e8vk

KITTY HAWK, INC.

/s/ Steven E. Markhoff

Steven E. Markhoff

Corporate Secretary

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BX7cuC9tVhHo35fHhp7OjD9JHQcnQbzlSzRY3QhoibCXRR2ApDm+idBEQLkSfITM eBgfKSDmAQxnom3zecUoPg== 0000950134-07-014648.txt : 20070703 0000950134-07-014648.hdr.sgml : 20070703 20070703160351 ACCESSION NUMBER: 0000950134-07-014648 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20070627 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Other Events ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070703 DATE AS OF CHANGE: 20070703 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KITTY HAWK INC CENTRAL INDEX KEY: 0000932110 STANDARD INDUSTRIAL CLASSIFICATION: AIR TRANSPORTATION, NONSCHEDULED [4522] IRS NUMBER: 752564006 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-32284 FILM NUMBER: 07960897 BUSINESS ADDRESS: STREET 1: P O BOX 612787 STREET 2: 1515 W 20TH ST CITY: DALLAS/FT WORTH INTN STATE: TX ZIP: 75261 BUSINESS PHONE: 9724562200 MAIL ADDRESS: STREET 1: P O BOX 612787 STREET 2: 1515 W 20TH ST CITY: DALLAS/FT WORTH INTN STATE: TX ZIP: 75261 8-K 1 d47987e8vk.htm FORM 8-K e8vk

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 27, 2007

Kitty Hawk, Inc.

(Exact name of registrant as specified in its charter)


Delaware	0-25202	75-2564006
(State or other jurisdiction of	(Commission File Number)	(I.R.S. Employer
incorporation)		Identification No.)


1515 West 20^th Street
P.O. Box 612787
DFW International Airport,
Texas		75261
(Address of principal		(Zip Code)
executive offices)

Registrant’s telephone number, including area code: (972) 456-2200

Not Applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement.

Warrant Repricing. On March 29, 2007, Kitty Hawk, Inc. (the “Company”) and its subsidiaries entered into a Security Agreement and Secured Revolving Note (the “Credit Facility”) with Laurus Master Fund, Ltd. (“Laurus”). In connection therewith, the Company issued to Laurus a five year warrant to purchase up to 8,216,657 shares of Kitty Hawk, Inc. common stock (the “Original Warrant”). The exercise price of the Original Warrant was $0.91 per share. On June 29, 2007, as an inducement to Laurus to release its liens on six Boeing 727-200 airframes and eleven JT8D aircraft engines, the Company agreed to cancel the Original Warrant and replace the Original Warrant with two new warrants.

The first warrant provides a right to purchase 4,000,000 shares of common stock at $0.55 per share (the “First Warrant”). The second warrant provides a right to purchase 4,216,657 shares of common stock at the original exercise price of $0.91 per share (collectively with the First Warrant, the “New Warrants”). All other terms of the Original Warrant remain unchanged, including the requirement that Laurus will not sell any shares for which it has exercised either of the New Warrants prior to March 29, 2008. Laurus also will not sell shares for which it has exercised either of the New Warrants during a 22 day trading period in a number that exceeds 20% of the aggregate dollar trading volume of the Company’s common stock for the 22 day trading period immediately preceding the sales.

The foregoing description of the terms of the New Warrants does not purport to be complete and is qualified in its entirety by the documents attached hereto as Exhibits 10.1 and 10.2 and are incorporated herein by reference.

Sale of Airframes, Engines and Parts. On June 27, 2007, Kitty Hawk Aircargo, Inc. (“Aircargo”), a subsidiary of the Company, entered into three sales agreements (the “Sales Agreements”) whereby it agreed to sell to AirLease International, Inc. (“AirLease”) each of the following: (1) six Boeing 727-200 airframes (the “Airframes”), (2) eleven JT8D aircraft engines (the “Engines”) and (3) certain Boeing 727-200 aircraft parts (the “Parts”). The aggregate purchase price for the Airframes, Engines and Parts was $3,500,000. The Company used the net proceeds of the sale of the Airframes, Engines and Parts to pay down indebtedness. In addition, the Company agreed with Laurus to maintain $1.0 million of the net proceeds as reserves under the Credit Facility as consideration for the release of Laurus’ security interest in the Airframes, Engines and Parts.

The foregoing description of the terms of the Sales Agreements does not purport to be complete and is qualified in its entirety by the documents attached hereto as Exhibits 10.3, 10.4 and 10.5 and are incorporated herein by reference.

Item 8.01 Other Events.

Lease Agreements. Aircargo and AirLease also entered into an Airframe Lease Agreement, under which AirLease will lease the Airframes back to Aircargo effective as of May 1, 2007. The initial term of each Airframe lease ranges from April 2008 to August 2008. The term of each Airframe lease may be extended at the option of Aircargo. In the event Aircargo extends the lease for an Airframe and a “C Check” comes due for such Airframe, AirLease is responsible for the first $850,000 of the expenses for such “C Check,” and Aircargo is responsible for the balance. Aircargo is responsible for maintaining insurance on the Airframes.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.


Exhibit No.		Description

10.1		Warrant Agreement, dated June 29, 2007.

10.2		Warrant Agreement, dated June 29, 2007.

10.3		Airframe Sale Agreement, dated June 27, 2007.

10.4		Engines Sales Agreement, dated June 27, 2007.

10.5		Aircraft Parts Sale Agreement, dated June 27, 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: July 3, 2007

EX-10.1 2 d47987exv10w1.htm WARRANT AGREEMENT exv10w1

Exhibit 10.1

THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON STOCK ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO KITTY HAWK, INC. THAT SUCH REGISTRATION IS NOT REQUIRED.

Right to Purchase up to 4,000,000 Shares of Common Stock of
Kitty Hawk, Inc.
(subject to adjustment as provided herein)

COMMON STOCK PURCHASE WARRANT
[Warrant with reduced Exercise Price issued on June 29, 2007
in replacement of a portion of the Warrants issued on March 29, 2007]


No. L(Rev) – 1		Issue Date: June 29, 2007

KITTY HAWK, INC., a corporation organized under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received, LAURUS MASTER FUND, LTD., or assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company (as defined herein) from and after the Issue Date of this Warrant and at any time or from time to time before 5:00 p.m., New York time, through the close of business March 29, 2012 (the “Expiration Date”), up to 4,000,000 fully paid and nonassessable shares of Common Stock (as hereinafter defined), $0.000001 par value per share, at the applicable Exercise Price per share (as defined below). The number and character of such shares of Common Stock and the applicable Exercise Price per share are subject to adjustment as provided herein.

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(a) The term “Affiliated Transferee” as used in Section 7 shall include (i) a partner, member or stockholder of the Transferor, (ii) an entity majority owned or controlled (as such term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended) by the Transferor or by the partners, members or stockholders of the Transferor, and (iii) a fund or account managed by the same management company as the Transferor or by an affiliate of such management company.

(b) The term “Common Stock” includes (i) the Company’s Common Stock, par value $0.000001 per share; and (ii) any other securities into which or for which any of the securities described in the preceding clause (i) may be converted or exchanged pursuant to a plan of recapitalization, reorganization, merger, sale of assets or otherwise.

(c) The term “Company” shall include Kitty Hawk, Inc. and any person or entity which shall succeed, or assume the obligations of, Kitty Hawk, Inc. hereunder.

(d) The term “Event of Default” shall have the meaning given thereto in the Security Agreement.

(e) The “Exercise Price” applicable under this Warrant shall be a price of $0.55.

(f) The term “Other Securities” refers to any stock (other than Common Stock) and other securities of the Company or any other person (corporate or otherwise) which the holder of the Warrant at any time shall be entitled to receive, or shall have received, on the exercise of the Warrant, in lieu of or in addition to Common Stock, or which at any time shall be issuable or shall have been issued in exchange for or in replacement of Common Stock or Other Securities pursuant to Section 3 or otherwise.

(g) The term “Security Agreement” means the Security Agreement dated as of March 29, 2007 among the Holder, the Company and various Subsidiaries of the Company party thereto, as amended, modified, restated and/or supplemented from time to time.

1. Exercise of Warrant.

1.1 Number of Shares Issuable upon Exercise. From and after the date hereof through and including the Expiration Date, the Holder shall be entitled to receive, upon exercise of this Warrant in whole or in part (but in increments of no less than 10,000 shares of Common Stock issuable upon exercise of this Warrant), by delivery of an original or fax copy of an exercise notice in the form attached hereto as Exhibit A (the “Exercise Notice”), shares of Common Stock of the Company, subject to adjustment pursuant to Section 4.

1.2 Fair Market Value. For purposes hereof, the “Fair Market Value” of a share of Common Stock as of a particular date (the “Determination Date”) shall mean:

(a) If the Company’s Common Stock is traded on the American Stock Exchange or another national exchange or is quoted on the National or Capital Market of The Nasdaq Stock Market, Inc. (“Nasdaq”), then the closing or last sale price, respectively, reported for the last trading day immediately preceding the Determination Date.

(b) If the Company’s Common Stock is not traded on the American Stock Exchange or another national exchange or on the Nasdaq but is traded on the NASD Over The Counter Bulletin Board, then the mean of the average of the closing bid and asked prices reported for the last trading day immediately preceding the Determination Date.

Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided.

(d) If the Determination Date is the date of a liquidation, dissolution or winding up, or any event deemed to be a liquidation, dissolution or winding up pursuant to the Company’s charter, then all amounts to be payable per share to holders of the Common Stock pursuant to the charter in the event of such liquidation, dissolution or winding up, plus all other amounts to be payable per share in respect of the Common Stock in liquidation under the charter, assuming for the purposes of this clause (d) that all of the shares of Common Stock then issuable upon exercise of the Warrant are outstanding at the Determination Date.

1.3 Company Acknowledgment. The Company will, at the time of the exercise of this Warrant, upon the request of the holder hereof acknowledge in writing its continuing obligation to afford to such holder any rights to which such holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant. If the holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to such holder any such rights.

1.4 Trustee for Warrant Holders. In the event that a bank or trust company shall have been appointed as trustee for the holders of this Warrant pursuant to Section 3.2, such bank or trust company shall have all the powers and duties of a warrant agent (as hereinafter described) and shall accept, in its own name for the account of the Company or such successor person as may be entitled thereto, all amounts otherwise payable to the Company or such successor, as the case may be, on exercise of this Warrant pursuant to this Section 1.

2. Procedure for Exercise.

2.1 Delivery of Stock Certificates, Etc., on Exercise. The Company agrees that the shares of Common Stock purchased upon exercise of this Warrant shall be deemed to be issued to the Holder as the record owner of such shares as of the close of business on the date on which this Warrant shall have been surrendered and payment made for such shares in accordance herewith. As soon as practicable after the exercise of this Warrant in full or in part, and in any event within three (3) trading days thereafter, the Company at its expense (including the payment by it of any applicable issue taxes) will cause to be issued in the name of and delivered to the Holder, or as such Holder (upon payment by such Holder of any applicable transfer taxes) may direct in compliance with applicable securities laws, a certificate or certificates for the number of duly and validly issued, fully paid and nonassessable shares of Common Stock (or Other Securities) to which such Holder shall be entitled on such exercise, plus, in lieu of any fractional share to which such holder would otherwise be entitled, cash equal to such fraction multiplied by the then Fair Market Value of one full share, together with any other stock or other securities and property (including cash, where applicable) to which such Holder is entitled upon such exercise pursuant to Section 1 or otherwise.

Stock being acquired upon exercise of this Warrant, (ii) by delivery of this Warrant, or shares of Common Stock and/or Common Stock receivable upon exercise of this Warrant in accordance with the formula set forth in Section 2.2(b) below, or (iii) by a combination of any of the foregoing methods, for the number of shares of Common Stock specified in such Exercise Notice (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to the Holder per the terms of this Warrant) and the Holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or Other Securities) determined as provided herein.

