AIRCRAFT LEASE AGREEMENT Effective March 1, 2006 Between Capitaline Advisors, LLC (“Lessor”) And US BioEnergy Corporation (“Lessee”) Regarding Beechcraft King Air B200 Manufacturer’s Serial No: BB-1711 FAA Registration Mark: N44KA
Exhibit 10.17
Effective March 1, 2006
Between
Capitaline Advisors, LLC (“Lessor”)
And
US BioEnergy Corporation (“Lessee”)
Regarding
Beechcraft King Air B200
Manufacturer’s Serial No: BB-1711
FAA Registration Xxxx: N44KA
THIS AIRCRAFT LEASE AGREEMENT (the “Agreement”) is made and entered into effective as of the
1st day of March, 2006, between, Capitaline Advisors, LLC a South Dakota limited
liability company, with its principal office in Brookings, South Dakota (“Lessor”); and US
BioEnergy Corporation, a South Dakota corporation, with its principal office in Brookings, South
Dakota, (“Lessee”).
WHEREAS, Lessor wishes to lease on an hourly basis its Beechcraft King Air B200,
Manufacturer’s Serial Number BB-1711, Federal Aviation Administration (“FAA”) Registration Xxxx
N44KA, and the appliances, communications equipment, accessories, instruments and other items of
equipment installed thereon (the “Aircraft’) to Lessee, and Lessee wishes to lease the Aircraft
from Lessor;
NOW, THEREFORE, in consideration of and subject to the terms and conditions xxxxx, Lessor and
Lessee agree as follows:
1. LEASE; TERM
(a) Effective Date. This Agreement is effective as of March 1, 2006.
(b) Lease Term. Lessee hereby agrees to lease the Aircraft on an hourly basis from
Lessor, and Lessor hereby agrees lo lease the Aircraft to Lessee, pursuant to the terns and
conditions in this Agreement. This Agreement shall commence on the first date written above and
continue in full force until terminated by either party upon 30 day’s prior written notice or
earlier pursuant to Section 7, below.
(c) Availability and Delivery. The Aircraft shall be available to Lessee, and shall
be scheduled for use, on an as-needed and first-come, first-serve basis. In order to schedule the
use of the Aircraft, Lessee shall contact Lessor and specify the dates and times use of the
Aircraft is requested. At such time, Lessor shall indicate whether or not the Aircraft is
available. Should the Aircraft not be available at the requested time, Lessor may indicate
alternative dates and times the Aircraft is available to Lessee. Lessee shall not have the right to
use the Aircraft for a period of time that would exceed 7 consecutive days without the prior
consent of Lessor.
2. USE OF AIRCRAFT
(a) Permitted Use. Notwithstanding anything herein to the contrary, during the times
the Aircraft is leased to Lessee:
(i) Dry Lease. The parties intend that this Agreement shall constitute a “dry”
operating lease. During each usage by Lessee, Lessee shall have possession, command, and
operational control over the Aircraft, aircrew and maintenance. “Operational control”
shall mean, consistent with 14 C.F.R. § 1.1 and FAA guidelines, the exercise of authority
over initiating, conducting, or terminating a flight. Lessee shall exercise complete control
over the phases of operation of the Aircraft requiring aviation expertise for all flights
under this Agreement.
(ii) Flight Crew. Lessee shall be solely responsible for supplying a flight
crew for Lessee’s operations. Lessee shall ensure that all flight crews (1) are FAA
certified and duly qualified to operate the Aircraft in accordance with all applicable laws
and regulations; and (2) meet the applicable requirements of Lessor’s insurance policies in
Section 8 of this Agreement.
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(iv) Pilot in Command. Lessor and Lessee acknowledge and agree that, contrary
provisions of Section 2 notwithstanding, (I) the pilot in command (“PIC”) of any flight, in
her or his sole discretion, my terminate the flight, refuse to commence the flight, or take
any other flight-related action which in her or his sole judgment is necessitated by
considerations of safety, (ii) the PIC of any flight shall have final and complete
authority to postpone or cancel the flight for any reason or condition which in his or her
judgment would compromise the safety of the flight, and (iii) no such action of the PIC
shall create or support any liability for loss, injury, damage, or delay to Lessor.
(v) Security Precautions. Lessee shall at all times use reasonable care and
diligence to maintain the security and safety of the Aircraft and to abide by applicable
security regulations and recommendations of the FAA, Department of Transportation, or local
airport authorities. Lessee shall secure or hangar the Aircraft at any time it is to be
unattended by Lessee or Lessee’s crew.
