Exhibit 10.4
October 31, 2002
▇▇. ▇▇▇ ▇▇▇▇▇▇▇
KBK Financial, Inc.
2200 City Center II
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Account Transfer and Purchase Agreement by and between KBK
Financial, Inc., Kitty Hawk, Inc., Kitty Hawk Aircargo, Inc.
and Kitty Hawk Cargo, Inc.
▇▇. ▇▇▇▇▇▇▇:
Kitty Hawk, Inc., Kitty Hawk Aircargo, Inc. and Kitty Hawk Cargo, Inc.
(collectively "Reorganized Kitty Hawk" or the "Debtors") warrant, represent and
agree as follows:
(1) All conditions to the effectiveness of the Debtors' Final
Joint Plan of Reorganization (the "Plan") which was approved pursuant
to the terms of the Order Confirming Debtors' Final Plan of
Reorganization (the "Confirmation Order") on August 5, 2002 by Judge
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Judge of the United States Bankruptcy Court for the
Northern District of Texas, Fort Worth Division (the "Court") (in
connection with the bankruptcy matter styled In Re: Kitty Hawk, Inc.,
et al.) jointly administered under Case Number 400-42141-BJH-)
including, but not limited to the following have occurred, have been
satisfied or met:
(a) The Confirmation Order has been signed by the
Court and duly entered on the docket for the
Reorganization Cases by the clerk of the Court in
form and substance acceptable to the Debtors;
(b) The Confirmation Order has become an Effective
Confirmation Order and has not been stayed, modified,
reversed or amended;
(c) The Debtors have received $30.9 million from USPS
on the TforC Claim;
(d) The Debtors have executed the Aircraft Use
Agreement;
(e) The Debtors have available resources, including
any working capital financing, to fund the
Reorganized Debtors' obligations under the Plan and
to meet its ongoing business needs.
(2) Substantially all Collateral, as that term is defined in
the Account Transfer and Purchase Agreement (the "Purchase Agreement")
by and between KBK Financial, Inc. ("KBK") and Reorganized Kitty Hawk,
is located in Texas and Indiana.
▇▇. ▇▇▇ ▇▇▇▇▇▇▇
October 31, 2002
Page 2
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(3) Within one business day after receipt, Reorganized Kitty
Hawk shall provide KBK with a copy of all pleadings, motions, notices,
orders, etc. pertaining to any stay, appeal, modification, reversal
and/or amendment of the Confirmation Order and immediate written notice
of the occurrence of any event which might reasonably result in the
imposition of a stay, or the granting of an appeal, modification,
reversal and/or amendment of the Confirmation Order.
(4) Reorganized Kitty Hawk shall provide KBK with a written
certification each month certifying full compliance with Article 3,
Section 3.1(g) of the Plan and upon payment of all franchise taxes and
related interest and penalties, if any, shall provide KBK with a
certificate of good standing from the State of Texas and the State of
Delaware.
(5) Reorganized Kitty Hawk shall indemnify KBK from and
against any and all damages, costs, expenses, attorney's fees, expert
fees, losses or judgments incurred by KBK as a result of or arising
out of, directly or indirectly, (1) Reorganized ▇▇▇▇▇ ▇▇▇▇'▇ failure
to comply with all of the terms, conditions and requirements of the
Plan and Confirmation Order; and/or (2) the failure of any condition
to the effectiveness of the Plan, as set forth in Article 9.1 of the
Plan, to have occurred or been satisfied by the date of this letter,
including, but not limited to the execution of the Registration Rights
Agreement, as referenced in Article 9.1(d) of the Plan.
(6) The Effective Date of the Plan has occurred.
(7) The Bank Group's liens against Reorganized ▇▇▇▇▇ ▇▇▇▇'▇
assets other than the Class 1 Escrow Funds (as defined in the
Confirmation Order) have been released and discharged and the Bank
Group has executed and delivered to Reorganized Kitty Hawk appropriate
lien release documents to release the Bank Group's liens against (and
all security interest in) Reorganized ▇▇▇▇▇ ▇▇▇▇'▇ assets (except the
Class 1 Escrow Funds).
(8) Reorganized Kitty Hawk warrants and represents that, to
its knowledge, nothing contained in the Purchase Agreement is
inconsistent with the Plan, the confirmation Order or the Findings of
Fact, Conclusions of Law Regarding Debtors' Final Plan of
Reorganization dated August 5, 2002.
(9) All representations and warranties and agreements
contained herein are hereby incorporated by reference into the Purchase
Agreement as if fully set forth therein. The breach of any
representation, warranty and/or agreement contained herein shall
constitute a material breach of the Purchase Agreement and an event of
default thereunder.
Additionally, Reorganized Kitty Hawk expressly authorizes KBK to sign
the
▇▇. ▇▇▇ ▇▇▇▇▇▇▇
October 31, 2002
Page 3
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Purchase Agreement and agrees that the Purchase Agreement is effective as of the
date of this letter.
Unless otherwise indicated above, all terms contained herein shall have
the same meaning as in the Plan. The foregoing representations, warranties and
agreements shall be effective as of the date of this letter.
KITTY HAWK, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman & C.E.O.
Date: Oct. 31, 2002
---------------------------------------------------
KITTY HAWK CARGO, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman & C.E.O.
Date: Oct. 31, 2002
---------------------------------------------------
KITTY HAWK AIRCARGO, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman & C.E.O.
Date: Oct. 31, 2002
---------------------------------------------------
ACCOUNT TRANSFER AND PURCHASE AGREEMENT
This Account Transfer and Purchase Agreement (this "Agreement") is dated this
___ day of August, 2002, and is between KBK Financial, Inc., a Delaware
corporation authorized to do business in Texas ("KBK"), and KITTY HAWK, INC., a
Delaware corporation, KITTY HAWK CARGO, INC., a Delaware corporation and KITTY
HAWK AIRCARGO, INC., a Texas corporation (collectively the "Seller"). This
Agreement shall become effective as of the day it is accepted in the State of
Texas by KBK as indicated at the end hereof by the date and signature on behalf
of KBK.
WHEREAS, KBK is in the business of purchasing accounts receivable
("accounts"); and
WHEREAS, Seller desires, from time to time during the term of this
Agreement, to sell accounts to KBK; and
WHEREAS, the parties hereto desire to enter into this Agreement to
govern the purchase and sale of accounts;
NOW THEREFORE, in consideration of the premises, the mutual agreements
herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
agree as follows:
1. Offer of Accounts. At its election from time to time during the term
of this Agreement, Seller agrees to offer for sale to KBK certain of
its accounts arising out of sales of goods, or services rendered, by
Seller, and to sell to KBK on the terms set forth in this Agreement
such of the offered accounts as KBK may accept for purchase in the
State of Texas. KBK shall have the absolute right in its sole
discretion to reject any offered accounts that KBK, in its sole
discretion, believes are not collectible, do not meet KBK's
collectability criteria, or if KBK deems itself insecure with respect
to that particular account, whether or not KBK has previously
purchased accounts of any particular account debtor hereunder. This
Facility Amount is offered in anticipation of KBK participating with
another financial institution. All parties agree that: 1) KBK will use
its best efforts to find a participant; 2) KBK will have no obligation
to do so; 3) KBK will have no liability in the event an acceptable
participant is not found; and 4) all obligations of Seller remain in
force regardless of whether or not an acceptable participant is
ultimately found. The parties agree that, without the prior consent of
KBK, the maximum Gross Amount (as defined below) of accounts that KBK
may purchase hereunder at any time, together with the Gross Amount of
accounts previously purchased by KBK from Seller hereunder which then
remain outstanding, will not exceed Ten Million and 00/100 Dollars
($10,000,000.00) (the "Facility Amount"), if a Participant is
obtained. At no time will KBK's individual maximum Gross Amount exceed
Five Million and 00/100 Dollars ($5,000,000.00). KBK's consent to
purchase accounts in excess of such amount may be evidenced by KBK's
acceptance for purchase of such offered accounts.