(b) Notwithstanding any provisions herein to the contrary, if the Fair Market Value of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being exercised) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Exercise Notice in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:


	X=	Y(A-B)
		A


		Where X =		the number of shares of Common Stock to be issued to the Holder

		Y =		the number of shares of Common Stock purchasable under this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being exercised (at the date of such calculation)

		A =		the Fair Market Value of one share of the Company’s Common Stock (at the date of such calculation)

		B =		the Exercise Price per share (as adjusted to the date of such calculation)

3. Effect of Reorganization, Etc.

3.1 Reorganization, Consolidation, Merger, Etc. (a) In case at any time or from time to time, the Company shall (i) effect a reorganization, (ii) consolidate with or merge into any other person (other than as contemplated in Section 3.1(b) below), or (iii) transfer all or substantially all of its properties or assets to any other person under any plan or arrangement contemplating the dissolution of the Company, then, in each such case, as a condition to the consummation of such a transaction, proper and adequate provision shall be made by the Company whereby the Holder, on the exercise hereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation or merger or the effective date of such dissolution, as the case may be, shall receive, in lieu of the Common Stock (or Other Securities) issuable on such exercise prior to such consummation or such effective date, the stock and other securities and property (including cash, where applicable) to which such Holder would have been entitled upon such consummation or in connection with such dissolution, as the case may be, if such Holder had so exercised this Warrant immediately prior thereto, all subject to further adjustment thereafter as provided in Section 4.

(b) Notwithstanding anything to the contrary contained in Section 3.1(a) above, the Holder agrees that, in the event of a consolidation or merger of the Company with or into any other person in which the sole consideration is cash, the Holder shall, upon the written request of the Company, elect either (i) to exercise this Warrant, in which event such exercise will be deemed effective immediately prior to the consummation of such transaction or (ii) not to exercise this Warrant, in which event this Warrant will expire upon the consummation of such transaction. The Company shall provide the Holder with written notice of its request relating to the foregoing (together with such reasonable information as the Holder may request in connection with the contemplated transaction giving rise to such notice), which is to be delivered to the Holder not less than ten (10) days prior to the closing of the proposed transaction.

3.2 Dissolution. In the event of any dissolution of the Company following the transfer of all or substantially all of its properties or assets, the Company, concurrently with any distributions made to holders of its Common Stock, shall at its expense deliver or cause to be delivered to the Holder the stock and other securities and property (including cash, where applicable) receivable by the Holder pursuant to Section 3.1, or, if the Holder shall so instruct the Company, to a bank or trust company specified by the Holder and having its principal office in New York, NY as trustee for the Holder.

3.3 Continuation of Terms. Upon any reorganization, consolidation, merger or transfer (and any dissolution following any transfer) referred to in this Section 3 (but other than any consolidation or merger referred to in Section 3.1(b)), this Warrant shall continue in full force and effect and the terms hereof shall be applicable to the shares of stock and other securities and property receivable on the exercise of this Warrant after the consummation of such reorganization, consolidation or merger or the effective date of dissolution following any such transfer, as the case may be, and shall be binding upon the issuer of any such stock or other securities, including, in the case of any such transfer, the person acquiring all or substantially all of the properties or assets of the Company, whether or not such person shall have expressly assumed the terms of this Warrant. In the event this Warrant does not continue in full force and effect after the consummation of the transactions described in this Section 3 (other than under the circumstances set forth in Section 3.1(b)), then the Company’s securities and property (including cash, where applicable) receivable by the Holder will be delivered to the Holder or the Trustee as contemplated by Section 3.2.

4. Extraordinary Events Regarding Common Stock; Adjustment of Exercise Price and Number of Shares Issuable Upon Exercise. In the event that the Company shall (a) issue additional shares of the Common Stock as a dividend or other distribution on (i) outstanding Common Stock or (ii) any preferred stock issued by the Company, (b) subdivide its outstanding shares of Common Stock, (c) combine its outstanding shares of the Common Stock into a smaller number of shares of Common Stock, then, in each such event, the Exercise Price shall, simultaneously with the happening of such event, be adjusted by multiplying the then Exercise Price by a fraction, the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to such event and the denominator of which shall be the number of shares of Common Stock outstanding immediately after such event, and the product so obtained shall thereafter be the Exercise Price then in effect. The Exercise Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein in this Section 4. The number of shares of Common Stock that the Holder shall

thereafter, on the exercise hereof as provided in Section 1, be entitled to receive shall be adjusted to a number determined by multiplying the number of shares of Common Stock that would otherwise (but for the provisions of this Section 4) be issuable on such exercise by a fraction of which (a) the numerator is the Exercise Price that would otherwise (but for the provisions of this Section 4) be in effect, and (b) the denominator is the Exercise Price in effect on the date of such exercise (taking into account the provisions of this Section 4). Notwithstanding the foregoing, in no event shall the Exercise Price be less than the par value of the Common Stock.

5. Certificate as to Adjustments. In each case of any adjustment or readjustment in the shares of Common Stock (or Other Securities) issuable on the exercise of this Warrant, the Company at its expense will promptly cause its Chief Financial Officer or other appropriate designee to compute such adjustment or readjustment in accordance with the terms of this Warrant and prepare a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based, including a statement of (a) the consideration received or receivable by the Company for any additional shares of Common Stock (or Other Securities) issued or sold or deemed to have been issued or sold, (b) the number of shares of Common Stock (or Other Securities) outstanding or deemed to be outstanding, and (c) the Exercise Price and the number of shares of Common Stock to be received upon exercise of this Warrant, in effect immediately prior to such adjustment or readjustment and as adjusted or readjusted as provided in this Warrant. The Company will forthwith mail a copy of each such certificate to the holder and any Warrant agent of the Company (appointed pursuant to Section 11 hereof).

6. Reservation of Stock, Etc., Issuable on Exercise of Warrant. The Company will at all times reserve and keep available, solely for issuance and delivery on the exercise of this Warrant, shares of Common Stock (or Other Securities) from time to time issuable on the exercise of this Warrant.

7. Assignment; Exchange of Warrant. (a) Subject to compliance with applicable securities laws and Section 7(b) below, this Warrant, and the rights evidenced hereby, may be transferred by any registered holder hereof (a “Transferor”) in whole or in part; provided, that, so long as no Event of Default shall have occurred and be continuing, the Transferor may make no more than 10 transfers (except for transfers to Affiliated Transferees). On the surrender for exchange of this Warrant, with the Transferor’s endorsement in the form of Exhibit B attached hereto (the “Transferor Endorsement Form”) and together with evidence reasonably satisfactory to the Company demonstrating compliance with applicable securities laws, which shall include, without limitation, a legal opinion from the Transferor’s counsel that such transfer is exempt from the registration requirements of applicable securities laws, the Company at its expense (but with payment by the Transferor of any applicable transfer taxes) will issue and deliver to or on the order of the Transferor thereof a new Warrant of like tenor, in the name of the Transferor and/or the transferee(s) specified in such Transferor Endorsement Form (each a “Transferee”), calling in the aggregate on the face or faces thereof for the number of shares of Common Stock called for on the face or faces of the Warrant so surrendered by the Transferor.

(b) If, at any time when no Event of Default shall have occurred and be continuing, any Transferor shall propose to sell all or any portion of this Warrant and the rights evidenced hereby (the “Offered Warrant Rights”) to any Person (a “Proposed Transferee”), other than

to an Affiliated Transferee, such sale shall be conditioned upon the satisfaction of the following conditions precedent:

(i) The Transferor shall first offer to sell the Offered Warrant Rights to the Company, at the same price and on terms identical to those terms that the Transferor intends to sell the Offered Warrant Rights to the Proposed Transferee; provided that the Company shall have no right to acquire the Offered Warrant Rights unless the Company acquires all of the Offered Warrant Rights. If such proposed sale involves consideration other than cash, the Company shall have the right to elect to pay, in lieu of such non-cash consideration, cash in an amount equal to the fair market value of such non-cash consideration. Such offer shall be made by a written notice (the “Notice of Proposed Sale”) delivered to the Company not less than 15 days prior to the proposed sale. Such Notice of Proposed Sale shall set forth the identity of the Proposed Transferee, the portion of this Warrant proposed to be sold (which may be all of this Warrant) and the terms and conditions of the proposed sale, including price and any other material terms and conditions of the proposed sale.

(ii) If the Company does not accept the offer made by the Transferor with respect to all of the Offered Warrant Rights within the 15-day period provided above, then the Transferor shall have the right for a period of 90 days following the 15^th day after the Company shall have received the Notice of Proposed Sale in accordance with Section 7(b)(i) above, to sell up to all of the Offered Warrant Rights to the Proposed Transferee and/or any other transferee, but at not less than the price, and upon terms not more favorable to the Proposed Transferee or other transferee, than were contained in the Notice of Proposed Sale. Any Offered Warrant Rights not sold within such 90-day period shall continue to be subject to the requirements of this Section 7.

8. Replacement of Warrant. On receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Warrant and, in the case of any such loss, theft or destruction of this Warrant, on delivery of a customary affidavit and an indemnity agreement or security reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, on surrender and cancellation of this Warrant, the Company at its expense (but with payment by the Holder of any applicable taxes or charges, if any) will execute and deliver, in lieu thereof, a new Warrant of like tenor.

9. Registration Rights; Lock-Up. (a) The Holder has been granted certain registration rights by the Company. These registration rights are set forth in a Registration Rights Agreement entered into by the Company and Holder dated as of March 29, 2007, as the same may be amended, modified and/or supplemented from time to time.

(b) Provided that no Event of Default shall have occurred and be continuing, the Holder agrees that it will not, without the prior written consent of the Company, sell any shares of Common Stock received upon exercise of this Warrant prior to March 29, 2008 (the “Initial Lock-Up”). Additionally, following the Initial Lock-Up and provided that no Event of Default shall have occurred and be continuing, the Holder agrees that it will not, without the prior written consent of the Company, sell shares of Common Stock received upon exercise of this Warrant during a twenty two (22) day trading period in a number that exceeds twenty percent (20%) of

the aggregate dollar trading volume of the Common Stock for the twenty two (22) day trading period immediately preceding such sales by the Holder, inclusive of the day of such sales. Such restriction shall in no way affect the Holder’s right to exercise all or any portion of this Warrant as provided in this Warrant.

10. Maximum Exercise. Notwithstanding anything herein to the contrary, in no event shall the Holder be entitled to exercise any portion of this Warrant in excess of that portion of this Warrant upon exercise of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its Affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unexercised portion of the Warrant or the unexercised or unconverted portion of any other security of the Holder subject to a limitation on conversion analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the exercise of the portion of this Warrant with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its Affiliates of any amount greater than 9.99% of the then outstanding shares of Common Stock (whether or not, at the time of such exercise, the Holder and its Affiliates beneficially own more than 9.99% of the then outstanding shares of Common Stock). As used herein, the term “Affiliate” means any person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a person or entity, as such terms are used in and construed under Rule 144 under the Securities Act. For purposes of the second preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such sentence. For any reason at any time, upon written or oral request of the Holder, the Company shall within two (2) business days confirm orally and in writing to the Holder the number of shares of Common Stock outstanding as of any given date. The limitations set forth herein (x) may be waived by the Holder upon provision of no less than sixty-one (61) days prior written notice to the Company and (y) shall automatically become null and void following notice to the Company upon the occurrence and during the continuance of an Event of Default, except that at no time shall the Company be obligated to issue any shares of Common Stock pursuant to the terms of this Warrant, the Security Agreement or any Ancillary Agreement (as defined in the Security Agreement) if the issuance of such shares of Common Stock would exceed the aggregate number of shares of Common Stock which the Company may issue pursuant to the terms of this Warrant, the Security Agreement or such Ancillary Agreement without violating the rules or regulations of the Principal Market (as defined in the Security Agreement), except that such limitation shall not apply in the event that the Company obtains the approval of its stockholders as required by the applicable rules or regulations of the Principal Market for issuances of Common Stock in excess of such amount.

11. Warrant Agent. The Company may, by written notice to the each Holder of the Warrant, appoint an agent for the purpose of issuing Common Stock (or Other Securities) on the exercise of this Warrant pursuant to Section 1, exchanging this Warrant pursuant to Section 7, and replacing this Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

12. Transfer on the Company’s Books. Until this Warrant is transferred on the books of the Company, the Company may treat the registered holder hereof as the absolute owner hereof for all purposes, notwithstanding any notice to the contrary.

13. Rights of Shareholders. No Holder shall be entitled to vote or receive dividends or be deemed the holder of the shares of Common Stock or any other securities of the Company which may at any time be issuable upon exercise of this Warrant for any purpose (the “Warrant Shares”), nor shall anything contained herein be construed to confer upon the Holder, as such, any of the rights of a shareholder of the Company or any right to vote for the election of directors or upon any matter submitted to shareholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon the recapitalization, issuance of shares, reclassification of shares, change of nominal value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or otherwise, in each case, until the earlier to occur of (x) the date of actual delivery to Holder (or its designee) of the Warrant Shares issuable upon the exercise hereof or (y) the third business day following the date such Warrant Shares first become deliverable to Holder, as provided herein.

