1
EXHIBIT 10.3
AGREEMENT
THIS AGREEMENT (the "AGREEMENT") is entered into January 21, 1999, by
and among, Kitty Hawk, Inc., a Delaware corporation (collectively with its
subsidiaries, unless the context otherwise requires, the "COMPANY"), M. Xxx
Xxxxxxxxxxx ("XXXXXXXXXXX"), Xxxxxx X. Kalitta ("KALITTA"), Kalitta
Motorsports, L.L.C., a Michigan limited liability company ("MOTORSPORTS"),
American International Airways, Inc., a Michigan corporation ("AIA"), American
International Travel, Inc., a Michigan corporation ("AIT"), Flight One
Logistics, Inc., a Michigan corporation ("FOL"), Kitty Hawk Charters, Inc.
(f/k/a Kalitta Flying Service, Inc.), a Michigan corporation ("KHC"), and O.K.
Turbines, Inc., a Michigan corporation ("OKT"). AIA, AIT, FOL, KHC and OKT
shall be collectively referred to as the "KALITTA COMPANIES."
RECITALS
A. The parties hereto have entered into certain contractual
arrangements, including, among others, (i) a Separation Agreement
dated as of April 17, 1998, by and among the parties hereto, among
others, as amended to date (as amended, the "SEPARATION AGREEMENT");
(ii) a Stockholders' Agreement dated as of November 19, 1997, by and
among the Company, Xxxxxxxxxxx and Kalitta, as amended by the
Separation Agreement (as amended, the "STOCKHOLDERS' AGREEMENT");
(iii) an Agreement and Plan of Merger dated as of September 22, 1997,
by and among certain of the parties hereto, as amended to date (the
"MERGER Agreement"); (iv) a Racing Entity Purchase Agreement, dated as
of November 19, 1997, by and among AIA and Motorsports (the "RACING
ENTITY PURCHASE AGREEMENT"); and (v) a Race Shop Facilities Lease,
dated as of November 19, 1997, by and among AIA and Motorsports (the
"RACE SHOP LEASE").
B. The parties desire to amend certain provisions of the Stockholders'
Agreement, the Merger Agreement, the Racing Entity Purchase Agreement
and the Race Shop Lease.
NOW, THEREFORE, in consideration of the premises, the terms and
conditions set forth herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
AGREEMENT
1. Demand Registration Rights. The parties hereto hereby amend the
Stockholders' Agreement, in accordance with Section 8.4 thereof, by deleting
Section 6.1.1(a) of the Stockholders' Agreement in its entirety and replacing
it with the following:
(a) General. At any time prior to June 30, 2000,
Kalitta may make a single request, by a written notice signed
by Kalitta and delivered to the Company (the "FIRST DEMAND
REQUEST"), that the Company effect the registration under the
Securities Act of no less than exactly 2,900,000 shares of
Common Stock that constitute Registrable Securities (the
"SHARES") and are beneficially owned by any Kalitta
Stockholder. In the event the managing underwriter or
underwriters shall advise Kalitta that the amount of Shares
proposed to be included in the registration statement filed
pursuant to such First
2
Demand Request (the "FIRST DEMAND REGISTRATION") by Kalitta
exceeds the number of such Shares that can be sold in such
offering within a price range acceptable to Kalitta, the
Shares to be included in such First Demand Registration shall
be reduced to the number of Shares that the Company and
Kalitta are so advised can be sold in such First Demand
Registration without a material adverse effect on the price
of, or the likelihood of successful completion of, such
offering. In the event, and only in the event, that not all
of the Shares are sold pursuant to the First Demand Request
as a result of the inability of the underwriters to sell such
Shares at a price acceptable to Kalitta, Kalitta will be
entitled to make a second single demand request on behalf of
himself and any other Kalitta Stockholder whose Shares were
excluded from the First Demand Registration by a written
notice signed by Kalitta and delivered to the Company that
the Company effect the registration (the "SECOND DEMAND
REGISTRATION," and, collectively with the First Demand
Registration, the "DEMAND REGISTRATIONS" and each
individually a "DEMAND REGISTRATION") of those Shares not
sold in the First Demand Registration (the "SECOND DEMAND
REQUEST," and, collectively with the First Demand Request,
the "DEMAND REQUESTS" and each individually a "DEMAND
REQUEST") at any time prior to June 30, 2000. The Company
shall file a registration statement under the Securities Act
necessary to effect a Demand Registration on or before the
Required Filing Date. The offering of Shares pursuant to the
First Demand Request and the Second Demand Request shall both
be in the form of a firm commitment underwritten offering,
and Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co., BT Alex. Xxxxx
Incorporated, or any successors thereof, or such other
nationally recognized investment banking firm or firms as are
mutually agreed upon by the Company and Kalitta, shall manage
such underwritten offerings of the Shares. The Company shall
have the exclusive right to grant to the managing underwriter
or managing underwriters an option to sell additional shares
of Common Stock for the purpose of covering over-allotments,
if any, in the offering of Shares pursuant to the First
Demand Request and the Second Demand Request. The number of
Registrable Securities constituting Shares shall be
appropriately adjusted in the event that, subsequent to
January 21, 1999, the outstanding shares of Common Stock of
the Company shall have been increased, decreased, changed
into or exchanged for, a different number or kind of shares
or securities through a reorganization, recapitalization,
stock split, reverse stock split or other similar change in
the Company's capitalization. In no event shall the Company
be required pursuant to this Section 6.1.1 to effect a shelf
registration pursuant to Rule 415 promulgated under the
Securities Act.