2. Purchase and Sale of Accounts. Each account purchased by KBK hereunder
shall be purchased by KBK without recourse against Seller. All losses
incurred by KBK from the financial inability of the applicable account
debtor to pay such account over and above any and all Residual
Payments (as hereinafter defined) and Reserve (as hereinafter defined)
amounts offset shall be borne solely by KBK; provided, however, that
nothing in this Agreement shall be construed to relieve Seller from
liability for any breach by Seller of any representation, warranty or
agreement of Seller contained herein. Notwithstanding any provision in
this Agreement to the contrary, it is contemplated by and the
intention of the parties hereto that accounts of Seller may be
considered and purchased as one account (herein a "batch") and the
terms "account" and "accounts" as used herein may also refer to and
mean a "batch" or "batches," as the case may be.
In connection with each offer of accounts to KBK, Seller shall (i)
forward electronically to KBK copies of its accounts receivable aging,
sales journal and collection journal, and (ii) deliver to KBK a
complete certificate in the form of Exhibit 1 attached hereto. Seller
shall maintain at its offices a written assignment of all accounts
offered to KBK, together with a copy of all invoices relating to such
accounts, and evidence of delivery of the related goods or performance
of the related services (and, if requested, the original purchase
orders, airway bills or contracts from the applicable customers), all
in a form satisfactory to KBK, and to make available to KBK all such
assignments, invoices and evidence in accordance with Section 12
hereof. In order for an account to be eligible for purchase by KBK, the
related invoice must set forth, as the sole address for payment, the
following post office box: Kitty Hawk Aircargo, Inc., ▇.▇. ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Account Number 0100130152; Kitty Hawk Cargo, Inc.
and Kitty Hawk, Inc., ▇.▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Account
Number 1559691322 ("Authorized Remittance Address") (or, upon notice
from KBK, another post office box of KBK) and, in the case of payments
to be effected by wire transfer or other electronic means, the related
invoice must set forth, as the sole bank account for such payment, a
bank account of KBK (or a third party designated by KBK) designated by
KBK from time to time (except in each case as otherwise agreed in
writing by KBK). KBK's acceptance for purchase of offered accounts
shall be evidenced by KBK's tendering of the Initial Payment (as
hereinafter defined) to Seller or otherwise delivering to Seller a
schedule of accounts accepted for purchase by KBK. Seller's
transference of offered accounts shall not be effective as to any
accounts not accepted for purchase by KBK. Seller hereby sells,
transfers, assigns and otherwise conveys to KBK (as a sale by Seller
and a purchase by KBK, and not as security for any indebtedness or
other obligation of Seller to KBK) all right, title and
interest of Seller in and to all accounts accepted by KBK
for purchase hereunder, together with all related rights (but not
obligations) of Seller with respect thereto, including all contract
rights, guarantees, letters of credit, liens in favor of Seller,
insurance and other agreements and arrangements of whatever character
from time to time supporting or securing payment of such accounts and
all right, title and interest of Seller in any related goods,
including Seller's rights and remedies under Article 2, Part 7 of the
applicable Uniform Commercial Code ("UCC"). The foregoing sale,
transfer, assignment and conveyance does not constitute and is not
intended to result in an assumption by KBK of any obligation of Seller
or any other person in connection with the accounts or related rights
or under any agreement or instrument relating thereto. Seller agrees
to execute and deliver such bills of sale, assignments, letters of
credit, notices of assignment, financing statements (including
continuation statements) under the applicable UCC and other documents,
and make such entries and markings in its books and records, and to
take all such other actions (including the negotiation, assignment or
transfer of negotiable documents, letters of credit or other
instruments) as KBK may request to further evidence or protect the
sales and assignments of accounts and related rights to KBK hereunder,
as well as KBK's interest in any returned goods referred to in Section
7 hereof.
3. Terms of Accounts. Except as otherwise may be agreed to in writing by
KBK from time to time, the terms of sale offered by Seller to its
account debtors with respect to all accounts offered to KBK for
purchase hereunder shall be NET 30 DAYS. After an account has been
purchased by KBK, Seller shall not have the right to vary the terms of
sale set forth in the invoice relating to such account, or any other
aspect of the account, except in Seller's capacity as agent for KBK for
purposes of collection of accounts purchased by KBK as set forth in
Section 8 hereof, and then only with the prior written consent of KBK.
4. Purchase Price. The purchase price for each account purchased hereunder
shall consist of and be paid by the Initial Payment and the Residual
Payment. The Initial Payment shall be payable by KBK to Seller on the
business day that KBK accepts for purchase the related account, and the
Residual Payment shall be payable by KBK to Seller within five business
days after KBK receives and deposits the proceeds of collection for the
subject account in an amount equal to the Net Amount (as hereinafter
defined) of such account (subject to KBK's right to withhold payment of
Residual Payments hereunder, and subject to KBK's right to withhold,
offset and charge, each as described below).
"Initial Payment" means eighty-five percent (85%) of the Gross Amount
of an account. "Gross Amount" of an account means the gross face amount
payable pursuant to the related invoice. "Net Amount" of an account
means the Gross Amount of such account, less all permitted discounts,
deductions and allowances. "Residual Payment" with respect to an
account means the aggregate amount collected with respect to such
account, less the sum of (i) the Initial Payment with respect to such
account, (ii) the KBK Discounts (as hereinafter defined), (iii) any and
all reasonable attorneys' fees and other costs of collection.
5. Fixed and Variable Discounts. "Fixed Discount" means a discount of
six-tenths of one percent (0.60%) of the Gross Amount of such account.
"Variable Discount" means a discount computed on the Initial Payment
and accruing on the basis of actual days elapsed from the date of
Initial Payment until and including three business days after KBK
receives and deposits the proceeds of collection of such account at a
per annum rate equal to KBK's Base Rate (as hereinafter defined) in
effect on the date of purchase of such account plus two percent (2.0%)
per annum; provided, however, in no event shall the Variable Discount
with respect to any account purchased hereunder be less than six and
75/100 percent (6.75%) per annum. "Base Rate" means that per annum
variable rate (expressed as a per annum percentage based on a year
consisting of 360 days) determined from time to time by KBK without
notice to Seller as KBK's Base Rate for purposes of calculating
variable discounts under KBK's account transfer agreements. The Fixed
Discount and the Variable Discount shall be collectively referred to
herein as the "KBK Discounts". The KBK Discounts may be subject to one
or more adjustments during the term of this Agreement if a Performance
Based Pricing Addendum is attached hereto. If a Performance Based
Pricing Addendum is attached hereto, it is then made a part hereof as
though fully written herein. In the event the Base Rate hereunder
exceeds the "Prime Rate" published in The Wall Street Journal by more
than 25 basis points for more than 30 consecutive days, then Seller
may terminate this Agreement prior to the end of the Term without
being required to pay a Termination Fee.
