AIRCRAFT LEASE EXHIBIT 10.20
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THIS LEASE is made as of April 1, 1999, between Ocean Air Charters, Inc., as
Trustee of the SJA 1&2, Ltd. Trust (the "Lessor"), and St. ▇▇▇▇ Knits, Inc.,.
(the "Lessee").
1. LEASE. Lessor leases to the Lessee the following described aircraft:
One Dassault-Brequet Falcon 50 Aircraft, Serial No. 080 and
▇▇▇▇▇▇▇ Engines Serial No. P76381, P76376 & P76212
("Aircraft")
2. TERM. The term of this lease shall be two (2) years, commencing on
April 1, 1999 and ending on March 31, 2001.
3. RENTAL. The Aircraft rental shall be at the rate of $93,000 per
month, plus any applicable state tax, payable to the Lessor on or before the
first day of each monthly period of the lease. All rental payments shall be paid
at the place where designated by the Lessor.
4. LESSEE COVENANTS AND AGREEMENTS.
(a) Conforming Use. Lessee covenants and agrees to use the Aircraft only
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for the purposes and in the manner set forth in any application for insurance
executed in connection with the leased Aircraft, to abide by and conform to, and
cause others to abide by and to, all present and future federal, state,
municipal, and other laws, ordinances, orders, rules, and regulations,
controlling or in any way affecting the operation, use, or occupancy of the
Aircraft or the use of any airport premises by the Aircraft.
(b) No Lien or Assignment. Lessee agrees to keep safely, and use
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carefully, the Aircraft, and not to sell, or attempt to sell, or assign or
dispose of the Aircraft, or of any interest therein, or of any part thereof, or
equipment necessary thereto, or suffer or permit any charge, lien, or
encumbrance of any nature upon the Aircraft, or any part thereof, or lend or
rent the same, or remove or permit the Aircraft to be removed from its
designated home airport for periods in excess of 30 days, and not to remove
permanently the Aircraft from its designated home airport without the Lessor's
prior written consent.
(c) Sublease. Upon approval of the Lessor, the Lessee may sublease the
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Aircraft, provided, however, the Aircraft is maintained in conformance with all
applicable rules and regulations pertaining to the use to which the Aircraft
shall be subjected.
(d) Taxes. Lessee shall pay all taxes, assessments, and charges imposed by
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any national, state, municipal, or other public or airport authority on the
Aircraft or on its use during the term of this lease and until redelivery of the
Aircraft to the Lessor; and to save the Lessor free and harmless therefrom, and
reimburse the Lessor on a pro rata basis for any such taxes or charges payable
subsequent to the term of this lease.
(e) Maintenance. Lessee shall maintain and keep the Aircraft and all its
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components in good order and repair, in accordance with the requirements of the
manufacturer and the Federal Aviation Agency or any other governmental authority
having jurisdiction, and within a reasonable time replace in or on the Aircraft
any and all parts, equipment, appliances, instruments, or accessories which may
be worn out, lost, destroyed, confiscated, or otherwise rendered unsatisfactory
or unavailable for use in or on the Aircraft. Such replacement shall be (1) in
good
operating condition and have a value, utility, and quality at least equal to
that which the property replaced originally had, and (2) at the time affixed to
the Aircraft and made subject to this lease, owned by the Lessee free and clear
of all liens and encumbrances, it being understood that the Lessee shall have
the same protection as the Lessor under the standard warranty clause of the
manufacturer of the Aircraft, the terms and provisions of said warranty being
incorporated herein; perform all major overhaul on the Aircraft, whenever deemed
necessary and as may be required by the manufacturer and/or the Federal Aviation
Agency or any other governmental authority during the term of this lease, and
all engine overhaul and inspection and maintenance service.
(f) Indemnification. Lessee shall be responsible and liable to the Lessor
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for, and indemnify the Lessor against, any and all damage to the Aircraft which
occurs in any manner from any cause or causes during the term of this lease or
until redelivery of the Aircraft to the Lessor, and to indemnify and hold Lessor
harmless from and against all claims, cost, expenses, damages, and liabilities,
including personal injury, death, or property damage claims arising or in any
manner occasioned by the operation or use of the Aircraft, during the term of
this lease or until redelivery of the Aircraft to the Lessor.
(g) Insurance. Lessee shall, at its own expense, keep the Aircraft covered
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by insurance in accordance with the following:
(1) Risk of Loss or Damage: With respect to the Aircraft and its
equipment, the insurance policy obtained in connection herewith shall be in
the joint names of Lessor and Lessee and shall insure the Aircraft and its
equipment against all risk of loss or damage or not less than the full
market value thereof, and the premiums therefor shall be paid by Lessee
unless otherwise provided herein. With respect to all other equipment,
Lessee shall keep the equipment insured against all risk of loss or damage
from every cause whatever for not less than the full replacement value
thereof, except that in the case of oil or gas equipment, the insurance, at
the election of Lessor, need not include fire and extended coverage on
equipment situated beneath the ground. Any such insurance shall be in form
and amount with companies approved by Lessor and shall, at the election of
Lessor, either be in the joint names of Lessor and Lessee or be for the
beneficial interest of Lessor, and Lessee shall pay the premiums therefor
and at the request of Lessor deliver said policies or duplicates thereof to
Lessor. The proceeds of any such insurance at the option of Lessor, shall
be applied (i) toward the replacement, restoration, or repair of the
Aircraft and its equipment or (ii) toward payment of the obligations of
Lessee hereunder.
