of Credit, and Agent shall
promptly thereupon notify the Revolving Credit Loans Lenders of such
information. In addition, the Issuing Bank shall promptly deliver to
the Agent a photocopy of such Letter of Credit. Each Letter of Credit
shall have an expiration date that does not exceed one year from the
date of issuance and that does not extend beyond the Revolving Credit
Loans Maturity Date, shall be payable in Dollars, shall support a
transaction entered into in the ordinary course of business of Kitty
Hawk or its Wholly-Owned Subsidiaries which are Guarantors and
Operating Subsidiaries, shall be satisfactory in form and substance to
the Issuing Bank, and shall be issued pursuant to such agreements,
documents and instruments (including a Letter of Credit Agreement) as
the Issuing Bank may reasonably require, none of which shall be
inconsistent with this Section 2.14. Each Letter of Credit shall (i)
provide for the payment of drafts presented for, on or thereunder by
the beneficiary in accordance with the terms thereof, when such drafts
are accompanied by the documents (if any) described in the Letter of
Credit and (ii) to the extent not inconsistent with the terms hereof
or any applicable Letter of Credit Agreement, be subject to the
Uniform Customs and Practice for Documentary Credits (1993 Revision),
International Chamber of Commerce Publication No. 500 (together with
any subsequent revision thereof approved by a Congress of the
International Chamber of Commerce and adhered to by the Issuing Bank,
the "UCP"), and shall, as to matters not governed by the UCP, be
governed by, and construed and interpreted in accordance with, the
laws of the State of Texas.
(c) Kitty Hawk agrees to pay to Agent for the account of
each Lender, in arrears on each Quarterly Payment Date (beginning on
December 31, 1997) and on the expiration date of each Letter of
Credit, a nonrefundable letter of credit fee with respect to each
Letter of Credit issued in an amount equal to the Applicable
Eurodollar Margin (as in effect from time to time) per annum of the
daily average face amount of the Letter of Credit in effect during the
period then ended. Agent agrees to pay to each Lender, promptly after
receiving any payment of such Letter of Credit fees, such Lender's
Commitment Percentage of such fees. Kitty Hawk agrees to pay to
Issuing Bank for its own account, concurrently with the issuance of
each Letter of Credit, a nonrefundable letter of credit fee with
respect to each Letter of Credit issued by the Issuing Bank in an
amount equal to one-quarter of one percent
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 42
49
(0.25%) of the face amount of the Letter of Credit issued. In
addition to the foregoing fees, Kitty Hawk shall pay or reimburse the
Issuing Bank for such normal and customary costs and expenses,
including, without limitation, administrative, issuance, amendment,
payment and negotiation charges, as are incurred or charged by the
Issuing Bank in issuing, effecting payment under, amending or
otherwise administering any Letter of Credit.
(d) Upon receipt from the beneficiary of any Letter of
Credit of any demand for payment or other drawing under such Letter of
Credit, the Issuing Bank shall promptly notify Kitty Hawk and each
Revolving Credit Loans Lender as to the amount to be paid as a result
of such demand or drawing and the respective payment date. If at any
time the Issuing Bank shall make a payment to a beneficiary of a
Letter of Credit pursuant to a drawing under such Letter of Credit,
each Revolving Credit Loans Lender will pay to the Issuing Bank,
immediately upon the Issuing Bank's demand at any time commencing
after such payment until reimbursement therefor in full by Kitty Hawk,
an amount equal to such Lender's Commitment Percentage of such
payment, together with interest on such amount for each day from the
date of such payment to the date of payment by such Lender of such
amount at a rate of interest per annum equal to the Federal Funds
Rate.
(e) Kitty Hawk shall be irrevocably and unconditionally
obligated to immediately reimburse the Issuing Bank for any amounts
paid by the Issuing Bank upon any drawing under any Letter of Credit,
without presentment, demand, protest or other formalities of any kind.
The Issuing Bank will pay to each Revolving Credit Loans Lender such
Revolving Credit Loans Lender's Commitment Percentage of all amounts
received from or on behalf of Kitty Hawk for application in payment,
in whole or in part, of the Reimbursement Obligation in respect of any
Letter of Credit, but only to the extent such Revolving Credit Loans
Lender has made payment to the Issuing Bank in respect of such Letter
of Credit pursuant to subsection (d) above. Outstanding Reimbursement
Obligations shall bear interest at the Default Rate and such interest
shall be payable on demand.
(f) The Reimbursement Obligations of Kitty Hawk under
this Agreement and the other Loan Documents shall be absolute,
unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement and the other Loan
Documents under all circumstances whatsoever, including, without
limitation, the following circumstances:
(i) Any lack of validity or enforceability of any
Letter of Credit or any other Loan Document;
(ii) Any amendment or waiver of or any consent to
departure from any Loan Document;
(iii) The existence of any claim, setoff,
counterclaim, defense or other right which Kitty Hawk or any
of its Subsidiaries or other Person may have at any time
against any beneficiary of any Letter of Credit, Agent, the
Issuing Bank, Lenders or
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 43
50
any other Person, whether in connection with this Agreement or
any other Loan Document or any unrelated transaction;
(iv) Any statement, draft or other document
presented under any Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect
whatsoever;
(v) Payment by the Issuing Bank under any Letter
of Credit against presentation of a draft or other document
that does not comply with the terms of such Letter of Credit,
provided, that such payment shall not have constituted gross
negligence or willful misconduct of the Issuing Bank; and
(vi) Any other circumstance whatsoever, whether or
not similar to any of the foregoing, provided that such other
circumstance or event shall not have been the result of the
gross negligence or willful misconduct of the Issuing Bank.
(g) Kitty Hawk assumes all risks of the acts or omissions
of any beneficiary of any Letter of Credit with respect to its use of
such Letter of Credit. Neither Agent, the Issuing Bank, Lenders nor
any of their respective officers or directors shall have any
responsibility or liability to Kitty Hawk or any other Person for: (a)
the failure of any draft to bear any reference or adequate reference
to any Letter of Credit, or the failure of any documents to accompany
any draft at negotiation, or the failure of any Person to surrender or
to take up any Letter of Credit or to send documents apart from drafts
as required by the terms of any Letter of Credit, or the failure of
any Person to note the amount of any instrument on any Letter of
Credit, (b) errors, omissions, interruptions or delays in transmission
or delivery of any messages, (c) the validity, sufficiency or
genuineness of any draft or other document, or any endorsement(s)
thereon, even if any such draft, document or endorsement should in
fact prove to be in any and all respects invalid, insufficient,
fraudulent or forged or any statement therein is untrue or inaccurate
in any respect, (d) the payment by the Issuing Bank to the beneficiary
of any Letter of Credit against presentation of any draft or other
document that does not comply with the terms of the Letter of Credit,
or (e) any other circumstance whatsoever in making or failing to make
any payment under a Letter of Credit; provided, however, that,
notwithstanding the foregoing, Kitty Hawk shall have a claim against
the Issuing Bank, and the Issuing Bank shall be liable to Kitty Hawk,
to the extent of any direct, but not indirect or consequential,
damages suffered by Kitty Hawk which Kitty Hawk proves in a final
nonappealable judgment were caused by (i) the Issuing Bank's willful
misconduct or gross negligence in determining whether documents
presented under any Letter of Credit complied with the terms thereof
or (ii) the Issuing Bank's willful failure to pay under any Letter of
Credit after presentation to it of documents strictly complying with
the terms and conditions of such Letter of Credit. The Issuing Bank
may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 44
51
(h) All letters of credit issued pursuant to the Prior
Credit Agreement which are outstanding as of the Closing Date shall be
deemed to be Letters of Credit issued pursuant to this Agreement,
which outstanding Letters of Credit are described in Schedule 2.14.
ARTICLE 3
Payments
Section 3.1 Method of Payment. All payments of principal,
interest, fees and other amounts to be made by Kitty Hawk or any Guarantor
under this Agreement or any other Loan Document shall be made via wire transfer
of funds to Agent c/o Wells Fargo Bank, NA, San Francisco, California, ABA #
1210-00248, for Account No. 4518-151709, Reference: Kitty Hawk, for the account
of each Lender's Applicable Lending Office in Dollars and in immediately
available funds, without setoff, deduction or counterclaim, not later than
11:00 a.m. (Dallas, Texas time) on the date on which such payment shall become
due (each such payment made after such time on such due date to be deemed to
have been made on the next succeeding Business Day). Kitty Hawk or such
Guarantor shall, at the time of making each such payment, specify to Agent the
sums payable by such Person under this Agreement or the other Loan Document to
which each such payment is to be applied (and in the event that such Person
fails to so specify, or if an Event of Default has occurred and is continuing
or if a Default would exist after the making of such payment, Agent may apply
such payment to such Person's Loans, Reimbursement Obligations and other
Obligations in such order and manner as Agent may elect, subject to Section
3.2). Upon the occurrence and during the continuation of an Event of Default,
all proceeds of any Collateral and all other funds of Kitty Hawk or any
Guarantor in the possession of Agent or any Lender may be applied by Agent to
the Obligations in such order and manner as Agent may elect, subject to the
provisions of Section 3.2 and 12.8. Notwithstanding the foregoing, however,
but subject to and except as otherwise provided in Section 12.8, if an Event of
Default has occurred and is continuing, Agent and Lenders agree among
themselves that all such payments, proceeds and funds, shall be applied (or, in
the case of Letter of Credit Liabilities consisting of the undrawn face amount
of Letters of Credit, held by Agent as cash collateral for application against)
pro rata to the Outstanding Revolving Credit and to the outstanding principal
amount of the Term Loans (based upon (a) the Outstanding Revolving Credit and
(b) the outstanding principal amount of the Term Loans, in each case as a
percentage of the sum of the Outstanding Revolving Credit plus the aggregate
outstanding principal amount of the Term Loans). Each payment received by
Agent under this Agreement or any other Loan Document for the account of a
Lender shall be paid promptly to such Lender, in immediately available funds,
for the account of such Lender's Applicable Lending Office. Whenever any
payment under this Agreement or any other Loan Document shall be stated to be
due on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest and commitment fee, as
the case may be.
Section 3.2 Pro Rata Treatment. Except to the extent otherwise
provided in this Agreement: (a) each Loan shall be made by Lenders under
Section 2.1, each payment of commitment fees under Section 2.11(a) shall be
made for the account of Lenders, and each termination or reduction of the
Commitments under Section 2.13 shall be applied to the appropriate Commitments
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 45
52
of the applicable Lenders, pro rata according to the respective unused
Commitments; (b) the making, Conversion and Continuation of Loans of a
particular Type (other than Conversions provided for by Section 4.4) shall be
made pro rata among Lenders holding Loans of such Type according to the amounts
of their respective appropriate Commitments; (c) each payment and prepayment by
Kitty Hawk of principal of or interest on Loans of a particular Type shall be
made to Agent for the account of Lenders holding Loans of such Type pro rata in
accordance with the respective unpaid principal amounts of such Loans held by
such Lenders; (d) Interest Periods for Loans of a particular Type shall be
allocated among Lenders holding Loans of such Type pro rata according to the
respective principal amounts held by such Lenders; and (e) Lenders (other than
the Issuing Bank) shall purchase participations in the Letters of Credit pro
rata in accordance with their respective Commitment Percentages of the
Revolving Credit Loans Commitments.
Section 3.3 Sharing of Payments, Etc. Subject to Section 12.8,
if a Lender shall obtain payment of any principal of or interest on any of the
Obligations due to such Lender hereunder through the exercise of any right of
setoff, banker's lien, counterclaim or similar right, or otherwise, it shall
promptly purchase from the other Lenders participations in the Obligations held
by other Lenders in such amounts, and make such adjustments from time to time,
as shall be equitable to the end that all Lenders shall share pro rata in
accordance with the unpaid principal and interest on the Obligations then due
to each of them. To such end, all Lenders shall make appropriate adjustments
among themselves (by the resale of participations sold or otherwise) if all or
any portion of such excess payment is thereafter rescinded or must otherwise be
restored. Each of Kitty Hawk and its Subsidiaries agrees, to the fullest
extent it may effectively do so under applicable law, that any Lender so
purchasing a participation in the Obligations by the other Lenders may exercise
all rights of setoff, banker's lien, counterclaim or similar rights with
respect to such participation as fully as if such Lender were a direct holder
of Obligations in the amount of such participation. Nothing contained herein
shall require any Lender to exercise any such right or shall affect the right
of any Lender to exercise, and retain the benefits of exercising, any such
right with respect to any other indebtedness, liability or obligation of Kitty
Hawk or any of its Subsidiaries.
Section 3.4 Non-Receipt of Funds by Agent. Unless Agent shall
have been notified by a Lender or Kitty Hawk ("Payor") prior to the date on
which such Lender is to make payment to Agent of the proceeds of a Loan to be
made by it hereunder or Kitty Hawk is to make a payment to Agent for the
account of one or more of Lenders, as the case may be (such payment being
herein called the "Required Payment"), which notice shall be effective upon
receipt, that Payor does not intend to make the Required Payment to Agent,
Agent may assume that the Required Payment has been made and may, in reliance
upon such assumption (but shall not be required to), make the amount thereof
available to the intended recipient on such date and, if Payor has not in fact
made the Required Payment to Agent, the recipient of such payment shall, on
demand, pay to Agent the amount made available to it together with interest
thereon in respect of the period commencing on the date such amount was so made
available by Agent until the date Agent recovers such amount at a rate per
annum equal to the Federal Funds Rate for such period.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 46
53
Section 3.5 Withholding Taxes.
(a) All payments by Kitty Hawk of principal of and
interest on the Loans and the Letter of Credit Liabilities and of all
fees and other amounts payable under the Loan Documents shall be made
free and clear of, and without deduction by reason of, any present or
future taxes, levies, duties, imposts, assessments or other charges
levied or imposed by any Governmental Authority (other than any taxes
imposed on the overall net income of Agent or any Lender or any
lending office of Agent or such Lender by any jurisdiction in which
Agent or such Lender or any such lending office is located). If any
such taxes, levies, duties, imposts, assessments or other charges are
so levied or imposed, Kitty Hawk will (i) make additional payments in
such amounts so that every net payment of principal of and interest on
the Loans and the Letter of Credit Liabilities and of all other
amounts payable by it under the Loan Documents, after withholding or
deduction for or on account of any such present or future taxes,
levies, duties, imposts, assessments or other charges (including any
tax imposed on or measured by net income of a Lender attributable to
payments made to or on behalf of a Lender pursuant to this Section 3.5
and any penalties or interest attributable to such payments), will not
be less than the amount provided for herein or therein absent such
withholding or deduction (provided that Kitty Hawk shall not have any
obligation to pay such additional amounts to any Lender to the extent
that such taxes, levies, duties, imposts, assessments or other charges
are levied or imposed by reason of the failure of such Lender to
comply with the provisions of Section 3.6), (ii) make such withholding
or deduction and (iii) remit the full amount deducted or withheld to
the relevant Governmental Authority in accordance with applicable law.
Without limiting the generality of the foregoing, Kitty Hawk will,
upon written request of any Lender, reimburse each such Lender for the
amount of (A) such taxes, levies, duties, imports, assessments or
other charges so levied or imposed by any Governmental Authority and
paid by such Lender as a result of payments made by Kitty Hawk under
or with respect to the Loans other than such taxes, levies, duties,
imports, assessments and other charges previously withheld or deducted
by Kitty Hawk which have previously resulted in the payment of the
required additional amount to Lender, and (B) such taxes, levies,
duties, assessments and other charges so levied or imposed with
respect to any Lender reimbursement under the foregoing clause (A), so
that the net amount received by such Lender (net of payments made
under or with respect to the Loans and the Letter of Credit
Liabilities) after such reimbursement will not be less than the net
amount such Lender would have received if such taxes, levies, duties,
assessments and other charges on such reimbursement had not been
levied or imposed. Kitty Hawk shall furnish promptly to Agent for
distribution to each affected Lender, as the case may be, upon request
of such Lender, official receipts evidencing any such payment,
withholding or reduction.
(b) Kitty Hawk will indemnify Agent and each Lender
(without duplication) against, and reimburse Agent and each Lender
for, all present and future taxes, levies, duties, imposts,
assessments or other charges (including interest and penalties) levied
or collected (whether or not legally or correctly imposed, assessed,
levied or collected), excluding, however, any taxes imposed on the
overall net income of Agent or such Lender or any lending office of
Agent or such Lender by any jurisdiction in which Agent or such Lender
or any such lending office is located, on or in respect of this
Agreement, any of the Loan Documents or
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 47
54
the Obligations or any portion thereof ("reimbursable taxes"). Any
such indemnification shall be on an after- tax basis, taking into
account any such reimbursable taxes imposed on the amounts paid as
indemnity.
(c) If and to the extent actually known by such Lender,
each Lender will use reasonable efforts to notify Kitty Hawk and
Agent, in a reasonably prompt fashion after such assignment is made,
of any assignment of the Commitments or the Loans by such Lender to an
Eligible Assignee which is subject to a withholding tax that will
impose any payment obligation upon Kitty Hawk pursuant to this Section
3.5. Each Lender will use reasonable efforts to notify Kitty Hawk and
Agent of any amounts to be paid by Kitty Hawk pursuant to this Section
3.5 in a reasonably prompt fashion after such Lender becomes aware of
the circumstances which require the payment of such amounts by Kitty
Hawk. Kitty Hawk shall not be obligated to pay any amounts to a
Lender pursuant to this Section 3.5 which accrued more than 90 days
prior to the date upon which such Lender initially notified Kitty Hawk
of the general circumstances which require such payment.
Section 3.6 Withholding Tax Exemption. Each Lender that is not
incorporated or otherwise formed under the laws of the U.S. or a state thereof
agrees that it will, prior to or on or about the Closing Date or the date upon
which it becomes a party to this Agreement, deliver to Kitty Hawk and Agent two
duly completed copies of U.S. Internal Revenue Service Form 1001, 4224 or W-8,
as appropriate, certifying in any case that such Lender is entitled to receive
payments from Kitty Hawk under any Loan Document without deduction or
withholding of any U.S. federal income taxes. Each Lender which so delivers a
Form 1001, 4224 or W-8 further undertakes to deliver to Kitty Hawk and Agent
two additional copies of such form (or a successor form) on or before the date
such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form so delivered by it, and such
amendments thereto or extensions or renewals thereof as may be reasonably
requested by Kitty Hawk or Agent, in each case certifying that such Lender is
entitled to receive payments from Kitty Hawk under any Loan Document without
deduction or withholding of any U.S. federal income taxes, unless an event
(including without limitation any change in treaty, law or regulation) has
occurred prior to the date on which any such delivery would otherwise be
required which renders all such forms inapplicable or which would prevent such
Lender from duly completing and delivering any such form with respect to it and
such Lender advises Kitty Hawk and Agent that it is not capable of receiving
such payments without any deduction or withholding of U.S. federal income tax.
Section 3.7 Reinstatement of Obligations. Notwithstanding
anything to the contrary contained in this Agreement or any other Loan
Document, if the payment of any amount of principal of or interest with
respect to the Loans, the Reimbursement Obligations or any other amount of the
Obligations, or any portion thereof, is rescinded, voided or must otherwise be
refunded by Agent, any Lender or Issuing Bank upon the insolvency, bankruptcy
or reorganization of Kitty Hawk or any of its Subsidiaries or otherwise for any
reason whatsoever, then each of (a) the Obligations, (b) the Loan Documents
(including, without limitation, this Agreement, the Notes and the Security
Documents), (c) the indebtedness, liabilities and obligations of Kitty Hawk and
its Subsidiaries under the Loan Documents, and (d) all Liens for the benefit of
Agent and Lenders created under or evidenced by the Loan Documents, will be
automatically reinstated and become automatically effective and in full force
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 48
55
and effect, all to the extent that and as though such payment so rescinded,
voided or otherwise refunded had never been made.
ARTICLE 4
Yield Protection and Illegality
Section 4.1 Additional Costs.
(a) Kitty Hawk shall pay directly to each Lender from
time to time, within ten days after the request of such Lender, the
costs incurred by such Lender which such Lender reasonably determines
are attributable to its making or maintaining of any Eurodollar Loans
or its obligation to make any of such Loans, or any reduction in any
amount receivable by such Lender hereunder in respect of any such
Loans or obligations (such increases in costs and reductions in
amounts receivable being herein called "Additional Costs"), resulting
from any Regulatory Change occurring after the Closing Date which:
(i) changes the basis of taxation of any amounts
payable to such Lender under this Agreement or its Notes in
respect of any of such Loans (other than income taxes and
franchise taxes attributable to net income of such Lender or
its Applicable Lending Office for any of such Loans by the
jurisdiction in which such Lender has its principal office or
such Applicable Lending Office);
(ii) imposes or modifies any reserve, special
deposit, minimum capital, capital ratio or similar requirement
relating to any extensions of credit or other assets of, or
any deposits with or other liabilities or commitments of, such
Lender (including any of such Loans or any deposits referred
to in the definition of "Eurodollar Rate" in Section 1.1
hereof, but excluding the Reserve Requirement to the extent it
is included in the calculation of the Adjusted Eurodollar
Rate); or
(iii) imposes any other condition affecting this
Agreement or the Notes or any of such extensions of credit or
liabilities or commitments.
Each applicable Lender will notify Kitty Hawk (with a copy to Agent)
of any event occurring after the Closing Date which will entitle such
Lender to compensation pursuant to this Section 4.1(a) as promptly as
practicable after it obtains knowledge thereof and determines to
request such compensation, and (if so requested by Kitty Hawk) will,
if and to the extent that it is reasonably feasible for such Lender to
do so given administrative and other considerations, designate a
different Applicable Lending Office for the Eurodollar Loans of such
Lender if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the reasonable opinion
of such Lender, violate any law, rule or regulation or be in any way
disadvantageous to such Lender. Each applicable Lender will furnish
Kitty Hawk with a certificate setting forth the basis and the amount
of each request of such Lender for compensation under this Section
4.1(a). If any Lender requests compensation from Kitty
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 49
56
Hawk under this Section 4.1(a), Kitty Hawk may, by notice to such
Lender (with a copy to Agent), suspend the obligation of such Lender
to make or Continue making, or Convert Base Rate Loans into,
Eurodollar Loans until the Regulatory Change giving rise to such
request ceases to be in effect (in which case the provisions of
Section 4.4 hereof shall be applicable).
(b) Without limiting the effect of the foregoing
provisions of this Section 4.1, in the event that, by reason of any
Regulatory Change, any Lender either (i) incurs Additional Costs based
on or measured by the excess above a specified level of the amount of
a category of deposits or other liabilities of such Lender which
includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a
category of extensions of credit or other assets of such Lender which
includes Eurodollar Loans or (ii) becomes subject to restrictions on
the amount of such a category of liabilities or assets which it may
hold, then, if such Lender so elects by notice to Kitty Hawk (with a
copy to Agent), the obligation of such Lender to make or Continue
making, or Convert Base Rate Loans into, Eurodollar Loans hereunder
shall be suspended until such Regulatory Change ceases to be in effect
(in which case the provisions of Section 4.4 hereof shall be
applicable).
(c) Determinations and allocations by any Lender for
purposes of this Section 4.1 of the effect of any Regulatory Change on
its costs of maintaining its obligation to make Loans or issue Letters
of Credit or of making or maintaining Loans or issuing Letters of
Credit or on amounts receivable by it in respect of Loans or Letters
of Credit, and of the additional amounts required to compensate such
Lender in respect of any Additional Costs, shall be conclusive in the
absence of manifest error, provided that such determinations and
allocations are made on a reasonable basis.
Section 4.2 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if with respect to any Eurodollar Loans for any
Interest Period therefor:
(a) Agent determines (which determination shall be made
reasonably and in good faith and shall be conclusive absent manifest
error) that quotations of interest rates for the relevant deposits
referred to in the definition of "Eurodollar Rate" in Section 1.1
hereof are not being provided in the relative amounts or for the
relative maturities for purposes of determining the rate of interest
for such Loans as provided in this Agreement; or
(b) any Lender determines (which determination shall be
in good faith and shall be conclusive absent manifest error) and
notifies Agent that the relevant rates of interest referred to in the
definition of "Eurodollar Rate" or "Adjusted Eurodollar Rate" in
Section 1.1 hereof on the basis of which the rate of interest for such
Loans for such Interest Period is to be determined do not accurately
reflect the cost to such Lender of making or maintaining such Loans
for such Interest Period;
then Agent shall give Kitty Hawk prompt notice thereof and, so long as such
condition remains in effect, such Lender shall be under no obligation to make
Eurodollar Loans or to Convert Base Rate Loans into Eurodollar Loans and Kitty
Hawk shall, on the last day(s) of the then current Interest
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 50
57
Period(s) for the outstanding Eurodollar Loans, either prepay such Loans or
Convert such Loans into Base Rate Loans in accordance with the terms of this
Agreement.
Section 4.3 Illegality. Notwithstanding any other provision of
this Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make Eurodollar Loans
or (b) maintain Eurodollar Loans, then such Lender shall promptly notify Kitty
Hawk thereof (with a copy to Agent) and such Lender's obligation to make or
maintain Eurodollar Loans and to Convert Base Rate Loans into Eurodollar Loans
hereunder shall be suspended until such time as such Lender may again make and
maintain Eurodollar Loans (in which case the provisions of Section 4.4 hereof
shall be applicable).
Section 4.4 Treatment of Affected Loans. If the obligation of
any Lender to make or Continue, or to Convert Base Rate Loans into, Eurodollar
Loans is suspended pursuant to Section 4.1 or 4.3 hereof, such Lender's
Eurodollar Loans shall be automatically Converted into Base Rate Loans on the
last day(s) of the then current Interest Period(s) for the Eurodollar Loans
(or, in the case of a Conversion required by Section 4.1(b) or 4.3 hereof, on
such earlier date as such Lender may specify to Kitty Hawk (with a copy to
Agent) and, unless and until such Lender gives notice as provided below that
the circumstances specified in Section 4.1 or 4.3 hereof which gave rise to
such Conversion no longer exist:
(a) To the extent that such Lender's Eurodollar Loans
have been so Converted, all payments and prepayments of principal
which would otherwise be applied to such Lender's Eurodollar Loans
shall be applied instead to its Base Rate Loans; and
(b) All Loans which would otherwise be made or Continued
by such Lender as Eurodollar Loans shall be made as or Converted into
Base Rate Loans and all Loans of such Lender which would otherwise be
Converted into Eurodollar Loans shall be Converted instead into (or
shall remain as) Base Rate Loans.
If such Lender gives notice to Kitty Hawk (with a copy to Agent) that the
circumstances specified in Section 4.1 or 4.3 hereof which gave rise to the
Conversion of such Lender's Eurodollar Loans pursuant to this Section 4.4 no
longer exist (which such Lender agrees to do promptly upon such circumstances
ceasing to exist) at a time when Eurodollar Loans are outstanding, such
Lender's Base Rate Loans shall be automatically Converted, on the first day(s)
of the next succeeding Interest Period(s) for such outstanding Eurodollar
Loans, to the extent necessary so that, after giving effect thereto, all Loans
held by Lenders holding Eurodollar Loans and by such Lender are held pro rata
(as to principal amounts, Types and Interest Periods) in accordance with their
respective Commitments.
Section 4.5 Compensation. Kitty Hawk shall pay to Agent for the
account of each Lender, promptly upon the request of such Lender through Agent,
such amount or amounts as shall be sufficient (in the reasonable opinion of
such Lender) to compensate it for any loss, cost or expense incurred by it as a
result of:
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(a) any payment, prepayment or Conversion of a Eurodollar
Loan for any reason (including, without limitation, the acceleration
of the outstanding Loans pursuant to Section 11.2) on a date other
than the last day of an Interest Period for such Loan; or
(b) any failure by Kitty Hawk for any reason (including,
without limitation, the failure of any conditions precedent specified
in Article 6 to be satisfied) to borrow, Convert or prepay a
Eurodollar Loan on the date for such borrowing, Conversion or
prepayment specified in the relevant notice of borrowing, prepayment
or Conversion under this Agreement.
The loss (as opposed to cost or expense) to be compensated under clause (a) of
this Section 4.5 shall not exceed an amount equal to the excess, if any, of (i)
the amount of interest which otherwise would have accrued on the principal
amount so paid, prepaid or Converted to the last day of the Interest Period at
the applicable rate for such Eurodollar Loan over (ii) the cost to the
applicable Lender of the interest component of such Eurodollar Loan which
otherwise would have accrued.
