1
Exhibit No. 10(E)
AIRCRAFT
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT (the "Agreement") made and entered into as of
this 23rd day of April, 1999, by and between Village Transport Corp., a Delaware
corporation having an office at 0000 Xxxxxx Xxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxx
00000 ("Manager"), and ACME Operating Corporation, an Ohio corporation having an
office at 0000 Xxxxxx Xxxxx Xxxx, Xxxxxxxx Xxxxxxx, Xxxx 00000 ("ACME").
WITNESSETH:
WHEREAS, ACME pursuant to an Aircraft Lease Agreement ("Lease") dated
of even date herewith, leases the aircraft (the "Aircraft") bearing the
manufacturer's Serial Number and Federal Aviation Administration Registration
Number set forth on the Schedule hereto, equipped with two General Electric CF
34-1A engines as more particularly described in the Lease Schedule (hereinafter
called the "Aircraft"); and
WHEREAS, ACME is desirous of engaging the services of Manager to
provide certain management services with respect to the Aircraft; and
WHEREAS, Manager is desirous of providing certain management services
pertaining to the Aircraft on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the parties hereto hereby
agree as follows:
1. ACME hereby engages Manager, and Manager hereby agrees, to provide
certain management services with respect to the Aircraft for the benefit of the
ACME.
2. Manager hereby agrees for the benefit and at the direction of ACME
that it shall provide the services set forth below:
3. (a) Throughout the term of this Agreement, Manager shall, at ACME's
cost and expense, (1) inspect, maintain, service, repair, overhaul and test the
Aircraft by duly competent personnel, in accordance with FAA approved
maintenance and preventive repair programs therefor, so as to keep the Aircraft
in good operating condition, ordinary wear and tear excepted, and in such
condition as may be necessary to enable the airworthiness certification of the
Aircraft to be maintained in good standing at all times under 49 U.S.C. Section
40101, et seq., as in effect from time to time; (2) maintain all records, logs
and other materials required by the FAA to be maintained in respect of the
Aircraft and make the same available for ACME's inspection; and (3) comply with
all laws of each and every jurisdiction in which the Aircraft may be operated
and with all rules of the FAA and each and every other legislative, executive,
administrative or judicial body exercising any power or jurisdiction over the
Aircraft, and shall maintain the Aircraft in proper condition for operation
under such laws and rules including, without limitation, all manufacturers
recommended maintenance. Manager also agrees not to
2
operate or locate the Aircraft, or suffer the Aircraft to be operated or
located, in any area excluded from coverage by any insurance required by the
terms of this Agreement.
(b) The cost of compliance with any airworthiness or similar
directive, or regulation issued by the FAA or other governmental agency
("Airworthiness Directive") and the cost of complying with any mandatory or
recommended service bulletins or letters, shall be borne by ACME.
4. (a) Manager hereby agrees to identify and make available to ACME at
the inception of this Agreement, certain pilots, from a group of professionally
qualified pilots who shall be familiar with and licensed to operate the
Aircraft, from which ACME shall, in its own discretion, designate two (2) of
such pilots to operate the Aircraft for ACME, and thereafter such designated
pilots shall be ACME's pilots of the Aircraft. The pilot designation shall be in
writing and signed by ACME, which writing shall be binding upon ACME.
(b) ACME shall be permitted to remove any of such pilots by
providing written notice to Manager and designate new pilots, who shall
thereafter be ACME's pilots of the Aircraft.
(c) Notwithstanding the foregoing, the pilots designated by ACME
shall be subject to (i) availability, (ii) the rules and regulations promulgated
by the FAA, and (iii) strikes and labor disputes.
(d) ACME may at any time provide its own pilots upon twenty-four
(24) hours prior notice to Manager.
(e) ACME hereby directs Manager and Manager hereby agrees to make
all necessary take-off, flight and landing arrangements for flights operated by
ACME. Manager shall pay, at Manager's cost and expense, the following operating
expenses relating to the Aircraft: crew salary and benefits, telephone and costs
associated with providing information services. ACME shall, at all reasonable
times, have the right to inspect Manager's records with respect to the Aircraft.
(f) ACME will pay all operating expenses related to the Aircraft
except those set forth in paragraph (e) of this Section 4. Such operating
expenses shall include, but shall not be limited to: fuel, storage, domestic
landing fees, all federal, state and local taxes, charges, imposts, duties and
excise taxes and with respect to flights outside the 48 contiguous states of the
continental United States (the "Continental United States"), for foreign permit,
overflight, navigation, and air space fees, customs, head taxes and similar
assessments relating to the ownership, operation, maintenance or the use of the
Aircraft by ACME, registration and handling costs, catering, crew travel and
lodging, hangar and tie-down costs, flight planning and weather contract
services, maintenance supplies, outside pilot services (if any), equipment
costs, sales and use taxes and any other taxes and licensing fees associated
with the Aircraft.
