Document:

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<Page>

                                                                   EXHIBIT 10(n)

                              EMPLOYMENT AGREEMENT

     AGREEMENT dated as of this 1st day of November, 2001, by and between
MINNTECH CORPORATION, a Minnesota corporation (the "Company"), and ROY K. MALKIN
(the "Employee").

                                  INTRODUCTION

     Employee is currently employed as President and Chief Executive Officer of
the Company and MediVators, Inc. ("MediVators"), a wholly-owned subsidiary of
Cantel Medical Corp. ("Cantel"). Cantel has recently acquired the Company, which
is now a wholly-owned subsidiary of Cantel. Since the acquisition, Employee has
served as President of both the Company and MediVators. Employee and the Company
desire to enter into an employment agreement and to set forth herein the terms
and conditions of Employee's employment by the Company. Such agreement will
replace and supersede Employee's employment agreement with MediVators.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is hereby agreed by and between the Company and Employee as follows:

     1.   ENGAGEMENT AND TERM. The Company hereby employs Employee and Employee
hereby accepts such employment by the Company on the terms and conditions set
forth herein, for the period commencing on November 1, 2001 (the "Effective
Date") and ending, unless sooner terminated in accordance with the provisions of
Section 4 hereof, on October 31, 2004 (the "Employment Period"). As used in this
Agreement, the term "Contract Year" shall refer to each twelve-month period
during the Employment Period ending October 31. Employee and MediVators (by its
signature below) agree that the Employment Agreement between MediVators and
Employee dated May 19, 1999 is cancelled and superseded by this Agreement as of
the Effective Date without any further liability or obligation thereunder (other
than Section 5.1 thereof, which shall survive).

<Page>

     2.   SCOPE OF DUTIES. Employee shall be employed by the Company as its
President and Chief Executive Officer. In such capacities, Employee shall have
such authority, powers and duties customarily attendant upon such offices.
Employee will also continue to serve as President and Chief Executive Officer of
MediVators without additional compensation. If elected or appointed, Employee
shall also serve, without additional compensation, in one or more offices and,
if and when elected, as a director of the Company or any subsidiary or affiliate
of the Company, provided that his duties and responsibilities are not
inconsistent with those pertaining to his position as stated above. Employee
agrees to perform the duties associated with his employment to the best of his
abilities, and shall faithfully devote his full business time and efforts so as
to advance the best interests of the Company. During the Employment Period,
Employee shall not be engaged in any other business activity, whether or not
such business activity is pursued for profit or other pecuniary advantage,
unless otherwise approved in writing by the Board of Directors of the Company.

     3.   COMPENSATION.

          3.1  BASE SALARY. In respect of services to be performed by Employee
during the Employment Period, the Company agrees to pay Employee a base salary
("Base Salary") at the rate of $250,000 per annum during the initial Contract
Year, payable in accordance with the Company's customary payroll practices for
executive employees.

               The Base Salary shall be increased annually by an amount
established by reference to the "Consumer Price Index for Urban Wage Earners and
Clerical Workers, Minneapolis, Minnesota, all items "Series A-01" published by
the Bureau of Labor Statistics of the United States Department of Labor (the
"Consumer Price Index"). The base period shall be the month ended July 31, 2001
(the "Base Period"). If the Consumer Price Index for the month of July in any
year, commencing in 2002, is greater than the Consumer Price Index for the Base
Period, then the Base Salary shall be increased, commencing on November 1 of the
next Contract Year, to the amount obtained by multiplying Base Salary by a
fraction, the numerator of which is the Consumer Price Index for the month of
July of the

                                        2
<Page>

year in which such determination is being made and the denominator of which is
the Consumer Price Index for the Base Period. Notwithstanding the foregoing, in
no event shall Employee receive, for any Contract Year, an increase in Base
Salary of less than five (5%) percent over the Base Salary, as adjusted for the
previous Contract Year.

          3.2  INCENTIVE COMPENSATION. For each Fiscal Year of the Company
during the Employment Period, the Employee shall be paid, as additional
compensation for his services, a bonus (the "Bonus") based on the combined
operating income of the Company and MediVators as follows:

               3.2.1      The Bonus for the Fiscal Year ending July 31, 2002
shall be equal to five percent (5%) of the excess of the Combined EBIT
(hereinafter defined) for such Fiscal Year over $8,500,000.