(2) With respect to the Aircraft and its equipment, public liability
and property damage insurance shall be carried in the joint names of Lessor
and Lessee against any and all damages and liabilities arising out of,
connected with, or resulting from the possession, use, and operation of
such equipment, shall be in form and amount with companies approved by
Lessor and the premiums therefor shall be paid by Lessee unless otherwise
provided herein. With respect to all equipment other than the Aircraft,
Lessee at the election of Lessor shall carry public liability and property
damage insurance against any and all damages and liabilities arising out
of, connected with, or resulting from the possession, use, and operation of
such equipment. Any such insurance shall be in form and amount with
companies approved by Lessor and shall be in the joint names of Lessor and
Lessee, and Lessee shall pay the premiums therefor and at the request of
Lessor deliver said policies or duplicates thereof to Lessor.
With respect to all policies of insurance hereinabove required to be obtained by
Lessee that are not issued in the joint names of Lessor and Lessee, such
policies, at Lessor's election, shall effectively provide that the insurer in
such policies shall give Lessor 30 days' written notice before the policy in
question shall be altered or canceled. If within ten days following notice by
Lessor to Lessee, the Lessor has not received the insurance policies herein
required to be obtained by Lessee or has not received evidence of the payment by
Lessee of the premiums due on any of the policies of insurance required herein,
the Lessor may procure such insurance or pay such premiums and any sums so
expended by Lessor shall thereafter be reimbursed by Lessee to Lessor and shall
become additional rent under this lease and shall be payable in its entirety on
the next rental payment date or within 60 days, whichever event is sooner.
The Lessee hereby appoints Lessor as the Lessee's attorney-in-fact to make proof
of loss, and claim for, receive payment of, and execute or endorse all
documents, checks, or drafts for hull damage or return premium under the
insurance policies.
(h) Licensed pilotage. Lessee shall permit the Aircraft to be operated
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only by a currently certificated pilot having at least the minimum total pilot
hours required by the applicable insurance and regulations.
(i) Right of inspection. Lessee shall permit the Lessor, or Lessor's duly
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authorized agent or representative, to inspect the Aircraft at any reasonable
time, either on the land or aloft, and to furnish any information in respect to
the Aircraft and its use that the Lessor may reasonable request.
(j) Delivery upon termination. Lessee shall return, upon demand, at the
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expiration of the lease term, the Aircraft to the Lessor, at such place as may
be designated by the Lessor, in the same operating order, repair, condition, and
appearance as when received, excepting only for reasonable wear and tear, and
damage by any cause covered by collectible insurance.
(k) Further assurances. Lessee shall execute and deliver to the Lessor all
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additional or supplemental instruments or documents as the Lessor may request in
connection with the Aircraft or this lease.
5. ASSIGNMENT OF WARRANTY. The Lessor hereby assigns to the Lessee, for
and during the lease term, any warranty of the manufacturer, express or implied,
issued on or relating to the Aircraft, and hereby authorizes the Lessee to
obtain the customary service furnished by the manufacturer in connection with
any warranty, at Lessee's expenses. The Lessee acknowledges and agrees that the
Aircraft is of a size, design, capacity, and a manufacturer selected by the
Lessee and suitable for its purposes.
6. NO IMPLIED REPRESENTATIONS OR WARRANTIES. The parties acknowledge that
the Lessor is not a manufacturer or engaged in the sale or distribution of the
Aircraft. Lessor makes no representations, promises, statements, or warranties,
expressed or implied, with respect to the merchantability, suitability, or
fitness for purpose of the Aircraft or otherwise. Lessor shall not be liable to
the Lessee for any loss, claim, demand, liability, cost, damage, or expense of
any kind, caused, or alleged to be caused, directly, or indirectly, by the
Aircraft, or by any inadequacy thereof for any purpose, or by any defect
therein; or in the use of maintenance thereof, or any repairs, servicing, or
adjustments thereto, or any delay in providing, or failure to provide the same,
or any interruption or loss of service or use thereof, or any loss of business,
or any damage whatsoever and howsoever caused.
7. RISK OF LOSS. All risks of loss or damage of the Aircraft leased, from
whatever cause, are hereby assumed by the Lessee during the entire lease term of
the Aircraft, and if the Aircraft is damaged, and is capable of being repaired,
the Lessee shall have the option of either repairing same or replacing same, at
the Lessee's cost.