5. ACME shall obtain, at ACME's expense, all-risk aircraft hull
insurance with no deductible with respect to the Aircraft, against any loss,
theft or damage to the Aircraft, including
2
3
extended coverage with respect to any engines or parts while removed from the
Aircraft, for the fair market value of the Aircraft, naming Manager and ACME, as
named insureds and loss payees with losses payable as their respective interests
may appear. ACME shall likewise pay for and arrange to procure liability
insurance for the Aircraft in the form and substance and with such insurers
approved by Manager but in an amount not less than One Hundred Million Dollars
($100,000,000) single limit liability coverage and shall cause ACME and Manager,
to be named as additional insureds. Copies of such policies and certificates of
Insurance shall be furnished by the ACME to Manager promptly upon the execution
of this Agreement. Such Insurance shall be maintained by ACME in full force and
effect throughout the term hereof and the insurer shall provide ACME and Manager
thirty (30) days advance notice of cancellation or material alteration. All such
insurance shall contain a Breach of Warranty Endorsement in favor of ACME and
Manager.
6. At ACME's direction, Manager hereby agrees that it will provide
assistance to and consult with ACME in all matters regarding the Aircraft
including but not limited to:
(a) FAA and manufacturers correspondence and directives;
(b) Enforcement of warranty claims;
(c) Enforcement, litigation and settlement of insurance matters; and
(d) Parts replacement, services and maintenance arrangements.
7. As compensation for the services to be performed by Manager
hereunder, ACME hereby agrees to pay to Manager an annual Management Fee in an
amount equal to $405,200; provided, that the parties agree to adjust the
Management Fee at each anniversary of the date hereof. The Management Fee shall
be payable in twelve equal monthly installments each of which shall be due on
the first day of each calendar month during the term of this Agreement.
8. In addition, ACME agrees that it shall provide Manager with the
following information for each proposed flight:
(a) proposed departure point;
(b) destination;
(c) date and time of flight;
(d) the number of anticipated passengers;
(e) the nature and extent of luggage to be carried;
(f) the date and time of a return flight, if any; and
3
4
(g) any other information concerning the proposed flight that may be
pertinent or is reasonably required by Manager.
9. Manager agrees that, throughout the term of this Agreement, it shall
not cause or permit, through any of its own acts or failures to act, any liens,
claims or encumbrances to attach to the Aircraft other than mechanics liens to
be discharged in the ordinary course of business.
10. ACME acknowledges that Manager shall have no liability for delay or
failure to furnish the pilots pursuant to this Agreement. Manager shall not
otherwise be liable to ACME for any direct, indirect, special, consequential or
other damages caused directly or indirectly by any such delay or failure to
furnish the pilots. ACME and Manager further agree that when, in the reasonable
view of ACME or the pilots of the Aircraft, safety may be compromised, ACME or
the pilots may terminate a flight, refuse to commence a flight, or take other
action necessitated by such safety considerations without liability for loss,
injury, damage or delay. ACME can dictate other limitations of flights. ACME
acknowledges that the ACME shall operate the Aircraft at all times in accordance
with applicable FAA Regulations.
11. Upon the occurrence of an Event of Default (as hereinafter defined)
under this Agreement, Manager will cease all activities hereunder. In addition
to the foregoing, Manager shall have all right to bring an action or claim
against ACME for all sums which may be due and owing hereunder and to pursue all
other remedies available to it at law or in equity. For purposes hereof, the
term "Event of Default" shall mean the occurrence and continuation of any of the
following events of default hereunder:
(a) The failure of ACME to pay when due the Management Fee set
forth in Section 7 hereof or any taxes or similar assessments levied or imposed
against components of such fee, as set forth in said Section 7, with a ten (10)
day period of grace after written notice of nonpayment;
(b) The material breach by ACME of any other provision of this
Agreement, which material breach shall continue for thirty (30) days after
written notice to ACME;
(c) If ACME shall:
(1) admit in writing its inability to pay, or fail to pay, its
debts generally as they become due;
(2) file a petition in bankruptcy or a petition to take
advantage of any insolvency act or file an answer admitting or failing
to deny the material allegations of such petition:
(3) make an assignment for the benefit of its creditors;
(4) consent to the appointment of, or possession by, a
custodian for itself or for the whole or substantially all of its
property; or
4
5
(5) file a petition or answer seeking reorganization or
arrangement or other aid or relief under any bankruptcy or insolvency
laws or any other law for the relief of debtors or file an answer
admitting, or fail to deny, the material allegations of a petition
filed against it for any such relief.
(d) If a court of competent jurisdiction shall enter an order,
judgment or decree appointing, without the consent of ACME, a custodian for ACME
or the whole or substantially all of its property, or approving a petition filed
against it seeking liquidation, reorganization or arrangement of ACME under any
bankruptcy or insolvency laws or any other law for the relief of debtors, and
such order, judgment or decree shall not be vacated or set aside or stayed
within sixty (60) days from the date of entry thereof; or,
(e) If, under the provision of any law for the relief of debtors,
any court of competent jurisdiction or custodian shall assume custody or control
of ACME or of the whole or any substantial part of its property without the
consent of ACME, and such custody or control shall not be terminated or stayed
within sixty (60) days from the date of assumption of such custody or control.