6. Reserve. In the event that KBK believes Seller has breached any
material representation, warranty, covenant or agreement contained
herein (including, without limitation, in the event an account
purchased by KBK becomes a Disputed Account as hereinafter defined),
any account is not paid in full within 90 days from the date of
purchase of such account, or KBK deems itself insecure hereunder, KBK
may at its election, withhold and accumulate the payment of the
Residual Payments ("Reserve") with respect to any or all accounts
purchased hereunder to the extent necessary to maintain a Reserve in
an amount up to the sum of (a) the total Initial Payments made by KBK
with respect to accounts purchased by KBK hereunder which remain
uncollected, plus (b) the total of the KBK Discounts with respect to
such accounts and (c) such other amounts which may become due by
Seller to KBK hereunder or under any other agreement. Seller hereby
authorizes KBK to offset and charge any and all amounts for which
Seller or the Reserve may be obligated to pay to KBK pursuant to the
terms of this Agreement against the Reserve, and at KBK's election,
against any funds of Seller in the possession or control of KBK, from
whatever source. However, if, on any business day that KBK regularly
makes a payment to Seller for accounts purchased, none of the
foregoing conditions exists and no other breach of this Agreement by
Seller exists, then KBK shall distribute to Seller the Residual
Payments then due and all funds it then has on hand that it has
collected from accounts that KBK has not then purchased.
7. Certain Security. For the purpose of securing KBK (a) in the payment of
any and all sums of money that
may become due and owing KBK from Seller by reason of this Agreement,
(b) in the performance by Seller of Seller's obligations hereunder,
and under any other agreement, contract, document, note or other
instrument in favor of KBK or its assignees and (c) in the performance
of all the obligations of all Affiliates (as hereinafter defined)
under each Affiliate's agreements, contracts, documents, notes or
other instruments in favor of KBK or its assigns, Seller hereby grants
to KBK a security interest in (i) all of Seller's present and future
inventory, equipment (with the exception of Seller's aircraft and
aircraft engines, which are expressly excluded from the Collateral (as
defined below), and in which KBK shall have no security interest),
accounts, account and contract rights, proceeds of inventory,
contracts, drafts, acceptances, documents, instruments, chattel paper,
deposit accounts, general intangibles and all products and proceeds
therefrom, including all returned or repossessed goods, as well as all
books and records pertaining to all of the foregoing, (ii) all amounts
due as Residual Payments or withheld by KBK as the Reserve pursuant to
Section 6 hereof and (iii) all money and other funds of Seller now or
hereafter in the possession, custody or control of KBK, from whatever
source (the "Collateral"). The term "Affiliate" shall mean with
respect to any person or entity in question, any other person or
entity owned or controlled by, or which owns or controls or is under
common control or is otherwise affiliated with such person or entity
in question. Seller agrees to execute and deliver such financing
statements under the applicable UCC and other documents, and make such
entries and markings in its books and records and to take all such
other actions, as KBK may request to further evidence, perfect,
preserve or protect the security interest granted to KBK hereunder.
KBK shall have all rights and remedies in respect of the lien and
security interest herein granted as are provided in this Agreement,
the UCC and other applicable law, including the right at any time, KBK
deems itself insecure before an event of default by Seller or after
any default by Seller of any of its obligations hereunder, to notify
account debtors and obligors on instruments to make payment to KBK (or
its designee) and to take control of proceeds to which KBK is
entitled, and to apply proceeds to (in addition to other obligations
of Seller to KBK) the reasonable attorneys' fees and legal expenses
incurred by KBK in connection with the disposition of collateral or
the other exercise of rights and remedies by KBK. In the event that
KBK has not obtained a qualified Participant (as contemplated by
Section 1 above) with an additional commitment in the amount of at
least Five Million and 00/100 Dollars ($5,000,000.00) by October 31,
2002, upon Seller's written request, KBK will release its security
interest in Seller's contracts with and accounts receivable owed by
the United States Postal Service as long as KBK does not deem itself
insecure at that time and/or Seller is not in default under the terms
of this Agreement or any other agreement executed by Seller in
connection herewith.
Seller hereby authorizes KBK to file in any jurisdiction KBK may deem
appropriate, without the signature of Seller, one or more financing
statements, and all amendments and continuations with respect thereto,
relating to the Collateral and hereby ratifies, confirms and consents
to any such filings made by KBK prior to the date hereof. Seller
further agrees that a carbon, photographic or other reproduction of
this Agreement or any financing statement describing any Collateral is
sufficient as a financing statement and may be filed in any
jurisdiction KBK may deem appropriate.
Seller herein acknowledges and warrants to KBK that it has received and
will receive, direct and indirect benefits by and from granting this
security interest to KBK to secure the obligations of any Affiliate to
KBK.
In the event a security interest has heretofore been granted and given
to KBK by Seller in a prior agreement(s) or document(s) to secure
certain obligations, then, in such event, and notwithstanding anything
in this Agreement to the contrary, including Section 23 hereof, the
lien and security interest herein granted and given to KBK is in
renewal and extension, and not in extinguishment of, all such prior
liens and security interests and are valid and subsisting liens and
security interests to secure all prior, existing and new obligations of
Seller to KBK hereunder and under any such prior agreements, which
obligations are likewise herein renewed and extended, in any manner,
including any action required in connection with or by virtue of the
United States Bankruptcy Code (the "Bankruptcy Code").
8. Servicing. KBK hereby appoints Seller as servicing agent for KBK
("Servicer") for the purpose of expediting the payment of accounts
purchased by KBK hereunder which become past due. Servicer agrees to
maintain an active, on-going and regular dialogue with each Account
Debtor. Servicer further agrees to utilize all powers, influences and
rights and take every action within its control in accordance with its
customary practices and applicable law to expedite the collection of
the accounts purchased by KBK which become past due and direct such
payments in specie exclusively to the Authorized Remittance Address.
Seller will furnish to KBK, upon request, any and all papers,
documents and records in its possession or control related to accounts
purchased by KBK hereunder, or related to Seller's business
relationship with the respective account debtors, and agrees to
cooperate fully with KBK in all matters related to collection of
accounts purchased by KBK hereunder. KBK reserves the right to
terminate such servicing relationship at any time with or without
cause and without notice to Servicer; provided, however, KBK will
provide Servicer with written notice of such termination within 10
days after the termination.
