EXHIBIT 10.2
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AIRCRAFT LEASE
(MSN 650-0084)
DATED AS OF AUGUST ___, 2003
BETWEEN
SOUTHWEST CARTAGE, INC.
AS LESSOR
AND
ELITE FLIGHT SOLUTIONS, INC.
AS LESSEE
This is Counterpart No. __ of a total of 3 counterparts. Only Counterpart No. 1
shall be considered chattel paper for purposes of the Uniform Commercial Code
and a security interest may be perfected only by possession of Counterpart
No. 1.
TABLE OF CONTENTS
SECTION 1 Lease and Acceptance of Aircraft
SECTION 2 Conditions to Closing
SECTION 3 Term and Rent
SECTION 4 Quiet Possession and Use
SECTION 5 Disclaimer and Assignment of Warranties
SECTION 6 Representations, Warranties and Agreements of Lessee
SECTION 7 Net Lease
SECTION 8 Taxes
SECTION 9 Compliance and Use
SECTION 10 Loss or Damage
SECTION 11 Indemnification
SECTION 12 Assignment and Sublease
SECTION 13 Events of Default
SECTION 14 Remedies
SECTION 15 Notices
SECTION 16 Miscellaneous
SECTION 17 Amendments
SECTION 18 Truth in Leasing
EXHIBIT A - Definitions
Lease Supplement ▇▇. ▇
▇▇▇▇▇▇▇▇ ▇▇. ▇ to Lease Supplement ▇▇. ▇
▇▇▇▇▇▇▇▇ ▇▇. ▇ to Lease Supplement No. 1
Schedule No. 2-A to Lease Supplement No. 1 *
Lease Supplement No. 2
Insurance Addendum
Maintenance Addendum
* To be deleted from FAA filing copy and copy of lease to be placed on board
the Aircraft
This AIRCRAFT LEASE (together with all Supplements, Exhibits, Riders and
Addenda hereto, the "LEASE") is made and entered into as of August ___, 2003 by
and between SOUTHWEST CARTAGE, INC., a Delaware corporation ("LESSOR"), with a
place of business at c/o AVPRO, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and ELITE FLIGHT SOLUTIONS, INC., a Delaware corporation
("LESSEE"), having its principal place of business and chief executive office at
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇-▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇. Certain capitalized
terms as used in this Lease are defined in EXHIBIT A hereto, and such
definitions are hereby incorporated herein and made a part hereof as though set
forth herein in full.
SECTION 1. LEASE AND ACCEPTANCE OF AIRCRAFT.
Subject to the satisfaction of each condition set forth in Section 2,
Lessor hereby agrees to lease the Aircraft to Lessee and Lessee hereby agrees to
lease the same from Lessor for the Term hereof pursuant to the terms and
conditions of this Lease.
The execution by Lessee of Lease Supplement No. 1 shall evidence that the
Aircraft is leased under, and is subject to all of the terms, provisions and
conditions of, this Lease and constitute Lessee's unconditional and irrevocable
acceptance of the Aircraft for all purposes of this Lease. Except as may be
expressly set forth herein, this Lease is non-cancelable and non-terminable by
Lessee.
SECTION 2. CONDITIONS TO CLOSING.
(a) CONDITIONS PRECEDENT. Lessor's obligations to lease the Aircraft to
Lessee shall each be subject to and conditioned upon all of the following
conditions being satisfied:
(i) Lessor shall have received the Closing Documents set forth on
Lease Supplement No. 2 hereto, all in form and substance satisfactory to Lessor.
(ii) Lessee's acceptance of the Aircraft on or before the Acceptance
Date.
(iii) In addition to the above listed conditions precedent, Lessee
covenants and agrees that upon Lessor's acknowledgment that all the conditions
to the lease as aforestated have been satisfied, Lessee shall authorize the
release from escrow to Lessor of the documents held by FAA Counsel on behalf of
Lessee and shall authorize FAA Counsel to file and record all appropriate
documentation with the FAA on the Acceptance Date.
(b) CONDITIONS SUBSEQUENT. Lessee shall comply with the Conditions
Subsequent set forth in Lease Supplement No. 2 hereto.
SECTION 3. TERM AND RENT.
(a) The leasing of the Aircraft by Lessor to Lessee shall commence on the
Acceptance Date and end on the Expiration Date each as set forth on Schedule No.
2 to Lease Supplement No. 1.
(b) Lessee shall pay to Lessor as basic rent (herein referred to as "BASIC
RENT") the following:
(i) On the Acceptance Date, $15,126.65 as and for the costs and
expenses incurred by Lessor in connection with any inspections and/or
demonstration and test flights conducted by or on behalf of Lessee in connection
with this Lease.
(ii) On the First Basic Rent Date and on each Basic Rent Date
thereafter, to and including the Last Basic Rent Date, an amount equal to
the Basic Rent set forth on Schedule 2-A to Lease Supplement No. 1.
(iii) After the Expiration Date until the payment of the amounts set
forth in (e) below, an amount equal to the Basic Rent. Such amount shall be
payable from and after the Expiration Date until the payment of the amounts set
forth in (e)
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below. Such amount shall be payable on the same dates and with the same
frequency as Basic Rent was payable during the Term.
(c) In addition, Lessee shall pay to Lessor the following amounts (herein
referred to as "SUPPLEMENTAL RENT" and, together with all Basic Rent,
collectively as "RENT"): (i) any other amount payable hereunder which Lessee
assumes the obligation to pay, or agrees to pay, under this Lease to Lessor or
others, including, without limitation, any amounts due pursuant to Section 6 (k)
hereof; (ii) on the date provided herein, any amount payable hereunder as
Casualty Value and/or any amounts due pursuant to any Exhibit, Rider or Addendum
hereto plus any and all amounts regarding the same; (iii) interest at the lesser
of the Late Payment Rate or the highest rate of interest permitted by applicable
law for the number of days actually elapsed on any amount payable hereunder not
paid when due, plus, if not paid when due, as an administrative and late charge,
an amount equal to the Administrative Charge. The expiration, cancellation or
other termination of Lessee's obligation to pay Basic Rent hereunder shall not
terminate, limit or modify the obligations of Lessee with respect to
Supplemental Rent, which shall survive such expiration, cancellation or other
termination of the Lease.
(d) All payments of Rent or other amounts required hereunder shall be made
to Lessor in immediately available United States funds on the date payable
hereunder at the address designated by Lessor for payment, by wire transfer to
an account specified by Lessor or at such other address or to such other Person
as Lessor may direct by notice in writing to Lessee.
(e) END OF TERM. Lessee shall purchase the Aircraft at the expiration of
the Term for an amount, payable in immediately available funds, equal to
$3,150,000.00 (the "END OF TERM PAYMENT") plus any applicable sales, excise or
other taxes imposed as a result of such sale (other than Lessor's gross or net
income taxes attributable to such sale) together with any Basic Rent due and
payable on or before such Basic Rent Date and all accrued and unpaid Rent then
due and owing. Lessor's sale of the Aircraft shall be on an "AS-IS WHERE-IS"
BASIS, WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND
WHATSOEVER, BY, OR RECOURSE TO, LESSOR.
SECTION 4. QUIET POSSESSION AND USE.
Lessor warrants that during the term of this Lease, so long as no Event of
Default or Default has occurred and is continuing hereunder, Lessee's possession
and use of the Aircraft shall not be divested or interfered with by Lessor or
anyone claiming by, through or under Lessor.
The warranty set forth hereinabove is in lieu of all other warranties of
Lessor, whether written, oral or implied, with respect to this Lease or the
Aircraft, and Lessor shall not be deemed to have modified in any respect the
obligations of Lessee pursuant to Section 7 hereof, which obligations are and
shall remain absolute, irrevocable and unconditional under all events and
circumstances whatsoever.
SECTION 5. DISCLAIMER AND ASSIGNMENT OF WARRANTIES.
LESSEE EXPRESSLY ACKNOWLEDGES THAT IT HAS SELECTED THE AIRCRAFT WITHOUT ANY
ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES AND LESSEE EXPRESSLY AGREES THAT
IT IS LEASING THE AIRCRAFT FROM LESSOR IN AN "AS IS" CONDITION. LESSEE FURTHER
ACKNOWLEDGES THAT THE LESSOR HAS NOT MANUFACTURED THE AIRCRAFT. LESSOR SHALL NOT
BE DEEMED TO HAVE MADE, AND LESSOR HEREBY EXPRESSLY DISCLAIMS, ANY
REPRESENTATION OR WARRANTY (EXCEPT FOR THE WARRANTY OF QUIET POSSESSION AND
USE), EITHER EXPRESS OR IMPLIED, AS TO THE AIRCRAFT, ANY PART THEREOF, ANY
RECORDS, OR ANY MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN,
CONDITION, CAPACITY OR DURABILITY OF THE AIRCRAFT, ITS MERCHANTABILITY OR ITS
FITNESS FOR ANY PARTICULAR PURPOSE, USE OR OPERATION, THE QUALITY OF THE
MATERIALS OR WORKMANSHIP OF THE AIRCRAFT, ITS VALUE OR AIRWORTHINESS, TITLE,
SAFETY, THE ABSENCE OF ANY PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT OR LATENT
DEFECT (WHETHER OR NOT DISCOVERABLE BY LESSEE), COMPLIANCE OF THE AIRCRAFT WITH
THE REQUIREMENTS OF ANY LAW, RULE, REGULATION OR STANDARD PERTAINING THERETO, OR
THE CONFORMITY OF THE AIRCRAFT TO THE PROVISIONS AND SPECIFICATIONS OF ANY
PURCHASE DOCUMENT RELATING THERETO OR ANY INTERFERENCE OR ANY COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OF TRADE, NOR SHALL LESSOR BE LIABLE,
REGARDLESS OF ANY ACTUAL OR ALLEGED NEGLIGENCE OF LESSOR, FOR ANY DEFECTS,
EITHER PATENT OR LATENT (WHETHER OR NOT DISCOVERABLE BY LESSEE), IN THE AIRCRAFT
OR ANY PART THEREOF OR ANY DIRECT OR
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INDIRECT DAMAGE TO PERSONS OR PROPERTY RESULTING THEREFROM OR FOR ANY DIRECT,
INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR STRICT OR ABSOLUTE
LIABILITY IN TORT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, LESSEE
HEREBY WAIVES ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE
LIABILITY IN TORT OR INFRINGEMENT) IT MIGHT HAVE AGAINST LESSOR FOR ANY LOSS,
DAMAGE OR EXPENSE (INCLUDING, WITHOUT LIMITATION, DIRECT, INDIRECT, INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGE, ANY LOSS OF BUSINESS OR PROFITS OR ANY
INTERRUPTION OR LOSS OF SERVICE OR USE THEREOF) CAUSED BY THE AIRCRAFT OR BY
LESSEE'S LOSS OF USE THEREOF FOR ANY REASON WHATSOEVER.
SECTION 6. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE.
Lessee represents, warrants and agrees as follows:
(a) DUE ORGANIZATION. Lessee has the form of business organization
indicated in the caption of this Lease and is duly organized and existing in
good standing under the laws of the state listed in the caption of this Lease
and is duly qualified to do business wherever necessary to carry on its present
business and operations, including, without limitation, the Primary Hangar
Location, and to own its property.
