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EXHIBIT 10.19
THIRD AMENDMENT AGREEMENT
This THIRD AMENDMENT AGREEMENT (this "Amendment") is made and entered
into as of December 10, 1998 by and among KITTY HAWK, INC., a Delaware
corporation ("Kitty Hawk"), KITTY HAWK AIRCARGO, INC., a Texas corporation
("Aircargo"), AIRCRAFT LEASING, INC., a Texas corporation ("Leasing"), KITTY
HAWK CHARTERS, INC., a Texas corporation ("Charters"), AMERICAN INTERNATIONAL
AIRWAYS, INC., a Michigan corporation ("AIA"), AMERICAN INTERNATIONAL TRAVEL,
INC., a Michigan corporation ("AIT"), FLIGHT ONE LOGISTICS, INC., a Michigan
corporation ("FOL"), KALITTA FLYING SERVICE, INC., a Michigan corporation
("KFS"), O. K. TURBINES, INC., a Michigan corporation ("OK"), LONGHORN
SOLUTIONS, INC., a Texas corporation ("Longhorn"), XXXXX FARGO BANK (TEXAS),
NATIONAL ASSOCIATION ("Xxxxx Fargo"), BANK ONE, TEXAS, N.A. ("Bank One"),
COMERICA BANK ("Comerica"), XXXXXX FINANCIAL, INC. ("Xxxxxx"), TORONTO DOMINION
(TEXAS), INC. ("Toronto Dominion") and XXXXX FARGO BANK (TEXAS), NATIONAL
ASSOCIATION, a national banking association, as agent for itself and the other
Lenders (in such capacity, together with its successors and assigns in such
capacity, "Agent").
R E C I T A L S:
A. Pursuant to that certain Second Amended and Restated Credit
Agreement dated as of November 19, 1997, by and among Kitty Hawk, Aircargo,
Leasing, Charters, Skyfreighters Corporation, AIA, AIT, FOL, KFS, OK, Xxxxx
Fargo (as a Lender) and Agent (as amended, the "Credit Agreement"), Xxxxx Fargo
and the other Lenders (of which there were then none, other than Xxxxx Fargo)
agreed to provide a $100,000,000 Revolving Credit Loans facility to Kitty Hawk
(for use by Kitty Hawk and its Subsidiaries) and a $45,900,000 Term Loans
facility to Kitty Hawk.
B. The Credit Agreement was amended in certain respects pursuant to
that certain First Amendment Agreement dated as of January 1, 1998 and that
certain Second Amendment Agreement dated as of February 6, 1998.
C. Each of Bank One, Comerica, Xxxxxx and Toronto Dominion have
previously purchased interests in the Loans and have become Lenders under the
Credit Agreement.
D. The parties to the Credit Agreement desire to further amend the
Credit Agreement as provided in this Amendment to, among other things, (i)
amend the Borrowing Base and (ii) provide for the grant of security interests
in additional aircraft as security for the Obligations.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
THIRD AMENDMENT AGREEMENT - Page 1
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ARTICLE 1
Definitions
Section 1.1 Definitions. Unless otherwise defined in this Amendment,
each capitalized term used in this Amendment has the meaning given to such term
in the Credit Agreement (as amended by this Amendment).
ARTICLE 2
Amendments to Credit Agreement
Section 2.1 New Terms and Definitions. The following new terms and
definitions thereof are hereby added to Section 1.1 of the Credit Agreement,
which terms shall appear in alphabetical order in such Section 1.1:
"'AIA Aircraft Appraisal' means an appraisal, dated on or
about or after the Third Amendment Date, in form and substance
satisfactory to Agent prepared by Pro-Tech Advisors Inc. which sets
forth the appraised value of the AIA Aircraft, other than Aircraft X."
"'Aircraft AE' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #DC- 8-61 airframe, United States Aircraft Registration
Number N24UA, Manufacturer's Serial No. 45963, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's
Serial No. 669524, (iii) one Xxxxx & Xxxxxxx JT3D-3B Engine,
Manufacturer's Serial No. 669663, (iv) one Xxxxx & Whitney JT3D-3B
Engine, Manufacturer's Serial No. 645059, and (v) one Xxxxx & Xxxxxxx
JT3D-3B Engine, Manufacturer's Serial No. 643331."
"'Aircraft AF' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #DC- 8-62 airframe, United States Aircraft Registration
Number N801MG, Manufacturer's Serial No. 45986, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's
Serial No. 669415, (iii) one Xxxxx & Whitney JT3D-3B Engine,
Manufacturer's Serial No. 644533, (iv) one Xxxxx & Xxxxxxx JT3D-3B
Engine, Manufacturer's Serial No. 669772, and (v) one Xxxxx & Whitney
JT3D-3B Engine, Manufacturer's Serial No. 643562."
"'Aircraft AG' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #DC- 8-62 airframe, United States Aircraft Registration
Number N802MG, Manufacturer's Serial No. 46098, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or
THIRD AMENDMENT AGREEMENT - Page 2
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appurtenant to such airframe, (ii) one Xxxxx & Whitney JT3D-7 Engine,
Manufacturer's Serial No. 671327, (iii) one Xxxxx & Xxxxxxx JT3D-7
Engine, Manufacturer's Serial No. 678966, (iv) one Xxxxx & Whitney
JT3D-7 Engine, Manufacturer's Serial No. 671140, and (v) one Xxxxx &
Whitney JT3D-7 Engine, Manufacturer's Serial No. 668044."
"'Aircraft AH' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #DC- 8-62 airframe, United States Aircraft Registration
Number N803CK, Manufacturer's Serial No. 46085, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT3D-7 Engine, Manufacturer's
Serial No. 669692, (iii) one Xxxxx & Xxxxxxx JT3D-7 Engine,
Manufacturer's Serial No 671383, (iv) one Xxxxx & Whitney JT3D-7
Engine, Manufacturer's Serial No. 671064, and (v) one Xxxxx & Xxxxxxx
JT3D-7 Engine, Manufacturer's Serial No. 678961."
"'Aircraft AI' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #XX-0- 00X xxxxxxxx, Xxxxxx Xxxxxx Aircraft Registration
Number N811CK, Manufacturer's Serial No. 46147, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Xxxxxxx JT3D-7 Engine, Manufacturer's
Serial No. 678985, (iii) one Xxxxx & Whitney JT3D-7 Engine,
Manufacturer's Serial No. 669723, (iv) one Xxxxx & Xxxxxxx JT3D-7
Engine, Manufacturer's Serial No. 645304, and (v) one Xxxxx & Whitney
JT3D-7 Engine, Manufacturer's Serial No. 642467."
"'Aircraft AJ' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #XX-0- 00 xxxxxxxx, Xxxxxx Xxxxxx Aircraft Registration
Number N812CK, Manufacturer's Serial No. 45890, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's
Serial No. 669498, (iii) one Xxxxx & Xxxxxxx JT3D-3B Engine,
Manufacturer's Serial No. 644485, (iv) one Xxxxx & Whitney JT3D-3B
Engine, Manufacturer's Serial No. 644408, and (v) one Xxxxx & Xxxxxxx
JT3D-3B Engine, Manufacturer's Serial No. 645300."
"'Aircraft AK' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #DC- 8-61 airframe, United States Aircraft Registration
Number N813CK, Manufacturer's Serial No. 45893, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's
Serial No. 642298, (iii) one Xxxxx & Whitney JT3D-3B Engine,
Manufacturer's Serial No. 645184, (iv) one Xxxxx & Xxxxxxx JT3D-3B
Engine, Manufacturer's Serial No. 632811, and (v) one Xxxxx & Whitney
JT3D-3B Engine, Manufacturer's Serial No. 644949."
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"'Aircraft AL' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #DC- 8-63F airframe, United States Aircraft Registration
Number N815CK, Manufacturer's Serial No. 46151, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT3D-7 Engine, Manufacturer's
Serial No. 678969, (iii) one Xxxxx & Xxxxxxx JT3D-7 Engine,
Manufacturer's Serial No. 671217, (iv) one Xxxxx & Whitney JT3D-7
Engine, Manufacturer's Serial No. 671326, and (v) one Xxxxx & Xxxxxxx
JT3D-7 Engine, Manufacturer's Serial No. 678986."