Seller authorizes KBK to forward directly to account debtors
statements or invoices on accounts purchased by KBK hereunder, and to
request payment at such address or to such bank account as may be
designated by KBK. Seller agrees that, if any payment is made to
Seller on any account purchased by KBK from Seller hereunder, Seller
(i) will hold such payment in trust for KBK, (ii) will not commingle
such payment with any funds of Seller, and (iii) will deliver such
payment to KBK, in the exact form received, by the close of business
on the next business day following receipt thereof by Seller. Such
payment will be deemed delivered to KBK once such payment is deposited
in the lock box at the Authorized Remittance Address. With respect to
all accounts purchased by KBK from Seller hereunder, Seller shall
direct all
account debtors for such accounts to remit all payments pertaining to
such accounts directly to the Authorized Remittance Address. If any
payment on such accounts is received by Seller (rather than sent to
the Authorized Remittance Address), Seller shall give prompt notice
thereof to KBK. Without limiting the other rights and remedies of KBK
under this Agreement or otherwise, Seller's failure to strictly comply
with this Section 8 shall constitute an immediate breach of and
default under this Agreement, entitling KBK (in KBK's discretion) to
immediately terminate this Agreement. If any goods relating to an
account purchased by KBK hereunder shall be returned to or repossessed
by Seller, Seller shall give prompt notice thereof to KBK and shall
hold such goods in trust for KBK, separate and apart from Seller's own
property, and such goods shall be owned solely by KBK and be subject
to KBK's direction and control. Seller shall properly store and
protect such goods and agrees to cooperate fully with KBK in any
subsequent disposition thereof for the benefit of KBK.
Seller authorizes KBK to collect, ▇▇▇ for and give releases for in the
name of Seller or KBK in KBK's sole discretion, all amounts due on
accounts sold to KBK hereunder. Seller specifically authorizes KBK to
endorse, in the name of Seller, all checks, drafts, trade acceptances
or other forms of payment tendered by account debtors in payment of
accounts sold to KBK hereunder and made payable to Seller. KBK shall
have no liability to Seller for any mistake in the application of any
payment received with respect to any account, IT BEING THE SPECIFIC
INTENT OF THE PARTIES HERETO THAT KBK SHALL HAVE NO LIABILITY HEREUNDER
FOR ITS OWN NEGLIGENCE except for its own gross negligence or willful
misconduct. Seller hereby waives notice of nonpayment of any account
sold to KBK hereunder as well as any and all other notices with respect
to such accounts, demands or presentations for payment, and agrees that
KBK may extend or renew from time to time the payment of, or vary or
reduce the amount payable under or compromise any of the terms of, any
account purchased by KBK, in each case without notice to or the consent
of Seller. Seller further authorizes KBK (or its designee) to open and
remove the contents of any post office box of Seller or KBK (or its
designee) which KBK believes contains mail relating to accounts, and in
connection therewith or otherwise, to receive and, open mail addressed
to Seller which KBK believes may relate to accounts, and in order to
further assure receipt by KBK (or its designee) of mail relating to
such accounts, to notify other parties including customers and postal
authorities to change the address for delivery of such mail addressed
to Seller to such address as KBK may designate. KBK agrees to use
reasonable measures to preserve the contents of any such mail which
does or does not relate to accounts purchased hereunder and to deliver
same to Seller (or, at the election of KBK, if Seller ceases
operations, to notify Seller of the address where Seller may take
possession of such contents; provided, if Seller does not take
possession of such contents within 30 days after notice from KBK to
take possession thereof, KBK may dispose of such contents without any
liability to Seller). Seller hereby irrevocably appoints KBK (and any
employee, agent or other person designated by KBK, any of whom may act
without joinder of the others) as Seller's attorneys-in-fact and
agents, in Seller's name, place and stead, to take all actions, execute
and deliver all notices, negotiate such instruments and other
documents, as may be necessary or advisable to permit KBK (or its
designee) to take any and all of the actions described in this
paragraph or to carry out the purpose and intent thereof, as fully and
for all intents and purposes as Seller could itself do, and hereby
ratifies and confirms all that said attorneys-in-fact and agents may do
or cause to be done by virtue hereof. This power of attorney is
irrevocable and deemed coupled with an interest for so long as there
are any outstanding obligations under this Agreement.
9. Representations and Warranties of Seller. Seller hereby represents and
warrants to KBK with respect to each account offered by Seller to KBK
hereunder that (i) Seller is the sole owner of such account, which
account is free and clear of any liens, claims, equities or
encumbrances whatsoever, and upon each purchase by KBK of such
account, KBK will own such account free and clear of any liens,
claims, equities or encumbrances whatsoever and the consideration
received by Seller from KBK for such account is fair and adequate,
(ii) Seller is the sole obligee under such account, and has full power
and is duly authorized to sell, assign and transfer such account to
KBK hereunder, and the date of sale of such account is not more than
30 days after the date of the original invoice relating to such
account, (iii) Seller has no knowledge of any fact which would lead it
to expect that, at the date of sale of such account to KBK , such
account will not be paid in the full stated amount when due, (iv) such
account arises out of a bona fide sale of conforming goods or the bona
fide rendition of services by Seller, and all underlying goods have
been delivered to the account debtor, or all underlying services have
been rendered by Seller, in complete fulfillment of all of the terms
and conditions of a fully executed, delivered and unexpired contract
with the account debtor, and the account debtor has accepted the goods
or services to which the account relates, (v) such account is
denominated and payable only in United States dollars and constitutes
the legal, valid and binding payment obligation of the account debtor,
enforceable in accordance with its terms (except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally), (vi) such account is
current and not past due as of the date of purchase by KBK, has not
been paid by or on behalf of the account debtor in whole or in part,
and to Seller's knowledge is not and will not be subject to any
dispute, rescission, set-off, recoupment, defense or claim by the
account debtor, whether relating to price, quality, quantity,
workmanship, delay in delivery, set off, counterclaim or otherwise,
and the account debtor has not and will not claim any defense of any
kind or character (other than bankruptcy or insolvency arising after
the date of sale of such account to KBK hereunder) against payment of
such account, and (vii) as of the date of purchase by KBK of such
account, the account debtor with respect to such account is located
(within the meaning of Section 9-307 of the applicable UCC) and has
its principal executive offices within the nited States. Seller
further represents and warrants to KBK that (a) the execution,
delivery and performance of this Agreement by Seller have been duly
authorized and this Agreement constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with
its terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally), (b)
Seller is not
a debtor in any bankruptcy proceedings, insolvent, undergoing
composition or adjustment of debts or unable to make payment of its
obligations when due and no petition in bankruptcy has been filed by
or against Seller or any Affiliate, nor has Seller or any Affiliate
filed any petition seeking an adjustment of its debts or for any other
relief under the Bankruptcy Code, and no application for appointment
of a receiver or trustee for all or a substantial part of the property
of Seller or any Affiliate is pending, nor has Seller or any Affiliate
made any assignment for the benefit of creditors, (c) Seller is not in
default of any debt or obligation to KBK, any other lender or other
creditor, (d) Seller's principal place of business, chief executive
office, the location where all records concerning its books of account
and contract rights are kept, and (except any additional locations
listed on Schedule A attached hereto) the sole location of any
property subject to the security interest granted herein is its
"Address for Notices" set forth on the signature page hereon, and (e)
Seller is organized under the laws of the State of Delaware, Delaware
and Texas respectively and its charter number(s) or similar
organization number(s) in such state(s) are 2445463, 9685346, and
011001872-0 respectively. Seller agrees not to change the location of
its principal place of business or chief executive office, the
location where its records concerning its books of account or contract
rights are kept, or the location of any property subject to the
security interest granted herein, without giving at least 15 days
advance written notice thereof to KBK pursuant to Section 19 herein.
