SCHEDULE FOR AIRCRAFT LEASE AGREEMENT
Schedule Number 11116.001
THIS SCHEDULE made as of June 27, 1996, by and between U.S. BANCORP
LEASING FINANCIAL ("Lessor"), having its principal place of business at ▇▇▇ ▇.▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, and Air Response, Inc. ("Lessee"),
having its principal place of business located at ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, to the Aircraft Lease Agreement dated as of June 27, 1996 between
the Lessee and the Lessor (the Lease). Capitalized terms used but not defined
herein are used with the respective meanings specified in the Lease.
LESSOR AND LESSEE HEREBY COVENANT AND AGREE AS FOLLOWS:
(a) The following specified equipment (the "Property") is hereby made and
constituted Property for all purposes pursuant to the Lease:
One (1) 1972 Learjet 25B, N700FC, s/n #082 with two General Electric CJ 610-6
Engines, s/n's #251-238A and #251-244A, each in excess of 750shp.
The above aircraft is complete as equipped including, but not limited to, all
avionics, accessories, improvements, components, instruments, furnishings,
substitutions, additions, replacements, parts tools and equipment now or
hereafter affixed to or used in connection with such airframe, engines and/or
propellers, together with all products and proceeds thereof, including, but not
limited to all leased and/or chartered income.
(b) The cost of the Property is $637,500.00;
PLEASE INITIAL HERE: /s/ LRC
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(c) This Schedule shall commence on July 1, 1996 and shall continue for 84
months thereafter.
(d) Lessee shall owe 84 basic monthly rental payments in arrears each in the
amount of $8,797.82 (plus applicable sales/use taxes). The first such
payment shall be due on August 1, 1996 and shall continue on the same
day of each month thereafter until the end of the term of this Schedule.
(e) The Property will be installed or stored at the following address:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, COUNTY: ▇▇▇▇▇▇;
(f) The record owner of the premises at which the Property will be installed
or stored is: Response Aviation, Johnstown, NY
1. TITLE PASSAGE. a. As long as no event of default has occurred under the
Lease, Lessee shall have the options, to purchase all, but not part, of the
Property at the end of 24 months (on August 1, 1998) hereinafter called the
"Mid-Term Option D" and "Mid-Term Option" or at the end of the Term or any
renewal thereof (hereinafter called the "End of Term Option Date" and "End of
Term Option").
b. The above Options may only be exercised by Lessee by written notice
of such exercise to Lessor, which notice must be received by Lessor not later
than one hundred eighty (180) days prior to: 1) the Mid-Term Option Date to
exercise the .Mid-Term Option; or 2) the End of Term Option Date to exercise the
End of Term Option. Payment of the purchase price must be received by Lessor on
or before the Mid-Term Option Date or the End of Term Option Date as
appropriate.
c. The Mid-Term Option purchase price for the Property shall be
$538,298.90. The End of Term purchase price for the Property shall be the fair
market value of the Property at the time of such exercise as mutually agreed
upon by Lessor and Lessee. If such parties cannot agree thereon after good faith
negotiation, the purchase price of the Property shall be the value determined by
an appraisal of the Property made by a reputable independent equipment appraiser
certified for the type of Property being appraised. The appraiser shall be
selected by Lessor and reasonably acceptable to Lessee, and the cost of the
appraisal shall be paid by Lessee.
d. The Mid-Term Option purchase price shall only be applicable in the
event that the Mid-Term Option is exercised in accordance with its Terms. Such
purchase price shall not be deemed to be equal to the "anticipated residual
value" as such phrase is used in the Lease.
e. Upon receipt of payment of the purchase price together with any and
all applicable sales or other taxes due in connection therewith, and any and all
remaining sums or other amounts payable under this Schedule, Lessor shall
transfer all its right, title and interest in and to the Property to Lessee. The
Property shall be transferred "As Is" and "Where Is" without any express or
implied representations or warranties.
f. Should Lessee fail to either return the Property in accordance with
the Lease or exercise the End of Term Option in accordance with its terms, then
Lessor, at its sole option, shall have the right to: a) declare the End of Term
Option terminated and demand immediate return of the Property; or, b) extend the
term for an additional six (6) months (the "Extended Term"). Should Lessor elect
to extend the Term, Lessee shall be irrevocably obligated to remit basic monthly
rent for the period beginning on the day immediately succeeding the last day of
the original Term (the "Holdover Date") and ending at the end of the sixth (6)
month thereafter. A payment of such rent being due on the Holdover Date and on
the same day of each consecutive month thereafter. Each payment of such rent
shall be in the amount of the basic monthly rent for the last month of the Term
in accordance with the provisions of this Schedule. All Lessee's other
obligations under the Lease shall remain in full force and effect for so long as
Lessee shall continue to possess the Property. Upon the expiration of each
Extended Term, Lessor, at its sole option, shall have the right to: a) permit
Lessee to exercise the End of Term Option in accordance with its Terms; b)
declare the End of Term Option terminated and demand immediate return of the
Property; or, c) extend the term for an additional six (6) month Extended Term.
