ex106.htm


     

     

    AIRCRAFT
LEASE OPTION AGREEMENT

     

    THIS
AIRCRAFT LEASE OPTION AGREEMENT (the “Agreement”) is made as of May 18, 2010, by
and between Tactical Air Defense Services, Inc., a Nevada corporation whose
registered business address is 123 W. Nye Lane, Carson City, Nevada 89706
(hereinafter known as “TADS”), and Air Support Systems, LLC, a Delaware company
whose registered address is 113 Barksdale Professional Center, Delaware 19711
(hereinafter known as “ASS”).  Both TADS and ASS are also referred to
as the “Parties”.

     

     

    RECITALS

     

    WHEREAS;

     

     

    
      	
              1.  

            	
              ASS
      is the owner of two ILyushin IL-78 aircraft (hereinafter the “IL-78
      Aircraft”) currently undergoing preparation for operation at their
      facility in Ukraine; and

            


    

     

     

    
      	
              2.  

            	
              ASS
      can additionally offer for lease two ILyushin IL-76 aircraft (hereinafter
      the “IL-76 Aircraft, and, together with the IL-78 Aircraft, hereinafter
      the “ILyushin Aircraft”) outfitted to the operational specifications of
      TADS (and

            


    

     

     

    
      	
              3.  

            	
              TADS
      is in the business of operating aircraft and providing air support
      services including air-to-air refueling services, aerial fire-fighting
      services, and oil-spill containment services, to various United States and
      foreign militaries, and other federal and state agencies;
    and

            


    

     

     

    
      	
              4.  

            	
              TADS
      desires an option (the “Option”) to lease from ASS the ILyushin Aircraft
      and ASS desires give an option to lease to TADS the ILyushin Aircraft, for
      the business of TADS, upon the terms and conditions contained in this
      Agreement.

            


    

     

     

    NOW,
THEREFORE, In consideration of the mutual covenants herein contained, and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the PARTIES agree as follows:

     

     

    AGREEMENT

     

     

    
      	
              1.  

            	
              Definitions

            


    

     

     

    Unless
defined elsewhere herein, or the context otherwise requires, capitalized terms
used herein shall have the following meanings:

     

     

    
      	
              a.  

            	
              “FAA”
      refers to the Federal Aviation
Administration.

            


    

     

     

    
      	
              b.  

            	
              “FLIGHT
      HOURS” shall mean any time the ILyushin Aircraft are operated (calculated
      in tenths of hours) in performance of a Mission (as defined below) under a
      Contract (as defined below), measured from “Chocks to Chocks” (engine
      start to engine shutdown as measured by the engine Hobbs
      meter).  Flight Hours as used herein shall not include ferry
      flights not funded by the customer, post maintenance check flights, or
      initial pilot proficiency or certification flights. “MISSION” shall mean
      any tasking for the ILyushin Aircraft for which Flight Hours are
      anticipated.

            


    

     

     

    
      	
              c.  

            	
              “CONTRACT”
      shall mean a Contract entered into by TADS with a customer for the use of
      the ILyushin Aircraft in the business of
  utilization.

            


    

     

     

    
      	
              d.  

            	
              “INSPECTIONS”
      shall mean those activities required of the FAA Approved Inspection
      Program.

            


    

     

     

    
      	
              e.  

            	
              “MAINTENANCE”
      (as distinguished from “Inspections”) shall be any work performed to ready
      the ILyushin Aircraft for flying operations, including servicing or
      correction of defects identified in the course of operations, and/or
      necessary parts replacements.

            


    

     

     

    
      	
               
      

            	
              2.

            	
              Parties’
      Obligations and Responsibilities

            


    

     

     

    Upon
exercise of the Option, TADS shall provide:

     

     

    
      	
              a.  

            	
              Contracts
      for utilization of the ILyushin
Aircraft.

            


    

     

     

    
      	
              b.  

            	
              Pilots
      for execution of Contract Missions.

            


    

     

     

    
      	
              c.  

            	
              Ground
      support equipment as required for Contract
  operations.

            


    

     

     

    
      	
              d.  

            	
              Maintenance
      personnel necessary to maintain the ILyushin Aircraft in airworthy
      condition.

            


    

     

     

    
      	
              e.  

            	
              Certification
      compliance of pilots to be employed by TADS for operation of the ILyushin
      Aircraft, and safety program to operate the ILyushin Aircraft in
      compliance with FAA requirements if operated within the United States, and
      in compliance with the requirements of the regulatory agency of the
      country within which the ILyushin Aircraft
  operate.

            


    

     

     

    
      	
              f.  

            	
              SME/technicians/administration,
      personnel, and experts/technicians/administration personnel to perform
      duties for any applicable Contract
requirements.

            


    

     

     

    
      	
              g.  

            	
              Aircraft
      insurance equal to no less than the appraised value of any such ILyushin
      Aircraft under lease by TADS.

