AIRCRAFT LEASE AGREEMENT
This AIRCRAFT LEASE AGREEMENT (the "Agreement") entered into as of the 15th day
of November 1996 by and between Superior Transport Service, Inc. ("Lessor") and
Proflight, Inc. ("Lessee").
RECITALS
WHEREAS, Lessor is the registered owner of a 1980 LearJet 25D FAA registration
#: N161RB, S/N 0294 ("Aircraft") and Lessor so desires to lease the Aircraft to
Lessee in accordance with the terms and conditions herein contained; and Whereas
the parties understand that Lessee intends to utilize the Aircraft in conducting
its business; Therefore in consideration of the premises and the mutual
covenants contained herein, and for other good and valuable consideration, the
parties hereby agree as follows:
ARTICLE ONE
LEASE AND TERM:
Lessor agrees to lease to Lessee the Aircraft together with the accessories and
equipment specified in appendix A hereto. Commencing on the 15th day of November
1996 and shall continue in effect until November 15, 1998. Thereafter, this
agreement shall continue in effect from month to month, being automatically
renewed after each month, unless terminated under the provisions of this
agreement.
Lessee has the option to purchase this Aircraft for $975,000 at the termination
of this lease
The lease payment, payable by lessee to lessor $13,000 per month. First payment
plus a one month security deposit shall be payable November 15, 1996. Payments
are due the 15th of each month, there is a ten (10) day grace period. A late
charge of five percent (5%) will be added for payments not received within this
grace period.
This lease is non-cancelable and may not be terminated by lessee before the end
of the initial term, except as provided in Article Nine of this Lease. Your
obligation to pay all amounts specified in this Lease is absolute and
unconditional until the Lease is fully satisfied and shall not be subject to any
abatement, reduction, set-off, defense, counterclaim, interruption, deferment or
recoupment. Your obligation to the lessor will continue despite any dispute you
may have with respect to the Aircraft or any Parts or its equipment.
FAILURE TO PURCHASE OR SURRENDER
If Lessee fails to purchase or surrender the Aircraft at the end of the initial
term, Lessee will continue to pay rent on a month to month basis at a sum equal
to 115% of the monthly rent. During the three (3) months prior to the scheduled
expiration of the Initial Term, Lessor may advertise the Aircraft for sale in
suitable Aircraft magazines or other print or electronic media. In
connection with such advertising, lessee at his convenience will cooperate in
making the Aircraft available for inspection by prospective purchasers and
Lessor or any broker or dealer acting on Lessors behalf.
ARTICLE TWO
ENGINE RESERVES:
The engine reserves for the engines of the Aircraft will be based on the hours
of use of the engines shown on the "Hourage Report" to be sent to the lessor by
lessee. The Hourage Report will cover the 30-day period ending on the 15th day
coinciding with the lease payment for which payment is due. Lessee shall for the
duration of the lease make payments to lessor of $150/engine hour ($75 per
engine) within ten (10) days of the end of reporting period. Reserve fund items
are: any mid-life, lease expiration or termination inspection; overhaul or
replacement of Engines; overhaul, cycle replacement or hot section inspection of
the Aircraft Power Unit ("APU") which includes the Accessory Gear Box and Fuel
Controller. When and if work on any Reserve Fund item is necessary, it shall be
performed by the lessee or other persons under contract to the lessee and the
expenses thereof shall be paid by lessor out of the Reserve Fund established
pursuant to this agreement. If such Reserve Fund is insufficient, the remainder
shall be paid by lessee directly. Lessor shall reimburse lessee out of the
Reserve Fund as funds are accrued within ten (10) days when an invoice is
presented accompanied by documentation substantiating the performance of the
necessary repairs pursuant to FAA requirements. Any Reserve Fund balance
remaining when this Lease expires, will be paid to lessee, should you exercise
your option to purchase Aircraft, but lessor shall retain the balance if you
fail to execute your purchase option, or the lease terminates before such option
can be exercised.
