EXHIBIT 10.10

 

 

 

 

 

 

 

AIRCRAFT LEASE

(Serial Number 560-5086)

 

DATED AS OF APRIL 11, 2002

 

between

 

FLEET CAPITAL CORPORATION

as Lessor

 

and

 

COPART, INC.

as Lessee

 

 

 

 

 

 

 

 

This is Counterpart No. 2 of a total of 3 counterparts.  Only Counterpart No. 1
shall be considered chattel paper for purposes of the Uniform Commercial Code
and a security interest may be perfected only by possession of Counterpart No.
1.

 

 

--------------------------------------------------------------------------------

 

TABLE OF CONTENTS

 

 

 

 

 

 

 

PAGE

 

 

 

 

 

 

 

SECTION

1

Lease and Acceptance of Aircraft

 

 

3

SECTION

2

Conditions to Closing

 

 

3

SECTION

3

Term and Rent

 

 

4

SECTION

4

Title; Quiet Possession and Use

 

 

5

SECTION

5

Disclaimer and Assignment of Warranties

 

 

5

SECTION

6

Representations, Warranties and Agreements of Lessee

 

 

6

SECTION

7

Net Lease

 

 

10

SECTION

8

Taxes

 

 

11

SECTION

9

Compliance and Use

 

 

11

SECTION

10

Loss or Damage

 

 

12

SECTION

11

Indemnification

 

 

13

SECTION

12

Assignment and Sublease

 

 

14

SECTION

13

Events of Default

 

 

16

SECTION

14

Remedies

 

 

18

SECTION

15

Notices

 

 

20

SECTION

16

Transaction Expenses

 

 

20

SECTION

17

Miscellaneous

 

 

21

SECTION

18

Amendments

 

 

23

SECTION

19

Truth in Leasing

 

 

23

 

 

EXHIBIT A - Definitions

 

 

 

 

 

Lease Supplement No. 1

 

 

 

 

 

 

Schedule No. 1 to Lease Supplement No. 1

 

 

 

 

 

Schedule No. 2 to Lease Supplement No. 1

 

 

 

 

 

Schedule No. 2-A to Lease Supplement No. 1 *

 

 

 

 

 

Schedule No. 3 to Lease Supplement No. 1 *

 

 

 

 

 

Schedule No. 4 to Lease Supplement No. 1 *

 

 

 

 

 

Schedule No. 5 to Lease Supplement No. 1 *

 

 

 

 

Lease Supplement No. 2

 

 

 

 

 

EXHIBIT B - Warranty Bill of Sale

 

 

 

 

 

EXHIBIT C - Special Tax Indemnity Rider *

 

 

 

 

 

Insurance Addendum

 

 

 

 

 

Purchase, Early Purchase and Renewal Option Addendum

 

 

 

 

 

Maintenance and Return Addendum

 

 

 

 

 

Security Deposit Amendment

 

 

 

 

 

 

 

 

 

 

 

*              to be deleted from FAA filing copy and copy of lease to be placed
on board the Aircraft

 

 

 

2

--------------------------------------------------------------------------------

 

                This AIRCRAFT LEASE (together with all Supplements, Exhibits,
Riders and Addenda hereto, the “Lease”) is made and entered into as of April 11,
2002 by and between FLEET CAPITAL CORPORATION, a Rhode Island
corporation(“Lessor”), with a place of business at One Financial Plaza, Fifth
Floor, Providence, RI  02903-2305, and COPART, INC., a California corporation
(“Lessee”), having its principal place of business and chief executive office at
5500 East Second Street, Benicia, CA 94510. Certain capitalized terms as used in
this Lease are defined in Exhibit A hereto, and such definitions are hereby
incorporated herein and made a part hereof as though set forth herein in full.

 

SECTION 1.  Lease and Acceptance of Aircraft.

 

                Subject to the satisfaction of each condition set forth in
Section 2, Lessor hereby agrees to purchase the Aircraft from the Supplier and
to lease the same to Lessee and Lessee hereby agrees to lease the same from
Lessor for the Basic Term hereof pursuant to the terms and conditions of this
Lease.  The sale of the Aircraft to Lessor shall include all of Supplier’s
right, title and interest in and to the Aircraft.

 

                Lessor hereby appoints Lessee as Lessor’s agent for the sole and
limited purpose of accepting delivery of the Aircraft from the Supplier.  The
execution by Lessee of Lease Supplement No. 1 shall evidence that the Aircraft
is leased under, and is subject to all of the terms, provisions and conditions
of, this Lease and constitute Lessee’s unconditional and irrevocable acceptance
of the Aircraft for all purposes of this Lease.  Except as may be expressly set
forth herein, this Lease is non-cancelable and non-terminable by Lessee.

 

SECTION 2.  Conditions to Closing.

 

                (a)  Conditions Precedent.  Lessor’s obligations to purchase the
Aircraft from the Supplier and to lease the Aircraft to Lessee, shall each be
both subject to and conditioned upon all of the following conditions being
satisfied:

 

                                (i)  Lessor shall have received the Closing
Documents set forth on Lease Supplement No. 2 hereto, all in form and substance
satisfactory to Lessor.

 

                                (ii)  No material adverse change in the
financial condition of either Lessee or any Guarantor has occurred since the
date of the last financial statements furnished to Lessor as set forth on
Schedule No. 2 to Lease Supplement No. 1.

 

                                (iii)  Receipt by Lessor of a reasonably
satisfactory inspection report with respect to the Aircraft prepared by
inspector(s) reasonably acceptable to Lessor.

 

                                (iv)  Lessee’s acceptance of the Aircraft on or
before the Acceptance Date.

 

                                (v)  In addition to the above listed conditions
precedent, Lessee covenants and agrees that upon Lessor’s acknowledgment that
all the conditions to the sale and lease as aforestated have been satisfied,
Lessee shall authorize the release from escrow to Lessor of the documents held
by FAA Counsel on behalf of Lessee and shall authorize FAA Counsel to file and
record all appropriate documentation with the FAA on the Acceptance Date.

 

                (b)           Lessee’s Conditions Precedent.

 

                                (i)            FAA Counsel shall have received
an original counterpart of this Lease and each other document executed in
connection herewith duly executed by an authorized officer of Lessor.

 

                                (ii)           The Supplier shall have performed
all of its obligations under the Purchase Agreement with respect to the
Aircraft.

 

 

 

3

--------------------------------------------------------------------------------

 

                (c)  Conditions Subsequent.  Lessee shall comply with the
Conditions Subsequent set forth in Lease Supplement No. 2 hereto.

 

SECTION 3.  Term and Rent.

 

                (a)  The leasing of the Aircraft by Lessor to Lessee shall
commence on the Acceptance Date and end on the Expiration Date each as set forth
on Schedule No. 2 to Lease Supplement No. 1, unless this Lease shall have been
earlier terminated, cancelled or extended in accordance with the terms hereof.

 

                (b)  Lessee shall pay to Lessor as basic rent (herein referred
to as “Basic Rent”) the following:

 

                                (i)  On the Acceptance Date, an amount equal to
the Daily Lease Rate, multiplied by the number of days elapsed from and
including the Acceptance Date with respect to the Aircraft to but excluding the
Rent Commencement Date.

 

                                (ii)  On the First Basic Rent Date and on each
Basic Rent Date thereafter, to and including the Last Basic Rent Date, an amount
equal to the Basic Rent set forth on Schedule 2-A to Lease Supplement No. 1.

 

                                (iii)  After the Expiration Date until the
Aircraft is returned to the Lessor in accordance with the terms and conditions
of this Lease, an amount equal to the Basic Rent.  Such amount shall be payable
from and after the Expiration Date until the return of the Aircraft to the
Lessor as provided under this Lease.  Such amount shall be payable on the same
dates and with the same frequency as Basic Rent was payable during the Term.

 

                (c)  In addition, Lessee shall pay to Lessor the following
amounts (herein referred to as “Supplemental Rent” and, together with all Basic
Rent, collectively as “Rent”):  (i)  any other amount payable hereunder which
Lessee assumes the obligation to pay, or agrees to pay, under this Lease to
Lessor or others;  (ii)  on the date provided herein, any amount payable
hereunder as Casualty Value and/or any amounts due pursuant to any Rider or
Addendum hereto plus any and all amounts regarding the same; (iii) interest at
the lesser of the Late Payment Rate or the highest rate of interest permitted by
applicable law for the number of days actually elapsed on any amount payable
hereunder not paid when due, plus, if not paid when due, as an administrative
and late charge, an amount equal to the Administrative Charge.  The expiration,
cancellation or other termination of Lessee’s obligation to pay Basic Rent
hereunder shall not terminate, limit or modify the obligations of Lessee with
respect to Supplemental Rent, which shall survive such expiration, cancellation
or other termination of the Lease.

 

                (d)  All payments of Rent or other amounts required hereunder
shall be made to Lessor in immediately available United States funds on the date
payable hereunder at the address designated by Lessor for payment, by wire
transfer to an account specified by Lessor or at such other address or to such
other Person as Lessor may direct by notice in writing to Lessee.

 

SECTION 4.  Title; Quiet Possession and Use.

 

                Title to the Aircraft shall at all times remain in Lessor (or
such other entity as Lessor shall designate in accordance with the terms hereof)
and at no time during the Term shall title become vested in Lessee.  Lessee
shall acquire no right, title or interest in or to the Aircraft except the right
to use the Aircraft pursuant to the terms of this Lease.

 

                Lessor warrants that during the term of this Lease, so long as
no Event of Default has occurred and is continuing hereunder, Lessee’s
possession and use of the Aircraft shall not be divested or interfered with by
Lessor or anyone claiming by, through or under Lessor, and, so long as no Event
of Default has occurred and is continuing hereunder, Lessor shall not take any
action contrary to Lessee’s right of quiet enjoyment as expressly described
above.  Lessor agrees to cause any lender of Lessor having a security interest
in the Aircraft to provide Lessee with

 

 

 

 

4

--------------------------------------------------------------------------------

 

 

a warranty substantially similar or comparable to the one set forth in the
immediately preceding sentence.

 

                The warranty set forth hereinabove is in lieu of all other
warranties of Lessor, whether written, oral or implied, with respect to this
Lease or the Aircraft, and Lessor shall not be deemed to have modified in any
respect the obligations of Lessee pursuant to Section 7 hereof, which
obligations are and shall remain absolute, irrevocable and unconditional under
all events and circumstances whatsoever.

 

SECTION 5. Disclaimer and Assignment of Warranties.

 

                LESSEE EXPRESSLY ACKNOWLEDGES THAT IT HAS SELECTED THE AIRCRAFT
WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES AND LESSEE EXPRESSLY
AGREES THAT IT IS LEASING THE AIRCRAFT FROM LESSOR IN AN “AS IS” CONDITION. 
LESSEE FURTHER ACKNOWLEDGES THAT THE LESSOR HAS NOT MANUFACTURED OR SUPPLIED THE
AIRCRAFT AND THAT THE LESSOR ACQUIRED OR WILL ACQUIRE THE AIRCRAFT AND/OR THE
RIGHT TO POSSESSION THERETO IN CONNECTION WITH THIS LEASE.  LESSOR SHALL NOT BE
DEEMED TO HAVE MADE, AND LESSOR HEREBY EXPRESSLY DISCLAIMS, ANY REPRESENTATION
OR WARRANTY (EXCEPT FOR THE WARRANTY OF QUIET POSSESSION AND USE), EITHER
EXPRESS OR IMPLIED, AS TO THE AIRCRAFT, ANY PART THEREOF, ANY RECORDS, OR ANY
MATTER WHATSOEVER, INCLUDING, WITHOUT LIMITATION, THE DESIGN, CONDITION,
CAPACITY OR DURABILITY OF THE AIRCRAFT, ITS MERCHANTABILITY OR ITS FITNESS FOR
ANY PARTICULAR PURPOSE, USE OR OPERATION, THE QUALITY OF THE MATERIALS OR
WORKMANSHIP OF THE AIRCRAFT, ITS VALUE OR AIRWORTHINESS, TITLE, SAFETY, THE
ABSENCE OF ANY PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT OR LATENT DEFECT
(WHETHER OR NOT DISCOVERABLE BY LESSEE), COMPLIANCE OF THE AIRCRAFT WITH THE
REQUIREMENTS OF ANY LAW, RULE, REGULATION OR STANDARD PERTAINING THERETO, OR THE
CONFORMITY OF THE AIRCRAFT TO THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE
DOCUMENT RELATING THERETO OR ANY INTERFERENCE OR ANY COURSE OF PERFORMANCE,
COURSE OF DEALING OR USAGE OF TRADE, NOR SHALL LESSOR BE LIABLE, REGARDLESS OF
ANY ACTUAL OR ALLEGED NEGLIGENCE OF LESSOR, FOR ANY DEFECTS, EITHER PATENT OR
LATENT (WHETHER OR NOT DISCOVERABLE BY LESSEE), IN THE AIRCRAFT OR ANY PART
THEREOF OR ANY DIRECT OR INDIRECT DAMAGE TO PERSONS OR PROPERTY RESULTING
THEREFROM OR FOR ANY DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL
DAMAGES OR FOR STRICT OR ABSOLUTE LIABILITY IN TORT.  WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, LESSEE HEREBY WAIVES ANY CLAIM (INCLUDING ANY CLAIM
BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT OR INFRINGEMENT) IT MIGHT HAVE
AGAINST LESSOR FOR ANY LOSS, DAMAGE OR EXPENSE (INCLUDING, WITHOUT LIMITATION,
DIRECT, INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGE, ANY LOSS OF
BUSINESS OR PROFITS OR ANY INTERRUPTION OR LOSS OF SERVICE OR USE THEREOF)
CAUSED BY THE AIRCRAFT OR BY LESSEE’S LOSS OF USE THEREOF FOR ANY REASON
WHATSOEVER.

 

                If the Aircraft is not delivered, does not operate as warranted,
becomes obsolete, or is unsatisfactory for any reason whatsoever, Lessee shall
make all claims on account thereof solely against the Manufacturer or Supplier
and not against Lessor, and Lessee shall nevertheless pay all Rent and other
sums payable hereunder.  Lessee acknowledges that neither the Manufacturer or
Supplier nor any sales representative or agent thereof, is an agent of Lessor,
and no agreement or representation as to the Aircraft or any other matter by any
such sales representative or agent of the Manufacturer or Supplier shall in any
way affect Lessee’s obligations hereunder.

 

                So long and only so long as an Event of Default hereunder shall
not have occurred and be continuing, and so long and only so long as the
Aircraft shall be subject to this Lease and Lessee shall be entitled to
possession of the Aircraft hereunder, Lessor assigns to Lessee and authorizes
Lessee, at Lessee’s expense, to assert for Lessor’s account, all rights and
powers of Lessor under any manufacturer’s, vendor’s or dealer’s warranty on the
Aircraft or any part thereof, (including, without limitation, any warranty of
Manufacturer or Supplier) and, so long as no Event of Default has occurred and
is continuing hereunder, Lessor agrees to reasonably cooperate, at Lessee’s sole
cost and expense, with any reasonable assertion by Lessee against any such
manufacturer, vendor or dealer concerning any existing warranty on the Aircraft
(or any part thereof); provided, however, that any such cooperation by Lessor or
assertion by Lessee shall be expressly limited to any non-legal proceedings,
processes or claims.  Notwithstanding the foregoing, Lessee shall not attempt to
enforce any such performance in the name of Lessor by legal proceeding without
Lessor’s prior

 

 

 

 

5

--------------------------------------------------------------------------------

 

written approval.  Lessor reserves the right to approve all pleadings and legal
process bearing its name.

 

SECTION 6.  Representations, Warranties and Agreements of Lessee.

 

                Lessee represents, warrants and agrees as follows:

 

                (a)  Due Organization.  Lessee has the form of business
organization indicated in the caption of this Lease and is duly organized and
existing in good standing under the laws of the state listed in the caption of
this Lease and is duly qualified to do business wherever necessary to carry on
its present business and operations, including, without limitation, the Primary
Hangar Location, and to own its property, except where the absence of such
qualification would not materially adversely affect Lessee’s ability to perform
its obligations hereunder.

 

                (b)  Due Authorization; No Violation.  This Lease has been duly
authorized by all necessary action on the part of Lessee consistent with its
form of organization, does not require any further shareholder, member or
partner approval, does not require the approval of, or the giving notice to, any
Federal, state, local or foreign governmental authority (including, without
limitation, the Department of Transportation and/or the FAA) and does not
contravene any law binding on Lessee or contravene any provision of, or
constitute a default under any certificate or articles of incorporation or
organization or by-laws or partnership certificate or agreement, or any
agreement, indenture, or other instrument to which Lessee is a party or by which
it may be bound.

 

                (c)  Enforceability.  This Lease has been duly executed and
delivered by authorized representatives of Lessee and constitutes a legal, valid
and binding obligation of Lessee enforceable in accordance with its terms.

 

                (d)  Financial Statements.  Lessee agrees to furnish Lessor (i)
as soon as available, and in any event within one hundred twenty (120) days
after the last day of each fiscal year of Lessee, a copy of the balance sheet of
Lessee as of the end of such fiscal year, and related statements of income and
retained earnings of Lessee for such fiscal year, all in reasonable detail
prepared in accordance with generally accepted accounting principles
consistently applied and certified by an independent certified public accounting
firm of recognized standing and which is reasonably acceptable to Lessor, each
on a comparative basis with corresponding statements for the prior fiscal year
and (ii) within forty five (45) days after the last day of each fiscal quarter
of Lessee (except the last fiscal quarter of any fiscal year), a copy of the
balance sheet of Lessee as of the end of each such quarter, and statement of
income and retained earnings covering the fiscal year to date of Lessee, each on
a comparative basis with the corresponding period of the prior year, all in
reasonable detail and certified by the treasurer or principal financial officer
of Lessee.  Notwithstanding the foregoing, in the event that the Lessee has debt
or equity securities regulated by the SEC, the furnishing by Lessee to Lessor of
all reports, forms and other filings, if any, required to be made by Lessee to
the SEC including, without limitation, any SEC Forms 10-K and 10-Q and related
reports or documents within thirty (30) days after the date on which they are
filed shall be deemed to satisfy the requirements of this paragraph.  All
credit, financial and other information provided by Lessee or at Lessee’s
direction is, and all such information hereafter furnished will be, true,
correct and complete in all material respects.

 

                (e)  Furnishing of Information.  Lessee agrees that it shall
furnish from time to time to Lessor such information relating to Lessee,
Guarantor, their subsidiaries and/or affiliates, financial or otherwise, as
Lessor shall reasonably request.

 

                (f)  Name, Location of Chief Executive Offices and
Organizational Identification Number.  Lessee warrants that Lessee’s exact legal
name as shown on its certificate or articles of incorporation or by-laws, or
certificate of articles of organization, each as amended as of the date of this
lease; Lessee’s state-issued organizational identification number (if any); and
the address of Lessee’s mailing, chief executive offices and principal place of
business are all

 

 

 

 

6

--------------------------------------------------------------------------------

 

correct as set forth in Schedule No. 2 to Lease Supplement No. 1. Lessee agrees
(i) that it shall not change its legal name without prior written notice to
Lessor and (ii) that it shall give Lessor thirty (30) days’ prior written notice
of any relocation of said chief executive offices or principal place of business
from its present location. Within the previous six (6) years Lessee has not
changed its name, done business under any other names, changed its chief place
of business from its present location or merged or been the surviving entity of
any merger.

 

                (g)  Documents on Board.  A current and valid Registration
Application or Certificate of Aircraft Registration and Standard Airworthiness
Certificate (FAA Form AC 8100-2) pertaining to the Aircraft and a copy of this
Lease and the Lease

 

 

 

 

7

--------------------------------------------------------------------------------

 

Supplements, will be kept on board the Aircraft at all times during the Term. 
In addition, for all operations outside the continental United States, the
Lessee shall maintain either a permanent Certificate of Registration or
“fly-time wire” (FAA Standard Form 14) on board the Aircraft.

 

                (h) Litigation.  There are no proceedings pending or, to the
actual knowledge of the officers of Lessee, threatened against or affecting
Lessee or any of its property before any court, administrative officer or
administrative agency which would, directly or indirectly, adversely affect or
impair the title of Lessor to the Aircraft, or which, if decided adversely,
materially affect the financial condition or operations of Lessee or the ability
of Lessee to perform its obligations under this Lease.

 

                (i)  No Adverse Mortgages.  The right, title and interest of
Lessor in and to the Aircraft and the Rent will not be adversely affected or
impaired by the terms of any mortgage, loan agreement or indenture or any other
contract, agreement or instrument to which Lessee is a party, or under which it
or any of its property is or may become bound.  In addition, no mortgage, deed
of trust, or other Lien which now covers or affects, or which may hereafter
cover or affect, any property or interest therein of Lessee, now attaches or
hereafter will attach to the Aircraft, the Airframe or any Engine, or in any
manner affects or will affect adversely Lessor’s right, title and interest
therein.

 

                (j)  Taxes.  Lessee has filed or caused to be filed and will
continue to file all Federal, state and local tax returns which are required to
be filed, and has paid or caused to be paid and will continue to pay all taxes
shown to be due and payable on such returns or (except to the extent being
contested in good faith and for the payment of which adequate reserves have been
provided) on any assessment received by Lessee, to the extent that such taxes
have heretofore or in the future become due and payable.

 

                (k)  Possession and Liens.  Lessee will not sell, convey,
transfer, exchange, lease or otherwise relinquish possession or dispose of the
Aircraft, Engine or Part (except for delivery of possession of the Aircraft or
any Engine or Part to another Person for testing, service, repair, maintenance,
overhaul or, to the extent permitted hereby, alteration or modification), or
attempt or offer to do any of the foregoing.  Lessee will not directly or
indirectly, voluntarily or involuntarily, create, incur, assume or suffer to
exist any Liens on or with respect to the Aircraft or any Part, Lessor’s title
thereto or any interest of Lessor therein (and Lessee will promptly, at its own
expense, take such action as Lessor deems necessary or advisable to duly
discharge any such Lien), except Permitted Liens.  In the event that Lessee
fails to take action to discharge or remove any such Lien, Lessor may take such
action as it deems necessary or appropriate to discharge or remove such Lien. 
Lessee shall reimburse Lessor on demand for any costs incurred by Lessor in
connection with such action together with interest at the Late Payment Rate. 
Lessor’s rights hereunder are in addition to, and not in derogation of, any
other rights which Lessor may have hereunder, at law or in equity.