14. Notices, Etc. All notices and other communications from the Company to the Holder shall be mailed by first class registered or certified mail, postage prepaid, at such address as may have been furnished to the Company in writing by such Holder or, until any such Holder furnishes to the Company an address, then to, and at the address of, the last Holder who has so furnished an address to the Company.

15. Miscellaneous. This Warrant and any term hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of such change, waiver, discharge or termination is sought. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTION BROUGHT CONCERNING THE TRANSACTIONS CONTEMPLATED BY THIS WARRANT SHALL BE BROUGHT ONLY IN STATE COURTS OF NEW YORK OR IN THE FEDERAL COURTS LOCATED IN THE STATE OF NEW YORK; PROVIDED, HOWEVER, THAT THE HOLDER MAY CHOOSE TO WAIVE THIS PROVISION AND BRING AN ACTION OUTSIDE THE STATE OF NEW YORK. The individuals executing this Warrant on behalf of the Company agree to submit to the jurisdiction of such courts and waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorneys’ fees and costs. In the event that any provision of this Warrant is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of this Warrant. The headings in this Warrant are for purposes of reference only, and shall not limit or otherwise affect any of the terms hereof. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision hereof. The Company acknowledges that legal counsel participated in the preparation of this Warrant and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Warrant to favor any

party against the other party. This Warrant and Warrant No. L – 2 were issued in exchange for, and cancellation of, Warrant No. L – 1.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.


	KITTY HAWK, INC.

WITNESS:

	By: Name:	/s/ James Kupferschmid James Kupferschmid
/s/ Steven E. Markhoff	Title:	Chief Financial Officer

[Kitty Hawk – Warrant]

Signature Page to Warrant

EXHIBIT A

FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Warrant)


TO:		Kitty Hawk, Inc.
		1515 West 20^th Street
		P.O. Box 612787
		DFW International Airport, Texas 75261
		Attention: Chief Financial Officer

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.___), hereby irrevocably elects to purchase (check applicable box):


		shares of the common stock covered by such warrant; or

		the maximum number of shares of common stock covered by such warrant pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned herewith makes payment of the full Exercise Price for such shares at the price per share provided for in such Warrant, which is $ . Such payment takes the form of (check applicable box or boxes):


		$ in lawful money of the United States; and/or

		the cancellation of such portion of the attached Warrant as is exercisable for a total of ___ shares of Common Stock (using a Fair Market Value of $___ per share for purposes of this calculation); and/or

		the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 2.2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned requests that the certificates for such shares be issued in the name of, and delivered to whose address is .

The undersigned represents and warrants that all offers and sales by the undersigned of the securities issuable upon exercise of the within Warrant shall be made pursuant to registration of the Common Stock under the Securities Act of 1933, as amended (the “Securities Act”) or pursuant to an exemption from registration under the Securities Act.


Dated:

						(Signature must conform to name of holder as specified on the face of the Warrant)
						Address:

EXHIBIT B

FORM OF TRANSFEROR ENDORSEMENT
(To Be Signed Only On Transfer Of Warrant)

For value received, the undersigned hereby sells, assigns, and transfers unto the person(s) named below under the heading “Transferees” the right represented by the within Warrant to purchase the percentage and number of shares of Common Stock of Kitty Hawk, Inc. into which the within Warrant relates specified under the headings “Percentage Transferred” and “Number Transferred,” respectively, opposite the name(s) of such person(s) and appoints each such person Attorney to transfer its respective right on the books of Kitty Hawk, Inc. with full power of substitution in the premises.


		Percentage	Number
Transferees	Address	Transferred	Transferred


Dated:

	(Signature must conform to name of holder as specified on the face of the Warrant)
	Address:




	SIGNED IN THE PRESENCE OF:


		(Name)

ACCEPTED AND AGREED:
[TRANSFEREE]


(Name)

EX-10.2 3 d47987exv10w2.htm WARRANT AGREEMENT exv10w2

Exhibit 10.2

Right to Purchase up to 4,216,657 Shares of Common Stock of
Kitty Hawk, Inc.
(subject to adjustment as provided herein)

COMMON STOCK PURCHASE WARRANT


No. L - 2		Issue Date: June 29, 2007

KITTY HAWK, INC., a corporation organized under the laws of the State of Delaware (the “Company”), hereby certifies that, for value received, LAURUS MASTER FUND, LTD., or assigns (the “Holder”), is entitled, subject to the terms set forth below, to purchase from the Company (as defined herein) from and after the Issue Date of this Warrant and at any time or from time to time before 5:00 p.m., New York time, through the close of business March 29, 2012 (the “Expiration Date”), up to 4,216,657 fully paid and nonassessable shares of Common Stock (as hereinafter defined), $0.000001 par value per share, at the applicable Exercise Price per share (as defined below). The number and character of such shares of Common Stock and the applicable Exercise Price per share are subject to adjustment as provided herein.

As used herein the following terms, unless the context otherwise requires, have the following respective meanings:

(c) The term “Company” shall include Kitty Hawk, Inc. and any person or entity which shall succeed, or assume the obligations of, Kitty Hawk, Inc. hereunder.

(d) The term “Event of Default” shall have the meaning given thereto in the Security Agreement.

(e) The “Exercise Price” applicable under this Warrant shall be a price of $0.91.

1. Exercise of Warrant.

1.2 Fair Market Value. For purposes hereof, the “Fair Market Value” of a share of Common Stock as of a particular date (the “Determination Date”) shall mean:

(c) Except as provided in clause (d) below, if the Company’s Common Stock is not publicly traded, then as the Holder and the Company agree or in the absence of agreement by arbitration in accordance with the rules then in effect of the American Arbitration Association, before a single arbitrator to be chosen from a panel of persons qualified by education and training to pass on the matter to be decided.

2. Procedure for Exercise.

2.2 Exercise. (a) Payment may be made either (i) in cash by wire transfer of immediately available funds or by certified or official bank check payable to the order of the Company equal to the applicable Exercise Price multiplied by the number of shares of Common Stock being acquired upon exercise of this Warrant, (ii) by delivery of this Warrant, or shares of Common Stock and/or Common Stock receivable upon exercise of this Warrant in accordance with the formula set forth in Section 2.2(b) below, or (iii) by a combination of any of the

foregoing methods, for the number of shares of Common Stock specified in such Exercise Notice (as such exercise number shall be adjusted to reflect any adjustment in the total number of shares of Common Stock issuable to the Holder per the terms of this Warrant) and the Holder shall thereupon be entitled to receive the number of duly authorized, validly issued, fully-paid and non-assessable shares of Common Stock (or Other Securities) determined as provided herein.


		X=		Y(A-B)
				A


		Where X =		the number of shares of Common Stock to be issued to the Holder

		Y =		the number of shares of Common Stock purchasable under this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being exercised (at the date of such calculation)

		A =		the Fair Market Value of one share of the Company’s Common Stock (at the date of such calculation)

		B =		the Exercise Price per share (as adjusted to the date of such calculation)

3. Effect of Reorganization, Etc.

the Company, elect either (i) to exercise this Warrant, in which event such exercise will be deemed effective immediately prior to the consummation of such transaction or (ii) not to exercise this Warrant, in which event this Warrant will expire upon the consummation of such transaction. The Company shall provide the Holder with written notice of its request relating to the foregoing (together with such reasonable information as the Holder may request in connection with the contemplated transaction giving rise to such notice), which is to be delivered to the Holder not less than ten (10) days prior to the closing of the proposed transaction.

which (a) the numerator is the Exercise Price that would otherwise (but for the provisions of this Section 4) be in effect, and (b) the denominator is the Exercise Price in effect on the date of such exercise (taking into account the provisions of this Section 4). Notwithstanding the foregoing, in no event shall the Exercise Price be less than the par value of the Common Stock.

shall have occurred and be continuing, the Holder agrees that it will not, without the prior written consent of the Company, sell shares of Common Stock received upon exercise of this Warrant during a twenty two (22) day trading period in a number that exceeds twenty percent (20%) of the aggregate dollar trading volume of the Common Stock for the twenty two (22) day trading period immediately preceding such sales by the Holder, inclusive of the day of such sales. Such restriction shall in no way affect the Holder’s right to exercise all or any portion of this Warrant as provided in this Warrant.

issuance, exchange or replacement, as the case may be, shall be made at such office by such agent.

Warrant and, therefore, stipulates that the rule of construction that ambiguities are to be resolved against the drafting party shall not be applied in the interpretation of this Warrant to favor any party against the other party. This Warrant and Warrant No. L – 3 were issued in exchange for, and cancellation of, Warrant No. L – 1.

[BALANCE OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATURE PAGE FOLLOWS]

IN WITNESS WHEREOF, the Company has executed this Warrant as of the date first written above.


	KITTY HAWK, INC.

WITNESS:

	By: Name:	/s/ James Kupferschmid James Kupferschmid
/s/ Steven E. Markhoff	Title:	Chief Financial Officer

[Kitty Hawk – Warrant]

Signature Page to Warrant

EXHIBIT A

FORM OF SUBSCRIPTION
(To Be Signed Only On Exercise Of Warrant)


TO:		Kitty Hawk, Inc.
		1515 West 20^th Street
		P.O. Box 612787
		DFW International Airport, Texas 75261
		Attention: Chief Financial Officer

The undersigned, pursuant to the provisions set forth in the attached Warrant (No.___), hereby irrevocably elects to purchase (check applicable box):


		shares of the common stock covered by such warrant; or

		the maximum number of shares of common stock covered by such warrant pursuant to the cashless exercise procedure set forth in Section 2.


		$ in lawful money of the United States; and/or

		the cancellation of such portion of the attached Warrant as is exercisable for a total of shares of Common Stock (using a Fair Market Value of $ per share for purposes of this calculation); and/or

		the cancellation of such number of shares of Common Stock as is necessary, in accordance with the formula set forth in Section 2.2, to exercise this Warrant with respect to the maximum number of shares of Common Stock purchasable pursuant to the cashless exercise procedure set forth in Section 2.

The undersigned requests that the certificates for such shares be issued in the name of, and delivered to whose address is .


Dated:

						(Signature must conform to name of holder as specified on the face of the Warrant)
						Address:

EXHIBIT B

FORM OF TRANSFEROR ENDORSEMENT
(To Be Signed Only On Transfer Of Warrant)


		Percentage	Number
Transferees	Address	Transferred	Transferred


Dated:

	(Signature must conform to name of holder as specified on the face of the Warrant)
	Address:




	SIGNED IN THE PRESENCE OF:


		(Name)

ACCEPTED AND AGREED:
[TRANSFEREE]


(Name)

EX-10.3 4 d47987exv10w3.htm AIRFRAME SALE AGREEMENT exv10w3

Exhibit 10.3

AIRFRAME SALE AGREEMENT

dated as of June 27, 2007

between

KITTY HAWK AIRCARGO, INC.,
Seller,

and

AIRLEASE INTERNATIONAL, INC.,
Buyer.

- 1 -

AIRFRAME SALE AGREEMENT

THIS AIRFRAME SALE AGREEMENT, executed this 27^th day of June, 2007 (the “Execution Date”), but effective as of May 1, 2007 (the “Effective Date”) (this “Agreement”) is between KITTY HAWK AIRCARGO, INC., a Texas corporation (“Seller”), and AirLease International, Inc., a Texas corporation (“Buyer”). Capitalized terms used herein, unless otherwise defined herein, shall have the meanings ascribed to such terms in Section 1 of this Agreement.

RECITALS

WHEREAS, Seller owns:

Six (6) Boeing 727-200 Airframes Bearing Manufacturer’s Serial Numbers 21269, 20041, 20664, 21512, 21513, and 20997 together with all loose equipment, logbooks, manuals and records in the possession of Seller, and excluding engines and QEC components (collectively, “the Airframes”). Each Airframe will be equipped and in the condition required for FAA Part 121 cargo operations.

WHEREAS, subject to the terms and conditions of this Agreement, Seller wishes to sell the Airframes to Buyer, and Buyer wishes to buy the Airframes from Seller.

NOW, THEREFORE, in consideration of the mutual covenants and premises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows:

Section 1. Definitions.