ARTICLE THREE
MAINTENANCE AND REPAIRS:
Lessee shall perform or cause to be performed all maintenance, repair,
inspection and overhaul work necessary to obtain and maintain certification for
the Aircraft pursuant to Part 135 of the FAA regulations. All such work
performed on the Aircraft shall be performed in accordance with the standards
set by the regulations of the FAA. Lessee Shall provide or cause to be provided
at all times qualified personnel to perform all maintenance repair, inspection
and overhaul work on the Aircraft. All such personnel will be contracted for, or
employed, by lessee, and lessor shall have no authority to direct, employ,
discharge, or pay compensation to such personnel. Lessor shall rely wholly on
the expertise of lessee as to the necessity of the labor and materials required
under this article. If the proper maintenance is not performed on said aircraft
by the lessee he shall be responsible for all damages incurred.
ARTICLE FOUR
OPERATING COSTS:
Lessee shall be responsible for all costs and expense incurred by lessee in
operation Aircraft during the term of this Agreement including but not limited
to the following:
A. MAINTENANCE: All costs and expenses incurred by lessee in performing or
causing to be performed all maintenance, repair, inspection and overhaul work on
the Aircraft, including but not limited to all costs and expense associated with
new parts and accessories utilized for such work.
B. FUEL AND OIL: All costs and expenses incurred by lessee in purchasing
fuel and oil for the Aircraft.
C. INSURANCE: All costs and expenses incurred by lessee in maintaining in
force such passenger, liability insurance of not less than $20,000,000, public
liability, property damage, malpractice (air ambulance). Aircraft hull insurance
of no less than $975,000 and baggage insurance in such form, for such amounts,
and with such insurers as shall be satisfactory to lessor, protecting lessee and
lessor as co-insureds against claim for death of, or injury to persons, and loss
of, or damage to property, in connection with the possession, maintenance, use
and operation of the Aircraft.
D. TAXES: All taxes, fees, assessments, fines and penalties dues, assessed
or levied by any taxing authority or governmental agency which relate in any way
to the use or operation of the Aircraft, including, but without limitation, all
sales taxes and personal property taxes, licenses, and registration fees, and
all use, excise, gross receipts, franchise, stamp, stamp or other taxes, duties
or charges, together with any penalties, fines or interest thereon, imposed, or
relating to activities conducted, during income taxes attributable to its income
earned under this Agreement.
E. STORAGE OF THE AIRCRAFT: All costs and expense incurred by Lessee in
storing the Aircraft.
F. RISK OF LOSS: Lessee will bear the sole risk of loss of theft or damage
to the Aircraft or any Parts or equipment ("Casualty Loss"). Lessee acknowledges
that the lessor has no obligation to provide a replacement aircraft for any
reason. The lessee will notify the lessor within 24 hours of any loss. If the
lessee determines that the Aircraft or the affected Part or equipment can be
economically repaired, lessee will have it repaired at lessees expense.
ARTICLE FIVE
LOG BOOK AND RECORDS:
Lessee shall maintain all log books and records pertaining to the Aircraft in
accordance with FAA regulations. All log books and records shall be stored in a
fire-resistant file or safe. Such log books and records shall be made available
for examination by lessor, and lessee shall at the termination of this Agreement
deliver them to lessor.
ARTICLE SIX
OPERATION OF AIRCRAFT:
A. Lessee shall operate the Aircraft in accordance with this Agreement.
During those times when the Aircraft has been chartered, Lessee shall have and
maintain operational control of the Aircraft in accordance with Section 135.77
of the FAA regulations.
B. Lessee may operate the Aircraft only for the purposes, and within the
geographical limits, set forth in the insurance policy or policies obtained by
Lessee in accordance with Paragraph C of Article Six of this Agreement. Lessee
shall not use the Aircraft in violation of any foreign, federal, state,
territorial or municipal law or regulation and shall be solely responsible for
any fines, penalties or forfeitures occasioned by any violation. If any such
fine or penalty is imposed on and paid by Lessor, Lessee shall reimburse Lessor
for the amount thereof within ten (10) days after receipt by Lessee of written
notice requesting such reimbursement. Lessee will not base the Aircraft, or
permit it to be based, outside the limits of the United States of America,
without the prior written consent of Lessor.
C. The Aircraft shall be operated only by licensed and qualified pilots.
For charter and air ambulance flights, all pilots shall be employees of Lessee
and shall be under the exclusive control of Lessee.
