THIS AIRCRAFT
LEASE AGREEMENT is entered into as of the 1st day of November, 2006
(the “ Commencement Date ”), by and between JLC
AVIATION LLC, a Tennessee limited liability company (the “
Lessor ”), and IdleAire Technologies Corporation, a
Tennessee corporation (the “ Lessee
”).
WHEREAS, Lessor is
the owner of the Aircraft (defined below);
WHEREAS, Lessee
desires to lease from Lessor, and Lessor is willing to lease to
Lessee, the Aircraft, on a non-exclusive basis, subject to the
terms and conditions of this Lease; and
WHEREAS, Lessee is
qualified, or will retain the services of a Person that is
qualified, in all respects to use and operate the Aircraft in
accordance with the rules and regulations of the FAA (defined
below) (the “ Federal Aviation Regulations ”)
under Part 91 thereof.
NOW, THEREFORE, in
consideration of the mutual covenants herein, Lessor and Lessee
hereby agree as follows:
Unless the context
otherwise requires, the following terms, when capitalized, shall
have the following meanings for all purposes of this Lease
Agreement, the following definitions to be equally applicable both
to the singular and plural forms of the terms herein
defined:
1.1. Act.
“Act” shall mean the Federal Aviation Act of 1958, as
amended from time to time, or any similar legislation of the United
States enacted in substitution or replacement thereof.
1.2.
Aircraft. “Aircraft” shall mean the Cessna Citation
V aircraft bearing manufacturer’s serial number 560-0120 and
current FAA registration number N560PS (which registration number
is being changed to N129MC) including all attached engines and any
and all Parts (defined below).
1.3. Business
Day. “Business Day” shall mean any Day other than
Saturday, Sunday or another day on which banks in Tennessee are
required or authorized to be closed.
1.4. Day.
“Day” shall mean a twenty-four (24) hour period
beginning at 12:00 a.m. and ending at
11:59 p.m.
1.5.
Designated Representative. ” Designated
Representative” shall mean Ambassador Jet Service, LLC, or
any other Person named as such by Lessor by giving notice to Lessee
as provided in herein. A copy of this Lease Agreement shall be
deposited with the Designated Representative.
1.6. Event of
Default. “Event of Default” shall have the meaning
specified in Section 12 hereof.
1.7. Event of
Loss. “Event of Loss” shall mean any of the
following events: (i) the Aircraft shall become lost or stolen
for a period greater than 3 days (or, if less, the remaining
Term); (ii) the Insurance Proceeds (defined below) shall be
received based upon an actual or constructive total loss with
respect to the Aircraft; (iii) the Aircraft shall be destroyed
or irreparably damaged; (iv) title to the Aircraft shall be
taken, seized, confiscated or requisitioned by any governmental
body by condemnation or otherwise for a period stated to be or in
fact in excess of 18 months (or, if less, the remaining Term for
such property); provided, however, that clause (iv) of this
definition shall not apply to any requisition for use by the
Government, provided that such requisition does not continue for a
period exceeding the remaining Term.
1.8. FAA.
“FAA” shall mean, as the context requires, the United
States Federal Aviation Administration and/or the Administrator of
the United States Federal Aviation Administration, or any person,
governmental department, bureau, commission or agency succeeding to
the functions of either of the foregoing.
1.9. Flight
Hour . “Flight Hour” shall mean each hour or part
thereof, elapsing from the moment the wheels of the Aircraft leave
the ground on take-off to the moment when the wheels of the
Aircraft touch the ground on landing, in each case as recorded in
the Aircraft log book or in any other document recording flight
time accepted by the FAA.
1.10.
Governmental Authority. “Governmental Authority”
shall mean and include (a) the FAA; (b) the United States
Department of Transportation; (c) a generally recognized
national government, or political subdivision thereof or local
jurisdiction therein; (d) any board, Commission, department,
division, organ, instrumentality, court, or agency of any entity
described in (c) above; and (d) an association, organization,
or institution of which any such entity described in (c) or
(d) above is a member or to whose jurisdiction any such entity
is subject or in whose activities any such entity is a participant
but only (except for purposes of defining Law below) to the extent
that any of the preceding have jurisdiction over the Aircraft or
its operations.
1.11. Home
Airport. “Home Airport” shall mean McGhee-Tyson
Airport.