8. IRREVOCABILITY. This lease is irrevocable for its full term and until
the aggregate rentals have been paid by the Lessee. Rent shall not ▇▇▇▇▇ during
the lease term because the Lessee's right to possession of the Aircraft has
terminated, or for any other reason whatsoever.
9. LESSOR'S ASSUMPTION OF LESSEE'S OBLIGATIONS. If Lessee shall fail to
use, preserve, and maintain the Aircraft, discharge all taxes, liens, or
charges, pay all costs and expenses, or procure and maintain insurance, in the
manner above provided, the Lessor, at its option, may do so, and all such
advances by the Lessor shall be added to the unpaid balance of the rentals due
under this lease and shall be repayable by the Lessee to Lessor on demand,
together with interest thereon at the rate of 10 percent per annum, until the
unpaid balance shall have been repaid in full. The Lessor may enter upon any
premises where the Aircraft is located, for the purpose of inspection, and may
remove the Aircraft forthwith, without notice to Lessee, if, in the opinion of
the Lessor, the Aircraft is being improperly used or maintained.
10. REPOSSESSION UPON DEFAULT. If the Lessee shall fail to pay any rental
or any other amounts payable pursuant to this lease, when the same is due and
payable, or if the Lessee shall breach any other provision of this lease, or if
the Lessee becomes insolvent, or files a voluntary, or has filed against him an
involuntary, proceeding in bankruptcy for either discharge of indebtedness or
other protection from creditors or if a receiver is appointed for the Lessees's
property or an arrangement is made with or committee is formed for the Lessee's
creditors, then the Lessor, at its option, and in addition to and without
prejudice to any other remedies, may take possession of and remove, the
Aircraft, and all equipment, instruments, accessories, and repairs thereon,
which shall be considered a component part of the Aircraft, and in removing the
Aircraft, the Lessor may, if permitted by law, use any of the Lessee's licenses
in respect to the Aircraft, and/or the Lessor may terminate this lease. The
retaking of such possession, however, shall not constitute a termination of this
lease unless the Lessor, so notifies Lessee in writing. The Lessor, at its
option, may (a) lease the repossessed Aircraft, or any part thereof to any third
party upon such terms and conditions as Lessor may determine, or (b) sell the
Aircraft, or any part thereof, at public or private sale. The total proceeds,
less the Lessor's expenses incurred in connection therewith, including
attorneys' fees, of such sale or sales, shall be applied to the total unpaid
rental. Any deficiency thereafter shall be paid by the Lessee.
11. TIME OF ESSENCE. Time is of the essence of this lease.
12. NO PASSAGE OF TITLE. This agreement is a lease, and the Lessee does
not acquire hereby any right, title, or interest whatsoever, legal or equitable,
in the Aircraft or to the proceeds of the sale of the Aircraft except its
interests as the Lessee under this lease.
13. MISCELLANEOUS.
(a) The Lessor warrants that, if Lessee performs its obligations under
this lease, the Lessee shall peaceable and quietly hold, possess and use the
Aircraft during the entire lease term, free of any interference or hindrance.
(b) The relationship between the Lessor and Lessee is only that of Lessor
and Lessee. The Lessee shall never at any time during the term of this lease
for any purpose whatsoever be
or become the agent of the Lessor, and the Lessor shall not be responsible for
the acts or omissions of the Lessee or its agents.
(c) The Lessor's rights and remedies with respect to any of the terms and
conditions of this lease shall be cumulative and not exclusive, and shall be in
addition to all other rights and remedies available to Lessor.
(d) The Lessor's failure to strictly enforce any provisions of this lease
shall not be construed as a waiver thereof or as excusing the Lessee from future
performance.
14. SEVERABILITY. The invalidity of any portion of this lease shall not
affect the remaining valid portions thereof.
15. ENTIRE AGREEMENT. This lease constitutes the entire agreement between
the parties hereto, and any change or modification to this lease must be in
writing and signed by the parties hereto.
16. NOTICES. All notices or other documents under this lease shall be in
writing and delivered personally or mailed by certified mail, postage prepaid,
addressed to the parties at their last known addresses.
17. NON-WAIVER. No delay or failure by either party to exercise any right
under this lease, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right, unless otherwise expressly
provided herein.
18. HEADINGS. Headings in this lease are for convenience only and shall
not be used to interpret or construe its provisions.
19. GOVERNING LAW. This lease shall be construed in accordance with and
governed by the laws of the State of California.
20. COUNTERPARTS. This lease may be executed in two or more counterparts,
each of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
21. BINDING EFFECT. The provisions of this lease shall be binding upon
and inure to the benefit of both parties and their respective legal
representatives, successors, and assigns.
IN WITNESS WHEREOF the Lessee and Lessor have duly executed this lease on
LESSOR: LESSEE:
▇▇▇ ▇▇▇ ▇&▇, ▇▇▇. ▇▇▇▇▇ ▇▇. ▇▇▇▇ Knits, Inc.
By: Ocean Air Charters, Trustee By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
/CFO
By: /s/ ▇▇▇ ▇▇▇▇
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▇▇▇ ▇▇▇▇, President