"'Aircraft AM' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #DC- 8-61 airframe, United States Aircraft Registration
Number N816CK, Manufacturer's Serial No. 45892, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's
Serial No. 669406, (iii) one Xxxxx & Whitney JT3D-3B Engine,
Manufacturer's Serial No. 643688, (iv) one Xxxxx & Xxxxxxx JT3D-3B
Engine, Manufacturer's Serial No. 645442, and (v) one Xxxxx & Whitney
JT3D-3B Engine, Manufacturer's Serial No. 645398."
"'Aircraft AN' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #DC- 8-61 airframe, United States Aircraft Registration
Number N817CK, Manufacturer's Serial No. 45887, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's
Serial No. 642691, (iii) one Xxxxx & Xxxxxxx JT3D-3B Engine,
Manufacturer's Serial No. 642387, (iv) one Xxxxx & Whitney JT3D-3B
Engine, Manufacturer's Serial No. 644992, and (v) one Xxxxx & Xxxxxxx
JT3D-3B Engine, Manufacturer's Serial No. 669668."
"'Aircraft AO' means, collectively, (i) one XxXxxxxxx
Xxxxxxx Model #DC- 8-62F airframe, United States Aircraft Registration
Number N818CK, Manufacturer's Serial No. 45961, together with any and
all parts, appliances, components, instruments, accessories,
accessions, equipment, and avionics installed in or appurtenant to
such airframe, (ii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's
Serial No. 667718, (iii) one Xxxxx & Whitney JT3D-3B Engine,
Manufacturer's Serial No. 669639, (iv) one Xxxxx & Xxxxxxx JT3D-3B
Engine, Manufacturer's Serial No. 669221, and (v) one Xxxxx & Whitney
JT3D-3B Engine, Manufacturer's Serial No. 669542."
"'Aircraft AP' means, collectively, (i) one Xxxxxxx Model
#DC-8E-55 airframe, United States Aircraft Registration Number N6161C,
Manufacturer's Serial No. 45856, together with any and all parts,
appliances, components, instruments, accessories, accessions,
equipment, and avionics installed in or appurtenant to such airframe,
(ii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's Serial
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No. 644999, (iii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's
Serial No. 642686, (iv) one Xxxxx & Whitney JT3D-3B Engine,
Manufacturer's Serial No. 642464, and (v) one Xxxxx & Xxxxxxx JT3D-3B
Engine, Manufacturer's Serial No. 644451."
"'Aircraft AQ' means, collectively, (i) one Xxxxxxx Model
#DC-8F-55 airframe, United States Aircraft Registration Number N6161M,
Manufacturer's Serial No. 45762, together with any and all parts,
appliances, components, instruments, accessories, accessions,
equipment, and avionics installed in or appurtenant to such airframe,
(ii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's Serial No.
644852, (iii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's
Serial No. 645507, (iv) one Xxxxx & Xxxxxxx JT3D-3B Engine,
Manufacturer's Serial No. 645997, and (v) one Xxxxx & Whitney JT3D-3B
Engine, Manufacturer's Serial No. 669356."
"'Aircraft AR' means, collectively, (i) one Xxxxxxx Model
#DC-8F-55 airframe, United States Aircraft Registration Number N801CK,
Manufacturer's Serial No. 45816, together with any and all parts,
appliances, components, instruments, accessories, accessions,
equipment, and avionics installed in or appurtenant to such airframe,
(ii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's Serial No.
644561, (iii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's
Serial No. 645540, (iv) one Xxxxx & Whitney JT3D-3B Engine,
Manufacturer's Serial No. 669167, and (v) one Xxxxx & Xxxxxxx JT3D-3B
Engine, Manufacturer's Serial No. 678971."
"'Aircraft AS' means, collectively, (i) one Xxxxxxx Model
#DC-8F-54 airframe, United States Aircraft Registration Number N8052U,
Manufacturer's Serial No. 46009, together with any and all parts,
appliances, components, instruments, accessories, accessions,
equipment, and avionics installed in or appurtenant to such airframe,
(ii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's Serial No.
643803, (iii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's
Serial No. 644121, (iv) one Xxxxx & Xxxxxxx JT3D-3B Engine,
Manufacturer's Serial No. 643521, and (v) one Xxxxx & Whitney JT3D-3B
Engine, Manufacturer's Serial No. 642507."
"'Aircraft AT' means, collectively, (i) one Xxxxxxx Model
#DC-8-54 airframe, United States Aircraft Registration Number N806CK,
Manufacturer's Serial No. 45932, together with any and all parts,
appliances, components, instruments, accessories, accessions,
equipment, and avionics installed in or appurtenant to such airframe,
(ii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's Serial No.
642294, (iii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's
Serial No. 669286, (iv) one Xxxxx & Whitney JT3D-3B Engine,
Manufacturer's Serial No. 669638, and (v) one Xxxxx & Xxxxxxx JT3D-3B
Engine, Manufacturer's Serial No. 670988."
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"'Aircraft AU' means, collectively, (i) one Xxxxxxx Model
#DC-8-55 airframe, United States Aircraft Registration Number N807CK,
Manufacturer's Serial No. 45767, together with any and all parts,
appliances, components, instruments, accessories, accessions,
equipment, and avionics installed in or appurtenant to such airframe,
(ii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's Serial No.
643274, (iii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's
Serial No. 669545, (iv) one Xxxxx & Xxxxxxx JT3D-3B Engine,
Manufacturer's Serial No. 644898, and (v) one Xxxxx & Whitney JT3D-3B
Engine, Manufacturer's Serial No. 669252."
"'Aircraft AV' means, collectively, (i) one Xxxxxxx Model
#DC-8-55 airframe, United States Aircraft Registration Number N809CK,
Manufacturer's Serial No. 45803, together with any and all parts,
appliances, components, instruments, accessories, accessions,
equipment, and avionics installed in or appurtenant to such airframe,
(ii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's Serial No.
669494, (iii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's
Serial No. 643623, (iv) one Xxxxx & Whitney JT3D-3B Engine,
Manufacturer's Serial No. 645762, and (v) one Xxxxx & Xxxxxxx JT3D-3B
Engine, Manufacturer's Serial No. 669313."
"'Aircraft AW' means, collectively, (i) one Xxxxxxx Model
#DC-8-52 airframe, United States Aircraft Registration Number N810CK,
Manufacturer's Serial No. 45814, together with any and all parts,
appliances, components, instruments, accessories, accessions,
equipment, and avionics installed in or appurtenant to such airframe,
(ii) one Xxxxx & Whitney JT3D-3B Engine, Manufacturer's Serial No.
645251, (iii) one Xxxxx & Xxxxxxx JT3D-3B Engine, Manufacturer's
Serial No. 644842, (iv) one Xxxxx & Whitney JT3D-3B Engine,
Manufacturer's Serial No. 669787, and (v) one Xxxxx & Xxxxxxx JT3D-3B
Engine, Manufacturer's Serial No. 644454."
"'Aircraft Related Collateral' means the AIA Aircraft, the
Sixty Series Aircraft and the Fifty Series Aircraft (other than such
aircraft as may have been expressly released from Liens securing the
Obligations pursuant to the Loan Documents)."
"'Appraised Orderly Liquidation Value of Parts' means the
appraised value of the Parts of the Companies pursuant to the Parts
Appraisal."
"'Appraised Value of the AIA Aircraft' means the appraised
value of the AIA Aircraft pursuant to the AIA Aircraft Appraisal."
"'Appraised Value of the Sixty Series Aircraft' means
$65,620,602.00, the appraised value of the Sixty Series Aircraft
pursuant to the Sixty Series Aircraft Appraisal."
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"'Cash Generated Report' means a report in the form of
Exhibit G attached hereto which has been appropriately and accurately
completed in all respects and executed by Kitty Hawk and as to which
the adjustments referred to therein have been approved by Agent."
"'Collateral Aircraft' means the AIA Aircraft, the Sixty
Series Aircraft and the Fifty Series Aircraft if and to the extent
that, at the relevant time of determination, such aircraft are either
subject to a Lien in favor of Agent securing any Obligation or are
required to be subject to any such Lien in accordance with any Loan
Document."
