EXHIBIT 10.1
AIRCRAFT LEASE AGREEMENT
This Aircraft Lease Agreement ("Agreement") is entered into on this 20th day of
August, 2004, by and between Regal Aviation LLC, a Delaware limited liability
corporation, having an office at 0000 Xxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000
(hereinafter referred to as "Regal") and MW Sky LLC, a Delaware limited
liability company, having its principal office at 0000 Xxxxxxxx, Xxxxxxx, Xxxxx
00000 (hereunder referred to as "Lessor"), and
Lessor is the owner of a certain Xxxxxxxxxx XXX, X000XX, Serial Number 301
aircraft (as identified in Exhibit "A" and hereinafter referred to as the
"Aircraft"), and Regal desires to lease from Lessor, and to operate, manage, and
market, the Aircraft in accordance with the terms of this Agreement.
In consideration of the foregoing and the agreements contained herein, Lessor
agrees to lease the Aircraft to Regal, and Regal agrees to lease the Aircraft
from Lessor and to provide aircraft management services as follows:
1) SCHEDULING AND DISPATCH SERVICES. Regal shall provide scheduling and
dispatch service to Lessor. Scheduling and dispatch services shall include
the coordination of flight schedules for use of the Aircraft, the
coordination of maintenance to be performed on the Aircraft, record
keeping and reporting (to both Lessor and such governmental entities as
may be required by applicable law), and such additional services as may be
mutually agreed upon by the parties.
One full time account manager will be provided to Lessor who will be
responsible to Lessor for scheduling and dispatch services. The initial
manager shall be Xxxxx Xxxx.
2) AIRCRAFT STORAGE AND IN-CABIN SERVICES. Regal shall cause the Aircraft to
be based at Regal Aviation's Lessor Care Center (the "Facility"), Dallas
Love Field Airport, Dallas, Texas (the "Airport"). Lessor shall lease
hangar storage space for the Aircraft at the Facility at the rates
outlined in Exhibit B of this Agreement. Lessor agrees to pay to Regal all
amounts due under the hangar lease, in accordance with the terms of this
Agreement.
Regal will arrange for trash removal, vacuuming, supply restocking, and
interior cleaning after each flight for the Aircraft. Additional cleaning
and detailing services (i.e., shampooing of carpets, steam cleaning of
seats, polishing of bright work, etc.) to maintain the appearance of the
aircraft will be provided by Regal at a reasonable additional cost, which
will be itemized in detail of the monthly invoice. No cosmetic work
exceeding $1,500.00 will be performed without prior approval of Lessor.
Page 1 of 1
3) CREW SERVICE. Regal shall provide Crew Services (as defined below) for all
flights whether such flights are for the Lessor or for Federal Aviation
Regulations ("FAR's") Part 135 charter. Lessor shall pay Regal Twenty One
Thousand and No/100 Dollars ($21,000.00) per month for Regal to provide
Crew Services (as defined below) for the Aircraft.
(a) The "Crew Services" shall consist of (2) Captains, each holding an
Airline Transport Pilot rating and possessing sufficient training
and experience in the Aircraft and one Co-Pilot holding at least a
commercial pilot's license with multi-engine and instrument
endorsements (together, the "Crew").
(b) Lessor agrees to pay all reasonable direct out-of-pocket expenses
incurred either by the Crew or in connection with the operation of
the Aircraft while on assignment for the Lessor. Such expenses
include, but are not limited to, (i) Crew meals, lodging, and
transportation; (ii) parking, landing fees, hangar fees, fuel
purchases, deicing fees, customs fees, and all other
Aircraft-related expenses; and (iii) normal cabin supplies consumed
during use of the Aircraft by Lessor.
(c) With respect to any flights, the captain shall have the final
authority to determine whether any flight should be delayed and/or
canceled due to departure and/or enroute and/or terminal weather
conditions or aircraft, equipment, facility, or other conditions
that may be considered hazardous to the Aircraft or its occupants.
(d) All Crew members are required to successfully complete initial and
recurrent annual Regal administered ground school and factory
simulator training as required. Lessor shall be responsible for the
cost of the initial and recurrent training for Crew members.
(e) The Aircraft and Crew shall be made available upon the request of
Lessor except when the Aircraft has a charter flight scheduled as
provided herein by Regal.
