8-K

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): January 31, 2003

Kitty Hawk, Inc.

(Exact name of registrant as specified in its charter)

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

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

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

Not Applicable

(Former name or former address, if changed since last report)

Item 5. Other Events and Regulation FD Disclosure.

Background

As previously reported, on or about May 1, 2000, Kitty Hawk, Inc. (the “Company”) and all of its subsidiaries (collectively with the Company, the “Debtors”) filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas, Fort Worth Division (the “Bankruptcy Court”). These proceedings were jointly administered under case No. 400-42141-BJH-11.

On August 5, 2002, the Bankruptcy Court entered an order dated August 5, 2002, confirming the Debtors’ Final Joint Plan of Reorganization dated August 2, 2002, with certain modifications (as so modified, the “Plan”). On September 26, 2002, the Bankruptcy Court entered another order dated September 26, 2002, approving a modification to the Plan to allow for the Plan to become effective on or before October 1, 2002, as compared to a date of September 1, 2002, as originally contemplated in the Plan. On September 30, 2002, the Plan became effective.

Under the Plan, beneficial owners (the “Noteholders”) of the Company’s 9.95% Senior Secured Notes Due 2004 (the “Senior Notes”) were entitled to receive, among other things, 81% of the shares of the Company’s common stock, par value $.01 per share (the “New Stock”), to be issued under the Plan. The proposed distribution of New Stock to the Noteholders under the Plan caused the U.S. Department of Transportation (the “DOT”) to express concern that non-U.S. citizens might own more New Stock than is permitted by federal law. Under federal law, as interpreted by the DOT, at least 75% of the voting stock of a U.S. certificated air carrier must be owned and controlled by “United States citizens,” as defined by 49 U.S.C. §40102(a)(15). After extensive negotiations, the DOT indicated that the Company could resolve the DOT’s concerns about non-U.S. citizen ownership of New Stock by issuing to non-U.S. citizens, on a pro rata basis, no more than 22.5% of the total New Stock to be issued under the Plan and issuing warrants to purchase any additional shares of New Stock that the non-U.S. citizens would otherwise be entitled to receive if they were U.S. citizens.

Modification of the Plan

On December 23, 2002, the Company filed a motion with the Bankruptcy Court seeking an order modifying the Plan to provide that (i) the Noteholders will receive New Stock and warrants to purchase New Stock equal, collectively, to 81% of the total New Stock to be issued under the Plan, (ii) all Noteholders that are non-U.S. citizens will share, ratably, in a distribution of 21.5% of the New Stock outstanding on the date of issuance and, to the extent that non-U.S. citizens are entitled to more than 21.5% of the New Stock outstanding on the date of issuance, they will receive warrants to purchase the remaining shares of New Stock that they would otherwise receive if they were U.S. citizens, and (iii) the warrants be exempt from federal, state or local law requiring the registration of such securities, to the extent provided by section 1145 of the Bankruptcy Code. The remaining 1% of the 22.5% of New Stock that could be distributed to non-U.S. citizens shall be reserved for distribution to the general unsecured trade creditors of the Company who are non-U.S. citizens. The Company’s motion further requested that the Bankruptcy Court’s order authorize the Company to file an amendment to its Second Amended and Restated Certificate of Incorporation to reduce the par value of the New Stock from $0.01 per share to $0.000001 per share.

On January 29, 2003, the Bankruptcy Court granted the Company’s motion and entered an order on January 31, 2003, granting all the relief requested in the Company’s motion, as described above. A copy of the Bankruptcy Court’s order is attached hereto as Exhibit 99.1 and incorporated herein by this reference.

Distribution of New Stock and Warrants

The Company expects to begin distributing New Stock and warrants to purchase New Stock to the Noteholders as soon as practicable, but no in event later than thirty (30) business days after January 31, 2003 or such other date as agreed to by the Company and HSBC BANK USA, as successor trustee and collateral trustee for the Senior Notes (the “Indenture Trustee”), as provided in the Plan. Distributions of New Stock and warrants to purchase New Stock will be made to the Noteholders that appear as Noteholders of record on the records of the Company, the Indenture Trustee and/or the Senior Note Custodian, as defined in the Plan, as of the close of business on October 21, 2002. Neither the Company, the Indenture Trustee, nor any Senior Note Custodian, as defined in the Plan, is required to recognize any transfer of legal or beneficial ownership of a Senior Note that occurred after October 21, 2002.

The warrants authorized by the Bankruptcy Court’s order have an exercise price of $0.000001 per share, have a term of 10 years and are exercisable only by a citizen of the United States as defined by 49 U.S.C. §40102(a)(15). The warrants will have the same transferability as shares of New Stock issued under the Plan. The forms of warrant to be issued by the Company to affiliates and non-affiliates are attached hereto as Exhibits 99.2 and 99.3, respectively, and incorporated herein by this reference.

Forward-Looking Statements

This report contains and incorporates forward-looking statements, including statements regarding the Company’s continuing operations and business, future financial performance and financial condition. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual plans of the Company to differ materially from any future plans expressed or implied by such forward-looking statements. Such factors include, but are not limited to: world-wide business and economic conditions; acquisitions, recruiting and new business solicitation efforts; product demand and the rate of growth in the air cargo industry; the impact of competitors and competitive aircraft and aircraft financing availability; the ability to attract and retain new and existing customers; jet fuel prices; normalized aircraft operating costs and reliability; and regulatory actions. All forward-looking statements involve substantial risks and uncertainties beyond the Company’s control. The Company undertakes no obligation to update or revise any forward-looking statements contained in the Plan or this report for events or circumstances after the date on which such forward-looking statements are made. New factors emerge from time to time, and it is not possible for the Company to predict all such factors.

Item 7. Financial Statements and Exhibits

(a) Financial Statements of businesses acquired.

Not applicable

(b) Pro forma financial information.

Not applicable

(c) Exhibits

The Exhibit Index attached hereto is incorporated by reference herein.

* * * * *

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.

	KITTY HAWK, INC.
Date: February 7, 2002
	By:	/s/ Drew Keith
	Name:	Drew Keith
	Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit   Number	Description
99.1	Order Granting Second Motion to Modify Debtors’ Final Joint Plan of Reorganization dated January 31, 2003
99.2	Form of Warrant to Purchase Common Stock of the Company (Affiliates)
99.3	Form of Warrant to Purchase Common Stock of the Company (Non-Affiliates)

EX-99.1

Exhibit 99.1

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

IN RE:	§	Chapter 11
	§
KITTY HAWK, INC., et al.	§	Case No. 400-42069-BJH and
	§	Case Nos. 400-42141 through
Debtors	§	Case No. 400-42149
	§
	§	Jointly Administered Under
	§	Case No. 400-42141-BJH
	§	Hearing Held January 29, 2003

ORDER GRANTING SECOND MOTION TO MODIFY DEBTORS’ FINAL

JOINT PLAN OF REORGANIZATION

On this day, came on for consideration the Second Motion to Modify Debtors’ Joint Plan of Reorganization (the “Motion”) filed by Kitty Hawk, Inc. (“Kitty Hawk”), Kitty Hawk Aircargo, Inc. and Kitty Hawk Charters, Inc., the Reorganized Debtors under the Debtors’ Final Plan of Reorganization (the “Plan”) confirmed by this Court on August 5, 2002. As an initial matter, the Court notes that no party objected to the relief requested in the Motion. After considering the pleadings, the evidence presented and the arguments of counsel, the Court finds as follows:

1.    The Reorganized Debtors provided notice of the Motion to all parties requesting notice in these cases and to the affected parties, including the affected beneficial owners of the Senior Notes.

2.    The Plan provides for the distribution of 81% of the Reorganized Debtors’ New Common Stock to be distributed to the holders of the Senior Notes (the “Noteholders”). The remainder of the New Common Stock will be distributed to general unsecured creditors and Pegasus Aviation, Inc. and its affiliates (“Pegasus”).

Order Granting Second Motion to Modify Debtors’

Final Joint Plan of Reorganization

1

Exhibit 99.1

3.    One of the Reorganized Debtors, Kitty Hawk Aircargo, Inc. (“Aircargo”) is a Part 121 certificated air carrier subject to the jurisdiction and regulations of the Department of Transportation (the “DOT”). The proposed distribution of New Common Stock to the Noteholders under the Plan caused the U.S. Department of Transportation to express some concern that non-U.S. citizens will own more stock in Aircargo, a U.S. air carrier, than is permitted by federal law. Under federal law as interpreted by the DOT, at least 75% of the voting stock of a U.S. air carrier must be owned and controlled by U.S. citizens. In determining ownership of a U.S. carrier, the DOT looks to the ownership of the ultimate parent corporation of the carrier, which in this case is Kitty Hawk. Pursuant to the Plan, 81% of the New Common Stock of Kitty Hawk would be distributed to the Noteholders. A significant portion of the Senior Notes is held by investment funds that are partnerships with one or more non-U.S.-citizen limited partners. The DOT believes these investment funds do not qualify under federal law as U.S. citizens because one or more partners are not U.S. citizens. Even though the Company’s Second Amended and Restated Certificate of Incorporation limits the voting power of non-U.S. citizens to 22.5% of the Company’s total voting power, the DOT was nevertheless concerned that non-U.S. citizen ownership of New Common Stock would exceed the amount permitted under federal law if all of the 40,500,000 shares of New Common Stock were distributed to the holders of the Senior Notes.

4.    After exhausting alternative ways to allay the DOT concerns, the Reorganized Debtors sought authority to amend the Plan to address the concern raised by the DOT. The only potentially material, rather than technical, modification of the Plan proposed by the Reorganized Debtors affects those Noteholders who are non-U.S. citizens. Kitty Hawk has determined the identity and citizenship (under DOT interpretations) of the beneficial holders of the Senior Notes

Order Granting Second Motion to Modify Debtors’

Final Joint Plan of Reorganization

2

Exhibit 99.1

through a Notice to, and Request for Information From, Beneficial Owners of 9.95% Senior Secured Notes Due 2004 (CUSIP No. 498326 AC 1) of Kitty Hawk, Inc. (the “Noteholder Notice”). Kitty Hawk proposes to modify the Plan to provide that the Noteholders who are non-U.S. citizens will receive, in the aggregate (i) their pro rata share of 21.5% of the New Common Stock, and (ii) Warrants to purchase the same number of shares of New Common Stock that they would otherwise be entitled to receive pursuant to the Plan if they were U.S. citizens. For example, each Noteholder is entitled to its pro rata share of 81% of the New Common Stock. If a Noteholder that is a non-U.S. citizen is entitled to X number of shares of New Common Stock based on its pro rata share of 81% of the New Common Stock, the Noteholder that is a non-U.S. citizen will receive Warrants to purchase the number of shares of New Common Stock equal to X minus the Noteholder’s share of the 21.5% of New Common Stock being distributed to Noteholders who are non-U.S. citizens. In connection with this modification, the Reorganized Debtors seek authority to issue the Warrants and to make the Warrants subject to the registration exemption provided by 11 U.S.C. §1145. They further seek authority to amend Kitty Hawk’s articles of incorporation to reduce the par value of the New Common Stock so the Warrants can be exercised at a de minimus exercise price.