(b) Compliance with Laws. Lessee shall not use or cause or permit the Aircraft to be
used in any way inconsistent with state, federal or international law or the law of any place to
which the Aircraft may go, or contrary to any manufacturer’s operation manuals and instructions, or
in violation of any airworthiness certificate, license or registration. Lessee shall not use or
cause or permit the Aircraft to be used in any way that would endanger the registration or
airworthiness of the Aircraft.
(c) Compliance with Insurance. Lessee shall not operate the Aircraft or permit or
suffer the Aircraft to be operated in conflict with the terms of the insurance coverage pursuant to
Section 8 of this Agreement. Lessee shall abide by all geographical limitations of such insurance.
3. RENT, TAXES AND PAYMENTS
(a) Rent. As rent for the lease of the Aircraft, the Lessee shall pay to the Lessor
the amounts set forth in Schedule 1 (“Rent”). Lessee will pay Rent to Lessor no later than the
15th day of the calendar month for the rental activity in the preceding month.
(b) Taxes. Lessee shall be responsible for any taxes (other than those based on
Lessor’s income), including but not limited to sales, use, embarkation or passenger departure
taxes, custome duties, charges or levies of the United States, any state or local government or any
foreign government related to Lessee’s use, possession, or lease of the Aircraft (collectively
“taxes”). Except as otherwise specified in Schedule 1 or any applicable invoice, neither the Rent
nor any other payments to be made by Lessee under this Agreement includes the amount of any such
taxes which may be assessed or levied by any taxing jurisdictions as a result of the lease of the
Aircraft to Lessee, or the use of the Aircraft by Lessee. Lessee shall be responsible for, shall
indemnify and hold harmless Lessor against, and shall remit to Lessor all such Taxes together with
each payment of Rent at the time required by applicable taw.
(c) Operating Costs. Lessee shall be responsible for all expenses related to Lessee’s
use of the Aircraft, including, without limitation, all necessary ground and flight operations
support such as charts, forms, aircraft cleaning (interior and exterior), lavatory service,
deicing, catering, and aircraft stocks (i.e. newspapers, beverages, snacks), all fuel, oil, and
lubricants, and all crew hiring costs and crew expenses. Lessee shall pay all such expenses
directly unless otherwise agreed to in advance by Lessor. To the extent Lessor pays for such
expenses, Lessor shall invoice Lessee for the expenses in conjunction with the invoices for the
Rent and Lessee will reimburse Lessor in
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accordance with Section 3(a).
(d) Payments. All payments or reimbursements due by virtue of this Agreement shall be
made to the Lessor at such address or bank accounts as may be specified to Lessee by Lessor by
written notice from time to time.
4. TITLE AND SECURITY
(a) Title; No Liens. Title to the Aircraft and all equipment subject to this
Agreement is retained by Lessor at all times. Lessee may not pledge or encumber the Aircraft in any
manner whatsoever, nor permit any liens, other than liens arising by operation of law or liens
solely attributable to Lessor, to attach thereto, and Lessee shall promptly cause to be removed any
such lien which may be placed on the Aircraft as a result of Lessee’s action or inaction hereunder.
Except as set forth in the immediately subsequent paragraph (b), Lessor shall not permit any lien
or encumbrance of any kind whatsoever to be created or exist upon the Aircraft if such lien or
eucumbrance may or does interfere with Lessee’s quiet use and enjoyment of the Aircraft hereunder.
(b) Security Interests. In the event that this Agreement or the Aircraft are subject
to a security agreement between Lessor and its lender, all rights of Lessee under this Agreement
will be subordinate to the rights of under such a security agreement. To the extent, if any, that
this Agreement constitutes chattel paper under the UCC in connection with such a security
agreement, the original of this Agreement shall be delivered to the lender upon demand as sectary
for the obligation of Lessor.
5. REGISTRATION
Lessee undertakes that at all times under this Agreement it shall not do or allow to be done
anything whereby the registration of the Aircraft with the FAA may be forfeited or imperiled.
6, MAINTENANCE; COSTS OF OPERATION; NO ALTERATIONS
(a) Maintenance. Lessor shall pay for costs of any repairs or maintenance of the
Aircraft required during the term associated with Lessee’s use, movement and operation of the
Aircraft, including, without limitation, all service, repairs, tests, and maintenance necessary to
maintain the Aircraft in accordance with FAA regulations, as amended from time to time. Lessor
shall have no expense or liability for repair or maintenance delays and shall not be liable to
Lessee for any damage from loss of profit or loss of use of Aircraft, either before or after
delivery of Aircraft to Lessee.