D. Lessee shall have sole control over dispatching and scheduling the
Aircraft.
ARTICLE SEVEN
ALTERATIONS:
Lessee shall not have the right to alter, modify or make additions or
improvements to the Aircraft, other than those necessary to obtain and maintain
FAA certification, without prior written permission from Lessor. All such
alterations, modifications, additions and improvements are so made shall become
the property of Lessor and shall be subject to all of the terms of this
Agreement.
ARTICLE EIGHT
TITLE:
The registration of, and title to, the Aircraft shall be in the name of Lessor,
and the Aircraft shall at all times bear United States registration markings.
ARTICLE NINE
DEFAULT:
A. Lessor shall be in breach of this Agreement if: ( 1) Lessor defaults in
the performance of any of its obligations under this Agreement and such default
shall continue for five (5) days after receipt by Lessor of notice thereof from
Lessee: or (2) Lessor takes any actions to prevent or
hinder the performance by Lessee of any of its obligations under this Agreement.
In the event of any breach, Lessee shall have the right to terminate the
Agreement immediately and to pursue any other remedy available to Lessee in law
or equity.
B. Lessee shall be in breach of this Agreement if Lessee defaults in the
performance of any of its obligations under this Agreement and such default
shall continue for five (5) days after receipt by Lessee of written notice
thereof from Lessor. In the event of any breach by Lessee, Lessor shall have the
right to repossess the Aircraft without further demand, notice or court order,
or other process of law and to terminate the Agreement immediately. Exercise by
Lessor of either or both of the rights specified above shall not prejudice
Lessor's right to pursue any other remedy available to Lessor in law or equity.
C. The failure of either party to enforce strictly any provision of this
Agreement shall not be construed as a waiver thereof and shall not preclude such
party from demanding performance in accordance with the terms hereof.
ARTICLE TEN
ASSIGNMENT:
Lessee shall not assign this Agreement or any interest in the Aircraft without
the prior written consent of Lessor. Subject to the foregoing, this Agreement
inures to the benefit of, and is binding on, the heirs, legal representatives,
successors, and assigns of the parties hereto.
ARTICLE ELEVEN
ACCIDENT AND CLAIM:
Lessee shall immediately notify Lessor of any accident involving the Aircraft,
which notification shall specify to the extent known by the Lessee, the time and
place of the accident, the extent of the damage, the names and addresses of
parties involved, persons injured, known witnesses, and owners of properties
damaged. Lessee shall advise Lessor of all correspondence, papers, notices, and
documents received by Lessee in connection with any claim or demand involving or
relating to the Aircraft or its operations, and shall aid in any investigation
instituted by Lessor and in the recovery of damages from third persons liable
therefor.
ARTICLE TWELVE
RETURN OF PLANE TO LESSOR:
On the termination of this Agreement by expiration or otherwise, Lessee shall
return the Aircraft to Lessor at Palm Springs Airport, in the same condition as
when received, ordinary wear, tear and deterioration excepted.
In case of the lessees election to surrender the aircraft, the value of the
aircraft and the cost of excess wear and tear and repairs needed to return the
aircraft to the required condition will be
established by a professional inspector and appraiser. Lessee will be
responsible for all costs and repairs.
ARTICLE THIRTEEN
A. Aircraft is to be operated on Part 135 Charter Certificate, to be
supplied by Lessee, and is exempt from California use/sales tax.
ARTICLE FOURTEEN
DISCLAIMER AND TRANSFER OF WARRANTIES; QUIET ENJOYMENT:
We are not the manufacturer of the aircraft or any Parts or equipment.
we hereby assign to you to the extent assignable all applicable manufacturer's
warranties, service agreements and patent and copyright protection, if any,
available under manufacturer or importer warranties or the Purchase or Sales
Agreement with the Supplier, for the purpose of making appropriate claims
against the manufacturer. However, we shall retain at all times the right to be
protected by these same warranties, agreements, and indemnities as the owner of
the Aircraft.
