AIRCRAFT LEASE OPTION AGREEMENT
THIS
AIRCRAFT LEASE OPTION AGREEMENT (the “Agreement”) is made as of May 18, 2010, by
and between Tactical Air Defense Services, Inc., a Nevada corporation whose
registered business address is ▇▇▇ ▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter known as “TADS”), and Air Support Systems, LLC, a Delaware company
whose registered address is ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(hereinafter known as “ASS”). Both TADS and ASS are also referred to
as the “Parties”.
RECITALS
WHEREAS;
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1.
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ASS
is the owner of two ILyushin IL-78 aircraft (hereinafter the “IL-78
Aircraft”) currently undergoing preparation for operation at their
facility in Ukraine; and
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2.
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ASS
can additionally offer for lease two ILyushin IL-76 aircraft (hereinafter
the “IL-76 Aircraft, and, together with the IL-78 Aircraft, hereinafter
the “ILyushin Aircraft”) outfitted to the operational specifications of
TADS (and
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3.
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TADS
is in the business of operating aircraft and providing air support
services including air-to-air refueling services, aerial fire-fighting
services, and oil-spill containment services, to various United States and
foreign militaries, and other federal and state agencies;
and
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4.
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TADS
desires an option (the “Option”) to lease from ASS the ILyushin Aircraft
and ASS desires give an option to lease to TADS the ILyushin Aircraft, for
the business of TADS, upon the terms and conditions contained in this
Agreement.
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NOW,
THEREFORE, In consideration of the mutual covenants herein contained, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the PARTIES agree as follows:
AGREEMENT
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1.
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Definitions
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Unless
defined elsewhere herein, or the context otherwise requires, capitalized terms
used herein shall have the following meanings:
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a.
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“FAA”
refers to the Federal Aviation
Administration.
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b.
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“FLIGHT
HOURS” shall mean any time the ILyushin Aircraft are operated (calculated
in tenths of hours) in performance of a Mission (as defined below) under a
Contract (as defined below), measured from “Chocks to Chocks” (engine
start to engine shutdown as measured by the engine ▇▇▇▇▇
meter). Flight Hours as used herein shall not include ferry
flights not funded by the customer, post maintenance check flights, or
initial pilot proficiency or certification flights. “MISSION” shall mean
any tasking for the ILyushin Aircraft for which Flight Hours are
anticipated.
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c.
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“CONTRACT”
shall mean a Contract entered into by TADS with a customer for the use of
the ILyushin Aircraft in the business of
utilization.
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d.
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“INSPECTIONS”
shall mean those activities required of the FAA Approved Inspection
Program.
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e.
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“MAINTENANCE”
(as distinguished from “Inspections”) shall be any work performed to ready
the ILyushin Aircraft for flying operations, including servicing or
correction of defects identified in the course of operations, and/or
necessary parts replacements.
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2.
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Parties’
Obligations and Responsibilities
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Upon
exercise of the Option, TADS shall provide:
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a.
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Contracts
for utilization of the ILyushin
Aircraft.
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b.
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Pilots
for execution of Contract Missions.
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c.
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Ground
support equipment as required for Contract
operations.
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d.
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Maintenance
personnel necessary to maintain the ILyushin Aircraft in airworthy
condition.
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e.
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Certification
compliance of pilots to be employed by TADS for operation of the ILyushin
Aircraft, and safety program to operate the ILyushin Aircraft in
compliance with FAA requirements if operated within the United States, and
in compliance with the requirements of the regulatory agency of the
country within which the ILyushin Aircraft
operate.
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f.
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SME/technicians/administration,
personnel, and experts/technicians/administration personnel to perform
duties for any applicable Contract
requirements.
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g.
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Aircraft
insurance equal to no less than the appraised value of any such ILyushin
Aircraft under lease by TADS.
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ASS
Shall Provide:
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a.
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The
ILyushin Aircraft in certified airworthy
condition.
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b.
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All
maintenance manuals, books, logs, airworthiness certificates, and
registration cards.
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3.
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Term
of Option and Lease and Terms of
Use:
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a.
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The
Option to enter into an exclusive lease agreement (a “Lease Agreement”)
with ASS to lease ILyushin Aircraft shall expire one (1) year from the
date of execution of this
Agreement.
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b.
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Upon
exercise, either partial or in its entirety, by TADS of the Option, TADS
and ASS shall execute a Lease Agreement for the lease of any such ILyushin
Aircraft.
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c.
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Upon
execution of a Lease Agreement, ASS shall have up to ninety (90) days to
prepare the respective ILyushin Aircraft for delivery to TADS under the
terms of this Agreement;
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d.
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The
term of the Lease Agreement between TADS and ASS shall be one (1) year
with two (2) follow-on options of one (1) year each. The follow-on options
shall automatically renew, unless notice is given by either party to this
Agreement in writing, no later than ninety (90) days prior to the end of
the respective lease term. In the event of a payment or
insurance default, or any other material default by TADS, ASS shall
provide written notice of default to TADS, and TADS shall have thirty (30)
days to cure such default. Thereafter, if such default remains
uncured, ASS shall have the right to terminate the Lease Agreement within
ten (10) days of receipt by TADS of such notice of
termination. Notwithstanding the above, should ASS receive a
bonafide offer to sell any of the ILyushin Aircraft, not subject at the
time to an exclusive Lease Agreement, to a third-party purchaser, TADS
shall have the first-right-of-refusal to purchase said aircraft under
terms equivalent to the terms of purchase by such third-party
purchaser. In the event that TADS does not exercise its
first-right-of-refusal to purchase any such aircraft, and such aircraft is
thereafter sold by ASS to said third-party purchaser, such aircraft would
thereafter be excluded from the Option without penalty to
ASS.
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e.