Section 4.6 Capital Adequacy. If, after the Closing Date, any
Lender shall have determined that the adoption or implementation of any
applicable law, rule or regulation regarding capital adequacy (excluding any
law, rule or regulation in existence as of the Closing Date which implements
the Basle Accord as it exists as of the Closing Date but including any other
law, rule or regulation implementing the Basle Accord), or any change therein,
or any change in the interpretation or administration thereof by any central
bank or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by such Lender (or its parent) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any central bank or other Governmental Authority
(excluding any guideline or other requirement in existence as of the Closing
Date which implements the Basle Accord as it exists as of the Closing Date but
including any other guideline or other requirement implementing the Basle
Accord), has or would have the effect of reducing the rate of return on such
Lender's (or its parent's) capital as a consequence of its obligations
hereunder or the transactions contemplated hereby to a level below that which
such Lender (or its parent) could have achieved but for such adoption,
implementation, change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender
to be material, then from time to time, within ten Business Days after demand
by such Lender (with a copy to Agent), Kitty Hawk shall pay to such Lender such
additional amount or amounts as will compensate such Lender (or its parent) for
such reduction. A certificate of such Lender claiming compensation under this
Section 4.6 and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive absent manifest error, provided that the
determination thereof is made on a reasonable basis. In determining such
amount or amounts, such Lender may use any reasonable averaging and attribution
methods.
Section 4.7 Additional Interest on Eurodollar Loans. Kitty Hawk
shall pay, directly to Agent for the account of each Lender from time to time,
additional interest on the unpaid principal amount of each Eurodollar Loan held
by such Lender, from the date of the making of such Eurodollar Loan until such
principal amount is paid in full, at an interest rate per annum determined by
such Lender in good faith equal to the positive remainder (if any) of (a) the
Adjusted Eurodollar Rate applicable to such Eurodollar Loan minus (b) the
Eurodollar Rate applicable to such Eurodollar Loan.
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Each payment of additional interest pursuant to this Section 4.7 shall be
payable by Kitty Hawk on each date upon which interest is payable on such
Eurodollar Loan pursuant to Section 2.4(b); provided, however, that Kitty Hawk
shall not be obligated to make any such payment of additional interest until
the first Business Day after the date when Kitty Hawk has been informed (i)
that such Lender is subject to a Reserve Requirement and (ii) of the amount of
such Reserve Requirement (after which time Kitty Hawk shall be obligated to
make all such payments of additional interest, including, without limitation,
such payment of additional interest that otherwise would have been payable by
Kitty Hawk on or prior to such time had Kitty Hawk been earlier informed).
Section 4.8 Mitigation of Additional Costs. It is the general
intent of the parties hereto that, with respect to the matters referred to in
Sections 3.5, 4.1(a) and 4.6, Kitty Hawk shall not be discriminated against by
any Lender relative to such Lender's general practice with respect to borrowers
of comparable credits extended by such Lender under comparable circumstances.
Accordingly, for purposes of Sections 3.5, 4.1(a) and 4.6, each Lender agrees
to use reasonable efforts to ensure that Kitty Hawk is not requested to pay
increased costs of a kind or type which are not also generally requested to be
paid by borrowers of comparable credits extended by such Lender under
comparable circumstances. In connection with any request that Kitty Hawk pay
increased costs pursuant to Section 3.5, 4.1(a) or 4.6, the Lender requesting
such payment shall deliver to Kitty Hawk and Agent information in reasonable
detail specifying the events giving rise to such increased costs, the basis for
determining and allocating such increased costs and a good faith estimate (if
and to the extent feasible) of the amounts of such particular increased costs
which may be incurred in the future.
ARTICLE 5
Security
Section 5.1 Collateral. To secure the full and complete payment
and performance of the Obligations, each of Kitty Hawk and its Subsidiaries,
other than AIC, shall, on or before the Closing Date, grant to Agent for the
benefit of Agent and Lenders a perfected, first priority Lien on all of its
right, title and interest in and to the following Property and all products and
proceeds thereof, whether now owned or hereafter acquired, pursuant to the
Security Documents as more specifically provided in the Security Documents, all
of which Collateral shall secure payment and performance of all of the
Obligations:
(a) all Capital Stock of each of the Subsidiaries of
Kitty Hawk other than AIC and other than Foreign Subsidiaries, and 65%
of the shares of each class of Capital Stock of each of the Foreign
Subsidiaries of Kitty Hawk;
(b) all AIA Aircraft and all engines, appliances and
spare parts installed in or appurtenant to any such AIA Aircraft; and
(c) all accounts (including, without limitation,
Receivables), Parts (including, without limitation, rotable spare
parts), inventory, chattel paper and general intangibles
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(including, without limitation, contract rights) and other personal
Property specified in the Security Agreements.
Kitty Hawk and its Subsidiaries covenant to Agent and Lenders that none of the
Capital Stock to be pledged in accordance with this Section 5.1 shall be
subject to any transfer restriction, shareholders' agreement or other
restriction except for such restrictions under applicable securities laws and
such restrictions, if any, as may be reasonably acceptable to Agent. In
connection with and in addition to the foregoing, Kitty Hawk and its
Subsidiaries shall execute and/or deliver such further agreements, documents
and instruments (including, without limitation, stock certificates, stock
powers and financing statements) as Agent may reasonably request in order for
it to obtain and maintain the perfected, first priority Liens to be granted in
accordance with this Section 5.1.
Section 5.2 Guaranties. Each of the Subsidiaries of Kitty Hawk,
other than AIC, in existence on the Closing Date shall guarantee the payment
and performance of the Obligations pursuant to the applicable Guaranty.
Section 5.3 New AIA Aircraft Related Collateral. Kitty Hawk and
its Subsidiaries shall, promptly (and, in any event within ten Business Days)
after any request made by Agent after the acquisition of any equipment or
enhancement to any AIA Aircraft, execute, acknowledge and deliver to Agent, in
favor of Agent for the benefit of Agent and Lenders, such agreements, documents
and instruments, including, without limitation, Aircraft Mortgages or Security
Agreements or amendments or modifications to Aircraft Mortgages or Security
Agreements, covering such acquired equipment or enhancements as may reasonably
be requested by Agent, together with evidence reasonably satisfactory to Agent
and its counsel of Agent's valid, first priority Lien on the equipment and
enhancements acquired as security for the payment and performance of the
Obligations.
Section 5.4 New Subsidiaries; New Issuances of Capital Stock.
Contemporaneously with the creation or acquisition of any Subsidiary of Kitty
Hawk, Kitty Hawk or the Subsidiary of Kitty Hawk which owns such new Subsidiary
(as applicable) shall, and (with respect to clauses (b) and (c) below) shall
cause each such new Subsidiary to:
(a) grant or cause to be granted to Agent a perfected,
first priority Lien in (i) all Capital Stock or other ownership
interests in or indebtedness of such Subsidiary, other than a Foreign
Subsidiary, owned by Kitty Hawk or any Subsidiary of Kitty Hawk (to
the extent such Capital Stock or other ownership interests or
indebtedness are already not so pledged to Agent) and (ii) 65% of the
shares of each class of Capital Stock of each of the Foreign
Subsidiaries of Kitty Hawk, in each case as security for the payment
and performance of the Obligations;
(b) Guarantee the payment and performance of the
Obligations by executing and delivering to Agent an appropriate
Guaranty; provided, however, that no Foreign Subsidiary shall be
required to execute and deliver any such Guaranty; and
(c) execute and deliver to Agent an appropriate Security
Agreement and such other Security Documents as Agent may reasonably
request to grant to Agent, for the benefit
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of Agent and Lenders, a perfected, first priority Lien on all Property
of such Subsidiary of the type described in clause (c) of Section 5.1
as security for the payment and performance of the Obligations;
provided, however, that no Foreign Subsidiary shall be required to
execute and delivery any such Security Agreement or other Security
Document or grant any such Lien.
Contemporaneously with the issuance of any additional Capital Stock of any of
the Subsidiaries of Kitty Hawk after the Closing Date, Kitty Hawk (as
applicable) shall, and shall cause each of its Subsidiaries (as applicable) to,
grant or cause to be granted to Agent, for the benefit of Agent and Lenders, a
perfected, first priority Lien in all Capital Stock or other ownership
interests in such Subsidiary (or, if such Subsidiary is a Foreign Subsidiary,
in 65% of the shares of each class of Capital Stock) owned by Kitty Hawk or any
Subsidiary of Kitty Hawk (to the extent such Capital Stock or other ownership
interests were not previously pledged to Agent) as security for the payment and
performance of the Obligations. Kitty Hawk and its Subsidiaries covenant to
Agent and Lenders that none of the Capital Stock to be pledged in accordance
with this Section 5.4 shall be subject to any transfer restriction,
shareholders' agreement or other restriction except for such restrictions under
applicable securities laws and such restrictions, if any, as may be reasonably
acceptable to Agent. In connection with and in addition to the foregoing,
Kitty Hawk and its Subsidiaries shall execute and/or deliver such further
agreements, documents and instruments (including, without limitation, stock
certificates, stock powers and financing statements) as Agent may reasonably
request in order for it to obtain and maintain the perfected, first priority
Liens to be granted in accordance with this Section 5.4.
Section 5.5 Release of Certain Collateral.
(a) Single Aircraft Release. Agent and Lenders
agree that, upon five Business Days prior written request from Kitty
Hawk and if (but only if) Kitty Hawk prepays the applicable
outstanding principal amount of the Term Loans by an aggregate amount
equal to the AIA Aircraft Release Amount attributable to a particular
AIA Aircraft, Agent shall (at Xxxxx Xxxx'x expense) release its Lien
on such AIA Aircraft; provided, however, that, in the event that Agent
requests such an appraisal in connection with such request for a
release made at any time after November 19, 1999, and such request is
not made by Kitty Hawk in connection with a casualty loss of such AIA
Aircraft, Agent shall have no obligation to release its Lien on such
AIA Aircraft unless Agent shall have received a then current appraisal
of all AIA Aircraft that will remain subject to Agent's Lien under the
Aircraft Mortgages after giving effect to such requested release (the
"Remaining AIA Aircraft"), which appraisal must be in form, substance
and content reasonably satisfactory to Agent and must be performed by
an appraiser reasonably satisfactory to Agent and must show that,
after giving effect to such prepayment, the aggregate outstanding
principal amount of the Term Loans will be less than or equal to 80%
of the appraised value of the Remaining AIA Aircraft; and provided,
further, however, that Agent shall have no obligation to release its
Lien on such AIA Aircraft if a Default shall have occurred and be
continuing. Furthermore, and notwithstanding anything to the contrary
contained herein, Agent shall not be required to execute any document
effectuating any release of a Lien on terms which, in Agent's
reasonable judgment, would expose Agent to liability or create any
obligation not reimbursed by Kitty Hawk or entail any warranty by
Agent (other than that Agent holds the Lien and enforceably releases
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it) or would, in any manner, discharge, affect or impair any of the
Obligations or any of Agent's Liens on any Collateral not required to
be so released or any proceeds thereof.
(b) Mandatory Engine Release. Agent and Lenders agree
that, upon five Business Days prior written request from Kitty Hawk,
Agent shall (at Xxxxx Xxxx'x expense) release its Lien on a particular
Engine if (but only if) (i) Aircargo grants to Agent, for the benefit
of Agent and Lenders as security for the payment and performance of
the Obligations, a perfected, first priority Lien on a replacement
Engine having a fair market value, as determined by Agent in good
faith, equal to or greater than the fair market value of such Engine
to be released (which value shall be evidenced by an appraisal if
Agent so requests) pursuant to an Aircraft Mortgage, and (ii) such
Lien referred to in clause (i) preceding is insured by a mortgagee's
policy of title insurance in form and substance reasonably
satisfactory to Agent.
(c) Optional Engine Release. Agent may, but shall not at
any time be obligated to, in its discretion from time to time and
without the consent of any Lender or Lenders, release Agent's Liens
securing the Obligations on engines which constitute a part of the AIA
Aircraft but which have been detached from the AIA Aircraft for
overhaul or maintenance; provided, however, that (i) no such release
may occur prior to January 1, 1999, (ii) no more than six engines may
be so released during calendar year 1999, no more than 12 engines may
be released during calendar years 1999 and 2000, no more than 18
engines may be released during calendar years 1999, 2000 and 2001 and
no more than 24 engines may be released during calendar years 1999,
2000, 2001 and 2002, in each case in the aggregate for all such years,
and (iii) Agent may, in its discretion, impose any one or more
conditions to any such release, including, without limitation, the
condition that Agent be granted perfected, first priority Liens
securing the Obligations on substitute engines.
Section 5.6 Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time
to time, without notice to Kitty Hawk or any of its Subsidiaries or any other
Person (any such notice being hereby expressly waived by Kitty Hawk and its
Subsidiaries), to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness
at any time owing by such Lender to or for the credit or the account of Kitty
Hawk or any of its Subsidiaries against any and all of the Obligations of Kitty
Hawk or any of its Subsidiaries now or hereafter existing under this Agreement,
any of such Lender's Notes or any other Loan Document, irrespective of whether
or not Agent or such Lender shall have made any demand under this Agreement,
any of such Lender's Notes or any such other Loan Document and although such
Obligations may be unmatured. Each Lender agrees promptly to notify Kitty Hawk
(with a copy to Agent) after any such setoff and application, provided that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights and remedies of each Lender hereunder are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which such Lender may have.
Section 5.7 Title Insurance. Aircargo shall (at its sole cost
and expense) purchase and maintain owner and mortgagee policies of title
insurance (or, if acceptable to Required Lenders, amendments or endorsements to
existing polices of title insurance) insuring that Aircargo has
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indefeasible title to each of the AIA Aircraft and that Agent, for the benefit
of Agent and Lenders, holds a perfected, first priority Lien on each of the AIA
Aircraft pursuant to the Loan Documents as security for the payment and
performance of the Obligations. The mortgagee policy of title insurance in
favor of Agent shall be in the amount of $45,900,000 and shall be issued by the
Title Company or another title insurance company reasonably acceptable to Agent
and shall contain such terms and provisions as are reasonably acceptable to
Agent.
ARTICLE 6
Conditions Precedent
Section 6.1 Initial Extension of Credit. The obligation of each
Lender to make its initial Loan under this Agreement and the obligation of the
Issuing Bank to issue the initial Letter of Credit under this Agreement are
subject to the conditions precedent that Agent shall have received, on or
before the Closing Date, all of the following in form and substance reasonably
satisfactory to Agent and, in the case of actions to be taken, evidence that
the following required actions have been taken to the satisfaction of Agent:
(a) Resolutions. Resolutions of the Board of Directors
of each Company certified by its Secretary or an Assistant Secretary
which authorize the execution, delivery and performance by such
Company of the Loan Documents to which it is or is to be a party
(including, without limitation, with respect to Aircargo, resolutions
which authorize the Aircraft Mortgages and the other Security
Documents relating to the AIA Aircraft);
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of each Company
certifying the name of each officer or other representative of such
Company (i) who is authorized to sign the Loan Documents to which such
Company is or is to be a party (including any certificates
contemplated therein), together with specimen signatures of each such
officer or other representative, and (ii) who will, until replaced by
other officers or representatives duly authorized for that purpose,
act as its representative for the purposes of signing documents and
giving notices and other communications in connection with the Loan
Documents and the transactions contemplated thereby;
(c) Articles or Certificates of Incorporation, etc. The
articles or certificates of incorporation, certificate of formation,
certificate of limited partnership, partnership agreement or other
applicable constitutional document of each Company certified by the
Secretary of State or other applicable Governmental Authority of the
jurisdiction of incorporation or organization of such Company and
dated as of a Current Date;
(d) Bylaws. The bylaws of each Company certified by the
Secretary or an Assistant Secretary of such Company;
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(e) Governmental Certificates. Certificates of
appropriate officials confirming (i) the existence and good standing,
status or compliance, as applicable, of each Company in its respective
jurisdiction of incorporation or organization and any and all
jurisdictions where such Company is qualified to do business as a
foreign corporation or other entity, each such certificate to be dated
as of a Current Date, (ii) that Aircargo is an air carrier certified
by the FAA and qualifies in all respects as a citizen of the U.S. as
defined in the Federal Aviation Act, (iii) that Aircargo is the
registered owner of each of the AIA Aircraft pursuant to proper
registrations under the Federal Aviation Act, and (iv) that each of
the AIA Aircraft is airworthy as evidenced by a valid, current
Certificate of Airworthiness issued by the FAA with respect to such
AIA Aircraft;
(f) Revolving Credit Loans Notes. The Revolving Credit
Loans Notes duly completed and executed by Kitty Hawk;
(g) Term Loans Notes. The Term Loans Notes duly
completed and executed by Kitty Hawk;
(h) Guaranties. A Guaranty executed by each of the
Companies other than Kitty Hawk;
(i) Security Documents. The Security Documents executed
by each of the Companies, including, without limitation, Security
Agreements executed by each of the Companies and Aircraft Mortgages
executed by Aircargo;
(j) Stock Certificates. The stock certificates
representing all of the issued and outstanding Capital Stock of each
of the Companies, other than Kitty Hawk, in each case accompanied by
appropriate instruments of transfer or stock powers signed in blank
(as appropriate);
(k) Insurance Policies. Copies of all insurance policies
required by this Agreement and the other Loan Documents, together with
loss payable endorsements naming Agent as loss payee under all such
casualty insurance policies and Agent as an additional insured party
under all such liability policies;
(l) Financing Statements. Financing statements and all
other requisite filing documents executed by the Companies necessary
to perfect the Liens created pursuant to the Security Documents;
(m) Title and Lien Searches. (i) Title and Lien searches
performed by the Title Company confirming that (A) each of the AIA
Aircraft is duly registered with the FAA in the name of Aircargo, (B)
Agent, for the benefit of Agent and Lenders, has a perfected, first
priority Lien in the AIA Aircraft as security for the payment and
performance of the Obligations; (ii) a policy of title insurance (or
amendments or endorsements thereto) for each of the AIA Aircraft with
Agent as named insured as required pursuant to Section 5.7; and (iii)
Lien searches in the names of each of the Companies (and in all names
under which each
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such Person has done business within the last five years and in all
names of Persons who previously owned any of the material Properties
constituting Collateral as Agent may reasonably require) in each state
where each such Person maintains an office or has Property, showing no
financing statements or other Lien instruments of record except for
Permitted Liens and Liens not otherwise prohibited by Section 9.2;
(n) Consents. Copies of all material consents necessary
for the execution, delivery and performance by each of the Companies
of the Loan Documents to which it is a party, including, without
limitation, any consents or waivers to the grant of a Lien in the
Collateral or execution of a Guaranty, which consents shall be
certified by a Responsible Officer of the applicable Company as true
and correct copies of such consents as of the Closing Date;
(o) Permits. If and to the extent required by Agent,
copies of all material Permits affecting each Company in connection
with its businesses or any of the Properties owned or leased by it,
and evidence reasonably satisfactory to Agent that such Permits are in
full force and effect;
(p) Payment of Fees and Expenses. Kitty Hawk shall have
paid to Agent the up-front fee and agency fee referred to in Section
2.11 that are payable on or before the Closing Date and, to the extent
required by Agent, Kitty Hawk shall have paid all fees, costs and
expenses of or incurred by Agent and its counsel referred to in
Section 13.1 to the extent billed on or before the Closing Date and
payable pursuant to this Agreement;
(q) Regulatory Approvals. Evidence reasonably
satisfactory to Agent that all filings, consents or approvals with or
of Governmental Authorities necessary to consummate each of (i) the
Merger, (ii) the Common Stock Offering, (iii) the Note Offering, and
(iv) the transactions contemplated by this Agreement and the other
Loan Documents, have been made and obtained, as applicable (including,
without limitation, all approvals or filings (if any) required under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 and the lapse
of all waiting periods with respect thereto);
(r) Compliance with Laws. As of the Closing Date, each
Company shall have complied with all Governmental Requirements
necessary to consummate each of (i) the Merger, (ii) the Common Stock
Offering, (iii) the Note Offering, and (iv) the transactions
contemplated by this Agreement and the other Loan Documents;
(s) No Prohibitions. No Governmental Requirement shall
prohibit the consummation of the transactions contemplated by each of
(i) the Merger, (ii) the Common Stock Offering, (iii) the Note
Offering, and (iv) this Agreement or any other Loan Document, and no
order, judgment or decree of any Governmental Authority or arbitrator
shall, and no litigation or other proceeding shall be pending or
threatened which would, enjoin, prohibit, restrain or otherwise
adversely affect the consummation of any of such transactions or
otherwise have a Material Adverse Effect;
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(t) No Material Adverse Change. As of the Closing Date,
no material adverse change shall have occurred with respect to the
financial condition, results of operations, business, operations,
capitalization, liabilities or prospects of Kitty Hawk or any of its
Subsidiaries since June 30, 1997;
(u) Disbursement Instructions. On or before the Closing
Date, written instructions to Agent from Kitty Hawk regarding the
disbursement of the proceeds of the Loans on the Closing Date, which
instructions shall include the request that the proceeds of the Term
Loans to be advanced on the Closing Date shall be disbursed to Xxxxx
Fargo (as agent under the Prior Credit Agreement) in payment of the
AIA Fleet Advance in accordance with Section 2.10(b);
(v) Financial Statements. Copies of each of the
financial statements referred to in Section 7.2;
(w) Opinions of Counsel. Favorable opinions of counsel
for Kitty Hawk and its Subsidiaries relating to (i) the Loan Documents
and the transactions contemplated thereby, (ii) the Related
Transactions Documents and the Related Transactions contemplated
thereby, (iii) Kitty Hawk and its Subsidiaries, and (iv) such other
matters as Agent may reasonably request;
(x) Appraisals. A current appraisal of each of the AIA
Aircraft, which appraisals must be in form, substance and content
reasonably satisfactory to Agent and must be performed by an
independent appraiser or appraisers reasonably satisfactory to Agent
and must show that the aggregate appraised value of the AIA Aircraft
is $63,200,000 or more (which Agent acknowledges has been received);
(y) Consummation of Merger. The Merger shall have been
consummated in accordance with the Merger Agreement, a true and
correct copy of which Merger Agreement and certificate of merger
therefor issued by the Secretary of State of Michigan shall have been
delivered to Agent, and the aggregate purchase price paid or payable
by Kitty Hawk and its Subsidiaries in connection with the Merger shall
not exceed any of the following (individually or in the aggregate):
(i) the assumption and/or repayment of an aggregate amount in excess
of $305,000,000 of indebtedness of any Kalitta Company or any of its
Affiliates; (ii) $20,000,000 in cash or cash equivalents paid or
payable in connection with Xxxxx Xxxx'x acquisition of the Capital
Stock of KFS; and (iii) 4,099,000 of shares of common stock of Kitty
Hawk issued in connection with Xxxxx Xxxx'x acquisition of the Capital
Stock of the Kalitta Companies other than KFS;
(z) Consummation of Common Stock Offering. The Common
Stock Offering shall have been consummated as (in all material
respects) described in the Registration Statement, a true and correct
copy of which shall have been delivered to Agent, and, in connection
therewith, Kitty Hawk shall have received gross proceeds of
$40,000,000 or more;
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(aa) Consummation of Note Offering. The Note Offering
shall have been consummated in accordance with the Indenture, a true
and correct copy of which shall have been delivered to Agent, and as
(in all material respects) described in the Offering Memorandum and,
in connection therewith, Kitty Hawk shall have received gross proceeds
of $325,000,000 or more;
(bb) Minimum Adjusted EBITDA. For the 9 month period
ended September 30, 0000, Xxxxx Xxxx and its Subsidiaries and the
Kalitta Companies (without duplication) shall have combined Adjusted
EBITDA of $47,000,000 or more;
(cc) Environmental Reports. Agent shall have received
environmental reports pertaining to the real Properties of Kitty Hawk
and its Subsidiaries which evidence that, to the satisfaction of
Agent, there do not exist any material environmental liabilities;
(dd) Solvency Certificate. A Solvency Certificate
(together with the Pro Forma and Projections referred to therein)
executed by the chief financial officer of each of the Companies which
evidences that each of the Companies (including the Kalitta
Companies), both immediately prior to and immediately after giving
effect to the Related Transactions, is Solvent.
(ee) Maximum Funded Debt; Payment of Existing Debt;
Minimum Cash. As of the Closing Date (and after giving effect to the
consummation of the Related Transactions and the use of proceeds of
the Common Stock Offering and the Notes Offering), (i) Funded Debt of
Kitty Hawk and its Subsidiaries (including the Kalitta Companies)
shall not exceed $400,000,000; (ii) the Debt of Kitty Hawk and its
Subsidiaries identified on Schedule 6.1 shall have been paid in full
with the proceeds of the Common Stock Offering, the Note Offering
and/or the proceeds of the initial Loans to be advanced under this
Agreement; and (iii) Kitty Hawk and its Subsidiaries shall have cash
of $40,000,000 or more;
(ff) Payment of Amounts owed under the Prior Credit
Agreement. Kitty Hawk or Leasing (as applicable), i.e., whichever is
the primary obligor with respect to such indebtedness under the Prior
Credit Agreement, shall have paid to Xxxxx Fargo (as agent under the
Prior Credit Agreement) all accrued interest, fees, costs and expenses
and other amounts payable by it under the Prior Credit Agreement;
(gg) Letters of Credit. With respect to the issuance of a
Letter of Credit, the Letter of Credit Agreement in the form required
by the Issuing Bank with respect thereto executed by Kitty Hawk; and
(hh) Bank One Interest Rate Protection Agreement. The
Bank One Interest Rate Protection Agreement shall have been
terminated.
Kitty Hawk shall deliver, or cause to be delivered, to Agent sufficient
counterparts of each agreement, document or instrument to be received by Agent
under this Section 6.1 to permit Agent to distribute a copy of the same to each
of Lenders. After the request of Kitty Hawk, Agent shall inform Kitty
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68
Hawk in writing as to the status of satisfaction of the conditions precedent
set forth in this Section 6.1.
Section 6.2 All Extensions of Credit. The obligation of each
Lender to make any Loan (including the initial Loans) under this Agreement and
the obligation of the Issuing Bank to issue any Letter of Credit (including the
initial Letter of Credit) under this Agreement are subject to the satisfaction
of each of the conditions precedent set forth in Section 6.1 and each of the
following additional conditions precedent:
(a) No Default or Material Adverse Effect. No Default
shall have occurred and be continuing or would result from such Loan
or Letter of Credit, and no Material Adverse Effect shall have
occurred since June 30, 1997;
(b) Representations and Warranties. All of the
representations and warranties of the Companies contained in Article 7
hereof and in the other Loan Documents shall be true and correct on
and as of the date of such Loan or Letter of Credit with the same
force and effect as if such representations and warranties had been
made on and as of such date;
(c) Borrowing Base. After giving effect to such Loan
and/or Letter of Credit requested to be made and/or issued,
respectively, the Outstanding Revolving Credit shall not exceed the
Borrowing Base then in effect; and
(d) Additional Documentation. Agent shall have received
such additional approvals, opinions, agreements, documents,
instruments and certificates as Agent may reasonably request.
Each notice of borrowing or request for the issuance of a Letter of Credit by
Kitty Hawk hereunder shall constitute a representation and warranty by Kitty
Hawk that the conditions precedent set forth in Sections 6.2(a) and (b) have
been satisfied (both as of the date of such notice and, unless Kitty Hawk
otherwise notifies Agent prior to the date of such borrowing or Letter of
Credit, as of the date of such borrowing or Letter of Credit).
Section 6.3 Closing Certificates. The Companies shall,
concurrently with the Closing Date, execute and deliver to Agent a Closing
Certificate in form and substance reasonably satisfactory to Agent certifying
as to the satisfaction of each of the conditions precedent set forth in Section
6.1 and 6.2 which are required to be satisfied on or before the Closing Date.
ARTICLE 7
Representations and Warranties
Each of the Companies jointly and severally represents and warrants
to Agent and Lenders that the following statements are, and after giving effect
to the funding of the initial Loans on the Closing Date will be, true, correct
and complete:
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Section 7.1 Corporate Existence. Each of Kitty Hawk and its
Subsidiaries (a) is a corporation or, with respect to AIC, a partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization, (b) has all requisite power
and authority to own its Properties and carry on its business as now being or
as proposed to be conducted, and (c) is qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a Material Adverse Effect.
Each of Kitty Hawk and its Subsidiaries has the power, authority and legal
right to execute, deliver and perform its obligations under the Loan Documents
and the Related Transaction Documents to which it is or may become a party.
Section 7.2 Financial Statements.
(a) Kitty Hawk has delivered to Agent and Lenders (i)
audited consolidated and consolidating financial statements of Kitty
Hawk and its Subsidiaries as of and for the fiscal years ended August
31, 1995 and August 31, 1996, and for the four month period ended
December 31, 1996, (ii) unaudited interim financial statements of
Kitty Hawk and its Subsidiaries as of and for the periods ended Xxxxx
00, 0000, (xxx) audited consolidated and consolidating financial
statements of AIA and its Subsidiaries as of and for the fiscal year
ended December 31, 1996, and (iv) unaudited interim financial
statements of AIA and its Subsidiaries as of and for the period ended
June 30, 1997. Such financial statements are complete, true and
correct, have been prepared in accordance with GAAP and fairly and
accurately present, on a consolidated and consolidating (where
applicable) basis, the financial condition of Kitty Hawk and its
consolidated Subsidiaries or AIA and its consolidated Subsidiaries (as
applicable) as of the respective dates indicated therein and the
results of operations for the respective periods indicated therein.