 

                (l)  Good Title.  Lessor will be the owner of the Aircraft as of
the Acceptance Date and will have good and marketable title to the Aircraft,
free and clear of all Liens other than any Lessor’s Liens or any other Liens
created in favor of Lessor under this Lease.

 

                (m)  Records.  Lessee has reviewed all Records with respect to
the operation and maintenance of the Aircraft prior to the Acceptance Date and
such Records have been kept in accordance with the requirements of the FAA rules
and regulations and industry standards.  Lessee shall maintain all such Records
during the Term in accordance with the requirements of the FAA, and any
manufacturer’s maintenance programs or requirements as the requirements of this
Lease.

 

                (n)  Claims.  Lessee has no pending claims, and does not have
knowledge of any facts upon which a future claim may be based, against any prior
owner, the Manufacturer or Supplier of the Aircraft or of any Engine or part
thereof for breach of warranty or otherwise.

 

 

 

 

8

--------------------------------------------------------------------------------

 

                (o)  Addenda, Exhibits and Riders.  Lessee shall perform all of
its agreements, undertakings and obligations set forth in the Addenda, Exhibits
and Riders hereto and shall comply with all of the terms and conditions set
forth in such Addenda, Exhibits and Riders.

 

                (p)  U.S. Citizen.  Lessee is and will continue to be a “citizen
of the United States” within the meaning  set forth in 49 USC Section 40102 (a)
(15).

 

                (q)  Engines.  Each of the Engines has 750 or greater rated
takeoff horsepower or the equivalent of such horsepower.

 

                (r)  Incidental Use.  The operation of the Aircraft by Lessee is
incidental to a business purpose of Lessee (other than the business of
transportation by air).

 

                (s)  Due Authorization of Guarantor, No Violation.  The
Guaranties have been duly authorized by all necessary action on the part of
Guarantors consistent with their form of organization, do not require any
further shareholder, member or partner approval, do not require the approval of,
or the giving notice to, any Federal, state, local or foreign governmental
authority (including, without limitation, the Department of Transportation
and/or the FAA) and do not contravene any law binding on any Guarantor or
contravene any provision of, or constitute a default under any certificate or
articles of incorporation or organization or by-laws or partnership certificate
or agreement, or any agreement, indenture, or other instrument to which any
Guarantor is a party or by which it may be bound.

 

                (t)  Binding Obligations of Guarantor.  The Guaranties have been
duly executed and delivered by authorized representatives of Guarantors and
constitute a legal, valid and binding obligation of Guarantors enforceable
against Guarantors in accordance with its terms.

 

                (u)  Litigation Regarding Guarantor.  There are no proceedings
pending or, to the actual knowledge of the officers of Lessee, threatened
against or affecting any Guarantor or any of its property before any court,
administrative officer or administrative agency which would, if decided
adversely, materially affect the financial condition or operations of any
Guarantor or the ability of any Guarantor to perform its obligations under the
Guaranty.

 

                (v)  Consideration for Guaranty.  The Guarantors have received
reasonably equivalent value and adequate and sufficient consideration in
exchange for the giving of the Guaranties.  The Guarantors were not insolvent on
the date of the execution of the Guaranties and did not become insolvent as a
result of the execution by Guarantors of the Guaranties.  The Guarantors have
sufficient capital to perform their obligations under the Guaranties.  The
performance of the obligations by Guarantors under the Guaranties will not cause
any Guarantor to exceed its ability to pay its debts as they mature.

 

                (w)          Additional Guarantors.       Lessee shall cause
each Subsidiary that is a Subsidiary of Lessee or that becomes a Subsidiary of
Lessee, that either (i)has assets with a fair market value in excess of
$100,000.00 or (ii) has revenues in any fiscal year in excess of $100,000.00, to
become a Guarantor of this Lease and to promptly execute and deliver to Lessor a
guaranty and further documents and take such further action as Lessor may
require in connection with the guaranty of this Lease. Lessee shall cause each
Subsidiary of Lessee that is organized and exists after the Acceptance Date of
the Lease that either (i) has assets with a fair market value in excess of
$100,000.00 or (ii) has revenues in any fiscal year in excess of $100,000.00, to
become a Guarantor of this Lease and to promptly execute and deliver to Lessor a
guaranty and further documents and take such further action as Lessor may
require in connection with the guaranty of this Lease within 60 days of the
organization of said Subsidiary.

 

 

 

 

9

--------------------------------------------------------------------------------

 

SECTION 7.  Net Lease.

 

                This Lease is a net lease, and Lessee acknowledges and agrees
that Lessee’s obligation to pay all Rent hereunder and the rights of Lessor in
and to such Rent, shall be absolute, irrevocable and unconditional and shall not
be subject to cancellation, termination, modification or repudiation by Lessee
or any abatement, reduction, setoff, defense, counterclaim or recoupment
(collectively, “Abatements”) for any reason or under any circumstance
whatsoever, including, without limitation, Abatements due to any present or
future claims of Lessee against Lessor, its successors and assigns whether under
this Lease or otherwise, the Manufacturer, the Supplier or any other Person for
whatever reason.  Lessee hereby waives any and all existing and future claims to
any Abatement against such Rent, and agrees to pay all such Rent regardless of
any Abatement which may be asserted in connection with this Lease, the Aircraft
or otherwise.  Except as otherwise expressly provided herein, this Lease shall
not terminate, nor shall the obligations of Lessee be affected, by reason of any
defect in or damage to, or any loss or destruction of, the Aircraft or any part
thereof from whatsoever cause,  or the invalidity or unenforceability or lack of
due authorization of this Lease or lack of right, power or authority of Lessor
to enter into this Lease, or for any other cause, whether similar or dissimilar
to the foregoing, any present or future law or regulation to the contrary
notwithstanding, it being the express intention of Lessor and Lessee that all
Rent payable to Lessor hereunder shall be, and continue to be, payable in all
events unless and until the obligation to pay the same shall be terminated
pursuant to the express provisions of this Lease.

 

        Nothing in this Section 7 shall be construed to prohibit Lessee from
separately pursuing any claim that it may have from time to time against Lessor
or any other Person with respect to any matter; provided, however, that in no
event shall any such claim or any other matter impair, prejudice, waive,
release, diminish or otherwise adversely affect in any way whatsoever Lessee’s
absolute, irrevocable and unconditional obligation to pay all Rent to Lessor
without any Abatements pursuant to the terms of the immediately preceding
paragraph, which obligation of Lessee shall remain in full force and effect
notwithstanding any such claim.

 

SECTION 8. Taxes.

 

                Lessee agrees to: (i) file directly with all appropriate taxing
authorities all declarations, returns, inventories and other documentation with
respect to any personal property taxes (or any other taxes in the nature of or
imposed in lieu of property taxes) due or to become due with respect to the
Aircraft and shall pay on or before the date when due all such taxes assessed,
billed or otherwise payable with respect to the Aircraft directly to the
appropriate taxing authorities and (ii) (a) pay when due as requested by Lessor
and (b) defend and indemnify Lessor against liability for all license and/or
registration fees, assessments, and sales, use, property, excise, privilege and
other taxes (including any related interest or penalties) or other charges or
fees now or hereafter imposed by any governmental body or agency upon the
Aircraft or with respect to landing, airport use, manufacturing, ordering,
shipment, purchase, ownership, delivery, installation, leasing, operation,
possession, use, return, or other disposition thereof or the rentals hereunder
(other than taxes on or measured solely by the net income of Lessor)(the items
referred to in (i) and (ii) above being referred to herein as “Impositions”). 
Any Impositions which are not paid when due and which are paid by Lessor shall,
at Lessor’s option, become immediately due from Lessee to Lessor. 
Notwithstanding the foregoing, Lessee shall pay, indemnify Lessor for and hold
Lessor harmless on a net after-tax basis from and against, all Impositions on or
measured by the net income of Lessor imposed against Lessor by any local or
foreign government or other local or foreign taxing authority if and to the
extent that Lessor would not have incurred such Impositions but for the
operation or presence of the Aircraft within the jurisdiction asserting an
Imposition.

 

                Notwithstanding the foregoing, in the event that the Lessor
sells, transfers or assigns this Lease or the Aircraft, the Lessee shall not be
required to indemnify the Lessor for any Imposition which occurs solely as a
result of any such sale, transfer or assignment, but only to the extent that (i)
any such Imposition would not have occurred with respect to the original Lessor

 

 

 

 

10

--------------------------------------------------------------------------------

 

had there been no such sale, transfer or assignment, or (ii) the amount payable
by reason of any such Imposition exceeds that amount that would have been
payable by the Lessee with respect to the original Lessor had there been no such
sale, transfer or assignment; provided, however, that the foregoing exclusion
shall not apply in any way whatsoever to any sale, assignment, transfer or other
disposition of this Lease or the Aircraft that occurs after an Event of Default
or an Event of Loss has occurred in connection with this Lease.

 

SECTION 9. Compliance and Use.

 

                Lessee agrees to comply with all laws, regulations and
governmental orders related to this Lease and/or the Aircraft, its use or
possession.  The Aircraft shall be used in furtherance of Lessee’s business or
other objectives.  The Aircraft shall be used solely in a passenger
configuration for which Lessee is duly authorized by the FAA.  Lessee will not
operate or permit the Aircraft to be operated at any time or in any geographic
area when or where insurance required by the provisions hereof shall not be in
effect.  Lessee will not operate or permit the Aircraft to be operated in a
manner, for any time period, such that Lessor or a third party (except, where
expressly permitted hereunder, an air carrier or air taxi operator certificated
under Part 121 or Part 135 of the Federal Aviation Regulations) shall be deemed
to have “operational control” of the Aircraft.  Without the prior written
consent of Lessor or except as otherwise expressly permitted hereunder, Lessee
shall not operate or permit the Aircraft to be operated under Part 135 of the
Federal Aviation Regulations.  Throughout the Term, the possession, use and
maintenance of the Aircraft shall be at the sole risk and expense of Lessee and
the Aircraft shall be based at the Primary Hangar Location set forth in Schedule
No. 2 to Lease Supplement No. 1.  At all times the Aircraft will be operated
only by duly qualified, currently certificated pilots as required by the
insurance policies required under this Lease.  IN ADDITION, EXCEPT AS EXPRESSLY
PERMITTED BY THE FOLLOWING PARAGRAPH, THE AIRCRAFT SHALL NOT BE OPERATED, USED
OR LOCATED OUTSIDE THE CONTINENTAL UNITED STATES.

 

                Notwithstanding the foregoing, Lessor agrees that the Aircraft
may be flown temporarily to any country in the world in connection with the
conduct of Lessee’s business; provided, however, that in no event may the
Aircraft temporarily fly, be operated, used or located in, to or over any such
country or area (1) which is excluded from coverage by any insurance policy in
effect with respect to such Aircraft or by any insurance policy required by the
terms hereof or any country or area not specifically and fully covered by such
insurance; (2) in a recognized or threatened area of hostility unless fully
covered to Lessor’s satisfaction by hull, political, expropriation, hijacking
and war risk insurance or (3) with which the United States of America does not
maintain diplomatic relations.  Lessee further agrees that it shall not operate
the Aircraft, or permit the Aircraft to be operated in any manner unless the
insurance coverages set forth herein are in full force and effect.

 

SECTION 10.  Loss or Damage.

 

                (a)  Event of Loss with Respect to the Aircraft.  Upon the
occurrence of any Event of Loss with respect to the Airframe and/or Aircraft,
Lessee shall notify Lessor of any such Event of Loss within five (5) days of the
date thereof. On the date that is the earlier of (i) the sixtieth day following
such Event of Loss, and (ii) the second Business Day following the receipt of
the applicable insurance proceeds with respect to such Event of Loss, Lessee
shall pay to Lessor any Rent then due, payable or outstanding, plus the Casualty
Value of the Aircraft determined as of the Basic Rent Date immediately following
the date of such notice, together with interest at the Late Payment Rate for the
period (if any) from the Basic Rent Date following the date of such notice
through the date of payment.  Upon making such payment and all Rent due and
owing, Lessee’s obligation to pay further Basic Rent for the Aircraft subsequent
to such payment shall cease, but Lessee’s obligation to pay Supplemental Rent as
well as any other amounts due under this Lease, if any, for the Aircraft shall
remain unchanged.  Except in the case of loss, permanent disappearance,
destruction or Return to Manufacturer, and unless possession thereof is required
to be delivered to a third party insurance

 

 

 

 

11

--------------------------------------------------------------------------------

 

 

carrier in order to settle an insurance claim, Lessor shall be entitled to
recover possession of the Aircraft and Lessor shall be entitled to any salvage
value in excess of the Casualty Value paid to Lessor.  In the event of a Return
to Manufacturer, Lessor agrees that Lessee shall receive and retain all amounts
payable to Lessor by the Manufacturer up to the amount, if any, of the Casualty
Value actually paid by Lessee hereunder, but any excess shall be retained by
Lessor.  With respect to a Requisition of Use, Lessor agrees that Lessee shall
receive and retain all amounts paid by any governmental authority up to the
Casualty Value actually paid by Lessee hereunder, and any excess shall be paid
over to, and retained by, Lessor.  Lessor shall be under no duty to Lessee to
pursue any claim against any Person in connection with an Event of Loss, but
Lessee may at its own cost and expense and with Lessor’s prior written consent
pursue the same on behalf of Lessor in such manner as may be reasonably
acceptable to Lessor.

 

                (b)  Event of Loss with Respect to an Engine.  Upon an Event of
Loss with respect to any Engine under circumstances in which there has not
occurred an Event of Loss with respect to the Airframe upon which such Engine
was installed, Lessee shall give Lessor prompt written notice thereof and shall
within thirty (30) days after the occurrence of such Event of Loss, duly convey
to Lessor title to a similar or better engine of the same make and model number
as the Engine suffering the Event of Loss.  Such engine shall be free and clear
of all Liens (other than any Permitted Liens), have a value, utility, and useful
life at least equal to, and be in as good an operating condition as, the Engine
suffering the Event of Loss, assuming such Engine was of the value and utility
and in the condition and repair required by the terms hereof immediately prior
to the occurrence of such Event of Loss.  Lessee, at its own cost and expense,
shall furnish Lessor with such documents to evidence such conveyance as Lessor
shall request.  Upon full compliance by Lessee with the terms of this paragraph,
Lessor will transfer to Lessee, without recourse, representation or warranty of
any kind whatsoever other than as to Lessor’s Liens, all of Lessor’s right,
title and interest, if any, in and to the Engine suffering the Event of Loss and
such Engine shall thereupon cease to be an “Engine” under this Lease.  SUCH
TRANSFER SHALL BE “AS-IS, WHERE-IS” AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE,
AND LESSOR HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR
IMPLIED, AS TO THE ENGINE SO TRANSFERRED TO LESSEE other than as to absence of
any Lessor’s Liens.  Each such replacement engine shall, after such conveyance
be deemed an “Engine” as defined herein and shall be deemed part of the same
Aircraft as was the Engine replaced thereby.  No Event of Loss with respect to
an Engine shall result in any reduction or delay in the payment of Basic Rent or
relieve Lessee of any obligation under this Lease.

 

                (c)  Risk of Loss.  Except as otherwise specifically provided in
this Section, Lessee shall bear the risk of loss, damage or partial destruction
of the Aircraft and shall not be released from its obligations hereunder in the
event of any damage to the Aircraft or any part thereof or any Event of Loss
relating thereto.

 

SECTION 11.  Indemnification.

 

                Lessee assumes liability for, and hereby agrees to indemnify,
protect, save, defend and keep harmless Lessor, its agents, employees, officers,
directors, shareholders, subsidiaries, affiliates, successors and assigns
(collectively “Lessor”), on a net after-tax basis, from and against any and all
liabilities, obligations, losses, damages, penalties, claims (including, without
limitation, claims involving or alleging product liability or strict or absolute
liability in tort), actions, suits, demands, costs, expenses and disbursements
(including, without limitation, reasonable legal fees and expenses) of any kind
and nature whatsoever (“Claims”) which may be imposed on, incurred by or
asserted against Lessor, whether or not Lessor shall also be indemnified as to
any such Claim by any other Person, to the extent relating to or arising out of
this Lease or any documents contemplated hereby, or the performance or
enforcement of any of the terms hereof or thereof, or to the extent relating to
or arising out of the assertion or enforcement of any manufacturer’s, vendor’s
or dealer’s warranties on

 

 

 

 

12

--------------------------------------------------------------------------------

 

the Aircraft or any part thereof, (including, without limitation, any warranty
of any Manufacturer or Supplier), the manufacture, inspection, construction,
purchase, pooling, interchange, acceptance, rejection, ownership, titling or
re-titling, delivery, lease, sublease, possession, use, operation, maintenance,
management, condition, registration or re-registration, sale, return, removal,
repossession, storage or other disposition of the Aircraft or any part thereof
or any accident in connection therewith (including, without limitation, latent
and other defects, whether or not discoverable, and any Claim for patent,
trademark or copyright infringement).

 

                Notwithstanding the foregoing, Lessee shall not be required to
indemnify Lessor for (a) any Claim to the extent caused directly by the gross
negligence or willful misconduct of the Lessor, (b) any Claim in respect of the
Aircraft arising from acts or events which occur after (x) possession of the
Aircraft has been redelivered to Lessor (which return and delivery shall be in
full and complete compliance with the terms of this Lease) and (y) any and all
other obligations of any kind whatsoever of the Lessee under this Lease which
have been fully paid and/or performed, as the case may be, unless any such
Claims were caused by Lessee (or any stockholder, director, officer, employee,
successor, assignee, agent or servant of the Lessee) or resulted or arose,
directly or indirectly, from any acts, events or omissions of any kind
whatsoever during the Term of this Lease, (c) any Claim directly caused by a
breach by Lessor of the warranty of Lessor expressly set forth in Section 4 of
this Lease, (d) any Claims for Impositions (it being agreed that Lessee’s sole
responsibility and liability for Impositions is set forth in Section 8 of this
Lease), (e) any Claim to the extent directly arising out of any financing of the
Aircraft by the Lessor or to the extent directly arising out of any voluntary or
involuntary sale, assignment, transfer or other disposition by Lessor of its
interest in the Aircraft (or any portion thereof); provided, however, that the
foregoing exclusion and/or limitation shall not apply in any way whatsoever to
any sale, assignment, transfer or other disposition of any kind whatsoever by
Lessor of its interest in the Aircraft (or any portion thereof) after any Event
of Default or Event of Loss has occurred under or in connection with this Lease
or in connection with any exercise by Lessor of any its rights, remedies or
recourses relating to any such Event of Default or Event of Loss, (f) any Claim
that Lessor has expressly agreed to pay in connection with this Lease, (g) any
Claim for any Tax Loss as set forth in the Special Tax Indemnity Rider to this
Lease (it being agreed that Lessee’s sole responsibility and liability for any
Tax Loss is set forth in the Special Tax Indemnity Rider of this Lease), or (h)
any Claim to the extent directly attributable to any Lessor’s Liens.

 

                The liability of Lessee to make indemnification payments shall,
notwithstanding any expiration, cancellation or other termination (whether
voluntary, as the result of an Event of Default, or otherwise) of this Lease,
continue to exist until such indemnity payments are irrevocably made in full by
Lessee and received by Lessor.  If any Claim is made against Lessee or Lessor,
the party receiving notice of such Claim shall promptly notify the other, but
the failure of the party receiving notice to so notify the other shall not
relieve Lessee of any obligation hereunder.

 

SECTION 12.  Assignment and Sublease.

 

                LESSEE SHALL NOT SELL, TRANSFER, ASSIGN, CHARTER, SUBLEASE (WITH
OR WITHOUT ONE OR MORE CREWMEMBERS), CONVEY, PLEDGE, MORTGAGE OR OTHERWISE
ENCUMBER ITS OR LESSOR’S INTEREST IN AND TO THE LEASE OR THE AIRCRAFT, AND ANY
SUCH SALE, TRANSFER, ASSIGNMENT, CHARTER, SUBLEASE, CONVEYANCE, PLEDGE, MORTGAGE
OR ENCUMBRANCE, WHETHER BY OPERATION OF LAW OR OTHERWISE, WITHOUT THE PRIOR
WRITTEN CONSENT OF LESSOR SHALL BE NULL AND VOID.  IN ADDITION, LESSEE SHALL NOT
ENTER INTO ANY INTERCHANGE AGREEMENT AFFECTING THE AIRCRAFT OR RELINQUISH
POSSESSION OF THE AIRFRAME OR ANY ENGINE OR INSTALL ANY ENGINE OR PART, OR
PERMIT ANY ENGINE OR PART TO BE INSTALLED, ON ANY AIRFRAME OTHER THAN THE
AIRFRAME LEASED HEREUNDER EXCEPT AS EXPRESSLY SET FORTH HEREIN.  Notwithstanding
the foregoing limitations Lessee shall be permitted to conduct the carriage of
the Lessee and/or guests pursuant to 14 CFR Section 91.501 (b) (4), affiliated
group operations pursuant to

 

 

 

 

13

--------------------------------------------------------------------------------

 

14 CFR Section 91.501 (b) (5) and/or (6), demonstration flights pursuant to 14
CFR Section 91.501 (b) (3), time sharing or interchange operations pursuant to
14 CFR Section 91.501(b) (6), the carriage of customers pursuant to 14 CFR
Section 91.501 (b) (9) and/or the carriage of candidates in Federal elections
conducted pursuant to 14 CFR Section 91.321.  In addition, the foregoing shall
be not be deemed to prohibit the delivery of possession of the Aircraft, any
Engine or Part to another Person for testing, service, repair, maintenance,
overhaul or, to the extent permitted hereby, alteration or modification.  No
acceptance, assignment, subletting, relinquishment or installation shall in any
event relieve Lessee of primary, absolute and unconditional liability for its
duties and obligations under this Lease.