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The
ILyushin shall be used specifically in support of TADS’ Contracts, which
may include TADS Contracts either awarded directly or indirectly to
TADS.
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d.
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The
ILyushin Aircraft shall require prior written approval and licenses from
the appropriate regulatory agencies of any country where TADS intends to
operate the ILyushin Aircraft in support of a Contract Mission, and shall
require the prior written agreement of ASS to operate the ILyushin
Aircraft in support of any Contract Mission to be operated outside of the
United States.
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4.
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Fees
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a.
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As
consideration for the Option to lease the ILyushin aircraft, TADS shall
pay to ASS a one-time, up-front fee of ten million (10,000,000) shares of
its Common Stock.
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b.
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As
consideration for operating the ILyushin Aircraft in connection with a
Contract, TADS shall pay to ASS the following
fees:
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(i)
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a
fee equal to fifty (50%) percent of the operating profits of any Contract,
where operating profits equals the gross cash receipts derived from a
Contract minus the direct expenses of operating said Contract;
and
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(ii)
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a
fee equal to fifty (50%) percent of the fee paid to TADS in connection
with any off-loaded fuel for which TADS is paid in connection with a
Contract for air-to-air refueling;
and
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(iii)
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TADS
and ASS shall agree upon a minimum monthly, quarterly, or annual fee
amount, as the case may be, on a case-by-case basis, relevant to the type
and terms of the particular ILyushin Aircraft under lease, the Contract
Mission, and the related Contract.
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5.
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Method
and Schedule of Payment
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Each
payment due to ASS from TADS, shall be mailed by TADS, via U.S. Mail, postage
prepaid, or bank electronic transfer, not later than five (5) business days
after the date TADS receives payment in connection with a Contract. TADS shall
include with each lease payment a statement showing the number of Flight Hours,
the gross cash receipts received for the period, and the direct operating
expenses related to operating such Contract.
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6.
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Representations
and Covenants
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a.
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Compliance
with Act: ASS certifies that it is a “Citizen of the United States” as
defined in Section 101(15) of the
Act.
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b.
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Conforming
Use: TADS shall use the ILyushin Aircraft for the purposes and
in the manner for which it was designed consistent with the uses set forth
in any application for insurance executed in connection with the ILyushin
Aircraft, and abide by and conform to all present and future federal,
state, municipal, and other laws, ordinances, orders, rules, and
regulations, controlling or affecting the operation, use, or occupancy of
the ILyushin Aircraft or the use of any airport premises by the ILyushin
Aircraft.
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c.
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Aircraft
Records: TADS shall maintain or cause to be maintained all
flight records, logs, and other materials required to be maintained in
respect of the ILyushin Aircraft by the FAA, and shall promptly furnish to
ASS such information as may be required to enable ASS to file reports with
any governmental agency or
authority.
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7.
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Limitation
of Liability
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Neither
TADS nor ASS shall be liable to the other for any special, indirect, or
consequential losses or damages caused by or arising out of performance under
this Agreement. Each Party shall indemnify, defend, and hold harmless
the other Party, its officers, employees, and agents, from any claim, liability,
damage, or loss for injury to or death of any employee of the indemnifying Party
in the performance of this Agreement, unless caused by the gross negligence or
intentional misconduct of the indemnified Party, its officers, employees, or
agents.
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8.
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Entire
Agreement
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This
Agreement constitutes the entire agreement between the Parties for the express
performance of the provisions contained herein, and supersedes all agreements,
representations, proposals, statements, and understandings made prior to the
date hereof. The Parties recognize that other documents may be
required to implement this Agreement.
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9.
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Amendment
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This
Agreement may be amended, modified, or superseded only by an agreed written
instrument executed by the parties, their respective legal representatives,
successors, or assigns.
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10.
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Notice
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Any and
all notices, consents, demands, or requests required or permitted by this
Agreement shall be in writing and, except as otherwise provided in this
Agreement, shall be sent postage prepaid, by registered, certified, or overnight
mail or courier service, return receipt requested, to the Parties at the herein
stated respective addresses. Any notice delivered as stated, including any
notice of change of address, shall be deemed given as of five (5) days after
mailing if given by mail, or upon personal delivery by courier.
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11.
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Waiver
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The
failure of either Party to enforce any applicable provision of this Agreement,
or to require at any time performance by any other Party of any provision
hereof, shall not be construed to be a waiver of such provision, nor in any way
affect the validity of this Agreement or any part hereof, or the right of any
party thereafter to enforce each and every provision.
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12.
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Severability
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If any
provision of this Agreement is held to be invalid or unenforceable, the validity
of any other provision shall not be affected thereby and such other provisions
shall remain in full force and effect.
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13.
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Force
Majeure
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Neither
Party shall be liable for its inability to perform hereunder in a timely manner
if such inability results from causes beyond its control, including but not
limited to: acts of war or other political hostilities, fire embargo,
strike, acts of God, or any other circumstances beyond the control of the Party
so affected. As soon as practicable after such causes cease to exist,
the affected party shall continue to perform pursuant to this Agreement and the
other Party shall accept such performance, at the agreed upon terms set forth
herein, modified as necessary for any required schedule adjustment.
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14.
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Headings
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Headings
in this Agreement are for convenience only and shall not be used to interpret or
construe its provisions.
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15.
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Governing
Law
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This
Agreement shall be construed in accordance with and governed by the internal
laws of the State of Florida, without regard to principals of conflicts of
laws.
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16.
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Binding
Affect
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The
provisions of this Agreement shall be binding upon and inure to the benefit of
both parties and their respective legal representatives, successors, and
assigns.
IN
WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of
the Day and Year first above written.
▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, President &
CEO
By: Air
Support Systems, LLC.
▇▇▇▇
▇▇▇▇▇, Managing Member