2. Limit on Sales of Common Stock. The parties hereto hereby amend the
Stockholders' Agreement, in accordance with Section 8.4 thereof, by adding the
following to the end of Section 6.1.1:
(g) Prior to June 30, 2000, Kalitta agrees to not
sell more than 25,000 shares of Common Stock in any three
month period except pursuant to a Demand Registration.
-2-
3
3. Race Shop Lease.
(a) The parties hereto hereby amend the Race Shop Lease by deleting
Section 3 of the Race Shop Lease in its entirety and replacing it with the
following:
3. Term. This lease shall be for a term commencing on November 17,
1997 (the "commencement date") and ending on June 30, 1999.
(b) The parties hereto hereby amend the Race Shop Lease by deleting
Section 4 of the Race Shop Lease in its entirety and replacing it with the
following:
4. Rental. Through December 31, 1998, Tenant shall pay to Landlord
as annual rent the sum of $12.00, payable in monthly installments,
in advance, on the first day of each month. After December 31,
1998, Tenant shall pay to Landlord as annual rent $5.50 per square
foot of leased space in accordance with Exhibit A attached hereto,
payable in monthly installments, in advance, on the first day of
each month. TENANT ASSURES LANDLORD THAT IT SHALL VACATE AND LEAVE
EMPTY AND IN PROPER CONDITION THE LEASED SPACE BY JUNE 30, 1999.
4. Voting by Kalitta prior to June 30, 2000. Until June 30, 2000,
Kalitta hereby irrevocably appoints Xxxxxxxxxxx as his proxy to vote all KTTY
Voting Securities (as defined in the Separation Agreement) Beneficially Owned
(as defined in the Stockholders' Agreement) by Kalitta, at any meeting of
stockholders (whether annual or special and whether or not an adjourned
meeting) of the Company, or express written consent or dissent in any action
taken in lieu of such a meeting. This proxy is irrevocable and is coupled with
an interest sufficient in law to support an irrevocable proxy. This proxy shall
revoke any other proxy granted by Kalitta with respect to the KTTY Voting
Securities, and Kalitta shall not grant any subsequent proxies with respect to
the KTTY Voting Securities.
5. Amendment to Merger Agreement. The parties hereto agree that
Section 9.4 of the Merger Agreement is hereby deleted in its entirety.
6. Amendment to Racing Entity Purchase Agreement. The parties hereto
hereby amend the Racing Entity Purchase Agreement by deleting the last sentence
of Section 4.1 of the Racing Entity Purchase Agreement in its entirety and
replacing it with the following:
Until November 19, 1999, Seller shall make available to Racing
Entity Thursdays through Sundays for racing activities on weekends
of scheduled NHRA races (without a pilot or fuel, both of which
shall be provided by the Racing Entity at its expense) either (i)
a Learjet at $275.00 per block hour or (ii) a MU-2 aircraft at
$150.00 per block hour. In addition, until November 19, 1999,
Seller shall make available to Xxxxxx X. Kalitta (without a pilot
or fuel, both of which shall be provided by Xxxxxx X. Kalitta at
his expense) either (i) a Learjet at $275.00 per block hour or
(ii) a MU-2 aircraft at $150.00 per block hour, for use at such
times as Seller reasonably determines that such aircraft will not
be utilized by Seller in revenue service.
-3-
4
7. Miscellaneous.
7.1 Entire Agreement. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof and may be amended
only by an agreement in writing executed by the parties hereto.
7.2 Headings. Descriptive headings are for convenience only and shall
not control or affect the meaning or construction of any provision of this
Agreement.
7.3 Number; Gender. Whenever the singular number is used herein, the
same shall include the plural where appropriate, and words of any gender shall
include each other gender where appropriate.
7.4 Notices. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be validly given, made or served, if in writing and sent by U.S.
certified mail, return receipt requested:
if to the Company, M. Xxx Xxxxxxxxxxx
AIA, AIT, FOL, Chairman of the Board
KHC, OKT or and Chief Executive Officer
Xxxxxxxxxxx: 0000 Xxxx 00xx Xxxxxx
XXX Xxxxxxx, Xxxxx 00000
with a copy to: Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
if to Kalitta or Xxxxxx X. Kalitta
Motorsports 0000 Xxxxx Xxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxx 00000
with a copy to: Xxxxx X. Xxxxxxxxx, Esq.
Miller, Canfield, Paddock & Stone, P.L.C.
