EXHIBIT 10.1
AIRCRAFT AND ENGINE USE AGREEMENT
This AIRCRAFT AND ENGINE USE AGREEMENT (hereafter the "Agreement") dated as of
September 30, 2002, is made by and between Kitty Hawk Aircargo, Inc.
("Aircargo") and the Kitty Hawk Collateral Liquidating Trust (the "Trust") by
Xxxxxxx Asset Management, Inc., its manager (the "Trust Manager"). Aircargo and
the Trust agree that Aircargo shall have the right and obligation to use certain
aircraft and engines owned by the Trust on the terms set forth herein.
1. Minimum Utilization. For a term commencing on September 30, 2002, which
is the Effective Date (as defined therein) of the Debtors' Joint Plan of
Reorganization dated May 22, 2002 (the "Plan"), and ending on September 30, 2004
(or, for any airframe, such earlier date on which the airframe has been removed
pursuant to this Agreement from Schedule A), Aircargo will use the Airframes
identified on Schedule A (along with all records, logs, manuals and documents or
other materials of any kind relating to the condition, use, location,
maintenance or of repairs or overhauls to any part of the Airframes identified
on Schedule A, collectively referred to as the "Airframes") collectively, in
total, a minimum of 450 block hours per month (the "Minimum Airframe Usage");
provided however, that if, for any reason whatsoever, fewer than four (4) heavy
weight Airframes (the four current heavy weight Airframes being N278US, N279US,
N281KH and N284KH) are available for Aircargo's use, the Minimum Airframe Usage
for the month will be reduced by 100 hours for each of the four (4) heavy weight
Airframes not available for Aircargo's use. In the event that an Airframe is not
available for use for any reason whatsoever for only part of a month, the
reduction in the Minimum Airframe Usage for the month shall be prorated for such
part based on a thirty-day month.
If Aircargo for any month fails to achieve the Minimum Airframe Usage
(subject to the reduction provisions set forth in the immediately preceding
paragraph), then on the date that payment for actual usage for the month is
required under Paragraph 4 of this Agreement, Aircargo shall pay to the Trust an
amount equal to the Minimum Airframe Usage block hour shortfall for the month
multiplied by $375. The Minimum Airframe Usage for the time between the
effective date of this Agreement and the last day of the month of such effective
date shall be prorated based on a 30-day month.
2. Rates for Airframes. The block hour rate for utilization of each of the
Airframes is as follows:
Airframe Rate per Block Hour
-------- -------------------
N278US $400.00
N279US $400.00
N281KH $400.00
N284KH $400.00
N69739 $375.00
N69740 $375.00
N854AA $375.00
N855AA $375.00
N252US $350.00
N6809 $350.00
N6827 $350.00
N6833 $350.00
3. Engines and Rates for Engines. Pursuant to the terms of the Plan and
this Agreement, Aircargo shall transfer all of its right, title and interest in
certain engines that it owns to the Trust in exchange for the Trust transferring
all of its right, title and interest in certain engines currently owned by the
Trust. Schedule B identifies the engines that Aircargo will transfer ownership
to the Trust, and likewise, identifies the engines that the Trust will transfer
ownership to Aircargo. Schedule C identifies the engines that will be owned by
the Trust after the ownership transfers contemplated above and shall be the
Engines (along with all records, logs, manuals and documents or other materials
of any kind relating to the condition, use, location, maintenance or of repairs
or overhauls to any part of the Engines identified on Schedule C, collectively
referred to as the "Engines") subject to this Agreement and sets forth the block
hour rate that Aircargo will pay for the use of each of the Engines, regardless
of the airframe upon which an Engine is operated.
Aircargo will use the Engines collectively, in total, a minimum of 1,350
block hours per month (the "Minimum Engine Usage"); provided however, that if,
for whatever reason whatsoever, fewer than four (4) heavy weight Airframes (the
four current heavy weight Airframes being N278US, N279US, N281KH and N284KH) are
available for Aircargo's use, the Minimum Engine Usage requirement will be
reduced by 300 hours for each of the four (4) heavy weight Airframes not
available for Aircargo's use. In the event that an Airframe is not available for
use for any reason whatsoever for only part of a month, the reduction in the
Minimum Engine Usage for the month shall be prorated for such part based on a
thirty-day month.
If Aircargo for any month fails to achieve the Minimum Engine Usage
(subject to the reduction provisions set forth in the immediately preceding
paragraph), then on the date that payment for actual usage for the month is
required under Paragraph 4 of this Agreement Aircargo shall pay to the Trust an
amount equal to the Minimum Engine Usage block hour shortfall for the month
multiplied by $75. The Minimum Engine Usage for the time between the effective
date of this Agreement and the last day of the month of such effective date
shall be prorated based on a thirty-day month.
4. Time for Payment of Hourly Rates. On or about the 10th day of each month
following the first month after the Effective Date, Aircargo will provide to the
Trust a schedule of the hours flown per Airframe and Engine and will pay to the
Trust the applicable block hour rate for each block hour each Airframe and
Engine has been used in the immediately preceding month.