Any and all rental payments pursuant to this Paragraph shall be deemed for all
intents and purposes to be payments for possession and use of the Property after
the expiration of the Term, and shall not be credited to any other obligation of
Lessee to Lessor. Lessor's invoicing and/or accepting any such payment shall not
give rise to any right, title or interest of Lessee other than to possession and
use of the Property during the period to which such rent applies in accordance
with this Paragraph. The aforesaid right to charge Lessee rent for possession
and use of the Property is not in limitation or derogation of any of Lessor's
rights pursuant to the Lease.
2. MAINTENANCE, USE, AND RETURN PROVISIONS. Lessee shall give Lessor prior
written notice of the location (at an airport in the continental United States)
and date for the Final
Inspection, which shall occur within sixty (60) days prior to the expiration of
the Lease Term, and which at Lessor's option shall also include a two-hour
operational test flight of the Aircraft Such test flight shall be conducted by
the manufacturer or designee acceptable to Lessor at Lessee's cost using the
manufacturers recommended test flight procedures. If such test(s) shall indicate
that the Aircraft is not in good working condition and in compliance with the
provisions herein, then Lessee shall remit the cost of such repairs to Lessor,
due upon presentation to Lessee of an invoice outlining the costs. Lessor or its
authorized representative may, with five (5) days prior written notice to
Lessee, inspect the Aircraft and the books and records of Lessee. As
supplemental rent herein, Lessee shall pay to Lessor, upon presentation of an
invoice, the pro-rated original rent per hour for each hour flown in excess of
the industry standard of 300 hours per year.
The Final Inspection shall verify that the condition of the Aircraft is
in compliance with the terms of the Lease, which shall include but not be
limited to the following: the Aircraft shall have a full complement of engines,
avionics, equipment, parts & accessories. Each engine shall have at least fifty
percent (50%) of the operating hours or cycles, whichever is more limiting,
remaining before the next anticipated hot section inspection or major overhaul;
the Aircraft with all material component parts shall have one half or less of
the available operating hours and/or, as applicable, one half or more of the
stated calendar time remaining as stated in the Code of Federal Regulations.
Aircraft shall comply with manufacturer's current specifications; shall have in
existence a valid and existing Certificate of Airworthiness issued by the
Federal Aviation Administration; and shall have cleared all pilot discrepancies
from the logbook.
3. DEPRECIATION. Lessor will be entitled to modified accelerated cost
recovery depreciation based on 100% of Property Cost using the 200% declining
balance method, switching to straight line, for 5 year Property, and zero
salvage value.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Schedule to be duly executed as of the day and year first above written.
Air Response, Inc.
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Secretary
U.S. BANCORP LEASING & FINANCIAL
By:
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An Authorized Officer Thereof
Address for All Notices:
U. S. BANCORP LEASING & FINANIAL
▇▇▇ ▇.▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Machine Tool Finance Group General Equipment Group
(▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇ (▇▇▇) ▇▇▇-▇▇▇▇
AIRCRAFT LEASE AGREEMENT
THIS LEASE, dated June 27, 1996, by and between U.S. Bancorp Leasing &
Financial, hereafter referred to as "Lessor," and Air Response, Inc., hereafter
referred to as "Lessee,"
LESSOR AND LESSEE(S) COVENANT AND AGREE AS FOLLOWS:
1. ALIRCRAFT LEASED. Lessor agrees to lease to Lessee and Lessee agrees
to lease from Lessor the aircraft ("Aircraft") described in the Lease Agreement
Schedule(s) ("Schedule") now or hereafter executed by the parties.
2. TERM. This Lease shall become effective on the execution hereof by
Lessor and the term of this Lease shall be deemed to commence on the day of the
month indicated in the Schedule.
3. RENT AND PAYMENT. Rental payments are specified in each Schedule. All
rents shall be payable in advance each month on the payment date shown in each
Schedule by Lessee at Lessor's address herein. or as otherwise directed by
Lessor, without notice or demand and without abatement, set-off or deduction of
any amount whatsoever. Lessee shall pay when due all taxes, fees assessments, or
other charges, however designated, now or hereafter levied or based upon the
rentals, ownership, use, possession, leasing, operation, control, or maintenance
of the Aircraft, whether or not paid or payable by Lessor, excluding Lessor's
income, franchise and business and occupation taxes, and shall supply Lessor
with proof of payment satisfactory to Lessor at least seven (7) days before
delinquency. Lessee shall not create, cause, or permit any kind of claim, ▇▇▇▇,
▇▇▇▇ or legal process on the Aircraft, and shall satisfy, remove or procure the
release thereof within thirty (30) days following written notice of its
imposition.
For any payment due hereunder which is not paid when due, Lessee agrees to pay a
delinquency charge calculated thereon at the rate of five (5) percent of such
payment due hereunder. Payments thereafter received shall be applied first to
delinquent amounts due, including delinquency charges, then to current
installments.
4. LOSS OR DAMAGE. No loss or damage to the Aircraft, or any part of it,
shall impair any obligation of Lessee hereunder. Lessee assumes all risk of
damage to or loss of the Aircraft, however caused, while in transit and during
the team hereof. if the aircraft is totally destroyed, Lessee's liability to pay
rent for it may be discharged by paying Lessor all past due and the present
value of all remaining rent discounted at the rate of eight (8%) percent, and
other charges owing, less the amount of any recovery for the loss received by
Lessor from any insurance or other source.