5.    The evidence suggests and Kitty Hawk believes that the proposed issuance of Warrants to non-U.S. citizens in lieu of New Common Stock in excess of 21.5% of the New Common Stock will satisfy the concerns raised by the DOT.

6.    Counsel for the Reorganized Debtors represented to the Court that she had personally communicated with each affected group of Noteholder funds and that representatives of each group of funds indicated its willingness to allow her to inform the Court that the affected Noteholders had no opposition to the modification.

Order Granting Second Motion to Modify Debtors’

Final Joint Plan of Reorganization

3

Exhibit 99.1

7.    The proposed modification provides the affected Noteholders with essentially the same consideration as that provided by the Plan. All creditors receiving New Common Stock who are non-U.S. citizens were always subject to a reduction in their voting rights as a result of the limitation on the voting rights of non-U.S. citizens in the Company’s certificate of incorporation. Because of this limitation, the Warrants give the Noteholders essentially the same rights as the New Common Stock. The Warrants are transferable, can be exercised by a U.S. citizen, and have a de minimus exercise price of only $0.000001 per share. The Warrants should have essentially the same value as the New Common Stock.

8.    The other proposed modifications of the Plan are chiefly conforming modifications.

9.    The Effective Date of the Plan was September 30, 2002. On or about the Effective Date, the Debtors paid numerous administrative claimants and entered into the Registration Rights Agreement and the Aircraft Use Agreement as contemplated by the Plan. Kitty Hawk Aircargo also finalized agreements restructuring its leases with Pegasus. However, a number of actions that were to be taken in connection with the Effective Date have yet to occur. Disputed administrative and priority claims have not been paid pending resolution of those disputes. More significantly, none of the Kitty Hawk New Common Stock has been delivered to the Noteholders, the Class 7 unsecured creditors, or Pegasus. The unsecured creditors have not received any of the consideration that the Plan provides they will receive.

10.    The proposed modifications are in the best interests of these estates. Any dispute between Kitty Hawk and the DOT threatens Kitty Hawk’s viability as a reorganized company. The Reorganized Debtors have proposed the modifications in good faith and in an effort to resolve a concern of the DOT by agreement.

Order Granting Second Motion to Modify Debtors’

Final Joint Plan of Reorganization

4

Exhibit 99.1

11.    The Court’s oral Findings of Fact on the record at the hearing are also incorporated herein by reference.

12.    To the extent that any provision designated herein as a Finding of Fact is more properly characterized as a Conclusion of Law, it is adopted as such.

The Court concludes that:

A.    This is a core proceeding within the meaning of 28 U.S.C. ‘ 157(b)(2)(L). This matter arises under title 11, and jurisdiction is vested in this Court to enter a final order by virtue of 28 U.S.C. ‘ 1334(a) and (b), 28 U.S.C. “ 151, 157(a) and (b)(1), and the Standing Order of Reference in this District.

B.    Notice of the Motion was appropriate under all the circumstances and complied with the applicable provisions of the Bankruptcy Code and the Bankruptcy Rules. The opportunity for a hearing on these matters was full and adequate.

C.    Because no party in interest opposes the Motion and the related modification of the Plan and because the consideration being provided to the affected Noteholders is essentially the same as that provided in the Plan, no additional solicitation is required under 11 U.S.C. §1125. The proponent of the modifications has complied with the requirements of section 1125.

D.    The Plan modifications will not alter the Court’s earlier conclusion that the Plan complies with sections 1122 and 1123 of Title 11.

E.    The Plan may be modified in accordance with 11 U.S.C. §1127(b).

F.    The Court’s oral Conclusions of Law on the record at the hearing are incorporated herein by reference.

G.    To the extent that any provision designated herein as a Conclusion of Law is more properly characterized as a Finding of Fact, it is adopted as such.

Order Granting Second Motion to Modify Debtors’

Final Joint Plan of Reorganization

5

Exhibit 99.1

Based on the Court’s findings of fact and conclusion of law, IT IS THEREFORE ORDERED that the Motion is granted.

IT IS FURTHER ORDERED that the Plan Modifications attached hereto as Exhibit A shall be incorporated into the Debtors’ Final Joint Plan of Reorganization, as Modified and filed with the Clerk within ten (10) days of the entry of this Order and such Debtors’ Final Joint Plan of Reorganization, as Modified shall be the controlling plan of reorganization for these Debtors.

IT IS FURTHER ORDERED that Kitty Hawk, Inc. is authorized to issue the Warrants.

IT IS FURTHER ORDERED that the distribution of the Warrants to holders of Allowed Noteholder Claims pursuant to the Plan shall be exempt from any and all federal, state and local laws requiring the registration of such security, to the extent provided by section 1145 of the Bankruptcy Code.

IT IS FURTHER ORDERED that the Second Amended and Restated Certificate of Incorporation of Kitty Hawk, Inc. shall be amended to reduce the par value of the New Common Stock from $0.01 to $0.000001.

SIGNED:    1/29/03	/s/  Barbara Houser
	HONORABLE BARBARA HOUSER UNITED STATES BANKRUPTCY JUDGE

Order Granting Second Motion to Modify Debtors’

Final Joint Plan of Reorganization

6

Exhibit A to Order Granting Second Motion to Modify Debtors’

Final Joint Plan of Reorganization

Plan Modifications

1. The definition of Distribution Date shall be amended to provide as follows:

“Distribution Date” means the date the Reorganized Debtors commence distributions under the Plan. In the case of distributions of cash to the Indenture Trustee on account of the Noteholders’ Adequate Protection Claim or the Noteholders’ Class 2 Claims, the Distribution Date shall be September 30, 2002. In the case of distributions of New Common Stock to the Noteholders, the Distribution Date shall be a date that is within thirty (30) business days following entry of the Modification Order or such other date as agreed to by the Reorganized Kitty Hawk and the Indenture Trustee.

2. The definition of Quarterly Surplus Distribution Date shall be amended to provide as follows:

“Quarterly Surplus Distribution Date” means the last day, or if the last day is not a Business Day, the first Business Day after the end, of the months of March, June, September and December.

3. The definitions shall be amended to add the following:

“Class 7 Notice” means the Notice To, and Request for Information From, Holders of Class 7 Claims Against Kitty Hawk, Inc.

“Modification Order” means the Order approving modification or amendment of the Debtors’ Final Joint Plan of Reorganization to provide for the distribution of Warrants in lieu of New Common Stock to the extent necessary to limit the New Common Stock held by Non-U.S. Citizens to 22.5% of the issued New Common Stock.

“Non-U.S. Citizen” means (i) a person who has responded to the Noteholder Notice or Class 7 Notice and stated under oath that it is not a U.S. citizen as that term is defined by 49 U.S.C. § 40102(a)(15) or (ii) a person who has not responded to the Noteholder Notice or Class 7 Notice (if so requested to respond) at the time of an issuance of New Common Stock.

“Noteholder Notice” means the Notice To, and Request for Information From, Beneficial Owners of 9.95% Senior Secured Notes Due 2004 of Kitty Hawk, Inc.

Page 1

“U.S. Citizen” means a person who is a U.S. citizen as that term is defined by 49 U.S.C. § 40102(a)(15).

“Warrants” means the warrants in the form attached to this Plan as Exhibit “A” for affiliates and Exhibit “B” for non-affiliates for the purchase of New Common Stock at an exercise price of $0.000001 per share distributed to Non-U.S. Citizens in lieu of New Common Stock and exercisable only by a person who certifies that it is a U.S. Citizen.

4. Section 3.1(d) of the Final Plan shall be amended to provide as follows:

Treatment of the Noteholders’ Adequate Protection Claim.    The Noteholders’ Adequate Protection Claim shall be satisfied in full by the delivery to the Indenture Trustee on behalf of the Noteholders of the Noteholders’ Cash Payment and 81% of the New Common Stock, both of which, subject to the Indenture Trustee’s liens, shall be distributed ratably to the Noteholders; provided however, that to the extent the total New Common Stock distributable to Non-U.S. Citizens exceeds 22.5% of the total outstanding New Common Stock, the Noteholders who are Non-U.S. Citizens will ratably receive, in lieu of New Common Stock, Warrants so that the total New Common Stock held by Noteholders who are Non-U.S. Citizens is not more than 21.5% of the total issued New Common Stock. As additional consideration for the Noteholders’ Adequate Protection Claim, the Reorganized Debtors shall execute the Aircraft Use Agreement and the Registration Rights Agreement. Upon the Indenture Trustee’s receipt of the Noteholders’ Cash Payment and 81% of the New Common Stock or Warrants to purchase New Common Stock, the Indenture Trustee and the Noteholders shall be deemed to have released any and all claims, including, but not limited to, claims under Section 506(c), against the Bank Group. On the Effective Date, the Debtors shall also waive their Section 506(c) claims against the Bank Group.

5. Section 3.1(f) of the Final Plan shall be amended to provide as follows:

Treatment of Pegasus and Wren Claims.    The Reorganized Debtors shall satisfy the obligations of Aircargo under its aircraft leases with Pegasus by (i) paying $100,000 in past due rent to Pegasus on the Effective Date; (ii) paying a $1 million termination fee to Pegasus in full satisfaction of all remaining claims under the lease of N264US; (iii) purchasing N69735 and N77780 from Pegasus for $750,000 financed by Pegasus over twelve months; (iv) entering into restructured lease agreements with 24 month terms on the following planes at the following monthly lease rates: N579PE at $65,000; N916PG at $75,000; N79748 at $85,000; and N936PG at $85,000 with maintenance reserves for each of the preceding planes reduced to 50% of existing reserves; (v) modifying

Page 2

the Airframe return conditions of the leased aircraft so that they will be satisfied by the payment of $750,000 per airframe with unused maintenance reserves for C and D checks paid to date and in the future available to satisfy airframe return conditions. The treatment of Pegasus’ claims is more fully explained in the aircraft purchase agreements, notes, security agreements and restructured leases included in the Plan Supplement. In the event of any discrepancy between this paragraph and the documents in the Plan Supplement, the documents in the Plan Supplement control. The obligations of Aircargo under its lease with Wren will be satisfied by performing the lease under its existing terms. In addition, the Reorganized Debtors will deliver 2,500,000 shares of New Common Stock to Pegasus within thirty (30) business days after the entry of the Modification Order. Wren will receive no New Common Stock.

