EXHIBIT 10.2
TO THE EXTENT THAT THIS AIRCRAFT LEASE AGREEMENT CONSTITUTES CHATTEL PAPER (AS
DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY APPLICABLE
JURISDICTION), NO SECURITY INTEREST IN THIS AIRCRAFT LEASE AGREEMENT MAY BE
CREATED THROUGH TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE
ORIGINAL COUNTERPART, WHICH SHALL BE IDENTIFIED AS THE COUNTERPART DESIGNATED AS
THE ORIGINAL ON THE SIGNATURE PAGE OF THIS AGREEMENT BY LESSOR.
The parties listed below as Lessee and Lessor hereby agree that Lessor will
lease the Aircraft to Lessee and Lessee will take delivery of and lease the
Aircraft from Lessor subject to and in accordance with the Lease for the
duration of the Term and further agree in this AIRCRAFT LEASE AGREEMENT dated as
of May 4, 2004 the following:
Lessee: Kitty Hawk Aircargo, Inc.
Lessor:
Owner:
Guarantee required: As set forth on Schedule A
Guarantor: As set forth on Schedule A
Aircraft:
Engines:
Common Terms Agreement: The Aircraft Lease Common Terms Agreement
dated as of May 4, 2004 between Aviation
Financial Services, Inc. and Kitty Hawk
Aircargo, Inc., as in effect on the date
hereof without giving effect to any
subsequent amendment, supplement, waiver
or other modification thereto, unless
Lessor and Lessee otherwise expressly
agree and as attached hereto on Schedule B
Duration of Term: 120 months commencing on the Delivery Date
Manufacturer: The Boeing Company
Extension Option applies: Yes, as set forth on Schedule C
Aircraft Substitution Option applies: Yes, as set forth on Schedule D
PAYMENTS
Rent: As set forth on Schedule A
Supplemental Rent Applies: Yes
Assumed Utilization: ***** Flight Hours per 12 month period
Assumed Ratio: ***** Flight Hours to 1 Cycle ratio (*****:1)
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
Assumed Ratio Adjustment Table: As set forth on Schedule A
Airframe Supplemental Rent: As set forth on Schedule A
APU Supplemental Rent: As set forth on Schedule A
Engine Supplemental Rent: As set forth on Schedule A
Engine LLP Supplemental Rent: As set forth on Schedule A
Landing Gear Supplemental Rent: As set forth on Schedule A
Annual Supplemental Rent Adjustment: As set forth on Schedule A
Enhanced Lessor Maintenance
Contribution applies: Yes, as set forth on Schedule A
Deposit: As set forth on Schedule A
DELIVERY
Scheduled Delivery Month (Month
Year): June 2005
Final Delivery Date: the date that is 180 days after the last
day of the Scheduled Delivery Month
Delivery Location: Denel Aviation, Johannesburg, South
Africa, or such other location as shall be
mutually agreed by Lessor and Lessee
Delivery Condition Requirements: Yes, as set forth on Schedule E
TECHNICAL
Airframe Structural Check: While Lessee is operating a MSG 2
maintenance program for the Aircraft: a
heavy maintenance visit which shall
include but not be limited to
accomplishment of a block C6 Check,
structural and relevant CPCP inspections,
all lesser checks, passenger cabin
refurbishment (including lavatories and
galleys) and strip and repainting of the
complete fuselage, empennage, wings and
pylons. Where relevant, the workscope and
intervals (calendar and/or hourly) shall
not be less than those prescribed by the
then current Manufacturer's Maintenance
Planning Document block maintenance
program.
While Lessee is operating a MSG 3
maintenance program for the Aircraft:
there will be no block C6 check and the
-2-
airframe inspections shall be divided
between sequential C checks. The only C
Check which qualifies as an Airframe
Structural Check for the purposes of
Section 7.2(a) of the Common Terms
Agreement under the MSG 3 maintenance
program, is one which zero's all CPCP and
structural inspections and performs a
refurbishment of the interior and a strip
and repaint of the complete fuselage,
empennage, wings and pylons.