"'Fifty Series Aircraft' means Aircraft AP, Aircraft AQ,
Aircraft AR, Aircraft AS, Aircraft AT, Aircraft AU, Aircraft AV and
Aircraft AW. The term 'Fifty Series Aircraft' shall also mean and
refer to any replacement aircraft which is required or permitted,
under this Agreement or an Aircraft Mortgage, to replace a Fifty
Series Aircraft as Collateral and with respect to which the Companies
comply with each of the applicable requirements contained in this
Agreement and the applicable Aircraft Mortgage."
"'Increase Termination Date' means the earliest to occur of
(a) the date upon which Kitty Hawk notifies the Agent in writing that
it elects to terminate the increase in the Borrowing Base attributable
to the Sixty Series Aircraft, (b) the date upon which any Lien with
respect to any Sixty Series Aircraft is released by Agent, or (c)
January 1, 2000."
"'Loan Pricing Increase Period' means the period from and
after the Third Amendment Date to the Calculation Date immediately
succeeding the later to occur of the Increase Termination Date or the
date upon which the Sixty Series Aircraft Release Amount has been paid
in full."
"'Parts Appraisal' means an appraisal, dated on or about or
after the Third Amendment Date, in form and substance satisfactory to
Agent prepared by MB Valuations of Dallas, Texas which sets forth the
orderly liquidation value of the Parts inventory of the Companies."
"'Sixty Series Aircraft' means Aircraft AE, Aircraft AF,
Aircraft AG, Aircraft AH, Aircraft AI, Aircraft AJ, Aircraft AK,
Aircraft AL, Aircraft AM, Aircraft AN and Aircraft AO. The term 'Sixty
Series Aircraft' shall also mean and refer to any replacement aircraft
which is required or permitted, under this Agreement or an Aircraft
Mortgage, to replace a Sixty Series Aircraft as Collateral and with
respect to which the Companies comply with each of the applicable
requirements contained in this Agreement and the applicable Aircraft
Mortgage."
"'Sixty Series Aircraft Appraisal' means the appraisal,
dated November 23, 1998, in form and substance satisfactory to Agent
and Lenders prepared by Pro-Tech
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Advisors Inc. which sets forth the appraised value of the Sixty Series
Aircraft based upon physical and complete record reviews of both
airframes and engines."
"'Sixty Series Aircraft Release Amount' means, at any time
of determination, an amount equal to the portion of the Borrowing Base
then in effect which is attributable to clause (c) of the definition
of the term "Borrowing Base."
"'Third Amendment Agent's Letter' means that certain letter
agreement dated December 10, 1998 between Xxxxx Fargo and Kitty Hawk,
accepted and agreed to by Kitty Hawk as of December 10, 1998, relating
to certain fees payable by Kitty Hawk in connection with the Third
Amendment."
"'Third Amendment Date' means December 10, 1998."
"'Third Amendment Projections' means the financial
projections of Kitty Hawk and its Subsidiaries for the fiscal years
1998 through 2002 dated as of November 3, 1998 prepared by Kitty Hawk
and delivered to Agent."
Section 2.2 Amendments to Certain Definitions. Each of the following
terms and definitions thereof contained in Section 1.1 of the Credit Agreement
is hereby amended and restated to read in its entirety as follows:
"'Advance Rate' means (a) for Eligible Receivables, 80% and
(b) for Eligible Parts, 50% (subject to the succeeding proviso);
provided, however, that, in the event that the product of (i) 90%
multiplied by (ii) the quotient (expressed as a percentage) of the
Appraised Orderly Liquidation Value of Parts (calculated with respect
to the Eligible Parts only) divided by the Companies' cost of the
Eligible Parts appraised pursuant to the Parts Appraisal, is less than
50%, then the Advance Rate for Eligible Parts shall not exceed such
product (expressed as a percentage) at any time after January 1,
1999."
"'Airframes' means those certain airframes identified in the
definitions of Aircraft O, Aircraft P, Aircraft Q, Aircraft R,
Aircraft S, Aircraft T, Aircraft U, Aircraft V, Aircraft W, Aircraft
X, Aircraft Y, Aircraft Z, Aircraft AA, Aircraft AB, Aircraft AC,
Aircraft AD, Aircraft AE, Aircraft AF, Aircraft AG, Aircraft AH,
Aircraft AI, Aircraft AJ, Aircraft AK, Aircraft AL, Aircraft AM,
Aircraft AN, Aircraft AO, Aircraft AP, Aircraft AQ, Aircraft AR,
Aircraft AS, Aircraft AT, Aircraft AU, Aircraft AV and Aircraft AW,
together with any and all parts, appliances, components, instruments,
accessories, accessions, attachments, equipment or avionics
(including, without limitation, communications, radar, navigation
systems or other electronic equipment) installed in, appurtenant to or
delivered with or in respect of such airframes. The term 'Airframes'
shall also mean and refer to any replacement airframe which is
required or permitted, under this Agreement or an Aircraft Mortgage,
to replace an Airframe as Collateral and with respect to which the
THIRD AMENDMENT AGREEMENT - Page 8
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Companies comply with each of the applicable requirements contained in
this Agreement and the applicable Aircraft Mortgage."
"'Applicable Base Rate Margin' means, for the period
commencing with the Closing Date and thereafter, the rate per annum
set forth in the table below under the heading 'Applicable Base Rate
Margin' that corresponds to the ratio of Funded Debt to Adjusted
EBITDA for the four fiscal quarters of Kitty Hawk and its Subsidiaries
on a consolidated basis then most recently ended, provided, however,
that the Applicable Base Rate Margin during the Loan Pricing Increase
Period shall be 1.75% per annum as set forth in the table below under
the heading 'Applicable Base Rate Margin during Loan Pricing Increase
Period':
Applicable
Funded Debt Applicable Base Rate Margin
to Base Rate during Loan Pricing
Adjusted EBITDA Ratio Margin Increase Period
--------------------- ------ ---------------
Greater than 4.25 to 1.00 1.25% 1.75%
Greater than 4.00 to 1.00,
but equal to or less than 4.25 to 1.00 1.00% 1.75%
Greater than 3.50 to 1.00,
but equal to or less than 4.00 to 1.00 0.75% 1.75%
Greater than 3.00 to 1.00,
but equal to or less than 3.50 to 1.00 0.50% 1.75%
Greater than 2.50 to 1.00,
but equal to or less than 3.00 to 1.00 0.25% 1.75%
Greater than 2.00 to 1.00,
but equal to or less than 2.50 to 1.00 0.00% 1.75%
Equal to or less than 2.00 to 1.00 0.00% 1.75%
For purposes hereof and notwithstanding the preceding sentence, the
Applicable Base Rate Margin for the period from the Closing Date to
May 19, 1998 shall be deemed to be 1.25% for Revolving Credit Loans
and 1.50% for Term Loans and shall thereafter be calculated on each
Calculation Date based upon the preceding table and the financial
statements delivered by Kitty Hawk pursuant to Section 8.1(b) and the
certificate delivered by Kitty Hawk pursuant to Section 8.1(c);
provided, that (a) if Kitty Hawk fails to deliver to Agent such
financial statements or certificate at least five Business Days before
the relevant Calculation Date, the Applicable Base Rate Margin shall
be deemed to be 1.25% for Revolving Credit Loans and 1.50% for Term
Loans until five Business Days after such statements and certificate
are delivered by Kitty Hawk to Agent, after which the Applicable Base
Rate Margin shall be determined as otherwise provided herein and (b)
the Applicable Base Rate Margin
THIRD AMENDMENT AGREEMENT - Page 9
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during the Loan Pricing Increase Period shall be as set forth in the
preceding sentence."