 

                Lessor, may at any time, with or without notice to Lessee,
mortgage, grant a security interest in or otherwise transfer, sell or assign all
or any part of its interest in this Lease or the Aircraft or any Rent or other
sums due or to become due hereunder (any such sale, transfer or assignment
hereinafter referred to as the “Transfer”) and Lessee shall perform all of its
obligations under this Lease for the benefit of such assignee, lender, creditor,
mortgagee, transferee or Person (hereinafter an “Assignee”) except that the
interest of any such Assignee shall be expressly subject to Lessee’s rights of
use and possession (including, without limitation, Lessee’s rights of possession
and use of the Aircraft pursuant to the warranty in favor of Lessee set forth in
Section 4 of this Lease), renewal rights, and purchase options, if any,
hereunder, and all other rights of Lessee expressly set forth in this Lease, so
long as no Event of Default has occurred and is continuing hereunder
notwithstanding any such Transfer to said Assignee.  Lessee agrees that the
rights hereunder of any such Assignee shall not be subject to any defense,
setoff, recoupment, abatement, reduction, claim or counterclaim (collectively
the “Defenses”) that Lessee has or may at any time have against Lessor for any
reason whatsoever unless Assignee expressly assumes Lessor’s obligations
hereunder with respect thereto.  Unless Lessor’s obligations with respect to
such Defenses are expressly assumed by Assignee, Lessee hereby waives any right
to assert at any time any of the foregoing Defenses against any such Assignee. 
Lessee further agrees that any such Assignee shall have all of Lessor’s rights
hereunder, but none of the Lessor’s obligations or duties.  Lessor shall remain
liable with respect to any Defenses which are not assumed by Assignee.  Lessee
further agrees, if so directed in writing, to, among other things, pay all sums
due or to become due hereunder directly to the Assignee or any other party
designated in writing by Lessor or any such Assignee.  Upon the request of
Lessor or any Assignee, Lessee also agrees (i) to promptly execute and deliver
to Lessor or to such Assignee an acknowledgment of assignment in form and
substance satisfactory to the requesting party which, among other things,
reaffirms the basic terms and conditions of this Lease and (ii) to comply with
the reasonable demands of any such Assignee in order to perfect any such
assignment or transfer; provided, however, that Lessor or any such Assignee
shall reimburse Lessee any reasonable out-of-pocket costs or expenses incurred
by Lessee relating to any such acknowledgment of assignment.

 

                Notwithstanding the foregoing, Lessor agrees that it shall only
sell, transfer or assign all or any part of its interest in this Lease or the
Aircraft or any Rent or other sums due or to become due hereunder to any
Assignee which (i) is a Recognized Financial Institution and a United States
Citizen, or (ii) is an affiliate (that is a United States Citizen) or a Special
Purpose Entity of any Recognized Financial Institution; provided, however, that
any such Assignee permitted by this sentence (together with its affiliates and
Special Purpose Entities) shall have a consolidated tangible net worth equal to
or greater than U.S. $50,000,000.00 (the “Consolidated $50,000,000.00 Tangible
Net Worth”) or, in the event any such Assignee (together with its affiliates and
Special Purpose Entities) does not have a Consolidated $50,000,000.00 Tangible
Net Worth, the obligations of such Assignee shall be guaranteed by a Person
(together with its affiliates and Special Purpose Entities) having such a
Consolidated $50,000,000.00 Tangible Net Worth.

 

                This Lease, including all agreements, covenants, representations
and warranties, shall be binding upon and inure to the benefit of, and may be
enforced by (a) Lessor and its successors, assigns, Assignees, agents and
servants and (b)

 

 

 

 

14

--------------------------------------------------------------------------------

 

 

Lessee and its successors and, to the extent expressly permitted by Lessor,
assigns.

 

SECTION 13.  Events of Default.

 

                The term “Event of Default”, wherever used herein, shall mean
any of the following events or circumstances (whatever the reason for such Event
of Default and whether it shall be voluntary or involuntary, or come about or be
effected by operation of law, or be pursuant to or in compliance with any
judgment, decree or order of any court or any order, rule or regulation or any
administrative or governmental body):

 

                (a)  Lessee shall fail to make any payment of Rent, Casualty
Value, if applicable, and/or any amount due pursuant to any Rider, Exhibit or
Addendum hereto after any or all of the same shall become due and payable, or,
upon demand, any other amount required to be paid herein or under any other
agreement with Lessor, and, in either case, such failure shall continue for ten
(10) days after written notice thereof from Lessor to Lessee; or

 

                (b)  Lessee shall fail to keep in full force and effect any of
the insurance required hereunder, or shall operate the Aircraft at a time when,
or at a place in which, such insurance shall not be in effect; or

 

                (c)  Lessee shall fail to perform or observe any covenant,
condition or agreement, (other than those specifically referred to in this
Section) required to be performed or observed by it under this Lease or any
Rider, Exhibit or Addendum hereto or any other agreement, document or
certificate delivered by or on behalf of Lessee in connection herewith, and such
failure shall continue for ten (10) days after written notice thereof from
Lessor to Lessee; or

 

                (d)  Lessee shall default in the payment or performance of any
indebtedness or obligation with a principal balance or outstanding obligation in
an amount of $100,000.00 or more to Lessor under any loan, note, security
agreement, lease, guaranty, title retention or conditional sales agreement or
any other instrument or agreement evidencing such indebtedness with Lessor; or

 

                (e)  any representation or warranty made by Lessee herein or in
any certificate, agreement, statement or document hereto or hereafter furnished
to Lessor in connection herewith, including without limitation, any financial
information disclosed to Lessor, shall prove to be or to have been false or
incorrect in any material respect; or

 

                (f)  the commencement of any bankruptcy, insolvency,
arrangement, reorganization, receivership, liquidation or other similar
proceeding by or against Lessee or any of its properties or businesses, (which,
in the case of a proceeding commenced against Lessee, has not been dismissed
within sixty [60] days of the filing thereof) the appointment of a trustee,
receiver, liquidator or custodian for Lessee or any of its properties or
businesses, if Lessee suffers the entry of an order for relief under Title 11 of
the United States Code or the making by Lessee of a general assignment or deed
of trust for the benefit of creditors; or

 

                (g)           Lessee shall (i)(A) default in the payment when
due of any amount due under any Indebtedness (whether by acceleration or
otherwise) to any Person if such default continues uncured beyond the expiration
of any applicable grace or cure periods, or (B) any default other than a payment
default by Lessee under any Indebtedness if the effect of such default is to
accelerate such Indebtedness, or give the holders of such Indebtedness, or any
trustee or other representative thereof, the right to accelerate the
Indebtedness, and (ii) the amount of such Indebtedness exceeds (A) in any
instance $3,000,000.00, or (B) in the aggregate, $5,000,000.00; or

 

                (h)           any Change in Control of Lessee; or

 

 

 

 

15

--------------------------------------------------------------------------------

 

                (i)            [Intentionally left blank]; or

 

                (j)            [Intentionally left blank]; or

 

                (k)           [Intentionally left blank]; or

 

                (l)            [Intentionally left blank]; or

 

                (m)  the failure to return the Aircraft to Lessor at the end of
the Term in accordance and in compliance with the terms and conditions hereof,
the Aircraft shall be abused, substantially damaged (without being repaired in
accordance with the provisions hereof) or destroyed (without payment of the
applicable Casualty Value in accordance with the terms and conditions hereof);
or

 

                (n)  Lessee shall or shall attempt to remove, sell, transfer,
charter, interchange, convey, pledge, mortgage, encumber, part with possession
of, assign or sublet (with or without one or more crewmembers) the Aircraft or
any part thereof, use the Aircraft for an illegal purpose or permit the same to
occur or Lessee shall create, incur, assume or suffer to exist any Lien (other
than Permitted Liens) with respect to the Aircraft, this Lease or Lessor’s
interests thereunder; or

 

                (o)  any event or condition set forth in subsections (c) through
(g) of this Section shall occur with respect to any Guarantor or other person
responsible, in whole or in part, for payment or performance of this Lease; or

 

                (p)  any event or condition set forth in subsections (d) through
(g) of this Section shall occur with respect to any Subsidiary or any affiliated
person, firm or entity controlling, controlled by or under common control with
Lessee.

 

                Lessee shall promptly notify Lessor of the occurrence of any
Default or Event of Default.

 

SECTION 14.  Remedies.

 

                (a)  Upon the occurrence of any Event of Default and so long as
the same shall be continuing, Lessor may, at its option, declare this Lease to
be in default (provided that no such declaration shall be a condition to any
suit against Lessee for specific performance of a defaulted covenant or for
damages in respect of such default upon such occurrence or at any time
thereafter), and at any time thereafter, whether or not such Event of Default
shall be continuing, Lessor may exercise any one or more of the following
remedies, as Lessor in its sole discretion shall lawfully elect:

 

                                (i)  Proceed by appropriate court action, either
at law or in equity, to enforce performance by Lessee of the applicable
covenants of this Lease or to recover damages for breach thereof.

 

                                (ii)  By notice cancel or terminate this Lease,
whereupon all rights of Lessee to the use of the Aircraft or any part thereof
shall absolutely cease and terminate but Lessee shall remain liable as
hereinafter provided and thereupon (A) if so requested by Lessor, Lessee shall
at its expense promptly return the Aircraft to the possession of Lessor at such
place as Lessor shall designate and in the condition required upon the return
thereof pursuant to and in accordance with the terms of this Lease, (B) Lessor,
at its option, may enter upon the premises where the Aircraft is located and
take immediate possession of and remove the same, together with any Engines and
Parts by self-help, summary proceedings or otherwise without any liability of
any kind whatsoever on the part of Lessor for or by reason of such entry or
taking of possession and Lessee hereby waives any cause of action it may have
arising from, or in connection with, the foregoing and/or (C) Lessee will
provide storage as set forth in this Lease.  In addition, upon the written
request of Lessor, Lessee, at its expense, will replace any engine installed on
the Airframe with an Engine. Lessee shall, without further demand, forthwith pay
to Lessor an amount equal to any unpaid Rent due and payable for all periods up
to and including the Basic Rent Date following the date on

 

 

 

 

16

--------------------------------------------------------------------------------

 

which Lessor has declared this Lease to be in default, plus, as liquidated
damages for loss of a bargain and not as a penalty, an amount equal to the
Casualty Value of the Aircraft, computed as of the Basic Rent Date immediately
following the date on which Lessor has declared this Lease to be in default
(plus all costs, charges and expenses including, legal fees and disbursements
incurred by Lessor by reason of the occurrence of any Event of Default or the
exercise of any of Lessor’s remedies with respect thereto or otherwise).

 

                Following the return of the Aircraft to Lessor pursuant to this
subparagraph (ii), Lessor shall proceed at its option to sell or otherwise
dispose of the Aircraft by public or private sale, with or without notice, and
without having the Aircraft present at the place of sale and in such manner as
it shall deem appropriate, provided that Lessor, if it so elects, may purchase
the Aircraft at such sale for a price not less than the highest bona fide bid
given by a Person unrelated to Lessee.  Lessee waives all its rights under laws
governing such sale to the extent permitted by law.  Lessor may apply any
deposit or other cash collateral or sale or remarketing proceeds of the Aircraft
at any time to reduce any amounts due to Lessor.  Notwithstanding the foregoing,
Lessor may at its option and in its sole discretion keep idle, lease, or use or
operate all or part of the Aircraft without any liability whatsoever and may use
Lessee’s premises for storage pending lease or sale or for holding a sale
without liability for rent or costs or any other matter whatsoever.  The net
proceeds of such sale or lease as provided above shall be applied by Lessor (x)
first, to pay all costs, charges and expenses, including the cost of discharging
all Liens, on the Aircraft and all legal fees and disbursements incurred by
Lessor as a result of the Event of Default and/or the exercise of its remedies
with respect thereto, (y) second, to pay to Lessor an amount equal to any unpaid
Rent due and payable and the Casualty Value, to the extent not previously paid
and (z) third, to reimburse Lessee for the Casualty Value to the extent paid by
Lessee as liquidated damages.  Any surplus remaining thereafter shall be
retained by Lessor.  To the extent that all Rent then due and payable with
respect to the Aircraft and the Casualty Value have not been previously paid,
Lessee shall forthwith pay upon demand to Lessor the sum of (AA) the amount by
which (1) the sum of (aa) all Rent then due and payable with respect to the
Aircraft, (bb) the Casualty Value or portion thereof not theretofore paid and
(cc) the amount payable under clause (x) of the preceding sentence exceeds (2)
the net proceeds of the sale or lease of the Aircraft actually received by the
Lessor and (BB) interest at the Late Payment Rate on the full amount of said
Casualty Value and Rent then due and unpaid, computed from the date such sums
are due until the same are paid by Lessee.  For purposes of computing liquidated
damages under this subparagraph (ii) only, the proceeds of any releasing of the
Aircraft shall be determined by discounting to present value, at the rate of
twelve and one-half percent (12.5%) per annum, the periodic rentals which are
payable to Lessor pursuant to such re-lease, up to and including the expiration
of the term of any such re-lease.

 

                If any Event of Default occurs or if Lessee fails to perform or
comply with any of its agreements contained herein, Lessor shall have the right,
but shall not be obligated, to effect such performance or compliance and the
amount of any out-of-pocket expenses and other reasonable expenses of Lessor
incurred in connection with the performance of or compliance with such
agreements, as the case may be, together with interest thereon at the Late
Payment Rate, shall be payable by Lessee promptly upon demand, and any such
action by Lessor shall not be deemed a cure or waiver of any Event of Default
hereunder.

 

                (b)  Lessee shall be liable for all costs, charges and expenses,
including legal fees and disbursements, incurred by Lessor by reason of the
occurrence of any Event of Default, the exercise of any of Lessor’s rights or
remedies with respect thereto or otherwise.

 

                (c)  Lessee hereby waives, to the maximum extent now or
hereafter permitted by applicable law, for itself and for its successors or
assigns any and all rights Lessee or Lessee’s successors or assigns may have
following an Event of Default under any bankruptcy, insolvency or similar laws,
rules or regulations with respect to the continued possession or use of the
Aircraft or relief from the payment of Rent therefor or otherwise with respect
to this Lease.  Rejection of

 

 

 

 

17

--------------------------------------------------------------------------------

 

this Lease by any bankruptcy trustee or debtor-in-possession shall entitle
Lessor to the immediate return of the Aircraft and to liquidated damages
calculated in the manner provided for in subsection 14(a)(ii) hereof with
respect to an Event of Default.

 

                (d)  No right or remedy referred to herein is intended to be
exclusive, but each shall be cumulative and in addition to any other right or
remedy referred to above or otherwise available to Lessor at law or in equity,
including, without limitation, such rights and/or remedies as are provided for
in the UCC.  No express or implied waiver by Lessor of any Default or Event of
Default hereunder shall in any way be, or be construed to be, a waiver of any
future or subsequent Default or Event of Default.  The failure or delay of
Lessor in exercising any rights granted it hereunder upon the occurrence of any
of the contingencies set forth herein shall not constitute a waiver of any such
right upon the continuation or reoccurrence of any such contingencies or similar
contingencies, and any single or partial exercise of any particular right by
Lessor shall not exhaust the same or constitute a waiver of any other right
provided for or otherwise referred to herein.  All remedies set forth herein
shall survive the expiration or other termination of this Lease for any reason
whatsoever.

 

                (e)  To the extent permitted by applicable law, Lessee hereby
waives any rights now or hereafter conferred by statute or otherwise which may
require Lessor to sell, lease or otherwise use the Aircraft in mitigation of
Lessor’s damages as set forth in this Section or which may otherwise limit or
modify any of Lessor’s rights or remedies under this Section.  To the extent
permitted by applicable law, Lessee waives any and all rights and remedies
conferred upon a lessee by Section 2A-508 to 2A-522 (inclusive) of the UCC,
including, without limitation, any rights of Lessee (a) to cancel or repudiate
this Lease or any supplement or any document relating thereto, (b) to reject or
revoke acceptance of the Aircraft or any component thereof and (c) to recover
from Lessor any general or consequential damages, for any reason whatsoever.

 

SECTION 15.  Notices.

 

                All communications and notices provided for herein shall be in
writing and shall become effective (i) upon hand delivery, (ii) upon delivery by
an overnight delivery service, (iii) upon two (2) Business Days after being
deposited in the United States mail with proper postage for first-class mail
prepaid, sent by registered or certified mail, return receipt requested, and
addressed to Lessor or Lessee at their respective addresses set forth under the
signatures hereto or such other address as either party may hereafter designate
by written notice to the other or (iv) or when sent by telecopy (with customary
confirmation of receipt of such telecopy) on the Business Day when sent or upon
the next Business Day if sent on other than a Business Day, followed by a copy
by overnight delivery service.

 

SECTION 16.  Transaction Expenses.

 

                Lessee shall pay all actual and reasonable fees, costs and
expenses incurred by Lessor in connection with this Lease, whether or not the
transactions contemplated hereby are consummated, including, without limitation,
appraisal fees, inspection fees, Lessor’s external counsel fees and expenses and
FAA Counsel fees and expenses, and FAA and UCC title and lien searches, reports,
filing and recording fees, charges and taxes.  Lessee also agrees to pay all
fees and expenses of Lessor’s counsel, FAA Counsel and all other third parties
who are engaged by Lessor to enforce Lessor’s rights and/or remedies hereunder,
to update any FAA or UCC title and/or lien reports and/or to review, file and
record any and all documents and instruments as required by Lessor or the FAA
during and after the Term of this Lease.

 

SECTION 17.  Miscellaneous.

 

                Any provision of this Lease which may be determined to be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective

 

 

 

 

18

--------------------------------------------------------------------------------

 

to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.  To the extent permitted by applicable law, Lessee hereby
waives any provision hereof prohibited or unenforceable in any respect.

 

                This Lease may be executed in any number of counterparts and by
the different parties hereto on separate counterparts.  The division of this
Lease into sections, the provision of a table of contents and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation of this Lease. The actual dates of execution
hereof by the parties hereto are respectively the dates set forth under the
signatures hereto, however this Lease shall be effective as of the date first
above written.

 

                In order to secure the prompt and full payment and performance
as and when due of any and all obligations and indebtedness of Lessee to Lessor,
now existing or hereafter created of any kind whatsoever, Lessee hereby grants
and conveys to Lessor, a security interest in and lien on all of Lessee’s right,
title and interest in and to this Lease and any present and future subleases,
management agreements, interchange agreements, charter agreements and any other
present and future agreements of any kind whatsoever relating to the Aircraft or
any part thereof and any and all proceeds of any and all of the foregoing,
including insurance, goods, accounts, chattel paper, documents, instruments,
general intangibles, investment property, deposit accounts, letter of credit
rights and supporting obligations, and all present and future books and records
relating to any of the foregoing and/or the Aircraft (including, without
limitation, all tapes, cards, computer programs, computer runs and computer data
in the possession or control of the Lessee, any computer service bureau or other
third party); provided, however, that the foregoing grant of a security interest
and lien shall not of itself be a factor in determining whether this Lease is
one intended as security (or that this Lease is a grant of a security interest).
Notwithstanding anything to the contrary contained herein or otherwise, should a
court of competent jurisdiction determine that this Lease is one intended as
security (or that this Lease is a grant of a security interest), then solely in
that event and for the expressly limited purposes thereof, and in order to
secure the prompt and full payment and performance as and when due of any and
all obligations and indebtedness of Lessee to Lessor, now existing of hereafter
created of any kind whatsoever, Lessee shall be deemed to have hereby granted
and conveyed, and for such express purposes Lessee hereby grants and conveys to
Lessor, a security interest in and lien on the Aircraft, and all present and
future parts, accessories, accessions and attachments thereto, and all present
and future replacements, substitutions and exchanges (including trade-ins) for
such goods, together with proceeds of all the foregoing, including goods,
accounts, chattel paper, documents, instruments, general intangibles, investment
property, deposit accounts, letter of credit rights and supporting obligations,
and all of Lessee’s rights in and to any of the foregoing.  The security
interests and liens granted herein shall survive the termination, cancellation
or expiration of this Lease for any reason whatsoever and shall remain in full
force and effect until such time as Lessee has no further obligations of any
kind whatsoever under this Lease.

 

                Lessee will promptly and duly execute and deliver to Lessor and
any assignee, mortgagee and/or lender of the Lessor, such other documents and
assurances, including, without limitation, such amendments to this Lease as may
be reasonably required by Lessor (and, subject to the provisions of Section 12
hereof, by any assignee, mortgagee and/or lender of the Lessor), and UCC
financing statements and continuation statements, and will take such further
action as Lessor or any such assignee, mortgagee and/or lender may from time to
time reasonably request in order to carry out more effectively the intent and
purposes of this Lease as specified by the terms and conditions herein and to
establish and protect the rights and remedies created or intended to be created
in favor of Lessor and of any such assignee, mortgagee and/or lender.  Lessee
irrevocably authorizes Lessor to file and record, and irrevocably appoints
Lessor (and, subject to the provisions of Section 12 hereof, any assignee,
mortgagee and/or lender of the Lessor) its attorney-in-fact to act in Lessee’s
name and on its

 

 

 

 

19

--------------------------------------------------------------------------------

 

behalf (i) at any time to make, execute, deliver, file and record any UCC
financing statements or UCC amendments and to take any action as Lessor (and any
such assignee, mortgagee and/or lender) deems necessary or appropriate to carry
out the intent of this Lease or any agreements, documents or instruments related
thereto as to the execution, delivery, filing and/or recording of any such UCC
financing statements or UCC amendments, and (ii) upon the occurrence of an Event
of Default, to make, execute, deliver, file and record any instruments or
documents (other than any UCC financing statements or UCC amendments which are
authorized and permitted to be executed, delivered, filed or recorded at any
time pursuant to the terms of subclause (i) above) and to take any other actions
as Lessor (and, subject to the provisions of Section 12 hereof, any such
assignee, mortgagee and/or lender) deems necessary or appropriate to carry out
the intent of this Lease or any agreements, documents or instruments related
thereto as to any instruments or documents (other than any UCC financing
statements or UCC amendments which are authorized and permitted to be executed,
delivered, filed or recorded at any time pursuant to the terms of subclause (i)
above). Lessee hereby further irrevocably ratifies the foregoing authorization
and appointment with regard to the execution, delivery, filing and recording of
any instrument or documents (including, without limitation, any UCC financing
statements or UCC amendments) and the taking of any action as Lessor (and,
subject to the provisions of Section 12 hereof, any such assignee, mortgagee
and/or lender of the Lessor) deems necessary or appropriate to carry out the
intent of this Lease or any agreements, documents or instruments related
thereto. To the extent appropriate or permissible under applicable law, such
appointment is coupled with an interest, shall be irrevocable and shall
terminate only upon payment in full of the obligations set forth in this Lease
and/or any agreements, documents or instruments related thereto. Lessee hereby
further covenants and agrees that it shall not file any corrective or
termination statements with respect to any UCC financing statements, amendments
or assignments filed or recorded by or for the benefit of Lessor with respect to
the Aircraft or any other property or collateral related to the Aircraft or this
Lease or on behalf of the Lessor without Lessor’s prior written consent. Lessee
hereby further agrees that any signature, execution and delivery of any document
or instrument may by satisfied, in Lessor’s sole discretion and to the extent
permitted by the UCC, by authentication of such document or instrument as a
record within the meaning of Article 9 of the UCC.

