AIRCRAFT LEASING AGREEMENT
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THIS LEASE AGREEMENT (hereinafter referred to as "Lease") is made and
entered into on the 1st day of October, 2002, by and between M.D. Lung, Inc., an
Indiana Corporation (hereinafter referred to as "Lessor",) and Patrick
Industries, Inc., 2216 Airport Boulevard, Elkhart Municipal Airport, Elkhart,
Indiana, 46514 (hereinafter referred to as "Lessee"), as follows:
WHEREAS, Lessor is the owner of the following described aircraft and
related equipment:
MAKE & MODEL: Sabreliner 65
AIRCRAFT SERIAL NO.: 465-33
REGISTRATION NO.: N265C
together with the manufacturer's specified equipment described in Exhibit "A"
attached hereto and made a part hereof by reference all of said personal
property being collectively referred to as the "Aircraft;"
WHEREAS, Lessor wishes to Lease to Lessee and Lessee desires to lease
from Lessor the Aircraft subject to the terms and conditions of this Lease; and
WHEREAS, the parties desire to memorialize this leasing relationship in
writing.
NOW, THEREFORE, in consideration of mutual agreements and covenants set
forth herein, and for all other good and valuable legal consideration which is
found to exist, the Parties agree as follows:
1. TERM: The term of this Lease shall be for a term of
twenty-four (24) months commencing on the 1st day of November,
2002, and ending on the 31st day of October, 2004.
2. RENTAL: Lessee shall pay Lessor, as rental for the Aircraft,
as follows:
(a) Lessee shall pay to Lessor Ten Thousand Dollars
($10,000.00), per month, beginning November 1, 2002,
with said monthly rental amount to continue on the
same day of each consecutive month thereafter to and
including the payment due October 1, 2004;
3. MAINTENANCE AND OPERATION: It is agreed that Lessee, as the
operator of the Aircraft, shall be responsible for all
maintenance, repairs, rebuilding of, refurbishment of,
modification of, painting and is further responsible for the
following:
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(a) Fuel, oil and associated taxes and fees;
(b) Crew, salaries, expenses, and employee benefits, and
related tax liabilities;
(c) Landing fees, customs, and other related types of
assessments, charges, or fees and any related fines
attributable thereto;
(d) Hangar rental provided that the Aircraft is to be
hangared at the Aircraft's home base as hereinafter
defined, and whenever possible, on the road;
(e) Any applicable excise, sales, use, and/or property
tax levied on the Aircraft as a result of Lessee's
use of any type or nature; and
(f) Ferry flights necessary to perform routine
maintenance.
In no event shall Lessor be responsible for the payment of any
maintenance or operational costs attributed to the Aircraft of any type unless
specifically agreed to in writing by Lessor.
Lessee shall give Lessor written notice, as soon as possible, for major
repairs or any major engine or airframe overhauls or repairs which may be
required or should be performed either by laws, regulations, or the desires of
Lessee. Any modifications, painting, and/or refurbishing must meet with Lessor's
satisfaction to be given by Lessor in writing prior to any painting,
modification, or refurbishing being done to the Aircraft. Lessee agrees at all
times to operate the Aircraft in the mechanical condition adequate and safe to
comply with regulations as set forth by the Federal Aviation Administration
(hereinafter referred to as "FAA") and any other regulations as set forth by any
local, state, or federal governing body, domestic or foreign, having power to
regulate or supervise the Aircraft or the maintenance, use or operation thereof.
Lessor shall have the right at all reasonable times to inspect the
Aircraft for purposes of ascertaining compliance with any terms of this Lease.
4. RETURN OF AIRCRAFT AT LEASE TERMINATION DATE: It is agreed by
the parties that Lessor shall have thirty (30) days, after the
Aircraft has been returned to Lessor, to examine the Aircraft
to determine what if any damage has been done and shall notify
Lessee in writing of such damages and, if possible, the cost
of repair of the same. Lessee shall be responsible for all
such damages and shall pay said costs of repairs, for both
labor and material, within thirty (30) days of written demand
thereof being made by Lessor to Lessee.
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5. OPTION TO PURCHASE AIRCRAFT. It is contemplated and agreed by
the Parties that Lessee shall have the option to purchase the
Aircraft from Lessor beginning the ___ day of ________, 20__,
at negotiated terms. Lessee shall exercise said option by
providing Lessor with sixty (60) days advanced written notice
of the intent to exercise the option at which time
negotiations shall be initiated for said purchase. All terms
of said purchase will be subject to negotiation during the
option period, which shall last for ninety (90) days after the
aforementioned notice is given.
