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EXHIBIT 10.5
EXECUTION COPY
AMENDMENT NO. 1 AND WAIVER TO LOAN AGREEMENT
AMENDMENT NO. 1 AND WAIVER TO LOAN AGREEMENT (this "Amendment")
dated as of April 27, 2005 by and among
World Airways, Inc. (the "Borrower"),
World Air Holdings, Inc. ("Parent"), North
American Airlines, Inc. ("North
American"), World Airways Parts Company,
LLC, Govco Incorporated, as Primary
Tranche A Lender ("Govco"), Citicorp North
America, Inc., as Govco
Administrative Agent (the "Govco
Administrative Agent"), the other Lenders party
hereto, Citibank, N.A., as Agent for the
Lenders (in such capacity, together
with its successors and permitted assigns,
the "Agent") Citibank, N.A., as
Collateral Agent (in such capacity,
together with its successors and permitted
assigns, the "Collateral Agent," and
together with the Agent, the "Agents"),
International Lease Finance Corporation, as
Supplemental Guarantor (the
"Supplemental Guarantor"), and the Air
Transportation Stabilization Board (the
"Board") created pursuant to the Air
Transportation Safety and System
Stabilization Act (the "Act"), P.L. 107-42
(2001), as the same may be amended
from time to time. Capitalized terms used
in this Amendment but not otherwise
defined herein have the meanings given to
such terms in the Loan Agreement (as
such term is defined herein).
WITNESSETH:
WHEREAS, the Borrower, the Board, the Agents, the Lenders
referred
to therein and Phoenix American Financial
Services Inc., as Loan Administrator,
executed and delivered that certain Loan
Agreement dated as of December 30, 2003
(as amended, supplemented or otherwise
modified through the date hereof, the
"Loan Agreement") pursuant to which the
Lenders made a loan to Borrower in the
amount of $30,000,000;
WHEREAS, on January 10,2005, Parent and Borrower consummated a
restructuring transaction pursuant to which
all of the outstanding shares of
common stock of the Borrower were
automatically converted into shares of common
stock of Parent, which resulted in Borrower
becoming a wholly-owned subsidiary
of Parent, and in connection therewith,
Parent executed and delivered, inter
alia, that certain Joinder Agreement dated
as of January 10, 2005 pursuant to
which Parent became an Obligor under, and
agreed to be bound by the terms and
provisions of, the Loan Agreement;
WHEREAS, pursuant to that certain Stock Purchase Agreement dated
as
of April 27, 2005 (the "Stock Purchase
Agreement") among Parent, North American,
and Dan McKinnon, individually and as
trustee of the Dan and Janice McKinnon
Family Trust dated January 15, 2005 (the
"Seller"), Parent has acquired all of
the outstanding shares of common stock of
North American (the "Acquisition");
WHEREAS, in connection with the Acquisition, Borrower and
Parent
have requested that certain provisions of
the Loan Agreement be amended or
waived as hereinafter provided; and
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WHEREAS, the Board, the Agents and the Lenders are willing to
amend
the Loan Agreement on the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and the
covenants
and agreements contained herein, the
parties hereto agree as follows:
SECTION 1. AMENDMENTS TO LOAN AGREEMENT. As of the Amendment
Effective Date (as defined in Section 4
below), the Loan Agreement is hereby
amended as follows:
(a)
Definitions.
(i) Section 1.1 of the Loan Agreement is hereby amended by
adding the following new definitions in the
proper alphabetical order:
"North American" means North American Airlines, Inc., a
Delaware corporation and wholly owned Subsidiary of Parent,
together
with its successors and permitted assigns.
"North American AMC Agreement" means, collectively, any
agreement or purchase order between the Air Mobility Command
and
North American (or any other party acting on its behalf, whether
in
connection with a teaming arrangement or otherwise) for airlift
services, including, without limitation, that certain agreement
identified as contract number FA4428-04-D-0022, together with
any
amendments, restatements, renewals, replacements, successors or
modifications of any of the foregoing.
"Parent Guarantee" means the Parent Guarantee dated as of
January 10, 2005 made by Parent in favor of the Guaranteed
Parties
(as defined therein).
"Payroll Accounts" has the meaning specified in Section
6.4(a).
(ii) Section 1.1 of the Loan Agreement is hereby amended by
amending and restating in its entirety the
definition of "Obligor" as follows:
"Obligor" means Parent, the Borrower or North American, and
"Obligors" means all of Parent, the Borrower and North
American,
together with their respective successors and permitted
assigns.
(iii) Section 1.1 of the Loan Agreement is hereby amended by
amending and restating in its entirety the
definition of "Security Agreement" as
follows:
"Security Agreement" means the Mortgage and Security Agreement
dated as of December 30, 2003 among the Borrower, World LLC and
the
Collateral Agent, as amended and restated by that certain
Amended
and Restated Mortgage and Security Agreement dated as of April
27,
2005 among the Borrower, Parent, North American, World LLC and
the
Collateral Agent, as the same may be amended, supplemented or
otherwise modified from time to time, including by any Security
Agreement Supplement.