5. DEPOSIT. Prior to delivery of the Aircraft, Lessee shall deposit with
Lessor and shall maintain during the term hereof the sum specified in the
Schedule, as security, to be applied at Lessor's option, toward payment of any
obligation of Lessee hereunder. Such deposit shall not prevent default or excuse
performance of any obligation of Lessee at the time and in the manner prescribed
herein.
6. USE, LOCATION AND MAINTENANCE. Lessee may use and operate the
Aircraft within and without the continental limits of the United States of
America. Lessee agrees that, without the prior written consent of Lessor, Lessee
will not base, or permit the Aircraft to be based, outside the continental
limits of the United States of America. Lessee agrees that the Aircraft will not
be maintained, used or operated in violation of any law or any rule, regulation
or order of any domestic or foreign governmental authority having jurisdiction
over the Aircraft or registration relating to the Aircraft issued by any such
authority. Lessee also agrees not to fly the
Aircraft, or suffer the Aircraft to be flown, in any area not fully covered by
each insurance policy in effect with respect to the Aircraft and required by the
terms of Section 7 hereof. Lessee agrees to keep the Aircraft at all times
registered in accordance with the laws of the United States of America.
At its own risk, Lessee shall use or permit the use of the Aircraft from the
location specified in the schedule and shall not loan, sublet, part with
possession or otherwise dispose of the Aircraft, without Lessor's prior written
consent. Lessee shall not use or permit the use of the Aircraft in any
unintended, injurious or unlawful manner, shall not permit use or operation of
the Aircraft by any one other than qualified pilots satisfactory to Lessee's
insurance carrier and shall not change or alter the Aircraft without Lessor's
written consent. Such consent shall not be unreasonably withheld by Lessor.
Lessee, at its own cost and expense, shall comply with all applicable service,
maintenance, repair and overhaul regulations, directives and instructions of
applicable governmental authority, and all applicable maintenance, service,
repair and overhaul manuals and service bulletins published by the manufacturers
of the airframe, engines, accessions, equipment and parts installed on the
Aircraft. Lessee shall maintain all records, logs and other materials required
by the aeronautics authority to be maintained in respect to the Aircraft after
delivery, regardless of upon whom such requirements are, by their terms,
normally imposed. Lessee shall comply with all laws of the jurisdiction in which
the Aircraft may be operated and within all rules of the FAA and other
legislative, executive, administrative or judicial body exercising any power or
jurisdiction over the Aircraft, to the extent that such laws and rules affect
the operation, maintenance or use of the Aircraft. In the event that such laws
or rules require the alteration of the Aircraft, Lessee shall conform or obtain
conformance therewith at no expense of Lessor, and shall maintain the Aircraft
in proper condition for operation under such laws and rules; provided, however,
that Lessee make good faith contest the validity and application of any such law
or rule in any reasonable manner which does not adversely affect the Aircraft or
rights Lessor hereunder, or to the Aircraft. No technical or non-substantial
non-compliance with the provisions of this paragraph shall be deemed a material
breach if Lessee shall have obtained from the appropriate authorities
permissions, extensions or continuances.
7. LEASE; OWNERSHIP NOTICES; INSIGNIA. This is a non-cancelable contract
of lease only and except as set forth in the Schedule(s) attached hereto,
nothing herein or in any other document executed in conjunction herewith shall
be construed as conveying or granting to Lessee any option to acquire any right.
title or interest, legal or equitable, in or to the Aircraft, other than use and
possession, subject to and upon full compliance with the provisions hereof.
Lessor shall affix and maintain, at its expense, in a prominent and visible
location, all ownership notices supplied by Lessor. Lessee shall permit Lessor
to reasonably ▇▇▇▇ the Aircraft in a manner sufficient to identify the Aircraft
as Lessor's property. Lessee shall secure from each person not a party hereto
who might acquire an interest, lien, or other claim in the Aircraft, a waiver
thereof. The Lessee shall have the right to print or paint its name or any other
symbols, insignia or its customary colors on the Aircraft. Lessee shall affix
and maintain, or cause to be affixed and maintained, in the cockpit of the
Aircraft adjacent to and not less prominent than the airworthiness certificate
therein, a certificate furnished by Lessor bearing the inscription, "This
aircraft leased from U.S. Bancorp Leasing & Financial, pursuant to a Lease
Agreement between U.S. Bancorp Leasing & Financial and Air Response, Inc.,
Lessee.
8. GENERAL INDEMNIFICATION. Lessee assumes liability for, and agrees to
defend, indemnify and hold Lessor harmless from any claims, liability, loss,
cost, expense, or damage of every nature (including without limitation, fines,
forfeitures, penalties, settlements, and reasonable
attorneys' fees) by or to any person whomsoever, regardless of the basis, which
directly or indirectly results from or pertains to the leasing, manufacture,
delivery, ownership, use, possession, selection, performance, operation,
inspection, condition (including without limitation, latent or other defects),
improvements, removal, return or storage of the Aircraft.