 

                Time is of the essence in the payment and performance of all of
Lessee’s obligations under the Lease.  For purposes of 49 USC Section 44108 (c),
Lessor and Lessee intend, by virtue of the Lessor having countersigned and
accepted the Lease in Rhode Island and by virtue of this Lease being delivered
for closing purposes to Lessor’s office in Providence, Rhode Island, that this
Lease has been executed and delivered in Rhode Island.  In all other respects,
this Lease shall be governed by, and construed in accordance with, the laws of
the State of New York, without giving effect to principles of conflicts of law
or choice of law (except as to the effect of Title 14, Section 5-1401 of the New
York General Obligations Law), including all matters of construction, validity
and performance.  Lessee hereby irrevocably consents and agrees that any legal
action, suit or proceeding arising out of or in any way in connection with this
Agreement may be instituted or brought in the courts of the State of New York or
the United States District Court for the Southern District of New York, as
Lessor may elect, and by execution and delivery of this Lease, Lessee hereby
irrevocably accepts and submits to, for itself and in respect of its property,
generally and unconditionally, the non-exclusive jurisdiction of any such court,
and to all proceedings in such courts.   To the extent permitted by applicable
law, this Lease shall be deemed a “finance lease” under Section 2A-103(g) of the
UCC.  LESSEE ACKNOWLEDGES AND AGREES THAT THIS LEASE IS A COMMERCIAL
TRANSACTION.  LESSEE ALSO HEREBY KNOWINGLY AND FREELY WAIVES ALL RIGHTS TO TRIAL
BY JURY IN ANY LITIGATION ARISING HEREFROM OR IN RELATION HERETO.

 

SECTION 18.  AMENDMENTS.

 

                This Lease, and each related instrument, document, agreement and
certificate, collectively constitute, and are intended to collectively
constitute, the complete and exclusive statement of the terms of the agreement
between Lessor and Lessee with respect to the purchase and leasing of the
Aircraft.  The Lease

 

 

 

 

20

--------------------------------------------------------------------------------

 

cancels and supersedes any and all prior or contemporaneous oral or written
understandings, memoranda, negotiations, communications and agreements with
respect thereto including, without limitation, any proposal letter, commitment
letter and/or term sheet delivered to the Lessee by Lessor, unless, with respect
to any such written materials only, any term and/or condition thereof expressly
supersedes any term and/or condition of this Lease.

 

                NO TERM OR PROVISION OF THIS LEASE MAY BE AMENDED, ALTERED,
WAIVED, DISCHARGED OR TERMINATED ORALLY, EXCEPT IN A WRITING SIGNED BY A DULY
AUTHORIZED OFFICER OF THE PARTY AGAINST WHOM THE ENFORCEMENT OF THE AMENDMENT,
ALTERATION, WAIVER, DISCHARGE OR TERMINATION IS SOUGHT.

 

 

 

 

 

LESSEE’S INITIALS

 

 

SECTION 19.  Truth in Leasing.

 

                THE AIRCRAFT, AS EQUIPMENT, BECAME SUBJECT TO THE MAINTENANCE
REQUIREMENTS OF PART 91 OF THE FEDERAL AVIATION REGULATIONS (“FARS”) UPON THE
REGISTRATION OF THE AIRCRAFT WITH THE FAA.  LESSEE CERTIFIES THAT DURING THE 12
MONTHS (OR PORTION THEREOF DURING WHICH THE AIRCRAFT HAS BEEN SUBJECT TO U.S.
REGISTRATION) PRECEDING THE EXECUTION OF THIS LEASE, THE AIRCRAFT HAS BEEN
MAINTAINED AND INSPECTED UNDER PART 91 OF THE FARS.  LESSEE CERTIFIES THAT THE
AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER PART 91 OF THE FARS FOR
OPERATIONS TO BE CONDUCTED UNDER THE LEASE.  UPON EXECUTION OF THIS LEASE, AND
DURING THE TERM HEREOF, THE LESSEE, WHOSE NAME AND ADDRESS ARE SET FORTH
IMMEDIATELY BELOW, ACTING BY AND THROUGH THE SIGNATORY HERETO, WHO EXECUTES THIS
SECTION SOLELY IN HIS CAPACITY OF THE LESSEE SET FORTH BELOW HIS SIGNATURE,
CERTIFIES THAT LESSEE SHALL BE RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE
AIRCRAFT UNDER THE LEASE (WHILE IT HAS POSSESSION OF THE AIRCRAFT), UNLESS THE
AIRCRAFT IS SUBLEASED TO AN AIR CARRIER OR AIR TAXI OPERATOR CERTIFICATED UNDER
PART 121 OR PART 135, RESPECTIVELY, OF THE FARS IF AND TO THE EXTENT SUCH
SUBLEASE IS PERMITTED HEREUNDER. THE LESSEE FURTHER CERTIFIES THAT IT
UNDERSTANDS ITS RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE FARS, PROVIDED
HOWEVER, THAT THE LESSEE SHALL NOT BE DEEMED TO BE RESPONSIBLE FOR THE
OPERATIONAL CONTROL OF THE AIRCRAFT FOR SO LONG AS THE AIRCRAFT IS IN POSSESSION
OF ANY SUBLESSEE THAT IS CERTIFICATED UNDER PART 121 OR PART 135 OF THE FARS IF
AND TO THE EXTENT SUCH SUBLEASE IS PERMITTED HEREUNDER.  AN EXPLANATION OF
FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT FARS CAN BE OBTAINED FROM
THE NEAREST FEDERAL AVIATION FLIGHT STANDARD DISTRICT OFFICE, GENERAL AVIATION
DISTRICT OFFICE OR AIR CARRIER DISTRICT OFFICE.

 

                The execution hereof on behalf of Lessee and Lessor shall be
deemed to constitute the acceptance by Lessee and Lessor of the terms and
conditions of Exhibit A hereto and each and every Addendum set forth hereto as
if each of such Exhibit A and Addendum was separately and individually executed
on behalf of such party hereto.

 

 

 

 

 

 

 

 

 

[this space intentionally left blank]

 

 

 

21

--------------------------------------------------------------------------------

 

                IN WITNESS WHEREOF, the parties hereto have caused the Lease to
be duly executed by their respective officers thereunto duly authorized.

 

Lessor:

 

 

Lessee:

 

 

 

 

FLEET CAPITAL CORPORATION

COPART, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/ John E. Haakenson, Jr.

 

By:

/s/ Paul A. Styer

 

 

 

 

 

 

 

 

 

 

Title: Vice President

 

Title:

Secretary

 

 

 

 

 

 

 

 

 

 

Print Name:

John E. Haakenson, Jr.

 

Print Name:

Paul A. Styer

 

 

 

 

 

 

 

 

 

 

Date: April 11, 2002

 

Date: April 11, 2002

 

 

 

 

 

 

 

 

 

 

 

Address:

One Financial Plaza, 5th Floor

Address:

5500 East Second Street

 

 

 

 

Providence, RI  02903

 

Benicia, CA 94510

 

 

 

 

This is Counterpart No. 2 of a total of 3 counterparts.  Only Counterpart No. 1
shall be considered chattel paper for purposes of the Uniform Commercial Code
and a security interest may be perfected only by possession of Counterpart No.
1.

 

 

 

 

 

 

22

--------------------------------------------------------------------------------

EXHIBIT A

 

Definitions

 

                (a)  All References in the Lease to designated Sections and
other subdivisions are to such designated Sections and other subdivisions only,
and the words “herein,” “hereof” and “hereunder” and other words of similar
import refer to the Lease as whole and not to any particular Section or other
subdivision.

 

                (b)  Except as otherwise indicated, all the agreements and
instruments defined herein or in the Lease shall mean such agreements and
instruments as the same may from time to time be supplemented or amended, or as
the terms thereof may be waived or modified to the extent permitted by, and in
accordance with, the terms thereof.

 

                (c)  The terms defined herein and in the Lease shall, for
purposes of the Lease and all Lease Supplements, Schedules and Exhibits thereto,
have the meanings assigned to them and shall include the plural as well as the
singular as the context requires.

 

                (d)  The following terms shall have the following meanings for
all purposes of the Lease:

 

                Basic Rent Date, Daily Lease Rate, Expiration Date, First Basic
Rent Date, Last Basic Rent Date, Permitted Deductible, Primary Hangar Location,
and Rent Commencement Date shall have the meanings set forth in Schedules 2 and
2-A to Lease Supplement No. 1 to the Lease.

 

                Abatements shall have the meaning set forth in Section 7 of the
Lease.

 

                Acceptance Date shall mean the date (which date shall be no
later than the date designated as the “Last Acceptance Date” on Schedule No. 2
to Lease Supplement No. 1) on which Lessee irrevocably and unconditionally
accepts the Aircraft for lease under the Lease as evidenced by the execution and
delivery of Lease Supplement No. 1 relating thereto dated such date.

 

                Additions shall have the meaning set forth in the Maintenance
and Return Addendum hereto.

 

                Administrative Charge shall mean an amount equal to three
percent (3%) of the amount payable to which such charge applies.

 

                Alterations shall have the meaning set forth in the Maintenance
and Return Addendum hereto.

 

                Aircraft shall mean (i) the Airframe, (ii) the Engines, and
(iii) to the extent applicable, the Records.

 

                Airframe shall mean (i) the Aircraft described in Schedule No. 1
to Lease Supplement No. 1, and shall not include the Engines and (ii) any and
all Parts from time to time incorporated in, installed on or attached to such
Aircraft and any and all Parts removed therefrom so long as title thereto shall
remain vested in Lessor in accordance with the applicable terms of this Lease
after removal from the Aircraft.

 

                Assignee shall have the meaning set forth in Section 12 of the
Lease.

 

                Basic Rent shall have the meaning set forth in Section 3 of the
Lease.

 

                Basic Term shall mean the number of months set forth on Schedule
No. 2 to Lease Supplement No. 1.

 

                Business Day shall mean any day other than a Saturday, Sunday or
other day on which banks located in Providence, Rhode Island are closed or are
authorized to close.

 

23

--------------------------------------------------------------------------------

 

                Capital Leases shall mean, as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is or should be accounted for as a capital lease
on the balance sheet of that Person.

 

                Casualty Value for any Basic Rent Date shall be the amount equal
to the Lessor’s Cost multiplied by the factor set forth on Schedule No. 3 for
such Basic Rent Date except that, in the case of an Event of Loss covered by the
insurance covering loss or damage to the Aircraft required to be maintained by
Lessee pursuant to the Lease (or which would have been covered by such
insurance, had such insurance been maintained as required), Casualty Value shall
mean the higher of Fair Market Value or the amount equal to the Lessor’s Cost
multiplied by the factor set forth on Schedule No. 3 to Lease Supplement No. 1.

 

                Change in Control shall mean the occurrence of any of the
following: A) any Person or two or more Persons constituting a group (as such
term is used in Rule 13d-5 under the Securities Exchange Act of 1934) acquiring
by contract or otherwise beneficial ownership (within the meaning of Rule 13d-3
of the U.S. Securities and Exchange Commission under the Securities Exchange Act
of 1934) directly or indirectly, of securities of Lessee (or other securities
immediately convertible into such securities) representing 30% or more of the
combined voting power of all securities of Lessee entitled to vote in the
election of directors; or B) any Person or two or more Persons constituting a
group (as such term is used in Rule 13d-5 under the Securities Exchange Act of
1934) entering into a contract or arrangement which upon consummation will
result in its or their acquisition of, or control over, securities of Lessee (or
other securities immediately convertible into such securities) representing 30%
or more of the combined voting power of all securities of Lessee entitled to
vote in the election of directors.

 

                Claims shall have the meaning set forth in Section 11 of the
Lease.

 

                Closing Documents shall mean the documents identified as such on
Lease Supplement No. 2 and such other documents as Lessor shall consider
necessary or advisable in order to convey to Lessor title to the Aircraft as
contemplated under the Lease, which documents shall be in form and substance
satisfactory to Lessor.

 

                Default shall mean an event or circumstance which, after the
giving of notice or lapse of time, or both, would become an Event of Default.

 

                Defenses shall have the meaning set forth in Section 12 of the
Lease.

 

                Engine shall mean (i) each of the engines and, if applicable,
the auxiliary power units described and listed by manufacturer’s serial numbers
in Schedule No. 1 to Lease Supplement No. 1 and currently installed on the
Airframe covered by such Lease Supplement whether or not thereafter installed on
such Airframe or any other airframe from time to time; (ii) any engine and/or
auxiliary power unit which may from time to time be substituted, pursuant to the
applicable terms of this Lease, for an Engine leased hereunder and (iii) in each
case set forth in clauses (i) and (ii) hereof, with any and all Parts
incorporated in or installed on or attached to such Engine, engine and/or
auxiliary power unit or any and all Parts removed therefrom so long as title
thereto shall remain vested in Lessor in accordance with the applicable terms of
this Lease after removal from such Engine.  The term “Engines” means, as of any
date of determination, all Engines leased hereunder.

 

                Event of Default shall have the meaning set forth in Section 13
of the Lease.

 

                Event of Loss with respect to the Aircraft, the Airframe or any
Engine shall mean any of the following events with respect to such property (i)
loss of such property or the use thereof due to theft, disappearance,
destruction, damage beyond repair or rendition of such property permanently
unfit for normal use for any reason whatsoever; (ii) any damage to such property
which results in an insurance settlement with respect to such property on the
basis of a total loss or constructive total loss; (iii) the condemnation,
confiscation or  seizure of, or

 

24

--------------------------------------------------------------------------------

 

requisition of title to or use of, such property by the act of any government
(foreign or domestic) or of any state or local authority or any instrumentality
or agency of the foregoing (“Requisition of Use”); (iv) as a result of any rule,
regulation, order or other action by any government (foreign or domestic) or
governmental body (including, without limitation, the FAA or any similar foreign
governmental body) having jurisdiction, the use of such property shall have been
prohibited, or such property shall have been declared unfit for use, for a
period of six (6) consecutive months, unless Lessee, prior to the expiration of
six-month period, shall have undertaken and, in the reasonable opinion of the
Lessor, shall be diligently carrying forward all steps which are necessary or
desirable to permit the normal use of such property by Lessee or, in any event,
if use shall have been prohibited, or such property shall have been declared
unfit for use, for a period of twelve (12) consecutive months; (v) with respect
to an Engine, the removal thereof from the Airframe for a period of six (6)
consecutive months or longer, whether or not such Engine is operational or (vi)
an Engine is returned to the Manufacturer, other than for modification in the
event of patent infringement or for repair or replacement (any such return being
herein referred to as a “Return to Manufacturer”).  The date of such Event of
Loss shall be the date of such theft, disappearance, destruction, damage,
Requisition of Use, prohibition, unfitness for use for the stated period,
removal for the stated period or Return to Manufacturer.  An Event of Loss with
respect to the Aircraft shall be deemed to have occurred if an Event of Loss
occurs with respect to the Airframe.  An Event of Loss with respect to any
Engine shall not, without loss of the Airframe, be deemed an Event of Loss with
respect to the Aircraft.

 

                FAA shall mean the United States Federal Aviation Administration
and/or the Administrator of the Federal Aviation Administration and the
Department of Transportation, or any person, governmental department, bureau,
authority, commission or agency succeeding the functions of any of the
foregoing.

 

                FAA Counsel shall mean Messrs. Daugherty, Fowler, Peregrin &
Haught, 204 North Robinson, Suite 900, Oklahoma City, Oklahoma 73102, or such
other counsel as Lessor may designate.

 

                Fair Market Value shall mean the amount which would be obtained
in an arm’s length transaction between an informed and willing buyer-user or
lessee, as the case may be, (who is neither a lessee in possession nor a used
equipment dealer) and an informed and willing seller or lessor, as the case may
be, under no compulsion to sell or lease, as the case may be, and in such
determination costs of removal of the Aircraft from its then location shall not
be a deduction from such amount and it shall be assumed (whether or not the same
be true) that the Aircraft has been maintained in accordance with the provisions
of this Lease and would have been returned to Lessor in compliance with the
requirements hereof.

 

                Guarantor(s) shall mean (individually and/or collectively as the
context requires) Copart of Arizona, Inc, an Arizona corporation, Copart or
Arkansas, Inc., an Arkansas corporation, Copart of Connecticut, Inc., a
Connecticut corporation, Copart of Kansas, Inc., a Kansas corporation, Copart of
Louisiana, Inc., a Louisiana corporation, Copart of Missouri, Inc., a Missouri
corporation, Copart of Oklahoma, Inc., an Oklahoma corporation, Copart of
Washington, Inc., a Washington corporation, Copart of Tennessee, Inc., a
Tennessee corporation, Dallas Copart Salvage Auto Auctions Limited Partnership,
a Texas limited partnership, Houston Copart Salvage Auto Auctions Limited
Partnership, a Texas limited partnership, CPRT Land Holdings, Inc., a California
corporation, CPRT Land Holdings, Inc., a Florida corporation, Copart of Texas,
Inc., a Texas corporation, Copart-Dallas, Inc., a California corporation, Copart
of Houston, Inc., a Texas corporation, Copart-Houston, Inc., a California
corporation, Copartfinder, Inc., a California corporation, Copart Land Holdings,
LLC, a Connecticut limited liability company, and Copart Land Holding, L.L.C., a
Maryland limited liability company.

 

                Guaranty or Guaranties shall mean, as the context shall require,
the Guaranty or Guaranties described in Lease Supplement No. 2 to the Lease.

 

                Impositions shall have the meaning set forth in Section 8 of the
Lease.

 

25

--------------------------------------------------------------------------------

 

                Indebtedness  shall mean (i) indebtedness or liability for
borrowed money; (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments; (iii) obligations for the deferred purchase price of
property or services (but excluding trade payables incurred in the ordinary
course of business); (iv) obligations as lessee under Capital Leases or other
leases in respect of which the lessee is treated as the owner of the leased
property for tax purposes or in connection with any transaction by which any
asset is sold or otherwise transferred to another Person and thereafter is
rented or leased from such Person with the intention to use such asset for
substantially the same purpose as its use prior to such sale or transfer; (v)
reimbursement obligations under letters of credit; and (vi) obligations, of the
types described in the foregoing clauses (i) through (v), secured by Liens
whether or not such obligations have been assumed.

 

                Late Payment Rate shall mean the lesser of a rate equal to 1%
per month or the highest rate permitted by applicable law.  The Late Payment
Rate shall be computed on the basis of a 360 day year and a 30 day month.

 

                Lease Supplement shall mean a supplement to the Lease to be
entered into as of the Acceptance Date by Lessor and Lessee, which supplement
shall be substantially in the form as attached to the Lease and identified as
either Lease Supplement No. 1 or Lease Supplement No. 2 both of which are
attached to the Lease and made a part thereof.

 

                Lessor’s Cost shall have the meaning set forth in Schedule No. 2
to Lease Supplement No. 1 to the Lease.

 

                Lessor’s Liens shall mean any Liens created or granted by Lessor
with respect to Lessor’s purchase or financing of the Aircraft or resulting from
claims against Lessor not related to Lessor’s ownership of the Aircraft.

 

                Liens shall mean all liens, charges, security interests, and
encumbrances of every nature and description whatever, including, without
limitation, liens, charges, security interests and encumbrances with respect to
Impositions, (other than Lessor’s Liens) and rights of third parties under
management, pooling, interchange, overhaul, repair or other similar agreements
or arrangements.

 

                Manufacturer shall mean the manufacturers identified on Schedule
No. 1 to Lease Supplement No. 1 to the Lease and their respective successors and
assigns.

 

                Parts shall mean all appliances, avionics, parts, instruments,
appurtenances, accessories, furnishings and other equipment of whatever nature
(other than Additions or Engines), which may from time to time be incorporated
or installed in or attached to the Airframe or any Engine for so long as title
thereto shall be vested in Lessor in accordance with the applicable terms of
this Lease.

 

                Permitted Liens shall mean (a) the respective rights of others
under agreements or arrangements to the extent expressly provided and permitted
by the terms of Section 12 of the Lease, (b) Lessor’s Liens and (c) Liens for
taxes either not yet due or being contested by Lessee in good faith and inchoate
materialmen’s, mechanic’s, workmen’s, repairmen’s, employee’s or other like
Liens arising in the ordinary course of business of Lessee for sums not yet
delinquent or being contested in good faith (and for the payment of which
adequate reserves and/or security have, in Lessor’s reasonable judgment, been
provided to Lessor) with due diligence and by appropriate proceedings, if
counsel for Lessor shall have determined in its reasonable opinion that the
nonpayment of any such tax or Lien or the contest of any such payment in such
proceedings does not and will not adversely affect the title, property or rights
of Lessor.

 

                Person shall mean any individual, employee, partnership,
corporation, limited liability company, trust, association, joint venture, joint
stock company, or non-incorporated organization or government or any department
or agency thereof, or any other entity of any kind whatsoever.

 

26

--------------------------------------------------------------------------------

 

                Primary Hangar Location shall meaning set forth in Schedule No.
2 to Lease Supplement No. 1 to the Lease.

 

                Recognized Financial Institution shall mean any of the
following: (i) any insurance company, (ii) any savings and loan bank,
institution or association, (iii) any thrift institution or association, (iv)
any mutual savings or loan bank, institution or association, (v) any commercial
bank, (vi) any investment bank, and/or (vii) any leasing company or any other
financial services company or institution.

 

                Records shall mean any and all logs, manuals, certificates and
date and inspection, modification, maintenance, engineering, technical and
overhaul records (including all computerized data, records and materials of any
kind whatsoever) with respect 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 or Supplier of the Aircraft (or any part thereof) with respect to
the enforcement of warranties or otherwise, which Records shall be at all times
the property of the Lessor after the Acceptance Date.

 

                Rent shall have the meaning set forth in Section 3 of the Lease.

 

                Requisition of Use shall have the meaning set forth in the Event
of Loss definition contained herein.

 

                Return to Manufacturer shall have the meaning set forth in the
Event of Loss definition contained herein.

 

                SEC shall mean the Securities and Exchange Commission.

 

                Special Purpose Entity shall mean any Person (including, without
limitation, any company, partnership, corporation, trust or other entity) which
has been organized, formed, created or used, or which will be used, by any
Recognized Financial Institution for the purpose of holding or owning any
interest in the Lease or the Aircraft and which is also a United States Citizen.

 

                Subsidiary shall mean any corporation, association, limited
liability company or other business entity of which Lessee owns directly or
indirectly more than 50% of the voting securities thereof or in which Lessee
otherwise owns a controlling interest.

 

                Supplemental Rent shall have the meaning set forth in Section 3
of the Lease.

 

                Supplier shall mean the “Supplier” or “Suppliers”, as the case
may be, identified as such on Schedule No. 1 to Lease Supplement No. 1 and their
respective successors and assigns.

