AIRCRAFT TIME SHARING AGREEMENT
EXHIBIT 10.42
This Aircraft Time Sharing Agreement (this “Agreement”) is made effective as of December 15,
2011 (the “Effective Date”) by and between UDR, Inc., a Maryland corporation (the “Company”), and
Xxxxxx X. Xxxxxx (the “Executive”). The Company and Executive are hereinafter sometimes referred
to individually as “Party” and also collectively as the “Parties”.
RECITALS
WHEREAS, the Company owns and has the exclusive right to possess, use and operate the Raytheon
Hawker 4000 aircraft bearing manufacturer serial number RC-54 and United States FAA Registration
No. N837RE (the “Aircraft”); and
WHEREAS, the Company has entered into an Aircraft Management Agreement, dated as of September
20, 2011 between the Company and Executive Jet Management, Inc. (the “Aircraft Management
Agreement”), for Executive Jet Management, Inc. to provide a fully qualified flight crew acceptable
to and approved by the Company to operate the Aircraft; and
WHEREAS, the Executive is the Chief Executive Officer and President of the Company; and
WHEREAS, the Company and the Executive desire to lease the Aircraft and the flight crew from
time to time on a time sharing basis, as defined in Section 91.501(c) (1) of the Federal Aviation
Regulations (“FAR”).
NOW, THEREFORE, in consideration of the foregoing, and based on the mutual covenants and
conditions set forth herein, the Parties agree as follows:
1. Lease of Aircraft. Pursuant to and in accordance with the provisions of FAR
91.501(c)(1), the Company hereby agrees to lease the Aircraft from time to time to the Executive on
a time sharing, non-continuous and non-exclusive basis and the Executive hereby agrees to lease the
Aircraft from time to time from the Company on a time sharing, non-continuous and non-exclusive
basis, during the Term (as defined in Section 8) and subject to the terms and conditions herein
contained.
2. Delivery and Redelivery of Aircraft. Upon the request of the Executive, subject to
the availability of the Aircraft as determined by the Company in accordance with Section 3, the
Company shall make the Aircraft available to the Executive at such locations as the Executive may
reasonably request. The Executive acknowledges that the Company currently bases the Aircraft at
Centennial Airport, (KAPA) Englewood, Colorado (the “Home Base”). The repositioning, ferry or dead
head flights of the Aircraft required in connection with the Executive’s flights of the Aircraft
under this Agreement, including delivery and/or redelivery of the Aircraft to the Home Base or to
such other location as determined by the Company’s specific schedule of the Aircraft usage for its
intended business or as the Parties may otherwise agree, shall be deemed to be use of the Aircraft
by the Executive and at the Executive’s expense subject to the Rent (as defined in Section 4).
3. Availability, Scheduling and Use of Aircraft Flights. The Executive shall advise
the Company of his request for flight time and use of the Aircraft under this Agreement by giving
the Company advance notice by telephone and/or facsimile and/or electronic mail as far in advance
of any given flight as possible, and in any case, at least two (2) business days in advance of the
Executive’s planned departure (unless the Company agrees to a shorter notice in its sole
discretion). The Executive’s notice shall provide the customary information required by the
Company and its flight crew for each proposed flight, including the following: (i) proposed
departure point, (ii) destination, (iii) date and time of flight, (iv) the number and name of the
anticipated passengers, (v) the nature and extent of luggage and/or cargo to be carried, (vi) the
date and time of return flight, if any, and (vii) any other information concerning the proposed
flight that may be pertinent or required by the Company or the Company’s flight crew. The Company,
in its sole discretion, shall have final authority over the scheduling of the Aircraft and in the
event of a scheduling conflict, the Company’s plans and decisions shall control.
4. Rent. For each flight, including the repositioning, ferry or dead head flights set
forth under Section 2 above, conducted under this Agreement, the Executive shall pay to the Company
rent (the “Rent”) as may be set by the Company’s Board of Directors from time to time for those
flight expenses that may be charged in accordance with FAR § 91.501(d).
5. Rent Limitation. In the unlikely event that the valuation of a flight transporting
the Executive and/or his guests on board the Aircraft under this Agreement using the special
non-commercial flight valuation rule for a control employee determined under the base aircraft
valuation formula (also known as the Standard Industry Fare Level formula or SIFL), in accordance
with the applicable provisions of federal income tax regulations § 1.61-21(g) (“Non-Commercial
Flight Valuation Taxable Fringe Benefit”), with respect to such flight should exceed the amount of
the Rent chargeable for such flight, then such excess difference shall be imputed as taxable
compensation to the Executive includable in the Executive’s gross income in accordance with the
applicable provisions of the Internal Revenue Code of 1986, as amended, and Treasury Regulations
promulgated thereunder and correctly treated and documented for income tax and employment tax and
reporting purposes.