Neither Kitty Hawk nor any of its Subsidiaries, nor AIA or any of its
Subsidiaries, has any material contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments, or unrealized or
anticipated losses from any unfavorable commitments except as referred
to or reflected in such financial statements. There has not been, as
of the Closing Date, any material adverse change in the business,
condition (financial or otherwise), operations, prospects or
Properties of any Company since the effective dates of the most recent
applicable financial statements referred to in this Section 7.2.
(b) The Pro Forma Balance Sheet was prepared by Kitty
Hawk on a basis substantially consistent with the financial statements
referred to in Section 7.2(a), with only such adjustments thereto as
would be required in accordance with GAAP. Neither Kitty Hawk nor any
of its Subsidiaries has any contingent liabilities, liabilities for
taxes, unusual forward or long-term commitments or unrealized or
unanticipated losses from any unfavorable commitments except as
referred to or reflected in the Pro Forma.
(c) The Projections were prepared by Kitty Hawk on a
basis substantially consistent with the financial statements referred
to in Section 7.2(a). The Projections represent, as of the Closing
Date, the good faith estimate of Kitty Hawk and its senior management
concerning the probable financial condition and performance of Kitty
Hawk and its Subsidiaries based on assumptions believed to be
reasonable at the time made.
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Section 7.3 Corporate Action; No Breach. The execution, delivery
and performance by each Company of the Loan Documents and the Related
Transaction Documents to which it is or may become a party and compliance with
the terms and provisions hereof and thereof have been duly authorized by all
requisite corporate or other entity action on the part of each Company and do
not and will not (a) violate or conflict with, or result in a breach of, or
require any consent under (i) the articles or certificates of incorporation or
bylaws of any Company, (ii) any Governmental Requirement or any order, writ,
injunction or decree of any Governmental Authority or arbitrator, or (iii) any
agreement, document or instrument to which any Company is a party or by which
any Company or any of its Property is bound or subject, or (b) constitute a
default under any such agreement, document or instrument, or result in the
creation or imposition of any Lien (except a Lien in favor of Agent for and on
behalf of Lenders under the Security Documents as provided in Article 5) upon
any of the revenues or Property of any Company.
Section 7.4 Operation of Business. Each of Kitty Hawk and its
Subsidiaries possesses all Permits, franchises, licenses, patents, copyrights,
trademarks, tradenames and authorizations or rights thereto necessary or
appropriate to conduct its business substantially as now conducted and as
presently proposed to be conducted. None of such Persons is in violation of
any valid rights of others with respect to any of the foregoing.
Section 7.5 Litigation and Judgments. Except as disclosed on
Schedule 7.5 hereto, there is no action, suit, investigation or proceeding
before or by any Governmental Authority or arbitrator pending or, to the
knowledge of any Company, threatened against or affecting Kitty Hawk or any of
its Subsidiaries that could, if adversely determined, reasonably be expected to
have a Material Adverse Effect. There are no outstanding judgments against any
Company. No Company has received any opinion or memorandum or legal advice from
legal counsel to the effect that it is exposed to any liability or disadvantage
that could reasonably be expected to have a Material Adverse Effect.
Section 7.6 Rights in Properties; Liens. Aircargo is the true
and lawful owner of each of the AIA Aircraft and is the registered owner of
each of the AIA Aircraft pursuant to proper registrations under the Federal
Aviation Act. Aircargo is an air carrier certified by the FAA and qualifies in
all respects as a citizen of the U.S. as defined in the Federal Aviation Act.
Each of the AIA Aircraft, other than Aircraft AD, is in freight configuration
and, as of the Closing Date, 14 of the AIA Aircraft are subject to an ACMI
Agreement which is in full force and effect. None of the AIA Aircraft is
subject to a true lease which constitutes an interest in such aircraft which is
recordable with the FAA. None of the Companies owns any material Parts other
than Aircargo, Leasing, AIA, KFS and OK, and, as of the Closing Date, no
material portion of the Parts owned by such Companies, other than Parts in
transit for installation or Parts in the process of being refurbished, are
located at other than the addresses specified in the Security Agreement
executed by such Company. None of the Properties or leasehold interests
(excluding Non-Collateral Aircraft) of any Kitty Hawk or any of its
Subsidiaries is subject to any Lien, except Permitted Liens.
Section 7.7 Enforceability. The Loan Documents have been duly and
validly executed and delivered by each of the Companies that is a party thereto
as of the Closing Date, and such Loan
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Documents constitute the legal, valid and binding obligations of the Companies,
enforceable against the Companies in accordance with their respective terms,
except as limited by bankruptcy, insolvency or other laws of general
application relating to the enforcement of creditors' rights and general
principles of equity.
Section 7.8 Approvals. No authorization, approval or consent of,
and no filing or registration with or notice to, any Governmental Authority or
third party is or will be necessary for the execution, delivery or performance
by any Company of any of the Loan Documents to which it is or will be a party
or for the validity or enforceability thereof, except for such consents,
approvals and filings as have been (or will have been as of the Closing Date)
validly obtained or made and are in full force and effect. None of Kitty Hawk
or any of its Subsidiaries has failed to obtain any material governmental
consent, approval, license, Permit, franchise or other governmental
authorization necessary for the ownership or use of any of its Properties or
the conduct of its business.
Section 7.9 Debt. As of the Closing Date, neither Kitty Hawk nor
any of its Subsidiaries has any Debt except for (a) the Obligations, (b) the
Senior Notes, and (c) the Debt disclosed on Schedule 7.9 hereto.
Section 7.10 Taxes. Except as disclosed on Schedule 7.10 hereto,
Kitty Hawk and its Subsidiaries have filed all tax returns (federal, state and
local) required to be filed, including all income, franchise, employment,
Property and sales tax returns, and have paid all of their respective
liabilities for taxes, assessments, governmental charges and other levies that
are due and payable. No Company is aware of any pending investigation of Kitty
Hawk or any of its Subsidiaries by any taxing authority or of any pending but
unassessed tax liability of Kitty Hawk or any of its Subsidiaries. No tax
Liens have been filed and, except as disclosed on Schedule 7.10, no claims are
being asserted against Kitty Hawk or any of its Subsidiaries with respect to
any taxes. Except as disclosed on Schedule 7.10 hereto, as of the Closing
Date, none of the income tax returns of Kitty Hawk or any of its Subsidiaries
is under audit. The charges, accruals and reserves on the books of Kitty Hawk
and its Subsidiaries in respect of taxes or other governmental charges are in
accordance with GAAP.
Section 7.11 Margin Securities. Neither Kitty Hawk nor any of its
Subsidiaries is engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or carrying
margin stock (within the meaning of Regulations G, T, U or X of the Board of
Governors of the Federal Reserve System), and no part of the proceeds of any
Loan will be used to purchase or carry any margin stock or to extend credit to
others for the purpose of purchasing or carrying margin stock.
Section 7.12 ERISA. Neither any Company nor any ERISA Affiliate
maintains or contributes to, or has any obligation under, any Pension Plan
other than the Pension Plans identified on Schedule 7.12. Each Plan of each
Company is in compliance in all material respects with all applicable
provisions of ERISA and the Code. Neither a Reportable Event nor a Prohibited
Transaction has occurred within the last 60 months with respect to any Plan.
No notice of intent to terminate a Pension Plan has been filed, nor has any
Pension Plan been terminated. No circumstances exist which constitute grounds
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administer, a Pension Plan, nor has the PBGC instituted any such
proceedings. Neither
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any Company nor any ERISA Affiliate has completely or partially withdrawn from
a Multiemployer Plan. Each Company and each ERISA Affiliate has met its
minimum funding requirements under ERISA and the Code with respect to all of
its Plans subject to such requirements, and, as of the Closing Date, except as
specified on Schedule 7.12, the present value of all vested benefits under each
funded Plan (exclusive of any Multiemployer Plan) do not and will not exceed
the fair market value of all such Plan assets allocable to such benefits, as
determined on the most recent valuation date of such Plan and in accordance
with ERISA. Neither any Company nor any ERISA Affiliate has incurred any
liability to the PBGC under ERISA. No litigation is pending or threatened
concerning or involving any Plan. There are no unfunded or unreserved
liabilities (on either a going-concern basis or a wind-up basis) relating to
any Plan that could, individually or in the aggregate, have a Material Adverse
Effect if such Company were required to fund or reserve such liability in full.
As of the Closing Date, no funding waivers have been or will have been
requested or granted under Section 412 of the Code with respect to any Plan.
As of the Closing Date, no unfunded or unreserved liability for benefits under
any Plan exceed $100,000, with respect to any Plan, or $100,000 in the
aggregate with respect to all such Plans or Plans (exclusive of any
Multiemployer Plans) on either a going-concern basis or a wind-up basis.
Section 7.13 Disclosure. No written statement, information,
report, representation or warranty made by any Company in any Loan Document or
furnished to Agent or any Lender by any Company in connection with the Loan
Documents or any transaction contemplated hereby or thereby contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known
to any Company which has had a Material Adverse Effect or which could
reasonably be expected to have a Material Adverse Effect.
Section 7.14 Capitalization.
(a) On and as of the Closing Date, the number and class
of the authorized Capital Stock, the par value per share and the
number of shares issued and outstanding with respect to the Capital
Stock of each of the Subsidiaries of Kitty Hawk is as set forth on
Schedule 7.14. Kitty Hawk owns all of the issued and outstanding
Capital Stock each of its Subsidiaries other than AIC, and AIA owns
60% of the partnership interests of AIC.
(b) On and as of the Closing Date, Kitty Hawk has no
Subsidiaries other than Aircargo, Leasing, Charters, Skyfreighters
(an inactive Texas corporation), AIA, AIT, FOL, KFS, OK and AIC.
(c) All of the issued and outstanding Capital Stock of
each of the Subsidiaries of Kitty Hawk has been validly issued and is
fully paid and nonassessable, and there are no outstanding
subscriptions, options, warrants, calls or rights (including
preemptive rights) to acquire, and no outstanding securities or
instruments convertible into, Capital Stock of any Subsidiary of Kitty
Hawk.
Section 7.15 Agreements. Neither Kitty Hawk nor any of its
Subsidiaries is a party to any indenture, loan, credit agreement, stock
purchase agreement or any lease or other agreement,
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document or instrument, or subject to any charter or corporate restriction,
that could reasonably be expected to have a Material Adverse Effect. Neither
Kitty Hawk nor any of its Subsidiaries is in default in any material respect in
the performance, observance or fulfillment of any of the obligations, covenants
or conditions contained in any agreement, document or instrument material to
its business to which it is a party.
Section 7.16 Compliance with Laws. Neither Kitty Hawk nor any of
its Subsidiaries is in violation in any material respect of any Governmental
Requirement.
Section 7.17 Investment Company Act. Neither Kitty Hawk nor any
of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Section 7.18 Public Utility Holding Company Act. Neither Kitty
Hawk nor any of its Subsidiaries is a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or a
"public utility" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
Section 7.19 Environmental Matters.
(a) Except for instances of noncompliance with or
exceptions to any of the following representations and warranties that
could not have, individually or in the aggregate, a Material Adverse
Effect:
(i) Each of Kitty Hawk and its Subsidiaries and
all of its Properties and operations is in full compliance
with all Environmental Laws. No Company is aware of, or has
received any written notice of, any past, present or future
conditions, events, activities, practices or incidents which
may interfere with or prevent the compliance or continued
compliance by Kitty Hawk or any of its Subsidiaries with all
Environmental Laws;
(ii) Each of Kitty Hawk and its Subsidiaries has
obtained all Permits that are required under applicable
Environmental Laws, and all such Permits are in good standing
and all such Persons are in compliance with all of the terms
and conditions thereof;
(iii) No Hazardous Materials exist on, about or
within or have been (to the knowledge of any Company) or are
being used, generated, stored, transported, disposed of on or
Released from any of the Properties of Kitty Hawk or any of
its Subsidiaries except in compliance with applicable
Environmental Laws. The use which each of Kitty Hawk and its
Subsidiaries makes and intends to make of its respective
Properties will not result in the use, generation, storage,
transportation, accumulation, disposal or Release of any
Hazardous Material on, in or from any of its Properties except
in compliance with applicable Environmental Laws;
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(iv) Neither Kitty Hawk nor any of its
Subsidiaries nor any of its currently or previously owned or
leased Properties or operations are subject to any outstanding
or, to the knowledge of any Company, threatened order from or
agreement with any Governmental Authority or other Person or
subject to any judicial or administrative proceeding with
respect to (A) any failure to comply with Environmental Laws,
(B) any Remedial Action, or (C) any Environmental Liabilities;
(v) There are no conditions or circumstances
associated with the currently or previously owned or leased
Properties or operations of Kitty Hawk or any of its
Subsidiaries that could reasonably be expected to give rise to
any Environmental Liabilities or claims resulting in any
Environmental Liabilities. Neither Kitty Hawk nor any of its
Subsidiaries is subject to, or has received written notice of,
any claim from any Person alleging that it is or will be
subject to any Environmental Liabilities;
(vi) No Property of Kitty Hawk or any of its
Subsidiaries is a treatment facility (except for the recycling
of Hazardous Materials generated on-site and the treatment of
liquid wastes subject to the Clean Water Act or for temporary
storage of Hazardous Materials generated on-site prior to
their disposal off-site) or disposal facility requiring a
permit under the Resource Conservation and Recovery Act, 42
U.S.C. Section 6901 et seq., regulations thereunder or any
comparable provision of state law. Each of Kitty Hawk and its
Subsidiaries is in compliance with all applicable financial
responsibility requirements of all Environmental Laws; and
(vii) Neither Kitty Hawk nor any of its
Subsidiaries has failed to file any notice required under
applicable Environmental Law reporting a Release.
(b) No Lien arising under any Environmental Law that
could have, individually or in the aggregate, a Material Adverse
Effect has attached to any Property or revenues of Kitty Hawk or any
of its Subsidiaries.
Section 7.20 Labor Disputes and Acts of God. Neither the business
nor the Properties of Kitty Hawk or any of its Subsidiaries are affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance) that is having or could have a
Material Adverse Effect.
Section 7.21 Material Contracts. Attached hereto as Schedule 7.21
is a complete list, as of the Closing Date, of all Material Contracts of Kitty
Hawk or any of its Subsidiaries, other than the Loan Documents. All of the
Material Contracts are in full force and effect and neither Kitty Hawk nor any
of its Subsidiaries is in default under any Material Contract and no other
Person that is a party thereto is, to the knowledge of any Company, in default
under any of the Material Contracts. None of the Material Contracts prohibit
the transactions contemplated under the Loan Documents.
Section 7.22 Outstanding Securities. As of the Closing Date, all
outstanding securities (as defined in the Securities Act of 1933, as amended,
or any successor thereto, and the rules and
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regulations of the Securities and Exchange Commission thereunder) of each of
Kitty Hawk and its Subsidiaries have been offered, issued, sold and delivered
in compliance with all applicable Governmental Requirements.
Section 7.23 Solvency. Each of Kitty Hawk and the Operating
Subsidiaries, as a separate entity, is Solvent, both before and after giving
effect to the Loans.
Section 7.24 Employee Matters. Except as set forth on Schedule
7.24, as of the Closing Date (a) neither Kitty Hawk nor any of its Subsidiaries
is subject to any collective bargaining agreement, and (b) no petition for
certification or union election is pending with respect to the employees of
Kitty Hawk or any of its Subsidiaries, and no union or collective bargaining
unit has sought such certification or recognition with respect to the employees
of Kitty Hawk or any of its Subsidiaries. There are no strikes, slowdowns,
work stoppages or controversies pending or, to the knowledge of the Companies,
threatened against Kitty Hawk or any of its Subsidiaries which could have,
either individually or in the aggregate, a Material Adverse Effect. Except as
set forth on Schedule 7.24, as of the Closing Date, neither Kitty Hawk nor any
of its Subsidiaries is subject to an employment contract with any executive
officer or director of a Company.
Section 7.25 Insurance. Schedule 7.25 sets forth an accurate
summary description of all policies of insurance (including, without
limitation, the coverage and deductibles thereunder, the limits of such
insurance and the issuers of such insurance) that will be in effect as of the
Closing Date for Kitty Hawk and its Subsidiaries. To the extent such policies
have not been replaced, no notice of cancellation has been received for such
policies and Kitty Hawk and its Subsidiaries are in compliance with all of the
terms and conditions of such policies.
Section 7.26 Common Enterprise. Each of Kitty Hawk and its
Subsidiaries is a member of an affiliated group, and Kitty Hawk and its
Subsidiaries are collectively engaged in a common enterprise with one another.
Each of Kitty Hawk and the Operating Subsidiaries expects to derive substantial
benefit (and may reasonably be expected to derive substantial benefit),
directly and indirectly, from all Loans and Letters of Credit contemplated by
this Agreement, both in its separate capacity and as a member of an affiliated
and integrated group. Each of Kitty Hawk and the Operating Subsidiaries will
receive reasonably equivalent value in exchange for the Collateral and
Guaranties being provided by it as security for the payment and performance of
the Obligations.
Section 7.27 Related Transactions.
(a) All representations and warranties made by Kitty Hawk
and its Subsidiaries in the Related Transactions Documents are true
and correct in all material respects on and as of each date made or
deemed made and as of the Closing Date; provided, however, that, with
respect to the representations and warranties of the Kalitta Companies
contained in the Merger Agreement, such representations and warranties
are, to the knowledge of Kitty Hawk, true and correct in all material
respects only to the extent necessary to avoid a claim of indemnity by
any Kitty Hawk Company under the indemnification provisions of the
Merger Agreement. No rights of cancellation or rescission and, to the
knowledge of Kitty Hawk and its Subsidiaries, no defaults or defenses
exist with respect to any of the Related Transactions
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Documents. Kitty Hawk has delivered to Agent complete and correct
copies of all Related Transactions Documents, including all schedules
and exhibits thereto. The Related Transactions Documents set forth
the entire agreement and understanding of the parties thereto relating
to the subject matter thereof, and there are no other agreements,
arrangements or understandings, written or oral, relating to the
matters covered thereby.
(b) As of the Closing Date, all conditions precedent to
the Related Transactions pursuant to the Related Transactions
Documents have been fulfilled in all material respects or (with the
prior written consent of Agent) waived, the Related Transactions
Documents have not been amended or otherwise modified in any material
respect (except as permitted by this Agreement), and there has not
been any breach of any material term or condition contained in the
Related Transactions Documents. After giving effect to the
consummation of the Merger, Kitty Hawk has acquired all issued and
outstanding Capital Stock of each of the Kalitta Companies free and
clear of any Liens, except the Liens securing the Obligations in favor
of Agent. In connection with the Merger, neither Kitty Hawk nor any
of its Subsidiaries has assumed or will assume any liabilities other
than those required to be assumed by Kitty Hawk and its Subsidiaries
in accordance with the express terms and provisions of the Merger
Agreement. All approvals, authorizations, consents, licenses,
exemptions of, filings or registrations with any Governmental
Authority or other Person required in connection with the Related
Transactions have been obtained (including, without limitation,
notification under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976) and all waiting periods (if any) relating thereto have lapsed.
Section 7.28 Purchase Money Security Interest. The Aircraft
Mortgage executed by Aircargo dated the Closing Date evidences and continues or
creates a purchase-money equipment security interest (as such phrase is used in
Section 1110(a) of the Bankruptcy Code) in each of the AIA Aircraft to the
extent that such security interest secures the Term Loans, and Agent (for and
on behalf of Agent and Lenders) has the benefits provided by Section 1110(a) of
the Bankruptcy Code to the extent of such purchase-money equipment security
interest.
ARTICLE 8
Affirmative Covenants
Each of the Companies jointly and severally covenants and agrees that,
as long as the Obligations or any part thereof are outstanding or any Lender
has any Commitment hereunder or any Letter of Credit remains outstanding, it
will perform and observe, or cause to be performed and observed, the following
covenants:
Section 8.1 Reporting Requirements. Kitty Hawk will furnish to
Agent and each Lender:
(a) Annual Financial Statements. As soon as available,
and in any event within 90 days after the end of each fiscal year of
Kitty Hawk, beginning with the fiscal year ending December 31, 1997:
(i) a copy of the annual audit report of Kitty Hawk and its
Subsidiaries
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for such fiscal year containing, on a consolidated basis, a balance
sheet and statements of income, shareholders' equity and sources and
uses of cash as at the end of such fiscal year and for the 12-month
period then ended, in each case setting forth in comparative form the
figures for the preceding fiscal year, all in reasonable detail and
audited and certified by Ernst & Young or other independent certified
public accountants of recognized standing reasonably acceptable to
Agent and containing no qualification thereto except as may be
reasonably acceptable to Agent, to the effect that such report has
been prepared in accordance with GAAP; (ii) consolidating schedules
with respect to the balance sheet, statement of income, shareholders'
equity and sources and uses of cash for each of Kitty Hawk and its
Subsidiaries; and (iii) a copy of Xxxxx Xxxx'x Form 10- K annual
report filed or to be filed with the SEC;
(b) Quarterly Financial Statements. As soon as
available, and in any event within 45 days after the end of each of
the first three fiscal quarters of each fiscal year of Kitty Hawk,
beginning with the fiscal quarter ending March 31, 1998, (i) an
unaudited financial report of Kitty Hawk and its Subsidiaries as of
the end of such fiscal quarter and for the portion of the fiscal year
then ended containing, on a consolidated basis, balance sheets and
statements of income, shareholders' equity and sources and uses of
cash, in each case setting forth in comparative form the figures for
the corresponding period of the preceding fiscal year, all in
reasonable detail certified by a Responsible Officer of Kitty Hawk to
have been prepared in accordance with GAAP and to fairly and
accurately present (subject to year-end audit adjustments) the
financial condition and results of operations of Kitty Hawk and its
Subsidiaries, on a consolidated and consolidating basis, at the date
and for the periods indicated therein, and (ii) a copy of Xxxxx Xxxx'x
Form 10-Q quarterly report filed or to be filed with the SEC;
(c) Compliance Certificate. Concurrently with the
delivery of each of the financial statements referred to in Sections
7.1(a) and 7.1(b), a certificate of a Responsible Officer of Kitty
Hawk (i) stating that, to the best of such officer's knowledge, no
Default has occurred and is continuing or, if a Default has occurred
and is continuing, stating the nature thereof and the action that has
been taken and is proposed to be taken with respect thereto, and (ii)
showing in reasonable detail the calculations demonstrating compliance
with Sections 10.1, 10.2, 10.3, 10.4 and 10.5.
(d) Applicable Margin and Commitment Fee Rate
Certificate. Concurrently with the delivery of the financial
statements referred to in Section 8.1(b), a certificate of a
Responsible Officer of Kitty Hawk showing in reasonable detail the
calculation of the Applicable Base Rate Margin, the Applicable
Commitment Fee Rate and the Applicable Eurodollar Margin as of the
next Calculation Date;
(e) Borrowing Base Report. Within 30 days after the end
of each calendar month, commencing with the month of January 1998, a
Borrowing Base Report certified by a Responsible Officer of Kitty
Hawk, together with information regarding the aging of accounts and
Parts reports as Agent may reasonably request from time to time;
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(f) Management Letters. Promptly upon receipt thereof, a
copy of any management or comment letter submitted to Kitty Hawk or
any of its Subsidiaries by independent certified public accountants
with respect to the business, condition (financial or otherwise),
operations, prospects, or Properties of Kitty Hawk or any of its
Subsidiaries;
(g) Notice of Litigation. Promptly after the
commencement thereof, notice of all actions, suits, and proceedings
before any Governmental Authority or arbitrator affecting Kitty Hawk
or any of its Subsidiaries which, if determined adversely to Kitty
Hawk or such Subsidiary, could reasonably be expected to have a
Material Adverse Effect;
(h) Notice of Default. As soon as possible and in any
event within 5 days after the occurrence of each Default, a written
notice setting forth the details of such Default and the action that
Kitty Hawk and its Subsidiaries have taken and propose to take with
respect thereto;
(i) ERISA Reports. Promptly after the filing or receipt
thereof, copies of all reports, including annual reports, and notices
which Kitty Hawk or any of its Subsidiaries or ERISA Affiliates files
with or receives from the PBGC or the U.S. Department of Labor under
ERISA, and as soon as possible and in any event within five days after
such Person knows or has reason to know that any Pension Plan is
insolvent, or that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or Multiemployer Plan, or that the
PBGC or Kitty Hawk or any of its Subsidiaries or ERISA Affiliates has
instituted or will institute proceedings under ERISA to terminate or
withdraw from or reorganize any Pension Plan, a certificate of a
Responsible Officer of Kitty Hawk setting forth the details as to such
insolvency, withdrawal, Reportable Event, Prohibited Transaction or
termination and the action that Kitty Hawk and its Subsidiaries have
taken and propose to take with respect thereto;
(j) Reports to Other Creditors. Promptly after the
furnishing thereof, copies of each written statement or report
required to be furnished by Kitty Hawk or any of its Subsidiaries to
any other party pursuant to or in connection with the terms of any
indenture (including the Indenture), loan, or credit or similar
agreement and not otherwise required to be furnished to Agent pursuant
to this Section 8.1;
(k) Notice of Material Adverse Effect. As soon as
possible and in any event within five days after the occurrence
thereof, written notice of any event, circumstance or other matter
that could reasonably be expected to have a Material Adverse Effect;
(l) Proxy Statements, Etc. As soon as available, one
copy of each financial statement, report, notice or proxy statement
sent by Kitty Hawk or any of its Subsidiaries to its stockholders
generally and one copy of each regular, periodic or special report,
registration statement or prospectus filed by Kitty Hawk or any of its
Subsidiaries with any securities exchange or the SEC, and of all press
releases and other statements made by Kitty Hawk or any of its
Subsidiaries to the public containing material developments in its
business;
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79
(m) Notice of New Subsidiaries. Concurrently with the
delivery of each of the financial statements referred to in Sections
8.1(a) and 8.1(b), notice of the creation or acquisition of any
Subsidiary of Kitty Hawk after the Closing Date and subsequent to the
last delivery of such information;
(n) Appraisals. From time to time upon the request of
Agent, appraisals of the AIA Aircraft reasonably satisfactory in form
and substance to Agent, which appraisals shall be at the expense of
Kitty Hawk except if and to the extent that such appraisals are
required by Agent on more than one occasion during any fiscal year of
Kitty Hawk;
(o) Insurance. Within 60 days prior to the end of each
fiscal year of Kitty Hawk, a report in form and substance reasonably
satisfactory to Agent summarizing all material insurance coverage
maintained by Kitty Hawk and its Subsidiaries as of the date of such
report and all material insurance coverage planned to be maintained by
such Persons in the subsequent fiscal year;
(p) Plan Information. From time to time, as reasonably
requested by Agent or any Lender, such books, records and other
documents relating to any Pension Plan as Agent or any Lender shall
specify; prior to any termination, partial termination or merger of a
Pension Plan covering employees of Kitty Hawk or any of its
Subsidiaries or ERISA Affiliates, or a transfer of assets of a Pension
Plan covering employees of Kitty Hawk or any of its Subsidiaries or
ERISA Affiliates, written notification thereof; promptly upon Xxxxx
Xxxx'x or any of its Subsidiaries' receipt thereof, a copy of any
determination letter or advisory opinion regarding any Pension Plan
received from any Governmental Authority and any amendment or
modification thereto as may be necessary as a condition to obtaining a
favorable determination letter or advisory opinion; and promptly upon
the occurrence thereof, written notification of any action requested
by any Governmental Authority to be taken as a condition to any such
determination letter or advisory opinion;
(q) Environmental Assessments and Notices. Promptly
after the receipt thereof, a copy of each environmental assessment
(including any analysis relating thereto) prepared with respect to any
real Property of Kitty Hawk or any of its Subsidiaries and each notice
sent by any Governmental Authority relating to any failure or alleged
failure to comply with any Environmental Law or any liability with
respect thereto;
(r) Annual Projections. On or before 30 days prior to
the end of each fiscal year of Kitty Hawk, financial projections,
prepared in reasonable detail, for Kitty Hawk and its Subsidiaries for
the immediately succeeding fiscal year which reflect a good faith
estimate of Kitty Hawk and its senior management concerning the
probable financial condition and performance of Kitty Hawk and its
Subsidiaries for such succeeding fiscal year based on assumptions
believed to be reasonable at the time made; and
(s) General Information. Promptly, such other
information concerning Kitty Hawk or any of its Subsidiaries as Agent
may from time to time reasonably request.