6. Section 6.2 of the Final Plan shall be amended to provide as follows:

Distribution of Creditors’ New Common Stock.    Reorganized Kitty Hawk shall distribute all of the New Common Stock to be distributed under the Plan. The initial distribution of New Common Stock on account of Allowed Claims other than the Claims of Noteholders and Pegasus shall be as soon as economically reasonable given the need to resolve Disputed Class 7 Claims. Reorganized Kitty Hawk may employ or contract with other entities to assist in or perform the distribution of New Common Stock. The initial distributions of New Common Stock and Warrants to the Noteholders and of New Common Stock to Class 7 shall be pro rata as if the total Allowed Claims in each such Class is the maximum amount if all disputed, unliquidated, contingent or otherwise objectionable Claims were resolved in the Claimant’s favor. Reorganized Kitty Hawk will not make a distribution to disputed, contingent, unliquidated or objected to Claims until entry of an Order of the Bankruptcy Court involving the dispute or objection. Stock held for possible distribution will be held in the Noteholder and Class 7 Stock Reserve Surplus Accounts. On each Quarterly Surplus Distribution Date, Reorganized Debtors shall distribute to holders of Allowed Noteholders and Class 7 Claims, in accordance with the terms of the Plan, all shares in the Class 7 Stock Reserve Surplus Account and the Noteholder Stock Reserve Surplus Account, provided however, that if, in Reorganized Debtors’ judgment, the aggregate value of the shares remaining in the Noteholder Stock Reserve Surplus Account or the Class 7 Stock Reserve Surplus Account is less than can be economically distributed, Reorganized Debtors may elect to hold such shares and distribute them on the next Quarterly Surplus Distribution Date.

Reorganized Kitty Hawk may designate the Indenture Trustee and/or the Senior Notes Custodian as the disbursing agent for all New Common Stock and Warrants to be issued to Noteholders. Distributions will be

Page 3

made to the Noteholders that appear as Noteholders of record on the records of the Debtors, Trustee and/or Senior Note Custodians, determined as of the close of business on October 21, 2002. Distributions will be made as soon after the Distribution Date as practicable. For purposes of distributions of any New Common Stock or Warrants to Noteholders, neither Reorganized Kitty Hawk, the Indenture Trustee, nor any Senior Notes Custodian shall be required to recognize any transfer of legal or beneficial ownership of a Senior Note that occurs after October 21, 2002. Reorganized Kitty Hawk shall pay all reasonable fees and expenses of the Indenture Trustee and/or a Senior Notes custodian in acting as distribution agent as and when such fees and expense become due without further order of the Bankruptcy Court.

To the extent that a Noteholder Claim is a Disputed or undetermined Claim on the Distribution Date for New Common Stock, the distribution of New Common Stock or Warrants allocable to the Disputed or undetermined portion of such Claim shall be deposited in the Noteholder Stock Reserve Account. To the extent that a Class 7 Claim is a Disputed or undetermined Claim on the Distribution Date for New Common Stock, the distribution of New Common Stock allocable to the Disputed or undetermined portion of such Claim shall be deposited in the Class 7 Stock Reserve Account.

To the extent that a Noteholder or Class 7 Claim is Allowed after the Distribution Date for New Common Stock, the holder thereof shall be entitled to receive the New Common Stock or Warrants reserved with respect to the Allowed amount of such Claim (including Shares representing distributions of Debtor’s shares from the Noteholder Stock Reserve Surplus Account or the Class 7 Stock Reserve Surplus Account).

7. Paragraph 1 of Section 6.4 (entitled Surrender and Cancellation of Old Securities) of the Final Plan will be amended to provide as follows:

As of October 21, 2002, the transfer ledgers with respect to the Senior Notes shall be closed. As against Reorganized Kitty Hawk, the Noteholders shall have only the rights granted under this Plan. Reorganized Kitty Hawk in conjunction with the Indenture Trustee requested from any Senior Notes Custodian a list of the Noteholders of record, determined as of October 21, 2002. The Indenture Trustee or a third party it designates (whichever being the “Registrar”) shall thereafter from such list(s) maintain a registry of the legal owners of the rights under this Plan held on account of Senior Notes. The Registrar shall be under no obligation to make a change in the registry unless it receives and acknowledges a written request for a change from a party then appearing on the registry. The Registrar may issue reasonable rules applicable to any request for a change in the registry. Reorganized Kitty Hawk shall

Page 4

have no obligation or power to change the registry maintained by the Registrar or, after the Effective Date, to recognize a transfer of a Senior Note or of rights under this Plan on account of a Senior Note.

8. Section 8.6 of the Final Plan will be amended to provide as follows:

Authorization and Issuance of New Common Stock and Warrants.    The Confirmation Order shall authorize 65,000,000 shares of capital stock in the Reorganized Debtors, classified as (i) 62,000,000 shares of the New Common Stock and (ii) 3,000,000 shares of preferred stock, $0.01 par value. The Reorganized Debtors shall have 50,000,000 shares of the New Common Stock issued and outstanding. The remaining 12,000,000 shares of New Common Stock and 3,000,000 shares of preferred stock shall be reserved for issuance by action of the Board of Directors selected in the manner described in Section 8.4 of the Plan. The Modification Order shall authorize issuance of the Warrants.

9. Section 8.8 of the Final Plan will be amended to provide as follows:

Registration Exemption for Debtors’ New Common Stock and Warrants Distributed to Creditors.    The Confirmation Order shall provide that the distribution of the New Common Stock to holders of Allowed Claims pursuant to the Plan and the Amended Certificate of Incorporation shall be exempt from any and all federal, state and local laws requiring the registration of such security, to the extent provided by section 1145 of the Bankruptcy Code. The Modification Order shall provide that the distribution of the Warrants to holders of Allowed Noteholder Claims pursuant to the Plan shall be exempt from any and all federal, state and local laws requiring the registration of such security, to the extent provided by section 1145 of the Bankruptcy Code.

10. Section 8.10 of the Final Plan will be amended to provide as follows:

Corporate Action.    Upon entry of the Confirmation Order, the following shall be and be deemed authorized and approved in all respects: (i) the filing by Reorganized Kitty Hawk of the Amended Certificate of Incorporation, (ii) the Amended Bylaws, (iii) the mergers contemplated by Section 8.3 of the Plan, and (iv) the issuance of the New Common Stock. On the Effective Date, or as soon thereafter as is practicable, the Reorganized Kitty Hawk shall file with the Secretary of State of the State of Delaware, in accordance with applicable state law, the Amended Certificate of Incorporation which shall conform to the provisions of the Plan and prohibit the issuance of non-voting equity securities. On the Effective Date, the matters provided under the Plan involving the capital and corporate structures and governance of the Reorganized Kitty Hawk, including the mergers effectuated pursuant to Section 8.3 of the Plan, shall

Page 5

be deemed to have occurred and shall be in effect from and after the Effective Date pursuant to applicable state laws without any requirement of further action by the stockholders or directors of the Debtors or the Reorganized Kitty Hawk. On the Effective Date, the Reorganized Debtors shall be authorized and directed to take all necessary and appropriate actions to effectuate the transactions contemplated by the Plan and the Disclosure Statement. The Modification Order shall authorize an Amendment of the Second Amended and Restated Certificate of Incorporation of Kitty Hawk, Inc. to reduce the par value of the New Common Stock from $0.01 to $0.000001.

Page 6

EX-99.2

Exhibit No. 99.2

FORM OF

WARRANT

to Purchase Common Stock of

KITTY HAWK, INC.

Warrant No. W-        

Original Issue

Date: February         , 2003

TABLE OF CONTENTS

1.	DEFINITIONS		1
2.	EXERCISE OF WARRANT		3
	2.1.	Restrictions on Exercise	3
	2.2.	Manner of Exercise	4
	2.3.	Issued Warrant Shares Fully Paid, Nonassessable	4
	2.4.	Fractional Shares	4
3.	TRANSFER, DIVISION AND COMBINATION		5
	3.1.	Transfer	5
	3.2.	Division and Combination	5
	3.3.	Expenses	5
	3.4.	Maintenance of Books	5
4.	ADJUSTMENT PROVISIONS		5
	4.1.	Stock Dividends, Subdivisions and Combinations	5
	4.2.	Consolidation, Amalgamation, Arrangement or Merger	6
	4.3.	Other Provisions Applicable to Adjustments Under this Section 4	6
5.	RESERVATION AND AUTHORIZATION OF COMMON STOCK		7
6.	NOTICE OF CORPORATE ACTIONS; TRANSFER BOOKS		7
	6.1.	Notices of Corporate Actions	7
	6.2.	Closing of Transfer Books	7
7.	TRANSFER RESTRICTIONS		7
	7.1.	Restrictions on Transfers	7
	7.2.	Restrictive Legends	8
	7.3.	Termination of Securities Law Restrictions	8
	7.4.	Transfers to Affiliates	8
8.	LOSS OR MUTILATION		9
9.	OFFICE OF THE COMPANY		9
10.	NO VOTING OR DIVIDEND RIGHTS; LIMITATIONS OF LIABILITY		9
11.	MISCELLANEOUS		9
	11.1.	Nonwaiver	9
	11.2.	Notice Generally	9
	11.3.	Successors and Assigns	9
	11.4.	Amendment	10
	11.5.	Severability	10
	11.6.	Headings	10
	11.7.	Governing Law; Jurisdiction	10
	11.8.	Investment Intent	10
	11.9.	Entire Agreement	10
	11.10.	Due Authorization	10
EXHIBIT A		SUBSCRIPTION FORM	A-1
EXHIBIT B		ASSIGNMENT FORM	B-1

THE WARRANT REPRESENTED BY THIS CERTIFICATE MAY BE EXERCISED ONLY BY A PERSON WHO IS A “CITIZEN OF THE UNITED STATES” (AS DEFINED IN TITLE 49, SECTION 40102(A)(15) OF THE UNITED STATES CODE) AT THE TIME OF SUCH EXERCISE. ANY PROPOSED EXERCISE OF THIS WARRANT BY A PERSON WHO IS NOT A “CITIZEN OF THE UNITED STATES” (AS DEFINED IN TITLE 49, SECTION 40102(A)(15) OF THE UNITED STATES CODE) AT THE TIME OF SUCH PROPOSED EXERCISE SHALL BE VOID AND HAVE NO EFFECT WHATSOEVER.