12. This Agreement shall commence on the date of execution hereof and
shall terminate on the earlier of (i) thirty (30) days after the date Manager
elects to terminate this Agreement as a result of ACME's default, or (ii) after
the first anniversary hereof, thirty (30) days after either party elects, by
written notice to the other party, to terminate this Agreement.
13. Manager represents and warrants to ACME as follows:
(a) Manager is a corporation duly and validly organized and
existing in good standing under the laws of the state of its incorporation.
Manager has the power and authority to enter into this Agreement and to execute,
deliver or receive all other instruments and documents executed and delivered
and received, in connection with the transactions contemplated hereunder;
(b) There is no action, suit or proceeding pending against Manager
before or by any court, administrative agency or other governmental authority,
or threatened, which brings into question the validity of, or in any way legally
or financially (in the case of performance) impairs or would if adversely
determined impair the execution, delivery or performance by Manager of this
Agreement;
(c) The execution and delivery of this Agreement by Manager and the
performance by it of its obligations hereunder, have been duly authorized by all
necessary corporate action of Manager and do not violate or conflict with (i)
any provision of Manager's Certificate of Incorporation or By-Laws, (ii) any law
or any order, writ, injunction, decree, rule or regulation of any court,
administrative agency or any other governmental authority or (iii) any Agreement
entered into or binding on Manager or its affiliated companies, whether relating
to the Aircraft or otherwise;
5
6
(d) This Agreement constitutes the valid and binding obligations of
Manager enforceable in accordance with its terms, subject, however, to (i) laws
of general application affecting creditors' rights and (ii) judicial discretion,
to which equitable remedies are subject; and
(e) Manager is not subject to any restriction (which has not been
complied with) or agreement which, with or without the giving of notice, the
passage of time, or both, prohibits or would be violated by, or be in conflict
with, the execution, delivery and consummation of this Agreement.
14. ACME represents and warrants to Manager as follows:
(a) ACME is duly and validly organized and existing in good
standing under the laws of the state of its incorporation;
(b) ACME has the power and the authority to enter into this
Agreement, and to carry out the transactions contemplated hereunder;
(c) The execution and delivery of this Agreement by ACME, and the
performance of its obligations hereunder, have been duly authorized by all
necessary action of ACME and do not violate or conflict with (i) any provision
of ACME's Certificate of Incorporation or By-Laws or (ii) any law or any order,
writ, injunction, decree, rule or regulation of any court, administrative agency
or any other governmental authority. There is no action, suit or proceeding
pending or threatened against ACME before any court, administrative agency or
other governmental authority which brings into question the validity of, or
might in any way impair, the execution, delivery or performance by ACME of this
Agreement; and
(d) This Agreement constitutes the valid and binding obligations of
the ACME enforceable in accordance with its terms, subject, however, to (i) laws
of general application affecting creditors' rights and (ii) judicial discretion,
to which equitable remedies are subject.
15. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto, their representatives, successors and permitted assigns.
This Agreement shall not be assignable by either party except upon the express
written consent of the other party.
16. This Agreement constitutes the entire understanding among the
parties with respect to the subject matter hereof, and any changes or
modifications hereto must be in writing and signed by authorized representatives
of both parties. The parties hereto further agree that the courts of the United
States and State of Ohio shall have jurisdiction over the parties with regard to
any disputes arising under this Agreement or arising out of the operation,
maintenance, inspection, servicing or occupancy of the Aircraft during the term
of the Agreement and that this Agreement shall be interpreted and governed by
the laws of the State of Ohio.
17. Any notice, request or other communication to either party by the
other hereunder shall be made in writing and shall be deemed given on the
earlier of the date (i) personally delivered with receipt acknowledged, or (ii)
telecopied at time of transmission or (iii) three (3)
6
7
days after mailed by certified mail, return receipt requested, postage prepaid
and addressed to the party at the address set forth in the first paragraph of
this Agreement. The address of a party to which notices or copies of notices are
to be given may be changed from time to time by such party by written notice to
the other party.
18. This Agreement may be executed in one or more counterparts each of
which shall be deemed an original, all of which together shall constitute one
and the same agreement.
19. In the event that any one or more of the provisions of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable,
the remaining provisions of this Agreement shall be unimpaired and the invalid,
illegal or unenforceable provision shall be replaced by a mutually acceptable
provision, which, being valid, legal and enforceable, comes closest to the
intention of the parties underlying the invalid, illegal or unenforceable
provision.
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
7
8
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed the day and year first above written. The persons
signing below warrant their signatures.
ACME Operating Corporation
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Xxxxx X. Xxxxx, President
Village Transport Corp.
By: /s/ Xxxxx X. Xxxxxxxxx
----------------------------------
Xxxxx X. Xxxxxxxxx, Secretary
8
9
SCHEDULE
Minimum Telephonic Notice: 24 hours
Serial No.: 3007
FAA Registration No.: N711SX