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 73
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Section 8.2 Maintenance of Existence; Conduct of Business. Each
of Kitty Hawk and its Subsidiaries will preserve and maintain its corporate or
other entity existence (except for mergers of Subsidiaries permitted by Section
9.3) and all of its material leases, privileges, licenses, Permits, franchises,
qualifications, patents, trademarks, copyrights, intangible Property and rights
that are necessary or appropriate in the ordinary conduct of its business
(including, without limitation, as to Aircargo and AIA, its Federal Aviation
Act Part 121 air carrier operating certificate and, as to KFS and OK, its
Federal Aviation Act Part 135 air carrier operating certificate). Each of
Kitty Hawk and its Subsidiaries will conduct its business in an orderly and
efficient manner in accordance with good business practices. All AIA Aircraft
will be maintained as ready and available for regular, uninterrupted revenue
generating operation in compliance with all laws and FAA regulations.
Section 8.3 Maintenance of Properties; Hush Kits. Aircargo will,
at all times, have good and indefeasible title to each of the AIA Aircraft free
and clear of any Lien other than the perfected, first priority Liens of Agent
for the benefit of Agent and Lenders pursuant to the Loan Documents as security
for the Obligations. Each of Kitty Hawk and its Subsidiaries will maintain,
keep and preserve all of its material Properties necessary, useful or
appropriate in the proper conduct of its business in good repair, working order
and condition (ordinary wear and tear excepted) and make all necessary repairs,
renewals, replacements, betterments and improvements thereof. All AIA Aircraft
maintenance and service will be performed in compliance with all airworthiness
directives and mandatory service bulletins and any and all repairs,
modifications and conversions of the AIA Aircraft and the installation of Hush
Kits shall be done in accordance with any and all FAA specifications and
requirements. Kitty Hawk and Aircargo (a) will cause a Hush Kit to be
maintained on (and added to if applicable) each of the AIA Aircraft on or
before December 31, 1999, or (b) if and to the extent that such a Hush Kit is
not added to any such aircraft by such date, will, from time to time within 30
days after any request by Agent and pursuant to an Aircraft Mortgage and other
Security Documents reasonably satisfactory to Agent, grant to Agent a
perfected, first priority Lien (as security for the Obligations) on other Stage
3 (as so qualifying under the Airport Noise and Capacity Act of 1990 and the
regulations promulgated thereunder) Kitty Hawk Aircraft reasonably acceptable
to Agent that have an aggregate fair market value at least equal to the value
of the AIA Aircraft specified by Agent which does not then have a Hush Kit in
exchange for Agent's release of its Lien on such aircraft specified by Agent.
In addition, Kitty Hawk and its Subsidiaries will add Hush Kits to the AIA
Aircraft that do not presently have a Hush Kit at a rate that is not less than
the rate (based upon the absolute number of aircraft as opposed to the number
of aircraft as a percentage of the AIA Aircraft and the Non-Collateral
Aircraft) at which such Hush Kits are added to the Non-Collateral Aircraft that
do not presently have a Hush Kit.
Section 8.4 Taxes and Claims. Each of Kitty Hawk and its
Subsidiaries will pay or discharge at or before maturity or before becoming
delinquent (a) all taxes, levies, assessments and governmental charges imposed
on it or its income or profits or any of its Property and (b) all lawful claims
for labor, material and supplies, which, if unpaid, might become a Lien upon
any of its Property; provided, however, that neither Kitty Hawk nor any of its
Subsidiaries will be required to pay or discharge any tax, levy, assessment or
governmental charge or claim for labor, material or supplies whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings being diligently pursued and for which adequate reserves have been
established under GAAP.
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Section 8.5 Insurance.
(a) Public Liability and Property Damage Insurance. Each
of Kitty Hawk and its Subsidiaries shall carry or cause to be carried
with respect to the AIA Aircraft, and with respect to all other Kitty
Hawk Aircraft in operation, at their expense, comprehensive airline
liability (including, without limitation, passenger, contractual,
bodily injury, cargo and property damage liability) insurance (i) in
an amount for each such aircraft of not less than (A) except as
provided in clause (B) succeeding, $50,000,000 per occurrence combined
single limit with respect to each Kitty Hawk Aircraft except, with
respect to Boeing model 727 and 747 aircraft and Lockhead model L1011
aircraft, $200,000,000 per occurrence combined single limit and
except, with respect to model DC8 and DC9 aircraft and Convair
aircraft, $100,000,000 per occurrence combined single limit and (B)
with respect to aircraft operated under KFS' or OK's Federal Aviation
Act Part 135 air carrier operating certificate, the amount of such
insurance that is not less than such insurance as in effect as of the
Closing Date for such aircraft or other aircraft of the same type as
represented in the written communication dated November 13, 1997, from
counsel to Kitty Hawk to Xxxxx Fargo, (ii) of the type and covering
the same risks as from time to time are applicable to similar aircraft
owned or leased by Kitty Hawk and its Subsidiaries, (iii) of the type
customarily carried by U.S. commercial air carriers similarly situated
with Kitty Hawk or its Subsidiary (as applicable) and operating
similar aircraft and engines and covering risks of the kind
customarily insured against by such carriers, and (iv) which is
maintained in effect with insurers of recognized reputation and
responsibility.
(b) Insurance Against Loss or Damage. Each of Kitty Hawk
and its Subsidiaries shall maintain or cause to be maintained in
effect, at their expense, with insurers of recognized reputation and
responsibility, all-risk aircraft hull insurance covering the AIA
Aircraft and all-risk property damage insurance covering engines and
parts while removed from such aircraft and not replaced by similar
components title to which is vested in Aircargo free and clear of all
Liens, which insurance shall include, without limitation, except with
respect to all-risk property damage insurance and to the extent
commercially available, aircraft war risk and governmental
confiscation and expropriation and hijacking insurance; provided, that
such insurance shall at all times be for an amount not less than the
greater of 110% of the aggregate outstanding principal amount of the
Term Loans advanced against such aircraft or the amount which, in the
judgment of Kitty Hawk, is sufficient to fully insure the fair market
value of such aircraft (but shall not be required to exceed such fair
market value as of the Closing Date). In addition, each of Kitty Hawk
and its Subsidiaries shall maintain or cause to be maintained in
effect, at their expense, insurance of the types and in the amounts
specified in this Section 8.5(b) preceding covering all other Kitty
Hawk Aircraft in operation if and to the extent that such insurance is
commercially available; provided, however, that aircraft war risk and
governmental confiscation and expropriation and hijacking insurance
shall not be required to be maintained with respect to such other
Kitty Hawk Aircraft.
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(c) Adjustment. Except during a period when a Default
has occurred and is continuing, all losses covered by insurance will
be adjusted by Kitty Hawk and its Subsidiaries with the insurers.
(d) Application of Insurance Proceeds if no Default.
Each of Kitty Hawk and its Subsidiaries will cause each Insurance
Recovery relating to the Collateral to be deposited promptly with
Agent as security for the Obligations. If no Default shall have
occurred and be continuing, the applicable Company may use each such
Insurance Recovery to repair, restore or replace the Property that was
the subject of such Insurance Recovery. An Insurance Recovery will
only be released to a Company pursuant to this Section 8.5(d) upon
delivery by such Company to Agent of evidence reasonably satisfactory
to Agent of the expenditure of amounts in repair, restoration or
replacement of the Property that was the subject of the Insurance
Recovery or the purchase of other, similar Property for use in the
Company's business in which Agent, for the benefit of Agent and
Lenders, shall have a perfected, first priority Lien as security for
the Obligations. Each of Kitty Hawk and its Subsidiaries will
promptly pay all Excess Insurance Proceeds to Agent for application
against the Obligations in accordance with Section 2.7(a).
(e) Application of Insurance Proceeds if a Default. If a
Default shall have occurred and be continuing, each of Kitty Hawk and
its Subsidiaries will cause all proceeds of insurance paid on account
of the loss of or damage to any Collateral and all awards of
compensation for any Collateral taken by condemnation or eminent
domain to be paid directly to Agent to be applied against or held as
security for the Obligations, at the election of the Required Lenders.
(f) Certificates. Kitty Hawk shall furnish, or cause to
be furnished, to Agent, on or before the Closing Date and concurrently
with the renewal of each insurance policy (but in no event less
frequently than once each calendar year commencing in 1997), a
certificate signed by an authorized representative of the insureds
(the "Insurance Broker"), describing in reasonable detail the hull and
liability insurance (and property insurance for detached engines and
parts) then carried and maintained with respect to the AIA Aircraft
and stating the opinion of such Insurance Broker that (i) such
insurance complies with the terms hereof and (ii) that such insurance
provides coverages against risks that are customarily insured against
by U.S. air carriers, and that such coverages are in substantially
similar forms, are of such types and have limits within the range of
limits as are customarily carried by U.S. carriers. Kitty Hawk shall
cause such Insurance Brokers to agree to advise Agent in writing of
any default in the payment of any premium and of any other act or
omission on the part of Kitty Hawk or any of its Subsidiaries of which
it has knowledge and which might invalidate or render unenforceable,
in whole or in part, any insurance on the AIA Aircraft, and to advise
Agent in writing at least 30 days (except a maximum of 7 days with
respect to war risk coverages) prior to the cancellation (but not
scheduled expiration if renewed prior thereto) or material adverse
change of any insurance maintained pursuant to this Section 8.5.
Kitty Hawk shall also cause such Insurance Brokers to agree to deliver
to Agent, at or before the expiration of any insurance policy
referenced in a previously delivered certificate of insurance, a new
certificate substantially in the form delivered on the Closing Date
except for changes
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 76
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in the coverage consistent with the terms hereof. If Kitty Hawk or
any of its Subsidiaries fails to maintain or cause to be maintained
insurance as herein provided, the Required Lenders may at their sole
option, but shall be under no duty to, provide such insurance and, in
such event, Kitty Hawk and its Subsidiaries shall, upon demand,
reimburse the Required Lenders for the costs thereof; provided,
however, that no exercise by the Required Lenders of said option shall
affect the provisions of this Agreement, including the provisions that
failure by Kitty Hawk or any of its Subsidiaries to maintain the
prescribed insurance shall constitute an Event of Default.
(g) Deductibles. Kitty Hawk and its Subsidiaries shall
have the right to self-insure to the extent of any applicable
mandatory minimum per aircraft (or, if applicable, per annum or other
period) hull or liability insurance deductible imposed by the aircraft
hull or liability insurer.
(h) Terms of Insurance Policies. Any policies of
insurance carried in accordance with this Sections 8.5 covering the AIA
Aircraft, and any policies taken out in substitution or replacement
for any such policies, (i) shall name Agent, for and on behalf of each
of the Lenders, and the Lenders as additional insured, with respect to
liability policies, and Agent, for and on behalf of each of the
Lenders as loss payee, with respect to casualty policies (but without
imposing on any such party liability to pay premiums with respect to
such insurance), (ii) may provide for self-insurance to the extent
permitted in Section 8.5(g), (iii) shall provide that, if the insurers
cancel such insurance for any reason whatever or if the same is
allowed to lapse for non-payment of premium or if any material change
is made in the insurance which adversely affects the interest of
Agent, such lapse, cancellation or change shall not be effective as to
Agent for 30 days (except a maximum of seven days with respect to war
risk coverages in accordance with standard industry practice) after
receipt by Agent of written notice by such insurers of such lapse,
cancellation or change, (iv) shall provide that the interests of Agent
and the Lenders in such policies shall not be invalidated by any
action or inaction of Kitty Hawk or any of its Subsidiaries or any
other Person having possession and shall insure the interests of Agent
and the Lenders, as they appear, regardless of any breach or violation
of any warranty, declaration or condition contained in such policies
by Kitty Hawk or any of its Subsidiaries or by any such Person having
possession, (v) shall be primary without any right of contribution
from any other insurance which is carried by Agent or the Lenders,
(vi) shall expressly provide that all of the provisions thereof,
except the limits of liability, shall operate in the same manner as if
there were a separate policy covering each insured, (vii) shall waive
any right of the insurers to set-off or counterclaim or any other
deduction, whether by attachment or otherwise, in respect of any
liability of Agent, and (viii) shall provide that, in the event of
loss involving the AIA Aircraft, Agent shall be sole loss payee for
the account of all interests.
(i) Additional Insurance Requirements. Kitty Hawk and
its Subsidiaries will, in connection with the ownership and operation
of all Kitty Hawk Aircraft, maintain such insurance as is required to
be maintained in accordance with the Indenture.
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Section 8.6 Inspection Rights. At any reasonable time and from
time to time, each of Kitty Hawk and its Subsidiaries will permit
representatives and agents of Agent and each Lender to examine, copy and make
extracts from its books and records (including, without limitation, for the
purpose of verifying the Borrowing Base), to visit and inspect its Properties
and to discuss its business, operations and financial condition with its
officers and independent certified public accountants. Each of Kitty Hawk and
its Subsidiaries will authorize their accountants in writing (with a copy to
Agent) to comply with this Section 8.6.
Section 8.7 Keeping Books and Records. Each of Kitty Hawk and
its Subsidiaries will maintain appropriate books of record and account in
accordance with GAAP consistently applied in which true, full and correct
entries will be made of all their respective dealings and business affairs. If
any changes in accounting principles from those used in the preparation of the
financial statements referenced in Section 8.1 are hereafter required or
permitted by GAAP and are adopted by Kitty Hawk or any of its Subsidiaries with
the concurrence of its independent certified public accountants and such
changes in GAAP result in a change in the method of calculation or the
interpretation of any of the financial covenants, standards or terms found in
Section 8.1 or Article 10 or any other provision of this Agreement, then Kitty
Hawk and its Subsidiaries and the Required Lenders agree to amend any such
affected terms and provisions so as to reflect such changes in GAAP with the
result that the criteria for evaluating the financial condition of Kitty Hawk
and its Subsidiaries shall be the same after such changes in GAAP as if such
changes in GAAP had not been made; provided that, until any necessary
amendments have been made, the certificate required to be delivered under
Section 8.1(c) hereof demonstrating compliance with Article 10 shall include
calculations setting forth the adjustments from the relevant items as shown in
the current financial statements based on the changes to GAAP to the
corresponding items based on GAAP as used in the financial statements
referenced in Section 7.2(a), in order to demonstrate how such financial
covenant compliance was derived from the current financial statements. All
airframe and engine logs for the AIA Aircraft and other Kitty Hawk Aircraft
will be correct, complete and accurate.
Section 8.8 Compliance with Laws. Each of Kitty Hawk and its
Subsidiaries will comply in all material respects with all applicable
Governmental Requirements.
Section 8.9 Compliance with Agreements. Each of Kitty Hawk and
its Subsidiaries will comply in all material respects with all material
agreements, contracts, documents and instruments binding on it or affecting its
Properties or business.
Section 8.10 Further Assurances. Each of Kitty Hawk and its
Subsidiaries will execute and deliver such further agreements, documents and
instruments and take such further action as may be requested by Agent to carry
out the provisions and purposes of this Agreement and the other Loan Documents,
to evidence the Obligations and to create, preserve, maintain and perfect the
Liens of Agent for the benefit of itself and Lenders in and to the Collateral
and the required priority of such Liens. Without limiting the generality of
the foregoing, each of Kitty Hawk and its Subsidiaries will use all reasonable
efforts to obtain agreements (e.g., landlord and mortgagee consents and
waivers) of the owners of the leased real properties and the lenders of such
owners, in form and substance reasonably satisfactory to Agent, as Agent may
request from time to time.
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Section 8.11 ERISA. Each of Kitty Hawk and its Subsidiaries will,
and will cause each of its ERISA Affiliates to, comply with all minimum funding
requirements and all other material requirements of ERISA so as not to give
rise to any liability thereunder.
Section 8.12 Aircraft Registration, Maintenance, Operation,
Insignia.
(a) Registration and Maintenance. Each of Kitty Hawk and
its Subsidiaries, at their own cost and expense, shall:
(i) cause the AIA Aircraft to be duly registered
in the name of Aircargo and to remain duly registered in the
name of Aircargo under the Federal Aviation Act;
(ii) maintain, service, repair and overhaul each
of the AIA Aircraft (A) so as to keep such aircraft in good
operating condition and so as to keep the such aircraft in
such condition as may be necessary to enable the airworthiness
certification for such aircraft to be maintained in good
standing at all times under the Federal Aviation Act, (B) so
as to comply with all airworthiness directives (at the time
and to the extent applicable to Kitty Hawk and its
Subsidiaries or other operators of such aircraft),
manufacturer manuals and mandatory service bulletins and all
applicable insurance policies, and (C) in substantially the
same manner as Kitty Hawk and its Subsidiaries maintain,
service, repair or overhaul similar aircraft and without in
any way discriminating against such aircraft (or in such other
manner as shall have been approved by Required Lenders in
writing);
(iii) maintain or cause to be maintained all
records, logs and other materials required to be maintained in
respect of the AIA Aircraft by the Federal Aviation Act or any
applicable Government Authority; and
(iv) continuously cause the AIA Aircraft to remain
in normal revenue generating operation (subject to maintenance
requirements in the ordinary course of business).
(b) Insignia. On or before March 31, 0000, Xxxxx Xxxx
and Aircargo agree to affix and maintain (or cause to be affixed and
maintained), conspicuously displayed, on the cockpit bulkhead of each
AIA Aircraft and on each engine, a nameplate (or, with respect to
engines, a stencil) bearing the inscription:
Mortgaged To
Xxxxx Fargo Bank (Texas), National Association
(as Agent for itself and other Lenders)
(such nameplate to be replaced, if necessary, with a nameplate
reflecting the name of any successor mortgagee). Kitty Hawk and its
Subsidiaries shall not allow the name of any Person to be placed on
any AIA Aircraft as a designation that might be interpreted as a claim
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 79
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of ownership; provided, that nothing herein shall prohibit Kitty Hawk
and its Subsidiaries from placing its or its vendee's customary colors
and insignia on the AIA Aircraft.
Section 8.13 Replacement of Parts; Alterations, Modifications and
Additions.
(a) Replacement of Parts. Each of Kitty Hawk and its
Subsidiaries shall, at their own cost and expense, promptly replace or
cause to be replaced all parts for any AIA Aircraft which may from
time to time become worn out, lost, stolen, destroyed, seized,
confiscated, damaged beyond repair, obsolete or permanently rendered
unfit for use for any reason whatsoever. All replacement parts shall
be owned by a Company free and clear of all Liens (other than Liens in
favor of Agent securing the Obligations) and shall be in as good an
operating condition as, and shall have a value at least equal to, the
parts replaced, assuming such replaced parts were in the condition and
repair required to be maintained by the terms hereof. All parts at
any time removed from the AIA Aircraft shall remain the property of a
Company and remain subject to the Lien of the Loan Documents, no
matter where located, until such time as such parts shall be replaced
by parts which are free and clear of all Liens and have become subject
to the Lien of the Loan Documents.
(b) Alterations, Modifications and Additions. Each of
Kitty Hawk and its Subsidiaries shall, at their own expense, make (or
cause to be made) such alterations and modifications in and additions
to the AIA Aircraft as may be required to meet the applicable
standards of the FAA and to maintain the standard certificate of
airworthiness for such aircraft. In addition, Kitty Hawk and its
Subsidiaries may, at their own expense, from time to time make such
alterations and modifications in and additions to the AIA Aircraft as
they may deem desirable in the proper conduct of their business;
provided, that no such alteration, modification or addition impairs
the condition or airworthiness of any such AIA Aircraft or diminishes
the value below the value thereof immediately prior to such
alteration, modification or addition assuming any such AIA Aircraft
were then in the condition required to be maintained by the terms of
the Loan Documents. All parts incorporated or installed in or
attached or added to the AIA Aircraft as the result of any such
alteration, modification or addition (the "Additional Parts") shall,
without further act, become subject to the Lien of the Loan Documents.
Kitty Hawk and its Subsidiaries may, at their own expense at any time,
so long as no Default shall have occurred and be continuing, remove or
suffer to be removed any Additional Part, provided that such
Additional Part:
(i) is in addition to, and not in replacement of
or substitution for, (A) any part originally incorporated or
installed in or attached to such aircraft upon the cargo
conversion of and installation of Hush Kits on such aircraft,
or (B) any part in replacement of or substitution for any such
part;
(ii) is not required to be incorporated or
installed in or attached or added to such aircraft pursuant to
the terms hereof or under any contract; and
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(iii) can be removed from such aircraft without
impairing the condition or airworthiness or diminishing the
value of such aircraft which such aircraft would have had at
such time had such alteration, modification or addition not
occurred.
Upon the removal thereof as provided above, such Additional Part shall
no longer be deemed subject to the Lien of the Loan Documents.
Section 8.14 Ownership of Subsidiaries. Kitty Hawk shall at all
times own all issued and outstanding Capital Stock of each of the Operating
Subsidiaries and Skyfreighters.
Section 8.15 Collateral Audit. Kitty Hawk and its Subsidiaries
will cooperate fully with Agent to allow Agent to promptly complete a
collateral audit of the accounts and Parts of the Companies and to facilitate
determinations of the Borrowing Base at any time and from time to time in
accordance with this Agreement.
ARTICLE 9
Negative Covenants
Each of the Companies jointly and severally covenants and agrees that,
as long as the Obligations or any part thereof are outstanding or any Lender
has any Commitment hereunder or any Letter of Credit remains outstanding, it
will perform and observe, or cause to be performed and observed, the following
covenants:
Section 9.1 Debt. Neither Kitty Hawk nor any of its Subsidiaries
will, without the prior written consent of Required Lenders, incur, create,
assume or permit to exist any Debt, except:
(a) Debt of Kitty Hawk and its Subsidiaries to Agent and
Lenders pursuant to the Loan Documents;
(b) Debt of Kitty Hawk and its Subsidiaries in an
aggregate principal amount not to exceed $340,000,000 evidenced by the
Senior Notes;
(c) Debt (in addition to the Debt referred to in clauses
(a) and (b) preceding) incurred in the ordinary course of business
(including, without limitation, Debt incurred to finance the
acquisition of additional aircraft) not to exceed $75,000,000 in
aggregate principal amount at any time outstanding;
(d) Debt owed by Operating Subsidiaries, other than AIC,
of Kitty Hawk to Kitty Hawk or other Operating Subsidiaries, other
than AIC, in connection with advancement of funds to such
Subsidiaries, other than AIC, for working capital purposes in the
ordinary course of business, which Debt shall be unsecured and, if
evidenced by promissory notes or similar instruments, such promissory
notes or similar instruments shall be pledged and delivered to Agent,
together with appropriate endorsements thereto, for and on behalf of
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Agent and Lenders as security for the payment and performance of the
Obligations pursuant to pledge agreements in form and substance
reasonably satisfactory to Agent; and
(e) the existing Debt specified in Schedule 1.1(c), which
Debt shall not exceed the principal amounts thereof specified in such
Schedule.
Section 9.2 Limitation on Liens. Neither Kitty Hawk nor any of
its Subsidiaries will incur, create, assume or permit to exist any Lien upon
any Property (including, without limitation, the Collateral) except Permitted
Liens. Neither Kitty Hawk nor any of its Subsidiaries will incur, create,
assume or permit to exist any Lien upon any Capital Stock issued by any
Subsidiary of Kitty Hawk other than Permitted Liens in favor of Agent (for the
benefit of Agent and Lenders) securing the payment and performance of
Obligations pursuant to the Loan Documents.
Section 9.3 Mergers, Etc. Neither Kitty Hawk nor any of its
Subsidiaries will, without the prior written consent of the Required Lenders,
(a) become a party to a merger or consolidation, (b) wind-up, dissolve or
liquidate itself, (c) form, purchase or acquire a Subsidiary, or (d) purchase
or acquire all or a material or substantial part of the business or Properties
of any Person; provided, however, that any Subsidiary of Kitty Hawk may merge
with and into Kitty Hawk or any Operating Subsidiary if (but only if) (i) the
surviving entity in such merger is Kitty Hawk or a Wholly-Owned Subsidiary of
Kitty Hawk, (ii) if an Operating Subsidiary is a party to such merger, the
surviving entity in such merger is Kitty Hawk or an Operating Subsidiary, (iii)
at the time of such merger, each entity that is a party thereto is Solvent, and
(iv) the parties to such merger execute and deliver to Agent such agreements,
documents and instruments as Agent may reasonably request in order to ensure
that the Loan Documents and the Liens in the Collateral in favor of Agent are
not affected by such merger; and provided, further, however, that Kitty Hawk or
a Operating Subsidiary may acquire the business or Properties of any Person
pursuant to an asset acquisition or stock acquisition if and to the extent that
the business or Properties acquired are used in the present lines of business
of Kitty Hawk and the Operating Subsidiaries if (but only if) (A) both
immediately prior to and after giving pro forma effect to such acquisition, the
ratio of Funded Debt to Adjusted EBITDA for the four fiscal quarters of Kitty
Hawk then most recently ended is less than 3.00 to 1.00 (assuming that such
acquisition had been consummated as of the beginning of such four fiscal
quarter period), and (B) the aggregate amount paid or payable by Kitty Hawk or
any of its Subsidiaries in connection with all such asset acquisitions and
stock acquisitions and in connection with all Investments made in any Person as
permitted in accordance with Section 9.5(g) shall not exceed $75,000,000 during
any fiscal year of Kitty Hawk.
Section 9.4 Restricted Payments. Neither Kitty Hawk nor any of
its Subsidiaries will make or permit to be made any Restricted Payments,
except:
(a) subject to the subordination provisions relating
thereto, Kitty Hawk and its Subsidiaries may make regularly scheduled
payments (as opposed to prepayments) of principal and accrued interest
on any Subordinated Debt permitted to be incurred in accordance with
Section 9.1;
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(b) Subsidiaries of Kitty Hawk other than the Operating
Subsidiaries may declare and pay dividends to Kitty Hawk to the extent
permitted by applicable law;
(c) the Operating Subsidiaries may declare and pay
dividends to Kitty Hawk to the extent permitted by applicable law and
consistent with prudent business practices; and
(d) purchases by Kitty Hawk of shares of Capital Stock of
Kitty Hawk from employees of Kitty Hawk and its Subsidiaries upon the
termination of the employment of such employees, provided that the
amount paid therefor shall not exceed the fair market value of such
shares to be purchased and shall not exceed $500,000 in the aggregate
during any fiscal year; and
provided, however, that no Restricted Payments may be made pursuant to any of
clauses (a) or (d) preceding if a Default exists at the time of such Restricted
Payment or would result therefrom.
Section 9.5 Investments. Neither Kitty Hawk nor any of its
Subsidiaries will make or permit to be made or remain outstanding any advance,
loan or extension of credit (except an advance, loan or extension of credit to
customers and suppliers in the ordinary course of business not to exceed
$5,000,000 in aggregate amount at any time outstanding) or any capital
contribution to or investment in any Person, or purchase or own any stock,
bonds, notes, debentures or other securities of any Person, or be or become a
joint venturer with or partner of any Person (all such transactions being
herein called "Investments"), except:
(a) Investments in obligations or securities received in
settlement of debts (created in the ordinary course of business) owing
to Kitty Hawk or any of its Subsidiaries;
(b) existing Investments identified on Schedule 9.5
hereto;
(c) Investments in securities issued or guaranteed by the
U.S. with maturities of one year or less from the date of acquisition;
(d) Investments in certificates of deposit and Eurodollar
time deposits with maturities of six months or less from the date of
acquisition, bankers' acceptances with maturities not exceeding six
months and overnight bank deposits, in each case with any Lender or
with any domestic commercial bank having capital and surplus in excess
of $500,000,000;
(e) Investments in repurchase obligations with a term of
not more than seven days for securities of the types described in
clause (c) preceding with any Lender or with any domestic commercial
bank having capital and surplus in excess of $500,000,000;
(f) Investments in commercial paper of a domestic issuer
rated A-1 or better or P-1 or better by Standard & Poor's Corporation
or Xxxxx'x Investors Services, Inc., respectively, maturing not more
than six months from the date of acquisition;
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(g) Investments by Kitty Hawk in its Operating
Subsidiaries existing on the Closing Date and, if a Default does not
exist at the time of such Investment or would not result therefrom,
additional Investments by Kitty Hawk in its Operating Subsidiaries,
other than AIC, made after the Closing Date;
(h) Investments consisting of Debt permitted in
accordance with Section 9.1(d); and
(i) Investments resulting from and consisting of stock
acquisitions permitted in accordance with Section 9.3.
Without limiting the generality of the foregoing, neither Kitty Hawk nor any
Operating Subsidiary will, except as may be expressly permitted by the
preceding clauses (a) through (h), make any Investment in (i) Skyfreighters
(except for the Investment of Kitty Hawk in Skyfreighters made prior to the
Closing Date), (ii) any other Subsidiary other than an Operating Subsidiary in
existence as of the Closing Date, or (iii) any other entity.
Section 9.6 Limitation on Issuance of Capital Stock. No
Subsidiary of Kitty Hawk will at any time issue, sell, assign or otherwise
dispose of (a) any of its Capital Stock, (b) any securities exchangeable for or
convertible into or carrying any rights to acquire any of its Capital Stock, or
(c) any option, warrant or other right to acquire any of its Capital Stock;
provided, however, that, if and to the extent not otherwise prohibited by this
Agreement or the other Loan Documents, a Operating Subsidiary may issue
additional shares of its Capital Stock to Kitty Hawk.