AD Sharing applies: Yes
AD Threshold: As set forth on Schedule A
AD Factor: 96 months
Power by the Hour Maintenance
Program: As set forth on Schedule F
Engines/Rating [For Engines which are B2 hardware
configuration and a thrust level of
22,000 lbs at Delivery, Lessee may derate
the Engines during the Term; provided that
on the Return Occasion, Lessee is
obligated to rerate the Engines to the
Engine Thrust Setting, in each case at
Lessee's expense;
For Engines which are B2 hardware
configuration but operating at a thrust
level of 20,000 lbs at Delivery, Lessee
may upgrade the thrust level to 22,000 lbs
during the Term; provided that on the
Return Occasion, Lessee is obligated to
rerate the Engines to the Engine Thrust
Setting, in each case at Lessee's
expense.]
OR
[The Engines may not be rerated by Lessee
during the Term, but shall remain at the
same thrust level as at Delivery.]
INSURANCE
Agreed Value: As set forth on Schedule A
Minimum Liability Coverage: As set forth on Schedule A
REDELIVERY
Redelivery Location: Kitty Hawk Maintenance Base, Fort Xxxxx,
Indiana or such other location as shall be
mutually agreed by Lessor and Lessee
Engine Thrust Setting:
Minimum APU Limit:
-3-
Minimum Component Calendar Life: ***** months
Minimum Component Cycles: ***** Cycles
Minimum Component Flight Hours: ***** Flight Hours
Minimum Engine Cycles: ***** Cycles
Minimum Engine LLP Cycles: ***** Cycles
Minimum Engine Flight Hours: ***** Flight Hours
Minimum Landing Gear Calendar Time: ***** months
Minimum Landing Gear Cycles: ***** Cycles
Minimum Landing Gear Flight Hours: ***** Flight Hours
Redelivery Check: Ex the next sequential "C" Check, or
higher check if applicable, in block
format so that all airframe inspections
falling due within the next following
***** Flight Hours of operation in
accordance with the Manufacturer's
Maintenance Planning Document have been
accomplished
Required EGT Margin:
AD Compliance Period: ***** days
Additional Return Condition
Requirements: Yes, as set forth on Schedule G
TAX
Lessor/Owner Tax Jurisdiction: United States
MACRS indemnity applies: Yes, as set forth on Schedule H
Foreign Tax Indemnity applies: Yes, as set forth on Schedule H
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
-4-
ALL THE PROVISIONS OF THE SCHEDULES HERETO AND THE COMMON TERMS AGREEMENT ARE
INCORPORATED BY REFERENCE HEREIN AND ARE PART OF THIS AIRCRAFT LEASE AGREEMENT
AS IF THEY WERE SET OUT IN FULL HEREIN.
WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BY ITS SIGNATURE BELOW, LESSEE
ACKNOWLEDGES AND AGREES THAT THE LEASE OF THE AIRCRAFT HEREUNDER IS ON AN "AS
IS, WHERE IS" BASIS AND THAT THE DISCLAIMERS, EXCULPATIONS AND LIMITATIONS OF
LIABILITY, INDEMNITIES, THE CHOICE OF NEW YORK LAW AS THE GOVERNING LAW,
LESSEE'S SUBMISSION TO PERSONAL JURISDICTION IN NEW YORK, AND THE WAIVER OF ANY
RIGHT TO A TRIAL BY JURY PROVIDED FOR IN THE COMMON TERMS AGREEMENT ARE
INCORPORATED HEREIN BY SUCH REFERENCE AND ARE PART OF THIS AGREEMENT AS IF THE
SAME WERE SET OUT IN FULL HEREIN.
No provision of this Lease, including any provision of the Schedules or the
Common Terms Agreement, may be amended, rescinded, changed, waived, discharged,
terminated or otherwise modified in any way whatsoever, except by a writing
signed by the party to be charged. Pursuant to and to comply with Section (2) of
Section 2A-208 of the UCC, if and to the extent applicable, Lessor and Lessee
acknowledge their agreement to the provisions of this Section by their
signatures below.
This Aircraft Lease Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
-5-
IN WITNESS WHEREOF, the parties hereto have executed this Aircraft Lease
Agreement, each by its duly authorized representative(s), as of the date shown
at the beginning of this Aircraft Lease Agreement.
AFS INVESTMENTS 59 LLC KITTY HAWK AIRCARGO, INC.
By: AFS INVESTMENTS 59, INC.
ITS SOLE MEMBER
By: ___________________________ By: ______________________________
Name: Name:
Title: Title:
-S-
SCHEDULE A
*****
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. THREE (3) PAGES OF SCHEDULE A HAVE BEEN OMITTED
PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST. CONFIDENTIAL PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT WITH "*****".