Upon request of Lessor, Lessee shall assume the defense of all demands, claims,
actions, suits and all proceedings against Lessor for which indemnity is
provided and shall allow Lessor to participate in the defense thereof. Lessor
shall be subrogated to all rights of Lessee for any matter which Lessor has
assumed obligation hereunder, and may settle any such demand, claim, or action
with Lessee's prior consent (which consent shall not be unreasonably withheld),
and without prejudice to Lessor's right to indemnification hereunder.
9. INSURANCE AGAINST LOSS OR DAMAGE. At its expense, Lessee shall
maintain in force, at all times from shipment of the Aircraft to Lessee until
surrender thereof, insurance of the types and amounts indicated in each Schedule
with insurance approved by Lessor, protecting Lessor, as an additional insured,
or loss payee, or both at the option of the Lessor, and providing for thirty
(30) days advance written notice to Lessor of modification or cancellation.
Lessee shall forthwith and annually deliver to Lessor satisfactory evidence of
the insurance coverage. In the event Lessee fails to provide satisfactory
evidence of coverage within ten (10) days of request thereof by Lessor, then
Lessor may, at Lessor's option, in addition to any other rights available to
Lessor, obtain coverage, and any sum paid therefor by Lessor shall be
immediately due and payable to Lessor by Lessee.
In addition to and without limitation of the insurance provisions set out in the
preceding paragraph, it is agreed that Lessee will carry or cause to be carried
at its own expense:
(a) Aircraft public liability (including, without limitation, passenger
legal liability) insurance and property damage insurance (exclusive of
manufacturers product liability insurance) with respect to the Aircraft and any
engine installed on the Aircraft in an amount not less than 520,000,000 per
occurrence; and,
(b) Insurance against Loss or damage, consisting of all-risk hull
insurance covering the aircraft, including the engines, and all-risk coverage of
engines and parts while removed from the Aircraft and not replaced by similar
components. Such insurance shall at times while the Aircraft is subject to this
lease be for not less than or a lesser amount as agreed to by Lessor.
Any policies carried in accordance with this section shall name the Lessor, as
owner of the Aircraft, as an additional insured, without imposing upon Lessor
any liability to pay premiums with respect to such insurance. If any material
change shall be made in the insurance that adversely affects the interest of
Lessor, any cancellation or change shall not be effective as to the Lessor for
thirty (30) days after receipt by Lessor of written notice by such insurer;
provided, however, that if any notice period specified above is not commercially
available, such policies shall provide for as long a period of prior notice as
is then commercially available. Such insurance shall be primary without any
right of contribution from any other insurance that is carried by the Lessor.
Insurance payments for any property damage loss to the airframe or any engine
will be applied in payment for repairs or for replacement property. All such
insurance proceeds remaining after compliance with this section will be paid to
the Lessee.
During any period that the Aircraft is in storage and reasonable precautions
have been taken to
insure that the Aircraft will not be flown without the insurance required under
this lease, the Lessee may carry or cause to be carried, in lieu of the
insurance otherwise required above, insurance otherwise conforming to that
carried by major air carriers for aircraft similar to the Aircraft in similar
storage.
10. INCOME TAX INDEMNITY. Lessee hereby represents, warrants, and
covenants to Lessor as follows:
(a) This Lease will be a lease for federal and Oregon state income tax
purposes; Lessor will be treated as the purchaser, owner, lessor, and original
user of the Aircraft and Lessee will be treated as the lessee of the Aircraft
for such purposes.
(b) Lessor shall be entitled to depreciation deductions with respect to
the Aircraft as provided by Section 167(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), determined under Section 168 of the Code by using the
applicable depreciation method, the applicable recovery period, and the
applicable convention, all as specified on the applicable Schedule for the
Aircraft, and Lessor shall be entitled to corresponding above depreciation
deductions.
(c) For purposes of determining depreciation deductions, the Aircraft
shall have an income tax basis equal to Lessor's cost for the Aircraft specified
applicable Schedule, plus such expenses of the transaction incurred by Lessor as
are includible in basis under Section 1012 of the Code.
(d) The maximum federal and Oregon income tax rates applicable to Lessor
in effect on the date of execution and delivery of a Schedule with respect to
the Aircraft will not change during the lease term applicable to such Aircraft.
If by any reason whatsoever any of the representations, warranties, or covenants
of Lessee contained in this Lease or in any other agreement relating to the
Aircraft shall prove to be incorrect and (i) Lessor shall determine that it is
not entitled to claim all or any portion of the depreciation deductions in the
amounts and in the taxable years determined as specified in (B) and (C), above,
or (ii) such depreciation deductions are disallowed, adjusted, recomputed,
reduced, or recaptured, in whole or in part, by the Internal Revenue Service or
Oregon Department of Revenue (such determination, disallowance, adjustment,
recomputation, reduction, or recapture being herein called a "Loss.), then
Lessee shall pay to Lessor as an indemnity and as additional rent such amount as
shall, in the reasonable opinion of Lessor, cause Lessor's after-tax economic
yield (the "Net Economic Return") to equal the Net Economic Return that would
have been realized by Lessor if such Loss had not occurred. The amount payable
to Lessor pursuant to this section shall be payable on the next succeeding
rental payment date after written demand therefor from Lessor, accompanied by a
written statement describing in reasonable detail such Loss and the computation
of the amount so payable.