(b) DUE AUTHORIZATION; NO VIOLATION. This Lease has been duly authorized by
all necessary action on the part of Lessee consistent with its form of
organization, does not require any further shareholder, member or partner
approval, does not require the approval of, or the giving notice to, any
Federal, state, local or foreign governmental authority (including, without
limitation, the Department of Transportation and/or the FAA) and does not
contravene any law binding on Lessee or contravene any provision of, or
constitute a default under any certificate or articles of incorporation or
organization or by-laws or partnership certificate or agreement, or any
agreement, indenture, or other instrument to which Lessee is a party or by which
it may be bound.
(c) ENFORCEABILITY. This Lease has been duly executed and delivered by
authorized representatives of Lessee and constitutes a legal, valid and binding
obligation of Lessee enforceable in accordance with its terms.
(d) FURNISHING OF INFORMATION. Lessee agrees that it shall furnish from
time to time to Lessor such information relating to Lessee, its subsidiaries
and/or affiliates, as Lessor shall reasonably request.
(e) NAME AND LOCATION OF CHIEF EXECUTIVE OFFICES. The chief executive
offices and principal place of business of Lessee is located at the address set
forth in the first paragraph of this, and Lessee agrees to give Lessor thirty
(30) days' prior written notice of any relocation of said chief executive
offices or principal place of business from its present location, or of any
change in its name or identity.
(f) DOCUMENTS ON BOARD. A current and valid Registration Application or
Certificate of Aircraft Registration and Standard Airworthiness Certificate (FAA
Form AC 8100-2) pertaining to the Aircraft and a copy of this Lease and the
Lease Supplements, will be kept on board the Aircraft at all times during the
Term. In addition, for all operations outside the continental United States, the
Lessee shall maintain either a permanent and valid Certificate of Registration
or a current and valid "fly-time wire" (FAA Standard Form 14) on board the
Aircraft.
(g) TAXES. Lessee has filed or caused to be filed and will continue to file
all Federal, state and local tax returns which are required to be filed, and has
paid or caused to be paid and will continue to pay all taxes shown to be due and
payable on such returns or (except to the extent being contested in good faith
and for the payment of which adequate reserves have been provided) on any
assessment received by Lessee, to the extent that such taxes have heretofore or
in the future become due and payable.
(h) POSSESSION AND LIENS. Lessee will not sell, convey, transfer, exchange,
lease or otherwise relinquish possession or dispose of the Aircraft, Engine or
Part (except for delivery of possession of the Aircraft or any Engine or Part to
another Person for testing, service, repair, maintenance, overhaul or, to the
extent permitted hereby, alteration or modification), or attempt or offer to do
any of the foregoing. Lessee will not directly or indirectly, voluntarily or
involuntarily, create, incur, assume or suffer to exist any Liens on or with
respect to the Aircraft
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or any Part, Lessor's interest therein (and Lessee will promptly, at its own
expense, take such action as Lessor deems necessary or advisable to duly
discharge any such Lien), except Permitted Liens. In the event that Lessee fails
to take action to discharge or remove any such Lien, Lessor may take such action
as it deems necessary or appropriate to discharge or remove such Lien. Lessee
shall reimburse Lessor on demand for any costs incurred by Lessor in connection
with such action together with interest at the Late Payment Rate. Lessor's
rights hereunder are in addition to, and not in derogation of, any other rights
that Lessor may have hereunder, at law or in equity.
(i) GOOD TITLE. Lessee will cause the Airframe to be registered in the
records of the Aircraft Registry of the FAA in the name of Lessee at all times
during the Term. At all times during the Term, the records of the Aircraft
Registry of the FAA shall reflect that Lessor has a duly perfected interest in
the Aircraft free and clear of all Liens other than any Liens created in favor
of or by Lessor.
(j) INCIDENTAL USE. The operation of the Aircraft by Lessee is incidental
to and within the scope of a business purpose of Lessee (other than the business
of transportation by air). At no time during the term shall the Aircraft be a
"foreign civil aircraft" within the meaning of Section 375.1 of the Aviation
Economic Regulations (14 CFR Section 375.1).
(k) MSP CONTRACT. Throughout the Term, on or before the fifth day of each
calendar month Lessee shall provide Lessor with a report of the hourly usage of
the Engines for the preceding calendar month. For each hour of each Engine's
use, Lessee shall, on or before the fifth day of each calendar month, remit to
Lessor an amount equal to $140.71 (or such other amount as shall be the current
hourly Engine use charge payable by Lessor pursuant to the MSP Contract). Lessee
shall not take any actions or fail to take any actions so as to cause the MSP
Contract to terminate, lapse, expire or become invalid.
SECTION 7. NET LEASE.
This Lease is a net lease, and Lessee acknowledges and agrees that Lessee's
obligation to pay all Rent hereunder and the rights of Lessor in and to such
Rent, shall be absolute, irrevocable and unconditional and shall not be subject
to cancellation, termination, modification or repudiation by Lessee or any
abatement, reduction, setoff, defense, counterclaim, recoupment, course of
dealings, course of conduct or statements or actions of Lessor relating to the
administration of this Lease or the enforcement thereof or any documents,
agreements or certificates entered into pursuant thereto (collectively,
"ABATEMENTS") for any reason or under any circumstance whatsoever, including,
without limitation, Abatements due to any present or future claims of Lessee
against Lessor, its successors and assigns whether under this Lease or
otherwise, the Manufacturer, or any other Person for whatever reason. Lessee
hereby waives any and all existing and future claims to any Abatement against
such Rent, and agrees to pay all such Rent regardless of any Abatement which may
be asserted in connection with this Lease, the Aircraft or otherwise. Except as
otherwise expressly provided herein, this Lease shall not terminate, nor shall
the obligations of Lessee be affected, by reason of any defect in or damage to,
or any loss or destruction of, the Aircraft or any part thereof from whatsoever
cause, or the invalidity or unenforceability or lack of due authorization of
this Lease or lack of right, power or authority of Lessor to enter into this
Lease, or for any other cause, whether similar or dissimilar to the foregoing,
any present or future law or regulation to the contrary notwithstanding, it
being the express intention of Lessor and Lessee that all Rent payable to Lessor
hereunder shall be, and continue to be, payable in all events unless and until
the obligation to pay the same shall be terminated pursuant to the express
provisions of this Lease.
SECTION 8. TAXES.
Lessee agrees to: (i) file directly with all appropriate taxing authorities
all declarations, returns, inventories and other documentation with respect to
any personal property taxes (or any other taxes in the nature of or imposed in
lieu of property taxes) due or to become due with respect to the Aircraft and
shall pay on or before the date when due all such taxes assessed, billed or
otherwise payable with respect to the Aircraft directly to the appropriate
taxing authorities and (ii) (a)
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pay when due as requested by Lessor and (b) defend and indemnify each Indemnitee
against liability for all license and/or registration fees, assessments, and
sales, use, property, excise, privilege and other taxes (including any related
interest or penalties) or other charges or fees now or hereafter imposed by any
governmental body or agency upon the Aircraft or with respect to landing,
airport use, manufacturing, ordering, shipment, purchase, ownership, delivery,
installation, leasing, operation, possession, use, return, or other disposition
thereof or the rentals hereunder (other than taxes on or measured solely by the
net income of Lessor)(the items referred to in (i) and (ii) above being referred
to herein as "IMPOSITIONS"). Any Impositions which are not paid when due and
that are paid by any Indemnitee shall, at such Indemnitee's option, become
immediately due from Lessee to such Indemnitee. Notwithstanding the foregoing,
Lessee shall pay, indemnify each Indemnitee for and hold each such Indemnitee
harmless on a net after-tax basis from and against, all Impositions on or
measured by the net income of any such Indemnitee imposed against such
Indemnitee by any local or foreign government or other local or foreign taxing
authority if and to the extent that such Indemnitee would not have incurred such
Impositions but for the operation or presence of the Aircraft within the
jurisdiction asserting an Imposition.
SECTION 9. COMPLIANCE AND USE.
Lessee agrees to comply with all laws, regulations and governmental orders
related to this Lease and/or the Aircraft, its use or possession. The Aircraft
shall be used in furtherance of Lessee's business or other objectives. The
Aircraft shall be used solely in a passenger configuration for which Lessee is
duly authorized by the FAA. Lessee will not operate or permit the Aircraft to be
operated at any time or in any geographic area when or where insurance required
by the provisions hereof shall not be in effect. Lessee will not operate or
permit the Aircraft to be operated in a manner, for any time period, such that
Lessor or a third party (except, where expressly permitted hereunder, an air
carrier or air taxi operator certificated under Part 121 or Part 135 of the
Federal Aviation Regulations) shall be deemed to have "operational control" of
the Aircraft. Throughout the Term, the possession, use and maintenance of the
Aircraft shall be at the sole risk and expense of Lessee and the Aircraft shall
be based at the Primary Hangar Location set forth in Schedule No. 2 to Lease
Supplement No. 1. At all times the Aircraft will be operated only by duly
qualified, currently certificated pilots as required by the insurance policies
required under this Lease. All such pilots shall be type-rated for the Aircraft
by either Flight Safety International or SimiFlite. IN ADDITION, EXCEPT AS
EXPRESSLY PERMITTED BY THE FOLLOWING PARAGRAPH, THE AIRCRAFT SHALL NOT BE
OPERATED, USED OR LOCATED OUTSIDE THE CONTINENTAL UNITED STATES.
Notwithstanding the foregoing, Lessor agrees that the Aircraft may be flown
temporarily to any country in the world in connection with the conduct of
Lessee's business; PROVIDED, HOWEVER, that in no event may the Aircraft
temporarily fly, be operated, used or located in, to or over any such country or
area (1) which is excluded from coverage by any insurance policy in effect with
respect to such Aircraft or by any insurance policy required by the terms hereof
or any country or area not specifically and fully covered by such insurance; (2)
in a recognized or threatened area of hostility unless fully covered to Lessor's
satisfaction by hull, political, expropriation, hijacking and war risk insurance
or (3) in violation of any applicable law (including all statutes, treaties,
conventions, judgments, decrees, injunctions, writs and orders of any court,
governmental body, instrumentality, agency or authority and rules, regulations,
orders, directives, licenses and permits of any governmental body,
instrumentality, agency or authority, including, but not limited to, any United
States law or United Nations Security Council Directive, or permit the Aircraft
to be operated in any manner unless the insurance coverages set forth herein are
in full force and effect.
In the event that the Aircraft is flown more than one hundred fifty (150)
hours in any three consecutive calendar month period, Lessee shall pay to Lessor
the sum of $100,000.00 for each and every three consecutive calendar month
period in which the one hundred fifty hour limitation is exceeded. Upon receipt
of each such payment by Lessor, the amount of the End of Term Payment shall be
reduced by the amount of such payment.
SECTION 10. LOSS OR DAMAGE.