Warrant No. W-    

WARRANT

TO PURCHASE COMMON STOCK OF

KITTY HAWK, INC.

THIS IS TO CERTIFY THAT                                      (“Initial Holder”), or its registered assigns, is entitled, at any time after February     , 2003 until the Expiration Date (the “Exercise Period”), to purchase from Kitty Hawk, Inc., a Delaware corporation (the “Company”), an aggregate of              duly authorized, validly issued, fully paid and nonassessable shares of Common Stock of the Company (subject to adjustment as provided herein), at a purchase price of $0.000001 per share (the initial “Exercise Price”, subject to adjustment as provided herein), all on the terms and conditions and pursuant to the provisions hereinafter set forth.

1. DEFINITIONS.

As used in this Warrant, the following terms have the respective meanings set forth below:

“Affiliate” shall mean (i) with respect to any Person, any other Person that directly or indirectly controls or manages, is controlled or managed by, or is under common control or management with such Person, whether through the ownership of equity interests, by contract or otherwise, and (ii) with respect to an individual, in addition to any Person specified in clause (i), the spouse, any parent or any child of such individual and any trust for the benefit of such individual’s spouse, parent or child.

“Business Day” shall mean any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the city of New York.

“Commission” shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws.

“Common Stock” shall mean the common stock of the Company, par value $0.000001 per share, and any class of stock resulting from successive changes or reclassifications of such Common Stock.

“Company” shall have the meaning set forth in the preamble of this Warrant.

“Current Market Price” shall mean, for a share of Common Stock on any date, the average Quoted Price for the three (3) consecutive Trading Days prior to the date in question.

“Designated Office” shall have the meaning set forth in Section 9 hereof.

“Exercise Date” shall have the meaning set forth in Section 2.2 hereof.

“Exercise Notice” shall have the meaning set forth in Section 2.2 hereof.

“Exercise Period” shall have the meaning set forth in the preamble of this Warrant.

“Exercise Price” shall have the meaning set forth in the preamble of this Warrant.

“Expiration Date” shall mean the earlier to occur of (i) the date on which no Warrants are outstanding or (ii) February     , 2013.

“Holder” shall mean (i) with respect to this Warrant, the Person in whose name the Warrant set forth herein is registered on the books of the Company maintained for such purpose and (ii) with respect to any other Warrant or shares of Warrant Stock, the Person in whose name such Warrant or shares of Warrant Stock is registered on the books of the Company maintained for such purpose.

“Initial Holder” shall have the meaning set forth in the preamble of this Warrant.

“Opinion of Counsel” shall mean a written opinion of counsel experienced in Securities Act matters chosen by the Holder (and which may be in-house counsel to such Holder) of this Warrant or Warrant Stock issued upon the exercise hereof; provided, however, that such opinion and opinion giver are reasonably acceptable to the Company.

“Original Issue Date” shall mean February     , 2003.

“Original Warrant” shall mean the Warrant originally issued by the Company as of the Original Issue Date to the Initial Holder.

“Person” shall mean any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

“Quoted Price” shall mean, with respect to Common Stock, (i) the last reported sales price of the Common Stock on the New York Stock Exchange or (ii) if not listed on the New York Stock Exchange, the last reported sales price of the Common Stock on such other principal exchange on which the Common Stock is listed or admitted for trading or (iii) if not listed or admitted for trading on a securities exchange, the last reported sales price for Common Stock as reported by the National Association of Securities Dealers Automated Quotation System – National Market System or the National Association of Securities Dealers Automated Quotation System – SmallCap Market System, or (iv) if not so reported or listed or admitted for trading, the last reported bid price of the applicable security in the over-the-counter market. In the event that the Quoted Price cannot be determined as aforesaid, the Board of Directors of the Company shall determine the Quoted Price on the basis of such quotations as it in good faith considers appropriate. Such determination may be challenged in good faith by holders of a majority of the shares of Common Stock issuable upon exercise of all Warrants, and any dispute shall be resolved at the prevailing party’s cost, by the determination of an investment banking firm of recognized national standing selected by the Company and acceptable to such holders of a majority of the shares of Common Stock issuable upon exercise of all Warrants, which determinations shall be made in good faith and be conclusive absent manifest error.

2

“Restricted Common Stock” shall mean shares of Common Stock which are, or which upon their issuance on exercise of this Warrant would be, evidenced by a certificate bearing the restrictive legend set forth in Section 7.2(a) hereof.

“Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

“Trading Day” shall mean, with respect to any security, any day on which any market in which the applicable security is then traded and in which the Quoted Price may be ascertained, is open for business.

“Transfer” shall mean any disposition of any Warrant or shares of Warrant Stock or of any interest in either thereof which would constitute a “sale” thereof within the meaning of the Securities Act.

“U.S. Citizen” shall mean any Holder who is (i) an individual who is a citizen of the United States, (ii) a partnership each of whose partners is an individual who is a “citizen of the United States” (as defined in Title 49, Section 40102(a)(15) of the United States Code) or (iii) a corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are “citizens of the United States” (as defined in Title 49, Section 40102(a)(15) of the United States Code), and in which at least 75 percent of the voting interest is owned or controlled by persons that are “citizens of the United States” (as defined in Title 49, Section 40102(a)(15) of the United States Code).

“Warrant Price” shall mean an amount equal to (i) the number of shares of Common Stock being purchased upon exercise of this Warrant pursuant to Section 2.2 hereof, multiplied by (ii) the Exercise Price as of the date of such exercise.

“Warrants” shall mean the Original Warrant and all warrants issued upon transfer, division or combination of, or in substitution for, such Original Warrant or any other such warrant.

“Warrant Stock” generally shall mean the shares of Common Stock issued, issuable or both (as the context may require) upon the exercise of this Warrant.

2. EXERCISE OF WARRANT.

2.1. Restrictions on Exercise. Notwithstanding anything contained herein to the contrary, the Holder of this Warrant shall not be entitled to exercise this Warrant unless such Holder is a U.S. Citizen at the time of such exercise. Any proposed exercise of this Warrant by a Holder who is not a U.S. Citizen at the time of such proposed exercise shall be void and have no effect whatsoever. Each Warrant issued to a Holder shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE WARRANT REPRESENTED BY THIS CERTIFICATE MAY BE EXERCISED ONLY BY A PERSON WHO IS A “CITIZEN OF THE UNITED STATES” (AS DEFINED IN TITLE 49, SECTION 40102(A)(15) OF THE UNITED STATES CODE) AT THE TIME OF SUCH EXERCISE. ANY PROPOSED EXERCISE OF THIS WARRANT BY A PERSON WHO IS NOT A “CITIZEN OF THE UNITED STATES” (AS DEFINED IN TITLE 49, SECTION 40102(A)(15) OF THE UNITED STATES CODE) AT THE TIME OF SUCH PROPOSED EXERCISE SHALL BE VOID AND HAVE NO EFFECT WHATSOEVER.”

3

2.2. Manner of Exercise. (a) Subject to the provisions of this Warrant, the Holder of this Warrant may exercise this Warrant from time to time during the Exercise Period, on any Business Day, for all or any part of the number of shares of Common Stock purchasable hereunder. In order to exercise this Warrant, in whole or in part, the Holder shall (i) deliver to the Company at the Designated Office a written notice of the Holder’s election to exercise this Warrant (an “Exercise Notice”), which Exercise Notice shall be irrevocable and shall specify the number of shares of Common Stock to be purchased, (ii) surrender to the Company at the Designated Office this Warrant and (iii) pay to the Company the Warrant Price (the date on which such delivery, surrender and payment shall have taken place being hereinafter sometimes referred to as the “Exercise Date”). Such Exercise Notice shall be in the form of the subscription form attached hereto as Exhibit A, duly executed by the Holder or its duly authorized agent or attorney.

(b) Upon receipt by the Company of such Exercise Notice, Warrant and Warrant Price, the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereinafter provided. The certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the Holder or such other name as shall be designated in the Exercise Notice. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the Exercise Date.

(c) Payment of the Warrant Price may be made as follows (or by any combination of the following): (i) by delivering to the Company cash in United States currency or a certified check or bank draft payable to the order of the Company, or a wire transfer to an account designated by the Company, (ii) by surrender of a number of shares of Common Stock held by the Holder equal to the quotient obtained by dividing (A) the Warrant Price payable with respect to the portion of this Warrant then being exercised by (B) the Current Market Price per share of Common Stock on the Exercise Date, or (iii) by cancellation of any portion of this Warrant with respect to the number of shares of Common Stock equal to the quotient obtained by dividing (A) the Warrant Price payable with respect to the portion of this Warrant then being exercised by (B) the Current Market Price per share of Common Stock on the Exercise Date.

(d) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing the shares of Common Stock being issued, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased shares of Common Stock called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

2.3. Issued Warrant Shares Fully Paid, Nonassessable. The Company shall take all actions reasonably necessary to ensure that upon exercise of this Warrant, the shares of Common Stock issued upon exercise hereof shall, without further action by the Holder, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.

2.4. Fractional Shares. The Company shall not be required to issue a fractional share of Common Stock upon exercise of this Warrant. As to any fraction of a share that the Holder of this Warrant would otherwise be entitled to purchase upon such exercise, the Company shall pay the Holder cash in lieu of such fractional share in an amount equal to the same fraction of the Current Market Price.

4

3. TRANSFER, DIVISION AND COMBINATION.

3.1. Transfer. Subject to compliance with Section 7 hereof, each transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the Designated Office, together with delivery of a written assignment of this Warrant in the form attached hereto as Exhibit B duly executed by the Holder or its duly authorized agent or attorney. Upon such surrender and delivery, the Company shall, subject to Section 7, execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned and this Warrant shall promptly be cancelled; provided, that in no event may this Warrant be transferred or assigned in an amount exercisable for less than 100,000 shares of Common Stock, unless this Warrant is exercisable for less than 100,000 shares of Common Stock, in which case, this Warrant may be transferred or assigned in whole, but not in part. Except as otherwise provided herein, a Warrant, if properly assigned in compliance with Section 7, may be exercised by the new Holder for the purchase of shares of Common Stock without having a new Warrant issued.