1.12.
Indemnitee. Indemnitee shall mean Lessor and its successors,
permitted assigns, members, agents, employees, officers and
servants.
1.13. Initial
Term. “Initial Term” shall mean, unless the Lease
is terminated earlier as provided herein, the period commencing on
the Commencement Date and ending on October 31,
2007.
1.14.
Insurance Proceeds. “Insurance Proceeds” shall mean
any insurance proceeds payable to Lessor under policies of
insurance obtained pursuant to Section 10 .
1.15. Law.
“Law” shall mean and include all applicable
(a) laws, statute, decree, constitution, regulation, order,
judgment or other directive of any Governmental
Authority;
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(b) treaty, pact, compact or other
agreement to which any Governmental Authority is a signatory or
party; (c) any amendment or revision of any Law described in
(a) or (b) above.
1.16.
Lease. “Lease,” “Lease Agreement”, this
“Agreement”, “herein”,
“hereunder” or other like words shall mean and include
this Lease Agreement and each amendment, modification or supplement
hereto from time to time entered into.
1.17. Lease
Year. “Lease Year” shall mean any twelve
(12) month period making up the Initial Term or any Renewal
Term.
1.18. Parts.
“ Parts” shall have the meaning set forth in
Section 8 hereof.
1.19.
Person . “Person” shall mean an individual,
corporation, trust, partnership, unincorporated association, joint
venture, association, joint-stock company, government or any agency
or political subdivision thereof or other entity.
1.20. Rent
. “Rent” shall have the meaning set forth in
Section 3 .
1.21. Reserved
Flight Day. “Reserved Flight Day” shall mean any
Day reserved by Lessee for use of the Aircraft.
1.22.
Taxes. “Taxes” shall have the meaning given such
term in Section 9 hereof.
1.23.
Term. “Term” shall mean the Initial Term and any
Renewal Term(s) (defined below).
1.24. Third
Party Lessee. A “Third Party Lessee” shall mean any
other lessee of the Aircraft who enjoys concurrent, non-exclusive
use of the Aircraft with Lessee.
1.25. Unearned
Rent. “Unearned Rent” shall be an amount equal to
the excess of (i) the total Rent paid by Lessee to Lessor
hereunder during the applicable Lease Year as of the event giving
rise to the need to compute Unearned Rent, over (ii) the
actual amount earned by Lessor hereunder taking into account the
actual number of Flight Hours the Aircraft is used by Lessee during
the applicable Lease Year as of the event giving rise to the need
to compute Unearned Rent and the associated rental rate for such
hours. The total amount of the Unearned Rent calculated in the
preceding sentence, may be adjusted, as appropriate, based on any
associated sales tax refund actually received by Lessor due to
Sales Tax payments previously made on Flight Hours that are not
used by Lessee.
2.1. Lease
. Lessor hereby agrees to lease to Lessee, and Lessee hereby agrees
to lease from Lessor, the Aircraft on a non-exclusive basis as
provided herein. During the Initial Term, in exchange for the Rent,
Lessee shall be entitled to use the Aircraft for a total of seventy
(70) Flight Hours (the “ Leased Hours ”). If
this Lease is renewed, the number of Leased Hours in a Renewal Term
shall be same number of Leased Hours during the Initial Term unless
otherwise agreed to by the parties.
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2.2. Lawful
and Proper Use Only . Lessee agrees throughout the Term to use
the Aircraft in accordance with the laws and regulations of the
United States and any country, state, territory or municipality
into or over which Lessee may operate, and shall further comply
with all health and police regulations and all rules and orders
relating to the Aircraft to which the Aircraft may be subject in
its use, operation, maintenance, modification, overhauling and
condition during the term hereof including, but not limited to,
maintaining strict adherence to Federal Aviation Regulations
specifically as they relate to Federal Air
Regulation Part 91. Lessee shall not employ, permit or
cause the Aircraft to be used in any business which is forbidden by
law or is otherwise illicit, nor knowingly carry illicit or
prohibited goods. Lessee shall not use or permit the Aircraft to be
used in any manner or for any purpose which is not covered by an
insurance policy or policies which Lessor or Lessee is required to
carry and maintain, or, for any purpose or for the carriage of any
goods of any description excepted or exempted from said policies,
or do any other act or permit to be done anything which could
reasonably be expected to invalidate or limit any said insurance
policy. Notwithstanding anything contained herein to the contrary,
the Aircraft shall at all times be primarily used and located in
the continental United States and may not be operated outside of
the continental United States except to the Bahamas, Mexico,
Caribbean and Canada. The Aircraft shall be based exclusively at
the Home Airport.