(b) Aircraft Documents. Lessor shall maintain and preserve, or cause to be maintained
and preserved, in the English language, all Aircraft Documents required by the FAA, the Aircraft
manufacturer and the manufacturers of all component parts thereof, and in a current, accurate, and
complete manner and shall be available at all reasonable times for examination and inspection by
Lessee. For purposes of this Agreement, “Aircraft Documents” means all records and documents (I)
required by the applicable law or any manufacturer’s warranty or any applicable maintenance service
plan to be maintained with respect to the Aircraft (I1) customarily maintained with respect to
aircraft of the same category and class as the Aircraft, or (I11) otherwise associated with the
Aircraft, including without limitation, flight records, maintenance and inspection records,
modification and repair records, overhaul records, historical records, manuals, logbooks,
authorizations, and drawings.
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(c) No Alterations. Lessee shall not alter, modify, or make additions or improvements
to the Aircraft without the prior written permission of Lessor, and any such alterations,
modifications, additions or improvements shall immediately become the property of Lessor.
(d) Maior Maintenance Events. Notwithstanding anything to the contrary in this
Section 5, Lessee shall be entitled to reimbursement from Lessor for all amounts paid directly to
third parties, or may request that Lessor directly pay, any invoice received in connection with any
unusual, non-routine, or extraordinary maintenance or repairs, including, without limitation, costs
of engine overhauls and costs associated with routine schedule maintenance and inspections.
7. TERMINATION
(a) By Lessor. Lessor may immediately terminate this Agreement upon the occurrence of
any one of the following:
(i) In the event Lessee fails to pay Rent or other sums due under this
Agreement, and such failure is not corrected within 15 days after receipt by Lessee of
written notice by Lessor, or
(ii) In the event Lessee operates the Aircraft in a manner not permitted by Lessor’s
insurance or FAA rules or regulations, upon written notice; or
(iii) In the event Lessee fails to observe or fulfill any term, condition and/or
provision of this Agreement other than those specified in Sections 7(a)(i) or 7(a)(ii) and
such failure is not corrected within 30 days after receipt by Lessee of written notice from
Lessor.
(b) By Lessee. Lessee may immediately terminate this Agreement in the event Lessor
fails to observe or fulfill any term, condition and/or provision of this Agreement and such failure
is not corrected within 30 days after written notice by Lessee.
(c) Rights Upon Termination. Upon the termination of this Agreement, rights of the
Lessee as to the Aircraft pursuant to this Agreement shall immediately cease and terminate. If the
Lessor terminates this Agreement as provided in this Section 7, Lessee shall notwithstanding such
termination, be liable to the Lessor for any arrears of Rent or other amounts due under this
Agreement. The provisions of Sections 4 and 5 shall survive the termination of this Agreement.
8. INSURANCE AND INDEMNIFICATION
(a} Insurance. Lessor shall provide insurance coverage related to Lessee’s
possession, use, maintenance and operations of the Aircraift, under policies in form and substance
and with insurers reasonably satisfactory to Lessee, as follows:
(i) Liability. The policies will insure liability for personal injuries, death
or property damages, or any one or more of them, arising or occasioned in any manner
occasioned by the acts or omissions of Lessor, Lessee, or others with respect to the
custody, operation or use of or with respect to said Aircraft in an amount not less than
$10,000,000 per occurrence relative to the personal injuries and/or death, and
relative to the property damage of others, all set within a single limit of coverage.
Lessee shall be an additional insured on said policies.
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(ii) Hull Insurance. The policies will insure against the loss or damage from
any cause or causes to the Aircraft for not less than $1,800,000 unless a different
value is agreed upon in writing between Lessee and Lessor. The policies shall be for the
benefit of Lessor with Lessor named as the sole loss payee. Any policies insuring against
the loss or damage to the Aircraft will provide a waiver of subrogation in favor of Lessee.
Lessee shall be responsible for the amount of the deductible, if any, if the damage to said
Aircraft is incurred during Lessee’s use hereunder. Such deductible will not exceed
$5,000 in motion or $2,000 not in motion unless agreed upon in writing
between Lessee and Lessor. Such policies need not include coverage against war risks.