3.2. Division and Combination. Subject to compliance with the applicable provisions of this Warrant, including Section 7 hereof, this Warrant may be divided or combined with other Warrants upon surrender and presentation hereof at the Designated Office, together with a written notice specifying the names and denominations in which new Warrants are to be issued, executed by the Holder or its duly authorized agent or attorney; provided, that in no event may this Warrant be divided into one or more Warrants exercisable for less than 100,000 shares of Common Stock, unless this Warrant is not exercisable for a whole multiple of 100,000 shares of Common Stock, in which case, this Warrant may be divided into one or more Warrants exercisable for whole multiples of 100,000 shares of Common Stock plus one Warrant exercisable for less than 100,000 shares of Common Stock. Subject to compliance with the applicable provisions of this Warrant as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

3.3. Expenses. The Company shall prepare, issue and deliver at its own expense any new Warrant or Warrants required to be issued under this Section 3.

3.4. Maintenance of Books. The Company agrees to maintain, at the Designated Office, books for the registration and transfer of the Warrants.

4. ADJUSTMENT PROVISIONS.

4.1. Stock Dividends, Subdivisions and Combinations. If at any time after the date hereof the Company shall:

(i) pay a dividend or make a distribution on its Common Stock in shares of its Common Stock;

(ii) subdivide its outstanding shares of Common Stock into a greater number of shares;

(iii) combine its outstanding shares of Common Stock into a smaller number of shares; or

(iv) issue by reclassification of its Common Stock any shares of its capital stock;

5

then the Exercise Price shall be adjusted to equal the product of the Exercise Price in effect immediately prior to such event multiplied by a fraction, the numerator of which is equal to the number of shares of Common Stock outstanding immediately prior to the event and the denominator of which is equal to the number of shares of Common Stock outstanding immediately after such event; provided, however, in no event shall the Exercise Price be less than the par value of a share of Common Stock. Such adjustment shall be made successively whenever any event listed above shall occur.

In addition, the number of shares for which this Warrant is exercisable shall be adjusted so that the Holder of this Warrant thereafter may exercise this Warrant for the same aggregate number and kind of shares of capital stock of the Company that such Holder would have owned immediately following such event if such Holder had exercised this Warrant immediately prior to such event. The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date of a subdivision, combination or reclassification.

If, after an adjustment referred to in clauses (i) through (iv) above, the Holder upon exercise of this Warrant may receive shares of two or more classes of capital stock of the Company, the Company shall determine the allocation of the Exercise Price between the classes of capital stock; provided, however, in no event shall the Exercise Price be less than the par value of the capital stock for which this Warrant is then exercisable. After such allocation, the exercise rights and the Exercise Price with respect to each class of capital stock shall thereafter be subject to adjustment on terms comparable to those applicable to Common Stock in this Section 4.

4.2. Consolidation, Amalgamation, Arrangement or Merger. In case of any consolidation, amalgamation, arrangement or merger of the Company with or into another Person or any merger of another Person with or into the Company (other than a transaction to which Section 4.1 applies), or in case of any sale or transfer of all or substantially all of the assets of the Company, this Warrant shall become exercisable only into the kind and amount of securities, cash and other property receivable upon such consolidation, amalgamation, arrangement, merger, sale or transfer by a holder of the number of shares of Common Stock (and other securities, if applicable) for which this Warrant was exercisable immediately prior thereto (assuming such holder of Common Stock (and other securities, if applicable) failed to exercise any rights of election). Concurrently with the consummation of such transaction, the corporation formed by or surviving any such consolidation or merger if other than the Company, or the person to which such sale or conveyance shall have been made, shall enter into a supplemental agreement so providing and further providing for adjustments which shall be as equivalent as may be practicable to the adjustments provided for in this Section 4.

4.3. Other Provisions Applicable to Adjustments Under this Section 4. The following provisions shall be applicable to the adjustments provided for pursuant to this Section 4:

(a) When Adjustments To Be Made. The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring such an adjustment shall occur. For the purpose of any such adjustment, except as otherwise provided herein, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. In computing the adjustments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest 1/100th of a share.

(b) When Adjustment Not Required. If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution to which the provisions of Section 4.1 would apply, but shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

6

(c) Notice of Adjustments. Whenever the Exercise Price or number of shares of Common Stock issuable upon exercise of this Warrant is adjusted, the Company shall promptly mail to the Holder, first class, postage paid, a notice of the adjustment briefly stating the facts requiring the adjustment and the manner of computing it. The Company shall keep at its principal office or at the Designated Office, if different, copies of all such notices and cause the same to be available for inspection at said office during normal business hours by any Holder or any prospective transferee of a Warrant designated by a Holder thereof.

Except as provided in the immediately following sentence, any determination that the Company or its Board of Directors must make pursuant to this Section 4 shall be conclusive. Whenever the Company or its Board of Directors shall be required to make a determination under this Section 4, such determination shall be made in good faith and may be challenged in good faith by the Holder and any dispute shall be resolved, at the prevailing party’s expense, by an investment banking firm of recognized national standing, selected by the Company and acceptable to such Holder.

5. RESERVATION AND AUTHORIZATION OF COMMON STOCK.

From and after the Original Issue Date, the Company shall at all times reserve and keep available for issuance upon the exercise of the Warrants such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all Warrants. All shares of Common Stock issuable upon the exercise of the Warrants shall be fully paid and nonassessable, not subject to preemptive rights and shall be free and clear of all liens (other than any created by actions of the Holder).

6. NOTICE OF CORPORATE ACTIONS; TRANSFER BOOKS.

6.1. Notices of Corporate Actions. In the event of (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or distribution, (b) any capital reorganization of the Company (including any transaction specified in Section 4.1), any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger involving the Company and any other Person or any transfer or other disposition of all or substantially all the assets of the Company to another Person or (c) any voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall provide not less than ten (10) days prior notice of such event described in clauses (a), (b) and (c) in accordance with Section 11.2.

6.2 Closing of Transfer Books. The Company shall not at any time, except upon dissolution, liquidation or winding up of the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrant.

7. TRANSFER RESTRICTIONS.

The Holder, by acceptance of this Warrant, hereby agrees to be bound by the provisions of this Section 7.

7.1. Restrictions on Transfers. Neither this Warrant nor any shares of Restricted Common Stock issued upon the exercise hereof shall be Transferred other than pursuant to (i) an effective registration statement under the Securities Act or (ii) an exemption from the registration provisions thereof. If requested by the Company, the Holder will deliver an Opinion of Counsel to the effect that a proposed transfer pursuant to clause (ii) of the preceding sentence (other than a transfer described in Section 7.4) is exempt from the registration requirements of the Securities Act.

7

7.2. Restrictive Legends. (a) Except as otherwise provided in this Section 7, each certificate for Warrant Stock issued upon the exercise of this Warrant shall be stamped or otherwise imprinted with a legend in substantially the following form:

“NO TRANSFER OF THE SHARES REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNLESS SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL (AS DEFINED IN THAT CERTAIN WARRANT TO PURCHASE COMMON STOCK OF KITTY HAWK, INC., DATED FEBRUARY         , 2003) OR OTHER MEANS SATISFACTORY TO THE COMPANY, THAT SUCH PROPOSED TRANSFER IS IN COMPLIANCE WITH THE ACT AND STATE SECURITIES LAWS.”

(b) Except as otherwise provided in this Section 7, each Warrant issued shall be stamped or otherwise imprinted with a legend in substantially the following form:

“NO TRANSFER OF THE WARRANT REPRESENTED BY THIS CERTIFICATE SHALL BE VALID OR EFFECTIVE UNLESS SUCH TRANSFER IS MADE PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER MEANS SATISFACTORY TO THE COMPANY, THAT SUCH PROPOSED TRANSFER IS IN COMPLIANCE WITH THE ACT AND STATE SECURITIES LAWS.”

7.3. Termination of Securities Law Restrictions. Notwithstanding the foregoing provisions of this Section 7, the restrictions imposed by Section 7.1 upon the transferability of the Warrants and the Restricted Common Stock and the legend requirements of Section 7.2 shall terminate as to any particular Warrant or shares of Restricted Common Stock if (i) the Company shall have received from the Holder thereof an Opinion of Counsel to the effect that such legend is not required in order to ensure compliance with the Securities Act or (ii) such Warrant or shares of Restricted Common Stock shall be registered by the Company. Whenever the restrictions imposed by Section 7.2 shall terminate as to this Warrant, as hereinabove provided, the Holder hereof shall be entitled to receive from the Company, at the expense of the Company, a new Warrant bearing the following legend in place of the restrictive legend set forth hereon:

“THE RESTRICTIONS ON TRANSFERABILITY OF THE WITHIN WARRANT CONTAINED IN SECTION 7 HEREOF TERMINATED ON                               ,              AND ARE OF NO FURTHER FORCE AND EFFECT.”

All Warrants issued upon registration of transfer, division or combination of, or in substitution for, any Warrant or Warrants entitled to bear such legend shall have a similar legend endorsed thereon. Wherever the restrictions imposed by this Section 7 shall terminate as to any share of Restricted Common Stock, as hereinabove provided, the Holder thereof shall be entitled to receive from the Company, at the Company’s expense, a new certificate representing such Common Stock not bearing the restrictive legends.

7.4. Transfers to Affiliates. Notwithstanding anything contained herein to the contrary, a Holder shall have the right at any time, without restriction of any kind, to transfer all or any portion of the Warrants and the Warrant Stock to any Affiliate of the Holder; provided, however, that any such Affiliate agrees to be bound by the provisions of this Section 7.

8

8. LOSS OR MUTILATION.

Upon receipt by the Company from any Holder of evidence reasonably satisfactory to the Company of the ownership of and the loss, theft, destruction or mutilation of this Warrant, and, in the case of such loss, theft, or destruction of this Warrant, an indemnity bond or agreement reasonably satisfactory to the Company or, in case of mutilation, upon surrender and cancellation of this Warrant, the Company will execute and deliver in lieu hereof a new Warrant of like tenor to such Holder; provided, however, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

9. OFFICE OF THE COMPANY.

As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency, which may be the principal executive offices of the Company (the “Designated Office”), where the Warrants may be presented for exercise, registration of transfer, division or combination as provided in this Warrant. Such Designated Office shall initially be the office of the Company at 1515 West 20th Street, P.O. Box 612787, DFW Airport, Texas 75261. The Company may from time to time change the Designated Office to another office of the Company or its agent within the United States by notice given to all registered holders of Warrants at least ten (10) Business Days prior to the effective date of such change.

10. NO VOTING OR DIVIDEND RIGHTS; LIMITATIONS OF LIABILITY.

This Warrant shall not be construed as conferring upon the Holder the right to vote or to execute written consents as a stockholder of the Company. Except as expressly provided herein, this Warrant shall not be construed as conferring upon the Holder the right to notice as a stockholder of the Company or any other matters or rights whatsoever as a stockholder of the Company. Except as expressly provided herein, no dividends or interest shall be payable or accrued in respect of this Warrant or the rights represented hereby or the shares purchasable hereunder until, and only to the extent that, shares of Common Stock have been issued to the Holder pursuant to the exercise of this Warrant. No provisions hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of such Holder for the Exercise Price for any Warrant Stock or as a stockholder of the Company, whether such liability is asserted by the Company or its creditors.