The following terms, when capitalized, shall have the following meanings for all purposes of this Agreement, except where the context otherwise requires:

“Affiliate” of any Person means any other Person (i) directly or indirectly controlling, directly or indirectly controlled by or under direct or indirect common control with such Person; (ii) that beneficially owns or holds (directly or through a Subsidiary) 50% or more of the voting power of any class of voting securities of the Person; or (iii) 50% or more of the voting securities (or in the case of a Person which is not a corporation, 50% or more of the equity interest) of which is beneficially owned or held by the Person or a Subsidiary thereof. For purposes of this definition, “control” when used with respect to any specified Person shall mean the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

- 2 -

“Bill of Sale” means the long form Bill of Sale, in the form attached hereto as Exhibit “B” from Seller to Buyer.

“Business Day” means any day other than a Saturday, Sunday or day on which commercial banking institutions are required or authorized by law to close in New York, New York.

“Buyer” has the meaning set forth in the preamble hereof.

“Delivery” means, with respect to the Airframe, the time at which the Buyer obtains title to such Airframe in accordance with this Agreement.

“Delivery Date” means the “Effective Date,” as previously defined.

“Delivery Location” shall have the meaning set forth in Section 3(a).

“Delivery Receipt” means the Delivery Receipt in the form attached hereto as Exhibit “A.”

“Dollars” and the sign “$” mean the lawful currency of the United States of America.

“Event of Loss” means any loss or destruction of the Airframe.

“Governmental Body” means any national government, political subdivision thereof, or local jurisdiction therein or any instrumentality, board, court, agency or commission thereof.

“Losses” means losses, costs, expenses, fees (including legal fees and disbursements), payments, demands, liabilities, claims, actions, proceedings, penalties, fines, damages and judgments of any kind and nature whatsoever (other than Taxes).

“Payment Date” means that date within three (3) business days after the Execution Date.

“Person” means an individual, corporation, national banking association, partnership, limited liability company, trust, unincorporated association, joint venture, joint-stock company, Governmental Body or any other entity.

“Purchase Price” means the total sale price for six (6) Airframes shall be one million four hundred thousand dollars ($1,400,000.00).

“Sale Documents” means this Agreement, the Bill of Sale and the Delivery Receipt.

“Seller” has the meaning set forth in the preamble hereto.

- 3 -

“Seller Indemnitees” means Seller and its respective directors, members, managers, servants, agents, employees, successors and assigns.

“Subsidiary” of any Person means any other Person more than 50% of the outstanding voting stock of which is at the time owned or controlled directly or indirectly by the Person or a Subsidiary thereof.

Section 2. Sale of Airframe; Purchase Price.

(a) Sale of Airframe. Subject to the terms of this Agreement, effective as of the Delivery Date for the Airframes, the Seller shall sell the Airframes to the Buyer, and the Buyer shall purchase the Airframes from the Seller. The obligation of the Seller and the Buyer to effect such sale and purchase shall be subject only to the compliance or waiver of their respective conditions precedent set forth in Section 4 hereof.

(b) Purchase Price. The Purchase Price for the Airframes shall be paid by the Buyer to the Seller on or before the Payment Date.

The payments provided for herein shall be paid to KHA via wire transfer to account number:

Beneficiary: Kitty Hawk Aircargo, Inc.
Capital One, N.A.
14651 Dallas Parkway, Suite 300
ABA # 111 901 014
Account # 3620477833

Swift code: HIBKUS44

With confirmation of payment concurrently sent to the attention of Jessica Wilson, Chief Accounting Officer, 1535 W. 20^th St., P.O. Box 612787, DFW Int’l Airport, TX 75261.

Section 3. Airframe Delivery, Title, Risk of Loss.

(a) Place of Delivery. Delivery of the Airframes shall be at Seller’s Dallas, Texas headquarters.

(b) Condition of Airframe. Buyer confirms that the Airframes and the related logbooks, manuals and records have been made available to it, that it has inspected the Airframes and such logbooks, manuals and records and the condition of the Airframes, logbooks, manuals

- 4 -

and records are acceptable to it for all purposes. Buyer shall be given the opportunity, upon notice from Seller two days prior to the scheduled Delivery Date of the Airframes, to inspect such Airframe, logbooks, manuals and records to confirm that same are not in materially different condition than when inspected and accepted by Buyer.

(c) Title and Risk of Loss. All right, title and interest in and to the Airframes and the risk of loss or destruction of, or damage to, the Airframes and all other risks relating thereto shall pass to Buyer upon the delivery (and release) of the Bill of Sale therefor to Buyer.

(d) Event of Loss. In the event that, prior to the Payment Date, such Airframe suffers an Event of Loss, then the Seller shall immediately notify the Buyer in writing of such occurrence and such notice shall discharge and terminate all obligations and liabilities of the parties hereunder with respect to such Airframe.

(e) Force Majeure. The Seller shall not be liable for any delay or failure in Delivery of the Airframes or the performance of any other obligation under this Agreement where such failure or delay is the result of any cause or matter beyond the Seller’s reasonable control.

Section 4. Conditions Precedent.

(a) The obligation of the Seller to sell the Airframes on the Delivery Date therefor pursuant to Section 2(a) hereof shall be subject only to the following conditions precedent, unless, in any case, waived by the Seller in its sole discretion:

(i) Buyer shall have paid in full the Purchase Price for such Airframes and paid it to Seller in accordance with Section 2(b) hereof;

(ii) Buyer shall have executed and delivered the Delivery Receipt for such Airframes to Seller;

(iii) the representations and warranties of the Buyer contained in Section 5 hereof shall be true and accurate in all material respects on and as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date); and

(iv) such Airframes shall not have suffered an Event of Loss.

(b) The obligation of the Buyer to purchase the Airframes and pay the Purchase Price therefor on the Delivery Date therefor shall be subject only to the following conditions precedent unless, in any case, waived by the Buyer in its sole discretion:

- 5 -

(i) the Seller shall have executed and delivered the Bill of Sale for such Airframes to Buyer;

(ii) the Seller shall have executed and delivered the Delivery Receipt for such Airframes to Buyer;

(iii) the Seller shall have executed and delivered to Buyer a certificate of conformance and non-incident statement on Seller’s letterhead in a form materially the same as Exhibit “C” attached hereto;

(iv) the representations and warranties of the Seller contained in Section 5 hereof shall be true and accurate in all material respects on and as of the Delivery Date as though made on and as of such date except to the extent that such representations and warranties relate solely to an earlier date (in which event such representations and warranties shall have been true and accurate on and as of such earlier date); and

(v) such Airframes shall not have suffered an Event of Loss prior to the Payment Date and shall be in the condition required herein.

Section 5. Representations and Warranties.

(a) Representations and Warranties of the Seller. The Seller hereby represents and warrants to the Seller that:

(i) The Seller is a Texas corporation and has the corporate power and authority to perform its obligations under this Agreement and the other Sale Documents to which it is a party and this Agreement and the other Sale Documents to which it is a party have been duly authorized by all necessary corporate action on the part of Seller;

(ii) this Agreement has been duly executed and delivered by the Seller and constitutes, and each other Sale Document to which it is a party when executed and delivered by the Seller will constitute, the legal, valid and binding obligation of the Seller, enforceable in accordance with its terms, subject only to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and to general equitable principles;

- 6 -

law, government rule or regulation binding upon the Seller or applicable to its business generally and do not require the consent or approval of, or the giving of notice to, the registration with or the taking of any other action in respect of any Governmental Body;

(iv) there is no litigation or proceeding pending or, to the best knowledge of the Seller, threatened against the Seller an adverse decision in which would prohibit or materially frustrate the consummation by the Seller of the transactions contemplated by this Agreement or any other Sale Document to which it is a party;

(v) as of the Delivery Date, the Seller will be the legal owner of such Airframes and will transfer to Buyer good and marketable title to such Airframes, free and clear of all Liens, and;

(vi) as of each of the Delivery Date, the Execution Date and the Payment Date, the Seller is not, or will not, have any knowledge of any Losses which would otherwise be covered by or within the scope of Seller’s indemnification of Buyer and Buyer’s Indemnitees as provided in Section 7(c) of this Agreement.

(b) Representations and Warranties of the Buyer. The Buyer hereby represents and warrants to the Seller that:

(i) The Buyer is Texas corporation and has the power and authority to perform its obligations under this Agreement and this Agreement has been duly authorized by all necessary action on the part of Buyer;

(ii) this Agreement has been duly executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer, enforceable in accordance with its terms, subject only to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and to general equitable principles;

(iii) the execution, delivery and performance by the Buyer of this Agreement are not in violation of its organizational documents or of any indenture, mortgage, contract or other agreement to which the Buyer is a party or by which it is bound or of any order or judgment applicable to the Buyer or any law, government rule or regulation binding upon the Buyer or applicable to its business generally and do not require the consent or approval of, or the giving of notice to, the registration with or the taking of any other action in respect of any Governmental Body;

(iv) there is no litigation or proceeding pending or, to the best knowledge of the Buyer, threatened against the Buyer an adverse decision in which would

- 7 -

prohibit or materially frustrate the consummation by the Buyer of the transactions contemplated by this Agreement or any other Sale Document to which it is a party.

(c) The Seller confirms that acceptance by the Seller of payment of the Purchase Price for the Airframes pursuant to Section 2 hereof on the Payment Date therefor will constitute a certification by the Seller that its representations and warranties contained in this Section 5 are true and accurate on and as of the Delivery Date and the Payment Date. The Buyer confirms that the payment by the Buyer of the Purchase Price for the Airframes pursuant to Section 2 hereof on the Delivery Date therefor will constitute a certification by the Buyer that its representations and warranties contained in this Section 5 are true and accurate on and as of the Delivery Date and the Payment Date.

(d) The representations and warranties contained in this Section 5 shall survive the sale of the Airframes hereunder and the execution and delivery of the agreements contemplated hereby.

(e) Disclaimer. Other than the express representations and warranties of the Seller set forth above in this Section 5 and in the Bill of Sale, the Airframes are being sold hereunder, “AS IS, WHERE IS” and THE BUYER ACKNOWLEDGES AND AGREES THAT THE SELLER NOR ANY OF ITS AFFILIATES, OFFICERS, DIRECTORS, MEMBERS, MANAGERS, EMPLOYEES OR REPRESENTATIVES HAS MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, VALUE, QUALITY, DURABILITY, DESCRIPTION, CONDITION (WHETHER OF THE AIRFRAME OR ANY PART THEREOF), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE AIRFRAME OR USE THE AIRFRAME IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE AIRFRAME, OR ANY PART THEREOF, (b) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, AND (c) ANY IMPLIED WARRANTY ARISING FROM THE COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, IT BEING UNDERSTOOD THAT NOTHING HEREIN WILL BE DEEMED TO LIMIT THE BUYER FROM AVAILING ITSELF OF ANY WARRANTIES, COVENANTS, AND REPRESENTATIONS OF ANY MANUFACTURER.

- 8 -

Buyer shall not have any obligation to pay Taxes imposed on the Seller by any Governmental Body in the state or country in which such other party is incorporated, organized or conducts any business. In the event that any taxes are due, assessed and/or paid by Buyer or Seller, Buyer and Seller each as to each other agree to assist and cooperate with each other to preserve and obtain any and all refunds or credits arising therefrom.

Section 7. Indemnification.

(a) Buyer assumes liability for, and hereby agrees to indemnify, protect, save and keep harmless each Seller Indemnitee from and against any and all Losses which may arise on or after the Payment Date in any manner out of or in relation to injury to or death of any persons whomsoever or loss or damage to any property of any Person and which may result from, or arise in any manner out of, or be attributable to (i) the condition, ownership, leasing, purchase, delivery, possession, disposition, use or operation of the Airframe or any part thereof either in the air or on the ground; or (ii) any defect in the Airframe or any part thereof arising from its manufacture or any material or article used therein or from the design, testing or use thereof or from any maintenance, service, repair, overhaul or testing of the Airframe, in the case of either (i) or (ii) in respect of Losses arising out of acts, omissions or events after the Payment Date; provided, however, that the Buyer’s obligations under this Section 7 to any Seller Indemnitee shall not extend to any Losses caused by the negligence or willful misconduct of any such Seller Indemnitee or arising from or related to the lease, use, operation, possession or use of any Airframe by Seller pursuant to the General Terms Agreement for the lease of the any Airframes between Buyer and Seller.