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(a) EVENT OF LOSS WITH RESPECT TO THE AIRCRAFT. Upon the occurrence of any
Event of Loss with respect to the Airframe and/or Aircraft, Lessee shall notify
Lessor of any such Event of Loss within five (5) days of the date thereof. On
the next Basic Rent Date following the date of such notice (or, if such Event of
Loss occurs after the Last Basic Rent Date, within thirty (30) days after such
notice), Lessee shall pay to Lessor any Rent then due, plus the Casualty Value
of the Aircraft determined as of the Basic Rent Date immediately following the
date of such notice, together with interest at the Late Payment Rate for the
period (if any) from the Basic Rent Date following the date of such notice
through the date of payment. Upon making such payment and all Rent due an owing,
Lessee's obligation to pay further Basic Rent for the Aircraft subsequent to
such payment shall cease, but Lessee's obligation to pay Supplemental Rent as
well as any other amounts due under this Lease, if any, for the Aircraft shall
remain unchanged. Except in the case of loss, permanent disappearance,
destruction or Return to Manufacturer, and unless possession thereof is required
to be delivered to a third party insurance carrier in order to settle an
insurance claim, upon making such payment and all Rent due and owing, Lessee
shall be entitled to recover possession of the Aircraft and Lessee shall be
entitled to any salvage value in excess of the Casualty Value paid to Lessor. In
the event of a Return to Manufacturer, Lessor agrees that Lessee shall receive
and retain all amounts payable to Lessor by the Manufacturer up to the amount,
if any, of the Casualty Value actually paid by Lessee hereunder, and that Lessee
shall retain any excess. With respect to a Requisition of Use, Lessor agrees
that Lessee shall receive and retain all amounts paid by any governmental
authority up to the Casualty Value actually paid by Lessee hereunder, and any
excess shall be paid over to, and retained by, Lessee. Lessor shall be under no
duty to Lessee to pursue any claim against any Person in connection with an
Event of Loss, but Lessee may at its own cost and expense and with Lessor's
prior written consent pursue the same on behalf of Lessor in such manner as may
be reasonably acceptable to Lessor.
(b) EVENT OF LOSS WITH RESPECT TO AN ENGINE. Upon an Event of Loss with
respect to any Engine under circumstances in which there has not occurred an
Event of Loss with respect to the Airframe upon which such Engine was installed,
Lessee shall give Lessor prompt written notice thereof and shall within thirty
(30) days after the occurrence of such Event of Loss, deliver to Lessor a
similar or better engine of the same make and model number as the Engine
suffering the Event of Loss which engine shall be subject in all respects to the
terms and conditions of this Lease. Such engine shall be free and clear of all
Liens, have a value, utility, and useful life at least equal to, and be in as
good an operating condition as, the Engine suffering the Event of Loss, assuming
such Engine was of the value and utility and in the condition and repair
required by the terms hereof immediately prior to the occurrence of such Event
of Loss. Lessee, at its own cost and expense, shall furnish Lessor with such
documents to evidence such conveyance as Lessor shall request. Upon full
compliance by Lessee with the terms of this paragraph, Lessor will transfer to
Lessee, without recourse, representation or warranty of any kind whatsoever
other than as to Lessor's Liens, all of Lessor's right, title and interest, if
any, in and to the Engine suffering the Event of Loss. SUCH TRANSFER SHALL BE
"AS-IS, WHERE-IS" AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE, AND LESSOR HEREBY
DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE
ENGINE SO TRANSFERRED TO LESSEE other than as to Lessor's Liens. Each such
replacement engine shall, after such conveyance be deemed an "ENGINE" as defined
herein and shall be deemed part of the same Aircraft as was the Engine replaced
thereby. No Event of Loss with respect to an Engine shall result in any
reduction or delay in the payment of Basic Rent or relieve Lessee of any
obligation under this Lease.
(c) RISK OF LOSS. Except as otherwise specifically provided in this
Section, Lessee shall bear the risk of loss, damage or partial destruction of
the Aircraft and shall not be released from its obligations hereunder in the
event of any damage to the Aircraft or any part thereof or any Event of Loss
relating thereto.
SECTION 11. INDEMNIFICATION.
Lessee assumes liability for, and hereby agrees to indemnify, protect,
save, defend and keep harmless each Indemnitee, on a net after-tax basis, from
and against any and all liabilities, obligations, losses, damages, penalties,
claims (including, without limitation, claims involving or alleging product
liability or strict or absolute liability in tort), actions, suits, demands,
costs, expenses and disbursements (including, without limitation, legal fees and
expenses) of any kind
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and nature whatsoever ("CLAIMS") which may be imposed on, incurred by or
asserted against any Indemnitee, whether or not such Indemnitee shall also be
indemnified as to any such Claim by any other Person, in any way relating to or
arising out of this Lease or any documents contemplated hereby, or the
performance or enforcement of any of the terms hereof or thereof, or in any way
relating to or arising out of the assertion or enforcement of any
manufacturer's, vendor's or dealer's warranties on the Aircraft or any part
thereof, (including, without limitation, any warranty of any Manufacturer), the
manufacture, inspection, construction, purchase, pooling, interchange,
acceptance, rejection, ownership, titling or re-titling, delivery, lease,
sublease, possession, use, operation, maintenance, management, condition,
registration or re-registration, sale, return, removal, repossession, storage or
other disposition of the Aircraft or any part thereof or any accident in
connection therewith (including, without limitation, latent and other defects,
whether or not discoverable, and any Claim for patent, trademark or copyright
infringement).
Notwithstanding the foregoing, Lessee shall not be required to indemnify
any Indemnitee for (a) any Claim caused solely and directly by the gross
negligence or willful misconduct of such Indemnitee or (b) any Claim in respect
of the Aircraft arising from acts or events which occur after (x) possession of
the Aircraft has been redelivered to Lessor (which return and delivery shall be
in full and complete compliance with the terms of this Lease) and (y) any and
all other obligations of any kind whatsoever of the Lessee under this Lease
which have been fully paid and/or performed, as the case may be, unless any such
Claims were caused by Lessee (or any stockholder, director, officer, employee,
successor, assignee, agent or servant of the Lessee) or resulted or arose,
directly or indirectly, from any acts, events or omissions of any kind
whatsoever during the Term of this Lease.
The liability of Lessee to make indemnification payments shall,
notwithstanding any expiration, cancellation or other termination (whether
voluntary, as the result of a Default or Event of Default, or otherwise) of this
Lease, continue to exist until such indemnity payments are irrevocably made in
full by Lessee and received by the appropriate Indemnitee. If any Claim is made
against Lessee or any Indemnitee, the party receiving notice of such Claim shall
promptly notify the other, but the failure of the party receiving notice to so
notify the other shall not relieve Lessee of any obligation hereunder.
Notwithstanding the foregoing, Lessee's indemnification obligations with
respect to Impositions are set forth in Section 8 hereto.
SECTION 12. ASSIGNMENT AND SUBLEASE.
LESSEE SHALL NOT SELL, TRANSFER, ASSIGN, CONVEY, PLEDGE, MORTGAGE OR
OTHERWISE ENCUMBER ITS OR LESSOR'S INTEREST IN AND TO THE LEASE OR THE AIRCRAFT,
AND ANY SUCH SALE, TRANSFER, ASSIGNMENT, CONVEYANCE, PLEDGE, MORTGAGE OR
ENCUMBRANCE, WHETHER BY OPERATION OF LAW OR OTHERWISE, WITHOUT THE PRIOR WRITTEN
CONSENT OF LESSOR SHALL BE NULL AND VOID. IN ADDITION, LESSEE SHALL NOT ENTER
INTO ANY INTERCHANGE AGREEMENT AFFECTING THE AIRCRAFT OR RELINQUISH POSSESSION
OF THE AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PART, OR PERMIT ANY
ENGINE OR PART TO BE INSTALLED, ON ANY AIRFRAME OTHER THAN THE AIRFRAME LEASED
HEREUNDER EXCEPT AS EXPRESSLY SET FORTH HEREIN. In addition, the foregoing shall
be not be deemed to prohibit the delivery of possession of the Aircraft, any
Engine or Part to another Person for testing, service, repair, maintenance,
overhaul or, to the extent permitted hereby, alteration or modification. No
acceptance, assignment, subletting, relinquishment or installation shall in any
event relieve Lessee of primary, absolute and unconditional liability for its
duties and obligations under this Lease.
Notwithstanding the foregoing, Lessor hereby acknowledges that the Lessee
has or will enter into a management agreement with American Air Network, Inc.
("CHARTER Operator") whereby Charter Operator will charter the aircraft to third
parties. Except as expressly set forth in the preceding sentence, without the
prior written consent of Lessor, Lessee shall not operate or permit the Aircraft
to be operated under Part 135 of the Federal Aviation Regulations.
Lessor, may at any time, with or without notice to Lessee, mortgage, grant
a security interest in or otherwise transfer, sell or assign all or any part of
its interest in this Lease or the Aircraft or any Rent or other sums due or to
become due
- 8 -
hereunder and Lessee shall perform all of its obligations under this Lease for
the benefit of such creditor, secured party, transferee or assignee (hereinafter
an "ASSIGNEE") except that the interest of any such Assignee shall be subject to
Lessee's rights of use and possession, renewal rights, and purchase options, if
any, hereunder, so long as no Default or Event of Default has occurred and is
continuing hereunder.
This Lease, including all agreements, covenants, representations and
warranties, shall be binding upon and inure to the benefit of, and may be
enforced by (a) Lessor and its successors, assigns, Assignees, agents and
servants and (b) Lessee and its successors and, to the extent expressly
permitted by Lessor, assigns.
SECTION 13. EVENTS OF DEFAULT.
The term "EVENT OF DEFAULT", wherever used herein, shall mean any of the
following events or circumstances (whatever the reason for such Event of Default
and whether it shall be voluntary or involuntary, or come about or be effected
by operation of law, or be pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation or any
administrative or governmental body):
(a) Lessee shall fail to make any payment of Rent, Casualty Value, if
applicable, and/or any amount due pursuant to any Rider, Exhibit or Addendum
hereto within ten (10) days after any or all of the same shall become due and
payable, or, upon demand, any other amount required to be paid herein or under
any other agreement with Lessor; or
(b) Lessee shall fail to keep in full force and effect any of the insurance
required hereunder, or shall operate the Aircraft at a time when, or at a place
in which, such insurance shall not be in effect; or
(c) Lessee shall fail to perform or observe any covenant, condition or
agreement, (other than those specifically referred to in this Section) required
to be performed or observed by it under this Lease, any Rider, Exhibit or
Addendum hereto or any other agreement, document or certificate delivered by or
on behalf of Lessee in connection herewith, and such failure shall continue for
ten (10) days after written notice thereof from Lessor to Lessee; or
(d) Any representation or warranty made by Lessee herein or in any
certificate, agreement, statement or document hereto or hereafter furnished to
Lessor in connection herewith, including without limitation, any financial
information disclosed to Lessor, shall prove to be or to have been false or
incorrect in any material respect; or
(e) The commencement of any bankruptcy, insolvency, arrangement,
reorganization, receivership, liquidation or other similar proceeding by or
against Lessee and/or Charter Operator or any of their respective properties or
businesses, (which, in the case of a proceeding commenced against Lessee and/or
Charter Operator, as the case may be, has not been dismissed within sixty [60]
days of the filing thereof) the appointment of a trustee, receiver, liquidator
or custodian for Lessee and/or Charter Operator or any of their respective
properties or businesses, if Lessee and/or Charter Operator suffers the entry of
an order for relief under Title 11 of the United States Code or the making by
Lessee and/or Charter Operator of a general assignment or deed of trust for the
benefit of creditors; or
(f) Lessor shall determine, in its sole discretion and in good faith, that
there has been a material adverse change in the business, operations or
financial condition of the Lessee since the date of this Lease or that Lessee's
ability to make any payment hereunder promptly when due or otherwise comply with
the terms of this Lease or any other agreement between Lessor and Lessee is
impaired; or
(g) Except as expressly permitted hereunder, Lessee shall or shall attempt
to remove, sell, transfer, charter, interchange, convey, pledge, mortgage,
encumber, part with possession of, assign or sublet (with or without one or more
crewmembers) the Aircraft or any part thereof, use the Aircraft for an illegal
purpose or permit the same to occur or Lessee shall create, incur, assume or
suffer to exist any Lien
- 9 -
(other than Permitted Liens) with respect to the Aircraft, this Lease or
Lessor's interests thereunder.