"'Applicable Commitment Fee Rate' means, for the period
commencing with the Closing Date and thereafter, the rate per annum
set forth in the table below under the heading 'Applicable Commitment
Fee Rate' that corresponds to the ratio of Funded Debt to Adjusted
EBITDA for the four fiscal quarters of Kitty Hawk and its Subsidiaries
on a consolidated basis then most recently ended, provided, however,
that the Applicable Commitment Fee Rate during the Loan Pricing
Increase Period shall be 0.50% per annum as set forth in the table
below under the heading 'Applicable Commitment Fee Rate during Loan
Pricing Increase Period':
Applicable
Funded Debt Applicable Commitment Fee Rate
to Commitment during Loan Pricing
Adjusted EBITDA Ratio Fee Rate Increase Period
--------------------- -------- ---------------
Greater than 4.25 to 1.00 0.50% 0.50%
Greater than 4.00 to 1.00,
but equal to or less than 4.25 to 1.00 0.50% 0.50%
Greater than 3.50 to 1.00,
but equal to or less than 4.00 to 1.00 0.50% 0.50%
Greater than 3.00 to 1.00,
but equal to or less than 3.50 to 1.00 0.375% 0.50%
Greater than 2.50 to 1.00,
but equal to or less than 3.00 to 1.00 0.375% 0.50%
Greater than 2.00 to 1.00,
but equal to or less than 2.50 to 1.00 0.375% 0.50%
Equal to or less than 2.00 to 1.00 0.250% 0.50%
For purposes hereof and notwithstanding the preceding sentence, the
Applicable Commitment Fee Rate for the period from the Closing Date to
May 19, 1998 shall be deemed to be 0.50% and shall thereafter be
calculated on each Calculation Date based upon the preceding table and
the financial statements delivered by Kitty Hawk pursuant to Section
8.1(b) and the certificate delivered by Kitty Hawk pursuant to Section
8.1(c); provided, that (a) if Kitty Hawk fails to deliver to Agent
such financial statements or certificate at least five Business Days
before the relevant Calculation Date, the Applicable Commitment Fee
Rate shall be deemed to be 0.50% until five Business Days after such
statements and certificate are delivered by Kitty Hawk to Agent, after
which the Applicable Commitment Fee Rate shall be determined as
otherwise provided herein, and (b) the Applicable Commitment Fee Rate
during the Loan Pricing Increase Period shall be as set forth in the
preceding sentence."
THIRD AMENDMENT AGREEMENT - Page 10
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"'Applicable Eurodollar Margin' means, for the period
commencing with the Closing Date and thereafter, the rate per annum
set forth in the table below under the heading 'Applicable Eurodollar
Margin' that corresponds to the ratio of Funded Debt to Adjusted
EBITDA for the four fiscal quarters of Kitty Hawk and its Subsidiaries
on a consolidated basis then most recently ended, provided, however,
that the Applicable Eurodollar Margin during the Loan Pricing Increase
Period shall be 3.25% per annum as set forth under the heading
'Applicable Eurodollar Margin during Loan Pricing Increase Period':
Applicable
Funded Debt Applicable Eurodollar Margin
to Eurodollar during Loan Pricing
Adjusted EBITDA Ratio Margin Increase Period
--------------------- ------ ---------------
Greater than 4.25 to 1.00 2.75% 3.25%
Greater than 4.00 to 1.00,
but equal to or less than 4.25 to 1.00 2.50% 3.25%
Greater than 3.50 to 1.00,
but equal to or less than 4.00 to 1.00 2.25% 3.25%
Greater than 3.00 to 1.00,
but equal to or less than 3.50 to 1.00 2.00% 3.25%
Greater than 2.50 to 1.00,
but equal to or less than 3.00 to 1.00 1.75% 3.25%
Greater than 2.00 to 1.00,
but equal to or less than 2.50 to 1.00 1.50% 3.25%
Equal to or less than 2.00 to 1.00 1.25% 3.25%
For purposes hereof and notwithstanding the preceding sentence, the
Applicable Eurodollar Margin for the period from the Closing Date to
May 19, 1998 shall be deemed to be 2.75% for Revolving Credit Loans
and 3.00% for Term Loans and shall thereafter be calculated on each
Calculation Date based upon the preceding table and the financial
statements delivered by Kitty Hawk pursuant to Section 8.1(b) and the
certificate delivered by Kitty Hawk pursuant to Section 8.1(c);
provided, that (a) if Kitty Hawk fails to deliver to Agent such
financial statements or certificate at least five Business Days before
the relevant Calculation Date, the Applicable Eurodollar Margin shall
be deemed to be 2.75% for Revolving Credit Loans and 3.00% for Term
Loans until five Business Days after such statements and certificate
are delivered by Kitty Hawk to Agent, after which the Applicable
Eurodollar Margin shall be determined as otherwise provided herein,
and (b) the Applicable Eurodollar Margin during the Loan Pricing
Increase Period shall be as set forth in the preceding sentence."
THIRD AMENDMENT AGREEMENT - Page 11
12
"'Borrowing Base' means, as of any date of determination in
accordance with this Agreement, the sum of (a) the product of the
Advance Rate for Eligible Receivables multiplied by the amount of
Eligible Receivables, plus (b) the lesser of the product of the
Advance Rate for Eligible Parts multiplied by the amount of Eligible
Parts or $25,000,000, plus (c) (i) at any time prior to the Increase
Termination Date, the lesser of 50% of the Appraised Value of the
Sixty Series Aircraft or $30,000,000 and (ii) at any time on or after
the Increase Termination Date, zero."
"'Eligible Parts' means, at any date of determination, the
value of all Parts then owned by, and in the possession of, Aircargo,
Leasing, AIA, KFS or OK and held for use in the ordinary course of
business, in which Agent has a perfected, first priority Lien pursuant
to the Security Documents as security for payment and performance of
the Obligations, valued at cost in accordance with GAAP. Eligible
Parts shall not include (i) Parts with respect to which a claim exists
disputing any such Company's title to or right to possession of such
Parts, (ii) Parts that are not in good condition or do not comply with
any Governmental Requirement with respect to manufacture, use or sale,
(iii) Parts that are located outside of the U.S., (iv) Parts produced
in violation of the Fair Labor Standards Act, (v) Parts that are
evidenced by a negotiable or non-negotiable document of title, and
(vi) Parts that have become obsolete or have been damaged or are not
usable in their present state for the use for which they were
manufactured or purchased."
"'Engines' means those certain aircraft engines identified
in the definitions of Aircraft A, Aircraft O, Aircraft P, Aircraft Q,
Aircraft R, Aircraft S, Aircraft T, Aircraft U, Aircraft V, Aircraft
W, Aircraft X, Aircraft Y, Aircraft Z, Aircraft AA, Aircraft AB,
Aircraft AC, Aircraft AD, Aircraft AE, Aircraft AF, Aircraft AG,
Aircraft AH, Aircraft AI, Aircraft AJ, Aircraft AK, Aircraft AL,
Aircraft AM, Aircraft AN, Aircraft AO, Aircraft AP, Aircraft AQ,
Aircraft AR, Aircraft AS, Aircraft AT, Aircraft AU, Aircraft AV and
Aircraft AW, together with any and all parts, appliances, components,
accessories, accessions, attachments or equipment (collectively, 'such
equipment') installed on, appurtenant to, or delivered with or in
respect of such engines prior to the time when such equipment is
replaced by replacement equipment in accordance with this Agreement.
The term 'Engines' shall also mean and refer to any replacement
aircraft engine which is required or permitted, under this Agreement
or an Aircraft Mortgage, to be installed upon the Airframes and with
respect to which the Companies comply with each of the applicable
requirements contained in this Agreement and the applicable Aircraft
Mortgage."
"'Kitty Hawk Aircraft' means, collectively, the Collateral
Aircraft and the Non-Collateral Aircraft."
In addition, the term "AIA Aircraft" contained in clause (ii) of the proviso at
the end of the definition of the term "Permitted Liens" in Section 1.1 of the
Credit Agreement is hereby amended to mean and refer to the "Collateral
Aircraft".