            


    

     

     

    ASS
Shall Provide:

     

     

    
      	
              a.  

            	
              The
      ILyushin Aircraft in certified airworthy
  condition.

            


    

     

     

    
      	
              b.  

            	
              All
      maintenance manuals, books, logs, airworthiness certificates, and
      registration cards.

            


    

     

     

    
      	
               
      

            	
              3.

            	
              Term
      of Option and Lease and Terms of
Use:

            


    

     

     

    
      	
              a.  

            	
              The
      Option to enter into an exclusive lease agreement (a “Lease Agreement”)
      with ASS to lease ILyushin Aircraft shall expire one (1) year from the
      date of execution of this
Agreement.

            


    

     

     

    
      	
              b.  

            	
              Upon
      exercise, either partial or in its entirety, by TADS of the Option, TADS
      and ASS shall execute a Lease Agreement for the lease of any such ILyushin
      Aircraft.

            


    

     

     

    
      	
              c.  

            	
              Upon
      execution of a Lease Agreement, ASS shall have up to ninety (90) days to
      prepare the respective ILyushin Aircraft for delivery to TADS under the
      terms of this Agreement;

            


    

     

     

    
      	
              d.  

            	
              The
      term of the Lease Agreement between TADS and ASS shall be one (1) year
      with two (2) follow-on options of one (1) year each. The follow-on options
      shall automatically renew, unless notice is given by either party to this
      Agreement in writing, no later than ninety (90) days prior to the end of
      the respective lease term.  In the event of a payment or
      insurance default, or any other material default by TADS, ASS shall
      provide written notice of default to TADS, and TADS shall have thirty (30)
      days to cure such default.  Thereafter, if such default remains
      uncured, ASS shall have the right to terminate the Lease Agreement within
      ten (10) days of receipt by TADS of such notice of
      termination.  Notwithstanding the above, should ASS receive a
      bonafide offer to sell any of the ILyushin Aircraft, not subject at the
      time to an exclusive Lease Agreement, to a third-party purchaser, TADS
      shall have the first-right-of-refusal to purchase said aircraft under
      terms equivalent to the terms of purchase by such third-party
      purchaser.  In the event that TADS does not exercise its
      first-right-of-refusal to purchase any such aircraft, and such aircraft is
      thereafter sold by ASS to said third-party purchaser, such aircraft would
      thereafter be excluded from the Option without penalty to
    ASS.

            


    

     

     

    
      	
              e.  

            	
              The
      ILyushin shall be used specifically in support of TADS’ Contracts, which
      may include TADS Contracts either awarded directly or indirectly to
      TADS.

            


    

     

     

    
      	
               
      

            	
              d.

            	
              The
      ILyushin Aircraft shall require prior written approval and licenses from
      the appropriate regulatory agencies of any country where TADS intends to
      operate the ILyushin Aircraft in support of a Contract Mission, and shall
      require the prior written agreement of ASS to operate the ILyushin
      Aircraft in support of any Contract Mission to be operated outside of the
      United States.

            


    

     

     

    
      	
               
      

            	
              4.

            	
              Fees

            


    

     

     

    
      	
               
      

            	
              a.

            	
              As
      consideration for the Option to lease the ILyushin aircraft, TADS shall
      pay to ASS a one-time, up-front fee of ten million (10,000,000) shares of
      its Common Stock.

            


    

     

     

    
      	
               
      

            	
              b.

            	
              As
      consideration for operating the ILyushin Aircraft in connection with a
      Contract, TADS shall pay to ASS the following
  fees:

            


    

     

     

    
      	
               
      

            	
              (i)

            	
              a
      fee equal to fifty (50%) percent of the operating profits of any Contract,
      where operating profits equals the gross cash receipts derived from a
      Contract minus the direct expenses of operating said Contract;
      and

            


    

     

     

    
      	
               
      

            	
              (ii)

            	
              a
      fee equal to fifty (50%) percent of the fee paid to TADS in connection
      with any off-loaded fuel for which TADS is paid in connection with a
      Contract for air-to-air refueling;
and

            


    

     

     

    
      	
               
      

            	
              (iii)

            	
              TADS
      and ASS shall agree upon a minimum monthly, quarterly, or annual fee
      amount, as the case may be, on a case-by-case basis, relevant to the type
      and terms of the particular ILyushin Aircraft under lease, the Contract
      Mission, and the related Contract.

            


    

     

     

    
      	
               
      

            	
              5.

            	
              Method
      and Schedule of Payment

            


    

     

     

    Each
payment due to ASS from TADS, shall be mailed by TADS, via U.S. Mail, postage
prepaid, or bank electronic transfer, not later than five (5) business days
after the date TADS receives payment in connection with a Contract. TADS shall
include with each lease payment a statement showing the number of Flight Hours,
the gross cash receipts received for the period, and the direct operating
expenses related to operating such Contract.

     

     

    
      	
               
      

            	
              6.

            	
              Representations
      and Covenants

            


    

     

     

    
      	
              a.  