Section 9.7 Transactions with Affiliates. Neither Kitty Hawk nor
any of its Subsidiaries will enter into any transaction, including, without
limitation, the purchase, sale or exchange of Property or the rendering of any
service, with any of its Affiliates except in the ordinary course of and
pursuant to the reasonable requirements of its business and upon fair and
reasonable terms no less favorable to it than would be obtained in a comparable
arms-length transaction with a Person not an Affiliate of Kitty Hawk or its
Subsidiaries; provided, however, that the following transactions shall be
exempt from the requirements of this Section 9.7:
(a) transactions in the ordinary course of business
between or among Kitty Hawk and its Wholly- Owned Subsidiaries which
are Guarantors;
(b) ACMI Agreements between Aircargo and AIC and between
AIA and AIC, in each case existing as of the Closing Date which are
consistent with past practices;
(c) the sale of the personal property assets of the
Kalitta Companies used in their promotional drag racing assets to
another entity for $350,000 as provided in Section 5.2.8 of the Merger
Agreement, and the promotional undertakings of the Kalitta Companies
relating thereto, all pursuant to and as provided in that certain
Racing Entity Purchase Agreement to be entered into among AIA, as
seller, and such entity, a true and correct copy of which agreement is
attached as Exhibit 5.2.8 to the Merger Agreement; and
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(d) that certain Corporate Offices Lease between AIA, as
tenant, and Kalitta LLC, as landlord, dated February 25, 1997, as such
agreement may be amended in accordance with the Merger Agreement.
Section 9.8 Disposition of Property. Neither Kitty Hawk nor
any of its Subsidiaries will sell, lease, assign, transfer or otherwise dispose
of any of its Property, except:
(a) subject to Section 2.7(b), dispositions of Property,
other than Collateral, in the ordinary course of business or
consistent with prudent business practices; and
(b) with respect to AIA Aircraft, ACMI Agreements
affecting such AIA Aircraft entered into in the ordinary course of
business for fair consideration, none of which ACMI Agreements shall
constitute a lease or other interest in such aircraft which is
recordable with the FAA or shall include a grant to any Person of any
option to purchase the AIA Aircraft or any portion thereof.
Section 9.9 Lines of Business. Neither Kitty Hawk nor any of its
Subsidiaries will (a) engage in any scheduled airline passenger service, or in
any material line or lines of business activity other than the businesses in
which it is engaged on the Closing Date and lines of business reasonably
related thereto or (b) discontinue any material line or lines of business in
which it is engaged on the Closing Date. Each of Kitty Hawk and its
Subsidiaries acknowledges and agrees that (i) each of the ACMI Agreements is
subject and subordinate to the Aircraft Mortgages and this Agreement and that
all indebtedness, liabilities and obligations of Kitty Hawk and its
Subsidiaries under the Aircraft Mortgages and this Agreement shall be deemed to
be incorporated into each of the ACMI Agreements as if independently stated
therein, and (ii) it shall not, without the prior written consent of Required
Lenders, permit any lease or sublease of any of the AIA Aircraft while it is,
or is required to be, subject to a Lien in accordance with this Agreement or
the other Loan Documents, except an ACMI Agreement relating to such aircraft
with a customer of Kitty Hawk or its Subsidiaries under which such aircraft
remains listed on Aircargo's operations specifications and Aircargo remains
fully responsible for maintenance and operation of such aircraft.
Section 9.10 Environmental Protection. Neither Kitty Hawk nor any
of its Subsidiaries will (a) use (or permit any tenant to use) any of its
Properties for the handling, processing, storage, transportation or disposal of
any Hazardous Material except in compliance with applicable Environmental Laws,
(b) generate any Hazardous Material except in compliance with applicable
Environmental Laws, (c) conduct any activity that is likely to cause a Release
or threatened Release of any Hazardous Material in violation of any
Environmental Law, or (d) otherwise conduct any activity or use any of its
Properties in any manner, that violates or is likely to violate any
Environmental Law or create any Environmental Liabilities for which Kitty Hawk
or any of its Subsidiaries would be responsible, except for circumstances or
events described in clauses (a) through (d) preceding that could not,
individually or in the aggregate, have a Material Adverse Effect.
Section 9.11 Certain Encumbrances or Restrictions. Except as
provided in the Indenture (as the Indenture is in effect as of the Closing Date
or may be thereafter amended with the prior written consent of Agent and
Required Lenders, which consent shall not be deemed given by
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Section 9.13) and as may be expressly permitted or required by the Loan
Documents, neither Kitty Hawk nor any of its Subsidiaries will create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of (a) any Subsidiary of
Kitty Hawk to pay dividends or make any other distribution to Kitty Hawk or any
of its Subsidiaries in respect of the Capital Stock of any such Subsidiary or
with respect to any other interest or participation in, or measured by, its
profits, (b) any Subsidiary of Kitty Hawk to pay any indebtedness owed to Kitty
Hawk or any of its Subsidiaries, (c) any Subsidiary of Kitty Hawk to make any
loan or advance to Kitty Hawk or any of its Subsidiaries, (d) any Subsidiary
of Kitty Hawk to sell, lease or transfer any of its Property to Kitty Hawk or
any of its Subsidiaries, or (e) Kitty Hawk or any of its Subsidiaries to
Guarantee, or grant any Lien to secure, payment or performance of the
Obligations or any portion thereof.
Section 9.12 Management Fees. Except for the consulting fees
payable pursuant to the consulting agreements specified on Schedule 9.12 hereto
(as in effect as of the Closing Date or as thereafter amended with the prior
written consent of Agent and Required Lenders), neither Kitty Hawk nor any of
its Subsidiaries will pay any management, consulting or similar fees (excluding
directors' fees and regular professional fees for services rendered) to any
Affiliate of Kitty Hawk or any of its Subsidiaries or to any director, officer
or employee of Kitty Hawk or any of its Subsidiaries or any Affiliate of any
such Person.
Section 9.13 Modification of Other Agreements. Neither Kitty Hawk
nor any of its Subsidiaries will consent to or implement any termination,
amendment, modification, supplement or waiver of (a) the Merger Agreement, (b)
any Subordinated Debt or any agreement, document or instrument evidencing or
governing such Debt, (c) the certificate or articles of incorporation or bylaws
(or analogous constitutional documents) of Kitty Hawk or any of its
Subsidiaries, (d) any ACMI Agreement to which any of the AIA Aircraft is
subject, or (e) any Material Contract to which it is a party or any Permit
which it possesses, in each case unless such termination, amendment,
modification, supplement or waiver could not be materially adverse to Kitty
Hawk or any of its Subsidiaries or Agent or any Lender. In addition, Kitty
Hawk shall not consent to or implement any termination, amendment,
modification, supplement or waiver of the Indenture which would (i) increase
the principal amount of the Senior Notes or any other Debt evidenced or
governed by the Indenture, (ii) shorten the maturity of, or any date for the
payment of any principal of or interest on, the Senior Notes or any such other
Debt, (iii) increase the rate of interest on or with respect to the Senior
Notes or any such other Debt, (iv) amend or modify the payment terms of the
Senior Notes or any such other Debt, (v) increase any cost, fee or expense
payable by Kitty Hawk or any of its Subsidiaries in connection with the
Indenture, (vi) provide any additional Collateral or security for payment or
collection of the Senior Notes or any such other Debt (other than replacement
and substitute collateral as contemplated by the Indenture), or (vii) be
materially adverse to Kitty Hawk or any of its Subsidiaries or Agent or any
Lender. Furthermore, Kitty Hawk shall not make or otherwise permit to occur
any prepayment (whether by redemption, repurchase or otherwise) of the Debt
evidenced by the Senior Notes except for (A) mandatory prepayments required by
Sections 4.11, 4.13 and 4.16 of the Indenture and (B) optional redemptions in
accordance with Section 3.01(b) of the Indenture.
Section 9.14 ERISA. Neither Kitty Hawk nor any of its
Subsidiaries will:
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(a) allow, or take (or permit any ERISA Affiliate to
take) any action which would cause, any unfunded or unreserved
liability for benefits under any Plan (exclusive of any Multiemployer
Plan) to exist or to be created that exceeds $500,000 with respect to
any such Plan or $1,000,000 with respect to all such Plans in the
aggregate on either a going concern or a wind-up basis; or
(b) with respect to any Multiemployer Plan, allow, or
take (or permit any ERISA Affiliate to take) any action which would
cause, any unfunded or unreserved liability for benefits under any
Multiemployer Plan to exist or to be created, either individually as
to any such Plan or in the aggregate as to all such Plans, that could,
upon any partial or complete withdrawal from or termination of any
such Multiemployer Plan or Plans, have a Material Adverse Effect.
Section 9.15 Territorial Restrictions. Neither Kitty Hawk nor any
of its Subsidiaries will:
(a) use, repair, maintain, overhaul or operate any Kitty
Hawk Aircraft (including, without limitation, the AIA Aircraft), or
permit any other Person to use, repair, maintain, overhaul or operate
any Kitty Hawk Aircraft, in violation of any applicable law or any
applicable rule, regulation, treaty, order or certification of any
government or Governmental Authority (domestic or foreign), or in
violation of any airworthiness certificate, license or registration
issued by any such authority; or
(b) operate or permit any other Person to operate a Kitty
Hawk Aircraft (including, without limitation, the AIA Aircraft), while
it is, or is required to be, subject to a Lien in favor of Agent in
accordance with this Agreement or the other Loan Documents, to or in
any area (i) excluded from coverage by any insurance policy or
policies required to be carried or maintained by the terms of this
Agreement, unless with U.S. governmental indemnity or with other
insurance or governmental indemnity reasonably acceptable to Agent and
(ii) in the event that such aircraft is not covered by aircraft war
risk and governmental confiscation and expropriation and hijacking
insurance, unless the Geneva Convention on the International
Recognition of Rights in Aircraft shall be in effect in such
jurisdictions in which such area lies and any agreements, documents
or instruments evidencing Agent's Lien in and to such aircraft as
Agent may reasonably require have been executed by the appropriate
Persons and appropriately filed in such jurisdictions.
Section 9.16 Sale and Leaseback. Neither Kitty Hawk nor any of
its Subsidiaries will enter into any arrangement with any Person pursuant to
which it leases from such Person real or personal Property that has been or is
to be sold or transferred, directly or indirectly, by it to such Person.
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ARTICLE 10
Financial Covenants
Each of the Companies jointly and severally covenants and agrees that,
as long as the Obligations or any part thereof are outstanding or any Lender
has any Commitment hereunder or any Letter of Credit remains outstanding, it
will perform and observe, or cause to be performed and observed, the following
covenants:
Section 10.1 Maximum Funded Debt to Adjusted EBITDA Ratio. Kitty
Hawk and its Subsidiaries will not permit the ratio, calculated as of the end
of each fiscal quarter of Kitty Hawk commencing with the fiscal quarter ending
December 31, 1997, of (a) Funded Debt to (b) Adjusted EBITDA for the four
fiscal quarters of Kitty Hawk then ended, to be greater than the ratio set
forth below for the applicable fiscal quarter end:
--------------------------------------------------------------------------------
Fiscal Quarter Ending Maximum Ratio
--------------------------------------------------------------------------------
December 31, 1997 through and
including June 30, 1998 4.50 to 1.00
--------------------------------------------------------------------------------
September 30, 1998 through and
including December 31, 1998 3.75 to 1.00
--------------------------------------------------------------------------------
March 31, 1999 through and
including December 31, 2000 3.00 to 1.00
--------------------------------------------------------------------------------
March 31, 2001 and each fiscal
quarter ending thereafter 2.50 to 1.00
--------------------------------------------------------------------------------
Section 10.2 Minimum Net Worth. Kitty Hawk and its Subsidiaries
will at all times maintain Net Worth in an amount equal to not less than the
sum of (a) $160,000,000, plus (b) 75% of Net Income, if positive, for each
fiscal quarter ending after the Closing Date (i.e., exclusive of any negative
Net Income for any such fiscal quarter) determined on a cumulative basis for
all such fiscal quarters during which such Net Income is positive, plus (c)
100% of the Net Proceeds of each Equity Issuance which occurs after the Closing
Date.
Section 10.3 Minimum Cash Flow Coverage Ratio. Kitty Hawk and its
Subsidiaries will not permit the ratio, calculated as of the end of each fiscal
quarter of Kitty Hawk commencing with the fiscal quarter ending March 31, 1998,
of (a) Free Cash Flow to (b) the sum of (i) Interest Expense, plus (ii) Capital
Lease Obligations, plus (iii) the aggregate amount of all scheduled payments of
Funded Debt which are due within one year or less after the date of
determination, in each case for the four fiscal quarters of Kitty Hawk then
ended, to be less than 1.25 to 1.00 or, with respect to the determination of
such ratio for each of the fiscal quarters ending during fiscal years 1998 and
1999, to be less than 1.10 to 1.00; provided, however, that, for each of the
first three fiscal quarters of 1998, such ratio shall be determined based upon
the number of fiscal quarters during fiscal year 1998 then ended.
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Section 10.4 Capital Expenditures. Kitty Hawk and its
Subsidiaries will not permit the aggregate of Capital Expenditures during
fiscal year 1998 to exceed $92,000,000.
ARTICLE 11
Default
Section 11.1 Events of Default. Each of the following shall be
deemed an "Event of Default":
(a) Kitty Hawk or any of its Subsidiaries shall fail to
pay, repay or prepay when due (i) any amount of principal or interest
owing to Agent or any Lender pursuant to this Agreement or any other
Loan Document, or (ii) any fee, expense or other amount or other
Obligation (other than principal or interest as referred to in clause
(i) preceding owing to Agent or any Lender pursuant to this Agreement
or any other Loan Document within three Business Days after the due
date thereof.
(b) Any representation or warranty made or deemed made by
Kitty Hawk or any of its Subsidiaries in this Agreement or any other
Loan Document or in any certificate, report, notice or financial
statement furnished at any time in connection with this Agreement or
any other Loan Document shall be false, misleading or erroneous in any
material respect when made or deemed to have been made.
(c) Kitty Hawk or any of its Subsidiaries shall fail to
perform, observe or comply with any covenant, agreement or term
contained in Sections 5.1, 5.2, 8.1(h), 8.1(k), 8.1(m), 8.1(o), 8.2
(other than the last two sentences of Section 8.2), clause (i) of
8.12(a), 8.14 or Article 9 of this Agreement; or Kitty Hawk or any of
its Subsidiaries shall fail to perform, observe or comply with any
other covenant, agreement or term contained in this Agreement or any
other Loan Document (other than covenants to pay the Obligations) and
such failure is not remedied or waived within the earlier to occur of
20 days after such failure commenced or, if a different grace period
is expressly made applicable in such other Loan Document, such
applicable grade period.
(d) Any of Kitty Hawk or any Operating Subsidiary ceases
to be Solvent or shall admit in writing its inability to, or be
generally unable to, pay its debts as such debts become due.
(e) Kitty Hawk or any of its Subsidiaries shall (i) apply
for or consent to the appointment of, or the taking of possession by,
a receiver, custodian, trustee, examiner, liquidator or the like of
itself or of all or any substantial part of its Property, (ii) make a
general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the U. S. Bankruptcy Code (11 U.S.C. Section
101, et seq.) (as now or hereafter in effect, the "Bankruptcy Code"),
(iv) institute any proceeding or file a petition seeking to take
advantage
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of any other law relating to bankruptcy, insolvency, reorganization,
liquidation, dissolution, winding-up or composition or readjustment of
debts, (v) fail to controvert in a timely and appropriate manner, or
acquiesce in writing to, any petition filed against it in an
involuntary case under the Bankruptcy Code, or (vi) take any corporate
or other action for the purpose of effecting any of the foregoing.
(f) A proceeding or case shall be commenced, without the
application, approval or consent of Kitty Hawk and its Subsidiaries in
any court of competent jurisdiction, seeking as to any such Person (i)
its reorganization, liquidation, dissolution, arrangement or
winding-up, or the composition or readjustment of its debts, (ii) the
appointment of a receiver, custodian, trustee, examiner, liquidator or
the like of all or any substantial part of its Property, or (iii)
similar relief under any law relating to bankruptcy, insolvency,
reorganization, winding-up or composition or adjustment of debts, and
such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 60 or
more days; or an order for relief against Kitty Hawk or any of its
Subsidiaries shall be entered in an involuntary case under the
Bankruptcy Code.
(g) Kitty Hawk or any of its Subsidiaries shall fail to
discharge within a period of 30 days after the commencement thereof
any attachment, sequestration, forfeiture or similar proceeding or
proceedings involving an aggregate amount in excess of $250,000
against any of its Properties.
(h) A final judgment or judgments for the payment of
money in excess of $1,000,000 in the aggregate shall be rendered by a
court or courts against Kitty Hawk and its Subsidiaries or any of them
on claims not covered by insurance or as to which the insurance
carrier has denied responsibility and the same shall not be
discharged, or a stay of execution thereof shall not be procured,
within five days from the date of entry thereof and Kitty Hawk and its
Subsidiaries or any of them shall not, within said period of five
days, or such longer period during which execution of the same shall
have been stayed, appeal therefrom and cause the execution thereof to
be stayed during such appeal.
(i) Kitty Hawk or any of its Subsidiaries shall fail to
pay when due any principal of or interest on any Debt (other than the
Obligations) having (either individually or in the aggregate) a
principal amount of at least $500,000, or the maturity of any such
Debt shall have been accelerated, or any such Debt shall have been
required to be prepaid prior to the stated maturity thereof, or any
event shall have occurred (and shall not have been waived or otherwise
cured) that permits (or, with the giving of notice or lapse of time or
both, would permit) any holder or holders of such Debt or any Person
acting on behalf of such holder or holders to accelerate the maturity
thereof or require any such prepayment; provided, however, that
prepayment of the Debt evidenced by the Senior Notes which is
permitted to be prepaid in accordance with Section 9.13 shall not
constitute an Event of Default.
(j) This Agreement or any other Loan Document shall cease
to be in full force and effect or shall be declared null and void or
the validity or enforceability thereof shall be
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contested or challenged by Kitty Hawk or any of its Subsidiaries or
any of its shareholders, or Kitty Hawk or any of its Subsidiaries
shall deny that it has any further liability or obligation under any
of the Loan Documents, or any Lien created by the Loan Documents shall
for any reason cease to be a valid, first priority perfected Lien
(except for Permitted Liens, if any, which are permitted by the Loan
Documents to have priority over the Liens in favor of Agent) upon any
of the Collateral purported to be covered thereby.
(k) Any of the following events shall occur or exist with
respect to Kitty Hawk or any of its Subsidiaries or ERISA Affiliates:
(i) any Prohibited Transaction involving any Plan; (ii) any Reportable
Event with respect to any Pension Plan; (iii) the filing under Section
4041 of ERISA of a notice of intent to terminate any Pension Plan or
the termination of any Pension Plan; (iv) any event or circumstance
that could reasonably be expected to constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Pension Plan, or the institution by the PBGC of any such proceedings;
(v) any "accumulated funding deficiency" (as defined in Section 406 of
ERISA or Section 412 of the Code), whether or not waived, shall exist
with respect to any Plan; or (vi) complete or partial withdrawal under
Section 4201 or 4204 of ERISA from a Plan or the reorganization,
insolvency or termination of any Pension Plan; and in each case above,
such event or condition, together with all other events or conditions,
if any, have subjected or could in the reasonable opinion of Required
Lenders subject Kitty Hawk or any of its Subsidiaries or ERISA
Affiliates to any tax, penalty or other liability to a Plan, a
Multiemployer Plan, the PBGC or otherwise (or any combination thereof)
which in the aggregate exceed or could reasonably be expected to
exceed $1,000,000.
(l) The occurrence of a Change of Control.
(m) The occurrence of a default or event of default (no
matter how used or defined) under any Subordinated Debt or any
agreement, document or instrument creating or evidencing such Debt,
unless (i) such default has been waived, cured or consented to in
accordance with such agreement, document or instrument, (ii) such
default is not a payment default, (iii) the maturity of the Debt
affected thereby has not been accelerated, and (iv) such waiver or
consent is not made in connection with any amendment or modification
of any such agreement, document or instrument or in connection with
any payment to the holders of any such Debt.
(n) If, at any time, any event or circumstance shall
occur which gives any holder of any Subordinated Debt the right to
request or require Kitty Hawk or any of its Subsidiaries to redeem,
purchase or prepay any such Debt.
(o) The occurrence of an "Event of Default" or a
"Collateral Access Event" as such terms are defined in the Indenture.
Section 11.2 Remedies. If any Event of Default shall occur and be
continuing, Agent may, and, if directed by the Required Lenders, Agent shall,
do any one or more of the following:
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(a) Acceleration. Declare all outstanding principal of
and accrued and unpaid interest on the Loans and Reimbursement
Obligations and all other amounts payable by Kitty Hawk or any of its
Subsidiaries under the Loan Documents immediately due and payable, and
the same shall thereupon become immediately due and payable, without
notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest or other
formalities of any kind, all of which are hereby expressly waived;
(b) Termination of Commitments. Terminate the
Commitments (including, without limitation, any obligation of Issuing
Bank to issue Letters of Credit) without notice to Kitty Hawk or any
of its Subsidiaries;
(c) Judgment. Reduce any claim to judgment;
(d) Foreclosure. Foreclose or otherwise enforce any Lien
granted to Agent for the benefit of Agent and Lenders to secure
payment and performance of the Obligations in accordance with the
terms of the Loan Documents; or
(e) Rights. Exercise any and all rights and remedies
afforded by the laws of the State of Texas or any other jurisdiction,
by any of the Loan Documents, by equity or otherwise;
provided, however, that upon the occurrence of an Event of Default under
Section 11.1(e) or Section 11.1(f), the Commitments of all of Lenders
(including, without limitation, any obligation of Issuing Bank to issue Letters
of Credit) shall immediately and automatically terminate, and the outstanding
principal of and accrued and unpaid interest on the Loans and all other amounts
payable under the Loan Documents shall thereupon become immediately and
automatically due and payable, all without notice, demand, presentment, notice
of dishonor, notice of acceleration, notice of intent to accelerate, protest or
other formalities of any kind, all of which are hereby expressly waived.
Section 11.3 Performance by Agent. If Kitty Hawk or any of its
Subsidiaries shall fail to perform any covenant or agreement in accordance with
the terms of the Loan Documents, Agent may, at the direction of the Required
Lenders, perform or attempt to perform such covenant or agreement on behalf of
such Person. In such event, Kitty Hawk shall, at the request of Agent,
promptly pay any amount expended by Agent or Lenders in connection with such
performance or attempted performance to Agent at the Principal Office, together
with interest thereon at the applicable Default Rate from and including the
date of such expenditure to but excluding the date such expenditure is paid in
full. Notwithstanding the foregoing, it is expressly agreed that neither Agent
nor any Lender shall have any liability or responsibility for the performance
of any obligation of Kitty Hawk or any of its Subsidiaries under this Agreement
or any of the other Loan Documents.
Section 11.4 Cash Collateral. If an Event of Default shall have
occurred and be continuing, Kitty Hawk shall, if requested by Agent or Required
Lenders, pledge to Agent as security for the Obligations an amount in
immediately available funds equal to the then outstanding Letter of Credit
Liabilities, such funds to be held in a cash collateral account satisfactory to
Agent without any right of withdrawal by Kitty Hawk or any of its Subsidiaries.
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ARTICLE 12
Agency and Intercreditor Provisions
Section 12.1 Appointment, Powers and Immunities. Each Lender
hereby irrevocably appoints and authorizes Agent to act as its agent hereunder
and under the other Loan Documents with such powers as are specifically
delegated to Agent by the terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably incidental thereto. Neither
Agent nor any of its Affiliates, officers, directors, employees, attorneys or
agents shall be liable for any action taken or omitted to be taken by any of
them hereunder or otherwise in connection with this Agreement or any of the
other Loan Documents except for its or their own gross negligence or willful
misconduct. Without limiting the generality of the preceding sentence, Agent
(a) may treat the payee of any Note as the holder thereof until Agent receives
written notice of the assignment or transfer thereof signed by such payee and
in form satisfactory to Agent, (b) shall have no duties or responsibilities
except those expressly set forth in this Agreement and the other Loan
Documents, and shall not by reason of this Agreement or any other Loan Document
be a trustee or fiduciary for any Lender, (c) shall not be required to initiate
any litigation or collection proceedings hereunder or under any other Loan
Document except to the extent requested by the Required Lenders, (d) shall not
be responsible to Lenders for any recitals, statements, representations or
warranties contained in this Agreement or any other Loan Document, or any
certificate or other document referred to or provided for in, or received by
any of them under, this Agreement or any other Loan Document, or for the value,
validity, effectiveness, enforceability or sufficiency of this Agreement or any
other Loan Document or any other document referred to or provided for herein or
therein or for any failure by any Person to perform any of its obligations
hereunder or thereunder, (e) may consult with legal counsel (including counsel
for Kitty Hawk or any of its Subsidiaries), independent public accountants and
other experts selected by it and shall not be liable for any action taken or
omitted to be taken in good faith by it in accordance with the advice of such
counsel, accountants or experts, and (f) shall incur no liability under or in
respect of any Loan Document by acting upon any notice, consent, certificate or
other instrument or writing reasonably believed by it to be genuine and signed
or sent by the proper party or parties. As to any matters not expressly
provided for by this Agreement, Agent shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
signed by the Required Lenders, and such instructions of the Required Lenders
and any action taken or failure to act pursuant thereto shall be binding on all
of Lenders; provided, however, that Agent shall not be required to take any
action which exposes Agent to liability or which is contrary to this Agreement
or any other Loan Document or applicable law.
Section 12.2 Rights of Agent as a Lender. With respect to its
Commitments, the Loans made by it and the Notes and Letters of Credit issued to
or by it, Xxxxx Fargo (and any successor acting as Agent) in its capacity as a
Lender or Issuing Bank hereunder shall have the same rights and powers
hereunder as any other Lender or Issuing Bank and may exercise the same as
though it were not acting as Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include Agent in its individual
capacity. Agent and its Affiliates may (without having to account therefor to
any Lender) accept deposits from, lend money to, act as trustee under
indentures of, provide merchant banking services to, own securities of, and
generally engage in any kind of banking,
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trust or other business with, Kitty Hawk and its Subsidiaries or any of their
Affiliates and any other Person who may do business with or own securities of
Kitty Hawk or any of its Subsidiaries or Affiliates, all as if it were not
acting as Agent and without any duty to account therefor to Lenders.
Section 12.3 Defaults. Agent shall not be deemed to have
knowledge or notice of the occurrence of a Default (other than the non-payment
of principal of or interest on the Loans or Reimbursement Obligations or of
commitment fees) unless Agent has received notice from a Lender or Kitty Hawk
specifying such Default and stating that such notice is a "notice of default".
In the event that Agent receives such a notice of the occurrence of a Default,
Agent shall give prompt notice thereof to Lenders (and shall give each Lender
prompt notice of each such non-payment). Agent shall (subject to Section 12.1)
take such action with respect to such Default as shall be directed by the
Required Lenders, provided that unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such Default as it shall seem
advisable and in the best interest of Lenders.
Section 12.4 INDEMNIFICATION. EACH LENDER HEREBY AGREES TO
INDEMNIFY AGENT FROM AND HOLD AGENT HARMLESS AGAINST (TO THE EXTENT NOT
REIMBURSED UNDER SECTIONS 13.1 AND 13.2, BUT WITHOUT LIMITING THE OBLIGATIONS
OF KITTY HAWK OR ANY OF ITS SUBSIDIARIES UNDER SECTIONS 13.1 AND 13.2), RATABLY
IN ACCORDANCE WITH ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF THE AGGREGATE
LOAN PERCENTAGES), ANY AND ALL LIABILITIES (INCLUDING, WITHOUT LIMITATION,
ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES AND
EXPENSES) AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER (BUT EXCLUDING
NORMAL ADMINISTRATIVE COSTS AND EXPENSES INCIDENT TO THE PERFORMANCE OF AGENT'S
DUTIES AS AGENT HEREUNDER) WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED
AGAINST AGENT IN ANY WAY RELATING TO OR ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE TAKEN BY AGENT UNDER OR IN
RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED, FURTHER, THAT NO LENDER SHALL
BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE EXTENT CAUSED BY AGENT'S
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING,
IT IS THE EXPRESS INTENTION OF LENDERS THAT AGENT SHALL BE INDEMNIFIED
HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES (INCLUDING,
WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING
ATTORNEYS' FEES AND EXPENSES) AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF AGENT (EXCEPT TO THE EXTENT THE SAME ARE CAUSED BY AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT). WITHOUT LIMITING ANY OTHER PROVISION OF
THIS SECTION 12.4, EACH LENDER AGREES TO REIMBURSE AGENT PROMPTLY UPON DEMAND
FOR ITS
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PRO RATA SHARE (CALCULATED ON THE BASIS OF THE AGGREGATE LOAN PERCENTAGES) OF
ANY AND ALL OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES AND EXPENSES)
INCURRED BY AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY,
ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH
NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF
RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT AGENT
IS NOT PROMPTLY REIMBURSED FOR SUCH EXPENSES BY KITTY HAWK OR ANY OF ITS
SUBSIDIARIES.