THIRD AMENDMENT AGREEMENT - Page 12
13
Section 2.3 Amendment to Section 2.7. Section 2.7 of the Credit
Agreement is hereby amended as follows:
(a) A new clause (e) is hereby added to Section 2.7, which clause (e)
shall read in its entirety as follows:
"(e) Loan to Value Ratio. If, upon receipt of the AIA
Aircraft Appraisal, the quotient (expressed as a percentage) of (i)
the aggregate outstanding principal amount of the Term Loans divided
by (ii) the Appraised Value of the AIA Aircraft, is greater than
72.63%, then Kitty Hawk shall, within one Business Day thereafter, pay
to Agent an amount of the principal of the Term Loans such that, after
giving effect to such prepayment, such quotient does not exceed
72.63%."
(b) Existing (i.e., prior to giving effect to this Amendment) clause
(e) is hereby amended to be clause (f) and to read in its entirety as follows:
"(f) Application of Mandatory Prepayments. All prepayments
pursuant to clauses (a), (b) and (c) preceding, if and to the extent
the same are required to be applied to the Term Loans in accordance
with such clauses, shall be applied pro rata to the then remaining
installments of principal of the Term Loans. All prepayments pursuant
to clause (e) preceding shall be applied to the then remaining
installments of the Term Loans in the inverse order of the maturities
of such installments."
Section 2.4. Amendment to Section 2.11. A new clause (d) is hereby
added to Section 2.11 of the Credit Agreement, which clause (d) shall read in
its entirety as follows:
"(d) Subject to Section 13.12, Kitty Hawk agrees to pay to
Agent on the Third Amendment Date, for the account of each Lender, a
restructure fee in an amount equal to the product of (i) 0.0007
multiplied by (ii) the sum of the Revolving Credit Loans Commitment of
such Lender plus the outstanding principal amount of the Term Loans
owed to such Lender. In addition, Kitty Hawk agrees to pay to Agent on
the Third Amendment Date, for its own account, the additional fee set
forth in the Third Amendment Agent's Letter."
Section 2.5. Amendment to Section 5.1. Section 5.1 of the Credit
Agreement is hereby amended to add the following sentence thereto immediately
succeeding the first sentence of Section 5.1:
"In addition, to secure the full and complete payment and performance
of the Obligations, AIA shall, on or before the Third Amendment Date,
grant to Agent and Lenders a perfected, first priority Lien on all of
its right, title and interest in and to all Sixty Series Aircraft and
all Fifty Series Aircraft and all engines, appliances and spare parts
installed in or appurtenant to any such Sixty Series Aircraft or Fifty
Series Aircraft and all products and proceeds thereof, whether now
owned or hereafter acquired, pursuant to additional Aircraft
Mortgages; provided, however, that the
THIRD AMENDMENT AGREEMENT - Page 13
14
following Liens affecting the following engines shall not be required
to be released of record until on or before February 28, 1999 or, if
not so released on or before such date and in lieu of such release,
AIA shall, on or before February 28, 1999 and to secure the full and
complete payment and performance of the Obligations, grant to Agent
and Lenders (pursuant to additional Aircraft Mortgages) a perfected,
first priority Lien on all of its right, title and interest in and to
substitute engines owned by AIA having a value equal to or greater
than the value of the following engines:
Engine Manufacturer's
Description Serial Number Lien Lienholder
----------- ------------- ---- ----------
1. Xxxxx & Xxxxxxx 669639 Aircraft Chattel De Nationale
JT3D-3B Mortgage and Security Investeringsbank
Agreement dated 3/3/93 N.V.
recorded as document
#AA49895
2. Xxxxx & Whitney 671217 Security Agreement Electrospace
JT3D-7 dated 5/23/90 recorded Systems, Inc., et al.
as document
#CC000780
3. Xxxxx & Xxxxxxx 671326 Hire Purchase Bail Leasing Limited,
JT3D-7 Agreement dated et al.
4/30/90 recorded as
document #WW31973
and related documents
4. Xxxxx & Whitney 642294 Security Agreement Xxxx Atlantic Tricon
JT3D-3B dated 1/22/90 recorded Leasing Corporation
as document #G77371
5. Xxxxx & Whitney 669638 Aircraft Chattel De Natioinale
JT3D-3B Mortgage and Security Investeringsbank
Agreement dated 3/3/93 N.V.
recorded as document
#AA49895
6. Xxxxx & Xxxxxxx 643521 Lien Notice dated Deutsche Credit
JT3D-3B 12/29/92 recorded as Corporation
document #U65100
7. Xxxxx & Whitney 642507 Security Agreement Xxxx Atlantic Triton
JT3D-3B dated 1/22/90 recorded Leasing Corporation"
as document #G77371
Section 2.6 Amendment to Section 5.3. Section 5.3 of the Credit Agreement
is hereby amended and restated to read in its entirety as follows:
"Section 5.3 New Aircraft Related Collateral. Kitty Hawk and its
Subsidiaries shall, promptly (and, in any event within ten Business Days)
after any request made by Agent after the
THIRD AMENDMENT AGREEMENT - Page 14
15
acquisition of any equipment or enhancement to any Aircraft Related
Collateral, execute, acknowledge and deliver to Agent, in favor of Agent for
the benefit of Agent and Lenders, such agreements, documents and instruments,
including, without limitation, Aircraft Mortgages or Security Agreements or
amendments or modifications to Aircraft Mortgages or Security Agreements,
covering such acquired equipment or enhancements as may reasonably be
requested by Agent, together with evidence reasonably satisfactory to Agent
and its counsel of Agent's valid, first priority Lien on the equipment and
enhancements acquired as security for the payment and performance of the
Obligations."
Section 2.7 Amendment to Section 5.5. A new clause (d) is hereby added to
Section 5.5 of the Credit Agreement, which clause (d) shall read in its
entirety as follows:
"(d) Release Provisions Non-Application to Other Aircraft Related
Collateral. The terms and provisions of this Section 5.5 shall not apply to
any Sixty Series Aircraft or Fifty Series Aircraft or any engines or Parts
forming a part thereof or relating thereto."
Section 2.8 Amendment to Section 5.7. Section 5.7 of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:
"Section 5.7 Title Insurance. Aircargo (with respect to the AIA
Aircraft) and AIA (with respect to the Sixty Series Aircraft) shall (at
their sole cost and expense) purchase and maintain owner and mortgagee
policies of title insurance (or, if acceptable to Required Lenders,
amendments or endorsements to existing polices of title insurance) insuring
that Aircargo and AIA have indefeasible title to each of the AIA Aircraft
and the Sixty Series Aircraft, respectively, and that Agent, for the benefit
of Agent and Lenders, holds a perfected, first priority Lien on each of the
AIA Aircraft and the Sixty Series Aircraft pursuant to the Loan Documents as
security for the payment and performance of the Obligations. The mortgagee
policy of title insurance in favor of Agent shall be in the amount of
$45,900,000 with respect to the AIA Aircraft and shall be in the amount of
$30,000,000 with respect to the Sixty Series Aircraft and shall be issued by
the Title Company or another title insurance company reasonably acceptable
to Agent and shall contain such terms and provisions as are reasonably
acceptable to Agent."
Section 2.9 Release of Sixty Series Aircraft. A new Section 5.8 is hereby
added to the Credit Agreement, which Section shall read in its entirety as
follows:
"Section 5.8 Release of Sixty Series Aircraft. Agent and Lenders agree
that, upon five Business Days prior written request from Kitty Hawk if (but
only if) Kitty Hawk, on or before the date of such release, prepays the
outstanding principal amount of the Revolving Credit Loans by an aggregate
amount equal to the Sixty Series Aircraft Release Amount (calculated with
respect to all Sixty Series Aircraft whether or not less than all Sixty
Series Aircraft are then proposed to be released), Agent shall (at Xxxxx
Xxxx'x expense) release its Lien on any one or more of the Sixty Series
Aircraft; provided, however, that Agent shall have no obligation to release
its Lien on any Sixty Series Aircraft (a) except concurrently with (or
thereafter) and in connection with a sale or exchange of such aircraft for
full and fair consideration during calendar
THIRD AMENDMENT AGREEMENT - Page 15
16
years 1998 or 1999 in accordance with and as permitted by Section 9.8 or (b)
after December 31, 1999, unless either (i) the audited financial statements
of Kitty Hawk and its Subsidiaries delivered pursuant to Section 8.1 reflect
that Adjusted EBITDA of Kitty Hawk and its consolidated Subsidiaries was
$149,000,000 or more for the fiscal year ending December 31, 1999 or (ii)
the Funded Debt to Adjusted EBITDA ratio of Kitty Hawk and its Subsidiaries
for the four fiscal quarters then most recently ended on or after December
31, 1999, as calculated pursuant to Section 10.1, does not exceed 3.00 to
1.00. Notwithstanding the foregoing provisions of this Section 5.8 or
anything to the contrary contained herein, Agent shall have no obligation to
release its Lien on any Sixty Series Aircraft if a Default shall have
occurred and be continuing. Furthermore, and notwithstanding anything to the
contrary contained herein, Agent shall not be required to execute any
document effectuating any release of a Lien on terms which, in Agent's
reasonable judgment, would expose Agent to liability or create any
obligation not reimbursed by Kitty Hawk or entail any warranty by Agent
(other than that Agent holds the Lien and enforceably releases it) or would,
in any manner, discharge, affect or impair any of the Obligations or any of
Agent's Liens on any Collateral not required to be so released or any
proceeds thereof."