11. MISCELLANEOUS.

11.1. Nonwaiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Company or the Holder shall operate as a waiver of such right or otherwise prejudice the rights, powers or remedies of such Person.

11.2. Notice Generally. Any notice, demand, request, consent, approval, declaration, delivery or communication hereunder to be made pursuant to the provisions of this Warrant shall be delivered or sent by registered or certified mail, postage prepaid, to any Holder of this Warrant, at its last known address appearing on the books of the Company maintained for such purpose, or to the Company at its Designated Office.

11.3. Successors and Assigns. Subject to the provisions of Sections 3.1, 7.1 and 7.2, this Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the permitted successors and assigns of the Holder hereof.

9

11.4. Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder thereof.

11.5. Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant.

11.6. Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

11.7. Governing Law; Jurisdiction. In all respects, including all matters of construction, validity and performance, this Warrant and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the state of Texas. The Company and the Holder of this Warrant hereby consent and agree that the state or federal courts located in Dallas County, Texas, shall have exclusive jurisdiction to hear and determine any claims or disputes between the Company and the Holder of this Warrant pertaining to this Warrant or to any matter arising out of or relating to this Warrant.

11.8. Investment Intent. The Holder hereby represents and warrants that this Warrant and the shares of Common Stock issued or issuable upon the exercise of this Warrant are being or will be acquired for the Holder’s account and with no intention of distributing or reselling such Warrant or shares of Common Stock or any part thereof in any transaction that would be in violation of the Securities Act or any state securities laws, without prejudice, however, to the Holder’s right at all times to sell or otherwise dispose of all or any part of (i) the shares of Common Stock issued upon the exercise of this Warrant, under an effective registration statement under the Securities Act, or (ii) the shares of Common Stock issued upon the exercise of this Warrant or the Warrant under an exemption from such registration available under the Securities Act, and subject, nevertheless, to the disposition of its property being at all times within its control.

11.9. Entire Agreement. This Warrant, including all exhibits attached hereto, constitute the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties.

11.10. Due Authorization. The execution and delivery by the Company of this Warrant, and the consummation by it of the transactions contemplated hereby, have been duly authorized by all necessary corporate action of the Company. This Warrant has been duly executed and delivered and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally, and (ii) general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).

* * * * * * * *

10

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed this              day of February, 2003.

KITTY HAWK, INC.

By:

Name:

Title:

11

EXHIBIT A

SUBSCRIPTION FORM

[To be executed only upon exercise of Warrant]

1. The undersigned registered owner of this Warrant hereby irrevocably exercises this Warrant for the purchase of              shares of Common Stock of the Company and herewith makes [makes payment of $             therefor pursuant to Section 2.2(c)(i)] [and/or] [makes payment therefor by surrendering pursuant to Section 2.2(c)(ii)              shares of Common Stock of the Company] [and/or] [makes payment therefor by cancellation pursuant to Section 2.2(c)(iii) of a portion of the Warrant with respect to              shares of Common Stock], all of the foregoing at the price and on the terms and conditions specified in this Warrant. The undersigned registered owner of this Warrant requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to              whose address is                                        and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant with the same terms and provisions of this Warrant, except that it shall be exercisable only for the balance of the shares of Common Stock issuable hereunder, shall be delivered to the undersigned.

2. The undersigned registered owner of this Warrant hereby represents and warrants that the shares of Common Stock issued upon the exercise of this Warrant are being acquired for the undersigned’s account and with no intention of distributing or reselling such shares of Common Stock or any part thereof in any transaction that would be in violation of the Securities Act or any state securities laws, without prejudice, however, to the undersigned’s right at all times to sell or otherwise dispose of all or any part of such shares of Common Stock under an effective registration statement under the Securities Act or an exemption from such registration available under the Securities Act, and subject, nevertheless, to the disposition of its property being at all times within its control.

3. The undersigned registered owner of this Warrant hereby represents and warrants that the undersigned is an “accredited investor” as defined in Rule 501 under the Securities Act.

4. The undersigned registered owner of this Warrant hereby represents and warrants that it ¨ is or ¨ is not an Affiliate of the Company. Please check the appropriate box.

5. The undersigned registered owner of this Warrant hereby certifies under oath that to the best knowledge of the undersigned after reasonably inquiry, the undersigned is a “citizen of the United States” (as defined in Title 49, Section 40102(a)(15) of the United States Code).

(Printed Name of Registered Owner)

(Signature of Registered Owner)

(Street Address)

(City) (State) (Zip Code)

A-1

SWORN TO BEFORE ME this              day of             ,20            .

(Notary Public, State of             )

(Notary’s Printed Name)

My Commission expires:                        

NOTICE: The signature on this subscription must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.

A-2

EXHIBIT B

ASSIGNMENT FORM

[To be executed only upon transfer of Warrant]

FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant with respect to the number of shares of Common Stock set forth below:

Name and Address of Assignee Number of Shares of Common Stock

and does hereby irrevocably constitute and appoint                              attorney-in-fact to register such transfer onto the books of the Company maintained for the purpose, with full power of substitution in the premises.

Dated:
	(Name of Registered Owner)
	(Signature of Registered Owner)
	(Street Address)
	(City) (State) (Zip Code)

(Printed Name of Witness)

(Signature of Witness)

NOTICE: The signature on this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.

B-1

EX-99.3

Exhibit 99.3

FORM OF

WARRANT

to Purchase Common Stock of

KITTY HAWK, INC.

Warrant No. W-        

Original Issue

Date: February        , 2003

TABLE OF CONTENTS

1.	DEFINITIONS		1
2.	EXERCISE OF WARRANT		3
	2.1.	Restrictions on Exercise	3
	2.2.	Manner of Exercise	3
	2.3.	Issued Warrant Shares Fully Paid, Nonassessable	4
	2.4.	Fractional Shares	4
3.	TRANSFER, DIVISION AND COMBINATION		4
	3.1.	Transfer	4
	3.2.	Division and Combination	4
	3.3.	Expenses	5
	3.4.	Maintenance of Books	5
4.	ADJUSTMENT PROVISIONS		5
	4.1.	Stock Dividends, Subdivisions and Combinations	5
	4.2.	Consolidation, Amalgamation, Arrangement or Merger	6
	4.3.	Other Provisions Applicable to Adjustments Under this Section 4	6
5.	RESERVATION AND AUTHORIZATION OF COMMON STOCK		7
6.	NOTICE OF CORPORATE ACTIONS; TRANSFER BOOKS		7
	6.1.	Notices of Corporate Actions	7
	6.2.	Closing of Transfer Books	7
7.	LOSS OR MUTILATION		7
8.	OFFICE OF THE COMPANY		7
9.	NO VOTING OR DIVIDEND RIGHTS; LIMITATIONS OF LIABILITY		8
10.	MISCELLANEOUS		8
	10.1.	Nonwaiver	8
	10.2.	Notice Generally	8
	10.3.	Successors and Assigns	8
	10.4.	Amendment	8
	10.5.	Severability	8
	10.6.	Headings	8
	10.7.	Governing Law; Jurisdiction	8
	10.8.	Investment Intent	9
	10.9.	Entire Agreement	9
	10.10.	Due Authorization	9
EXHIBIT A		SUBSCRIPTION FORM	A-1
EXHIBIT B		ASSIGNMENT FORM	B-1

THE WARRANT REPRESENTED BY THIS CERTIFICATE MAY BE EXERCISED ONLY BY A PERSON WHO IS A “CITIZEN OF THE UNITED STATES” (AS DEFINED IN TITLE 49, SECTION 40102(A)(15) OF THE UNITED STATES CODE) AT THE TIME OF SUCH EXERCISE. ANY PROPOSED EXERCISE OF THIS WARRANT BY A PERSON WHO IS NOT A “CITIZEN OF THE UNITED STATES” (AS DEFINED IN TITLE 49, SECTION 40102(A)(15) OF THE UNITED STATES CODE) AT THE TIME OF SUCH PROPOSED EXERCISE SHALL BE VOID AND HAVE NO EFFECT WHATSOEVER.

Warrant No. W-        

WARRANT

TO PURCHASE COMMON STOCK OF

KITTY HAWK, INC.

THIS IS TO CERTIFY THAT                              (“Initial Holder”), or its registered assigns, is entitled, at any time after February         , 2003 until the Expiration Date (the “Exercise Period”), to purchase from Kitty Hawk, Inc., a Delaware corporation (the “Company”), an aggregate of              duly authorized, validly issued, fully paid and nonassessable shares of Common Stock of the Company (subject to adjustment as provided herein), at a purchase price of $0.000001 per share (the initial “Exercise Price”, subject to adjustment as provided herein), all on the terms and conditions and pursuant to the provisions hereinafter set forth.

1. DEFINITIONS.

As used in this Warrant, the following terms have the respective meanings set forth below:

“Business Day” shall mean any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed in the city of New York.

“Commission” shall mean the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal securities laws.

“Common Stock” shall mean the common stock of the Company, par value $0.000001 per share, and any class of stock resulting from successive changes or reclassifications of such Common Stock.

“Company” shall have the meaning set forth in the preamble of this Warrant.

“Current Market Price” shall mean, for a share of Common Stock on any date, the average Quoted Price for the three (3) consecutive Trading Days prior to the date in question.

“Designated Office” shall have the meaning set forth in Section 8 hereof.

“Exercise Date” shall have the meaning set forth in Section 2.2 hereof.

“Exercise Notice” shall have the meaning set forth in Section 2.2 hereof.

“Exercise Period” shall have the meaning set forth in the preamble of this Warrant.

“Exercise Price” shall have the meaning set forth in the preamble of this Warrant.

“Expiration Date” shall mean the earlier to occur of (i) the date on which no Warrants are outstanding or (ii) February         , 2013.

“Holder” shall mean (i) with respect to this Warrant, the Person in whose name the Warrant set forth herein is registered on the books of the Company maintained for such purpose and (ii) with respect to any other Warrant or shares of Warrant Stock, the Person in whose name such Warrant or shares of Warrant Stock is registered on the books of the Company maintained for such purpose.

“Initial Holder” shall have the meaning set forth in the preamble of this Warrant.

“Original Issue Date” shall mean February         , 2003.

“Original Warrant” shall mean the Warrant originally issued by the Company as of the Original Issue Date to the Initial Holder.