 

                Tax Loss shall have the meaning set forth in the Special Tax
Indemnity Rider to the Lease.

 

                Term shall mean the Basic Term together with (i) the period, if
any, from and including the Acceptance Date through, but not including, the Rent
Commencement Date and (ii) any Renewal Term or Renewal Terms, if any, entered
into pursuant to this Lease.

 

                Transfer shall have the meaning set forth in Section 12 of the
Lease.

 

                UCC shall mean the Uniform Commercial Code as in effect in the
applicable jurisdiction.

 

                United States Citizen shall mean any Person who is a “citizen of
the United States” within the meaning  set forth in 49 USC Section 40102 (a)
(15).

 

27

--------------------------------------------------------------------------------

 

                Warranty Bill of Sale shall mean a warranty bill of sale in the
form of Exhibit B hereto or such other form of warranty bill of sale as Lessor
in its sole discretion shall deem satisfactory.

 

28

--------------------------------------------------------------------------------

 

LEASE SUPPLEMENT NO. 1

(Acceptance Certificate)

 

                AIRCRAFT LEASE dated as of April 11, 2002, (the “Lease”) by and
between FLEET CAPITAL CORPORATION, as lessor (“Lessor”), and COPART, INC., as
lessee (“Lessee”).

 

                (a)  The Aircraft.

 

                Lessee hereby acknowledges, agrees and certifies that the
Aircraft as set forth and described in Schedule No. 1 hereto is in Lessee’s
possession, has been inspected by Lessee to its complete satisfaction, has been
found to be in good working order, repair and condition and fully equipped to
operate as required under applicable law for its purpose, is of a size, design,
capacity and manufacture selected by Lessee and suitable for Lessee’s purposes,
and is, as of the date set forth below, unconditionally, irrevocably and fully
accepted by Lessee for lease under the Lease.  Lessee hereby further
unconditionally and irrevocably reaffirms its acknowledgments and agreements in
the Lease.  All capitalized terms used herein which are not otherwise defined
herein shall have the meanings given to such terms in the Lease.

 

                (b)  Representations by Lessee.

 

                Lessee hereby represents and warrants to Lessor that on the date
hereof:

 

                (1)  The representations and warranties of Lessee set forth in
the Lease and all certificates and opinions delivered in connection therewith
were true and correct in all respects when made and are true and correct as of
the date hereof, with the same force and effect as if the same had been made on
this date.

 

                (2)  Lessee has satisfied or complied with all conditions
precedent and requirements as set forth in the Lease and Lease Supplements which
are required to be or to have been satisfied or complied with on or prior to the
date thereof.

 

                (3)  No Default or Event of Default under the Lease has occurred
and is continuing on the date hereof.

 

                (4)  Lessee has obtained, and there are in full force and
effect, such insurance policies with respect to the Aircraft as are required to
be obtained under the terms of the Lease.

 

                (5)  Lessee has furnished no equipment for the Aircraft other
than as stated on Schedule No. 1 hereto or permitted as an Addition thereto
pursuant to the Lease.

 

                (6)  The facts, terms, information, description and costs set
forth in the attached Schedules No. 1, No. 2 and No. 2-A hereto are true,
complete, accurate and correct.

 

                (7)  The Lease shall be deemed a “finance lease” under Section
2A-103 (g) of the UCC.

 

                Date of unconditional, irrevocable and final acceptance by
Lessee:

 

                April 15, 2002.

 

                IN WITNESS WHEREOF, Lessee has caused this Lease Supplement No.
1 to be duly executed by its officer thereunto duly authorized.

 

 

COPART, INC.

 

 

 

By:

/s/ Paul A. Styer

 

 

 

Title:

Secretary

 

 

 

Date:

April 15, 2002

 

 

29

--------------------------------------------------------------------------------

 

 

SCHEDULE NO. 1

 

TO

 

LEASE SUPPLEMENT NO. 1

 

 

Description of Aircraft

 

2000 Cessna 560XL aircraft which consists of the following components:

 

                (a)  Airframe bearing U.S. Registration Mark N269JR (but to be
changed to N394WJ) and manufacturer’s serial number 560-5086.

 

                (b)  Two (2) Pratt & Whitney PW545A engines bearing
manufacturer’s serial numbers PCE-DB0175 and PCE-DB0176, (each of which has 750
or more rated takeoff horsepower or the equivalent of such horsepower).

 

                (c)  Standard accessories and optional equipment and such other
items fitted or installed on the Aircraft and as may be more particularly
described hereinafter:

 

                See Schedule A which is attached hereto and made a part hereof.

 

                (d)  Those items of Lessee furnished equipment described in a
bill of sale or bills of sale therefor (copies of which may be appended hereto),
delivered by Lessee to Lessor which constitute appliances and equipment which
will be installed on the Aircraft.

 

             (e)  one (1) AlliedSignal auxiliary power unit bearing
manufacturer’s serial number P-152.

 

Manufacturer of Airframe:

 

Cessna Aircraft Company

Manufacturer of Engines:

 

Pratt & Whitney

Supplier:

 

The Dyer Group, Inc.

 

 

30

--------------------------------------------------------------------------------

 

Schedule A

to Aircraft Lease (Serial Number 560-5086)

2000 Cessna 560XL aircraft, S/N 560-5086, U.S. Registration Number N269JR

(but to be changed to N394WJ)

 

ENGINES:              Two (2) Pratt & Whitney PW545A engines bearing
manufacturer’s serial numbers PCE-DB0175 and PCE-DB0176

 

AUXILIARY POWER UNIT: One (1) AlliedSignal RE100 serial number P-152

 

AVIONICS (including but not limited to):

 

 

Standard Honeywell Primus 1000

 

 

Panel layout 1-01

 

 

Dual UNS-1Csp

 

 

KHF-950HF

 

 

TCAS 2000

 

 

EGPWS

 

 

WX-950 Stormscope

 

 

Aero-M SATCOM System w/cockpit handset

 

 

Fax/Data port at seat #6 including 2 110V outlets

 

 

Provisions for AFIS-Global

 

 

Cockpit speaker mute switch

 

 

CSD-714 SELCAL-Coltech

 

 

Permanent Data transfer unit

 

 

 

ADDITIONAL EQUIPMENT (including but not limited to):

 

 

RH external Lav Serviceable

 

 

Oxygen system- 76 cubic feet

 

 

Remote cabin temp. controls

 

 

 

EXTERIOR:

 

Overall white with silver titanium, tan and red stripes

 

 

 

INTERIOR:

 

High gloss burled mahogany with gold accents.  Tan leather seats with taupe
carpet and accented sidewalls.  Forward LH refreshment center and RH closet
w/forward two place couch.  Fully enclosed flushing potty w/hot water vanity.

 

TOGETHER WITH ALL ADDITIONS, ACCESSIONS, MODIFICATIONS,  IMPROVEMENTS,
REPLACEMENTS, SUBSTITUTIONS, AND ACCESSORIES THERETO AND THEREFORE, ALL
AVIONICS, ONBOARD EQUIPMENT, MANUALS, DOCUMENTATION AND TECHNICAL PUBLICATIONS
NOW OWNED OR HEREAFTER ACQUIRED, AND ALL RECORDS AND LOGBOOKS (IN WRITTEN FORM
OR AS COMPUTER DATA, DISCS OR TAPES, WHETHER NOW EXISTING OR HEREAFTER ACQUIRED
OR CREATED, AND WHETHER IN THE POSSESSION OF LESSEE OR HELD ON BEHALF OF LESSOR
BY OTHERS).

 

31

--------------------------------------------------------------------------------

 

SCHEDULE NO. 2

 

TO

 

LEASE SUPPLEMENT NO. 1

 

Financial Terms

 

Rent Commencement Date:

 

May 1, 2002

 

 

 

Basic Term:

 

144 months commencing with the Rent

 

 

Commencement Date through and including the Expiration Date

 

 

 

Basic Rent Dates:

 

the 1st day of each and every calendar month from and including the First Basic
Rent Date through and including the Last Basic Rent Date

 

 

 

First Basic Rent Date:

 

May 1, 2002

 

 

 

Last Basic Rent Date:

 

April 1, 2014

 

 

 

Expiration Date:

 

April 30, 2014

 

 

 

Lessee’s Exact Legal Name:

 

Copart, Inc.

 

 

 

Lessee’s Organizational

 

 

Identification Number:

 

C1126641

 

 

 

Lessee’s Chief Executive Offices

 

 

and Principal Place of Business:

 

5500 East Second Street

 

 

Benicia, CA  94510

 

 

 

Primary Hangar Location:

 

Nut Tree Airport

 

 

640 Alamo Drive

 

 

Vacaville, CA  95688

 

 

 

Acceptance Date:

 

April 15, 2002

 

 

 

Last Acceptance Date:

 

April 15, 2002

 

 

 

Date of Last Financial Statements:

 

October 31, 2001

 

 

 

Lessor’s Cost:

 

$8,675,000.00

 

32

--------------------------------------------------------------------------------

 

SCHEDULE NO. 2-A

 

TO

 

LEASE SUPPLEMENT NO. 1

 

Financial Terms (continued)

 

 

Daily Lease Rate:

 

0.019579% of the Lessor’s Cost

 

 

 

Basic Rent:

 

 

 

 

 

Basic Rent Dates 1 through 72

 

0.528634% of the Lessor’s Cost

(subject to the rate reset

 

 

provisions below)

 

 

 

 

 

Basic Rent Dates 73 through 144

 

0.646109% of the Lessor’s Cost

(subject to the rate reset

 

 

provisions below)

 

 

 

 

 

Permitted Deductible:

 

$0 per occurrence

 

 

 

Estimated Annual Hours

 

550

 

 

 

Early Purchase Option Amounts:

 

 

 

 

 

Basic Rent Dates

 

Percentage of Lessor’s Cost

 

 

 

60

 

90.98%

84

 

82.93%

 

Rate Reset:            Effective as of the sixty-first (61st) Basic Rent Date,
the amount of Basic Rent to be paid by Lessee under the Lease for the remainder
of the Basic Term shall be reset and fixed for the remainder of the Basic Term
at an amount determined by multiplying the Remaining Rental Factor (as such term
is defined below) by the Lessor’s Cost.  As used herein, the following terms
shall have the meanings set forth below:

 

“Remaining Rental Factor” shall mean (i) for the sixty-first (61st) through and
including the seventy-second (72nd) Basic Rent Dates, 0.528634%, adjusted
(upward or downward) by the percentage adjustment calculated, upward or
downward, obtained by multiplying .000246% for each basis point corresponding
change in the Index Rate (as such term is defined below) from 4.53%, and (ii)
for the seventy-third (73rd) through and including the one hundred forty-fourth
(144th) Basic Rent Dates, 0.646109%, adjusted (upward or downward) by the
percentage adjustment calculated, upward or downward, obtained by multiplying
.000300% for each basis point corresponding change in the Index Rate from 4.53%.

 

“Index Rate” shall mean the weekly average yield on three year Interest Rate
Swaps determined by reference to the Selected Interest Rates table of the
Federal Reserve Statistical Release H.15(519) (or similar or successor
publication) in effect fifteen days prior to the sixty-first (61st) Basic Rent
Date.

 

Effective upon the sixty-first (61st) Basic Rent Date, the Lessor shall prepare
new Schedule Nos. 2-A, 3, 4 and 5 to Lease Supplement No. 1 which reflect the
revised payment schedule as provided herein. Upon furnishing of the foregoing
schedules and values to the Lessee, such schedules and values shall be deemed to
replace the Early Purchase Option Amounts set forth on Schedule 2-A to Lease

 

33

--------------------------------------------------------------------------------

 

Supplement No. 1, the Casualty Values set forth in Schedule No. 3 to Lease
Supplement No. 1, the Upgrade Amounts set forth in Schedule No. 4 to Lease
Supplement No. 1, and the Upgrade Amounts set forth in Schedule No. 5 to Lease
Supplement No. 1 for all purposes.

 

 

 

 

Initials:

 

 

 

 

 

Lessee:

PAS

 

 

 

 

Lessor:

JEH

 

34

--------------------------------------------------------------------------------

 

SCHEDULE NO. 3 TO LEASE

 

SUPPLEMENT NO. 1

 

CASUALTY VALUES

 

             The Casualty Value of the Aircraft for any Basic Rent Date shall be
an amount equal to the Lessor’s Cost multiplied by the factor set forth opposite
the rental payment number due on such Basic Rent Date.  Upon the exercise of any
option to renew the Term by Lessee, Lessor shall provide to Lessee a new
Schedule No. 3 to Lease Supplement No. 1 setting forth the Casualty Values for
the Renewal Term.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BASIC

RENT

DATE/

NUMBER

 

APPLICABLE

PERCENTAGE

 

BASIC

RENT DATE/

NUMBER

 

APPLICABLE

PERCENTAGE

 

BASIC RENT DATE/NUMBER

 

APPLICABLE

PERCENTAGE

1

 

102.47

 

31

 

101.53

 

61

 

96.52

2

 

102.52

 

32

 

101.41

 

62

 

96.30

3

 

102.57

 

33

 

101.29

 

63

 

96.09

4

 

102.60

 

34

 

101.16

 

64

 

95.87

5

 

102.63

 

35

 

101.03

 

65

 

95.65

6

 

102.67

 

36

 

100.90

 

66

 

95.43

7

 

102.69

 

37

 

100.76

 

67

 

95.20

8

 

102.71

 

38

 

100.62

 

68

 

94.98

9

 

102.73

 

39

 

100.48

 

69

 

94.75

10

 

102.74

 

40

 

100.33

 

70

 

94.52

11

 

102.74

 

41

 

100.18

 

71

 

94.28

12

 

102.75

 

42

 

100.03

 

72

 

94.05

13

 

102.75

 

43

 

99.87

 

73

 

93.69

14

 

102.74

 

44

 

99.71

 

74

 

93.34

15

 

102.72

 

45

 

99.55

 

75

 

92.98

16

 

102.69

 

46

 

99.38

 

76

 

92.63

17

 

102.65

 

47

 

99.21

 

77

 

92.27

18

 

102.62

 

48

 

99.04

 

78

 

91.91

19

 

102.56

 

49

 

98.87

 

79

 

91.55

20

 

102.51

 

50

 

98.69

 

80

 

91.19

21

 

102.45

 

51

 

98.51

 

81

 

90.82

22

 

102.37

 

52

 

98.33

 

82

 

90.46

23

 

102.30

 

53

 

98.14

 

83

 

90.09

24

 

102.22

 

54

 

97.95

 

84

 

89.72

25

 

102.14

 

55

 

97.75

 

85

 

89.35

26

 

102.05

 

56

 

97.55

 

86

 

88.98

27

 

101.96

 

57

 

97.35

 

87

 

88.61

28

 

101.85

 

58

 

97.15

 

88

 

88.23

29

 

101.75

 

59

 

96.94

 

89

 

87.86

30

 

101.64

 

60

 

96.73

 

90

 

87.48

 

 

 

Initials:

Lessee:

PAS

 

Lessor:

JEH

 

35

--------------------------------------------------------------------------------

 

 

SCHEDULE NO. 3 TO LEASE

 

SUPPLEMENT NO. 1

 

CASUALTY VALUES

 

(CONTINUED)

 

             The Casualty Value of the Aircraft for any Basic Rent Date shall be
an amount equal to the Lessor’s Cost multiplied by the factor set forth opposite
the rental payment number due on such Basic Rent Date.  Upon the exercise of any
option to renew the Term by Lessee, Lessor shall provide to Lessee a new
Schedule No. 3 to Lease Supplement No. 1 setting forth the Casualty Values for
the Renewal Term.

 

 

BASIC

RENT

DATE/

NUMBER

 

APPLICABLE

PERCENTAGE

 

BASIC

RENT DATE/

NUMBER

 

APPLICABLE

PERCENTAGE

 

BASIC RENT DATE/NUMBER

 

APPLICABLE

PERCENTAGE

91

 

87.11

 

111

 

79.22

 

131

 

70.72

92

 

86.73

 

112

 

78.81

 

132

 

70.27

93

 

86.34

 

113

 

78.40

 

133

 

69.82

94

 

85.96

 

114

 

77.99

 

134

 

69.38

95

 

85.58

 

115

 

77.57

 

135

 

68.93

96

 

85.19

 

116

 

77.16

 

136

 

68.48

97

 

84.80

 

117

 

76.74

 

137

 

68.03

98

 

84.41

 

118

 

76.32

 

138

 

67.58

99

 

84.02

 

119

 

75.90

 

139

 

67.12

100

 

83.63

 

120

 

75.48

 

140

 

66.67

101

 

83.24

 

121

 

75.05

 

141

 

66.21

102

 

82.84

 

122

 

74.62

 

142

 

65.75

103

 

82.45

 

123

 

74.19

 

143

 

65.29

104

 

82.05

 

124

 

73.77

 

144

 

65.00

105

 

81.65

 

125

 

73.34

 

 

 

 

106

 

81.25

 

126

 

72.90

 

 

 

 

107

 

80.85

 

127

 

72.47

 

 

 

 

108

 

80.45

 

128

 

72.03

 

 

 

 

109

 

80.04

 

129

 

71.59

 

 

 

 

110

 

79.63

 

130

 

71.16

 

 

 

 

 

 

 

Initials:

 

 

 

 

 

 

 

 

 

Lessee:

PAS

 

 

 

 

 

 

 

 

Lessor:

JEH

 

 

 

 

 

 

 

 

 

36

--------------------------------------------------------------------------------

 

SCHEDULE NO. 4 TO LEASE

 

SUPPLEMENT NO. 1

 

UPGRADE OPTION AMOUNTS

 

             Subject to the terms of the Lease, the Upgrade Option Amount of the
Aircraft for any Upgrade Option Date shall be an amount equal to the Lessor’s
Cost multiplied by the factor set forth opposite the applicable Upgrade Option
Date.

 

UPGRADE

 

UPGRADE

OPTION

 

OPTION

DATE

 

AMOUNT

 

 

 

36

 

96.25%

 

 

 

48

 

93.93%

 

 

 

60

 

90.98%

 

 

 

72

 

87.78%

 

 

 

84

 

82.93%

 

 

 

96

 

77.86%

 

 

 

108

 

72.57%

 

 

 

120

 

67.05%

 

 

Initials:

 

 

 

 

 

 

 

 

 

Lessee:

PAS

 

 

 

 

 

 

 

 

Lessor:

JEH

 

 

 

 

 

 

 

 

37

--------------------------------------------------------------------------------

 

SCHEDULE NO. 5 TO LEASE

 

SUPPLEMENT NO. 1

 

UPGRADE OPTION AMOUNTS

 

             Subject to the terms of the Lease, the Upgrade Option Amount of the
Aircraft for any Upgrade Option Date shall be an amount equal to the Lessor’s
Cost multiplied by the factor set forth opposite the applicable Upgrade Option
Date.

 

UPGRADE

 

UPGRADE

OPTION

 

OPTION

DATE

 

AMOUNT

 

 

 

36

 

97.25%

 

 

 

48

 

94.93%

 

 

 

60

 

91.98%

 

 

 

72

 

88.78%

 

 

 

84

 

83.93%

 

 

 

96

 

78.86%

 

 

 

108

 

73.57%

 

 

 

120

 

68.05%

 

 

 

 

 

Initials:

 

 

 

 

 

 

 

 

 

Lessee:

PAS

 

 

 

 

 

 

 

 

Lessor:

JEH

 

 

 

 

 

 

 

 

 

38

--------------------------------------------------------------------------------

 

 

LEASE SUPPLEMENT NO. 2

(Closing Terms)

 

                AIRCRAFT LEASE dated as of April 11, 2002, (the “Lease”) by and
between FLEET CAPITAL CORPORATION, as lessor (“Lessor”), and COPART, INC., as
lessee (“Lessee”). All capitalized terms used herein which are not otherwise
defined herein shall have the meanings given to such terms in the Lease.

 

Closing Documents:

 

             On or prior to the Acceptance Date, Lessee has delivered or caused
to be delivered the following Closing Documents to Lessor:

 

                1.  The duly executed Order or Aircraft Purchase Agreement
between Supplier and Lessee, as assignee of Copart of Washington, Inc., dated
February 28, 2002, as amended, and, the duly executed and authorized assignments
of same to Lessor in form and substance satisfactory to Lessor.

 

                2.  Warranty Agreements between Cessna Aircraft Company or any
other manufacturer or vendor and Lessee and, if applicable, the duly executed
and authorized assignments of same to Lessor in form and substance satisfactory
to Lessor.

 

                3.  Invoices for the Aircraft, including the Engines, from the
Supplier showing Lessor as the purchaser thereof.

 

                4.  Evidence of reservation of an “N” number for the Aircraft,
together with an assignment of Lessee’s rights in such “N” number to Lessor.

 

                5.  A copy of the Standard Airworthiness Certificate (FAA Form
8100-2) issued by the FAA for the Aircraft.

 

                6.  A certificate or certificates, executed by the Lessee’s
secretary or other authorized representative certifying: (A) that execution,
delivery and performance of this Lease and all ancillary documentation and the
entrance by Lessee into the transactions contemplated hereby and thereby have
been authorized and (B) the name(s) of the person(s) authorized to execute and
deliver such documents on behalf of Lessee together with specimen signature(s)
of such person.

 

                7.  A certificate of insurance as to the coverage required under
the Lease accompanied, if requested by Lessor, by the applicable policies and
reports of insurance brokers or underwriters pursuant thereto as to the
conformity of such coverage with such requirements.

 

                8.  Evidence that FAA Counsel has received in escrow: (A) the
executed FAA AC Form 8050-2 Aircraft Bill of Sale (the “FAA Bill of Sale”) in
the name of Lessor; (B) the executed AC Form 8050-1 Aircraft Registration
Application (the “Registration Application”) (except for the pink copy which
shall be available to be placed on the Aircraft upon acceptance thereof); (C)
executed releases in form and substance satisfactory to FAA Counsel, Lessor’s
counsel and/or Lessor of any Liens; (D) such other documents as are necessary,
in the opinion of Lessor’s counsel and/or FAA Counsel to vest good title to the
Aircraft in the name of Lessor and (E) executed duplicates of the Lease, all
Riders hereto requiring separate execution, and Lease Supplements No. 1 and 2
executed in triplicate, all the foregoing (except for the Warranty Bill of Sale)
being in proper form for filing with the FAA.

 

                9.  UCC financing statements executed by Lessee with respect to
the Aircraft and the Collateral (and, where needed, assignment, release and/or
termination statements with respect to UCC financing statements of record
evidencing an interest in the Aircraft and/or Collateral) in all places which
are, in Lessor’s opinion, necessary or appropriate to protect Lessor’s interest
therein.