Section 2.10 Release of Fifty Series Aircraft. A new Section 5.9 is hereby
added to the Credit Agreement, which Section shall read in its entirety as
follows:
"Section 5.9 Release of Fifty Series Aircraft. Agent and Lenders agree
that, upon five Business Days prior written request from Kitty Hawk, Agent
shall (at Xxxxx Xxxx'x expense) release its Lien on any one or more of the
Fifty Series Aircraft; provided, however, that Agent shall have no
obligation to release its Lien on any Fifty Series Aircraft except
concurrently with (or thereafter) and in connection with a sale or exchange
of such aircraft for full and fair consideration in accordance with and as
permitted by Section 9.8. Notwithstanding the foregoing provisions of this
Section 5.9 or anything to the contrary contained herein, Agent shall have
no obligation to release its Lien on any Fifty Series Aircraft if a Default
shall have occurred and be continuing. Furthermore, and notwithstanding
anything to the contrary contained herein, Agent shall not be required to
execute any document effectuating any release of a Lien on terms which, in
Agent's reasonable judgment, would expose Agent to liability or create any
obligation not reimbursed by Kitty Hawk or entail any warranty by Agent
(other than that Agent holds the Lien and enforceably releases it) or would,
in any manner, discharge, affect or impair any of the Obligations or any of
Agent's Liens on any Collateral not required to be so released or any
proceeds thereof."
Section 2.11 Third Amendment Projections. Section 7.2 of the Credit
Agreement is hereby amended to add a new subsection (d) thereto, which
subsection (d) shall read in its entirety as follows:
"(d) The Third Amendment Projections were prepared by Kitty Hawk on a
basis substantially consistent with the financial statements referred to in
Section 7.2(a). The Third Amendment Projections represent, as of the Third
Amendment Date, the good faith estimate of Kitty Hawk and its senior
management concerning the probable financial condition and
THIRD AMENDMENT AGREEMENT - Page 16
17
performance of Kitty Hawk and its Subsidiaries based on assumptions believed
to be reasonable at the time made."
Section 2.12 Rights in Properties; Liens. Section 7.6 of the Credit
Agreement is hereby amended to add the following two sentences to the end of
Section 7.6:
"AIA is the true and lawful owner of each of the Sixty Series Aircraft and
the Fifty Series Aircraft and is the registered owner of each of such
aircraft pursuant to proper registrations under the Federal Aviation Act.
AIA is an air carrier certified by the FAA and qualifies in all respects as
a citizen of the U.S. as defined in the Federal Aviation Act."
Section 2.13 Monthly Financial Statements. Section 8.1 of the Credit
Agreement is hereby amended to delete the word "and" at the end of clause (r)
of Section 8.1, to delete the period at the end of clause (s) of Section 8.1
and to add a semi-colon in lieu thereof and to add the following after clause
(s):
"(t) Monthly Financial Statements. As soon as available, and in any event
within 30 days after the end of each calendar month, beginning with the
calendar month ending November 30, 1998, (i) an unaudited financial report
of Kitty Hawk and its Subsidiaries as of the end of such month and for the
portion of the fiscal year then ended containing, on a consolidated basis,
balance sheets and statements of income, shareholders' equity and sources
and uses of cash, in each case setting forth in comparative form the figures
for the corresponding period of the preceding fiscal year, all in reasonable
detail certified by a Responsible Officer of Kitty Hawk to have been
prepared in accordance with GAAP and to fairly and accurately present
(subject to year-end audit adjustments) the financial condition and results
of operations of Kitty Hawk and its Subsidiaries, on a consolidated and
consolidating basis, at the date and for the periods indicated therein; and
(u) Monthly Cash Generated Reports. As soon as available, and in any
event within 30 days after the end of each calendar month, beginning with
the calendar month commencing January 1999 and continuing through December
1999, a Cash Generated Report in the form of Exhibit G attached hereto,
appropriately and accurately completed in all respects and executed by Kitty
Hawk."
Section 2.14 Maintenance of Existence; Conduct of Business. The last
sentence of Section 8.2 of the Credit Agreement is amended and restated to read
in its entirety as follows:
"All AIA Aircraft and Sixty Series Aircraft will be maintained as ready and
available for regular, uninterrupted revenue generating operation in
compliance with all laws and FAA regulations."
Section 2.15 Maintenance of Properties; Hush Kits. Section 8.3 of the Credit
Agreement is hereby amended such that each reference therein to the term "AIA
Aircraft" shall mean and refer to "AIA Aircraft and Sixty Series Aircraft".
THIRD AMENDMENT AGREEMENT - Page 17
18
Section 2.16 Insurance. Section 8.5 of the Credit Agreement is hereby
amended such that each reference therein to the term "AIA Aircraft" shall mean
and refer to "Collateral Aircraft".
Section 2.17 Aircraft Registration, Maintenance, Operation, Insignia.
Section 8.12 of the Credit Agreement is hereby amended such that each reference
therein to the term "AIA Aircraft" shall mean and refer to "AIA Aircraft and
Sixty Series Aircraft"; provided, however, that clause (i) of Section 8.12(a)
of the Credit Agreement is hereby amended and restated to read in its entirety
as follows:
"(i) cause the AIA Aircraft and the Sixty Series Aircraft and Fifty
Series Aircraft to be duly registered in the name of Aircargo and AIA,
respectively, and to remain duly registered in such name under the Federal
Aviation Act;".
Section 2.18 Replacement of Parts; Alterations, Modifications and Additions.
Section 8.13 of the Credit Agreement is hereby amended such that each reference
therein to the term "AIA Aircraft" shall mean and refer to "Collateral
Aircraft".
Section 2.19 Appraisals. A new Section 8.16 is hereby added to the Credit
Agreement, which Section 8.16 shall read in its entirety as follows:
"Section 8.16 Delivery of Appraisals. Kitty Hawk shall deliver, or cause
to be delivered, to Agent the following, all of which must be in form and
substance satisfactory to Agent and Required Lenders:
(a) on or before the Third Amendment Date, the Sixty Series Aircraft
Appraisal;
(b) on or before December 28, 1998, the AIA Aircraft Appraisal; and
(c) on or before December 31, 1998, the Parts Appraisal.
In addition, in the event that Agent or Required Lenders in their sole
discretion require any modification, amendment or supplement to any such
appraisal, Kitty Hawk shall cause such modification, amendment or supplement
to be prepared and delivered to Agent promptly after any request therefor
made by Agent to Kitty Hawk. Assuming such appraisals are timely received by
Agent, Agent and Lenders shall review the AIA Aircraft Appraisal and the
Parts Appraisal by no later than January 15, 1999 and shall inform Kitty
Hawk as to whether such appraisals have been approved by Agent and Lenders
by such date."