6. DELIVERY AND RETURN: It is agreed by the Parties that
possession of the Aircraft will be delivered to Lessee by
Lessor on the date of execution of this Lease. Lessee agrees
that it will return the Aircraft to Lessor in the same and as
good a condition as when accepted by Lessee at the beginning
of this Lease term. In the event Lessee does not return the
Aircraft in such condition, Lessor will provide written notice
to Lessee of repairs necessary to restore the Aircraft to the
condition it was in when accepted by lessee as specified by
lessor with payment of said repairs to be made by Lessee to
lessor within thirty (30) days after written demand of the
same by Lessor to Lessee.
7. BASE OF AIRCRAFT. The Lessor and the Lessee both agree that
the Aircraft shall be permanently based in a closed, secured
hangar at the Elkhart Municipal Airport, 2216 Airport Drive,
Elkhart, Indiana 46514. Lessee shall not make any change in
this permanent base without notifying Lessor in writing of
such change and receipt of Lessor's prior written consent
thereto.
8. TITLE AND USE OF AIRCRAFT. Title to the Aircraft shall remain
with Lessor through the term of this Lease and the Aircraft
shall remain under U.S. registry.
Lessee shall have complete use of the Aircraft, restricted, however to
the ordinary purposes of Lessee's business operations and pleasure. Lessee
agrees to not use, operate, maintain, or store the Aircraft in violation of this
Lease or any applicable law or regulation, local, state or federal, or any
instructions furnished therefore by Lessor. Furthermore, Lessee shall not
operate the Aircraft in any manner which would contravene the uses and purposes
stipulated in any insurance policies discussed in this Lease. Nothing herein
shall authorize Lessee or any other person to operate the Aircraft or incur any
liability or obligation on behalf of Lessor. Lessee shall not use the Aircraft
in any manner to cause harm to the Aircraft other than ordinary wear and tear.
9. CONDITION OF AIRCRAFT. Lessor and Lessee mutually agree and
understand that Lessee has had ample opportunity to inspect
the Aircraft in all respects, and accepts the Aircraft in an
"AS IS" condition, agreeing that the same is in a proper, fit
condition for its intended use and is in good, safe,
serviceable and airworthy condition.
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10. INSURANCE AND RISK OF LOSS. It is agreed that Lessor shall
assume all risk of loss of the Aircraft for any reason
whatsoever until Lessee has been given possession of said
Aircraft. Thereafter, and until this Lease terminates and
possession is returned to Lessor on a permanent basis, Lessee
shall assume all risk of loss of the Aircraft.
11. INSURANCE. Lessee shall secure and maintain, in effect,
throughout the term hereof, insurance policies covering said
Aircraft, all of which shall be agreed to in their entirety by
Lessor, with minimum limits, as follows:
(a) Full hull coverage, including all risk, both in
flight and not in flight in the amount of Two Million
One Hundred Fifty Thousand Dollars ($2,150,000.00)
with Lessee to be responsible for paying any
deductible amounts as provided for in said coverage.
(b) Liability insurance in the amount of at least Twenty
Million Dollars ($20,000,000.00) combined single
limit, bodily injury and property damage, including
passengers.
Lessee shall provide Lessor with copies of all insurance policies or
certificates prior to the time of delivery from Lessee's carriers, all of which
shall be approved by Lessor. Lessee agrees to make any changes in coverage as
required by Lessor as notified by Lessor to Lessee, in writing, within thirty
(30) days after said request being made by lessor to Lessee. In all policies of
insurance, Lessor shall be included as an additional insured and breach of
warranty insurance shall apply to Lessor.
In the event of loss or damage to the Aircraft, Lessee shall
immediately report such loss or damage to Lessor in writing, to the insurance
companies underwriting such a risk, and to any and all applicable government
agencies, both local, state and federal, and shall furnish such information and
execute such documents as may be required and necessary to collect the proceeds
from the insurance policies. In the event, the rights, liabilities, and
obligations of the parties shall be as follows:
(a) In the event that the Aircraft is lost or damaged
beyond repair, the proceeds of hull coverage,
insurance policy or policies shall be payable first
to the Lessor to the full extent of said coverage.