(b) The Buyer hereby agrees to indemnify, reimburse, and hold harmless the Seller Indemnitees from any Losses arising out of (i) the breach by Buyer of any of its representations or warranties hereunder or any other Sale Document, and (ii) the non-performance by Buyer of its obligations hereunder or any other Sale Document.

(c) Seller agrees to indemnify, protect, save and keep harmless Buyer and each of Buyer’s officers, directors, employees, agents, servants and contractors (collectively, “Buyer’s Indemnitees”) from and against any and all Losses which may have arisen either before the Effective Date or during the period from and after the Effective Date and on or before the Payment Date, in any manner out of or in relation to injury to or death of any persons whomsoever or loss or damage to any property of any Person and which may result from, or arise in any manner out of, or be attributable to (i) the condition, ownership, leasing, purchase, delivery, possession, disposition, use or operation of the Airframe or any part thereof either in the air or on the ground; or (ii) any defect in the Airframe or any part thereof arising from its manufacture or any material or article used therein or from the design, testing or use thereof or from any maintenance, service, repair, overhaul or testing of the Airframe, in the case of either (i) or (ii) in respect of Losses arising out of acts, omissions or events prior to the Payment Date; provided, however, that the Seller’s obligations under this Section 7 to Buyer or any Buyer’s

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Indemnitee shall not extend to any Losses caused by the negligence or willful misconduct of Buyer or any such Buyer’s Indemnitee.

Section 8. Assignment of Manufacturer’s Warranties. The Seller shall extend to the Buyer the rights and benefits, to the extent that the same are not extinguished by the sale of the Airframes or the passage of time, of any warranties, service life policies and patent indemnities of any manufacturer and any maintenance and overhaul agencies of and for such Airframe which the Seller may have to the extent that the same are assignable and transferable. The Seller also hereby grants to the Buyer rights of subrogation relating to any claim which the Seller may have under such warranties (if any) concerning the Airframes.

Section 9. Default and Remedies.

(a) The following events shall constitute events of default (hereafter “Events of Default”):

(i) if the Buyer shall fail to make any payment when due hereunder; or

(ii) if either party shall default in the performance of this Agreement and such default shall continue for five (5) Business Days after written notice of default to the defaulting party and is not thereafter waived; provided that no Event of Default shall be deemed to have occurred under this sub-section if the relevant party is using diligent efforts to cure the default as soon as may be practicable (but, in any case, within fourteen (14) days after notice from the other party); or

(iii) if the Seller or the Buyer shall file a voluntary petition in bankruptcy, or shall be adjudicated as bankrupt or insolvent, or shall file any petition or answer seeking any reorganization, composition, readjustment, liquidation or similar relief for itself under any present statute, law or regulation or any future statute, law or regulation adopted on or prior to the Delivery Date, or shall seek or consent to, or acquiesce in, the appointment of any trustee, or shall make any general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due; or

(iv) if a petition shall be filed against the Seller or the Buyer seeking any reorganization, composition, readjustment, liquidation or similar relief under any present statute, law or regulation or any future statute, law or regulation adopted on or prior to the Delivery Date or if any trustee, receiver or liquidator of either party is appointed.

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(b) Upon the occurrence of an Event of Default by one party under this Agreement, the other party shall be entitled, by notice in writing to the other, to terminate this Agreement and/or recover such damages and/or remedies as are available to it under applicable Law, and, in addition to such remedies of Seller, upon the occurrence of an Event of Default by Buyer, Seller shall, as liquidated damages for loss of a bargain and not as a penalty, retain any Deposit paid to Seller and Buyer shall have no further right or interest therein.

Section 10. Broker’s Commissions. Each party hereto agrees that should any claim be made for commissions or other amounts by any broker or brokers by or through or on account of actions of that party, that party shall hold the other parties free and harmless from any and all claims, demands, liabilities, damages, losses, judgments and expenses of every kind (including legal fees, costs and related expenses) in connection therewith.

Section 11. Miscellaneous.

(a) Notice. All notices required or permitted hereunder shall be in writing and may be either telefaxed or sent by internationally recognized overnight courier service, addressed as follows:

If to Seller:

Kitty Hawk Aircargo, Inc.
P.O. Box 612787
DFW Airport, Texas 75261-2787
Telephone: 972-456-2427
Facsimile: 972-456-2350
(Attention: Robert Barron)

If to Buyer:

AirLease International, Inc.
Attn: Harold Woody, President
204 Whispering Hills Street
Hot Springs, AR 71901
(501) 318-2341 Fax

- 11 -

not a Business Day, it shall be deemed to have been received at the opening of business in the country of the addressee on the next Business Day), and in the case of a notice sent by courier service, when delivered personally (provided that if delivery is tendered but refused, such notice shall be deemed effective upon such tender).

(b) Counterparts. This Agreement may be executed in counterparts, and each counterpart shall be an original, and all counterparts together shall be but one and the same Agreement.

(c) Applicable Law; Jurisdiction. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN NEGOTIATED AND MADE IN, AND SHALL BE GOVERNED AND INTERPRETED UNDER THE LAWS OF, THE STATE OF TEXAS, UNITED STATES, APPLICABLE TO AGREEMENTS MADE BY RESIDENTS THEREOF TO BE ENTIRELY PERFORMED THEREIN.

(d) Dispute Resolution: The parties hereby agree that any dispute that arises under this Lease which is not disposed of by mutual agreement shall be resolved through mediation and/or arbitration. Specifically, any disputes arising out of or connected with this Lease will be submitted to mediation in Tarrant County, Texas, in accordance with the rules for alternative dispute resolutions set forth under Texas law. The parties will mutually cooperate to select the mediator to be used. Any and all information, negotiation and results of the mediation will remain confidential.

In the event that mediation is not successful, any remaining dispute that may arise in connection with any and all aspects of this Agreement, on the written request of either party, shall be submitted to binding arbitration in accordance with appropriate statutes of the State of Texas and the Commercial Arbitration Rules of the American Arbitration Association. Judgment upon the award rendered by the arbitrators may be entered in any court having appropriate jurisdiction. The parties agree to act in good faith to select a single, neutral arbitrator. If the parties are unable to do so within ninety (90) days after one party notifies the other party, in writing, of a dispute or claim, then each party shall appoint one person as arbitrator, and a third neutral arbitrator shall be chosen by the two arbitrators previously selected by the parties. The third arbitrator shall then conduct the arbitration alone. It is provided, however, that if there is no agreement as to the third arbitrator within sixty (60) days after the notice is served, then the third arbitrator shall be selected by a district judge in Tarrant County, Texas, having subject matter jurisdiction over the dispute. In such event, all three arbitrators shall conduct the arbitration. It is further agreed that the expenses of the arbitration shall be paid in proportions as the arbitrators decide, except that the successful party in any proceeding seeking enforcement of the provisions of this agreement shall be entitled to receive from the party not prevailing reasonable and necessary attorneys’ fees and expenses, in addition to any other sums to which such successful party may be entitled. The arbitrators shall decide the identity of the successful party for the purposes of the preceding sentence.

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(e) Time of the Essence. Time shall be of the essence in the performance of the duties of the parties hereto.

(f) Captions and Paragraph Headings. Captions and paragraph headings used herein are for convenience only and are not a part of this Agreement and shall not be used in construing it.

(g) Severability. In the event that any one or more of the provisions of this Agreement shall be invalid, illegal or unenforceable in any respect or in any jurisdiction, the validity, legality and enforceability of the remaining provisions contained herein or of the same provisions in any other jurisdiction shall not, in any way, be affected or impaired thereby.

(h) Further Assurances. Seller and Buyer will promptly, at any time and from time to time, execute and deliver to each other such further instruments and documents and take such further action as may be required by law or as they may each reasonably request to establish, maintain and protect their respective rights and remedies and to carry out the intent of the parties under this Agreement.

(i) Written Changes Only. No term or provision of this Agreement may be changed or waived orally, but only by an instrument in writing signed by the parties hereto.

(j) Exclusiveness. This Agreement and the other Sale Documents are the complete and exclusive statement of the parties hereto with respect to the subject matter hereof and supersede all prior oral and written communications, proposals, agreements, representations, statements, negotiations and undertakings, whether express or implied, between the parties hereto with respect to the subject matter hereof.

(k) Terms and Definitions. The terms and definitions, as herein contained, shall include the singular and/or plural, masculine, feminine and/or neuter, successors and/or permitted assigns wherever the context so requires or admits.

(l) Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors and assigns.

(m) Confidentiality. This Agreement and the terms and conditions contained herein shall be and remain strictly privileged and confidential between the parties, and shall not be discussed, revealed, disseminated or divulged to the media or general public, or to any other third party, without the express prior written consent of the other party, which consent shall not be unreasonably withheld; except that (i) the Buyer may disclose any relevant term to a financial institution for the purpose of financing the purchase of the Airframe or any technical data to any potential purchaser or lessee of the Airframe from the Buyer; (ii) the Buyer may disclose any relevant term to its insurers for the purpose of insuring the Airframe; (iii) either party may disclose any relevant term to any of its Affiliates; (iv) either party may make any disclosure

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required by generally accepted accounting principles, by applicable Law or by any order of a court or other Governmental Body; (v) either party may make any disclosure in connection with any litigation relating to the transactions contemplated by this Agreement; (vi) either party, or their professional advisors, may make any disclosure to any of its agents, employees, auditors, lawyers, any Governmental Body having jurisdiction over it or any other person which it in good faith determines has reason to have knowledge of such information; (vii) either party may make any disclosure to the extent such information is publicly available through no fault of the party making the disclosure; (viii) either party may make any disclosure to the extent such disclosure is necessary to carry out its obligations hereunder; (ix) the Seller may make a press announcement in respect of the transactions contemplated hereby and may announce the same in any of its shareholder or other reports; and (x) subject to the Seller having approved the text and content of the same in advance, the Buyer may make a press announcement in respect of the transactions contemplated hereby and may announce the same in any of its shareholder or other reports.

(n) Expenses. Except to the extent provided herein, each party will bear and be responsible for all costs and expenses incurred or to be incurred by it in connection with this Agreement and the transactions contemplated hereby.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement through their respective duly authorized officers, as of the date and year first above written.


		KITTY HAWK AIRCARGO, INC.

		By:		/s/ Robbie Barron
		Name: Robbie Barron
		Title: VP & COO

		AirLease International, Inc.

		By:		/s/ Harold M. Woody
		Name: Harold M. Woody
		Title: President

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EX-10.4 5 d47987exv10w4.htm ENGINES SALES AGREEMENT exv10w4

Exhibit 10.4

ENGINES SALES AGREEMENT

Dated as of June 27, 2007

by and between

AIRLEASE INTERNATIONAL, INC.

as Buyer

and

KITTY HAWK AIRCARGO, INC.

as Seller

JT8D Aircraft Engines

ENGINES SALES AGREEMENT

This ENGINES SALES AGREEMENT (this “Agreement”) is executed this 27^th day of June 2007 (the “Execution Date”) but effective as of May 1, 2007 (the “Effective Date”) by and between KITTY HAWK AIRCARGO, INC., a Texas corporation, as seller (“Seller”) and AIRLEASE INTERNATIONAL, INC., a Texas corporation, as buyer (“Buyer”).

RECITALS:

A. WHEREAS, Seller currently owns the Engines (as defined below); and

B. WHEREAS, Seller desires to sell the Engines to Buyer, and Buyer wishes to buy the Engines from Seller, on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, the parties hereto agree as follows:

SECTION 1. DEFINITIONS

In addition to other terms defined throughout this Agreement, the following terms shall have the meanings specified below for all purposes of this Agreement. It is expressly understood that plural terms shall include the singular, and vice versa.

Affiliate shall mean, with respect to any Person, any other Person directly or indirectly controlling, controlled by or under common control with such Person.

Acceptance Certificate shall mean a certificate to be executed by Buyer and dated the Closing Date confirming technical acceptance of the Engines by Buyer, and confirming tender of the Engines by Seller to Buyer, in substantially the form set forth in Exhibit A hereto.

Bill of Sale shall mean a Bill of Sale in respect of each of the Engines in substantially the form set forth in Exhibit B hereto, executed by the selling party and dated the Closing Date.

Closing shall have the meaning set forth in Section 2.2 hereof.

Closing Date shall have the meaning set forth in Section 2.2 hereof.

Delivery Location shall mean the Sellers facility at DFW Airport.