(h) Any failure of Lessee to fully and timely comply with any of the terms
or provisions of that certain Consent to Lease and Assignment dated as of August
__, 2003 between Fleet Capital Corporation, Lessor and Lessee or that certain
FAA Assignment dated as of August __, 2003 between Fleet Capital Corporation,
Lessor and Lessee.
(i) Any failure of either Lessee or Charter Operator to fully and timely
comply with any of the terms or provisions of that certain Consent to Charter
dated as of August __, 2003 between Fleet Capital Corporation, Charter Operator,
Lessor and Lessee.
Lessee shall promptly notify Lessor of the occurrence of any Default or
Event of Default.
SECTION 14. REMEDIES.
(a) Upon the occurrence of any Event of Default and so long as the same
shall be continuing, Lessor may, at its option, declare this Lease to be in
default (provided that no such declaration shall be a condition to any suit
against Lessee for specific performance of a defaulted covenant or for damages
in respect of such default upon such occurrence or at any time thereafter), and
at any time thereafter, whether or not such Event of Default shall be
continuing, Lessor may exercise any one or more of the following remedies, as
Lessor in its sole discretion shall lawfully elect:
(i) Proceed by appropriate court action, either at law or in equity,
to enforce performance by Lessee of the applicable covenants of this Lease or to
recover damages for breach thereof.
(ii) By notice cancel or terminate this Lease, whereupon all rights of
Lessee to the use of the Aircraft or any part thereof shall absolutely cease and
terminate but Lessee shall remain liable as hereinafter provided and thereupon
(A) if so requested by Lessor, Lessee shall at its expense promptly return the
Aircraft to the possession of Lessor at such place as Lessor shall designate and
in the condition required upon the return thereof pursuant to and in accordance
with the terms of this Lease, (B) Lessor, at its option, may enter upon the
premises where the Aircraft is located and take immediate possession of and
remove the same, together with any Engines and Parts by self-help, summary
proceedings or otherwise without any liability of any kind whatsoever on the
part of Lessor for or by reason of such entry or taking of possession and Lessee
hereby waives any cause of action it may have arising from, or in connection
with, the foregoing and/or (C) Lessee will provide storage as set forth in this
Lease. In addition, upon the written request of Lessor, Lessee, at its expense,
will replace any engine installed on the Airframe with an Engine. Lessee shall,
without further demand, forthwith pay to Lessor an amount equal to any unpaid
Rent due and payable for all periods up to and including the Basic Rent Date
following the date on which Lessor has declared this Lease to be in default,
plus, as liquidated damages for loss of a bargain and not as a penalty, an
amount equal to the Casualty Value of the Aircraft, computed as of the Basic
Rent Date immediately following the date on which Lessor has declared this Lease
to be in default (plus all costs, charges and expenses including, legal fees and
disbursements incurred by Lessor by reason of the occurrence of any Event of
Default or the exercise of any of Lessor's remedies with respect thereto or
otherwise).
Following the return of the Aircraft to Lessor pursuant to this
subparagraph (ii), Lessor shall proceed at its option to sell or otherwise
dispose of the Aircraft by public or private sale, with or without notice, and
without having the Aircraft present at the place of sale and in such manner as
it shall deem appropriate, provided that Lessor, if it so elects, may purchase
the Aircraft at such sale for a price not less than the highest bona fide bid
given by a Person unrelated to Lessee. Lessee waives all its rights under laws
governing such sale to the extent permitted by law. Lessor may apply any deposit
or other cash collateral or sale or remarketing proceeds of the Aircraft at any
time to reduce any amounts due to Lessor. Notwithstanding the foregoing, Lessor
may at its option and in its sole discretion keep idle, lease, or use or operate
all or part of the Aircraft without any liability
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whatsoever and may use Lessee's premises for storage pending lease or sale or
for holding a sale without liability for rent or costs or any other matter
whatsoever. The net proceeds of such sale or lease as provided above shall be
applied by Lessor (x) first, to pay all costs, charges and expenses, including
the cost of discharging all Liens, on the Aircraft and all legal fees and
disbursements incurred by Lessor as a result of the Event of Default and/or the
exercise of its remedies with respect thereto, (y) second, to pay to Lessor an
amount equal to any unpaid Rent due and payable and the Casualty Value, to the
extent not previously paid and (z) third, to reimburse Lessee for the Casualty
Value to the extent paid by Lessee as liquidated damages. Lessor shall retain
any surplus remaining thereafter. To the extent that all Rent then due and
payable with respect to the Aircraft and the Casualty Value have not been
previously paid, Lessee shall forthwith pay upon demand to Lessor the sum of
(AA) the amount by which (1) the sum of (aa) all Rent then due and payable with
respect to the Aircraft, (bb) the Casualty Value or portion thereof not
theretofore paid and (cc) the amount payable under clause (x) of the preceding
sentence exceeds (2) the net proceeds of the sale or lease of the Aircraft
actually received by the Lessor and (BB) interest at the Late Payment Rate on
the full amount of said Casualty Value and Rent then due and unpaid, computed
from the date such sums are due until the same are paid by Lessee. For purposes
of computing liquidated damages under this subparagraph (ii) only, the proceeds
of any releasing of the Aircraft shall be determined by discounting to present
value, at the rate of twelve and one-half percent (12.5%) per annum, the
periodic rentals which are payable to Lessor pursuant to such re-lease, up to
and including the expiration of the term of any such re-lease.
If any Default or Event of Default occurs or if Lessee fails to perform or
comply with any of its agreements contained herein, Lessor shall have the right,
but shall not be obligated, to effect such performance or compliance and the
amount of any out-of-pocket expenses and other reasonable expenses of Lessor
incurred in connection with the performance of or compliance with such
agreements, as the case may be, together with interest thereon at the Late
Payment Rate, shall be payable by Lessee promptly upon demand, and any such
action by Lessor shall not be deemed a cure or waiver of any Default or Event of
Default hereunder.
(b) Lessee shall be liable for all costs, charges and expenses, including
legal fees and disbursements, incurred by Lessor by reason of the occurrence of
any Event of Default, the exercise of any of Lessor's rights or remedies with
respect thereto or otherwise.
(c) Lessee hereby waives, to the maximum extent now or hereafter permitted
by applicable law, for itself and for its successors or assigns any and all
rights Lessee or Lessee's successors or assigns may have following an Event of
Default under any bankruptcy, insolvency or similar laws, rules or regulations
with respect to the continued possession or use of the Aircraft or relief from
the payment of Rent therefor or otherwise with respect to this Lease. Rejection
of this Lease by any bankruptcy trustee or debtor-in-possession shall entitle
Lessor to the immediate return of the Aircraft and to liquidated damages
calculated in the manner provided for in subsection 14(a)(ii) hereof with
respect to an Event of Default.
(d) No right or remedy referred to herein is intended to be exclusive, but
each shall be cumulative and in addition to any other right or remedy referred
to above or otherwise available to Lessor at law or in equity, including,
without limitation, such rights and/or remedies as are provided for in the UCC.
No express or implied waiver by Lessor of any Default or Event of Default
hereunder shall in any way be, or be construed to be, a waiver of any future or
subsequent Default or Event of Default. The failure or delay of Lessor in
exercising any rights granted it hereunder upon the occurrence of any of the
contingencies set forth herein shall not constitute a waiver of any such right
upon the continuation or reoccurrence of any such contingencies or similar
contingencies, and any single or partial exercise of any particular right by
Lessor shall not exhaust the same or constitute a waiver of any other right
provided for or otherwise referred to herein. All remedies set forth herein
shall survive the expiration or other termination of this Lease for any reason
whatsoever.
(e) To the extent permitted by applicable law, Lessee hereby waives any
rights now or hereafter conferred by statute or otherwise which may require
Lessor to sell, lease or otherwise use the Aircraft in mitigation of Lessor's
damages as set
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forth in this Section or which may otherwise limit or modify any of Lessor's
rights or remedies under this Section. To the extent permitted by applicable
law, Lessee waives any and all rights and remedies conferred upon a lessee by
Section 2A-508 to 2A-522 (inclusive) of the UCC, including, without limitation,
any rights of Lessee (a) to cancel or repudiate this Lease or any supplement or
any document relating thereto, (b) to reject or revoke acceptance of the
Aircraft or any component thereof and (c) to recover from Lessor any general or
consequential damages, for any reason whatsoever.
SECTION 15. NOTICES.
All communications and notices provided for herein shall be in writing and
shall become effective (i) upon hand delivery, (ii) upon delivery by an
overnight delivery service, (iii) upon two (2) Business Days after being
deposited in the United States mail with proper postage for first-class mail
prepaid, sent by registered or certified mail, return receipt requested, and
addressed to Lessor or Lessee at their respective addresses set forth under the
signatures hereto or such other address as either party may hereafter designate
by written notice to the other or (iv) or when sent by telecopy (with customary
confirmation of receipt of such telecopy) on the Business Day when sent or upon
the next Business Day if sent on other than a Business Day.
SECTION 16. MISCELLANEOUS.
Any provision of this Lease which may be determined to be prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, Lessee hereby
waives any provision hereof prohibited or unenforceable in any respect.
This Lease may be executed in any number of counterparts and by the
different parties hereto on separate counterparts. The division of this Lease
into sections, the provision of a table of contests and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Lease. The actual dates of execution
hereof by the parties hereto are respectively the dates set forth under the
signatures hereto, however this Lease shall be effective as of the date first
above written.
In order to secure the prompt and full payment and performance as and when
due of any and all obligations and indebtedness of Lessee to Lessor, now
existing or hereafter created, of any kind whatsoever, Lessee hereby grants and
conveys to Lessor, a security interest in and lien on all of Lessee's right,
title and interest in and to this Lease and any present and future subleases,
management agreements, interchange agreements, charter agreements and any other
present and future agreements of any kind whatsoever relating to the Aircraft or
any part thereof and any and all proceeds of any and all of the foregoing,
including insurance, goods, accounts, chattel paper, documents, instruments,
general intangibles, investment property, deposit accounts, letter of credit
rights and supporting obligations, and all present and future books and records
relating to any of the foregoing, such Aircraft (including, without limitation,
all tapes, cards, computer programs, computer runs and computer data in the
possession or control of the Lessee, any computer service bureau or other third
party). In order to secure the prompt and full payment and performance as and
when due of any and all obligations and indebtedness of Lessee to Lessor, now
existing or hereafter created of any kind whatsoever, Lessee shall be deemed to
have hereby granted and conveyed, and for such express purposes Lessee hereby
grants and conveys to Lessor, a security interest in and lien on Lessee's
interest in the Aircraft, and all present and future parts, accessories,
accessions and attachments thereto, and all present and future replacements,
substitutions and exchanges (including trade-ins) therefor, together with
proceeds of all the foregoing, including goods, accounts chattel paper,
documents, instruments, general intangibles, investment property, deposit
accounts, letter of credit rights and supporting obligations, and all of
Lessee's rights in and to any of the foregoing. The security interests and lien
granted herein shall survive the termination or expiration of this Lease for any
- 12 -
reason whatsoever and shall remain in full force and effect until such time as
Lessee has no further obligations of any kind whatsoever under this Lease.