(b) In the event that the Aircraft is partially damaged,
Lessee shall, at its costs and expense, fully repair
the Aircraft to the full and complete satisfaction at
least as good or the same condition as it was prior
to damage. Lessor shall have the right to prior
approval of all repairs made by Lessee.
12. DEFAULT. The following events shall constitute default for
purposes of this Lease:
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(a) Lessor shall fail to perform or observe any material
covenant, condition or agreement to be performed or
observed by it hereunder and such failure shall
continue unremedied for a period of twenty (20) days
after written notice by Lessee;
(b) Any representation or warranty made by Lessee
hereunder or in any document or certificate furnished
Lessor in connection herewith which shall prove to
have been false in any material respect when made or
furnished to Lessor;
(c) Lessee shall fail to make any payment of rent when
due;
(d) Lessee shall fail to perform or observe any other
material covenant, condition or agreement to be
performed or observed by it hereunder, and such
failure shall continue unremedied for a period of
twenty (20) days after written notice thereof by
Lessor;
(e) Lessee ceases doing business as a going concern, a
petition is filed by or against Lessee under the
bankruptcy act or any amendment thereto, a receiver
is appointed for Lessee or its property, Lessee
commits any act of bankruptcy, makes an assignment
for the benefit of its creditors, or offers a
composition or extension of any of its indebtedness,
or becomes insolvent.
13. REMEDIES FOR DEFAULT BY LESSEE. Upon the occurrence of any
default by Lessee any time hereafter so long as the same shall
be continuing, the Lessor may, at its option, declare this
Lease to be in default by Lessee, and at any time thereafter
so long as the default shall be continuing, s long as Lessee
shall not have remedied all outstanding defaults, have and
exercise all remedies provided at law and in equity, including
without limitation the following:
(a) Declare the entire amount of rent hereunder
immediately due and payable without notice or demand
to Lessee;
(b) Recover from Lessee an amount equal to the unpaid
balance due and to become due during the term of this
Lease;
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(c) Cause Lessee, at Lessee's expense, to return the
Aircraft to Lessor at a point in the United States
designated by Lessor, or Lessor, through its
employees, agents, or attorneys, may enter upon the
premises where the Aircraft is located and take
immediate possession of the same without demand or
legal process and free of all rights of Lessee, in
which case the Lessee authorizes Lessor or its agents
to enter upon any premises where the Aircraft may be
found for the purpose of repossessing the same, and
Lessee specifically waives any right of action it
might otherwise have arising out of such entry and
repossession whereupon all rights of the Lessee in
the equipment shall terminate immediately. No such
retaking of possession shall constitute a termination
of this Lease, unless Lessor so notifies Lessee in
writing.
(d) Terminate this Lease and retain all prior payments of
rent and retake possession of the Aircraft as herein
provided.
14. DEFAULT BY LESSOR. Upon the occurrence of an incident of
default by Lessor, and at any time thereafter so long as the
same shall be continuing, Lessee may, at its option, declare
this Lease to be in default and at any time thereafter, so
long as Lessor shall not have remedied all outstanding
defaults within reasonable time, have and exercise all
remedies provided at law and in equity.
15. COST OF LITIGATION. In the event that litigation is initiated
by either party to this Lease, as a result of the default by a
party to the Lease, the prevailing party in said litigation
shall be entitled to have all costs of litigation, including
court costs, discovery expense, expert witness fees, and
reasonable attorneys fees paid by the defaulting party.
16. INDEMNIFICATION OF LESSOR. Lessee agrees to indemnify and hold
harmless Lessor and its successors and assigns from and
against any and all loss, damage, injury or death claims,
demands and liability of every nature, including reasonable
attorneys fees arising from or in connection with the
possession, maintenance, or use or operation of the Aircraft
by Lessee, unless due to causes arising in whole or in part
from possession, maintenance, use or operation prior to the
delivery of the Aircraft to Lessee, or unless due to the
negligence of Lessor.
17. INDEMNIFICATION OF LESSEE. Notwithstanding anything to the
contrary contained in Paragraph 13, above, Lessor agrees to
indemnify and hold Lessee and its affiliates, employees,
agents, directors, successors and assigns harmless from any
and all liabilities, losses, damages, demands and liability of
every nature due to bodily injury and property damage,
including reasonable attorneys fees, arising from or in
connection with the ownership, operation, maintenance, use or
storage of the Aircraft, arising from any act, omission or
event occurring prior to the delivery of the Aircraft, to
Lessee, or arising from any act or omission of Lessor, or any
event over which Lessor has or had reasonable control,
subsequent to the delivery of the Aircraft to Lessee.