 

39

--------------------------------------------------------------------------------

 

 

                10.  An opinion of FAA Counsel satisfactory to Lessor that title
to the Airframe is vested in Lessor, Lessor has a valid and perfected interest
in the Engines and that the Aircraft (including, without limitation the Airframe
and Engines) is free and clear of all other liens and encumbrances of record.

 

11.  If requested by Lessor, an opinion of counsel for Lessee in form and
substance satisfactory to Lessor.

 

                12.  If requested by Lessor, certificate(s) of good standing for
Lessee from the state of its incorporation and the state(s) where the Primary
Hangar Location and Lessee’s chief executive offices and principal place of
business are located.

 

                13.  Guaranties in favor of Lessor, duly executed by Guarantors,
in form and substance satisfactory to Lessor and Lessor’s counsel,
unconditionally guaranteeing, among other things, the payment and performance by
Lessee of all its obligations under the Lease.

 

                14.  A certificate or certificates, executed by the Guarantor’s
secretary or other authorized representative certifying: (A) that execution,
delivery and performance of the Guaranty and all ancillary documentation and the
entrance by Guarantor into the transactions contemplated thereby have been
authorized and (B) the name(s) of the person(s) authorized to execute and
deliver such documents on behalf of Guarantor together with specimen
signature(s) of such person.

 

                15.  If requested by Lessor, certificate(s) of good standing for
Guarantor from the state of its incorporation and the state(s) where the
Guarantor’s chief executive offices and principal place of business are located.

 

                16.  such other documents, certificates and opinions, and
evidence of such other matters, as Lessor, Lessor’s counsel or FAA Counsel may
reasonably request.

 

Conditions Subsequent:

 

                On or subsequent to the Acceptance Date, but not later than the
date of the Aircraft’s first flight under the leasehold conveyed herein, Lessee
shall provide written confirmation to Lessor that copies of the Registration
Application and Standard Airworthiness Certificate (FAA Form AC 8100-2)
pertaining to the Aircraft have been properly placed on the Aircraft.

 

            In addition, if the Aircraft is more than 12,500 pounds maximum
certificated takeoff weight, prior to the date of the Aircraft’s first flight
under the Lease, Lessee shall provide Lessor with written confirmation that:

 

                1.  a copy of the Lease, including Lease Supplements No. 1 and
No. 2, has been properly placed on the Aircraft;

 

                2.  a copy of the Lease, including Lease Supplements No. 1 and
No. 2 thereto, was mailed, within 24 hours following execution thereof, to the
Flight Standards Technical Division of the FAA; and

 

                3.  Lessee has notified the FAA (such notification to have been
given by facsimile transmission, telephone or in person to the FAA Flight
Standards District Office, General Aviation District Office nearest the airport
where such flight will originate) concerning the first flight of the Aircraft
under this Lease at least 48 hours prior to takeoff.

 

40

--------------------------------------------------------------------------------

 

         IN WITNESS WHEREOF, effective as of April _____, 2002 the parties
hereto have each caused this Lease Supplement No. 2 to be duly executed by their
respective officers, thereunto duly authorized.

 

 

FLEET CAPITAL CORPORATION

 

 

 

 

By:

/s/ John E. Haakenson, Jr.

 

 

 

 

Name:

John E. Haakenson, Jr.

 

 

 

 

Title:

Vice President

 

 

 

 

COPART, INC.

 

 

 

 

By:

/s/ Paul A. Styer

 

 

 

 

Name:

Paul A. Styer

 

 

 

 

Titile:

Secretary

 

 

41

--------------------------------------------------------------------------------

 

EXHIBIT B

TO AIRCRAFT LEASE

WARRANTY BILL OF SALE

 

             ______________________ (the “Seller”), in consideration of the sum
of __________________________________ and __/100 Dollars ($____________) paid by
FLEET CAPITAL CORPORATION (the “Buyer”), receipt of which is acknowledged,
hereby grants, sells, assigns, transfers and delivers to Buyer the aircraft
described below together with the engines installed thereon and all appliances,
parts, instruments, appurtenances, accessories, furnishings, avionics,
components and other equipment of whatever nature installed on said aircraft and
all logbooks, manuals, certificates, data and inspection, modification,
maintenance, engineering, technical, overhaul and all other books and records
(including all computerized data, records and materials) as pertain to the
operation and maintenance of such aircraft (all of the foregoing hereinafter
collectively referred to as the “Aircraft”), along with whatever claims and
rights Seller may have against the manufacturer and/or supplier of the Aircraft,
including, but not limited to, all warranties and representations. At Buyer’s
request, Seller will cause the manufacturer and/or supplier of the Aircraft to
execute an Acknowledgment in form and substance satisfactory to Buyer in its
sole discretion.

 

DESCRIPTION OF AIRCRAFT

 

_______________ aircraft bearing FAA Registration Mark N_____ and manufacturer’s
serial number _____ and ___ ( ) ______________________ engines, respectively,
bearing manufacturer’s serial numbers. ____ and ____.

 

 

(See also Schedule A attached hereto and made a part hereof for further
description of the Aircraft.)

 

             Seller represents, warrants and agrees to Buyer that (1) Seller is
the lawful owner of the full title to the Aircraft and that Buyer will acquire
by the terms of this Warranty Bill of Sale good and full title to the Aircraft
free and clear of all mortgages, leases, security interests, claims, charges,
liens and encumbrances of any kind whatsoever; (2) Seller has the right to sell
the Aircraft as aforesaid; (3) Seller shall warrant and defend title to the
Aircraft and indemnify Buyer against the claims of any person, party, firm,
corporation or entity of any kind whatsoever and (4) the Aircraft had been
delivered to Buyer in good order and condition and conforms to the
specifications and the requirements and standards applicable thereto.

 

             Seller agrees to save and hold harmless Buyer from and against any
and all foreign, Federal, state, municipal and local license fees and taxes of
any kind or nature, including, without limiting the generality of the foregoing,
any and all excise, personal property, privilege, use and sales taxes, and from
and against any and all liabilities, obligations, losses, damages, penalties,
claims, actions and suits, including, without limitation, attorney’s fees,
resulting therefrom and imposed upon, incurred by or asserted against Buyer as a
consequence of the sale of the Aircraft to the Buyer.

 

             Seller agrees and acknowledges that the terms and conditions of
this Warranty Bill of Sale, including, without limitation, all representations,
warranties and agreements for the benefit of Buyer, shall survive the delivery
of the Aircraft and the delivery, execution and recording of this or any Federal
Aviation Administration Bill of Sale.

 

             IN WITNESS WHEREOF, Seller has executed this Warranty Bill of Sale
this ____ day of _______, 2002

 

 

 

 

 

SELLER:

 

 

 

 

 

By:

 

 

 

 

 

Titile:

 

 

 

42

--------------------------------------------------------------------------------

EXHIBIT C

 

                Special Tax Indemnity Rider (“Tax Rider”) to Aircraft Lease
(Serial Number 560-5086) dated as of April 11, 2002, (the “Lease”) by and
between Fleet Capital Corporation, as lessor (“Lessor”), and Copart, Inc., as
lessee (“Lessee”).

 

                All capitalized terms used herein which are not otherwise
defined herein shall have the meanings given to such terms in the Lease.  Upon
execution and delivery hereof, this Tax Rider shall be deemed to be a part of
the Lease.  Except as set forth herein, all of the terms and conditions of the
Lease and any supplements, schedules, addenda, exhibits or the like entered into
pursuant to the Lease remain in full force and effect.

 

                For good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto hereby agree to amend the Lease by the
addition of the following provisions:

 

                (a)  Assumed Tax Benefits.  In entering into the Lease and the
transactions contemplated thereby, Lessor has assumed that it would be entitled,
for Federal, state and local income tax purposes, to the tax benefits set forth
in paragraph (f) below (collectively referred to as the “Assumed Tax
Benefits”).  Lessor has also assumed that its income would be taxed for Federal,
state and local corporate income and franchise tax purposes at an effective
combined tax rate of 39.55% (the “Assumed Tax Rate”).

 

                (b)  [Intentionally left blank].

 

                (c)  Indemnity.  If

 

(A)      by reason of (i) any act or failure to act of Lessee or (ii) the breach
of any of Lessee’s representations and warranties set forth in the Lease, any
certificate or document delivered by Lessee in connection with the delivery and
acceptance of the Aircraft;

 

(B)        for Federal, foreign, state or local income tax purposes, any item of
income, loss or deduction with respect to the Aircraft during the Term of the
Lease is treated as derived from, or allocable to, sources outside the United
States (whether or not any foreign income taxes imposed as a result thereof may
be credited against Federal, state or local income taxes of Lessor); or

 

(C)        there shall be included in Lessor’s gross income for Federal, state
or local income tax purposes any amount on account of any addition, modification
or improvement to or in respect of the Aircraft made or paid for by Lessee;

 

Lessor shall lose, shall not have the right to claim or shall suffer a
disallowance or recapture with respect to, or shall receive a lower than
anticipated economic benefit from, all or a portion of the Assumed Tax Benefits
with respect to the Aircraft (any such loss, failure to have or loss of the
right to claim, disallowance, recapture, delay, treatment, inclusion or economic
detriment referred to in any of the foregoing clauses (A) through (C) of this
paragraph (c) being hereinafter called a “Tax Loss”); Lessee shall pay to Lessor
at Lessor’s option either:  (i) an amount or amounts that, after reduction by
the net amount of all Federal, state and local taxes required to be paid by
Lessor with respect to the receipt of such amount or amounts, equals the
aggregate additional Federal, state and local income taxes payable by Lessor as
a result of such Tax Loss plus an amount equal to any interest, fines, additions
to tax or penalties as a result of such Tax Loss or (ii) additional Rent on each
Basic Rent Date in such amounts as are necessary to maintain Lessor’s after-tax
economic yield and overall net after-tax cash flow.  The amount payable by
Lessor with respect to a Tax Loss shall be calculated with the assumption that
Lessor is subject to Federal, state and local tax at the Assumed Tax Rate.  In
the event any indemnity payments shall be paid to Lessor under this Tax Rider
with respect to

 

 

 

 

43

--------------------------------------------------------------------------------

 

the Aircraft, the Casualty Value, Upgrade Option Amount, and Early Purchase
Option Amount of the Aircraft shall be adjusted appropriately.

 

                (d)  Consolidated Tax Returns; Lessor’s Assigns.  For purposes
of this Tax Rider, the term “Lessor” will include the corporation constituting
Lessor, its successors in interest, each assignee and each of their respective
successors in interest and assigns and any Consolidated Group (hereinafter
defined) of which Lessor or any such assignee or any of their respective
successors in interest or assigns is, or may become a member, and each member of
such Consolidated Group and the term “Consolidated Group” means an affiliated
group (within the meaning of Section 1504 of the Code) that files consolidated
returns for Federal income tax purposes and any group filing combined, unitary
or consolidated returns pursuant to the rules of any state taxing authority.

 

                (e)  Miscellaneous.  The indemnification obligations of Lessee
under this Tax Rider shall survive the expiration, cancellation or termination
of the Lease and the Term and shall remain in full force and effect until such
time as Lessee has no further obligations of any kind whatsoever under the
Lease. Provided that Lessee performs its indemnification obligations under this
Tax Rider in a timely manner, Lessor shall have no additional remedies with
respect to the occurrence of a Tax Loss.

 

                (f)  Assumed Tax Benefits.  For purposes of this Tax Rider, the
term “Assumed Tax Benefits” shall mean the following:

 

                Cost Recovery Deductions:

 

                A.            Depreciation Method:  (commencing in Lessor’s
taxable year which includes the Acceptance Date) 200% declining balance method,
switching to straight line method for the first taxable year for which using the
straight line method with respect to the adjusted basis as of the beginning of
such year would yield a larger allowance.

 

                B.            Recovery Period:  five years

 

                C.            Basis:  100% of Lessor’s Cost.

 

(g)  Additional Definitions.  For purposes of this Tax Rider the term “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

                (h)  Exclusions. Lessee shall not be required to indemnify
Lessor for any Tax Loss which occurs solely as a result of any of the following
events:

 

                                                (i)  a failure by Lessor to have
either sufficient income or the class of income to utilize fully the Assumed Tax
Benefits; or

 

                                                (ii)  a failure by Lessor to
timely claim any Assumed Tax Benefits so long as such failure was not related to
any  failure by the Lessee to provide the Lessor with any applicable
information; or

 

                                                (iii) any change in the Code or
regulations enacted or effective after the Acceptance Date; or

 

                                                (iv) to the extent caused
directly by any act of Lessor; or

 

(v) in the event that the Lessor sells, transfers or assigns the Lease or the
Aircraft, the Lessee shall not be required to indemnify the Lessor for any Tax
Loss which occurs solely as a result of any such sale, transfer or assignment,
but only to the extent that (i) any such Tax Loss would not have occurred with
respect to the original Lessor had there been no such sale, transfer or
assignment, or (ii) the amount payable by reason of any such Tax Loss exceeds
that amount that would have been payable by the Lessee with respect to the
original Lessor had there been no such sale, transfer or

 

44

--------------------------------------------------------------------------------

 

assignment; provided, however, that the foregoing exclusion shall not apply in
any way whatsoever to any sale, assignment, transfer or other disposition of
this Lease or the Aircraft that occurs after an Event of Default or an Event of
Loss has occurred in connection with the Lease.

 

                IN WITNESS WHEREOF, the parties hereto have each caused this Tax
Rider to be duly executed by their respective officers, thereunto duly
authorized.

 

 

FLEET CAPITAL CORPORATION

 

 

 

 

By:

/s/ John E. Haakenson, Jr.

 

 

 

 

Name:

John E. Haakenson, Jr.

 

 

 

 

Title:

Vice President

 

 

 

 

COPART, INC.

 

 

 

 

By:

/s/ Paul A. Styer

 

 

 

 

Name:

Paul A. Styer

 

 

 

 

Title:

Secretary

 

 

45

--------------------------------------------------------------------------------

 

                Insurance Addendum (“Insurance Addendum”) to Aircraft Lease
(Serial Number 560-5086) dated as of April 11, 2002, (the “Lease”) by and
between Fleet Capital Corporation, as lessor (“Lessor”), and Copart, Inc., as
lessee (“Lessee”).

 

                All capitalized terms used herein which are not otherwise
defined herein shall have the meanings given to such terms in the Lease.  Except
as set forth herein, all of the terms and conditions of the Lease and any
supplements, schedules, addenda, exhibits or the like entered into pursuant to
the Lease remain in full force and effect.  Execution of the Lease by Lessee and
Lessor shall be deemed to constitute execution and acceptance of the terms and
conditions hereof, whereupon this Insurance Addendum shall be deemed to be a
part of the Lease.

 

                The following provisions are hereby incorporated into the Lease:

 

Insurance.

 

                (a)  Aircraft Liability and Property Damage Insurance.  Lessee
shall maintain at its own cost and expense for the entire Term with insurers
reasonably satisfactory to Lessor, (i) comprehensive aircraft and general public
liability insurance against bodily injury and property damage claims including,
without limitation, contractual liability, premises damage, public liability,
death and property damage liability, public and passenger legal liability
coverage in an amount not less than $100,000,000.00 for each single occurrence
and (ii) personal injury liability in an amount not less than $25,000,000.00. 
Lessee shall also provide worker’s compensation insurance with all-states
coverage for the Aircraft’s crew and maintenance personnel.

 

                (b)  Insurance Against Loss or Damage to the Aircraft.  Lessee
shall maintain at its own cost and expense for the entire Term with insurers
reasonably satisfactory to Lessor, all-risk ground and flight aircraft hull
insurance covering the Aircraft, including foreign object damage, fire and
explosion coverage resulting from a collision, cargo, environmental (limited to
pollutants released because of a crash or collision of the Aircraft or related
to an emergency causing abnormal operation of the Aircraft), damages resulting,
from ingestion and lightning and associated electrical damage and comparable
insurance with respect to any Engines or Parts while removed from the Aircraft,
and with respect to any engines or parts while temporarily installed on the
Aircraft, provided that such insurance shall at all times be in an amount not
less than the Casualty Value of the Aircraft (such amount determined at the Rent
Commencement Date and at each anniversary thereof for the next succeeding year
throughout the Term).  Lessee shall maintain in effect hijacking (air piracy)
insurance with respect to the Aircraft in a face amount of not less than the
Casualty Value of the Aircraft (determined as described herein), which shall be
in full force and effect worldwide throughout any geographical areas at any time
traversed by the Aircraft.  Such insurance, to the extent available, shall also
include war risk, governmental confiscation and expropriation and related
insurance.

 

                (c)  Lessor as Additional Insured; Notice.  Any policies of
insurance carried in accordance with this Insurance Addendum and any policies
taken out in substitution or replacement of any such policies (i) shall be
amended to name Lessor as the owner of the Aircraft and as additional insured as
its interests may appear, (ii) with respect to insurance carried in accordance
with paragraph (b) of this Insurance Addendum covering the Aircraft, shall
provide that any amount payable thereunder which exceeds $100,000.00 in the
aggregate shall be paid directly to Lessor as sole loss payee and not to Lessor
and Lessee jointly (and, so long as no Event of Default has occurred, such
amounts shall be disbursed by Lessor to Lessee or other appropriate Persons in
payment of the costs actually incurred with respect to repairs made to the
Aircraft so as to restore it to the operating condition required by the M&R
Addendum, or shall be disbursed by Lessor as otherwise required by the Lease),
and that, provided no Default or Event of Default has occurred and is
continuing, any amount(s) of less than $100,000.00 in the aggregate shall be
paid to Lessee (and such amounts shall be applied by Lessee to pay the costs of
such repairs), (iii) shall provide for thirty (30) days written notice by such
insurer of cancellation, change, non-renewal or reduction and (iv) shall provide
that in respect of the interests of Lessor in such policies, the insurance shall
not be invalidated by any action or inaction of Lessee regardless of any breach
or violation of any warranties, declarations or conditions contained in such

 

46

--------------------------------------------------------------------------------

 

policies by or binding upon Lessee.  Each shall be primary insurance, not
subject to any co-insurance clause and shall be without right of contribution
from any other insurance. Such insurance shall also include, to the extent
available, war risk and allied perils, including hijacking and terrorism,
governmental confiscation and appropriation and related insurance. Lessee shall
arrange for appropriate certification as to the satisfaction of the requirements
set forth above in this Insurance Addendum to be delivered to Lessor not later
than the Acceptance Date by each such insurer or underwriter therefor, which
certification shall specifically acknowledge that the insurance is in conformity
with this Insurance Addendum.  Notwithstanding the foregoing, Lessee shall
promptly provide Lessor with a copy of each policy of insurance required
hereunder if it so requests.

 

                (d)  Reports, etc.  Annually on the anniversary of the
Acceptance Date, Lessee shall furnish to Lessor a report describing in
reasonable detail the insurance then carried and maintained on the Aircraft and
certifying that such insurance complies with the terms hereof and, if Lessor
shall so request, a copy of each applicable policy.  In the event Lessee shall
fail to maintain insurance as herein provided, Lessor may, at its option,
provide such insurance, and Lessee shall, upon demand, reimburse Lessor for the
cost thereof, together with interest at the Late Payment Rate from the date of
payment through the date of reimbursement.

 

                (e)  Agreed Value.  Anything herein to the contrary
notwithstanding, at all times while the Aircraft is subject to this Lease, the
insurance required hereunder shall be for an amount on an “agreed value” basis
not less than the Casualty Value.

 

                (f)  No Right To Self-Insure.  Lessee shall not self-insure (by
deductible, premium adjustment, or risk retention arrangement of any kind) the
insurance required to be maintained hereunder, except to the extent of
deductibles usually and customarily maintained by companies engaged in the same
or similar business as Lessee and operating the same or similar aircraft, but in
no event shall any deductible exceed the Permitted Deductible amount on Schedule
No. 2-A  to Lease Supplement No. 1. Lessee agrees to give Lessor prompt notice
of any damage to or loss of, the Aircraft, or any part thereof.

 

                (g)  Attorney-in Fact.  Effective upon the occurrence of an
Event of Default or Default, Lessee irrevocably appoints Lessor (and any
assignee, mortgagee and/or lender of the Lessor) its attorney-in-fact to act in
Lessee’s name and on its behalf to make, execute, deliver and file any
instruments or documents, settle, adjust, receive payment, make claim or proof
of loss, endorse Lessee’s name on any checks, drafts or other instruments in
payment of such claims and to take any action as Lessor (and any such assignee,
mortgagee and/or lender) deems necessary or appropriate to carry out the intent
of this Insurance Addendum or any agreements, documents or instruments related
thereto and to endorse Lessee’s name on any checks, drafts or other instruments
in payment of  claims.  To the extent appropriate or permissible under
applicable law, such appointment is coupled with an interest, shall be
irrevocable and shall terminate only upon payment in full of the obligations set
forth in this Lease and/or any agreements, documents or instruments related
thereto.

 

47

--------------------------------------------------------------------------------

 

                Purchase, Early Purchase and Renewal Option Addendum (“Option
Addendum”) to Aircraft Lease (Serial Number 560-5086) dated as of April 11,
2002, (the “Lease”) by and between Fleet Capital Corporation, as lessor
(“Lessor”), and Copart, Inc., as lessee (“Lessee”).

 

                All capitalized terms used herein which are not otherwise
defined herein shall have the meanings given to such terms in the Lease.  Except
as set forth herein, all of the terms and conditions of the Lease and any
supplements, schedules, addenda, exhibits or the like entered into pursuant to
the Lease remain in full force and effect.  Execution of the Lease by Lessee and
Lessor shall be deemed to constitute execution and acceptance of the terms and
conditions hereof, whereupon this Option Addendum shall be deemed to be a part
of the Lease.

 

                The following provisions are hereby incorporated into the Lease:

 

Purchase and Renewal Options.

 

                (a)  End of Term Purchase Option. So long as (i) no Event of
Default shall have occurred and be continuing under the Lease, (ii) Lessee shall
not have exercised its renewal option pursuant to paragraph (b) hereof and (iii)
the Lease shall not have been earlier terminated or cancelled, Lessee shall be
entitled, at its option, upon written notice to Lessor at least one hundred
eighty (180) days but no more than two hundred forty (240) days prior to the
expiration of the Basic Term, to purchase the Aircraft at the expiration of the
Basic Term for an amount, payable in immediately available funds, equal to the
Fair Market Sales Value of the Aircraft as of the end of the Basic Term
determined in accordance with paragraph (c) hereof plus any applicable sales,
excise or other taxes imposed as a result of such sale (other than gross or net
income taxes attributable to such sale) together with any Basic Rent due and
payable on or before such Basic Rent Date and all accrued and unpaid Rent then
due, owing or outstanding.  Lessor’s sale of the Aircraft shall be on an “AS-IS
WHERE-IS” BASIS, WITHOUT ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF
ANY KIND WHATSOEVER, BY, OR RECOURSE TO, LESSOR.