Further, in the event (i) there shall be any change, amendment, addition, or
modification of any provision of Oregon law or of the Code or regulations
thereunder or interpretation thereof with respect to the matters set forth in
this section 9 effective prior to the commencement date of the term of this
Lease with respect to any Aircraft or (ii) if at any time there shall be any
change, amendment, addition, or modification of any provision of Oregon law or
of the Code or regulations thereunder or interpretation thereof with respect to
the maximum applicable federal and state income tax rates as set forth in (D),
above, which results in a decrease in Lessor's Net
Economic Return, then Lessor shall recalculate and submit to Lessee the modified
rental rate required to provide Lessor with the same Net Economic Return as it
would have realized absent such change and the lease shall thereupon
automatically be deemed to be amended to adopt such rental rate and values,
11. INSPECTION AND REPORTS. Lessor shall have the right, at any
reasonable time, to enter on Lessee's premises or elsewhere and inspect the
Aircraft or observe its use. Within thirty (30) days of any written request by
Lessor, Lessee shall furnish all information requested by Lessor which is
reasonably necessary to determine Lessee's current financial condition or
faithful performance of the terms hereof. Lessee shall give Lessor immediate
notice and copy of all tax notices, reports, or inquires and of all seizure,
attachment, or judicial process affecting or relating to the use, maintenance,
operation, possession, or ownership of the Aircraft.
12. SUBORDINATION; QUIET ENJOYMENT. This Lease, and Lessee's rights and
interest hereunder, and to the Aircraft, shall be subject, subordinate and
junior to the lien of any security agreement created by Lessor, and to the
rights of the holder thereof, whether executed heretofore or hereafter. After
notice of default in payment or performance under any such security agreement,
Lessee may perform or pay rent for the Aircraft subject thereto to the holder of
such security and the same to the extent of such payment shall constitute
payment of rent as if it had been made to Lessor.
Lessor represents and warrants that as of the date of this Lease the aircraft is
free of liens. Lessor covenants that it will not, through its own actions,
interfere in the lessee's (or any Sublessee's) quiet enjoyment of the Aircraft
during the lease term except in accordance with the provisions of this Lease.
13. ASSIGNMENT. LESSEE SHALL NOT ASSIGN OR IN ANY WAY DISPOSE OF ALL OR
ANY OF ITS RIGHTS OR OBLIGATIONS UNDER THIS LEASE OR ENTER INTO ANY SUBLEASE OF
ALL OR ANY PART OF THE LEASED PROPERTY WITHOUT THE PRIOR WRITTEN CONSENT OF
LESSOR LESSEE AGREES THAT LESSOR MAY ASSIGN OR TRANSFER THIS LEASE OR LESSOR'S
INTEREST IN THE LEASED PROPERTY WITHOUT NOTICE TO LESSEE. Any assignee of Lessor
shall have all of the rights, but none of the obligations, of Lessor under this
Lease and Lessee agrees that it will not assert against any assignee of Lessor
any defense, counter claim or offset that Lessee may have against Lessor. Lessee
acknowledges that any assignment or transfer by Lessor will not materially
change Lessee's duties or obligations under this Lease nor materially increase
the burdens or risks imposed on Lessee. Lessee shall cooperate with Lessor in
executing any documentation reasonably required by Lessor or any assignee of
Lessor to effectuate any such assignment.
14. RETURN OF THE AIRCRAFT; TRANSFER OF RECORDS. On the expiration or
termination of this lease, Lessee shall, at its risk and expense, assemble,
prepare for delivery, and deliver the Aircraft to Lessor at Portland, Oregon.
The Aircraft shall be delivered unencumbered and free of any liens, charges, or
other obligations (including delivery expense and sales or use taxes, if any,
arising from such delivery).
Upon return of the Aircraft at the termination of this lease at the end of the
basic term or any renewal term or pursuant to sections 15 or 16,
(a) At the Lessee's expense: (i) the Aircraft shall be in passenger
configuration, (ii) the interior of the aircraft shall be clean in accordance
with industry standards with respects to
"between flights" cleaning, (iii) the exterior of the Aircraft shall be cleaned
in accordance with industry standards, (iv) the Aircraft shall have no deferred
maintenance items or placards and all systems and components shall be
operational, and, (v) the Aircraft shall have all of Lessee's exterior markings
removed or painted over and the areas where such markings were located shall be
refurbished as necessary to blend with adjacent areas;
(b) The Aircraft shall at Lessee's expense be in compliance with all FAA
airworthiness directives and standards then applicable thereto for an aircraft
registered, and certified as airworthy, under the laws of the United States of
America, without regard to any variances or extensions granted specifically to
the Lessee waiving or delaying compliance with such directives or standards;
(c) All fuel and oil aboard the Aircraft shall be the property of the
Lessor without charge;
(d) During the last three (3) months of the lease term (unless the
Lessee shall have elected to purchase or renew in accordance with the terms of
this Lease), with reasonable prior written notice, the Lessee will cooperate in
all reasonable respects with the efforts of the Lessor to sell or lease the
Aircraft including, without limitation. permitting prospective purchasers or
lessees to inspect the Aircraft and the records relating thereto. Any request to
inspect the Aircraft or related records shall be made to Lessee at least 48
hours before such inspection unless otherwise agreed by Lessee. Such inspections
shall not obstruct Lessee's use of the Aircraft but Lessee shall permit
inspections that are reasonably requested and which can be completed while the
Aircraft is not in use at Lessee's premises.