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18. SUB-LEASING AND ASSIGNMENT. It is agreed by the parties that
Lessee agrees not to sub-lease or assign this Lease or any
interest therein without the prior written consent of Lessor,
or in any way to part with the possession of the same Aircraft
either by voluntary act, operation of law or otherwise.
It is understood that Lessor may assign this Lease.
19. TAXES, FINES, FEES OR PENALTIES. During the term of this
Lease, Lessee shall be responsible for all taxes, fines, fees
or penalties arising out of this Lease or the Lessee's
operation of the Aircraft including, but not limited to,
personal property taxes, and/or landing fees, assessed during
the term of this Lease.
20. TRUTH IN LEASING. (See Federal Aviation Regulation FAR 91.54).
Lessor certifies that the vendor of this Aircraft has
represented to lessor that the Aircraft has been maintained
and effected under FAR 91 from the date of manufacture, to the
date hereof, and that the Aircraft will be maintained by
Lessee under FAR 91 for the operations to be construed under
this Lease. Lessee is considered responsible for operational
control of the Aircraft under this Lease.
For an explanation of the factors bearing on operational control,
pertinent Federal Aviation Regulations can be obtained from the nearest Federal
Aviation Administration Flight Standard District Office, General Aviation
District Office or Air Carrier District Office.
The undersigned Lessee certifies that it is responsible for operational
control of the Aircraft during the term of this Lease and that it understands
its responsibilities for compliance with applicable Federal Aviation
Administration Regulations.
21. MISCELLANEOUS.
(a) Modification. This Lease may be modified only by
written instrument executed by both parties hereto.
(b) Binding Effect. This Lease shall be binding upon the
parties hereto, their successors, assigns and legal
representatives.
(c) Entire Agreement. The terms and conditions of this
Lease constitute the entire agreement and supersedes
all previous negotiations, presentations and
agreements between the parties, whether written or
oral.
(d) Applicable Law Venue. This Lease shall be construed
and performance shall be governed under the laws of
the State of Indiana. Any lawsuit or other court
proceeding between or among Lessor and Lessee in
relation to or arising out of this Lease or the
subject matter hereof shall be brought in the federal
or state courts located in Northern Indiana and St.
Joseph County, Indiana.
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(e) Counterparts. This Lease may be executed in separate
counterparts, each of which when so executed and
delivered shall be an original, but all such
counterparts shall together constitute one and the
same instruments.
(f) Survival of Representatives and Warranties. All
representations and warranties contained herein and
made by either party to the other shall survive the
execution of this Lease.
(g) Assignment. This Lease shall insure to the benefit of
and be binding upon each of the parties hereto and
their respective successors and assigns.
LESSOR
M.D. LUNG, INC.
by _____________________________
Mervin D. Lung, President
LESSEE
PATRICK INDUSTRIES, INC.
by _____________________________
David D. Lung, President
by _____________________________
______________, Secretary
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EXHIBIT "A"
MANUFACTURER'S SPECIFIED EQUIPMENT
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1980 Sabreliner 65 S/N 465-33
Registration Number: N265C
Airframe Hours: 5831
Engine Hours: LH 5804/766 SMPI Core Due 7,923
RH 5804/766 SMPI Core Due 7,923
APU Hours: 607 (Solar)
Avionics: Dual Collins VHF 20A Comms
Dual Collins VIR 30A NAVS
Dual Collins FD 1092 Flight Directors
Collins APS 80 Autopilot System
Collins ADF 60
Dual Collins RMI 30's
Dual Collins MC 103 Compasses
Collins 718U-5 HF with SELCAL
Wulfsberg Flitefone VI with Dual Handsets
Primus 400 Color Radar
Dual TDR 90 Transponders
Cockpit Voice Recorder
Long Range NAVS: Global GNS 500 Series IV
ANI 7000 LORAN
Foster Database
Wire Provisions and Antenna for GPS
Options: Angle of Attack
J.E.T. Standby Gyro Horizon
Second Hydraulic Pump Kit
Hydraulic Accumulator Pressure Gage
Computerized Aircraft Maintenance Program
APU Certified for In-Flight Operation
Interior: Eight Passengers
Blue Leather Chairs
Gray Carpet
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Exterior: Overall White with Yellow Tail