Seller does business under no trade or assumed names except as may be
listed on Schedule A attached hereto.
Each representation and warranty of Seller contained in this Agreement
shall be deemed to be made at and as of the date hereof and at and as
of the date of each sale of accounts to KBK hereunder.
Seller agrees to indemnify and hold all Indemnified Persons (as
hereinafter defined) harmless against any breach by Seller of any
representation, warranty or agreement of Seller contained in this
Agreement, and against any claims or damages arising out of the
manufacture, sale, possession or use of, or otherwise relating to,
goods, or the performance of services, associated with or relating to
accounts or related rights purchased (or with respect to which a
security interest is granted) hereunder. The term "Indemnified
Persons" shall mean KBK and its officers, directors, shareholders,
employees, attorneys, representatives, agents, Affiliates, successors
and assigns.
Seller agrees to notify KBK immediately of any breach by Seller of any
material representation, warranty or agreement of Seller contained
herein or should any representation, warranty or agreement made herein
become untrue or false at any time. Seller further agrees to notify
KBK immediately of the assertion by any account debtor of any dispute
or other claim (including any defense or offset asserted by any
account debtor) with respect to any account sold to KBK hereunder, or
with respect to any related goods or services ("Disputed Accounts").
Upon KBK's request, Seller agrees to settle, at its own expense and
for the benefit of KBK, all such Disputed Accounts; provided, that any
such settlement shall be made only with the prior written consent of
KBK. Unless KBK is advised in writing by Seller to the contrary, any
account that has not been approved by the account debtor within sixty
(60) days from the date of the invoice upon which the account is
based, shall be deemed to be a Disputed Account. As to any Disputed
Account, KBK shall have the right, in its sole discretion, (i) to
settle at the expense of Seller (including all attorneys' fees and
expenses of KBK) and for the benefit of KBK any such dispute or claim
upon such terms as KBK may in its sole discretion deem advisable or
(ii) to assign the related account to Seller, without recourse to KBK
, and charge any unpaid balance with respect thereto (up to the amount
of the Initial Payment with respect thereto and KBK's Discounts
through the date of such charge with respect thereto) against the
Reserve or deduct such unpaid balance from any Initial Payments or
against any money or other funds of Seller in the possession, custody
or control of KBK, from whatever source. Seller agrees that, in lieu
of KBK charging any such unpaid balance against the Reserve, Initial
Payments or against such other funds, KBK may require Seller to pay
(and Seller hereby agrees to pay) to KBK on demand any such unpaid
balance. An account with respect to which the account debtor has
asserted an Insolvency Claim is not a Disputed Account. As used
herein, "Insolvency Claim" means any defense or other claim by an
account debtor with respect to an account sold to KBK hereunder
arising solely out of the bankruptcy or insolvency of the account
debtor or the financial inability of the account debtor to pay, if
Seller has not breached its representation contained in clause (vi) of
the first paragraph of this Section. Notwithstanding anything herein
to the contrary, KBK shall have the right to charge all accounts not
paid because of an Insolvency Claim against the Reserve and such
charge shall have priority over and be paid before any Disputed
Account charge.
Seller covenants and agrees that at the end of each fiscal month
during the effectiveness of this Agreement, the Seller's Dilution
shall not exceed three percent (3.0%). As used herein, the term
"Dilution" means for any period of time the percentage obtained by
dividing (a) the aggregate amount of credit memos, discounts and other
downward adjustments to the original invoiced price of inventory sold
or services rendered by Seller during such period, by (b) gross sales
for such period, all as determined by KBK.
10. Financial Statements. Seller represents and warrants that all
financial and other information provided by Seller to KBK in
connection with or in Seller's application to KBK or to induce KBK to
enter into this Agreement is true, complete and correct in all
material respects. Seller agrees to furnish to KBK (i) within 90 days
after the last day of each fiscal year of Seller, a consolidated
statement of income and a consolidated statement of cash flows of
Kitty Hawk, Inc. for such fiscal year, and a consolidated balance
sheet of Kitty Hawk Inc. as of the last day of such fiscal year, in
each case audited by an independent certified public accounting firm
acceptable to KBK, together with a copy of any report to management
delivered to Kitty Hawk, Inc. by such accountants in connection
therewith; (ii) within 90 days after the last day of each fiscal year
of Seller, company prepared unaudited statements of income and cash
flow for
Kitty Hawk Cargo, Inc. and Kitty Hawk Aircargo, Inc. for such fiscal
year, and balances sheets for Kitty Hawk Cargo, Inc. and Kitty Hawk
Aircargo, Inc. as of the last day of such fiscal year; (iii) within 30
days after the last day of each fiscal month of Seller, an unaudited
consolidated statement of income and statement of cash flows of Kitty
Hawk, Inc. for such fiscal month, and an unaudited consolidated
balance sheet of Kitty Hawk, Inc as of the last day of such fiscal
month; and (iv) within 30 days after the last day of each fiscal month
of Seller, an unaudited consolidated statement of income and statement
of cash flows of Kitty Hawk Cargo, Inc. and Kitty Hawk Aircargo, Inc.
for such fiscal month, and an unaudited consolidated balance sheet of
Kitty Hawk Cargo, Inc and Kitty Hawk Aircargo, Inc. as of the last day
of such fiscal month. Seller represents and warrants that each such
statement of income and statement of cash flows will fairly present,
in all material respects, the results of operations and cash flows of
each entity constituting the Seller for the period set forth therein,
and that each such balance sheet will fairly present, in all material
respects, the financial condition of each entity constituting Seller
as of the date set forth therein, all in accordance with generally
accepted accounting principles applied on a consistent basis, except
as otherwise noted in the accompanying auditors' report (or, with
respect to unaudited financial statements, in the notes thereto).
Seller also agrees to furnish to KBK, upon request, such additional
financial and business information concerning Seller and its business
as KBK may reasonably request, including copies of its Form 941
returns filed with the Internal Revenue Service and evidence of
payment of related taxes. KBK and its agents, representatives and
accountants shall have the right, at all times during normal business
hours and with 48 hours prior notice to Seller (or no notice if KBK
deems itself insecure), to conduct an audit or other examination of
the financial and business records of Seller and to examine and make
copies of all books and records of Seller for the purpose of assuring
or verifying compliance by Seller with the terms of this Agreement,
and Seller agrees to cooperate fully with KBK and its agents,
representatives and accountants in connection therewith and to timely
pay all costs associated with such audits at a rate equal to $750.00
per day, per person, plus out-of-pocket expenses. KBK agrees to limit
such audit visits to a monthly basis so long as KBK does not deem
itself insecure or no event of default has occurred. Seller agrees to
properly reflect the effect of this Agreement, and all sales related
thereto, in all financial reports and disclosures, written or
otherwise, provided to Seller's creditors and other interested
parties. Seller specifically agrees that all accounts purchased by KBK
will be excluded from Seller's reported accounts receivable balances.
Seller also specifically agrees to immediately notify KBK of any
material adverse change in Seller's financial condition or business.