Engines means eleven (11) used JT8D aircraft Engines as identified in Schedule One in complete Pratt & Whitney bare configuration including any shipping stands owned by seller, otherwise, sold in ‘as is, where is’ condition together with all equipment attached thereto or installed thereon, and all logs, manuals and technical records (sufficient to provide for life limited parts traceability back to birth) with respect thereto.

FAA means the Federal Aviation Administration of the United States Department of Transportation or any successor thereto.

Governmental Entity shall mean and include (a) the FAA, (b) any national government, or political subdivision thereof or local jurisdiction therein; (c) any board, commission, department, division, organ, instrumentality, court or agency of any entity described in (b) above, however constituted; and (d) any association, organization or institution of which any entity described in (b) or (c) above is a member or to whose jurisdiction any such entity is subject or in whose activities any such entity is a participant but only to the extent that any of the preceding have jurisdiction over the Engines, or the operations of Buyer or Seller.

Seller Indemnitee shall mean Seller and each of its Affiliates, including their respective shareholders, directors, officers, agents, representatives and employees (excluding the repair facility which repaired, modified, altered, tested and or certified said Engines and deemed them “Serviceable” per the OEM standards).

Buyer Indemnitee shall mean Buyer and each of its Affiliates, including their respective shareholders, directors, officers, agents, representatives and employees.

Parties shall mean Seller and Buyer collectively, and “Party” shall mean either one of them individually.

Person shall mean and include any individual person, corporation, partnership, limited liability company, firm, joint stock company, joint venture, trust, estate, unincorporated organization, associate or Governmental Entity.

Purchase Price shall have the meaning specified in Section 2.1.

Records shall have the meaning specified in Section 3.1.

Transaction Documents shall mean this Agreement, the Bill of Sale, the Acceptance Certificate and the other documents and instruments executed in connection with any of the foregoing.

SECTION 2. PURCHASE AND CLOSING

2.1		Purchase Price. The Purchase Price for the Engines is One Million and 00/100 Dollars ($1,000,000.00). The Purchase Price shall be payable in accordance with Section 2.3 below.

2.2		Closing Upon satisfaction or waiver of each of the conditions precedent set forth in Section 4, Seller shall deliver the Engines to Buyer and Buyer shall pay the Purchase Price to Seller as set forth in Section 2.3 below (the “Closing”). A Closing will occur on or before three (3) business days after the Execution Date. (the “Closing Date”).

2.3

Payment of the Purchase Price Buyer shall pay the Purchase Price to Seller on the Closing Date in immediately available funds via wire transfer to:

Beneficiary: Kitty Hawk Aircargo, Inc.
Capital One, N.A.
14651 Dallas Parkway, Suite 300
ABA # 111 901 014
Account # 3620477833

Swift code: HIBKUS44

With confirmation of payment concurrently sent to the attention of Jessica Wilson, Chief Accounting Officer, 1535 W. 20^th St., P.O. Box 612787, DFW Int’l Airport, TX 75261.

2.4

Delivery of the Engines On the Closing Date for the Engines, Seller shall deliver the Engines to Buyer at the Delivery Location and an executed Bill of Sale for the Engines to Buyer, and a Non-Incident Statement in the form of Attachment C, and Buyer shall execute and deliver the Acceptance Certificate. On the Closing Date title and risk of loss of or damage to the Engines shall pass to Buyer.

SECTION 3. INSPECTION

Technical Inspection and Acceptance Buyer may conduct or cause to be conducted an inspection of the Engines including a borescope inspection, a review of the disk sheets for the Engines and a review of all records in the possession or reasonably available to Seller. Buyer may inspect the (i) disk sheets, (ii) non-incident statement and (iii) all

pertinent maintenance and operation records as required by the FAA for FAR Part 121 cargo operations in Seller’s possession sufficient to provide for life limited parts traceability back to birth, (collectively, the “Records”). Buyer shall notify Seller no later than three (3) days following conclusion of records review. If the Engines and Records do not meet Buyer’s technical standards, Seller may then correct any deficiencies identified on the Engines or may substitute another engine so long as it has a suitable engine in inventory. Nothing in this Agreement obligates Seller to purchase an Engine to fulfill a delivery requirement nor is Seller obligated to correct deficiencies in an Engine should such correction not be economically justified, in Seller’s sole but commercially reasonable discretion. In the event that Seller exercises his rights contained herein section 3 and cannot produce a satisfactory solution for the deficient Engines, then Buyer has the right to cancel the order for that Engine. If Buyer elects to accept the Engines, the parties shall proceed to a Closing Date no more than two (2) days following Buyer’s acceptance unless otherwise mutually agreed by the parties in writing.

SECTION 4. CONDITIONS PRECEDENT

4.1 Conditions to Buyer’s Obligations Buyer’s obligation to purchase the Engines from Seller shall be subject to (a) Buyer’s receipt of this Agreement, the Bill of Sale and the Non-incident Statements for the Engines, each duly executed by Seller, on or prior to the Closing Date and (b) the representations and warranties of Seller contained in this Agreement and the other Transaction Documents being true and correct on the Closing Date with the same effect as though made on the Closing Date in respect of the circumstances on the Closing Date.

4.2 Conditions to Seller’s Obligations Seller’s obligation to sell the Engines under this Agreement is subject to (a) Seller’s receipt of this Agreement and the Acceptance Certificate, each duly executed by Buyer, (b) Seller’s receipt of the Purchase Price pursuant to Section 2.3, and (c) the representations and warranties of Buyer contained in this Agreement and the other Transaction Documents being true and correct on the Closing Date with the same effect as though made on the Closing Date in respect of the circumstances on the Closing Date.

SECTION 5. REPRESENTATIONS AND WARRANTIES; DISCLAIMER

5.1 Representations and Warranties of Buyer Buyer hereby represents and warrants that (a) Buyer is a corporation duly organized and existing in good standing under the laws of the State of Texas with full power and authority to enter into and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party, and (b) this Agreement and each of the other Transaction Documents to which it is a party has been duly authorized, executed and delivered on behalf of Buyer and constitutes the valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms.

5.2 Representations and Warranties of Seller: Seller hereby represents and warrants that (a) Seller is a corporation duly organized and existing in good standing under the laws of the State of Texas, with full power and authority to enter into and perform its obligations under this Agreement and each of the other Transaction Documents to which it is a party, (b) this Agreement and each of the other Transaction Documents to which it is a party has been duly authorized, executed and delivered on behalf of Seller and constitutes the valid and binding obligation of Seller, enforceable against Seller, in accordance with its terms, (c) the Engines records delivered to Buyer are all of the records in Seller’s possession, and to the best of Seller’s knowledge, all of the Records accurately reflect the current condition of the Engines, and (d) Seller is the legal and beneficial owner of the Engines, and, upon execution and delivery of the Bill of Sale, Seller will convey to Buyer good and marketable title to the Engines, free and clear of all liens, claims and encumbrances.

OTHER THAN THE WARRANTY OF TITLE EXPRESSED ABOVE, SELLER MAKES NO EXPRESS OR IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR PURPOSE, AND NO REPRESENTATION OR AFFIRMATION OF FACT IS MADE BY SELLER WITH RESPECT TO THE ENGINES COVERED BY THIS AGREEMENT, AND SUCH ENGINES IS SOLD AND CONVEYED “AS-IS, WHERE-IS” IN “SERVICEABLE” CONDITION AND “WITH ALL FAULTS”. SELLER SHALL NOT BE LIABLE TO BUYER FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES SUSTAINED BY BUYER AS A RESULT OF THE SALE OF THE ENGINES TO BUYER.

SECTION 6. ASSIGNMENT OF MANUFACTURER’S WARRANTIES

Seller, upon the transfer of title to the Engines to Buyer shall assign any and all warranties of and product support agreements with manufacturers, maintenance and overhaul agencies and other applicable vendors of and for the Engines, and all appliances, parts, instruments, appurtenances, accessories, furnishings or other equipment installed in or attached to the Engines to the extent such warranties are assignable. Seller shall provide Buyer with reasonable assistance in transferring such warranty rights, provided however that all costs incurred shall be for the account of Buyer.

SECTION 7. BROKERS

Each of Seller and Buyer represents and warrants to the other party that it has not employed any broker or sales agent in connection with the transactions contemplated by this Agreement and the other Transaction Documents. Each of Seller and Buyer agrees to indemnify and hold the other party harmless from and against any liabilities, losses, claims, suits, damages, costs and expenses (including but not limited to reasonable attorneys’ fees) arising out of any breach of the foregoing representation.

SECTION 8. TAX INDEMNITY

8.1 Buyer Indemnity Buyer hereby assumes liability for and agrees (i) to pay in a procedurally proper and timely manner to the appropriate taxing authority, and on written demand to defend Seller against and indemnify Seller for, all sales taxes, use taxes, value-added taxes, documentary stamp taxes and similar transfer taxes (and all fines, penalties, additions to tax and interest relating thereto, if any) (collectively, “Transfer Taxes”) which are imposed by any governmental, regulatory or taxing authority in the United States or in any other jurisdiction and which are imposed on or with respect to (x) the sale, transfer of title or delivery of the Engines by Seller to Buyer, or any payment by Buyer to Seller, pursuant to this Agreement or (y) the execution, delivery, filing or recording of this Agreement or any other agreement or other document pursuant to this Agreement (including any of the Transaction Documents), and all costs and expenses incurred by Seller with respect thereto, (ii) to prepare and file in a procedurally proper and timely manner all reports and other documents required to be filed with respect to all Transfer Taxes, and (iii) on written demand to pay, and to indemnify Seller for all costs and expenses (including reasonable attorneys’ fees and disbursements) incurred by Seller with respect to any Transfer Taxes. Without in any way limiting, modifying or amending Buyer’s obligations set forth in this Section 8.1 hereinabove, if Buyer is entitled to an exemption from any Transfer Tax which, but for such exemption, would apply to the sale, transfer or delivery of the Engines by Seller to Buyer pursuant to this Agreement, Buyer shall deliver to Seller before the transfer of title to such Engines by Seller to Buyer on the Closing Date a properly completed and duly signed exemption certificate or other document required by applicable Transfer Tax law evidencing Buyer’s entitlement to such exemption.

8.2 Net Price For the avoidance of doubt, the Purchase Price of the Engines and each other amount stated as being payable by Buyer to the Seller pursuant to this Agreement does not include any amount with respect to any Transfer Tax, and if any Transfer Tax is required to be paid with respect to any such amount, Buyer shall pay such Transfer Tax and indemnify Seller therefore in the manner described in Section 8.1 hereof.

SECTION 9. GENERAL INDEMNITIES AND INSURANCE

9.1 Indemnity from Buyer Buyer agrees to indemnify, reimburse and hold harmless each Seller Indemnitee from and against any and all claims, damages, losses, liabilities, demands, suits, judgments, causes of action, proceedings, whether civil or criminal, penalties, fines and other sanctions, and any attorney’s fees and other reasonable costs and expenses in connection herewith or therewith, arising or in any way connected with injury to or death of any Person or loss or damage to property or loss of use of any property (including the Engines), including, without limitation, any of the foregoing arising or imposed with or without Seller’s negligence (whether passive or active), or under the doctrine of strict liability (any and all of which are hereafter referred to as “Claims”) arising after the date of Delivery which in any way may result from, pertain to or arise in any manner out of, or are in any manner related to, (i) the Engines, this Agreement or any of the Transaction Documents, or the breach of any representation, warranty or covenant made by Buyer hereunder or under any of the Transaction Documents; (ii) the condition, ownership, manufacture, purchase, delivery, non-delivery,

registration, performance, transportation, management, control, design, testing, maintenance, repair, service, modification, overhaul, replacement, removal, redelivery, lease, acceptance, rejection, possession, return, disposition, use, or operation of the Engines, either in the air or on the ground by Buyer or any other Person, whether or not such Claims may be attributable to any defect in the Engines or any part thereof or to the design, testing or use thereof or to any maintenance, service, repair, overhaul, or to any other reason whatsoever (whether similar to any of the foregoing or not); or (iii) any defect in the Engines (whether or not discovered or discoverable by Buyer or Seller) arising from the material or any articles used therein or from the design, testing or use thereof or from any maintenance, service, repair, overhaul, or testing of the Engines, whether or not the Engines is in the possession of Buyer, and regardless of where the Engines may then be located; or (iv) any design, article or material in the Engines or any part thereof or the operation or use thereof constituting or being alleged to constitute an infringement of any patent, copyright, design or any proprietary right; or (v) preventing or attempting to prevent the arrest, confiscation, seizure, taking and execution, impounding, forfeiture or detention of the Engines, or in securing the release of the Engines.