Section 12.5 Independent Credit Decisions. Each Lender agrees
that it has independently and without reliance on Agent or any other Lender,
and based on such documents and information as it has deemed appropriate, made
its own credit analysis of Kitty Hawk and its Subsidiaries and its own decision
to enter into this Agreement and that it will, independently and without
reliance upon Agent or any other Lender, and based upon such documents and
information as it shall deem appropriate at the time, continue to make its own
analysis and decisions in taking or not taking action under this Agreement or
any of the other Loan Documents. Agent shall not be required to keep itself
informed as to the performance or observance by Kitty Hawk or any of its
Subsidiaries of this Agreement or any other Loan Document or to inspect the
Properties or books of Kitty Hawk or any of its Subsidiaries. Except for
notices, reports and other documents and information expressly required to be
furnished to Lenders by Agent hereunder or under the other Loan Documents,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other financial information concerning the affairs, financial
condition or business of Kitty Hawk or any of its Subsidiaries (or any of their
Affiliates) which may come into the possession of Agent or any of its
Affiliates.
Section 12.6 Several Commitments. The Commitments and other
obligations of Lenders under this Agreement are several. The default by any
Lender in making a Loan in accordance with its Commitment shall not relieve the
other Lenders of their obligations under this Agreement. In the event of any
default by any Lender in making any Loan, each nondefaulting Lender shall be
obligated to make its Loan but shall not be obligated to advance the amount
which the defaulting Lender was required to advance hereunder. In no event
shall any Lender be required to advance an amount or amounts with respect to
any of the Loans which would in the aggregate exceed such Lender's Commitment
with respect to such Loans. No Lender shall be responsible for any act or
omission of any other Lender.
Section 12.7 Successor Agent. Subject to the appointment and
acceptance of a successor Agent as provided below, Agent may resign at any time
by giving notice thereof to Lenders and Kitty Hawk. Upon any such resignation,
the Required Lenders will have the right to appoint another Lender as a
successor Agent; provided, however, that, prior to the occurrence and
continuation of a Default, the identify of such successor Agent shall be
approved by Kitty Hawk, which approval shall not be unreasonably withheld,
conditioned or delayed. If no successor Agent shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the retiring Agent's giving of notice of resignation, then the retiring
Agent may, on behalf of Lenders, appoint a successor Agent, which shall be a
commercial bank organized under the laws of the U.S.
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or any state thereof or of a foreign country if acting through its U.S. branch
and having combined capital and surplus of at least $100,000,000. Upon the
acceptance of its appointment as successor Agent, such successor Agent shall
thereupon succeed to and become vested with all rights, powers, privileges,
immunities and duties of the resigning Agent, and the resigning Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents. After any Agent's resignation as Agent, the provisions of this
Article 12 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was Agent. Each Agent (including
each successor Agent) agrees that, so long as it is acting as Agent under this
Agreement, it shall be a Lender under this Agreement.
Section 12.8 Beneficiaries of Article 12. Notwithstanding
anything to the contrary contained in this Agreement, each of Kitty Hawk and
its Subsidiaries acknowledges and agrees that the terms and provisions of this
Article 12 other than Section 12.6 are intended solely for the benefit of Agent
and Lenders and that neither Kitty Hawk nor any of its Subsidiaries is a
beneficiary of any of such terms or provisions or may enforce any of such terms
or provisions against Agent or any Lender.
ARTICLE 13
Miscellaneous
Section 13.1 Expenses. Whether or not the transactions
contemplated hereby are consummated, Kitty Hawk hereby agrees, on demand, to
pay or reimburse Agent and each of Lenders for paying: (a) all reasonable
out-of-pocket costs and expenses of Agent in connection with the preparation,
negotiation, execution and delivery of this Agreement and the other Loan
Documents, and any and all waivers, amendments, modifications, renewals,
extensions and supplements thereof and thereto, and the syndication of the
Commitments and the Loans, including, without limitation, the reasonable fees
and expenses of legal counsel for Agent, (b) all out-of-pocket costs and
expenses of Agent and Lenders in connection with any Default, the exercise of
any right or remedy and the enforcement of this Agreement or any other Loan
Document or any term or provision hereof or thereof, including, without
limitation, the fees and expenses of all legal counsel for Agent and/or any
Lender (unless, with respect to legal counsel of any Lender other than Xxxxx
Fargo, Agent has not approved of the payment by Kitty Hawk of the fees and
expenses of such counsel), (c) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any Governmental Authority in
respect of this Agreement or any of the other Loan Documents, (d) all costs,
expenses, assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any Lien contemplated by this
Agreement or any other Loan Document, and (e) all out-of-pocket costs and
expenses incurred by Agent in connection with due diligence, computer services,
copying, appraisals, environmental audits, collateral audits, field exams,
insurance, consultants and search reports.
Section 13.2 INDEMNIFICATION. EACH OF KITTY HAWK AND ITS
SUBSIDIARIES HEREBY JOINTLY AND SEVERALLY AGREES TO INDEMNIFY AGENT AND EACH
LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS AND AGENTS
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FROM, AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES
(INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' AND CONSULTANTS' FEES AND EXPENSES) TO WHICH ANY OF THEM MAY BECOME
SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE TO (A) THE
NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION OR ENFORCEMENT OF
ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN
DOCUMENTS, (C) THE RELATED TRANSACTIONS, (D) ANY BREACH BY KITTY HAWK OR ANY OF
ITS SUBSIDIARIES OF ANY REPRESENTATION, WARRANTY, COVENANT OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, (E) THE USE OR PROPOSED USE OF ANY LOAN
OR LETTER OF CREDIT, (F) ANY AND ALL TAXES, LEVEES, DEDUCTIONS AND CHARGES
IMPOSED ON AGENT, ISSUING BANK OR ANY LENDER IN RESPECT OF ANY LOAN OR LETTER
OF CREDIT (EXCLUSIVE OF INCOME AND FRANCHISE TAXES ATTRIBUTABLE TO NET INCOME),
(G) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL OR CLEANUP OF
ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN OR AFFECTING ANY OF THE
PROPERTIES OF KITTY HAWK OR ANY OF ITS SUBSIDIARIES, EXCEPT TO THE EXTENT THAT
THE LOSS, DAMAGE OR CLAIM IS THE DIRECT RESULT OF AN INTENTIONAL AND
AFFIRMATIVE ACT BY THE PERSON TO BE INDEMNIFIED THAT CONSTITUTES GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PERSON, OR (H) ANY INVESTIGATION,
LITIGATION OR OTHER PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED
INVESTIGATION, LITIGATION OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING;
BUT EXCLUDING ANY OF THE FOREGOING TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. WITHOUT LIMITING ANY
PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS
SECTION 13.2 SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL
LOSSES, LIABILITIES (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES),
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES
(INCLUDING REASONABLE ATTORNEYS' FEES AND EXPENSES) ARISING OUT OF OR RESULTING
FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON. THE OBLIGATIONS OF
EACH OF KITTY HAWK AND ITS SUBSIDIARIES UNDER THIS SECTION 13.2 SHALL SURVIVE
THE REPAYMENT OF THE LOANS AND OTHER OBLIGATIONS AND TERMINATION OF THE
COMMITMENTS.
Section 13.3 Limitation of Liability. None of Agent, any Issuing
Bank, any Lender or any Affiliate, officer, director, employee, attorney or
agent thereof shall be liable for any error of judgment or act done in good
faith, or be otherwise liable or responsible under any circumstances whatsoever
(including such Person's negligence), except for such Person's gross negligence
or willful misconduct. None of Agent, any Issuing Bank, any Lender or any
Affiliate, officer, director,
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employee, attorney or agent thereof shall have any liability with respect to,
and each of Kitty Hawk and its Subsidiaries hereby waives, releases and agrees
not to xxx any of them upon, any claim for any special, indirect, incidental or
consequential damages suffered or incurred by Kitty Hawk or any of its
Subsidiaries in connection with, arising out of or in any way related to this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents. Each of
Kitty Hawk and its Subsidiaries hereby waives, releases and agrees not to xxx
Agent, any Issuing Bank or any Lender or any of their respective Affiliates,
officers, directors, employees, attorneys or agents for exemplary or punitive
damages in respect of any claim in connection with, arising out of or in any
way related to this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
Section 13.4 No Duty. All attorneys, accountants, appraisers and
other professional Persons and consultants retained by Agent and Lenders shall
have the right to act exclusively in the interest of Agent and Lenders and
shall have no duty of disclosure, duty of loyalty, duty of care or other duty
or obligation of any type or nature whatsoever to Kitty Hawk or any of its
Subsidiaries or any of their shareholders or any other Person.
Section 13.5 No Fiduciary Relationship. The relationship between
each of Kitty Hawk and its Subsidiaries, on the one hand, and Agent and each
Issuing Bank and Lender, on the other hand, is solely that of debtor and
creditor, and neither Agent, any Issuing Bank nor any Lender has any fiduciary
or other special relationship with Kitty Hawk or any of its Subsidiaries, and
no term or condition of any of the Loan Documents shall be construed so as to
deem any such relationship to be other than that of debtor and creditor. No
joint venture or partnership is created by this Agreement between or among
Agent or any Issuing Bank or any Lender or between or among Kitty Hawk or any
of its Subsidiaries and Agent or any Issuing Bank or any Lender.
Section 13.6 Equitable Relief. Each of Kitty Hawk and its
Subsidiaries recognizes that, in the event it fails to pay, perform, observe or
discharge any or all of the Obligations, any remedy at law may prove to be
inadequate relief to Agent and Lenders. Each of Kitty Hawk and its
Subsidiaries therefore agrees that Agent and Lenders, if Agent or Lenders so
request, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
Section 13.7 No Waiver; Cumulative Remedies. No failure on the
part of Agent or any Lender to exercise and no delay in exercising, and no
course of dealing with respect to, any right, power or privilege under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under
this Agreement or any other Loan Document preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
rights and remedies provided for in this Agreement and the other Loan Documents
are cumulative and not exclusive of any rights and remedies provided by law.
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Section 13.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. Neither Kitty Hawk nor any of its Subsidiaries may assign or
transfer any of its rights or obligations under this Agreement or any
other Loan Document without the prior written consent of Agent and
Lenders. Any Lender may sell participations in all or a portion of
its rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, all or a portion of its
Commitments and the Loans owing to it and the Letters of Credit issued
by it); provided, however, that (i) such Lender's obligations under
this Agreement and the other Loan Documents (including, without
limitation, its Commitments) shall remain unchanged, (ii) such Lender
shall remain solely responsible to Kitty Hawk for the performance of
such obligations, (iii) such Lender shall remain the holder of its
Notes for all purposes of this Agreement, and (iv) Kitty Hawk shall
continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under this Agreement and the
other Loan Documents.
(b) Each of Kitty Hawk and its Subsidiaries and each of
Lenders agree that any Lender (the "Assigning Lender") may at any time
assign to one or more Eligible Assignees all, or a proportionate part
of all, of its rights and obligations under this Agreement and the
other Loan Documents (including, without limitation, its Commitments
and Loans and Letters of Credit) (each an "Assignee"); provided,
however, that (i) each such assignment may be of a varying percentage
of the Assigning Lender's rights and obligations under this Agreement
and the other Loan Documents and may relate to some but not all of
such rights and/or obligations, (ii) except in the case of an
assignment of all of a Lender's rights and obligations under this
Agreement and the other Loan Documents, the amount of the Commitments
and Loans and Letters of Credit of the Assigning Lender being assigned
pursuant to each assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no
event be less than an aggregate amount equal to $5,000,000 calculated
based upon the sum of the Revolving Credit Loans Commitment assigned
(or, if such Commitment has terminated or expired, the aggregate
outstanding principal amount of the Revolving Credit Loans and face
amount of outstanding Letters of Credit assigned) plus the aggregate
outstanding principal amount of the Term Loans assigned, and (iii) the
parties to each such assignment shall execute and deliver to Agent for
its acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with the Notes subject to such
assignment, and a processing and recordation fee of $2,500. Upon such
execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the
execution thereof or such other date as may be approved by Agent, (1)
the Assignee thereunder shall be a party hereto as a "Lender" and, to
the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and under the Loan Documents, and
(2) the Assigning Lender thereunder shall, to the extent that rights
and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from
its obligations under this Agreement and the other Loan Documents
(and, in the case of an Assignment and Acceptance covering all or the
remaining portion of a Lender's rights and obligations under the Loan
Documents, such Lender shall cease to be a party
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thereto, provided that such Lender's rights under Article 4, Section
13.1 and Section 13.2 accrued through the date of assignment shall
continue).
(c) By executing and delivering an Assignment and
Acceptance, the Assigning Lender thereunder and the Assignee
thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Assignment and
Acceptance, such Assigning Lender makes no representation or warranty
and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any other
instrument or document furnished pursuant thereto; (ii) such Assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition or results of
operations of Kitty Hawk or any of its Subsidiaries or the performance
or observance by Kitty Hawk or any of its Subsidiaries of its
obligations under the Loan Documents; (iii) such Assignee confirms
that it has received a copy of the other Loan Documents, together with
copies of the financial statements referred to in Section 7.2 and such
other documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into such Assignment and
Acceptance; (iv) such Assignee will, independently and without
reliance upon Agent or such Assigning Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under this Agreement and the other Loan Documents; (v) such
Assignee confirms that it is an Eligible Assignee; (vi) such Assignee
appoints and authorizes Agent to take such action as agent on its
behalf and exercise such powers under the Loan Documents as are
delegated to Agent by the terms thereof, together with such powers as
are reasonably incidental thereto; and (vii) such Assignee agrees that
it will perform in accordance with their terms all of the obligations
which by the terms of the Loan Documents are required to be performed
by it as a Lender.
(d) Agent shall maintain at its Principal Office a copy
of each Assignment and Acceptance delivered to and accepted by it and
a register for the recordation of the names and addresses of Lenders
and the Commitments of, and principal amount of the Loans owing to and
Letters of Credit issued by, each Lender from time to time (the
"Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Kitty Hawk, Agent
and Lenders may treat each Person whose name is recorded in the
Register as a Lender hereunder for all purposes under the Loan
Documents. The Register shall be available for inspection by Kitty
Hawk or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance
executed by an Assigning Lender and Assignee representing that it is
an Eligible Assignee, together with the Notes subject to such
assignment, Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit A hereto, (i)
accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register, and (iii) give prompt written
notice thereof to Kitty Hawk. Within five Business Days after its
receipt of such notice, Kitty Hawk, at its expense, shall execute and
deliver to Agent in exchange for each
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surrendered Note evidencing particular Loans, a new Note evidencing
such Loans payable to the order of such Eligible Assignee in an amount
equal to such Loans assigned to it and, if the Assigning Lender has
retained any Loans, a new Note evidencing such Loans payable to the
order of the Assigning Lender in the amount of such Loans retained by
it (each such promissory note shall constitute a "Note" for purposes
of the Loan Documents). Such new Notes shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibits C and/or D hereto, as applicable.
(f) Any Lender may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section 13.8, disclose to the Assignee or participant or proposed
Assignee or participant any information relating to Kitty Hawk or any
of its Subsidiaries furnished to such Lender by or on behalf of Kitty
Hawk or any of its Subsidiaries; provided that each such actual or
proposed Assignee or participant shall agree to be bound by the
provisions of Section 13.20.
(g) Any Lender may assign and pledge all or any of the
Notes held by it to any Federal Reserve Bank or the U.S. Treasury as
collateral security pursuant to Regulation A of the Board of Governors
of the Federal Reserve System and any operating circular issued by the
Federal Reserve System and/or Federal Reserve Bank; provided, however,
that any payment made by Kitty Hawk for the benefit of such assigning
and/or pledging Lender in accordance with the terms of the Loan
Documents shall satisfy Xxxxx Xxxx'x obligations under the Loan
Documents in respect thereof to the extent of such payment. No such
assignment and/or pledge shall release the assigning and/or pledging
Lender from its obligations hereunder.
Section 13.9 Survival. All representations and warranties made or
deemed made in this Agreement or any other Loan Document or in any document,
statement or certificate furnished in connection with this Agreement shall
survive the execution and delivery of this Agreement and the other Loan
Documents and the making of the Loans, and no investigation by Agent or any
Lender or any closing shall affect the representations and warranties or the
right of Agent or any Lender to rely upon them. Without prejudice to the
survival of any other obligation of each of Kitty Hawk and its Subsidiaries
hereunder, the obligations of each of Kitty Hawk and its Subsidiaries under
Article 4 and Sections 13.1 and 13.2 shall survive repayment of the Loans, the
Reimbursement Obligations and the other Obligations.
Section 13.10 ENTIRE AGREEMENT; AMENDMENT AND RESTATEMENT; WAIVER
OF CLAIMS. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN
EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY
AND ALL PRIOR COMMITMENTS, TERM SHEETS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES HERETO. This Agreement amends and
restates in its entirety (but does
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 101
108
not extinguish the indebtedness, liabilities or obligations evidenced by or
outstanding under) the Prior Credit Agreement. The execution of this Agreement
and the other Loan Documents executed in connection herewith does not
extinguish the indebtedness, liabilities or obligations evidenced by or
outstanding under the Prior Credit Agreement, nor does such execution
constitute a novation with respect to any such indebtedness, liabilities or
obligations. Each of Kitty Hawk and its Subsidiaries represents and warrants
to Agent and Lenders that, as of the Closing Date, there are no claims or
offsets against, or defenses or counterclaims to, its indebtedness, liabilities
and obligations under the Prior Credit Agreement or the promissory notes or the
other "Loan Documents" as defined therein. TO INDUCE AGENT AND LENDERS TO
ENTER INTO THIS AGREEMENT, EACH OF KITTY HAWK AND ITS SUBSIDIARIES WAIVES ANY
AND ALL SUCH CLAIMS, OFFSETS, DEFENSES OR COUNTERCLAIMS, WHETHER KNOWN OR
UNKNOWN, ARISING PRIOR TO THE DATE HEREOF AND RELATING TO ANY OF THE PRIOR
CREDIT AGREEMENT OR SUCH "LOAN DOCUMENTS" OR THE TRANSACTIONS CONTEMPLATED
THEREBY.
Section 13.11 Amendments. No amendment or waiver of any term or
provision of this Agreement, the Notes or any other Loan Document to which
Kitty Hawk or any of its Subsidiaries is a party, nor any consent to any
departure by Kitty Hawk or any of its Subsidiaries therefrom, shall in any
event be effective unless the same shall be agreed or consented to by Required
Lenders and Kitty Hawk in writing, and each such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given; provided, that no amendment, waiver or consent shall, unless in writing
and signed by all of Lenders and Kitty Hawk, do any of the following: (a)
increase the Commitments of Lenders or subject Lenders to any additional
obligations; (b) reduce the principal of, or interest on, the Loans or any fees
or other amounts payable hereunder; (c) postpone any date fixed for any payment
(including, without limitation, any mandatory prepayment) of principal of, or
interest on, the Loans or any fees or other amounts payable hereunder; (d)
waive any of the conditions precedent specified in Article 6; (e) change the
Commitment Percentages or the Aggregate Loan Percentages or the aggregate
unpaid principal amount of the Loans, the Reimbursement Obligations or other
Obligations or the number or interests of Lenders which shall be required for
Lenders or any of them to take any action under this Agreement; (f) change any
provision contained in Section 3.2, Section 3.3 or this Section 13.11 or modify
the definition of "Required Lenders" contained in Section 1.1; or (g) except as
expressly authorized by this Agreement, release any Collateral from any of the
Liens created by the Security Documents or release any guaranty of all or any
portion of the Obligations. Notwithstanding anything to the contrary contained
in this Section 13.11, no amendment, waiver or consent shall be made with
respect to Article 12 hereof without the prior written consent of Agent and
Agent and Lenders may, without the agreement of Kitty Hawk, amend the terms and
provisions of Article 12 other than Section 12.6.
Section 13.12 Maximum Interest Rate.
(a) No interest rate specified in this Agreement or any
other Loan Document shall at any time exceed the Maximum Rate. If at
any time the interest rate (the "Contract Rate") for any Obligation
shall exceed the Maximum Rate, thereby causing the interest accruing
on such Obligation to be limited to the Maximum Rate, then any
subsequent reduction in the Contract Rate for such Obligation shall
not reduce the rate of interest on such Obligation
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 102
109
below the Maximum Rate until the aggregate amount of interest accrued
on such Obligation equals the aggregate amount of interest which would
have accrued on such Obligation if the Contract Rate for such
Obligation had at all times been in effect.
(b) Notwithstanding anything to the contrary contained in
this Agreement or the other Loan Documents, none of the terms and
provisions of this Agreement or the other Loan Documents shall ever be
construed to create a contract or obligation to pay interest at a rate
in excess of the Maximum Rate, and neither Agent nor any Lender shall
ever charge, receive, take, collect, reserve or apply, as interest on
the Obligations, any amount in excess of the Maximum Rate. The
parties hereto agree that any interest, charge, fee, expense or other
obligation provided for in this Agreement or in the other Loan
Documents which constitutes interest under applicable law shall be,
ipso facto and under any and all circumstances, limited or reduced to
an amount equal to the lesser of (i) the amount of such interest,
charge, fee, expense or other obligation that would be payable in the
absence of this Section 13.12(b) or (ii) an amount, which when added
to all other interest payable under this Agreement and the other Loan
Documents, equals the Maximum Rate. If, notwithstanding the
foregoing, Agent or any Lender ever contracts for, charges, receives,
takes, collects, reserves or applies as interest any amount in excess
of the Maximum Rate, such amount which would be deemed excessive
interest shall be deemed a partial payment or prepayment of principal
of the Obligations and treated hereunder as such, and if the
Obligations, or applicable portions thereof, are paid in full, any
remaining excess shall promptly be paid to Kitty Hawk. In determining
whether the interest paid or payable, under any specific contingency,
exceeds the Maximum Rate, Kitty Hawk and its Subsidiaries, Agent and
Lenders shall, to the maximum extent permitted by applicable law, (i)
characterize any nonprincipal payment as an expense, fee or premium
rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof, and (iii) amortize, prorate, allocate and spread in
equal or unequal parts the total amount of interest throughout the
entire contemplated term of the Obligations, or applicable portions
thereof, so that the interest rate does not exceed the Maximum Rate at
any time during the term of the Obligations; provided that, if the
unpaid principal balance is paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest
received for the actual period of existence thereof exceeds the
Maximum Rate, Agent and/or Lenders, as appropriate, shall refund to
Kitty Hawk the amount of such excess and, in such event, Agent and
Lenders shall not be subject to any penalties provided by any laws for
contracting for, charging, receiving, taking, collecting, reserving or
applying interest in excess of the Maximum Rate.
(c) Pursuant to Chapter 346 of the Finance Code of the
State of Texas, as amended, each of Kitty Hawk and its Subsidiaries
agrees that such Chapter 346 (which regulates certain revolving credit
loan accounts and revolving tri-party accounts) shall not govern or in
any manner apply to the Obligations.
Section 13.13 Notices. All notices and other communications
provided for in this Agreement and the other Loan Documents to which Kitty Hawk
or any of its Subsidiaries is a party shall be given or made by telecopy or in
writing and telecopied, mailed by certified mail return receipt requested or
delivered to the intended recipient at the "Address for Notices" specified
below its name on the
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 103
110
signature pages hereof (or, with respect to a Lender that becomes a party to
this Agreement pursuant to an assignment made in accordance with Section 13.8,
in the Assignment and Acceptance executed by it); or, as to any party, at such
other address as shall be designated by such party in a notice to each other
party given in accordance with this Section 13.13. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have
been duly given when transmitted by telecopy or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid; provided, however, that notices to Agent shall be deemed given when
received by Agent.
Section 13.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF
PROCESS. EXCEPT AS MAY BE EXPRESSLY STATED TO THE CONTRARY IN CERTAIN LOAN
DOCUMENTS, THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS
(WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND APPLICABLE LAWS OF THE
U.S. EACH OF KITTY HAWK AND ITS SUBSIDIARIES HEREBY SUBMITS TO THE NON-
EXCLUSIVE JURISDICTION OF EACH OF (1) THE U.S. DISTRICT COURT FOR THE NORTHERN
DISTRICT OF TEXAS, AND (2) ANY TEXAS STATE COURT SITTING IN DALLAS COUNTY,
TEXAS, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY. EACH OF KITTY HAWK AND ITS SUBSIDIARIES HEREBY IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SET
FORTH UNDERNEATH ITS SIGNATURE HERETO. EACH OF KITTY HAWK AND ITS SUBSIDIARIES
HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORM.
Section 13.15 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.
Section 13.16 Severability. Any provision of this Agreement held
by a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be invalid or illegal.
Section 13.17 Headings. The headings, captions and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 13.18 Construction. Each of Kitty Hawk and its
Subsidiaries, Agent and each Lender acknowledges that it has had the benefit of
legal counsel of its own choice and has been afforded an
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 104
111
opportunity to review this Agreement and the other Loan Documents with its
legal counsel and that this Agreement and the other Loan Documents shall be
construed as if jointly drafted by the parties hereto.
Section 13.19 Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the limitations of, another covenant
shall not avoid the occurrence of a Default if such action is taken or such
condition exists.
Section 13.20 Confidentiality. Each Lender agrees to exercise its
best efforts to keep any information delivered or made available by Kitty Hawk
or any of its Subsidiaries to it which is clearly indicated to be confidential
information, confidential from anyone other than Persons employed or retained
by such Lender who are or are expected to become engaged in evaluating,
approving, structuring or administering the Loans; provided that nothing herein
shall prevent any Lender from disclosing such information (a) to any other
Lender, (b) to any Person if reasonably incidental to the administration of the
Loans, (c) upon the order of any court or administrative agency, (d) upon the
request or demand of any regulatory agency or authority having jurisdiction
over such Lender, (e) which has been publicly disclosed, (f) in connection with
any litigation to which Agent, any Lender or their respective Affiliates may be
a party, (g) to the extent reasonably required in connection with the exercise
of any right or remedy under the Loan Documents, (h) to such Lender's legal
counsel, independent auditors and affiliates, and (i) to any actual or proposed
participant or Assignee of all or part of its rights hereunder, so long as such
actual or proposed participant or Assignee agrees to be bound by the provisions
of this Section 13.20.
Section 13.21 Approvals and Consent. Except as may be expressly
provided to the contrary in this Agreement or in the other Loan Documents (as
applicable), in any instance under this Agreement of the other Loan Documents
where the approval, consent or exercise of judgment of Agent or any Lender is
requested or required, (a) the granting or denial of such approval or consent
and the exercise of such judgment shall be within the sole discretion of Agent
or such Lender, respectively, and Agent and such Lender shall not, for any
reason or to any extent, be required to grant such approval or consent or to
exercise such judgment in any particular manner, regardless of the
reasonableness of the request or the action or judgment of Agent or such
Lender, and (b) no approval or consent of Agent or any Lender shall in any
event be effective unless the same shall be in writing and the same shall be
effective only in the specific instance and for the specific purpose for which
given.
Section 13.22 Joint and Several Obligations. Each and every
representation, warranty, covenant or agreement of Kitty Hawk and its
Subsidiaries (or any two or more of them) contained herein shall be, and shall
be deemed to be, the joint and several representation, warranty, covenant and
agreement of each such Person.
Section 13.23 AGREEMENT FOR BINDING ARBITRATION. EACH OF THE
PARTIES HERETO AGREES TO BE BOUND BY THE TERMS AND PROVISIONS OF THE CURRENT
ARBITRATION PROGRAM OF XXXXX FARGO, WHICH
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 105
112
ARBITRATION PROGRAM IS ATTACHED HERETO AS EXHIBIT F. ALL DISPUTES AMONG THE
PARTIES HERETO SHALL BE RESOLVED BY MANDATORY BINDING ARBITRATION UPON THE
REQUEST OF ANY PARTY HERETO.
[The remainder of this page intentionally left blank.]
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 106
113
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
KITTY HAWK:
KITTY HAWK, INC.
By: /s/ M. XXX XXXXXXXXXXX
----------------------------------------
Name: M. Xxx Xxxxxxxxxxx
Title: Chairman of the Board of Directors
and Chief Executive Officer
AIRCARGO:
KITTY HAWK AIRCARGO, INC.
By: /s/ XXXXXX X. XXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
LEASING:
AIRCRAFT LEASING, INC.
By: /s/ XXXXXXX X. XXXXXXXXX, XX.