11. Taxes. All taxes and governmental charges of any kind imposed with
respect to the sale of goods or the rendering of services relating to
accounts purchased by KBK hereunder shall be for the account of, and
paid by, Seller.
12. Fees. Seller has paid to KBK a one-time commitment fee (the
"Commitment Fee") of Fifty Thousand and No/100 Dollars ($50,000.00).
An additional Commitment Fee equal to one percent (1.0%) of the
additional commitment amount will be due to KBK from Seller upon
securing a qualified Participant acceptable to KBK for fundings over
Five Million Dollars with an additional commitment amount equal to or
in excess of Two Million and 00/100 Dollars ($2,000,000.00). Seller
and KBK acknowledge and agree that the Commitment Fee(s) is intended
as reasonable compensation to KBK for making this facility available
under the terms of this Agreement and for no other purpose.
Additionally, in the event the Facility is terminated and replaced by
an alternative working capital facility at KBK, with a Facility Amount
equal to current Facility, KBK shall not assess an additional
Commitment Fee for the origination of such facility.
Seller hereby agrees to pay to KBK a termination fee equal to two
percent (2.0%) of the Facility Amount (the "Termination Fee") and the
payment shall be an obligation of Seller secured under Section 7
hereof. This Termination Fee is payable upon termination of this
Agreement by Seller for any reason or upon termination by KBK at its
election for the reasons set forth in the second sentence of Section
13 below. However, if this Agreement is so terminated after the
expiration of one (1) year from the date of KBK's execution hereof,
but before the expiration of two (2) years from such date, one-half of
the Termination Fee shall be waived. If the Agreement is terminated
more than two (2) years after the date of KBK's execution hereof, all
of the Termination Fee shall be waived. Notwithstanding the foregoing,
KBK will waive the Termination Fee after the expiration of six (6)
months from the date of KBK's execution hereof if KBK is unable to
secure a participant with an additional commitment amount of at least
Two Million and 00/100 Dollars (in addition to KBK's commitment of
Five Million and 00/100 Dollars ($5,000,000.00)) for fundings greater
than Five Million and 00/100 Dollars ($5,000,000.00).
13. Termination. This Agreement may be terminated by either party hereto
by delivery of written notice of termination of this Agreement to the
other party specifying the date of termination, which date shall be at
least 30 days after the date such notice is given. KBK may, at its
election, terminate this Agreement immediately and without the
requirement of notice to Seller if (i) Seller shall fail to perform
any of its obligations hereunder or shall breach any of its
representations and warranties hereunder, (ii) Seller or any of its
Affiliates shall become insolvent or suspend all or a substantial part
of its or their business, (iii) a petition under the Bankruptcy Code
or any other insolvency or debtor statute shall be filed by or against
Seller or any Affiliate or any receivership proceedings with respect
thereto shall commence, (iv) any guarantee of any of Seller's
obligations hereunder shall be terminated or become impaired, (v) an
event of default occurs under any other agreement now or hereafter
executed between Seller and KBK, or (vi) KBK otherwise determines that
it is insecure hereunder.
Termination of this Agreement shall not affect the rights and
obligations of the parties hereunder with respect to transactions
occurring on or prior to the date of such termination, and this
Agreement shall continue to govern the rights and obligations of the
parties hereto with respect to accounts purchased by
KBK from Seller on or prior to the date of such termination. All
security interests granted or contemplated by this Agreement shall
survive the termination of this Agreement until all amounts payable to
KBK with respect to transactions occurring on or prior to the date of
termination have been paid to KBK, and Seller has performed all its
obligations to KBK with respect to such transactions and all
obligations under this Agreement including but not limited to payment
of any fees owing hereunder. KBK agrees to release all security
interests granted or contemplated by this Agreement once Seller's
obligations hereunder have been satisfied as determined by KBK.
14. Notice of Proposed Refinancing. Seller hereby agrees that in the event
(a) Seller receives a written proposal from any third party to provide
financing or factoring ("Proposed Refinancing"), (b) the terms of the
Proposed Refinancing are acceptable to Seller, and (c) Seller is
considering accepting the Proposed Refinancing from the offeror
("Offeror"), Seller will immediately advise KBK in writing of the
identity of the Offeror, and provide a description of the terms of the
Proposed Refinancing. Seller agrees not to accept the Proposed
Refinancing from the Offeror until at least 5 business days after
delivery of the foregoing items to KBK.
15. Attorney's Fees, Litigation Expense. Seller agrees to reimburse KBK
upon demand for KBK's attorneys' fees, court costs and other fees and
expenses incurred in collecting any sums due or to become due to KBK
hereunder, enforcing any of KBK's rights under this Agreement and all
actions taken by KBK that it deems necessary or desirable under the
Bankruptcy Code or should any provisions of the Bankruptcy Code be
applicable to any rights or obligations of any party to this
Agreement, as well as all appearances, motions and actions to which
KBK may be or become a party in any bankruptcy case of Seller. Any
fees or costs incurred by KBK relating to the bankruptcy of an account
debtor will be charged to the Reserve account.
16. Governing Law; Venue; Submission to Jurisdiction. THIS AGREEMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS
THEREOF, EXCEPT TO THE EXTENT PERFECTION AND THE EFFECT OF PERFECTION
OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL, ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF TEXAS. THIS AGREEMENT IS
PERFORMABLE BY THE PARTIES IN TARRANT COUNTY, TEXAS. SELLER AND KBK
EACH AGREE THAT TARRANT COUNTY, TEXAS SHALL BE THE EXCLUSIVE VENUE FOR
LITIGATION OF ANY DISPUTE OR CLAIM ARISING UNDER OR RELATING TO THIS
AGREEMENT, AND THAT SUCH COUNTY IS A CONVENIENT FORUM IN WHICH TO
DECIDE ANY SUCH DISPUTE OR CLAIM. SELLER AND KBK EACH CONSENT TO THE
PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN
TARRANT COUNTY, TEXAS FOR THE LITIGATION OF ANY SUCH DISPUTE OR CLAIM.
SELLER 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 FORUM.
17. Waiver of Jury Trial. SELLER AND KBK EACH HEREBY IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME
ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
18. Amendments; Waivers. This Agreement may be amended only in writing
signed by the parties hereto. No failure on the part of KBK to
exercise, and no delay by KBK in exercising, and no course of dealing
by KBK with respect to, any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder by KBK
preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The remedies of KBK hereunder are
cumulative and not exclusive of any remedies provided by law.
19. Notices. All notices and other communications provided for herein shall
be given or made in writing and telecopied or delivered by courier or
by certified mail, return receipt requested, to the intended recipient
at the "Address for Notices" specified opposite its name on the
signature page hereto, or at such other address or telecopy number as
shall be designated by a party to the other party in the manner
specified in this Section. All such notices and other communications
shall be deemed to have been duly given when transmitted by telecopier
(with receipt thereof confirmed by telecopier) or personally delivered
or, in the case of a mailed notice, upon deposit in the United States
Postal System postage prepaid and properly addressed, in each case
given or addressed as aforesaid.