Section 2.20 Amendment to Section 9.1. Clause (c) of Section 9.1 of the
Credit Agreement is hereby amended and restated to read in its entirety as
follows:
"(c) Debt (in addition to the Debt referred to in clauses (a) and (b)
preceding) incurred in the ordinary course of business (including, without
limitation, Debt incurred to finance the acquisition of additional aircraft)
not to exceed $75,000,000 in aggregate principal amount at
THIRD AMENDMENT AGREEMENT - Page 18
19
any time outstanding, provided, however, that no Debt may be incurred
pursuant to this clause (c) on or after the Third Amendment Date until the
later to occur of the Increase Termination Date or the date upon which the
Sixty Series Aircraft Release Amount has been paid in full."
Section 2.21 Amendment to Section 9.3. Section 9.3 of the Credit Agreement
is hereby amended to delete the period at the end of Section 9.3 and to add a
semi-colon in lieu thereof and to add the following new clause to the end of
Section 9.3:
"and provided, further, however, that AIC may be dissolved and wound-up in
accordance with applicable law."
Section 2.22 Amendment to Section 9.8. Section 9.8 of the Credit Agreement
is hereby amended to delete the word "and" at the end of clause (a), to delete
the period at the end of clause (b) and to add a semi-colon in lieu thereof and
to add the following new clause (c):
"(c) with respect to Sixty Series Aircraft and Fifty Series Aircraft,
dispositions of such aircraft for full and fair consideration, provided,
however, that the Lien in favor of Agent as security for the Obligations
shall not be released in connection with any such disposition except as
provided pursuant to Sections 5.8 and 5.9."
Section 2.23 Lines of Business. Section 9.9 of the Credit Agreement is
hereby amended such that the reference therein to the term "AIA Aircraft" shall
mean and refer to "Collateral Aircraft".
Section 2.24 Modification of Other Agreements. Section 9.13 of the Credit
Agreement is hereby amended such that the reference therein to the term "AIA
Aircraft" shall mean and refer to "Collateral Aircraft".
Section 2.25 Territorial Restrictions. Section 9.15 of the Credit Agreement
is hereby amended such that each reference therein to the term "AIA Aircraft"
shall mean and refer to "Collateral Aircraft".
Section 2.26 Amendment to Section 10.1. Section 10.1 of the Credit Agreement
is hereby amended and restated to read in its entirety as follows:
"Section 10.1 Maximum Funded Debt to Adjusted EBITDA Ratio. Kitty Hawk
and its Subsidiaries will not permit the ratio, calculated as of the end of
each fiscal quarter of Kitty Hawk commencing with the fiscal quarter ending
December 31, 1997, of (a) Funded Debt to (b) Adjusted EBITDA for the four
fiscal quarters of Kitty Hawk then ended, to be greater than the ratio set
forth below for the applicable fiscal quarter end:
THIRD AMENDMENT AGREEMENT - Page 19
20
Fiscal Quarter Ending Maximum Ratio
--------------------- -------------
December 31, 1997 through and
including December 31, 1998 4.25 to 1.00
March 31, 1999 through and
including December 31, 1999 4.00 to 1.00
March 31, 2000 through and
including June 30, 2000 3.50 to 1.00
September 30, 2000 3.25 to 1.00
December 31, 2000 through and
including December 31, 2001 3.00 to 1.00
March 31, 2002 and each fiscal
quarter ending thereafter 2.50 to 1.00"
Section 2.27 Amendment to Section 10.3. Section 10.3 of the Credit Agreement
is hereby amended and restated to read in its entirety as follows:
"Section 10.3 Minimum Debt Service Coverage. Kitty Hawk and its
Subsidiaries will not permit the ratio, calculated as of the end of each
fiscal quarter of Kitty Hawk commencing with the fiscal quarter ending March
31, 1998, of (a) Adjusted EBITDA to (b) the sum of (i) Interest Expense,
plus (ii) Capital Lease Obligations, plus (iii) the aggregate amount of all
payments of Funded Debt paid by Kitty Hawk or any of its Subsidiaries during
the 12-month period ending on the date of determination, in each case for
the four fiscal quarters of Kitty Hawk then ended, to be less than 2.00 to
1.00."
Section 2.28 Capital Expenditures. Section 10.4 of the Credit Agreement is
hereby amended and restated to read in its entirety as follows:
"Section 10.4 Capital Expenditures. Kitty Hawk and its Subsidiaries will
not permit the aggregate of Capital Expenditures (a) during fiscal year 1998
to exceed $160,000,000, (b) during fiscal year 1999 to exceed $115,000,000,
and (c) during fiscal year 2000 and each fiscal year thereafter to exceed
$65,000,000; provided, however, that, for purposes of clause (a) preceding,
Capital Expenditures shall exclude the cost of the acquisition of two model
747 aircraft from Middle Eastern Airlines during January or February 1998."
THIRD AMENDMENT AGREEMENT - Page 20
21
Section 2.29 Minimum Cash Generated Requirement. A new Section 10.5 is
hereby added to the Credit Agreement, which Section 10.5 shall read in its
entirety as follows:
"Section 10.5 Minimum Cash Generated Requirement. Kitty Hawk and its
Subsidiaries will:
(a) as of March 31, 1999 and based upon the Cash Generated Report as
of March 31, 1999, have 'Total Cash Generated Year-to-Date' (as such term
is used and reflected in such report) equal to or greater than 22.8959%
of the 'Adjusted Required Cash' (as such term is used and reflected in
such report), in each case as reflected in such Cash Generated Report;
(b) as of June 30, 1999 and based upon the Cash Generated Report as of
June 30, 1999, have 'Total Cash Generated Year-to-Date' (as such term is
used and reflected in such report) equal to or greater than 68.6876% of
the 'Adjusted Required Cash' (as such term is used and reflected in such
report), in each case as reflected in such Cash Generated Report; and
(c) as of September 30, 1999 and based upon the Cash Generated Report
as of September 30, 1999, have 'Total Cash Generated Year-to-Date' (as
such term is used and reflected in such report) equal to or greater than
100% of the 'Adjusted Required Cash' (as such term is used and reflected
in such report), in each case as reflected in such Cash Generated
Report."
Section 2.30 Term Loans to Value Ratio. A new Section 10.6 is hereby added
to the Credit Agreement, which Section shall read in its entirety as follows:
"Section 10.6 Term Loans to Value Ratio. Kitty Hawk and its Subsidiaries
will not, as of September 30, 1999, permit the quotient (expressed as a
percentage) of (a) the aggregate outstanding principal amount of the Term
Loans divided by (b) the Appraised Value of the AIA Aircraft, to exceed
50%."
Section 2.31 Form of Borrowing Base Report. Exhibit B to the Credit
Agreement, the form of Borrowing Base Report, is hereby amended and restated to
read as set forth in Third Amendment Exhibit A attached hereto.
Section 2.32 Form of Cash Generated Report. A new Exhibit G is hereby added
to the Credit Agreement, which Exhibit G shall read as set forth in Third
Amendment Exhibit B attached hereto.
THIRD AMENDMENT AGREEMENT - Page 21
22
ARTICLE 3
Conditions Precedent
Section 3.1 Conditions Precedent. Except as provided in Section 3.2, the
effectiveness of this Amendment is subject to the satisfaction of each of the
following conditions precedent.
(a) Agent shall have received all of the following, each dated (unless
otherwise indicated) the Third Amendment Date, in form and substance
satisfactory to Agent:
(i) Amendment Documents. This Amendment, Aircraft Mortgages covering
the Sixty Series Aircraft and the Fifty Series Aircraft, UCC-1 financing
statements relating to the Aircraft Mortgages, the Sixty Series Aircraft
Appraisal, mortgagee policies of title insurance relating to the Sixty
Series Aircraft and any other agreement, instrument, document or
certificate required by this Amendment or reasonably required by Agent to
be executed or delivered by Kitty Hawk or any of its Subsidiaries in
connection with this Amendment, in each case duly executed by all parties
thereto (the "Amendment Documents");
(ii) Resolutions. Resolutions of the Board of Directors of each of
Kitty Hawk and its Subsidiaries certified by the Secretary or an
Assistant Secretary of each such Person which authorize the execution,
delivery and performance by such Person of this Amendment and the other
Amendment Documents to which it is or is to be a party;
(iii) Fees, Costs and Expenses. The fees payable by Kitty Hawk on the
Third Amendment Date in accordance with Section 2.4 of this Amendment
shall have been paid in full by Kitty Hawk, and all fees, costs and
expenses (including, without limitation, attorneys' fees and expenses)
incurred by Agent incident to this Amendment and the Amendment Documents
or required to be paid in accordance with Section 13.1 of the Credit
Agreement, to the extent incurred and submitted to Kitty Hawk, shall have
been paid in full by Kitty Hawk; and
(iv) Additional Information. Such additional agreements, documents,
instruments and information as Agent or its legal counsel, Jenkens &
Xxxxxxxxx, a Professional Corporation, may reasonably request to effect
the transactions contemplated hereby.