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(b) Amendment to
Section 2.3. Section 2.3 of the Loan Agreement is
hereby amended by replacing the chart set
forth in such Section with the
following chart:
<TABLE>
<CAPTION>
Interest Payment Date falling on or
about:
Principal Amount
-----------------------------------
----------------
<S>
<C>
December 12,
2005
$6,000,000.00
June 12, 2006
$5,000,000.00
December 12,
2006
$5,000,000.00
June 12, 2007
$5,000,000.00
December 12,
2007
$5,000,000.00
June 12, 2008
$4,000,000.00
</TABLE>
(c) Amendment to
Section 5.17. Section 5.17 of the Loan Agreement
is hereby amended by renumbering the
existing clause (ii) in the last sentence
thereof as clause (iii) and inserting a new
clause (ii) as follows: "(ii)
pledged under the Security Agreement which
are maintained with financial
institutions in the United States and which
contain, in the aggregate, no more
than $250,000".
(d) Amendment to
Section 6.4(a). Section 6.4(a) of the Loan
Agreement is hereby amended and restated in
its entirety as follows:
The Obligors shall not permit the reserve of unrestricted Cash
and
Cash Equivalents (which in each case shall be free from all
Liens other than Permitted Encumbrances of the type described
in
clause (vii) of the definition of Permitted Encumbrances) of
the
Obligors and their Restricted Subsidiaries to be less than
$15,000,000; it being understood that the following shall be
excluded from unrestricted Cash and Cash Equivalents for the
purposes of this Section 6.4(a): (i) Cash or Cash Equivalents
securing obligations in respect of letters of credit that are
collateralized by Cash or Cash Equivalents, if any, and (ii) Cash
or
Cash Equivalents held in any payroll account of any of the
Obligors
(collectively the "Payroll Accounts"), including without
limitation
North American's payroll account with account number 7747385 at
Citibank, N.A and Borrower's payroll account with account
number
2079920018648 at Wachovia Bank, N.A.
(e) Amendment to
Article VI. Article VI of the Loan Agreement is
hereby amendment by inserting a new Section
6.18 and a new Section 6.19 as
follows:
Section 6.18 Prohibition on Borrower Guarantees. Neither the
Borrower nor any of its Restricted Subsidiaries shall Guarantee
or
assume any obligation of North American or any Restricted
Subsidiary
of North American, including, without limitation, under any
aircraft
lease or other financing arrangement. For the avoidance of doubt,
it
is acknowledged and agreed that the foregoing shall not prohibit
the
Borrower or any of its Restricted Subsidiaries from making
capital
contributions or equity investments or advances, loans or other
extensions of credit to North American or any Restricted
Subsidiary
of North American so long as such contributions, equity
investments,
advances, loans or other extensions of
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credit are not made for the purpose of Guaranteeing or assuming
an
obligation of North American.
Section 6.19 Payroll Accounts. The Obligors shall not fund any
Payroll Account other than in the ordinary course of business
for
the purpose of meeting current payroll obligations.
(f) Amendments
to Section 7.1.
(i) Section 7.1 of the Loan Agreement is hereby amended by
amending and restating subsection (1)
thereof in its entirety as follows:
(1) A Subsidiary Guarantee or the Parent Guarantee shall
for any reason cease to be in full force and effect or any
Person
that is a guarantor thereunder shall, in writing, repudiate
such
Subsidiary Guarantee or Parent Guarantee, as the case may be,
or
deny that its obligations thereunder are valid, binding and
enforceable; or
(ii) Section 7.1 of the Loan Agreement is hereby amended by
inserting new subsections (t) and (u) after
subsection (s) thereof and replacing
the "." after subsection (s) with ";
or":
(s) Any default by North American under the North
American AMC Agreement or any team agreement related thereto,
which
default is not waived or remedied prior to the expiration of
any
period of grace provided with respect thereto and which results
in
(i) North American being suspended or disqualified from the
performance of airlift services thereunder or (ii) the
termination
of any such agreements with respect to North American, and
which
suspension, disqualification or termination has had, or could
reasonably be expected to have, a Material Adverse Effect; or
(t) Any representation and warranty contained in that
certain Stock Purchase Agreement dated as of April 27, 2005
among
Parent, North American and Dan McKinnon, individually and as
trustee
of the Dan and Janice McKinnon Family Trust dated January 15,
2005
made by Seller (as defined therein) thereunder or in connection
therewith shall prove not to have been true and correct as and
when
made by Seller, and the failure of such representation and
warranty
to be true and correct shall have had a Material Adverse
Effect.
(g) Amendment to
Section 10.4. Section 10.4 of the Loan Agreement
is hereby amended by replacing the words
"Borrower and Parent" in the second
line thereof with "Obligors".
(h) Amendment to
Schedule 6.1. Schedule 6.1 of the Loan Agreement
is hereby amended to add the items
described in Exhibit A