2.3.
Non-Exclusive Lease. This Lease is non-exclusive and does not
prevent Lessee from entering into similar arrangements with Third
Party Lessees; provided, however, that Lessor use its best efforts
not to enter into any lease with a Third Party Lessee that would
preclude Lessee from using the Aircraft for the number of Leased
Hours specified in Section 3 . Notwithstanding the
forgoing to the contrary, Lessor makes no representations or
warranties regarding the specific time or specific number of
Reserved Flight Days during which the Aircraft will be available to
Lessee or that Lessee will be able to use all of the Leased Hours
prior to the end of the Lease Year. As between Lessee and the Third
Party Lessees, use of the Aircraft shall be on a first-come,
first-served basis. Lessee and the Third Party Lessees shall
contact the Designated Representative to schedule use of the
Aircraft by reserving the number of Reserved Flight Days that will
be required for a particular trip. Consistent with the
non-exclusive nature of the Lease, Lessee may make arrangements
with Third Party Lessees to share Reserved Flight Days (“
Joint Trips ”) provided that Lessee and the Third
Party Lessee(s) notify the Designated Representative in advance of
the existence of a Joint Trip arrangement and the parties’
agreement as to who will be credited with the Flight Hours
associated with Joint Trip and who will assume operational control
of the Aircraft.
3.1. Term
. Upon the conclusion of the Initial Term and any Renewal Term
(defined herein), this Lease shall be automatically renewed for an
additional twelve (12) month period (each a “ Renewal
Term ”) unless Lessee or Lessor gives at least ninety
(90) days prior written notice prior to the end of the then
current Lease Year to the other of its intention not to renew this
Lease. Furthermore, in the event Lessor intends to sell the
Aircraft, Lessor shall have the right to terminate this Lease at
any time upon giving Lessee one (1) month prior written notice
of termination. In the event that this Lease is terminated by
Lessor prior to the expiration of the Term for any reason, any
Unearned Rent calculated as of the effective date of the
termination of the Lease shall be returned to the Lessee by the
Lessor, otherwise the Rent shall be due and owing to Lessor in all
events.
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3.2. Rent.
During the Initial Term, Lessee shall pay Lessor the following
amounts as rent for the use of the Aircraft (“ Rent
”):
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(i)
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In
exchange for Leased Hours, Lessee shall pay annual base in the
amount of $83,020 (the “ Base Rent ”), which
shall be paid in equal monthly installments as provided herein;
and
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(ii)
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In
addition to the Base Rent, Lessee shall pay the applicable
Tennessee sales tax (the “ Sales Tax ”) on the
monthly installments of the Base Rent.
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The monthly
installments of Base Rent, plus the applicable Sales Tax, shall be
paid by Lessee to Lessor no later than the third (3
rd ) Business Day of each month during the Lease
Year. No refund will be given to Lessee if Lessee shall not use all
of the Leased Hours during a Lease Year. Unused Leased Hours from
one Lease Year will not carryover to any subsequent Lease Years. If
this Lease is extended for one or more Renewal Terms as provided in
Section 3.1 , the Base Rent for each Renewal Term shall
be negotiated by Lessor and Lessee at the time this Lease is
renewed, and the appropriate Sales Tax shall be determined based on
the amount of Base Rent charged. If this Lease is renewed and the
Base Rent or the number of Leased Hours is not renegotiated, it
shall be assumed that the Base Rent and the number of Leased Hours
in the immediately preceding Lease Year shall be the Base Rent and
the number of Leased Hours in the new Lease Year.
3.3.
Accelerated Rent; Additional Rent .