(iii) Conditions. The policies shall also specifically grant approval for
all Lessee’s pilots that meet the requirements of the policies, including, without
limitation, pilots approved by the insurer and pilots that meet the requirements of any
“open pilot warranty” under the policy. Such insurance under this Section 8 shall be
primary, without any right of contribution from Lessee or any insurance maintained by
Lessee. Lessor’s insurance shall provide that any cancellation or substantive change in
coverage shall not be effective as to Lessee without written notice to Lessee from Lessor’s
insurer at least 10 days for cancellation due to nonpayment, 7 days for cancellation due to
war risks, or otherwise 30 days for any other change or cancellation.
(iv) Certificates of Insurance. Lessor shall deliver to Lessee a certificate
of insurance upon executive of this Agreement, as well as additional certificates from
time-to-time as requested by Lessee, but not less often than annually. Such certificate
shall include evidence of premiums paid and all policy amendments or endorsements necessary
to satisfy the requirements of this Section 8.
(b) Indemnification by Lessee. Lessee agrees to indemnify, defend, and hold Lessor
and all other users of the Aircraft harmless from any and all fines, citations, forfeitures, or
penalties of any kind imposed by the FAA or any other governmental entity arising out of operation,
use, or possession of the Aircraft by Lessee during the term of this Agreement, except to the
extent arising from the negligence or willful misconduct by Lessor or other users.
(c) Indemnification by Lessor. Lessor agrees to indemnify, defend, and hold Lessee
harmless from any and all fines, citations, forfeitures, or penalties of any kind imposed by the
FAA or any other governmental entity arising out of the operation, use, or possession of the
Aircraft by Lessor or other users, except to the extent arising out of the negligence or willful
misconduct of Lessee.
9. REPRESENTATIONS AND WARRANTIES / DISCLAIMER
(a) By Lessor. Lessor represents and warrants to Lessee that Lessor has full
authority to enter into and fulfill this Agreement and has taken all steps and has done all acts
required by applicable law to permit Lessor to enter into and fulfill this Agreement, and upon
execution, this Agreement shall become the legal, valid and binding obligation of Lessor,
enforceable in accordance with its terms.
(b) By Lessee. Lessee represents and warrants to Lessor that:
(i) Lessee is not and shall not be bound by any other agreements, restrictions, or
obligations which do or would in any way interfere with or be inconsistent with or be
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violated by this Agreement, nor shall Lessee assume any such obligations or
restrictions, which do or would in any way interfere with or be inconsistent with or be
violated by this Agreement.
(ii) Lessee has full authority to enter into and fulfill this Agreement and has taken
all steps and has done all acts required by applicable law to permit Lessee to enter into
and fulfill this Agreement and that upon execution, this Agreement shall become the legal,
valid and binding obligation of Lessee, enforceable in accordance with its terms.
(c) Disclaimer; Limitation of Liability. EXCEPT AS EXPRESSLY STATED TO THE CONTRARY
HEREIN, THE AIRCRAFT IS BEING LEASED BY THE OWNER TO THE OPERATOR HEREUNDER ON A COMPLETELY “AS
IS”, “WHERE IS”, BASIS. THE WARRANTIES AND REPRESENTATIONS SET FORTH IN THIS AGREEMENT ARE
EXCLUSIVE AND IN LIEU OF, AND OWNER DISCLAIMS AND OPERATOR WAIVES, ALL OTHER REPRESENTATIONS OR
WARRANTIES OF EVERY KIND WHATSOEVER, WHETHER EXPRESS OR IMPLIED OR ARISING FROM A COURSE OF
PERFORMANCE OR DEALING OR USAGE OF TRADE, INCLUDING, WITHOUT LIMITATION, REPRESENTATIONS OF AND
WARRANTIES, WITH RESPECT TO THE AIRCRAFT, OF AIRWORTHINESS, VALUE, CONDITION, DESIGN,
MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION AND CONDITION, OPERATION, FITNESS FOR
A PARTICULAR USE, ABSENCE OF LATENT AND OTHER DEFECTS WHETHER OR NOT DISCOVERABLE, ABSENCE OF ANY
INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AND QUALITY OF MATERIALS OR WORKMANSHIP. IN NO
EVENT SHALL EITHER PARTY TO THIS GREEMENT BE LIABLE FOR SPECIAL, INDIRECT, INCIDENTAL OR
CONSEQUENTIAL DAMAGES OF ANY KIND WHATSOEVER, INCLUDING, WITHOUT LIMITATION, DAMAGES ARISING FROM
LOSS OF USE, LOSS OF REVENUE OR PROFIT, OR DIMINUTION IN VALUE OF THE AIRCRAFT.
10. NOTICES
All notices or other communications required under this Agreement shall be in writing and
shall be effective when delivered personally or deposited in the mail, postage prepaid, and
addressed to the parties at their respective addresses first written above, unless by such notice a
different party or address shall have been designated in writing.