               3.2.2      The Bonus for the Fiscal Year ending July 31, 2003
shall be equal to five percent (5%) of the excess of the Combined EBIT for such
Fiscal Year over the sum of (a) the greater of (x) $7,336,000 and (y) the
Company's EBIT for the 327 day period ending July 31, 2002 multiplied by 1.1162
(365/327) (such product referred to herein as "2002 Minntech Annualized EBIT")
PLUS (b) the greater of (x) $1,927,000 and (y) MediVators EBIT for the Fiscal
Year ending July 31, 2002 ("2002 MediVators EBIT").

               3.2.3      The Bonus for the Fiscal Year ending July 31, 2004
shall be equal to five percent (5%) of the excess of the Combined EBIT for such
Fiscal Year over the sum of (a) the greatest of (x) $7,336,000, (y) 2002
Minntech Annualized EBIT, and (x) the Company's EBIT for the Fiscal Year ending
July 31, 2003 PLUS (b) the greater of (x) $1,927,000, (y) 2002 MediVators EBIT
or (z) MediVators EBIT for the Fiscal Year ending July 31, 2003.

               3.2.4      For the period commencing August 1, 2004 and ending
October 31, 2004, the Board of Directors of the Company shall determine the
amount of the Bonus in its sole discretion based on Employee's performance and
such other factors that the Board deems appropriate.

                                        3
<Page>

               3.2.5      "EBIT" of a corporation for any Fiscal Year shall mean
operating income of the corporation and its consolidated subsidiaries for such
Fiscal Year from continuing operations, determined in accordance with generally
accepted accounting principles from time to time in effect, before provision for
interest (income) expense, income taxes, intercompany management charges and
provision for Employee's Bonus pursuant to this Section 3.2.

               3.2.6      "Combined EBIT" for any Fiscal Year shall mean the
sum of the Company's EBIT and MediVators EBIT for such Fiscal Year.

               3.2.7      Notwithstanding anything in this Section 3.2 to the
contrary, in the event Employee's employment with the Company is terminated
prior to the end of a Fiscal Year, the Bonus for such Fiscal Year shall be equal
to the Bonus determined pursuant to Section 3.2.1, 3.2.2 or 3.2.3, whichever is
applicable, multiplied by a fraction (i) the numerator of which is the number of
days during such Fiscal Year that Employee is employed hereunder and (ii) the
denominator of which shall be 365.

               3.2.8      The Bonus shall be payable by November 15th following
the Fiscal Year for which the Bonus is payable.

          3.3  DISCRETIONARY COMPENSATION. Employee shall also be entitled to
such additional increases in Base Salary, bonuses and stock options as may be
determined from time to time by the Compensation Committee of the Board of
Directors of Cantel.

                                        4
<Page>

          3.4  LIFE INSURANCE. Provided that Employee is insurable at rates that
are comparable to those obtainable on other persons of similar age and position
in good health (if Employee is classified in a higher risk category, he may
elect to pay the excess premium cost to obtain the coverage), during the
Employment Period the Company shall procure and maintain term life insurance on
the life of Employee in the face amount of $250,000. Employee shall be the owner
of such life insurance policy and shall have the absolute right to designate the
beneficiaries thereunder. The Company shall pay all premiums for such life
insurance. Employee agrees to submit to all medical examinations, supply all
information and execute all documents required by insurance companies in
connection with the issuance of such policy.

          3.5  USE OF AUTOMOBILE. During the Employment Period, Employee shall
be entitled to the use of an automobile leased or owned by the Company in
connection with the Company's business. The make and model of the automobile
shall be reasonably satisfactory to Employee, provided that the Company's
monthly payments in respect thereof (exclusive of the expenses referred to in
the following sentence) shall not exceed $700. In lieu of the foregoing, the
Company may pay Employee an automobile allowance of $700 a month. Employee shall
be entitled to receive reimbursement for reasonable out-of-pocket expenses,
including, without limitation, cost of gas, oil, insurance and other costs
incurred by Employee in operating and maintaining the automobile; provided,
however, that Employee shall be responsible for keeping appropriate records
regarding the use of said automobile, as instructed by the Company or its
accountants.