A - 1
SCHEDULE A
INTENTIONALLY OMITTED FROM THE VERSION OF THIS DOCUMENT FILED WITH THE FAA AS
CONTAINING CONFIDENTIAL AND PROPRIETARY INFORMATION
A - 1
SCHEDULE B
COMMON TERMS AGREEMENT
B - 1
SCHEDULE C
EXTENSION OPTION
1. EXTENSION OPTION
(a) Lessor hereby grants Lessee the right to extend the Term for thirty
(30) months from the Scheduled Expiry Date in accordance with the terms
and conditions set forth in this Schedule C (the "First Extension
Option"). Provided that Lessee exercises the First Extension Option in
accordance herewith, Lessee shall have the right to further extend the
Term an additional thirty (30) months from the then applicable
Scheduled Expiry Date in accordance with the terms and conditions set
forth in this Schedule C (the "Second Extension Option").
(b) In order to exercise any Extension Option, the following conditions
must be satisfied:
(i) Not later than twelve (12) months prior to the ten applicable
Scheduled Expiry Date, Lessor shall have received a written
notice from Lessee stating that it is exercising the Extension
Option, which notice once given shall be irrevocable;
(ii) Promptly after such notice, Lessee shall deliver to Lessor a
Lease Supplement, board resolutions, legal opinions and other
documents related to such extension, as Lessor may reasonably
request; and
(iii) no Default shall have occurred and be continuing on the date
that Lessor receives notice of Lessee's exercise of the
Extension Option or on the then applicable Scheduled Expiry
Date (as determined without giving effect to Lessee's exercise
of the Extension Option).
(c) If the Term is so extended, the then applicable Scheduled Expiry Date
shall be the Extended Expiry Date, the Rent for the period of such
extension shall be as agreed by Lessor and Lessee at the time the
Extension Option is exercised (but will in no event be greater than the
Rent provided for in the Lease as of the date hereof) and all other
provisions of the Lease shall remain in full force and effect.
EXTENDED EXPIRY DATE means (i) with respect to the First Extension Option, the
date that corresponds to the Scheduled Expiry Date in the 30th month after the
Scheduled Expiry Date; (ii) with respect to the Second Extension Option, the
date that corresponds to the Scheduled Expiry Date in the 60th month after the
Scheduled Expiry Date.
2. *****
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
C - 1
SCHEDULE D
*****
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
D - 1
SCHEDULE E
DELIVERY CONDITION REQUIREMENTS
The Delivery Condition described below is solely a description of such condition
precedent and shall not be construed as a representation, warranty or agreement
of any kind whatsoever, express or implied, by Lessor with respect to the
Aircraft or its condition, all of which have been disclaimed by Lessor and
waived by Lessee as set forth in the Lease, including in the Common Terms
Agreement.
For purposes of Schedule 4, Part 2 of the CTA:
Minimum APU Limit:
Minimum Component Calendar Life: ***** months
Minimum Component Cycles: ***** Cycles
Minimum Component Flight Hours: ***** Flight Hours
Minimum Engine Cycles: ***** Cycles
Minimum Engine LLP Cycles: ***** Cycles
Minimum Engine Flight Hours: ***** Flight Hours
Minimum Landing Gear Calendar Time: ***** months
Minimum Landing Gear Cycles: ***** Cycles
Minimum Landing Gear Flight Hours: ***** Flight Hours
Required EGT Margin:
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
E - 1
In addition to and supplementing Lessor's obligations set forth Schedule 4, Part
2 of the CTA, Lessee shall Deliver the Aircraft to Lessee on the Delivery Date
meeting the following requirements which, to the extent that they conflict with
the terms of Schedule 4, Part 2 of the CTA, shall control:
1. The maintenance workscope referenced in Section 2.2(b)(v) of Schedule
4, Part 2 shall be:
Airframe: Ex the next sequential `C' Check in accordance with the
previous lessee's approved maintenance program such
that, with the exception of ferry and demonstration
flight hours all inspections due within the next *****
hours and ***** months shall be completed and all MPD
requirements are satisfied, including, so long as
Lessee provides the bridging program and any task cards
not already available in the existing program to Lessor
no later than ***** months prior to the Scheduled
Delivery Month (the "Task Date"), the tasks required to
bridge the Aircraft onto the Boeing MSG 3 maintenance
planning document. Lessor will provide the prior
lessee's aircraft maintenance program information,
sufficient to determine the MSG 3 bridging program
requirements, as soon as practicable but no later than
75 days prior to the Task Date.