11. MISCELLANEOUS
(a) Entire Agreement; Amendments. This Agreement constitutes the entire agreement of
the parties as of the date hereof and supersedes all prior or independent, oral or written
agreements, understandings, statements, representations, commitments, promises and warranties made
with respect to the subject matter of this Agreement. This Agreement may not be amended except in a
writing signed by all parties.
(b) Severability. Any provision of this Agreement which is 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
prohibitions or unenforceability in any jurisdiction. To the extent permitted by applicable law,
each of Lessor and Lessee hereby waives any provision of applicable law which renders any provision
hereof prohibited or unenforceable in any respect.
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(c) No Assignment. Neither party may assign its fights or obligations under this
Agreement without the prior written permission of the other.
(d) Further Assurances. The parties hereto agree to cooperate with each other in
effectuating this Agreement, and, at the reasonable request of the other party, to execute and
deliver such further documents or instruments and take such further actions as shall reasonably be
requested in order to carry out the proposes of this Agreement.
(e) No Waiver. Neither party shall be deemed to have waived any breach by the other
party of any provision of this Agreement unless it expressly does so in writing. If either xxxxx
shall expressly waive any right hereunder, such waiver shall not be construed as a continuing
waiver of other rights under the same or other provisions of this Agreement.
(f) Force Majeure. Either party shall be relieved of its obligations hereunder if the
performance hereof is delayed or prevented or interrupted by any cause beyond its reasonable
control, including but not limited to, acts of God, public enemies, war, civil disorder, fire,
flood, explosion, labor disputes or strikes, or any acts or orders of any governmental authority.
12. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the laws of the State of
South Dakota (excluding its choice of law rules) and the United States of America.
13. TRUTH IN LEASING
TRUTH IN LEASING STATEMENT UNDER SECTION 91.23 OF THE FEDERAL AVIATION REGULATIONS.
(a) LESSOR HEREBY CERTIFIES THAT THE AIRCRAlCT HAS BEEN INSPECTED AND MAINTAINED FROM THE DATE OF
ITS DELIVERY TO LESSOR TO THE DATE OF THIS AGREEMENT IN ACCORDANCE WITH THE PROVISIONS OF FAR PART
135 AND ALL APPLICABLE REQUIREMENTS FOR THE MAINTENANCE AND INSPECTION THEREUNDER HAVE BEEN MET.
(b) LESSOR WILL XXXXXXX.XX AT ALL TIMES UNDER THIS LEASE TO MAINTAIN AND INSPECT THE AIRCRAFT UNDER
FAR PART 135 FOR ALL OPERATIONS TO BE CONDUCTED UNDER THIS LEASE.
(c) LESSOR AND LESSEE AGREE, CERTIFY AND KNOWINGLY ACKNOWLEDGE THAT WHEN THE AIRCRAFT IS OPERATED
UNDER THIS AGREEMENT, LESSEE SHALL BE KNOWN AS, CONSIDERED, AND SHALL IN FACT BE THE OPERATOR OF
THAT AIRCRAFT. LESSEE IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT UNDER THIS LEASE.
(d) THE PARTIES UNDERSTAND THAT AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND
PERTINENT FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT STANDARDS
DISTRICT OFFICE.
(e) LESSEE IS RESPONSIBLE FOR COMPLYING WITH THE TRUTH IN LEASING REQUIREMENTS SET FORTH IN
SCHEDULE 2.
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LESSEE HEREBY ACKNOWLEDGES THIS TRUTH IN LEASING STATEMENT AND THAT HE OR SHE UNDERSTANDS THE
RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FEDERAL REGULATIONS.
Signature of Lessee:
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/s/ XXXXXX XXXXX
|
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Printed Name of Lessee: |
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IN WITNESS WHEREOF, the parties have entered into this Aircraft Lease Agreement on the date first
written above.
LESSOR:
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LESSEE: | |
Capitaline Advisors, LLC
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US BioEnergy Corporation | |
/s/ XXXXXX X. XXXXX
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/s/ XXXXXX XXXXX | |
By: Xxxxxx X. Xxxxx
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By: Xxxxxx X. Xxxxx | |
Is: President
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Its: Chief Executive Officer |
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Lease Payment
Lessee will pay monthly installments that equal:
Base Monthly Fee |
$ | 25,000.00 | ||
Hourly Charge for Use of Aircraft: |
$ | 300.00 |
Payments will be made on or before the 15th of each month.
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