“Person” shall mean any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, incorporated organization, association, corporation, institution, public benefit corporation, entity or government (whether federal, state, county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof).

“Quoted Price” shall mean, with respect to Common Stock, (i) the last reported sales price of the Common Stock on the New York Stock Exchange or (ii) if not listed on the New York Stock Exchange, the last reported sales price of the Common Stock on such other principal exchange on which the Common Stock is listed or admitted for trading or (iii) if not listed or admitted for trading on a securities exchange, the last reported sales price for Common Stock as reported by the National Association of Securities Dealers Automated Quotation System – National Market System or the National Association of Securities Dealers Automated Quotation System – SmallCap Market System, or (iv) if not so reported or listed or admitted for trading, the last reported bid price of the applicable security in the over-the-counter market. In the event that the Quoted Price cannot be determined as aforesaid, the Board of Directors of the Company shall determine the Quoted Price on the basis of such quotations as it in good faith considers appropriate. Such determination may be challenged in good faith by holders of a majority of the shares of Common Stock issuable upon exercise of all Warrants, and any dispute shall be resolved at the prevailing party’s cost, by the determination of an investment banking firm of recognized national standing selected by the Company and acceptable to such holders of a majority of the shares of Common Stock issuable upon exercise of all Warrants, which determinations shall be made in good faith and be conclusive absent manifest error.

“Securities Act” shall mean the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations of the Commission thereunder, all as the same shall be in effect at the time.

“Trading Day” shall mean, with respect to any security, any day on which any market in which the applicable security is then traded and in which the Quoted Price may be ascertained, is open for business.

“U.S. Citizen” shall mean any Holder who is (i) an individual who is a citizen of the United States, (ii) a partnership each of whose partners is an individual who is a “citizen of the United States” (as defined in Title 49, Section 40102(a)(15) of the United States Code) or (iii) a corporation or association organized under the laws of the United States or a State, the District of Columbia, or a territory or possession of the United States, of which the president and at least two-thirds of the board of directors and other managing officers are “citizens

2

of the United States” (as defined in Title 49, Section 40102(a)(15) of the United States Code), and in which at least 75 percent of the voting interest is owned or controlled by persons that are “citizens of the United States” (as defined in Title 49, Section 40102(a)(15) of the United States Code).

“Warrant Price” shall mean an amount equal to (i) the number of shares of Common Stock being purchased upon exercise of this Warrant pursuant to Section 2.2 hereof, multiplied by (ii) the Exercise Price as of the date of such exercise.

“Warrants” shall mean the Original Warrant and all warrants issued upon transfer, division or combination of, or in substitution for, such Original Warrant or any other such warrant.

“Warrant Stock” generally shall mean the shares of Common Stock issued, issuable or both (as the context may require) upon the exercise of this Warrant.

2. EXERCISE OF WARRANT.

2.1. Restrictions on Exercise. Notwithstanding anything contained herein to the contrary, the Holder of this Warrant shall not be entitled to exercise this Warrant unless such Holder is a U.S. Citizen at the time of such exercise. Any proposed exercise of this Warrant by a Holder who is not a U.S. Citizen at the time of such proposed exercise shall be void and have no effect whatsoever. Each Warrant issued to a Holder shall be stamped or otherwise imprinted with a legend in substantially the following form:

“THE WARRANT REPRESENTED BY THIS CERTIFICATE MAY BE EXERCISED ONLY BY A PERSON WHO IS A “CITIZEN OF THE UNITED STATES” (AS DEFINED IN TITLE 49, SECTION 40102(A)(15) OF THE UNITED STATES CODE) AT THE TIME OF SUCH EXERCISE. ANY PROPOSED EXERCISE OF THIS WARRANT BY A PERSON WHO IS NOT A “CITIZEN OF THE UNITED STATES” (AS DEFINED IN TITLE 49, SECTION 40102(A)(15) OF THE UNITED STATES CODE) AT THE TIME OF SUCH PROPOSED EXERCISE SHALL BE VOID AND HAVE NO EFFECT WHATSOEVER.”

2.2. Manner of Exercise. (a) Subject to the provisions of this Warrant, the Holder of this Warrant may exercise this Warrant from time to time during the Exercise Period, on any Business Day, for all or any part of the number of shares of Common Stock purchasable hereunder. In order to exercise this Warrant, in whole or in part, the Holder shall (i) deliver to the Company at the Designated Office a written notice of the Holder’s election to exercise this Warrant (an “Exercise Notice”), which Exercise Notice shall be irrevocable and shall specify the number of shares of Common Stock to be purchased, (ii) surrender to the Company at the Designated Office this Warrant and (iii) pay to the Company the Warrant Price (the date on which such delivery, surrender and payment shall have taken place being hereinafter sometimes referred to as the “Exercise Date”). Such Exercise Notice shall be in the form of the subscription form attached hereto as Exhibit A, duly executed by the Holder or its duly authorized agent or attorney.

(b) Upon receipt by the Company of such Exercise Notice, Warrant and Warrant Price, the Company shall, as promptly as practicable, and in any event within five (5) Business Days thereafter, execute (or cause to be executed) and deliver (or cause to be delivered) to the Holder a certificate or certificates representing the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereinafter provided. The certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the exercising Holder shall reasonably request in the Exercise Notice and shall be registered in the name of the Holder or such other name as shall be designated in the Exercise Notice. This Warrant shall be deemed to have been exercised and such certificate or

3

certificates shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a holder of record of such shares for all purposes, as of the Exercise Date.

(c) Payment of the Warrant Price may be made as follows (or by any combination of the following): (i) by delivering to the Company cash in United States currency or a certified check or bank draft payable to the order of the Company, or a wire transfer to an account designated by the Company, (ii) by surrender of a number of shares of Common Stock held by the Holder equal to the quotient obtained by dividing (A) the Warrant Price payable with respect to the portion of this Warrant then being exercised by (B) the Current Market Price per share of Common Stock on the Exercise Date, or (iii) by cancellation of any portion of this Warrant with respect to the number of shares of Common Stock equal to the quotient obtained by dividing (A) the Warrant Price payable with respect to the portion of this Warrant then being exercised by (B) the Current Market Price per share of Common Stock on the Exercise Date.

(d) If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing the shares of Common Stock being issued, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased shares of Common Stock called for by this Warrant. Such new Warrant shall in all other respects be identical to this Warrant.

2.3. Issued Warrant Shares Fully Paid, Nonassessable. The Company shall take all actions reasonably necessary to ensure that upon exercise of this Warrant, the shares of Common Stock issued upon exercise hereof shall, without further action by the Holder, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes, liens and charges with respect to the issue thereof.

2.4. Fractional Shares. The Company shall not be required to issue a fractional share of Common Stock upon exercise of this Warrant. As to any fraction of a share that the Holder of this Warrant would otherwise be entitled to purchase upon such exercise, the Company shall pay the Holder cash in lieu of such fractional share in an amount equal to the same fraction of the Current Market Price.

3. TRANSFER, DIVISION AND COMBINATION.

3.1. Transfer. Subject to compliance with the applicable provisions of this Warrant, each transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the Designated Office, together with delivery of a written assignment of this Warrant in the form attached hereto as Exhibit B duly executed by the Holder or its duly authorized agent or attorney. Upon such surrender and delivery, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination or denominations specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned and this Warrant shall promptly be cancelled; provided, that in no event may this Warrant be transferred or assigned in an amount exercisable for less than 100,000 shares of Common Stock, unless this Warrant is exercisable for less than 100,000 shares of Common Stock, in which case, this Warrant may be transferred or assigned in whole, but not in part. Except as otherwise provided herein, a Warrant, if properly assigned in compliance with the applicable provisions of this Warrant, may be exercised by the new Holder for the purchase of shares of Common Stock without having a new Warrant issued.

3.2. Division and Combination. Subject to compliance with the applicable provisions of this Warrant, this Warrant may be divided or combined with other Warrants upon surrender and presentation hereof at the Designated Office, together with a written notice specifying the names and denominations in which new

4

Warrants are to be issued, executed by the Holder or its duly authorized agent or attorney; provided, that in no event may this Warrant be divided into one or more Warrants exercisable for less than 100,000 shares of Common Stock, unless this Warrant is not exercisable for a whole multiple of 100,000 shares of Common Stock, in which case, this Warrant may be divided into one or more Warrants exercisable for whole multiples of 100,000 shares of Common Stock plus one Warrant exercisable for less than 100,000 shares of Common Stock. Subject to compliance with the applicable provisions of this Warrant as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

3.3. Expenses. The Company shall prepare, issue and deliver at its own expense any new Warrant or Warrants required to be issued under this Section 3.

3.4. Maintenance of Books. The Company agrees to maintain, at the Designated Office, books for the registration and transfer of the Warrants.

4. ADJUSTMENT PROVISIONS.

4.1. Stock Dividends, Subdivisions and Combinations. If at any time after the date hereof the Company shall:

(i) pay a dividend or make a distribution on its Common Stock in shares of its Common Stock;

(ii) subdivide its outstanding shares of Common Stock into a greater number of shares;

(iii) combine its outstanding shares of Common Stock into a smaller number of shares; or

(iv) issue by reclassification of its Common Stock any shares of its capital stock;

then the Exercise Price shall be adjusted to equal the product of the Exercise Price in effect immediately prior to such event multiplied by a fraction, the numerator of which is equal to the number of shares of Common Stock outstanding immediately prior to the event and the denominator of which is equal to the number of shares of Common Stock outstanding immediately after such event; provided, however, in no event shall the Exercise Price be less than the par value of a share of Common Stock. Such adjustment shall be made successively whenever any event listed above shall occur.

In addition, the number of shares for which this Warrant is exercisable shall be adjusted so that the Holder of this Warrant thereafter may exercise this Warrant for the same aggregate number and kind of shares of capital stock of the Company that such Holder would have owned immediately following such event if such Holder had exercised this Warrant immediately prior to such event. The adjustment shall become effective immediately after the record date in the case of a dividend or distribution and immediately after the effective date of a subdivision, combination or reclassification.

5

If, after an adjustment referred to in clauses (i) through (iv) above, the Holder upon exercise of this Warrant may receive shares of two or more classes of capital stock of the Company, the Company shall determine the allocation of the Exercise Price between the classes of capital stock; provided, however, in no event shall the Exercise Price be less than the par value of the capital stock for which this Warrant is then exercisable. After such allocation, the exercise rights and the Exercise Price with respect to each class of capital stock shall thereafter be subject to adjustment on terms comparable to those applicable to Common Stock in this Section 4.