6. Federal Excise Tax on Transportation by Air. The Executive agrees and accepts that
the Executive shall be responsible for paying to the Company the federal excise tax under Section
4261 of the Internal Revenue Code on the Rent paid to the Company in accordance with Section 4.
7. Method of Payment. The Company will pay all expenses related to the operation of
the Aircraft when incurred, and will invoice the Executive for the applicable Rent on the last day
of the month in which any flight or flights for the account of the Executive occur.
8. Term and Termination. This Agreement shall be effective on the date set forth above
and shall remain in effect until December 15, 2014 or until terminated by either Party upon ten
(10) days prior written notice to the other Party (the “Term”); provided however this Agreement
shall automatically terminate upon the date that the Executive is no longer employed by the
Company.
9. Operational Control and Crew. With respect to each flight undertaken under this
Agreement, the Company shall have and retain operational control of the Aircraft as provided in the
applicable FAR (as defined in FAR §1.1 “operational control,” with respect to a flight means the
exercise of authority over initiating, conducting, or terminating a flight.); and, for federal tax
purposes, shall have and retain “possession, command and control” of the Aircraft. The Company
shall employ, pay for and provide to the Executive a qualified flight crew for each flight
undertaken under this Agreement.
10. Duties and Responsibilities of Crew. In accordance with applicable FAR, the
qualified flight crew provided by the Company will exercise all of its duties and responsibilities
in regard to the safety of each flight conducted hereunder. The Executive specifically agrees that
the flight crew, in its sole discretion, may terminate any flight, refuse to commence any flight,
or take other action which in the considered judgment of the pilot in command is necessitated by
considerations of safety. The pilot in command shall have final and complete authority to cancel
any flight for any reason or condition which in his or her judgment would compromise the safety of
the flight. No such action of the pilot in command shall create or support any liability for loss,
injury, damage or delay to the Executive or any other person. The Executive acknowledges and
agrees that the Company shall not be liable under any circumstances for delay or failure to furnish
the Aircraft and crew pursuant to this Agreement, except in the event of willful misconduct by the
Company.
11. Maintenance. The Company shall be solely responsible for securing maintenance,
preventive maintenance and required or otherwise necessary inspections on the Aircraft, and shall
take such requirements into account in scheduling the Aircraft. No period of maintenance,
preventative maintenance or inspection shall be delayed or postponed for the purpose of scheduling
the Aircraft, unless said maintenance or inspection can be safely conducted at a later time in
compliance with all applicable laws and regulations, and within the sound discretion of the pilot
in command.
12. Insurance.
(a) Insurance by Company. The Company, at its sole cost, shall maintain in effect
during the Term of this Agreement its present liability insurance covering public liability,
property damage, including passenger legal liability and its all risk hull and engine insurance.
The Company’s insurance shall be primary and without right of contribution from any other
insurance. The Company shall cause the Executive to be an additional named insured with respect to
the liability coverage.
(b) Further Insurance. The Company will provide such additional insurance coverage as
the Executive shall request or require, provided, however, that the cost of such additional
insurance shall be borne by the Executive.
13. Representations and Warranties.
(a) The Company hereby represents and warrants to the Executive the following:
(i) The Company has the full power, authority and legal right to execute, deliver and perform
the terms of this Agreement; and
(ii) The Company shall operate and maintain the Aircraft in a prudent and professional manner,
in accordance with the flight manual and all recommended manufacturer’s operating practices and
procedures, and in full compliance with all applicable federal, state or local rules and
regulations, and the provisions of the Company’s insurance policy.
(b) The Executive hereby represents and warrants that:
(i) He has the full power, authority and legal right to executive, deliver and perform
the terms of this Agreement;
(ii) He will use the Aircraft only for and on account of his own business or personal
use only, including the transportation of his family members, relatives, guest and business
associates, and will not use the Aircraft for the purpose of providing transportation of
passengers or cargo in air commerce for compensation or hire;
(iii) He will refrain from incurring any mechanics or other lien in connection with
inspection, preventative maintenance, maintenance or storage of the Aircraft, whether
permissible or impermissible under this Agreement, nor shall there be any attempt by
Executive to convey, mortgage, assign, lease or any way alienate the Aircraft or create any
kind of lien or security interest involving the Aircraft or do anything to take or fail to
take any action that might mature into such a lien or security interest attaching to the
Aircraft; and
(iv) During the Term of this Agreement, he will, and will cause any passengers in his
party to, abide by all such laws, governmental and airport orders, rules and regulations, as
shall from time to time be in effect relating in any way to the operation and use of the
Aircraft by a time sharing lessee.