 

                (b)  Renewal Option. So long as (i) no Event of Default shall
have occurred and be continuing under the Lease, (ii) Lessee shall not have
exercised its purchase option pursuant to paragraph (a) hereof or its early
purchase option pursuant to paragraph (e) hereof, and (iii) the Lease shall not
have been earlier terminated, Lessee shall be entitled, at its option, to extend
the Term of the Lease with respect to the Aircraft at the expiration of the
Basic Term for an additional period as set forth below.  A Renewal Term shall
commence at the expiration of the Basic Term.  Lessee’s option to renew the
Lease for a Renewal Term shall be exercisable by giving written notice to Lessor
at least one hundred eighty (180) days but no more than two hundred forty (240)
days prior to the expiration of the Basic Term.  All of the provisions of the
Lease shall be applicable during the Renewal Term, except that, during the
Renewal Term, the Basic Rent shall be an amount equal to the Aircraft’s Fair
Market Rental Value, which shall be determined in accordance with paragraph (c)
hereof and the Expiration Date shall be changed to the date the last day of the
Renewal Term.  During the Renewal Term, Basic Rent shall be payable monthly in
advance on the same day of each month as Basic Rent was payable during the Basic
Term, which dates shall be deemed “Basic Rent Dates” for purposes of the Lease.

 

(c)           Determination of Fair Market Sales and Rental Values.  If Lessee
has elected to exercise its purchase or renewal options, as provided in
paragraphs (a) or (b) hereof, then as soon as practicable following Lessor’s
receipt of the written notice from Lessee of Lessee’s intent to exercise such
option, Lessor and Lessee shall consult for the purpose of determining the Fair
Market Sales Value or Fair Market Rental Value, as applicable, (as defined
below) of the Aircraft as of the end of the Basic Term, and any values agreed
upon in writing shall constitute such Fair Market Sales Value or Fair Market
Rental Value, as the case may be, of the Aircraft for the purposes of this
Option Addendum.  If Lessor and Lessee fail to agree upon such value prior to
one hundred thirty-five (135) days before the expiration of the Basic Term, each

 

48

--------------------------------------------------------------------------------

 

of Lessor and Lessee shall appoint an independent appraiser (collectively, the
“Appraisers”) within seven (7) Business Days after the expiration of said one
hundred thirty-five (135) day period (the “Seven Day Period”), and such
Appraisers shall be instructed to determine the Fair Market Sales Value or the
Fair Market Rental Value, as the case may be, of the Aircraft (all as determined
below) within ten (10) Business Days (the “Ten Day Period”) after the expiration
of the Seven Day Period.  If the Appraisers are able to mutually agree as to the
Fair Market Sales Value or the Fair Market Rental Value, as the case may be, of
the Aircraft (all as determined below) within such Ten Day Period, that
determination shall be final, binding and conclusive for all purposes.  If,
however, the Appraisers are not able to mutually agree as to the Fair Market
Sales Value or the Fair Market Rental Value, as the case may be, of the Aircraft
(all as determined below) within the Ten Day Period, the Appraisers shall then
appoint a third independent appraiser (“Third Appraiser”) within eight (8)
Business Days (“Eight Day Period”) after the expiration of the Ten Day Period. 
The Appraisers and the Third Appraiser shall then be instructed to determine the
Fair Market Sales Value or the Fair Market Rental Value, as the case may be, of
the Aircraft (all as determined below) within ten (10) Business Days after the
expiration of the Eight Day Period.  In the event that the Appraisers and the
Third Appraiser are selected, the determination of the applicable Fair Market
Sales Value and/or Fair Market Rental Value, as the case may be, of the Aircraft
which is the average among such Appraisers and Third Appraiser shall be final,
binding and conclusive for all purposes. Lessee shall pay all costs and expenses
of the appraiser appointed by Lessee hereunder, Lessor shall pay all costs and
expenses of the appraiser appointed by Lessor hereunder, and Lessee and Lessor
each agree to pay one-half (1/2) of all of the costs and expenses of the Third
Appraiser.  For the purposes of this Option Addendum, “Fair Market Sales Value”
and “Fair Market Rental Value” shall be determined on the basis of, and shall
equal in value, the amount which would be obtained in an arm’s length
transaction between an informed and willing buyer-user or lessee, as the case
may be, (who is neither a lessee in possession nor a used equipment dealer) and
an informed and willing seller or lessor, as the case may be, under no
compulsion to sell or lease, as the case may be, and in such determination costs
of removal of the Aircraft from its then location shall not be a deduction from
such Fair Market Sales Value or Fair Market Rental Value, as the case may be,
and it shall be assumed (whether or not the same be true) that the Aircraft has
been maintained by Lessee and returned to Lessor in accordance with the
provisions of the Lease.  Furthermore, Fair Market Sales Value and Fair Market
Rental Value shall be calculated utilizing the assumption that the total number
of Airframe hours (including, without limitation, the landing gear and/or any
other component with hourly overhaul schedules) accumulated from the Acceptance
Date to the Expiration Date are equal to the lesser of (i) the actual number of
hours thereon and (ii) the Estimated Annual Hours for each twelve month period
or any portion thereof from the Acceptance Date to the Expiration Date. For
purposes hereof, “Estimated Annual Hours” shall mean the anticipated number of
average annual flight hours as shown on Schedule 2-A to Lease Supplement No. 1.

 

                (d)  Time to Exercise Option.  Lessee shall be deemed to have
waived the foregoing purchase option and renewal option unless Lessee provides
Lessor with written notice of its irrevocable election to exercise the
applicable option within fifteen (15) days after the Fair Market Sales Value
and/or Fair Market Rental Value, as applicable, is determined (by agreement or
appraisal).

 

                (e)  Early Purchase Option.  So long as no Event of Default
shall have occurred and be continuing hereunder, Lessee shall be entitled, at
its option, on each Early Purchase Date upon written notice to Lessor of at
least one hundred twenty (120) but no more than one hundred eighty (180) days
prior to the proposed Early Purchase Date, to purchase the Aircraft.  Such early
purchase by Lessee shall be effective upon the payment to the Lessor on the
Early Purchase Date of an amount equal to the applicable Early Purchase Option
Amount together any applicable sales, excise or other taxes imposed as a result
of such sale (other than gross or net income taxes attributable to such sale),
any Basic Rent due and owing on or before such Early Purchase Date and all
accrued and unpaid Rent then due, owing or outstanding for the Aircraft.

 

49

--------------------------------------------------------------------------------

 

                On the Early Purchase Date [but in no event prior to Lessor’s
receipt of the amounts specified in this paragraph (e)], Lessor shall sell the
Aircraft to Lessee on an “AS-IS, WHERE-IS” BASIS, WITHOUT ANY REPRESENTATION BY,
OR RECOURSE OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND WHATSOEVER TO LESSOR,
except as to the absence of any Lessor’s Liens.  Upon receipt of the amounts
specified in the foregoing paragraph and upon consummation of the sale of the
Aircraft, this Lease shall be deemed terminated.

 

                Unless and until the foregoing payments and performance have
been made and/or observed in full by Lessee, Lessee’s obligations under this
Lease, including, without limitation, the obligation to pay Basic Rent for the
Aircraft, shall continue in full force and effect.

 

                Notwithstanding anything to the contrary contained herein or
otherwise, Lessee shall not be entitled to purchase the Aircraft pursuant to
this paragraph (e) if an Event of Default or Default shall have occurred and be
continuing, this Lease shall have been earlier terminated and/or the Aircraft
purchased or upgraded on or prior to the proposed Early Purchase Date.

 

 (e)  Additional Definitions.  For purposes of this Option Addendum and the
Lease, the following terms shall have the following meanings:

 

                Early Purchase Date shall mean each of the Basic Rent Dates
designated as such on Schedule 2-A to Lease Supplement No. 1.

 

                Early Purchase Option Amount shall mean an amount equal to the
greater of (i) the Early Purchase Option Fair Market Value and (ii) the amount
determined by multiplying the Lessor’s Cost of the Aircraft by the percentage
set forth opposite the applicable Basic Rent Date set forth on Schedule No. 2-A
to Lease Supplement No. 1 to the Lease for the applicable Early Purchase Date.

 

                Early Purchase Option Fair Market Value shall mean if Lessee has
elected to exercise its early purchase option pursuant to paragraph (e) of this
Option Addendum of the Lease, then as soon as practicable following Lessor’s
receipt of the written notice from Lessee of Lessee’s intent to exercise such
early purchase option, Lessor and Lessee shall consult for the purpose of
determining the Early Purchase Option Fair Market Value of the Aircraft as of
the Early Purchase Date.  Any values agreed upon in writing between Lessee and
Lessor shall constitute such Early Purchase Option Fair Market Value of the
Aircraft for the purposes of the Early Purchase Option Amount.  If Lessor and
Lessee fail to agree upon such value within thirty (30) days after Lessee has
elected its early purchase option pursuant to paragraph (e) of this Option
Addendum of the Lease, each of Lessor and Lessee shall appoint an independent
appraiser (collectively, the “Appraisers”) within seven (7) Business Days after
the expiration of said thirty (30) day period (the “Seven Day Period”), and such
Appraisers shall be instructed to determine the Early Purchase Option Fair
Market Value of the Aircraft (as determined below) within ten (10) Business Days
(the “Ten Day Period”) after the expiration of the Seven Day Period.  If the
Appraisers are able to mutually agree as to the Early Purchase Option Fair
Market Value of the Aircraft (as determined below) within such Ten Day Period,
that determination shall be final, binding and conclusive for all purposes.  If,
however, the Appraisers are not able to mutually agree as to the Early Purchase
Option Fair Market Value of the Aircraft (as determined below) within the Ten
Day Period, the Appraisers shall then appoint a third independent appraiser
(“Third Appraiser”) within eight (8) Business Days (“Eight Day Period”) after
the expiration of the Ten Day Period.  The Appraisers and the Third Appraiser
shall then be instructed to determine the Early Purchase Option Fair Market
Value of the Aircraft (all as determined below) within ten (10) Business Days
after the expiration of the Eight Day Period.  In the event that the Appraisers
and the Third Appraiser are selected, the determination of the Early Purchase
Option Fair Market Value of the Aircraft which is the average among such
Appraisers and Third Appraiser shall be final, binding and conclusive for all
purposes. Lessee shall pay all costs and expenses of the appraiser appointed by
Lessee hereunder, Lessor shall pay all costs and expenses of the appraiser
appointed by Lessor hereunder, and Lessee and Lessor each agree to pay one-half
(1/2) of all of the

 

50

--------------------------------------------------------------------------------

 

costs and expenses of the Third Appraiser.  For the purposes of this definition,
“Early Purchase Option Fair Market Value” shall be determined on the basis of,
and shall equal in value, the amount which would be obtained in an arm’s length
transaction between an informed and willing buyer-user (who is neither a lessee
in possession nor a used equipment dealer) and an informed and willing seller
under no compulsion to sell or lease, as the case may be, and in such
determination costs of removal of the Aircraft from its then location shall not
be a deduction from such Early Purchase Option Fair Market Value and it shall be
assumed (whether or not the same be true) that the Aircraft has been maintained
by Lessee and returned to Lessor in accordance with the provisions of the
Lease.  Furthermore, the Early Purchase Option Fair Market Value (as determined
pursuant to the terms of this definition) shall be calculated utilizing the
assumption that the total number of Airframe hours (including, without
limitation, the landing gear and/or any other component with hourly overhaul
schedules) accumulated from the Acceptance Date to the Early Purchase Date are
equal to the lesser of (i) the actual number of hours thereon and (ii) the
Estimated Annual Hours for each twelve month period or any portion thereof from
the Acceptance Date to the Early Purchase Date. For purposes hereof, “Estimated
Annual Hours” shall mean the anticipated number of average annual flight hours
as shown on Schedule 2-A to Lease Supplement No. 1.

 

                Renewal Term shall mean a period of twelve months.

 

51

--------------------------------------------------------------------------------

 

                Maintenance and Return Addendum (“M&R Addendum”) to Aircraft
Lease (Serial Number 560-5086) dated as of April 11, 2002, (the “Lease”) by and
between Fleet Capital Corporation, as lessor (“Lessor”), and Copart, Inc., as
lessee (“Lessee”).

 

                All capitalized terms used herein which are not otherwise
defined herein shall have the meanings given to such terms in the Lease.  Except
as set forth herein, all of the terms and conditions of the Lease and any
supplements, schedules, addenda, exhibits or the like entered into pursuant to
the Lease remain in full force and effect.  Execution of the Lease by Lessee and
Lessor shall be deemed to constitute execution and acceptance of the terms and
conditions hereof, whereupon this M&R Addendum shall be deemed to be a part of
the Lease.

 

                The following provisions are hereby incorporated into the Lease:

 

I.  Maintenance of Aircraft.

 

                (a)  Maintenance and Operation.  During the Term, Lessee, at its
own cost and expense, shall (i) maintain, inspect, service, repair, overhaul and
test the Airframe and each Engine in accordance with FAA approved and
Manufacturer’s recommended maintenance programs; (ii) maintain (in the English
language) all Records and (iii) promptly furnish to Lessor such information as
may be required to enable Lessor to file any reports required by any
governmental authority as a result of Lessor’s ownership of the Aircraft.  All
maintenance procedures shall be performed in accordance with all FAA and
Manufacturer’s standards and procedures by properly trained, licensed, and
certified maintenance sources and maintenance personnel utilizing replacement
parts approved by the FAA and the Manufacturer, so as to keep the Airframe and
each Engine and Part in good operating condition, ordinary wear and tear alone
excepted, and to enable the airworthiness certificate for the Aircraft to be
continually maintained.

 

                In the event any Engine is damaged or is being inspected or
overhauled and provided no Event of Default has occurred and is continuing,
Lessee, at its option, may substitute another engine of the same make and model
as the Engine being repaired or overhauled provided such Engine is approved by
the FAA and the manufacturer of the Airframe for use on the Aircraft (any such
substitute engine being hereinafter referred to as a “Loaner Engine”) during the
period of such repair or overhaul and provided further (x) installation of the
Loaner Engine is performed by an FAA and manufacturer certified mechanic with
respect to an aircraft of the type of the Aircraft, (y) the Loaner Engine is
removed and the repaired or overhauled original Engine is reinstalled on the
Airframe promptly upon completion of the repair or overhaul of the original
Engine but in no event later than the expiration, cancellation or earlier
termination of the Term and (z) the Loaner Engine is free and clear of all Liens
(other than Permitted Liens) and is maintained in accordance herewith.  Lessor
hereby agrees that it has no, and agrees not to assert any, right, title or
interest in and to any such Loaner Engine, and Lessor agrees that it shall
execute any agreement or document to such effect as Lessee may reasonable
request; provided, however, that (i) any reasonable costs or expenses of Lessor
related to any such agreement shall be paid by the Lessee upon demand by the
Lessor for payment of the same, and (ii) any such agreement shall be in from and
substance reasonably satisfactory to Lessor.

 

                (b)  Additions, Alterations and Replacement Parts.  Lessee shall
be entitled from time to time during the Term to acquire and install on the
Aircraft at Lessee’s own cost and expense (and Lessor hereby appoints Lessee to
be Lessor’s agent for such purpose, so long as no Event of Default has occurred
and is continuing), any additional accessory, device or equipment as may be
available at such time (“Additions”) but only so long as such Additions (i) are
ancillary to the Aircraft; (ii) are not required to render the Aircraft complete
for its intended use by Lessee; (iii) will not materially impair the originally
intended function or use of the Aircraft or materially diminish the value of the
same; (iv) can be readily removed without causing material damage to the
Aircraft and (v) in the event that Lessee has executed a Special Tax

 

52

--------------------------------------------------------------------------------

 

Indemnity Rider to the Lease, do not result in a “Tax Loss” as such term is
defined in such Special Tax Indemnity Rider.  Title to each Addition which is
not removed by Lessee prior to the return of the Aircraft to Lessor shall vest
in Lessor upon such return.

 

                Any alteration or modification (“Alterations”) with respect to
the Aircraft that may at any time during the Term be required to comply with any
applicable law or any governmental rule or regulation, including, without
limitation, any airworthiness directives, shall be made at the expense of
Lessee.

 

                Lessee, at its own cost and expense, will promptly replace all
Parts which may from time to time become worn out, lost, stolen, taken,
destroyed, seized, confiscated, requisitioned, damaged beyond repair or
permanently rendered or declared unfit for use for any reason whatsoever.

 

                Lessee shall repair all damage to the Aircraft resulting from
the installation and removal of Additions, Alterations and/or replacement parts
so as to restore the Aircraft to its condition prior to installation, ordinary
wear and tear excepted.

 

                Alterations and/or replacement parts shall be deemed accessions,
and title thereto shall be immediately vested in Lessor without cost or expense
to Lessor.

 

             (c)  Aircraft Marking.  Lessee agrees, at its own cost and expense,
to (i) cause the Airframe and the Engines to be kept numbered with the
identification or serial number therefor as specified in Schedule No. 1 to Lease
Supplement No. 1 hereof; (ii) prominently display on the Aircraft that “N”
number, and only that “N” number, specified in Schedule No. 1 to Lease
Supplement No. 1 or such other “N” number as has been approved in writing by the
Lessor and duly recorded with the FAA; (iii) notify Lessor in writing thirty
(30) days prior to making any change in the configuration, appearance or
coloring of the Aircraft from the time the Aircraft is accepted by Lessee
hereunder (other than changes in configuration mandated by the FAA or changes
which are reasonably consistent with the configuration, appearance and coloring
of the Aircraft as of the Acceptance Date) and in the event of any such change
or modification of configuration, coloring or appearance, (other than as
permitted hereby) at the request of Lessor to restore the Aircraft to the
configuration, coloring and/or appearance of the Aircraft as of the Acceptance
Date or, at Lessor’s option to pay to Lessor an amount equal to the reasonable
cost of such restoration and (iv) affix and maintain in the Airframe adjacent to
the airworthiness certificate and on each Engine a two-inch by four-inch plaque
made of metal or other permanent material or permanently painted stencil bearing
the following legend:

 

“This property is Owned by and Leased from Fleet Capital Corporation, One
Financial Plaza, Fifth Floor, Providence, Rhode Island 02903.  Any removal,
alteration, disposal or other change in the condition or location of this
property must be approved by the Owner-Lessor.”

 

and such other markings as from time to time may be required by law or otherwise
deemed necessary or advisable by Lessor in order to protect the title of Lessor
to the Aircraft and the rights of Lessor under this Lease.

 

II.  Return of Aircraft.

 

                (a)  Condition Upon Return.  Unless purchased by Lessee, whether
in connection with the Purchase, Early Purchase and Renewal Option Addendum to
the Lessee, the Upgrade Addendum to the Lease or otherwise, upon the expiration,
cancellation or other termination of the Lease (whether following an Event of
Default or otherwise), Lessee, at its own expense, will return the Aircraft
(together with all Records) to Lessor at a location specified by the Lessor
within the continental United States and in the condition in which the Aircraft
is required to be maintained pursuant to this M&R Addendum and any other
applicable provisions of the Lease.  The Aircraft shall be fully equipped with
the Engines or the same number, make and model number of engines as are set
forth on Schedule No. 1 to Lease Supplement No. 1, which shall fully comply with
this M&R Addendum, and which, in the opinion of Lessor, have the same or
improved

 

53

--------------------------------------------------------------------------------

 

utility, value, useful life, performance, and efficiency (normal wear and tear
excepted) as the Engines had on the Acceptance Date and are suitable for use on
the Airframe and owned by Lessor and properly installed thereon.  Lessee shall
not be relieved of any of its duties, obligations, covenants, or agreements
under the Lease (including, without limitation, its obligation to pay Rent)
prior to the return of the Aircraft in the manner and condition required with
respect to such return.  The Aircraft, at Lessee’s expense, upon redelivery
pursuant hereto (i) shall have a currently effective FAA airworthiness
certificate; (ii) shall be free and clear of all Liens other than the Lease and
any Lessor’s Liens; (iii) shall be in the same configuration and in the same
operating condition, ordinary wear and tear excepted, as when delivered to
Lessee on the Acceptance Date; (iv) shall be in good operating condition, in
good physical condition and good appearance (ordinary wear and tear excepted)
with all systems operating normally; (v) shall have no damage history
(including, without limitation, any damage history required to be reported on a
FAA form #337 or pursuant to any other governmental reporting requirement),
unless such damage has been repaired in accordance with the provisions hereof,
and after the making of such repairs, the Fair Market Sales Value of the
Aircraft has not been negatively affected (or in the event that the Fair Market
Sales Value of the Aircraft continues to be negatively affected after such
repairs, Lessee may avoid any Default that might otherwise result therefrom by
paying to Lessor an amount equal to the difference between the Fair Market Sales
Value of the Aircraft without such history and the Fair Market Sales Value of
the Aircraft with such history); (vi) shall have no open (and shall be in
compliance with) all mandatory service bulletins, manufacturer’s directives or
airworthiness directives and all other applicable service, maintenance, repair
and overhaul regulations issued by the FAA and/or any Manufacturer, and (vii)
shall be otherwise in the condition and repair required under the Lease.  For
purposes of clause (v) of the preceding sentence, the existence and the extent
of any diminution in Fair Market Sales Value contemplated therein shall be
determined by mutual agreement, and if no such agreement is reached between the
parties within ten (10) Business Days of Lessor’s notice that it desires a
valuation with respect to such damage history (the “Damage History Notice”), the
parties will use the appraisal process set forth in Paragraph (c) of the Option
Addendum to determine the existence and extent of such diminution. The parties
will use their best efforts to complete such valuation as promptly as
practicable, but, in any event, within thirty (30) Business Days after the
Damage History Notice. A final determination regarding the existence and extent
of any diminution shall be binding and conclusive on both parties. Upon Lessor’s
request, Lessee shall assign to Lessor Lessee’s rights under any manufacturer’s
or servicer’s maintenance service contracts and/or extended warranties for the
Aircraft, the Engines and/or any Parts. If at the time of the return of the
Aircraft to Lessor, the actual average annual flight hours accumulated with
respect to the Airframe (such product, the “Actual Annual Hours”) for the period
from the Acceptance Date to such return date (such period, the “Operating
Period”), is greater than the Estimated Annual Hours (as defined below), then,
Lessor and Lessee shall consult for the purpose of determining the Fair Market
Sales Value and the Excess Use Amount (as defined below) of the Aircraft as of
the return date, and any values agreed upon in writing shall constitute such
Fair Market Sales Value and Excess Use Amount of the Aircraft for the purposes
of this M&R Addendum.  If Lessor and Lessee fail to agree upon such values
within 30 days after the return date, then Lessor and Lessee shall follow the
appraisal procedure set forth in paragraph (c) of the Option Addendum to the
Lease for the purpose of determining the Fair Market Sales Value and Excess Use
Amount of the Aircraft.  Lessee shall then pay to Lessor within ten (10) days of
Lessor’s written demand therefor (which demand shall, unless determination of
the amount payable is otherwise agreed upon by Lessor and Lessee without
consulting with an appraiser, be accompanied by a copy of an appraiser’s report
containing such determination), an amount equal to the Excess Use Amount.  For
the purposes of this M&R Addendum, (A) “Excess Use Amount” shall mean the amount
by which the Aircraft’s Fair Market Sales Value has been diminished as a result
of the Actual Annual Hours accumulated with respect to the Airframe during the
Operating Period being greater than the Estimated Annual Hours per annum on
average; and (B) “Estimated Annual Hours” shall mean the anticipated number of
average annual flight hours as shown on Schedule 2-A to Lease Supplement No. 1.