4.2. Consolidation, Amalgamation, Arrangement or Merger. In case of any consolidation, amalgamation, arrangement or merger of the Company with or into another Person or any merger of another Person with or into the Company (other than a transaction to which Section 4.1 applies), or in case of any sale or transfer of all or substantially all of the assets of the Company, this Warrant shall become exercisable only into the kind and amount of securities, cash and other property receivable upon such consolidation, amalgamation, arrangement, merger, sale or transfer by a holder of the number of shares of Common Stock (and other securities, if applicable) for which this Warrant was exercisable immediately prior thereto (assuming such holder of Common Stock (and other securities, if applicable) failed to exercise any rights of election). Concurrently with the consummation of such transaction, the corporation formed by or surviving any such consolidation or merger if other than the Company, or the person to which such sale or conveyance shall have been made, shall enter into a supplemental agreement so providing and further providing for adjustments which shall be as equivalent as may be practicable to the adjustments provided for in this Section 4.

4.3. Other Provisions Applicable to Adjustments Under this Section 4. The following provisions shall be applicable to the adjustments provided for pursuant to this Section 4:

(a) When Adjustments To Be Made. The adjustments required by this Section 4 shall be made whenever and as often as any specified event requiring such an adjustment shall occur. For the purpose of any such adjustment, except as otherwise provided herein, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. In computing the adjustments under this Section 4, fractional interests in Common Stock shall be taken into account to the nearest 1/100th of a share.

(b) When Adjustment Not Required. If the Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or distribution to which the provisions of Section 4.1 would apply, but shall, thereafter and before the distribution to stockholders thereof, legally abandon its plan to pay or deliver such dividend or distribution, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled.

(c) Notice of Adjustments. Whenever the Exercise Price or number of shares of Common Stock issuable upon exercise of this Warrant is adjusted, the Company shall promptly mail to the Holder, first class, postage paid, a notice of the adjustment briefly stating the facts requiring the adjustment and the manner of computing it. The Company shall keep at its principal office or at the Designated Office, if different, copies of all such notices and cause the same to be available for inspection at said office during normal business hours by any Holder or any prospective transferee of a Warrant designated by a Holder thereof.

6

Except as provided in the immediately following sentence, any determination that the Company or its Board of Directors must make pursuant to this Section 4 shall be conclusive. Whenever the Company or its Board of Directors shall be required to make a determination under this Section 4, such determination shall be made in good faith and may be challenged in good faith by the Holder and any dispute shall be resolved, at the prevailing party’s expense, by an investment banking firm of recognized national standing, selected by the Company and acceptable to such Holder.

5. RESERVATION AND AUTHORIZATION OF COMMON STOCK.

From and after the Original Issue Date, the Company shall at all times reserve and keep available for issuance upon the exercise of the Warrants such number of its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all Warrants. All shares of Common Stock issuable upon the exercise of the Warrants shall be fully paid and nonassessable, not subject to preemptive rights and shall be free and clear of all liens (other than any created by actions of the Holder).

6. NOTICE OF CORPORATE ACTIONS; TRANSFER BOOKS.

6.1. Notices of Corporate Actions. In the event of (a) any taking by the Company of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or distribution, (b) any capital reorganization of the Company (including any transaction specified in Section 4.1), any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger involving the Company and any other Person or any transfer or other disposition of all or substantially all the assets of the Company to another Person or (c) any voluntary or involuntary dissolution, liquidation or winding up of the Company, the Company shall provide not less than ten (10) days prior notice of such event described in clauses (a), (b) and (c) in accordance with Section 10.2.

6.2 Closing of Transfer Books. The Company shall not at any time, except upon dissolution, liquidation or winding up of the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or transfer of any Warrant.

7. LOSS OR MUTILATION.

Upon receipt by the Company from any Holder of evidence reasonably satisfactory to the Company of the ownership of and the loss, theft, destruction or mutilation of this Warrant, and, in the case of such loss, theft, or destruction of this Warrant, an indemnity bond or agreement reasonably satisfactory to the Company or, in case of mutilation, upon surrender and cancellation of this Warrant, the Company will execute and deliver in lieu hereof a new Warrant of like tenor to such Holder; provided, however, in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation.

8. OFFICE OF THE COMPANY.

As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency, which may be the principal executive offices of the Company (the “Designated Office”), where the Warrants may be presented for exercise, registration of transfer, division or combination as provided in this Warrant. Such Designated Office shall initially be the office of the Company at 1515 West 20th Street, P.O. Box 612787, DFW Airport, Texas 75261. The Company may from time to time change the Designated Office to another office of the Company or its agent within the United States by notice given to all registered holders of Warrants at least ten (10) Business Days prior to the effective date of such change.

7

9. NO VOTING OR DIVIDEND RIGHTS; LIMITATIONS OF LIABILITY.

This Warrant shall not be construed as conferring upon the Holder the right to vote or to execute written consents as a stockholder of the Company. Except as expressly provided herein, this Warrant shall not be construed as conferring upon the Holder the right to notice as a stockholder of the Company or any other matters or rights whatsoever as a stockholder of the Company. Except as expressly provided herein, no dividends or interest shall be payable or accrued in respect of this Warrant or the rights represented hereby or the shares purchasable hereunder until, and only to the extent that, shares of Common Stock have been issued to the Holder pursuant to the exercise of this Warrant. No provisions hereof, in the absence of affirmative action by the Holder to purchase shares of Common Stock, and no mere enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of such Holder for the Exercise Price for any Warrant Stock or as a stockholder of the Company, whether such liability is asserted by the Company or its creditors.

10. MISCELLANEOUS.

10.1. Nonwaiver. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Company or the Holder shall operate as a waiver of such right or otherwise prejudice the rights, powers or remedies of such Person.

10.2. Notice Generally. Any notice, demand, request, consent, approval, declaration, delivery or communication hereunder to be made pursuant to the provisions of this Warrant shall be delivered or sent by registered or certified mail, postage prepaid, to any Holder of this Warrant, at its last known address appearing on the books of the Company maintained for such purpose, or to the Company at its Designated Office.

10.3. Successors and Assigns. Subject to the provisions of Sections 3.1, this Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the permitted successors and assigns of the Holder hereof.

10.4. Amendment. This Warrant may be modified or amended or the provisions hereof waived with the written consent of the Company and the Holder thereof.

10.5. Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant.

10.6. Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.

10.7. Governing Law; Jurisdiction. In all respects, including all matters of construction, validity and performance, this Warrant and the obligations arising hereunder shall be governed by, and construed and enforced in accordance with, the laws of the state of Texas. The Company and the Holder of this Warrant hereby consent and agree that the state or federal courts located in Dallas County, Texas, shall have exclusive jurisdiction to hear and determine any claims or disputes between the Company and the Holder of this Warrant pertaining to this Warrant or to any matter arising out of or relating to this Warrant.

8

10.8. Investment Intent. The Holder hereby represents and warrants that this Warrant and the shares of Common Stock issued or issuable upon the exercise of this Warrant are being or will be acquired for the Holder’s account and with no intention of distributing or reselling such Warrant or shares of Common Stock or any part thereof in any transaction that would be in violation of the Securities Act or any state securities laws, without prejudice, however, to the Holder’s right at all times to sell or otherwise dispose of all or any part of (i) the shares of Common Stock issued upon the exercise of this Warrant, under an effective registration statement under the Securities Act, or (ii) the shares of Common Stock issued upon the exercise of this Warrant or the Warrant under an exemption from such registration available under the Securities Act, and subject, nevertheless, to the disposition of its property being at all times within its control.

10.9. Entire Agreement. This Warrant, including all exhibits attached hereto, constitute the entire agreement among the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the parties.

10.10. Due Authorization. The execution and delivery by the Company of this Warrant, and the consummation by it of the transactions contemplated hereby, have been duly authorized by all necessary corporate action of the Company. This Warrant has been duly executed and delivered and constitutes a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms, except that such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium and similar laws relating to or affecting creditors’ rights generally, and (ii) general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at law).

* * * * * * * *

9

IN WITNESS WHEREOF, the Company has caused this Warrant to be duly executed this              day of February, 2003.

KITTY HAWK, INC.

By:

Name:

Title:

10

EXHIBIT A

SUBSCRIPTION FORM

[To be executed only upon exercise of Warrant]

1. The undersigned registered owner of this Warrant hereby irrevocably exercises this Warrant for the purchase of              shares of Common Stock of the Company and herewith makes [makes payment of $             therefor pursuant to Section 2.2(c)(i)] [and/or] [makes payment therefor by surrendering pursuant to Section 2.2(c)(ii)              shares of Common Stock of the Company] [and/or] [makes payment therefor by cancellation pursuant to Section 2.2(c)(iii) of a portion of the Warrant with respect to                  shares of Common Stock], all of the foregoing at the price and on the terms and conditions specified in this Warrant. The undersigned registered owner of this Warrant requests that certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to                                                               whose address is                                                                                                     and, if such shares of Common Stock shall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant with the same terms and provisions of this Warrant, except that it shall be exercisable only for the balance of the shares of Common Stock issuable hereunder, shall be delivered to the undersigned.

2. The undersigned registered owner of this Warrant hereby represents and warrants that it ¨ is or ¨ is not an “affiliate” (as defined in the Securities Act of 1933, as amended) of the Company. Please check the appropriate box.

3. The undersigned registered owner of this Warrant hereby certifies under oath that to the best knowledge of the undersigned after reasonably inquiry, the undersigned is a “citizen of the United States” (as defined in Title 49, Section 40102(a)(15) of the United States Code).

(Printed Name of Registered Owner)

(Signature of Registered Owner)

(Street Address)

(City) (State) (Zip Code)

SWORN TO BEFORE ME this          day of                             , 20    .

(Notary Public, State of                 )

(Notary’s Printed Name)

My Commission expires:                                              

NOTICE: The signature on this subscription must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.

A-1

EXHIBIT B

ASSIGNMENT FORM

[To be executed only upon transfer of Warrant]

FOR VALUE RECEIVED, the undersigned registered owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant with respect to the number of shares of Common Stock set forth below:

Name and Address of Assignee Number of Shares of Common Stock

and does hereby irrevocably constitute and appoint                                          attorney-in-fact to register such transfer onto the books of the Company maintained for the purpose, with full power of substitution in the premises.

Dated:
	(Name of Registered Owner)
	(Signature of Registered Owner)
	(Street Address)
	(City) (State) (Zip Code)

(Printed Name of Witness)

(Signature of Witness)

NOTICE: The signature on this assignment must correspond with the name as written upon the face of the within Warrant in every particular, without alteration or enlargement or any change whatsoever.

B-1