(f) If during the term of this Agreement, or any extension thereof, or
for three (3) months thereafter, Lessor elects to hire any
Applicable Employee, to perform the same of substantially the same
services for Owner as said Applicable Employee was providing or had
provided Regal, Lessor agrees to pay Regal Twelve Thousand Five
Hundred Dollars ($12,500.00) for each such Applicable Employee that
Lessor hires. Such compensation shall be paid within thirty (30)
days of Lessor's hiring of said Applicable Employee and shall be
deemed compensation for Regal's expenses incurred in training such
Applicable Employee. For purposes of this provision, an "Applicable
Employee" shall be defined as a current employee of Regal and/or any
former employees of Regal whose employment with Regal terminated
less than three (3) months prior to Lessor's hiring of said
employee.
Page 2 of 2
4) MAINTENANCE. Regal and Lessor agree that the Aircraft shall be maintained
in accordance with all of its manufacturer's recommendations and
procedures and in accordance with the standards and guidelines established
by the Federal Aviation Administration ("FAA") and other applicable law.
Regal shall perform, or cause to be performed, all maintenance, repair,
inspection, and overhaul work necessary to maintain the Aircraft in good
operating condition, including, without limitation, maintenance of the
airworthiness of the Aircraft pursuant to Part 91 and 135 of the FAR's and
the manufacturer's recommendations, including the annual Aircraft Flight
Information System ("AFIS") subscription for the Aircraft (hereinafter the
"Maintenance.")
All work performed on the Aircraft shall be accomplished in accordance
with the standards set by the FAA, the Aircraft manufacturer, and relevant
component manufacturers. Regal shall cause to be maintained all records,
logs, and other materials required by the FAA to be maintained in
connection with the Aircraft.
Regal shall provide assistance to Lessor on matters regarding the
Aircraft, including, without limitation, FAA and manufacturer's
correspondence and directives, administration and enforcement of warranty
claims and insurance matters, and preparation and filing of FAA and any
other required reports or registrations.
The cost of all Maintenance shall be the sole responsibility of Lessor,
unless a repair is caused by the negligence of, or breach of this
Agreement by Regal, its officers, employees, or affiliates. Maintenance
performed by Regal personnel shall be at the shop rate of Seventy-Five
Dollars ($75.00) per hour.
5) FUEL. Lessor shall be responsible for all fuel and lubricant costs for the
Aircraft. Fuel shall be purchased at a contract discount rate wherever
possible. Regal agrees to use Lessor's fuel credit cards for fuel
purchases whenever possible. For fuel purchased using Regal's fuel credit
cards, Lessor shall pay to Regal a handling fee of fifteen cents ($0.15)
per gallon for all fuel provided to the Aircraft. Fuel purchased at the
Facility shall be charged to Lessor at forty-five cents ($0.45) off
Regal's retail rate per gallon.
6) INSURANCE. Lessor shall provide hull and liability insurance under an
aircraft fleet policy. The amounts of such insurance, coverage areas,
named insured, etc. are described in Exhibit "C" of this Agreement. Regal
shall notify Lessor immediately of any incident which may give rise to a
claim under Lessors insurance coverages detailed in Exhibit "C." Regal
shall obtain the consent of Lessor prior to making any decisions regarding
the filing of insurance claims or the involvement of the Aircraft in any
litigation. Regal shall not allow the Aircraft to be operated or located
in any area excluded from coverage by any insurance provided by the terms
of this Agreement.
Regal shall provide workers compensation insurance for all pilots and
personnel working in, on, or about Lessor's aircraft.
Page 3 of 3
All insurance coverages set forth in Exhibit "C" must be with insurers
having an A.M. Best minimum rating of "A XII" or Standard & Poor's minimum
rating of "A."
Lessor shall provide to Regal evidence of all required insurance by way of
a certificate.
7) SERVICE FEE. Lessor shall pay to Regal a Service Fee in the amount of Four
Thousand Dollars ($4,000.00) per month during the term of this Agreement,
in addition to the costs and expenses for which Lessor is responsible. The
Management Fee and expense reimbursement shall be due within thirty (30)
days after invoice from Regal for services provided to Lessor. Regal's
invoices to Lessor shall identify with reasonable particularity the
Management Fee and other services and expenses for which Lessor is
responsible. In the event that Lessor disputes any invoiced amount or
portion thereof, Lessor shall notify Regal of its dispute within ten (10)
days of its receipt of the invoice, specifying the item or items that
Lessor disputes and providing each reason therefore. Notwithstanding
Lessor's dispute of any portion of an invoice, Lessor shall be obligated
to pay the undisputed balance in accordance with the terms hereof.