(b) Agent and Lenders shall have approved the Appraised Value of the
Sixty Series Aircraft.
(c) The representations and warranties contained herein and in all other
Loan Documents, as amended hereby, shall be true and correct as of the date
hereof as if made again on and as of the date hereof (except to the extent
that such representations and warranties were expressly, in the Loan
Documents, made only in reference to a specific date).
(d) No Default or Event of Default shall have occurred and be continuing
(after giving effect to this Amendment).
THIRD AMENDMENT AGREEMENT - Page 22
23
(e) All corporate proceedings taken in connection with the transactions
contemplated by this Amendment and all other agreements, documents and
instruments executed and/or delivered pursuant hereto, and all legal matters
incident thereto, shall be satisfactory to Agent and its legal counsel,
Jenkens & Xxxxxxxxx, a Professional Corporation.
Section 3.2 Failure of Conditions Precedent. In the event that any of the
conditions precedent referred to in Section 3.1 of this Amendment are not fully
and timely satisfied on or before December 31, 1998, except as stated in the
proviso below, this Amendment (including all terms and provisions hereof) shall
be of no force or effect as if this Amendment were never executed; provided,
however, that the Aircraft Mortgages granting Liens on the Sixty Series
Aircraft and the Fifty Series Aircraft shall be valid, enforceable and of full
force and effect whether or not such conditions precedent are satisfied.
ARTICLE 4
Miscellaneous
Section 4.1 Fees, Costs and Expenses. Kitty Hawk shall pay all reasonable
fees, costs and expenses incurred by Agent (including, without limitation,
attorneys fees and expenses) in connection with the negotiation, preparation,
execution and consummation of this Amendment and the other Amendment Documents
and transactions contemplated hereby and thereby. Kitty Hawk shall pay to
Agent, on the Third Amendment Date and for the account of Agent and/or Lenders
(as applicable), the fees referred to in Section 2.4 of this Amendment.
Section 4.2 Headings. The headings, captions and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
Section 4.3 Effect of this Amendment. The Credit Agreement, as amended by
this Amendment, shall remain in full force and effect except that any reference
therein, or in any other Loan Document, to the Credit Agreement shall be deemed
to mean and refer to the Credit Agreement as amended by this Amendment.
Section 4.4 Counterparts. This Amendment may be executed in one or more
counterparts, by means of facsimile or otherwise, each of which shall be deemed
an original, but all of which together shall constitute one and the same
Amendment.
SECTION 4.5 GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS (WITHOUT REGARD TO
CONFLICTS OF LAW PRINCIPLES) AND APPLICABLE LAWS OF THE UNITED STATES.
SECTION 4.6 NO ORAL AGREEMENTS. THE CREDIT AGREEMENT, AS AMENDED BY THIS
AMENDMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENT THE FINAL, ENTIRE
AGREEMENT BETWEEN AND AMONG THE PARTIES HERETO, AND MAY NOT BE CONTRADICTED OR
VARIED BY EVIDENCE
THIRD AMENDMENT AGREEMENT - Page 23
24
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES HERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG THE PARTIES.
Section 4.7 Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid, illegal or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision held to be invalid, illegal or unenforceable.
Section 4.8 Representations and Warranties. Each of Kitty Hawk and its
Subsidiaries hereby represents and warrants to Agent and Lenders that, as of
the date of and after giving effect to this Amendment, (a) the execution,
delivery and performance of this Amendment and any and all other Amendment
Documents executed and/or delivered in connection herewith have been duly
authorized by all requisite corporate action on the part of such Person and
will not violate such Person's corporate charter or bylaws, (b) the term Loan
Documents as defined in the Credit Agreement and as used in any of the Loan
Documents includes, without limitation, the Amendment Documents, (c) all
representations and warranties set forth in the Credit Agreement and the other
Loan Documents are true and correct as if made again on and as of such date
(except to the extent that such representations and warranties were expressly
therein made only in reference to a specific date), (d) no Default or Event of
Default has occurred and is continuing, (e) the Credit Agreement and the other
Loan Documents (as amended by this Amendment) are and remain legal, valid,
binding and enforceable obligations of Kitty Hawk and its Subsidiaries, and (f)
to the best of their knowledge, all indebtedness, liabilities and obligations
secured by the Liens affecting the seven engines referred to in the table
contained in Section 2.5 of this Amendment have been paid in full. Without
limiting the generality of the foregoing, (i) the Liens granted by AIA covering
the Sixty Series Aircraft and the Fifty Series Aircraft are permitted pursuant
to clause (vii) of Section 4.09 of the Indenture, (ii) the Adjusted
Consolidated Net Tangible Assets of Kitty Hawk and its "Restricted
Subsidiaries" (as defined in the Indenture) is not less than $700,000,000 as of
the Third Amendment Date, and (iii) the fair market value of the Sixty Series
Aircraft and the Fifty Series Aircraft does not exceed $80,000,000 as of the
Third Amendment Date.
Section 4.9 Credit Agreement Remains in Effect; No Waiver. Except as
expressly provided herein, all terms and provisions of the Credit Agreement and
the other Loan Documents shall remain unchanged and in full force and effect
and are hereby ratified and confirmed. No waiver by Agent or any Lender of any
Default or Event of Default shall be deemed to be a waiver of any other Default
or Event of Default. No delay or omission by Agent or any Lender in exercising
any power, right or remedy shall impair such power, right or remedy or be
construed as a waiver thereof or an acquiescence therein, and no single or
partial exercise of any such power, right or remedy shall preclude other or
further exercise thereof or the exercise of any other power, right or remedy
under the Credit Agreement, the Loan Documents or otherwise.
Section 4.10 Survival of Representations and Warranties. All representations
and warranties made in this Amendment or any other Loan Document shall survive
the execution and delivery of this Amendment and the other Loan Documents, and
no investigation by Agent or any
THIRD AMENDMENT AGREEMENT - Page 24
25
Lender or any closing shall affect the representations and warranties or the
right of Agent and Lenders to rely upon them.
Section 4.11 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Agent and Lenders and the Amending Parties and
their respective successors and assigns, except that none of the Amending
Parties may assign or transfer any of its rights or obligations hereunder
without the prior written consent of Agent and Lenders.
THIRD AMENDMENT AGREEMENT - Page 25
26
IN WITNESS WHEREOF, the undersigned parties hereto have duly executed this
Amendment effective as of the dates first above written.
KITTY HAWK:
KITTY HAWK, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AIRCARGO:
KITTY HAWK AIRCARGO, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
LEASING:
AIRCRAFT LEASING, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
CHARTERS:
KITTY HAWK CHARTERS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
AIA:
AMERICAN INTERNATIONAL AIRWAYS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THIRD AMENDMENT AGREEMENT - Page 26
27
AIT:
AMERICAN INTERNATIONAL TRAVEL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
FOL:
FLIGHT ONE LOGISTICS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
KFS:
KALITTA FLYING SERVICE, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
OK:
O. K. TURBINES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
LONGHORN:
LONGHORN SOLUTIONS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THIRD AMENDMENT AGREEMENT - Page 27
28
AGENT AND A LENDER:
XXXXX FARGO BANK (TEXAS), NATIONAL
ASSOCIATION, as Agent and as a Lender
By:
---------------------------------
Name: Xxxx Xxxxx
Title: Vice President
ADDITIONAL LENDERS:
BANK ONE, TEXAS, N.A.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
COMERICA BANK
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
XXXXXX FINANCIAL, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
TORONTO DOMINION (TEXAS), INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
THIRD AMENDMENT AGREEMENT - Page 28
