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AIRCRAFT LEASE
This Aircraft Lease (this "Lease") is made and entered into as of the
6th day of October, 1996, by and between JSM, Inc., a Connecticut corporation
which has a principal place of business c/o Cannondale Corporation, 9 Brookside
Place, Georgetown, Connecticut 06829 (hereinafter called "Lessor"), and
Cannondale Corporation, a Delaware corporation which has a principal place of
business at 9 Brookside Place, Georgetown, Connecticut 06829 (hereinafter called
"Lessee").
Lessor and Lessee hereby certify that the Aircraft Lease, dated as of
March 29, 1995, between Lessor and Lessee, recorded by the Federal Aviation
Administration on June 23, 1995, and assigned Conveyance No. C32820 (the "Prior
Lease") has terminated and the Aircraft and Engines covered thereby are no
longer subject to the terms thereof. The foregoing shall not affect indemnity
obligations under Section 16 of the Prior Lease, which obligations, by the
agreement of the Lessor and Lessee, shall survive the termination of the Prior
Lease.
W I T N E S S E T H:
In consideration of the rents and covenants set forth herein, Lessor
does hereby lease to Lessee and Lessee hereby leases from Lessor the aircraft
described below (the "Aircraft"), subject to all of the terms and conditions set
forth herein:
Aircraft Manufacturer and Model: Cessna 525 CitationJet
Aircraft Serial No.: 525-0094
U.S. Registration No.: N94MZ
Engine Manufacturer and Model: Williams-Rolls, Inc.
Model FJ-44-1A*
Engine Serial Nos.: Left: 1206
Right: 1193
* Engines are in excess of 750 shaft horsepower or its equivalent.
Lessee shall have complete responsibility to maintain the Aircraft
during the term of the Lease in accordance with the terms and conditions set
forth herein, except as otherwise provided herein.
1. DELIVERY OF AIRCRAFT (a) Lessee shall take delivery of the Aircraft
upon the expiration of the Prior Lease at Danbury Municipal Airport, Danbury,
Connecticut. On such date Lessee shall be deemed to have accepted the Aircraft
for all purposes hereunder in an "AS IS" condition, ACKNOWLEDGING THEREBY THAT
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LESSOR HAS NOT MADE NOR DOES IT MAKE ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO AIRWORTHINESS, DESIGN, CONDITION, SUITABILITY, MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE OR AS TO ANY OTHER MATTER. Lessor represents
and warrants that upon such delivery, it will have good title to the Aircraft
and that the Aircraft will have been registered in its name with the Federal
Aviation Administration ("FAA"). During the term of this Lease, Lessor shall not
impair such registration or cause it to be impaired, suspended or canceled.
Lessor agrees that so long as the Lessee is not in default and fully performs
hereunder, Lessor will not interfere with Lessee's quiet use and enjoyment of
the Aircraft.
(b) Upon delivery of the Aircraft and thereafter during the
remainder of this Lease so long as Lessee is not in default hereunder, Lessor
assigns to Lessee, and authorizes Lessee to exercise, such rights as Lessor may
have under any warranty, express or implied, with respect to the Aircraft, made
by any manufacturer, supplier or subcontractor, to the extent the same may be
assignable or made available to Lessee, and Lessor agrees that upon Lessee's
request, Lessor shall use its reasonable efforts to enforce such rights as
Lessor may have with respect thereto for the benefit of Lessee.
2. TERM -- The term of this Lease shall commence as of October 6, 1996,
and shall expire on October 5, 1999.
3. AMOUNT OF PAYMENT -- Lessee agrees to pay rent at the rate set forth
on Exhibit A annexed hereto and made a part hereof, together with all applicable
sales and use taxes.
4. MODE OF PAYMENT -- Monthly rental payments shall be paid in advance
on or before the 6th day of each calendar month.
5. PLACE OF PAYMENT -- Monthly rental payments are to be made to Lessor
at the address specified above or to such other place as the parties may agree.
6. TIME, PLACE, CONDITION AND DELIVERY UPON TERMINATION -- The Aircraft
shall be returned to Lessor at the place the Aircraft was accepted for delivery
hereunder or such other place agreed upon by the parties. At the time of such
delivery, Lessee shall deliver all operating, overhaul and maintenance manuals,
records, logs and other materials required to be maintained with respect to the
Aircraft. The Aircraft will be in the same
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operating condition, order, repair and condition as when received excepting only
for reasonable wear and tear.
7. MAINTENANCE AND REPAIR -- Lessee shall, at its own expense, maintain
the Aircraft and keep the Aircraft in good order and repair, in accordance with
(i) all applicable laws, rules and regulations and (ii) applicable requirements
of the FAA or other governmental authority. All inspections, repairs,
modifications and overhaul work to be accomplished by Lessee shall be performed
by personnel duly licensed to perform such work and shall be performed in
accordance with the standards set by the FAA in its regulations and
requirements. Lessee shall maintain all log books pertaining to the Aircraft
during the term of this Lease in accordance with the rules and regulations of
the FAA. Such records shall be made available for examination by Lessor or its
duly authorized agent upon reasonable notice to Lessee, and Lessee shall, at the
end of the term of this Lease, deliver such records to Lessor. Lessee will
promptly replace all or any part of the Aircraft which may be worn out, lost,
destroyed, confiscated or otherwise rendered unsatisfactory or unavailable for
use in or upon the Aircraft.
8. INSPECTION BY LESSOR -- Lessee agrees to permit Lessor or its duly
authorized agent to inspect the Aircraft upon reasonable notice to Lessee.