So long as you are not in default under this Lease, we warrant that
neither we nor anyone acting for or claiming through us will interfere with your
quiet enjoyment of the Aircraft. EXCEPT FOR OUR WARRANTY OF QUIET ENJOYMENT, WE
MAKE NO WARRANTY, EXPRESS OR IMPLIED, ABOUT ANY MATTER, INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF AIRWORTHINESS, MERCHANTABILITY OR FITNESS
FOR A PARTICULAR PURPOSE. AS TO US, YOU LEASE THE AIRCRAFT IN AN `AS IS'
CONDITION. IN NO EVENT WILL WE HAVE ANY LIABILITY FOR, NOR WILL YOU HAVE ANY
REMEDY AGAINST US FOR CONSEQUENTIAL DAMAGES, ANY LOSS OF PROFITS OR SAVINGS,
LOSS OF USE, OR ANY OTHER LOSS.
ARTICLE FIFTEEN
REMEDIES
If you are in default, we may do one or more of the following:
A. declare this Lease to be in default;
B. terminate this lease;
C. revoke any authorization we have given to you under this Lease
to act on our behalf;
D. recover from you all amounts that are or will be due;
E. attempt to satisfy any amounts due with any collateral used as
security;
F. repossess or render the Aircraft unusable without demand,
notice, court order or other process and retain all payments
made as partial compensation for the use of the Aircraft and
depreciation; require you at your expense to assemble on the
Aircraft all equipment that is supposed to be there and deliver
the Aircraft to us at
the return base designated in paragraph 4G of Addendum No. 2;
H. require you to pay an amount equal to 115% of the current Rent
prorated on a 30-day month for each day the Aircraft is not
returned plus any associated late charges; and
I. recover from you all reasonable attorney's fees and associated
expenses and consequential damages incurred in exercising any of
our rights under this Lease.
To repossess the Aircraft, we may peaceable enter your premises or any
airport or storage facility where the Aircraft is stored. If we accept
late payments or partial payments, that does not mean we will accept
other late or partial payments.
ARTICLE SIXTEEN
MISCELLANEOUS PROVISIONS
A. The relationship between Lessor and Lessee shall always and only be that
of lessor and lessee. Lessee shall never at any time during the term of this
Agreement become the agent of Lessor, and Lessor shall not be responsible for
acts or omission of Lessee or its agents.
B. This Agreement constitutes the entire understanding between the parties,
and as of its effective date supersedes all prior or independent agreements
between the parties covering the Aircraft. Any change or modification hereof
must be in writing, signed by both parties.
C. This Agreement is to be construed in accordance with the laws of the
State of California.
D. Any notice given by one party to the other in connection with this
Agreement shall be in writing and shall be sent by certified or registered mail,
return receipt requested:
(1) If to Lessor, addressed to:
Xxxx Xxxxxxx
Superior Transport Service, Inc.
0000 Xxxxxxxx Xxx
Xxxx Xxxxxxx, XX 00000
(2) If to Lessee, addressed to:
Xxxxx Xxxxxxxxx
Proflight, Inc.
00000 X. Xxxxxxx Xxxxx Xx.
Xxxxxxxxx, XX 00000
Notices shall be deemed to have been received on the date of receipts as shown
on the return receipt.
E. Lessee shall have no right to consent, allow or permit any liens or
encumbrances on the Aircraft. Lessee shall immediately remove from the Aircraft
any lien on encumbrance arising or created by any act or omission on the part of
the Lessee.
F. The rights and remedies with respect to any of the terms and conditions
of the Agreement
shall be cumulative and not exclusive, and shall be in addition to all other
rights and remedies.
X. Xxxxxx, at their expense will deliver aircraft to Denver (Centennial
Airport) at commencement of lease.
INDEMNITY:
Lessee shall indemnify us for any action, claim, damage, obligations,
liabilities and costs and expenses ("Claims") regarding any matter arising
during the Lease Term or holdover term, including reasonable attorneys' and
collection fees.
NON COMPETE:
Principals of Superior Transport agree not to establish any form of
Aeromedical/Charter transport services for a period of five years, commencing
from date of signature.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first written above.
LESSOR:
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Title: /s/ CEO
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Date: 11/15/96
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LESSEE: /s/ Xxxxx X. Xxxxxxxxx
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Title: President
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Date: 11/15/96
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