Upon return of the Aircraft at the end of the basic term or any renewal term or
pursuant to Sections 14 or 15, the Lessee, except to the extent prohibited by
applicable law, shall deliver or cause to be delivered to the Lessor, ail logs,
manuals and data and inspection, modification and overhaul records required to
be transferred (or customarily transferred) with the ownership or possession of
such an aircraft.
15. DEFAULT. Time is of the essence under this Lease, and Lessee shall
be in default in event of any of the following ("Event of Default") herein: (a)
any failure to pay when due the full amount of any payment required hereunder,
including, without limitation, rent, taxes, liens, insurance, indemnification,
repair or other charge; or (b) any material misstatement or false statement in
connection with, or non-performance of any of Lessee's obligations, agreements,
or affirmations under this Lease; or (c) upon Lessee's dissolution, termination
of existence, insolvency, becoming the subject of a petition in bankruptcy,
either voluntary or involuntary, or in any other proceeding under federal
bankruptcy laws; making an assignment for benefit of creditors; or being named
in, or the Aircraft being subjected to a suit for the appointment of a receiver;
or (d) if the Aircraft should be seized or levied upon under any legal or
governmental process against Lessee or the Aircraft; or (e) bankruptcy,
insolvency, termination, or default of any guarantor for Lessee. Upon any Event
of Default, Lessor shall give Lessee ten (10) days written notice and an
opportunity to cure in the case of a monetary default and thirty (30) days
written notice and an opportunity to cure in the case of a non-monetary default.
16. REMEDIES. Upon the occurrence of any event of default and at any
time thereafter, Lessor shall have all remedies provided by law; and, without
limiting the generality of the foregoing and without terminating this Lease,
Lessor, at its sole option, shall have the right at any time to exercise
concurrently, or separately, any one or all of the following remedies:
(a) request Lessee to make the Aircraft available to Lessor at a
reasonable place
designated by Lessor and put Lessor in possession thereof on demand;
(b) immediately and without legal proceedings or notice to Lessee, take
possession of, remove and retain the Aircraft or render it unusable (any such
taking shall not terminate this Lease);
(c) without notice to Lessee declare due the entire amount of rent
contracted to be paid over the balance of the unexpired term of the Lease,
discounted at a rate equal to the discount rate of the Federal Reserve Bank of
San Francisco, calculated as of the date of termination, plus one (1%) percent;
(d) without notice to Lessee terminate the leasing of the Aircraft and
be immediately entitled to the entire amount of rent and other sums payable
hereunder;
(e) if this Lease provides for a Stipulated Loss Value of the Aircraft,
recover the Stipulated Loss Value of the Aircraft as of the rent payment date
immediately preceding Lessee's date of default, plus all commercially reasonable
costs and expenses incurred by Lessor in any repossession, recovery, storage,
repair, sale, release or other disposition of the Aircraft, including reasonable
attorneys' fees and costs incurred in connection therewith or otherwise
resulting from Lessee's default;
(f) if this Lease does not provide for a Stipulated Loss Value of the
Aircraft, recover damages from Lessee, not as a penalty, but herein liquidated
for all purposes and in an amount equal to the sum of: (i) any accrued and
unpaid rent as of the date of entry of judgment in favor of Lessor plus interest
at the rate of eighteen percent (18.0%) per annum; plus (ii) the present value
of all future rentals reserved in the Lease and contracted to be paid over the
unexpired term of the Lease, discounted at a rate equal to the discount rate of
the Federal Reserve Bank of San Francisco as of the date of entry of judgment in
favor of Lessor plus one percent (1%); plus, (iii) all commercially reasonable
costs and expenses incurred by Lessor in any repossession, recovery, storage, or
repair, sale, re-lease or other disposition of the Aircraft, including
reasonable attorneys' fees and costs incurred in connection therewith or
otherwise resulting from Lessee's default plus, (iv) the estimated residual
value of the leased Aircraft as of the expiration of this Lease or any renewal
thereof; and, (v) any indemnity, if then determinable, plus interest at eighteen
percent (18.0% per annum);
(g) release or sell the Aircraft at a public or private sale on such
terms and notice as Lessor shall deem reasonable, and recover damages from
Lessee, not as a penalty, but herein liquidated for all purposes and in an
amount equal to the sum of: (i) any accrued and unpaid rent as of the latter of
(a) the date of default, or (b) the date Lessor has obtained possession of the
Aircraft, or such other date as Lessee has made an effective tender of
possession of the Aircraft back to lessor ("Default Date"); plus rent (at the
rate provided for in this Lease and any Lease Schedule) for a period (the
"Additional Period".) commencing on the Default Date and ending on the earlier
of (A) the date the Aircraft is resold or re-let by Lessor, or (B) the date of
entry of judgment in favor of Lessor; plus, (ii) the present value of all future
rentals reserved in the Lease and the present value of the estimated residual
value of the Aircraft as of the expiration of this Lease, or any renewal
thereof, discounted at a rate equal to the discount rate as provided in
sub-paragraph (f) (ii) above; plus,(iii) any indemnity, if then determinable,
plus interest at eighteen percent (18.0%) per annum; less the amount received by
Lessor upon any such public or private sale or re-lease of the Aircraft if any;
provided that Lessee shall be given no less than five (5) business days written
notice of any such public or private sale.