Lessee agrees to furnish Lessor with any information in respect to the Aircraft
and its use that Lessor may reasonably request.
9. RISK OF LOSS -- During the term of this Lease (and until the
Aircraft is returned to Lessor in accordance with paragraph 6 above), Lessee
shall bear the risk of loss with respect to the Aircraft.
10. INSURANCE -- Upon delivery of the Aircraft and thereafter during
the remaining term of this Lease (and until the Aircraft is returned to Lessor
in accordance with paragraph 6 above), Lessee shall maintain in full force and
effect and at its own expense policies of insurance against loss or damage to,
or relating to the operation of, the Aircraft, with insurers and in such form as
are reasonably acceptable to Lessor, as follows:
(i) Hull insurance covering all risks on the ground and in
flight in an amount not less than $3,000,000.00, naming the Lessor, Joseph S.
Montgomery, and Park National Bank, as Trustee for the Joseph S. Montgomery
Irrevocable Trust, as their interests may appear, as loss payees. Such coverage
shall
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include a mutual waiver of subrogation between Lessor and Lessee; and
(ii) Passenger liability, public liability and property damage
liability with an aggregate combined limit of not less than $25,000,000.00
against claims arising from the possession, maintenance or operation of the
Aircraft by Lessee. Such coverage shall name Lessor, Joseph S. Montgomery and
Park National Bank, as Trustee for the Joseph S. Montgomery Irrevocable Trust,
and any person or entity on whose behalf the Aircraft may be operated
(including, without limitation, Joseph S. Montgomery), as their interests may
appear, as additional insureds.
The above coverages shall contain a provision requiring the
insurance carrier to provide the Lessor with at least thirty days written notice
prior to canceling coverage and a breach of warranty provision in favor of Park
National Bank, as Trustee for the Joseph S. Montgomery Irrevocable Trust.
Lessee shall deliver to Lessor at the commencement hereof, and
annually thereafter, a copy of said insurance policy or other reasonable
evidence that coverage in accordance with this provision is in effect.
11. LESSEE'S COVENANTS -- The Lessee covenants and agrees as follows:
(i) Conforming Use. To abide by and conform to the provisions
of any insurance policy issued with respect to the Aircraft and all laws,
ordinances, orders, rules and regulations controlling or affecting the operation
or use of the Aircraft.
(ii) Operation. To operate and to cause others to operate the
Aircraft at all times in accordance with the Aircraft's flight manual.
(iii) Licensed Pilotage. To permit the Aircraft to be operated
only by pilots duly licensed and qualified to operate the Aircraft and having at
least the minimum total pilot hours required by insurance covering the Aircraft.
12. TAXES -- Lessee agrees to pay all local, state and federal taxes
relating to the Aircraft, except income taxes of Lessor.
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13. TITLE; PERMITTED USE -- The registration of, and title to, the
Aircraft shall be in the name of Lessor at all times during the term of this
Lease. This Lease is and is intended to be a lease and the Lessee does not
acquire hereby any right, title or interest whatsoever, legal or equitable, in
the Aircraft except its interest as Lessee hereunder. Lessee may sublease or
permit use of the Aircraft by third parties provided that any such use shall be
in accordance with the terms of this Lease and all applicable laws, rules and
regulations and the insurance policies maintained under paragraph 10 hereof.
14. DEFAULT -- In addition to any of Lessor's other remedies at law or
in equity, if Lessee fails to make any payments of rent as required hereunder or
if Lessee fails to comply with any provision of this Lease, Lessor shall have
the right to take possession of the Aircraft wherever it may be located without
demand or notice. In the event of such default by Lessee, Lessor may at its
option terminate this Lease immediately.
15. GOVERNING LAW -- This Lease shall be construed under the laws of
the State of Connecticut.
16. INDEMNIFICATION -- Lessee shall indemnify, defend and hold harmless
Lessor from all claims, expenses, damages and liabilities, including, without
limitation, personal injury, death and property damage claims, arising during
the term of this Lease and in any manner occasioned by or related to Lessee's
possession, operation, use, or maintenance of the Aircraft to the extent the
same are not covered by the insurance required hereunder. The foregoing
indemnification obligations shall expressly survive any termination of this
Lease.
17. ENTIRE AGREEMENT -- This Lease, together with any exhibits and
schedules appended hereto, constitutes the entire agreement between the parties,
superseding any and all agreements and undertakings, oral or written, between
the parties hereto, and may not be modified or amended except in a writing
executed by the parties.
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IN WITNESS WHEREOF, the parties have set their hands and seals at
Georgetown, Connecticut as of the 6th day of October, 1996.
JSM, INC. CANNONDALE CORPORATION
By: /s/ Joseph S. Montgomery By: /s/ John Moriarty
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Name: Joseph S. Montgomery Name: John Moriarty
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Title: President Title: Assistant Treasurer
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EXHIBIT A
To Aircraft Lease dated as of October 6, 1996, between JSM, Inc., as
Lessor, and Cannondale Corporation, as Lessee
RENT
1. First Year of Term. Annual rent for the first year of the
term of the Lease shall be $375,000 payable in advance on the 6th day of each
month as follows:
October 6, 1996 $100,000
6th day of each
calendar month
thereafter $25,000
2. Subsequent Years of Term. Within 90 days prior to each
anniversary date of the Lease, Lessor and Lessee shall negotiate in good faith
to determine whether the rent as provided in paragraph 1 of this Exhibit A
should be adjusted to account for changes in the fair market value of aircraft
comparable to the Aircraft.
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