14. Risk of Loss. The Company assumes and shall bear the entire risk of loss, theft,
confiscation, damage to, or destruction of the Aircraft. The Company shall release, indemnify,
defend and hold harmless the Executive and his heirs, executors and personal representatives from
and against any and all losses, liabilities, claims, judgments, damages, fines, penalties,
deficiencies and expenses (including, without limitation, reasonable attorneys fees and expenses)
incurred or suffered by the Executive on account of a claim or action made or instituted by a third
person arising out of or resulting from operations of the Aircraft hereunder and/or any services
provided by the Company to the Executive hereunder, except to the extent attributable to the gross
negligence or willful misconduct of the Executive or his guests on the Aircraft.
15. No Assignment. Neither this Agreement nor any Party’s interest herein shall be
assignable to any other party whatsoever. This Agreement shall inure to the benefit of and be
binding upon the Parties hereto, and their respective heirs, representatives and successors.
16. Entire Agreement. This Agreement constitutes the entire agreement between the
Parties pertaining to the subject matter contained of this Agreement and supersedes any prior or
contemporaneous agreements between the Parties with respect to the subject matter of this
Agreement. There are no representations, warranties, covenants, promises or undertakings, other
than those expressly set forth or referred to herein.
17. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Colorado.
18. Amendments. This Agreement may not be changed, altered, modified or amended,
except in writing signed by all Parties to this Agreement. This Agreement shall be binding upon the
Parties hereto and their respective successors and permitted assigns.
19. Counterparts. This Agreement may be executed in one or more counterparts, and by
the different Parties hereto in separate counterparts, each of which when executed shall be deemed
to be an original but all of which taken together shall constitute one and the same agreement.
20. Waiver. No purported waiver by any Party of any default by any other party of any
term or provision contained herein shall be deemed to be a waiver of such term or provision unless
the waiver is in writing and signed by the waiving Party. No such waiver shall in any event be
deemed a waiver of any subsequent default under the same or any other term or provision contained
herein.
21. Jointly Prepared. This Agreement is to be deemed to have been prepared jointly by
the Parties hereto, and any uncertainty or ambiguity existing herein, if any, shall not be
interpreted against any Party, but shall be interpreted according to the application of rules of
interpretation for arm’s-length agreements.
22. No Third Party Rights. Nothing herein expressed or implied is intended or shall be
construed to confer upon or give any person other than the Parties hereto and their successors or
assigns, any rights or remedies under or by reason of this Agreement.
23. No Joint Venture. Nothing contained in this Agreement shall be deemed or construed
by the Parties hereto or by any third person to create the relationship of principal and agent or
of partnership or of joint venture.
24. Survival. All representations, warranties, covenants and agreements of the Parties
contained in this Agreement, or in any instrument, certificate, exhibit, schedule or other writing
provided for in it, shall survive the Term of this Agreement.
25. TRUTH IN LEASING
THE COMPANY CERTIFIES THAT THE AIRCRAFT PRESENTLY COMPLIES WITH APPLICABLE FAA MAINTENANCE AND
INSPECTION REQUIREMENTS FOR OPERATION TO BE CONDUCTED UNDER THIS AGREEMENT AND THAT THE AIRCRAFT
HAS BEEN MAINTAINED AND INSPECTED FOR THE LAST 12 MONTHS AND IN THE FUTURE WILL BE MAINTAINED AND
INSPECTED UNDER PART 91 OF THE FEDERAL AVIATION REGULATIONS FOR OPERATIONS TO BE CONDUCTED UNDER
THIS AGREEMENT.
THE COMPANY CERTIFIES THAT THE COMPANY, AND NOT THE EXECUTIVE, IS RESPONSIBLE FOR OPERATION
CONTROL OF THE AIRCRAFT UNDER THIS AGREEMENT DURING THE TERM HEREOF AND THE COMPANY WILL BE THE
OPERATOR OF THE AIRCRAFT AS PROVIDED HEREIN.
AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FEDERAL AVIATION
REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS DISTRICT OFFICE, GENERAL AVIATION
DISTRICT OFFICE, OR AIR CARRIER DISTRICT OFFICE.
[Signatures on following page]
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the Effective Date.
| UDR, INC. |
||||
| By: | ||||
| Name: | Xxxxxx X. Xxxxxx | |||
| Title: | Senior Executive Vice President | |||
| XXXXXX X. XXXXXX | ||||