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, Xx.
Title: President
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 107
114
CHARTERS:
KITTY HAWK CHARTERS, INC.
By: /s/ M. XXX XXXXXXXXXXX
----------------------------------------
Name: M. Xxx Xxxxxxxxxxx
Title: President
SKYFREIGHTERS:
SKYFREIGHTERS CORPORATION
By: /s/ M. XXX XXXXXXXXXXX
----------------------------------------
Name: M. Xxx Xxxxxxxxxxx
Title: President
AIA:
AMERICAN INTERNATIONAL AIRWAYS, INC.
By: /s/ XXXXXXX X. XXXXXXXXX, XX.
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, Xx.
Title: Vice President
AIT:
AMERICAN INTERNATIONAL TRAVEL, INC.
By: /s/ XXXXXXX X. XXXXXXXXX, XX.
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, Xx.
Title: Vice President
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 108
115
FOL:
FLIGHT ONE LOGISTICS, INC.
By: /s/ XXXXXXX X. XXXXXXXXX, XX.
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, Xx.
Title: Vice President
KFS:
KALITTA FLYING SERVICE, INC.
By: /s/ XXXXXXX X. XXXXXXXXX, XX.
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, Xx.
Title: Vice President
OK:
O. K. TURBINES, INC.
By: /s/ XXXXXXX X. XXXXXXXXX, XX.
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx, Xx.
Title: Vice President
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 109
116
Address for Notices to Kitty Hawk
and each of its Subsidiaries:
Kitty Hawk, Inc., Kitty Hawk Aircargo, Inc.,
Aircraft Leasing, Inc., Kitty Hawk Charters, Inc.,
Skyfreighters Corporation, American International
Airways, Inc., American International Travel, Inc.,
Flight One Logistics, Inc., Kalitta Flying Service, Inc.
and O. K. Turbines, Inc. (as applicable)
X.X. Xxx 000000
Xxxxxx, Xxxxx 00000
Attention: Mr. M. Xxx Xxxxxxxxxxx
0000 X. 00xx Xxxxxx
XXX Xxxxxxx, Xxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 110
117
AGENT AND A LENDER:
COMMITMENTS: XXXXX FARGO BANK (TEXAS) NATIONAL
Revolving Credit Loans ASSOCIATION
Commitment: $100,000,000
By: /s/ XXXX XXXXX
-----------------------------
Term Loans Name: Xxxx Xxxxx
Commitment: $45,900,000 Title: Vice President
Address for Notices:
Xxxxx Fargo Bank (Texas),
National Association
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Lending Office for Base Rate Loans:
Xxxxx Fargo Bank, NA
Commercial Bank Loan Center
Agency Dept. 2840
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Manager
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Lending Office for Eurodollar Loans:
Xxxxx Fargo Bank, NA
Commercial Bank Loan Center
Agency Dept. 2840
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Manager
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
SECOND AMENDED AND RESTATED CREDIT AGREEMENT - Page 111
118
EXHIBIT A
ASSIGNMENT AND ACCEPTANCE
119
ASSIGNMENT AND ACCEPTANCE
Date:_____, 19__
Reference is made to that certain Second Amended and Restated Credit
Agreement, dated as of November 19, 1997 (as the same may be amended and in
effect from time to time, the "Credit Agreement") among Kitty Hawk, Inc., Kitty
Hawk Aircargo, Inc., Aircraft Leasing, Inc., Kitty Hawk Charters, Inc.,
Skyfreighters Corporation, American International Airways, Inc., American
International Travel, Inc., Flight One Logistics, Inc., Kalitta Flying Service,
Inc., 0.K. Turbines, Inc., the lenders named therein ("Lenders") and Xxxxx
Fargo Bank (Texas), National Association, as agent for the Lenders (in such
capacity, "Agent"). Capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement.
This Assignment and Acceptance is being executed pursuant to Section 13.8 of
the Credit Agreement.
_____________________ ("Assignor and ____________________ ("Assignee")
agree as follows:
1. Assignor hereby sells and assigns to Assignee, and Assignee
hereby purchases and assumes from Assignor, the following interests in and to
Assignor's rights and obligations under the Credit Agreement and the other Loan
Documents as of the Effective Date (as defined below):
(a) a % interest in the Revolving Credit Loans Commitments
(which percentage interest represents a $ commitment with
respect to the aggregate Revolving Credit Loans Commitments of
$ ); and/or
(b) a % interest in the aggregate outstanding principal
amount of the Term Loans (which percentage interest represents
a $ interest in the $ aggregate principal amount of the
Term Loans presently outstanding).
After giving effect to this Assignment and Acceptance, the Revolving Credit
Loans Commitment of Assignor will be $ , and the outstanding principal
amount of Assignor's interest in the Term Loans will be $ .
2. Assignor (i) represents that, as of the date hereof and
immediately prior to giving effect to this Assignment and Acceptance, (A) its
Revolving Credit Loans Commitment is $ and the outstanding principal
balance of its Revolving Credit Loans is $ , (B) the outstanding
principal balance of its Term Loans is $ , and (C) its pro rata share of the
Letters of Credit outstanding under its Revolving Credit Loans Commitment is
$ , (ii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or any other Loan Document or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of the Credit Agreement or any other Loan Document, other than that it is
the legal and beneficial owner of the interest being assigned by it hereunder
and that such interest
ASSIGNMENT AND ACCEPTANCE - Page 1
120
is free and clear of any adverse claim, (iii) makes no representation or
warranty and assumes no responsibility with respect to the financial condition
or results of operations of any Company or the performance or observance by any
Company of any of its obligations under the Credit Agreement or any other Loan
Document, and (iv) attaches the assigned Notes held by Assignor and requests
that Agent exchange such Notes for a new [Revolving Credit Loans and/or Term
Loans Note] payable to the order of (A) Assignee in an amount equal to (1) in
the case of the Revolving Credit Loans Note, the amount of Assignor's Revolving
Credit Loans Commitment assumed by Assignee hereunder, and (2) in the case of
the Term Loans Note, the principal amount of the Term Loans assigned to
Assignee pursuant hereto, and (B) Assignor in an amount equal to (1) in the
case of the Revolving Credit Loans Note, the amount of the Revolving Credit
Loans commitment retained by Assignor, and (2) in the case of the Term Loans
Note, the principal amount of the Term Loans retained by Assignor.(1)
3. Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance, (ii) confirms that it has received
a copy of the Credit Agreement, together with copies of the most recent
financial statements delivered pursuant to Section 8.1 thereof, and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance, (iii)
agrees that it will, independently and without reliance upon Agent, Assignor or
any other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under the Credit Agreement and other Loan Documents, (iv)
confirms that it is an Eligible Assignee, (v) appoints and authorizes Agent to
take such action on Assignee's behalf and to exercise such powers under the
Loan Documents as are delegated to Agent by the terms thereof, together with
such powers as are reasonably incidental thereto, (vi) agrees that it will
perform in accordance with their terms all obligations which by the terms of
the Credit Agreement and the other Loan Documents are required to be performed
by it as a Lender, (vii) agrees that it will keep confidential all information
with respect to the Companies furnished to it by any Company or Assignor marked
as being confidential (other than information generally available to the
public) in accordance with Section 13.20 of the Credit Agreement, and (viii)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying as to Assignee's exemption from United States withholding
taxes with respect to all payments to be made to Assignee under the Credit
Agreement, or certificate as to Assignee's exemption from United States
withholding taxes with respect to all payments to be made to Assignee under the
Credit Agreement, or such other documents as are necessary to indicate that all
such payments are subject to such tax at a rate reduced by an applicable tax
treaty.(2)
-------------------------
(1) If this Assignment and Acceptance does not relate to all of the Loans,
this language is to be revised accordingly.
(2) If Assignee is organized under the laws of a jurisdiction outside the
United States.
ASSIGNMENT AND ACCEPTANCE - Page 2
121
4. The effective date for this Assignment and Acceptance shall be
____ , ___ (the "Effective Date").(3) Following the execution of this Assignment
and Acceptance, it will be delivered to Agent for acceptance and recording by
Agent.
5. Upon such acceptance and recording, from and after the
Effective Date, (i) Assignee shall be a party to the Credit Agreement and, to
the extent provided in this Assignment and Acceptance, shall have the rights
and obligations of a Lender thereunder and under the other Loan Documents and
(ii) Assignor shall, to the extent provided in this Assignment and Acceptance,
relinquish its rights and be released from its obligations under the Credit
Agreement and the other Loan Documents.
6. Upon such acceptance and recording, from and after the
Effective Date, Agent shall make all payments in respect of the interest
assigned hereby (including payments of principal, interest, fees and other
amounts) to Assignee. Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement and the Notes for periods
prior to the Effective Date directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES) AND APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA.
8. Assignee's address for notices and Applicable Lending Office
for purpose of the Credit Agreement (until such address or office are
subsequently changed in accordance with the Credit Agreement) are specified
below its name on the signature pages of this Assignment and Acceptance.
[NAME OF ASSIGNOR]
By:
-------------------------
Name:
-----------------------
Title:
----------------------
-------------------------
(3) Such date shall be at least five (5) Business Days after the execution
of this Assignment and Acceptance and delivery thereof to Agent, unless
otherwise agreed by Agent.
ASSIGNMENT AND ACCEPTANCE - Page 3
122
[NAME OF ASSIGNEE]
By:
-----------------------------------
Name
---------------------------------
Title:
--------------------------------
Address for Notices:
--------------------------------------
--------------------------------------
--------------------------------------
Fax No. (_)
---------------------------
Telephone No. (___)
-------------------
Attention:
----------------------------
Lending Office for Prime Rate Loans:
--------------------------------------
--------------------------------------
--------------------------------------
Lending Office for Eurodollar Loans:
--------------------------------------
--------------------------------------
--------------------------------------
ACCEPTED BY:
XXXXX FARGO BANK (TEXAS), NATIONAL ASSOCIATION, as Agent
By:
-----------------------------------
Name
---------------------------------
Title:
--------------------------------
KITTY HAWK, INC.(1)
By:
-----------------------------------
Name
---------------------------------
Title:
--------------------------------
Date:
---------------------------------
-------------------------
(1) Applicable only prior to the occurrence and continuation of a Default.
ASSIGNMENT AND ACCEPTANCE - Page 4
123
EXHIBIT B
BORROWING BASE REPORT
124
BORROWING BASE REPORT
TO: Xxxxx Fargo Bank (Texas), National Association
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxx
Ladies/Gentlemen:
This Borrowing Base Report ("Report") for the month ending ____, 19 __,
is executed and delivered by Kitty Hawk, Inc. ("Borrower") pursuant to that
certain Second Amended and Restated Credit Agreement, dated as of November 19,
1997 (as the same may be amended and in effect from time to time, the
"Agreement"), among Borrower, Kitty Hawk Aircargo, Inc., Aircraft Leasing, Inc.,
Kitty Hawk Charters, Inc., Skyfreighters Corporation, American International
Airways, Inc., American International Travel, Inc., Flight One Logistics, Inc.,
Kalitta Flying Service, Inc., 0. K. Turbines, Inc., the lenders named therein
("Lenders") and Xxxxx Fargo Bank (Texas), National Association, as agent for
Lenders (in such capacity, "Agent"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Agreement.
Borrower hereby represents and warrants to Agent that all information
contained herein is true, correct and complete, and that the Eligible
Receivables and Eligible Parts referred to below represent the Eligible
Receivables and Eligible Parts that qualify for purposes of determining the
Borrowing Base under the Agreement. Borrower further represents and warrants to
Agent that (a) attached hereto as Schedule 1 is a list of Eligible Receivables
for the month ending _____, _____, showing all Eligible Receivables aged in
thirty-day intervals, (b) attached hereto as Schedule 2 is a calculation showing
the amounts of all Receivables and showing the amounts of all exclusions
therefrom for purposes of calculating Eligible Receivables (set forth separately
for each entity and for each exclusion specified in clauses (a) through (r) of
the definition of Eligible Receivables and for any exclusion resulting from the
last paragraph of such definition) and (c) attached hereto as Schedule 3 is a
calculation showing the amounts of all Eligible Parts showing the amounts of all
exclusions therefrom for purposes of calculating Eligible Parts (set forth
separately for each entity and for each exclusion specified in clauses (i)
through (vi) of the definition of Eligible Parts).
CALCULATION OF BORROWING BASE
Receivables:
1. Eligible Receivables . . . . . . . . . . . . . . . . . . $_______
Parts:
2. Eligible Parts . . . . . . . . . . . . . . . . . . . . . . $_______
BORROWING BASE REPORT - Page 1
125
Borrowing Base:
3. __% of line 1(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $___________
4. __% of line 2(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $___________
5. Borrowing Base (line 3 plus line 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $___________
6. Revolving Loans Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100,000,000
7. Outstanding principal amount of Revolving Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $___________
8. Outstanding Letter of Credit Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $___________
9. Outstanding Revolving Credit (line 7 plus line 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $___________
10. Availability under Revolving Loans Commitment (the lesser of line 5 or line 6, minus line 9) . . . . . . . . . $___________
Borrower further represents and warrants to Agent that the
representations and warranties contained in Article 7 of the Agreement are true
and correct on and as of the date of this Borrowing Base Report as if made on
and as of the date hereof, and that no Default or Event of Default has occurred
and is continuing.
Date:
--------------------
KITTY HAWK, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
-------------------------
(1) The percentages referred to in line 3 and line 4 are to be determined
by Agent in accordance with the Agreement.
BORROWING BASE REPORT - Page 2
126
SCHEDULE 1
ELIGIBLE RECEIVABLES
SCHEDULE 1 - ELIGIBLE RECEIVABLES AGING SCHEDULE
127
SCHEDULE 2
RECEIVABLES AND EXCLUSIONS
SCHEDULE 2 - RECEIVABLES OF THE BORROWER AND ITS WHOLLY-OWNED SUBSIDIARIES
128
SCHEDULE 3
ELIGIBLE PARTS
SCHEDULE 3 - INVENTORY OF THE BORROWER AND ITS WHOLLY-OWNED SUBSIDIARIES
129
EXHIBIT C
REVOLVING CREDIT LOANS NOTE
130
REVOLVING CREDIT LOANS NOTE
$____________ Dallas, Texas November 19, 1997
FOR VALUE RECEIVED, the undersigned, KITTY HAWK, INC., a Delaware
corporation ("Borrower"), hereby promises to pay to the order of ___________
("Lender"), in accordance with the instructions for payment to Agent specified
in Section 3.1 of the Credit Agreement and for the account of the Applicable
Lending Office of Lender, in lawful money of the United States of America and in
immediately available funds, the principal amount of ______________ and NO/100
Dollars ($________________) or such lesser amount as shall equal the aggregate
unpaid principal amount of the Revolving Credit Loans (hereinafter "Loans") made
by Lender (or its predecessor in interest) to Borrower under the Credit
Agreement referred to below, on the dates and in the principal amounts provided
in the Credit Agreement, and to pay interest on the unpaid principal amount of
each such Loan, at such office, in like money and funds, for the period
commencing on the date of such Loan until such Loan shall be paid in full, at
the rates per annum and on the dates provided in the Credit Agreement.
Borrower hereby authorizes Lender to endorse in its records the amount
and Type of Loans made to Borrower by Lender (or its predecessor in interest)
and all Continuations, Conversions and payments of principal in respect of such
Loans, which endorsements shall, in the absence of manifest error and in the
absence of disagreement between Lender and Agent as to such amount, be
conclusive as to the outstanding principal amount of all such Loans; provided,
however, that the failure to make such notation with respect to any such Loans
or payment shall not limit or otherwise affect the obligations of Borrower
under the Credit Agreement or this Note.
This Note is one of the Revolving Credit Loans Notes referred to in
the Second Amended and Restated Credit Agreement dated as of November 19, 1997,
among Borrower, Kitty Hawk Aircargo, Inc., Aircraft Leasing, Inc., Kitty Hawk
Charters, Inc., Skyfreighters Corporation, American International Airways,
Inc., American International Travel, Inc., Flight One Logistics, Inc., Kalitta
Flying Service, Inc., OK Turbines, Inc., Xxxxx Fargo Bank (Texas), National
Association, as Agent, and the Lenders named therein (such agreement, as the
same may be amended, modified or supplemented from time to time, being referred
to herein as the "Credit Agreement"), and evidences Loans made by Lender (or
its predecessor in interest) thereunder. The Credit Agreement, among other
things, contains provisions limiting the amount of interest that may be charged
on this Note, for acceleration of the maturity of this Note upon the happening
of certain stated events and for prepayments of Loans prior to the maturity of
this Note upon the terms and conditions specified in the Credit Agreement.
Capitalized terms used in this Note and not otherwise defined herein have the
respective meanings assigned to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES) AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
REVOLVING CREDIT LOANS NOTE - Page 1
131
Each of Borrower and each surety, Guarantor, endorser and other party
ever liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent
to accelerate, notice of intent to demand, diligence in collecting, grace and
all other formalities of any kind, and consent to all extensions without notice
for any period or periods of time and partial payments, before or after
maturity, and any impairment of any collateral securing this Note, all without
prejudice to the holder. The holder shall similarly have the right to deal in
any way, at any time, with one or more of the foregoing parties without notice
to any other party, and to grant any such party any extensions of time for
payment of any of said indebtedness, or to release or substitute part or all of
the collateral securing this Note, or to grant any other indulgences or
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
This Note, in part, is issued in amendment and restatement of, but not
in extinguishment of the indebtedness evidenced by, (a) that certain Revolving
Credit Loans Note, dated September 17, 1997, in the original principal amount
of $30,450,000 made by Borrower payable to the order of Xxxxx Fargo Bank
(Texas), National Association and (b) that certain Revolving Credit Loans Note,
dated September 17, 1997, in the original principal amount of $30,450,000 made
by Borrower payable to the order of Bank One, Texas, N.A.
KITTY HAWK, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
REVOLVING CREDIT LOANS NOTE - Page 2
132
EXHIBIT D
TERM LOANS NOTE
133
TERM LOANS NOTE
$_____________ Dallas, Texas November 19, 1997
FOR VALUE RECEIVED, the undersigned, KITTY HAWK, INC., a Delaware
corporation ("Borrower"), hereby promises to pay to the order of _____________
("Lender"), in accordance with the instructions for payment to Agent specified
in Section 3.1 of the Credit Agreement and for the account of the Applicable
Lending Office of Lender, in lawful money of the United States of America and in
immediately available funds, the principal amount of ____________ Dollars
($____________) on the dates and in the principal amounts provided in the Credit
Agreement referred to below, and to pay interest on the unpaid principal amount
of each of the Term Loans (hereinafter "Loans") made by Lender (or its
predecessor in interest) to Borrower under the Credit Agreement, at such office,
in like money and funds, for the period commencing on the date of such Loans
until such Loans shall be paid in full, at the rates per annum and on the dates
provided in the Credit Agreement.
Borrower hereby authorizes Lender to endorse in its records the amount
and Type of Loans made to Borrower by Lender (or its predecessor in interest)
and all Continuations, Conversions and payments of principal in respect of such
Loans, which endorsements shall, in the absence of manifest error and in the
absence of disagreement between Lender and Agent as to such amount, be
conclusive as to the outstanding principal amount of all such Loans; provided,
however, that the failure to make such notation with respect to any such Loans
or payment shall not limit or otherwise affect the obligations of Borrower
under the Credit Agreement or this Note.
This Note is one of the Term Loans Notes referred to in the Second
Amended and Restated Credit Agreement dated as of November 19, 1997, among
Borrower, Kitty Hawk Aircargo, Inc., Aircraft Leasing, Inc., Kitty Hawk
Charters, Inc., Skyfreighters Corporation, American International Airways,
Inc., American International Travel, Inc., Flight One Logistics, Inc., Kalitta
Flying Service, Inc., OK Turbines, Inc., Xxxxx Fargo Bank (Texas), National
Association, as Agent, and the Lenders named therein (such agreement, as the
same may be amended, modified or supplemented from time to time, being referred
to herein as the "Credit Agreement"), and evidences Loans made by Lender (or
its predecessor in interest) thereunder. The Credit Agreement, among other
things, contains provisions limiting the amount of interest that may be charged
on this Note, for acceleration of the maturity of this Note upon the happening
of certain stated events and for prepayments of Loans prior to the maturity of
this Note upon the terms and conditions specified in the Credit Agreement.
Capitalized terms used in this Note and not otherwise defined herein have the
respective meanings assigned to them in the Credit Agreement.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
INTERNAL LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES) AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
TERM LOANS NOTE - Page 1
134
Each of Borrower and each surety, Guarantor, endorser and other party
ever liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent
to accelerate, notice of intent to demand, diligence in collecting, grace and
all other formalities of any kind, and consent to all extensions without notice
for any period or periods of time and partial payments, before or after
maturity, and any impairment of any collateral securing this Note, all without
prejudice to the holder. The holder shall similarly have the right to deal in
any way, at any time, with one or more of the foregoing parties without notice
to any other party, and to grant any such party any extensions of time for
payment of any of said indebtedness, or to release or substitute part or all of
the collateral securing this Note, or to grant any other indulgences or
forbearances whatsoever, without notice to any other party and without in any
way affecting the personal liability of any party hereunder.
This Note, in part, is issued in amendment and restatement of, but not
in extinguishment of the indebtedness evidenced by, (a) that certain Revolving
Credit Loans Note, dated September 17, 1997, in the original principal amount
of $30,450,000 made by Borrower payable to the order of Xxxxx Fargo Bank
(Texas), National Association and (b) that certain Revolving Credit Loans Note,
dated September 17, 1997, in the original principal amount of $30,450,000 made
by Borrower payable to the order of Bank One, Texas, N.A.
KITTY HAWK, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
TERM LOANS NOTE - Page 2
135
EXHIBIT E
NOTICE OF BORROWING, CONVERSION, CONTINUATION OR PREPAYMENT
136
NOTICE OF BORROWING, CONVERSION,
CONTINUATION OR PREPAYMENT
Date:_________, ____
Xxxxx Fargo Bank (Texas), National Association, as Agent
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xx. Xxxx Xxxxx
Reference is made to that certain Second Amended and Restated Credit
Agreement, dated as of November 19, 1997 (as the same may be amended and in
effect from time to time, the "Credit Agreement"), among Kitty Hawk, Inc.
("Borrower"), Kitty Hawk Aircargo, Inc., Aircraft Leasing, Inc., Kitty Hawk
Charters, Inc., Skyfreighters Corporation, American International Airways,
Inc., American International Travel, Inc., Flight One Logistics, Inc., Kalitta
Flying Service, Inc., 0. K. Turbines, Inc., the lenders named therein
("Lenders") and Xxxxx Fargo Bank (Texas), National Association, as agent for
Lenders (in such capacity, "Agent"). Capitalized terms used herein and not
otherwise defined herein shall have the meanings assigned to such terms in the
Credit Agreement.
Borrower hereby gives this Notice, irrevocably, pursuant to Section
2.9 of the Credit Agreement. Borrower hereby notifies you of the following
(check and/or complete the applicable item):(1)
_____ (a) New Loan.
(i) Borrower requests Revolving Credit Loans in the
amount of $ on __________, _____.
(ii) The Revolving Credit Loans will be of the following
Type: [Base Rate Loan] [Eurodollar Loan].
(iii) If the Revolving Credit Loans will be a Eurodollar
Loan, the Interest Period will be _____ months.
_____ (b) [Conversion] [Continuation] of Loan
(i) Revolving Credit Loans:
(A) Borrower requests a [Conversion]
[Continuation] of a Revolving Credit Loan in the amount of $
on __________, ______.
-------------------------
(1) Borrower shall also be required to provide the additional information
(if any) required by the Credit Agreement.
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS OR PREPAYMENTS - Page 1
137
(B) The Type of Revolving Credit Loans to be
[Converted] [Continued] will be a [Base Rate Loan] [Eurodollar
Loan].
(C) The Revolving Credit Loans resulting from the
[Conversion] [Continuation] will be a [Base Rate Loan] [Eurodollar
Loan].
(D) If the Revolving Credit Loans resulting from the
[Conversion] [Continuation] will be a Eurodollar Loan, the
Interest Period for such Loan will be ______ month[s].
(ii) Term Loans:
(A) Borrower requests a [Conversion] [Continuation]
of the Term Loans in the amount of $ ____________ on
__________,___________.
(B) The Type of Term Loans to be [Converted]
[Continued] ill be a [Base Rate Loan] [Eurodollar Loan].
(C) The Term Loans resulting from the [Conversion]
[Continuation] will be a [Base Rate Loan] [Eurodollar Loan].
(D) If the Term Loans resulting from the [Conversion]
[Continuation] will be a Eurodollar Loan, the Interest Period for
such Loan will be _______ month[s].
_____ (c) Prepayment:
(i) Revolving Credit Loans:
(A) Borrower will make a prepayment of the principal
of the Revolving Credit Loans in the amount of $ on , .
(B) The Revolving Credit Loans to be prepaid will be
of the following Type: [Base Rate Loan] [Eurodollar Loan].
(C) If the Revolving Credit Loans to be prepaid is a
Eurodollar Loan, it has an Interest Period of _____ month[s] that
will end on __________, _____.
(ii) Term Loans:
(A) Borrower will make a prepayment of the
principal of the Term Loans in the amount of $ _____ on , .
(B) The Term Loans to be prepaid will be of the
following Type: [Base Rate Loan] [Eurodollar Loan].
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS OR PREPAYMENTS - Page 2
138
(C) If the Term Loans to be prepaid is a
Eurodollar Loan, it has an Interest Period of _____ month[s]
that will end on __________,_____.
KITTY HAWK, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
NOTICE OF BORROWINGS, CONVERSIONS, CONTINUATIONS OR PREPAYMENTS - Page 3
139
EXHIBIT F
ARBITRATION PROGRAM
140
ARBITRATION PROGRAM
(a) Binding Arbitration. Upon the demand of any party, whether made
before or after the institution of any judicial proceeding, any Dispute (as
defined below) shall be resolved by binding arbitration in accordance with the
terms of this Arbitration Program. A "Dispute" shall include any action,
dispute, claim or controversy of any kind (e.g., whether in contract or in
tort, statutory or common law, legal or equitable or otherwise) now existing or
hereafter arising between the parties in any way arising out of, pertaining to
or in connection with (1) any agreement, document or instrument to which this
Arbitration Program is attached or in which it is referred to or any related
agreements, documents or instruments (the "Documents"), (2) all past, present
or future loans, notes, instruments, drafts, credits, accounts, deposit
accounts, safe deposit boxes, safekeeping agreements, guarantees, letters of
credit, goods or services or other transactions, contracts or agreements of any
kind whatsoever, (3) any past, present or future incidents, omissions, acts,
errors, practices or occurrences causing injury to either party whereby the
other party or its agents, employees or representatives may be liable, in whole
or in part, or (4) any other aspect of the past, present or future
relationships of the parties including any agency, independent contractor or
employment relationship but excluding claims for workers' compensation and
unemployment benefits ("Relationship"). Any party to this Arbitration Program
may, by summary proceedings (e.g., a plea in abatement or motion to stay
further proceedings), bring any action in court to compel arbitration of any
Disputes. Any party who fails or refuses to submit to binding arbitration
following a lawful demand by the opposing party shall bear all costs and
expenses incurred by the opposing party in compelling arbitration of any
Dispute. The parties agree that by engaging in activities with or involving
each other as described above, they are participating in transactions involving
interstate commerce.
(b) Governing Rules. All Disputes between the parties submitted to
arbitration shall be resolved by binding arbitration administered by the
American Arbitration Association (the "AAA") in accordance with, and in the
following order of priority: (1) the terms of this Arbitration Program, (2) the
Commercial Arbitration Rules of the AAA, (3) the Federal Arbitration Act (Title
9 of the United States Code) and (4) to the extent the foregoing are
inapplicable, unenforceable or invalid, the laws of the State of Texas. The
validity and enforceability of this Arbitration Program shall be determined in
accordance with this same order of priority. In the event of any inconsistency
between this Arbitration Program and such rules and statutes, this Arbitration
Program shall control. Judgment upon any award rendered hereunder may be
entered in any court having jurisdiction; provided, however, that nothing
contained herein shall be deemed to be a waiver by any party that is a bank of
the protections afforded to it under 12 U.S.C. Section 91 or Texas Banking
Code art. 342-609.