If: (i) Lessor elects to sell, re-lease or otherwise dispose of the
Aircraft, or (ii) does so by a re-lease which is not made in a manner
substantially similar to the applicable Lease Schedule, or (iii) the measure of
damages under sub-paragraphs e, f, or g above are not allowable under any
applicable law, Lessor may recover the market value, if any, as of the default
date, of the rent reasonably estimated by Lessor to be obtainable for the
Aircraft during the remaining lease term or any renewal thereof then in effect,
plus any accrued and unpaid rent as of the default date.
If this Lease is deemed at any time by a court of competent jurisdiction to be
one intended as security, Lessee agrees that the Aircraft shall secure, in
addition to the indebtedness set forth herein, indebtedness at any time owing by
Lessee to Lessor.
No remedy referred to in this paragraph is intended to be exclusive, but shall
be cumulative and in addition to any other remedy referred to above or otherwise
available to Lessor at law or in equity. No express or implied waiver by Lessor
of any default shall constitute a waiver of any other default by Lessee or a
waiver of Lessor's rights, provided, however, that Lessor shall not be entitled
to recover a multiple recovery or be made more than whole in availing itself of
such cumulative remedies.
17. LESSEE'S WAIVERS. To the extent permitted by applicable law and
except as provided in the attached lease schedule(s), Lessee hereby waives its
rights to: (i) cancel this lease; (ii) repudiate this Lease; (iii) reject the
Aircraft; (iv) revoke acceptance of the Aircraft; (v) claim a security interest
in the Aircraft in Lessee's possession or control for any reason; (vi) accept
any partial delivery of the Aircraft.
18. CHARGES. Upon failure by Lessee, at its option, Lessor may pay any
tax, assessment, insurance premium, expense, repair, release, confiscation
expense, lien, encumbrance, or other charge or fee payable hereunder by Lessee,
and any amount so paid shall be repayable by Lessee on demand. The rights
secured hereby are not a waiver of any other rights of Lessor arising from
breach by Lessee of any of the covenants hereof. If enforcement, collection, or
realization procedures of this Lease or any agreement of Lessee contained herein
are undertaken by lessor, lessee shall pay a reasonable attorney's fee,
including fees incurred in both trial and appellate courts or without suits, all
costs of court and public officials, and all other expense incurred in the
pursuit thereof' including, but not limited to, reasonable compensation for
efforts conducted by Lessor's employees or agents.
19. MULTIPLE LESSEES. Where more than one Lessee has signed this
agreement whether as co-lessee, guarantor, or otherwise, liability hereunder
shall be joint and several, and Lessor or its assigns may, with the consent of
any one of the lessees hereunder, modify, extend or change any of the terms
hereof without the consent or knowledge of the others, without in any way
releasing, waiving or impairing any rights granted to Lessor against such
others.
20. NOTICES, PAYMENTS AND GOVERNING LAW. All notices and payments shall
be mailed or delivered to the respective parties at the below address, or such
other address as a parry may provide in writing from time to time. This Lease
shall be considered to have been made in Oregon and shall be interpreted, and
the rights and liabilities of the parties determined, in accordance with the
laws of the State of Oregon. In the event of suit enforcing this Lease, Lessee
agrees that venue may, at Lessor's option, be in the county of Lessor's address
below. Paragraph headings shall not be considered a part of this Lease. Any
action by Lessee against Lessor for any alleged default by Lessor under this
Lease, and any action for indemnity, shall be commenced
within the time required under the law of jurisdiction in which the Lessee
resides after any such cause of action accrues, not withstanding the provision
that Oregon law prevails under the terms of this agreement.
21. WARRANTIES AND ACCEPTANCE. The Lessor has obtained the Aircraft
herein leased based on specifications furnished by the Lessee. The Lessor does
not deal in Aircraft of this kind or otherwise by his occupation hold himself or
his agents out as having knowledge or skill peculiar to the Aircraft involved in
the transaction. The Lessee acknowledges that he has relied on his own skill and
experience in selecting an aircraft suitable to the Lessee's particular needs or
purposes and has neither relied upon the skill or judgment of the Lessor nor
believes the Lessor or his agents to possess any special skill or judgment in
the selection of aircraft for the Lessee's particular purposes. Further, the
Lessee has not notified the Lessor of the Lessee's particular needs in using the
Aircraft. THE LESSOR HAS MADE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, TO THE LESSEE CONCERNING THE FITNESS OF THE AIRCRAFT FOR THE PARTICULAR
PURPOSES OF THE LESSEE.
THE LESSOR ASSUMES NO RESPONSIBILITY FOR THE CONDITIONS, SAFENESS, USEABILITY,
REPAIR OR FITNESS OF THE AIRCRAFT. THE LESSOR MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE WARRANTY OF MERCHANTABILITY,
CONCERNING THE AIRCRAFT OR ANY INDIVIDUAL CHARACTERISTICS OR QUALITIES OF THE
AIRCRAFT.