 

54

--------------------------------------------------------------------------------

 

                (b)  Mid-Life Condition.  At the time of such return (i) each
Engine shall have available operating hours until both the next scheduled “hot
section” inspection and the next scheduled major overhaul of not less than fifty
percent (50%) of the total operating hours available between such “hot section”
inspection or major overhaul, as the case may be; (ii) the Airframe shall have
remaining not less than (aa) fifty percent (50%) of the available operating
hours allowed between major airframe inspections; and (bb) fifty percent (50%)
of number of available operating months allowed between major airframe
inspections until the next scheduled major airframe inspection; and (iii) all
life limited parts and components shall have remaining not less than fifty
percent (50%) of the available hours, cycles and/or months, as the case may be,
until the next scheduled replacement.  In addition to the requirements set forth
in clauses (i), (ii) and (iii) above, all inspections and scheduled maintenance
required to be performed on the Airframe, Engines and all life limited parts and
components within one hundred twenty (120) days of the date of return and/or one
hundred hours (100) of additional operation shall have been performed by Lessee.

 

                (c)  Engines.  In the event that any Engine does not meet the
conditions set forth in Section II (b) (i) above, for each such Engine Lessee
shall pay Lessor an amount equal to the sum of (i) the current estimated cost of
the next scheduled “hot section” inspection (including in such estimated cost,
all required replacements of life limited parts) multiplied by the fraction
wherein the numerator shall be the greater of (A) zero and (B) the remainder of
(x) the actual number of operating hours since the previous hot section
inspection, minus (y) 50% of the total operating hours allowable between hot
section inspections, and the denominator shall be the total operating hours
allowable between hot section inspections, plus (ii) for each such Engine, the
product of the current estimated cost of the next scheduled major overhaul
(including in such estimated cost, all required replacements of life limited
parts) multiplied by the fraction wherein the numerator shall be the greater of
(A) zero and (B) the remainder of (x) the actual number of hours of operation
since the previous major overhaul minus (y) 50% of the total operating hours
allowable between major overhauls, and the denominator shall be the total
operating hours allowable between major overhauls.

 

                Notwithstanding the foregoing, the requirements of Section II
(b)(i) above and the final sentence of Section II (b) above (but solely with
respect to the Engines) shall be deemed to have been satisfied if at the time of
return of the Engines (x) the Engines being returned to Lessor shall be covered
by a service and maintenance contract in form and substance satisfactory to
Lessor which provides for the maintenance and/or overhaul of the Engines
(“Maintenance Contract”), (y) either (i) adequate reserves for future required
maintenance and/or overhaul shall have been provided for pursuant to such
Maintenance Contract or (ii) all amounts due and payable pursuant to such
Maintenance Contract shall have been paid in full through the date of return and
(z) the entity which provides the maintenance and/or overhaul services under
such Maintenance shall either (i) recognize the transfer by Lessee to Lessor of
the rights and interests of Lessor (or its designee) under such Maintenance
Contract or (ii) acknowledge the rights and interests of Lessor (or its
designee) under such Maintenance Contract.

 

                (d)  Airframe.  In the event that the Airframe does not meet the
conditions set forth in Section II (b) (ii) above, Lessee shall pay Lessor an
amount equal to the sum of the product of the current estimated cost of the next
scheduled major airframe and pressure vessel inspection (including in such
estimated cost, all required replacement of life limited parts) multiplied by
the fraction wherein the numerator shall be the greater of (i) zero and (ii) the
remainder of (x) the actual number of respective operating hours or months of
operation since previous major airframe and pressure vessel inspection, minus
(y) 50% of the respective total operating hours or months of operation allowable
between scheduled major airframe and pressure vessel inspections, and the
denominator shall be the respective total operating hours or months of operation
between scheduled major airframe and pressure vessel inspections.

 

55

--------------------------------------------------------------------------------

 

                (e)  Parts and Components.  In the event any life limited part
or component does not meet the conditions set forth in Section II (b)(iii)
above, Lessee shall pay to Lessor with respect to each part or component for
which said requirement is not met the dollar amount obtained by multiplying (i)
the ratio that the life expended in excess of fifty percent (50%) of the
available hours, cycles and/or months, as the case may be, until the next
scheduled replacement bears to the total allowable life (measured in hours,
cycles and/or months, as the case may be) for such part or component by (ii)
Lessor’s cost of replacement of such part or component.  Lessor’s cost of
replacement of a part or component shall include Lessor’s then current cost of
purchasing the part or component itself and all of Lessor’s then current costs
associated with the replacement.

 

                (f)  Treatment of Charges.  All prorated inspection and/or
overhaul charges, if any, shall be payable as Supplemental Rent and shall be due
upon presentation to Lessee of an invoice setting forth in reasonable detail the
calculation of such amounts due, including the names of all sources used for the
required cost estimates.  Unless both Lessor and Lessee agree to an alternative
source, the Manufacturers of the Airframe and Engines shall be used as the
sources for all cost estimates.

 

                (g)  Records.  Upon the return of the Aircraft in accordance
with the terms and conditions hereof, Lessee shall deliver all Records to
Lessor.  In the event any Records are missing or incomplete, Lessor shall have
the right to cause any such Records to be reconstructed at the expense of
Lessee.

 

                (h)  Storage.  Upon the expiration, cancellation or other
termination of the Lease, Lessee will, if requested by Lessor, permit Lessor to
store the Aircraft at the Primary Hangar Location.  During such storage period
Lessee will, at its own cost and expense, keep the Aircraft properly hangared,
and will permit Lessor or any Person designated by Lessor, including the
authorized representatives of any prospective purchaser, lessee or user of the
Aircraft to inspect the same.  Lessee shall not be liable, except in the case of
negligence, gross negligence or intentional misconduct of Lessee or of its
employees or agents, for injury to, or the death of, any Person exercising,
either on behalf of Lessor or any prospective purchaser, lessee or user, the
rights of inspection granted hereunder.  Lessee shall bear the risk of loss and
shall pay any and all expenses connected with insuring and maintaining the
Aircraft during such storage period.  Notwithstanding the foregoing, upon the
expiration of the Term for any reason other than an expiration, cancellation or
termination which occurs as a result of an Event of Default, the storage period
provided for in this paragraph and the obligation to hangar and insure the
Aircraft shall be limited to fifteen (15) days.

 

                (i)  Replacement Engines.  In the event that any engine not
owned by Lessor shall be installed on the returned Airframe as set forth in
Section II (a) hereof, then Lessee will, concurrently with such delivery, at its
own expense, furnish Lessor with a full warranty bill of sale, in form and
substance satisfactory to Lessor, with respect to each such engine and with a
written opinion of FAA Counsel to the effect that, upon such return, Lessor will
acquire a valid and perfected interest in such engine free and clear of all
Liens (except Lessor’s Liens).  Thereupon, unless an Event of Default shall have
occurred and be continuing, Lessor will transfer to Lessee, on an “AS-IS,
WHERE-IS” BASIS WITHOUT ANY REPRESENTATION OR WARRANTY BY, OR RECOURSE OR
WARRANTY TO, LESSOR, except as to the absence of any Lessor’s Liens, all of
Lessor’s right, title and interest in and to any Engine not installed on the
Airframe at the time of the return of such Airframe.

 

                (j)  Inspections.  Not more than ninety (90) days prior to the
expiration of the Lease, upon the written request of Lessor, Lessee shall, at
its expense, review the maintenance records of the Aircraft to determine if the
Aircraft is in the condition required by this M&R Addendum.  Following such
review, Lessee shall certify to Lessor that such Aircraft is in the condition
required by this M&R Addendum according to the maintenance records for such
Aircraft, or, if the maintenance records so indicate, indicate what maintenance
or repair is needed to bring the Aircraft to the specified condition.

 

56

--------------------------------------------------------------------------------

 

                Lessor shall have the right, but not the duty, to inspect the
Aircraft, any component thereof and/or the Records, at any reasonable time and
from time to time, wherever located, upon reasonable prior written notice to
Lessee.  Upon request of Lessor, Lessee shall confirm to Lessor the location of
the Aircraft and shall, at any reasonable time and from time to time, upon
reasonable prior written notice to Lessee, make the Aircraft and/or the Records
available to Lessor for inspection.

 

                (k)  Survival.  The provisions of this M&R Addendum shall
survive the expiration, cancellation or other termination of the Lease and the
return of the Aircraft for any reason whatsoever.

 

                (l)  Injunctive Relief.  Without limiting any other terms or
conditions of the Lease, the provisions of this M&R Addendum are of the essence
of the Lease, and upon application to any court of equity having jurisdiction,
Lessor shall be entitled to a decree against Lessee requiring specific
performance of the covenants of Lessee set forth herein.

 

 

57

--------------------------------------------------------------------------------

 

                Upgrade Addendum (“Upgrade Addendum”) to Aircraft Lease (Serial
Number 560-5086) dated as of April 11, 2002, (the “Lease”) by and between Fleet
Capital Corporation, as lessor (“Lessor”), and Copart, Inc., as lessee
(“Lessee”).

 

                All capitalized terms used herein which are not otherwise
defined herein shall have the meanings given to such terms in the Lease.  Except
as set forth herein, all of the terms and conditions of the Lease and any
supplements, schedules, addenda, exhibits or the like entered into pursuant to
the Lease remain in full force and effect.  Execution of the Lease by Lessee and
Lessor shall be deemed to constitute execution and acceptance of the terms and
conditions hereof, whereupon this Upgrade Addendum shall be deemed to be a part
of the Lease.

 

                The following provisions are hereby incorporated into the Lease:

 

                Upgrade Option.  So long as no Event of Default shall have
occurred and be continuing hereunder, Lessee shall be entitled, at its option,
upon at least one hundred twenty (120) days but no more than two hundred forty
(240) days prior written notice to Lessor, to replace the Aircraft on each of
the 36th Basic Rent Date, the 48th Basic Rent Date, the 60th Basic Rent Date,
the 72nd Basic Rent Date, the 84th Basic Rent Date, the 96th Basic Rent Date,
the 108th Basic Rent Date and the 120th Basic Rent Date (any such date for
purposes of this Section called an “Upgrade Option Date”), with an aircraft (the
“Upgrade Aircraft”) which has a value, utility, and useful life better than the
Aircraft immediately prior to the exercise by Lessee of its option under this
Upgrade Addendum to upgrade the Aircraft.  In connection with any such proposed
Upgrade Aircraft, Lessee shall promptly provide Lessor with copies of any
proposed aircraft purchase agreement, as well as any other information or
documents requested by Lessor, as to said proposed Upgrade Aircraft.  Any such
proposed Upgrade Aircraft shall be expressly subject to the prior written
approval and consent of the Lessor, which approval and consent shall be given,
if at all, in Lessor’s sole discretion.  On the Upgrade Date, the Lessee shall
pay to Lessor in immediately available funds, (i) the applicable Upgrade Option
Amount No. 1 or Upgrade Option Amount No. 2, as the case may be, (ii) the Basic
Rent due for the Aircraft on the Upgrade Date, (iii) all accrued and unpaid Rent
then due, owing or outstanding plus (iv) any applicable sales, excise or other
taxes imposed as a result of the sale of the Aircraft (other than gross or net
income taxes attributable to such sale).  Upon full compliance by Lessee with
the terms of this Upgrade Addendum, the Lease shall terminate and Lessor will
transfer to Lessee, all of Lessor’s right, title and interest, if any, in and to
the Aircraft.  SUCH TRANSFER SHALL BE “AS-IS, WHERE-IS,” WITHOUT RECOURSE TO
LESSOR, AND LESSOR SHALL NOT BE DEEMED TO HAVE MADE, AND LESSOR HEREBY
DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE
AIRCRAFT SO TRANSFERRED TO LESSEE.

 

                Notwithstanding anything to the contrary contained herein or
otherwise, until such time as the Lease is actually terminated pursuant to the
terms hereof, in no event shall Lessee’s exercise of this option to upgrade the
Aircraft under the circumstances contemplated by the terms of this Upgrade
Addendum result in any reduction in or delay in the payment of Basic Rent or any
other payments of any kind whatsoever due under the Lease or relieve Lessee of
any obligations of any kind whatsoever under the Lease or any document,
agreement or instrument related thereto.

 

                Lessor’s Option to Lease.  If the Lessor determines that the
Upgrade Aircraft is acceptable, Lessor shall have the option, subject to
satisfaction of Lessor’s then current underwriting standards and completion of
Lessor’s then current underwriting process, to lease the Upgrade Aircraft to
Lessee pursuant to the terms hereof.  In the event that Lessor exercises its
option to lease pursuant hereto, on the Upgrade Date Lessee, at its own cost and
expense, shall convey to the Lessor good and marketable title to the Upgrade
Aircraft, free and clear of any Liens or title defects of any kind whatsoever
(for no additional cost to Lessor, including, without limitation, any purchase
price amounts or any taxes of any kind whatsoever relating to the conveyance or
the sale of the Upgrade Aircraft).  Prior to or at the time of any such
conveyance, Lessee, at its own

 

58

--------------------------------------------------------------------------------

 

cost and expense, will furnish Lessor with such documents to evidence such
conveyance as Lessor shall request in its sole discretion, including, without
limitation, bills of sale and opinions of Lessee’s counsel and FAA Counsel
comparable to those furnished on the Acceptance Date, which documents shall be
in form and substance satisfactory in all respects to Lessor in its sole
discretion. In addition, Lessor and Lessee agree that any such lease financing
of the Upgrade Aircraft shall be effected utilizing substantially the form of
this Lease but which shall be revised or modified to reflect Lessor’s then
current standard aircraft lease financing documents and the financial terms of
such financing shall reflect Lessor’s then current financial terms for similar
customers and aircraft (any such revised or modified lease and related documents
hereinafter the “New Lease Documentation”).

 

                In the event, and only in such event, that Lessor elects not to
exercise the foregoing option to lease, Lessee shall be entitled to exercise the
upgrade option set forth in this Upgrade Addendum free and clear of Lessor’s
option to lease.

 

                Notwithstanding the foregoing, (i) in the event Lessor does not
accept or approve the Upgrade Aircraft for any reason whatsoever pursuant to the
terms of this Upgrade Addendum and informs Lessee of the same in writing, or
(ii) in the event Lessor determines that the Upgrade Aircraft is acceptable and
Lessor elects to exercise the foregoing option to lease the Upgrade Aircraft to
Lessee pursuant to the terms of this Upgrade Addendum, but Lessee fails to
execute and deliver the New Lease Documentation to Lessor for any reasonable
reason (including, without limitation, any disagreement as to pricing) on or
prior to the Upgrade Option Date, Lessee shall be entitled to exercise the
upgrade option set forth in this Upgrade Addendum free and clear of Lessor’s
option to lease only so long as on the Upgrade Date, the Lessee shall pay to
Lessor in immediately available funds, (A) the Upgrade Option Amount No. 2, (B)
the Basic Rent due for the Aircraft on the Upgrade Date, (C) all accrued and
unpaid Rent then due, owing or outstanding plus (D) any applicable sales, excise
or other taxes imposed as a result of the sale of the Aircraft (other than gross
or net income taxes attributable to such sale).  Upon full compliance by Lessee
with the terms of this Upgrade Addendum as provided above, the Lease shall
terminate and Lessor will transfer to Lessee, all of Lessor’s right, title and
interest, if any, in and to the Aircraft.  SUCH TRANSFER SHALL BE “AS-IS,
WHERE-IS,” WITHOUT RECOURSE TO LESSOR, AND LESSOR SHALL NOT BE DEEMED TO HAVE
MADE, AND LESSOR HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EITHER
EXPRESS OR IMPLIED, AS TO THE AIRCRAFT SO TRANSFERRED TO LESSEE.

 

                Additional Terms and Definitions.  For purposes of this Upgrade
Addendum and the Lease, the following definitions and terms shall apply:

 

                Upgrade Option Amount No. 1 shall mean in the event the Lessor
determines that the Upgrade Aircraft is acceptable and Lessor exercises its
option to lease the Upgrade Aircraft to Lessee pursuant to the terms of this
Upgrade Addendum:  an amount equal to the Lessor’s Cost multiplied by the
percentage set forth on Schedule No. 4 to Lease Supplement No. 1 to the Lease
for the applicable Upgrade Option Date.

 

Upgrade Option Amount No. 2 shall mean (i) in the event the Lessor determines
that the Upgrade Aircraft is not acceptable and Lessor does not exercise its
option to lease the Upgrade Aircraft to Lessee pursuant to the terms of this
Upgrade Addendum, or (ii) in the event Lessor determines that the Upgrade
Aircraft is acceptable and Lessor elects to exercise the foregoing option to
lease the Upgrade Aircraft to Lessee pursuant to the terms of this Upgrade
Addendum but Lessee fails to execute and deliver the New Lease Documentation to
Lessor for any reasonable reason on or prior to the Upgrade Option Date,:  an
amount equal to the Lessor’s Cost multiplied by the percentage set forth on
Schedule No. 5 to Lease Supplement No. 1 to the Lease for the applicable Upgrade
Option Date.

 

59

--------------------------------------------------------------------------------

 

 

SECURITY DEPOSIT AMENDMENT

 

Fleet Capital Corporation

One Financial Plaza

Providence, Rhode Island 02903–2305

 

                This Security Deposit Amendment (this “Amendment”) is attached
to and made a part of that certain Aircraft Lease dated as of April  11, 2002
(the “Lease”), by and between Copart, Inc. (“Lessee”) and Fleet Capital
Corporation (“Lessor”), and is made in addition to and not in substitution for
any other security agreement, security or collateral now held or hereafter
acquired by Lessor.

 

                1.     Security Deposit.  Concurrently with the execution and
delivery of this Amendment, Lessee shall pay or cause to be paid to Lessor in
immediately available funds the sum of $900,000.00 (together with all accrued
interest, profits and replacements thereof, the “Security Deposit”) on account
of and as collateral security for the payment and performance of all Obligations
(hereinafter defined). The outstanding principal balance of the Security Deposit
shall be held by Lessor hereunder without payment or crediting of interest to
Lessee.  The Security Deposit, and any proceeds or replacements thereof, may be
commingled with, and shall not be segregated from, any other funds or property
in the possession of Lessor.  Upon the occurrence an Event of Default under the
Lease, Lessor may, but shall not be obligated to, apply all or any portion of
the Security Deposit in payment or satisfaction of all or any portion of the
Obligations, all without demand upon or notice to Lessee or any other party. 
Lessee shall immediately restore and replace the Security Deposit so applied (or
the portion thereof, as the case may be), by payment of a like amount to Lessor
immediately upon demand.  Absent manifest error, the amount of the Security
Deposit at any time held by Lessor reflected on the books and records of Lessor
shall be final, binding and conclusive on the parties hereto.

 

                2.     Security Agreement.  Lessee hereby grants to Lessor a
continuing security interest in the Security Deposit, and any and all proceeds
thereof, to secure the prompt payment and performance as and when due of all
indebtedness, obligations and liabilities of Lessee owing to Lessor, of every
kind and description, direct or indirect, secured or unsecured, joint or
several, absolute or contingent, due or to become due, whether for payment or
performance, now existing or hereafter arising, regardless of how the same arise
or by what instrument, agreement or book account they may be evidenced, or
whether evidenced by any instrument, agreement or book account, including,
without limitation, all loans (including any loan by renewal or extension of
existing indebtedness or liability), all indebtedness, all obligations for the
deferred purchase price or rental of any property, all indebtedness, liabilities
or obligations owing from Lessee to others which may have been obtained by
purchase, negotiation, discount, transfer, assignment or otherwise, and all
interest, taxes, fees, charges, expenses and attorneys fees chargeable to Lessee
or incurred by Lessor, in connection with the Lease (the “Obligations”).  Lessor
shall have all of the rights and remedies provided for in this Amendment and
also the rights and remedies of a secured party under the Uniform Commercial
Code and any applicable laws, all of which shall be deemed cumulative and not
alternative and are not exclusive of any other remedies provided by law.

 

                3. Satisfaction.  Upon satisfaction of all of Lessee’s
Obligations to Lessor and further provided that no Event of Default or Default
has occurred and is continuing, the balance of the Security Deposit, if any,
then held by Lessor shall, subject to applicable law, be promptly paid to Lessee
and the security interest granted therein shall terminate.

 

                All capitalized terms used herein and not defined herein shall
have the meanings set forth or referred to in the Lease.  Except as specifically
set forth herein, all of the terms and conditions of the Lease shall remain in
full force and effect and are hereby ratified and affirmed.  To the extent that
the provisions of this Amendment conflict with any provisions contained in the
Lease, the provisions of this Amendment shall control.

 

60

--------------------------------------------------------------------------------

 

Dated as of: April 11, 2002

 

 

 

 

 

 

 

 

FLEET CAPITAL CORPORATION

 

COPART, INC.

 

 

 

 

 

By:

/s/ John E. Haakenson, Jr.

 

By

/s/ Paul A. Styer

 

 

 

 

 

Name:

John E. Haakenson, Jr.

 

Name:

Paul A. Styer

 

 

 

 

 

Title:

Vice President

 

Title:

Secretary

 

 

 

fleet\copart\3aircraft lease

 

 

61

--------------------------------------------------------------------------------