Lessee will promptly and duly execute and deliver to Lessor and any
assignee, mortgagee and/or lender of the Lessor, such other documents and
assurances, including, without limitation, such amendments to this Lease as may
be reasonably required by Lessor (and by any assignee, mortgagee and/or lender
of the Lessor), and UCC financing statements, continuation statements and
control agreements, and will take such further action as Lessor or any such
assignee, mortgagee and/or lender may from time to time request in order to
carry out more effectively the intent and purposes of this Lease and to
establish and protect the rights and remedies created or intended to be created
in favor of Lessor and of any such assignee, mortgagee and/or lender. Lessee
irrevocably authorizes Lessor to file and record and Lessee irrevocably appoints
Lessor (and any assignee, mortgagee and/or lender of the Lessor) its
attorney-in-fact to act in Lessee's name and on its behalf to make, execute,
deliver and file any instruments or documents (including, without limitation,
any UCC financing statements and/or UCC amendments) and to take any action as
Lessor (and any such assignee, mortgagee and/or lender) deems necessary or
appropriate to carry out the intent of this Lease or any agreements, documents
or instruments related thereto. Lessee hereby irrevocably ratifies the foregoing
authorization and appointment with regard to the execution, delivery and filing
of any instrument or documents (including, without limitation, any UCC financing
statements and/or UCC amendments) and the taking of any action as Lessor (and
any such assignee, mortgagee and/or lender of the Lessor) deems necessary or
appropriate to carry out the intent of this Lease or any agreements, documents
or instruments related thereto. To the extent appropriate or permissible under
applicable law, such appointment is coupled with an interest, shall be
irrevocable and shall terminate only upon payment in full of the obligations set
forth in this Lease and/or any agreements, documents or instruments related
thereto. Lessee hereby further covenants and agrees that it shall not file any
corrective or termination statements with respect to any UCC financing
statements recorded by or for the benefit of Lessor with respect to the Aircraft
any other property or collateral related thereto or this Lease without Lessor's
prior written consent. Lessee hereby further agrees that any signature,
execution and delivery of any document or instrument may be satisfied, in
Lessor's sole discretion and to the extent permitted by the UCC, by
authentication of such document or instrument as a record within the meaning of
Article 9 of the UCC.
Time is of the essence in the payment and performance of all of Lessee's
obligations under the Lease. For purposes of 49 USC Section 44108 (c), Lessor
and Lessee intend, by virtue of the Lessor having countersigned and accepted the
Lease in Rhode Island and by virtue of this Lease being delivered for closing
purposes to Lessor's office in Annapolis Maryland, that this Lease has been
executed and delivered in Maryland. In all other respects, this Lease shall be
governed by, and construed in accordance with, the laws of the State of New
York, without giving effect to principles of conflicts of law or choice of law,
including all matters of construction, validity and performance. Lessee hereby
irrevocably consents and agrees that any legal action, suit or proceeding
arising out of or in any way in connection with this Lease may be instituted or
brought in the courts of the State of New York or the United States District
Court for the Southern District of New York, as Lessor may elect, and by
execution and delivery of this Lease, Lessee hereby irrevocably accepts and
submits to, for itself and in respect of its property, generally and
unconditionally, the non-exclusive jurisdiction of any such court, and to all
proceedings in such courts. To the extent permitted by applicable law, this
Lease shall be deemed a "finance lease" under Section 2A-103(g) of the UCC.
LESSEE ACKNOWLEDGES AND AGREES THAT THIS LEASE IS A COMMERCIAL TRANSACTION.
LESSEE ALSO HEREBY KNOWINGLY AND FREELY WAIVES ALL RIGHTS TO TRIAL BY JURY IN
ANY LITIGATION ARISING HEREFROM OR IN RELATION HERETO.
SECTION 17. AMENDMENTS.
This Lease, and each related instrument, document, agreement and
certificate, collectively constitute, and are intended to collectively
constitute, the complete and exclusive statement of the terms of the agreement
between Lessor and Lessee with respect to the purchase and leasing of the
Aircraft. The Lease cancels and supersedes any and all prior or contemporaneous
oral or written understandings, memoranda, negotiations, communications and
agreements with respect thereto including, without limitation, any proposal
letter, commitment letter and/or term
- 13 -
sheet delivered to the Lessee by Lessor, unless, with respect to any such
written materials only, any term and/or condition thereof expressly supersedes
any term and/or condition of this Lease.
The execution hereof on behalf of Lessee and Lessor shall be deemed to
constitute the acceptance by Lessee and Lessor of the terms and conditions of
Exhibit A hereto and each and every Addendum set forth hereto as if each of such
Exhibit A and Addendum was separately and individually executed on behalf of
such party hereto.
NO TERM OR PROVISION OF THIS LEASE MAY BE AMENDED, ALTERED, WAIVED,
DISCHARGED OR TERMINATED ORALLY, EXCEPT IN A WRITING SIGNED BY A DULY AUTHORIZED
OFFICER OF THE PARTY AGAINST WHOM THE ENFORCEMENT OF THE AMENDMENT, ALTERATION,
WAIVER, DISCHARGE OR TERMINATION IS SOUGHT.
-----------------
LESSEE'S INITIALS
SECTION 18. TRUTH IN LEASING.
THE AIRCRAFT, AS EQUIPMENT, BECAME SUBJECT TO THE MAINTENANCE REQUIREMENTS
OF PARTS 91 AND/OR 135, AS APPLICABLE, OF THE FEDERAL AVIATION REGULATIONS
("FARS") UPON THE REGISTRATION OF THE AIRCRAFT WITH THE FAA. LESSEE CERTIFIES
THAT DURING THE 12 MONTHS (OR PORTION THEREOF DURING WHICH THE AIRCRAFT HAS BEEN
SUBJECT TO U.S. REGISTRATION) PRECEDING THE EXECUTION OF THIS LEASE, THE
AIRCRAFT HAS BEEN MAINTAINED AND INSPECTED UNDER PARTS 91 AND/OR 135, AS
APPLICABLE, OF THE FARS. LESSEE CERTIFIES THAT THE AIRCRAFT WILL BE MAINTAINED
AND INSPECTED UNDER PARTS 91 AND/OR 135, AS APPLICABLE, OF THE FARS FOR
OPERATIONS TO BE CONDUCTED UNDER THE LEASE. UPON EXECUTION OF THIS LEASE, AND
DURING THE TERM HEREOF, THE LESSEE, WHOSE NAME AND ADDRESS ARE SET FORTH
IMMEDIATELY BELOW, ACTING BY AND THROUGH THE SIGNATORY HERETO, WHO EXECUTES THIS
SECTION SOLELY IN HIS CAPACITY OF THE LESSEE SET FORTH BELOW HIS SIGNATURE,
CERTIFIES THAT LESSEE SHALL BE RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE
AIRCRAFT UNDER THE LEASE (WHILE IT HAS POSSESSION OF THE AIRCRAFT), UNLESS THE
AIRCRAFT IS SUBLEASED TO AN AIR CARRIER OR AIR TAXI OPERATOR CERTIFICATED UNDER
PART 121 OR PART 135, RESPECTIVELY, OF THE FARS IF AND TO THE EXTENT SUCH
SUBLEASE IS PERMITTED HEREUNDER. THE LESSEE FURTHER CERTIFIES THAT IT
UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FARS, PROVIDED
HOWEVER, THAT THE LESSEE SHALL NOT BE DEEMED TO BE RESPONSIBLE FOR THE
OPERATIONAL CONTROL OF THE AIRCRAFT FOR SO LONG AS THE AIRCRAFT IS IN POSSESSION
OF ANY SUBLESSEE THAT IS CERTIFICATED UNDER PART 121 OR PART 135 OF THE FARS IF
AND TO THE EXTENT SUCH SUBLEASE IS PERMITTED HEREUNDER. AN EXPLANATION OF
FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FARS CAN BE OBTAINED FROM
THE NEAREST FEDERAL AVIATION FLIGHT STANDARD DISTRICT OFFICE, GENERAL AVIATION
DISTRICT OFFICE OR AIR CARRIER DISTRICT OFFICE.
IN WITNESS WHEREOF, the parties hereto have caused the Lease to be duly
executed by their respective officers thereunto duly authorized.
Lessor: Lessee:
SOUTHWEST CARTAGE, INC. ELITE FLIGHT SOLUTIONS, INC.
By: By:
---------------------------- -----------------------------
Title: Title:
------------------------- --------------------------
Print Name: Print Name:
-------------------- ---------------------
Date: August , 2003 Date: August , 2003
--- ---
Address: c/o AVPRO, Inc. Address: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
This is Counterpart No. __ of a total of 3 counterparts. Only Counterpart No. 1
shall be considered chattel paper for purposes of the Uniform Commercial Code
and a security interest may be perfected only by possession of Counterpart
No. 1.
- 14 -
EXHIBIT A
DEFINITIONS
(a) All References in the Lease to designated Sections and other
subdivisions are to such designated Sections and other subdivisions only, and
the words "HEREIN," "HEREOF" and "HEREUNDER" and other words of similar import
refer to the Lease as whole and not to any particular Section or other
subdivision.
(b) Except as otherwise indicated, all the agreements and instruments
defined herein or in the Lease shall mean such agreements and instruments as the
same may from time to time be supplemented or amended, or as the terms thereof
may be waived or modified to the extent permitted by, and in accordance with,
the terms thereof.
(c) The terms defined herein and in the Lease shall, for purposes of the
Lease and all Lease Supplements, Schedules and Exhibits thereto, have the
meanings assigned to them and shall include the plural as well as the singular
as the context requires.
(d) The following terms shall have the following meanings for all purposes
of the Lease:
BASIC RENT DATE, EXPIRATION DATE, FIRST BASIC RENT DATE, LAST BASIC RENT
DATE, PRIMARY HANGAR LOCATION, AND RENT COMMENCEMENT DATE shall have the
meanings set forth in Schedules 2 and 2-A to Lease Supplement No. 1 to the
Lease.
ABATEMENTS shall have the meaning set forth in Section 7 of the Lease.
ACCEPTANCE DATE shall mean the date (which date shall be no later than the
date designated as the "Last Acceptance Date" on Schedule No. 2 to Lease
Supplement No. 1) on which Lessee irrevocably and unconditionally accepts the
Aircraft for lease under the Lease as evidenced by the execution and delivery of
Lease Supplement No. 1 relating thereto dated such date.
ADDITIONS shall have the meaning set forth in the Maintenance and Return
Addendum hereto.
ADMINISTRATIVE CHARGE shall mean an amount equal to five percent (5%) of
the amount payable to which such charge applies.
ALTERATIONS shall have the meaning set forth in the Maintenance and Return
Addendum hereto.
AIRCRAFT shall mean (i) the Airframe, (ii) the Engines, and (iii) to the
extent applicable, the Records.
AIRFRAME shall mean (i) the Aircraft described in Schedule No. 1 to Lease
Supplement No. 1, and shall not include the Engines and (ii) any and all Parts
from time to time incorporated in, installed on or attached to such Aircraft and
any and all Parts removed therefrom so long as title thereto shall remain vested
in Lessor in accordance with the applicable terms of this Lease after removal
from the Aircraft.
ASSIGNEE shall have the meaning set forth in Section 12 of the Lease.
BASIC RENT shall have the meaning set forth in Section 3 of the Lease.
BUSINESS DAY shall mean any day other than a Saturday, Sunday or other day
on which banks located in Providence, Rhode Island are closed or are authorized
to close.
CASUALTY VALUE for any Basic Rent Date shall be the amount equal to that
portion of the Lessor's Cost remaining due and outstanding hereunder together
with all other sums then due and outstanding under the Lease.
CHARTER OPERATOR shall have the meaning set forth in Section 12 of the
Lease.
- 15 -
CLAIMS shall have the meaning set forth in Section 11 of the Lease.