          3.6  OTHER BENEFITS.

               3.6.1      During the Employment Period, Employee shall be
entitled to participate, at Company expense (subject to applicable employee
contribution requirements imposed by the Company from time to time on its
employees generally), in the medical health insurance plan, and all other
health, insurance and other benefit plans applicable generally to executive
officers of the Company on the same basis as such officers. In addition,
Employee shall be entitled to participate in the

                                        5
<Page>

Company's 401(k) benefit plan.

               3.6.2      During the Employment Period, Employee will be
entitled to paid vacation (four weeks) and holidays consistent with the
Company's policy applicable to executives generally. All vacations shall be
scheduled at the mutual convenience of the Company and Employee.

               3.6.3      The Company will reimburse Employee for reasonable
out-of-pocket expenses incurred in furtherance of the business of the Company,
including travel, entertainment and similar items, upon the presentation of
appropriate receipts or vouchers therefor, consistent with the Company's policy
applicable to executives generally.

     4.   TERMINATION OF EMPLOYMENT. The provisions of Section 1 of this
Agreement notwithstanding, this Agreement and Employee's employment hereunder
may be terminated in the manner and for the causes hereinafter set forth, in
which event the Company shall be under no further obligation to Employee other
than as specifically provided herein:

          4.1  If Employee is absent from work or otherwise substantially unable
to assume his normal duties for a period of sixty (60) successive days or an
aggregate of ninety (90) business days during any consecutive twelve-month
period during the Employment Period because of physical or mental disability,
accident, illness, or any other cause other than vacation or approved leave of
absence, the Company may thereupon, or at any time thereafter while such absence
or disability still exists, terminate the employment of Employee hereunder upon
ten (10) days' written notice to Employee.

          4.2  In the event of the death of Employee, this Agreement shall
immediately terminate on the date thereof.

          4.3  If Employee materially breaches or violates any material term of
his employment hereunder, or commits any criminal act or an act of dishonesty or
moral turpitude, in the reasonable judgment of Cantel's Board of Directors, then
the Company may, in addition to other rights and remedies available at law or
equity, immediately terminate this Agreement upon written notice to Employee
with the date of such notice being the termination date and such termination
being deemed for "cause."

                                        6
<Page>

          4.4  Employee may terminate his employment under this Agreement upon
not less than thirty (30) days' written notice to the Company if the Company,
without Employee's consent, undergoes a "Change in Control" (as defined below).
"Change in Control" shall mean (1) the acquisition of beneficial ownership,
direct or indirect, of securities of the Company by any person (as that term is
defined in Section 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended), other than Employee or a person approved by Employee, which when
combined with all other securities of the Company beneficially owned, directly
or indirectly, by that person, equals or exceeds 50% of the combined voting
power of the Company's then outstanding securities or (2) at any time after the
Effective Date, a majority of the Board of Directors is composed of persons who
are not "Continuing Directors" as hereinafter defined. "Continuing Directors" as
used herein shall mean (i) the directors of the Company at the close of business
on the Effective Date, and (ii) any person who was or is elected (A) to succeed
a Continuing Director or (B) to become a director as a result of an increase in
the size of the board, recommended, in each case, by a majority of the
Continuing Directors then on the Board. Any Termination Notice given by Employee
hereunder must be given within ninety (90) days following the occurrence of the
event giving rise to such termination.

          4.5  In the event Employee's employment shall be terminated by reason
of the provisions of Section 4.1 or 4.2, then in such event, the Company shall
continue to pay to Employee, if living, or other person or persons as Employee
may from time to time designate in writing as the beneficiary of such payments,
the Basic Compensation in effect at the time which such death or disability
occurred during the three-month period following such death or disability.

          4.6  Upon termination of Employee's employment under Section 4.3, the
Company shall have no further obligation under this Agreement to make any
payments to Employee or to bestow any benefits on Employee after the termination
date, other than payments and benefits accrued and due and payable to Employee
prior to the termination date.

          4.7  Upon termination of Employee's employment by Employee under
Section 4.4,

                                        7
<Page>

then in addition to payments and benefits accrued and due and payable to
Employee prior to the termination date, the Company shall pay to Employee in a
lump sum, within ten (10) days following the termination date, an amount equal
to one hundred fifty percent (150%) of the Base Salary and Incentive
Compensation paid or accrued by the Company to Employee with respect to the most
recently completed Contract Year.