5. Maintenance. Aircargo will perform line maintenance of the Airframes and
Engines in accordance with Aircargo's maintenance program. The Airframe
maintenance for which Aircargo is responsible hereunder will be limited to "A"
checks, "B" checks, and repairs or incidental replacement of parts and rotables
not to exceed $50,000 for any check or other event. In the event that a
maintenance check, incidental repair or replacement of parts exceeds $50,000,
the Trust will determine if it wants such maintenance work to be conducted, and
if so, will be responsible for such costs. The Engine maintenance for which
Aircargo is responsible hereunder will be limited to repairs and replacement of
parts and rotables not to exceed $50,000 for any check or other event. In the
event that Engine maintenance, incidental repair or replacement of parts exceeds
$50,000, the Trust will determine if it wants such maintenance work to be
conducted, and if so, will be responsible for such costs. Aircargo shall be
required to make any repairs, replacements, or improvements to any Airframe or
Engine necessary as the result of an Airworthiness Directive or Service Bulletin
or similar requirement issued by any regulating body not to exceed $50,000 for
any Airworthiness Directive, Service Bulletin or
similar requirement issued by any regulating body. In the event that any repair,
replacement or improvements to any Airframe or Engine is necessary as a result
of an Airworthiness Directive or Service Bulletin or similar requirement issued
by any regulating body exceeds $50,000, the Trust determine if it wants such
repair, replacement or improvement to be conducted, and if so, will be
responsible for such costs.
6. Insurance. During the term of this Agreement, Aircargo shall cause the
Airframes and Engines to be covered by hull and liability insurance in
accordance with Aircargo's fleet plan which policies shall show the Trust as a
loss payee and an additional insured; provided that, for any Airframe removed
from Schedule A and the Engines mounted on such Airframe, Aircargo's obligation
to insure the Airframe and Engines shall terminate upon the Trust's receipt of
the Deliverables (defined below).
7. Removal of Airframes and Engines from the terms of this Agreement. Upon
60 days written notice to Aircargo, the Trust may withdraw an Airframe from
Schedule A. An Airframe removed from Schedule A shall be referred to as a
"Terminated Airframe." On the 60th day of the notice period, Aircargo shall
deliver physical possession of the Terminated Airframe to a place within the
United States designated by the Trustee, along with (i) a current certificate of
airworthiness; (ii) three serviceable, unencumbered Xxxxx & Xxxxxxx engines of
the type appropriate for such aircraft; and (iii) all technical records,
including but not limited to current maintenance and operations records relating
to the Terminated Airframe and engines (all of the foregoing, for any Terminated
Airframe, being the "Deliverables"). In the event that Aircargo proposes to
deliver to the Trust free and clear title to an engine that is not owned by the
Trust in lieu of an Engine, the Trust shall convey an engine of similar type and
condition (determined by a comparison of engine disk profiles and limiters) to
Aircargo.
8. Operation of Aircraft. Aircargo may operate the Airframes and Engines in
such types of service as it deems appropriate; provided that Aircargo shall not
"Dry Lease" any of the Airframes or Engines.
9. Financial Reporting. Aircargo will provide the consolidated, unaudited
financial statements of its parent company, Kitty Hawk, Inc., on a monthly basis
delivered timely to the Trust Manager.
IN WITNESS WHEREOF, this Agreement is executed by it duly authorized
representative as of the date set forth above.
KITTY HAWK AIRCARGO, INC. KITTY HAWK COLLATERAL
LIQUIDATING TRUST
/s/ Xxxx Xxxxx /s/ Xxxx Xxxxxxx
------------------------------- -------------------------------------
By: Xxxx Xxxxx By: Xxxxxxx Asset Management Trust
---------------------------
Its: V.P. By: Xxxx Xxxxxxx
---------------------------
SCHEDULE A
Airframes
---------
N278US
N279US
N281KH
N284KH
N69739
N69740
N854AA
N855AA
N252US
N6809
N6827
N6833
SCHEDULE B
Trust Engines To Be Transferred to Aircargo Engines to be Transferred to
---------------------------------- -------------------------------------
Aircargo the Trust
-------- ---------
655968
687662 674498
657394 696629
649269
665294 665348
665899 665230
665676
656066 648784
665591 653365
653835 654158
654677 654979
653897
653619
SCHEDULE X
Xx. Xxxxxx Xx. Xxxxx Xxxx Xxxx
0 000000 $83.33
2 674498 $83.33
3 687698 $83.33
4 700451 $83.33
5 700377 $83.33
6 687659 $83.33
7 702952 $83.33
8 696629 $83.33
9 657070 $83.33
10 700522 $83.33
11 649269 (9a) $75.00
12 708328 X/X-xxxx/xxxx
00 000000 $83.33
14 685501 $83.33
15 688689 $83.33
16 687788 $75.00
17 665348 $75.00
18 665230 $75.00
19 665356 $75.00
20 665676 $75.00
21 655829 $66.67
22 657666 $66.67
23 648784 $66.67
24 653365 $66.67
25 665275 X/X-xxxx/xxxx
00 000000 $66.67
27 654158 $66.67
28 654792 $66.67
29 654305 $66.67
30 657315 $66.67
31 649514 X/X-xxxx/xxxx
00 000000 $66.67
33 654368 $66.67
34 654914 $66.67
35 653897 $66.67
36 653619 $66.67