CLOSING DOCUMENTS shall mean the documents identified as such on Lease
Supplement No. 2 and such other documents as Lessor shall consider necessary or
advisable in order to convey to Lessor title to the Aircraft as contemplated
under the Lease, which documents shall be in form and substance satisfactory to
Lessor.
DEFAULT shall mean an event or circumstance that, after the giving of
notice or lapse of time, or both, would become an Event of Default.
END OF TERM PAYMENT shall have the meaning set forth in Section 3 (e) of
the Lease.
ENGINE shall mean (i) each of the engines and, if applicable, the auxiliary
power units described and listed by manufacturer's serial numbers in Schedule
No. 1 to Lease Supplement No. 1 and currently installed on the Airframe covered
by such Lease Supplement whether or not thereafter installed on such Airframe or
any other airframe from time to time; (ii) any engine and/or auxiliary power
unit which may from time to time be substituted, pursuant to the applicable
terms of this Lease, for an Engine leased hereunder and (iii) in each case set
forth in clauses (i) and (ii) hereof, with any and all Parts incorporated in or
installed on or attached to such Engine, engine and/or auxiliary power unit or
any and all Parts removed therefrom so long as Lessor shall retain an interest
therein in accordance with the applicable terms of this Lease after removal from
such Engine. The term "ENGINES" means, as of any date of determination, all
Engines leased hereunder.
EVENT OF DEFAULT shall have the meaning set forth in Section 13 of the
Lease.
EVENT OF LOSS with respect to the Aircraft, the Airframe or any Engine
shall mean any of the following events with respect to such property (i) loss of
such property or the use thereof due to theft, disappearance, destruction,
damage beyond repair or rendition of such property permanently unfit for normal
use for any reason whatsoever; (ii) any damage to such property which results in
an insurance settlement with respect to such property on the basis of a total
loss or constructive total loss; (iii) the condemnation, confiscation or seizure
of, or requisition of title to or use of, such property by the act of any
government (foreign or domestic) or of any state or local authority or any
instrumentality or agency of the foregoing ("REQUISITION OF USE"); (iv) as a
result of any rule, regulation, order or other action by any government (foreign
or domestic) or governmental body (including, without limitation, the FAA or any
similar foreign governmental body) having jurisdiction, the use of such property
shall have been prohibited, or such property shall have been declared unfit for
use, for a period of six (6) consecutive months, unless Lessee, prior to the
expiration of six-month period, shall have undertaken and, in the opinion of the
Lessor, shall be diligently carrying forward all steps which are necessary or
desirable to permit the normal use of such property by Lessee or, in any event,
if use shall have been prohibited, or such property shall have been declared
unfit for use, for a period of twelve (12) consecutive months; (v) with respect
to an Engine, the removal thereof from the Airframe for a period of six (6)
consecutive months or longer, whether or not such Engine is operational or (vi)
an Engine is returned to the Manufacturer, other than for modification in the
event of patent infringement or for repair or replacement (any such return being
herein referred to as a "RETURN TO MANUFACTURER"). The date of such Event of
Loss shall be the date of such theft, disappearance, destruction, damage,
Requisition of Use, prohibition, unfitness for use for the stated period,
removal for the stated period or Return to Manufacturer. An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if an Event of Loss
occurs with respect to the Airframe. An Event of Loss with respect to any Engine
shall not, without loss of the Airframe, be deemed an Event of Loss with respect
to the Aircraft.
FAA shall mean the United States Federal Aviation Administration and/or the
Administrator of the Federal Aviation Administration and the Department of
Transportation, or any person, governmental department, bureau, authority,
commission or agency succeeding the functions of any of the foregoing.
FAA COUNSEL shall mean Messrs. Daugherty, Fowler, Peregrin & ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other counsel
as Lessor may designate.
- 16 -
IMPOSITIONS shall have the meaning set forth in Section 8 of the Lease.
INDEMNITEE shall mean each of Lessor, its successors and assigns and its
affiliates, subsidiaries, officers, directors, stockholders, members, employees,
servants and agents of Lessor.
LATE PAYMENT RATE shall mean the lesser of a rate equal to 1.5% per month
or the highest rate permitted by applicable law. The Late Payment Rate shall be
computed on the basis of a 360-day year and a 30-day month.
LEASE SUPPLEMENT shall mean a supplement to the Lease to be entered into as
of the Acceptance Date by Lessor and Lessee, which supplement shall be
substantially in the form as attached to the Lease and identified as either
Lease Supplement No. 1 or Lease Supplement No. 2 both of which are attached to
the Lease and made a part thereof.
LESSOR'S COST shall have the meaning set forth in Schedule No. 2 to Lease
Supplement No. 1 to the Lease.
LESSOR'S LIENS shall mean any Lien on the Aircraft arising as a result of
(1) claims against or affecting Lessor not related to the Lease or the
transactions contemplated thereby, (2) acts or omissions of Lessor not
contemplated or permitted under the Lease and/or the documents contemplated
thereby, (3) Impositions imposed against Lessor that are not to be indemnified
by Lessee pursuant to terms of the Lease or the documents contemplated thereby
and/or (4) claims against Lessor arising out of a transfer by Lessor of any
interest in the Aircraft, other than a transfer by Lessor pursuant to an Event
of Loss, to any Assignee, pursuant to the exercise of any remedy by Lessor or
pursuant to the exercise or non-exercise of any option by Lessee set forth in
the applicable Addendum hereto.
LIENS shall mean all liens, charges, security interests, and encumbrances
of every nature and description whatever, including, without limitation, liens,
charges, security interests and encumbrances with respect to Impositions, (other
than Lessor's Liens) and rights of third parties under management, pooling,
interchange, overhaul, repair or other similar agreements or arrangements.
MANUFACTURER shall mean the manufacturers identified on Schedule No. 1 to
Lease Supplement No. 1 to the Lease and their respective successors and assigns.
MSP CONTRACT shall mean that certain Honeywell MSP Gold Program Contract
No. 6101A service and maintenance contract or such other maintenance contracts
entered into from time to time by Lessee, in form and substance satisfactory to
Lessor, which provide for the maintenance and/or overhaul of the Engines.
PARTS shall mean all appliances, avionics, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than Additions or Engines), which may from time to time be incorporated
or installed in or attached to the Airframe or any Engine for so long as Lessor
shall retain an interest therein in accordance with the applicable terms of this
Lease.
PERMITTED LIENS shall mean (a) the respective rights of others under
agreements or arrangements to the extent expressly provided and permitted by the
terms of Section 12 of the Lease, (b) Lessor's Liens and (c) Liens for taxes
either not yet due or being contested by Lessee in good faith and inchoate
materialmen's, mechanic's, workmen's, repairmen's, employee's or other like
Liens arising in the ordinary course of business of Lessee for sums not yet
delinquent or being contested in good faith (and for the payment of which
adequate assurances and/or security have, in Lessor's sole judgment, been
provided to Lessor) with due diligence and by appropriate proceedings, if
counsel for Lessor shall have determined in its sole opinion that the nonpayment
of any such tax or Lien or the contest of any such payment in such proceedings
does not and will not adversely affect the title, property or rights of Lessor.
- 17 -
PERSON shall mean any individual, partnership, corporation, limited
liability company, trust, association, joint venture, joint stock company, or
non-incorporated organization or government or any department or agency thereof,
or any other entity of any kind whatsoever.
RECORDS shall mean any and all logs, manuals, certificates and date and
inspection, modification, maintenance, engineering, technical and overhaul
records (including all computerized data, records and materials of any kind
whatsoever) with respect to the Aircraft, including, without limitation, all
records required to be maintained by the FAA or any other governmental agency or
authority having jurisdiction with respect to the Aircraft or any Manufacturer
of the Aircraft (or any part thereof) with respect to the enforcement of
warranties or otherwise, which Records shall be at all times the property of the
Lessor after the Acceptance Date.
RENT shall have the meaning set forth in Section 3 of the Lease.
REQUISITION OF USE shall have the meaning set forth in the Event of Loss
definition contained herein.
RETURN TO MANUFACTURER shall have the meaning set forth in the Event of
Loss definition contained herein.
SUPPLEMENTAL RENT shall have the meaning set forth in Section 3 of the
Lease.
TERM shall mean the number of months set forth on Schedule No. 2 to Lease
Supplement No. 1 together with the period, if any, from and including the
Acceptance Date.
UCC shall mean the Uniform Commercial Code as in effect in the applicable
jurisdiction.
- 18 -
LEASE SUPPLEMENT NO. 1
(Acceptance Certificate)
AIRCRAFT LEASE dated as of August ___, 2003, (the "LEASE") by and between
SOUTHWEST CARTAGE, INC., as lessor ("LESSOR"), and ELITE FLIGHT SOLUTIONS, INC.,
as lessee ("LESSEE").
(a) THE AIRCRAFT.
Lessee hereby acknowledges, agrees and certifies that the Aircraft as set
forth and described in Schedule No. 1 hereto is in Lessee's possession, has been
inspected by Lessee to its complete satisfaction, has been found to be in good
working order, repair and condition and fully equipped to operate as required
under applicable law for its purpose, is of a size, design, capacity and
manufacture selected by Lessee and suitable for Lessee's purposes, and is, as of
the date set forth below, unconditionally, irrevocably and fully accepted by
Lessee for lease under the Lease. Lessee hereby further unconditionally and
irrevocably reaffirms its acknowledgments and agreements in the Lease. All
capitalized terms used herein that are not otherwise defined herein shall have
the meanings given to such terms in the Lease.
(b) REPRESENTATIONS BY LESSEE.
Lessee hereby represents and warrants to Lessor that on the date hereof:
(1) The representations and warranties of Lessee set forth in the Lease and
all certificates and opinions delivered in connection therewith were true and
correct in all respects when made and are true and correct as of the date
hereof, with the same force and effect as if the same had been made on this
date.
(2) Lessee has satisfied or complied with all conditions precedent and
requirements as set forth in the Lease and Lease Supplements which are required
to be or to have been satisfied or complied with on or prior to the date
thereof.
(3) No Default or Event of Default under the Lease has occurred and is
continuing on the date hereof.
(4) Lessee has obtained, and there are in full force and effect, such
insurance policies with respect to the Aircraft as are required to be obtained
under the terms of the Lease.
(5) Lessee has furnished no equipment for the Aircraft other than as stated
on Schedule No. 1 hereto or permitted as an Addition thereto pursuant to the
Lease.
(6) The facts, terms, information, description and costs set forth in the
attached Schedules ▇▇. ▇, ▇▇. ▇ and No. 2-A hereto are true, complete, accurate
and correct.
(7) Lessee has the form of business organization indicated in the caption
of this Lease and is duly organized and existing in good standing under the laws
of the state listed in the caption of this Lease. Lessee's exact legal name as
shown on its certificate or articles of incorporation or bylaws, or certificate
or articles of organization, each as amended as of the date of this Lease, is as
set forth in the caption of this Lease. Lessee shall not change its legal name
without thirty (30) days' prior written notice to Lessor. Lessee's state-issued
organizational identification number (if any) is as set forth in Schedule No. 2
to Lease Supplement No. 1; and if Lessee's organizational identification number
changes, or if Lessee currently has no such organizational identification
number, but is subsequently issued such a number, Lessee shall immediately
notify Lessor thereof. The chief executive offices and principal place of
business of Lessee is located at the address set forth in the first paragraph of
this Lease, and Lessee agrees to give Lessor thirty (30) days' prior written
notice of any relocation of said chief executive offices or principal place of
business from its present location.
Date of unconditional, irrevocable and final acceptance by Lessee:
August , 2003.