     5.   DISCLOSURE OF CONFIDENTIAL INFORMATION, ASSIGNMENT OF INVENTIONS,
          AND COVENANTS NOT TO COMPETE.

          5.1  CONFIDENTIAL INFORMATION. Employee acknowledges that the Company
(which term, for purposes of Section 5 shall be deemed to include Cantel,
MediVators and other affiliates of the Company) possesses confidential
information, know-how, customer lists, purchasing, merchandising and selling
techniques and strategies, and other information used in its operations of which
Employee has or will obtain knowledge, and that the Company will suffer serious
and irreparable damages and harm if this confidential information were disclosed
to any other party or if Employee used this information to compete against the
Company. Accordingly, Employee hereby agrees that except as required by
Employee's duties to the Company, Employee, without the consent of the Company's
Board of Directors, shall not at any time during or after the Employment Period
disclose or use any secret or confidential information of the Company,
including, without limitation, such business opportunities, customer lists,
trade secrets, formulas, techniques and methods of which Employee shall become
informed during his employment, whether learned by him as an employee of the
Company, as a member of its Board of Directors or otherwise, and whether or not
developed by Employee, unless such information shall be or becomes public
knowledge other than as a result of Employee's direct or indirect disclosure of
the same.

                                        8
<Page>

          5.2  PATENT AND RELATED MATTERS.

               5.2.1      Employee will promptly disclose in writing to the
Company complete information concerning each and every invention, discovery,
improvement and idea (whether or not shown or described in writing or reduced to
practice), and device, design, apparatus, process, and work of authorship,
whether or not patentable, copyrightable or registerable, which is made,
developed, perfected, devised, conceived or first reduced to practice by
Employee, either solely or in collaboration with others, during the Employment
Period, whether or not during regular working hours (hereinafter collectively
referred to as the "Inventions"). Employee, to the extent that he has the legal
right to do so, hereby acknowledges that any and all of the Inventions are
property of the Company and hereby assigns and agrees to assign to the Company
any and all of Employee's right, title and interest in and to any and all of the
Inventions.

               5.2.2      LIMITATION. It is further agreed and Employee is
hereby notified that the above agreement to assign the Inventions to the Company
does not apply to an Invention for which no equipment, supplies, facility or
confidential information of the Company was used and which was developed
entirely on Employee's own time, and

                            (i)    which does not relate (a) directly to the
business of the Company or (b) to the Company's actual or demonstrably
anticipated research or development, or

                                        9
<Page>

                            (ii)   which does not result from any work
performed by Employee for the Company.

               5.2.3      ASSISTANCE. Upon request and without further
compensation therefor, but at no expense to Employee, and whether during the
Employment Period or thereafter, Employee will do all lawful acts, including,
but not limited to, the execution of documents and instruments and the giving of
testimony, that in the opinion of the Company, its successors and assigns, may
be necessary or desirable in obtaining, sustaining, reissuing, extending or
enforcing United States and foreign copyrights and Letters Patent, including,
but not limited to, design patents, on any and all of the Inventions, and for
perfecting, affirming and recording the Company's complete ownership and title
thereto, and to cooperate otherwise in all proceedings and matters relating
thereto.

               5.2.4      RECORDS. Employee will keep complete, accurate and
authentic accounts, notes, data and records of all the Inventions in the manner
and form requested by the Company. Such accounts, notes, data and records shall
be the property of the Company, and upon its request, Employee will promptly
surrender the same to it.

               Upon the termination of his employment hereunder, Employee agrees
to deliver promptly to the Company all records, manuals, books, blank forms,
documents, letters, memoranda, notes, notebooks, reports, data, tables,
accounts, calculations and copies thereof, which are the property of the Company
or which relate in any way to the business, products, practices or techniques of
the Company, and all other property, trade secrets and confidential information
of the Company, including, but not limited to, all documents which in whole or
in part contain any trade secrets or confidential information of the Company,
which in any of these cases are in his possession or under his control.