20. Indemnification. Seller agrees to indemnify, defend and hold the
Indemnified Persons harmless from and against any and all loss,
liability, obligation, damage, penalty, judgment, claim, deficiency and
expense (including interest, penalties, attorneys' fees and amounts
paid in settlement) owing to any third party to which any Indemnified
Person may become subject arising out of or based upon this Agreement
as well as any prior relationship of Seller with any Indemnified
Person, WHETHER BY ALLEGED OR ACTUAL NEGLIGENCE OF ANY INDEMNIFIED
PERSON, except and to the extent caused by the gross negligence or
willful misconduct of any Indemnified Person.
21. Waiver and Release. Seller and KBK, by their execution of this
Agreement, do hereby covenant, warrant and represent that (i) neither
of them is in default and no default exists under any prior agreements
or transactions with the other party hereto , (ii) Seller and KBK each
releases, relinquishes and waives any and all defenses to the
enforceability of any prior agreements or transactions with the other
party hereto in connection therewith to which Seller or KBK may have
otherwise been entitled as of the date hereof, (iii) Seller and KBK
each relinquishes, waives and releases the other party hereto from any
and all claims known or unknown which Seller or KBK may or might have
against the other party hereto arising directly or indirectly out of
or from any prior agreements or transactions between Seller and KBK,
(iv) the benefit received and to be received by Seller and KBK as a
result of this Agreement shall and does constitute sufficient and
valuable consideration to Seller and KBK for entering into and
performing their respective obligations under this Agreement, (v) the
execution, delivery and performance by Seller and KBK of this
Agreement and the consummation of the transaction contemplated thereby
are (a) not prohibited by any indenture, contract or agreement, law or
corporate or partnership documents, including, but not limited to the
Bylaws and Articles of Incorporation or Certificate of Incorporation,
as the case may be, if Seller is a corporation, or Seller's
partnership agreement, if Seller is a partnership, (b) duly authorized
by appropriate action of Seller and KBK, and (c) legally valid and
binding obligations of Seller and KBK and will continue to be such and
enforceable according to their terms (except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally), (vi) that this Agreement will be
executed and delivered by properly authorized officers of Seller and
KBK, (vii) KBK has no obligation to continue the prior agreements or
enter into this Agreement except for the considerations herein
expressed, and (viii) the representations and warranties set forth
herein will survive the execution and delivery of this Agreement.
22. Captions; Final Agreement; Counterparts; Successors and Assigns.
Captions and headings appearing herein are included solely for
convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement. This Agreement
represents the final agreement between the parties hereto with respect
to the subject matter hereof, and supersedes all prior proposals,
negotiations, agreements and understandings, oral or written, related
to such subject matter. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and
the same instrument. Delivery of an executed counterpart of this
Agreement by telecopy shall be equally as effective as delivery of a
manually executed counterpart of this Agreement. Any party delivering
an executed counterpart of this Agreement by telecopy also shall
deliver a manually executed counterpart of this Agreement but the
failure to deliver a manually executed counterpart shall not affect
the validity, enforceability, and binding effect of this Agreement.
This Agreement may not be assigned by Seller without the prior written
consent of KBK. This Agreement may be assigned by KBK, and any
accounts purchased by KBK hereunder, together with all rights and
interests related thereto granted to KBK hereunder, may be assigned by
KBK, all without notice to or the consent of Seller. This Agreement
shall be binding upon the parties hereto and their respective
successors and permitted assigns.
23. Effectiveness of Agreement. This Agreement shall become effective only
upon acceptance by KBK at its offices in Fort Worth, Tarrant County,
Texas as evidenced by KBK's signature hereon.
24. True Sales. Seller and KBK acknowledge and agree that the sale of
accounts contemplated and covered hereby are fully intended by the
parties hereto as true sales governed by the provisions of Section
306.103 of the Texas Finance Code and Section 9.109(e) of the Texas
Business and Commerce Code, as each may be amended from time to time,
and, accordingly, legal and equitable title in all of Seller's
accounts sold to and purchased by KBK from time to time hereunder will
pass to KBK.
IN WITNESS WHEREOF, the parties hereto, heretofore duly authorized, have
executed this Agreement as of the date first set forth above.
Address for Notices: SELLER:
1515 w. 20/th/ Street KITTY HAWK, INC.,
P.O. BOX 612787 a Delaware corporation
▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman & C.E.O.
▇▇▇▇ ▇. ▇▇/▇▇/ ▇▇▇▇▇▇ KITTY HAWK CARGO, INC.,
P.O. BOX 612787 a Delaware corporation
▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman & C.E.O.
▇▇▇▇ ▇. ▇▇/▇▇/ ▇▇▇▇▇▇ KITTY HAWK AIRCARGO, INC.,
P.O. BOX 612787 a Texas corporation
▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman & C.E.O.
Address for Notices: KBK FINANCIAL, INC.:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ CENTER By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ -----------------------------
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇ Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Title: Asst. Vice President
-----------------------------
Date: 10/31/02
-----------------------------
SCHEDULE A
TO
ACCOUNT TRANSFER AND PURCHASE AGREEMENT
Dated August ___, 2002
By and Between
KBK FINANCIAL, INC.
AND
KITTY HAWK, INC.,
KITTY HAWK CARGO, INC.,
KITTY HAWK AIRCARGO, INC.
The addresses of any other locations of Collateral referenced in Section 9:
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
--------------------------------------------
YODER, IN 46798
--------------------------------------------
Any trade or assumed names referenced in Section 9:
None.
EXHIBIT 1
KITTY HAWK, INC, KITTY HAWK CARGO, INC, and KITTY HAWK AIRCARGO, INC
Officer's Certificate
The undersigned hereby certify that they are a duly elected officer of
a corporation (the "Company"), and are authorized by the Board of
Directors to execute this Certificate on behalf of the Company. This certificate
is issued pursuant to Section 2 of the Account Transfer and Purchase Agreement
("Purchase Agreement"), dated as of ______________ between KBK Financial, Inc.
("KBK") and the Company. Terms defined in the Purchase Agreement are used herein
as so defined. The undersigned further certify the following:
1. All invoices ("Offered Accounts") submitted on __________ are offered
for sale to KBK by the Seller. True and complete sales journal,
collections journal, and accounts receivable aging related to the
Offered Accounts have been sent to KBK electronically in accordance
with the terms of the Purchase Agreement.
2. The representations and warranties of Company (Seller) in Section 9 of
the Purchase Agreement are true and correct as of the date hereof as
to all accounts and specifically as to the accounts submitted
electronically to KBK of even date herewith.
3. Seller further represents and warrants that for all of the accounts
electronically submitted:
(a) such account arises out of a bona fide sale of conforming goods
or the bona fide rendition of services by Seller, and all
underlying goods have been delivered to the account debtor, or
all underlying services have been rendered by Seller, in complete
fulfillment of all of the terms and conditions of a fully
executed, delivered and unexpired contract with the account
debtor, and the account debtor has accepted the goods or services
to which the account relates;
(b) such account is current and not past due as of the date of
purchase by KBK, has not been paid by or on behalf of the account
debtor in whole or in part, and is not and will not be subject to
any dispute, rescission, set-off, recoupment, defense or claim by
the account debtor, whether relating to price, quality,
quantity, workmanship, delay in delivery, set off, counterclaim
or otherwise, and the account debtor has not and will not claim
any defense of any kind or character (other than bankruptcy or
insolvency arising after the date of sale of such account to KBK
hereunder) against payment of such account;
(c) the accounts are payable according to trade terms disclosed and
agreed to by KBK;
(d) the accounts remain unpaid when purchased by KBK; and;
4. The Company has not converted any proceeds of previously purchased
accounts.