---
- 19 -
IN WITNESS WHEREOF, Lessee has caused this Lease Supplement No. 1 to be
duly executed by its officer thereunto duly authorized.
ELITE FLIGHT SOLUTIONS, INC.
By:
-----------------------
Title:
-----------------------
Date:
-----------------------
- 20 -
SCHEDULE NO. 1
TO
LEASE SUPPLEMENT NO. 1
DESCRIPTION OF AIRCRAFT
Cessna Citation III model 650 aircraft that consists of the following
components:
(a) Airframe bearing FAA Registration ▇▇▇▇ N650CB and manufacturer's serial
number 650-0084.
(b) Two (2) Honeywell TFE-731-3C-100S model engines bearing manufacturer's
serial numbers 87281 and 87284, (each of which has 750 or more rated takeoff
horsepower or the equivalent of such horsepower).
(c) Standard accessories and optional equipment and such other items fitted
or installed on the Aircraft and as may be more particularly described
hereinafter:
See SCHEDULE A that is attached hereto and made a part hereof.
(d) One (1) Turbomach Inflight Model T40C3A1 auxiliary power unit bearing
manufacturer's serial number E925041.
Manufacturer of Airframe: Cessna Aircraft Company
Manufacturer of Engines: Honeywell
- 21-
SCHEDULE A
----------
1985 CESSNA CITATION III MODEL 650
SERIAL NUMBER 650-0084 REGISTRATION N650CB
AIRFRAME: ENGINES: ▇▇▇▇▇▇▇ TFE-731-3C-100S
#1 #2
5,675 Total Hours 5,425 5,514 Hours Since New
5,137 Total Landings 2,296 2,385 Hours Since CORE
307 248 Hours Since MPI
4,927 4,991 Cycles Since New
ENGINES ENROLLED ON MSP GOLD PROGRAM APU: PATS INSTALLED TURBOMACH
(INFLIGHT)
PHASE I - V INSPECTION: ▇▇▇▇▇▇ AVIATION SEPT 2001 1,243 Hours Since New
PHASE I - IV INSPECTION: CESSNA NEWBURGH JULY 2002 2,731 Cycles Since New
PRE-PURCHASE INSPECTION: CESSNA WICHITA SEPT 2002
CESCOM MAINTENANCE
AVIONICS
DUAL SPERRY SPZ-650 FLIGHT DIRECTORS King KHF-950 HF w/SELCAL
Dual ▇▇▇▇▇▇▇ CTL-22 Comm's Dual AD-650A ADI's
Dual ▇▇▇▇▇▇▇ CTL-32 Navs Dual RD-650A HSI's
Dual ▇▇▇▇▇▇▇ DME-42 DME's Dual ▇▇▇▇▇▇▇ RMI-30
Dual ▇▇▇▇▇▇▇ CTL-62 ADF's HONEYWELL TCAS II
Dual ▇▇▇▇▇▇▇ CTL-92 Transponders ▇▇▇▇▇▇▇▇▇ 100 CVR
Sperry Primus 400 SL Color Radar WULFSBERG VI FLITEFONE
w/ DATA NAV III Honeywell ADC-800 Air Data Computer
GLOBAL GNS-XLS LONG RANGE NAV Sperry SPZ-650 Autopilot
FEATURES/OPTIONS
INCREASED GROSS WEIGHT (21,500 LBS.) 3M Stormscope (Series II)
Three Disc Brakes Dual 44 AMP Batteries
Sunstrand Air Cycle Machines Dual Davtron Clocks
WEMAC BOOST
INTERIOR
New fireblocked eight passenger Citation VII style executive interior featuring
six seats in a mid-cabin club configuration with a forward two-place side-facing
divan all upholstered in beige leathers. Two executive tables are located at the
club positions with two Slimline tables at both of the aft cabin forward facing
seats. The cabin features a soft beige ultraleather headliner and windowline
panels along with custom, hand tufted Elara patterned taupe carpeting. The
cabinetry is finished in new high gloss bronze ribbon mahogany throughout the
cabin. There is a full size forward left side deluxe refreshment center and a
forward right side closet. The lavatory features and aft vanity with closet and
the lavatory seat is belted for a ninth passenger. Interior refurbished in
January, 2003.
EXTERIOR
Overall Matterhorn White with Black Velvet and ▇▇▇▇▇▇ Gold accent stripes
New January, 2003
- 22 -
SCHEDULE NO. 2
TO
LEASE SUPPLEMENT NO. 1
FINANCIAL TERMS
Rent Commencement Date: August____, 2003
Term: 9 months commencing with the Rent
Commencement Date through and including
the Expiration Date
Basic Rent Dates: the ____ day of each and every calendar
month from and including the First
Basic Rent Date through and including
the Last Basic Rent Date
First Basic Rent Date: August ____, 2003
Last Basic Rent Date: April ____, 2004
Expiration Date: May ____, 2004
Primary Hangar Location: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
, ▇▇▇▇▇▇▇
------------
Lessee's Organizational
Identification Number
----------------------
Acceptance Date: August ____, 2003
Last Acceptance Date: August ____, 2003
Lessor's Cost: $3,850,000.00
- 23 -
SCHEDULE NO. 2-A
TO
LEASE SUPPLEMENT NO. 1
FINANCIAL TERMS (continued)
"BASIC RENT" Payments of Basic Rent shall be calculated as follows: On the First
Basic Rent Date, Lessee shall pay to Lessor the sum of $300,000.00 as and for a
repayment of the Lessor's Cost. On each of the succeeding four Basic Rent Dates,
Lessee shall pay to Lessor the sum of $100,000.00 as and for a repayment of the
Lessor's Cost. In addition to the foregoing payments, on each Basic Rent Date
hereunder, Lessee shall pay to Lessor an amount equal to interest at the Index
Rate on the then outstanding Lessor's Cost for the period to which the Basic
Rent payment corresponds.
For purposes hereof, the term "INDEX RATE" shall mean the "PRIME RATE" as
published in THE WALL STREET JOURNAL in effect on the 15th day of the month
preceding the Basic Rent Date for which Basic Rent is being calculated plus one
percent (1.00%) (or if THE WALL STREET JOURNAL is not published on such day, the
next preceding day on which THE WALL STREET JOURNAL is published). In the event
that THE WALL STREET JOURNAL is not published or does not report a Prime Rate
for seven consecutive Business Days, a comparable rate shall be selected by
Lessor in its reasonable discretion. The Index Rate shall be calculated on a per
annum basis and shall be calculated on the basis of a year of three hundred
sixty (360) days comprised of twelve (12) months of thirty (30) days each.
- 24 -
LEASE SUPPLEMENT NO. 2
(Closing Terms)
AIRCRAFT LEASE dated as of August ___, 2003, (the "LEASE") by and between
SOUTHWEST CARTAGE, INC., as lessor ("LESSOR"), and ELITE FLIGHT SOLUTIONS, INC.,
as lessee ("LESSEE"). All capitalized terms used herein that are not otherwise
defined herein shall have the meanings given to such terms in the Lease.
CLOSING DOCUMENTS:
On or prior to the Acceptance Date, Lessee has delivered or caused to be
delivered the following Closing Documents to Lessor:
1. A certificate or certificates, executed by the Lessee's secretary or
other authorized representative certifying: (A) that execution, delivery and
performance of this Lease and all ancillary documentation and the entrance by
Lessee into the transactions contemplated hereby and thereby have been
authorized and (B) the name(s) of the person(s) authorized to execute and
deliver such documents on behalf of Lessee together with specimen signature(s)
of such person.
2. A certificate of insurance as to the coverage required under the Lease
accompanied, if requested by Lessor, by the applicable policies and reports of
insurance brokers or underwriters pursuant thereto as to the conformity of such
coverage with such requirements.
3. Evidence that FAA Counsel has received in escrow: (A) the executed AC
Form 8050-1 Aircraft Registration Application (the "REGISTRATION APPLICATION")
(except for the pink copy which shall be available to be placed on the Aircraft
upon acceptance thereof) in the name of Lessee; (B) such other documents as are
necessary, in the opinion of Lessor's counsel and/or FAA Counsel to evidence and
perfect Lessor's interest in the Aircraft and (C) executed duplicates of the
Lease, all Riders hereto requiring separate execution, and Lease Supplements No.
1 and 2 executed in triplicate, all the foregoing being in proper form for
filing with the FAA.
4. UCC financing statements executed by Lessee with respect to the Aircraft
and the Collateral (and, where needed, assignment, release and/or termination
statements with respect to UCC financing statements of record evidencing an
interest in the Aircraft and/or Collateral) in all places which are, in Lessor's
opinion, necessary or appropriate to protect Lessor's interest therein.
5. That certain Consent to Lease and Assignment among Fleet Capital
Corporation, Lessor and Lessee, executed by Lessee and such other documents as
are reasonably required to effect the provisions of such agreement.
6. Such other documents, certificates and opinions, and evidence of such
other matters, as Lessor, Lessor's counsel or FAA Counsel may reasonably
request.
CONDITIONS SUBSEQUENT:
On or subsequent to the Acceptance Date, but not later than the date of the
Aircraft's first flight under the leasehold conveyed herein, Lessee shall
provide written confirmation to Lessor that copies of the Registration
Application and Standard Airworthiness Certificate (FAA Form AC 8100-2)
pertaining to the Aircraft have been properly placed on the Aircraft.
In addition, prior to the date of the Aircraft's first flight under the
Lease, Lessee shall provide Lessor with written confirmation that:
1. A copy of the Lease, including Lease Supplements No. 1 and No. 2, has
been properly placed on the Aircraft;
2. A copy of the Lease, including Lease Supplements No. 1 and No. 2
thereto, was mailed, within 24 hours following execution thereof, to the Flight
Standards Technical Division of the FAA; and
- 25 -
3. Lessee has notified the FAA (such notification to have been given by
facsimile transmission, telephone or in person to the FAA Flight Standards
District Office, General Aviation District Office nearest the airport where such
flight will originate) concerning the first flight of the Aircraft under this
Lease at least 48 hours prior to takeoff.
IN WITNESS WHEREOF, effective as of August ___, 2003 the parties hereto
have each caused this Lease Supplement No. 2 to be duly executed by their
respective officers, thereunto duly authorized.
SOUTHWEST CARTAGE, INC.
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
ELITE FLIGHT SOLUTIONS, INC.
By:
-------------------------
Name:
-------------------------
Title:
-------------------------
- 26 -
INSURANCE ADDENDUM ("INSURANCE ADDENDUM") to Aircraft Lease (MSN 650-0084)
dated as of August ___, 2003, (the "LEASE") by and between SOUTHWEST CARTAGE,
INC., as lessor ("LESSOR"), and ELITE FLIGHT SOLUTIONS, INC., as lessee
("LESSEE").
All capitalized terms used herein that are not otherwise defined herein
shall have the meanings given to such terms in the Lease. Except as set forth
herein, all of the terms and conditions of the Lease and any supplements,
schedules, addenda, exhibits or the like entered into pursuant to the Lease
remain in full force and effect. Execution of the Lease by Lessee and Lessor
shall be deemed to constitute execution and acceptance of the terms and
conditions hereof, whereupon this Insurance Addendum shall be deemed to be a
part of the Lease.
The following provisions are hereby incorporated into the Lease:
INSURANCE.