The indemnity set forth in the preceding paragraph shall not extend to (i) any Claim to the extent such Claim is attributable to the willful misconduct or gross negligence of a Seller Indemnitee, or (ii) any Claim to the extent such Claim results from a breach of any Seller representation or warranty in Section 5.2.

9.2 Indemnity From Seller. Seller agrees to indemnify, reimburse and hold harmless each Buyer Indemnitee from and against any and all claims, damages, losses, liabilities, demands, suits, judgments, causes of action, proceedings, whether civil or criminal, penalties, fines and other sanctions, and any attorney’s fees and other reasonable costs and expenses in connection herewith or therewith, arising or in any way connected with injury to or death of any Person or loss or damage to property or loss of use of any property (including the Engines), including, without limitation, any of the foregoing arising or imposed with or without Buyer’s negligence (whether passive or active), or under the doctrine of strict liability (any and all of which are hereafter referred to as “Claims”) which in any way may result from, pertain to or arise in any manner out of, or are in any manner related to, (i) the Engines, this Agreement or any of the Transaction Documents, or the breach of any representation, warranty or covenant made by Buyer hereunder or under any of the Transaction Documents; (ii) the condition, ownership, manufacture, purchase, delivery, non-delivery, registration, performance, transportation, management, control, design, testing, maintenance, repair, service, modification, overhaul, replacement, removal, redelivery, lease, acceptance, rejection, possession, return, disposition, use, or operation of the Engines, either in the air or on the ground by Buyer or any other Person, whether or not such Claims may be attributable to any defect in the Engines or any part thereof or to the design, testing or use thereof or to any maintenance, service, repair, overhaul, or to any other reason whatsoever (whether similar to any of the foregoing or not) arising prior to the date of Delivery, or the Closing Date, whichever is later.

9.3 Buyer’s Insurance If and during such times as the Engines are placed into service, Buyer shall, for a period of thirty six (36) months after the Delivery Date maintain or cause to be maintained by the operator of such Engine(s) comprehensive Airline liability insurance issued by a reputable insurance company of internationally recognized responsibility and standing specializing in aircraft insurance, and reasonably acceptable to Seller, covering the ownership, maintenance and use of any aircraft to which the Engines is affixed (the “Aircraft”) with a minimum aggregate limit of Five Hundred Million and 00/100 ($500,000,000.00) Dollars per occurrence,

SECTION 10. MISCELLANEOUS

10.1 Governing Law This Agreement shall in all respects be governed by and construed in accordance with the internal laws of the State of Texas, without regard to conflicts of laws principles. Each of the parties hereto hereby submits to the nonexclusive jurisdiction of the state or federal courts sitting in Dallas, Texas and consents to the service of process out of any of the foregoing courts by mailing of copies of the summons and proceedings thereof to such party at the address set forth in Section 10.2 below.

10.2 Notices All notices required under the terms of this Agreement shall be in writing and shall be sent to Seller or Buyer at its address set forth below (or such other address as the parties may designate) and shall become effective upon (the earlier of actual receipt or (i) in the case of a letter, the fifth day after posting, and (ii) in the case of a facsimile transmission on the day immediately following the date of dispatch. Address of Seller and Buyer are as follows:


		Buyer:		AirLease International, Inc.
				204 Whispering Hills
				Hot Springs, Arkansas 27410
				Attention: Harold M. Woody, President
				Facsimile: (501) 318-2341

		Seller:		KITTY HAWK AIRCARGO, INC.
				P.O. Box 612787
				1535 W. 20th ST.
				DFW Int’l Airport, Texas 75261
				Attention: Robert L. Barron, Vice President
				Facsimile: (972) 456-2427

10.3 Entire Agreement This Agreement, including all of the exhibits hereto which are incorporated herein by this reference as though set forth in full herein, constitutes the

entire agreement of the parties relating hereto and supersedes any prior or contemporaneous agreements, whether oral or in writing.

10.4 Assignment This Agreement shall inure to the benefit of the Parties and their respective successors and assigns. Without limiting the generality of the foregoing, Buyer and Seller shall be permitted to assign their respective rights hereunder to the trustee of any grantor trust established by it.

10.5 Time is of the Essence Except as otherwise provided herein, time is of the essence with respect to each provision of this Agreement.

10.6 Further Assurances Each Party shall cooperate with the other and execute and deliver such instruments and other documents as may be necessary to effectuate and carry out the provisions of this Agreement.

10.7 Confidentiality Without the prior written consent of the other Party with respect to each instance of disclosure, each party agrees, except as required by law or an order of court, not to disclose, advertise or publicize the contents of this Agreement or the transactions contemplated therein or thereby as it relates to confidential information.

10.8 Headings The headings in this Agreement are for reference only, and do not form part of and are not to be used to interpret this Agreement.

10.9 Severability If any provision of this Agreement is declared to be invalid or unenforceable by a final judgment, order or decree of any court of administrative body having jurisdiction then, as to that jurisdiction only, such provision shall be deemed to be severed from the Agreement and the remainder of the Agreement shall remain in full force and effect.

10.10 Interpretation No section, clause or provision of this Agreement shall be construed or resolved against any Party based upon the fact that such Party drafted the section, clause or provision.

10.12 Consequential Damages IN NO EVENT WILL EITHER BUYER OR SELLER BE LIABLE FOR ANY REASON FOR SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, SUCH AS LOST REVENUES, LOST PROFITS, OR LOSS OF PROSPECTIVE ECONOMIC ADVANTAGE, RESULTING FROM PERFORMANCE OR FAILURE TO PERFORM UNDER THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have caused this Engines Sales Agreement to be executed as of the date set forth in the first paragraph above.



AIRLEASE INTERNATIONAL, INC.		KITTY HAWK AIRCARGO, INC.

/s/ Harold M. Woody		/s/ Robbie Barron

Signed by: Harold M. Woody		Signed by: Robbie Barron
Its: President		Its: VP & COO

EX-10.5 6 d47987exv10w5.htm AIRCRAFT PARTS SALE AGREEMENT exv10w5

Exhibit 10.5

AIRCRAFT PARTS SALE AGREEMENT

dated as of June 27, 2007

between

KITTY HAWK AIRCARGO, INC.,
Seller,

and

AIRLEASE INTERNATIONAL, INC.,
Buyer.

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AIRCRAFT PARTS SALE AGREEMENT

THIS AIRCRAFT PARTS SALE AGREEMENT, executed this 27th day of June 2007 (the “Execution Date”), but effective as of May 1, 2007 (the “Effective Date”) (this “Agreement”) is between KITTY HAWK AIRCARGO, INC., a Texas corporation (“Seller”), and AirLease International, Inc., a Texas corporation (“Buyer”). Capitalized terms used herein, unless otherwise defined herein, shall have the meanings ascribed to such terms in Section 1 of this Agreement.

RECITALS

WHEREAS, Seller owns:

Boeing 727-200 aircraft parts (excluding those parts that are common to Seller’s Boeing 737 aircraft fleet) together with all, logbooks, manuals and records in the possession of Seller (the “Parts”).

WHEREAS, subject to the terms and conditions of this Agreement, Seller wishes to sell the Parts to Buyer, and Buyer wishes to buy the Parts from Seller in as is where is condition and Buyer understands and agrees that Seller makes no warranty of the airworthiness of the Parts.

Section 1. Definitions.

The following terms, when capitalized, shall have the following meanings for all purposes of this Agreement, except where the context otherwise requires:

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“Bill of Sale” means the long form Bill of Sale, in the form attached hereto as Exhibit “B” from Seller to Buyer.

“Business Day” means any day other than a Saturday, Sunday or day on which commercial banking institutions are required or authorized by law to close in New York, New York.

“Buyer” has the meaning set forth in the preamble hereof.

“Delivery” means, with respect to the Parts, the time at which the Buyer obtains title to such Parts in accordance with this Agreement.

“Delivery Date” means the Effective Date as previously defined.

“Delivery Location” shall have the meaning set forth in Section 3(a).

“Delivery Receipt” means the Delivery Receipt in the form attached hereto as Exhibit “A.”

“Dollars” and the sign “$” mean the lawful currency of the United States of America.

“Event of Loss” means any loss or destruction of any Parts.

“Governmental Body” means any national government, political subdivision thereof, or local jurisdiction therein or any instrumentality, board, court, agency or commission thereof.

“Payment Date” means that date three (3) business days after the Execution Date.

“Purchase Price” means total sale price for the Parts of One Million One Hundred Thousand United States Dollars, ($1,100.000.00).

“Sale Documents” means this Agreement, the Bill of Sale and the Delivery Receipt.

“Seller” has the meaning set forth in the preamble hereto.

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“Seller Indemnitees” means Seller and its respective directors, members, managers, servants, agents, employees, successors and assigns.

Section 2. Sale of Parts; Purchase Price.

(a) Sale of Parts. Subject to the terms of this Agreement, effective as of the Delivery Date for the Parts, the Seller shall sell the Parts listed in Schedule 1 attached hereto to the Buyer, and the Buyer shall purchase the Parts from the Seller. The obligation of the Seller and the Buyer to effect such sale and purchase shall be subject only to the compliance or waiver of their respective conditions precedent set forth in Section 4 hereof.

(b) Purchase Price. The Purchase Price for the Parts shall be paid by the Buyer to the Seller on or before the Payment Date.

The payments provided for herein shall be paid to KHA via wire transfer to account number:

Beneficiary: Kitty Hawk Aircargo, Inc.
Capital One, N.A.
14651 Dallas Parkway, Suite 300
ABA # 111 901 014
Account # 3620477833

Swift code: HIBKUS44

With confirmation of payment concurrently sent to the attention of Jessica Wilson, Chief Accounting Officer, 1535 W. 20^th St., P.O. Box 612787, DFW Int’l Airport, TX 75261.

Section 3. Parts Delivery, Title, Risk of Loss.

(a) Place of Delivery. Delivery of the Parts shall be at Seller’s Dallas, Texas headquarters.

(b) Condition of Parts. Buyer confirms that the Parts and the related logbooks, manuals and records have been made available to it, that it has inspected the Parts and such logbooks, manuals and records and the condition of the Parts, logbooks, manuals and records are

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acceptable to it for all purposes. Buyer shall be given the opportunity, upon notice from Seller two days prior to the scheduled Delivery Date of the Parts, to inspect such Parts, logbooks, manuals and records to confirm that same are not in materially different condition than when inspected and accepted by Buyer. Parts are sold as is where is.

(c) Storage and Handling of Parts. Seller agrees to continue storage, insurance, and warehousing services for the Parts including packing for shipment, excluding shipping costs, of sold parts for Buyer at no cost to Buyer until termination of the Power by the Hour Maintenance Agreement dated June 27, 2007. Upon termination of the Power by the Hour Maintenance Agreement, Buyer will have six (6) months to relocate Parts remaining at that time at Buyer’s cost.

(d) Title and Risk of Loss. All right, title and interest in and to the Parts and the risk of loss or destruction of, or damage to, the Parts and all other risks relating thereto shall pass to Buyer upon the delivery (and release) of the Bill of Sale therefor to Buyer.

(e) Event of Loss. In the event that, prior to the Payment Date, any Parts suffer an Event of Loss, then the Seller shall immediately notify the Buyer in writing of such occurrence and such notice shall discharge and terminate all obligations and liabilities of the parties hereunder only with respect to such Parts that have suffered an Event of Loss.

(f) Force Majeure. The Seller shall not be liable for any delay or failure in Delivery of the Parts or the performance of any other obligation under this Agreement where such failure or delay is the result of any cause or matter beyond the Seller’s reasonable control.

Section 4. Conditions Precedent.

(a) The obligation of the Seller to sell the Parts on the Delivery Date therefor pursuant to Section 2(a) hereof shall be subject only to the following conditions precedent, unless, in any case, waived by the Seller in its sole discretion:

(i) Buyer shall have paid in full the Purchase Price for such Parts and paid it to Seller in accordance with Section 2(b) hereof;

(ii) Buyer shall have executed and delivered the Delivery Receipt for such Parts to Seller;

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(iv) such Parts shall not have suffered an Event of Loss.