8) USE OF AIRCRAFT BY LESSOR AND ITS AFFILIATES; CHARTER. As rent for the
Aircraft, Lessor and its affiliates shall have the right to unlimited use
of the Aircraft on a priority basis. At such times as the Aircraft is not
being used by Lessor or its affiliates, as provided above, Lessor hereby
grants to Regal the exclusive right to charter the Aircraft to third
parties, upon such financial terms and conditions, as Regal deems
acceptable; provided, however, that without the prior written approval of
Lessor, Regal shall charge charter customers not less than $4,300 per hour
for charter of the Aircraft. The Aircraft will be placed under the Regal
Aviation, LLC Charter Certificate, #YNTA128U. Regal will actively
advertise, market, send out invoices, and collect revenues for charter
flights. Lessor may from time to time, upon written notice to Regal and
subject to Regal's consent (which consent shall not be unreasonably
withheld), increase the minimum charge per hour. As rent for the Aircraft,
Regal will pay Lessor eighty-five percent (85%) of all billed flight
revenue for time the Aircraft is chartered by Regal to third parties,
rounded to the nearest tenth of an hour. All amounts due to Lessor for
each month shall be paid to Lessor within thirty (30) days following the
last day of each calendar month.
9) TERMINATION. The initial term of this Agreement shall be twelve (12)
months. This Agreement shall automatically renew on every anniversary
date, pursuant to the same terms and conditions as set forth herein,
unless either party gives written notice of termination of at least thirty
(30) days prior to the end of the term. Unless otherwise agreed in writing
by the parties hereto, this Agreement shall terminate on the date of any
sale of the Aircraft by Lessor.
This Agreement may be terminated by either party, upon not less than
thirty (30) days prior written notice to the other party, upon any
material breach of the Agreement buy such other party. Such notice shall
describe in reasonable detail
Page 4 of 4
the material breach (or breaches) upon which such notice of termination is
based.
This Agreement may be terminated by Lessor, upon written notice to Regal
designating the date of termination, in the event of a Change of Control.
As used in this Agreement, "Change of Control" means with respect to Regal
(a) the sale, lease or transfer of all or substantially all of Regal's
assets to any person or group (within the meaning of the Securities,
Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder), (b) the liquidation or dissolution of Regal or (c)
the acquisition or ownership, directly or indirectly, beneficially or of
record by any person or group (within the meaning of the Securities
Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder) of more than 49% of the ownership of Regal.
Termination of this Agreement shall not relieve either Lessor or Regal
from any obligation hereunder arising prior to the effective date of such
termination.
10) MODIFICATION. This Agreement shall not be modified except in writing and
signed by both parties.
11) LEASING TO THIRD PARTIES. Other than charters pursuant to FAR Part 135 as
provided above, the Aircraft shall not be leased to third parties without
the express written permission of Lessor and Regal.
12) OPERATIONS. During the term of this Agreement, the Aircraft shall be
operated and maintained in accordance with this Agreement. Regal shall at
all times have and maintain exclusive use and operational control of the
Aircraft in accordance with FAR Section 135.77. Regal shall have sole
possession, control and use of the Aircraft for flight, within the meaning
of FAR Section 135.25, and for the purposes of determining and performing
required maintenance and ensuring compliance with all applicable FAA
regulations.
Notwithstanding any other provision of this Agreement which may possibly
be interpreted to the contrary, it is the intent of the parties that Regal
shall maintain "operational control" (pursuant to the definition and use
of such term in the FAA regulations) of the Aircraft operated pursuant to
this Agreement during all such operations, and shall be responsible for
complying with all provisions of the FAA regulations applicable to such
operations.
13) INDEMNIFICATION. Lessor hereby agrees to defend, indemnify, protect, save
and keep harmless Regal and its agents and employees, from and against any
and all liabilities, obligations, losses, damages, penalties, claims,
actions and suits, including legal expenses, of whatever kind and nature,
imposed or incurred by or asserted against Regal on the basis of any act
or omission of Lessor, its agents, servants and employees.