(a) AIRCRAFT LIABILITY AND PROPERTY DAMAGE INSURANCE. Lessee shall maintain
at its own cost and expense for the entire Term with insurers satisfactory to
Lessor, (i) comprehensive aircraft and general public liability insurance
against bodily injury and property damage claims including, without limitation,
contractual liability, premises damage, public liability, death and property
damage liability, public and passenger legal liability coverage in an amount not
less than $100,000,000.00 for each single occurrence and (ii) personal injury
liability in an amount not less than $25,000,000.00. Lessee shall also provide
worker's compensation insurance with all-states coverage for the Aircraft's crew
and maintenance personnel.
(b) INSURANCE AGAINST LOSS OR DAMAGE TO THE AIRCRAFT. Lessee shall maintain
at its own cost and expense for the entire Term with insurers satisfactory to
Lessor, all-risk ground and flight aircraft hull insurance covering the
Aircraft, including foreign object damage, fire and explosion coverage resulting
from a collision, cargo, environmental (limited to pollutants released because
of a crash or collision of the Aircraft or related to an emergency causing
abnormal operation of the Aircraft), damages resulting, from ingestion and
lightning and associated electrical damage and comparable insurance with respect
to any Engines or Parts while removed from the Aircraft, and with respect to any
engines or parts while temporarily installed on the Aircraft, provided that such
insurance shall at all times be in an amount not less than the Lessor's Cost of
the Aircraft (such amount determined at the Rent Commencement Date and at each
anniversary thereof for the next succeeding year throughout the Term). Lessee
shall maintain in effect hijacking (air piracy) insurance with respect to the
Aircraft in a face amount of not less than the Lessor's Cost, which shall be in
full force and effect worldwide throughout any geographical areas at any time
traversed by the Aircraft. Such insurance shall also include diminution in
value, war risk, governmental confiscation and expropriation and related
insurance.
(c) LESSOR AS ADDITIONAL INSURED; NOTICE. Any policies of insurance carried
in accordance with this Insurance Addendum and any policies taken out in
substitution or replacement of any such policies (i) shall be amended to name
Lessor as the owner of the Aircraft and Lessor and/or, at the request of Lessor,
Lessor's lender as additional insureds as their interests may appear, (ii) with
respect to insurance carried in accordance with paragraph (b) of this Insurance
Addendum covering the Aircraft, shall provide that any amount payable thereunder
which exceeds $100,000.00 in the aggregate shall be paid directly to Lessor
and/or, at the request of Lessor, Lessor's lender as loss payees and not to
Lessor and Lessee jointly (and, so long as no Event of Default has occurred,
such amounts shall be disbursed by Lessor to Lessee or other appropriate Persons
in payment of the costs actually incurred with respect to repairs made to the
Aircraft so as to restore it to the operating condition required by the
Maintenance Addendum, or shall be disbursed by Lessor as otherwise required by
the Lease), and that, provided no Default or Event of Default has occurred and
is continuing, any amount(s) of less than $100,000.00 in the aggregate shall be
paid to Lessee (and such amounts shall be applied by Lessee to pay the costs of
such repairs), (iii) shall provide for thirty (30) days written notice by such
insurer of cancellation, change, non-renewal or reduction and (iv) shall provide
that in respect of the interests of Lessor in such policies, the insurance shall
not be invalidated by any action or inaction of Lessee regardless of any breach
or violation of any warranties, declarations or conditions contained in such
policies by or binding upon Lessee. Each shall be primary insurance, not subject
to any co-
- 27 -
insurance clause and shall be without right of contribution from any other
insurance. Lessee shall arrange for appropriate certification as to the
satisfaction of the requirements set forth above in this Insurance Addendum to
be delivered to Lessor not later than the Acceptance Date by each such insurer
or underwriter therefor, which certification shall specifically acknowledge that
the insurance is in conformity with this Insurance Addendum. Notwithstanding the
foregoing, Lessee shall promptly provide Lessor with a copy of each policy of
insurance required hereunder if it so requests.
(d) REPORTS, ETC. Upon Lessor's request, Lessee shall furnish to Lessor a
report describing in reasonable detail the insurance then carried and maintained
on the Aircraft and certifying that such insurance complies with the terms
hereof and, if Lessor shall so request, a copy of each applicable policy. In the
event Lessee shall fail to maintain insurance as herein provided, Lessor may, at
its option, provide such insurance, and Lessee shall, upon demand, reimburse
Lessor for the cost thereof, together with interest at the Late Payment Rate
from the date of payment through the date of reimbursement.
(e) AGREED VALUE. Anything herein to the contrary notwithstanding, at all
times while the Aircraft is subject to this Lease, the insurance required
hereunder shall be for an amount on an "agreed value" basis not less than the
Lessor's Cost.
(f) NO RIGHT TO SELF-INSURE. Lessee shall not self-insure (by deductible,
premium adjustment, or risk retention arrangement of any kind) the insurance
required to be maintained hereunder. Lessee agrees to give Lessor prompt notice
of any damage to or loss of, the Aircraft, or any part thereof.
(g) ATTORNEY-IN FACT. Effective upon the occurrence of an Event of Default
or Default, Lessee irrevocably appoints Lessor (and any assignee, mortgagee
and/or lender of the Lessor) its attorney-in-fact to act in Lessee's name and on
its behalf to make, execute, deliver and file any instruments or documents,
settle, adjust, receive payment, make claim or proof of loss, endorse Lessee's
name on any checks, drafts or other instruments in payment of such claims and to
take any action as Lessor (and any such assignee, mortgagee and/or lender) deems
necessary or appropriate to carry out the intent of this Insurance Addendum or
any agreements, documents or instruments related thereto and to endorse Lessee's
name on any checks, drafts or other instruments in payment of claims. To the
extent appropriate or permissible under applicable law, such appointment is
coupled with an interest, shall be irrevocable and shall terminate only upon
payment in full of the obligations set forth in this Lease and/or any
agreements, documents or instruments related thereto.
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MAINTENANCE ADDENDUM ("MAINTENANCE ADDENDUM") to Aircraft Lease (MSN
650-0084) dated as of August ___, 2003, (the "LEASE") by and between SOUTHWEST
CARTAGE, INC., as lessor ("LESSOR"), and ELITE FLIGHT SOLUTIONS, INC., as lessee
("LESSEE").
All capitalized terms used herein that are not otherwise defined herein
shall have the meanings given to such terms in the Lease. Except as set forth
herein, all of the terms and conditions of the Lease and any supplements,
schedules, addenda, exhibits or the like entered into pursuant to the Lease
remain in full force and effect. Execution of the Lease by Lessee and Lessor
shall be deemed to constitute execution and acceptance of the terms and
conditions hereof, whereupon this Maintenance Addendum shall be deemed to be a
part of the Lease.
The following provisions are hereby incorporated into the Lease:
MAINTENANCE OF AIRCRAFT.
(a) MAINTENANCE AND OPERATION. During the Term, Lessee, at its own cost and
expense, shall (i) maintain, inspect, service, repair, overhaul and test the
Airframe and each Engine in accordance with FAA approved and Manufacturer's
recommended maintenance programs, including, without limitation, the MSP
Contract; (ii) maintain (in the English language) all Records and (iii) promptly
furnish to Lessor such information as may be required to enable Lessor to file
any reports required by any governmental authority as a result of Lessor's
ownership of the Aircraft. All maintenance procedures shall be performed in
accordance with all FAA and Manufacturer's standards and procedures by properly
trained, licensed, and certified maintenance sources and maintenance personnel
at a Cessna Citation Service Center utilizing replacement parts approved by the
FAA and the Manufacturer, so as to keep the Airframe and each Engine and Part in
good operating condition, ordinary wear and tear alone excepted, and to enable
the airworthiness certificate for the Aircraft to be continually maintained.
In the event any Engine is damaged or is being inspected or overhauled and
provided no Event of Default or Default has occurred and is continuing, Lessee,
at its option, may substitute another engine of the same make and model as the
Engine being repaired or overhauled provided such Engine is approved by the FAA
and the manufacturer of the Airframe for use on the Aircraft (any such
substitute engine being hereinafter referred to as a "LOANER ENGINE") during the
period of such repair or overhaul and provided further (x) installation of the
Loaner Engine is performed by an FAA and manufacturer certified mechanic with
respect to an aircraft of the type of the Aircraft, (y) the Loaner Engine is
removed and the repaired or overhauled original Engine is reinstalled on the
Airframe promptly upon completion of the repair or overhaul of the original
Engine but in no event later than the expiration, cancellation or earlier
termination of the Term and (z) the Loaner Engine is free and clear of all Liens
and is maintained in accordance herewith.
(b) ADDITIONS, ALTERATIONS AND REPLACEMENT PARTS. Lessee shall be entitled
from time to time during the Term to acquire and install on the Aircraft at
Lessee's own cost and expense (and Lessor hereby appoints Lessee to be Lessor's
agent for such purpose, so long as no Event of Default or Default has occurred
and is continuing), any additional accessory, device or equipment as may be
available at such time ("ADDITIONS") but only so long as such Additions (i) are
ancillary to the Aircraft; (ii) are not required to render the Aircraft complete
for its intended use by Lessee; (iii) will not impair the originally intended
function or use of the Aircraft or diminish the value of the same and shall
become subject to the interest of Lessor created by the Lease and (iv) can be
readily removed without causing material damage to the Aircraft. Any Addition
shall become subject to the interest of Lessor created by the Lease.
Any alteration or modification ("ALTERATIONS") with respect to the Aircraft
that may at any time during the Term be required to comply with any applicable
law or any governmental rule or regulation, including, without limitation, any
airworthiness directives, shall be made at the expense of Lessee.
Lessee, at its own cost and expense, will promptly replace all Parts which
may from time to time become worn out, lost, stolen, taken, destroyed, seized,
confiscated, requisitioned, damaged beyond repair or permanently rendered or
declared unfit for use for any reason whatsoever.
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Lessee shall repair all damage to the Aircraft resulting from the
installation and removal of Additions, Alterations and/or replacement parts so
as to restore the Aircraft to its condition prior to installation, ordinary wear
and tear excepted.
Alterations and/or replacement parts shall be deemed accessions, and title
thereto shall be immediately vested in Lessor without cost or expense to Lessor.
(c) AIRCRAFT MARKING. Lessee agrees, at its own cost and expense, to (i)
cause the Airframe and the Engines to be kept numbered with the identification
or serial number therefor as specified in Schedule No. 1 to Lease Supplement No.
1 hereof; (ii) prominently display on the Aircraft that "N" number, and only
that "N" number, specified in Schedule No. 1 to Lease Supplement No. 1 or such
other "N" number as has been approved in writing by the Lessor and duly recorded
with the FAA and (iii) notify Lessor in writing thirty (30) days prior to making
any change in the configuration, appearance or coloring of the Aircraft from the
time the Aircraft is accepted by Lessee hereunder (other than changes in
configuration mandated by the FAA or changes which are reasonably consistent
with the configuration, appearance and coloring of the Aircraft as of the
Acceptance Date) and in the event of any such change or modification of
configuration, coloring or appearance, (other than as permitted hereby) at the
request of Lessor to restore the Aircraft to the configuration, coloring and/or
appearance of the Aircraft as of the Acceptance Date or, at Lessor's option to
pay to Lessor an amount equal to the reasonable cost of such restoration.
(d) INSPECTIONS. Lessor shall have the right, but not the duty, to inspect
the Aircraft, any component thereof and/or the Records, at any reasonable time
and from time to time, wherever located, upon twenty four (24) hours prior
notice to Lessee. Upon request of Lessor, Lessee shall confirm to Lessor the
location of the Aircraft and shall, at any reasonable time and from time to
time, upon twenty four (24) hours prior notice to Lessee, make the Aircraft
and/or the Records available to Lessor for inspection.
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