(b) The obligation of the Buyer to purchase the Parts and pay the Purchase Price therefor on the Delivery Date therefor shall be subject only to the following conditions precedent unless, in any case, waived by the Buyer in its sole discretion:

(i) the Seller shall have executed and delivered the Bill of Sale for such Parts to Buyer;

(ii) the Seller shall have executed and delivered the Delivery Receipt for such Parts to Buyer;

(iii) the Seller shall have executed and delivered to Buyer a certificate of non-incident statement on Seller’s letterhead in a form materially the same as Exhibit “C” attached hereto; Seller shall have stamped a non-incident statement and original appropriate signatures executed on each page of the inventory listings in Schedule 1.

(v) such Parts shall not have suffered an Event of Loss prior to the Payment Date.

Section 5. Representations and Warranties.

(a) Representations and Warranties of the Seller. The Seller hereby represents and warrants to the Seller that:

(ii) this Agreement has been duly executed and delivered by the Seller and constitutes, and each other Sale Document to which it is a party when executed

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and delivered by the Seller will constitute, the legal, valid and binding obligation of the Seller, enforceable in accordance with its terms, subject only to bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and to general equitable principles;

(iii) the execution, delivery and performance by the Seller of this Agreement are not in violation of its certificate of incorporation or by-laws or of any indenture, mortgage, contract or other agreement to which the Seller is a party or by which it is bound or of any order or judgment applicable to the Seller or any law, government rule or regulation binding upon the Seller or applicable to its business generally and do not require the consent or approval of, or the giving of notice to, the registration with or the taking of any other action in respect of any Governmental Body;

(v) as of Delivery Date, the Seller will be the legal owner of such Parts and will transfer to Buyer good and marketable title to such Parts, free and clear of all Liens; and,

(b) Representations and Warranties of the Buyer. The Buyer hereby represents and warrants to the Seller that:

(iii) the execution, delivery and performance by the Buyer of this Agreement are not in violation of its organizational documents or of any indenture, mortgage,

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contract or other agreement to which the Buyer is a party or by which it is bound or of any order or judgment applicable to the Buyer or any law, government rule or regulation binding upon the Buyer or applicable to its business generally and do not require the consent or approval of, or the giving of notice to, the registration with or the taking of any other action in respect of any Governmental Body;

(iv) there is no litigation or proceeding pending or, to the best knowledge of the Buyer, threatened against the Buyer an adverse decision in which would prohibit or materially frustrate the consummation by the Buyer of the transactions contemplated by this Agreement or any other Sale Document to which it is a party.

(c) The Seller confirms that acceptance by the Seller of payment of the Purchase Price for the Parts pursuant to Section 2 hereof on the Payment Date therefor will constitute a certification by the Seller that its representations and warranties contained in this Section 5 are true and accurate on and as of the Delivery Date and the Payment Date. The Buyer confirms that the payment by the Buyer of the Purchase Price for the Parts pursuant to Section 2 hereof on the Delivery Date therefor will constitute a certification by the Buyer that its representations and warranties contained in this Section 5 are true and accurate on and as of the Delivery Date and the Payment Date.

(d) The representations and warranties contained in this Section 5 shall survive the sale of the Airframes hereunder and the execution and delivery of the agreements contemplated hereby.

(e) Disclaimer. Other than the express representations and warranties of the Seller set forth above in this Section 5 and in the Bill of Sale, theParts are being sold hereunder, “AS IS, WHERE IS” and THE BUYER ACKNOWLEDGES AND AGREES THAT THE SELLER NOR ANY OF ITS AFFILIATES, OFFICERS, DIRECTORS, MEMBERS, MANAGERS, EMPLOYEES OR REPRESENTATIVES HAS MADE OR WILL BE DEEMED TO HAVE MADE ANY TERM, CONDITION, REPRESENTATION, WARRANTY OR COVENANT EXPRESS OR IMPLIED (WHETHER STATUTORY OR OTHERWISE) AS TO (a) THE CAPACITY, AGE, VALUE, QUALITY, DURABILITY, DESCRIPTION, CONDITION (WHETHER OF THE AIRFRAME OR ANY PART THEREOF), DESIGN, WORKMANSHIP, MATERIALS, MANUFACTURE, CONSTRUCTION, OPERATION, DESCRIPTION, STATE, MERCHANTABILITY, PERFORMANCE, FITNESS FOR ANY PARTICULAR USE OR PURPOSE (INCLUDING THE ABILITY TO OPERATE OR REGISTER THE PARTS OR USE THE PARTS IN ANY OR ALL JURISDICTIONS) OR SUITABILITY OF THE PARTS, OR ANY PART THEREOF, (b) THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, KNOWN OR UNKNOWN, APPARENT OR CONCEALED, EXTERIOR OR INTERIOR, AND (c) ANY IMPLIED WARRANTY ARISING FROM THE COURSE OF PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, IT BEING UNDERSTOOD THAT NOTHING HEREIN WILL BE DEEMED TO

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LIMIT THE BUYER FROM AVAILING ITSELF OF ANY WARRANTIES, COVENANTS, AND REPRESENTATIONS OF ANY MANUFACTURER.

Section 6. Taxes. The Buyer and the Seller shall reasonably endeavor to complete this transaction in a manner to avoid or minimize any transaction taxes. However, if such taxes are due, the Buyer shall pay any and all sales, other applicable transfer, use, value-added, stamp, registration and other similar taxes and any penalties, fines, additions to tax or interest thereon, (individually a “Tax”, and collectively called “Taxes”), imposed upon the Seller by any taxing jurisdiction or authority arising out of the sale of the Airframe hereunder; provided, however, Buyer shall not have any obligation to pay Taxes imposed on the Seller by any Governmental Body in the state or country in which such other party is incorporated, organized or conducts any business. In the event that any taxes are due, assessed and/or paid by Buyer or Seller, Buyer and Seller each as to each other agree to assist and cooperate with each other to preserve and obtain any and all refunds or credits arising therefrom.

Section 7. Indemnification.

(a) Buyer assumes liability for, and hereby agrees to indemnify, protect, save and keep harmless each Seller Indemnitee from and against any and all Losses which may arise on or after the Payment Date in any manner out of or in relation to injury to or death of any persons whomsoever or loss or damage to any property of any Person and which may result from, or arise in any manner out of, or be attributable to (i) the condition, ownership, leasing, purchase, delivery, possession, disposition, use or operation of the Parts or any part thereof either in the air or on the ground; or (ii) any defect in the Parts or any part thereof arising from its manufacture or any material or article used therein or from the design, testing or use thereof or from any maintenance, service, repair, overhaul or testing of the Parts, in the case of either (i) or (ii) in respect of Losses arising out of acts, omissions or events after the Payment Date; provided, however, that the Buyer’s obligations under this Section 7 to any Seller Indemnitee shall not extend to any Losses caused by the negligence or willful misconduct of any such Seller Indemnitee or arising from or related to the lease, use, operation, possession or use of any Airframe (as defined in the General Terms Agreement of even date herewith between Buyer and Seller (the “GTA”)) under the terms of the GTA if any such Parts are used on or in connection with the operation of any Airframe.

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Effective Date or during the period from and after the Effective Date and on or before the Payment Date, in any manner out of or in relation to injury to or death of any persons whomsoever or loss or damage to any property of any Person and which may result from, or arise in any manner out of, or be attributable to (i) the condition, ownership, leasing, purchase, delivery, possession, disposition, use or operation of the Parts or any part thereof either in the air or on the ground; or (ii) any defect in the Parts or any part thereof arising from their manufacture or any material or article used therein or from the design, testing or use thereof or from any maintenance, service, repair, overhaul or testing of the Parts, in the case of either (i) or (ii) in respect of Losses arising out of acts, omissions or events prior to the Payment Date; provided, however, that the Seller’s obligations under this Section 7 to Buyer or any Buyer’s Indemnitee shall not extend to any Losses caused by the negligence or willful misconduct of Buyer or any such Buyer’s Indemnitee.

Section 8. Assignment of Manufacturer’s Warranties. The Seller shall extend to the Buyer the rights and benefits, to the extent that the same are not extinguished by the sale of the Parts or the passage of time, of any warranties, service life policies and patent indemnities of any manufacturer and any maintenance and overhaul agencies of and for such Parts which the Seller may have to the extent that the same are assignable and transferable. The Seller also hereby grants to the Buyer rights of subrogation relating to any claim which the Seller may have under such warranties (if any) concerning the Parts.

Section 9. Default and Remedies.

(a) The following events shall constitute events of default (hereafter “Events of Default”):

(i) if the Buyer shall fail to make any payment when due hereunder; or

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general assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due; or

Section 11. Miscellaneous.

(a) Notice. All notices required or permitted hereunder shall be in writing and may be either telefaxed or sent by internationally recognized overnight courier service, addressed as follows:

If to Seller:

Kitty Hawk Aircargo, Inc.
P.O. Box 612787
DFW Airport, Texas 75261-2787
Telephone: 972-456-2427
Facsimile: 972-456-2350
(Attention: Robert Barron)

If to Buyer:

AirLease International, Inc.
Attn: Harold Woody, President
204 Whispering Hills Street
Hot Springs, AR 71901
(501) 318-2341 Fax

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or to such other address as the party desiring the change advises the others from time to time through a notice given in accordance with the provisions of this Section 11(a). Any such notice shall be effective and shall be deemed to have been given, in the case of a facsimile, upon confirmation of receipt of such facsimile by the addressee (provided that if the date of dispatch is not a Business Day, it shall be deemed to have been received at the opening of business in the country of the addressee on the next Business Day), and in the case of a notice sent by courier service, when delivered personally (provided that if delivery is tendered but refused, such notice shall be deemed effective upon such tender).

(b) Counterparts. This Agreement may be executed in counterparts, and each counterpart shall be an original, and all counterparts together shall be but one and the same Agreement.

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is further agreed that the expenses of the arbitration shall be paid in proportions as the arbitrators decide, except that the successful party in any proceeding seeking enforcement of the provisions of this agreement shall be entitled to receive from the party not prevailing reasonable and necessary attorneys’ fees and expenses, in addition to any other sums to which such successful party may be entitled. The arbitrators shall decide the identity of the successful party for the purposes of the preceding sentence.

(e) Time of the Essence. Time shall be of the essence in the performance of the duties of the parties hereto.

(f) Captions and Paragraph Headings. Captions and paragraph headings used herein are for convenience only and are not a part of this Agreement and shall not be used in construing it.

(i) Written Changes Only. No term or provision of this Agreement may be changed or waived orally, but only by an instrument in writing signed by the parties hereto.

(l) Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of and shall be enforceable by the parties hereto and their respective successors and assigns.

(m) Confidentiality. This Agreement and the terms and conditions contained herein shall be and remain strictly privileged and confidential between the parties, and shall not be

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discussed, revealed, disseminated or divulged to the media or general public, or to any other third party, without the express prior written consent of the other party, which consent shall not be unreasonably withheld; except that (i) the Buyer may disclose any relevant term to a financial institution for the purpose of financing the purchase of the Airframe or any technical data to any potential purchaser or lessee of the Airframe from the Buyer; (ii) the Buyer may disclose any relevant term to its insurers for the purpose of insuring the Airframe; (iii) either party may disclose any relevant term to any of its Affiliates; (iv) either party may make any disclosure required by generally accepted accounting principles, by applicable Law or by any order of a court or other Governmental Body; (v) either party may make any disclosure in connection with any litigation relating to the transactions contemplated by this Agreement; (vi) either party, or their professional advisors, may make any disclosure to any of its agents, employees, auditors, lawyers, any Governmental Body having jurisdiction over it or any other person which it in good faith determines has reason to have knowledge of such information; (vii) either party may make any disclosure to the extent such information is publicly available through no fault of the party making the disclosure; (viii) either party may make any disclosure to the extent such disclosure is necessary to carry out its obligations hereunder; (ix) the Seller may make a press announcement in respect of the transactions contemplated hereby and may announce the same in any of its shareholder or other reports; and (x) subject to the Seller having approved the text and content of the same in advance, the Buyer may make a press announcement in respect of the transactions contemplated hereby and may announce the same in any of its shareholder or other reports.

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IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement through their respective duly authorized officers, as of the date and year first above written.



		KITTY HAWK AIRCARGO, INC.

		By:		/s/ Robbie Barron

		Name: Robbie Barron
		Title: VP & COO

		AirLease International, Inc.

		By:		/s/ Harold M. Woody

		Name: Harold M. Woody
		Title: President

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