(A) Base Rent is computed hereunder on the assumption
that Lessee will utilize the Leased Hours on a consistent basis
throughout each Lease Year. At the end of each quarter of each
Lease Year or upon the early termination of the Lease by Lessor,
Lessor will review Lessee’s usage of the Aircraft to
determine if the Leased Hours have been over utilized on a
year-to-date basis. In the event that Lessee’s year-to-date
Flight Hours exceed the prorated number of Leased Hours that should
have been used on a year-to-date basis (e.g.,
1 / 4
of the Leased Hours used through the
first three months of the Lease Year), Lessee shall pay to Lessor,
as accelerated rent (the “ Accelerated Rent ”),
an amount equal to $1,186 multiplied by the number of Flight Hours
over the prorated share of Leased Hours that should have been used
as of such date, plus the applicable Sales Tax on such Accelerated
Rent. The Accelerated Rent shall be paid by Lessee within five
(5) Business Days of notice from the Lessor and shall be
treated as an advance payment of Base Rent otherwise due hereunder
with the monthly Base Rent due for subsequent months offset by the
Accelerated Rent.
(B) In the event that Lessee’s use of the
Aircraft exceeds the Leased Hours for a particular Lease Year,
Lessee shall pay to Lessor within five (5) Business Days of
the end of the Flight that results in such overage, an amount equal
to $1,293 times the total number of Flight Hours, or fraction
thereof, Lessee has used the Aircraft during the Lease Year in
excess of the Leased Hours (the “ Additional Rent
”).
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3.4.
Additional Leased Hours. Once Lessee has used all of the Leased
Hours, Lessee may purchase additional time in one (1) hour
blocks at the rate of $1,293 per Flight Hour, plus applicable Sales
Tax.
3.5.
Insurance. The Base Rent charged hereunder shall include
Lessee’s proportionate share of insurance acquired by Lessor
pursuant to Section 10 .
4.
COVENANTS, REPRESENTATIONS AND WARRANTIES.
4.1.
Lessor’s Representations and Warranties . LESSOR SHALL
NOT BE DEEMED TO HAVE MADE OR GIVEN, AND HEREBY EXPRESSLY
DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS
TO THE TITLE, AIRWORTHINESS, CONDITION, MERCHANTABILITY, DESIGN,
OPERATION OR FITNESS FOR USE OF THE AIRCRAFT, OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT except that Lessor represents that it is
duly authorized to enter into this Agreement and to Lease the
Aircraft to Lessee hereunder.
4.2.
Lessee’s Representations and Warranties . Lessee
covenants, represents and warrants that on the date of execution of
this Agreement and on the Commencement Date:
(A) Entity Organization and Standing. Lessee is a
corporation duly organized and validly existing in good standing
under the laws of the State of Tennessee, and is duly qualified and
authorized to do business and in good standing wherever necessary
to substantially carry on its business and operations and to own
its properties and to perform its obligations under this
Lease.
(B) Entity Authority. Lessee has the full power,
authority and legal right to enter into and perform the Lease, and
the execution, delivery and performance of the Lease has been duly
authorized by all necessary action on the part of Lessee, does not
require any stockholder [member] approval or approval or consent of
any trustee or holders of any indebtedness or obligations of
Lessee, or such required approvals and consents have heretofore
been duly obtained by Lessee, and does not and will not contravene
any law, judgment, governmental rule, regulation or order binding
on Lessee or any of its subsidiaries or the chartering documents or
by-laws of Lessee or any of its subsidiaries or result in the
breach of, constitute a default under, contravene the provisions
of, or result in the creation of any lien, charge, encumbrance or
security interest upon any property or assets of Lessee pursuant to
any indenture, mortgage, contract or other agreement to which
Lessee or any of its subsidiaries is a party or by which it is
bound.
(C) Binding Obligations. The Lease constitutes a valid
and legally binding obligation of Lessee enforceable against Lessee
in accordance with the respective terms thereof, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors’ rights generally.
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Each time during
the Term in which the Aircraft is returned to Lessor, Lessee agrees
that the Aircraft shall be clean, serviced (potty included) ready
for the next flight, airworthy with all systems functioning
properly, in the same condition, and available for the same use
within Lessor’s operations (including, without limitation,
the same interior configuration, cockpit
arrangement/instrumentation, other operating systems and
components), as when delivered to Lessee hereunder, reasonable wear
and tear excepted, and free and clear of all liens, encumbrances or
rights of others whatsoever except any lien placed on the Aircraft
by Lessee.
6.
MORTGAGES, LIENS, ETC.
Lessee will not
directly or indirectly create, incur, a
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