                                       10
<Page>

          5.3  NON-COMPETE. Employee agrees that for a period of twenty-four
(24) months following the termination of Employee's employment hereunder, except
as a result of the breach by the Company of any material term or condition
hereof, Employee will not, directly or indirectly, alone or with others,
individually or through or by a corporate or other business entity in which he
may be interested as a partner, shareholder, joint venturer, officer, director,
employee or otherwise, own, manage, control, participate in, lend his name to,
or render services to or for any business within the continental United States
or Canada which is competitive with that of the Company or any of its
affiliates, provided, however, that the foregoing shall not be deemed to prevent
the ownership by Employee of up to five (5%) percent of any class of securities
of any corporation which is regularly traded on any stock exchange or
over-the-counter market. For the purpose of this Agreement, a business activity
competitive with the business of the Company or any of its affiliates shall
include only the design, manufacture, marketing, sale, or distribution of (i)
endoscopes, (ii) endoscope disinfection or sterilization equipment or supplies,
(iii) infection control equipment, products, supplies or systems or (iv)
products or services for the dialysis, medical device reprocessing, or
filtration and separation markets (collectively "Products") which are the same
as or similar to or compete with, or have a usage allied to Products being
developed, marketed, sold or distributed by the Company or any of its affiliates
at any time during the last twelve months of Employee's employment by the
Company.

                                       11
<Page>

          5.4  NON-INTERFERENCE. Employee further agrees that for a period of
two years following termination of Employee's employment hereunder, he will not
(i) induce or attempt to induce any other employee of the Company or any of its
affiliates to leave the employ of the Company or affiliate, or in any way
interfere with the relationship between the Company (or any of its affiliates)
and any other employee, or (ii) induce or attempt to induce any customer,
supplier, franchisee, licensee, distributor or other business relation of the
Company or any of its affiliates to cease doing business with the Company or
affiliate, or in any way interfere with the relationship between any customer,
franchisee or other business relation and the Company and any of its affiliates
without prior written consent of the Board of Directors of the Company.

          5.5  ENFORCEMENT. If, at the time of enforcement of any provisions of
this Section, a court of competent jurisdiction holds that the restrictions
stated herein are unreasonable under the circumstances then existing, the
parties hereto agree that the maximum period, scope or geographical area
reasonable under such circumstances will be substituted for the stated period,
scope or area. Employee agrees that the covenants made in this Section shall be
construed as an agreement independent of any other provision of this Agreement,
and shall survive the termination of this Agreement.

     6.   MISCELLANEOUS PROVISIONS.

          7.1  Section headings are for convenience only and shall not be
deemed to govern, limit, modify or supersede the provisions of this Agreement.

          7.2  This Agreement is entered into in the State of Minnesota and
shall be governed pursuant to the laws of the State of Minnesota. If any
provision of this Agreement shall be held by a court of competent jurisdiction
to be invalid, illegal or unenforceable, the remaining provisions hereof shall
continue to be fully effective.

          7.3  This Agreement contains the entire agreement of the parties
regarding this subject matter. There are no contemporaneous oral agreements, and
all prior understandings, agreements, negotiations and representations are
merged herein.

                                       12
<Page>

          7.4  This Agreement may be modified only by means of a writing signed
by the party to be charged with such modification.

          7.5  Notices or other communications required or permitted to be given
hereunder shall be in writing and shall be deemed duly given upon receipt by the
party to whom sent at the respective addresses set forth below or to such other
address as any party shall hereafter designate to the other in writing delivered
in accordance herewith:

          If to Minntech:
               Minntech Corporation
               14605 28th Avenue North
               Minneapolis, Minnesota 55447

          With a copy to:

               Cantel Medical Corp.
               150 Clove Road
               Little Falls, NJ  07424

          If to Employee:
               Roy K. Malkin
               16652 Jackpine Trail
               Lakeville, MN  55044

          7.6  This Agreement shall inure to the benefit of, and shall be
binding upon, the Company, its successors and assigns, including, without
limitation, any entity that may acquire all or substantially all of the
Company's assets and business or into which the Company may be consolidated or
merged. This Agreement may not be assigned by Employee.

          7.7  This Agreement may be executed in separate counterparts and may
be delivered by facsimile, each of which shall constitute the original hereof.

          IN WITNESS WHEREOF, the parties have set their hands as of the date
first above written.

                                         MINNTECH CORPORATION

                                         By: /s/ Roy K. Malkin
                                            ------------------

                                            /s/ Roy K. Malkin
                                            -----------------
                                            Roy K. Malkin

                                       13
<Page>

With respect to the last
sentence of Section 1:

MEDIVATORS, INC.

By: /s/ Roy K. Malkin
    -----------------

                                       14

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