(c) No Waiver; Preservation of Remedies; Multiple Parties. No
provision of, nor the exercise of any rights under, this Arbitration Program
shall limit the right of any party, during any Dispute, to seek, use and employ
ancillary or preliminary remedies, judicial or otherwise, for the purposes of
realizing upon, preserving, protecting, foreclosing or proceeding under
forcible entry and detainer for possession of any real or personal property,
and any such action shall not be deemed an election of remedies. Such rights
shall include, without limitation, rights and remedies relating to (1)
foreclosing against any real or personal property collateral or other security
by the exercise of power of sale under a deed of trust, mortgage or other
security agreement or instrument, or applicable law, (2) exercising self-help
remedies (including setoff rights) or (3) obtaining provisional or ancillary
remedies such as injunctive relief, sequestration, attachment, garnishment or
the appointment of a
141
receiver from a court having jurisdiction. Such rights can be exercised at any
time except to the extent such action is contrary to a final award or decision
in any arbitration proceeding. The institution and maintenance of an action for
judicial relief or pursuit of provisional or ancillary remedies or exercise of
self-help remedies shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the Dispute to arbitration, nor render
inapplicable the compulsory arbitration provisions hereof. In Disputes involving
indebtedness or other monetary obligations, each party agrees that the other
party may proceed against all liable persons, jointly or severally, or against
one or more of them, less than all, without impairing rights against other
liable persons. Nor shall a party be required to join the principal obligor or
any other liable persons (e.g., sureties or guarantors) in any proceeding
against a particular person. A party may release or settle with one or more
liable persons as the party deems fit without releasing or impairing rights to
proceed against any persons not so released.
(d) Statute of Limitations. All statutes of limitation applicable
to any Dispute shall apply to any proceeding in accordance with this
Arbitration Program.
(e) Arbitrator Powers and Qualifications; Award; Modification or
Vacation of Award. Arbitrators are empowered to resolve Disputes by summary
rulings substantially similar to summary judgments and motions to dismiss.
Arbitrators shall resolve all Disputes in accordance with the applicable
substantive law. Any arbitrator selected shall be required to be a practicing
attorney licensed to practice law in the State of Texas and shall be required
to be experienced and knowledgeable in the substantive laws applicable to the
subject matter of the Dispute. With respect to a Dispute in which the claims or
amounts in controversy do not exceed $1,000,000, a single arbitrator shall be
chosen and shall resolve the Dispute. In such case, the arbitrator shall be
required to make specific, written findings of fact, and shall have authority
to render an award up to but not to exceed $1,000,000, including all damages of
any kind whatsoever, including costs, fees and expenses. A Dispute involving
claims or amounts in controversy exceeding $1,000,000, shall be decided by a
majority vote of a panel of three arbitrators (an "Arbitration Panel"), the
determination of any two of the three arbitrators constituting the
determination of the Arbitration Panel, provided, however, that all three
Arbitrators on the Arbitration Panel must actively participate in all hearings
and deliberations. Arbitrators, including any Arbitration Panel, may grant any
remedy or relief deemed just and equitable and within the scope of this
Arbitration Program and may also grant such ancillary relief as is necessary to
make effective any award. Arbitration Panels shall be required to make
specific, written findings of fact and conclusions of law, and in such
proceedings before an Arbitration Panel only, the parties shall have the
additional right to seek vacation or modification of any award of an
Arbitration Panel that is based in whole, or in part, on an incorrect or
erroneous ruling of law by appeal to a Federal or State Court of Appeals,
following the entry of judgment on the award in Federal or State District
Court, as appropriate. For these purposes, the award and judgment entered by
the Federal or State District Court shall be considered to be the same as the
award and judgment of the Arbitration Panel. All requirements applicable to
appeals from any Federal or State District Court judgment shall be applicable
to appeals from judgments entered on decisions rendered by Arbitration Panels.
The Appellate Courts shall have the power and authority to vacate or modify an
award based upon a determination that there has been an incorrect or erroneous
ruling of law. The Appellate Court shall also have the power to reverse and/or
remand the decision of an Arbitration Panel. Subject to the foregoing, the
determination of an Arbitrator or
142
Arbitration Panel shall be binding on all parties and shall not be subject to
further review or appeal except as otherwise allowed by applicable law.
(f) Other Matters and Miscellaneous. To the maximum extent
practicable, the AAA, the Arbitrator (or the Arbitration Panel, as appropriate)
and the parties shall take any action necessary to require that an arbitration
proceeding hereunder shall be concluded within 180 days of the filing of the
Dispute with the AAA. Arbitration proceedings hereunder shall be conducted at
one of the following locations in the State of Texas agreed to in writing by
the parties or, in the absence of such agreement, selected by the AAA: (1)
Austin; (2) Dallas; (3) Fort Worth; (4) Houston; or (5) San Antonio.
Arbitrators shall be empowered to impose sanctions and to take such other
actions as they deem necessary to the same extent a judge could pursuant to the
Federal Rules of Civil Procedure, the Texas Rules of Civil Procedure and
applicable law. With respect to any Dispute, each party agrees that all
discovery activities shall be expressly limited to matters directly relevant to
the Dispute and any Arbitrator, Arbitration Panel and the AAA shall be required
to fully enforce this requirement. This Arbitration Program constitutes the
entire agreement of the parties with respect to its subject matter and
supersedes all prior discussions, arrangements, negotiations and other
communications on dispute resolution. The provisions of this Arbitration
Program shall survive any termination, amendment or expiration of the Documents
or the Relationship, unless the parties otherwise expressly agree in writing.
To the extent permitted by applicable law, Arbitrators, including any
Arbitration Panel, shall have the power to award recovery of all costs and fees
(including attorneys' fees, administrative fees and arbitrators' fees) to the
prevailing party. This Arbitration Program may be amended, changed or modified
only by the express provisions of a writing which specifically refers to this
Arbitration Program and which is signed by all the parties hereto. If any term,
covenant, condition or provision of this Arbitration Program is found to be
unlawful, invalid or unenforceable, such illegality, or invalidity or
unenforceability shall not affect the legality, validity or enforceability of
the remaining parts of this Arbitration Program, and all such remaining parts
hereof shall be valid and enforceable and have full force and effect as if the
illegal, invalid or unenforceable part had not been included. The captions or
headings in this Arbitration Program are for convenience of reference only and
are not intended to constitute any part of the body or text of this Arbitration
Program. Each party agrees to keep all Disputes and arbitration proceedings
strictly confidential, except for disclosures of information required in the
ordinary course of business of the parties or by applicable law or regulation.
To the maximum extent permitted by law, this Arbitration Program modifies and
supersedes any and all prior agreements for arbitration between the parties.
143
SCHEDULE 1.1(a)
AIA AIRCRAFT RELEASE AMOUNTS
144
SCHEDULE 1.1(a)
AIA AIRCRAFT RELEASE AMOUNTS
================================================================================
Appraised Initial AIA Aircraft Percentage
AIA Aircraft Value Release Amount Allocation
================================================================================
1. Aircraft O 719CK $ 4,100,000 $ 2,974,301 6.4800%
--------------------------------------------------------------------------------
2. Aircraft P 255US $ 5,800,000 $ 4,207,548 9.1668%
--------------------------------------------------------------------------------
3. Aircraft Q 856AA $ 4,800,000 $ 3,482,109 7.5863%
--------------------------------------------------------------------------------
4. Aircraft R 858AA $ 4,644,000 $ 3,368,940 7.3397%
--------------------------------------------------------------------------------
5. Aircraft S 6831 $ 3,800,000 $ 2,756,670 6.0058%
--------------------------------------------------------------------------------
6. Aircraft T 6834 $ 3,700,000 $ 2,684,126 5.8478%
--------------------------------------------------------------------------------
7. Aircraft U 6808 $ 3,300,000 $ 2,393,950 5.2156%
--------------------------------------------------------------------------------
8. Aircraft V 6811 $ 4,000,000 $ 2,901,757 6.3219%
--------------------------------------------------------------------------------
9. Aircraft W 6816 $ 3,600,000 $ 2,611,582 5.6897%
--------------------------------------------------------------------------------
10. Aircraft X 1908 $ 1,828,000 $ 1,326,103 2.8891%
--------------------------------------------------------------------------------
11. Aircraft Y 729CK $ 3,800,000 $ 2,756,670 6.0058%
--------------------------------------------------------------------------------
12. Aircraft Z 727CK $ 2,400,000 $ 1,741,054 3.7931%
--------------------------------------------------------------------------------
13. Aircraft AA 720CK $ 3,700,000 $ 2,684,126 5.8478%
--------------------------------------------------------------------------------
14. Aircraft AB 722CK $ 5,400,000 $ 3,917,373 8.5346%
--------------------------------------------------------------------------------
15. Aircraft AC 723CK $ 6,000,000 $ 4,352,636 9.4829%
--------------------------------------------------------------------------------
16. Aircraft AD 706CA $ 2,400,000 $ 1,741,054 3.7931%
--------------------------------------------------------------------------------
Total: $63,272,000 $45,900,000 100.0000%
================================================================================
145
SCHEDULE 1.1 (b)
APPROVED FOREIGN ACCOUNT DEBTORS
146
Schedule 1.1(b)
Approved Foreign Account Debtors
None.
Schedule 1.1(b) - Approved Foreign Account Debtors Lone Page
147
SCHEDULE 1.1(c)
EXISTING LIENS AND EXISTING DEBT
148
SCHEDULE 1.1(c)
Section 9.1(e) Existing Debt
and Permitted Liens (f)
Principal
Holder Description Balance Liens
------ ----------- ------- -----
1. Iosco County EDC Business loan note $ 613,250 Security interest in
for renovation and airplane hangar sublease
expansion of airplane and furniture, fixtures
and equipment in
the hangar
2. GE Capital Equipment loan 2,680,198 Security interest in
ground handling
equipment
3. GE Capital Aircraft loan 428,024 Aircraft mortgage on
Xxxx N500JS aircraft
and engines
4. Michigan Nat'l Equipment loan 740,048 Security interest in
Bank ground handling
equipment
5. Concord Equipment loan 213,490 Security interest in
ground handling
equipment
6. Imperial Insurance premium 699,100 Policy claim
financing
7. First Source Aircraft loan 2,669,904 Aircraft mortgage on
DC-8 aircraft N801MG
and engines
8. First Source Aircraft loan 1,950,844 Aircraft mortgage on
DC-9 aircraft N112PS
----------- and engines
Total $9,994,858
SCHEDULE 1.1(C) - EXISTING DEBT AND PERMITTED LIENS Lone Page
149
SCHEDULE 2.14
EXISTING LETTERS OF CREDIT
150
SCHEDULE 2.14
EXISTING LETTERS OF CREDIT
--------------------------------------------------------------------------------------
Letter of Face Account
Credit No. Amount Issuer Party Beneficiary Expires
--------------------------------------------------------------------------------------
285536 $ 500,000.00 Xxxxx Fargo Aircargo Air Transport 12-1-97
International
--------------------------------------------------------------------------------------
241386 $ 25,000.00 Xxxxx Fargo Aircargo Exxon 2-15-98
--------------------------------------------------------------------------------------
281229 $ 945,000.00 Xxxxx Fargo Aircargo Atlas Air Inc. 1-7-98
--------------------------------------------------------------------------------------
286204 $1,303,200.00 Xxxxx Fargo Kitty Hawk Comerica Bank 11-17-98
--------------------------------------------------------------------------------------
151
SCHEDULE 6.1
DEBT TO BE PAID AT CLOSING
152
SCHEDULE 6.1
Debt to be Paid at Closing
All existing debt of Kitty Hawk and its Subsidiaries will be paid at
closing except for current accounts payable and debt described in Section 9.1
(d), if any; the debt of Kitty Hawk and its Subsidiaries to Agent and Lenders
pursuant to the Loan Documents, under Section 9.1(a); the debt of Kitty Hawk and
its Subsidiaries evidenced by the Senior Notes, under Section 9.1(b); and the
existing debt described in Section 9.1(e) and identified in Schedule 1.1(c).
SCHEDULE 6.1 - DEBT TO BE PAID AT CLOSING Lone Page
153
SCHEDULE 7.5
LITIGATION
154
SCHEDULE 7.5
Litigation Reasonably Likely to Have
a Material Adverse Effect
None.
SCHEDULE 7.5 - LITIGATION REASONABLY LIKELY TO HAVE Lone Page
MATERIAL ADVERSE EFFECT
155
SCHEDULE 7.9
DEBT
156
SCHEDULE 7.9
Debt at Closing
Debt of Kitty Hawk and its Subsidiaries at closing, other than current
accounts payable, will be only that described in Subsections 9.1(a),(b),(d)
and (e).
SCHEDULE 7.9 - DEBT AT CLOSING Lone Page
157
SCHEDULE 7.10
TAXES
158
SCHEDULE 7.10
Taxes
None.
SCHEDULE 7.10 - TAXES Lone Page
159
SCHEDULE 7.12
ERISA MATTERS
160
SCHEDULE 7.12
ERISA Matters
Neither Kitty Hawk nor any of its Subsidiaries maintains or has any obligation
to contribute to any defined benefit pension plan.
SCHEDULE 7.12 - ERISA MATTERS Lone Page
161
SCHEDULE 7.14
CAPITALIZATION
162
SCHEDULE 7.14
Capitalization
On the Closing Date, the number and class of the authorized Capital Stock,
the par value per share, and the number of shares issued and outstanding of the
Capital Stock of Xxxxx Xxxx'x Subsidiaries, are:
Kitty Hawk Aircargo, Inc.:
1,000 shares of $1 par value common stock are authorized. 1,000 shares are
issued and outstanding, all of which are held by Kitty Hawk, Inc.
Kitty Hawk Leasing, Inc.:
100,000 shares of $1 par value common stock are authorized. 1,000 shares are
issued and outstanding, all of which are held by Kitty Hawk, Inc.
Kitty Hawk Charters, Inc.:
10,000 shares of $1 par value common stock are authorized. 1,000 shares are
issued and outstanding, all of which are held by Kitty Hawk, Inc.
Skyfreighters Corporation:
1,000,000 shares of $1 par value common stock are authorized. 1,000 shares are
issued and outstanding, all of which are held by Kitty Hawk, Inc.
American International Airways, Inc.:
50,000 shares of $1 par value common stock are authorized. 25,000 shares are
issued and outstanding, all of which are held by Kitty Hawk, Inc.
American International Travel, Inc.:
50,000 shares of $1 par value common stock are authorized. 1,000 shares are
issued and outstanding, all of which are held by Kitty Hawk, Inc.
Flight One Logistics, Inc.:
50,000 shares of $1 par value common stock are authorized. 1,000 shares are
issued and outstanding, all of which are held by Kitty Hawk, Inc.
Kalitta Flying Service, Inc.:
50,000 shares of $1 par value common stock are authorized. 25,000 shares are
issued and outstanding, all of which are held by Kitty Hawk, Inc.
O.K. Turbines, Inc.:
50,000 shares of $1 par value common stock are authorized. 1,000 shares are
issued and outstanding, all of which are held by Kitty Hawk, Inc.
SCHEDULE 7.14- CAPITALIZATION Lone Page
163
SCHEDULE 7.21
MATERIAL CONTRACTS
164
SCHEDULE 7.21
Material Contracts
The Material Contracts of Kitty Hawk and its Subsidiaries are listed as items
1.1, items 2.1 through 2.3, item 4.2, and items 10.1 through 10.25 in the Index
to Exhibits of Xxxxx Xxxx'x Form S-1 Registration Statement under the Securities
Act of 1933, as filed with the Securities and Exchange Commission in November
1997.
A copy of that Index is attached to and incorporated into this Schedule 7.21.
SCHEDULE 7.21 - MATERIAL CONTRACTS Lone Page
165
INDEX TO EXHIBITS
EXHIBIT
NUMBER ITEM
------- ----
1.1*** - Form of Underwriting Agreement.
2.1*** - Agreement and Plan of Merger, dated September 22, 1997 (the "Merger
Agreement"), by and among Kitty Hawk and certain of its subsidiaries,
M. Xxx Xxxxxxxxxxx, AIA, AIT, FOL, KFS, OK and Xxxxxx X. Kalitta.
2.2*** - Amendment No. 1 to the Merger Agreement, dated October 23, 1997, by
and among Kitty Hawk and certain of its subsidiaries, M. Xxx
Xxxxxxxxxxx, AIA, AIT, FOL, KFS, OK and Xxxxxx X. Kalitta.
2.3*** - Amendment No. 2 to the Merger Agreement, dated October 29 1997, by
and among Kitty Hawk and certain of its subsidiaries, M. Xxx
Xxxxxxxxxxx, AIA, AIT, FOL, KFS, OK and Xxxxxx Xxxxxxx.
3.1 - Certificate of Incorporation of Kitty Hawk, Inc. (the "Company"),
filed as an Exhibit to the Registrant's previously filed Registration
Statement on Form S-1 (Reg. No. 33-85698) dated as of December 1994,
which exhibit is incorporated herein by reference.
3.2 - Amendment No. 1 to the Certificate of Incorporation of the Company,
filed as an Exhibit to the Registrant's previously filed Registration
Statement on Form S-1 (Reg. No. 33-85698) dated as of December 1994,
which exhibit is incorporated herein by reference.
3.3 - Bylaws of Kitty Hawk, filed as an Exhibit to the Registrant's
previously filed Registration Statement on Form S-1 (Reg. No.
33-85698) dated as of October 1996, which exhibit is incorporated
herein by reference.
3.4 - Amendment No. 1 to Bylaws of Kitty Hawk, filed as an Exhibit to the
Registrant's previously filed Registration Statement on Form S-1 (Reg.
No. 33-85698) dated as of October 1996, which exhibit is incorporated
herein by reference.
4.1 - Specimen Common Stock Certificate, filed as an Exhibit to the
Registrant's previously filed Registration Statement on Form S-1 (Reg.
No. 333-8307) dated as of October 1996, which exhibit is incorporated
herein by reference.
4.2*** - Form of Stockholders' Agreement to be entered into among the Company,
M. Xxx Xxxxxxxxxxx and Xxxxxx X. Kalitta.
5.1*** - Opinion of Xxxxxx and Xxxxx, LLP, regarding legality of the Common
Stock being issued.
10.1 - Settlement Agreement dated as of August 22, 1994 by and between the
Company, Aircargo, Leasing, M. Xxx Xxxxxxxxxxx, American International
Airways, Inc. and Xxxxxx Xxxxxxx, filed as an Exhibit to the
Registrant's previously filed Registration Statement on Form S-1 (Reg.
No. 33-85698) dated as of December 1994, which exhibit is incorporated
herein by reference.
10.2 - Salary Continuation Agreement dated as of June 15, 1993 by and between
the Company and M. Xxx Xxxxxxxxxxx, filed as an Exhibit to the
Registrant's previously filed Registration Statement on Form S-1 (Reg.
No. 33-85698) dated as of December 1994, which exhibit is incorporated
herein by reference.
10.3 - Split Dollar Insurance Agreement dated as of June 15, 1993 by and
between the Company and Xxxxx X. Xxxxx, filed as an Exhibit to the
Registrant's previously filed Registration Statement on Form S-1 (Reg.
No. 33-85698) dated as of December 1994, which exhibit is incorporated
herein by reference.
166
EXHIBIT
NUMBER ITEM
------- ----
10.4 - Split Dollar Insurance Agreement dated as of June 15, 1993 by and
between the Company and Xxxxx X. Xxxxx, filed as an Exhibit to the
Registrant's previously filed Registration Statement on Form S-1 (Reg.
No. 33-85698) dated as of December 1994, which exhibit is incorporated
herein by reference.
10.5 - Kitty Hawk, Inc. Amended and Restated Omnibus Securities Plan, dated
as of September 3, 1996, filed as an Exhibit to the Registrant's
previously filed Registration Statement on Form S-1 (Reg. No.
333-8307) dated as of October 1996, which exhibit is incorporated
herein by reference.
10.6 - Kitty Hawk, Inc. Amended and Restated Employee Stock Purchase Plan,
dated as of September 3, 1996, filed as an Exhibit to the Registrant's
previously filed Registration Statement on Form S-1 (Reg. No.
333-8307) dated as of October 1996, which exhibit is incorporated
herein by reference.
10.7 - Kitty Hawk, Inc. Amended and Restated Annual Incentive Compensation
Plan, dated as of September 3, 1996, filed as an Exhibit to the
Registrant's previously filed Registration Statement on Form S-1 (Reg.
No. 333-8307) dated as of October 1996, which exhibit is incorporated
herein by reference.
10.8 - Kitty Hawk, Inc. 401(k) Savings Plan, filed as an Exhibit to the
Registrant's previously filed Registration Statement on Form S-1 (Reg.
No. 33-85698) dated as of December 1994, which exhibit is incorporated
herein by reference.
10.9 - Employment Agreement dated as of October 27, 1994 by and between the
Company and M. Xxx Xxxxxxxxxxx, filed as an Exhibit to the
Registrant's previously filed Registration Statement on Form S-1 (Reg.
No. 33-85698) dated as of December 1994, which exhibit is incorporated
herein by reference.
10.10 - Amended and Restated Employment Agreement dated as of June 12, 1996
by and between the Company and Xxxxxxx X. Xxxxxxxxx, filed as an
Exhibit to the Registrant's previously filed Registration Statement on
Form S-1 (Reg. No. 333-8307) dated as of October 1996, which exhibit
is incorporated herein by reference.
10.11 - Amended and Restated Employment Agreement dated as of December 31,
1995 by and between the Company and Xxxxxx X. Xxxxxx, filed as an
Exhibit to the Registrant's previously filed Registration Statement on
Form S-1 (Reg. No. 333-8307) dated as of October 1996, which exhibit
is incorporated herein by reference.
10.12 - Purchase Agreement between Federal Express Corporation and Postal Air,
Inc. (predecessor to the Company) dated as of October 22, 1992 (the
"FEASI Agreement"), filed as an Exhibit to the Registrant's previously
filed Registration Statement on Form S-1 (Reg. No. 333-8307) dated as
of October 1996, which exhibit is incorporated herein by reference.
10.13 - Amendment No. 1 dated November 17, 1992 to the FEASI Agreement,
filed as an Exhibit to the Registrant's previously filed Registration
Statement on Form S-1 (Reg. No. 333-8307) dated as of October 1996,
which exhibit is incorporated herein by reference.
10.14 - Amendment No. 2 dated February 1993 to the FEASI Agreement, filed as
an Exhibit to the Registrant's previously filed Registration Statement
on Form S-1 (Reg. No. 333-8307) dated as of October 1996, which
exhibit is incorporated herein by reference.
167
EXHIBIT
NUMBER ITEM
------- ----
10.15 - Amendment No. 3 dated June 11, 1993 to the FEASI Agreement, filed as
an Exhibit to the Registrant's previously filed Registration Statement
on Form S-1 (Reg. No. 333-8307) dated as of October 1996, which
exhibit is incorporated herein by reference.
10.16 - Amendment No. 4 dated May 10, 1994 to the FEASI Agreement, filed as
an Exhibit to the Registrant's previously filed Registration Statement
on Form S-1 (Reg. No. 333-8307) dated as of October 1996, which
exhibit is incorporated herein by reference.
10.17 - Amendment No. 5 dated September 29, 1995 to the FEASI Agreement,
filed as an Exhibit to the Registrant's previously filed Registration
Statement on Form S-1 (Reg. No. 333-8307) dated as of October 1996,
which exhibit is incorporated herein by reference.
10.18 - Amendment No. 6 dated December 6, 1996 to the FEASI Agreement, filed
as an Exhibit to the Company's Form 10-Q for the quarter ended
November 30, 1996, which exhibit is incorporated herein by reference.
10.19 - Amended and Restated Credit Agreement (the "Credit Agreement"),
dated as of August 14, 1996, by and among the Company, Xxxxx Fargo
Bank (Texas), National Association ("WFB") and Bank One, Texas, N.A.
("BOT"), filed as an Exhibit to the Registrant's previously filed
Registration Statement on Form S-1 (Reg. No. 333-8307) dated as of
October 1996, which exhibit is incorporated herein by reference.
10.20***- Agreement, dated July 20, 1995, between American International
Airways, Inc. and the Pilots, Co-Pilots and Flight Engineers in the
service of American International Airways, Inc., as represented by The
International Brotherhood of Teamsters - Airline Division.
10.21* - Form of Employment Agreement to be entered into by and between
Xxxxxx X. Kalitta and AIA.
10.22* - Amended and Restated Consulting Agreement by and between Xxxxxx X.
Kalitta and AIA.
10.23***- First Amendment to the Credit Agreement, dated September 17, 1997,
by and among the Company, WFB and BOT.
10.24* - License Agreement (the "License Agreement"), dated May 15, 1995, by
and between Roadway Global Air, Inc. ("RGA") and American
International Freight ("AIF"), a division of AIA.
10.25* - Amendment to License Agreement, dated August 14, 1997, by and
between RGA and AIR
12.1* - Statement of Computation of ratio of earnings to fixed charges.
21.1 - Subsidiaries of the Registrant, filed as an Exhibit to the
Registrant's previously filed Registration Statement on Form S-1 (Reg.
No. 333-8307) dated as of October 1996, which exhibit is incorporated
herein by reference.
23.1* - Consent of Ernst &Young LLP.
23.2* - Consent of Deloitte & Touche LLP.
23.3 - Consent of Xxxxxx and Xxxxx, LLP (contained in legal opinion).
24.1*** - The power of attorney of officers and directors of the Company.
------------
* Filed herewith.
** To be filed by amendment.
*** Previously filed.
168
SCHEDULE 7.24
EMPLOYEE MATTERS
169
SCHEDULE 7.24
Employee Matters
American International Airways, Inc. ("AIA"), one of Xxxxx Xxxx'x Subsidiaries,
is subject to a collective bargaining agreement, dated July 20, 1995, with the
pilots, co-pilots and flight engineers employed by AIA, who are represented by
The International Brotherhood of Teamsters - Airline Division.
Neither Kitty Hawk nor any of its Subsidiaries is subject to any other
collective bargaining agreement, and there is no petition for certification or
union election pending with respect to any other employees of Kitty Hawk or its
Subsidiaries.
Neither Kitty Hawk nor any of its Subsidiaries is subject to an employment
contract with any executive officer or director except:
1. those employment agreements by Kitty Hawk with Xxx Xxxxxxxxxxx,
Xxxxxxx Xxxxxxxxx, and Xxxxxx X. Xxxxxx that are listed as items 10.9,
10.10, and 10.11 in the Index to Exhibits (the "Index") of Xxxxx
Xxxx'x Form S-1 Registration Statement under the Securities Act of
1933, as filed with the Securities and Exchange Commission in November
1997, a copy of which is attached to and incorporated into Schedule
7.21;
2. the employment agreement by AIA with Xxxxxx X. Kalitta that is listed
as item 10.21 in the Index;
3. certain severance and noncompetition agreements that may be effective
as of the Closing Date between AIA and Xxxxx Xxxxx, Xxxxxxx Xxxx,
Xxxxxxx Xxxxxxx, X. Xxxxxxxxxx, Xxxxxxx Xxxxxxx, Xxxxxxx Xxxxxxx, Xxxx
Xxxxxx, X. Xxxxxxx, Xxxxx Xxxxxx and Xxxxxx Xxxxxxxxx, in accordance
with Section 7.3(a) of the Merger Agreement among Kitty Hawk, AIA and
others; and
4. certain consulting agreements described in Schedule 9.12.
SCHEDULE 7.24 - EMPLOYEE MATTERS Lone Page
170
SCHEDULE 7.25
INSURANCE
171
SCHEDULE 7.25
Insurance
Kitty Hawk and its Subsidiaries maintain the insurance coverage that is
reasonably required with prudent risk management to conduct their business. That
insurance is placed by The Aviation Agency, Inc., and is with coverage,
deductibles, limits and insurers consistent with prior practice by Kitty Hawk.
Aviation-related aircraft casualty and liability coverage complies with the
requirements of Section 8.5, as evidenced by a certificate of The Aviation
Agency, Inc. that has been supplied to the Agent in connection with closing
under this Agreement.
SCHEDULE 7.25 - INSURANCE Lone Page
172
SCHEDULE 9.5
INVESTMENTS
173
SCHEDULE 9.5
Investments
None.
SCHEDULE 9.5 - INVESTMENTS Lone Page
174
SCHEDULE 9.12
CONSULTING FEES
175
SCHEDULE 9.12
Consulting Fees
Consulting fees are payable by AIA under a written consulting agreement with
Xxxxxx X. Kalitta, dated October 23, 1997, in connection with certain litigation
in the United States District Court for the Northern District of California
captioned American International Airways, Inc. v. GATX Capital Corporation, et
al, No. C-97-0378 WHO, under which among other things a significant portion of
any recovery might be paid to Mr. Kalitta;
Consulting fees are payable by Xxxxxx X. Kalitta to Xxxxxx X. Xxxxxxxxx, Xxxxxx
X. Xxxxxx, Xxxxxxx X. Kalitta under written consulting agreements, each dated
October 23, 1997, for services to Mr. Kalitta in connection with the Merger
pursuant to the Merger Agreement. Neither Kitty Hawk nor any of its Subsidiaries
has any material obligations under any of those consulting agreements.
Various members of Xxxxx Xxxx'x board of directors from time to time provide and
will continue to provide professional services to Kitty Hawk and its
Subsidiaries, at regular professional fees for services rendered.
SCHEDULE 9.12 - CONSULTING FEES Lone Page