            	
              Compliance
      with Act: ASS certifies that it is a “Citizen of the United States” as
      defined in Section 101(15) of the
Act.

            


    

     

     

    
      	
              b.  

            	
              Conforming
      Use:  TADS shall use the ILyushin Aircraft for the purposes and
      in the manner for which it was designed consistent with the uses set forth
      in any application for insurance executed in connection with the ILyushin
      Aircraft, and abide by and conform to all present and future federal,
      state, municipal, and other laws, ordinances, orders, rules, and
      regulations, controlling or affecting the operation, use, or occupancy of
      the ILyushin Aircraft or the use of any airport premises by the ILyushin
      Aircraft.

            


    

     

     

    
      	
              c.  

            	
              Aircraft
      Records:  TADS shall maintain or cause to be maintained all
      flight records, logs, and other materials required to be maintained in
      respect of the ILyushin Aircraft by the FAA, and shall promptly furnish to
      ASS such information as may be required to enable ASS to file reports with
      any governmental agency or
authority.

            


    

     

     

    
      	
               
      

            	
              7.

            	
              Limitation
      of Liability

            


    

     

     

    Neither
TADS nor ASS shall be liable to the other for any special, indirect, or
consequential losses or damages caused by or arising out of performance under
this Agreement.  Each Party shall indemnify, defend, and hold harmless
the other Party, its officers, employees, and agents, from any claim, liability,
damage, or loss for injury to or death of any employee of the indemnifying Party
in the performance of this Agreement, unless caused by the gross negligence or
intentional misconduct of the indemnified Party, its officers, employees, or
agents.

     

     

    
      	
               
      

            	
              8.

            	
              Entire
      Agreement

            


    

     

     

    This
Agreement constitutes the entire agreement between the Parties for the express
performance of the provisions contained herein, and supersedes all agreements,
representations, proposals, statements, and understandings made prior to the
date hereof.  The Parties recognize that other documents may be
required to implement this Agreement.

     

     

    
      	
               
      

            	
              9.

            	
              Amendment

            


    

     

     

    This
Agreement may be amended, modified, or superseded only by an agreed written
instrument executed by the parties, their respective legal representatives,
successors, or assigns.

     

     

    
      	
               
      

            	
              10.

            	
              Notice

            


    

     

     

    Any and
all notices, consents, demands, or requests required or permitted by this
Agreement shall be in writing and, except as otherwise provided in this
Agreement, shall be sent postage prepaid, by registered, certified, or overnight
mail or courier service, return receipt requested, to the Parties at the herein
stated respective addresses. Any notice delivered as stated, including any
notice of change of address, shall be deemed given as of five (5) days after
mailing if given by mail, or upon personal delivery by courier.

     

     

    
      	
               
      

            	
              11.

            	
              Waiver

            


    

     

     

    The
failure of either Party to enforce any applicable provision of this Agreement,
or to require at any time performance by any other Party of any provision
hereof, shall not be construed to be a waiver of such provision, nor in any way
affect the validity of this Agreement or any part hereof, or the right of any
party thereafter to enforce each and every provision.

     

     

    
      	
               
      

            	
              12.

            	
              Severability

            


    

     

     

    If any
provision of this Agreement is held to be invalid or unenforceable, the validity
of any other provision shall not be affected thereby and such other provisions
shall remain in full force and effect.

     

     

    
      	
               
      

            	
              13.

            	
              Force
      Majeure

            


    

     

     

    Neither
Party shall be liable for its inability to perform hereunder in a timely manner
if such inability results from causes beyond its control, including but not
limited to:  acts of war or other political hostilities, fire embargo,
strike, acts of God, or any other circumstances beyond the control of the Party
so affected.  As soon as practicable after such causes cease to exist,
the affected party shall continue to perform pursuant to this Agreement and the
other Party shall accept such performance, at the agreed upon terms set forth
herein, modified as necessary for any required schedule adjustment.

     

     

    
      	
               
      

            	
              14.

            	
              Headings

            


    

     

     

    Headings
in this Agreement are for convenience only and shall not be used to interpret or
construe its provisions.


     

     

    
      	
               
      

            	
              15.

            	
              Governing
      Law

            


    

     

     

    This
Agreement shall be construed in accordance with and governed by the internal
laws of the State of Florida, without regard to principals of conflicts of
laws.

     

     

    
      	
               
      

            	
              16.

            	
              Binding
      Affect

            


    

     

     

    The
provisions of this Agreement shall be binding upon and inure to the benefit of
both parties and their respective legal representatives, successors, and
assigns.

     

     

    


     

     

    IN
WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of
the Day and Year first above written.

    
 

     

     

    By:
Tactical Air Defense Services, Inc.

     

     

     

    Alexis C.
Korybut, President &
CEO                                                                                                                     

     

     

     

     

    By: Air
Support Systems, LLC.

     

     

    


     

     

    Gary
Fears, Managing Member