Regal hereby agrees to defend, indemnify, protect, save and keep harmless
Lessor and its agents and employees from and against any and all
liabilities,
Page 5 of 5
obligations, losses, damages, penalties, claims actions and suits,
including legal expenses, of whatever kind and nature, imposed or incurred
by or asserted against Lessor on the basis of any act or omission of
Regal, or negligence of Regal, its agents, servants and employees.
The indemnities contained in this Section 13 shall survive the termination
of this Agreement.
14) RETURN OF AIRCRAFT. Upon the termination of this Agreement Regal shall
return the Aircraft (with all Records) to Lessor, at a location designated
by Lessor in the continental United States, in good operating and
airworthy condition with the same interior configuration as of the date of
this Agreement. Regal is not responsible for normal wear and tear to the
Aircraft during the term of this Agreement. As used in this Agreement, the
term "Records" means all log books, manuals, certificates, inspection,
maintenance, modification, overhaul, engineering and technical records
(including all computerized data, records and materials) relating 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, including the engines).
15) SECURITY. Termination of this Agreement shall not release either Lessor or
Regal from any obligation hereunder arising prior to the effective date of
such termination.
Regal will cause the Aircraft to be locked and inaccessible to outsiders
during flights away from the Facility when the Crew is not physically
present at the Aircraft. Regal will secure the Aircraft while it is
located at the Facility.
16) DISPUTES. In the event of a dispute under this Agreement, the prevailing
party shall be entitled to recover reasonable attorney's fees and costs
from the other party.
17) GOVERNING LAW AND VENUE. This Agreement shall be governed by and construed
in accordance with the laws of the State of Texas (excluding its conflicts
of law principles), including all matters of construction, validity, and
performance. Any claim or controversy that arises out of this Agreement,
or is related to this Agreement, or the breach of it, shall be settled by
arbitration in Dallas, Texas before and in accordance with the rules of
the American Arbitration Association. Judgment upon the award may be
entered in any court with jurisdiction.
18) PAYMENTS. Any payments due to either party under this Agreement, or any
portion thereof, if not paid on or before the due date, shall bear
interest at the lesser of 8% per annum or the maximum rate allowed by law.
19) NOTICES. All notices, requests, consents, and permissions required or
permitted by the terms and conditions of this Agreement shall be in
writing, and
Page 6 of 6
any such notice, request, consent, and permission shall become effective
when delivered by overnight courier or messenger, or telecopier/facsimile,
when receipt is confirmed at the following contact information for the
parties:
Lessor: MW Sky LLC
0000 Xxxxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxxx Xxxxxx
PH: 000-000-0000
FX: 000-000-0000
Regal: Xxxxx XxxXxxxxx
Regal Aviation LLC
0000 Xxxx Xxxxx Xxxxx
Xxxxxx, Xxxxx 00000
Phone (000) 000-0000
Fax (000) 000-0000.
or to such other notice address as either party may, from time to time,
hereafter designate in writing to the other.
20) ENTIRE AGREEMENT, AMENDMENTS. This Agreement embodies the entire agreement
and understanding between Regal and Lessor with respect to its subject
matter and supersedes all prior agreements and understandings and shall
not be modified or amended except by a written instrument signed by duly
authorized representatives of the parties.
21) ASSIGNMENT. Neither party shall have the right to assign all or any part
of its rights or obligations under this Agreement without the agreement of
the other party.
22) EXECUTION. Each of the parties agree that each of them shall be entitled
to rely upon the signature of the other party hereto, received via
facsimile transmission, to the same extent as an originally signed copy
hereof; provided, however, this shall not relieve either party from
delivery of originally signed documents.
23) SUCCESSORS. The rights and obligations of the parties shall inure to the
benefit of, and be binding and enforceable upon, the respective successors
and permitted assigns of the parties.
Page 7 of 7
IN WITNESS WHEREOF, the parties hereto affix their duly authorized signatures in
the spaces provided below as of the date first written above.
CONTRACT ACTIVATION DATE: August 20, 2004
Regal Aviation LLC MW Sky LLC
By: /s/ XXXXX XXXXXXXXX By: /s/ XXXXXXX X. XXXXXX
--------------------- ----------------------------
Xxxxx XxxXxxxxx Xxxxxxx X. Xxxxxx
President Vice President and Treasurer
Page 8 of 8