Configuration: Full cargo configuration in accordance with IAW IAI FAA
Approved STC, including option for solid 9g barrier.
Conversion: The Aircraft will be registered with the FAA during the
cargo conversion, at the completion of which the
Aircraft will have a Standard Certificate of
Airworthiness issued by an FAA DAR contracted by
Lessor.
Other: The Aircraft will be delivered with a MTOW of 139,000
lbs, MZFW of 109,600 lbs, and a MLW of 116,000 lbs.
The Aircraft will be RVSM compliant.
The Aircraft will be equipped with EGPWS.
The fuel quantity indication system shall be
represented in pounds.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
E - 2
The second observer seat in the cockpit shall be
installed (if not already).
The Aircraft shall have transponders, flight management
computers, EFIS display option, VHF COM and associated
control heads replaced to standardize to the easyJet
fleet standard.
[The Aircraft shall be modified to include a standard
air speed - Mach indicator on the main instrument panel,
left of the electronic attitude direction indicator.]
2. *****
3. The livery referenced in Section 2.2(b)(viii) of Schedule 4, Part 2 of the
CTA shall be Lessee's livery.
4. The Aircraft shall have EFIS.
5. CSET Inspection:
Lessor shall prepare the Aircraft and the Aircraft Documents and Records
for Delivery in accordance with the CSET 121 conformity checklist and
demonstrate compliance with each applicable requirement to Lessee by
reference to equipment installed, aircraft technical specifications from
the Manufacturer, technical and maintenance records and embodied
modifications.
6. Scribe Marks:
Notwithstanding anything in Section 2.2(b)(xii) of Schedule 4, Part 2 of
the CTA to the contrary, if there are fuselage skin scribe marks at
Delivery that are permitted in accordance with an Airworthiness Directive
expected to be issued in late 2004 or if such expected Airworthiness
Directive has not yet been issued, then such clause shall not apply in
respect of such scribe marks. Lessee shall rectify such scribe marks
post-Delivery as and when required by such Airworthiness Directive and the
cost for such work shall be paid as set forth in Schedule A.
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
E - 3
SCHEDULE F
*****
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. TWO (2) PAGES OF SCHEDULE F HAVE BEEN OMITTED
PURSUANT TO THE CONFIDENTIAL TREATMENT REQUEST. CONFIDENTIAL PORTIONS HAVE BEEN
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS
ARE INDICATED IN THIS AGREEMENT WITH "*****".
F - 1
SCHEDULE G
ADDITIONAL RETURN CONDITIONS
In addition to and supplementing Lessee's obligations set forth in Section 12
and Schedule 6 of the CTA, Lessee shall redeliver the Aircraft to Lessor on the
Return Occasion meeting the following requirements which, to the extent that
they conflict with the terms of Section 12 or Schedule 6 of the CTA, shall
control:
1. In the event the next lessee is not on the same maintenance program as the
Lessee (expected to be MSG 3), or no next lessee has been identified, the
airframe will be fresh from the next sequential block C check in accordance with
the Manufacturer's Maintenance Planning Document including all maintenance tasks
and inspections falling due within the next C check interval per the
Manufacturer's Maintenance Planning Document. If the next lessee is on the same
maintenance program as Lessee, Lessee shall be required to perform the next
sequential C check in accordance with the Manufacturer's Maintenance Planning
Document.
2. *****
3. Section 1.2(h) of Schedule 6 of the CTA shall be amended in respect of the
Aircraft by inserting the following proviso at the end thereof: "; provided that
if such livery is in excess of three (3) colors, the cost of the paint in excess
of three (3) colors will be borne by Lessor."
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. CONFIDENTIAL PORTIONS HAVE BEEN FILED SEPARATELY WITH
THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE INDICATED IN THIS
AGREEMENT WITH "*****".
G - 1
SCHEDULE H
*****
CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY KITTY HAWK, INC. FOR CERTAIN
PORTIONS OF THIS DOCUMENT. TWO (2) PAGES OF SCHEDULE H BEEN OMITTED PURSUANT TO
THE CONFIDENTIAL TREATMENT REQUEST. CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION. OMITTED PORTIONS ARE
INDICATED IN THIS AGREEMENT WITH "*****".
H - 1