IN WITNESS WHEREOF, the undersigned has executed this Certificate as of the ____
day of ____________, 20__.
KITTY HAWK, INC., KITTY HAWK CARGO,
INC., and KITTY HAWK AIRCARGO, INC.,
By:________________________________
Name:______________________________
Title:_____________________________
LIMITED GUARANTY
This Limited Guaranty ("Guaranty") is made by the following corporations with
mailing addresses as set forth below (referred to herein collectively as the
"Guarantors")
Kitty Hawk, Inc. Kitty Hawk Cargo, Inc. Kitty Hawk Aircargo, Inc.
P.O. ▇▇▇ ▇▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
to and for the benefit of KBK FINANCIAL, INC. ("KBK"), a Delaware corporation
authorized to transact business in Texas.
A. KBK has contemporaneously herewith entered into that certain Account
Transfer and Purchase Agreement of even date herewith (such agreement,
and all amendments and modifications thereof, collectively, the
"Purchase Agreement"), to which reference is made for all purposes,
with KITTY HAWK, INC., a Delaware corporation, KITTY HAWK CARGO, INC.,
a Delaware corporation, KITTY HAWK AIRCARGO, INC., a Texas corporation,
(collectively referred to herein as the "Seller"), pursuant to which
KBK has purchased or will purchase all right, title and interest in
certain accounts receivable of the Seller (the "Accounts"), on those
terms and conditions set forth in the Purchase Agreement.
B. KBK is willing to enter into the Purchase Agreement only if the
Guarantors execute and deliver this Guaranty to KBK.
NOW, THEREFORE, in consideration of the aforesaid premises and other good and
valuable consideration, and for the purpose of inducing KBK to enter into the
Purchase Agreement and to purchase accounts receivables from the Seller pursuant
to the terms thereof, the sufficiency of which is hereby acknowledged, the
Guarantors hereby covenant and agree as follows:
1. The Guarantors hereby unconditionally and irrevocably guarantee the
payment in full of any losses incurred by KBK under the Purchase
Agreement (collectively the "Obligations") to the extent that such
losses are related to or attributable to any of the following limited
circumstances only:
(a) In the event any of the representations and warranties set
forth in Section 9 of the Purchase Agreement was not true when
made or ceases to be true for any reason.
(b) In the event that the Seller, any Guarantor, or any other
person, without receiving prior written consent from KBK,
shall cash, deposit, or retain, any checks, drafts, monies or
proceeds of the Accounts purchased by KBK, and the Seller
shall fail to immediately tender the entire amount of the same
to KBK.
2. KBK shall not be required, as a condition precedent to making a demand
upon the Guarantors or to bringing an action against the Guarantors
under this Guaranty, to make demand upon, or to institute any action
or proceeding, at law or in equity against the Seller or anyone else,
or to exhaust its remedies against the Seller, or anyone else, or
against any collateral security. All remedies afforded to KBK by
reason of this Guaranty are separate and cumulative remedies and it is
agreed that not one of such remedies, whether exercised by KBK or not,
shall be deemed to be exclusive of any of the other remedies available
to KBK and shall not limit or prejudice any other remedy which KBK may
have against any party, including the Guarantors.
3. The Guarantors shall remain liable on this Guaranty notwithstanding any
change or changes in the terms, covenants or conditions of the Purchase
Agreement, or any amendment thereto, hereafter made or granted, or any
delay on the part of KBK in exercising its rights hereunder or
thereunder, it being the intention hereof that each of the Guarantors
shall remain liable as principals until the full amount of the
Obligations guaranteed hereby, with interest and any sums which may be
due thereon, shall have been fully paid, notwithstanding any act or
omission which might otherwise operate as a legal or equitable
discharge of the Guarantors.
4. The Guarantors hereby waive (a) notice of acceptance of this Guaranty;
(b) presentment and demand for payment of the Obligations or any
portion thereof; (c) protest and notice of dishonor or default to the
Guarantors or to any other person or party with respect to the
Obligations or any portion thereof; (d) all other notices to which the
Guarantors might otherwise be entitled; (e) any demand for payment or
performance of this Guaranty; and (f) all Guaranty and suretyship
defenses or other defenses in the nature thereof (including, without
limitation, all rights Guarantor has under, or the requirements imposed
by, Chapter 34 of the Texas Business and Commerce Code, as may be
amended from time to time).
5. Each Guarantor shall promptly furnish to KBK at any time and from time
to time such financial statements and other financial information of
Guarantor as KBK may require, in form and detail satisfactory to KBK
(including, without limitation, annual financial statements within 90
days after the end of each calendar year).
6. This Guaranty shall inure to the benefit of, and may be enforced by
KBK, and its respective successors and assigns, and shall be binding
upon and enforceable against the Guarantors and their respective heirs,
executors, legal representatives, administrators, or successors and
assigns thereof. All obligations of the Guarantors hereunder shall be
joint and several.
7. The Guarantors agree that in the event this Guaranty is placed in the
hands of an attorney for enforcement, the Guarantors will reimburse KBK
for all expenses incurred, including reasonable attorneys' fees.
8. This Guaranty cannot be modified or amended except in a writing, duly
executed by the Guarantors and KBK.
9. Each Guarantor has received, and will receive, direct and/or indirect
benefits by and from the making of this Guaranty and the execution of
the Purchase Agreement by KBK.
10. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO THE PRINCIPLES
OF CONFLICTS OF LAWS THEREOF. THIS GUARANTY IS PERFORMABLE IN TARRANT
COUNTY, TEXAS. EACH GUARANTOR AGREES THAT TARRANT COUNTY, TEXAS SHALL
BE THE EXCLUSIVE VENUE FOR LITIGATION OF ANY DISPUTE OR CLAIM ARISING
UNDER OR RELATING TO THIS GUARANTY, AND THAT SUCH COUNTY IS A
CONVENIENT FORUM IN WHICH TO DECIDE ANY SUCH DISPUTE OR CLAIM. EACH
GUARANTOR CONSENTS TO THE PERSONAL JURISDICTION OF THE STATE AND
FEDERAL COURTS LOCATED IN TARRANT COUNTY, TEXAS FOR THE LITIGATION OF
ANY SUCH DISPUTE OR CLAIM. EACH GUARANTOR 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 FORUM.
11. EACH GUARANTOR HEREBY IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT
PERMITTED BY LAW, ANY RIGHT EACH GUARANTOR MAY HAVE TO A TRIAL BY JURY
IN RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY AT ANY TIME ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY OR ANY TRANSACTION
CONTEMPLATED HEREBY OR ASSOCIATED HEREWITH.
12. THIS GUARANTY REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREIN AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the undersigned have executed this Guaranty this ___ day of
August, 2002.
GUARANTORS:
KITTY HAWK, INC. KITTY HAWK CARGO, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇ Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman & C.E.O. Title: Chairman & CEO
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KITTY HAWK AIRCARGO, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman & CEO
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