000 X. Xxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxx, Xxxxxxxx 00000
7.5 Enforceability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated. It is hereby stipulated and
declared to be the intention of the parties that the parties would have
executed the remaining terms, provisions, covenants and restrictions without
including any such term which may be hereafter declared invalid, void or
unenforceable. In addition, the parties agree to use their commercially
reasonable efforts to agree upon and substitute a valid and enforceable term,
-4-
5
provision, covenant or restriction for any of such that is held invalid, void
or unenforceable by a court of competent jurisdiction.
7.6 Law Governing. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Texas, without regard
to any conflict of laws provisions thereof; provided that Section 3 hereof
relating to amendments to the Race Shop Lease shall be construed in accordance
with and governed by the laws of the State of Michigan without regard to any
conflict of laws provisions thereof.
7.7 Jurisdiction and Venue. The state or federal courts located in
Dallas County, Texas shall have exclusive jurisdiction and venue over all
disputes arising out of or related to this Agreement and will be the sole
proper forum in which the parties and any of their officers, directors,
employees, representatives and affiliates shall adjudicate any such dispute.
The parties agree that this choice of jurisdiction and venue is enforceable by
the issuance of injunctive relief against the parties and that its violation
constitutes irreparable harm for which there is an inadequate remedy at law.
7.8 Legal Fees and Expenses. The prevailing party in any legal
proceeding based upon this Agreement shall be entitled to reasonable attorney's
fees and court costs, in addition to and other recoveries allowed by law.
7.9 Binding Effect; No Assignment. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the successors and
assigns of the parties hereto. Nothing in this Agreement, expressed or implied,
is intended to confer on any person or entity other than the parties hereto or
their respective heirs, successors, executors, administrators and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement. No party to this Agreement may assign its rights or delegate its
obligations hereunder (whether voluntarily, involuntarily, or by operation of
law) without the prior written consent of the other party. Any such attempted
assignment shall be null and void.
7.10 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.
7.11 Section Headings. The headings contained in this Agreement are
for reference purposes only and will not affect in any way the meaning or
interpretation of this Agreement.
7.12 No Construction Against Drafting Party. The parties agree that
each has been represented by competent legal counsel in connection with this
Agreement and that this Agreement shall not be construed against the party on
whose behalf this Agreement has been drafted.
7.13 Cooperation. The parties agree to cooperate to the extent
necessary to give full effect to the provisions of this Agreement.
7.14 REMEDIES. EACH PARTY HERETO HEREBY ACKNOWLEDGES AND AGREES THAT
IRREPARABLE HARM WOULD OCCUR IN THE EVENT ANY OF THE PROVISIONS OF THIS
AGREEMENT
-5-
6
WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE
BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED TO
SPECIFIC PERFORMANCE HEREUNDER, INCLUDING, WITHOUT LIMITATION, AN INJUNCTION OR
INJUNCTIONS TO PREVENT AND ENJOIN BREACHES OF THE PROVISIONS OF THIS AGREEMENT
AND TO ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY STATE OR
FEDERAL COURT IN ADDITION TO ANY OTHER REMEDY TO WHICH THEY MAY BE ENTITLED AT
LAW OR IN EQUITY. ANY REQUIREMENTS FOR THE SECURING OR POSTING OF ANY BOND WITH
SUCH REMEDY ARE WAIVED. ALL RIGHTS AND REMEDIES UNDER THIS AGREEMENT ARE
CUMULATIVE, NOT EXCLUSIVE, AND SHALL BE IN ADDITION TO ALL RIGHTS AND REMEDIES
AVAILABLE TO EITHER PARTY AT LAW OR IN EQUITY.
* * * * *
-6-
7
The parties hereto have duly executed this Agreement as of the date
first above written.
KITTY HAWK, INC.
By: /s/ M. XXX XXXXXXXXXXX
----------------------------------------
Name: M. Xxx Xxxxxxxxxxx
Title: Chairman and Chief Executive Officer
/s/ M. XXX XXXXXXXXXXX
-------------------------------------------
M. Xxx Xxxxxxxxxxx
/s/ XXXXXX X. KALITTA
-------------------------------------------
Xxxxxx X. Kalitta
KALITTA MOTORSPORTS, L.L.C.
By: /s/ XXXXXX X. KALITTA
----------------------------------------
Name: Xxxxxx X. Kalitta
Title: Authorized Member
AMERICAN INTERNATIONAL
AIRWAYS, INC.
By: /s/ XXXXXX X. XXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
AMERICAN INTERNATIONAL
TRAVEL, INC.
By: /s/ XXXXXX X. XXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
-7-
8
FLIGHT ONE LOGISTICS, INC.
By: /s/ XXXXXX X. XXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
KITTY HAWK CHARTERS, INC. (F/K/A
KALITTA FLYING SERVICE, INC.)
By: /s/ XXXXXX X. XXXXXX
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
O.K. TURBINES, INC.
By: /s/ XXXXXX X. XXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
- 8 -