Providing Lessee is not in Default under this Lease, the Lessor hereby assigns
to the Lessee without recourse, all rights arising under any warranties
applicable to the Aircraft provided by the manufacturer or any other person. All
proceeds of any warranty claim from the manufacturer or any other person shall
first be used to repair the affected Aircraft.
By signing the Schedule, Lessee states that it has fully accepted and taken
possession of the Aircraft and acknowledges the Aircraft to be satisfactory and
suitable for the purposes specified by Lessee in full compliance with the term
of this Lease, and in good condition and repair lessee agrees that Lessor shall
not be liable to Lessee for any representation, claim, breach of warranty,
expense or loss directly or indirectly caused by any person, including Lessor,
or in any way related to the Aircraft.
22. SEVERABILITY. If any of the provisions of this Lease are contrary
to, prohibited by, or held invalid under applicable laws or regulations of any
Jurisdiction in which it is sought to be enforced, then that provision shall be
considered inapplicable and omitted but shall not invalidate the remaining
provisions.
23. SURVIVAL. All of Lessor's rights, privileges and indemnities
contained herein (including rights, privileges, and indemnities under paragraphs
8, 9 & 10) shall survive the expiration or other termination of the Lease and
its Schedules, and the rights, privileges and indemnities contained herein are
expressly made for the benefit of, and shall be enforceable by Lessor, its
successors and assigns.
24. ENTIRE AGREEMENT: WAIVERS, SUCCESSORS. This Lease and all Schedules
expressly referring hereto contain the entire agreement of the panics in
connection with the Aircraft and shall not be qualified or supplemented by
course of dealing. No waiver or modification by lessor of any of the terms or
conditions hereof shall be effective unless in writing signed by an officer of
lessor. No waiver or indulgence by Lessor of any deviation by lessee of any
required performance shall be a waiver of Lessor's right to subsequent or other
full and timely
performance. This Lease shall be binding on Lessor and Lessor's successors and
assigns and shall inure to the benefit of Lessor's successors and assigns.
25. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original and all of which
taken together shall constitute a single instrument.
BY INITIALING AND DATING THIS SECTION, LESSEE ACKNOWLEDGES THAT LESSEE HAS READ
THE ABOVE PARAGRAPHS UNDER SECTION 21, WARRANTIES AND ACCEPTANCE, AND SECTION
24, ENTIRE AGREEMENT, AND FULLY UNDERSTANDS THEIR CONTENT.
INITIALED: /s/ LRC DATED: 6/28/96
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TRUTH IN LEASING REQUIREMENT IN COMPLIANCE WITH FAR 91.54:
FOR THE TWELVE (12) MONTHS PRECEDING THE DATE OF THIS LEASE AGREEMENT, THE
AIRCRAFT LEASED HEREUNDER HAS BEEN MAINTAINED AND INSPECTED IN ACCORDANCE WITH
FEDERAL AVIATION REGULATIONS PART 91.169 (E)(F)(5). THE AIRCRAFT CURRENTLY
COMPLIES WITH SUCH REGULATIONS.
THE LESSEE CERTIFIES THAT IT IS RESPONSIBLE FOR THE AIRCRAFT'S STATUS OF
COMPLIANCE WITH APPLICABLE MAINTENANCE AND INSPECTION REQUIREMENTS AS SET FORTH
UNDER THE FAA REGULATIONS APPLICABLE TO LESSEE'S USE AND OPERATION OF THE
AIRCRAFT. THE LESSEE UNDERSTANDS IT'S RESPONSIBILITIES PURSUANT SUCH
REGULATIONS. IN ADDITION, THE LESSEE AGREES TO ADVISE THE LESSOR OF WHICH OF THE
REQUIRED FAA MAINTENANCE PROGRAMS THEY HAVE SELECTED AND AGREES TO PROVIDE
LESSOR UPON REQUEST WITH WRITTEN INSPECTION REPORTS FOR INSPECTIONS ACCOMPLISHED
UNDER SAID PROGRAM.
THE LESSEE IS SOLELY RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT AND
CERTIFIES AND AGREES TO COMPLY WITH ALL APPLICABLE FAA REGULATIONS NOW IN EFFECT
OR SUBSEQUENT FAA REGULATIONS ISSUED DURING THE TERM OF THE LEASE AGREEMENT. THE
LESSEE IS HERERY ADVISED THAT AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL
CONTROL AND PERTINENT FAA REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA
FLIGHT STANDARDS DISTRICT OFFICE. LESSEE AGREES TO KEEP A COPY OF THIS LEASE
AGREEMENT IN THE AIRCRAFT AT ALL TIMES DURING THE TERM OF THIS LEASE AGREEMENT.
IN WITNESS WHEREOF, the Lessor and Lessee have each caused this Lease to be duly
executed.
Air Response, Inc. (LESSEE)
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President and Secretary
U.S. BANCORP LEASING & FINANCIAL (LESSOR)
By:
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Address for All Notices:
U. S. Bancorp Leasing & Financial
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Machine Tool Finance Group General Equipment Group
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